Con Robinson: Mastering The Art of Begging For Forgiveness

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By: Dillon Nichols, Staff Member

Con Robinson owns a composting business on his property at 4247 Georgetown Road just northwest of Lexington. Though zoned for rural agriculture use, the Board of Adjustment (the “Board”) issued Mr. Robinson a conditional permit in 1990, which, until recently, authorized his compositing business.[i] According to the Zoning Ordinance regulations, the intent of agriculture rural (A-R) zoning is “to preserve the rural character of the agricultural service area by promoting agriculture and related uses.”[ii] Conditional uses are additional activities that require the Board’s approval.[iii]

Commercial composting operations are allowed under conditional uses, but the ordinance requires that “the Board specifically consider and be able to find that the proposed use will not constitute a public nuisance by creating excessive noise, odor, traffic or dust.”[iv] The ordinance, however, only permits “the open windrow or static pile method of aerobic processing using plant material, soils and animal manure.”[v] The windrow composting method requires setting up long piles of organic matter and turning them periodically, which, over time, creates compost as microbes decompose the organic waste.[vi]

The true timeline still remains uncertain, but for some time throughout the aughts, Mr. Robinson was operating an illegal rock quarry.[vii] Some say Mr. Robinson’s composting operations ceased as early as 2003.[viii] According to minutes at a Board of Adjustment meeting, Mr. Robinson began digging and blasting on his A-R zoned land.[ix] In 2010, Mr. Robinson applied “for a conditional use permit to conduct a temporary mining and quarrying operation to improve an existing composting site.”[x] In support of his application, Mr. Robinson claimed that he needed to create an all-weather operation because, “[i]n the winter, he found that he could not work in the windrow method because weather conditions were too wet.”[xi] Mr. Robinson received a grading permit from the Division of Engineering to alter his land, presumably to build a flat space to accommodate his enhance compost operation. Board Member Jan Meyer asked Mr. Robinson if building a concrete pad—as other compost companies in the area have done—would allow him to work year around. He responded, “he could not afford to provide that amount of concrete on 22 acres.”[xii]

During the public meeting, eighteen of Mr. Robinson’s neighbors presented evidence in opposition to his ongoing operation and to his new quarry permit request.[xiii] Among other complaints they asserted that Mr. Robinson had: dug up to twenty feet below the surface; operated a commercial quarry business in violation of the zoning ordinance; reduced his composting operation to roughly ten percent of his land; used a type of composting method that violated in the zoning ordinance; damaged their collective property values; engaged in explosive blasting without proper permits that purportedly damaged a neighbor’s house foundation; and created enough limestone dust to kill seventy-five percent of his neighbor’s pine trees.[xiv] The board ultimately rejected Mr. Robinson’s request for a temporary quarry permit.[xv]

In January of this year, the board again examined Mr. Robinson’s supposed commercial composting operation. After finding that Mr. Robinson was violating his various permits, the board revoked his conditional composting permit.[xvi]

Though Mr. Robinson’s questionable activities have been well documented, the “illegal”[xvii] quarry operation is surprisingly under publicized. Given the gravity of this case, the Lexington-Fayette Urban County Government must answer two important questions: will it hold Mr. Robinson accountable and take the necessary steps to disincentive future willful violations of its zoning laws?
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[i] Minutes for the Board of Adjustment Meeting, Urban County Board of Adjustment, October 29, 2010 at 31.
[ii] Lexington-Fayette Urban County, Zoning Ordinance art. 8, § 8-1. (2013).
[iii] Id.
[iv] Id.
[v] Id. (emphasis added).
[vi] See Windrow composting systems can be feasable, cost effective (Research Brief #20), Center for Integrated Agricultural Systems (1996), available at http://www.cias.wisc.edu/crops-and-livestock/windrow-composting-systems-can-be-feasable-cost-effective/.
[vii] Tom Eblen, Lexington's ordinances governing urban industry are inadequate, Lexington Herald-Leader (February 2, 2011) available at http://www.kentucky.com/2011/02/02/1620014_tom-eblen-lexingtons-ordinances.html.
[viii] Breaking the rules with few consequences; Unauthorized quarrying in rural zone for years, Lexington Herald-Leader (February 3, 2013), available at http://www.kentucky.com/2013/02/03/2501294/breaking-the-rules-with-few-consequences.html.
[ix] Minutes, supra n. 1 at 30-37.
[x] Id. (emphasis added).
[xi] Id.
[xii] Id.
[xiii] Id.
[xiv] Id.
[xv] Id.
[xvi] Minutes for the Board of Adjustment Meeting, Urban County Board of Adjustment, January 1, 2013 at 20-21.
[xvii] Eblen, supra n. 3.

Business Planning in Agriculture: Farmers Should Consider Forming a Limited Liability Company

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By: Matthew Doane, Staff Member

Like any other business, effective business planning is essential when it comes to the formation and operation of a farm. Farmers should consider utilizing a limited liability company, or LLC, when deciding what business entity is the right choice for them. The advantages outlined below are general principles of structure and governance associated with limited liability companies. It is important to note that each state has its own applicable statutes associated with LLC’s, and farmers should consult those before forming a limited liability company.

First and foremost, limited liability companies are seen as separate fictitious entities distinct from their owners.[1] Thus, the most appealing advantage of an LLC is that all LLC owners are protected from personal liability against debts and claims of the business.[2] While there are some exceptions, generally this means that if the business cannot pay its creditor, the creditor cannot pursue any of the LLC owners’ personal assets.[3] Put in an agriculture perspective, if a farm businessperson, acting as a manager of the LLC, takes out a million dollar loan from the local bank for new farming equipment, and for some reason the LLC must default on the loan, the local bank cannot come after the personal assets of LLC members. With all sorts of avenues for farmer liability in today’s world, limited liability associated with an LLC is a huge advantage for the modern day farmer. Forming an LLC allows farmers to not only protect their personal assets, but also peace of mind.

The federal government does not classify LLC’s as a separate tax entity, thus an LLC does not pay any income tax at the entity level, but instead the business’s profits and losses are reported on the individual income tax returns of its members.[4] The advantage of this taxing structure to farmers is obvious: single taxation on any profits that their farm brings in.

Finally, Limited Liability Companies provide flexible ways for management of its day-to-day business. LLC’s can either be “member managed”, with all of the owners of the LLC participating in day-to-day business decisions, or “manager managed”, where owners appoint one or more managers to manage the LLC.[5] Management of an LLC is set out in the LLC’s operating agreement.[6] This flexibility offers farmers a way to manage and control the business operations of the farm while enjoying limited liability to their personal assets.

Utilizing a limited liability company business model provides farmers with limited liability associated with their personal assets, single taxation on profits, and the ability to control and manage the day-to-day business of the farm. Farmers should seriously consider the advantages that an LLC offers to their business.
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[1] Revised Unif. Ltd. Liab. Co. Act § 104(a) (2006).
[2] Id. § 304.
[3] Id.
[4] U.S. Small Business Administration, Limited Liability Company, http://www.sba.gov/content/limited-liability-company-llc (last visited October 21, 2013).
[5] Revised Unif. Ltd. Liab. Co. Act, supra note 1, § 407.
[6] Id.

No Subsidies for “Losers”

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By: Sean R. Courtney, Staff Member

The Wind Production Tax Credit (PTC) “was first enacted as part of the 1992 Energy Policy Act as a replacement for prior incentives for wind generation.” [i] The current tax credit is 2.3 cents per kilowatt-hour for ten years.[ii] The PTC will expire at the end of 2013 for future companies wanting to enter the market.[iii] The following provides arguments from both sides of the issue and gives an opinion on whether the tax credit should be renewed.

The Heritage Foundation, a conservative think tank, contends Congress should end the Wind PTC.[iv] It “threatens the long-term viability of the wind industry by focusing efforts on securing an extension rather than recognizing the true price point necessary to become competitive and innovative to achieve that goal.”[v] Since Congress had not extended the PTC in 2000, 2002, and 2004, the production of wind energy fell 93, 77, and 73 in the following years.[vi] The Wind PTC hurts taxpayers because extending the tax credit would amount to $6.1 billion for one year and $18 billion for five years according to the Joint Committee on Taxation.[vii] “The Wind PTC has already cost taxpayers billions, distorted energy markets, and misallocated resources toward politically favored energy sources and technologies.”[viii]

Rob Gramlich, the American Wind Energy Association’s senior Vice President, wishes to extend the Wind PTC.[ix] He explained how the Wind PTC made the wind industry the “No. 1 source of new generation capacity last year.”[x] Most are made in the United States by about 550 plants throughout the country.[xi] Rural areas benefitted each year from approximately $400 million in yearly property taxes and $120,000 to farmers for the life of each wind turbine.[xii] The Wind PTC only costs about $2 billion for the year and generates in excess of $20 billion in private investment and allows 15 million Americans electricity in their homes.[xiii] He explained that uncertain policy hurts the wind industry and reiterated that Congress should extend the tax credit.[xiv]

The Federal Government should not subsidize private industries in any case. Generally, the only reason that industries need government subsidies is if they cannot thrive on their own. Thus, the Government subsidizes industries that will eventually fail when no taxpayer dollars come their way. This is no different with the wind sector. The Government should discontinue the Wind PTC and allow the free market to work. With a free market, taxpayers will benefit from cheaper energy costs and the energy industry can innovate without the threat of subsidized “losers.”
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[i] Wind Energy Tax Credit Set to Expire at the End of 2012, U.S. Energy Information Administration (Nov. 21, 2012), http://www.eia.gov/todayinenergy/detail.cfm?id=8870
[ii] Richard Rubin and Christopher Martin, IRS Sets Wind Tax Credit Regulations for 2013 Projects, Bloomberg (April 15, 2013 5:03 PM), http://www.bloomberg.com/news/2013-04-15/irs-sets-wind-tax-credit-regulations-for-2013-projects.html.
[iii] Lauren Gardner, Energy Tax Credits Set To Expire Could Hurt Wind Farm Industry, Roll Call (Oct. 8, 2013 3:37 PM), http://www.rollcall.com/news/energy_tax_credits_set_to_expire_could_hurt_wind_farm_industry-228252-1.html.
[iv] Nicolas Loris, Let the Wind PTC Die Down Immediately, Heritage Foundation (Oct. 8, 2013), http://www.heritage.org/research/reports/2013/10/wind-production-tax-credit-ptc-extension.
[v] Id.
[vi] Id.
[vii] Id.
[viii] Id.
[ix] Legislators Debate Survival of Wind Production Tax Credit, North American Windpower (Oct. 3, 2013), http://www.nawindpower.com/e107_plugins/content/content.php?content.12106.
[x] Id.
[xi] Id.
[xii] Id.
[xiii] Id.
[xiv] Id.

The Risks of Hopping on the Wagon

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By: Alison Cox, Staff Member

Autumn is the season for fall festivals, pumpkin patches, and hayrides, or in other words a season for agritourism. Kentucky defines agritourism as “the act of visiting a working farm or any agricultural, horticultural, or agribusiness operations for the purpose of enjoyment, education or active involvement in the activities of the farm or operation.”[i] Agritourism is one of the fastest growing segments of tourism nationwide, and as of 2012 there were roughly 300 agritourism operators registered in the Kentucky Department of Agriculture’s database.[ii] As Kentucky tobacco farmers move forward in the post-tobacco quota buy out economy, agritourism venues and events have been able to provide additional income for tobacco producers.[iii] Other states have also seen an increase in agritourism as small farms are seeking alternative methods of increasing profits due to economic challenges from foreign competition and large, corporate farms.[iv]

Agritourism arguably helps improve the local economy, but there are challenges to beginning an agritourism operation. Operating an agritourism business requires different skills than those needed for running a typical farm, also start-up costs including farm renovations and marketing can be high.[v] Of most concern are new liabilities that come along with operating an agritourism business. Ben Shaffar the Director of Business Development at the Kentucky Department of Agriculture stated, “[l]iability is the No. 1 inhibitor for farmers looking to diversify into agritourism.”[vi] Allowing visitors on your property increases an operator’s liability, as there is a legal duty to patrons to reasonably ensure their safety and well being while participating in the operations activities. If a patron is harmed the operator could be held liable and open to a lawsuit. While farmers may already have liability insurance for their farm, this insurance may not extend to certain agritourism activities.[vii] Obtaining adequate liability insurance is critical to the success of an agritourism operation; one unfortunate event can be potentially detrimental to the business.[viii]

Kentucky aided in the growth of agritourism by minimizing liability for agritourism operators. In July 2012, KRS 247.809 went in to effect and provides limited liability protection if injury or death of a participant results from the inherent risks of the agritourism activity.[ix] It is important to note that limited liability laws may benefit agritourism operators, but they are in no way a substitute for insurance.[x] It is important for all agritourism operators to protect themselves by obtaining liability insurance coverage. Limited liability laws do not bar all lawsuits, and they only provide an extra layer of protection for agritourism operators.

In addition to Kentucky, nineteen other states have laws that limit liability for agritourism operators. [xi] Those seeking to participate in agritourism in the remaining thirty states have to take into account full liability before beginning their agritourism operations. Limited liability laws encourage farmers to make the decision to join the agritourism business, and as the agritourism industry is on the rise, it seems to be a step in the right direction for non-liability law states to start thinking about how they can encourage agritourism.
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[i] Agritourism, Kentucky Department of Agriculture, http://www.kyagr.com/marketing/agritourism.html (last visited Oct. 14, 2013).
[ii] Univ. of Ky. Coop. Extension Serv., Agritourism (2011), available at http://www.uky.edu/Ag/CDBREC/introsheets/agritourism.pdf, see also Agritourism, Kentucky Department of Agriculture, http://www.kyagr.com/marketing/agritourism.html (last visited Oct. 14, 2013).
[iii] What is Agritourism?, Kentucky Farms are Fun, http://www.kentuckyfarmsarefun.com (last visited Oct. 14, 2013).
[iv] What is Agritourism?, Eckert Agrimarketing, http://www.eckertagrimarketing.com/eckert-agritourism-what-is-agritourism.php (last visited Oct. 14, 2013).
[v] Univ. of Ky. Coop. Extension Serv., supra note 2.
[vi] Press Release, Kentucky Department of Agriculture, New law taking effect in July aims to protect agritourism operators and participants (June 27, 2012), http://www.kyagr.com/pr/newscenter/New-law-taking-effect-in-July-aims-to-protect-agritourism-operators-and-participants.htm.
[vii] Agritourism, Nationwide, http://www.nationwide.com/offering-agritourism-liability-considerations.jsp (last visited Oct. 14, 2013).
[viii] The Rural Landscape Inst., The State of Agritourism Liability Insurance in Montana and the West 1 (2007), available at http://www.rurallandscapeinstitute.org/insurance_report_09_07.pdf.
[ix] Ky. Rev. Stat. Ann. §247.809 (West 2012).
[x] Univ. of Ky. Coop. Extension Serv., supra note 2.
[xi] Colleen D. Holland, Know your state’s agritourism liability law, Lexology (Aug. 15, 2013), http://www.lexology.com/library/detail.aspx?g=0d53fefa-00fb-4e68-b748-efb3af27f132.

Kentucky Coal: What Authority Does the EPA Actually Have?

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By: Elizabeth Combs, Staff Member

Shortly after Congress passed the National Environmental Policy Act, President Richard Nixon established the U.S. Environmental Protection Agency (EPA) in 1970 as an independent regulatory agency intended to administer and manage environmental policy.[i] Founded in large part in response to decades of “rampant and highly visible pollution,”[ii] the EPA was given far-reaching powers[iii] to ensure the protection of public health and the natural environment.[iv]

Since the EPA manages the protection of the land, air, and water, it naturally follows that this agency also regulates many industrial activities. The EPA’s regulation of the mining industry is mostly concerned with waste rock, wastewater, and air emissions created during these activities.[v] The EPA relies mostly on the statutory authority granted to it by the Clean Water Act (CWA) to regulate mining activities. According to the CWA, a mining company must first obtain a permit before any mining operations take place[vi]. These permits ensure that any wastewater discharges that result from the mining operations are treated, stored, and disposed of in compliance with relevant water quality standards.[vii]

While this permit program, referred to as the National Pollutant Discharge Elimination System (NPDES), has been in place since the 1970’s,[viii] the EPA’s interpretation and implementation of this regulatory authority has varied depending on the goals and objectives of each Presidential administration.[ix] During the current administration, much focus has been placed on the need to reduce greenhouse gas emissions.[x] As a result, the EPA has launched many new regulatory initiatives while tightening the requirements of long-standing mandates, like that of the CWA, leading to devastating effects on the energy industry.[xi] Of particular importance in Kentucky is the EPA’s issuance of more stringent guidelines for permitting procedures specifically applied to Appalachian surface coal mining operations.[xii] These new regulations have created massive delays in the permitting process, causing many mining companies to be inoperable and thus, leading to massive layoffs of thousands of both direct and indirect coal mining jobs.[xiii]

However, it is not completely clear whether the EPA actually has the authority to issue these regulations, especially given the other federal and state authorities involved in the surface mining permitting process.[xiv] In addition to the EPA’s use of the CWA to issue NPDES permits, the Surface Mining Control and Reclamation Act (SMCRA) requires compliance with its own, albeit EPA-approved, environmental protection standards via the issuance of permits by the Department of the Interior’s Office of Surface Mining Reclamation and Enforcement.[xv] Further, individual states have the opportunity to control and regulate their own surface mining activities by having their own permitting program approved by the Secretary of the Interior.[xvi]

As a result of the EPA’s drastically increased standards and uncertain statutory authority, several groups, including the National Mining Association, the Kentucky Coal Association, and the West Virginia Department of Environmental Protection, recently challenged the EPA’s authority in federal court.[xvii] In July of last year, the U.S. District Court for the D.C. Circuit ruled in favor of these plaintiffs, finding that the EPA had exceeded its authority in issuing these new, more stringent regulations, having “impermissibly interjected” into the SMCRA permitting process.[xviii] While the outcome of this case was certainly a victory for the coal industry, particularly for the targeted surface coal mining companies in Appalachian states, what is often referred to as “the war on coal” is far from over. The EPA has appealed this decision, and that case is currently pending in the U.S. Court of Appeals for the D.C. Circuit. With a decision expected in late 2013 to early 2014, the “war on coal” wages on in this and other EPA-related litigation. Given its potential impact on the coal industry in Kentucky, this pending case will certainly be an interesting and important one to watch.
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[i] The Guardian: Origins of the EPA, EPA Historical Publication, Spring 1992, available at http://www2.epa.gov/aboutepa/guardian-origins-epa.
[ii] Jack Lewis, The Birth of the EPA, EPA Journal, Nov. 1985, available at http://www2.epa.gov/aboutepa/birth-epa.
[iii] The Guardian, supra note 1.
[iv] Jack Lewis, Looking Backward: A Historical Perspective on Environmental Regulations, EPA Journal, Jack Lewis, Mar. 1988, available at http://www2.epa.gov/aboutepa/looking-backward-historical-perspective-environmental-regulations.
[v] Mining Overview, National Pollutant Discharge Elimination System, U.S. Envtl. Prot. Agency Website, available at http://cfpub.epa.gov/npdes/indpermitting/mining.cfm (last visited Oct. 14, 2013).
[vi] Id.
[vii] Id.
[viii] Id.
[ix] Richard L. Gordon, An EPA War on Coal?, Regulation, Spring 2013, available at http://www.cato.org/sites/cato.org/files/serials/files/regulation/2013/3/v36n1-7.pdf.
[x] Id at 16.
[xi] Id at 16.
[xii] Environmental Issues & Kentucky Coal, Kentucky Coal Association Website, available at http://www.kentuckycoal.com/documents/CoalWhitePaperV11.pdf (last visited Oct. 14, 2013).
[xiii] Id at 3.
[xiv] Nat’l Mining Ass’n v. Jackson, 880 F.Supp.2d 119 (D.C. Cir. 2012).
[xv] Id at 124.
[xvi] Id.
[xvii] Nat’l Mining Ass’n v. Jackson, supra note 14.
[xviii] Id at 119.

The Impact of the Government Shutdown on the United States Farm Bill and Why the Bill Must Be Split Into Two Pieces

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By: Brad Butler, Staff Member

The Agricultural Act of 1949 (“Act”) was enacted on October 31, 1949.[i] It is the only permanent legislation concerning U.S. agricultural policy.[ii] Temporary modifications and extensions to the Act, known as “farm bills,” are typically enacted every five years.[iii] The Food, Conservation, and Energy Act of 2008 (“2008 U.S. Farm Bill”), the most recent farm bill, was a $288 billion, five-year agricultural policy bill that was passed by Congress in June 2008.[iv] The 2008 U.S. Farm Bill expired in September 2012, but Congress extended certain provisions of the 2008 U.S. Farm Bill through September 2013 when it passed the American Taxpayer Relief Act of 2012 in early 2013 to avoid the fiscal cliff.[v] However, September 2013 has come and gone without the passage of another farm bill. If neither a new farm bill nor another extension is passed, then the U.S. will revert back to the agricultural policy set forth in the Act on January 1, 2014 and every consumer and farmer in the U.S. will be affected.

Reversion would have several consequences. It would give dairy farmers huge subsidies because the cost of operating a farm, after adjusting for inflation, was much higher in 1949 than it is today.[vi] The current support prices for dairy under the Act are more than double the current market price.[vii] Collin Peterson, a member of the House Agricultural Committee, predicts that the support by the federal government would require the Agriculture Department to artificially raise the market price of dairy products through a massive government-buying program.[viii] The Act also sets floor prices for certain commodities, such as wheat, which also directly affects consumers.[ix] For example, in 2012, the market price for a bushel of wheat was $6.37, but under the Act there would be a price floor of $13.58 per bushel.[x]

There are more time sensitive matters, however. A critical issue is the availability of tax incentives to purchase crop insurance so that farmers can obtain the operating loans needed to survive from now until harvest next year personally and professionally.[xi] Without the proper tax incentives to purchase the insurance, the extra cost could amount to around $50 per acre, which is infeasible for large farms.[xii]

Now that the federal government has shut down, there will not likely be a new farm bill in the immediate future. However, the government shutdown is not the only reason that the bill has not been passed. Over the summer, the U.S. Senate passed its version of a farm bill.[xiii] The U.S. House of Representatives separated the farm bill into two parts: the agricultural policy bill[xiv] and the nutrition assistance program bill.[xv] The House passed the agricultural policy bill and the nutrition program bill separately, but the Senate rejected both. The House wanted $20 billion cut from the Supplemental Nutrition Assistance Program (“SNAP”) over the next ten years, while the Senate only wants $4.1 billion cut during that same time.[xvi] The House has since recombined the farm bill.[xvii] However, it took a step toward ensuring that the bill remains separated in the future: it authorized the programs for different lengths of time.[xviii] Food stamps would be authorized for three years, and the agricultural policy would be authorized for five.[xix]

SNAP is clearly causing the gridlock. The House and the Senate have both recognized the necessity of passing a new farm bill, but the extent of the cuts to SNAP has created an impasse. A separation of the farm bill into its parts is logical because it removes a controversial political element from agriculture policy. Neither the House nor the Senate rejected the other’s farm bill because of the agricultural policy – it was because of the level of the proposed cuts to SNAP. It is ironic that Congress on the whole seems to understand the need to reduce government spending even though it allowed the extension to the 2008 U.S. Farm Bill to lapse and a reversion to the rules under the Act is possible. The reversion may cost more in the long-term than simply agreeing to a specific reduction to SNAP. The practical impact of splitting the bill would be the obvious fact that the Congress would likely be at odds every time the SNAP program needs to be reauthorized. Therefore, Congress must be aware of the fact that splitting the bill would ensure that the agricultural policy bill is passed when it needs to be reauthorized. However, the guaranteed passage of the agricultural bill every few years might be at the expense of SNAP and the people who need it.
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[i] Agricultural Act of 1949, 7 U.S.C. § 1431 (1949).
[ii] Eric Schuck, Congress needs to pass a farm bill -- or learn to farm like it's 1949, Oregon Live (Sep. 8, 2012, 12:00 PM), http://www.oregonlive.com/opinion/index.ssf/2012/09/congress_needs_to_pass_a_farm.html.
[iii] Kevin Diaz, Minn. farmers get lost in budget standoff; crop policies revert to '49, Star Tribune (Oct. 7, 2013, 9:32 AM), http://www.startribune.com/politics/226683921.html.
[iv] House Committee on Agriculture, 2008 Farm Bill, http://agriculture.house.gov/issue/farm-bill/2008-farm-bill.
[v] Ron Nixon, Tax Bill Passed By Senate Includes Farm Bill Extension, NY Times (Jan. 1, 2013, 11:02 AM), http://www.nytimes.com/interactive/us/politics/debt-reckoning.html?_r=0.
[vi] Diaz, supra note 3, at 1.
[vii] Id.
[viii] Id.
[ix] Id.
[x] Id.
[xi] American Farm Bureau Federation, A Tale of Two Farmers: Harvest, the Farm Bill and Political Paralysis, The Voice of Agriculture (Oct. 1, 2013), http://www.fb.org/index.php?action=newsroom.news&year=2013&file=nr1001b.html.
[xii] Id.
[xiii] S. 954
[xiv] H.R. 2642
[xv] H.R. 3102
[xvi] FRAC Action Council, Farm Bill 2013, http://frac.org/leg-act-center/farm-bill-2012/.
[xvii] H. Res. 361
[xviii] Erika Johnsen, House re-couples, staggers “farm bill” as the clock winds down, Hot Air (Sep. 30, 2013, 6:41 PM), http://hotair.com/archives/2013/09/30/house-re-couples-staggers-farm-bill-as-the-clock-winds-down/.
[xix] Id.

UPDATE: Domestic Rare Earth Mining as a Solution to Chinese Monopoly

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By: Victoria Clontz, Staff Member

By the end of 2017, over 5 billion people are expected to be mobile phone users.[1] This estimate becomes all the more significant when considered with the fact that 97% of the rare earth metals, the materials used to make high-tech products like cell phones, produced in the entire world come from China.[2] This dominance over the production of such important minerals has put the United States, along with European Union countries, in the precarious position of relying on virtual monopoly holder.[3] The U.S., joined by the EU and Japan, filed a complaint against China’s unfair pricing and supply tactics with the World Trade Organization.[4]

In response to China’s dominance, several companies have begun developing plans for domestic drilling in the various rare earth deposits located in the US.[5] One of these companies, Molycorp, located in Mountain Pass, CA, owns what is reportedly one of the “greatest rare-earth deposits in the world,” almost double the size of the largest deposit in China.[6] The Mountain Pass mine was once the world producer of rare earths, but was forced to close operations in 2002 due to the low-price competition from China.[7]

As with all mining processes, environmental hazards remain a concern among communities and government agencies alike.[8] However, the cost of playing by China’s rules may very well be too high for US manufacturers to continue.
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[1] Zoe Fox, 5 Billion People Will Use Mobile Phones by 2017, Mashable, http://mashable.com/2013/10/03/mobile-phones-2017/ (last visited Oct. 7, 2013).
[2] Russia Vies to Challenge China’s 97% Monopoly on Rare Earth Metals, RT.com (Apr. 26, 2013, 9:21AM), http://rt.com/business/production-china-rare-metals-402/.
[3] Id.
[4] Paul Martyn, Rare Earth Minerals: An End to China’s Monopoly in Sight, Forbes (Jun. 8, 2012, 3:17PM), http://www.forbes.com/sites/ciocentral/2012/06/08/rare-earth-minerals-an-end-to-chinas-monopoly-is-in-sight/.
[5] Id.
[6] Martin Zimmerman, California Metal Mine Regains Luster, L.A. Times, Oct. 14, 2009, http://articles.latimes.com/2009/oct/14/business/fi-rare-earth14.
[7] Id.
[8] Lindsey Hilsum, Are Rare Earth Minerals Too Costly for Environment, PBS (Dec. 14, 2009), http://www.pbs.org/newshour/bb/asia/july-dec09/china_12-14.html.

Expiration of the Farm Bill: What Effects Will its Lapse Have?

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By: John Bishop, Staff Member

Overshadowed by the looming government shutdown, the “Food, Conservation, and Energy act of 2008” or “Farm Bill” is set to expire on October 1, 2013.[1] The Farm Bill provides the statutory basis for crop subsidies, food stamps, and free and reduced school lunch programs.[2] Its lapse, however, is much more of a paper tiger than a farmer’s doomsday.

With a bill of such important (and costly) subject matter, many are left scratching their heads at Congress’s apparent lethargy in passing a new one. If the bill expires, won’t the important programs therein be cut? Not exactly: the Farm Bill has a built-in safety net. When the current Farm Bill lapses, the law will revert to the 1949 “permanent law.”[3] Moreover, most of the major reversions would not take effect until January 1, 2014, granting additional time for legislators to present a new Farm Bill to the President.[4] Both houses of Congress are already working on a revised 2013 Farm Bill.[5]

Although the expiring Farm Bill is making headlines, farmers may feel like they are experiencing Farm Bill “déjà vu.” This year, 2013, is not the first time legislators have run out of time on passing a new Farm Bill. In fact, the last three Farm Bills have been passed well beyond the September 30 expiration date.[6] Doomsdayers’ prophesies about skyrocketing prices of milk and other commodities are probably better described as just “crying over spilled milk.” Congress will more than likely approve an acceptable 2013 Farm Bill before disastrous effects set in.
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[1] Food, Conservation, and Energy Act of 2008, PL 110-234, May 22, 2008, 122 Stat 923.
[2] The 2008 Farm Bill Side-By-Side Comparison, http://webarchives.cdlib.org/sw1vh5dg3r/http://ers.usda.gov/FarmBill/2008/ (last visited Sept. 30, 2013).
[3] What an expiring Farm Bill means to you, Think Forward Blog (Sept. 19, 2012), http://www.iatp.org/blog/201209/what-an-expiring-farm-bill-means-to-you.
[4] Id.
[5] See Agriculture Reform, Food, and Jobs Act of 2013 (S. 954), Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 1947).
[6] Ryan Holeywell, The Farm Bill Expires This Week. Does it Matter?, FedWatch (Sept. 26, 2012), http://www.governing.com/blogs/fedwatch/gov-the-farm-bill-expires-next-week-does-it-matter.html.

It’s a Beautiful Day in the Neighborhood: “Good Neighbor Provisions” versus Federalism in the Clean Air Act

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By: Ellen Black, Staff Member

The Clean Air Act (CAA) authorizes the Environmental Protection Agency (EPA) to establish National Ambient Air Quality Standards (NAAQS) for “certain pervasive air pollutants.”[1] A “defining feature” of the CAA is a “cooperative federalism” structure where states implement these federal NAAQS through State Implementation Plans (SIPs). [2] Another distinctive characteristic is its “good neighbor provision,” prohibiting “sources….within a state from emitting air pollutants in amounts that will interfere” with another state’s ability to maintain it own NAAQS.[3] Section 126(b) then offers a remedy for a state that is downwind of a violation by allowing a petition to the EPA for a finding of interference.[4] If a violation is found, the upwind “polluting source must cease operations.”[5]

In 2010, the EPA made the NAAQS for sulfur dioxide more stringent, and affected states were required to submit revised SIPs by 2013.[6] Shortly after this change, New Jersey filed a §126(b) petition against the GenOn REMA Portland plant in Pennsylvania, now newly in violation, claiming sulfur dioxide from Portland was interfering with New Jersey’s NAAQS. [7] The EPA investigated, found the plant to be in violation and thus issued “the Portland Rule,” imposing “direct limits on….emissions” to reduce pollution by 2013.[8]

GenOn then sued, citing a federalism argument that they must have the full time until 2013 to submit their revised SIP before the federal government can enforce under §126(b).[9] The Third Circuit rejected GenOn’s argument, holding that the “EPA was permitted to make a finding in a downwind state’s petition without regard for the SIP process.”[10] The court upheld the Portland Rule as a reasonable interpretation that §126(b), defined as “an independent mechanism for enforcing interstate pollution control.”[11]

In upholding the EPA’s novel construction of the CAA to separate the SIP process and the §126(b) mechanism, the Third Circuit followed an established three-step framework:[12] the two-part Chevron[13] test, which examines the language and then legislative history of an Act,[14] followed by the application a narrow standard of review.[15]

First, the court must determine whether Congress has “unambiguously expressed [its] intent” by examining the “plain” and “literal” language of the statute through “the language itself, the specific context,….and the broader context….as a whole.”[16] The court found that the SIP and §126(b) processes were sufficiently and necessarily distinct in the language of the CAA to support the EPA’s separation of them. [17] Second, through the legislative history, the court determined cooperative federalism was not actually the rationale for enacting §126(b) in the CAA. [18] Rather, the motivation for §126(b) was to ameliorate problems of interstate pollution not addressed in the Act by providing downwind states “an incentive and need to act,” via a “separate and alternative method.” [19] Third, the court determined the §126(b) time frame in the “Portland Rule” was not “arbitrary, capricious, or an abuse of agency discretion” since the EPA’s reasonably acted after confirming that New Jersey was being impaired.[20]

In upholding this distinction between SIPs and §126(b) petitions, the Third Circuit narrowed states’ ability to construct their own plans through “cooperative federalism.” However, this maintains an important safety net for downwind states to better rectify harmful interstate pollution without having to wait the completion of the SIP process. Furthermore, this decision provides the persuasive analytical framework for future courts in the proliferating “good neighbor provision” violation litigation that is emerging across the country.[21]
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[1] GenOn REMA, LLC v. U.S. E.P.A., 722 F.3d 513, 516 (3d Cir. 2013) (citing 42 U.S.C. §§ 7408, 7409).
[2] GenOn REMA, 722 F.3d at 516.
[3] Id. at 516-17.
[4] Id.
[5] Id.
[6] GenOn REMA, 722 F.3d at 517-518.
[7] Id. at 518; see also Lorraine McCarthy, EPA Grants Petition to Limit Sulfur Dioxide From Coal-Fired Power Plant in Pennsylvania, Bloomberg BNA 42 ENR 2458, (Nov. 4, 2011).
[8] GenOn REMA, 722 F.3d at 516, 518.
[9] Jessica Coomes, Appeals Court Upholds EPA Rule to Limit Emissions From Pennsylvania Power Plant, Bloomberg BNA 44 ENR 2117 (June 19, 2013).
[10] GenOn REMA, 722 F.3d at 513.
[11] Id. at 526-27.
[12] Id. at 519, 525.
[13] Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43(1984).
[14] Id. at 519 (citing Hagans v. Comm'r of Soc. Sec., 694 F.3d 287, 294 (3d Cir.2012)).
[15] Id. at 525 (citing 42 U.S.C. § 7607(d)(9)(A); North Carolina v. EPA, 531 F.3d 896, 906 (D.C.Cir.2008)).
[16] GenOn REMA, 722 F.3d at 519 (citing United States v. Geiser, 527 F.3d 288, 294 (3d Cir.2008)).
[17] Id. at 521.
[18] Id. at 522.
[19] Id. (citing H.R.Rep. No. 95–294, at 330 (1977), reprinted in 4 1977 Legislative History of the Clean Air Act Amendments of 1977, at 2797).
[20] Id. at 525-26
[21] See Andrew Childers, Tennessee, Kentucky Ozone Plans Lack ‘Good Neighbor' Provisions, Lawsuits Say, Bloomberg BNA 44 ENR 1373 (May 10, 2013); Jessica Coomes, States, Cities Urge U.S. Supreme Court To Review EPA Cross-State Rule Case, Bloomberg BNA 28 TXLR 479 (Apr. 25, 2013).