On December 22, 2016, the USDA entered into a Memorandum of Understanding ("MOU") with the Montana Beef Council ("MBC"). This agreement comes as a result of the lawsuit filed by R-CALF against the MBC, alleging the MBC violated the First Amendment by using checkoff fees to pay for advertisements which not all cattlemen support. In October, the federal magistrate issued a recommendation to the federal judge, suggesting the judge enter a preliminary injunction against the MBC, prohibiting it from using checkoff fees to fund promotional materials for the time being, until the full lawsuit can be sorted out. The MBC filed an objection to the recommendation and referenced the new MOU. R-CALF replied to the MBC's objection, casting doubt on the MOU. The focus of this article is the terms of the MOU--how do they affect other states and other checkoff groups?
The MOU is the MBC's (and the USDA's) attempt to avoid judgment in R-CALF's federal lawsuit. It is an agreement between the state MBC and the federal USDA, giving the USDA more oversight and authority over how the state MBC uses its checkoff fees. Under the agreement, the MBC is required to submit budgets, promotion plans, and projects to the USDA Agricultural Marketing Service ("AMS") for review and approval. The AMS can audit the MBC's books and will review minutes from all MBC meetings. A copy of the MOU is available here. R-CALF argues the MOU can be terminated by MBC and the USDA upon mutual agreement. This very well could mean the parties will dissolve the MOU as soon as the court case is resolved. R-CALF argues the MOU doesn't change the fact that the MBC requires cattlemen to fund the MBC's private speech against their will.
But the MOU doesn't just affect the USDA and the MBC. Its broad terms open the door to federal audits for any party who contracts with the MBC. This means a local Farm Bureau or company who enters into an agreement with the MBC could be setting itself up for an audit by the national Cattlemen's Beef Promotion and Research Board or the Beef Promotion Operating Committee.
The beef MOU also could affect other commodities. Qualified checkoff boards should monitor this lawsuit and the application of the MOU. Both could be used as templates for other states' beef councils or the qualified checkoff boards for other commodities. The MOU gives significant oversight and control of "state" checkoff fees back to the federal government. Whether this consolidation of federal power will help or hurt beef producers in Montana is yet to be seen, but the same type of agreement could be repeated for other groups.
The Montana federal judge could rule on R-CALF's lawsuit (including the relevance of the MOU) at any time. Stay tuned!