Lamson, Dugan and Murray, LLP, Attorneys at Law

Insuring Additional Acres? The Number of Acres Added May Affect Your Coverage

Posted in Crop Insurance, Farm Management, Government Regulations
Added Land: Insurance Options Ahead

Added Land: Insurance Options Ahead

 

Farm land does not change hands very often but when it does the acquiring operator should keep in mind the rules which may affect the operator’s crop insurance benefits covering the newly added land. Failing to understand and abide by the Risk Management Association’s (RMA) rules can cost an operator the maximum guaranteed yields and dramatically reduce the indemnity available under the Multi Peril Crop Insurance (MPCI) policy.

Most types of crop insurance provide some sort of coverage based on projected yields.  The projected yields are generally determined by the operator’s historical yields known as an Actual Production History (APH).  However, the RMA limits the APH on land added as an Optional Unit (OU) or new Basic Unit (BU) as follows:

1.     If the added land is less than 640 acres, RMA will approve APH yield established by the higher of (i) the applicable county average yield for the insured crop (T-Yield) or (ii) the operator’s county average yield for the insured crop (SA T-Yield).

2.     If the added land is 640 acres but less than 2000 acres, RMA will approve APH yield established by (i) the applicable variable T-Yield or (ii) the SA T-Yield if the operator requests and receives approval for the SA T-Yield from RMA.

3.     If the added land is 2000 acres or more, RMA will only approve APH yield established by the applicable variable T-Yield.

The request for RMA approval of the SA T-Yield on 640 acres or more must be submitted on or before the Acreage Reporting Date (ARD).  In the event the request is not made, the operator will be limited to an APH determined by the county average.  Depending on the operator, the county average yield may be substantially less than the operator’s average yields on similar crops in the county.  A lower APH will lower the guaranteed yields under the policy and consequently lower the insured’s indemnity payment in case of a loss.

Many operators rely solely on their agent to lead them through the process and catch issues such as the newly added land acreage limits.  However, an agent is only as good as the information the operator provides.  An operator who has a handle on the crop insurance rules will be better prepared to take advantage of benefits others may not request and prevent mistakes which can occur in the computation of the number of acres and types of crops planted.

Crop insurance can be an important safety net.  Every operator should take ownership of their insurance needs and the rules governing their coverage to ensure the best insurance coverage is provided.

 

 

 

Foregoing Work Comp Coverage? Remember to Provide Notice.

Posted in Farm Management, Government Regulations
Work Comp Claim Form

Work Comp Claim Form

 

Early in my career I had a Nebraska case come across my desk which involved a farm hand falling and striking his head while working on a farm truck.  The farmer had not obtained a workers’ compensation policy to cover such accidents because most farms and ranches are not required to provide workers’ compensation in Nebraska.  Unfortunately, the farmer had failed to have the employee sign the required notice informing the employee workers compensation was not provided.  The employee then had the option to pursue a claim against the farmer under the Nebraska Workers’ Compensation Act (the “Act”), which offered certain benefits to the employee.

Since that early case, I had not seen a similar case come through our firm.  I came to believe most if not all farmers and ranchers were aware of the notice requirement when electing to forego workers’ compensation insurance for their employees.  However, another case recently came across my desk.  So a refresher on Nebraska’s worker compensation laws as applied to farmers and ranchers may be a good idea.

First, the Nebraska Workers’ Compensation Act applies to every resident employer except to employers engaged in an agricultural operation and (1) employs only related employees; or (2) employs less than 10 unrelated full time employees.

Second, every exempt agricultural operation which does not provide workers compensation must have the employee sign the following notice

In this employment you will not be covered by the Nebraska Workers’ Compensation Act and you will not be compensated under the act if you are injured on the job or suffer an occupational disease.  You should plan accordingly.

Third, the agricultural operation will be subject to liability under the Act if the operation fails to provide and have such notice signed by the employee.

In the event the notice is not provided and signed, an injured employee has the option of pursuing a claim against the employer under the Workers’ Compensation Act.  Under the Act, the employee only has to prove he was injured while working for the employer.  The employer cannot generally escape responsibility for the injury even if the employee was at fault for his injuries.  Although the amount of damages the employee can recover are limited by the Act, automatic liability is a sizable advantage for any employee looking for compensation for his injuries.

Therefore, please remember to provide the notice and have it signed if you want a fighting chance to defend an injury claim from your employee.

 

Crop Insurance Claim Denied? Steps to Take Before Weathering the Arbitration Storm

Posted in Crop Damage Claims, Crop Insurance, Farm Management, Government Regulations

iStock_000047019710_Large

 

Every year, certain portions of the Midwest get pounded by bad weather causing bad yields or outright crop loss.  This year, several states encountered above average rainfall preventing several million acres from being planted.  At one point this summer, Missouri alone had approximately 4 million acres of un-planted corn and soybean acres.   During times of devastating weather, many producers rely on their crop insurance policies to mitigate crop losses.  Unfortunately, crop insurance payouts can be as unpredictable as the weather.

Seemingly as random the Midwest’s bad weather patterns, every year, a number of producers will receive letters from their crop insurance companies denying their claims. You options to dispute the denial letter are limited to the crop insurance policy.  Section 20 of the Common Crop Insurance Policy requires most disputes be arbitrated if they cannot be settled otherwise.

You have one year from the date of the denial to initiate the arbitration process.  However, before sending the arbitration demand, you should take the following five steps:

First, review your policy to determine the exact provision which the insurance company has relied upon in denying your claim.  Most denial letters specify why the claim is denied and cite the policy provision which supports the insurance company’s reasoning.

Second, call the adjuster and determine whether there is any information  you may have left out or could be used to re-evaluate the claim.  Additional information may not change the insurance company’s decision but you do not want to be denied simply because you failed to produce relevant information.

Third, determine whether the value of the denied claim is worth fighting the insurance company.  Insurance companies are well equipped to defend their denials.  The cost of pursuing a claim, no matter how strong, may be more than the total value of the claim.  In the end, you have determine whether pursuing the insurance company is throwing good money after bad.

Fourth, start putting together your case by compiling the necessary official weather records evidencing the weather event which caused the loss.  Collect any and all receipts from seed and other inputs you purchased prior to planting.  Also contact an agronomist which can review the records, your documentation, and your property to provide an independent analysis of your claim and loss.  It is good to know upfront if a certified agronomist agrees with your claim before incurring the time and effort involved in arbitrating the matter.

Finally, contact your attorney.  Although lacking the formality, arbitration is similar to a full blown trial on the merits of your claim.  Therefore, you are going to want somebody trained to elicit testimony from witnesses and present evidence in a way the arbitrator will understand and accept.  Plus you will want somebody who knows how to make a record of the proceeding in case the arbitration goes bad and you have to seek a judicial review. Most importantly, any attorney worth his/her salt will give you an honest opinion of your chances at success in an arbitration hearing.

Winning an arbitration award against the insurance companies is not an easy task and success is not guaranteed even in the best cases.  Although arbitration decisions may seem as random as the weather which caused your loss, it may be your only option to recover under the policy.

 

Apply for Your Commercial Drone Use Exemption Now

Posted in Farm Management, Government Regulations

Quadrocopter drone flying in the skyAs previously explained the Federal Aviation Administration (FAA) is working on a rule to allow commercial use of unmanned aircraft (i.e. drones) without going through the same rules for manned aircraft.  However, until the rule is finalized farmers and ranchers can apply for an exemption under Section 333 of the FAA Modernization and Reform Act of 2012 (FMRA).

The exemption process is not necessarily easy.  However, the FAA website provides detailed instructions for applying for a Section 333 exemption.

It is important to recognize the 333 exemption does not override other regulations including:

–     The UAS registration and proper identification markings requirement and;

–     The PIC’s airmen certificate and medical certificate requirement.

The FAA receives reports of unsafe drone operation on a daily basis, ranging from “incidents at sporting events, flights near manned aircraft, to interference with wildfire operations.”  U.S. Transportation Secretary Announces Unmanned Aircraft Registration Requirement.   In response, a task force is being created to develop a registration process for drones.  The task force is also given the responsibility to make additional safety recommendation the task force deems imperative.  Consequently, scouting fields or other agricultural uses for drones may be more difficult to perform absent an exemption.  At least until the proposed rule becomes effective.

Currently, the FAA is offering blanket Certificates of Authorization (COA) for flights at or below 200 feet of any operator with a 333 exemption.  The blanket COAs are limited to aircraft weighing less than 55 pounds and operated during daytime Visual Flight Rules and within visual line of sight of the UAS operator.

The FAA claims Section 333 exemptions are a priority and as of September 22, 2015 the FAA has granted 1,658 petitions.  While the application may be tedious, a Section 333 exemption is currently your only option if you want to use that drone in your farm and ranch operation.

The 6th Circuit Puts the Brakes on EPA Enforcing New Definition of Waters of the US

Posted in Government Regulations, Water Law

water drop

 

The Environmental Protection Agency (EPA) was set to begin enforcing the new definition of Waters of the United States (WOTUS) on August 28, 2015.  However, several states filed suits in various jurisdictions alleging the EPA lacked the authority to expand its jurisdiction pursuant to the new definition.  Now the United States Court of Appeals for the 6th Circuit has put the brakes on the EPA’s plan to enforce WOTUS until the court can determine whether the new definition is lawful.

Earlier this summer, thirteen states successfully obtained an order from the United States District Court of North Dakota prohibiting the EPA from enforcing the new definition until the states had an opportunity to litigate their claims.   The judge found “the states are likely to succeed on their claim because (1) it appears likely that the EPA has violated its Congressional grant of authority in its promulgation of the Rule at issue and (2) it appears likely the EPA failed to comply with [Administrative Procedure Act] requirements when promulgating the Rule.”  Judge Blocks EPA’s ‘waters’ rule from taking effect; find the full order here.  However, the order only applied to those thirteen states who filed suit in North Dakota.  Consequently, the EPA planned to establish the new rule in the remaining 37 states.

On October 9, 2015 the 6th Circuit extended the stay to all states.  Similar to the North Dakota Court, the 6th Circuit found the the petitioners have a substantial possibility to succeed on their claims that the new definition “is at odds” with the Supreme Court’s prior rulings, a product of “facially suspect” rulemaking and not supported by scientific decision making.  Read full opinion here.

In sum, the EPA was not going to be able to effectively enforce the new definition of WOTUS considering the multiple claims filed across the country.  Now the brakes won’t come off WOTUS until and unless the EPA  can obtain a favorable ruling from the 6th Circuit and eventually the U.S. Supreme Court.

Crop Insurance Deadline: Missouri AG Tries to Buy Time for Flooded Farmers

Posted in Crop Insurance
Too wet to plant

Too wet to plant

 

Earlier this month, Chuck Koster, Attorney General for Missouri, filed a lawsuit against Tom Vilsack, U.S. Secretary of Agriculture to extend the deadline for filing  planted acreage reports.  The USDA requires most farmers in Missouri to report their planted acres by July 15 in order to secure coverage under the farmers’ crop insurance policies.  The USDA allows farmers a 5 day grace period to submit the reports.

However, heavy rainfall and flooding the last few months pushed the planting season back several weeks preventing many farmers from getting their crops planted in time to submit the acreage report.  Approximately 60% of Missouri farmers may be ineligible for corp insurance on some of their land as a result of missing the deadline.  Many farmers left some fields fallow and submitted the acreage reports on the ground they were able to plant.

The lawsuit is a last ditch effort to convince the USDA to accept acreage reports after the deadline and farmers are encouraged to keep filing their paperwork while the lawsuit is processed.  Hopefully the suit will buy the time necessary for Missouri’s flooded farmers to receive the insurance coverage they need.    

For more information on the suit visit the articles in the Insurance Journal, the Springfield News Leader and KSPR.   

 

Syngenta Lawsuit Update: Fed. Ct. Sends Cases Back to State Court

Posted in Biotechnology
Syngenta cases u-turned back to state court

Syngenta cases u-turned back to state court

On May 5th, 2015, United States District Judge, John Lungstrum sent two lawsuits against Syngenta back to the state courts in which they were originally filed.  The decision appears to be a major strategic victory for plaintiffs looking to keep their claims in state court and a potential blueprint for others who may want to file a claim in state court.

Syngenta has been under a pile of lawsuits filed in federal and state courts across the country for losses allegedly caused by the the release of Agrisure Viptera trait (otherwise known as MIR162) prior to China’s approval of the trait in imported grain. The federal lawsuits have been combined and moved to a Multi-District Litigation (“MDL”) in the United States District Court for the District of Kansas.  Syngenta had been attempting to remove most if not all state court claims to the federal MDL claiming the state court suits include questions of federal law and, therefore, fall under federal court jurisdiction.

Strategically, Syngenta wanted to litigate all the cases in federal court for two reasons. First, defending all the cases in one federal forum is easier and more cost effective than appearing in multiple states.  Syngenta can file pre-trial motions and discovery requests against all plaintiffs at one time rather than individually in each state court.  Second, and most importantly, Syngenta did not want to defend cases in state courts which may be located in the farmers’ back yards.

Removing the state cases to federal court, Syngenta argued the plaintiffs’ claims questioned a foreign government’s impact on a domestic industry and therefore, the federal common law of foreign relations trumped state courts jurisdiction.  Throwing a wrench in Syngenta’s strategy, the judge disagreed and found the plaintiffs did not question China’s actions nor did China or the U.S. express interest in the lawsuits. Therefore, the alleged federal question was “not substantial” and the judge remanded the two cases back to the Louisiana state court in which they were originally filed.

The judge admitted his ruling may “result in the remand of many MDL cases to state court” and ordered Syngenta to provide a list of all cases removed from state court under the same theory.   A complete copy of the opinion can be found here.  Since the original opinion, Judge Lungstrom has remanded more than 1,000 other lawsuits back to state court.

Corn producers thinking about filing a claim against Syngenta should talk with their attorney about how this ruling may affect where their claim is filed and which claims to assert.

 

 

Actively Engaged In Farming: The New Definition

Posted in Farm Management, Government Regulations

 

As farm operations continue to grow and become more complex, multiple owners or members of a farming entity may consider themselves “farm managers” even though they never set a foot in the field.   Characterizing oneself as a “farm manager” may entitle the individual to benefits under certain government programs. However, to obtain benefits from such programs an individual has to be considered actively engaged in farming, which means

(1)     Contribute land, capital, or equipment; and

(2)     Contribute personal labor, active personal management, or a combination of personal labor and active personal management.

The term “active personal management” has been subject to various interpretations, especially in non-family farming operations that are seeking to qualify more than one manager and collect more benefits.  Therefore, the Agricultural Act of 2014 (Farm Bill) proposed a new rule to define what constitutes a “significant contribution of active personal management.”

The new rule would restrict the number of farm managers to one person, except in situations where the farming operation is considered a “large operation” or “complex operation”.  While large and complex operations may qualify for two or three managers, no operation would be allowed more than three.

The new rule would also redefine “significant contribution of active personal management” as an annual contribution of 500 hours of management, or at least 25% of the total management required for that operation.  Eligible management activities would include:

Capital, land and safety-net programs: Arrange financing, manage capital, acquire equipment, negotiate land acquisition and lease, and manage insurance or USDA program participation

Labor: Hire and manage labor; and

Agronomics and Marketing: Decide which crop(s) to plant, purchase inputs, manage crops, … price crops, and market crops or futures.

The newly proposed standard was created for those farming operations structured as general partnerships or joint ventures rather than family farming operations.  Consequently, the new rule would not affect farming operations made up by family members, landowners who share a risk in the crop, or spouses whose husband or wife are actively engaged in farming.

The comment period for the proposed rule ended in May and are to be implemented in 2016.  Farm operations with multiple “farm managers” need to ensure the they meet the new requirements of “actively engaged in farming” prior to seeking benefits from various farm programs.

For more information please check out the Farm Service Agency website here, and the fully version of the proposed rule here.

 

 

 

Getting Permission: FAA Proposes New Regulations to Legalize Drone Scouting

Posted in Farm Management, Government Regulations

When deciding whether to let your spouse know you are going out for a beer with friends rather than straight home for dinner, you may have heard the phrase “it is better to ask for forgiveness than it is for permission.”  If you haven’t heard that phrase, then I guess we do not have the same type of friends.  Recently, I have noted the truism is being entertained by those using drones for scouting crops and other agricultural uses.

Quadrocopter drone flying in the sky

 

Currently, the Federal Aviation Administration (FAA) bans the use of drones or UAV’s (unmanned aerial vehicles) for almost all commercial purposes; including crop scouting, irrigation equipment monitoring, mid-field weed identification, variable rate fertility, and cattle herd monitoring.  Despite the ban, many producers are using drones for these purposes and figure receiving forgiveness would be easier than getting FAA permission.

 

 

In response to the unavoidable drone revolution, the FAA has proposed new regulations to govern the use of drones for commercial purposes.  The regulations provide several restrictions for drone use including the following:

–     UAV weight limit of 55 lbs;

–     The operator must be able to see the UAV at all times, unaided by any device;

–    Daylight operation only;

–     Maximum airspeed of 100 mph;

–     Maximum altitude of 500 feet;

–     Minimum weather visibility of 3 miles;

Drone operators would also be required to meet the following criteria:

–    Pass an initial aeronautical knowledge test and subsequent test every 2 years;

–     Be vetted by the Transportation Security Administration;

–     Obtain an UAV operator certificate; and

–     Be at least 17 years old.

I expect some may not want to hassle with the restrictions or operator certification and continue to ask for forgiveness rather than seek permission.  However, as a producer who hires a crop scout, it would be in your interest to make sure the scout has FAA permission before using a drone.

Please visit the FAA Website for the complete set of rules and summary of the provisions.

 

Des Moines Divides the House: Files suit against rural drainage districts

Posted in Uncategorized

As previously reported in A House Divided, Des Moines claims its water supply has been polluted by excessive nitrogen from farm runoff drained through the rural tiling systems.  Des Moines’ threat to sue neighboring rural drainage districts for failing to prevent the pollution of Des Moines water supply is no longer idle.

On March 16, 2015 Des Moines filed suit against the board of supervisors of Sac County, Calhoun County and Buena Vista County for allegedly violating the Clean Water Act, which regulates point source pollutants.

The lawsuit claims the drainage districts’ actions violated provisions of the Clean Water Act, the Iowa Code, was a public and private nuisance, and constituted negligence, trespass and a taking of Des Moines water rights.  Des Moines seeks compensation for the alleged discharge of nitrates into Des Moines water supply plus a permanent injunction requiring the counties to “take all steps reasonably necessary within a reasonable period of time to reduce the discharge of nitrate to the Raccoon River to concentrations that do not exceed 10 mg/L”.

The house has been officially divided.  The question is whether it can be repaired.

A copy of the complaint can be found at: Des Moines Board-of-Water-Works-Trustees Complaint

Crack in the wall