Month: June 2011

Legislature agrees on changes to Ohio Livestock Environmental Permitting Program

Bill establishes time limits for township and county infrastructure review

A bill approved by the Ohio General Assembly proposes limiting the amount of time county and township officials have for recommending local infrastructure needs for the operation or expansion of a Concentrated Animal Feeding Facility (CAFF).  Both the House and Senate have approved H.B. 22, sponsored by Rep. Buchy (R-77).  The bill now awaits action by Governor Kasich.

Recently introduced on May 17, 2011, H.B. 22 proposes a 75 day time limit for county commissioners and township trustees to provide final recommendations for improvements to local infrastructure that are needed to accomodate a CAFF.   Notification by the CAFF to the county and township is a required step in the Livestock Environmental Permitting Program (LEPP) permit application process.  Information on anticipated traffic routes and number and weights of vehicles must accompany the notification.  Under current law, the county and township must next provide initial recomendations to the CAFF for needed infrastructure improvements.  The CAFF may accept the recommendations or may propose an alternative, and the county and township must then render written final recommendations for infrastructure improvements.  The CAFF must submit the county and township’s final recommendations in its LEPP permit application.

Under the language agreed to by the legislature in H.B. 22, if the county or township fails to provide the written final recommendations in 75 days, the CAFF may proceed with the permit application by submiting an affidavit in lieu of the written final recommendations.  The affidavit must state that the CAFF provided the required notification but did not receive written final recommendations from the county or township within 75 days of giving the notification.

The legislature’s approval of H.B. 22 comes in the wake of a controversial denial of a LEPP permit application by Hi-Q for an egg laying facility in Union County.  ODA Director Zehringer denied Hi-Q’s application because it did not contain the required final infrastructure recommendations from county and township officials.  Hi-Q and Union County had reached an impasse on infrastructure issues, and Hi-Q submitted the permit without any final recommendations by the county.  (See our earlier post on the Director’s decision.)  Under H.B. 22′s language, Hi-Q could have submitted an affidavit instead of the written final recommendations because more than 75 days had passed since Hi-Q’s original notification to the county and township.    The Director thus would not have had to deny the permit application for lack of county and township written final recommendations for infrastructure improvements.

H.B. 22 also proposes changing LEPP from a program to a Division of Livestock Environmental Permitting, and contains a number of other revisions to ODA programs and regulations.  See the analysis of H.B. 22 on the Ohio Legislature’s website.

Ohio Legislature revises law for livestock running loose

New law establishes clear standards for liability, adds alpacas, llamas and bison

Livestock owners and keepers in Ohio will soon have less risk of automatic liability when their animals escape enclosures and run loose on public roadways or the property of others.   The Ohio legislature has revised the “animals running at large” law to clarify two different standards for criminal and civil liability under the law.  

Criminal liability will occur only when proven that a livestock operator behaved “recklessly” in allowing the animals to run loose.  Under Ohio law, a person behaves recklessly when he or she perversely disregards a known risk of his or her conduct, with heedless indifference to the consequences of that conduct.   For example, a livestock owner who sees but intentionally ignores a downed fence where cattle graze near a roadway could be deemed “reckless.”  

The new law establishes a different standard of liability for a civil situation.  A person may recover damages against a livestock owner if harm resulted because the livestock owner’s “negligence” caused the animals to escape.  Under Ohio law, negligence is a substantial lapse of “due care” that results in a failure to perceive or avoid a risk.  For example, a livestock owner who has not checked the line fences in a grazing area for several years could be deemed “negligent.”

Additionally, the revised law states that an animal being at large creates an initial presumption of negligence by the owner.  The animal owner must then rebut the presumption by proving that he or she exercised due care.

The revised law should address a growing problem in Ohio, where livestock owners have been held automatically liable when their animals are found running at large–regardless of  the reason for the animals’ escape or any actions taken or not taken by the owner.  This problem has occurred most frequently with criminal prosecutions.  Owners of escaped animals have been assessed automatic criminal penalties, without having an opportunity to explain their management practices or present facts about the animals’ escape.  The new law remedies this problem by clarifying that criminal liability is not “automatic” simply because livestock are loose; there must be proof that the owner was reckless.

In addition to addressing the standards for liability, the revised animals at large law also:

  • Adds llamas, alpacas and bison to the list of animals addressed in the liability provisions, which already included horses, mules, cattle, sheep, goats, swine and geese.
  • Also adds llamas, alpacas and bison to the law’s provisions for taking, confinement and care of animals running at large.
  • Removes a separate liability provision for male breeding animals; male breeding animals will now fall under the same liability section of the law as other animals.
  • Revises a similar civil liability provision for livestock in Ohio’s line fence law to clarify that negligence is the requisite standard of liability under that law.

The governor signed H.B. 22 on June 21, 2011; the law takes effect on September 20, 2011.  View H.B. 22 here.

IRS Increases Mileage Rate to 55.5 Cents per Mile

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2011-40 on the optional standard mileage rates. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes effective July 1, 2011:
Business- from $0.51 to $0.555
Medical/Moving- from $0.19 to $0.235
Charitable- stays at $0.14

Article courtesy of Internal Revenue Service

GIPSA Hog Contract Requirements

by Robert Moore, Attorney-Wright Law Co. LPA
Dublin, Ohio

The 2008 Farm Bill contained specific provisions that must be included in all hog production contracts. The Grain Inspection, Packers, and Stockyards Administration (GIPSA) defines hog production contracts as “any growout contract or arrangement under which a person or business raises and cares for swine according to the instructions of another person”. In essence, anyone raising, feeding, or growing hogs for another person or business is subject to these provisions.

Four specific provisions must be included in all hog production contracts executed after June 18, 2008. The provisions are as follows:
1. The Grower may cancel the contract within three days after signing or within some other agreed to period. The method of notice and deadline for cancellation must be specifically provided.
2. Include a disclosure statement on the first page that clearly states that additional large capital investments may be required of the grower during the term of the contract.
3. Allow growers to opt out of arbitration provisions before entering a contract.
4. The venue for a contractual dispute shall be the federal judicial district in which the contract was performed and the choice of law shall be governed by the state in which the dispute arose (unless otherwise prohibited by the law of the state in which the contract was being performed).

Contracts that were executed after June 18, 2008 but do not contain the above provisions must be cancelled and re-executed with the required provisions. Amending the contract will likely not meet the requirements of GIPSA because the capital improvement disclosure statement must be on the front page of the contract. An amendment containing the disclosure statement would likely not be considered to be on the front page of the contract even if physically attached to the front of the contract.

The penalty for not complying with the GIPSA regulations is a fine up to $11,000 per violation. While hog contractors may not like or agree with these rules, it is nonetheless a relatively easy issue to resolve by adding the four provisions to the contractor’s standard contract.

USDA Announces Projects to Provide Increased Renewable Energy Production, Reduce Reliance on Foreign Oil

NE Ohio has been designated a BCAP project area!! See below news release

Click here to access more information about Aloterra Energy and BCAP in Ohio

WASHINGTON, June 15, 2011 — Agriculture Secretary Tom Vilsack announced today the establishment of four additional Biomass Crop Assistance Program (BCAP) project areas to promote the cultivation of crops that can be processed into renewable energy. Acreage in Arkansas, Missouri, Ohio and Pennsylvania will be designated to grow giant miscanthus, a sterile hybrid warm-season grass that can be converted into energy to be used for heat, power, liquid biofuels, and bio-based products.

“Renewable, home-grown, clean energy from American producers is vital to our country’s energy future because it reduces our reliance on foreign oil and creates good-paying production jobs that cannot be exported,” said Vilsack. “Today’s announcement will make a significant contribution to rural America and create nearly 4,000 jobs, demonstrating the great economic potential the production of renewable energy holds for our rural communities.”

It is estimated that each of the four project areas and conversion facilities would earn about $50 million per year. According to industry estimates, a large number of biorefinery, agriculture and support jobs will be created in each area. The estimates are: Ashtabula, Ohio – 1,210 jobs added; Paragould, Ark. – 750 jobs added; Aurora, Mo. – 960 jobs added; and Columbia, Mo. – 980 jobs added. These numbers are estimated based on an economic impact study that measures the amount of jobs the projects will generate by 2014. There is also the possibility of establishing “green hubs” in the project areas leading to other green industries, including green industrial parks.

Yields for biomass from giant miscanthus are expected to range between 10 and 12 tons of dry matter per acre and can be as high as 15 tons per acre. BCAP project areas provide financial incentives to eligible agriculture producers to establish dedicated energy crops that will be used for production of heat, power, liquid biofuels or bio-based products. A project area must have specific boundaries that are approved by the Secretary of Agriculture.

Project areas announced today include:

Project Area Number 2 is in Arkansas and targets 2011 enrollment of 5,588 acres in Craighead, Greene, Jackson, Lawrence, Mississippi, Poinsett, and Randolph counties. The sponsor for this project is MFA Oil Biomass LLC and the project area surrounds the co-op’s biomass conversion facility in Paragould, Ark.

Project Area Number 3 is in Missouri, and targets 2011 enrollment of 3,000 acres in Audrain, Boone, Callaway, Cole, Cooper, Howard, Moniteau, Monroe and Randolph counties. The sponsor for this project is MFA Oil Biomass LLC and the project area surrounds the co-op’s biomass conversion facility in Columbia, Mo.

Project Area Number 4 is in Missouri, and targets 2011 enrollment of 5,250 acres in Barry, Christian, Dade, Jasper, Lawrence, Newton, and Stone counties. The sponsor for this project is MFA Oil Biomass LLC and the project area surrounds the co-op’s biomass conversion facility in Aurora, Mo.

Project Area Number 5 is in parts of Ohio and Pennsylvania and targets 2011 enrollment of 5,344 acres in Ashtabula, Geauga, Lake, and Trumbull, Ohio, and Crawford, Erie, and Mercer counties, Pennsylvania. The sponsor for this project is Aloterra Energy, LLC and the project area surrounds the company’s biomass conversion facility in Ashtabula, Ohio.

Earlier this year, USDA announced BCAP Project Area 1 that comprised up to 50,000 acres for establishing a dedicated energy crop of native grasses and forbs for energy purposes in 39 counties in central and western Missouri and eastern Kansas.

USDA provides an opportunity for teams of crop producers and bioenergy facilities to submit proposals to USDA to be selected as a BCAP project area. Selected producers are eligible for reimbursements of up to 75 percent of the cost of establishing a perennial bioenergy crop. They can receive up to five years of annual payments for herbaceous crops (annual or perennial) and up to 15 years of annual payments for woody crops (annual or perennial). BCAP, which was authorized in the 2008 Farm Bill, is a primary component of the strategy to reduce U.S. reliance on foreign oil, improve domestic energy security, reduce pollution and spur rural economic development and job creation.

The sign-up period for these project areas will begin on Monday, June 20, 2011. The deadline to sign up for the project areas will be announced at a later date. The Farm Service Agency (FSA), administering the program on behalf of the Commodity Credit Corporation with conservation planning assistance from the Natural Resources Conservation Service (NRCS) and other partners, will enter into contracts with landowners and operators in these project areas. Producers interested in participating in the project areas should visit their local FSA county office. Information about BCAP may be found at www.fsa.usda.gov/bcap.
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Cover Crops and Prevented Planting Update for Illinois, Indiana, Michigan and Ohio

SPRINGFIELD, Ill., June 10, 2011 – An announcement made by the Risk Management Agency (RMA) today states that producers are eligible for prevented planting on acreage where the cover crop was not timely terminated and the subsequent crop was prevented from planting due to an insurable cause of loss.

The statements in the Special Provisions of Insurance are relevant to insuring a spring crop (e.g. corn, soybeans, etc.) following a crop or small grain crop that has reached the headed stage. Producers who plant a crop after a cover crop that has headed, budded, or has been harvested in the same calendar year are required to request a written agreement through their crop insurance agent. Producers have until July 15th to request a written agreement request through their agent, but are encouraged to submit their request as early as possible because a crop inspection is required as part of the written agreement. The inspection must show a yield potential equal to 90 percent of the guarantee. Filing a request early will ensure producers are protected from losses during the growing season.

Producers are encouraged to talk to their insurance agent and ask questions related to their insurance policy, coverage, and prevented planting. Click here to Access the Cover Crops and Prevented Planting RMA News Release

ODA Denies Egg Farm Permit as Legislation Proposes Change to Permit Program

Current bill in House would yield different outcome for Hi-Q CAFF permit

In a unique and controversial case, the Ohio Department of Agriculture (ODA) has denied an application under its Livestock Environmental Permitting Program for Hi-Q Egg Products, LLC to establish an egg laying facility in Union County.   In denying the application, ODA Director Zehringer followed the recommendations made in April 2011 by the ODA hearing officer who reviewed the permit application (see our earlier post).  The hearing officer had recommended denial on the basis of an incomplete application, because  Hi-Q’s application did not include a written statement from local officials certifying that final recommendations had been made for local infrastructure improvements and costs, as required by program regulations (OAC 901:10-1-02(A)(6)).  Hi-Q claimed that the county and township failed to provide the recommendations, while the county and township argued that there were no final recommendations because  Hi-Q refused to discuss an alternative transportation route.  In agreeing that the recommendations were not included in the application, Director Zehringer stated that there was “no other viable option but to deny the [permit] due to an incomplete application.” 

Ohio’s  Livestock Environmental Permitting Program (LEPP) regulates the installation and operation of  large Confined Animal Feeding Facilities (CAFFs).  Critics have long complained that the program fails to consider the potential impacts of CAFF development  upon the local community.  Those concerned about local impacts have used the public hearing process to voice opposition to CAFF permits, but have never successfully prevented approval of a permit.  Until now, the program’s obscure requirement for county and township approval of infrastructure improvements has gone unnoticed as a prevention mechanism by such opponents.   

While the Hi-Q denial is a first, opponents of large livestock operations won’t have cause to celebrate the decision for long if a current legislative proposal meets with success.  H.B. 229, introduced May 17, 2011 by Rep. Buchy, will place a time limit on the county and township officials who must consider local infrastructure improvements needed for a CAFF permit application.  According to the proposal,  local officials would have 75 days after receiving notice of the proposed facility to render a written statement on local infrastructure improvements and costs.  After 75 days, the permit applicant may submit a notarized affidavit stating that it had provided local officials with notice but did not receive any written final recommendations from the local government within the required timeframe.  Under the law as proposed by H.B. 229, ODA could not deny a permit application that lacks the written statement from local officials as long as 75 days have passed after giving notice and the permit applicant submits the notarized affidavit rather than the written statement from local officials. 

H.B. 229 is currently before the House Agriculture and Natural Resources committee.  Visit this link to view H.B. 229 and here for Director Zehringer’s press release on the Hi-Q permit.

How Well Do Farmers Tolerate Risk? Part 1

By: Brian Roe, McCormick Professor, Department of Agricultural, Environmental and Development Economics, Ohio State University

Flood and drought.  Late plantings.  Delayed harvesting.  Crazy price swings.  Dangerous working conditions.  Today’s successful farmers may have more in common with professional poker players than with the stolid managers of generations past as crucial decisions balancing risk and reward must be made on a regular basis and, often, on the fly.   

So, has this constant exposure to risk and risky decisions made U.S. farmers better able to tolerate risk than other people?  Or has it gone the other way and made farmers more likely to want to avoid future risks? 

One classic view of risk tolerance is that risk tolerant people seek entrepreneurial activities such as owning a small business or becoming otherwise self-employed.  Several studies over the years have validated this logic – risk seekers seek entrepreneurial activities.

But farming isn’t exactly like other forms of small business ownership and self employment, is it?  Sometimes entering farming is more the outcome of intergenerational inertia than of a free, unfettered choice among all feasible professions.  I would argue that, more than other forms of small business, family ties are crucial to farming entry decisions because they often provide the key knowledge, experience and skills necessary to become a successful farmer.  And that’s not to mention the fact that family ties often provide the access to land and other crucial, expensive assets.  So, while the city kid who loves risk will choose to run a small business rather than take a government job, the farm kid who, deep down, doesn’t really like to take risks, may end up running the family farm even if that safe government job was available. 

Farming is also different in that, for some sectors of farming and some regions of the country, federal and state programs provide some downside risk protection through subsidized insurance products and various program payments.  Do these modest protections blunt the risk enough and keep some folks in farming that would have otherwise left for less risky occupations? 

The question I am interested in is this: when you put all these factors together, does it mean that U.S. farmers, as a group, are more or less tolerant of risk than the rest of Americans?

To answer this question, I asked a question.  Specifically, I asked farmers, small business owners and other people around the U.S. the following:

“How do you see yourself?  Are you generally a person who is fully prepared to take risks or do you try to avoid taking risks?”   Please mark one response below.

Don’t like to take risks                   Fully prepared to take risks
                0 1 2 3 4 5 6 7 8 9 10
                     
                     

I asked this question because, perhaps surprisingly, the answer to this question has proven very effective in predicting a broad range of observed behaviors when used by other researchers.  For example, this question was asked of tens of thousands of Germans as part of a large, ongoing study of the German population.  Researchers have found that it predicts behaviors such smoking, traffic offenses, investment behavior and willingness to migrate and be self-employed.  However, it had never been used with a U.S. population.

Next month, I’ll share with you how I conducted the surveys and give you the answer to the question “Who can better tolerate risk: farmers, business owners or the average American?”  This will coincide with my presentation of these results to the Agricultural and Applied Economics Association Annual Meetings, which are being held in Pittsburgh this year.