Ranchers-Cattlemen Action Legal Fund v. U.S. Dep't of Agric.

• Decision Date: 29 September 2021
• Docket Number: Civil Action No. 20-2552 (RDM)
• Parties: RANCHERS-CATTLEMEN ACTION LEGAL FUND, UNITED STOCKGROWERS OF AMERICA, Plaintiff, v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

573 F.Supp.3d 324

RANCHERS-CATTLEMEN ACTION LEGAL FUND, UNITED STOCKGROWERS OF AMERICA, Plaintiff,

v.UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.

Civil Action No. 20-2552 (RDM)

United States District Court, District of Columbia.

Signed September 29, 2021

Kellan Richard Smith, Pro Hac Vice, Oakland, CA, David S. Muraskin, Public Justice, P.C., Washington, DC, for Plaintiff.

Liam Holland, Emily B. Nestler, Rebecca Michelle Kopplin, United States Department of Justice, Civil Division, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

RANDOLPH D. MOSS, United States District Judge

This case concerns the administration of the Beef Checkoff Program, a federal initiative that, among other things, funds generic advertising of beef products through mandatory assessments on cattle sales and imports. Plaintiff Ranchers-Cattlemen Action Legal Fund ("R-CALF") brings this action under the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq. , against the U.S. Department of Agriculture ("USDA") and the Secretary of Agriculture.¹ In its complaint, R-CALF alleges that the USDA substantively amended the Beef Checkoff Program in violation of the APA by entering into certain agreements (known as "Memoranda of Understanding" or "MOUs") with the Qualified State Beef Councils that help administer the program rather than engaging in notice-and-comment rulemaking under 5 U.S.C. § 553. Dkt. 1 at 5 (Compl. ¶ 17). The case is now before the Court on the USDA's motion to dismiss for lack of jurisdiction and for failure to state a claim, Dkt. 11, in which the USDA argues that R-CALF lacks standing to challenge the MOUs and that R-CALFs claims are precluded by earlier litigation in the District of Montana, Dkt. 11-1 at 2–3.

For the reasons set forth below, the Court concludes that R-CALF has adequately alleged the elements of associational standing and, accordingly, will DENY USDA's motion to dismiss for lack of jurisdiction. But that conclusion merely resolves the USDA's facial challenge to the adequacy of R-CALF's complaint; it does not resolve the factual question whether R-CALF actually has standing. Because the Court must (or, at least, is inclined to) resolve that question before proceeding to the USDA's preclusion defense, the Court will DENY without prejudice USDA's motion to dismiss for failure to state a claim and will ORDER further briefing (and discovery, if necessary) concerning the factual basis for R-CALF's associational standing.

I. BACKGROUND

The Beef Checkoff Program is a federal initiative that promotes the marketing of "beef and beef products" using funds collected through a mandatory assessment on cattle sales and imports. 7 U.S.C. § 2901(b). The program was established in the Beef Promotion and Research Act of 1985 ("Beef Act"), Pub. L. No. 99-198, § 1601, 99 Stat. 1354, 1597–1606 (codified at 7 U.S.C. § 2901 – 2911 ), which Congress enacted with the goal of "carrying out a coordinated program of promotion and research designed to strengthen the beef industry's position in the marketplace and to maintain and expand domestic and foreign markets and uses for beef and beef products." 7 U.S.C. § 2901(b).

The Beef Act directed the USDA to implement the statute's substantive provisions through a "beef promotion and research order," 7 U.S.C. § 2903(b), which USDA promulgated in July 1986. See Beef Promotion and Research Order ("Beef Order"), 51 Fed. Reg. 26,132 (July 18, 1986) (codified at 7 C.F.R. pt. 1260); see also 7 U.S.C. § 2904 (setting forth the "required terms" of the beef promotion and research order). Together, the Beef Act and the Beef Order establish the Beef Checkoff Program and provide for its funding through a one-dollar-per-head-of-cattle "checkoff" or assessment, 7 U.S.C. § 2904(8)(A) ; 7 C.F.R. § 1260.172(a), "on all cattle sold in the United States and on cattle, beef, and beef products imported into the United States," 7 U.S.C. § 2901(b).

The Beef Act and Beef Order created two national entities to administer the program under USDA oversight: the Cattlemen's Beef Promotion and Research Board ("Beef Board") and the Beef Promotion Operating Committee ("Operating Committee"). 7 U.S.C. § 2904(1) – (5) ; 7 C.F.R. §§ 1260.141, 1260.161. In addition, Congress contemplated a role for certain beef-promotion entities operating at the state level, known as Qualified State Beef Councils, or QSBCs. See 7 U.S.C. §§ 2904(8), 2905. A QSBC is a "beef promotion entity" that (1) is either "authorized by State statute" or "organized and operating within a State;" (2) "receives voluntary assessments or contributions;" (3) "conducts beef promotion, research, and consumer and industry information programs;" and (4) is "certified by the [Beef Board] ... as the beef promotion entity in such State." 7 C.F.R. § 1260.115 ; see also id. § 1260.181 (setting forth the requirements for the Beef Board to certify a QSBC). QSBCs perform several functions in support of the Beef Checkoff Program, including serving as liaisons between the Beef Board and state cattle producers, 7 U.S.C. § 2905 ; collecting the one-dollar-per-head checkoff assessments on the Beef Board's behalf, 7 U.S.C. § 2904(8) ; 7 C.F.R. § 1260.172(a) ; electing, as a group, half the members of the Operating Committee, 7 C.F.R. § 1260.161(a) ; id. § 1260.112; and conducting beef promotion, research, and consumer and industry information programs, id. § 1260.181(a).

To foster the QSBCs’ operations, the Beef Act and Beef Order permit cattle producers to divert up to 50 cents per head of cattle from their checkoff assessment to their local QSBC. 7 U.S.C. § 2904(8)(C) ; 7 C.F.R. § 1260.172(a)(3). In practice, the USDA has permitted QSBCs to retain 50 cents of every checkoff dollar they collect and to forward the rest to the Beef Board. See Beef Promotion and Research, 84 Fed. Reg. 20,765, 20,766 (May 13, 2019). Cattle producers, however, may opt out of this arrangement and elect to have their entire assessment sent to the federal program. Id. at 20,767. The Beef Order also places limits on how QSBCs may spend the funds they receive: specifically, QSBCs must conduct or fund "plans or projects for promotion, research, consumer information and industry information, with respect to beef and beef products," 7 C.F.R. § 1260.169(a), intended to "strengthen the beef industry's position in the marketplace," id. § 1260.181(b)(1). QSBCs may "[n]ot use council funds collected pursuant to [the Beef Checkoff Program] for the purpose of influencing governmental policy or action, or to fund plans or projects which make use of any unfair or deceptive acts or practices including unfair or deceptive acts or practices with respect to the quality, value or use of any competing product." Id. § 1260.131(b)(7). This case concerns the funds that the QSBCs obtain through the checkoff program, and in particular the uses to which the QSBCs put those funds.

When it comes to challenging aspects of the Beef Checkoff Program, this is not R-CALF's first rodeo. The story of this litigation begins in the District of Montana, four years before the filing of the complaint in this action. In 2016, R-CALF sued the USDA and the Secretary in the District of Montana, arguing that the Beef Checkoff Program violated the First Amendment insofar as it permitted QSBCs to retain a portion of cattle producers’ checkoff assessments and to use that money to fund speech with which R-CALF's members disagreed. Dkt. 1 at 3 (Compl. ¶ 7); see Complaint, R-CALF v. Perdue , No. 16-CV-41 (D. Mont. May 2, 2016) (Dkt. 1). Eventually, R-CALF obtained a preliminary injunction based, in part, on the district court's conclusion that "the Government's statutorily authorized control over the [QSBCs] appears inadequate to transform [QSBC] advertising into government speech." R-CALF v. Perdue (R-CALF I) , No. 16-CV-41, 2017 WL 2671072, *7 (D. Mont. June 21, 2017). Concluding that the mandatory assessments were thus used, in part, to fund private speech, the district court "enjoined [the USDA] from continuing to allow the Montana Beef Council to use the assessments that it collects under the Beef Checkoff Program to fund its advertising campaigns, unless the payer provides prior affirmative consent authorizing the [QSBC] to retain a portion of the payer's assessment," id. at *8. The Ninth Circuit affirmed, holding that the district court had not abused its discretion in granting the preliminary injunction. R-CALF v. Perdue (R-CALF II) , 718 F. App'x 541, 542 (9th Cir. 2018).

After the district court issued the preliminary injunction, but before the case proceeded to summary judgment, the USDA began entering into Memoranda of Understanding ("MOUs") with QSBCs across the country. Dkt. 1 at 4 (Compl. ¶ 9). These MOUs, which R-CALF alleges are "identical" for each QSBC, id. (Compl. ¶ 10), increase the USDA's oversight over QSBCs’ use of funds acquired through the Beef Checkoff Program. The MOUs grant the Secretary the power to "review[ ] and approve[ ] the QSBCs’ budgets and marketing plans;" permit "government officials [to] participate in QSBC board meetings at which promotional and funding decisions are made;" and "allow the Secretary to decertify a noncompliant QSBC, thereby terminating its access to checkoff funds." R-CALF v. Vilsack (R-CALF IV) , 6 F.4th 983, 986–87 (9th Cir. 2021). Significantly, they also grant the Secretary pre-approval authority over "any and all promotion, advertising, research, and consumer information plans and projects" undertaken by QSBCs, id. at 986, as well as over "all contracts" QSBCs make with third parties to produce advertisements and promotional materials, and "any plans or projects" developed under those contracts, id. at 987. The MOUs do not require pre-approval, however, of "noncontractual transfers of checkoff funds to third parties to produce promotional materials." Id. (emphasis added). Instead, "recipients of these transfers" need only "identify their expenditures in an annual...