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Here’s our latest gathering of agricultural law news that you may want to know:
Congress considers bankruptcy code changes with Family Farmer Relief Act of 2019. Senator Grassley and Representative Delgado introduced companion bills in their respective chambers of Congress that would modify the definition of “family farmer” in the federal bankruptcy code. The change would raise the operating debt limit for a family farmer from $3.2 million as listed in the U.S. Code to $10 million. Sometimes a small change can make a big difference. In chapter 12 of the bankruptcy code, a “family farmer” has special options that other chapters do not offer, such as the power to determine a long-term payment schedule and pay the present market value of the asset instead of the amount due on the loan. Many farmers had not been able to take advantage of the special bankruptcy provisions because of the low debt limit, but that may change. For more information on the bills, click HERE for S.897 and HERE for H.R. 2336.
Congress also considers changing the number of daily hours a driver may transport livestock. The Transporting Livestock Across America Safely Act would instruct the Secretary of Transportation to amend the rules governing drivers who transport certain animals. The changes would loosen restrictions on the number of hours that drivers may drive, and increase the types of activities that are exempt from counting toward the maximum time. Travel under 300 miles would be exempt from the hours of service (HOS) and electronic logging (ELD) requirements. Both chambers of Congress are considering this bill, and both companion bills are currently in committee. For more information on the bills and to learn about the changes proposed, click HERE for S.1255 and HERE for H.R. 487.
It’s not too late to submit comments to the FDA about its potential cannabidiol rulemaking. Electronic or written comments can be sent to the FDA until July 2nd, although the deadline to request to make an oral presentation or comment at tomorrow’s hearing has passed. Click HERE for more information from the Federal Register about the May 31st hearing and submitting comments.
Meatpackers face second class-action lawsuit, and R-CALF refiles. In our last edition of The Harvest, we talked about a new class-action lawsuit filed in Illinois federal court by a number of cattle ranchers, including R-CALF, against the nation’s largest meatpacking companies. Now, another lawsuit has been filed in Minnesota federal court also alleging a price fixing conspiracy by the meatpackers. The second lawsuit is being brought by a cattle futures trader, rather than a rancher. After the second suit was filed, R-CALF voluntarily dismissed its case in Illinois to refile it in Minnesota. This refiling allows the lawsuits to be heard by the same court.
Tyson sues the USDA’s Food Safety and Inspection Service. Tyson, which is named as a defendant in the class action suits we just mentioned, is a plaintiff in a case against the USDA’s Food Safety and Inspection Service. The company alleges that a FSIS inspector falsified an inspection of 4,622 hogs, which were intermingled with another 8,000 carcasses, at one of its Iowa facilities in 2018. The company claims that the false inspection required it to destroy all of the carcasses, and cost nearly $2.5 million in total losses and expenses. The complaint, which is available HERE, alleges four counts: negligence, negligent inspection, negligent retention, and negligent supervision. The lawsuit is based on the legal principle that an employer is liable for the actions of its employee.
Ohio Case Law Update
Plaintiff must prove that a defendant wedding barn operator’s breach of a duty caused her harm. Conrad Botzum Farmstead is a privately operated wedding and event barn located in the Cuyahoga Valley National Recreation Area and on lease from the National Park Service. The plaintiff in the case was attending a wedding at the barn, where she broke her ankle while dancing on a wooden deck. The jury trial found that the barn operator was 51% at fault for her injuries, and awarded the plaintiff compensation. However, the barn operator appealed the decision and won. The Ohio Ninth District Court of Appeals found that the plaintiff did not introduce sufficient evidence to prove that any act or breach of duty by the barn operator actually or proximately caused the plaintiff to fall and break her ankle. The case raises standard questions of negligence, but it is worth noting in the Ag Law Blog because the court did not base its decision on Ohio’s agritourism immunity statute. The case is cited as Tyrrell v. Conrad Botzum Farmstead, 2019-Ohio-1874 (9th Dist.), and the decision is available HERE.
Ohio History Connection can use eminent domain to cancel Moundbuilders Country Club’s lease. A Licking County judge ruled in early May that the Ohio History Connection, formerly the Ohio Historical Society, can reclaim full ownership of land that it had leased to a country club. The Moundbuilders County Club has operated a golf course around prehistoric Native American earthworks for decades under a long-term lease with the state. The Ohio History Connection sought to have the lease terminated in order to give the public full access to the earthworks as part of a World Heritage List nomination. The judge viewed the request as sufficiently in the public interest to apply Ohio’s eminent domain laws.
With all the rain and delayed planting that Ohio farmers have experienced this spring, signing a solar lease has been a very appealing prospect for many farmland owners. While this may be the right decision for a farm, it is very important that the farmland owner understand exactly what he or she is signing. Once an energy developer offers to pay you to enter into an agreement, and you sign that agreement, its terms will be legally binding.
In our recent blog post on solar leasing, we discussed some of the early documents that a farmland owner is likely to receive from an interested solar energy developer. Further, we gave some general advice on what farmland owners should do if an energy developer wants to discuss leasing his or her land. One of our main suggestions was to take the time to fully understand what the farmland owner is getting into, and that is where this post comes in.
In this blog post, we highlight some of the important provisions of a solar lease that you as a farmland owner should look for in your solar lease, and understand what they mean. A good solar lease will be very thorough, and include a lot of legalese. Our upcoming Ohio Farmland Owner’s Guide to Solar Leasing, due out in the next month, will go more in depth than this blog post on the terms below and more. It would also be a wise decision to consult with an attorney to ensure that your understanding of your solar lease reflects what the documents say.
For now, here are a few provisions to be on the lookout for in your solar lease:
The term. How long does this lease last? Most solar leases last for 20 to 30 years. This is the time during which solar energy is being collected and sold. Solar energy developers like this multi-decade duration because it allows them to use of the solar panels for their expected productive lifespan.
Thirty years is a long time. Many careers are retirement-eligible after that period, and many farms will transition to the next generation in that amount of time. This long of a term is not necessarily a bad thing. It just means that a farmland owner should look back and look ahead. Think back 30 years to 1989. What all has changed on your farm? What would it have looked like to not be able to use this ground for the past 30 years? Now look ahead. What do you expect your needs and those of your family to look like when this lease ends in 2049? Only you can determine if not being able to use your land for that long is a good thing.
Phases. How is this lease broken up? We just explained that most solar leases will last for 20 to 30 years, but that clock usually starts ticking once construction has started on the project. Solar energy developers will often reserve a year or two during which they can conduct their final feasibility studies and obtain necessary permits. Some leases structure this pre-construction phase as merely an option phase, meaning that the energy developer will pay a small amount of rent to keep its option alive for that one or two-year period, but it does not necessarily have to commence construction.
Further, toward the end of the term, the energy developer may have written in an option to renew for another 5 or 10 years. These renewals are often structured as a right that the energy developer may exercise merely by giving notice to the landowner. Additionally, in the middle, if there is a natural disaster that puts the operation out of service for any period of time, a solar lease may stop the clock from ticking until the project is operational again and solar energy is being collected.
The important take-away for the phases is being able to know when each phase begins and ends. When all of the different phases are combined, instead of just a 30-year lease, you could be looking at a 42-year agreement. The only way to know how long it could last is to thoroughly read the entire lease.
A description of the premises. Every solar lease will contain a description of the premises. If an entire parcel is being leased, then this part is fairly easy. However, if only a portion of the parcel is being lease, the farmland owner will want to make sure that the lease provides an adequate description so that the leased portion can be easily determined on the ground. Often, this will include a survey and maps. Knowing the boundaries is important because these leases are often exclusive, such that the farmland owner has little or no use or access of the leased land throughout the term.
Easements. What rights are being granted to the solar energy developer? Solar leases include a series of easements that give the solar energy developer the right to use your land. Some of the common easements include a:
- Construction easement: a right to cross over portions of the farmland owner’s property in order to construct the solar facility
- Access easement: a right to cross over portions of the farmland owner’s property to reach the solar facility
- Transmission easement: a right to install power lines, poles, and other equipment to transmit the energy produced by the solar panels to the grid
- Solar easement: a right to unobstructed access to the sun without interference from structures or other improvements
- Catch-all easement: a general right to do whatever is necessary for the benefit of the project
Solar energy developers want their easements to be as broad and generous as possible in order to maximize their flexibility with the project. This is not always to the advantage of the farmland owner. If the lease is general enough to allow the solar energy developer to sub-lease to another entity such as a telecommunications company, the landowner will have a difficult time preventing the solar energy developer from doing so. The farmland owner wants to make sure that the easements being granted are specific enough to not result in any surprises.
Landowner obligations and rights. What does the lease require of you as the farmland owner? Usually private solar energy developers include a non-interference provision, a quiet enjoyment provision, and an exclusivity provision. All combined, these provisions are a promise by the farmland owner to not enter the solar facilities without prior permission, not interfere with the solar facilities, and not allow anyone else to do so for the duration of the term.
Further, solar leases often include a confidentiality provision that courts will enforce as legally binding. These provisions allow the solar energy developer to control the flow of its proprietary information, and also prevent landowners from talking with one another about topics such as rent rates. It is important to understand:
- What information is protected
- If there are any exceptions
- When consent might be granted
- If specific penalties apply
- How long confidentiality lasts
The solar lease may also include a provision about farmland owner improvements. These explain if and when the landowner needs to obtain prior approval of the solar energy developer in order to build a structure or plant something that may interfere with the solar project.
Property maintenance. Who is going to mow? Ohio landowners have a legal duty to cut noxious weeds, and a well drafted lease will cover which party to the lease bears responsibility for keeping the leased land clear. Usually, the solar energy developer will take this responsibility, but it helps to have this in writing.
Cleanup terms. Cleanup involves a lot of questions. Does the solar lease require the solar energy developer to restore the land to its previous state? If so, how is this measured? Will all stakes and foundations be removed? Will all improvements, like roadways, be removed? How will the solar energy developer guarantee that it will be able to pay for this cleanup in 30 years? Does it post a security, and if so, when? A thorough lease will answer these questions.
Tax and conservation penalties. Tax and conservation also involves a lot of questions because constructing and operating a solar facility will make the property ineligible for the full benefits of CAUV and most conservation programs. Does the lease require the solar energy developer to cover real estate taxes? Does the lease require the solar energy developer to cover the three-year lookback penalty for removing land from CAUV? What will the solar energy developer do toward the end of the lease so that the land can be put back into production and made CAUV eligible again? Similar questions must be asked for conservation programs.
Compensation. It’s not that we saved the fun and best part for last. We just wanted to make sure that compensation is not the first and only thing considered when deciding whether or not to enter into a solar lease. While it certainly is important, some of the issues discussed above must be just as carefully understood.
The solar leases that we have seen involve cash rent that increases over time based upon a fixed escalator. The escalator is a percent increase. If the escalator increases at a rate greater than inflation, then the farmland owner will receive more bang for his or her land. However, if the escalator increases at a rate lower than long-term inflation, then the solar energy developer will have to pay less over time.
Another point of compensation to consider is how damages will be calculated for harm to property and crops. When the solar energy developer decides it is time to start construction, its option and easements grant it the right to begin construction even if there is a crop already in the ground. This makes it in a farmland owner’s best interest to have this issue addressed up front. These damages will often be calculated my multiplying the number of acres by the average county yield for that crop by that crop’s commodity future price with the Chicago Board of Trade for a given date. This provides an objective calculation for damages.
Verbal promises. A note of caution: if the solar energy developer makes you a verbal promise, ask for that promise to be included in the written lease. If there is a conflict between what a representative of the solar energy developer tells you and what is written in the lease, the terms in the written lease are likely to prevail.
The activity we are seeing across Ohio right now with solar reminds us of the early stages of the recent wind and shale energy booms. Some of the biggest regrets that we hear about are from landowners who thought they were getting a better deal than they actually did. Reading through, understanding, and thinking about the lease is an essential part of calculating whether or not the lease being offered is actually a good deal for a farmland owner and his or her family. Don’t be afraid to reach out to your team of professionals in this process. Your attorney, tax professional, extension educator, and others can be a great resource.
When you don’t want to move, you don’t want to move. That’s the message being sent to Secretary Perdue and the leadership of the USDA by employees of the USDA Economic Research Service (ERS), who recently voted to unionize 138 to 4.
ERS produces research on agriculture and rural economies that is used by policymakers in determining where to prioritize federal money, personnel, and attention. Many universities and agricultural organizations also utilize the data in their own research. Economists and statisticians make up a large portion of ERS’s staff.
The vote comes after months of tension over the fate of ERS. USDA leaders have been seriously discussing moving the headquarters of ERS closer to the farms and rural areas that it is charged with researching, and away from D.C. Recently the USDA announced that locations in Indiana near Purdue University, in Kansas City, and in North Carolina’s Research Triangle Region have been selected as potential relocation sites. However, many ERS staffers have been vocal about not wanting to move away from D.C., either for personal reasons or to protect the prestige of the office within the USDA.
Further, Secretary Perdue had announced plans last year to place the service directly under the USDA’s chief economist, which would put ERS more directly under the watch of administrators appointed by President Trump. Some staffers have expressed concerns that such a move could increase the pressure to analyze data in a particular way, and reduce the service’s independence.
According to news interviews, as conversations among the higher level administrators became more serious, many ERS employees felt that they did not have much say in the matter. This sense of helplessness triggered many employees to want to unionize, while some employees have already left in pursuit of other jobs.
The right of most federal employees to unionize is protected under federal law, but the preliminary vote was not the final stop in the process. The vote to unionize had to be reviewed by the National Labor Relations Authority, which governs public-sector labor relations. The American Federation of Government Employees (AFGE) has already begun to represent the roughly 200 workers at ERS. AFGE represents approximately 700,000 employees of the federal government and of the District of Columbia, with just under half of those members paying dues. AFGE is affiliated with the AFL-CIO, which is the nation’s largest federation of labor unions.
The formation of a union does not mean that ERS employees will be able to prevent the changes being proposed at the administrative level. However, it increases the likelihood that ERS employees have a seat at the decision table as a united group. This desire to have a united front and collectively bargain is one of the traditional purposes of forming a union.
We haven’t seen much sun in Ohio lately, but that hasn’t stopped the growth of solar energy development. In the past two years, the Ohio Power Siting Board has approved six large scale solar projects with generating capacities of 50MW or more, and three more projects are pending approval. These “solar farms” require a large land base, and in Ohio that land base is predominantly farmland. The nine solar energy facilities noted on this map will cover about 16,500 acres in Brown, Clermont, Hardin, Highland and Vinton counties. About 12,300 of those acres were previously used for agriculture.
We’re hearing that solar energy developers are on the lookout for more land in these and several other counties across the state. As the markets fluctuate and weather continues to prevent planting, leasing farmland to a solar energy developer might look pretty appealing. But we always urge caution and due diligence for any leasing situation, and solar energy is no exception.
What should you do if an energy developer wants to discuss leasing your farmland for a large scale solar energy facility? Our best advice is not to jump too quickly. Instead, take the time to fully understand what you’re getting into. A typical solar lease can last for 30 years and thus can have long term legal, financial and social implications for a farmland owner. An important initial question is how does this type of land use fit into your future vision for your land, your farm operation, and your family? If you don’t yet know much about large scale solar development and what it means for your land, give a listen to this webinar from our partner, the National Agricultural Law Center.
In this post, we’ll focus on the beginning of the solar leasing legal process. The large scale solar projects in Ohio range from 600 to 3,300 acres of land, so a developer first has to assemble the land base once it identifies an area for a solar development project. Leasing the land is the typical mechanism used for the solar projects in Ohio. If a developer is interested in leasing your land, the first documents you may receive from the developer are a letter of intent and/or an option to lease. These documents are the precursors to a solar lease but, like a lease, are written in favor of the developer and establish legal rights for the developer. Careful review is critical, as these documents can tie up the land and the landowner for several years or more.
The letter of intent. Some developers use a written letter of intent to notify a landowner of the developer’s interest in a parcel of land. The purpose of the letter is to begin the process of considering the land for a long term solar lease. Note, however, that a letter of intent might also contain a confidentiality clause that would prevent the landowner from talking with other developers about the land or sharing details of the developer’s interest with anyone. Be aware that courts will generally enforce a signed letter of intent as a legally binding contract if the developer has offered the landowner a payment or similar benefit for signing the letter. By signing confidentiality provisions in a letter of intent, a landowner can be foreclosed from considering other solar leasing opportunities.
The option to lease. More commonly, the first document a solar developer will ask a landowner to sign is an option to lease. Don’t be fooled by the name of this document and think that it’s not a legally binding agreement. While an option is not the same as a lease, it can have the same legal effect of tying up the land for a certain period of time and might also dictate many of the terms of the lease if the developer decides to move forward on the project.
An option to lease grants the solar developer rights to explore the possibility of using the land for a solar project, but the developer may choose not to lease the land or develop the project. The option period, typically up to five years, gives the developer time to conduct due diligence on the property, assemble other land parcels, secure financing, and obtain government approval for the project. At the end of the option period, the developer should decide whether or not to proceed with the project. An option also can give the developer the right to terminate and back out of the option at any time prior to the end of the option period.
On the other hand, a landowner doesn’t have an option to back out once he or she signs an option to lease. The landowner is bound for the entire option period. Like a letter of intent, an option can contain confidentiality and “exclusive dealing” provisions that prevent the landowner from sharing details or entering into leasing opportunities with other developers during the option period. The option might also require the landowner to cooperate with the developer’s due diligence and help the developer obtain approvals and permits. Many options also include language that allows the developer to assign the option to another solar developer.
Be aware that an option can also contain significant leasing terms that carry over if the developer proceeds with the project. For example, in addition to allowing the developer to consider the land for a project, the option to lease could also include provisions for the period of the actual long term solar lease, the lease payment amount, easement rights, and landowner obligations. Landowners might think that such terms could be negotiable later if the parties sign an “official” solar lease, but the option language may bind the landowner to the leasing terms that are presented in the option. Sometimes, the option itself becomes the lease. The net effect: a landowner who thinks he or she is just signing a five year option agreement might also be committing to a 30 year solar lease and a predetermined lease payment.
What about crop production during the option period? An option might contain language stating that the landowner may continue managing and operating the property in the same way after agreeing to the option. But the option might also allow the developer to enter the property and proceed with the project at any time, including when crops are in the ground, although the option might not provide the landowner payment for the lost production. In that case, the landowner simply loses out on the crop if the option doesn’t contain provisions for lost production.
As for payment for the option, a landowner usually receives an initial payment for signing the option, perhaps several thousand dollars or more. During the option period, the landowner also typically receives an annual payment that is based on number of acres, perhaps $20 dollars per acre or more.
Should you have an attorney review an option to lease? Yes. Option language can vary and we surely haven’t addressed all potential issues in this post. A close examination by an attorney shouldn’t take much time or cost a lot and will ensure that you fully understand the legal implications of entering into the option to lease.
Are the terms of an option negotiable? That’s up to the landowner and the developer, but don’t assume that the developer won’t negotiate. If you’re faced with an option to lease and don’t like the terms, try negotiating. An attorney can be helpful here, also.
In our next solar leasing post, we’ll review the terms of a solar lease and consider how the lease can impact agricultural landowners over the typical 30 year lease period. Watch also for our upcoming Ohio Farmland Owner’s Guide to Solar Leasing, due out in the next month, which will provide a detailed examination of the solar leasing process.
A jury recently returned a verdict awarding a California couple $2.055 billion (yes, billion) in damages after the couple alleged that the glyphosate in Roundup caused their cancer. This is the third California jury to be convinced that the Monsanto herbicide, which was acquired by Bayer last year, caused or substantially contributed to a cancer diagnosis of non-Hodgkin lymphoma. A lot has happened since we last reported on these lawsuits HERE and HERE, so it is time to look at the glyphosate lawsuits, jury verdicts, and the larger debate.
Thousands of glyphosate lawsuits have been filed against Monsanto/Bayer. Over 13,000 cases have been filed alleging almost the same thing: that a plaintiff’s cancer was caused by the glyphosate in Roundup. About two years ago there were only a few hundred such cases. News stories about large jury verdicts have caught people’s attention, as have commercials that some law firms have aired to find clients for this type of litigation. The vast majority of these cases have been brought in state courts, which have a reputation for being somewhat quicker than federal courts, but there are still over a thousand in federal courts across the country. So far, only three of these cases have reached a jury, and all have been in California.
First California jury awarded a plaintiff $289 million. Dewayne Johnson was a school groundskeeper who routinely used Roundup as part of his job. He was diagnosed with non-Hodgkin’s lymphoma in 2014, and believed that his diagnosis was a result of at least two prior incidents where he was soaked with Roundup. His lawsuit against Monsanto in California state court was chosen to be the first case to be tried before a jury because his doctors did not expect him to live for much longer.
The San Francisco jury sided with Mr. Johnson and awarded him $39 million in compensatory damages, and $250 million in punitive damages. Compensatory damages are meant to directly compensate for harm, and can include medical expenses, lost wages, and emotional distress. Punitive damages, on the other hand, are meant to punish the party in the wrong and deter a similar course of conduct in the future. The judge in the case ultimately reduced the punitive damages to match the compensatory damages, leaving Mr. Johnson with a potential $78 million recovery. However, the decision is on appeal.
Second California jury awarded a plaintiff $80 million. Edwin Hardeman sprayed Roundup on his property for about three decades. In 2014, he was diagnosed with non-Hodgkin’s lymphoma, and decided to file a lawsuit two years later after learning about research connecting his form of cancer to Roundup use. His lawsuit was the first to be heard in federal court. This San Francisco jury awarded Mr. Hardeman $5.8 million in compensatory damages, and $75 million in punitive damages. However, the decision is also on appeal.
Third California jury awarded the plaintiffs $2.055 billion. The first two cases certainly sent shock waves through the news, but the size of this third jury award sent more than just shock. The plaintiffs, Alva and Alberta Pilliod, are a California couple who were diagnosed with non-Hodgkin’s lymphoma within four years of each other. The jury awarded the couple $55 million in compensatory damages, along with $1 billion in punitive damages each. Bayer has promised to appeal this decision as well.
Will the parties ultimately get these punitive damages? It is hard to answer this question just yet, but it is likely that the punitive damages awards will be reduced. Courts are often hesitant about awarding punitive damages absent bad intentions by the party being punished, and few verdicts result in a punitive damages award. When they are awarded, there are constitutional limitations on how large the award can be. The U.S. Supreme Court has said that a punitive damages award that exceeds a compensatory damages award by more than a single digit multiplier likely violates a party’s due process rights and is not likely to be upheld. This means that if a punitive damages award exceeds nine or ten times the compensatory damages, courts are to look at that jury’s decision with a high level of suspicion. However, such an award could ultimately be awarded if the evidence of bad intent merits such an award, and if such award is necessary to deter future bad acts.
Bayer’s first hope on appeal is to have the jury decisions invalidated altogether by arguing that the juries were incorrect in linking these plaintiff’s cancer to their prior use of Roundup. In order to succeed, it must prove that the decisions of the three juries were against the “manifest weight of the evidence,” meaning that they relied too much on one pile of evidence leaning one way while ignoring a mountain of evidence going the other way. If it can succeed on this, then it would not have to pay damages to the plaintiffs. However, this can be a high burden for an appellant to satisfy because of our legal system’s deference to juries. If Bayer cannot succeed on avoiding fault, it would still argue that the jury awards are excessive.
In the first case, the initial jury award had a single digit multiplier of roughly six; however, the judge viewed even that multiplier as excessive and reduced the punitive damages award to match the compensatory damages award. In the second case, the initial jury award had a multiplier of over twelve, which could give Bayer a strong argument on appeal if it is ultimately determined that it must pay the plaintiffs. However, Bayer is also challenging the basis of the jury’s decision on appeal.
The third case is simply on a different level. The $2 billion in punitive damages is 36 times the compensatory damages awarded to the couple. The trial judge may respond like the first trial judge and reduce the compensatory damages award; however, that is not a guarantee. What is likely a guarantee is that Bayer will appeal.
Does glyphosate cause non-Hodgkins lymphoma? This question will continue to be a debate for years, and we as attorneys are not in the best spot to make any sorts of determinations based on the scientific research. The U.S. Environmental Protection Agency and a number of scientific studies say no; however, the World Health Organization said in 2015 that glyphosate was “probably carcinogenic to humans.” It was that announcement, and some research that followed, which triggered the wave of lawsuits we see today. Bayer is using the first set of research to defend its product, while the plaintiffs are using the second set of research to attack Roundup. The attorneys in the first three cases tried to undercut Bayer’s use of EPA and university research by arguing Monsanto had influenced the first set of research in a manner favorable to it.
For better or worse, what matters in a jury trial is less what the science says, and more what the jury believes the science says. So far, three California juries have been convinced that there is enough science to say that glyphosate caused or contributed to the cancer of four plaintiffs. The first non-California cases are beginning to be scheduled for later this year, including in Monsanto’s former home in St. Louis. As of now, it remains to be seen whether the first three cases will be the outliers or the norms for the glyphosate litigation nationwide.
In January, we wrote about state “ag-gag” laws and the trend of federal courts overturning such laws nationwide. “Ag-gag” is the term for fraud and trespass laws that aim to prevent undercover journalists, investigators, animal rights advocates, and other whistleblowers from secretly filming or recording at agricultural production facilities. We specifically discussed a case in Iowa, where the state’s “agricultural production facility fraud law” was found to be unconstitutional on First Amendment grounds in the federal District Court for the Southern District of Iowa. In response to that ruling, the legislature modified the law, but a group made up of animal rights, community, and food safety organizations has again sued the state. The plaintiffs contend that the new law still violates the First and Fourteenth Amendments to the Constitution.
Iowa law: current and former
Shortly following the aforementioned district court decision, Iowa passed a new ag-gag law with slightly different language. The new Iowa law changes the crime from “agricultural production facility fraud” to “agricultural production facility trespass.” The legislature also changed the language from outlawing false statements or pretenses to outlawing deception. Another important change is the focus in the new statutory language on the “intent to cause physical or economic harm or other injury” to the farm.
The new law reads:
717A.3B Agricultural production facility trespass.
1. A person commits agricultural production facility trespass if the person does any of the following:
a. Uses deception as described in section 702.9, subsection 1 or 2, on a matter that would reasonably result in a denial of access to an agricultural production facility that is not open to the public, and, through such deception, gains access to the agricultural production facility, with the intent to cause physical or economic harm or other injury to the agricultural production facility's operations, agricultural animals, crop, owner, personnel, equipment, building, premises, business interest, or customer.
b. Uses deception as described in section 702.9, subsection 1 or 2, on a matter that would reasonably result in a denial of an opportunity to be employed at an agricultural production facility that is not open to the public, and, through such deception, is so employed, with the intent to cause physical or economic harm or other injury to the agricultural production facility's operations, agricultural animals, crop, owner, personnel, equipment, building, premises, business interest, or customer.
Iowa law defines “deception,” in part, as “knowingly…[c]reating or confirming another’s belief or impression as to the existence or nonexistence of a fact or condition which is false and which the actor does not believe to be true,” or “[f]ailing to correct a false belief or impression as to the existence or nonexistence of a fact or condition which the actor previously has created or confirmed.”
The previous Iowa law, which was struck down in a district court decision, is currently still available on the Iowa Legislature’s website. The old law made it illegal to gain access to a facility through false pretenses and to make a “false statement or representation” in order to be employed by an agricultural production facility. Note that the former law did not use the word “deception,” or touch on injury to the farm.
In the district court decision overturning the previous law, Judge Gritzner agreed with the plaintiffs that the language of the law violated the First Amendment right to free speech because it was content-based, viewpoint based, and overbroad. He decided that even though the law banned false statements, such false statements are still protected under the First Amendment. In other words, just because Iowa livestock operators do not like the speech of the activists and whistleblowers trying to gain access to their farms, it does not mean that the speech should be infringed upon.
Animal rights groups and others challenge the new law
On April 22, 2019, shortly after the passage of Iowa’s new law, plaintiffs filed suit against the state once again in the U.S. District Court for the Southern District of Iowa. Plaintiffs include Animal Legal Defense Fund, Iowa Citizens for Community Improvement, Bailing out Benji, People for the Ethical Treatment of Animals, Inc., and the Center for Food Safety. In their complaint against the state of Iowa, plaintiffs contend that the new law still violates the Constitution, saying that “the only difference” between the two laws is that the new law “targets a slightly different form of speech.” In other words, Iowa has changed its law from outlawing false statements or pretenses to outlawing deception, but the plaintiffs believe the new law basically ends up doing the same thing as the old, overturned ag-gag law; it prevents their speech based on content and viewpoint. Plaintiffs rely on the following arguments to illustrate their reasoning:
- Iowa’s new law bans any negative speech about the agricultural industry, which creates a preference for speech favorable to the industry.
- Whistleblowing is not criminalized in other Iowa industries.
- Iowa statutes already outlaw fraud, trespass, and adulteration of food products, as well as the theft of trade secrets, so agriculture already has adequate protection from economic harm.
- Outlawing deception “with the intent to cause…other injury” is too vague; it is not easily discernable what other kinds of speech or actions might be illegal under the statute.
As such, the plaintiffs allege that the Iowa law violates freedom of speech under the First Amendment because it is overbroad, viewpoint-based discrimination, and because it is vaguely written under the First and Fourteenth Amendments. Finally, plaintiffs contend that the law violates the Fourteenth Amendment’s Due Process clause because it “substantially burdens” their exercise of free speech. The court must determine whether or not they agree with this assessment.
Many “ag-gag” statutes struck down as unconstitutional, but many more decisions to go
As was mentioned in our January blog post, there is ongoing ag-gag litigation outside of Iowa, as well. Kansas and North Carolina have both been sued for their ag-gag statutes, and both cases are still pending. Will the federal courts find laws in Iowa, Kansas and North Carolina unconstitutional like they have previously in Iowa, as well as in Idaho, Utah and Wyoming, or will they find that they do not violate freedom of speech and due process? Will lawsuits challenge the remaining ag-gag laws in Alabama, Arkansas, Missouri, Montana, and North Dakota? The answers may take a while to sort out.
Lawsuits can be a long and drawn out process, and the Lake Erie Bill of Rights (LEBOR) lawsuit has demonstrated that. Two and a half months after the complaint in Drewes Farm Partnership v. City of Toledo was filed by the farm, which parties will be allowed to participate in the lawsuit is becoming somewhat clearer, but it might not be over yet. However, a conference call between the court and the current parties scheduled for the end of this week may signal that some substantive action is on the horizon.
The State of Ohio is now a party. Judge Zouhary granted Ohio Attorney General Yost’s motion to intervene, making the State of Ohio a party to the lawsuit. The procedural rules for federal courts permit non-parties to ask a court to allow them into a lawsuit either as of right or at the judge’s discretion. As of right means that a statute, rule, or case gives a non-party a right to enter into a lawsuit as a party. In contrast, a discretionary intervention allows a judge to grant a motion to intervene at his or her discretion so long as the person or entity seeking to intervene has a “common question of law or fact” with a current party to the lawsuit. Non-parties often argue both in order to cover all of their bases, which is what the Ohio Attorney General did in this case. Judge Zouhary focused his analysis on discretionary intervention, and found that the state has asserted the same question as the plaintiff, Drewes Farms, in that Ohio’s constitution, statutes, and administrative regulations preempt the LEBOR amendment to Toledo’s city charter. The court also noted that the City of Toledo did not oppose the state’s intervention. Based on these points, the court granted the motion to intervene. The State of Ohio may now make arguments and participate in the lawsuit as a full party.
Lake Erie Ecosystem and Toledoans for Safe Water are denied party status. Days after allowing the Ohio Attorney General’s intervention, Judge Zouhary decided that neither Lake Erie nor Toledoans for Safe Water will be allowed to intervene as parties. Much like the Ohio Attorney General, these non-parties made arguments to support both forms of intervention. Judge Zouhary believed that neither Lake Erie nor Toledoans for Safe Water met the requirements for either form of intervention. As for Toledoans for Safe Water, the court found that it had no right to intervene since it does not have a substantial interest in defending the charter amendment. Just being the group that put LEBOR on the ballot is not enough. Further, since the group recognized that its arguments about the rights of nature are novel and not currently recognized in U.S. law, allowing the party to intervene and make these arguments would cause undue delay. As for Lake Erie, Judge Zouhary noted that the only basis for intervention cited in the motion was LEBOR itself, and that LEBOR only gave Lake Erie the right to enforce its rights in the Lucas County Court of Common Pleas. Therefore, neither Lake Erie nor Toledoans for Safe Water will be able to participate in the lawsuit at this time.
But Lake Erie Ecosystem and Toledoans for Safe Water still want in. Shortly after their motions to intervene were denied, Lake Erie and Toledoans for Safe Water filed two documents with the court: a motion to stay pending appeal and a notice of appeal. First, the motion to stay pending appeal asks the court to pause the proceedings while the non-parties ask an appellate court to review Judge Zouhary’s decision. Their hope is that no decisions would be made in their absence should the appellate court decide that their intervention should be granted. Drewes Farm has already filed a brief in opposition to the motion to stay, which asks the court to continue the case as quickly as possible. Second, the notice of appeal is a required notice to the court and the parties that an appeal of a judge’s decision has been made to the U.S. Sixth Circuit. An appeal of this sort, especially one involving a discretionary act, imposes a high burden on the appellant in order to succeed.
Conference call set for Friday, May 17th regarding a Motion for Judgment on the Pleadings. On May 7th, Judge Zouhary issued an order stating that the parties must submit letters in a joint filing regarding a Motion for Judgment on the Pleadings. Our case law updates often talk about motions for summary judgment, but motions for judgment on the pleadings are less frequently discussed. Motions for judgment on the pleadings are requests for the court to make a decision after a complaint and answer (and, when allowed, a reply) have been filed. The court can make a decision at this stage only if it finds that there is no real dispute about the facts. The parties essentially agree about what happened, and all the court has to decide is how the law applies to the facts in the pleadings. A motion for summary judgment generally involves the presentation of additional facts that were not included in the pleadings, but makes a similar request. The court can grant a motion for judgment on the pleadings in part, which means that some of the case will be resolved and some will continue, but these motions can also be used to end the entire case.
It would be quite interesting to be a fly on the wall during the conference call scheduled for this Friday. It seems likely that we will hear about it soon after. However, this conference call does not necessarily mean that this case, or even LEBOR, will be over soon. Stay tuned to the Ohio Ag Law Blog for more case updates.
We might be in the middle of planting season, but it’s time for another harvest! Here’s our latest gathering of agricultural law news that you may want to know:
Hemp bill completes third hearing in Ohio House committee. The Agriculture and Rural Development Committee in the Ohio House of Representatives completed its third hearing regarding Senate Bill 57 on Tuesday. The bill would decriminalize hemp produced under the regulatory system proposed in the bill. The committee heard testimony from nearly two dozen individuals and organization representatives. None of the witnesses gave testimony in opposition to the bill. Nearly all of the testimony, including the testimony given on behalf of the Ohio Farm Bureau Federation and Ohio Chamber of Commerce, was offered in support of the bill. The Ohio Farmers Union submitted testimony only as an “interested party” rather than as a “proponent,” saying that it supports the principle of hemp decriminalization, but does not believe that the hemp marketing program established in the current version of the bill would be necessary. Click HERE to view the witness testimony regarding Senate Bill 57 on the Ohio General Assembly’s webpage.
Food and Drug Administration sets public hearing on cannabis in food and drinks. The U.S. Food and Drug Administration has set May 31, 2019 as the date of its first hearing on whether to legalize the use of cannabis derived compounds like CBD in foods and drinks. According to the Federal Register, the hearing is open to the public, and intended for the FDA to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds. The hearing will be held in Maryland on May 31st, but those wishing to submit written or electronic comments may do so until July 2nd. Click HERE for more information from the Federal Register about the hearing.
Cattle ranchers file class action suit against major meatpacking companies. The Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) and six other named parties brought suit against major meatpackers, including Tyson Foods, JBS USA, Cargill, and National Beef Packing Company. Filed in federal court in the Northern District of Illinois, the plaintiffs’ complaint alleges that these meatpackers colluded to suppress the price of fed cattle since at least 2015, and that as a result, the plaintiffs suffered significant economic harm from the deflated prices. When companies agree to set prices for an industry, they engage in collusion, which could violate U.S. antitrust laws. The 121 page complaint includes a number of charts, graphs, and visuals that explain the alleged economic manipulation, along with a thorough history of an alleged pattern of collusion. If the federal judge certifies the class as requested, other cattle ranchers will have the choice of whether to be included in the class or not. This is important in determining whether the unnamed members of the class are bound by a final decision or able to participate in any settlement or final award. Click HERE to view the complaint and learn more about this lawsuit.
Indiana Right-to-Farm law upheld by Court of Appeals of Indiana. When a federal court in North Carolina decided that that state’s right-to-farm law did not protect hog barns operated by Smithfield Foods in lawsuits alleging agricultural nuisance, there was concern that right-to-farm laws in the United States may be in trouble. However, those fears have begun to subside in other states. As we explained in a previous blog post, Ohio’s right-to-farm law provides greater protections from a nuisance lawsuit than North Carolina’s law. Further, the Court of Appeals of Indiana recently upheld the use of Indiana’s Right to Farm Act. In doing so, it upheld a lower court decision that granted summary judgment in favor of the defendant livestock operators. At the start of the case, the plaintiffs alleged that the defendants created a nuisance, acted negligently, and caused a trespass when the defendants constructed and began to operate a new concentrated animal feeding operation in 2013. However, the defendants cited Indiana’s Right to Farm Act as a defense and won. The plaintiffs sought to challenge the constitutionality of the Indiana’s Right to Farm Act, but the appellate court found that the law was within the legislature’s proper authority, did not constitute a taking, and did not improperly set farmers apart for preferential treatment. The original plaintiffs have a few more days to file an appeal with the Indiana Supreme Court. Click HERE to read the appellate court’s opinion.
State of Washington passes cage-free egg production law. Washington is set to join states like Massachusetts and California in requiring egg-laying hens to live free of cages. Once signed into law by the governor, Substitute House Bill 2049 would require poultry operators to use a cage-free housing system that would allow hens to roam within the confined area by 2023. Further, hens must be “provided enrichments that allow them to exhibit natural behaviors including, at minimum, scratch areas, perches, nest boxes, and dust bathing areas.” Farm employees must be able to provide care while standing in the hens’ usable floor space. The bill would also make it illegal to buy, sell, or transport eggs and egg products that were not produced in compliance with the state’s cage free egg production law. The Humane Society of the United States spearheaded the legislative effort on this bill, which initially passed the Washington House of Representatives 90-6 and the Senate 40-6. Click HERE for more information about the bill’s status, and HERE to read the final text of the bill.
Missouri legislature considers ending local regulation of CAFOs. The Missouri General Assembly is considering a pair of bills that would 1) limit the ability of county commissions and health boards from imposing restrictions on confined animal feeding operations that are more stringent than state law, and 2) eliminate the authority of county commissions and health boards from inspecting livestock operations. So far, each bill has passed one chamber of the Missouri General Assembly, and is being considered in the other chamber. Supporters argue that the bills would provide for regulatory consistency across the state in light of varying local regulations. Opponents argue that the bills would harm local jurisdictions from enacting restrictions that better protect the environment than current state law. This debate is similar to recent and ongoing debates in states like Tennessee and Wisconsin over which entities can regulate confined animal feeding operations, and how much. Click HERE for more information about Missouri’s Senate Bill 391, and HERE for more information about Missouri’s House Bill 951.