UPDATED: Pork industry cries foul over USDA moveUPDATED: Pork industry cries foul over USDA move
Pork producers are calling out USDA for settling with activist group over contract dispute, noting that the move does not have industry support, despite the ag agency's claims.
March 5, 2016
Pork producers from across the United States called out the USDA for recently entering into a settlement discussion with the Humane Society of the United States to put closure to the lawsuit over the sale of the “Pork, the Other White Meat” trademark rather than continuing to robustly defend a previously legally approved contract.
In a legislative hearing of the U.S. House Agriculture Committee last week, U.S. Representative David Rouzer (N.C.) questioned USDA Secretary of Agriculture Tom Vilsack about the decision to enter into a settlement with HSUS rather than exhaust any of the natural defenses the agency would normally pursue. In response, Vilsack says, “It was a decision made in concert with the industry. The industry has been involved in the discussion.”
However, that statement was far from the truth. Leadership from the National Pork Producers Council and the National Pork Board both confirmed at the National Pork Industry Forum in Indianapolis, Ind., that the U.S. pork industry never agreed to a settlement. In fact, the two parties — NPPC and NPB — were not allowed to participate in the negotiation with HSUS at all.
During the hearing, Rouzer questioned the agency’s decision process. Rouzer says, “The part that concerns me is the tendency, not just related to this specific case but across the board, where someone files suit and rather than pursuing every legal option we just settle.”
In two separate annual meetings, voting delegates of the NPPC and NPB, presented a resolution and advisement, petitioning the USDA secretary to “mount a strong and vigorous defense.” In the first day of official business meetings, state delegates lined up to sponsor the NPB advisement and NPPC resolution.
The North Carolina Pork Council delegation submitted the advisement at Pork Forum to urge Vilsack to defend the U.S. pork industry by upholding a purchase agreement between the NPB and the NPPC.
John Johnson, NPB chief operating officer, says “it is obvious that the delegate body here has strong sentiment that USDA should defend their past decisions and decisions of NPB to provide the latitude and freedom for us to use our judgment to enter into contracts that are appropriate and necessary to promote pork without interference by a third-party.”
In a historic move, 145 Pork Checkoff delegates representing 43 states and importers unanimously joined the North Carolina Pork Council in support of an advisement introduced at the NPB delegate assembly. During the advisement’s introduction and discussion, it was particularly noteworthy that every state represented in the delegate body added their name as co-sponsors to the advisement.
NPPC delegates also wholeheartedly approved the synchronized floor resolution brought to the voting body by the Illinois Pork Producers during the annual business meeting.
The original lawsuit filed by HSUS is based on a single small hog farmer upset with actions of the NPB. Micheal Formica, NPPC assistant vice president of domestic policy and counsel, says there are proper ways for that producer to voice concerns over the checkoff program, including participation in the NPB annual meeting. He adds, the recent actions of the USDA illustrate that now a single producer, disagreeing with the governing board, can shut down a checkoff program. “It now just takes one single person and they can bring the whole checkoff system down. This really calls into question all the checkoff organizations,” says Formica.
Furthermore, it questions the USDA’s authorization and the government agency's approval of contracts in general. In this situation, an activist group sues over an approved contract. The two parties involved are not a party of the action and the DOJ just settles without a fight.
Valuable background information
Over 10 years ago, when NPB and NPPC officially became two entities, the NPB leased the “Pork, the Other White Meat” and the Pork trademark. In 2005, the NPB approached NPPC about purchasing those trademarks, which lead to a lengthy appraisal and negotiation. Johnson says in 2006, the contract received the proper government approval, and was signed to purchase the trademarks for $3 million a year for 20 years.
In 2012, HSUS filed a lawsuit in the U.S. District Court claiming the contract should have never been approved and the appraisal was not accurate.
Johnson explains that, “It was properly valued, reviewed and the USDA approved the contract. Subsequently, every year the USDA has approved this payment with our budget since 2006.”
The lawsuit was originally dismissed. The HSUS appealed. The Court reinstated the lawsuit, said it has good standing and sent back to the lower courts.
Neil Dierks, NPPC chief executive officer, says “Fundamentally, what you have is an agreement, arm’s length business transaction that has been done and had oversight and approval by the USDA. There have not been any issues raised with it in the industry or from producers until a lawsuit by activist group was brought.”
At that point, USDA entered into negotiation with the HSUS. As part of the negotiation process, it agreed to complete a new evaluation on the value of the trademark. The USDA authorized expenditures to begin this process and directed the NPB to complete the new appraisal to be completed this spring. USDA told the Court it will have a final decision on the contract by June 15.
Although the agreement is between the NPPC and NPB neither party is allowed to participate in the negotiation process. Once the lawsuit is filed against the government, the Department of Justice gets involved. Dierks says in the past the DOJ had aggressively defended the lawsuit, but it became apparent last fall that the USDA was looking to settle the case. NPPC was not in favor of settling the case and in December it formally filed to intervene. On Jan. 6, NPPC was denied the right to get involved because of other stipulations between USDA and HSUS. However, the organization had the right to reapply to intervene.
Formica says the DOJ representing the USDA made two filings that indicated that they were settling. When NPPC questioned the filings, the USDA response was it is not a settlement and this is a normal review. Yet, the filings state differently.
The NPPC did file again to intervene and the organization is committed to exercise every legal option to fight the settlement.
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