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August turned out to be a very busy month for food law. We’re again reading headlines about the definition of meat and debates over cage-free egg laws. We’ve also come across some interesting criminal actions involving organic labeling fraud and undocumented workers at poultry processing plants. And yet again we have a Roundup update, but fortunately for Bayer, the target of the latest lawsuits are Home Depot and Lowe’s. So without further ado, here’s our latest gathering of agricultural law news you may want to know:
Tofurkey cries foul against state definitions of meat. The maker of edible vegetarian products designed to replicate the taste and texture of meats is fighting back against state labeling and advertising laws that require products labeled as “meat” to be made of meat. Tofurky filed a lawsuit in federal court in Arkansas to stop the state from enforcing such laws, which is similar to a lawsuit it filed in Missouri and yet another company filed in Mississippi. Livestock advocacy groups succeeded in having 12 states pass laws restricting the ability of food producers to refer to their products as meats if those products contain no meat. Livestock advocacy groups argue that the labeling practices are confusing and misleading to consumers, while companies like Tofurky argue that they have a constitutional right to describe their products with meat terminology. On its website, Tofurky lists beer brats, jumbo hot dogs, “slow roasted chick’n,” “ham style roast,” and more. None of the products contain meat.
Organic food fraud puts farmers in jail. A federal judge sentenced a 60-year-old Missouri farmer to serve 10 years and 2 months in prison after being convicted of wire fraud, which is the federal crime of committing financial fraud through the use of a telecommunications wire across state lines. This includes placing a phone call, sending an email, or advertising online in the furtherance of the fraudulent scheme. Another three farmers were also sentenced to prison for terms ranging from 3 months to 2 years for their participation. The fraud involved a decade-long scheme to mix traditional corn and soybeans with a small amount of organic grains and then label everything as certified organic. The grains were mostly sold as animal feed to producers and companies selling organic meat. Organic products generally are sold at a high premium, and the volume of goods in this scheme resulted in the farmers receiving millions of dollars from consumers that was fraudulently obtained. The lengthy prison sentences reflect the farmers’ intentional misrepresentation and mislabeling. In other words, it was not an accident.
Oregon joins California and Washington to make the west coast cage-free. States continue to battle over whether eggs should come from cage-free hens or caged hens. When we last discussed the topic HERE in May, the governor of the state of Washington had just signed his state’s cage-free requirement into law. Iowa, the nation’s leading egg producing state, has gone the other way in trying to limit cage-free egg production. Now, Oregon is set to ban the purchase or sale of eggs and egg products from caged hens starting in 2024. However, Oregon’s law exempts eggs and egg products from caged hens if the sale occurs at a federally inspected plant under the Egg Products Inspection Act or if the caged hens were at a commercial farm with a flock of fewer than 3,000 hens. You can read the text of the bill HERE.
Immigration and Customs Enforcement raids poultry processing plants. Federal immigration officials have alleged that managers at five Mississippi poultry processing plants knowingly hired undocumented aliens who are not authorized to work in the United States. Fines for individuals or companies proven to have actual knowledge that they hired undocumented workers can reach up to $3,000 per undocumented worker. Individuals may also face prison time. According to news reports, ICE arrested 680 possibly undocumented workers during its August 7th raids in Mississippi. In their applications for the search warrants, the investigators alleged that the companies hired undocumented workers who were wearing GPS ankle monitors as they await deportation hearings, reported Social Security numbers of deceased persons, and used different names at different times.
Latest Roundup lawsuit targets retailers Home Depot and Lowe’s. You’ve heard us talk before about the thousands of lawsuits against Monsanto (now owned by Bayer) based on the allegation that the glyphosate in products like Roundup has caused cancer. If you’d like a refresher, you can review our last post HERE. Now, instead of going after the manufacturer, a new plaintiff is going after retailers. Plaintiff James Weeks filed two class action complaints in federal court in California against Home Depot and Lowe’s, alleging that the home improvement giants failed to adequately warn customers about the safety risks posed by using the popular weed killer. Mr. Weeks argues that the labeling leaves the average consumer with the impression that the greatest risk of harm is eye irritation, when in fact the retailers know of the product’s potential carcinogenic properties. As these complaints are class action complaints, Mr. Weeks seeks to claim representative status over all consumers who purchased Roundup products from these retailers, and thereby lead the case against the retailers. It will be interesting to see whether the court certifies these cases as class actions, or if this strategy falls short for the plaintiff. You can read the complaint against Home Depot HERE.
Food giants seek silence from U.S. Commodity Futures Trading Commission. In 2015, the U.S. Commodity Futures Tradition Commission initiated a lawsuit against Mondelez International Inc. and Kraft Heinz Co. for allegedly manipulating the wheat futures market. All parties recently agreed to an undisclosed settlement, and entered into a consent order with the court to close the matter. The agreement apparently included a provision that all parties would refrain from publically commenting about the settlement. However, the federal agency ended up commenting on the settlement by the end of the week in which the agreement was finalized. Mondelez and Kraft Heinz believe that such statements violated the terms of the consent order, although the federal agency contests the allegation. Nonetheless, the confidentiality restrictions make it difficult to know the full details of the settlement. All we know for certain is that there was one.
Federal courts report that Chapter 12 family farm bankruptcies are on the rise. The federal court system releases data every quarter on the number of bankruptcies filed each month in that quarter. The latest numbers for April to June 2019 showed a slight increase in the number of Chapter 12 bankruptcies filed when compared to the same time period in 2018. Nationwide, there were 164 new filings, compared to 135 in the second quarter of 2018. The numbers show a gradual increase in the use of Chapter 12 bankruptcy since 2013, but the numbers are starting to tick up to levels not seen since the Great Recession. Chapter 12 bankruptcy is a special form of bankruptcy that can only be used by family farmers and family fishermen whose total debts do not exceed a certain dollar limit. The current dollar limit is $4.4 million, but there is legislation awaiting President Trump’s signature to increase the limit to $10 million. In large part because of these restrictions, Chapter 12 is one of the least commonly used forms of bankruptcy.
Large "utility-scale" solar energy development is on the rise in Ohio. 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.
With solar energy development, then, comes a new demand for farmland: solar leasing. Many Ohio farmland owners have received post cards and letters about the potential of leasing land to a solar energy developer. This prospect might sound appealing at first, particularly in a difficult farming year like this one. But leasing land for a solar energy development raises many implications for the land, family, farm operation, and community. It's a long-term legal commitment--usually 25 years or more--that requires careful assessment and a bit of homework.
To help landowners who are considering solar leasing, we've joined forces with Eric Romich, OSU Extension's Field Specialist in Energy Education, to publish the Farmland Owner's Guide to Solar Leasing. The online guide explains the state of solar energy development in Ohio, reviews initial considerations for leasing farmland to solar, and describes legal documents and common terms used for solar leasing. The guide's solar leasing checklist organizes the information into a list of issues to consider, things to do, people to consult, and questions to ask before deciding whether to enter into a solar lease.
The Farmland Owner's Guide to Solar Leasing is available at no cost on our Farm Office website, here. A separate Law Bulletin of The Farmland Owner's Solar Leasing Checklist is also available on Farm Office, here. We produced the guide in partnership with the National Agricultural Law Center at the University of Arkansas, with funding from the National Agricultural Library, Agricultual Research Service, at the United States Department of Agriculture.
This weekend, as you enjoy your morning cup of coffee and find yourself wondering what’s the news in our court system, look no further than this blog post. Every now and then there’s a new court opinion related to agricultural law that peaks our interest and makes us want to share a summary of what happened. This week we read cases about the federal Takings Clause, wind energy, and oil and gas rights. Here are the stories:
- A property owner may bring a claim in federal court under the Fifth Amendment when the government has violated the Takings Clause by taking property without just compensation. This case involved a township ordinance requiring all cemeteries to be held open and accessible to the general public during daylight hours. A property owner with a small family graveyard was notified that she was violating the ordinance. The property owner filed suit in state court arguing that the ordinance constituted a taking of her property, but did not seek compensation. The township responded by saying it would withdraw the notice of violation and not enforce the ordinance against her. The state court said that the matter was therefore resolved, but the property owner was not satisfied with that decision. She decided to bring a takings claim in federal court.
Before this decision, there was a roadblock to bringing such claim. Lower courts had read a previous Supreme Court decision to say that if a state or local government commits a taking, the property owner would first have to seek a remedy through the state’s adverse condemnation procedure before going to federal court. But in doing so, the property owner would actually not have a chance to bring the claim in federal court because the federal court would have to give full faith and credit to the state court decision. At first, that seemed like what would happen to the property owner because the state court had decided that the issue was moot since the township had agreed not to enforce the ordinance against her. But the U.S. Supreme Court cleared the way for the property owner by taking the rare action of overruling its prior precedent. Knick v. Township of Scott, Pennsylvania, was not an Ohio court case, but rather one that made its way all the way up to the U.S. Supreme Court. To read the case, click HERE.
The final opinion handed down by the justices is certainly important, but it is also notable for Ohio because the Ohio Farm Bureau Federation (OFBF) submitted an amicus brief in support of the property owner through its legal counsel, Vorys Sater Seymour and Pease, LLP of Columbus. The brief cited examples in Ohio showing that the Supreme Court’s prior precedent was causing problems for Ohio property owners by limiting their access to federal courts in Fifth Amendment takings claims. OFBF has noted that this was the first time it had submitted an amicus brief to the U.S. Supreme Court.
- Ohio Power Siting Board’s approval of new wind-turbine models in facility’s certificate does not constitute an amendment to the certificate for the purposes of triggering current turbine-setback requirements. In 2014, the Ohio Power Siting Board approved an application by Greenwich Windpark to construct a wind farm in Huron County with up to 25 wind turbines. In the initial application, all of the wind turbines would have used the same model of turbine. Just over a year after the application was approved, the wind farm developer applied for an amendment to add three additional models to the approved wind turbine model list, noting that the technology had advanced since its initial application. Two of the three newer models would be larger than the originally planned model, but would occupy the same locations and would comply with the minimum setback requirements at the time the application was approved.
The issue involved whether the new setback requirements, which were put in place by the state between the initial approval and the requested change, should apply. An amendment to a certificate would trigger the current wind turbine setback requirements. Greenwich Windpark wanted the less restrictive setback requirements in their initial application to still apply to the newer models, but a local group wanted the more restrictive setback requirements to apply. The Ohio Power Siting Board said that adding the new wind turbine models would not be an amendment, and would not trigger the more restrictive setbacks. The Ohio Supreme Court sided with the Ohio Power Siting Board, explaining that the Ohio General Assembly wanted the Ohio Power Siting Board to have broad authority to regulate wind turbines. This case is cited as In re Application of 6011 Greenwich Winkpark, L.L.C., 2019-Ohio-2406, and is available to read on the Ohio Supreme Court’s website HERE.
- Children claiming to be heirs of reserved oil and gas rights are in privity with previous owners of the interest when connected by an auditor’s deed specifically mentioning those interests. The issue was whether children claiming their father’s oil and gas interests were blocked by the legal doctrine of issue preclusion from obtaining clear title to their interest when a previous Ohio Dormant Mineral Act (ODMA) lawsuit quieted title to mineral interests underlying their claim. This preclusion would be possible because the previous owners’ interests formed the basis of the father’s interest. Even though they were not named in the previous ODMA lawsuit, by virtue of being in privity, or legally connected, to the previous owners, the children would be bound by the previous lawsuit because the ODMA lawsuit cleared the previous owners’ interests along with any interests in their successors and assigns. Ultimately the court found that because the children stood in their father’s shoes, and his claim would be linked to the previous owners’ claims in the land, the previous ODMA lawsuit binds the children. This had the effect of eliminating the children’s claims in the oil and gas rights. This case is cited as Winland v. Christman, 2019-Ohio-2408 (7th Dist.), and is available to read on the Ohio Supreme Court’s website HERE.
Congress must be concerned about the financial state of farmers. A bill to increase the Chapter 12 debt limit to $10 million has languished in Congress since March, but recently gained traction and passed through both houses quickly. Congress forwarded the bill, known as the Family Farmer Relief Act of 2019, to the President after the Senate approved it late last week. The House passed the change to Chapter 12 on July 25.
Chapter 12 allows eligible family farmers and fishermen to stay in business and reorganize their debts through a repayment plan. The recent action by Congress more than doubles the debt limit for Chapter 12 eligibility from its current amount of $4.4 million, adjusted for inflation from the original $1.5 million limit established when Congress created Chapter 12 in 1986. If the President signs the current bill, a family farmer or fisherman with an aggregate debt of no more than $10 million will be eligible to use the special protections of the Chapter 12 bankruptcy process.
The bill’s sponsor, Rep. Antonio Delgado (D-NY), explained that the increase to the debt limit reflects higher land values and the growth over time in the average size of U.S. farming operations. He stressed that the changes are necessary so that farmers have additional options to manage the current farm economy because farmers are “currently facing a fifth year of declining net farm income…. [p]rices are low, inputs are high, and current trade policies make the future unknown.”
According to the U.S. Bankruptcy Courts, farmers and fishermen filed a total of 535 Chapter 12 bankruptcies from June 2018 to June 2019, up from 475 in the previous year and 482 in the 2017 period. Ohio had nine of those cases in each of the past two years and six in 2017. These numbers will likely continue to grow with the recent change made by Congress, as more farmers will qualify for the special protections of Chapter 12.
It’s been a while since we’ve written about the Lake Erie Bill of Rights (LEBOR)! As a refresher, LEBOR was passed in February in a special election as an amendment to Toledo’s city charter. LEBOR was meant to create new legal rights for Lake Erie, the Lake Erie ecosystem, and to give Toledo citizens the ability to sue to enforce those legal rights against a government or a corporation violating them. For a longer explanation on LEBOR, see our post here. Since then, lawsuits for and against LEBOR have been filed, and the state of Ohio has passed legislation concerning the language in LEBOR. Updates on those actions will be discussed below.
Update on the Drewes Farm lawsuit
The day after LEBOR passed, Drewes Farm Partnership initiated a lawsuit in the U.S. District Court for the Northern District of Ohio, Western Division, against the city of Toledo. Our initial blog posts concerning this lawsuit are available here and here. In May, we discussed updates to the Drewes Farm lawsuit in yet another blog post. Since our last update, the Lake Erie Ecosystem and TSW’s motion to stay pending appeal and the appeal were both denied, meaning the Sixth Circuit agreed with the district court’s decision to leave the ecosystem and TSW out of the lawsuit. As a result, the current parties to the lawsuit are plaintiffs Drewes Farm Partnership and the State of Ohio, as well as the defendant City of Toledo. In early June, both the Drewes Farm Partnership and the state of Ohio filed motions for judgement on the pleadings. The district court has not yet determined whether to grant the motions; the City of Toledo’s response to the motions is due on August 9, 2019. After the response is filed, the plaintiffs will have a chance to reply.
Toledo Citizens file lawsuit against State of Ohio
In the midst of the Drewes Farm lawsuit, yet another complaint has been filed concerning LEBOR. On June 27, 2019, three citizens of Toledo filed a complaint against the state of Ohio in the Lucas County Court of Common Pleas. In the complaint, the citizens, who all voted for LEBOR, asked the court to find that the state has failed to address pollution in Lake Erie, and due to its inaction, circumstances in the lake are getting worse, that LEBOR is enforceable under the Ohio Constitution and state law, and to issue an injunction to prevent the state from curtailing their rights under LEBOR. Currently, it appears as though no response has been filed by the state of Ohio. Perhaps the state wants to let recently passed legislation do the talking.
State budget bill includes language aiming to invalidate LEBOR, adds water quality initiative
Finally, the Ohio General Assembly has also gotten in on the LEBOR action. On July 18, 2019, Governor DeWine signed the General Assembly’s budget bill into law. Page 482 contains language that seems to be aimed at LEBOR and other environmental community rights initiatives. Most importantly, the bill states:
- Nature or any ecosystem does not have standing to participate or bring an action in any court of common pleas.
- No person, on behalf of or representing nature or an ecosystem, shall bring an action in any court of common pleas.
It will be interesting to see how courts handle lawsuits on behalf of ecosystems and nature after the passage of this budget law.
While the budget bill appears to take LEBOR and initiatives like it head-on, it also created a water quality initiative called “H2Ohio,” which includes a fund in the state treasury. The money in the H2Ohio fund will go toward water quality improvement projects, including projects to reduce phosphorus, nitrogen, and sediment pollution from agricultural practices. With this initiative, the state seems to be offering an alternative way to protect its waters, including Lake Erie.
Work continues on sorting out the legality of LEBOR and the wider problem of Lake Erie pollution, and there appears to be no end in sight. Keep an eye on the Ohio Ag Law Blog for new developments on LEBOR lawsuits and the H2Ohio program!