By: Peggy Kirk Hall, Friday, July 13th, 2018

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

Case highlights value of Ohio’s Grain Indemnity Fund.  The recent prosecution and guilty plea of a grain handler who withheld $3.22 million in proceeds from grain he sold on behalf of 35 farmers in northern Ohio illustrates the value of Ohio’s Grain Indemnity Fund.  The farmers had received approximately $2.5 million in reimbursement from the fund, which protects farmers from grain handlers who become insolvent.  Though the fund, a farmer is reimbursed 100% for open storage grain in the elevator and 100% of the first $10,000 of a loss for future contracts, delayed price and basis transactions, with 80% reimbursement beyond the first $10,000 of loss.  The grain handler, Richard Schwan, must now reimburse the fund and pay additional amounts to the farmers and the state.  For more about the Grain Indemnity Fund, read our previous post.

More on North Carolina nuisance lawsuits against hog farms.  A jury decision on June 29, 2018 awarded $25.13 million to a couple living next door to a 4,700 head hog farm in North Carolina owned by a subsidiary of Smithfield Foods.  The award included $25 million in punitive damages.  The apparent reason for the jury’s significant punitive damage award is Smithfield’s failure to finance and utilize new technologies that could reduce the impacts of current anaerobic lagoon and spraying application technologies.  This is the second successful verdict in the second of many nuisance lawsuits filed by over 500 neighbors of hog farms owned by Smithfield.

North Carolina legislature reacts to nuisance wins.  In response to the first two jury awards against Smithfield, the North Carolina legislature adopted new restrictions on nuisance lawsuits against farm and forestry operations.  The legislation requires that a nuisance suit be filed within a year of the establishment of an agricultural or forestry operation or within a year of a “fundamental change” to the operation, which does not include changes in ownership, technology, product or size of the operation.  The bill also limits the awarding of punitive damages to operators with criminal convictions or those who’ve received regulatory notices of violation.  North Carolina Governor Roy Cooper vetoed the bill, but the legislature successfully overrode the veto.

Meanwhile, Court upholds Iowa Right-to-Farm law.  The Iowa Supreme Court declined a request to declare the Iowa Right-to-Farm law facially unconstitutional for exceeding the state’s police power.  The court concluded that the Right-to-Farm law, which protects animal feeding operations that are in compliance with applicable laws and utilizing generally acceptable agricultural practices from nuisance lawsuits, falls within the legislature’s police power but could be unconstitutional as applied to a particular situation.  However, such a determination requires application of a three part test and extensive fact finding by the court.  Read more on Honomichl v. Valley View Swine, LLC here from Iowa State’s Center for Agricultural Law and Taxation.

IRS reveals the new Form 1040.  It’s not quite post card size, but the IRS claims that its draft of the revised Form 1040 is about half the size of the current form.  The agency unveiled the draft form, which it intends to be shorter, simpler and supplemented with applicable schedules, and is seeking comments from the tax community.  The new form, when complete, will replace the 1040, 1040A and 1040EZ.

Ohio legislation on the move.  A flurry of activity at the Statehouse followed the lengthy re-election of a new House speaker that had stalled legislation this spring.  Several bills have now been signed by Governor Kasich and a few bills have passed through one or both houses, as follows:

• Plugging idle and orphan oil and gas wells.  A bill we reported on back in January, H.B. 225, was signed into law on June 29, 2018.  The new law provides an increase, from 14% to 30%, in funding for plugging unused oil and gas wells.   Landowners can report an idle or orphaned well to the Chief of the Division of Oil and Gas Resources, who must then inspect the well within 30 days and prioritize how soon the well should be plugged and the land surface be restored.  The Chief’s duty to find prior owners and legal interests in the well is limited to records less than 40 years old.  The law also includes procedural changes for entering into contracts for restoration or plugging of wells.
• Tax appeals.  One provision in H.B. 292 allows a party to appeal a decision of the Board of Tax Appeals directly to the Supreme Court if it concerns a final determination of the Tax Commissioner or a municipal corporation’s income tax review board.  This reverses a recent change that removed the Supreme Court option for such appeals.  The act also removes a provision that allowed a party to file a petition requesting that the Supreme Court take jurisdiction over an appeal from the Court of Appeals, which the Supreme Court was authorized to do if the appeal involved a substantial constitutional question or a question of great general or public interest.  Governor Kasich signed the legislation on June 14, 2018.
• Hunting and fishing licenses.  S.B. 257 creates multi-year and lifetime hunting and fishing licenses for residents of Ohio and allows the Division of Wildlife to offer licensure “packages” for any combination of licenses, permits, or stamps.  The law also establishes the “Lake Erie sport fishing district,” consisting of the Ohio waters of Lake Erie and its tributaries.   Nonresidents must obtain a $10 special permit to fish in the Lake Erie sport fishing district from January 1 to April 30, with the fees earmarked specifically to benefit Lake Erie.  The legislation received the Governor’s signature on June 29, 2018.
• High volume dog breeders.  New standards addressing sustenance, housing, veterinarian care, exercise and human interaction for dogs bred for sale in high volumes are in H.B. 506, signed by the Governor on June 29, 2018.
• Dogs on patios.  H.B. 263, which we wrote about previously, has passed both the House and Senate.  The bill allows retail food establishments and food service operations to permit customers to bring a dog into an outdoor dining area if the dog is vaccinated.  The establishment must adopt a policy requiring customers to control their dogs and keep their dogs out of indoor areas.  The bill just needs a signature from Governor Kasich to become effective.
• Alfalfa products.  H.R. 298 was adopted by the House on June 7, 2018.  The resolution recognizes the existence of two alfalfa products, direct dehydrated alfalfa and sun-cured alfalfa, as defined by the Association of American Feed Control Officials. The resolution further calls on alfalfa processors and suppliers use the defined terms in their labeling.    A companion resolution in the Senate remains in committee.
• Township laws.  A number of changes affecting township authority are in H.B. 500, which unanimously passed the House on June 27 and was introduced in the Senate on July 5.  Of most consequence to agriculture are proposals to broaden township zoning authority over agricultural activities in platted subdivisions and authority for townships to impose fees for zoning appeals.