VOLUME 22, NUMBER 11, WHOLE NUMBER 264 NOVEMBER 2005
Federal Register: September 3 to November 11, 2005 COTTON. The CCC has adopted as final regulations changing the Extra Long Staple cotton price used to calculate the payment rate from the “average domestic spot price quotation for base quality U.S. Pima cotton” to the “American Pima c.i.f. Northern Europe” price. 70 Fed. Reg. 67342 (Nov. 7, 2005). MEAT, POULTRY AND EGGS. The FSIS has announced the availability on its web site of information regarding new technologies for use in the production of meat, poultry, and egg products that the FSIS has received and for which FSIS has written a “No Objection” letter. The web site includes brief descriptions of the new technolo- NSI DE gies in order to increase public and industry awareness of new technologies and foster I their use by small and very small plants. 70 Fed. Reg. 60784 (Oct. 19, 2005). ORGANIC FOOD. The AMS has issued a notice to inform certified organic producers and handlers that the AMS will release the names and addresses of certified operations to the • Unresolved issues in general public. AMS has determined that the Organic Foods Production Act of 1990, as the tobacco quota amended, 7 U.S.C. 6501 et seq., authorizes the release of the names and addresses of certified buyout organic producers and handlers under the broad category of information characterized by the 1990 Act as “certification documents.” 70 Fed. Reg. 53617 (Sept. 9, 2005). • Agricultural law POULTRY INSPECTION. The FSIS has issued proposed regulations which amend the bibliography federal poultry products inspection regulations to provide that turkey slaughter establish- ments that open turkey carcasses with Bar-type cuts may operate at the maximum line speeds established for J-type cuts, if the establishment uses the specific type of shackle described in the proposed rule. Under the proposed regulation, as under current regulations, the inspector in charge will reduce line speeds when, in his or her judgment, the prescribed inspection procedure cannot be adequately performed within the time available because of the health conditions of a particular flock or because of other factors, including the manner in which birds are being presented to the inspector for inspection and the level of contamination among the birds on the line. 70 Fed. Reg. 53582 (Sept. 9, 2005). SUGAR. The CCC has issued proposed regulations to provide for an orderly and transparent method of distributing the allocation of marketing allotments to successor Solicitation of articles: All AALA mills after growers have petitioned the Executive Vice President, CCC, to transfer their members are invited to submit articles allocation when their mill closes. The proposed regulations use a formula to distribute to the Update. Please include copies of the closed mill’s allocation that will calculate grower shares based on the grower’s contribution to the mill’s allocation. The proposed regulations also formalize the due decisions and legislation with the ar- date, on the 20th of each month, for the reporting to the CCC on their sugar production. ticle. To avoid duplication of effort, The CCC noted that willful failure to timely file the reports can make a reporter subject please notify the Editor of your pro- to a maximum civil penalty of $10,000. The proposed regulations also require each posed article. reporting entity to have an independent third party verify each company’s data submitted to the CCC. 70 Fed. Reg. 53103 (Sept. 7, 2005). TRANSPORTATION. The CCC has issued a notice to all interested parties regarding additional actions pursuant to the September 20, 2005 announcement to ease transportation issues exacerbated by Hurricane Katrina. The CCC is seeking N UTURE proposals from interested parties for unloading barges of agricultural commodities I F located in the New Orleans area to make them available to transport 2005-crop agricultural commodities. Proposals should be submitted November 14, 2005 to be SSUES assured of consideration. 70 Fed. Reg. 67410 (Nov. 7, 2005). I TUBERCULOSIS. The APHIS has adopted as final regulations which remove two inconsistent definitions of affected herd under the tuberculosis regulations, 7 C.F.R. § 77.5, 77.20, and add a new definition of affected herd as “a herd of livestock in which • Conservation easements there is strong and substantial evidence that Mycobacterium bovis exists. This for agricultural evidence should include, but is not limited to, any of the following: epidemiologic evidence, histopathology, polymerase chain reaction (PCR) assay, bacterial isolation landowners or detection, testing data, or association with known sources of infection.” 70 Fed. Reg. 61025 (Oct. 20, 2005). • Conservation Reserve The APHIS has adopted as final regulations amending the tuberculosis regulations to Program long-term remove New Mexico from the list of modified accredited advanced states and adding policy portions of New Mexico to the list of modified accredited advanced zones, with the remainder of the state listed as accredited-free zones. 70 Fed. Reg. 61226 (Oct. 21, 2005). — Robert P. Achenbach, Jr., AALA Executive Director
NOVEMBER 2005 AGRICULTURAL LAW UPDATE 1 Agricultural law bibliography—3rd Quarter 2005 Animals — animal rights to Chapter 12 – Adjust of Debts for a Family Comment, Legislative History of Conser- Comment, The American Horse Slaughter Farmer (National AgLaw Center Publica- vation Security Programs, 9 Great Plains Prevention Act, 14 San Joaquin L. Rev. 143- tions) 2005 http:// Nat. Res. J. 36-52 (2004). 158 (2004). www.nationalaglawcenter.org Cook et al., An Overview of United States Comment,Unhappy Cows and Unfair Com- Schneider, Bankruptcy Reform and Family Environmental Protection Agency Air Quality petition: Using Unfair Competition Laws to Farmers (National AgLaw Center Publica- Consent Agreement for Animal Feeding Opera- Fight Farm Animal Abuse, 52 UCLA L. Rev. tions) (2005). http:// tions, 22 Agric. L. Update 4-6 4-2005. 1313-1357 (2005). www.nationalaglawcenter.org Davidson,Factory Fields: Agricultural Prac- Favre, Judicial Recognition of the Interests tices, Polluted Water and Hypoxic Oceans, 9 of Animals–A New Tort, 2005 Mich. St. L. Rev. General Great Plains Nat. Res. J. 1-35 (2004). 333-367. Crain, Farm Program Payments as Property Hedley, The International Plant Protection of the Bankruptcy Estate (National AgLaw Convention and Invasive Species, 35 Envtl. L. Bankruptcy Center Publications) 2005 http:// Rep. News & Anal. 10381-10389 (2005). Farmers www.nationalaglawcenter.org Nill, How Biotechnology-Derived Crops Re- Chapter 12 duce the Runoff that Creates “Dead Zones,” 9 Porter, Phantom Farmers: Chapter 12 of the Biotechnology ABA Agric. Mgmt. News. 18-20 2-2005. Bankruptcy Code, 79 Am. Bankr. L.J. 729-747 Bratspies, Glowing in the Dark: How Note, When is a Pesticide Not a Pollutant? (2005). America’s First Transgenic Animal Escaped Never: An Analysis of the EPA’s Misguided Schneider, Bankruptcy Reform: Changes Regulation, 6 Minn. J. L. Sci. & Tech. 457-504 Guidance, 90 Iowa L. Rev. 1241-1274 (2005). to Chapter 12 Family Farmer Reorganization, (2005). Rogers, CAFO Water Regulations Invali- 20 Farmers’ Legal Action Rep. 1-4 (2-2005). Comment, Judging GMOs: Judicial Appli- date, 22 Agric. L. Update 4-6 2-2005. Schneider, Bankruptcy Reform: Changes cation of the Precautionary Principle in Brazil, 32 Ecol. L. Q. 149-174 (2005). Estate planning/divorce Endres, Revising Seed Purity Laws to Ac- Comment, Stealing the Family Farm: Tor- count for the Adventitious Presence of Geneti- tious Interference with Inheritance, 14 San cally Modified Varieties: A First Step Towards Joaquin L. Rev. 73-96 (2004). Coexistence, 1 J. Food L. & Pol’y 131-163 (2005). Farm labor Mandel, Gregory, The Future of Biotech- Aliens nology Litigation and Adjudication 3-2005, Satterthwaite, Crossing Borders, Claiming http://ssrn.com/abstract=706546 Rights: Using Human Rights Law to Empower McAllister, Judging GMOs: Judicial Appli- Women Migrant Workers, 8 Yale Human Rts. cation of the Precautionary Principle in Brazil, & Dev. L. J. 1-66 (2005). VOL. 22, NO. 11, WHOLE NO. 264 NOVEMBER 2005 AALA Editor...... Linda Grim McCormick 32 Ecol. L. Q. 149-174 (2005). Moeller, Farmers’ Guide to GMO Con- Collective bargaining 2816 C.R. 163, Alvin, TX 77511 Phone: (281) 388-0155 tracts, 22 Agric. L. Update 4-7, 3 12-2004. Halgas, Reach an Agreement or Else: Man- E-mail: [email protected] Recent development, Transgenic Crops: datory Arbitration Under the California Agri- The Good, the Bad, and the Laws, 6 Minn. J. L. cultural Labor Relations Act, 14 San Joaquin Contributing Editors: Drew Kershen, The University of Oklahoma; Ted Feitshans, North Carolina State University; Sci. & Tech. 877-896 (2005). L. Rev. 1-38 (2004). Robert A. Achenbach, Eugene, OR. Redick & Sachs, BioPharming: Its Recent Student Article, Union Access to Migrant For AALA membership information, contact Robert Past and Foreseeable Future, 9 ABA Agric. Farmworkers: The Mt. Olive Pickle Company, Achenbach, Interim Executive Director, AALA, P.O. Box Mgmt. Newsl. 14-18 2-2005. Cucumber Farmers, and Farmworkers, 20 Lab. 2025, Eugene, OR 97405. Phone 541-485-1090. E-mail [email protected]. Rogers, Seeds, Weeds and Greed: An Analy- L. 339-361 (2005). sis of the Gene Technology Act 2000 (Cth), Its Agricultural Law Update is published by the American Effect on Property Rights, and the Legal and General & social welfare Agricultural Law Association, Publication office: County Line Printing, Inc. 6292 NE 14th St. ,Des Moines, IA 50313. Policy Dimensions of a Constitutional Chal- Gilbert, Fields of Hope, Fields of Despair: All rights reserved. First class postage paid at Des Moines, lenge, 2 Macquarie L. J. 1-30 (2002). Legisprudential and Historic Perspectives on IA 50313. the AgJobs Bill of 2003, 42 Harv. J. Legis. 417- This publication is designed to provide accurate and Cooperatives 482 (2005). authoritative information in regard to the subject matter covered. It is sold with the understanding that the General Lyon, Farm Workers in Illinois: Law Reforms publisher is not engaged in rendering legal, accounting, or O’Brien, Legal and Policy Considerations of and Opportunities for the Legal Academy to other professional service. If legal advice or other expert Investor-Friendly Cooperatives (National Assist Some of the State’s Most Disadvan- assistance is required, the services of a competent professional should be sought. AgLaw Center Publications) 2005 http:// taged Workers, 29 S. Ill. U. L. J. 263-284 www.nationalaglawcenter.org (2005). Views expressed herein are those of the individual authors and should not be interpreted as statements of policy by the American Agricultural Law Association. Taxation Farm policy and legislative analysis
Letters and editorial contributions are welcome and Reynolds, Patronage-Sourced Income: An Ex- Domestic should be directed to Linda Grim McCormick, Editor, 2816 panding Universe, 58 Tax L. 479-507 (2005). Comment, Please Stop Helping: What is C.R. 163, Alvin, TX 77511, 281-388-0155. the Family Farm, and Should the USDA Try and Copyright 2005 by American Agricultural Law Environmental issues Figure It Out for Us?, 14 San Joaquin L. Rev. Association. No part of this newsletter may be reproduced Centner, Legal Structures Governing Ani- 97-115 (2004). or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any mal Waste Management, ch. 15 pt. 2 in Nat’l information storage or retrieval system, without permission Ctr. Manure & Animal Waste Mngt. White Food and Drug law in writing from the publisher. Papers N.C. St. U. (2002). Comment, Do Recent Studies Prove that Comment, Managing Carbon in a World Farmed Salmon Are Toxic? A Commentary on Economy: The Role of American Agriculture, 9 Whether the Current FDA Guidelines Ad- Great Plains Nat. Res. J. 18-27 (2005). equately Protect Consumers from Potential Continued on page 3
2 AGRICULTURAL LAW UPDATE NOVEMBER 2005 Ag law bibliography/Cont. from page 2 Toxins in Farmed Salmon, 16 Villanova Envtl. Big Stink for Residents of Yankton County: Right, 56 Hastings L. J. 769-799 (2005). L. J. 89-107 (2005). Zoning Attempts to Limit a Concentrated Ramanna & Smale, Rights and Access to Coutrelis, European Union Food Law Up- Feedlot Operation in South Dakota (Heine Plant Genetic Resources under India’s New date, 1 J. Food L. & Pol’y 219-238 (2005). Farms v. Yankton County, 649 N.W.2d 597, Law, 22 Dev. Pol’y Rev. 423-442 (2004). Grossman, Traceability and Labeling of 2002), 9 Great Plains Nat. Res. J. 89-113 Symposium, Biodiversity, Biotechnology, Genetically Modified Crops, Food, and Feed in (2005). and the Legal Protection of Traditional Knowl- the European Union, 1 J. Food L. & Pol’y 43- Comment, From Red Barn to Facility: edge, 17 Wash. U. J. L. & Pol’y 1-232 (2005). 85 (2005). Changing Environmental Liability to Fit the * McManis, Introduction, 1-10 Hamilton, Food Democracy II: Revolution Changing Structure of Livestock Production, * Chen, Across the Apocalypse on Horse- or Restoration?, 1 J. Food L. & Pol’y 13-42 93 Cal. L. Rev. 797-846 (2005). back: Imperfect Legal Responses to Biodiversity (2005). McEowen, Supreme Court Rules that Beef Loss, 13-35 Hutt, Food Law & Policy: An Essay, 1 J Check-Off Is Government Speech; but Check- * Hamilton, Forced Feeding: New Legal .Food L. & Pol’y 1-11 (2005). Off Litigation May Not Be Done, 22 Agric. L. Issues in the Biotechnology Policy Debate, 37- McGarity, Federal Regulation of Mad Cow Update 4-6 5-2005. 57 Disease Risks, 57 Admin. L. Rev. 289-410 Note, Bovines and Global Warming: How * Brush, Protecting Traditional Agricultural (2005). the Cows Are Heating Things Up and What Knowledge, 59-109 Roberts & Alsbrook, United States Food Can Be Done to Cool Them Down, 29 Wm. & * Pires de Carvalho, From the Shaman’s Law Update, 1 J. Food L. & Pol’y 187-218 Mary Envtl. L. & Pol’y Rev. 767-805 (2005). Hut to the Patent Office: In Search of a TRIPS- (2005). Roberts & O’Brien, Fact Sheet on Animal Consistent Requirement to Disclose the Origin Student article, Protecting Our Food: A Identification: Liability Exposure and Risk of Genetic Resources and Prior Informed Con- Critical Look at the National Uniformity for Management (National AgLaw Center Pub- sent, 111-186 Food Act of 2004 and Food Safety in America, lications) 2005 http:// * Gollin, Answering the Call: Public Interest 17 Loy. Cons. L. Rev. 253-282 (2005). www.nationalaglawcenter.org Intellectual Property Advisors, 187-223 Roberts & O’Brien, Fact Sheet on Animal * McManis, Conclusion–Answering the Call: Forestry Identification: Confidentiality of Information the Intellectual Property & Business Formation Comment, Stepping onto a Moving Train: (National AgLaw Center Publications) 2005 Legal Clinic at Washington University, 225- The Collision of Illegal Logging, Forestry Policy, http://www.nationalaglawcenter.org 232 and Emerging Free Trade in the Russian Far Skibinsky, Changes in Store for the Live- East, 14 Pac. Rim L. & Pol’y J. 425-453 (2005). stock Industry? Canada’s Recurring Proposed Pesticides, herbicides, insecticides, fungi- Animal Cruelty Amendments, 68 cides, fertilizers International trade Saskatchewan L. Rev. 173-222 (2005). Pittman, Supreme Court Considers Preemp- Comment, The Challenges of Exporting tion of State Law Claims under the Federal Biotechnology Products Created by the Euro- Patents, trademarks & trade secrets Insecticide, Fungicide, and Rodenticide Act, 22 pean Union Moratorium on Genetically Modi- Adelman, A Fallacy of the Commons in Agric. L. Update 4-6 3-2005. fied Organisms, 7 Duquesne Bus. L. J. 65-88 Biotech Patent Policy, 20 Berkeley Tech. L. J. Pittman, Supreme Court Considers Preemp- (2005). 985-1030 (2005). tion of State Law Claims under the Federal Comment, The Farm Bill of 2002, the WTO, Case Comment, Of Transgenic Mice and Insecticide, Fungicide, and Rodenticide Act and Poor African Farmers: Can They Co-Exist?, Roundup Ready Canola: The Decisions of the (National AgLaw Center Publications) 2005 12 Tulsa J. Comp. & Int’l. L. 227-262 (2004). Supreme Court of Canada in Harvard College v. http://www.nationalaglawcenter.org Jacobs, Brazil’s Agricultural Trade War: Canada and Monsanto v. Schmeiser, 38 U. Brit. Success and Failure on the Southern Route to Colum. L. Rev. 189-222 (2005). Rural development Antarctica, 36 U. Miami Inter-Am. L. Rev. Comment,Battling Bills, Beans & Biopiracy, Sheppard & Mazzanti, Liability of Federal 167-195 (2005). 15 Albany L. J. Sci. & Tech. 545-577 (2005). Agencies for Failure to Abide by the Rural Note, Agricultural Trade Liberalization in Comment, The Horns of a Dilemma: The Development Act (National AgLaw Center Tech. 545-577 (2005). Application of the Doctrine of Patent Exhaus- Publications) 2005 http:// Redick & Adrian, Do European Union Non- tion and Licensing of Patented Seed, 14 San www.nationalaglawcenter.org Tariff Barriers Create Economic Nuisances in Joaquin L. Rev. 39-72 (2004). the United States?, 1 J. Food L. & Pol’y 87- Conforto, Traditional and Modern-Day Sustainable & organic farming 130 (2005). Biopiracy: Redefining the Biopiracy Debate. 19 Comment, What Does “Organic” Mean J. Envtl. L. & Litig. 357-396 (2004). Now? Chickens and Wild Fish are Undermining Land sales/finance, mortgages/foreclosures Cortes Martin, TRIPS Agreement: Towards the Organic Foods Production Act of 1990, 14 Barnet, The Uniform Registered State Land a Better Protection for Geographical Indica- San Joaquin L. Rev. 117-141 (2004). and Adverse Possession Reform Act, a Proposal tions? 30 Brooklyn J. Int’l. L. 117-184 (2004). Friedland, You Call that Organic?—The for Reform of the United States Real Property DeBeer, Reconciling Property Rights in USDA’s Misleading Food Regulations, 13 Law, 12 Buffalo Envtl. L. J. 1-52 (2004). Plants, 8 J. World Intell. Prop. 5-31 (2005). N.Y.U. Envtl. L. J. 379-440 (2005). Janis & Kesan, Designing the Optimal Hodge, Agri-environmental Relationships Land use regulation Intellectual Property System for Plants: A U.S. and the Choice of Policy Mechanisms, 23 The Land use planning and farmland preser- Supreme Court Debate, 19 Nature/Biotech. World Econ. 257-273 (2000). vation techniques 981-983 (2001). Tobey & Smets, The Polluter-Pays Prin- McLaughlin, Rethinking the Perpetual Liivak, The Forgotten Originality Require- ciple in the Context of Agriculture and the Nature of Conservation Easements, 29 Harv. ment: A Constitutional Hurdle for Gene Pat- Environment, 19 The World Econ. 63-87 Envtl. L. Rev. 421-521 (2005). ents, 87 J. Patent & Trademark Off. Soc. (1996). 261-297 (2005). Livestock and Packers & Stockyards Muscati, Terminator Technology: Protec- Taxation Aiken, The Nebraska Hog Wars, 22 Agric. tion of Patents or a Threat to the Patent Harl & McEowen, American Jobs Creation L. Update 4-7 6-2005. System? 45 Idea 477-510 (2005). Case Note, Procedural Mishaps Created a Note, Two Wrongs Don’t Make a Patent Cont. on page 7
NOVEMBER 2005 AGRICULTURAL LAW UPDATE 3 Unresolved issues raised by the Tobacco Transition Payment Program (TTPP, also called the ‘Tobacco Buyout’) By Theodore A. Feitshans
The Fair and Equitable Tobacco Reform www.fsa.usda.gov/tobacco >. (For those ing year.” Section 622(a) of the Act autho- Act of 2004 (the Act) was signed by the not familiar with the structure of the U.S. rizes the Secretary of Agriculture “to en- President on October 22, 2004. Subtitle A Department of Agriculture (USDA), com- ter into a contract with each tobacco quota of the Act provides for termination of modity programs, including the tobacco holder under which the tobacco quota federal tobacco quota and price support quota program and the TTPP, are admin- holder shall be entitled to receive programs, effective for crops after the istered by the Commodity Credit Corpo- payments…in exchange for the termina- 2004 marketing year. Subtitle B of the Act ration (CCC). The CCC is a government- tion of tobacco marketing quotas and re- provides for transitional payments to be owned corporation staffed by employees lated price support…” Section 622(a) states made to tobacco quota holders and pro- of the FSA.) The North Carolina Coopera- that “[t]he contract payments shall consti- ducers of tobacco. TTPP payments will be tive Extension has also established an tute full and fair consideration for the made from June through September of informational website that provides analy- termination of such tobacco marketing 2005 for the 2005 marketing year, and sis and additional documentation.
4 AGRICULTURAL LAW UPDATE NOVEMBER 2005 owners of life estates. Consistent with its future interests will generally have no tract offers a way of simplifying marital position on other commodity programs, claim unless they can show that they settlements by reducing the stream of the CCC has determined that the life ten- shared in the risk of production in one or payments to a lump sum that can be easily ant is the ‘eligible tobacco quota holder’, more of the 2002, 2003, or 2004 crop years. divided. Possibly a direct transfer from exclusively entitled to receive payments one spouse to the other of the right to under the TTPP. (70 Fed. Reg. 17150, 17151, Marital rights payments could be effected using the 17160). The marriage relationship may give success-in-interest contract. Unfortu- An eligible quota holder does not in- rise to an interest in tobacco quota. To- nately fractional transfers of TTPP con- clude any other person who: claims a bacco quota acquired during the course of tracts are not permitted. If a successor-in- lien, security interest or other similar marriage will generally be marital prop- interest contract to make a direct transfer equitable interest in the farm or in any erty, subject to division upon termination between spouses is contemplated, it may personal asset of the owner of the farm of the marriage, unless a valid prenuptial be necessary to complete the transaction or a producer on the farm; has a remain- agreement or marital contract provides prior to the final decree of divorce be- der interest or any other contingent otherwise. In most states, tobacco quota cause it is an unresolved issue whether interest in the farm or in any personal acquired before marriage or by inherit- the CCC would still consider ex-spouses asset of the owner of the farm or a ance is not marital property subject to to be family members eligible to execute producer on the farm; or who may have equitable distribution. Note, however, that a successor-in-interest contract. Careful caused any such marketing quota to non-marital property may be transformed review of the tax consequences of such a have been transferred to the farm. (70 into marital property by the spouse’s con- transaction is essential prior to execution Fed. Reg. 17150, 17160). tributions to the farm business. Examples of any such a transfer. However, the CCC made no claim of of such contributions include paying taxes No tobacco quota holder or producer is federal preemption. To the contrary it on the property and repaying loans for required to take TTPP payments. How- stated, in the explanatory material to the which the property was pledged as collat- ever, the quota holder or producer’s fail- April 4th regulation, the CCC stated that eral. The fact that the government’s ter- ure to sign a contract with the CCC on a disputes involving these claims must be mination of the quota program has con- timely basis could be evidence of volun- settled ‘privately’ without the involvement verted the tobacco quota to a stream of tary suppression of income. of either the CCC or the FSA. (70 Fed. Reg. payments will generally not change its 17150, 17151). character as marital or non-marital prop- Interests of prior lien holders, A discussion of the claims of the holders erty. bankruptcy and insolvency of future interests to TTPP payments would The question of whether TTPP payments In some respects, interests of prior lien not be complete without a discussion of arising from producer payments consti- holders are analogous to holders of future just what sort of property interest tobacco tute marital property is a more difficult interests. Much turns on how tobacco quota quota was. For most transfers of land the question. The right to producer payments is characterized; however, prior lien hold- quota was transferred with it; however, arises from having produced tobacco in ers may have greater rights because liens such did not occur in every land transfer. one or more of the 2002, 2003, or 2004 crop can encompass personal property, even Land transfers occur by deed, registered years. An argument can be made that if after-acquired, as well as real property. at the local land office while transfers of those years should serve as the basis for To date, one decision, In re: Evans (Case No. quota were registered exclusively with determining whether the producer pay- 04-03288-8-JRL (Bankr. E.D.N.C. April 15, the FSA county office. Although CCC regu- ments are marital property. However, no 2005)), has addressed the question of the lations required that any transfer of land right to the payments arose until the Presi- rights of prior lien holders in TTPP pay- be accompanied by a change of owner- dent signed the Act on October 22, 2004. ments. The debtors were tobacco farmers ship in the FSA office, it was not uncom- Prior to that time the producer had noth- who filed for relief under Chapter 11 of the mon that this did not happen, especially ing. Even after that date the producer had U.S. Bankruptcy Code on April 22, 2004. where the land transfer was intra-family. to take the positive step of submitting a The decision in In re: Evans was not ap- The CCC implicitly recognized this fact in contract application by June 17, 2005. Even pealed. its regulations governing the TTPP. (70 at that point, no right of action in the The debtors in In re: Evans were eligible Fed. Reg. 17150, 17151). For those varieties producer arose until the government ac- for both producer and quota holder pay- of tobacco, such as flue-cured, for which cepted the application, forming a contract ments. Judge Leonard held that the to- the CCC allowed the transfer between with the producer. The contract date is the bacco quota was valuable property of the farms, an argument can be made that date upon which the government accepted estate, and that the TTPP quota holder tobacco quota was not real property. Since the producer’s application. payments were proceeds and therefore quota became transferable, judicial deci- Even where TTPP payments are not part of the bankruptcy estate. In a foot- sions addressing this issue are sparse. marital property, the value that the pay- note, Judge Leonard characterized to- Obviously, the characterization of tobacco ments represent may be a factor in deter- bacco quota as a species of real property quota has a profound influence upon the mining the appropriate division of the running with the land. rights of holders of future interests. And, parties’ marital property. Moreover, the As to the producer payments based to state the obvious, while treatment of TTPP payments are income includable in upon the 2002 and 2003 crop years, Judge quota by federal taxing authorities and income for determining child support and Leonard held that the ‘risk of production’ courts may be suggestive of how the states spousal support. Where TTPP payments was simply the measure that Congress should treat quota, that treatment does are marital property, there is a risk of used for determining eligibility for pay- not likely bind the states. double counting when calculating spousal ments, and that the risk of production in As to producer payments, holders of support. The successor-in-interest con- 2002 and 2003 had no value as of the Cont. on p. 6
NOVEMBER 2005 AGRICULTURAL LAW UPDATE 5 Tobacco/Cont. from page 5 commencement of the action. Since it had Tobacco Transition Payment Program (TTPP), indicate the means by which they wish to no value as of the commencement of the indicated that sign-up will be available be notified of contract approval. Part D action, the TTPP producer payments based from March 14 to June 17, 2005, and that includes instructions for submission of the upon the risk of production in 2002 and 2003 this will be “the final and only opportunity to Form CCC-962. were not proceeds and not part of the receive Federal payments related to to- By signing the successor-in-interest bankruptcy estate. Judge Leonard found bacco production.” FSA softened its posi- contract, the transferor warrants that the that the bankruptcy estate bore the risk of tion in its April 4, 2005 Federal Register contract identified in Part A is a valid TTPP loss associated with the 2004 crop year. As notice, in which it reserved the discretion contract, that no assignment of any future such, the bankruptcy estate, under 11 U.S.C to extend this deadline. (70 Fed. Reg. 17150, payment has been made, and that the §541(a)(7), acquired whatever the risk of 17164). FSA also stated that late applicants transferor is not indebted to the federal loss provided. The court determined that would, in any event, receive all payments government. The successor-in-interest the TTPP payments based on the risk of made after the late contract application is contract is silent as to the rights of third loss in the 2004 crop year were part of the accepted. parties in TTPP payments under state law. bankruptcy estate. It is, therefore, incumbent upon produc- If the analysis in In re: Evans is ultimately The court in In re: Evans found that FETRA ers or quota holders who have not submit- adopted by other courts, then financial evinced no intent by Congress to preempt ted a contract application to do so with all institutions that have executed succes- state law under which prior liens were due speed. Although FSA has issued no sor-in-interest contracts may be protected created. The regulations state, “[t]his final guidance as to the circumstances under from preexisting liens only to the extent rule preempts State laws that are incon- which it will exercise its discretion to ac- that the law of the state where the contract sistent with its provisions, but the rule is cept late contract applications, applicants arose (presumably the location of the not retroactive. “(70 Fed. Reg. 17150, or their representatives would be well quota and the production of the tobacco) 17157). The court held that the rules deter- advised to document the causes of their protects the purchaser of a contract from mining to whom TTPP payments are to be tardiness and request late acceptance of preexisting liens. The limited preemption made were adopted for administrative their application. The representative of an that the April 4th rule provides, as dis- ease and not intended to affect the under- incompetent quota holder or producer cussed above, would not likely provide lying rights of the parties. To summarize would certainly want to fully document any protection from preexisting liens. the decision, quota holder payments were how the incompetency of the applicant Successor-in-interest contracts may be part of the bankruptcy estate, subject to prevented a timely application. In the used for transfers to other than financial preexisting liens, the producer payments event that FSA makes an adverse deter- institutions in three limited circumstances. based upon the risk of production in 2002 mination, the Act provides for appeal first These circumstances are limited to “con- and 2003 were not part of the bankruptcy to the county committee and then to the tract transfers between family members[,] estate, and the producer payments based National Appeals Division (NAD), in a pro- contract transfers between a TTPP con- upon the risk of production in 2004 were cedure very familiar to practitioners who tract holder and a person who purchased part of the bankruptcy estate, but not handle disputes with the FSA. Adverse tobacco quota or allotment before Octo- subject to preexisting liens. decisions of the NAD may be appealed to ber 22, 2004, when quota was put on a farm the appropriate federal district court. not owned by the purchaser[, and] con- Treatment of payments to incompetents tract transfers because of death of the The FSA-211 is the power of attorney Successor-in-interest contracts original contract holder.” (FSA Notice TB- form required by FSA when another per- Section 624 of the Act requires the Sec- 1172 (9-28-2005)). These transfers are ex- son has been designated by the recipient retary of Agriculture to permit producers empt from the minimum payment provi- of program benefits to sign papers for that and quota holders to transfer their right to sions applicable to registered financial recipient. As a tool for managing the af- payment to a financial institution in return institutions. (70 Fed.Reg. 17150, 17165). fairs of one physically or mentally unable for a lump sum payment from the financial to manage their own affairs, the FSA-211 institution. By notice and request for com- Estate planning issues is useless because by its own terms it is ments published in the Federal Register on In the event of the death of the quota rendered not in force by the “incompe- June 27, FSA gave notice of the procedure holder, section 622(f) provides for transfer tence or incapacitation of the undersigned and form that it anticipated using for suc- of the right to receive payments to the grantor”. A separate durable power of cessor-in-interest contracts. (70 Fed. Reg. quota holder’s surviving spouse, or, if attorney or appointment of a guardian is 36919). Form CCC-962, Tobacco Transi- there is none, to the quota holder’s estate. required to manage the TTPP business of tion Payment Program Successor-in-In- This provision does not appear to pre- a person who is incompetent. FSA will not terest Contract, has been made available empt state law governing intestacy, trans- automatically accept the durable power through county offices and the FSA fers by will, and prenuptial agreements by of attorney of a person who is incompe- website. Form CCC-962 has already been transferring the right to payment to the tent. revised several times. The successor-in- surviving spouse. As the court held in In It refers these documents to the USDA’s interest contract requires in Part A, iden- re: Evans, this provision appears to be Office of General Counsel (OGC) for a tification of the original contract, identity primarily for the administrative conve- determination of whether the document and contact information for the transf- nience of the CCC. Nonetheless, the issue will be honored. eror, and the transferor’s signature and remains open and subject to interpreta- Given the extensive publicity gener- date signed; in Part B, identity and contact tion. For those with a state-law claim based ated by FSA and the state extension and information for the successor-in-interest, on a will, a prenuptial agreement, or the other organizations in quota tobacco the successor-in-interest’s signature and law of intestacy, there are practical barri- states, however, it is likely that a few quota date signed, and the TTPP Account Num- ers to obtaining the money from the party holders, and, perhaps even a few produc- ber (obtained by registering with CCC to whom the CCC makes the payment if ers, primarily among those who are in- using Form CCC-963); and in Part C, infor- that party is not willing to voluntarily relin- competent failed to meet the June 17, 2005 mation needed for immediate transfer to quish the funds. Section 623(e) is identical signup deadline to receive the first pay- a subsequent successor, if any, if not this to section 622(f) in setting terms of succes- ment. FSA’s February 2005 Fact Sheet, section is left blank. In Part D, the parties sion in the event of the death of the pro- Cont. on page 7
6 AGRICULTURAL LAW UPDATE NOVEMBER 2005 Tobacco/Cont. from page 6 Ag law bibliography/Cont. from page 3 ducer of quota tobacco. USDA’s October Act of 2004: A Summary of Selected Provisions, recenter.tamu.edu/pdf/1593.pdf 6 press release (Release No. 0415.05) and 21 Agric. L. Update 4-7 11-2004. Note, Water Now: The Impact of Israel’s the related FSA notice (FSA Notice TB- McEowen & Harl, Proposed Repeal of the Security Fence on Palestinian Water Rights 1172 (9-28-2005)) have provided some clari- Federal Estate Tax – Is This a Good Idea for and Agriculture in the West Bank, 36 Case W. fication and readers are referred to those Agriculture? 22 Agric. L. Update 4-6 1-2005. Res. J. Int’l. L. 639-671 (2004). documents. Note, Saving the Family Farm through Fed- Ruml, The Coase Theorem and Western U.S. For estates that receive TTPP contracts, eral Tax Policy: Easier Said than Done, 62 Appropriative Water Rights, 45 Nat. Res. J. the availability of successor-in-interest Wash. & Lee L. Rev. 729-780 (2005). 169-200 (2005). contracts to transfer interests in the con- Schorr, Appropriation as Agrarianism: Dis- tracts to the beneficiaries should be very Torts and insurance tributive Justice in the Creation of Property helpful. This will avoid what some had Cantu, Fattening Foods: Under Products Rights, 32 Ecol. L. Q. 3-71 (2005). earlier feared, the necessity of holding the Liability Litigation is the Big Mac Defective?, estate open to receive the payments. 1 J. Food L. & Pol’y 165-185 (2005). If you desire a copy of any article or further Early, Potential Grower Liability for Biotech information, please contact the Law School Tobacco manufacturer and importer Crops in a Zero-Tolerance World, 9 ABA Agric.. Library nearest your office. The National AgLaw assessments Mgmt. News. 8-13 2-2005. Center website < http:// The TTPP is paid from funds generated Marquitz, Right to Farm in Pennsylvania: www.nationalaglawcenter.org > http:// through an assessment on producers and Arriving at Act 38, 22 Agric. L. Update 4-5 8- www.aglaw-assn.orghas a very extensive Ag- importers of tobacco products. The FSA 2005. ricultural Law Bibliography. If you are looking published its Final Rule, Tobacco Transition for agricultural law articles, please consult this Assessments, in the Federal Register on Feb- Trade regulation/antitrust bibliographic resource on the National AgLaw ruary 10, 2005, [70 Fed. Reg. 7007 – 14] O’Brien, Developments in Horizontal Con- Center website. setting assessments for domestic manu- solidation and Vertical Integration (National — Drew L. Kershen , Professor of Law, The facturers of tobacco products and import- AgLaw Center Publications) 2005 http:// University of Oklahoma, Norman, OK ers of tobacco products. www.nationalaglawcenter.org Pittman, Market Concentration, Horizon- tal Consolidation, and Vertical Integration in Disclaimer Hogs and Cattle, 22 Agric. L. Update 1-2, 4- Information provided here is for educational 7 7-2005. purposes only. Nothing herein constitutes the Pittman, Market Concentration, Horizon- Report from Executive Director provision of legal advice or accounting services. tal Consolidation, and Vertical Integration in Cont. from p. 8 Quota holders and tobacco producers should the Hog and Cattle Industries: Taking Stock UPDATE BY E-MAIL. If you have not contact their legal advisers, tax practitioners of the Road Ahead (National AgLaw Center already switched to the e-mail version of and other professional advisers relative to their Publications) 2005 http:// the Update, I urge you to use the member- circumstances in regards to these issues. www.nationalaglawcenter.org ship renewal form to change your sub- scription to the e-mail version. This will Editor’s note: This article is a companion Veterinary law save the association a considerable piece to the In Depth article, entitled “Tobacco Note, Toward a More Equitable Approach to amount of expense in reduced printing quote buyout tax considerations”, by Guido Causation in Veterinary Malpractice Actions, and portage costs. In addition, if you had van der Hoeven, appearing in the September/ 16 Hastings Women’s L. J. 201-220 (2005). an e-mail subscription now, this issue of October 2005 issue of the Agricultural Law the Update would have been in your e- Update, pages 4-7, 10-11, Water rights: agriculturally related mail box at least a week before you read Blankenau, Wilmoth, & Bromm, Spear T this. If you would like to see a sample PDF Ranch v. Knaub: The Reincarnation of file of the e-mail Update, please send me Riparianism in Nebraska Water Law, 38 an e-mail at [email protected] and Creighton L. Rev. 1203-1220 (2005). I will send a sample file. Case Note, Following The Crowd: The Su- preme Court of South Dakota Expands the CONFERENCE HANDBOOK ON CD. Scope of the Public Trust Doctrine to Non- Again this year, we are offering CD-ROMs Navigable, Non-Meandered Bodies of Water in of the printed materials from the 2005 ... (Parks v. Cooper, 676 N.W.2d 823, S.D. conference. The CDs also contain the ar- 2004), 38 Creighton L. Rev. 1317-1368 (2005). chives of the Update from 1999-2005. Just Case Note, The Supreme Court of Colorado send me an e-mail and I will send one to Incorrectly Excused Nonuse of a Senior Water you with an invoice for $45.00. Right Contrary to Precedent Establishing the Owners’ Actions Demonstrated Intent to Aban- As always, I look forward to hearing from don (East Twin Lakes Ditches and Waterworks, all members about suggestions for im- Inc. v. Bd. of County Comm’rs of Lake County, proving your membership benefits. Happy 76 P.3d 918, Colo. 2003), 38 Creighton L. Rev. Holidays to all. 1221-1261 (2005). Comment, Floating on Uncharted Head- — Robert P. Achenbach, Jr, waters: A Look at the Laws Governing Recre- AALA Executive Director ational Access on Waters of the Inter-Moun- P.O. Box 2025, Eugene, OR 97405 tain West, 5 Wyo. L. Rev. 561-603 (2005). Phone 541-485-1090 Fambrough, Secrets for Negotiating Texas E-mail [email protected] Groundwater Leases, Tech. Rep. 1593 (Texas A&M Real Estate Center) 2-2002 http://
NOVEMBER 2005 AGRICULTURAL LAW UPDATE 7 Report from the Executive Director
MEMBERSHIP RENEWALS. The new year rapidly approaches and that means that it is time to renew your membership to the AALA. Membership renewal packets should be arriving shortly and I urge everyone to return their membership dues promptly to avoid unintentional interruption in your Update subscription and other member benefits. Recent graduates should notice the membership category of “new professional” for $60 for members who are within three years, as of January 1, 2006, of graduating from a college or law school.
2006 MEMBERSHIP RECRUITMENT PROGRAM. Members will also receive information about the 2006 member- ship recruitment program which provides the chance to win a free registration to the 2006 annual conference in Savannah, GA. In 2005, all recruiters received at least a $25 gift certificate from Amazon.com so everyone wins. New this year, we are offering new members a sign-up premium of a free copy of the 2005 conference handbook on CD. The CD also contains the archives of the Update from 1999-2005.
ONLINE DATABASE. Members should check the information listed on the AALA online database for accuracy and completeness. To log on to the “members only” portion of the web site, use your last name as the username and your member number as the password. The membership renewal forms will have your member number listed or send me an e-mail if you forgot your password.
Cont. on p. 7
8 AGRICULTURAL LAW UPDATE NOVEMBER 2005