2016 in Review: An Agricultural Law Summary

 

As we close out the year, we pause to review important developments in agricultural law from 2016. The year saw several notable rulings under the Clean Water Act,as well as the progression of several key Clean Water Act cases. Federal regulators unveiled new rules, and Congress passed legislation impacting producers and ag businesses. As always, the courts were busy and so were we. It seems likely that 2017 will be even busier as we track new legislation and rulemaking proposed by a new administration. The transformation of agencies key to agriculture, such as the USDA, the Treasury, and the EPA, mean big change ahead. We'll be here to keep you posted!

> Clean Water Rule Sits Idle.

Since October of 2015, the embattled Clean Water Rule, which was finalized by the EPA and the U.S. Army Corps Engineers on May 27, 2015, has been stayed nationwide. In other words, the agencies cannot use it.  The final Rule defines “waters of the United States” or those waters over which the federal government has Clean Water Act jurisdiction. The Rule, which identifies eight categories of “jurisdictional waters,” retained most of the provisions from its proposed form and added additional controversial provisions as well. Immediately upon publication of the Rule on June 29, 2015, the majority of states filed actions challenging the validity of the Rule. Industry groups also challenged the Rule. The plaintiffs generally allege that:

  • The Rule exceeds the agencies’ authority under the Clean Water Act.
  • The Rule violates Const. Amend. X.
  • The agencies violated the Administrative Procedures Act in promulgating the Rule.

Of particular concern to the states (as well as many farming and industry groups) are the definitions in the Rule for “tributaries” and “adjacent waters.” The states allege that the definition of “tributaries” “sweeps within the agencies’ authority” ephemeral streams and channels that are usually dry.” Likewise, the federal complaints assert concerns over the definition of “adjacent waters,” which includes all waters “bordering,” “contiguous” to, or “neighboring” “primary waters, impoundments, or tributaries.” The final rule introduced a new definition of “neighboring” that would grant per se jurisdiction to a “large variety of waters within floodplains, including lands that are dry most of the year.” This is because the definition of “neighboring” includes certain “waters” based strictly on their proximity to other jurisdictional waters, including tributaries. For example, the definition includes as a per se jurisdictional neighboring water “waters located within 100 feet of the ordinary high water mark of navigable waters, interstate waters, territorial seas, impoundments, or tributaries.” Given the potentially indirect relation of a tributary to traditional navigable waters, the definition of “neighboring” would seem to strain this connection even more.  

The Rule became effective on August 28, 2015; however, the United States Court of Appeals for the Sixth Circuit stayed the Rule nationwide in October of 2015 in Murray Energy Corp. v. EPA, no. 15-3751. The Sixth Circuit determined on February 22, 2016, that it had jurisdiction to rule on the merits of the legal challenges to the Rule. Specifically, the Sixth Circuit held that 33 U.S.C. § 1369(b)(1) gives courts of appeals (and not district courts) exclusive original jurisdiction over challenges to the Clean Water Rule. In re EPA & Dep't of Def. Final Rule, 817 F.3d 261 (6th Cir. 2016). On April 21, 2016, the Sixth Circuit denied petitions seeking a rehearing en banc. Briefing is scheduled to be complete February 17, 2017, with oral arguments to follow. The National Association of Manufacturers has asked the United States Supreme Court to decide whether the Sixth Circuit got the jurisdictional question correct.

Prediction: The 2016 election sounded the death knell for the current Clean Water Rule. President-elect Trump has nominated Scott Pruitt to be the new Administrator for the EPA. Pruitt, the Oklahoma Attorney General, filed his own legal challenge (on behalf of the State of Oklahoma) to the validity of the Clean Water Rule. The new administration will likely seek to begin the process of repealing the embattled Clean Water Rule shortly after January 20. A final repeal would end the protracted litigation and allow the EPA to work on creating new guidance defining the jurisdictional reach of the CWA. Writing this new guidance, however, will take time. And, once new rules are proposed, they will be subject to a notice and comment period before becoming effective. For its part, Congress could pass legislation to more clearly define the meaning of “navigable waters.” The majority of both houses of Congress, as well as the President-elect, would likely support legislation to make the definition more restrictive. If 41 senators were opposed to a new definition, however, the legislation could meet a filibuster.

> U.S. Supreme Court Denies Certiorari in Chesapeake Bay Litigation.

In American Farm Bureau v. EPA, the plaintiffs argued that the EPA had exceeded its authority when it drafted the “Chesapeake Bay TMDL,” a blueprint of sorts for improving water quality in the Chesapeake Bay. The Third Circuit disagreed, ruling—as the district court had—that the EPA had reasonably executed its authority under the CWA in administering the new plan. At the core of the lawsuit is the CWA directive for the development of a “total maximum daily load” or TMDL of pollution for certain waters. The definition of that phrase and the corresponding authority granted to the EPA by that phrase was at the center of the Chesapeake Bay controversy. Am. Farm Bureau Fed'n v. United States EPA, 2015 U.S. App. LEXIS 11548 (3d Cir. Pa. July 6, 2015).

The CWA provides that the states are to set the TMDL and the EPA is to approve or disapprove it. If the EPA disapproves it, it must create the TMDL itself. This is referred to as a “backstop” measure. Given the complex issues surrounding the pollution in the Chesapeake Bay, the states in the Chesapeake watershed agreed that the EPA would set the TMDL initially for the entire watershed. As part of its TMDL, the EPA included (1) permissible levels of nitrogen, phosphorus, and sediment among different kinds of sources of these pollutants, (2) target dates for reducing discharges to the level the TMDL envisions, and (3) assurance from the seven affected states that they would fulfill the TMDL objectives.

Plaintiffs argued that in issuing the TMDL, the EPA should only have issued a numeric value, not a vast implementation plan. Of particular concern to the plaintiffs was the fact that the TMDL includes allocations between point and nonpoint sources. The lawsuit alleged that the EPA’s TMDL intrudes upon land use, an area of state jurisdiction. Consequently, the plaintiffs argued that the plan violates the CWA and raises serious constitutional federalism concerns.

In its opinion, the Third Circuit affirmed summary judgment for the EPA. The court ruled that the phrase “total maximum daily load” in the CWA was ambiguous and that Congress had left it to the EPA to fill in the gaps. The court then ruled that the EPA’s attempt to interpret the phrase was a “reasonable policy choice.”

On February 29, 2016, the United States Supreme Court denied Farm Bureau’s petition for a writ of certiorari. As is true with all denial of certiorari petitions, no explanation for the denial was given. The denial came just two weeks after Justice Scalia’s death.

Prediction: Many states and industry groups were concerned that the Chesapeake Bay TMDL would lead to further attempts by EPA to establish similar plans, such as a Mississippi River watershed-wide TMDL. The change in Administration likely tempers that concern, at least for the next four years.

> U.S. Supreme Court Rules in Landowner’s Favor in Case Involving Review of Jurisdictional Determination.

On May 31, 2016, the United States Supreme Court unanimously ruled that an approved jurisdictional determination from the U.S. Army Corps of Engineers is “final agency action” subject to judicial review. Army Corps of Engineers v. Hawkes Co., No. 15-290, 578 U.S. ____ (May 31, 2016). This was a significant victory for landowners.

The landowner in Hawkes purchased wetlands in northern Minnesota, seeking to mine them for peat moss used in landscaping. The landowner initially sought a permit from the U.S. Army Corps, but the Corps strongly discouraged the landowner from pursuing the permit or the project. Representatives told him that the permit process would be very costly, would require much additional study and data, and would likely not yield a permit in the end. The Corps sent a letter to the landowner advising him that it had made a “preliminary determination” that the property was a jurisdictional wetland. The landowner challenged the determination and the Corps issued its approved JD stating that the wetland was a “water of the United States” because of its “significant nexus” to the Red River, which was 120 miles away. The Corps considered the landowner’s challenge and issued a revised JD, stating that it was a “final Corps permit decision.” The landowner sought judicial review of the JD.

The Corps argued and the district court ruled that the JD was not “final agency action” subject to review. The landowner, the court asserted, had continuing rights. He could move forward with his permit application or launch his dredge and fill operation and see if the Corps took administrative action against him. If his permit was denied or if the agency took enforcement action, he could, the district court reasoned, get his day in court. He could then challenge the “final agency action.”

On appeal, the Eighth Circuit reversed. The court described essentially a Hobson’s choice, stressing the prohibitive cost of taking either of the alternative actions proposed by the Corps. “As a practical matter,” the court stated, “the permitting option is prohibitively expensive and futile.” The court found the second option even more inadequate. Landowners could not realistically initiate their project “and each day they wait for the agency to drop the hammer, they accrue huge additional potential liability.” Hawkes Co., Inc., v. United States Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015).

On May 31, 2016, the United States Supreme Court unanimously affirmed the ruling, finding that an approved jurisdictional determination from the U.S. Army Corps of Engineers is “final agency action” subject to judicial review. The court ruled that the JD was final agency action because (1) the JD marked the consummation of the agency’s decision-making process and (2) the action was one from which legal consequences will flow. The Court stated that there were no adequate alternatives to APA review in court. Neither of the Corps’ two suggested alternatives was sufficient: (1) discharge fill without a permit and risk an enforcement action (then argue that a permit was not required) or (2) apply for a permit and seek judicial review if dissatisfied with the results.

In his separate concurrence, Justice Kennedy (joined by Alito and Thomas) wrote to stress that the “reach and systemic consequences of the Clean Water Act remain a cause for concern.” Justice Kennedy stated that the Act, “especially without the JD procedure were the Government permitted to foreclose it, continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”

Prediction: Justice Kennedy, who authored the 2006 Rapanos concurring opinion giving us the “significant nexus” test, used strong language in his Hawkes concurrence. His voiced concern for the rights of landowners seems to signal a greater recognition of the potential of Clean Water Act enforcement abuse. This could come into play in future decisions.

> Des Moines Water Works Litigation Awaiting Summary Judgment Rulings.

At the end of 2016, the Des Moines Water Works Litigation is poised for a ruling on two summary judgment motions.

On March 16, 2015, the Des Moines Board of Water Works Trustees (DMWW) filed a federal Clean Water Act (CWA) lawsuit against the supervisors and drainage districts of Buena Vista, Sac and Calhoun Counties in Iowa. The lawsuit, which was filed in the United States District Court for the Northern District of Iowa, assert causes of action falling into two categories: (1) Claims under the CWA (and companion Iowa law) positing that discharges from drainage districts are “point sources” of nitrate pollution for which a National Pollutant Discharge Elimination System (NPDES) permit is required and (2) claims seeking money damages and injunctive relief under state common law. 

In September of 2015, the drainage districts filed a motion for partial summary judgment, asking the federal court to dismiss the common law claims from the lawsuit. Among many arguments, the districts allege that long-standing, well-settled Iowa law establishes that drainage districts cannot be sued for money damages under any set of facts. DMWW acknowledges this precedent, but argues that this is an “ancient doctrine” and that the courts have never considered the novel facts of this case.

On January, 2016, the federal district court decided that the Iowa Supreme Court was best positioned to answer these important issues of state law. The district court then certified four questions to the Iowa Supreme Court:

Question 1: As a matter of Iowa law, does the doctrine of implied immunity of drainage districts as applied in cases such as Fisher v. Dallas County, 369 N.W.2d 426 (Iowa 1985), grant drainage districts unqualified immunity from all of the damage claims set forth in the Complaint?

Question 2: As a matter of Iowa law, does the doctrine of implied immunity grant drainage districts unqualified immunity from equitable remedies and claims, other than mandamus?

Question 3: As a matter of Iowa law, can the plaintiff assert protections afforded by the Iowa Constitution’s Inalienable Rights, Due Process, Equal Protection, and Takings Clauses against drainage districts as alleged in the Complaint?

Question 4: As a matter of Iowa law, does the plaintiff have a property interest that may be the subject of a claim under the Iowa Constitution’s Takings Clause as alleged in the Complaint?

The Iowa Supreme Court (absent Justices Wiggins and Hecht) heard oral arguments on these questions on September 14, 2016. A decision is expected in early 2017. Once the Supreme Court answers the questions, the federal district court will rule on the motion for summary judgment with respect to the common law claims.

It is likely that the federal district court will then also rule on the second motion for summary judgment filed by the drainage districts on April15, 2016. In this motion, the districts asked the federal court to enter judgment in their favor on Counts One and Two of the lawsuit. Count One asserts that the districts have been violating the Clean Water Act by discharging nitrates into Waters of the United States without a National Pollutant Discharge Elimination System (NPDES) permit.  It asks the court to declare that the districts are in violation of the Clean Water Act, to order them to obtain NPDES permits, and to assess monetary penalties for each day of continuing violation. Count Two asserts similar claims under Iowa Code chapter 455B, Iowa’s counterpart to the Clean Water Act. That count additionally asks the court to direct the districts to “cease” all discharges of nitrates not authorized by an NPDES or state operating permit.

Prediction: With the caveat that year-end predictions are worth very little, I predict that this case will not reach the trial scheduled for June 2017. It seems likely, especially in light of the tone of the oral argument, that the Iowa Supreme Court will follow its precedent and refuse to open the door to money damages claims against drainage districts. I also predict that Judge Strand will enter summary judgment for the districts with respect to the Clean Water Act claims. A contrary ruling would mark a stunning departure from widely-accepted interpretations of the Clean Water Act. That does not mean that the DMWW litigation will end in 2017. Appeals could continue well into the future, regardless of how the court rules on these motions.

> FAA Clears the Way for Commercial Use of Unmanned Aircraft Systems.

On June 21, 2016, the FAA issued its long-awaited final rule, 14 CFR part 107 (Part 107), for integrating small unmanned aircraft systems (UAS) into the U.S. airspace. Part 107, which was effective August 29, cleared the way for the widespread use of small commercial unmanned aircraft. The Rule applies to all UAS weighing less than 55 pounds (sUAS) that are flown for commercial (not hobby) purposes. Any farming use falls into the commercial-use category. The hallmark of the new Rule is that operators must obtain a new “remote pilot airman certificate with a small UAS rating.” To receive this “remote pilot in command” certificate, as it is sometimes called, applicants must, among other requirements, pass a knowledge test at an FAA-approved center.

As of December 9, 2016, FAA had issued 22,959 remote pilot in command certificates. Operators can continue to fly a UAS for hobby purposes without permission from the FAA and without receiving a remote pilot in command certificate. All operators of UAS weighing more than .55 pounds, however, must register their aircraft with the FAA through a straightforward, online registration process. Since it began requiring this registration on December 21, 2015, FAA has registered more than 616,000 aircraft through its online system. 

Prediction: The use of UAS for commercial purposes will continue to explode in 2017, prompting more state lawmakers to craft specific legislation addressing UAS privacy, trespass, and nuisance concerns. Although the majority of states (including Iowa) have passed some legislation addressing the use of unmanned aircraft, most early legislation targeted the use of UAS by law enforcement. Only a quarter of states have addressed specific privacy issues stemming from the private use of UAS. These laws include bans on aerial stalking and surveillance. For a comprehensive look at state efforts as of September 2016, read this report.

> Class Certification Granted in Syngenta Litigation.

The Syngenta litigation reached a crucial milestone on September 26, 2016, when U.S. District Judge John W. Lungstrum issued an order certifying a nationwide class and eight statewide classes of producer plaintiffs in the multi-district litigation pending since 2014. In November, the court approved the final notice to be sent to potential class members. The notice informs producers that they are automatically included in the class action, unless they choose to opt-out. The existence of a class action means that anyone who meets the court’s definition of a class member but does not opt-out (affirmatively exclude himself from the litigation) will be bound by the ultimate judgment, even if that judgment is occasioned by a settlement. Also in March of 2016, the court appointed a special master for settlement to facilitate mediation and a potential settlement. The first bellwether trials are scheduled for June of 2017.

The litigation continues in light of a potential acquisition by ChemChina of Syngenta (yes, the takeover of Syngenta by a Chinese company seems ironic in light of this lawsuit).  The merger received approval from the Committee on Foreign Investment in the United States in August of 2016; however, regulatory approval from the European Union and elsewhere is still pending.

> Multiple Ag-Related Companies Propose Consolidation.

ChemChina and Syngenta are not alone. 2016 ushered in what’s been called by Senator Charles Grassley a “tsunami” of merger talks. DuPont and Dow Chemical are in negotiations to merge their two companies, as are Monsanto and Bayer and Canadian fertilizer companies Potash Corp. and Agrium. 2017 will no doubt see many developments with respect to these deals and their potential impacts on the products available to producers.

> GMO Disclosure Law Stops Threatened Patchwork of State GMO Labeling Regulation

On July 29, 2016, President Obama Signed the National bioengineered food disclosure standard. This measure set a new federal standard for the disclosure of the presence of “bioengineered” ingredients in food. The law applies its disclosure standard to foods that manufacturers are currently required to label under the Federal Food, Drug, and Cosmetic Act. It only requires disclosure as to meat, poultry, or egg products where meat, poultry, or eggs is not the predominant ingredient. Key to its passage, the bill contains a preemption clause, prohibiting states from enacting or enforcing laws requiring the labeling of “genetically engineered” foods. Consequently, the law preempted Vermont Act 120, the first GMO labeling law to “go live” in the U.S. on July 1, 2016. The law was quickly passed to prevent a patchwork of state laws for manufacturers and producers to follow with respect to GMO labeling. The law’s actual impact, however, may not be known for several years, until the USDA issues the regulations required to implement it. The bill relies heavily on USDA interpretation and discretion to implement its new standard.

> Bakken Pipeline is Largely Constructed, But Litigation Continues.

At the end of 2016, Dakota Access, LLC, a subsidiary of Dallas-based Energy Transfer Partners, is closer to its goal of operating a 1,172-mile pipeline to transport crude oil from the Bakken Shale Oil field to a refinery hub in Illinois. The pipeline stretches from northwestern North Dakota to the Patoka Oil Terminal Hub in south-central Illinois. South Dakota regulators approved a construction permit on November 30, 2015, the Illinois Commerce Commission granted its approval on December 16, 2015, and North Dakota regulators issued their approval on January 20, 2016. In March of 2016, the Iowa Utilities Board (IUB) granted Dakota Access a hazardous liquid pipeline permit, clearing the way for the company to construct their 346-mile pipeline across Iowa. This order also granted Dakota Access eminent domain authority over parcels in the pipeline’s path for which Dakota Access could not negotiate voluntary easements. Condemnation hearings were held throughout the state, and the pipeline is now largely installed across Iowa. Some restoration activities are yet to be completed.

Nonetheless, the owners of 15 parcels of farmland subject to condemnation by Dakota Access continue their legal challenge to the project. Last May, the landowners filed an action seeking judicial review of the IUB decision in the Polk County District Court. They argued that Dakota Access is not a “public utility” and that the company should not have been granted the authority to use eminent domain to build a private pipeline across Iowa farmland. Specifically, the landowners argue that Iowa Code § 6A.21 prevents the condemnation of “agricultural land” for “private development purposes.” They also argue that Dakota Access’s use of eminent domain against them is unconstitutional. Oral arguments in the case were held December 15, 2016. Regardless of the decision, it will likely be appealed, up through the Iowa Supreme Court. A ruling in the case could help shape the definition of “public necessity and convenience,” which is the applicable standard for eminent domain in Iowa.

On December 4, 2016, The U.S. Army Corps of Engineers denied Dakota Access an easement under Lake Oahe for the pipeline to cross the Missouri River upstream of the Standing Rock Sioux Tribe reservation. This denial came in the midst of litigation and protests by the Tribe and supporters. It is unclear whether the pipeline will be rerouted or whether the new Administration will seek to undue the Corps’ decision.

> PATH Act Makes Key Federal Tax Breaks Permanent, but Iowa Has Not Followed Suit.

Congress enacted the Path Act on December 18, 2015. This landmark legislation permanently extended an enhanced “Section 179” deduction for 2015 and beyond. For 2016, farmers and small businesses can immediately deduct up to $500,000 of the tax basis of certain business property or equipment placed into service that year. Once qualifying purchases reach a threshold of $2,010,000, the amount of the deduction is reduced, dollar-for-dollar for each dollar above the threshold. In 2017, the federal deduction increases to $510,000 with a threshold of $5,030,000. Section 179 applies to new or used equipment, as well as to single purpose agricultural structures.

The PATH Act also made permanent a number of other popular tax breaks, including:

  • the $250 above-the-line deduction for teachers who purchase supplies for their K-12 classrooms,
  • an option for taxpayers ages 70.5 and older to make tax-free distributions from their IRAs to a qualified charity, and
  • a five-year (as opposed to a 10-year) lookback period for S Corporations to recognize built-in gain once they’ve converted from a C corporation.       

Although these federal provisions are now in place permanently—unless Congress chooses to rescind them—Iowa has not yet chosen to sync with federal law. For example, for 2016, the Iowa Section 179 deduction is back to $25,000 with a $200,000 threshold. Since 2010, Iowa has always synced the amount of the Iowa Section 179 deduction to that of the federal deduction through coupling legislation. This coupling has also allowed Iowa’s tax breaks to correspond with other federal tax breaks now made permanent through the PATH Act.  Although the PATH Act extended federal bonus depreciation for five years (50% in 2015, 2016, and 2017, 40% in 2018, and 30% in 2019), Iowa has chosen to exclude this tax break from previous coupling legislation and would likely do so again in 2017.

Iowans concerned about Iowa’s failure to couple with federal legislation should contact their legislators, asking them to prioritize this legislation in 2017. It appears that 2017 will be a very busy year on the tax front with drastic tax reform measures promised by the new Administration. The details on these proposals are still very sketchy. We will keep you posted as details unfold.

> Congress Moves to Exempt Qualified Small Employer Health Reimbursements from Onerous ACA Penalty.

On December 13, 2016, President Obama signed the 21st Century Cures Act. Tucked away in its “Other Provisions” is Section 18001, Exception from group health plan requirements for qualified small employer health reimbursement arrangements. This new law may be useful to small agricultural employers.

The bipartisan provision (which was sponsored by Iowa Senator Charles Grassley) effectively nullifies the impact of IRS Notice 2013-54 for new "qualified small employer health reimbursement arrangements" (QSE) offered by small employers. It removes from the definition of “group health plan” reimbursement arrangements that follow certain requirements. Removing such plans from the definition of “group health plan” means exempting them from the requirements of Affordable Care Act's market reforms, including the “no annual dollar limits” and “no cost sharing for preventive health services.” Violation of these market reforms currently subjects employers to excise taxes in an amount up to $100 per day per employee (or $36,500 per employee per year!). This new arrangement is available only to employers with fewer than 50 employees who do not offer group health insurance to their employees. The reimbursement, which must be offered to all eligible employees, is capped at $4,950 for the employee or $10,000 for family coverage. The reimbursement may prevent some employees from premium tax credit eligibility on the Marketplace. Further information on this new law is available here.

> Eighth Circuit Rules in Favor of CAFO Owners' Privacy.

On September 9, 2016, the Eighth Circuit Court of Appeals granted a big win to CAFO owners when it ruled that the EPA abused its discretion by concluding that the release of personal information about CAFO owners would not invade substantial privacy interests. The court ruled that, under the circumstances, mandatory disclosure in response to a Freedom of Information Act Request by an advocacy group “would constitute a clearly unwarranted invasion of personal privacy” and that it “was an abuse of discretion for the agency to conclude otherwise.” For more detailed information on Am. Farm Bureau Fed'n v. EPA, 2016 U.S. App. LEXIS 16623 (8th Cir. Minn. Sept. 9, 2016), read this article.

> Ninth Circuit Says Hawaii Counties Can't Regulate GM Crops.

In a case study of the balance of governmental powers, the United States Court of Appeals for the Ninth Circuit ruled November 18, 2016, that local ordinances passed by three Hawaii Counties to ban the cultivation of GM (genetically modified) plants were preempted by state and federal law. The cases had been around for almost as long as the ordinances. In 2013 and 2014 the Counties of Kauai, Hawaii, and Maui enacted ordinances to stop the growing of GE plants within their jurisdictions. The counties are popular destinations for companies developing new GM seeds because of their year-round growing conditions. The Ordinances noted the concern of the public, as demonstrated by this language from the Maui ordinance, “The citizens of Maui County have serious concerns as to whether GE Operations and Practices and associated use and testing of Pesticides, occurring in Maui County are causing irreparable harm to the people, Environment, and Public Trust Resources.”

Growers challenging the ordinances claimed that they were preempted both by state and federal laws designed to regulate the growing of harmful plants. The United States District Court for the District of Hawaii agreed, and the Ninth Circuit on November 18, 2016, affirmed. This ruling seems to close the door for local regulation of the growing of GE crops. Restrictive state legislation is likely preempted as well. The cases were Atay v. County of Maui, No. 15-16466 (9th Cir. Nov. 18, 2016), Robert Ito Farm, Inc. v. County of Maui, No. 15-15246 (9th Cir. Nov. 18, 2016), and Syngenta Seeds v. County of Kauai, No. 14-16833 (9th Cir. Nov. 18, 2016). Hawaii Floriculture &  Nursery Ass’n v. County of Hawaii, No. 14-17538 (9th Cir. Nov. 18, 2016) was an unpublished opinion.

For more information on this ruling, read this article.

> USDA issues "Farmer Fair Practices Rules."

“Midnight” action by the USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) caused a stir December 14, 2016. GIPSA, the USDA division tasked with interpreting the Packers and Stockyards Act of 1921, 7 U.S.C. 181, (the Act) unveiled an interim final rule and two proposed rules that have been in the works for many years. Controversy over the set of rules—which GIPSA has tagged the Farmer Fair Practices Rules—highlights a split between the meat industry on one side, and some livestock producers and growers on the other.  

GIPSA issued an Interim Final Rule (§ 201.3(a), (b)) specifying that conduct or action can sometimes violate the Act without a finding of harm or likely harm to competition. GIPSA also issued two proposed rules, one intended to regulate poultry grower ranking systems (§ 201.214) and another clarifying the definition of Unfair Practices and Undue Preferences (§§ 201.210 and 201.211) under the Act. With a new administration and a new Secretary of Agriculture (who, as of today, remains unnamed), it is unclear what will happen with these rules. Nonetheless, the rules are now on the table, forcing the new administration to act. For more information on these rules, read this article.

> Ninth Circuit Affirms Dismissal of California Egg Law Case.

On November 17, 2016, the Ninth Circuit affirmed dismissal of a lawsuit challenging the California egg law, AB 1437. The law, passed in 2010, made it a crime to sell a shelled egg in California if that egg came from a hen confined in a cage that did not allow it to “lie down, stand up, fully extend its limbs, and turn around freely” Concerned about the law’s impact on egg producers, the Missouri Attorney General initiated a lawsuit in March of 2014 that was joined by the Attorneys General from four other egg-producing states, as well as the Governor of Iowa. The lawsuit alleged that AB 1437 was unconstitutional and preempted by the Federal Egg Products Inspection Act. The district court and the Ninth Circuit did not reach these merits. Rather, they dismissed the case for a lack of standing, ruling that the States failed to establish parens patriae standing. Specifically, the Court ruled that the States failed to articulate an interest apart from the interests of an identifiable group of private egg producers who could have filed an action on their own behalf.

So there it stands. Two and a half years after the lawsuit was filed no court has looked at the merits. The rulings have been strictly procedural. The case is State of Missouri v. Harris, No. 14-17111 (9th Cir. Nov. 11, 2016). For more information, read this article.

> Veterinary Feed Directive Goes into Effect.

On October 1, 2015, the Veterinary Feed Directive (VFD) was revised to regulate the use of antibiotics in the treatment of food animals. The VFD requires veterinary supervision with the use of all medically important feed grade antibiotics used in food-producing animals. The newly expanded act goes into full effect on January 1, 2017. The VFD final rule attempts to provide veterinary supervision to ensure that the use of antibiotics in food-producing animals is judicious and compliant with consumers’ needs.

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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