Monday, September 5, 2022
Bibliography – January through June of 2022
Overview
Periodically I post an article containing the links to all of my blog articles that have been recently published. Today’s article is a bibliography of my articles from the beginning of 2022 through June. Hopefully this will aid your research of agricultural law and tax topics.
A bibliography of articles for the first half of 2022 – it’s the content of today’s post.
Bankruptcy
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
Other Important Developments in Agricultural Law and Taxation
Recent Court Cases of Importance to Agricultural Producers and Rural Landowners
Business Planning
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Should An IDGT Be Part of Your Estate Plan?
Farm Wealth Transfer and Business Succession – The GRAT
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance – Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Intergenerational Transfer of the Farm/Ranch Business – The Buy-Sell Agreement
IRS Audit Issue – S Corporation Reasonable Compensation
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
S Corporation Dissolution – Part 1
https://lawprofessors.typepad.com/agriculturallaw/2022/06/s-corporation-dissolution-part-1.html
S Corporation Dissolution – Part Two; Divisive Reorganization Alternative
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
Durango Conference and Recent Developments in the Courts
Civil Liabilities
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
Agritourism
https://lawprofessors.typepad.com/agriculturallaw/2022/03/agritourism.html
Animal Ag Facilities and the Constitution
When Is an Agricultural Activity a Nuisance?
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Durango Conference and Recent Developments in the Courts
Dicamba Spray-Drift Issues and the Bader Farms Litigation
Tax Deal Struck? – and Recent Ag-Related Cases
Contracts
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
What to Consider Before Buying Farmland
Elements of a Hunting Use Agreement
https://lawprofessors.typepad.com/agriculturallaw/2022/02/elements-of-a-hunting-use-agreement.html
Ag Law (and Medicaid Planning) Court Developments of Interest
Cooperatives
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Criminal Liabilities
Animal Ag Facilities and the Constitution
Is Your Farm or Ranch Protected From a Warrantless Search?
Durango Conference and Recent Developments in the Courts
Environmental Law
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
“Top Tan” Agricultural Law and Tax Developments of 2021 – Numbers 2 and 1
The “Almost Top Ten” (Part 3) – New Regulatory Definition of “Habitat” under the ESA
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
Estate Planning
Other Important Developments in Agricultural Law and Taxation
Other Important Developments in Agricultural Law and Taxation (Part 2)
The “Almost Top Ten” (Part 4) – Tax Developments
The “Almost Top 10” of 2021 (Part 7) [Medicaid Recovery and Tax Deadlines]
Nebraska Revises Inheritance Tax; and Substantiating Expenses
https://lawprofessors.typepad.com/agriculturallaw/2022/02/recent-developments-in-ag-law-and-tax.html
Tax Consequences When Farmland is Partitioned and Sold
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Should An IDGT Be Part of Your Estate Plan?
Farm Wealth Transfer and Business Succession – The GRAT
Family Settlement Agreement – Is it a Good Idea?
Registration Open for Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Proposed Estate Tax Rules Would Protect Against Decrease in Estate Tax Exemption
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Ag Law (and Medicaid Planning) Court Developments of Interest
Joint Tenancy and Income Tax Basis At Death
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
IRS Modifies Portability Election Rule
Income Tax
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 10 and 9
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 2 and 1
The “Almost Top Ten” (Part 4) – Tax Developments
The “Almost Top 10” of 2021 (Part 7) [Medicaid Recovery and Tax Deadlines]
Purchase and Sale Allocations Involving CRP Contracts
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
What’s the Character of the Gain From the Sale of Farm or Ranch Land?
Proper Tax Reporting of Breeding Fees for Farmers
Nebraska Revises Inheritance Tax; and Substantiating Expenses
https://lawprofessors.typepad.com/agriculturallaw/2022/02/recent-developments-in-ag-law-and-tax.html
Tax Consequences When Farmland is Partitioned and Sold
Expense Method Depreciation and Leasing- A Potential Trap
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
income Tax Deferral of Crop Insurance Proceeds
What if Tax Rates Rise?
https://lawprofessors.typepad.com/agriculturallaw/2022/03/what-if-tax-rates-rise.html
Registration Open for Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance – Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
IRS Audit Issue – S Corporation Reasonable Compensation
Missed Tax Deadline & Equitable Tolling
https://lawprofessors.typepad.com/agriculturallaw/2022/04/missed-tax-deadline-equitable-tolling.html
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Joint Tenancy and Income Tax Basis At Death
Tax Court Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2022/05/tax-court-caselaw-update.html
Deducting Soil and Water Conservation Expenses
Correcting Depreciation Errors (Including Bonus Elections and Computations)
When Can Business Deductions First Be Claimed?
Recent Court Decisions Involving Taxes and Real Estate
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
Tax Issues with Customer Loyalty Reward Programs
S Corporation Dissolution – Part 1
https://lawprofessors.typepad.com/agriculturallaw/2022/06/s-corporation-dissolution-part-1.html
S Corporation Dissolution – Part Two; Divisive Reorganization Alternative
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
What is the Character of Land Sale Gain?
Deductible Start-Up Costs and Web-Based Businesses
Using Farm Income Averaging to Deal with Economic Uncertainty and Resulting Income Fluctuations
Tax Deal Struck? – and Recent Ag-Related Cases
Insurance
Tax Deal Struck? – and Recent Ag-Related Cases
Real Property
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 4 and 3
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
What to Consider Before Buying Farmland
Elements of a Hunting Use Agreement
https://lawprofessors.typepad.com/agriculturallaw/2022/02/elements-of-a-hunting-use-agreement.html
Animal Ag Facilities and the Constitution
Recent Court Decisions Involving Taxes and Real Estate
Recent Court Cases of Importance to Agricultural Producers and Rural Landowners
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Tax Deal Struck? – and Recent Ag-Related Cases
Regulatory Law
The “Almost Top 10” of 2021 (Part 5)
https://lawprofessors.typepad.com/agriculturallaw/2022/01/the-almost-top-10-of-2021-part-5.html
The “Almost Top 10” of 2021 (Part 6)
https://lawprofessors.typepad.com/agriculturallaw/2022/02/the-almost-top-10-of-2021-part-6.html
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
Animal Ag Facilities and the Constitution
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Ag Law (and Medicaid Planning) Court Developments of Interest
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
The Complexities of Crop Insurance
https://lawprofessors.typepad.com/agriculturallaw/2022/07/the-complexities-of-crop-insurance.html
Secured Transactions
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
Water Law
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 4 and 3
Durango Conference and Recent Developments in the Courts
September 5, 2022 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)
Saturday, August 20, 2022
Ag Law Summit
Overview
Last September Washburn Law School conducted it’s first “Ag Law Summit” and held it at Mahoney State Park in Nebraska. This year the Summit returns in collaboration with Creighton University School of Law. The Summit will be held at Creighton University on September 30, and will also be broadcast live online.
The Summit will cover various topics of relevance to agricultural producers and the tax and legal counsel that represent them.
The 2022 Ag Law Summit – it’s the topic of today’s post.
Agenda
Survey of ag law and tax. I will start off the day with a session surveying the major recent ag law and tax developments. This one-hour session will update attendees on the big issues facing ag clients and provide insight concerning the issues that look to be on the horizon in the legal and tax world.
Tax issues upon death of a farmer. After my session, Prof. Ed Morse of Creighton Law School will examine the tax issues that arise when a farm business owner dies. Income tax basis and the impact of various entity structures will be the focus of this session along with the issues that arise upon transitioning ownership to the next generation and various tax elections.
Farm succession planning drafting language. After a morning break Dan Waters, and estate planning attorney in Omaha, NE, will take us up to lunch with a technical session on the drafting of critical documents for farm and ranch entities. What should be included in the operative agreements? What is the proper wording? What provisions should be included and what should be avoided? This session picks up on Prof. Morse’s presentation and adds in the drafting elements that are key to a successful business succession plan for the farm/ranch operation.
Fences and boundaries. After a provided lunch, Colten Venteicher who practices in Gothenburg, NE, will address the issues of fence line issues when ag land changes hands. This is an issue that seems to come up over and over again in agriculture. The problems are numerous and varied. This session provides a survey of applicable law and rules and practical advice for helping clients resolve existing disputes and avoid future ones.
The current farm economy and future projections. Following the afternoon break, a presentation on the current economy and economic situation facing ag producers, ag businesses and consumers will be presented by Darrell Holaday. Darrell is an economist and his firm, Advanced Market Concepts, provides marketing plans for ag producers. What are the economic projections for the balance of 2022 and into 2023 that bear on tax and estate planning for farmers and ranchers? This will be a key session, especially with the enactment of legislation that will add fuel to the current inflationary fire – unless of course, the tax increases in the legislation slow the economy enough to offset the additional spending.
Ethics. I return to close out the day with a session of ethics focused on asset protection planning. There’s a right way and a wrong way to do asset protection planning. This session guides the practitioner through the proper approach to asset protection planning, client identification, and the pitfalls if the “stop signs” are missed.
Reception
For those attending in person, a reception will follow in the Harper Center Ballroom on the Creighton Campus.
Conclusion
If your tax or legal practice involves ag clients, the Ag Law Summit is for you. As noted, you can also attend online if you can’t be there in person. If you are a student currently in law school or thinking about it, or are a student in accounting, you will find this seminar beneficial.
I hope to see you in Omaha on September 30 or see that you are with us online.
You can learn more about the Summit and get registered at the following link: https://www.washburnlaw.edu/employers/cle/aglawsummit.html
August 20, 2022 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, July 11, 2022
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
Overview
In late June, the U.S. Supreme Court issued an opinion in a case involving the Environmental Protection Agency’s (EPA’s) regulatory authority under the Clean Air Act (CAA). The Court, as it has in several recent cases, invoked the “major question” doctrine to pair back unelected bureaucratic agency authority and return policy-making power to citizens through their elected representatives.
The Court’s decision is important to agriculture. Many government agencies regulate agricultural activities. When federal regulations amount to setting nationwide policy and when state regulations do the same at the state level, the regulatory bodies may be successfully challenged in court.
The scope of government agency regulatory authority – it’s the topic of today’s post.
Background
Government regulation. A significant amount of governmental regulation of economic activity is conducted by and through administrative agencies that promulgate regulations and make decisions. This is particularly true concerning the regulation of agricultural activities. This form of regulation occurs outside both the legislatures and the courts, where most of conventional lawmaking occurs. Consequently, with much of administrative law, the administrative agency that writes the regulation at issue serves as judge and jury over disputed matters involving those same regulations via the administrative review process – a process that must reach a final determination before judicial review is available. This raises fundamental questions of fairness. In exercising their rule-making power, agencies of government cannot go beyond the authority provided by the legislative body. This is the precise point that the U.S. Supreme Court recently dealt with.
At the federal level, the Congress enacts basic enabling legislation, but leaves the particular administrative agency (such as the USDA, EPA or FDA, for example) to implement and administer congressionally created programs. As a result, the enabling legislation tends to be vague with the administrative agencies (such as the USDA) needing to fill in the specific provisions by promulgating regulations. The procedures that administrative agencies must follow in promulgating rules and regulations, and the rights of individuals affected by administrative agency decisions are specified in the Administrative Procedures Act (APA). 5 U.S.C. §§ 500 et seq. (2008). The APA constitutes the operative law for many of the relationships between farmers and ranchers and the government.
Standard of review and deference. Courts generally consider only whether the administrative agency acted rationally and within its statutory authority. Consequently, a particular farmer or rancher bears the burden of insuring that the record is adequate for the appeal of the issues involved before the matter leaves the administrative process. Otherwise, an appeal of an administrative agency's decision must be based solely on arguments that the agency acted arbitrarily, capriciously, beyond legal authority or that it abused its discretion. Prevailing in court on this type of a claim can be quite difficult. However, in Christensen v. Harris County, 529 U.S. 576 (2000), the U.S. Supreme Court ruled that statutory interpretations made by governmental agencies in pronouncements that do not have the force of law, such as opinion letters, policy statements, agency manuals, and enforcement guidelines, are not entitled to such great deference. This is a significant case for the agricultural sector because the USDA often interpretates the laws they administer in formats that do not have the force of law.
Similarly, in another case the court noted than an agency is not entitled to deference simply because it is a governmental agency. Meister v. United States Department of Agriculture, 623 F.3d 363 (6th Cir. 2010). involved a claim that the U.S. Forest Service had failed to comply with its own regulations and a federal statute in developing its 2006 management plan for national forests in northern Michigan. The court specifically noted that agency deference was not automatic. Instead, the agency must apply the relevant statutory and regulatory authority.
The “major questions” doctrine. In several decisions, the U.S. Supreme Court has held that if a government agency is, in essence, setting national policy via regulation, the “arbitrary and capricious” level of deference normally accorded to the agency under the rule of Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), will not apply. Instead, the agency’s action must be supported by clear statutory authorization from the Congress. See Utility Air Regulatory Group v. Environmental Protection Agency, 573 U.S. 302 (2014). This is known as the “major questions” doctrine. It’s a doctrine that has been around for about 30 years and has been utilized in numerous cases involving the Federal Communication Commission, the Food and Drug Administration, the IRS, the Centers for Disease Control, the Occupational Safety and Health Administration, the conduct of the U.S. Attorney General as well as the EPA. Each case involves the Court determining that agency action involves a matter significant enough on a national scale for the Court to invoke the doctrine, either on the basis that the Congress had not given the agency the authority to regulate the particular matter at issue, or because the agency’s interpretation was unreasonable due to lack of clear authority from the Congress.
Recent U.S. Supreme Court Opinion
In West Virginia, et al. v. Environmental Protection Agency, et al., No. 20-1530, 2022 U.S. LEXIS 3268 (U.S. Jun. 30, 2022), the U.S. Supreme Court was asked to review the EPA’s authority to regulate greenhouse gas emissions from existing power plants under the CAA. The case arose from the EPA’s regulatory development of the Clean Power Plan (CPP) in 2015 which, in turn, stemmed from then-President Obama’s 2008 promise to establish policy that would bankrupt the coal industry. The EPA claimed it had authority to regulate CO2 emissions from coal and natural-gas-fired power plants under Section 111 of the CAA. Under that provision, the EPA determines emission limits. But EPA took the position that Section 111 empowered it to shift energy generation at the plants to “renewable” energy sources such as wind and solar. Under the CPP, existing power plants could meet the emission limits by either reducing electricity production or by shifting to “cleaner” sources of electricity generation. The EPA admitted that no existing coal plant could satisfy the new emission standards without a wholesale movement away from coal, and that the CPP would impose billions in compliance costs, raise retail electricity prices, require the retirement of dozens of coal plants and eliminate tens of thousands of jobs. In other words, the CPP would keep President Obama’s 2008 promise by bypassing the Congress through the utilization of regulatory rules set by unelected, unaccountable bureaucrats.
The U.S. Supreme Court stayed the CPP in 2016 preventing it from taking effect. The EPA under the Trump Administration repealed the CPP on the basis that the Congress had not clearly delegated regulatory authority “of this breadth to regulate a fundamental sector of the economy.” The EPA then replaced the CPP with the Affordable Clean Energy (ACE) rule. Under the ACE rule, the focus was on regulating power plant equipment to require upgrades when necessary to improve operating practices. Numerous states and private parties challenged the EPA’s replacement of the CPP with the ACE. The D.C. Circuit Court vacated the EPA’s repeal of the CPP, finding that the CPP was within the EPA’s purview under Section 7411 of the CAA – the part of the CAA that sets standards of performance for new sources of air pollution. American Lung Association v. Environmental Protection Agency, 985 F.3d 914 (D.C. Cir. 2021). The Circuit Court also vacated the ACE and purported to resurrect the CPP. In the fall of 2021, the U.S. Supreme Court agreed to hear the case.
The Supreme Court reversed, framing the issue as whether the EPA had the regulatory authority under Section 111 of the CAA to restructure the mix of electricity generation in the U.S. to transition from 38 percent coal to 27 percent coal by 2030. The Supreme Court said EPA did not, noting that the case presented one of those “major questions” because under the CPP the EPA would tremendously expand its regulatory authority by enacting a regulatory program that the Congress had declined to enact. While the EPA could establish emission limits, the Supreme Court held that the EPA could not force a shift in the power grid from one type of energy source to another. The Supreme Court noted that the EPA admitted that did not have technical expertise in electricity transmission, distribution or storage. Simply put, the Supreme Court said that devising the “best system of emission reduction” was not within EPA’s regulatory power.
Conclusion
Clearly, the Congress did not delegate administrative agencies the authority to establish energy policy for the entire country. While the Supreme Court has never precisely defined the boundaries and scope of the major question doctrine, when the regulation is more in line with what should be legislative policymaking, it will be struck down. The Supreme Court’s decision is also broad enough to have long-lasting consequences for rulemaking by all federal agencies including the USDA/FSA. The decision could also impact the Treasury Department’s promulgation of tax regulations.
The Supreme Court’s decision returns power to the Congress that it has ceded over the years to administrative agencies and the Executive branch concerning matters of “vast economic and political significance.” But, it’s also likely that the Executive branch and the unelected bureaucrats of the administrative state will likely attempt to push the envelope and force the courts to push back. It’s rare that the Executive branch and administrative agencies voluntarily return power to elected representatives as was done in numerous instances from 2017 through 2020.
July 11, 2022 in Environmental Law, Regulatory Law | Permalink | Comments (0)
Sunday, May 22, 2022
2021 Bibliography
Overview
In the past, I have posted bibliographies of my articles by year to help readers researching the various ag tax and ag law topics that I write about. The blog articles are piling up, with more 750 available for you to read and use for your research for clients (and yourself). The citations contained in the articles are linked so that you can go directly to the source. I trust that you find that feature helpful to save you time (and money) in representing clients.
Today, I provide you with the bibliography of my 2021 articles (by topic) as well as the links to the prior blogs containing past years. Many thanks to my research assistant, Kennedy Mayo, for pulling this together for me.
Prior Years
Here are the links to the bibliographies from prior years:
Ag Law and Taxation 2020 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/01/ag-law-and-taxation-2020-bibliography.html
Ag Law and Taxation – 2019 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/02/ag-law-and-taxation-2019-bibliography.html
Ag Law and Taxation – 2018 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/03/ag-law-and-taxation-2018-bibliography.html
Ag Law and Taxation – 2017 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/04/ag-law-and-taxation-2017-bibliography.html
Ag Law and Taxation – 2016 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/04/ag-law-and-taxation-2016-bibliography.html
2021 Bibliography
Below are the links to my 2021 articles, by category:
BANKRUPTCY
The “Almost Tope Ten” Ag Law and Ag Tax Developments of 2020
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
What’s an “Asset” For Purposes of a Debtor’s Insolvency Computation?
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Is a Tax Refund Exempt in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2021/06/is-a-tax-refund-exempt-in-bankruptcy.html
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
Montana Conference and Ag Law Summit (Nebraska)
Farm Bankruptcy – “Stripping,” “Claw-Back” and the Tax Collecting Authorities (Update)
BUSINESS PLANNING
For Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
C Corporate Tax Planning; Management Fees and Reasonable Compensation – A Roadmap of What Not to Do
Will the Estate Tax Valuation Regulations Return?
June National Farm Tax and Estate/Business Planning Conference
August National Farm Tax and Estate/Business Planning Conference
C Corporation Compensation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/03/c-corporation-compensation-issues.html
Planning for Changes to the Federal Estate and Gift Tax System
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
Intergenerational Transfer of Family Businesses with Split-Dollar Life Insurance
Ohio Conference -June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
The Illiquidity Problem of Farm and Ranch Estates
When Does a Partnership Exist?
https://lawprofessors.typepad.com/agriculturallaw/2021/09/when-does-a-partnership-exist.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Assets Pre-Death (Entity Interests) – Part Two
Gifting Pre-Death (Partnership Interests) – Part Three
The Future of Ag Tax Policy – Where Is It Headed?
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Fall 2021 Seminars
https://lawprofessors.typepad.com/agriculturallaw/2021/09/fall-2021-seminars.html
Corporate-Owned Life Insurance – Impact on Corporate Value and Shareholder’s Estate
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
S Corporations – Reasonable Compensation; Non-Wage Distributions and a Legislative Proposal
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
CIVIL LIABILITIES
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Three
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Damaged and/or Destroyed Trees and Crops – How is the Loss Measured?
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Mailboxes and Farm Equipment
https://lawprofessors.typepad.com/agriculturallaw/2021/07/mailboxes-and-farm-equipment.html
Statutory Immunity From Liability Associated With Horse-Related Activities
CONTRACTS
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Deed Reformation – Correcting Mistakes After the Fact
Considerations When Buying Farmland
https://lawprofessors.typepad.com/agriculturallaw/2021/11/considerations-when-buying-farmland.html
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
The Potential Peril Associated With Deferred Payment Contracts
COOPERATIVES
Continuing Education Events and Summer Conferences
Final Ag/Horticultural Cooperative QBI Regulations Issued
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
CRIMINAL LIABILITIES
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
ENVIRONMENTAL LAW
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
Valuing Ag Real Estate With Environmental Concerns
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
No Expansion of Public Trust Doctrine in Iowa – Big Implications for Agriculture
Key “Takings” Decision from SCOTUS Involving Ag Businesses
Montana Conference and Ag Law Summit (Nebraska)
Navigable Waters Protection Rule – What’s Going on with WOTUS?
ESTATE PLANNING
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
What Now? – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2021/02/what-now-part-two.html
Will the Estate Tax Valuation Regulations Return?
June National Farm and Tax and Estate/Business Planning Conference
August National Farm Tax and Estate/Business Planning Conference
Farmland in an Estate – Special Use Valuation and the 25 Percent Test
The Revocable Living Trust – Is it For You?
Summer Conferences – NASBA Certification! (and Some Really Big Estate Planning Issues – Including Basis)
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Planning for Changes to the Federal Estate and Gift Tax System
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
The Revocable Trust – What Happens When the Grantor Dies?
Intergenerational Transfer of Family Businesses with Split-Dollar Life Insurance
Ohio Conference –June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
Reimbursement Claims in Estates; Drainage District Assessments
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
The Illiquidity Problem of Farm and Ranch Estates
Planning to Avoid Elder Abuse
https://lawprofessors.typepad.com/agriculturallaw/2021/08/planning-to-avoid-elder-abuse.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Assets Pre-Death (Entity Interests) – Part Two
The Future of Ag Tax Policy – Where Is It Headed?
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Tax Happenings – Present Status of Proposed Legislation (and What You Might Do About It)
Corporate-Owned Life Insurance – Impact on Corporate Value and Shareholder’s Estate
Tax (and Estate Planning) Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/11/tax-and-estate-planning-happenings.html
Selected Tax Provisions of House Bill No. 5376 – and Economic Implications
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
INCOME TAX
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Ag Tax Developments of 2020 – Part One
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Four
Final Ag/Horticultural Cooperative QBI Regulations Issued
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Deducting Start-Up Costs – When Does the Business Activity Begin?
What Now? – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/02/what-now-part-one.html
C Corporate Tax Planning; Management Fees and Reasonable Compensation – A Roadmap of What Not to Do
Where’s the Line Between Start-Up Expenses, the Conduct of a Trade or Business and Profit Motive?
June National Farm Tax and Estate/Business Planning Conference
Selling Farm Business Assets – Special Tax Treatment (Part One)
Tax Update Webinar
https://lawprofessors.typepad.com/agriculturallaw/2021/03/tax-update-webinar.html
Selling Farm Business Assets – Special Tax Treatment (Part Two)
Selling Farm Business Assets – Special Tax Treatment (Part Three)
August National Farm Tax and Estate/Business Planning Conference
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
C Corporation Compensation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/03/c-corporation-compensation-issues.html
Tax Considerations When Leasing Farmland
Federal Farm Programs and the AGI Computation
Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/04/tax-potpourri.html
What’s an “Asset” For Purposes of a Debtor’s Insolvency Computation?
Summer Conferences – NASBA Certification! (and Some Really Big Estate Planning Issues – Including Basis)
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
The Revocable Trust – What Happens When the Grantor Dies?
Ohio Conference -June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
What’s the “Beef” With Conservation Easements?
Is a Tax Refund Exempt in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2021/06/is-a-tax-refund-exempt-in-bankruptcy.html
Tax Court Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/06/tax-court-happenings.html
IRS Guidance On Farms NOLs
https://lawprofessors.typepad.com/agriculturallaw/2021/07/irs-guidance-on-farm-nols.html
Montana Conference and Ag Law Summit (Nebraska)
Tax Developments in the Courts – The “Tax Home”; Sale of the Home; and Gambling Deductions
Recovering Costs in Tax Litigation
https://lawprofessors.typepad.com/agriculturallaw/2021/07/recovering-costs-in-tax-litigation.html
Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/08/tax-potpourri.html
Weather-Related Sales of Livestock
https://lawprofessors.typepad.com/agriculturallaw/2021/08/weather-related-sales-of-livestock.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
Livestock Confinement Buildings and S.E. Tax
When Does a Partnership Exist?
https://lawprofessors.typepad.com/agriculturallaw/2021/09/when-does-a-partnership-exist.html
Recent Tax Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2021/09/recent-tax-developments-in-the-courts.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Pre-Death (Partnership Interests) – Part Three
The Future of Ag Tax Policy – Where Is It Headed?
Tax Happenings – Present Statute of Proposed Legislation (and What You Might Do About It)
Fall 2021 Seminars
https://lawprofessors.typepad.com/agriculturallaw/2021/09/fall-2021-seminars.html
Extended Livestock Replacement Period Applies in Areas of Extended Drought – IRS Updated Drought Areas
Farm Bankruptcy – “Stripping,” “Claw-Back” and the Tax Collecting Authorities (Update)
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
Tax Issues Associated With Easements
https://lawprofessors.typepad.com/agriculturallaw/2021/10/tax-issues-associated-with-easements.html
S Corporations – Reasonable Compensation; Non-Wage Distributions and a Legislative Proposal
Tax Reporting of Sale Transactions By Farmers
The Tax Rules Involving Prepaid Farm Expenses
Self Employment Taxation of CRP Rents – Part One
Self-Employment Taxation of CRP Rents – Part Two
Self-Employment Taxation of CRP Rents – Part Three
Recent IRS Guidance, Tax Legislation and Tax Ethics Seminar/Webinar
Tax (and Estate Planning) Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/11/tax-and-estate-planning-happenings.html
Selected Tax Provisions of House Bill No. 5376 – and Economic Implications
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
The Potential Peril Associated With Deferred Payment Contracts
Inland Hurricane – 2021 Version; Is There Any Tax Benefit to Demolishing Farm Buildings and Structures?
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
The Home Sale Exclusion Rule – How Does it Work When Land is Also Sold?
Gifting Ag Commodities To Children
https://lawprofessors.typepad.com/agriculturallaw/2021/12/gifting-ag-commodities-to-children.html
Livestock Indemnity Payments – What Are They? What Are the Tax Reporting Options?
Commodity Credit Corporation Loans and Elections
INSURANCE
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
REAL PROPERTY
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Ag Zoning Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/02/ag-zoning-potpourri.html
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
Is That Old Fence Really the Boundary
https://lawprofessors.typepad.com/agriculturallaw/2021/04/is-that-old-fence-really-the-boundary.html
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Deed Reformation – Correcting Mistakes After the Fact
Valuing Ag Real Estate With Environmental Concerns
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Considerations When Buying Farmland
https://lawprofessors.typepad.com/agriculturallaw/2021/11/considerations-when-buying-farmland.html
The Home Sale Exclusion Rule – How Does it Work When Land is Also Sold?
REGULATORY LAW
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Ag Tax Developments of 2020 – Part One
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Four
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Packers and Stockyards Act Amended – Additional Protection for Unpaid Cash Sellers of Livestock
Federal Farm Programs and the AGI Computation
Regulation of Agriculture – Food Products, Slaughterhouse Line Speeds and CAFOS
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The FLSA and Ag’s Exemption From Paying Overtime Wages
The “Dormant” Commerce Clause and Agriculture
Trouble with ARPA
https://lawprofessors.typepad.com/agriculturallaw/2021/06/trouble-with-arpa.html
No Expansion of Public Trust Doctrine in Iowa – Big Implications for Agriculture
Key “Takings Decision from SCOTUS Involving Ag Businesses
Reimbursement Claims in Estates; Drainage District Assessments
Mailboxes and Farm Equipment
https://lawprofessors.typepad.com/agriculturallaw/2021/07/mailboxes-and-farm-equipment.html
Montana Conference and Ag Law Summit (Nebraska)
California’s Regulation of U.S. Agriculture
Checkoffs and Government Speech – The Merry-Go-Round Revolves Again
Is There a Constitutional Way To Protect Animal Ag Facilities
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
Livestock Indemnity Payments – What Are They? What Are the Tax Reporting Options?
SECURED TRANSACTIONS
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Cross-Collateralization Clauses – Tough Lessons For Lenders
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “EIDL Trap” For Farm Borrowers
https://lawprofessors.typepad.com/agriculturallaw/2021/07/the-eidl-trap-for-farm-borrowers.html
The Potential Peril Associated With Deferred Payment Contracts
WATER LAW
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Three
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Montana Conference and Ag Law Summit (Nebraska)
May 22, 2022 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)
Saturday, April 9, 2022
Farm Economic Issues and Implications
Overview
A firm understanding of the economic context within which the farmers and ranchers operate is necessary for both tax planning and financial planning. The creation and dissolution of legal entities, the restructuring of debt, and the use of various legal devices for the protection of assets from creditors and preserving inheritances cannot successfully be accomplished without knowledge of agriculture that transcends the applicable legal rules.
Crop production, energy issues, monetary policy, issues in the meat sector and unanticipated outside shocks have farm-level impacts that professional advisors and counselors need to account for when representing farm and ranch clients.
Current economic issues impacting ag – it’s the topic of today’s post.
Projected Plantings (and Implications)
On March 31, the USDA released its “prospective plantings” report for the 2022 crops. https://www.nass.usda.gov/Publications/Todays_Reports/reports/pspl0322.pdf The report projects farmers planting 91 million acres of soybeans and 89.5 million acres of corn. The corn planting number is down 4 percent from last year, and is the lowest acreage estimate over the last five years. The soybean projection is up four percent from 2021. Total planted acres are projected to remain about the same as 2021.
Note: The shift from corn acres to soybean acres was very predictable. Farmers have calculators and can run the numbers with higher input costs (such as fertilizer). Corn, as compared to soybeans, requires a greater amount of inputs which have risen in price substantially.
Projected wheat planted acres is up one percent from 2021, but still is projected to be the fifth lowest total wheat planted acres since 1919. Grain sorghum is projected to be down 15 percent (1.4 million acres) from 2021, with significant declines projected in Kansas and Texas. Conversely, barley and sunflower planted acres is projected to increase 11 percent and 10 percent respectively from 2021. With respect to sunflowers, however, the 2022 projection is still the fifth lowest planted area on record. Cotton acreage is projected to be up about 800,000 acres.
Implication: The projected planting numbers indicate that higher protein prices can be expected in the future.
Global Crops
The Russian war with Ukraine will have impacts on global grain trade and create additional issues for U.S. farmers and ranchers. Russia and Ukraine are leading exporters of food grains. But, Ukraine ports are closed and Russian imports are being avoided causing rising food prices. In the U.S., the rise is in addition to existing inflationary price increases for most good products. Russia and Ukraine produce 19 percent of the world’s barley; 14 percent of the world’s wheat; and four percent of the world’s maize. They also produce 29 percent of total world wheat exports and 19 percent of total world corn exports. Those numbers are particularly important to countries that depend on imported grain from Russia and Ukraine, with a major issue being the loss of corn exports from Ukraine.
Note: U.S. corn exports are projected to rise, but U.S. wheat exports are not.
If the war triggers a global food crisis, the least developed countries that are also likely to be low-income or food-deficit countries are the most vulnerable to food shortages. This would create a surge in malnutrition in these countries. Presently, 50 countries rely on Russia and Ukraine for 30 percent of their wheat supply (combined), and 26 countries source at least 50 percent of their wheat needs from Russia/Ukraine. Egypt and Turkey get over 70 percent of their wheat from Russia/Ukraine. Russia supplies 90 percent of Lebanon’s wheat and cooking oil. Grain shortages will hit the poorer African countries particularly hard. These countries rely on imported bread to feed their expanding populations. As a whole, in 2020, the continent of Africa imported $4 billion worth of ag products from Russia (which supplied the majority of the continent’s wheat consumption.
This combined data indicates an escalation of global food insecurity. One estimate is that worldwide food and feed prices could rise by 22 percent which could, in turn, cause a surge in malnutrition in developing nations. Since the war started, total world food output has decreased, resulting in a sharp drop in food exports from exporting countries. Other food exporting countries have announced new limitations on food exports (or are exploring bans) to preserve domestic supplies. This will have an impact on international grain markets and will likely have serious implications for the world’s wheat supply. The extent of such disruptions is unknown at the present time.
Note: Russia is also a major fertilizer exporter, supplying 21 percent of world anhydrous exports, 16 percent of world urea exports and 19 percent of world potash exports. Combined, Russia and Belarus provide 40 percent or world potash exports. The Russia/Ukraine war will likely have long term impacts on fertilizer prices in the U.S. and elsewhere. This will have impact crop planting decisions by farmers.
Energy Policy
Incomprehensible energy policy in the U.S. since late January of 2021 and in Europe have been a financial boon to Russia. The policy, largely couched in terms of ameliorating “climate change,” has resulted in the U.S. from being energy independent to begging foreign countries to produce more. The restriction in U.S. production and distribution of oil has occurred at a time of increasing demand coming out of state government mandated shutdowns as a result of the China-originated virus. The resulting higher energy prices have caused the prices of many products and commodities to increase.
Monetary Policy
The U.S. economy is incurring the highest inflation in 40 years. While the employment numbers are improving coming out of virus-related shutdowns, the labor force participation rate is not. A higher rate of employment coupled with a decrease in the labor force participation rate may mean that workers are taking on multiple (lower paying) jobs in an attempt to stay even with inflation.
The last time the government attempted to dig itself out of a severe inflationary situation the Federal Reserve raised interest rates substantially to “wring inflation out of the economy.” The result for agriculture was traumatic, bringing on the farm debt crisis of the 1980s. The current situation is similar with the Federal Reserve having backed itself into a corner with prolonged, historic low interest rates coupled with an outrageous increase in the money supply caused by massive government spending. If the Federal Reserve attempts to get out of the corner by just raising interest rates, the end result will likely not be good. The money supply must be reduced, or worker productivity gains must be substantial. Higher interest rates are a means to reducing the money supply.
Meat Sector
In the meat sector, the demand for beef remains strong. Beef exports are steadily growing. The current major issue in the sector is the disconnect between beef demand and the beef producer. Currently, the large meat packers are enjoying record-wide margins. Cattle producers are being signaled to decrease herd sizes because of the disconnect. Legislation is being considered in the Congress with the intent of providing more robust and transparent marketing of live cattle.
On the pork side, demand is not as impressive but is improving.
For poultry, demand remains strong and flock sizes are decreasing largely because of the presence of Avian Flu.
Some states have enacted labeling laws designed to protect meat consumers from deceptive and misleading advertising of “fake meat” products. The Louisiana law has been held unconstitutional on free speech grounds. Turtle Island Foods SPC v. Strain, No. 20-00674-BAJ-EWD, 2022 U.S. Dist. LEXIS 56208 (M.D. La. Mar. 28, 2022). Much of the advertising of “fake meat” products is couched not in terms of health benefits, but on reducing/eliminating “climate change.” Government mandates have been imposed for the sake of “climate change” – a certain amount of ethanol blend in fuel; a certain amount of “renewable” energy to generate electricity, etc.). Could that also happen to the meat industry, but in a negative way? A concern for the meat industry is whether the government will try to mandate that a certain percentage of meat cuts in a meat case consist of “fake meat” products based on a claim that doing so would further the “save the planet” effort.
Water Issues
West of the Sixth Principal Meridian, access to water is critical for the success of many farming and ranching operations. A dispute is brewing between Colorado and Nebraska over water in northeast Colorado that Nebraska lays claim to under a Compact entered into almost 100 years ago. In the fertile Northeastern Colorado area, the State Engineer has shut-in almost 4,000 wells over the past two decades to maintain streamflow and satisfy downstream priority claims. A similar number of wells have had their pumping rights limited in some way. While this is a very diverse agricultural-rich area, water is essential to maintain production. Given the rapid urban development in this area, the need for water for new subdivisions along the front range will trigger major political ramifications if there are any further reductions in agriculture’s water usage.
The economic impact of water issues in Northeastern Colorado is already being felt. The Colorado-Big Thompson Project collects, stores and delivers more than 200,000 acre-feet of supplemental water annually. Melting snowpack in the Colorado River headwaters on the West Slope is diverted through a tunnel beneath the Continental Divide to approximately 1,021,000 million residents and 615,000 acres of irrigated farmland in Northeastern Colorado. A unit (acre-foot) of Colorado Big Thompson water storage is presently selling for approximately $65,000. Fifteen years ago, it was priced in the $6,000 range. All other water shares are priced accordingly. This dramatic increase in price has implications for the structure of farming operations, succession planning and estate valuation.
Water access and availability will continue to be key to profitability of farms and ranches in the Plains and the West.
Tax Policy
In late March, the White House release its proposed 2023 fiscal year budget (October 1, 2022 – September 30, 2023). At the same time, the Treasury release its “Greenbook” explanation of the tax provisions contained in the budget proposal. Many of the proposals are the same as or similar to those included in bills in 2021 that failed to become law.
Here’s a brief list of some of the proposals:
- Top individual rate to 39.6 percent on income over $400,000 ($450,000 for married couples;
- Corporate rate goes to 28 percent (87 percent increase on many farm corporations);
- Raise capital gain rate to 39.6 percent on income over $1 million;
- Capital gain tax on any transfer of appreciated property either during life or at death;
- Partial elimination of stepped-up basis – if to spouse, then carryover; transfer of appreciated property to CRAT would be taxable;
- Trust assets must be “marked-to-market” every 90 years beginning with any new trust after 1940. The rule would be the same for partnerships or any other non-corporate owned entity. In addition, no valuation discount for partial interests, and a transfer from a trust would be a taxable event. Exclusion of $1 million/person would apply. Any tax on illiquid assets could be paid over 15 years or the taxpayer could elect to pay the tax when the property is sold or is no longer used as a farm (in that event, there would be no 15-year option);
- All farm income (including self-rents) would be subject to the net investment income tax of 3.8 percent;
- A minimum tax would apply to those with a net worth over $100 million;
- Grantor-Retained Annuity Trusts (GRATs) must have minimum term of 10 years. This would essentially eliminate the use of a “zeroed-out” GRAT;
- Any sale to a grantor trust is taxable and any payment of tax of the trust is a taxable gift;
- Limitation on valuation discounts (related party rules);
- R.C. §2032A maximum reduction would increase to $11.7 million
- Trust reporting of assets would be required if the trust corpus is over $300,000 (or $10,000 of income);
- Elimination of dynasty trusts;
- Carried interest income would become ordinary income;
- R.C. §1031 exchange tax deferral would be limited to $1 million;
- Depreciation recapture would be triggered on the sale of real estate, which would eliminate the maximum 25% rate.
Note: The provisions have little to no chance of becoming law, but if some or all were to become law, there would be significant implications for farm and ranch businesses. Many of those implications would be negative for farming and ranching operations.
Conclusion
Farmland values remain strong. Indeed, input, machinery costs and land values are outpacing inflation. For those farmers that were able to pre-pay input expenses in 2021 for 2022 crops, the perhaps much of the price increase of inputs will be blunted until another round of inputs are needed in late 2022 for the 2023 crop. Also, short-term loans were locked in before interest rates began rising. That story will also likely be different in early 2023 when those loans are redone.
The biggest risks to agriculture will continue to be from outside the sector. Unexpected catastrophic events such as the Russian war with Ukraine, whether (or when) China will invade Taiwan, domestic monetary and fiscal policy, political developments at home and abroad, and regulation of agricultural activities remain the biggest unknown variables to the profitability of farming and ranching operations and agribusinesses.
An awareness of the economic atmosphere in which farmers and ranchers operate is important to understand for practitioners to provide fully competent advice and counsel with respect to income tax, estate, business and succession planning for farmers and ranchers.
April 9, 2022 in Business Planning, Environmental Law, Estate Planning, Income Tax, Regulatory Law | Permalink | Comments (0)
Wednesday, February 9, 2022
Ag Law and Tax Potpourri
Overview
I haven’t done a “potpourri” topic for a couple of months, so it is time for one. There are always interesting developments happening in the courts and with the IRS. Today’s edition of the “potpourri” is no different.
Recent miscellaneous developments in the courts and with the IRS – it’s the topic of today’s post.
No WOTC For “Weed” Business
C.C.A. 202205024 (Nov. 30, 2021)
The taxpayer is a business that is engaged in the trade or business of trafficking marijuana. Under federal law, marijuana is a Schedule I controlled substance under the Controlled Substances Act. The taxpayer hires and pays wages to employees from one or more targeted groups provided under I.R.C. §51, and is otherwise eligible for the Work Opportunity Tax Credit (WOTC). The IRS noted that I.R.C. §280E bars a deduction or credit for a business that traffics in controlled substances as defined by state or federal law. Thus, the taxpayer was not eligible for any WOTC attributable to wages paid or incurred in carrying on a business of trafficking in marijuana.
Note: The IRS position is correct, based on the statute. But, the discrepancy between federal law and the law of some states creates confusion and inconsistency.
IRS Email Approval of Supervisor Penalty Approval
C.C.A. 202204008 (Sept. 13, 2021)
Under I.R.C. §6751(b)(1), when an IRS agent makes an initial determination to assess penalties against a taxpayer, the agent must obtain “written supervisory approval” before informing the taxpayer of the penalties via a “30-day” letter. Here, the IRS agent received written supervisory approval of the penalty recommendation via an email from his supervisor before issuing the 30-day letter to the taxpayer. The taxpayer sought to have the IRS remove the tax lien securing penalties imposed for his failure to furnish information on reportable transactions on the basis that IRS had failed to comply with I.R.C. §6751. The taxpayer claimed that such failure made the penalties invalid and required the lien to be released. The IRS Chief Counsel’s Office disagreed, finding that the IRS had complied with I.R.C. §6751. The Chief Counsel’s Office noted that the U.S. Tax Court has held that compliance with the supervisory approval requirement doesn’t require written supervisory approval to be given on a specific form and that an email satisfied the statute, if not the Internal Revenue Manual.
Low Soil Quality Doesn’t Reduce Assessment Value
Reichert v. Scotts Buff County Board of Equalization, No. 20A 0061, (Neb. Tax Equal. And Rev. Com. Jan. 31, 2022)
The petitioner owned low soil quality farmland in western Nebraska and challenged the assessed value of the land of $312,376 for 2020 as determined by the county assessor. The value had been set at $289,186 for 2020. The petitioner sought a value of $269,595 for 2020 in accordance with the land’s lower 2019 classification. The County Board of Equalization (CBOE) determined the taxable value of the property was $289,186 for tax year 2020. The petitioner’s primary issue with the county’s valuation was that the county had upgraded the soil quality of the land from 2019 to 2020 to justify the higher valuation. The petitioner provided a Custom Soil Resource Report conducted by the Natural Resources Conservation Service (NRCS) showing that the soil had a farmland classification of “not prime farmland” and should be put back to its prior classification at the lower valuation. The CBOE determined that the value should be $289,186 for 2020. The petitioner appealed.
On review, the Nebraska Tax Equalization and Review Commission (Commission) affirmed the CBOE’s valuation. The Commission noted that the CBOE’s valuation was based on state assessment standards that became law in 2019 as a result of LB 372 that amended Neb. Rev. Stat. §77-1363. Under the revised law, the Land Capability Group (LCG) classifications must be based on land-use specific productivity data from the NRCS. The Nebraska Dept. of Revenue Property Assessment Division used the NRCS data to develop a new LCG structure to comply with the statutory change. Each county received the updated LCG changes and applied them to the land inventory in the 2020 assessment year. The Commission noted that the petitioner’s NRCS report did not show the classification that each soil type should receive under the LCG system and, thus, did not rebut the reclassifications of the soil types for his farmland under an arbitrary or unreasonable standard.
Note: The case points out that the burden is in the taxpayer to establish that the assessed value is incorrect. To rebut the presumption, the evidence provided must be specific as to soil type. The Nebraska farmland tax valuation system is a frustration for many farmers and ranchers despite the change in the system made with the 2019 legislation.
ESOP Didn’t Shield Taxpayer From Income
Larson v. Comr., T.C. Memo. 2022-3
The petitioner, a CPA and an attorney, was also the fiduciary of an Employee Stock Ownership Plan (ESOP). He placed restricted S corporate stock in the ESOP for his own benefit. The petitioner claimed that the ESOP met the requirements of I.R.C. §401(a) such that the related trust was exempt from income tax under I.R.C. §501(a). The IRS claimed that the stock value was to be included in his income because he (and the other control person) failed to enforce employment performance restrictions, and “grotesquely” failed to perform fiduciary duties associated with the ESOP. The petitioner testified that he was not aware of his duties as a fiduciary, but the court didn’t believe the testimony. The court noted that the petitioner waived the stock restrictions and breached his fiduciary duties which revealed an effort to avoid enforcement of the restrictions. As such, there was no way he could lose control over the S corporation. As a result, there was no substantial risk of forfeiture associated with the stock, and the value of the stock was properly included in the petitioner’s income in accordance with Treas. Reg. §1.83-3(a)-(b). The court also upheld the denial of deductions for claimed business expenses incurred and paid by the S corporation.
New ESA Policy for ESA Consultations
EPA Announcement, January 11, 2022. Effective upon announcement
The Environmental Protection Agency (EPA) has announced a change in policy regarding Endangered Species Act (ESA) consultations (to determine the impact on endangered or threatened species in light of critical habitat) for newly registered pesticide active ingredients being registered under the Federal Insecticide, Fungicide, Rodenticide Act (FIFRA) for the first time. Pesticides already registered under FIFRA or that have active ingredients already registered by EPA may not be subject to the same policy, but may still require ESA consultation but not under the ESA’s new policy. The EPA will determine whether formal or informal consultation is necessary on a case-by-case basis.
Court Says Animal Chiropractic is Veterinary Medicine
McElwee v. Bureau of Professional and Occupational Affairs, No. 1274 C.D. 2020, 2022 Pa. Commw. LEXIS 9 (Pa. Commw. Ct. Jan. 18, 2022)
The plaintiff is a licensed chiropractor that holds herself out to the public as an “animal chiropractor.” She treats animals in her practice. She is not a veterinarian and does not hold herself out as a veterinarian. She is certified in veterinary chiropractic by the International Veterinary Chiropractic Association. She receives medical records or x-rays when necessary from a treating veterinarian and reviews them to find infusions of the spine, breaks or fracturs of the spine, misalignments of the spine or any disk space between the vertebrae. She then makes a treatment and care plan for the animal with or without the veterinarian’s input. She also practices on animals of veterinarians, and requires animal owners to complete a consultation form granting authorization for her to provide chiropractic care to the animal’s owner. All animals in her care must have a veterinarian before she will work with the animals.
The defendant filed an order to show cause alleging that the plaintiff was subject to disciplinary action under state law because the services she performed in her practice constituted the unlicensed practice of veterinary medicine. The plaintiff sought a hearing on the matter and the hearing examiner issued a proposed adjudication and order concluding that the plaintiff was engaged in the unlicensed practice of veterinary medicine. The State Board of Veterinary Medicine issued a final adjudication finding the plaintiff, and the plaintiff appealed. The court rejected the plaintiff’s claim that animal chiropractic was unregulated not subject to the Board’s authority. The court held that even though animal chiropractic was not specifically regulated under the Veterinary Medicine Practice Act, it was regulated by the Board.
Note: Occupational licensure is highly questionable. In this case, there was no allegation that the plaintiff was not performing as an animal chiropractor in any manner other than with professional competence.
February 9, 2022 in Environmental Law, Income Tax, Real Property, Regulatory Law | Permalink | Comments (0)
Saturday, January 22, 2022
The “Almost Top Ten” (Part 3) - New Regulatory Definition of “Habitat” under the ESA
Overview
As readers of this blog will note, I recently concluded a five-part series on what I viewed as the “Top Ten” agricultural law and agricultural tax developments of 2021. There were many “happenings” in ag law and tax in 2021 which meant that there were still some significant developments that didn’t make the “Top Ten.” So far, those development that didn’t make the “Top Ten, but are still very significant as to their impact on the ag sector and those that represent farmers and ranchers involve, whether a bankruptcy trustee can retain the trustee’s fee in certain situations; improper set-up of an LLC that caused significant gifts to be recharacterized for tax purposes; and a case involving a huge estate planning mistake that cost the family a $2.5 million charitable deduction.
In today’s article I continue with another important development in agricultural law during 2021 that just wasn’t quite big enough to make the “Top Ten” list, but is still very significant – a change in the way “habitat” is defined for species listed as “endangered” under federal law.
A change is the way the feds define “habitat” for endangered species – it’s the topic of today’s post.
Background. The Endangered Species Act (ESA) establishes a regulatory framework for the protection and recovery of endangered and threatened species of plants, fish and wildlife. 16 U.S.C. § 1531 et seq (2002). The U.S. Fish and Wildlife Service (USFWS), within the Department of the Interior, is the lead administrative agency for most threatened or endangered species.
The ESA has the potential to restrict substantially agricultural activities because many of the protections provided for threatened and endangered species under the Act extend to individual members of the species when they are on private land. For example, in People for the Ethical Treatment of Property Owners v. United States Fish and Wildlife Service, 852 F.3d 990 (10th Cir. 2017), a USFWS rule concerning the “taking” of a Utah prairie dog on private property was upheld on basis that the Congress has the power to regulate purely local activities that are part of an economic class of activities that have a substantial economic effect on interstate commerce. Ts is because the court determined that the Commerce Clause authorized the regulation of noncommercial purely intrastate activity that is an essential part of a broader regulatory scheme. As such, the “take” regulation at issue was constitutional. The court noted that approximately 68 percent of ESA-protected species have habitats that do not cross state borders and, as such, the ESA could be severely undercut if the ESA only allowed protection to those species whose habitats were in multiple states.
The ESA prohibits individuals from “taking” a listed species. To take a species is to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect or attempt to engage in any such conduct with a listed species. When a species is listed as endangered or threatened, the Secretary of the Interior must consider whether to designate “critical habitat” for the species. Once a habitat designation is made, land use activities on private land designated as habitat can be severely restricted. Critical habitat must first be habitat. It must be an area that is essential for conservation of the species. See, e.g., Weyerhauser Co. v. United States Fish and Wildlife Service, 139 S.Ct. 361 (2018). But, it need not include the entire geographical range which the species could potentially occupy. That was federal government’s position until the U.S. Supreme Court in Weyerhauser determined otherwise. That decision was a major victory for farmers and ranchers and other private property owners because about half of the species listed as endangered or threatened have approximately 80 percent of their habitat on privately owned land.
Note: In late August of 2021 an appeal was filed in a case from New Mexico by ranchers on their assertion that USFWS acted in an arbitrary and capricious manner when it ignored the costs and benefits of designating critical habitat for the New Mexico Meadow Jumping Mouse. In 2016, the U.S. Fish and Wildlife Service issued a final rule designating critical habitat for the rodent across 14,000 acres and 170 miles of streams in Arizona, Colorado, and New Mexico. The USWFS asserted that the regulatory costs to the ranchers would not exceed $100 million, with $15 million of that cost imposed on grazing activities of the ranchers by regulating grazing activities. The disaffected ranchers claim that the cost is grossly underestimated and that their water rights would not be adequately protected under law by the actions of the USFWS. The trial court determined that the USFWS’ incremental effects approach to considering economic impacts was consistent with the ESA, and excluding compensation for impacts on water rights was proper as the claim was speculative. Northern New Mexico Stockman’s Association v. United States Fish and Wildlife Service, 494 F. Supp. 3d 850 (D. N.M. 2020). The U.S. Circuit Court of Appeals for the Tenth Circuit heard oral arguments in the case on appeal on January 21, 2022.
2019 regulations. In 2019, the USFWS published final rules entitled, “Endangered and Threatened Wildlife and Plants; Revision of the Regulations for Listing Species and Designating Critical Habitat.” 83 Fed. Reg. 35,193 (Aug. 12, 2019). The final rules clarified the procedures and criteria that are used to add or remove species from the endangered and threatened species lists and how their critical habitat is designated. The new rules also eliminate the rule that, by default, extended many prohibitions on endangered species to those species that only had threatened status. In addition, the final rules further defined the procedures for interagency cooperation.
Importantly, the 2019 final rules modified the ESA listing process, and allowed for economic impacts of the potential listing, delisting or reclassifying of a species to be accounted for. The findings of anticipated economic impact must be publicly disclosed. In addition, the Secretary was required to evaluate areas occupied by the species, with unoccupied areas only being considered “essential” where a critical habitat designation that is limited only to the geographical areas that a species occupies would be inadequate to ensure conservation of the species. In addition, for an unoccupied area to be designated as critical habitat, the Secretary had to determine that there is a reasonable certainty that the area will contribute to the conservation of the species and that the area contains one or more physical or biological features essential to the conservation of the species. Also, a “threatened” listing for a species was to be evaluated in accordance with whether the species is likely to become endangered in the “foreseeable future” (as long as a threat is probable).
2021 developments. Additional final rules were published in December of 2020 that became effective in mid-January of 2021. These rules modified the definition of “habitat” to make habitat designations less burdensome on private property owners, and clarifying when the USFWS may exclude certain areas from designation as critical habitat by confining the definition to simply the ecosystem that a species presently occupied rather than the historical range of the species. The final rules became effective January 19, 2021. 85 FR 8237 (eff. Jan. 19, 2021).
The very next day, the new White House Administration indicated that it would be reviewing the ESA rules pursuant to Executive Order 13990 (86 Fed. Reg. 7037, Jan. 20, 2021). On October 27, 2021, the USFWS published proposed rules that would rescind the Trump Administration’s critical habitat rule. 50 C.F.R. Part 17, RIN 1018-BD84 (Oct. 27, 2021). Prompted by the Administration, the USFWS then said it did not agree that areas must be excluded from designation when the costs exceed the benefits if it will not result in the extinction of a species. The USFWS now claims that it should retain discretion to make those decisions on excluded areas.
Conclusion
The issues involved with respect to the ESA and “habitat” designation are important to those agriculture and other private landowners that could be financially impacted by the new regulation. A new, expanded, definition of “critical habitat” would pose greater land use restrictions on private property, much of it farm and ranch land. That will likely lead to more court battles over the property regulation and whether a compensable taking has occurred.
I will continue the journey through other significant 2021 developments in ag law and tax next time.
January 22, 2022 in Environmental Law | Permalink | Comments (0)
Thursday, January 13, 2022
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 2 and 1
Overview
The time has come to “unveil” the two biggest two developments in agricultural law and taxation for 2021. As I have been pointing out in the previous articles in this series, agricultural law and agricultural tax law intersect with everyday life of farmers and ranchers in many ways. Some of those areas of intersection are good, but some are quite troubling. In any event, it points to the need for being educated and having good legal and tax counsel that is well-trained in the special rules that apply to agriculture.
This is the fifth and final installment in my list of the “Top Ten” agricultural law and tax developments of 2021. The list is comprised of what are, in my view, the most important developments in agricultural law (which includes taxation that impacts farmers and ranchers) to the sector as a whole. The developments primarily are focused on the impact to production agriculture, but the issues involved will also have effects that spillover to rural landowners and agribusinesses as well as consumers of agricultural products.
The Second and First most important agricultural law and tax developments of 2021 – it’s the topic of today’s post.
2. Developments Involving “Waters of the United States” (WOTUS).
Background. The scope of the federal government’s regulatory authority over wet areas on private land, streams and rivers under the Clean Water Act (CWA) has been controversial for more than 40 years. Many court opinions have been filed attempting to define the scope of the government’s jurisdiction. On two occasions, the U.S. Supreme Court attempted to clarify the 1986 regulatory definition of a WOTUS, but in the process of rejecting the regulatory definitions of a WOTUS developed by the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (COE), the Court didn’t provide clear direction for the lower courts. See Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, 531 U.S. 159 (2001); Rapanos v. United States, 547 U.S. 175 (2006). The lower courts have also had immense difficulties in applying the standards set forth by the U.S. Supreme Court.
Particularly with its Rapanos decision, the Court failed to clarify the meaning of the CWA phrase “waters of the United States” and the scope of federal regulation of isolated wetlands. The Court did not render a majority opinion in Rapanos, instead issuing a total of five separate opinions. The plurality opinion, written by Justice Scalia and joined by Justices Thomas, Alito and Chief Justice Roberts, would have construed the phrase “waters of the United States” to include only those relatively permanent, standing or continuously flowing bodies of water that are ordinarily described as “streams,” “oceans,” and “lakes.” In addition, the plurality opinion also held that a wetland may not be considered “adjacent to” remote “waters of the United States” based merely on a hydrological connection. Thus, in the plurality’s view, only those wetlands with a continuous surface connection to bodies that are “waters of the United States” in their own right, so that there is no clear demarcation between the two, are “adjacent” to such waters and covered by permit requirement of Section 404 of the CWA.
Justice Kennedy authored a concurring opinion, but on much narrower grounds. In Justice Kennedy’s view, the lower court correctly recognized that a water or wetland constitutes “navigable waters” under the CWA if it possesses a significant nexus to waters that are navigable in fact or that could reasonably be so made. But, in Justice Kennedy’s view, the lower court failed to consider all of the factors necessary to determine that the lands in question had, or did not have, the requisite nexus. Without more specific regulations comporting with the Court’s 2001 SWANCC opinion, Justice Kennedy stated that the COE needed to establish a significant nexus on a case-by-case basis when seeking to regulate wetlands based on adjacency to non-navigable tributaries, in order to avoid unreasonable application of the CWA. In Justice Kennedy’s view, the record in the cases contained evidence pointing to a possible significant nexus, but neither the COE nor the lower court established a significant nexus. As a result, Justice Kennedy concurred that the lower court opinions should be vacated, and the cases remanded for further proceedings.
Justice Kennedy’s opinion was neither a clear victory for the landowners in the cases or the COE. While he rejected the plurality’s narrow reading of the phrase “waters of the United States,” he also rejected the government’s broad interpretation of the phrase. While the “significant nexus” test of the Court’s 2001 SWANCC opinion required regulated parcels to be “inseparably bound up with the ‘waters’ of the United States,” Justice Kennedy would require the nexus to “be assessed in terms of the statute’s goals and purposes” in accordance with the Court’s 1985 opinion in United States v. Riverside Bayview Homes. 474 U.S. 121 (1985).
The “Clean Water Rule.” The Obama Administration attempted take advantage of the lack of clear guidance on the scope of federally jurisdictional wetland by issuing an expansive WOTUS rule. The EPA/COE regulation was deeply opposed by the farming/ranching and rural landowning communities, and triggered many legal challenges. The courts were, in general, highly critical of the regulation, invalidating it in 28 states by 2019. The CWR became a primary target of the Trump Administration.
The “NWPR Rule.” The Trump Administration essentially rescinded the Obama-era rule and replaced it with its own rule – the “Navigable Waters Protection Rule” (NWPR). 85 Fed. Reg. 22, 250 (Apr. 21, 2020). The NWPR redefined the Obama-era WOTUS rule to include only: “traditional navigable waters; perennial and intermittent tributaries that contribute surface water flow to such waters; certain lakes, ponds, and impoundments of jurisdictional waters; and wetlands adjacent to other jurisdictional waters. In short, the NWPR narrowed the definition of the statutory phrase “waters of the United States” to comport with Justice Scalia’s approach in Rapanos. Thus, the NWPR excluded from CWA jurisdiction wetlands that have no “continuous surface connection” to jurisdictional waters. The rule much more closely followed the Supreme Court’s guidance issued in 2001 and 2006 that did the Obama-era rule, but it was challenged by environmental groups. Indeed, the NWPR has been challenged in 15 cases filed in 11 federal district courts.
2021 developments. In early 2021, the U.S. Court of Appeals for the Tenth Circuit reversed a Colorado trial court that had entered a preliminary injunction barring the NWPR from taking effect in Colorado as applied to the discharge permit requirement of Section 404 of the CWA. The result of the appellate court’s decision is that the NWPR became effective in every state. Colorado v. United States Environmental Protection Agency, 989 F.3d 874 (10th Cir. 2021).
A primary aspect of the litigation involving the NWPR is whether it should apply retroactively or whether it is limited in its application on a prospective basis. For example, in United States v. Lucero, 989 F.2d 1088 (9th Cir. 2021), the defendant, in 2014, operated a business that charged construction companies for the dumping of soil and debris on dry lands near San Francisco Bay. The Environmental Protection Agency (EPA) later claimed that the dry land was a “wetland” subject to the dredge and fill permit requirements of Section 404 of the Clean Water Act (CWA). As a result, the defendant was charged with (and later convicted of) violating the CWA without any evidence in the record that the defendant knew or had reason to know that the dry land was a wetland subject to the CWA.
On further review, the appellate court noted that the CWA prohibits the “knowing” discharge of a pollutant into covered waters without a permit. At trial, the jury instructions did not state that the defendant had to make a “knowing” violation of the CWA to be found guilty of a discharge violation. Accordingly, the appellate court reversed on this point. However, the appellate court ruled against the defendant on his claim that the regulation defining “waters of the United States” was unconstitutionally vague, and that the 2020 Navigable Waters Protection Rule should apply retroactively to his case.
The NWPR was also held to apply prospectively only in United States v. Acquest Transit, LLC, No. 09-cv-555, 2021 U.S. Dist. LEXIS 40143 (W.D. N.Y. Mar. 3, 2021) and United States v. Mashni, No. 2:18-cv-2288-DCN, 2021 U.S. Dist. LEXIS 123345 (S.D. S.C. Jul. 1, 2021).
Most recently, a federal district court in South Carolina remanded the NWPR to the EPA. South Carolina Coastal Conservation League, et al. v. Regan, No. 2:20-cv-016787-BHH, 2021 U.S. Dist. LEXIS 132031 (D. S.C. Jul. 15, 2021). The NWPR was being challenged on the scope issue. Even though the NWPR was remanded, the court left the rule intact. That fit with the strategy of present Administration. If the court had invalidated the NWPR, then the Administration would have had to defend the Obama-era rule in court. By not vacating the NWPR allows the current administration to proceed in trying to write a new rule without bothering to defend the Obama-era rule in court.
In Pasqua Yaqui Tribe v. United States Environmental Protection Agency, No. CV-20-TUC-RM, 2021 U.S. Dist. LEXIS 163921 (D. Ariz. Aug. 30, 2021). the court vacated the NWPR. The court’s order did not specify the scope of the vacatur, but the EPA and the COE soon announced that neither agency would implement the NWPR on a nationwide basis, and will rely on the pre-2015 regulatory definition of a WOTUS until a new rule is developed. This all means that projects that have already received a CWA permit based on the NWPR can continue to rely on the permit until it expires. If a project has received an approved jurisdictional determination based on the NWPR may rely on it for five years from the date of issuance regardless of whether the project has already received a CWA permit based on the jurisdictional determination. For projects that have received a preliminary jurisdictional determination after the date of the court’s opinion may continue to rely on it.
New proposed rule. On December 7, 2021, the EPA and the COE published a proposed rule redefining a WOTUS in accordance with the pre-2015 definition of the term. 86 FR 69372 (Dec. 7, 2021). Under the proposed rule, EPA states its intention to define a WOTUS in accordance with the 1986 regulations as further defined by the courts since that time. In addition, the proposed rule would base the existence of a WOTUS on the “significant nexus” standard set forth in prior Supreme Court decisions. As such, a WOTUS would include traditional navigable waters; territorial seas and adjacent wetlands; most impoundments of a WOTUS and wetlands adjacent to impoundments or tributaries that meet either the relatively permanent standard or the significant nexus standard; all waters that are currently used or were used in the past or may be susceptible to use in interstate or foreign commerce, including all waters that are subject to the ebb and flow of the tide. The proposed rule defines “interstate waters” as “all rivers, lakes, and other waters that flow across, or form a part of State boundaries” regardless of whether those waters are also traditionally navigable. A “tributary” is also defined as being a WOTUS if it fits in the “other waters” category via a significant nexus with covered waters or if it is relatively permanent. The EPA and COE further define the “relatively permanent standard” as “waters that are relatively permanent, standing or continuously flowing and waters with a continuous surface connection to such waters.” The “significant nexus standard” is defined as “waters that either alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity of traditional navigable waters, interstate waters, or the territorial seas (the "foundational waters").” The comment period on the proposed rule expires on February 7, 2022.
Related WOTUS issue. During 2021 another significant case with WOTUS-related issues continued to wind its way through the court system. In Sackett v. Environmental Protection Agency, 8 F.4th 1075 (9th Cir. 2021), the plaintiffs bought a .63-acre lot in 2004 on which they intended to build a home. The lot is near numerous wetlands the water from which flows from a tributary to a creek, and eventually runs into a lake approximately 100 yards from the lot. The lake is 19 miles long and is a WOTUS subject to the CWA which bars the discharge of a pollutant, including rocks and sand into it. The plaintiffs began construction of their home, and the EPA issued a compliance order notifying the plaintiffs that their lot contained wetlands due to adjacency to the lake and that continuing to backfill sand and gravel on the lot would trigger penalties of $40,000 per day. The plaintiff sued and the EPA claimed that its administrative orders weren’t subject to judicial review. Ultimately the U.S. Supreme Court unanimously rejected the EPA’s argument and remanded the case to the trial court for further proceedings. The EPA withdrew the initial compliance order and issued an amended compliance order which the trial court held was not arbitrary or capricious. The plaintiffs appealed and the EPA declined to enforce the order, withdrew it and moved to dismiss the case. However, the EPA still maintained the lot was a jurisdictional wetland subject to the CWA and reserved the right to bring enforcement actions in the future. In 2019, the plaintiffs resisted the EPA’s motion and sought a ruling on the motion to bring finality to the matter. The EPA claimed that the case was moot, but the appellate court disagreed, noting that the withdrawal of the compliance order did not give the plaintiffs final and full relief. On the merits, the appellate court noted that the lot contained wetlands 30 feet from the tributary, and that under the “significant nexus” test of Rapanos v. United States, 547 U.S. 715 (2006), the lot was a regulable wetland under the CWA as being adjacent to a navigable water of the United States (the lake).
Note: On September 22, 2021, the plaintiffs filed a petition with the U.S. Supreme court asking the Court to review the case. The Supreme Court set January 14, 2022, as the conference date to determine whether it will accept the case for review and decision.
Update: On January 24, 2022, the U.S. Supreme Court granted certiorari. The Court will be deciding whether the Ninth Circuit used the proper test to decide whether the wetlands at issue are “waters of the United States” for purposes of the CWA. The Sacketts are asking the Court to use the four-justice plurality in Rapanos v. United States, 547 U.S. 175 (2006). Under that test, wetlands are only subject to the CWA when they have a continuous surface water connection to regulated waters.
1. The Failure of “Build Back Better” to Become Law.
Without doubt, the biggest development of 2021 was the failure of H.R. 5376, known as “Build Back Better” (BBB) to become law. The BBB would have also been the biggest development had it also become law. There are numerous provisions in the BBB that would have impacted farmers and ranchers significantly. While the bill did pass the U.S. House on November 19, the version that passed was a “slimmed-down” version that did not contain many of the more onerous (as viewed by agriculture) provisions that were originally included. The Senate failed to take up the legislation before the end of 2021.
The following are some of the more significant provisions that were originally included in H.R. 5376 that didn’t make it into the House passed version:
- Increase in corporate tax rate to 26.5 percent;
- Modifications to the “stepped-up” basis rule at death;
- Increase in top individual marginal rate to 39.6 percent;
- A phase-out or elimination of the 20 percent qualified business income deduction;
- Increase in top capital gain rate to 25%;
- Reduction in the federal estate/gift tax unified credit exemption equivalent;
- Change in the grantor trust rules;
- Change in the present interest annual exclusion rule;
- Increase in the top federal estate/gift tax marginal rate;
- Valuation discounting rules; and
- Increase in value reduction for land in decedent’s estate under Sec. 2032A
But, there remained certain provisions in H.R. 5376 of relevance to agricultural producers. Those include the following:
- An increase in the state and local tax deduction (SALT) from the present $10,000 amount to $80,000 (MFJ);
- A surcharge on high income earners;
- Expansion of the NIIT (3.8 percent) to trade or business income for taxpayers with taxable income exceeding $400,000 (single); $500,000 (MFJ), and application of the NIIT to trade or business income of estates/trusts;
- Limit on contributions to traditional or Roth IRAs for persons with combined IRA and defined contribution account balances exceeding $10 million and adjusted taxable income exceeds the $400,000/$500,000 thresholds; required distributions for accounts where owner has combined values exceeding $10 million; no “backdoor” Roths;
- Expansion of Medicare to cover dental, hearing and vision care;
- No oil and gas drilling on non-wilderness portion or ANWR; and
- Moratorium on offshore oil and gas leasing in Eastern Gulf of Mexico, Atlantic and Pacific federal waters.
Going forward into 2022, Democrats are expected to make efforts to advance their priorities in a filibuster-proof reconciliation bill containing the White House economic recovery “blueprint.” Disputes over the structure of several tax incentives remain at the center of bicameral talks aimed at clearing the way for the Senate to pass and the House to clear a revised version of H.R. 5376. The House appears to be focused on implementing H.R. 5376 and salvaging parts of it if the bill does not pass the Senate in the same form it passed the House. Democrats also are pushing to double the current IRS budget and are pitching the move as a revenue raiser by virtue of increased revenue from audits.
On the other side of the aisle, Republicans are pushing to make the point that temporary tax breaks followed by extensions would further fuel already high inflation and add to the deficit. Senate Republicans appear to be focused on keeping the corporate tax rate at 21 percent, the top individual rate at 37 percent and top capital gains rate at 20 percent.
As of today, there is no clear sign about how a deal will be cut on a fiscal 2022 omnibus spending deal before the February 18 expiration of the current stopgap spending law. There is no current ongoing negotiation with respect to H.R. 5376, Another issue for 2022 is what the Congress might do with respect to extending tax provisions that have currently expired. There are about two dozen provisions that expired at the end of 2021. Perhaps there will be a push for a separate extender bill for renewal of popular provisions such as a tax break for mortgage insurance premiums, the ($300/$600) above-the-line deduction for charitable deductions, and an increase to age 75 for the start of required minimum distributions from retirement plans.
Conclusion
So there you have it - five articles discussing the ten biggest developments in agricultural law and taxation for 2021. What else was the law concerned with involving agriculture in 2021 that didn’t make the “Top Ten” list? Next, I will start looking at those issues.
January 13, 2022 in Environmental Law, Income Tax | Permalink | Comments (0)
Friday, January 7, 2022
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
Overview
As I pointed out in the previous articles in this series, agricultural law and agricultural tax law intersect with everyday life of farmers and ranchers in many ways. Some of those areas of intersection are good, but some are quite troubling. In any event, it points to the need for being educated and having good legal and tax counsel that is well-trained in the special rules that apply to agriculture.
This is the third installment in my list of the “Top Ten” agricultural law and tax developments of 2021. The list is comprised of what are, in my view, the most important developments in agricultural law (which includes taxation that impacts farmers and ranchers) to the sector as a whole. The developments primarily are focused on the impact to production agriculture, but the issues involved will also have effects that spillover to rural landowners and agribusinesses as well as consumers of agricultural products.
The Sixth and Fifth most important agricultural law and tax developments of 2021 – it’s the topic of today’s post.
6. The Potential Peril Associated With Deferred Payment Grain Sales. On November 8, a group of Mississippi farmers filed a class action against UMB Bank, N.A. for misleading them about the financial status of a grain elevator they sold grain to that filed bankruptcy before paying them. Island Farms, LLC, et al. v. UMB Bank, N.A., No.___, (S.D. Miss. filed Nov. 8, 2021). The case is a grim reminder of the financial peril a farmer can be in when grain is delivered to an elevator, but payment is not made on delivery. After grain is delivered, but before it is paid for, the seller is an unsecured creditor of the buyer. If the buyer files bankruptcy before making payment, the seller is not likely to recover much, if anything.
Based on the plaintiffs’ complaint, they delivered grain to a grain elevator that, unbeknownst to them, was insolvent and being propped up by the defendant bank. The elevator’s grain purchases involved the farmers delivering and transferring title to the grain to the elevator. The elevator would then weigh, inspect and access the grain, and deliver payment in the form of a check within a period of a few days, or at another date if any particular farmer so desired.
The elevator is one of the largest grain elevator operations serving farmers in the Mississippi Delta, and was highly leveraged with massive amounts of debt. The elevator’s principal creditor was the bank, with loans dating back to 2015. The total balance on the loans was approximately $70 million as of September 2021. $37 million was the balance on a revolving loan and $33 million was the balance on a term note. The bank required the grain elevator to post collateral, which meant that virtually all of its assets were collateralized. The loan agreements gave the bank a continuing security interest upon all property of the grain elevator, whether then owned or later acquired. The elevator’s most valuable collateral was the grain they stored, and the amount they could borrow was determined in part by the amount of grain in inventory.
By the spring of 2021, the elevator was in serious financial distress, having less than $4,000 cash on hand, and was effectively insolvent. In addition, throughout 2021 the elevator failed to make payments to reduce the balance of the revolving loan, which it was contractually obligated to reduce. However, the bank permitted the elevator to keep the balance of the loan at the maximum level throughout the year. The elevator was required to furnish audited financial statements to the bank within 120 days of December 31, the end of its fiscal year.
The plaintiffs claim that the elevator was kept afloat by the bank’s forbearance on their loans. The bank was aware that if it called the loans, there would be little grain it could claim as security for the grain elevator’s debt. As a result, the plaintiffs claim that the bank proposed to wait until the grain elevator had as much grain as practicable before calling the loan and thereby effectively forcing the grain elevator into bankruptcy – which it filed for Chapter 11 (reorganization) bankruptcy on September 29, 2021.
Although the elevator was in financial distress, the farmers claim that it continued to hold out to farmers the opposite. In the spring of 2021, the elevator issued an update that stated it would be better prepared financially than in years past. The update also mentioned that the elevator had funding in place from multiple sources to ensure everyone got paid on time. However, several checks that the elevator wrote bounced during the harvest season. By the end of September, the bank notified the elevator that all amounts owed under the loan would be due immediately. As a result, the elevator filed Chapter 11 on September 29, 2021, effectively placing the bank in priority position as a secured creditor in accordance with its security agreements and the farmers in non-priority, general unsecured creditor status.
The plaintiffs claim that the elevator made knowingly false representations and concealed information that it had a duty to disclose. Additionally, they claim the bank aided and abetted the elevator’s fraud by remaining silent while knowing that the farmers would deliver their crops with a time interval before being paid. The plaintiffs specifically claim that the bank deliberately propped up the grain elevator until the crops were delivered during harvest season. The plaintiffs claim that the bank was the beneficiary of the elevator’s fraud, and that it has been unjustly enriched at the plaintiffs’ expense. The plaintiffs further claim that in addition to equitable title of the crops, they had a constructive trust over the grain for the purpose of getting paid. They assert that had the grain elevator clearly indicated its financial position, the plaintiffs would have sold their crops elsewhere. Ultimately, the plaintiffs seek forfeiture of all money received by the bank in the matter.
The Mississippi case points out the problems that a farmer can encounter when a buyer fails before making paying on delivered grain. While state indemnity funds and bonding programs might be available, they often don’t go far in making any particular farmer whole. Certainly, the financial status of a buyer should be examined carefully before delivery is made. That means seeing a certified audit of the buyer before making delivery. Also, carefully using a letter of credit or an escrow account might provide security against a buyer’s default and achieve deferability. In any event, planning is required anytime an ag commodity is sold on a deferred basis to a buyer.
Update: Shortly after the elevator filed bankruptcy, two farming entities sued for an expedited determination that the grain contracts they had with the debtor were executory and subject to an immediate deadline for the executor to assume them. In In re Express Grain Terminals, LLC, No. 21-11832-SDM, 2021 Bankr. LEXIS 3415 (Bankr. N.D. Miss. Dec. 14, 2021), the court determined that the contracts were executory and set deadlines for the debtor to assume or reject them. The debtor was required to provide adequate assurance of performance of both the monetary and non-monetary requirements of the executory contracts. The issues became whether the executory contracts were a part of a “single contract” under the Master Trade Agreement (MTA), and whether the executory contracts were actually contracts for “financial accommodations” under 11 U.S.C. §365(c)(2). The court determined that the individual farmer contracts were the executory contracts that the debtor could assume or reject. Based on state law, the court found that the individual farmer contracts were severable. In addition, the language of the MTA and the individual grain contracts demonstrated the severable nature of the individual grain contracts. In addition, the court determined that the parties’ conduct indicated the severable nature of the individual grain contracts. The court also held that the individual grain contracts with farmers were not contracts for financial accommodation because they were not contracts for the extension of cash or line of credit.
5. U.S. Supreme Court May Decide Whether FIFRA Preempts State Law – Roundup Litigation. Since 2015, thousands of cancer victims have sued Monsanto in state and federal court, alleging that Roundup caused their non-Hodgkins lymphoma. In 2021, a state court in California and a federal court in California issued important decisions on whether the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) pre-empts a state-law failure-to-warn claim when the warning cannot be added to the Roundup product without the Environmental Protection Agency’s (EPA’s) approval.
Background. In 2005, the U.S. Supreme Court, in Bates, et al. v. Dow Agrosciences LLC, 544 U.S. 431 (2005) provided guidance on how courts are to analyze FIFRA preemption claims in the future. The plaintiffs in Bates were 29 Texas peanut farmers who claimed that in the 2000 growing season their crops were severely damaged by the application of the defendant’s pesticide. The farmers claimed that the defendant knew or should have known that the pesticide would stunt the growth of peanuts in acidic soils. However, the pesticide label stated that the pesticide was recommended in all areas where peanuts were grown. Before the 2001 growing season, the defendant reregistered the pesticide with the EPA, and the EPA approved a supplemental label that specified that the product was not to be used on peanuts grown in soils with a high acidity level (pH of 7.2 or greater). After negotiations failed, the farmers gave notice of intent to sue under Texas law, and the defendant filed a motion for declaratory judgment in Federal District Court on the grounds that FIFRA preempted the farmers’ claims. The farmers also brought tort claims based in strict liability and negligence, fraud, breach of warranty and violation of the Texas Deceptive Trade Practices-Consumer Protection Act. The District Court granted the defendant’s motion, finding that FIFRA preempted the farmers’ claims, and the U.S. Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit reasoned that the farmers’ claims were preempted because if the claims were successful, the defendant would be induced (as opposed to being actually required) to change its label. Accordingly, the farmers’ successful claim would impose an additional “requirement” on the defendant under state law – something the states cannot do under FIFRA.
The Supreme Court began its analysis in Bates by noting that FIFRA preemption applies to state rules that: (1) establish a requirement for labeling or packaging that; (2) is in addition to or different from what FIFRA requires. The Court noted, therefore, that rules that require manufacturers to design reasonably safe products, use due care in conducting appropriate testing of their products, market products free of manufacturing defect, and to honor their express warranties or other contractual commitments are not preempted because they do not qualify as requirements for labeling or packaging. Thus, the Court ruled that the farmers’ claims for defective design, defective manufacture, negligent testing and breach of express warranty were not preempted. The Court rejected the Fifth Circuit’s “inducement” test as overbroad – that the farmers’ claims were preempted because, if successful, the defendant would be induced to change the pesticide label. However, the Court ruled that the farmers’ fraud and negligent- failure-to-warn claims were premised on common law rules that qualified as “requirements” for labeling or packaging. But, such claims are only preempted, the Court reasoned, if the state level common law rules establish requirements that are “in addition to or different from” FIFRA’s standards. The farmers claimed that their claims based on fraud and failure-to-warn were not preempted because these common law duties were equivalent to FIFRA’s requirements that a pesticide label not contain “false or misleading” statements, or inadequate instructions or warnings.
Ultimately, the Court ruled that it had not received sufficient briefing on whether FIFRA preempted the farmers’ fraud and failure-to-warn claims brought under Texas law, and remanded the case to the Fifth Circuit for a resolution of those claims. In remanding on these claims, the Court emphasized that a state law labeling requirement must in fact be equivalent to a requirement under FIFRA to survive preemption. If, for example, the element of falsity contained in a Texas common law fraud action imposes a broader obligation than FIFRA’s requirement that labels not contain “false or misleading statements,” the action would be preempted to the extent of the difference. The Court also opined that state law requirements must be measured against any relevant EPA regulations that give content to FIFRA’s misbranding standards. Likewise, the Court stated that jury instructions must ensure that nominally equivalent labeling requirements are genuinely equivalent such that a pesticide manufacturer should not be held liable under a state labeling requirement unless the manufacturer is also liable for misbranding under FIFRA.
In rejecting the “inducement” test of the Fifth Circuit and utilizing a “parallel requirements” test for determining FIFRA preemption, it is likely that more claims against pesticide manufacturers will survive preemption. It is no longer a valid ground for preemption that a state-based claim, if successful, would induce a manufacturer to change a label. Under the “parallel requirements” test, preemption applies only to claims that, if successful, would actually require a label to be changed. Thus, the key is whether applicable state law imposes broader obligations on pesticide manufacturers than does FIFRA.
Note: Nothing in FIFRA precludes states from providing a remedy to farmers and state law claims can be asserted based on alleged FIFRA violations to the extent that the claims would not impose a requirement that is in addition to or different from FIFRA requirements. However, a federal claim cannot be asserted. See, e.g., G & M Farms, Inc. v. Britz-Simplot Grower Solutions, LLC, et al., No. 1:13-cv-0368 LJO MJS, 2013 U.S. Dist. LEXIS 75458 (E.D. Cal. May 29, 2013).
Based on the Court’s opinion in Bates, it became reasonable to believe that additional litigation would be brought against applicators and other parties that have some connection with the activity that caused damages along with pesticide manufacturers, and that some state legislatures might reexamine state statutes governing pesticides with an eye toward conformity with FIFRA. In any event, the Court illustrated its preference against preemption without clear direction from the Congress.
2021 developments. In a California case, a married couple claimed that their usage of Roundup on their properties for several decades caused the husband’s non-Hodgkin’s lymphoma. They made numerous legal claims, including a claim that Monsanto knew or had reason to know that its Roundup products were defective and inherently dangerous and unsafe when used in the manner that Monsanto instructed. The jury determined that Monsanto had designed Roundup in a manner that was a substantial factor causing the husband’s harm; that Roundup had potential risks that were known or knowable in light of scientific and medical knowledge that were generally known in the scientific community at the time of manufacture, distribution and sale; that Monsanto was negligent in designing, manufacturing and supplying Roundup; and that Monsanto negligently failed to warn and instruct of Roundup’s danger. The trial court jury awarded $2,055,000,000 to the plaintiffs. The trial court reduced the total damage award to $86.7 million.
In 2021, the appellate court affirmed in Pilliod v. Monsanto Co., 67 Cal. App. 5th 591 (2021), pet. for review den., No. S270957, 2021 Cal. LEXIS 7965 (Cal. Sup. Ct. Nov. 17, 2021). The appellate court determined that Monsanto had not shown that FIFRA preempted the plaintiffs’ design defect and failure to warn claims because it failed to identify any state-law requirements that were in addition to or different from FIFRA’s misbranding requirements.
Also in 2021, the U.S. Circuit Court of Appeals for the Ninth Circuit issued its opinion on the application of FIFRA preemption in a bellweather case involving Roundup. Hardeman v. Monsanto Co., 997 F.3d 941 (9th Cir. 2021). In Hardeman, the trial court jury returned a verdict in the plaintiff’s favor of $5,267,634.10 in compensatory damages and $75 million in punitive damages for the plaintiff’s non-Hodgkin’s lymphoma allegedly caused by long-term used of Roundup. Monsanto appealed claiming that FIFRA preempted the plaintiff’s failure to warn claims; that the trial court committed numerous errors; and that the punitive damage award was excessive in violation of California law and the Constitution’s Due Process Clause. The appellate court disagreed, holding that the plaintiff’s failure-to-warn claims based on Roundup’s labeling were consistent with FIFRA and, therefore, neither expressly nor impliedly preempted. FIFRA’s requirement, the appellate court found, that a pesticide not be misbranded were consistent with (if not broader) than California’s common law duty to warn. Thus, Monsanto could comply with both FIFRA and California law which eliminated any preemption claim. The appellate court also held that the trial court had applied the correct standard for the admission of the plaintiff’s expert witness testimony, and properly included and excluded various evidence as to Roundup being likely carcinogenic – a risk that was known at the time of the plaintiff’s exposure. The appellate court also upheld the trial court’s reduction of punitive damages from $75 million to $20 million was proper.
Note: On August 16, 2021, Monsanto filed a petition for certiorari with the U.S. Supreme Court. The Supreme Court held a conference on the matter on December 10. While the Court did not decide whether to take the case at its conference on December 10, on December 13 the Court invited the U.S. Solicitor General to file briefs expressing the views of the United States on the matter. Monsanto Co. v. Hardeman, No. 21-241, 2021 U.S. LEXIS 6152 (U.S. Sup. Ct. Dec. 13, 2021). The issue the Court may consider is whether FIFRA preempts a state law failure-to-warn claim when the warning cannot be added to a product without the EPA's approval and the EPA has repeatedly concluded that the warning is not appropriate. A side issue in the case is whether the Ninth Circuit's standard for admitting expert testimony is inconsistent with the Court's precedent and Rule 702 of the Federal Rules of Evidence.
Conclusion
The next installment in this series will detail what I view as the fourth and third most important developments in ag law and ag tax from 2021. Stay tuned and keep reading.
January 7, 2022 in Contracts, Environmental Law, Secured Transactions | Permalink | Comments (0)
Thursday, July 22, 2021
Navigable Waters Protection Rule – What’s Going on with WOTUS?
Overview
The scope of the federal government’s regulatory authority via the Clean Water Act (CWA) over “Waters of the United States” (WOTUS) has been controversial for many years. What’s the current status of the law on this issue? It’s an important issue for farmers, ranchers and rural landowners.
Status update of the regulatory definition of a WOTUS – it’s the topic of today’s post.
Background
The scope of the federal government’s CWA regulatory authority over wet areas on private land, streams and rivers has been controversial for more than 40 years. Many court opinions have been filed attempting to define the scope of the government’s jurisdiction. On two occasions, the U.S. Supreme Court attempted to clarify matters, but in the process of rejecting the regulatory definitions of a WOTUS proffered by the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (COE) didn’t provide clear direction for the lower courts. See Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, 531 U.S. 159 (2001); Rapanos v. United States, 547 U.S. 175 (2006).
Particularly with its Rapanos decision, the Court failed to clarify the meaning of the CWA phrase “waters of the United States” and the scope of federal regulation of isolated wetlands. The Court did not render a majority opinion in Rapanos, instead issuing a total of five separate opinions. The plurality opinion, written by Justice Scalia and joined by Justices Thomas, Alito and Chief Justice Roberts, would have construed the phrase “waters of the United States” to include only those relatively permanent, standing or continuously flowing bodies of water that are ordinarily described as “streams,” “oceans,” and “lakes.” In addition, the plurality opinion also held that a wetland may not be considered “adjacent to” remote “waters of the United States” based merely on a hydrological connection. Thus, in the plurality’s view, only those wetlands with a continuous surface connection to bodies that are “waters of the United States” in their own right, so that there is no clear demarcation between the two, are “adjacent” to such waters and covered by permit requirement of Section 404 of the CWA.
Justice Kennedy authored a concurring opinion, but on much narrower grounds. In Justice Kennedy’s view, the lower court correctly recognized that a water or wetland constitutes “navigable waters” under the CWA if it possesses a significant nexus to waters that are navigable in fact or that could reasonably be so made. But, in Justice Kennedy’s view, the lower court failed to consider all of the factors necessary to determine that the lands in question had, or did not have, the requisite nexus. Without more specific regulations comporting with the Court’s 2001 SWANCC opinion, Justice Kennedy stated that the COE needed to establish a significant nexus on a case-by-case basis when seeking to regulate wetlands based on adjacency to non-navigable tributaries, in order to avoid unreasonable application of the CWA. In Justice Kennedy’s view, the record in the cases contained evidence pointing to a possible significant nexus, but neither the COE nor the lower court established a significant nexus. As a result, Justice Kennedy concurred that the lower court opinions should be vacated, and the cases remanded for further proceedings.
Justice Kennedy’s opinion was neither a clear victory for the landowners in the cases or the COE. While he rejected the plurality’s narrow reading of the phrase “waters of the United States,” he also rejected the government’s broad interpretation of the phrase. While the “significant nexus” test of the Court’s 2001 SWANCC opinion required regulated parcels to be “inseparably bound up with the ‘waters’ of the United States,” Justice Kennedy would require the nexus to “be assessed in terms of the statute’s goals and purposes” in accordance with the Court’s 1985 opinion in United States v. Riverside Bayview Homes. 474 U.S. 121 (1985).
The “WOTUS Rule”
The Obama Administration attempted take advantage of the lack of clear guidance on the scope of federally jurisdictional wetland by dramatically expanding the federal government’s reach by issuing an expansive WOTUS rule. The EPA/COE regulation was deeply opposed by the farming/ranching and rural landowning communities, and triggered many legal challenges. The courts were, in general, highly critical of the regulation and it became a primary target of the Trump Administration.
The “NWPR Rule”
The Trump Administration essentially rescinded the Obama-era rule with its own rule – the “Navigable Waters Protection Rule” (NWPR). 85 Fed. Reg. 22, 250 (Apr. 21, 2020). The NWPR redefined the Obama-era WOTUS rule to include only: “traditional navigable waters; perennial and intermittent tributaries that contribute surface water flow to such waters; certain lakes, ponds, and impoundments of jurisdictional waters; and wetlands adjacent to other jurisdictional waters. In short, the NWPR narrowed the definition of the statutory phrase “waters of the United States” to comport with Justice Scalia’s approach in Rapanos. Thus, the NWPR excludes from CWA jurisdiction wetlands that have no “continuous surface connection” to jurisdictional waters. The rule much more closely followed the Supreme Court’s guidance issued in 2001 and 2006 that did the Obama-era rule, but it was challenged by environmental groups. Indeed, the NWPR has been challenged in 15 cases filed in 11 federal district courts.
In early 2020, the U.S. Court of Appeals for the Tenth Circuit reversed a Colorado trial court that had entered a preliminary injunction barring the NWPR from taking effect in Colorado as applied to the discharge permit requirement of Section 404 of the CWA. The result of the appellate court’s decision is that the NWPR is effective in every state. Colorado v. United States Environmental Protection Agency, 989 F.3d 874 (10th Cir. 2021).
A primary aspect of the litigation involving the NWPR is whether it should apply retroactively or whether it is limited in its application on a prospective basis. For example, in United States v. Lucero, No. 10074, 2021 U.S. App. LEXIS 6307 and 6327 (9th Cir. Mar. 4, 2021), the defendant, in 2014, operated a business that charged construction companies for the dumping of soil and debris on dry lands near San Francisco Bay. The Environmental Protection Agency (EPA) later claimed that the dry land was a “wetland” subject to the dredge and fill permit requirements of Section 404 of the Clean Water Act (CWA). As a result, the defendant was charged with (and later convicted of) violating the CWA without any evidence in the record that the defendant knew or had reason to know that the dry land was a wetland subject to the CWA. On further review, the appellate court noted that the CWA prohibits the “knowing” discharge of a pollutant into covered waters without a permit. At trial, the jury instructions did not state that the defendant had to make a “knowing” violation of the CWA to be found guilty of a discharge violation. Accordingly, the appellate court reversed on this point. However, the appellate court ruled against the defendant on his claim that the regulation defining “waters of the United States” was unconstitutionally vague, and that the 2020 Navigable Waters Protection Rule should apply retroactively to his case.
The NWPR was also held to apply prospectively only in United States v. Acquest Transit, LLC, No. 09-cv-555, 2021 U.S. Dist. LEXIS 40143 (W.D. N.Y. Mar. 3, 2021) and United States v. Mashni, No. 2:18-cv-2288-DCN, 2021 U.S. Dist. LEXIS 123345 (S.D. S.C. Jul. 1, 2021).
Current Challenge
Most recently, a federal district court in South Carolina remanded the NWPR to the EPA. South Carolina Coastal Conservation League, et al. v. Regan, No. 2:20-cv-016787-BHH (D. S.C. Jul. 15, 2021). The NWPR was being challenged on the scope issue. Even though the NWPR was remanded, the court left the rule intact. That fit with the strategy of the present Administration. If the court had invalidated the NWPR, then the Administration would have had to defend the indefensible Obama-era rule in court. That wouldn’t have turned out well for the Administration. Last week’s opinion not vacating the NWPR allows the Administration to proceed in trying to write a new rule without bothering to defend the Obama-era rule in court.
Conclusion
The litigation involving WOTUS will continue, as will the rule-writing. Ultimately, the issue on the scope of the federal government’s regulatory control over wet areas on private property as well as streams and lakes may be back before the Supreme Court.
July 22, 2021 in Environmental Law | Permalink | Comments (0)
Thursday, July 15, 2021
Montana Conference and Ag Law Summit (Nebraska)
Overview
The second of the two national conferences on Farm/Ranch Income Tax and Farm/Ranch Estate and Business Planning is coming up on August 2 and 3 in Missoula, Montana. A month later, on September 3, I will be conducting an “Ag Law Summit” at Mahoney State Park located between Omaha and Lincoln, NE.
Upcoming conferences on agricultural taxation, estate and business planning, and agricultural law – it’s the topic of today’s post.
Montana
The second of my two 2021 summer conferences on agricultural taxation and estate/business planning will be held in beautiful Missoula, Montana. Day 1 on August 2 is devoted to farm income taxation, with sessions involving an update of farm income tax developments; lingering PPP and ERC issues (as well as an issue that has recently arisen with respect to EIDLs); NOLs (including the most recent IRS Rev. Proc. and its implications); timber farming; oil and gas taxation; handling business interest; QBID/DPAD planning; FSA tax and planning issues; and the prospects for tax legislation and implications. There will also be a presentation on Day 1 by IRS Criminal Investigation Division on how tax practitioners can protect against cyber criminals and other theft schemes.
On Day 2, the focus turns to estate and business planning with an update of relevant court and IRS developments; a presentation on the farm economy and what it means for ag clients and their businesses; special use valuation; corporate reorganizations; the use of entities in farm succession planning; property law issues associated with transferring the farm/ranch to the next generation; and an ethics session focusing on end-of life decisions.
If you have ag clients that you do tax or estate/business planning work for, this is a “must attend” conference – either in-person or online.
For more information about the Montana conference and how to register, click here: https://www.washburnlaw.edu/employers/cle/farmandranchtaxaugust.html
Nebraska
On September 3, I will be holding an “Ag Law Summit” at Mahoney St. Park, near Ashland, NE. The Park is about mid-way between Omaha and Lincoln, NE on the adjacent to the Platte River and just north of I-80. The Summit will be at the Lodge at the Park. On-site attendance is limited to 100. However, the conference will also be broadcast live over the web for those that would prefer to or need to attend online.
I will be joined at the Summit by Prof. Ed Morse of Creighton Law School who, along with Colten Venteicher of the Bacon, Vinton, et al., firm in Gothenburg, NE, will open up their “Ag Entreprenuer’s Toolkit” to discuss the common business and tax issues associated with LLCs. Also on the program will be Dan Waters of the Lamson, et al. firm in Omaha. Dan will address how to successfully transition the farming business to the next generation of owners in the family.
Katie Zulkoski and Jeffrey Jarecki will provide a survey of state laws impacting agriculture in Nebraska and key federal legislation (such as the “30 x 30” matter being discussed). The I will address special use valuation – a technique that will increase in popularity if the federal estate tax exemption declines from its present level. I will also provide an update on tax legislation (income and transfer taxes) and what it could mean for clients.
The luncheon speaker for the day is Janet Bailey. Janet has been deeply involved in Kansas agriculture for many years and will discuss how to create and maintain a vibrant rural practice.
If you have a rural practice, I encourage you to attend. It will be worth your time.
For more information about the conference, click here: https://www.washburnlaw.edu/employers/cle/aglawsummit.html
Conclusion
The Montana and Nebraska conferences are great opportunities to glean some valuable information for your practices. As noted, both conferences will also be broadcast live over the web if you can’t attend in person.
July 15, 2021 in Bankruptcy, Business Planning, Environmental Law, Estate Planning, Income Tax, Real Property, Regulatory Law, Water Law | Permalink | Comments (0)
Thursday, June 24, 2021
Key “Takings” Decision from SCOTUS Involving Ag Businesses
Overview
The power to “take” private property for public use (or for a public purpose) without the owner's consent is an inherent power of the federal and state governments. However, the United States Constitution limits the government's eminent domain power by requiring federal and state governments to pay for what is “taken.” The Fifth Amendment states in part “...nor shall private property be taken for public use without just compensation.”
Whether a taking has occurred is not an issue when the government physically takes the property, with the only issue being whether the taking is compensable and the amount of compensation due to the landowner. However, for non-physical (regulatory) takings, the issue is murkier. At what point does government regulation of private property amount to a compensable taking?
Earlier this week, the U.S. Supreme Court addressed the issue of physical/non-physical takings in a case involving a California strawberry growing operation.
Takings and the constitution – it’s the topic of today’s post.
Background
The power to “take” private property for public use (or for a public purpose) without the owner's consent is an inherent power of the federal and state government. However, the United States Constitution limits the government's eminent domain power by requiring federal and state governments to pay for what is “taken.” The Fifth Amendment states in part “...nor shall private property be taken for public use without just compensation.” The clause has two prohibitions: (1) all takings must be for public use, and (2) even takings that are for public use must be accompanied by compensation. Historically, the “public use” requirement operated as a major constraint on government action. For many years, the requirement was understood to mean that if property was to be taken, it was necessary that it be used by the public – the fact that the taking was “beneficial” was not enough. Eventually, however, courts concluded that a wide range of uses could serve the public even if the public did not, in fact, have possession. Indeed, so many exceptions were eventually built into the general rule of “use by the public” that the rule itself was abandoned.
Actual physical takings of property by the government are easy to identify. When a non-physical taking has occurred is not as easy to spot.
Regulatory (Non-Physical) Takings
A non-physical taking may involve the governmental condemnation of air space rights, water rights, subjacent or lateral support rights, or the regulation of property use through environmental restrictions. How is the existence of a regulatory taking determined? There are several approaches that the Supreme Court has utilized.
Multi-factor balancing test. In a key case decided in 1978, the U.S. Supreme Court set forth a multi-factored balancing test for determining when governmental regulation of private property effects a taking requiring compensation. In Penn Central Transportation Co. et al. v. New York City, 438 U.S. 104 (1978), the Court held that a landowner cannot establish a “taking” simply by being denied the ability to exploit a property interest believed to be available for development. Instead, the Court ruled that in deciding whether particular governmental action effects a taking, the character, nature and extent of the interference with property rights as a whole are the proper focus rather than discrete segments of the owner’s property rights. In 2005, the Court confirmed the multi-factor test and noted that the touchstone for deciding when a regulation is a taking is whether the restriction on property usage is functionally equivalent to a physical taking of the property. Lingle, et al. v. Chevron U.S.A., Inc., 544 U.S. 528 (2005).
Total regulatory taking. In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), the landowner purchased two residential lots with an intent to build single-family homes. Two years later, the state legislature passed a law prohibiting the erection of any permanent habitable structures on the Lucas property. The law's purpose was to prevent beachfront erosion and to protect the property as a storm barrier, a plant and wildlife habitat, a tourist attraction, and a “natural health environment” which aided the physical and mental well-being of South Carolina's citizens. The law effectively rendered the Lucas property valueless. Lucas sued the Coastal Council claiming that, although the act may be a valid exercise of the state's police power, it deprived him of the use of his property and thus, resulted in a taking without just compensation. The Coastal Council argued that the state had the authority to prevent harmful uses of land without having to compensate the owner for the restriction.
The Supreme Court ruled for Lucas and opined that the state's interest in the regulation was irrelevant since the trial court determined that Lucas was deprived of any economically viable alternative use of his land. The Lucas case has two important implications for environmental regulation of agricultural activities. First, the Lucas court focused solely on the economic viability of the land and made no recognition of potential noneconomic objectives of land ownership. However, in the agricultural sector land ownership is typically associated with many noneconomic objectives and serves important sociological and psychological functions. Under the Lucas approach, these noneconomic objectives are not recognized. Second, under the Lucas rationale, environmental regulations do not invoke automatic compensation unless the regulations deprive the property owner of all beneficial use.
Under the Lucas approach, an important legal issue is whether compensation is required when the landowner has economic use remaining on other portions of the property that are not subject to regulation.
Unconstitutional conditions. In Nollan v. California Coastal Commission,483 U.S. 825 (1987), the plaintiff owned a small, dilapidated beach house and wanted to tear it down and replace it with a larger home. However, the defendant was concerned about preserving the public's viewing access over the plaintiff's land from the public highway to the waterfront. Rather than preventing the construction outright, the defendant conditioned the plaintiff's right to build on the land upon the plaintiff giving the defendant a permanent, lateral beachfront easement over the plaintiff's land for the benefit of the public. Thus, the issue was whether the state could force the plaintiffs to choose between their construction permit and their lateral easement. The Court held that this particular bargain was impermissible because the condition imposed (surrender of the easement) lacked a “nexus” with, or was unrelated to the legitimate interest used by the state to justify its actions - preserving the view. The Court later ruled similarly in Dolan v. Tigard, 512 U.S. 374 (1994). These cases hold that the government may not require a person to give up the constitutional right to receive just compensation when property is taken for a public use in exchange for a discretionary benefit that has little or no relationship to the property. The rule of the cases does not apply to situations involving impact fees and other permit conditions that do not involve physical invasions, but it would apply to monetary exactions where none of the plaintiff’s property is actually taken. See, e.g., Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013).
State/Local Takings – Seeking a Remedy
For a landowner that has sustained a state/local regulatory (or physical) taking, can compensation be sought initially in federal court or must legal procedures be first pursued in state court with federal courts only available if compensation is denied at the state level? The U.S. Supreme Court answered this question in 1985. In Williamson Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), the Court held that if a state provides an adequate procedure for seeking just compensation, there is no Fifth Amendment violation until the landowner has used the state procedure and has been denied just compensation. However, 28 U.S.C. §1738, would then be applied with the resulting effect that the failure to receive compensation at the state level generally meant that there was no recourse in the federal courts because of the preclusive effect of the landowner having already litigated the same issue(s) in the state courts. See, e.g., San Remo Hotel L.P., v. City and County of San Francisco, 545 U.S. 323 (2005).
The Court dealt with this “catch-22” in 2019 in Knick v. Township of Scott, 139 S. Ct. 2162 (2019, pointing out that there is a distinction between the substance of a right and the remedy for the violation of that right. It’s the takings clause of the Fifth Amendment that establishes that the government can only take (either physically or via regulation) private property by paying for it. The government’s infringement on private property is what triggers possible compensation. The Constitutional violation has occurred and a state court decision that makes the landowner financially whole simply remedies that violation. It doesn’t redefine the property right. Thus, the majority opinion reasoned, laws confer legal rights and when those rights are violated there must be legal recourse. See, e.g., Marbury v. Madison, 5 U.S. 137 (1803). As the majority noted, “a government violates the Takings Clause when it takes property without compensation, and…a property owner may bring a Fifth Amendment claim [in federal court]… at that time.”
Physical Takings
California case. Earlier this week, the Court again dealt with the takings issue in Cedar Point Nursery, et al. v. Hassid, et al., No. 20-107, 2021 U.S. LEXIS 3394 (U.S. Sup. Ct. Jun. 23, 2021). The lead plaintiff is a large strawberry growing operation in California, employing over 400 seasonal workers and about 100 full-time workers. A California labor regulation, based on the California Agricultural Labor Relations Act of 1975 that gives ag employees a right to self-organize, grants labor organizations a “right to take access” to an ag employer’s property in order to solicit support for unionization. Cal Code Regs., tit. 8, §20900(e)(1)(C). Under the regulation, an ag employer must allow union organizers onto their property for up to three hours daily, 120 days per year. In the fall of 2015, at 5 a.m., members of the United Farm Workers entered the plaintiff’s property without any prior notice being given. They entered the plaintiff’s trim shed where hundreds of workers were preparing strawberry plants. The organizers used bullhorns to stir up the workers and encourage them to join in a protest. Other workers left the worksite. The plaintiff filed charges against the union for taking access without notice. In return, the union claimed that the plaintiff had committed an unfair labor practice similar to the claim it had made during the summer of 2015 against a California grower and shipper of table grapes and citrus.
The ag businesses believed that the union would try to enter their properties again in the future, they sued claiming that the access regulation was an unconstitutional per se physical taking of an easement that was given, without compensation, to union organizers. The trial court held that the regulation did not amount to a per se physical taking because it did not “allow the public to access their property in a permanent and continuous manner for whatever reason.” Instead, the trial court held that the regulation was a non-physical taking to be evaluated under the muti-factor balancing test of Penn Central. A majority of the appellate court affirmed, identifying the various types of non-physical takings discussed above and again determining that the balancing test of Penn Central applied. The U.S. Supreme Court agreed to hear the case and reversed.
The Supreme Court determined that an actual physical appropriation of private property was involved. It was a per se governmental taking. The Court noted that the regulation didn’t merely restrict the use of private property, it appropriated it for the use and enjoyment of third parties. One aspect of property ownership is the right to exclude others, and the Court determined that the ability of the union to take access of a part of an ag operation’s private property took that right away. In addition, the right of access, even though temporary, still constitutes a taking. There was no benefit of the loss of a property right flowing back to the ag businesses.
Conclusion
The distinction between outright physical and non-physical takings is not always clear. But, the Court’s decision in Cedar Point Nursery is a clear indication that the loss of the right to exclude others, even on a temporary basis, when no benefit inures to the property owner, is a fundamental property right that will be classified and protected as a physical taking with no balancing test required.
June 24, 2021 in Environmental Law, Regulatory Law | Permalink | Comments (0)
Wednesday, June 23, 2021
No Expansion of Public Trust Doctrine in Iowa – Big Implications for Agriculture
Overview
I wrote last fall about a legal theory that could have significant negative implications for private property rights in general and agricultural production activities in particular. I was writing about the “public trust” doctrine and you can read last fall’s article here: https://lawprofessors.typepad.com/agriculturallaw/2020/10/the-public-trust-doctrine-a-camels-nose-under-agricultures-tent.html.
I mentioned in last fall’s article that some activist groups and academics are pushing the courts to expand the public trust doctrine beyond its historic application to accomplish certain environmental and conservation objectives. But as I mentioned then, any judicial expansion of the public trust doctrine will result in curtailing vested property rights. That’s a big deal for agriculture because of agriculture’s use of natural resources such as land, air, water, minerals and the like. Expanding the public trust doctrine also takes the power away from citizens and their elected officials to determine environmental and conservation policy.
Recently, the Iowa Supreme Court refused to expand the doctrine to apply to farming practices in the state concluding that the issues involved were political ones that should be left up to the legislature.
The public trust doctrine and a recent Iowa Supreme Court decision – it’s the topic of today’s post.
Background
As I noted last fall, the public trust doctrine is not new. It derives from the seas being viewed as the common property of the public that cannot be privately used or owned. They are held in “public trust.” This concept from England ultimately became part of the U.S. common law and has its primary application to the access of the seashore and intertidal waters.
The U.S. Supreme Court’s first application of the public trust doctrine was in 1842 in Martin v. Lessee of Waddell, 41 U.S.367 (1842). In the case, the issue was who had the right to submerged land and oyster harvesting off the coast of New Jersey. The Court, largely based on the language in the charter granted by the King to a Duke to establish a colony and for policy and economic reasons, determined that the land area in issue belonged to the state of New Jersey for the benefit of the people of the state. The Court dealt with the issue again in 1892 in a case involving a railroad that had been granted a large amount of the Chicago harbor. Illinois Central Railroad Company v. Illinois, 146 U.S. 387 (1892). The Court determined that the government cannot alienate (interfere with) the public’s right to access land under waters that are navigable in fact except for situations where the land involved wouldn’t interfere with the public’s ability to access the water or impair navigation.
As generally applied in the United States (although there are differences among the states), an oceanfront property owner can exclude the public below the mean high tide (water) line. See e.g., Gunderson v. State, 90 N.E. 3d 1171 (Ind. 2018). That’s the line of intersection of the land with the water's surface at the maximum height reached by a rising tide (e.g., high water mark). Basically, it’s the debris line or the line where you would find fine shells. However, traceable to the mid-1600s, Massachusetts and Maine recognize private property rights to the mean low tide line even though they do allow the public to have access to the shore between the low and high tide lines for "fishing, fowling and navigation.” In addition, in Maine, the public can cross private shoreline property for scuba diving purposes. McGarvey v. Whittredge, 28 A.3d 620 (Me. 2011).
Other applications of the public trust doctrine involve the preservation of oil resources, fish stocks and crustacean beds. Also, many lakes and navigable streams are maintained via the public trust doctrine for purposes of drinking water and recreation. But, whether the doctrine applies in such situations is a matter of state law. That’s where the recent Iowa Supreme Court decision comes into play.
Iowa Citizens for Community Improvement, et al. v. State
A long-standing battle in Iowa over the level of nitrates and phosphorous in an Iowa waterway and farm filed runoff came to a head in Iowa Citizens for Community Improvement, et al. v. State,
No. 19-1644, 2021 Iowa Sup. LEXIS 84 (Jun. 18, 2021). For approximately the past decade activist groups and certain academics have sought more regulatory control over farming practices that they deem contribute to excessive nutrients in an Iowa river and higher drinking water prices in Des Moines and elsewhere. They have sought to remove from the state legislature the power to make these decisions and have also sought more federal control.
The plaintiffs, two social justice organizations, sued the State of Iowa and state officials and agencies associated with agriculture and the environment claiming that the public trust doctrine required them to enact legislation and rules forcing farmers to adopt farming practices that would significantly reduce levels of nitrogen and phosphorous runoff into the Raccoon River. The plaintiffs claimed that such a requirement would improve members’ feelings by enhancing aesthetics and recreational uses of the river and by reducing members’ water bills (at least in the Des Moines area). They sought declaratory and injunctive relief.
In response, the State argued that the plaintiffs lacked standing to sue and that the issue was nonjusticiable (i.e., not capable of being decided by a court). After the trial court denied the defendants’ motion to dismiss, the defendants sought an interlocutory appeal (i.e., an appeal of the trial court’s ruling while other aspects of the case proceeded).
On review, the state Supreme Court first noted that the scope of the public trust doctrine in Iowa is narrow, and that the doctrine should not be overextended. The Supreme Court noted that for a party to have standing to sue, they must have a specific personal or legal interest in the litigation and be “injuriously affected.” For a party to be injuriously affected, the Supreme Court stated that the injury complained of must be likely to be redressed by the court’s favorable decision. On that point, the Supreme Court determined that it would be speculative that a favorable court decision would result in a more aesthetically pleasing river or lower water rates.
Further, the Supreme Court determined the injunctive relief was not appropriate and that what the plaintiffs were seeking could only be accomplished through legislation. The Supreme Court pointed out that the plaintiffs admitted that the defendants lacked authority to require limits for nitrogen and phosphorous from agricultural nonpoint sources – the matter was up to the legislature. As a result, the Supreme Court determined the plaintiffs’ claims must be dismissed due to lack of standing.
The plaintiffs also claimed that constitutional due process rights were at stake and the Court should address them. The Supreme Court disagreed, pointing out that the plaintiffs’ own arguments cut against the Court being able to address such a claim. Because the plaintiffs were asking the Court to broaden the application of the public trust doctrine, the plaintiffs were essentially asking the Court to inject itself into political matters where there would be a lack of judicially discoverable and manageable standards. As the Supreme Court pointed out, “different uses matter in different degrees to different people.” Publicly elected policy makers decide these matters. Not the courts.
Consequently, the Court determined that granting any meaningful relief to the plaintiffs would result in the judicial branch asserting superiority over the legislature. An impermissible outcome under the co-equal system of government.
Conclusion
The push for an expansion of the public trust doctrine is not likely to subside. Activists that are unable to win at the ballot box have long tried to use the judicial system to do their policy work for them. Many agricultural activities and uses of natural resources on private property remain at risk of an expanded doctrine. State legislators and all citizens should be aware of the court battles going on over the public use doctrine and what an expansion of the doctrine would do to limit property rights (without compensation).
June 23, 2021 in Environmental Law, Regulatory Law | Permalink | Comments (0)
Wednesday, June 9, 2021
Ag Law and Tax Potpourri
Overview
Periodically, I cover recent “happenings” in ag law and tax. It’s been a while since a selected a few developments for summary on this blog. So, today is the day. A snippet of taxes, environmental law and property law
Recent developments in the courts of relevance to agricultural producers, rural landowners and taxpayers in general – it’s the topic of today’s post.
“Roberts Tax” is a “Tax” Entitled to Priority in Bankruptcy
In re Szczyporski, No. 2:20-cv-03133, 2021 U.S. Dist. LEXIS 61628 (E.D. Pa. Mar. 31, 2021).
As you likely recall, in 2012, Chief Justice Roberts of the U.S. Supreme Court badly twisted the law to salvage Obamacare by concluding that Obamacare’s requirement that certain persons buy government-mandated health insurance was constitutional because the mandate was a “tax” withing the taxing power of the Congress – even though Obamacare calls it a “penalty.” National Federation of Independent Businesses v. Sebelius, 567 U.S. 519 (2012). The cost of that “shared responsibility payment” was offset by a credit under I.R.C. §36B. I.R.C. §36B of the grants “premium tax credits” to subsidize certain purchases of health insurance made on “Exchanges.” The tax credit consists of “premium assistance amounts” for “coverage months.” I.R.C. §36B(b)(1). An individual has a coverage month only when he is covered by an insurance plan “that was enrolled in through an Exchange established by the State. I.R.C. §36B(c)(2)(A). The law ties the size of the premium assistance amount to the premiums for health plans which cover the individual “and which were enrolled in through an Exchange established by the State. I.R.C. §36B(b)(2)(A). The credit amount further depends on the cost of certain other insurance plans “offered through the same Exchange. I.R.C. §36B(b)(3)(B)(i).
The tax Code provision that Obamacare created clearly states that the credit is available to a taxpayer only if the taxpayer has enrolled in an insurance plan through “an Exchange established by the State.” I.R.C. §36B(b)(2)(A). When several persons living in a state that didn’t have a state exchange claimed they were exempt from the mandate to buy health insurance because of its cost absent the credit, Chief Justice Roberts again applied his contorted legal logic to conclude that “an Exchange established by the State” meant “an Exchange established by the State or Federal Government.” King v. Burwell, 576 U.S. 473 (2015). In other words, he completely rewrote the law a second time to salvage it.
Note. Justice Scalia had enough of the nonsense of Chief Justice Roberts when he wrote in his dissent in King, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.” He also stated, “Words no longer have meaning if an Exchange that is not established by a State is “established by the State” and “The Court’s next bit of interpretive jiggery-pokery involves other parts of the Act that purportedly presuppose the availability of tax credits on both federal and state Exchanges.”
This all brings us to the current case. In Szczyporski, the debtor was required to file an income tax return in 2018, but hadn’t obtained the government-mandate health insurance resulting in the IRS assessing the “Roberts Tax” for 2018. In 2019, the debtor filed Chapter 13 bankruptcy and the IRS filed a proof of claim for taxes in the amount of $18,027.08 which included the Roberts Tax of $927. The IRS listed the Roberts Tax as an excise tax and the balance of the tax claim as income taxes. The debtors objected on the basis that the Roberts Tax is a penalty that is not qualify for priority treatment under 11 U.S.C. §507(a)(8). The debtor’s Chapter 13 plan was confirmed in 2020, and the IRS filed a brief objecting to the debtor’s tax treatment of the Roberts Tax.
The bankruptcy court ruled that the Roberts Tax was a “tax” under the bankruptcy Code entitled to priority treatment. In re Szczyporski, 617 B.R. 529, 2020 Bankr. LEXIS 1725 (Bankr. E.D. Pa., Jun. 23, 2020). On appeal, the federal district court affirmed, citing National Federation of Independent Businesses v. Sebelius, 567 U.S. 519 (2012). While that decision involved facts outside of the bankruptcy context, the Supreme Court concluded that the Roberts Tax was a “tax” because it was enacted according to the taxing power of the Congress. Thus, it was either an excise or income tax, both of which are entitled to priority in bankruptcy. Here, the district concluded it was an income tax.
Settlement Proceeds Are Taxable Income
Blum v. Comr., T.C. Memo. 2021-18
A damage award that a taxpayer receives that is not attributable to physical injury or physical sickness is includible in gross income. In many lawsuits, there is almost always some lost profit involved and recovery for lost profit is ordinary income. See, e.g., Simko v. Comr., T.C. Memo. 1997-9. For recoveries in connection with a business, if the taxpayer can prove that the damages received were for injury to capital, no income results except to the extent the damages exceed the income tax basis of the capital asset involved. The recovery is, in general, a taxable event except to the extent the amount recovered represents a return of basis. Recoveries representing a reimbursement for lost profit are taxable as ordinary income.
In Blum, the petitioner was involved in a personal injury lawsuit and received a payment of $125,000 to settle a malpractice suit against her attorneys. She did not report the amount on her tax return for 2015 and the IRS determined a tax deficiency of $27,418, plus an accuracy-related penalty. The IRS later conceded the penalty, but maintained that the amount received was not on account of personal physical injuries or personal sickness under I.R.C. §104(a)(2). The Tax Court agreed with the IRS because the petitioner’s claims against the law firm did not involve any allegation that the firm’s conduct had caused her any physical injuries or sickness, but merely involved allegations that the firm had acted negligently in representing her against a hospital.
EPA Properly Approved Missouri Water Quality Standards
Missouri Coalition for the Environment Foundation v. Wheeler, No. 2:19-CV-04215-NKL, 2021 U.S. Dist. LEXIS 102806 (W.D. Mo. Jun. 1, 2021)
In 2009, the state of Missouri proposed water quality standards for nutrient standards for nutrient pollutants in Missouri lakes. The Environmental Protection Agency (EPA) originally rejected the proposed standards, but ultimately accepted a revised version of the standards in 2018. The plaintiffs, a coalition of environmental groups, sued claiming that the water quality standards should be set aside on the basis that the EPA’s determination was arbitrary and capricious. The court upheld the state standards, finding them to have been grounded upon a rational basis that they would adequately protect the designated uses of protected waterbodies.
Plaintiffs’ Use of Road on Defendant’s Property Deemed a Prescriptive Easement
Ramsey v. Keesee, 2021 Ky. App. Unpub. LEXIS 231 (Ky. Ct. App. Apr. 16, 2021)
The plaintiffs each owned property adjacent to the defendant’s eastern boundary line. A road ran along the boundary on the defendant’s property, which was the only local road that connected to a state highway. One of the plaintiffs began maintaining the road without the defendant’s consent. In response, the defendant closed the gate on the road with a lock on it to prevent the plaintiffs from using it. The plaintiffs sued and sought to remove the gate from the road. The trial court determined the plaintiffs had acquired a prescriptive easement over the road by actual, hostile, open and notorious, exclusive and continuous possession of the road for the statutory period of 15 years. As a result, the trial court held that the plaintiffs had the right to use the road for agricultural purposes and to maintain the road in a reasonable manner.
On appeal, the defendant argued that one of the plaintiff’s use of the road two or three times per week did not constitute open and notorious possession because it was insufficient to put the defendant on notice. The appellate court noted that under state common law, it is the legal owner’s actual or imputable knowledge of another’s possession of lands that affects the ownership. As a result, the appellate court held that the plaintiff’s use of the road put the defendant on constructive notice. The defendant then argued that one of the plaintiff’s use of the road was permissive as she had maintained the gates on the road. The plaintiff argued that he always believed the road at issue was an old county road and that he never sought permission to use the road. The appellate court determined that the gates on the road were never intended to prevent the plaintiffs from using the road, but were primarily for farm purposes. The defendant also claimed that the trial court erred in determining the use and location of the prescriptive easement as two of the plaintiffs had not maintained the road. The appellate court noted that maintenance of the road was not a necessary element to establish an easement by prescription. Lastly, the defendant argued that the plaintiffs’ nonuse of the north part of the road resulted in an abandonment of the prescriptive easement. The appellate court noted that mere non-use of an easement does prove that an easement has been abandoned, and held that the plaintiffs occasional use of the road rebutted the defendant’s abandonment claim.
Conclusion
The developments never cease. There will be more as time goes on.
June 9, 2021 in Bankruptcy, Environmental Law, Real Property | Permalink | Comments (0)
Monday, May 24, 2021
Valuing Ag Real Estate With Environmental Concerns
Overview
For federal estate tax purposes, valuation is typically the primary issue. Quite often, there are more dollars at stake with respect to the valuation issue than with respect to all other issues combined. As such, the facts of a particular case concerning valuation may be more important than applicable law and IRS rulings.
What if ag land has an environmental issue associated with it? Such things as the presence of hazardous materials and wetlands can have a significant impact on land value. But, what is the degree of the impact on value, and how is it measured?
Valuing ag land with environmental concerns – it’s the topic of today’s post.
Practical Aspects
When valuing agricultural land, it is important to preserve all contemporaneous data applicable to the decedent’s estate. This includes creating a checklist of assets requiring action by others as to evaluation. The checklist should include appraisals, environmental land-use restrictions recorded in the real estate records; environmental audits; and assessment figures for property tax purposes.
If a decedent’s estate contains contaminated real estate, or real estate subject to use restrictions, the estate executor will need to justify a reduction in value for estate tax purposes. That will require sufficient proof of the existence of contamination and any associated land use restrictions as of the date of the decedent’s death and the effect on the land’s value.
Note: Property valuation is also important during the landowner’s life for purposes of gift taxes, property taxes, or to establish a selling price. The issue is complicated by the fact that the effect of contamination on value, like other elements influencing valuation is frequently more subjective than it is tangible and quantifiable.
Specific Problems
Two of the big ways that environmental constraints can impact the value of agricultural land involve hazardous materials and wetlands.
Hazardous chemicals/waste. Farms and ranches use various chemicals in the process of raising crops and livestock and operating machinery and equipment. It was not uncommon in the past for a farm or ranch to have a dump site on the premises. Various hazardous substances could be present at those sites. When hazardous chemicals are present, they will increase the cost of owning the property in terms of monitoring and cleanup costs as well as potential legal liability.
In recent years, the IRS has been all over the board on whether cleanup costs are currently deductible or must be capitalized. In short, the answer depends on whether the taxpayer created the mess that is being cleaned up or is cleaning up someone else’s mess. In a 2004 ruling, a corporation in the business of manufacturing products that it placed in inventory was required by state and federal law to clean up the soil and water contaminated by hazardous waste that the corporation had disposed of at the site. The IRS ruled that the soil and groundwater mediation costs had to be capitalized into the costs of the products that the corporation produced. Rev. Rul. 2004-18, 2004-1 C.B. 509. In 2005, the IRS extended the ruling by concluding that environmental remediation costs are more in the nature of repairs than capital improvements and are allocable to the inventory produced in the tax year during which the costs are incurred. Rev. Rul. 2005-42, 2005-2 C.B. 67.
Note: Because costs incurred to clean up environmentally contaminated property may involve a pre-existing material condition or defect, the tangible property regulations could come into play. In such event, remediation costs may be treated as a betterment because they ameliorated a material condition or defect in existence before the taxpayer bought the property, which would require the costs to be capitalized. Capitalization could have a particularly harsh effect on individual landowners, who may be less capable of sustaining a large outlay for cleanup costs without an offsetting deduction. Also, if the property is held merely as an investment and not as part of the landowner’s trade or business, the landowner will be subject to the passive loss rules. Thus, even if the remediation costs are deductible, costs in excess of income from the property may offset only other passive income that the landowner may have. See I.R.C. §469.
The presence of hazardous chemicals/waste will also make the property less desirable in the marketplace.
Wetlands. Wetland laws and regulations restrict land use and may cause the land to be unmarketable and, perhaps, worthless because of the loss of value to the particular property owner. If the restriction eliminates all of the economic value of the property without a federal permit, some court’s have held that a governmental taking has occurred. For example, in 2014, the United States Court of Federal Claims held that the denial of a CWA §404 permit constituted a taking. Lost Tree Village Corporation v. United States, 115 Fed. Cl. 219 (2014), aff’d., 787 F.3d 1111 (Fed. Cir. 2015). Under the facts of the case, the landowner bought the tract at issue as part of a transaction in which the landowner purchased an entire peninsula on which the tract was located. The landowner developed the other land into a gated community and did not treat the tract as part of the same economic unit, but later decided to develop the tract. In order to develop the tract, the landowner needed to acquire a Clean Water Act Section 404 permit. The permit was denied, and the landowner sued for a constitutional taking. Initially, the U.S. Court of Federal Claims determined that a constitutional taking had occurred and that the relevant parcel against which to measure the impact of the permit denial was the tract plus a nearby lot and scattered wetlands located nearby that the landowner owned. On appeal, the U.S. Court of Appeals for the Federal Circuit held that the tract was the relevant parcel. On remand, the Court of Federal Claims, held that the loss of value caused by the permit denial was 99.4 percent of the tract's value, or $4,217,888 based on the difference in the tract's value before and after the permit denial. The court rejected the government's argument that the "before valuation" must account for the permit denial. The court said that the government cannot lower the tract's value by arguing the possibility of the permit denial.
The presence of a wetland on tract can also trigger a reduction in the land’s assessed value for property tax purposes. In a significant case from New Jersey, the New Jersey Superior Court upheld a state tax court decision that reduced a property tax assessment from nearly $20 million to $976,500. Bergen County Associates v. Borough of East Rutherford, 265 N.J. Super. 1, 625 A.2d 524 (1993), certification den., 134 N.J. 482, 634 A.2d 528 (1993). The court found persuasive testimony that indicated that the application process for permits to dredge and fill wetlands had become “much stricter” in the late 1980s, and were “virtually impossible to obtain.” It is important to note that the taxpayer was not denied a permit to fill the property. Instead, the taxpayer went directly to court to argue for a substantial assessed valuation reduction based on the land use restrictions.
On the property tax valuation issue, as long as the property has a value in use (e.g., it is producing income), a lack of marketability will not support a claim for lack of value. However, the IRS Examination Technique Handbook for Estate Tax Examiners instructs IRS estate and gift tax examiners to consult assessment records as good sources of information for estate and gift tax values.
Valuation Principles
IRS test. The IRS test for valuation is the “willing-buyer/willing-seller” test. Treas. Reg. §§20.2031-1(b); 25.2512-1. For estate (and gift) tax purposes, property must be valued at its fair market value as of the valuation date in accordance with the IRS test. The test necessarily focuses on the marketability of any particular property. But, there is value in use that is separate from marketability. Value in use focuses on value to the particular owner of the property.
Consider the following example:
Kenny Dewitt owns a farm that produces an income stream (net of expenses) of $350,000 per year in harvested crops. Assume that the farm normally would has a capitalization rate of four percent (typical for cropland), producing a “clean” value of $875,000. Due to contamination from leaking underground storage tanks and nitrate contamination of groundwater, the property is neither marketable nor mortgageable, leaving the equity yield (which is generally higher than the cost of debt financing) the primary component of the capitalization rate. In addition, a higher return on equity will be demanded to reflect the additional risk of holding contaminated property and its lack of marketability. As a result, the capitalization rate could easily become eight percent, which decreases the value of the property by 50 percent to $437,500. After this value is calculated, the costs of cleaning up the property still will have to be taken into account.
Note: It’s probably overly simplistic to determine the “clean value” of a property and then subtract the cost of cleanup. Additional factors such as contingent liabilities to the public and stigmatization may affect value to at least the same extent as the actual remediation costs.
Stigma. A physical cleanup of a tract does not eliminate the loss of value resulting from stigmatization. Even when property has been cleaned up to the satisfaction of the state and federal government, potential buyers tend to remain reluctant, making the property less desirable in the marketplace. Additionally, if interested buyers can be found, lenders may be reluctant to finance the acquisition of contaminated or potentially contaminated property. That could make financing the property more costly. That, in turn, can impact market value. Thus, it’s safe to say that external environmental factors can influence market value.
Conclusion
Buying agricultural land often is fairly straightforward. However, when environmental factors are present determining fair market value takes on a completely different twist.
May 24, 2021 in Environmental Law, Real Property | Permalink | Comments (0)
Saturday, May 1, 2021
The Agricultural Law and Tax Report
May 1, 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, April 19, 2021
Ag Law and Taxation - 2016 Bibliography
Overview
Today's post is a bibliography of my ag law and tax blog articles of 2016. Earlier this year I have provided bibliographies for you of my blog articles for 2020, 2019, 2018 and 2017. This now completes the bibliographies since I began the blog in July of 2016. At the end of 2021, I will post a lengthy blog article of all of the articles published through that timeframe.
The 2016 bibliography of articles – it’s the subject matter of today’s post.
BUSINESS PLANNING
Treasury Attacks Estate and Entity Planning Techniques With Proposed Valuation Regulations
Using an LLC to Reduce S.E Tax and the NIIT
IRS Audit Issue – S Corporation Reasonable Compensation
Rents Are Passive, But They Can Be Recharacterized - And Grouped (Sometimes)
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
CIVIL LIABILITIES
Registration of a Pesticide Doesn't Mean It Might Not Be Misbranded
Death of Livestock In Blizzard Was a Covered Loss by “Drowning”
FIFRA Pre-Emption of Pesticide Damage Claims
Agritourism Acts, Zoning Issues and Landowner Liability
The “Agriculture” Exemption From The Requirement To Pay Overtime Wages
The Scope and Effect of Equine Liability Acts
What’s a Rural Landowner’s Responsibility Concerning Crops, Trees and Vegetation Near an Intersection?
CONTRACTS
Some Thoughts on Production Contracts
https://lawprofessors.typepad.com/agriculturallaw/2016/10/some-thoughts-on-production-contracts.html
CRIMINAL LIABILITIES
Prison Sentences Upheld For Egg Company Executives Even Though Government Conceded They Had No Knowledge of Salmonella Contamination.
ENVIRONMENTAL LAW
Registration of a Pesticide Doesn't Mean It Might Not Be Misbranded
FIFRA Pre-Emption of Pesticide Damage Claims
Air Emissions, CWA and CERCLA
https://lawprofessors.typepad.com/agriculturallaw/2016/08/air-emissions-cwa-and-cercla.html
Are Seeds Coated With Insecticides Exempt From FIFRA Regulation?
ESTATE PLANNING
The Situs of a Trust Can Make a Tax Difference
Treasury Attacks Estate and Entity Planning Techniques With Proposed Valuation Regulations
Common Estate Planning Mistakes of Farmers
Staying on the Farm With the Help of In-Home Care
Including Property in the Gross Estate to Get a Basis Step-Up
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2016/10/farm-valuation-issues.html
The Future of the Federal Estate Tax and Implications for Estate Planning
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
INCOME TAX
House Ways and Means Committee Has A Blueprint For Tax Proposals - Implications For Agriculture
In Attempt To Deny Oil and Gas-Related Deductions, IRS Reads Language Into the Code That Isn’t There – Tax Court Not Biting
IRS Does Double-Back Layout on Self-Employment Tax
S.E. Tax on Passive Investment Income; Election Out of Subchapter K Doesn’t Change Entity’s Nature; and IRS Can Change Its Mind
Handling Depreciation on Asset Trades
https://lawprofessors.typepad.com/agriculturallaw/2016/08/handling-depreciation-on-asset-trades.html
Claiming “Bonus” Depreciation on Plants
https://lawprofessors.typepad.com/agriculturallaw/2016/08/claiming-bonus-depreciation-on-plants.html
Proper Reporting of Crop Insurance Proceeds
Permanent Conservation Easement Donation Opportunities and Perils
Sales By Farmers/Rural Landowners Generate Common Questions
Expense Method Depreciation - Great Tax Planning Opportunities On Amended Returns
The DPAD and Agriculture
https://lawprofessors.typepad.com/agriculturallaw/2016/10/the-dpad-and-agriculture.html
Donating Food Inventory to a Qualified Charity - New Opportunity for Farmers
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2016/10/farm-valuation-issues.html
Treatment of Farming Casualty and Theft Losses
More on Handling Farm Losses
https://lawprofessors.typepad.com/agriculturallaw/2016/11/more-on-handling-farm-losses.html
Selected Tax Issues For Rural Landowners Associated With Easement Payments
Are You A Farmer? It Depends!
https://lawprofessors.typepad.com/agriculturallaw/2016/11/are-you-a-farmer-it-depends.html
Rents Are Passive, But They Can Be Recharacterized - And Grouped (Sometimes)
It’s Fall and Time to “Hoop it Up”!
https://lawprofessors.typepad.com/agriculturallaw/2016/11/its-fall-and-time-to-hoop-it-up.html
Utilizing the Home Sale Exclusion When Selling the Farm
Farmland Acquisition – Allocation of Value to Depreciable Items
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
IRS Continues (Unsuccessfully) Attack on Cash Accounting By Farmers
The Uniform Capitalization Rules and Agriculture
The Non-Corporate Lessor Rule – A Potential Trap In Expense Method Depreciation
REAL PROPERTY
Texas Mineral Estates, Groundwater Rights, Surface Usage and the “Accommodation Doctrine”
So You Want To Buy Farmland? Things to Consider
What’s the Character of the Gain From the Sale of Farm or Ranch Land?
Utilizing the Home Sale Exclusion When Selling the Farm
REGULATORY LAW
New Food Safety Rules Soon to Apply to Farmers and Others In the Food Production Chain
New Regulations on Marketing of Livestock and Poultry
The Future of Ag Policy Under Trump
https://lawprofessors.typepad.com/agriculturallaw/2016/11/the-future-of-ag-policy-under-trump.html
Verifying Employment – New Form I-9; The Requirements and Potential Problem Areas
SECURED TRANSACTIONS
Feedlot Has Superior Rights to Cattle Sale Proceeds
WATER LAW
Watercourses and Boundary Lines
https://lawprofessors.typepad.com/agriculturallaw/2016/11/watercourses-and-boundary-lines.html
April 19, 2021 in Business Planning, Civil Liabilities, Contracts, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Friday, April 2, 2021
Ag Law and Taxation - 2017 Bibliography
Overview
Today's post is a bibliography of my ag law and tax blog articles of 2017. This will make it easier to find the articles you are looking for in your research. In late January I posted the 2020 bibliography of articles. In late February I posted the bibliography of the 2019 articles. Last month, I posted the 2018 bibliography of articles. Today’s posting is the bibliography of my 2017 articles. Later this month I will post the 2016 bibliography.
The library of content continues to grow with relevant information for you practice or your farming/ranching business.
The 2017 bibliography of articles – it’s the subject matter of today’s post.
BANKRUPTCY
The Most Important Agricultural Law and Tax Developments of 2016
Top Ten Agricultural Law and Tax Developments of 2016 (Ten Through Six)
Top Ten Agricultural Law Developments of 2016 (Five Through One)
Farm Financial Stress – Debt Restructuring
Qualified Farm Indebtedness – A Special Rule for Income Exclusion of Forgiven Debt
What Are a Farmer’s Rights When a Grain Elevator Fails?
Agricultural Law in a Nutshell
https://lawprofessors.typepad.com/agriculturallaw/2017/07/agricultural-law-in-a-nutshell.html
The Business of Agriculture – Upcoming CLE Symposium
Tough Financial Times in Agriculture and Lending Clauses – Peril for the Unwary
What Interest Rate Applies to a Secured Creditor’s Claim in a Reorganization Bankruptcy?
PACA Trust Does Not Prevent Chapter 11 DIP’s Use of Cash Collateral
Are Taxes Dischargeable in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2017/12/are-taxes-dischargeable-in-bankruptcy.html
Christmas Shopping Season Curtailed? – Bankruptcy Venue Shopping, That Is!
BUSINESS PLANNING
The Most Important Agricultural Law and Tax Developments of 2016
Top Ten Agricultural Law and Tax Developments of 2016 (Ten Through Six)
Top Ten Agricultural Law Developments of 2016 (Five Through One)
C Corporation Penalty Taxes – Time to Dust-Off and Review?
Divisive Reorganizations of Farming and Ranching Corporations
The Scope and Effect of the “Small Partnership Exception”
Using the Right Kind of an Entity to Reduce Self-Employment Tax
Employer-Provided Meals and Lodging
https://lawprofessors.typepad.com/agriculturallaw/2017/05/employer-provided-meals-and-lodging.html
Self-Employment Tax on Farming Activity of Trusts
Minority Shareholder Oppression Case Raises Several Tax Questions
Farm Program Payment Limitations and Entity Planning – Part One
Farm Program Payment Limitations and Entity Planning – Part Two
Summer Ag Tax/Estate and Business Planning Conference
An Installment Sale as Part of an Estate Plan
The Use of a Buy-Sell Agreement for Transitioning a Business
The Business of Agriculture – Upcoming CLE Symposium
Forming a Farming/Ranching Corporation Tax-Free
Farmers Renting Equipment – Does it Trigger A Self-Employment Tax Liability?
New Partnership Audit Rules
https://lawprofessors.typepad.com/agriculturallaw/2017/09/new-partnership-audit-rules.html
Self-Employment Tax on Farm Rental Income – Is the Mizell Veneer Cracking?
IRS To Finalize Regulations on Tax Status of LLC and LLP Members?
H.R. 1 – Farmers, Self-Employment Tax and Business Arrangement Structures
Summer 2018 – Farm Tax and Farm Business Education
Partnerships and Tax Law – Details Matter
CIVIL LIABILITIES
The Most Important Agricultural Law and Tax Developments of 2016
Top Ten Agricultural Law and Tax Developments of 2016 (Ten Through Six)
Top Ten Agricultural Law and Developments of 2016 (Five Through One)
Recreational Use Statutes – What is Covered?
Is Aesthetic Damage Enough to Make Out a Nuisance Claim?
Liability Associated with a Range of Fires and Controlled Burns
What’s My Liability for Spread of Animal Disease
Dicamba Spray-Drift Issues
https://lawprofessors.typepad.com/agriculturallaw/2017/07/dicamba-spray-drift-issues.html
Agricultural Law in a Nutshell
https://lawprofessors.typepad.com/agriculturallaw/2017/07/agricultural-law-in-a-nutshell.html
The Business of Agriculture – Upcoming CLE Symposium
Right-to-Farm Laws
https://lawprofessors.typepad.com/agriculturallaw/2017/09/right-to-farm-laws.html
CONTRACTS
The Most Important Agricultural Law and Tax Developments of 2016
Top Ten Agricultural Law and Tax Developments of 2016 (Ten Through Six)
Top Ten Agricultural Law Developments of 2016 (Five Through One)
Another Issue With Producing Livestock on Contract – Insurance
The Ability of Tenants-in-Common To Bind Co-Tenants to a Farm Lease – and Related Issues
Ag Goods Sold at Auction – When is a Contract Formed?
Agricultural Law in a Nutshell
https://lawprofessors.typepad.com/agriculturallaw/2017/07/agricultural-law-in-a-nutshell.html
The Business of Agriculture – Upcoming CLE Symposium
Ag Contracts and Express Warranties
https://lawprofessors.typepad.com/agriculturallaw/2017/09/ag-contracts-and-express-warranties.html
What Remedies Does a Buyer Have When a Seller of Ag Goods Breaches the Contract?
COOPERATIVES
The Most Important Agricultural Law and Tax Developments of 2016
Top Ten Agricultural Law Developments of 2016 (Five Through One)
What Is a Cooperative Director’s Liability to Member-Shareholders and Others?
CRIMINAL LIABILITIES
The Necessity Defense to Criminal Liability
The Business of Agriculture – Upcoming CLE Symposium
What Problems Does The Migratory Bird Treaty Act Pose For Farmers, Ranchers and Rural Landowners?
ENVIRONMENTAL LAW
Drainage Activities on Farmland and the USDA
The Application of the Endangered Species Act to Activities on Private Land
Eminent Domain – The Government’s Power to “Take” Private Property
Spray Drift As Hazardous Waste?
https://lawprofessors.typepad.com/agriculturallaw/2017/07/spray-drift-as-hazardous-waste.html
What Problems Does The Migratory Bird Treaty Act Pose For Farmers, Ranchers and Rural Landowners?
The Prior Converted Cropland Exception From Clean Water Act Jurisdiction
Air Emission Reporting Requirement For Livestock Operations
ESTATE PLANNING
Rights of Refusal and the Rule Against Perpetuities
Some Thoughts On Long-Term Care Insurance
Overview of Gifting Rules and Strategies
Disinheriting a Spouse – Can It Be Done?
https://lawprofessors.typepad.com/agriculturallaw/2017/04/disinheriting-a-spouse-can-it-be-done.html
Specific Property Devised in Will (or Trust) That Doesn’t Exist At Death – What Happens?
Discounting IRAs for Income Tax Liability?
Special Use Valuation and Cash Leasing
Self-Employment Tax On Farming Activity Of Trusts
Would an Interest Charge Domestic International Sales Corporation Benefit a Farming Business?
An Installment Sale as Part of An Estate Plan
Using An IDGT For Wealth Transfer and Business Succession
Federal Tax Claims in Decedent’s Estates – What’s the Liability and Priority?
Estate Tax Portability – The Authority of the IRS To Audit
Digital Assets and Estate Planning
https://lawprofessors.typepad.com/agriculturallaw/2017/10/digital-assets-and-estate-planning.html
INCOME TAX
The Burden of Proof in Tax Cases – What are the Rules?
The Home Office Deduction
https://lawprofessors.typepad.com/agriculturallaw/2017/02/the-home-office-deduction.html
IRS To Continue Attacking Cash Method For Farmers Via the “Farming Syndicate Rule”
Using Schedule J As A Planning Tool For Clients With Farm Income
Deductibility of Soil and Water Conservation Expenses
Should Purchased Livestock Be Depreciated or Inventoried?
The Changing Structure of Agricultural Production and…the IRS
Farm-Related Casualty Losses and Involuntary Conversions – Helpful Tax Rules in Times of Distress
Charitable Contributions Via Trust
https://lawprofessors.typepad.com/agriculturallaw/2017/03/charitable-contributions-via-trust.html
Ag Tax Policy The Focus in D.C.
https://lawprofessors.typepad.com/agriculturallaw/2017/04/ag-tax-policy-the-focus-in-dc-.html
For Depreciation Purposes, What Does Placed in Service Mean?
Tax Treatment of Commodity Futures and Options
Discounting IRAs for Income Tax Liability?
Like-Kind Exchanges, Reverse Exchanges, and the Safe Harbor
Insights Into Handling IRS Disputes
https://lawprofessors.typepad.com/agriculturallaw/2017/05/insights-into-handling-irs-disputes.html
Employer-Provided Meals and Lodging
https://lawprofessors.typepad.com/agriculturallaw/2017/05/employer-provided-meals-and-lodging.html
Self-Employment Tax On Farming Activity Of Trusts
Minority Shareholder Oppression Case Raises Several Tax Questions
Input Costs – When Can a Deduction Be Claimed?
Like-Kind Exchange Issues
https://lawprofessors.typepad.com/agriculturallaw/2017/06/like-kind-exchange-issues.html
Tax Issues With Bad Debt Deductions
https://lawprofessors.typepad.com/agriculturallaw/2017/06/tax-issues-with-bad-debt-deductions.html
Like-Kind Exchanges – The Related Party Rule and a Planning Opportunity
Tax Treatment of Cooperative Value-Added Payments
Would an Interest Charge Domestic International Sales Corporation Benefit a Farming Business?
Timber Tax Issues – Part One
https://lawprofessors.typepad.com/agriculturallaw/2017/07/timber-tax-issues-part-one.html
Timber Tax Issues – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2017/07/timber-tax-issues-part-two.html
An Installment Sale as Part of An Estate Plan
Using An IDGT For Wealth Transfer and Business Succession
Prospects for Tax Legislation
https://lawprofessors.typepad.com/agriculturallaw/2017/08/prospects-for-tax-legislation.html
Deferred Payment Contracts
https://lawprofessors.typepad.com/agriculturallaw/2017/08/deferred-payment-contracts.html
When Is A Farmer Not A “Qualified Farmer” For Conservation Easement Donation Purposes?
Substantiating Charitable Contributions
Forming a Farming/Ranching Corporation Tax-Free
Farmers Renting Equipment – Does It Trigger A Self-Employment Tax Liability?
Commodity Credit Corporation Loans and Elections
New Partnership Audit Rules
https://lawprofessors.typepad.com/agriculturallaw/2017/09/new-partnership-audit-rules.html
Alternatives to Like-Kind Exchanges of Farmland
South Dakota Attempts To Change Internet Sales Taxation – What Might Be The Impact On Small Businesses?
Fall Tax Schools
https://lawprofessors.typepad.com/agriculturallaw/2017/09/fall-tax-schools.html
Self-Employment Tax on Farm Rental Income – Is the Mizell Veneer Cracking?
Tax Treatment of Settlements and Court Judgments
The “Perpetuity” Requirement For Donated Easements
The Tax Rules Involving Prepaid Farm Expenses
It’s Just About Tax School Time
https://lawprofessors.typepad.com/agriculturallaw/2017/10/its-just-about-tax-school-time.html
IRS To Finalize Regulations On Tax Status of LLC and LLP Members?
The Deductibility (Or Non-Deductibility) of Interest
H.R. 1 - Farmers, Self-Employment Tax and Business Arrangement Structures
The Broad Reach of the Wash-Sale Rule
https://lawprofessors.typepad.com/agriculturallaw/2017/11/the-broad-reach-of-the-wash-sale-rule.html
Comparison of the House and Senate Tax Bills – Implications for Agriculture
Partnerships and Tax Law – Details Matter
Senate Clears Tax Bill - On To Conference
Are Taxes Dischargeable in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2017/12/are-taxes-dischargeable-in-bankruptcy.html
Bitcoin Fever and the Tax Man
https://lawprofessors.typepad.com/agriculturallaw/2017/12/bitcoin-fever-and-the-tax-man.html
House and Senate to Vote on Conference Tax Bill This Week
Another Tax Bill Introduced, Year-End Planning, and Jan. 10 Seminar/Webinar
PUBLICATIONS
Agricultural Law in a Nutshell
https://lawprofessors.typepad.com/agriculturallaw/2017/07/agricultural-law-in-a-nutshell.html
REAL PROPERTY
Another Issue When the Definition of “Agriculture” Matters – Property Tax
The Ability of Tenants-in-Common To Bind Co-Tenants to a Farm Lease – and Related Issues
Like-Kind Exchanges, Reverse Exchanges, and the Safe Harbor
Like-Kind Exchange Issues
https://lawprofessors.typepad.com/agriculturallaw/2017/06/like-kind-exchange-issues.html
Easements on Agricultural Land – Classification and Legal Issues
Should I Enter Into An Oil and Gas Lease?
REGULATORY LAW
Checkoffs, The Courts and Free Speech
https://lawprofessors.typepad.com/agriculturallaw/2017/01/checkoffs-the-courts-and-free-speech.html
Joint Employment Situations In Agriculture – What’s the FLSA Test?
Farmers, Ranchers and Government Administrative Agencies
IRS To Target “Hobby” Farmers
https://lawprofessors.typepad.com/agriculturallaw/2017/03/irs-to-target-hobby-farmers.html
Drainage Activities on Farmland and the USDA
What is a “Separate Person” For Payment Limitation Purposes?
Livestock Indemnity Payments – What They Are and Tax Reporting Options
Can One State Regulate Agricultural Production Activities in Other States?
Farm Program Payment Limitations and Entity Planning – Part One
Farm Program Payment Limitations and Entity Planning – Part Two
Eminent Domain – The Government’s Power to “Take” Private Property
Department of Labor Overtime Rules Struck Down – What’s the Impact on Ag?
The Prior Converted Cropland Exception From Clean Water Act Jurisdiction
Air Emission Reporting Requirement For Livestock Operations
Federal Labor Law and Agriculture
https://lawprofessors.typepad.com/agriculturallaw/2017/11/federal-labor-law-and-agriculture.html
Electronic Logs For Truckers and Implications for Agriculture
SECURED TRANSACTIONS
Ag Supply Dealer Liens – Important Tool in Tough Financial Times
“Commercial Reasonableness” of Collateral Sales
What Are A Farmer’s Rights When a Grain Elevator Fails?
Selling Collateralized Ag Products – The “Farm Products” Rule
SEMINARS AND CONFERENCES
Fall Tax Schools
https://lawprofessors.typepad.com/agriculturallaw/2017/09/fall-tax-schools.html
Another Tax Bill Introduced, Year-End Planning, and Jan. 10 Seminar/Webinar
Summer 2018 - Farm Tax and Farm Business Education
The Business of Agriculture – Upcoming CLE Symposium
Summer Ag Tax/Estate and Business Planning Conference
WATER LAW
Prior Appropriation – First in Time, First in Right
Kansas Water Law - Reactions to and Potential Consequences of the Garetson decision
Public Access To Private Land Via Water
Big Development for Water in the West - Federal Implied Reserved Water Rights Doctrine Applies to Groundwater
April 2, 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)
Wednesday, March 24, 2021
Court and IRS Happenings in Ag Law and Tax
Overview
It’s been a while since I have written a summary of what’s been happening in the courts concerning developments relevant to agricultural producers, ag businesses and rural landowners. It’s always helpful to stay informed of the ag legal issues that the courts are addressing.
Current court developments in the courts involving ag law and tax – it’s the topic of today’s post.
Nuisance Case Against Hog CAFO Continues
Barden v. Murphy-Brown, LLC, No. 7:20-CV-85-BR, 2021 U.S. Dist. LEXIS 47809 (E.D. N.C. Mar. 15, 2021)
The plaintiff sued the defendant for trespass, negligence, civil conspiracy and unjust enrichment arising from odor, dust, feces, urine and flies from a neighboring hog facility that housed 20,000-head of the defendant’s hogs. The plaintiff sought compensatory and punitive damages. The defendant sought to dismiss the complaint for failure to join to the lawsuit the farmer that operated the hog facility via a contact with the defendant as an indispensable party. The court disagreed as the farmer’s conduct was likely irrelevant to the outcome of the litigation and any impact that an adverse judgment against the defendant might have on the farmer’s interests at the farm was speculative.
The defendant also sought dismissal on the basis that the plaintiff’s complaint failed to state a claim for relief that was other than speculative. The defendant cited the state (NC) right-to-farm (RTF) law as barring all of the plaintiff’s claims. However, the court disagreed noting that conditions that constitute a nuisance can also constitute a trespass (and other causes of action). Thus, the plaintiff’s complaint was not restricted to allegations of a nuisance cause of action which the RTF law would bar. The court noted that the NC RTF law was different from other state RTF laws that covered non-nuisance tort claims related to farming operations along with nuisance claims. The NC RTF law only covered nuisance-related claims and had no application to non-nuisance claims.
As to whether the plaintiff adequately alleged the non-nuisance claims, the court concluded that the plaintiff sufficiently alleged, at a minimum, a claim for unintentional trespass by not consenting to dust, urine and fecal matter from entering its property. On the plaintiff’s negligence claim, the court determined that it was reasonably foreseeable that if the defendant did not act reasonably in managing the facility that dust and animal waste would be present on the plaintiff’s property. As such, the defendant owed the plaintiff a duty and there was a causal link with any potential breach of that duty. Thus, the plaintiff properly stated a claim for negligence. The plaintiff also alleged that the defendant conspired with its corporate parent to mislead the public about the science of hog manure removal and various constitutional violations. The court rejected this claim because any conspiracy was between the defendant and its corporate parent and not with any independent party. The plaintiff also claimed that the defendant unjustly enriched itself by using the plaintiff’s property for a de facto easement without paying for it. The court rejected the claim because the plaintiff had conferred no benefit on the plaintiff which gave rise to any legal or equitable obligation on the defendant’s part to account for the benefit received. However, the court refused to strike the plaintiff’s allegations relating to the defendant’s Chinese ownership, influence and exploitation as well as the defendant’s financial resources. The court determined that such allegations had a bearing on the defendant’s motivation, extent of harm and ability to implement alternative technology.
1914 Fence Agreement Fixes Boundary
Eggemeyer v. Hughes, No. 08-19-0002-CV, 2021 Tex. App. LEXIS 691 (Tex. Ct. App. Jan. 28, 2021)
The parties owned adjacent tracts of land north and south of each other separated by section lines. The defendant claimed that the section lines delineated the boundary and that a barbed wire fence constructed from a survey was built in its location due to practicalities. The plaintiff claimed that the fence, which existed 150 yards to the north of the section lines, was the boundary. The disputed acreage between the section lines and the fence was 90 acres.
In 1914, prior owners of the tracts had executed a fence agreement that was filed in the county register of deeds office. In the agreement they fixed the boundary in accordance with a metes and bounds description that referred to natural landmarks. The plaintiff’s deed referred to the 1914 agreement. In 2013, the plaintiffs sought to place a water well close to the boundary and negotiations with the defendant revealed that the parties had different views of the actual boundary. The defendants sought a declaratory judgment seeking to enforce the 1914 agreement and the plaintiffs filed an adverse possession claim. The trial court upheld the 1914 fence agreement and dismissed the plaintiff’s claims.
On further review the appellate court affirmed. While the non-permanent markers referred to in the 1914 fence agreement could not be found, the appellate court determined that there was sufficient evidence to support the defendant’s claim of ownership of the disputed acres via the 1914 fence agreement. The appellate court also remanded the case on the issue of attorney fees.
Boundary by Acquiescence Established by Landowners’ Conduct
Waggoner v. Alford, No. CV-19-931, 2021 Ark. App. 120 (Ark. Ct. App. Mar. 10, 2021)
The defendants purchased land adjacent to the plaintiff’s property on which they built a house. The defendants had a survey completed which indicated that their house was twenty-seven feet from the property line. This initial survey treated the plaintiff’s wire fence as the boundary. The plaintiff commissioned a survey nine years later that revealed that the fence was not the true boundary, and the defendants’ house encroached thirty-three feet onto the plaintiff’s property. A subsequent survey by the defendants made the same finding. The plaintiff sued to eject the defendants from the disputed .828-acre tract. The defendants claimed that the plaintiff’s fence constituted a boundary by acquiescence. The plaintiff argued that the fence was never intended to act as a boundary line, but rather as a means for keeping his horses on his property for a period of two to three years.
The trial court determined that the defendants had proved title to the disputed .828-acre tract. On appeal, the plaintiff argued that a boundary by acquiescence had not been established. Specifically, the plaintiff argued that the parties had not mutually consented to the fence as the property line. The appellate court noted that an express agreement between the parties is not necessary, and silent acquiescence can be established when a boundary line can be inferred from the conduct of the parties over a period of time. The appellate court noted that the defendants had maintained the disputed property for eight years before the plaintiff objected. As a result, the appellate court held that the evidence supported the finding of a boundary by acquiescence.
Trump-Era WOTUS Rule Applies in All States
Colorado v. United States Environmental Protection Agency, No. 20-1238, 2021 U.S. App. LEXIS 6070 (10th Cir. Mar. 2, 2021)
The “Navigable Waters Protection Rule” (NWPR) issued in April 2020, defines the Clean Water Act (“CWA”) term “waters of the United States” (“WOTUS”). The definition is a key aspect of administering the CWA. Only waters that constitute a WOTUS are subject to the CWA requirements and regulations. However, the Congress left the definition of a WOTUS up to the Environmental Protection Agency (EPA) to write rules defining the term. The NWPR is the most recent attempt at a regulatory definition.
In 2020, the Colorado federal district court entered a preliminary injunction that barred the NWPR from taking effect in Colorado as applied to the discharge permit requirement of Section 404 of the CWA. On appeal, the appellate court reversed. The appellate court noted that Colorado had failed to show irreparable harm without the issuance of the preliminary injunction. The result of the appellate court’s decision is that the NWPR is presently in effect in every state in the U.S.
CWA Contains “Knowing” Requirement, But WOTUS is Not Vague
United States v. Lucero, No. 10074, 2021 U.S. App. LEXIS 6307 and 6327 (9th Cir. Mar. 4, 2021)
The defendant, in 2014, operated a business that charged construction companies for the dumping of soil and debris on dry lands near San Francisco bay. The Environmental Protection Agency (EPA) later claimed that the dry land was a “wetland” subject to the dredge and fill permit requirements of Section 404 of the Clean Water Act (CWA). As a result, the defendant was charged with (and later convicted of) violating the CWA without any evidence in the record that the defendant knew or had reason to know that the dry land was a wetland subject to the CWA.
On further review, the appellate court noted that the CWA prohibits the “knowing” discharge of a pollutant into covered waters without a permit. At trial, the jury instructions did not state that the defendant had to make a “knowing” violation of the CWA to be found guilty of a discharge violation. Accordingly, the appellate court reversed on this point. However, the appellate court ruled against the defendant on his claim that the regulation defining “waters of the United States” was unconstitutionally vague, and that the 2020 Navigable Waters Protection Rule should apply retroactively to his case.
Conservation Easement Deduction Allowed for Donated Façade Easement
C.C.M. AM 2021-001 (Mar. 8, 2021)
The taxpayer donated an easement on a building in a registered historic district on which the taxpayer had installed an accessibility ramp to comply with the Americans With Disabilities Act (ADA). The IRS determined that the installation of the ramp would not disqualify the taxpayer’s deduction. The IRS viewer the ramp as “upkeep” essential to the preservation of the structure. Such upkeep, if required to comply with the ADA, does not jeopardize the donor’s eligibility for a charitable deduction under I.R.C. §170(h)(4)(B) with respect to a building in a registered historic district.
No Exception From Early Withdrawal Penalty for Payment of Living Expenses
Catania v. Comr., T.C. Memo. 2021-33
The petitioner retired at age 55 and transferred his 401(k) funds to a traditional IRA. Two years later, the petitioner withdrew $37,000 from the IRA to pay for maintenance on his home and other living expenses. The IRS applied a 10 percent penalty to the amount withdrawn because the petitioner had not reached age 59.5 at the time of the withdrawal. The Tax Court agreed with the IRS, determining that the Code contains no exception to early retirement account withdrawals for payment of living expenses and/or home maintenance.
Conclusion
These are just some of the recent developments in the ag law and tax world. There’s never a dull moment.
March 24, 2021 in Environmental Law, Income Tax, Real Property | Permalink | Comments (0)
Sunday, March 21, 2021
Ag Law and Taxation - 2018 Bibliography
Overview
Today's post is a bibliography of my ag law and tax blog articles of 2018. 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 and 2019 articles. Soon I will post the bibliography of the 2017 articles and then 2016. After those are posted. I will post one long bibliography containing all of the articles up to that point in time. Then, to close out 2021, I will post the articles of 2021.
The library of content is piling up.
Cataloging the 2018 ag law and tax blog articles - it's the topic of today's post.
BANKRUPTCY
Top Ten Agricultural Law and Tax Developments of 2017 (Ten through Six)
Chapter 12 Bankruptcy – Feasibility of the Reorganization Plan
Farm Bankruptcy and the Preferential Payment Rule
Can a Bankrupt Farm Debtor Make Plan Payments Directly to Creditors?
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Chapter 12 Bankruptcy and the Tools-of-the-Trade Exemption
Developments in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2018/11/developments-in-ag-law-and-tax.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
BUSINESS PLANNING
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
The Spousal Qualified Joint Venture
https://lawprofessors.typepad.com/agriculturallaw/2018/02/the-spousal-qualified-joint-venture.html
The Spousal Qualified Joint Venture – Implications for Self-Employment Tax and Federal Farm Program Payment Limitations
Form a C Corporation – The New Vogue in Business Structure?
Tax Issues When Forming a C Corporation
End of Tax Preparation Season Means Tax Seminar Season is About to Begin
Converting a C Corporation to an S Corporation – The Problem of Passive Income
Valuation Discounting
https://lawprofessors.typepad.com/agriculturallaw/2018/05/valuation-discounting.html
Valuation Discounting – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2018/05/valuation-discounting-part-two.html
The Impact of the TCJA on Estates and Trusts
Buy-Sell Agreements for Family Businesses
When is an Informal Business Arrangement a Partnership?
Management Activities and the Passive Loss Rules
Expense Method Depreciation and Trusts
Qualified Business Income Deduction – Proposed Regulations
Intentionally Defective Grantor Trust – What is it and How Does it Work?
When Can a Corporate Shareholder be Held Liable for Corporate Debts and Liabilities?
Farm Wealth Transfer and Business Succession – The GRAT
Social Security Planning for Farmers
https://lawprofessors.typepad.com/agriculturallaw/2018/10/social-security-planning-for-farmers.html
Corporations Post-TCJA and Anti-Corporate Farming Laws
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
What Happens When a Partner Dies?
https://lawprofessors.typepad.com/agriculturallaw/2018/10/what-happens-when-a-partner-dies.html
What are the Tax Consequences on Sale or Exchange of a Partnership Interest?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
CIVIL LIABILITIES
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
Landlord Liability for Injuries Occurring on Leased Premises
When Does a Rule of Strict Liability Apply on the Farm?
When Can I Shoot My Neighbor’s Dog?
https://lawprofessors.typepad.com/agriculturallaw/2018/05/when-can-i-shoot-my-neighbors-dog.html
Reasonable Foreseeability
https://lawprofessors.typepad.com/agriculturallaw/2018/05/reasonable-foreseeability.html
What is “Agriculture” for Purposes of Agritourism?
Negligence – Can You Prove Liability?
https://lawprofessors.typepad.com/agriculturallaw/2018/06/negligence-can-you-prove-liability.html
Wind Farm Nuisance Matter Resolved – Buy the Homeowners Out!
Torts Down on the Farm
https://lawprofessors.typepad.com/agriculturallaw/2018/08/torts-down-on-the-farm.html
Roadkill – It’s What’s for Dinner
https://lawprofessors.typepad.com/agriculturallaw/2018/09/roadkill-its-whats-for-dinner.html
What Difference Does it Make if I Post My Property “No Trespassing”?
Liability for Injuries Associated with Horses
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Developments in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2018/11/developments-in-ag-law-and-tax.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
CONTRACTS
Is a Farmer a Merchant? Why it Might Matter
Some Thoughts on the Importance of Leasing Farmland
Contract Rescission – When Can You Back Out of a Deal?
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Disclaiming Implied Warranties
https://lawprofessors.typepad.com/agriculturallaw/2018/11/disclaiming-implied-warranties.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
COOPERATIVES
The Qualified Business Income (QBI) Deduction – What a Mess!
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
CRIMINAL LIABILITIES
Curtilage – How Much Ag Property is Protected from a Warrantless Search?
Establishing the Elements of a Cruelty to Animals Charge
What Difference Does it Make if I Post My Property “No Trespassing”?
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
ENVIRONMENTAL LAW
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
Top Ten Agricultural Law and Tax Developments of 2017 (Five through One)
Is a CWA Permit Needed for Pollution Discharges via Groundwater?
Non-Tax Ag Provisions and the Omnibus Bill
Wetlands and Farm Programs – Does NRCS Understand the Rules?
Regulation of Wetlands and “Ipse Dixit” Determinations
WOTUS Developments
https://lawprofessors.typepad.com/agriculturallaw/2018/08/wotus-developments.html
Does the Migratory Bird Treaty Act Apply to Farmers?
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Is Groundwater a “Point Source” Pollutant?
“Waters of the United States” Means “Frozen Soil”?
Developments in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2018/11/developments-in-ag-law-and-tax.html
Can an Endangered Species be Protected in Areas Where it Can’t Survive?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
ESTATE PLANNING
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
The Tax Cuts and Job Acts – How Does it Impact Estate Planning?
What’s the Charitable Deduction for Donations From a Trust?
The Spousal Qualified Joint Venture
https://lawprofessors.typepad.com/agriculturallaw/2018/02/the-spousal-qualified-joint-venture.html
Why Clarity in Will/Trust Language Matters
Some Thoughts on the Importance of Leasing Farmland
End of Tax Preparation Season Means Tax Seminar Season is About to Begin
Modifying an Irrevocable Trust – Decanting
Valuation Discounting – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2018/05/valuation-discounting-part-two.html
The Impact of the TCJA on Estates and Trusts
Impact of Post-Death Events on Valuation
Beneficiary Designations, Changed Circumstances and the Contracts Clause
Qualified Business Income Deduction – Proposed Regulations
Spousal Joint Tendencies and Income Tax Basis
Farm and Ranch Estate Planning in 2018 and Forward
The TCJA, Charitable Giving and a Donor-Advised Fund
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Unpaid Tax at Death – How Long Does IRS Have to Collect?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
INCOME TAX
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
Top Ten Agricultural Law and Tax Developments of 2017 (Five through One)
The Qualified Business Income (QBI) Deduction – What a Mess!
The Tax Cuts and Jobs Act – How Does it Impact Estate Planning?
What’s the Charitable Deduction for Donations from a Trust?
Can Farmers Currently Deduct Research Expenditures?
Innovation on the Farm – Will the Research and Development Credit Apply?
What Happens When the IRS Deems an Ag Activity to Be a Hobby?
The Spousal Qualified Joint Venture – Implications for Self-Employment Tax and Federal Farm Program Payment Limitations
Livestock Sold or Destroyed Because of Disease
Form a C Corporation – The New Vogue in Business Structure?
Deductible Repairs Versus Capitalization
The Tax Treatment of Farming Net Operating Losses
Congress Modifies the Qualified Business Income Deduction
IRS Collections – The Basics
https://lawprofessors.typepad.com/agriculturallaw/2018/03/irs-collections-the-basics-.html
Tax Issues Associated with Oil and Gas Production
Refundable Fuel Credits – Following the Rules Matters
Distinguishing Between a Capital Lease and an Operating Lease
End of Tax Preparation Season Means Tax Seminar Season is About to Begin
Passive Activities and Grouping
https://lawprofessors.typepad.com/agriculturallaw/2018/04/passive-activities-and-grouping.html
Divorce and the New Tax Law – IRS Grants Some Relief
Gifts of Ag Commodities to Children and the New Tax Law
Post-Death Sale of Crops and Livestock
Is There a Downside Risk to E-Filing Your Taxes?
Purchase and Sale Allocations to CRP Contracts
Converting a C Corporation to an S Corporation – The Problem of Passive Income
The Impact of the TCJA on Estates and Trusts
The TCJA and I.R.C. 529 Plans
https://lawprofessors.typepad.com/agriculturallaw/2018/05/the-tcja-and-irc-529-plans.html
Farmers, Self-Employment Tax, and Personal Property Leases
State Taxation of Online Sales
https://lawprofessors.typepad.com/agriculturallaw/2018/06/state-taxation-of-online-sales.html
The Depletion Deduction for Oil and Gas Operations
Charitable Giving Post-2017
https://lawprofessors.typepad.com/agriculturallaw/2018/07/charitable-giving-post-2017.html
When is an Informal Business Arrangement a Partnership?
Management Activities and the Passive Loss Rules
Tax Issues on Repossession of Farmland
Outline of Tax Proposals Released
https://lawprofessors.typepad.com/agriculturallaw/2018/07/outline-of-tax-proposals-released.html
Life Estate/Remainder Arrangements and Income Tax Basis
Expense Method Depreciation and Trusts
Qualified Business Income Deduction – Proposed Regulations
The Qualified Business Income Deduction and “W-2 Wages”
Tax Consequences on Partition and Sale of Land
Deducting Residual Soil Fertility
https://lawprofessors.typepad.com/agriculturallaw/2018/09/deducting-residual-soil-fertility.html
Social Security Planning for Farmers
https://lawprofessors.typepad.com/agriculturallaw/2018/10/social-security-planning-for-farmers.html
Eliminating Capital Gain Tax – Qualified Opportunity Zones
The TCJA, Charitable Giving and a Donor-Advised Fund
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
What is Depreciable Farm Real Property?
What is “Like-Kind” Real Estate?
https://lawprofessors.typepad.com/agriculturallaw/2018/10/what-is-like-kind-real-estate.html
Developments in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2018/11/developments-in-ag-law-and-tax.html
Trusts and Like-Kind Exchanges
https://lawprofessors.typepad.com/agriculturallaw/2018/11/trusts-and-like-kind-exchanges.html
Unpaid Tax at Death – How Long Does IRS Have to Collect?
Non-Depreciable Items on the Farm or Ranch
What are the Tax Consequences on Sale or Exchange of a Partnership Interest?
Expense Method Depreciation and Structures on the Farm
Deduction Costs Associated with Items Purchased for Resale
https://lawprofessors.typepad.com/agriculturallaw/2018/12/sale-of-items-purchased-for-resale.html
Claiming Business Deductions? – Maintain Good Records, and… Hire a Tax Preparer
https://lawprofessors.typepad.com/agriculturallaw/income-tax/page/7/
Depletion – What is it and When is it Available?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
INSURANCE
Beneficiary Designations, Changed Circumstances and the Contracts Clause
Recent Developments Involving Crop Insurance
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Farm Liability Policies – Are All Activities on the Farm Covered?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
REAL PROPERTY
In-Kind Partition and Adverse Possession – Two Important Concepts in Agriculture
Some Thoughts on the Importance of Leasing Farmland
Prescriptive Easements and Adverse Possession – Obtaining Title to Land Without Paying for It
Purchase and Sale Allocations to CRP Contracts
Tax Issues on Repossession of Farmland
The Accommodation Doctrine – Working Out Uses Between Surfaces and Subsurface Owners
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
What is “Like-Kind” Real Estate?
https://lawprofessors.typepad.com/agriculturallaw/2018/10/what-is-like-kind-real-estate.html
Negative Easements – Is There a Right to Unobstructed Light, Air, or View?
The “Almost Top Ten” Ag Law and Tax Developments of 2018
REGULATORY LAW
The “Almost Top Ten” Agricultural Law and Tax Developments of 2017
Top Ten Agricultural Law and Tax Developments of 2017 (Ten through Six)
Is There a Constitutional Way to Protect Animal Ag Facilities?
Trade Issues and Tariffs – Are Agriculture’s Concerns Legitimate?
Federal Crop Insurance – Some Recent Case Developments
Non-Tax Ag Provisions in the Omnibus Bill
Are Mandatory Assessments for Generic Advertising of Ag Commodities Constitutional?
Wind Farm Nuisance Matter Resolved – Buy the Homeowners Out!
Regulation of Wetlands and “Ipse Dixit” Determinations
Ag Employment – Verifying the Legal Status of Employees
Roadkill – It’s What’s for Dinner
https://lawprofessors.typepad.com/agriculturallaw/2018/09/roadkill-its-whats-for-dinner.html
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
“Waters of the United States” Means “Frozen Soil”?
How Long Can a Train Block a Crossing?
https://lawprofessors.typepad.com/agriculturallaw/2018/11/how-long-can-a-train-block-a-crossing.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
SECURED TRANSACTIONS
Ag Finance – Getting the Debtor’s Name Correct on the Financing Statements
What Are “Proceeds” of Crops and Livestock?
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
The “Almost Top Ten” Ag Law and Tax Developments of 2018
SEMINARS AND CONFERENCES
Agricultural Law and Economics Conference
Summer Farm Income Tax/Estate and Business Planning Conference
Upcoming Seminars
https://lawprofessors.typepad.com/agriculturallaw/2018/08/upcoming-seminars.html
Fall Tax Seminars
https://lawprofessors.typepad.com/agriculturallaw/2018/09/fall-tax-seminars.html
Year-End Ag Tax Seminar/Webinar
https://lawprofessors.typepad.com/agriculturallaw/2018/12/year-end-ag-tax-seminarwebinar.html
WATER LAW
Top Ten Agricultural Law and Tax Developments of 2017 (Ten through Six)
Top Ten Agricultural Law and Tax Developments of 2017 (Five through One)
The Accommodation Doctrine – Working on Uses Between Surface and Subsurface Owners
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2018/10/agricultural-law-online.html
Drainage Issues – Rules for Handling Excess Surface Water
The “Almost Top Ten” Ag Law and Tax Developments of 2018
March 21, 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)
