CIT Rejects Importer Challenge to Cotton Fee
In Cricket Hosiery, Inc. et al. v. U.S. et al., the Court of International Trade (CIT) dismissed the challenge to the Cotton Research and Promotion Act of 1996, as amended (Cotton Act) and the regulations implementing the Cotton Act (Cotton Order) brought by certain importers who contend that the Cotton Act and Cotton Order violate certain constitutional rights.
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In dismissing the importers' claims, the CIT relied on the Supreme Court's reasoning in Johanns v. Livestock Marketing Association, in which the Constitutionality of the Beef Promotion and Research Act of 1985 (Beef Act) was upheld in the face of a similar challenge. With regard to the Beef Act, the Supreme Court found that, in general, because the speech complained of was government speech, it did not infringe upon the respondents' First Amendment rights. (See ITT's Online Archives or 05/25/05 news, 05052505, for BP summary of the Supreme Court's finding that the Beef Act is Constitutional.)
The importers had argued that the Cotton Act violated their First Amendment rights to free speech and free association, as well as their due process rights. However, the CIT rejected each of these claims noting that the speech funded by the cotton fee is the government's own, that no importers are required to become members of the Cotton Board, and that the statue of limitations for due process arguments had long expired.
(See ITT's Online Archives or 03/21/06 news, 06032125, for BP summary of the USDA's review to ascertain whether a referendum is needed to determine whether producers and importers favor continuation of the 1990 amendments to the Cotton Research and Promotion Order.)
CIT Ruling (Slip Op. 06-56, decided 04/24/06) available at http://www.cit.uscourts.gov/slip_op/Slip_op06/06-56.pdf
BP Notes
- Prior to the Supreme Court's ruling that the Beef Act is Constitutional, it had previously ruled in U.S. v. United Food, that the assessment requirement under the Mushroom Checkoff Program, which is virtually identical to the Beef Checkoff Program provided for under the Beef Act, was unconstitutional as it violated the First Amendment. According to one justice, the Supreme Court's United Food decision did not consider the "government speech" theory, which was raised in the case concerning the Beef Act. (See ITT's Online Archives or 06/27/01 news, (Ref; 01062720), for BP summary of the Supreme Court's ruling in the mushroom case.)
(USDA sources have previously stated that the Mushroom Checkoff Program is still in existence, although its checkoff fee has been lowered and the revenues from these fees are no longer used for advertising.)
It should be noted that the lower courts have ruled the Pork Checkoff Program unconstitutional. However, press reports indicate that the Supreme Court's beef decision bolsters the legal case of those supporting the Pork Checkoff Program, as well as those supporting the promotion fees assessed on milk, eggs, cotton, and soybeans.
- According to 7 CFR 1205 (Cotton Research and Promotion), the cotton fee is meant to apply to Upland cotton.
Among other exclusions and exemptions, imported cotton and the cotton content of imported products which is i) U.S. produced cotton, or ii) cotton other than Upland cotton may be exempt from the cotton fee. A request for such exemption must be submitted to the Cotton Board by the importer, prior to importation. The Cotton Board will then issue, if deemed appropriate, a numbered exemption certificate valid for 1 year from the date of issue. The exemption number should be entered by the importer on Customs entry documentation in the appropriate location as determined by U.S. Customs and Border Protection. (See 7 CFR 1205 for additional information on other exemptions and exclusions.)