WASHINGTON — The Supreme Court ruled Monday that the government has the right to charge beef producers for a multimillion-dollar federal marketing program, a decision that has far-reaching implications for importers of cotton apparel.
Importers of cotton clothing — including VF Corp. and Jones Apparel Group, as well as such major retailers as Kohl’s and May Department Stores — have challenged a similar federal program requiring them to pay about $24 million to $25 million a year into a cotton advertising and research fund.
The High Court’s decision Monday involved cattle ranchers from North and South Dakota challenging a U.S. Department of Agriculture beef program similar to that for cotton. At issue was whether cattle ranchers could claim First Amendment free speech protections and refuse to participate in the USDA program, or whether the government could exercise its immunity from the First Amendment and compel participation.
“Citizens may challenge compelled support of private speech, but have no First Amendment right not to fund government speech,” Justice Antonin Scalia wrote in an opinion joined by Chief Justice William H. Rehnquist, as well as Justices Sandra Day O’Connor, Clarence Thomas and Stephen G. Breyer. “And that is no less true when the funding is achieved through targeted assessment devoted exclusively to the program to which the assessed citizens object.”
Under a similar USDA program, cotton apparel importers and cotton producers are charged annual fees based on volume of production or volume of imports and price, and forced to pay into a cotton advertising and research fund administered by the Cotton Board, a quasi-governmental organization. The board contracts with Cotton Inc. to promote consumption of cotton apparel and home furnishings, as well as research into cotton’s use in textiles and improvements in cotton agriculture.
“Obviously, it’s a very positive day for the beef checkoff program,” said Bill Crawford, president and chief executive officer of the Cotton Board. “I didn’t see anything negative [for the cotton program], but I have to be really cautious because of all of the pending cases.”
Crawford said cotton apparel importers pay about $25 million a year into the advertising and research program, while cotton farmers and producers will pay another $45 million this year based on their volume of production. He said the program increases cotton consumption and supports textile innovations, such as Cotton Inc.’s work on wrinkle-free and -resistant technology.
But the High Court’s ruling does not bode well for some 200 cotton apparel importers who have filed challenges to the USDA-sponsored cotton program in the U.S. Court of International Trade in New York, contending they shouldn’t be forced to participate in marketing programs over which they have no control. The importers who have filed individual cases with the CIT include Kohl’s, Nautica Enterprises, Seattle Pacific Industries, VF Corp., Jones Apparel Group, May Department Stores, Sears and Dillard’s Inc.
Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles & Apparel, said the court’s ruling will make it “much more difficult [for importers] to mount challenges to other promotion programs, such as cotton.”