By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- A recent legal move by the National Cattlemen's Beef Association to have a say in the release of documents related to government audits of the beef checkoff system has been challenged by the group that sued for those documents.
A lawsuit filed in 2014 by the Organization for Competitive Markets demands the release of some 9,300 pages of documents related to the USDA's Office of the Inspector General investigation into the beef checkoff program. The documents stem from two OIG audits of the beef checkoff and its contractors, including the National Cattlemen's Beef Association.
NCBA has asked the U.S. District Court for the District of Columbia, where the OCM suit was filed, to be an intervenor in that suit. Such intervenor status would allow NCBA to be directly involved in the litigation, rather than be a bystander. The beef organization claims OCM is simply suing so the Humane Society of the United States, which is funding the OCM legal actions, can gain access to sensitive business documents to undermine the checkoff process. HSUS is critical of many modern livestock practices.
In a written statement to DTN, NCBA's Chief Executive Officer Kendal Frazier pointed to the HSUS's involvement as reason for suspicion about the motivations for the OCM lawsuit.
"We're not opposed to transparency, but we are opposed to releasing information that is sought to harass the industry by those who wish us harm," Frazier said.
For years questions have been raised by groups like OCM about whether millions in checkoff dollars are used properly by industry representatives.
The audits found producer investments in the checkoff are protected by a firewall that prevents beef checkoff dollars from being used for policy activities. Two audits by the OIG and several random audits by USDA found contractors to be in compliance with the laws that protect checkoff funds.
The OCM has said it doesn't buy that, filing the initial lawsuit in October 2014. In recent weeks the NCBA filed a motion to intervene; at the end of last week OCM filed a motion in opposition to NCBA's attempt to be named an intervenor.
"Cattle producers already have access to all the information on checkoff expenditures, and OIG released a full report on their audit," Frazier said. "What HSUS and OCM are seeking here is work product that is not covered or intended to be covered by FOIA (freedom of information act), and that is why they had to take the extraordinary step of seeking a court order."
Frazier said NCBA is concerned about OCM's pursuit because, "many of the documents that are being sought are business documents, like internal lease agreements with our office co-tenants, documents that have absolutely nothing to do with NCBA's role as a contractor to the checkoff."
If allowed to be part of the suit as an intervenor, NCBA would have a say in what documents were released and which parts of documents could be redacted because of sensitive information such as social security numbers.
The documents suit, he said, "isn't about transparency, it's orchestrated harassment meant to divert attention from the work the checkoff is intended to do on behalf of all producers -- build beef demand."
OCM Director Fred Stokes told DTN in an interview he believes the documents belong to the beef board.
"OCM simply wants an open, fair and competitive market so ranchers can get the price that reflects supply and demand," he said. "I fully expect eventually we'll get the 9,300 pages of data."
NCBA has said the lawsuit is an attempt to divide the beef industry and to weaken the checkoff.
The OCM continues to pursue the release of the documents in question, Stokes said, in part because the group believes checkoff dollars have been used to kill country-of-origin labeling, or COOL, and ultimately a Grain Inspection, Packers and Stockyards Administration, or GIPSA, rule. The rule was touted by supporters as a way to protect cattle and poultry producers against unfair, fraudulent or retaliatory practices in the market.
The USDA's office of inspector general initially conducted an audit of the beef checkoff program in 2013. The Organization for Competitive Markets filed a freedom of information act request and the OIG withdrew the audit and re-released it in 2014.
Stokes said the initial audit included a statement saying the NCBA was in full compliance. When the audit was re-released in 2014, he said the statement was removed.
The OCM said in a news release last week it believes the beef checkoff is responsible for the challenges producers currently face in the cattle market.
"Current U.S. cattle-producer numbers are nearly half what they were 20 years ago," the release said.
"The price of calves is less than half what it was just one year ago, and losses are the worst in 40 years. Even at the market highs of 2015, producers' share of the retail price was $170 to $200 less than the retail market price in 1970. Today, following the cattle market crash, the retail share for producers is $716 less than the producers' 1970 retail share.
"With heavy concentration in the retail market and few buyers, producers are the ones being squeezed right out of business. It is beef prices that have stayed relatively high -- not cattle prices. Through the advancement of their policies, NCBA has almost single handedly destroyed the cattle price."
NCBA's Frazier said in a news release last month the HSUS was the driving force behind the lawsuit.
"Those findings haven't satisfied the extremist animal rights activists at HSUS or its partners at OCM," he said.
"Instead of working to better our industry, these two organizations and a small handful of cattlemen have chosen a devil's pact in an effort to weaken the checkoff, which will in turn, weaken beef demand and our entire industry...There's no doubt that HSUS stands against rural America. Their attacks on the beef and pork checkoff programs weaken promotion efforts."
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @toddneeleyDTN
(GH/CZ)
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