The siting of renewable energy projects on Ohio farmland is a divisive issue these days, pitting neighbors against neighbors and farmers against farmers. Some support expanding renewable energy capacity while others oppose losing productive farmland or changing the rural landscape. A common question arising in this conflict is this: when can a county or township say “no” to a proposed renewable energy development? Several new laws, old laws, and recent court cases can help answer this question, although the answer is not always clear.
The “public utility exemption” from zoning. A long-standing provision of Ohio law that limits county and township land use power is the “public utility exemption” from zoning. Ohio Revised Code Sections 303.211(counties) and 519.211 (townships) specifically state that counties and townships have no zoning authority “in respect to the location, erection, construction, reconstruction, change, alteration, maintenance, removal, use, or enlargement of any buildings or structures of any public utilities.” The historical reason for this exemption is to keep local regulations from interfering with the provision of public utility services to Ohio residents. But what is a “public utility”? The exemption does not define the term, leaving Ohio courts to determine what is and is not a public utility on a case-by-case basis. More on that later.
New powers in Senate Bill 52. Effective in October of 2021, Senate Bill 52 gave new powers to county commissioners over certain renewable energy developments, setting aside the “public utility exemption” in those situations. The new law states that counties can designate restricted areas where wind and solar development is prohibited and can prohibit an individual proposed wind and solar facility or limit its size. These new powers, however, apply only to facilities with a single interconnection to the electrical grid and beyond a certain production size. For solar facilities, that size is 50 MW or more of energy production and for wind facilities, it’s 5 MW or more. Facilities that aren’t connected to the grid or are beneath those amounts are not subject to the new powers granted in S.B. 52. Additionally, facilities that had reached a certain point in the state approval process aren’t subject to the new law. Several Ohio counties have already established restricted areas or worked with townships to determine whether the county will approve individual projects as they come forward.
Authority over “small wind farms.” New wind power development in Ohio a decade ago led to the “small wind farm” provision in Ohio Revised Code Sections 303.213 (counties) and 519.213 (townships). This law allows counties and townships to use their zoning powers to regulate the location and construction of publicly and privately owned “small wind farms,” regardless of the public utility exemption. A “small wind farm” is any wind turbine that is not subject to Ohio Power Siting Board jurisdiction, meaning that it produces less than 5 MW of energy. Some counties and townships have utilized this provision of law to establish setback distances for wind turbines in residential areas.
The “bioenergy” exemptions. Yet another Ohio law limits county and township zoning authority over bioenergy facilities. Found in the “agricultural exemption from zoning” statute, Ohio Revised Code Sections 303.21(C) (counties) and 519.21(C) (townships) states that county and township zoning cannot prohibit the use of any land for biodiesel production, biomass energy production, electric or heat energy production, or biologically derived methane gas production if the facility is on land that qualifies as “land devoted exclusively to agricultural use” under Ohio’s Current Agricultural Use Valuation program and if, for biologically derived methane gas, the facility does not produce more than 5 MW or 17.06 million BTUs of energy. Ohio now has several facilities that fit within this exemption from zoning authority.
Two recent cases examine when a renewable energy facility a “public utility.” The “public utility exemption” from county and township zoning was at issue in two similar Ohio cases concerning biodigesters, facilities that process manure and other solid wastes into methane gas that is used to generate electricity. The most recent is Dovetail Energy v. Bath Township. The township claimed that the Dovetail biodigester located on farmland in Greene County was an “industrial use” that violated township zoning regulations. The owners argued that the biodigester was exempt from township zoning under both the “public utility” exemption and the “bioenergy” exemption.
The case reached the Second District Court of Appeals, which focused a large part of its analysis on the issue of whether the biodigester is a “public utility” that is exempt from township zoning under Ohio Revised Code 519.211. Relying on earlier cases from the Ohio Supreme Court, the court explained that an entity is a public utility if “the nature of its operation is a matter of public concern” and if “membership is indiscriminately and reasonably made available to the general public” as a public service.
The court analyzed the “public service” and “public concern” factors for the Dovetail biodigester, examining first whether Dovetail provides a public service, which requires a showing that the facility indiscriminately provides essential goods or services to the public, which has a legal right to demand or receive the goods or services, and that the goods or services can’t be arbitrarily withdrawn. Because Dovetail generates electricity that is sold into the wholesale energy market and used to provide energy to local utilities and customers and because Dovetail is also required to provide renewable energy credits that it cannot arbitrarily or unreasonable withdraw, the court concluded that the facility is a “public service.”
Factors determining whether Dovetail’s operation is also a matter of “public concern” that the court analyzed included whether Dovetail “serves such a substantial part of the public that its rates, charges and methods of operation become a public concern.” The court looked to Ohio’s incentives for renewable energy development, the lack of competition in the electric grid, the “heavy” regulatory environment for Dovetail, and its payment of public utility taxes as indications that Dovetail and the energy it produces are “public concerns.” Meeting both the “public service” and “public concern” components, the appeals court agreed with the lower court’s ruling that Dovetail is a public utility and is exempt from Bath Township zoning regulations.
The Dovetail decision echoes an earlier decision in the Fifth Appellate District, Westfield Township v. Emerald Bioenergy, where the appellate court examined a biodigester on farmland in Morrow County and found that the township could not regulate it because it is a “public utility.” The court cited factors such as Emerald’s provision of electric to the general public through interconnection agreements that distribute the energy to the energy grid, its lack of control over which customers receive or use the energy, its renewable energy credit requirements that can’t be arbitrarily or unreasonably withdrawn, its acceptance of waste from any customer, its governmental regulations and oversight, and its public utility taxes. The court also noted that it need not address the “bioenergy” exemption because it found the enterprise to be a “public utility.”
Both townships in the Dovetail Energy and Emerald Bioenergy cases requested a review of the decision by the Ohio Supreme Court. But the Supreme Court decided not to hear either case, although several of the justices dissented from that decision in each case. Without further review by the Supreme Court, the appellate court decisions stand.
What do these cases mean for solar energy facilities under 50 MW? Recall that S.B. 52 allows counties to prohibit or restrict solar facilities that are 50 MW or higher, but no other law addresses solar facilities with a single interconnection point to the energy grid that produce less than 50 MW. Would such a facility be a “public utility” under the public utility exemption? As with Dovetail and Emerald, a court would have to examine the solar facility and determine whether “the nature of its operation is a matter of public concern” and if “membership is indiscriminately and reasonably made available to the general public” as a public service. If so, a county or township could not use zoning to prohibit or regulate the location or construction of the solar facility.
Learn more about renewable energy laws in the Farm Office Energy Law Library at https://farmoffice.osu.edu/our-library/energy-law.
Large-scale wind and solar energy development has generated both opportunity and conflict across Ohio in recent years. For several months, we monitored the progress of Senate Bill 52, a proposal intended to address community and landowner concerns about wind and solar facilities. This past Monday marked the effective date for Senate Bill 52, passed by the Ohio Legislature in June, and we've been busy developing new resources to help explain the laws that are now effective.
The legislation expands local involvement in the siting and approval of large-scale wind and solar facilities in several ways:
- County commissioners may designate “restricted areas” where such facilities may not locate.
- County citizens may petition for a referendum to approve or reject restricted area designations.
- Developers must hold a public meeting overviewing a proposed facility in the county where it would locate.
- County commissioners may prohibit or limit a proposed wind or solar facility after learning of it at the public meeting.
- County and township representatives must sit on the Ohio Power Siting Board committee that reviews facility applications.
The new laws also require wind and solar developers to submit decommissioning plans and performance bonds to address removal of a facility at the end of its lifetime.
Our two law bulletins and video series on Senate Bill 52 are now available. The resources work through each part of Senate Bill 52 and explain which types of facilities will be subject to the laws. You'll find the new resources in our energy law library on the Farm Office website at https://farmoffice.osu.edu/our-library/energy-law.
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.
Written by Ellen Essman and Peggy Hall
The holidays are almost here, 2019 is almost over, but the world of ag law isn’t taking a break. From cannabidiol, to Ohio bills on water quality and wind power, to a cage-free egg law in Michigan, here’s the latest roundup of agricultural law news you may want to know:
FDA warns companies about cannabidiol products. If you’ve been following the hemp saga unfold over the past year, you know that the Food and Drug Administration (FDA) has been contemplating what to do with cannabidiol, or CBD from derived hemp products. In addition to manufacturing standards, FDA has also considered how CBD products are marketed and labeled. Although FDA has issued no official rules on CBD marketing and labeling, the agency has warned a number of companies that their marketing of CBD violates the Federal Food, Drug, and Cosmetic Act (FD&C Act). On November 25, FDA sent warning letters to 15 companies. FDA asserts that the companies “are using product webpages, online stores and social media to market CBD products in interstate commerce in ways that violate the FD&C Act.” In particular, FDA is apprehensive about those companies who market CBD products in ways that claim they can treat diseases or be used therapeutically for humans and animals. Since CBD has not been approved by FDA or found safe for these uses, companies cannot make such claims. You can see FDA’s news release for more information and for the list of companies.
It won’t be as difficult for financial institutions to serve hemp related businesses. Federal agencies and state bank regulators released a statement clarifying what is required of banks when hemp businesses are customers. Since hemp was removed from the federal list of controlled substances, banks no longer have to file a Suspicious Activity Report on every customer involved in growth or cultivation of hemp just because they grow hemp. This action will make it easier for those legally cultivating hemp to work with banks and obtain loans for their farms. For more information, the agencies’ press release is available here.
Ohio House considers the Senate’s water quality bill. Ohio’s House Energy & Natural Resources Committee held a hearing on Senate Bill 2 just last week. The bill would implement a Statewide Watershed and Planning Program through the Ohio Department of Agriculture (ODA). Under the bill, ODA would be charged with categorizing watersheds in Ohio and appointing coordinators for each of the watersheds. ODA and the coordinators would work closely with soil and water conservation districts to manage watersheds. Ag groups such as the Sheep Improvement Association, the Cattleman’s Association, the Pork Council, the Dairy Producers Association, and the Poultry Association testified in favor of SB 2.
Ohio House committee debates wind bill. The House Energy & Natural Resources Committee was busy last week—in addition to SB 2, they also discussed House Bill 401. In the simplest terms, if passed, HB 401 would allow townships to hold a referendum on approved wind projects. This means that with a vote, townships could overturn decisions made by the Ohio Power and Siting Board (OPSB). In the committee hearing, wind industry representatives argued that such a referendum would be harmful, since it would overturn OPSB decisions after companies have already spent a great deal of money to be approved by the Board. They also argued that the bill singles out the wind industry and does not allow referendums on other energy projects. Republican committee members signaled that they may be willing to revise the language of HB 401 to allow a referendum before OPSB decisions.
Iowa’s ag-gag law is paused. In May, we wrote about Iowa’s new ag-gag law, which was the state’s second attempt to ban undercover whistleblowers and journalists from secretly filming or recording at livestock production facilities. In response, numerous animal rights groups sued the state, claiming that the law unconstitutionally prevents their speech based on content and viewpoint. On December 2, the U.S. District Court for the Southern District of Iowa issued a preliminary injunction, which means that the state will not be able to enforce the ag-gag law while the lawsuit against it is being considered. The preliminary injunction can be found here.
Cage free eggs coming to Michigan in 2024. Michigan lawmakers recently passed Senate Bill 174, which, among other things, will require that all birds producing eggs both in and out of the state be housed in “cage-free” facilities by 2024. The cage-free facilities will have to allow hens to roam unrestricted with the exception of exterior walls, and some types of fencing to contain the birds. In an indoor facility, the farmer must be able to stand in the hens’ usable floor space while caring for them. In addition, the facilities must have enrichments for hens such as scratch areas, perches, nest boxes, and dust bathing areas. Michigan joins California, Oregon, Rhode Island, and Washington in banning non-cage-free eggs. Note that Michigan’s law will apply to Ohio egg producers who sell eggs to buyers in Michigan.
Case watch: hearing set in Lake Erie Bill of Rights case. The court has set a January 28, 2020 hearing date for the slow moving federal lawsuit challenging the Lake Erie Bill of Rights (LEBOR) enacted by Toledo voters in February. The hearing will likely focus on several motions to dismiss the case filed by the parties on both sides of the controversy, but Judge Zouhary indicated that he’ll set the agenda for the hearing prior to its date. Drewes Farm Partnership filed the federal lawsuit against the City of Toledo in February, claiming that LEBOR is unconstitutional and violates several Ohio laws. The State of Ohio was permitted to join the farm as plaintiffs in the case, but the court denied motions by Toledoans for Safe Water and the Lake Erie Ecosystem to join as defendants in the case. For more on the LEBOR lawsuit, refer to this post and this post. For our explanation of LEBOR, see this bulletin.
Stay tuned to the Ohio Ag Law Blog as we continue to track these and other developments in agricultural law through the holidays and beyond.
This weekend, as you enjoy your morning cup of coffee and find yourself wondering what’s the news in our court system, look no further than this blog post. Every now and then there’s a new court opinion related to agricultural law that peaks our interest and makes us want to share a summary of what happened. This week we read cases about the federal Takings Clause, wind energy, and oil and gas rights. Here are the stories:
- A property owner may bring a claim in federal court under the Fifth Amendment when the government has violated the Takings Clause by taking property without just compensation. This case involved a township ordinance requiring all cemeteries to be held open and accessible to the general public during daylight hours. A property owner with a small family graveyard was notified that she was violating the ordinance. The property owner filed suit in state court arguing that the ordinance constituted a taking of her property, but did not seek compensation. The township responded by saying it would withdraw the notice of violation and not enforce the ordinance against her. The state court said that the matter was therefore resolved, but the property owner was not satisfied with that decision. She decided to bring a takings claim in federal court.
Before this decision, there was a roadblock to bringing such claim. Lower courts had read a previous Supreme Court decision to say that if a state or local government commits a taking, the property owner would first have to seek a remedy through the state’s adverse condemnation procedure before going to federal court. But in doing so, the property owner would actually not have a chance to bring the claim in federal court because the federal court would have to give full faith and credit to the state court decision. At first, that seemed like what would happen to the property owner because the state court had decided that the issue was moot since the township had agreed not to enforce the ordinance against her. But the U.S. Supreme Court cleared the way for the property owner by taking the rare action of overruling its prior precedent. Knick v. Township of Scott, Pennsylvania, was not an Ohio court case, but rather one that made its way all the way up to the U.S. Supreme Court. To read the case, click HERE.
The final opinion handed down by the justices is certainly important, but it is also notable for Ohio because the Ohio Farm Bureau Federation (OFBF) submitted an amicus brief in support of the property owner through its legal counsel, Vorys Sater Seymour and Pease, LLP of Columbus. The brief cited examples in Ohio showing that the Supreme Court’s prior precedent was causing problems for Ohio property owners by limiting their access to federal courts in Fifth Amendment takings claims. OFBF has noted that this was the first time it had submitted an amicus brief to the U.S. Supreme Court.
- Ohio Power Siting Board’s approval of new wind-turbine models in facility’s certificate does not constitute an amendment to the certificate for the purposes of triggering current turbine-setback requirements. In 2014, the Ohio Power Siting Board approved an application by Greenwich Windpark to construct a wind farm in Huron County with up to 25 wind turbines. In the initial application, all of the wind turbines would have used the same model of turbine. Just over a year after the application was approved, the wind farm developer applied for an amendment to add three additional models to the approved wind turbine model list, noting that the technology had advanced since its initial application. Two of the three newer models would be larger than the originally planned model, but would occupy the same locations and would comply with the minimum setback requirements at the time the application was approved.
The issue involved whether the new setback requirements, which were put in place by the state between the initial approval and the requested change, should apply. An amendment to a certificate would trigger the current wind turbine setback requirements. Greenwich Windpark wanted the less restrictive setback requirements in their initial application to still apply to the newer models, but a local group wanted the more restrictive setback requirements to apply. The Ohio Power Siting Board said that adding the new wind turbine models would not be an amendment, and would not trigger the more restrictive setbacks. The Ohio Supreme Court sided with the Ohio Power Siting Board, explaining that the Ohio General Assembly wanted the Ohio Power Siting Board to have broad authority to regulate wind turbines. This case is cited as In re Application of 6011 Greenwich Winkpark, L.L.C., 2019-Ohio-2406, and is available to read on the Ohio Supreme Court’s website HERE.
- Children claiming to be heirs of reserved oil and gas rights are in privity with previous owners of the interest when connected by an auditor’s deed specifically mentioning those interests. The issue was whether children claiming their father’s oil and gas interests were blocked by the legal doctrine of issue preclusion from obtaining clear title to their interest when a previous Ohio Dormant Mineral Act (ODMA) lawsuit quieted title to mineral interests underlying their claim. This preclusion would be possible because the previous owners’ interests formed the basis of the father’s interest. Even though they were not named in the previous ODMA lawsuit, by virtue of being in privity, or legally connected, to the previous owners, the children would be bound by the previous lawsuit because the ODMA lawsuit cleared the previous owners’ interests along with any interests in their successors and assigns. Ultimately the court found that because the children stood in their father’s shoes, and his claim would be linked to the previous owners’ claims in the land, the previous ODMA lawsuit binds the children. This had the effect of eliminating the children’s claims in the oil and gas rights. This case is cited as Winland v. Christman, 2019-Ohio-2408 (7th Dist.), and is available to read on the Ohio Supreme Court’s website HERE.
As our readers can probably tell by now, there has been a lot happening in the agricultural law world over the past couple of weeks. From the Lake Erie Bill of Rights going on the ballot in Toledo to a new court decision on wedding barns, we’ve done our best to keep you in the know. While the legislative sessions in Congress and the Ohio General Assembly have started to shift into a higher gear, covering those bills will take up a lot of space, so be on the lookout for a legislative update soon.
For now, here’s our latest gathering of agricultural law news that you may want to know:
Yep, more WOTUS. The U.S. EPA has announced new public hearings regarding its proposed revised definition of Waters of the United States. The hearing will be held on Wednesday, February 27th and Thursday, February 28th at the Reardon Convention Center in Kansas City, Kansas. For those who wish to provide input, but are unable to make the trip, the U.S. EPA will accept written comments from the public online at http://www.regulations.gov with the docket ID number: EPA-HQ-OW-2018-0149. The online comment portal will accept new submissions until April 14th. The text of the proposed rule, which the U.S. EPA released just in time for Valentine’s Day, is available on the online comment portal page as well as in the Federal Register. For more information about either attending the meeting or submitting a comment to the U.S. EPA, visit the Federal Register’s webpage here. For more information about WOTUS rulemaking, see our most recent WOTUS blog post, or visit the U.S. EPA’s webpage here.
Conservation funding for federal lands could be restored under U.S. Senate bill. In a sign of bipartisanship, the U.S. Senate passed the National Resources Management Act by a vote of 92-8. If the House approves and it receives the President’s signature, the bill would modify a number laws addressing the management and conservation of federal lands, and would also restore funding to the Land and Water Conservation Fund, which had expired last fall. This fund primarily supports the protection of federal public lands and waters, but it also promotes voluntary conservation on private lands and awards grants to states for the acquisition and development of parks and outdoor recreation sites. Also in the bill are two specific changes of note for Ohio. First, section 6004(c) of the bill would increase the cap on total spending for the Ohio & Erie National Heritage Canalway from $10 million to $20 million. Second, section 2502 of the bill would extend the Lewis and Clark National Historic Trail from Illinois to Pennsylvania, which will include portions in Ohio. You can read the full text of the bill and see the official analyses on Congress’s website here.
FFA charter amendments approved by Congress and the President. Citing issues arising from the U.S. Department of Education’s not filling seats on the National FFA Board of Directors, the National FFA sought an amendment to its charter. Congress originally granted the charter in 1950, and any changes to the charter must be done so by an act of Congress. One of the major changes sought by National FFA was a reduction in the number of seats on the board of directors that must be appointed by the Department of Education. By not filling all of the seats on the Board of Directors, the National FFA faced difficulty making decisions because it often could not meet its quorum for meetings. The new amendments reduce the organization’s reliance on an appointment to its board of directors by the U.S. Department of Education, which increases the organization’s ability to self-govern. You can read the text of the bill on Congress’s website here, or visit the National FFA’s webpage on frequently asked questions about the charter revision here.
The PACT Act is back. The Prevention of Animal Cruelty and Torture Act has been reintroduced into the U.S. House of Representatives. The act would allow for significant fines and up to seven years in prison for those convicted of animal crushing, creating animal crushing videos, or distributing animal crushing videos. The bill defines crushing as “actual conduct in which one or more living non-human mammals, birds, reptiles, or amphibians is purposely crushed, burned, drowned, suffocated, impaled, or otherwise subjected to serious bodily injury.” However, the bill does contain exceptions for conduct that is related to “customary and normal veterinary, agricultural husbandry, or other animal management practice[s];” “the slaughter of animals for food;” legal hunting, trapping, and fishing activities; research; defense of a human; and euthanizing an animal. Many in the agriculture community have opposed the bill, arguing that it is duplicative in light of animal protections created by the states and that it risks courts and juries interpreting the language too broadly. At this time, the bill has only been introduced in the U.S. House and referred to the Judiciary Committee.
Nebraska wind farms sue to enforce contract and keep utility from flying off into the sunset. Three Nebraska windfarms in a power supply contract with the Nebraska Public Power District (NPPD) have filed suit to prevent the utility from backing out of the contract. The wind farms filed a complaint in federal court in Nebraska on January 30th, alleging that NPPD expressed its intention to terminate a power purchase agreement, and that doing so would be wrongful. The complaint explains NPPD’s position that the wind farms materially violated the contract by investing in other businesses and operations. The plaintiffs disagree that there was a breach, but say that even if there was, NPPD cannot terminate the contract because it knew of the transactions. The plaintiffs also note that NPPD has eminent domain power. They argue that by terminating the contract, NPPD knows that the wind farms will likely enter default with creditors. This could allow NPPD to acquire the rights of the wind farms through a foreclosure sale or eminent domain. To prevent NPPD from terminating the contract, the parties requested, and were granted, a temporary restraining order until March 1st that requires NPPD to honor the contract. The case is cited as Laredo Ridge Wind, LLC v. Nebraska Pub. Power Dist., No. 8:19-cv-45 (D. Neb.).
Wisconsin Supreme Court asked to decide scope of agency power to regulate agriculture. A Wisconsin court of appeals has certified two cases to the Wisconsin Supreme Court, asking the court to determine the extent of the Wisconsin Department of Natural Resource’s authority to regulate agriculture in order to protect groundwater. A certification represents a lower court seeking guidance on an issue that the lower court believes it is not in the best position to decide without knowing what the higher court thinks. These cases are important for Wisconsin because they pertain to a law passed in 2011 that restrained authority of state agencies to act beyond express grants of authority by the state legislature. Specifically, the cases ask whether the Wisconsin DNR can impose conditions on issuing a permit beyond the conditions stated in a statute. The affected parties in the cases range from dairy farms to manufacturers and from food processors to municipal water utilities. Environmental groups hope that state agencies may take a more expansive look at environmental impacts when reviewing permit applications. The two certification orders are available here and here.
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.
Bill makes wind and solar in Ohio competitive with neighboring states
Passed by both chambers of the Ohio legislature early morning on Friday, June 4, S.B. 232 provides tax exemptions for certain sources of new power generation. The bill was sponsored by State Senator Chris Widener and enjoyed bipartisan support. A press release from the Governor’s office makes clear he intends to sign it into law as soon as he receives it.
The new law will eliminate both the tangible personal property tax and the real property tax on new advanced energy projects. Qualified energy sources include wind, solar, and all other renewable energy resources as defined in Ohio Revised Code Section 4928, in addition to clean coal, nuclear energy, and the cogeneration of electricity from waste heat sources. To qualify, new projects involving wind, solar and other renewables must be under construction by January 1, 2012 and in service by January 1, 2013. All other qualified energy sources must be under construction by 2017.
One impetus for this change in tax treatment is that the current tangible tax rate energy companies pay is not competitive with other states. In Ohio, the tax rate for wind facilities stands at approximately $40,000 per megawatt, while solar is approximately $100,000 per megawatt. This compares to a range of $3,000 to $9,000 per megawatt in neighboring states.
The Ohio Department of Development will certify the exemption and base new payment rates (payment in lieu of taxes) on the number of Ohioans employed in the construction and installation of a qualified facility. Energy companies will have to comply with several other requirements including road repair, first responder training, and the establishment of university partnerships to promote the education, training and curriculum development of renewable energy industries.
The new rates will be as follows:
- Solar - $7,000 per MW
All other facilities:
- $6,000 per MW when 75% or more Ohio-domiciled employees are employed during construction and installation.
- $7,000 per MW when 60% or more Ohio-domiciled employees are employed during construction and installation.
- $8,000 per MW when 50% or more Ohio-domiciled employees are employed during construction and installation.
The bill also addresses Current Agricultural Use Valuation (CAUV) property and provides that the installation of an energy facility will not cause the remaining portion of a CAUV tract to be ineligible for CAUV.
The new law may signify the beginning of wind development in Ohio’s rural communities. Three wind projects have already received an Ohio Power Siting Board certificate and may be the first projects situated to apply for the new tax exemptions. Information regarding the three approved wind projects and four pending projects can be found on the Ohio Power Siting Board website.
Full text of S.B. 232 is available here.