USDA Reaches Settlement; Checkoff to Continue

USDA announced on Feb. 28 that it has reached an out-of-court settlement agreement in the lawsuit filed against it concerning the pork checkoff referendum. At issue were the actions taken by then-Secretary of Agriculture Dan Glickman in calling for the referendum and the subsequent outcome.

The lawsuit – filed by independent pork producers in Michigan, the Michigan Pork Producers Association and the National Pork Producers Council (NPPC) – argued that the secretary did not have legal authority to call for a referendum on the pork checkoff, did not have the legal authority to terminate the pork checkoff and, citing the numerous irregularities in initiating the referendum and the voting process, maintained there was no clear determination of the true outcome of the vote.

A key component of the settlement agreement allows for the continuation of the mandatory checkoff.

Other provisions in the settlement agreement include:

• The agreement requires a distinct separation between the National Pork Producers Council (NPPC) and the National Pork Board. In effect, that means that NPPC’s role, as general contractor to implement checkoff-funded pork promotion, consumer education and research initiatives will be terminated. In the future, the National Pork Board will assume full responsibility for implementation of those programs.
• The agreement specifically points out that "all NPPC staff who perform predominantly checkoff-related functions… shall be given the opportunity to transfer their employment to the (National Pork) Board." To qualify, any current NPPC staffer’s compensation must be at least 50% allocated to the Pork Checkoff Program to be eligible. This rule applies equally to the chief executive officer (CEO) and chief financial officer (CFO) positions at NPPC, too. Therefore, any NPPC employee who has performed predominantly non-checkoff related functions (of a policy-setting nature) may not be employed by the National Pork Board while performing those non-Checkoff-related functions for NPPC nor can they be employed by the National Pork Board for two years after ceasing to perform those non-Checkoff related functions. The restriction basically applies to the NPPC staff in Washington, DC.
• Joint communications efforts with NPPC and the National Pork Board will no longer be allowed at the national level. However, state pork producers groups may sponsor communications containing both checkoff and non-checkoff issues and materials.
• The settlement agreement also calls for a survey of all eligible pork producers and importers to be conducted by the USDA sometime after June 2003. The purpose of the survey will be to evaluate the effectiveness of the settlement agreement and the on-going allocation of checkoff funds. If at least 15% of producers and importers express concerns about the pork checkoff and favor a referendum at that time, one will be held in accordance with the Pork Act. USDA or its successor responsible for overseeing the checkoff will pay for survey costs.
• Annual meetings of both NPPC and the National Pork Board, scheduled for March 8-10, may proceed as planned, according to the agreement. However, after the annual meetings, NPPC or any succeeding or similar organizations may not be involved in nominating producers or importers to serve on the National Pork Board.
• Additionally, the agreement provides that the National Pork Board may lease the office space from the NPPC, who owns the headquarters building in Clive, IA, at fair market value. Following the transition period, NPPC staff offices can no longer be housed at that address.
• Finally, with the agreement, all claims against USDA were resolved.

• On behalf of the plaintiffs of the lawsuit, Pete Blauwiekel, producer from Fowler, MI, stated: "Through this settlement, we have been able to help pork producers across the U.S. maintain their access to promotion, research and education funded by the checkoff. We believe that USDA’s participation in the Settlement Agreement reflects their genuine concerns regarding the referendum and the way it was conducted."

  Blauwiekel says the injunction was filed on behalf of pork producers to ensure they got a "fair shake" in the referendum. "Without the checkoff, the future of pork production would have changed dramatically, especially in a state like Michigan where there are already only a small number of pork producers."

  A general statement by NPPC regarding the agreement reads: "NPPC has agreed to this settlement for a simple but extremely important reason – this settlement fulfills our overarching goal of continuing the highly effective pork checkoff for the benefit of every pork producer."

  The NPPC statement further discloses that in the future NPPC will focus their full attention on legislative policy and regulatory issues. Those activities will continue to be supported by noncheckoff or unrestricted funds.

  National Pork Board President John Kellogg, Yorkville, IL, noted that their primary order of business now is to identify an interim-CEO to oversee checkoff-funded programs, to move forward with those programs and to set a timeframe to interview CEO and CFO candidates.

  "We’re still working out the details on how many days we have to make the full transition. It’s the intent of the USDA, and us, to do it as soon as we can but to do a very good job of it," Kellogg notes. "Fortunately, we’ve got Pork Forum coming up next week where we will all be together and we can get into action. It provides us the opportunity to talk about moving forward instead of talking about ‘what-ifs.’"

  Kellogg say there will be time allocated for a joint session of NPPC delegates and Pork Act delegates "so that somebody from USDA can come and explain to the whole group the details of the agreement."

  USDA officials acknowledged that plans for World Pork Expo were so far along that any substantial changes in that event would be very disruptive. "That will probably be the last major event under the current organization," notes Kellogg.

  "We’re looking forward to the opportunity to continue to provide programs. And, we’re certainly open to new ideas and the opportunity for change," Kellogg added.

  Timely updates regarding the checkoff referendum and the administration of checkoff-funded programs will be posted on our Web site, www.nationalhogfarmer.com.

  For a complete copy of the "settlement agreement," go the www.nppc.org, click on "Industry News," then click on "Pork Checkoff Referendum News," and finally, click on "Settlement Agreement between USDA and NPPC."