Since the 1970s, producers of certain agricultural commodities have been covered by checkoff programs to fund generic promotion activities (such as advertising "Got Milk?" and "Incredible Edible Egg"). These programs, sanctioned under federal law, have at times been controversial because they require affected producers and other market participants to pay assessments to cover the cost of these activities. Nonetheless, Congress has supported checkoff programs. On November 14, the House of Representatives approved a bill that would expand them far beyond agriculture—to concrete masonry. Similar legislation is pending in the Senate.

The Logic of Mandatory Assessments

Programs to promote farm commodities have been popular in Congress for decades. Through the mid-1990s, they were established on an ad hoc basis under laws applicable to specific commodities. The first, the Potato Research and Promotion Act (7 U.S.C. 2611), dates to 1971. To streamline the process, Congress included in the omnibus 1996 farm bill (P.L. 104-127) the Commodity Promotion, Research, and Information Act, which allows for establishment of a checkoff program without specific legislative authority.

Under that law, producers of an agricultural commodity can propose a program of research, promotion, and consumer information to develop markets for their product. Following federal rulemaking procedures, the U.S. Department of Agriculture (USDA) issues a proposed rule specifying how the program would be structured and administered, and how the assessment would be levied to cover costs. USDA then oversees a referendum among those who would be covered. If the threshold for approval is reached, USDA issues final regulations to implement the program, including referendum procedures for determining whether to continue the program (including its mandatory assessment). It also appoints a board to oversee the program.

Once a checkoff program enters into force, all producers and other market participants covered by the program, including those who voted against establishing it, must pay the assessment or face enforcement action by USDA. This mandatory aspect of checkoffs has been viewed as a way to address the "free rider" problem by requiring that all producers share in the cost, as they all stand to benefit if generic promotion and research increase product demand. Some checkoff programs exempt small and organic producers from paying the assessment.

Redefining Farm Commodities

The 1996 law lists in broad terms the agricultural products for which producer groups can seek to establish checkoff programs. These include not only commodities produced on farms or in forests, but also "products produced or manufactured from products specified in the preceding subparagraphs as determined appropriate by the Secretary [of Agriculture]." This language opened the way for USDA to apply the checkoff concept to some industrial products.

The first USDA checkoff program governing an industry more distant from farming, softwood lumber manufacturing, began in 2011. The second such program, governing the paper industry, came into effect in 2014. Under that program, all companies that manufacture or import over 100,000 tons of paper or paper-based packaging per year must pay $0.35 per ton "to maintain and expand markets for paper and paper-based packaging." A proposal for a similar arrangement covering hardwood lumber was abandoned by USDA in 2015 amid opposition from small manufacturers.

Some producers, frequently small ones, oppose checkoff programs. In the case of the paper and packaging industry, 15% of manufacturers and importers responsible for 5% of total U.S. production voted against the promotion program and mandatory assessment. The 2011 vote on the softwood lumber program revealed even greater opposition, with 33% of the industry representing 20% of production voting no. Some producers who object to mandatory assessments have mounted legal challenges. In 2005, the U.S. Supreme Court held in a 6-3 decision that compelling a producer to contribute to a marketing campaign does not infringe on the producer's constitutional right to free speech.

In 2013, the House Agriculture Committee approved language to allow the stone industry to create a checkoff program. As reported, H.R. 1947, the Federal Agriculture Reform and Risk Management Act of 2013, contained a provision defining "the products of natural stone" to be an agricultural commodity. Had it been enacted, this provision would have authorized manufacturers of stone products to seek to establish a checkoff program for research and promotion under the 1996 law. The provision sparked floor debate and was deleted by a vote of 215-211. No similar language appeared in the farm bill as eventually enacted in 2014.

Concrete Concerns

Congress created the first checkoff program outside USDA's jurisdiction, the Propane Education and Research Act (15 U.S.C. 90), in 1996. That law, which allows a mandatory assessment on propane gas marketers to fund promotion and safety programs, is administered by the Department of Energy, as is a similar checkoff program for heating oil authorized in 2000.

The bill passed by the House on November 14, the Concrete Masonry Products Research, Education, and Promotion Act of 2015 (H.R. 985), would authorize the first checkoff program under the jurisdiction of the Commerce Department. The bill would establish a Concrete Masonry Products Board. If approved in a referendum in which each block manufacturer would have one vote, an initial assessment of $0.01 would be levied on every concrete block and paver made in the United States. The board could use the proceeds for "research," which the bill defines as "studies testing the effectiveness of market development and promotion efforts, studies relating to the improvement of concrete masonry products and new product development, and studies documenting the performance of concrete masonry." A manufacturer that fails to pay the assessment could be fined up to $5,000 per day. A similar bill, S. 1524, is pending in the Senate Commerce, Science, and Transportation Committee. If these bills achieve the purpose of increasing the use of concrete block, that success could come at the expense of competing building materials, whose manufacturers may well find it useful to ask Congress for permission to establish checkoff programs of their own.