Crop issues

Ohio Supreme Court Refuses to Hear Henry County Drainage Dispute

Litigation that arose from a drainage improvement project completed in 2002 has finally ended with a decision by the Ohio Supreme Court.  The court announced today that it will not accept the case for review, which allows the ruling by … Continue reading →

Ohio Legislature Revises Agricultural Commodity Handler’s Law

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program The Ohio Senate concurred with the House of Representatives yesterday to enact changes to Ohio’s Agricultural Commodity Handler’s law, commonly known as the Grain Indemnity Fund.  According to … Continue reading →

Court Will Hold Monsanto to its Promise Not to Sue Organic Farmers

Catharine Daniels, Attorney, OSUE Agricultural & Resource Law Program The court’s decision was not exactly what a group of farmers, seed sellers, and agricultural organizations was hoping for, but they are nevertheless claiming partial victory against Monsanto in a recent lawsuit centered on genetically modified … Continue reading →

U.S. Supreme Court Protects Monsanto’s Patent Rights in Roundup Ready Bean Case

Court rules that farmer’s replanting of Roundup Ready beans violates federal patent law

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program

The U.S. Supreme Court today ruled that a farmer’s replanting of harvested Roundup Ready© soybeans violates Monsanto Company’s patent rights.  The ruling leaves in place a former court award of $84,456 against farmer Vernon Bowman for planting and harvesting the soybeans, which he had purchased as commodity beans from a local grain elevator or saved from his prior harvests.

Relying on the theory of “patent exhaustion,” Bowman argued that Monsanto’s patent rights exhausted after the first sale of the seed and did not apply to later uses or sales.  This exception to patent protection allows a purchaser of a patented good to resell the “used” good without violating patent rights.   The Court unanimously disagreed that patent exhaustion was applicable in Bowman’s case, explaining that the patent exhaustion theory applies to later uses of a good but not to the creation of new and additional goods from a patented good.  While Bowman could sell harvested Roundup Ready beans or use them as feed, he could not plant those beans, produce new beans and sell the new beans without violating Monsanto’s patent rights.  “That is how “to ‘make’ a new product,” said the Court, or to ”reproduce Monsanto’s patented invention” without compensation to Monsanto.   “A patentee retains an undiminished right to prohibit others from making the thing his patent protects,” said the Court.

Bowman tried to distinguish the application of patent exhaustion to his case based on the “self-replicating” nature of seed, arguing that the seed, rather than Bowman, controlled the seed’s actual reproduction.  Monsanto should not be allowed to interfere with natural reproduction, claimed Bowman.  The Court again disagreed, rejecting what it referred to as Bowman’s “blame the bean” and “seeds are special” arguments and pointing out that Bowman played an active role in the seed reproduction process.  But the Court carefully noted that its ruling does not automatically apply to every  self-replicating product, as there could be situations where a self-replication might occur outside a purchaser’s control or be a necessary but incidental step in using the item for another purpose.

Many expected the Court to rule in favor of Monsanto based solely on the argument that ruling otherwise would negate the incentive for innovation that Congress intended upon passing the federal Patent Act.  The Court was mindful of this argument when clarifying the parameters of the patent exhaustion doctrine, referring several times to the importance of not depriving Monsanto of its monopoly and the rewards of innovation.

What does the case mean for farmers?  The Monsanto ruling is not a big surprise but it does send a strong message to farmers, some of whom have likely grumbled over seed patents and limitations on the age-old practice of saving seed.  With the Supreme Court’s decision, it’s clear that the current legal system simply won’t tolerate replantings of patented seeds.  Instead, the law will support continued efforts by patent holders to monitor what farmers do with patented seed.  Replanting of patented seed, whether intentional or accidental, is more than ever a high risk activity.

Read the Supreme Court’s decision in Bowman v. Monsanto Co. here.

Burning Crop Debris is Legal, isn’t it?

Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law

It’s the time of year when farmers clear fields and fence rows of corn stalks, branches and other debris and use a common management practice–piling the debris and burning it in the field.  Because outdoor fires such as this create air emissions and wildfire concerns, Ohio has laws that regulate open burning activities.   Burning certain materials at certain times in certain places may violate the open burning laws and cause a health or safety issue.  It’s important to know when open burning of crop debris and field residue is permissible, and to take precautions to minimize risk and liability.

There are several areas of law in Ohio that address open burning.  The Ohio Environmental Protection Agency (OEPA) oversees regulations on the open burning of materials that may produce harmful air emissions that affect human and environmental health.  Ohio also has laws that regulate open burning to minimize the danger of wildfires; these laws may be enforced by the Ohio Department of Natural Resources (ODNR) Division of Forestry or local law officials.   Additionally, a local government might have local ordinances that regulate open burning.

In regards to crop debris in farm fields, it is typically permissible for a farmer to burn the debris.  However, the law creates duties to conduct the burn responsibly and imposes some conditions on what, where and when to burn.  Violating the laws can lead to criminal charges, fines and civil liability to harmed parties.

What can you burn?

Ohio law allows the burning of “agricultural wastes” under certain conditions.  The definition of agricultural waste includes materials such as crop debris, as well as other materials.   According to Ohio law, agricultural waste includes:

  • Waste material generated by crop, horticultural, or livestock production practices, landscape wastes that are generated in agricultural activities and woody debris and plant matter from stream flooding.
  • Bags, cartons, structural materials and containers for pesticides, insecticides, fungicides, rodenticides, miticides, nematocides, fumigants, herbicides, seed disinfectants and defoliants, if the manufacturer has identified open burning as a safe disposal procedure.  Farmers may add seed bags and cartons to the burn pile as long as the label states that open burning of the materials is safe.

Agricultural waste does not include:

  • Standing or fallen buildings, building materials, food waste, dead animals, materials made from petroleum or containing plastic, rubber, grease or asphalt.   A farmer may not add these materials to the burn pile.
  • Debris resulting from the clearing of land for new agricultural, residential, commercial or industrial development—this type of waste is defined as “land clearing waste.”  Open burning of land clearing waste requires prior written notification to Ohio EPA.

Where can you burn?

Several regulations determine acceptable locations for burning crop debris and other agricultural waste:

  • Agricultural waste may only be burned on the property where the waste is generated; the waste may not be taken to a different property for burning and a farmer cannot receive and burn waste from another property.
  • If the burning is inside a “restricted area,” then prior written notice to Ohio EPA must be provided at least ten days in advance of the burning.  A “restricted area” is an area where there is higher population density.  The law defines a restricted area as:
    • Any area inside city or village limits.
    • Any area within the 1,000-foot zone outside of a city or village with a population of 1,000 to 10,000.
    • Any area within a one-mile zone outside of a city or village with a population of more than 10,000.
    • The fire must occur in a location where it will not obscure visibility for roadways, railroad tracks or air fields.
    • The fire must be more than 1,000 feet from any neighboring building inhabited by people, such as homes, stores, restaurants, schools, etc.

When can you burn?

There are definite times when burning of crop debris and other agricultural waste is not permitted unless certain conditions are met.

  • Ohio’s wildfire laws limit open burning in rural areas during the months of March, April, May, October and November, when wildfire risk is highest due to dry vegetative conditions and dry winds.  During these months, open burning in rural areas is completely prohibited between the hours of 6 a.m. and 6 p.m., when volunteer fire departments are not well-staffed.  One exception to this prohibition applies to farmers:
    • Open burning may occur in a plowed field or garden, if the burn pile is at least 200 feet from any woodland, brush land or field containing dry grass or other flammable material.  If a farmer can’t meet this 200 foot buffer zone requirement, the farmer should wait until after 6 p.m. to conduct the burn.
    • Open burning should only occur when atmospheric conditions will readily dissipate any smoke and potential contaminants.  If weather conditions are foggy, rainy or causing air inversions, smoke and contaminants will not readily disperse and the farmer should not burn the materials.
    • Even if all other legal requirements for open burning are met, open burning is not allowed when air pollution warnings, alerts or emergencies are in effect.

What about prescribed burning?

Both the ODNR and Ohio EPA have authority over prescribed burning—intentional burns for horticultural, silvicultural, range or wildlife management practices.  Prescribed burning requires prior written permission from Ohio EPA and–if taking place during March, April, May, October or November–the burn must be conducted by a Certified Prescribed Fire Manager with permission by the Chief of ODNR’s Division of Forestry.  See the Division of Forestry’s website for more information on becoming a Certified Prescribed Fire Manager and requesting permission for prescribed burns.

Prior notice to Ohio EPA

For burns that require advance notice to the Ohio EPA, farmers may use the notification form on the Ohio EPA website at http://www.epa.ohio.gov/dapc/general/openburning.  The form seeks information about what will be burned and when and where the burn will take place; this allows the EPA to ensure that the burn is permissible.

Legal duties for conducting open burning

Ohio law also imposes duties for managing open burns.   Ohio Revised Code 1503.18 establishes a duty to prevent fire escape.   The law requires any person who starts a fire near trees, woodland or brush land to take steps to prevent the fire from escaping.  All leaves, grass, wood and inflammable material surrounding the place must be removed to a safe distance and all other reasonable precautions must be taken to keep the fire under control.   The law also states that a person should extinguish or safely cover an open fire before leaving the area.

Ohio EPA’s regulations impose several other duties for managing burns.  As mentioned above, burning of agricultural waste should take place at least 1,000 feet from any neighbor’s inhabited buildings. The wastes should be stacked and dried to provide the best practicable condition for efficient burning and weather conditions should not prevent dispersion of the smoke and emissions.  If the size of an agricultural waste pile exceeds 20 feet in diameter by 10 feet in height (or 4,000 cubic feet),  the farmer must provide written notification of the burn to the Ohio EPA at least ten days before burning.

Local laws

The above analysis explains Ohio’s laws on open burning; remember that the local government might have a local law that also regulates burning activities.  Check with your local fire department to know whether any local regulations apply to the situation.

What if a farmer violates open burning laws?

Violation of the open burning laws creates several risks for farmers.  Ohio EPA has the authority to issue fines of up to $1,000 per day per offense.  The EPA states that it takes enforcement action against repeat offenders or violations that cause significant harmful emissions.  Otherwise, EPA enforcement officers prefer to issue warnings to first-time offenders and educate on how to conduct open burns that minimize pollution impacts.  EPA enforcement officers regularly patrol their districts, investigate fires they see and investigate complaints from neighbors or others who report burning activities.  According to the EPA, the most common violations by farmers include burning substances that are not “agricultural wastes” such as tires and plastics, failing to meet the 1,000 foot setback requirement and burning waste from another property.

Conducting open burns that violate Ohio’s wildfire prevention laws can result in third degree misdemeanor charges, which carry penalties of up to $500 and 60 days of jail time per violation.   Any person may report a potential illegal burn that creates wildfire risks to the local law enforcement or Division of Forestry.

Equally and perhaps more important is the risk of civil liability from an open burning incident.  We all know that the “burn police” can’t observe everyone all the time, but civil liability doesn’t require intensive monitoring—it requires harm.  Where an open burn causes harm to people or property, civil liability may arise.  An open burn that reduces roadway visibility and results in an auto accident, escapes the property and harms neighbors or neighboring property or significantly interferes with other owners’ property use could result in a negligence or nuisance lawsuit.  The farmer who violated open burning laws or failed to properly manage the fire could be liable for all harm resulting from the fire.

For more information on Ohio’s open burning laws, visit the websites of the Ohio EPA Division of Air Pollution Control and ODNR Division of Forestry.

Protecting Interests in a Verbal Farm Lease Situation

A written lease is a valuable tool to use in a farm lease situation, but many farm lease arrangements never progress beyond a conversation and a handshake.    A written lease brings certainty to the farming arrangement by laying out important terms such as lease duration, notice of termination, payment provisions and conservation practices. Verbal farm leases are risky; problems can arise with legal enforceability and disputes over rights and obligations.  For those dealing with a verbal lease agreement, here are a few strategies for protecting interests in the verbal farm lease situation.

Put the verbal lease in writing.  The first recommendation is no surprise; attorneys have long encouraged farmers to use written farmland leases rather than relying on verbal agreements.  But many landowners and tenants are uncomfortable using a written lease, for a variety of reasons.  Consider the following concerns and recommendations for addressing them:

  • “We’ve always operated on a verbal agreement and a handshake.”  Transitioning from a long-time verbal agreement to a written lease can be awkward and uncomfortable, and the landowner or tenant farmer who wishes to make the change may be uncertain about how to introduce the change.  To address an awkward transition, consider using a third party to “intervene” and facilitate the process of converting to a written agreement.  Have a farm manager, attorney or accountant explain the reasons for moving to a written agreement and begin the process of discussing lease terms.  Provide the other party with ample time to respond and to consider its own concerns and suggested lease terms. 
  • “We don’t want everyone to know the terms of our lease.”  Landowners and tenants often express concern that a written farm lease must be recorded in the county recorder’s office, thus revealing private terms such as the price paid for the lease.  In this case, the parties may utilize a provision under Ohio law referred to as the “memorandum of lease.”  Ohio Revised Code section 5301.251 allows the parties to record a shortened form of the farmland lease.  The only provisions the parties must include in a recorded memorandum of lease are the names and addresses of the landowner and tenant, the date of executing the agreement, a description of the leased property, the starting date and duration of the lease and any rights of renewal or extension.   With the recorded memorandum of lease, there is public notice that the lease exists but key terms remain confidential between the landowner and tenant.  The parties can include a term in the written lease verifying their agreement to execute and record a memorandum of lease rather than recording the entire lease.
  • “A written lease is overwhelming or too much detail.”  It is true that farmland leases can be lengthy and detailed, although attorneys usually have sound reasons for drafting detailed leases.   Note that the parties can make a gradual transition.  Even a simple lease or a checklist can bring certainty to the relationship by outlining key obligations or providing resolutions if problems arise in the future.  Additionally, there are many good resources that simplify and explain farm lease provisions, and a few good “model” leases for reference.  For helpful resources, visit the website http://aglease101.org .

Pay attention to lease payments and possession.  If the parties can’t convert a verbal lease to a written lease, be aware that one problem with a verbal lease is that it’s not clear when the lease agreement actually begins.  In the event of a dispute, Ohio courts often look to factors such as possession and lease payments to determine the term of the lease.  Two indicators that a farm lease agreement is in place are possession of the property by the tenant coupled with acquiescence by the landowner, or a lease payment made by the tenant and accepted by the landowner.  Both parties should be mindful of these important actions and should maintain records to document these occurrences.

Address financial fairness.  Determining the payment amount for a farm lease is a challenging task, particularly when the farm economy is in flux.  Disagreement over the lease price can quickly end a verbal farm lease relationship.   Thorough research and equitable approaches can maintain the lease relationship by ensuring a financial arrangement that is responsive to the market and fair to both parties.   OSU’s Farm Management website at http://aede.osu.edu/programs-and-research/osu-farm-management contains data on farmland values and cash rental rates.  Consider a flexible cash lease to accommodate economic changes; information on flexible cash leases is also available through OSU’s Farm Management website and at http://www.aglease101.org.    

Maintain records of the lease relationship.  Good records that document the leasing history can help establish a “course of dealing” between the parties.  While a written farm lease is preferable, a record of how the parties managed the lease or handled issues in the past can be a useful point of reference for ensuring consistency in the relationship.  If there is litigation over the lease, a court might rely on proof of the parties’ course of dealing to help resolve an issue.  Both parties should maintain thorough records of payments, agreements, farm management practices, soil sampling, nutrient applications, improvements and any other facts or data that establish the details of the leasing relationship.

Maintain communication.   Don’t underestimate the power of good communication between the leasing parties.  A landowner can provide a tenant with valuable certainty by keeping the tenant informed on potential changes with land ownership or financial management.  Tenants can keep a landowner apprised of the condition of the farm property by providing reports on a regular basis, especially in the case of an absentee landowner or a crop share lease.  A report that includes pictures and a brief summary of improvements made,  management practices adopted or crop share calculations may go a long way toward ensuring a solid leasing relationship.

A written and comprehensive farm lease is a valuable tool for farmland owners and tenant farmers alike; those who still rely on verbal farm leases should carefully consider making a transition to a written lease.  Parties that continue to use a verbal farm lease face legal and financial risks, but can adopt some practices to help protect the verbal farm lease situation.  For resources and examples of written farm leases, see http://aglease101.org.

Bill introduced to address on-farm bioenergy production

Proposal would ensure that on-farm bioenergy activities qualify for CAUV and are exempt from zoning regulation.

A legislative proposal in the Ohio House of Representatives would include on-farm bioenergy production activities in two key provisions of Ohio law:  qualification for differential tax assessment under the Current Agricultural Use Valuation program and exemption from local zoning authority.  Representatives Pryor and Domenick introduced  House Bill 485 in mid-April with assistance from the Ohio Department of Agriculture.  The bill was referred to the House Agriculture and Natural Resources Committee, but no other action on the bill has taken place.

The proposal addresses ”biodiesel production, biomass energy production, electric or heat energy production and biologically derived methane gas production”  where at least 50% of the starting material or feedstocks are from the same tract, lot or parcel on which the energy production takes place.  This 50% requirement targets on-farm energy production, where a farm is producing and processing the energy inputs, as long as no more than 50% of the supplementary inputs derive from other properties.

The bioenergy production activities that meet the 50% rule would be included in the CAUV’ program’s definition of “land devoted exclusively to agricultural use” in ORC 5713.30, thus guaranteeing eligibility for the CAUV property tax rate.  The bioenergy production activities would also become part of the definition of “agriculture” for purposes of county and township zoning, ORC 303.01 and ORC 519.01.  Because counties and townships have  limited zoning authority over “agriculture,” the proposal would ensure that a county or township could not use zoning authority to prohibit the qualifying bioenergy production activities. 

H.B. 485 is available online, here.

Guest Blog: Vomitoxin in Corn – Legal Ramifications for Producers and Buyers

Thanks go to my colleague Robert Moore for  submitting our first guest blog and sharing the following expertise on the issue of vomitoxin detection in corn.

by Robert Moore, Attorney, Wright Law Company, LPA

Ohio and other areas of the Corn Belt have seen unusually high levels of vomitoxin in corn.  Vomitoxin is a mycotoxin that can cause livestock to reduce feed intake and reduce weight gain.  Some elevators and ethanol plants have been rejecting corn that has tested too high for vomitoxin.  What legal standing do producers with rejected corn have?

Producers with a Contract                       

Producers who have a contract with a buyer must look to the contract to determine their rights.  All provisions, including any small print on the back of the contract, must be read entirely before assessing legal rights.  The language of the contract is what matters; any verbal agreements made outside the contract have very little effect in enforcing legal rights.  Even if the producer and buyer agree to certain terms, if the terms do not find their way onto the contract then the parties are probably not bound by the terms.

In regards to Vomitoxin, the key terms are those describing the quality of the corn required to be delivered.  Grain contracts will include at least the bare minimum “No.2 Yellow Corn” requirement.  No. 2 Yellow corn is a grade established by the USDA and may have up to 5% damaged kernels.  The USDA defines damaged kernels as “kernels and pieces of corn kernels that are badly ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, heat-damaged, insectbored, mold-damaged, sprout-damaged, or otherwise materially damaged.”  Therefore, if the only grade standard in the contract is No. 2 Yellow Corn, a producer’s corn should not be rejected or discounted solely for Vomitoxin unless more than 5% of the kernels are diseased.  However, corn could likely be rejected if 3% of the kernels were diseased with Vomitoxin and another 3% were damaged in another manner.  The 5% threshold is the accumulation of all damaged kernels and not just a single type of damage.

Some contracts will include more restrictive grade terms such as “must be suitable to be fed to livestock” or “must meet all FDA guidelines”.  The FDA has established a 5 part per million (ppm) threshold for hogs and 10 ppm threshold for cattle and poultry.  Therefore, an elevator that requires corn to meet FDA standards or to be safe for livestock consumption can reject corn if it has more than 5 ppm vomitoxin.  It is important to note that corn could have less than 5% damaged kernels but have more than  5 ppm vomitoxin.  That is, the USDA No.2 Yellow Corn grade is a completely different standard that the FDA’s ppm standard.  Ethanol plants must be extra concerned with vomitoxin becoming concentrated in the distillers grain by-product and may have even more restrictive terms than FDA.

Producers that have corn rejected can have the dual problem of having corn rejected and still being obligated to fulfill the contract.  A worse case scenario would see a producer not being able to sell his corn due to high vomitoxin levels while still being required to fulfill his contract obligations for untainted corn with the elevator.  Local reports indicate that elevators have been letting producers out of their contracts if their corn has been rejected for vomitoxin but this could change at any time.

Producers without Contracts

A producer who intends to sell a load of corn to the elevator without a contract has very little legal protection from the corn being rejected.  The elevator is under no obligation to buy the corn and can simply opt not to buy the corn for any reasonable reason.  Without a contract, the elevator is not bound to any predetermined grade standards.  Even the smallest amount of vomitoxin in the corn could cause it to be rejected.

Disputed Grain Samples

Producers have the right to appeal the grain grading determination performed by the elevator.  The Federal Grain Inspection Service (FGIS) oversees grain grading procedures and methods and also provides inspection and appeal services.  A producer who disputes the elevator’s grading can send a sample to FGIS and FGIS’ determination will be binding on both parties.  A FGIS office is located in Toledo.  For more details and information on grading appeals, contact FGIS at 419- 893-3076‎.

Crop Insurance

Some crop insurance policies cover Vomitoxin damage. It is best to have the corn checked by an adjuster while still in the field to avoid tainted corn from being mixed with untainted corn in bins.  Many producers have opted to not file a claim due to the significant impact on APH.  They would rather maintain a higher APH than to file a marginal crop insurance claim.  The deadline for any claims on vomitoxin was December 25, 2009.  In the future, a producer’s crop insurance agent should be contacted at the first sign of Vomitoxin to ensure that all claim procedures are property followed.

Future Implications

Will we see grain contracts move away from the USDA No.2 Yellow Corn standard and towards the FDA ppm standard for vomitoxin and other mycotoxins?  Elevators relying on the USDA standard could get stuck buying corn that exceeds the FDA’s ppm standards.  Unless blended with non-tainted grain, this grain would seemingly be unmarketable as it could not be used for human consumption, livestock consumption, and/or export. Producers should anticipate possible changes to grading standards in contracts offered by elevators and other buyers.  A careful reading of all new grain contracts should be a must for producers to make sure they fully understand the quality and grade of grain they are expected to deliver to the buyer.

Robert Moore is an attorney with Wright Law Co. LPA in Dublin, Ohio, www.wright-law.net.  E-mail:  rmoore@wright-law.net