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By: Peggy Kirk Hall, Thursday, February 16th, 2017

Written by:  Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program

The Parties

The Board of Trustees of the Des Moines Water Works (DMWW) brought a lawsuit against thirteen Iowa drainage districts.  DMWW is the biggest water provider in Iowa, serving the largest city, Des Moines, and the surrounding area. Drainage districts were first created in Iowa in the 1800s to drain wetlands and allow for agriculture in those areas.  In Iowa, the counties are in charge of drainage districts.  Individual landowners can tile their land so that it drains water to the ditches, pipes, etc. that make up the counties’ drainage districts.  Eventually, that water ends up in Iowa’s rivers.  The thirteen drainage districts being sued by DMWW are located in the Raccoon River watershed in Buena Vista, Sac, and Calhoun counties.  DMWW is located downstream from the drainage districts in question.

Background of the Lawsuit

On March 16, 2015, the Board of Trustees for the DMWW filed a complaint against the thirteen drainage districts in the U.S. District Court for the Northern District of Iowa, Western Division.  DMWW alleged that the drainage districts did not act in accordance with the federal Clean Water Act (CWA) and provisions of the Iowa Code because they did not secure the applicable permits to discharge nitrates into the Raccoon River.  In order to serve its customers, DMWW uses the Raccoon River as part of its water supply. 

 DMWW has to meet maximum contaminant levels prescribed under the federal Safe Drinking Water Act.  Nitrate is a contaminant with a maximum allowable level of 10 mg/L.  In its complaint, DMWW cited record levels of nitrate in water from the Raccoon River watershed in recent years.  DMWW alleged that the nitrate problem is exacerbated by the “artificial subsurface drainage system infrastructure…created, managed, maintained, owned and operated by” the thirteen drainage districts.  DMWW alleged that the drainage district infrastructure—“pipes, ditches, and other conduits”—are point sources.  DMWW points to agriculture—row crops, livestock production, and spreading of manure, as a major source of nitrate pollution. 

 DMWW also cited a number of costs associated with dealing with nitrates, including the construction of facilities that remove nitrates, the operation of those facilities, and the cost associated with acquiring permits to discharge the removed waste.  In their complaint, they generally asked the court to make the drainage districts reimburse them for their cleanup costs, and to make the drainage districts stop discharging pollutants without permits.

 All together, DMWW filed ten counts against the drainage districts.  In addition to their claim that the drainage districts had violated the CWA and similarly, Iowa’s Chapter 455B, DMWW also alleged that the continued nitrate pollution violated a number of other state and federal laws.  DMWW maintained that the pollution was a public, statutory, and private nuisance, trespassing, negligence, a taking without just compensation, and a violation of due process and equal protection under the U.S. and Iowa Constitutions.  Finally, DMWW sought injunctive relief from the court to enjoin the drainage districts to lessen the amount of nitrates in the water.  In many of the counts, DMWW asked the court for damages to reimburse them for their costs of dealing with the pollution. 

On May 22, 2015, the defendants, the thirteen drainage districts, filed their amended answer with the court.   On January 11, 2016, the district court filed an order certifying questions to the Iowa Supreme Court.  In other words, the district court judge submitted four questions of state law to the Iowa Supreme Court to be answered before commencing the federal trial.  The idea behind this move was that the highest court in Iowa would be better equipped to answer questions of state law than the district court. 

Iowa Supreme Court Decision

 The Iowa Supreme Court filed its opinion containing the answers to the four state law questions on January 27, 2017.  All of the questions were decided in favor of the drainage districts.  The court answered two questions related to whether the drainage districts had unqualified immunity (complete protection) from the money damages and equitable remedies (actions ordered by the court to be taken or avoided in order to make amends for the harm caused) requested by DMWW.  Both were answered in the affirmative—the court said that Iowa legislation and court decisions have, throughout history, given drainage districts immunity.  Iowa law has long found the service drainage districts provide—draining swampy land so that it could be farmed—to be of great value to the citizens of the state.  To that end, the law has been “liberally construed” to promote the actions of drainage districts.  What is more, judicial precedent in the state has repeatedly found that drainage districts are not entities that can be sued for money damages because they are not corporations, and they have such a limited purpose—to drain land and provide upkeep for that drainage.  The law has further prohibited receiving injunctive relief  (obtaining a court order to require an action to be taken or stopped), from drainage districts.  Instead, the only remedy available to those “claim[ing] that a drainage district is violating a duty imposed by an Iowa statute” is mandamus.  Mandamus allows the court to compel a party to carry out actions that are required by the law.  In this case, those requirements would be draining land and the upkeep of the drainage system. 

 The second two questions considered by the court dealt with the Iowa Constitution.  The court determined whether or not DMWW could claim the constitutional protections of due process, equal protection, and takings.  They also answered whether DMWW’s property interest in the water could even be “the subject of a claim under...[the] takings clause.”  The court answered “no” to both questions, and therefore against DMWW.  Their reasoning was that both DMWW and the drainage districts are subdivisions of state government, and based on numerous decisions in Iowa courts, “one subdivision of state government cannot sue another…under these clauses.”  Additionally, the court found that “political subdivisions, as creatures of statute, cannot sue to challenge the constitutionality of state statutes.”  Consequently, they reasoned that the pollution of the water and the resulting need to remove that pollution did “not amount to a constitutional violation” under Iowa law.  The court also found that since the water in question was not private property, the takings claim was not valid.  A takings claim only applies to when the government takes private property.  What is more, the court added that regardless of its status as a public or private body, DMWW was not actually deprived of any property—they still had the ability to use the water.  Therefore, the Iowa Supreme Court answered all four state law questions in the drainage districts’ favor, and against DMWW. 

What’s next?

The Iowa Supreme Court found that the questions of state law favored the drainage districts, but that is not necessarily the end of this lawsuit.  Now that the questions of state law are answered, the U.S. District Court for the Northern District of Iowa, Western Division, can decide the questions of federal law.  If any of the numerous motions for summary judgment are not granted to the drainage districts, a trial to decide the remaining questions is set for June 26, 2017.  The questions left for the district court to decide include a number of U.S. Constitutional issues. 

One of these issues is whether the drainage districts’ discharge of nitrates into the water constitutes a “taking” of DMWW’s private property for a public use under the Fifth and Fourteenth Amendments.   Another issue is whether the drainage districts’ state-given immunity infringes upon DMWW’s constitutional rights of due process, equal protection, and just compensation.  An important federal law question that also remains to be decided is whether the drainage districts are “point sources” that require a permit to discharge pollutants under the CWA. 

 How will the outcome affect other states?

Either outcome in this lawsuit will have implications for the rest of the country.  For example, if the district court sides with DMWW on all of the questions, it could open the floodgates to potential lawsuits against drainage districts and other similar entities around the country for polluting water.  Municipal and other users of the water could assert an infringement of their constitutional rights, including taking without just compensation.  Furthermore, if drainage districts are found to be “point sources,” it could mean greater costs of permitting and cleanup for drainage districts and other state drainage entities.  Those costs and additional regulations could be passed onto farmers within the watershed.  As a result, farmers and water suppliers around the country will closely follow the district court’s decisions on the remaining questions in the case. 

All of the court documents and decisions concerning this lawsuit, as well as additional articles and blog posts on the topic can be found here.  Additional reading on the subject from the Des Moines Register can be found here and here.

By: Peggy Kirk Hall, Wednesday, February 08th, 2017

Written by:  Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Ohio Legislature is once again considering a bill regarding Ohio’s current agricultural use valuation (CAUV) program. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. Senator Cliff Hite (R-Findlay) introduced SB 36 on February 7, 2017. The bill would alter the capitalization rate used to calculate agricultural land value and the valuation of land used for conservation practices or programs. The bill has yet to be assigned to a committee.  

The content of SB 36 closely mirrors the language of a bill meant to address CAUV from the last legislative session: SB 246. Introduced during the 131st General Assembly, SB 246 failed to pass into law. SB 246 proposed alterations to the CAUV formula which are identical to those proposed by the current bill: SB 36. According to the Ohio Legislative Service Commission’s report on SB 246, the bill would have proposed changes that would have led to a “downward effect on the taxable value of CAUV farmland.” The likely effect for Ohio farmers enrolled in CAUV would have been a lower tax bill.

Due to the similarity between the two bills, the potential impacts of SB 36 on the CAUV program will likely be comparable to those of the previous bill. The proposed adjustment of the capitalization rate is likely to reduce the tax bill for farmers enrolled in CAUV. More specifically, the bill proposes several changes to the CAUV formula:

  • States additional factors to include in the rules that prescribe CAUV calculation methods. Currently, the rules must consider the productivity of the soil under normal management practices, the average price patterns of the crops and products produced to determine the income potential to be capitalized and the market value of the land for agricultural use. The proposed legislation adds two new factors: typical cropping and land use patterns and typical production costs.
  • Clarifies that when determining the capitalization rate used in the CAUV formula, the tax commissioner cannot use a method that includes the buildup of equity or appreciation.
  • Requires the tax commissioner to add a tax additur to the overall capitalization rate, and that the sum of the capitalization rate and tax additur “shall represent as nearly as possible the rate of return a prudent investor would expect from an average or typical farm in this state considering only agricultural factors.”
  • Requires the commissioner to annually determine the overall capitalization rate, tax additur, agricultural land capitalization rate and the individual components used in computing those amounts and to publish the amounts with the annual publication of the per-acre agricultural use values for each soil type.

To remove disincentives for landowners who engage in conservation practices yet pay CAUV taxes at the same rate as if the land was in production, the proposed legislation:

  • Requires that the land in conservation practices or devoted to a land retirement or conservation program as of the first day of a tax year be valued at the lowest valued of all soil types listed in the tax commissioner’s annual publication of per-acre agricultural use values for each soil type in the state.
  • Provides for recalculation of the CAUV rate if the land ceases to be used for conservation within three years of its original certification for the reduced rate, and requires the auditor to levy a charge for the difference on the landowner who ceased the conservation practice or participation in the conservation program.

To read SB 36, visit this page. For more information on previous CAUV bills, see our previous blog post

By: Peggy Kirk Hall, Thursday, February 02nd, 2017

 

Update:  The final rule concerning the listing of the rusty patched bumble bee as endangered was originally slated to go into effect on February 10, 2017, as is described below.  On February 9, the Fish and Wildlife Service published a notice in the Federal Register explaining that they would abide by the Trump Administration’s 60-day regulatory freeze and delay the effective date until March 21, 2017.   The Federal Register entry is available here.  

Will the bee's ESA listing stand, and how might it affect agriculture?

Written by:  Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program

On January 11, 2017, the U.S. Fish and Wildlife Service (FWS) published a final rule designating the rusty patched bumble bee (scientific name Bombus affinis) as an endangered species, the first bee in the continental U.S. to receive this status.  The rule was originally slated to go into effect on February 10, 2017.  If the rule is allowed to stand, it will have a number of implications for federal agencies, farmers, and other private entities. 

The final rule, found in the Federal Register at 50 CFR Part 17, includes a lengthy description of the rusty patched bumble bee.  The bees have black heads, and the worker bees, as well as the male bees, have a “rusty reddish patch centrally located on the abdomen,” giving them their common name.  Necessities for the species include “areas that support sufficient food (nectar and pollen from diverse and abundant flowers), undisturbed nesting sites in proximity to floral resources, and overwintering sights for hibernating queens.”  Additionally, the bees prefer temperate areas. The rusty patched bumble bee was found in 31 states and provinces in the 1990s. From the year 2000 and on, the bumble bee has only been found in a diminished range of 14 states and provinces.  The bumble bee has been found in Ohio since 2000, but following the overall trend, at much lower rates. 

Possible reversal of the rule

Since the publishing of the final rule, the Trump Administration has instituted a regulatory freeze on administrative agencies which could push back effective dates for those regulations that have not yet gone into effect by at least 60 days.  In the meantime, the Congressional Review Act (CRA) may also affect the final rule.  The CRA gives Congress 60 legislative days from either the date a rule is published in the Federal Register, or the date Congress receives a report on the rule, to pass a joint resolution disapproving the rule.  A signature by the President is the final step required to invalidate the rule.  What is more, an agency cannot submit a rule after these steps are taken that is “substantially in the same form” as the overturned rule. Historically, the CRA has not been frequently used, as success is typically only possible when a number of events align:

  1. There is a new presidential administration;
  2. Congress and the President are members of the same party;
  3. The previous President was a member of the opposing party; and
  4. The timing of rule publication or rule reporting and Congressional calendars allow for a joint resolution within the 60-day limit.

The text of the CRA is available here.  With the regulatory freeze and the possible use of the CRA, it is not clear when or even if the new rule will actually go into effect.  

Importance of the rusty patched bumble bee

The rusty patched bumble bee is a pollinator species, meaning they, along with other pollinators, assist with the reproduction of flowers, crops, and grasses.  According to a FWS fact sheet, in the United States, the rusty patched bumble bee and other insects’ pollination is worth $3 billion annually.

The Endangered Species Act

What exactly is the process for listing a species as “endangered?”  The Endangered Species Act’s (ESA) definition of an endangered species is: “any species which is in danger of extinction throughout all or a significant portion of its range.”  Accordingly, the ESA allows the FWS to designate species as endangered or threatened as long as one (or more) of five factors apply:

  • (A)  The present or threatened destruction, modification or curtailment of its habitat or range;
  • (B)  Overutilization for commercial, recreational, scientific, or educational purposes;
  • (C)  Disease or predation;
  • (D)  The inadequacy of existing regulatory mechanisms; or
  • (E)  Other natural or manmade factors affecting its continued existence.   16 USC 1533.

In the case of the rusty patched bumble bee, the FWS found that factors (A), (C), and (E) applied.  For factor (A), which concerns loss of habitat and range, the FWS cited past encroachment by residential, commercial, and agricultural development.  Additionally, agriculture has contributed to the replacement of plant diversity with monocultures, which has resulted in loss of food for the bees.  What is more, the range of the rusty patched bumble bee has faced an 87% reduction, as well as an 88% drop in the number of recognized populations. 

Concerning factor (C), FWS pointed to a number of diseases and parasites that have afflicted the rusty patched bumble bee.  Finally, for factor (E), the FWS identified more numerous hot and dry periods, pesticide and herbicide use, and reproductive issues that have contributed to the reduction of the species.  Due to its findings and the factors discussed, the FWS determined that the rusty patched bumble bee is “in danger of extinction throughout its range,” and therefore designated it as endangered.

Significance of ESA listing

After a species is labeled “endangered,” what happens next?  In order to facilitate recovery of a species, the ESA also calls for, to the “maximum extent prudent and determinable,” a critical habitat designation to be made for the species.  The term “critical habitat” does not apply to everywhere the species is found.  Instead, “critical habitat” can be certain places both inside and outside the overall “geographical area occupied by the species” that are found to be “essential” to its preservation. In the case of the rusty patched bumble bee, the FWS has not yet determined its critical habitat. 

Implications for agriculture

Under the ESA, federal agencies and private entities have different responsibilities.  Federal agencies generally must make sure that any action they are involved in will not do harm to an endangered species or its critical habitat. For the most part, private entities are not affected by critical habitat unless financial aid or approval is sought from a federal agency.

Even though critical habitat concerns do not explicitly apply to private entities, the ESA does contain provisions that prohibit the importing, exporting, possession, sale, delivery, transport, shipping, receiving, or carrying of an endangered species in the United States or in foreign commerce.  What is more, the ESA prohibits the “taking” of endangered species within the United States or in the ocean.  “Take” is defined as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect,” an endangered species, or to attempt to do so (emphasis added).  It is important to note that “harm” is defined as “an act which actually kills or injures fish or wildlife…includ[ing] significant habitat modification or degradation which actually kills or injures fish or wildlife by significantly impairing essential behavior patterns, including, breeding, spawning, rearing, migrating, feeding or sheltering.” Thus, even though the designation of an endangered species and its critical habitat does not explicitly affect private entities, the definitions of “take” and “harm,” when read together, implicitly prohibit actions that are damaging to the species or its habitat.  The FWS rule defining “harm” can be found here.   The government can assess penalties against those who violate these provisions.

Farmers and other private entities should be aware of the designation of a species as endangered.  In the case of the rusty patched bumble bee, if the rule is allowed to stand, private landowners, including farmers, would not be allowed to “take” or “harm” the bee or destroy its critical habitat.   Given the important role pollinators like the rusty patched bumble bee play in making agriculture possible, we can assume that agriculture will want to protect the species.  But due to the nature of this species, it will be difficult to ascertain when a farmer’s actions do “take” or “harm” a rusty patched bumble bee.   The nature of the species and the future status of the rule create much uncertainty on how agriculture will address the rusty patched bumble bee going forward.

By: Peggy Kirk Hall, Wednesday, February 01st, 2017

Senate President Larry Obhof and Speaker of the House Cliff Rosenberger have made committee assignments for the new session of Ohio’s 132nd General Assembly.  While there are no major changes to committee structure or leadership, the committees contain many new members, including several legislators serving their first terms as legislators. 

Sen. Cliff Hite (R-Findlay) will again chair the Senate’s Agriculture Committee, with newly elected Sen. Frank Hoagland (R-Mingo Junction) serving as vice chair and first Senate termer Sen. Sean O’Brien (D-Bazetta) appointed as the ranking minority member.  O’Brien previously served three terms in the House of Representatives, which included a term on its Agriculture and Rural Development Committee. 

  • Returning from last session’s Agriculture Committee are Senators Bill Beagle (R-Tipp City), Bob Peterson (R-Washington Court House) and Michael Skindell (D-Lakewood).
  • New to the committee are Senators Bob Hackett (R-London), previous House member Stephanie Kunze (R-Hilliard), Frank Larose (R-Hudson), Charleta Tavares (D-Columbus) and Joe Uecker (R-Miami Township).

Rep. Brian Hill (R-Zanesville) will again lead the House Agriculture and Rural Development Committee with Rep. Kyle Koehler (R-Springfield) serving as vice  chair for the first time and Rep. John Patterson (D-Jefferson) returning as the ranking minority member. 

  • Representatives Jack Cera (D-Bellaire), Christina Hagan (R-Marlboro Township), Michael O’Brien (D-Warren), Bill Patmon (D-Cleveland), Jeff Rezabek (R-Clayton), Michael Sheehy (D-Toledo) and Andy Thompson (R-Marietta) will return to the committee.
  • New to both the House of Representatives and the committee are Representatives Rick Carfagna (R-Genoa Township), Jay Edwards (R-Nelsonville), Darrell Kick (R-Loudonville), Scott Lipps (R-Franklin) and Dick Stein (R-Norwalk).
  • New to the committee are Representatives Candice Keller (R-Middletown), David Leland (R-Columbus) and Derek Merrin (R-Monclova Township), along with Former Senate President Keith Faber (R-Celina).

Neither committee has a meeting scheduled at this time.  Follow the committees' work in the new legislative session at https://www.legislature.ohio.gov/.