Farm Product "Check-off" Programs: A Constitutional Analysis
Released: 2006-06-09T00:00:00

Introduction

A number of farm products are promoted through the use of congressionally authorizedgeneric promotion programs. (1) To fund these programs, the authorizing statutes (and orders)require that an assessment be collected based on the amount of product that a covered party sells,produces, or imports. Some producers have opposed the use of, or message in, genericadvertisements and have brought First Amendment challenges in court, three of which the SupremeCourt has decided.

The Supreme Court's first two attempts at addressing First Amendment challenges tocheck-off programs -- California fruits and mushrooms, respectively -- resulted in contrastingopinions and some confusion for lower courts. Subsequent circuit court decisions for the beef, pork,and dairy check-off programs, for example, have all seemed to struggle with determining theapplicable level of scrutiny to apply to the programs. Nonetheless, in each case the appellate courtsrejected the government's argument that the check-off programs were "government speech" immunefrom First Amendment scrutiny and found the programs to unconstitutionally compel speech (orcompel the subsidy for the support of some type of speech).

In May 2005, the Supreme Court issued its third opinion in eight years regarding theconstitutionality of a check-off program (beef). In Johanns v. Livestock Marketing Association , (2) the Supreme Court upheld thecheck-off program on "government speech" grounds -- a legal theory not addressed by the SupremeCourt in the earlier check-off cases. This ruling is likely to have far-reaching effects for check-offprograms. For example, it has already been used to vacate the circuit court decisions mentionedabove and will undoubtedly be used to defend other check-off programs from First Amendmentchallenges. The decision may also serve to inform and encourage future legislation creating oramending such programs.

This report begins with a brief introduction on check-off programs and then describes theapplicable First Amendment principles argued in many of the check-off cases. Next is an analysisof the first two challenges that reached the Supreme Court, as well as a brief discussion ofsubsequent appellate court decisions. This report concludes with a discussion of Johanns v.Livestock Marketing Association and its possible implications for check-off programs.

Check-off Programs

Congress has provided for the generic promotion of farm products since the 1930s. (3) These programs -- commonlyknown as "check-off" programs -- are requested, administered, and funded by the industriesthemselves, and, in part, operate under promotion and research orders or agreements issued by theSecretary of Agriculture. General oversight of these programs is provided by the U.S. Departmentof Agriculture's (USDA) Agricultural Marketing Service; however, there is still some debate as toactually how much control and responsibility the USDA has over the check-off programs. Farmproduct check-off programs are designed to strengthen the position of each respective commodityin the marketplace by increasing domestic demand and consumption and by expanding foreignmarkets.

Typically, the statutory language authorizing a check-off program calls on the Secretary ofAgriculture to appoint a board (e.g., National Dairy Promotion and Research Board), council (e.g.,Mushroom Council) or other type of representative body, based on nominations made by theproducers, to pursue the statute's goals. To fund the programs, the authorizing statutes and orderscall on the board or council to collect an assessment based on the amount of product that a coveredparty sells, produces, or imports. The collected funds may finance a variety of programs, includingadvertising, consumer education, nutrition, production, marketing research, and new product andforeign market development. In some cases, large percentages of the collected funds are used toimplement generic promotions and advertisements. (4) The Secretary of Agriculture must approve each promotional projector plan before it can be implemented. (5)

The First Amendment

The First Amendment to the Constitution provides that "Congress shall make no law ...abridging the freedom of speech, or of the press...." (6) In general, the First Amendment prohibits the government fromregulating private speech based on its content and may prevent the government from compellingindividuals to express certain views (7) or to pay subsidies for speech to which they object. (8) However, the right to speakor refrain from speaking is not absolute. Courts, for example, look at the context and purpose of thespeech and allow greater government regulation for some types of speech than others. In consideringchallenges to check-off programs, courts have generally looked to the "commercial speech,""compelled speech," and "government speech" doctrines that have been developed under FirstAmendment jurisprudence.

Commercial Speech. Commercial speech isspeech that "proposes a commercial transaction" (9) or relates "solely to the economic interests of the speaker and itsaudience." (10) Thegovernment may regulate commercial speech, even truthful expressions, more than it may regulatefully protected speech, and it also may ban false or misleading commercial speech, or advertisementsthat promote an illegal product.

Courts typically use a four-prong test that was articulated by the Supreme Court in CentralHudson Gas & Electric Corp. v. Public Service Commission of New York to determine whether agovernmental regulation of commercial speech is constitutional. (11) The Central Hudson testasks (1) whether the commercial speech at issue is protected by the First Amendment (that is,whether it concerns a lawful activity and is not misleading) and (2) whether the assertedgovernmental interest in restricting it is substantial. "If both inquiries yield positive answers," thento be constitutional the restriction must (3) "directly advance the governmental interest asserted," and(4) be "not more extensive than is necessary to serve that interest." (12) Determining whether thespeech in question is "commercial speech" is important because it allows a court to apply the moreflexible intermediate scrutiny test of Central Hudson . As discussed below, courts have oftenstruggled with placing check-off programs solely within the parameters of "commercial speech."

Compelled Speech. The First Amendment hasbeen interpreted to prevent the government from compelling individuals to express certain views orto pay subsidies for certain speech to which they object. Agricultural check-off cases havetraditionally been analyzed within this category or some modification of it.

Initially, courts looked to the Supreme Court cases of Abood v. Detroit Board ofEducation (13) and Kellerv. State Bar of California (14) when analyzing check-off programs under the principles ofcompelled speech or subsidies. In Abood , non-union employees objected to paying a "service fee"equal to union dues because the fees subsidized economic, political, professional, scientific, andreligious activities not related to the union's collective bargaining agreement. The Supreme Courtheld that the union could constitutionally finance ideological activities that were not germane to theunion's collective bargaining but only with funds provided by non-objecting employees. (15) Since collectivebargaining was the authorized purpose of the union, and the union's political activities were notgermane to that purpose according to the Court, employees who disagreed with the political activitiescould not be compelled to support them. Similarly, in Keller , the Supreme Court held that the StateBar of California could constitutionally fund activities germane to its goals of regulating the legalprofession out of the mandatory dues of all members, but could not use compulsory dues foractivities of an ideological nature that fell outside of activities germane to the Bar's goals. (16)

From these two cases, courts have fashioned a "germaneness" test for "compelled speech"or more particularly, "compelled subsidy" cases. (17) Under this test, courts are called on to "draw a line" betweenthose activities that are germane to a broader and legitimate government purpose and those that arenot -- a test both the Abood and Keller courts acknowledged would be difficult to apply.

Government Speech. Generally, courts have"permitted the government to regulate the content of what is or is not expressed when thegovernment is the speaker or when the government enlists private entities to convey its ownmessage." (18) So longas the government bases its actions on legitimate goals, the government may speak despite citizendisagreement with the content of the message. Indeed, the government, with some exceptionspertaining to religion, may deliver a content-oriented message. "When the government speaks, forinstance to promote its own policies or to advance a particular idea, it is, in the end, accountable tothe electorate and the political process for its advocacy. If the citizenry objects, newly electedofficials later could espouse some different or contrary position." (19)

In analyzing whether the "government speech" doctrine applies, courts typically consider thegovernment's responsibility for, and control over, the speech in question. The more control thegovernment exerts, the more likely it will be determined to be the speaker. Although there seemsto be some debate as to the scope of the "government speech" doctrine, (20) its effect is still broad, inthat it can provide immunity to First Amendment scrutiny.

Check-off Case Law

Over the years, a number of parties assessed under check-off programs have claimed that themandatory assessments are unconstitutional restraints on their right to free speech. Generally,opponents argue that they should not be required to pay for advertisements with which they disagree. For example, in a challenge against the dairy check-off program, the claimants were traditional dairyfarmers that did not use the genetically engineered and controversial "recombinant Bovine GrowthHormone." Consequently, they objected to subsidizing generic advertisements that they feltconveyed a message that milk is a fungible product that bears no distinction based on where and howit is produced. (21) Thesetypes of challenges were most often successful under a "compelled speech" analysis, even thoughthe cases varied in their analysis of "germaneness" and their attention to whether a "governmentspeech" approach might be more appropriate. The Supreme Court's recent expansive view of whatcan constitute "government speech," however, has put the entire line of earlier case law in question.

Early Supreme Court Cases

California Tree Fruits Check-off Program. In Glickman v. Wileman Brothers and Elliot, Inc. , several producers of California tree fruits (peaches,nectarines, and plums) challenged the constitutionality of a USDA marketing order that requiredassessments be imposed on producers to fund costs associated with the orders, including genericadvertising. (22) Themarketing order at issue was derived from the Agricultural Marketing Agreement Act of 1937 (7U.S.C. Â§Â§ 601 et seq. ) and provides regulatory guidelines and restraints on its participants, includingquality and quantity controls, uniform price measures, and grade and size standards. Ultimately, theSupreme Court determined that the marketing orders were a species of economic regulation andupheld the constitutionality of the assessments imposed on the fruit growers to cover the costs ofgeneric advertising.

The Supreme Court began its analysis by describing the regulatory guidelines and restraintsthat the marketing order posed on the industry as a whole and concluded that they fostered a "policyof collective, rather than competitive marketing." (23) The Court then distinguished the regulatory scheme at issue fromlaws that had previously been found suspect under the First Amendment by determining that theorders (1) posed no restraint on the freedom of any producer to communicate any message to anyaudience, (2) did not compel any person to engage in any actual or symbolic speech, and (3) did notcompel the producers to endorse or to finance any political or ideological views. (24) Next, the Courtdetermined that the standards established in "compelled speech" case law favored a finding ofconstitutionality because (1) the generic advertising was unquestionably germane to the purposes ofthe marketing orders, and (2) the assessments were not used to fund political or ideologicalactivities. (25) The Glickman Court further dismissed the argument that the compelled assessments required the levelof scrutiny usually applied in "commercial speech" cases because this level was inconsistent withthe very nature and purpose of the collective action of marketing orders at issue. (26)

Based on these findings and the general cooperative nature of the regulatory scheme, theCourt found that the assessments imposed did not raise First Amendment concerns. The Courtdetermined that the respondent's criticisms of generic advertising "provid[ed] no basis for concludingthat factually accurate advertising constitutes an abridgment of anybody's right to speak freely." (27) The Supreme Courtconcluded by stating that the marketing orders in question were a "species of economic regulationthat should enjoy the same strong presumption of validity that we accord to other policy judgementsmade by Congress." (28)

Mushroom Check-off Program. In 2001, theSupreme Court revisited the issue of compelled marketing assessments for generic advertisementsin United States v. United Foods, Inc. (29) In United Foods , the Court was faced with determining whetherthe mandatory assessments for the mushroom check-off program established pursuant to theMushroom Promotion, Research, and Consumer Information Act of 1990 (7 U.S.C. Â§Â§ 6101 et seq .)violated the First Amendment. The Supreme Court concluded that the program authorized by theMushroom Promotion Act differed fundamentally from the marketing orders at issue under Glickman and found the program unconstitutional.

The Court started its analysis by declaring that it was not going to view the case in light of"commercial speech" jurisprudence because the government never raised the issue; however, theCourt determined that First Amendment issues arose "because of the requirement that producerssubsidize speech with which they disagree." (30) Accordingly, the Court began its examination by viewing theentire regulatory program at issue and comparing it with the scheme under scrutiny in Glickman. The Court determined that the features of the marketing scheme found important in Glickman werenot present in the case before it. For example, the Court concluded that "[i]n Glickman , themandated assessments for speech were ancillary to a more comprehensive program restricting marketautonomy" and that under the mushroom check-off "the advertising itself, far from being ancillary,is the principal object of the regulatory scheme." (31) By underscoring these differences, the Court moved away fromthe precedent established by Glickman .

The Court next turned to the "compelled speech" arguments before it and found that the"mandated support is contrary to the First Amendment principles set forth in cases involvingexpression by groups which include persons who object to the speech, but who, nevertheless, mustremain members of the group by law or necessity." (32) In so holding, the United Foods Court found that the compelledspeech in the mushroom check-off program was not germane to a purpose related to an associationindependent from the speech itself. The only purpose the compelled contributions served, accordingto the Court, was the advertising scheme for the mushroom check-off program, which was not likethe broader cooperative marketing structure relied upon by a majority of the Court in Glickman . (33) Accordingly, the Courtstruck down the mandatory assessments used to fund generic advertisements imposed by themushroom check-off program. The government also attempted to assert "government speech"arguments; however, the Court refused to hear such substantive claims because they had not beenraised at the lower levels. (34)

Since this decision, the Mushroom Council, which administers the check-off program underUSDA supervision, voted to reduce the mandatory assessments and divert their revenue tonon-promotional activities such as research into mushrooms' health and nutritional attributes.

Federal Circuit Cases after United Foods

Since United Foods , there have been challenges to the constitutionality of the beef, dairy, andpork check-off programs. These challenges were all successful at the appellate level. (35) In each case, the appellatecourts rejected the government's argument that the check-off programs were "government speech"immune from First Amendment scrutiny. Generally, the courts found that the government exertedinsufficient control and responsibility over the check-off programs to support the applicability of the"government speech" doctrine. After declaring that the check-off cases presented private speech,the courts typically compared the check-off program at issue with those presented in Glickman and United Foods . All three circuit courts found the check-off programs in question more akin to theteachings and holdings of United Foods and thus unconstitutional. In so holding, each courtappeared to struggle with placing the check-off programs within the "commercial speech -- compelled speech" rubric.

All three appellate decisions were appealed to the Supreme Court. The Court, however,heard arguments only in Livestock Marketing Ass'n v. Dep't of Agriculture , where the Eighth Circuithad ruled that the beef check-off program, authorized under the Beef Promotion and Research Actof 1985 (7 U.S.C. Â§Â§ 2901 et seq .) and its implementing regulations was unconstitutional. (36) The Court decided to holdthe petitions for writ of certiorari for the pork and dairy check-off cases until the beef case wasdecided. The Court heard oral arguments in December 2004, and released its opinion on May 23,2005, upholding the constitutionality of the beef check-off program. The Supreme Court vacatedall three appellate court decisions and remanded each case for further consideration in light of theruling. (37)

Recent Supreme Court Decision: Johanns v. Livestock Marketing Association

In Johanns v. Livestock Marketing Association , the Supreme Court, in a 6-3 opinion, ruledthat the beef check-off funds the government's own speech, and it is therefore not susceptible to aFirst Amendment compelled-subsidy challenge. (38) The Court vacated the judgment by the Eighth Circuit andremanded the case to the appellate court for further proceedings consistent with its decision. (39)

The Court began its analysis by declaring that it has upheld First Amendment challenges incases involving "compelled speech" and "compelled subsidy," but had never considered the FirstAmendment consequences of "government-compelled subsidy of the government's ownspeech." (40) In all thecases invalidating requirements to subsidize speech, the Court stated, "the speech was, or waspresumed to be, that of an entity other than the government itself." (41) The Court added (quotingan earlier Supreme Court case), that "'[t]he government, as a general rule, may support validprograms and policies by taxes or other exactions binding on protesting parties.'" (42) After recognizing theseprinciples, the Court observed that it has generally assumed, but not squarely held, that "compelledfunding of government speech does not alone raise First Amendment concerns." (43)

The Court next rejected respondent's argument that the beef check-off program was not"government speech," and instead, found the promotional campaigns to be "effectively controlledby the Federal Government itself" and "from beginning to end the message established by the FederalGovernment." (44) TheCourt seemed to come to these conclusions primarily because: (1) Congress and the Secretary set outthe overarching message of the beef check-off program; (2) all proposed promotional messages arereviewed for substance (and possibly rejected or rewritten) by USDA officials; and (3) officials ofthe USDA attend and participate in the open meetings at which proposals are developed. (45) Noting the overall degreeof governmental control over the check-off messages, the Court stated that "the government is notprecluded from relying on the government-speech doctrine merely because it solicits assistance fromnongovernmental sources in developing specific messages." (46)

The Court also dismissed the respondent's argument that the beef check-off program neededto be funded by general revenues, rather than targeted assessments, to qualify as "governmentspeech." In so concluding, the Court pointed out that the respondents have no right under the FirstAmendment not to fund government speech, irrespective of where the money comes from (i.e.,broad-based taxes or targeted assessments). (47) In addition, the Court concluded that the beef check-off programprovides political safeguards that are "more than adequate" to ensure that the message is kept apartfrom private interests. (48) Finally, the Court rejected respondent's argument that they were unconstitutionally forced to endorsea message with which they disagreed because the promotions used the tag-line "America's BeefProducers." The Court stated that such an argument involved compelled speech , rather thancompelled subsidy . (49) The Court suggested in dictum, nonetheless, that a compelled speech cause of action might lie if aparty could show that an objectionable beef advertisement was attributable to it. That is, even if astatute is constitutional on its face, a party may show that the government has applied it in anunconstitutional manner.

Justices Souter, Stevens, and Kennedy dissented from the majority opinion. The dissentargues that the generic beef advertisements should not qualify for treatment as speech by thegovernment mainly because the statute does not require the government to indicate that it is thesponsor of the message. (50) If the government wishes to rely on the "government speech"doctrine to compel specific groups to fund speech with targeted taxes, the dissent states, "it mustmake itself politically accountable by indicating that the content actually is a government message.. . ." (51) Because the"government speech" doctrine is not applicable, the dissent noted, the case should have been decidedin line with United Foods .

Possible Implications of Johanns v. Livestock Marketing Association

The Supreme Court's decision to uphold the beef check-off program on the "governmentspeech" doctrine is likely to have far-reaching implications for check-off programs. Johanns , ingeneral, appears to have fortified the constitutionality of check-off programs and has likely enhancedthe ability of Congress to provide similar promotional support for more agricultural products. Accordingly, this ruling will undoubtedly be used to defend other check-off programs from FirstAmendment challenges, to reevaluate those already decided, and to inform future legislation creatingor amending check-off programs.

This opinion will probably clear up much of the confusion that the Glickman -- UnitedFoods dichotomy established. By classifying the beef check-off program as a type of "governmentspeech," the Court has now made it possible for lower courts to avoid (1) placing a check-offprogram within or (2) applying a test from, the "commercial speech -- compelled speech" line ofcases -- a task many lower courts struggled with. On the other hand, attorneys for the respondentclaim that with five different opinions from the Court (i.e., majority, three concurrences, dissent),"there are as many questions left open as there were answers." (52) Moreover, the extent towhich United Foods is, as the dissent points out, a "dead letter" is unclear, since the ruling did notexpressly overrule it. (53) These observations notwithstanding, the decision establishes a precedent by which check-offprograms may be immune from First Amendment scrutiny.

The Johanns ruling put into question many of the earlier check-off appellate courtdecisions. (54) Indeed,the Supreme Court has already vacated the appellate court decisions that invalidated the federal dairyand pork check-off programs and has remanded each case, including the beef check-off case, forreconsideration in light of the decision. If it can be shown that these cases are analogous to the beefcheck-off program, it appears that a court would now likely find these check-off programsconstitutional "government speech." This finding seems probable, since the programs are authorizedand administered much in the same fashion and were all declared almost identical to the mushroomcheck-off program in United Foods .

Opponents, accordingly, may attempt to reformulate their arguments outside the beefcheck-off holding. For example, some may attempt to use an "as-applied" challenge, which wassuggested by the Court (without expressing a view on the issue) as possibly being available. In theNinth Circuit case Charter v. U.S. Dep't of Agriculture , the court vacated and remanded a districtcourt decision that had found the beef check-off program to be government speech because ofevidence that the individual appellants could be associated with speech to which they objected. (55) Others might pursuerecourse under completely different legal theories. Opponents of the pork check-off program, forinstance, are reportedly pursuing a "freedom of association" claim that was not addressed by theSupreme Court in the beef check-off decision. (56) The USDA has stated that it is studying the beef check-offopinion to determine its impact on other First Amendment challenges to check-off programs. (57)

Some have claimed that the decision might spur Congress into reconsidering the underlyingauthority and purposes of the check-off programs to accommodate some of the concerns raised bythe parties or noted by the courts. (58) Congress, for instance, might consider exempting certaincategories of producers who disagree with generic advertising from paying mandatory assessmentsunder a commodity promotion law similar to the exemption that Congress established in the 2002Farm Bill for persons that produce and market solely 100% organic products. (59) Congress might also seekto further define or expand current provisions in commodity promotion laws that already requirecouncils and projects to "take into account similarities and differences" between certain products andproducers. (60)

Congress may also wish to reexamine its position on requiring the advertisements to showthat they are, in fact, speech by the Government, since this was a major criticism in the dissent andall circuit courts found insufficient governmental control. A clear indication of who is the speakermay be important, as mentioned by Justice Ginsburg in her concurring opinion and some experts,to reconcile the message in check-off programs with other speech that is overtly sponsored by thegovernment, particularly the nutritional and dietary guidelines ( e.g. , "Food Pyramid"). (61) The most recent federalDietary Guidelines, for example, encourage greater consumption of fruits, vegetables, whole grains,and low-fat dairy, within a balanced, lower-calorie intake diet, while check-off programs generallyencourage more consumption of both low-fat and high-fat beef, pork, and dairy products. (62) These apparentinconsistencies, it has been argued, might undermine one or both federal government messages andcould lead to consumer confusion. (63)

Some also speculate, given the Court's acceptance of the "government speech" argument, thatthe ruling will prompt the USDA to exert greater effort in supervising check-offs and addressing theconcerns of some of the opposing parties. (64) With respect to programs that are still operating, many maycontinue operating as usual. Others that have modified their practices, such as the mushroomcheck-off program, may look to return to the status quo , pre- United Foods , and impose mandatoryassessments for generic promotion campaigns. Overall, the ruling is expected to call more attentionto the operation of check-off programs.