The Ohio General Assembly is off and running in its new session. Many bills that affect agriculture in Ohio are already on the move. Here’s a summary of those that are gaining the most momentum or attention.
Tax Conformity Bill – S.B. 18 and H.B. 48. The Senate has already passed its version of this bill, which conforms our state tax code with recent changes to the Internal Revenue Code made in the latest COVID-19 stimulus provisions of the Consolidated Appropriations Act. Both the Senate and the House will also exempt forgiven Paycheck Protection Program second-draw loan proceeds from the Commercial Activity Tax. The Senate version additionally exempts Bureau of Workers Compensation dividend rebates from the Commercial Activity Tax beginning in 2020, but the House bill does not. Both bills include “emergency” language that would make the provisions effective in time for 2020 tax returns.
Beginning farmers tax credits – H.B. 95. A slightly different version of this bill is returning after not passing in the last legislative session. The bi-partisan bill aims to assist beginning farmers through several temporary income tax credits:
- Businesses that sell or rent agricultural assets such as land, animals, facilities or equipment to certified beginning farmers can receive a 5% income tax credit for sales, a 10% of gross rental income credit for cash rents, and 15% of gross rental income for share rents.
- Certified beginning farmers can receive an income tax credit equal to the cost of participating in a certified financial management program.
Beginning farmers, among other requirements, are those in or seeking entry into farming in Ohio within the last ten years who are not a partner, member or shareholder with the owner of the agricultural assets and who have a net worth of less than $800,000 in 2021, which adjusts for inflation in subsequent years. Beginning farmers must be certified by the Ohio Department of Agriculture or a land grant institution. The House Agriculture and Conservation Committee will discuss the bill at its meeting on February 16.
Wind and solar facilities – S.B. 52. In addition to revising setback and safety specifications for wind turbines, this proposal would amend Ohio township zoning law to establish a referendum process for large wind and solar facility certificates. The bill would require a person applying for a certificate for a large wind or solar facility to notify the township trustees and share details of the proposed facility. That notification sets up opportunities for the township trustees or residents of the township to object to the application and submit the proposed application to a vote of township residents. A certificate would not take effect unless approved by a majority of the voters. A first hearing on S.B. 52 will be held on Tuesday, February 16 before the Senate Energy and Public Utilities Committee.
Grants for broadband services – H.B. 2 and S.B. 8. The Senate passed its version of this bill last week, which sets up a $20 million competitive grant program for broadband providers to extend broadband services throughout the state. The proposal would also allow broadband providers to use electric cooperative easements and poles, subject to procedures and restrictions. The bill had its second hearing before the House Finance Committee last week.
Eminent domain – H.B. 63. Based on a similar bill that didn’t pass last session, this bill changes eminent domain law in regard to property taken for the use of recreational trails, which include public trails used for hiking, bicycling, horseback riding, ski touring, canoeing and other non-motorized recreational travel. H.B. 63 would allow a landowner to submit a written request asking a municipality or township to veto the use of eminent domain for a recreational trail within its borders. The bill would also allow a landowner to object to a use of eminent domain for any purpose at any time prior to a court order for the taking, rather than limiting that time period to ten days as in current law. The bill had its first hearing before the House Civil Justice Committee last week.
Minimum wage increases. S. B. 51 and H.B. 69. Bills on each side of the General Assembly propose gradually increasing the state minimum wage to $15, but have different paths for reaching that amount. S.B. 51 proposes increasing the wage to $12/hour in 2022, followed by $1/hour increases each year and reaching $15 by 2025, which is when a federal bill proposes to establish the $15 minimum wage. H.B. 69 begins at $10/hour in 2022 with $1/hour increases annually, reaching $15 in 2027. S.B. 51 was referred last week to the Workforce and Higher Education Committee and H.B. 69 was referred to the Commerce and Labor Committee.
Here’s our latest gathering of agricultural law news that you may want to know:
Congress considers bankruptcy code changes with Family Farmer Relief Act of 2019. Senator Grassley and Representative Delgado introduced companion bills in their respective chambers of Congress that would modify the definition of “family farmer” in the federal bankruptcy code. The change would raise the operating debt limit for a family farmer from $3.2 million as listed in the U.S. Code to $10 million. Sometimes a small change can make a big difference. In chapter 12 of the bankruptcy code, a “family farmer” has special options that other chapters do not offer, such as the power to determine a long-term payment schedule and pay the present market value of the asset instead of the amount due on the loan. Many farmers had not been able to take advantage of the special bankruptcy provisions because of the low debt limit, but that may change. For more information on the bills, click HERE for S.897 and HERE for H.R. 2336.
Congress also considers changing the number of daily hours a driver may transport livestock. The Transporting Livestock Across America Safely Act would instruct the Secretary of Transportation to amend the rules governing drivers who transport certain animals. The changes would loosen restrictions on the number of hours that drivers may drive, and increase the types of activities that are exempt from counting toward the maximum time. Travel under 300 miles would be exempt from the hours of service (HOS) and electronic logging (ELD) requirements. Both chambers of Congress are considering this bill, and both companion bills are currently in committee. For more information on the bills and to learn about the changes proposed, click HERE for S.1255 and HERE for H.R. 487.
It’s not too late to submit comments to the FDA about its potential cannabidiol rulemaking. Electronic or written comments can be sent to the FDA until July 2nd, although the deadline to request to make an oral presentation or comment at tomorrow’s hearing has passed. Click HERE for more information from the Federal Register about the May 31st hearing and submitting comments.
Meatpackers face second class-action lawsuit, and R-CALF refiles. In our last edition of The Harvest, we talked about a new class-action lawsuit filed in Illinois federal court by a number of cattle ranchers, including R-CALF, against the nation’s largest meatpacking companies. Now, another lawsuit has been filed in Minnesota federal court also alleging a price fixing conspiracy by the meatpackers. The second lawsuit is being brought by a cattle futures trader, rather than a rancher. After the second suit was filed, R-CALF voluntarily dismissed its case in Illinois to refile it in Minnesota. This refiling allows the lawsuits to be heard by the same court.
Tyson sues the USDA’s Food Safety and Inspection Service. Tyson, which is named as a defendant in the class action suits we just mentioned, is a plaintiff in a case against the USDA’s Food Safety and Inspection Service. The company alleges that a FSIS inspector falsified an inspection of 4,622 hogs, which were intermingled with another 8,000 carcasses, at one of its Iowa facilities in 2018. The company claims that the false inspection required it to destroy all of the carcasses, and cost nearly $2.5 million in total losses and expenses. The complaint, which is available HERE, alleges four counts: negligence, negligent inspection, negligent retention, and negligent supervision. The lawsuit is based on the legal principle that an employer is liable for the actions of its employee.
Ohio Case Law Update
Plaintiff must prove that a defendant wedding barn operator’s breach of a duty caused her harm. Conrad Botzum Farmstead is a privately operated wedding and event barn located in the Cuyahoga Valley National Recreation Area and on lease from the National Park Service. The plaintiff in the case was attending a wedding at the barn, where she broke her ankle while dancing on a wooden deck. The jury trial found that the barn operator was 51% at fault for her injuries, and awarded the plaintiff compensation. However, the barn operator appealed the decision and won. The Ohio Ninth District Court of Appeals found that the plaintiff did not introduce sufficient evidence to prove that any act or breach of duty by the barn operator actually or proximately caused the plaintiff to fall and break her ankle. The case raises standard questions of negligence, but it is worth noting in the Ag Law Blog because the court did not base its decision on Ohio’s agritourism immunity statute. The case is cited as Tyrrell v. Conrad Botzum Farmstead, 2019-Ohio-1874 (9th Dist.), and the decision is available HERE.
Ohio History Connection can use eminent domain to cancel Moundbuilders Country Club’s lease. A Licking County judge ruled in early May that the Ohio History Connection, formerly the Ohio Historical Society, can reclaim full ownership of land that it had leased to a country club. The Moundbuilders County Club has operated a golf course around prehistoric Native American earthworks for decades under a long-term lease with the state. The Ohio History Connection sought to have the lease terminated in order to give the public full access to the earthworks as part of a World Heritage List nomination. The judge viewed the request as sufficiently in the public interest to apply Ohio’s eminent domain laws.
Written by: Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
Several major pipeline projects, which plan to crisscross the state, are in the final stages of preparation. As part of the planning process for a project, pipeline builders plot the path that the pipeline will travel across the state. That path inevitably crosses private landowners’ property. Some landowners may feel overwhelmed trying to understand the rights of private pipeline companies to cross private property in Ohio. The frequently asked questions discussed below should help answer some of the common questions about pipeline projects in Ohio.
Can a pipeline company come on to my property to conduct a survey?
Yes. Prior to building a pipeline, pipeline companies must select a route where the pipeline is to be constructed. A pipeline project usually crosses private property along a proposed route. When a pipeline must cross private property along the project’s route, the pipeline company will ask the landowner for an easement that allows for pipeline construction on the property. However, even before signing an easement, a survey of the property may be necessary to determine the feasibility of constructing a pipeline on the property. Therefore, a pipeline company may need to enter a landowner’s private property to conduct a survey.
In Ohio, the law allows private companies that are organized “for transporting natural or artificial gas, petroleum, coal or its derivatives . . . through tubing, pipes or conduits” to enter upon private land to examine or survey for pipelines. This means that a pipeline company organized for these specific purposes does have the right in Ohio to enter onto a landowner’s property to conduct a private survey for the purpose of pipeline construction.
A pipeline company is telling me that they might use Eminent Domain to acquire my property. Is that legal?
Most likely, yes. A pipeline company may negotiate an easement with landowners which compensates landowners in exchange for the right to build a pipeline. However, landowners may not want to give a pipeline company the right to cross their property. In that scenario, pipeline companies have the option of crossing a landowner’s property by using eminent domain. Eminent domain is the taking of private property for public purposes with compensation.
In Ohio, the same law that allows for companies that are organized “for transporting natural or artificial gas, petroleum, coal or its derivatives . . . through tubing, pipes or conduits” to enter upon private land for survey also allows those same companies to use eminent domain to take private land. The law states that a company organized for the above purpose “may appropriate so much of such land, or any right or interest [to the land], as is deemed necessary for the laying down or building of pipes . . .” This suggests that pipeline companies have the power of eminent domain in Ohio.
Some argue that the law only grants eminent domain rights for transporting gas, and does not extend the right of eminent domain for the transport of gas derivatives such as ethane. While there is not strong legal support for this argument, it is under litigation in Ohio courts.
To use eminent domain, the pipeline company must prove that the landowner and the company were not able to reach an agreement about granting a pipeline easement and that the taking of the pipeline easement is “necessary.” A pipeline company must establish that the taking of property will serve a “public use.” Ohio courts have noted that the term public use is flexible. Accordingly, Ohio courts have held that private pipelines are a public use if those pipelines provide an economic benefit to Ohio. After establishing necessity and public use, the pipeline company must follow the procedures for eminent domain in Ohio Revised Code Chapter 163.
For an interstate pipeline that runs between Ohio and another state, federal law could allow a company to use eminent domain to obtain land from unwilling landowners. Federal law states that a company may acquire property rights for a gas pipeline if the company has obtained a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission and the company and landowner have not been able to agree on compensation for the pipeline easement. See 15 USC §717(F).
What about the pipeline cases that are in court right now, do those affect my rights?
Ohio landowners have probably heard about several high-profile pipeline projects that are planning to cut across the state. Some landowners have challenged the construction of these pipeline projects on their property. These landowners are challenging the right of the pipeline companies to use eminent domain to acquire an easement on their property. Two pipeline projects in Ohio are of particular interest: Kinder Morgan’s Utopia Project and Rover Pipeline LLC.
A court in Wood County, Ohio decided in 2016 that Kinder Morgan’s Utopia Project, which plans to run across Ohio and into Canada, did not have eminent domain authority. The court concluded that the pipeline did not “serve the public of the State of Ohio or any public in the United States.” The court based its conclusion on the fact that Utopia did not provide a benefit to Ohio. However, Kinder Morgan quickly appealed that case to Ohio’s Sixth Circuit Court of Appeals. Therefore, this opinion is on hold while a higher court decides whether it agrees with the lower court’s interpretation of the eminent domain law.
A second high-profile pipeline case involves the right of Rover Pipeline LLC to use eminent domain for an interstate pipeline project. The Federal Energy Regulatory Commission issued this pipeline project a certificate of public convenience and necessity on February 2, 2017. As a result, Rover Pipeline LLC is moving forward with construction on landowners’ property, because a federal court found that the pipeline company has eminent domain authority.
So how do these court cases affect landowners? First, landowners should be aware that other pipeline projects in Ohio likely have eminent domain authority, if they meet the requirements for eminent domain described by Ohio law. Second, landowners should be aware that that the pipeline case that began in Wood County and is currently being appealed is still pending. It is important to note that this case is reviewing the Utopia Project’s right to use eminent domain in Ohio. Therefore, this does not mean that all pipeline companies in Ohio no longer have the right to use eminent domain to acquire private property in Ohio. Instead, this case will determine the fate of that particular pipeline project and whether or not that project has the right to use eminent domain to acquire an easement. In the meantime, pipeline companies continue to have the right to use eminent domain in Ohio.
More information on pipelines in Ohio and resources for landowners considering signing an easement is available here.