Lamson, Dugan and Murray, LLP, Attorneys at Law

Not So Fast: RMA Continues to Scrutinize New Producer Crop Status

Posted in Crop Insurance, Farm Management, Government Regulations

slow down road sign

If you have received a Notice of Overpayment and Removal of New Producer Status from your crop insurance company, you are not alone.  In 2012 the Risk Management Agency started auditing crop insurance applications wherein the insured had requested “New Producer” status.  The effects of the audit have come to fruition in the last few years.

The notices generally demand immediate payment of any indemnity paid pursuant to the benefits provided under New Producer status.  The producer runs the risk of being placed on the Ineligible Tracking System list; essentially barring the producer from crop insurance until removed from the list.  While an attorney can assist the producer to fight these notices, the best play is to avoid receiving one and paying attorney fees by knowing the eligibility requirements for New Producer status.

The RMA audit came about when RMA started receiving complaints that producers were dumping bad yield history by creating new farming entities to farm the land.  The new entity would then obtain insurance using 100% of the county yield average as a “New Producer” rather than the producer’s prior low yield history.

However, “to be a new producer, the insured must not have produced the crop in the county for more than two APH crop years.”  Crop Insurance Handbook Sec. 15(E)(1).  Furthermore, “formation of a new person (business entity such as a corporation, partnership, trust, etc.) comprised of one or more persons does not automatically qualify the person as a new producer.”  Crop Insurance Handbook Sec. 15(E)(1)(b).

When applying for crop insurance an agent will routinely ask whether the producer has previously farmed in the county.  In the event of a farming entity involving one or more producers, the individual applying for the insurance on behalf of the entity must know whether any member has ever farmed in the county.  If so, the entity is not eligible for New Producer status.

So slow down and take the time to investigate the crop insurance rules that may affect you when buying and farming land in a new county.  Although 100% of the county average may sound good,  repaying an unearned indemnity 2 years later sounds worse.  There are ways to transfer yields from an individual to a new entity or vice versa.  However, you need to let your agent know so the agent can get the proper paperwork submitted before the applicable deadlines.  As always an agent’s help is only as good as the information the producer provides.

Pulled from the Swamp: EPA Wetland Determination Now Judicially Reviewable

Posted in Government Regulations, Water Law

Sunset Over Scenic Everglades National Park Horizon

Landowners and developers bogged in an EPA wetland determination were recently thrown a life line when the United States Supreme Court determined The Army Corps of Engineer’s (Corps) “jurisdictional determinations” (JD) regarding wetland designations are reviewable by the court.  United States Army Corps of Engineers v. Hawkes Co. Inc.

Under the Clean Water Act (CWA) landowners and developers who do not have the proper permits can face severe criminal and civil penalties for releasing any pollutant into “the waters of the United States.”  Anybody stuck wading through the permitting process will tell you it is difficult, time consuming, expensive, and may eventually prohibit the intended use of the property.  Furthermore, there is yet to be a consensus on the definition or scope of the term “waters of the US”.  Consequently, a landowners or developers may never be certain whether a permit is necessary before conducting any activity that may discharge a pollutant into a “water of the United States”.

To solve this dilemma, the Corps will graciously provide a “jurisdictional determination” (“JD”) designating whether a property (1) contains waters of the US; (2) does not contain waters of the US; or (3) “may” contain waters of the US.  Any JD stating the property contains or does not contain waters of the US is binding on the Corps and landowner or developer for 5 years.  The JD is also appealable to the EPA but not to the District Court.

Because the landowner was not allowed to appeal the determination beyond the EPA, the landowner was stuck with the decision unless the landowner decided to discharge the pollutant and argue in a government enforcement action that a permit was not necessary.  The landowner or developer could also complete the permit process and have the determination judicially reviewed after the permit is issued or denied.

The Supreme Court determined that neither was a viable option for the landowner or developer.  Federal law states that any agency decision that (1) concludes the agency’s decision making process and (2) legally affects the rights or obligations of another are appealable to the federal district court.  The Supreme Court found that a Corps’ JD met both obligations.

First, the JD was issued after a fact-finding investigation and was described as a “final agency action” by the Corps.

Second, the JD had a legal binding effect for a period of 5 years which directly affected the legal rights and remedies of the landowner or developer.

Obviously any feelings of joy or celebration have to be tempered by the fact that any court to which the JD is appealed can determine the JD is correct.  However, the life line gives the landowner or developer an opportunity to pull the decision from the very agency which made the original decision.

You can find the entire decision at:United States Army Corps of Engineers v. Hawkes Co.

North Dakota Farmer’s 4 Year Sentence for Insurance Fraud Upheld

Posted in Crop Insurance

Such is the life of a farmer.   Even in times of a good crop, the potential insurance claim may be more valuable than the crop itself.  That may have been the case for Aaron Johnson of Norwood, North Dakota, who in 2014 received a 4 year sentence for receiving crop insurance payments on a potato crop he purposely damaged.

According to court records, Johnson had his hired man spray the potato crop with Rid-X and Flush, add frozen potatoes to the piles, and turning up the heat in the storage facility.  The process caused the potato’s to rot.  Thereafter, Johnson filed an insurance claim.  Unfortunately for Johnson, his hired man became an informant for the government in exchange for cash and leniency on some unrelated criminal charges.  The hired man subsequently turned on the government and informed Johnson of the government’s investigation of Johnson’s fraud.

Despite the hired man’s criminal history and tendency to turn in favor of anybody paying him, the government had enough other evidence to corroborate the hired man’s testimony. The District Court found Johnson guilty of insurance fraud and sentenced him to 4 years under an enhanced sentencing guideline.  Not one to give up without a fight, Johnson appealed the decision to the 8th Circuit Court only to have the decision affirmed on May 4, 2016.

From a legal standpoint, Johnson argued the government’s evidence was insufficient to support the verdict.  Specifically, Johnson claimed no reasonable jury could believe the testimony of the hired man.  However, the 8th Circuit confirmed the credibility of a witness is not an appealable issue.  Furthermore, the government had plenty of other evidence to support the conviction; including Johnson bragging about intentionally destroying his crop.

I’m sure there is a lesson to be learned from all this but I am not sure what it is.  Maybe it is any one of the following;

Be careful who you hire;

Don’t brag about defrauding the government; or maybe

Just don’t commit insurance fraud.

You can find complete details of this almost comical case at U.S. v. Johnson.

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



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.