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By: Peggy Kirk Hall, Wednesday, November 29th, 2017

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

Veal and dairy producers in Ohio will be subject to new livestock care standards in 2018. Producers were first made aware of these changes when the Ohio Livestock Care Standards for veal, dairy and other species were originally adopted in September of 2011 after the passage of State Issue 2, a constitutional amendment that required Ohio to establish standards for the care of livestock. Since the new care standards make significant changes to the management of veal and dairy, producers were given a little more than six years to transition their facilities and practices accordingly. The new standards will be effective on January 1, 2018.  Producers with veal calves and dairy cattle are encouraged to understand the regulations and make the required changes to their operations by January 1.

Changes to veal regulations

The regulations for veal address housing for veal calves weighing 750 pounds or less. Currently, veal calves may be tethered or non-tethered in stalls of a minimum of 2 feet x 5.5 feet. Next year, the following housing standards will apply:

  • Tethering will be permitted only to prevent naval and cross sucking and as restraint for examinations, treatments and transit, if:
    • The tether is long enough to allow the veal calf to stand, groom, eat, lie down comfortably and rest in a natural posture;
    • The tether’s length and collar size is checked every other week and adjusted as necessary.
  • Individual pens must allow for quality air circulation, provide opportunity for socialization, allow calves to stand without impediment, provide for normal resting postures, grooming, eating and lying down, and must be large enough to allow calves to turn around.
  • By the time they are ten weeks old, veal calves must be housed in group pens. The regulations currently require that group pens meet the above standards required for individual pens and also must contain at least two calves with a minimum area of 14 square feet per calf, must separate calves of substantially different sizes and that calves must be monitored daily for naval and cross sucking and be moved to individual pens or provided other intervention for naval or cross sucking.

The veal regulations, including both the current rules and the rules that will become effective January 1, are available here.

Changes to dairy cattle regulations

There is only one change to the dairy care standards. As of January 1, docking the tails of dairy cattle will only be permissible if:

  • Performed by a licensed veterinarian; and
  • Determined to be medically necessary.

The dairy cattle standards, including the current tail docking rule and the rule that becomes effective January 1, are here.

More information is also available in this press release recently published by the Ohio Department of Agriculture and on the website for Ohio’s Livestock Care Standards, which is here.

By: Peggy Kirk Hall, Wednesday, November 15th, 2017

UPDATE 2:  The federal spending bill signed into law on March 23, 2018 contained a provision stating that air emissions from animal waste at a farm are not subject to CERCLA reporting requirements, nor are emissions from the application, handling or storage of registered pesticides.

UPDATE:  The court has delayed these new reporting requirements for a second time-- the new date is May 1, 2018.  Farm operations of certain sizes are now required to report air emissions of certain hazardous substances that exceed a reportable quantity under CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act.  This new requirement affects livestock farmers with larger numbers of animals, as they may exceed the reportable quantity for ammonia emissions.  We've authored a new Law Bulletin on Continuous Release Reporting of Air Emissions for Livestock Farms to help farms determine whether they must report air emissions and if so, how to complete the reporting process.  The new bulletin is available here.

Read more about the new CERCLA air emissions reporting mandate in our earlier post.

Rover Pipeline's route across Ohio
By: Peggy Kirk Hall, Tuesday, November 14th, 2017

Longstanding complaints against Rover Pipeline's environmental practices while constructing an interstate natural gas pipeline across Ohio recently culminated in a lawsuit against the company.  Attorney General Mike Dewine filed the suit in Stark County on behalf of the Ohio EPA, alleging that Rover illegally discharged drilling fluids, sediment-laden storm water and several million gallons of drilling fluids into Ohio waters, including wetlands in Stark County.  The state seeks a court order requiring Rover to apply for state permits, comply with environmental plans approved and ordered by the Ohio EPA, and pay civil penalties of $10,000 per day for each violation. 

To read more about the state's claims visit this post by our partner, the National Agricultural Law Center.

Posted In: Environmental, Oil and Gas
Tags: pipelines, rover pipeline
Comments: 0
By: Peggy Kirk Hall, Monday, November 06th, 2017

Written by Peggy Hall and Ellen Essman

UPDATE 4:  Congress has clarified in new legislation enacted on March 23, 2018,  that emissions from animal waste on farms are not subject to CERCLA reporting.

UPDATE 3:  The U.S. EPA has requested and received an additional reporting delay until May 1, 2018 or after and has advised that the agency will provide a notice of the specific date that farms should begin reporting once the court enters its final order.

UPDATE 2:  The court has delayed theese new reporting requirements until January 22, 2018.

UPDATE 1:  The EPA and several agricultural groups have requested the court for a delay of the November 15 reporting deadline, but the court has not yet responded to the request.  Due to a high call volume, the EPA is now advising that producers should utilize the e-mail option for continuous reporting, rather than calling the NRC line. We explain the reporting requirements in this new Law Bulletin, Continuous Release Reporting of Air Emissions for Livestock Farms.

Beginning November 15, 2017, many livestock, poultry and equine farms must comply with reporting requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) section 103. The law requires entities to report releases of hazardous substances above a certain threshold that occur within a 24-hour period. Farms have historically been exempt from most reporting under CERCLA, but in the spring of 2017 the U.S. Court of Appeals for the District of Columbia Circuit struck down the rule that allowed reporting exemptions for farms. As long as there is no further action by the Court to push back the effective date, farmers and operators of operations that house beef, dairy, horses, swine and poultry must begin complying with the reporting requirements on November 15, 2017.

Farmers and operators, especially of sizeable animal operations that are likely to have larger air emissions, need to understand the reporting responsibilities. The Environmental Protection Agency (EPA) has published interim guidance to assist farms with the new compliance obligations. The following summarizes the agency’s guidance.

What substances to report

The EPA specifically names ammonia and hydrogen sulfide as two hazardous substances commonly associated with animal wastes that will require emissions reporting. Each substance has a reportable quantity of 100 pounds. If a farm releases 100 pounds or more of either substance to the air within a 24-hour period, the owner or operator must notify the National Response Center. A complete list of hazardous substances and their corresponding reportable quantities is here.

Note that farmers do not have to report emissions from the application of manure, and fertilizers to crops or the handling, storage and application of pesticides registered under federal law. However, a farmer must report any spills or accidents involving these substances when they exceed the reportable quantity.

How to report

Under CERCLA, farm owners and operators have two compliance options—to report each release or to follow the continuous release reporting process:

  • For an individual release that meets or exceeds the reportable quantity for the hazardous substance, an owner or operator must immediately notify the National Response Center (NRC) by phone at 1-800-424-8802.
  • Continuous release reporting allows the owner or operator to file an “initial continuous release notification” to the NRC and the EPA Regional Office for releases that will be continuous and stable in quantity and rate. Essentially, this puts the authorities “continuously” on notice that there will be emissions from the operation within a certain estimated range. If the farm has a statistically significant increase such as a change in the number of animals on the farm or a significant change in the release information, the farm must notify the NRC immediately. Otherwise, the farm must file a one year anniversary report with the EPA Regional Office to verify and update the emissions information and must annually review emissions from the farm. Note that a farm must submit its initial continuous release notification starting on November 15, 2017.

No reporting required under EPCRA

The litigation that led to CERCLA reporting also challenged the farm exemption from reporting for the Emergency Planning and Community Right to Know Act (EPCRA). EPRCRA section 304 requires facilities at which a hazardous chemical is produced, used or stored to report releases of reportable quantities from the chemicals. However, EPA explains in a statement issued on October 25, 2017 that the statute excludes substances used in “routine agricultural operations” from the definition of hazardous chemicals. EPCRA doesn’t define “routine agricultural operations,” so EPA states that it interprets the term to include regular and routine operations at farms, animal feeding operations, nurseries, other horticultural operations and aquaculture and a few examples of substances used in routine operations include animal waste stored on a farm and used as fertilizer, paint used for maintaining farm equipment, fuel used to operate machine or heat buildings and chemicals used for growing and breeding fish and plans for aquaculture. As a result of this EPA interpretation, most farms and operations do not have to report emissions under EPCRA. More information on EPA’s interpretation of EPCRA reporting for farms is here.

What should owners and operators of farms with animal wastes do now?

  1. Review the EPA’s interim guidance on CERCLA and EPCRA Reporting Requirements, available here.
  2. Determine if the operation may have reportable quantities of air emissions from hazardous substances such as ammonia or hydrogen sulfide. The EPA offers resources to assist farmers in estimating emission quantities, which depend upon the type and number of animals and type of housing and manure storage facilities. These resources are available here.
  3. A farm that will have reportable emissions that are continuous and stable should file an initial continuous release notification by November 15, 2017. A guide from the EPA for continuous release reporting is here. Make sure to understand future responsibilities under continuous release reporting.
  4. If not operating under continuous release reporting, immediately notify the National Response Center at National Response Center (NRC) at 1-800-424-8802 for any release of a hazardous substance that meets or exceeds the reportable quantity for that substance in a 24-hour period, other than releases from the normal application or handling of fertilizers or pesticides.
  5. Learn about conservation measures that can reduce air pollution emissions from agricultural operations in this guide from the EPA.

Note that the EPA is seeking comments and suggestions on the resources the agency is providing or should provide to assist farm owners and operators with meeting the new reporting obligations. Those who wish to comment should do so by November 24, 2017 by sending an e-mail to CERCLA103.guidance@epa.gov.

By: Peggy Kirk Hall, Thursday, November 02nd, 2017

The American Agricultural Law Association held its national conference last week in Louisville, Kentucky, and two Ohio law students from OSU Moritz College of Law and Capital University Law School took top honors in the student competitions.  Evin Bachelor and  Devon Alexander joined forces with U. of Houston law student Sara Luther and finished first in the Student Quiz Bowl competition.  The Quiz Bowl requires law students to correctly answer questions about law, agriculture and agricultural law.   

Bachelor also entered and won first place in the Student Poster Competition with his research project titled "Ohio: The Midwestern Ag Mediation Holdout." Bachelor discussed the potential for Ohio to become one of the last midwestern states to engage in USDA's Agricultural Mediation Program.  Bachelor is a third year law student at OSU's Moritz College of Law and Alexander is a second year law student at Capital University Law School.  Both hope to work in the agricultural law arena after law school. 

OSU was able to send the students to the conference due to the generous support of the Paul L. Wright Endowment in Agricultural Law at OSU.

For more information about the American Agricultural Law Association, visit https://www.aglaw-assn.org/

By: Peggy Kirk Hall, Tuesday, October 24th, 2017

Last week, the Environmental Protection Agency (EPA) announced an agreement with Monsanto, BASF and DuPont to change dicamba registration and labeling beginning with the 2018 growing season. EPA reports that the agreement was a voluntary measure taken by the manufacturers to minimize the potential of dicamba drift from “over the top” applications on genetically engineered soybeans and cotton, a recurring problem that has led to a host of regulatory and litigation issues across the Midwest and South. The upcoming changes might alleviate dicamba drift issues, but they also raise new concerns for farmers who will have more responsibility for dicamba applications.

The following registration and labeling changes for dicamba use on GE soybeans and cotton will occur in 2018 as a result of the agreement:

  • Dicamba products will be classified as “restricted use” products for over the top applications. Only those who are certified through the state pesticide certification program or operating under the supervision of a certified applicator may apply the product. Training for pesticide certification will now include information specific to dicamba use and application, and applicators will be required to maintain records on the use of dicamba products.
  • The maximum wind speed for applications will reduce from 15 mph to 10 mph.
  • There will also be greater restrictions on the times during the day when applications can occur, but details are not yet available on those restrictions.
  • Tank clean-out instructions for the prevention of cross contamination will be on the label.
  • The label will also include language that will heighten the awareness of application risk to sensitive crops.

Farmers should note that the additional restrictions and information on dicamba labels shifts more responsibility for the product onto the applicator.  An applicator must take special care to follow the additional label instructions, as going “off label” subjects an applicator to higher risk. If drift occurs because of the failure to follow the label, the applicator is likely to be liable to the injured party for resulting harm and may also face civil penalties. Producers should take care to assess the new dicamba labels closely when the manufacturers issue the revised labels for 2018.

To learn more about legal issues with pesticide use, be sure to sit in on the Agricultural & Food Law Consortium’s upcoming webinar, “From Farm Fields to the Courthouse: Legal Issues Surrounding Pesticide Use.” The webinar will take place on Wednesday, November 1 at Noon EST and will feature an examination of regulatory issues and litigation surrounding pesticide use around the country by attorneys Rusty Rumley and Tiffany Dowell Lashmet. To view the free webinar, visit http://nationalaglawcenter.org/consortium/webinars/pesticide/

By: Peggy Kirk Hall, Friday, October 06th, 2017

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

The U.S. Senate has passed a bill sponsored by Ohio senators Sherrod Brown and Rob Portman that intends to improve the federal response to water pollution by amending the Harmful Algal Bloom and Hypoxia Research and Control Act of 1998.  Senate Bill 1057 will now move on to the House of Representatives for debate.

What are harmful algal blooms and hypoxia?

The EPA defines harmful algal blooms as “overgrowths of algae in water,” some of which “produce dangerous toxins in fresh or marine water.” The toxins can be dangerous for humans and animals. One major contributor to algal blooms is an excess of nitrogen and phosphorus in the water.  Hypoxiacan also be caused by too much nitrogen and phosphorus in the water. The EPA defines hypoxia as “low oxygen” in water. Hypoxia sometimes goes hand-in-hand with algal blooms, because as algae dies, it uses oxygen, which in turn removes oxygen from the water. Algal blooms and hypoxia have been a problem in Lake Erie and other parts of the country.

Background of the law

The Harmful Algal Bloom and Hypoxia Research and Control Act was passed in 1998 in response to harmful algal blooms and hypoxia along the coast of the United States. When passing the law, Congress cited scientists who said both problems were caused by “excessive nutrients.” Furthermore, Congress found that harmful algal blooms had caused animal deaths, health and safety threats, and “an estimated $1,000,000,000 in economic losses” in the previous decade.

The law established an interagency Task Force on Harmful Algal Blooms and Hypoxia (Task Force), which was charged with submitting an assessment to Congress on the “ecological and economic consequences” of both harmful algal blooms and hypoxia. The assessments were to include “alternatives for reducing, mitigating, and controlling” harmful algal blooms and hypoxia. A number of other reports and assessments were also required, which were to all culminate in a plan to combat and reduce the impacts of harmful algal blooms. Additionally, the Act singled out the areas of the Northern Gulf of Mexico and the Great Lakes. For these two areas, the Act required additional progress reports and mitigation plans.

The Act has undergone a few amendments throughout the years. The amendments have expanded and/or renewed the duties of the Task Force and other state and federal actors. Most notably, amendments in 2014 created the national harmful algal bloom and hypoxia program (Program) and a comprehensive research plan and action strategy. Under the Program, the National Oceanic and Atmospheric Administration (NOAA) was charged with administering funding to programs combatting algal blooms and hypoxia, working with state, local, tribal, and international governments to research and address algal blooms and hypoxia, and supervising the creation and review of the action strategy, among other duties. The action strategy identified the “specific activities” that the Program should carry out, which activities each agency in the Task Force would be responsible for, and the parts of the country where even more specific research and activities addressing algal blooms and hypoxia would be necessary.

What changes are proposed?

SB 1057 would make a number of changes and additions to the current law. Overall, the goal of the bill seems to be to strengthen the federal government’s ability to research and respond to water pollution in the form of algal blooms and hypoxia. The most important amendments in the bill would:

  • Add the Army Corps of Engineers to the list of agencies on the Task Force.
  • Combine the sections on freshwater and coastal algal blooms, and require that scientific assessments be submitted to Congress every five years for both types of water.
  • Establish a website that would provide information about the harmful algal bloom and hypoxia program (Program) activities to “local and regional stakeholders.”
  • Require the Task Force to work with extension programs to promote the Program and “improve public understanding” about harmful algal blooms and hypoxia.
  • Require the use of “cost effective methods” when carrying out the law.
  • Require the development of “contingency plans for the long-term monitoring of hypoxia.”
  • Fund the Program and the comprehensive research plan and action strategy from 2019 through 2023.

Most importantly, SB 1057 would add a completely new section to the law that would allow federal officials to “determine whether a hypoxia or harmful algal bloom event is an event of national significance.” Under the new language, the federal official can independently determine that such an event is occurring, or the Governor of an affected state can request that a determination to be made.

When making the determination, the federal official would have to take a number of factors into consideration including:

  • Toxicity of the harmful algal bloom;
  • Severity of the hypoxia;
  • Potential to spread;
  • Economic impact;
  • Relative size in relation to the past five occurrences of harmful algal blooms or hypoxia events that occur on a recurrent or annual basis; and
  • Geographic scope, including the potential to affect several municipalities, to affect more than one State, or to cross an international boundary.

Finally, in the case an event of national significance is found, the the federal official would have the power to give money to the affected state or locality to mitigate the damages. However, SB 1057 states that the federal share of money awarded cannot be more than 50% of the cost of any activity. The federal official would have the power to accept donations of “funds, services, facilities, materials, or equipment” to supplement the federal money.

The bill now goes to the House of Representatives for consideration. Text and information on SB 1057 is available here. To read the current law, click here. For further information on water pollution, check out the EPA’s pages on harmful algal blooms and hypoxia.

By: Peggy Kirk Hall, Monday, October 02nd, 2017

Are you using the correct version of the I-9 Form to verify that your new employees are eligible for employment?  Employers  must now use only the revised July 17, 2017 version of Form I-9 for employment eligibility verification for new hires.

The U.S. Citizenship and Immigration Services (USCIS) made a few revisions on the July 17, 2017 version of the I-9 Form.  Employers can now accept an individual's Consular Report of Birth Abroad (Form FS-240) as an acceptable document for employment authorization under List C.  The instructions for the new form also reflect the name change for the office that enforces anti-discrimination provisions of the Immigration and Nationality Act.  The office is now called the Immigrant and Employee Rights Section, which replaces the previous Office of Special Counsel for Immigration-Related Unfair Employment Practices.

The current I-9 Form is available here.  USCIS provides helpful resources to assist employers with completing the I-9 Form are here

Posted In: Labor
Tags: Form I-9, employment verification
Comments: 0
By: Peggy Kirk Hall, Wednesday, September 27th, 2017

We're happy to return to our blog after a short summer recess, but are sad to have lost fellow blogger and Law Fellow Chris Hogan, who has moved to California.  Chris is now in private practice with agricultural attorney Tim Kelleher.  We are confident that California agriculture is in good hands!    

Our first blog post concerns updates to Ohio’s Agricultural Fertilizer Applicator Certification Program.   The Ohio Department of Agriculture (ODA) recently revised the rules in order to fine-tune the program established in 2014 by Ohio’s legislature. ODA made several changes to the certification, education, and recordkeeping requirements for those who apply agricultural fertilizers to more than 50 acres of land in agricultural production.  The changes go into effect on October 1, 2017.

Updates to the Certification Requirements

Three modifications to the certification requirements will: 1) provide additional clarity about how the certifications apply to employees, 2) adjust the cycle for when the certifications begin and expire, and 3) establish a grace period to obtain a renewal certification after a prior certification has expired.

  1. The new rule clarifies how the requirements apply to employees of businesses and farms, a provision that was unclear under the old rule. The certification rule requires all persons who apply fertilizer for the purpose of agricultural production on more than 50 acres of land to either personally have a certificate issued by the ODA Director, or to act under the instruction and control of a certificate holder. The person acting under the certificate holder must be either a family member of the certificate holder, or “employed by the same business or farm as the certificate holder.”
  2. Instead of starting on June 1 of year one and ending on May 31 of the third year, the certification period for an applicator will run from April 1 of year one until March 31of the third year. The new cycle will avoid mid-season headaches by ensuring that certifications will generally be in place prior to planting season.
  3. The new rule provides a grace period to certificate holders who do not renew their certificates prior to the expiration of their old certificates. If a certificate holder’s certificate expires before they complete a renewal application, the new rule gives the expired certificate holder 180 days after the date of expiration to complete the renewal process. The primary benefit of this grace period is that within the 180 day period, the application will be treated as a renewal application rather than a new application, which requires fewer training hours.

Updates to the Education Requirements

ODA has modified the education requirements in two important ways:

  1. The rule provides an examination option as opposed to requiring all applicants to attend a certain number of hours of agricultural nutrient training. This allows individuals who know what ODA wants them to know about the topic to bypass the hours of training requirement.
  2. The new rule differentiates education requirements for new certification applications and renewal applications. Fewer training hours will be required for renewal applications than new applications.
    • New applicants have the option of either attending at least three hours of agricultural nutrient training or passing an ODA-approved fertilizer examination that demonstrates an “adequate knowledge of the fertilizer training requirements.” New applicants must successfully complete one of these options within the twelve months prior to applying for certification.
    • Those wishing to renew their certifications have the option of either attending one hour of agricultural nutrient training or passing an ODA-approved fertilizer examination. Those who obtain their fertilizer certificate within twelve months of applying for a renewal certificate do not have to complete the renewal education requirements.

Additional Recordkeeping Requirements

The final change to the program rules adds two new recordkeeping requirements. For each application of fertilizer, the fertilizer certificate holder must record:

  • The number of acres on which fertilizer is applied, and
  • The total amount of fertilizer applied, by either weight or volume.

These are in addition to the current requirements, which include maintaining records of:

  • The date, place, and rate of the application of fertilizer,
  • An analysis of the fertilizer applied,
  • The name of the individual who applied the fertilizer,
  • The name of the certificate holder,
  • The type of application method used,
  • The soil and weather conditions at the time of application,
  • The weather forecast for the day following the fertilizer application, and
  • For surface applications, whether the land was frozen and/or snow covered during the fertilizer application.

Each of these must be documented within 24 hours of the application. The existing timing requirements, such as how long the applicator has to submit the information to the certificate holder, have not changed.

For more information, visit ODA’s Agricultural Fertilizer Applicator Certification web page and OSU’s Nutrient Education and Management website. The program rules in Chapter 901:5-4 of the Ohio Administrative Code are here.  

By: Peggy Kirk Hall, Monday, August 14th, 2017

Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Agricultural and Food Law Consortium is holding a webinar regarding Using LLCs in Agriculture: Beyond Liability Protection this Wednesday, August 16th at 12:00 (EST).

The Limited Liability Company (LLC) is a relatively new type of business entity. The first LLC statute passed in Wyoming in 1977. Since then, all fifty states passed legislation permitting LLCs as an operating entity. Many Ohio farmers use the LLC as their preferred operating entity.

In Ohio, an LLC is a legal entity created by Ohio statute. An LLC is considered to be separate and distinct from its owners. An LLC may have a single owner in Ohio, or it may have numerous owners. LLCs combine the best attributes of a corporation and a partnership. Individuals, corporations, other LLCs, trusts, and estates may be members in a single LLC. There is no limit on maximum members.

The Importance of an Operating Agreement

When an agricultural operation chooses to operate as an LLC, that operation must consider drafting an operating agreement. An operating agreement specifies the financial responsibilities of the parties, how profits and losses are shared among members within the LLC, limitations on transfers of membership, and other basic principles of operation.

If an LLC does not choose to draft an operating agreement, Ohio’s default rules apply. Ohio law prescribes default rules of operation for LLCs in R.C. Chapter 1705. However, LLC members often wish to modify state rules to tailor an LLC to their business. Ideally, agricultural operators should draft an operating agreement with the assistance of an attorney.

Single Member LLCs

Every state in the Midwest permits single-member Limited Liability Companies (SMLLCs). A single member LLC is an LLC which has one member or manager; that means that there are no other owners or managers of that LLC. In 2016, Ohio enacted R.C. 1705.031 which states that Ohio LLC laws apply to all LLCs, including those with only one member. Therefore, small agribusinesses that have only one member are not prevented from forming an LLC. 

Will a Personal Guaranty on a Loan Affect Limited Liability Protection?

Ohio farmers operating as an LLC enjoy the benefits of limited liability protection. Usually, that means that the debts and obligations of a farm LLC operation are solely those of the LLC. That means that a farmer is not personally liable for any debts or obligations incurred by the LLC.

However, lenders, implement dealers, financial institutions, and others are finding ways around an LLC’s personal liability protection. Those parties are increasingly requiring that the members and managers of LLCs provide personal guarantees. That is, a member or manager of an LLC agrees to be personally liable for a debt or obligation, if an LLC is not able to pay.

A full discussion of personal guarantees and LLCs in an earlier blog post is here

LLCs are not Invincible

Limited Liability Companies are extremely popular among Ohio farmers. However, LLCs merely limit liability. LLCs don’t create a perfect liability shield, they are subject to a concept known as “veil piercing” where the owners of a company are held personally liable for the actions of the company.

Generally, a person cannot use a corporation to commit fraud on others or to use a corporation as an alter ego for a member’s own personal gain. Plainly speaking, Ohio courts may hold an owner of an LLC liable in certain cases of fraud committed by the LLC or where an LLC is undercapitalized and is not treated as a separate entity from a member (i.e. the LLC is used as an “alter ego”). While this is not a common scenario among farm business LLCs, LLC members should be aware that a business’s status as an LLC will not shield it from liability in all instances.

Carrying Liability Insurance

Many LLC owners consider the protections under Ohio’s LLC laws to be sufficient. Some LLC members are satisfied that their personal assets are sufficiently protected and separated from LLC assets and LLC liabilities. However, every business should have liability insurance. Liability insurance is a relatively inexpensive means of managing liability exposure for injuries and physical damage to a third party. While insurance doesn’t lower liability, it gives the business a way to pay for damages in the event of an incident.

The question of “how much liability insurance should a farm operation have?” is a difficult one. The amount of insurance that a farm should have must be determined on a case-by-case basis. Factors such as farm size, type of operation, location, and other factors impact the insurance needs of a farm operation.

More information on LLCs and other alternative business organizations through the National Agricultural Law Center is here.

 

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