U.S. Senate passes changes to federal Harmful Algal Bloom and Hypoxia Research and Control Act

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.

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Employers should use revised Form I-9 for employee verification

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.

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Ohio Department of Agriculture Updates Fertilizer Certification Program Rules

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 will be effective 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.

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Limiting Liability on the Farm: An Overview of Ohio’s LLC Laws

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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What Should a Landowner do if a Pipeline is Improperly Constructed?

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

Several pipeline projects are crisscrossing the state. While some landowners are just seeing equipment and workers show up on their property, others are seeing pipelines be buried and the land being reclaimed. Some Ohio landowners question whether pipelines on their property and reclamation of the land are being carried out properly.

Safety Issues Related to Construction of Pipelines

In certain circumstances, landowners with completed pipelines on their property can contact the Public Utilities Commission of Ohio (PUCO) with their concerns. PUCO has the authority to oversee safety issues on completed pipelines in Ohio. If a landowner is concerned that an existing pipeline on their property has a legitimate safety issue, that landowner should contact PUCO to report suspected safety issues. PUCO inspectors may issue a noncompliance letter to pipeline companies, if a violation is discovered.

If the landowner specifically suspects that the pipeline company is not following recommended standards and construction specifications, local Soil and Water Conservation Districts or the Ohio Department of Agriculture (ODA) may be able to assist. By law ODA must cooperate with other agencies to protect the agricultural status of rural lands adjacent to projects such as pipelines. ODA publishes model pipeline standard and construction specifications intended to limit the impact of construction of a pipeline on agricultural productivity.

Contract Disagreement Issues (Non-Safety Issues)

If a landowner has an issue that is not related to safety, that issue may be addressed in the easement agreement between the landowner and the pipeline company. A pipeline easement is a contract. Both parties agree to uphold their obligations under the contract. Essentially, the landowner agrees to provide subsurface land and access rights to a pipeline company in return for monetary compensation.

Of course, an easement is much more complicated than that. As part of this contractual relationship, a landowner has the right to request that the pipeline company uphold their duties under the contract. If a landowner doesn’t believe that a pipeline company is following the terms of an easement, the landowner has the right to enforce the agreement. While the landowner may seek an attorney to do this, it may be best to work with the pipeline company first.

Landowners should consider keeping detailed notes of issues as they arise. For example, a landowner may wish to take written notes on and photographs of the property after noticing a construction issue. This may be helpful in presenting the issue to the pipeline company. It may be cheaper and faster to raise the issue with the pipeline company first, before speaking with an attorney. However, if a landowner’s complaints aren’t resolved in a timely manner after speaking with the company, the landowner will want to speak with an attorney to enforce the contract.

What to Remember When Speaking with a Pipeline Company Representative

As a practical note, it is important for a landowner to realize that the workers on a pipeline might not be from the pipeline company itself. For example, if a landowner has an issue with the way that the easement is re-soiled and re-planted, it could be a third party that did the work. Landowner’s should re-read their easement to ensure that sub-contracting is allowed. When a landowner calls a company, he or she should realize that the company may not have done the work, but rather a subcontractor completed the work. Therefore, the landowner should fully describe the issue to the pipeline company so that the company understands the issue. Any evidence, such as photographs or written notes may be very helpful in resolving an issue with the pipeline company.

It is always best to identify potential issues early. Landowners may want to check the progress of pipeline construction on their property as it occurs. If there is an issue, landowners should promptly contact the company. Landowners should check their easement agreement to see if the easement outlines a process to dispute terms of the agreement.

If the contract does not outline a process to dispute terms of the agreement, it would be best for landowners to speak with the construction foreman first, then moving up the management chain if the company doesn’t react favorably. If the company and the landowner can’t come to a resolution, the landowner may need an attorney at some point.

Reclamation of the Land

After a pipeline is buried, the soil and the surface of the land is ideally placed back in its original condition. This process is sometimes referred to as reclamation. The pipeline easement agreement between a landowner and a pipeline company usually discusses how this process will be completed. Landowners and pipeline companies often agree beforehand how the land will be reclaimed after the pipeline is constructed. Pipelines may disturb trees, soil, and waterways during the construction process. These disturbances may impact crop yields and grazing habits in future years. For this reason, landowners may wish to carefully monitor the reclamation process and enforce the terms of the easement.

Living with a Pipeline Easement

When landowners have concerns or questions regarding a pipeline on their property, the best place to start is the pipeline easement. Landowners may have recently signed an easement, or landowners may be subject to a pre-existing easement signed by a previous owner of the property. Current landowners are subject to pre-existing easements, because easements “run with the land.” Old easements don’t typically expire, unless the original easement language provides for extinguishment of the easement under certain circumstances (for example, abandonment the easement).

Pipelines are a common tool for the transportation of natural resources. Many Ohio landowners have pipelines crisscrossing their property. Landowners should raise any pipeline safety or construction issues with the appropriate state agency, and any contractual issues should be brought to the pipeline company. As always, a landowner should pay careful attention to the language of the pipeline easement in determining how to approach a potential problem.

More information on pipeline easements is here.

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Changes to Ohio’s Lake Erie Commission will impact agriculture and Lake Erie water quality

By Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program

The Ohio legislature recently enacted a bill expected to enhance Ohio’s efforts to address water quality in Lake Erie.  Senate Bill 2, a far reaching environmental bill, contains several revisions to the Ohio Lake Erie Commission (OLEC) and Ohio’s Lake Erie Protection and Restoration Strategy.

The purpose of OLEC is to advise on the development, implementation, and coordination of Lake Erie programs and policies and to oversee the management of the Lake Erie Protection Fund.   For Ohio agriculture, the most important of S.B. 2’s revisions to OLEC is the expansion of OLEC’s purpose to include “issues related to nutrient-related water quality.”  This change reveals a new focus on nutrient impacts on Lake Erie’s water quality and a resulting charge for OLEC to implement the Ohio EPA’s current plan for reducing phosphorous levels in the Lake by 40% by 2025.

Furthermore, S.B. 2 broadens and strengthens OLEC’s role in coordinating and funding policies, programs and priorities related to Lake Erie.  Coordination with the federal government is encouraged, as is consideration of the efforts of Ohio and other Great Lakes states and countries, as well as any agreements between those states and countries and Ohio.  OLEC must also publish a Lake Erie Protection and Restoration Strategy that describes the commission’s goals and its planned uses for the Lake Erie Protection Fund.  Demonstration projects and cooperative research are now acceptable uses of the fund, in addition to the previously established use of data gathering.

S.B. 2 enhances coordination between OLEC and the Great Lakes Protection Fund (GLPF) board by bringing two members of the GLPF’s board onto OLEC’s board, which currently consists of the directors of Ohio’s EPA, Department of Natural Resources, Department of Health, Department of Agriculture, Department of Transportation and Department of Development, along with five additional members appointed by the governor and approved by the Senate.  S.B. 2 requires the Governor to select the two GLPF board members who will serve on the OLEC board.

Changes in S.B. 2 also call for OLEC to develop public education and outreach programs about their work and issues facing Lake Erie and to expand fundraising efforts to support their programs—namely through the promotion of the sale of Lake Erie license plates.  A number of provisions regard the disposal of construction and demolition debris and dredging in Lake Erie.

The revisions in S.B. 2 are likely to better equip OLEC to carry out strategies for improving Lake Erie’s water quality.  Most notably, the new law will shift some of OLEC’s focus to combating water quality problems associated with nutrient pollution, a change that will surely affect Ohio agriculture.

S.B. 2 is available here in its entirety.  Refer to the first four pages of the bill for the revisions to OLEC.   More information about OLEC is here.

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USDA seeks comments on regulatory reform

The United States Department of Agriculture (USDA) wants to hear from you.   The agency published its “Identifying Regulatory Reform Initiatives” notice in the Federal Register on July 17 seeking “ideas from the public on how we can provide better customer service and remove unintended barriers to participation in our programs in ways that least interfere with our customers and allow us to accomplish our mission.”

The notice derives from the Regulatory Reform Task Force established by President Trump’s February 24, 2017 Executive Order 13777 on “Enforcing the Regulatory Reform Agenda”.   The order requires the heads of federal agencies to evaluate existing regulations and make recommendations to repeal, replace or modify regulations that create unnecessary burdens.

Specifically, the USDA invites the public to evaluate the agency’s existing regulations.  The agency poses several questions and encourages commenters to respond in detail to the questions:

  1. Are there any regulations that should be repealed, replaced or modified?
  2. For each regulation identified in question one, identify whether the regulation:
    • Results in the elimination of jobs, or inhibits job creation;
    • Is outdated, unnecessary, or ineffective;
    • Imposes costs that exceed benefits;
    • Creates a serious inconsistency or otherwise interferes with regulatory reform initiatives and policies;
    • Is inconsistent with requirements that agencies maximize the quality, objectivity, and integrity of the information they disseminate;
    • Derives from or implements previous presidential directives that have been rescinded or substantially modified.

The comment process offers the agricultural community an opportunity to draw attention to USDA regulations that create unnecessary or unintended negative impacts on agriculture.   Considering the wide range of programs and regulations administered by the USDA in areas such as crop and livestock insurance; Farm Service Agency programs; commodity standards, grading and inspections; animal and plant health; and agricultural exports, it’s likely that agricultural producers will have thoughts to share with the agency.   To that end, USDA will accept comments for the next year, but will review the comments in four phases.  The deadline for the first review is September 15, 2017.

To read the agency’s notice and instructions for submitting comments on regulatory reform, visit this link.

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