WA State Apple Commission Shutting Operations
The commission Thursday said it's winding down operations in the wake of a ruling by a federal judge that its mandatory fee collections are unconstitutional.
Commissioners met Thursday morning at the agency's Wenatchee office and announced their decision to comply with the judge.
It has stopped collecting mandatory assessments from the state's nearly 4,000 growers and will refund any fees sent after March 31, the commission said in a Thursday news release.
Grower assessments typically represent more than 90 percent of the commission's budget. The mandatory fee in Washington was 25 cents per 42-pound box of apples to the commission, or about $21.5 million for the 2002-2003 crop.
The commission will pay off and close out promotion contracts and cancel all future advertising.
Certain industry organizations will continue to receive funds through June of next year from the commission's cash reserves, including the Northwest Horticultural Council, the Northwest Fruit Exporters, the Washington State Horticultural Association and the U.S. Apple Association.
It will develop a plan to protect the Washington apple logo, recognized worldwide.
The commission is immediately reducing its staff of 48 to 15 employees during the wind-down process.
Employees will continue to be let go as workloads decline.
Commission President Welcome Sauer and Chairman Bill Zirkle did not return phone calls seeking comment Thursday.
Apple commission spokeswoman Tricia Belcastro left this message on her voice mail: "I am no longer employed by the commission, and the commission has shut down."
In 2001, the commission sued a pair of north-central Washington apple growers, who served as defendants in the class-action lawsuit, hoping for an affirmation of its right to collect the fees. The commission agreed to pay the two growers' legal bills.
But the outcome was something the commission never anticipated: U.S. District Judge Edward Shea in Richland ruled less than two weeks ago against the commission, based on a 2001 U.S. Supreme Court opinion that said forcing growers to pay for promotions that benefited their competitors infringed upon their constitutional protection of free speech.
Intervening in the lawsuit were a handful of organic growers and three Yakima Valley warehouses: Washington Fruit and Produce Co., Borton & Sons and Evans Fruit Co.
Representing the warehouses is Yakima attorney Brendan Monahan.
Commission attorney Peter Spadoni of Wenatchee had previously said the agency planned to appeal the decision.
But on Thursday, Spadoni said the parties are negotiating a settlement, which the federal judge would have to approve.
Issues the court left unresolved include whether the growers should receive refunds and how the commission would operate pending an appeal.
The defendants were seeking nearly $50 million in refunds.
"There will only be an appeal if the parties are unable to agree," Spadoni said. "If it's settled, it will result in the end of the commission."
Monahan said he's optimistic the parties will reach a resolution.
Like Spadoni, he declined to name any specifics regarding the settlement.
"The parties have rolled up their sleeves and put side personal interests and agendas," Monahan said.
"They've worked diligently to find a sensible solution that serves the best interest of the entire apple industry."
Exactly how the commission's demise will affect the state's industry is unclear.
Dan Kelly tracks apple prices for the Wenatchee Growers Clearing House.
That organization officially supported the Apple Commission during its court case, but it receives no funding from the apple group.
Kelly said he believes prices might slide without the commission's marketing programs.
"We're going to potentially have less shelf space while trying to push the same amount of product," Kelly said. "Chances are, there will be some lowering of prices."
As of Tuesday, prices for apples overall averaged $15.95 per 42-pound box.
The Clearing House is working with several industry organizations to try to find an alternative to the Apple Commission.
"Right now, we're still researching options," Kelly said. "Can the industry come together and create something else that will benefit it and fit the Constitution, and keep going from there? That's the big question."
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