Cotton industry defending checkoff against importers

STONEVILLE, Miss. – They may not be drawing the media chatter other issues have been commanding, but legal challenges to the Cotton Research and Promotion Act have grabbed the full attention of National Cotton Council leaders.

The challenges are being mounted by textile importers, unhappy that they have to contribute to the cotton research and promotion program even though checkoff dollars help fuel the demand for the rising tide of cotton textile and apparel imports they’re bringing into the country.

“A number of importers have filed a lawsuit against the Cotton Research and Promotion Act, claiming that it is unconstitutional as to assessing imports,” said Craig Brown, vice president for producer affairs at the NCC.

“I think we’re up to around 100 separate lawsuits, which is the result of some good lawyers making sure they get enough firms involved to try to make it a class action case.”

Brown said the cases have been filed with the Court of International Trade, a federal court in Washington that deals with trade disputes. Because importers brought the lawsuits, the Court of International Trade has jurisdiction.

The first case was filed by Cricket Hosiery, which sued the federal government, claiming it was violating the company’s First Amendment rights by enforcing the collection of checkoff dollars under the Cotton Research and Promotion Act.

“There has been little action on the cases,” said Brown, who spoke at a meeting of the Delta Council’s Farm Policy Committee in Stoneville, Miss. “It took four or five months for the judge to rule on the first motion from the Department of Justice to dismiss the case.

“The Cotton Research and Promotion Act provides for an administrative hearing if someone has a grievance with the Act. The Department of Justice sought to have the case dismissed because they didn’t follow the administrative route first. The judge denied the motion, as was expected.”

Not leaving any bases uncovered, another importer has filed an administrative complaint against the program with USDA. The Agriculture Department has scheduled a hearing on that complaint in October.

Importers were expected to seek class action status as the next step in the Court of International Trade proceedings, but the lawsuits have been put on hold until the Supreme Court hears arguments on a challenge to the beef checkoff program this fall.

“The beef case has a lot of the same arguments about freedom of speech and first amendment issues that affect the cotton case, but it is not exactly the same,” said Brown. “On the other hand, there are enough similarities that we are very interested in the Supreme Court decision on the beef case.”

In the latter, a group of North Dakota livestock producers claims the mandatory beef checkoff program forces them to pay for advertising they disagree with, thus violating their rights of free speech.

Textile and apparel imports currently account for one-third and domestic production two-thirds of the $66 million in cotton checkoff funds collected annually, but that ratio is changing, according to Brown. “The assessment is made on the cotton equivalent of U.S. textile imports, and the import side of the equation is growing.”

Brown said the cotton industry “is very involved” in defending the cotton checkoff program because of the increasing role it plays in helping producers operate more efficiently and promotion of cotton exports.

“The industry has asked and been granted permission to intervene in the defense of the case with the Department of Justice and USDA,” he said. “You’ve heard of an Amicus brief or friend of the court filing – this is the next step in that we will actually have a formal part in the case.”

Delta Council and some individual growers are also intervenors, working through an industry steering committee called the Cotton Research and Promotion Defense Council that was created by the NCC.

“One thing we’re trying to do is to get better information on the economic impact of this program, and there’s some work being done on that now,” said Brown.

The Cotton Research and Promotion Defense Council has also decided to file a separate Amicus brief on behalf of the cotton industry when the beef checkoff case goes before the Supreme Court in October.

“Á number of these Amicus briefs are being filed,” said Brown. “The American Farm Bureau is coordinating this effort and will file an Amicus brief on behalf of all the farm groups. But the cotton industry will file a separate brief, as well, because our attorneys believe specific points need to be made that might not be covered by other filings.”

Brown said the National Cotton Council, Delta Council and other farm organizations believe defending the checkoff programs is important to U.S. farmers.

“It may become more critical than ever because of our dependence on the export market,” said Brown, “And we are quite hopeful that we can join the Department of Justice and USDA in defending this program.”

He told Farm Policy Committee members not to expect immediate results. “It’s likely to be a long, drawn-out process. The Supreme Court will not hear the case until this fall so there will be a lot of hurry up and wait.”

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