Legalized hemp production in the U.S. took a major step forward today with the publication of the USDA’s rule establishing the “U.S. Domestic Hemp Production Program.” States and potential hemp growers have been awaiting this rule since the Farm Bill legalized hemp back in December 2018 but required that regulatory programs be established for overseeing hemp production. Today’s hemp rule sets up the regulatory framework for state departments of agriculture, Indian tribal governments and the USDA to license producers who want to grow hemp as a commodity crop.
What’s in the hemp rule?
The hemp rule lays out the requirements for establishing Hemp Production Plans within States or Tribal governments and creates a USDA administered licensing program for producers in areas that choose not to regulate hemp production. Other parts of the rule include definitions, appeal provisions, and reporting requirements. The rule also addresses the interstate transportation of hemp. Here’s a quick summary of provisions that affect Ohioans.
Requirements for State and Tribal Hemp Production Plans. A State or Tribe must include the following in a Hemp Production Plan that the USDA must approve before the State or Tribe can allow hemp production within its borders:
- Plans to maintain relevant producer and land information. A state must collect, maintain and provide USDA with contact and location information for each licensed hemp producer, including personal information about the individual or business and location information about the land where hemp is produced.
- Plans for accurate and effective sampling and testing. A plan must include procedures for collecting hemp flower samples; conducting sampling and testing of plants 15 days prior to any harvest; ensuring that sampling methods are reliable and represent a homogeneous composition of the sampling area; preventing commingling of plants from different sampling areas; requiring that producers are present during sampling; and allowing samplers to have unrestricted access to hemp plants and all land and facilities used for cultivating or handling hemp.
- Procedures to accurately test THC levels in samples. The rule lays out suggested reliable testing methods but does not establish a single, national testing procedure for determining whether a hemp plant falls beneath the 0.3 threshold for THC, the psychoactive ingredient that distinguishes hemp from marijuana. However, a State or Tribe must use a testing lab that is registered with the Drug Enforcement Agency and must require the lab to follow testing performance standards. The standards must include evaluation of “measurement of uncertainty,” a concept similar to determining the margin of error, and must account for the uncertainty in THC test results.
- Procedures for disposal of non-compliant plants. A State or Tribal plan must prohibit any handling, processing, or entering the stream of commerce of any hemp grown in an area that exceeds the acceptable THC level and must have procedures for disposing of the plants, verifying disposal, and notifying USDA of non-compliant plants, including provision of test results to USDA.
- Inspection procedures. A plan must include procedures for annual inspections of random samples of licensed producers.
- Reporting procedures. A plan must explain how a State or Tribe will submit all of the information and reports required by the rule, which includes monthly producer reports, monthly hemp disposal reports, and annual reports of total planted, harvested, and disposed acreage. The plan must also require producers to report crop acreage to the Farm Service Agency.
- Corrective action plans. A required corrected action plan will address procedures for allowing producers to correct negligent regulatory violations such as failing to provide a legal description, failing to obtain a license, and exceeding the THC level. The procedures must include a reasonable compliance date, reporting by the producer for two years after a violation, five years of ineligibility for producers with three negligence violations with a five-year period, and inspections to ensure implementation of corrective action plans.
- Enforcement for culpable violations. A plan must have procedures for reporting any intentional, knowing, willful or reckless violations made by producers to the U.S. Attorney General and chief law enforcement officers of the State or Tribe.
- Procedures for addressing felonies and false information. The plan must not allow a producer with a felony conviction relating to controlled substances to be eligible for a hemp license for a period of ten years from the felony conviction, and must prohibit a producer who materially falsifies information on an application to be ineligible for a license.
Plan review by USDA. The rule states that after a State or Tribe submits a hemp plan, USDA has 60 days to approve or deny the plan. The rule also allows USDA to audit approved state plans at least every three years.
Interstate commerce of hemp. The rule reiterates an important provision first mentioned in the 2018 Farm Bill: that no state can prohibit transportation of hemp or hemp products lawfully produced under an approved state plan or a USDA license.
USDA issued licenses. A producer in a state that chooses not to regulate hemp production may apply to the USDA for a license to cultivate hemp. The USDA’s sets forth its licensing program requirements in the rule, which are similar to provisions for State and Tribal Hemp Production Plans.
Effective date: today
It’s important to note that the USDA published the rule as an “interim final rule” that becomes effective upon its publication in the Federal Register, which is today, October 31, 2019. Federal law allows an agency to forego the typical “notice and comment” period of rulemaking and publish a final rule if there is good cause for doing so. USDA explains that good cause exists due to Congress’s interest in expeditious development of domestic hemp production, critically needed guidance to stakeholders who’ve awaited publication of the hemp rule, previous outreach efforts, and the public’s interest in engaging in a new and promising economic endeavor. The immediacy of USDA’s rule allows the agency to begin reviewing State and Tribal Hemp Production Plans now, in hopes that producers will be able to plant hemp for the 2020 growing season. USDA is seeking public input on the interim final rule for the next sixty days, however, and plans to consider such comments when it replaces the interim final rule with a “final rule” in two years time.
Is Ohio ready?
While Ohio’s Department of Agriculture (ODA) won’t be the first in line to have its hemp production program reviewed under the new USDA program, Ohio won’t be too far behind the twenty states and tribes that are already awaiting review. ODA proposed Ohio’s hemp regulations earlier this month after the General Assembly decriminalized hemp and authorized the agency to develop a hemp program in July of this year via Senate Bill 57. The USDA rule comes just one day after ODA closed the comment period on the proposed rules, which we summarize here. Once ODA publishes the final hemp regulations, it can proceed to submit Ohio’s Hemp Production Plan to the USDA for approval. Ohio’s timing may prove beneficial, as ODA now has the opportunity to review the USDA rule and ensure that Ohio’s plan will meet the federal requirements.
Our comparison of Ohio’s hemp laws and regulations to the USDA’s hemp rule indicates that Ohio is well prepared to meet the hemp rule requirements. Only a few provisions in the federal rule may require additional attention by Ohio before ODA submits its plan for USDA approval. Key among those are procedures for THC testing methods (technical details not included in Ohio’s proposed regulations) and procedures for corrective action plans (which are not clearly laid out in the proposed regulations but are addressed in Senate Bill 57). One potential conflict between the federal and Ohio rules regards destruction of hemp plants that exceed the allowable 0.3 THC level. The federal rule prohibits any further handling, processing or entering into the stream of commerce of any hemp plants from the sampling area and requires disposal of non-compliant plants, while Ohio’s regulations allow bare hemp stalks for fiber that is free of leaf, seed and floral material to be harvested, processed and used while all other material from plants that exceed 0.3 THC must be destroyed. We’ll soon see how ODA handles these and other issues when it submits Ohio’s Hemp Production Plan for USDA approval.
Read the interim final rule on “Establishment of a Domestic Hemp Production Program” here, which is also the site for submitting comments on the rule. USDA will accept public comments until December 30, 2019.
When you don’t want to move, you don’t want to move. That’s the message being sent to Secretary Perdue and the leadership of the USDA by employees of the USDA Economic Research Service (ERS), who recently voted to unionize 138 to 4.
ERS produces research on agriculture and rural economies that is used by policymakers in determining where to prioritize federal money, personnel, and attention. Many universities and agricultural organizations also utilize the data in their own research. Economists and statisticians make up a large portion of ERS’s staff.
The vote comes after months of tension over the fate of ERS. USDA leaders have been seriously discussing moving the headquarters of ERS closer to the farms and rural areas that it is charged with researching, and away from D.C. Recently the USDA announced that locations in Indiana near Purdue University, in Kansas City, and in North Carolina’s Research Triangle Region have been selected as potential relocation sites. However, many ERS staffers have been vocal about not wanting to move away from D.C., either for personal reasons or to protect the prestige of the office within the USDA.
Further, Secretary Perdue had announced plans last year to place the service directly under the USDA’s chief economist, which would put ERS more directly under the watch of administrators appointed by President Trump. Some staffers have expressed concerns that such a move could increase the pressure to analyze data in a particular way, and reduce the service’s independence.
According to news interviews, as conversations among the higher level administrators became more serious, many ERS employees felt that they did not have much say in the matter. This sense of helplessness triggered many employees to want to unionize, while some employees have already left in pursuit of other jobs.
The right of most federal employees to unionize is protected under federal law, but the preliminary vote was not the final stop in the process. The vote to unionize had to be reviewed by the National Labor Relations Authority, which governs public-sector labor relations. The American Federation of Government Employees (AFGE) has already begun to represent the roughly 200 workers at ERS. AFGE represents approximately 700,000 employees of the federal government and of the District of Columbia, with just under half of those members paying dues. AFGE is affiliated with the AFL-CIO, which is the nation’s largest federation of labor unions.
The formation of a union does not mean that ERS employees will be able to prevent the changes being proposed at the administrative level. However, it increases the likelihood that ERS employees have a seat at the decision table as a united group. This desire to have a united front and collectively bargain is one of the traditional purposes of forming a union.
Written by Evin Bachelor, Law Fellow, OSU Extension Agricultural & Resource Law Program
The United States Department of Agriculture (USDA) announced last week that farmers.gov will now feature two new tools. One will help farmers navigate the application process for obtaining temporary agricultural workers under H-2A, and the second will help farmers understand and manage their USDA-backed farm loans. The press release explained that the USDA values the experience of its customers, and that it developed these tools after hearing feedback on the need for simple, technology based resources to help farmers. Unveiled in 2018, farmers.gov allows users to apply for USDA programs, process transactions, and manage their accounts.
Customized H-2A checklists based on the needs of an individual farmer
Many farmers need seasonal or temporary workers for planting, cultivating, and harvesting crops. The seasonal nature of agriculture can make it difficult for farmers to find an adequate supply of domestic labor willing to fill the temporary positions. To relieve this difficulty, the federal government created the H-2A temporary agricultural worker program to allow these farmers to hire workers from foreign countries to supplement the domestic labor market on a temporary or seasonal basis. Farmers must demonstrate that there are not enough U.S. workers able, willing, qualified, and available for the temporary work, and that the H-2A workers will not result in reduced wages for other U.S. workers.
Understanding the H-2A process has long been complex and confusing, but a new tool focused on education for smaller producers includes a revamped website and an interactive checklist tool. The new website explains the basics of the program, includes an interactive checklist tool to create custom checklists, and gives an estimate of the costs of hiring H-2A workers.
The interactive checklist tool is a helpful way for producers to learn about the steps they need to take to obtain the labor that they need. In the past, websites would rely heavily on producers to sift through information and determine the requirements that they needed to follow. Now, the interactive tool asks questions one at a time to generate a custom checklist.
When using the tool, producers will first be asked whether this will be their first time hiring workers using the H-2A Visa Program. If the producer answers yes, they will be asked when they need the labor. If the producer answers no to the first question, they will be asked whether they are extending the contract of workers that they are currently employing. Ultimately, the producer will be asked when they need the labor. At the end of the questions, the tool will provide a checklist that the producer will use to determine what steps he or she needs to take to obtain H-2A labor. The checklists are designed to be easy to understand and to make the process less confusing.
View information about your USDA-backed farm loan online
The USDA offers farm ownership and operating loans through the Farm Services Agency to family-size farmers and ranchers who cannot obtain commercial credit. Farmers.gov now allows producers to view information about these USDA-backed farm loans through a secure online account. Producers can view loan information, history, and payments from a desktop computer, tablet, or smartphone. Producers will need to sign up for a USDA online account in order to create an account profile with a password.
At this time, the program only allows producers doing business on their own behalf as individuals to view this information through farmers.gov. Other entities such as LLCs and trusts or producers acting on behalf of another cannot utilize this tool yet, although the USDA indicates that this is planned for in the future.
The USDA’s press release made clear that the addition of these tools represents a step toward providing better customer service and increased transparency. As only a step, producers can expect more tools and features to be added to farmers.gov in the future. As this happens, we will be sure to keep you up to date about the website’s new bells and whistles.
Written by: Evin Bachelor, Law Fellow
Welcome to 2019 from all of us at the OSU Extension Agricultural and Resource Law Program! With a new Congress, a new Ohio General Assembly, and a new slate of leaders atop Ohio’s executive offices, we are expecting a flurry of activity in the new year. Our resolution this year is to keep you in the know about agricultural law news, and maybe find some time to exercise.
Here’s our latest gathering of agricultural law news that you may want to know:
U.S. Supreme Court declines to hear state livestock standard lawsuits. In a previous blog post, we noted that California and Massachusetts had adopted laws that would require sellers of certain meats and eggs to follow heightened animal care standards in order to sell those products within California or Massachusetts. Thirteen states, led by Indiana, quickly sued Massachusetts to stop its law from taking effect. Missouri led another group of thirteen states in suing California.
Indiana and Missouri had attempted to have their cases brought directly before the U.S. Supreme Court, arguing that the U.S. Supreme Court has “original jurisdiction” over claims between states. After the states filed their arguments with the Supreme Court, the justices asked the U.S. Solicitor General whether he believed these cases were appropriate for the Court’s original jurisdiction. The Solicitor General filed briefs in the Indiana v. Massachusetts and Missouri v. California maters, and suggested that the Supreme Court should not exercise original jurisdiction because, among other things, the states lack the proper standing to sue. Here, this argument essentially means that the resulting harm from enforcement of the statutes would not harm the states as states, but only some of their citizens, and that those citizens may still sue California or Massachusetts for their individualized harm.
The Supreme Court took the position of the Solicitor General and denied the requests of Indiana and Missouri to have the cases brought before the Court. Any further action will have to be taken through the lower courts. For more information about the Missouri v. California matter as argued to the Supreme Court, click here. For more information about the Indiana v. Massachusetts matter as argued to the Supreme Court, click here.
USDA not required to adopt Obama-era “Farmer Fair Practice Rules,” according to federal appeals court. In December 2016, the USDA published the Farmer Fair Practices Rules as an interim final rule, and published two amendments to its rules that deal with the Packers and Stockyards Act. The amendments addressed the ease of bringing a lawsuit for unfair and uncompetitive business practices under the Packers and Stockyards Act. The rule was set to take effect at the end of February 2017, although the amendments were only proposals that had not fully gone through the required notice and comment process. In early February 2017, citing the President’s regulatory freeze, and arguing that the rule would cause more litigation and confusion, the USDA postponed, and ultimately withdrew, the rule. The USDA also did not take action on the two proposed amendments. The Organization for Competitive Markets sued to stop the USDA from withdrawing the interim final rule, and to compel the USDA to promulgate the two amendments, arguing that the 2008 Farm Bill requires action by the USDA.
On December 21, 2018, the United States Court of Appeals for the Eighth Circuit denied the Organization for Competitive Markets’ request for review. The court explained that the USDA did not fail to fulfill its mandate, describing Congress’s language as ambiguous. Further, the court said that the USDA’s withdrawal of the interim final rule followed the proper notice and comment procedures. Ultimately the court believed that Congress has been monitoring this issue and if Congress wishes for a more specific action, then Congress should act. The court’s opinion in Organization for Competitive Markets v. USDA, No. 17-3723 (8th Cir. 2018) is available here.
Funding for National Weather Service and National Algal Bloom Program receives President’s signature. On Monday, January 7th, President Trump signed Senate Bill 2200, which passed during the previous Congress. The bill increases funding for the National Weather Service’s agriculture related weather monitoring and forecasting from $26.5 million in 2019 to $28.5 million by 2023. The Office of Oceanic and Atmospheric Research, the research arm of the National Oceanic and Atmospheric Administration (NOAA), will see an increase in funding from $136.5 million in 2019 to $154 million by 2023. The bill also instructs NOAA to “plan the procurement of future data sources and satellite architectures,” essentially instructing NOAA to think about cost-effective ways to upgrade weather monitoring systems both on the ground and in space. The National Integrated Drought Information System will also see an increase in funding from $13.5 million this year to $14.5 million by 2023. The program is to use some of the funding to “develop a strategy for a national coordinated soil moisture monitoring network” within the next year. Finally, the bill also reauthorizes $20.5 million each year through 2023 for relief from hypoxia or harmful algal blooms “of national significance,” which the bill defines as “a hypoxia or harmful algal bloom event that has had or will likely have a significant detrimental environmental, economic, subsistence use, or public health impact on an affected state.” For the text of the act, visit Congress’s webpage here.
Ohio Case Law Update
- Ohio Power Citing Board cannot extend construction certificate for wind farm by simple motion, but must follow amendment process, according to the Ohio Supreme Court. Black Fork Wind Energy filed an application with the Ohio Power Citing Board (“the board”) to construct a wind farm in Crawford and Richland Counties in 2011, and the board approved the application in January 2012. Black Fork had five years, until January 2017, to begin construction on the project. The project was delayed due to a lawsuit challenging the project, and Black Fork sought an additional two years to begin construction. The board granted Black Fork’s motion without a full application to amend and investigation. The board argued that it regularly grants such extensions and that extensions do not amount to an “amendment” that would require an application because an extension is not “a proposed change to the facility.” The majority of the Ohio Supreme Court disagreed, and held that the board acted improperly. Because the commencement of construction was a term in the certificate, granting an extension amounts to an amendment in the certificate. As such, the board should not have acted on the request without requiring an application for amendment and investigation. The Court reversed the order and remanded the issue back for further proceedings. Justices Fischer and O’Donnell dissented, arguing that the Court should defer to the board in how it reads “amendment” under Ohio Revised Code § 4906.07(B). For the Ohio Supreme Court’s opinion from In re application of Black Ford Wind Energy, Slip Opinion No. 2018-Ohio-5206, click here.
- Creditors must first seek payment of unpaid bills from estate of deceased spouse before attempting to collect from a surviving spouse, according to the Ohio Supreme Court. In Embassy Healthcare v. Bell, Mr. Robert Bell received care at a nursing home operated by Embassy Healthcare. Embassy sent a letter for collection to his wife, Mrs. Bell, six months and three days after he had passed away, but no estate for Mr. Bell had been opened. In Ohio, creditors have six months to request an estate administrator be appointed in order to collect a debt from an estate, but Embassy did not make such a request. Since it missed the six month statute of limitations, Embassy tried to seek collection from Mrs. Bell under Ohio’s “necessaries” law, as provided in Ohio Revised Code § 3103.03. This law requires spouses to support their spouse with money, property, or labor if their spouse cannot do so on their own; however, the Ohio Supreme Court has said that a person is responsible for their own debts first, and that under this statute their spouse will only be liable if that person cannot pay for their debts. In this case, the Ohio Supreme Court said that Embassy had to seek payment from Mr. Bell’s estate before it could require payment from his spouse. Since the statute of limitations had run to bring a claim against Mr. Bell’s estate, Embassy would be unable to demonstrate that Mr. Bell’s estate could not cover his personal debts. Therefore, Embassy would not be able to prove an essential requirement of Ohio’s necessaries law, and cannot recover from his spouse. For the Ohio Supreme Court’s opinion in Embassy Healthcare v. Bell, Slip Opinion No. 2018-Ohio-4912, click here.
- Trial court may determine width of easement as a question of fact, and will not be reversed by appellate court unless the evidence shows it clearly lost its way, according to Ohio Court of Appeals for the 7th District. A property owner signed an express easement to a neighbor so that the neighbor could cross the property owner’s land to access the public road. The written easement did not specify the width of the easement, but the neighbor cleared a path approximately 10 feet wide. The property owner eventually sold the property, and the new owner laid gravel on the path from the public road to their garage, and the neighbor extended the gravel all the way to his own property. Disputes later arose regarding the easement, and the neighbor sued the new property owners for breach of easement, and sought a declaration that the easement was thirty feet wide. Ohio case law allows trial courts to establish the dimensions of an easement if the writing does not specify any dimensions if the trial court examines: 1) the language of the granting document, 2) the context of the transaction, and 3) the purpose of the easement. The trial court found the easement to be ten feet wide. The neighbor appealed, but the Seventh District found the trial court’s decision to be reasonable given the evidence and Ohio law. Since the width of an easement is a question of fact, an appellate court will not reverse the trial court absent evidence that the trial court clearly lost its way given the weight of the evidence. For the Seventh Districts’ opinion in Cliffs and Creek, LLC v. Swallie, 2018-Ohio-5410 (7th Dist.), click here.
The United States Department of Agriculture (USDA) wants to hear from you. The agency published its “Identifying Regulatory Reform Initiatives” notice in the Federal Register on July 17 seeking “ideas from the public on how we can provide better customer service and remove unintended barriers to participation in our programs in ways that least interfere with our customers and allow us to accomplish our mission.”
The notice derives from the Regulatory Reform Task Force established by President Trump’s February 24, 2017 Executive Order 13777 on "Enforcing the Regulatory Reform Agenda". order requires the heads of federal agencies to evaluate existing regulations and make recommendations to repeal, replace or modify regulations that create unnecessary burdens.
Specifically, the USDA invites the public to evaluate the agency’s existing regulations. The agency poses several questions and encourages commenters to respond in detail to the questions:
- Are there any regulations that should be repealed, replaced or modified?
- For each regulation identified in question one, identify whether the regulation:
- Results in the elimination of jobs, or inhibits job creation;
- Is outdated, unnecessary, or ineffective;
- Imposes costs that exceed benefits;
- Creates a serious inconsistency or otherwise interferes with regulatory reform initiatives and policies;
- Is inconsistent with requirements that agencies maximize the quality, objectivity, and integrity of the information they disseminate;
- Derives from or implements previous presidential directives that have been rescinded or substantially modified.
The comment process offers the agricultural community an opportunity to draw attention to USDA regulations that create unnecessary or unintended negative impacts on agriculture. Considering the wide range of programs and regulations administered by the USDA in areas such as crop and livestock insurance; Farm Service Agency programs; commodity standards, grading and inspections; animal and plant health; and agricultural exports, it’s likely that agricultural producers will have thoughts to share with the agency. To that end, USDA will accept comments for the next year, but will review the comments in four phases. The deadline for the first review is September 15, 2017.
To read the agency’s notice and instructions for submitting comments on regulatory reform, visit this link.