A lawsuit in Montana is grabbing the attention of checkoff boards across the country. The Rancher-Cattlemen Action Legal Fund (R-CALF) sued the Montana state beef checkoff council in May, asking a federal court for a preliminary injunction prohibiting the council from spending federal checkoff dollars on advertising unless the state cattle producers paying the fees agree to it. This past October, a magistrate heard arguments from both sides, and in December he made an official recommendation to the federal judge to stop the council's advertising spending without cattlemen approval. The checkoff filed objections to the recommendation on December 23, 2016, and R-CALF replied on January 5, 2017. The federal judge will decide the preliminary injunction issue based on these filings.
A $1 per head fee, imposed on each cattle sale, was established by the federal Beef Promotion and Research Act of 1985. The money, used for marketing and research, is divided between qualified state boards and the federal beef checkoff board. The lawsuit claims the state moneys are being used to fund the private speech of the Montana Beef Council. R-CALF claims the state council supported advertising by fast food restaurants claiming to use all "North American" beef. R-CALF believes the council should spend its funds on advertising that supports U.S. beef, not just any beef. The council argued its funds come not only from U.S. cattlemen, but also from imports, and therefore the promotion of beef, in general, helps all farmers. The $1 per head fee is imposed on all cattle imported from Mexico or Canada as well.
The magistrate agreed with R-CALF, writing: "the First Amendment prohibits the government from compelling individuals to subsidize a private message when the individuals disagree with that message. The Supreme Court has rejected the argument that the presence of an opt-out provision alleviates the First Amendment concerns." The parties will file briefs with the federal judge this winter, arguing why the judge should confirm or reject the magistrate's recommendation.
For now, only Montana's checkoff council is affected by the lawsuit. Qualified state beef checkoff boards must adhere to the rules set up by the federal beef board. Beef producers were recently given the option of requesting that their entire checkoff fee go the federal beef board, rather than dividing it with the state board.
The CEO of R-CALF, Bill Bullard, has said this is a test case, and other state cases could follow if R-CALF is successful in Montana. The question of imported versus domestic beef is complicated by two factors: (1) Congress repealed a mandatory country of origin labeling (COOL) on beef in 2015; and (2) president-elect Trump's focus on American products over imported goods. A Republican Congress and Trump may reinvigorate a COOL bill, although opponents of COOL are concerned Mexico and Canada could impose retaliatory tariffs if such a bill were passed.