Written by Evin Bachelor, Law Fellow and Sr. Research Associate
We’re back from another successful Farm Science Review! Thank you to everyone who stopped by our booth to ask us questions and pick up law bulletins. We received some great suggestions on new topics affecting agricultural law, so stay tuned as we post more to our Ag Law Blog and Law Library in the near future.
Here’s our gathering of ag law news you may want to know:
ODA reviews meat inspection rules. Ohio’s meat inspection rules are up for review under the state’s Five-Year Review requirement. The Ohio Department of Agriculture (ODA) recently posted the proposed changes to Ohio Administrative Code 901:2-1; 901:2-3; 901:2-6; and 901:2-7 for stakeholder comment on its website. The primary changes to the substance of the rules are meant to bring them into compliance with new federal requirements that took effect earlier this year. ODA also proposes to merge the interstate and intrastate regulations, which could change some rule numbers, but not necessarily their substance. ODA will be accepting comments until Monday, October 1, 2018, which stakeholders may submit to AGReComments@agri.ohio.gov.
OSU explains tariff relief program and impacts. Our good friend and economist Ben Brown and other policy experts in OSU's College of Food, Agricultural, and Environmental Sciences recently published information that explains and analyzes the USDA’s response to the tariffs. View a brief brochure that explains the Market Facilitation Program here. View a longer report on the Market Facilitation Program and the impacts on farm income in Ohio here .
U.S. EPA petitions for new hearing on Chlorpyrifos registrations. A panel of three judges on the U.S. Court of Appeals for the Ninth Circuit in San Francisco ordered the U.S. Environmental Protection Agency (EPA) to cancel chlorpyrifos registrations in August. The judges cited scientific evidence that the chemical insecticide causes developmental defects in children. The U.S. Department of Justice (DOJ), on behalf of the U.S. EPA, filed a petition on Monday, September 24th, requesting an en banc hearing on the decision. If granted, an en banc hearing would involve all the judges who serve on the Ninth Circuit, rather than only the three judges who initially ordered the cancellation of the registrations. The U.S. DOJ argues that the August decision was incorrect and that the court should allow the U.S. EPA to reconsider the insecticide’s registration. For more details, check out The Progressive Farmer’s post here.
License needed to broker oil and gas leases in Ohio. On Tuesday, September 25th, the Ohio Supreme Court decided that oil and gas leases fall within the statutory definition of “real estate.” As such, a person who offers and negotiates an oil and gas lease must have a real estate broker’s license under Ohio Revised Code § 4735.01(A) and § 4735.02(A). Check out Court News Ohio’s webpage for more details.
No "bill of rights" vote for Lake Erie. The group Toledoans for Safe Water sought to put a “Lake Erie Bill of Rights” on the ballot this November as an amendment to the Toledo City Charter. The amendment would have stated that Lake Erie and its watershed “possess the right to exist, flourish, and naturally evolve,” and that the citizens of Toledo have a right to a clean and healthy environment. Enforcement would have been through a mix of revoking corporate licenses and privileges or criminal penalties if violated. Despite having enough signatures, the Lucas County Board of Elections refused to place the issue on the ballot, saying that the amendment contained provisions beyond the City of Toledo’s authority. The dispute made it up to the Ohio Supreme Court, which on Friday, September 21st, decided that Toledoans for Safe Water failed to prove that the Lucas County Board of Elections improperly denied their petition to place the issue on the ballot. The court’s decision is here.
Iowa court makes owner liable for corporate liabilities. An Iowa Court of Appeals decision recently allowed a plaintiff who was suing a biosolids management corporation to “pierce the corporate veil” and collect directly from the sole owner of the corporation. The plaintiff obtained a judgment of $410,067 against the corporation for breach of contract after the corporation stopped performing its work. However, the plaintiff could not collect against the corporation, and an Iowa Court of Appeals decided that the sole owner must pay the judgement. The court said that the owner did not conduct the business or maintain its finances in a manner that demonstrates the existence of a separate legal entity from himself or his other businesses. The owner co-mingled corporate and personal assets and accounts, failed to keep records, and had no bylaws or meeting records. For more on the case, visit the Iowa State University’s Center for Agricultural Law and Taxation website here, or view the case opinion here.
California passes "home cooked food" law. California's governor signed a bill into law last Friday that allows cities and counties to authorize and permit residents to operate “microenterprise home kitchens.” Assembly Bill 626 exempts qualifying businesses from some food service facility regulations to allow residents to sell prepared food from their home, while also recognizing the differences between a home kitchen and a commercial kitchen. To qualify, among other things, the operation can have no more than one full-time non-family employee, the food must be sold direct to the customer, and no more than 60 individual meals can be prepared per week. The bill’s full text and legislative analysis are here.
Barn wedding popularity continues to grow. Fifteen percent of weddings in the United States took place in a barn last year, according to a survey published by the wedding planning site The Knot. In comparison, only two percent of weddings took place in a barn as recently as 2009. The popularity of wedding barns has become a point of contention in many states, including Ohio, because statutory zoning exemptions for agriculture have been used to exempt wedding barns from zoning requirements. We explain Ohio's zoning exemption for "agritourism" in this law bulletin.
Ohio legislation on the move:
- Ohio Senate refers township bill to committee. The Ohio House of Representatives passed House Bill 500 earlier this summer, and the bill has recently been referred to the Ohio Senate’s Local Government, Public Safety, and Veterans Affairs Committee. House Bill 500 proposes to make a number of changes to Ohio’s township statutes, including a change to agricultural zoning regulations. If passed as-is, the bill would allow a township to use zoning to regulate agricultural activities within any platted subdivision. Under current law, townships are limited to a specified list of platted subdivisions that townships may regulate; however, the new law clarifies that the specified list is not intended to be exclusive. For more information on the bill, view the bill analysis produced by the Ohio Legislative Service Commission, or visit the Ohio General Assembly’s website here.
Court rules in favor of Myrddin Winery
The Ohio Supreme Court has clarified how the "agricultural exemption" contained in Ohio zoning law applies to wineries. The Court agreed with appellant Myrddin Winery in ruling today that Ohio law does not grant a township or county zoning authority over buildings or structures used for the vinting and selling of wine if they are on property used for viticulture, which is the growing of grapes.
The case before the Court, Terry v Sperry, involved a Milton Township property in northeast Ohio located in a district zoned as residential. Prior to establishing the winery on the property, the Sperrys asked the township whether a winery was a permissible use of the property. The township zoning inspector advised that the winery was an agricultral use that did not require a zoning permit pursuant to Ohio's "agricultural exemption" from zoning. The Sperrys proceeded to establish and operate Myrddin Winery, making wine from a small number of grape vines grown on the property and from grape concentrate purchased from other sources. The Sperrys sold the wine, as well as food items, to customers who visited the winery.
When the township later received complaints about the winery from neighbors, the township decided that the winery was no longer a permissible agricultural use. Rather, the township claimed that the use constituted a restaurant and retail business that was not permitted in the residential zoning district. The township sought an injunction to close down the winery. The Sperrys argued that the township could not exert zoning authority over the winery because of the agricultural exemption in Ohio zoning law.
Both the Mahoning Court of Common Pleas and the Seventh District Court of Appeals agreed with the township, and held that it could exert zoning authority over the winery. The courts examined the "agricultural exemption" contained in Ohio Revised Code Chapter 519, which limits township and county zoning authority over agricultural land uses. The courts concluded that the agricultural exemption did not apply to Myrddin Winery because the winery did not fit within the statute's definition of "agriculture." The definition includes "viticulture," but also states that the processing and marketing of agricultural products are included in the definition of agriculture only if those activities are secondary to agricultural production. Pointing to the small number of grape vines grown on the property, the township argued that the winery was not "agriculture" because the processing of grapes and marketing of wine were the primary uses of the property, and grape production itself was secondary to the processing and marketing activities.
The Ohio Supreme Court disagreed that the statute's definition of agriculture dictated the outcome of the case. The Court turned instead to additional language regarding wineries contained inORC 519.21(A), another part of the agricultural exemption. That provision states that a township has no power to prohibit the “use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located, including buildings or structures that are used primarily for vinting and selling wine and that are located on land any part of which is used for viticulture." (Emphasis added). That provision, stated the Court, is a "clear and unambiguous" exemption from zoning authority for winery buildings, as long as grapes are also grown on the property. Because of the unambiguous exemption, the township need not refer to the definition of "agriculture" or analyze the number of grapes or whether grape growing or processing and marketing are the primary uses of the property.
The Ohio Supreme Court's decision in Terry v Sperry brings much needed clarification to Ohio's agricultural zoning exemption, a complicated statute whose interpretation has long created headaches for local zoning officials. When Ohio legislators granted zoning authority to townships and counties years ago, agricultural interests expressed concern that agricultural land uses would be "zoned out" of many rural areas. The agricultural exemption addresses those concerns by limiting local zoning authority over agricultural land uses. The problem arises with the statute's attempt to determine what is or is not an agricultural land use. The distinction is often muddy, but today's decision provides some clarity: in regards to buildings used for making and selling wine on property where wine grapes are growing, the township or county has no zoning authority.
Read the Terry v Sperry opinion here.
Court says winery must grow more grapes to be defined as "agriculture."
In a split decision, the Seventh Distict Court of Appeals has ruled in favor of a township in Mahoning County that wants to close down a small winery. Milton Township claims that the winery violates township zoning regulations because it is located in a residential zoning district and does not qualify for the "agricultural exemption" from local zoning. The court of common pleas and the majority on the appeals court agreed with the township, but a strong dissent by Court of Appeals Judge DeGenaro challenges the courts' rulings and illustrates the need for clarity in Ohio's rural zoning laws.
Myrddin Winery is a family owned business located on Lake Milton in Milton Township, on property that also contains a residence. A free standing addition serves as the winery, and the property also has a vineyard containing 20 grape vines, with 12 vines producing grapes for harvest. The Sperry family uses their grapes for wine, and must also import grapes and grape juices for their wine production--5% of their wine derives from their grape vines. They make and bottle the wine on the premises. Customers visit the winery to taste and purchase the wine and food items.
Before opening in 2005, the Sperry family asked the township zoning inspector if the township required any permits for the winery. The zoning inspector advised that the family could begin operations immediately because the township did not require any permits. In 2008, however, the township changed its opinion and notified the Sperrys that they were in violation of the township zoning resolution. The township filed a complaint and requested the court to issue an injunction that would prohibit continued operation of the winery.
Two issues were before the Mahoning County trial court upon hearing the Myrddin Winery case: 1) whether a winery is "agriculture" for purposes of the agricultural exemption in Ohio zoning law, and 2) whether Ohio zoning law exempts wineries from local zoning regulation. The trial court answered both questions in the negative. The Sperry family appealed the decision to the Court of Appeals.
The court of appeals examined the Ohio Revised Code's agricultural exemption from township zoning authority, but focused its decision on the statute's definition of "agriculture" in O.R.C. 519.01, which states:
- "As used in section 519.02 to 519.25 of the Revised Code, 'agriculture' includes farming; ranching; aquaculture; apiculture; horticulture; viticulture; animal husbandry, * * *; poultry husbandry * * *; dairy production; the production of field crops, tobacco, fruits, vegetables, nursery stock, ornamental shrubs, ornamental trees, flowers, sod, or mushrooms; timber; pasturage; any combination of the foregoing; the processing, drying, storage, and marketing of agricultural products when those activities are conducted in conjunction with, but are secondary to, such husbandry or production." (Emphasis added.)
As Judge DeGenaro points out in the dissent, the court should have relied on the actual agricultural exemption language contained in R.C. 519.21(A), which provides:
- "Except as otherwise provided in division (B) of this section, sections 519.02 to 519.25 of the Revised Code confer no power on any township zoning commission, board of township trustees, or board of zoning appeals to prohibit the use of any land for agricultural purposes or the construction or use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located, including buildings or structures that are used primarily for vinting and selling wine and that are located on land any part of which is used for viticulture, and no zoning certificate shall be required for any such building or structure." (Emphasis added.)
I agree with the dissent's interpretation of the statute, which is that a township may not prohibit the use of buildings or structures that are used primarily for vinting and selling wine and that are located on land used for viticulture, which is the growing of grapes for wine. Under this interpretation, Myrddin Winery could not be prohibited by way of zoning regulation. However, the majority chose to read R.C. 519.21(A) to require that "any buildings or structures used primarily for vinting and selling wine" must also fit within the definition of "agriculture" in R.C. 519.01. That definition includes "viticulture" and the processing and marketing of agricultural products, but only if processing and marketing of products is "secondary to" production. Because Myrddin Winery was importing more grapes and grape juice for its wine than it was growing on the property, the court concluded that the processing and marketing of the wine was not secondary to production, but was the primary use of the property. Thus, the agricultural exemption from zoning regulation would not apply and the township could prohibit the winery.
In short, the court's ruling requires a winery to ensure that production of grapes is the primary use of the property and any processing and marketing of wine is the secondary use of the property. Otherwise, local zoning can prohibit a winery. This outcome is especially problematic for beginning operations, because grape vines require many years of cultivation prior to successful harvest for wine production. It also raises challenges for the winery landowner who must prove whether the grapes or the wine are the "primary" use of the property. The specific exemption for wineries in 519.21(A) avoids these complications.
The Myrddin Winery case is one example of the confusion surrounding Ohio's agricultural exemption from township and county zoning authority, and the court's ruling strays too far from the intent of the law--to ensure that agricultural activities can persist outside of municpal areas. The Sperry family has a strong basis for appealing the decision to the Ohio Supreme Court and seeking final clarification of the winery provision in the agricultural exemption. But the Ohio legislature could alleviate the problem for landowners like the Sperry family, as well as townships and counties, by providing statutory clarification to the agricultural exemption. Cases like the Myrddin winery case pervade the state and continuously raise the issue of which agricultural activities can and cannot be regulated by zoning. With growing interests in agriculture and with state and federal policies that promote new types of agricultural production, direct marketing, and on-site processing by agricultural producers, Ohio will continue to experience conflicts between agriculture and local zoning regulation. It's time for the legislature to simplify and clarify the relationship between agricultural land uses and local zoning authority.
The Myrddin Winery case is Terry v. Sperry, 2010-Ohio-1299 (March 23, 2010), and is available here.
Can Ohio townships use their zoning authority to regulate outdoor signs on agricultural property? This is a question I've received many times. I can now refer townships to legal guidance provided by the Ohio Attorney General in an opinion issued October 20, 2009 (OAG 2009-041). The OAG opinion walks us through an analysis of the persistently problematic Ohio Revised Code section 519.21, commonly referred to as the 'agricultural zoning exemption,' which states that townships may not use their zoning authority "to prohibit the use of any land for agricultural purposes or the construction or use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located," with a few exceptions.
The OAG opinion provides the following explanation of how the agricultural exemption applies to an outdoor sign on agricultural property:
"1. Pursuant to R.C. 519.21(A), officials of a township that has not adopted a limited home rule government under R.C. Chapter 504 may not regulate the location, height,bulk, or size of a fee-standing outdoor sign that is located on a lot greater than five acres and deemed to be a structure when the use of the sign relates directly and immediately to the use for agricultural purposes of the lot on which the sign is located.
2. The use of a free-standing outdoor sign is directly and immediately related to the use for agricultural purposes of the lot on which the sign is located when the sign advertises the sale of agricultural products derived from the lot on which the sign is located.
3. The use of a free-standing outdoor sign is not directly and immediately related to the use for agricultural purposes of the lot on which the sign is located when the sign advertises the sale of (1) agricultural products not derived from the lot on which the sign is located or (2) things other than agricultural products.
4. Township officials may consider any information or facts they deem necessary and relevant in order to determine in a reasonable manner whether the use of a free-standing outdoor sign is directly and immediately related to the use for agricultural purposes of the lot on which the sign is located or an attempt to promote an activity that is not conducted in conjunction with, and secondary to, the production of the agricultural products derived from the lot on which the sign is located."
Note that the opinion pertains only to townships that have not adopted a limited home rule form of government--most of our townships have not taken the action necessary to adopt limited home rule powers. The opinion also notes that the 'farm market exception' may provide townships with limited authority to regulate outdoor signs, and that a different outcome could result for regulation of lots less than five acres in a subdivision setting.
The OAG's guidance is consistent with the history of the agricultural exemption and the many court cases that have interpreted the law. When the Ohio legislature gave townships zoning authority over 50 years ago, it tried to ensure that townships would not "zone out" all agricultural land uses in rural areas. The legislature's foresight on the issue of agricultural land use was remarkable, but their statutory language has yielded uncertainty and confusion. The OAG's opinion attempts to clarify some of that language, but the opinion forces townships into a careful analysis of each individual situation that may prove difficult and problematic for zoning officials.
The opinion itself recognizes the challenges posed by a "mixed use" situation, where the sign includes multiple products or partial products--some that derive from the property and others that do not, or promotes an activity related to the property's agricultural use. The Attorney General doesn't resolve this problem, but defers to the townships on these types of situations. The opinion states that when addressing these situations, township officials may consider "any information or facts they deem necessary and relevant in order to determine in a reasonable manner whether the use of an advertising device is drectly and immediately related to the use for agricultural purposes of the lot on which the device is located," or conversely is an "attempt to promote an activity that is not conducted in conjunction with and secondary to the production of the agricultural prouducts derived from the lot." Once again, township zoning officials may find themselves in a state of uncertainty over how or whether to regulate a land use on an agricultural property.
Read OAG opinion 2009-041 at http://www.ohioattorneygeneral.gov/Legal/Opinions.
If you heard a collective sigh of relief around Ohio on Thursday, it was likely coming from Ohio townships after learning the outcome of the long-awaited “Phantom Fireworks” court case. The Ohio Supreme Court unanimously agreed that Ohio townships may rely on countywide comprehensive land use plans as a basis for township zoning, rather than preparing individual township comprehensive plans. B.J. Alan Co. v. Congress Twp. Bd. of Zoning Appeals, Slip Opinion No. 2009-Ohio-5863 (Nov. 12, 2009).
I tend to like the pragmatic opinions authored by Justice Pfeifer, and this case is no exception. The decision answers with brevity the question of whether a township must prepare its own comprehensive land use plan in order to comply with Ohio zoning law. Examining the language of Ohio Revised Code 519.02, which grants townships the authority to utilize zoning “in accordance with a comprehensive plan,” the court determined that the statute does not require each township to develop its own comprehensive plan. Such an interpretation would be reading additional language into 519.02, said the court, and “the law requires only that a zoning resolution be ‘in accordance with a comprehensive plan.’” A countywide comprehensive plan is sufficient, and “accounts for the interrelationship of communities and marshals resources and expertise.”
Had the court reached a different conclusion, it would have invalidated hundreds of Ohio township zoning resolutions that are based on county land use plans. This was the hope of the B.J. Alan Company, which brought the case as a challenge to a zoning decision by Congress Township in Wayne County. The township denied the company’s request for a use variance to allow it to construct a Phantom Fireworks store on land zoned for agricultural use. When the case went to the court of appeals, that court agreed with the company’s argument that Congress Township’s zoning resolution was invalid according to ORC 519.02 because it was not based on a township comprehensive plan.
The controversial nature of the case led to parties lining up in interesting partnerships on both sides of the appeal to the Ohio Supreme Court. Backing the township were the Ohio Township Association, the Ohio Farm Bureau Federation, the Wayne County Farm Bureau and the Ohio Prosecuting Attorneys’ Association. On the opposite side in support of B.J. Alan Company’s appeal were the Ohio Home Builders’ Association, American Planning Association and Ohio Planning Conference.
The Supreme Court referred the case back to the court of appeals to resolve the question of whether Congress Township’s zoning is indeed “in accordance with” the Wayne County comprehensive plan. The court did examine the county plan, and held that the plan itself is a valid comprehensive plan for purposes of ORC 519.02. Sidestepping the fact that Ohio law does not clearly define a “comprehensive plan,” the court concluded that the Wayne County plan “presents a thorough study of the region and sets forth comprehensive land-use goals for the County.”
For now, townships need not panic about finding the time and funds to develop township comprehensive plans. Townships may continue to enforce their zoning resolutions based on county plans. Unknown to us is whether B.J. Alan Company will need to find a new piece of land for its Phantom Fireworks store—that decision is now in the hands of the appellate court.