Happy 2022! As we do each year, we’ve compiled our list of some of the biggest agricultural law stories in 2021. Today, we will take a look at this from the national level. Next week, we will take a look at Texas-specific issues. To hear Paul Goeringer and I discuss the biggest issues of 2021, click here to listen to our year-end episode of the Ag Law in the Field Podcast.
Waters of the United States
If there has been one constant over the last 5 years, it has been the inclusion of this topic on every year-in-review blog post. Just a brief background, the federal Clean Water Act was passed in 1972 giving federal jurisdiction to the Environmental Protection Agency and US Army Corps of Engineers over “waters of the United States.” Particularly relevant for agriculture, this requires a federal permit to discharge a point source pollutant into a water of the US or to move dredge and fill material on a water of the US. [To read more about the Clean Water Act and agriculture, click here or listen to my podcast with Anthony Schutz here.] Despite using the term, the Clean Water Act did not define the meaning of “waters of the United States.” Decades of litigation ensued. In 2015, the Obama administration published its “WOTUS Rule,” to define the meaning of “waters of the United States.” Lawsuits quickly followed around the country. When President Trump took office, he told the EPA to rescind and revise the definition, and the Navigable Waters Protection Rule (“NWPR”) was passed in 2020. Again, lawsuits quickly followed. After an Arizona federal court struck down the NWPR, the Biden EPA announced it would no longer seek to enforce that definition. In November 2021, the Biden administration published its proposed rule, which includes elements of Justice Scalia’s plurality opinion and Justice Kennedy’s concurring opinion in Rapanos v. EPA. Public comment is currently open through February 7, 2022. The final Biden rule is expected in 2022. It is certainly likely that, again, lawsuits will follow. Stay tuned for 2022, as I’ll be having Jim Bradbury on the podcast to chat with us about the proposed rule. Also, if you really want to dive into the weeds on this topic, Jesse Richardson and I will have a law review article coming out in 2022 in the William & Mary Law Review that really provides a detailed history of waters of the United States. Without question, this definition being a moving target is frustrating for landowners, agriculture, construction, and other industries required to follow the Clean Water Act.
If a person were to choose the hottest topic of 2021 by counting news headlines, carbon contracts might be high on that list. There has been lots of discussion around the country about farmers entering into various agreements with companies related to carbon. In the agricultural space, most of these agreements involve farmers or ranchers entering into contracts with brokers and agreeing to undertake certain production practices such as no till farming or regenerative grazing. To listen to a podcast episode I did on this topic, click here. To hear from a Midwestern farmer who has been involved with a number of carbon contracts with various companies, click here. I’m currently working on a fact sheet along with Dr. Jordan Shockley from the University of Kentucky and Dr. Justin Benavidez with Texas A&M AgriLife Extension that will help farmers and ranchers know what to look for when evaluating a potential carbon contract. For now, I would just remind everyone to take time to really review, analyze, and understand any contract prior to signing!
Why does a California-specific law make the national list of hot topics? Because of it’s potential to impact pork producers around the country. California voters passed a ballot initiative in 2018 related to specific spacing requirements and production practices required for pigs, laying hens, and veal animals. The initiative, Proposition 12, sets forth specifications that California producers must follow on their operations. It also went a step further, providing that products raised in other states not comporting with these practices may not be sold in California. For example, if a hog producer in North Carolina does not meet the spacing requirements of the California law, that producer may not sell his pork in California. This provision goes into effect January 1, 2022 and reports indicate that nearly all pork produced in the United States would violate the California standards. There were a number of lawsuits filed challenging the constitutionality of this law, but thus far, none have succeeded. One such suit brought by the National Pork Council and the American Farm Bureau Federation was dismissed at both the trial court and the US Court of Appeals for the Ninth Circuit and is currently awaiting a decision on a petition for certiorari from the United States Supreme Court. To listen to a podcast episode I did with Beth Rumley from the National Ag Law Center, click here.
Litigation continues with regard to the Beef Checkoff program. You may recall from this prior blog post that R-Calf USA filed suit against the Montana Beef Council (MBC) claiming that the MBC’s advertising violated the First Amendment rights of R-Calf members. In 2020, the US District Court for the District of Montana dismissed the case, holding that the MBC advertisements constituted government speech, which is protected from First Amendment challenge. [Read blog post here.] This was based in large part on Memorandum of Understandings that were signed between numerous state beef councils and the USDA, allowing government oversight of the messaging from the state beef councils. The US Court of Appeals for the Ninth Circuit affirmed this decision on appeal in July 2021. [To listen to a prior podcast episode discussion these issues, click here.] Additionally, in 2020, R-Calf filed suit against the USDA alleging that these MOUs were unlawful as the USDA failed to follow the Administrative Procedures Act. In September 2021, the US District Court for the District of Columbia denied USDA’s motion to dismiss the case, allowing it to proceed.
US Supreme Court Water Law Rulings
If anyone is curious about what can unite the United States Supreme Court, apparently it’s water law cases. This year, the High Court issued two unanimous opinions in water law disputes between states. To hear a discussion between Jesse Richardson and me on these cases, click here.
Most recently, the court dismissed the claims in Mississippi v. Tennessee. This case involved a dispute over the Middle Claiborne Aquifer, which sits beneath multiple states, including Mississippi and Tennessee. Mississippi argued that Tennessee’s pumping resulted in the loss of billions of gallons of water that used to lie beneath Mississippi. In what is an important opinion on an issue of first impression, Chief Justice Roberts found that the doctrine of “equitable apportionment” applied to this case. This doctrine had previously only been applied to surface water disputes. This case makes clear that equitable apportionment applies to an interstate aquifer if it is: (1) multistate; (2) water flows naturally between the states; and (3) actions of one state affects portions of the aquifer below another state. Because Mississippi expressly said it did not seek equitable apportionment, and because the Court found that to be the only available remedy in this dispute, the case was dismissed. It will be interesting to see how this plays out in cases going forward now that it is clear that, at least in some instances, equitable apportionment does apply to groundwater.
The other water law decision from the Supreme Court this year pitted Florida against Georgia in a dispute over the waters of the Apalachicola Chattahoochee Flint River Basin. Florida filed an equitable apportionment lawsuit claiming that Georgia was using more than their fair share of the water from the basin. Justice Barrett wrote for the unanimous Court finding that Florida simply could not prove substantial injury caused by Georgia’s actions. Thus, the case was dismissed.
Just recently over the last couple of weeks, dicamba has been in the news based on various statements and reports from the EPA. You may recall that in 2020, the US Court of Appeals for the Ninth Circuit vacated the registration for three over-the-top dicamba products in June. [To read more about that click here or listen here.] In November 2020, the EPA approved the use of XtendiMax, Engenia, and Tavium through 2025 and added a number of additional restrictions to the label. [Read more here.] At the end of December 2021, the EPA released a summary of dicamba-related incident reports from the 2021 growing season. This report noted widespread alleged damage from dicamba in 2021, despite the more restrictive label. The EPA also stated that it could not move quickly enough to fully implement changes by the 2022 growing season. [Read article here.]
North Carolina Right to Farm Statute
Another development right at the end of 2021 came from North Carolina where the NC Court of Appeals upheld the constitutionality of the state’s Right to Farm statute. After numerous hog farms were sued for nuisance in North Carolina, the General Assembly passed (overriding the governor’s veto) a more stringent Right to Farm Statute in 2019. Plaintiffs filed suit challenging the constitutionality of the amended Right to Farm law. The trial court granted the state’s motion to dismiss in December 2020. On December 21, 2021, the North Carolina Court of Appeals affirmed that dismissal. [Read Opinion here].
Potential Changes to Estate & Capital Gains Taxes
Lastly, one of my most popular speaking requests related to potential changes that did not occur in 2021. There were certainly proposals, talking points, and agendas in Washington, DC that would have modified estate and capital gains taxes, which had agricultural producers and rural landowners paying attention. In particular, there was concern from agricultural groups that Congress might decrease the lifetime exemption for estate taxes from the current 2021 level of $11.7 million/person to far less, with some proposals suggesting $3.5 million/person. [Read this prior blog post about estate taxes.] With regard to capital gains taxes, agricultural groups were concerned that Congress may do away with the step up in basis or impose capital gains taxes on unrealized gains at death. [Read this prior blog post about capital gains taxes.] Thus far, none of these changes have come to fruition. [To listen to podcast episodes about estate, gift and capital gains taxes, click here and here.]