Penn State Agricultural Law Blog: Agricultural Law Weekly Review

Written by:

M. Sean High—Staff Attorney

Audry Thompson—Research Assistant

The following information is an update of recent local, state, national, and international legal developments relevant to agriculture:

Checkoff Programs: Court Dismisses Challenge Regarding Use of Pork Checkoff Funds

On August 23, 2019, the U.S. Court of Appeals, District of Columbia Circuit dismissed a lawsuit alleging that the government improperly used funds collected under the pork checkoff program (Humane Society of the United States v. Perdue, No. 18-5188). Under the Pork Promotion, Research, and Consumer Information Act, the government may collect “assessments” from producers for the purpose of "strengthen[ing] the position of the pork industry in the marketplace." Known as “checkoffs,” these assessments are paid by producers to the National Pork Board (Board) who in turn uses the funds for pork “promotion, research, and consumer information plans and projects." In 2006, the Board used checkoff funds to purchase four trademarks—relating to the advertising phrase: “Pork: The Other White Meat”—from the private lobbying organization the National Pork Producers Council (NPPC). Under the terms of the agreement, the Board agreed to pay NPPC $3 million per year for twenty years with an option to cancel. In 2011, the Board discontinued use of three of the four trademarks but continued to pay NPPC the full $3 million per year fee. Subsequently, in 2012, pork producer Harvey Dillenburg, the Humane Society of the United States, and Iowa Citizens for Community Improvement, filed suit alleging that the Board’s contract with NPPC impermissibly diverted checkoff funds for NPPC’s lobbying activity. The court determined that the plaintiffs provided “no evidence that the Board's alleged misuse of checkoff funds caused them to suffer an injury in fact,” and as a result, dismissed the case “for lack of standing.”

WOTUS: Georgia Court Returns 2015 WOTUS Rule to Federal Agencies

On August 21, 2019, the U.S. District Court for the Southern District of Georgia remanded the 2015 “Waters of the United States” (WOTUS) rule back to the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers (the Agencies) for further proceedings (Georgia v. Wheeler, No. 2:15-cv-00079). Additionally, the court left in place a preliminary injunction against the 2015 WOTUS rule in Alabama, Florida, Georgia, Kansas, Kentucky, South Carolina, Utah, and West Virginia pending those proceedings. Currently, the 2015 WOTUS rule is in effect in 22 states (plus the District of Columbia and the U.S. territories), not in effect in 27 states, and under federal court consideration in New Mexico. According to the court, the 2015 WOTUS rule impermissibly extended the authority granted to the Agencies “beyond the limits of the [Clean Water Act], and thus is not a permissible construction of the phrase ‘waters of the United States’ within the statute.” Additionally, the court held “that the Agencies’ promulgation of the WOTUS Rule violates the [Administrative Procedure Act’s] procedural requirements.” The court stated that it chose not to vacate the WOTUS rule because “administrative efforts are already underway to repeal and replace the WOTUS Rule with a new rule that abides by both statutes” and that such an order could “cause disruptive consequences to the ongoing administrative process.” For more information on the 2015 WOTUS rule and EPA’s proposed rule to revise the rule’s definition of WOTUS, see the January 9, 2019 Agricultural Law in the Spotlight article entitled: U.S. EPA and Army Corps of Engineers Issue Proposed Revised Definition of “Waters of the United States.”

Agricultural Finance: President Signs Legislation to Permit More Chapter 12 Bankruptcies

On August 23, 2019, President Donald Trump signed legislation increasing the Chapter 12 Bankruptcy operation debt cap limit from $3,237,000 to $10,000,000 (H.R. 2336 (116)). Under Chapter 12, qualifying “family farmers” experiencing financial difficulties are provided with the ability to establish plans to repay parts or all of their debts. Through increasing the debt cap limit, the legislation, known as the Family Farmer Relief Act of 2019, allows more farmers to qualify for Chapter 12 Bankruptcy. According to American Farm Bureau Federation President Zippy Duvall, the change to the bankruptcy code “will help family farmers reorganize after falling on hard times.” Duvall further stated that “[w]hile this is a sobering reflection of the current state of the agricultural economy, we are grateful to Congress, the President and his administration for their prioritization of reforming our current bankruptcy laws.”

International Trade: President Trump Announces Trade Agreement with Japan

On August 25, 2019, U.S. President Donald Trump and Prime Minister of Japan Shinzō Abe announced that a trade agreement has been reached in principle between the two nations. Known as the Japan-U.S. agreement, the trade deal involves agriculture, industrial trade, and digital trade and reduces both tariff and non-tariff barriers to the Japanese market. Currently, Japan is the third largest market for U.S. agricultural products importing $14 billion of such goods annually. Under the new agreement, it is anticipated that Japan will import an additional $7 billion of U.S. agricultural products. The two leaders stated that a finalized agreement will be signed in September 2019 around the time of the upcoming United Nations General Assembly meeting in New York City.

International Trade: USDA Details Trade Damage Estimate Calculations

On August 23, 2019, U.S. Secretary of Agriculture Sonny Perdue announced a publication by the U.S. Department of Agriculture (USDA) Office of the Chief Economist detailing the methods used by USDA to calculate economic losses from trade disruptions, which were then applied to compensate farmers in the Market Facilitation Program and Food Purchase and Distribution Program. USDA determined the “economic loss” of a particular county by the “gross trade damages” suffered, which were defined as “the total amount of expected export sales lost to the retaliatory partner due to the additional tariffs.” These losses were estimated by subtracting the “bilateral trade with the tariff” from the “baseline,” or trade without the tariff. These “estimated gross trade damages” were then “divided by the average volume of production” during 2015-2017, as reported by the National Agricultural Statistics Service, to form the specific commodity rates which were then used to determine the county rates used for payments. USDA asserts that this same approach has been used in the adjudication of trade dispute cases in the World Trade Organization.

Food Policy: USDA Announces Clarifications to SNAP Requirements

On August 21, 2019, USDA’s Food and Nutrition Service (FNS) announced two new rule clarifications intended to “enable states to leverage modern technologies in their efforts to deliver Supplemental Nutrition Assistance Program (SNAP) benefits.” Based on the success of several pilot projects, FNS will no longer require states to obtain Federal approval to provide third-party identity authentication services as an option for SNAP applicants to verify their identity. Additionally, FNS specified that “third-party payroll sources, such as The Work Number, can be used” to certify income and employment information supplied by households. The clarifications specify that, when adopting these procedures, states are still accountable for “complying with federal laws and protecting applicant rights.”

Pesticides: EPA Opens Public Comment Period for Pesticide Use on Hemp

On August 21, 2019, U.S. Environmental Protection Agency (EPA) Administrator Andrew Wheeler announced the opening of a 30-day public comment period on ten applications from Agro Logistic Systems, Inc., Marrone Bio Innovations, and Hawthorne Hydroponics LLC to include hemp as a site on the labeling of currently registered pesticide products. EPA has already “established tolerance exemptions” for “residues in or on all raw agricultural . . . commodities” from the active ingredients in these pesticides and deemed them safe “under any reasonably foreseeable circumstances.” Because the agency does not perceive the “patterns of use” of the pesticides to change with use on hemp, EPA is not formally required to provide a notice-and-comment period for the applications. Although the agency does not plan to continue such notification for future similar applications, EPA acknowledges the potential public interest in these early applications and is providing the notice-and-comment period to “enhance transparency.” EPA predicts it will arrive at a decision regarding the pesticide use “on hemp before the end of 2019 to help growers make informed purchasing choices for the upcoming growing season.”

Crop Insurance: USDA Offers Hemp Crop Insurance Coverage for 2020

On August 27, 2019, the U.S. Department of Agriculture’s Risk Management Agency announced that qualifying industrial hemp growers will be eligible for crop insurance coverage for the 2020 crop year. Issued under the Whole-Farm Revenue Protection program, the insurance will cover “hemp grown for fiber, flower or seeds” and will be offered “to producers who are in areas covered by USDA-approved hemp plans or who are part of approved state or university research pilot programs.” Interested individuals can find more information regarding crop insurance coverage for industrial hemp at the Hemp and Farm Bill Programs webpage on farmers.gov.

From National Ag Law Experts:

“Family Law Issues with Agriculture: Estate and Succession Planning”, Cari Rincker, Rincker Law Blog – Rincker Law PLLC (August 23, 2019)

“Court Determines Meaning of ‘Oil and Gas’ in Century-Old Pipeline Easement”, Tiffany Dowell Lashmet, Texas Agriculture Law Blog – Texas A&M AgriLife Extension (August 12, 2019)

Federal Actions and Notices:

Environmental Protection Agency

“Pesticide Product Registrations; Receipt of Applications for a New Site” (hemp)

“Pesticide Reregistration Performance Measures and Goals; Annual Progress Report; Notice of Availability”

Executive Office for Immigration Review

“Organization of the Executive Office for Immigration Review”

Food Safety and Inspection Service

“Notice of Request To Revise an Approved Information Collection: Import Inspection Application and Application for the Return of Exported Products to the United States”

Pennsylvania Actions and Notices: