Thanks to a settlement between pork producer plaintiffs and USDA, the national pork checkoff will continue. However, it spells change for the industry.

The settlement was agreed to by USDA, a group of independent pork producers, the Michigan Pork Producers Association and National Pork Producers Council, which were the principal parties involved in the complaint filed in the Western District of Michigan, United States District Court, on Jan. 12, 2001.

Chief Judge Enslen issued a temporary restraining order on Jan. 19, 2001, blocking USDA from publishing the final rule in the Federal Register, terminating the checkoff.

A hearing on the lawsuit was ultimately set for March 16, 2001. Based on its review, the U.S. Justice Department advised USDA to settle the case. The plaintiffs (listed above) and USDA were the only parties involved in the settlement agreement, because they were the only parties listed in the lawsuit.

According to Barry Carpenter, representing USDA's Agricultural Marketing Service, all of the checkoff programs were conducted within the rules of the Pork Act, but in light of last fall's referendum vote, USDA Secretary Ann Veneman determined the reorganization was necessary. USDA's AMS will take a more active role in monitoring the transition until the agency is satisfied the transition is complete.

After consulting with the U.S. Department of Justice, USDA decided a long court battle was not in the best interest of U.S. pork producers and importers. The Justice Department believes the settlement is legally defendable.

A copy of the signed agreement between the parties and other referendum information, is available on the NPPC Web site at www.nppc.org.

Here is a look at some of the key elements of the settlement agreement.

Q Why won't the national pork checkoff be terminated as directed by former USDA Secretary Dan Glickman on Jan. 11, 2001?

A USDA officials have reviewed the decisions and circumstances involved in conducting the referendum and has determined that it could not be considered a binding referendum because it was not conducted under the provisions of section 1623 of the Pork Promotion, Research and Consumer Information Act of 1985. That Act requires that 15 percent of valid U.S. pork producers and importers must petition to request a referendum. Last fall's referendum petition fell short of that 15 percent.

USDA considers last fall's referendum to be advisory in nature. Despite the referendum vote, the evidence is not conclusive that the pork checkoff is not fulfilling the Pork Act's policy.

Q Is the settlement legally binding?
A Yes. All parties to the settlement, including USDA and the Department of Justice, believe this is a valid and binding legal settlement. Because the Campaign for Family Farms has threatened to sue to overturn the settlement, the plaintiffs in the Michigan case have asked the court to issue a prompt and final ruling that the settlement is legal. The Campaign for Family Farms was not involved in the settlement agreement. Court documents indicate CFF was an intervener, not a plaintiff nor a defendant in the lawsuit.

Q Did NPPC and MPPA use checkoff dollars to file the lawsuit to clarify the referendum results?

A No. Checkoff dollars cannot be used for this purpose. NPPC and MPPA used funds from sources other than the checkoff to pay for costs associated with the lawsuit.

Q Do I still have to pay the checkoff even though I am not in favor of it?

A Yes. As long as the national pork checkoff program is in effect, all pork producers and importers must pay the assessments. The rate of 45 cents per $100 value of each market hog will remain the same. Seedstock, feeder pig and early weaned pigs also have a checkoff requirement; as do importers bringing pork into this country.

Q What are the key elements of the checkoff settlement?

A Under the agreement, NPPC and NPB are required to operate independently of each other, including no joint communications.

As a result, NPPC or its successor organization will be responsible for non-checkoff-funded policy (legislative/regulatory) issues.

NPB will be responsible for checkoff-funded promotion, education and research programs and projects. Those programs will continue with any revisions or changes to be determined.

Q What impact does the settlement have on state pork producer organizations?

A None. State pork producer associations are allowed to continue to perform both checkoff and non-checkoff functions. Of course policy activities will have to be funded with non-checkoff revenue. USDA will continue to audit state programs and activities to ensure adequate accounting and separation of all funds.

Q What happens to the NPPC staff?
A All current NPPC staff who spend more than 50 percent of their time on checkoff programs will have the opportunity to become NPB employees. However, the current NPPC chief executive officer and chief financial officer are not eligible for transfer or employment with the NPB for a minimum of two years.

This is to provide a distinct separation between NPPC and specific policy issues from NPB and checkoff-funded programs.

Q What happens to non-checkoff assets, such as "Pork. The Other White Meat" and the Clive, Iowa, office building?

A NPPC owns the office building which was built with non-checkoff dollars. It has the option of selling or leasing the building. NPB will certainly review options for its headquarters. However, it likely will lease the NPPC office building at least in the short term to expedite the transition.

"Pork. The Other White Meat" is a trademarked property of NPPC. It was developed before the national pork checkoff was fully in place. All of the research was conducted with funds prior to the mandatory national checkoff. NPPC has the option of leasing or selling this asset, whereas the advertising programs belong to NPB.

Q What is the timeline for the settlement to occur?

A All elements of the settlement agreement must be completed no later than the conclusion of NPB's 2002 annual meeting. However, many elements, such as staff transfers and ceasing of joint communications, will occur as soon as possible.

NPB will put an interim chief executive officer and chief financial officer in place until qualified permanent ones can be found. NPB is considering appointing an independent third party, such as PriceWaterhouse, to serve in the interim capacity. A committee is already conducting a search to permanently fill the CEO position. USDA has agreeded that a logical timeline would be to have someone in place within 90 to 120 days.

The entire process will be a gradual transition, occurring in stages. Both NPPC and NPB have transition teams in place and will work with USDA to complete the process within one year. NPPC and NPB have 90 days to show that they're working toward that goal.

Q What is the impact on the NPB?

A NPB has always been responsible for collecting and distributing national pork checkoff funds. Plus, developing, implementing and overseeing all checkoff-funded projects and programs.

The difference is that the NPB contracted all of the staffing and services out for other contractors to implement. Now, NPB will take over the day-to-day operations of all checkoff programs and services, and the associated staff to carry the tasks through.

Q What is the impact on NPPC?

A NPPC's role as the general contractor to NPB will be terminated. NPPC has established a task force to determine the future role, direction, membership, funding and needs of the association. NPPC will not receive checkoff funding, and will therefore need to look for new avenues.

Since NPB can not address industry policy, legislative or regulatory issues, and NPPC has played a strong role in those areas, it will likely continue in that role. NPPC is expected to maintain a Washington, D.C., office. It hasn't been determined whether the association will have offices in other cities.

Q What impact does the settlement have on World Pork Expo?

A The majority of planning and programming for the 2001 WPX is done. As a result, the settlement will have only a modest impact on this year's event. There is a ban on all joint communications. The impact will be far greater on the 2002 WPX.

Q Does the settlement have any impact on the Pork Act or the Pork Order?

A No.

Q What impact does the settlement have on the efforts of various voluntary state pork checkoff programs?

A None. However, most efforts to establish (or re-establish) a state checkoff program were driven by the anticipated termination of the national checkoff. Since that checkoff will continue, the immediate need to implement various state checkoff programs may be eliminated.

Q Does the agreement affect who can be elected to NPB?

A Yes. No officer or board member of NPPC or its successor organization may serve on NPB during his or her NPPC term. Upon completing an NPPC term, an individual will have to wait two years before he/she will be eligible to serve within NPB.

Q Has USDA scheduled another referendum on the pork checkoff?

A USDA will conduct a survey of eligible/valid U.S. pork producers and importers no sooner than June 2003, to determine whether 15 percent or more favor a referendum. USDA requires 15 percent for a binding referendum.

This way, pork producers will have an opportunity to express their support or concerns with the checkoff. If 15 percent of the eligible producers and importers request a referendum, USDA will conduct one through its state offices within a year to determine if the program will continue.