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By: Jeffrey K. Lewis, Friday, May 21st, 2021

It’s that time of year again.  A time full of excitement and hope.  Kids and students are eagerly waiting for that final bell to ring, releasing them into weeks of freedom and fun.  Some are celebrating with their closest loved ones as they prepare to embark on their next journey.  And lastly, some parents have circled a certain fall date for when things return back to normal.  It is finally nice to see hope, joy, and excitement return to our lives.  These past 18 months have been a real wake-up call, and by no means is it over, but the light can be seen at the end of the tunnel.  This past week has also been abuzz with interesting agricultural and resource issues.  This edition of the Ag Law Harvest brings you some interesting lawsuits, reports, and initiatives from across the country affecting agriculture and the environment. 

USDA expands aquaculture disaster assistance.  The USDA has announced a policy change that makes food fish and other aquatic species eligible for the Emergency Assistance for Livestock, Honey Bees and Farm-raised Fish Program (ELAP).  Previously, only losses of farm-raised game and bait fish were eligible under ELAP.  Under the program, eligible producers can receive financial assistance for losses due to disease and certain severe weather events.  To be eligible, losses must have occurred on or after January 1, 2021.  The Farm Service Agency (FSA) is waiving the requirement to file a notice of loss within 30 calendar days for farm-raised fish and other aquatic species death losses that occurred prior to June 1, 2021.  Producers must still provide records to document any eligible losses.  The deadline to file an application for payment for the 2021 program year is January 31, 2022.  The USDA also announced that it will purchase up to $159.4 million in domestically produced seafood, fruits, legumes, and nuts for distribution to domestic food assistance programs in order to address disruptions in the food production and supply chains resulting from the COVID-19 pandemic. 

Oregon ballot initiative seeks to redefine animal cruelty.  Supporters of Oregon Initiative Petition 13 (“IP13”) have succeeded in meeting their first requirement to putting their proposed law on the 2022 Oregon ballot.  IP13 seeks to amend the definition of what constitutes animal cruelty and who can be punished.  Oregon, like many other states, does have an animal cruelty law that prohibits individuals from unnecessarily harming animals.  Additionally, Oregon’s current law specifically exempts certain practices from being assumed to be animal abuse (activities like farming, breeding livestock, hunting, fishing, wildlife management practices, rodeos, slaughter, and scientific or agricultural research).  However, IP13 seeks to remove all the above listed exemptions and would make it a crime to engage in those types of activities.  IP13 only exempts individuals that harm an animal because the animal posed an immediate risk of danger and veterinarians.  Supporters of IP13 claim that no one should be above the law and should be held accountable for any and all animal abuse and neglect.  Opponents of IP13 fear that if the initiative passes and becomes law, Oregon’s animal agriculture industry will be destroyed.  Opponents argue that IP13 makes common farming practices like breeding and slaughtering livestock for food, illegal.  If supporters of IP13 continue to collect signatures and meet the required thresholds, IP13 will be voted on by the citizens of Oregon in 2022. 

Indiana passes law to purchase locally grown food from youth agricultural education programs.  Indiana’s governor signed a bill into law that allows schools to purchase up to $7,500 worth of food from youth agricultural education programs.  The bill, sponsored by State Rep. Steve Davisson, was born after local Indiana FFA students were raising hogs and growing hydroponic lettuce to sell to their school cafeteria but hit a roadblock because of state laws and requirements.  House Bill 1119 provides an avenue for local youth agricultural programs to sell to their respective school districts and not compete against wholesale distributors.  Rep. Davisson hopes the program will expand into other Indiana schools to give students practical agricultural experience and potentially launch students into a career in agriculture.  

Federal lawsuit about USDA’s RFID tags for cattle dismissed.  Last month we reported that farmers and ranchers from South Dakota and Wyoming filed a lawsuit against the USDA and its subagency, the Animal and Plant Health Inspection Service (“APHIS”), for improperly using advisory committees to create new rules in violation of federal law.  Well, last week a Wyoming federal court dismissed the complaint against the USDA and APHIS.  The court concluded that APHIS did not “establish” the Cattle Traceability Working Group (“CTWG”) or the Producer Traceability Council (“PTC”) as advisory councils to create the RFID tag rules.  The court also found that the advisory groups were completely private and consisted of cattle industry representatives, showing that APHIS did not “establish” these advisory groups.  Additionally, the court held that APHIS did not “utilize” or control the actions of the advisory groups.  The court reasoned that the advisory groups and APHIS were working on parallel tracks to achieve the same goal, preventing and tracing animal disease for livestock moving across state lines, and that APHIS only provided input to the advisory groups.  The court held that the USDA and APHIS were not in violation of federal law because the advisory groups were not subject to the Federal Advisory Committee Act.  As it stands, the USDA and APHIS have rescinded their July 2020 notice that RFID tags would be required for cattle crossing state lines. However, attorneys and interest groups representing the farmers and ranchers in the Wyoming case still fear that APHIS and the USDA will use the information provided by these advisory groups to implement an “unlawful mandate” in the future.  

South Dakota farmer suing the USDA over a mud puddle?  On May 05, 2021, Arlen and Cindy Foster filed a federal lawsuit in South Dakota claiming that the USDA has improperly identified a mud puddle in the middle of their farm field as a federally protected wetland and that the Swampbuster Act violates the U.S. Constitution.  Under the Swampbuster Act, farmers that receive USDA benefits cannot produce crops on or around a federally protected wetland or they risk losing all federal agriculture benefits.  The Fosters contend that Arlen’s father planted a tree belt in 1936 to help prevent soil erosion which is now causing snow to accumulate under the tree belt producing a puddle in the field when the snow melts.  The Fosters argue that this makes the puddle in their field an unregulated “artificial wetland” and is not subject to the Swampbuster Act or the USDA’s control.  Additionally, the Fosters claim that the Swampbuster Act violates the Tenth Amendment of the U.S. Constitution, and that the federal government cannot regulate the Fosters’ alleged wetland.  The Fosters reason that if their puddle should be considered a wetland, any regulation of that wetland should come from the state of South Dakota, not the federal government.   

Hawai’i man fined over $600,000 for pouring poison into Paahe’ehe’e Stream.  Hawai’i’s Board of Land and Natural Resources (“BLNR”) fined a Hilo resident $633,840 for pouring poison into a North Hilo stream and causing the death of an estimated 6,250 Tahitian prawns.  North Hilo has a history of individuals using poison to harvest Tahitian prawn.  DLNR, in conjunction with other natural resource protection entities, are continuously concerned with the impact that the poison will have on the local wildlife and environment.  The $633,840 fine is the largest in BLNR history and advocates hope that it is a step in the right direction to let illegal fishers know that Hawai’i is committed to prosecuting individuals that engage in harmful environmental practices to the full extent of the law in order to protect Hawai’i’s natural resources. 

Montana man sentenced to prison for cattle theft.  A ranch manager has been sentenced to 30 months in prison and ordered to pay back $451,000 after pleading guilty to wire fraud and to selling cattle that he did not own.  The Montana man was a ranch manager at Hayes Ranch in Wilsall, Montana from 2008 to 2017 and also started his own cattle company in 2015.  When the owners of Hayes Ranch were out of town, the ranch manager began stealing cattle from his employer and selling them as if they were his own.  The ranch manager was ordered to repay his former employer $241,000 for the stolen cattle.  Additionally, the ranch manager was ordered to pay Northwest Farm Credit Services over $200,000 for selling cattle that he pledged as collateral for loans obtained from the lender.  

The return of the U.S. Jaguar?  Environmental groups and scientists recently published a paper urging U.S. wildlife managers to consider reintroducing jaguars to the American Southwest.  Advocates argue that reintroducing jaguars to the region is essential to species conservation and restoration of the ecosystem.  In July 2018, the U.S. Fish and Wildlife Service published a jaguar recovery plan as required by the Endangered Species Act of 1973.  While the recovery plan does not call for the reintroduction of jaguars into the Southwest region of the U.S., federal officials have been increasingly focused on sustaining habitat, eliminating poaching, and improving public acceptance for jaguars that naturally make their way across the U.S.-Mexico border.  The southwest region of the U.S. makes up 1% of the jaguar’s historic range but is suitable for sustaining the big cat.  Jaguar sightings have been reported in the area, although very rarely.  Jaguar advocates hope that potential opposition to the reintroduction of jaguars, specifically from ranchers and rural residents, can be eased by implementing compensation programs focused on things like increased livestock deaths. 

2016 Current Agricultural Use Value table
By: Peggy Kirk Hall, Thursday, May 20th, 2021

We learn early in law school that it’s an uphill battle when challenging agency actions in court, as the law typically grants agencies discretion to apply expertise and professional judgment when making decisions.  A landowner in Clark County just learned this lesson.  The landowner appealed the Ohio tax commissioner’s adoption of the 2016 Current Agricultural Use Valuation (CAUV) table, but the Ohio Supreme Court found no showing of an abuse of discretion by the agency.

The case arose from the CAUV valuation update in 2016 of William Johnson’s land in Clark County.  In setting the CAUV values, the county auditor consulted the unit-value table adopted by the tax commissioner.  The unit-value table lists soil types and ratings of each soil type along with per-acre values for each soil type. The tax commissioner annually adopts the table using a potential-income approach, as required by Ohio law, which determines typical net income from agricultural products for each type of soil, assuming typical management, yields, and cropping and land use patterns.   A county auditor refers to the unit-value table when determining CAUV farmland values, applying the per-acre values from the table to the soil types on a parcel. 

Johnson claimed that his CAUV value was too high because the 2016 unit-value table adopted by the tax commissioner did not list separate values for drained and undrained soils on his land.  The table does list differing values for Adrian, Carlisle and Linwood soils—one value for drained soils and one value for undrained soils.  However, the table lists just one value for all Crosby, Kokomo, and Patton soil types, the soils contained on the Johnson’s parcel.  Johnson argued that the tax commissioner erred by adopting the unit-value table without establishing separate values for drained and undrained Crosby, Kokomo, and Patton soil types.

The Supreme Court explained that Johnson’s challenge required showing that the tax commissioner committed an “abuse of discretion” in adopting the unit-value table. Two important principles apply to the “abuse of discretion” standard, the first being that the court will not substitute its judgment for the agency’s judgment unless the agency acted with an unreasonable, arbitrary, or unconscionable attitude.  The court also presumes that an agency’s decision is carried out in good faith and with sound judgment, unless there is proof to the contrary.

According to Johnson, the tax commissioner abused his discretion in several ways:  by departing from the USDA’s taxonomy of soils, excluding data for land lacking artificial drainage, and not listing all soils with drained and undrained variations.  The court found no abuse of discretion, however, and no evidence to support the Johnson’s claims.  The court pointed out that the commissioner, as required by law, consulted with the “agricultural advisory committee” in preparing the table and referred to both Ohio State University’s Bulletin 685 and updates to the USDA taxonomy for guidance on soil types.  Explaining that the CAUV potential-income approach required the commissioner to determine “typical” management practices, the court stated that the commissioner was justified in not establishing a separate value for the Johnson’s “atypical practice” of not installing artificial drainage for the specific soils on his property.  Considering investments required for artificial drainage for some soil types but not for others doesn’t prove an abuse of discretion, the court stated.

The court’s conclusion reiterates the lesson on the difficulty of challenging an agency decision:

“To repeat:  the differential treatment of soil types reflects the exercise of judgment by the commissioner, which we presume to be sound. . . The record does not disclose the rationale for every consideration underlying the unit-value table, but it was not the commissioner’s burden to demonstrate the reasonableness of the CAUV journal entry—it was Johnson’s burden to show an arbitrary or unconscionable attitude on the part of the commissioner.  He has not done so.”

Read the Ohio Supreme Court’s decision in Johnson v. McClain here.

Posted In: Property, Tax
Tags: cauv, Current Agricultural Use Value
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Barry Ward; Leader, Production Business Management; Director, OSU Income Tax Schools, May 19, 2021

What a difference a year makes! The crop margin outlook for this year is decidedly different from where we were last year at this time. Factors affecting both supply and demand have driven commodity crop prices much higher over the last 12 months and the result is a positive margin outlook for 2021 commodity crops. In spite of higher fertilizer, fuel and insurance costs among others, there is a good profit outlook for 2021.

Fuel costs have increased as the state of the overall economy has improved over the last months and fertilizer prices have increased fairly dramatically as a number of factors have impacted costs in manufacturing, and overall supply and demand for nitrogen, phosphorous and potassium fertilizers.

Each year producers tend to purchase inputs over a period of several months leading up to planting for a variety of reasons. Some farmers look to spread risk by pricing fertilizer over several months, some purchase inputs early to take advantage of early buying discounts while many will pre-pay for certain inputs to manage income taxes. On-farm fuel and fertilizer storage tend to give producers more flexibility in spreading their purchases over a longer period to take advantage of possible lower prices. This large input purchase window may have paid dividends this year especially if producers priced fertilizer prior to big price increases.

Production costs for Ohio field crops are forecast to be higher than last year with higher fertilizer prices leading the way. Variable costs for corn in Ohio for 2021 are projected to range from $405 to $488 per acre depending on land productivity. The trend line corn yield (177.9 bpa) scenario included in the corn enterprise budget shows an increase in variable costs of 9.5%.  

Variable costs for 2021 Ohio soybeans are projected to range from $227 to $253 per acre. Variable costs for trend-line soybeans (55.3 bpa) are expected to increase 12.8% in 2021 compared to 2020.

Wheat variable expenses for 2021 are projected to range from $173 to $207 per acre. The trend line wheat yield (70.6 bpa) scenario included in the wheat enterprise budget shows an increase in variable costs of 5.8%.  

Returns will likely be positive for most producers depending on price movement throughout the rest of the year. Grain prices used as assumptions in the 2021 crop enterprise budgets are $5.00/bushel for corn, $13.20/bushel for soybeans and $6.30/bushel for wheat. Projected returns above variable costs (contribution margin) range from $307 to $579 per acre for corn and $357 to $623 per acre for soybeans. Projected returns above variable costs for wheat range from $182 to $327 per acre.

Return to Land is a measure calculated to assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to Land for Ohio corn (Total receipts minus total costs except land cost) are projected to range from $135 to $389 per acre in 2021 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $233 to $484 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $93 per acre to $229 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $824 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $78 per acre include depreciation, interest, insurance and housing. A land charge of $195 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $83 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.

Total costs projected for trend line soybean production in Ohio are estimated to be $565 per acre. (Fixed machinery costs: $62 per acre, land charge: $195 per acre, labor and management costs combined: $55 per acre.)

Total costs projected for trend line wheat production in Ohio are estimated to be $479 per acre. (Fixed machinery costs: $36 per acre, land charge: $195 per acre, labor and management costs combined: $45 per acre.)

Data used to compile these enterprise budgets includes research, surveys, market data, economic modeling, calculations and experience of authors.

Current budget analyses indicates very favorable returns for all three primary commodity crops but crop price change and harvest yields may change this outcome. These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2021 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets

 

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By: Jeffrey K. Lewis, Friday, May 14th, 2021

Happy Friday! It's time for another Ag Law Harvest and in this week's edition we explore landmark court rulings, pending lawsuits, and newly enacted laws that affect agriculture and the environment from around the country. 

USDA announces $92.2 million in grants under the Local Agriculture Market Program.  The USDA announced last week that it will be funding Local Agriculture Market Program (LAMP) grants through the Farmers Market program as part of the USDA’s Pandemic Assistance for Producers Initiative.  Through these grants, the USDA hopes to support the development and growth of direct producer-to-consumer marketing and boost local and regional food markets.  $76.9 million will be focused on projects that support direct-to-consumer markets like farmers markets and community supported agriculture.  $15.3 million will fund public-private partnerships that will build and strengthen local and regional food markets.  All applications must be submitted electronically through www.grants.gov.  More information can be found on the following webpages: Farmers Market Promotion ProgramLocal Food Promotion Program, or Regional Food System Partnerships

Mexico Supreme Court Rules in favor of U.S. Potato Growers.  On April 28, 2021, Mexico’s highest court overturned a lower court’s decision preventing the Mexican government from implementing regulations to allow for the importation of U.S. potatoes.  The ruling comes after nearly a decade of legal battles between Mexican potato growers and their government. Beginning in 2003, Mexico restricted U.S. potato imports but then lifted the restrictions in 2014, allowing U.S. potatoes full access to the Mexican market.  Shortly after lifting the restrictions, the National Confederation of Potato Growers of Mexico (CONPAPA) sued its government claiming that Mexican regulators have no authority to determine if agricultural imports can enter the country. Since the filing of the lawsuit, the U.S. has been bound by the 2003 restrictions on U.S. potatoes entering the Mexican market.  Mexico’s Supreme Court ultimately rejected CONPAPA’s argument and ruled that the Mexican government does have the authority to issue regulations about the importation of agricultural and food products, including U.S. potatoes.  Mexico represents the third largest export market for U.S. potatoes, making this a landmark decision for U.S. potato farmers. 

Indiana enacts new wetlands law.  Indiana governor, Eric Holcomb, has approved a new controversial wetlands law.  The new law amends the requirements for permits and restoration costs for “wetland activity” in a state regulated wetland (federally protected wetlands are excluded).  Under Senate Bill 389, permits are no longer required to conduct activity in Class I wetlands, some Class II wetlands, and certain farmland.  In Indiana, Class I wetlands are either: (a) at least 50% disturbed or affected by human activity; or (b) support only minimal wildlife or hydrological function.  Class III wetlands are minimally disturbed by human activity and can support more than minimal wildlife or hydrologic function.  Class II wetlands fall somewhere in the middle.  Supporters of the law argue that the changes will reduce the cost to landowners and farmers for conducting activity in wetlands that only provide nominal environmental benefits.  Opponents of the law argue otherwise.  Some environmental groups believe that wetlands, whether they can support more than minimal wildlife or not, provide profound economic benefit by reducing the cost to citizens for water storage and water purification.  Additionally, environmental groups argue that the subsequent loss of wetlands from this law will greatly increase flooding and erosion and reduce Indiana’s diverse wildlife.  Some even suggest that this law is nothing more than a subsidy for the building and housing development industry.  Senate Bill 389 became law on April 29, 2021, and has a retroactive effective date of January 1, 2021. 

USDA being sued for promotion of meat and dairy industry.  Three physicians have filed a lawsuit against the USDA in a federal court in California.  The doctors, part of the Physicians Committee for Responsible Medicine (PCRM), argue that some of the USDA’s new 2020-2025 Dietary Guidelines for Americans, issued last December, contradict current scientific and medical knowledge.  PCRM believes that the USDA is acting out of its interests in the dairy and meat industry rather than the health interests of U.S. residents.  For example, PCRM argues that the USDA’s statement suggesting that more individuals would benefit by increasing their intake of dairy contradicts scientific evidence that increased dairy intake can increase the chances of prostate cancer and that 1 in 4 Americans is lactose intolerant.  PCRM seeks a court order requiring the USDA to delete dairy promotions, avoid equating protein with meat, and eliminate deceptive language hiding the ill effects of consuming meat and dairy products.  In an email to the Washington Post, a spokesperson for the USDA, claims that the dietary guidelines are just that – guidelines.  The USDA argues that the dietary guidelines are meant to help provide guidance based on the best available science and research and provide many alternatives for people based on an individual’s preferences and needs.

Sesame added to the list of major allergens.  On April 23, 2021, President Biden signed into law the Food Allergy Safety, Treatment, Education and Research (FASTER) Act.  The law requires that sesame be added to the list of major allergens and be disclosed on food labels.  Up until this law was enacted, sesame was allowed to be labeled as a “natural flavor” or a “natural spice.”  With the new law, sesame, in any form, must be labeled as an allergen on packaged foods.  Food manufacturers have until 2023 to add sesame allergen statements to their labels. This is the first time since 2006 that a new allergen has been added to the Food Allergen and Consumer Protection Act (FALCPA).  Sesame joins peanuts, tree nuts, fish, shellfish, soy, dairy, eggs, and wheat as the FDA’s list of allergens that require specific labeling.  

Florida passes updated Right to Farm Law.  Florida Governor, Ron DeSantis, signed into law Florida’s new and improved Right to Farm Act.  The new law adds agritourism to the definition of “farm operations” so that agritourism is also protected under Florida’s Right to Farm Law.  Additionally, Florida lawmakers have expanded the protection given to farmers under the new law by defining the term nuisance.  Under Florida’s Right to Farm Law, nuisance is defined as “any interference with the reasonable use and enjoyment of land, including, but not limited to, noise, smoke, odors, dust, fumes, particle emissions, or vibrations.” Florida’s definition of nuisance also includes all claims brought in negligence, trespass, personal injury, strict liability, or other tort, so long as the claim could meet the definition of nuisance.  This protects farmers from individuals disguising their nuisance claim as a trespass claim.  The importance of defining nuisance to include claims such as trespass can best be demonstrated by an ongoing federal lawsuit in North Carolina.  In that case, Murphy-Brown, LLC and Smithfield Foods, Inc. are being sued for having ownership in a hog farm that caused odors, dust, feces, urine, and flies to “trespass” onto neighboring properties.  North Carolina’s Right to Farm Law only protects farmers from nuisance claims, not trespass claims.  Although Murphy-Brown and Smithfield argue that the neighbors are disguising their nuisance claim as a trespass claim, the federal judge is allowing the case to move forward.  The judge found that farmers are protected from nuisance claims, not trespass claims and even if the trespass could also be considered a nuisance, the neighbors to the hog farm are entitled to seek compensation for the alleged trespass.

Solar panels in a field
By: Peggy Kirk Hall, Thursday, May 13th, 2021

Energy is a hot topic at the statehouse these days.  The Ohio General Assembly is reviewing several proposals dealing with energy sources, including solar and wind facilities, oil, gas, and gas pipelines.  The proposals raise a critical question about where control over energy production activities should lie:  with the state or with local communities?  The proposals offer contrasting views on the answer to that question.

Solar and wind projects.  We reported in March that companion bills H.B. 118 and S.B. 52 were on hold due to conflicts with the proposals, which would have allowed citizens to use the referendum process to reject proposed large scale wind and solar energy developments in their communities.  On May 12, the bill sponsors offered a substitute bill to the House Public Utilities Committee.   The new approach in the substitute bill would allow a township to adopt a resolution designating all or parts of the township as “energy development districts.”  Doing so would allow wind and solar facilities to be constructed within the designated district(s) and would prevent the Ohio Power Siting Board from approving any projects that are not within a designated district.  The residents in a township, however, would have the right to petition an energy development district designation and submit it to a vote by township residents.  Sponsor Sen. Rob McColley (R-Napoleon) explained that the new approach would allow a township to let energy developers know “up front” that the community is “open for business.”  The committee will hear responses to the substitute bill in additional hearings, not yet scheduled.

Fossil fuel and gas pipelines.  A proposal regarding energy generation from fossil fuels and gas pipelines takes an opposite approach on local control.  H.B. 192, sponsored by Rep. Al Cutrona (R-Canfield) would prohibit counties, townships, and municipal corporations from prohibiting or limited the use of fossil fuels for electricity generation and the construction or use of a pipeline to transport oil or gas.  About a dozen opponents testified against the bill at its third hearing before the House Energy and Natural Resources last week, with most arguing that the proposal removes rights of local communities to control their energy sources and violates the home rule authority for municipalities provided in Ohio’s Constitution.  The bill is not yet scheduled for an additional committee hearing.

Natural gas.  A bill that guarantees access to natural gas passed the House of Representatives on May 6, largely along party lines.  H.B. 201, sponsored by Rep. Jason Stephens (R-Kitts Hill), guarantees that every person has a right to obtain any available distribution service or competitive retail natural gas service from gas suppliers, and bars a political subdivision from enacting laws that would limit, prevent, or prohibit a consumer within its boundaries from using distribution services, retail natural gas service, or propane.  Opponents argue that the bill violates home rule authority and is unnecessary, since no community in Ohio has ever banned the use of natural gas.  The bill was referred to the Senate Energy and Public Utilities Committee on May 12.

We'll keep you posted on the progress of these bills as the Ohio General Assembly continues to deal with the question of local versus state control of energy production and distribution in Ohio.

Spraying applying pesticides to farm field
By: Peggy Kirk Hall, Wednesday, May 12th, 2021

Pesticide drift is a risk many farmers face.  Pesticides in the wrong place can injure unintended targets such as crops, trees and other vegetation, animals, and people, and can raise questions of liability for the misapplication. What should you do if you suspect pesticide drift?  Whether you’re on the sending or the receiving side of it, here’s a summary of what could happen after an incident of pesticide drift.

Documentation.  Many pieces of information are necessary to analyzing whether and why pesticide drift occurred and can be helpful to determining liability.  Documentation of an incident should include: 

  • Date, time, and location of the potential drift occurrence.
  • Weather conditions at the time of the occurrence, including temperature, wind speed, and wind direction.
  • Photographs of the site at the time of the possible drift.
  • Date, time, and description of any damages that become noticeable after the pesticide application.  Note that damage symptoms may not be visible for at least 7 days. 
  • Photographs of damages.  A series of photographs taken over several weeks can help document damages as they develop, and a phone or time stamp will ascertain the date and time of each photograph.
  • Identify of the applicator.
  • Notes of conversations between neighbors, investigators, the applicator, and others.

Ohio Department of Agriculture (ODA) investigation.   A person who believes drift occurred can file a pesticide complaint with the Pesticide Regulation Section of ODA, which has the authority to investigate an alleged pesticide drift situation and assess potential risks to human health, damages to crops and vegetation, and whether the applicator violated Ohio pesticide laws. 

If someone files a pesticide complaint, ODA’s investigation could include reviewing maps of the properties, visiting the site, talking with the person who filed the complaint, taking photographs, and collecting samples.  The agency might also seek a written statement from the complaining party and others aware of the occurrence.  The inspector next meets with the pesticide applicator to gather information about the application, such as pesticide applied, pesticide labels, mixing and spraying practices, and weather conditions. 

After reviewing a case, ODA submits an investigation report to the complaining party.  If a violation occurred, the agency takes enforcement action against the applicator in the form of a warning, civil penalty, license restriction, or criminal prosecution.  It could take months for ODA to complete the investigation and make an enforcement decision.  Note that an ODA investigation and decision does not address compensation to any harmed parties—that must come through other mechanisms.

Settlement.  It’s not uncommon for parties to agree between themselves on how to handle harm from a pesticide misapplication, especially if the damages are minor.  Settlement might include a direct payment for estimated losses of crops or other goods, replacement of vegetation, or remediation of the damaged area.  A well written settlement agreement can clarify the terms and prevent future liability issues from arising.

Insurance coverage.  An insurance policy can provide compensation for pesticide drift damages, but it’s important to ascertain whose insurance applies to the situation and whether there is coverage for the particular incident.  Many policies provide coverage for losses resulting from negligence or unintentional behaviors, such as drift resulting from an unexpected gust or an equipment malfunction.  Liability insurance held by the landowner, a tenant operator, or a custom applicator could cover the damages resulting from negligence.  

Some insurance policies will not cover certain intentional actions that could cause pesticide drift.  Failing to follow the label or applicable laws and regulations could lead to a loss of coverage, for example.  Additionally, a policy might contain a “pollution exclusion” that would deem pesticides and herbicides as “pollution” that is not covered by the policy.  Note that federal crop insurance policies typically are not applicable, as they do not cover crop losses resulting from pesticide drift.

Civil litigation.  Sometimes a pesticide drift situation can end in civil litigation between the applicator and those who claim harm from the application.  The most common legal claims for pesticide drift in Ohio are a negligence cause of action claiming that the applicator failed to use the required standard of care when applying the pesticides and a “negligence per se” action claiming that the applicator’s violation of pesticide laws caused the harm.  The harmed party might sue everyone involved with the land where the application took place, including a landowner, tenant operator, and custom applicator, leaving the parties to fight among themselves about who is liable.  Claimed damages might include compensation for lost crops, costs of restoration, differences in property value before and after the harm, and expenses for medical treatment.  If insurance hasn’t already been considered, it could arise in the litigation setting.

Pesticide drift is a risk that we hope won’t become a reality.  Many management strategies can reduce that risk--education, following label instructions, selecting the right nozzle for the job, calibrating spray equipment, spraying in appropriate weather conditions, adapting buffers for sensitive crops and animals on nearby properties, and more.  If the risk does become reality, both the applicator and the harmed party should be aware and prepared for what might happen next.

Cover crop on Ohio farm
By: Peggy Kirk Hall, Wednesday, May 05th, 2021

There’s a lot of talk about carbon markets and agriculture these days.  While carbon markets aren’t new, recent proposals in Congress and announcements by the Biden administration are raising new interests in them.  Some companies are actively pursuing carbon trading agreements with farmers, further fueling the discussion in the agricultural community. 

As is common for any new opportunity, the talk on carbon markets may be tinged with a bit of skepticism and a lot of questions.  Do carbon sequestration practices have real potential as an agricultural commodity?  That’s a tough question and the answer isn’t yet clear.  There are answers for other questions, though, as well as resources that may be helpful for those considering carbon markets for the first time.  Here’s a sampling.

What is a carbon market?   A carbon market revolves around carbon credits generated by carbon reduction practices.  In the farm setting, a producer who either lowers the farm’s carbon emissions or captures carbon through “sequestration” practices can earn carbon credits.  Like other markets, a carbon market involves a transaction between a seller and a buyer.  The seller sells a carbon credit to a buyer who can use the carbon credit to offset or reduce its carbon emissions.

Do carbon markets already exist?  Yes, although they may be private markets with varying names occurring in different regions.  For example, Bayer Crop Sciences began its Carbon Initiative last year, paying producers for adopting carbon reduction practices that will help Bayer reach its goal of reducing its greenhouse gas emissions by 30% in 2030.  Indigo Ag began entering into long-term carbon agreements with producers in 2019, paying $15 per ton for carbon sequestration practices.  Food companies and agribusinesses including McDonald’s, Cargill, and General Mills formed the Ecosystem Services Market Consortium, which will fully open its private carbon market in 2022.

Are legal agreements involved?  Yes.  Using a written agreement is a common practice in carbon market transactions, but the agreements can vary from market to market.  Provisions might address acceptable practices, calculating and verifying carbon reductions including third-party verification, sharing data and records, pricing, costs of practices, minimum acreage, and contract period.  As with other legal contracts, reviewing a carbon agreement with an attorney is a wise decision.  Watch for more details about carbon agreements as we share our analysis of them in future blog posts.

What is President Biden considering for carbon markets?  The Biden administration has expressed interest in developing a federal carbon bank that would pay producers and foresters for carbon reduction practices.  The USDA would administer the bank with funding from the Commodity Credit Corporation.  Rumors are that the bank would begin with at least $1 billion to purchase carbon credits from producers for $20 per ton.  The proposal is one of several ideas for the USDA outlined in the administration’s Climate 21 Project.

What is Congress proposing for carbon markets?  The bipartisan Growing Climate Solutions Act would require USDA to assess the market for carbon credits, establish a third-party verifier certification program overseen by an advisory council, establish an online website with information for producers, and regularly report to Congress on market performance, challenges for producers, and barriers to market entry.  An initial $4.1 million program allocation would be supplemented with $1 million per year for the next five years.  The Senate Agriculture, Nutrition and Forestry Committee has already passed the bill.  The Rural Forest Markets Act, also a bipartisan bill, would help small-scale private forest landowners by guaranteeing financing for markets for forest carbon reduction practices.

Is there opposition to carbon markets?  Yes, and skepticism also.  For example, a recent letter from dozens of organizations urged Congress to “oppose carbon offset scams like the Growing Climate Solutions Act” and argued that agricultural offsets are ineffective, incompatible with sustainable agriculture, may further consolidate agriculture and will increase hazardous pollution, especially in environmental justice communities.  The Institute for Agriculture & Trade Policy also criticizes carbon markets, claiming that emission credit prices are too low and volatile, leakages and offsets can lead to accountability and fraud issues, measurement tools are inadequate, soil carbon storage is impermanent, and the markets undermine more effective and holistic practices.  Almost half of the farmers in the 2020 Iowa Farm and Rural Life Poll were uncertain about earning money for carbon credits while 17% said carbon markets should not be developed.

To learn more about carbon markets, drop into an upcoming webinar by our partner, the National Agricultural Law Center.  “Considering Carbon:  The Evolution and Operation of Carbon Markets” on May 19, 2021 at Noon will feature Chandler Van Voorhis, a leading expert in conservation and ecological markets.  The Center also has a recording of last month’s webinar on “Opportunities and Challenges Agriculture Faces in the Climate Debate,” featuring Andrew Walmsley, Director of Congressional Relations and Shelby Swain Myers, Economist, both with American Farm Bureau.  A new series by the Center on Considering Carbon will focus on legal issues with the carbon industry and will complement our upcoming project on “The Conservation Movement:  Legal Needs for Farm and Forest Landowners.”  There’s still more talking to do on carbon markets.