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The Ninth Circuit Court of Appeals recently affirmed a U.S. District Court of the District of Montana decision holding that the Montana Beef Council’s and other qualified state beef councils’ (QSBCs) advertisements are exempt from First Amendment scrutiny. The decision is in Ranchers Cattlemen Action Legal Fund United Stockgrowers of America v. Vilsack, No. 20-35453 (9th Cir. July 27, 2021).
In 1985, Congress passed the Beef Promotion and Research Act of 1985 imposing a $1 per head assessment on all cattle sold in the United States. This “checkoff” was used to fund promotions to expand domestic and international markets and uses of beef. The Secretary of Agriculture oversees the checkoff program through the Cattlemen’s Beef Promotion and Research Board members. The program operates through a QSBC collecting the checkoff, retaining 50 cents of every dollar to fund the state program, and passing the remaining 50 cents to the federal program. A beef producer may choose to opt-out of funding the QSBC and direct the entire checkoff to the federal program.
Since 2016, the Secretary has worked through the Agricultural Marketing Service (AMS) to enter into memoranda of understanding (MOUs) with QSBCs, giving the Secretary more oversight over the operations of the QSBCs. QSBCs can contract with third parties to produce advertisements and promotional materials, but the Secretary must pre-approve all contracts and plans/projects developed by the third parties. At the same time, QSBCs can also make noncontractual transfers to third parties for promotional materials, and the resulting materials do not need preapproval. At issue, in this case, is whether the noncontractual promotional materials are effectively government speech. R-CALF is arguing these materials are compelled speech protected under the First Amendment.
R-CALF first challenged the Montana checkoff program in 2016, alleging that how the Montana program distributed funds according to the federal program was unconstitutional compelled private speech. As the litigation was pending, Montana’s Beef Council entered into the MOU with USDA. Initially, the district court and the Ninth Circuit did not consider the impacts of the MOU. Later in the litigation, R-CALF amended its complaint to include additional QSBCs who had MOUs with USDA. The district court found that because the Secretary of Agriculture had sufficient control over the QSBCs’ speech and the third parties with which the QSBCs contract with, the promotional materials were effectively government speech not protected under the First Amendment. R-CALF appealed that decision.
Ninth’s Circuit’s Opinion
The main issue on appeal was whether the speech effectively controlled by the government was government speech. The court looks to a prior Supreme Court decision in Johanns v. Livestock Marketing Association. The Supreme Court in Johanns upheld portions of the beef checkoff program against claims that the promotions were compelled speech because the government controlled the promotions to set an overall message and approved the words used. The Supreme Court, in that decision, looked at three aspects showing the speech was indeed governmental speech:
Congress created the beef checkoff program and the promotional activities,
Congress and USDA specified the general content of the promotional activities, and
The Secretary of Agriculture exercised final approval over the wording of the promotional campaigns.
Using this past Supreme Court decision, the Ninth Circuit had applied the factors in two past decisions. In one case involving the California Pistachio Commission, the court had found that the assessment on pistachio sales was constitutional because the assessment was under the control of the California Pistachio Commission, and was government-controlled, with the state specifying the overall goal of the program and exercising control over the messaging.
The court had upheld a similar required assessment for California table grape growers. In that decision, the court found the state’s statute creating the commission and the assessment went further than the federal Beef Act at issue in Johanns. With the table grape assessment, the state could remove and appoint all board members of the California Table Grape Commission. The state did not require a review of the Commission-developed messaging, but the court still upheld that decision.
To the Ninth Circuit, the current case on appeal looked very similar to the two past decisions. According to the MOU, all promotions, advertising, research, and consumer information plans by the QSBCs must be pre-approved by the Secretary of Agriculture. QSBCs must also submit annual budgets explaining anticipated expenses for approval by the Secretary of Agriculture.
To the Ninth Circuit, this approval of the QSBCs’ budgets would include any third parties contracted with by the QSBCs. At the same time, the third parties were required under the regulations implementing the Beef Act to meet certain requirements. The Secretary also had clear authority to prevent QSBCs from contracting with third parties which did not meet the Beef Act’s requirements. This was enough to agree with the district court that the third parties’ advertising was government speech, not compelled speech.
This case involved at least 19 states which had QSBCs with MOUs with USDA; included in the 19 states where Maryland and Virginia. This decision potentially ends at least six years’ worth of litigation arguing over the beef checkoff program’s constitutionality. R-CALF still has ongoing litigation in the federal district court for the District of Columbia arguing that USDA did not have the authority to enter into the MOUs with the QSBCs. We will continue to monitor that litigation.
R-CALF v. Vilsack, No. 20-35453, 2021 WL 3161201 (9th Cir. 2021).