Category: Ag Law

Private companies are approaching farmers and forest landowners about entering into carbon contracts, generating a lot of interest.  Carbon contracts are voluntary agreements that landowners can enter into promising to use certain practices such as limited/no-till farming, planting cover crops, or forego the harvesting of mature timber and then paying the farmer for sequestered carbon.  Contracts are difficult to come by and typically contain confidentiality clauses; however, there are some common elements that landowners should be aware of before signing.

• The length of the contracts can vary substantially.  I have read contracts that range from one year to ten years in length, and some may be longer.  One contract required the storage of carbon in the field for the next one hundred years.  Ensure that you can comply with the contract for the entire life of the agreement.
• To measure the carbon sequestered, the landowner often has to grant the other party access to the property to take those measurements. 
• Payments, and payment mechanisms, can vary substantially. For example, some contracts pay for certain practices, such $3 per acre for no-till farming, while other contracts pay based on the tons of carbon sequestered, typically around $15-$20 per ton, but this can vary as well.
• Read the definitions section carefully, as words may not mean what you think they mean.
• Many contracts pay only for the carbon sequestered and allow the other party to sell off other environmental benefits, such as water quality credits. Unfortunately, some of the contracts do not have a mechanism to enable the landowner to realize any gain from the sale of other environmental benefits, so make sure that your contract allows you to profit from all potential environmental benefits.

If approached with a carbon contract, read it carefully, make sure that it makes financial sense to adopt the practices you will be required to follow, and consult with a knowledgeable attorney before signing.

Source – Considering Carbon Series from the National Agricultural Law Center

---

Rumley, Rusty. “Carbon Contracts for Farmers.” Southern Ag Today 1(43.5). October 22, 2021. Permalink

Forecasting legal developments is never an easy task, but we can often look at what is currently happening to get a sense of what to keep an eye on in 2022.  Below are just a few issues discussed at the recent Southern Outlook Conference in Atlanta. 

As we move into 2022, producers will need to pay attention to the ongoing Roundup/Glyphosate class action settlement process.  A federal judge has now rejected Bayer’s settlement with class members for a second time.  This rejection is based on how the settlement handles future class members who may not be aware of all potential medical costs until years from now. Nevertheless, Bayer continues to settle individual claims and has put an additional $4.5 billion into settling these claims.

CAFO (Concentrated Animal Feeding Operations) legal issues always seem to be on the list each year, and 2022 will likely be no exception. One such issue to watch involved an appeal out of Maryland from an interesting lower court decision.  A group challenged the state’s Animal Feeding Operation Discharge permit (a water discharge permit), claiming the State should have considered air emission of ammonia that could eventually reach waters in the state.  The lower court agreed with this approach, and the State has appealed this decision with a decision expected later in 2022.

Additionally, Texas has seen a challenge to a poultry farm after complaints by neighbors who lived in the area where the farm was recently constructed. The Court of Appeals upheld a permanent injunction against the poultry integrator and poultry growers from continuing poultry farms in the area, click here to read an overview.  This decision has been appealed to the Texas Supreme Court, and we should see a decision in 2022.

2022 will continue to see developments that could have significant legal implications for producers in the South and across the country.  

Goeringer, Paul. “Legal Outlook for 2022 Shows Several Ongoing Issues Will Be Top of Mind for Agricultural Producers.” Southern Ag Today 1(42.5). October 15, 2021. Permalink