Recent Blog Posts
Part 2: Rules for Operating Drones
The FAA’s long awaited rule for drones or “small unmanned aircraft systems” (sUAS) weighing less than 55 pounds will be effective on August 29, 2016. Our previous post explained the rule’s process for obtaining certification as a Remote Pilot in Command (Remote PIC) that will apply to those who operate a sUAS for commercial uses or incidental to a business, such as for farming purposes. In this post, we focus on the new rule's operational requirements and limitations. Farmers who want to use a drone in the farm operation need to understand and comply with these provisions.
- Registration. A person may not operate a sUAS over 0.55 pounds unless it is registered with FAA. An online registration is available at https://registermyuas.faa.gov/
- Pre-flight inspection. The Remote PIC must inspect the sUAS prior to a flight to ensure that it is in a condition for safe operation, which includes inspecting for equipment damage or malfunctions. The FAA advises operators to conduct the pre-flight inspection in accordance with the sUAS manufacturer’s inspection procedures and provides a list of the elements to address in a pre-flight inspection in section 7.3.4 of this guideline.
- Pre-flight information. The Remote PIC must make sure that all persons directly involved in the flight are informed about roles and responsibilities, operating conditions, emergency and contingency procedures and potential hazards.
- Flight operators. Only a Remote PIC may fly the sUAS, or someone under the direct supervision of a Remote PIC if the PIC is easily able to gain control of the sUAS. A Remote PIC may only operate or observe one drone at a time.
- Airspace. Flights of sUAS are allowed in Class G airspace, the airspace that is not controlled by Air Traffic Control (ATC) communications, which encompasses a majority of agricultural lands. A flight in Class, B, C, D and E controlled airspace requires permission from the appropriate ATC prior to flight. The FAA will establish a web portal that will allow an operator to apply for ATC permission online.
- Waiver process. The operator may apply for a “certificate of waiver” that allows deviation from some of the operational requirements if the FAA determines that the flight would be safe. The operator must receive the waiver prior to the flight, so should file the request about 90 days in advance of the proposed flight. The FAA will post the waiver applications, which are not yet available, at http://www.faa.gov/uas/.
Operating rules during flight
- Weather visibility. There must be a minimum visibility of three miles from the sUAS control station.
- Visual line of sight. The Remote PIC or the authorized person operating the drone must maintain a constant visual line of sight with the sUAS, without the aid of a device other than glasses or contact lenses. The operator may use a visual observer to help maintain the line of sight, but using an observer cannot extend the line of sight.
- See and avoid. The operator must yield the right of way and avoid collision with another use of the national air space.
- Height. The sUAS may not fly more than 400 feet above ground level.
- Time of day. Flights may occur only during daylight hours or no more than 30 minutes before official sunrise or after official sunset if the sUAS has anti-collision lighting.
- Speed. The sUAS speed may not exceed 100 miles per hour.
- People. A flight may not occur over persons who are not involved in the flight or are not under a covered structure or inside a covered stationary vehicle.
- Base of operation. Operation of the sUAs may not occur from a moving aircraft. Operation from a moving land or water vehicle is permissible if in a sparsely populated area and not transporting property for hire.
- External load and towing. A sUAS may carry or tow an external load if the load is securely attached, does not affect control of the aircraft, is not a hazardous substance and the combined weight of the sUAS and its load does not exceed the 55 pound weight limit.
- Aerial applications. Use of a sUAS for dispensing herbicides, pesticides and similar substances must also comply with the “agricultural aircraft operation” regulations in 14 CFR 137.3.
- Dropping objects. An operator may not create an undue hazard that poses a risk of injury to persons or property when dropping an object from a sUAS.
- Careless or reckless operation. A person must not operate a sUAS carelessly or recklessly. The FAA provides the example of failing to consider weather conditions when flying near structures, trees or rolling terrain in a densely populated area as an example of careless or reckless operation.
- Production of records and vehicle. If requested by FAA, a person must make the sUAS or its records available for testing or inspection.
- Accident reporting. Within 10 days of occurrence, a Remote PIC must report to the FAA a flight operation that results in loss of consciousness or serious injury to a person or creates property damage of at least $500. Reporting can occur online at www.faa.gov/uas or by telephone to the appropriate FAA field office or regional center.
Penalties for noncompliance with the rule
The FAA will have enforcement authority over the new regulations. Depending upon the type and violation, civil penalties could be up to $27,500. An operator could also be subject to criminal penalties for violations that are reckless, destroy property or threaten public safety; those penalties could be up to $250,000.
Learn more about the sUAS rule at http://www.faa.gov/uas/
After several years of debate over voluntary versus mandatory GMO (genetically modified organism) labeling, Congress passed legislation yesterday to create a unified national standard requiring disclosure of information for bioengineered foods. Predictions are that President Obama will sign the legislation soon. Once effective, the new law will preempt state laws that require labeling of foods containing GMOs, such as the Vermont labeling law that recently became effective on July 1. The bill's passage through Congress represented a bi-partisan compromise led by senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI). "This is the most important food and agriculture policy debate of the last 20 years," said Sen. Roberts.
What’s in the bill?
The legislation amends the Agricultural Marketing Act of 1946 to include the following:
Definition of “bioengineered” food, which is food intended for human consumption that contains genetic material that has been modified through in vitro recombinant DNA techniques and for which the modification could not otherwise be obtained through conventional breeding or found in nature.
- The Secretary of Agriculture shall determine the amount of bioengineered substance necessary to deem the food as bioengineered.
- A food that is derived from an animal that consumed feed containing bioengineered substances shall not be considered bioengineered. Thus, meat, poultry, dairy and eggs from animals that have consumed GMO feed will not be subject to the labeling requirements because they cannot be defined as bioengineered.
- Preemption of state food labeling standards. No state or political subdivision may establish requirements for labeling whether a food or seed is bioengineered or contains ingredients that are bioengineered. A food may bear disclosure of bioengineering only in accordance with federal regulations arising from this law.
- Creation of federal mandatory disclosure standard. Within two years of the bill’s enactment, the Secretary of Agriculture must establish a mandatory national bioengineered food disclosure standard and the procedures necessary to implement the national standard.
Choice of labeling. The federal standard must give a manufacturer the option of disclosing information with on-package text, a symbol or an electronic or digital link, such as a QR code. An electronic or digital link must contain access to an internet website or other type of electronic source.
- The USDA must conduct a study to identify potential technological challenges of disclosure through electronic or digital means, and must provide additional options if determined that the proposed technological options do not provide sufficient access to bioengineered food disclosure information.
- The USDA must also develop alternative disclosure options for foods contained in small packages.
Exclusions. The following are excluded from the national disclosure standard:
- Food served in a restaurant or similar retail food establishment.
- “Very small” food manufacturers, to be defined through rulemaking.
- As explained above, meat, poultry, dairy and eggs from animals that consume GMO feed.
- A food containing meat, poultry or eggs if the predominant ingredient would not independently be subject to the standard of if the predominant ingredient is broth, stock, water or a similar solution and the second-most predominant ingredient would not independently be subject to the national standard.
- “Small” food manufacturers. The USDA must define “small food manufacturers” and provide such manufacturers with a grace period of at least one year for implementation of the new standards and the additional option of providing only a telephone number or internet website on a food label to disclose required information.
- Food safety implications. The FDA conducts a pre-market consultation process for foods from genetically engineered plants; foods that successfully complete the process shall not be treated as more or less safe than non-genetically engineered counterparts because of bioengineering.
- Organically produced foods. A food certified as “organic” under the national organic program may be labelled as “not bioengineered,” “non-GMO” or with similar language.
- Enforcement. Failing to disclose a food as bioengineered is a prohibited act, but the rulemaking process will determine whether there will be penalties for noncompliance. The USDA Secretary will have authority to request records and conduct audits and hearings in regards to compliance but will not have recall authority for a food that does not comply with disclosure regulations.
The preemption established in the new law will be effective immediately and the State of Vermont is prohibited from enforcing its GMO labeling law. The USDA, through its Agricultural Marketing Service, will begin the rulemaking process for the national disclosure standard. A few key issues for agriculture to track though out the rulemaking stage will be the determination of "how much" bioengineered substance is sufficient to deem a food as bioengineered; defining the "very small" food manufacturers that will be exempt from the standard and the "small" manufacturers that will have a grace period and simpler disclosure requirements, whether QR codes and other technology options will remain viable due to expected objections that they discriminate against lower income consumers; and penalties for noncompliance. The two year window for rulemaking, however, leaves open the opportunity for future changes such as amending the legislation or prohibiting funding to be used for its implementation. Thus, while we have entered a new stage of the GMO labeling debate, the uncertainty of GMO labeling is not yet fully resolved.
To read the legislation, visit this page.
The Ohio General Assembly has enacted a law that raises the monetary limit for cases handled through Ohio's small claims court system. The new maximum amount of $6,000 for a small claims case will replace the current limit of $3,000 when House Bill 387 becomes effective in late September. Under the new law, a defendant in the case may also file a counterclaim for up to $6,000. Governor Kasich signed the bill on June 28, 2016.
Ohio law requires every county and municipal court in Ohio to establish a small claims division to handle minor disputes involving only the recovery of money. A small claims court cannot hear cases for slander, libel, malicious prosecution, abuse of process, return of personal property, punitive damages or other cases seeking remedies other than money. A person may file a small claims complaint and present the case in court without the assistance of an attorney, but may have legal representation if desired. The court may appoint a magistrate, who must be an attorney, to oversee the case and render a decision. The court also has the authority to enforce a monetary judgment against a party. Because small claims cases tend to be simple, they are resolved in less time and with less expense than cases heard by other courts.
The increased monetary limit for small claims cases will allow farmers and agribusinesses to address more disputes quickly and without the expense of an attorney. Operators and landowners owed money for products or services in excess of the current $3,000 small claims maximum often express frustration that it could be too costly and time consuming to address the matter through municipal or county courts. The new higher limit of $6,000 should capture many of these cases and offer an opportunity to recover such losses through the small claims process. According to the bill's sponsor, Rep. Lou Terhar (R-Cincinnati), the change will "bring Ohio in line with surrounding states and make Ohio a better place to do business and generate jobs."
Governor Kasich has signed legislation to create a new “Ohio Farm Winery Liquor Permit.” While wine makers in Ohio may currently obtain a general liquor permit to make and sell wine on a farm, the general permit does not distinguish the source of the wine. The new Ohio Farm Winery Permit legally designates the wine as being made from grapes grown on the wine maker’s farm. Sponsors and supporters of the legislation claim that the special designation will help consumers know a wine’s localized nature, bring recognition to Ohio’s wine growing regions, keep Ohio competitive with other states that designate farm-produced wines, and ensure that farm wineries continue to receive property tax treatment as agricultural operations. Wineries that qualify for the new permit would "be able to present themselves as true farming operations," according to sponsor Ron Young (R-Leroy Township).
Ohio’s Division of Liquor Control may issue an Ohio Farm Winery Permit only to wine makers who meet two requirements: the manufacturer produces wine from grapes, fruit or other agricultural products grown on the manufacturer’s property, and the property qualifies as “land devoted exclusively to agricultural use” under Ohio’s Current Agricultural Use Valuation (CAUV) program, which requires that the land be used for commercial agricultural production and be at least 10 acres in size or, if less than 10 acres, generates a minimum average of $2500 in gross income.
Under the new law, an Ohio Farm Winery Permit holder may sell its wine products for consumption on the premises where manufactured, for consumption off the premises in sealed containers, or to a wholesale permit holder. An Ohio Farm Winery Permit holder may also manufacture, purchase and import brandy for fortifying wine and may import and purchase wine for blending purposes, but the total amount of wine used for blending cannot exceed 40% of all wine manufactured by the wine maker.
H.B. 342, which will be effective in late September, is available here.
Part 1: Drone Pilots Must Obtain FAA Certification
The Federal Aviation Administration (FAA) yesterday filed its final rule in the Federal Register for the Operation and Certification of Small Unmanned Aircraft Systems (sUAS). The new rule allows for the non-recreational operation of sUAS less than 55 pounds in the national airspace. Farmers and professionals planning to use UAS or “drones” for agricultural purposes must comply with the rule beginning on August 29, 2016. An important first step toward compliance is to obtain the proper license to operate a sUAS, referred to as “remote pilot certification” by the FAA.
The Remote Pilot Certification Requirement
The Remote Pilot in Command (Remote PIC) is the person who is directly responsible for the operation of the sUAS. The new rule requires the Remote PIC to obtain a remote pilot certificate with a small UAS rating. To do so, an applicant must meet eligibility requirements, pass a knowledge test and complete the application process.
1. Eligibility requirements. An applicant for a Remote PIC must be at least 16 years old, proficient in the English language, and in a physical and mental condition that would not interfere with safe operation of a sUAS.
2. Knowledge test. An applicant must pass the unmanned aircraft general (UAG) knowledge test before applying for the remote pilot certificate. The knowledge test, which will be available beginning August 29, 2016, will contain 60 multiple choice questions on:
- Federal regulations for sUAS.
- Airspace classification and operating requirements.
- Weather sources and effects of weather on sUAS.
- Loading and performance of sUAS.
- Emergency procedures.
- Crew resource management.
- Radio communication procedures.
- Determining performance of sUAS.
- Effects of drugs and alcohol.
- Aeronautical decision-making.
- Airport operations and maintenance.
- Preflight inspection procedures.
The FAA provides a free online learning course for knowledge test preparation, available through www.faasafety.gov or here. The FAA also presents a sample exam on its website, available here. Applicants must take the knowledge test at an FAA-approved Knowledge Testing Center. A list of Ohio’s 23 test centers is available at www.faa.gov/training_testing/testing/media/test_centers.pdf . Passing the test requires a score over 70%; an applicant who fails the test may retake the test after 14 days.
Applicants already holding a pilot certificate, other than a student pilot, must follow a different process that includes completing a two-hour online course. The course, which includes an exam, is available through www.faasafety.gov or here.
3. Application. An applicant who passes the UAG knowledge test must complete the application for a remote pilot certificate, FAA Form 8710-13. The form will be available as a paper application or online through the FAA’s Integrated Airmen Certificate Rating Application System at https://iacra.faa.gov. The Transportation Security Administration (TSA) will then conduct a background security screening of the applicant to determine if the applicant represents a security threat. If the screening is successful, an applicant will receive the remote pilot certificate. An unsuccessful security screening will disqualify the applicant, who would have a right to appeal the security screening decision. Note that an applicant who uses the online application can obtain a temporary certificate online upon successful completion of the security screening, while an applicant who submits a paper application must wait to receive the permanent remote pilot certificate through U.S. mail. The FAA has announced that it hopes to issue a temporary remote pilot certificate within 10 business days after submission of an online application.
What Happens After Certification?
A certified Remote PIC may legally fly a sUAS and may also directly supervise persons who do not hold a remote pilot certificate, as long as the Remote PIC maintains the ability to take control of the sUAS. This provision will allow Remote PICs to teach, demonstrate and train uncertified operators. The Remote PIC has several responsibilities:
- Register the sUAS with the FAA.
- Conduct pre-flight inspections.
- Abide by operational limitations in the new sUAS rule.
- Maintain records on the sUAS and its flights.
- Upon request, make the sUAS and records available to the FAA for inspection or testing.
- Report any operation that results in injury, loss of consciousness or property damage of at least $500 to the FAA within 10 days of occurrence.
Recurrent knowledge test. A person who receives the remote pilot certificate must take a recurrent knowledge test within 24 months to retain the certification.
Part 2 of this Series
In our next post in this series on implications of the new rule for sUAS in agriculture, we’ll explain the operational limitations and requirements for sUAS. To read the new rule or access up-to-date information on sUAS, go to www.faa.gov/uas.
A landowner may immediately appeal an agency’s determination that property contains “waters of the United States” that is subject to the federal Clean Water Act, according to a decision issued today by the United States Supreme Court.
The court’s holding in Army Corps of Engineers v. Hawkes Co. centered on a decision by the U.S. Army Corps of Engineers (the Corps) that property in Minnesota owned by the Hawkes Company (Hawkes) contained wetlands that were subject to the Clean Water Act. Hawkes planned to mine peat on the property, and would have to comply with Minnesota regulations. The Corps decided that Hawkes must also comply with federal Clean Water Act regulations, based on its “jurisdictional determination” that the property contained waters of the United States because its wetlands had a “significant nexus” to the Red River of the North, located 120 miles away.
Hawkes challenged the Corps’ jurisdictional determination in federal district court. The Corps requested dismissal of the case, arguing that its jurisdictional determination was not a "final agency action" that Hawkes could appeal in court. Rather, the Corps asserted that Hawkes should apply for a Clean Water Act permit and challenge the results of the permit request if dissatisfied or should proceed without a permit and challenge the jurisdictional determination in a likely enforcement action.
The federal district court agreed with the Corps and dismissed the case. Hawkes then appealed to the Eighth Circuit Court of Appeals, which reversed the district court’s decision. The Corps requested review of the appeal by the United States Supreme Court, which accepted the case.
The Supreme Court concluded that the Corps’ jurisdictional determination is appealable according to the federal Administrative Procedures Act, which allows an aggrieved party to appeal a “final” agency action. An action is final if it determines legal consequences,“marks the consummation of the agency’s decision making process,” and when there are no adequate alternatives for relief other than judicial review. All three circumstances existed in the Hawkes case, said the Court, stating that parties should not have to await enforcement proceedings that carry the risk of criminal and civil penalties before challenging a jurisdictional determination or be forced through a lengthy and costly permitting process before being able to challenge the Corps’ jurisdictional determination.
Read the decision in Army Corps of Engineers v. Hawkes Co. here.
An agritourism bill first introduced over a year ago has finally received approval from the Ohio General Assembly. The Senate passed SB 75 last November, but the bill did not pass the House of Representatives until May 4, 2016. The House had passed a similar bill last May, but the Senate failed to act on that bill. If signed by Governor Kasich, SB 75 will be in effect in time for the fall agritourism season. (Update: Governor Kasich signed the bill, which becomes effective 8/16/16).
The legislation addresses civil liability risk, property taxation and local zoning authority for “farms” that provide “agritourism” activities. It’s important to understand several definitions in the law:
- A "farm" is land that is devoted to commercial agricultural production, either at least 10 acres in size or grossing an average income of $2500 from such production.
- "Agricultural production" means commercial aquaculture, algaculture, apiculture, animal husbandry, poultry husbandry; the production for a commercial purpose of timber, field crops, tobacco, fruits, vegetables, nursery stock, ornamental shrubs, ornamental trees, flowers, or sod; the growth of timber for a noncommercial purpose if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use; or any combination of such husbandry, production, or growth; and includes the processing, drying, storage, and marketing of agricultural products when those activities are conducted in conjunction with such husbandry, production, or growth.
- "Agritourism" is an agriculturally related educational, entertainment, historical, cultural, or recreational activity, including you-pick operations or farm markets, conducted on a farm that allows or invites members of the general public to observe, participate in, or enjoy that activity.
- An "agritourism provider" is anyone who owns, operates, provides, or sponsors an agritourism activity, whether or not for a fee, including employees at agritourism activities.
For agritourism providers on farms, the legislation offers the following protections:
Civil liability immunity. The new law protects an agritourism provider from liability for injuries to agritourism participants in certain situations. The law states that a provider does not have a legal duty to remove risks that are “inherent” in agritourism activities and will not be liable for any harm a participant suffers because of such risks. “Inherent risks” are dangers or conditions that are an integral part of an agritourism activity, including surface and subsurface conditions of land; ordinary dangers of structures or equipment ordinarily used in farming; behavior or actions of domestic or wild animals , except for vicious or dangerous dogs; the possibility of contracting illness from physical contact with animals, animal feed, animal waste, or surfaces contaminated by animal waste; and a participant’s failure to follow instructions or exercise reasonable caution while engaging in the agritourism activity.
Warning sign requirement. An agritourism provider must post and maintain warning signs on the farm to receive the law’s civil liability protection, and a provider who fails to post or maintain these signs can be liable for a participant’s harm. At or near each entrance to the agritourism location or at each agritourism activity, a provider must post and maintain a sign that states: "WARNING: Under Ohio law, there is no liability for an injury to or death of a participant in an agritourism activity conducted at this agritourism location if that injury or death results from the inherent risks of that agritourism activity. Inherent risks of agritourism activities include, but are not limited to, the risk of injury inherent to land, equipment, and animals as well as the potential for you as a participant to act in a negligent manner that may contribute to your injury or death. You are assuming the risk of participating in this agritourism activity." This warning must be printed in black letters that are at least one inch in height.
Exceptions to immunity. An agritourism provider will not be immune for harm caused by the provider’s willful or wanton disregard for a participant’s safety; if the provider purposefully caused harm to the participant; if the provider's actions or inactions constituted criminal conduct and caused harm to the participant; or if the provider had or should have had actual knowledge of an existing dangerous condition that is not an inherent risk and the provider did not make the dangerous condition known to the participant.
Property taxation. The new legislation ensures that agritourism parcels are eligible for Ohio’s Current Agricultural Use Valuation (CAUV) program, which provides reduced property taxation on qualifying agricultural lands. According to the new law, the existence of agritourism on a tract, lot, or parcel of land does not disqualify land that otherwise qualifies for the CAUV program.
Local zoning authority. The new legislation expands Ohio’s “agricultural exemption” from local zoning to include agritourism activities. The “agricultural exemption” limits the ability of townships and counties to use zoning to prohibit or regulate certain agricultural land uses in any zoning district. Under the new law, agritourism becomes part of the agricultural exemption and is an agricultural land use that zoning officials cannot prohibit by way of zoning.
The legislation does allow townships and counties to regulate some factors related to agritourism land uses if the regulations are necessary to protect public health and safety, however. These factors include the size of structures used primarily for agritourism and setback lines for such structures, egress or ingress into a parcel, and the size of parking areas. This limited authority does not include the power to require improvements such as drainage or paving for agritourism parking areas.
The legislation also clarifies that county and township zoning may not prohibit the use or construction of structures for vinting and selling wine if located on land where grapes are grown.
Implications of the new legislation
- Not everyone who engages in agritourism will benefit from the new law. The law is designed to address agritourism activities that diversify an existing farm—where the activities occur on land that is otherwise engaged in agricultural production. For example, a person who purchases 10 acres of vacant land with the intent of creating a corn maze and petting farm will not benefit from the law because there is no agricultural production already taking place on the land. If the land is first involved in agricultural production, added agritourism activities will fall under the new law.
- Visitors to agritourism operations must take more responsibility for their own safety. The law recognizes that there are inherent dangers on farms that can be beyond the control of agritourism providers. Visitors who wish to participate in an agritourism experience must be aware of these dangers and be prepared to protect themselves by following directions, paying attention to surface conditions, being cautious around animals and equipment, supervising their children and generally exercising reasonable care while on the farm.
- Agritourism providers must be prepared to meet the law’s signage requirements. When the law becomes effective, agritourism operators should have proper warning signs posted. Providers who fail to post the right sign in the right place will lose the law’s immunity protections.
- Local officials must treat free and fee-based agritourism activities equally. Unlike some agricultural laws, there is no distinction in the new law between commercial agritourism businesses and free agritourism activities like educational farm tours; the law applies in the same way regardless of whether the activity is fee-based or free, as long as it’s conducted on a “farm.”
- Counties and townships must identify public health and safety issues and develop appropriate zoning standards. Counties and townships must be prepared to recognize agritourism situations that pose health and safety concerns due to the size and location of a structure, ingress and egress on the property or the size of a parking area. If a public health or safety issue is identified and the county or township wants to regulate the issue, it must have enacted zoning standards that address the issue.
Read SB 75 on the Ohio General Assembly’s website here.
Post Script: Governor Kasich signed this legislation on May 17, 2016; the new law becomes effective on August 16, 2016.
Tags: agritourism liability; agritourism; agritourism zoning; agritourism taxation; agritourism rides
A legislative proposal to address manure infrastructure costs introduced by Rep. Brian Hill (R-Zanesville) is moving once again, receiving its third hearing before the House Ways and Means Committee on Tuesday, April 26. The bill proposes a refundable personal income tax credit for livestock owners in Ohio who invest in facilities or equipment for manure storage, treatment, application, handling or transportation. Rep. Hill introduced the measure last August, but it has not been on the committee's agenda since its second hearing in February. Here are the details of the proposed legislation:
- The tax credit would apply only to taxpayers who own livestock in Ohio on the bill’s effective date and for the entire taxable year in which claiming the credit. The credit would not apply to former livestock owners, those who obtain livestock after the effective date or those who do not own livestock for the entire year in which claiming the credit.
- Eligible investments would include those made between January 1, 2005 and January 1, 2020 for any costs incurred to:
- Acquire manure handling or transportation equipment, which means any machinery, device, equipment, tool, motor vehicle, system or infrastructure improvement used primarily to move manure to or from a manure storage or treatment facility or other location, or to clean or decontaminate land or surfaces on or in which manure is deposited or stored.
- Acquire manure application equipment, which includes any machinery, device, equipment, motor vehicle or system used to apply or inject manure into or onto soil for agricultural purposes;
- Plan, design, excavate, construct or install a manure storage or treatment facility anywhere in Ohio, which includes any excavated, diked or walled structure or combination of structures designed to stabilize, hold or store manure.
- The investments made must assist the taxpayer in complying with NRCS Nutrient Management Code 590 regarding manure application anywhere in the state or complying with state laws regarding the application of manure in Lake Erie’s western basin.
- The amount of the tax credit would be 50% of the total eligible investment, and the taxpayer would be required to spread the credit amount equally over a five year period.
- If the taxpayer’s credit would exceed the income tax due, the taxpayer would be entitled to a refund of the excess amount.
- The tax commissioner would be responsible for adopting rules for the tax credit, which could require the taxpayer to substantiate the amount of the investment, identify the location of the livestock or describe how the investment helps the taxpayer comply with laws regarding manure storage and application.
Several dairy farmers, the Ohio Soybean Association and the Ohio Farm Bureau testified at the April 26 committee hearing in support of the bill, highlighting the financial strains on livestock operators who install new manure storage and separation equipment. Committee members expressed several concerns with the proposal, including the retroactivity to investments made since 2005, its application to owners of Confined Animal Feeding Operations and the Legislative Service Commission’s projected loss of tens of millions of dollars per year in state revenue due to the credit.
Read and follow HB 297 on the Ohio General Assembly website, here.
Legislation proposing changes to Ohio’s current agricultural use valuation (CAUV) program has remained on hold in the General Assembly since last fall. Senator Cliff Hite (R-Findlay) and Representative Brian Hill (R-Zanesville) introduced the companion bills on November 18, 2015. The Senate referred its bill, SB 246, to the Senate Ways and Means Committee on December 9, 2015 and House Bill 398 was referred to the House Government Accountability and Oversight Committee on January 20, 2016. Neither committee has acted on its bill.
Taking up Ohio Farm Bureau’s recommendations, the bill sponsors target two aspects of the CAUV program—the formula used to determine CAUV values and the valuation of land used for conservation practices or programs. To create more accurate valuations, the legislation proposes several changes to the CAUV formula:
• States additional factors to include in the rules that prescribe CAUV calculation methods. Currently, the rules must consider the productivity of the soil under normal management practices, the average price patterns of the crops and products produced to determine the income potential to be capitalized and the market value of the land for agricultural use. The proposed legislation adds two new factors: typical cropping and land use patterns and typical production costs.
• Clarifies that when determining the capitalization rate used in the CAUV formula, the tax commissioner cannot use a method that includes the buildup of equity or appreciation.
• Requires the tax commissioner to add a tax additur to the overall capitalization rate, and that the sum of the capitalization rate and tax additur “shall represent as nearly as possible the rate of return a prudent investor would expect from an average or typical farm in this state considering only agricultural factors.”
• Requires the commissioner to annually determine the overall capitalization rate, tax additur, agricultural land capitalization rate and the individual components used in computing those amounts and to publish the amounts with the annual publication of the per-acre agricultural use values for each soil type.
To remove disincentives for landowners who engage in conservation practices yet pay CAUV taxes at the same rate as if the land was in production, the proposed legislation:
• Requires that the land in conservation practices or devoted to a land retirement or conservation program as of the first day of a tax year be valued at the lowest valued of all soil types listed in the tax commissioner’s annual publication of per-acre agricultural use values for each soil type in the state.
• Provides for recalculation of the CAUV rate if the land ceases to be used for conservation within three years of its original certification for the reduced rate, and requires the auditor to levy a charge for the difference on the landowner who ceased the conservation practice or participation in the conservation program.
For an explanation of the CAUV formula, see our Tax Bulletin "Why did my CAUV values increase so much?" available here.
Update: On April 21, 2016, the Sixth Circuit Court of Appeals denied a request for en banc (full court) review of this decision made by agricultural groups and several states.
In a case successfully argued by Ohio’s Solicitor Eric Murphy, the Sixth Circuit Court of Appeals based in Cincinnati has determined that it has jurisdiction to hear challenges to the Clean Water Rule (WOTUS Rule) proposed by the U.S. EPA and Army Corps of Engineers. The Rule expands the geographic extent of the “waters of the United States” (WOTUS) that are subject to the Clean Water Act.
A brief background
When the agencies published the final WOTUS Rule last summer, dozens of parties and 31 states, including Ohio, filed challenges in nine federal district courts and eight federal courts of appeal. The filings raised an immediate uncertainty about whether federal district courts or federal courts of appeal have jurisdiction to review the Rule. Despite this uncertainty, the U.S. District Court for the District of North Dakota issued a temporary injunction that prevented the Rule’s application in the 13 states that were involved in that district’s litigation. Other district courts in West Virginia and Georgia declined to issue injunctions and instead ruled that they did not have jurisdiction to review the Rule. A federal panel consolidated the cases filed before the Sixth Circuit Court of Appeals, which includes the challenge by the State of Ohio. The Sixth Circuit first issued a nationwide stay of the WOTUS Rule last October before turning to the jurisdictional challenges raised by the EPA and Army Corps.
The Sixth Circuit’s fractured opinion
The decision on jurisdiction issued by the Sixth Circuit’s three judge panel is not harmonious. Judge McKeague wrote the court’s opinion and based jurisdiction on two of seven provisions in the Clean Water Act that grant appellate court jurisdiction to review EPA actions: subsection 1369 (b)(1)(E) for actions “approving or promulgating any effluent limitation or other limitation” under certain sections of the Act and subsection 1369(b)(1)(F), for actions issuing or denying National Pollutant Discharge Elimination System (NPDES) permits. Judge McKeague relies on a U.S. Supreme Court decision that interprets the “other limitations” language in 1369 (b)(1)(E) to include limitations that “indirectly” produce limitations on point source operators and permit issuing authorities. He also cites the Sixth Circuit’s earlier decision in National Cotton Council v. U.S. EPA to conclude that agency actions “issuing or denying” an NPDES permit under 1369(b)(1)(F) include actions creating “regulations governing the issues of permits” and “rules that regulate NPDES permitting procedures,” such as the WOTUS Rule.
A concurring opinion written by Judge Griffin agrees only with the requirement to follow the Sixth Circuit’s previous decision in National Cotton Council. Judge Griffin clarifies that he is bound by but does not agree with the court’s reasoning in that case, and would not otherwise accept jurisdiction under subsections 1369(b)(1)(E) or (F). In a dissenting opinion, Judge Keith agrees with the concurring opinion that neither subsection 1369(b)(1)(E) or (F) grants an appeals court jurisdiction in regards to the WOTUS Rule. Judge Keith also argues that Judge McKeague mistakenly relies upon and overly broadens the National Cotton Council decision, which he believes does not apply to the WOTUS Rule.
Despite the disagreements between the Sixth Circuit Court judges, the decision means that the nationwide stay of the WOTUS Rule remains in effect and the court will proceed to hear the circuit’s consolidated cases that challenge the WOTUS Rule. The court’s decision on jurisdiction applies only to the states within the Sixth Circuit—Ohio, Michigan, Kentucky and Tennessee. Given the range of reasoning in the Sixth Circuit’s decision, other federal courts could reach differing decisions on the question of which court has jurisdiction over the cases. If so, we can expect a request for the United States Supreme Court to review the jurisdictional issue. As we expected, the WOTUS Rule challenges will be with us for quite some time.
Read the Sixth Circuit’s opinion for In re: U.S. Dep’t of Defense & U.S. Envtl. Protection Agency Final Rule: Clean Water Rule at http://www.ca6.uscourts.gov/opinions.pdf/16a0045p-06.pdf.