Sunday, February 28, 2021

Ag Law and Taxation - 2019 Bibliography

Overview

Today's post is a bibliography of my ag law and tax blog articles of 2019.  Many of you have requested that I provide something like this to make it easier to find the articles, and last month I posted the bibliography of the 2020 articles.  Soon I will post the bibliography of the 2018 articles and then 2017 and 2016. 

The library of content is piling up.

Cataloging the 2019 ag law and tax blog articles - it's the topic of today's post.

BANKRUPTCY

Non-Dischargeable Debts in Bankruptcy

https://lawprofessors.typepad.com/agriculturallaw/2019/02/non-dischargeable-debts-in-bankruptcy.html

Developments in Agricultural Law and Taxation

https://lawprofessors.typepad.com/agriculturallaw/2019/03/developments-in-agricultural-law-and-taxation.html

More Recent Developments in Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/03/more-recent-developments-in-agricultural-law.html

More Ag Law and Tax Developments

https://lawprofessors.typepad.com/agriculturallaw/2019/05/more-ag-law-and-tax-developments.html

Farmers, Bankruptcy and the “Absolute Priority” Rule

https://lawprofessors.typepad.com/agriculturallaw/2019/07/farmers-bankruptcy-and-the-absolute-priority-rule.html

Ag in the Courtroom

            https://lawprofessors.typepad.com/agriculturallaw/2019/07/ag-in-the-courtroom.html

Key Farm Bankruptcy Modification on the Horizon?

https://lawprofessors.typepad.com/agriculturallaw/2019/07/key-farm-bankruptcy-modification-on-the-horizon.html

Ag Legal Issues in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/08/ag-legal-issues-in-the-courts.html

Are Taxes Dischargeable in Bankruptcy?

https://lawprofessors.typepad.com/agriculturallaw/2019/09/are-taxes-dischargeable-in-bankruptcy.html

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2019

https://lawprofessors.typepad.com/agriculturallaw/2019/12/the-almost-top-ten-ag-law-and-ag-tax-developments-of-2019.html 

BUSINESS PLANNING

Can a State Tax a Trust with No Contact with the State?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/can-a-state-tax-a-trust-with-no-contact-with-the-state.html

Real Estate Professionals and Aggregation – The Passive Loss Rules

https://lawprofessors.typepad.com/agriculturallaw/2019/03/real-estate-professionals-and-aggregation-the-passive-loss-rules.html  

More Recent Developments in Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/03/more-recent-developments-in-agricultural-law.html

Self-Rentals and the Passive Loss Rules

https://lawprofessors.typepad.com/agriculturallaw/2019/04/self-rentals-and-the-passive-loss-rules.html    

What’s the Best Entity Structure for the Farm or Ranch Business?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/whats-the-best-entity-structure-for-the-farm-or-ranch-business.html

Where Does Life Insurance Fit in an Estate Plan for a Farmer or Rancher?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/where-does-life-insurance-fit-in-an-estate-plan-for-a-farmer-or-rancher.html

Recent Developments in Farm and Ranch Business Planning

https://lawprofessors.typepad.com/agriculturallaw/2019/06/recent-developments-in-farm-and-ranch-business-planning.html

ESOPs and Ag Businesses – Part One

https://lawprofessors.typepad.com/agriculturallaw/2019/07/esops-and-ag-businesses-part-one.html

ESOPs and Ag Businesses – Part Two

https://lawprofessors.typepad.com/agriculturallaw/2019/07/esops-and-ag-businesses-part-two.html

Is a Discount for The BIG Tax Available?

https://lawprofessors.typepad.com/agriculturallaw/2019/08/is-a-discount-for-the-big-tax-available.html

Tax Consequences of Forgiving Installment Payment Debt

https://lawprofessors.typepad.com/agriculturallaw/2019/09/tax-consequences-of-forgiving-installment-payment-debt.html

Ag Law and Tax in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/09/ag-law-and-tax-in-the-courts.html

Shareholder Loans and S Corporation Stock Basis

https://lawprofessors.typepad.com/agriculturallaw/2019/09/shareholder-loans-and-s-corporation-stock-basis.html

The Family Limited Partnership – Part One

https://lawprofessors.typepad.com/agriculturallaw/2019/09/the-family-limited-partnership-part-one.html

The Family Limited Partnership – Part Two

https://lawprofessors.typepad.com/agriculturallaw/2019/09/the-family-limited-partnership-part-two.html

Does the Sale of Farmland Trigger Net Investment Income Tax?

https://lawprofessors.typepad.com/agriculturallaw/2019/10/does-the-sale-of-farmland-trigger-net-investment-income-tax.html

Some Thoughts on Ag Estate/Business/Succession Planning

https://lawprofessors.typepad.com/agriculturallaw/2019/11/some-thoughts-on-ag-estatebusinesssuccession-planning.html

S Corporation Considerations

https://lawprofessors.typepad.com/agriculturallaw/2019/11/s-corporation-considerations.html

CIVIL LIABILITIES

When is an Employer Liable for the Conduct of Workers?

https://lawprofessors.typepad.com/agriculturallaw/2019/01/when-is-an-employer-liable-for-the-conduct-of-workers.html

Selected Recent Cases Involving Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/01/selected-recent-cases-involving-agricultural-law.html

Ag Nuisances – Basic Principles

https://lawprofessors.typepad.com/agriculturallaw/2019/02/ag-nuisances-basic-principles.html

Do the Roundup Jury Verdicts Have Meaning For My Farming Operation?

https://lawprofessors.typepad.com/agriculturallaw/2019/04/do-the-roundup-jury-verdicts-have-meaning-for-my-farming-operation.html

What Does a “Reasonable Farmer” Know?

https://lawprofessors.typepad.com/agriculturallaw/2019/04/what-does-a-reasonable-farmer-know.html

Product Liability Down on the Farm - Modifications

https://lawprofessors.typepad.com/agriculturallaw/2019/05/product-liability-down-on-the-farm-modifications.html

Coming-To-The-Nuisance By Staying Put – Or, When 200 Equals 8,000

https://lawprofessors.typepad.com/agriculturallaw/2019/05/coming-to-the-nuisance-by-staying-put-or-when-200-equals-8000.html

More Ag Law and Tax Developments

https://lawprofessors.typepad.com/agriculturallaw/2019/05/more-ag-law-and-tax-developments.html

Public Trust vs. Private Rights – Where’s the Line?

https://lawprofessors.typepad.com/agriculturallaw/2019/06/public-trust-vs-private-rights-wheres-the-line.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/11/ag-law-in-the-courts.html

Fence Law Basics

            https://lawprofessors.typepad.com/agriculturallaw/2019/11/fence-law-basics.html

CONTRACTS

Negotiating Cell/Wireless Tower Agreements

https://lawprofessors.typepad.com/agriculturallaw/2019/01/negotiating-cellwireless-tower-agreements.html

Developments in Agricultural Law and Taxation

https://lawprofessors.typepad.com/agriculturallaw/2019/03/developments-in-agricultural-law-and-taxation.html

Ag Contracts – What if Goods Don’t Conform to the Contract?

https://lawprofessors.typepad.com/agriculturallaw/2019/09/ag-contracts-what-if-goods-dont-conform-to-the-contract.html

ENVIRONMENTAL LAW

Top 10 Developments in Ag Law and Tax for 2018 – Numbers 10 and 9

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-10-developments-in-ag-law-and-tax-for-2018-numbers-10-and-9.html

Top 10 Developments in Ag Law and Tax for 2018 – Numbers 8 and 7

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-10-developments-in-ag-law-and-tax-for-2018-numbers-8-and-7.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 6, 5, and 4

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-6-5-and-4.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 3, 2, and 1

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-3-2-and-1.html

Big EPA Developments – WOTUS and Advisory Committees

https://lawprofessors.typepad.com/agriculturallaw/2019/02/big-epa-developments-wotus-and-advisory-committees.html

Does Soil Erosion Pose a Constitutional Issue?

https://lawprofessors.typepad.com/agriculturallaw/2019/04/does-soil-erosion-pose-a-constitutional-issue.html

Public Trust vs. Private Rights – Where’s the Line?

https://lawprofessors.typepad.com/agriculturallaw/2019/06/public-trust-vs-private-rights-wheres-the-line.html

More Ag Law and Tax Developments

https://lawprofessors.typepad.com/agriculturallaw/2019/05/more-ag-law-and-tax-developments.html

Eminent Domain and Agriculture

https://lawprofessors.typepad.com/agriculturallaw/2019/06/eminent-domain-and-agriculture.html

Court Decisions Illustrates USDA’s Swampbuster “Incompetence”

https://lawprofessors.typepad.com/agriculturallaw/2019/08/court-decision-illustrates-usdas-swampbuster-incompetence.html

Regulatory Changes to the Endangered Species Act

https://lawprofessors.typepad.com/agriculturallaw/2019/09/regulatory-changes-to-the-endangered-species-act.html

Irrigation Return Flows and the Clean Water Act

https://lawprofessors.typepad.com/agriculturallaw/2019/09/irrigation-return-flows-and-the-clean-water-act.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/10/ag-law-in-the-courts.html

Regulatory Takings – Pursuing a Remedy

https://lawprofessors.typepad.com/agriculturallaw/2019/10/regulatory-takings-pursuing-a-remedy.html

Does a Pollutant Discharge From Groundwater into a WOTUS Require a Federal Permit?

https://lawprofessors.typepad.com/agriculturallaw/2019/11/does-a-pollutant-discharge-from-groundwater-into-a-wotus-require-a-federal-permit.html

Groundwater Discharges of Pollutants and the Supreme Court

https://lawprofessors.typepad.com/agriculturallaw/2019/11/groundwater-discharges-of-pollutants-and-the-supreme-court.html

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2019

https://lawprofessors.typepad.com/agriculturallaw/2019/12/the-almost-top-ten-ag-law-and-ag-tax-developments-of-2019.html

ESTATE PLANNING

Tax Filing Season Update and Summer Seminar!

https://lawprofessors.typepad.com/agriculturallaw/2019/01/tax-filing-season-update-and-summer-seminar.html

Time to Review Estate Planning Documents?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/time-to-review-of-estate-planning-documents.html

Can a State Tax a Trust with No Contact with the State?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/can-a-state-tax-a-trust-with-no-contact-with-the-state.html

Estate Planning in Second Marriage Situations

https://lawprofessors.typepad.com/agriculturallaw/2019/02/estate-planning-in-second-marriage-situations.html

Valuing Non-Cash Charitable Gifts

https://lawprofessors.typepad.com/agriculturallaw/2019/03/valuing-non-cash-charitable-gifts.html

Real Estate Professionals and Aggregation – The Passive Loss Rules

https://lawprofessors.typepad.com/agriculturallaw/2019/03/real-estate-professionals-and-aggregation-the-passive-loss-rules.html

Can the IRS Collect Unpaid Estate Tax From the Beneficiaries?

https://lawprofessors.typepad.com/agriculturallaw/2019/03/can-the-irs-collect-unpaid-estate-tax-from-the-beneficiaries.html

Sale of the Personal Residence After Death

https://lawprofessors.typepad.com/agriculturallaw/2019/03/sale-of-the-personal-residence-after-death.html

More Recent Developments in Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/03/more-recent-developments-in-agricultural-law.html

Thrills with Wills – When is a Will “Unduly Influenced”?

https://lawprofessors.typepad.com/agriculturallaw/2019/04/thrills-with-wills-when-is-a-will-unduly-influenced.html

Heirs Liable for Unpaid Federal Estate Tax 28 Years After Death

https://lawprofessors.typepad.com/agriculturallaw/2019/05/heirs-liable-for-unpaid-federal-estate-tax-28-years-after-death.html

What’s the Best Entity Structure for the Farm or Ranch Business?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/whats-the-best-entity-structure-for-the-farm-or-ranch-business.html

Where Does Life Insurance Fit in an Estate Plan for a Farmer or Rancher?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/where-does-life-insurance-fit-in-an-estate-plan-for-a-farmer-or-rancher.html

Recent Developments in Farm and Ranch Business Planning

https://lawprofessors.typepad.com/agriculturallaw/2019/06/recent-developments-in-farm-and-ranch-business-planning.html

Wayfair Does Not Mean That a State Can Always Tax a Trust Beneficiary

https://lawprofessors.typepad.com/agriculturallaw/2019/06/wayfair-does-not-mean-that-a-state-can-always-tax-a-trust-beneficiary.html

ESOPs and Ag Businesses – Part One

https://lawprofessors.typepad.com/agriculturallaw/2019/07/esops-and-ag-businesses-part-one.html

Issues in Estate Planning – Agents, Promises, and Trustees

https://lawprofessors.typepad.com/agriculturallaw/2019/10/issues-in-estate-planning-agents-promises-and-trustees.html

The Importance of Income Tax Basis “Step-Up” at Death

https://lawprofessors.typepad.com/agriculturallaw/2019/10/the-importance-of-income-tax-basis-step-up-at-death.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/11/ag-law-in-the-courts.html

Co-Tenancy or Joint Tenancy – Does it Really Matter?

https://lawprofessors.typepad.com/agriculturallaw/2019/11/co-tenancy-or-joint-tenancy-does-it-really-matter.html

Year-End Legislation Contains Tax Extenders, Repealers, and Modifications to Retirement Provisions

https://lawprofessors.typepad.com/agriculturallaw/2019/12/year-end-legislation-contains-tax-extenders-repealers-and-modification-to-retirement-provisions.html

INCOME TAX

Top 10 Developments in Ag Law and Tax for 2018 – Numbers 10 and 9

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-10-developments-in-ag-law-and-tax-for-2018-numbers-10-and-9.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 6, 5, and 4

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-6-5-and-4.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 3, 2, and 1

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-3-2-and-1.html

Tax Filing Season Update and Summer Seminar!

https://lawprofessors.typepad.com/agriculturallaw/2019/01/tax-filing-season-update-and-summer-seminar.html

QBID Final Regulations on Aggregation and Rents – The Meaning for Farm and Ranch Businesses

https://lawprofessors.typepad.com/agriculturallaw/2019/01/qbid-final-regulations-on-aggregation-and-rents-the-meaning-for-farm-and-ranch-businesses.html

The QBID Final Regulations – The “Rest of the Story”

https://lawprofessors.typepad.com/agriculturallaw/2019/01/the-qbid-final-regulations-the-rest-of-the-story.html

Can a State Tax a Trust with No Contact with the State?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/can-a-state-tax-a-trust-with-no-contact-with-the-state.html

Tax Matters – Where Are We Now?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/tax-matters-where-are-we-now.html

New Developments on Exclusion of Employer-Provided Meals

https://lawprofessors.typepad.com/agriculturallaw/2019/02/new-development-on-exclusion-of-employer-provided-meals.html

Valuing Non-Cash Charitable Gifts

https://lawprofessors.typepad.com/agriculturallaw/2019/03/valuing-non-cash-charitable-gifts.html

Passive Losses and Material Participation

https://lawprofessors.typepad.com/agriculturallaw/2019/03/passive-losses-and-material-participation.html

Passive Losses and Real Estate Professionals

https://lawprofessors.typepad.com/agriculturallaw/2019/03/passive-losses-and-real-estate-professionals.html

Developments in Agricultural Law and Taxation

https://lawprofessors.typepad.com/agriculturallaw/2019/03/developments-in-agricultural-law-and-taxation.html

Real Estate Professionals and Aggregation – The Passive Loss Rules

https://lawprofessors.typepad.com/agriculturallaw/2019/03/real-estate-professionals-and-aggregation-the-passive-loss-rules.html

Sale of the Personal Residence After Death

https://lawprofessors.typepad.com/agriculturallaw/2019/03/sale-of-the-personal-residence-after-death.html

Cost Segregation Study – Do You Need One for Your Farm?

https://lawprofessors.typepad.com/agriculturallaw/2019/03/cost-segregation-study-do-you-need-one-for-your-farm.html

Cost Segregation – Risk and Benefits

https://lawprofessors.typepad.com/agriculturallaw/2019/04/cost-segregation-risks-and-benefits.html

Permanent Conservation Easement Donation Transactions Find Their Way to the IRS “Dirty Dozen” List

https://lawprofessors.typepad.com/agriculturallaw/2019/04/permanent-conservation-easement-donation-transactions-find-their-way-to-the-irs-dirty-dozen-list.html

Self-Rentals and the Passive Loss Rules

https://lawprofessors.typepad.com/agriculturallaw/2019/04/self-rentals-and-the-passive-loss-rules.html

More on Self-Rentals

            https://lawprofessors.typepad.com/agriculturallaw/2019/04/more-on-self-rentals.html

Of Black-Holes, Tax Refunds, and Statutory Construction

https://lawprofessors.typepad.com/agriculturallaw/2019/04/of-black-holes-tax-refunds-and-statutory-construction.html

What Happened in Tax During Tax Season?

https://lawprofessors.typepad.com/agriculturallaw/2019/04/what-happened-in-tax-during-tax-season.html

Cost Segregation and the Recapture Issue

https://lawprofessors.typepad.com/agriculturallaw/2019/06/cost-segregation-and-the-recapture-issue.html

S.E. Tax and Contract Production Income

https://lawprofessors.typepad.com/agriculturallaw/2019/06/se-tax-and-contract-production-income.html

Recent Developments in Farm and Ranch Business Planning

https://lawprofessors.typepad.com/agriculturallaw/2019/06/recent-developments-in-farm-and-ranch-business-planning.html

Ag Cooperatives and the QBID – Initial Guidance

https://lawprofessors.typepad.com/agriculturallaw/2019/06/ag-cooperatives-and-the-qbid-initial-guidance.html

Wayfair Does Not Mean That a State Can Always Tax a Trust Beneficiary

https://lawprofessors.typepad.com/agriculturallaw/2019/06/wayfair-does-not-mean-that-a-state-can-always-tax-a-trust-beneficiary.html

Start Me Up! – Tax Treatment of Start-Up Expenses

https://lawprofessors.typepad.com/agriculturallaw/2019/07/start-me-up-tax-treatment-of-start-up-expenses.html

More on Real Estate Exchanges

https://lawprofessors.typepad.com/agriculturallaw/2019/07/more-on-real-estate-exchanges.html

2019 Tax Planning for Midwest/Great Plains Farmers and Ranchers

https://lawprofessors.typepad.com/agriculturallaw/2019/07/2019-tax-planning-for-midwestgreat-plains-farmers-and-ranchers.html

Tax Treatment of Settlements and Court Judgments

https://lawprofessors.typepad.com/agriculturallaw/2019/07/tax-treatment-of-settlements-and-court-judgments.html

ESOPs and Ag Businesses – Part One

https://lawprofessors.typepad.com/agriculturallaw/2019/07/esops-and-ag-businesses-part-one.html 

Tax “Math” on Jury Verdicts

https://lawprofessors.typepad.com/agriculturallaw/2019/07/tax-math-on-jury-verdicts.html

Kansas Revenue Department Takes Aggressive Position Against Remote Sellers

https://lawprofessors.typepad.com/agriculturallaw/2019/08/kansas-revenue-department-take-aggressive-position-against-remote-sellers.html

Tax-Deferred Exchanges and Conservation Easements

https://lawprofessors.typepad.com/agriculturallaw/2019/08/tax-deferred-exchanges-and-conservation-easements.html

Proper Handling of Breeding Fees

https://lawprofessors.typepad.com/agriculturallaw/2019/08/proper-handling-of-breeding-fees.html

Proper Tax Reporting of Commodity Wages

https://lawprofessors.typepad.com/agriculturallaw/2019/08/proper-tax-reporting-of-commodity-wages.html

Tax Consequences of Forgiving Installment Payment Debt

https://lawprofessors.typepad.com/agriculturallaw/2019/09/tax-consequences-of-forgiving-installment-payment-debt.html

Are Taxes Dischargeable in Bankruptcy?

https://lawprofessors.typepad.com/agriculturallaw/2019/09/are-taxes-dischargeable-in-bankruptcy.html

Ag Law and Tax in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/09/ag-law-and-tax-in-the-courts.html

Refund Claim Relief Due to Financial Disability

https://lawprofessors.typepad.com/agriculturallaw/2019/09/refund-claim-relief-due-to-financial-disability.html

Shareholder Loans and S Corporation Stock Basis

https://lawprofessors.typepad.com/agriculturallaw/2019/09/shareholder-loans-and-s-corporation-stock-basis.html

The Family Limited Partnership – Part Two

https://lawprofessors.typepad.com/agriculturallaw/2019/09/the-family-limited-partnership-part-two.html

Hobby Losses Post-2017 and Pre-2026 – The Importance of Establishing a Profit Motive

https://lawprofessors.typepad.com/agriculturallaw/2019/10/hobby-losses-post-2017-and-pre-2026-the-importance-of-establishing-a-profit-motive.html

The Importance of Income Tax Basis “Step-Up” at Death

https://lawprofessors.typepad.com/agriculturallaw/2019/10/the-importance-of-income-tax-basis-step-up-at-death.html

Bad Debt Deduction

            https://lawprofessors.typepad.com/agriculturallaw/2019/10/bad-debt-deduction.html

More on Cost Depletion – Bonus Payments

https://lawprofessors.typepad.com/agriculturallaw/2019/10/more-on-cost-depletion-bonus-payments.html

Recapture – A Dirty Word in the Tax Code Lingo

https://lawprofessors.typepad.com/agriculturallaw/2019/10/recapture-a-dirty-word-in-tax-code-lingo.html

Does the Sale of Farmland Trigger Net Investment Income Tax?

https://lawprofessors.typepad.com/agriculturallaw/2019/10/does-the-sale-of-farmland-trigger-net-investment-income-tax.html

Are Director Fees Subject to Self-Employment Tax?

https://lawprofessors.typepad.com/agriculturallaw/2019/10/are-director-fees-subject-to-self-employment-tax.html

Are Windbreaks Depreciable?

https://lawprofessors.typepad.com/agriculturallaw/2019/11/are-windbreaks-depreciable.html

Tax Issues Associated with Restructuring Credit Lines

https://lawprofessors.typepad.com/agriculturallaw/2019/12/tax-issues-associated-with-restructuring-credit-lines.html

Is a Tenancy-in-Common Interest Eligible for Like-Kind Exchange Treatment?

https://lawprofessors.typepad.com/agriculturallaw/2019/12/is-a-tenancy-in-common-interest-eligible-for-like-kind-exchange-treatment.html

Year-End Legislation Contains Tax Extenders, Repealers, and Modifications to Retirement Provisions

https://lawprofessors.typepad.com/agriculturallaw/2019/12/year-end-legislation-contains-tax-extenders-repealers-and-modification-to-retirement-provisions.html

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2019

https://lawprofessors.typepad.com/agriculturallaw/2019/12/the-almost-top-ten-ag-law-and-ag-tax-developments-of-2019.html

INSURANCE

Prevented Planting Payments – Potential Legal Issues?

https://lawprofessors.typepad.com/agriculturallaw/2019/06/prevented-planting-payments-potential-legal-issues.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/11/ag-law-in-the-courts.html

REAL PROPERTY

 Negotiating Cell/Wireless Tower Agreements

https://lawprofessors.typepad.com/agriculturallaw/2019/01/negotiating-cellwireless-tower-agreements.html

Selected Recent Cases Involving Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/01/selected-recent-cases-involving-agricultural-law.html

The Accommodation Doctrine – More Court Action

https://lawprofessors.typepad.com/agriculturallaw/2019/01/the-accommodation-doctrine-more-court-action.html

Defects in Real Estate Deeds – Will Time Cure All?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/defects-in-real-estate-deeds-will-time-cure-all.html

Is there a Common-Law Right to Hunt (and Fish) Your Own Land?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/is-there-a-common-law-right-to-hunt-and-fish-your-own-land.html

Legal Issues Associated with Abandoned Railways

https://lawprofessors.typepad.com/agriculturallaw/2019/05/legal-issues-associated-with-abandoned-railways.html

Public Trust vs. Private Rights – Where’s the Line?

https://lawprofessors.typepad.com/agriculturallaw/2019/06/public-trust-vs-private-rights-wheres-the-line.html

Ag in the Courtroom

            https://lawprofessors.typepad.com/agriculturallaw/2019/07/ag-in-the-courtroom.html

More on Real Estate Exchanges

https://lawprofessors.typepad.com/agriculturallaw/2019/07/more-on-real-estate-exchanges.html

How Does the Rule Against Perpetuities Apply in the Oil and Gas Context?

https://lawprofessors.typepad.com/agriculturallaw/2019/08/how-does-the-rule-against-perpetuities-apply-in-the-oil-and-gas-context.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/10/ag-law-in-the-courts.html

Cost Depletion of Minerals

https://lawprofessors.typepad.com/agriculturallaw/2019/10/cost-depletion-of-minerals.html

Co-Tenancy or Joint Tenancy – Does it Really Matter?

https://lawprofessors.typepad.com/agriculturallaw/2019/11/co-tenancy-or-joint-tenancy-does-it-really-matter.html

“Slip Slidin’ Away” – The Right of Lateral and Subjacent Support

https://lawprofessors.typepad.com/agriculturallaw/2019/12/slip-slidin-away-the-right-of-lateral-and-subjacent-support.html

Is a Tenancy-in-Common Interest Eligible for Like-Kind Exchange Treatment?

https://lawprofessors.typepad.com/agriculturallaw/2019/12/is-a-tenancy-in-common-interest-eligible-for-like-kind-exchange-treatment.html

REGULATORY LAW

Top 10 Developments in Ag Law and Tax for 2018 – Numbers 10 and 9

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-10-developments-in-ag-law-and-tax-for-2018-numbers-10-and-9.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 6, 5, and 4

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-6-5-and-4.html

Top Ten Agricultural Law and Tax Developments of 2018 – Numbers 3, 2, and 1

https://lawprofessors.typepad.com/agriculturallaw/2019/01/top-ten-agricultural-law-and-tax-developments-of-2018-numbers-3-2-and-1.html

Is There a Common-Law Right to Hunt (and Fish) Your Own Land?

https://lawprofessors.typepad.com/agriculturallaw/2019/02/is-there-a-common-law-right-to-hunt-and-fish-your-own-land.html

Packers and Stockyards Act – Basic Provisions

https://lawprofessors.typepad.com/agriculturallaw/2019/03/packers-and-stockyards-act-basic-provisions.html

Packers and Stockyards Act Provisions for Unpaid Cash Sellers of Livestock

https://lawprofessors.typepad.com/agriculturallaw/2019/03/packers-and-stockyards-act-provisions-for-unpaid-cash-sellers-of-livestock.html

More Recent Developments in Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2019/03/more-recent-developments-in-agricultural-law.html

Ag Antitrust – Is There a Crack in the Wall of the “Mighty-Mighty” (Illinois) Brick House?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/ag-antitrust-is-there-a-crack-in-the-wall-of-the-mighty-mighty-illinois-brick-house.html

Can Foreign Persons/Entities Own U.S. Agricultural Land?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/can-foreign-personsentities-own-us-agricultural-land.html

Prevented Planting Payments – Potential Legal Issues?

https://lawprofessors.typepad.com/agriculturallaw/2019/06/prevented-planting-payments-potential-legal-issues.html

Eminent Domain and Agriculture

https://lawprofessors.typepad.com/agriculturallaw/2019/06/eminent-domain-and-agriculture.html

Classification of Seasonal Ag Workers – Why It Matters

https://lawprofessors.typepad.com/agriculturallaw/2019/06/classification-of-seasonal-ag-workers-why-it-matters.html

Administrative Agency Deference – Little Help for Ag From the Supreme Court

https://lawprofessors.typepad.com/agriculturallaw/2019/06/administrative-agency-deference-little-help-for-ag-from-the-supreme-court.html

Regulation of Food Products

https://lawprofessors.typepad.com/agriculturallaw/2019/07/regulation-of-food-products.html

Ag Legal Issues in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/08/ag-legal-issues-in-the-courts.html

Kansas Revenue Department Takes Aggressive Position Against Remote Sellers

https://lawprofessors.typepad.com/agriculturallaw/2019/08/kansas-revenue-department-take-aggressive-position-against-remote-sellers.html

Court Decision Illustrates USDA’s Swampbuster “Incompetence”

https://lawprofessors.typepad.com/agriculturallaw/2019/08/court-decision-illustrates-usdas-swampbuster-incompetence.html

Ag Law and Tax in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/09/ag-law-and-tax-in-the-courts.html

Regulatory Takings – Pursuing a Remedy

https://lawprofessors.typepad.com/agriculturallaw/2019/10/regulatory-takings-pursuing-a-remedy.html

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2019

https://lawprofessors.typepad.com/agriculturallaw/2019/12/the-almost-top-ten-ag-law-and-ag-tax-developments-of-2019.html

SECURED TRANSACTIONS

Market Facilitation Program Pledged as Collateral – What are the Rights of a Lender?

https://lawprofessors.typepad.com/agriculturallaw/2019/05/market-facilitation-program-payments-pledged-as-collateral-what-are-the-rights-of-a-lender.html

SEMINARS AND CONFERENCES

Summer 2019 Farm and Ranch Tax and Estate/Business Planning Seminar

https://lawprofessors.typepad.com/agriculturallaw/2019/04/summer-2019-farm-and-ranch-tax-and-estatebusiness-planning-seminar.html

2019 National Ag Tax/Estate and Business Planning Conference in Steamboat Springs!

https://lawprofessors.typepad.com/agriculturallaw/2019/05/2019-national-ag-taxestate-and-business-planning-conference-in-steamboat-springs.html

Summer Tax and Estate Planning Seminar!

https://lawprofessors.typepad.com/agriculturallaw/2019/07/summer-tax-and-estate-planning-seminar.html

2020 National Summer Ag Income Tax/Estate and Business Planning Seminar

https://lawprofessors.typepad.com/agriculturallaw/2019/12/2020-national-summer-ag-income-taxestate-and-business-planning-seminar.html

Fall Seminars

            https://lawprofessors.typepad.com/agriculturallaw/2019/08/fall-seminars.html

WATER LAW

The Accommodation Doctrine – More Court Action

https://lawprofessors.typepad.com/agriculturallaw/2019/01/the-accommodation-doctrine-more-court-action.html

Ag Legal Issues in the Courts

https://lawprofessors.typepad.com/agriculturallaw/2019/08/ag-legal-issues-in-the-courts.html

Ag Law in the Courts

            https://lawprofessors.typepad.com/agriculturallaw/2019/10/ag-law-in-the-courts.html

Regulating Existing Water Rights – How Far Can State Government Go?

https://lawprofessors.typepad.com/agriculturallaw/2019/10/regulating-existing-water-rights-how-far-can-state-government-go.html

The Politics of Prior Appropriation – Is a Senior Right Really Senior?

https://lawprofessors.typepad.com/agriculturallaw/2019/12/the-politics-of-prior-appropriation-is-a-senior-right-really-senior.html

Changing Water Right Usage

https://lawprofessors.typepad.com/agriculturallaw/2019/12/changing-water-right-usage.html

February 28, 2021 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Monday, February 15, 2021

Prescribed Burning Legal Issues

Overview

The calendar indicates that the time for conducting open burns of agricultural land is approaching.  In the Great Plains (and also some areas of eastern Washington and Oregon), prescribed burning of pasture grass is a critical component of rangeland management.  It is an effective and affordable means of reversing and controlling the negative impacts of woody plant growth and its expansion that damages native grasslands.  It can also play a role in limiting wildfire risk.  But some landowners are reluctant to engage in prescribed (controlled) burns out of a concern for liability and casualty risks associated with escaped fire and smoke.  While some states in the Great Plains have “burn bans,” agricultural-related burns are typically not prohibited during such bans. 

The legal rules, regulations and liability risks associated with prescribed burning of agricultural lands – it’s the topic of today’s post.

Regulations – The Kansas Approach

The states that comprise the Great Plains have regulations governing the conduct of prescribed burns. The regulations among the states have commonalities, but there are distinctions from state-to-state.  In addition, in some states, open burning bans can be imposed in the interest of public safety but exempt agricultural-related burns.  For purposes of this article, I will look at the Kansas regulations. 

Kansas administrative regulations set forth the rules for conducting prescribed burns.  K.A.R. §28-19-645 et seq. In general, open burning is prohibited unless an exception applies.  K.A.R. §645. One of those exceptions is for open burning of agricultural lands that is done in accordance with the regulations.  K.A.R. §28-19-647(a)(3). Under that exception, open burning of vegetation such as grass, woody species, crop residue, and other dry plant growth for the purpose of crop, range, pasture, wildlife or watershed management is exempt from the general prohibition on open burning.  K.A.R. §28-19-648(a).  However, a prescribed burn of agricultural land must be conducted within certain guidelines.  For instance, before a burn is started the local fire control authority with jurisdiction in the area must be notified unless local government has specified that notification is not required.  K.A.R. §28-19-648(a)(1).  Also, the burn cannot create a traffic hazard.  If wind conditions might result in smoke blowing toward a public roadway, notice must be given to the highway patrol, county sheriff or local traffic officials before the burn is started. K.A.R. §28-19-648(a)(2).  Likewise, a burn cannot create a visibility safety hazard for airplanes that utilize a nearby airport. K.A.R. §28-19-648(a)(3).  If such a problem could potentially result, notice must be given to the airport officials before the burn begins.  Id.  In all situations, the burn must be supervised until the fire is extinguished. K.A.R. §28-19-648(a)(4).  Also, the Kansas burn regulations allow local jurisdictions to adopt more restrictive ordinance or resolutions governing prescribed burns of agricultural land.  K.A.R. §28-19-648(b). 

Kansas regulations also specify that the open burning of vegetation and wood waste, structures, or any other materials on any premises during the month of April is prohibited in the counties of  Butler, Chase, Chautauqua, Cowley, Elk, Geary, Greenwood, Johnson, Lyon, Marion, Morris, Pottawatomie, Riley, Sedgwick, Wabaunsee, and Wyandotte counties.  K.A.R. §28-19-645a(a). This is the Flint Hills region of Kansas – some of the most abundant pasture ground in the United States.  However, certain activities are allowed in these counties during April.  For instance, the prescribed burning of agricultural land for the purposes of range or pasture management is allowed, as is the burning of Conservation Reserve Program (CRP) land that is conducted in accordance with the requirements for a prescribed burn of agricultural land.  K.A.R. §28-19-645a(b)(1).  Open burning during April is also allowed in these counties if it is carried out on a residential premise containing five or less dwelling units and incidental to the normal habitation of the dwelling units, unless prohibited by any local authority with jurisdiction over the premises.  K.A.R. §28-19-645a(b)(2).    Also, open burning is allowed for cooking or ceremonial purposes, on public or private lands regularly used for recreational purposes. Id. 

Non-agricultural open burning activities must meet certain other requirements including a showing that the open burning is necessary, in the public interest and not otherwise prohibit by any local government or fire authority.  K.A.R. §28-19-647(b).   These types of open burning activities must also be conducted pursuant to an approved written request to the Kansas Department of Health and Environment that details how the burn will be conducted, the parameters of the activity, and the location of public roadways within 1,000 feet as well as occupied dwelling within that same distance. K.A.R. §§28-19-647(d)(2)(E-F).  The open burning of heavy oils, tires and tarpaper and other heavy smoke-producing material is not permitted.  K.A.R. §28-19-647(e)(2).  A burn is not to be started at night (two hours before sunset until one hour after sunrise) and material is not to be added to a fire after two hours before sunset.  A burn is not to be conducted during foggy conditions or when wind speed is less than five miles-per-hour or greater than 15 miles-per-hour. K.A.R. §§28-19-647(e)(3-5).   

Legal Liability Principles

As noted above, Kansas regulations require that an agricultural prescribed burn is to be supervised until the fire is extinguished. But sometimes a fire will get out of control even after it is believed to be extinguished and burn an adjacent property resulting in property damage.  How does the law sort out liability in such a situation? 

Negligence.  In general, as applied to agricultural burning activities, the law applies one of three possible principles.  One principle is that of negligence and the other is that of strict liability.  The negligence system is a fault system.  For a person to be deemed legally negligent, certain conditions must exist. These conditions can be thought of as links in a chain. Each condition must be present before a finding of negligence can be obtained.  The first condition is that of a legal duty giving rise to a standard of care.  How is duty measured?  To be liable for a negligent tort, the defendant's conduct must have fallen below that of a “reasonable and prudent person” under the circumstances.  A reasonable and prudent person is what a jury has in mind when they measure an individual's conduct in retrospect - after the fact, when the case is in court. The conduct of a particular tortfeasor (the one causing the tort) who is not held out as a professional is compared with the mythical standard of conduct of the reasonable and prudent person in terms of judgment, knowledge, perception, experience, skill, physical, mental and emotional characteristics as well as age and sanity. For those held out as having the knowledge, skill, experience or education of a professional, the standard of care reflects those factors. For example, the standard applicable to a professional veterinarian in diagnosing or treating animals is what a reasonable and prudent veterinarian would have done under the circumstances, not what a reasonable and prudent person would do.

If a legal duty exists, it is necessary to determine whether the defendant's conduct fell short of the conduct of a “reasonable and prudent person (or professional) under the circumstances.”  This is called a breach, and is the second element of a negligent tort case.

Once a legal duty and breach of that duty are shown to exist, a causal connection (the third element) must be established between the defendant's act and (the fourth element) the plaintiff's injuries (whether to person or property). In other words, the resulting harm to the plaintiff must have been a reasonably foreseeable result of the defendant's conduct at the time the conduct occurred. Reasonable foreseeability is the essence of causality (also known as proximate cause). For example, assume that a Kansas rancher has followed all of the rules to prepare for and conduct a prescribed pasture burn. After conducting the burn, the rancher banks the fire up and leaves it in what he thinks is a fairly safe condition before heading to the house for lunch.  Over lunch, the wind picks up and spreads the fire to an adjoining tract of real estate.  If the burning of the neighbor's property was not reasonably foreseeable, an action for negligence will likely not be successful.  However, if the wind was at a high velocity before lunch and all adjoining property was extremely dry, it probably was foreseeable that the fire would escape and burn a neighboring landowner's tract.

Note:  For a plaintiff to prevail in a negligence-type tort case, the plaintiff bears the burden of proof to all of the elements by a preponderance of the evidence (just over 50 percent). 

Intentional interference with real property.  Another legal principle that can apply in to open burning activities, is intentional interference with real property.  This principle is closely related to trespass.  Trespass is the unlawful or unauthorized entry upon another person's land that interferes with that person's exclusive possession or ownership of the land.   At its most basic level, an intentional trespass is the intrusion on to another person's land without the owner's consent.  However, many other types of physical invasions that cause injury to an owner's possessory rights abound in agriculture.  These types of trespass include dynamite blasting, flooding with water or residue from oil and gas drilling operations, erection of an encroaching fence, unauthorized grazing of cattle, raising of crops and cutting timber on another's land without authorization, and prescribed agricultural burning activities, among other things. 

In general, the privilege of an owner or possessor of land to utilize the land and exploit its potential natural resources is only a qualified privilege.  The owner or possessor must exercise reasonable care in conducting operations on the land so as to avoid injury to the possessory rights of neighboring landowners.  The owner or possessor must exercise reasonable care in conducting operations on the land so as to avoid injury to the possessory rights of neighboring landowners.  For example, if a prescribed burn of a pasture results in heavy smoke passing onto an adjoining property accompanied with a long-term residual smoke odor, the party conducting the burn could be held legally responsible for damages under the theory of intentional interference with real property even if the burn was conducted in accordance with applicable state regulations.  See, e.g., Ream v. Keen, 112 Ore. App. 197, 828 P.2d 1038 (1992), aff’d, 314 Ore. 370, 838 P.2d 1073 (Ore. 1992).

Strict liability.  Some activities are deemed to be so dangerous that a showing of negligence is not required to obtain a recovery.  Under a strict liability approach, the defendant is liable for injuries caused by the defendant's actions, even if the defendant was not negligent in any way or did not intend to injure the plaintiff. In general, those situations reserved for resolution under a strict liability approach involve those activities that are highly dangerous.  When these activities are engaged in, the defendant must be prepared to pay for all resulting consequences, regardless of the legal fault.

Kansas liability rule for prescribed burning.  A strict liability rule could apply to a prescribed burn of agricultural land if the activity were to be construed as an inherently (e.g., extremely) dangerous activity.    In Kansas, however, farmers and ranchers have a right to set controlled fires on their property for agricultural purposes and will not be liable for damages resulting if the fire is set and managed with ordinary care and prudence, depending on the conditions present.  See, e.g., Koger v. Ferrin, 23 Kan. App. 2d 47, 926 P.2d 680 (Kan. Ct. App. 1996).  In Kansas, at least at the present time, the courts have determined that there is no compelling argument for imposing strict liability on a property owner for damages resulting from a prescribed burn of agricultural land.  Id. 

Note:  The liability rule applied in Texas and Oklahoma is also negligence and not strict liability.  In these states, carefully following applicable prescribed burning regulations goes along way to defeating a lawsuit claiming that damages from a prescribed burn were the result of negligence. 

Certainly, for prescribed burns of agricultural land in Kansas, the regulations applicable to non-agricultural burns establish a good roadmap for establishing that a burn was conducted in a non-negligent manner.  Following those requirements could prove valuable in protecting against a damage liability claim if the fire gets out of control and damages adjacent property.

Conclusion

Prescribed burning of agricultural land in Kansas and elsewhere in the Great Plains is an excellent range management tool.  Practiced properly the ecological and economic benefits to the landowner can be substantial.  But a burn must be conducted within the framework of existing regulations with an eye toward the legal rule governing any potential liability. 

February 15, 2021 in Civil Liabilities, Real Property, Regulatory Law | Permalink | Comments (0)

Wednesday, January 20, 2021

Ag Law and Taxation 2020 Bibliography

Overview

Today's post is a bibliography of my ag law and tax blog articles of 2020.  Many of you have requested that I provide something like this to make it easier to find the articles.  If possible, I will do the same for articles from prior years.  The library of content is piling up - I have written more than 500 detailed articles for the blog over the last four and one-half years.

Cataloging the 2020 ag law and tax blog articles - it's the topic of today's post.

BANKRUPTCY

Ag Law and Tax in the Courts – Bankruptcy Debt Discharge; Aerial Application of Chemicals; Start-Up Expenses and Lying as Protected Speech

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-and-tax-in-the-courts-bankruptcy-debt-discharge-aerial-application-of-chemicals-start-up-expe.html

Unique, But Important Tax Issues – “Claim of Right;” Passive Loss Grouping; and Bankruptcy Taxation

https://lawprofessors.typepad.com/agriculturallaw/2020/01/unique-but-important-tax-issues-claim-of-right-passive-loss-grouping-and-bankruptcy-taxation.html

Disaster/Emergency Legislation – Summary of Provisions Related to Loan Relief; Small Business and Bankruptcy

https://lawprofessors.typepad.com/agriculturallaw/2020/04/disasteremergency-legislation-summary-of-provisions-related-to-loan-relief-small-business-and-bankruptcy.html

Retirement-Related Provisions of the CARES Act

https://lawprofessors.typepad.com/agriculturallaw/2020/04/retirement-related-provisions-of-the-cares-act.html

Farm Bankruptcy – “Stripping, “Claw-Black,” and the Tax Collecting Authorities

https://lawprofessors.typepad.com/agriculturallaw/2020/05/farm-bankruptcy-stripping-claw-back-and-the-tax-collecting-authorities.html

SBA Says Farmers in Chapter 12 Ineligible for PPP Loans

https://lawprofessors.typepad.com/agriculturallaw/2020/06/sba-says-farmers-in-chapter-12-ineligible-for-ppp-loans.html

The “Cramdown” Interest Rate in Chapter 12 Bankruptcy

https://lawprofessors.typepad.com/agriculturallaw/2020/07/the-cramdown-interest-rate-in-chapter-12-bankruptcy.html

Bankruptcy and the Preferential Payment Rule

https://lawprofessors.typepad.com/agriculturallaw/2020/12/bankruptcy-and-the-preferential-payment-rule.html

BUSINESS PLANNING

Partnership Tax Ponderings – Flow-Through and Basis

https://lawprofessors.typepad.com/agriculturallaw/2020/02/partnership-tax-ponderings-flow-through-and-basis.html

Farm and Ranch Estate and Business Planning in 2020 (Through 2025)

https://lawprofessors.typepad.com/agriculturallaw/2020/03/farm-and-ranch-estate-and-business-planning-in-2020-through-2025.html

Transitioning the Farm or Ranch – Stock Redemption

https://lawprofessors.typepad.com/agriculturallaw/2020/07/transitioning-the-farm-or-ranch-stock-redemption.html

Estate and Business Planning for the Farm and Ranch Family – Use of the LLC (Part 1)

https://lawprofessors.typepad.com/agriculturallaw/2020/07/estate-and-business-planning-for-the-farm-and-ranch-family-use-of-the-llc-part-1.html

Estate and Business Planning for the Farm and Ranch Family – Use of the LLC (Part 2)

https://lawprofessors.typepad.com/agriculturallaw/2020/07/estate-and-business-planning-for-the-farm-and-ranch-family-use-of-the-llc-part-two.html

The Use of the LLC for the Farm or Ranch Business – Practical Application

https://lawprofessors.typepad.com/agriculturallaw/2020/08/the-use-of-the-llc-for-the-farm-or-ranch-business-practical-application.html

CIVIL LIABILITIES

Top Ten Agricultural Law and Tax Developments from 2019 (Numbers 10 and 9)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-from-2019-numbers-10-and-9.html

Ag Law in the Courts – Feedlots; Dicamba Drift; and Inadvertent Disinheritance

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-in-the-courts-feedlots-dicamba-drift-and-inadvertent-disinheritance.html

Ag Law and Tax in the Courts – Bankruptcy Debt Discharge; Aerial Application of Chemicals; Start-Up Expenses and Lying as Protected Speech

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-and-tax-in-the-courts-bankruptcy-debt-discharge-aerial-application-of-chemicals-start-up-expe.html

Dicamba, Peaches and a Defective Ferrari; What’s the Connection?

https://lawprofessors.typepad.com/agriculturallaw/2020/05/dicamba-peaches-and-a-defective-ferrari-whats-the-connection.html

Liability for Injuries Associated with Horses (and Other Farm Animals)

https://lawprofessors.typepad.com/agriculturallaw/2020/06/liability-for-injuries-associated-with-horses-and-other-farm-animals.html

Issues with Noxious (and Other) Weeds and Seeds

https://lawprofessors.typepad.com/agriculturallaw/2020/09/issues-with-noxious-and-other-weeds-and-seeds.html

Of Nuisance, Overtime and Firearms – Potpourri of Ag Law Developments

https://lawprofessors.typepad.com/agriculturallaw/2020/11/of-nuisance-overtime-and-firearms-potpourri-of-ag-law-developments.html

CONTRACTS

The Statute of Frauds and Sales of Goods

https://lawprofessors.typepad.com/agriculturallaw/2020/01/the-statute-of-frauds-and-sales-of-goods.html

Disrupted Economic Activity and Force Majeure – Avoiding Contractual Obligations in Time of Pandemic

https://lawprofessors.typepad.com/agriculturallaw/2020/04/disrupted-economic-activity-and-force-majeure-avoiding-contractual-obligations-in-time-of-pandemic.html

Is it a Farm Lease or Not? – And Why it Might Matter

https://lawprofessors.typepad.com/agriculturallaw/2020/11/is-it-a-farm-lease-or-not-and-why-it-might-matter.html

COOPERATIVES

Top Ten Agricultural Law and Tax Developments of 2019 (Numbers 2 and 1)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-2-and-1.html

Concentrated Ag Markets – Possible Producer Response?

https://lawprofessors.typepad.com/agriculturallaw/2020/05/concentrated-ag-markets-possible-producer-response.html

CRIMINAL LIABILITIES

Is an Abandoned Farmhouse a “Dwelling”?

https://lawprofessors.typepad.com/agriculturallaw/2020/02/is-an-abandoned-farmhouse-a-dwelling.html

ENVIRONMENTAL LAW

Top Ten Agricultural Law and Tax Developments of 2019 (Numbers 8 and 7)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-8-and-7.html

Top Ten Agricultural Law and Tax Developments of 2019 (Numbers 6 and 5)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-six-and-five.html

Top Ten Agricultural Law and Tax Developments of 2019 (Numbers 4 and 3)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-4-and-3.html

Clean Water Act – Compliance Orders and “Normal Farming Activities”

https://lawprofessors.typepad.com/agriculturallaw/2020/03/clean-water-act-compliance-orders-and-normal-farming-activities.html

Groundwater Discharges of “Pollutants” and “Functional Equivalency”

https://lawprofessors.typepad.com/agriculturallaw/2020/04/groundwater-discharges-of-pollutants-and-functional-equivalency.html

NRCS Highly Erodible Land and Wetlands Conservation Final Rule – Clearer Guidance for Farmers or Erosion of Property Rights? – Part One

https://lawprofessors.typepad.com/agriculturallaw/2020/09/nrcs-highly-erodible-land-and-wetlands-conservation-final-rule-clearer-guidance-for-farmers-or-erosi.html

NRCS Highly Erodible Land and Wetlands Conservation Final Rule – Clearer Guidance for Farmers or Erosion of Property Rights? – Part Two

https://lawprofessors.typepad.com/agriculturallaw/2020/09/nrcs-highly-erodible-land-and-wetlands-conservation-final-rule-clearer-guidance-for-farmers-or-loss-of-property-rights.html

NRCS Highly Erodible Land and Wetlands Conservation Final Rule – Clearer Guidance for Farmers or Erosion of Property Rights? – Part Three

https://lawprofessors.typepad.com/agriculturallaw/2020/09/nrcs-highly-erodible-land-and-wetlands-conservation-final-rule-clearer-guidance-for-farmers-or-loss-of-property-rights-1.html

The Prior Converted Cropland Exception – More Troubles Ahead?

https://lawprofessors.typepad.com/agriculturallaw/2020/09/the-prior-converted-cropland-exception-more-troubles-ahead.html

TMDL Requirements – The EPA’s Federalization of Agriculture

            https://lawprofessors.typepad.com/agriculturallaw/2020/10/tmdl-requirements-.html

Eminent Domain and “Seriously Misleading” Financing Statements

https://lawprofessors.typepad.com/agriculturallaw/2020/10/eminent-domain-and-seriously-misleading-financing-statements.html

 

ESTATE PLANNING

Ag Law in the Courts – Feedlots; Dicamba Drift; and Inadvertent Disinheritance

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-in-the-courts-feedlots-dicamba-drift-and-inadvertent-disinheritance.html

Recent Developments Involving Estates and Trusts

https://lawprofessors.typepad.com/agriculturallaw/2020/02/recent-developments-involving-decedents-estates-and-trusts.html

What is a “Trade or Business” For Purposes of Installment Payment of Federal Estate Tax?

https://lawprofessors.typepad.com/agriculturallaw/2020/03/what-is-a-trade-or-business-for-purposes-of-installment-payment-of-federal-estate-tax.html

Alternate Valuation – Useful Estate Tax Valuation Provision

https://lawprofessors.typepad.com/agriculturallaw/2020/03/alternate-valuation-useful-estate-tax-valuation-provision.html

Farm and Ranch Estate and Business Planning in 2020 (Through 2025)

https://lawprofessors.typepad.com/agriculturallaw/2020/03/farm-and-ranch-estate-and-business-planning-in-2020-through-2025.html

Retirement-Related Provisions of the CARES Act

https://lawprofessors.typepad.com/agriculturallaw/2020/04/retirement-related-provisions-of-the-cares-act.html

Are Advances to Children Loans or Gifts?

https://lawprofessors.typepad.com/agriculturallaw/2020/06/are-advances-to-children-loans-or-gifts.html

Tax Issues Associated with Options in Wills and Trusts

https://lawprofessors.typepad.com/agriculturallaw/2020/06/tax-issues-associated-with-options-in-wills-and-trusts.html

Valuing Farm Chattels and Marketing Rights of Farmers

https://lawprofessors.typepad.com/agriculturallaw/2020/06/valuing-farm-chattels-and-marketing-rights-of-farmers.html

Is it a Gift or Not a Gift? That is the Question

https://lawprofessors.typepad.com/agriculturallaw/2020/06/is-it-a-gift-or-not-a-gift-that-is-the-question.html

Does a Discretionary Trust Remove Fiduciary Duties a Trustee Owes Beneficiaries?

https://lawprofessors.typepad.com/agriculturallaw/2020/10/does-a-discretionary-trust-remove-fiduciary-duties-a-trustee-owes-beneficiaries.html

Can I Write my Own Will? Should I?

https://lawprofessors.typepad.com/agriculturallaw/2020/10/can-i-write-my-own-will-should-i.html

Income Taxation of Trusts – New Regulations

https://lawprofessors.typepad.com/agriculturallaw/2020/10/income-taxation-of-trusts.html

Merging a Revocable Trust at Death with an Estate – Tax Consequences

https://lawprofessors.typepad.com/agriculturallaw/2020/11/merging-a-revocable-trust-at-death-with-an-estate-tax-consequences.html

When is Transferred Property Pulled Back into the Estate at Death?  Be on Your Bongard!

https://lawprofessors.typepad.com/agriculturallaw/2020/11/when-is-transferred-property-pulled-back-into-the-estate-at-death-be-on-your-bongard.html

‘Tis the Season for Giving, But When is a Transfer a Gift?

https://lawprofessors.typepad.com/agriculturallaw/2020/12/tis-the-season-for-giving-but-when-is-a-transfer-a-gift.html

 

INCOME TAX

Top Ten Agricultural Law and Tax Developments of 2019 (Numbers 2 and 1)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-2-and-1.html

Does the Penalty Relief for a “Small Partnership” Still Apply?

https://lawprofessors.typepad.com/agriculturallaw/2020/01/does-the-penalty-relief-for-a-small-partnership-still-apply.html

Substantiation – The Key to Tax Deductions

https://lawprofessors.typepad.com/agriculturallaw/2020/01/substantiation-the-key-to-tax-deductions.html

Ag Law and Tax in the Courts – Bankruptcy Debt Discharge; Aerial Application of Chemicals; Start-Up Expenses and Lying as Protected Speech

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-and-tax-in-the-courts-bankruptcy-debt-discharge-aerial-application-of-chemicals-start-up-expe.html

Unique, But Important Tax Issues – “Claim of Right;” Passive Loss Grouping; and Bankruptcy Taxation

https://lawprofessors.typepad.com/agriculturallaw/2020/01/unique-but-important-tax-issues-claim-of-right-passive-loss-grouping-and-bankruptcy-taxation.html

Conservation Easements and the Perpetuity Requirement

https://lawprofessors.typepad.com/agriculturallaw/2020/02/conservation-easements-and-the-perpetuity-requirement.html

Tax Treatment Upon Death of Livestock

https://lawprofessors.typepad.com/agriculturallaw/2020/02/tax-treatment-upon-death-of-livestock.html

What is a “Trade or Business” For Purposes of I.R.C. §199A?

https://lawprofessors.typepad.com/agriculturallaw/2020/02/what-is-a-trade-or-business-for-purposes-of-irc-199a.html

Tax Treatment of Meals and Entertainment

https://lawprofessors.typepad.com/agriculturallaw/2020/03/tax-treatment-of-meals-and-entertainment.html

Farm NOLs Post-2017

            https://lawprofessors.typepad.com/agriculturallaw/2020/03/farm-nols-post-2017.html

Disaster/Emergency Legislation – Summary of Provisions Related to Loan Relief; Small Business and Bankruptcy

https://lawprofessors.typepad.com/agriculturallaw/2020/04/disasteremergency-legislation-summary-of-provisions-related-to-loan-relief-small-business-and-bankruptcy.html

Retirement-Related Provisions of the CARES Act

https://lawprofessors.typepad.com/agriculturallaw/2020/04/retirement-related-provisions-of-the-cares-act.html

Income Tax-Related Provisions of Emergency Relief Legislation

https://lawprofessors.typepad.com/agriculturallaw/2020/04/income-tax-related-provisions-of-emergency-relief-legislation.html

The Paycheck Protection Program – Still in Need of Clarity

https://lawprofessors.typepad.com/agriculturallaw/2020/05/the-paycheck-protection-program-still-in-need-of-clarity.html

Solar “Farms” and The Associated Tax Credit

https://lawprofessors.typepad.com/agriculturallaw/2020/05/solar-farms-and-the-associated-tax-credit.html

Obtaining Deferral for Non-Deferred Aspects of an I.R.C. §1031 Exchange

https://lawprofessors.typepad.com/agriculturallaw/2020/05/obtaining-deferral-for-non-deferred-aspects-of-an-irc-1031-exchange-.html

Conservation Easements – The Perpetuity Requirement and Extinguishment

https://lawprofessors.typepad.com/agriculturallaw/2020/05/conservation-easements-the-perpetuity-requirement-and-extinguishment.html

PPP and PATC Developments

https://lawprofessors.typepad.com/agriculturallaw/2020/06/ppp-and-patc-developments.html

How Many Audit “Bites” of the Same Apple Does IRS Get?

https://lawprofessors.typepad.com/agriculturallaw/2020/07/how-many-audit-bites-of-the-same-apple-does-irs-get.html

More Developments Concerning Conservation Easements

https://lawprofessors.typepad.com/agriculturallaw/2020/07/more-developments-concerning-conservation-easements.html

Imputation – When Can an Agent’s Activity Count?

https://lawprofessors.typepad.com/agriculturallaw/2020/07/imputation-when-can-an-agents-activity-count.html

Exotic Game Activities and the Tax Code

https://lawprofessors.typepad.com/agriculturallaw/2020/08/exotic-game-activities-and-the-tax-code.html

Demolishing Farm Buildings and Structures – Any Tax Benefit?

         https://lawprofessors.typepad.com/agriculturallaw/2020/08/demolishing-farm-buildings-and-structures-any-tax-benefit.html

Tax Incentives for Exported Ag Products

https://lawprofessors.typepad.com/agriculturallaw/2020/08/tax-incentives-for-exported-ag-products.html

Deducting Business Interest

https://lawprofessors.typepad.com/agriculturallaw/2020/09/deducting-business-interest.html

Recent Tax Court Opinions Make Key Point on S Corporations and Meals/Entertainment Deductions

https://lawprofessors.typepad.com/agriculturallaw/2020/09/recent-tax-court-opinions-make-key-points-on-s-corporations-and-mealsentertainment-deductions.html

Income Taxation of Trusts – New Regulations

https://lawprofessors.typepad.com/agriculturallaw/2020/10/income-taxation-of-trusts.html

Accrual Accounting – When Can a Deduction Be Claimed?

https://lawprofessors.typepad.com/agriculturallaw/2020/11/accrual-accounting-when-can-a-deduction-be-claimed.html

Farmland Lease Income – Proper Tax Reporting

https://lawprofessors.typepad.com/agriculturallaw/2020/11/farmland-lease-income-proper-tax-reporting.html

Merging a Revocable Trust at Death with an Estate – Tax Consequences

https://lawprofessors.typepad.com/agriculturallaw/2020/11/merging-a-revocable-trust-at-death-with-an-estate-tax-consequences.html

The Use of Deferred Payment Contracts – Specifics Matter

https://lawprofessors.typepad.com/agriculturallaw/2020/11/the-use-of-deferred-payment-contracts-specific-matters.html

Is Real Estate Held in Trust Eligible for I.R.C. §1031 Exchange Treatment?

https://lawprofessors.typepad.com/agriculturallaw/2020/11/is-real-estate-held-in-trust-eligible-for-irc-1031-exchange-treatment.html

 

INSURANCE

Recent Court Developments of Interest

https://lawprofessors.typepad.com/agriculturallaw/2020/07/recent-court-developments-of-interest.html

PUBLICATIONS

Principles of Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2020/01/principles-of-agricultural-law.html

 

REAL PROPERTY

Signing and Delivery

https://lawprofessors.typepad.com/agriculturallaw/2020/02/deed-effectiveness-signing-and-delivery.html

Abandoned Railways and Issues for Adjacent Landowners

https://lawprofessors.typepad.com/agriculturallaw/2020/04/abandoned-railways-and-issues-for-adjacent-landowners.html

Obtaining Deferral for Non-Deferred Aspects of an I.R.C. §1031 Exchange

https://lawprofessors.typepad.com/agriculturallaw/2020/05/obtaining-deferral-for-non-deferred-aspects-of-an-irc-1031-exchange-.html

Are Dinosaur Fossils Minerals?

https://lawprofessors.typepad.com/agriculturallaw/2020/06/are-dinosaur-fossils-minerals.html

Real Estate Concepts Involved in Recent Cases

https://lawprofessors.typepad.com/agriculturallaw/2020/10/real-estate-concepts-involved-in-recent-cases.html

Is it a Farm Lease or Not? – And Why it Might Matter

https://lawprofessors.typepad.com/agriculturallaw/2020/11/is-it-a-farm-lease-or-not-and-why-it-might-matter.html

 

REGULATORY LAW

Top Ten Agricultural Law and Tax Developments from 2019 (Numbers 10 and 9)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-from-2019-numbers-10-and-9.html

Top Ten Agricultural Law and Tax Developments from 2019 (Number 8 and 7)

https://lawprofessors.typepad.com/agriculturallaw/2020/01/top-ten-agricultural-law-and-tax-developments-of-2019-numbers-8-and-7.html

Ag Law and Tax in the Courts – Bankruptcy Debt Discharge; Aerial Application of Chemicals; Start-Up Expenses and Lying as Protected Speech

https://lawprofessors.typepad.com/agriculturallaw/2020/01/ag-law-and-tax-in-the-courts-bankruptcy-debt-discharge-aerial-application-of-chemicals-start-up-expe.html

Hemp Production – Regulation and Economics

https://lawprofessors.typepad.com/agriculturallaw/2020/04/hemp-production-regulation-and-economics.html

DOJ to Investigate Meatpackers – What’s it All About?

https://lawprofessors.typepad.com/agriculturallaw/2020/05/doj-to-investigate-meatpackers-whats-it-all-about.html

Dicamba Registrations Cancelled – Or Are They?

https://lawprofessors.typepad.com/agriculturallaw/2020/06/dicamba-registrations-cancelled-or-are-they.html

What Does a County Commissioner (Supervisor) Need to Know?

https://lawprofessors.typepad.com/agriculturallaw/2020/06/what-does-a-county-commissioner-supervisor-need-to-know.html

The Supreme Court’s DACA Opinion and the Impact on Agriculture

https://lawprofessors.typepad.com/agriculturallaw/2020/07/the-supreme-courts-daca-opinion-and-the-impact-on-agriculture.html

Right-to-Farm Law Headed to the SCOTUS?

https://lawprofessors.typepad.com/agriculturallaw/2020/08/right-to-farm-law-headed-to-the-scotus.html

The Public Trust Doctrine – A Camel’s Nose Under Agriculture’s Tent?

https://lawprofessors.typepad.com/agriculturallaw/2020/10/the-public-trust-doctrine-a-camels-nose-under-agricultures-tent.html

Roadkill – It’s What’s for Dinner (Reprise)

https://lawprofessors.typepad.com/agriculturallaw/2020/10/roadkill-its-whats-for-dinner-reprise.html

Beef May be for Dinner, but Where’s It From?

https://lawprofessors.typepad.com/agriculturallaw/2020/11/beef-may-be-for-dinner-but-wheres-it-from.html

Of Nuisance, Overtime and Firearms – Potpourri of Ag Law Developments

https://lawprofessors.typepad.com/agriculturallaw/2020/11/of-nuisance-overtime-and-firearms-potpourri-of-ag-law-developments.html

What Farm Records and Information Are Protected from a FOIA Request?

https://lawprofessors.typepad.com/agriculturallaw/2020/12/what-farm-records-and-information-are-protected-from-a-foia-request.html

Can One State Dictate Agricultural Practices in Other States?

https://lawprofessors.typepad.com/agriculturallaw/2020/12/can-one-state-dictate-agricultural-practices-in-other-states.html

SECURED TRANSACTIONS

Family Farming Arrangements and Liens; And, What’s a Name Worth?

https://lawprofessors.typepad.com/agriculturallaw/2020/02/family-farming-arrangements-and-liens-and-whats-a-name-worth.html

Conflicting Interests in Stored Grain

https://lawprofessors.typepad.com/agriculturallaw/2020/03/conflicting-interests-in-stored-grain.html

Eminent Domain and “Seriously Misleading” Financing Statement

https://lawprofessors.typepad.com/agriculturallaw/2020/10/eminent-domain-and-seriously-misleading-financing-statements.html

 

SEMINARS AND CONFERENCES

Summer 2020 Farm Income Tax/Estate and Business Planning Conference

https://lawprofessors.typepad.com/agriculturallaw/2020/02/summer-2020-farm-income-taxestate-and-business-planning-conference.html

Registration Open for Summer Ag Income Tax/Estate and Business Planning Seminar

https://lawprofessors.typepad.com/agriculturallaw/2020/03/registration-open-for-summer-ag-income-taxestate-and-business-planning-seminar.html

 

Summer 2020 – National Farm Income Tax/Estate and Business Planning Conference

https://lawprofessors.typepad.com/agriculturallaw/2020/04/summer-2020-national-farm-income-taxestate-and-business-planning-conference.html

Year-End CPE/CLE – Six More to Go

https://lawprofessors.typepad.com/agriculturallaw/2020/12/year-end-cpecle-six-more-to-go.html

2021 Summer National Farm and Ranch Income Tax/Estate and Business Planning Conference

https://lawprofessors.typepad.com/agriculturallaw/2020/12/2021-summer-national-farm-income-taxestate-business-planning-conference.html

WATER LAW

Principles of Agricultural Law

https://lawprofessors.typepad.com/agriculturallaw/2020/01/principles-of-agricultural-law.html

MISCELLANEOUS

More “Happenings” in Ag Law and Tax

https://lawprofessors.typepad.com/agriculturallaw/2020/02/more-happenings-in-ag-law-and-tax.html

Recent Cases of Interest

            https://lawprofessors.typepad.com/agriculturallaw/2020/03/recent-cases-of-interest.html

More Selected Caselaw Developments of Relevance to Ag Producers

https://lawprofessors.typepad.com/agriculturallaw/2020/03/more-selected-caselaw-developments-of-relevance-to-ag-producers.html

Court Developments of Interest

https://lawprofessors.typepad.com/agriculturallaw/2020/04/court-developments-of-interest.html

Ag Law and Tax Developments

https://lawprofessors.typepad.com/agriculturallaw/2020/05/ag-law-and-tax-developments.html

Recent Court Developments of Interest

https://lawprofessors.typepad.com/agriculturallaw/2020/07/recent-court-developments-of-interest.html

Court Developments in Agricultural Law and Taxation

https://lawprofessors.typepad.com/agriculturallaw/2020/08/court-developments-in-agricultural-law-and-taxation.html

Ag Law and Tax in the Courtroom

https://lawprofessors.typepad.com/agriculturallaw/2020/09/ag-law-and-tax-in-the-courtroom.html

Recent Tax Cases of Interest

https://lawprofessors.typepad.com/agriculturallaw/2020/09/recent-tax-cases-of-interest.html

Ag and Tax in the Courts

 https://lawprofessors.typepad.com/agriculturallaw/2020/11/ag-and-tax-in-the-courts.html

Of Nuisance, Overtime and Firearms – Potpourri of Ag Law Developments

https://lawprofessors.typepad.com/agriculturallaw/2020/11/of-nuisance-overtime-and-firearms-potpourri-of-ag-law-developments.html

Bankruptcy Happenings

            https://lawprofessors.typepad.com/agriculturallaw/2020/12/bankruptcy-happenings.html

January 20, 2021 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Sunday, January 17, 2021

Agricultural Law Online!

Overview

For the Spring 2021 academic semester, Kansas State University will be offering my Agricultural Law and Economics course online. No matter where you are located, you can enroll in the course and participate in it as if you were present with the students in the on-campus classroom.

Details of this spring semester’s online Ag Law course – that’s the topic of today’s post.

Course Coverage

The course provides a broad overview of many of the issues that a farmer, rancher, rural landowner, ag lender or other agribusiness will encounter on a daily basis. As a result, the course looks at contract issues for the purchase and sale of agricultural goods; the peril of oral contracts; the distinction between a lease and a contract (and why the distinction matters); and the key components of a farm lease, hunting lease, wind energy lease, oil and gas lease, and other types of common agricultural contractual matters. What are the rules surrounding ag goods purchased at auction?

Ag financing situations are also covered – what it takes to provide security to a lender when financing the purchase of personal property to be used in the farming business. In addition, the unique rules surrounding farm bankruptcy is covered, including the unique tax treatment provided to a farmer in Chapter 12 bankruptcy.

Of course, farm income tax is an important part of the course. Tax planning is perhaps the most important aspect of the farming business that every-day decisions have an impact on and are influenced by. As readers of this blog know well, farm tax issues are numerous and special rules apply in many instances. The new tax law impacts many areas of farm income tax.

Real property legal issues are also prevalent and are addressed in the course. The key elements of an installment land contract are covered, as well as legal issues associated with farm leases. Various types of interests in real estate are explained – easements; licenses; profits, fee simples, remainders, etc. Like-kind exchange rules are also covered as are the special tax rules (at the state level) that apply to farm real estate.

A big issue for some farmers and ranchers concerns abandoned railways, and those issues are covered in the course. What if an existing fence is not on the property line?

Farm estate and business planning is also a significant emphasis of the course. What’s the appropriate estate plan for a farm and ranch family? How should the farming business be structured? Should multiple entities be used? Why does it matter? These questions, and more, are addressed.

Agricultural cooperatives are important for the marketing of agricultural commodities. How a cooperative is structured and works and the special rules that apply are also discussed.

Because much agricultural property is out in the open, that means that personal liability rules come into play with respect to people that come onto the property or use farm property in the scope of their employment. What are the rules that apply in those situations? What about liability rules associated with genetically modified products? Ag chemicals also pose potential liability issues, as do improperly maintained fences? What about defective ag seed or purchased livestock that turns out to not live up to representations? These issues, and more, are covered in the scope of discussing civil liabilities.

Sometimes farmers and ranchers find themselves in violation of criminal laws. What are those common situations? What are the rules that apply? We will get into those issue too.

Water law is a very big issue, especially in the western two-thirds of the United States. We will survey the rules surrounding the allocation of surface water and ground water to agricultural operations.

Ag seems to always be in the midst of many environmental laws – the “Clean Water Rule” is just one of those that has been high-profile in recent years. We will talk about the environmental rules governing air, land, and water quality as they apply to farmers, ranchers and rural landowners.

Finally, we will address the federal (and state) administrative state and its rules that apply to farming operations. Not only will federal farm programs be addressed, but we will also look at other major federal regulations that apply to farmers and ranchers.

Further Information and How to Register

Information about the course and how to register is available here:  https://www.enrole.com/ksu/jsp/session.jsp?sessionId=442107&courseId=AGLAW&categoryId=ROOT

You can also find information about the text for the course at the following link:  https://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/principlesofagriculturallaw/index.html

If you are an undergraduate student at an institution other than Kansas State, you should be able to enroll in this course and have it count as credit towards your degree at your institution.  Consult with your academic advisor to see how Ag Law and Economics will transfer and align with your degree completion goals.

If you have questions, you can contact me directly, or submit your questions to the KSU Global Campus staff at the link provided above.

I hope to see you in class beginning on January 26!

January 17, 2021 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Monday, January 11, 2021

The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Three

No. 5 – Dicamba Drift Damages

The Issue

Numerous cases have been filed in recent years alleging damage to soybean crops as a result of dicamba drift.  However, one significant case has involved alleged dicamba drift damage to a peach crop.  In 2019, the federal trial court judge hearing the case allowed much of the case to go to the jury.  In early 2020, the jury returned a $265 million judgment against Monsanto/Bayer and BASF.  $15 million of that amount was to compensate the peach farmer.  $250 million was punitive damages.  Throughout 2020, the litigation continued with the courts addressing the whether the allocation of damages was proper and reasonable. 

Dicamba Drift, Peaches and Calculation of Damages

The plaintiff claimed that his peach orchard was destroyed after the defendants (Monsanto and BASF) conspired to develop and market dicamba-tolerant seeds and dicamba-based herbicides. The plaintiff claimed that the damage to the peaches occurred when dicamba drifted from application to neighboring fields. The plaintiff claimed that the defendants released its dicamba-tolerant seed with no corresponding dicamba herbicide that could be safely applied. As a result, farmers illegally sprayed an old formulation of dicamba herbicide that was unapproved for in-crop, over-the-top, use and was "volatile," or prone to drift.

While many cases had previously been filed on the dicamba drift issue, the plaintiff did not join the other litigation because it focused on damages to soybean crops. Monsanto moved to dismiss the claims for failure to warn; negligent training; violation of the Missouri Crop Protection Act; civil conspiracy; and joint liability for punitive damages. BASF moved to dismiss those same counts except the claims for failure to warn. The trial court granted the motion to dismiss in part. Monsanto argued that the failure to warn claims were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), but the plaintiff claimed that no warning would have prevented the damage to the peaches. The trial court determined that the plaintiff had adequately plead the claim and denied the motion to dismiss this claim. Both Monsanto and BASF moved to dismiss the negligent training claim, but the trial court refused to do so. However, the trial court did dismiss the claims based on the Missouri Crop Protection Act, noting that civil actions under this act are limited to “field crops” which did not include peaches. The trial court did not dismiss the civil conspiracy claim based on concerted action by agreement, but did dismiss the aiding and abetting portion of the claim because that cause of action is no recognized under Missouri tort law.

The parties agreed to a separate jury determination of punitive damages for each defendant. Bader Farms, Inc. v. Monsanto Co., et al., No. MDL No. 1:18md2820-SNLJ, 2019 U.S. Dist. LEXIS 114302 (E.D. Mo. July 10, 2019). At the jury trial, the jury found that Monsanto had negligently designed or failed to warn for 2015 and 2016 and that both defendants had done so for 2017 to the present. The jury awarded the plaintiff $15 million in compensatory damages and $250 million in punitive damages against Monsanto for 2015 and 2016. The jury also found that the defendants were acting in a joint venture and in a conspiracy. The plaintiff submitted a proposed judgment that both defendants are responsible for the $250 million punitive damages award. BASF objected, but the trial court found the defendants jointly liable for the full verdict in light of the jury’s finding that the defendants were in a joint venture. Bader Farms, Inc. v. Monsanto Co., et al., MDL No. 1:18-md-02820-SNJL, 2020 U.S. Dist. LEXIS 34340 (E.D. Mo. Feb. 28, 2020). BASF then moved for a judgment as a matter of law on punitive damages or motion for a new trial or remittitur (e.g., asking the court to reduce the damage award), and Monsanto moved for a judgment as a matter of law or a new trial. The trial court, however, found both defendants jointly liable, although the court lowered the punitive damages to $60 million after determining a lack of actual malice.

The trial court did uphold the $15 million compensatory damage award upon finding that the correct standard under Missouri law was applied to the farm’s damages. Bader Farms, Inc. v. Monsanto Co, et al., MDL No. 1:18md2820-SNLJ, 2020 U.S. Dist. LEXIS 221420 (E.D. Mo. Nov. 25, 2020). The defendants filed a notice of appeal on December 22, 2020.

No. 4 – Groundwater Discharges and Functional Equivalency

The Issue

Under the Clean Water Act (CWA), a National Pollution Discharge Elimination System (NPDES) permit is required for an “addition” of any “pollutant” from a “point source” into the “navigable waters of the United States” (WOTUS).  33 U.S.C. §1362(12)Excluded are agricultural stormwater discharges and return flows from irrigated agriculture.  33 U.S.C. §1362(14).  Clearly, a discharge directly into a WOTUS is covered. A point source of pollution is that which comes from a discernible, confined and discrete conveyance such as a pipe, ditch or well. 

But, is an NPDES permit necessary if the discharge is directly into groundwater which then seeps its way to a WOTUS in a diffused manner?  Are indirect discharges from groundwater into a WOTUS covered?   If so, does that mean that farmland drainage tile is subject to the CWA and an NPDES discharge permit is required?  1n the 48 years of the CWA, the federal government has never formally taken that position, instead leaving the matter up to the states.  The issue is a big one for agriculture.  In 2020, the U.S. Supreme Court addressed the issue.

Ninth Circuit Decision

In 2018, three different U.S. Circuit Courts of Appeal decided cases on the discharge from groundwater issue.  One of those cases was heard by the U.S. Circuit Court of Appeals for the Ninth Circuit.  In Hawai’i Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018), the defendant owned and operated four wells at the Lahaina Wastewater Reclamation Facility (LWRF). Although constructed initially to serve as a backup disposal method for water reclamation, the wells became the defendant’s primary means of effluent disposal into groundwater and, ultimately, the Pacific Ocean.  The defendant injected approximately 3 to 5 million gallons of treated wastewater per day into the groundwater via its wells.  The wastewater seeped through the groundwater for about one-half of a mile until it reached the Pacific Ocean. The U.S. Court of Appeals for the Ninth Circuit held that the seepage into the Pacific from the point-source wells one-half mile away was “functionally one into navigable water,” and that a permit was required because the “pollutants are fairly traceable from the point source to a navigable water.”

EPA Reaction

After the Ninth Circuit issued its opinion, the EPA, on February 20, 2018, requested comment on whether pollutant discharges from point sources that reach jurisdictional surface waters via groundwater may be subject to Clean Water Act (“CWA”) regulation. Specifically, the EPA sought comment on whether the EPA should consider clarification or revision of previous EPA statements regarding the Agency’s mandate to regulate discharges to surface waters via groundwater under the CWA.  In particular, the EPA sought comment on whether it is consistent with the CWA to require a CWA permit for indirect discharges into jurisdictional surface waters via groundwater. The EPA also sought comment on whether some or all of such discharges are addressed adequately through other federal authorities, existing state statutory or regulatory programs or through other existing federal regulations and permit programs.

After receiving over 50,000 comments, on April 15, 2019, the EPA issued an interpretive statement concluding that the releases of pollutants to groundwater are categorically excluded from the NPDES regardless of whether the groundwater is hydrologically connected to surface water.  The EPA reasoned that the Congress explicitly left regulation of groundwater discharges to the states and that the EPA had other statutory authorities through which to regulate groundwater other than the NPDES.  The EPA, in its statement, noted that its interpretation would apply in areas not within the jurisdiction of the U.S. Circuit Courts of Appeal for the Ninth and Fourth Circuits. 

The Supreme Court and the Hawaii Case

In 2019, the U.S. Supreme Court agreed to hear the Ninth Circuit opinion.  Hawaii Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018), pet. for cert. granted, County of Maui v. Hawaii Wildlife Fund, 139 S. Ct. 1164 (2019)Boiled down to its essence, the case turns on the meaning of “from.”  As noted above, an NPDES permit is required for point source pollutants that originate “from” a point source that are discharged into a navigable water.  The NPDES system only applies to discharges of “any addition” of any pollutant from “any point source” to “navigable waters.”  Thus, by the statutory text, there must be an “addition” of a pollutant to a navigable water of the U.S. “from” a point source.  Discharges of pollutants into groundwater are not subject to the NPDES permit requirement even if the groundwater is hydrologically connected to surface water.  The legislative history of the CWA indicates that the Congress intentionally chose not to regulate hydrologically-connected groundwater, instead leaving such regulation up to the states.  See, e.g., Umatilla Water Quality Protective Association v. Smith Frozen Foods, 962 F. Supp. 1312 (D. Or. 1997)

As noted, the case involved pollutants that originated from a point source, traveled through groundwater, and then a half-mile later reached a WOTUS.  Does the permit requirement turn on a direct discharge into a WOTUS (an addition of a pollutant from a point source), or simply a discharge that originated at a point source that ultimately ends up in a WOTUS?  Clearly, the wells at issue in the case are point sources – on that point all parties agreed.  But, are indirect discharges into a WOTUS via groundwater (which is otherwise exempt from the NPDES) subject to the permit requirement?

On April 23, 2020, in County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), issued a 6-3 opinion written by Justice Breyer holding that an NPDES permit is required not only when there is a direct discharge of a pollutant from a point source into a WOTUS, but also when there is the “functional equivalent” of a direct discharge.    This conclusion, the Court noted, was somewhat of a middle ground between the Ninth Circuit’s “fairly traceable” test and the position that a permit is required only if a point source ultimately delivered the pollutant to a WOTUS.  The Court determined that because the Congress coupled the words “from” and “to” in the statutory language that the Congress was referring to the destination of a WOTUS rather than the origin of a point source.  Thus, the Court determined that a permit is required when there is a direct discharge of a point source pollutant to a WOTUS or when, in effect, that is what occurred.    The Court believed that the EPA’s recent Interpretive Statement excluding all releases of pollutants to groundwater from the permit requirement was too broad and would create a loophole that would defeat the purpose of the CWA. The Court noted that many factors could be relevant in determining whether a particular discharge is the functional equivalent of a direct discharge into a WOTUS, but that time and distance would be the most important factors in most cases.  The Court also indicated that other factors could include the nature of the material through which a pollutant traveled and the extent of its dilution or chemical change while doing so, and noted that the lower courts would provide additional guidance as they decided subsequent cases. 

Justice Thomas dissented (joined by Justice Gorsuch), pointing out that the use of the word “addition” in the statute requires an augmentation or increase of a WOTUS by a pollutant and that, as a result, anything other than a direct discharge is statutorily excluded.  Indeed, in 2010, the Court declined to hear a case where the lower court held that an NPDES permit is not required unless there is an “addition” of a pollutant to a WOTUS.  See e.g., Friends of the Everglades, et al. v. South Florida Water Management District, et al., 570 F.3d 1210 (11th Cir. 2009) reh’g., den., 605 F.3d 962 (11th Cir. 2010), cert. den., 131 S. Ct. 643 (2010).  Justice Thomas also noted that the Court’s opinion provided practically zero guidance on the question of when a permit is necessary when a direct discharge is not involved, except for the Court’s provision of a list of non-exhaustive factors.  Justice Thomas stated, “[The] Court does not commit to whether those factors are the only relevant ones, whether [they] are always relevant, or which [ones] are the most important.”

Justice Alito also dissented, similarly disenchanted with the nebulous standard and “buck-passing” of the Court to lower courts on the issue.  Justice Alito wrote that, “If the Court is going to devise its own legal rules, instead of interpreting those enacted by Congress, it might at least adopt rules that can be applied with a modicum of consistency.” 

Ultimately, the Court’s “functional equivalency” test was narrower than the “fairly traceable” test that the Ninth Circuit utilized, and the Court vacated the Ninth Circuit’s opinion and remanded the case for a decision based on the Court’s standard. 

Implications for agriculture.  The Court’s opinion is significant for agriculture.  From a hydrological standpoint, surface water and groundwater systems are often connected.  Groundwater is what often maintains a presence of surface water in a stream.  From agriculture’s perspective, the case is important because of the ways that a pollutant can be discharged from an initial point and ultimately reach a WOTUS.  For example, the application of manure or commercial fertilizer to a farm field either via surface application or via injection could result in eventual runoff of excess via the surface or groundwater into a WOTUS.  Certainly, when manure collects and channelizes through a ditch or depression and enters a WOTUS a direct discharge requiring an NPDES permit is required.  See, e.g., Concerned Area Residents for the Environment v. Southview Farm, 34 F.3d 114 (2d Cir. 1994).  But, that’s a different situation from seepage of manure (or other “pollutants”) through groundwater.  No farmer can guarantee that 100 percent of a manure or fertilizer application is used by the crop to which it is applied and that there are no traces of the unused application remaining in the soil.  Likewise, while organic matter decays and returns to the soil, it contains nutrients that can be conveyed via stormwater into surface water.  The CWA recognizes this and contains an NPDES exemption for agricultural stormwater discharges. But, if the Supreme Court decides in favor of the environmental group, the exemption would be removed, subjecting farmers (and others) to onerous CWA penalties unless a discharge permit were obtained - at a cost estimated to exceed $250,000 (not to mention time delays).

What about farm field tile drainage systems?  Seemingly, such systems would make it easier for “pollutants” to enter a WOTUS.  Such drainage systems are prevalent in the Midwest and other places, including California’s Central Valley.  Groundwater, by some standards, is polluted or includes pollutants.  Farm field drainage tile is deliberately installed to deliver that polluted groundwater to a WOTUS.  That is a significant reason that groundwater discharges have always been exempt from the NPDES permit requirement along with agricultural stormwater discharges and agricultural irrigation return flows.  Should the law now discourage agricultural drainage activities? 

Conclusion

Pesticide drift and groundwater discharges of “pollutants” - two big issues for agricultural producers.  Next time I look at the three biggest developments of 2020.

January 11, 2021 in Civil Liabilities, Environmental Law, Water Law | Permalink | Comments (0)

Friday, January 8, 2021

Continuing Education Events and Summer Conferences

Overview

There are a couple of online continuing education events that I will be conducting soon, and the dates are set for two summer national conferences in 2021. 

Upcoming continuing education events – it’s the topic of today’s post.

Top Developments in Agricultural Law and Tax

On Monday, January 11, beginning at 11:00 a.m. (cst), I will be hosting a two-hour CLE/CPE webinar on the top developments in agricultural law and agricultural taxation of 2020.  I will not only discuss the developments, but project how the developments will impact producers and others in the agricultural sector and what steps need to be taken as a result of the developments in the law and tax realm.  This is an event that is not only for practitioners, but producers also.  It’s an opportunity to hear the developments and provide input and discussion.  A special lower rate is provided for those not claiming continuing education credit.

You may learn more about the January 11 event and register here:  https://washburnlaw.edu/employers/cle/taxseasonupdate.html

Tax Update Webinar – CAA of 2021

On January 21, I will be hosting a two-hour webinar on the Consolidated Appropriations Act, 2021.  This event will begin at 10:00 a.m. (cst) and run until noon.  The new law makes significant changes to the existing PPP and other SBA loan programs, CFAP, and contains many other provisions that apply to businesses and individuals.  Also, included in the new law are provisions that extend numerous provisions that were set to expire at the end of 2020.  The PPP discussion is of critical importance to many taxpayers at the present moment, especially the impact of PPP loans not being included in income and simultaneously being deductible if used to pay for qualified business expenses.  Associated income tax basis issues loom large and vary by entity type.

You may learn more about the January 21 event and register here:  https://agmanager.info/events/kansas-income-tax-institute

Summer National Conferences

Mark your calendars now for the law school’s two summer 2021 events that I conduct on farm income tax and farm estate and business planning.  Yes, there are two locations for 2021 – one east and one west.  Each event will be simulcast live over the web if you aren’t able to attend in-person.  The eastern conference is first and is set for June 7-8 at Shawnee Lodge and Conference Center near West Portsmouth, Ohio.  The location is about two hours east of Cincinnati, 90 minutes south of Columbus, Ohio, and just over two hours from Lexington, KY.  I am presently in the process of putting the agenda together.  A room block will be established for those interested in staying at the Lodge.  For more information about Shawnee Lodge and Conference Center, you made click here:  https://www.shawneeparklodge.com/

The second summer event will be held on August 2-3 in Missoula, Montana at the Hilton Garden Inn.  Missoula is beautifully situated on three rivers and in the midst of five mountain ranges.  It is also within three driving hours of Glacier National Park, and many other scenic and historic places.  The agenda will soon be available, and a room block will also be established at the hotel.  You may learn more about the location here:  https://www.hilton.com/en/hotels/msogigi-hilton-garden-inn-missoula/

Conclusion

Take advantage of the upcoming webinars and mark you calendars for the summer national events.  I look for to seeing you at one or more of the events.

January 8, 2021 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Tuesday, January 5, 2021

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three

Overview

Today’s post continues my trek through the “Almost Top 10” ag law and tax developments of 2020.  2020 was another big year for many illustrations of the law intersecting with agriculture.  In today’s final installation of the “Almost Top 10” I look at an Indiana case involving the state’s right-to-farm law; a Montana case involving the issue of whether dinosaur fossils are minerals and, thus, belong to the mineral estate owner; and force majeure clauses in contracts and their application to events that make contract performance impossible.

The final installment of the “Almost Top Ten” of 2020 – it’s the topic of today’s post.

Right-To-Farm Laws

Himsel v. Himsel, 122 N.E. 3d 395 (Ind. Ct. App. 2019); reh’g. den., No. 18A-PL-645, 2019 Ind App. LEXIS 314 (Ind. Ct. App. Jul. 12, 2019); rev. den., 143 N.E.3d 950 (Ind. 2020).

Every state has enacted a right-to-farm (RTF) law that is designed to protect existing agricultural operations by giving farmers and ranchers who meet the legal requirements a defense in nuisance suits. It may not be only traditional row crop or livestock operations that are protected.  But, the RTF laws vary widely from state-to-state.  One such law, the Indiana version (Ind. Code §32-30-6-9), was at issue in 2019 and 2020.

The Himsel Litigation

The Indiana Court of Appeals determined that the Indiana RTF law applied to protect the defendant because the change in the nature of the defendant’s hog operation from row crop farming to a large-scale confined animal feeding operation (CAFO) involving 8,000 hogs was “not a significant change” that would make the RTF law inapplicable.  In other words, 8,000 hogs in a confinement building raised by a contracting party that likely doesn’t make management decisions concerning the hogs, doesn’t report some the associated contract income as farm income on Schedule F, and cannot pledge the hogs as loan collateral due to a lack of an ownership interest in the hogs, was somehow not significantly different from a farmer raising 200 hogs and 200 head of cattle with associated crop ground who manages the diversified operation.  Just the sheer number of hogs alone stands out in stark contrast.  Indeed, the hog operation required a change in the existing zoning of the tract.

The plaintiffs in Himsel, members of the same family as the defendants, were found to have essentially come to the nuisance because one of them chose to retire from farming and remain on the land that he had lived on for nearly 80 years, and the other didn’t move from the rural home he built in 1971.  An 8,000-head hog confinement operation and the presence of 3.9 million gallons of untreated hog manure was deemed to be comparable to farming in this area in 1941.

The court also determined that a “taking” had not occurred because the plaintiff had not sold his home and moved away from the place where he grew up and lived all of his life, and the RTF law did not take the entire value of the plaintiffs’ property away.  The appellate court, however, did not address the implications of whether its opinion essentially granted the CAFO an easement to produce odors across the plaintiffs’ property.

The appellate court declined to rehear the case and the Indiana Supreme Court declined to review the appellate court’s decision by a single vote.  On July 17, 2020, a petition for certiorari was filed with the U.S. Supreme Court.  On October 5, 2020, the U.S. Supreme Court declined to hear the case. 

Following Indiana’s lead, several states have modified their state RTF laws to more closely align with the Indiana provision.

Dinosaur Fossils Are Not Minerals

Murray v. BEJ Minerals, LLC, 400 Mont. 135 (2020)

 A common granting clause in a mineral deed specifies that the grantor either conveys or reserves “the oil, gas and other minerals.”  That language can raise an issue concerning what “other minerals” means.  Does it include such things as gravel, clay granite, sandstone, limestone, coal, carbon dioxide, hot water and steam?  The courts have struggled with this issue and have reached differing conclusions.  Does the phrase mean anything that is in the soil that the surface estate owner doesn’t use for agricultural purposes?  Does is matter how the substance is extracted?  Does it matter if the material is located in the subsoil rather than the topsoil?  Is it material if the substance can be extracted without significant damage to the surface estate? 

The issue of whether dinosaur fossils are “minerals” for the purposes of a mineral reservation clause in a mineral deed was an issue in a recent Montana case.  In Murray, court dealt with the issue in a case with millions of dollars on the line.  Under the facts of the case, the plaintiffs (a married couple), leased farm and ranch land beginning in 1983.  Over a period of years, the owner of the land transferred portions of his interest in the property to his two sons and sold the balance to the plaintiffs.  From 1991 to 2005, the plaintiffs and the sons operated the property as a partnership.  In 2005, the sons severed the surface estate from the mineral estate and sold their remaining interests in the surface estate to the plaintiffs.  A mineral deed was to be executed at closing that apportioned one-third of the mineral rights to each son and one-third to the plaintiffs.  After the transactions were completed, the plaintiffs owned all of the surface estate of the 27,000-acre property and one-third of the mineral (subsurface) estate.  At the time, none of the parties suspected there were valuable dinosaur fossils on the property, and none of them gave any thought to whether dinosaur fossils were part of the mineral estate as defined in the mineral deed.  Likewise, none of the parties expressed any intent about who might own dinosaur fossils that might be found on the property. 

Specifically, the mineral deed stated that the parties would own, as tenants in common, “all right, title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [Ranch].”  The purchase agreement required the parties “to inform all of the other parties of any material event which may [affect] the mineral interests and [to] share all communications and contracts with all other Parties.” 

In 2006, the plaintiffs gave permission to a trio of fossil hunters to search (and later dig) for fossils on the property.  The hunters ultimately uncovered dinosaur fossils of great value including a nearly intact Tyrannosaurus rex skeleton and two separate dinosaurs that died locked in battle.  The fossils turned out to be extremely rare and quite valuable, with the “Dueling Dinosaurs” valued at between $7 million and $9 million.  In 2014, the plaintiffs sold the Tyrannosaurus rex skeleton to a Dutch museum for several million dollars.  A Triceratops foot was sold for $20,000 and a Triceratops skull was offered for sale for over $200,000.  The proceeds of sale were placed in an escrow account pending the outcome of a lawsuit that the sons filed.  The sons (the defendants in the present action) sued claiming that the fossils were “minerals” and that they were entitled to a portion of any sale proceeds.  The plaintiffs brought a declaratory judgment action in state court claiming that the fossils were theirs as owners of the surface estate.  The defendants removed the action to federal court and asserted a counterclaim on the basis that the fossils should be included in the mineral estate.  The trial court granted summary judgment for the plaintiffs on the basis that, under Montana law, fossils are not included in the ordinary and natural meaning of “mineral” and are thus not part of the mineral estate.

On appeal, the appellate court reversed.  The appellate court determined that the term “fossil” fit within the dictionary definition of “mineral.” Specifically, the appellate court noted that Black’s Law Dictionary defined “mineral” in terms of the “use” of a substance, but that defining “mineral” in that fashion did not exclude fossils.  The appellate court also noted that an earlier version of Black’s Law Dictionary defined “mineral” as including “all fossil bodies or matters dug out of mines or quarries, whence anything may be dug, such as beds of stone which may be quarried.”  Thus, the appellate court disagreed with the trial court that the deed did not encompass dinosaur fossils.  Turning to state court interpretations of the term “mineral”, the appellate court noted that the Montana Supreme Court had held certain substances other than oil and gas can be minerals if they are rare and exceptional.  Thus, the appellate court determined that to be a mineral under Montana law, the substance would have to meet the scientific definition of a “mineral” and be rare and exceptional.  The appellate court held that those standards had been met.  The plaintiffs sought a rehearing by the full Ninth Circuit and their request was granted.  The appellate court then determined that the issue was one of first impression under Montana law and certified the question of whether dinosaur fossils constitute “minerals” for the purpose of a mineral reservation under Montana law to the Montana Supreme Court.  

The Montana Supreme Court answered the certified question in the negative – dinosaur fossils are not “minerals” for the purpose of the mineral reservation at issue because they were not included in the expression, “oil, gas and hydrocarbons,” and could not be implied in the deed’s general grant of all other minerals.  “Fossils” and “minerals” were mutually exclusive terms as the parties used those terms in the mineral deed.  In making its determination, the Montana Supreme Court reasoned that whether a substance or material is a “mineral” is based on whether it is rare and valuable for its mineral properties, whether the conveying instrument expressed an intent to use the scientific definition of the term, and the relation of the substance or material to the land’s surface and the method and effect of its removal. The Court also noted that deeds are like contracts and should be interpreted in accordance with their plain and ordinary meaning to give effect to the parties’ mutual intent at the time of execution. 

The Court noted that the term “minerals” is defined in various areas of Montana statutory law (including tax provisions) and none include “fossils,” and that the only statutory provision mentioning fossils and minerals in the same statute referred to them separately.  The Court also noted that the U.S. Department of Interior (for purposes of federal law) had made an administrative decision in 1915 that dinosaur fossils are not “minerals.”  As such, the terms were mutually exclusive as used in the mineral deed between the parties, and the plaintiffs maintained ownership of any interests that the two sons had not specifically reserved in the mineral deed.  The deed simply did not contemplate including “fossils” under the mineral reservation clause.  Instead, the Court concluded that “minerals” under Montana law are a resource that is mined as a raw material for further processing, refinement and eventual economic exploitation.  Fossils are not mined, they are excavated, and they are not rare and valuable due to their mineral properties.  Therefore, unless specifically mentioned in the mineral deed, language identifying “minerals” would not “ordinarily and naturally” include fossils.

Based on the Montana Supreme Court’s answer to the certified question, the U.S. Court of Appeals for the Ninth Circuit affirmed the federal district court’s order granting summary judgment to the plaintiffs and declaring them the sole owners of the dinosaur fossils.  

Force Majeure Clauses in Contracts

Governmental reaction to the China-originated virus in 2020 created legal and economic issues for many persons and businesses.  One of those legal issues involves existing contracts.  The issuance of various Executive Orders by state governors as a result of the anticipated impact of the virus shut down significant economic activity in those states and triggered problems up and down the food supply chain.  That raised numerous questions.  What happens when a supply chain is disrupted?  What recourse exists for a farmer that entered into a contract to sell corn to an ethanol plant, and now the ethanol price has collapsed and the plant refuses to pay?  What if a hog buyer won’t buy hogs because the processing plant is shut-down?  What if a milk buyer backs out of a milk contract because the milk market has disintegrated?  Grain can be stored and milk can be dumped, but what do you do with a 300-lb. fat hog?

A common provision in some agricultural contracts (particularly hog production contracts) is known as a “force majeure” provision. Under such a provision, a contracting party is not liable for damages due to the delay or failure to perform under the contract because of an event that is beyond the party’s control.  Performance is excused until it becomes possible for the party to perform under the contract.

Force Majeure means “superior force” or “unavoidable accident.”  It applies when there are circumstances beyond a party’s control that excuses the party from performing, such as an extraordinary event like war, riot, crime, pandemic, etc. Most often, a “force majeure” event involves an “act of God” (i.e. flooding, earthquakes, or volcanoes) or the failure of third parties (such as suppliers and subcontractors) to perform their obligations to a contracting party. However, sometimes a contracting party will attempt to use the clause to extract themselves from a contract that has turned out to not be profitable for them.

A force majeure clause is not uncommon in contracts.  It concerns how the parties allocate risk and, in essence, frees the contracting parties from liability or obligation when an extraordinary event or circumstance beyond their control prevents at least one party from fulfilling their contractual obligations.  The event or circumstance must be one that the parties couldn’t have anticipated at the time the contract was entered into; the party seeking to remove themselves from the contract must not have caused the problem; and the event or circumstance makes it impossible or impractical to perform the contract.  

The wording of a force majeure clause is critical and should be negotiated by the contracting parties so that it applies equally to all parties to the contract. Often, it is helpful if the clause includes examples of acts that will excuse performance under the provision.

A contract may distinguish between “acts of God” and force majeure, and a contract may include an “act of God” clause rather than a force majeure clause.  Many contracts contain language specifying that if a particular event occurs, then no performance is required.  That type of language tends to deal with “acts of God.”  Again, it’s a matter of how the parties allocated risk. Perhaps the virus is such an event that is comparable to those that fall under the category of an “act of God.”

Conclusion

In the next post, I will start the journey through the “Top Ten” of 2020 in ag law and ag tax.

January 5, 2021 in Civil Liabilities, Contracts, Real Property | Permalink | Comments (0)

Friday, January 1, 2021

The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020

Overview

It’s the time of year again where I sift through the legal and tax developments impacting U.S. agriculture from the past year, and rank them in terms of their importance to farmers, ranchers, agribusinesses, rural landowners and the ag sector in general. 

As usual, 2020 contained many legal and tax developments of importance to the agricultural sector.  Of course, there were major tax law changes that occurred as a result of the federal government’s response to various state governors shutting down businesses in their states and locking down their economies with resulting economic harm.  The other issues continued their natural ebb and flow in reaction to the economics governing the sector and policy and regulatory implementations.

It’s also difficult to pair things down to ten significant developments.  There are other developments that are also significant, but perhaps less so on a national scale.  So, today’s post is the first installment in a series devoted to those developments that were left on the cutting table and didn’t quite make the “Top Ten” for 2020.

The “almost top ten of 2020” (in no particular order) – that’s the topic of today’s post.

Withheld Tax Not Deprioritized in Bankruptcy 

In In re DeVries, 621 B.R. 445 (8th Cir. B.A.P. 2020), rev’g., No. 19-0018, 2020 U.S. Bankr. LEXIS 1154 (Bankr. N.D. Iowa Apr. 28, 2020)

A major aspect of Chapter 12 bankruptcy is the ability to deprioritize governmental claims (e.g., taxes).  But, does the provision cover withheld taxes?  Is so, Chapter 12 is even more valuable to farm debtors. 

In this case, the debtors filed Chapter 12 and sold a significant amount of farmland and farming machinery in 2017, triggering almost $1 million of capital gain income and increasing their 2017 tax liability significantly. The tax liability was offset to a degree by income tax withholding from the wife’s off-farm job. Their amended Chapter 12 plan called for a refund to the estate of withheld federal and state income taxes. The taxing authorities objected, claiming that the withheld amounts had already been applied against the debtor’s tax debt as 11 U.S.C. §553(a) allowed. The debtors claimed that 2017 legislation barred tax debt arising from the sale of assets used in farming from being offset against previously collected tax. Instead, the debtors argued, the withheld taxes should be returned to the bankruptcy estate. If withheld taxes weren’t returned to the bankruptcy estate, the debtors argued, similarly situated debtors would be treated differently.

The bankruptcy court was faced with the issue of whether 11 U.S.C. §1232(a) entitled the bankruptcy estate to a refund of the withheld tax.  Largely based on legislative history, the trial court concluded that 11 U.S.C. §1232(a) overrode a creditor’s set-off rights under 11 U.S.C. §553(a) in the context of Chapter 12. The debtors’ bankruptcy estate was entitled to a refund of the withheld income taxes.

On appeal, the bankruptcy appellate panel for the Eighth Circuit reversed. The appellate panel determined that 11 U.S.C. §1232(a) is a priority-stripping provision and not a tax provision and only addresses the priority of a claim and does not establish any right to or amount of a refund. As such, nothing in the statue authorized a debtor’s Chapter 12 plan to require a taxing authority to disgorge, refund or turn-over pre-petition withholdings for the benefit of the bankruptcy estate. The statutory term “claim,” The court reasoned, cannot be read to include withheld tax as of the petition date. Accordingly, the statute was clear and legislative history purporting to support the debtor’s position was rejected. 

Bankruptcy and the Preferential Payment Rule – The Dean Foods Matter

A decade ago, the preferential payment rule arose in the context of the VeraSun bankruptcy.  In late 2020, the issue back in relation to bankruptcy filing of Dean Foods, the largest dairy subsidiary company in the United States. Dean Foods and its forty-three affiliates filed Chapter 11 bankruptcy on November 12, 2019 in the United States Bankruptcy Court for the Southern District of Texas, which is being jointly administered under case no. 19-36313.  In the fall of 2020, Dean Foods and its affiliates filed a joint Chapter 11 plan of liquidation.  Dairy farmers that sold milk to Dean Farms shortly before the bankruptcy filing then started receiving letters demanding repayment of the amount paid for those milks sales. 

The preferential payment rule does come with some exceptions.  The exceptions basically comport with usual business operations.  In other words, if the transaction between the debtor and the creditor occurred in the normal course of the parties doing business with each other, then the trustee’s “avoidance” claim will likely fail. 

Exchange for new value.  The bankruptcy trustee cannot avoid a transfer to the extent the transfer was intended by the debtor and the creditor (to or for whose benefit such transfer was made) to be a contemporaneous exchange for new value given to the debtor, and occurred in a substantially contemporaneous exchange.  11 U.S.C. §547(c)(1)(A-B).  A contemporaneous exchange for new value is not preferential because it encourages the creditor to deal with troubled debtors and because other creditors are not adversely affected if the debtor’s estate receives new value.  See, e.g., In re Jones Truck Lines, 130 F.3d 323 (8th Cir. 1997).  “New value” as used in Section 547(c) means “money or money’s worth in goods, services, or new credit.” 11 U.S.C. § 547(a)(2). An exchange for new value is presumed substantially contemporaneous if the transfer of estate property is made within seven days of the transfer of the new value.  See, e.g., In re Mason, 189 B.R. 932 (Bankr. N.D. Iowa 1995).

Ordinary course of business.  The bankruptcy trustee also cannot avoid a transfer  to the extent that the transfer was in payment of a debt that the debtor incurred in the ordinary course of the debtor’s business (or financial affairs) with the creditor, and the transfer was made in the ordinary course of business or financial affairs of the debtor and the creditor; or was made according to ordinary business terms.  11 U.S.C. §547(c)(2)(A)-(B).  If the transaction at is the first between the parties, “the transaction must be typical compared to both parties’ past dealings with similarly-situated parties.  In re Pickens, No. 06-01120, 2008 Bankr. LEXIS 6 (Bankr. N.D. Iowa Jan. 3, 2008). 

The vast majority of dairy farmers receiving the demand letters should be able to demonstrate that the milk sales were in the ordinary course of business.  But, just knowing the exceptions to the rule is vitally important.

Appellate Court Upholds $750,000 Compensatory Damage Award in Hog Nuisance Suit

McKiver v. Murphy-Brown, LLC, 980 F.3d 937 (4th Cir. 2020)

Here, the plaintiffs were pre-existing neighbors to the defendant’s large-scale confinement hog feeding facility conducted by a third-party farming operation via contract. The facility annually maintained nearly 15,000 of the defendant’s hogs that generated about 153,000 pounds of feces and urine every day. The waste was disposed of via lagoons and by spreading it over open “sprayfields” on the farm. The plaintiffs sued in state court in 2013 for nuisance violations, but later dismissed that action and refiled in federal court after learning of the defendant’s control over the hog feeding facility naming the defendant as the sole defendant.

The federal trial court coordinated 26 related cases against similar hog production operations brought by nearly 500 plaintiffs into a master case docket and proceeded with trials in 2017. In this case, the jury awarded $75,000 in compensatory damages to each of 10 plaintiffs and $5 million in punitive damages to each plaintiff. The punitive damage award was later reduced to $2.5 million per plaintiff after applying a state law cap on punitive damages.

On appeal, the appellate court determined that the trial court had properly allowed the plaintiffs’ expert testimony to establish the presence of fecal material on the plaintiffs’ homes and had properly limited the expert witness testimony of the defendant concerning odor monitoring she conducted at the hog facility. The appellate court also rejected the defendant’s claim that the third party farming operation should be included in the case as a necessary and indispensable party. The appellate court also affirmed the trial court’s holding concerning the availability of compensatory damages beyond the rental value of the property and the jury instruction on nuisance. The appellate court also concluded that the trial court properly submitted the question of punitive damages to the jury. The appellate court reversed the trial court’s admission of financial information of the defendant’s corporate grandfather and combining the punitive damages portion of the trial with the liability portion, but held that such errors did not require a new trial. However, the appellate court remanded the case for a consideration of the proper award of punitive damages without consideration of the grandparent’s company’s financial information (such as compensation amounts to corporate executives).

It’s also important to note that while North Carolina law was involved in this case, as a result of this litigation several states, including Nebraska and Oklahoma, have recently amended their state right-to-farm laws with the intent of strengthening the protections afforded farming operations. 

Shortly after the appellate court reached its decision, the defendant's parent company (China-based WH Group Ltd and its U.S.-based pork producer Smithfield Foods, Inc.) announced that it settled the nuisance suits brought by hundreds of plaintiffs.  Smithfield Foods, Inc. said that the settlement, "takes into account the divided decision of the court."  

Lifetime Ban on Owning Firearms For Filing Tax Returns With False Statement 

Folajtar v. The Attorney General of the United States, 980 F.3d 897(3rd Cir. 2020)

Any law that impairs a fundamental constitutional right (any of the first ten amendments to the Constitution) is subject to strict scrutiny – or at least it’s supposed to be.  The right to bear arms, as the Second Amendment, is a fundamental constitutional right.  Thus, any law restricting that right is to be strictly scrutinized.  But, does a convicted felon always permanently lose the right to own a firearm.  What if the felony is a non-violent one?  These questions were at issue in this case.

The plaintiff pleaded guilty in 2011 to willfully making a materially false statement on her federal tax returns. She was sentenced to three-years’ probation, including three months of home confinement, a $10,000 fine, and a $100 assessment. She also paid back taxes exceeding $250,000, penalties and interest. Her conviction triggered 18 U.S.C. §922(g)(1), which prohibits those convicted of a crime punishable by more than one year in prison from possessing firearms. The plaintiff’s crime was punishable by up to three years’ imprisonment and a fine of up to $100,000.

As originally enacted in 1938, 18 U.S.C. §922(g)(1) denied gun ownership to those convicted of violent crimes (e.g., murder, kidnapping, burglary, etc.). However, the statute was expanded in the 1968. Later, the U.S. Supreme Court recognized gun ownership as an individual constitutional right in 2008. District of Columbia v. Heller, 554 U.S. 570 (2008). In a split decision, the majority reasoned that any felony is a “serious” crime and, as such, results in a blanket exclusion from Second Amendment protections for life. The majority disregarded the fact that the offense was non-violent, was the plaintiff’s first-ever felony offense, and was an offense for which she received no prison sentence. The majority claimed it had to rule this way because of deference to Congressional will that, the majority claimed, created a blanket, categorical rule.

The dissent rejected the majority’s categorical rule, pointing out that the plaintiff’s offense was nonviolent, and no evidence of the plaintiff’s dangerousness was presented. The dissent also noted that the majority’s “extreme deference” gave legislatures the power to manipulate the Second Amendment by simply choosing a label. Instead, the dissent reasoned, when the fundamental right to bear arms is involved, narrow tailoring to public safety is required. Because the plaintiff posed no danger to anyone, the dissent’s position was that her Second Amendment rights should not be curtailed. Likewise, because gun ownership is an individual constitutional right, the dissent pointed out that the Congress bears a high burden before extinguishing it. Post-2008, making a categorical declaration is insufficient to satisfy that burden, according to the dissent.

Expect this case to be headed to the U.S. Supreme Court. 

Conclusion

That’s the first part of the trip through the “almost Top 10” of 2020.  I will continue the trek through the list next time.

January 1, 2021 in Bankruptcy, Civil Liabilities, Criminal Liabilities | Permalink | Comments (0)

Thursday, November 26, 2020

Of Nuisance, Overtime and Firearms – Potpourri of Ag Law Developments

Overview

As readers of this blog know, periodically I write an article focusing on recent court developments.  This is one of those articles.  Recently, federal and state courts have issued some rather significant opinions involving livestock odors, overtime wages for dairy workers and the Second Amendment right to bear arms. 

A potpourri of ag law and related issues – it’s the topic of today’s post.

Appellate Court Upholds $750,000 Compensatory Damage Award in Hog Nuisance Suit

McKiver v. Murphy-Brown, LLC, No. 19-1019, 2020 U.S. App. LEXIS 36416 (4th Cir. Nov. 19, 2020)

A nuisance is an invasion of an individual's interest in the use and enjoyment of land rather than an interference with the exclusive possession or ownership of the land. The concept has become increasingly important in recent years due to land use conflicts posed by large-scale, industrialized confinement livestock operations.  Indeed, the industrialization of agriculture has given rise to nuisance suits brought by farmers against large-scale agricultural operations.

Nuisance law prohibits land uses that unreasonably and substantially interfere with another individual's quiet use and enjoyment of property.  The doctrine is based on two interrelated concepts: (1) landowners have the right to use and enjoy property free of unreasonable interferences by others; and (2) landowners must use property so as not to injure adjacent owners.

Nuisance law is rooted in the common law and has been developed over several centuries as courts settled land use conflicts.  Nuisance law is always changing, and the legal rules vary between jurisdictions.  Nuisance law is important to agriculture because of the noxious odors produced by many farm operations, especially those involving livestock production.

The two primary issues at stake in any agricultural nuisance dispute are whether the use alleged to be a nuisance is reasonable for the area and whether the use alleged to be a nuisance substantially interferes with the use and enjoyment of neighboring land.  Another issue may be whether the complained-of activity is protected by a state right-to-farm statute.

All of these concepts were involved in this case.  Here, the plaintiffs were pre-existing neighbors to the defendant’s large-scale confinement hog feeding facility conducted by a third-party farming operation via contract. The facility annually maintained nearly 15,000 of the defendant’s hogs that generated about 153,000 pounds of feces and urine every day. The waste was disposed of via lagoons and by spreading it over open “sprayfields” on the farm. The plaintiffs sued in state court in 2013 for nuisance violations, but later dismissed that action and refiled in federal court after learning of the defendant’s control over the hog feeding facility naming the defendant as the sole defendant.

The federal trial court coordinated 26 related cases against similar hog production operations brought by nearly 500 plaintiffs into a master case docket and proceeded with trials in 2017. In this case, the jury awarded $75,000 in compensatory damages to each of 10 plaintiffs and $5 million in punitive damages to each plaintiff. The punitive damage award was later reduced to $2.5 million per plaintiff after applying a state law cap on punitive damages.

On appeal, the appellate court determined that the trial court had properly allowed the plaintiffs’ expert testimony to establish the presence of fecal material on the plaintiffs’ homes and had properly limited the expert witness testimony of the defendant concerning odor monitoring she conducted at the hog facility. The appellate court also rejected the defendant’s claim that the third party farming operation should be included in the case as a necessary and indispensable party. The appellate court also affirmed the trial court’s holding concerning the availability of compensatory damages beyond the rental value of the property and the jury instruction on nuisance. The appellate court also concluded that the trial court properly submitted the question of punitive damages to the jury. The appellate court reversed the trial court’s admission of financial information of the defendant’s corporate grandfather and combining the punitive damages portion of the trial with the liability portion, but held that such errors did not require a new trial. However, the appellate court remanded the case for a consideration of the proper award of punitive damages without consideration of the grandparent’s company’s financial information (such as compensation amounts to corporate executives).

It’s also important to note that while North Carolina law was involved in this case, as a result of this litigation several states, including Nebraska and Oklahoma, have recently amended their state right-to-farm laws with the intent of strengthening the protections afforded farming operations. 

Overtime Exemption for Dairy Workers Unconstitutional. 

Martinez-Cuevas v. Deruyter Brothers Dairy, Inc., No. 96267-7, 2020 Wash. LEXIS 660 (Wash. Sup. Ct. Nov. 5, 2020)

Federal law provides an exemption from paying overtime wages for persons employed in agriculture.  Many states have a comparable exemption.  In this case, the exemption contained in Washington law was at issue.

The plaintiffs brought a class action on behalf of 300 of the defendant’s workers challenging the exemption of dairy workers from overtime pay under the Washington Minimum Wage Act. The plaintiffs also claimed that the defendant violated other wage and hour rules. The plaintiffs claimed that the overtime exemption violated the equal protection clause in the state constitution and was racially biased against Hispanic workers.

The state Supreme Court, in a 5-4 decision, the majority held that the exemption undermined a “fundamental right” to health and safety protections for workers in dangerous jobs that the state Constitution guarantees via the privileges and immunities clause. The majority focused on Article II, Sec. 35 of the Washington Constitution requiring the legislature to pass law necessary “for the protection of persons working in…employments dangerous to life or deleterious to health,” and Article I which the majority construed as protecting “fundamental rights of state citizenship.” The majority believed that there was a connection between the requirement that the legislature pass laws to protect workers in dangerous occupations and the minimum wage law, and that the legislature didn’t have a reasonable basis to exclude dairy workers from the overtime pay requirements of the law.

The dissenting justices pointed out that overtime pay is not a fundamental constitutional right and, as such, does not implicated the privileges and immunities clause. Instead, the state legislature has a “wide berth” to decide that laws that are required to carry out that purpose. The dissent pointed out that the legislature could simply repeal the overtime law and no person would have a personal or private common law right to insist on overtime pay absent an employment contract with a term promising overtime pay.

The ruling means that dairy farmers will be required to pay $20.54 per overtime hour beginning in 2021.  That is the case, of course, for the workers that still have a job, have overtime hours and aren’t displaced by automation.

Lifetime Ban on Owning Firearms For Filing Tax Returns With False Statement 

Folajtar v. The Attorney General of the United States, No. 19-1687, 2020 U.S. App. LEXIS 37006 (3rd Cir. Nov. 24, 2020)

Any law that impairs a fundamental constitutional right (any of the first ten amendments to the Constitution) is subject to strict scrutiny – or at least it’s supposed to be.  The right to bear arms, as the Second Amendment, is a fundamental constitutional right.  Thus, any law restricting that right is to be strictly scrutinized.  But, does a convicted felon always permanently lose the right to own a firearm.  What if the felony is a non-violent one?  These questions were at issue in this case.

The plaintiff pleaded guilty in 2011 to willfully making a materially false statement on her federal tax returns. She was sentenced to three-years’ probation, including three months of home confinement, a $10,000 fine, and a $100 assessment. She also paid back taxes exceeding $250,000, penalties and interest. Her conviction triggered 18 U.S.C. §922(g)(1), which prohibits those convicted of a crime punishable by more than one year in prison from possessing firearms. The plaintiff’s crime was punishable by up to three years’ imprisonment and a fine of up to $100,000.

As originally enacted in 1938, 18 U.S.C. §922(g)(1) denied gun ownership to those convicted of violent crimes (e.g., murder, kidnapping, burglary, etc.). However, the statute was expanded in the 1968. Later, the U.S. Supreme Court recognized gun ownership as an individual constitutional right in 2008. District of Columbia v. Heller, 554 U.S. 570 (2008). In a split decision, the majority reasoned that any felony is a “serious” crime and, as such, results in a blanket exclusion from Second Amendment protections for life. The majority disregarded the fact that the offense was non-violent, was the plaintiff’s first-ever felony offense, and was an offense for which she received no prison sentence. The majority claimed it had to rule this way because of deference to Congressional will that, the majority claimed, created a blanket, categorical rule.

The dissent rejected the majority’s categorical rule, pointing out that the plaintiff’s offense was nonviolent, and no evidence of the plaintiff’s dangerousness was presented. The dissent also noted that the majority’s “extreme deference” gave legislatures the power to manipulate the Second Amendment by simply choosing a label. Instead, the dissent reasoned, when the fundamental right to bear arms is involved, narrow tailoring to public safety is required. Because the plaintiff posed no danger to anyone, the dissent’s position was that her Second Amendment rights should not be curtailed. Likewise, because gun ownership is an individual constitutional right, the dissent pointed out that the Congress bears a high burden before extinguishing it. Post-2008, making a categorical declaration is insufficient to satisfy that burden, according to the dissent.

Expect this case to be headed to the U.S. Supreme Court.  Justices Barrett and Kavanaugh have already indicated that they agree with the dissent based on their comments in earlier cases.

Conclusion

There are always significant developments in the law impacting farmers and ranchers and rural landowners.  The three court opinions discussed in this article are each significant in their own respect.  Stay informed.  And, on this Thanksgiving Day 2020, if you don’t have everything you want, be thankful for the things you don’t have that you don’t want.

November 26, 2020 in Civil Liabilities, Criminal Liabilities, Income Tax, Regulatory Law | Permalink | Comments (0)

Monday, October 26, 2020

Roadkill – It’s What’s For Dinner (Reprise)

Overview

I don’t normally bring back a prior blog article for readers, but the articles are stacking up (over 500) and newer readers are frequently joining.  So, some may not know that a prior post exists on a topic they are searching for information about.  Thus, I bring back a topic I wrote about over two years ago for re-posting today (with some updates).

It’s the time of year again when I field questions about whether it is permissible to pick up roadkill.  Often, the question is in relation to big game such as deer or bear or moose.  But, other times the question may involve various types of furbearing animals such as coyotes, raccoons or badgers.  I don’t get too many roadkill questions involving small game.  That’s probably because when small game is killed on the road, it is either not wanted or the party hitting it simply assumes that there is no question that it can be possessed.

There are many collisions involving wildlife and automobiles every year.  One estimate by a major insurance company shows that one out of every 169 motorists in the U.S. hit a deer during 2018.  Between mid-2018 and mid-2019, insurance industry data show that there were almost two million animal insurance claims filed in the United States.  To put it in perspective, that’s almost ten times the number of people that have died with the virus listed as one of their co-morbidities. Perhaps state governors professing deep concern about the number of virus infections should be severely restricting speed limits or mandating no non-essential night-time travel. 

If a wild animal is hit by a vehicle, the meat from the animal is the same as that from animal meat obtained by hunting – assuming that the animal is not diseased.  So, in that instance, harvesting roadkill is a way to get free food – either for personal consumption or to donate to charity.  

What are the rules and regulations governing roadkill?  That’s the topic of today’s post.

State Rules

Presently, the top four states experiencing the highest rate of animal (wildlife)/car with collisions are West Virginia, Montana, Pennsylvania and South Dakota.  Especially in those states, it’s helpful to know the rules that apply when an animal or fowl is struck.

Many states have rules on the books concerning roadkill.  Often, the approach is for the state statutes and the regulatory body (often the state Department of Game and Fish (or something comparable)) to distinguish between "big game," "furbearing animals" and "small game."  This appears to be the approach of Kansas and a few other states.  Often a salvage tag (e.g., “permit”) is needed to pick up big game and turkey roadkill.  This is the approach utilized in Iowa and some other states.  If a salvage tag is possessed, a hunting license is not required.  For furbearing animals such as opossums and coyotes that are roadkill, the typical state approach is that these animals can only be possessed during the furbearing season with a valid fur harvester license.  As for small game, the typical state approach is that these roadkill animals can be possessed with a valid hunting license in-season.  But variations exist from state-to-state. 

An approach of several states is to allow the collection of roadkill with a valid permit.  That appears to be the approach in Colorado, Georgia, Idaho, Illinois, Indiana, Maryland, New Hampshire, North Dakota, New York, Ohio, Pennsylvania and Tennessee.  Other states require the party hitting wildlife and collecting the roadkill to report the incident and collection within 24 hours.  Other states may limit roadkill harvesting to licensed fur dealers.  In these states (and some others), the general public doesn’t have a right to collect roadkill.  In Texas, roadkill-eating is not allowed (although a legislative attempt to remove the ban was attempted in 2014).  South Dakota has legislatively attempted to make roadkill public property.  Wyoming requires a tag be received from the game warden for possessing big game roadkill.  Oregon allows drivers to get permits to recover, possess, use or transport roadkill. 

Other states (such as Alabama) may limit roadkill harvesting to non-protected animals and game animals, and then only during open season.  The Alaska approach is to only allow roadkill to be distributed via volunteer organizations.  A special rule for black bear roadkill exists in Georgia.  Illinois, in certain situations requires licenses and a habitat stamp.  Massachusetts requires that roadkill be submitted for state inspection, and New Jersey limits salvaging roadkill to deer for persons with a proper permit. 

In all states, federally-protected species cannot be possessed.  If a question exists about the protected status of roadkill, the safest approach is to leave it alone.  Criminal penalties can apply for mere possession of federally protected animals and birds.  Similarly, if a vehicle does significant enough damage to wildlife that the animal’s carcass cannot be properly identified to determine if the season is open for that particular animal (in those states that tie roadkill possession to doing so in-season) the recommended conduct is to not possess the roadkill.   

In the states that have considered roadkill legislation in recent years, proponents often claim that allowing licensed hunters to take (subject to legal limits) a fur-bearing animal from the roadside would be a cost-saving measure for the state.  The logic is that fewer state employees would be required to clean-up dead animal carcasses.  Opponents of roadkill bills tend to focus their arguments on safety-related concerns – that having persons stopped alongside the roadway to collect dead animals would constitute a safety hazard for other drivers.  That’s an interesting argument inasmuch as those making this claim would also appear to be asserting that a dead animal on a roadway at night is not a safety hazard.  Others simply appear to argue that collecting roadkill for human consumption is disgusting. 

Conclusion

There is significant variation among state approaches with respect to possession of roadkill.  That means that for persons interested in picking up roadkill, researching applicable state law and governing regulations in advance would be a good idea.  For roadkill that is gleaned from a roadway that is used for human consumption, care should be taken in preparation and cooking.  The present younger generation typically doesn’t have much experience dining on raccoon (they tend to be greasy), opossum shanks and gravy, as well as squirrel.  But, prepared properly, some people view them as a delicacy. 

To date, the USDA hasn’t issued guidelines on the proper preparation of roadkill or where roadkill fits in its food pyramid (that was revised in recent years).  That’s sounds like a good project for some USDA Undersecretary for Food Safety to occupy their time with.  Thanksgiving is just around the corner.

Be careful out there.

October 26, 2020 in Civil Liabilities, Regulatory Law | Permalink | Comments (1)

Monday, October 12, 2020

Principles of Agricultural Law

PrinciplesForBlog2020Fall-cropped

Overview

The fields of agricultural law and agricultural taxation are dynamic.  Law and tax impacts the daily life of a farmer, rancher, agribusiness and rural landowner practically on a daily basis.  Whether that is good or bad is not really the question.  The point is that it’s the reality.  Lack of familiarity with the basic fundamental and applicable rules and principles can turn out to be very costly.  As a result of these numerous intersections, and the fact that the rules applicable to those engaged in farming are often different from non-farmers, I started out just over 25 years ago to develop a textbook that addressed the major issues that a farmer or rancher and their legal and tax counsel should be aware of.  After three years, the book was complete – Principles of Agricultural Law - and it’s been updated twice annually since that time. 

The 47th edition is now complete, and it’s the topic of today’s post – Principles of Agricultural Law.

Subject Areas

The text is designed to be useful to farmers and ranchers; agribusiness professionals; ag lenders; educational professionals; lawyers, CPAs and other tax preparers; undergraduate and law students; and those that simply want to learn more about legal and tax issues.  The text covers a wide range of topics.  Here’s just a sample of what is covered:

Ag contracts.  Farmers and ranchers engage in many contractual situations, including ag leases, to purchase contracts.  The potential perils of verbal contracts are numerous and can lead to unnecessary litigation. What if a commodity is sold under forward contract and a weather event destroys the crop before it is harvested?  When does the law require a contract to be in writing?  For purchases of goods, do any warranties apply?  What remedies are available upon breach? If a lawsuit needs to be brought to enforce a contract, how soon must it be filed? Is a liability release form necessary?  Is it valid?  What happens when a contract breach occurs?  What is the remedy? 

Ag financing.  Farmers and ranchers are often quite dependent on borrowing money for keeping their operations running.  What are the rules surrounding ag finance?  This is a big issue for lenders also?  What about dealing with an ag cooperative and the issue of liens?  What are the priority rules with respect to the various types of liens that a farmer might have to deal with? 

Ag bankruptcy.  A unique set of rules can apply to farmers that file bankruptcy.  Chapter 12 bankruptcy allows farmers to de-prioritize taxes.  That can be a huge benefit.  Knowing how best to utilize those rules is very beneficial.  That’s especially true with the unsettled issue of whether Payment Protection Program (PPP) funds can be utilized by a farmer in bankruptcy.  The courts are split on that issue.

Income tax.  Tax and tax planning permeate daily life.  Deferral contracts; depreciation; installment sales; like-kind exchanges; credits; losses; income averaging; reporting government payments; etc.  The list could go on and on.  Having a basic understanding of the rules and the opportunities available can add a lot to the bottom line of the farming or ranching operation as well as help minimize the bleeding when times are tough.

Real property.  Of course, land is typically the biggest asset in terms of value for a farming and ranching operation.  But, land ownership brings with it many potential legal issues.  Where is the property line?  How is a dispute over a boundary resolved?  Who is responsible for building and maintaining a fence?  What if there is an easement over part of the farm?  Does an abandoned rail line create an issue?  What if land is bought or sold under an installment contract?  How do the like-kind exchange rules work when farmland is traded? 

Estate planning.  While the federal estate tax is not a concern for most people and the vast majority of farming and ranching operations, when it does apply it’s a major issue that requires planning.  What are the rules governing property passage at death?  Should property be gifted during life?  What happens to property passage at death if there is no will?  How can family conflicts be minimized post-death?  Does the manner in which property is owned matter?  What are the applicable tax rules?  These are all important questions.

Business planning.  One of the biggest issues for many farm and ranch families is how to properly structure the business so that it can be passed on to subsequent generations and remain viable economically.  What’s the best entity choice?  What are the options?  Of course, tax planning is a critical part of the business transition process.

Cooperatives.  Many ag producers are patrons of cooperatives.  That relationship creates unique legal and tax issues.  Of course, the tax law enacted near the end of 2017 modified an existing deduction for patrons of ag cooperatives.  Those rules are very complex.  What are the responsibilities of cooperative board members? 

Civil liabilities.  The legal issues are enormous in this category.  Nuisance law; liability to trespassers and others on the property; rules governing conduct in a multitude of situations; liability for the spread of noxious weeds; liability for an employee’s on-the-job injuries; livestock trespass; and on and on the issues go.  Agritourism is a very big thing for some farmers, but does it increase liability potential?  Nuisance issues are also important in agriculture.  It’s useful to know how the courts handle these various situations.

Criminal liabilities.  This topic is not one that is often thought of, but the implications can be monstrous.  Often, for a farmer or rancher or rural landowner, the possibility of criminal allegations can arise upon (sometimes) inadvertent violation of environmental laws.  Even protecting livestock from predators can give rise to unexpected criminal liability.  Mail fraud can also arise with respect to the participation in federal farm programs.  The areas of life potentially impacted with criminal penalties are worth knowing, as well as knowing how to avoid tripping into them.

Water law.  Of course, water is essential to agricultural production.  Water issues vary across the country, but they tend to focus around being able to have rights to water in the time of shortage and moving the diversion point of water.  Also, water quality issues are important.  In essence, knowing whether a tract of land has a water right associated with it, how to acquire a water right, and the relative strength of that water rights are critical to understand.

Environmental law.  It seems that agricultural and the environment are constantly in the news.  The Clean Water Act, Endangered Species Act and other federal (and state) laws and regulations can have a big impact on a farming or ranching operation.  Just think of the issues with the USDA’s Swampbuster rules that have arisen over the past 30-plus years.  What constitutes a regulatory taking of property that requires the payment of compensation under the Constitution?  It’s good to know where the lines are drawn and how to stay out of (expensive) trouble.

Regulatory law.  Agriculture is a very heavily regulated industry.  Animals and plants, commodities and food products are all subject to a great deal of regulation at both the federal and state level.  Antitrust laws are also important to agriculture because of the highly concentrated markets that farmers buy inputs from and sell commodities into.  Where are the lines drawn?  How can an ag operation best position itself to negotiate the myriad of rules?   

Conclusion

It is always encouraging to me to see students, farmers and ranchers, agribusiness and tax professionals get interested in the subject matter and see the relevance of material to their personal and business lives. Agricultural law and taxation is reality.  It’s not merely academic.  The Principles text is one that can be very helpful to not only those engaged in agriculture, but also for those advising agricultural producers.  It’s also a great reference tool for Extension educators. It’s also a great investment for any farmer – and it’s updated twice annually to keep the reader on top of current developments that impact agriculture.

If you are interested in obtaining a copy, perhaps even as a Christmas gift, you can visit the link here:  http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/principlesofagriculturallaw/index.html.  Instructors that adopt the text for a course are entitled to a free copy.  The book is available in print and CD versions.  Also, for instructors, a complete set of Powerpoint slides is available via separate purchase.  Sample exams and work problems are also available.  You may also contact me directly to obtain a copy.

If you are interested in obtaining a copy, you can visit the link here:  http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/principlesofagriculturallaw/index.html.  You may also contact me directly. 

October 12, 2020 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Thursday, September 10, 2020

Ag Law and Tax in the Courtroom

Overview

In today’s post, I take a look at some recent court cases involving agricultural producers and rural landowners.

The next installment of “ag in the courtroom” – it’s the topic of today’s post.

Solar “Farm” Not a Nuisance

Yates v. United States Environmental Protection Agency, No. 6:17-cv-1819-AA, 2019 U.S. Dist. LEXIS 160799 (D. Or. Sept. 20, 2019); Yates v. United States Environmental Protection Agency, No. 6:17-cv-01819-AA, 2020 U.S. Dist. LEXIS 65949 (D. Or. Apr. 14, 2020)

A nuisance is an invasion of an individual's interest in the use and enjoyment of land rather than an interference with the exclusive possession or ownership of the land.  Nuisance law prohibits land uses that unreasonably and substantially interfere with another individual's quiet use and enjoyment of property.  The doctrine is based on two interrelated concepts: (1) landowners have the right to use and enjoy property free of unreasonable interferences by others; and (2) landowners must use property so as not to injure adjacent owners.

The two primary issues at stake in any agricultural nuisance dispute are whether the use alleged to be a nuisance is reasonable for the area and whether the use alleged to be a nuisance substantially interferes with the use and enjoyment of neighboring land.  These concepts played out in a case last year involving the construction of a “solar farm” in Oregon. 

In the Oregon case, the plaintiff owned land zoned as “Exclusive Farm Use.” The plaintiff alleged that construction of a 12-acre collection of solar panels (solar array) built on an adjacent property constituted a nuisance by interfering with her use and enjoyment of her property.  The plaintiff also claimed that the construction during the summer of 2017 caused flooding on her property. The plaintiff’s suit was against the adjacent landowner; a company that held a conditional use permit for the solar array; and the construction company. The plaintiff alleged that all three defendants were responsible for the nuisance and trespass claims. The trial court granted summary judgment to all three defendants, finding that the plaintiff failed to offer any material evidence to establish either her nuisance or trespass claim. The court held that the defendant landowner did not engage in any activity constituting a nuisance or trespass. Landowners are generally not responsible for nuisances occurring after the execution of the lease, unless the landowner knew the activity being carried on would involve an unreasonable risk causing the nuisance or had control over the activities on the land. The trial court also noted that merely because the solar company obtained the permit that ultimately allowed construction to happen did not show they had any control over the construction workers’ actions. As for the actions of the construction company, the trial court held the plaintiff failed to allege evidence of an unreasonable interference with her private use or enjoyment of her land. Although the plaintiff complained of increased traffic and leftover debris, she was unable to establish that she had to adjust any daily habits or the manner in which she enjoyed her property as a result of the construction company’s conduct. The plaintiff alleged that a ditch built between the array and her property caused flooding on her property. However, the trial court noted the plaintiff could not show that the defendant construction company built the ditch or that the ditch directly diverted water onto her property. 

In a later action solely against the county, the trial court granted the county’s motion for summary judgment on the plaintiff’s claims of negligence per se and procedural due process.  The trial court determined that the county did not violate state law (a requirement for a nuisance per se) because state law didn’t require the county to provide actual notice to the plaintiff of its permitting decision, but merely an opportunity to appeal.  The appellate court also determined that the setback requirement of state law was complied with and that the waster runoff or flooding allegedly caused by the ditch did not constitute a trespass by water. 

Recreational Use Statute Provides Landowner Protection

Nolan v. Fishman, 218 A.3d 1034 (Vt. 2019)

Many states have what is known as a recreational use statute.  Under such a statute, an owner or occupier owes no duty of care to keep the premises safe for entry or use by others for recreational purposes, or to give any warning of dangerous conditions, uses, structures, or activities to persons entering the premises for such recreational purposes. Similarly, if an owner, directly or indirectly, invites or permits any person without charge to use the property for recreational purposes, the owner does not extend any assurance the premises are safe for any purpose, confer the status of licensee or invitee on the person using the property, or assume responsibility or incur liability for any injury to persons or property caused by any act or omission of persons who are on the property.  But, if injury to recreational users is caused by the willful or malicious failure to guard or warn against a dangerous condition, use, structure, or activity, the protection of the statute is lost. Likewise, if the owner imposes a charge on the user of the property, the liability protection is lost under many state provisions.  In a 2019 case, the Vermont recreational use statute was at issue.

The facts of the Vermont case revealed that the plaintiff is the administrator of the estate of a three-year-old who drowned in a brook on the defendants’ property. The defendants are the parents of the owners of the daycare facility where the decedent had been attending when the accident occurred. The defendants’ land was connected to the daycare property, and the daycare would regularly use a small area of the defendants’ land to access a brook beach and used the defendants’ land for various outdoor activities. The defendants did not profit from the daycare and were not involved in any of the daycare’s business activities. The defendant’s land was not posted, and they had always held it open to the public for recreational use.

The plaintiff sued the defendants alleging their negligence was the direct and proximate cause of the incident. The state recreational use law encourages owners to make their land and water available to the public for no consideration for recreational uses without increasing liability potential for the owner. Under the statute, a recreational user is treated as an adult trespasser, meaning that the landowner must only avoid willfully or wantonly injuring a recreational entrant. 

The trial court found that the activities engaged in by the daycare on defendants’ land were both recreational and educational, therefore qualifying as a recreational use. However, the trial court dismissed the defendant’s motion for summary judgment because questions remained as to whether the defendants’ property was open and undeveloped land that qualified for protection under the statute. On appeal, the appellate court reversed the trial court and held that the statute applied. The appellate court held that the daycare’s use of the defendants’ property was without consideration, qualified as a recreational use, and  that the land was open and undeveloped - the general public was freely permitted to use defendants’ land, along with the daycare. Although the defendants had placed a sandbox and brook bridge on their land, the appellate court noted that the legislature had expressly stated that the presence of such objects on land would not, by itself, preclude land from being open and undeveloped. Therefore, the defendants were covered under the recreational use statute.

Tract Properly Zoned as “Residential.” 

Miller v. Scott County Board of Review, No. 19-1038, 2020 Iowa App. LEXIS 436 (Iowa Ct. App. Apr. 29, 2020)

The rural-urban fringe provides its own unique set of legal issues.  One of those, is an attempt by landowners who aren’t really farmers to qualify their small tracts as “agriculture” for purposes of achieving a lower property tax assessment.  The issue came up recently in an Iowa case.

The plaintiff, a computer services consultant, bought a 10.2-acre tract in 2008. It consisted of approximately two acres of a home and improvements; five acres of deep mud/bog; and 3.6 acres of cropland. The cropland is in a 100-year floodplain. From 2009-2011 the plaintiff grew hay on the cropland, and in 2012 and 2013 he grew corn on it. No crops were grown in 2014 due to weather, and in 2015 he grew corn and pumpkins. He challenged his 2015 property tax assessment and the 2017 assessment as inequitable and on the basis that it misclassified the property as “residential” rather than “agricultural.”

The county zoning board denied his petition and he appealed to the local trial court. At a trial court hearing the county’s assessor noted that the property had multiple uses, but that the plaintiff’s farming operation was “a secondary use.” The county did adjust the valuation downward by 16 percent and granted a “slough bill” exemption for the 2017 tax year. However, the trial court upheld the county’s designation of the property as “residential” on the basis that the plaintiff was a hobby farmer. As such, the trial court determined that the plaintiff’s property taxes should be based on a valuation amount $100,000 greater than the plaintiff desired.

On appeal, the appellate court affirmed, noting that the burden was on the plaintiff to establish the predominant agricultural use of the property. The court agreed with the trial court’s findings that the ag use of the property had never been profitable, and that if it were sold it would be marketed as a residential property rather than a farm property. Indeed, the plaintiff purchased the property as a residential property, and it is surrounded by residential housing. In addition, the largest valued asset on the property is the residence. The plaintiff also testified that he benefited from tax savings as a result of the cropping activities on his tract. He also testified to spending $90,000 for ag equipment and $55,000 to construct a barn but had farm income never exceeding $1,200 annually. That’s a classic “hobby farm” activity.

Conclusion

The legal issues involving rural landowners keep rolling in.  It’s always best to have a well-trained ag lawyer at the ready when needed. 

September 10, 2020 in Civil Liabilities, Real Property | Permalink | Comments (0)

Saturday, September 5, 2020

Issues With Noxious (and Other) Weeds and Seeds

Observation

A constant struggle for farmers is the battle with weeds.  Some weeds must be controlled.  Those are the ones that are listed by the state as noxious weeds.  Failure to control those can bring monetary penalties from local government officials.  Then there are non-noxious weeds that aren’t required to be controlled.  Those are a big issue when a neighbor fails to control them and their seeds drift in the wind and create a weed problem on an adjacent owner’s tract.  That can also present legal issue.  In addition, both the state and federal government have rules governing seeds designed to prevent the spread of noxious weeds.

Legal issues associated with weeds – it’s the topic of today’s post.

Federal Seed Act

Originally enacted in 1939, the Federal Seed Act (Act) (7 U.S.C. §§ 1551-1611).has two major purposes:  (1) to correct abuses in the merchandising of agricultural and vegetable seed in interstate commerce; and (2) to prevent the importation of adulterated or misbranded seed.  The Act is essentially a truth-in-labeling law that protects buyers against purchasing mislabeled or contaminated seed by imposing stringent labeling requirements under which the class and variety of seed must be specified on the label of the seed product. 

Under the Federal Seed Act, seeds are deemed to include “agricultural,” “vegetable,” or “weed” seeds.  In general, the labels must disclose the variety name and kind of seed, and the percentage by weight of each variety of seed representing over 5 percent of the total weight of the container.  Hybrid seeds must be designated, and the label must also contain the lot number, origin (state or nation) of the seed, percentage by weight of weed seeds, the kind and rate of occurrence of noxious weeds, the percentage of germination, the date of the germination test, and the date after which any inoculant used on the seeds may be ineffective.  The Act establishes seed certifying agencies that have the power officially to certify seeds as meeting purity, packaging and processing standards established by the Secretary of Agriculture.  Without certification, any representation of purity is deemed to be a false representation. 7 U.S.C. § 1562.

Violations of the Act may result in having the seed seized, and civil and criminal penalties imposed.  Any violation of the Act or rules and regulations committed with knowledge or as the result of gross negligence is considered a misdemeanor and subjects the offender to a maximum fine of $1,000 for the first offense and $2,000 for each subsequent offense.  Any other violation of the Act or rules and regulations, even though committed without knowledge or actual negligence, subjects the violator to a fine of between $25 and $500 for each violation.  Any act, omission, or failure by an officer, agent, or employee also binds the company, principal, or employer, as the case may be.  The Act does not directly create a private civil remedy for the buyer who may be harmed by a violation, but buyers may recover damages against the seed seller or distributor under general tort or contract law, or by claiming a breach of warranty.  If the problem related to the seeds stems from the failure of the producer or seller to comply with the Act, that will generally be a major factor in resolving the lawsuit.

Seed imported into the United States is also subject to inspection and sampling requirements under the Act. 7 U.S.C. § 1581.  The Collector of Customs is authorized to draw samples of all seeds and screenings so they may be tested and analyzed to insure their fitness for use in the United States.  The Act establishes requirements regarding importation of seed into the United States and when seeds may be denied entry. Certain seed which is declared to be imported for the seeding of roses is subject to the import provisions of the Act.  Seed that is adulterated or deemed to be unfit for seeding purposes may be prohibited from importation.  Unfit or adulterated seed may be cleaned or processed under the supervision of a USDA employee.  If, after careful analysis, it is determined that the clean seed meets the requirements of the Act, the seed may be admitted into the United States.

State Noxious Weed Laws

The liability of farmers and ranchers for the spread of weeds and other noxious or invasive vegetation onto adjoining land is governed by statute in almost all jurisdictions.  Noxious weed laws create a duty on the part of owners, tenants, and other possessors of land to destroy noxious weeds or otherwise prevent their spread.  A typical noxious weed statute delegates enforcement authority to state agriculture officials, as well as local boards and officials.  A typical statute defines the type of noxious weed or other vegetation subject to regulation, establishes county weed control districts, authorizes the appointment of local weed control officials and specifies their authorities and duties, prescribes the duty of landowners to destroy weeds, establishes the procedure for giving notice to offending parties, and provides local control authorities with limited enforcement powers.  Most state noxious weed statutes provide that weed control officials may assess the cost of removing weeds to the property owner rather than a tenant or other person in possession of the premises.  Some statutes also impose criminal penalties for violations.

Recovering damages against a neighbor.  Most state noxious weed laws do not permit an injured landowner to recover civil damages for the spread of weeds from an adjoining owner's property. However, this does not prevent an injured party from suing to recover damages for the defendant's negligence in allowing weeds to overspread the plaintiff's land.  For example, the South Dakota Weed Act (S.D. Codified Laws Ch. 38-22) has been held to not prohibit a private nuisance action for damages caused by a failure to control non-noxious weeds.  Collins v. Barker, 668 N.W.2d 548 (S.D. 2003). In the South Dakota case, the court held that a farmer has duty to use ordinary care in working the land.  Under the facts of the case, the plaintiff could bring a nuisance action to determine whether the defendant breached the duty of ordinary care in working Conservation Reserve Program (CRP) land.

In reality, however, obtaining a judgment may be rather difficult. An injured landowner must usually prove that the weeds were spread by the defendant's active negligence or willful conduct rather than by nature. While it may be possible for the plaintiff to prove negligence by the fact that the defendant was found guilty of violating a criminal weed control provision, there does not appear to be any authority directly on point.

An offended landowner may also be able to recover damages for the spread of noxious weeds onto their land from an adjoining landowner's premises by showing that the noxious weeds were destroyed negligently.  For example, in Kukowski v. Simonson Farm, Inc., 507 N.W.2d 68 (N.D. 1993), the court held that a farmer has a duty to exercise ordinary care when attempting to control or remove weeds.  The land at issue in the case was seeded to grass and a weed control chemical was applied.  Over the course of the growing season, a stand of Kochia and Russian thistle grew on the CRP acreage.  The landowner combined the weeds in an attempt to control the weeds.  A neighboring farmer sued alleging that the combine broke off the weeds in an unnatural manner, allowing them to blow onto their property, causing damage.  The neighbor also claimed that the use of the combine “branded” the weeds, making them readily identifiable as coming from the CRP ground.  $80,000 of damages were claimed for clean-up costs, reduced crop yields and costs for present and future weed control.  While the court noted that the common law does not hold a landowner liable for the natural spread of weeds from their property, liability can be present if weeds spread from an independent act of negligence. 

Weeds in the fence line.  For noxious weeds that are in a partition fence line, state law typically sets forth a procedure for the adjoining landowners to follow to take care of the problem.  That procedure may involve one adjoining landowner making a request of the other adjoining landowner to clear the fence line of noxious weeds.  After a set time, if the needed control hasn’t occurred, then local officials can be notified.  The local officials will come view the matter and make a determination concerning weed control.  If action is to be taken, the local officials may hire someone to control the weeds and then add the costs to the responsible landowner’s property tax bill. 

Road ditches and railroads.  Many states have law requiring counties, townships or municipalities to control noxious weeds within their jurisdiction that are growing along public roadways.  There typically is a timeframe established for the control measures to be taken.  There might also be a weed control requirement outside the specified timeframe(s) if control is necessary to minimize a public safety hazard.  If a landowner controls noxious weeds in ditches, recovery of control costs against the responsible governmental entity is possible, but only if proper procedural requirements are first followed such as providing notice and then (after a period of time without action) requesting the local court to order the governmental body to fulfill its duty. For example, in Metzger v. Horton, 2013 Ohio 2964 (Ohio Ct. App. 2013), a farmer bought a larger combine and needed trees and brush trimmed back along a road he used to get access to the land he farmed.  He requested that the township trustees trim the vegetation, but when they didn’t get the job done, he did it himself and billed the township $1,863 for his costs.  The township trustees didn’t pay the invoice and the farmer sued.  He lost.  The court held that he didn’t follow the proper procedure of seeking a court to order the township to do its job.  As such, his costs he sought reimbursement for were self-imposed. 

For noxious weeds that are growing in the right-of-way of toll-road or rail line, state law commonly specifies the company controlling the toll road (for toll roads) and the railroad company (for rail lines) is responsible for controlling noxious weeds.  If control doesn’t occur, state law typically gives the local government the ability to eliminate the weeds and sue the responsible company for the cost of control. 

Public land.  For noxious weeds on public land, state law may detail the procedure to be followed in controlling such weeds. 

Non-Noxious Weeds

Weeds that are not on a state’s (or county’s) noxious weed list also present problems.  While a farmer has a duty to control the spread of noxious weeds, as noted above, that duty doesn’t extend to non-noxious weeds absent malicious intent to injure an adjoining landowner.  For example, in Krug v. Koriel, 23 Kan. App. 2d 751, 935 P.2d 1063 (1997), the court held that there is no common law duty in Kansas to control volunteer wheat so as to prevent the spread of wheat streak mosaic virus that is caused by the wheat curl mite because volunteer wheat is not listed as a noxious weed under Kansas law.  

Controlling volunteer wheat (and grassy weeds) is a key point, there is no treatment for wheat streak mosaic virus.  This is a big issue in Kansas.  Most recent data show that the five-year average statewide loss is 1.74 percent of the Kansas wheat crop.  In 2017, the loss was estimated at $76.8 million – 5.6 percent of the statewide wheat crop.  A drought in the major wheat growing regions of Kansas in the fall of 2019 and spring of 2020 could mean that more volunteer wheat will be present in 2021 without additional control measures being taken.  Adding to the potential for more volunteer wheat in 2021 is hail damage, head scab and even waterlogged fields in late summer in some areas.  Simply planting later can be at least a partial control technique.

Conclusion

Seeds and weeds present practical and legal issues for farmers and ranchers. With respect to seeds, detailed rules apply to seed that is certified.  For weeds, it’s important to understand the types of noxious weeds in a particular state and the rules governing their control.  For, non-noxious weeds properly following protocol for their control is critical.

September 5, 2020 in Civil Liabilities | Permalink | Comments (0)

Monday, August 24, 2020

Court Developments in Agricultural Law and Taxation

Overview

The cases and rulings involving agriculture keep on coming.  In today’s post, I pick out just a few involving some rather common issues.

Ag law in the courts – it’s the topic of today’s post.

Railroad Responsible For Faulty Railroad Fence 

Leslie v. BNSF Railway. Co., No. Civ. 1:16-cv-1208-JCH-JHR, 2019 U.S. Dist. LEXIS 154460 (D. N.M. Sept. 10, 2019)

Railroads are responsible for building and maintaining railroad fences.  But, the nuances of each state’s fence law involving railroads can cause some interesting arguments.  In a New Mexico case last year, the court was faced with addressing a previously unanswered application of the state fence law as applied to a railroad.   

The plaintiffs collided with a cow on a public highway.  The defendant was responsible for building and maintaining the adjacent fence along a ranch that it had a right-of-way through. The plaintiffs alleged that the railroad company negligently maintained the fence, which allowed a cow to escape onto the highway. The defendant claimed that it did not own the cow that escaped, and that the plaintiff’s theory for recovery hinged on the defendant first being found liable in an action against the owner of the livestock. The defendant removed the action from New Mexico state court to federal court and sought a judgment with respect to both of the plaintiffs’ negligence claims.

 The court interpreted the New Mexico legislature’s intent of whether the plaintiffs were a protected class under the state’s fence law and determined that the plaintiff failed to establish a negligence per se claim requiring railroads to build fence lines. The purpose of the railroad fencing portion of the fence law, the court determined, was to protect owners of livestock rather than the motoring public.  The plaintiffs’ second claim was that the defendant was per se negligent by permitting the cow to wander upon the road. The statute at issue stated that it was unlawful for “any person” to “negligently permit” livestock to wander upon any unfenced highway. The defendant argued that the term “permit” required that the negligence of the owner of the livestock must be established before liability would attach. Although the court determined that the phrase “any person” had not been construed to mean persons other than owners of livestock, it concluded that the New Mexico legislature had limited the application of similar statutes and failed to do so in this instance. According to the court, the failure to limit the statute by the state legislature meant the statute was intended to be interpreted broadly in order to protect a broader class of people.  The court held that the plaintiffs had established themselves as members of the class sought to be protected by the fence law and that the defendant had permitted the cow to wander on the road. Upon further consideration, the plaintiff must establish whether the defendant had negligently permitted the cow to wander upon the road.

Paying Principal Amount Within Redemption Period is Insufficient to Redeem Property

Sibley State Bank v. Zylstra, No. 19-0126, 2020 Iowa App. LEXIS 830 (Iowa Ct. App. Aug. 19, 2020)

When farmland is foreclosed upon, the owner is given a period of time to redeem the property by paying the price the property brought at the foreclosure sale plus costs.  But details matter.  In this case, the plaintiff purchased one of two parcels of land at a foreclosure action and another business purchased the other parcel. Under state (Iowa) law, the buyers took the property subject to the prior owner’s one-year right of redemption from the date of the sale. The prior owner assigned its redemption rights to the defendant 364 days after the foreclosure sale. The next day (the final day of the redemption period) the defendant tendered a check to the county court clerk for the principal amount of the two foreclosure bids and received a receipt from the clerk showing a “balance due” of zero.

Two days later, the plaintiff applied for a hearing on the redemption issue to refund the defendant’s check and sought a finding that no redemption had occurred because the amount tendered by the defendant did not include interest and fees. The defendant claimed that the court clerk would not tell him the exact amount that was necessary to redeem both properties upon his asking. The defendant further claimed that the clerk withheld the amount from him, and that he had acted in good faith in trying to redeem the properties by paying the full principal amount (well over $1 million). The trial court found that the defendant failed to inquire with either the bank or the bank’s attorney what the amount due for redemption would be. Additionally, the trial court held that the county clerk had no duty to the defendant to determine the redemption amount. On appeal, the defendant claimed that the trial court erred in not granting him equitable relief, and that he paid a sufficient amount to redeem at least one of the properties. The appellate court affirmed, holding that the mistake in calculating the payoff amount was the defendant’s sole fault. Further, the appellate court noted the defendant could have taken advantage of a safe harbor provision, as the redemption period was about to expire, but failed to do so. As for the defendant’s claim of partial redemption for having tendered an amount exceeding the redemption price of either property, the appellate court held that in order to redeem one tract required the defendant to specify which parcel was being redeemed. The appellate court held that an insufficient payment for redemption of two properties alone cannot result in an after-the-fact redemption of one of the properties.

A Prescriptive Easement May Be Created Over a Ditch or Waterway

Five Forks Hunting Club, LLC v. Nixon Family Partnership, No. CV-18-301, 2019 Ark. App. LEXIS 397 (Ark. Ct. App. Sept. 11, 2019)

Easement issues are frequently encountered with respect to agricultural properties.  But, is an access easement restricted to land, or can it apply to water access?  That was the issue involved in this case.

Here, the parties owned adjoining tracts that they used for duck hunting.  The plaintiff sought a declaratory judgment against the defendant, claiming that the plaintiff had the right to control the use of a ditch that the defendant had been using to gain access to the plaintiff’s land. The plaintiff had built a bridge to block the defendant’s path to their property, and in years past had obstructed the defendant’s path on separate occasions. The plaintiff claimed that the defendant merely had permissive use of the ditch, but the defendant sought a prescriptive easement over the ditch and a road that ran parallel to the ditch. The defendant would use the road to gain access to the land during dry periods and travel by boat in the ditch during times where the road was underwater. The trial court held that the defendant was able to establish an easement by prescription over the ditch by establishing that a preponderance of the evidence showed that the use of the ditch was adverse to the plaintiff and under a claim of right for the seven-year statutory period. On appeal, the appellate court noted that under Arkansas law, any vehicle needed for the operation of the easement could be driven across the servient estate. A boat could be used to access the easement therefore a prescriptive easement could be created over a ditch or waterway. The plaintiff also argued on appeal that the defendant failed to prove the necessary elements of a prescriptive easement. The plaintiff argued that the use of the ditch was not continuous or uninterrupted for the required statutory period because the ditch was not always flooded. The appellate court, however, held that mere temporary absences of a claimant do not interrupt the “continuous” requirement for a prescriptive easement. Also, the plaintiff’s attempts to obstruct the defendant’s use of the ditch occurred after the defendant had met the statutory requirement for establishing a prescriptive easement. Finally, the appellate court noted that the trial court’s decision to not limit the prescriptive easement for the ditch to a shorter route was not in error as it created no additional burden to the plaintiff landowner.

Lack of Proof for Ag Sales Tax Exemption 

Arkansas Dept. of Rev. Legal Counsel Op. No. 20200527 (Jul. 21, 2020)

In many states, personal property used in farming is exempt from sales tax.  That is the case, for example, in Arkansas.  But, it is important to be able to certify that the buyer is engaged in the trade or business of farming and that the item(s) purchased will be used in farming.  Under many state provisions, to be exempt the item(s) purchased must be used directly in farm production activities.  Indirect uses, such as an all-terrain vehicle used to spray weeds on the farm, don’t qualify.

Under the Arkansas procedure, a farmer provides a “Farm Exemption Certificate” to a seller so that the seller knows whether the sale of an item is exempt from sales tax because the buyer was engaged in farming and the item purchased would be used directly and exclusively in farming.  Here, the question was whether livestock shade systems and mower covers qualified for the exemption.  Based on the facts presented, it was determined that the taxpayer (seller) did not provide sufficient facts concerning any specific sale or transaction for a determination of exemption to be made.  However, the seller could rely on the buyer’s Certificate and could accept a certification or other information from the buyer to establish that the sale was exempt.  Alternatively, the taxpayer could accept a certification or other information that the buyer provided to establish that the sale was exempt.  Such, other information could include the buyer certifying in writing on a copy of the invoice or sales ticket that the taxpayer would retain stating that the buyer was a farmer and that the items would be used exclusively and directly in farming as a business. 

More Problems with Donated Permanent Conservation Easements

Belair Woods, LLC v. Comr., T.C. Memo. 2020-112 ; Cottonwood Place, LLC, et al. v. Comr., T.C. Memo. 2020-115

The Tax Court continues to render decisions involving claimed charitable deductions for the donation of “permanent” conservation easements.  At the National Farm Income Tax/Estate and Business Planning Conference last month in Deadwood, SD, U.S. Tax Court Judge Elizabeth Paris stated that many cases remain in the Tax Court’s pipeline yet to decide.  That vast majority of the decision so far have been decided in favor of the IRS.  Don’t expect that trend to change. 

I.R.C. §170(h)(5)(A) requires that an easement donated to a qualified organization to be “protected in perpetuity.”  Treas. Reg. §1.170A-14(g)(6) requires that the easement grant must, upon extinguishment, result in the charity receiving a proportionate part of the proceeds when the property subject to the easement is sold.  In Belair Woods, however, the deed language did not provide the charity with a proportionate part of the gross sales proceeds.  Instead, it specified that the charity would receive the extinguishment proceeds reduced by any increase in value related to improvements that the donor had placed on the property.  The deed language also required a reduction in the proceeds going to the charity by an amount paid to satisfy any and all prior claims regardless of whether a claim arose from the donor’s conduct. 

The Tax Court strictly construed the regulation and denied a charitable deduction for the donation because the grantee was not in all cases absolutely entitled to a proportionate share of the proceeds upon extinguishment sale of the property.  As such, the contribution was not protected in perpetuity.  The Tax Court noted that the improvements were part of the donation rather than the donation being restricted just to the underlying land.  The rights to construct improvements were restricted in meaningful ways by the easement, and also enhanced the property’s value.   The petitioner also claimed that the IRS had accepted deed terms comparable to the petitioner’s deed via a stipulation in a case involving a different petitioner and, as such, should be estopped from disallowing the petitioner’s deduction.  The Tax Court determined that the petitioner had failed to satisfy its burden in establishing that judicial estoppel should apply because the IRS position in the other case was merely a tactical stipulation and the case was settled. 

In Cottonwood Place, LLC, the petitioner donated a conservation easement on land to a land trust (qualified charity), reserving the right to construct limited improvements in the area subject to the easement.  The Tax Court determined that no charitable deduction was allowed because the deed language didn’t entitle the charity to a proportionate share of any easement extinguishment proceeds if a court were to extinguish the easement and order the property sold.  Thus, the language violated Treas. Reg. §1.170A-14(g)(6).  The Tax Court noted that the deed language specified that the charity’s share of such proceeds would be reduced by the value of improvements added to the property after the easement donation.  The Tax Court rejected the petitioner’s substantial compliance argument. 

Conclusion

As you can see, issues involving agricultural land and agricultural producers are prevalent.  Good legal and tax counsel is a must.  That’s what we are training at Washburn Law School in the Rural Law Program.  This week we welcome new students to the program from state across the country!

August 24, 2020 in Civil Liabilities, Income Tax, Real Property | Permalink | Comments (0)

Monday, June 15, 2020

Liability For Injuries Associated With Horses (And Other Farm Animals)

Overview

In recent years, all states except California and Maryland (and New York, to some extent) have enacted Equine Activity Liability Acts designed to encourage the continued existence of equine-related activities, facilities and programs, and provide the equine industry limited protection against lawsuits.  The laws vary from state-to-state, but generally require special language in written contracts and liability releases or waivers; require the posting of warning signs; an attempt to educate the public about inherent risks in horse-related activities; and provide immunities designed to limit liability.  The basic idea of these laws is to provide a legal framework to incentivize horse-related activities by creating liability protection for horse owners and event operators.

An important question is whether the laws extend to farm animals and persons working on farms and ranches.

Liability rules involving horses, farm animals and associated events – it’s the topic of today’s post.

State Law Variations

Under the typical statute, an “equine activity sponsor,” “equine professional,” or other person  can only be sued in tort for damages related to the knowing provision of faulty tack failure to determine the plaintiff’s ability to safely manage a horse, or failure to post warning signs concerning dangerous latent conditions.  For example, in Germer v. Churchill Downs Management, No. 3D14-2695, 2016 Fla. App. LEXIS 13398 (Fla. Ct. Ap. Sept. 7, 2016), state law “immunized” (among other things) an equine activity sponsor from liability to a “participant” from the inherent risks of equine activities.  The plaintiff, a former jockey visited a racecourse that the defendant managed.  It was a spur-of-the-moment decision, but he was required to get a guest pass to enter the stables.  He was injured by a horse in the stables and the court upheld the immunity provisions of the statute on the basis that the requirement to get a guest pass before entering the stables was sufficient protocol to amount to “organization” which made the plaintiff’s visit to the stables “an organized activity” under the statute. 

While many state equine activity laws require the postage of warning signs and liability waivers, not every state does.  For example, the statutes in CT, HI, ID, MT, NH, ND, UT, WA and WY require neither signage nor particular contract language.

Recovery for damages resulting from inherent risks associated with horses is barred, and some state statutes require the plaintiff to establish that the defendant’s conduct constituted “gross negligence,” “willful and wanton misconduct,” or “intentional wrongdoing.”  For example, in  Snider v. Fort Madison Rodeo Corp., No. 1-669/00-2065, 2002 Iowa App. LEXIS 327 (Iowa Ct. App. Feb. 20, 2002), the plaintiff sued a parade sponsor and a pony owner for injuries sustained in crossing the street during a parade.  The court determined that the omission of a lead rope was not reckless conduct and that the plaintiff assumed the risk of crossing the street during the parade.  Similarly, in Markowitz v. Bainbridge Equestrian Center, Inc., No. 2006-P-0016, 2007 Ohio App. LEXIS 1411 (Ohio Ct. App. Mar. 30, 2007), the court held that there was no evidence present that the plaintiff’s injuries sustained in the fall from a horse was a result of the defendant’s willful or wanton conduct or reckless indifference.  In addition, the signed liability release form complied with statutory requirements.  However, in Teles v. Big Rock Stables, L.P., 419 F. Supp. 2d 1003 (E.D. Tenn. 2006), the provision of a saddle with stirrups that could not be shortened enough to reach plaintiff’s feet which then caused the plaintiff to fall from a horse raised jury question as to whether faulty tack provided, whether the fall was the result of the inherent risk of horseback riding, and whether the defendant’s conduct was willful or grossly negligent and, thus, not covered by the signed liability release form.

What constitutes an “inherent risk” from horse riding is a fact issue in many states due to the lack of any precise definition of “inherent risk” in the particular state statute.  For example, under the Texas Equine Activity Liability Act, the phrase “inherent risk of equine activity” refers to risks associated with the activity rather than simply those risks associated with innate animal behavior.  See, e.g., Loftin v. Lee, No. 09-0313, 2011 Tex. LEXIS 326 (Tex. Sup. Ct. Apr. 29, 2011).  The Ohio equine activities immunity statute has been held to bar recovery for an injury incurred while assisting an employer unload a horse from a trailer during a day off, because the person deliberately exposed themselves to an inherent risk associated with horses and viewed the activity as a spectator.  Smith v. Landfair, No. 2011-1708, 2012 Ohio LEXIS 3095 (Ohio Sup. Ct. Dec. 6, 2012)Also, in Einhorn v. Johnson, et al., No. 50A03-1303-CT-93, 2013 Ind. App. LEXIS 495 (Ind. Ct. App. Oct. 10, 2013), the Indiana Equine Activity Act barred a negligence action after a volunteer at a county fair was injured by a horse.  The plaintiff’s injuries were determined to result from the inherent risk of equine activities.  Likewise, in Holcomb v. Long, No. A14A0815, 2014 Ga. App. LEXIS 726 (Ga. Ct. App. Nov. 10, 2014), the Georgia Equine Activities Act barred recovery for injuries sustained as a result of slipping saddle during horseback ride; slipping saddle inherent risk of horseback riding.  See also, Fishman v. GRBR, Inc., No. DA 17-0214, 2017 Mont. LEXIS 602 (Mont. Sup. Ct. Oct. 5, 2017).

Application to Farm Animals

Iowa and Texas amended their existing laws in 2011 to include farm animals.  The Iowa provision, known as the “Domesticated Animal Activities Act” (Iowa Code §§673.1-673.3) was amended due to a state Supreme Court decision.  The Texas “Farm Animal Act” is an expanded revision to that state’s Equine Activity Act. 

Iowa.  The Iowa law was enacted in 1997 and amended in 2011 as a result of a 2009 Iowa Supreme Court decision, Baker v. Shields, 767 N.W.2d 404 (Iowa 2009). Under the facts of the case, a farmhand suffered a severe leg fracture in a fall from a horse during an attempt to move his employer’s cattle.  What was assumed to be the employer’s horse was a two-year old that the farmhand had successful ridden a few days earlier. The farmhand sued his employer (a father and son duo) to recover for his damages, claiming that because his employer did not carry workers’ compensation insurance as the plaintiff claimed Iowa law required, he was entitled to a presumption that his injury was the direct result of the employer’s negligence and that the negligence was the proximate cause of his injury.

The employer moved for summary judgment based on the immunity granted in the Domesticated Animal Activities Act (Act). Based on the language of the statute and the history behind enactment in most of the states with equine liability laws, the employer’s claim of immunity under the Act looked to be a long-shot. However, the trial court granted the employer’s motion for summary judgment, finding that a horse is a “domesticated animal,” riding a horse is a “domesticated animal activity,” and the horse’s actions were an inherent risk of that activity. More importantly, the trial court noted that the statute provided that a “person” is not liable under the Act and reasoned that “person” should be broadly construed to include employer/employee settings involving the use of livestock – such as the employer’s horse in this case. The trial court also noted that the Act defined “participant” as “a person who engages in a domesticated animal activity, regardless of whether the person receives compensation” and reasoned that this indicated application to employment situations. 

The Supreme Court affirmed based on its belief that the Iowa legislature intended the statute to apply broadly to all “persons” and that the statutory definitions of “domesticated animal activity sponsor” and “domesticated animal event” did not preclude ag employment situations involving domesticated livestock (although the “sponsors” and “activities” listed in the statute have nothing to do with common ag employment situations).

At trial, and again at the Supreme Court, the farm hand argued that the Act did not specifically exempt farming operations as a “domesticated animal activity sponsor” and, as such, only applied to activities involving participation of members of the general public (as “spectators” in or “participants” of activities involving domesticated animals) and not “traditional farming operations done by employees.” However, the Iowa Supreme Court agreeing with the trial court, determined that the Act applied, and that the employer was immunized from suit.  The Court’s opinion was a stretch (to say the least) of the intent and meaning of the Act’s language.  At the time, the Court’s decision was the first court opinion to hold that a state equine activity (or domestic animal activity) liability act applied to common agricultural employment situations with the effect of immunizing the employer from suit from damages arising from inherent risks associated with the subject animal.  In 2011, the Iowa legislature amended the statute to include domestic animals.

Texas.  In 1995, Texas enacted the Equine Activity Act (Equine Act).  Ch. 87 of Tex. Civ. Prac. & Rem. Code.  The Equine Act provided that “any person, including an equine activity sponsor or an equine professional, is not liable for property damage or damages arising from the personal injury or death of a participant…[that] results from the dangers or conditions that are an inherent risk of equine activity.”  An equine activity sponsor is “a person or group who sponsors, organizes, or provides the facilities for an equine activity…without regard to whether the person operates for profit.”  The statute provides many examples demonstrating the specific application of the Equine Act and its concern for equine activities unrelated to ranching activities such as breeding, feeding and working equine animals as a vocation.  None of the examples hinted at any application to ranchers’ and ranch hands’ involvement with horses. 

In 2011, the Texas legislature amended the Equine Act.  The amendment renamed the law as the “Farm Animal Activity Act” and broadened coverage to include other farm animals in addition to equines.  Veterinarians and livestock shows were also included under its coverage, and the words “handling, loading, or unloading” were added to the definition of “farm animal activity.”  The Farm Animal Activity Act limits the liability of “any person, including a farm animal activity sponsor [or] farm animal professional,” but also includes examples of a person whose liability is limited that is demonstrated to be event organizers and facility providers with “professionals” defined as trainers and equipment renters.  All of the livestock examples relate to shows, rides, exhibitions, competitions and similar events.  The Farm Animal Act limits liability to or for a “participant.”  A “participant is defined as “a person who engage in [a farm animal] activity without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free. 

In Waak v. Rodriguez, No. 19-0167, 2020 Tex. LEXIS 528 (Tex. Sup. Ct. Jun. 12, 2020), ranch owners (a married couple) bred Charolais cattle on their 760-acre ranch in southeast Texas.  They hired an individual (Raul Zuniga) on a part-time basis to work the cattle, do landscaping and cut hay.  Raul later started working full-time for them and lived on the ranch in a mobile home that he was purchasing from them.  After training him how to work and cut cattle, Raul was given daily tasks and often worked cattle alone.  In late 2013, the couple asked Raul to moved cattle to another location on the ranch, a task he had done often in the past.  The couple then went left to run errands in town about 20 miles away.  Upon their return to the ranch, the owners found Raul lying dead behind the barn.  A medical examiner determined that Raul’s cause of death at (almost) age 34 was “blunt force and crush injuries” that were “severe enough to have come from extensive force like that of a large animal trampling the body.”  His surviving parents and children sued the ranch owners for wrongful death.  They did not participate in the Texas workers’ compensation system.  The lawsuit claimed that a bull killed Raul and that the owners were negligent in failing to provide a safe workplace; failing to properly train Raul; and failing to warn of the dangers of working cattle and failing to properly supervise him.  The owners claimed that the Farm Animal Activity Act barred the lawsuit, and the trial court agreed.  The appellate court reversed, however.

On further review, the Texas Supreme Court affirmed the appellate court’s decision – the Farm Animal Activity Act did not apply, and the suit was not barred.  The Court noted that the text and examples contained the legislation did not make any reference to ranchers or ranch hands or otherwise indicate that they were covered.  The Court also indicated its belief that no reported decision anywhere in the country applied an equine statute to farming or ranching or limit an employee’s recovery for on-the-job injuries.  The ranch owners’ attorneys failed to bring the Iowa case to the Court’s attention (the owners’ attorneys were civil litigators from a big-city firm and not rural ag lawyers).  The Court also noted that while the legislature had broadened the statute in 2011 and renamed it, it still limited liability protection to event organizers and facilities providers as well as professional trainers and equipment renters.  All of the livestock examples in the amended statute still were in the context of “shows.”  Ranch hands, the Court noted, do not work as “amateurs” or “professionals” and do not pay to do their work and don’t typically work for free.  Ranch hands are not “participants.”

Conclusion

State Equine Activity Liability laws are designed to provide liability protection for injuries arising from horse-related activities.  The Iowa and Texas provisions have been modified to include farm animals.  It would have been interesting had the ranch owners in the Texas case brought the Iowa case to the Texas Supreme Court’s attention.  While doing so may not have resulted in a different outcome, the Court would have been forced to deal with it.

June 15, 2020 in Civil Liabilities | Permalink | Comments (0)

Friday, May 29, 2020

Dicamba, Peaches and a Defective Ferrari; What’s the Connection?

Overview

Numerous cases have been filed in recent years alleging damage to soybean crops as a result of dicamba drift.  However, one significant case has involved alleged dicamba drift damage to a peach crop.  In 2019, the federal trial court judge hearing the case allowed much of the case to go to the jury.  In early 2020, the jury returned a $265 million judgment against Monsanto/Bayer and BASF.  $15 million of that amount was to compensate the peach farmer.  $250 million was punitive damages.  Is that allocation of damages proper and reasonable?  A defective Ferrari may have something to say about the allocation.

Dicamba drift, a defective Ferrari and allocation of damages – it’s the topic of today’s post.

The Bader Case

Bader Farms, Inc. v. Monsanto Co., No. MDL No. 1:18md2820-SNLJ, 2019 U.S. Dist. LEXIS 114302 (E.D. Mo. Jul. 10, 2019).

Monsanto introduced dicamba-tolerant seeds for cotton in 2015 and for soybeans in 2016.  The seeds were popular with many farmers to control weeds that had become tolerant to other herbicides, including Roundup.  However, at the time the seeds were released, the EPA had not yet approved the newer formulations of dicamba (BASF’s Engenia and Monsanto’s XtendiMax with Vaporgrip and Roundup Xtend with VaporGrip) to be sprayed on crops.  Those newer formulations were less volatile and less likely to vaporize and drift to nearby crops for which they were not intended.  Starting in 2016, numerous crop damage complaints arose in certain parts of the country, particularly in southeast Missouri. Bader Farms, Inc., the largest peach farm in Missouri, claimed that its entire peach crop was destroyed by dicamba drift from nearby cotton fields that were planted with Monsanto’s Roundup Ready Xtend cotton seeds.  Those seeds had been genetically modified to withstand dicamba and glyphosate. 

Specifically, the peach farm claimed that its orchard was destroyed after the defendants (Monsanto/Bayer and BASF) conspired to develop and market dicamba-tolerant seeds and dicamba-based herbicides.  Bader Farms, Inc. claimed that the damage to the peaches occurred when dicamba drifted from application to neighboring fields. It claimed that the defendants released its dicamba-tolerant seed with no corresponding dicamba herbicide that could be safely applied. As a result, farmers illegally sprayed an old formulation of dicamba herbicide that was unapproved for in-crop, over-the-top, use and was "volatile" or prone to drift.

While many cases had previously been filed on the dicamba drift issue, Bader Farms, Inc. did not join the other litigation because those cases focused on damages to soybean crops. Monsanto moved to dismiss the claims for failure to warn; negligent training; violation of the Missouri Crop Protection Act; civil conspiracy; and joint liability for punitive damages. BASF moved to dismiss those same counts except the claims for failure to warn. The trial court granted the motion to dismiss in part. Monsanto argued that the failure to warn claims were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), but the plaintiff claimed that no warning would have prevented the damage to the peaches.

The trial court determined that the peach farm had adequately plead the claim and denied the motion to dismiss this claim. Both Monsanto and BASF moved to dismiss the negligent training claim, but the trial court refused to do so. However, the trial court did dismiss the claims based on the Missouri Crop Protection Act, noting that civil actions under this act are limited to “field crops” which did not include peaches. The trial court did not dismiss the civil conspiracy claim based on concerted action by agreement, but did dismiss the aiding and abetting portion of the claim because that cause of action is not recognized under Missouri tort law. The parties agreed to a separate jury determination of punitive damages for each defendant. 

The Jury Verdict

In mid-February of 2020, after a three-week trial, the jury returned a $265 million verdict against Monsanto/Bayer and BASF, with $250 million of that being punitive damages.  Trial evidence revealed that the defendants anticipated drift before the new, less volatile, formulation was released.  The jury concluded that the companies negligently released the dicamba-tolerant seeds without the necessary herbicide to prevent off-target drift, and that they were negligent when they released the less volatile herbicide.  The jury also determined that the companies conspired to “create an ecological disaster to increase profits.”

The companies are appealing.  They deny that Bader Farms, Inc. suffered any damage from dicamba drift.  The experts for the companies testified that armillaria root rot fungus was the cause of the damage to the peach crop.  They claimed that armillaria had gotten into the soil and had been slowly infecting and killing the peach trees.  While the expert for Bader Farms testified that the damage was caused by dicamba drift, he also admitted that he was not a peach expert and agreed that armillaria was present in the orchard and was damaging the trees.  The companies also pointed out the peach farm did not sustain any monetary damage and that peach profits actually increased during the timeframe at issue.

After the jury returned its verdict, both parties have filed numerous briefs with the court.  Last week, Bader Farms, Inc. motioned to bar Monsanto’s request for “post-trial judicial notice” of screen shots from the farm’s website that Monsanto believes would establish that dicamba drift was not the cause of the loss of the peach crop.    

Calculating Damages

As noted, the jury returned a total verdict of $265 million.  $250 million of that is punitive damages designed to punish the companies involved.  In other words, the punitive damages were roughly 16 times that of the compensatory damages awarded to Bader Farms, Inc.  Is that reasonable?  Where do the courts draw the line between compensatory and punitive damages?  A recent case sheds some light on the issue.  In Adeli v. Silverstar Auto, Inc., No. 19-1481/19-1602, 2020 U.S. App. LEXIS 16206 (8th Cir. May 21, 2020), the plaintiff claimed that the defendant intentionally misrepresented the condition of a used Ferrari that it sold to him.  The jury agreed and awarded the plaintiff $20,201 in compensatory and incidental damages (approximately $7,000 of the amount was for compensatory damages) and $5.8 million in punitive damages on his claims for fraud, breach of express warranty, and deceptive trade practices under Arkansas Law.  The defendant then moved to alter or amend the judgment, claiming that the jury’s $5.8 million punitive damage award was unconstitutionally excessive under the Due Process Clause of the Fourteenth Amendment.  The trial court agreed and reduced the punitive damage award to $500,000.  The defendant appealed claiming, among other things, that the punitive damage award should have been further reduced.  The farm claimed that the $5.8 million amount was correct and shouldn’t have been reduced. 

The appellate court noted that while juries have considerable flexibility in determining the amount of punitive damages, the Due Process Clause bars the imposition of “grossly excessive or arbitrary punishments on a tortfeasor.”  In other words, the award is excessive if it “shocks the conscience” of the court or “demonstrates passion or prejudice on the part of the trier of fact.”  While that standard doesn’t establish a bright line, there are factors that guide courts in determining a proper award of punitive damages.  Those factors are: (1) the degree of reprehensibility of the defendant’s conduct; (2) the disparity between actual or potential harm suffered and the punitive damage award; and (3) the difference between the punitive damage award and the civil penalties authorized in comparable cases. 

The appellate court believed that the defendant’s conduct was reprehensible.  The defendant knew that the car’s headers were cracked and needed replaced, having been advised as such by a Ferrari technician.  The defendant advertised the car for sale, however, as having completed a pre-purchase inspection by a Ferrari dealership.  The plaintiff asked for a copy of the pre-purchase inspection, but was sent instead an invoice from the Ferrari dealer that reflected the defendant’s choice not to repair the tire pressure monitoring system.  It didn’t disclose the defendant’s choice not to fix the cracked headers.  The defendant represented the car as “turnkey” and “ready to go.”  The plaintiff bought the car for $90,000, signing an “as is” purchase contract.  On his way home from picking up the car, the plaintiff detected a fuel smell.  The next day the plaintiff had the car towed to a garage that specialized in Ferraris which discovered a fuel leak and the cracked headers, making it unsafe to drive. The garage identified over $30,000 worth of repairs.  The defendant refused to take the car back. 

As for the disparity between the harm and punitive damages, the appellate court factored the incidental damages into the total harm that the plaintiff suffered and upheld the trial court’s finding of a 1:24.75 ratio ($20,021/$500,000).  A single-digit ratio was not required, given the fraud that the defendant engaged in.  On the comparable civil penalty factor, the appellate court cited other comparable caselaw finding a ratio between actual and punitive damages close to the 1:24.75 ratio set by the trial court. Ultimately, the appellate court affirmed the trial court’s award of $500,000 of punitive damages.

Application to Bader Farms

From the time the jury in Bader Farms returned its verdict, the parties have been battling over the proper amount of punitive damages.  The companies claim that the punitive damage award is unconstitutionally too high. But, the ratio in Bader Farms is approximately 1:16.7.  That’s a lower ratio than the court approved in Adeli.  Bader Farms, Inc., in a recent filing in its case, claims that the Ferrari case supports an even higher punitive damage award.  Whether the court agrees will be based on the multi-factor Due Process analysis noted above.

Conclusion

The dicamba trait may be presently at its highest use rate.  Technology has not improved the potential drift issue, but education and wider usage of the dicamba trait likely has.  However, the present tough financial condition of many farmers could make it more likely that unapproved types of dicamba will be used this crop growing season.  In future years, the use of the dicamba trait may drop with newer technologies taking a larger part of market share.  In particular, the Enlist trait appears to be safer more sprayer-friendly compared to dicamba and comes with rules that are easier to follow and less potential for drift. 

As for the case involving the peach farm, it will be interesting to see how the ultimate damage award shakes out. 

May 29, 2020 in Civil Liabilities | Permalink | Comments (0)

Wednesday, April 15, 2020

Court Developments of Interest

Overview

In recent articles on this blog, I have taken a look at the various parts of recently enacted legislation as a consequence of the economic trauma the federal and state governments have imposed on businesses and individuals as a recent of the virus.  Today, I step away from virus related developments and focus on recent court opinions of relevance to agricultural law and taxation. 

Ag law and tax in the courts – it’s the topic of today’s post.

Valuation Discounting – Assignee Interests

Streightoff v. Comr., T.C. Memo. 2018-178, aff’d., No. 19-60244, 2020 U.S. App. LEXIS 10070 (5th Cir. Mar. 31, 2020).

Limited partnerships (and their variant – the family limited partnership), emerged as an important estate and business planning tool in the early 1990s.  They can be useful for farming and ranching operations of relatively higher net worth as a vehicle to transfer interests in the farming or ranching business to a succeeding generation at a discounted value.  That discounted value is often achieved by working the transferor into a minority position before death and the creation of multiple types of partnership interests, and also holding those partnership interests in different types of entities.  Discounted value can also be achieved (under the laws of some states) by transferring an assignee interest rather than the actual interest in the partnership.  Assignee interests are, in essence, limited partnership interests with economic participation equal to that of limited partnership interests but typically without the same rights.  They typically do not carry the right to vote, inspect partnership books or transfer their interests.  Thus, the claim is, they should be valued less than a general partnership interest and even less than a limited partnership interest for both federal gift tax as well as estate tax purposes - if they are established and transferred properly.  That was the issue in a recent case.

In Streightoff, the decedent had created a limited partnership under Texas law before death. The decedent held a one percent general partner interest and an 88.99 percent limited partner interest. Eight of the decedent’s family members owned the balance of the limited partner interests. The partnership didn’t conduct any meetings and held cash, equities, bonds and mutual funds. The decedent had the power to approve the sale of partnership interests and had a right of first refusal on all sales. The partnership agreement described persons who acquired partnership interests as “assignees.”

A few years before death, the decedent purported to create an “assignee” interest in his revocable trust with respect to his 88.99 percent limited partnership interest. The decedent’s estate tax return reported the decedent’s limited partnership interest as an “assignee” of the revocable trust and claimed a 37.2 percent discount for lack of marketability discount and lack of control. The estate based the level of the discount on the notion that the trust only held an assignee interest consistent with the partnership agreement which stated that, “A transferee who was not admitted as a substituted limited partner would hold the right to allocations and distributions with respect to the transferred interest, but would have no right to information or accounting or to inspect the books or records of the partnership and would not have any of the rights of a general or limited partner (including the right to vote on partnership matters)."

The IRS reduced the extent of the discount and asserted a deficiency of about $500,000. While the estate claimed that the lack of marketability discount should be 27.5 percent based on a possible holding period until 2075, the Tax Court determined that the decedent’s assignee interest was essentially the same thing as a limited partnership interest. Accordingly, the Tax Court settled on an 18 percent discount for lack of marketability. No discount for lack of control was allowed because the Tax Court found that the partnership interest was significant and carried with it the power to remove the general partner. The appellate court affirmed on appeal, concluding that the Tax Court properly determined that the assignment was essentially a transfer of the decedent’s partnership interest. The “assignment” clearly conveyed more than an assignee interest. 

 

Petition to Quiet Title Over Disputed Boundary Denied

Liddiard v. Mikesh, No. 19-0143, 2020 Iowa App. LEXIS 267 (Iowa Ct. App. March 18, 2020)

If an individual possesses someone else's land in an open and notorious fashion with an intent to take it away from them, such person (known as an adverse possessor) can become the true property owner after the statutory time period has expired via a quiet title action.  Adverse possession statutes vary by jurisdiction in terms of the requirements a person claiming title by adverse possession must satisfy and the length of time property must be adversely possessed.  A boundary between two properties can also be established by acquiescence.  This theory applies when neither of the adjacent owners knows the location of the true boundary.  Instead, the parties treat a particular marker or line as the boundary for a prescribed period of time.  Both parties simply agree (acquiesce) to treat that particular line or marker as the boundary.  Both of these concepts were involved in a recent Iowa case.

The parties had been adjoining rural landowners since 1988. When the defendant bought his tract, a survey was conducted.  That survey was relied on in litigation between the parties concerning a dispute over logged timber on a five-acre parcel where ownership between the parties was not clear via the respective deeds. A few years later the plaintiff sued to quiet title to the disputed area claiming that the true boundary was the existing fence line based on either the theory of adverse possession or boundary by acquiescence.

The trial court determined that the plaintiff had failed to establish the requirements for either theory, and refused to quiet title in the plaintiff. On appeal, the appellate court agreed. Based on the evidence, the appellate court determined that the plaintiff failed to establish exclusive use of the disputed area for the statutory period and did not substantially maintain or improve the area.  Thus not all of the elements of adverse possession were satisfied.  In addition, the plaintiff did not bring the quiet title action for six years after the initial dispute over timber. The appellate court also determined that the defendant did not treat the fence line as the boundary. Thus, no boundary by acquiescence was established because both parties did not assume the fence line was the boundary. 

Court Addresses Direct and Indirect Discharges Under CWA – Awaiting Supreme Court Guidance

Conservation Law Foundation v. New Hampshire Fish & Game Department, No. 18-CV-996-PB, 2020 U.S. Dist. LEXIS 59608 (D. N.H. Apr. 6, 2020).

The plaintiff claimed that the defendant had violated the Clean Water Act (CWA) by allowing a hatchery that the defendant owned and operated to discharge pollutants into a river in violation of the hatchery’s National Pollutant Discharge Elimination System (NPDES) permit. The plaintiff claimed that the defendant was making both direct and indirect discharges in violation of its NPDES permit. The direct discharge claims were based on current and anticipated future discharges directly from the hatchery into the river. The indirect discharge claims stemmed from past releases of phosphorus by the hatchery that became sediment at the bottom of the river.  Those discharges continued to leach phosphorus into the water.

The trial court dismissed the direct discharge claims and directed the parties to submit additional arguments with respect to the indirect discharge claims. The direct discharge claims were dismissed because in late 2019, the EPA released a new NPDES permit for the hatchery which ultimately may allow the discharges that the plaintiffs claim violate the CWA. Because the anticipated 2020 permit may moot some or all of the plaintiffs’ direct discharge claims, the court dismissed those claims. As for the indirect discharge claims, the court noted that the plaintiffs’ arguments that the defendants have violated the CWA by allowing pollutants to enter a water of the United States through a conduit is similar to an issue that is presently before the United States Supreme Court.  See Hawaii Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018), pet. for cert. granted, County of Maui v. Hawaii Wildlife Fund, 139 S. Ct. 1164 (2019)Because how the Supreme Court rules on the indirect discharge claim could impact the court’s decision in this case, the court requested that the parties file additional briefing on whether the Maui case should influence the court’s decision. 

Alimony Payments Not Deductible

Biddle v. Comr., T.C. Memo. 2020-39

In divorce situations, it’s fairly common for one ex-spouse to become legally obligated to make payments to the other ex-spouse.  Before 2018, the ex-spouse making alimony payments could deduct them for federal income tax purposes.  To be deductible alimony, a payment could not be classified as fixed or deemed to be child support under a set of complex rules, as evidenced in a recent Tax Court case.

Under the facts of the case, the petitioner and his wife were married for 14 years and had four children together before divorcing in 2010. The divorce decree included provisions for “child support” and “alimony.” The decree ordered the petitioner to pay monthly child support of $1,795.63 per month until each child reached age 18, died, married, entered military school or became self-sufficient. The decree also ordered the petitioner to pay “permanent periodic alimony” of $1,592.50 for at least five years until either the youngest child reached age 18, the ex-wife or petitioner died, the ex-wife remarried at the five-year point or later, or the wife became self-supporting. The decree also specified that if the husband received a pay raise that half of the net increase would increase the alimony payment. The decree was later modified to reduce the monthly child support amount because the petitioner took custody of an additional child. No change was made to the alimony payment.

On petitioner’s 2015 return, he claimed a $28,000 alimony deduction. The IRS disallowed the deduction as nondeductible child support because of one of the contingencies terminating payment was petitioner’s youngest child turning 18. The Tax Court upheld the IRS position. The Tax Court noted that under I.R.C. §71(c)(2)(A), the payments would count as child support until the child turned 18. Here, the decree clearly stated that the designated alimony payments would terminate on the contingency that the petitioner’s youngest child turn 18. That was a contingency relating to a child that qualifies a payment as nondeductible child support. This is the result, the court noted, even though the decree designated separate amounts for child support and alimony. The parties’ intent also was immaterial. 

Conclusion

Even though the focus of much present thought and discussion is on the virus and the economic wreckage that (primarily) state governmental policies are causing, the courts continue to crank out important cases.  Make sure you are still paying attention to what is going on.

April 15, 2020 in Business Planning, Civil Liabilities, Environmental Law, Estate Planning | Permalink | Comments (0)

Monday, January 27, 2020

Ag Law and Tax in the Courts – Bankruptcy Debt Discharge; Aerial Application of Chemicals; Start-Up Expenses and Lying as Protected Speech

Overview

A couple of weeks ago I did a post on some recent developments in the courts involving ag law and ag tax.  Since that time, there have been additional important court developments.  Before getting deep into tax season, it may be a good idea to provide a summary of a few of these cases.

More ag law and tax developments in the courts – it’s the topic of today’s post.

Bankruptcy Discharge and Fraud

In re Kurtz, 604 B.R. 349 (Bankr. D. Neb. 2019)

A major feature of bankruptcy in the United States is the ability to discharge at least some debt.  This makes possible the “fresh start” for debtors. But, some debtors and debts are not eligible for discharge.  Of the several categories of debts that aren’t eligible for discharge, one category is reserved for debts associated with the debtor’s fraudulent conduct.  In this case, the creditor was a landlord and the debtor was the farm tenant who put up hay and other crops on the landlord’s land. The parties did not have a written lease agreement, but the landlord assumed the lease was a 50-50 crop share agreement where the parties would split the expenses and the sale proceeds equally. The record was unclear as to what the tenant understood the relationship to be, but he did make statements to others that it was a cash rent lease. The tenant did not pay the landlord after the first two cuttings of hay because he incurred expenses while cutting. After the third cutting was bailed the landlord contacted the tenant about payment. The tenant told the landlord that he could have the proceeds from the third cutting of hay and that the tenant was finished farming for the landlord. The tenant paid a third party to stack the hay. When the landlord attempted to sell the hay he discovered that the tenant had already given the hay to a third party to settle a debt. Both parties submitted expenses related to the hay crop that year.

The landlord filed a complaint in the tenant’s bankruptcy case alleging fraud and misrepresentation seeking that the debt to the landlord not be discharged. The bankruptcy court agreed, determining that the landlord proved that the tenant’s obligation of $5,916.50 was exempt from discharge because of the debtor’s false representation. The bankruptcy court determined that the full debt owed to the landlord was $22,292.84 based on the oral lease, but that the only part of that amount derived from fraud was the amount related to the third cutting of hay - $5,370.50 plus $546 for stacking. The balance of the unpaid debt arose from a general misunderstanding that wasn’t settled before the debtor put up the first two hay cuttings. The only blatant dishonesty, the bankruptcy court determined, concerned the third cutting.  

Aerial Application of Ag Chemicals Not Inherently Dangerous

Keller Farms, Inc. v. Stewart, No. 1:16 CV 265 ACL, 2018 U.S. Dist. LEXIS 210209 (E.D. Mo. Dec. 13, 2018), aff’d. sub. nom., Keller Farms, Inc. v. McGarity Flying Service, LLC, No. 18-3755, 2019 U.S. App. LEXIS 36664 (8th Cir. Dec. 11, 2019)

This case involves a dispute involving alleged damage to the plaintiffs’ trees caused by chemicals that allegedly drifted during aerial application. The plaintiffs attempted to hold liable both the aerial applicator and the landowner that hired the applicator. The plaintiffs claimed the landowner was vicariously liable (liable because of the relationship with the applicator) for the applicator’s actions because aerial spraying of burndown chemicals is an "inherently dangerous activity." The trial court granted the defendants’ motion for Judgment as a Matter of Law on the plaintiff's trespass claim, but the remaining issues were left for the jury to resolve. The jury returned a verdict in favor of the defendants on the negligence and negligence per se claims. The plaintiffs filed a motion for a new trial, arguing the verdict was against the weight of the evidence; that the trial court erred in excluding evidence; and that the trial court erred in granting the defendants’ Motion for Judgment as a Matter of Law. The trial court, however, denied the plaintiff’s motion for a new trial.

On appeal, the appellate court affirmed. The appellate court determined that the jury’s verdict was not against the weight of the evidence, and that the aerial application of herbicides was commonplace and not inherently dangerous. In addition, the appellate court noted that the defendants’ evidence was that the herbicides did not actually drift onto the plaintiffs’ property and that the applicator complied with all label requirements and sprayed during optimal conditions. The appellate court also determined that the trial court had ruled properly on evidentiary matters and that the plaintiff had not proven the alleged monetary damages to the trees properly. The appellate court also upheld the trial court’s denial of the plaintiff’s motion for a new trial.

The Line Between Nondeductible Start-Up Expenses and Deductible Business Expenses

Primus v. Comr., T.C. Sum. Op. 2020-2

The petitioner lived in New York and bought a property in Quebec containing 200 maple trees with a significant number of them being mature, maple syrup-producing trees. The tract contained other types of trees and pasture ground and hay fields and a small amount of ground suitable for growing crops. There were also various improvements on the tract. Before collecting sap and producing syrup, the petitioner thinned underbrush and later installed a pipeline to collect sap. Sap production began in 2017. When the petitioner bought the property in 2012, the cleared the areas of the tract where he planned to plant blueberry bushes. He ordered 2,000 blueberry bushes in 2014 and planted them in 2015. He reported a substantial amount of farming-related expenses in 2012 and 2013, with most of the expenses attributable to costs of repairs to improvements on the property. The petitioner deducted expenses attributable to preparatory costs for the production of selling maple syrup and blueberries as trade or business expenses under I.R.C. §162 (or as I.R.C. §212 expenses for income-producing property).

The IRS denied the deductions, asserting that they were nondeductible start-up expenses under I.R.C. §195 on the basis that the petitioner had not yet begun the business of producing maple syrup and blueberries. The Tax Court upheld the IRS position. The Tax Court noted that expenses are not deductible as trade or business expenses until the business is actually functioning and performing the activities for which it was organized. Here, the petitioner had not actually started selling blueberries or sap in either 2012 or 2013.  That meant that the expenses incurred in 2012 and 2013 were incurred to prepare the farm to produce sap and plant blueberries, and were nondeductible startup expenses. The thinning activities, while a generally acceptable industry practice, did not establish that the business had progressed beyond the startup phase. In addition, during the years at issue, the petitioner had not collected sap, installed any infrastructure needed to convert sap into syrup, or bought any blueberry bushes. 

Lying With Purpose of Harming Livestock Facility is Protected Speech

Animal Legal Defense Fund v. Schmidt, No. 18-2657-KHV, 2020 U.S. Dist. LEXIS 10202 (D. Kan. Jan. 22, 2020)

The plaintiffs are a consortium of activist groups regularly conduct undercover investigations of livestock production facilities. Some of the plaintiffs gain access to farms through employment without disclosing the real purpose for which they seek employment (and lie about their ill motives if asked) and wear body cameras while working. For those hired into managerial and/or supervisory positions, they gain the ability to close off parts of the facility to avoid detection when filming and videoing. The film and photos obtained are circulated through the media and with the intent of encouraging public officials, including law enforcement, to take action against the facilities. The employee making the clandestine video or taking pictures, is on notice that the facility owner forbids such conduct via posted notices at the facility. The other plaintiffs utilize the data collected to cast the facilities in a negative public light, but do no “investigation.”

In 1990, Kansas enacted the Kansas Farm Animal and Field Crop and Research Facilities Protect Act (Act). K.S.A. §§ 47-1825 et seq.  The Act makes it a crime to commit certain acts without the facility owner’s consent where the plaintiff commits the act with the intent to damage an animal facility. Included among the prohibited acts are damaging or destroying an animal facility or an animal or other property at an animal facility; exercising control over an animal facility, an animal from an animal facility or animal facility property with the intent to deprive the owner of it; entering an animal facility that is not open to the public to take photographs or recordings; and remaining at an animal facility against the owner's wishes. K.S.A. § 47-1827(a)-(d). In addition, K.S.A. § 47-1828 provides a private right of action for "[a]ny person who has been damaged by reason of a violation of K.S.A. § 47-1827 against the person who caused the damage." For purposes of the Act, a facility owner’s consent is not effective if it is induced by force, fraud, deception duress or threat. K.S.A. § 47-1826(e). The plaintiff challenged the constitutionality of the Act, and filed a motion for summary judgment. The defendant also motioned for summary judgment on the basis that the plaintiffs lacked standing or, in the alternative, the Act barred trespass rather than speech.

On the standing issue, the trial court held that the plaintiffs lacked standing to challenge the portions of the Act governing physical damage to an animal facility (for lack of expressed intent to cause harm) and the private right of action provision, However, the trial court determined that the plaintiffs did have standing to challenge the exercise of control provision, entering a facility to take photographs, etc., and remaining at a facility against the owner’s wishes to take pictures, etc. The plaintiffs that did no investigations but received the information from the investigations also were deemed to have standing on the same grounds. On the merits, the trial court determined that the Act regulates speech by limiting what the plaintiffs could say and by barring pictures/videos. The trial court determined that the provisions of the Act at issue were content-based and restricted speech based on viewpoint – barring only that speech that would harm an animal facility. The trial court determined that barring lying is only constitutionally protected when it is associated with a legally recognizable harm, and the Act is unconstitutional to the extent it bars false speech intended to damage livestock facilities. Because the provisions of the Act at issue restrict content-based speech, its constitutionality is measured under a strict scrutiny standard. As such, a compelling state interest in protecting legally recognizable rights must exist. The trial court concluded that even if privacy and property rights involved a compelling state interest, the Act must be narrowly tailored to protect those rights. By focusing only on those intending to harm owners of a livestock facility, the Act did not bar all violations of property and privacy rights. The trial court also determined that the Governor was a proper defendant. 

The status of the litigation presently rests with the Kansas Attorney General and the Governor to determine the next step(s) to be taken.

Conclusion

There is never a dull moment in agricultural law and taxation.  I will provide more updates like this is in future posts.

January 27, 2020 in Bankruptcy, Civil Liabilities, Criminal Liabilities, Income Tax | Permalink | Comments (0)

Friday, January 17, 2020

Principles of Agricultural Law

Overview

Principles2020springedition400x533The fields of agricultural law and agricultural taxation are dynamic.  Law and tax impacts the daily life of a farmer, rancher, agribusiness and rural landowner practically on a daily basis.  Whether that is good or bad is not really the question.  The point is that it’s the reality.  Lack of familiarity with the basic fundamental and applicable rules and principles can turn out to be very costly.  As a result of these numerous intersections, and the fact that the rules applicable to those engaged in farming are often different from non-farmers, I started out just over 25 years ago to develop a textbook that addressed the major issues that a farmer or rancher and their legal and tax counsel should be aware of.  After three years, the book was complete – Principles of Agricultural Law - and it’s been updated twice annually since that time. 

The 46th edition is now complete, and it’s the topic of today’s post – Principles of Agricultural Law.

Subject Areas

The text is designed to be useful to farmers and ranchers; agribusiness professionals; ag lenders; educational professionals; laywers, CPAs and other tax preparers; undergraduate and law students; and those that simply want to learn more about legal and tax issues.  The text covers a wide range of topics.  Here’s just a sample of what is covered:

Ag contracts.  Farmers and ranchers engage in many contractual situations, including ag leases, to purchase contracts.  The potential perils of verbal contracts are numerous as one recent bankruptcy case points out.  See, e.g., In re Kurtz, 604 B.R. 549 (Bankr. D. Neb. 2019).  What if a commodity is sold under forward contract and a weather event destroys the crop before it is harvested?  When does the law require a contract to be in writing?  For purchases of goods, do any warranties apply?  What remedies are available upon breach? If a lawsuit needs to be brought to enforce a contract, how soon must it be filed?

Ag financing.  Farmers and ranchers are often quite dependent on borrowing money for keeping their operations running.  What are the rules surrounding ag finance?  This is a big issue for lenders also?  For instance, in one recent Kansas case, the lender failed to get the debtor’s name exactly correct on the filed financing statement.  The result was that the lender’s interest in the collateral (a combine and header) securing the loan was discharged in bankruptcy.   In re Preston, No. 18-41253, 2019 Bankr. LEXIS 3864 (Bankr. D. Kan. Dec. 20, 2019). 

Ag bankruptcy.  A unique set of rules can apply to farmers that file bankruptcy.  Chapter 12 bankruptcy allows farmers to de-prioritize taxes.  That can be a huge benefit.  Knowing how best to utilize those rules is very beneficial.

Income tax.  Tax and tax planning permeate daily life.  Deferral contracts; depreciation; installment sales; like-kind exchanges; credits; losses; income averaging; reporting government payments; etc.  The list could go on and on.  Having a basic understanding of the rules and the opportunities available can add a lot to the bottom line of the farming or ranching operation. 

Real property.  Of course, land is typically the biggest asset in terms of value for a farming and ranching operation.  But, land ownership brings with it many potential legal issues.  Where is the property line?  How is a dispute over a boundary resolved?  Who is responsible for building and maintaining a fence?  What if there is an easement over part of the farm?  Does an abandoned rail line create an issue?  What if land is bought or sold under an installment contract? 

Estate planning.  While the federal estate tax is not a concern for most people and the vast majority of farming and ranching operations, when it does apply it’s a major issue that requires planning.  What are the rules governing property passage at death?  Should property be gifted during life?  What happens to property passage at death if there is no will?  How can family conflicts be minimized post-death?  Does the manner in which property is owned matter?  What are the applicable tax rules?  These are all important questions.

Business planning.  One of the biggest issues for many farm and ranch families is how to properly structure the business so that it can be passed on to subsequent generations and remain viable economically.  What’s the best entity choice?  What are the options?  Of course, tax planning is part and parcel of the business organization question. 

Cooperatives.  Many ag producers are patrons of cooperatives.  That relationship creates unique legal and tax issues.  Of course, the tax law enacted near the end of 2017 modified an existing deduction for patrons of ag cooperatives.  Those rules are very complex.  What are the responsibilities of cooperative board members? 

Civil liabilities.  The legal issues are enormous in this category.  Nuisance law; liability to trespassers and others on the property; rules governing conduct in a multitude of situations; liability for the spread of noxious weeds; liability for an employee’s on-the-job injuries; livestock trespass; and on and on the issues go.  It’s useful to know how the courts handle these various situations.

Criminal liabilities.  This topic is not one that is often thought of, but the implications can be monstrous.  Often, for a farmer or rancher or rural landowner, the possibility of criminal allegations can arise upon (sometimes) inadvertent violation of environmental laws.  Even protecting livestock from predators can give rise to unexpected criminal liability.  Mail fraud can also arise with respect to the participation in federal farm programs.  The areas of life potentially impacted with criminal penalties are worth knowing, as well as knowing how to avoid tripping into them.

Water law.  Of course, water is essential to agricultural production.  Water issues vary across the country, but they tend to focus around being able to have rights to water in the time of shortage and moving the diversion point of water.  Also, water quality issues are important.  In essence, knowing whether a tract of land has a water right associated with it, how to acquire a water right, and the relative strength of that water rights are critical to understand.

Environmental law.  It seems that agricultural and the environment are constantly in the news.  The Clean Water Act, Endangered Species Act and other federal (and state) laws and regulations can have a big impact on a farming or ranching operation.  Just think of the issues with the USDA’s Swampbuster rules that have arisen over the past 30-plus years.  It’s good to know where the lines are drawn and how to stay out of (expensive) trouble.

Regulatory law.  Agriculture is a very heavily regulated industry.  Animals and plants, commodities and food products are all subject to a great deal of regulation at both the federal and state level.  Antitrust laws are also important to agriculture because of the highly concentrated markets that farmers buy inputs from and sell commodities into.  Where are the lines drawn?  How can an ag operation best position itself to negotiate the myriad of rules?   

Conclusion

The academic semesters at K-State and Washburn Law are about to begin for me.  It is always encouraging to me to see students getting interested in the subject matter and starting to understand the relevance of the class discussions to reality.  The Principles text is one that can be very helpful to not only those engaged in agriculture, but also for those advising agricultural producers.  It’s also a great reference tool for Extension educators. 

If you are interested in obtaining a copy, you can visit the link here:  http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/principlesofagriculturallaw/index.html

January 17, 2020 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)

Wednesday, January 15, 2020

Ag Law in the Courts – Feedlots; Dicamba Drift; and Inadvertent Disinheritance

Overview

It’s been over two months since I last did a post surveying court action of interest to farmers and ranchers.  I owe readers a couple of those types of posts to catch up.  It’s not that the courts have been quiet.  They haven’t.  I have just been writing about other things – including top legal and tax developments of 2019.  So, for today’s post I take a look at a few recent developments in the courts – this time two court opinions each from Iowa and Missouri.  The issues involve livestock feeding facilities, Dicamba drift and disinheritance.

Ag law in the courts – that’s the topic of today’s post.

Time Limit for Suing a Livestock Facility on Nuisance Claims

Dvorak v. Oak Grove Cattle, L.L.C., No. 18-1624, 2019 Iowa App. LEXIS 743 (Iowa Ct. App. Aug. 7, 2019).

The plaintiffs owned property adjacent to the defendant’s cattle feedlot. The feedlot began operating in 2006 and was investigated in 2009 and 2013 by the Iowa Department of Natural Resources (IDNR) due to manure run-off issues. The IDNR required that the defendants take remedial action. In 2016 the plaintiffs sued for negligence, trespass, and nuisance. The plaintiffs claimed, "from approximately 2009 to the present there have been multiple occasions when manure from [the defendant’s] cattle lot has entered upon, and traversed over, [the plaintiffs’] property." The defendant countered with a claim for defamation, arguing that the plaintiffs made false statements about the feedlot and published it to third parties. The defendant moved for summary judgment arguing that the nuisance cause of action was barred by the five-year statute of limitations. The trial court granted the motion for summary judgment on the basis that the plaintiffs were claiming that the feedlot was a permanent nuisance from its inception in 2006.  Thus, the nuisance suit should have been brought within five years of that time, according to the defendant.  The plaintiffs did not make separate nuisance claims for each instance of runoff which would make their claims an intermittent nuisance.

On further review, the appellate court reversed and remanded. The only issue on appeal concerned the statute of limitations. The parties agreed that a five-year statute of limitations applied.  But, did it start to run from the time the feedlot was established, or upon each occurrence of manure runoff?  In other words, was the manure runoff a permanent nuisance or a continuing nuisance?  If the manure runoff constituted a permanent nuisance, the statute of limitations began to run in 2006 and would have expired in 2011. Conversely, If the manure runoff amounted to an intermittent nuisance, the statute of limitations would start upon each occurrence. The appellate court determined that the defendant failed to meet the burden of proof that the runoff was a permanent nuisance in order to sustain the motion for summary judgment. Permanence of a nuisance, the appellate court held, goes to the injury itself and the defendant did not show that the damage to the plaintiffs’ property could not be cleaned up or abated. Instead, the defendant relied upon the contention that the runoff from the feed lot was not temporary. The appellate court determined that he feedlot itself is a permanent nuisance but the runoff itself is a temporary nuisance. Thus, the plaintiffs’ suit was not time barred. 

CAFO Permit Properly Granted 

K Tre Holdings, LP v. Missouri Department of Natural Resources, No. SD35512, 2019 Mo. App. LEXIS 1146 (Ct. App. Jul. 26, 2019)

In early 2016, a farm applied for a "General Operating Permit" to operate a Class 1C poultry Confined Feeding Operation “CAFO” in southwest Missouri.  Later that year, the farm was issued a “State No-Discharge" CAFO operating permit. The plaintiff challenged the issuance before the Administrative Hearing Commission (ACH), and the ACH determined that the CAFO permit was issued in accordance with the applicable state law and regulations. In late 2017, the defendant (state Dept. of Natural Resources) affirmed. The plaintiff sued and that state appellate court affirmed. The appellate court noted that the farm provided a 2014 google map image with labels and setback distances marked. Other maps were also presented during the agency hearings and submitted as evidence. The appellate court determined that the defendant’s decision was supported by sufficient evidence. The maps provided the necessary information to determine whether the setback distance requirements had been satisfied. The appellate court also determined that the farm did not have to provide a copy of proposed building plans to obtain a building permit, and that the plaintiff could not challenge the ACH appointment of commissioners. 

Some Dicamba Drift Claims Proceed

Bader Farms, Inc. v. Monsanto Co., No. MDL No. 1:18md2820-SNLJ, 2019 U.S. Dist. LEXIS 114302 (E.D. Mo. Jul. 10, 2019)

Dicamba drift issues have been in the news and the courts over the past couple of years.  In this case, the plaintiff claimed that his peach orchard was destroyed after the defendants (Monsanto and BASF) conspired to develop and market dicamba-tolerant seeds and dicamba-based herbicides. The plaintiff claimed that the damage to the peaches occurred when dicamba drifted to his peach orchard after being applied to neighboring fields. The plaintiff claimed that the defendants released the dicamba-tolerant seed with no corresponding dicamba herbicide that could be safely applied. As a result, farmers illegally sprayed an old formulation of dicamba herbicide that was unapproved for in-crop, over-the-top, use and was "volatile"  - meaning that it was highly likely to drift. While many cases had previously been filed on the dicamba drift issue, the plaintiff did not join the other litigation because it focused on damages to soybean crops.

Monsanto moved to dismiss the plaintiff’s claims that were based on failure to warn; negligent training; violation of the Missouri Crop Protection Act; civil conspiracy; and joint liability for punitive damages. BASF moved to dismiss those same claims except those for failure to warn. Monsanto argued that the failure to warn claims were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), but the plaintiff claimed that no warning would have prevented the damage to the peaches. The trial court determined that the plaintiff had adequately plead the claim and denied the motion to dismiss this claim. Both Monsanto and BASF moved to dismiss the negligent training claim, but the trial court refused to do so. However, the trial court did dismiss the claims based on the Missouri Crop Protection Act, noting that civil actions under this act are limited to “field crops” which did not include peaches. The trial court did not dismiss the civil conspiracy claim based on concerted action by agreement, but did dismiss the aiding and abetting portion of the claim because that cause of action is not recognized under Missouri tort law. The parties agreed to a separate jury determination of punitive damages for each defendant.

The saga continues. 

Inadvertent Disinheritance – Words Means Things

In re Trust Under the Will of Daubendiek, 929 N.W.2d 723 (Iowa Ct. App. 2019)

This case has an unfortunate (and, I believe, incorrect result).  It points out that sometimes courts are willing to strictly apply the law even in light of a potentially absurd result.  It also points out that lawyers drafting wills and trusts have to carefully consider the words that they use and how those words might be applied years later.  

Here, the testator created a will in 1942 which contained a trust. The trust had nine beneficiaries and specified that in the event of a named beneficiary’s death, the beneficiary’s interest would pass to the beneficiary’s “lawful bodily issue.” The testator died in 1948, and in 1956 one of the named beneficiaries (a grandson of the testator) adopted a child. The grandson died in 2016, and the adopted child (great-grandson of the testator) sought court confirmation that he and his descendants were the “lawful bodily issue” of the beneficiary for purposes of the trust. The trial court disagreed and granted summary judgment for the trustee, effectively disinheriting the great-grandson.

On further review, the appellate court affirmed. While the appellate court noted that Iowa law presumes that a testator intends to treat an adopted child in the same manner as a natural born child, this presumption does not apply when an intent to exclude the adopted child is shown in the will. The appellate court held that intent to exclude was present by the testator’s repeated use of “lawful bodily issue” after denoting every named trust beneficiary to describe who received that share of the trust upon a particular beneficiary’s death. The appellate court cited a 1983 Iowa Supreme Court opinion where that Court said that a similar phrase, “heirs of the body,” did not include adopted children. The appellate court concluded that there was no reasonable interpretation of the will/trust that allowed for an adopted child who is not a beneficiary’s “lawful bodily issue” to receive a share of the trust.

An expert on wills and trusts (and my law school professor on the same subject) testified that lawyers often use “legalisms” without the client providing express direction for such terminology.  As such, in his view, the phraseology of the will was ambiguous and created a genuine issue of material fact.  That would have bearing on the issue of the testator’s intent – the “polestar” or directing principle of construing a will.  But, the court refused to consider the professor’s point as being a legal argument concerning a legal issue – an opinion as to a legal standard.  As such, the court said it would not be considered.  But with that said, the court did consider it and still concluded that the will was clear and the great-grandson was to be disinherited. 

I take issue with the appellate court’s opinion.   The court read "lawful bodily issue" in a way that disinherited the great grandson without the testator specifically saying that is what he wanted to do.  Normally, disinheriting someone requires the testator’s clearly expressed intention.  Did the attorney in 1942 explain what the phrase “lawful bodily issue” meant to the testator and the effect that it possibly could have 74 years later?  Highly unlikely.  At a minimum the phrase created an ambiguity.   Also, the appellate court made no mention of the fact that under Iowa law, a legally adopted child is treated as blood relation (“lawful bodily issue”) of the adoptive parent(s) for purposes of intestacy. Thus, had the grandson involved died intestate, Iowa law would have treated the great grandchild as “lawful bodily issue.” The appellate court did not address this potentially absurd result of its opinion – making disinheritance of a great grandson dependent on whether the great grandson’s father died without a will.

Words mean things – sometimes unintended things. 

Conclusion

I will do another post on more developments in the courts soon. 

January 15, 2020 in Civil Liabilities, Estate Planning | Permalink | Comments (0)