Recent Blog Posts

By: Ellen Essman, Monday, August 10th, 2020

Welcome to August! Despite the fact that most of us haven’t seen much besides the inside of our homes lately, the world still turns, which is also true for the gears in Washington D.C.  In this issue of the Ag Law Harvest, we will take a look at some recently introduced and passed federal legislation, as well as a proposed federal rule.

Great American Outdoors Act is a go.  The Great American Outdoors Act, one of the last pieces of legislation introduced by the late Representative John Lewis, was signed into law by the President on August 4.  The new law secures funding for deferred maintenance projects on federal lands.  The funding will come from 50% of the revenues from oil, gas, coal, or alternative energy development on federal lands.  The funding will be broken down between numerous agencies, with 70% to the National Park Service each year, 15% to the Forest Service, 5% to the U.S. Fish and Wildlife Service, 5% to the Bureau of Land Management, and 5% to the Bureau of Indian Education.  You can read the law in its entirety here.

A meat processing slowdown for worker safety? In addition to the Great American Outdoors Act, numerous bills have been introduced to help farmers, ag-related businesses, and rural areas in the wake of COVID-19.  For instance, in early July, Ohio’s own Representative from the 11th District, Marcia Fudge, introduced H.R. 7521, which would suspend increases in line speeds at meat and poultry establishments during the pandemic.  Notably, if passed, the bill would “suspend implementation of, and conversion to the New Swine Slaughter Inspection System,” which has been planned since the USDA published the final rule in October of 2019. It would also make the USDA suspend any waivers for certain establishments related to increasing line speed.  The resolution was introduced to protect the safety of workers, animals, and food.  In theory, slower line speeds would make it easier for workers to social distance. This is especially important in the wake of outbreaks among workers at many processing plants.  On July 28, Senator Cory Booker introduced a companion bill in the Senate.

Will livestock markets become more competitive?  On July 9, a group of Representatives from Iowa introduced H.R. 7501.  The bill would amend the Agricultural Marketing Act of 1946 “to foster efficient markets and increase competition and transparency among packers that purchase livestock from producers.  To achieve this outcome, the bill would require packers to obtain at least 50% of their livestock through “spot market sales” every week.  This means that the packers would be required to buy from producers not affiliated with the packer. “Unaffiliated producers” would have less than a 1 percent equity interest in the packer (and vice versa), no directors, employees, etc. that are directors, employees, etc. of the packer, and no fiduciary responsibility to the packer.  Additionally, the packer would not have an equity interest in a nonaffiliated producer.  Basically, this bill would make it easier for independent producers to sell to packers. This bill is a companion to a Senate Bill 3693, which we discussed in a March edition of the Ag Law Harvest. According

New bill would make changes to FIFRA.  Just last week, a new bill was proposed in both the House and Senate that would alter the Federal Insecticide, Fungicide, and Rodenticide Act.  The bill is called the “Protect America’s Children from Toxic Pesticides Act of 2020.” In a press release, the sponsoring Senator, Tom Udall, and Representative, Joe Neguse, explained that the proposed law would ban organophosphate insecticides, neonicotinoid insecticides, and the herbicide paraquat, which are linked to harmful effects in humans and the environment.  Furthermore, the law would allow individuals to petition the EPA to identify dangerous pesticides, close the loopholes allowing EPA to issue emergency exemptions and conditional registrations to use pesticides before they are fully vetted, allow communities to pass tougher laws on pesticides without state preemption, and press the pause button on pesticides found to be unsafe by the E.U. or Canada until they undergo EPA review.  Finally, the bill would make employers report pesticide-caused injuries, direct the EPA to work with pesticide manufacturers on labeling, and require manufacturers to include Spanish instructions on labels.  You can read the text of the bill here

USDA AMS publishes proposed Organic Rule.  Moving on to federal happenings outside Congress, the USDA Agricultural Marketing Service published a proposed rule on August 5. The rule would amend current regulations for organic foods by strengthening “oversight of the production, handling certification, marketing, and sale of organic agricultural products.” The rule would make it easier to detect any fraud, trace organic products, and would make organic certification practices for producers more uniform.  Anyone interested in commenting on this proposed rule has until October 5, 2020 to do so.  You can find information on how to submit a comment on the website linked above. 

Welcome to August! Despite the fact that most of us haven’t seen much besides the inside of our homes lately, the world still turns, which is also true for the gears in Washington D.C.  In this issue of the Ag Law Harvest, we will take a look at some recently introduced and passed federal legislation, as well as a proposed federal rule.

Great American Outdoors Act is a go.  The Great American Outdoors Act, one of the last pieces of legislation introduced by the late Representative John Lewis, was signed into law by the President on August 4.  The new law secures funding for deferred maintenance projects on federal lands.  The funding will come from 50% of the revenues from oil, gas, coal, or alternative energy development on federal lands.  The funding will be broken down between numerous agencies, with 70% to the National Park Service each year, 15% to the Forest Service, 5% to the U.S. Fish and Wildlife Service, 5% to the Bureau of Land Management, and 5% to the Bureau of Indian Education.  You can read the law in its entirety here.

A meat processing slowdown for worker safety? In addition to the Great American Outdoors Act, numerous bills have been introduced to help farmers, ag-related businesses, and rural areas in the wake of COVID-19.  For instance, in early July, Ohio’s own Representative from the 11th District, Marcia Fudge, introduced H.R. 7521, which would suspend increases in line speeds at meat and poultry establishments during the pandemic.  Notably, if passed, the bill would “suspend implementation of, and conversion to the New Swine Slaughter Inspection System,” which has been planned since the USDA published the final rule in October of 2019. It would also make the USDA suspend any waivers for certain establishments related to increasing line speed.  The resolution was introduced to protect the safety of workers, animals, and food.  In theory, slower line speeds would make it easier for workers to social distance. This is especially important in the wake of outbreaks among workers at many processing plants.  On July 28, Senator Cory Booker introduced a companion bill in the Senate.

Will livestock markets become more competitive?  On July 9, a group of Representatives from Iowa introduced H.R. 7501.  The bill would amend the Agricultural Marketing Act of 1946 “to foster efficient markets and increase competition and transparency among packers that purchase livestock from producers.  To achieve this outcome, the bill would require packers to obtain at least 50% of their livestock through “spot market sales” every week.  This means that the packers would be required to buy from producers not affiliated with the packer. “Unaffiliated producers” would have less than a 1 percent equity interest in the packer (and vice versa), no directors, employees, etc. that are directors, employees, etc. of the packer, and no fiduciary responsibility to the packer.  Additionally, the packer would not have an equity interest in a nonaffiliated producer.  Basically, this bill would make it easier for independent producers to sell to packers. This bill is a companion to a Senate Bill 3693, which we discussed in a March edition of the Ag Law Harvest. According

New bill would make changes to FIFRA.  Just last week, a new bill was proposed in both the House and Senate that would alter the Federal Insecticide, Fungicide, and Rodenticide Act.  The bill is called the “Protect America’s Children from Toxic Pesticides Act of 2020.” In a press release, the sponsoring Senator, Tom Udall, and Representative, Joe Neguse, explained that the proposed law would ban organophosphate insecticides, neonicotinoid insecticides, and the herbicide paraquat, which are linked to harmful effects in humans and the environment.  Furthermore, the law would allow individuals to petition the EPA to identify dangerous pesticides, close the loopholes allowing EPA to issue emergency exemptions and conditional registrations to use pesticides before they are fully vetted, allow communities to pass tougher laws on pesticides without state preemption, and press the pause button on pesticides found to be unsafe by the E.U. or Canada until they undergo EPA review.  Finally, the bill would make employers report pesticide-caused injuries, direct the EPA to work with pesticide manufacturers on labeling, and require manufacturers to include Spanish instructions on labels.  You can read the text of the bill here

USDA AMS publishes proposed Organic Rule.  Moving on to federal happenings outside Congress, the USDA Agricultural Marketing Service published a proposed rule on August 5. The rule would amend current regulations for organic foods by strengthening “oversight of the production, handling certification, marketing, and sale of organic agricultural products.” The rule would make it easier to detect any fraud, trace organic products, and would make organic certification practices for producers more uniform.  Anyone interested in commenting on this proposed rule has until October 5, 2020 to do so.  You can find information on how to submit a comment on the website linked above. 

By: Peggy Kirk Hall, Thursday, August 06th, 2020

It wasn’t that long ago that “agritourism” was an unfamiliar term to in the agricultural community.  But agritourism has been on the rise in the U.S. and agritourism income tripled between 2002 and 2017.  Many farmers and ranchers are now familiar with the economic benefits agritourism presents.   Along with the agritourism industry’s continued growth and prospects, however, has been an evolution of laws and legal issues.

Join me with OSU Extension Educators Eric Barrett and Rob Leeds on August 19, 2020 for a free webinar on "The Evolution of Agritourism:  Current Legal Issues and Future Trends," hosted by the National Agricultural Law Center.  We’ll examine opportunities in agritourism today and the legal challenges agritourism faces from COVID-19 and other anticipated legal issues.   Here's what we'll cover:

  • What’s new and hot:  agritourism marketing trends and opportunities
  • In the courts:  litigation against agritourism operations
  • COVID-19:  legal issues for agritourism
  • What may come:  anticipated legal challenges for the future
  • How to deal with it:  thoughts on  managing agritourism legal risk

Additional information and a registration link for the webinar are available at https://nationalaglawcenter.org/webinars/agritourism2020/.    If you can't make the live webinar, visit the same page later for a recorded version.

 

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By: Peggy Kirk Hall, Thursday, July 23rd, 2020

In a decision that turns largely on scientific methodology and reliable data, the Ninth Circuit Court of Appeals yesterday allowed continued registration of the Enlist Duo herbicide developed by Dow AgroScience (Corteva).  Unlike last month’s decision that vacated registrations of three dicamba herbicides, the two-judge majority on the court held that substantial evidence supported the EPA’s decision to register the herbicide.  Even so, the court sent one petition back to the EPA to further consider the impact of Enlist Duo on monarch butterflies in application areas. One dissenting judge would have held that the science used to support the Enlist Duo registration violates the Endangered Species Act.

The case began in 2014, when the same organizations that challenged the dicamba registrations (National Family Farm Coalition, Family Farm Defenders, Beyond Pesticides, Center for Biological Diversity, Center for Food Safety and Pesticide Action Network North America) and the Natural Resources Defense Council each filed petitions challenging the EPA’s registration of Enlist Duo.  The EPA later amended the registration in 2015 and 2017, eventually allowing use of the herbicide on corn, soybeans and cotton in 34 states.  The petitioners challenged the 2015 and 2017 registrations as well, and the Ninth Circuit consolidated the challenges into the case at hand.

The court’s opinion begins with an explanation of why it agreed with the parties who brought the challenges that they had the legal right to do so, or had “associational standing.”   Likely of higher interest to our readers is how the court answered the questions of whether the EPA adequately examined the potential impacts of Enlist Duo under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the federal Endangered Species Act (ESA).  Here’s what the court had to say about the petitioners’ claims under each law:

The FIFRA claims.  The monarch butterfly issue was the only successful FIFRA claim advanced by the petitioners.  The court agreed that the EPA didn’t properly assess adverse harm to monarch butterflies that would result from increased 2,4-D use on milkweed in application fields, despite evidence suggesting that the butterflies might be adversely affected.  The EPA stated that it didn’t do so because the approval of Enlist Duo would not change the amount of milkweed being controlled by herbicides—those milkweeds would still be controlled with or without Enlist Duo.  The court disagreed, stating that FIFRA required the agency to determine whether any effect was “adverse” before then determining whether the effect on the environment was unreasonable, which EPA didn’t do in regard to the monarch butterfly.

The court rejected all of the petitioners’ other arguments under FIFRA:

Applicable standards.  Several claims that the EPA applied the wrong FIFRA registration standards failed.  The agency correctly used the broader and more stringent standard, which was to determine whether the registration would cause any unreasonable adverse effects on the environment.   

Increased glyphosate use.  Petitioners also argued that the EPA erred in determining that approval of Enlist Duo would not cause unreasonable adverse effects on environment because glyphosate was already being used.  The registration would only impact which glyphosate was being used but not how much glyphosate was in use.  The court agreed with EPA’s assertion that due to the “nearly ubiquitous use” of glyphosate across the country before the approval of Enlist Duo registration, there would not be an increase in overall glyphosate use and no increased risks.   Interestingly, the court distinguished increased use from new data about glyphosate use, stating that “this does not mean, of course, that new data about glyphosate will go unconsidered….”

Volatility risk.  The court also rejected volatility risk arguments, one of the science-heavy parts of the opinion (begin at page 37 for a good read).  The EPA had concluded the type of 2,4-D in Enlist Duo exhibits lower volatility and off-site vapor drift than other forms of 2,4-D.  EPA reached this conclusion based several studies and data points:  a laboratory study that examined degree of visual damage, six publicly available studies assessing plant growth and survival damage, data from a vapor flux study used to perform computer modeling to determine dose level and air concentration in order to predict adverse damages to plants off-field, a second type of modeling that assesses drift of wet and dry depositions, and atmospheric monitoring data.  Petitioners claimed limitations to the studies and methodology used, contradictions between EPA scientists, failure to follow regulatory guidelines and to consider large enough field sizes in its modeling.  The court commented that the evaluation of volatility “probably could have been better,” but found no evidence showing that EPA’s conclusion was wrong or that volatility fears had materialized since approval of the herbicide.  The court explained that the agency may apply its expertise to draw conclusions from probative preliminary data and “it is not our role to second-guess EPA’s conclusion.” 

Mixing risks.  Petitioners also argued that Dow intended to mix Enlist Duo with glufosinate and EPA failed to account for the synergistic effect of such mixing.  With no evidence other than an abandoned patent application for a mixed product by Dow, the court held that FIFRA doesn’t require an analysis of theoretical tank mixing but only that which is contemplated on the label. 

Nearly all of the EPA’s FIFRA decisions were supported by substantial evidence, the court concluded, with the exception of the monarch butterfly analysis. 

The ESA claims.   Science is a recurring theme in the court’s analysis of the petitioners’ ESA arguments, and also the source of sharp disagreement on the court.  ESA’s section 7 requires a determination of the biological impacts of a proposed action.  ESA consultation among the agencies is required if determined that an agency’s action “may affect” a listed species or critical habitat in an “action area.”   The petitioners claimed that EPA failed in its determination on several grounds, requiring the court to review whether the EPA’s determination was arbitrary, capricious, an abuse of discretion, or contrary to law.  Here are the arguments, and the court’s responses:

“No effect” finding.  The petitioners argued that the EPA erred in determining that Enlist Duo approval would have “no effect” on plant and animal species and the court responded with another lengthy science-heavy discussion of “risk quotient” methodology and legal requirements  to use the “best scientific and commercial data available.”  The EPA employed a risk quotient methodology to conclude that there would be exposure to the herbicide but that such exposure would not lead to an effect on plants and animals.  The two judges in the majority were willing to defer to the agency on this conclusion and its dependence on the risk quotient methodology, but Judge Watford strongly disagreed.  Pointing out that the National Academy of Sciences had advised the EPA that the risk quotient method was “scientifically unsound,” the dissent concluded that the data derived from the methodology did not qualify as “scientific data” and therefore violated the ESA.   The majority stated that the risk quotient methodology doesn’t violate the duty to use the best scientific and commercial data available, which means that the EPA must not disregard available scientific evidence that is better and does not require the agency to conduct new tests or make decisions on data that doesn’t exist.   Deference to the agency was warranted, said the majority, and restraint against second guessing or using the court’s judgment.

Action area.   For its ESA determination, the EPA limited the “action area” to treated fields, while petitioners argued that the herbicide would drift beyond treated fields.  Again turning to the EPA’s science, the court held that the agency had science-based reasons for limiting the target area.  The EPA had appropriately accounted for drift through empirical data, mitigation measures, and label restrictions and no evidence in the record supported that the agency had made an error.

Critical habitat.  The final argument advanced by petitioners was that EPA did not meet its duty to insure that there would be no “adverse modification” of critical habitat from the registration.  Although there were 154 species with critical habitats in the states where Enlist Duo would be approved, EPA concluded that 176 of the species would not be in corn, cotton or soybean fields.  Of the eight species remaining, the agency determined that there would be no modification to their critical habitats as a result of Enlist Duo registration because none of the species’ essential features or “primary constituent elements” were related to agriculture.  Petitioners challenged the methodology EPA employed to reach this conclusion, but the court once again disagreed and deferred to the agency.

What remedy?

With only the monarch butterfly impact analysis in need of further study, the Ninth Circuit declined the petitioners’ request to vacate the Enlist Duo registration.   The court chose instead to remand the petition without vacating the registration, stating that the EPA’s failure to consider harm to monarch butterflies was technical and not a “serious” error.  Pointing also to the “disruptive” consequences of removing a pesticide that has been in use for over five years, the court stated that vacatur was not warranted when the EPA had substantially complied with FIFRA and fully complied with the ESA.

What’s next?

Enlist Duo registration will continue.  The EPA must address evidence that its destruction of milkweed in fields harms monarch butterflies, however.  The court advised the agency to “move promptly” in doing so.

Further action by the petitioners is likely.  According to correspondence with DTN, the petitioners are disappointed and will fight the decision.  They will likely also follow the EPA’s science quite closely as it reexamines the monarch butterfly issue.

Read the Ninth Circuit's decision National Family Farm Coalition et al v. U.S. EPA and Natural Resources Defense Council v. Wheeler, here.

By: Ellen Essman, Wednesday, July 22nd, 2020

Since the advent of the Clean Water Act (CWA), states have attempted to address agricultural nutrient pollution through the National Pollutant Discharge Elimination Permit (NPDES) system. But legal challenges have plagued state NPDES permit programs from their beginnings, and litigation has become a common tool for reducing water quality impacts from manure and other agricultural nutrients. States have developed their own water quality laws and policies, and there have been legal challenges to those as well. These legal challenges arise from environmental interests and impacted neighbors and communities and can be pre-emptive or reactionary. Our newest report for the National Agricultural Law Center examines litigation involving agricultural nutrients from 2018 through 2020. 

In the report, the cases are broken down into several categories. We examine what the courts have to say when it comes to NPDES permits for individual farms and whether they are properly issued by states, whether or not the government (state and federal) is following its own laws and regulations when carrying out water pollution policies, the validity of state CAFO General Discharge permits, and whether or not neighboring landowners have redress for potential agricultural runoff. Some of the cases are challenges to state water quality laws, or the issuance of an NPDES permit.  A few other cases directly target agricultural producers.  The report is entitled Agricultural Nutrients and Water Quality: Recent Litigation in the United States, and can be found here

In addition to the paper, we also recently updated part of our nutrient management project on the National Agricultural Law Center’s website.  The project was first published last year, and includes a report and a state chart. The chart tracks which states require nutrient management plans, nutrient application restrictions, and certification and education for nutrient applicators, and can be found here. The chart also provides links to states’ nutrient management laws and regulations.  A few changes and additions have been made to state laws and regulations within the chart.

The USDA’s National Agriculture Library funded our research on these related projects, which we conducted in partnership with the National Agricultural Law Center. 

By: Ellen Essman, Friday, July 17th, 2020

Written by Ellen Essman and Peggy Hall

 

This edition of the Ag Law Harvest has a little bit of everything—Ohio and federal legislation responding to COVID issues, new USDA guidance on bioengineered foods, and a judicial review of Bayer’s Roundup settlement.  Read on to learn about the legal issues currently affecting agriculture.  

Ohio COVID-19 immunity bill stalls.  While the Ohio House and Senate agree with the concept of immunity for COVID-19 transmissions, the two chambers don’t yet see eye-to-eye on the parameters for COVID-19 liability protection.  H.B. 606, which we reported on here, has passed both the House and Senate, but the Senate added several amendments to the legislation.  The House won’t be addressing those amendments soon because it’s in recess, and doesn’t plan to return for business until at least September 15.   The primary point of disagreement between the two bills concerns whether there should be a rebuttable presumption for Bureau of Workers’ Compensation coverage that certain employees who contract COVID-19 contracted it while in the workplace.  The Senate amendment change by the Senate concerns exemption from immunity for "intentional conduct," changed to "intentional misconduct.”  Currently, there is not a plan for the House to consider the Senate’s amendments before September 15.

Lawmakers propose bill to avoid more backlogs at processing plants.

Most people are aware that the COVID-19 pandemic created a huge backlog and supply chain problem in U.S. meatpacking plants.  A group of bipartisan representatives in the House recently proposed the

Requiring Assistance to Meat Processors for Upgrading Plants Act, or RAMP-UP Act.  The bill would provide grants up to $100,000 to meat and poultry processing plants so the plants could make improvements in order to avoid the kind of problems caused by the pandemic in the future.  The plants would have to provide their own matching funds for the improvements.  You can find the bill here

Revisiting the Paycheck Protection Program, again.  In a refreshing display of non-partisanship, Congress passed legislation in late June to extend the Paycheck Protection Program (PPP).  Employers who haven’t taken advantage of PPP now have until August 8, 2020 to apply for PPP funds to cover payroll and certain other expenses.  Several senators also introduced the Paycheck Protection Program Small Business Forgiveness Act, a proposal to streamline an automatic approval process for forgiveness of PPP loans under $150,000, but there’s been little action on the bill to date.  Meanwhile, the American Farm Bureau Federation is in discussion with the Senate on its proposal for other changes to PPP that would expand access to PPP for agriculture.

More clarification for bioengineered food disclosure. You may recall that the National Bioengineered Food Law was passed by Congress in 2016.  The legislation tasked USDA with creating a national mandatory standard for disclosing bioengineered foods. The standard was implemented at the beginning of 2020, but USDA still needed to publish guidance on validating a refining process and selecting an acceptable testing method.  On July 8, 2020, that guidance was published. The guidance provides steps for industry to take when validating a food refining process under the rule.  A lot of food refining processes remove traces of modified genetic material. So, if a refining process is validated, there is no further need to test for bioengineered material to disclose.  The guidance also contains instructions on testing methods. Basically, “any regulated entity that is using a food on the AMS List of Bioengineered Foods and does not want to include a bioengineered food disclosure because the food or ingredient is highly refined and does not include detectable modified genetic material” should follow these testing instructions. Therefore, any entity with highly refined foods that do “not include detectable modified genetic material” should follow the recently published guidance. 

Bayer settlement proposal under scrutiny.  Last month, Bayer, the owner of Roundup, announced that it would settle around 9,500 lawsuits related to alleged injuries caused by using the product.  Not only was the proposal supposed to settle previous lawsuits, but it was also meant to address any future lawsuits stemming from purported injuries caused by Roundup.  A judge from the United States District Court for the Northern District of California recently pumped the breaks on this plan, stating that any settlement that would resolve “all future claims” against Roundup must first be approved by the court.  A hearing will be held on July 24, where the court will decide whether or not to “grant preliminary approval of the settlement.”

Internal Revenue Service building
By: Peggy Kirk Hall, Monday, June 29th, 2020

Written by Barry Ward, Director, OSU Income Tax Schools

Significant tax related changes as a result of the new legislation passed in response to COVID-19 have created some questions and perhaps consternation over the past few months.  Taxpayers and tax professionals alike are wrestling with how these changes may affect tax returns this year and beyond.  OSU Income Tax Schools is offering a Summer Update to address these issues and other important information for tax professionals and taxpayers.

The OSU Income Tax Schools Summer Update: Federal Income Tax & Financial Update Webinar is scheduled for August 13, 2020and will be presented as a webinar using the Zoom platform.

Webinar content

  • New tax provisions implemented by the CARES Act and Families First Coronavirus Response Act and how to account for them such as the new net operating loss rules, the payroll tax credit, etc.
  • Paycheck Protection Program Loan Issues: loan applications, forgiveness issues and the IRS ruling on loan expenditures that are forgiven under PPP are not tax deductible and how to account for them in preparing a return, etc.
  • Dealing with the IRS in these difficult times.  Also, what it means to the practitioner as to “dos” and don’ts” regarding the announcement that beginning this summer the IRS will allow the electronic filing of amended returns.
  • The “Hot IRS Audit Issues – Pitfalls for S Corporations and Partnerships."  Basis of entities as to the rules and related rulings, how to track basis in these entities, creation of basis where none had been computed in prior tax years, losses in excess of basis and when they are not allowed, definition of an excess distribution, taxation of excess distributions, distribution of appreciated property,  conversion of C corporations to S corporations - do and don'ts, computation of the Built-In Gains Tax, inference and imputation of a reasonable wage for purposes of the computation of the qualified business income deduction, etc.
  • Other rulings, developments, and cases.

Webinar personnel

  • John Lawrence, CPA, John M. Lawrence & Associates: Instructor
  • Barry Ward, Director, OSU Income Tax Schools: Co-Host & Question Wrangler
  • Julie Strawser, Program Assistant, OSU Income Tax Schools: Co-Host and Webinar Manager

Details

  • August 13th, 2020:  10 am – 3:30 pm (lunch break: noon – 12:50 pm)
  • Cost: $150
  • Registration information and link to the registration page is at https://farmoffice.osu.edu/osu-income-tax-schools
  • This workshop is designed to be interactive with questions from the audience encouraged.

Continuing education offered

  • Accountancy Board of Ohio (5 hours)
  • IRS Office of Professional Responsibility (5 hours)
  • Continuing Legal Education, Ohio Supreme Court (4.5 hours)

 

By: Ellen Essman, Friday, June 26th, 2020

Dicamba, Roundup, WOTUS, and ag-gag: although there are important updates, this week’s Harvest topics could be considered some of the Ag Law Blog’s “greatest hits.”   In addition to these ongoing issues, a bill that is meant to encourage farmers to participate in carbon markets was recently introduced in the Senate. June has certainly been a busy month. 

Decisions on dicamba. If you’ve been following along with our blog posts over the past few weeks, you know that the Ninth Circuit Court of Appeals vacated the registration of several over-the-top dicamba products, and in response, the EPA announced that all such products in farmers’ possession must be used before July 31, 2020 (our last post on the topic is available here).  The Ohio Department of Agriculture went a step further, making the final date for dicamba use in the state June 30, 2020, due to the state registrations expiring on that day.  Since the Ninth Circuit decision, the companies that produce dicamba products such as Engenia and, FXapan, and XtendiMax have filed numerous motions with the Ninth Circuit.  On June 25, the court declined a motion from the BASF Corporation, which makes Engenia, asking the court to pause and withdraw their decision from the beginning of the month.  What does this mean?  Basically, at this moment, the court’s ruling still stands, and use of certain over-the-top products will have to cease on the dates mentioned above.  That’s the latest on this “volatile” issue. 

Bayer settles Roundup lawsuits, but this probably isn’t the end. Bayer, the German company that purchased Monsanto and now owns rights to many of the former company’s famous products, has been fighting lawsuits on multiple fronts.  Not only is the company involved in the dicamba battle mentioned above, but over the past few years it has had a slew of lawsuits concerning Roundup. On June 24, Bayer, the German company that now owns the rights to Roundup, announced that it would settle around 9,500 lawsuits.  The lawsuits were from people who claimed that Roundup’s main ingredient, glyphosate, had caused health problems including non-Hodgkin’s lymphoma.  The amount of the settlement will be between 8.8 and 9.6 billion dollars.  Some of that money will be saved for future Roundup claims.  Although many are involved in this settlement, there are still thousands of claims against Bayer for litigants who did not want to join the settlement. 

Updated WOTUS still not perfect. As always, there is an update on the continuing saga of the waters of the United States (WOTUS) rule.  If you recall, back in April, the Trump administration’s “final” WOTUS rule was published.  Next, of course, came challenges of the rule from both sides, as we discussed in a previous Harvest post.  Well, the rule officially took effect (in most places, we’ll get to that) June 22, despite the efforts of a group of attorneys general from Democratically-controlled states attempting to halt the implementation of the rule.  The attorneys general asked the U.S. District Court for the Northern District of California a nationwide preliminary injunction, or pause on implementation of the rule until it could be sorted out in the courts.  The district court judge denied that injunction on June 19. On the very same day, a federal judge in Colorado granted the state’s request to pause the implementation of the rule within the state’s territory.  Remember that the 2015 rule was implemented in some states and not others for similar reasons.  The same trend seemingly continues with Trump’s replacement rule.  In fact, numerous lawsuits challenging the rule are ongoing across the country.  A number of the suits argue that rule does not go far enough to protect waters.  For instance, just this week environmental groups asked for an injunction against the rule in the U.S. District Court for the District of Columbia.  Environmental organizations have also challenged the rule in Maryland, Massachusetts, and South Carolina district courts.  On the other hand, agricultural groups like the New Mexico Cattle Growers Association have filed lawsuits arguing that the rule is too strict.

  No more ag-gag in NC?  We have mentioned a few times before on the blog that North Carolina’s ag-gag law has been embroiled in a lawsuit for several years (posts are available here).  North Carolina’s version of “ag-gag” was somewhat different from other states, because the statute applied to other property owners, not just those involved in agriculture. The basic gist of the law was that an unauthorized person entering into the nonpublic area of a business was liable to the owner or operator if any damages occurred.  This included entering recording or surveilling conditions in the nonpublic area, which is a tool the plaintiffs use to further their cause. In a ruling, the U.S. District Court for the Middle District of North Carolina was decided largely in the plaintiffs’ (PETA, Animal Legal Defense Fund, etc.) favor. In order to not get into the nitty gritty details of the 73-page ruling, suffice it to say that the judge found that that law did violate the plaintiffs’ freedom of speech rights under the First Amendment to the U.S. Constitution. Another ag-gag law bites the dust. 

Carbon markets for farmers?  And, now for something completely different. In the beginning of June, a bipartisan group of four U.S. senators introduced the “Growing Climate Solutions Act.”  On June 24, the Senate Committee on Agriculture, Nutrition, and Forestry held its first hearing on the new bill, numbered 3894.  The text of SB 3894 is not currently available online, but it would create “a certification program at USDA to help solve technical entry barriers that prevent farmer and forest landowner participation in carbon credit markets.”  The barriers “include[] access to reliable information about markets and access to qualified technical assistance providers and credit protocol verifiers” and “have limited both landowner participation and the adoption of practices that help reduce the costs of developing carbon credits.” You can read the Committee’s full press release about the bill here. It is backed by several notable businesses and groups, including the American Farm Bureau Federation, the National Corn Growers Association, the Environmental Defense Fund, and McDonalds and Microsoft. 

By: Peggy Kirk Hall, Wednesday, June 24th, 2020

Written by Peggy Kirk Hall and Barry Ward, Leader, Production Business Management

Many farmers have utilized the CARES Act’s Paycheck Protection Program (PPP) to obtain federal funds to help with payroll and certain non-payroll expenses in the wake of COVID-19.  As we’ve discussed on our Farm Office Live webinars here, Congress revised the PPP with the passage of the Paycheck Protection Program Flexibility Act earlier this month.  As a result of the new legislation, the Small Business Administration released a series of Interim Final Rules (IFRs) and a new forgiveness application.  The IFRs, available here, clarify certain points contained in the bill and provide revisions to previous IFRs.  All of these changes affect how farmers can use the funds and how much of the funds can be forgiven from loan repayment requirements. 

The new PPP provisions

  • The “covered period” that applies to the issuance and use of PPP loan expenditures was to end on June 30, 2020, but the law now extends that date to December 31, 2020.  This means that borrowers now have until December 31 to spend PPP loan proceeds.
  • The “covered period” for loan forgiveness has also changed.  Borrowers will now be able to have up to 24 weeks of costs forgiven and not subject to repayment.  But borrowers who received loans prior to June 5, 2020 may choose to use the 8-week period provided in the original PPP.  A borrower need not wait until the end of the covered period to apply for forgiveness if the borrower has expended the loan funds prior to the end of the covered period.
  • The requirement that 75% of loan proceeds be used for payroll costs in order to receive full forgiveness has been reduced to 60%.   This means that forgiveness is not applicable for any portion of non-payroll costs that exceed the 40% maximum for non-payroll.  Under the original law, forgivable non-payroll costs could not exceed 25%.
  • The amount eligible for forgiveness can equal the full loan amount plus accrued interest, and the IFR revises the eligible costs for both the 8-week and 24-week covered periods as follows:
    • Payroll costs for 24 weeks at a maximum of $46,154 per employee and for 8-weeks at a maximum of $15,385 per employee, as well as benefits such as health care costs, state payroll taxes paid by the employer, and retirement contributions.  Note that there are limitations to including health insurance contributions made on behalf of self-employed persons, general partners and owner-employees of S-corporations and to including employer retirement payments on behalf of self-employed persons or general partners.
    • Owner compensation replacement is calculated according to 2019 net profit.  The forgiveness limit for an 8-week covered period is 8/52 of the 2019 net profit, up to $15,385 and for a 24-week covered period, is restricted to two and a half months or 2.5/12 of 2019 net profit, up to $20,833.
    • Mortgage interest, rent payments on lease agreements, and utility payment costs are eligible to the extent that they would be deductible as business mortgage, rent and utility payments on Form 1040 Schedule F or Schedule C.  Note that although this language defines the forgivable portions of these non-payroll costs, such costs are not actually deductible if forgiven.
  • Employers will have a longer period to rehire employees and restore salaries without reducing the forgiveness amount.  This “safe harbor” date for rehiring employees is extended to December 31, 2020.
  • An employer who isn’t able to rehire employees by the end of the “safe harbor” period may qualify for an exemption from a corresponding forgiveness reduction that would occur if the employer can document that:
    • The employer is unable to rehire persons who were employees on February 15, 2020 or to rehire similarly qualified persons, or
    • The employer is unable to return to the same level of business activity it was at before February 15 due to COVID-19 standards and requirements.
  • For new loans taken out after June 5, loan proceeds that are not forgiven may be repaid in five years rather than two years.  Loans prior to June 5 remain at a two-year repayment term, unless the lender agrees otherwise.
  • Borrowers can defer repayment of the loan until the date that the lender receives the borrower’s forgiveness amount, or until 10 months from the end of the borrower’s forgiveness period if not applying for forgiveness.              
  • The original law prohibited borrowers  from using the CARES Act provision that allows employers to defer payroll taxes once they received loan forgiveness, but the new law allows borrowers who receive forgiveness to also defer payroll taxes under the CARES Act.

The forgiveness application and process

A new forgiveness application was also released to correspond with the changes in the new PPP Flexibility Act.  As laid out in the application instructions, borrowers are eligible to use a shorter “EZ application” for loan forgiveness if they meet one of these criteria:

  • Borrower is self-employed and has no employees or
  • Borrower didn’t reduce salaries or wages for employees by more than 25% and didn’t reduce numbers or hours of employees or
  • Borrower experienced reductions in business activity as the result of health directives related to COVID-19 and did not reduce salaries or wages of employees by more than 25%.

The forgiveness process could take up to five months.  It begins with a borrower submitting the application to the lender that provided the loan, who will have 60 days to review the application and send the approved application on to the SBA.  The SBA will have up to 90 days to review the application, confirm the amount to be forgiven and remit to the lender the forgivable amount and any accrued interest, less any advance payments made to the borrower under the Economic Injury Disaster Loan program. 

The Loan Forgiveness Application Form is here and its instructions are here.  The Loan Forgiveness Application Form EZ is available here and its instructions are here. 

Uncertainties remain

Despite the recent changes to PPP, several gray areas and uncertainties remain, such as:

  • PPP Loans received prior to June 5, 2020 allow the borrower to choose between an 8 week and a 24 week covered period.  Farmers with a loan based on owner compensation replacement and no employees will likely benefit from choosing the 24 week covered period to meet the criteria for full loan forgiveness.  One possible downside with choosing the 24 week covered period might be further rule changes that might be unfavorable to the borrower, although this is unlikely.  There is still uncertainty as to whether a self-employed person needs to write a check to themselves to qualify for forgiveness based on the owner compensation replacement portion of the PPP Loan. The safe alternative would be to write this check even if the check is deposited back into the same account.
  • According to some sources there is ongoing discussion regarding legislation that would grant forgiveness to all PPP loans under $150,000. This discussion of a safe harbor based on the size of the PPP loan is apparently being advanced by certain banks.

We encourage employers who obtained a PPP loan to talk with their lenders and accountants to capitalize on and comply with the PPP changes and make decisions about the forgiveness options.  For those who have not yet applied for a PPP loan, the deadline is soon approaching —applicants have until June 30, 2020 to apply for a loan.

Read more about the PPP’s original provisions in our blog post here.

 

 

 

 

 

By: Peggy Kirk Hall, Monday, June 22nd, 2020

There was a great deal of action last Friday in the case that vacated the registrations of XtendiMax, Engenia and FeXapan dicamba-based products.  Despite a barrage of court filings on Friday, however, nothing has changed the current legal status of the dicamba products in Ohio, and Ohio growers may use existing stocks of the products now but must end use by June 30, 2020

Here’s a rundown of the orders that the Ninth Circuit Court of Appeals issued in the case last Friday:

  • The court denied the emergency motion that the petitioners (National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) filed on June 13.  That motion asked the court to enforce its previous mandate to vacate the registrations, to prevent any further use of the products, and to hold the EPA in contempt for issuing the Cancellation Order the agency had made that allowed continued use of existing stocks of the products.  The court did not provide its reasoning for denying the motion.
  • The court granted amicus curiae (friend of the court) status to CropLife America and American Farm Bureau (representing  itself as well as national soybean, cotton, wheat, corn and sorghum association interest.)  Those parties filed their amicus curiae briefs in support of the EPA’s Cancellation Order and in opposition to the petitioners' emergency motion.
  • The court granted also emergency motions to intervene in the case filed by BASF Corporation, maker of Engenia, and DuPont (Corteva) , maker of FeXapan.   The companies argued that they did not know that the  scope of the court’s order on Bayer's XtendiMax product registration would also affect their dicamba product registrations and they should now be permitted an opportunity to defend their products. 
  • BASF filed a motion asking the court to recall the court's mandate that had cancelled the registrations of the products, claiming that the court had not followed appropriate procedural rules.  In its brief, BASF also suggested that the company would be filing petitions for rehearing since BASF had not had an opportunity to be heard when the court vacated the registration of its Engenia product.
  • The court ordered the original petitioners to file a brief in response to BASF’s motion to recall the mandate by June 23, and for BASF to reply to that brief by June 24.

The companies that make the dicamba products clearly intend to challenge the vacatur of their product registrations, even though the EPA's Cancellation Order allows continued use of existing stocks of the products until July 30, 2020.   This dicamba battle is not yet over, and we'll keep you posted on new developments.

Read our previous posts on the court's vacatur in National Family Farm Coalition here, on the EPA's Cancellation Order here, and on the Ohio Department of Agriculture's ruling on use of the products in Ohio here.

By: Ellen Essman, Tuesday, June 16th, 2020

There’s been a lot of action in the Ohio General Assembly over the last few weeks ahead of the body’s summer break.  Specifically, the House of Representatives has considered bills involving a student debt forgiveness program for veterinarians, animal abuse, road safety in Amish country, immunity for apiary owners for bee stings, and a bill meant to support county fairs during the COVID pandemic. Finally, both the Ohio House and Senate have passed bills that would limit liability involving the transfer of COVID-19.  

Animal-drawn vehicle lighting. House Bill 501, concerning slow-moving, animal drawn vehicles, was introduced in February of 2020 and was first heard in the House Transportation & Public Safety committee on June 2.  The purpose of HB 501 is to “clarify the law governing slow-moving vehicles and to revise the lighting and reflective material requirements applicable to animal-drawn vehicles.” The bill would require animal-drawn vehicles, like the buggies typically driven by the Amish, to have the following: (1) at least one white lamp in the front visible from 1,000 feet or more; (2) two red lamps in the rear visible from 1000 or more; (3) one yellow flashing lamp mounted on the top most portion of the rear of the vehicle; (4) a slow moving vehicle (SMV) emblem; and (5) micro-prism reflective tape that is visible from at least 500 feet to the rear when illuminated by low beams on a vehicle.  In the committee hearing, HB 501 had mostly positive feedback, and was touted as a solution to crashes involving animal-drawn vehicles in poor visibility. 

When the bee stings.  HB 496, which would grant apiary owners immunity for bee stings, passed the Ohio House on June 9, 2020.  The bill would protect the owner of a registered apiary from liability in the case of a personal injury or property damage from a sting if they do the following: (1) implement and comply with the beekeeping industry best management practices (BMPs) as established by the department of agriculture; (2) keep correct and complete records of their implementation and compliance with BMPs and make the records available in a legal proceeding; (3) comply with local zoning ordinances pertaining to apiaries; (4) operate the apiary in compliance with the Ohio Revised Code.  Notably, the bill would not protect apiarists from harming a person intentionally or through gross negligence.  The bill now moves on to the Ohio Senate for consideration.

Debt forgiveness for veterinarians.  The House also passed HB 67 on June 10, 2020.  This bill would create the “veterinarian student debt assistance program,” which would determine which veterinarians would receive student debt assistance, and how much each person would receive.  The amount awarded must be between $5,000 and $10,000.  Essentially, if the new veterinarian agrees to live in Ohio for a certain amount of time, and to participate in “charitable veterinarian services” like spaying and neutering for a nonprofit organization, humane society, law enforcement agency, or state, local, or federal government, student debt could be forgiven.  The details, including how many hours a veterinarian would need to work for charity, the types of charities that qualify, the amount of time a person must live in Ohio, and others would be determined by State Veterinary Medical Licenses Board. 

Animal abuse. HB 33 passed the lower chamber on June 11, 2020.  This bill would require veterinarians, social service professionals (people who work at the county Job and Family Services, Children’s Services), counselors, social workers, and other similar professions to report violations against “companion animals” (dogs, cats, other animals kept in a residential dwelling), to law enforcement and/or the county humane agent or animal control officer.  People in these professions would have to report when they have “knowledge or reasonable cause to suspect” that violations to companion animals are happening, and they know or suspect that a child or older adult (60 years and older) lives in the residence, and they know or suspect that the violation is having an impact on the child or older adult.  Violations include animal abandonment, injury, poisoning, cruelty, fighting, dog fighting, or sexual conduct with an animal. 

Assistance for county fairs.  If you’ve heard about any Ohio legislation recently, it was likely this bill.  HB 665 was passed by the House after much debate on June 11, 2020.  The 61 page bill makes a lot of changes to the statutory language.  Importantly, the bill would make it a misdemeanor for patrons not to follow written warnings and directions on amusement rides.  The bill also makes a number of changes to how county agricultural societies operate.  First of all, members of a county agricultural society would have to be residents of the county.  Members would have to pay a fee to retain membership, and the societies would have to issue a printed membership certificate to members.  In counties with an ag society, the county treasurer must transfer $1600 to the society each year as long as the society holds its annual exhibition, reports to the Ohio Department of Agriculture (ODA), and the director of ODA presents the society with a certificate showing it has followed applicable laws and regulations.  The bill also addresses independent agricultural societies, to which similar rules apply. The county board of commissioners would also be required to appropriate at least $100 to the ag society’s junior club.  The bill would require ag societies to create a report of its proceedings during the year, file a financial report and send it to the ODA director, and publish an announcement in the county newspaper or the society’s website a statement about the filing of the financial report, and contact information for people who want to obtain a copy of the report.  The bill also outlines the circumstances under which an ag society can sell fairgrounds or parts of fairgrounds.  Finally, an amendment to the bill was adopted that would allow rescheduling of horse races. 

So what was so controversial about this bill?  A suggested amendment to the bill led to a heated argument in the House.  The amendment would have banned sales and displays of confederate flags and other memorabilia at county fairs.  This ban is already in place at the Ohio State Fair, but not county fairs.  Ultimately, the bill passed in the house, but this amendment did not.  The vote to table the amendment was largely along party lines, with every Republican except one voting against the amendment, and all Democrats voting for.

COVID-19 liability. The House passed HB 606 back in May, and we discussed it in a blog post here.  As a refresher, the bill is meant to protect businesses, schools, corporations, people, etc. from liability.  It would accomplish this with the declaration: “orders and recommendations from the Executive Branch, from counties and local municipalities, from boards of health and other agencies, and from any federal government agency, do not create any new legal duties for purposes of tort liability.” In other words, as long as the person, school, or business did not expose or transfer the virus recklessly, intentionally, or with willful and wanton conduct, someone could not bring a civil action for injury, death, or loss to person or property if they contract COVID from the entity.  Furthermore, the bill also provides temporary civil immunity for health care providers, grants immunity to the State for care of persons in its custody or if an officer or employee becomes infected with COVID-19 in the performance or nonperformance of governmental functions and public duties, and expands the definition of “governmental functions” for purposes of political subdivision immunity to include actions taken during the COVID-19 pandemic.

The Ohio Senate passed a similar bill, SB 308. Unlike the House bill, SB 308 provides immunity only in the health care context.  The bill would provide immunity from civil liability for doctors, nurses, and others working in the health care arena during “disasters” like the current pandemic.  It would also provide a qualified immunity from liability to services providers for “manufacturing” and any other service “that is part of or outside of a service provider's normal course of business conducted during the period of a disaster or emergency declared due to COVID-19 and ending on April 1, 2021.” 

What’s next?  The Ohio Senate is scheduled to meet next week on an “as needed” basis.  During these tentatively scheduled sessions, the senate could consider the bills that have cleared the House—HBs 496, 67, 33, and 665.  If passed by the Senate, the bills would then move on to Governor DeWine for approval.  We will keep you updated on what the Senate and Governor decide.  In the case of the COVID immunity bills, each bill moved to the opposite house, where they are currently being considered in committees.  We’ll have to wait and see if one or both are sent on to DeWine, or if the two houses choose to somehow combine the bills into one document. 

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