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Written by:  Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program

The Parties

The Board of Trustees of the Des Moines Water Works (DMWW) brought a lawsuit against thirteen Iowa drainage districts.  DMWW is the biggest water provider in Iowa, serving the largest city, Des Moines, and the surrounding area. Drainage districts were first created in Iowa in the 1800s to drain wetlands and allow for agriculture in those areas.  In Iowa, the counties are in charge of drainage districts.  Individual landowners can tile their land so that it drains water to the ditches, pipes, etc. that make up the counties’ drainage districts.  Eventually, that water ends up in Iowa’s rivers.  The thirteen drainage districts being sued by DMWW are located in the Raccoon River watershed in Buena Vista, Sac, and Calhoun counties.  DMWW is located downstream from the drainage districts in question.

Background of the Lawsuit

On March 16, 2015, the Board of Trustees for the DMWW filed a complaint against the thirteen drainage districts in the U.S. District Court for the Northern District of Iowa, Western Division.  DMWW alleged that the drainage districts did not act in accordance with the federal Clean Water Act (CWA) and provisions of the Iowa Code because they did not secure the applicable permits to discharge nitrates into the Raccoon River.  In order to serve its customers, DMWW uses the Raccoon River as part of its water supply. 

 DMWW has to meet maximum contaminant levels prescribed under the federal Safe Drinking Water Act.  Nitrate is a contaminant with a maximum allowable level of 10 mg/L.  In its complaint, DMWW cited record levels of nitrate in water from the Raccoon River watershed in recent years.  DMWW alleged that the nitrate problem is exacerbated by the “artificial subsurface drainage system infrastructure…created, managed, maintained, owned and operated by” the thirteen drainage districts.  DMWW alleged that the drainage district infrastructure—“pipes, ditches, and other conduits”—are point sources.  DMWW points to agriculture—row crops, livestock production, and spreading of manure, as a major source of nitrate pollution. 

 DMWW also cited a number of costs associated with dealing with nitrates, including the construction of facilities that remove nitrates, the operation of those facilities, and the cost associated with acquiring permits to discharge the removed waste.  In their complaint, they generally asked the court to make the drainage districts reimburse them for their cleanup costs, and to make the drainage districts stop discharging pollutants without permits.

 All together, DMWW filed ten counts against the drainage districts.  In addition to their claim that the drainage districts had violated the CWA and similarly, Iowa’s Chapter 455B, DMWW also alleged that the continued nitrate pollution violated a number of other state and federal laws.  DMWW maintained that the pollution was a public, statutory, and private nuisance, trespassing, negligence, a taking without just compensation, and a violation of due process and equal protection under the U.S. and Iowa Constitutions.  Finally, DMWW sought injunctive relief from the court to enjoin the drainage districts to lessen the amount of nitrates in the water.  In many of the counts, DMWW asked the court for damages to reimburse them for their costs of dealing with the pollution. 

On May 22, 2015, the defendants, the thirteen drainage districts, filed their amended answer with the court.   On January 11, 2016, the district court filed an order certifying questions to the Iowa Supreme Court.  In other words, the district court judge submitted four questions of state law to the Iowa Supreme Court to be answered before commencing the federal trial.  The idea behind this move was that the highest court in Iowa would be better equipped to answer questions of state law than the district court. 

Iowa Supreme Court Decision

 The Iowa Supreme Court filed its opinion containing the answers to the four state law questions on January 27, 2017.  All of the questions were decided in favor of the drainage districts.  The court answered two questions related to whether the drainage districts had unqualified immunity (complete protection) from the money damages and equitable remedies (actions ordered by the court to be taken or avoided in order to make amends for the harm caused) requested by DMWW.  Both were answered in the affirmative—the court said that Iowa legislation and court decisions have, throughout history, given drainage districts immunity.  Iowa law has long found the service drainage districts provide—draining swampy land so that it could be farmed—to be of great value to the citizens of the state.  To that end, the law has been “liberally construed” to promote the actions of drainage districts.  What is more, judicial precedent in the state has repeatedly found that drainage districts are not entities that can be sued for money damages because they are not corporations, and they have such a limited purpose—to drain land and provide upkeep for that drainage.  The law has further prohibited receiving injunctive relief  (obtaining a court order to require an action to be taken or stopped), from drainage districts.  Instead, the only remedy available to those “claim[ing] that a drainage district is violating a duty imposed by an Iowa statute” is mandamus.  Mandamus allows the court to compel a party to carry out actions that are required by the law.  In this case, those requirements would be draining land and the upkeep of the drainage system. 

 The second two questions considered by the court dealt with the Iowa Constitution.  The court determined whether or not DMWW could claim the constitutional protections of due process, equal protection, and takings.  They also answered whether DMWW’s property interest in the water could even be “the subject of a claim under...[the] takings clause.”  The court answered “no” to both questions, and therefore against DMWW.  Their reasoning was that both DMWW and the drainage districts are subdivisions of state government, and based on numerous decisions in Iowa courts, “one subdivision of state government cannot sue another…under these clauses.”  Additionally, the court found that “political subdivisions, as creatures of statute, cannot sue to challenge the constitutionality of state statutes.”  Consequently, they reasoned that the pollution of the water and the resulting need to remove that pollution did “not amount to a constitutional violation” under Iowa law.  The court also found that since the water in question was not private property, the takings claim was not valid.  A takings claim only applies to when the government takes private property.  What is more, the court added that regardless of its status as a public or private body, DMWW was not actually deprived of any property—they still had the ability to use the water.  Therefore, the Iowa Supreme Court answered all four state law questions in the drainage districts’ favor, and against DMWW. 

What’s next?

The Iowa Supreme Court found that the questions of state law favored the drainage districts, but that is not necessarily the end of this lawsuit.  Now that the questions of state law are answered, the U.S. District Court for the Northern District of Iowa, Western Division, can decide the questions of federal law.  If any of the numerous motions for summary judgment are not granted to the drainage districts, a trial to decide the remaining questions is set for June 26, 2017.  The questions left for the district court to decide include a number of U.S. Constitutional issues. 

One of these issues is whether the drainage districts’ discharge of nitrates into the water constitutes a “taking” of DMWW’s private property for a public use under the Fifth and Fourteenth Amendments.   Another issue is whether the drainage districts’ state-given immunity infringes upon DMWW’s constitutional rights of due process, equal protection, and just compensation.  An important federal law question that also remains to be decided is whether the drainage districts are “point sources” that require a permit to discharge pollutants under the CWA. 

 How will the outcome affect other states?

Either outcome in this lawsuit will have implications for the rest of the country.  For example, if the district court sides with DMWW on all of the questions, it could open the floodgates to potential lawsuits against drainage districts and other similar entities around the country for polluting water.  Municipal and other users of the water could assert an infringement of their constitutional rights, including taking without just compensation.  Furthermore, if drainage districts are found to be “point sources,” it could mean greater costs of permitting and cleanup for drainage districts and other state drainage entities.  Those costs and additional regulations could be passed onto farmers within the watershed.  As a result, farmers and water suppliers around the country will closely follow the district court’s decisions on the remaining questions in the case. 

All of the court documents and decisions concerning this lawsuit, as well as additional articles and blog posts on the topic can be found here.  Additional reading on the subject from the Des Moines Register can be found here and here.

Update:  The final rule concerning the listing of the rusty patched bumble bee as endangered was originally slated to go into effect on February 10, 2017, as is described below.  On February 9, the Fish and Wildlife Service published a notice in the Federal Register explaining that they would abide by the Trump Administration’s 60-day regulatory freeze and delay the effective date until March 21, 2017.   The Federal Register entry is available here.  

Will the bee's ESA listing stand, and how might it affect agriculture?

Written by:  Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program

On January 11, 2017, the U.S. Fish and Wildlife Service (FWS) published a final rule designating the rusty patched bumble bee (scientific name Bombus affinis) as an endangered species, the first bee in the continental U.S. to receive this status.  The rule was originally slated to go into effect on February 10, 2017.  If the rule is allowed to stand, it will have a number of implications for federal agencies, farmers, and other private entities. 

The final rule, found in the Federal Register at 50 CFR Part 17, includes a lengthy description of the rusty patched bumble bee.  The bees have black heads, and the worker bees, as well as the male bees, have a “rusty reddish patch centrally located on the abdomen,” giving them their common name.  Necessities for the species include “areas that support sufficient food (nectar and pollen from diverse and abundant flowers), undisturbed nesting sites in proximity to floral resources, and overwintering sights for hibernating queens.”  Additionally, the bees prefer temperate areas. The rusty patched bumble bee was found in 31 states and provinces in the 1990s. From the year 2000 and on, the bumble bee has only been found in a diminished range of 14 states and provinces.  The bumble bee has been found in Ohio since 2000, but following the overall trend, at much lower rates. 

Possible reversal of the rule

Since the publishing of the final rule, the Trump Administration has instituted a regulatory freeze on administrative agencies which could push back effective dates for those regulations that have not yet gone into effect by at least 60 days.  In the meantime, the Congressional Review Act (CRA) may also affect the final rule.  The CRA gives Congress 60 legislative days from either the date a rule is published in the Federal Register, or the date Congress receives a report on the rule, to pass a joint resolution disapproving the rule.  A signature by the President is the final step required to invalidate the rule.  What is more, an agency cannot submit a rule after these steps are taken that is “substantially in the same form” as the overturned rule. Historically, the CRA has not been frequently used, as success is typically only possible when a number of events align:

1. There is a new presidential administration;
2. Congress and the President are members of the same party;
3. The previous President was a member of the opposing party; and
4. The timing of rule publication or rule reporting and Congressional calendars allow for a joint resolution within the 60-day limit.

The text of the CRA is available here.  With the regulatory freeze and the possible use of the CRA, it is not clear when or even if the new rule will actually go into effect.  

Importance of the rusty patched bumble bee

The rusty patched bumble bee is a pollinator species, meaning they, along with other pollinators, assist with the reproduction of flowers, crops, and grasses.  According to a FWS fact sheet, in the United States, the rusty patched bumble bee and other insects’ pollination is worth $3 billion annually.

The Endangered Species Act

What exactly is the process for listing a species as “endangered?”  The Endangered Species Act’s (ESA) definition of an endangered species is: “any species which is in danger of extinction throughout all or a significant portion of its range.”  Accordingly, the ESA allows the FWS to designate species as endangered or threatened as long as one (or more) of five factors apply:

• (A)  The present or threatened destruction, modification or curtailment of its habitat or range;
• (B)  Overutilization for commercial, recreational, scientific, or educational purposes;
• (C)  Disease or predation;
• (D)  The inadequacy of existing regulatory mechanisms; or
• (E)  Other natural or manmade factors affecting its continued existence.   16 USC 1533.

In the case of the rusty patched bumble bee, the FWS found that factors (A), (C), and (E) applied.  For factor (A), which concerns loss of habitat and range, the FWS cited past encroachment by residential, commercial, and agricultural development.  Additionally, agriculture has contributed to the replacement of plant diversity with monocultures, which has resulted in loss of food for the bees.  What is more, the range of the rusty patched bumble bee has faced an 87% reduction, as well as an 88% drop in the number of recognized populations. 

Concerning factor (C), FWS pointed to a number of diseases and parasites that have afflicted the rusty patched bumble bee.  Finally, for factor (E), the FWS identified more numerous hot and dry periods, pesticide and herbicide use, and reproductive issues that have contributed to the reduction of the species.  Due to its findings and the factors discussed, the FWS determined that the rusty patched bumble bee is “in danger of extinction throughout its range,” and therefore designated it as endangered.

Significance of ESA listing

After a species is labeled “endangered,” what happens next?  In order to facilitate recovery of a species, the ESA also calls for, to the “maximum extent prudent and determinable,” a critical habitat designation to be made for the species.  The term “critical habitat” does not apply to everywhere the species is found.  Instead, “critical habitat” can be certain places both inside and outside the overall “geographical area occupied by the species” that are found to be “essential” to its preservation. In the case of the rusty patched bumble bee, the FWS has not yet determined its critical habitat. 

Implications for agriculture

Under the ESA, federal agencies and private entities have different responsibilities.  Federal agencies generally must make sure that any action they are involved in will not do harm to an endangered species or its critical habitat. For the most part, private entities are not affected by critical habitat unless financial aid or approval is sought from a federal agency.

Even though critical habitat concerns do not explicitly apply to private entities, the ESA does contain provisions that prohibit the importing, exporting, possession, sale, delivery, transport, shipping, receiving, or carrying of an endangered species in the United States or in foreign commerce.  What is more, the ESA prohibits the “taking” of endangered species within the United States or in the ocean.  “Take” is defined as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect,” an endangered species, or to attempt to do so (emphasis added).  It is important to note that “harm” is defined as “an act which actually kills or injures fish or wildlife…includ[ing] significant habitat modification or degradation which actually kills or injures fish or wildlife by significantly impairing essential behavior patterns, including, breeding, spawning, rearing, migrating, feeding or sheltering.” Thus, even though the designation of an endangered species and its critical habitat does not explicitly affect private entities, the definitions of “take” and “harm,” when read together, implicitly prohibit actions that are damaging to the species or its habitat.  The FWS rule defining “harm” can be found here.   The government can assess penalties against those who violate these provisions.

Farmers and other private entities should be aware of the designation of a species as endangered.  In the case of the rusty patched bumble bee, if the rule is allowed to stand, private landowners, including farmers, would not be allowed to “take” or “harm” the bee or destroy its critical habitat.   Given the important role pollinators like the rusty patched bumble bee play in making agriculture possible, we can assume that agriculture will want to protect the species.  But due to the nature of this species, it will be difficult to ascertain when a farmer’s actions do “take” or “harm” a rusty patched bumble bee.   The nature of the species and the future status of the rule create much uncertainty on how agriculture will address the rusty patched bumble bee going forward.

Beginning January 22, 2017, employers must use a new version of Form I-9 for employment eligibility verification of new hires.  The U.S. Citizenship and Immigration Services (USCIS) revised Form I-9  last November and gave employers a short grace period for making the conversion to the new form, dated 11/14/16.  The new form is available on the USCIS website at https://www.uscis.gov/i-9.  

Employers will  notice several improvements to the new I-9:

• The instructions are now separate from the form and include specific guidance on each section.
• The form is much more computer-friendly, with drop-down lists, calendars, on screen prompts and instructions for each field, a "start over" button and easy access to full instructions.
• The employer may now list more than one preparer and translator who assisted in completion of the form.
• In the first section, the employer must list only "other last names used" rather than "other names used."
• A new "additional information" box provides space for the employer to note important information for the employer's purposes such as additional documents presented, employee termination dates or form retention dates.

Employers must complete a Form I-9 to verify the identity and employment authorization of every individual hired for employment.  For more information, see our previous post on Form I-9, and visit the USCIS's "I-9 Central" at https://www.uscis.gov/i-9-central.  

Written by:  Ellen Essman and Chris Hogan, Law Fellows, OSU Agricultural & Resource Law Program

Part Two

Below is the second of our two-part series regarding bills related to agriculture that failed to pass during Ohio’s 2015-2016 legislative session.

Animal Welfare

Requirements for Humane Society Agents and House Bill 45

House Bill 45 was introduced February 10, 2015 and would have amended existing law to impose additional requirements upon those people hoping to be appointed as humane society agents.  A number of changes and additions would have been implemented through the passage of HB 45.  The bulk of the proposed legislation concerned training for humane society agents and filing evidence of completing that training with the county recorder.  HB 45 would have required county recorders to record “[p]roof of successful completion of training by humane society agents,” as well as “notices of revocation of agents’ appointment” in the official records (emphasis added).  According to the bill, proof of completion of training would have had to been signed by the CEO of the organization that provided training, the chief officer of the county humane society, and either the mayor or probate judge in the county.

House Bill 45 was referred to the Local Government Committee on February 11, 2015.  No further action was taken, rendering the proposed legislation dead when the 131^st General Assembly ended.  

To read HB 45, visit this page. The Ohio Legislative Service Commission’s analysis of HB 45 is available here.

Tethering Animals and House Bill 94

House Bill 94 was introduced March 2, 2015 and would have enacted language that would have made it illegal to negligently tether an animal outside in certain situations. The bill would have imposed time limits on tethering and a prohibition on tethering animals in certain weather conditions.  Furthermore, a prohibition on tethering would have been imposed if the tethers were unsafe, under a certain length, allowed the animal to touch fences or cross property lines, or were inappropriate for the animal’s size.  HB 94 also would have prohibited tethering if the surrounding area was unsanitary, or if the owner of the premises was not present.  Finally, the bill would have amended the current law to include punishment for violating the proposed tethering language.  The bill, however, was referred to the House Agriculture and Rural Development Committee and afterwards, no action was taken on it. 

To read HB 94, visit this page. The Ohio Legislative Service Commission’s analysis of HB 94 is available here.

Animal Abusers and House Bill 177

 House Bill 177 was introduced on April 28, 2015.  HB 177 would have required people who either were “convicted of or pleaded guilty to” a number of animal abuse violations to submit certain information, along with a fee, to the Attorney General within 30 days of “being convicted or pleading guilty.” HB 177 also tasked the Attorney General with creating and keeping a registry of animal abuse violators.

Law enforcement officers, humane society agents, and dog wardens would have been responsible for notifying the Attorney General of animal abuse violations. Animal shelters would have been prohibited from allowing a person on the registry from adopting a dog, cat, or any animal kept in a home. 

The bill was referred to the Agriculture and Rural Development Committee on May 5, 2015, where no further action was taken.

To read HB 177, visit this page.

Sale of Dogs and House Bill 573

House Bill 573 was introduced on May 17, 2016.  This bill focused on the sale of dogs both from pet stores and from other entities.   The bill would have added or changed a number of definitions in the Ohio Revised Code.  Most notably, the law would have made it illegal for a pet store to “negligently…offer for sale” or otherwise “transfer” a dog unless it came from an animal rescue, an animal shelter, a humane society, a dog retailer, or a qualified breeder, all of which were defined elsewhere in the bill. 

Additionally, according to HB 573, both dog retailers and pet stores would have been forbidden from selling or otherwise transferring a dog under a number of conditions.  Under the bill, they could not have sold dogs less than eight weeks old, dogs that had not been inspected by a veterinarian, and dogs without a microchip, among other conditions. However, none of these requirements would have been applicable to a dog sold or otherwise “transferred from the premises where the dog was bred and reared.” Finally, the bill included language stating that it would preempt local laws regulating the sale of dogs.  House Bill 573 was referred to the Finance Committee on May 23, 2016 and no further action was taken. 

To read HB 573, visit this page. The Ohio Legislative Service Commission’s analysis of HB 573 is available here.

Natural Resources

Invasive Species and House Bill 396

House Bill 396 was introduced on November 16, 2015.  This bill dealt with restricting and prohibiting certain species in Ohio.  HB 396 would have added a number of definitions to the Ohio Revised Code, including a lengthy list of “prohibited species.”  Species of birds, crayfish, fish, insects, and mollusks were included in the list.  Additionally, “restricted species” was defined as including the quagga mussel, the zebra mussel, and their eggs.  In addition, HB 396 would have given the Chief of the Division of Wildlife, with advice from Ohio Director of Agriculture, the power to designate other restricted and prohibited species subject to a number of considerations.  One of these considerations would have been whether or not the species could cause severe harm to agricultural resources. The bill would have made it illegal to possess, introduce, sell, or offer to sell restricted and prohibited species.

The bill was referred to the Agricultural and Rural Development Committee on January 20, 2016 and ultimately did not leave the Committee.

To read HB 396, visit this page. The Ohio Legislative Service Commission’s analysis of HB 396 is available here.

Deer Rehabilitation and House Bill 267

House Bill 267 was introduced on June 22, 2015 and would have changed the Ohio Revised Code to allow licenses to run deer sanctuaries, permits to rehabilitate deer, and training for law enforcement.  During the training, law enforcement officers were supposed to learn how to determine whether they needed to humanely euthanize injured deer or transfer them to someone permitted to rehabilitate the deer.

The bill was referred to the House Committee on Energy and Natural Resources on October 1, 2015, and was ultimately stranded there. 

To read HB 267, visit this page. The Ohio Legislative Service Commission’s analysis of HB 267 is available here.

Labeling Nursery Stock and House Bill 566

 House Bill 566 was introduced on May 12, 2016 and would have made it illegal for a person to “recklessly label or advertise nursery stock as beneficial to pollinators” if the nursery stock had been “treated with a systemic insecticide.”  It would also have been illegal for a person to “recklessly label” stock as beneficial if the stock included the U.S. EPA warnings of “pollinator protection box[es]” and “pollinator, bee, or honey bee precautionary statement[s] in the environmental hazard section of an insecticide product label” on its packaging. 

The bill was referred to the Agriculture and Rural Development Committee on November 11, 2016 and never made it any further.

To read HB 566, visit this page. The Ohio Legislative Service Commission’s analysis of HB 566 is available here.

Taxation

Adjusting Current Agricultural Use Value formulas: Senate Bill 246 and House Bill 398

During the 131^st General Assembly, the Senate considered Senate Bill 246. SB 246 addressed how current agricultural use value, otherwise known as CAUV, is calculated. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. SB 246 was a companion bill. That means that a version of the bill was introduced in both the Ohio House and the Ohio Senate. The companion house bill to SB 246 was House Bill 398.

Both bills were intended to alter the current formula used to calculate CAUV values across Ohio. According to the Ohio Legislative Service Commission, the changes proposed by the bill would “have a uniformly downward effect on the taxable value of CAUV farmland.” Thus, the likely effect would have been a lower tax bill for farmers who are taxed on a CAUV basis.

The Senate referred its bill, SB 246, to the Senate Ways and Means Committee on December 9, 2015 and HB 398 was referred to the House Government Accountability and Oversight Committee on January 20, 2016. Neither committee acted on its bill. Therefore, neither bill was passed into law during the 131^st General Assembly.

To read SB 246, visit this page. The Ohio Legislative Service Commission’s analysis of SB 246 is available here. To read HB 398, visit this page. The Ohio Legislative Service Commission’s analysis of HB 398 is available here.

Nonrefundable Tax Credits for Rural Businesses and Senate Bill 209

The 131^st General Assembly considered a nonrefundable tax credit for insurance companies that invest in certain rural business growth funds. According to the Ohio Legislative Service Commission, qualifying rural business growth funds include special purpose rural businesses that contribute capital to certain kinds of businesses with substantial operations in rural areas of Ohio.

SB 209 passed in the Ohio Senate. But, the bill did not pass the Ohio House. Therefore, the bill was not passed into law during the 131^st General Assembly.

To read SB 209, visit this page. The Ohio Legislative Service Commission’s analysis of SB 209 is available here.