Category: Ag Law

In Ideker Farms, Inc. v. US, after years of litigation, farmers prevailed in their claims that the U.S. Army Corps of Engineers’ (Corps) recurring flooding of their land was a compensable regulatory taking.  Specifically, the U.S. Court of Appeals for the Federal Circuit decided that recurring flooding was a “permanent flowage easement,” and the farmers deserved compensation for lower land values and some crop losses.

Beginning in 1944, federal law authorized dams to be constructed on the Missouri River (River) and opened the former floodplain to agriculture.  However, by the 1980s, flood control led to habitat impacts, the listing of several endangered species, subsequent lawsuits, and a new 2004 Corps management plan.  In effect, the Corps: (1) elevated fish and wildlife conservation to be on par with flood control objectives; and (2) allowed periodic flooding, starting in 2007.  

By 2014, hundreds of farmers adjacent to the River sued, alleging the flooding was a regulatory taking under the Fifth Amendment of the U.S. Constitution.  The Fifth Amendment provides that no private property will be taken for public use without just compensation.  

The court held that the farmers’ land-value “baseline” was the period of flood control (from the 1940s to 2004) rather than when floods were common (pre-1940). This determination meant farmers could be compensated for the investments they made while protected from flooding.  A pre-1940 baseline would have meant minimal farmer losses.  

Relatedly, the court held “a reasonable property owner” would expect flood-control goals from the 1940s Laws to continue.  Thus, new expectations from the 2004 management plan were caused by Congress’ “separate, intervening obligations” from the Endangered Species Act.  This means farmers did not have unreasonable expectations for continued flood control.  The court agreed with the lower court that the flooding was a permanent flowage easement that created a compensable taking.  The court disagreed with the lower court that crops and other personal property destroyed by the flooding were compensable.  For mature crops, farmers would be limited to the market value of the crop.  For immature crops, the farmer would be limited to the probable yield of the crop at harvest had the crop not been destroyed.  This decision potentially creates more avenues for the protection of property rights in flood control damage cases.  Time will tell how the Federal Court of Claims and U.S. Court of Appeals for the Federal Circuit will utilize this decision in future cases.  

Sources: Ideker Farms, Inc. v. US., 71 F.4^th 964 (Fed. Cir. 2023).

Duke, Joshua M., and Paul Goeringer. “Farmers Win Regulatory Takings Case for Managed-Flooding Impacts.” Southern Ag Today 3(32.5). August 11, 2023. Permalink

Whether your operation emphasizes the agricultural aspect or the tourism aspect of agritourism matters in several legal issues. This article briefly describes some of the pitfalls of having the tourism aspects dominate the agricultural aspects. However, except for federal income taxation, these issues differ from state to state. In addition, this article cannot begin to explore the nuance of these issues. Therefore, this article intends to alert the reader to these issues. You should consult with your attorney and tax advisor for advice.

Agritourism Generally

One definition of agritourism defines the term as “a form of commercial enterprise that links agricultural production and/or processing with tourism to attract visitors to a farm, ranch, or other agricultural business for purposes of entertaining and/or educating visitors and generating income for the farm, ranch, or business owner.”^[1] Like most definitions of agritourism, this definition connects the tourism activity to a farm, ranch or agricultural business. This connection proves particularly important in zoning

Zoning

In general, local governments are free to define agritourism in zoning ordinances differently than any state definitions. Theoretically, every local government could define agritourism differently from any other local government for zoning purposes. However, most zoning definitions share some common elements.

In zoning terminology, the connection between tourism and agriculture makes agritourism activity an accessory use on the land. The agricultural use is the property’s principal use, or primary use. Accessory uses are uses that are subordinate and customarily incidental to the principal use. 

A use is subordinate where the use does not dominate the parcel. Courts look at how much land area is encompassed by each use, how many employees are engaged in each use, and revenue generated by each use. The agricultural (or principal use in this case) should dominate the parcel of land.

Customarily incidental means that the accessory use is an activity that one would consider a normal part of or related to the primary use. For example, a pick-your-own operation is customarily incidental to an apple orchard. A corn maze may be customarily incidental to an operation that grows hay. A bouncy house does not appear to be customarily incidental to any farming operation. 

Exemptions from Zoning

Some states exempt agritourism from zoning regulations. To qualify, the activity must meet similar requirements to the accessory use definition. For example, a North Carolina court^[2] identified three main factors to determine whether an activity is agritourism and, therefore, exempt under North Carolina law. First, the agritourism activity derives some value from or requires the farm or natural setting. Second, the legal risk factor should align with that of the farm use, and third, the agritourism use does not require much in the way of artificial structures or alterations to the land.

Agritourism Liability Acts

Many Agritourism Liability Acts similarly define agritourism as “an activity carried out on a farm or ranch.”^[3] Without the principal use of the farm or ranch, the liability protection may be lost.

Use Value Assessment for Real Property Tax Purposes

Use value assessment for real property tax purposes also depends upon the agricultural use of the land. When income from non-agricultural uses exceeds income from agricultural uses, use value assessment may be denied.^[4]

Federal Income Tax

Persons engaged in “farming” report farm income on the Schedule F for federal income tax purposes. Farm income is treated differently in many ways than other business income to the benefit of the farmer. However, most “agritourism” income does not likely qualify as “farm income.” If the agritourism income is more than “incidental” (which is difficult to define), the agritourism income should be segregated and reported separately on Schedule C.^[5]

Conclusions

Agritourism provides producers with the opportunity to generate additional income to supplement income from production activities. However, with additional income and success with agritourism activities come the potential for loss of the preferential treatment of agricultural in several legal settings. Operators should be careful to consider these consequences when planning agritourism activities.  

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^[1] National Agricultural Law Center, Agritourism, https://nationalaglawcenter.org/research-by-topic/agritourism-2/

^[2] Jeffries et al v. Harnett County, 259 N.C. App. 473 (2018), cert. denied 826 S.E.2d 710 (2019). See https://canons.sog.unc.edu/2022/07/what-the-heck-is-agritourism/ for a more in depth discussion of the case.

^[3] See, e.g., Virginia Code § 3.2-6400.

^[4] See, e.g., Settimi v. Irby, 2022 WL 292317 (Supr. Ct. of W.Va.).

^[5] Email correspondence with Kristine A. Tidgren, Iowa State University, February 5, 2023. For more information on farm income generally, see https://www.calt.iastate.edu/article/reporting-farm-income-overview

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Richardson, Jesse J. “Is Your Operation AGRItourism or AgriTOURISM?” Southern Ag Today 3(31.5). August 4, 2023. Permalink

On May 25, 2023, the United States Supreme Court released its highly-anticipated opinion in Sackett v. EPA, a lawsuit concerning the scope of wetlands jurisdiction under the Clean Water Act (“CWA”). This decision from the Court intends to clarify when a wetland may be considered a water of the United States or WOTUS. Only those waters identified as a WOTUS receive CWA protection.

Prior to Sackett, the Environmental Protection Agency (“EPA”) interpreted WOTUS according to the Supreme Court’s 2006 decision, Rapanos v. U.S, which also considered the scope of wetlands jurisdiction. Instead of issuing a majority opinion in Rapanos, the Court issued both a plurality opinion – an opinion that the largest number of Justices signed onto, but not enough to result in a majority –  and a concurring opinion written by Justice Kennedy who agreed in the outcome of the case, but not the legal reasoning. In the plurality opinion, the justices concluded that only those wetlands that share a “continuous surface connection” with relatively permanent bodies of water should be considered WOTUS. The concurrence concluded that wetland jurisdiction should be determined based on whether the wetland possessed a “significant nexus” to a recognized WOTUS. A significant nexus exists when a wetland “significantly affect[s] the chemical, physical, and biological integrity of other covered waters[.]”

Following Rapanos, EPA engaged in several rulemaking attempts to define WOTUS, including the most recent rule finalized earlier this year that interpreted WOTUS to include wetlands that meet either test. However, many felt that the “significant nexus” test created uncertainty for regulated parties. The plaintiffs in Sackett asked the Supreme Court to formally adopt the “continuous surface connection” test, arguing that the plurality’s test was both a more accurate interpretation of the CWA and provided greater clarity for landowners. The Court agreed with the plaintiffs and decided to officially overturn the “significant nexus” test and confirm that only those wetlands that share a continuous surface water connection with relatively permanent bodies of water could fall under the definition of WOTUS and receive full CWA protection. To learn more about the Court’s decision, click here.

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Rollins, Brigit. “U.S. Supreme Court Issues Important Clean Water Act Ruling.” Southern Ag Today 3(26.5). June 30, 2023. Permalink

Photo by Cam Green: https://www.pexels.com/photo/aerial-view-of-wetland-near-a-river-10144176/

Lifelong lessons in work ethic are often learned as a kid bailing hay on hot summer days. It’s summer, the kids are out of school, and many are looking for summer jobs. It’s a good time to take inventory of the measures agricultural operators need to take to keep minors safe and stay in compliance with state and federal child labor laws. In addition to the federal child labor laws discussed herein, there are likely additional state laws that should be fully explored and familiarized prior to employing a minor in an agricultural operation.  

When hiring youth to assist with farm chores, there are various factors that can affect what duties a minor may or may not legally perform. Prudent operators would certainly never intentionally assign dangerous farm tasks to minors. However, what the law considers “hazardous” may vary from even the most reasonable operators’ idea of dangerous. For instance, the law very specifically addresses whether a minor may assist with, or even ride on a tractor. Other common tasks such as feeding bulls, checking on calving cows, and spraying weeds or spreading fertilizer may or may not be permissible, depending on a number of factors.

The duties that a minor may perform on an agricultural operation varies depending upon their age. Under the Fair Labor Standards Act (“FLSA”), children under the age of 12 must have parental consent to work on a small farm (as defined by FLSA) and are exempt from federal minimum wage provisions. Children the age of 12 or 13 may work with parental consent or where the child’s guardian is also employed. If 14 years of age, a minor may work without parental consent but only in non-hazardous agricultural jobs. Once a minor reaches the age of 16, they may perform any farm job including those deemed hazardous by the Secretary of Labor. Minors that are 16 or older may also work at any time, including during school hours, while youth under age 16 may only work outside of regular public school hours, even if home schooled, unless employed by their parents or guardian. There are also limitations on the number of hours minors may work, depending upon their age and whether school is in session in the local public school district.

The Secretary of Labor has identified 11 categories of duties deemed “hazardous” that minors under the age of 16 may not perform. Those range from operating a tractor with over 20 PTO horsepower to entering a pen or yard with male breeding stock or with pigs or cows that have recently given birth, to handling agricultural chemicals which include the word “danger” or “poison” with skull and crossbones or “warning” on the label. A full list of these hazardous activities as well as other federal laws regarding the employment of minors in agriculture, can be found in the U.S. Department of Labor’s (“DOL”) Child Labor Bulletin 102. Exemptions to these hazardous activity prohibitions may apply to minors employed by their parents or enrolled in certain formal training or vocational programs. 

While federal law does not require a work permit for minors employed in agriculture, some states may require one. The DOL maintains a comparison of federal and state requirements of child labor laws that is searchable by state here. However, even where not required, it may be prudent to request a state issued age certification in order to protect employers from unintentional violations of the federal age requirements. 

There may be no better place to learn the value of hard work than a farm or ranch. When providing opportunities to minors, be prudent, ensure you’re in compliance, and keep our youth safe. Don’t forget to keep the lemonade flowing. 

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Friedel, Jen. “What to Know About Employing Minors in the Summer and Beyond.” Southern Ag Today 3(25.5). June 23, 2023. Permalink

Photo by Stephen Andrews

What happens when a property owner removes a fence along its property line and allegedly damages the trees of the other property owner as well as their crops? The Minnesota Court of Appeals case of Moon v. Schultz illustrates how a court can properly examine the issue of damages in such cases.^[i]

In Moon v. Schultz, a property owner in Chippewa County, Minnesota replaced a fence along a neighbor’s property line.^[ii] However, during the replacement of the fence, the property owner entered upon the other party’s property and cut down several elm trees.^[iii] In addition, trees fell onto the neighbor’s adjacent soybean field, allegedly damaging the growing crops.^[iv]

During a bench trial, the trial court ruled in favor of the neighbor who lost several elm trees and allegedly suffered crop damage.^[v] The neighbor testified during the trial that he felt that the trees had special value but did not testify as to any loss of property value as a result of the loss of the trees.^[vi] In addition, an owner of a nursery and landscaping business testified on behalf of the neighbor that the loss of 19 elm trees could be replaced for a cost between $9,500 and $12,500.^[vii] The property owner moved to disqualify the expert, but the trial court denied the motion.^[viii]

On the crop loss claim, the neighbor testified that two acres of soybean crops were damaged and utilizing yields and price information from his crop insurance, calculated damages in the amount of $1,182.04.^[ix]

The trial court ruled in favor of the neighbor and awarded $9,500 for the fallen elm trees, $1,182.04 for the soybean crop loss, and found treble damages^[x] applicable under Minnesota law (for a total amount of $32,046.12).^[xi]The property owner appealed.^[xii]

The Minnesota Court of Appeals reversed the trial court, finding the district court should not have awarded any damages in the case.^[xiii] On the tree loss claim, the Court noted^[xiv] that prior caselaw in Minnesota holds that the measure of damages for loss of trees is generally the difference in the value of land before and after the trees are removed.^[xv] There is an exception to this rule for cases in which the trees have substantial value for shade or other ornamental purposes, have aesthetic value, or are used as a sound barrier or traffic screen.^[xvi] The Minnesota Court of Appeals held that no evidence was presented by the neighbor that the trees had substantial value for shade or ornamental purposes, had aesthetic value, or were utilized as a sound barrier or traffic screen.^[xvii] The Court also noted testimony in the case that the elm trees were “bushy,” “weed-like” trees, and if anything, may possibly have a “negative” value.^[xviii] Thus, the proper measure of damages is loss of property value, and since the neighbor did not allege any loss in property value, the neighbor did not incur any recoverable damages for the loss of the elm trees.^[xix]

The Minnesota Court of Appeals also held the trial court’s awarding of crop damages and treble damages to be in error.^[xx] The Court mentioned that the proper “measure of damages for destruction or injury to growing crops is the value of the crops as they were standing at the time and place of their destruction.”^[xxi] In rejecting the neighbor’s crop damage claim, the Court of Appeals found that the trial court did not engage in any legal analysis to arrive at its calculation of damages.^[xxii]

Overall, Moon v. Schultz exemplifies the importance of a plaintiff in establishing proper damages in a fallen tree case.

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^[i] See Moon v. Schultz, No. A22-0903, 2023 WL 193682 (Minn. Ct. App. Jan. 17, 2023).

^[ii] Id. at *1.

^[iii] Id.

^[iv] Id.

^[v] Id.

^[vi] Id.

^[vii] Id.

^[viii] Id.

^[ix] Id.

^[x] “Treble damages” are damages awarded by a court when that court awards triple damages. The statute that was applied by the trial court was the following: “Whoever shall carry away, use or destroy wood, timber, lumber, hay, grass, or other personal property of another person without lawful authority, shall be liable to the owner thereof for treble the amount of damages assessed therefor in an action to recover such damages. If upon trial, the defendant proves having probable cause to believe that such property was the defendant’s own, or was owned by the person for whom the defendant acted, judgment shall be given for the actual damages only, and for costs.” See Minn. Stat. Ann. § 548.05 (2023).

^[xi]  See Moon v. Schultz, 2003 WL 193682 at *2.

^[xii] Id.

^[xiii] Id. at *4.

^[xiv] Id. at *2.

^[xv] See Baillon v. Carl Bolander & Sons Co., 235 N.W.2d 613, 614 (Minn. 1975). 

^[xvi] See Moon v. Schultz, 2003 WL 193682 at *2.

^[xvii] Id. 

^[xviii] Id. at *3.

^[xix] Id. 

^[xx] Id. at *3-4.

^[xxi] Id. at *3.

^[xxii] Id.

Photo by Mike Bird: https://www.pexels.com/photo/uprooted-tree-cut-in-pieces-5351109/