Category: Ag Law

The Supreme Court of the United States (“SCOTUS”) has recently had a significant docket of cases with an impact on agriculture.  Two cases have been heard this fall, with another hearing set for next spring.

In Sackett v. EPA, the Supreme Court once again considered the scope of wetlands jurisdiction under the Clean Water Act (“CWA”). Specifically, the Court was asked to revisit its landmark Rapanos ruling which resulted in two tests to establish when a wetland should receive CWA protection.  However, the Court rules are sure to impact the scope of CWA jurisdiction, and potentially impact EPA’s ongoing attempt to redefine the key CWA term “waters of the United States.” To learn more about the case, click here.

In National Pork Producers Council v. Ross, SCOTUS considered the constitutionality of “Prop 12,” a California law regulating space requirements for farm animals.  Specifically, the court heard arguments about the circumstances under which a state government can pass laws that primarily affect the actions of people in other states.  To learn more about this and other similar challenges to Prop 12, click here. 

The upcoming case involves water rights in the Colorado River basin, an area where drought conditions are already causing existing water allocations to be substantially reduced. In November, SCOTUS agreed to hear two cases involving the Navajo Nation’s potential rights to Colorado River water.  These cases have been consolidated so that there will be only one hearing, which is expected to be in early 2023. To read more, click here. 

In all three cases, a decision is expected by June 2023.

Author: Elizabeth Rumley

Senior Staff Attorney

erumley@uark.edu

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Rumley, Beth. “The Supreme Court and Agriculture.” Southern Ag Today 2(53.5). December 30, 2022. Permalink

Maryland has the most significant solar, specific carve-out of any state at 14.5% energy generation sales by 2028 (1) – the majority of which will be produced through utility-scale solar operations. Utility-scale solar is a solar energy generating system that sells electricity through power purchase agreements or into the wholesale electricity market (2). Utility-scale solar facilities are usually owned by a generation company and require a Certificate of Public Convenience and Necessity (CPCN) to be developed and connected to the grid (2). 

Although there are mandatory considerations and research-based claims to prioritize solar development on non-farmland, that has not been the case in Maryland and other states. In Maryland, only one of the currently built utility-scale solar projects is not on “Prime Farmland” or “Farmland of Statewide Importance,” as defined by the Natural Resources Conservation Service (NRCS). More specifically, 44% of utility-scale solar acres developed are on “Prime farmland,” 48% on “Farmland of statewide importance,” and 8% on “Not prime farmland.”

Producers who own land are acting as rational economic agents, given the estimated additional gross revenue utility-scale solar can generate for the landowner compared to traditional crop rotation gross annual farm profits. In the lefthand column of the following table is the range of annual gross rental rates, less the land payment or land cost^[1], a commercial corn-soybean field rotation receives per acre in Maryland^[2]. The first row shows the range of utility-scale solar rental payments collected from focus groups and leases. The most likely outcome amongst the ranges of annual gross revenues for a farmer who transitions land from farmland to solar generation in Maryland would be a ~350% increase in gross revenue per acre. 

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The ambitious renewable energy generation goals of Maryland, paired with the financially attractive offers landowners are receiving, have and look to continue to result in the development of utility-scale solar generation facilities on farmland. The continuing increase in renewable energy generation, like large-scale solar generation, will likely result in the loss of farmland nationwide. It would be advantageous for the Southern region to conduct outreach and research to determine the impacts of farmland loss on renewable energy generation.  

This work is supported by the Agriculture and Food Research Initiative (AFRI) program, grant no. 2020-68006-31182/project accession no. 1022637, from the U.S. Department of Agriculture, National Institute of Food and Agriculture.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and should not be construed to represent any official USDA or U.S. Government determination or policy.

1. Renewable Energy Development and Siting, (2020, August 14). Governor’s Task Force on REDS –Final Report. Retrieved November 18, 2022, from https://docs.google.com/presentation/d/1F4wXH9XD9Tbozab6gpuhLg4tmuGJSw52/edit#slide=id.p13
2. Maryland Public Service Commission. (2022, October 7). Solar in Maryland – Maryland Policies. Electricity – Renewable Energy. Retrieved November 18, 2022, from https://www.psc.state.md.us/electricity/renewable-energy/solar-in-maryland/ 

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^[1] The land payment or cost is assumed to be the same per acre between farmland and land developed into solar fields

^[2] Derived from University of Maryland Extension Enterprise Budgets (https://extension.umd.edu/programs/agriculture-food-systems/program-areas/farm-and-agribusiness-management/grain-marketing/crop-budgets)

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Thilmany, Elizabeth. “The Potential Implications of Large-Scale Solar Development: A Case Study on Maryland’s Agricultural Industry.” Southern Ag Today 2(49.5). December 2, 2022. Permalink

Agricultural conservation easements (ACES) – given their perpetual and restrictive nature – are considered the best tool for protecting valuable agricultural soils from non-farm residential and commercial development. While ACES are also considered helpful in farm succession planning due to cash and tax – and often emotional – benefits, their principal feature – a restriction of future subdivision – may have frustrating consequences on an equal division of estate value and desired future development. While the outright restriction on subdivision is the default position in most ACE deeds, pathways exist in federal and state policy to preplan subdivision for the distribution of family lands to heirs to avoid co-tenancy while ensuring the resulting parcels are protected. Once a blanket restriction on subdivision is granted, however, it is tough – if at all – to undo.

Given the need for consolidation of management over tracts used in farming and forestry, it is generally undesirable to have multiple co-tenants on a single parcel, mainly when one “heir” is farming and one or more (usually siblings) are not, which can frustrate long-term decision-making and use of the land as collateral for loans. While parcel partition usually is available to a real property co-tenant under a state law proceeding, the conservation easement likely frustrates any judicial order of partition “in kind” (i.e., physical subdivision), resulting in a sale of the parcel as a whole.

Most agricultural conservation easement deeds receiving federal monies are based on a common template language provided by NRCS, which must include specific language to conform to public policy goals associated with the monies and tax benefits (among these being a blanket prescription against subdivision). However, the NRCS deed guidance provides sample language to contemplate the present or future subdivision of a parcel, and it is critical to ensure this option remains open from the outset of the application process (the NRCS manual provides criteria for consideration and acceptance of future subdivisions, including allocation of impervious surface ratios among subdivided parcels). Additionally, state laws and funding policies may contemplate future subdivisions. For example, North Carolina’s state ACE purchase fund – the NC Agricultural Development and Farmland Preservation Trust Fund – allows future subdivision provided no parcel is less than 20 acres, and North Carolina’s ACE authorization statute restricts such subdivisions to no more than three parcels).

How a request for future subdivisions impacts a particular project application’s ranking is unclear. Still, pre-planning is critical for those wishing to protect a large parcel while allowing a future subdivision among family members. For more detailed information on this topic, a draft paper is in development.

Author: Robert Andrew Branan, JD

Assistant Extension Professor, Agricultural and Resource Economics

rabrana2@ncsu.edufarmlaw.ces.ncsu.edu

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Brannon, Robert Andrew. “Conservation Easements: Subdivision Considerations in Farm Succession Planning.” Southern Ag Today 2(48.5). November 25, 2022. Permalink

Over the past few months, two potential class action lawsuits have been filed in South Carolina and Georgia by former poultry growers for Amick Farms and Perdue Farms, claiming that growers are not independent contractors as stated in their contracts but employees.  In the lawsuits, the former growers claim that both companies miscategorized growers and failed to pay growers a minimum wage and overtime.  The cases are Diaz v. Amick Farms, LLC, No. 5:22-CV-01246, and Parker v. Perdue Farms, Inc., No. 5:22-cv-00268-TES.

Class action lawsuits allow the judicial system to manage lawsuits that could potentially be unmanageable. Cases would become unwieldy if each potential class member were to bring a lawsuit.  In class actions, the class members must share common questions of law or fact, with proposed claims or defenses typical for each member.  At the same time, class actions require that the size of the potential class makes it impractical for all the members to join in and that the class representatives can adequately protect the interests of the entire class.

In both lawsuits, the former growers claim that the poultry companies miscategorized the growers as independent contractors and that growers should be treated as employees.  As employees, the growers are entitled to be paid the minimum wage required under federal law.  At the same time, one of the lawsuits argues that the growers are entitled to overtime pay for all work over 40 hours per week.  The growers claim that the tournament system used to compensate growers did not provide a wage above the minimum wage for hours worked by the growers.  Additional claims were filed, but for now, these are the ones we are focusing on.

It will be interesting to watch if these lawsuits are certified as a class action lawsuit and which federal district court will be given jurisdiction over the class action suit.  All this could happen in 2023, and poultry growers should continue to keep an eye on this litigation.

Author: Paul Goeringer

Senior Faculty Specialist

lgoering@umd.edu

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA). The IRA will provide USDA assistance and support for underserved farmers, ranchers, and foresters by amending section 1005 of the American Rescue Plan Act of 2021. This will provide $125,000,000 for USDA assistance and support for underserved farmers, ranchers, and foresters through technical assistance, $250,000,000 in land loss assistance, $10,000,000 in funding for equity commissions addressing racial equity issues with USDA, $250,000,000 in funding for research education and extension, $2,200,000,000 for discrimination financial assistance, and $3,100,000,000 to provide payments for the cost of loans or loan modifications with respect to distressed borrowers of direct or guaranteed loans administered by FSA. Additionally, the IRA addresses environmental concerns in agriculture and conservation by including $20,000,000,000 for climate-smart agriculture practices, $5,000,000,000 for fire resilient forests and forest conservation, and $2,600,000,000 for coastal habitat conservation and restoration.^[1]

The Inflation Reduction Act repealed section 1005 of the American Rescue Plan, allowing funding originally intended for debt relief (but stuck in litigation) to be reallocated. The ability to receive an individual payment due to discrimination may be better for farmers who would not have benefited from debt relief provided in section 1005 of the American Rescue Plan. 

Research conducted by the Federation of Southern Cooperatives for the Socially Disadvantaged Farmers and Ranchers Policy Research Center (The Policy Center) has found that one of the identified challenges that Heirs’ property participants face was a lack of information or assistance making productive use of their land. In 2014, a research study conducted by Prairie View A&M University, on behalf of The Policy Center, found that SDFRs needed to be further educated on USDA programs to increase their applications. Heirs property continues to be an issue, and Policy Center research conducted by Auburn University conservatively estimated that there are 579k heirs’ properties with a combined total acreage of 6.8m valued at $47.3b across the 14 states they studied. 

Institutions that serve, work with, and educate historically marginalized communities play a vital role in all of these areas that will be impacted by the IRA. These institutions provide the necessary technical support and outreach needed for most farmers to run a successful operation. These institutions also aid in creating the next generation of those who will work with these farmers, and the IRA ensures that there is funding to do that. 

The Inflation Reduction Act is crucial to the survival of Socially Disadvantaged Farmers and Ranchers, and it is clear that change will come with its implementation. The only question is how much change will it truly bring? 

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^[1] For additional information, see previous Southern Ag Today articles on the history of debt relief, the IRA, and heirs property.