Happy last day of June! We close out the month with another Ag Law Harvest, which brings you two interesting court cases, one about an Ohio man asserting his right to give away free gravel, and another which could decide the constitutionality of “Ag-Gag” laws once and for all. We also provide a few federal policy updates and announcements.
Ohio Department of Agriculture Prohibited from Fining a Landowner for Charging to Load Free Gravel. In May of 2020, Paul Gross began selling gravel and topsoil (collectively “gravel”) that he had accumulated from excavating a pond on his property. Gross charged $5 per ton of gravel, which was weighed at a scale three miles from his property. After receiving a complaint of the gravel sales, the Madison County Auditor sent a Weights and Measures Inspector to investigate Gross’s gravel sales. The Inspector informed Gross that the gravel sales violated Ohio Administrative Code 901:6-7-03(BB) (the “Rule”) because the gravel was not being weighed at the loading site. Under the Rule, “[s]and, rock, gravel, stone, paving stone, and similar materials kept, offered, or exposed for sale in bulk must be sold . . . by cubic meter or cubic yard or by weight.” As explained by the Inspector, Gross’s problem was that he was selling gravel by inaccurate weight measurements because the trucks hauling the gravel lose fuel weight when traveling the three miles to the scale.
Instead of installing scales on his property, Gross decided to start giving away the gravel for free. However, Gross did charge a flat rate fee of $50 to any customer that requested Gross’s help in loading the gravel. According to Gross, this $50 fee was to cover the cost of his equipment, employees, and other resources used to help customers load the gravel. Unsatisfied with the structure of this transaction, the Ohio Department of Agriculture (“ODA”) decided to investigate further and eventually determined that even though Gross was giving away the gravel for free, the flat fee for Gross’s services represented a commercial sale of the gravel and, therefore, Gross was in continued violation of the Rule.
For the alleged violation, the ODA intended to impose a $500 civil penalty on Gross, who requested an administrative hearing. The hearing officer recommended imposing the penalty and the Franklin County Court of Common Pleas agreed. Gross appealed the decision to the Tenth District Court of Appeals, which found that Gross was not in violation of the Rule.
The Tenth District reasoned that customers were paying for the service of moving the gravel, not for the gravel itself. The court explained that the purpose of the Rule is to protect consumers by ensuring transparent pricing of materials like gravel. Since Gross was not in the business of selling gravel and the transaction was primarily for services, the court concluded that the ODA’s fine was impermissible.
North Carolina Asks U.S. Supreme Court to Review “Ag-Gag Law.” In 2015, the North Carolina Legislature passed the North Carolina Property Protection Act, allowing employers to sue any employee who “without authorization records images or sound occurring within” nonpublic areas of the employer’s property “and uses the recording to breach the [employee’s] duty of loyalty to the employer.” After the act’s passage several food-safety and animal-welfare groups, including the People for the Ethical Treatment of Animals (“PETA”), challenged the Property Protection Act in an effort to prevent North Carolina from enforcing the law.
A federal district court in North Carolina struck down the law, finding it to be a content-based restriction on speech in violation of the First Amendment of the United States Constitution. The 4th Circuit Court of Appeals upheld the district court’s ruling also reasoning that the law’s broad prohibitions restrict speech in a manner inconsistent with the First Amendment. Now, the North Carolina Attorney General, Josh Stein, has petitioned the Supreme Court of the United States (“SCOTUS”), asking the Court to reverse the 4th Circuit’s decision. If SCOTUS decides to hear the case, the justices will be tasked with determining “[w]hether the First Amendment prohibits applying state tort law against double-agent employees who gather information, including by secretly recording, in the nonpublic areas of an employer’s property and who use that information to breach their duty of loyalty to the employer.”
We have reported on several Ag-Gag laws and the court challenges that have followed. If SCOTUS decides to take up the case, we may finally have a definitive answer as to whether Ag-Gag laws are constitutional or not.
Lab-grown Chicken Given the Green Light by the USDA. The United States Department of Agriculture’s (“USDA”) Food Safety and Inspection Service granted its first approvals to produce and sell lab-grown chicken to consumers. Upside Foods and Good Meat, the two entities given the green light by the USDA, plan on initially providing their “cell-cultivated” or “cultured” chicken to patrons of restaurants in the San Francisco and Washington D.C. areas. However, the timeline for such products showing up in your local grocery store has yet to be determined.
USDA Suspends Livestock Risk Protection 60-Day Ownership Requirement. The USDA’s Risk Management Agency issued a bulletin suspending the 60-day ownership requirement for the Livestock Risk Protection (“LRP”) program. Normally under the LRP, covered livestock must be owned by the producer within the last 60 days of the specified coverage endorsement period for coverage to apply. According to the bulletin, “[d]ue to the continuing severe drought conditions impacting many parts of the nation, producers are struggling to find adequate supplies of feed or forage, causing them to market their livestock sooner than anticipated.” In response, the USDA is allowing producers to apply to waive the 60-day ownership requirement, subject to verification of proof of ownership of the livestock. The USDA hopes this waiver will allow producers to market their livestock as necessary while dealing with the current drought effects. Producers will be able to apply for the waiver until December 31, 2024.
USDA Announces Tool to Help Small Businesses and Individuals Identify Contracting Opportunities. Earlier this month, the USDA announced a new tool “to assist industry and small disadvantaged entities in identifying potential opportunities for selling their products and services to USDA.” USDA’s Procurement Forecast tool lists potential contracting or subcontracting opportunities with the USDA. Until now, businesses could only access procurement opportunities through the federal-wide System for Award Management (“SAM”). The USDA hopes the Procurement Forecast tool will provide greater transparency and maximize opportunity for small and underserved businesses.
Did you know that Giant Panda cubs can be as small as a stick of butter? A panda mother is approximately 900 times bigger than her newborn cub, which can weigh less than 5 ounces. This is like an 8-pound human baby having a mother that weighed 7,200 pounds – this size difference may explain why so many panda cubs die from accidentally being crushed by their mothers. However, not everything is doom and gloom for the Giant Panda. Chinese officials have officially downgraded pandas from “endangered” to “vulnerable.” Although the International Union for Conservation of Nature re-labelled, the Panda as “vulnerable” in 2016, China wanted to make sure that the population of its national treasure continued to grow before downgrading the panda’s classification.
Although it seems as though pandas are thriving thanks to conservation efforts in China, not all animal species in China are so lucky. This week’s Ag Law Harvest takes a trip around the world to bring you domestic and international agricultural and resource issues. We take a look at court decisions, Congress’ latest actions, China’s struggle with African Swine Fever, and President Biden’s latest executive order.
Iowa Supreme Court Dismisses Raccoon River Lawsuit. Environmental organizations (“Plaintiffs”) filed a lawsuit against the state of Iowa and its agencies (“Defendants”) asking the court to compel Defendants to adopt legislation that would require Iowa farmers to implement practices that would help reduce the levels of nitrogen and phosphorus in Raccoon River. The Plaintiffs argued that Defendants violated their duty under the Public Trust Doctrine (“PTD”), which is a legal doctrine that requires states to hold certain natural resources in trust for the benefit of the state’s citizens. Defendants argued that Plaintiffs lacked standing to bring the lawsuit. The Iowa Supreme Court agreed with Defendants and found that a ruling in Plaintiffs’ favor would not necessarily remediate Plaintiffs’ alleged injuries, and therefore the Plaintiffs lacked standing to bring the lawsuit. The Iowa Supreme Court also found that Plaintiffs’ issue was a nonjusticiable political question. The political question doctrine is a principle that helps prevent upsetting the balance of power between the branches of government. Under the doctrine, courts will not decide certain issues because they are better suited to be decided by another branch of government. In this case, the court reasoned that Plaintiffs’ issue was better suited to be resolved through the legislative branch of government, not the judicial branch. The Iowa Supreme Court decision is significant because, as it stands, agricultural producers in the Raccoon River Watershed will not be required to adopt any new practices but the decision leaves it up to Iowa’s legislature to determine whether farmers should be required to adopt new practices under the PTD to help reduce nitrogen and phosphorus in Raccoon River.
U.S. House of Representatives’ spending bill increases focuses on climate action and environmental protection. Before the July 4th break, the United States House Appropriations Committee approved the first of its Fiscal Year 2022 (“FY22”) funding bills. Included in these bills is the agriculture funding bill, which will be sent to the House floor for full consideration. The bill provides $26.55 billion in the discretionary funding of agencies and programs within the USDA, FDA, the Commodity Futures Trading Commission, and the Farm Credit Administration – an increase of $2.851 billion from 2021. In total, the agriculture funding bill includes $196.7 billion for both mandatory and discretionary programs. The bill focuses on: (1) rural development and infrastructure – including rural broadband; (2) food and nutrition programs to help combat hunger and food insecurity; (3) international food assistance to promote U.S. agricultural exports; (4) conservation programs to help farmers, ranchers, and other landowners protect their land; (5) ag lending; (6) climate-related work to help research and remedy the climate crisis; and (7) enforcement of environmental programs. The agriculture spending bill will, however, have to be reconciled with any spending bill produced by the U.S. Senate.
U.S. House Agriculture Committee advances rural broadband bill. The House Agriculture Committee (the “Committee”) unanimously voted to advance the Broadband Internet Connections for Rural America Act (the “Act”), which would authorize $4.5 billion in annual funding, starting in fiscal year 2022, for the Broadband ReConnect Program (the “Program”) through fiscal year 2029. The existing Program is set to expire on June 30, 2022. To demonstrate Congress’ commitment to expanding rural broadband, the Program was only given $742 million in 2021. It is unclear whether the Act will be included in the infrastructure package that is currently being negotiated between Congress and the White House. Under the Act, the USDA must give the highest priority to projects that seek to provide broadband service to unserved communities that do not have any residential broadband service with speeds of at least 10/1 Mbps. The USDA will then prioritize communities with less than 10,000 permanent residents and areas with a high percentage of low-income families.
Small hog farmers in China no longer required to seek environmental approval. China is the world’s largest pork producer and over the past few years, its hog herds have been decimated. A deadly African Swine Fever (“ASF”) has wiped out about half of China’s hog herds, especially affecting small farmers. According to Reuters, China relies heavily on small farmers for its pork output, but because of ASF, small farmers have been left with little to no product and mass amounts of debts. Further, Chinese farmers are hesitant to rebuild their herds because ASF is an ongoing risk and farmers stand to lose everything if they continue to raise diseased hogs. Addressing these concerns, China’s agriculture ministry will no longer require small hog farmers to get environmental approval from the government before breeding their hogs. China hopes to reduce the costs and red tape for small farmers as China tries to incentivize small farmers to rebuild their hog herds. African Swine Fever is a highly contagious and deadly viral disease affecting both domestic and feral swine. The ASF poses no threat to human health but can decimate domestic hog populations. Germany has recently reported its first two cases of ASF in domestic hogs. Currently, ASF has not been found within the United States, and the USDA hopes to keep it that way. To learn more about ASF, visit the USDA’s Animal and Plant Health Inspection Service website.
President Biden signs executive order to reduce consolidation in agriculture. President Biden’s recent Executive Order on Promoting Competition in the American Economy seeks to address inadequate competition within the U.S. economy that the administration believes holds back economic growth and innovation. The Order includes more than 70 initiatives by more than a dozen federal agencies to promote competition. With respect to agriculture, the Order seeks to break up agricultural markets “that have become more concentrated and less competitive.” The Biden Administration believes that the markets for seeds, equipment, feed, and fertilizer are dominated by a few large companies which negatively impacts family farmers and ranchers. The Biden Administration believes that the lack of competition increases the costs of inputs for family farmers all while decreasing the revenue a family farmer receives. The Order directs the USDA to consider issuing new rules: (1) making it easier for farmers to bring and win lawsuits under the Packers and Stockyards Act; (2) prohibiting chicken processors from exploiting and underpaying chicken farmers; (3) adopting anti-retaliation protections for farmers who speak out about a company’s bad practices; and (4) defining when meat producers can promote and label their products as a “Product of the USA.” The Order also requires the USDA to develop a plan to increase opportunities for small farmers to access markets and receive a fair return and encourages the Federal Trade Commission to limit when equipment companies can restrict farmers from repairing their own farm machinery. Follow this link to learn more about President Biden’s recent Executive Order.
"Farm Office Live" returns this summer as an opportunity for you to get the latest outlook and updates on ag law, farm management, ag economics, farm business analysis, and other related issues. Targeted to farmers and agri-business stakeholders, our specialists digest the latest news and issues and present it in an easy-to-understand format.
The live broadcast is presented monthly. In months where two shows are scheduled, one will be held in the morning and one in the evening. Each session is recorded and posted on the OSU Extension Farm Office YouTube channel for later viewing.
|July 23, 2021||10:00 - 11:30 am||December 17, 2021||10:00 - 11:30 am|
|August 27, 2021||10:00 - 11:30 am||January 19, 2022||7:00 - 8:30 pm|
|September 23, 2021||10:00 - 11:30 am||January 21, 2022||10:00 - 11:30 am|
|October 13, 2021||7:00 - 8:30 pm||Februrary 16, 2022||7:00 - 8:30 pm|
|October 15, 2021||10:00 - 11:30 am||February 18, 2022||10:00 - 11:30 am|
|November 17, 2021||7:00 - 8:30 pm||March 16, 2022||7:00 - 8:30 pm|
|November 19, 2021||10:00 - 11:30 am||March 18, 2022||10:00 - 11:30 am|
|December 15, 2021||7:00 - 8:30 pm||April 20, 2022||7:00 - 8:30 pm|
Topics we will discuss in upcoming webinars include:
- Coronavirus Food Assitance Program (CFAP)
- Legislative Proposals and Accompanying Tax Provisions
- Outlook on Crop Input Costs and Profit Margins
- Outlook on Cropland Values and Cash Rents
- Tax Issues That May Impact Farm Businesses
- Legal Trends
- Legislative Updates
- Farm Business Management and Analysis
- Farm Succession & Estate Planning
To register or to view a previous "Farm Office Live," please visit https://go.osu.edu/farmofficelive. You will receive a reminder with your personal link to join each month.
The Farm Office is a one-stop shop for navigating the legal and economic challenges of agricultural production. For more information visit https://farmoffice.osu.edu or contact Julie Strawser at email@example.com or call 614.292.2433
Tags: Farm Office Live, farm management, Farm Succession, Estate Planning, Farm Business, Dairy Production, Farm Tax, Agricultural Law, Resource Law
Written by Ellen Essman and Peggy Hall
This edition of the Ag Law Harvest has a little bit of everything—Ohio and federal legislation responding to COVID issues, new USDA guidance on bioengineered foods, and a judicial review of Bayer’s Roundup settlement. Read on to learn about the legal issues currently affecting agriculture.
Ohio COVID-19 immunity bill stalls. While the Ohio House and Senate agree with the concept of immunity for COVID-19 transmissions, the two chambers don’t yet see eye-to-eye on the parameters for COVID-19 liability protection. H.B. 606, which we reported on here, has passed both the House and Senate, but the Senate added several amendments to the legislation. The House won’t be addressing those amendments soon because it’s in recess, and doesn’t plan to return for business until at least September 15. The primary point of disagreement between the two bills concerns whether there should be a rebuttable presumption for Bureau of Workers’ Compensation coverage that certain employees who contract COVID-19 contracted it while in the workplace. The Senate amendment change by the Senate concerns exemption from immunity for "intentional conduct," changed to "intentional misconduct.” Currently, there is not a plan for the House to consider the Senate’s amendments before September 15.
Lawmakers propose bill to avoid more backlogs at processing plants.
Most people are aware that the COVID-19 pandemic created a huge backlog and supply chain problem in U.S. meatpacking plants. A group of bipartisan representatives in the House recently proposed the
Requiring Assistance to Meat Processors for Upgrading Plants Act, or RAMP-UP Act. The bill would provide grants up to $100,000 to meat and poultry processing plants so the plants could make improvements in order to avoid the kind of problems caused by the pandemic in the future. The plants would have to provide their own matching funds for the improvements. You can find the bill here.
Revisiting the Paycheck Protection Program, again. In a refreshing display of non-partisanship, Congress passed legislation in late June to extend the Paycheck Protection Program (PPP). Employers who haven’t taken advantage of PPP now have until August 8, 2020 to apply for PPP funds to cover payroll and certain other expenses. Several senators also introduced the Paycheck Protection Program Small Business Forgiveness Act, a proposal to streamline an automatic approval process for forgiveness of PPP loans under $150,000, but there’s been little action on the bill to date. Meanwhile, the American Farm Bureau Federation is in discussion with the Senate on its proposal for other changes to PPP that would expand access to PPP for agriculture.
More clarification for bioengineered food disclosure. You may recall that the National Bioengineered Food Law was passed by Congress in 2016. The legislation tasked USDA with creating a national mandatory standard for disclosing bioengineered foods. The standard was implemented at the beginning of 2020, but USDA still needed to publish guidance on validating a refining process and selecting an acceptable testing method. On July 8, 2020, that guidance was published. The guidance provides steps for industry to take when validating a food refining process under the rule. A lot of food refining processes remove traces of modified genetic material. So, if a refining process is validated, there is no further need to test for bioengineered material to disclose. The guidance also contains instructions on testing methods. Basically, “any regulated entity that is using a food on the AMS List of Bioengineered Foods and does not want to include a bioengineered food disclosure because the food or ingredient is highly refined and does not include detectable modified genetic material” should follow these testing instructions. Therefore, any entity with highly refined foods that do “not include detectable modified genetic material” should follow the recently published guidance.
Bayer settlement proposal under scrutiny. Last month, Bayer, the owner of Roundup, announced that it would settle around 9,500 lawsuits related to alleged injuries caused by using the product. Not only was the proposal supposed to settle previous lawsuits, but it was also meant to address any future lawsuits stemming from purported injuries caused by Roundup. A judge from the United States District Court for the Northern District of California recently pumped the breaks on this plan, stating that any settlement that would resolve “all future claims” against Roundup must first be approved by the court. A hearing will be held on July 24, where the court will decide whether or not to “grant preliminary approval of the settlement.”
There was a great deal of action last Friday in the case that vacated the registrations of XtendiMax, Engenia and FeXapan dicamba-based products. Despite a barrage of court filings on Friday, however, nothing has changed the current legal status of the dicamba products in Ohio, and Ohio growers may use existing stocks of the products now but must end use by June 30, 2020.
Here’s a rundown of the orders that the Ninth Circuit Court of Appeals issued in the case last Friday:
- The court denied the emergency motion that the petitioners (National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) filed on June 13. That motion asked the court to enforce its previous mandate to vacate the registrations, to prevent any further use of the products, and to hold the EPA in contempt for issuing the Cancellation Order the agency had made that allowed continued use of existing stocks of the products. The court did not provide its reasoning for denying the motion.
- The court granted amicus curiae (friend of the court) status to CropLife America and American Farm Bureau (representing itself as well as national soybean, cotton, wheat, corn and sorghum association interest.) Those parties filed their amicus curiae briefs in support of the EPA’s Cancellation Order and in opposition to the petitioners' emergency motion.
- The court granted also emergency motions to intervene in the case filed by BASF Corporation, maker of Engenia, and DuPont (Corteva) , maker of FeXapan. The companies argued that they did not know that the scope of the court’s order on Bayer's XtendiMax product registration would also affect their dicamba product registrations and they should now be permitted an opportunity to defend their products.
- BASF filed a motion asking the court to recall the court's mandate that had cancelled the registrations of the products, claiming that the court had not followed appropriate procedural rules. In its brief, BASF also suggested that the company would be filing petitions for rehearing since BASF had not had an opportunity to be heard when the court vacated the registration of its Engenia product.
- The court ordered the original petitioners to file a brief in response to BASF’s motion to recall the mandate by June 23, and for BASF to reply to that brief by June 24.
The companies that make the dicamba products clearly intend to challenge the vacatur of their product registrations, even though the EPA's Cancellation Order allows continued use of existing stocks of the products until July 30, 2020. This dicamba battle is not yet over, and we'll keep you posted on new developments.
Read our previous posts on the court's vacatur in National Family Farm Coalition here, on the EPA's Cancellation Order here, and on the Ohio Department of Agriculture's ruling on use of the products in Ohio here.
The dicamba roller coaster ride continues today, with a statement issued by the Ohio Department of Agriculture clarifying that the use of XtendiMax, Engenia, and FeXapan dicamba-based products in Ohio will end as of June 30, 2020. Even though the US EPA has issued an order allowing continued use of the products until July 31, 2020, use in Ohio must end on June 30 because the Ohio registrations for the three dicamba-based products expire on that day.
As we’ve explained in our previous blog posts here and here, the Ninth Circuit Court of Appeals vacated the registration of the dicamba products on June 3, 2020. In doing so, the court stated that the EPA had failed to perform a proper analysis of the risks and resulting costs of the products. According to the court, EPA had substantially understated the amount of acreage damaged by dicamba and the extent of such damage, as well as complaints made to state agriculture departments. The court determined that EPA had also entirely failed to acknowledge other risks, such as the risk of noncompliance with complex label restrictions, economic risks from anti-competition impacts created by the products, and the social costs to farm communities caused by dicamba versus non-dicamba users. Rather than allowing the EPA to reconsider the registrations, the court vacated the product registrations altogether.
The EPA issued a Cancellation Order for the three products on June 8, stating that distribution or sale by the registrants is prohibited as of June 3, 2020. But the agency also decided to examine the issue on the minds of many farmers: what to do with the products. Applying its “existing stocks” policy, the EPA examined six factors to help it determine how to deal with stocks of the product that are in the hands of dealers, commercial applicators, and farmers. The EPA concluded that those factors weighed heavily in favor of allowing the end users to use the products in their possession, but that use must occur no later than July 31, 2020 and that any use inconsistent with the previous label restrictions is prohibited.
Despite the EPA’s Cancellation Order, however, the Ohio Department of Agriculture is the final arbiter of the registration and use of pesticides and herbicides within Ohio. ODA patiently waited for the EPA to act on the Ninth Circuit’s ruling before issuing its guidance for Ohio users of the dicamba products. In its guidance released today, ODA stated that:
- After careful evaluation of the court’s ruling, US EPA’s Final Cancellation Order, and the Ohio Revised Code and Administrative Code, as of July 1, 2020, these products will no longer be registered or available for use in Ohio unless otherwise ordered by the courts.
- While use of already purchased product is permitted in Ohio until June 30, further distribution or sale of the products is illegal, except for ensuring proper disposal or return to the registrant.
- Application of existing stocks inconsistent with the previously approved labeling accompanying the product is prohibited.
But the roller coaster ride doesn’t necessarily end there. Several dangling issues for dicamba-based product use remain:
- We’re still waiting to see whether the plaintiffs who challenged the registrations (the National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) will also challenge the EPA’s Cancellation Order and its decision to allow continued use of the products, and will request immediate discontinuance of such uses.
- Bayer Crop Science, as an intervenor in the Ninth Circuit case, could still appeal the Ninth Circuit’s decision, as could the EPA.
- All of these orders add complexity to the issue of liability for dicamba damage. That issue has already become quite controversial, often pitting farmer against farmer and requiring the applicator or damaged party to prove adherence to or violation of the complicated label restrictions. But the Ninth Circuit’s attention to the risks of adverse impacts from the products raises additional questions about whether an applicator who chooses to use the products is knowingly assuming a higher risk, and whether a liability insurance provider will cover that risk. For this reason, growers may want to have a frank discussion with their liability insurance providers about coverage for dicamba drift.
The dicamba roller coaster ride will surely continue, and we’ll keep you updated on the next development.
Read the ODA’s Official Statement Regarding the Use of Over-the-Top Dicamba Products here.
When we explained in our last blog post the recent Court of Appeals decision that vacated the registration of three dicamba-based products, we mentioned that one possibility for answering the “what happens now” question was for the EPA to issue a cancellation order that would allow end users to use existing stocks of the products. That’s exactly what happened yesterday, when the US EPA made a final order that cancels the registrations of XtendiMax, Engenia, and FeXapan but allows for movement and use of the products. Here’s a summary of the agency’s order.
Authority to issue the cancellation order
After reviewing the background of the dicamba product registrations vacated by the Ninth Circuit Court of Appeals last week for lack of “substantial evidence” supporting the registrations, the EPA stated that it was relying upon the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to establish provisions for the disposition of existing stocks of registrations that are found to be invalid. “The Administrator may permit the continued sale and use of existing stocks of a pesticide whose registration is suspended or canceled under [sections 3, 4 or 6 of FIFRA] to such extent, under such conditions, and for such uses as the Administrator determines that such sale or use is not inconsistent with the purposes of [FIFRA]” stated the agency.
The EPA noted that FIFRA does not prohibit the use of unregistered pesticides, but only prohibits the sale and distribution of unregistered pesticides. The agency noted that without its action, end users holding stocks of the products aren’t prevented from using the stocks without following the now voided label directions and restrictions. And the agency pointed to a similar action it took after a 2015 court order that vacated the registration of sulfoxaflor and a 2010 court decision that vacated the registration of spirotetramat. In both cases, the EPA utilized a cancellation order to establish terms and conditions for the disposition of existing stocks of the products.
Existing Stocks Determination
Back in 1991, the EPA established an “existing stocks policy” to help the agency assess how to treat existing stocks of cancelled pesticides, both when no significant risk concerns have been identified and when there are significant risk concerns for a cancelled product. The agency noted that it considered the six factors outlined in the policy for considering significant risk concerns associated with a cancelled pesticide and reached the conclusion that “distribution and use in certain narrow circumstances is supported.” The six factors the agency considered in determining what to do with the existing stocks of dicamba products are:
- Quantities of existing stocks at each level of the channels of trade
The agency noted that due to the current timing of the growing season, significant existing stocks are present in the possession of end users and throughout the channels of trade. Stating that it couldn’t determine the exact quantities of existing stocks at each level of the channels of trade, the EPA estimates that “approximately 4 million gallons could be in the channels of trade.”
- Risks resulting from the use of the existing stocks
Again concluding that because the product registrations were vacated and the labels therefore voided, end users were not legally bound to follow label restrictions if using the dicamba products. The agency concluded that such non-label uses would have greater potential for adverse effects than if the agency issued an order allowing and regulating the use of the existing stocks. Such an order is imperative, said the agency, to ensure that any use of the products would be consistent with previously approved labeling and could be enforced in order to prevent unreasonable adverse effects on the environment. Surprisingly, the EPA gave little attention to the volatility concerns raised by the Ninth Circuit in its decision last week, and evidence the court pointed to in that case that suggested that even applications by those who carefully followed the label restrictions were subject to drift and damage.
- The benefits resulting from the use of existing stocks
Capitalizing on the unfortunate timing of the Ninth Circuit’s vacation of the pesticide in regards to immediate needs for the current growing season, the agency concluded that “the benefits resulting from the use of the products are considerable and well established, particularly for this growing season.” The EPA reiterated many of the numerous communications it had received stating how essential the over-the-top products are, especially with the growing season underway. It also concluded that allowing non-over-the-top uses would result in substantially greater benefits to users and society than would disposal of the products.
- The financial expenditures users and others have already spent on existing stocks
Echoing the concerns of many farmers and again pointing to the current growing season, the agency concluded that “the costs to farmers are not limited to their existing stocks of these dicamba products, but include other sunk costs made in expectation of the availability of these products (seed purchase, tilling, planting, etc.) as well as the lost opportunity to switch to a different crop or to another herbicide or weed management method.”
- The risks and costs of disposal or alternative disposition of the stocks
The EPA concluded that disposal of the existing stocks of dicamba products would incur substantial costs for all and for stock already in the hands of end users, “may be neither feasible nor advisable.” Additionally, the agency pointed to disposal or return of opened containers which would have high risks of spillage and increased expenses for proper disposal.
- The practicality of implementing restrictions on distribution, sale, or use of the existing stocks
Another option available to the agency under FIFRA would be to issue individual stop sale, use and removal orders to all end users holding dicamba products, but the EPA concluded that such an action would be unwarranted under the present facts because tracking the existing stocks would be burdensome, inaccurate and impractical and that “hard-pressed farmers who have made large investments in their existing stocks may be uncooperative with a cancellation order that requires disposal.”
After weighing the six factors above, the EPA concluded that the six factors weigh heavily in support of allowing end users to use existing stocks of the dicamba products in their possession. However, the agency imposed a July 31 , 2020 cut-off date for use of existing stocks in order to “further reduce the potential for adverse effects.” Here are the final orders the agency made for distributed, sale and use of the products:
- Distribution or sale by the registrant. Distribution or sale by the registrant of all existing stocks of the products listed below is prohibited effective as of the time of the order on June 3, except for distribution for the purposes of proper disposal.
- Distribution or sale by persons other than the registrant. Distribution or sale of existing stocks of the products listed below that are already in the possession of persons other than the registrant is permitted only for the purposes of proper disposal or to facilitate return to the registrant or a registered establishment under contract with the registrant, unless otherwise allowed below.
- Distribution or sale by commercial applicators. For the purpose of facilitating use no later than July 31, 2020, distribution or sale of existing stocks of products listed below that are in the possession of commercial applicators is permitted.
- Use. Use of existing stocks of products inconsistent in any respect with the previously-approved labeling accompanying the product is prohibited. All use is prohibited after July 31, 2020.
While the manufacturers of XtendiMax, Engenia, and FeXapan are prohibited from selling and distributing their products effective as of June 3, 2020, the EPA’s cancellation order allows others to return, dispose of, or use the products according to the previous label restrictions and no later than July 31, 2020. But a few other factors come into play:
- Some states have already taken actions to restrict the use of the dicamba products within their states, which is within a state’s authority. Ohio has not done so, and instead has stated that it has been awaiting US EPA guidance on the legal status of the products and will communicate options for farmers afterwards. This means that users in Ohio should keep a close eye on the Ohio Department of Agriculture to see if it will go along with the US EPA’s guidance or direct otherwise.
- A cancellation order issued by the EPA is a final agency action that is subject to appeal, so we might see an immediate of the cancellation order and a request to stay the order pending appeal. Such an appeal could challenge whether the EPA has the authority to regulate existing stocks of the products and whether the agency’s analysis sufficiently addressed the risks of adverse impacts from continued use.
As seems often to be the case with dicamba, there’s a mixed sense of drama and dread with what lies ahead. We’ll be sure to keep you posted on the next legal news for dicamba.
Read the US EPA’s cancellation order for XtendiMax, Engenia, and FeXapan here.
Dicamba has had its share of legal challenges, and a decision issued yesterday dealt yet another blow when the Ninth Circuit Court of Appeals vacated the product’s registration with the U.S. EPA. In doing so, the court held that the EPA’s approval of the registration violated the provisions of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), which regulates the use of herbicides and other chemicals in the U.S. Here’s a summary of how the court reached its decision and a few thoughts on the uncertainty that follows the opinion.
The challenge: EPA’s approval of three dicamba products
We first have to step back to 2016, when the EPA approved three dicamba-based products-- Monsanto’s XTendiMax, DuPont’s FeXapan, and BASF’s Engenia--as conditional use pesticides for post-emergent applications in 34 states, including Ohio. Although dicamba has been around for years, the approval came after the companies reformulated dicamba to make it less volatile and in anticipation of the development of dicamba tolerant soybean and cotton seeds. The agency conducted a risk assessment and concluded that if used according to the label restrictions, the benefits of the dicamba products outweighed “any remaining minimal risks, if they exist at all.” The EPA also provided that the registrations would automatically expire if there was a determination of an unacceptable level or frequency of off-site dicamba damage.
Before the conditional registrations were set to automatically expire in late 2018, the EPA approved requests by Bayer CropScience (previously Monsanto), Cortevo (previously DuPont) and BASF to conditionally amend the registrations for an additional two years. The approval came despite widespread concerns about dicamba drift and damage during the 2017 growing season. To address those concerns, EPA chose not to conduct a new risk assessment and instead adopted additional label restrictions that had been proposed by Monsanto/Bayer to minimize off-field movement of dicamba. Many states added restrictions for dicamba use that exceeded the label restrictions, including banning any use of the product during certain periods.
Several organizations challenged the EPA’s dicamba registration approvals. The National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America filed suit against the EPA, claiming that the agency violated both FIFRA and the Endangered Species Act in approving the product registrations. Monsanto requested and was granted permission to intervene in the case.
The Ninth Circuit’s review
To approve the request to amend the dicamba registrations, FIFRA required the EPA to make two conclusions: first, that the applicant had submitted satisfactory data related to the proposed additional use of the pesticide and second, that the approval would not significantly increase the risk of unreasonable adverse effects on the environment. The task before the Ninth Circuit Court of Appeals was to review the EPA’s 2018 decision and determine whether there was substantial evidence to support the EPA's conclusions and amend the registrations.
The conclusion that drew the most attention from the court was the EPA’s determination that amending the dicamba registrations for two years would not cause unreasonable adverse effects on the environment. The court determined that the EPA erred in making this conclusion when it substantially understated several risks of dicamba registration, such as:
- Misjudging by as much as 25% the amount of acreage on which dicamba would be used in 2018.
- Concluding that complaints to state departments of agriculture could have either under-reported or over-reported the actual amount of dicamba damage, when the record clearly showed that complaints understated the amount of damage.
- Failing to quantify the amount of damage caused by dicamba, “or even to admit that there was any damage at all,” despite having information that would enable the EPA to do so.
But that’s not all. The court pointed out that the agency had also “entirely failed to acknowledge other risks, including those it was statutorily required to consider,” such as:
- The risk of substantial non-compliance with label restrictions, which the court noted became “increasingly restrictive and, correspondingly, more difficult to follow” and to which even conscientious applicators could not consistently adhere.
- The risk of economic costs. The court stated that the EPA did not take into account the “virtually certain” economic costs that would result from the anti-competitive effect of continued dicamba registration, citing evidence in the record that growers were compelled to adopt the dicamba products just to avoid the possibility of damage should they use non-dicamba tolerant seed.
- The social costs of dicamba technology to farming communities. The court pointed out that a farmer in Arkansas had been shot and killed over dicamba damage, that dicamba had “pitted neighbor against neighbor,” and that the EPA should have identified the severe strain on social relations in farming communities as a clear social cost of the continued registration of the products.
Given the EPA’s understatement of some risks and failure to recognize other risks, the Court of Appeals concluded that substantial evidence did not support the agency’s decision to grant the conditional registration of the dicamba products. The EPA “failed to perform a proper analysis of the risks and resulting costs of the uses,” determined the court. The court did not address the Endangered Species Act issue.
A critical point in the decision is the court’s determination of the appropriate remedy for the EPA’s unsupported approval of the dicamba products. The EPA and Monsanto had asked the court to utilize its ability to “remand without vacatur,” or to send the matter back to the agency for reconsideration. The remedy of “vacatur,” however, would vacate or void the product registrations. The court explained that determining whether vacatur is appropriate required the court to weigh several criteria, including:
- The seriousness of the agency’s errors against the disruptive consequences of an interim change that may itself be changed,
- The extent to which vacating or leaving the decision in place would risk environmental harm, and
- Whether the agency would likely be able to offer better reasoning on remand, or whether such fundamental flaws in the agency’s decision make it unlikely that the same rule would be adopted on remand.
The court’s weighing of these criteria led to its conclusion that vacating the registrations of the products was the appropriate remedy due to the “fundamental flaws in the EPA’s analysis.” Vacating the registrations was not an action taken lightly by the court, however. The judges acknowledged that the decision could have an adverse impact on growers who have already purchased dicamba products for the current growing season and that growers “have been placed in this situation through no fault of their own.” Clearly, the court places the blame for such consequences upon the EPA, reiterating the “absence of substantial evidence” for the agency’s decision to register the dicamba products.
The court raised the issue we’re all wondering about now: can growers still use the dicamba products they’ve purchased? Unfortunately, we don’t have an immediate answer to the question, because it depends largely upon how the EPA responds to the ruling. We do know that:
- FIFRA § 136a prohibits a person from distributing or selling any pesticide that is not registered.
- FIFRA § 136d allows the EPA to permit continued sale and use of existing stocks of a pesticide whose registration is suspended or canceled. The EPA utilized this authority in 2015 after the Ninth Circuit Court of Appeals vacated the EPA’s registration of sulfoxaflor after determining that the registration was not supported by substantial evidence. In that case, the EPA allowed continued use of the existing stocks of sulfoxaflor held by end-users provided that the users followed label restrictions. Whether the agency would find similarly in regards to existing stocks of dicamba is somewhat unlikely given the court's opinion, but remains to be seen. The EPA’s 2015 sulfoxaflor cancellation order is here.
- While the U.S. EPA registers pesticides for use and sale in the U.S., the product must also be registered within a state in order to be sold and used within the state. The Ohio Department of Agriculture oversees pesticide registrations within Ohio, and also regulates the use of registered pesticides.
- If the EPA appeals the Ninth Circuit’s decision to the U.S. Supreme Court, the agency would likely include a request for a “stay” that would delay enforcement of the court’s Order.
- Bayer strongly disagrees with the decision but has paused its sale, distribution and use of XtendiMax while assessing its next step and awaiting EPA direction. The company states that it will “work quickly to minimize any impact on our customers this season.” Bayer also notes that it is already working to obtain a new registration for XtendiMax for the 2021 season and beyond, and hopes to obtain the registration by this fall. See Bayer’s information here.
- BASF and Corteva have also stated that they are awaiting the EPA’s reaction to the decision, and will “use all legal remedies available to challenge this Order.”
- Syngenta has clarified that its Tavium Plus VaporGrip dicamba-based herbicide is not part of the ruling and .that the company will continue selling that product.
For now, all eyes are on the U.S. EPA’s reaction to the Ninth Circuit’s decision, and we also need to hear from the Ohio Department of Agriculture. Given the current state of uncertainty, it would be wise for growers to wait and see before taking any actions with dicamba products. We’ll keep you posted on any new legal developments. Read the court's decision in National Family Farm Coalition et al v. U.S. EPA here.
Written by Ellen Essman and Peggy Kirk Hall
Many people are still working from home, but that hasn’t stopped legal activity in Washington, D.C. Bills have been proposed, federal rules are being finalized, and new lawsuits are in process. Here’s our gathering of the latest ag law news.
SBA posts Paycheck Protection Program (PPP) loan forgiveness application. We’ve been waiting to hear more about how and to what extent the SBA will forgive loans made under the CARES Act’s PPP that many farm businesses have utilized. The SBA recently posted the forgiveness application and instructions for applicants here. But there are still unanswered questions for agricultural applicants as well as talk in Congress about changing some of the forgiveness provisions, suggesting that loan recipients should sit tight rather than apply now. Watch for our future blog post and a discussion on the forgiveness provisions in our next Farm Office Live webinar.
House passes another COVID-19 relief bill. All predictions are that the bill will go nowhere in the Senate, but that didn’t stop the House from passing a $3 trillion COVID-19 relief package on May 15. The “HEROES Act” includes a number of provisions for agriculture, including an additional $16.5 billion in direct payments to producers of commodities, specialty crops and livestock, as well as funds for local agriculture markets, livestock depopulation losses, meat processing plants, expanded CRP, dairy production, other supply chain disruptions, and biofuel producers (discussed below). Read the bill here.
Proposed bipartisan bill designed to open cash market for cattle. Last week, Republican Senator Chuck Grassley and Democratic Senator Jon Tester introduced a bill that “would require large-scale meatpackers to increase the proportion of negotiable transactions that are cash, or ‘spot,’ to 50 percent of their total cattle purchases.” The senators hope this change would bring up formula prices and allow livestock producers to better negotiate prices and increase their profits. In addition, the sponsors claim ithe bill would provide more certainty to a sector hard hit by coronavirus. Livestock groups aren’t all in agreement about the proposal. You can read the bill here, Senator Grassley’s press release here and Senator Tester’s news release here.
New Senate and House bills want to reform the U.S. food system. Representative Ro Khanna from California has introduced the House companion bill to the Senate's Farm System Reform Act first introduced by Senator Cory Booker in January. The proposal intends to address underlying problems in the food system. The bill places an immediate moratorium on the creation or expansion of large concentrated animal feeding operations and requires such operations to cease by January 1, 2040. The proposal also claims to strengthen the Packers and Stockyards Act and requires country of origin labeling on beef, pork, and dairy products. The bill would also create new protections for livestock growers contracted by large meat companies, provide money for farmers to transition away from operating animal feeding facilities, strengthen the term “Product of the United States” to mean “derived from 1 or more animals exclusively born, raised, and slaughtered” in the U.S., and, similar to the Grassley/Tester bill above, require an increased percentage of meatpacker purchases to be “spot” transactions.
Lawmakers ask Trump to reimburse livestock producers through FEMA. In another move that seeks to help livestock producers affected by the pandemic, a bipartisan group of U.S. Representatives sent a letter to Donald Trump imploring him to issue national guidance to allow expenses of livestock depopulation and disposal to be reimbursed under FEMA's Public Assistance Program Category B. The lawmakers reason that FEMA has "been a valued Federal partner in responding to animal losses due to natural disasters," and that the COVID-19 epidemic should be treated "no differently." You can read the letter here.
More battling over biofuels. Attorneys General from Wyoming, Utah, Louisiana, Oklahoma, Texas, Arkansas and West Virginia have sent a request to EPA Administrator Andrew Wheeler to waive the Renewable Fuel Standard (RFS) because of COVID-19 impacts on the fuel economy. The letter states that reducing the national quantity of renewable fuel required would alleviate the regulatory cost of purchasing tradable credits for refiners, who use the credits to comply with biofuel-blending targets. Meanwhile, 70 mayors from across the U.S. wrote a letter urging the opposite, and criticizing any decisions not to uphold the RFS due to the impact that decision would have on local economies, farmers, workers, and families who depend on the biofuels industry. The House is also weighing in on the issue. In its recently passed HEROES Act, the House proposes a 45 cents per gallon direct payment to biofuel producers for fuels produced between Jan 1 and May 1, 2020 and a similar payment for those forced out of production during that time.
New USDA rule for genetically engineered crops. A final rule concerning genetically engineered organisms is set to be published this week. In the rule, USDA amends biotechnology regulations under the Plant Protection Act. Importantly, the new rule would exempt plants from regulation by the Animal and Plant Health Inspection Service (APHIS) if the plants are genetically engineered but the same outcome could have occurred using conventional breeding. For instance, gene deletions and simple genetic transfers from one compatible plant relative to another would be exempted. If new varieties of plants use a plant-trait mechanism of action combination that has been analyzed by APHIS, such plants would be exempt. You can read a draft of the final rule here.
Trump’s new WOTUS rule attacked from both sides of the spectrum. A few weeks ago, we wrote about the Trump Administration’s new “waters of the United States” or WOTUS rule. Well, it didn’t take too long for those who oppose the rule to make their voices heard. The New Mexico Cattle Growers Association (NMCGA) sued the administration, claiming that the new rule is still too strict and leaves cattle ranchers questioning whether waters on their land will be regulated. In their complaint, NMCGA argues that the new definition violates the Constitution, the Clean Water Act, and Supreme Court precedent. On the other side, the Natural Resources Defense Council (NRDC), along with other conservation groups, sued the administration, but argued that the new rule does not do enough to protect water and defines “WOTUS” too narrowly. Here we go again—will WOTUS ever truly be settled?
The Farm Office is Open! Join us for analysis of these and other legal and economic issues facing farmers in the Farm Office Team’s next session of “Farm Office Live” on Thursday, May 28 at 9:00 a.m. Go to this link to register in advance or to watch past recordings.
The OSU Extension Farm Office team has returned from the National Farm Business Conference in Wisconsin. We gained some fresh perspective on events beyond Ohio’s borders, but are happy to be back in slightly warmer weather. Our colleagues from across the nation presented on a variety of farm management topics, and we had a chance to discuss some of our recent projects. We also toured a number of dairy and agritourism farms, and of course ate lots of cheese curds. The fresh perspective means that it is time for a fresh Ag Law Harvest.
Here’s our latest gathering of agricultural law news that you may want to know:
OSU Extension Ag Law Team featured on Agronomy and Farm Management Podcast. Recently we had a chance to talk with OSU Extension Educators Amanda Douridas and Elizabeth Hawkins, who together moderate the bi-weekly Agronomy and Farm Management Podcast for OSU Extension. We discussed the status of Ohio’s hemp bill and what we expect to happen in the near future with hemp regulation and production. Then we provided an update on the Drewes Farm Partnership v. City of Toledo lawsuit, which grapples with the legality of the Lake Erie Bill of Rights. Click HERE to listen to the podcast, and look for episode 28.
Minnesota focuses new commercial nitrogen fertilizer regulations on drinking water quality. In an effort to protect public drinking water sources, the Minnesota Department of Agriculture has chosen to regulate the commercial application of fertilizer. The state has long regulated the application of manure, but not commercial nitrogen. The regulations focus on two types of geographic areas: regions with vulnerable soil (coarse soils, karst geology, or shallow bedrock) and farms located in Drinking Water Supply Management Areas. These management areas are designated based upon nitrate levels found in the drinking water. Starting in 2020, the state will ban the application of commercial nitrogen in these areas during the fall months and on frozen ground. Farms in any of the 30 Drinking Water Supply Management Areas would have to follow best management practices to start, but if nitrate levels continue to exceed state limits, then the state may impose additional restrictions in an area to reduce nitrogen pollution. For more information on Minnesota’s Groundwater Protection Rule, click HERE.
Federal court puts a hold on Bud Light’s “100 percent less corn syrup” ads. If they missed seeing it live during the Super Bowl, most people in the agricultural industry have at least seen the recent Bud Light advertising campaign that claims the beer uses no corn syrup while its competitors do. Shortly after the initial release of the ad, MillerCoors sued Anheuser-Busch, which makes Bud Light. MillerCoors wants a permanent injunction that would stop Bud Light from continuing its corn syrup advertising campaign, arguing that the advertisements are false and misleading to consumers. The first step to a permanent injunction is often a preliminary injunction, which makes a party act or not act in a certain way only while the case is pending. The judge presiding over the lawsuit granted MillerCoors’ motion for a preliminary injunction in part. The judge ordered Anheuser-Busch to temporarily stop using ads mentioning corn syrup if those ads do not contain language explaining that Bud Light does not use corn syrup in the brewing process. The judge’s act does not ban the ad that premiered during the Super Bowl. Rather it only blocks ads released later that claim Bud Light uses 100 percent less corn syrup than competitors like MillerCoors. Click HERE to view the complaint, and HERE to view the judge’s order.
It’s (mostly) official: USDA’s ERS and NIFA are headed to Kansas City. U.S. Secretary of Agriculture Sonny Perdue announced the USDA’s selection of the Kansas City, Missouri region as the new headquarters for the Economic Research Service and National Institute of Food and Agriculture. The location changed caused a great deal of controversy as some viewed it as a political move. However, the USDA has maintained that relocation will save millions of dollars over the next few years and put the agencies closer to a number of other USDA offices in Kansas City, such as the Farm Service Agency’s Commodity Operations Office. The Secretary reduced some of the controversy by scrapping plans to place the agencies under the USDA’s Chief Economist, who is a political appointee. Before we call the move a done deal, we must note that Congress could stop the plans. The U.S. House of Representatives might block the move via a Department of Agriculture-FDA spending bill currently under consideration. Click HERE to read Secretary Perdue’s press release.
Bayer announces multi-billion dollar hunt for glyphosate replacement. Somewhat buried in a press release titled “Bayer raises the bar in transparency, sustainability and engagement,” Bayer recently announced a substantial investment in its weed management research. Over the next ten years, the company plans to spend 5 billion euros, or roughly 5.6 billion U.S. dollars, to develop weed control products as alternatives to glyphosate. The announcement comes at a time with thousands of plaintiffs across the United States have claimed that the widely-used glyphosate caused their cancer. As we have previously discussed in the Ag Law Blog, the first three juries have in total awarded plaintiffs billions of dollars in damages. Bayer continues to fight the allegations and defend its product, but the press release marks the first time that Bayer has publically announced a search for an alternative to glyphosate. It remains to be seen whether the press release could have an impact in the lawsuits, but Bayer will likely try to keep the press release out of the trials by using court rules of evidence.
Ohio House passes amusement ride safety bill. County fair season has officially kicked off in Ohio, and some state lawmakers want to make sure that amusement rides at those fairs are safe. House Bill 189 seeks to heighten Ohio’s amusement ride safety inspection standards and impose additional duties on amusement ride owners. The bill would require the Ohio Department of Agriculture to adopt ride classification rules that identify types of rides needing more comprehensive inspection, along with the minimum number of inspectors and number of inspections for each ride. Further, the bill would require amusement ride owners to keep a manual for each amusement ride, and make it available upon request of an inspector. Amusement ride owners would also have to keep records, including documents and photographs, of all major repairs along with all locations where the owner stored or operated each ride. The bill includes an emergency clause, which would allow it to take effect as soon as the Governor signs it. Lawmakers named the bill “Tyler’s Law” after the young man who died following an equipment breakdown at the Ohio State Fair in 2017. Click HERE for more information about the bill.