USDA Loses in Checkoff Case

Court Blocks Annual $3M Payment for Pork Checkoff Trademarks

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A federal court questioned the process USDA used to set $3 million annual payments for trademarks related to the pork checkoff. (DTN file photo)

OMAHA (DTN) -- A federal judge's ruling blocks the National Pork Board from paying $3 million annually to the National Pork Producers Council for trademarks such as "Pork. The Other White Meat."

The ruling from a judge in the U.S. District Court for the District of Columbia essentially blocks the U.S. Department of Agriculture from approving the future annual payments on trademark pork checkoff campaigns. Because the National Pork Board is a checkoff program, USDA signs off on all annual checks cut by the pork board, including the trademark payments.

The Humane Society of the United States filed suit against then-U.S. Secretary of Agriculture Tom Vilsack to stop the payments, but the suit carried over to current USDA Secretary Sonny Perdue. The Humane Society is challenging USDA's authority to continue approving $3 million in annual payments from the National Pork Board for multiple trademarks, including the "Pork. The Other White Meat" campaign.

The National Pork Producers Council sold the "Pork. The Other White Meat" trademarks to the National Pork Board in 2006 for about $35 million. It financed the purchase for 20 years, making the Pork Board's annual payment $3 million.

HSUS claimed in its original lawsuit the trademark sale resulted in the use of pork checkoff dollars to influence legislation, which is prohibited by the Pork Act. The federal judge questioned the logic of USDA's rationale approving the payments.

"But neither the agency nor the expert adequately explains why this calculation sheds any light on what the 2016 review was supposed to ascertain: the current value of the set of four trademarks to the agency," the court said in its ruling.

Three trademarks in question include "The Other White Meat" slogan, but the court noted the trademarks are "obsolete" and no longer being used. "So their value is minimal, or at best, undetermined."

Then there is a fourth trademark, the "Pork and Design" logo, but the court noted USDA made no effort to determine its value. "The secretary's 2016 decision also fails to explain why it makes sense to predicate future payments on the cost of replacing 'The Other White Meat' when the cost of replacing 'The Other White Meat' has already been incurred."

The secretary of agriculture approved spending $3 million per year for the purchase of the trademarks for 10 years based on an expert's determination of their replacement cost. The court calls USDA's 2016 decision "arbitrary, capricious, and not supported by the record."

Ken Maschhoff, a pork farmer from Illinois and president of the National Pork Producers Council, said in a statement the group was "disappointed" over the court's ruling. USDA had asked the court to dismiss the case in January 2017.

"We are disappointed that the court partially denied the U.S. Department of Agriculture's motion to dismiss this frivolous lawsuit, one that was never based on a legitimate legal challenge to a federally approved transaction but instead was brought by an anti-meat activist group intent on eliminating meat consumption and harming a vast U.S. industry that employs hundreds of thousands of Americans and feeds billions of people at home and abroad," he said.

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley