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Late in 2020, we had a North Carolina Hog Farm Litigation settlement that ended several lawsuits filed against Murphy-Brown, LLC and Smithfield Foods. In May 2020, neighboring landowners filed a new set of federal lawsuits against Murphy-Brown and Smithfield, the same defendants in the prior lawsuits. Similar to the previous lawsuits, neighbors sued the companies that the farms grow for, not the actual hog farms themselves. In these lawsuits, the neighbors used legal theories based on trespass and negligence and not around nuisance. Recently, the federal judge hearing the lawsuit allowed it to continue and ruled the state’s right-to-farm law did not apply, though providing a defense in this case to the trespass and negligence claims. The judge also dismissed two other claims brought by the neighbors.
With 2020 over and 2021 just starting, I wanted to take a minute to look back at the top legal developments impacting agriculture in 2019. A few of these legal developments may seem like repeats from my 2019 update; see here. Moving into 2021, we will see new issues emerge as continued lawsuits involving pesticides, continued implementation of the 2018 Farm Bill and COVID-19 relief bills, and possible appeals in a few cases on the list. See above for the embedded annual podcast episode covering these issues. If you have not already signed up for updates, click here to sign up to get email updates sent to you as new content is available.
On July 6, 2020, the Maryland Department of Agriculture released the proposed hemp plan, required under the 2018 Farm Bill to allow for more hemp production in the state. The 2014 Farm Bill opened the door to limited hemp production, and several Maryland growers have been participating in the state’s pilot research program for the past two years. With this move towards a hemp production plan, Maryland growers need to pay attention to the changes between the two programs. One of the most significant changes will be the definition of what is considered hemp in the state. While the 2014 Farm Bill focused on hemp containing less than 0.3 percent of delta-9-tetrahydrocannabinol (THC) on a dry weight basis, the 2018 Farm Bill will look at a total concentration of THC of less than 0.3 percent on a dry weight basis. These regulations, once finalized, would take effect on November 1, 2020, and the state would move away from the pilot research program regulations.
Dicamba has been back in the news lately in several areas. EPA recently moved to cancel registrations for three dicamba products, XtendiMax, Engenia, and FeXapa, based on a ruling in the Ninth Circuit. Growers have till the end of July 2020 to use existing stocks. And Bayer, the parent company of Monsanto, recently announced settlement of around $400 million for class-action lawsuits filed against possible drift damage caused by the company’s XtendiMax product. Although details of that settlement will not be known for a while, let’s step back and get a sense of what this means for growers.
What are the dicamba drift lawsuits about?
Producers experiencing dicamba drift damage brought the current In re Dicamba Herbicides Litigation against the manufacturers of the dicamba-based herbicides XtendiMax and Engenia. With the federal claims, the plaintiffs argue that Monsanto and BASF Corporation violated § 1125(a) of the Lanham Act in marketing both XtendiMax and Engenia dicamba-based herbicides. The plaintiffs also allege that state claims focused on negligence claims in product design, failure to warn of negligence in the design, failure to warn of the dangers, and poor training sales of representatives for the two dicamba-based herbicides.
Only one of the federal lawsuits has gone to trial on similar claims in In re Dicamba Herbicides Litigation. A federal jury in Bader Farms, Inc. v. Monsanto Co. awarded a Missouri peach grower $265 million in damages, $15 million in actual damages, and $250 million punitive damages. The defendants are currently appealing this decision.
What is in the settlement?
The exact terms of the settlement are currently unknown. The plaintiffs and defendants have agreed in principle to settle claims of yield losses due to dicamba damage from 2015 to 2020. About $300 million of the settlement will cover specific losses to soybean growers during that period. Another $100 million of the settlement will go towards non-soybean damage and include the plaintiffs’ attorneys’ fees.
Who will be eligible?
What still is not known is how broad the eligibility will be. We do not know if this will be nationwide or limited to the class action lawsuit states. As mentioned above, we currently know the settlement will cover yield losses due to drift damage from 2015 to 2020. We will have to wait for the final settlement agreement to be announced to get more details on eligibility.
How will you apply?
How to apply is another good question for which we currently do not have an answer. When the final settlement agreement is announced we will get a sense of the timeline for eligibility. Since this settlement includes the 2020 crop year, we can assume that signup would not even start until after completing the 2020 harvest to allow time to determine potential damage. Because the settlement is based on yield damage, we can assume you will need to submit crop insurance documentation or have calibrated yield monitoring data to verify this yield loss due to dicamba drift damage.
How does this relate to the on-going lawsuit in the Ninth Circuit Court of Appeals?
The recently announced settlement and the lawsuit in the Ninth Circuit Court of Appeals are related in the sense that they both include many of the same dicamba-based herbicide products, and that is about it. As mentioned earlier, the class action settlement is based around federal claims that the defendants violated the Lanham Act and state law-based tort claims. The claims in the Ninth Circuit are related to EPA’s approval of the 2018 registration for BASF, Bayer, and Corteva dicamba-based herbicide products.
Based on the court’s vacatur of that registration, EPA has moved to cancel the three dicamba-based herbicides’, XtendiMax, Engenia, and FeXapa, registrations. Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), EPA only has authority to either cancel or suspend federal pesticide registrations. With a suspension or cancellation, EPA can set the conditions on which canceled or suspended pesticides can be sold, distributed, or used.
Looking forward, the 2018 registrations for these three products would have expired later this year. EPA will need to consider the Ninth Circuit’s ruling in the process to reregister these three products. We will have to watch this process to see if the products are reregistered in time for the 2021 growing season.
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As we move through 2020 and a potentially lower period of crop prices due to issues associated with the global pandemic, many of you might be looking at renewing existing agricultural leases. While you might be utilizing fixed cash rental rates or crop-share rents, with projected low crop prices, now might be the time to consider using a flex-cash lease. Flex-cash leases are a rental agreement which work like a hybrid of the cash lease and state that the tenant will pay in proportion to either or both the price and yield level. This form of a lease might be better suited for producers who are working to handle low crop prices in their operations. At the same time, if you do not want to consider a flex cash lease, you might want to consider adding language to your fixed cash lease which could reduce the rental rate if prices stay low.
I have gotten a few questions involving farm dogs here lately and thought I would take a moment to provide information here on the issues. If you have livestock, you may have a dog to scares away predators that might injure or kill the livestock. This dog may bark throughout the night, which may cause an issue for your neighbors. And although your neighbors may find this a nuisance, many Maryland counties specifically exempt dogs used on farms from county ordinances limiting dogs from being a nuisance. You should check your county code to determine if farm dogs are exempt from the nuisance limitations in your county. For those in counties without a code provision for farm dogs, the county’s right-to-farm ordinance and state’s right-to-farm law potentially provide protections.
A number of you continue to ask me when you might see settlement checks from the Syngenta corn seed settlement. In late 2018, the court approved the settlement order for the $1.51 billion MIR162 Syngenta settlement. Based on the final order, payments to producers should have started going out in the second quarter of 2019. Payments did not go out. On January 3, 2020, the federal district court in Kansas gave final approval to the settlement. There is one last step for growers is to provide the claims administrator with an IRS W-9 form either online or by mailing a form into Corn Seed Settlement Program Claims Administrator, P.O. Box 26226, Richmond, Virginia 23260.
The Court of Special Appeals of Maryland, in Uninsured Employers’ Fund v. Tyson Farms, Inc., recently agreed with the Workers’ Compensation Commission that a poultry farm manager’s occupational disease disablement arose out of his co-employment to both the poultry farm owner and the poultry company, Tyson Farms, Inc. Tyson may appeal to the Court of Appeals of Maryland, but growers and companies should consider the possible implications of this decision.
In November, the IRS announced the revised federal estate tax and gift tax limits for 2020. For 2020, the federal estate tax limit will increase from $11.4 million to $11.58 million. The federal gift tax limit will remain at $15,000 in 2020. In Maryland, state estate tax limits will stay at $5 million.
Recently the Court of Appeals of Minnesota partially reversed the Minnesota Pollution Control Agency’s (MPCA) determination that an environmental impact statement (EIS) for a proposed dairy expansion was not needed. During the public comment period, the Minnesota Center for Environmental Advocacy (MCEA) raised concerns that the MPCA had not addressed climate change and the greenhouse gas emissions from the expansion, and the MPCA should develop an EIS to approve the expansion. The court of appeals agreed with the MCEA, and now the MPCA will need to conduct an additional environmental review before approving the expansion and the National Pollutant Discharge Elimination System permit (NPDES) modifications. This ruling has raised a concern that other states may see similar challenges.