Welcome to the June 2013 issue of the Center for Agricultural Law and Taxation (CALT) newsletter. Thank you for subscribing. We hope that the information that we provide is relevant and timely for your practices and businesses. If you are a new subscriber, we welcome you to the monthly newsletter. You’ll find the most comprehensive, current and accurate database of agricultural law and taxation information and research-related materials on the CALT website. If you have a development from your own practice or experience that you think others would be helped by knowing, drop us a note so that we can share the discussion on the website. We appreciate your input because it is very helpful in making and keeping us the leading source for the most relevant and accurate information involving agricultural law and taxation.

2013 Summer Seminars -We still have seats available for both locations!

Traverse City, Michigan - June 13-14, 2013
- Click here to register or learn more
Santa Fe, New Mexico - June 27-28, 2013
- Click here to register or learn more

2013 September Seminars

Agricultural Law Seminar: September 13
Farm Estate and Business Planning Seminar: September 14

Mark your calendars now for this September seminar in Ames. Day 1 will address ag law issues of relevance to farmers and their legal counsel. Day 2 will feature numerous experts addressing various aspect of estate and business planning. This year’s featured speaker will be U.S. Tax Court Judge Elizabeth Paris. You won’t want to miss this conference, which has become Iowa’s premier farm estate and business planning conference. Watch for details in the coming weeks on the agenda for both days.

CALT Director – May Activities
During May, the Director addressed the Missouri and Kansas bankers at a conference in Kansas City on tax issues associated with retirement plans, spoke at the IRS practitioner/liaison conference in Des Moines and spoke at the Lawyer’s Chautauqua along with the Center’s Staff Attorney in Okoboji. Preparation continued for the two CALT summer seminars and upcoming events in Kansas, Missouri and for the Iowa Bar Association.

CALT Staff Attorney – May Activities
In May, the Staff Attorney continued writing and preparing presentations for upcoming seminars this summer. She is also working with the Program Administrator on improving the CALT website. The Staff Attorney continues to respond to questions that come in to the Center and writes articles on current legal issues for Wallace’s Farmer and the Center’s website.

Significant Developments

There were several significant developments in May of relevance to agricultural law and taxation. Of course, the various scandals in Washington, D.C. have captured a lot of attention. The one involving the IRS merits watching simply because of the possible impact on tax reform and future implementation of the health care law, for which the IRS currently has tremendous responsibility. Politicians of all stripes are now questioning that strategy. But, there was another major scandal out West. In May, a federal judge ruled that the Bureau of Land Management (BLM) had engaged in a conspiracy beginning in 1993 to deny ranchers their grazing and water rights on BLM land. The court said the BLM’s conduct “shocked the conscience” and issued an injunction against the BLM ordering them to allow the ranchers to reapply for their grazing permits. You can read our annotation on the case here. That’s on top of news stories about how the Environmental Protection Agency was abusing its power in a similar fashion. So it’s a real mess with respect to various aspects of the federal government. Hopefully you won’t be directly impacted.

In late May, the ag world was given news of the discovery in Oregon of GMO wheat. Now a lawsuit has been filed against Monsanto for alleged damages arising from the contamination of the U.S. wheat supply and the loss of markets. We summarize the complaint here. Relatedly, during May a federal court upheld the USDA-APHIS decision to fully deregulate Roundup-Ready Alfalfa. Still there hasn’t been a single court that has determined that GMO products have any harmful effect on the environment or consumers. Read our article summarizing the complaint here.

We also updated our article on Iowa legislation. The big news this session is that both bodies of the Iowa legislature unanimously passed legislation to, in essence, overturn a February Iowa Supreme Court decision involving the Iowa Recreational Use Statute. The Court’s decision would have made it extremely difficult for ag landowners to receive the liability protection of the statute. Now, the statute has been strengthened. There is no need for a covered person to be directly involved in the recreational activity for the landowner to be covered, an educational activity is expressly included in the definition of “recreational use,” there is liability protection for persons acting as “tour guides.” Also, the legislation makes it clear that the land need not be opened to the general public for the landowner to get the liability protection of the statute, and chaperones are covered. To read about all of the Iowa legislation with potential impact to ag law and taxation, click here.

The U.S. Supreme Court ruled that a farmer couldn’t “copy” Monsanto’s Roundup-Ready technology by buying commercial seed at an elevator and replanting it. The Court’s decision involved the patent exhaustion doctrine. You can read our article about the Court’s decision here.

Of course, the relevant Iowa appellate-level court opinions were summarized.

Make sure to mark your calendars to attend one of CALT’s summer seminars in June, either in Traverse City, MI or Sante Fe, NM. We have a great line-up of speakers and topics that will benefit your practice or your farming/ranching operation. This isn’t the type of seminar where a single speaker drones on for the whole day and wastes your time on some topics that are purely academic in nature and/or don’t have much, if any, application to your practice. Instead, we have a dynamic lineup of speakers at both locations, and topics tailored to address the issues that you and your clients are facing on a daily basis. You will enjoy the interaction with the speakers and the networking with other attendees. If you haven’t registered yet, now is the time. We hope to see you at one of the locations this summer.

Case and Ruling Annotations

Make sure to keep up on the annotations list. The list is update daily with the most current cases and rulings of importance to agricultural producers and agricultural businesses. New developments are added on a daily basis. For May, 55 annotations were added to the list. This list is the most current and comprehensive listing of case and ruling developments of relevance to agricultural law that you can find anywhere. The following annotations highlight those that were added to the list during May.

Bankruptcy - click here to view

Corn deliveries were property of bankrupt ethanol plant’s bankruptcy estate; creditor failed to perfect security interest in corn. In re Clean Burn Fuels, LLC, No. 11-80562, 2013 Bankr. LEXIS 2009 (Bankr. M.D. N.C. May 16, 2013).
Court reminds bank when automatic stay terminates in a Chapter 12 case. In re Blankenship, No. 10-14097, 2013 Bankr. LEXIS 1767 (Bankr. S.D. Ohio Apr. 29, 2013).

Business Planning - click here to view

Kansas Supreme Court declines to review ranching family dispute that ended up with partnership dissociation. Giles v. Giles Land Co., No. 11-105537-A, 2013 Kan. LEXIS 509 (Kan. Sup. Ct. May 20, 2013), rev. den., 47 Kan. App. 2d 744 (Kan. Ct. App. 2012).
Husband and wife not shareholders of family farming company in which they sought judicial dissolution. In re Involuntary Dissolution of Wiles Bros., Inc., No. S-12-769, 2013 Neb. LEXIS 79 (Neb. Sup. Ct. May 17, 2013).
IRS still clinging to its judicially-rejected position on how trusts can satisfy the material participation test for passive loss purposes. Tech. Adv. Memo. 201317010 (Jan. 18, 2013).
Another reasonable compensation case. Aries Communications Inc. & Subsidiaries v. Comr., T.C. Memo. 2013-97.

Civil Liabilities - click here to view

Plaintiff alleging damage to blueberry crop can bring state claim as FIFRA does not preclude, but cannot assert federal claim based on FIFRA. G & M Farms, Inc. v. Britz-Simplot Grower Solutions, LLC, et al., No. 1:13-cv-0368 LJO MJS, 2013 U.S. Dist. LEXIS 75458 (E.D. Cal. May 29, 2013).
Res ipsa loquitor not definitively proven in jury trial over trees allegedly damaged by 2, 4-D herbicide. Green Ridge Farm, Inc. v. Shipp, No. 2012-CA-000001-MR, 2013 Ky. Unpub. LEXIS 363 (Ky. Ct. App. May 3, 2013).
Strict liability theory does not apply to domestic animals straying from their property. Hastings v. Sauve, No. 78, 2013 N.Y. LEXIS 849 (N.Y. Ct. App. May 2, 2013).
Court says Right-To-Farm statute bars nuisance suit even where farming operation’s scope expanded, cropping activities converted to dairy facility and plaintiff is a fellow farmer. Parker v. Obert’s Legacy Dairy, LLC, No. 26A05-1209-PL-450, 2013 Ind. App. LEXIS 203 (Ind. Ct. App. Apr. 30, 2013).

Contracts - click here to view

Lutz v. Chesapeake Appalachia, L.L.C., et al., No. 10-4538/11-3034, 2013 U.S. App. Lexis 10733 (6th Cir. May 29, 2013).

Criminal Law - click here to view

“Wheel of Fortune” analogy almost causes headache for prosecutor. Kansas v. Stevenson, No. 103,508, 2013 Kan. LEXIS 399 (Kan. Sup. Ct. Apr. 12, 2013).

Environmental Law - click here to view

Court holds that receipt of Clean Water Act Sec. 402 permits for stormwater discharges is not a defense to other enforcement actions under the CWA due to dual regulatory authority with Corps of Engineers; prior converted wetland abandonment rule not repealed by 1986 Farm Bill and EPA abandonment rule still applies. Huntress v. United States Department of Justice, No. 12-CV-1146S, 2013 U.S. Dist. LEXIS 73805 (W.D. N.Y. May 24, 2013).
Group’s tactic to use child as plaintiff to gain court’s sympathy in greenhouse gas fails (again); no violation by federal officers of fiduciary duties under alleged public trust doctrine. Loorz v. Perciasepe, No. 11-cv-2235, 2013 U.S. Dist. LEXIS 72301 (D. D.C. May 22, 2013).
“Global warming” case dismissed. Comer, et al. v. Murphy Oil USA, Inc., et al., No. 12-60291, 2013 U.S. App. LEXIS 9705 (5 th Cir. May 14, 2013), aff’g., 839 F. Supp. 2d 849 (S.D. Miss. 2012).
All information contained in nutrient management plan of poultry farm operation confidential indefinitely and not available under Freedom of Information Act request. Waterkeeper Alliance, Inc. v. Maryland Department of Agriculture, et al., No. 1289, 2013 Md. App. LEXIS 51 (Md. Ct. App. May 2, 2013).

Estate Planning - click here to view

Trial court admitted will to probate not offered within four-year time period as required by state law because elderly widow not in default due to misunderstanding of law. In re Estate of Allen, No. 11-11-00131-CV, 2013 Tex. App. LEXIS 5675 (Tex. Ct. App. May 9, 2013).

Insurance - click here to view

Arbitration award upheld in determination not high enough percentage of fresh apples sold to qualify for crop insurance. Leonard L. Tate Orchards v. Rain and Hail, LLC, No. 1:13-cv-691, 2013 U.S. Dist. LEXIS 62052 (M.D. Penn. May 1, 2013).

Real Estate - click here to view

Circumstances surrounding execution and filing of deed at issue. Johnson v. Johnson, No. 307572, 2013 Mich. App. LEXIS 930 (Mich. Ct. App. May 28, 2013).
Court addresses issues arising when farmland owned in co-tenancy and lease involved. H&H Farms, Inc., et al. v. Huddle, No. 3:13 CV 371, 2013 U.S. Dist. LEXIS 72501 (N.D. Ohio May 22, 2013).

Regulatory Law - click here to view

Complaint regarding deceptive “All natural soup” claim for soups using GM products survived motion to dismiss. Krzykwa v. Campbell Soup Co., No. 12-62058-CIV-DIMITROULEAS, 2013 U.S. Dist. LEXIS 74749 (S.D. Fla. May 28, 2013).
Court says that Bureau of Land Management engaged in “conspiracy” to deny ranchers grazing and water rights, and government’s conduct “shocked the conscience”; court issued permanent injunction ordering the government to grant grazing permit renewal application. United States v. Estate of Hage, et al., No. 2:07-cv-01154-RCJ-VCF, 2013 U.S. Dist. LEXIS 74023 (D. Nev. May 24, 2013).
PACA violation found in grapes left undelivered due to earthquake. Pandol Associates Marketing, Inc. v. Robinson Company, No. 1:11-CV-01829-LJO-JLT, 2013 U.S. Dist. LEXIS 65173 (E.D. Cal. May 7, 2013).

Secured Transactions – click here to view

Lien upheld only for specified counties in which crops grown , but not same counties in which crops merely brought in for processing. In re Moore, No. 11-11850-JDW, 2013 Bankr. LEXIS 2060 (Bankr. N.D. Miss. May 17, 2013).

Taxation - click here to view

Real estate professional test not met for passive loss purposes. Hofinga, et al. v. Comr., T.C. Sum. Op. 2013-43.
Failure to keep adequate records dooms deductions. Reiff v. Comr., T.C. Sum. Op. 2013-40.
U.S. Supreme Court won’t hear conservation easement case. Historic Boardwalk Hall, LLC, et al. v. Comr., 694 F.3d 425 (3d Cir. 2012), cert. den., No. 12-901, 2013 U.S. LEXIS 3982 (U.S. May 28, 2013).
Taxpayer takes early distribution from IRA and fails to meet exception for first-time homebuyer. Ung v. Comr., T.C. Memo. 2013-126.
Professional shopper denied expense deductibility for many claimed business expenses. Heinbockel v. Comr., T.C. Memo. 2013-125.

Donate to CALT

As you know, our work at the Center is dependent on the fees generated by seminar registrations and gifts. If you would like to donate to further the Center's efforts, please contact our Program Administrator, Tiffany Kayser at tlkayser@iastate.edu or (515) 294-5217. We thank you for your generous support.

Keep checking the website daily for new developments and contact us at the Center with any questions you may have.

Roger A. McEowen, Director (mceowen@iastate.edu or 515-294-4076)
Erika K. Eckley, Staff Attorney (ekeckley@iastate.edu or 515-294-6365)
Tiffany L. Kayser, Program Administrator (tlkayser@iastate.edu or 515-294-5217)

CALT Interns: Kirsten, Lindsey and Jeannette

2012 - 2013 CALT Sponsors

Current Events and Announcements

2013 Summer Seminars - Registration is Now Available

Traverse City, Michigan - June 13-14, 2013
- Click here to register or learn more
Santa Fe, New Mexico - June 27-28, 2013
- Click here to register or learn more

2013 September Seminars (Ames)

September 12 - Agricultural Law Seminar
September 13 - Farm Estate and Business Planning Seminar

2013 Tax School Dates and Locations

Maquoketa - October 28-29
Sheldon - November 11-12
Mason City - November 12-13
Ottumwa - November 14-15
Waterloo - November 18-19
Red Oak - November 25-26
Denison - December 9-10
Ames - December 16-17

News and Updates

Court Upholds USDA-APHIS Decision To Fully Deregulate Roundup-Ready Alfalfa

May 22, 2013 - The U.S. Circuit Court of Appeals has affirmed a Federal District Court decision granting summary judgment to USDA-APHIS on claims brought by activist groups that Roundup Ready Alfalfa posed various alleged harms to the environment. In addition, federal legislation has been signed into law designed to limit the ability of groups using the National Environmental Policy Act to attack ag biotech products. Read our updated article here.

Kansas Supreme Court Deals With Trespassing Cow Case - With A Twist

May 17, 2013 - The Kansas Supreme Court has decided a case involving an attempt by the plaintiff to put stray cows back in their pasture and the application of the privilege necessity doctrine. The case will continue back at the trial court and liability will be analyzed under the reasonable care standard. Read our summary of the case here.

Developments from the Iowa General Assembly

May 17, 2013 - We have again updated our article that tracks Iowa legislation that could impact ag producers, rural landowners and agribusinesses. One big development is that the legislature has unanimously approved legislation that essentially abrogates (without saying so) the Iowa Supreme Court opinion on recreational use decided this past February. That means that the longstanding Iowa recreational use statutory immunity has been put back in place and the legislation clarifies several areas of uncertainy resulting from the Court's opinion. You can read our updated article here.

Two New Iowa Court of Appeals Opinions

May 16, 2013 - Recent opinions of the Iowa Court of Appeals deal with the construction of an insurance policy for flood damage and "boiler-plate" language in a contract involving the delegation of duty for tort liability. Read our summaries of the cases:

Court Says Farmer Illegally Copied Monsanto's Technology

May 13, 2013 - The U.S. Supreme Court has unanimously held that an Indiana farmer violated Monsanto's patent on soybean seed by planting commercial seed he bought from an elevator. Monsanto's patent had not been exhausted upon the initial sale of seed. You can read our article about the Court's decision here.

Trusts, S Corporations, The Material Participation Test and the Medicare Passive Income Surtax

May 1, 2013 - The IRS continues to reassert its judicially-rejected position on how trusts can satisfy the material participation test under the passive loss rules. In a recent Tech. Adv. Memo., the IRS said a trustee of a trust that owned S corporation stock and in which the trustee was also the S corporation president, couldn't count his time spent running the business as president. If that's the case, good luck in ever getting a trust to be found to be a material participant in an S corporation. You can read our updated article here.

Tax Bytes and Other Tax Information

June 2013 AFRs: http://www.calt.iastate.edu/irs.html#nov