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Farmers markets in Ohio continue to grow in number, and the types of vendors and products offered by those vendors have greatly diversified over the years. Along with this growth come new questions about vendor’s licenses and the collection of sales taxes.
Many market vendors may know that traditional market items like fresh fruits and vegetables do not require a vendor’s license or the collection of sales tax. But what about beverages, cottage foods, plants and flowers, ready to eat foods, soaps, crafts, and similar items that contribute to the success of today’s farmers markets? Fortunately, learning about Ohio’s vendor’s license and sales tax requirements doesn’t have to be a taxing experience.
In our fresh off the press law bulletin, titled “Vendor’s Licenses and Sales Taxes at Ohio Farmers Markets,” we dive into a number of questions that farmers market vendors frequently ask us. Specifically, we address questions such as:
- Do vendors at a farmers market need a vendor’s license?
- What items do not require the collection of sales tax?
- What items do require the collection of sales tax?
- How do I obtain a vendor’s license in Ohio?
- Is a vendor’s license the same as a retail food establishment license?
- What if I want to sell products in other states?
- Can vendors include sales tax in the price of the product?
While this law bulletin covers vendor’s licenses and sales taxes fairly in depth, there is always more to learn. The law bulletin also provides a number of links to helpful resources from the Ohio Department of Taxation and neighboring states, along with a number of references to Ohio law.
Click HERE to view our latest law bulletin.
The media storm that surrounded the controversial Lake Erie Bill of Rights (LEBOR) has quieted, but the federal lawsuit over LEBOR has heated up. Just a month ago, Toledo residents voted to approve LEBOR. The measure establishes rights within the City’s charter for the Lake Erie Ecosystem to “exist, flourish, and naturally evolve” as well as rights to self-government and a clean and healthy environment for the citizens of Toledo. LEBOR states that corporations or governments that violate these rights can be liable for harm caused and also cannot use existing federal and state laws or permits in defense of the violations. Drewes Farm Partnership filed a lawsuit in federal court the day after LEBOR passed. The farm’s complaint asks a federal court to declare LEBOR unconstitutional on several grounds and also claims that LEBOR violates state laws. Recent developments in the past week prompted us to provide this quick update on the lawsuit:
City of Toledo agrees to a preliminary injunction. The court announced on March 18 that the City of Toledo agreed to the entry of a Preliminary Injunction Order. Drewes Farm requested the injunction when it filed the lawsuit. The court stated that the purpose of a preliminary injunction “is merely to preserve the relative positions of the parties until a trial on the merits can be held” and noted that the City of Toledo has not “commenced or initiated any action against Drewes Farms or others pursuant to LEBOR.” Toledo therefore agreed to the injunction and to maintain its current position of not taking any action to enforce LEBOR.
Lake Erie Ecosystem and Toledoans for Safe Water ask to join the lawsuit. Also on March 18, two attorneys filed a motion asking the court to allow the Lake Erie Ecosystem and the Toledoans for Safe Water to “intervene” in the case as defendants. Federal rules allow a party to file a motion to intervene and become a party to ongoing litigation as either a matter of right or with permission of the court. The attorneys argue that the parties should be allowed to intervene as of right because they have significant legal interests that will be impaired by the case and that the City of Toledo can’t adequately represent those interests. They also ask the court to allow permissive intervention because the parties have a claim or defense that share a common question of law or fact with the main action. The court has asked Drewes Farm and Toledo to file briefs in response to the motion to intervene. Note that the two attorneys representing the Lake Erie Ecosystem and the Toledoans for Safe Water have worked with the Community Environmental Legal Defense Fund, the organization that assisted with the petition initiative that resulted in the adoption of LEBOR.
Lake Erie Ecosystem and Toledoans for Safe Water file a motion to dismiss the lawsuit. On the same day as filing a motion to intervene, the attorneys also filed a motion to dismiss the case on behalf of the Lake Erie Ecosystem and Toledoans for Safe Water. The motion argues that Drewes Farm does not have legal “standing” to bring the case, which is based upon federal constitutional law that states that a federal court cannot have jurisdiction over a case unless the plaintiff demonstrates that he or she has suffered concrete and particularized “injury in fact” that is fairly traceable to the defendant’s conduct and that the requested remedies will redress the alleged injuries. Lake Erie and the Toledoans for Safe Water argue that Drewes Farm has not stated a concrete injury or actual or imminent harm due to LEBOR and therefore cannot meet the standing requirement.
City of Toledo files its answer to the complaint. Yesterday, the City of Toledo filed its answer to the complaint filed against it by Drewes Farm. Toledo presents sixteen defenses to the farm’s allegations, which include a general denial of the complaint and other defenses based upon arguments that: the farm does not have legal standing, has not stated a claim or stated actual or imminent harm and has based its harm on premature speculation; that the City itself is immune and has acted properly, in good faith, and as authorized or required by law to act; that the relief requested by the farm would violate the rights of the citizens of Toledo; that the farm has a duty to mitigate its damages; and that the farm failed to join necessary parties and has not stated a basis for the relief requested. Toledo asks the court to dismiss the case and award all costs of the lawsuit to the City of Toledo.
What’s next? Now the parties must wait for the court to act on the motion to intervene, motion to dismiss, and/or the City of Toledo’s request to dismiss the case. We’ll keep watching the case and will let you know when the court makes a ruling on any of these requests.
Sometimes you happen upon a question that you want an answer to, and the answer you find raises more questions. That’s exactly what happened when we started examining Limited Liability Company (LLC) statutes from across the Midwest.
Originally, we wanted to determine whether there are any significant legal differences between the LLC statutes of different states. While we may be based in Ohio, we find projects that examine how different states compare to one another on the same legal topic fascinating. The comparisons allow us to see trends and different ideas, and we had the chance to do this in our recently completed projects on CAUV and agritourism.
Ultimately we found the Midwestern states to have functionally similar LLC statutes, with about half of the Midwest having adopted a uniform statute. When a state adopts a uniform statute, it intends for its law on a given topic to match those of other states with the same uniform statute. There are other examples of these like the Uniform Commercial Code, Uniform Probate Code, and more. Uniform codes are designed to make it easier for people to do business and live their lives across state lines. For Midwestern LLC statutes, even in states that have not adopted a uniform statute, the key elements are still very similar. The statutes have filing procedures for creating the entity, default rules for operating agreements, and rules that govern LLCs in general.
When we answered our questions about the state statutes, we became curious about some of the benefits offered by using an LLC instead of some other business form. We found that LLCs offer great liability protection, with some specific limitations such as the application of piercing the veil from corporate law. Further, pass through taxation can provide great tax benefits and avoid double taxation. Since states allow operating agreements to be highly customizable, LLCs also provide a flexible entity structure that may be adapted to suit the needs of a business or family.
That last word led us to another question: what benefits does the LLC structure offer a family farm in its estate and business transition plan? The previous three benefits are well known and thoroughly discussed; however, this last one, while done a lot in practice, is not commonly mentioned in academic writing. Ultimately, the benefits in estate and transition planning come from the flexible nature of the operating agreement.
How can LLCs be helpful in an estate and business transition plan for a farm? Here’s a few ways:
- Restrict the transfer of an ownership interest through rights of first refusal and buy-out provisions
- Restrict membership and voting power of non-family members
- Transition equity ownership more easily than in a corporation
- Transition the business in relative privacy
Once we learned about these benefits, the question arose of how common farming LLCs now are. Using data from the USDA’s Census of Agriculture, we found that by 2012, there were almost as many farms organized as LLCs as there were farms organized as corporations, while the vast majority of farms remained owned outright by individuals with no formal legal entity. We are waiting for the next Census of Agriculture to spot any trends, because 2012 was the first year that farms were asked to identify whether they were organized as LLCs.
Throughout the paper, we made some observations and predictions for what we expect to see in the future. We are also history buffs, so of course there had to be a section on the origins of the LLC, and why Wyoming was the first state to adopt an LLC statute. It is an interesting and dramatic history that we had not heard about before.
Our project examining farm LLCs is available on our OSU Extension Farm Office website HERE, as well as the National Agricultural Law Center’s website HERE. This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.
Not only have you read it in the almanac, but you also feel it when you walk outside. Spring is finally arriving, and your field awaits. As the weather improves, farm machinery and equipment will head back on the roads for planting season. We wanted to take a moment to look at Ohio’s roadway laws and how they apply to farm machinery.
State law includes both special requirements and special exceptions for farm machinery operating on Ohio roadways. “Farm machinery” broadly means all machines and tools used in agriculture, whether for planting, harvesting, or transporting agricultural products. The special rules that apply to farm machinery are primarily safety driven, and impose additional and different requirements on farmers when compared to other drivers.
Fortunately, we have a law bulletin, available HERE, that explains these special requirements and exceptions. The law bulletin, titled “Rules of the Road: Navigating Ohio Roadway Laws for Farm Machinery,” sifts through the statutes and regulations to boil down topics like:
- How does Ohio law define farm machinery?
- What are the marking requirements for farm machinery traveling on roads? Specifically, when are slow moving vehicle (SMV) emblems, speed identification symbols (SIS), lighting, and reflectors required?
- How do vehicle weight and dimension limits apply to farm machinery?
- When is it okay to operate left of center when the road’s lane is too narrow?
- When must traffic control devices like signs, signals, and flaggers be followed?
- When may farm machinery enter a freeway?
Additionally, you can also learn more about Ohio’s laws regarding Speed Identification Symbols HERE, and Ohio’s laws regarding All-Purpose Vehicles (APVs) HERE. It can be a lot of information to keep in mind, especially given how busy a farmer’s life gets this time of year. That is why we do our best to explain the law in simple, to-the-point law bulletins and blog posts.
Depending upon who you talk to and when you talk to them, Ohio is either blessed or cursed as a water rich state. Droughts certainly occur, but in the past couple of years Ohio farmers have experienced record breaking rainfall both by measures of inches and intensity. As spring showers bring about a transition from winter to spring, we wanted to take a moment to look at Ohio’s surface water drainage laws.
Ohio courts follow the “reasonable use” doctrine for surface water drainage. Under this doctrine, a landowner may drain surface water from his or her property in a reasonable manner. When a landowner’s attempts to drain surface water from his or her property seem to result in harm to the property of another, legal issues may arise.
Courts and juries generally determine whether a landowner acted reasonably by looking at a number of factors, such as: the utility of the drainage, the gravity of the harm, the practicality of avoiding the harm, and whether it is fair to relieve the landowner of liability. These factors are examined and balanced on a case-by-case basis to determine whether the landowner should be found liable for the harm experienced by another.
Certainly there are ways to resolve a dispute before resorting to a lawsuit. Landowners may talk with their neighbors to work out an agreeable solution. Landowners also have the option to work with the county Soil and Water Conservation District or county engineer’s office to file a petition for a drainage improvement project that would address the drainage need.
For more information, check out our law bulletin on Surface Water Drainage Rights in Ohio, which is available HERE. It explains the “reasonable use” doctrine, describes how reasonableness is determined, and discusses remedies for harm caused by drainage.
The Ohio Specialty Crop Registry connects producers of specialty crops, beekeepers, and pesticide applicators to one another through free online registries. Producers of specialty crops and beekeepers may voluntarily report the boundaries of their specialty crops and beehives. The registry then compiles this information in a mapping tool that also provides the contact information of the registrant. In doing so, pesticide applicators are better able to avoid these areas and minimize spray drift.
The Old System: the Ohio Sensitive Crop Registry
The Ohio Department of Agriculture (ODA) first launched a registry for sensitive crops in 2014 so that pesticide applicators could know the locations of sensitive crops before spraying in a given area. The registry came about at a time when widespread demand for organic foods required more farmers to closely monitor what came into contact with their crops. The original tool allowed commercial producers of at least a half-acre of a single type of sensitive crop to register. Sensitive crops included just about any non-row crop such as fruits, vegetables, and herbs. Apiaries, outdoor aquaculture, brambles, certified organic farms, nurseries, greenhouses, and orchards also could be registered.
The New System: the Ohio Specialty Crop Registry
Now, ODA partners with FieldWatch, Inc. to operate the Ohio Specialty Crop Registry. FieldWatch, Inc. is a non-profit organization that operates three registries: DriftWatch for producers of specialty crops, BeeCheck for beekeepers, and CropCheck for producers of row crops. FieldWatch creates maps based on the information from these registries, and makes those maps available to pesticide applicators in another program called FieldCheck. In summary, the three registries are for the producers and beekeepers, and FieldCheck is for the pesticide applicators.
Ohio currently only uses the DriftWatch and BeeCheck registries. According to ODA, the list of sensitive crops under the old program is virtually the same under the new system, meaning that producers of any non-row crop may utilize DriftWatch. While beekeepers may report the location of their beehives in DriftWatch, ODA recommends that beekeepers with no specialty crops use BeeCheck.
FieldWatch, Inc. continues to update its tools to add features and indicators, and CropCheck represents one such development. New for 2019, this registry allows producers of row crops like corn, soybeans, and wheat to register their crops. Its development comes on the heels of the introduction of dicamba-tolerant seeds. Only Arkansas, North Carolina, Illinois, and Indiana have adopted CropCheck for 2019. Ohio has not yet adopted it.
Connecting the Dots between the Registry and Liability
At this point you may be asking yourself, why is this in the ag law blog? That’s a fair question, and the answer is simple: risk management. As more farmers adopt organic practices, as pesticides and seeds change, and as weather patterns evolve, the risk increases that pesticide drift may come into contact with and negatively impact specialty crops and beehives.
The law expects people to act reasonably and to exercise due care at all times, and this default duty applies to pesticide applicators. Common claims for drift include negligence, nuisance, and trespass. Each of these claims examine whether the parties acted reasonably and with due care. Most often, when a court decides that a pesticide applicator acted unreasonably, it is because he or she failed to apply the pesticide in a manner consistent with the label. Following the label is certainly an expectation, but it is not the only thing a court will consider.
When a pesticide applicator does not use FieldCheck, a perceptive attorney representing beekeepers and producers of specialty crops would likely argue that the use of FieldCheck is an industry standard. If an attorney could establish this, then the failure to use FieldCheck would mean that a pesticide applicator failed to act in a reasonable manner and exercise due care. While we have not seen an Ohio court consider this issue yet, as use of the program continues to grow, this argument will come to hold more weight when a case does arise.
When a pesticide applicator does use FieldCheck, he or she has a stronger argument that he or she acted in a reasonable manner. FieldCheck provides pesticide applicators with a way to know exactly where registered sensitive crops and beehives are located, and allows the applicator to buffer accordingly. FieldCheck provides a quick, cheap, and easy way to manage legal risk, alongside following the label. Applicators who use the program may want to document when they used the program and also how the maps impacted their application plan.
These scenarios presume that the beekeeper or producer of specialty crops has registered the locations of their bees or crop with a FieldWatch registry. When sued by a beekeeper or producer of specialty crops who did not register their locations, a pesticide applicator could use similar arguments as noted above in order to defend against the lawsuit. However, the applicator’s focus would likely regard the lack of notice. Again, these arguments alone would not likely determine the outcome of the case, but they would help the court determine whether the parties acted reasonably.
What about hemp?
Another question that some of our readers will also be asking is: which registry is for hemp? We made a call and left a message with FieldWatch. If or when hemp production becomes legal in Ohio, we’ll be sure to provide an update on which registry is proper for hemp. Ohio’s hemp bill is on the move, and the Ohio Senate Agriculture & Natural Resources Committee completed its third hearing of the bill this week. However, we can’t forget that growing hemp is not legal in Ohio unless and until the bill is passed into law and the regulatory system is created.
Agritourism continues to boom across the United States, with agritourism farms offering activities from apple picking to zip lining. Literally A to Z. Consumer interest in food and farming, along with an economic need to augment farm income through diversification, have combined to drive this boom. As more farms delve into agritourism, their liability risks change. Risk and liability are hard, if not impossible, to totally eliminate, but there are a number of steps that agritourism farms can take to reduce the chances of something bad happening.
Based upon the questions generated from our law bulletin on Ohio’s agritourism law, we wanted to take an in depth look at common legal issues and risks facing agritourism. Created as part of a project for the Agricultural & Food Law Consortium, our new factsheet series does just that. Specifically, these factsheets examine:
- Legal risks of animal and human interactions
- Selling food on the farm
- Agritourism immunity laws across the country
- Zoning laws across the country
- Insurance coverage for agritourism
Each factsheet addresses common considerations and questions about starting and operating an agritourism farm, and provides links to helpful resources. The factsheets are designed to have something for everyone in the industry. From those just thinking about implementing agritourism who need to think about the basic risks, to those agritourism farms that are already well established and want a risk refresher. Beyond the industry, those professionals who advise agritourism farms may find the considerations helpful.
Most of the new factsheets include a checklist. The checklists include questions that an agritourism farmer should ask their attorney, zoning inspector, insurance provider, local health department, and more. The checklists do not represent the only legal concerns that an agritourism farm must think about, but rather a starting point. Every agritourism farm is unique, and must be treated as such when examining liability and risk.
The reducing legal risk in agritourism project is available on our website HERE, as well as the National Agricultural Law Center’s website HERE. This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.
State lawmakers have been busy crafting new legislation since the 133rd General Assembly took shape in January. As promised, here are some highlights and summaries of the pending bills that relate to agriculture in Ohio:
- Senate Bill 57, titled “Decriminalize hemp and license hemp cultivation.” The Ohio Senate Agriculture and Natural Resources Committee held a second hearing about the bill on March 13th, and numerous farm organizations spoke in support of the bill. As of now the language of the bill has not changed since we last discussed Ohio’s hemp bill in a blog post, but some changes could be made when the bill is sent out of the committee. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- Senate Bill 2, titled “Create state watershed planning structure.” The one sentence bill expresses the General Assembly’s intent “to create and fund a comprehensive statewide watershed planning structure to be implemented at the local soil and water conservation district level.” It further expresses the intent “to provide authorization and conditions for the operation of watershed programs implemented by local soil and water conservation districts.” Click HERE for more information about the bill.
- House Bill 24, titled “Revise humane society law.” The bill would make various changes to Ohio’s Humane Society Law, including changes to enforcement powers, appointment and removal procedures, training, and criminal law applicability. One of the significant changes would expand to all animals the seizure and impoundment provisions that currently apply only to companion animals. This change would allow an officer to seize and impound any animal that the officer has probable cause to believe is the subject of a violation of Ohio’s domestic animal law. At the same time, the bill would remove certain provisions from current law that pertain to harm to people, thereby focusing the new law solely on the protection of animals. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- House Bill 124, titled “Allow small livestock on residential property.” Under this bill, counties and townships would no longer be allowed to restrict via zoning certain noncommercial agricultural activities on residential property conducted for an individual’s personal use and enjoyment. Instead, owners of residential property that is not generally agricultural would be allowed to keep, harbor, breed, and maintain small livestock on their property. Small livestock includes goats, chickens and similar fowl, rabbits, and similar small animals. Roosters are explicitly excluded from this definition. However, the owner would lose his or her rights to keep small livestock if the small livestock create a nuisance, are kept in a manner that causes noxious odors or unsanitary conditions, are kept in a building that is unsafe as defined under the statute, or if the number of animals exceeds a certain ratio of animals to acres as defined under the statute. The ratio may be modified by the local jurisdiction to allow for more animals per acre. Click HERE for more information about the bill.
- House Bill 55, titled “Require oil and gas royalty statements.” Owners of oil and gas wells would have to provide mandatory reports to holders of royalty interests under this bill. Current law only requires disclosure of the information upon request, but this bill would make the disclosure mandatory. The bill would expand the types of information that the reports must include, and allows the holder of royalty interests to sue to enforce the new rights. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- House Bill 94, titled “Ban taking oil or natural gas from bed of Lake Erie.” The Ohio Department of Natural Resources handles oil and gas permitting in Ohio, and this bill would bar the agency from issuing permits or making leases “to take or remove oil or natural gas from and under the bed of Lake Erie.” Click HERE for more information about the bill.
- House Bill 95, titled “Revise Oil and Gas Law about brine and well conversions.” The bill would ban the use of brine in secondary oil and gas recovery operations. It would also ban putting brine, crude oil, natural gas, and other fluids associated with oil and gas exploration in ground or surface waters, on the ground, or in the land. This restriction would apply even if the fluid received treatment in a public water system or other treatment process. Further, brine disposal permits would not be allowed to utilize underground injection or disposal on the land or in surface or ground water. Click HERE for more information about the bill.
- House Bill 100, titled “Revise requirements governing abandoned mineral rights.” Ohio has a statute that governs when a surface owner can take the mineral rights held or claimed by another by operation of law, essentially because of the passage of time. The bill would require a surface owner to attempt to give notice to a holder of mineral rights by personal service, certified mail, or if those are unsuccessful then by publication. Currently, if a holder of mineral rights believes that his or her interest remains valid, he or she may file an affidavit that complies with Ohio Revised Code (ORC) § 5301.56(H)(1) in the county property records. If the holder of mineral rights fails to file an affidavit, the surface owner may then file an affidavit under ORC § 5301.56(H)(2) that effectively vests the mineral rights in the surface owner. The new law would allow the surface owner to challenge a holder of mineral rights’ ORC § 5301.56(H)(1) affidavit. This process would require the surface owner to obtain a court determination that the affidavit is invalid. Then the surface owner would be able to file the new ORC § 5301.56(H)(3) affidavit to obtain the mineral rights. Click HERE for more information about the bill.
There are also some bills that could have some indirect implications in the agricultural and natural resources sectors. These indirect effects make this next set of bills noteworthy, or at least interesting.
- Senate Bill 1, titled “Reduce number of regulatory restrictions.” The bill would require each state agency to count its total number of regulatory restrictions, and then reduce the number of restrictions based on that baseline by 30% by 2022. Once an agency meets its reduction target, it would not be able to increase the number of regulatory restrictions without making additional cuts elsewhere. The bill would target agency rules that require or prohibit specific acts. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- Senate Bill 21, titled “Allow corporation to become benefit corporation.” Much like the LLC merged the principles of a corporation and a partnership, the benefit corporation merges the principles of a corporation and a non-profit. A benefit corporation must follow the formalities of a corporation, but the articles of incorporation can designate a social purpose for the business to pursue, such as promoting the environment through sustainable practices. One of the unique traits of benefit corporations is that benefit corporations cannot be held liable for damages for failing to seek, achieve, or comply with their beneficial purpose, or even obtain a profit; however, certain individuals may seek a court ordered injunction to force the company to pursue those interests. In a sense, the benefit corporation reduces the traditional fiduciary duties expected in general corporations. The bill purports to maintain the traditional fiduciary duties, but by allowing a social purpose other than profit to guide decisions, the traditional fiduciary duties are in effect modified. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- House Bill 33, titled “Establish animal abuse reporting requirements.” Under the bill, veterinarians and social service professionals would have to report their knowledge of abuse, cruelty, or abandonment toward a companion animal. Social service professionals would include licensed counselors, social workers, and marriage or family therapists acting in their professional capacity. Companion animals include non-wild animals kept in a residential dwelling, along with any cats and dogs kept anywhere. These individuals would be required to report the neglect to law enforcement, agents of the county humane society, dog wardens, or other animal control officers. Further, dog wardens, deputy dog wardens, and animal control officers would become mandatory reporters of child abuse. Lastly, the bill explains the information that must be reported, the timing, and the penalties for failure to comply. Click HERE for more information about the bill, and HERE for the current official bill analysis.
- House Bill 48, titled “Create local government road improvement fund.” The bill proposes to deposit into a new local government road improvement fund some of the surplus funds generated when the state spends less than it appropriates in the general revenue fund. Under current law, this surplus is split between the budget stabilization fund, also known as the “rainy day fund,” and the income tax reduction fund, which would redistribute remaining surplus to taxpayers. Click HERE for more information about the bill.
- House Bill 54, titled “Increase tax revenue allocated to the local government fund.” The bill would increase the proportion of state tax revenue allocated to the Local Government Fund from 1.66% to 3.53%. Click HERE for more information about the bill.
- House Bill 74, titled “Prohibit leaving junk watercraft or motor uncovered on property.” The bill would allow a sheriff, chief of police, highway patrol officer, or township trustee to send notice to a landowner to remove a junk vessel or outboard motor within 10 days. The prohibition applies to junk vessels, including watercraft, and outboard motors that are three years or older, apparently inoperable, and with a fair market value of $1,500 or less. Failure to cover, house, or remove the item in ten days could result in conviction of a misdemeanor. Click HERE for more information about the bill, and HERE for the current official bill analysis.
As more bills are introduced, and as these bills move along, stay tuned to the Ag Law Blog for updates.
When we are not on the road presenting, in the classroom teaching, or keeping up with the news for the blog, our team is busy working on large scale research projects for the Agricultural & Food Law Consortium. One of our recent projects looked at how states assess farmland for property tax purposes, and we then created a compilation of every state’s laws on this topic. Based upon the research, we found that property taxes are a fact of life for virtually all landowners in the United States, but that each state uses a “differential tax assessment” for agricultural lands.
What exactly is a differential tax assessment? Many Ohio farmers know about and use Ohio’s special property tax assessment known as CAUV, which is short for Current Agricultural Use Valuation. Instead of assessing property taxes on the basis of the market rate for developable land, CAUV uses a different formula that assesses the land on its value for agricultural production. CAUV is a form of differential tax assessment.
While each state utilizes differential tax assessments for agricultural lands, they use different definitions of agriculture, different formulas, and different application processes. Some areas of law utilize model acts that states may adopt in order to make it easier to do business across state lines. Differential tax assessments of agricultural land do not have a model act, so each state’s language reflects the culture, norms, and conditions of the respective state at the time the state adopted or amended its differential tax assessment.
An example close to home illustrates what this means. Under Ohio Revised Code § 5713.30(A), agricultural use means commercial animal or poultry husbandry, aquaculture, algaculture, apiculture, the commercial production of field crops, tobacco, fruits, vegetables, nursery stock, ornamental trees, and sod. Commercial timber qualifies, but non-commercial timber only qualifies if it located on or next to land that otherwise would qualify for CAUV. Exclusive use requires just that: the land is exclusively used for an activity listed as an agricultural use. Lands of more than 10 acres that are exclusively devoted to agricultural uses qualify, but lands of less than 10 acres only qualify if the average yearly gross income exceeds $2,500 over the preceding three years. That is an example of a definition of what qualifies as agriculture for the purposes of the differential tax assessment.
The differential tax assessment project compiled the approaches taken by all fifty states, and the compilations are available on the National Agricultural Law Center website HERE. This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.
Written by Evin Bachelor, Law Fellow, OSU Extension Agricultural & Resource Law Program
Toledo’s Lake Erie Bill of Rights (LEBOR) has been in the headlines a lot lately, and certainly on the minds of farmers in the Lake Erie watershed. So far, the Ag Law Blog has focused attention on what LEBOR is, why it was on the ballot, and what types of defenses agricultural producers can raise if sued. Because voters approved the ballot measure, the focus now shifts to how LEBOR will be treated in the courts.
On February 26th, Toledo held a special election, with one of the ballot questions being whether to amend the City of Toledo’s charter to adopt LEBOR. While less than 9 percent of Toledo’s registered voters cast a ballot, the majority of those who did voted in favor of amending the city’s charter to include LEBOR.
On February 27th, the Drewes Farm Partnership filed a complaint and initiated a lawsuit in federal court against the City of Toledo. Family owned and operated, this Wood County based grain farm operates wholly within the Lake Erie watershed. Drewes Farm utilizes both manure and commercial fertilizers, and states in its complaint that it follows industry best practices, scientific recommendations, and all legal requirements such as keeping records and not applying fertilizer on snow covered ground. Two of the family members obtained Fertilizer Applicator Certificates, and the Ohio Department of Agriculture certified the farm under its Ohio Agricultural Stewardship Verification Program.
The complaint specifically alleges violations of Drewes Farm’s rights under the First Amendment, Equal Protection Clause, and Due Process Clauses of both the Fifth and Fourteenth Amendments. Further, the complaint argues that LEBOR exceeds the City of Toledo’s authority by intruding on state and federal powers by attempting to meddle with international relations, invalidate state and federal permits, invalidate state law, alter the rights of corporations, and create new causes of action in state courts. Drewes Farm requests that the court 1) grant it a preliminary and permanent injunction to prevent LEBOR’s enforcement, 2) invalidate LEBOR, and 3) grant the plaintiff an award for costs and fees.
The following day, Drewes Farm filed a motion for a preliminary injunction. Parties use preliminary injunctions as a way to enforce the status quo and prevent the other parties from acting in a way that would cause further harm. If granted, the preliminary injunction would prevent the enforcement of LEBOR against the Drewes Farm Partnership during the course of the litigation. At the end of the case, there would be a determination of whether Drewes Farm should receive a permanent injunction, which would prevent LEBOR from being enforced against it after the case has ended.
The party who brings the motion must argue and prove four elements in order for the court to grant the motion for a preliminary injunction:
First, that the movant has a likelihood of success on the merits, meaning that it is likely that the movant will win the underlying case. Drewes Farm’s motion examines each of the grounds that it believes violates its constitutional rights and state and federal law. Drewes Farm argues that it can win on each of the dozen grounds it examines, and that it need only show a likelihood of success on one ground to satisfy this element.
Second, that the movant could suffer irreparable harm without a preliminary injunction, meaning that without a preliminary injunction, the other party may take action to harm the movant in a way that it will not be able to recover. Here, Drewes Farm cites court cases explaining that the loss of one’s constitutional rights for any amount of time constitutes irreparable harm, and that a likelihood of success also demonstrates irreparable harm.
Third, that the issuance of an injunction will not cause greater harm. This element balances the previous element to see whether the injunction is fair. Where the second element looks at the harm to the movant, the third element looks at whether a preliminary injunction will harm others. Here, Drewes Farm argues that others will not be harmed by the granting of a preliminary injunction because it will merely allow the farm to continue operating as required under the law and its permits using best practices. Further, Drewes Farm mentions that the other farms in the watershed will actually experience a benefit from the prevention of LEBOR’s enforcement.
Fourth, that the issuance of a preliminary injunction would serve the public interest. Here, Drewes Farm cites additional court cases explaining that the enforcement of constitutional rights is inherently in the public interest. Further, it argues that the State of Ohio holds its portion of Lake Erie in trust “for all Ohio citizens, not just those residing in a single municipality.”
If the court is satisfied that Drewes Farm has established each of the four elements, it may grant a preliminary injunction.
At this time, the City of Toledo has not filed any responses to the complaint or motion; however, procedural rules require it to respond in a timely manner. Because it has not filed anything with the court, it is unclear how the City of Toledo intends to defend or respond. However, since enforcement of LEBOR had not been commenced against the Drewes Farm Partnership, it is possible that Toledo will challenge the plaintiff’s standing to sue at the present time.
The case is cited in court records as Drewes Farm Partnership v. City of Toledo, Ohio, 3:19-cv-00343 (N.D. Ohio). Stay tuned to the Ag Law Blog for updates about the case.