U.S. v. Frame

• Citation: 885 F.2d 1119
• Decision Date: 14 September 1989
• Docket Number: No. 88-1104,88-1104
• Parties: UNITED STATES of America v. L. Robert FRAME, Sr. and Vintage Sales Stables, Inc., Appellants.
• Court: U.S. Court of Appeals — Third Circuit

Page 1119

885 F.2d 1119

58 USLW 2165

UNITED STATES of America v. L. Robert FRAME, Sr. and Vintage Sales Stables, Inc., Appellants.

No. 88-1104.

United States Court of Appeals, Third Circuit.

Argued July 11, 1988.

Decided Sept. 14, 1989.

William H. Mitman, Jr. (argued), West Chester, Pa., for appellants.

Constance A. Wynn (argued), Douglas Letter, Jeffrica J. Lee, U.S. Dept. of Justice, Appellate Staff, Civ. Div., Washington, D.C., for appellee.

Before SLOVITER, SCIRICA and WEIS, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This appeal concerns constitutional and statutory challenges to the Beef Promotion

and Research Act of 1985, 7 U.S.C. Secs. 2901-11 (Supp. III, 1985). The Act requires cattle producers and importers to finance a national beef promotional campaign by paying, on each head of cattle sold, a one dollar assessment, which is eventually remitted to statutorily designated organizations composed of industry representatives. The constitutional questions are whether the Act contravenes: (1) the limits of congressional power enumerated in the Federal Constitution; (2) the Free Speech and Association clauses of the First Amendment; or (3) the Takings Clause or Equal Protection guarantee of the Due Process Clause of the Fifth Amendment. The statutory questions are whether the Act: (1) creates a civil cause of action in which the government may recover uncollected assessments from "collecting persons"; or (2) authorizes the government to impose late payment charges. The district court held that the Act violated no constitutional provision, and that the Act authorizes a private cause of action against "collecting persons" for both uncollected payments and late charges. We will affirm.

I. BACKGROUND

A. Statutory and Regulatory Scheme

The Beef Promotion and Research Act, Pub.L. No. 99-198, Title XVI, Sec. 1601, 99 Stat. 1597 (codified as amended at 7 U.S.C. Secs. 2901-11), first passed in 1976 and later amended in 1985, was designed to strengthen the beef industry's position in the marketplace through a coordinated program of promotion and research. 7 U.S.C. Secs. 2901(b). This legislation was structured as a "self-help" measure that would enable the beef industry to employ its own resources and devise its own strategies to increase beef sales, while simultaneously avoiding the intrusiveness of government regulation and the cost of government "handouts." See Report of Committee on Agriculture, Beef Research and Information Act, H.R.Rep. No. 452, 94th Cong., 1st Sess. 3 (1975). The Beef Promotion and Research Program receives no direct funding from the federal government, and in this regard resembles a number of recent congressional enactments designed to make various federal regulatory programs partially or entirely self-financing. See Skinner v. Mid-America Pipeline, --- U.S. ----, 109 S.Ct. 1726, 1729, 104 L.Ed.2d 250 (1989) (characterizing Section 7005 of Consolidated Omnibus Budget Act of 1985, codified at 42 U.S.C.App. Sec. 1682a, which directs Secretary of Transportation to collect "pipeline safety user fees" to fund administrative costs, as one example of several self-financing measures). Currently in existence are seven other promotion and research programs for agricultural commodities, identical in most respects to the Beef Promotion Act. See 7 U.S.C. Secs. 2101-18 (1982) (cotton); 7 U.S.C. Secs. 2611-27 (1982) (potatoes); 7 U.S.C. Secs. 2701-18 (1982) (eggs); 7 U.S.C. Secs. 4501-13 (Supp. III 1985) (dairy products); 7 U.S.C. Secs. 4601-12 (Supp. III 1985) (honey); 7 U.S.C. Secs. 4801-19 (Supp. III 1985) (pork); 7 U.S.C. Secs. 4901-16 (Supp. III 1985) (watermelon). ¹

The Beef Promotion Act directs the Secretary of Agriculture to promulgate a Beef Promotion and Research Order that establishes this self-help program and provides for its financing "through assessments on all cattle sold in the United States and on cattle, beef, and beef products imported into the United States." 7 U.S.C. Secs. 2901(b), 2903, 2904(8)(A)-(C). The Beef Promotion Act itself, however, establishes the rate of assessment at one dollar ($1.00) per head of cattle, which must be paid by cattle producers and importers. 7 U.S.C. Sec. 2904(8)(C). The Act also specifies most of the other terms that the Order must contain, see 7 U.S.C. Sec. 2904(1)-(11), but authorizes the "inclusion of all terms and conditions necessary to effectuate the provision of the order," provided they are not inconsistent with the statute. 7 U.S.C. Sec. 2904(12). After notice and opportunity for public comment, the Beef Promotion and Research Order became effective on July 18, 1986, 7 C.F.R. Secs. 1260.101-.217 (Subpart A), while the rules and regulations for collection of assessments, 7 C.F.R. Secs. 1260.301-.316 (Subpart B), and the Certification for the Cattlemen's Beef Promotion and Research Board, 7 C.F.R. Secs. 1260.500-.530 (Subpart C), became effective on October 1, 1986.

The Secretary's Order, as the Act mandates, provides for the establishment of a Cattlemen's Beef Promotion and Research Board ("Cattlemen's Board"), and a Beef Promotion Operating Committee ("Operating Committee") to administer the Order under the supervision of the Secretary. The Beef Promotion Act and Order specify the manner in which the membership of the Cattlemen's Board is to be selected. First, the Order divides the United States into forty-two units that correspond primarily to the States. 7 C.F.R. Sec. 1260.141(a). Forty-one of those units represent cattle producers, and one unit represents importers. Id. The Order specifies the number of Cattlemen's Board members allocated to each unit. Id. "Eligible organizations" representing each unit submit nominations to the Secretary for positions on the Cattlemen's Board. 7 U.S.C. Secs. 2904(1), 2905(a); 7 C.F.R. Sec. 1260.143(a). "Eligible organizations" are those existing state cattle organizations certified by the Secretary as meeting criteria specified by the Beef Promotion Act and Order, criteria which include large membership, history of stability, and an "overriding purpose of promoting the economic welfare of cattle producers." 7 U.S.C. Sec. 2905(b); 7 C.F.R. Sec. 1260.530. From these nominations, the Secretary appoints the members of the Board. 7 U.S.C. Sec. 2904(1); 7 C.F.R. Sec. 1260.141(b).

Similarly, the Beef Promotion Act and Order details the selection procedure to fill the twenty positions available on the Operating Committee. The Cattlemen's Board elects from its own ranks ten members to serve on the Committee. 7 U.S.C. Sec. 2904(4)(A); 7 C.F.R. Secs. 1260.161. The other ten Committee members are cattle producers who are representatives of the "Federation," which includes as its members "qualified State beef councils." 7 U.S.C. Sec. 2904(4)(A). A "qualified State beef council" is a beef promotion entity that is authorized by state statute, or a beef promotion entity that receives voluntary assessments or contributions from cattle producers; in either case, that entity is not "qualified" unless certified by the Cattlemen's Board. 7 C.F.R. Sec. 1260.115. Federation representatives on the Committee consist of the Federation chairperson and vice-chairperson, and eight elected cattle producers who are members of the Federation Board of Directors, and are members or ex officio members of the Board of Directors of a Qualified State beef council. 7 C.F.R. Sec. 1260.161(c). The Secretary must certify that the Federation representatives meet the above criteria and that they have sufficiently disclosed any contractual relationship between the Federation representative and the Committee or Board. 7 U.S.C. Sec. 2904(4)(A); 7 C.F.R. Sec. 1260.161(c).

Under the supervision of the Secretary, who must finally approve all budgets, plans, expenditures, and contracts for them to become effective, 7 U.S.C. Secs. 2904(4)(C) & (6)(A), (B), the Operating Committee and the Cattlemen's Board take the initiative in implementing the program. The Operating Committee has the responsibility for developing plans and projects of promotion and advertising, and of submitting to the Board, for its approval, budgets for the fiscal year. 7 U.S.C. Sec. 2904(4)(A)-(C); 7 C.F.R. Sec. 1260.168(b), (d), (e). The Operating Committee is also authorized to enter into contracts with established national nonprofit industry-governed organizations, including the Federation, to implement the Beef Promotion Act. 7 U.S.C. Sec. 2904(6); 7 C.F.R. Sec. 1260.168(f). The powers and duties of the Cattlemen's Board, delineated by the Beef Promotion Act, include the power to: (A) administer the order; (B) make rules and regulations to effectuate the terms and provisions of the Order; (C) elect members to serve on the Operating Committee; and (D) approve or disapprove budgets submitted by the Committee. 7 U.S.C. Sec. 2904(2)(A)-(D).

Cattle producers and importers are required to pay an assessment of one dollar ($1.00) per head of cattle. 7 U.S.C. Sec. 2904(8)(C); 7 C.F.R. Sec. 1260.172(a)(1). In calculating the amount of assessment due, producers receive partial credit from the Cattlemen's Board for contributions to a qualified State beef council. 7 U.S.C. Sec. 2904(8)(A); 7 C.F.R. Secs. 1260.172(a)(3). Each person making payment to a producer for cattle purchased is designated a "collecting person," 7 C.F.R. Sec. 1260.311(a), and is required to collect a per-head assessment and remit the assessments either to the qualified State beef council (which in turn remits the money to the Board), or if no such council exists in that State, directly to the Cattlemen's Board. 7 U.S.C. Sec. 2904(8)(A); 7 C.F.R. Secs. 1260.172(a)(5), 1260.311(a), 1260.312(c). All "collecting persons" are obligated to maintain records of assessments collected and payments made pursuant to the Beef Promotion Act, and must make these records available to the Secretary for inspection. 7 U.S.C. 2904(11); 7 C.F.R. Sec. 1260.202. The Order further requires collecting persons...