Written by: Evin Bachelor, Law Fellow, and Ellen Essman, Sr. Research Associate
The end of the year is here, and there is a flurry of news coming across our desks. We wish you a prosperous 2019 and look forward to keeping you up to date on what is happening in the agricultural law world.
Here’s our latest gathering of agricultural law news that you may want to know:
GMO labeling rule released by USDA. The Agricultural Marketing Service posted the National Bioengineered Food Disclosure Standard rule on the Federal Register, located here, on Friday, December 21, 2018. According to the rule page, the rule “establishes the new national mandatory bioengineered (BE) food disclosure standard (NDFDS or Standard).” The standards require foods labeled for retail sale to disclose certain information either through a new symbol, inclusion of a QR code that provides a link to a website, including a phone number to text for more information, or including the term “bioengineered” on the label. The rule defines bioengineered food as food that contains genetic material modified through changing DNA or other modifications that could not be done through conventional breeding or otherwise found in nature. Exemptions for foods served in restaurants and very small food manufacturers with gross receipts of less than $2.5 million limit the rule’s applicability. The rule will take effect on February 19, 2019, with compliance becoming mandatory by January 1, 2022. For more information, or to see the new label, visit the USDA Agricultural Marketing Service’s BE Disclosure webpage here.
Farm Bill provides good news for dairy farmers. Under the 2018 Farm Bill Conference Report, available here, the Margin Protection Program (MPP) was renamed the Dairy Margin Coverage (DMC). The name was not the only change made to the program. Per the USDA, the program “is a voluntary risk management program… offer[ing] protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.” The Farm Bill lowers the premium rates for risk coverage. Furthermore, the bill adds coverage levels of $8.50, $9.00 and $9.50 for a dairy operation’s “first five million pounds of participating production.” If a farmer covers his first five million pounds at $8.50, $9.00, or $9.50, he then has the option to cover anything in excess of five million pounds at coverage levels of $4.00-$8.00 (in fifty cent increments). Another notable change—the Farm Bill allows farmers who maintain “their coverage decisions, including coverage level and covered production, through 2023,” to “receive a 25% discount on their premiums each year.” The DMC language can be found in section 1401 of the Farm Bill.
Missouri farmer pleads guilty to wire fraud for falsely marketing grains as organic. Federal prosecutors charged Mr. Randy Constant with wire fraud, alleging that since 2008 he and his associates improperly marketed millions of dollars worth of grain as certified organic while knowing that it was not. Mr. Constant operated certified organic farms as part of his larger operation, but “at least 90% of the grain being sold was actually either entirely non-organic or a mix,” according to the information filed by the federal prosecutors. Federal prosecutors sought full restitution of approximately $128 million for victims/purchasers, in addition to the forfeiture of 70 pieces of equipment, ranging from pickup trucks to combines and semi-trucks to GPS yield mapping systems.
On December 20, 2018, Mr. Constant entered a plea of guilty. The magistrate filed a report indicating that Mr. Constant understood what his plea meant, and that the one count of wire fraud is punishable by (1) a maximum of 20 years in prison, (2) a maximum of 3 years of supervised release following prison, and (3) a maximum fine of $250,000. Further, Mr. Constant will be barred from receiving USDA benefits, including those from USDA Farm Service Agency, Agricultural Marketing Service National Organic Program, and Federal Crop Insurance Program. Additionally, Mr. Constant could face restitution to all victims/purchasers of approximately $128 million. For more information, search for United States v. Constant, 6:18-cr-02034-CJW-MAR (N.D. Iowa 2018).
Japan set to lower tariffs on agricultural commodities from TPP members and the EU. The United States exports a significant share of the beef, pork, wheat, and other farm products imported by Japan. However, two major trade agreements set to take effect early in 2019 will result in reduced tariffs for imports into Japan from a number of other countries. The United States withdrew from the Trans-Pacific Partnership negotiations, but 11 other nations continued to pursue the agreement, which is set to begin taking effect at the start of 2019. On February 1st, the Japan-EU Economic Partnership Agreement takes effect, and will result in lowered tariffs for a number of agricultural products, especially for beef. Under the new agreements, chilled or frozen beef from EU and TPP exporters will face a 26.6% tariff, while tariffs on American beef will remain at 38.5%. Prepared pork from EU and TPP exporters will face a 13.3% tariff, while tariffs on American pork will remain at 20%. For more information on Japan’s participation in the Trans-Pacific Partnership, visit the Ministry of Foreign Affairs of Japan’s TPP webpage here. For more information on Japan’s agreement with the European Union, visit the Ministry of Foreign Affairs of Japan’s EU agreement webpage here.
Ohio Case Law Update
- Signing a mortgage is enough to bind signatory despite not being named in the mortgage if the signature demonstrates an intent to be bound by the mortgage. The Bankruptcy Appellate Panel for the United States Sixth Circuit Court of Appeals asked the Ohio Supreme Court to clarify “whether a mortgage is invalid and unenforceable against the interest of a person who has initialed, signed, and acknowledged the mortgage agreement but who is not identified by name in the body of the agreement.” In this case, Vodrick and Marcy Perry filed for bankruptcy. At issue was a piece of property subject to a promissory note and mortgage. The bank held the promissory note, which was signed and initialed by Mr. Perry only, while the mortgage was signed by both Mr. and Mrs. Perry. The Ohio Supreme Court held that “the failure to identify a signatory by name in the body of a mortgage agreement does not render the agreement unenforceable as a matter of law against that signatory.” The focus is on the signor’s intent to be bound by the mortgage, even if the mortgage itself does not mention the signor by name. The case is cited as Bank of New York Mellon v. Rhiel, Slip Opinion No. 2018-Ohio-5087, and the Ohio Supreme Court’s opinion is available here.
- Specific reference in a deed to a mineral interest preserves the interest despite Marketable Title Act when the reference includes the type of interest created and to whom the interest was granted. Generally, Ohio’s Marketable Title Act allows a landowner with an unbroken chain of title for forty years or more to take an interest in the land free and clear of other claims that arose before the “root of title.” However, there is an exception where prior interests will still apply if there is a specific identification of a recorded title transaction, rather than a general reference to an interest. In this case, Nick and Flora Kuhn conveyed a 60-acre tract of land in 1915, but retained an interest in royalties from any oil and gas extracted from the parcel, specifically naming Nick and Flora Kuhn and their heirs and assigns. Then in 1969, the Blackstone family purchased the 60-acre parcel, and received a deed that included language “[e]xcepting the one-half interest in oil and gas royalty previously excepted by Nick Kuhn, their [sic] heirs and assigns in the above described sixty acres.” The Blackstone family sought to quiet title and have the Kuhn heirs’ interest extinguished or deemed abandoned in 2012. The Ohio Supreme Court interpreted the language in the deed as sufficient to survive Ohio’s Marketable Title Act, which preserves the Kuhn heirs’ oil and gas interest that dates back to 1915. The case is cited as Blackstone v. Moore, Slip Opinion No. 2018-Ohio-4959, and the Ohio Supreme Court’s opinion is available here.
Here’s our gathering of ag law news you may want to know:
We have a Farm Bill. After months of waiting, the United States Congress has passed the Agriculture Improvement Act of 2018, known as the Farm Bill. Members of Congress have been working for months trying to reconcile a House version and a Senate version in what is known as a Conference Committee. On Monday, December 10th, the Conference Committee submitted a report to members of Congress. Both the House of Representatives and the Senate approved the report by bipartisan majorities within a matter of days. The bill will become law once signed by President Trump, which analysts expect him to do by the end of this week.
The Ohio Ag Law Blog will explore some of the major provisions that will affect Ohio from a legal perspective, rather than restate what other news outlets and other sources have already said about the Farm Bill. First up will be a blog post about what the Farm Bill means for hemp in Ohio, so stay tuned for an in-depth analysis.
Syngenta settlement approved by federal judge. As previously reported in the Ohio Ag Law Blog here and here, the major multi-year class action lawsuit against Syngenta for failing to receive import approval from China before selling its Viptera and Duracade seeds in the United States has been settled for $1.51 billion. On December 7th, Judge John Lungstrum of the U.S. District Court for the District Kansas issued a final order granting the settlement. In the order, the court overruled a number of objections from class members who opposed the settlement. It also awarded one third of the settlement amount to the plaintiffs’ attorneys as attorney fees, valued at $503,333,333.33. The next step could involve appeals by those opposed to the settlement. According to a statement posted by one of the co-lead counsels for the plaintiffs, payments to eligible parties could begin as early as the second quarter of 2019, depending upon whether any appeals are filed.
Lawsuit centered on definition of “natural” allowed to proceed in California. Sanderson Farms labels its chicken products as “100% Natural.” However, the environmental groups Friends of the Earth and the Center for Food Safety have alleged that Sanderson Farms’ labeling is misleading, false, and unfair to competition. The lawsuit hinges around Sanderson Farms’ use of antibiotics in light of its “100% natural claims,” as the plaintiffs have argued that the reasonable consumer would believe “100% natural” to mean that the chickens were antibiotic free. Sanderson Farms has repeatedly countered that its chickens were cleared of any antibiotics before processing.
Sanderson Farms has asked Judge Richard Seeborg of the U.S. District Court for the Northern District of California to dismiss the case multiple times. Each time the court has either allowed the plaintiffs to amend their complaint or rejected Sanderson Farms’ motions. The most recent denial came days after Sanderson Farms issued a press release announcing that it would no longer routinely use antibiotics considered medically important for humans by March 1, 2019. The judge’s denial of the motion to dismiss does not mean that the plaintiffs are correct, it only means that the plaintiffs have presented enough facts for the case to continue.
The controversy stems from labeling and consumer expectations. We previously talked about the “what is meat” and “what is milk” debates in a previous blog post, and this issue is not much different. Again there is a word that has not been thoroughly regulated by a governing entity such that companies have used it to mean different things. As more labeling questions arise, the Ohio Ag Law Blog will keep you posted on trends and updates.
Ohio legislation on the move:
Lake Erie shoreline improvement bill passes. Last Thursday, the Ohio Senate and House of Representatives agreed to modifications to Senate Bill 51, which addresses Lake Erie shoreline improvements, along with multiple amendments. The primary purpose of the bill is to add projects for Lake Erie shoreline improvement to the list of public improvements that may be financed by a special improvement district (SID). According to the Legislative Service Commission’s analysis when the bill was introduced, a SID is “an economic development tool” that facilitates improvements and services in the district “through a special assessment levied against property in the district.”
The bill as passed also would remove a requirement, previously included in Senate Bill 299, for the Ohio Department of Agriculture to establish rules regarding the Soil and Water Phosphorous Program. Instead, the department would now be instructed to “establish programs to assist in reducing” phosphorous in the Western Lake Erie Basin.
Further, the House added amendments that change a previously passed spending bill, House Bill 529. The bill would authorize $15 million for a flood mitigation project in the Eagle Creek Watershed. The Columbus Crew would also receive $15 million for construction of a new stadium in Columbus. The Armstrong Air & Space Museum in Wapakoneta would receive $250,000 for improvements. A few other tax items were addressed.
The bill as passed is available for download from the Ohio General Assembly’s website here. An analysis of the bill as most recently referred from the House Finance Committee is available here. As of the time of posting, the Governor still has to sign Senate Bill 51 for it to take effect.
Ohio township bill passes. Last Thursday, the Ohio House of Representatives and Senate agreed to modifications to House Bill 500, which would make a number of changes to Ohio’s township laws. Some of the highlights of the most recent version include:
- A boards of township trustees must select a chairperson annually.
- Petitions to change the name of township roads will result in an automatic name change if the county commissioners do not adopt a resolution regarding the petition within 60 days.
- County commissioners will not be able to vacate township roads unless the applicable board of township trustees have adopted a resolution approving the vacation.
- A board of township trustees will have the authority to charge a fee against a person who appeals a zoning decision to the board of zoning appeals in order to defray costs associated with advertising, mailing, and the like.
- A board of township trustees may suspend a member of a township zoning commission or township board of zoning appeals after charges are filed against a member, but must provide a hearing for removal no later than 60 days after the charges are filed.
- In limited home rule townships, the current requirement that a township must submit a proposed zoning amendment or resolution to a planning commission will be optional.
This list comes from the Ohio Legislative Service Commission’s bill analysis as of the bill’s re-reporting by the Senate Finance Committee. The bill analysis has a full list of the changes that House Bill 500 would make. For more information on the bill, visit the bill’s webpage on the Ohio General Assembly website.
Importantly for agriculture, the Ohio Senate removed language from the bill that would have changed Ohio Revised Code § 519.21(B), which limits the authority of townships to restrict agricultural uses via zoning. Currently, townships may only regulate agricultural uses in platted subdivisions created under certain statutory procedures, and only if certain conditions are met. The House had passed a version that would have allowed townships to regulate agricultural uses in any platted subdivision, but the language would not have changed the certain conditions that would have to be met.
Written by Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program
Last summer, federal legislation requiring a National Bioengineered Food Disclosure Standard (“the Standard”) was signed into law by President Obama. The law requires the establishment of standard for labeling foods that contain bioengineered substances such as GMOs (genetically modified organisms). It was meant to preempt state GMO labeling laws and instead create a standard that would be applicable nationwide. This summer, the United States Department of Agriculture’s Agricultural Marketing Service (AMS) is moving a step closer toward implementing the law. To this end, AMS released a list on June 28, 2017 of thirty questions for parties interested in the Standard, such as food producers, retailers and manufacturers. The answers will be taken into consideration when USDA begins writing its agency rules to fully implement the Bioengineered Food Disclosure Standard.
Many of the questions concern how certain terms, such as “very small” and “small” packages, “very small” and “small” food manufacturers should be defined under the law. Similarly, the agency asks what terms should be considered synonymous with “bioengineering.” AMS also presents technical questions, such as what kinds of breeding techniques should be thought of as conventional, what genetic modifications should be seen as natural, and what amounts of bioengineered substance in a food should require a disclosure and a number of questions relating to how bioengineering should be disclosed on food products and their packages. Finally, AMS asks quite a few questions involving compliance with the Standard, such as what types of records should be maintained by regulated parties and how AMS will go about investigating noncompliance.
The full list of questions, including an explanation of each, is available here. Producers, retailers, manufacturers, biotechnology companies, consumers and others interested in the rule are encouraged to submit their answers and feedback to GMOlabeling@ams.usda.gov by July 17, 2017.
For more information on the National Bioengineered Food Disclosure Standard legislation, see our previous blog post from July 2016 here.
Catharine Daniels, Attorney, OSUE Agricultural & Resource Law Program
If you already produce and sell home-based food products, or are considering starting, it is very important to label your products correctly. All home-based food products, whether sold as a cottage food or sold under a home bakery license, must be properly labeled to sell legally. If you are not familiar with the difference between cottage foods and foods produced under a home bakery license, check out our recent post on the requirements for selling your home-based food products at farmer’s markets here. The food labeling and packaging requirements for both cottage foods and foods produced under a home bakery license are very similar with a few differences that will be highlighted below.
All cottage food products must contain a label that includes the following information:
- The name and address of the cottage food production operation.
- The name of the food product – Ex: “Chocolate Chip Cookies”
- The ingredients of the food product, in descending order of predominance by weight. This means your heaviest ingredient will be listed first and the least heavy ingredient listed last. Also, ingredients must be broken down completely if the ingredient itself contains two or more ingredients. For example, if unsalted butter is one of your ingredients, then you would list it as follows: Butter (Sweet Cream, Natural Flavor).
- The net quantity of contents in both the U.S. Customary System (inch/pound) and International System of Units (metric system). This must be placed within the bottom 30% of the label in a line parallel to the bottom of the package. An example of what this would look like in both the U.S. Customary System and International System is: Net Wt 8 oz (227 g)
- The following statement in ten-point type: “This product is home produced.” This statement is required because it gives notice to the purchaser of the food product that the product was produced in a private home that is not required to be inspected by a food regulatory authority.
Allergen Statement. There are 8 foods considered a major food allergen under the Food Allergen Labeling and Consumer Protection Act that must be declared on your label if they are contained in your food product. They include:
- Fish – For fish, the specific species must be declared – Ex: Bass
- Crustacean Shellfish – For shellfish, the specific species must be declared – Ex: crab
- Tree Nuts - For tree nuts, the specific type of nut must be declared – Ex: Almond
If any of these major allergens are contained in your food product, then you may declare them in either of two different ways.
First, you can list the allergens in a “Contains” statement. The “Contains” statement would follow the ingredients list and look like this: “Contains: Wheat, Egg.”
The second way to declare an allergen is in your ingredients list. An example would be: “Enriched flour (wheat flour, malted barley, niacin, reduced iron, thiamin monotrate, riboflavin, folic acid), Egg.” In this example, wheat and egg are specifically stated within the ingredients so you would not need to put an additional “Contains” statement.
Nutritional information is not required for cottage foods unless a nutrient content claim or health claim is made. An example of a nutrient content claim would be “low fat.” An example of a health claim would be “may reduce heart disease.” If either or both of these claims are made, then you are required to include a Nutrition Facts panel on your cottage food product. More information on the Nutrition Facts Panel can be found on the U.S. Food and Drug Administration’s website.
Cottage foods may be sold in any packaging that is appropriate for the food product with one exception. Cottage foods may not be packaged using reduced oxygen packaging methods. Reduced oxygen packaging is defined as removing oxygen from a package, displacing and replacing oxygen with another gas or combination of gases, or controlling the oxygen content to a level that is below what is normally found in the surrounding atmosphere. Reduced oxygen packaging includes vacuum packaging and modified atmosphere packaging:
- Vacuum Packaging
When air is removed from a package of food and the package is hermetically sealed so that a vacuum remains inside the package.
- Modified Atmosphere Packaging
When the proportion of air in a package is reduced, the oxygen is totally replaced, or when the proportion of other gases such as carbon dioxide or nitrogen are increased.
Foods Produced Under a Home Bakery License
For foods produced under a home bakery license, you will follow the same guidelines for labeling as explained above with a few exceptions.
- The statement, “this product is home produced” is not required to be on your label. The statement is not required because your home kitchen must be inspected by the Ohio Department of Agriculture to obtain a home bakery license.
- If your home bakery product requires refrigeration, then you must include the language “Keep Refrigerated,” or a similar statement, on your label.
The same guidelines also apply here.
There is no restriction against using reduced oxygen packing methods if you have a home bakery license. You may sell your baked goods in any package that is appropriate for the food product.
Why is labeling so important?
Properly labeling your food products will allow you to legally sell them. It is essential to make sure your labels are accurate or else you could be found guilty of a fourth degree misdemeanor for selling a misbranded food product. For additional resources, see the following:
An example label can be found on the Ohio Department of Agriculture’s website under the Food Safety Division at: http://www.agri.ohio.gov/divs/FoodSafety/docs/CottageFoodLabelExample.pdf
Also, the U.S. Food and Drug Administration website provides great resources for guidance on food labeling: http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/LabelingNutrition/ucm064880.htm