Recent Blog Posts

Farmer holding clipboard and title of "Legal Groundwork Series, legal planning for the future of your farm"

By Robert Moore, Attorney and Research Specialist, Agricultural & Resource Law Program

Anyone who has ever been an Executor of an estate knows how much paperwork is involved with administering an estate.  The county probate court, which oversees the estate process, requires many filings to verify the assets the deceased person owned, determine the value of those estates and to ensure that the correct beneficiaries receive the assets.  Typically, administering an estate requires the assistance of an attorney familiar with probate rules and forms.

Like any professional providing services, attorneys will expect to be paid for their estate administration services.  Legal fees charged by an attorney for an estate must be approved by the probate court.  Many probate courts have established a schedule of fees that provides a benchmark for attorneys.  Basically, if the attorney’s legal fees are no more than the schedule of fees, the court will approve the fees.  The approved probate fees vary from county to county but are usually between 1% to 6% of the value of the estate. 

It is important to note that the court approved probate fees are a benchmark, not a requirement.  That is, the court is not requiring an attorney to charge those rates.  Instead, the court is merely stating that fees that do not exceed the benchmark will likely be approved.  It is up to each attorney to determine the fee structure to implement for their services.  Some attorneys may use the probate rates for fees while other attorneys may bill based on an hourly basis.

Before hiring an attorney, Executors should have a thorough discussion regarding the attorney’s fee structure.  The Executor should ask if the attorney charges on an hourly basis, flat rate basis or uses the county probate rates.  Based on the fee structure used, the attorney should be able to provide a good estimate of legal costs for the estate administration.  If the Executor has reason to believe the fees charged by the attorney may be too high, it’s helpful to consult with other attorneys who use a different fee structure and compare. 

Consider the following examples:

  • The county probate court allows a 2% legal fee rate for real estate that is not sold.  Joe passes away owning a $100,000 house.  Joe’s Will directs the house to be inherited by his daughter.  The attorney assisting with the estate administration uses fees based on the county rate.  The attorney will be entitled to $2,000 in legal fees.
  • Let’s change the scenario so that Joe owned a $1,000,000 farm when he passed away.  The attorney will be entitled to $20,000 in legal fees.

The above examples illustrate how probate rates work and also illustrates why executors should not automatically agree to pay the probate rates.  In the examples, the attorney basically does the same work – transfers one parcel of real estate to the daughter.  However, because the farm was worth ten times more in value, the attorney received ten times more in legal fees.

Let’s continue the scenario. 

  • The Executor thinks $20,000 in legal fees to transfer the farm may be too much.  The executor finds an attorney that charges hourly for estate administration, rather than using the county rates.  The attorney charges $200/hour and thinks it will take about 15 hours of work to have the farm transferred to Joe’s daughter.  Executor quickly decides to hire the second attorney and saves $17,000 in legal fees.

Often, probate rates can result in reasonable legal fees.  Charging $2,000 to transfer a $100,000 house is probably reasonable.  In some situations, particularly for smaller estates, the probate rates may be inadequate, and the attorney may seek permission from the court to charge in excess of the rates.  However, for farm estates, the county rates can result in excessive legal fees.  Due to the capital-intensive nature of farming, farm estates will tend to have a much higher value than typical, non-farm estates.  A modest farm estate of $5 million, at a 2% probate fee rate, will result in $100,000 of legal fees.  An attorney charging $250/hour would have to bill 400 hours to make those same legal fees.  A $5 million farm estate is not going to take 400 hours to administer.

Executors administering farm estates should carefully evaluate legal fees charged by the estate attorney.  Applying county probate rates to farm estates can result in very large legal fees.  Before agreeing to accept the probate rates as the fee structure, Executors should also inquire as to what legal fees would be if charged on an hourly basis.  After getting an estimate of legal fees for both fee structures, the Executor can then make an informed decision as to how best to proceed with legal counsel.

American Burying Beetle
By: Peggy Kirk Hall, Thursday, March 31st, 2022

When the U.S. EPA approved the seven-year renewal registration for Corteva’s Enlist One and Enlist Duo on January 12, 2022, it also prohibited use of the herbicide in 217 counties across the country.  Twelve Ohio counties were on that list, preventing farmers in Athens, Butler, Fairfield, Guernsey, Hamilton, Hocking, Morgan, Muskingum, Noble, Perry, Vinton, and Washington counties from using the herbicides.  Welcome news for those farmers came on Tuesday, when the EPA announced that it is removing the restricted use for all Ohio counties.

The prohibition against using Enlist Duo’s use was because Corteva did not submit its use in all U.S. counties in the reregistration, many of which had endangered species and critical habitat that could be impacted by the herbicides.  The twelve Ohio counties that were not submitted for use by Corteva are home to the American Burying Beetle, which is on the Endangered Species list.  But in February, Corteva submitted a label amendment that proposed use of Enlist One and Enlist Duo in 128 of the previously restricted counties, including Ohio’s twelve counties. 

Upon receiving Corteva’s amendment, federal law requires EPA to complete an “effects determination” to assess potential effects on the endangered species in the previously restricted counties.  The assessment included reviewing updated range maps for the endangered species and their habitats that were provided by the U.S. Fish and Wildlife Service.  Range maps help identify the overlap between the American Burying Beetle’s location and growing areas for corn, soybeans, and cotton where Enlist might be applied.  Based on the maps, the agency determined that the beetle was not present in 10 of the previously restricted counties and had less than a 1% overlap with crop areas in another 118 counties.

EPA also examined whether there would be direct or indirect effects on other listed endangered species or habitat in those counties.  The black-footed ferret was the only specifies identified in field areas in the 128 counties, and fifteen other listed specifies and three critical habitats were determined to exist off of the field areas.  But the EPA found that the Enlist label restrictions would address any concerns with these additional species and habitats.

After completing its effects determination and review of the amendment, the EPA concluded that “the use of these products—with the existing label requirements in place to mitigate spray drift and pesticide runoff—will not likely jeopardize the American Burying Beetle or other listed species and their critical habitats in these counties.”  Similarly, EPA determined that six Minnesota counties that are home to the endangered Eastern Massasauga rattlesnake were also removed from the prohibited list and approved for Enlist use.

EPA noted the importance of following the label restrictions for the herbicides, particularly in areas where endangered species reside.  The new label approved by the EPA in January contains changes to the previous label.  According to OSU weed scientist Mark Loux, those changes include a revised application cutoff for soybeans, “through R1” that replaces “up to R2” on previous labels, and the addition of a slew of spray nozzles to the approved nozzle list.  Enlist users should take care to review these new provisions.  As required by EPA, Corteva provides educational tools on using Enlist, available at https://www.enlist.com/en/enlist-360-training.html.

If you’re interested in reading more about the EPA’s registration review on Enlist One and Enlist Duo, the agency’s docket on the registration is available at  https://www.regulations.gov/docket/EPA-HQ-OPP-2021-0957/document.  The amendment letter for the recent removal of prohibitions on certain counties is at https://www.regulations.gov/document/EPA-HQ-OPP-2021-0957-0020.

Photo of farmer in the field with a clipboard

By Robert Moore, Research Specialist and Attorney, Agricultural & Resource Law Program

Prior to LLCs becoming available for common use, Limited Partnerships (LP) were used extensively to hold farmland.  LPs provide liability protection for the limited partners and usually allow the land to be distributed out to the partners without tax liability.  Additionally, the land in the LP can receive a stepped-up tax basis upon the death of a partner.  LPs were a good choice to hold farmland.

The primary disadvantage of an LP is the liability exposure of the general partner.  Because the general partner is tasked with management responsibilities for the LP, they receive no liability protection.  Therefore, any liability created by the activities of the LP will transfer to the general partner and put all of the general partner’s assets at risk.

LLCs were developed in the 1990’s and started to become popular in the early 2000’s.  LLCs can be taxed as partnerships and thus provide all the tax benefits of an LP.  Also, LLCs provide liability protection for all owners regardless of their management roles.  Therefore, LLCs provide all the benefits of an LP plus provide liability protection for the manager.  Due to the superior lability protection of LLCs, LPs have been made obsolete in Ohio.

If you have an LP, you should consider converting it to an LLC.  The conversion will extend liability protection to all the owners while maintaining the partnership taxation structure.  Converting from an LP to an LLC is relatively easy.

The conversion is performed by completing Form 700 provided by the Ohio Secretary of State.  The form can be filed through the mail or by submitting online.  A $99 fee is required to be paid when the conversion is submitted.  The form asks for the identification and structure of the current entity and the name and structure of the future, converted entity.

Any asset held by the LP is automatically owned by the LLC after conversion.  For real estate, an affidavit is recorded with the county recorder stating the LP has been converted to an LLC.  Because both the LP and LLC will have a partnership taxation structure, the same tax identification number can be used after the conversion.  An operating agreement should be drafted for the new, converted LLC as the old LP agreement will no longer be in effect.

Consider the following example.  XYZ Farms Ltd. is an LP and holds farmland.  The owners of the LP wish to convert to an LLC to provide liability protection for the manager partner.  Form 700 is filed with the Ohio Secretary of State along with the $99 fee.  The conversion form states that XYZ Farms Ltd. is converting to an LLC and will have the new name of XYZ Farms LLC[1].  After the conversion, the LLC files an affidavit with the county recorder stating that XYZ Farms was converted from an LP to an LLC and the farmland is now owned by the LLC.  The owners of XYZ Farms LLC draft a new operating agreement with terms and provisions applicable to an LLC.

LLCs have replaced LPs as the entity of choice to hold farmland.  LPs that were established prior to the availability of LLCs can be converted to LLCs relatively easily.  Owners of an LP should consider converting to an LLC to provide liability protection for the managing partner.

 

[1] Form 590, “Consent for Use of Similar Name”, and Form 610, “Articles of Organization”, must also be filed with the conversion form.

Long term care written out in a blue bubble with associated activities in surrounding/connecting bubbles.

By Robert Moore, Attorney and Research Specialist, OSU Agricultural and Resource Law Program 

The costs for assisted living and nursing home care have steadily been increasing.  Many people find themselves in the situation where their income will not cover the costs of long-term care.  Long-term care costs have become a significant risk to Ohio farms and the ability to continue a viable farming operation for future generations.

The following are the most recent long-term care costs from a Genworth survey:

Type of Care                                                     Annual Cost

Ohio Semi - Private Room                                  $85,776

Ohio - Private Room                                          $98,556

National – Semi-Private Room                           $93,075

National – Private Room                                    $105,850

Ohio - Assisted Living                                        $52,500

National - Assisted Living                                   $54,000

Ohio costs are less than national costs but are still significant.  Care facilities in small towns and rural areas tend to cost less than facilities in larger cities like Cleveland, Columbus and Cincinnati.  Costs are expected to continue to increase.  By 2030, Genworth predicts that national average cost for a private room in a nursing home will be around $142,000/year.

Farmers that do not have adequate income to pay for long-term care costs will be required to dip into savings to make up the deficit.  If savings are extinguished, farm assets may need to be sold to pay for the care.  The sale of these farm assets is what can jeopardize the future viability of the farming operation.

There are no easy solutions regarding long-term care costs.  Options include gifting assets away, buying long-term care insurance or self-insuring.  Medicaid can also play a role in long-term care costs.  In future posts we will discuss strategies to minimize the risk of long-term care costs to farming operations.

Row of Case IH Combines.

By Robert Moore, Research Specialist, OSU Agricultural & Resource Law Program

A common business strategy for farming operations is to place their machinery in a separate, stand-alone LLC.  The idea behind this strategy is that by putting the high-liability machinery in its own LLC the other farm assets are protected.  Unfortunately, the liability protection of a machinery LLC is sometimes overstated and may not provide as much protection as intended.

The compromised liability protection of a machinery LLC is not due to a defect in LLCs, but rather it is a result of who is operating the machinery.  Typically, the persons operating the machinery are the owners or employees of the farming operation.  Many liability incidents involving farm machinery are the result of operator error which pulls the liability back to the farming operation.

Consider the following example.  XYZ Farms is a grain operation.  To mitigate the liability of having large machinery traveling on roadways, XYZ Farms establishes Machinery LLC and transfers all machinery to the LLC.  An employee of XYZ Farms causes an accident while driving machinery on a roadway.  Because employers are liable for the actions of employees, XYZ Farms is liable for the accident even though the machinery was held in Machinery LLC.

A machinery LLC does provide some liability protection.  If the liability incident is caused solely by an issue with the machine and not the operator, the LLC may prevent liability from transferring to other assets. Again, most accidents are caused by operator error so relying on this liability protection is planning against the odds.

As seen in the example, machinery LLCs do not completely insulate owners and other assets from liability.  In fact, no entity used in a farming operation is guaranteed to prevent liability exposure for the owner.  Therefore, liability insurance should always be the primary liability management plan for farm operations.  Business entities should be used as the backup plan if liability insurance fails to cover liability exposure.

Machinery LLCs do have other beneficial uses.  One of the more common uses is to consolidate various machinery ownership among family members.  Having one entity own, buy, and sell all machinery is often a simpler plan than multi-ownership.  For example:

Mom and Dad, Son, and Daughter each own some machinery. Each time they need to buy a new piece of equipment, it is a challenge to determine how the trade-in is handled and who should be the new owner.  Instead, they establish a machinery LLC and put all their machinery in the LLC.  They each receive ownership in the LLC in proportion to the ownership in the machinery.  For all future purchases, the LLC provides the trade-in and buys the new machine.  

The liability protection provided by machinery LLCs may not be as thorough as sometimes expected but they can still be a valuable component of a business structure plan.  They do provide some liability protection and are useful in other ways such as consolidating ownership.  Before establishing a machinery LLC, be sure to have a thorough discussion with legal counsel to fully understand it’s benefits and limitations.

 

Young goat standing on a pile of hay in a snowy field with Farm Office Live agenda overlay.
By: Jeffrey K. Lewis, Esq., Monday, March 14th, 2022

It's that time again, Farm Office Live comes back this week! We have all the recent legal, tax, and farm management information to help you spring into the new season.    

Our program this month will feature agricultural economist, Seungki Lee, PhD, Associate Professor AEDE, who will be providing a grain marketing outlook.  The Farm Office Team of Dianne Shoemaker, David Marrison, Peggy Kirk Hall, Barry Ward, and Robert Moore will follow with discussion and updates on: 

  • Farm Service Agency Programs  
  • Federal Tax Law 
  • Medicaid Planning
  • Finanical Efficiency for Grain Farms
  • Fertilizer
  • Crop Budgets Look-Ahead

We are offering Farm Office Live this Wednesday, March 16 from 7 - 8:30 pm, and again on Friday, March 18 from 10 - 11:30 am.  Register or catch the recorded version at https://farmoffice.osu.edu/farmofficelive

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Picture of Ohio farmland at sunset
By: Peggy Kirk Hall, Thursday, March 10th, 2022

In farm estate and transition planning, we caution against leaving farmland to multiple heirs as co-owners on the deed to the property.  That’s because Ohio law allows any co-owner of property to seek “partition,”  a legal action asking the court to either sell the property and divide sale proceeds among the co-owners or, in some cases, to physically divide the property between co-owners.  If the goal of a farm family is to keep property in the family, co-ownership and partition rights put that goal at risk.  A recent case from the Ohio Court of Appeals illustrates how partition can force the unwilling sale of property from a co-owner of the property.

The recent court case didn’t involve farmland, but concerned a home and four acres of land owned jointly by an unmarried couple, each on the deed to the property as co-owners with rights of survivorship.  The couple separated and one remained in the home, but the two could not agree upon how to resolve their interests in the property.  That led to a court case in which one co-owner asked the court to declare that the other had no remaining interest in the property. The other co-owner disagreed and filed a partition claim asking the court to sell the property and divide sale proceeds according to each person’s property interest.  The trial court determined that each co-owner did have ownership interests in the property and ordered the property to be sold according to the partition law.

The trial court granted each party the right to purchase the property within 14 days before it would be sold, but neither exercised that right.  After an appraisal, the court ordered the property sold and also ordered payment of the outstanding mortgage.   That left the court with the challenge of determining how to divide the remaining sale proceeds according to each party’s interests in the property.  A complicated analysis of payments, credit card debts, a home equity loan, rental value, and improvements to the property resulted in a final determination that granted one co-owner more of the proceeds than the other.

Both parties appealed the division of proceeds to the Twelfth District Court of Appeals, unfortunately adding more cost and consternation to resolving the co-ownership problem.  The court of appeals noted that Ohio law grants a court the duty and discretion to apply broad “equitable” principles of fairness when determining how to divide property interests among co-owners in a partition proceeding. A review of the trial court’s division of the proceeds led the appeals court to affirm the lower court’s holding as “equitable,” ending the three-and-a-half-year legal battle. 

Ohio’s partition statute itself provides a warning of the risk of property co-ownership.  It states in R.C. 5307.01 that co-owners of land “may be compelled to make or suffer partition…”  While the purpose of partition is to allow a co-owner to obtain the value of their property interests, it can certainly force others to “suffer.”  If a co-owner can’t buy out another co-owner, the power of partition can force the loss of farm property.  As a result, family land can leave the family and a farming heir can lose land that was part of the farming operation.  That’s most likely not the outcome parents or grandparents expected when they left their farmland to heirs as co-owners.

Fortunately, legal strategies can avoid the risk of partition.  For example, placing the land in an LLC removes partition rights completely, as the land is no longer in a co-ownership situation—the LLC is the single owner of the land.  The heirs could have ownership interests in the LLC instead of in the land, so heirs could still receive benefits from the land.  The LLC Operating Agreement could contain rules about if and how land could be sold out of the LLC, and could ensure terms that would allow other LLC members to buy out another member’s ownership interests.  An agricultural attorney can devise this and other legal strategies to ensure that partition isn’t a risk to farmland or farm heirs.

Read the case of Redding v. Cantrell, 2022-Ohio-567.

Vintage picture of cowgirl on a horse with a lasso.
By: Peggy Kirk Hall, Friday, February 25th, 2022

It’s time to round up a sampling of legal questions we’ve received the past month or so. The questions effectively illustrate the breadth of “agricultural law,” and we’re happy to help Ohioans understand its many parts.  Here’s a look at the inquiries that have come our way,

I’m considering a carbon credit agreement.  What should I look for?   Several types of carbon credit agreements are now available to Ohio farmers, and they differ from one another so it’s good to review them closely and with the assistance of an attorney and an agronomist.  For starters, take time to understand the terminology, make sure you can meet the initial eligibility criteria, review payment and penalty terms, know what types of practices are acceptable, determine “additionality” requirements for creating completing new carbon reductions, know the required length of participation and how long the carbon reductions must remain in place, understand how carbon reductions will be verified and certified, be aware of data ownership rights, and review legal remedy provisions.  That’s a lot!  Read more about each of these recommendations in our blog post on “Considering Carbon Farming?”

I want to replace an old line fence.  Can I remove trees along the fence when I build the new fence?   No, unless they are completely on your side of the boundary line.  Both you and your neighbor co-own the boundary trees, so you’ll need the neighbor’s permission to remove them.  You could be liable to the neighbor for the value of the trees if you remove them without the neighbor’s approval, and Ohio law allows triple that value if you remove them against the neighbor’s wishes or recklessly harm the trees in the process of building the fence.  You can, however, trim back the neighbor’s tree branches to the property line as long as you don’t harm the tree.  Also, Ohio’s line fence law in ORC 971.08 allows you to access up to 10 feet of the neighbor’s property to build the fence, although you can be liable if you damage the property in doing so.

I want to sell grow annuals and sell the cut flowers.  Do I need a nursery license?  No.  Ohio’s nursery dealer license requirement applies to those who sell or distribute “nursery stock,” which the law defines as any “hardy” tree, shrub, plant, bulb, cutting, graft, or bud, excluding turf grass.  A “hardy” plant is one that is capable of surviving winter temperatures. Note that the definition of nursery stock also includes some non-hardy plants sold out of the state.  Because annual flowers and cuttings from those flowers don’t fall into the definition of “nursery stock,” a seller need not obtain the nursery dealer license.

Must I collect sales tax on cut flowers that I sell?  Yes.  In agriculture, we’re accustomed to many items being exempt from Ohio’s sales tax.  That’s not the case when selling flowers and plants directly to customers, which is a retail sale that is subject to the sales tax.  The seller must obtain a vendor’s license from the Ohio Department of Taxation, then collect and submit the taxes regularly.  Read more about vendor’s licenses and sales taxes in our law bulletin at this link.

I’m an absentee landowner who rents my farmland to a tenant operator.  Should I have liability insurance on the land?  Yes.  A general liability policy with a farm insurer should be affordable and worth the liability risk reduction.  But a few other steps can further minimize risk.  Require your tenant operator to have liability insurance that adequately covers the tenant’s operations, and include indemnification provisions in your farm lease that shift liability to the tenant during the lease period.  Also consider requiring your tenant or hiring someone to do routine property inspections, monitor trespass issues, and ensure that the property is in a safe condition. 

My neighbor and I both own up to the shoreline on either side of a small lake--do I have the right to use the whole lake?  It depends on where the property lines lay and whether the lake is connected to other waters. If the lake is completely surrounded by private property and not connected to other “navigable” waters, such as a stream that feeds into it, the lake is most likely a private water body.  Both of you could limit access to your side of the property line as it runs through the lake.  You also have the legal right to make a “reasonable use” of the water in the lake from your land, referred to as “riparian rights.”  You could withdraw it to water your livestock, for example; but you cannot “unreasonably” interfere with your neighbor’s right to reasonably use the water.   The law changes if the lake is part of a “navigable” waterway.  It is then a “water of the state” that is subject to the public right of navigation.  Others could float on and otherwise navigate the water, and you could navigate over to your neighbor’s side.  Public users would not have the riparian rights that would allow them to withdraw and use the water, however, and would be trespassing if they go onto the private land along the shore.

If I start an agritourism activity on my farm, will I lose my CAUV status?  No, not if your activities fit within the legal definition of “agritourism.”  Ohio law states in ORC 5713.30(A)(5) that “agritourism” activities do not disqualify a parcel from Ohio’s Current Agricultural Use Valuation (CAUV) program. “Agritourism,” according to the definition in ORC 901.80, is any agriculturally related educational, entertainment, historical, cultural, or recreational activity on a “farm” that allows or invites members of the general public to observe, participate in, or enjoy that activity.  The definition of a “farm” is the same as the CAUV eligibility—a parcel devoted to commercial agricultural production that is either 10 acres or more or, if under 10 acres, grosses $2500 annually from agricultural production.  This means that land that is enrolled in the CAUV program qualifies as a “farm” and can add agritourism activities without becoming ineligible for CAUV.

Send your questions to aglaw@osu.edu and we’ll do our best to provide an answer.  Also be sure to check out our law bulletins and the Ag Law Library on https://farmoffice.osu.edu, which explain many of Ohio’s vast assortment of agricultural laws.

Picutre of Ohio Statehouse building against a blue sky in Columbus, Ohio
By: Peggy Kirk Hall, Tuesday, February 22nd, 2022

February is bringing renewed activity down at Ohio’s Statehouse as both the House and Senate return to their regular committee schedules.  The General Assembly began tending to several pieces of agricultural and resource legislation.  Here’s the latest summary of our state’s legislative developments.

Newly introduced Ohio legislation

H.C.R. 41 – Repeal individual income tax.  Rep. Tom Brinkman (R-Mt. Lookout) introduced a resolution on January 25, 2022 expressing an intent for the General Assembly to repeal the state personal income tax within ten years.  The resolution matches S.C.R. 13, introduced in the Senate last December, and both resolutions cite negative impacts on Ohio’s business climate as justification for the repeal.  The House Ways and Means Committee already held a first hearing on the resolution on February 15, 2022.

Legislation on the move

H.B. 30 –  Slow-moving vehicles.  One of the slowest moving bills on the move, a proposal to increase visibility of animal-drawn vehicles by changing marking and lighting requirements finally received a third hearing before the Senate Transportation Committee on February 16, 2022.  No opponents testified against the bill.  Readers may recall that the proposal passed the House on June 23, 2021.

H.B. 321– Auctioneers.  The bill that passed the House on December 9, 2021 had its second hearing before the Senate Agriculture and Natural Resources Committee on February 15, 2022, with the Ohio Auctioneers Association testifying in support of the bill. It replaces the auctioneer apprenticeship requirement and replaces it with a course of study in auctioneering at an approved institution.  The bill also eliminates the special auctioneer license, changes the auction firm license, removes the oral exam requirement, increases the number of written exams offered, allows auction firms to provide online or live auction services, and gives ODA authority over internet auctions. 

H.B. 365 – Safe Drinking Water Act.  Although introduced back in July, H.B. 365 just received its first hearing before House Agriculture & Conservation Committee House on February 15, 2022.  The proposal requires Ohio EPA to adopt rules to establish water quality standards and maximum allowable contaminant levels in drinking water for PFAS (the “forever chemicals”), chromium-6, and 1-4 dioxane, and to annually review the standards.  Sponsors Rep. Mary Lightbody and Rep. Allison Russo provided testimony at the hearing.  The many questions and concerns about costs and impacts of setting standards for the chemicals raise doubts about whether it will receive another hearing.

H.B. 397 – Agricultural leases.  The second hearing for H.B. 397 before the Senate Agriculture and Natural Resources Committee took place on February 15, 2022.  The proposal passed the House on December 8, 2021, and would require a landlord who wants to terminate a crop lease that doesn’t address termination to provide a written notice of termination by September 1.  The Ohio State Bar Association Agricultural Law Committee and Ohio Farm Bureau Federation testified in support of the bill.

H.B. 484 – Fish designation.  Readers who like walleye will be happy to hear that H.B. 484’s proposal to name the Lake Erie Walleye as the state fish received its first hearing before the House Agriculture and Conservation Committee House on February 15, 2022.  Sponsors Rep. Michael Sheehy and Rep. Lisa Sobecki testified that Ohio is one of only three states without a designated state fish despite sport fishing’s annual $1 billion economy, and that the walleye beat out yellow perch and smallmouth bass for the nomination in an online poll on NBC4 news.

H.B. 507 – Poultry chicks.  This bill to reduce the minimum number for poultry chicks sold in lots from six to three received a first hearing before the House Agriculture and Conservation Committee on February 15.  Committee chair and bill sponsor Rep. Kyle Koehler testified that the bill would reduce costs and challenges for 4-H members who must buy six turkey chicks to show one turkey and later struggle to find processors for the birds.

H.B. 515 – Income tax.  Reps. James Hoops (R-Napoleon) and Craig Riedel (R-Defiance) are sponsors of this companion to S.B. 247, which appears stalled before the Senate Ways and Means Committee.  Both proposals would allow a sale of an ownership interest in a business to be considered business income for Ohio income tax purposes if federal income tax law treats the sale as a sale of assets or the seller materially participates in the business activities during the taxable year in which interest was sold or any of preceding five taxable years.  If passed, the legislation would apply to any audits, refund applications, petition for reassessments, and appeals pending on or after the bill’s 90-day effective date.  H.B. 515 received a second hearing before the House Ways and Means Committee on February 15, 2022.

S.B. 210 – Postnuptial agreements.  The proposal to allows spouses to modify pre-nuptial agreements and separation agreements had its first hearing before the House Civil Justice Committee on February 8, 2022.  Sponsor Sen. Theresa Gavarone testified that the bill would bring Ohio into line with other states by allowing married couples to address life changes with options other than divorce or separation.  The bill passed the Senate back in November of 2021.

S.B. 241 – Agricultural Linked Deposit Program.  The Senate version of revisions to Ohio’s Agricultural Linked Deposit Program passed the Senate on January 26, 2022 with emergency provisions that would make the bill effective immediately.  The proposal was referred to the House Financial Institutions Committee on February 15.  Meanwhile, it’s counterpart in the House, H.B. 440, which passed the House on December 9, 2021, awaits a hearing before the Senate Financial Institutions & Technology Committee. The proposals expand the availability of Agricultural Linked Deposit Program loans to agricultural cooperatives and replaces the current $150,000 loan limit to amounts as determined by the Treasurer.

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Picture of a black howler monkey.
By: Jeffrey K. Lewis, Esq., Friday, February 18th, 2022

Did you know that the loudest land animal is the howler monkey?  The howler monkey can produce sounds that reach 140 decibels.  For reference, that is about as loud as a jet engine at take-off, which can rupture your eardrums.  

Like the howler monkey, we are here to make some noise about recent agricultural and resource law updates from across the country.  This edition of the Ag Law Harvest brings you court cases dealing with zoning ordinances, food labeling issues, and even the criminal prosecution of a dairy farm.  We then look at a couple states proposing, or disposing, of legislation related to agriculture.  

A zoning ordinance has Michigan landowners hogtied.  The Michigan Supreme Court recently ruled that Michigan’s 6-year statute of limitations does not prevent a township from suing a landowner for alleged ongoing zoning violations, even if the start of landowner’s alleged wrongdoing occurred outside the statute of limitations period.  

Harvey and Ruth Ann Haney (“Defendants”) own property in a Michigan township that is zoned for commercial use.  Defendants began raising hogs on their property in 2006.  Defendants started with one hog and allegedly grew their herd to about 20 hogs in 2016.  In 2016, Fraser Township (“Plaintiff”) filed suit against Defendants seeking a permanent injunction to enforce its zoning ordinance and to prevent Defendants from raising hogs and other animals that would violate the zoning ordinance on their commercially zoned property.  Defendants filed a motion to dismiss and argued that Plaintiff’s claims were barred because of Michigan’s 6-year statute of limitations.  A statute of limitations is a law that prevents certain lawsuits from being filed against individuals after a certain amount of time has passed.  In Ohio, for example, if someone were to be injured in a car accident, they would only have 2 years to bring a personal injury claim against the person who caused the accident.  That’s because Ohio has passed a law that mandates most personal injury claims to be brought within 2 years of the date of injury.  

In the Michigan case, Defendants argued that because their first alleged wrongdoing occurred in 2006, Plaintiff could not file their lawsuit against the Defendants in 2016.  A trial court disagreed with Defendants and denied their motion to dismiss.  Defendants took the motion up to the Michigan Court of Appeals, and the Court of Appeals found that Plaintiff’s claim was barred because of the 6-year statute of limitations.  Plaintiff appealed to the Michigan Supreme Court, which overturned the Court of Appeals’ decision and held that Plaintiff’s claim was not barred.  The Michigan Supreme Court reasoned that the presence of the hogs constitutes the alleged unlawful conduct of the Defendants, and that unlawful conduct occurred in 2006 and has occurred almost every day thereafter.  The court concluded that because Defendants unlawful conduct was ongoing after 2006, Plaintiff’s claims were not barred by the statute of limitations.  The case now goes back to the trial court to be tried on the merits of Plaintiff’s claims against Defendants. 

Where there’s smoke, there’s fire.  Family Dollar Stores, Inc. (“Family Dollar”) has found itself in a bit of nutty situation.  Plaintiff, Heather Rudy, has filed a class action lawsuit against Family Dollar, alleging that Family Dollar has misled her and other consumers by marketing its Eatz brand Smoked Almonds as “smoked.”  Plaintiff asserts that Family Dollar is being deceptive because its Smoked Almonds are not smoked over an open fire, but instead flavored with a natural smoke flavoring.  Plaintiff’s claims against Family Dollar include violating the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”); breaches of express warranty and implied warranty of merchantability; violation of the Magnuson-Moss Warranty Act; negligent misrepresentation; fraud; and unjust enrichment.  

Family Dollar filed an early motion to dismiss, arguing that Plaintiff has not stated a claim for which relief can be granted.  A federal district court in Illinois dismissed some of Plaintiff’s claims but ruled that some claims against Family Dollar should be allowed to continue.  Plaintiff’s claims for breaches of warranty, violation of the Magnuson-Moss Warranty Act, negligent misrepresentation, and fraud were all dismissed by the court.  The court did decide that Plaintiff’s claims under ICFA unjust enrichment should stay.  The court reasoned that Plaintiff’s interpretation that Family Dollar’s almonds would be smoked over an open fire are not unreasonable.  Moreover, the court recognized that nothing on the front label of Family Dollar’s Smoked Almonds would suggest, to consumers, that the term “smoked” refers to a flavoring rather than the process by which the almonds are produced.  The court even pointed out that competitors’ products contain the word “flavored” on the front of similar “smoked” products.  Therefore, the court concluded that Plaintiff’s interpretation of Family Dollar’s Smoked Almonds was not irrational and her claims for violating the ICFA should continue into the discovery phase of litigation, and possibly to trial.  

Undercover investigation leads to criminal prosecution of Pennsylvania dairy farm.  A Pennsylvania Court of Appeals (“Court of Appeals”) recently decided on Animal Outlook’s (“AO”) appeal from a Pennsylvania trial court’s order dismissing AO’s petition to review the decision of the Franklin County District Attorney’s Office (“DA”) to not prosecute a Pennsylvania dairy farm (the “Dairy Farm”) for animal cruelty and neglect.  An undercover agent for AO held employment at the Dairy Farm and captured video of the condition and treatment of animals on the farm, which AO claims constitutes criminal activity under Pennsylvania’s animal cruelty laws.  

AO compiled a report containing evidence and expert reports documenting the Dairy Farm’s alleged animal cruelty and neglect.  AO submitted its report to the Pennsylvania State Police (“PSP”) in 2019.  The PSP conducted its own investigation which lasted for over a year, and in March 2020, issued a press release indicating that the DA would not prosecute the Dairy Farm.  

In response, AO drafted private criminal complaints against the Dairy Farm and submitted those to the local Magisterial District Judge.  The local Magisterial Judge disapproved all of AO’s complaints and concluded that the complaints “lacked merit.”  AO then filed a petition in a Pennsylvania trial court to review the Magisterial Judge’s decision.  The trial court dismissed AO’s petition and concluded that the DA correctly determined “that there was not enough evidence, based upon the law, to initiate prosecution against any of the Defendants alleged in the private criminal complaints.”  AO appealed the trial court’s decision to the Court of Appeals which ended up reversing the trial court’s decision.    

The Court of Appeals concluded that the trial court failed to view the presented evidence through a lens that is favorable to moving forward with prosecution and the trial court failed to consider all reasonable inferences that could be made on the evidence.  The Court of Appeals observed that the trial court made credibility determinations of the evidence by favoring the evidence gathered by PSP over the evidence presented by AO.  The Court of Appeals noted that a trial court’s duty is to determine “whether there was evidence proffered to satisfy each element of an offense, not to make credibility determinations and conduct fact-finding.” Additionally, the Court of Appeals found that the trial court did not do a complete review of all the evidence and favored the evidenced obtained by PSP over the evidence presented by AO.  The Court of Appeals determined that had the trial court reviewed all the evidence, it would have found that AO provided sufficient evidence to establish prima facie cases of neglect and animal cruelty, which would have provided the legal basis for the DA’s office to prosecute the claims.  

Lastly, the DA argued that no legal basis for prosecution exists because the Dairy Farm is protected by the normal agricultural operations exemption to Pennsylvania’s animal cruelty laws.  However, the Court of Appeals found that the conduct of the Dairy Farm, as alleged, would fall outside the normal agricultural operations exemption because AO’s report demonstrates that the Dairy Farm’s practices were not the dairy industry norm.    

Ultimately the Court of Appeals found that AO’s private criminal complaints did have merit and that the DA had enough evidence and a legal basis to prosecute AO's claims.  The Court of Appeals remanded the trial court’s decision and ordered that the DA to go ahead and prosecute the Dairy Farm on its alleged animal cruelty violations.  

Wyoming fails to pass legislation limiting what can be considered agricultural land.  The Wyoming House of Representatives struck down a recent piece of legislation looking to increase the threshold requirement to allow landowners the ability to classify their land as agricultural, have their land appraised at an agricultural value, and receive the lower tax rate for agricultural land.  Current Wyoming law classifies land as agricultural if: (1) the land is currently being used for an agricultural purpose; (2) the land is not part of a patted subdivision; and (3) the owner of the land derived annual gross revenue of $500 or more from the marketing of agricultural products, or if the land is leased, the lessee derived annual gross revenues of $1,000 or more from the marketing of agricultural products.  

Wyoming House Bill 23 sought to increase the threshold amount of gross revenues derived from the marketing of agricultural products to $5,000 for all producers.  The Wyoming Farm Bureau Federation and Wyoming Stock Growers associations supported the bill.  Proponents of the bill argued that the intent of agricultural land appraisals is to support commercial agriculture, not wealthy landowners taking advantage of Wyoming’s tax laws.  Opponents of the bill argued that House Bill 23 hurt small agricultural landowners and that the benefits of the bill did not outweigh the harms.  House Bill 23 died with a vote of 34-25, failing to reach the 2/3 approval for bills to advance.  

Oregon introduces legislation relating to overtime for agricultural workers.  Oregon House Bill 4002 proposes to require agricultural employers to pay all agricultural employees an overtime wage for time worked over 40-hours in a workweek.  House Bill 4002 does propose a gradual phase-in of the overtime pay requirements for agricultural employees.  For the years 2023 and 2024, agricultural employees would be entitled to overtime pay for any time worked over 55 hours in a workweek.  For 2025 and 2026, the overtime pay requirement kicks in after 48 hours.  Then in 2027, and beyond, agricultural employers would be required to pay an overtime pay rate to employees that work more than 40 hours in a workweek.   

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