Raw milk study released in Indiana

Unpasteurized or "raw" milk sales for human consumption are illegal in Indiana, but lately every year a bill shows up in the Indiana General Assembly to legalize raw milk sales. After a legalization bill failed in the 2012 legislative session, Indiana legislators authorized Indiana Board of Animal Health (BOAH) to "conduct a study of the issue of farmers selling unpasteurized milk to consumers."  After a summer of researching and soliciting public comments, BOAH has released its study on the sale of raw milk.

The LLC - The Infinitely Variable Company

Growing up, tractors had gears.  The older the tractor, the fewer the gears.  Throughout my childhood, tractors moved from 4 to 8 to 16 gears.  Now, nearly every manufacturer offers an "infinitely variable" transmission that no longer restricts an operator to using a specific gear.

Corporate law underwent a similar transformation in the early 1990s with the development of the "limited liability company" or "LLC."  Prior to the passage of the Indiana Business Flexibility Act in 1994, the LLC form of legal entity did not exist in Indiana. The same was true elsewhere. In 1989, only two states had enacted LLC statutes.  Businesses that wanted to protect their owners from personal liability had one option--form a corporation.

Three reasons it's time to incorporate your farm.

I'm surprised how many farmers I meet that own land or buildings in their personal name.  I'm surprised, because my non-farm clients would not even consider starting up a new business or purchasing commercial property in their own personal name.  Farmers shouldn't do it either, for a number of reasons.

Don't like CAFO regulations? Tell the EPA.

On October 31, 2012, the United States Environmental Protection Agency ("EPA") provided notice that it was undertaking a review of its regulations for concentrated animal feeding operations, or "CAFOs" as they are often described (or "factory farms" as their opponents describe them).  Under Section 610 of the Regulatory Flexibility Act, the EPA must review regulations every ten years to determine their continued necessity.

What the Indianapolis Star forgot to tell you about "Big Farms"

Today's Sunday Indianapolis Star's ("IndyStar") lead front page story was titled:  "Big farms pose challenge for state."  The focal point of the story was Chalfant Farms, a 4000 sow Indiana swine farm (or "CAFO" as it is legally defined) that was accused of spilling manure and causing a kill of 107,650 fish in the Mississinewa River.  As someone who routinely defends  farmers against accusations of fish kills, manure spills, and environmental non-compliance, I took a particular interest in this story.  There are some big facts the IndyStar article left out.

Indiana Farmer Takes Monsanto to Supreme Court

The United States Supreme Court will hear one Indiana farmer's claim that he is entitled to re-plant Roundup Ready (RR) soybeans that contain Monsanto's patented glyphosate resistant technology.  The Court granted the farmer's petition for appeal (or "certiorari") in Bowman v. Monsanto Company on October 5, 2012.

The farmer, Vernon Bowman, purchased RR soybeans from Pioneer Hi-Bred, which licenses the glyphosate resistant technology under patents from Monsanto.

Melon Farming "Ripe for Litigation"

Today's Indianapolis Star reported on the results of a recent Food and Drug Administration (FDA) inspection of Chamberlain Farms, a southern Indiana farm that was believed to be the source of a salmonella outbreak this summer that caused 270 people to get sick, including 101 hospitalizations.  The inspector noted, among other things:

Failure to clean as frequently as necessary to protect against contamination of food:  On 08/14/2012, while cantaloupes were
 being processed, I observed, multiple locations of the conveyor including rollers and belts, had an accumulation of black, green, and brown buildup.  There was an accumulation of debris including trash, wood, food pieces, standing water, mud,  dirt,  and green buildup observed  beneath the  conveyor belt in the cantaloupe packing shed.

Is GMO Corn Killing Me?

A recent French study suggests that eating genetically modified corn will produce an increase tumors in mammals.  The study, published in the Food and Chemical Toxicology Journal, details the findings of French researchers after feeding Genetically Modified (GMO) corn (maize) and the herbicide Roundup to rats for two years.  Rats were divided in various groups, some were fed GMO corn at different levels, some were fed GMO corn and given doses of Roundup, some were only given Roundup, and few were left in the control group.  Gilles-Eric Séralini, one of the researches from the University of Caen in France, said:  “The results were really alarming”:

Aflotoxin Poses Risk to Crop Insurance Recovery

There have been a number of reports in recent days about elevated aflotoxin levels in harvested corn. Such corn can be rejected by the local elevator and is also unfit for livestock consumption. All is not lost, however, if the crop is covered by crop insurance. Hoosier Ag Today recently reported that the presence of aflotoxin in this year's crop has created a number insurance issues for farmers.

Unique nuisance case produces unique Right to Farm Act ruling

Indiana’s courts have traditionally been very strong supporters of the Right to Farm Act, a law that shields farms from being sued for creating a “nuisance” because a neighbor dislikes the sights, smells or sounds of the nearby farm.  If you live in the country, you should expect to smell manure once in while.  That’s what the Indiana Court of Appeals stated more eloquently in 1987, when it upheld the Right to Farm Act in a nuisance suit against an Indiana hog farmer:

We must observe that pork production generates odors which cannot be prevented, and so long as the human race consumes pork, someone must tolerate the smell. [The Right to Farm Act] addresses that fundamental fact and protects pork production when it is confined to its natural habitat, that is, rural farm communities . . . 

Does the EPA Need to Flyover Farms to Know Where They Are?

Recently, Indiana-Illinois Agri-News ran a good article on the topic of EPA flyovers. Jeannine Otto at Agri-News interviewed a local cattleman, who echoed the concerns from other livestock owners in Nebraska, Iowa, and elsewhere:

“If you’ve got issues, come to the door. Don’t be sneaking in with an airplane just because you’ve got the power of the government behind you,” said Steve Foglesong, a cattleman from Astoria in Fulton County.

“It doesn’t sit very well with me,” Foglesong said. “It seems to me to be a bit of a waste of taxpayers’ money.”

Dealing with Distressed Properties

On August 20, 2012, I'll be speaking to lenders, attorneys, and real estate professionals about dealing with distressed properties.  Everyone knows that there are thousands of distressed properties on the market right now, with more in the pipeline.  The seminar will tackle a number of current topics, including:

• The nuts and bolts of the foreclosure process, including its requirements and pitfalls.
• Using various workout tools and loan modification options at your disposal to avoid foreclosure.
• Recognizing the title issues involved in the foreclosure and workout context and learn how to resolve them.
• Mitigating the environmental risk associated with troubled assets using tips from our experienced faculty. 

My portion of the program involves the last of these topics, how to resolve environment issues before, during, or after the foreclosure process.

If you would like to know more, please click here.  The conference will be held at the Capital Conference Center, 201 N. Illinois Street, Indianapolis, Indiana.

"Pig Adventure" Breaks New Ground

Today I attended the groundbreaking ceremony for the Fair Oaks Pig Adventure in Fair Oaks, Indiana.  The Pig Adventure will be a modern, 2500+ sow swine farm that will showcase the latest technology and production capabilities utilized by the pork industry.  More importantly though, the Pig Adventure will be open to the public.  Adults and school children will be able walk through the facility on an elevated platform to see how modern pigs are raised.  The farm will be coupled with a nearby education center that will seek to inform the public about modern swine raising.  To my knowledge, the Pig Adventure will be the first such facility in the nation, if not the world.

EPA Drops CAFO Reporting Rule

In an about face, the US Environmental Protection Agency (EPA) has dropped its proposed CAFO reporting rule. The rule was published last October and required CAFOs (concentrated animal feeding operations) to report to the EPA the overall size of the farm and the total available manure application area. The reporting requirements were the result of a settlement agreement reached between the EPA and the Natural Resources Defense Council, Waterkeeper Alliance, and the Sierra Club.

The Return of the Plow

In 1837, John Deere invented the steel moldboard plow.  In the years that followed, Midwestern and Great Plains' farmers plowed under prairie sod to plant corn, wheat, and other grains for humans and livestock consumption.  Prairie busting continued for years, gradually putting more and more grassland into grain production.  Not until the Great Depression and the coinciding Dust Bowl did use of the plow begin to diminish.  Use of herbicides, no-till and minimum till have further diminished the traditional moldboard plow's role in north american farming practices.

But I've read that in the last couple years the moldboard plow has returned to the Midwest--if not literally, at least figuratively.

Indiana's New Confined Feeding Regulations

The Indiana Department of Environmental Management's (IDEM) new Confined Feeding Operation (CFO) regulations go into effect on July 1, 2012.  As a result of National Pork Producers v. EPA, most of Indiana's regulated Concentrated Animal Feeding Operations (CAFOs) will be moving from the state's CAFO program to the state's CFO program.  This makes the new CFO regulations especially significant, as it signals a transition from a federal (CAFO) program to a state (CFO) regulation.  Does that mean that those new CFO permitted farms will no longer face strict regulations?  Not hardly.  The new CFO regulations ratchet up environmental regulations in a number of ways:

Silage vs. Curtilage: More on the EPA's Flyover Controversy

The web has been abuzz the last few weeks with articles and editorials about the Environmental Protection Agency’s (EPA) use of aerial flyovers to look for violations of the Clean Water Act on Nebraska and Iowa feedlots. The issue exploded online when someone described the EPA’s actions as using “military drones” to spy on farmers. Even Fox News and The Daily Show picked up on this story. (Both incorrectly reporting, as far as I am aware, since no drones are used by EPA, just a Cessna and a really good camera). I too, have been in the middle of this discussion, thanks to a couple of popular blog posts and a trip last week to speak to the Nebraska Cattlemen on environmental issues and property rights.

Questioning the EPA's Use of Aerial Surveillance

A few weeks ago I wrote an article about the U.S. Environmental Protection Agency's (EPA) use of aerial surveillance to look for violations of the Clean Water Act. (EPA Aerial Surveillance Under Fire) I questioned whether the EPA's usage of aerial flyovers was both necessary from an enforcement perspective and legal under the Fourth Amendment's protections that people be free from unreasonable search and seizure.

The topic seems to have struck a nerve with farmers and cattle ranchers in Nebraska. Kristen Hassebrook, director of natural resources and environmental affairs for the Nebraska Cattlemen, told the Grand Island Independent that her organization expressed their concerns about flyovers to the EPA, but "we didn't get the response that we wanted." So they took their concerns to Nebraska's senators and congressmen.

The Struggle Over the Mississippi River Basin

While most farmers go quietly about their spring planting this year, a storm is brewing over the Mississippi River Basin of which few are probably aware.  I am referring to the legal struggle over establishing "numeric nutrient criteria" for the Mississippi watershed, that would set numeric thresholds for nitrogen and phosphorus levels in rivers and lakes that ultimately drain into the Mississippi River.  The outcome of this struggle will impact most states in the breadbasket of America.

Department of Labor Abandons Proposed Changes to Child Labor Standards

Last fall I authored a post about the U.S. Department of Labor's efforts to revise decades-old labor laws that would change how children work on a farm:  "New Child Labor Restrictions Will Impact Farm Life"  Yesterday, that story became old news, as the Department of Labor issued a press release saying it was abandoning this process:

"The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations. The Obama administration is also deeply committed to listening and responding to what Americans across the country have to say about proposed rules and regulations.

"As a result, the Department of Labor is announcing today the withdrawal of the proposed rule dealing with children under the age of 16 who work in agricultural vocations. 

"The decision to withdraw this rule – including provisions to define the 'parental exemption' – was made in response to thousands of comments expressing concerns about the effect of the proposed rules on small family-owned farms. To be clear, this regulation will not be pursued for the duration of the Obama administration.

"Instead, the Departments of Labor and Agriculture will work with rural stakeholders – such as the American Farm Bureau Federation, the National Farmers Union, the Future Farmers of America, and 4-H – to develop an educational program to reduce accidents to young workers and promote safer agricultural working practices."

The press release can be found here.  This is a great result.

China's Hunger for U.S. Breeding Stock

This weekend I met a dairy farmer that derives part of his farm income from selling embryos from his high quality breeding stock. That by itself is not unusual in the dairy industry, but what he told me next is. He sells the embryos to buyers in China.

That is remarkable. Many United States' dairy farms have spent generations developing the world’s most efficient milking cows. China currently bans the importation of live cattle from the U.S., which is why embryos are shipped across the Pacific Ocean to start new herds in China.

Kicking the Raw Milk Can Down the Road

This past year a bill was proposed in Indiana to legalize the sale of "raw" milk.  The bill was met with a firestorm of criticism from industry groups and dairy farmers who view the sale of unpasteurized milk as dangerous and unfair, since "raw" milk does not have to pass the same milk quality inspections as Grade A store-bought milk.  Ultimately, the legalization of raw milk was defeated, but that is not the end of the road for raw milk sales in Indiana.

Buried in the end of House Bill 1129 (HB 1129), which was passed and signed by Governor Mitch Daniels, was a provision requiring the State Board of Animal Health (BOAH) to "conduct a study of the issue of farmers selling unpasteurized milk to consumers."   That's it.  The rest of the details are left up to BOAH, including the how, what, or who should be included in the study.  The study must be concluded by November 1, 2012 and reported to the governor by December 1, 2012.

Here's my list of questions for BOAH as it undertakes this process:

1. Can raw milk be sold in a way that minimizes the potential health dangers?
2. If raw milk sales are legalized, what warning labels should be required?
3. How can raw milk products be regulated so that they meet all other standards (aside from pasteurization) applicable to grade A milk? For example, regular store-bought milk is tested for antibiotic residue but raw milk sold on the black market lacks such tests.
4. How extensive are raw milk sales on the black market today? If raw milk sales are legalized and regulated, will these black market sellers disappear or continue to sell raw milk anyway?
5. How have other states regulated raw milk sales?
6. Does the likelihood of raw milk related illness increase in places where it is legal?
7. Is products liability insurance coverage available to sellers of raw milk, so that those farmers wishing to sell raw milk are insured in the case of illness?  Would such insurance be required along with a license to sell raw milk?

I look forward to BOAH's raw milk report.  Feel free to add your own list of questions in the comments below and I will gladly share with BOAH officials.

To read about what Indiana law currently says about raw milk sales, continue reading after the jump, click here.

By Todd Janzen

Raising the Stakes in Farm Nuisance Cases

Indiana farms that are the victims of "nuisance" suits by neighbors who don't like the smell, sounds, or sights associated with farming are generally protected by Indiana's Right to Farm Act.  The Right to Farm Act bars nuisance suits against "agricultural operations" that have been in operation for more than one year at the time the alleged "nuisance" began.  An "agricultural operation" is broad category, encompassing crop farming, raising livestock and poultry, and forestry.  In addition, conversion from one type of agricultural operation to another--e.g. from raising hogs to milking cows--does not strip away the Right to Farm Act's protections. In essence, if the area where the complained-of nuisance exists was "agricultural" for more than one year before the suit began, the Right to Farm Act bars the claim.

There are good reasons for this.  The Indiana legislature declared that it wanted to protect farmland and encourage its development for agricultural purposes.  The Right to Farm Act states:

The general assembly declares that it is the policy of the state to conserve, protect, and encourage the development and improvement of its agricultural land for the production of food and other agricultural products. The general assembly finds that when nonagricultural land uses extend into agricultural areas, agricultural operations often become the subject of nuisance suits. As a result, agricultural operations are sometimes forced to cease operations, and many persons may be discouraged from making investments in farm improvements. It is the purpose of this section to reduce the loss to the state of its agricultural resources by limiting the circumstances under which agricultural operations may be deemed to be a nuisance.

Indiana Code 32-30-6.

In spite of the strength of the Right to Farm Act, nuisance suits against Indiana farmers--based upon my unscientific observations--have been on the rise in recent years, due to the expansion of small farms combined with the number of non-farmers moving into rural areas.  This year House Bill 1091 (HB 1091) was introduced to the Indiana legislature to try to bolster the Right to Farm Act by giving farmers that successfully defended against "frivolous" lawsuits an award of attorneys' fees.  HB 1091 stirred up a lot of controversy, and as a result, the final bill that the governor signed into law is substantially watered-down.  It now states:

(a) If a court finds that an agricultural operation
that is the subject of a nuisance action:
(1) was not a nuisance under section 9 ofthis chapter and that
the nuisance action was frivolous,the courtshall award court
costs and reasonable attorney's fees, to the defendant in the
action; or
(2) was a nuisance under this chapter and that the defense of
the nuisance action was frivolous,the courtshall award court
costs, including reasonable attorney's fees, to the plaintiff in
the action.

The key difference between the enrolled act and the original introduced bill is that now plaintiffs--neighbors complaining of nuisance--can also be awarded their attorneys' fees if the farmer's "defense of the nuisance action was frivolous."  In sum, now either side risks having to pay the opposing side's attorneys' fees if they take a position in the litigation that was "frivolous."  (Indiana law already provides an award of attorneys' fees if the lawyer asserts a frivolous claim or defense in any litigation.  See IC 34-52-1-1).  Still, HB 1091 raises the stakes of nuisance litigation.

But the stakes were already high.  My prediction is that HB 1091 will have no measurable effect on the number of nuisance suits filed in Indiana.

Posted by Todd Janzen

What is a "nuisance"?

Sackett v. EPA: Landowners Win!

The past few months I've been watching Sackett v. EPA, a case involving one couple's fight against an EPA enforcement order compelling restoration of a "wetlands" on a residential lot they purchased for development.  (See prior posts: Sackett v. EPA: The Supreme Court Reviews the EPA's Ability to Regulate Wetlands and Sackett v. EPA: Quotes from Oral Argument). The case has tremendous implications for farmers who are often accused by the EPA of intentionally destroying "wetlands" while doing innocent ditch, stream, or levee maintenance.  Fortunately, the landowners won this one--which does not mean the end of wetlands, but it does restore some due process to EPA enforcement proceedings.  Thanks to Dan Cory for being the guest blogger on this story: 

The U.S. Supreme Court issued its most anticipated decision in the environmental arena this term in Sackett v. U.S. Environmental Protection Agency - a case that has been dubbed a sort of David vs. Goliath battle by property rights advocates - finding in favor of the landowner and against EPA.

The basic facts of Sackett are relatively straight-forward: the Sacketts owned a residential lot near Priest Lake, Idaho and were preparing to build a home there. After they performed grading and fill work at the site, EPA officials served the couple with an administrative compliance order advising them that their parcel constituted wetlands subject to federal permit jurisdiction under section 404 of the Clean Water Act. The order directed the Sacketts to restore the lot to its original condition without delay; and threatened the Sacketts with substantial daily fines (quantified by the Solicitor General at oral argument as up to $75,000/day) for non-compliance with the CWA and administrative order. 

The landowners then sought a hearing to make their case that the property was not actually a wetland. This request was denied and the Sacketts filed suit in federal district court to challenge EPA’s wetlands classification of their lot. The district court dismissed their lawsuit, holding that EPA administrative compliance orders issued under the CWA do not constitute final agency actions subject to judicial review. The Ninth Circuit affirmed, joining numerous other federal circuits that had previously come to the same conclusion. 

The Supreme Court disagreed, holding that a compliance order issued under the CWA is final agency action under the APA and subject to judicial review. The Supreme Court did not reach the issue of whether EPA violated the Sacketts' due process rights by depriving them of the opportunity for judicial review. Had the Court reached this issue, it would likely have had impacts on administrative law far beyond the wetlands context. Instead, the Court restricted its opinion to the question of whether the administrative compliance order was a final agency action, and found that it was. 

This decision will likely make life more difficult for EPA regulators, requiring the agency often to engage in costly litigation before actual compliance with its administrative orders is required. But a system in which EPA can use the threat of significant daily fines in order to force compliance without the landowners having any opportunity for judicial review is inequitable and was in need of fixing. Judicial review should also reduce waste in many cases because it will allow courts to decide disputed issues before the landowner is required to pay significant compliance costs. This is particularly important when the issue, as in Sackett, is whether EPA has jurisdiction over the site at all. Presumably the availability of judicial review will also make EPA think twice before denying a request for a hearing from a landowner.

The full opinion of Sackett v. EPA can be found at http://pub.bna.com/lw/101062.pdf.

Dan Cory regularly blogs on The Monitoring Well.

Cleaning up Illegal Pharming on Rural Properties

Today's Indianapolis Star ran a story about the continuing problem of methamphetamine ("meth") manufacturing in rural America: "Cleaning up the mess left by meth labs a profitable niche."  The Star's article focused not on the problem of meth use, but on the chemical residue left behind when meth labs are discovered in rural homes.

Inside a Crawfordsville rental property, the tenants liked to cook.
But what they were cooking got them busted last month, Indiana State Police say. In the kitchen, police found everything it took to make meth.. . .
Methamphetamine labs are more than just dangerous and illegal. They leave a mess -- an environmental hazard that, according to state law, must be cleaned up.

When meth is "cooked," such amateur chemistry often results in explosions and fires, leaving behind a toxic mess of chemicals:

At the Crawfordsville home . . . [a]ccording to the police report, there was a lithium/ammonia reaction, flammable solvents, water reactive metal (lithium), hydrochloric acid gas generator and corrosive acid.

The Indiana Department of Environmental Management ("IDEM") and county health departments require that the chemical constituents left behind be remediated before occupants are allowed back into the building. According to the Star, "it takes a special process, certification and inspectors who scour the property in full-gear Hazmat suits and respirators to do the dirty work."  This can be expensive, $10,000 or more.

Tonya Bond, an attorney at our law firm, has helped a number of landowners confronting five-figure meth cleanups on their rural rental properties.  She instructs clients to file their cleanup claims with their insurers.  Often, insurers will deny these claims because they involve "criminal activity" or "pollution,"  but that is not the end of the matter:

Tonya Bond

Though there is no Indiana coverage law interpreting meth cleanups under insurance policies, other jurisdictions have found that the damages from meth manufacturing are caused by “smoke” and “vandalism”—both covered perils under standard property policies. Indiana courts also would likely find that meth manufacturing is “criminal mischief,” another commonly covered peril.

Coverage for drug manufacturing, however, does not stop with first-party property coverage. Where cleanups are required by the government, these are standard environmental liability claims, and coverage is also available under the liability coverage in most policies.

There a number of legal lessons here.  First, if you own rental property, know your tenants.  Second, make sure your rental property is insured for the casualties like those described in the Star article.  Third, if you are dealing with an expensive state-mandated cleanup, engaging a knowledgeable attorney can make a big difference.