On November 5, 2018, we blogged about the circumstances under which checkoff dues violate the First Amendment.  Such dues are common in the ag sector.  Growers of cattle, for example, pay dues of $1 per head to various organizations that use the money for generic advertising.  These dues are by no means entirely popular with growers.  Large producers can pay hundreds of thousands of dollars a year.  Many growers would prefer to tailor their own advertising rather than relying on generic ads.  Constitutional challenges to the checkoff are not uncommon.

As the earlier blog post suggested, they key to the constitutionality of checkoff dues is the degree of control that the government has over the content of the ads.  If government has the right to control the content, these ads are considered to be government speech and are perfectly legitimate.  If the government does not have control, the ads are private speech and the checkoff violates well-established principles of compelled speech under the First Amendment.

A recent decision from the District Court in Montana illustrates this principle.  In 2017, growers of cattle challenged the federal Beef Checkoff Program and its Montana affiliate.  As of that date, the $1 checkoff was evenly divided between the federal Beef Board, appointed by the Secretary of Agriculture, and the Montana Beef Council, a private corporation.

The Montana Beef Council used its share of the checkoff to develop its own promotional activities.  It must use those funds to promote the beef industry and it cannot use the money to promote unfair or deceptive practices or to lobby any governmental body.  Aside from that, however, the Department of Agriculture had only limited control over the Beef Council.  The Department reviewed the Beef Council’s plans each year and conducted an audit.  Beyond that, however, the Beef Council was largely free to design its own promotions.

The District Court held that the Department lacked sufficient control over the Beef Council to qualify its advertising as government speech.  The Department had no authority to either appoint of remove the members of the Beef Council.  It had no control over the content of the promotional materials.

The Beef Council argued that any grower who objected to its promotions could opt out of the program by completing paperwork necessary to send the entire checkoff to the federal Beef Board.  The District Court held that an opt-out provision was insufficient to salvage the First Amendment violation.  The Ninth Circuit affirmed.

To address the District Court’s concerns, the Department entered into a memorandum of understanding with the Beef Council.  Under this MOU, the Beef Council had to submit all proposed promotional materials to the Department for its approval.  It also had to submit any contracts it proposed to enter to the Department.

Revisiting the issue, the District Court held that the significant control the Department had over proposed advertising by virtue of the MOU meant that the ads were government speech.  Hence, the checkoff dues complied with the First Amendment.