Thursday, April 28, 2016

Agricultural Law Weekly Review—April 28, 2016

Written by M. Sean High – Staff Attorney

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

Litigation: Court Rejects Contract Grower Claims against Pilgrim’s Pride
On April 22, 2016, the United States District Court, E.D. Texas, Marshall Division granted summary judgement and dismissed claims brought by more than 200 poultry growers alleging that Pilgrim’s Pride Corporation (PPC) violated the Packers and Stockyards Act (PSA) by closing two processing facilities (Sheila Adams, et al, v. Pilgrim’s Pride Corp., 2016 WL 1615700).  The court disagreed with the poultry growers’ assertion that PPC’s facility closures had violated PSA through an attempt to increase prices by keeping as much chicken off the market as possible.

GMO Ingredients: Court Permits Chipotle Advertisement Lawsuit to Move Forward
On April 20, 2016, the United States District Court Southern District of Florida ruled that a class action lawsuit, alleging that Chipotle Mexican Grill, Inc. (Chipotle) “misrepresented to customers that its food products contain only non-GMO products,” may proceed (Reilly v. Chipotle Mexican Grill, Inc., Case No. 15-Civ-23425-COOKE-TORRES).  Specifically, the court stated that the plaintiffs are permitted to proceed with their “allegation that Chipotle’s ‘Non-GMO’ claims ‘mislead consumers into paying a premium price…for inferior products or undesirable ingredients or for products that contain ingredients that are not disclosed.”

Equine Disease: PDA Quarantines Barn after Horse Tests Positive for Equine Infections Anemia
On April 20, 2016, the Pennsylvania Department of Agriculture (PDA) issued a press release announcing the quarantine “of an equine barn in Halifax, Dauphin County, after a horse at the barn tested positive for Equine Infectious Anemia (EIA) on Monday, April 18.”  According to PDA, both the barn and the horses will be quarantined for at least 60 days.  PDA further stated that EIA poses no health threat to humans and that “[t]he quarantine can be lifted after the remaining horses are determined not to be infected.”

Contract Review: USDA to Continue Payments for Pork Trademarks
On April 20, 2016, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) announced that the agency “has completed its review of the 2006 asset purchase agreement between the National Pork Board and the National Pork Producers Council (NPPC) for the purchase of four trademarks…[which] include the word ‘pork’ in distinctive lettering set against a pork loin silhouette and ‘The Other White Meat’ in various forms.”  According to USDA, “[a]s a result [of the review], AMS is approving continuing annual payments of $3 million under the terms of the agreement.”

Department Structure: PDA Announces Reorganization
On April 23, 2016, the Pennsylvania Department of Agriculture (PDA) published notice in the Pennsylvania Bulletin that “[t]he Executive Board approved a reorganization of the Department of Agriculture effective April 4, 2016” (46 Pa.B. 20165).  Of note, “at the request of the Joint Committee on Documents under 1 Pa. Code § 3.1(a)(9) (relating to contents of Code)” PDA’s reorganization is published through the use of an organizational chart.   

Regulation: USDA Proposes Amendment to Voluntary Grading of Shell Eggs
On April 20, 2016, the United States Department of Agriculture Agricultural Marketing Service published notice in the Federal Register that the agency was “propos[ing] to amend the Regulations Governing the Voluntary Grading of Shell Eggs to clarify the definition of ‘condition’ and revise the prerequisite requirement for shell eggs eligible for voluntary USDA grading and certification” (81 FR 23188).  The comment period for the proposed rule closes June 20, 2016.

Monday, April 25, 2016

Crop Insurance Update: Farmer Complaint Dismissed for Failure to State Claim

Written by M. Sean High—Staff Attorney

On February 11, 2016, the United States Court of Appeals for the Fifth Circuit issued an unpublished opinion affirming dismissal of a complaint for damages resulting from an alleged misrepresentation regarding an insurance agent’s license to sell crop insurance (Shannon v. Ham, 2016 U.S. App. LEXIS 2404).

According to the court, farmers Billy and Fannie Shannon (Shannons) filed a complaint alleging that insurance agent Bobby Ham (Ham) committed fraud by selling the couple crop insurance without a license; the result of which was a subsequent mishandling of their crop insurance policy and claims that resulted in over $200,000 in damages.

According to the court, the Shannons did not show “a causal connection between Ham’s lack of an insurance license and his mishandling of their policies.” The court asserted that Ham provided the Shannons with seven years of satisfactory insurance service without issue, and thus, “it is far more likely that Ham’s lack of licensure played no part in the Shannons’ injuries and that the claim mishandling that occurred in 2011 and 2012 is attributed to other causes.”

The court stated: “there is no direct relationship between the lie and the injury because the Shannons have not plausibly alleged that the lie had anything to do with the eventual claims mishandling.” Ultimately, the court affirmed the dismissal of the Shannons’ complaint because Ham’s faulty insurance credentials were not the proximate cause of his mishandling of the crop insurance policy and claims; the result of which meant the Shannons’ complaint failed to state a plausible claim for relief as required under 12(b)(6) of the Federal Rules of Civil Procedure. 

Thursday, April 21, 2016

Agricultural Law Weekly Review—April 21, 2016


Written by M. Sean High – Staff Attorney

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

Medical Marijuana: Pennsylvania Establishes Medical Marijuana Program
On April 17, 2016, Pennsylvania Governor Tom Wolf signed into law the establishment of the Commonwealth’s medical marijuana program (Act 16).  Under the enacted legislation, only persons holding a permit from the Department of Health of the Commonwealth (the Department) may grow or process medical marijuana.  Accordingly, the Department is only authorized to issue 25 permits throughout the entire state and must charge each permit holder a $10,000 permit application fee, a $200,000 permit fee, and a $10,000 yearly permit renewal fee.

Legislation: Committee Approves Agricultural Appropriations Bill
On April 19, 2016, United States House of Representatives Committee on Appropriations approved the Fiscal Year 2017 Agriculture Appropriations Bill (the Bill).  Of note, approval of the Bill included amendments that: 1) prevent the slaughter of horses for human consumption; 2) delay a new rule by USDA to change the requirements for approved SNAP retailers; and 3) prevent a Grain Inspection, Packers and Stockyards Administration regulation that would place restrictions on poultry, beef and pork marketing arrangements.

Dairy Production: USDA Updates Margin Protection Program for Dairy
On April 13, 2016, the United States Department of Agriculture Commodity Credit Corporation published notice in the Federal Register “amend[ing] the regulations for the Margin Protection Program for Dairy (MPP-Dairy) to allow dairy operations to update their production history when a son, daughter, grandchild, or spouse of a child or grandchild of a current producer participating in the MPP-Dairy program joins the operation” (81 FR 21699).  Additionally, the final “rule provides for a later due date for the payment of the entire premium and clarifies that dairy operations that purchase buy-up coverage on less than 90 percent of their production history will also receive catastrophic coverage on the balance, up to 90 percent of the production history.” The final rule became effective April 13, 2016.

Fruit Importation: APHIS Reopens Comment Period Regarding European Apples and Pears
On April 15, 2016, the United States Department of Agriculture animal and Plant Health Inspection Service published notice in the Federal Register that the agency was “reopening the comment period for our proposed rule that would amend the regulations to allow the importation of fresh apple and pear fruit from certain countries in the European Union into the continental United States, provided that the fruit is produced in accordance with a systems approach, as an alternative to importation under the current preclearance program” (81 FR 22203).  The proposed rule in question was originally published in the Federal Register January 20, 2016 (81 FR 3033).  The reopened comment period for the proposed rule closes May 5, 2016.

Marketing Order: USDA Adopts Final Rule on Tart Cherries
On April 18, 2016, the United States Department of Agriculture Agricultural Marketing Service published notice in the Federal Register that the agency was “adopting, as a final rule, without change an interim rule implementing a recommendation from the Cherry Industry Administrative Board (Board) that revised the exemption provisions under the marketing order for tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin” (81 FR 22511).  Accordingly, “[t]he interim rule changed the number of years that new market development and market expansion projects are eligible for handler diversion credit from one year to three years…[and] revised the composition of the subcommittee which reviews exemption requests.” The effective date for the affirmation of the interim rule as final rule was April 19, 2016.

Animal Drugs: FDA Publishes Final Rule for New Animal Drugs
On April, 18, 2016, the Department of Health and Human Services Food and Drug and Administration (FDA) published notice in the Federal Register of a final rule “amending the animal drug regulations to reflect application-related actions for new animal drug applications (NADAs) and abbreviated new animal drug applications (ANADAs) during January and February 2016” (81 FR 22520).  According to the final rule, “FDA is also informing the public of the availability of summaries of the basis of approval and of environmental review documents, where applicable.” The final rule became effective April 18, 2016.

FSMA: OSHA Publishes Final Rule for Employee Protection
On April 18, 2016, the United States Department of Labor Occupational Safety and Health Administration published notice in the Federal Register “provid[ing] the final text of regulations governing the employee protection (retaliation or whistleblower) provision found at section 402 of the FDA Food Safety Modernization Act (FSMA)” (81 FR 22530). The final rule became effective April 18, 2016.

Farmland Preservation: 32 New PA Farms Added to Protected List
On April 15, 2016, the Pennsylvania Department of Agriculture (PDA) issued a press release announcing that “an additional 1,792 acres on 32 farms in 14 counties were safeguarded through the state’s nation-leading farmland preservation program.”  According to PDA: “[s]ince the program began in 1988, federal, state, county and local governments have invested more than $1.3 billion to preserve 520,619 acres on 4,951 farms in 57 counties for future agricultural production.”  

Wednesday, April 20, 2016

Understanding Crop Insurance: Historical Perspective—Part 4

Written by M. Sean High—Staff Attorney

Stabilization and Expansion
After the 1944 amendments to the Agricultural Adjustment Act of 1938 provided reauthorization for federal crop insurance, the program gradually began to show improvement.  Significantly, in 1947, for the first time, premiums collected exceeded indemnity payments on combined operations.[1] Additionally, from 1948-1952 the total surplus of premiums collected exceeded indemnity payments by $2.25 million.[2]

Perhaps more importantly, the federal crop insurance program offered many farmers a valuable tool for handling uncontrollable operating factors.  Significantly, just as drought conditions in “the 1930s provided impetus for the establishment of government-sponsored crop insurance, so did the drought of the early 1950s demonstrate the continued benefits of the program.”[3] Accordingly, “[i]n 1951 and 1952, indemnities totaled $42 million and enabled many farmers to continue operations on a scale not otherwise possible.”[4]   

Throughout the 1950s, crop insurance continued to achieve financial stability.  Of note, for every year from 1957-1961, the total surplus of premiums collected exceeded total indemnity payments.[5] 

During the 1960s, the Federal Crop Insurance Corporation (FCIC) undertook a concerted effort to expand the program’s coverage numbers.  The effect was an increase in total coverage from $271 million in 1959 to $920 million in 1969.[6] Unfortunately, along with rapid program expansion, “[p]remiums did not keep pace with liabilities and indemnities.”[7]

As a result, in 1970, the Secretary of Agriculture formed a task force, consisting of nongovernmental insurance experts, to investigate FCIC practices.[8]  Ultimately, the task force determined that FCIC had incorrectly chosen to set crop insurance premiums through the use of a countywide base.  Instead, the task force proposed that the program should set premiums “based on individual farm risks.”[9]

In 1977, the General Accounting Office (GAO) released a report supporting the task force’s assertion that the federal crop insurance program would be better served basing premiums on individual farm risks.  According to GAO, a crop insurance program “based on rates individualized by farm…[would] be more equitable because the premium rate and amount of coverage would be based on the farm’s actual yield history.”[10] Furthermore, GAO “suggested that individualized protection would particularly increase participation among low-risk producers who would enjoy lower premiums and/or higher coverage than under the existing areawide system.”[11]

In response to GAO’s recommendations, “FCIC instituted a pilot program of individualized crop insurance in twenty counties for the 1978 crop year.”[12] In 1979, the pilot program was expanded to offer individualized crop insurance in forty counties.

In 1980 federal crop insurance underwent its most dramatic expansion with the enactment of the Federal Crop Insurance Act of 1980.  Designed to become the primary tool for providing farmers with disaster protection, the legislation “removed annual limits on expansion, previously set at 150 counties and three commodities, and authorized the expansion of the program to all counties with significant amounts of agriculture.”[13] Perhaps of greatest significance, to encourage participation in the crop insurance program, the Federal Crop Insurance Act of 1980 explicitly authorized the subsidizing of crop insurance premiums.[14]

Farmer response to the new program was resoundingly positive.  As a result, in 1981 total acreage insured under the crop insurance program increased by 81%; up from 26.3 million acres to 47.7 million acres.[15]   



[1] Federal Crop Insurance 1938-1982, Randall A. Kramer, Agricultural History, Vol. 57, No. 2 (Apr., 1983), p. 193
[2] Id at p. 194
[3] Id at p. 193
[4] Id.
[5] Id at p. 195
[6] Id at pp. 195-196
[7] Id at p. 196
[8] Id
[9] Id
[10] Id at p. 197
[11] Id
[12] Id
[13] Id at p. 198
[14] Id
[15] Id at p. 199

Monday, April 18, 2016

Understanding Crop Insurance: Historical Perspective—Part 3

Written by M. Sean High—Staff Attorney

Growing Pains
With the passage of the Federal Crop Insurance Act of 1938, federal crop insurance was initially only available for wheat planted in 1939.  To administer the crop insurance program, the enacted legislation created the Federal Crop Insurance Corporation (FCIC), an agency within the United States Department of Agriculture.  Accordingly, FCIC was to be managed by “a board of directors appointed by the Secretary of Agriculture.”[1]

The first version of federal crop insurance was “authorized for wheat planted for harvest in 1939” and provided coverage for losses resulting from “drought, flood, hail, wind, winterkill, lightning, tornado, insect infestation, plant disease, and such other unavoidable causes as may be determined by the Board.”[2] This initial version of federal crop insurance, however, did not prove to be successful.

In the first year of its offering, the crop insurance program made indemnity payments to nearly one-third of all the 165,775 enrolled farmers.[3]  Significantly, overall national participation in the program was relatively low which led to these indemnity payments greatly exceeding the total premiums received.[4] While participation in the program would gradually increase in 1940 to 360,596 farms and in 1941 to 371,392 farms, these relatively low enrollment numbers resulted in the program losing money each year as indemnity payments made to farmers continued to exceed the total amount of premiums collected.[5]

In 1941, the federal crop insurance program was expanded to include coverage for cotton.  Subsequently, in 1942 and 1943, crop insurance results for cotton and wheat mirrored those for wheat alone as “[i]ndemnities greatly exceeded premiums during both years.”[6] As a result of these poor performances, in 1943, Congress passed legislation that “prohibited the FCIC from writing any new crop insurance policies after 31 July 1943.”[7] Nevertheless, the suspension of the crop insurance program would prove to be temporary.

In late 1944, in an attempted to correct the problems with the original version of crop insurance, Congress passed legislation that amended the Agricultural Adjustment Act of 1938.   The result of the amendment was not only a restoration of crop insurance, but an expansion the program.

Under the 1944 amendment, FCIC was authorization to provide crop insurance coverage for not only wheat and cotton, but also for flax crops.  Additionally, policies could now be written to “include losses resulting from frost, fire, excessive rain, snow, wildlife, and hurricane.”[8] Importantly, coverage was restricted to certain designated counties and FCIC was given the power “to refuse to sell insurance in high-risk areas.”[9]

Significant to achieving the goal of expanded program participation, the new legislation authorized FCIC to begin implementing “experimental crop insurance programs for ‘corn, dry beans, oats, barley, rye, tobacco, rice, peanuts, soybeans, sugar beets, sugar-cane, timber and forests, potatoes and other vegetables, citrus and other fruits, tame hay, and any other agricultural commodity, if sufficient actuarial data are available.’”[10] Immediately, FCIC began offering crop insurance “on a trial basis in 1945 for corn in fifteen counties and tobacco in twelve.”[11]      



[1] Federal Crop Insurance, Randall A. Kramer, Agricultural History, Vol. 57, No. 2 (Apr., 1983), p. 188
[2] Id.
[3] Id. at p. 189
[4] Id.
[5] Id.
[6] Id. at p. 191
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id. at p. 192

Thursday, April 14, 2016

Agricultural Law Weekly Review—April 14, 2016

Written by M. Sean High – Staff Attorney

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

Animal Welfare: USDA Proposes Rule Amending Organic Livestock and Poultry Production Requirements
On April 13, 2016, the United States Department of Agriculture’s Agricultural Marketing Service published a proposed rule in the Federal Register that would amend the organic livestock and poultry production requirements (81 FR 21955).  According to the proposed rule, the proposal would “add new provisions for livestock handling and transport for slaughter and avian living conditions; and expand and clarify existing requirements covering livestock health care practices and mammalian living conditions.” The comment period for the proposed rule closes June 13, 2016.

Pipelines: Proposed Rule on Safety of Transmission and Gathering Lines Published
On April 8, 2016, the United States Department of Transportation Pipeline and Hazardous Materials Safety Administration published notice of a proposed rule in the Federal Register “to revise the Pipeline Safety Regulations applicable to the safety of onshore gas transmission and gathering pipelines” (81 FR 20721).  According to the proposed rule, the proposal is intended to provide “additional safety measures to increase the level of safety for those pipelines that are not in HCAs [High Consequence Areas] as well as clarifications and selected enhancements to integrity management requirements to improve safety in HCAs.” The comment period for the proposed rule closes June 7, 2016.

Animal Classification: USDA Amends Definition of “Roaster” Chickens
On April 13, 2016, the United States Department of Agriculture Food Safety and Inspection Service published notice in the Federal Register of a final rule “amending the definition and standard of identity for the ‘roaster’ or ‘roasting chicken’ poultry class to better reflect the characteristics of ‘roaster’ chickens in the market today” (81 FR 21706). According to the final rule, because “[g]enetic changes and management techniques have continued to reduce the grow-out period and increased the RTC [ready-to-cook] weight for this poultry class,” the new definition of roaster “remove[s] the 8-week minimum age criterion and increase[s] the RTC carcass weight from 5 pounds to 5.5 pounds.” The effective date for the final rule is January 1, 2018. 

Industrial Hemp: Legislation Moves to Senate Committee
On April 12, 2016, Pennsylvania House Bill 967 (HB 967), legislation that would legalize the growth and cultivation of industrial hemp for research purposes, was referred to the Pennsylvania Senate’s Agricultural and Rural Affairs Committee. The action comes as a result of the recent unanimous vote by the Pennsylvania House of Representatives to pass HB 967 (see previous Penn State Agricultural Law Blog article).

Food Safety: USDA Proposes Permitting Honduran Poultry into the U.S.
On April 13, 2016, the United States Department of Agriculture Food Safety and Inspection Service (FSIS) published notice in the Federal Register of a proposed rule for the inclusion of Honduras on the list of countries eligible to export poultry products into the United States (81 FR21758).  According to the proposed rule, “FSIS review of Honduras' laws, regulations, and inspection system demonstrated that its poultry slaughter inspection system is equivalent to the system FSIS has established under the Poultry Products Inspection Act (PPIA) and its implementing regulations.” The comment period for the proposed rule closes June 13, 2016.

Animal Slaughter: Vermont Senate Committee Discusses On-Farm Slaughter Bill
On April 12, 2016, the Vermont Senate Committee on Agriculture held discussion regarding Vermont House Bill 860 (H.860); legislation that would extend an exemption authorizing on-farm animal slaughter activities through July 1, 2019.  The action came as a result of a March 17, 2016 vote by the Vermont House of Representatives to pass H.860.  Currently, Vermont’s law providing exemption for on-farm animal slaughter is scheduled to expire on July 1, 2016.

SNAP: Information Collection Request Approved
On April 8, 2016, the United States Department of Agriculture Food and Nutrition Service published notice in the Federal Register of approval of a Supplemental Nutrition Assistance Program (SNAP) Final Rule Information Collection Request (ICR) (81 FR 20524). The ICR approval was published in connection to a final rule, published on January 19, 2016, amending SNAP operations, reporting, reviews, definitions, and coupons (81 FR2725).    

Wednesday, April 13, 2016

Understanding Crop Insurance: Historical Perspective—Part 2

Written by M. Sean High—Staff Attorney

Movement towards Federal Legislation
In 1932, “at a time of near collapse of the agricultural economy,” President Franklin Roosevelt named Henry A. Wallace as Secretary of Agriculture.[1] In 1936, under the direction of Wallace, the United States Department of Agriculture (USDA) began to actively investigate the possibility of a federal crop insurance program.  Significantly, research regarding wheat yield results, collected from individual farms led USDA to make a preliminary analysis that “wheat data could provide an actuarial basis for crop insurance.”[2]   

Meanwhile, in both 1934 and 1936, large portions of the U.S. agricultural sector experienced significant difficulties due to widespread drought.  The effects of these adverse weather conditions caused the general public to become increasingly interested in the possible benefits that could be achieved through the use of crop insurance.[3]  As a result, crop insurance was listed among the campaign issues of the 1936 presidential election.[4]

While both of the presidential candidates in 1936 expressed their support for the concept of crop insurance, they disagreed on structure and implementation.  President Roosevelt favored a “government-sponsored program,” while his Republican opponent, Governor Alfred M. Landon of Kansas, “believed a private approach was preferable.”[5]   

Shortly after Roosevelt’s 1936 presidential victory, the President’s Committee on Crop Insurance released a report recommending the establishment of a federal crop insurance program that applied to wheat only.  According to the report, a federal crop insurance program should “be administered by the USDA with policies sold by local committees or boards of directors who could require minimum levels of participation before offering insurance in a given county or region.”[6]

Based on the findings of the President’s Committee report, on March 30, 1937, the U.S. Senate passed a crop insurance bill to establish the President’s Committee’s recommendations.  In time, U.S. House of Representatives included legislation “nearly identical to the Senate bill” as part of the Agricultural Adjustment Act of 1938.[7]  As a result, the Federal Crop Insurance Act (FCIA) was enacted on February 16, 1938 for the purpose of “promot[ing] the national welfare by alleviating the economic distress caused by wheat crop failures due to drought and other causes, by maintaining the purchasing power of farmers, and by providing for stable supplies of wheat for domestic consumption.”[8]




[1] Federal Crop Insurance 1938-1982, Randall A. Kramer, Agricultural History, Vol. 57, No. 2 (Apr., 1983), p. 184
[2] Id. at p. 185
[3] Id.
[4] Id.
[5] Id. at p. 186
[6] Id. at pp. 186-187
[7] Id. at p. 188
[8] Id.