Agricultural Law in the Spotlight - June 4, 2020

U.S. Appeals Court Invalidates FIFRA Registrations of Dicamba Products XtendiMax, Engenia and FeXapan.  

Written By:

Brook Duer, Staff Attorney

On June 3, 2020, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit issued a decision overturning and vacating the U.S. Environmental Protection Agency’s October 31, 2018 approvals of conditional two-year amended product registrations of three dicamba herbicide products (Monsanto/Bayer’s XtendiMax, BASF’s Engenia and Corteva’s FeXapan) for over-the-top use on soybeans and cotton, effective immediately. National Family Farm Coalition, et al. v. EPA, No. 19-70115.  The Court held that the approvals violated the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. § 136 et seq. 

Since the prior registrations for those products expired by December 2018, none of the three products have a valid registration at this time and are therefore prohibited from being used or sold in the U.S. for those purposes. 

Syngenta’s dicamba herbicide product approved for over-the-top use on soybeans and cotton, Tavium, was not a subject of the petition for review because it was first registered and marketed for this use in April 2019, after the petition for review was filed.

The disruption to farming activities for the 2020 growing season, for which planning, purchasing of seed, planting and scheduled herbicide use may have already been completed, was acknowledged by the Court in stating,

    “We are aware of the practical effects of our decision. Among other things, we are aware of the adverse impact on growers who have already purchased [dicamba-tolerant] soybean and cotton seeds and dicamba products for this year’s growing season, relying on the availability of the herbicides for post-emergent use . . . We acknowledge the difficulties these growers may have in finding effective and legal herbicides to protect their DT crops if we grant vacatur. They have been placed in this situation through no fault of their own. However, the absence of substantial evidence to support the EPA’s decision compels us to vacate the registrations.”  

The current FIFRA registration for Tavium for over-the-top use on soybeans and cotton is dated April 5, 2019, and remains valid until December 20, 2020.  The product can still be used and sold in the U.S. for those purposes at this time.  

 The Ninth Circuit panel succinctly summarized the reasons for its decision as follows:

 

   “We hold that the EPA’s October 31, 2018, decision, and the conditional new-use registrations of XtendiMax, Engenia, and FeXapan for use on DT soybean and cotton that are premised on that decision, violate FIFRA. As we will explain in more detail below, FIFRA provides two requirements for conditional amendment of an existing registration. The EPA must determine that (i) the applicant has submitted “satisfactory data,” and (ii) the amendment will not “significantly increase the risk of any unreasonable adverse effect on the environment.” 7 U.S.C. § 136a(c)(7)(B). We need not decide whether substantial evidence supports a finding that the applicants submitted satisfactory data—although, as we discuss below, the data have several flaws—because we hold that the EPA substantially understated risks that it acknowledged and failed entirely to acknowledge other risks.

The EPA substantially understated three risks that it acknowledged. The EPA substantially understated the amount of DT seed acreage that had been planted in 2018, and, correspondingly, the amount of dicamba herbicide that had been sprayed on post-emergent crops. Further, the EPA purported to be agnostic as to whether formal complaints of dicamba damage under-reported or overreported the actual damage, when record evidence clearly showed that dicamba damage was substantially under-reported. Finally, the EPA refused to estimate the amount of dicamba damage, characterizing such damage as “potential” and “alleged,” when record evidence showed that dicamba had caused substantial and undisputed damage.

The EPA also entirely failed to acknowledge three other risks. The EPA entirely failed to acknowledge record evidence showing the high likelihood that restrictions on OTT dicamba application imposed by the 2018 label would not be

followed. The EPA based its registration decision on the premise that the label’s

mitigation measures would limit off-field movement of OTT dicamba. These

measures became increasingly restrictive with each iteration of OTT dicamba

labels. Record evidence shows that the restrictions on the 2016 and 2017 labels

had already been difficult if not impossible to follow for even conscientious users;

the restrictions on the 2018 label are even more onerous. Further, the EPA entirely failed to acknowledge the substantial risk that the registrations would have anticompetitive economic effects in the soybean and cotton industries. Finally, the EPA entirely failed to acknowledge the risk that OTT dicamba use would tear the social fabric of farming communities.

   We therefore vacate the EPA’s October 31, 2018, registration decision and

the three registrations premised on that decision. Because our vacatur is based on

our holding under FIFRA, we do not reach the question whether the registration

decision also violates the Endangered Species Act.” 

Links to the decision and the current Tavium registration, as well as to the April 21, 2020, oral argument by the parties’ legal teams before the U.S. Court of Appeals for the Ninth Circuit, are provided at the links embedded herein, or at the following:

Decision

https://law.justia.com/cases/federal/appellate-courts/ca9/19-70115/19-70115-2020-06-03.html

Tavium FIFRA Registration

https://www3.epa.gov/pesticides/chem_search/ppls/000100-01623-20190405.pdf

Oral Argument:

https://www.ca9.uscourts.gov/media/view_video.php?pk_vid=0000017284

This material is based upon work supported by the National Agricultural Library, U.S. Department of Agriculture.

Agricultural Law in the Spotlight: Apprentices, Interns, and Volunteers

Written by M. Sean High—Staff Attorney

To help agricultural producers better understand their legal obligations relating to the agricultural workforce, the Penn State Center for Agricultural and Shale Law is publishing a series of Agricultural Law in the Spotlight articles addressing key farm labor issues.  The first article in the series covered an agricultural producer’s basic legal obligations under the Fair Labor Standards Act.  This article will address legal considerations regarding the use of workers who are classified as apprentices, interns, and/or volunteers.

Proper Classification of Agricultural Workers

As was discussed in the previous article, the Fair Labor Standards Act of 1938 (FLSA) sets the federal standards for overtime pay, minimum wage, and child labor.  FLSA requires an employment relationship.  If a worker is not an employee, then FLSA requirements do not apply.  

Under FLSA, workers employed solely in agriculture are not entitled to overtime pay.  Agricultural employees, however, may be entitled to minimum wage as FLSA provides only limited exemptions for agricultural operations.  As a result, agricultural producers should determine if workers who they consider to be apprentices, interns, or volunteers are actually employees who are entitled to FLSA’s minimum wage protection.  The legal obligations for which an agricultural operation is responsible depend upon the specific legal status – employee, apprentice, intern, or volunteer – of their workers.  Thus, it is imperative that a farm properly categorize their workers.  When a farm has work performed by someone claimed to be an apprentice, intern, or volunteer, this worker must meet the appropriate legal standard for his or her position.

Apprentices

An apprentice is a person who agrees to work for an employer for a fixed time-period, at wages that are usually relatively low, in exchange for learning a trade.  In short, an apprenticeship is a job with training.  Therefore, apprentices are employees covered under FLSA. 

Many industries have historically used the apprentice system to pass on specialized skills from a master practitioner to an interested student.  For example, in many states (though not in Pennsylvania) an individual can acquire a barber’s license through either attending barbering school or serving an apprenticeship in a licensed barbershop.  In those instances, the apprentice would receive pay while working the hours necessary to fulfill the state’s licensing requirements.  

Frequently, industries create formal apprenticeship programs that are registered with the U.S. Department of Labor or an approved State Apprenticeship Agency.  Apprenticeships under these programs generally last from one to six years and can be sponsored by an individual business, an employer association, or in partnership with a labor organization.  These types of apprenticeships usually involve both on-the-job training and related classroom instruction conducted under the supervision of a highly skilled trade professional.    

Recently, members of the agricultural industry in Pennsylvania have created two new formal apprenticeship programs designed to pass on important knowledge and skills to a new workforce.  As with all formal state apprenticeship programs, apprentices in both programs are considered employees under FLSA. 

First, on October 10, 2017, the Pennsylvania Department of Agriculture announced the creation of an agricultural equipment service technician apprenticeship program.  Under the program, five Pennsylvania equipment companies have agreed to hire and provide mentors to the employee apprentices.  Sponsored by the Northeast Equipment Dealers Association, the program is intended to resolve anticipated workforce shortfalls resulting from the retirement of more than 1,000 of Pennsylvania’s agricultural equipment service technicians by 2027.  

Second, on March 21, 2019, the Pennsylvania Association for Sustainable Agriculture (PASA) announced state approval of a formal apprenticeship program for vegetable growers.  Called the Diversified Vegetable Apprenticeship, the new program was developed by PASA and provides a way for beginning farmers to train under master growers.  The program is intended to help beginning farmers acquire the skills necessary to start their own vegetable farms and to assist master growers meeting their employment needs.  Since 2016, PASA also has offered an apprenticeship focused on dairy grazing in conjunction with Wisconsin-based Dairy Grazing Apprenticeship.

Interns

Internships are positions held by workers—called interns—for the primary purpose of providing work experience for these interns.  If a position meets the requirements necessary to qualify as an internship, the intern is not considered to be an employee and is therefore not required to be provided  compensation for the work performed.  

FLSA requires that for-profit businesses—as opposed to nonprofit organizations—pay all employees for their work.  In certain specific situations, however, a worker at a for-profit business could be considered an intern and not an employee.  In those circumstances, because an employment relationship would not exist, FLSA compensation requirements would not apply to the intern.

Whether the worker at a for-profit agricultural business is considered to be an employee or an intern will depend on who primarily benefits from the work being performed—the business or the worker.  If the work being performed is primarily for the benefit of the agricultural business, then the worker is an employee who is entitled to wages.  If the work being performed is primarily for the benefit of the worker, then the worker is an intern and not entitled to wages. 

According to courts that have ruled on this issue, seven factors are to be considered when determining when work at a for-profit business is primarily for the benefit of the worker and may qualify as an internship:

1. Both the business owner and the worker understand that there is no expectation of compensation for the work to be performed;
2. The training provided is like that given in an educational environment; 
3. The work is tied to the worker’s formal education (such as receiving academic credit for the work performed); 
4. The work accommodates the worker’s academic commitments by corresponding to the worker’s academic calendar; 
5. The duration of the work is limited to the time the worker receives beneficial learning; 
6. The worker does not displace paid employees; and 
7. Both the business owner and the worker understand that the worker is not entitled to a job after the work period has been completed.

No single factor in the primary benefit test is intended to be dispositive in the determination of whether the work being performed is for the primary benefit of the worker.  Instead, the circumstances of each work arrangement are to be assessed individually.  

Volunteers

A volunteer is an individual that freely gives of his or her time in performing work-related tasks.  Unlike an apprentice, a volunteer has no expectation of wages nor of receiving job training.  Unlike an intern, a volunteer has no expectation of receiving work experience.  Instead, a volunteer is merely demonstrating their generosity through contributing time to a charitable or public purpose. 

FLSA does not apply to qualifying volunteer work.  Accordingly, an individual may volunteer his or her time to a public entity such as a local fire department or public library and not be covered under FLSA.  Additionally, an individual may generally volunteer his or her time to a nonprofit organization such as a church or civic organization and not be covered under FLSA.  An individual, however, may not volunteer his or her time to a for-profit business. 

While an individual may volunteer his or her time to a nonprofit organization, certain restrictions apply.  Generally, an individual may not volunteer to operate any commercial activity that a nonprofit organization offers to the public.  For example, a volunteer may not operate a cash register in a nonprofit organization’s retail gift shop. 

Additionally, volunteers may not be used to displace a nonprofit organization’s employees or to perform work that is normally performed by the nonprofit organization’s employees.  For example, if a nonprofit organization normally employs workers to unload trucks in its warehouse, the nonprofit organization may not bring in volunteers to unload trucks in its warehouse.

Finally, an employee of a nonprofit organization may not volunteer to perform the same type of work at the nonprofit organization for which the worker is currently employed.  For example, a nonprofit organization employee hired to unload trucks in the nonprofit organization’s warehouse may not volunteer to unload trucks in the nonprofit organization’s warehouse after the employee’s work shift has ended.

Conclusion

While agricultural producers may potentially utilize apprentices, interns, and/or volunteers to perform work, they must fully consider their legal obligations under FLSA.  First, an apprentice is an employee under FLSA and such workers must receive both on-the-job training and wages for their efforts.  Next, an intern is not an employee under FLSA as the work performed by the intern is primarily for the benefit of the intern.  Interns are not entitled to wages.  Finally, a volunteer is not an employee under FLSA and is not entitled to wages.  Individuals, however, may not volunteer their services to for-profit businesses and are limited in the types of activities that they perform for a nonprofit organization.

References

U.S. Department of Labor, Apprenticeship Resources

https://www.dol.gov/apprenticeship/

U.S. Department of Labor Wage and Hour Division, Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

https://www.dol.gov/whd/regs/compliance/whdfs71.pdf

U.S. Department of Labor Wage and Hour Division, Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA)

https://www.dol.gov/whd/regs/compliance/whdfs14a.pdf

U.S. Department of Labor, Fair Labor Standards Advisor, Volunteers

https://webapps.dol.gov/elaws/whd/flsa/docs/volunteers.asp

Agricultural Law in the Spotlight: The Fair Labor Standards Act

Written by M. Sean High—Staff Attorney

Agricultural producers face numerous complex federal and state agricultural labor laws.  Unfortunately, failure to comply with these laws could result in costly sanctions.  To assist interested individuals to better understand an agricultural producer’s labor legal obligations, the Penn State Center for Agricultural and Shale Law is publishing a series of Spotlight articles addressing key farm labor issues.  The first article in the series covers an agricultural producer’s legal obligations under the Fair Labor Standards Act.

The Fair Labor Standards Act

The Fair Labor Standards Act of 1938 (FLSA) sets the federal standards for overtime pay, minimum wage, and child labor.  FLSA requires an employment relationship and is not applicable to independent contractors.  Nevertheless, even if an employment relationship does exist, FLSA may provide an agricultural employer with an exemption to the law’s requirements.

Employee or Independent Contractor

Because FLSA applies only where an employment relationship exists, an agricultural producer must first determine whether a given worker is an employee or an independent contractor.  Courts have ruled that a worker is generally considered to be an employee of someone who has the right to control the worker’s behavior regarding the work that will be done.  This right to control a worker’s behavior can be demonstrated through instructions, training, and financial aspects of the job being performed.  Such instructions could be telling a worker when, where, and how to work; providing the tools and equipment that are to be used; and assigning the order in which tasks are to be performed.  Additionally, employers often train workers to perform tasks in a certain way, while independent contractors ordinarily use their own methods.  Finally, an employee is generally paid a wage based on an hourly, weekly, or monthly basis.  An independent contractor, however, is generally paid according to a flat fee or based upon time and material.

Coverage

A business or worker is subject to FLSA if either the enterprise coverage or the individual coverage applies.  Under the enterprise coverage, FLSA applies to all businesses that have at least two employees and at least $500,000 a year in gross receipts.  Under the individual coverage, FLSA applies to workers who are engaged in interstate commerce, in the production of goods for commerce, or in any closely-related process or occupation directly essential to such production.  As a practical matter, nearly all agricultural employment will fall under one of the two types of FLSA coverage, but as described below, many agricultural employers are exempt from some of the law’s requirements.

FLSA Definition of Agriculture

An employee covered by FLSA may fall under one of the agricultural exemptions provided by the statute.  For an agricultural exemption to apply, a worker must be performing agricultural work. 

FLSA defines agriculture as farming and all its branches.  Agriculture also is defined to include any practices which are performed either by a farmer or on a farm as an incident to or in conjunction with a farming operation.  Things to consider when determining whether an activity is incident to or in conjunction with a farming operation include the following:

• Whether the activity is an established part of agriculture;
• Whether the activity is subordinate to the farming operation;
• Whether the activity is an independent business; and
• Whether the activity is ordinarily performed by farmers incidentally to their farming operations. 

When assessing whether an activity is ordinarily performed by farmers incidentally to their farming operations, an employer must look at the proportion of other farmers producing the same commodity who also perform the activity.  For example, a farmer who wants to demonstrate that the processing of milk into yogurt meets the definition of agriculture must consider how many dairy farmers, among all dairy farmers, also engage in the activity of processing their milk into yogurt.

Overtime Pay

Employees covered by FLSA generally must receive overtime pay of at least time and one-half of their regular rate of pay for hours worked over 40 in a workweek.  FLSA, however, contains an agricultural exemption for overtime pay.  Under FLSA, workers employed solely in agriculture are not entitled to overtime pay.

Even with the application of FLSA’s agricultural exemption for overtime pay, employers must still check with state overtime laws to see if an agricultural exemption exists.  For example, under Pennsylvania law, labor on a farm is exempt from Pennsylvania overtime requirements.  In California, however, overtime pay is required for agricultural employees working over 10 hours in a day or over 60 hours in a week.

Minimum Wage

Employees covered by FLSA generally must be paid a federal minimum wage rate of $7.25 per hour.  The minimum wage rate must be paid regardless of whether the method of payment is hourly, salary, or piece rate.  FLSA, however, contains a partial exemption applicable to agriculture.  Under FLSA, agricultural employees are not entitled to minimum wage if one of the below-listed FLSA agricultural exemptions applies:

• The worker is an immediate family member of their employer (An immediate family member is limited to a parent, spouse, child, step-child, foster child, step-parent, and foster parent);
• The agriculture employer did not utilize more than 500 “man days” of agricultural labor in any calendar quarter of the preceding calendar year (A “man day” is any day during which an employee performs agricultural work for at least one hour);
• The worker is principally engaged in the range production of livestock;
• The worker is a local hand harvest laborer who commutes daily from his/her permanent residence, is paid on a piece-rate basis in traditional piece-rated occupations, and was engaged in agriculture fewer than 13 weeks during the preceding calendar year; or
• The worker is a non-local minor, 16 years of age or under, who is a hand harvester, is paid on a piece-rate basis in a traditional piece-rated occupation, is employed on the same farm as his/her parent and is paid the same piece-rate as those over 16. 

Even when a FLSA agriculture exemption to the federal minimum wage applies, employers must always check state laws to see if the agricultural labor is subject to the state minimum wage.  For example, under Pennsylvania law, labor on a farm is exempt from the state’s minimum wage rate of $7.25 per hour.  If, however, the employee is classified under Pennsylvania law as a seasonal farm worker, the employee must be paid at least the statutory minimum wage or a piece-rate equivalent.

Child Labor

Anyone under the age of 18 years is legally considered to be a minor.  Unless an exemption applies, FLSA sets the minimum age for employment in hazardous occupations at 18 years of age and the minimum age for employment in non-hazardous occupations at 16 years of age.  Additionally, minors who are at least 14 years of age may be employed in certain limited occupations that carry restrictions on hours and work conditions.  FLSA, however, does provide an exemption for minors employed in agriculture

FLSA establishes the following minimum age requirements for minors employed in agricultural occupations:

• Regardless of age, if a minor is employed by a parent on a farm owned or operated by the parent, the minor may work without any restriction;
• Minors who are 16 years of age may work in any agricultural job, whether hazardous or not, with no work hour restrictions;
• Minors who are 14 or 15 years old may work outside of school hours in any non-hazardous agricultural job;
• Minors who are 12 or 13 years old may work outside of school hours in any non-hazardous agricultural job at the farm where their parent works or with written parental consent; and
• Minors who are under 12 years old, with written parental consent, may work outside of school hours in any non-hazardous agricultural job on a small farm that is exempt from the federal minimum wage provisions. 

While FLSA may provide hour and hazard exemptions for minors that work on a family farm or for any minor 16 years or older, agricultural employers must still look to other laws to see if the minor is permitted to engage in a specific activity.  For example, FLSA would not prevent a 17-year-old from operating a forklift on a farm.  Under the Occupational Safety and Health Administration regulations, however, it is a violation of federal law for anyone under 18 years of age to operate a forklift.

Conclusion

Agricultural employers must always be aware of FLSA requirements establishing federal standards for overtime pay, minimum wage, and child labor.  FLSA does provide agricultural exemptions that may be applicable depending upon the nature of the farm and the type of work that is being performed.  For an agricultural exemption to apply, a worker’s employment activity must meet FLSA’s definition of agriculture.  Finally, agricultural employers must be mindful that even if exempted under FLSA, other federal and state laws may still apply.

References

29 USC Ch. 8: FAIR LABOR STANDARDS

http://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter8&edition=prelim

U.S. Department of Labor, Wage and Hour Division, Fair Labor Standards Act in Agriculture: https://www.dol.gov/whd/ag/ag_flsa.htm

U.S. Department of Labor, Wage and Hour Division, Fact Sheet #12: Agricultural Employers Under the Fair Labor Standards Act (FLSA): https://www.dol.gov/whd/regs/compliance/whdfs12.htm

U.S. Department of Labor, Wage and Hour Division, Fact Sheet #40: Overview of Youth Employment (Child Labor) Provisions of the Fair Labor Standards Act (FLSA) for Agricultural Occupations:

https://www.dol.gov/whd/regs/compliance/whdfs40.htm

Agricultural Law in the Spotlight: Federal Court Dismisses Des Moines Water Works Case

Written by Robert T. Caccese—Staff Attorney

On March 17, 2017, the U.S. District Court, N.D. Iowa, Western Division dismissed a lawsuit brought by an Iowa municipal water utility against thirteen Iowa agricultural water drainage districts (Board of Water Works Trustees of the City of Des Moines, Iowa v. SCA County Board of Supervisors, 2017 WL 1042072). The Des Moines Water Works (DMWW) is a municipal water utility (political subdivision) charged with providing drinking water to an estimated 500,000 citizens in the Des Moines area. The utility draws water primarily from the Raccoon and Des Moines Rivers, with the Raccoon draining over two million acres across seventeen counties. As a public water supplier, DMWW is mandated to meet maximum contaminant levels when serving water to customers, per obligations set out in state laws and the federal Safe Drinking Water Act. Included as a contaminant are nitrates, a common by-product of fertilizers in agricultural field runoff. Since the mid-1990s, nitrate concentrations in the Raccoon River have increased beyond acceptable standards set out by the U.S. Environmental Protection Agency, requiring DMWW to increase its resources to treat water from the river into safe drinking levels.. Specifically, DMWW stated three water treatment plants had been in continuous operation for extended time periods during 2015 and forced the authority to explore options of designing a new multi-million dollar nitrate-removal facility with larger capacities.

DMWW pointed to Iowa drainage districts as the primary culprits for increased nitrate levels in Raccoon River water. Drainage districts are political subdivision creations of Iowa with the purpose of allowing wetland areas to be converted into productive agricultural land. Districts enable property owners to fund improvements together, specifically through placement of tiles in swales, ditches, or man-made canals, which collect and convey water to streams and rivers. Importantly, the Iowa Legislature limited the powers of drainage districts to solely draining water from overlying land when it created the entities. In this specific part of Iowa, thirteen drainage districts contribute flows to the Raccoon River.

In 2015, DMWW filed suit in U.S. District Court, N.D. Iowa, Western Division against the Sac County Board of Trustees as Trustees of Drainage Districts, et. al. (thirteen districts total), alleging ten causes of action ranging from Clean Water Act violations to constitutional claims. Specifically, DMWW alleged the actions of the drainage districts caused additional costs necessary for complying with state and federal water regulations because of increased nitrate contributions into the Raccoon River. Another disagreement among parties focused on whether districts were considered “point sources” under the confines of the Clean Water Act; thus requiring a National Pollution Discharge Elimination System (NPDES) permit to discharge into navigable waterways. Simply put, the case centered on which political entity retained responsibility to pay to comply with state and federal regulations. After motions for summary judgment by the defendants, the District Court certified four questions to the Iowa Supreme Court for clarification of state law to proceed with the case. Specifically, the District Court inquired about implied immunity for drainage districts, due process and equal protection violations, and property interests in regards to takings claims by the government.

With regard to immunity of drainage districts to suits for damages and/or injunctive relief, the Iowa Supreme Court focused on the text of Iowa Code Chapter 468, which lays out the powers of drainage districts. The Court reasoned under the express language of the Code, “drainage districts are limited in their powers to restoring, maintaining, and increasing the flow of water through a drainage system.” References to removing contaminants from water or the quality of the water filtered through districts is expressly missing from the Code. Because of a lack of duty to remove nitrates, redressing the perceived injury to DMWW is not possible by the drainage districts because of their limited powers conferred to them by the Legislature. As a result, DMWW lacked standing to further address the notion of whether the districts could be considered “point sources” under the Clean Water Act. The Court held that while DMWW may have suffered an injury, “drainage districts lack the ability to redress that injury.”  The District Court held the first two claims failed for this reason and granted defendants summary judgment motion.

For Counts III through X, DMWW argued the grant of immunity to drainage districts violated Due Process, Equal Protection, and Takings clauses of the U.S. Constitution.  However, the District Court noted that because DMWW is a public entity created by the Iowa Legislature, they cannot invoke protections of the Fourteenth Amendment (reserved for private entities). Furthermore, DMWW’s claim “was not based on a suspect class or fundamental right”, leading to a rational basis review by the Court. Based on the limited powers and purpose conferred to districts in their enabling legislation, the Court ruled a rational basis existed for their immunity from suit and compliance of the Equal Protection clause. Although DMWW argued irrational results in nutrient management strategy obligations cause unfairness in compliance, the District Court viewed this as a policy issue best served for the Iowa Legislature to address. In regards to alleged Due Process violations by the districts, the District Court cited no authority supported a fundamental right to clean water. Instead, the Court noted “DMWW had continuous access to Raccoon River water and districts lack the broad police powers utilized by counties and other political subdivisions,” as noted by the Iowa Supreme Court.

Finally, DMWW’s takings claim was rejected by both the Iowa and District Courts. The Takings clause of the Fifth Amendment requires compensation where the government takes “private property” for public use. In this case, water in Iowa is owned by the state in trust for the public. DMWW does not own the water, nor was denied access to it. Because Raccoon River water is considered a public resource, a taking did not occur. As a result, the Court dismissed Counts III-X and granted the drainage districts motion for summary judgement, effectively dismissing the case altogether. In sum, DMWW must continue to treat collected Raccoon River water to comply with state and federal laws and may not sue drainage districts. Instead, DMWW consumers will likely see fees increase to compensate for increased treatment costs. Overall, the Court’s ruling allows the possibility of new dialogue and collaboration among parties to develop solutions to the water quality issue, while sustaining Iowa farming practices. Significantly, the ruling may provide insight for other states faced with similar issues in this context, in particular Pennsylvania.  

Agricultural Law in the Spotlight: Understanding Legal Protections and Potential Liabilities Associated with Seed Use in Pennsylvania

Written by Ross Pifer and M. Sean High

With the calendar marking the start of spring, much of Pennsylvania’s agricultural industry has turned its attention to the upcoming planting season.  As they do each year, farmers are making decisions about the varieties of seed that they will be purchasing as well as where they will be purchasing this seed.  In making these important decisions, farmers should be aware that there are several laws – at both the state and federal level – addressing their purchase and use of seed.

This article will discuss the Pennsylvania Seed Act, federal patent law, and the federal Plant Variety Protection Act.  These laws provide some protections for farmers, but they also subject farmers to potential liability where seed is misused in violation of applicable intellectual property rights.  Farmers need to be aware that they may be opening a door to legal liability unknowingly through their seed purchasing decisions.  How can farmers protect themselves from potential liability?  Farmers simply should look for, and read, the label or tag on the seed package or container.  By doing so, farmers can ensure themselves that they are purchasing quality seed and that the intended use of the seed will not violate intellectual property rights conferred by federal law.    

In Pennsylvania, all seed sales are regulated by Act 164 of 2005, also known as the Pennsylvania Seed Act.  Under the Seed Act, all seed distributors must obtain an annual license from the Pennsylvania Department of Agriculture and perform certain testing to ensure the quality of the seed that is being sold.  In the retail market, the Seed Act requires that all packages or containers of seed have a label that includes the name and address of the distributor, the lot number, information about the purity and germination testing of the seed, and other data depending on the specific type of seed.  In addition to potentially decreasing yields by planting seeds with an inferior germination ratio, farmers who buy unlabeled seed risk introducing unwanted weeds into their fields.  If any seed is sold in Pennsylvania without a valid label, that seed has been sold illegally.      

While proper labeling of seed is required under Pennsylvania law, seed labels often also fulfill another practical purpose by indicating to farmers whether the seed is subject to any intellectual property protections – through either patent law or the Plant Variety Protection Act.  According to the Plant Variety Protection Office within the United States Department of Agriculture (USDA), the development of new and improved plant varieties is necessary to “promote agriculture production and food security for an increasing world population.”  To encourage this development, federal law provides seed companies with significant legal protections for the intellectual property contained within the plant varieties they create.  Farmers must be aware of these protections as they face potentially severe legal consequences if they infringe upon these intellectual property rights.    

Seed companies often seek patent protection from the U.S. Patent and Trademark Office when a new seed variety is developed.  A patent provides a seed company with the exclusive right to the use of a plant variety for twenty years.  Thus, patented seed can be used only in the manner authorized by the patent holder.  Any unauthorized sale or use of the patented seed is prohibited for the duration of the patent.  A farmer or merchant who violates a patent through some unlawful action, such as the planting or selling of harvested seeds, may face a patent infringement lawsuit filed by the seed company.  As a result of this litigation, a farmer may bear significant legal costs to defend against the lawsuit in addition to the financial liability imposed if the seed company successfully establishes a violation of its patent rights.

The second type of intellectual property rights of which farmers should be familiar is provided through the Plant Variety Protection Act (PVPA).  PVPA is a federal law administered by USDA that operates similarly to a patent and provides seed companies with a twenty-year certificate to control the purchase or sale of a plant variety.  Farmers violate PVPA when they sell, purchase, offer for sale, deliver, or exchange PVPA certified seeds.  PVPA does provide a narrow exception for farmers who lawfully purchase certified seeds.  In such cases, seeds may be saved and replanted on the farmer’s property, but only in an area no larger than that which was previously planted.  Just as with the violation of patent rights, a violation of PVPA may result in a farmer suffering substantial financial penalties and costly litigation.  Significantly, courts have determined that selling seed in an unmarked bag, a practice commonly known as a “brown bag sale,” can constitute a violation of PVPA.     

When farmers make their purchasing decisions, they need to be aware of the relevant legal protections and responsibilities, including those associated with patented and protected seed, to ensure that they are receiving a quality product and that they are not subjecting themselves to potential financial liability.  As a best practice, farmers should purchase seed only from a licensed seed distributor that properly labels its products.  Farmers then must use patented and protected seed only in the manner authorized by law or the holder of the intellectual property rights.   

Agricultural Law in the Spotlight: Executive Order on the “Waters of the United States” Rule

Written by M. Sean High—Staff Attorney and Errin McCaulley – Research Assistant

On February 28, 2017, President Donald J. Trump signed an Executive Order directing the Administrator of the Environmental Protection Agency (Administrator) and the Assistant Secretary of the Army for Civil Works (Assistant Secretary) to review the current federal “Waters of the United States” rule (WOTUS).  The outcome of this review could have significant implications for both the agricultural and energy sectors. 

Under the Executive Order, the Administrator and Assistant Secretary are required to review WOTUS to determine if the current rule is consistent with the order’s stated policy:

[T]o ensure that the Nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of the Congress and the States under the Constitution.

Upon completion of this review, the Administrator and Assistant Secretary are to propose a rule either rescinding or revising the current rule.  Regarding ongoing WOTUS litigation, the Attorney General is permitted to inform “any court of such review and take such measures as he deems appropriate concerning any such litigation pending the completion of further administrative proceedings related to the rule.” Significantly, for future WOTUS rulemaking, “the Administrator and Assistant Secretary shall consider interpreting the term ‘navigable waters,’ as defined in 33 U.S.C. 1362(7), in a manner consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006).”

Background

Clean Water Act

Congress, in amending the Federal Water Pollution Control Act, passed the Clean Water Act (CWA) “to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.” 33 U.S.C. § 1251(a).  Generally, CWA empowers the Environmental Protection Agency (EPA) and Army Corps of Engineers (ACE) to regulate pollutant discharges into “navigable waters.” 33 U.S.C. § 1311(a).  The phrase “navigable waters,” is further defined as “the waters of the United States, including the territorial seas.” 33 U.S.C. § 1362(7).  

Rapanos

Persistent disputes over the meaning of “waters of the United States” led to a series of cases and resulted in the U.S. Supreme Court’s attempt to define “waters of the United States” in the case Rapanos v. United States, 547 U.S. 715 (2006).  In Rapanos, the Supreme Court concluded that ACE’s interpretation of the phrase “waters of the United States” was an impermissible construction of the CWA.  Id. at 739.  Nevertheless, the Court also appeared to invite rulemaking to further clarify the meaning of “the waters of the United States.” Id. at 718. 

Justice Antonin Scalia, who authored the plurality opinion, stated that regarding the phrase “navigable waters”:

“[T]he waters of the United States” includes only those relatively permanent, standing or continuously flowing bodies of water “forming geographic features” that are described in ordinary parlance as “streams[,] ... oceans, rivers, [and] lakes.” . . . The phrase does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall.

Rapanos, 547 U.S. at 739.

In a concurring opinion, however, Justice Anthony Kennedy developed a “significant nexus” test for determining federal jurisdiction over the Nation’s waters.  Justice Kennedy derived the “significant nexus” test from two earlier cases, Solid Waste Agency of Northern Cook Cty. v. Army Corps of Eng’rs, 531 U.S. 159 (2001) (SWANCC) and United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985) (Bayview Homes).  According to Justice Kennedy, prior to EPA or ACE asserting CWA jurisdiction over a wetland:

[T]he wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as “navigable.” When, in contrast, wetlands’ effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term “navigable waters.”

Rapanos, 547 U.S. at 780.  

In reference to Justice Kennedy’s opinion, Justice Scalia read the “significant nexus” test narrowly.  In addressing Justice Kennedy’s analysis, Justice Scalia noted that SWANCC and Bayview Homes rejected the notion that either EPA or ACE could rely upon ecological connectivity alone as a basis for CWA jurisdiction. Rapanos, 547 U.S. at 741.  Additionally, after a thorough analysis of the development of the “significant nexus” test in those cases, Justice Scalia reasoned that the “significant nexus” test is intended only to resolve a narrow ambiguity in the CWA, namely to determine where a navigable water ends and a wetland, marsh, or other feature begins. Justice Scalia wrote:

[O]nly those wetlands with a continuous surface connection to bodies that are “waters of the United States” in their own right, so that there is no clear demarcation between “waters” and wetlands, are “adjacent to” such waters and covered by the Act. Wetlands with only an intermittent, physically remote hydrologic connection to “waters of the United States” do not implicate the boundary-drawing problem of Riverside Bayview, and thus lack the necessary connection to covered waters that we described as a “significant nexus” in SWANCC.

Rapanos, 547 U.S. at 741. Ultimately, Justice Scalia concluded, in order for a feature to be within the scope of the CWA, the feature must either satisfy the definition of “waters of the United States,” provided above, or maintain a “continuous surface connection” with a water that meets the definition of “waters of the United States.” Id. 

WOTUS

In promulgating WOTUS, EPA and ACE explicitly based the final rule on Justice Kennedy’s “significant nexus” analysis. See 80 Fed. Reg. 37,056 (June 29, 2015).  Additionally, EPA and ACE relied upon Justice Kennedy’s reading of the purpose of the CWA.  The agencies concluded “the critical factor in determining the CWA’s coverage is whether a water has a ‘significant nexus’ to downstream traditional navigable waters such that the water is important to protecting the chemical, physical, or biological integrity of the navigable water.” 80 Fed. Reg. 37,056 (June 29, 2015).  As a result, the “significant nexus” analysis per WOTUS focuses generally on ecological connectivity, physical indicators such as a high-water mark, geographic proximity to navigable waters, and a contested feature’s location within a 100-year floodplain.

Currently, WOTUS is not in force due to a nationwide stay of the final rule issued by the Court of Appeals for the Sixth Circuit. See In re EPA, 803 F.3d 804 (6th Cir. 2015).   

Conclusion

If EPA and ACE substantially adopt Justice Scalia’s opinion in Rapanos, many provisions in WOTUS will require revision. Several of the eight categories of features EPA and ACE announced in WOTUS to be jurisdictional waters under CWA likely fail Justice Scalia’s analysis.  For example, WOTUS includes in its coverage prairie potholes and pocosins. 80 Fed. Reg. 37,105 (June 29, 2015).  These features, however, generally lack a continuous surface connection with “waters of the United States.”

Although a specific timeline for agency review of WOTUS was not provided in the Executive Order, EPA and ACE cannot simply repeal WOTUS; the agencies must issue a proposed rule to revise or replace the rule.  In response to the Executive Order, EPA and ACE stated: “[a] revised rulemaking based ‘on a reevaluation of which policy would be better in light of the facts’ is ‘well within an agency’s discretion.’” 82 Fed. Reg. 12,532 (Mar. 6, 2017).  This rulemaking process could last well over a year as the notice-and-comment period for the previous WOTUS rulemaking process resulted in over one million comments after the proposed rule’s publication in April 2014. 

Agricultural Law in the Spotlight: Federal Court Rules against Application of Pennsylvania Equine Activity Immunity Act

Written by M. Sean High—Staff Attorney

On September 26, 2016, the United States District Court, M.D. Pennsylvania denied a motion for summary judgement seeking dismissal of an injury claim involving a Pennsylvania equine facility.  (Melendez v. Happy Trails and Riding Center, Inc., 2016 WL 5402745).  The claim alleged that the plaintiff, Wilberto Melendez, suffered an injury at Happy Trails and Riding Center due to defective equipment supplied by the equine facility.  The motion, filed by the defendant owner of the equine facility, sought dismissal of the case due to immunity protection resulting from: (1) a signed waiver and (2) the Pennsylvania Equine Activity Immunity Act (EAIA).

Background

On May 31, 2014, Melendez visited defendant’s equine facility for the purpose of engaging in horseback riding.  Prior to taking part in any equine activity, Melendez signed an agreement assuming the risk of all activities relating to horseback riding.  Additionally, signs were prominently posted at defendant’s facility stating: “You assume the risk of equine activities pursuant to Pennsylvania Law.”

While at the defendant's equine facility, Melendez engaged in horseback riding with a horse and saddle supplied by the defendant.  During this time, a stirrup on the saddle Melendez was using broke and Melendez fell to the ground.  According to Melendez, the fall resulted in his suffering fractured ribs and pneumothorax.  Subsequently, Melendez brought suit alleging that the defendant had negligently furnished defective equipment which directly resulted in his injury.

In response, the equine facility owner sought to dispose of the claim, through summary judgement, on two separate grounds.  First, the defendant argued that the waiver Melendez signed covered broken equipment and provided immunity under the facts presented.  Second, the defendant claimed that as a qualifying equine facility, it was entitled to liability protection under EAIA.

Ruling

Regarding the signed waiver, the court agreed that the document contained language protecting the defendant from negligence.  Melendez, however, contended that the defendant’s conduct “amount[ed] to recklessness and exculpatory agreements cannot immunize reckless conduct.”

The court agreed that the waiver only provided immunity for negligence and not for recklessness.  The court stated that the defendant’s “bare assertion that its actions do not rise to the level of recklessness does not satisfy its burden to show that there is no genuine dispute as to the material fact.” As a result, the court ruled that the signed waiver did not provide “a sufficient basis for summary judgement.”   

Next, the court addressed the application of EAIA. 

Under EAIA, a qualifying equine facility that demonstrates proper signage, and that a plaintiff knowingly assumed the risk of the equine activities, is granted immunity from liability. (4 P.S. §§ 601-606).  Melendez acknowledged that signage at defendant’s equine facility was proper.  Nevertheless, Melendez argued that EAIA did not apply because he was not aware that the stirrup could possibly be defective, and thus could not have knowingly assumed the risk. 

The court agreed, maintaining that under EAIA a "Defendant must show that [a] Plaintiff knew that the equipment he was provided with might break and voluntarily continued with the horseback ride in spite of that knowledge." The court stated that this was not “a case where the risk is so obvious that the knowledge could be inferred.” The court ruled that because the defendant did not show that Melendez decided to use the equipment with knowledge that the stirrup could possibly fail, the defendant was not entitled to EAIA protection.

Conclusion

The court’s ruling raises the issue of how Pennsylvania equine facilities are to establish the assumption of risk for possible equipment failure under EAIA.  Significantly, because the decision was issued by a federal court, Pennsylvania courts are not bound by the holding.  Nevertheless, equine facility owners should be aware that Pennsylvania courts may find the decision persuasive and choose to rule in similar fashion.  

Agricultural Law in the Spotlight: Federal Court Addresses Clean Water Act Jurisdiction

Written by Errin McCaulley – Research Assistant

On January 24, 2017, the U.S. District Court for the District of Minnesota issued an opinion in the latest iteration of the dispute between Hawkes Co., Inc. and the U.S. Army Corps of Engineers regarding a peat mining operation in Minnesota. Hawkes Co. v. U.S. Army Corps of Eng’rs, Civil No. 13-107 ADM/TNL, 2017 WL 359170 (D. Minn.). This case, which has been developing since 2010, represents one of the latest Clean Water Act  cases to confront the application of the “significant nexus” test developed by Justice Kennedy in Rapanos v. United States, 547 U.S. 715, 778-82 (2006) (Kennedy, J., concurring). After a series of decisions leading to the Supreme Court last year, this most recent decision ended with the District Court setting aside the Corps’ Revised jurisdictional determination and enjoining the Corps from further attempts to assert jurisdiction over the wetland at issue. This case did not reach a decision on the joint Army Corps of Engineers-Environmental Protection Agency “Waters of the United States” Rule, but the Supreme Court has granted certiorari in another case to make a final determination on that rule. See Nat’l Ass’n of Mfrs. v. Dep’t of Def., No. 16-299, 2017 WL 125667 (U.S. Jan. 13, 2017).

Background. In December of 2010, Hawkes Co., Inc. sought a CWA “jurisdictional determination” (JD) by the U.S. Army Corps of Engineers regarding 150 acres of wetlands upon which Hawkes Co. intended to expand its peat mining operation. The Corps, following the Rapanos “significant nexus” test, ultimately found that the 150 acres fell under the Corps’ jurisdiction under the Clean Water Act (CWA), thus Hawkes Co. would be required to obtain from the Corps a § 404 dredge/fill permit. Hawkes Co. disputed the Initial JD and, after an administrative appeal, the Corps was ordered to review the chemical, physical, and biological connections between the 150 acre tract and the nearest navigable water, the Red River, 120 miles away.

The internal review invalidated the Initial JD for numerous reasons, most of which sprung from the Corps’ lack of site-specific measurements and evaluations. Ultimately, the internal review process found that the Corps’ documentation used to establish CWA jurisdiction was insubstantial and speculative with regard to the chemical, physical and biological integrity of the Red River. The Corps made several changes to the wording of the Initial JD and subsequently issued its Revised JD, yet the Corps did not carry out further on-site measurements or evaluations. Rather, the Corps substituted the Initial JD’s speculative language with “more definitive wording.” Hawkes Co., 2017 WL 359170, at *6. In sum, the record used by the Corps in issuing its Initial JD was substantially the same as the one used for the Revised JD.

After a series of disputes over whether the Revised JD was a “final agency action” within the meaning of the Administrative Procedures Act, the Supreme Court held that the Revised JD was a final agency action. U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct. 1807, at 1813-16 (2016). The Court then remanded the case back to the District Court to determine whether the Revised JD established a “significant nexus” between the Red River and the 150 acre tract. Significantly, however, during oral arguments, Justice Kennedy, the author of the “significant nexus” test, appeared to retreat from his position in Rapanos and stated “the Clean Water Act is unique in both being quite vague in its reach, arguably unconstitutionally vague.” Oral Argument at 19:05 (statement by Justice Kennedy), Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016) (No. 15-290), https://www.oyez.org/cases/2015/15-290.

The Significant Nexus Test. The “significant nexus” test developed by Justice Kennedy requires the agency asserting CWA jurisdiction over a wetland to establish:

[T]he wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as “navigable.” When, in contrast, wetlands’ effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term “navigable waters.”

Rapanos, 547 U.S. at 780. Despite the use of the word “and” between “physical” and “biological,” the test has been read to be satisfied if the relevant agency can prove any one of the three attributes: chemical, physical, or biological connectivity to a navigable water. Hawkes Co., 2017 WL 359170, at *2. The test is not satisfied, however, if the wetland’s “effect on water quality is speculative or insubstantial.” Id.

District Court Ruling. The District Court, in holding the Revised JD was arbitrary and capricious, worked its way through the Corps’ evidence regarding each of the three attributes that can support a significant nexus finding. The court based its ruling on the reasoning that, since the administrative review process found the Corps’ evidence for the Initial JD insubstantial and speculative, id. at *4, the same must be true for the Revised JD as the Corps conducted no water quality assessments, made no site-specific measurements, and carried out no further evaluations of the site, id. at *11. Simply, the Corps relied upon substantially the same record in its Revised JD as it had in its Initial JD. The court then moved on to the question of remedy. The court noted that, under normal circumstances, the next step would be to remand to the Corps for further proceedings and another JD. The court refused to do this, noting that another JD would prolong an already long case and would entitle the Corps to a third “bite of the apple.” Id. at 11. The court also reasoned that, by prolonging the dispute, remand would “fuel . . . the Corps’ ‘transparently obvious litigation strategy’” whereby the Corps “‘achieve[s]the result its local officers desire, abandonment of the peat mining project’—without ever having to establish CWA jurisdiction.” Id. at 12.

Conclusion. The Minnesota District Court’s ruling has been hailed as a victory for land use rights advocates and the agricultural community overall, yet the more pressing question concerning the validity of the Waters of the United States (WOTUS) rule, promulgated jointly by the Corps and the Environmental Protection Agency, still looms large.