TheFirstFurrow

Stick with us here. Most people probably understand the wisdom, or can at least appreciate the purpose, of maintaining your home. Over time your home gets cluttered, things break, and some of those deep, dark corners you never visit have to be dealt with. It’s not always a fun job, but doing it can make your home a more enjoyable place to live.

North Carolina’s statutes, just like a home, require ongoing maintenance. So it’s necessary, on occasion, for the Legislature to take a look at our statutes and clean up some of the confusing, unhelpful, and out-of-date provisions.

That’s where the annual Farm Act comes into play. Each year since 2013 state legislators have passed a Farm Act to make necessary changes to the law to better serve North Carolina’s farmers.

In the past, the Farm Act has addressed wide-ranging aspects of agriculture including transportation, legal liability, deregulation, clarifying terms and interpretation of federal laws, amongst many more.

The 2018 Farm Act is sponsored by Senators Brent Jackson, Bill Cook, and Norman Sanderson. Let’s get to the bill’s highlights:

Right-to-Farm

Last year we wrote about a serious threat to North Carolina’s ag economy: the arrival in 2013 of a group of out-of-state lawyers who make a living suing animal ag operations for nuisance. Fast forward five years. The cases developed and the court heard the first “bellwether” trial in April of this year. Unfortunately, it resulted in a $50 million damage award against Smithfield.

Of similar concern, several months before the first trial began a federal district court judge issued a ruling in the case that eviscerated North Carolina’s Right-to-Farm law, which protects every North Carolina farmer from nuisance lawsuits under certain conditions. The judge wrongly concluded that a farm isn’t protected by the law even when a plaintiff moves near the farm after it was established.

In response, S. 711 strengthens the Right-to-Farm defense and attempts to discourage future copycat lawsuits before they are filed.

Milk Labeling

In an effort to assist the struggling dairy industry and protect product integrity, the bill would direct the Food and Drug Protection Division of the Department of Agriculture and Consumer Services to immediately develop an enforcement plan to enforce the United States Food and Drug Administration’s standard of identity for milk. This would prohibit the sale of plant-based products mislabeled as milk, such as soy milk and almond milk. Enforcement could include notification of the Department’s intent to embargo all mislabeled products offered for sale in the State.

Farm Equipment Property Tax

The bill would require counties that use the “cost approach” in appraising farm equipment to use a standard depreciation schedule published by the N.C. Department of Revenue. The Department of Revenue must publish a depreciation schedule for farm equipment and make the schedule electronically available on its website. This ensures that depreciation schedules will be consistent across the state.

Additional Studies

The bill would instruct the Agriculture and Forestry Awareness Study Commission to study: (i) requiring the holders of unused rights-of-way and utility easements to offer the easements to the underlying property owners for fair market value; and (ii) the exclusion of property enrolled in the present use value taxation program from rural fire protection district and county service district taxes.

North Carolina has a rich agricultural tradition, and despite the growth of other industries in our state agriculture remains the state’s leading economic driver. That’s why the Farm Act is such an important piece of legislation, and one that North Carolina Farm Bureau supports wholeheartedly.

It’s no secret that farmers nationwide oppose the Obama Administration’s 2015 Waters of the U.S. (WOTUS) Rule. As we’ve written here before, the 2015 Rule would significantly expand the area where the federal government has the authority to regulate water. Why? Because under the 2015 Rule many tracts of land would become newly regulated “waters,” even land that is only wet for a couple of hours after it rains.

If implemented, farmers would have to apply for costly federal government permits to engage in even the most basic farming practices on these lands. And there is no guarantee that those permits would be approved. Accordingly, numerous federal lawsuits were filed in 2015, including one brought by American Farm Bureau, in the hopes of stopping the WOTUS Rule.

On Monday, the Supreme Court of the U.S. (SCOTUS) once again waded into the WOTUS Rule waters, issuing an opinion in one of those lawsuits, National Association of Manufacturers v. Department of Defense (NAM). The Court’s decision wasn’t a blockbuster (or a page turner, for that matter). It merely stated that opponents of the Rule had to file their legal challenges in the federal district courts, not the federal appellate courts. That’s the result the opponents of the Rule were hoping for. So, let’s call it a narrow win for farmers and other landowners.

But, ironically, the Court’s decision may be a double-edged sword. To explain why, we’ve got to look back at those 2015 lawsuits we mentioned above.

Remember that, until Monday, opponents of the WOTUS Rule weren’t exactly sure where to file their lawsuits. Should they file in federal district court or federal appellate court? To hedge their bets, multiple lawsuits were filed in both courts. Of the cases filed in federal district court, most were dismissed by federal trial judges who said they didn’t have authority to hear the challenges because the cases should have been—wait for it—filed in the federal appellate courts! But a district court judge in North Dakota said otherwise and blocked the 2015 Rule from taking effect. However, that ruling only applied to 13 states: Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, and Wyoming. Therefore, North Carolina farmers were not protected by the judge’s order.

Meanwhile, the cases filed in the federal appellate courts were consolidated in the Sixth Circuit, U.S. Court of Appeals. The Sixth Circuit ultimately blocked the Rule from taking effect while it wrestled with the procedural question that SCOTUS answered earlier in the week. Unlike the North Dakota decision, the Sixth Circuit’s order took effect nationwide and it has been in effect since October 2015. As a result, North Carolina farmers haven’t had to comply with the 2015 Rule.

But the nationwide order blocking implementation of the 2015 Rule will go away soon. That’s because, at the end of its Monday opinion, SCOTUS sent the NAM case back to Sixth Circuit, directing it to dismiss the all of the cases challenging the rule. If the Sixth Circuit doesn’t have the power to hear those cases, it can’t continue to block the WOTUS Rule. The process of sending NAM back to the Sixth Circuit will take a little over thirty days. So sometime in late February the national stay that has protected North Carolina farmers from the 2015 Rule will evaporate.

A month ago, farmers scored an important victory when the North Carolina Supreme Court issued an opinion in the case of Kornegay Family Farms v. Cross Creek Seed Co. It hasn’t gotten much media attention, but Kornegay is a significant case for North Carolina’s farm families, so let’s take a moment to break it down — in both legal terms and layman’s terms.

For more than two decades, two out-of-state trial lawyers have made millions suing farmers across the country. Four years ago, they came to North Carolina and started picking fights between about 90 hog farms and their neighbors, alleging the farms were nuisances. The lawyers told the neighbors they could recover substantial damages far exceeding the value of their homes. They didn’t ask the farmers to address the alleged nuisances—they just asked for money.

Most reasonable people understand there are some aspects of farming that are unpleasant. You can’t raise animals without some odor; you can’t transport farm products without trucks; and you can’t work the soil without occasionally stirring up dust. Recognizing this reality, North Carolina’s right-to-farm statute provides farmers with a limited defense against some nuisance lawsuits. But the right-to-farm law is silent about the amount of damages that can be recovered in nuisance actions.

In 2015, a federal judge considering these cases ruled that North Carolina’s nuisance law isn’t clear on damages. If this isn’t clarified, more lawsuits will be filed, pitting neighbor against neighbor. That means more money for the lawyers.

That’s why a bill was introduced last week in the N.C. House of Representatives. House Bill 467, introduced by Reps. Jimmy Dixon, John Bell, Ted Davis and David Lewis, would limit the compensatory damages in nuisance cases to the market value of the plaintiff’s property. Basically, if a nuisance reduces the value of your home by $25,000, you can be awarded up to $25,000.

The bill doesn’t prevent a neighbor from recovering damages in a legitimate nuisance suit. It cuts off the incentive for lawyers to use farmers and their neighbors to grow their bank accounts.

Farmers care about the communities they live in. Many times, they work with their neighbors to address problems and create solutions without unnecessarily wasting resources settling complaints in court. House Bill 467 is an assurance to all farmers that they can farm their land without the fear of repeated litigation and without the specter of catastrophic damages and legal fees.

The General Assembly should quickly pass H. 467.

News flash: Farmers own a lot of land. In fact, they own about 8.3 million acres in North Carolina, which is more than a quarter of the state and is roughly the size of Maryland and Delaware combined. It’s not surprising, then, that they pay attention when the General Assembly takes up bills relating to eminent domain. Last week the N.C. House of Representatives passed an eminent domain bill, H. 3, by a large bipartisan vote. It’s a good bill, so let’s use this opportunity to briefly talk about eminent domain and why H. 3 is needed.

About two months ago we reported on a case being argued in front of the Supreme Court of the United States. The case was US Army Corps of Engineers v. Hawkes Co., and it dealt with landowners’ rights to judicial review when they are told by the Corps that their land contains waters subject to regulation under the Clean Water Act. For more background on the case you can read our April 6 blog post here.

Last Tuesday the Supreme Court issued a unanimous but narrow decision in favor of the landowners in Hawkes.

Last week, the Supreme Court of the United States heard oral arguments in US Army Corps of Engineers v. Hawkes Co., Inc. The case is significant for a number of reasons: it could have major implications on how landowners are allowed to use their property; it could strike a blow to regulatory overreach by government bureaucrats; and it could provide insight into how the Court will view environmental regulation in future cases.