Crop Issues

By: Peggy Kirk Hall, Friday, August 01st, 2014

The Occupational Safety & Health Administration (OSHA) faced harsh criticism recently when the agency inspected and issued fines to small farms engaged in grain storage activities.  The farms argued that OSHA had no authority to do so because of the "small farm exemption" that limits OSHA’s authority to enforce safety regulations on small farms.  This week, OSHA released a guidance memorandum that attempts to clarify how its regional administrators should interpret the small farm exemption.  The agency's new guidance focuses on whether an activity on a small farm is “not related to farming operations and not necessary to gain economic value from products produced on the farm.”

The small farm exemption and OSHA's earlier interpretation

Since 1976, Congress has prohibited OSHA from using any of its funds to enforce safety regulations on "small farms," those farm operations that employ 10 or fewer employees and do not maintain a temporary labor camp.  In recent years, however, the agency turned its regulatory attention to grain operations on small farms.  OSHA justified its inspections and enforcement actions for grain storage activities by arguing that “post-harvest” grain storage and processing activities differ from “farming operations” and “core agricultural operations” and thus do not fit within the small farm exemption (see our earlier post).  The agency withdrew this interpretation of the small farm exemption earlier this year.

OSHA’s new guidance memorandum

In its July 29, 2014 memorandum to OSHA regional administrators, the agency now states that a small farm would not be subject to OSHA enforcement if it simply stores its own grain on the farm, sells grain from the farm or grows, stores and grinds grain on the farm to feed its own livestock.  These activities fit within the definition of a "farming operation" because the activities are "necessary to gain economic value from grain grown on the farm."

But the agency also explains that other types of activities on a small farm could be subject to OSHA authority.   According to the agency, if a small farm engages in activities that “are not related to farming operations and are not necessary to gain economic value from products produced on the farm, those activities are not exempt from OSHA enforcement.”

The agency provides a few examples of activities on small farms that would not be exempt because they are not related to farming operations or are not necessary to gain economic value from farm products. The list includes grain-based activities, but also addresses food processing examples:

  • A grain handling operation that stores and sells grain grown on other farms.
  • A food processing facility for making cider from apples grown on the farm or for processing large carrots into "baby" carrots.
  • Milling of grain into flour used to make baked goods.
  • The agency also explains that food manufacturing operations are not exempt from OSHA enforcement activities under the appropriations rider, even if they take place on a small farm.

OSHA's new guidance memorandum on the small farm exemption is available here.

By: Peggy Kirk Hall, Thursday, May 22nd, 2014

The Ohio House of Representatives gave final approval on May 21, 2014 to a bill initiated in the Senate that addresses invasive plants.  As approved by both chambers, Senate Bill 192 grants regulatory authority over invasive plants to the Ohio Department of Agriculture (ODA).  While ODA, Ohio EPA and Ohio's Division of Forestry already have programs in place to educate and assist in the identification and removal of invasive species, the new law clarifies that the director of ODA has "sole and exclusive authority to regulate invasive plant species in this state."  This authority includes the identification of invasive plant species and the establishment of prohibited activities regarding invasive plants.

The bill defines "invasive plant species" as:

"plant species that are not native to this state whose introduction causes or is likely to cause economic or environmental harm or harm to human health as determined by scientific studies."

A committee amendment to the bill clarifies that the definition of invasive plant species does not include "cultivated plants grown as food or livestock feed in accordance with generally accepted agricultural practices, including all plants authorized by the animal and plant health inspection service in the USDA."   In committee hearings, the Ohio Invasive Plants Council expressed serious concerns about this exclusion for cultivated crops.  The group's concern is that ODA would not have authority to evaluate plants with invasive properties if they are grown for livestock feed.  Other groups have raised similar worries about plants with invasive characteristics grown for biofuel production.  The Ohio Farm Bureau submitted testimony supporting the exemption, stating that the federal government already regulates plants grown for agricultural crops.

The bill contains one exception to ODA's authority over invasive plant regulation.  The director of Ohio EPA may continue to consider invasive plant species when evaluating applications and permits for wetlands under Ohio's Water Pollution Control Act.   Once ODA develops invasive plant regulations, however,  the EPA must refer to ODA's list of invasive plant species when reviewing wetland applications and permits.

Read S.B. 192 here.

 

 

By: Peggy Kirk Hall, Monday, April 14th, 2014

The Ohio Legislature is one step closer to creating a unique fertilizer applicator certification program for Ohio agriculture.  The Ohio House of Representatives recently approved the measure in S.B. 150, which had already passed the Senate in January (see our related post.)   The legislation aims to reduce fertilizer runoff into Ohio's waters in response to recent problems with algae blooms in Lake Erie and Grand Lake St. Mary's.   Other states with fertilizer applicator certification programs focus on professional, turf or urban applications of fertilizer, but Ohio's program would require farmers applying fertilizers on their own land to complete the knowledge-based certification program. 

An amendment by the House extends the certification requirement to anyone applying fertilizer for agricultural production on more than 50 acres of land, rather than on more than 50 "contiguous" acres as approved by the Senate.  The amendment will likely expand the program to more smaller-acreage farmers.    Although urged to do so, neither the House of Representatives nor the Senate agreed to extend the proposal even further by including "manure" in the definition of "fertilizer."

The Senate must now approve the House-amended version when it reconvenes in early May.  Upon Senate approval, the legislation would move to the Governor by mid-May.  If enacted, the bill gives the Ohio Department of Agriculture three years to establish and implement the fertilizer applicator certification program.  The bill also contains provisions for voluntary nutrient mangement plans, operation and management plans for animal feeding operations, and a few changes to Ohio's fertilizer license laws.

Watch for our final analysis of S.B. 150 as it continues the legislative process next month.

 

By: Peggy Kirk Hall, Wednesday, March 05th, 2014

The Ohio Department of Agriculture (ODA) has announced that pesticide applicators, commercial sensitive crop producers and apiaries may now use the online Ohio Sensitive Crop Registry (OSCR).  ODA developed OSCR as a “voluntary informational tool designed to allow stakeholders an effective way to communicate and protect pesticide-sensitive crops and apiaries.”  The registry will enable applicators to determine whether there are any sensitive crops in an area before applying pesticides.

How does the registry work?

ODA designed the tool for registered apiaries and "commercial" sensitive crop producers who produce at least one-half acre of a single type of sensitve crop.  The ODA defines sensitive crops as follows:

Apiaries – any ODA-registered apiary
Aquaculture – a location with any fish and other aquatics grown outdoors
Brambles – aggregated total of fruit such as raspberries and blackberries of at least .5 acres
Certified Organic – an organic farm certified by a USDA-accredited agent; certified organic crops, forage, and livestock of at least .5 acres
Nurseries – nursery stock and flowers of at least .5 acres
Greenhouse/High Tunnels – must be for commercial use and produce at least .5 acre of any combination of crops annually
Orchards – fruit or nut-producing trees of at least .5 acres
Grapes – vineyards of at least .5 acres
Tomatoes – all tomato cultivars of at least .5 acres
Fruit (other) - non-tree simple, aggregate and multiple fruits of at least .5 acres, excluding tomatoes, grapes, and brambles
Herbs – herbs and plants for spices of at least .5 acres
Vegetables – root and leafy vegetables, legumes, and pumpkins of at least .5 acres
 

Registration on OSCR is completely voluntary; a sensitive crop producer may create an account on the OSCR website and map the locations of their crops.  ODA will then verify the producer's information before it is available on the registry.  Private and commercial pesticide applicators may also voluntarily register on the site.  If approved by ODA, an applicator may search the registry to identify the locations of sensitive crops and apiaries.  The registry includes a mapping tool with options to search by address, parcel number, township, county, city, village and other methods.

It is important to note that the information provided in the registry is not available to the general public.  It is only available to those who have registered on OSCR and have been verified by ODA.

Implications for crop producers and pesticide applicators

The registry offers a good risk management tool to sensitive crop producers.  By allowing producers to communicate the existence of sensitive crops, which are typically not as easily observed as other crops, the registry should reduce pesticide drift impacts.  One possible implication for sensitive crop producers is the risk of sharing crop information through the registry, but the ODA verification process should minimize potential misuse of registry information.

Reduced drift impacts will also benefit pesticide applicators who use OSCR.  However, the voluntary nature of the registry raises potential implications for pesticide applicators.  What is the liability exposure for an applicator who knows the registry is available but chooses not to use the tool?  Could a harmed party argue that an applicator "should have known" about a sensitive crop because it was registered?  Does the availability of the information create a new legal duty for  pesticide applicators--a duty to take the additional step to identify nearby sensitive crops?  Could an insurer refuse to cover an applicator who failed to consult the registry?   Until Ohio courts receive and answer these legal questions, we don't have clear answers.

The caution to pesticide applicators, then, is to take the OSCR seriously.  Don't overlook the registry because participation is "voluntary" rather than mandatory.   The registry can provide important information that could reduce pesticide exposure to sensitive crops; a pesticide applicator who fails to utilize the information might be increasing his or her potential liability if pesticide drift occurs.

To learn more about the Ohio Sensitive Crop Registry, visit: http://www.agri.ohio.gov/scr/.

By: Peggy Kirk Hall, Tuesday, February 04th, 2014

The federal Occupational Safety & Health Administration (OSHA) generated controversy recently when several of its enforcement actions against farms with grain bin storage hit the news headlines.   The enforcement actions are contrary to a general understanding in the agricultural community that OSHA does not have authority to enforce its regulations against farms with ten or fewer employees, referred to as the “small farms rider.”  While claiming that it does not intend to enforce beyond its authority, OSHA justifies its actions in an internal agency memorandum that interprets the small farms rider.  Is OSHA’s justification reasonable or contrary to law?  Here’s the language of the small farms rider and OSHA’s explanation of its authority:

  • The Small Farms Rider.  The 2014 Consolidated Appropriations Act passed by Congress, like every previous appropriations bill since 1976, states that none of the funds appropriated by Congress to OSHA “shall be obligated or expended to prescribe, issue, administer, or enforce any standard, rule, regulation, or order under the Act which is applicable to any person who is engaged in a farming operation which does not maintain a temporary labor camp and employs 10 or fewer employees.”  (emphasis added)
  • The agency focuses on the small farm rider’s use of the term “farming operation” which, according to the agency’s prior interpretation, means “any operation involved in the growing or harvesting of crops, the raising of livestock or poultry, or related activities conducted by a farmer on sites such as farms, ranches, orchards, dairy farms or similar farming operations.”  
  • Not included in the definition of “farming operations,” according to the agency, are those establishments engaged in performing services on crops subsequent to their harvest with the intent of preparing them for market or further processing, including activities such as crop cleaning, sun drying, shelling, fumigating, curing, sorting, grading, packing and cooling, corn drying and shelling, grain drying, cleaning, and fumigating.  Why are these not considered farming operations?   Because the North American Industrial Classification System (NAICS) and Standard Industrial Codes (SIC) differentiate agricultural businesses that conduct crop and livestock production from those that conduct post-production activities.   Small farms with grain storage structures where grain is fumigated, dried, or processed subsequent to harvest and sold into the market would fall under the post-harvest NAICS codes rather than the agricultural production codes and therefore are not “farming operations” exempted by the small farms rider, states OSHA.    
  • The agency also notes that grain handling operations are not “core agricultural operations” according to OSHA’s federal regulations.  These regulations state that “core agricultural operations” include activities such as growing and harvesting crops, plants, vines, fruit trees, nut trees, ornamental plants, egg production, the raising of livestock, poultry, fish and livestock products.
Why is OSHA working so hard to distinguish grain storage activities from other farming activities?  Statistics could be one reason.   The agency notes that over 900 grain entrapment fatalities have occurred in the past 50 years with the highest on record occurring in 2010, when 26 workers died in grain engulfments.  This led to agency efforts to increase attempts to prevent deaths and injuries (see, for example, “OSHA works with The Ohio State University to promote safe practices”).  The agency also points to statistics indicating steadily growing amounts of on-farm grain storage capacity.  Finding a way to increase inspection opportunities on the expanding number of farms with grain storage would be consistent with OSHA’s efforts to reduce fatalities and injuries.  Unfortunately, recent enforcement actions against farms in Nebraska and Ohio appear punitive in nature and not simply focused on reducing risk.
 
What’s next?  Many members of Congress are pushing OSHA to revise its interpretation of the small farms rider.  OSHA has agreed, stating that it plans to look to USDA for advice on which post-harvest activities are "intimately related to farming activities and which ones aren't," according to OSHA deputy assistant secretary Jordan Barab.  An alternative to OSHA action would be for Congress to provide its own definition of “farming operations” rather than deferring to the agency’s interpretation.  
 
The important issue here:  grain handling safety.  Agriculture prides itself on knowing how best to handle its own issues.  As Congress and OSHA bicker over regulatory authority, let’s hope agriculture stays focused on grain handling practices and continues to reduce grain-related deaths.  For resources on safe grain handling, visit OSU’s Agricultural Safety & Health Program at http://agsafety.osu.edu/resources
By: Peggy Kirk Hall, Friday, January 24th, 2014

The Ohio Senate has approved a bill directing the Ohio Department of Agriculture (ODA) to establish a fertilizer applicator certification program in Ohio.  The sponsors of Senate Bill 150, Senator Cliff Hite and Senator Bob Peterson, designed the legislation to address agricultural nutrient runoff into Ohio waterways and the algae problems in Grand Lake St. Marys and Lake Erie.  According to Senator Hite, the bill hinges on a new education and certification program that will give farmers additional information about fertilizer and nutrient use best practices.    

Here are answers to a few basic questions farmers might have about the proposed program:

When would the program begin?  If the bill is passed by the Ohio House of Representatives, the fertilizer application certification program would begin on September 30 on the third yearsfollowing the law’s effective date.   

Who would have to be certified?  Someone who applies “fertilizer” for agricultural production on land more than 50 acres in size would have to be certified by ODA as a fertilizer applicator, or would have to be acting under the instruction of a certified fertilizer applicator. 

Would there be any exemptions from the program?  Those who would make applications of fertilizer on land parcels of 50 acres or less would be exempt from the certification requirement.  The bill would also allow the ODA director to establish additional exemptions for certain persons or certain “types of cultivation.”

What fertilizers would the program cover?  Under the bill, “fertilizer” means any substance containing nitrogen, phosphorus, or potassium or any recognized plant nutrient element or compound that is used for its plant nutrient content or for compounding mixed fertilizers.  The definition of fertilizer does not include lime, manure and residual farm products such as bedding, wash waters, waste feed, silage drainage and certain dead animal composts, unless those are mixed with fertilizer materials or distributed with a guaranteed analysis.

What would the certification program involve?  The Senate’s bill directs that the program must educate applicants on the time, place, form, amount, handling, and application of fertilizer—commonly referred to as the "4-Rs" of nutrient stewardship (right fertilizer source at the right rate, at the right time and in the right place).  The bill also states that the program must "serve as a component of a comprehensive state nutrient reduction strategy addressing all sources of relevant nutrients" and must "support generally practical and economically feasible best management practices."

Would there be a certification fee?  The bill allows the ODA to establish a fee for applicants who seek certification, but the fee may not exceed the fee charged for the state’s pesticide applicator certification program.  Additionally, the bill exempts persons who hold an Ohio commercial or private pesticide applicator’s license from paying an additional application fee if they also seek fertilizer application certification.

Other important provisions in Senate Bill 150 include:

Recordkeeping requirements.  Certified applicators would have to maintain fertilizer application records for at least three years from the date of a fertilizer application.  The records must include the date, place and rate of application, an analysis of the fertilizer and the name of the person applying the fertilizer.  Applicators would not be required to submit the records to ODA on a regular basis, but would have to make the records available upon a request by the agency.

Emergency revocation and suspension powers.  The bill would allow the ODA director to immediately deny, suspend, revoke, refuse to renew or modify a fertilizer applicator certificate if there is "substantial reason to believe the certificate holder recklessly applied fertilizer in such a manner that an emergency exists that presents a clear and present danger to human or animal health."

Voluntary Nutrient Management Plans.  The bill would allow a person who owns or operates agricultural land to develop a voluntary nutrient management plan in collaboration with Ohio State University, the Soil and Water Conservation District or the Natural Resource Conservation Service or its certified providers and submit the plan for approval by the Soil and Water Conservation District.  A voluntary nutrient management plan would be an important critieria for immunity from civil liability, discussed below.

Legal Defense against Civil Actions.   Under the bill, a person sued in a claim involving liability for an application of fertilizer would have a legal defense that would prevent liability upon showing these three criteria:

  • The person is a certified fertilizer applicator or under the control of a certified applicator;
  • The person properly maintained fertilizer application records as required by the certification program;
  • The fertilizer was applied according to and in substantial compliance with an approved voluntary nutrient management plan.

Watch now for the agricultural nutrient management bill to be introduced in the Ohio House of Representatives for final approval.  More information about S.B. 150 is available here.

Litigation that arose from a drainage improvement project completed in 2002 has finally ended with a decision by the Ohio Supreme Court.  The court announced today that it will not accept the case for review, which allows the ruling by the Third District Court of Appeals in favor of the Henry County Engineer to remain in place.

Richard and Rodney Rohrs sued the county engineer  and several staff members in 2005 after a drainage project completed by the county flooded several acres of a farm field the Rohrs had rented from Gerald Westhoven.  In the late 1990s, Westhoven approached the Henry County Engineer about flooding problems on Westhoven's farm and the possibility of cleaning out the open drainage ditch that ran between his land and the county road.  The engineer proposed an alternative solution, to lay drainage tiles and fill the ditch, and offered to classify the work as a road safety improvement project to be handled through the engineer's budget rather than through the petition ditch process that would result in assessments on property owners.

The county engineer installed the new drainage system in 2002.  Westhoven entered into a lease for the land with the Rohrs in the Spring of 2003.  The Rohrs planted a tomato crop on the parcel; by July, part of the field was under water.   After the harvest season, the county engineer and Westhoven attempted to locate a drainage tile that could be the source of the flooding but they could not find any tile in the flooded area.  The county then installed a new catch basin near Westhoven's property to resolve the flooding problem, with plans to tie in any field tile that Westhoven might later discover on his land.  The Rohrs continued to lease the farmland from Westhoven.

According to witness testimony, the cause of the 2003 flooding was a drainage tile and catch basin just south of Westhoven's property that had been cut off during construction of the road improvement project drainage system; the engineer's staff  had filled the tile and catch basin because it did not appear to be a functioning tile and did not exist on any of the county's plans.  Excavation on the Westhoven property several years later revealed a drainage tile located just 15 feet from the filled tile and catch basin.  The newly discovered tile, which Westhoven had not previously reported to the engineer,  had a seed bag stuffed into its outlet, which was near the filled catch basin.   The Rohrs claimed that the engineer's staff had intentionally stuffed the seed bag into the functioning tile, while the engineer's staff claimed they did not know about the tile.   The county surmised that the seed bag had been used in the previous filling of the tile and catch basin that they had believed to be non-functioning.

The Rohrs sought $70,000 for losses to their 2003 tomato crop as a result of the flooding.  Their legal causes of action included several tort claims and violations of federal and state due process rights.  They also asked the court for a writ of mandamus to order the county to compensate them for a partial "taking" of their property by the county engineer.   The Henry County Court of Common Pleas, after seven years of litigation, rejected each of the Rohrs' claims.

The Rohrs appealed with no avail to the Third District Court of Appeals.  The appellate court agreed with the trial court's conclusion that state law prevented tort liability for the flooding because the county was entitled to governmental immunity under Ohio Revised Code 2744.02(A)(1) i.  The court stated that the Rohrs had failed to prove that any of the law's exceptions to governmental immunity applied to the situation.  In response to the Rohrs' argument that the county had committed a partial "taking" of property, the appeals court agreed with the trial court that a "taking" had not occurred for three reasons:  because the flooding was accidental and incidental rather than an intentional taking of property, because the alleged taking was not for a public use as required by the Constitution and because the Rohrs had other remedies for their harm, such as a tort claim against Westhoven and the failed tort claims against the county engineer.  As such other remedies were available, the court also agreed with the trial court that the Rohrs failed to prove violations of their due process rights.

In their request for a review by the Ohio Supreme Court, the Rohrs focused on the lower courts' conclusions that a "taking" had not occurred.  The Henry County Farm Bureau and the Ohio Farm Bureau filed a brief in support of the Rohrs, urging the Supreme Court to accept the case and review the takings issue.  The Court today declined to accept the case by a vote of 5--2 with Justices Paul Pfeifer and Judith French dissenting.  Without a review by the Ohio Supreme Court, the appellate court decision stands as the final resolution of the case.

The decision of the Third District Court of Appeals in State ex rel. Rohrs v. Germann is available here.

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program

The Ohio Senate concurred with the House of Representatives yesterday to enact changes to Ohio's Agricultural Commodity Handler's law, commonly known as the Grain Indemnity Fund.  According to the bill sponsors, the changes will better protect Ohio farmers from grain elevator insolvency by raising the fund cap from $10 to $15 million and increasing the minimum fund balance trigger for the per bushel fee assessment from $8 to $10 million.

The Ohio Legislature originally created the Grain Indemnity Fund in 1983 to reimburse farmers when a grain handler becomes insolvent.  The law requires licensing of all grain handlers, who pay a 1/2 cent per bushel fee on grain handled to maintain a minimum balance in the indemnity fund.    In the case of a grain handler's financial failure, a farmer is reimbursed 100% for open storage grain in the elevator and 100% of the first $10,000 of a loss  for future contracts, delayed price and basis transactions, with 80% reimbursement beyond the first $10,000 of loss.  The legislature raised the indemnity fund's required minimum balance to $10 million in 2005.

Ohio Department of Agriculture handles the fund, which paid out $4.1 million to farmers in grain insolvency cases in 2011 and its highest payout of $2.5 million for one elevator in 2004.   The fund currently is around $8.2 million, but bill sponsors believe that payouts similar to those of the past could nearly bankrupt the fund under today’s grain prices.  Changes to the fund cap and the assessment trigger should prevent depletion of the fund, according to bill sponsor Senator Cliff Hite.

The legislation also changes grain lien priority rules, revises licensing requirements for commodity handlers and increases discretion for the ODA Director to determine the validity of claims.  The following summarizes these and other provisions in the legislation:

  • Increases the Grain Indemnity Fund's minimum balance from $8 to $10 million and its maximum balance from $10 to $15 million.  ODA cannot assess the per bushel assessment on handlers outside of the minimum and maximum balances.
  • Gives priority to the automatic lien established and held by ODA in the event of a commodity handler’s failure or insolvency.  The lien will now have priority over all competing lien claims asserted against the commodity.
  • Requires a commodity handler whose license is revoked to immediately notify all parties storing agricultural commodities in the handler's warehouse and all holders of receipts issued by the handler.
  • Directs the ODA Director to determine the validity of claims against the fund with the recommendation of the Commodity Advisory Commission rather than the approval of the Commission.
  • Revises the type of financial statements that must be submitted to the Director by an applicant for an agricultural commodity handler's license or renewal.  The financial statements must consist of all financial statements and footnotes required by generally accepted accounting principles as promulgated by the Financial Accounting Standards Board together with an independent accountant's report on the statements.
  • Establishes the total net worth requirements for a handler's license applicant as 15 cents per bushel handled in the previous year and raises the minimum net worth requirement to $50,000.
  • Removes barley, oats, rye, grain sorghum, sunflower and speltz from the list of agricultural commodities addressed by the law.

Revisions to the law will be effective on October 11, 2013.    View the agricultural commodity handler's legislation here.

Catharine Daniels, Attorney, OSUE Agricultural & Resource Law Program

The court's decision was not exactly what a group of farmers, seed sellers, and agricultural organizations was hoping for, but they are nevertheless claiming partial victory against Monsanto in a recent lawsuit centered on genetically modified seed.  On June 10, 2013, the United States Court of Appeals denied the group's request for a judgment against Monsanto but at the same time declared that Monsanto would be judicially bound to its promise not to pursue future patent infringement suits against the growers, seed sellers or organizations for "inadvertently using or selling 'trace amounts' of genetically modified seeds."

Case History

Several farmers and organizations who grow, use, or sell conventional and organic seeds ("Seed Growers")  filed a federal lawsuit against Monsanto in March of 2011.  Ohioans in the group include the Ohio Ecological Food and Farm Association.  The Seed Growers asked the court to declare some of Monsanto’s patents “invalid, unenforceable, and not infringed.”  The Seed Growers claimed they had to forgo planting certain crops and had to take “costly precautions” to avoid contamination by Monsanto's genetically modified "Roundup Ready" seeds.  Pointing to Monsanto's history of aggressive patent infringement litigation, the Seed Growers feared they would be sued by Monsanto despite their efforts to prevent unintended contamination.  The Seed Growers also alleged adverse health effects and long term environmental impacts from the genetically modified seed.   The federal court dismissed the case after determining that no traceable injury existed that the court could address, since none of the Seed  Growers had actually been sued by Monsanto.

The Appeal

The Seed Growers appealed the decision to the Court of Appeals for the Federal Circuit.  The court of appeals agreed that there was not a current traceable injury to the Seed Growers.  But the appeals court also concluded that there was no risk of harm to the Seed Growers because Monsanto had “unequivocally disclaimed any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling “trace amounts” of genetically modified seeds.”   Even though Monsanto had denied the Seed Growers' request to enter into a written covenant not to sue, the appeals court held that Monsanto's promise to the Seed Growers throughout the lawsuit had the same effect as a written, signed agreement not to bring suit.

How Can the Court Enforce Monsanto's  “Promises”?

Monsanto's promise not to sue the Seed Growers came through verbal representations made in the course of the federal court proceedings.  How can the court hold Monsanto to such a promise?  To do so, the appeals court relied on the unique legal doctrine of "judicial estoppel," which states that under certain circumstances, a party who makes a declaration in a legal proceeding will be bound to that statement and may not contradict the declaration in a future legal proceeding.   The appeals court examined three factors that warrant a court's use of judicial estoppel:

  1. The party’s later position is clearly inconsistent with its prior position.
  2. The party successfully persuaded a court to accept its prior position.
  3. The party would derive an unfair advantage or impose an unfair detriment on the opposing party if the court didn't step in to enforce the promise.

According to the court, all three of these situations would exist if Monsanto later sued the parties for patent infringement, which requires the  application of judicial estoppel to bind Monsanto to its promise.

But the Promise is Limited

Monsanto's promise was not to sue "inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of seeds carrying Monsanto's patented traits."  But what about growers who inadvertently use or sell seed containing greater than trace amounts; i.e. greater than one percent?  Despite the appeals court's effort to clarify whether or not Monsanto would assert its patent rights in those situations, Monsanto would not state its position on the issue.  Monsanto did make it clear that their view of an inadvertent infringement is quite narrow, stating that an "inadvertent infringer" would not include “those growers whose crops become accidentally contaminated, and who do not treat their fields with Roundup, but who, knowing of the contamination, harvest and replant or sell the seeds.”  Thus in situations where growers inadvertently use or sell seed containing greater than trace amounts of Monsanto's seed, it is possible that Monsanto could  bypass judicial estoppel and pursue a patent infringement case.

So Was this Really a Victory for the Organic Seed Growers?

While the Seed Growers did not obtain the declaratory judgments they sought against Monsanto, they did receive some protection from future litigation in the form of judicial estoppel.  Because the appeals court concluded that the Seed Growers were not at risk of being sued by Monsanto, the court was able to avoid delving into the deeper issues of whether or not Monsanto's patents are valid, whether avoiding contamination is a burden to conventional farmers and whether Monsanto's seed poses health and environmental harms.   The Seed Growers have expressed interest in requesting a review of the decision by the U.S. Supreme Court.  Even if the case does not make its way to the Supreme Court, it surely isn't the last lawsuit we'll see that challenges genetically modified seed technology.

View Organic Seed Growers et al v. Monsanto here.

Court rules that farmer's replanting of Roundup Ready beans violates federal patent law

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program

The U.S. Supreme Court today ruled that a farmer's replanting of harvested Roundup Ready© soybeans violates Monsanto Company's patent rights.  The ruling leaves in place a former court award of $84,456 against farmer Vernon Bowman for planting and harvesting the soybeans, which he had purchased as commodity beans from a local grain elevator or saved from his prior harvests.

Relying on the theory of "patent exhaustion," Bowman argued that Monsanto's patent rights exhausted after the first sale of the seed and did not apply to later uses or sales.  This exception to patent protection allows a purchaser of a patented good to resell the "used" good without violating patent rights.   The Court unanimously disagreed that patent exhaustion was applicable in Bowman's case, explaining that the patent exhaustion theory applies to later uses of a good but not to the creation of new and additional goods from a patented good.  While Bowman could sell harvested Roundup Ready beans or use them as feed, he could not plant those beans, produce new beans and sell the new beans without violating Monsanto's patent rights.  "That is how "to ‘make’ a new product," said the Court, or to "reproduce Monsanto’s patented invention" without compensation to Monsanto.   "A patentee retains an undiminished right to prohibit others from making the thing his patent protects," said the Court.

Bowman tried to distinguish the application of patent exhaustion to his case based on the "self-replicating" nature of seed, arguing that the seed, rather than Bowman, controlled the seed's actual reproduction.  Monsanto should not be allowed to interfere with natural reproduction, claimed Bowman.  The Court again disagreed, rejecting what it referred to as Bowman's "blame the bean" and "seeds are special" arguments and pointing out that Bowman played an active role in the seed reproduction process.  But the Court carefully noted that its ruling does not automatically apply to every  self-replicating product, as there could be situations where a self-replication might occur outside a purchaser’s control or be a necessary but incidental step in using the item for another purpose.

Many expected the Court to rule in favor of Monsanto based solely on the argument that ruling otherwise would negate the incentive for innovation that Congress intended upon passing the federal Patent Act.  The Court was mindful of this argument when clarifying the parameters of the patent exhaustion doctrine, referring several times to the importance of not depriving Monsanto of its monopoly and the rewards of innovation.

What does the case mean for farmers?  The Monsanto ruling is not a big surprise but it does send a strong message to farmers, some of whom have likely grumbled over seed patents and limitations on the age-old practice of saving seed.  With the Supreme Court's decision, it's clear that the current legal system simply won't tolerate replantings of patented seeds.  Instead, the law will support continued efforts by patent holders to monitor what farmers do with patented seed.  Replanting of patented seed, whether intentional or accidental, is more than ever a high risk activity.

Read the Supreme Court's decision in Bowman v. Monsanto Co. here.

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