Federal court stops $3 million annual checkoff payments for obsolete "Other White Meat" slogan

The federal district court in Washington, DC, yesterday stopped the $3 million annual payments that the federal government's semi-public pork checkoff program makes to the National Pork Producers Council (NPPC), a private trade association, for the purchase of the "Other White Meat" slogan.

The ruling confirms something that I have been reporting for a dozen years. In 2006, the pork checkoff program first announced plans to purchase the industry's own slogan from NPPC for $60 million, in payments of $3 million per year for 20 years. At the time, I noted that USDA was keeping the financial appraisal secret. I had serious doubts that the slogan could be worth such a sum, because who else but the pork board would want to buy it? Were the artichoke producers vigorously bidding up the price for the "Other White Meat" slogan?

It seemed clear what was really going on. The semi-public checkoff program, which is established by Congress and overseen by USDA, must follow rules such as never using its money for lobbying or other types of political influence. The inflated payments circumvented these rules, allowing the checkoff program to shift $3 million each year to the private trade association, without expecting any actual goods or services in return.

This pork industry plan seemed bad for the public interest and bad for pork farmers whose mandatory payments fund the checkoff program. A new report this week from the Government Accountability Office (GAO) says more broadly that checkoff programs have shortcomings in transparency and in USDA oversight of contracting.

Over the years, I requested the appraisal under the Freedom of Information Act (FOIA), but USDA refused my request and then on appeal just sent censored documents with the actual financial details blacked out. The Humane Society of the United States (HSUS) was finally given the actual appraisal many years later, and, as expected, it fell far short of justifying the sale price.

Many years have passed, and the federal district court yesterday said the initial 2006 sale -- however bad it may be -- now falls under a statute of limitations. But, the court allowed the plaintiffs, including HSUS and a pork farmer in Iowa, to question a USDA decision in 2016 to continue the payments. By that time, USDA had a new appraisal, which had the same problems as the earlier appraisal.

In yesterday's ruling, the federal district court sharply summarized why the sale fails to meet the standards of the federal government's Administrative Procedures Act (APA):

The Secretary approved spending $3 million per year for the purchase of the trademarks for another ten years based on an expert’s determination of their replacement cost, that is, what it would cost to develop and market an entirely new promotional campaign today. But neither the agency nor the expert adequately explains why this calculation sheds any light on what the 2016 review was supposed to ascertain: the current value of the set of four trademarks to the agency. The fundamental problem is that the three trademarks that include The Other White Meat slogan have been declared to be obsolete, and they have been retired from active use. So their value is minimal, or at best, undetermined. And the record contains no effort to ascertain the value of the fourth mark – the “Pork and Design” logo that consists of the word “pork” written across a blue triangular “pork loin silhouette” – at all. 

The Secretary’s 2016 decision also fails to explain why it makes sense to predicate future payments on the cost of replacing The Other White Meat when the cost of replacing The Other White Meat has already been incurred. Moreover, while the agency states that the expert endeavored to calculate the value of the marks based upon the cost of developing a new trademark with the same level of effectiveness as the old trademarks, “as measured by aided awareness studies of the percentage of people who are aware of the trademark,” there is no data in the record underlying the expert’s selection of 40% awareness as the target measure. The expert simply cut the high level of awareness garnered by The Other White Meat slogan in its heyday in half and calculated what it would cost to buy something else that effective now. But without any analysis of how much The Other White Meat still resonates in the consumer consciousness today, or, more important, whether the blue triangular logo has gained any traction in the market at all, this approach to quantifying “current value” is completely arbitrary and cannot pass muster under the APA.

Although the pork industry and USDA surely will appeal the decision, it is pleasing to see the problem with this payment stated so clearly by a federal court.