Louisiana Ag official worries millions owed in rice suit

A squabble with a group of southwest Louisiana rice farmers could force state government to repay millions of dollars.

“I don’t have the money. I didn’t spend it,” state Agriculture and Forestry Commissioner Mike Strain said.

Strain estimated he could be asked for $60 million to $70 million depending on the outcome of a legal battle.

At issue are assessments that state boards collected from farmers for promotion and research. The assessments — which go back years — total about $1.5 million annually for research and $1 million annually for promotion.

Strain is involved because the money passes through his hands.

The governor selects farmers to serve on rice promotion and research boards. The boards decide how much money to assess farmers per hundredweight of rice when they take their crops to the mill.

Strain transfers the assessments to the boards, which spend the dollars on promotion and research. A chunk of it helps support the LSU Agricultural Center’s rice research station in Crowley.

Unhappy with the assessments, Jefferson Davis Parish farmers Carl Krielow, Glendon Marceaux, Phillip J. Watkins and 44 similarly situated plaintiffs sued the Louisiana Department of Agriculture and Forestry. Among other issues, they wanted an avenue for a refund when they objected to how their money was spent.

The Louisiana Supreme Court sided with Krielow and the others, ruling last year that the Legislature improperly transferred its assessment power to the boards.

“As we stated in (another case), such action is ‘legislative delegation in its most obnoxious form,’ ” the court ruled.

Now the courts must decide whether to certify a class action and determine damages.

By Strain’s math, they could order him to repay every cent that’s been collected since 1992.

“He’s being dramatic. … Right now, one of the problems we’re facing is the commissioner is continuing to participate in the collection of the tax,” said Larry Bankston, attorney for Krielow and the other plaintiffs.

After the Supreme Court’s ruling, the assessments became voluntary. The idea was farmers could choose whether to pay them, and about 75 percent continue to hand over a portion of their profits when they take their rice to the mill.

Bankston accused the mills of withholding money from farmers unless the assessments are paid. He said the Commissioner’s Office is a participant.

“We’re unaware of any mills forcing farmers to do anything,” said Veronica Mosgrove, Strain’s spokeswoman.

John Denison, an Iowa farmer who served on the Rice Research Board for 25 years, said the legal arguments really stem from a dispute over mills benefiting from the flow of money.

Part of the assessments go the USA Rice Federation, with headquarters in Virigina, which pulls together farmers and mills under the same umbrella.

Some Louisiana farmers felt the mills had too much influence and formed the Louisiana Independent Rice Producers Association.

Denison said the offshoot group wants to ship rice by rail into Mexico but struggled with raising money to market the effort. “This is all about trying to get money into their little organization,” he said.

Bankston said his clients had concerns about their money going to the national association.

He said they wanted an option for a refund if they were unhappy with the activities supported with their money.

“They told them to go away. They were unwilling to work with the farmers who were unhappy,” he said, referring to the state rice research and promotion boards.

Denison said the plaintiffs, whom he characterized as friends and members of a splinter group, should talk to the governor about serving on the boards if they are unhappy.

Most farmers continue to pay the assessments on a voluntary basis because the money helps their industry, he said.

“It’s worked for the rice farmer. It’s kept us in business,” Denison said.

From Crowley, rice research station Director Steve Linscombe is nervously awaiting the outcome of the court battle.

A portion of the assessments help fund Linscombe’s research, which focuses on how farmers can increase their yields.

“A good three-fourths of the rice farmers understand how beneficial this program is,” Linscombe said.

The dispute has reached the State Capitol, where Strain flirted with trying to wrest control over board appointments from the governor.

Discussions with Gov. Bobby Jindal’s aides convinced Strain to rethink that move.

A number of proposals — House Bills 886, 1045, 878 and 1056 — seek to clean up the problems cited by the Louisiana Supreme Court.

They provide for refunds and set the assessment amounts into state law.

Farmers filled a committee room when the bills came up for discussion. Legislators never called any of the farmers to the table, choosing instead to let them get back to their crops.

“You are the backbone of this country. We’ve got to feed America. We’ve got to feed this state,” mused state Rep. Frankie Howard, R-Many.