Author Archives: Peggy Kirk Hall

About Peggy Kirk Hall

Associate Professor and Director, OSU Agricultural & Resource Law Program

“Watersheds in distress” rules don’t clear the JCARR hurdle

The legislative Joint Committee on Agency Rule Review (JCARR) has voted  to send the “watersheds in distress” rule revisions back to the Ohio Department of Agriculture (ODA).   JCARR reviews administrative rules to make sure they follow legal requirements, which we explained in a previous blog post.   The “watersheds in distress” rules seek to address agricultural nutrient impacts on water quality, also explained in an earlier post.  At its meeting yesterday, JCARR members voted 8 to 1 to recommend that ODA revise and refile the rules for consideration at JCARR’s next meeting on January 22, 2019.

The January 22 meeting date effectively removes Governor Kasich’s administration from the rules revision.  Kasich issued an executive order last July directing his agencies to prepare the controversial rule package.  But the incoming DeWine Administration will control the fate of the rules since DeWine takes office on January 14, 2019.    JCARR is apparently counting on the new administration to take a different approach on agricultural nutrient pollution reduction.

“There will be a new administration and we’ll have maybe more productive talks,” stated JCARR’s chair, Sen. Joe Uecker (R-Loveland).  “The DeWine Administration has demonstrated an interest on working with stakeholders on this issue.”

The lack of stakeholder involvement was a common concern voiced by JCARR members, who stated that the rules had been rushed and did not involve all of the interested parties.  Several committee members also suggested that the rules are inconsistent with legislative intent and will have a significant adverse impact on farmers.  The Ohio Soybean Association, Ohio Corn & Wheat Growers Association, and Ohio Farm Bureau echoed those criticisms to JCARR members while several local residents, local groups and the Ohio Environmental Council testified that the rules would not sufficiently protect water quality.

If ODA fails to refile the rules proposal for the January meeting, JCARR will have 31 days to recomend that the Ohio General Assembly invalidate the rules.  That action would allow each chamber five days to pass a resolution invalidating the rules; if the concurrent resolution does not pass within that time period, the rules would stand.  Alternatively, ODA could remove the proposal from JCARR’s agenda and refile revised rules at a later date, a likely course of action for the incoming DeWine administration.

Read the minutes of the December 10, 2018 JCARR meeting, which will be posted here.  The proposed rules are here and here.

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An overview of Ohio’s Joint Committee on Agency Rule Review

Written by Ellen Essman

The Joint Committee on Agency Rule Review (JCARR) plays an important role in Ohio’s government. Its review of new and old rules assists in verifying that administrative rules are not duplicative, overly-burdensome, or costly.  Among other things, JCARR also helps to confirm that rules in fact carry out what the legislature had in mind when passing the law.  In fact, on Monday, December 10, 2018, JCARR will decide the fate of the controversial watersheds in distress rules (we explained the proposed rules in this blog post) prompted by Governor Kasich’s July 2018 executive order.

The Joint Committee on Agency Rule Review, often referred to by its acronym, JCARR, was enacted by the Ohio General Assembly in 1977, and is codified in section 101.35 of the Ohio Revised Code.  JCARR is charged with “review[ing] proposed new, amended, and rescinded rules” from Ohio’s administrative agencies.  The state’s administrative agencies are numerous and include the Ohio Department of Agriculture, the Ohio Environmental Protection Agency, and the Ohio Department of Natural Resources, just to name a few.  The administrative agencies are responsible for making the administrative rules to help carry out the Ohio General Assembly’s legislation.

Make-up of the committee

JCARR is made up of five members of each house of the Ohio General Assembly, meaning that five members from the house of representatives and five members from the senate make up the full committee.  The speaker of the house appoints the five representatives, and the president of the senate appoints the five senators.  The appointments must be bipartisan; each house may only appoint three members of the same political party.  During the general assembly’s first regular session, the speaker of the house chooses the chairperson of JCARR from their house appointees, and the president of the senate chooses the vice-chair.  During the second regular session, the chair and vice-chair are chosen in the reverse.

Conditions that rules must meet

If JCARR reviews an administrative rule and finds that rule to “violates one or more” of six requirements, the committee may “make a recommendation to invalidate the rule.”  The six requirements are as follows:

  1. The rules do not exceed the scope of the rule-making agency’s statutory authority;
  2. The rules do not conflict with a rule of that agency or another rule-making agency;
  3. The rules do not conflict with the intent of the legislature in enacting the statute under which the rule is proposed;
  4. The rule-making agency has prepared a complete and accurate rule summary and fiscal analysis of the proposed rule, amendment, or rescission (Revised Code 18);
  5. The rule-making agency has met the incorporation by reference standards for a text or other material as stated in Revised Code 72, Revised Code 121.75, or Revised Code 121.76; and
  6. If the rule has an adverse impact on business (Revised Code 52), the rule-making agency has demonstrated through the business impact analysis, the Common Sense Initiative office recommendations, and the agency’s memorandum of response to the recommendations, that the regulatory intent of the rule justifies its adverse impact on business.

Rule Invalidation

If a rule is found to violate any of the conditions listed above, a member of JCARR can move to recommend a resolution to invalidate the rule.  The motion for invalidation must include the reason for the invalidation specifically based on one or more of the above conditions.  The motion can be to invalidate the whole rule, or just part of the rule.  If the motion for invalidation is seconded by another committee member, the members of JCARR can then vote on the motion.  A majority of the committee is required to recommend a resolution for amended, revised, and rescinded rules.  A two-thirds super majority is required to recommend a resolution to invalidate a no-change 5 year review.

If a motion for invalidation passes JCARR, the rule is put into suspension, meaning the administrative agency cannot proceed with the rule.  A member of the committee then writes a concurrent resolution about invalidating the rule. Then, depending on which house the writer of the resolution comes from, the resolution goes to the house of representatives or senate, where the body has five session days to act on the resolution.  If that time lapses, or there is no majority vote within five days, then the resolution dies, meaning the rule would no longer be suspended.  If the resolution does pass the first body by majority vote, it then goes to the other house of General Assembly.  Again, in the second body, the resolution must be voted on within 5 session days and be passed by a majority vote.  If the resolution does not pass or is not voted on, again, the rule comes out of suspension.  Finally, if the concurrent resolution for invalidating the rule passes both the house and senate, the rule is invalidated.

5 Year Review of Rules

Administrative agencies in Ohio must review their administrative rules every five years.  The first part of the review requires the agency to ascertain whether or not the rule has a harmful effect on business in the state of Ohio. If the agency decides that the rule does have a bad impact on business, then the rule must be sent to the Common Sense Initiative office (CSI).  The CSI is charged with finding ways to diminish the effects on business.

After the analysis of the effect on business, the agency decides whether or not the rule needs to be updated or removed.  Upon deciding that a rule needs to be changed or removed, the agency must then file the rule with JCARR as a five year amended or rescinded rule.  Then, JCARR goes through the process described above—the committee determines whether the amended or rescinded rule violates any of the six requirements, and if it does, the committee follows the process for rule invalidation.

If the agency determines that the rule should remain as it is, then it should file the rule as a five year no-change rule.  JCARR then considers the following questions as pertains to the no-change rule:

  • Should the rule be continued based on the intent of the statute under which the rule was adopted?
  • Should the rule be amended to give more flexibility at the local level?
  • Should the rule be rescinded or eliminated because of unnecessary paperwork?
  • Does the rule meet the standards for incorporation by reference?
  • Does the rule duplicate, overlap, or conflict with other rules?
  • Is there a continued need for the rule?
  • If the rule has an adverse impact on business, did the rulemaker demonstrate through the business impact analysis, CSI recommendations, and the memorandum of response that the regulatory intent of the rule justifies its adverse impact on business?

If JCARR finds that one of the above questions was violated or not sufficiently addressed by the agency, then the committee can entertain a motion for invalidation of the rule, triggering the rule invalidation process discussed above.

More information

JCARR has an excellent website with informative videos and other information about its purpose and how it carries out the review process, available here.  For a deeper dive into JCARR and the review process, the committee’s procedure manual is also very helpful.

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We bring you tidings of gifts and tax implications in this season of giving

Written by: Evin Bachelor, Law Fellow

The holiday season stands out as one of the most generous times of year as people give gifts to the people they love.  What better way to get into the holiday spirit than to talk about the tax implications of your gifts?  There are three shopping weekends left until December 25th, so here are three highlights about the federal gift tax that you should know:

1. The federal gift tax is assessed on the person who gives the gift, not the person who receives the gift.

An individual who gives a gift of cash or assets with a fair market value greater than $15,000 to any one person in a given year will have to report the gift(s) using IRS Form 709 when filing taxes for that year.  These forms cannot be filed jointly, so if a married couple gives a gift that is worth more than $30,000 to any one person, both of them must file IRS Form 709 and report half of the value of the gift.

Form 709 requires a few pieces of information about the gift and who receives the gift.  It asks for things like a description of the gift, the recipient’s name and address, when it was given, and its value.  While documentation or receipts do not have to be submitted with Form 709, filers should keep records for themselves about the gift in case the IRS has questions.

The gift tax rates for 2018 range from 18 to 40 percent.  The rates depend upon how much in excess of the $15,000 exclusion the gift is valued.  For instance, a gift valued at $20,000 would have no taxes on the first $15,000, but the $5,000 over the $15,000 threshold would be subject to an 18 percent tax.  The 40 percent rate applies to gifts valued at $1,015,000, or $1,000,000 over the $15,000 exclusion.

Fortunately for the recipient, the gift does not count as income to the recipient because the gift falls under the gift tax rules instead of the income tax rules.

2. Each individual may give up to $15,000 in gifts to any person per year free of federal gift taxes. Because this rule focuses on the individual giver, a married couple could give up to a combined $30,000 in gifts to any one person tax free.

To illustrate, if Bob and Betty Buckeye have a daughter, Bernice, both Bob and Betty can give Bernice $15,000 worth of gifts in 2018, for a total of $30,000, without having to pay taxes on the gift.  If Bernice is married to Brutus, then Bob and Betty could also give a combined $30,000 gift to Brutus; however, that money is Brutus’s.  The gift to Brutus cannot be used to hide a gift to Bernice.

Importantly, some gifts are excluded from the gift tax and do not count toward the $15,000 exclusion threshold.  These include gifts to a spouse, gifts of tuition paid directly to the college or institution, gifts of medical expenses, gifts to certain exempt organizations like charities, and gifts to certain political organizations.

However, things like forgiving a debt, contributing to a 529 education plan, making an interest-free or below market rate loan, transferring the benefits of an insurance policy, or giving up an annuity in exchange for the creation of a survivor annuity do count as gifts.  When these gifts exceed the $15,000 exclusion threshold, they are taxable.

The $15,000 threshold is new for 2018.  In 2017, it was only $14,000.  The IRS now revises the amount based upon inflation, but is expected only to do so periodically in $1,000 increments.

3. Under the new tax plan passed by Congress and signed by the President in 2017, the higher estate tax threshold has made gift giving less urgent as a tax planning strategy.

Many individuals used the gift exemption as a way to provide for the next generation while also lessening the risk or burden of federal estate taxes.  However, the 2017 tax reform doubled the value of an individual estate that is exempt from the estate tax to $11,180,000.  A couple may take advantage of that individual exemption, and, with proper planning, shield $22.4 million in assets from the federal estate tax.  Unless an estate is likely to reach the applicable threshold, gifts may not be as important of an estate planning tool solely to avoid estate tax consequences.

Long-term planners may want to keep in mind that the new estate tax exemption is set to expire at the end of 2025.  If the $11,180,000 exemption is not extended by the end of 2025, the law will revert back to what it was before the 2017 tax reform, thereby returning the estate tax exemption threshold to around $5.5 million.

Disclaimer: While the estate tax changes may have made gifts less relevant as an estate planning tool for some, this certainly does not mean that gifts should be cancelled this year.  The OSU Extension Farm Office cannot take responsibility for that.  It only means that more families can focus on giving for love, rather than taxes.

For more information on federal gift taxes, contact an accountant or attorney, or visit the Internal Revenue Service’s “Frequently Asked Questions on Gift Taxes” here.  For more general information about how taxes affect agriculture, visit the OSU Extension Farm Office Tax Law Library here.

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The Ag Law Harvest

Written by: Ellen Essman, Sr. Research Associate, and Evin Bachelor, Law Fellow

Here’s our latest gathering of agricultural law news that you may want to know:

GIPSA as we know it is no more.  A rule was released November 29, 2018 by the USDA as part of the Trump administration’s ongoing efforts to reorganize the agency.  Of particular note, the rule, which was published in the Federal Register, eliminates the Grain Inspection, Packers and Stockyards Administration (GIPSA) as a “stand-alone agency.”  According to the GIPSA website (which is currently still available here), the agency “facilitate[d] the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and promote[d] fair and competitive trading practices for the overall benefit of consumers and American agriculture.”  The new administrative rule relocates GIPSA responsibilities to the Agricultural Marketing Service (AMS) Administrator.  The change is not without controversy, as some farmers and agricultural groups argue that the protection of farmers through fair trading practices is antithetical to AMS, an agency responsible for marketing and promoting commodities.  The rule is available here.

Supreme Court considers when habitat is “critical habitat” under the Endangered Species Act.  The Supreme Court of the United States ruled in favor of private landowners when it recently determined that protected “critical habitat” for an endangered species must be habitat in which the species could actually survive.  The Court’s decision in Weyerhaeuser Co. v. United States Fish and Wildlife Service et al  involved the dusky gopher frog, an endangered species that once lived throughout the coastal regions of Alabama, Louisiana, and Mississippi.  Some of the habitat deemed by the U.S. Fish & Wildlife Service to be protected “critical habitat” for the frog was not actually occupied by the frog, and was instead being used for commercial timber production.  Weyerhaeuser and other affected landowners brought suit, claiming that the land couldn’t be critical habitat because the frog could not survive there without significant human intervention, such as intensive tree planting.  The Court agreed that critical habitat “cannot include areas where the species could not currently survive.”  Weyerhouser and other landowners had also challenged the agency’s cost-benefit analysis for the critical habitat designation, but the Fifth Circuit Court of Appeals disagreed and stated that it had no power to review the FWS  analysis.   The Supreme Court disagreed, stating that federal courts can review an agency’s economic impact analysis to determine whether the agency abused its discretion or was arbitrary and capricious.  With that guidance, the Supreme Court remanded the case back to the Fifth Circuit for further proceedings.  The Supreme Court’s decision is here.

A second judge finds that Trump’s WOTUS repeal was not procedurally sound.  Surprise, surprise, the WOTUS, or “waters of the United States” rule is in the news again.  In many previous blog posts, we have chronicled decisions on the ever-present WOTUS rule (search “WOTUS” in our search bar for our other posts).  Readers will recall that last February, the Trump administration published a new rule which was meant to repeal Obama’s WOTUS rule and replace it with the pre-2015 definition of WOTUS until a new definition could be developed.  Trump’s  rule was published on February 6, 2018, giving the administration until 2020 to come up with a new definition.  On August 16, 2018, a district court judge in South Carolina found that the Trump administration did not comply with the requirements of the Administrative Procedure Act (APA) when it enacted the February 6 rule.  Similarly, on November 26, 2018, Judge John Coughenour in the Western District of Washington found that “by restricting the content of the comments solicited and considered [about the February rule], the Agencies deprived the public of a meaningful opportunity to comment on relevant and significant issues in violation of the APA’s notice and comment requirements.”  Rulemaking that violates the APA is invalid.  Judge Coughenour’s full decision is available here.

Both the South Carolina and the Washington state district court decisions are applicable to the entire country.  As a result, one might think that the Obama WOTUS rule should be in effect nationwide.  However, it is important to remember that in some states, there are injunctions against carrying out Obama’s WOTUS rule.  This means that it cannot be carried out in those states, and that the pre-2015 rule is actually effective in those states.  EPA has a map depicting which version of the rule applies where.  Uncertainty and WOTUS seem to be synonymous these days.  The only thing we know for certain is that the WOTUS saga is not over, meaning things are likely to change again in the future.

Ohio Treasurer pioneers paying taxes with Bitcoin.  Any business operating in Ohio may now pay certain taxes to the state of Ohio using Bitcoin, as recently announced by outgoing Ohio Treasurer Josh Mandel.  The move makes Ohio the first state to accept Bitcoin as a form of tax payment.  The official press release expressed hopes that other cryptocurrencies could be used, but at this time only Bitcoin will be accepted.  Cryptocurrencies are said to be secure because they use blockchain, which is a digital register of transactions and information that is difficult to modify because changes to the register cannot be done by any single user.  The Treasurer’s Office has specified 23 different taxes that can be paid with cryptocurrencies, including: Commercial Activity Taxes (CAT), consumer’s use taxes, Interest on Lawyers Trust Accounts (IOLTA) taxes, Pass-Thru Entity (PTE) taxes, sales taxes, and more.  Paying with cryptocurrency is being accepted as an additional form of payment, as businesses can still pay with ACH credit, ACH debit, check, and money order.  However, the state will not keep the cryptocurrency, but instead will use a third party to cash out the Bitcoin and convert it into U.S. dollars before depositing them into the state’s account.  For more information, visit www.OhioCrypto.com or view the Treasurer’s Frequently Asked Questions page here.

Bayer prepares to bear with multiple jury trials over Monsanto’s glyphosate.  Bayer AG continues to battle more and more plaintiffs claiming that their health problems were caused as a direct result of Monsanto’s Roundup and glyphosate.  Another 600 plaintiffs have reportedly sued Bayer/Monsanto in the past two months since we last reported the number of lawsuits initiated with this argument.  Following the multi-billion dollar verdict in California state court late this summer, more jury trials are set to begin.  Over 620 cases have been filed in federal court, and the first case to reach a federal jury is now set for trial in San Francisco in February 2019.  Another California state court case has been fast-tracked to be heard in March 2019 because of the condition and age of the plaintiffs.  Yet another case is expected to be scheduled in Missouri state court for sometime later in 2019.  The cases largely depend upon a plaintiff’s ability to convince a jury that his or her cancer was more likely than not directly caused by glyphosate.  This question because controversial in 2015 when the United Nation’s World Health Organization released a report stating that the widely used herbicide is “probably carcinogenic to humans.”  However, the U.S. Environmental Protection Agency issued a release in 2017 saying that its own findings demonstrate that glyphosate is unlikely to be carcinogenic in humans.

Is this pumpkin pie made of pumpkin?  Thanksgiving dinner conversations often involve at least one debate for many families.  Prompted by recent coverage in news outlets like the Wall Street Journal, one of the topics this year was whether grandma’s pumpkin pie is made of pumpkin, and whether it should be.  At one end of the debate are those who say that pumpkin pie must be made from pumpkins, while others say that closely related squashes have a better flavor and consistency that make a pie taste the way a “pumpkin pie” should taste.  Central to this debate is the status of firm-shelled, golden-fleshed sweet squash, which currently makes up a large portion of the market for “canned pumpkin.”  The U.S. Food and Drug Administration (FDA) has a long-standing policy saying that labeling the golden-fleshed, sweet squash as “pumpkin” complies with the Food, Drug, and Cosmetic Act and the Fair Packaging and Labeling Act.  Since 1938, the FDA has “consistently advised canners that we would not initiate regulatory action solely because of their using the designation “pumpkin” or “canned pumpkin” on labels for articles prepared from golden-fleshed, sweet squash, or mixtures of such squash with field pumpkins.”  The FDA explains that allowing current labeling practice does not seem to mislead or deceive consumers.  While the FDA declines to take a stand on the issue, families are free to continue to debate which ingredients make for the best pumpkin pie.

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The Ag Law Harvest

Written by: Evin Bachelor, Law Fellow

The midterm elections are over, and Thanksgiving is upon us.  A lot of activity is expected out of Washington and Columbus as the legislative sessions wind up.  The OSU Extension Agricultural and Resource Law team will continue to keep you up to date on the legal issues affecting agriculture as we enter into the holiday season.

Here’s our gathering of ag law news you may want to know:

State of Ohio sued over wind turbine setbacks.  Four farmers in Paulding County have joined with The Mid-Atlantic Renewable Energy Coalition to sue the State of Ohio over wind turbine setbacks added to the 2014 biennial budget that some allege curtailed wind energy development in Ohio.  In that budget bill, lawmakers included provisions late in the lawmaking process to amend Ohio Revised Code § 4906.20, which establishes the setback requirements for wind turbines.  Those provisions more than doubled the distance that wind turbines must be located away from the nearest residential structures.  The plaintiffs in this lawsuit allege that including these restrictions in the budget bill violated the single-subject provisions of the Ohio Constitution because the setbacks lack a “common purpose or relationship” to the rest of the budget bill.  On this issue, the Ohio Supreme Court said in the case In re Nowak (cited as 2004-Ohio-6777) that the single-subject rule is a requirement that legislators must abide by, but that only a “manifestly gross and fraudulent” violation will result in the law being struck down.  The plaintiff’s complaint is available here.  Stay tuned to the Harvest for updates.

Department of Labor proposes rule requiring H-2A advertisements be posted online.  The U.S. Department of Labor (DOL) published a notice of proposed rulemaking in the Federal Register on November 9th that would change how employers must advertise available positions before they may obtain H-2A worker permits.  H-2A permits are work visas for temporary agricultural workers who are non-U.S. citizens.  Currently, employers must advertise work in a local newspaper of general circulation for at least two consecutive days, one of which must be a Sunday.  This requirement is located in the Code of Federal Regulations at 20 C.F.R. § 655.151.  The DOL now proposes to modernize the recruitment advertising rule by requiring employers to post the jobs online instead of in print.  The DOL’s notice explained that it believes online postings would more effectively and efficiently give U.S. workers notice of job opportunities.  Further, the notice explained that the DOL intends to only require online advertisements, which would render newspaper advertisements unnecessary.  U.S. Secretary of Agriculture Sonny Perdue issued a press release in support of the DOL’s proposal.  The public may submit comments to the DOL about the proposed rule.  Those wishing to comment may do so until December 10th, 2018, by visiting the proposed rule’s webpage in the Federal Register.

LLC agreement to adjust member financial contributions must be in writing.  The Ohio Fourth District Court of Appeals recently affirmed a decision finding a verbal agreement to adjust contributions between members of a Limited Liability Company (LLC) to be unenforceable, even if the other party admitted to making the statements.  Ohio Revised Code § 1715.09(B) requires a signed writing in order to enforce a “promise by a member to contribute to the limited liability company,” and therefore the court could not enforce an oral agreement to adjust contributions.  The Fourth District Court of Appeals heard the case of Gardner v. Paxton, which was originally originally filed in the Washington County Court of Common Pleas.  The plaintiff, Mr. Gardener, argued that his business partner breached an agreement to share in LLC profits and losses equally.  In order to share equally, both parties would have needed to adjust their contributions, but Mr. Paxton only made verbal offers that were never reduced to writing.  Because there was no writing, Mr. Paxton’s statements were not enforceable by his business associate against him.

Ohio legislation on the move:

The Ohio General Assembly has returned from the midterm elections with a potentially busy lame duck session ahead of it.  Already a number of bills that we have been monitoring have seen activity in their respective committees.

  • Ohio Senate Agriculture Committee held first hearing on multi-parcel auction bill. State senators heard testimony on House Bill 480 last Tuesday, November 13th.  The bill would authorize the Ohio Department of Agriculture to regulate multi-parcel auctions, which are currently not specifically addressed in the Ohio Revised Code.  The bill also defines “multi-parcel auction,” saying such an auction is one involving real or personal property in which multiple parcels or lots are offered for sale in part or in whole.  The bill would also establish certain advertising requirements.  The bill’s primary sponsor, Representative Brian Hill of Zanesville, says that he introduced the bill in an effort to recognize by statute what auctioneers are already doing, and to do so without interrupting the industry.  The bill passed the Ohio House of Representatives 93-0 in June.  For more information on the legislation, visit the House Bill 480 page on Ohio General Assembly’s website or view this bill analysis prepared by the Ohio Legislative Service Commission.

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Did you know that states’ “right-to-farm” protections can apply to aquaculture, too?

Written by Ellen Essman, Sr. Research Associate

A few weeks ago we attended the American Agricultural Law Association’s (AALA) annual conference, which was held in Portland, Oregon this year. While we were there, we had the opportunity to learn about numerous topics related to agricultural law.  One such topic was presented by our colleague from the National Sea Grant Law Center, Amanda Nichols.  Nichols presented her research on state “right-to-farm” statutes and their applicability to aquaculture.

What is aquaculture?

For those who don’t know, aquaculture is defined by the National Oceanic and Atmospheric Administration (NOAA) as “the breeding, rearing, and harvesting of fish, shellfish, plants, algae, and other organisms in all types of water environments.”  Thus, aquaculture is essentially the farming of aquatic species in freshwater and saltwater, in manmade and natural bodies of water.

What are right-to-farm laws?

Right-to-farm laws are meant to protect agricultural operations against nuisance lawsuits brought by neighboring landowners complaining about smell, dust, noise, or other annoyances.  In terms of “traditional,” terrestrial farming, for example, right-to-farm laws could potentially protect against lawsuits claiming the spreading or accumulation of livestock manure is a nuisance to neighbors.  Every state in the U.S. has their own right-to-farm statute, and some of the statutes protect farming operations more completely than others do.  For example, Ohio’s right-to-farm language provides farmers with a complete defense to civil nuisance lawsuits when certain conditions are met.  On the other hand, neighboring Michigan and Pennsylvania’s statutes provide no such defenses.

Where aquaculture and right-to-farm laws overlap

In her research on the topic of which states include protection of aquaculture operations in their right-to-farm laws, Nichols found that twenty-six states, including Ohio, “expressly include fish or aquaculture within the scope of their right-to-farm protections.” As a result, any right-to-farm protections to traditional agriculture, as well as any conditions agricultural operations must meet in order for the right-to-farm language to apply, would also extend to aquaculture in those twenty-six states.  Nichols found that one state, New Jersey, did “not mention aquaculture or fish expressly” but has adopted a manual for best management practices (BMPs) for aquaculture within the state, which shows the state’s “intent” to protect aquaculture from nuisance lawsuits.

Ohio’s right-to-farm legislation

As mentioned above, Ohio’s right-to-farm legislation “expressly include[s]” aquaculture.  It does so by defining “agricultural production” not only as “animal husbandry” or production of plants for “a commercial purpose,” but also as “commercial aquaculture” and “algaculture meaning the farming of algae.”

Ohio farmers, including those involved in aquaculture, have right-to-farm protection in two parts of the Ohio Revised Code (ORC).  ORC Chapter 929 establishes “agricultural districts.”  Generally, in order to place land in an agricultural district, the owner of the land must file an application with the county auditor.  Certain requirements must be met in order for an application to be accepted.  Slightly different rules apply if the land in question is within a municipal corporation or is being annexed by a municipality.  If the application is accepted, the land is placed in an agricultural district for five years.  The owner may submit a renewal application after that time is up.

Being part of an agricultural district in Ohio can help farmers and landowners to defend against civil lawsuits.  ORC 929.04 reads:

In a civil action for nuisances involving agricultural activities, it is a complete defense if:

A. The agricultural activities were conducted within an agricultural district;

B. Agricultural activities were established within the agricultural district prior to the plaintiff’s activities or interest on which the action is based;

C. The plaintiff was not involved in agricultural production; and

D. The agricultural activities were not in conflict with federal, state, and local laws and rules relating to the alleged nuisance or were conducted in accordance with generally accepted agriculture practices.

The ORC’s chapter on nuisances provides additional protection for those “engaged in agriculture-related activities.”  Under ORC 3767.13, people who are practicing agricultural activities “outside a municipal corporation, in accordance with generally accepted agricultural practices, and in such a manner so as not to have a substantial, adverse effect on public health, safety, or welfare” are typically exempt from claims of nuisance due to farm noise, smells, etc.

Not only is Ohio’s right-to-farm legislation more forceful in its protection of agriculture than many other states, but it also explicitly includes aquaculture under that protection.  AALA gave us the chance to learn about this very interesting study of right-to-farm legislation as applies to aquaculture, which is an area of agriculture that many Ohioans might not necessarily think about.  If you are interested in learning more about state right-to-farm laws and aquaculture, the National Sea Grant Law Center’s report is available here.

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North Carolina’s Smithfield Lawsuits: Could Ohio Farmers Face Similar Results?

Written by Ellen Essman, Sr. Research Associate

Over the last several months, three nuisance cases have been decided against Smithfield Foods in federal court in North Carolina.  The juries in the cases have found Smithfield’s large farms, with thousands of hogs, and the odor, traffic, and flies that come along with them, to be a nuisance to neighboring landowners.  Smithfield has been ordered to pay hefty damages to the neighbors, and more cases against the company remain to be decided.  Given the outcomes of the cases that have been decided thus far, farmers and landowners in Ohio might be wondering how Ohio law compares to North Carolina law as pertains to agricultural nuisances.

Ohio’s Right-to-Farm law

Many states, including both Ohio and North Carolina, have “right-to-farm” legislation, which in part is meant to protect agriculture from nuisance lawsuits such as those filed against Smithfield.  While nearly every state has a right-to-farm statute, they do differ in language and how they go about protecting agriculture.

Ohio farmers have right-to-farm protection in two parts of the Revised Code.  ORC Chapter 929 establishes “agricultural districts.”  Generally, in order to place land in an agricultural district, the owner of the land must file an application with the county auditor.  Certain requirements must be met in order for an application to be accepted.  Slightly different rules apply if the land in question is within a municipal corporation or is being annexed by a municipality.  If the application is accepted, the land is placed in an agricultural district for five years.  The owner may submit a renewal application after that time is up.

Being part of an agricultural district in Ohio can help farmers and landowners to defend against civil lawsuits.  ORC 929.04 reads:

 In a civil action for nuisances involving agricultural activities, it is a complete defense if:

  • The agricultural activities were conducted within an agricultural district;
  • Agricultural activities were established within the agricultural district prior to the plaintiff’s activities or interest on which the action is based;
  • The plaintiff was not involved in agricultural production; and
  • The agricultural activities were not in conflict with federal, state, and local laws and rules relating to the alleged nuisance or were conducted in accordance with generally accepted agriculture practices.

The ORC’s chapter on nuisances provides additional protection for those “engaged in agriculture-related activities.”  Under ORC 3767.13, people who are practicing agricultural activities “outside a municipal corporation, in accordance with generally accepted agricultural practices, and in such a manner so as not to have a substantial, adverse effect on public health, safety, or welfare” are typically exempt from claims of nuisance due to farm noise, smells, etc.

North Carolina’s Right-to-Farm law

Much like Ohio, North Carolina farm land can be part of an “agricultural district.” North Carolina’s preservation of farmland law is available here.  This program is meant to protect agricultural land—land that is part of an agricultural district is must be used for agriculture for at least 10 years.  However, unlike Ohio’s law, North Carolina does not specifically spell out that land in agricultural districts will be protected from nuisance suits when the landowner follows the rules of the agricultural district.  North Carolina’s law does state that one of the purposes of agricultural districts is to “increase protection from nuisance suits and other negative impacts on properly managed farms,” but unlike Ohio, it does not explicitly state that being part of an agricultural district is a defense to a nuisance lawsuit.

North Carolina also has a statute which specifically spells out the right-to-farm.  In response to the recent jury decisions, however, North Carolina has changed its right-to-farm law.  The original law read:

(a) No agricultural or forestry operation or any of its appurtenances shall be or become a nuisance, private or public, by any changed conditions in or about the locality outside of the operation after the operation has been in operation for more than one year, when such an operation was not a nuisance at the time the operation began.

(a1) The provisions of subsection (a) of this section shall not apply when the plaintiff demonstrates that the agricultural or forestry operation has undergone a fundamental change.  A fundamental change does not include any of the following:

  • A change in ownership or size.
  • An interruption of farming for a period of no more than three years.
  • Participation in a government-sponsored agricultural program.
  • Employment of new technology.
  • A change in the type of agricultural or forestry product produced.

The original law did not protect agricultural operations if their actions were negligent or improper.  The original law is available here.

Following the first decision against Smithfield, the North Carolina legislature overrode the Governor’s veto to implement amendments to the state’s right-to-farm law.  In the amendments, available here (sections 106-701 and 106-702), the legislature substantially changed the language of the law, making what constitutes a nuisance much more explicit and dependent on certain factors.  What is more, the new version of the law places limits on when plaintiffs can recover punitive damages for a private nuisance action.

A comparison of the Ohio and North Carolina’s sections of legislation promoting the “right-to-farm” shows how different the two states are.  Ohio’s legislative language makes it obvious that the meaning of the law is to protect agriculture from nuisance suits—by specifically stating that being in an agricultural district is a complete defense to nuisance, and that otherwise, agriculture is generally exempt from nuisance suits.  North Carolina’s law concerning agricultural districts does not specifically state that being in such a district is a defense to nuisance, instead, it simply expresses the hope that districts will “increase protection from nuisance suits.”  Furthermore, while North Carolina’s original right-to-farm law stated that agricultural operations do not “become a nuisance” due to changed conditions in the community, that language is not very specific.  Ohio’s agricultural district language lays out exactly what must be done to have a complete defense against a nuisance lawsuit; North Carolina’s language in multiple parts of the General Statutes does not have the same degree of specificity.

Permit as a defense to nuisance

In addition to the right-to-farm law, under ORC 903.13, those owning, operating, or responsible for concentrated animal feeding facilities in Ohio have an affirmative defense to a private civil action for nuisance against them if the CAFO is “in compliance with best management practices” established in their installation of a disposal system or operation permits.   North Carolina does not appear to have similar language protecting permitted farms in its General Statutes.

Other factors that may come into play

In the lawsuits against Smithfield farms, the lawyers for the plaintiffs (neighboring landowners) have continuously asserted that Smithfield has “means and ability” to “reduce the nuisance from existing facilities” by ending the use of “lagoon and sprayfield” systems at their farms.  Plaintiffs stress that not only is Smithfield Foods, Inc. a large, wealthy, multinational company, but that they have also changed their lagoon and sprayfield practices outside of North Carolina.  In lagoon and sprayfield systems, all waste is collected in an open-air lagoon and then sprayed on fields as fertilizer.  The practice was first banned for new construction in North Carolina in 1997, and in 2007, the state permanently banned the practice for newly constructed swine facilities.  Although many of the facilities in question were opened before any ban on the construction of lagoon and sprayfield facilities, the plaintiffs contend that changes made in other states mean Smithfield can afford to change in North Carolina.  The ban on new lagoon and sprayfield systems in North Carolina, and evidence that Smithfield has used different practices to reduce the smell from the farms in other states, likely helped the juries in the cases that have been tried to date find that the farms are a nuisance to their neighbors. The above argument is something operators of livestock facilities in Ohio should be aware of.  Although Ohio has not specifically banned lagoon and sprayfield systems like North Carolina has, the ability to change the system could still potentially be used to argue nuisance.  Ohio operators are supposed to follow best management practices and the Natural Resources Conservation Service’s Field Office Technical guide when applying and storing manure, which include ways to reduce odor from manure and other applications, as well as reducing other types of nutrient pollution.  Following such guidelines would likely help operators in any argument against nuisance.

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