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The Occupational Safety & Health Administration (OSHA) faced harsh criticism recently when the agency inspected and issued fines to small farms engaged in grain storage activities.  The farms argued that OSHA had no authority to do so because of the "small farm exemption" that limits OSHA’s authority to enforce safety regulations on small farms.  This week, OSHA released a guidance memorandum that attempts to clarify how its regional administrators should interpret the small farm exemption.  The agency's new guidance focuses on whether an activity on a small farm is “not related to farming operations and not necessary to gain economic value from products produced on the farm.”

The small farm exemption and OSHA's earlier interpretation

Since 1976, Congress has prohibited OSHA from using any of its funds to enforce safety regulations on "small farms," those farm operations that employ 10 or fewer employees and do not maintain a temporary labor camp.  In recent years, however, the agency turned its regulatory attention to grain operations on small farms.  OSHA justified its inspections and enforcement actions for grain storage activities by arguing that “post-harvest” grain storage and processing activities differ from “farming operations” and “core agricultural operations” and thus do not fit within the small farm exemption (see our earlier post).  The agency withdrew this interpretation of the small farm exemption earlier this year.

OSHA’s new guidance memorandum

In its July 29, 2014 memorandum to OSHA regional administrators, the agency now states that a small farm would not be subject to OSHA enforcement if it simply stores its own grain on the farm, sells grain from the farm or grows, stores and grinds grain on the farm to feed its own livestock.  These activities fit within the definition of a "farming operation" because the activities are "necessary to gain economic value from grain grown on the farm."

But the agency also explains that other types of activities on a small farm could be subject to OSHA authority.   According to the agency, if a small farm engages in activities that “are not related to farming operations and are not necessary to gain economic value from products produced on the farm, those activities are not exempt from OSHA enforcement.”

The agency provides a few examples of activities on small farms that would not be exempt because they are not related to farming operations or are not necessary to gain economic value from farm products. The list includes grain-based activities, but also addresses food processing examples:

• A grain handling operation that stores and sells grain grown on other farms.
• A food processing facility for making cider from apples grown on the farm or for processing large carrots into "baby" carrots.
• Milling of grain into flour used to make baked goods.
• The agency also explains that food manufacturing operations are not exempt from OSHA enforcement activities under the appropriations rider, even if they take place on a small farm.

OSHA's new guidance memorandum on the small farm exemption is available here.

Larry Gearhardt, OSU Extension Asst. Professor, Taxation

Ohio Governor John Kasich recently signed a bill that, among other things, increases the small business income deduction from 50 percent to 75 percent of the first $250,000 in net business income.

In an effort to grow Ohio’s economy, last year the Ohio budget bill included significant tax law changes to deliver a $2.7 billion tax cut to individuals and businesses, over the course of three years. The changes included:

• A small business tax cut that enables owners/investors to deduct from taxable income 50 percent of the first $250,000 in net business income.
• A 10 percent personal income tax cut to be phased in over three years. In 2013, Ohio tax rates were reduced by 8.5 percent.
• New assistance for lower-income Ohioans in the form of an Earned Income Tax Credit (EITC) equal to five percent of the amount claimed for the federal EITC.

An improving economy is generating stronger than expected state revenue, resulting in additional tax cuts. The Governor’s Mid-Biennium Review (HB 483) included the following additional tax relief:

• ADDITIONAL SMALL BUSINESS TAX CUTS – For tax year 2014, the personal income tax deduction on small business income will be increased to 75 percent of the first $250,000 in net business income. (Under current law, the deduction does not affect the school district income tax base).
• ACCELERATING THE INCOME TAX CUT – Next year’s scheduled one percent cut in income tax rates is moving up to be effective retroactive to January 1, 2014. This change will give taxpayers the full 10 percent income tax cut that was not scheduled to go into effect until January 2015.
• NEW TAX RELIEF FOR LOW-AND MIDDLE-INCOME OHIOANS – Ohio is doubling the EITC from 5 to 10 percent of the federal credit. In addition, the state is increasing the personal exemption for Ohioans earning less than $40,000 a year from $1700 to $2200, and for those with incomes between $40,000 and $80,000 a year from $1700 to $1950.

Business income is defined as income from the regular conduct of a trade or business, including gains and losses. It also includes gains and losses from liquidating a business or selling goodwill. The deduction applies only to the business income apportioned to Ohio under existing law.

The business deduction percentage reverts back to 50 percent for taxable years after 2014.

UPDATE:  The Ohio Supreme Court affirmed the decision of the Court of Appeals on September 17, 2015.  Read the Court's decision here. 

Hunting laws don't often reach our highest court, but the Ohio Supreme Court has agreed to review one man's challenge to an unlawful hunting action by the Ohio Department of Natural Resources (ODNR).  The case resulted in a fine of $27,851 against Huron County hunter Arlie Risner for the unlawful taking of an antlered white-tailed deer. 

The case began in 2011, when ODNR charged Risner with “taking a white-tailed deer from the lands of another without first obtaining written permission from the landowner or an authorized agent in violation of R.C. 1533.17.”  The Norwalk Municipal Court fined Risner $200 plus court costs and ordered forfeiture of the meat, which ODNR had seized from a processor.  Risner also had to reimburse ODNR $90 for meat processing costs.  The court later ordered Risner to turn over the deer's antler rack also, which he had taken to a taxidermist.

A few months following the court hearing, ODNR advised Risner that he also owed the state $27,851.33 as restitution for the value of the deer and that his hunting license was suspended until he paid the amount.   ODNR based its claim on Ohio Revised Code section 1531.201, which states:

“(B) The chief of the division of wildlife or the chief's authorized representative may bring a civil action to recover possession of or the restitution value of any wild animal held, taken, bought, sold, or possessed in violation of this chapter or Chapter 1533 of the Revised Code or any division rule against any person who held, took, bought, sold, or possessed the wild animal.”

$27,851 for killing a deer?

ODNR's claim for $27,851 in restitution derived from ORC 1531.201, which contains a formula for calculating the minimum restitution value of an illegally taken antlered white-tailed deer.  The formula determines the deer's value based on its the size.  The law also includes additionall provisions for exceptionally large deer, stating that a convicted violator who takes a deer with a gross score of more than 125 inches  "shall pay an additional restitution value that is calculated using the following formula:  Additional restitution value = ((gross score - 100)² x $1.65)."

The deer Risner killed exceeded the 125 gross score limit, with a 20-point rack and a gross score of 228 inches.  ODNR thus used the additional formula to determine Risner's restitution, which escalated the demanded payment to over $27,000.

Challenges by both parties

Risner refused to pay ODNR’s restitution order and the agency began enforcement proceedings in court.  Risner argued that the fee violated his constitutional rights and that ODNR could not seek restitution because the agency had already chosen its remedy of seizing the deer meat and antlers.  The Huron County Court of Common Pleas avoided the constitutional issues but agreed with Risner that the plain language of ORC 1531.201 prevented further restitution because ODNR had already been awarded possession of the deer and antlers in prior court proceedings.   Both Risner and the Huron County court focused on the “or” in the statute’s language, which states that ODNR “may bring a civil action to recover possession of or the restitution value of…” an animal.  The "or" set up a choice either one remedy or the other, according Risner and to the common pleas court.

ODNR appealed the decision to Ohio’s Sixth District Court of Appeals.  The appeals court disagreed with the lower court.  The court unanimously concluded that ODNR did in fact have authority to recover the restitution value for the deer.   “The statute, on its face, does not restrict ODNR from bringing a civil action to recover the restitution value if wildlife officers have already seized parts of the wild animal,” said the court.  “Since Risner had no title to or ownership interest in the seized wild animal parts,” the court explained, “ it is illogical to construe ORC 1531.201 to require ODNR to choose between possession of the unlawfully taken parts or restitution for the unlawfully taken deer.” 

Additionally, the appellate court noted that ORC 1531.201 contained “additional” provisions for restitution assessments for deer in excess of 125 points, explaining that "[w]e must presume that in enacting a statute, the General Assembly intended for the entire statute to be effective. * * * Thus, all words should have effect and no part should be disregarded."  The court also stated, however, that nothing in its decision would prevent Risner from arguing for a deduction of the restitution value based on the monetary value the seized deer provided the state.

Risner requests review by Ohio Supreme Court

Risner asked the Ohio Supreme Court to review the decision.  “To allow the chief to bring a second action when a remedy has already been provided, chosen and carried out is nonsensical, frivolous, a violation of law and due process, and a waste of the Court's time and resources,” argued Risner.  “A second action provides for multiple sanctions and double (if not more) remedies…”

ODNR argued that the Supreme Court should not accept the case for review because the appeals court made a correct interpretation of the statute and because Risner had not been doubly penalized, as he had claimed.  “It is clear the General Assembly recognized the need to create R.C. 1531.201(B) as a separate civil mechanism to recoup the full economic loss of this valuable resource,” stated ODNR.   “The return of evidence did not make the State whole, nor should it be construed as a satisfaction of restitution liability…”

The question before the Supreme Court

Challenges to hunting laws don’t often pique the interest of the Ohio Supreme Court, especially those that don’t revolve around constitutional issues.  But this case does carry serious implications for both ODNR and Ohio hunters.   Does ORC 1531.201 allow ODNR to recover the parts of an antlered white-tailed deer and also to seek payment from the violator for the value of the deer, with additional payment for large animals?  If this is the correct interpretation, we can conclude that our legislature intended strong sanctions against violators in addition to ensuring that a violator would not be able to keep a poached animal.   Is this outcome more severe a punishment for unlawful takings of deer than the legislature intended? 

Or does the statute require ODNR to choose either possession or a restitution payment, but not both?   If this is the case, then ODNR must strategically determine how to handle an illegal taking of an antlered white-tailed deer.  Should ODNR claim the meat and antlers so that a violator does not benefit from breaking the law?  Or should ODNR allow the violator to keep the animal so that it can seek payment from the violator?  If the deer is quite large and the restitution payment high, should ODNR choose the higher payment and higher economic value over reclaiming the animal from the violator?  Is the goal of the statute punishment or regaining the economic value of an animal?

The Ohio Supreme Court will answer these and other questions when it determines the correct interpretation of ORC 1531.302 later this year or next.

Read the Court of Appeals decision in Risner v. Ohio Dept. of Natural Resources, Div. of Wildlife.

UPDATE:  The Ohio Supreme Court affirmed the decision of the Court of Appeals on September 17, 2015.  Read the Court's decision here. 

The Ohio House of Representatives gave final approval on May 21, 2014 to a bill initiated in the Senate that addresses invasive plants.  As approved by both chambers, Senate Bill 192 grants regulatory authority over invasive plants to the Ohio Department of Agriculture (ODA).  While ODA, Ohio EPA and Ohio's Division of Forestry already have programs in place to educate and assist in the identification and removal of invasive species, the new law clarifies that the director of ODA has "sole and exclusive authority to regulate invasive plant species in this state."  This authority includes the identification of invasive plant species and the establishment of prohibited activities regarding invasive plants.

The bill defines "invasive plant species" as:

"plant species that are not native to this state whose introduction causes or is likely to cause economic or environmental harm or harm to human health as determined by scientific studies."

A committee amendment to the bill clarifies that the definition of invasive plant species does not include "cultivated plants grown as food or livestock feed in accordance with generally accepted agricultural practices, including all plants authorized by the animal and plant health inspection service in the USDA."   In committee hearings, the Ohio Invasive Plants Council expressed serious concerns about this exclusion for cultivated crops.  The group's concern is that ODA would not have authority to evaluate plants with invasive properties if they are grown for livestock feed.  Other groups have raised similar worries about plants with invasive characteristics grown for biofuel production.  The Ohio Farm Bureau submitted testimony supporting the exemption, stating that the federal government already regulates plants grown for agricultural crops.

The bill contains one exception to ODA's authority over invasive plant regulation.  The director of Ohio EPA may continue to consider invasive plant species when evaluating applications and permits for wetlands under Ohio's Water Pollution Control Act.   Once ODA develops invasive plant regulations, however,  the EPA must refer to ODA's list of invasive plant species when reviewing wetland applications and permits.

Read S.B. 192 here.