Business and Financial

By: Peggy Kirk Hall, Friday, July 05th, 2019

With many farmers in Ohio unable to plant before the Final Planting Date for crop insurance, questions are arising about planting and harvesting cover crops on those prevented planting acres.  USDA Risk Management Agency (RMA) rules allow operators to plant cover crops on prevented planting acres and to hay, graze, or cut the cover crops for silage after the posted “harvest date.”  In previous years, the harvest date for cover crops was November 1.   If an operator harvested the cover crop before that date, the prevented plant payment would be reduced from 100% to 35%. 

The RMA has changed the harvest date for 2019, however.  In response to reduced livestock feed supplies that will result from the loss of planted acres this year, the RMA has moved up the cover crop harvest date to September 1.  An operator who plants a cover crop after the Final Planting Date and then cuts the crop for forage on or after September 1 can still receive 100% of the prevented plant payment, even if the operator sells the forage and regardless of whether the operator planted the cover crop during or after the Late Planting Period.  The Final Planting Date in Ohio was June 5 for corn and June 20 for soybeans; the Late Planting Period ended on June 20 for corn and runs until July 15 for soybeans.  Note, too, that a cover crop that was in the ground before the Final Planting Date but was not terminated because the operator couldn’t plant the intended corn or soybean crop can also be harvested for forage on or after September 1.

The RMA’s chart below illustrates payment scenarios for cover crops planted and harvested on prevented planting acres.

Cover Crop Planted

Disposition

Pay 100%

Pay 35%

Pay 0%

Before Final Planting Date (FPD) of the Prevented Crop**

Hayed/Grazed/Cut for silage during or before the end of the LPP

X

 

 

Hayed/Grazed/Cut for silage after the LPP, but before Sept 1

 

X*

 

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

 

X

 

During Late Planting Period (LPP) of the Prevented Crop

Hayed/Grazed/Cut for Silage before Sept 1

 

 

X

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

 

X

 

After Late Planting Period of the Prevented Crop

Hayed/Grazed/Cut for silage before Sept 1

 

X

 

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

X*

 

*Provided the crop claimed as a cover crop is not the prevented crop and all other policy provisions are met.

**Example: Fall-Planted Cover Crop; Spring PP Crop

Other requirements for cover crops

While the cover crop harvest date seems pretty straightforward, don’t be fooled--crop insurance provisions can be tricky.  Farmers planning to put out cover crops on prevented plant acres should work closely with their crop insurance agents to ensure that all policy provisions and documentation requirements are met. 

An initial requirement is that the cover crop planted must meet the definition of an “acceptable cover crop” for crop insurance purposes.   The RMA considers an acceptable cover crop as one that is recognized by agricultural experts as agronomically sound for the area for erosion control or other purposes related to conservation or soil improvement and planted at the recommended seeding rate.  OSU agricultural experts can help provide guidance on acceptable cover crops.   

Operators should also be aware that many seed licenses, particularly for bio-engineered seeds, restrict the use of the seed to grain production only.  In those situations, planting the seed for a cover crop or harvesting it for silage would violate the seed licensing contract and create a liability situation for the operator.

Additionally, note that crop insurance provisions prohibit harvesting the cover crop for grain or seed, and an operator who does so will lose all of the prevented plant payment.  The cover crop harvest can also impact other provisions, such as the farm’s Actual Production History (APH) yields.  These and other provisions highlight the importance of a close working arrangement with the crop insurance agent in order to comply with RMA’s cover crop provisions.

For RMA’s guidance on Prevented Planting Flooding, go to this page.  The site contains a comprehensive list of questions and answers on prevented planting, along with information about the 2019 cover crop provisions.   

By: Evin Bachelor, Monday, June 10th, 2019

The biennial budget remains the center of attention for members of the Ohio General Assembly, but some other bills have made progress since our last legislative update.  We will post a separate blog post about the biennial budget soon, but for now here is a review of other legislative activity at the statehouse. 

New legislation since our last legislative update

  • Senate Bill 159, titled “Grant tax credits to assist beginning farmers.”  This bill is essentially the same as House Bill 183, which seeks to provide tax incentives to beginning farmers along with those willing to help them build a farm operation.  Introducing the bill in the Senate while the House considers another bill allows the process to potentially go more quickly.  Instead of waiting on the House to complete all of its committee hearings and approve the bill, the Senate can start its own process.
  • House Bill 223, titled “Alter setback-wind farms of 5 or more megawatts.”  In 2014, the Ohio General Assembly modified the distance that wind turbines must be setback from an adjacent property line.  House Bill 223 would modify the setback law to base the setback on the distance from the nearest habitable residential structure on a neighboring property instead of the property line.  The setback requirement would affect future project certificates, as well as any amendments made to an existing certificate.  Click HERE for more information about the bill from the Ohio General Assembly’s website.

Legislation that we continue to follow

Here’s a status update on bills we covered HERE in March and HERE in April.  Access each bill’s webpage on the Ohio General Assembly website by clicking on the bill number in the following tables. 

 

Legislation passed by the Senate and currently under consideration in the House

Category

Bill No.

Bill Title

Status

Hemp

SB 57

Decriminalize hemp and license hemp cultivator

- Passed Senate

- Passed House Ag & Natural Resources committee

- Awaits vote of the full House of Representatives

Regulations

SB 1

Reduce number of regulatory restrictions

- Passed Senate

- Referred to House State & Local Government Committee

Business Law

SB 21

Allow corporation to become benefit corporation

- Passed Senate

- Referred to House Civil Justice Committee

 

Legislation going through the committee process, but not yet passed in either chamber

Category

Bill No.

Bill Title

Status

Watershed Planning

SB 2

Create state watershed planning structure

- Completed third hearing in Senate Ag & Natural Resources Committee

Tax

HB 183

Allow tax credits to assist beginning farmers

- Completed second hearing in House Ag & Rural Development Committee

Estate Planning

HB 209

Abolish estate by dower

- Completed third hearing in House Civil Justice Committee

Animals

HB 24

Revise humane society law

- Passed House Ag & Rural Development Committee

- Awaits vote of the full House of Representatives

Oil and Gas

HB 55

Require oil and gas royalty statements

- Completed first hearing in House Energy & Natural Resources Committee

Mineral Rights

HB 100

Revise requirements governing abandoned mineral rights

- Completed first hearing in House Energy & Natural Resources Committee

Energy

SB 119

Exempt Ohio from daylight savings time

- Completed first hearing in Senate General Government and Agency Review Committee

Local Gov’t

SB 114

Expand township authority-regulate noise in unincorporated areas

- Completed second hearing in Senate Local Government, Public Safety, & Veterans Affairs Committee

Property

HB 103

Change law relating to land installment contracts

- Completed second hearing in House Civil Justice Committee

Regulation of Alcohol

HB 160

Revise alcoholic ice cream law

- Completed third hearing in House State & Local Government Committee

Regulation of Alcohol

HB 179

Exempt small wineries from retail food establishment licensing

- Completed first hearing in House Health Committee

 

Legislation not on the move

These bills have not made much progress.  The biggest action taken on each so far has been referring the bill to a committee, but no committee has yet to hold a hearing on any of the bills.  Remember that we are in the middle of budget season, and only in the first six months of this legislative cycle, so the bills could still see activity later.

Category

Bill No.

Bill Title

Status

Animals

HB 124

Allow small livestock on residential property

- Referred to House Ag & Rural Development Committee

Animals

HB 33

Establish animal abuse reporting requirements

- Referred to House Criminal Justice Committee

Energy

HB 20

Prohibit homeowner associations placing limits on solar panels

- Referred to House State & Local Government Committee

Local Gov’t

HB 48

Create local government road improvement fund

- Referred to House Finance Committee

Local Gov’t

HB 54

Increase tax revenue allocated to the local government fund

- Referred to House Ways & Means Committee

Oil and Gas

HB 94

Ban taking oil or natural gas from bed of Lake Erie

- Referred to House Energy & Natural Resources Committee

Oil and Gas

HB 95

Revise oil and gas law about brine and well conversions

- Referred to House Energy & Natural Resources Committee

Regulation of Alcohol

HB 181

Promote use of Ohio agricultural goods in alcoholic beverages

- Referred to House Ag & Rural Development Committee

Tax

HB 109

Grant tax exemption for land used for commercial maple syruping

- Referred to House Ways & Means Committee

 

By: Evin Bachelor, Tuesday, May 21st, 2019

A jury recently returned a verdict awarding a California couple $2.055 billion (yes, billion) in damages after the couple alleged that the glyphosate in Roundup caused their cancer.  This is the third California jury to be convinced that the Monsanto herbicide, which was acquired by Bayer last year, caused or substantially contributed to a cancer diagnosis of non-Hodgkin lymphoma.  A lot has happened since we last reported on these lawsuits HERE and HERE, so it is time to look at the glyphosate lawsuits, jury verdicts, and the larger debate.

Thousands of glyphosate lawsuits have been filed against Monsanto/Bayer.  Over 13,000 cases have been filed alleging almost the same thing: that a plaintiff’s cancer was caused by the glyphosate in Roundup.  About two years ago there were only a few hundred such cases.  News stories about large jury verdicts have caught people’s attention, as have commercials that some law firms have aired to find clients for this type of litigation.  The vast majority of these cases have been brought in state courts, which have a reputation for being somewhat quicker than federal courts, but there are still over a thousand in federal courts across the country.  So far, only three of these cases have reached a jury, and all have been in California.

First California jury awarded a plaintiff $289 million.  Dewayne Johnson was a school groundskeeper who routinely used Roundup as part of his job.  He was diagnosed with non-Hodgkin’s lymphoma in 2014, and believed that his diagnosis was a result of at least two prior incidents where he was soaked with Roundup.  His lawsuit against Monsanto in California state court was chosen to be the first case to be tried before a jury because his doctors did not expect him to live for much longer.

The San Francisco jury sided with Mr. Johnson and awarded him $39 million in compensatory damages, and $250 million in punitive damages.  Compensatory damages are meant to directly compensate for harm, and can include medical expenses, lost wages, and emotional distress.  Punitive damages, on the other hand, are meant to punish the party in the wrong and deter a similar course of conduct in the future.  The judge in the case ultimately reduced the punitive damages to match the compensatory damages, leaving Mr. Johnson with a potential $78 million recovery.  However, the decision is on appeal.

Second California jury awarded a plaintiff $80 million.  Edwin Hardeman sprayed Roundup on his property for about three decades.  In 2014, he was diagnosed with non-Hodgkin’s lymphoma, and decided to file a lawsuit two years later after learning about research connecting his form of cancer to Roundup use.  His lawsuit was the first to be heard in federal court.  This San Francisco jury awarded Mr. Hardeman $5.8 million in compensatory damages, and $75 million in punitive damages.  However, the decision is also on appeal.

Third California jury awarded the plaintiffs $2.055 billion.  The first two cases certainly sent shock waves through the news, but the size of this third jury award sent more than just shock.  The plaintiffs, Alva and Alberta Pilliod, are a California couple who were diagnosed with non-Hodgkin’s lymphoma within four years of each other.  The jury awarded the couple $55 million in compensatory damages, along with $1 billion in punitive damages each.  Bayer has promised to appeal this decision as well.

Will the parties ultimately get these punitive damages?  It is hard to answer this question just yet, but it is likely that the punitive damages awards will be reduced.  Courts are often weary about awarding punitive damages absent bad intentions by the party being punished, and few verdicts result in a punitive damages award.  When they are awarded, there are constitutional limitations on how large the award can be.  The U.S. Supreme Court has said that a punitive damages award that exceeds a compensatory damages award by more than a single digit multiplier likely violates a party’s due process rights and is not likely to be upheld.  This means that if a punitive damages award exceeds nine or ten times the compensatory damages, courts are to look at that jury’s decision with a high level of suspicion.  However, such an award could ultimately be awarded if the evidence of bad intent merits such an award, and if such award is necessary to deter future bad acts.

Bayer’s first hope on appeal is to have the jury decisions invalidated altogether by arguing that the juries were incorrect in linking these plaintiff’s cancer to their prior use of Roundup.  In order to succeed, it must prove that the decisions of the three juries were against the “manifest weight of the evidence,” meaning that they relied too much on one pile of evidence leaning one way while ignoring a mountain of evidence going the other way.  If it can succeed on this, then it would not have to pay damages to the plaintiffs.  However, this can be a high burden for an appellant to satisfy because of our legal system’s deference to juries.  If Bayer cannot succeed on avoiding fault, it would still argue that the jury awards are excessive.

In the first case, the initial jury award had a single digit multiplier of roughly six; however, the judge viewed even that multiplier as excessive and reduced the punitive damages award to match the compensatory damages award.  In the second case, the initial jury award had a multiplier of over twelve, which could give Bayer a strong argument on appeal if it is ultimately determined that it must pay the plaintiffs.  However, Bayer is also challenging the basis of the jury’s decision on appeal.

The third case is simply on a different level.  The $2 billion in punitive damages is 36 times the compensatory damages awarded to the couple.  The trial judge may respond like the first trial judge and reduce the compensatory damages award; however, that is not a guarantee.  What is likely a guarantee is that Bayer will appeal.

Does glyphosate cause non-Hodgkins lymphoma?  This question will continue to be a debate for years, and we as attorneys are not in the best spot to make any sorts of determinations based on the scientific research.  The U.S. Environmental Protection Agency and a number of scientific studies say no; however, the World Health Organization said in 2015 that glyphosate was “probably carcinogenic to humans.”  It was that announcement, and some research that followed, which triggered the wave of lawsuits we see today.  Bayer is using the first set of research to defend its product, while the plaintiffs are using the second set of research to attack Roundup.  The attorneys in the first three cases tried to undercut Bayer’s use of EPA and university research by arguing Monsanto had influenced the first set of research in a manner favorable to it.

For better or worse, what matters in a jury trial is less what the science says, and more what the jury believes the science says.  So far, three California juries have been convinced that there is enough science to say that glyphosate caused or contributed to the cancer of four plaintiffs.  The first non-California cases are beginning to be scheduled for later this year, including in Monsanto’s former home in St. Louis.  As of now, it remains to be seen whether the first three cases will be the outliers or the norms for the glyphosate litigation nationwide.

By: Ellen Essman, Thursday, April 25th, 2019

A case out of the Fourth Appellate District in Gallia County serves as a lesson for farmers in Ohio who have roadside stands and sell products using the honor system.  This case involves a honey stand owned by Frederick Burdell.  He kept cash in the freezer at his stand so customers could make change for their purchases. The case, State v. Montgomery, was an appeal from the Gallipolis Municipal Court’s conviction of first-degree misdemeanor theft of honey and money from a “self-service honey stand.”

On appeal, the person convicted of theft claimed that the State of Ohio did not have enough evidence to convict her, and that her conviction was against the manifest weight of the evidence.  In other words, she argued that the State did not have enough evidence to prove, beyond a reasonable doubt, that she committed the crime.  The appellate court did not agree with the defendant’s argument; her conviction was upheld.  For owners of roadside stands, the most relevant part of this case may not be the legal arguments, but instead, the evidence that was provided by the owner of the honey stand.  Mr. Burdell’s surveillance setup around the honey stand helped the jury find the defendant to be guilty of theft.  Owners of roadside stands for honey and other agricultural products should take note of the tools Mr. Burdell had in place to surveil his stand, as well as what he might have done to better protect his business from theft. 

The appellate court’s opinion reveals that Mr. Burdell had multiple cameras set up around the honey stand, which were able to capture footage of a car driving down the driveway and a passenger exiting the car.  From another viewpoint, a camera was able to record the defendant taking two items out of the refrigerator and all the cash from the freezer.  Another shot provided a close-up, “head to toe” view of the woman walking away.  What is more, the video captured the actions in color—so the jury was able to see the color of the car and the hair color of the thief.  The appellate court found that the video evidence was sufficient enough for the trial court to reach the decision that the defendant was the perpetrator.

 Owners of roadside stands can learn from Mr. Burdell’s set-up if they want to protect themselves from theft.  Multiple color cameras placed at multiple angles around the area helped Mr. Burdell recover some of his loss from the theft.  Owners may want to test cameras to make sure they are set up at good angles.  In addition, although it is not clear from this opinion whether or not Mr. Burdell had security lights and other lighting around his stand, owners of roadside stands may want to consider the lighting around their premises—inadequate lighting might be detrimental to seeing what is happening in surveillance footage.

 The trial court ultimately awarded Mr. Burdell $20 in restitution for the theft, which was the value of the honey stolen.  Mr. Burdell was not reimbursed for the money that was stolen, apparently because he could “not state…with certainty” how much money was taken from the freezer, instead he guessed it could have been up to $50.  There are certainly numerous tools roadside stand owners can use to keep track of money in their stands more accurately.  Owners can keep detailed records of what products are in their stand at any given time and their prices, so they know exactly how much money should be in the cash box at all times, even after customers make change.  Roadside stand owners can also make sure they or an employee or family member monitors the area around the stand from time to time, counts the cash, and possibly take away excess cash not needed at the site and store it in a safer place.  Essentially, any actions an owner can take to keep track of how much cash is in a stand with more accuracy could prove helpful in recovering stolen cash if they ever find themselves in a situation like Mr. Burdell. 

While the theft from Mr. Burdell’s self-service honey stand was unfortunate, it may serve as a helpful reminder to farmers who own similar honey, produce, or other stands of what they can do to protect their businesses.  It is also timely information as farmers prepare for spring and summer sales from roadside stands.  For those interested in more information on the case, the full opinion is available here

By: Evin Bachelor, Wednesday, April 24th, 2019

Since our last legislative update in March, Ohio’s legislators and staffers have been busy introducing more legislation.  As of this morning, there are 332 bills that have been introduced by members of the Ohio General Assembly since January.  Some have already passed both the Ohio House and Senate, but most are still pending.  While we cannot write about every pending bill, the following bills relate to agricultural, local government, or natural resource law.  In addition to these bills that we have not yet covered, see the end of this post for an update about bills we mentioned in our last blog post.

Tax

  • Senate Bill 183, titled “Allow tax credits to assist beginning farmers.”  Many agricultural news outlets quickly picked up on this bill.  The bill would authorize two nonrefundable tax credits.  One is for beginning farmers who attend a financial management program, while the other is for individuals or businesses that sell or rent farmland, livestock, buildings, or equipment to beginning farmers.  The Ohio Department of Agriculture would be responsible for certifying individuals as beginning farmers and for approving eligible financial management programs.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • House Bill 109, titled “Grant tax exemption for land used for commercial maple syruping.”  The bill would exempt “maple forest land” from having to pay property taxes.  The landowner would have to apply for the designation with the Ohio Department of Taxation.  Eligible lands are those lands bearing a stand of maple trees where 1) an average of at least thirty taps are drilled each year into at least fifteen different maple trees per acre of land, 2) the harvested sap is incorporated into a maple product for commercial sale, 3) the land is managed under a forest land maintenance plan, and 4) the property has ten or more acres or the sap harvest produces an average yearly gross income of more than $2,500.  Note that all four requirements must be met in order to qualify as an exempt maple forest land.  Click HERE for more information about the bill.

Real property

  • House Bill 103, titled “Change law relating to land installment contracts.”  Ohio’s Land Installment Contract Law, which applies to contracts involving properties with a residence but not contracts involving only open farmland, would see some significant changes under this proposed legislation.  The bill would shift the burden of paying property taxes and homeowner’s insurance from the buyer to the seller.  The seller would also be prohibited from holding a mortgage on the property.  The contract would have to include provisions stating that the seller is responsible for all repairs and maintenance on the property.  Interest rates would also be capped so that the rate cannot exceed the Treasury bill rate for loans of the same length of time by 2%.  For example, if a 5-year land installment contract is entered into on September 7th and the 5-year Treasury bill rate on that day is 2.64%, the interest rate for the land installment contract would not be able to exceed 4.64% under this bill.  Click HERE for more information about the bill, and HERE for the current official bill analysis.

Estate planning

  • House Bill 209, titled “Abolish estate by dower.”  Dower provides a surviving spouse with rights in any real property owned by a decedent spouse.  This bill would end dower estates moving forward, but any interests that vest before the change would take effect would still be valid.  Click HERE for more information about the bill.

Local government

  • Senate Bill 114, titled “Expand township authority-regulate noise in unincorporated area.”  A board of township trustees is currently limited to regulate noise coming from either areas zoned as residential or premises where a D liquor permit has been issued.  The bill would expand the township’s authority to regulate noise anywhere within the unincorporated territory of the township.  However, the bill does not affect another section of the law that exempts agriculture from noise ordinances, so agricultural activities would not be subject to any new noise ordinances, should this law pass.  Click HERE for more information about the bill, and HERE for the current official bill analysis.
  • Senate Bill 12, titled “Change laws governing traffic law enforcement.”  Notably for townships, this bill would prohibit township law enforcement officers or representatives from using a traffic camera on an interstate highway.  Click HERE for more information about the bill, and HERE for the current official bill analysis.

Regulation of Alcohol

  • House Bill 181, titled “Promote use of Ohio agricultural goods in alcoholic beverages.”  The bill would authorize the Ohio Department of Agriculture to create promotional logos that producers of Ohio craft beer and spirits may display on their products.  Specifically, the bill would authorize an “Ohio Proud Craft Beer” and an “Ohio Proud Craft Spirits promotion.  Click HERE for more information about the bill.
  • House Bill 160, titled “Revised alcoholic ice cream law.”  Under current Ohio law, those wishing to sell ice cream containing alcohol must obtain an A-5 liquor permit and can only sell the ice cream at the site of manufacture, and that site must be in an election precinct that allows for on- and off-premises consumption of alcohol.  This bill would allow the ice cream maker to sell to consumers for off-premises enjoyment and to retailers that are authorized to sell alcohol.  Click HERE for more information about the bill.
  • House Bill 179, titled “Exempt small wineries from retail food establishment licensing.”  The bill would exempt small wineries that produce less than 10,000 gallons of wine annually from having to obtain a retail food establishment license in order to sell commercially prepackaged foods.  The sales of the prepackaged foods cannot exceed more than 5% of the winery’s gross annual receipts.  The winery would have to notify the permitting authority that it is exempt, and also notify its customers about its exemption.  Click HERE for more information about the bill.

Energy

  • House Bill 20, titled “Prohibit homeowner associations placing limits on solar panels.”  The bill would prohibit homeowners and neighborhood associations, along with civic and other associations, from imposing unreasonable restrictions on the installation of solar collector systems on roofs or exterior walls under the ownership or exclusive use of a property owner.  Condominium properties would similar be prohibited from imposing unreasonable restrictions where there are no competing uses for the roof or wall space where a solar collector system would be located.  According to the bill analysis, an unreasonable limitation is one that significantly increases the cost or significantly decreases the efficiency of a solar collector system.  Individual unit owners would also have the right to negotiate a solar access easement.  Click HERE or more information about the bill, and HERE for the current official bill analysis.
  • Senate Bill 119, titled “Exempt Ohio from daylight savings time.”  The bill would require Ohio to observe Daylight Savings Time on a permanent basis effective March 8, 2020.  The state’s clocks would spring forward in March, but there would be no falling back in the fall.  Click HERE for more information about the bill, and HERE for the current official bill analysis.

As for the bills that we previously covered in our March legislative update, the following chart explains where those bills stand.  Those that have passed at least one chamber have their passage status underlined in the column on the right.  Those that have had at least one committee hearing list the number of hearings, while those that have not had any activity in committee state only the committee that the bill has been referred to from the floor.

Category

Bill No.

Bill Title

Status

Hemp

SB 57

Decriminalize hemp and license hemp cultivation

- Passed Senate

- Completed first committee hearing in House

Watershed Planning

SB 2

Create state watershed planning structure

- Referred to Senate Agriculture and Natural Resources Committee

Animals

HB 24

Revise humane society law

- Completed third committee hearing in House

Animals

HB 124

Allow small livestock on residential property

- Referred to House Agriculture and Rural Development Committee

Oil and Gas

HB 55

Require oil and gas royalty statements

- Completed first committee hearing in House

Oil and Gas

HB 94

Ban taking oil or natural gas from bed of Lake Erie

- Referred to House Energy and Natural Resources Committee

Oil and Gas

HB 95

Revise oil and gas law about brine and well conversions

- Referred to House Energy and Natural Resources Committee

Mineral Rights

HB 100

Revise requirements governing abandoned mineral rights

- Referred to House Energy and Natural Resources Committee

Regulations

SB 1

Reduce number of regulatory restrictions

- Completed three committee hearings in Senate

Business Law

SB 21

Allow corporation to become benefit corporation

- Passed Senate

- Completed first hearings in two separate House committees

Animals

SB 33

Establish animal abuse reporting requirements

- Completed fifth committee hearing in Senate

Local Gov’t

HB 48

Create local government road improvement fund

- Referred to House Finance Committee

Local Gov’t

HB 54

Increase tax revenue allocated to the local government fund

- Referred to House Ways and Means Committee

Property

HB 74

Prohibit leaving junk watercraft or motor uncovered on property

- Completed first committee hearing in House

By: Peggy Kirk Hall, Wednesday, April 10th, 2019

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

The United States Department of Agriculture (USDA) announced last week that farmers.gov will now feature two new tools.  One will help farmers navigate the application process for obtaining temporary agricultural workers under H-2A, and the second will help farmers understand and manage their USDA-backed farm loans.  The press release explained that the USDA values the experience of its customers, and that it developed these tools after hearing feedback on the need for simple, technology based resources to help farmers.  Unveiled in 2018, farmers.gov allows users to apply for USDA programs, process transactions, and manage their accounts.

Customized H-2A checklists based on the needs of an individual farmer

Many farmers need seasonal or temporary workers for planting, cultivating, and harvesting crops.  The seasonal nature of agriculture can make it difficult for farmers to find an adequate supply of domestic labor willing to fill the temporary positions.  To relieve this difficulty, the federal government created the H-2A temporary agricultural worker program to allow these farmers to hire workers from foreign countries to supplement the domestic labor market on a temporary or seasonal basis.  Farmers must demonstrate that there are not enough U.S. workers able, willing, qualified, and available for the temporary work, and that the H-2A workers will not result in reduced wages for other U.S. workers.

Understanding the H-2A process has long been complex and confusing, but a new tool focused on education for smaller producers includes a revamped website and an interactive checklist tool.  The new website explains the basics of the program, includes an interactive checklist tool to create custom checklists, and gives an estimate of the costs of hiring H-2A workers.

The interactive checklist tool is a helpful way for producers to learn about the steps they need to take to obtain the labor that they need.  In the past, websites would rely heavily on producers to sift through information and determine the requirements that they needed to follow.  Now, the interactive tool asks questions one at a time to generate a custom checklist. 

When using the tool, producers will first be asked whether this will be their first time hiring workers using the H-2A Visa Program.  If the producer answers yes, they will be asked when they need the labor.  If the producer answers no to the first question, they will be asked whether they are extending the contract of workers that they are currently employing.  Ultimately, the producer will be asked when they need the labor.  At the end of the questions, the tool will provide a checklist that the producer will use to determine what steps he or she needs to take to obtain H-2A labor.  The checklists are designed to be easy to understand and to make the process less confusing.

View information about your USDA-backed farm loan online

The USDA offers farm ownership and operating loans through the Farm Services Agency to family-size farmers and ranchers who cannot obtain commercial credit.  Farmers.gov now allows producers to view information about these USDA-backed farm loans through a secure online account.  Producers can view loan information, history, and payments from a desktop computer, tablet, or smartphone.  Producers will need to sign up for a USDA online account in order to create an account profile with a password.

At this time, the program only allows producers doing business on their own behalf as individuals to view this information through farmers.gov.  Other entities such as LLCs and trusts or producers acting on behalf of another cannot utilize this tool yet, although the USDA indicates that this is planned for in the future.

The USDA’s press release made clear that the addition of these tools represents a step toward providing better customer service and increased transparency.  As only a step, producers can expect more tools and features to be added to farmers.gov in the future.  As this happens, we will be sure to keep you up to date about the website’s new bells and whistles.

Posted In: Business and Financial, Labor
Tags: USDA, H-2A, labor law, USDA loans
Comments: 0
By: Evin Bachelor, Friday, March 29th, 2019

Farmers markets in Ohio continue to grow in number, and the types of vendors and products offered by those vendors have greatly diversified over the years.  Along with this growth come new questions about vendor’s licenses and the collection of sales taxes.

Many market vendors may know that traditional market items like fresh fruits and vegetables do not require a vendor’s license or the collection of sales tax.  But what about beverages, cottage foods, plants and flowers, ready to eat foods, soaps, crafts, and similar items that contribute to the success of today’s farmers markets?  Fortunately, learning about Ohio’s vendor’s license and sales tax requirements doesn’t have to be a taxing experience.

In our fresh off the press law bulletin, titled “Vendor’s Licenses and Sales Taxes at Ohio Farmers Markets,” we dive into a number of questions that farmers market vendors frequently ask us.  Specifically, we address questions such as:

  • Do vendors at a farmers market need a vendor’s license?
  • What items do not require the collection of sales tax?
  • What items do require the collection of sales tax?
  • How do I obtain a vendor’s license in Ohio?
  • Is a vendor’s license the same as a retail food establishment license?
  • What if I want to sell products in other states?
  • Can vendors include sales tax in the price of the product?

While this law bulletin covers vendor’s licenses and sales taxes fairly in depth, there is always more to learn.  The law bulletin also provides a number of links to helpful resources from the Ohio Department of Taxation and neighboring states, along with a number of references to Ohio law.

Click HERE to view our latest law bulletin.

By: Evin Bachelor, Wednesday, March 27th, 2019

Sometimes you happen upon a question that you want an answer to, and the answer you find raises more questions.  That’s exactly what happened when we started examining Limited Liability Company (LLC) statutes from across the Midwest.

Originally, we wanted to determine whether there are any significant legal differences between the LLC statutes of different states.  While we may be based in Ohio, we find projects that examine how different states compare to one another on the same legal topic fascinating.  The comparisons allow us to see trends and different ideas, and we had the chance to do this in our recently completed projects on CAUV and agritourism.

Ultimately we found the Midwestern states to have functionally similar LLC statutes, with about half of the Midwest having adopted a uniform statute.  When a state adopts a uniform statute, it intends for its law on a given topic to match those of other states with the same uniform statute.  There are other examples of these like the Uniform Commercial Code, Uniform Probate Code, and more.  Uniform codes are designed to make it easier for people to do business and live their lives across state lines.  For Midwestern LLC statutes, even in states that have not adopted a uniform statute, the key elements are still very similar.  The statutes have filing procedures for creating the entity, default rules for operating agreements, and rules that govern LLCs in general.

When we answered our questions about the state statutes, we became curious about some of the benefits offered by using an LLC instead of some other business form.  We found that LLCs offer great liability protection, with some specific limitations such as the application of piercing the veil from corporate law.  Further, pass through taxation can provide great tax benefits and avoid double taxation.  Since states allow operating agreements to be highly customizable, LLCs also provide a flexible entity structure that may be adapted to suit the needs of a business or family.

That last word led us to another question: what benefits does the LLC structure offer a family farm in its estate and business transition plan?  The previous three benefits are well known and thoroughly discussed; however, this last one, while done a lot in practice, is not commonly mentioned in academic writing.  Ultimately, the benefits in estate and transition planning come from the flexible nature of the operating agreement.

How can LLCs be helpful in an estate and business transition plan for a farm?  Here’s a few ways:

  • Restrict the transfer of an ownership interest through rights of first refusal and buy-out provisions
  • Restrict membership and voting power of non-family members
  • Transition equity ownership more easily than in a corporation
  • Transition the business in relative privacy

Once we learned about these benefits, the question arose of how common farming LLCs now are.  Using data from the USDA’s Census of Agriculture, we found that by 2012, there were almost as many farms organized as LLCs as there were farms organized as corporations, while the vast majority of farms remained owned outright by individuals with no formal legal entity.  We are waiting for the next Census of Agriculture to spot any trends, because 2012 was the first year that farms were asked to identify whether they were organized as LLCs.

Throughout the paper, we made some observations and predictions for what we expect to see in the future.  We are also history buffs, so of course there had to be a section on the origins of the LLC, and why Wyoming was the first state to adopt an LLC statute.  It is an interesting and dramatic history that we had not heard about before.

Our project examining farm LLCs is available on our OSU Extension Farm Office 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, 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.

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