Recent Blog Posts

By: Peggy Kirk Hall, Tuesday, June 18th, 2019

The decision on whether to take prevented planting is a tough one, but don’t let concerns about increased property taxes on idle land enter into the equation.  Ohio’s Current Agricultural Use Valuation program allows landowners to retain the benefit of CAUV tax assessment on agricultural land even if the land lies idle or fallow for a period of time.

Ohio’s CAUV program provides differential property tax assessment to parcels of land “devoted exclusively to agricultural use” that are ten acres or more or, if less than ten acres, generated an average gross income for the previous three years of $2,500 or more from commercial agricultural production.  Timber lands adjacent to CAUV land, land enrolled in federal conservation programs, and land devoted to agritourism or bio-mass and similar types of energy production on a farm also qualify for CAUV.   

There must have been some farmers in the legislature when the CAUV law was enacted, because the legislature anticipated the possibility that qualifying CAUV lands would not always be actively engaged in agricultural production.   The law allows CAUV land to sit "idle or fallow" for up to one year and remain eligible for CAUV, but only if there's not an activity or use taking place on the land that's inconsistent with returning the land to agricultural production or that converts the land from agricultural production.  After one year of lying idle or fallow, a landowner may retain the CAUV status for up to three years by showing good cause to the board of revision for why the land is not actively engaged in agricultural production.   

The law would play out as follows.  When the auditor sends the next CAUV reenrollment form for a parcel that qualifies for CAUV but was not planted this year due to the weather, a landowner must certify that the land is still devoted to agricultural production and return the CAUV form to the auditor.  The auditor must allow the land to retain its CAUV status the first year of lying idle or fallow, as long as the land is not being used or converted to a non-agricultural use.  If the land continues to be idle or fallow for the following year or two years, the auditor could ask the landowner to show cause as to why the land is not being used for agricultural production.  The landowner would then have an opportunity to prove that the weather has prevented plans to plant field crops, as intended by the landowner.  After three years, the landowner would have to change the land to a different type of commercial agricultural production to retain its CAUV status if the weather still prevents the ability to plant field crops on the parcel.  Other agricultural uses could include commercial animal or poultry husbandry, aquaculture, algaculture, apiculture, the production for a commercial purpose of timber, tobacco, fruits, vegetables, nursery stock, ornamental trees, sod, or flowers, or the growth of timber for a noncommercial purpose, if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use.  

Being forced out of the fields due to rain is a frustrating reality for many Ohio farmers today.   One positive assurance we can offer in the face of prevented planting is that farmers won't lose agricultural property tax status on those fields this year.  Read Ohio’s CAUV law in the Ohio Revised Code at sections 5713.30 and 5713.31.

By: Peggy Kirk Hall, Wednesday, June 12th, 2019

Sparse dry weather conditions haven't dampened concerns about the extent of agricultural water quality problems we may see when summer weather finally arrives.   Despite the weather, harmful algal bloom (HAB) predictions for the summer are already out and are one important  measure of water quality impacts that are attributed to agriculture.   As HABs arise, so too do the questions about what is being done  to reduce HABs and other water quality impacts resulting from agricultural production activities.  We set out to answer these questions by examining key players in the water quality arena:  the states. 

In our new national report, State Legal Approaches to Reducing Water Quality Impacts from the Use of Agricultural Nutrients on Farmland, we share the results of research that examines how states are legally responding to the impact of agricultural nutrients on water quality.  After examining state laws, regulations and policies across the country, we can make several observations about state responses to the agricultural water quality issue.  First, more activity occurs in states that are near significant water resources such as the Chesapeake Bay, Great Lakes, Mississippi River and coastal regions.  States in those areas have more legal solutions in place to address nutrient impacts.  Next, nearly all states rely heavily on nutrient management planning as a tool for reducing agricultural nutrient impacts on water quality.  We also note that there is an absence of monitoring, bench marking, and data collection requirements in the laws that address agricultural nutrient management and water quality.  Finally, many states have piecemeal, reactionary approaches rather than an organized statewide strategy accompanied by a locally-driven governance structure.

As we conducted our research, two types of approaches quickly emerged:  mandatory and voluntary.  Mandatory approaches are  those that require specific actions or inactions by persons who use nutrients on agricultural lands, while voluntary approaches allow a user of agricultural nutrients to decide whether to engage in programs and practices that relate to water quality, with or without incentives for doing so.  Because we could identify mandatory approaches through statutory and administrative codes, we were able to compile the laws into a database.  Our compilation of Mandatory Legal Approaches to Agricultural Nutrient Management is available on the National Agricultural Law Center's website. 

We classified the state mandatory approaches into three categories:

1.  Nutrient management planning is the most common mandatory tool used by the states.  All but two states mandate nutrient management planning, but the laws vary in terms of who must have or prepare a nutrient management plan (NMP).  In the report, we provide examples of states that require NMPs for animal feeding operations, those that require NMPs only in targeted areas, those that require all operators to have an NMP, and those that require preparers of NMPs to be certified.

2.  Nutrient application restrictions are becoming increasingly common across the states, but also vary by type of restrictions.  In the report, we categorize four types of nutrient application restrictions and present the combination of restrictions in place in five states across the country:

---Weather condition restrictions

---Setback and buffer requirements

---Restrictions on method of application

---Targeted area restrictions

3.  Certification of nutrient applicators is an approach used by 18 states, but state laws differ in terms of who must obtain certification.  Some states require only animal feeding operations and commercial "for hire" applicators to be certified, while others extend certification to private landowners, users of chemigation equipment, or those in targeted sensitive areas.  We provide examples of each type of certification approach.

The number and types of voluntary approaches to reducing agricultural nutrient impacts on water quality is extensive and more than we could identify and gather into a state compilation.  In our report, however, we present examples of four types of voluntary approaches states are taking:

1.  Technical assistance in the form of technical expertise and informational tools.

2.  Economic incentives such as cost share programs, tax credits and water quality trading programs.

3.  Legal protections for those who engage in nutrient reduction efforts.

4.  Research and education programs that aim to increase understanding of the problem and expand the knowledge base of those who use and work with nutrients.

Please read our report, available here, to learn more about legal approaches states are taking in response to concerns about the impact of agricultural nutrients on water quality.  We produced the report with funding from the USDA National Agricultural Library in partnership with the National Agricultural Law Center.

Posted In: Environmental
Tags: agricultural nutrients, water quality
Comments: 0
By: Evin Bachelor, Monday, June 10th, 2019

The biennial budget remains the center of attention for members of the Ohio General Assembly, but some other bills have made progress since our last legislative update.  We will post a separate blog post about the biennial budget soon, but for now here is a review of other legislative activity at the statehouse. 

New legislation since our last legislative update

  • Senate Bill 159, titled “Grant tax credits to assist beginning farmers.”  This bill is essentially the same as House Bill 183, which seeks to provide tax incentives to beginning farmers along with those willing to help them build a farm operation.  Introducing the bill in the Senate while the House considers another bill allows the process to potentially go more quickly.  Instead of waiting on the House to complete all of its committee hearings and approve the bill, the Senate can start its own process.
  • House Bill 223, titled “Alter setback-wind farms of 5 or more megawatts.”  In 2014, the Ohio General Assembly modified the distance that wind turbines must be setback from an adjacent property line.  House Bill 223 would modify the setback law to base the setback on the distance from the nearest habitable residential structure on a neighboring property instead of the property line.  The setback requirement would affect future project certificates, as well as any amendments made to an existing certificate.  Click HERE for more information about the bill from the Ohio General Assembly’s website.

Legislation that we continue to follow

Here’s a status update on bills we covered HERE in March and HERE in April.  Access each bill’s webpage on the Ohio General Assembly website by clicking on the bill number in the following tables. 

 

Legislation passed by the Senate and currently under consideration in the House

Category

Bill No.

Bill Title

Status

Hemp

SB 57

Decriminalize hemp and license hemp cultivator

- Passed Senate

- Passed House Ag & Natural Resources committee

- Awaits vote of the full House of Representatives

Regulations

SB 1

Reduce number of regulatory restrictions

- Passed Senate

- Referred to House State & Local Government Committee

Business Law

SB 21

Allow corporation to become benefit corporation

- Passed Senate

- Referred to House Civil Justice Committee

 

Legislation going through the committee process, but not yet passed in either chamber

Category

Bill No.

Bill Title

Status

Watershed Planning

SB 2

Create state watershed planning structure

- Completed third hearing in Senate Ag & Natural Resources Committee

Tax

HB 183

Allow tax credits to assist beginning farmers

- Completed second hearing in House Ag & Rural Development Committee

Estate Planning

HB 209

Abolish estate by dower

- Completed third hearing in House Civil Justice Committee

Animals

HB 24

Revise humane society law

- Passed House Ag & Rural Development Committee

- Awaits vote of the full House of Representatives

Oil and Gas

HB 55

Require oil and gas royalty statements

- Completed first hearing in House Energy & Natural Resources Committee

Mineral Rights

HB 100

Revise requirements governing abandoned mineral rights

- Completed first hearing in House Energy & Natural Resources Committee

Energy

SB 119

Exempt Ohio from daylight savings time

- Completed first hearing in Senate General Government and Agency Review Committee

Local Gov’t

SB 114

Expand township authority-regulate noise in unincorporated areas

- Completed second hearing in Senate Local Government, Public Safety, & Veterans Affairs Committee

Property

HB 103

Change law relating to land installment contracts

- Completed second hearing in House Civil Justice Committee

Regulation of Alcohol

HB 160

Revise alcoholic ice cream law

- Completed third hearing in House State & Local Government Committee

Regulation of Alcohol

HB 179

Exempt small wineries from retail food establishment licensing

- Completed first hearing in House Health Committee

 

Legislation not on the move

These bills have not made much progress.  The biggest action taken on each so far has been referring the bill to a committee, but no committee has yet to hold a hearing on any of the bills.  Remember that we are in the middle of budget season, and only in the first six months of this legislative cycle, so the bills could still see activity later.

Category

Bill No.

Bill Title

Status

Animals

HB 124

Allow small livestock on residential property

- Referred to House Ag & Rural Development Committee

Animals

HB 33

Establish animal abuse reporting requirements

- Referred to House Criminal Justice Committee

Energy

HB 20

Prohibit homeowner associations placing limits on solar panels

- Referred to House State & Local Government Committee

Local Gov’t

HB 48

Create local government road improvement fund

- Referred to House Finance Committee

Local Gov’t

HB 54

Increase tax revenue allocated to the local government fund

- Referred to House Ways & Means Committee

Oil and Gas

HB 94

Ban taking oil or natural gas from bed of Lake Erie

- Referred to House Energy & Natural Resources Committee

Oil and Gas

HB 95

Revise oil and gas law about brine and well conversions

- Referred to House Energy & Natural Resources Committee

Regulation of Alcohol

HB 181

Promote use of Ohio agricultural goods in alcoholic beverages

- Referred to House Ag & Rural Development Committee

Tax

HB 109

Grant tax exemption for land used for commercial maple syruping

- Referred to House Ways & Means Committee

 

By: Ellen Essman, Thursday, June 06th, 2019

The controversy over the 2015 Waters of the United States (WOTUS) rule never really leaves the news. Case in point: last week, on May 28, 2019, the U.S. District Court for the Southern District of Texas decided to keep a preliminary injunction that prevents the enforcement of the 2015 version of the rule in Texas, Louisiana, and Mississippi, meaning that the 2015 rule does not currently apply in those states.  Meanwhile, at the end of March, the U.S. District Court for the Southern District of Ohio was not persuaded by Ohio and Tennessee to issue a preliminary injunction which would have halted the execution of the 2015 rule in those states.  All of this judicial activity is taking place while the Trump administration is working on a replacement for the Obama administration’s 2015 rule. 

WOTUS background

If you’re a regular follower of the Ag Law Blog, you know we’ve written numerous updates on the WOTUS saga.  For a refresher, the WOTUS rule defines which waters are considered “waters of the United States,” and are consequently protected under the Clean Water Act. In 2015, the Obama administration promulgated its final WOTUS rule, which many agricultural groups and states felt regulated too many waters.  Needless to say, many lawsuits over the rule ensued. The Trump administration, hoping to replace the Obama-era rule, released its new proposed rule on February 14, 2019.  The comment period for the proposed rule ended on April 15, 2019.  The new rule is forthcoming, but in the meantime, due to all of the litigation, whether or not the 2015 WOTUS rule is applicable varies by state.  For an explanation of the 2015 rule and the new proposed rule, see our previous blog post here

Judge continues to block 2015 WOTUS in Texas, Louisiana, and Mississippi…

At the end of May, Judge George C. Hanks Jr. of the U.S. District Court for the Southern District of Texas handed down a decision remanding the 2015 WOTUS rule to the EPA and Army Corps of Engineers and ordering that a previously issued preliminary injunction stay in place, meaning that the government should not implement the 2015 rule in Texas, Louisiana, and Mississippi.  While Judge Hanks declined to take up the questions raised by the plaintiffs about the constitutionality of the 2015 rule, he did determine that the agencies violated the Administrative Procedure Act (APA) at the rule’s conception.  The APA is a federal law that controls how federal agencies must go about making regulations.  Importantly, the APA dictates that agencies should give the American public notice of a proposed rule, as well as a chance to comment on a proposed rule.  In the case of Obama’s 2015 WOTUS rule, the definition of “adjacent waters” was changed from being based upon a “hydrologic connection” in the proposed rule to being based on how many feet separated the waters in the final rule. Interested parties did not have any chance to comment on the change before it was included in the final rule.  What is more, interested parties did not have the chance to comment on the final report that served as the “technical basis” for the rule.  For these reasons, Judge Hanks found that the final rule violated the APA.  As a result, he remanded the rule to the agencies to fix and left in place the preliminary injunction blocking the implementation of the rule in Texas, Louisiana, and Mississippi. 

…but 2015 WOTUS still applies in Ohio and Tennessee

A decision in the District Court for the Southern District of Ohio came to the opposite conclusion of the Texas case.  In March of this year, Judge Sargus denied the states’ motion for a preliminary injunction against carrying out the 2015 WOTUS rule.  Sargus did not agree that Ohio and Tennessee were being irreparably harmed by having to follow the 2015 rule, and therefore did not go through with what he called the “extraordinary measure” of providing the states preliminary injunctive relief.  Basically, Ohio and Tennessee were not persuasive enough in their argument, and “failed to draw the Court’s attention” to any specific harm the states faced from the 2015 rule.  Therefore, as of this writing, the 2015 WOTUS rule still applies in Ohio and Tennessee. 

What regulation applies in which states?

All of these lawsuits with different outcomes beg the question: what rule is applicable in which state?  EPA has a map depicting which states must currently follow the 2015 rule, and which states instead must follow the pre-2015 definition of WOTUS.  The map has not been updated since September of 2018.  Since the last update, Colorado, Michigan, New Mexico, and Wisconsin, whose governors’ mansions flipped from red to blue in November, have pulled out of lawsuits against the 2015 rule.  These withdrawals could affect which version of WOTUS applies in these states. 

Although the outcomes in the different lawsuits throughout the country presently affect which version of the WOTUS rule applies in which state, it is not clear how the rulings will ultimately affect the 2015 WOTUS rule.  The Trump administration is currently carrying out its plan to scrap the rule and replace it with new language, which may render all of the existing legal fights over the 2015 rule irrelevant. 

What’s next?

The new WOTUS rule, which is expected in its final form later this year, will probably not mark the end of the WOTUS debate.  While implementation of the new rule will likely make the aforementioned lawsuits moot, it doesn’t necessarily mean we’ll be out of the woods yet.  With all the contention over this topic, it is likely lawsuits will be filed challenging the new rule, as well.  Disagreement over what makes up WOTUS might be around for as long as rivers flow. 

By: Ellen Essman, Monday, June 03rd, 2019

Are you perplexed by what “Sell By,” “Use By,” “Best If Used By,” and similar terms mean on your packaged foods?  If the date has passed, should throw the food out, or take your chances with it?  You are not alone in wondering about the meaning of dates and other terms printed on our food packages.  Under most circumstances, food manufacturers are not required to include date labels and terms on packaged foods, so when they do include such labels, there are no official guidelines to follow.   As a result, we have the current voluntary patchwork of various confusing terms.  On May 23, 2019, the U.S. Food & Drug Administration (FDA) took a step toward alleviating the uncertainty surrounding date labels.  FDA released a letter addressed to the “Food Industry” at large.  In the letter, FDA said that it “strongly supports” the use of the term “Best If Used By” when the “date is simply related to optimal quality—not safety.”

Food waste

In its letter, FDA cites confusion over terms on date labels as a contributor to food waste in the United States.  People don’t know what the dates mean, or they think the date means the food is expired or not safe to eat, and so they throw the food out.  The range of different phrases on date labels only adds to the confusion.  FDA says around 20% of food waste by consumers can be attributed to unclear date labels. 

Food safety

As was mentioned above, the food industry is largely on their own in terms of choosing what kind of date language to include on their packaged food labels. (One exception is infant formula, which FDA requires to have a date label reading “Use By.”) Consequently, many of the date labels on packaged foods are not indicative of when a food is safe to eat.  Instead, FDA says that “quality dates indicate the food manufacturer’s estimate of how long a product will retain its best quality. If stored properly, a food product should be safe, wholesome, and of good quality after the quality date.” Therefore, FDA supports using “Best if Used By” as the standard to communicate to consumers when a packaged food product “will be at its best flavor and quality,” which does not necessarily mean that the food is unsafe to eat after that date. 

Not a binding law or regulation

FDA’s recommendation for the food industry to use “Best if Used By” on packaged food when including a date label is just that: a recommendation.  Food companies are not required to use the terminology on their packaged foods; with the exception of infant formula, no date label is required by federal law or regulation.  However, FDA “strongly supports industry’s voluntary…efforts” to use “Best if Used By” to communicate food quality to consumers.  Therefore, the letter to the Food Industry is not a mandate by FDA, but an endorsement and strong suggestion that the industry use “Best if Used By” to indicate food quality. 

Will “Use By” be the next recommended standard?

In its letter, FDA touches on another recommendation by grocery and food associations, but declines to endorse it.  Grocery and food groups advocate for the use of the term “Use By” on date labels on perishable foods that may be unsafe to eat after the printed date.  While FDA is not currently recommending the use of “Use By,” it is important to note that industry groups support using the term in this way.  Perhaps after further safety studies, “Use By” will be the next recommendation on the horizon for FDA. 

What does FDA hope to accomplish with this recommendation?

While FDA is not requiring the food industry to use the “Best if Used By” date label, the purpose of its recommendation is to encourage the majority of the industry to adopt the language as a standard.  The hope is, that as “Best if Used By” is more widely used and the public becomes more educated on its meaning, the amount of confusion, and accordingly, the amount of food waste, will greatly decrease.  To learn more about FDA’s decision to endorse “Best if Used By,” see their article here. For more information about food product dating, see USDA’s page here

Posted In: Food
Tags: food, FDA, Food Labeling
Comments: 0
By: Evin Bachelor, Thursday, May 30th, 2019

Here’s our latest gathering of agricultural law news that you may want to know:

Congress considers bankruptcy code changes with Family Farmer Relief Act of 2019.  Senator Grassley and Representative Delgado introduced companion bills in their respective chambers of Congress that would modify the definition of “family farmer” in the federal bankruptcy code.  The change would raise the operating debt limit for a family farmer from $3.2 million as listed in the U.S. Code to $10 million.  Sometimes a small change can make a big difference.  In chapter 12 of the bankruptcy code, a “family farmer” has special options that other chapters do not offer, such as the power to determine a long-term payment schedule and pay the present market value of the asset instead of the amount due on the loan.  Many farmers had not been able to take advantage of the special bankruptcy provisions because of the low debt limit, but that may change.  For more information on the bills, click HERE for S.897 and HERE for H.R. 2336.

Congress also considers changing the number of daily hours a driver may transport livestock.  The Transporting Livestock Across America Safely Act would instruct the Secretary of Transportation to amend the rules governing drivers who transport certain animals.  The changes would loosen restrictions on the number of hours that drivers may drive, and increase the types of activities that are exempt from counting toward the maximum time.  Travel under 300 miles would be exempt from the hours of service (HOS) and electronic logging (ELD) requirements.  Both chambers of Congress are considering this bill, and both companion bills are currently in committee.  For more information on the bills and to learn about the changes proposed, click HERE for S.1255 and HERE for H.R. 487.

It’s not too late to submit comments to the FDA about its potential cannabidiol rulemaking.  Electronic or written comments can be sent to the FDA until July 2nd, although the deadline to request to make an oral presentation or comment at tomorrow’s hearing has passed.  Click HERE for more information from the Federal Register about the May 31st hearing and submitting comments.

Meatpackers face second class-action lawsuit, and R-CALF refiles.  In our last edition of The Harvest, we talked about a new class-action lawsuit filed in Illinois federal court by a number of cattle ranchers, including R-CALF, against the nation’s largest meatpacking companies.  Now, another lawsuit has been filed in Minnesota federal court also alleging a price fixing conspiracy by the meatpackers.  The second lawsuit is being brought by a cattle futures trader, rather than a rancher.  After the second suit was filed, R-CALF voluntarily dismissed its case in Illinois to refile it in Minnesota.  This refiling allows the lawsuits to be heard by the same court.

Tyson sues the USDA’s Food Safety and Inspection Service.  Tyson, which is named as a defendant in the class action suits we just mentioned, is a plaintiff in a case against the USDA’s Food Safety and Inspection Service.  The company alleges that a FSIS inspector falsified an inspection of 4,622 hogs, which were intermingled with another 8,000 carcasses, at one of its Iowa facilities in 2018.  The company claims that the false inspection required it to destroy all of the carcasses, and cost nearly $2.5 million in total losses and expenses.  The complaint, which is available HERE, alleges four counts: negligence, negligent inspection, negligent retention, and negligent supervision.  The lawsuit is based on the legal principle that an employer is liable for the actions of its employee.


Ohio Case Law Update

Plaintiff must prove that a defendant wedding barn operator’s breach of a duty caused her harm.  Conrad Botzum Farmstead is a privately operated wedding and event barn located in the Cuyahoga Valley National Recreation Area and on lease from the National Park Service.  The plaintiff in the case was attending a wedding at the barn, where she broke her ankle while dancing on a wooden deck.  The jury trial found that the barn operator was 51% at fault for her injuries, and awarded the plaintiff compensation.  However, the barn operator appealed the decision and won.  The Ohio Ninth District Court of Appeals found that the plaintiff did not introduce sufficient evidence to prove that any act or breach of duty by the barn operator actually or proximately caused the plaintiff to fall and break her ankle.  The case raises standard questions of negligence, but it is worth noting in the Ag Law Blog because the court did not base its decision on Ohio’s agritourism immunity statute.  The case is cited as Tyrrell v. Conrad Botzum Farmstead, 2019-Ohio-1874 (9th Dist.), and the decision is available HERE.

Ohio History Connection can use eminent domain to cancel Moundbuilders Country Club’s lease.  A Licking County judge ruled in early May that the Ohio History Connection, formerly the Ohio Historical Society, can reclaim full ownership of land that it had leased to a country club.  The Moundbuilders County Club has operated a golf course around prehistoric Native American earthworks for decades under a long-term lease with the state.  The Ohio History Connection sought to have the lease terminated in order to give the public full access to the earthworks as part of a World Heritage List nomination.  The judge viewed the request as sufficiently in the public interest to apply Ohio’s eminent domain laws.

By: Evin Bachelor, Wednesday, May 29th, 2019

With all the rain and delayed planting that Ohio farmers have experienced this spring, signing a solar lease has been a very appealing prospect for many farmland owners.  While this may be the right decision for a farm, it is very important that the farmland owner understand exactly what he or she is signing.  Once an energy developer offers to pay you to enter into an agreement, and you sign that agreement, its terms will be legally binding.

In our recent blog post on solar leasing, we discussed some of the early documents that a farmland owner is likely to receive from an interested solar energy developer.  Further, we gave some general advice on what farmland owners should do if an energy developer wants to discuss leasing his or her land.  One of our main suggestions was to take the time to fully understand what the farmland owner is getting into, and that is where this post comes in.

In this blog post, we highlight some of the important provisions of a solar lease that you as a farmland owner should look for in your solar lease, and understand what they mean.  A good solar lease will be very thorough, and include a lot of legalese.  Our upcoming Ohio Farmland Owner’s Guide to Solar Leasing, due out in the next month, will go more in depth than this blog post on the terms below and more.  It would also be a wise decision to consult with an attorney to ensure that your understanding of your solar lease reflects what the documents say.

For now, here are a few provisions to be on the lookout for in your solar lease:

The term.  How long does this lease last?  Most solar leases last for 20 to 30 years.  This is the time during which solar energy is being collected and sold.  Solar energy developers like this multi-decade duration because it allows them to use of the solar panels for their expected productive lifespan.

Thirty years is a long time.  Many careers are retirement-eligible after that period, and many farms will transition to the next generation in that amount of time.  This long of a term is not necessarily a bad thing.  It just means that a farmland owner should look back and look ahead.  Think back 30 years to 1989.  What all has changed on your farm?  What would it have looked like to not be able to use this ground for the past 30 years?  Now look ahead.  What do you expect your needs and those of your family to look like when this lease ends in 2049?  Only you can determine if not being able to use your land for that long is a good thing.

Phases.  How is this lease broken up?  We just explained that most solar leases will last for 20 to 30 years, but that clock usually starts ticking once construction has started on the project.  Solar energy developers will often reserve a year or two during which they can conduct their final feasibility studies and obtain necessary permits.  Some leases structure this pre-construction phase as merely an option phase, meaning that the energy developer will pay a small amount of rent to keep its option alive for that one or two-year period, but it does not necessarily have to commence construction.

Further, toward the end of the term, the energy developer may have written in an option to renew for another 5 or 10 years.  These renewals are often structured as a right that the energy developer may exercise merely by giving notice to the landowner.  Additionally, in the middle, if there is a natural disaster that puts the operation out of service for any period of time, a solar lease may stop the clock from ticking until the project is operational again and solar energy is being collected.

The important take-away for the phases is being able to know when each phase begins and ends.  When all of the different phases are combined, instead of just a 30-year lease, you could be looking at a 42-year agreement.  The only way to know how long it could last is to thoroughly read the entire lease.

A description of the premises.  Every solar lease will contain a description of the premises.  If an entire parcel is being leased, then this part is fairly easy.  However, if only a portion of the parcel is being lease, the farmland owner will want to make sure that the lease provides an adequate description so that the leased portion can be easily determined on the ground.  Often, this will include a survey and maps.  Knowing the boundaries is important because these leases are often exclusive, such that the farmland owner has little or no use or access of the leased land throughout the term.

Easements.  What rights are being granted to the solar energy developer?  Solar leases include a series of easements that give the solar energy developer the right to use your land.  Some of the common easements include a:

  • Construction easement: a right to cross over portions of the farmland owner’s property in order to construct the solar facility
  • Access easement: a right to cross over portions of the farmland owner’s property to reach the solar facility
  • Transmission easement: a right to install power lines, poles, and other equipment to transmit the energy produced by the solar panels to the grid
  • Solar easement: a right to unobstructed access to the sun without interference from structures or other improvements
  • Catch-all easement: a general right to do whatever is necessary for the benefit of the project

Solar energy developers want their easements to be as broad and generous as possible in order to maximize their flexibility with the project.  This is not always to the advantage of the farmland owner.  If the lease is general enough to allow the solar energy developer to sub-lease to another entity such as a telecommunications company, the landowner will have a difficult time preventing the solar energy developer from doing so.  The farmland owner wants to make sure that the easements being granted are specific enough to not result in any surprises.

Landowner obligations and rights.  What does the lease require of you as the farmland owner?  Usually private solar energy developers include a non-interference provision, a quiet enjoyment provision, and an exclusivity provision.  All combined, these provisions are a promise by the farmland owner to not enter the solar facilities without prior permission, not interfere with the solar facilities, and not allow anyone else to do so for the duration of the term.

Further, solar leases often include a confidentiality provision that courts will enforce as legally binding.  These provisions allow the solar energy developer to control the flow of its proprietary information, and also prevent landowners from talking with one another about topics such as rent rates.  It is important to understand:

  • What information is protected
  • If there are any exceptions
  • When consent might be granted
  • If specific penalties apply
  • How long confidentiality lasts

The solar lease may also include a provision about farmland owner improvements.  These explain if and when the landowner needs to obtain prior approval of the solar energy developer in order to build a structure or plant something that may interfere with the solar project.

Property maintenance.  Who is going to mow?  Ohio landowners have a legal duty to cut noxious weeds, and a well drafted lease will cover which party to the lease bears responsibility for keeping the leased land clear.  Usually, the solar energy developer will take this responsibility, but it helps to have this in writing.

Cleanup terms.  Cleanup involves a lot of questions.  Does the solar lease require the solar energy developer to restore the land to its previous state?  If so, how is this measured?  Will all stakes and foundations be removed?  Will all improvements, like roadways, be removed?  How will the solar energy developer guarantee that it will be able to pay for this cleanup in 30 years?  Does it post a security, and if so, when?  A thorough lease will answer these questions.

Tax and conservation penalties.  Tax and conservation also involves a lot of questions because constructing and operating a solar facility will make the property ineligible for the full benefits of CAUV and most conservation programs.  Does the lease require the solar energy developer to cover real estate taxes?  Does the lease require the solar energy developer to cover the three-year lookback penalty for removing land from CAUV?  What will the solar energy developer do toward the end of the lease so that the land can be put back into production and made CAUV eligible again?  Similar questions must be asked for conservation programs.

Compensation.  It’s not that we saved the fun and best part for last.  We just wanted to make sure that compensation is not the first and only thing considered when deciding whether or not to enter into a solar lease.  While it certainly is important, some of the issues discussed above must be just as carefully understood.

The solar leases that we have seen involve cash rent that increases over time based upon a fixed escalator.  The escalator is a percent increase.  If the escalator increases at a rate greater than inflation, then the farmland owner will receive more bang for his or her land.  However, if the escalator increases at a rate lower than long-term inflation, then the solar energy developer will have to pay less over time.

Another point of compensation to consider is how damages will be calculated for harm to property and crops.  When the solar energy developer decides it is time to start construction, its option and easements grant it the right to begin construction even if there is a crop already in the ground.  This makes it in a farmland owner’s best interest to have this issue addressed up front.  These damages will often be calculated my multiplying the number of acres by the average county yield for that crop by that crop’s commodity future price with the Chicago Board of Trade for a given date.  This provides an objective calculation for damages.

Verbal promises.  A note of caution: if the solar energy developer makes you a verbal promise, ask for that promise to be included in the written lease.  If there is a conflict between what a representative of the solar energy developer tells you and what is written in the lease, the terms in the written lease are likely to prevail.

The activity we are seeing across Ohio right now with solar reminds us of the early stages of the recent wind and shale energy booms.  Some of the biggest regrets that we hear about are from landowners who thought they were getting a better deal than they actually did.  Reading through, understanding, and thinking about the lease is an essential part of calculating whether or not the lease being offered is actually a good deal for a farmland owner and his or her family.  Don’t be afraid to reach out to your team of professionals in this process.  Your attorney, tax professional, extension educator, and others can be a great resource.

By: Evin Bachelor, Friday, May 24th, 2019

When you don’t want to move, you don’t want to move.  That’s the message being sent to Secretary Perdue and the leadership of the USDA by employees of the USDA Economic Research Service (ERS), who recently voted to unionize 138 to 4.

ERS produces research on agriculture and rural economies that is used by policymakers in determining where to prioritize federal money, personnel, and attention.  Many universities and agricultural organizations also utilize the data in their own research.  Economists and statisticians make up a large portion of ERS’s staff.

The vote comes after months of tension over the fate of ERS.  USDA leaders have been seriously discussing moving the headquarters of ERS closer to the farms and rural areas that it is charged with researching, and away from D.C.  Recently the USDA announced that locations in Indiana near Purdue University, in Kansas City, and in North Carolina’s Research Triangle Region have been selected as potential relocation sites.  However, many ERS staffers have been vocal about not wanting to move away from D.C., either for personal reasons or to protect the prestige of the office within the USDA.

Further, Secretary Perdue had announced plans last year to place the service directly under the USDA’s chief economist, which would put ERS more directly under the watch of administrators appointed by President Trump.  Some staffers have expressed concerns that such a move could increase the pressure to analyze data in a particular way, and reduce the service’s independence.

According to news interviews, as conversations among the higher level administrators became more serious, many ERS employees felt that they did not have much say in the matter.  This sense of helplessness triggered many employees to want to unionize, while some employees have already left in pursuit of other jobs.

The right of most federal employees to unionize is protected under federal law, but the preliminary vote was not the final stop in the process.  The vote to unionize had to be reviewed by the National Labor Relations Authority, which governs public-sector labor relations.  The American Federation of Government Employees (AFGE) has already begun to represent the roughly 200 workers at ERS.  AFGE represents approximately 700,000 employees of the federal government and of the District of Columbia, with just under half of those members paying dues.  AFGE is affiliated with the AFL-CIO, which is the nation’s largest federation of labor unions.

The formation of a union does not mean that ERS employees will be able to prevent the changes being proposed at the administrative level.  However, it increases the likelihood that ERS employees have a seat at the decision table as a united group.  This desire to have a united front and collectively bargain is one of the traditional purposes of forming a union.

By: Peggy Kirk Hall, Thursday, May 23rd, 2019

We haven’t seen much sun in Ohio lately, but that hasn’t stopped the growth of solar energy development.  In the past two years, the Ohio Power Siting Board has approved six large scale solar projects with generating capacities of 50MW or more, and three more projects are pending approval.   These “solar farms” require a large land base, and in Ohio that land base is predominantly farmland.   The nine solar energy facilities noted on this map will cover about 16,500 acres in Brown, Clermont, Hardin, Highland and Vinton counties.  About 12,300 of those acres were previously used for agriculture. 

We’re hearing that solar energy developers are on the lookout for more land in these and several other counties across the state.  As the markets fluctuate and weather continues to prevent planting, leasing farmland to a solar energy developer might look pretty appealing.  But we always urge caution and due diligence for any leasing situation, and solar energy is no exception. 

What should you do if an energy developer wants to discuss leasing your farmland for a large scale solar energy facility?  Our best advice is not to jump too quickly.  Instead, take the time to fully understand what you’re getting into.  A typical solar lease can last for 30 years and thus can have long term legal, financial and social implications for a farmland owner.  An important initial question is how does this type of land use fit into your future vision for your land, your farm operation, and your family?  If you don’t yet know much about large scale solar development and what it means for your land, give a listen to this webinar from our partner, the National Agricultural Law Center.

In this post, we’ll focus on the beginning of the solar leasing legal process.   The large scale solar projects in Ohio range from 600 to 3,300 acres of land, so a developer first has to assemble the land base once it identifies an area for a solar development project.   Leasing the land is the typical mechanism used for the solar projects in Ohio.  If a developer is interested in leasing your land, the first documents you may receive from the developer are a letter of intent and/or an option to lease.  These documents are the precursors to a solar lease but, like a lease, are written in favor of the developer and establish legal rights for the developer.  Careful review is critical, as these documents can tie up the land and the landowner for several years or more.

The letter of intent Some developers use a written letter of intent to notify a landowner of the developer’s interest in a parcel of land.  The purpose of the letter is to begin the process of considering the land for a long term solar lease.   Note, however, that a letter of intent might also contain a confidentiality clause that would prevent the landowner from talking with other developers about the land or sharing details of the developer’s interest with anyone.   Be aware that courts will generally enforce a signed letter of intent as a legally binding contract if the developer has offered the landowner a payment or similar benefit for signing the letter.   By signing confidentiality provisions in a letter of intent, a landowner can be foreclosed from considering other solar leasing opportunities.

The option to leaseMore commonly, the first document a solar developer will ask a landowner to sign is an option to lease.  Don’t be fooled by the name of this document and think that it’s not a legally binding agreement.  While an option is not the same as a lease, it can have the same legal effect of tying up the land for a certain period of time and might also dictate many of the terms of the lease if the developer decides to move forward on the project.

An option to lease grants the solar developer rights to explore the possibility of using the land for a solar project, but the developer may choose not to lease the land or develop the project.  The option period, typically up to five years, gives the developer time to conduct due diligence on the property, assemble other land parcels, secure financing, and obtain government approval for the project.  At the end of the option period, the developer should decide whether or not to proceed with the project.  An option also can give the developer the right to terminate and back out of the option at any time prior to the end of the option period. 

On the other hand, a landowner doesn’t have an option to back out once he or she signs an option to lease.  The landowner is bound for the entire option period.   Like a letter of intent, an option can contain confidentiality and “exclusive dealing” provisions that prevent the landowner from sharing details or entering into leasing opportunities with other developers during the option period.  The option might also require the landowner to cooperate with the developer’s due diligence and help the developer obtain approvals and permits.  Many options also include language that allows the developer to assign the option to another solar developer.

Be aware that an option can also contain significant leasing terms that carry over if the developer proceeds with the project.  For example, in addition to allowing the developer to consider the land for a project, the option to lease could also include provisions for the period of the actual long term solar lease, the lease payment amount, easement rights, and landowner obligations.  Landowners might think that such terms could be negotiable later if the parties sign an “official” solar lease, but the option language may bind the landowner to the leasing terms that are presented in the option.  Sometimes, the option itself becomes the lease.  The net effect:  a landowner who thinks he or she is just signing a five year option agreement might also be committing to a 30 year solar lease and a predetermined lease payment.

What about crop production during the option period?  An option might contain language stating that the landowner may continue managing and operating the property in the same way after agreeing to the option.  But the option might also allow the developer to enter the property and proceed with the project at any time, including when crops are in the ground, although the option might not provide the landowner payment for the lost production.  In that case, the landowner simply loses out on the crop if the option doesn’t contain provisions for lost production.

As for payment for the option, a landowner usually receives an initial payment for signing the option, perhaps several thousand dollars or more.  During the option period, the landowner also typically receives an annual payment that is based on number of acres, perhaps $20 dollars per acre or more. 

Should you have an attorney review an option to lease?  Yes.  Option language can vary and we surely haven’t addressed all potential issues in this post.   A close examination by an attorney shouldn’t take much time or cost a lot and will ensure that you fully understand the legal implications of entering into the option to lease. 

Are the terms of an option negotiable?  That’s up to the landowner and the developer, but don’t assume that the developer won’t negotiate.  If you’re faced with an option to lease and don’t like the terms, try negotiating.  An attorney can be helpful here, also.

In our next solar leasing post, we’ll review the terms of a solar lease and consider how the lease can impact agricultural landowners over the typical 30 year lease period.  Watch also for our upcoming Ohio Farmland Owner’s Guide to Solar Leasing, due out in the next month, which will provide a detailed examination of the solar leasing process.

By: Evin Bachelor, Tuesday, May 21st, 2019

A jury recently returned a verdict awarding a California couple $2.055 billion (yes, billion) in damages after the couple alleged that the glyphosate in Roundup caused their cancer.  This is the third California jury to be convinced that the Monsanto herbicide, which was acquired by Bayer last year, caused or substantially contributed to a cancer diagnosis of non-Hodgkin lymphoma.  A lot has happened since we last reported on these lawsuits HERE and HERE, so it is time to look at the glyphosate lawsuits, jury verdicts, and the larger debate.

Thousands of glyphosate lawsuits have been filed against Monsanto/Bayer.  Over 13,000 cases have been filed alleging almost the same thing: that a plaintiff’s cancer was caused by the glyphosate in Roundup.  About two years ago there were only a few hundred such cases.  News stories about large jury verdicts have caught people’s attention, as have commercials that some law firms have aired to find clients for this type of litigation.  The vast majority of these cases have been brought in state courts, which have a reputation for being somewhat quicker than federal courts, but there are still over a thousand in federal courts across the country.  So far, only three of these cases have reached a jury, and all have been in California.

First California jury awarded a plaintiff $289 million.  Dewayne Johnson was a school groundskeeper who routinely used Roundup as part of his job.  He was diagnosed with non-Hodgkin’s lymphoma in 2014, and believed that his diagnosis was a result of at least two prior incidents where he was soaked with Roundup.  His lawsuit against Monsanto in California state court was chosen to be the first case to be tried before a jury because his doctors did not expect him to live for much longer.

The San Francisco jury sided with Mr. Johnson and awarded him $39 million in compensatory damages, and $250 million in punitive damages.  Compensatory damages are meant to directly compensate for harm, and can include medical expenses, lost wages, and emotional distress.  Punitive damages, on the other hand, are meant to punish the party in the wrong and deter a similar course of conduct in the future.  The judge in the case ultimately reduced the punitive damages to match the compensatory damages, leaving Mr. Johnson with a potential $78 million recovery.  However, the decision is on appeal.

Second California jury awarded a plaintiff $80 million.  Edwin Hardeman sprayed Roundup on his property for about three decades.  In 2014, he was diagnosed with non-Hodgkin’s lymphoma, and decided to file a lawsuit two years later after learning about research connecting his form of cancer to Roundup use.  His lawsuit was the first to be heard in federal court.  This San Francisco jury awarded Mr. Hardeman $5.8 million in compensatory damages, and $75 million in punitive damages.  However, the decision is also on appeal.

Third California jury awarded the plaintiffs $2.055 billion.  The first two cases certainly sent shock waves through the news, but the size of this third jury award sent more than just shock.  The plaintiffs, Alva and Alberta Pilliod, are a California couple who were diagnosed with non-Hodgkin’s lymphoma within four years of each other.  The jury awarded the couple $55 million in compensatory damages, along with $1 billion in punitive damages each.  Bayer has promised to appeal this decision as well.

Will the parties ultimately get these punitive damages?  It is hard to answer this question just yet, but it is likely that the punitive damages awards will be reduced.  Courts are often weary about awarding punitive damages absent bad intentions by the party being punished, and few verdicts result in a punitive damages award.  When they are awarded, there are constitutional limitations on how large the award can be.  The U.S. Supreme Court has said that a punitive damages award that exceeds a compensatory damages award by more than a single digit multiplier likely violates a party’s due process rights and is not likely to be upheld.  This means that if a punitive damages award exceeds nine or ten times the compensatory damages, courts are to look at that jury’s decision with a high level of suspicion.  However, such an award could ultimately be awarded if the evidence of bad intent merits such an award, and if such award is necessary to deter future bad acts.

Bayer’s first hope on appeal is to have the jury decisions invalidated altogether by arguing that the juries were incorrect in linking these plaintiff’s cancer to their prior use of Roundup.  In order to succeed, it must prove that the decisions of the three juries were against the “manifest weight of the evidence,” meaning that they relied too much on one pile of evidence leaning one way while ignoring a mountain of evidence going the other way.  If it can succeed on this, then it would not have to pay damages to the plaintiffs.  However, this can be a high burden for an appellant to satisfy because of our legal system’s deference to juries.  If Bayer cannot succeed on avoiding fault, it would still argue that the jury awards are excessive.

In the first case, the initial jury award had a single digit multiplier of roughly six; however, the judge viewed even that multiplier as excessive and reduced the punitive damages award to match the compensatory damages award.  In the second case, the initial jury award had a multiplier of over twelve, which could give Bayer a strong argument on appeal if it is ultimately determined that it must pay the plaintiffs.  However, Bayer is also challenging the basis of the jury’s decision on appeal.

The third case is simply on a different level.  The $2 billion in punitive damages is 36 times the compensatory damages awarded to the couple.  The trial judge may respond like the first trial judge and reduce the compensatory damages award; however, that is not a guarantee.  What is likely a guarantee is that Bayer will appeal.

Does glyphosate cause non-Hodgkins lymphoma?  This question will continue to be a debate for years, and we as attorneys are not in the best spot to make any sorts of determinations based on the scientific research.  The U.S. Environmental Protection Agency and a number of scientific studies say no; however, the World Health Organization said in 2015 that glyphosate was “probably carcinogenic to humans.”  It was that announcement, and some research that followed, which triggered the wave of lawsuits we see today.  Bayer is using the first set of research to defend its product, while the plaintiffs are using the second set of research to attack Roundup.  The attorneys in the first three cases tried to undercut Bayer’s use of EPA and university research by arguing Monsanto had influenced the first set of research in a manner favorable to it.

For better or worse, what matters in a jury trial is less what the science says, and more what the jury believes the science says.  So far, three California juries have been convinced that there is enough science to say that glyphosate caused or contributed to the cancer of four plaintiffs.  The first non-California cases are beginning to be scheduled for later this year, including in Monsanto’s former home in St. Louis.  As of now, it remains to be seen whether the first three cases will be the outliers or the norms for the glyphosate litigation nationwide.

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