CFAES Give Today
Farm Office

Ohio State University Extension

CFAES

Recent Blog Posts

Department of Labor Website
By: Jeffrey K. Lewis, Esq., Friday, May 31st, 2024

With Memorial Day behind us, the unofficial start of summer is here, and we are back to bring you another edition of the Ag Law Harvest. In this Harvest we discuss OSHA’s proposed workplace heat hazard standards, DOL’s new H-2A Farmworker rule, an interesting income tax credit in Colorado, and a proposal to limit Ohio property tax increases. 

OSHA Advances Proposed Rule to Mitigate Workplace Heat Hazards.  
The U.S. Department of Labor's Occupational Safety and Health Administration (“OSHA”) announced that it is advancing a proposed rule to mitigate workplace heat hazards, following unanimous approval from an advisory committee. The rule aims to protect workers from heat-related illnesses and fatalities, particularly in agriculture. While OSHA works to finalize the proposed rule, OSHA “continues to direct significant existing outreach and enforcement resources to educate employers and workers and hold businesses accountable for violations of the Occupational Safety and Health Act’s general duty clause, 29 U.S.C. § 654(a)(1) and other applicable regulations.” Assistant Secretary for Occupational Safety and Health Doug Parker explained that as OSHA moves through the regulatory process, “OSHA will use all of its existing tools to hold employers responsible when they fail to protect workers from known hazards such as heat. . .” Since 2022, OSHA's National Emphasis Program has conducted nearly 5,000 inspections to proactively address heat-related hazards in workplaces with high heat exposure. The agency prioritizes inspections in agricultural industries employing temporary H-2A workers, who face unique vulnerabilities. Employers are reminded that they are legally required to protect workers from heat exposure by providing cool water, breaks, shade, and acclimatization periods for new or returning workers. Training for both workers and managers on heat illness prevention is also essential.

Department of Labor Finalizes and Publishes Rule Enhancing Protections for H-2A Farmworkers. 
The U.S. Department of Labor (“DOL”) announced a final rule to strengthen protections for H-2A farmworkers. The new rule titled “Improving Protections for Workers in Temporary Agricultural Employment in the United States” includes the following provisions: 

  • Adding new protections for worker self-advocacy: The final rule enhances worker advocacy by expanding anti-retaliation protections and allowing self-organization and concerted activities. Workers can decline attending employer-led meetings that discourage union participation. The rule permits workers to consult legal and other key service providers and meet them in employer-furnished housing. Additionally, workers can invite guests, including labor organizations, to their employer-provided housing.
  • Clarifying “for cause” termination: The final rule clarifies that a worker is not “terminated for cause” unless the worker is terminated for failure to comply with an employer’s policies or fails to adequately perform job duties in accordance with reasonable expectations based on criteria listed in the job offer. Additionally, the rule identifies five conditions that must be met in order to ensure that disciplinary and/or termination processes are justified and reasonable: These five conditions are: (1) the worker has been informed, in a language understood by the worker, of the policy, rule, or performance expectation; (2) compliance with the policy, rule, or performance expectation is within the worker’s control; (3) the policy, rule, or performance expectation is reasonable and applied consistently to H-2A workers and workers in corresponding employment; (4) the employer undertakes a fair and objective investigation into the job performance or misconduct; and (5) the employer corrects the worker’s performance or behavior using progressive discipline. 
  • Seat Belts: Any employer provided transportation must have seat belts if the vehicle was manufactured with seat belts. All passengers and the driver must be wearing seat belts before the vehicle can be driven. 
  • Ensuring timely wage changes for H-2A workers:  The final rule establishes that the effective date of updated adverse effect wage rates is the date of publication in the Federal Register. 
  • Passport Withholding: The final rule prohibits an employer from holding or confiscating a worker’s passport, visa, or other immigration or government identification documents. An employer may, however, hold a worker’s passport for safekeeping only if: (1) the worker voluntarily requests that the employer keep the documents safe; (2) the employer returns the documents to the worker immediately upon their request; (3) the employer did not direct the worker to submit the request; and (4) the worker states, in writing, that the three conditions listed above have been met. 

The final rule is effective on June 28, 2024. However, the DOL has made it clear that H-2A applications filed before August 28, 2024, will be subject to the current applicable federal regulations. Applications submitted on or after August 29, 2024, will be subject to the new rule. For more information, visit the DOL’s “H-2A Employer’s Guide to the Final Rule ‘Improving Protections for Workers in Temporary Agricultural Employment in the United States.’

Colorado Establishes State Income Tax Credit for Qualified Agricultural Stewardship Practices. 
Beginning in 2026 Colorado farmers and ranchers will be able to qualify for an income tax credit for actively engaging in conversation stewardship practices. The newly enacted legislation creates three different tiers of income tax credits. 

  • Tier 1: A state income tax credit equal to at least $5 and no more than $75 per acre of land covered by one qualified stewardship practice, up to a maximum of $150,000 per tax year. 
  • Tier 2: A state income tax credit equal to at least $10 and no more than $100 per acre of land covered by two qualified stewardship practices, up to a maximum of $200,000 per tax year.
  • Tier 3: A state income tax credit equal to at least $15 and no more than $150 per acre of land covered by at least three qualified stewardship practices, up to a maximum of $300,000 per tax year. 

However, only $3 million worth of tax credits can be issued in one tax year. Any claims for the tax credit beyond the $3 million dollars are placed on a waitlist in the order submitted and a certificate will be issued for use of the agricultural stewardship credit in the next income tax year. No more than $2 million in claims shall be placed on the waitlist in any given calendar year. Additionally, only one tax credit certificate may be issued per qualified taxpayer in a calendar year, and the taxpayer can only claim the credit for up to three income tax years. 

Ohio House of Representatives Proposes Joint Resolution to Limit Property Tax Increases for Ohio Property Owners. 
The Ohio House of Representatives have proposed to enact a new section in Article I of Ohio’s Constitution. Section 23 would limit property tax increases on Ohioans. Under the proposed change, the amount of real property taxes levied on a parcel of property cannot exceed the amount of tax levied on that parcel in the preceding year plus the rate of inflation or four percent, whichever is lower. There are some exceptions that allow a one-time increase in property tax liability in excess of the four percent limit. The exceptions include: (1) when a parcel is divided; (2) the expiration of a tax exemption, abatement, or credit that applied to the parcel in the preceding year; or (3) when a building is completed or significantly improved and is added to the tax list on the parcel. We will continue to closely monitor how the proposed resolution fares in committee and beyond. If the resolution passes both chambers of the Ohio Legislature, the proposed change would be voted on in the November 5, 2024, election.  

Poison hemlock plants growing in field
By: Peggy Kirk Hall, Wednesday, May 29th, 2024

The poison hemlock popping up across Ohio and the questions we’re receiving in the Farm Office both signal that the high season for “noxious weeds” has begun. Ohio has several statutes and regulations intended to curtail the spread of the invasive and potentially harmful weeds we refer to as noxious weeds.  The most common question we’re hearing is this:  if there is a weed problem spreading onto or around my property, what can I do about it? 

There are several answers to this question, and the first is to have a civil discussion with the landowner or agency responsible for the property, alerting them to the problem.  Sometimes that party simply doesn’t know about the weeds or doesn’t know how to remedy the problem.  If the neighborly discussion strategy fails, then the legal answer to the question depends upon two factors:  1) whether the weed is one named in the law or on the “noxious weeds” list, and 2) the location of the weed.

  1. Does the law apply to the weed?

There are two ways Ohio noxious weeds law would apply to a weed situation. One way is if the law specifically refers to the weed.  For example, one law specifically names wild parsnip, wild carrot, oxeye daisy, and wild mustard. The second way is if the law refers generally to noxious weeds, which applies to weeds named on Ohio’s noxious weeds list.  The Ohio Department of Agriculture has the responsibility of identifying and maintaining a list of noxious weeds—that list is in Ohio Administrative Code 901:5-37-01 and includes the following:

  • Shatter cane (Sorghum bicolor)
  • Russian thistle (Salsola Kali var. tenuifolia)
  • Johnsongrass (Sorghum halepense L. (Pers.))
  • Wild parsnip (Pastinaca sativa)
  • Grapevines: when growing in groups of one hundred or more and not pruned, sprayed, cultivated, or otherwise maintained for two consecutive years.
  • Canada thistle (Cirsium arvense L. (Scop.))
  • Poison hemlock (Conium maculatum)
  • Cressleaf groundsel (Senecio glabellus)
  • Musk thistle (Carduus nutans)
  • Purple loosestrife (Lythrum salicaria)
  • Mile-A-Minute Weed (Polygonum perfoliatum)
  • Giant Hogweed (Heracleum mantegazzianum)
  • Apple of Peru (Nicandra physalodes)
  • Marestail (Conyza canadensis)
  • Kochia (Bassia scoparia)
  • Palmer amaranth (Amaranthus palmeri)
  • Kudzu (Pueraria montana var. lobata)
  • Japanese knotweed (Polygonum cuspidatum)
  • Yellow Groove Bamboo (Phyllostachys aureasculata), when the plant has spread from its original premise of planting and is not being maintained.
  • Field bindweed (Convolvulus arvensis)
  • Heart-podded hoary cress (Lepidium draba sub. draba)
  • Hairy whitetop or ballcress (Lepidium appelianum)
  • Perennial sowthistle (Sonchus arvensis)
  • Russian knapweed (Acroptilon repens)
  • Leafy spurge (Euphorbia esula)
  • Hedge bindweed (Calystegia sepium)
  • Serrated tussock (Nassella trichotoma)
  • Columbus grass (Sorghum x almum)
  • Musk thistle (Carduus nutans)
  • Forage Kochia (Bassia prostrata)
  • Water Hemp (Amaranthus tuberculatus)
  1.  What is the location of the weed?

There are several different noxious weeds laws, and which one applies depends on the location of the weed.  Here are the three most common locations we receive questions about:

  • If a noxious weed is in the fence row on land outside of a municipality, Ohio’s line fence law addresses noxious weeds in ORC 971.33—971.35.  The law states that a landowner or occupant may give notice to an adjacent landowner or tenant to clear “brush, briers, thistles, or other noxious weeds” within four feet of the line fence on the owner or tenant’s side of the fence.  If the adjacent owner or tenant fails to do so within 10 days, the landowner or occupant may provide notice to the board of township trustees and the trustees must view the premises and determine if there is just cause for the clearing.  If there is, the trustees must “cause the weeds to be cut, by letting the work to the lowest bidder, or by entering into a private contract.”  The county auditor must assess the costs on the landowner’s property taxes.
  • If noxious weeds, wild parsnip, wild carrot, oxeye daisy, wild mustard, or other harmful weeds are on private land beyond the fence row, a person may send written information to the township trustees of the weeds and where they exist.  The trustees must then notify the owner or about the existence of the weeds. The owner must either destroy the weeds or show the township trustees why there is no need for doing so.  If the owner does not take one of these actions within five days of the trustee’s notice, the township trustees “shall cause the weeds to be cut or destroyed and may employ the necessary labor, materials, and equipment to perform the task.” The county auditor must assess the costs on the landowner’s property taxes.
  • If noxious weeds are along a public roadway, Ohio law requires counties, townships and municipalities to cut or destroy the noxious weeds every year between June 1 and 20, August 1 and 20, and if necessary, September 1 and 20, or whenever it’s necessary to destroy the vegetation to prevent or eliminate a safety hazard.  ORC 5579.04 and 5579.08. 

There are other laws that help us deal with the noxious weeds high season, and we review each of those in our law bulletin, Ohio’s Noxious Weeds Laws, in the Property Law Library on farmoffice.osu.edu.

Posted In:
Tags:
Comments: 0
Lake Erie with sunset in background
By: Peggy Kirk Hall, Wednesday, May 22nd, 2024

A new chapter is developing in the legal battle over resolving water quality problems in the Western Lake Erie Basin.  Earlier this month, the Lucas County Board of Commissioners, City of Toledo, and Environmental Law & Policy Center filed a federal lawsuit against the U.S. Environmental Protection Agency (EPA). The lawsuit targets the EPA’s approval of Ohio’s Total Maximum Daily Load (TMDL) plan for the Maumee River Watershed. If it feels like déjà vu, that’s because it is. In the ten years since Toledo experienced a drinking water crisis caused by harmful algal blooms in the Western Basin, there have been four federal lawsuits demanding a plan for improving water quality in the lake and a legal battle to protect the lake with a “Lake Erie Bill of Rights.”

The current litigation arises from a 2023 settlement agreement that led the Ohio EPA to create the TMDL for the Maumee River Watershed.  A TMDL establishes a framework for future decisions that affect water quality by identifying the links between sources of impairment and pollutant load reductions necessary to reduce impairment and attain water quality standards. The EPA reviewed and approved Ohio EPA’s Maumee River WatershedTMDL last year, against opposition from environmental groups and the parties in the current lawsuit. That approval of the TMDL is the source of the new lawsuit.

According to the plaintiffs, the EPA should not have approved the Maumee River Watershed TMDL because it “will not remediate Lake Erie.” The parties claim that the plan “fails to limit pollution caused by dissolved reactive phosphorus and does not meaningfully address the concentrated feeding operations, or CAFOs, that are responsible for polluting the watershed.” In support of their argument, the parties cite the following five “legal defects” in the plan, each an alleged violation of the Clean Water Act: 

  1. Failure to set Dissolved Reactive Phosphorous (DRP) limits.
  2. Failure to set an adequate “margin of safety” that accounts for lack of knowledge about the relationship between effluent limitations and water quality.
  3. Failure to assign waste load allocations to discharging CAFOs.
  4. Failure to apportion load allocations to all nonpoint sources.
  5. Inadequate implementation plan and failure to provide reasonable assurances.

The lawsuit asks the federal court to vacate the current Maumee River Watershed TMDL and order the EPA to prepare a new TMDL that “will actually clean up Lake Erie.”

What does this mean for Ohio agriculture?

If the plaintiffs are successful, the lawsuit could result in the preparation of a new TMDL for the Western Basin.  The current Maumee River Watershed TMDL plan prepared by the Ohio EPA encourages an “adaptive management” approach for agricultural activities, based on voluntary adoption of management practices coupled with monitoring and progress evaluation. A new TMDL could more directly affect agricultural activities, particularly if the EPA agrees with the plaintiffs’ arguments that the TMDL should  assign waste load allocations to discharging CAFOs and apportion load allocations to all nonpoint sources. But remember that the EPA approved the current TMDL plan, suggesting that the agency will not be inclined to make significant alterations if the court orders it to prepare a new plan.

Other than the possibility of a new TMDL, the lawsuit does not directly affect agricultural operations right now.  It does not name any specific farms or bring them into the litigation.  The lawsuit does not affect current voluntary efforts to reduce water quality impacts, such as H2Ohio. 

Nor is the litigation likely to generate additional lawsuits against agricultural operations that currently comply with all applicable laws, a question we've heard from some producers in the Maumee River watershed.  Several Ohio laws provide defenses to such lawsuits and those laws will continue to be in effect throughout the federal litigation, unless the Ohio legislature makes any changes to the laws.  Those legal defenses, explained in our law bulletin on “Laws that Provide Defenses for Agricultural Production Activities,” apply to operations that meet the specific requirements of the laws and include:

  • The Fertilizer Applicator Certification Training (FACT) defense for claims involving the application of nitrogen, phosphorous, potassium and plant nutrients.
  • The Right to Farm Law defense and exemption from Statutory Nuisance for allegations that agricultural activities are creating a nuisance that unreasonably interferes with health, comfort, or property rights.
  • The Ohio Agricultural Pollution Abatement Law for nuisance claims involving “agricultural pollution,” defined as the failure to use practices to abate erosion, or degradation of waters of the State by residual farm products, manure, or soil sediment.
  • The Confined Animal Feeding Facilities (CAFF) defense for nuisance claims against farms operating under a CAFF permit.

What happens next?

The EPA is likely to respond to the complaint with a request that the federal court dismiss the claim, and we probably won’t see a decision on that request before the end of the year. If the court declines to dismiss the case, the plaintiffs must then convince the court that the current TMDL plan does not comply with the Clean Water Act. Arguments will focus on the five legal defects presented by the plaintiffs. As has been true for the previous litigation, a decision would take a year or more. Yet again, we await the outcome of a Lake Erie lawsuit.

Read the complaint in Lucas County Commissioners v. EPA.

Posted In: Environmental
Tags: Lake Erie, tmdl, western basin
Comments: 0
Cattle standing in field with sunset in background
By: Peggy Kirk Hall, Thursday, May 16th, 2024

Producers shipping certain types of cattle and bison across state lines might have to use electronic identification (EID or RFID) tags if a final rule developed by USDA’s Animal and Plant Health Inspection Service (APHIS) becomes effective. Federal funding is available to help producers obtain the EID tags.  But efforts are underway to stop the EID rule from taking effect.  As we’ve seen in the past, disagreements continue over animal traceability and EID mandates. Here’s an update on the current events surrounding the EID issue.

The APHIS final rule.  The final rule announced by APHIS on April 26, 2024 will amend the animal traceability rule enacted in 2013.  That rule requires “official identification” on certain cattle and bison moved in interstate shipment for the purpose of animal disease traceability. Under the rule, “visual” ear tags are a form of official identification, in addition to certain pre-approved brands and tattoos and group lots.

The new final rule, originally proposed in 2022, will expand the requirements for ear tags used as official identification.  For animals tagged after the rule’s effective date, the ear tags “must be readable both visually and electronically (EID).” The EID rule will continue to apply only to these types of cattle and bison when shipped across state lines:

  • Sexually intact cattle and bison 18 months of age or older;
  • Dairy cattle;
  • Cattle and bison of any age used for rodeo or recreation events, shows, or exhibitions.

Effective date of the rule.  The EID requirement is not yet effective. The final rule will take effect 180-days after the rule was published in the Federal Register.  USDA published the final rule on May 9, 2024, making the effective date November 5, 2024.

Funding for EID tagsBefore APHIS finalized the rule, Congress approved funding to help producers voluntarily obtain EID tags, which cost around $3 each.  The Consolidated Appropriations Act passed in March of 2024 allocated $15 million for EID.  Ohio producers should contact the State Veterinarian’s office at the Ohio Department of Agriculture for information about the availability of free EID tags that comply with the official identification requirements.

EID bill in Congress.  A bill introduced on May 8 by Sen. Mike Rounds (R-SD) would counteract the APHIS final rule. The one-paragraph bill simply states:  “The Secretary of Agriculture shall not implement any rule or regulation requiring the mandatory use of electronic identification eartags on cattle or bison.”

Why the debate over EID?  Animal traceability has long been a controversial issue for the livestock industry.  APHIS and Sen. Rounds capture the two sides of the controversy well with their recent statements summarizing their efforts.  APHIS explains that “the most significant benefits will be enhanced ability to limit disease outbreak impact in the U.S., as well as maintaining foreign markets.”  On the other hand, Sen. Rounds states that “USDA’s proposed RFID mandate is federal government overreach, plain and simple. .. If farmers and ranchers want to use electronic tags, they can do so voluntarily.”

What’s next?  Given the slow pace of legislative activity in Congress, it’s unlikely that Sen. Rounds’ proposal will affect the November 5 effective date of the EID final rule.  Several associations have threatened to bring legal action against the rule, however, so it’s likely we’ll see litigation and other legal challenges.  As seems always to be the case with animal traceability, we still don’t yet know what the future holds.

Legal Groundwork
By: Robert Moore, Tuesday, May 14th, 2024

The Cultivating Connections Conference, an annual event dedicated to farm transition planning, is returning for its second year on August 5th and 6th, 2024. This year's conference will be held at the University of Cincinnati College of Law and will convene farm transition planners—attorneys, accountants, educators, and other professionals—from across the country.

Cultivating Connections serves as a forum for learning, discussing, and collaborating on the latest strategies, tools, and legal and tax aspects of farm transition planning. The conference fosters a supportive community dedicated to preserving the legacy and sustainability of family farms for future generations.

Conference Highlights:

  • In-depth sessions and workshops: Featuring a real-life case study, the conference delves into practical farm transition planning techniques, estate planning considerations, and tax implications.
  • Networking opportunities: Attendees can connect with peers, share experiences, and build relationships with a network of farm transition professionals.
  • Expert speakers: The conference brings together a distinguished faculty of attorneys, accountants, professors, and other professionals who share their knowledge and insights.
  • The Association of Farm Transition Planners: This newly formed association offers ongoing support and resources for farm transition professionals beyond the conference.

Registration and More Information

For detailed information about the Cultivating Connections Conference agenda, speakers, and registration, please visit https://go.osu.edu/cultivatingconnections or use the QR code below. For more information or questions, contact Robert Moore (moore.301@osu.edu).

QR Code Cultivating Connections

About the Cultivating Connections Conference

The Cultivating Connections Conference is a partnership between The Ohio State University Agricultural & Resource Law Program, Iowa State University Center for Agricultural Law & Taxation, and the National Agricultural Law Center.

 

 

 

Legal Groundwork
By: Robert Moore, Friday, May 10th, 2024

One of the primary challenges for a retiring farmer is the large tax burden that retirement may cause.  Throughout their farming careers, farmers do a good job of managing income taxes, in part, by delaying sales and prepaying expenses.  This strategy works well while the farm is operating but can cause significant tax liability upon retirement.  The combination of a large increase in revenue from the sale of assets and little or no expenses to offset the revenue can cause a retiring farmer to be pushed into high tax brackets.  It is not unusual for 40% or more of the sale proceeds from a retirement sale to go to taxes.  One strategy to reduce income tax liability at retirement is a Charitable Remainder Trust (CRT).  A CRT can be an effective way of managing income taxes at retirement, but it is not for everyone. 

A CRT is a charitable trust because at least some of the assets in the CRT must eventually pass to a qualified U.S. charitable organization such as a church or 501(c)(3) corporation.  This charitable nature of the CRT is central to the CRT strategy.  As a charitable trust, the CRT may sell assets without paying tax on the sale.  So, instead of the retiring farmer selling assets in their own name, they donate the assets to the CRT and then the CRT sells the assets.  The retiring farmer then receives an income stream from the CRT.  After a period of time, the income stream stops and the remaining trust assets are contributed to the named charity.  The following are the steps of the CRT strategy:

  1. Assemble a team of advisors and develop a CRT strategy.
  2. Donor establishes a CRT.  The trust document declares the income beneficiaries and the charitable beneficiaries. 
  3. Donor determines the assets to be contributed to the CRT.
  4. Donor contributes assets into the CRT, typically grain, machinery and/or livestock.
  5. The CRT sells the assets but does not pay tax.
  6. The Trustee of the CRT uses the sale proceeds to establish an annuity.  The annuity must be designed to provide at least 10% of the sale proceeds to the charity.
  7. The annuity pays out to the Donor over a number of years.  The Donor pays income tax on the annuity distributions.
  8. When the trust is terminated, the charity is paid the remaining assets.

CRTs are best used in situations where the retiring farmer does not have a successor and must sell all operating assets.  CRTs should generally not be used when the farming operation is to be passed along to the next generation.  A CRT can be an excellent strategy to help a retiring farmer reduce income tax liability and provide a charitable donation but it is not for everyone.  Be sure to consult with your team of advisors before deciding upon or implementing a CRT.

For a detailed discussion of CRTs, including advantages and disadvantages, see the new publication Charitable Remainder Trusts as a Retirement Strategy for Farmers available on farmoffice.osu.edu.

Little girl walking through strawberry patch with basket of berries
By: Peggy Kirk Hall, Wednesday, May 08th, 2024

Many of Ohio’s farm markets, u-picks, farm petting zoos, and other “agritourism” operations are preparing to open for their spring and summer activities.  While these types of agritourism activities are popular, they raise unique liability concerns. That’s because there is always the risk of an injury or harm when bringing people onto the farm, whether allowing them to be near animals, riding on equipment, in crop and orchard areas, or engaging in physical activities.  Along with readying the farm for the new season, agritourism operators should also plan for the possibility of a liability incident. 

Here are five actions agritourism providers can take to manage liability risk.

  1. Conduct a safety review.   Inspect your operation with visitor safety in mind.  Remember, many visitors have never been on a farm or don’t understand what might harm them on a farm. Examine all areas visitors will be in, including surrounding “off limits” areas visitors might try to access, and identify any possible safety hazards.  Pay extra attention to areas children will use. Consider these questions:
    • Are the facilities, fences, gates, steps, play areas, and other structures in good repair?
    • Are doors and gates working and latching properly?
    • Are pesticides, herbicides, or chemicals out of sight and inaccessible?   
    • Are animal enclosures sound, do any “dangerous” animals need to be fully off limits to visitors, and are there handwashing stations near animal contact areas?
    • Are there any accessible dangers that might attract children, such as ladders, equipment, lagoons, large tractor tires, and wells?
    • Are parking areas and walkways sufficiently sized and buffered from traffic?

Look for the potential dangers, then take actions such as making repairs; installing blockades, fences, locks, or other structures to keep visitors away; putting up signs and warnings; providing instructions or maps; expanding parking areas or walkways; and removing unnecessary dangers.

  1. Complete our Agritourism Ready course.  Be prepared for the possibility of an emergency situation—both natural and man-made disasters can raise the need for an emergency response. How an operation responds to an emergency can reduce harm to visitors and ultimately affect the operation’s risk of liability or harm.  OSU offers a curriculum that helps agritourism operations reduce risks by developing an emergency management plan.  Access this valuable and free resource at https://u.osu.edu/agritourismready/.
  2. Train employees.  A business is legally responsible for the negligence of its employees, so it’s important to reduce the risk that an employee’s actions will cause or contribute to a visitor’s harm.  Provide thorough safety training to agritourism employees.  Make sure employees know how to do the job, including activities like operating equipment, maintaining and cleaning visitor areas, handling animals, overseeing children, and responding to a safety incident.
  3. Obtain agritourism insurance coverage.  Insurance is an excellent liability management tool.  But be aware that a typical farm insurance policy does not cover agritourism activities, and a separate endorsement or policy may be necessary.  Even if a farm has a separate endorsement for agritourism, it’s still important to ensure that any new agritourism activities fall under the agritourism coverage. Now is the time to schedule a visit with the insurance provider and review the insurance policy.  Don’t be secretive about what you’re doing in your operation.  Share all activities with the provider and ensure that each activity is covered by the policy.  If an activity is not covered or will require costly additional coverage, weigh the risk, costs, and benefits of continuing to offer the activity.
  4. Install the Ohio agritourism immunity sign.  I’ve been surprised recently by how many operations I’ve visited that do not have an agritourism immunity sign on display. Posting the sign is a critical risk management tool.  That’s because Ohio law provides civil immunity for qualifying agritourism providers if a visitor suffers harm or injuries due to the “inherent risks” of being on a farm.  To receive the immunity, however, an agritourism provider must post the required agritourism immunity sign at the entrance to or near the agritourism activities.  The agritourism immunity sign warns visitors that the operation is not liable for harm from inherent risks and that they are assuming the risk of participating in agritourism activities. But while it’s an important tool, don’t let the sign replace all of the other recommendations provided in this article.  Read more about the immunity law and the agritourism immunity sign in our law bulletin, Ohio’s Agritourism Law, available on farmoffice.osu.edu.

Agritourism is a thriving industry in Ohio. Taking legal precautions to manage liability risk will help ensure that agritourism remains an important component of Ohio agriculture. To learn more about legal issues in agritourism, visit OSU’s Agritourism Law Library on the Farm Office website at farmoffice.osu.edu/law-library.

By: Robert Moore, Thursday, May 02nd, 2024

Retirement means different things to different farmers.  For some, retirement is the slow, gradual process of turning over the farming operation to the next generation. For others, retirement may be the immediate sale of operating assets when there is not an heir to take over the farming operation.  Regardless of the type of retirement, operating assets will often be transferred.  This article will discuss the different strategies to transfer operating assets and the implications of each strategy.

Strategy #1.  Gifting

The gifting of assets is the simplest transfer strategy.  Gifting works best when the assets are being transferred to a family member and no income is needed from the assets.  While gifting may seem like the obvious best solution if transferring to a family member, there are significant negative tax implications to gifting that should be considered.

Advantages

  • Simple
  • Ownership is transferred relieving owner of liability and responsibility for repairs and maintenance
  • Helps next generation

Disadvantages

  • No income to owner
  • Loss of stepped-up tax basis

Strategy #2. Outright Sale

When income is needed from operating assets, a sale may be the best transfer strategy.  Because many operating assets are untitled, a sale can be completed rather easily.  The buyer provides the funds and the sale is completed.  An outright sale is considered to be a sale that involves all assets being transferred simultaneously with a payment for the entire sale.

Advantages

  • Creates income
  • Relieves owner of liability and maintenance responsibilities

Disadvantages

  • Tax liability is usually significant due to little or no tax basis and depreciation recapture
  • Will use resources of next generation of farmer

Strategy #3.  Gradual Sale

Instead of an outright sale, assets can be sold gradually, over time.  Usually in this strategy, a few items are sold each year until transfer is complete.  The sales can happen somewhat uniformly each year or be adjusted as the seller needs income and/or the buyer has available resources to purchase.

Advantages

  • May help keep seller in lower income tax brackets by spreading out income
  • Relatively simple

Disadvantages

  • Owner must wait to receive income for all assets
  • Owner retains some ownership and thus retains some liability and responsibility for maintenance

Strategy #4. Installment Sale

An installment sale involves the sale of the assets with payment being made over a number of years.  This strategy may seem attractive as a way to sell assets and spread income over time.  However, an installment sale is often the worst strategy when selling operating assets because the IRS requires all depreciation recapture taxes to be paid in the first year of the installment sale.  Be sure to discuss an installment sale with your tax advisor before implementing this strategy.

Advantages

  • Transfers ownership immediately to eliminate liability and maintenance
  • After the taxes are paid in year 1, little or no taxes may be owed on the remaining payments

Disadvantages

  • All depreciation recapture tax is due in the first year of the installment sale
  • Risk of buyer not making payments

Strategy #5. Lease with Purchase Option

A lease allows payments to be spread over the term of the lease with taxes due upon receipt of each payment, rather than all due up front.  The person leasing the machinery can then be given the option to purchase the machinery upon the expiration of the lease.  For the retiring farmer who needs income from their machinery, this is a strategy worth exploring.

Advantages

  • Spreads income and tax liability over the term of the lease
  • May help cash flow for buyer and lease payments are a deductible expense

Disadvantages

  • Ownership is retained so remain liable for the asset
  • The “Buyer” does not own the asset so cannot use as collateral
  • It can be complicated to determine lease rates when machinery is traded, replaced or sold

Strategy #6. Integrating a Business Entity into the Transfer Plan

Using a business entity, such as a limited liability company (LLC) , for the transfer of operating assets can have multiple benefits.  An LLC can reduce liability exposure, simplify the transfer process, and reduce tax liability.  Anyone transferring operating assets should consider incorporating an LLC into the process.

Advantages

  • Will provide liability protection for the owner of the assets
  • Sale of entity ownership is usually considered a capital gain which is taxed at lower rates

Disadvantages

  • Can cost up to several thousand dollars to set up
  • Business entity requires management such as accounting, bank accounts and tax returns

Strategy #7.  Charitable Remainder Trust

A Charitable Remainder Trust (CRT) can be an excellent strategy for the retiring farmer to sell operating assets without immediate tax liability, receive a long-term flow of income and make a charitable contribution.  The strategy involves establishing a charitable trust, transferring operating assets to the trust, then selling the assets through the trust.  Due to the charitable nature of the CRT, no tax is due upon the sale of the assets.  The CRT then establishes an annuity for the retiring farmer which generates annual income.  At the termination of the CRT, the remaining principal in the CRT is donated to the charitable beneficiary.  The CRT strategy is the most complicated strategy and will require the most legal and accounting fees.

For a detailed discussion of the CRT strategy, see the Charitable Remainder Trusts as a Retirement Strategy for Farmers bulletin available at farmoffice.osu.edu.

Conclusion

There are several strategies that can be implemented to transfer operating assets at retirement.  There is no perfect strategy, each one has advantages and disadvantages.  A thorough analysis of the implications to income, taxes, liability and cash flow of each strategy should be performed before deciding on the preferred strategy.  Working with knowledgeable tax and legal counsel can help with the decision-making process and reduce the chances of unwanted or unexpected outcomes.

For more information on these strategies, see the Strategies for Transferring Farm Operating Assets bulletin available at farmoffice.osu.edu.

The Federal Trade Commission Website.
By: Jeffrey K. Lewis, Esq., Monday, April 29th, 2024

As April comes to a close, we bring you another edition of the Ag Law Harvest. This month’s harvest brings you laws and regulations from across the country regarding a national drinking water standard, the Endangered Species Act, Ag-Gag laws, noncompete agreements, and pollution. 

EPA Finalizes First-Ever PFAS Drinking Water Standards
Earlier this month, the U.S. Environmental Protection Agency (“EPA”) announced a final rule, issuing the “first-ever national, legally enforceable drinking water standard to protect communities from exposure to harmful per-and polyfluoroalkyl substances (PFAS), also known as ‘forever chemicals’”. The final rule sets legally enforceable maximum contaminant levels for six PFAS chemicals in public water systems. The EPA also announced nearly $1 billion in new funding to “help states and territories implement PFAS testing and treatment at public water systems and to help owners of private wells address PFAS contamination.” The EPA suggests that this final rule “will reduce PFAS exposure for approximately 100 million people, prevent thousands of deaths, and reduce tens of thousands of serious illnesses.” 

Interior Deptartment Finalizes Rule to Strengthen Endangered Species Act
The Department of the Interior has announced that the U.S. Fish and Wildlife Service finalized revisions to the Endangered Species Act (ESA). These revisions aim to enhance participation in voluntary conservation programs by promoting native species conservation. They achieve this by clarifying and simplifying permitting processes under Section 10(a) of the ESA, encouraging greater involvement from resource managers and landowners in these voluntary initiatives. For more information about Section 10 of the ESA visit the U.S. Fish and Wildlife Service’s website.

Kentucky Passes Ag-Gag Statute
On April 12, 2024, the Kentucky legislature overrode the governor’s veto to pass Senate Bill 16 into law. The new law, titled “An Act Relating to Agricultural Key Infrastructure Assets,” expands the definition of “key infrastructure assets” to include commercial food manufacturing or processing facilities, animal feeding operations, and concentrated animal feeding operations. It criminalizes trespassing on such properties with unmanned aircraft systems, recording devices, or photography equipment without the owner's consent. The first offense is a Class B misdemeanor with up to 90 days imprisonment and a $250 fine, while subsequent offenses are Class A misdemeanors with up to 12 months imprisonment and a $500 fine.

Federal Trade Commission Bans Non-Compete Agreements
The Federal Trade Commission (“FTC”) announced a final rule banning noncompete agreements and clauses nationwide. This move aims to promote competition by safeguarding workers’ freedom to change jobs, increasing innovation and the formation of new businesses. Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. However, existing noncompetes for senior executives – those earning more than $151,164 annually and in policy making positions – remain enforceable under the new rule. Employers will have to notify workers bound to an existing noncompete that the noncompete agreement will not be enforced against the worker in the future. The final rule will become effective 120 days after publication in the Federal Register.  

EPA Announces New Rules to Reduce Pollution from Fossil Fuel-Fired Power Plants 
The U.S. Environmental Protection Agency (“EPA”) unveiled a set of final rules designed to decrease pollution from fossil fuel-fired power plants. These rules, developed under various laws such as the Clean Air Act, Clean Water Act, and Resource Conservation and Recovery Act, aim to protect communities from pollution and improve public health while maintaining reliable electricity supply. They are expected to substantially reduce climate, air, water, and land pollution from the power industry, aligning with the Biden-Harris Administration's goals of promoting public health, advancing environmental justice, and addressing climate change.

 

Multi-colored chicken eggs in an egg carton
By: Peggy Kirk Hall, Thursday, April 25th, 2024

In time for another farmers’ market season, Ohio has a new food license available for food entrepreneurs who sell eggs, meats, and certain home-produced foods at farmers markets and similar venues.  A new “Low Risk Mobile Retail Food Establishment license” (Low Risk MRFE) offers a lower risk level license that will benefit many of Ohio’s farm-based and home-produced food vendors. Regulations establishing the new license were effective on February 12, 2024.

Ohio law has historically required an MRFE license for vendors selling certain foods from mobile units such as trucks, trailers, tents, and stalls at farmers markets and similar locations. All mobile vendors, regardless of the risk level of the food they were selling, had to obtain the same type of MRFE license.  That changes with the new regulations, which create two types of MRFE licenses, low risk and high risk, and different licensing requirements for each.

The new Low Risk MRFE license offers two positive changes for the mobile food vendors who qualify for it:

  • The Low Risk MRFE license will be half the cost of the High Risk MRFE license, and,
  • Low Risk MRFE license holders can use non-mechanical refrigeration rather than commercial equipment to maintain their food product temperatures.

Here’s an explanation of the new Low Risk MRFE license option.

Mobile vendors that qualify for the Low Risk MRFE license

The Low Risk MRFE license is available for mobile vendors whose activities fall into a low risk level.  Low risk level activity means the food poses a potential risk to the public in terms of sanitation, food labeling, sources of food, and food storage practices at the mobile unit, but the risk is lower than higher risk food activities. Low risk activities involve foods that were “pre-packaged” before being brought to sell at the mobile unit, and include the activities of holding pre-packaged refrigerated or frozen foods that require temperature controls for safety and offering pre-packaged foods that do not require temperature controls for safety. See Ohio Admin. Code 901:3-4-05(E)

If pre-packaged, these foods that are held and offered for sale from a mobile unit will qualify for the Low Risk MRFE:

  • Eggs
  • Frozen and refrigerated meats and fish
  • Foods from a licensed Home Bakery that require refrigeration, such as cheesecakes and cream pies
  • Cheeses and dairy products from a licensed Milk Producer or Milk Processor
  • Frozen foods from a facility with a Frozen Foods License
  • Cottage foods from a cottage food operation, but the MRFE is not required  if the cottage foods are sold at any of these locations:  farmers market, farm market, registered farm product auction, a political subdivision sponsored festival or celebration, or direct from the producer’s residence.

Holding temperature requirements for a Low Risk MRFE

There has long been confusion about the type of equipment an MRFE vendor must use to maintain the temperature of refrigerated or frozen foods, and some health departments have required vendors to use only commercial refrigerators or freezers.  That will change under the new rule, which allows a Low Risk MRFE license holder to choose whether to use mechanical or non-mechanical refrigeration such as ice, ice packs, gel packs, or dry ice.  The rule does not require the use of commercial equipment. 

There are several important points mobile vendors should note about the new rule:

  • When applying for the MRFE license or renewal, a vendor should explain their refrigeration choice and method, and the health department might require a plan or process for replenishing the cooling material if using non-mechanical equipment.  The health department will note the refrigeration information on the MRFE license.
  • The new rule requires a vendor to refresh or replenish the ice, ice packs, gel packs, or dry ice every four hours.
  • A vendor should keep a working thermometer inside each cooler or refrigerating unit and be able to document that the temperature is within the allowable range for the food held in the unit.
  • Gel packs and dry ice are preferred non-mechanical methods for maintaining food packaged in paper because wet ice can destroy paper packages and increase food safety risk.

See Ohio Admin. Code 3717-1-04.1(K)(K)

Lesser fee for Low Risk MRFE licenses

The new rule specifies that a Low Risk MRFE license fee will be 50% of the health department’s fee for high risk MRFEs. See Ohio Admin. Code 901:3-4-03(A)

New signage requirement for MRFEs

The new rule also requires any MRFE vendor to display specific information on the exterior of the mobile unit, in individual lettering at least three inches high and one inch wide.  The information must include:

  • Name of the operation
  • The operation’s city of origin
  • The operation’s telephone number, including area code

See Ohio Admin. Code 901:3-4-02(I)

High Risk MRFEs

A High Risk MRFE creates higher potential risks due to concerns with receiving, holding, cooking, cooling, processing, handling, and heating food products.  Activities such as assembling or cooking, heating, and reheating foods are high risk activities.  A few examples of high risk activities include making kettle corn or soft serve ice cream. Most farm-based and home-produced food activities will not require the High Risk MRFE.  See Ohio Admin. Code 901:3-4-05(E)

For additional questions about the new Low Risk MRFE license, contact your local health department or the Ohio Department of Agriculture's Food Safety Division.

Pages