WASHINGTON, D.C. — USDA Secretary Brooke Rollins announced Sept. 17 that the Department is hitting the brakes on mandatory dairy checkoff funds being used for Environmental, Social and Governance (ESG) activities. This includes the nearly two decades of checkoff-funded greenhouse-gas (GHG) accounting driven by net-zero emissions targets in what have become de facto mandatory FARM ES audits for most dairy farms. (Fig. 1)

The action comes on the deadline for the government’s response to the lawsuit filed by three Wisconsin dairy farmers challenging the use of their mandatory checkoff assessments for these activities.

Abby Swan, Adam Faust and Christopher Baird filed Swan v. Rollins June 9 against USDA and the National Dairy Board, alleging their checkoff assessments funded ESG work through the Innovation Center for U.S. Dairy. Represented by the Wisconsin Institute for Law & Liberty (WILL), they argued this amounted to compelled speech in violation of the First Amendment and exceeded USDA’s statutory authority.

The dairy checkoff was authorized by Congress in the Dairy Production Stabilization Act of 1983 to “build demand through promotion, research, and nutrition education” at a time when excess milk was driving excess government purchases.

“American dairy producers, cattle ranchers, and farmers pay checkoff assessments so those dollars can build demand for their products, not bankroll radical climate agendas that raise costs and constrain production,” Rollins declared in an official statement, noting this action returns checkoff programs to their “core mission: expanding markets and supporting the hardworking men and women who feed this country.”

That same day, Under Secretary Dudley Hoskins issued a memo to all commodity checkoff boards emphasizing “agricultural production, producer profitability, and freedom from ideologically driven mandates.” USDA’s Agricultural Marketing Service will evaluate the other 21 commodity checkoff programs under the directive.

One day earlier on Sept. 16, USDA, the National Dairy Board and the farmer plaintiffs asked the U.S. District Court for the Eastern District of Wisconsin to pause the lawsuit while USDA carries out the changes, with joint reports every 30 days. The lawsuit does not seek to end the checkoff. The case is paused, not dismissed.

USDA’s action does not immediately end dairy’s 2050 net-zero goals, corporate GHG reporting or the Farmers Assuring Responsible Management Environmental Stewardship (FARM ES) program that feeds the on-farm data into the Innovation Center’s GHG models. It does, however, end mandatory checkoff funding for these activities that USDA determines fall under its new directive.

Some critics have gone on record to call the decision heavy-handed USDA involvement, but in reality, there’s another twist: USDA itself helped build, with checkoff funds, the system it is now scrutinizing.

In December 2009, then-Secretary of Agriculture Tom Vilsack signed a memorandum of understanding with Dairy Management Inc. (DMI) and its Innovation Center to “help advance dairy’s GHG reduction effort.”

In 2022, during Vilsack’s third term as Ag Secretary, USDA renewed the agreement around the checkoff’s 2050 net-zero goals. In between his USDA tenures, Vilsack was the checkoff-paid CEO of the U.S. Dairy Export Council and chairman of DMI’s Innovation Center Jan. 2017-Dec. 2020. In his May 2019 testimony in that capacity, he told the Senate Ag Committee that the Innovation Center for U.S. Dairy had a net-zero GHG goal by 2050 and urged federal climate funding for pilot farms.

The current USDA action pivots the emphasis back toward demand-building and producer profitability, as indicated in the memo to all 21 checkoff boards. In her Sept. 17 letter to National Dairy Board Chair Lolly Lesher, Rollins directed spending to align with building markets and long-term value for dairy farmers. She gave the board until Sept. 30 to provide a list of current and planned projects covered by the directive, contract limitations on ending them, and a proposed termination plan.

“USDA will work with you to determine which activities need to be terminated,” Rollins wrote.

The action covers DMI and affiliated organizations it funds or staffs, including the Innovation Center for U.S. Dairy, U.S. Dairy Export Council, Global Dairy Platform, Dairy Research Institute, Newtrient, National Dairy Council, and state, regional and importer qualified programs.

Named in Rollins’ letter are “mandatory participation in Scope 3 GHG accounting by dairy producers,” the U.S. Dairy Materiality Assessment, U.S. Dairy Net Zero Initiative, Pathways to Dairy Net Zero, Greener Cattle Initiative, Sustainability Alliance, U.S. Dairy Stewardship Commitment, “mandatory participation in FARM ES,” and portions of the 2050 goals.

In a prepared statement, DMI told Farmshine Sept. 21 that it “will continue to fully support the USDA’s directive to prioritize agricultural production, producer profitability, and market expansion.”

DMI stated it will work “closely with USDA to review projects and take necessary steps to modify or terminate contracts and activities as needed while maintaining our commitment to our authorized promotion, research, and consumer information functions.”

FARM ES: When voluntary becomes mandatory

Since FARM ES began in 2017, the checkoff Innovation Center has described it as a “voluntary tool.” The choice, however, rests with companies and cooperatives encouraged to voluntarily adopt the checkoff-backed U.S. Dairy Stewardship Commitment. FARM ES is a defined term-of-adoption with a defined participation standard and compliance period.

By July 2025, companies and co-ops representing more than 77% of U.S. milk production had signed the Commitment. In some regions, adoption is near 100%.

The Innovation Center’s own resource materials make the Scope 3 connection explicit. In 2019, it developed greenhouse-gas accounting guidance for dairy processors and cooperatives covering Scope 1, 2 and 3 emissions. The World Resources Institute reviewed it and awarded the guidance its “Built on GHG Protocol” mark.

FARM ES then feeds into the Innovation Center’s GHG model covering herd composition, production, reproduction, feed and rations, cropping and field maps, manure management, fuel and utility bills, water use, and other operating details.

Under the Stewardship Commitment, the Innovation Center obtains the de-identified FARM ES data for analysis “toward industry-wide goals or for other analysis it deems relevant.”

Adopting processors and cooperatives can also aggregate and use their  milk supply data for their own Scope 3 emissions reporting they say customers are requesting.

In short, the Commitment has remained voluntary for companies and co-ops, but once adopted, the FARM ES requirement was part of what they agreed to, so the company or co-op had to then provide to DMI’s Innovation Center either a FARM ES stratified sample of its farmgate milk supply or FARM ES evaluations covering 100% of its farms.

Organizations not already meeting this term-of-adoption had to do so within the 2024-27 FARM ES Version 3 cycle. Requests from processors and co-ops for on-farm data ramped up noticeably in late 2025 into 2026, prompting the court complaint.

This chain from voluntary to mandatory is essentially the supply-chain-leverage model developed by the Innovation Center’s early partner, World Wildlife Fund (WWF).

In effect, when a milk buyer tells a farmer that the FARM ES is “expected” and an evaluator will be coming to the farm, it becomes a mandatory action at the farm level for a producer who obviously needs that milk market for a perishable product that is shipped daily.

USDA’s Sept. 17 memo bars checkoff support for ESG pledges, scorecards and reporting that “condition market access on participation” in ESG or climate metrics or other non-statutory standards.

On the legal side, there is no federal Scope 3 climate reporting mandate. The Securities and Exchange Commission under the previous Administration dropped Scope 3 from its 2024 climate-disclosure rule, and in May 2026 the current Administration proposed scrapping the entire rule. EPA has also stepped back from Scope 3 reporting.

California is the exception. Its Climate Corporate Data Accountability Act requires U.S.-based companies with more than $1 billion in annual revenue doing business in California to report greenhouse-gas emissions, with Scope 3 rules that are still being developed to start in 2027 that could potentially reach back to farms.

After going much farther with its required climate reporting, even Europe is now reducing some reporting burdens. In 2026, the EU Commission added a “value chain cap” intended to prevent requirements on large companies from “trickling down” to smaller suppliers.

USDA’s action now examines the pieces to how farmer checkoff dollars are financing a similar trickle-down to U.S. farms.

How did we get here?

In 2008, DMI formed a 501(c)(6) under the legal name Dairy Center for Strategic Innovation and Collaboration, Inc., doing business as the Innovation Center for U.S. Dairy. The so-called “precompetitive forum” shares DMI’s Rosemont, Illinois address and has long been staffed by DMI.

World Wildlife Fund was involved “since the beginning” with representation on DMI’s Sustainability Council, according to the Innovation Center’s 2010 Sustainability Report. By 2011 the Innovation Center sponsored a full-time WWF employee. DMI documents show WWF reviewed carbon- and water-footprint work, helped write the measurement framework, reviewed the FARM ES manual, and helped develop the GHG calculator.

Meanwhile, farmers at large have not had a public-comment process on FARM ES like the processes used for NMPF’s FARM Animal Care.

Nearly two decades after dairy’s sustainability architecture began taking shape, USDA is sorting through what farmers paid for, what they may be asked to do as a result, and whether those activities build markets and profitability for the farmers who funded it through the mandatory checkoff.

Rollins has given the National Dairy Board until Sept. 30 to identify current and planned ESG- and net-zero-related projects and propose a termination plan. Then USDA decides what goes.

What portions of FARM ES will continue? Which environmental research continues? Will companies continue and pay for Scope 3 accounting on their own?

And will USDA’s action create enough of a pause to examine a fundamental question still debated by scientists: how methane from cows is viewed, modeled and measured?

Cows are, after all, an essential part of the essential biogenic carbon cycle — and at the heart of this essential conversation that is far from over.

Look for more in a future Farmshine on the global giants behind the GHG Protocol.