Checkoff Programs – An Overview

Background

Checkoff programs – also referred to as research and promotion programs – promote and provide research and information for a particular agricultural commodity without reference to specific producers or brands. The term “checkoff” is derived from historical programs that were not mandatory; producers marked a checkoff box if they wished to contribute to the program. Mandatory programs do not have such forms, but the name has remained. Producers and handlers usually finance these programs from assessments charged on a per unit basis of the marketed commodity. While these programs have basic similarities, they can differ considerably in terms of legal and regulatory boundaries, administration, and operation.

Basic Types of Programs

Currently, the USDA Agricultural Marketing Service (AMS) oversees 21 research and promotion boards, which consist of large and small producers, importers, and other commodity stakeholders. Of those 21 programs, twelve operate under and are administered under authority provided by a federal statute specific to the commodity. For example, the Soybean Research and Promotion program operates under the authority of the Soybean Promotion, Research, and Consumer Information Act. Programs for eggs, beef, cotton, dairy, pork, potatoes, watermelons, and popcorn are also authorized by a specific statute for the respective commodity. The remaining nine programs operate under the authority of the Commodity Promotion, Research, and Information Act of 1996, often referred to as the “generic promotion law.”  Programs for lamb, Christmas trees, blueberries, honey, mangoes, peanuts, paper and paper-based packaging, softwood lumber, and sorghum operate under the authority of the generic promotion law.

Regardless of the statutory authority, the day-to-day management of each program is overseen by a research and promotion board (and its staff) that is overseen by AMS. The board members are nominated by the industry and appointed by the Secretary of Agriculture. Board members help bring a wealth unique perspectives that contribute to the common goal of promoting their commodity to more consumers. Note that programs such as those for beef and soybeans operate in a statutory and regulatory framework that contains both a federal board and numerous state-level entities known as “Qualified State Beef Councils” and “Qualified State Soybean Boards.” Additionally, there are checkoff programs that fall outside the orbit of the above-mentioned checkoff programs that are overseen by AMS. For example, states like Arkansas, Mississippi, Missouri, and California operate statutorily-authorized state-level programs for rice.  It bears noting that many states have state-law authorized programs for beef and soybeans that operate in tandem, and sometimes in addition to, the federally-authorized programs for beef and soybeans.


Challenges

Checkoff programs have been challenged in courts and in USDA administrative proceedings in various ways on numerous  occasions over the past decades. In particular, a variety of constitutional challenges have been brought against different checkoff programs.   The primary constitutional argument has centered on the argument that the programs violate the First Amendment of the U.S. Constitution  by mandating the challengers to pay a mandatory assessment to pay for speech with which they disagree.   . On three occasions this issue has been before the U.S. Supreme Court.

In its first opportunity to hear the issue, the U.S. Supreme Court ruled that assessments for promotion that were part of a broader regulatory framework included in a marketing order were legal and did not violate the First Amendment. In a later decision, the Court decided that assessments for a generic mushroom promotion program violated the First Amendment because they were directed primarily at generic advertising that some producers did not support.  In a third checkoff decision — Johanns v. Livestock Mktg. Ass’n, 544 U.S. 550 (2005), the Court determined advertisements promoting beef as a generic commodity were government speech, thus not susceptible to First Amendment compelled-subsidy challenges.  The Court did, however, hold open the possibility that the beef checkoff program could be unconstitutional if it is shown that the advertisements are attributable to individual producers who disagree with the message. Following Johanns, First Amendment challenges to checkoff programs were unsuccessful.

However, in 2016, new litigation was initiated in the United States District Court for the District of Montana  — Ranchers Cattleman Action Legal Fund United Stockgrowers of America v. Perdue.  In R-CALF, the plaintiffs primarily allege that the collection of a portion of the federally-mandated dollar-per head of cattle violates the First Amendment because the operation of several states’ Qualified State Beef Councils fall outside the government speech test set forth in Johanns.  The litigation has had developed considerably since 2016 and is currently being appealed for a second time to the United States Court of Appeals for the Ninth Circuit.