CFAES Give Today
Farm Office

Ohio State University Extension

CFAES

Environmental

Pile of tree limbs burning in open farm field
By: Peggy Kirk Hall, Thursday, November 30th, 2023

With the warm, dry, and windy months of October and November behind us, Ohio farmers will soon have legal clearance to conduct open burning during the daylight hours.  Ohio law prohibits all open burning from 6 a.m. to 6 p.m. during October and November, and then again in March, April, and May.  That’s because ground cover and weather conditions create high fire risk and volunteer firefighters with daytime jobs aren’t readily available to fight the fires. 

December 1 marks the end of the daytime burn restriction, but other open burning laws remain in effect. Farmers can burn “agricultural waste,” but must follow conditions in the open burning laws.  Burning wastes that aren't agricultural waste might require prior permission or notification, and it is illegal to burn some wastes due to the environmental harms they cause. Don't get burned by failing to know and follow the open burning laws.  Here’s a summary of important provisions that affect farmers and farmland owners.

What you can burn.  Ohio law allows the burning of “agricultural wastes” under certain conditions.  Ohio law defines what is and is not “agricultural waste” as follows:

  • Agricultural waste is any waste material generated by crop, horticultural, or livestock production practices, and includes such items as woody debris and plant matter from stream flooding, bags, cartons, structural materials, and landscape wastes that are generated in agricultural activities.
  • Agricultural waste does not include buildings; dismantled or fallen barns; garbage; dead animals; animal waste; motor vehicles and parts thereof; or "economic poisons and containers," unless the manufacturer has identified open burning as a safe disposal procedure.
  • Agricultural waste does not include"land clearing waste," which is debris resulting from the clearing of land for new development for agricultural, residential, commercial or industrial purposes.  Burning of “land clearing waste” requires prior written notification to Ohio EPA.
  • If an agricultural waste pile is greater than 20 ft. wide x 10 ft. high (4,000 cubic feet), permission from Ohio EPA is necessary.

Where you can burn.  Laws that affect the burning location relate to where the waste is generated and whether the burn is in or near a village, city, or buildings:

  • It is legal to burn agricultural waste only if it is generated on the property where the burn occurs.  It is illegal to take agricultural waste to a different property for burning and to receive and burn agricultural waste from another property.
  • Burning inside a “restricted area” requires providing a ten day written notice to Ohio EPA.  A restricted area is any area inside city or village limits, within 1,000-feet of a city or village with a population of 1,000 to 10,000, or within one-mile of a city or village with a population of more than 10,000. 
  • A burn must be located more than 1,000 feet from any neighboring inhabited building.

How to manage the burn.  Ohio laws impose practices a person must follow when conducting open burning, which includes:

  • Remove all leaves, grass, wood, and inflammable materials around the burn to a safe distance.
  • Stack waste to provide the best practicable condition for efficient burning.
  • Don’t burn in weather conditions that prevent dispersion of smoke and emissions.
  • Take reasonable precautions to keep the fire under control. 
  • Extinguish or safely cover an open fire before leaving the area.

Local laws matter too. A local government can also have laws that regulate burning activities, so it’s important to check with the local fire department to know whether any additional regulations apply to a burn.

A bad burn can burn you.   Violation of state and local open burning laws creates several risks for farmers and farmland owners. First is the risk of enforcement by the Ohio EPA, which has the authority to issue fines of up to $1,000 per day per offense for an illegal burn.  According to the EPA, the most common violations by farmers include burning substances that are not “agricultural wastes,” such as tires and plastics, failing to meet the 1,000 foot setback requirement, and burning waste from another property. EPA enforcement officers regularly patrol their districts, investigate fires they see, and investigate complaints from neighbors or others who report burning activities, so “getting caught” is quite possible.

An illegal burn might also bring in the Ohio Division of Forestry or local law enforcement.  Beyond the environmental provisions, other violations of the open burning laws can result in third degree misdemeanor charges.  Penalties of up to $500 and 60 days of jail time per violation could result.  

A final risk to consider is liability for harm to yourself, other people, or other property if a burn goes wrong.  It’s possible for a fire to escape and burn unintended property, to reduce roadway visibility and cause an accident, or to interfere with people, animals, crops, or buildings.  These situations can cause personal injuries, property harm, and could result in insurance claims or a negligence or nuisance lawsuit.  Using common sense and taking reasonable safety precautions when conducting a burn can go a long way toward reducing the risk of harm and resulting liability for harm.

To learn more about Ohio’s open burning laws, visit the Ohio EPA website at https://epa.ohio.gov/divisions-and-offices/air-pollution-control/permitting/open-burning.

Title page of Maumee Watershed TMDL Report
By: Peggy Kirk Hall, Tuesday, November 14th, 2023

Featuring the work of Carolyn C. Jolly, Law Fellow, National Agricultural Law Center

OSU’s Agricultural & Resource Law Program is fortunate to be a partner with the National Agricultural Law Center, which includes working with the Center’s Law Fellows—students currently studying law in different law schools across the country.  Carolyn C. Jolly is one of our current Law Fellows, and she has an interest in environmental laws that affect agriculture.  Carolyn is the author of today’s blog.  She has assembled a harvest of environmental updates affecting agriculture that include approval of Ohio EPA’s phosphorus TMDL, a practical ESA guide for producers, EPA’s commitment to adhering to its ESA requirements, and an update on participation by agricultural producers in voluntary carbon markets.

EPA Approves Ohio’s Maumee Watershed Nutrient Total Maximum Daily Load

In 2014, phosphorous runoff from farms in the western basin of Lake Erie caused an algal bloom. Harmful algal blooms produce toxins that impair drinking water, affect aquatic life, and hinder recreational use. Coming up with a solution to reduce the phosphorus runoff has been contentious. In 2019, Toledo voters passed a bill that would allow citizens to sue farmers on behalf of the lake. This measure was held to be unconstitutional, but it could have greatly impacted the ability of farmers and producers to continue their operations. To address specific pollutants, the Clean Water Act requires states to develop Total Maximum Dailey Loads (TMDL).  Environmental interests and local governments in Ohio legally challenged both the Ohio EPA and U.S. EPA to establish a TMDL for the western Lake Erie Basin.  In June of 2023, the Ohio EPA did submit a proposed TMDL for to the EPA and it was approved in September. The aim of the TMDL is to reduce phosphorus runoff in the Maumee Watershed.

Here are some of the approaches for agricultural areas the EPA included in the TMDL:

  Nutrient Management

  • Soil testing and nutrient management planning efforts (e.g., Voluntary Nutrient Management Plans via H2Ohio funding)
  • Variable rate fertilization and subsurface placement of fertilizer (e.g., following the ‘4 R’s’ of nutrient management: using the right nutrient at the right rate and right time in the right place)
  • Manure incorporation (mixing manure into soils or placing the manure below the soil surface)

Erosion Management

  • Conservation crop rotation and cover crops (e.g., improving soil health, increasing soil organic matter, improving soil moisture storage capacity, etc.)

Agricultural Water Quantity Management

  • Drainage water management (e.g., management of discharge from agricultural tile drainage lines to store water in the water table beneath fields and reduce discharge to surface waters) 
  • Edge-of-field buffers (e.g., planting in riparian areas to increase water storage and decrease nutrient and sediment inputs, Great Lakes Restoration Initiative)
  • Two-stage ditch deployment (e.g., modifying the profile of stream channel bottoms by constructing a bench/floodplain adjacent to the existing stream channel to slow water flow during high flow events and trap nutrients and sediment)
  • Wetland restoration and preservation (e.g., the restoration/protection of existing wetlands are beneficial for storing water and nutrients on the landscape, Environmental Quality Incentives Program; Western Lake Erie Basin Project - Ohio)

Read the Final TMDL on the Ohio EPA’s webpage for the Maumee Watershed.

Agricultural Producers Now have a Practical Guide to the Endangered Species Act

The Endangered Species Act (ESA) is intended to protect endangered and threatened species and thus has an impact on agriculture and land use across the country. However, being such a wide-ranging piece of legislation, it can be difficult to understand the law and its full  impact on agriculture. Brigit Rollins, an attorney with our partner, the National Agricultural Law Center, set out to answer how and why the ESA affects agriculture and land use by creating the Endangered Species Act Manual: A Practical Guide to the ESA for Agricultural Producers. It is a concise guide that describes the history of the ESA, influential case law, regulatory changes, and specifics of the ESA’s impact on agriculture. Additionally, it is meant to be a living document that will be updated with current changes and issues.

EPA on Balancing ESA Requirements and Responsible Pesticide Use

When registering new uses for pesticides and reviewing already registered uses, the Environmental Protection Agency (EPA) is required to consult the Endangered Species Act (ESA) to ensure that the use follows ESA standards. This can be a lengthy process and the EPA has complied with the process in less than 5% of its actions. This noncompliance has resulted in substantial litigation. To address these issues, EPA issued its ESA Workplan.  EPA actions in the workplan include developing mitigation measures for particularly vulnerable species, developing and implementing strategies to identity mitigation measures for the different classes of pesticides, completion of ESA work for eight organophosphates and four rodenticides, and hosting a workshop with stakeholders to explore other methods of offsetting pesticide impacts. EPA also released its Draft Herbicide Strategy for comment and the Rodenticide, Insecticide, and Fungicide Strategies are under development. The EPA has also released its ESA guidance for future registrations.

Agricultural Producer Participation in Carbon Markets

To mitigate climate change, Congress passed the Growing Climate Solutions Act (GCSA) to improve access to carbon markets for agricultural producers. In accordance with the law’s requirements, the U.S Department of Agriculture (USDA) released A General Assessment of the Role of Agriculture and Forestry in the U.S. Carbon Markets on October 23, 2023.  The report addresses participation by agricultural producers in the carbon market, barriers to and concerns or participation, and ways to improve producer participation. The report notes that even though producers are aware of the carbon market, voluntary participation has been low.  According to the report, “Producers cite the concerns about the return on investment, upfront costs, data collection burdens, compensation for pre-existing practices, permanence requirements, issues of scale, and confusion about carbon markets and programs as key factors in their evaluation into whether to participate in a carbon project.” The USDA concludes that to reduce barriers to participation, strategies need to be implemented to “reduce transaction costs, minimize record-keeping burdens, address early-adopter and permanence requirement concerns, and address barriers related to project scale.” The report also details the USDA’s role in improving participation through outreach and education, offering grants and partnerships, supporting carbon market infrastructure, and investing in measurement, monitoring, reporting, and verification of carbon credit procedures.

 

Three women holding sign saying "Ohio preserved farm" in front of field of corn.
By: Peggy Kirk Hall, Wednesday, October 25th, 2023

An agricultural easement is a legal instrument that can protect farmland from non-farm development and preserve the legacy of family land for the future. An earlier blog post explains how an agricultural easement works and answers common questions about agricultural easements.  As we explained, an agricultural easement not only preserves farmland but can also be a valuable financial and tax tool that can enable a transition of the farm to the next generation.  But are there drawbacks to agricultural easements?  Here's a summary of potential negative implications of easements that landowners should also consider.

It's difficult to forecast the future of a farm.  The very nature of the easement requires a best estimate of how the farmland might be used for agriculture into the future--a challenging task.  The Deed of Agricultural Easement the parties agree to must predict agricultural activities that are consistent with the easement and those that would violate the easement.  There could be future problems if the predictions and forecasting aren’t flexible enough to accommodate agriculture in the future. 

The “perpetuity” requirement. While it’s possible to draft an easement that lasts only for a certain term of years, most agricultural easements remain on the land “in perpetuity,” or permanently.  The programs that pay a landowner to grant an agricultural easement and the federal income and estate tax benefits for donating all or part of an easement require that the easement is perpetual.  This differs from the conservation programs we’re accustomed to in agriculture that require shorter term commitments, and it can be a deterrent to a landowner who wants future generations to have a say in what happens to the land.  These concerns might be addressed in the deed of agricultural easement, however, which may provide sufficient flexibility to address those future concerns.

Termination can be difficult and costly.  Hand in hand with the perpetuity issue is the difficulty of terminating an agricultural easement once it’s in place. Typically, both parties must agree on a termination and a court of law must determine that conditions on or surrounding the land make it impossible or impractical to continue to use the land for agricultural purposes. Attempts to terminate without following the stated procedures can result in penalties for the current landowner.  If there was a payment for the agricultural easement, a deed of easement will likely require the landowner to reimburse the paying party for the proportionate share of the fair market value of the land with the easement removed and will also require the party receiving the reimbursement to use the funds only for similar conservation purposes.  

Eminent domain can be an issue.  As one Ohio farm family has learned, an agricultural easement might not protect the farmland from an eminent domain proceeding.  In Columbia Gas v. Bailey, 2023-Ohio-1245, the Bailey family was forced to litigate an attempt by Columbia Gas to use eminent domain for the construction of a gas pipeline across their farmland.  Their predecessor had placed an agricultural easement on the farmland in 2003, and the family argued the easement prevented the taking of land for the pipeline under the doctrine of “prior public use.”  That doctrine prohibits an eminent domain action that would destroy a prior public use.  The court agreed that the agricultural easement did create a prior public use on the land, and the court shifted the burden to Columbia Gas to prove that the pipeline would not destroy the established prior public use.  Rather than doing so, Columbia Gas withdrew its eminent domain proceeding and moved the location of the pipeline.  The court's decision to recognize an agricultural easement as a prior public use might provide some protection from eminent domain for future owners of agricultural easement land but, like the Baileys, landowners may have to fight a long, expensive battle to prove that an eminent domain action would destroy an established prior public use.

Lenders and other interests must be on board.  A landowner must deal with any existing mortgages, liens, leases, or easements on the farmland before entering into an agricultural easement.  The State of Ohio’s agricultural easement, for example, requires a lender to subordinate a mortgage to the rights of the easement holder.  Renegotiation of the mortgage might be necessary, and the lender might require a paydown of the outstanding mortgage if the property’s value could reduce below that amount.  Without subordination and other approvals, a landowner will not be able to enter into an agricultural easement. 

Local governments must be on board.  Ohio’s program for purchasing agricultural easements requires a landowner to submit a resolution of support from the township and county where the land is located.  This means the local governments must agree that committing the land to agriculture is consistent with local land use plans.  An early conversation with local officials is necessary to ensuring consistency with the community’s future plans.

There will be monitoring.  An easement holder has the responsibility of ensuring there is not a violation of the easement or conversion of the land to non-agricultural uses.  This means there will be a baseline or “present condition” report of the easement property upon easement creation and monitoring of the property “in perpetuity.”  An annual visit to the property and completion of an annual monitoring report by the easement holder is common. 

It's a lengthy process.  Agricultural easements don’t pop up overnight.  Especially when applying for funding from competitive programs like Ohio’s Local Agricultural Easement Purchase Program or the NRCS Agricultural Land Easements Program, it can be a year or more before an agricultural easement is in place. 

Planning and integration with plans is necessary.  An agricultural easement is one piece of what can be a complex plan addressing a landowner’s expansion, retirement, estate, and transition needs.  A landowner would be wise to work with a team of professionals—financial planner, tax professional, attorney—to ensure that an agricultural easement integrates with all other parts of the plan.

Still interested?  Ohio landowners interested in learning more about agricultural easements may want to consider these steps:

  • Review the resources on the Ohio Department of Agriculture’s Office of Farmland Preservation.
  • Talk with other landowners who have entered into easements.  Refer to the Coalition of Ohio Land Trusts landowner resources and landowner stories.
  • Visit American Farmland Trust’s Farmland Information Center.
  • Talk with a “local sponsor” or land trust in your area.  The Office of Farmland Preservation provides a list of local sponsors for the Clean Ohio Agricultural Easement Purchase Program on its website.
  • Talk with your attorney, financial planner, and accountant about the implications of entering into an agricultural easement.
Rolling Ohio farmland with large hay bales and barns in distance
By: Peggy Kirk Hall, Wednesday, October 18th, 2023

Questions from farmers and farmland owners about agricultural easements are on the rise at the Farm Office.  Why is that?  From what we’re hearing, the questions are driven by concerns about the loss of farmland to development as well as desires to keep farmland in the family for future generations.  An agricultural easement is a unique tool that can help a farmland owner and farming operation meet goals to protect farmland from development or transition that land to the next generation.  Here are answers to some of the questions we’ve been hearing.

What is an agricultural easement?  An agricultural easement is a voluntary legal agreement by a landowner to use land primarily for agricultural purposes and forfeit the right to develop the land for other purposes, either permanently or, less often, for a term of years.  In an agricultural easement, a landowner grants an easement “holder” the legal right to enforce the easement against a landowner or other party who attempts to convert the land to a non-agricultural use. A written legal instrument details and documents this agreement between a landowner and the easement “holder.”  The agricultural easement instrument must be recorded in the county land records, and the agricultural easement is binding on all future landowners for the duration of its term.

A state legislature must authorize the use of the agricultural easement instrument, and Ohio’s legislature did so in 1999.  At that time, the legislature adopted a detailed legal definition of “agricultural easement” in Ohio Revised Code 5301.67(C):

"Agricultural easement" means an incorporeal right or interest in land that is held for the public purpose of retaining the use of land predominantly in agriculture; that imposes any limitations on the use or development of the land that are appropriate at the time of creation of the easement to achieve that purpose; that is in the form of articles of dedication, easement, covenant, restriction, or condition; and that includes appropriate provisions for the holder to enter the property subject to the easement at reasonable times to ensure compliance with its provisions.

The legislature also required in Ohio Revised Code 5301.68 that a landowner may only grant an agricultural easement on land that qualifies for Ohio’s Current Agricultural Use Valuation (CAUV) program under Ohio Revised Code 5713.31.

Is an agricultural easement the same as a conservation easement?  No, not in Ohio, but they share the same legal concept of dedicating land to a particular use.  Ohio also allows a landowner to grant a conservation easement, which is a promise to retain land predominantly in its natural, scenic, open, or wooded condition and forfeit the right to develop the land for other purposes.  A conservation easement might allow agricultural land uses, and an agricultural easement might allow some conservation uses.  The terms used in federal law and some other states vary from Ohio, and include “agricultural conservation easement” or “agricultural land easement.”

Who can be a “holder” of an agricultural easement?  Ohio law answers this question in Ohio Revised Code 5301.68, which authorizes only these entities to enter into an agricultural easement with a landowner:

  • The director of the Ohio Department of Agriculture;
  • A municipal corporation, county, or township;
  • A soil and water conservation district;
  • A tax exempt charitable organization organized for the preservation of land areas for public outdoor recreation or education, or scenic enjoyment; the preservation of historically important land areas or structures; or the protection of natural environmental systems (generally referred to as a “land trust” or a “land conservancy.”)

What kinds of land uses would be inconsistent with keeping the land in agricultural use?  That depends on the terms in the written deed for the agricultural easement.  Activities that might violate the agreement to maintain the land as agricultural include subdivision of the property, commercial and industrial uses, major surface alterations, and oil and gas development.  It’s typical to identify the homestead or “building envelope” area and allow new buildings, construction and similar activities within that area, but those activities might not be permitted on other parts of the land.  Review the  Ohio Department of Agriculture’s current Deed of Agricultural Easement through the link on this page:  https://agri.ohio.gov/programs/farmland-preservation-office/landowners.

Can a landowner transfer land that is subject to an agricultural easement?  Yes.  An agricultural easement does not restrict the right to sell or gift land, but it does carry over to the new landowner.  That landowner must abide by the terms of the agricultural easement.

Are there financial incentives for entering into an agricultural easement?  Yes.  There are several financial incentives:

  • The Ohio Department of Agriculture’s Office of Farmland Preservation oversees the Local Agricultural Easement Purchase Program, which provides Clean Ohio grant funds to certified local sponsors to purchase permanent agricultural easements in their communities.  It’s a competitive process that requires a landowner to work with an approved local sponsor to apply for the program and to donate at least 25% of the agricultural easement’s value if selected.  A landowner can receive up to 75% of the appraised value of the farm’s “development rights,” with a payment cap of $2,000 per acre and $500,000 per farm per application period.
  • Federal funds are also available through the Natural Resource Conservation Service’s Agricultural Conservation Easement Program. This program is also competitive and requires a landowner to work with an approved partner to determine eligibility and apply for easement funding.  NRCS may contribute up to 50 percent of the fair market value of the agricultural land easement.
  • There are also federal income tax incentives for donating a portion or all of an agricultural easement’s value to a qualified charitable organization.  Internal Revenue Code section 170(h) allows a landowner to deduct the value of the easement up to 50 percent of their adjusted gross income (AGI) in the year of the gift, with a 15-year carryover of excess value.  That AGI percentage increases to 100% for a “qualified farmer” who earns more than 50% of their gross income from farming.
  • There can also be federal estate tax benefits for land subject to a permanent agricultural or conservation easement.  The land is valued at its restricted value, which lowers the estate value.  Additionally, Section 2055(f) of the Internal Revenue Code allows donations of qualifying easements to a public charity to be deducted from the taxable value of an estate.  Up to 40% of the value of land restricted by an agricultural or conservation easement  can be excluded from the value of an estate if the easement meets Internal Revenue Code section 2031(C) provisions, limited to $500,000. 

How can a family use an agricultural easement to enable farm transition goals?  Here’s an example.  John and Sue are fourth generation owners of 250 acres of farmland they plan to leave to their child Lee, and they want the land to remain as farmland into the future.  Lee is committed to farming and wants to farm, and John and Sue would like Lee to have more land to improve the viability of the farming operation. They find a local sponsor and apply to Ohio’s Local Agricultural Easement Purchase Program, offering to donate 25% of the agricultural easement value to the program.  They are selected for the funding and receive a payment of $2,000 per acre for the agricultural easement.  They use the $500,000 in easement proceeds to purchase additional farmland for Lee.  John and Sue receive a federal income tax credit for the portion of the easement value they donated to qualify for the program, and carryover the amount until it is fully used, up to 15 years.

What are the drawbacks of agricultural easements?  There are challenges and drawbacks of agricultural easements, and we’ll discuss those in our next blog post.

Agricultural easements require legal and tax advice and careful planning.  Our short Q&A doesn’t address all of the nuances of agricultural easements.  It’s a big decision, and one that should align with current goals and estate and transition plans.  To determine if an agricultural easement works for your situation, seek the advice and planning assistance of knowledgeable legal and tax professionals.

Post-it notes with insurance coverage questions.
By: Jeffrey K. Lewis, Esq., Friday, August 25th, 2023

With just over a week left until echoes of “Hang on Sloopy” and chants of “O-H” and “I-O” can be heard from Buckeye faithful across the nation, we thought we would provide you with some light reading to hold you over until that long awaited 3:30 kick off. In this edition of our Ag Law Harvest, we focus on three recent Ohio Supreme Court cases that could potentially impact business owners, Northern Ohio landowners, and Ohio taxpayers. 

Assault and Battery: Is it Covered Under an Insurance Policy?
A victim of a stabbing at an Ohio adult care facility is unable to collect judgment from the facility’s insurance company after a recent decision by the Ohio Supreme Court. The victim was living at the facility when another resident stabbed him. The perpetrator was later indicted on criminal charges but found not guilty by reason of insanity. 

The victim then filed a civil lawsuit against the perpetrator and the facility to recover for damages resulting from the stabbing injuries. The victim ultimately dropped his lawsuit against the perpetrator and entered into a settlement agreement with the facility. As part of the settlement agreement, the victim agreed not to pursue the judgment against the facility, and instead, sought to collect his judgment from the facility’s insurance company.   

At the time of the stabbing, the adult care facility had a commercial general liability policy. When the victim sought judgment from the facility’s insurance company, the insurance company refused to provide coverage. The insurance company explained that the insurance policy contained a provision that specifically excluded coverage for any bodily injury resulting from an assault or battery. The specific provision at issue stated: 

 

The victim argued that because the perpetrator was found to be not guilty by reason of insanity in the criminal trial, the exclusion provision was nullified because the perpetrator lacked the subjective intent to commit any assault or battery. 

The Ohio Supreme Court disagreed. The Court explained that the plain language of the exclusion provision of the insurance policy at issue is clear – there is no intent requirement included in the exclusion language. Therefore, the Court held that coverage did not exist for the willful assault on the victim. The Court sympathized with the victim but ultimately could not interpret the insurance policy language to include a subjective intent requirement where none existed. 

This case demonstrates the importance of reading and understanding your business insurance policy. Insurance policies are, at the core, contracts between two parties and the language contained within the policy will usually govern that contractual relationship. What you assume is covered under your policy may not necessarily be the case. Furthermore, not all insurance policies are the same. We have seen Ohio cases where an insurance policy does require the presence of some subjective intent in order for an assault and battery exclusion to apply. Speak with your insurance agent and/or attorney to make sure you understand when and where coverage exists, knowing this can be critical to protecting you, your farm, and/or your business. 

Ohio Supreme Court Approves Northern Ohio Wind Farm. 
Residents of Huron and Erie Counties along with Black Swamp Bird Conservatory (the “Plaintiffs”) recently lost their battle in court to prevent the construction of a new wind farm in Northern Ohio. The Plaintiffs argued that the Ohio Power Siting Board (the “Board”) failed to satisfy Ohio law before granting the new wind farm its certificate of environmental compatibility and public need. Specifically, the Plaintiffs assert that the wind farm could “disrupt the area’s water supply, create excessive noise and ‘shadow flicker’ for residents near the wind farm, and kill bald eagles and migrating birds.” 

The Ohio Supreme Court found otherwise. The Court concluded that the Plaintiffs failed to establish that the Board’s granting of the certificate was unlawful or unreasonable. As approved, the new wind farm will consist of up to 71 turbines and cover 32,000 acres of leased land. To read more about the Ohio Supreme Court’s decision visit: In re Application of Firelands Winds, L.L.C.

Ohio Supreme Court Sets New Precedent on Interpreting Ohio Tax Law.
In Ohio, most retail sales are subject to sales tax unless a certain exemption applies. Ohio law does have a sales tax exemption for equipment used directly in the production of oil and gas. A fracking business recently challenged a decision by Ohio’s Tax Commissioner and Board of Tax Appeals that levied the sales tax on certain equipment purchased by the business. The fracking equipment at issue included: a data van, blenders, sand kings, t-belts, hydration units, and chemical-additive units.

The Tax Commissioner concluded that the fracking equipment was not used directly in the extraction of oil and gas, only indirectly, and therefore, did not qualify for the tax exemption. The Ohio Supreme Court felt differently. 

The Court found that all the equipment, except the data van, is used in unison to expose the oil and gas. Because the equipment is used to expose the oil and gas – a necessary part of fracking – the Court had little difficulty concluding that the equipment is being used directly in the production of oil and gas. 

In addition to the equipment’s direct use in the production of oil and gas, the Court also recognized that the fracking equipment may also have a storage or delivery function/purpose. However, the Court reasoned that a piece of equipment’s function must be viewed through the “primary purpose” lens. For example, the Court held that although the blender equipment in this case performs a holding function, the primary use of the blender is to mix “the critical ingredients in the fracking recipe seconds before the mixture is inserted into the well.” Therefore, the Court found that the blender’s holding function did not disqualify it from Ohio’s sales tax exemption. 

Additionally, in this case, the Court also issued an opinion on how Ohio courts should interpret tax law moving forward. Normally, courts use the ever-important legal principal of stare decisis to help it decide on new cases. Stare decisis is the principal that courts and judges should honor the decisions, rulings, and opinions from prior cases when ruling on new cases. Here, the Court took its opportunity to acknowledge that in the past the Court interpreted tax exemptions against the taxpayer, favoring tax collection. But the Court made clear that from here on out, the Court “will apply the same rules of construction to tax statutes that [it applies] to all other statutes” without a slant toward one side or the other. The Court concluded that its task “is not to make tax policy but to provide a fair reading of what the legislature has enacted: one that is based on the plain language of the [law].” 

To read the Ohio Supreme Court’s decision visit: Stingray Pressure Pumping, L.L.C. v. Harris

By: Peggy Kirk Hall, Friday, July 07th, 2023

It was a long time coming, but the Ohio EPA has presented a final Total Maximum Daily Load (TMDL) report for the Western Basin of Lake Erie to the U.S. EPA.  The agency submitted the “Maumee Watershed Nutrient TMDL ” report on June 30, 2023.  This was the exact deadline agreed to in the Consent Decree that settled litigation against the U.S. EPA and Ohio EPA over the lack of a TMDL for Lake Erie’s Western Basin. 

What is a TMDL?

A TMDL provides a framework for future decisions that affect water quality in waters designated as “impaired waters” that fail to meet water quality standards.  The Ohio EPA declared Western Lake Erie waters as “impaired” in 2018, and the TMDL is the plan for addressing shoreline and open water impairments in the basin.  According to the Ohio EPA, the TMDL report “identifies the links between the waterbody use impairment, sources of impairment, and the pollutant load reductions needed to meet water quality standards.”

How will it affect Ohio agriculture?

A major source of the impairment in the Lake Erie Western Basin is cyanobacterial harmful algal blooms caused by high phosphorus loads.  The report identifies many sources of phosphorus that contribute to the impairment, with the largest component being “nonpoint” sources that include row crop commercial fertilizers and manures.  “Point” sources of phosphorous sources include water treatment facilities; stormwater discharges; and home sewage treatment systems.  The TMDL calls for phosphorus load reductions in the Maumee watershed to remedy the lake’s impairment.  Agriculture would be affected by increased emphasis on management practices for agricultural fertilizers, manures, soils, and drainage. 

How does the TMDL address phosphorus reductions?

The TMDL embraces an “adaptive management” approach that involves developing strategies, establishing milestones, implementing strategies, monitoring environmental responses, evaluating progress, and adjusting strategies.  For row crops, the report focuses on management practices such as soil testing and developing a nutrient management plan.  It proposes other agricultural phosphorous reductions from soil erosion management, increasing cropping diversity through rotations and cover crops, reductions of phosphorus applications, edge-of-field management, two-stage ditch designs, and controlled drainage. The report points out that many of the proposed actions have already been underway on farms in the watershed for over a decade, and monitoring, evaluations, and adjustment strategies will continue the progress made to-date. Figure 50 in the report, below, highlights phosphorous reduction strategies.

What happens next?

The U.S. EPA now must review the TMDL and decide whether to approve or disapprove the report.  It has up to 90 days to do so, according to the Consent Decree.  If the U.S. EPA does not approve the TMDL report, it must then prepare a TMDL for the Western Basin. 

How to learn more

Read the Maumee Watershed Nutrient TMDL on the Ohio EPA website, which also includes a fact sheet, appendices, and a summary of responses to public comments on the draft TMDL.

A chicken looking directly at the camera.
By: Jeffrey K. Lewis, Esq., Friday, May 26th, 2023

We’re back! We are excited to bring back our regular Ag Law Harvest posts, where we bring you interesting, timely, and important agricultural and environmental legal issues from across Ohio and the country. This month’s post provides you with a look into Ohio’s ongoing legal battle of some provisions in the recently enacted “Chicken Bill”, a brief dive into the U.S. Department of Labor’s new H-2A wage rules, a warning about conservation easement fraud, and an explanation of a court’s recent decision to release an insurance company from its duty to defend its insured in a lawsuit. 

Battle of “Chicken Bill.”
Ohio House Bill 507 (“HB 507”), sometimes referred to as “the Chicken Bill” went into effect last month and was widely known for reducing the number of poultry chicks that can be sold in lots (from six to three). However, HB 507 contained other non-poultry related provisions that have caused quite a stir. Environmental groups have sued the State, seeking a temporary restraining order, a preliminary and permanent injunction to prevent HB 507 from going into effect, and a declaratory judgement that HB 507 violates Ohio’s Constitution. Two provisions within HB 507 have specifically caught the attention of the Plaintiffs in this case: (1) a revision to Ohio Revised Code § 155.33 that requires state agencies to lease public lands for oil and gas development (the “Mandatory Leasing Provision”); and (2) a revision to Ohio Revised Code § 4928.01 that defines “green energy” to include energy generated by using natural gas, so long as the energy generated meets certain emissions and sustainability requirements (the “Green Energy Provision”). 

Plaintiffs argue that the Mandatory Leasing Provision will cause irreparable harm to their members’ “environmental, aesthetic, social, and recreational interests” in Ohio’s public lands. Additionally, Plaintiffs assert that the Mandatory Leasing Provision and Green Energy Provision violate Ohio’s Constitution by not following the “One-Subject Rule” and the “Three-Consideration Rule” both of which require transparency when creating and passing legislation in Ohio. The Franklin County Court of Common Pleas recently denied Plaintiffs’ request for a temporary restraining order, reasoning that no new leases would likely be granted until the Oil and Gas Land Management Commission adopts its rules (as required by Ohio law) and that there is “no likelihood of any immediate and irreparable injury, loss, or damage to the plaintiffs.” Since the hearing on Plaintiffs’ request for a temporary restraining order, the State of Ohio has filed its answer denying Plaintiffs’ claims and currently all parties are in the process of briefing the court on the merits of Plaintiffs’ request for a preliminary injunction. 

New H-2A Wage Rules: Harvesting Prosperity or Sowing Seeds of Despair? 
On February 28, 2023, the U.S. Department of Labor (the “DOL”) published a final rule establishing a new methodology for determining hourly Adverse Effect Wage Rates (“AEWR”) for non-range farm occupations (i.e. all farm occupations other than herding and production of livestock on the range) for H-2A workers. The new methodology has been in effect since March 30th. Late last month Rep. Ralph Norman and the Chairman of the House Committee on Agriculture, Rep. Glenn “GT” Thompson, introduced a resolution of disapproval under the Congressional Review Act, seeking to invalidate the DOL’s final rule. Similarly, the National Council of Agricultural Employers (“NCAE”) released a statement declaring that it has filed a Motion for Preliminary Injunction against the DOL’s new methodology. 

Opponents of the new rule argue that the increased wages that farmers and ranchers will be required to pay will put family operations out of business. On the other hand, the DOL believes “this methodology strikes a reasonable balance between the [law’s] competing goals of providing employers with adequate supply of legal agricultural labor and protecting the wages and working conditions of workers in the United States similarly employed.” Producers can visit the DOL’s frequently asked questions publication to learn more about the new H-2A wage rule. As it stands, the new H-2A regulations remain in effect and producers should be taking all possible steps to follow the new rules. Make sure to speak with your attorney if you have any questions about compliance with H-2A regulations. 

Conservation Easement Fraud – Protecting Land or Preying on Profits? 
For a while now, conservation easements have been utilized by farmers and landowners to preserve their land while also obtaining a substantial tax benefit. But not all actors in the conservation easement sphere are good ones. Earlier this month, a land appraiser in North Carolina pled guilty to conspiring to defraud the United States as part of a syndicated conservation easement tax shelter scheme. According to a press release by the U.S. Department of Justice (“DOJ”), Walter “Terry” Douglas Roberts II of Shelby, North Carolina conspired with others to defraud the United States by inflating the value of conservation easements which led to $1.3 billion in fraudulent tax deductions. Roberts is guilty of inflating the value at least 18 conservation easements by failing to follow normal appraisal methods, making false statements, and manipulating or relying on knowingly manipulated data to achieve a desired tax deduction amount. Roberts faces a maximum penalty of five years in prison and could be forced to pay back a specified amount to the U.S. Government. 

Conservation easement fraud is not new, however. The Internal Revenue Service (“IRS”) has been monitoring the abuse of the conservation easement tax deductions for some time. The IRS has included these fraudulent transactions on its annual “Dirty Dozen” list of tax avoidance scams. The IRS has seen taxpayers, often encouraged by promoters armed with questionable appraisals, take inappropriately large deductions for these types of easements. These promoters twist the law to develop abusive tax shelters that do nothing more than “game the tax system with grossly inflated tax deductions and generate high fees for promoters.” The IRS urges taxpayers to avoid becoming entangled by these dishonest promoters and that “[i]f something sounds too good to be true, then it probably is.” If you have questions about the tax benefits of a conservation easement, make sure to speak with your attorney and/or tax professional.  

Alleged Intentional Acts Not Covered by Insurance. 
An animal feed manufacturer is in hot water, literally. A city in Mississippi has accused Gold Coast Commodities, Inc. (“Gold Coast”), an animal feed manufacturer, of intentionally dumping hot, greasy wastewater into the City’s sewer system. Prior to the City’s investigation into Gold Coast’s alleged toxic dumping, Gold Coast purchased a pollution liability insurance policy from Crum & Forster Specialty Insurance Company (“Crum & Forster”). After an investigation conducted by the City and the Mississippi Department of Environmental Quality, the City filed a lawsuit against the feed manufacturer alleging that it intentionally dumped toxic waste into the City’s sewer system. Gold Coast then notified its insurance company of the potential claim. However, Crum & Forster denied coverage for Gold Coast’s alleged toxic dumping. According to the insurance policy, coverage exists for an “occurrence” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Crum & Forster refused to provide a defense or coverage for Gold Coast in the City’s toxic dumping lawsuit because the City alleges multiple times that Gold Coast acted intentionally, and therefore, Gold Coast’s actions were not an accident and not covered by the policy. 

In response, Gold Coast filed a lawsuit against Crum & Forster asking a federal district court in Mississippi to declare that Crum & Forster is required to defend and provide coverage for Gold Coast under the terms of the insurance policy. On a motion to dismiss, the federal district court in Mississippi dismissed Gold Coast’s lawsuit against the insurance company. The district court reasoned that in the underlying toxic dumping lawsuit, the City is not alleging an accident, rather the City asserts that Gold Coast intentionally dumped the toxic waste. Thus, Crum & Forster is not obligated to provide a defense or coverage for Gold Coast, under the terms of the policy. Gold Coast appealed to the Fifth Circuit Court of Appeals (which has jurisdiction over federal cases arising in Texas, Louisiana, and Mississippi). 

The Fifth Circuit affirmed the decision of the federal district court, rejecting Gold Coast’s claim that Crum & Forster is obligated to provide a defense and coverage for Gold Coast in the City’s toxic dumping lawsuit. Gold Coast argued that the City seeks to recover under the legal theory of negligence in the toxic dumping case, therefore Gold Coast’s actions are accidental in nature. The Fifth Circuit was unconvinced. The Fifth Circuit explained that when reading a complaint, the court must look at the factual allegations, not the legal conclusions. The Fifth Circuit found that the factual allegations in the City’s lawsuit all referred to Gold Coast’s intentional or knowing misconduct and any recovery sought under the theory of negligence is not a factual allegation, instead it is a legal conclusion. The Fifth Circuit concluded that using terms like “negligence” do not “transform the character of the factual allegations of intentional conduct against [Gold Coast] into allegations of accidental conduct constituting an ‘occurrence.’” Thus, the Fifth Circuit affirmed the federal district court’s decision to dismiss Gold Coast’s lawsuit against its insurer. Unless the Supreme Court of the United States decides to take up the case, it looks like Gold Coast is all on its own in its fight against the City. The lesson here is that although insurance is important to have, its equally as important to speak with your insurance agent to understand what types of incidents are covered under your insurance policy. 

Sunset over Western Lake Erie
By: Peggy Kirk Hall, Thursday, May 18th, 2023

What is the key to resolving disagreements over water quality issues in Lake Erie?  Cooperation, according to the federal court judge overseeing a legal battle over Lake Erie. The judge, U.S. District Judge James G. Carr, recently approved a plan that is the result of cooperation between the U.S. EPA, State of Ohio, Lucas County Commissioners, and the Environmental Law & Policy Center.  For almost six years, the parties have been in a legal battle over how to deal with water quality in Western Lake Erie.  But at the encouragement of the court, the parties developed and agreed to a Consent Decree to settle the case.  Judge Carr approved the Consent Decree on May 4, 2023.  Time will soon tell if the cooperation approach will satisfy the parties holding interests in Lake Erie’s water quality.

What led to the Consent Decree?

In the midst of growing concerns about harmful algal blooms and water quality in Western Lake Erie, the Environmental Law & Policy Center and Lucas County Commissioners filed a lawsuit against the U.S. EPA, claiming that the federal agency had failed its obligations to oversee Ohio’s duties to meet water quality standards under the Clean Water Act (CWA).  The CWA requires states to identify waters that do not meet water quality standards and designate them as “impaired waters.”  Once it lists a water as impaired, the state must also rank which waters have the highest need for determining Total Maximum Daily Loads (TMDLs) that set maximum amounts of pollutants that may enter the water.  TMDLs provide a framework for future decisions that affect water quality in the impaired water.

Following a separate lawsuit that challenged Ohio EPA’s designation of some but not all waters in Western Lake Erie as impaired, Ohio EPA assigned impaired water status to all Western Lake Erie waters by 2018.  But Ohio identified the waters as a “low” TMDL priority and stated that it would address water quality the western basin through “alternative measures” rather than preparation of a TMDL. The U.S. EPA, charged with reviewing state actions for compliance with the CWA, approved Ohio’s designation.  The Environmental Law & Policy Center and the Lucas County Board of Commissioners each filed lawsuits against the U.S. EPA for approving Ohio’s approach, and the two lawsuits were consolidated into the current case.  The State of Ohio, not an original party to the litigation, received the court’s permission to intervene as a defendant in the lawsuit.

Several years and many motions and hearings later, Judge Carr admonished both sides of the lawsuit for dragging the matter out in court and leaving Lake Erie’s water quality problem “largely unattended.”  In 2021, before considering separate summary judgment motions the parties had made, the Judge pointed out that no matter his decision, the other party would appeal it and continue the litigation and that “nothing is going to get done.”  Resolving the problems in Lake Erie would only happen if the U.S. EPA, the plaintiffs, and the State of Ohio would “work cooperatively towards accomplishing a meaningful outcome and resolution,” Judge Carr stated.  His resolution on the summary judgment motions would only “kick the can down the road for another two years, at least...” A better solution, said Judge Carr, would be for the parties to resolve the matter through settlement.

With the court’s oversight, the parties engaged in settlement negotiations for nearly two years.  They reached an agreement in 2022.  As required by law, the U.S. EPA filed the proposed agreement, or Consent Decree, in the Federal Register last November and sought public comments to the proposal.  The parties then filed a joint motion to the court, asking Judge Carr to approve the proposed Consent Decree. 

The Consent Decree

The Consent Decree outlines a timeline Ohio EPA must follow to create a TMDL designed to address nutrient and algae impairments for drinking water, aquatic life, and recreational uses by establishing pollutant limits for all Western Lake Erie waters. The agreement requires the plaintiffs to allow additional time for the U.S. EPA to step in and prepare a TMDL if Ohio fails in its efforts to do so.  The Consent Decree also sets up a status report schedule and a dispute resolution process and awards attorney fees and costs to the Plaintiffs.  The agreement does not address the legal sufficiency of the TMDL, and the plaintiffs still hold the right to challenge the legal sufficiency or adequacy of the TMDL. The Consent Decree will end upon performance of all obligations by all parties.

The following summarizes the steps of the agreed upon TMDL schedule.

Approval of the Consent Decree

Judge Carr’s role in reviewing the proposed agreement was to determine if it is “fair, adequate, and reasonable, as well as consistent with the public interest.”  The parties’ submitted a joint motion in support of the Consent Decree that laid out their arguments as follows:

  1. The proposed agreement is fair because it was negotiated at length, in good faith, and in recognition of the strengths and weaknesses of each side.
  2. Because the proposed agreement addresses Defendant’s alleged violations by providing a schedule for developing a TMDL for Western Lake Erie, it is adequate and reasonable.
  3. The Consent Decree is in the public interest and furthers the goals of the Clean Water Act by providing for the timely development of a TMDL that will help “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters” as intended by the Act. It also allows continued citizen rights to participate in the TMDL, does not alter existing regulations for TMDLs, and avoids significant time and expenses associated with ongoing litigation.

Judge Carr agreed with the parties’ arguments and approved the Consent Decree.  In doing so, he praised the work of U.S. District Judge Polster, who oversaw the settlement negotiations, the lawyers for each party, and the State of Ohio.  “Though the work that today’s agreement brings is but a first step, it is a step that has to be taken.  How many more steps lie ahead, and how long they will take, is beyond even guessing,” he stated.  “But there’s reason to hope that, in time, the Maumee River will no longer display, as it has for countless summers, a loathsome foul and slimy green surface as it flows through Toledo on its constant and irresistible course on to Lake Erie’s Western Basin.”

What’s next?

Implementation of the Consent Decree schedule is already underway.  The Ohio EPA issued a draft TMDL or “Nutrient Water Quality Improvement Plan for the Maumee River Watershed” on December 30, 2022, and is currently reviewing comments made during the public comment period that ended on March 8, 2023.  The agency appears to be on schedule for meeting the June 30 deadline for submitting the TMDL to the U.S. EPA for its review. Information on the Draft TMDL is available at https://epa.ohio.gov/divisions-and-offices/surface-water/reports-data/maumee-river-watershed.

But is continued cooperation on the TMDL for Western Lake Erie possible?  Both the plaintiffs in this case submitted comments on the draft TMDL, and both raised concerns about its “shortcomings.”  

“The TMDL just proposes to keep doing the same things that have already failed, focused on voluntary measures and incentive payments to producers,” stated the Environmental Law & Policy Center in its comments, available at https://elpc.org/wp-content/uploads/2023/03/ELPC-Maumee-TMDL-comments-FINAL.pdf

“It is critical that the draft TMDL not lack the necessary steps to reduce agriculture phosphorous runoff into Lake Erie and place limits on dissolved reactive phosphorous,” said Lucas County Commissioner Wozniak in comments summarized at https://co.lucas.oh.us/CivicAlerts.aspx?AID=1750.  “We shouldn’t be fooled into settling for half measures and voluntary practices any longer. We are talking about the health of our most valuable resource, and we must have a meaningful TMDL to protect it.”

While the spirit of cooperation encouraged by Judge James G. Carr is at play in the development of a TMDL for Western Lake Erie, whether that spirit will thrive in the debate over the content and future implementation of the TMDL is a critical question. In the words of Judge Carr, how many more steps lie ahead, and how long they will take, is beyond even guessing.  Let’s hope that more litigation isn’t one of those steps.

 

The Consent Decree is available through this link.

Judge Carr's Order on the Consent Decree is at this link.

By: Peggy Kirk Hall, Wednesday, April 05th, 2023

The United States Supreme Court began its new term last October with the now famous wetlands case of Sackett v. U.S. EPAThe case is one in a long line of legal battles over how to define which waters are “waters of the United States” (“WOTUS”) that are subject to federal jurisdiction under the Clean Water Act.  We expected quiet waters for WOTUS as we awaited the Sackett decision. But we were wrong.

New EPA rule.  The U.S. EPA made a big splash on January 18, when the agency published a new WOTUS rule to define which waters are WOTUS.  Although the rule had been under consideration since the beginning of the Biden administration, many expected the EPA to hold off on finalizing the rule until after the Supreme Court’s Sackett ruling because that decision could affect the rule.  The EPA chose not to wait, and the new rule became effective on March 20, 2023. 

New litigation begins.  Not surprisingly, the new WOTUS rule set off a new wave of litigation.  A string of four federal lawsuits were filed in January and February of 2023 by many states and interest groups.  The cases contest the validity of the rule and ask for preliminary injunctions preventing implementation of the rule while the cases are pending.

Two cases, two different outcomes.  The Southern District of Texas made the first decision on the new litigation in Texas v. U.S. EPA, granting an injunction on March 19 for two of the lawsuits filed by Texas, Idaho, and the American Farm Bureau and other interest groups.  The injunction prevents the rule from going into effect in Texas and Idaho. The federal district court determined the plaintiffs would expend significant resources complying with the rule although the rule was unlikely to withstand judicial scrutiny, creating potential irreparable harm and justifying an injunction against the rule. The Kentucky district court recent an opposite decision on March 31 in the case filed by the State of Kentucky.  The Eastern District court in Kentucky v. U.S. EPA declined to issue Kentucky’s request for a preliminary injunction, concluding that because the EPA has not begun enforcing the rule in Kentucky, there is no impending injury that warrants an injunction.  In both the Kentucky and Texas cases, the courts declined to issue a nationwide injunction against the new WOTUS rule.

Another injunction decision to come. Twenty four states joined together to file West Virginia v. EPA, the fourth federal lawsuit against the new WOTUS rule.  Ohio is not one of the plaintiff states in the case, which challenges the rule and seeks injunctions in the states as well as a nationwide injunction.  We should see a decision on the injunction request soon from the federal district court in North Dakota.

There are waves in Congress, too.  Not satisfied to sit back and watch the battles over the new WOTUS rule,  Congress recently took action to void the rule.  Congress used its authority under the Congressional Review Act, a little-used federal law that allows Congress to invalidate an agency action.  The House passed a resolution to void the rule on March 9 by a margin of 227 to 198, and the Senate voted on March 29 with 53 for and 43 against nullifying the WOTUS rule.  President Biden has the power to veto the legislation, however.  Neither the House nor the Senate appear to hold the two-thirds majority necessary to override a Biden veto.  (UPDATE:  President Biden vetoed the resolution on April 6, 2023).

Back to SCOTUS.  And still, we circle back to the Sackett case and await the Supreme Court’s analysis of the proper test to use to define a “waters of the United States.”  How will the ruling affect the new WOTUS rule and its litigation?  Will Congress act on the Supreme Court’s ruling to establish a statutory definition for WOTUS that would preempt the EPA’s rule?  As we have learned, there are more WOTUS waves yet to come.  

 

United States Department of Agriculture
By: Peggy Kirk Hall, Tuesday, February 07th, 2023

Sometimes a legislative proposal stalls, appears dead, then emerges in another piece of legislation in a slightly different form.  That’s exactly what happened with the Growing Climate Solutions Act and its plan to help farmers with carbon and environmental credit markets.  First introduced in 2020, the bill gained some momentum and passed the U.S. Senate before coming to a standstill in the House. But Congress added the bill, with some negotiated changes, into the Consolidated Appropriations Act it passed in the final days of 2022. The USDA is now charged with implementing its provisions.

Purpose of the bill

The bill aims to reduce barriers for farmers, ranchers, and foresters who want to enter into voluntary markets that establish environmental credits for greenhouse gas emission reductions resulting from agricultural or forestry practices (also known as carbon credits).  It allows the USDA to create the “Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program” if it appears, after an initial assessment, that the program would accomplish these purposes for farmers, ranchers, and private forest landowners:   

  • Facilitate participation in environmental credit markets
  • Ensure fair distribution of revenues
  • Increase access to resources and information on environmental credit markets

Advisory Council

If the USDA determines that the program would meet the above purposes, it must establish an Advisory Council to help guide the program.  At least 51% of the Advisory Council must be farmers, ranchers, and private forest landowners, including beginning, socially disadvantaged, limited resource, and veteran members.  Other members on the Advisory Council would include representatives from agencies, the agricultural and forestry industries, the scientific research community, non-governmental organizations,  and professionals and private sector entities involved in credit markets.

Protocols

A primary concern with the environmental credit market is uncertainty and variations in how to establish, quantify, and value environmental credits.  An important component of the new program is for USDA to publish lists of widely accepted protocols that are designed to ensure consistency, reliability, effectiveness, efficiency, and transparency of the markets along with documents relating to the protocols.  The act directs the USDA to include protocol documents and details on calculations; sampling methodologies; accounting principles; systems for verification, monitoring, measurement, and reporting; and methods to account for issues such as additionality, permanence, leakage, and double counting of credits.

Vendor registry

Another concern for landowners who want to participate in environmental credit markets is knowing who to turn to for technical assistance.  To address this issue, the program would require the USDA to create a registry of third-party vendors of environmental credits who can help farmers, ranchers, and forest landowners measure the carbon reduction benefits of different types of practices.  Unlike an earlier version of the bill, the USDA would not establish a certification program for these vendors, although the agency must ensure that the vendors possess demonstrated expertise in practices that prevent, reduce, or mitigate greenhouse gas emissions. 

Assessments

The USDA, in concert with the Advisory Council, must submit an initial and ongoing assessments to the agricultural committees in the Senate and House.  The initial assessment must examine ways to ensure certainly for farmers, ranchers and forest landowners in the marketplace.  Ongoing assessments would examine the environmental credit market itself, including actors in the market, participation, credits generated and sold, barriers to entry, opportunities for other voluntary markets, and more.

Program funding

The act provides an appropriation of at least $1 million per year to fund the program through 2027 and another $4.1 million of potential unobligated American Rescue Plan Act funds.  It specifically prohibits the USDA from using funds from the Commodity Credit Corporation for the program, a demand of the House Agriculture Committee Chairman Glenn Thompson, who states that those funds are obligated for Farm Bill program payments.

What’s next?

Farm Bill negotiations this year and other climate initiatives recently undertaken by the Biden administration, such as the USDA’s Partnerships for Climate-Smart Commodities, could reduce the focus the Growing Climate Solutions Act would have received if it had passed when first introduced back in 2020.  Even so, the timeclock has started for the USDA to make its initial determination of whether the program would meet the intended purposes. Secretary Vilsack must make that determination by late September, and the expectation is that the program will proceed.  We should then see the Advisory Council established by fall and and can expect program outputs such as protocols and the third-party registry as early as 2024. 

Read the provisions of the new law beginning on page 1,512 of the Consolidated Appropriations Act of 2023, H.R. 2617.

Pages

Subscribe to RSS - Environmental