Court documents show millions of pork checkoff dollars continue to flow to the National Pork Producers Council and its for-profit subsidiaries despite NPPC severing its $40 million-per-year "general contractor" role with the checkoff in July 2001 and the checkoff being declared unconstitutional in October 2002.
The documents also reveal that if the nationwide, non-refundable checkoff ends -- through court action or by a producer vote -- the checkoff's governing body, the National Pork Board, would owe NPPC more than $1 million.
The documents, part of the court record in the 2001 Michigan lawsuit that resulted in the checkoff being declared illegal, strongly suggest that the cash-strapped NPPC remains afloat partly -- if not largely -- through cozy, insider deals between NPPC, its subsidiaries and the checkoff's Pork Board. For example, after NPPC volunteered to end its checkoff role in July 2001, it agreed to rent its suburban Des Moines office to the Pork Board for 30 months at $28,820 per month. The rental contract permits the lease to be renewed for two, subsequent five-year periods, making the entire deal worth at least $4.32 million. Additionally, according to a May 2002 deposition given by NPPC chief executive officer Neil Dierks in the case, "probably around 80" former NPPC employees now work for the checkoff and many never even moved from their former NPPC offices.
The few NPPC staff members who remained after the split moved to the Des Moines offices of Environmental Management Solutions, LLC, a wholly-owned, for-profit subsidiary of NPPC. NPPC pays rent to EMS.
The links between the checkoff and EMS also run deep,. According to a 113-page joint NPB/NPPC Final Report on the July 2001 break-up, the National Pork Board projected it would pay $1.9 million to EMS between July 1 and Dec. 31, 2001 to manage 15 projects formerly operated by NPPC for the checkoff.
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Also, the checkoff implemented another agreement with EMS for calendar 2002 to spend $1.474 million with the for-profit NPPC subsidiary for eight projects formerly managed by NPPC.
In his deposition, NPPC's Dierks conceded "all" the 2001 projects were NPPC's. He also noted that "EMS is paying NPPC a dividend of $10,000 a month" from "environmental program assessments" revenue.
Curiously, a clause in both National Pork Board-EMS contracts states that "No funds advanced or paid by the National Pork Board shall be used in any manner for the purposes of influencing governmental policy or action."
While the language forbids EMS from underwriting any lobbying with profits made through checkoff contracts, it does not forbid EMS's owner, NPPC, from paying for lobbying with EMS profits passed to it.
NPPC and the National Cattlemen's Beef Association, the contractor for the unconstitutional beef checkoff, both lobbied hard and successfully to kill funding for Country of Origin Labeling in the House of Representatives July 14. Among other deals that move checkoff money to NPPC, the documents reveal that on July 1, 2001 the NPPC licensed two trademarks -- Pork The Other White Meat and PORK and Design -- to the checkoff for $1 per year through June 30, 2005.
However, "In the case of an Adverse Termination Event" -- described as a court-ordered shut-down or a producer vote to end the checkoff -- "the Pork Board shall immediately pay to NPPC, as contingent compensation for the use of the Licensed marks an amount of up to $1,500,000, depending on the date of termination ...."
The odds triggering just such a "termination event" payment increased July 8 when the Eighth Circuit Court of Appeals upheld the unconstitutionality of the beef checkoff. The pork checkoff is under a similar appeal and a second ruling on its legality is expected soon from the Sixth Circuit.
