Business and Financial

By: Evin Bachelor, Wednesday, March 20th, 2019

Agritourism continues to boom across the United States, with agritourism farms offering activities from apple picking to zip lining.  Literally A to Z.  Consumer interest in food and farming, along with an economic need to augment farm income through diversification, have combined to drive this boom.  As more farms delve into agritourism, their liability risks change.  Risk and liability are hard, if not impossible, to totally eliminate, but there are a number of steps that agritourism farms can take to reduce the chances of something bad happening.

Based upon the questions generated from our law bulletin on Ohio’s agritourism law, we wanted to take an in depth look at common legal issues and risks facing agritourism.  Created as part of a project for the Agricultural & Food Law Consortium, our new factsheet series does just that.  Specifically, these factsheets examine:

  • Legal risks of animal and human interactions
  • Selling food on the farm
  • Agritourism immunity laws across the country
  • Zoning laws across the country
  • Insurance coverage for agritourism

Each factsheet addresses common considerations and questions about starting and operating an agritourism farm, and provides links to helpful resources.  The factsheets are designed to have something for everyone in the industry.  From those just thinking about implementing agritourism who need to think about the basic risks, to those agritourism farms that are already well established and want a risk refresher.  Beyond the industry, those professionals who advise agritourism farms may find the considerations helpful.

Most of the new factsheets include a checklist.  The checklists include questions that an agritourism farmer should ask their attorney, zoning inspector, insurance provider, local health department, and more.  The checklists do not represent the only legal concerns that an agritourism farm must think about, but rather a starting point.  Every agritourism farm is unique, and must be treated as such when examining liability and risk.

The reducing legal risk in agritourism project is available on our website HERE, as well as the National Agricultural Law Center’s website HERE.  This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

By: Evin Bachelor, Friday, March 15th, 2019

State lawmakers have been busy crafting new legislation since the 133rd General Assembly took shape in January.  As promised, here are some highlights and summaries of the pending bills that relate to agriculture in Ohio:

  • Senate Bill 57, titled “Decriminalize hemp and license hemp cultivation.”  The Ohio Senate Agriculture and Natural Resources Committee held a second hearing about the bill on March 13th, and numerous farm organizations spoke in support of the bill.  As of now the language of the bill has not changed since we last discussed Ohio’s hemp bill in a blog post, but some changes could be made when the bill is sent out of the committee.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • Senate Bill 2, titled “Create state watershed planning structure.”  The one sentence bill expresses the General Assembly’s intent “to create and fund a comprehensive statewide watershed planning structure to be implemented at the local soil and water conservation district level.”  It further expresses the intent “to provide authorization and conditions for the operation of watershed programs implemented by local soil and water conservation districts.”  Click HERE for more information about the bill.
  • House Bill 24, titled “Revise humane society law.”  The bill would make various changes to Ohio’s Humane Society Law, including changes to enforcement powers, appointment and removal procedures, training, and criminal law applicability.  One of the significant changes would expand to all animals the seizure and impoundment provisions that currently apply only to companion animals.  This change would allow an officer to seize and impound any animal that the officer has probable cause to believe is the subject of a violation of Ohio’s domestic animal law.  At the same time, the bill would remove certain provisions from current law that pertain to harm to people, thereby focusing the new law solely on the protection of animals.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • House Bill 124, titled “Allow small livestock on residential property.”  Under this bill, counties and townships would no longer be allowed to restrict via zoning certain noncommercial agricultural activities on residential property conducted for an individual’s personal use and enjoyment.  Instead, owners of residential property that is not generally agricultural would be allowed to keep, harbor, breed, and maintain small livestock on their property.  Small livestock includes goats, chickens and similar fowl, rabbits, and similar small animals.  Roosters are explicitly excluded from this definition.  However, the owner would lose his or her rights to keep small livestock if the small livestock create a nuisance, are kept in a manner that causes noxious odors or unsanitary conditions, are kept in a building that is unsafe as defined under the statute, or if the number of animals exceeds a certain ratio of animals to acres as defined under the statute.  The ratio may be modified by the local jurisdiction to allow for more animals per acre.  Click HERE for more information about the bill.
  • House Bill 55, titled “Require oil and gas royalty statements.”  Owners of oil and gas wells would have to provide mandatory reports to holders of royalty interests under this bill.  Current law only requires disclosure of the information upon request, but this bill would make the disclosure mandatory.  The bill would expand the types of information that the reports must include, and allows the holder of royalty interests to sue to enforce the new rights.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • House Bill 94, titled “Ban taking oil or natural gas from bed of Lake Erie.”  The Ohio Department of Natural Resources handles oil and gas permitting in Ohio, and this bill would bar the agency from issuing permits or making leases “to take or remove oil or natural gas from and under the bed of Lake Erie.”  Click HERE for more information about the bill.
  • House Bill 95, titled “Revise Oil and Gas Law about brine and well conversions.”  The bill would ban the use of brine in secondary oil and gas recovery operations.  It would also ban putting brine, crude oil, natural gas, and other fluids associated with oil and gas exploration in ground or surface waters, on the ground, or in the land.  This restriction would apply even if the fluid received treatment in a public water system or other treatment process.  Further, brine disposal permits would not be allowed to utilize underground injection or disposal on the land or in surface or ground water.  Click HERE for more information about the bill.
  • House Bill 100, titled “Revise requirements governing abandoned mineral rights.”  Ohio has a statute that governs when a surface owner can take the mineral rights held or claimed by another by operation of law, essentially because of the passage of time.  The bill would require a surface owner to attempt to give notice to a holder of mineral rights by personal service, certified mail, or if those are unsuccessful then by publication.  Currently, if a holder of mineral rights believes that his or her interest remains valid, he or she may file an affidavit that complies with Ohio Revised Code (ORC) § 5301.56(H)(1) in the county property records.  If the holder of mineral rights fails to file an affidavit, the surface owner may then file an affidavit under ORC § 5301.56(H)(2) that effectively vests the mineral rights in the surface owner.  The new law would allow the surface owner to challenge a holder of mineral rights’ ORC § 5301.56(H)(1) affidavit.  This process would require the surface owner to obtain a court determination that the affidavit is invalid.  Then the surface owner would be able to file the new ORC § 5301.56(H)(3) affidavit to obtain the mineral rights.  Click HERE for more information about the bill.

There are also some bills that could have some indirect implications in the agricultural and natural resources sectors.  These indirect effects make this next set of bills noteworthy, or at least interesting.

  • Senate Bill 1, titled “Reduce number of regulatory restrictions.”  The bill would require each state agency to count its total number of regulatory restrictions, and then reduce the number of restrictions based on that baseline by 30% by 2022.  Once an agency meets its reduction target, it would not be able to increase the number of regulatory restrictions without making additional cuts elsewhere.  The bill would target agency rules that require or prohibit specific acts.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • Senate Bill 21, titled “Allow corporation to become benefit corporation.”  Much like the LLC merged the principles of a corporation and a partnership, the benefit corporation merges the principles of a corporation and a non-profit.  A benefit corporation must follow the formalities of a corporation, but the articles of incorporation can designate a social purpose for the business to pursue, such as promoting the environment through sustainable practices.  One of the unique traits of benefit corporations is that benefit corporations cannot be held liable for damages for failing to seek, achieve, or comply with their beneficial purpose, or even obtain a profit; however, certain individuals may seek a court ordered injunction to force the company to pursue those interests.  In a sense, the benefit corporation reduces the traditional fiduciary duties expected in general corporations.  The bill purports to maintain the traditional fiduciary duties, but by allowing a social purpose other than profit to guide decisions, the traditional fiduciary duties are in effect modified.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • House Bill 33, titled “Establish animal abuse reporting requirements.”  Under the bill, veterinarians and social service professionals would have to report their knowledge of abuse, cruelty, or abandonment toward a companion animal.  Social service professionals would include licensed counselors, social workers, and marriage or family therapists acting in their professional capacity.  Companion animals include non-wild animals kept in a residential dwelling, along with any cats and dogs kept anywhere.  These individuals would be required to report the neglect to law enforcement, agents of the county humane society, dog wardens, or other animal control officers.  Further, dog wardens, deputy dog wardens, and animal control officers would become mandatory reporters of child abuse.  Lastly, the bill explains the information that must be reported, the timing, and the penalties for failure to comply.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • House Bill 48, titled “Create local government road improvement fund.”  The bill proposes to deposit into a new local government road improvement fund some of the surplus funds generated when the state spends less than it appropriates in the general revenue fund.  Under current law, this surplus is split between the budget stabilization fund, also known as the “rainy day fund,” and the income tax reduction fund, which would redistribute remaining surplus to taxpayers.  Click HERE for more information about the bill.
  • House Bill 54, titled “Increase tax revenue allocated to the local government fund.”  The bill would increase the proportion of state tax revenue allocated to the Local Government Fund from 1.66% to 3.53%.  Click HERE for more information about the bill.
  • House Bill 74, titled “Prohibit leaving junk watercraft or motor uncovered on property.”  The bill would allow a sheriff, chief of police, highway patrol officer, or township trustee to send notice to a landowner to remove a junk vessel or outboard motor within 10 days.  The prohibition applies to junk vessels, including watercraft, and outboard motors that are three years or older, apparently inoperable, and with a fair market value of $1,500 or less.  Failure to cover, house, or remove the item in ten days could result in conviction of a misdemeanor.  Click HERE for more information about the bill, and HERE for the current official bill analysis.

As more bills are introduced, and as these bills move along, stay tuned to the Ag Law Blog for updates.

Written by Evin Bachelor, Law Fellow, OSU Extension Agricultural & Resource Law Program

Ten of Ohio’s thirty-three state senators have introduced and sponsored legislation that would decriminalize licensed hemp cultivation and production in the state of Ohio.  These senators represent a bipartisan mix of seven Republicans and three Democrats.  After the passage of the Farm Bill, we sent out a blog post that explained how current Ohio law does not distinguish hemp from marijuana, meaning that hemp is currently just as illegal under Ohio law as marijuana.  Senate Bill 57 would change that, if passed.

What Senate Bill 57 would change.

Senate Bill 57, if passed in its current form, would effectively decriminalize hemp cultivation and the production and sale of hemp products, so long as the activities are conducted under a license.  The bill establishes definitions for cannabidiol and hemp under Ohio law.  Specially, hemp would be defined as:

“the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, sales, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths per cent on a dry weight basis.”

Importantly for hemp cultivators and producers, this bill would remove hemp from Ohio’s Controlled Substances Act.  We previously noted in a blog post that Senate Bill 229 from the last General Assembly was set to remove Ohio’s controlled substances schedules from the Ohio Revised Code, and instead would allow the Ohio Board of Pharmacy to create the schedules by rule.  That bill passed, and would have allowed sales of CBD oils that had obtained approval from the U.S. Food and Drug Administration.  However, if Senate Bill 57 passes the Ohio General Assembly, the Ohio Board of Pharmacy would no longer be able to adopt rules designating hemp and hemp products as controlled substances.

The (potential) Ohio Hemp Cultivation Program.

The Director of the Ohio Department of Agriculture (ODA) would be required to establish a program to monitor and regulate hemp cultivation consistent with the requirements of the Farm Bill that Congress passed last year.  The Farm Bill authorizes the cultivation of hemp and the production of hemp products through state licensing programs.  Ohio’s program would include a licensing program.  Licenses will be valid for five years.  ODA and universities would not be required to obtain a license, but their activities would be limited to certain activities listed in the bill.  Hemp cultivation would still be illegal without a license, and could result in criminal misdemeanor charges.

The bill authorizes ODA to adopt regulations regarding:

  • What the license application looks like
  • What information the license application requires
  • How much a license costs
  • How background check will be conducted, and what they will examine
  • How ODA will issue, renew, deny, suspend, and revoke hemp cultivation licenses
  • How ODA will keep track of the lands where hemp is grown
  • How ODA will test for delta-9 tetrahydrocannabinol concentration
  • How hemp products must be labeled
  • How ODA will enforce the rules and conduct inspections
  • “Any other requirements or procedures necessary to administer and enforce” Ohio’s hemp cultivation program

The bill would deny licenses to any person who has pleaded guilty to or been convicted of a felony relating to controlled substances in the ten years before submitting their application, along with any person found to have falsified information on their application.

To administer the program, the bill would create a Hemp Cultivation Fund in the Ohio Treasury.  Application fees, fees collected from program operations, money appropriated to the program by the General Assembly or ODA, and any gifts or grants may be deposited into the fund for use in program administration.

At this time, the bill has only been introduced and referred to the Ohio Senate Agriculture Committee.  Bills are often subject to amendment, so stay tuned to the Ag Law Blog for updates on Senate Bill 57.  For the text of the bill, click HERE, or visit the Ohio General Assembly’s Senate Bill 57 webpage HERE.

By: Evin Bachelor, Friday, January 18th, 2019

We are full steam ahead in 2019, and so far we have held to our new year’s resolutions.  However, we want to take a quick look in the rearview mirror.  Ohio legislators passed a number of bills in 2018 that affect Ohio agriculture.  They range from multi-parcel auction laws to broadband grants, and oil & gas tax exemptions to hunting licenses.  Here are some highlights of bills that the Ohio General Assembly passed and former Governor Kasich signed in 2018.

  • House Bill 500, titled “Change township law.”  As mentioned in a previous blog post, the Ohio General Assembly made a number of generally minor changes to Ohio’s township laws with House Bill 500.  The changes included, among other things, requiring a board of township trustees to select a chairperson annually, modifying how vacating township roads and name changes are carried out, allowing fees for appealing a zoning board decision, clarifying how a board can suspend a member of a zoning commission or board of appeals, and removing the requirement for limited home rule townships to submit a zoning amendment or resolution to a planning commission.  To learn about more of the changes that were made, visit the Ohio General Assembly’s H.B. 500 webpage here.
  • House Bill 480, titled “Establish requirements for multi-parcel auctions.”  The Ohio Department of Agriculture regulates auctions, and H.B. 480 gave ODA authority to regulate a new classification of auctions: the multi-parcel auction.  Revised Code § 4707.01(Q) will define these as “any auction of real or personal property in which multiple parcels or lots are offered for sale in various amalgamations, including as individual parcels or lots, combinations of parcels or lots, and all parcels or lots as a whole.”  For more information, visit the Ohio General Assembly’s H.B. 480 webpage here.
  • House Bill 522, titled “Allow outdoor refreshment area to include F permit holders.”  A municipality or township may create a “designated outdoor refreshment area” where people may walk around the area with their opened beer or liquor.  Previously, only holders of certain D-class permits (bars, restaurants, and clubs) and A-class permits (alcohol manufacturers) could allow their patrons to partake in a designated open area.  H.B. 522 will allow holders of an F-class liquor permit to also allow their patrons to roam in the designated area with an open container.  F-class liquor permits are for festival-type events of a short duration.  However, holders of either permits D-6 (allowing Sunday sales) or D-8 (allowing sales of growlers of beer or of tasting samples) will no longer be eligible for the open container exception.  For more information, visit the Ohio General Assembly’s H.B. 522 webpage, here.
  • Senate Bill 51, titled “Facilitate Lake Erie shoreline improvement.”  As mentioned in a previous blog post, the primary purpose of Senate Bill 51 was to add projects for Lake Erie shoreline improvement to the list of public improvements that may be financed by a special improvement district.  S.B. 51 also instructed the Ohio Department of Agriculture (“ODA”) to establish programs to assist in phosphorous reduction in the Western Lake Erie Basin.  This adds to the previous instructions given to ODA in S.B. 299 regarding the Soil and Water Phosphorous Program.  S.B. 51 further provided funding for a number of projects, ranging from flood mitigation to MLS stadium construction.  For more information, visit the Ohio General Assembly’s S.B. 51 webpage here.
  • Senate Bill 299, titled “Finance projects for protection of Lake Erie and its basin.”  Largely an appropriations bill to fund projects, S.B. 299 primarily targeted water quality projects and research.  ODA received an additional $3.5 million to support county soil and water conservation districts in the Western Lake Erie Basin, plus $20 million to establish water quality programs under a Soil and Water Phosphorous Program.  Further, the Ohio Department of Natural Resources (“ODNR”) received an additional $10 million to support projects that divert dredging materials from Lake Erie.  Stone Laboratory, a sea grant research program, received an additional $2.65 million.  The bill also created a mentorship program called OhioCorps, and set aside money for grants to promote broadband internet access.  For more information, visit the Ohio General Assembly’s S.B. 299 webpage here.
  • Senate Bill 257, titled “Changes to hunting and fishing laws.”  ODNR may now offer multi-year and lifetime hunting and fishing licenses to Ohio residents under S.B. 257.  Further, the bill creates a resident apprentice senior hunting license and an apprentice senior fur taker permit, and removes the statutory limits on the number of these permits a person may purchase.  The bill also creates a permit for a Lake Erie Sport Fishing District, which may be issued to nonresidents to fish in the portions of Lake Erie and connected waters under Ohio’s control.  For more information, visit the Ohio General Assembly’s S.B. 257 webpage here.
  • House Bill 225, titled “Regards plugging idle or orphaned wells.”  H.B. 225 creates a reporting system where a landowner may notify ODNR’s Division of Oil and Gas Resources about idle and orphaned oil or gas wells.  Upon notification, the Division must inspect the well within 30 days.  After the inspection, the Division must determine the priority for plugging the well, and may contract with a third party to plug the well.  To fund this, the bill increases appropriations to the Oil and Gas Well Fund, and increases the portion of the fund that must go to plugging oil and gas wells.  For more information, visit the Ohio General Assembly’s H.B. 225 webpage here.
  • House Bill 430, titled “Expand sales tax exemption for oil and gas production property.”  Certain goods and services directly used for oil and gas production have been exempted from sales and use taxes, and H.B. 430 clarifies what does and does not qualify for the exemption.  Additionally, property used to control water pollution may qualify for the property, sales, and use tax exemptions if approved by ODNR as a qualifying property.  H.B. 430 also extends the moratorium on licenses and transfers of licenses for fireworks manufacturers and wholesalers.  For more information, visit the Ohio General Assembly’s H.B. 430 webpage here.
  • Senate Bill 229, titled “Modify Board of Pharmacy and controlled substances laws.”  The Farm Bill’s opening the door for industrial hemp at the federal level has led to a lot of conversations about controlled substances, which we addressed in a previous blog post.  Once its changes take effect, Ohio’s S.B. 229 will remove the controlled substances schedules from the Ohio Revised Code, which involve the well-known numbering system of schedules I, II, III, IV, and V.  Instead, the Ohio Board of Pharmacy will have rulemaking authority to create schedules and classify drugs and compounds.  Prior to the removal of the schedules from the Revised Code, the Board of Pharmacy must create the new schedules by rule.  S.B. 229 also mentions cannabidiols, and lists them as schedule V under the current system if the specific cannabidiol drug has approval from the Food and Drug Administration.  For more information, visit the Ohio General Assembly’s S.B. 229 webpage here.

The end of 2018 effectively marked the end of the 132nd Ohio General Assembly, and 2019 marks the start of the 133rd Ohio General Assembly.  Any pending bills from the 132nd General Assembly that were not passed will have to be reintroduced if legislators wish to proceed with those bills.  Stay tuned to the Ag Law Blog for legal updates affecting agriculture from the Ohio General Assembly.

By: Peggy Kirk Hall, Friday, September 14th, 2018

It's Farm Science Review week!  Be sure to visit us in the Firebaugh Building to get your questions answered and pick up copies of our Law Bulletins and a helping of candy corn.  We'll be speaking on "Pond Liability" at the Gwynne Conservation Area on Wednesday and on "Estate Planning:  Mistakes to Avoid" in the Ask the Experts session everyday.

Here's our gathering of ag law news you may want to know:

Movement on Ohio “Watersheds in Distress” rules.  As we have reported on several times this summer, Governor John Kasich signed an executive order on July 11, 2018 directing ODA to “consider whether it is appropriate to seek the consent of the Ohio Soil and Water Commission (OSWC) to designate” certain watersheds “as watersheds in distress due to increased nutrient levels resulting from phosphorous attached to soil sediment.”  Since that time, ODA has submitted a proposed rule dealing with Watersheds in Distress.  Amendments were made to the proposed rule after evaluating the first set of public comments, and ODA is now resubmitting the rules package.  ODA reopened the proposed rule for public comments, but it closed the comment period on September 7, 2018.  Information about the proposed rules, as well as how and where to comment, can be found here (click on the “Stakeholder Review” tab and then the “Soil and Water Conservation – Watersheds in Distress OAC 901:13-1” drop down option).  A draft of the newly amended proposed rules is available here

WOTUS woes continue.  The Obama administration’s hotly contested “Waters of the United States” Rule is back in the news, and this time, where it applies is dependent on where you live.  A background on the rule can be found in our previous blog post.  The rule basically expanded which bodies of water qualify as “waters of the United States,” which in turn protected more waters under the Clean Water Act.  The rule became effective in 2015.  Since that time, U.S. District Courts in North Dakota and Georgia have issued preliminary injunctions against Obama’s WOTUS Rule, which means it cannot be carried out in twenty-four states.  Additionally,  last summer, the EPA and Army Corps of Engineers, under the direction of President Trump, announced their plan to repeal Obama’s WOTUS Rule and replace it with the definition of WOTUS “that existed prior to 2015” until a new definition could be developed. Trump’s  rule was published on February 6, 2018, giving the administration until 2020 to come up with a new definition.   However, in a ruling on August 16, 2018, in a U.S. District Court in South Carolina, Judge David Norton determined that the Trump administration “failed to comply with” requirements of the Administrative Procedure Act when it enacted its rule.  This means that the Trump rule repealing and replacing the definition of WOTUS is invalidated.  As a result of Judge Norton’s decision, in the remaining twenty-six states without an injunction, the Obama administration’s version of the rule has been reinstated.  Ohio is one of the twenty-six states where the Obama rule currently applies.  Will the Trump administration and the EPA respond to Norton’s decision by announcing yet another new WOTUS rule?  Follow the Ag Law Blog for any updates.  In the meantime, the country remains nearly split in half by which version of the WOTUS rule is carried out. 

Regulators, meet “meat.”  Under a new Missouri law, it is a criminal offense to misrepresent a product as “meat” if there is, in fact, no meat.  Missouri’s revision of its meat advertising laws took effect on August 28th, and has been dubbed by many as the first attempt by a state to regulate what qualifies as meat.  Defining meat as “any edible portion of livestock, poultry, or captive cervid carcass,” the law prohibits “misrepresenting a product as meat that is not derived from harvested production livestock or poultry.”  Violations are treated as a misdemeanor, with a fine up to $1,000 and possible jail time.  The Missouri Department of Agriculture has said that it intends to enforce the law, but that it plans to give affected companies until the start of next year to bring their labels into compliance.  Supporters of the law, like the Missouri Cattlemen’s Association, argue that it will provide consumers with accurate information about their food, and also protect meat producers from unfair labeling of plant-based or lab-grown meat alternatives.  Opponents have already filed a lawsuit to prevent enforcement, arguing that the law restricts free speech and improperly discriminates against out-of-state producers of meat alternatives.  The named plaintiff on the lawsuit is Turtle Island Foods, an Oregon company that does business under the names Tofurky and The Good Foods Institute.  The company makes plant-based food products, and is joined in its opposition by the American Civil Liberties Union of Missouri and the Animal Legal Defense Fund.  Beyond Missouri, the National Cattlemen’s Beef Association has listed the issue as a top policy priority for this year, and the U.S. Cattlemen’s Association has petitioned the USDA to adopt stricter labeling requirements.  As this issue develops, the Ag Law Blog will keep you updated.

USDA taps Commodity Credit Corporation to aid farmers.  Readers are no doubt aware of global trade disputes in which other countries have increased tariffs on American agricultural exports.  Given the extensive news coverage, the Harvest will not attempt to cover the dispute in depth; however, one point that has been less covered is the tool that the USDA has selected to provide relief to impacted farmers: the Commodity Credit Corporation.  What is it?  The Commodity Credit Corporation (CCC) is a federal government entity created during the Great Depression in 1933 to “stabilize, support, and protect farm income and prices.”  Since 1939, it has been under the control of the Secretary of Agriculture, although it is managed by a seven member Board of Directors.  CCC is technically authorized to borrow up to $30 billion from the U.S. Treasury at any one time, but due to trade agreements, that number is, in reality, much smaller.  This gives USDA access to billions of dollars in funding without having to go to Congress first.  The money can be used to provide loans or payments to agricultural producers, purchase agricultural products to sell or donate, develop domestic and foreign markets, promote conservation, and more.  CCC has no staff, but is instead administered through other USDA agencies, largely the Farm Service Agency and Agricultural Marketing Service.  On August 27th, Secretary of Agriculture Sonny Perdue announced that USDA plans to tap the Commodity Credit Corporation for up to $12 billion worth of aid to farmers affected by recent tariffs.  The Market Facilitation Program will provide direct payments to eligible corn, cotton, dairy, hog, sorghum, soybean, and wheat producers, and the Food Purchase and Distribution Program will purchase up to $1.2 billion in select commodities.  For more about the Commodity Credit Corporation, check out its website.

Bayer reports increasing number of lawsuits against newly acquired Monsanto.  Bayer, the German pharmaceutical and life sciences company that acquired Monsanto early this summer, has indicated that there are an increasing number of lawsuits in the United States alleging that its weed killers cause cancer.  According to the Wall Street Journal, there were roughly 8,700 plaintiffs seeking monetary damages from Bayer as of late August, a sharp increase from the 5,200 plaintiffs just months earlier.  Many of these lawsuits involve cancer patients who claim that Monsanto’s glyphosate-containing herbicides like Roundup caused their cancer.  As we reported in a previous edition of the Harvest, one person’s successful lawsuit against Monsanto resulted in a San Francisco jury award of $289.2 million for failing to warn consumers of the risks posed by its weed killers.  Monsanto is expected to file motions for a new trial and for the judge to set aside the verdict, and may ultimately appeal the decision.  These cancer-related claims come at a time when another Monsanto product, Dicamba, is causing great controversy.  Stay tuned to the Ag Law Blog as these lawsuits continue to develop.

By: Peggy Kirk Hall, Tuesday, July 31st, 2018

When you think of “agritourism,” corn mazes and hay rides may first come to mind.  While those activities can fall under Ohio's definition of agritourism, you may be surprised to find that farm markets, you-pick operations, farm tours, wineries and other types of farm-based activities can also fit into the legal definition of “agritourism” in Ohio.  This definition is important for purposes of Ohio’s agritourism immunity law, which can protect agritourism providers from liability for harm incurred during agritourism activities.  The law shifts the risk of liability from agritourism operators to the participants who willingly choose to engage in agritourism activities on a farm.

It's important to understand that in order to receive the law’s liability protection, each of the following conditions must exist:

Conditions for immunity from liability

1.  Qualify as an “agritourism provider.”    The law specifically protects only those who are “agritourism providers,” which means someone “who owns, operates, provides, or sponsors an agritourism activity, or an employee of such a person who engages in or provides agritourism activities, whether or not for a fee.   An important term within this definition is “agritourism,” which means “an agriculturally related educational, entertainment, historical, cultural or recreational activity, including you-pick operations or farm markets, conducted on a farm that allows or invites members of the general public to observe, participate in, or enjoy that activity.”  This definition can include a broad range of activities, such as wine tastings, educational classes, corn mazes and other recreational activities, farm tours, and farm festivals.  Note, however, that the agritourism definition requires that the activity be on a “farm,” which the law further defines as:

  • At least ten acres of land (composed of tracts, lots, or parcels), that is used for “agricultural production,”  which means the land is used for “commercial aquaculture, algaculture, apiculture, animal husbandry, poultry husbandry; the production for a commercial purpose of timber, field crops, tobacco, fruits, vegetables, nursery stock, ornamental shrubs, ornamental trees, flowers, or sod; the growth of timber for a noncommercial purpose if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use; or any combination of such husbandry, production, or growth; and includes the processing, drying, storage, and marketing of agricultural products when those activities are conducted in conjunction with such husbandry, production, or growth”  
  • Or, less than ten acres of land if there is an average yearly gross income of at least $2,500 from “agricultural production” on the land. 

2.  Post required signs.  Every “agritourism provider” must “post and maintain” warning signs in order to receive the law’s liability protection.  The purpose of this provision is to inform participants that they are voluntarily assuming the risks of many of the harms that are inherent to being on a farm.  The warning signs or sign templates are available through OSU Extension South Centers and Ohio Farm Bureau.  Each sign must:

  • Be placed in a clearly visible location at or near each entrance to the agritourism location or at the site of each agritourism activity;
  • Contain the following statement, in black letters measuring at least one inch high:

WARNING: Under Ohio law, there is no liability for an injury to or death of a participant in an agritourism activity conducted at this agritourism location if that injury or death results from the inherent risks of that agritourism activity.  Inherent risks of agritourism activities include, but are not limited to, the risk of injury inherent to land, equipment, and animals as well as the potential for you as a participant to act in a negligent manner that may contribute to your injury or death.  You are assuming the risk of participating in this agritourism activity.

Immunity from what?

The agritourism immunity law states that an agritourism provider is immune, or protected from liability, in any civil action for an injury to a person participating in the agritourism activity as long as that person was injured due to a “risk inherent in an agritourism activity.”  An “inherent risk” is a “danger or condition that is an integral part of an agritourism activity,” that would be difficult for an agritourism provider to completely minimize.  According to the law, “inherent risks” include:

  • The surface and subsurface conditions of the land;
  • The behavior or actions of wild animals not kept by or under the control of an agritourism provider;
  • The behavior or actions of domestic animals other than vicious or dangerous dogs;
  • The ordinary dangers associated with structures or equipment ordinarily used in farming or ranching operations;
  • The possibility of contracting illness resulting from physical contact with animals, animal feed, animal waste, or surfaces contaminated by animal waste;
  • The possibility that a participant may act in a negligent manner, including by failing to follow instructions given by the agritourism provider or by failing to exercise reasonable caution while engaging in the agritourism activity that may contribute to injury to that participant or another participant. 

If a participant in an agritourism activity is harmed and sues the agritourism provider for injuries caused by any of the above situations, the law protects the provider from any liability or monetary responsibility for those injuries.  In addition, the law specifically states that an agritourism provider is not required to eliminate such inherent risks on the property. 

Exceptions to immunity

Although the agritourism immunity law provides civil immunity under certain circumstances, the immunity is not absolute.  The law also states that an agritourism provider could be legally responsible for injury to a participant if the agritourism provider:

  • Fails to post and maintain signs (discussed above)
  • Acts with a willful or wanton disregard for the safety of the participant,
  • Purposefully causes harm to the participant,
  • Acts or fails to act in a way that constitutes criminal conduct that causes harm to the participant,
  • Has or should have actual knowledge of an existing dangerous condition that is not an inherent risk, and does not make the dangerous condition known to the participant. 

Use the agritourism law to your advantage

Agritourism activities can provide many benefits, such as additional income and diversification opportunities for farmers, unique cultural and recreational experiences for farm visitors and education about agriculture.  But there are always liability risks to having people on the farm, which can impact a farmer’s risk exposure.  Take advantage of the agritourism immunity law by ensuring that the operation qualifies for its provisions and does not fall within any of the exceptions from immunity protection.  Even with this liability protection, however, operators should continuously assess the property for safety risks to minimize the possibility of visitor injuries. 

The agritourism immunity law is in Ohio Revised Code section 901.80.  For further information, see our Agritourism Law Bulletin and a previous post, which also explain the agritourism law’s protections from county and township zoning for agritourism operations.

By: Peggy Kirk Hall, Thursday, December 07th, 2017

Decisions announced today by the Ohio Supreme Court will allow landowners to challenge Current Agricultural Use Valuation (CAUV) land values established by Ohio’s tax commissioner by appealing the values to the Board of Tax Appeals.

Twin rulings in cases filed by a group of owners of woodland enrolled in CAUV, Adams v. Testa, clarify that when the tax commissioner develops tables that propose CAUV values for different types of farmland, holds a public hearing on the values and adopts the final values by journal entry, the tax commissioner’s actions constitute a “final determination” that a landowner may immediately appeal to the Board of Tax Appeals. The Board of Tax Appeals had argued that the adoption of values is not a final determination and therefore is not one that a landowner may appeal to the Board.

The tax commissioner forwards the CAUV tables to the county auditors, who must use the values for a three year period. An inability to appeal the values when established by the tax commissioner would mean that a landowner must wait until individual CAUV tax values are calculated by the county auditor, who relies upon the tax commissioner’s values to calculate the county values. As a result of today’s decision, landowners may appeal the values as soon as the tax commissioner releases them.

The landowners also claimed that the process and rules for establishing the CAUV values are unreasonable and not legal. However, the Court rejected those claims.

For an excellent summary of the Adams v. Testa cases by Court News Ohio, follow this link.

By: Peggy Kirk Hall, Friday, December 01st, 2017

The first hearing for a bill that would limit legal liability for Ohio beekeepers took place this week before the House Economic Development, Commerce and Labor Committee. The bill’s sponsor, Rep. Dick Stein (R-Norwalk), offered several reasons for the proposal, including that beekeeping has recently grown in popularity along with increased demand for honey products, bees play an important role in pollinating plants and contribute to the agricultural economy, and beekeepers have incurred expenses defending themselves against lawsuits that are typically unsuccessful.

House Bill 392 aims to provide immunity from liability for any personal injury or property damage that occurs in connection with keeping and maintaining bees, bee equipment, queen breeding equipment, apiaries, and appliances, as long as the beekeeper does all of the following:

  1. Registers the apiary with the Ohio Department of Agriculture, as is currently required by Ohio law;
  2. Operates according to Ohio Revised Code Chapter 909, which contains provisions for apiaries;
  3. Implements and complies with the best management practices for beekeeping as established by the Ohio State Beekeepers Association; and
  4. Complies with local zoning ordinance provisions for apiaries. Note that zoning ordinances for apiaries would likely exist only in incorporated areas, as Ohio’s “agricultural exemption from zoning” prohibits townships and counties from using zoning to regulate agricultural activities like beekeeping in most situations.

A beekeeper would not have immunity from liability resulting from intentional tortious conduct or gross negligence, however.

The second hearing for the bill will take place on December 5, 2017. Information about the proposal is available here.

By: Peggy Kirk Hall, Monday, August 14th, 2017

Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Agricultural and Food Law Consortium is holding a webinar regarding Using LLCs in Agriculture: Beyond Liability Protection this Wednesday, August 16th at 12:00 (EST).

The Limited Liability Company (LLC) is a relatively new type of business entity. The first LLC statute passed in Wyoming in 1977. Since then, all fifty states passed legislation permitting LLCs as an operating entity. Many Ohio farmers use the LLC as their preferred operating entity.

In Ohio, an LLC is a legal entity created by Ohio statute. An LLC is considered to be separate and distinct from its owners. An LLC may have a single owner in Ohio, or it may have numerous owners. LLCs combine the best attributes of a corporation and a partnership. Individuals, corporations, other LLCs, trusts, and estates may be members in a single LLC. There is no limit on maximum members.

The Importance of an Operating Agreement

When an agricultural operation chooses to operate as an LLC, that operation must consider drafting an operating agreement. An operating agreement specifies the financial responsibilities of the parties, how profits and losses are shared among members within the LLC, limitations on transfers of membership, and other basic principles of operation.

If an LLC does not choose to draft an operating agreement, Ohio’s default rules apply. Ohio law prescribes default rules of operation for LLCs in R.C. Chapter 1705. However, LLC members often wish to modify state rules to tailor an LLC to their business. Ideally, agricultural operators should draft an operating agreement with the assistance of an attorney.

Single Member LLCs

Every state in the Midwest permits single-member Limited Liability Companies (SMLLCs). A single member LLC is an LLC which has one member or manager; that means that there are no other owners or managers of that LLC. In 2016, Ohio enacted R.C. 1705.031 which states that Ohio LLC laws apply to all LLCs, including those with only one member. Therefore, small agribusinesses that have only one member are not prevented from forming an LLC. 

Will a Personal Guaranty on a Loan Affect Limited Liability Protection?

Ohio farmers operating as an LLC enjoy the benefits of limited liability protection. Usually, that means that the debts and obligations of a farm LLC operation are solely those of the LLC. That means that a farmer is not personally liable for any debts or obligations incurred by the LLC.

However, lenders, implement dealers, financial institutions, and others are finding ways around an LLC’s personal liability protection. Those parties are increasingly requiring that the members and managers of LLCs provide personal guarantees. That is, a member or manager of an LLC agrees to be personally liable for a debt or obligation, if an LLC is not able to pay.

A full discussion of personal guarantees and LLCs in an earlier blog post is here

LLCs are not Invincible

Limited Liability Companies are extremely popular among Ohio farmers. However, LLCs merely limit liability. LLCs don’t create a perfect liability shield, they are subject to a concept known as “veil piercing” where the owners of a company are held personally liable for the actions of the company.

Generally, a person cannot use a corporation to commit fraud on others or to use a corporation as an alter ego for a member’s own personal gain. Plainly speaking, Ohio courts may hold an owner of an LLC liable in certain cases of fraud committed by the LLC or where an LLC is undercapitalized and is not treated as a separate entity from a member (i.e. the LLC is used as an “alter ego”). While this is not a common scenario among farm business LLCs, LLC members should be aware that a business’s status as an LLC will not shield it from liability in all instances.

Carrying Liability Insurance

Many LLC owners consider the protections under Ohio’s LLC laws to be sufficient. Some LLC members are satisfied that their personal assets are sufficiently protected and separated from LLC assets and LLC liabilities. However, every business should have liability insurance. Liability insurance is a relatively inexpensive means of managing liability exposure for injuries and physical damage to a third party. While insurance doesn’t lower liability, it gives the business a way to pay for damages in the event of an incident.

The question of “how much liability insurance should a farm operation have?” is a difficult one. The amount of insurance that a farm should have must be determined on a case-by-case basis. Factors such as farm size, type of operation, location, and other factors impact the insurance needs of a farm operation.

More information on LLCs and other alternative business organizations through the National Agricultural Law Center is here.

 

By: Peggy Kirk Hall, Thursday, May 04th, 2017

Written by: Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Grain Inspection, Packers and Stockyards Administration (GIPSA) is delaying the implementation of the Farmer Fair Practices rules. GIPSA is a USDA agency that facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products. One purpose of GIPSA is to promote fair and competitive trading practices for the benefit of consumers and agriculture.

On April 11, 2017, the USDA announced that GIPSA delayed the implementation of the Farmer Fair Practices rules until October 19, 2017. The delayed Farmer Fair Practices rules were originally set to be effective on December 20, 2016. According to the USDA, the delayed rules would protect chicken growers from retaliation by processors when growers explore opportunities with other processors, discuss quality concerns with processors, or when refusing to make expensive upgrades to facilities. GIPSA concludes that the Farmer Fair Practices rules alleviates these issues. However, several livestock groups argue that the delayed rules would have adverse economic effects on the livestock industry.

Opportunity for Public Comment

During the delay, the USDA is seeking public comment on the Farmer Fair Practices rules. The comment period offers the agricultural community an opportunity to suggest what action the USDA should take in regard to the Farmer Fair Practices rules. The USDA asked the public to suggest one of four actions that the USDA should take:

  1. Let the delayed rules become effective
  2. Suspend the delayed rules indefinitely
  3. Delay the effective date of the delayed rules further, or
  4. Withdraw the delayed rules

After receiving public comments, the USDA will consider the comments and make an informed decision regarding the delayed Farmer Fair Practices rules. According to Drovers, Secretary of Agriculture Sonny Perdue recently visited Kansas City, Missouri to speak with farmers, ranchers, and industry members. During the event, Secretary Perdue responded to a question about the GIPSA rule. “We’re going to look at it very closely,” said Perdue. The full Drovers article is here.

More information on the delayed GISPA rules is here. Leave a public comment on the delayed rules here by clicking “Comment Now.”

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