dairy

Enzo the Eurasian Eagle Owl staring
By: Jeffrey K. Lewis, Esq., Friday, August 20th, 2021

Did you know that the “wise old owl” saying is a myth?  Generally speaking, owls are no wiser than other birds of prey.  In fact, other bird species like crows and parrots have shown greater cognitive abilities than the owl.  An owl’s anatomy also helps dispel the myth because most of the space on an owl’s head is occupied by their large eyes, leaving little room for a brain. 

This week’s Ag Law Harvest brings you EPA bans, Ohio case law, USDA announcements, and federal case law which could make your head spin almost as far as an owl’s.  

EPA banning use of chlorpyrifos on food crops.  The EPA announced that it will stop the use of the pesticide chlorpyrifos on all food to better protect producers and consumers.  In its final rule released on Wednesday, the EPA is revoking all “tolerances” for chlorpyrifos.  Additionally, the EPA will issue a Notice of Intent to Cancel under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) to cancel all registered food uses of chlorpyrifos.  Chlorpyrifos is an insecticide used for a variety of agricultural uses, including soybeans, fruit and nut trees, broccoli, cauliflower, and other row crops, in addition to non-food uses.  The EPA’s announcement comes in response to the Ninth Circuit’s order directing the EPA to issue a final rule in response to a petition filed by opponents to the use of chlorpyrifos.  The petition requested that the EPA revoke all chlorpyrifos tolerances because those tolerances were not safe, particularly because of the potential negative effects the insecticide has on children.  For more information about chlorpyrifos and the EPA’s final rule, visit the EPA’s website.

Trusts aren’t to be used as shields.  An Ohio appeals court recently reinforced the concept that under Ohio law, trusts are not be used as a way to shield a person’s assets from creditors.  Recently, a plaintiff filed a lawsuit against a bank alleging breach of contract and conversion, among other things.  Plaintiff, an attorney and real estate developer, claimed that the bank removed money from his personal account and a trust account in violation of Ohio law and the terms of the loan agreement between the parties.  Prior to the lawsuit, plaintiff established a revocable trust for estate planning purposes and to acquire and develop real estate. This dispute arose from a $200,000 loan from the bank to the plaintiff to help establish a restaurant.  A provision of the loan agreement, known as the “Right to Setoff” provision, allowed the bank to “setoff” or effectively garnish all accounts the plaintiff had with the bank.  The setoff provision explicitly prohibited any setoff from any IRA or trust accounts “for which setoff would be prohibited by law.”  Plaintiff made all monthly payments but failed to make the final balloon payment on the loan.  Plaintiff argued that the bank broke the loan contract and violated Ohio law by taking funds from the trust account to pay off the remaining balance of the loan.  The court disagreed.  The court noted that under Ohio law, a settlor’s property in a revocable trust is subject to the claims of the settlor’s creditors.  A settlor is a person who creates or contributes property to a trust.  In this case, plaintiff was the creator, settlor, and sole beneficiary of the revocable trust.  Because of that, the court concluded the bank did not violate Ohio law when using the trust account to setoff the balance of the loan.  Additionally, the court found that the bank did not violate the terms of the loan agreement because a setoff from the trust account was not prohibited by law.  The court noted that Ohio law did not intend to allow a settlor who is also a beneficiary of the trust to use a trust as a “shield” against creditors.  Although trusts can be a useful estate planning tool, there are limits to what a trust can do, as evidenced by this case. 

Renewable fuel supporters file appeal on E15 summer sales. Corn farmers have joined forces with the biofuel industry (“Petitioners”) to ask the D.C. Circuit Court of Appeals for a new hearing on a ruling that struck down the EPA’s 2019 decision to allow year-round E15 sales.  Earlier this year, the same D.C. Circuit Court of Appeals issued an opinion that ruled the legislative text in the law supporting the biofuel mandate does not support the Trump administration’s regulatory waiver that allowed E15 to be sold during the summer months. In their petition, Petitioners argue that the D.C. Circuit Court made “significant legal errors.”  Petitioners contend that the court should rehear the case because the intent behind the nation’s biofuel mandate is better served by the sale of E15 through the summer months because it is less volatile, has less evaporative emissions, and is overall better for the environment than other fuel sources.  Petitioners also believe the court’s original decision deprives American drivers the choice of lower carbon emitting options at the gas pump.

Monsanto asks Supreme Court to review Ninth Circuit’s Roundup Decision.  In its petition to the Supreme Court of the United States Monsanto Company (“Monsanto”) asked the Supreme Court to review the $25 million decision rendered by the Ninth Circuit Court of Appeals.  In that decision, the Ninth Circuit held that the Federal Insecticide Fungicide and Rodenticide Act (“FIFRA”) did not preempt, or otherwise prevent, the plaintiff from raising California failure-to-warn claims on Roundup products and allowed plaintiff to introduce expert testimony that glyphosate causes cancer in humans.  In trial, the plaintiff argued that Monsanto violated California’s labeling requirements by not including a warning on the Roundup label that glyphosate, which is found in Roundup, causes cancer.  Monsanto argues that FIFRA expressly preempts any state law that imposes a different labeling or packaging requirement.  Under FIFRA, Monsanto argues that the EPA did not require Monsanto to include a cancer warning on its Roundup label.  Therefore, Monsanto maintains, that because California law differed from FIFRA, Monsanto was not required to follow California law when it came to labeling its Roundup product.  Secondly, the Ninth Circuit allowed plaintiff to present expert evidence that glyphosate could cause non-Hodgkin’s lymphoma in the general public and that glyphosate caused the plaintiff’s lymphoma.  Monsanto contends that the lower courts have distorted established precedent by allowing the expert testimony because the testimony is not based on generally accepted scientific principles and the scientific community has consistently found that glyphosate does not cause cancer in humans.    

USDA working to protect nation’s dairy industry.  The USDA’s Agricultural Marketing Service (“AMS”) has struck a deal with the European Union (“EU”) to satisfy the EU’s new import requirements on U.S. dairy.  The EU will require new health certificates for U.S. dairy products exported to the EU to verify that the U.S. milk used for products exported to the EU is sourced from establishments regulated under the Grade “A” Pasteurized Milk Ordinance or the USDA AMS Milk for Manufacturing Purposes.  Officials representing the U.S. Dairy Export Council and International Dairy Foods Association claim that the deal will allow U.S. producers to comply with the EU’s mandates while also satisfying the concerns within the American dairy industry.  The deal pushes back the EU’s deadline for new health certificates to January 15, 2022, to allow U.S. producers and exporters enough time to bring their products into compliance.  The USDA also announcedthat it is providing around $350 million to compensate dairy producers who lost revenue because of market disruptions due to the COVID-19 pandemic and a change to the federal pricing formula under the 2018 farm bill.  Additional details are available at the AMS Dairy Program website.

Tale as old as time.  An Ohio appeals court recently decided a dispute between neighbors about a driveway easement.  The driveway in dispute is shared by both neighbors to access their detached garages. Defendants used the driveway to access their garage and then the driveway extends past the Defendants’ garage onto Plaintiff’s property and ends at Plaintiff’s garage.  The dispute arose after Defendants built a parking pad behind their garage and used parts of the driveway they never used before to access the parking pad.  The original easement to the driveway was granted by very broad and general language in a 1918 deed, when the property was divided into two separate parcels.  In 1997, a Perpetual Easement and Maintenance Agreement (“Agreement”) was entered into by the two previous property owners.  The Agreement was much more specific than the 1918 deed and specifically showed how far the easement ran and what portions of the driveway could be used by both parties.  The 1997 Agreement did not allow for Defendants to use the portion of the driveway necessary to access their parking pad.  Plaintiffs argue that the 1997 Agreement controls the extent of the easement, whereas Defendants argue that the broad general language in the 1918 deed grants them authority to use the whole length of the driveway.  The Court found the more specific 1997 Agreement to be controlling and ruled in favor of the Plaintiffs.   The Court reasoned that the 1918 deed creates an ambiguity as to the extent of the easement and there is no way of knowing what the original driveway looked like or how it was used.  The Court concluded that the 1997 Agreement does not contradict or invalidate the 1918 deed, rather the 1997 Agreement puts specific parameters on the existing easement and does not violate any Ohio law.  The Defendants were found liable for trespass onto the Plaintiffs’ property and is expected to pay $27,500 in damages.  The lesson to be learned from all of this?  Make sure your easements are as specific and detailed as possible to ensure that all parties are in compliance with the law.

Close up of beef cow.
By: Jeffrey K. Lewis, Esq., Friday, June 04th, 2021

As planting season draws to a close, new agricultural issues are sprouting up across the country.  This edition of the Ag Law Harvest brings you federal court cases, international commodity news, and new program benefits affecting the agriculture industry. 

Pork processing plants told to hold their horses.  The USDA’s Food Safety and Inspection Service (“FSIS”) is not going to appeal a federal court’s ruling that requires the nation’s hog processing facilities to operate at slower line speeds.  On March 31, 2021, a federal judge in Minnesota vacated a portion of the USDA’s 2019 “New Swine Slaughter Inspection System” that eliminated evisceration line speed limits.  The court held that the USDA had violated the Administrative Procedure Act when it failed to take into consideration the impact the new rule would have on the health and safety of plant workers.  The court, however, only vacated the provisions of the new rule relating to line speeds, all other provisions of the rule were not affected.  Proponents of the new rule claim that the rule was well researched and was years in the making.  Further, proponents argue that worker safety was taken into consideration before adopting the rule and that the court’s decision will cost the pork industry millions.  The federal court stayed the order for 90 days to give the USDA and impacted plants time to adjust to the ruling.  All affected entities should prepare to revert to a maximum line speed of 1,106 head per hour starting June 30, 2021. 

Beef under (cyber)attack.  Over the Memorial Day weekend, JBS SA, the largest meat producer globally, was forced to shut down all of its U.S. beef plants which is responsible for nearly 25% of the American beef market.  JBS plants in Australia and Canada were also affected.  The reason for the shut down?  Over the weekend, JBS’ computer networks were infiltrated by unknown ransomware.  The USDA released a statement showing its commitment to working with JBS, the White House, Department of Homeland Security, and others to monitor the situation.  The ransomware attack comes on the heels of the Colonial Pipeline cyber-attack, leading many to wonder who is next.  As part of its effort, the USDA has been in touch with meat processors across the country to ensure they are aware of the situation and asking them to accommodate additional capacity, if possible.  The impact of the cyber-attack may include a supply chain shortage in the United States, a hike in beef prices at the grocery store, and a renewed push to regulate other U.S. industries to prevent future cyber-attacks. 

Texas has a new tool to help combat feral hogs.  Texas Agriculture Commissioner, Sid Miller, announced a new tool in their war against feral hogs within the state.  HogStop, a new hog contraceptive bait enters the market this week.  HogStop is being released in hopes of curbing the growth of the feral hog population.  According to recent reports, the feral hog population in Texas has grown to over 2.6 million.  It is estimated that the feral hogs in Texas have been responsible for $52 million in damage.  HogStop is an all-natural contraceptive bait that targets the male hog’s ability to reproduce.  HogStop is considered a 25(b) pesticide under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), which allows Texas to use it without registering the product.  Commissioner Miller thinks HogStop is a more humane way to curb the feral hog population in Texas and hopes that it is the answer to controlling the impact that feral hogs have on farmers and ranchers.  More information about HogStop can be found at their website at www.hogstop.com

USDA announces premium benefit for cover crops.  Most farmers who have coverage under a crop insurance policy are eligible for a premium benefit from the USDA if they planted cover crops this spring.  The USDA’s Risk Management Agency (“RMA”) announced that producers who insured their spring crop and planted a qualifying cover crop during the 2021 crop year are eligible for a $5 per acre premium benefit.  However, farmers cannot receive more than the amount of their insurance premium owed.  Certain policies are not eligible for the benefit because those policies have underlying coverage that already receive the benefit or are not designed to be reported in a manner consistent with the Report of Acreage form (FSA-578).  All cover crops reportable to the Farm Service Agency (“FSA”) including, cereals and other grasses, legumes, brassicas and other non-legume broadleaves, and mixtures of two or more cover crop species planted at the same time, are eligible for the benefit.  To receive the benefit, farmers must file a Report of Acreage form (FSA-578) for cover crops with the FSA by June 15, 2021.  To file the form, farmers must contact and make an appointment with their local USDA Service Center.  More information can be found at https://www.farmers.gov/pandemic-assistance/cover-crops.

Federal court vacates prior administration’s small refinery exemptions.  The Tenth Circuit Court of Appeals issued an order vacating the EPA’s January 2021 small refinery exemptions issued under the Trump administration and sent the case back to the EPA for further proceedings that are consistent with the Tenth Circuit’s holding in Renewable Fuels Association v. EPA.  The Tenth Circuit held that the EPA may only grant a small refinery exemption if “disproportionate economic hardship” is caused by complying with Renewable Fuel Standards. The EPA admitted that such economic hardship may not have existed with a few of the exemptions granted and asked the court to send the case back to them for further review.  The order granted by the Tenth Circuit acknowledged the agency’s concession and noted that the EPA’s motion to vacate was unopposed by the plaintiff refineries.  

Michigan dairy farm penalized for National Pollutant Discharge Elimination System violations.  A federal district court in Michigan issued a decision affirming a consent decree between a Michigan dairy farm and the EPA.  According to the complaint, the dairy farm failed to comply with two National Pollutant Discharge Elimination System (“NPDES”) permits issued under Section 402 of the Clean Water Act.  The violations include improper discharges, deficient maintenance and operation of waste storage facilities, failing to report discharges, failing to abide by its NPDES land application requirements, and incomplete recordkeeping.  The farm is required to pay a penalty of $33,750, assess and remedy its waste storage facilities, and implement proper land application and reporting procedures.  The farm also faces potential penalties for failing to implement any remedial measures in a timely fashion.  

Dairy Cows in Pasture
By: Jeffrey K. Lewis, Esq., Friday, February 26th, 2021

Update:  Mengel Dairy Farms appealed the federal district court's decision regarding loss of business income (discussed below) to the 6th Circuit Court of Appeals.  On July 16, 2021, the 6th Circuit Court of Appeals issued an opinion agreeing with the district court's decision.  The 6th Circuit concluded that in order for Mengel Dairy Farms to receive insurance proceeds for loss of business income, Mengel Dairy Farms had to completely shut down its dairy farm.  The 6th Circuit found that a reduction in business is simply not enough.  

When was the last time you read your farm business insurance policy? Under your policy, do you know when coverage is triggered for loss of business profits and loss of assets? In the case below, you will learn about a dairy farm that recently dealt with the issue of stray voltage causing dairy cattle to unexpectedly pass away. Even though the farm had insurance, the farm continued to operate, albeit at a reduced capacity, while it dealt with the silent killer. The farm continued to operate under the assumption that any loss of business income and the loss of its primary assets would be covered under its insurance policy.

Mengel Dairy Farms

Mengel Dairy Farms (“Mengel”) could not begin to fathom why its dairy cattle were unexpectedly dying off. Beyond its loss of livestock, Mengel also suffered loss of milk production and business profits. The farm eventually hired an expert to help it determine the cause of death of its cattle. The expert determined that a stray electrical current was present on the property, causing the dairy cattle to die. 

Mengel then proceeded to file an insurance claim with its insurance provider, Hastings Mutual Insurance Company (“Hastings”), hoping to receive insurance benefits for the lost cattle, cost of the investigation into the death of the cattle, the subsequent repairs to correct the stray electrical current, and for its lost business profits. 

Hastings, however, sent out its own expert to help determine the cause of death of the cattle. Hastings’ expert could not find any stray voltage on the property but did believe that electrocution may have caused Mengel’s cattle to stop eating and ultimately die. 

After its investigation, Hastings paid Mengel for the death of its cattle and the cost of the investigation into the deaths of the livestock, but Hastings rejected coverage for the loss of business income. Hastings then filed an action in the Federal District Court, asking the court to determine that there was no coverage for Mengel’s lost business income as a result of the electrocuted dairy cattle. 

After Hastings filed its action, Mengel submitted a second insurance claim to Hastings for the death of additional livestock, costs of additional investigation and repair, and additional lost profits. Hastings did not provide any coverage, this time, to Mengel for its second insurance claim and instead issued a reservation of rights letter to Mengel stating that coverage for Mengel’s second claim may be subject to exclusions under Mengel’s insurance policy. Hastings then asked the court to also determine whether Hastings was required to pay for the loss of the additional dairy cattle and additional lost profits.  

Coverage for Electrocuted Dairy Cattle

In its arguement to the court, Hastings claimed that under the dairy farm’s insurance policy, Hastings was not required to pay any insurance benefits for the additional dairy cattle that passed away from the stray electrical current. Hastings argued that even though death or destruction of livestock by electrocution is a covered peril under Mengel’s insurance policy, the term electrocution means instant death, and because Mengel’s cattle did not die instantly, Mengel was not entitled to insurance benefits for the cattle. 

The Court disagreed. The court found that the term “electrocution” was an ambiguous term within the insurance policy because it was not expressly defined. Additionally, the court went on to analyze that coverage existed for both the death or destruction of livestock. The court determined that the term destruction encompasses more than just death. Reading the terms destruction and electrocution together, the court held that electrocution can consist of an event that does not necessarily result in instantaneous death but may still cause irreparable harm. 

Therefore, the electrocution causing Mengel’s cattle to stop eating and ultimately die could be considered “destruction of livestock” which would be covered under the farm’s insurance policy.

Coverage for Lost Business Income

Since discovering the cause of death to its dairy cattle, Mengel reduced its farming operations to deal with the stray electrical current. Under Mengel’s insurance policy, coverage existed for lost business income “due to the necessary suspension” of operations. The insurance policy also indicated that the necessary suspension of farm operations must have been caused or resulted from an insured peril. Mengel thought that because it reduced operations for a covered peril (the electrocution of its livestock), it was entitled to coverage for its lost business income. Hastings disagreed and claimed that coverage did not exist for Mengel because the farm did not shut down its farming operations completely, it only reduced operations. 

The court sided with Hastings. The court found that “necessary suspension” means a complete shutdown of operations, even if temporary. The court noted that a slowing down of business is not covered under the insurance policy. Therefore, Mengel’s claim for lost profits is not covered under the policy because it continued to operate at a reduced capacity. 

Other Claims 

Mengel filed its own claims against its insurer for bad faith and breach of contract. However, after the court’s determination that coverage existed for electrocuted cattle that did not die instantly and the court’s conclusion that Mengel was not owed any insurance benefits for lost profits, the parties settled their dispute out of court. 

Conclusion

It may not be as easy as you think to determine what is covered (and what should be covered) under your insurance policy. Insurance companies do their best to draft insurance policies to be as precise as possible. Certain pre-requisites must be met in order for coverage to exist for a farmer and their business. It is vital that you understand what is covered (and not covered) under your insurance policy. You may be taking steps to remediate any issues with the assumption that insurance will cover any expenses or lost revenue you may endure, but as the above case demonstrates, this is not always true. 

To learn more, visit the Federal Court’s opinion on Hastings Mutual Insurance Company v. Mengel Dairy Farm, LLC.  

 

USDA National Agricultural Library and National Agricultural Law Center

The Farm Office is Open
By: Peggy Kirk Hall, Monday, April 06th, 2020

As you may know, Ohio State's campuses and offices are closed.  But we are all working away at home, and our virtual offices are still open for business.  Starting today, April 6th, the OSU Extension Farm Office Team will open our offices online and offer weekly live office hours from 8:00-9:30 pm EST.  We'll provide you with short updates on emerging topics and help answer your questions about the farm economy.   Each evening will start off with a quick 10-15-minute summary of select farm management topics from our experts and then we'll open it up for questions and answers from attendees on other topics of interest.  For tonight's office hours, we'll focus on the newly enacted CARES Act and how it affects agriculture.

Who's on the Farm Office Team?  Our team features OSU experts ready to help you run your farm office:

  • Peggy Kirk Hall -- agricultural law
  • Dianne Shoemaker -- farm business analysis and dairy production
  • Ben Brown -- agricultural economics
  • David Marrison -- farm management
  • Barry Ward  -- agricultural economics and tax

Each office session is limited to 500 people and if you miss our office hours, we'll post recordings on farmoffice.osu.edu the following day.  Register at  https://go.osu.edu/farmofficelive.  We look forward to seeing you there!

By: Peggy Kirk Hall, Wednesday, November 29th, 2017

Written by Ellen Essman, Law Fellow, Agricultural & Resource Law Program

Veal and dairy producers in Ohio will be subject to new livestock care standards in 2018. Producers were first made aware of these changes when the Ohio Livestock Care Standards for veal, dairy and other species were originally adopted in September of 2011 after the passage of State Issue 2, a constitutional amendment that required Ohio to establish standards for the care of livestock. Since the new care standards make significant changes to the management of veal and dairy, producers were given a little more than six years to transition their facilities and practices accordingly. The new standards will be effective on January 1, 2018.  Producers with veal calves and dairy cattle are encouraged to understand the regulations and make the required changes to their operations by January 1.

Changes to veal regulations

The regulations for veal address housing for veal calves weighing 750 pounds or less. Currently, veal calves may be tethered or non-tethered in stalls of a minimum of 2 feet x 5.5 feet. Next year, the following housing standards will apply:

  • Tethering will be permitted only to prevent naval and cross sucking and as restraint for examinations, treatments and transit, if:
    • The tether is long enough to allow the veal calf to stand, groom, eat, lie down comfortably and rest in a natural posture;
    • The tether’s length and collar size is checked every other week and adjusted as necessary.
  • Individual pens must allow for quality air circulation, provide opportunity for socialization, allow calves to stand without impediment, provide for normal resting postures, grooming, eating and lying down, and must be large enough to allow calves to turn around.
  • By the time they are ten weeks old, veal calves must be housed in group pens. The regulations currently require that group pens meet the above standards required for individual pens and also must contain at least two calves with a minimum area of 14 square feet per calf, must separate calves of substantially different sizes and that calves must be monitored daily for naval and cross sucking and be moved to individual pens or provided other intervention for naval or cross sucking.

The veal regulations, including both the current rules and the rules that will become effective January 1, are available here.

Changes to dairy cattle regulations

There is only one change to the dairy care standards. As of January 1, docking the tails of dairy cattle will only be permissible if:

  • Performed by a licensed veterinarian; and
  • Determined to be medically necessary.

The dairy cattle standards, including the current tail docking rule and the rule that becomes effective January 1, are here.

More information is also available in this press release recently published by the Ohio Department of Agriculture and on the website for Ohio’s Livestock Care Standards, which is here.

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