The Ag Law Harvest

Written by Ellen Essman and Peggy Hall

This edition of the Ag Law Harvest has a little bit of everything—Ohio and federal legislation responding to COVID issues, new USDA guidance on bioengineered foods, and a judicial review of Bayer’s Roundup settlement.  Read on to learn about the legal issues currently affecting agriculture.

Ohio COVID-19 immunity bill stalls.  While the Ohio House and Senate agree with the concept of immunity for COVID-19 transmissions, the two chambers don’t yet see eye-to-eye on the parameters for COVID-19 liability protection.  H.B. 606, which we reported on here, has passed both the House and Senate, but the Senate added several amendments to the legislation.  The House won’t be addressing those amendments soon because it’s in recess, and doesn’t plan to return for business until at least September 15.   The primary point of disagreement between the two bills concerns whether there should be a rebuttable presumption for Bureau of Workers’ Compensation coverage that certain employees who contract COVID-19 contracted it while in the workplace.  The Senate amendment change by the Senate concerns exemption from immunity for “intentional conduct,” changed to “intentional misconduct.”  Currently, there is not a plan for the House to consider the Senate’s amendments before September 15.

Lawmakers propose bill to avoid more backlogs at processing plants.

Most people are aware that the COVID-19 pandemic created a huge backlog and supply chain problem in U.S. meatpacking plants.  A group of bipartisan representatives in the House recently proposed the

Requiring Assistance to Meat Processors for Upgrading Plants Act, or RAMP-UP Act.  The bill would provide grants up to $100,000 to meat and poultry processing plants so the plants could make improvements in order to avoid the kind of problems caused by the pandemic in the future.  The plants would have to provide their own matching funds for the improvements.  You can find the bill here.

Revisiting the Paycheck Protection Program, again.  In a refreshing display of non-partisanship, Congress passed legislation in late June to extend the Paycheck Protection Program (PPP).  Employers who haven’t taken advantage of PPP now have until August 8, 2020 to apply for PPP funds to cover payroll and certain other expenses.  Several senators also introduced the Paycheck Protection Program Small Business Forgiveness Act, a proposal to streamline an automatic approval process for forgiveness of PPP loans under $150,000, but there’s been little action on the bill to date.  Meanwhile, the American Farm Bureau Federation is in discussion with the Senate on its proposal for other changes to PPP that would expand access to PPP for agriculture.

More clarification for bioengineered food disclosure. You may recall that the National Bioengineered Food Law was passed by Congress in 2016.  The legislation tasked USDA with creating a national mandatory standard for disclosing bioengineered foods. The standard was implemented at the beginning of 2020, but USDA still needed to publish guidance on validating a refining process and selecting an acceptable testing method.  On July 8, 2020, that guidance was published. The guidance provides steps for industry to take when validating a food refining process under the rule.  A lot of food refining processes remove traces of modified genetic material. So, if a refining process is validated, there is no further need to test for bioengineered material to disclose.  The guidance also contains instructions on testing methods. Basically, “any regulated entity that is using a food on the AMS List of Bioengineered Foods and does not want to include a bioengineered food disclosure because the food or ingredient is highly refined and does not include detectable modified genetic material” should follow these testing instructions. Therefore, any entity with highly refined foods that do “not include detectable modified genetic material” should follow the recently published guidance.

Bayer settlement proposal under scrutiny.  Last month, Bayer, the owner of Roundup, announced that it would settle around 9,500 lawsuits related to alleged injuries caused by using the product.  Not only was the proposal supposed to settle previous lawsuits, but it was also meant to address any future lawsuits stemming from purported injuries caused by Roundup.  A judge from the United States District Court for the Northern District of California recently pumped the breaks on this plan, stating that any settlement that would resolve “all future claims” against Roundup must first be approved by the court.  A hearing will be held on July 24, where the court will decide whether or not to “grant preliminary approval of the settlement.”

 

Dicamba battles continue: court allows dicamba use

There was a great deal of action last Friday in the case that vacated the registrations of XtendiMax, Engenia and FeXapan dicamba-based products.  Despite a barrage of court filings on Friday, however, nothing has changed the current legal status of the dicamba products in Ohio, and Ohio growers may use existing stocks of the products now but must end use by June 30, 2020.

Here’s a rundown of the orders that the Ninth Circuit Court of Appeals issued in the case last Friday:

• The court denied the emergency motion that the petitioners (National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) filed on June 13.  That motion asked the court to enforce its previous mandate to vacate the registrations, to prevent any further use of the products, and to hold the EPA in contempt for issuing the Cancellation Order the agency had made that allowed continued use of existing stocks of the products.  The court did not provide its reasoning for denying the motion.
• The court granted amicus curiae (friend of the court) status to CropLife America and American Farm Bureau (representing  itself as well as national soybean, cotton, wheat, corn and sorghum association interest.)  Those parties filed their amicus curiae briefs in support of the EPA’s Cancellation Order and in opposition to the petitioners’ emergency motion.
• The court granted also emergency motions to intervene in the case filed by BASF Corporation, maker of Engenia, and DuPont (Corteva) , maker of FeXapan.   The companies argued that they did not know that the  scope of the court’s order on Bayer’s XtendiMax product registration would also affect their dicamba product registrations and they should now be permitted an opportunity to defend their products.
• BASF filed a motion asking the court to recall the court’s mandate that had cancelled the registrations of the products, claiming that the court had not followed appropriate procedural rules.  In its brief, BASF also suggested that te company would be filing petitions for rehearing since BASF had not had an opportunity to be heard when the court vacated the registration of its Engenia product.
• The court ordered the original petitioners to file a brief in response to BASF’s motion to recall the mandate by June 23, and for BASF to reply to that brief by June 24.

The companies that make the dicamba products clearly intend to challenge the vacatur of their product registrations, even though the EPA’s Cancellation Order allows continued use of existing stocks of the products until July 30, 2020.   This dicamba battle is not yet over, and we’ll keep you posted on new developments.

Read our previous posts on the court’s vacatur in National Family Farm Coalition v. EPA here, on the EPA’s Cancellation Order here, and on the Ohio Department of Agriculture’s ruling on use of the products in Ohio here.

Ohio Department of Agriculture: dicamba use in Ohio ends June 30, 2020

The dicamba roller coaster ride continues today, with a statement issued by the Ohio Department of Agriculture clarifying that the use of XtendiMax, Engenia, and FeXapan dicamba-based products in Ohio will end as of June 30, 2020.  Even though the US EPA has issued an order allowing continued use of the products until July 31, 2020, use in Ohio must end on June 30 because the Ohio registrations for the three dicamba-based products expire on that day.

As we’ve explained in our previous blog posts here and here, the Ninth Circuit Court of Appeals vacated the registration of the dicamba products on June 3, 2020.  In doing so, the court stated that the EPA had failed to perform a proper analysis of the risks and resulting costs of the products.  According to the court, EPA had substantially understated the amount of acreage damaged by dicamba and the extent of such damage, as well as complaints made to state agriculture departments.  The court determined that EPA had also entirely failed to acknowledge other risks, such as the risk of noncompliance with complex label restrictions, economic risks from anti-competition impacts created by the products, and the social costs to farm communities caused by dicamba versus non-dicamba users.  Rather than allowing the EPA to reconsider the registrations, the court vacated the product registrations altogether.

The EPA issued a Cancellation Order for the three products on June 8, stating that distribution or sale by the registrants is prohibited as of June 3, 2020.  But the agency also decided to examine the issue on the minds of many farmers:  what to do with the products.  Applying its “existing stocks” policy, the EPA examined six factors to help it determine how to deal with stocks of the product that are in the hands of dealers, commercial applicators, and farmers.  The EPA concluded that those factors weighed heavily in favor of allowing the end users to use the products in their possession, but that use must occur no later than July 31, 2020 and that any use inconsistent with the previous label restrictions is prohibited.

Despite the EPA’s Cancellation Order, however, the Ohio Department of Agriculture is the final arbiter of the registration and use of pesticides and herbicides within Ohio.  ODA patiently waited for the EPA to act on the Ninth Circuit’s ruling before issuing its guidance for Ohio users of the dicamba products.  In its guidance released today, ODA stated that:

• After careful evaluation of the court’s ruling, US EPA’s Final Cancellation Order, and the Ohio Revised Code and Administrative Code, as of July 1, 2020, these products will no longer be registered or available for use in Ohio unless otherwise ordered by the courts.
• While use of already purchased product is permitted in Ohio until June 30, further distribution or sale of the products is illegal, except for ensuring proper disposal or return to the registrant.
• Application of existing stocks inconsistent with the previously approved labeling accompanying the product is prohibited.

But the roller coaster ride doesn’t necessarily end there.  Several dangling issues for dicamba-based product use remain:

• We’re still waiting to see whether the plaintiffs who challenged the registrations (the National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America) will also challenge the EPA’s Cancellation Order and its decision to allow continued use of the products, and will request immediate discontinuance of such uses.
• Bayer Crop Science, as an intervenor in the Ninth Circuit case, could still appeal the Ninth Circuit’s decision, as could the EPA.
• All of these orders add complexity to the issue of liability for dicamba damage.  That issue has already become quite controversial, often pitting farmer against farmer and requiring the applicator or damaged party to prove adherence to or violation of the complicated label restrictions.  But the Ninth Circuit’s attention to the risks of adverse impacts from the products raises additional questions about whether an applicator who chooses to use the products is knowingly assuming a higher risk, and whether a liability insurance provider will cover that risk.  For this reason, growers may want to have a frank discussion with their liability insurance providers about coverage for dicamba drift.

The dicamba roller coaster ride will surely continue, and we’ll keep you updated on the next development.

Read the ODA’s Official Statement Regarding the Use of Over-the-Top Dicamba Products here.

US EPA allows use of dicamba products by July 31, 2020

When we explained in our last blog post the recent Court of Appeals decision that vacated the registration of three dicamba-based products, we mentioned that one possibility for answering the “what happens now” question was for the EPA to issue a cancellation order that would allow use of existing stocks of the products held by end users.  That’s exactly what happened yesterday, when the US EPA made a final order that cancelled the registrations of XtendiMax, Engenia, and FeXapan but allows for movement and use of the products.  Here’s a summary of the agency’s order.

Authority to issue the cancellation order

After reviewing the background of the dicamba product registrations vacated by the Ninth Circuit Court of Appeals last week for lack of “substantial evidence” supporting the registrations, the EPA stated that it was relying upon the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to establish provisions for the disposition of existing stocks of registrations that are found to be invalid.   “The Administrator may permit the continued sale and use of existing stocks of a pesticide whose registration is suspended or canceled under [sections 3, 4 or 6 of FIFRA] to such extent, under such conditions, and for such uses as the Administrator determines that such sale or use is not inconsistent with the purposes of [FIFRA]” stated the agency.

The EPA noted that FIFRA does not prohibit the use of unregistered pesticides, but only prohibits the sale and distribution of unregistered pesticides.  The agency noted that without its action, end users holding stocks of the products aren’t prevented from using the stocks without following label directions and restrictions.  And the agency pointed to a similar action it took after a 2015 court order that vacated the registration of sulfoxaflor and a 2010 court decision that vacated the registration of spirotetramat.  In both cases, the EPA utilized a cancellation order to establish terms and conditions for the disposition of existing stocks of the products.

Existing Stocks Determination

The EPA established an “existing stocks policy” in 1991 to help the agency assess how to treat existing stocks of cancelled pesticides, both when no significant risk concerns have been identified and when there are significant risk concerns for a cancelled product.  The agency noted that it considered the six factors outlined in the policy for considering significant risk concerns associated with a cancelled pesticide and reached the conclusion that “distribution and use in certain narrow circumstances is supported.”

The six factors the agency considered in determining what to do with the existing stocks of dicamba products are:

1. Quantities of existing stocks at each level of the channels of trade

The agency noted that due to the current timing of the growing season, significant existing stocks are present in the possession of end users and throughout the channels of trade.  Stating that it couldn’t determine the exact quantities of existing stocks at each level of the channels of trade, the EPA estimates that “approximately 4 million gallons could be in the channels of trade.”

2. Risks resulting from the use of the existing stocks

Again concluding that because the product registrations were vacated and the labels therefore voided, end users were not legally bound to follow label restrictions if using the dicamba products.  The agency concluded that such non-label uses would have greater potential for adverse effects than if the agency issued an order regulating the use of the existing stocks. Such an order is imperative, said the agency, to ensure that any use of the products would be consistent with previously approved labeling and can be enforced in order to prevent unreasonable adverse effects on the environment. Surprisingly, the EPA gave little attention to the volatility concerns raised by the Ninth Circuit in its decision last week, and evidence the court pointed to in that case that suggested that even applications by those who carefully followed the label restrictions were subject to drift and damage.

3. The benefits resulting from the use of existing stocks

Capitalizing on the unfortunate timing of the Ninth Circuit’s vacation of the pesticide in regards to planned immediate uses in the current growing season, the agency concluded that “the benefits resulting from the use of the products are considerable and well established, particularly for this growing season.”  The EPA reiterated many of the numerous communications it had received stating how essential the over-the-top products are, especially with the growing season underway. It also concluded that allowing non-over-the-top uses would result in substantially greater benefits to users and society than would disposal of the products.

4. The financial expenditures users and others have already spent on existing stocks

Again pointing to the current growing season, the agency concluded that “the costs to farmers are not limited to their existing stocks of these dicamba products, but include other sunk costs made in expectation of the availability of these products (seed purchase, tilling, planting, etc.) as well as the lost opportunity to switch to a different crop or to another herbicide or weed management method.”

5. The risks and costs of disposal or alternative disposition of the stocks

The EPA concluded that disposal of the existing stocks of dicamba products would incur substantial costs for all and, for stock already in the hands of end users, “may be neither feasible nor advisable.”  Additionally, the agency pointed to disposal or return of opened containers which would have high risks of spillage and increased expenses for proper disposal.

6. The practicality of implementing restrictions on distribution, sale, or use of the existing stocks

Another option available to the agency under FIFRA would be to issue individual stop sale, use and removal orders to all end users holding dicamba products, but the EPA concluded that such an action would be unwarranted under the present facts because tracking the existing stocks would be burdensome, inaccurate and impractical and that “hard-pressed farmers who have made large investments in their existing stocks may be uncooperative with a cancellation order that requires disposal.”

Final Order

After weighing the six factors above, the EPA concluded that the six factors weigh heavily in support of allowing end users to use existing stocks of the dicamba products in their possession.   However, the agency imposed a July 31 , 2020 cut-off date for use of existing stocks in order to “further reduce the potential for adverse effects.”  Here are the final orders the agency made for the products:

1. Distribution or sale by the registrant. Distribution or sale by the registrant of all existing stocks of the products listed below is prohibited effective as of the time of the order on June 3, except for distribution for the purposes of proper disposal.
2. Distribution or sale by persons other than the registrant. Distribution or sale of existing stocks of the products listed below that are already in the possession of persons other than the registrant is permitted only for the purposes of proper disposal or to facilitate return to the registrant or a registered establishment under contract with the registrant, unless otherwise allowed below.
3. Distribution or sale by commercial applicators. For the purpose of facilitating use no later than July 31, 2020, distribution or sale of existing stocks of products listed below that are in the possession of commercial applicators is permitted.
4. Use. Use of existing stocks of products listed below inconsistent in any respect with the previously-approved labeling accompanying the product is prohibited. All use is prohibited after July 31, 2020.

Now what? 

While the manufacturers of XtendiMax, Engenia, and FeXapan are prohibited from selling and distributing their products effective as of June 3, 2020, the EPA’s cancellation order allows others to return, dispose of, or use the products according to the previous label restrictions and no later than July 31, 2020.  But a few other factors come into play:

• Some states have already taken actions to restrict the use of the dicamba products, which is within a state’s authority. Ohio has not done so, and instead has stated that it has been awaiting US EPA guidance on the legal status of the products and will communicate options for farmers afterwards.  This means that users in Ohio should keep a close eye on the Ohio Department of Agriculture to see if it will go along with the US EPA’s guidance or direct otherwise.
• A cancellation order issued by the EPA is a final agency action that is subject to appeal, so we might see an immediate of the cancellation order and a request to stay the order pending appeal. Such an appeal could challenge whether the EPA has the authority to regulate existing stocks of the products and whether the agency’s analysis sufficiently addressed the risks of adverse impacts from continued use.

As seems often to be the case with dicamba, there’s a mixed sense of drama and dread with what lies ahead.  We’ll be sure to keep you posted on the next legal news for dicamba.

Read the US EPA’s cancellation order for XtendiMax, Engenia, and FeXapan here.

Dicamba takes another blow: Court of Appeals vacates dicamba registration

Dicamba has had its share of legal challenges, and a decision issued yesterday dealt yet another blow when the Ninth Circuit Court of Appeals vacated the product’s registration with the U.S. EPA.  In doing so, the court held that the EPA’s approval of the registration violated the provisions of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), which regulates the use of herbicides and other chemicals in the U.S.  Here’s a summary of how the court reached its decision and a few thoughts on the uncertainty that follows the opinion.

The challenge:  EPA’s approval of three dicamba products

We first have to step back to 2016, when the EPA approved three dicamba-based products– Monsanto’s XTendiMax, DuPont’s FeXapan, and BASF’s Engenia–as conditional use pesticides for post-emergent applications in 34 states, including Ohio.  Although dicamba has been around for years, the approval came after the companies reformulated dicamba to make it less volatile and in anticipation of the development of dicamba tolerant soybean and cotton seeds.  The agency conducted a risk assessment and concluded that if used according to the label restrictions, the benefits of the dicamba products outweighed “any remaining minimal risks, if they exist at all.”  The EPA also provided that the registrations would automatically expire if there was a determination of an unacceptable level or frequency of off-site dicamba damage.

Before the conditional registrations were set to automatically expire in late 2018, the EPA approved requests by Bayer CropScience (previously Monsanto), Cortevo (previously DuPont) and BASF to conditionally amend the registrations for an additional two years.  The approval came despite widespread concerns about dicamba drift and damage during the 2017 growing season.  To address those concerns, EPA chose not to conduct a new risk assessment and instead adopted additional label restrictions that had been proposed by Monsanto/Bayer to minimize off-field movement of dicamba.   Many states added restrictions for dicamba use that exceeded the label restrictions, including banning any use of the product during certain periods.

Several organizations challenged the EPA’s dicamba registration approvals.  The National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network North America filed suit against the EPA, claiming that the agency violated both FIFRA and the Endangered Species Act in approving the product registrations.  Monsanto requested and was granted permission to intervene in the case.

The Ninth Circuit’s review

To approve the request to amend the dicamba registrations, FIFRA required the EPA to make two conclusions:  first, that the applicant had submitted satisfactory data related to the proposed additional use of the pesticide and second, that the approval would not significantly increase the risk of unreasonable adverse effects on the environment.  The task before the Ninth Circuit Court of Appeals was to review the EPA’s 2018 decision  and determine whether there was substantial evidence to support the EPA’s conclusions and amend the registrations.

The conclusion that drew the most attention from the court was the EPA’s determination that amending the dicamba registrations for two years would not cause unreasonable adverse effects on the environment.  The court determined that the EPA erred in making this conclusion when it substantially understated several risks of dicamba registration, such as:

• Misjudging by as much as 25% the amount of acreage on which dicamba would be used in 2018.
• Concluding that complaints to state departments of agriculture could have either under-reported or over-reported the actual amount of dicamba damage, when the record clearly showed that complaints understated the amount of damage.
• Failing to quantify the amount of damage caused by dicamba, “or even to admit that there was any damage at all,” despite having information that would enable the EPA to do so.

But that’s not all.  The court pointed out that the agency had also “entirely failed to acknowledge other risks, including those it was statutorily required to consider,” such as:

• The risk of substantial non-compliance with label restrictions, which the court noted became “increasingly restrictive and, correspondingly, more difficult to follow” and to which even conscientious applicators could not consistently adhere.
• The risk of economic costs.  The court stated that the EPA did not take into account the “virtually certain” economic costs that would result from the anti-competitive effect of continued dicamba registration, citing evidence in the record that growers were compelled to adopt the dicamba products just to avoid the possibility of damage should they use non-dicamba tolerant seed.
• The social costs of dicamba technology to farming communities.  The court pointed out that a farmer in Arkansas had been shot and killed over dicamba damage, that dicamba had “pitted neighbor against neighbor,” and that the EPA should have identified the severe strain on social relations in farming communities as a clear social cost of the continued registration of the products.

Given the EPA’s understatement of some risks and failure to recognize other risks, the Court of Appeals concluded that substantial evidence did not support the agency’s decision to grant the conditional registration of the dicamba products.  The EPA “failed to perform a proper analysis of the risks and resulting costs of the uses,” determined the court.  The court did not address the Endangered Species Act issue.

What remedy?

A critical point in the decision is the court’s determination of the appropriate remedy for the EPA’s unsupported approval of the dicamba products.  The EPA and Monsanto had asked the court to utilize its ability to “remand without vacatur,” or to send the matter back to the agency for reconsideration.  The remedy of “vacatur,” however, would vacate or void the product registrations.  The court explained that determining whether vacatur is appropriate required the court to weigh several criteria, including:

• The seriousness of the agency’s errors against the disruptive consequences of an interim change that may itself be changed,
• The extent to which vacating or leaving the decision in place would risk environmental harm, and
• Whether the agency would likely be able to offer better reasoning on remand, or whether such fundamental flaws in the agency’s decision make it unlikely that the same rule would be adopted on remand.

The court’s weighing of these criteria led to its conclusion that vacating the registrations of the products was the appropriate remedy due to the “fundamental flaws in the EPA’s analysis.”  Vacating the registrations was not an action taken lightly by the court, however.  The judges acknowledged that the decision could have an adverse impact on growers who have already purchased dicamba products for the current growing season and that growers “have been placed in this situation through no fault of their own.”  Clearly, the court places the blame for such consequences upon the EPA, reiterating the “absence of substantial evidence” for the agency’s decision to register the dicamba products.

What now?

The court raised the issue we’re all wondering about now:  can growers still use the dicamba products they’ve purchased?  Unfortunately, we don’t have an immediate answer to the question, because it depends largely upon how the EPA responds to the ruling.  We do know that:

• FIFRA § 136a prohibits a person from distributing or selling any pesticide that is not registered.
• FIFRA § 136d allows the EPA to permit continued sale and use of existing stocks of a pesticide whose registration is suspended or canceled.  The EPA utilized this authority in 2015 after the Ninth Circuit Court of Appeals vacated  the EPA’s registration of sulfoxaflor after determining that the registration was not supported by substantial evidence.  In that case, the EPA allowed continued use of the existing stocks of sulfoxaflor held by end-users provided that the users followed label restrictions.  Whether the agency would find similarly in regards to existing stocks of dicamba is somewhat unlikely given the court’s opinion, but remains to be seen.  The EPA’s 2015 sulfoxaflor cancellation order is here.
• While the U.S. EPA registers pesticides for use and sale in the U.S., the product must also be registered within a state in order to be sold and used within the state.  The Ohio Department of Agriculture oversees pesticide registrations within Ohio, and also regulates the use of registered pesticides.
• If the EPA appeals the Ninth Circuit’s decision to the U.S. Supreme Court, the agency would likely include a request for a “stay” that would delay enforcement of the court’s Order.
• Bayer strongly disagrees with the decision but has paused its sale, distribution and use of XtendiMax while assessing its next step and awaiting EPA direction.  The company states that it will “work quickly to minimize any impact on our customers this season.”  Bayer also notes that it is already working to obtain a new registration for XtendiMax for the 2021 season and beyond, and hopes to obtain the registration by this fall.  See Bayer’s information here. 
• BASF and Corteva have also stated that they are awaiting the EPA’s reaction to the decision, and will “use all legal remedies available to challenge this Order.”
• Syngenta has clarified that its Tavium Plus VaporGrip dicamba-based herbicide is not part of the ruling and that the company will continue selling that product.

For now, all eyes are on the U.S. EPA’s reaction to the Ninth Circuit’s decision, and we also need to hear from the Ohio Department of Agriculture.  Given the current state of uncertainty, it would be wise for growers to wait and see before taking any actions with dicamba products.  We’ll keep you posted on any new legal developments.  Read the court’s decision in National Family Farm Coalition et al v. U.S. EPA here.

 

The Ag Law Harvest

Written by Ellen Essman and Peggy Kirk Hall

Many people are still working from home, but that hasn’t stopped legal activity in Washington, D.C.  Bills have been proposed, federal rules are being finalized, and new lawsuits are in process.  Here’s our gathering of news about current legal activities affecting agriculture.

SBA posts Paycheck Protection Program (PPP) loan forgiveness application.  We’ve been waiting to hear more about how and to what extent the SBA will forgive loans made under the CARES Act’s PPP that many farm businesses have utilized.  The SBA recently posted the forgiveness application and  instructions for applicants here.  But there are still unanswered questions for agricultural applicants as well as talk in Congress about changing some of the forgiveness provisions, suggesting that loan recipients should sit tight rather than apply now.  Watch for our future blog post and a discussion on the forgiveness provisions in our next Farm Office Live webinar.

House passes another COVID-19 relief bill.  All predictions are that the bill will go nowhere in the Senate, but that didn’t stop the House from passing a $3 trillion COVID-19 relief package on May 15.  The “HEROES Act” includes a number of provisions for agriculture, including an additional $16.5 billion in direct payments to producers of commodities, specialty crops and livestock, as well as funds for local agriculture markets, livestock depopulation losses, meat processing plants, expanded CRP, dairy production, other supply chain disruptions, and biofuel producers (discussed below).  Read the bill here.

Proposed bipartisan bill designed to open cash market for cattle.  Last week, Republican Senator Chuck Grassley and Democratic Senator Jon Tester introduced a bill that “would require large-scale meatpackers to increase the proportion of negotiable transactions that are cash, or ‘spot,’ to 50 percent of their total cattle purchases.” The senators hope this change would bring up formula prices and allow livestock producers to better negotiate prices and increase their profits. In addition, the sponsors claim ithe bill would provide more certainty to a sector hard hit by coronavirus.  Livestock groups aren’t all in agreement about the proposal.  You can read the bill here, Senator Grassley’s press release here and Senator Tester’s news release here.

New Senate and House bills want to reform the U.S. food system.   Representative Ro Khanna from California has introduced the House companion bill to the Senate’s Farm System Reform Act first introduced by Senator Cory Booker in January.  The proposal intends to address underlying problems in the food system.  The bill places an immediate moratorium on the creation or expansion of large concentrated animal feeding operations and requires such operations to cease by January 1, 2040.  The proposal also claims to strengthen the Packers and Stockyards Act and requires country of origin labeling on beef, pork, and dairy products.  The bill would also create new protections for livestock growers contracted by large meat companies, provide money for farmers to transition away from operating animal feeding facilities, strengthen the term “Product of the United States” to mean “derived from 1 or more animals exclusively born, raised, and slaughtered” in the U.S., and, similar to the Grassley/Tester bill above, require an increased percentage of meatpacker purchases to be “spot” transactions.

Lawmakers ask Trump to reimburse livestock producers through FEMA.  In another move that seeks to help livestock producers affected by the pandemic, a bipartisan group of U.S. Representatives sent a letter to Donald Trump imploring him to issue national guidance to allow expenses of livestock depopulation and disposal to be reimbursed under the Federal Emergency Management Agency’s (FEMA’s) Public Assistance Program Category B.  The lawmakers reason that FEMA has “been a valued Federal partner in responding to animal losses due to natural disasters,” and that the COVID-19 epidemic should be treated “no differently.”  You can read the letter here.

More battling over biofuels.  Attorneys General from Wyoming, Utah, Louisiana, Oklahoma, Texas, Arkansas and West Virginia have sent a request to EPA Administrator Andrew Wheeler to waive the Renewable Fuel Standard (RFS) because of COVID-19 impacts on the fuel economy. The letter states that reducing the national quantity of renewable fuel required would alleviate the regulatory cost of purchasing tradable credits for refiners, who use the credits to comply with biofuel-blending targets.   Meanwhile, 70 mayors from across the U.S. wrote a letter urging the opposite, and criticizing any decisions not to uphold the RFS due to the impact that decision would have on local economies, farmers, workers, and families who depend on the biofuels industry.  The House is also weighing in on the issue.  In its recently passed HEROES Act, the House proposes a 45 cents per gallon direct payment to biofuel producers for fuels produced between Jan 1 and May 1, 2020 and a similar payment for those forced out of production during that time.

New USDA rule for genetically engineered crops.  A final rule concerning genetically engineered organisms is set to be published this week.  In the rule, USDA amends biotechnology regulations under the Plant Protection Act.  Importantly, the new rule would exempt plants from regulation by the Animal and Plant Health Inspection Service (APHIS) if the plants are genetically engineered but the same outcome could have occurred using conventional breeding.  For instance, gene deletions and simple genetic transfers from one compatible plant relative to another would be exempted.  If new varieties of plants use a plant-trait mechanism of action combination that has been analyzed by APHIS, such plants would be exempt.  You can read a draft of the final rule here.

Trump’s new WOTUS rule attacked from both sides of the spectrum.  A few weeks ago, we wrote about the Trump Administration’s new “waters of the United States” or WOTUS rule.  Well, it didn’t take too long for those who oppose the rule to make their voices heard. The New Mexico Cattle Growers Association (NMCGA) sued the administration, claiming that the new rule is still too strict and leaves cattle ranchers questioning whether waters on their land will be regulated.  In their complaint, NMCGA argues that the new definition violates the Constitution, the Clean Water Act, and Supreme Court precedent.  On the other side, the Natural Resources Defense Council, along with other conservation groups, sued the administration, but argued that the new rule does not do enough to protect water and defines “WOTUS” too narrowly.  Here we go again—will WOTUS ever truly be settled?

The Farm Office is Open!  Join us for analysis of these and other legal and economic issues facing farmers in the Farm Office Team’s next session of “Farm Office Live” on Thursday, May 28 at 9:00 a.m.  Go to this link to register in advance or to watch past recordings.

Syngenta corn seed settlement claims due October 12

Those post cards advising producers of a $1.51 billion settlement in the Syngenta corn seed lawsuits are legitimate, and corn producers seeking compensation from the settlement must file claims by 11:59 p.m. on October 12, 2018.  The settlement is the result of class action and individual lawsuits alleging that Syngenta failed to receive import approval from China before selling its genetically modified Viptera and Duracade seeds in the United States, which led to the rejection of  U.S. corn shipments and a lowering of corn prices from 2013 to 2018.

Who can file a claim?

Three types of claimants that were involved in the U.S. corn market between September 15, 2013 and April 10, 2018 may file claims:

• Corn producers, which includes any owner, operator, landlord or tenant who shared in the risk of producing any variety of corn, not just Syngenta varieties.  Landlords who operated under fixed cash leases are not eligible.
• Grain handling facilities that purchased, transported, stored, handled and sold any variety of corn.
• Ethanol production facilities that produced, purchased and sold dried distillers’ grains from any variety of corn.

How to file a claim?

File electronically through a secure, encrypted portal at www.CornSeedSettlement.com or download a printed form on the same website to file via U.S. mail.  Claimants must file using either a federal tax ID number or social security number and must file a separate claim for each Form 578 filed with FSA.  Note that the settlement claims administrator states that all claims information is confidential and will be destroyed after the payment of claims.

How much will a claimant receive?

Payments will vary and will depend upon the total number of filed claims.  For corn producers, the claims administrator will determine payments based on the following factors: (1) compensable recovery quantity as calculated by number of acres, ownership interest, NASS county yields and predetermined marketing year averages, (2) the year of planting, (3) the producer’s ownership interest, and (4) whether the producer purchased and planted Agrisure Viptera or Duracade seed or a different variety.

When will claimants receive payments?

A claimant might not receive a payment for about a year.  A court hearing to approve the settlement will take place in the U.S District Court in Kansas on November 15, 2018.  If the court approves the settlement, those who object to the approval can file appeals.  Final payments won’t occur until the court resolves all appeals, which could take about a year or more.

Must claimants report payments as income?

Class action settlement payments that compensate for the loss of business income should be reported for tax purposes.  Claimants should consult with tax advisors to determine IRS reporting requirements.

For more information, an extensive list of frequently asked questions about the Syngenta corn seed settlement is available here.

The Ag Law Harvest

Movement on Ohio “Watersheds in Distress” rules.  As we have reported on several times this summer, Governor John Kasich signed an executive order on July 11, 2018 directing ODA to “consider whether it is appropriate to seek the consent of the Ohio Soil and Water Commission (OSWC) to designate” certain watersheds “as watersheds in distress due to increased nutrient levels resulting from phosphorous attached to soil sediment.”  Since that time, ODA has submitted a proposed rule dealing with Watersheds in Distress.  Amendments were made to the proposed rule after evaluating the first set of public comments, and ODA is now resubmitting the rules package.  ODA reopened the proposed rule for public comments, but it closed the comment period on September 7, 2018.  Information about the proposed rules, as well as how and where to comment, can be found here (click on the “Stakeholder Review” tab and then the “Soil and Water Conservation – Watersheds in Distress OAC 901:13-1” drop down option).  A draft of the newly amended proposed rules is available here.

WOTUS woes continue.  The Obama administration’s hotly contested “Waters of the United States” Rule is back in the news, and this time, where it applies is dependent on where you live.  A background on the rule can be found in our previous blog post.  The rule basically expanded which bodies of water qualify as “waters of the United States,” which in turn protected more waters under the Clean Water Act.  The rule became effective in 2015.  Since that time, U.S. District Courts in North Dakota and Georgia have issued preliminary injunctions against Obama’s WOTUS Rule, which means it cannot be carried out in twenty-four states.  Additionally,  last summer, the EPA and Army Corps of Engineers, under the direction of President Trump, announced their plan to repeal Obama’s WOTUS Rule and replace it with the definition of WOTUS “that existed prior to 2015” 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.   However, in a ruling on August 16, 2018, in a U.S. District Court in South Carolina, Judge David Norton determined that the Trump administration “failed to comply with” requirements of the Administrative Procedure Act when it enacted its rule.  This means that the Trump rule repealing and replacing the definition of WOTUS is invalidated.  As a result of Judge Norton’s decision, in the remaining twenty-six states without an injunction, the Obama administration’s version of the rule has been reinstated.  Ohio is one of the twenty-six states where the Obama rule currently applies.  Will the Trump administration and the EPA respond to Norton’s decision by announcing yet another new WOTUS rule?  Follow the Ag Law Blog for any updates.  In the meantime, the country remains nearly split in half by which version of the WOTUS rule is carried out.

Regulators, meet “meat.”  Under a new Missouri law, it is a criminal offense to misrepresent a product as “meat” if there is, in fact, no meat.  Missouri’s revision of its meat advertising laws took effect on August 28th, and has been dubbed by many as the first attempt by a state to regulate what qualifies as meat.  Defining meat as “any edible portion of livestock, poultry, or captive cervid carcass,” the law prohibits “misrepresenting a product as meat that is not derived from harvested production livestock or poultry.”  Violations are treated as a misdemeanor, with a fine up to $1,000 and possible jail time.  The Missouri Department of Agriculture has said that it intends to enforce the law, but that it plans to give affected companies until the start of next year to bring their labels into compliance.  Supporters of the law, like the Missouri Cattlemen’s Association, argue that it will provide consumers with accurate information about their food, and also protect meat producers from unfair labeling of plant-based or lab-grown meat alternatives.  Opponents have already filed a lawsuit to prevent enforcement, arguing that the law restricts free speech and improperly discriminates against out-of-state producers of meat alternatives.  The named plaintiff on the lawsuit is Turtle Island Foods, an Oregon company that does business under the names Tofurky and The Good Foods Institute.  The company makes plant-based food products, and is joined in its opposition by the American Civil Liberties Union of Missouri and the Animal Legal Defense Fund.  Beyond Missouri, the National Cattlemen’s Beef Association has listed the issue as a top policy priority for this year, and the U.S. Cattlemen’s Association has petitioned the USDA to adopt stricter labeling requirements.  As this issue develops, the Ag Law Blog will keep you updated.

USDA taps Commodity Credit Corporation to aid farmers.  Readers are no doubt aware of global trade disputes in which other countries have increased tariffs on American agricultural exports.  Given the extensive news coverage, the Harvest will not attempt to cover the dispute in depth; however, one point that has been less covered is the tool that the USDA has selected to provide relief to impacted farmers: the Commodity Credit Corporation.  What is it?  The Commodity Credit Corporation (CCC) is a federal government entity created during the Great Depression in 1933 to “stabilize, support, and protect farm income and prices.”  Since 1939, it has been under the control of the Secretary of Agriculture, although it is managed by a seven member Board of Directors.  CCC is technically authorized to borrow up to $30 billion from the U.S. Treasury at any one time, but due to trade agreements, that number is, in reality, much smaller.  This gives USDA access to billions of dollars in funding without having to go to Congress first.  The money can be used to provide loans or payments to agricultural producers, purchase agricultural products to sell or donate, develop domestic and foreign markets, promote conservation, and more.  CCC has no staff, but is instead administered through other USDA agencies, largely the Farm Service Agency and Agricultural Marketing Service.  On August 27th, Secretary of Agriculture Sonny Perdue announced that USDA plans to tap the Commodity Credit Corporation for up to $12 billion worth of aid to farmers affected by recent tariffs.  The Market Facilitation Program will provide direct payments to eligible corn, cotton, dairy, hog, sorghum, soybean, and wheat producers, and the Food Purchase and Distribution Program will purchase up to $1.2 billion in select commodities.  For more about the Commodity Credit Corporation, check out its website.

Bayer reports increasing number of lawsuits against newly acquired Monsanto.  Bayer, the German pharmaceutical and life sciences company that acquired Monsanto early this summer, has indicated that there are an increasing number of lawsuits in the United States alleging that its weed killers cause cancer.  According to the Wall Street Journal, there were roughly 8,700 plaintiffs seeking monetary damages from Bayer as of late August, a sharp increase from the 5,200 plaintiffs just months earlier.  Many of these lawsuits involve cancer patients who claim that Monsanto’s glyphosate-containing herbicides like Roundup caused their cancer.  As we reported in a previous edition of the Harvest, one person’s successful lawsuit against Monsanto resulted in a San Francisco jury award of $289.2 million for failing to warn consumers of the risks posed by its weed killers.  Monsanto is expected to file motions for a new trial and for the judge to set aside the verdict, and may ultimately appeal the decision.  These cancer-related claims come at a time when another Monsanto product, Dicamba, is causing great controversy.  Stay tuned to the Ag Law Blog as these lawsuits continue to develop.

Farmers Have One Month to Decide Whether to Stay in Syngenta Litigation

Farmers are receiving a lot of attention from law firms these days, from video mailers to offers of free consultations, dinners, hats and more.  The purpose of these marketing efforts is to entice farmers away from participating in the current class action lawsuit against Syngenta.  Law firms want farmers to exclude themselves from the class action litigation and participate in individual lawsuits their firms would bring against Syngenta.  With a deadline of April 1 looming, farmers must decide whether to remain in or step away from the class action lawsuit.

The class action lawsuit, known as “In re Syngenta AG MIR162 Corn Litigation,” is pending before the U.S. District Court in Kansas.  It is one of two major lawsuits regarding corn rejected by China in 2013 because China had not yet approved Syngenta’s Duracade and Viptera brands of genetically-modified corn.  The lawsuit consolidated hundreds of similar federal court cases that all claimed that Syngenta should be liable for the drop in corn prices that followed China’s rejections because Syngenta stated that it had obtained all necessary regulatory approvals for Duracade and Viptera, but instead released the seed before receiving China’s approval.

Class Certification

Last September, the court certified the litigation as a class action lawsuit, which allows the case to commence on behalf of all class members.  Any farmer that fits within the class definitions is automatically included in the lawsuit and does not have to pursue individual litigation against Syngenta.  The court established a nationwide class of “producers,” defined as any person or entity listed as a producer on an FSA-578 form filed with the USDA who priced corn for sale after November 18, 2013 and who did not purchase Viptera or Duracade corn seed (farmers who used Syngenta’s seed have different legal claims).  The nationwide class is for producers bringing claims under federal law.  The court also certified eight state classes for producers bringing claims under state laws, including Ohio.  Syngenta appealed the class certification, but the Tenth District Court of Appeals denied the appeal.

Ohio farmers who fit the definition of “producers” are now automatically members of both the nationwide and Ohio classes.  This means that every Ohio producer can receive a share of any award or settlement that results from the litigation, with required documentation.  However, Ohio producers may choose to exclude themselves from or “opt out” of their classes and bring their own individual actions against Syngenta.  The district court required attorneys for the class action suit to notify all potential producers of the lawsuit and of a producer’s right to be excluded from the litigation.   A producer must send an exclusion request by April 1, 2017, following the process for exclusion stated in the court’s order, available here.

Pros and Cons of Staying in the Class

A major benefit of remaining in the class action lawsuit is convenience.  Class members in the lawsuit have no responsibility for the proceedings, which falls upon the attorneys who represent the entire class.  However, convenience comes at the cost of deferring decision making authority and losing a share of the award or settlement to court-ordered attorney fees, although class members may file objections to such decisions.  Exclusion from the class gives producers freedom to pursue their own actions, which will likely lead to a stronger role in decision making and the ability to negotiate attorney fees.  Exclusion also allows a farmer who may not agree with the litigation on principal to dissociate from the lawsuit.

What’s Next?

The court has scheduled “bellwether” cases in the lawsuit, which will go to trial in June.  Bellwether cases are chosen to be representative of the class.  Allowing these cases to go to trial gives an indication of how the litigation will play out—the strength of each side, how juries react and how the law applies to the situation.   Upon completion of the bellwether cases, both sides should be better able to decide whether to settle the lawsuit or continue with litigation.

The U.S. District Court’s website for the Syngenta class action lawsuit is http://www.ksd.uscourts.gov/syngenta-ag-mir162-corn-litigation/

Congress Finalizes Mandatory GMO Labeling Law

After several years of debate over voluntary versus mandatory GMO labeling, Congress passed legislation yesterday to create a unified national standard requiring disclosure of information for bioengineered foods.  Read this post on our new blog site, here.