The Ag Law Harvest

As April comes to a close, we bring you another edition of the Ag Law Harvest. This month’s harvest brings you laws and regulations from across the country regarding a national drinking water standard, the Endangered Species Act, Ag-Gag laws, noncompete agreements, and pollution. 

EPA Finalizes First-Ever PFAS Drinking Water Standards
Earlier this month, the U.S. Environmental Protection Agency (“EPA”) announced a final rule, issuing the “first-ever national, legally enforceable drinking water standard to protect communities from exposure to harmful per-and polyfluoroalkyl substances (PFAS), also known as ‘forever chemicals’”. The final rule sets legally enforceable maximum contaminant levels for six PFAS chemicals in public water systems. The EPA also announced nearly $1 billion in new funding to “help states and territories implement PFAS testing and treatment at public water systems and to help owners of private wells address PFAS contamination.” The EPA suggests that this final rule “will reduce PFAS exposure for approximately 100 million people, prevent thousands of deaths, and reduce tens of thousands of serious illnesses.” 

Interior Deptartment Finalizes Rule to Strengthen Endangered Species Act
The Department of the Interior has announced that the U.S. Fish and Wildlife Service finalized revisions to the Endangered Species Act (ESA). These revisions aim to enhance participation in voluntary conservation programs by promoting native species conservation. They achieve this by clarifying and simplifying permitting processes under Section 10(a) of the ESA, encouraging greater involvement from resource managers and landowners in these voluntary initiatives. For more information about Section 10 of the ESA visit the U.S. Fish and Wildlife Service’s website.

Kentucky Passes Ag-Gag Statute
On April 12, 2024, the Kentucky legislature overrode the governor’s veto to pass Senate Bill 16 into law. The new law, titled “An Act Relating to Agricultural Key Infrastructure Assets,” expands the definition of “key infrastructure assets” to include commercial food manufacturing or processing facilities, animal feeding operations, and concentrated animal feeding operations. It criminalizes trespassing on such properties with unmanned aircraft systems, recording devices, or photography equipment without the owner’s consent. The first offense is a Class B misdemeanor with up to 90 days imprisonment and a $250 fine, while subsequent offenses are Class A misdemeanors with up to 12 months imprisonment and a $500 fine.

Federal Trade Commission Bans Non-Compete Agreements
The Federal Trade Commission (“FTC”) announced a final rule banning noncompete agreements and clauses nationwide. This move aims to promote competition by safeguarding workers’ freedom to change jobs, increasing innovation and the formation of new businesses. Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. However, existing noncompetes for senior executives – those earning more than $151,164 annually and in policy making positions – remain enforceable under the new rule. Employers will have to notify workers bound to an existing noncompete that the noncompete agreement will not be enforced against the worker in the future. The final rule will become effective 120 days after publication in the Federal Register.  

EPA Announces New Rules to Reduce Pollution from Fossil Fuel-Fired Power Plants 
The U.S. Environmental Protection Agency (“EPA”) unveiled a set of final rules designed to decrease pollution from fossil fuel-fired power plants. These rules, developed under various laws such as the Clean Air Act, Clean Water Act, and Resource Conservation and Recovery Act, aim to protect communities from pollution and improve public health while maintaining reliable electricity supply. They are expected to substantially reduce climate, air, water, and land pollution from the power industry, aligning with the Biden-Harris Administration’s goals of promoting public health, advancing environmental justice, and addressing climate change.

Agricultural easements can address farmland preservation and farm transition goals, part 2

An agricultural easement is a legal instrument that can protect farmland from non-farm development and preserve the legacy of family land for the future. An earlier blog post explains how an agricultural easement works and answers common questions about agricultural easements.  As we explained, an agricultural easement not only preserves farmland but can also be a valuable financial and tax tool that can enable a transition of the farm to the next generation.  But are there drawbacks to agricultural easements?  Here’s a summary of potential negative implications of easements that landowners should also consider.

It’s difficult to forecast the future of a farm.  The very nature of the easement requires a best estimate of how the farmland might be used for agriculture into the future–a challenging task.  The Deed of Agricultural Easement the parties agree to must predict agricultural activities that are consistent with the easement and those that would violate the easement.  There could be future problems if the predictions and forecasting aren’t flexible enough to accommodate agriculture in the future. 

The “perpetuity” requirement. While it’s possible to draft an easement that lasts only for a certain term of years, most agricultural easements remain on the land “in perpetuity,” or permanently.  The programs that pay a landowner to grant an agricultural easement and the federal income and estate tax benefits for donating all or part of an easement require that the easement is perpetual.  This differs from the conservation programs we’re accustomed to in agriculture that require shorter term commitments, and it can be a deterrent to a landowner who wants future generations to have a say in what happens to the land.  These concerns might be addressed in the deed of agricultural easement, however, which may provide sufficient flexibility to address those future concerns.

Termination can be difficult and costly.  Hand in hand with the perpetuity issue is the difficulty of terminating an agricultural easement once it’s in place. Typically, both parties must agree on a termination and a court of law must determine that conditions on or surrounding the land make it impossible or impractical to continue to use the land for agricultural purposes. Attempts to terminate without following the stated procedures can result in penalties for the current landowner.  If there was a payment for the agricultural easement, a deed of easement will likely require the landowner to reimburse the paying party for the proportionate share of the fair market value of the land with the easement removed and will also require the party receiving the reimbursement to use the funds only for similar conservation purposes.  

Eminent domain can be an issue.  As one Ohio farm family has learned, an agricultural easement might not protect the farmland from an eminent domain proceeding.  In Columbia Gas v. Bailey, 2023-Ohio-1245, the Bailey family was forced to litigate an attempt by Columbia Gas to use eminent domain for the construction of a gas pipeline across their farmland.  Their predecessor had placed an agricultural easement on the farmland in 2003, and the family argued the easement prevented the taking of land for the pipeline under the doctrine of “prior public use.”  That doctrine prohibits an eminent domain action that would destroy a prior public use.  The court agreed that the agricultural easement did create a prior public use on the land, and the court shifted the burden to Columbia Gas to prove that the pipeline would not destroy the established prior public use.  Rather than doing so, Columbia Gas withdrew its eminent domain proceeding and moved the location of the pipeline.  The court’s decision to recognize an agricultural easement as a prior public use might provide some protection from eminent domain for future owners of agricultural easement land but, like the Baileys, landowners may have to fight a long, expensive battle to prove that an eminent domain action would destroy an established prior public use.

Lenders and other interests must be on board.  A landowner must deal with any existing mortgages, liens, leases, or easements on the farmland before entering into an agricultural easement.  The State of Ohio’s agricultural easement, for example, requires a lender to subordinate a mortgage to the rights of the easement holder.  Renegotiation of the mortgage might be necessary, and the lender might require a paydown of the outstanding mortgage if the property’s value could reduce below that amount.  Without subordination and other approvals, a landowner will not be able to enter into an agricultural easement. 

Local governments must be on board.  Ohio’s program for purchasing agricultural easements requires a landowner to submit a resolution of support from the township and county where the land is located.  This means the local governments must agree that committing the land to agriculture is consistent with local land use plans.  An early conversation with local officials is necessary to ensuring consistency with the community’s future plans.

There will be monitoring.  An easement holder has the responsibility of ensuring there is not a violation of the easement or conversion of the land to non-agricultural uses.  This means there will be a baseline or “present condition” report of the easement property upon easement creation and monitoring of the property “in perpetuity.”  An annual visit to the property and completion of an annual monitoring report by the easement holder is common. 

It’s a lengthy process.  Agricultural easements don’t pop up overnight.  Especially when applying for funding from competitive programs like Ohio’s Local Agricultural Easement Purchase Program or the NRCS Agricultural Land Easements Program, it can be a year or more before an agricultural easement is in place. 

Planning and integration with plans is necessary.  An agricultural easement is one piece of what can be a complex plan addressing a landowner’s expansion, retirement, estate, and transition needs.  A landowner would be wise to work with a team of professionals—financial planner, tax professional, attorney—to ensure that an agricultural easement integrates with all other parts of the plan.

Still interested?  Ohio landowners interested in learning more about agricultural easements may want to consider these steps:

• Review the resources on the Ohio Department of Agriculture’s Office of Farmland Preservation.
• Talk with other landowners who have entered into an easement.  Refer to the Coalition of Ohio Land Trusts landowner resources and landowner stories.
• Visit American Farmland Trust’s Farmland Information Center.
• Talk with a “local sponsor” or land trust in your area.  The Office of Farmland Preservation provides a list of local sponsors for the Clean Ohio Agricultural Easement Purchase Program on its website.
• Talk with your attorney, financial planner, and accountant about the implications of entering into an agricultural easement.

Agricultural easements can address farmland preservation and farm transition goals

Questions from farmers and farmland owners about agricultural easements are on the rise at the Farm Office.  Why is that?  From what we’re hearing, the questions are driven by concerns about the loss of farmland to development as well as desires to keep farmland in the family for future generations.  An agricultural easement is a unique tool that can help a farmland owner and farming operation meet goals to protect farmland from development or transition that land to the next generation.  Here are answers to some of the questions we’ve been hearing.

What is an agricultural easement?  An agricultural easement is a voluntary legal agreement by a landowner to use land primarily for agricultural purposes and forfeit the right to develop the land for other purposes, either permanently or, less often, for a term of years.  In an agricultural easement, a landowner grants an easement “holder” the legal right to enforce the easement against a landowner or other party who attempts to convert the land to a non-agricultural use. A written legal instrument details and documents this agreement between a landowner and the easement “holder.”  The agricultural easement instrument must be recorded in the county land records, and the agricultural easement is binding on all future landowners for the duration of its term.

A state legislature must authorize the use of the agricultural easement instrument, and Ohio’s legislature did so in 1999.  At that time, the legislature adopted a detailed legal definition of “agricultural easement” in Ohio Revised Code 5301.67(C):

“Agricultural easement” means an incorporeal right or interest in land that is held for the public purpose of retaining the use of land predominantly in agriculture; that imposes any limitations on the use or development of the land that are appropriate at the time of creation of the easement to achieve that purpose; that is in the form of articles of dedication, easement, covenant, restriction, or condition; and that includes appropriate provisions for the holder to enter the property subject to the easement at reasonable times to ensure compliance with its provisions.

The legislature also required in Ohio Revised Code 5301.68 that a landowner may only grant an agricultural easement on land that qualifies for Ohio’s Current Agricultural Use Valuation (CAUV) program under Ohio Revised Code 5713.31.

Is an agricultural easement the same as a conservation easement?  No, not in Ohio, but they share the same legal concept of dedicating land to a particular use.  Ohio also allows a landowner to grant a conservation easement, which is a promise to retain land predominantly in its natural, scenic, open, or wooded condition and forfeit the right to develop the land for other purposes.  A conservation easement might allow agricultural land uses, and an agricultural easement might allow some conservation uses.  The terms used in federal law and some other states vary from Ohio, and include “agricultural conservation easement” or “agricultural land easement.”

Who can be a “holder” of an agricultural easement?  Ohio law answers this question in Ohio Revised Code 5301.68, which authorizes only these entities to enter into an agricultural easement with a landowner:

• The director of the Ohio Department of Agriculture;
• A municipal corporation, county, or township;
• A soil and water conservation district;
• A tax exempt charitable organization organized for the preservation of land areas for public outdoor recreation or education, or scenic enjoyment; the preservation of historically important land areas or structures; or the protection of natural environmental systems (generally referred to as a “land trust” or a “land conservancy.”)

What kinds of land uses would be inconsistent with keeping the land in agricultural use?  That depends on the terms in the written deed for the agricultural easement.  Activities that might violate the agreement to maintain the land as agricultural include subdivision of the property, commercial and industrial uses, major surface alterations, and oil and gas development.  It’s typical to identify the homestead or “building envelope” area and allow new buildings, construction and similar activities within that area, but those activities might not be permitted on other parts of the land.  Review the  Ohio Department of Agriculture’s current Deed of Agricultural Easement through the link on this page:  https://agri.ohio.gov/programs/farmland-preservation-office/landowners.

Can a landowner transfer land that is subject to an agricultural easement?  Yes.  An agricultural easement does not restrict the right to sell or gift land, but it does carry over to the new landowner.  That landowner must abide by the terms of the agricultural easement.

Are there financial incentives for entering into an agricultural easement?  Yes.  There are several financial incentives:

• The Ohio Department of Agriculture’s Office of Farmland Preservation oversees the Local Agricultural Easement Purchase Program, which provides Clean Ohio grant funds to certified local sponsors to purchase permanent agricultural easements in their communities.  It’s a competitive process that requires a landowner to work with an approved local sponsor to apply for the program and to donate at least 25% of the agricultural easement’s value if selected.  A landowner can receive up to 75% of the appraised value of the farm’s “development rights,” with a payment cap of $2,000 per acre and $500,000 per farm per application period.
• Federal funds are also available through the Natural Resource Conservation Service’s Agricultural Conservation Easement Program. This program is also competitive and requires a landowner to work with an approved partner to determine eligibility and apply for easement funding.  NRCS may contribute up to 50 percent of the fair market value of the agricultural land easement.
• There are also federal income tax incentives for donating a portion or all of an agricultural easement’s value to a qualified charitable organization.  Internal Revenue Code section 170(h) allows a landowner to deduct the value of the easement up to 50 percent of their adjusted gross income (AGI) in the year of the gift, with a 15-year carryover of excess value.  That AGI percentage increases to 100% for a “qualified farmer” who earns more than 50% of their gross income from farming.
• There can also be federal estate tax benefits for land subject to a permanent agricultural or conservation easement.  The land is valued at its restricted value, which lowers the estate value.  Additionally, Section 2055(f) of the Internal Revenue Code allows donations of qualifying easements to a public charity to be deducted from the taxable value of an estate.  Up to 40% of the value of land restricted by an agricultural or conservation easement  can be excluded from the value of an estate if the easement meets Internal Revenue Code section 2031(C) provisions, limited to $500,000. 

How can a family use an agricultural easement to enable farm transition goals?  Here’s an example.  John and Sue are fourth generation owners of 250 acres of farmland they plan to leave to their child Lee, and they want the land to remain as farmland into the future.  Lee is committed to farming and wants to farm, and John and Sue would like Lee to have more land to improve the viability of the farming operation. They find a local sponsor and apply to Ohio’s Local Agricultural Easement Purchase Program, offering to donate 25% of the agricultural easement value to the program.  They are selected for the funding and receive a payment of $2,000 per acre for the agricultural easement.  They use the $500,000 in easement proceeds to purchase additional farmland for Lee.  John and Sue receive a federal income tax credit for the portion of the easement value they donated to qualify for the program, and carryover the amount until it is fully used, up to 15 years.

What are the drawbacks of agricultural easements?  There are challenges and drawbacks of agricultural easements, and we’ll discuss those in our next blog post.

Agricultural easements require legal and tax advice and careful planning.  Our short Q&A doesn’t address all of the nuances of agricultural easements.  It’s a big decision, and one that should align with current goals and estate and transition plans.  To determine if an agricultural easement works for your situation, seek the advice and planning assistance of knowledgeable legal and tax professionals.

Carbon credit market assistance program now in the hands of USDA

Sometimes a legislative proposal stalls, appears dead, then emerges in another piece of legislation in a slightly different form.  That’s exactly what happened with the Growing Climate Solutions Act and its plan to help farmers with carbon and environmental credit markets.  First introduced in 2020, the bill gained some momentum and passed the U.S. Senate before coming to a standstill in the House. But Congress added the bill, with some negotiated changes, into the Consolidated Appropriations Act it passed in the final days of 2022. The USDA is now charged with implementing its provisions.

Purpose of the bill

The bill aims to reduce barriers for farmers, ranchers, and foresters who want to enter into voluntary markets that establish environmental credits for greenhouse gas emission reductions resulting from agricultural or forestry practices (also known as carbon credits).  It allows the USDA to create the “Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program” if it appears, after an initial assessment, that the program would accomplish these purposes for farmers, ranchers, and private forest landowners:   

• Facilitate participation in environmental credit markets
• Ensure fair distribution of revenues
• Increase access to resources and information on environmental credit markets

Advisory Council

If the USDA determines that the program would meet the above purposes, it must establish an Advisory Council to help guide the program.  At least 51% of the Advisory Council must be farmers, ranchers, and private forest landowners, including beginning, socially disadvantaged, limited resource, and veteran members.  Other members on the Advisory Council would include representatives from agencies, the agricultural and forestry industries, the scientific research community, non-governmental organizations,  and professionals and private sector entities involved in credit markets.

Protocols

A primary concern with the environmental credit market is uncertainty and variations in how to establish, quantify, and value environmental credits.  An important component of the new program is for USDA to publish lists of widely accepted protocols that are designed to ensure consistency, reliability, effectiveness, efficiency, and transparency of the markets along with documents relating to the protocols.  The act directs the USDA to include protocol documents and details on calculations; sampling methodologies; accounting principles; systems for verification, monitoring, measurement, and reporting; and methods to account for issues such as additionality, permanence, leakage, and double counting of credits.

Vendor registry

Another concern for landowners who want to participate in environmental credit markets is knowing who to turn to for technical assistance.  To address this issue, the program would require the USDA to create a registry of third-party vendors of environmental credits who can help farmers, ranchers, and forest landowners measure the carbon reduction benefits of different types of practices.  Unlike an earlier version of the bill, the USDA would not establish a certification program for these vendors, although the agency must ensure that the vendors possess demonstrated expertise in practices that prevent, reduce, or mitigate greenhouse gas emissions. 

Assessments

The USDA, in concert with the Advisory Council, must submit an initial and ongoing assessments to the agricultural committees in the Senate and House.  The initial assessment must examine ways to ensure certainly for farmers, ranchers and forest landowners in the marketplace.  Ongoing assessments would examine the environmental credit market itself, including actors in the market, participation, credits generated and sold, barriers to entry, opportunities for other voluntary markets, and more.

Program funding

The act provides an appropriation of at least $1 million per year to fund the program through 2027 and another $4.1 million of potential unobligated American Rescue Plan Act funds.  It specifically prohibits the USDA from using funds from the Commodity Credit Corporation for the program, a demand of the House Agriculture Committee Chairman Glenn Thompson, who states that those funds are obligated for Farm Bill program payments.

What’s next?

Farm Bill negotiations this year and other climate initiatives recently undertaken by the Biden administration, such as the USDA’s Partnerships for Climate-Smart Commodities, could reduce the focus the Growing Climate Solutions Act would have received if it had passed when first introduced back in 2020.  Even so, the timeclock has started for the USDA to make its initial determination of whether the program would meet the intended purposes. Secretary Vilsack must make that determination by late September, and the expectation is that the program will proceed.  We should then see the Advisory Council established by fall and and can expect program outputs such as protocols and the third-party registry as early as 2024. 

Read the provisions of the new law beginning on page 1,512 of the Consolidated Appropriations Act of 2023, H.R. 2617.

The Ag Law Harvest

By: Jeffrey K. Lewis, Attorney and Research Specialist, OSU Agricultural and Resource Law Program

Did you know that ants are the only creatures besides humans that will farm other creatures?  It’s true.  Just like we raise cows, sheep, pigs, and chickens in order to obtain a food source, ants will do the same with other insects.  This is particularly true with aphids.  Ants will protect aphids from natural predators and shelter them during heavy rain showers in order to gain a constant supply of honeydew.

Like an ant, we have done some heavy lifting to bring you the latest agricultural and resource law updates.  We start with some federal cases that deal with the definition of navigable waters under the Clean Water Act, mislabeling honey products, and indigenous hunting rights.  We then finish with some state law developments from across the country that include Georgia’s right to farm law and California’s Proposition 12.  

Supreme Court to review navigable waters definition under the Clean Water Act.  The Supreme Court announced that it would hear the case of an Idaho couple who have been battling the federal government over plans to build their home.  Chantell and Mike Sackett (“Plaintiffs”) began construction on their new home near Priest Lake, Idaho but were halted by the Environmental Protection Agency (“EPA”).  The EPA issued an administrative compliance order alleging that Plaintiffs’ construction violates the Clean Water Act.  The EPA claims that the lot, on which the Plaintiffs are constructing their new home, contains wetlands that qualify as federally regulated “navigable waters.”  Plaintiffs are asking the Court to revisit its 2006 opinion in Rapanos v. United States and help clarify how to determine when a wetland should be classified as “navigable waters.”  In Rapanos, the Court found that the Clean Water Act regulates only certain wetlands, those that are determined to be “navigable waters.”  However, two different tests were laid out in the Court’s opinions.  The Court issued a plurality opinion which stated that the government can only regulate wetlands that have a continuous surface water connection to other regulated waters.  A concurring opinion, authored by Justice Kennedy, put forth a more relaxed test that allows for regulation of wetlands that bear a “significant nexus” with traditional navigable waters.  Justice Kennedy’s test did not take into consideration whether there was any surface water connection between the wetland and the traditional navigable waters.  In the lower appellate court, the Ninth Circuit Court of Appeals used Justice Kennedy’s “significant nexus” test to uphold the EPA’s authority to halt Plaintiffs’ construction.  Now, Plaintiffs hope the Supreme Court will adopt a clear rule that brings “fairness, consistency, and a respect for private property rights to the Clean Water Act’s administration.”  

SueBee sued for “bee”ing deceptive.  Sioux Honey Association Cooperative (“Defendant”) finds itself in a sticky situation after Jason Scholder (“Plaintiff”) brought a class action lawsuit against the honey maker for violating New York’s consumer protection laws by misrepresenting the company’s honey products marketed under the SueBee brand.  Plaintiff claims that the words “Pure” or “100% Pure” on the Defendant’s honey products are misleading and deceptive because the honey contains glyphosate.  Defendant filed a motion to dismiss the class action lawsuit and a federal district court in New York granted Defendant’s motion in part and denied it in part.  Defendant asked the court to find that its labels could not be misleading as a matter of law because any trace amounts of glyphosate in the honey is a result of the natural behavior of bees interacting with agriculture and not a result of Defendant’s production process.  However, the court declined to dismiss Plaintiff’s mislabeling claims.  The court concluded that a reasonable consumer might not actually understand that the terms “Pure” or “100% Pure” means that trace amounts of glyphosate could end up in honey from the bees’ foraging process.  The court also declined the Defendant’s request to dismiss Plaintiff’s unjust enrichment claim because of the alleged misrepresentations of the honey.  However, the court did dismiss Plaintiff’s breach of express warranty claim and request for injunctive relief.  The court dismissed Plaintiff’s breach of express warranty claim because Plaintiff failed to notify Defendant of its alleged breach of warranty, as required by New York law.  Plaintiff’s request for injunctive relief was also dismissed because the court could not find any imminent threat of continued injury to Plaintiff since he has now learned that the honey contains trace amounts of glyphosate.  The court ordered the parties to proceed with discovery on Plaintiff’s remaining claims, keeping the case abuzz.

Indigenous Hunting Rights.  Recently, two members of the Northwestern Band of the Shoshone Nation (“Northwestern Band”) were cited for hunting on Idaho lands without tags issued by the state.  The Northwestern Band filed suit against the state of Idaho declaring that its members possessed hunting rights pursuant to the Fort Bridger Treaty of 1868 (the “1868 Treaty”).  The 1868 Treaty provided that the Shoshone Nation agreed to permanently settle on either Fort Hall Reservation, located in Southeastern Idaho, or Wind River Reservation, located in Western Wyoming.  By agreeing to settle on one of the two reservations, the Shoshone Nation was granted hunting rights on unoccupied lands of the United states.  However, the Northwestern Band ended up settling in Northern Utah and not on one of the two named reservations.  After considering the 1868 Treaty, the Federal District Court of Idaho dismissed Northwestern Band’s lawsuit.  The court held that the hunting rights contained in the 1868 Treaty were tied to the promise to live on one of the reservations, and that a tribe cannot receive those hunting rights without living on one of the appropriate reservations.  Thus, the court found that because the Northwestern Band settled in Northern Utah and not on one of the reservations, the hunting rights of the 1868 Treaty did not extend to the Northwestern Band of the Shoshone Nation.  

Tensions rise over Georgia’s Freedom to Farm Act.  A few days ago, Georgia lawmakers introduced legislation that seeks to further protect Georgia farmers from nusiance lawsuits.  House Bill 1150 (“HB 1150”) proposes to change current Georgia law to protect farmers and other agricultural operations from being sued for emitting smells, noises, and other activities that may be found offensive by neighboring landowners.  Georgia’s current law, which became effective in 1980, does provide some protection for Georgia farmers, but only from neighboring landowners that have moved near the farm or agricultural operation after the current law went into effect.  All neighboring landowners that lived near the farming operation prior to the current law going into effect have retained their right to sue.  HB 1150, on the other hand, will prevent these nuisance lawsuits by all neighboring landowners, as long as the farm or agricultural operation have been operating for a year or more.  Passing a right to farm law has proven to be difficult in Georgia.  In 2020, House Bill 545, also known as the “Right to Farm bill” failed to pass before the final day of the 2019-2020 legislative session. Private landowners, farmers, and their supporters, are divided on the issue and seek to protect their respective property rights. It doesn’t look like HB 1150 will have the easiest of times in the Georgia legislature. 

Confining California’s Proposition 12.  Meat processors and businesses that sell whole pork meat in California (collectively the “Petitioners”) have delayed the enforcement of California’s Proposition 12 (“Prop 12”), for now.  Prop 12 is California’s animal confinement law that has sent shockwaves across the nation as it pertains to raising and selling pork, eggs, and veal.  Last week, the Superior Court for Sacramento County granted Petitioners’ writ of mandate to delay the enforcement of Prop 12 on sales of whole pork meat.  Petitioners argue that Prop 12 cannot be enforced until California has implemented its final regulations on Prop 12.  To date, California has yet to implement those final regulations.  California, on the other hand, suggests that final regulations are not a precondition to enforcement of Prop 12 and the civil and criminal penalties that can be brought against any farmer or business that violates Prop 12.  The court disagreed.  The court found that the language of Prop 12, as voted on by California residents, explicitly states that California voters wanted regulations in place before the square-footage requirements of Prop 12 took effect.  Therefore, the court granted Petitioners’ writ of mandate to prevent the enforcement of Prop 12 until final regulations have been implemented.  The court’s writ will remain in effect until 180 days after final regulations go into effect.  This will allow producers and businesses to prepare themselves to comply with the final regulations.  Opponents of Prop 12 believe this is another reason why the Supreme Court of the United States should review California’s Proposition 12 for its constitutionality.  

Join us for a Farmland Leasing Update webinar

Winter is a good time to review farm leases, for both economic and legal reasons.  We’ll provide you current information to help with the farmland leasing process in our Ohio Farmland Leasing Update webinar on February 9, 2022 from 7 to 9 p.m.   Barry Ward, Leader of Production Business Management for OSU Extension, will address the economic issues and our legal team of Peggy Hall and Robert Moore will provide the legal information.  

Our agenda will include:

• Current economic outlook for Ohio row crops
• Research on cash rent markets for the Eastern Corn Belt
• Rental market outlook fundamentals
• Negotiating conservation practices
• Using leases in farmland succession planning
• Ohio’s proposed law on providing notice of termination
• Ensuring legal enforceability of a lease

There is no fee for the webinar, but registration is necessary.  Register at https://go.osu.edu/farmlandleasingupdate.

The Ag Law Harvest

By:Jeffrey K. Lewis, Attorney and Research Specialist, OSU Agricultural & Resource Law 

Did you know that the Nile Crocodile has the strongest bite of any animal in the world?  The deadly jaws can apply 5,000 pounds of pressure per square inch, which is about 10 times more powerful than the crunch of the Great White Shark. Humans?  Well, they can apply about 100 pounds of pressure per square inch.  

This edition of the Ag Law Harvest takes a bite out of some federal lawsuits, Department of Labor developments, and USDA announcements affecting agriculture and the environment. 

Animal advocates lack standing to sue poultry producer.  In 2020, animal advocacy groups In Defense of Animals (“IDA”) and Friends of the Earth (“FoE”) (collectively the “Plaintiffs”) filed a lawsuit against Sanderson Farms (“Sanderson”), a Mississippi poultry producer, alleging that Sanderson engaged in false advertising as it relates to its chicken products.  According to Plaintiffs, Sanderson advertises that its chickens are “100% natural” with no “hidden ingredients.”  However, Plaintiffs allege that Sanderson has been misleading the public after many of Sanderson’s products tested positive for antibiotics and other unnatural substances.  This however is not the first court battle between FoE and Sanderson.  In 2017, FoE sued Sanderson for the same false advertising.  However, the 2017 case was dismissed because the court held that FoE did not have standing to bring the lawsuit.  The 2017 case was appealed to the Ninth Circuit Court of Appeals where the decision to dismiss the lawsuit was upheld.  Fast forward to 2020, FoE joined forces with a new plaintiff, IDA, hoping to file a lawsuit that would finally stick.  Recently however, a federal district court in California dismissed the most recent lawsuit because FoE was precluded, or prohibited, from suing Sanderson again on the same claims and because IDA lacked the standing to bring the lawsuit.  The California district court found that FoE could not bring its claims against Sanderson because those same claims were litigated in the 2017 lawsuit.  This legal theory, known as issue preclusion, prevents the same plaintiff from a previous lawsuit from bringing the same claims against the same defendant in a new lawsuit, when those claims were resolved or disposed of in a prior lawsuit.  Issue preclusion did not affect IDA, however, because it was a new plaintiff.  But the California district court still found that IDA lacked standing to bring this lawsuit against Sanderson.  IDA argued that because it expended resources to launch a campaign against Sanderson to combat the allegedly false advertising, it had organizational standing to bring the lawsuit.  Standing requires a plaintiff to show they suffered an “injury-in-fact” before they can maintain a lawsuit.  Organizational standing is the theory that allows an organization like IDA to establish an “injury-in-fact” if it can demonstrate that: (1) defendant frustrated its organizational mission; and (2) it diverted resources to combat the defendant’s conduct.  IDA argued that because it diverted resources including writing letters to Sanderson and the Federal Trade Commission, filing a complaint with the Better Business Bureau, publishing articles and social media posts, and diverting staff time from other campaigns to focus on countering Sanderson’s advertising, it had the organizational standing to bring the lawsuit.  The Court disagreed.  The Court reasoned that the diverting of resources by IDA was totally voluntary and not a result of Sanderson’s advertising.  The Court determined that in order to obtain organizational standing, IDA must have been forced to take the actions it did as a result of Sanderson’s advertising, the diverting of resources cannot be self-inflicted.  The Court held that Sanderson’s advertising did not ultimately frustrate IDA’s organizational mission and that any diverting of resources to counter Sanderson’s advertising was the normal course of action taken by a group like IDA.  

Joshua trees, a threatened species?  WildEarth Guardians (“Plaintiff”), a conservation organization, brought suit against the U.S. Secretary of the Interior and the U.S. Fish and Wildlife Service (“Defendants”) for failing to list the Joshua tree as a threatened species under the Endangered Species Act (“ESA”).  Plaintiff argued that the Defendants’ decision not to list the Joshua tree as threatened was arbitrary, capricious, contrary to the best scientific and commercial data available, and otherwise not in line with the standards set forth by the ESA.  In 2015 Plaintiff filed a petition to have the Joshua tree listed as a threatened species after Plaintiff provided scientific studies showing that climate change posed a serious threat to the continued existence of the Joshua tree.  The U.S. Fish and Wildlife Service (“FWS”) issued a 90-day finding that Plaintiff’s petition presented credible information indicating that listing the Joshua tree as threatened may be warranted.  However, the FWS’s 12-month finding determined that listing the Joshua tree as threatened or endangered under the ESA was not necessary due to the Joshua tree’s long lifespan, wide range, and ability to occupy multiple various ecological settings.  That’s when Plaintiff decided to bring this lawsuit asking the federal district court in California to set aside the 12-month finding and order the Defendants to prepare a new finding, and the Court agreed.  The Court held that Defendants’ decision was arbitrary, capricious, and contrary to the ESA and ordered the Defendants to reconsider Plaintiff’s petition.  The Court reasoned that the FWS’s climate change conclusions were arbitrary and capricious because it failed to consider Plaintiff’s scientific data and failed to explain why in its 12-month finding.  Further, the Court noted that the FWS’s findings regarding threats to the Joshua tree posed by climate change and wildfire were unsupported, speculative, or irrational.  And finally, the Court determined that the FWS’s conclusion that Joshua trees are not threatened in a significant portion of their range was arbitrary and capricious.  The FWS must now prepare a new finding that addresses all the above deficiencies.  

Department of Labor announces expanded measures to protect workers from extreme heat.  The U.S. Department of Labor (“DOL”) announced that the Occupational Safety and Health Administration (“OSHA”) is working on ways to protect workers in hot environments and reduce the dangers associated with exposure to high heat.  According to the DOL, OSHA will be implementing an enforcement initiative on heat-related hazards,  developing a National Emphasis Program on heat inspections, and launching a rulemaking process to develop a workplace heat standard.  Current and future extreme heat initiatives and rules apply to indoor and outdoor worksites in general industry, construction, agriculture and maritime where potential heat-related hazards exist. 

Deadline to apply for pandemic assistance to livestock producers extended.  The USDA announced that it is providing additional time for livestock and poultry producers to apply for the Pandemic Livestock Indemnity Program (“PLIP”).  Producers who suffered losses during the Covid-19 pandemic due to insufficient access to processing may now apply for relief for those losses through October 12, 2021.  Payments are based on 80% of the fair market value of the livestock and poultry and for the cost of depopulation and disposal of the animals.  Eligible livestock include swine, chickens, and turkeys.  For more information on PLIP, and how to apply, visit farmers.gov/plip.

Carbon as a commodity for agriculture?

There’s a lot of talk about carbon markets and agriculture these days.  While carbon markets aren’t new, recent proposals in Congress and announcements by the Biden administration are raising new interests in them.  Some companies are actively pursuing carbon trading agreements with farmers, further fueling the discussion in the agricultural community. 

As is common for any new opportunity, the talk on carbon markets may be tinged with a bit of skepticism and a lot of questions.  Do carbon sequestration practices have real potential as an agricultural commodity?  That’s a tough question and the answer isn’t yet clear.  There are answers for other questions, though, as well as resources that may be helpful for those considering carbon markets for the first time.  Here’s a sampling.

What is a carbon market?   A carbon market revolves around carbon credits generated by carbon reduction practices.  In the farm setting, a producer who either lowers the farm’s carbon emissions or captures carbon through “sequestration” practices can earn carbon credits.  Like other markets, a carbon market involves a transaction between a seller and a buyer.  The seller sells a carbon credit to a buyer who can use the carbon credit to offset or reduce its carbon emissions.

Do carbon markets already exist?  Yes, although they may be private markets with varying names occurring in different regions.  For example, Bayer Crop Sciences began its Carbon Initiative last year, paying producers for adopting carbon reduction practices that will help Bayer reach its goal of reducing its greenhouse gas emissions by 30% in 2030.  Indigo Ag began entering into long-term carbon agreements with producers in 2019, paying $15 per ton for carbon sequestration practices.  Food companies and agribusinesses including McDonald’s, Cargill, and General Mills formed the Ecosystem Services Market Consortium, which will fully open its private carbon market in 2022.

Are legal agreements involved?  Yes.  Using a written agreement is a common practice in carbon market transactions, but the agreements can vary from market to market.  Provisions might address acceptable practices, calculating and verifying carbon reductions including third-party verification, sharing data and records, pricing, costs of practices, minimum acreage, and contract period.  As with other legal contracts, reviewing a carbon agreement with an attorney is a wise decision.  Watch for more details about carbon agreements as we share our analysis of them in future blog posts.

What is President Biden considering for carbon markets?  The Biden administration has expressed interest in developing a federal carbon bank that would pay producers and foresters for carbon reduction practices.  The USDA would administer the bank with funding from the Commodity Credit Corporation.  Rumors are that the bank would begin with at least $1 billion to purchase carbon credits from producers for $20 per ton.  The proposal is one of several ideas for the USDA outlined in the administration’s Climate 21 Project.

What is Congress proposing for carbon markets?  The bipartisan Growing Climate Solutions Act would require USDA to assess the market for carbon credits, establish a third-party verifier certification program overseen by an advisory council, establish an online website with information for producers, and regularly report to Congress on market performance, challenges for producers, and barriers to market entry.  An initial $4.1 million program allocation would be supplemented with $1 million per year for the next five years.  The Senate Agriculture, Nutrition and Forestry Committee has already passed the bill.  The Rural Forest Markets Act, also a bipartisan bill, would help small-scale private forest landowners by guaranteeing financing for markets for forest carbon reduction practices.

Is there opposition to carbon markets?  Yes, and skepticism also.  For example, a recent letter from dozens of organizations urged Congress to “oppose carbon offset scams like the Growing Climate Solutions Act” and argued that agricultural offsets are ineffective, incompatible with sustainable agriculture, may further consolidate agriculture and will increase hazardous pollution, especially in environmental justice communities.  The Institute for Agriculture & Trade Policy also criticizes carbon markets, claiming that emission credit prices are too low and volatile, leakages and offsets can lead to accountability and fraud issues, measurement tools are inadequate, soil carbon storage is impermanent, and the markets undermine more effective and holistic practices.  Almost half of the farmers in the 2020 Iowa Farm and Rural Life Poll were uncertain about earning money for carbon credits while 17% said carbon markets should not be developed.

To learn more about carbon markets, drop into an upcoming webinar by our partner, the National Agricultural Law Center.  “Considering Carbon:  The Evolution and Operation of Carbon Markets” on May 19, 2021 at Noon will feature Chandler Van Voorhis, a leading expert in conservation and ecological markets.  The Center also has a recording of last month’s webinar on “Opportunities and Challenges Agriculture Faces in the Climate Debate,” featuring Andrew Walmsley, Director of Congressional Relations and Shelby Swain Myers, Economist, both with American Farm Bureau.  A new series by the Center on Considering Carbon will focus on legal issues with the carbon industry and will complement our upcoming project on “The Conservation Movement:  Legal Needs for Farm and Forest Landowners.”  There’s still much more talking to do on the carbon markets topics.

Federal bills target carbon reduction practices on farms and forests

President Biden announced a major goal this week–for the U.S. to reduce greenhouse gas emissions by half over the next decade as compared to 2005 levels.  Agriculture will play a key role in that reduction by “deploying cutting-edge tools to make the soil of our heartland the next frontier in carbon innovation,” according to President Biden.  Several bills introduced in Congress recently could help agriculture fulfill that key role.  The proposals offer incentives and assistance for farmers, ranchers, and forest owners to engage in carbon sequestration practices. 

Here’s a summary of the bills that are receiving the most attention.

Growing Climate Solutions Act, S. 1251.  The Senate Agriculture, Nutrition and Forestry Committee passed S. 1251 today.  The bipartisan proposal led by sponsors Sen. Mike Braun (R-IN), Sen. Debbie Stabenow (D-MI), Sen. Lindsey Graham (R-SC) and Sen. Sheldon Whitehouse (D-RI) already has the backing of over half of the Senate as co-sponsors, including Ohio’s Sen. Sherrod Brown.  The bill has come up in prior sessions of Congress without success, but the sponsors significantly reworked the bill and reintroduced it this week.  The new version includes these provisions:

• Requires the USDA to conduct an initial assessment of the domestic market for carbon credits, to include assessing market actors, market demand, estimated credits in process, supply and demand of offsets, barriers to entry, monitoring and measurement technologies, barriers for small, beginning and socially disadvantaged operators, among other factors.
• Creates a Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Certification Program to ensure that technical service assistance providers who work with farmers to establish and sell carbon credits have sufficient expertise, including agricultural and forestry knowledge.  Certified parties are to act in good faith to provide realistic estimates of costs and revenues and to help farmers, ranchers and forester receive “fair distribution of revenues” derived from carbon credit sales. 
• Establishes an online website providing information for farmers, ranchers and foresters interested in participating in carbon markets.
• Creates an advisory council that would oversee the certification program.  At least 16 of the committee’s 25 members must be farmers, ranchers, or private forest owners. 
• Charges the USDA with producing a report to Congress identfiying barriers to market entry, challenges raised by farmers and forest owners, market performance, and suggesting additional ways to encourage voluntary participation in carbon sequestration practices.
• Authorizes up to $9.1 million in USDA funding for the program, including $4.1 million immediately and an additional $1 million per year for the next five years.

Rep. Don Bacon (R-NE) and Rep. Abigail Spanberger (D-VA) will soon introduce companion legislation in the House of Representatives.   

Rural Forest Markets Act, S. 1107.  A second proposal in Congress aims to remove barriers for small-scale private forest landowners and help them benefit from carbon markets and other climate solution markets.  Senators Stabenow and Braun are also sponsors of this bill, along with Sen. Angus King (I-Maine) and Sen. Shelley Moore Capito (R-WV).  The bill echoes previous similar legislative attempts and includes these provisions:

• Directs the USDA to create a Rural Forest Market Investment Program to guarantee up to $150 million to finance eligible projects for rural private forest landowners to participate in an “innovative market for forest carbon or other products.” 
• States that eligible projects will be those developed by private entities or nonprofits to aggregate sustainable practices by rural private forest landowners for sales in a carbon or environmental market, using approved methodologies. 
• Requires that eligible tree planting projects may take place only on historically forested lands using native species and be planted at ecologically appropriate densities without causing negative impacts to biodiversity or the environment.

The interest in carbon reduction practices and monetizing carbon sequestration at the federal level doesn’t end with these two proposals.   While not addressing private landowners, another Senate proposal focuses on public land reforestation.  The “Repairing Existing Public Land by Adding Necessary Trees Act” (REPLANT Act), with Ohio’s Sen. Rob Portman as a sponsor, proposes increased funding in the Reforestation Trust Fund for replanting 1.2 billion trees over the next ten years on public land in need of reforestation.  The USDA is weighing in on the issue as well, and has recently announced plans to target carbon reduction through existing programs such as the Conservation Reserve Program.  And just after passing the “Growing Climate Solutions Act” today, the Senate Agriculture, Nutrition, and Forestry Committee held a hearing on “Farmers and Foresters:  Opportunities to Lead in Tackling Climate Change” featuring testimony from several farmers and organizations.  Readers may get a sense of what more is to come by viewing the hearing on the committee’s website. 

The Ag Law Harvest

Written by Ellen Essman

Welcome to August! Despite the fact that most of us haven’t seen much besides the inside of our homes lately, the world still turns, which is also true for the gears in Washington D.C.  In this issue of the Ag Law Harvest, we will take a look at some recently introduced and passed federal legislation, as well as a proposed federal rule.

Great American Outdoors Act is a go.  The Great American Outdoors Act, one of the last pieces of legislation introduced by the late Representative John Lewis, was signed into law by the President on August 4.  The new law secures funding for deferred maintenance projects on federal lands.  The funding will come from 50% of the revenues from oil, gas, coal, or alternative energy development on federal lands.  The funding will be broken down between numerous agencies, with 70% to the National Park Service each year, 15% to the Forest Service, 5% to the U.S. Fish and Wildlife Service, 5% to the Bureau of Land Management, and 5% to the Bureau of Indian Education.  You can read the law in its entirety here.

A meat processing slowdown for worker safety? In addition to the Great American Outdoors Act, numerous bills have been introduced to help farmers, ag-related businesses, and rural areas in the wake of COVID-19.  For instance, in early July, Ohio’s own Representative from the 11th District, Marcia Fudge, introduced H.R. 7521, which would suspend increases in line speeds at meat and poultry establishments during the pandemic.  Notably, if passed, the bill would “suspend implementation of, and conversion to the New Swine Slaughter Inspection System,” which has been planned since the USDA published the final rule in October of 2019. It would also make the USDA suspend any waivers for certain establishments related to increasing line speed.  The resolution was introduced to protect the safety of workers, animals, and food.  In theory, slower line speeds would make it easier for workers to social distance. This is especially important in the wake of outbreaks among workers at many processing plants.  On July 28, Senator Cory Booker introduced a companion bill in the Senate.

Will livestock markets become more competitive?  On July 9, a group of Representatives from Iowa introduced H.R. 7501.  The bill would amend the Agricultural Marketing Act of 1946 “to foster efficient markets and increase competition and transparency among packers that purchase livestock from producers.  To achieve this outcome, the bill would require packers to obtain at least 50% of their livestock through “spot market sales” every week.  This means that the packers would be required to buy from producers not affiliated with the packer. “Unaffiliated producers” would have less than a 1 percent equity interest in the packer (and vice versa), no directors, employees, etc. that are directors, employees, etc. of the packer, and no fiduciary responsibility to the packer.  Additionally, the packer would not have an equity interest in a nonaffiliated producer.  Basically, this bill would make it easier for independent producers to sell to packers. This bill is a companion to a Senate Bill 3693, which we discussed in a March edition of the Ag Law Harvest. According

New bill would make changes to FIFRA.  Just last week, a new bill was proposed in both the House and Senate that would alter the Federal Insecticide, Fungicide, and Rodenticide Act.  The bill is called the “Protect America’s Children from Toxic Pesticides Act of 2020.” In a press release, the sponsoring Senator, Tom Udall, and Representative, Joe Neguse, explained that the proposed law would ban organophosphate insecticides, neonicotinoid insecticides, and the herbicide paraquat, which are linked to harmful effects in humans and the environment.  Furthermore, the law would allow individuals to petition the EPA to identify dangerous pesticides, close the loopholes allowing EPA to issue emergency exemptions and conditional registrations to use pesticides before they are fully vetted, allow communities to pass tougher laws on pesticides without state preemption, and press the pause button on pesticides found to be unsafe by the E.U. or Canada until they undergo EPA review.  Finally, the bill would make employers report pesticide-caused injuries, direct the EPA to work with pesticide manufacturers on labeling, and require manufacturers to include Spanish instructions on labels.  You can read the text of the bill here.

USDA AMS publishes proposed Organic Rule.  Moving on to federal happenings outside Congress, the USDA Agricultural Marketing Service published a proposed rule on August 5. The rule would amend current regulations for organic foods by strengthening “oversight of the production, handling certification, marketing, and sale of organic agricultural products.” The rule would make it easier to detect any fraud, trace organic products, and would make organic certification practices for producers more uniform.  Anyone interested in commenting on this proposed rule has until October 5, 2020 to do so.  You can find information on how to submit a comment on the website linked above.