KANSAS CITY, Kan. (CN) – The U.S. Department of Agriculture illegally funneled hundreds of millions of dollars to lobbyists for the beef industry, a cattleman claims in Federal Court.
Michael Callicrate sued the USDA and its Secretary Tom Vilsack; the Cattlemen’s Beef Promotion and Research Board, and the Beef Promotion Operating Committee – both based in Centennial, Colo.; and the USDA’s Agricultural Marketing Service.
Callicrate asked the court to stop the payments to the National Cattlemen’s Beef Association under the “Beef Checkoff” program. He claims the handouts of public money violate the Beef Research and Information Act of 1985.
The Beef Research and Information Act was enacted in 1976 to strengthen the beef industry’s position in the marketplace. It allows the Secretary of Agriculture to run a Beef Promotion and Research Order, financed by charging cattle-raisers $1 per head of cattle owned.
The Act “prohibits the use of Beef Checkoff funds for influencing governmental action or policy: ‘The order [required to be issued by the Secretary under 7 U.S.C. § 2904(1)] shall prohibit any funds collected by the [CBB] under the order from being used in any manner for the purpose of influencing governmental action or policy, with the exception of recommending amendments to the order,'” the complaint states. (Brackets in complaint.)
Callicrate claims that even though the National Cattlemen’s Beef Association (NCBA) is primarily a policy and lobbying organization, it has received $200 million in the past 6 years from the defendants, which are responsible for administering the Beef Promotion and Research Order.
Callicrate says an independent audit of NCBA showed numerous examples of the organization using the $200 million for lobbying.
“The audit evaluated a small portion of NCBA transactions charged to the Beef
Checkoff in FY 2008, FY 2009, and the first five months of FY 2010, ended February 28, 2010,” the complaint states. “Specifically, the audit investigated only 45 expenditures and 25 employees’ timesheets for five months.
“According to NCBA’s Forms 990, NCBA had total expenses of $110,412,425 in
2008 and 2009, and of that $72,833,595 (approximately 66 percent) came from the Beef Checkoff. However, only a minuscule forty-five transactions that occurred during this period were audited by the independent auditor. If the average expense evaluated by the independent auditor was $1,000, the independent auditor examined approximately $45,000 of transactions. This tiny fraction – less than 1 percent – of the NCBA’s Beef Checkoff funds revealed numerous expenditures that violated the Act,” the complaint states.
Callicrate claims the report turned up only “the tip of the iceberg.”
“As a result of the audit, NCBA agreed to return the checkoff fund over $216,000 to settle claims of unlawful expenditures,” the complaint states. “If the ratio of misappropriated funds holds for the rest of the Beef Checkoff funds received by NCBA, the amount misappropriated by NCBA would be in the tens of millions of dollars, if not more.”
Callicrate claims that a USDA audit of its Agricultural Marketing Service found that the agency’s oversight of 18 related checkoff programs failed to ensure that the money was properly spent.
“According to the OIG Audit, ‘[Defendant] AMS program area staff did not always require the various boards, [including Defendant CBB,] to comply with agency guidelines,'” the complaint states. “‘For example, [Defendant] AMS program area staff did not receive detailed information about boards’ administrative expenses. [Defendant] AMS needs this information in order to verify that boards are operating in compliance with regulations and legislation. … [P]rogram area staff did not have enough information to determine that the administrative expenses incurred by these boards were in compliance with the legislation requirements.'” (Brackets and ellipsis in complaint.)
Callicrate claims that he and others in his industry will be irreparably damaged if the payments to the NCBA continue. He claims the beef industry already has suffered a serious downturn: that almost 500,000 beef cattle operations have gone out of business since 1996.
Callicrate is represented by Daniel Owen, with Polsinelli Shughart, in Kansas City, Mo.
He seeks costs, an order “immediately and permanently suspending any contracts between NCBA and defendants,” and an injunction “permanently enjoining defendants from contracting with the NCBA under the Act or otherwise giving the NCBA any additional Beef Checkoff funds.”