The U.S. Court of Appeals for the Fourth Circuit (“4th Circuit”) recently decided InterProfession Du Gruyere vs. U.S. Dairy Export Council, which considered whether a geographic indication was essential to the use of the label “gruyère.” The 4th Circuit decided that it was not, finding that using that term on labels in the United States does not depend on where the cheese was produced (often referred to as a geographical indication), but merely on whether it meets Food and Drug Administration’s (FDA) standard of identity.
FDA is responsible for the labeling of dairy products, among other things. It partially regulates labels by creating “standards of identity,” outlining how specific words may be used. FDA has created a standard of identity for gruyère cheese, defining it by the process needed to create the cheese, not by the location where the cheese is made.
In Europe, however, the label can only be used on cheese produced in the Alps region, near the Swiss/French border. As a result, a group of Swiss and French cheese producers brought the lawsuit at issue today. Ultimately, the court decided that FDA- and ultimately American consumers- saw gruyère as a type of cheese (similar to a label of “mozzarella” or “cheddar”) rather than one produced in a specific place.
Geographical indications are used worldwide, helping protect producers’ market share in specific regions. Whether you’re interested in “Idaho Potatoes” or “Parmigiano-Reggiano,” a part of the label’s meaning includes an indication of the area where the product originated. This case illustrates a trend that international food and beverage manufacturers are becoming more proactive in protecting names with a regional geographical significance. This is an important international trade issue because we expect similar litigation from other affected producers. On a larger scale, the European Union focuses on including geographical indicators as a critical part of trade deals and we expect this trend to continue. To learn more about geographical indications and international trade, clickhere for a National Agricultural Law Center webinar.
In January 2023, the United States Department of Agriculture (USDA”) published its latest report of information collected under the Agricultural Foreign Investment Disclosure Act (AFIDA) of 1978, which provides data on foreign U.S. landholdings through December 31, 2021. Under AFIDA, certain foreign persons are required to disclose their ownership interests and investments in farm, ranch, and forestland to USDA. According to the report, foreign persons hold an interest in over 40 million acres of private U.S. agricultural land, an increase of 2.4 million acres from 2020. From 2011 through 2021, foreign ownership in private U.S. farmland has increased 35.7%.
This increase of foreign agricultural landholdings has become a growing concern for the majority of state legislatures. In the past two years or so, the issue of restricting foreign ownership and investments in privately held agricultural land emerged or reemerged in at least twenty-six states. Currently, there are approximately fourteen states that specifically forbid or limit nonresident aliens, foreign business entities, and/or foreign governments from acquiring or owning an interest in farmland within their state.
Additionally, several other states have introduced bills that take their own approach to restricting foreign acquisitions of farmland and real property. Some states have proposed measures that would restrict foreign ownership in not only agricultural land, but all real property located within their state. Of the states that have considered restrictions within the previous two years, Indiana is currently the only state to enact a foreign ownership law during that time period. With the majority of states considering proposals that seek to restrict foreign interests in farmland, other states may begin to consider the issue of prohibiting or limiting foreign purchases and ownership of land within their state.
On January 18, 2023, the United States District Court for the Northern District of Oklahoma ruled on a lawsuit filed by the State of Oklahoma against 11 poultry producers. The lawsuit alleged that the poultry producers polluted and continue to pollute the Illinois River with phosphorus and bacteria from poultry litter applied to lands in the Illinois River watershed.
The original lawsuit included 11 causes of action. The court dismissed six causes of action before trial: cost recovery under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA); natural resource damages under CERCLA; a Solid Waste Disposal Act (SWDA) citizen suit; unjust enrichment/restitution/disgorgement; and two claims under Oklahoma state statutes and regulations. A trial was held on the following five causes of action: violation of Resource Conservation and Recovery Act (RCRA) 42 U.S.C. § 6972; state law public nuisance and state law nuisance per se; federal common law nuisance; trespass; and two claims under Oklahoma state law.
The court granted two posttrial motions, dismissing the RCRA claim, the per se nuisance claim, and one of the state law claims because poultry litter can have a beneficial use and was not being disposed of on the fields. On the merits, the court found that the poultry growers were liable for state law nuisance, federal common law nuisance, trespass, and one state law claim.
Oklahoma proved that each poultry grower contributed significantly to the phosphorus loading of the river and that the state need not trace the exact contribution of each. State-approved permits to apply poultry litter needed to be more specific to immunize the poultry growers from liability. In addition, Oklahoma statute prohibits the creation of an environmental or public health hazard or contamination of waterways from poultry waste handling.
Since activities in Arkansas caused damages in Oklahoma, the interstate nature of the activities implicates federal nuisance law. The court found that the Clean Water Act did not displace federal nuisance law in this instance. Further, the court found that the poultry growers have unreasonably interfered with the public’s use of the Illinois River in Oklahoma and are liable under state nuisance law and federal nuisance law.
As to trespass, the activities of the poultry growers resulted in runoff containing phosphorus entering the waters of the Illinois River, constituting a physical invasion. But, again, the state-issued permits did not immunize the poultry growers against the trespass claim. Likening the alleged violation of state law prohibiting waterway pollution to trespass, the court also found the poultry growers liable on those grounds.
The court ordered the parties to attempt to reach an agreement on the remedies and present the agreement to the court for approval on March 17, 2023. If no agreement is reached, the court will rule on the remedies.
For well more than a decade, every year has brought a new wave of WOTUS uncertainty. At all but the stroke of midnight to close out 2022, the EPA announced the final revised WOTUS rule which is set to take effect this spring, 60 days after publication in the Federal Register. If headlines about WOTUS over the past decade have confused you, fear not. You’re not alone. The two steps forward – one step back progression of the hunt for WOTUS clarity follows a switchback trail of previous and current administrations. Despite this brand-new rule, the uncertainly might not be over just yet.
Since the inception of the modern-day Clean Water Act (“CWA”), enforcement agencies and citizens alike have been seeking to define “water of the United States” in an effort to determine where federal jurisdiction of a body of water begins and ends under the CWA. Sparing the dirty details, there have been four WOTUS eras worthy of mention here.
First, commonly referred to as the “Pre-2015 Rule,” the WOTUS rule in place since the 1980s was constructed through regulation and the implementation of key agency memoranda shaped by seminal judicial opinions.[1] The second era of mention began in 2015, when the EPA and Army Corps of Engineers (the “Corps”) issued a new rule, also known as the “Clean Water Rule” which was broader in application and was simultaneously praised as a long-overdue revision of the WOTUS rule, and also criticized as a gross overreach of authority. Due in part to legal challenges, the EPA and the Corps delayed implementation of the 2015 Clean Water Rule until 2020. Meanwhile, in 2019, the Trump administration repealed the 2015 Clean Water Rule and in 2020, proposed yet another new WOTUS rule, the “Navigable Waters Protection Rule,” or “NWPR,” the third mentionable WOTUS era.
The NWPR reversed course from the 2015 Rule, narrowing the scope of WOTUS and federal jurisdiction under the CWA by setting forth four categories of waters falling under CWA jurisdiction which included territorial seas, traditionally navigable waters and interstate waters; tributaries and lakes, ponds, impoundments directly or indirectly contributing surface water to traditionally navigable waters; and wetlands adjacent to these. Once again, litigation quickly took center stage. The NWPR was short-lived as President Biden’s administration sought to provide a workable, more stable definition of WOTUS and nix the never-ending uncertainty that has plagued the CWA since its inception.
The fourth and current era officially began on December 30, 2022, when the EPA and the Corps finalized the latest WOTUS rule. Under the new final rule, using the Pre-2015 Rule as a foundation, tributaries and impoundments as well as wetlands adjacent to traditionally navigable water that are either “relatively permanent” or have a “significant nexus” to traditionally navigable waters will fall under the CWA’s jurisdiction. The new rule sets forth that its “relatively permanent standard” refers to “relatively permanent, standing or continuously flowing waters” connected to traditionally navigable waters or waters with a “continuous surface connection to such relatively permanent waters.” The rule also defines a “significant nexus” as where waters “either alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity of traditional navigable waters, the territorial seas, or interstate waters.” Finally, the new rule states that “adjacent wetlands” are those which have a “continuous surface connection to a relatively permanent, standing or continuously flowing water” connected to traditionally navigable waters “or must either alone or in combination with similarly situated waters significantly affect the chemical, physical, or biological integrity” of traditionally navigable waters, territorial seas or interstate waters.[2]WOTUS clarity, in large part, hinges on these defined terms and the ability of these terms to be readily identified and applied.
In its release of the new rule, the EPA also published a “Fact Sheet for the Agricultural Community” which sets forth the agricultural exemptions from CWA jurisdiction and specific exclusions in the final rule. Among the exemptions are “normal farming, silviculture, and ranching activities” with examples listed; construction of farm or stock ponds or irrigation ditches and maintenance of drainage ditches; and construction or maintenance of farm roads in accordance with best management practices. Prior converted cropland also remains excluded from the final rule so long as it is available for agricultural commodity production, such as crop production, haying, grazing, agroforestry, or idling land for conservation uses.[3]
Currently, the nation awaits the Supreme Court’s decision in Sackett v. EPA, wherein the Supreme Court is asked to determine the proper test for determining which wetlands constitute WOTUS. The Supreme Court is expected to announce its decision early this spring. The anticipated ruling has the potential to affect the latest WOTUS final rule and send the EPA and Corps back to the writing room or alternatively, to affirm the appropriateness of the new rule as written. For today, a new WOTUS rule reigns. Time will tell whether the hunt for WOTUS clarity is over or whether litigation, both new and old, will keep WOTUS in the trenches
[1] See SWANCC v. U.S. Army Corps of Engineers, 531 US 159 (2001), and Rapanos v. U.S., 547 US 715 (2006).
[2] EPA, Pre-Publication Final Rule Notice: Revised Definition of ‘Waters of the United States.’” 6560-50-P (December 2022) pp. 9-10.
[3] EPA, “Final Rule: Revised Definition of ‘Waters of the United States’ Fact Sheet for the Agricultural Community December 2022.”
When one thinks of crops, insurance, and risk, one may think of traditional crop insurance. The case of Three Rivers Hydroponics, LLC v. Florists’ Mutual Insurance Company,[1] decided by the United States District Court of the Western District of Pennsylvania in 2021, illustrates a “business package” insurance policy application to a fast-growing area of agriculture: hydroponic agriculture.[2]
In the Three Rivers Hydroponics case, the insured was engaged in the business of growing organic basil through a hydroponic ozone system.[3] The ozone system treated and disinfected water utilized for crop production.[4] On June 30, 2014, the ozone system caught fire, and the crop soon failed thereafter.[5] Eventually, the insured lost its business.[6]
The insured’s business package insurance policy in the case included an Equipment Breakdown Boiler and Machinery Coverage endorsement, in which the insurer agreed to pay for a loss caused by an “Accident” to “covered equipment.”[7] An “Accident” was defined in the policy as a “mechanical breakdown.”[8] Thus, the insured could only recover under the policy if the ozone system had a mechanical breakdown.
The insured contended that the ozone system failed due to an issue with the ORP controller.[9] Two engineering experts of the Defendant concluded that only the ozone generator sustained damage in the fire and that complete replacement of the system was unnecessary.[10] The insurer issued a payment for replacement of the ozone generator but denied the claim for mechanical breakdown.[11]
The insured filed a breach of contract claim as well as bad faith claim against the insurer.[12] In examining these claims, the Court noted that whether mechanical breakdown of the ozone system occurred is a “highly technical” matter.[13] However, the insured did not produce any expert testimony of an engineer who opined on whether a mechanical breakdown of the system occurred.[14] Thus, the Court found that the insured did not meet its burden to produce admissible evidence to establish a prima facie case that coverage existed and granted summary judgment to the insurer on the insured’s breach of contract claim.[15] In addition, the Court also granted summary judgment to the insurer on the insured’s bad faith claim as the Court found that the insurer “conducted a substantial, thorough, and timely investigation” as a matter of law.[16]
The Three Rivers Hydroponics case exemplifies a sometimes overlooked area in agricultural law – the significance of expert testimony in cases involving more technical matters.
Nothing in this article is intended to create an attorney-client relationship and does not constitute legal advice.
[1]See Three Rivers Hydroponics, LLC v. Florists’ Mutual Insurance Company, No. 2:15-cv-00809, 2021 WL 6133304 (W.D. Pa. Dec. 29, 2021).
