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VOLUME 16, NUMBER 3, WHOLE NUMBER 184 FEBRUARY 1999

concentrated
Clean W ater and concentrated animal
operations
feeding oper (CAFOs)
ations (CAFOs)
For years, the leading agricultural environmental issue was wetlands. Farmers,
ranchers, and their agricultural organizations worried greatly about the scope, the
application, and the enforcement of section 404 of the Clean Water Act and the
wetlands provisions of federal farm legislation to their fields and pastures. They
worried greatly that environmental organizations would use wetlands laws and
regulations to gain land use control over their agricultural lands. 1

INSIDE By contrast, Clean Water Act section 402 NPDES and delegated-state equivalents
had very little impact on farmers and ranchers. Exemptions from the definition of
point source for return flows from irrigation 2 and stormwater runoff from agricul-
tural lands 3 buffered agriculture from the NPDES system. Only concentrated
animal feeding operations (CAFOs) met the definition of a point source. Even with
• Critical questions respect to CAFOs, the EPA and states defined CAFOs in such a way that most
farmers and ranchers did not worry that they had to apply for an NPDES permit for
about the farm crisis: their livestock operations. 4
causes and remedies Beginning in the early 1990s, farmers’ and ranchers’ complacency about section
402 began to change. Federal appellate courts decided two cases that applied section
• Pesticide drift law 402 to a feedlot and a dairy, respectively. 5 Moreover, a rural donnybrook between
compilation available small dairies and large dairies in Erath County, Texas resulted in the EPA for the
first time ever issuing a general permit applicable to CAFOs. 6
Then along came hogs. Hogs became the focal point for environmental disputes
under the Clean Water Act, land use disputes about rural zoning and nuisances, and
social disputes about corporate agriculture. Indeed, several state regulators have
publicly stated that if there were no social disputes about corporate agriculture, hogs
would just be another farm animal. 7 Instead, the passions generated by hogs, similar
to the passions in the Erath County donnybrook, have created a battle royale in state
after state. While large-scale livestock production continues to be the major focus of
legal activity, growing concern over the chronic impacts to water quality of diffuse
Solicitation of articles: All AALA sources of livestock pollution, including small-scale livestock production, is also
members are invited to submit generating significant interest in new CWA policies and programs.
articles to the Update. Please in- From its beginning several years ago, the Special Committee on Agricultural
Management recognized the significance of livestock production. On behalf of the
clude copies of decisions and leg-
islation with the article. To avoid
Continued on page 6
duplication of effort, please no-
tify the Editor of your proposed
article. agr
T he ag iculture
ricultur pro
e provisions of the
Appropr
1999 Omnibus Appr opriations
opriations Bill
IN FUTURE On October 19, 1998, Congress passed H.R. 4328, “Making Omnibus Consolidated
and Emergency Supplemental Appropriations for Fiscal Year 1999.” President
Clinton signed this bill into law on October 21, 1998.1 Regulations implementing the

I SSUES changes have not yet been adopted by USDA, but the Secretary of Agriculture is
directed to issue the necessary regulations “as soon as practicable.”2 In this article,
the bill will be referred to as the “1999 Omnibus Bill.” [This is a continuation of the
coverage of the 1999 Omnibus Appropriations Bill that began in the January 1999
• Expanded qualification issue of the Agricultural Law Update. ]
under recreational use
statutes Chapter 12 bankruptcy extension
Chapter 12 of the Bankruptcy Code, which allows for bankruptcy reorganization
of family farms, was enacted in 1986 as a temporary law that was due to expire or
• Agricultural “sunset” on October 1, 1998. Although Congress failed to re-authorize Chapter 12
environmental prior to October 1, the 1999 Omnibus Bill included a provision that extended Chapter
management in 12 for six months.3 The extension is retroactive, meaning that it applies back to
New York state October 1, 1998. Chapter 12 will continue to be available to farmers through April

Continued on page 2
OMNIBUS/CONTINUED FROM PAGE 1

1, 1999. Any cases that are filed on or Senate version of the bill. retary announces a basic formula price
before April 1, 1999, will be allowed to The Conference Report expresses the (BFP) for milk, he must include an esti-
proceed under the existing Chapter 12 expectation that the Secretary will pro- mate of per hundredweight costs of pro-
provisions.4 vide a two-year extension for CRP par- duction, including transportation and
ticipants to complete pruning, thinning, marketing costs, in different regions of
Conservation programs and stand improvement of trees on lands the United States.19
The 1999 Omnibus Bill and the accom- subject to a CRP contract.10 The improve-
panying Conference Report include a ments would otherwise have to be com- Discrimination at USDA
number of provisions affecting USDA pleted in 1998 or 1999. The 1999 Omnibus Bill includes a
conservation programs. These provisions waiver of the statute of limitations for
are briefly described here. Livestock pricing and trade many discrimination complaints related
Funding for the Environmental Qual- provisions to USDA credit, commodity, or disaster
ity Incentives Program is limited to $174 Livestock Price Reporting Pilot programs.20
million.5 Program
Enrollment in the Wetlands Reserve The 1999 Omnibus Bill requires the Two-year extension for filing civil
Program is limited to 120,000 acres.6 Secretary to conduct a 12-month pilot actions based on eligible complaints of
Thirty-year easements are now exempt program for mandatory reporting of pro- discrimination
from payment limitations for the Wet- curement prices in the beef and lamb No civil action filed within two years of
lands Reserve Program.7 Acceptance of industries.11 This limited pilot program the enactment of the 1999 Omnibus Bill
bids for the Wetlands Reserve Program is a compromise coming out of stronger will be barred by the statutory limita-
may now be “in proportion to landowner livestock price reporting provisions tions period if the action seeks relief
interest expressed in program options.”8 passed by the Senate. Only those in- related to discrimination alleged in an
The 1999 Omnibus Bill did not adopt a volved in trading a “significant share” of eligible complaint.21 “Eligible” complaints
pilot program for haying and grazing on the national market are covered by the are any complaints not related to em-
Conservation Reserve Program (CRP) program. The covered trades include do- ployment that were filed with USDA
land.9 This program was included the mestic or imported cattle for immediate before July 1, 1997, and that allege that
slaughter, fresh muscle cuts of beef, do- discrimination in USDA farm loan pro-
mestic or imported sheep, and fresh or grams, housing programs, commodity
frozen muscle cuts of lamb. Feeder cattle programs, and/or disaster assistance pro-
price information is specifically excluded grams occurred between January 1, 1981,
by the Conference Report language.12 and December 31, 1996.22 The word “filed”
The Secretary is required to report the is not defined in the statute for this
findings from the pilot program no more purpose. We are hoping that the Depart-
than six months after the program con- ment will interpret this broadly to in-
VOL. 16, NO. 3, WHOLE NO. 184 February 1999 clusion. 13 No information collected clude any form of communication that
AALA Editor..........................Linda Grim McCormick through the program may be disclosed can be documented, either in official
Rt. 2, Box 292A, 2816 C.R. 163 until the report is submitted. In addition USDA documents or by affidavit.
Alvin, TX 77511
Phone: (281) 388-0155
to the pilot program for mandatory price
FAX: (281) 388-0155 reporting, the Secretary is directed by Option to seek agency review of
E-mail: lsgmc@flash.net the Conference Report to “take steps” to discrimination complaint
Contributing Editors: Drew L. Kershen, University of increase voluntary price and volume re- Instead of filing a civil action, farmers
Oklahoma, College of Law; Otto Doering, Purdue, porting of beef and lamb sales.14 may choose to file an administrative ac-
University; Phil Paarlberg, Purdue, University; Karen
R. Krub, FLAG, Inc., St. Paul, MN. The Secretary is also to conduct a 12- tion. The statute gives farmers up to two
For AALA membership information, contact month pilot investigation of streamlined years from the enactment of the 1999
William P. Babione, Office of the Executive Director, Omnibus Bill to request a hearing on the
Robert A. Leflar Law Center, University of Arkansas,
electronic system for collecting export
Fayetteville, AR 72701. data for fresh or frozen muscle cuts of record regarding their “eligible” com-
meat food products.15 plaint.23 (The wording in this section of
Agricultural Law Update is published by the
American Agricultural Law Association, Publication the law is unclear—it is possible that this
office: Maynard Printing, Inc., 219 New York Ave., Des Report on interstate distribution of section also allows new complaints to be
Moines, IA 50313. All rights reserved. First class
postage paid at Des Moines, IA 50313. state-inspected meat filed for a period of up to two years after
The Conference Report directs the Sec- enactment—but the language is too con-
This publication is designed to provide accurate and
retary to make a report by March 1, 1999, fusing to be sure.24) Following the hear-
authoritative information in regard to the subject
matter covered. It is sold with the understanding that to the House and Senate Appropriations ing on the record, the agency is required
the publisher is not engaged in rendering legal, Committees with recommendations on to provide the complainant with “such
accounting, or other professional service. If legal advice
or other expert assistance is required, the services of lifting the statutory ban on interstate relief as would be afforded under the
a competent professional should be sought. distribution of state-inspected meat.16 applicable statute... notwithstanding any
Views expressed herein are those of the individual
authors and should not be interpreted as statements of
statute of limitations.”25 The 1999 Omni-
policy by the American Agricultural Law Association. Dairy pricing bus Bill lists some of the substantive
The 1996 FAIR Act required the Secre- statutes which may govern the disposi-
Letters and editorial contributions are welcome and
should be directed to Linda Grim McCormick, Editor, tary to undertake consolidation and re- tion of complaints, including the Equal
Rt. 2, Box 292A, 2816 C.R. 163, Alvin, TX 77511. form of the federal milk marketing or- Credit Opportunity Act.26 The agency is
Copyright 1999 by American Agricultural Law ders.17 The 1999 Omnibus Bill requires required “to the maximum extent practi-
Association. No part of this newsletter may be the Secretary to submit to Congress be- cable” to conduct an investigation, issue
reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopying, tween February 1, 1999, and April 4, a written determination, and propose a
recording, or by any information storage or retrieval 1999, a final rule implementing that con- resolution within 180 days of a request
system, without permission in writing from the
solidation.18 The 1999 Omnibus Bill re- for a hearing.27
publisher.
quires that the actual changes not take The 1999 Omnibus Bill makes it clear
effect until October 1, 1999. that complainants who opt for the on-
The 1999 Omnibus Bill includes a pro- the-record hearing discussed above and
vision requiring that whenever the Sec- Cont. on p.3

2 AGRICULTURAL LAW UPDATE FEBRUARY 1999
are denied the requested relief will have provisions included in the Senate bill ous three-years, all or a portion of the
180 days after the denial to seek judicial which would have required country-of- taxable income attributable to the farm
review of the agency decision.28 origin labeling for fresh produce and meat. business.41 Prior to the enactment of the
Instead, the Conference Report directs 1999 Omnibus Bill, this provision was
Compensatory damages for the General Accounting Office (GAO) to only authorized for years 1998-2000.42
discrimination based on disability conduct a comprehensive study on the The Tax and Trade Relief Extension Act
The 1999 Omnibus Bill provides for effects of mandatory country-of-origin of 1998 permanently extends authority
compensatory damages to be paid to farm- labeling on fresh produce importers, pro- for this farm income averaging provi-
ers who filed a disability discrimination ducers, consumers, and retailers.35 The sion.43
complaint after January 1994 related to Conference Report similarly directs the
USDA farm loan programs or activities.29 Secretary to conduct a comprehensive Production flexibility contract payments
The complaint must have resulted in a study on the effects of mandatory coun- taxed in year received
finding that the farmer was subjected to try-of-origin labeling on meat importers, The 1996 FAIR Act allows producers to
discrimination and the farmer must have exporters , livestock producers, consum- choose whether to receive half of their
sought compensatory damages while the ers, packers, processors, distributors, and annual Production Flexibility Contract
case was pending. Unlike the other dis- grocers.36 The reports on the studies must (PFC) payment on December 15 or Janu-
crimination provision of the 1999 Omni- be submitted to Congress within six ary 15 of the fiscal year that the payment
bus Bill, this section does not waive the months after enactment of the 1999 is due.44 The option to receive an advance
statute of limitations. Omnibus Bill. payment in December can have tax re-
The 1999 Omnibus Bill did not adopt sults for producers, even if they choose to
USDA required to make report on provisions included in the Senate bill receive the advance payment in January.
Indian agriculture which would have established a new Of- The Emergency Farm Financial Relief
The Conference Committee directed fice of the Small Farms Advocate within Act of 1998 allows producers to receive
USDA to report to Congress by February USDA. Instead, the Secretary is directed their entire 1999 PFC payment at any
1, 1999, “on the progress made within to better manage existing programs “to time after October 1, 1998.45 This statu-
Indian agriculture, Federal inter-agency encourage policy considerations within tory option, could have had tax implica-
coordination, and the level of Indian us- existing programs . . . that promote the tions for producers even if they did not
age of Federal programs and initiatives needs of small farm operators and that choose to take early payment on the
outlined to benefit Indian agriculture.”30 may help reverse the unwarranted de- contract.
cline in small farm operations.”37 The Tax and Trade Relief Extension
Crop insurance provisions The 1999 Omnibus Bill did not adopt a Act of 1998 provides that a producer’s
The 1999 Omnibus Bill changes the change in the definition of “family farm” legal option to take early payments must
law for setting fees for catastrophic (CAT) which was included in the Senate bill.38 be disregarded in determining the tax-
crop insurance protection.31 Beginning The 1999 Omnibus Bill eliminated able year for PFC payments.46 PFC pay-
with the 1999 reinsurance year, produc- funding for both the Fund for Rural ments are to be included in gross income
ers cannot be required to pay more than America and the Conservation Farm for the taxable year in which they are
$50 per crop as an administrative fee for Option program established by the 1996 actually received.
CAT coverage. Earlier in 1998 Congress FAIR Act.39
had passed a law allowing CAT fees to be Five-year carryback available for farm
the greater of $50 per crop or 10 percent Tax provisions net operating losses
of the coverage received.32 This is no The 1999 Omnibus Bill includes tax Federal tax law generally allows busi-
longer effective for the 1999 reinsurance provisions which are known together as nesses to carry a net operating loss back
years and thereafter. the “Tax and Trade Relief Extension Act two years and forward 20 years to offset
The Conference Committee specifically of 1998.” You should be aware that a taxable income in those years. Farmers
noted that “risk management tools are number of changes made by this Act will are able to carry the net operating loss
limited for livestock producers.”33 USDA’s affect tax liabilities for farmers and ranch- back three years if the loss is due to a
Risk Management Agency is directed by ers. These changes are discussed only Presidentially-declared disaster.
the Committee to report to Congress on briefly here. Farmers and ranchers should The Tax and Trade Relief Extension
feasibility of a crop insurance program consult tax professionals for assistance Act of 1998 provides a special five-year
for livestock producers’ forages and na- in understanding how the changes will carryback period for farm net operating
tive pastures. affect their individual tax obligations. losses, regardless of whether the loss
was incurred in a Presidentially declared
Miscellaneous ag provisions Self-employed may deduct 100 percent disaster area.47
The 1999 Omnibus Bill did not adopt of health insurance costs starting in
1
provisions included in the Senate bill 2003 The legislation is known as Public Law 105-277.
which would have provided statutory The Tax and Trade Relief Extension Statute-at-Large designations have not yet been made.
relief for producers who inadvertently Act of 1998 increases the percentage of The text of the bill can be found in the Congressional
planted ineligible bean crops in violation health insurance expenses that may be Record for October 19, 1998.
2
of Production Flexibility Contract (PFC) deducted by self-employed individuals. 1999 Omnibus Bill, Div. A, Agriculture, Title XI,
eligibility requirements. (Many produc- The allowable deduction is increased to § 1133.
3
ers had planted garbanzo beans and simi- 60 percent in 1999 through 2001, 70 1999 Omnibus Bill, Div. C, Other Matters, Title I,
lar bean crops not realizing that those percent in 2002, and 100 percent in 2003 § 149.
4
The bill language refers to “the period beginning on
crops are classified as vegetables and are and later years.40
October 1, 1998, and ending on April 1, 1999.” 1999
therefore ineligible for PFC acreage cal-
OmnibusBill,Div.C,OtherMatters,TitleI,§ 149.Weare
culations). Rather than provide statu- Three-year farm income averaging interpretingthislanguagetokeepChapter12alive through
tory relief, the Conference Report “urges” made permanent April 1, 1999, rather than ending on March 31, 1999, but
the Secretary to “exercise reasonable Federal tax law allows a farmer to there is some ambiguity. Farmers seeking to file as the
treatment of producers in order to avoid choose to compute his or her current year end of March 1999 approaches should confirm the end
harmful consequences.”34 tax liability by averaging, over the previ- date for the Chapter 12 extension.
The 1999 Omnibus Bill did not adopt
Cont. on p.7

FEBRUARY 1999 AGRICULTURAL LAW UPDATE 3
Critical
Cr farm
itical questions about the f cri
arm cr remedies*
isis: causes and remedies*
By Otto Doering and Phil Paarlberg

Just over a year ago everything seemed U.S. agricultural prices. Using the elas- its exports go to the weakened markets
settled. The new Freedom to Farm legis- ticities the Eonomic Research Service in Asia. The Japanese banking system
lation ended farm programs as we knew used to analyze effects of the Uruguay holds extensive bad debts, and past at-
them, eliminating acreage restriction on Round trade agreement, the devalua- tempts to stimulate domestic demand
crops that could be planted, eliminating tions and falling aggregate demand in failed. In China, which accounts for 3
supply control with land set asides, and Asia resulted in a short-run 4.1 percent percent of U.S. agricultural exports,
providing “transition” payments to farm- drop in the wheat price, a 3.7 percent slowed economic growth and unmet re-
ers that were fixed amounts in contrast drop in the coarse grains price, and a 10.2 forms may force a currency devaluation
to the counter cyclical target payments percent fall in the soybean price. We to boost exports. Competitive devalua-
that increased when prices were low. estimate that the devaluations and fall- tions by other Asian nations may follow.
Freedom to Farm passed because prices ing national income reduced the price of Latin America and Brazil in particular,
were high, exports were supposed to in- beef 1.5 percent, pork by 9 percent, and which are large buyers of U.S. agricul-
crease over the next decades, and poultry by 5 percent. Rice, in contrast, tural goods and rival exporters of some,
agribusiness consultants claimed that shows a much larger price effect, falling are experiencing currency and financial
increased land in production (no set- 29.9 percent. Except for rice, these Asia- problems related to the Asian Crisis.
asides and a smaller CRP) would not specific impacts are much smaller than If the Asian problems have not been
reduce prices, just create more jobs. Times the overall price declines observed, and the major cause, how do we account for
were good. For 1996 wheat land owners rice has other mitigating factors that the sharp fall in commodity prices?
and producers got almost $2 billion in have reduced even its large overall price Weather and the production response to
payments under Freedom to Farm com- decline. A recent analysis using a global the high prices of 1996 both weigh in.
pared to less than 40 million they would macroeconomic model with an agricul- Despite the strong El Nino in 1997/98,
have received under the old program. tural sector supports these small price expectations of short global food supplies
Corn land owners and producers received impacts (Stoeckel, Fisher, McKibbin, and failed to materialize. Production of all
a little over $5 billion in payments in Borrell). grains worldwide rose from 1,872 million
1996 and 1997 instead of just a little over Why might price declines be smaller tons in 196/97 to 1,889 million tons in
$1 billion under the old program. than expected? First, the Asian countries 1997/98. With excellent crops in South
What a change today. The Asian finan- most severely affected were neither ma- America and the United States, world
cial crisis, declining exports, big crops in jor agricultural importers nor exporters. oilseed production rose from 261 million
the bins, and a good ’98 harvest have Of the Asian Tigers (Korea, Malaysia, tons in 1996/97 to 287 million tons in
lowered prices. Gloom replaces optimism. Indonesia, Philippines, Thailand, Hong 1997/98. Production forecasts for 1998/
Exports of agricultural products by the Kong, and Taiwan), only Korea was a 99 continue to be positive. Current fore-
United States for fiscal 1998/99 are fore- large importer of U.S. agricultural prod- casts for the United States show record
cast at 52 billion dollars, 4 billion dollars ucts, with a market share of 5 percent, or near record production. USDA projects
lower than in 1997/98. Freedom to Farm and Korea received over 1 billion dollars world grain production to fall only slightly
payments looked good with high prices, in General Sales Manager (GSM) credit in 1998/99 to 1,879 million tons and esti-
but with low prices producers feel the guarantees. The remaining 6 nations com- mates world oilseed production to re-
decline in government support under the bined acounted for 13 percent of U.S. main at a high level as the U.S. soybean
new program. agricultural exports. Of these, the most crop offsets a return to normal crops in
severely affected, Indonesia, Thailand, South America.
Did Asia do it? and Malaysia, buy only small amounts of It is the combination of these negative
Many believe the economic problems agricultural goods. Rice is again a differ- forces that has so sharply reduced agri-
in Asia caused most of our commodity ent story, with Indonesia and Thailand cultural prices and called into question
price problem. During the 1990s, Asia being important importers or exporters. the decision to adopt the Freedom to
emerged as a major market for U.S. agri- Data for Japan and China through May Farm legislation. Since the middle 1990s,
cultural products. However, many of the 1998 do not show a large fall in trade. the world has added around 150 million
factors causing the current financial cri- Japan shows a small, but persistent, tons to the average level of annual world
sis, like overextended credit, had ini- drop in purchases from the United States grain output. The concern now is that the
tially boosted economic growth and fu- during the past two years. Except for economic problems in Asia will spread to
eled agricultural imports. In the summer December 1997 and May 1998, Chinese other major markets for U.S. agricul-
of 1997, this house of cards collapsed (see purchases are at or above year earlier tural goods—in Japan and in Latin
Coyle, McKibbin, Wang, and Lopez, levels. The data for the Asian Tigers America—while global food supplies re-
Choices, 4th Qtr. 1998). show monthly purchases of U.S. agricul- main at record levels. If this happens,
While serious for most U.S. export tural commodities fell sharply, starting recovery will be a 3-5 year process.
commodities, the price impacts to this in the fall of 1997, but as small customers Is such an outcome likely? There is
point have not been as large as the media the impact is modest. little to support the idea that recovery in
portrays. The Asian problems have not Adverse impacts of the Asian crisis Asian economies will boost demand be-
been the major cause of the decline in may worsen. For the 1998/99 year, the fore early in the next century (only a year
problems experienced by the Asian Ti- or two away). What about adjusting out-
gers could spread. Japan alone accounts put? Arguments for and against a quick
for roughly 18 percent of U.S. agricul- supply response can be mustered. Even
Otto Doering, Professor, Purdue Univer- tural exports—our largest single export the authors disagree.
sity; Phil Paarlberg, Associate Professor, market. Japan’s current recession fol- Paarlberg sees a drop in global supply
Purdue University. lows years of low growth. Nearly half of occurring within the next few years.

4 AGRICULTURAL LAW UPDATE FEBRUARY 1999
With Freedom to Farm, U.S. farmers “There are two things we can do to save This is a big increase over the $5.7
will react to market signals and will the ’96 Farm Bill.” He wanted to uncap billion FAIR Act transition payments and
abandon marginal lands. The Euro- loan rates and “for this year only” insti- the $2.0 billion conservation payments
pean Union has the ability and will use tute a farmer-held reserve. Farmers had that would have been paid in a normal
set-asides to cut area. Other exporters, freedom to farm, according to Harkin, year. The political issue is that many
like Argentina and Australia, are more but they needed “freedom to market”—in want even more government payments
open to world prices than in the 1980s this context a farmer-held reserve to hold in low price years—the extreme example
and will adjust. Also weather can play grain off the market until prices are being the $26 billion expenditure in 1986
a role. Already Russia appears to have higher. He concluded that “we are facing during the Farm Financial crisis.
a crop disaster, and the United States a farm crisis in America unlike anything
is extending concessional sales to that we have seen before in a long time.” The issues joined
nation. We could move substantial food Congress was already laying out alter- The cusp of the debate that resulted in
aid to the former Soviet Union this natives to deal with the farm financial the Clinton veto of the Ag Appropriations
winter (but Congress appears unwill- problem when Harkin spoke. With the Bill on October 7, 1998, revolved around:
ing). Looking at our past experience, October 1998 omnibus spending bill, 1. The distribution as well as the
La Nina could cut U.S. crop yeilds by Congress made available large disaster amount of the payments
10 percent or more. A 10 percent de- payments ($2.58 billion) to producers 2. The extent to which agricultural
crease in U.S. coarse grains yields who suffered extreme weather and other programs return to being counter cyclical
translates into an output loss of around crop and livestock losses. In addition, entitlements subject to large outlays dur-
25 million tons, well above the 10 mil- Congress made Fair Act payments that ing bad times.
lion tons of coarse grains exports some would normally be made in 1999 avail-
have estimated lost due to the eco- able to farmers in 1998. This belies the Clinton, with Daschle looking over his
nomic problems in Asia. claim of keeping expenditures predict- shoulder, vetoed the Ag. Appropriations
able. Will Congress let landowners and Bill, H.R. 4101, “because it fails to ad-
Doering has a different review. He producers go through 1999 without addi- dress adequately the crisis now gripping
argues that farmers have few alterna- tional payment? Not likely. our Nation’s farm community.” The mes-
tives and so production is very price Under the FAIR Act, the Loan Defi- sage also stressed the inadequate “safety
inelastic. ciency Payment (LDP) still does provide net” of Freedom to Farm and supported
It will take several years of low prices a safety net under prices. If markets fall Daschle and Harkin’s proposal to lift the
to cut production. Actual policy re- below a very low fixed loan rate, the cap on the marketing loan. Clinton said,
forms resulting from the Uruguay government will pay the farmer the dif- “I firmly believe and have stated often
Round were limited, and most coun- ference between the loan rate and the that the Federal Government must play
tries continue to protect farmers while market price. Unlike the old program, an important role in strengthening the
severing the link between domestic the government does not take title to farm safety net.”
prices and world prices. Those nations grain and accumulate stocks. The FAIR The Daschle and Harkin debate also
will not adjust production. In nations Act set the loan very low to prevent questioned the beneficiaries of the tran-
where reforms did occur, governments outlays except in extremely low price sition payment. Freedom to Farm puts
will intervene to support farm prices or situations like we had late this summer. the landowner in the best position to
farm incomes. Relying on weather to However, it does provide a low level of capture the transition payments and capi-
cut output is a risky stragety given the counter cyclical support and can trigger talize them into the value of the land
recent experience with El Nino, which substantial government payments. (Schertz & Johnston). The equity con-
was also supposed to tighten world In the pre-election budget compromise, cern, while it has been raised, will not
food supplies. At least one La Nina Congress also voted an additional “one- likely be addressed directly. Congress
event was associated with a 20 percent time” payment to FAIR Act program farm- has been unwilling to have agricultural
yield increase in the United States. ers of over $3 billion. If farmers took just programs means tested like other in-
the first half of their 1999 transition come transfer programs, or to really tackle
Is Freedom to Farm a failure? payments the end of 1998 and locked in the large farm versus small farm issue.
Freedom to Farm has done what it was LDP payments at the early fall commod- Congress’ traditional solution pumps
supposed to do, and it has done it very ity prices, the Federal commodity and some money to most parties and very
well. It removed planting and acreage conservation expenditures might look like liberal amounts to a few.
restrictions, gave farmers production sig- this? Lifting the cap on the marketing loan
nals from commodity markets rather than is exactly what the Republican leader-
from price supports, and stabilized gov- 1998 Freedom to Farm ship (especially Dick Armey, who dis-
ernment program expenditures at fixed Transition Payments @$5.7 billion likes farm programs more than almost
amounts that can be counted on for bud- First half 1999 transition anything else) wanted to avoid at all
getary purposes. The problem is that the payments payable in costs. That is one reason the GOP leader-
1996 optimism about demand for com- Nov.-Dec. ’98 @$2.7 billion ship rushed to move the 1999 Freedom to
modities has not panned out, prices have CRP and other Farm payments ahead to 1998 and ap-
gone down, and with low prices, Freedom conservation payments @$2.0 billion proved the disaster and market loss as-
to Farm does not pump as much extra Special disaster and sistance payment to farmers—to keep
cash to landowners and producers as the market loss assistance @$5.9 billion the structure of Freedom to Farm. Lift-
old programs would have. Estimated potential ing the cap would destroy the discipline
LDP payments @$2.5 billion of fixed payments and take us back to the
What are the issues and ___________ counter cyclical payments of old without
alternatives now? $18.8 billion supply control.
On September 2, 1998, Senator Tom
Harkin, in the political rhetoric of an
outspoken critic of the FAIR Act, said Continued on page 6

FEBRUARY 1999 AGRICULTURAL LAW UPDATE 5
CRITICAL QUESTIONS/Cont. from page 5 CAFOs/Cont. from page 1 impaired waters required under section
303 of the Act, and to complete the total
The decision for now—does it Special Committee, this author prepared maximum daily loads (TMDLs) of pollut-
settle the issues? this summary of recent significant legal ants that stream segments can handle
In the pre-election rush, Congress has events relating to CAFOs. while, at the same time, meeting as-
spoken. The market-based character of signed water quality standards.17 The
the FAIR Act itself has been preserved, Federal actions EPA has also begun the process for devel-
but Congress has gone beyond the pro- In October 1997, Vice-President Gore oping numeric water quality standards
gram and increased income transfers to announced the Clean Water Initiative to for nutrients that are often associated
agriculture. Congress also proved again improve and strengthen water pollution with livestock production.18 The TMDL
it is unable to enforce discipline on crop control under the Clean Water Act program must take into account CAFOs
insurance—allowing those who did not (CWA). 8 In response to the Clean Water and nonpoint sources in the agricultural
take the required crop insurance under Initiative, USDA and EPA have proposed sector if EPA’s goals are to be achieved.19
Freedom to Farm to receive the disaster a Unified National Strategy for Animal
payments if they promise to take subsi- Feeding Operations. 9 The major thrusts State activities
dized crop insurance for the coming two of the Strategy are voluntary planning Oklahoma amended its CAFOs law in
years. Where does this leave us? through Comprehensive Nutrient Man- 1998 to focus its odor and clean water
1. The income transfers beyond the agement Plans (CNMPs), increased regu- efforts specifically on poultry and swine.
Freedom to Farm program will dampen latory permitting (with the intention of In one bill, Oklahoma enacted three laws
the market-based supply response that increasing from the approximately 2,000 regulating poultry: the Registered Poul-
might otherwise have occurred in the CAFOs with CWA permits to an addi- try Feeding Operations Act (a permit
United States (proving Doering right for tional 15,000 to 20,000 CAFOs with CWA system); the Poultry Waste Transfer Act
the wrong reasons). permits by the year 2005), and increased (transfer of poultry waste out of desig-
2. However, Freedom to Farm pay- financial and technical assistance to the nated watersheds); and the Poultry Waste
ments and added government transfers livestock sector to meet the goals of the Applicators Certification Act (controls
fall below the payments that probably Strategy.10 In addition, EPA has an- on land application of poultry litter).20 As
would have been made under the old nounced that a long-term action on its for swine, Oklahoma toughened its statu-
program. unified agenda is to revise the existing tory requirements for permits and opera-
3. Congress demonstrated again that it effluent guidelines for beef, dairy, poul- tion of licensed managed feeding opera-
can hardly resist sending aid to disas- try, and swine operations.11 tions (LMFOs), which by definition are
ters—making subsidized crop insurance In line with the Clean Water Initiative, large swine operations. With the enact-
that much more difficult to sell. EPA and the National Pork Producers ment of these toughened requirements,
4. This year proves that the FAIR Act Council (NPPC) agreed to a voluntary the Oklahoma legislature lifted a mora-
will be challenged when prices are low, Compliance Audit Program (CAP) for torium that it had imposed on the issu-
and foretells a real debate in 2002 when swine producers. The program has two ance of permits for new swine opera-
the FAIR Act expires—unless, of course, prongs. Prong one is an on-farm environ- tions.21
prices are very high in 2001 and 2002. If mental assessment. The NPPC has de- Colorado voters on November 3, 1998
it so chooses, the Commission on 21st veloped and copyrighted a comprehen- adopted a ballot initiative, Amendment
Century Production Agriculture may have sive assessment framework for pork pro- 14, that created a statutory regulatory
an opportunity to suggest another course. ducers through which trained, certified scheme for large swine operations.22
Income insurance anyone (Harrington personnel will conduct environmental as- Amendment 14 created a regulatory
and Doering)? sessments.12 Prong two is the Final Re- scheme for swine operations similar to
port by the pork producer to the EPA (or that adopted in Oklahoma. On Novem-
References participating state agency) whereby the ber 3, 1998, South Dakota voters adopted
Coyle, W., W. McKibbin, Wang, and M. producer reveals the results of the as- a state constitutional amendment,
Lopez, Choices, 4th Qtr. 1998. sessment and commits to correcting any Amendment E, that prohibits corpora-
Harrington, David and Otto Doering, violations or deficiencies that the assess- tions, limited partnerships, business
Agricultural Policy Reform: A Proposal. ment revealed. In return for the self- trusts, or limited liability companies from
Choices, 1st Qtr. 1993. revelations, the EPA and participating acquiring any legal, beneficial, or other
Schertz, Lyle and Warren Johnson, states agree to lessen the sanctions that interest in real estate and from engaging
Land Owners: They Get the 1996 Farm could have been imposed upon the pro- in crop or livestock production. Amend-
Act Benefits. Choices, 1st Qtr. 1998. ducer under the CWA.13 ment E creates an exemption for family
Stoeckel, A., S. Fisher, W. McKibbin, During 1998, EPA also proposed to farm corporations or family farm syndi-
and B. Borrell, Asia's Meltdown and reissue the EPA Region 6 NPDES gen- cates.23
Agriculture, Center for International eral permit for CAFOs. The comment The Mississippi legislature imposed a
Economics, Canberra, 1998. period on the proposed reissuance ex- moratorium beginning February 28, 1998
pired October 12, 1998 but as of early on the issuance of permits for swine
*Reprinted with permission of The Ameri- December the EPA had not published a operations (new or expanded) until Janu-
can Agricultural Economics Association, final decision.14 Furthermore, EPA del- ary 1, 2000.24 In addition, the legislature
Iowa State University, 415 S. Duff St., egated to Texas, through the Texas Natu- expanded the rural zoning authority of
Suite 3, Ames, IA 50010. Critical Ques- ral Resources Conservation Commission county Boards of Supervisors relating to
tions about the Farm Crisis, Otto Doering (TNRCC), NPDES authority, including swine CAFOs, if counties enacted their
& Phil Paarlberg, Choices, 4th Qtr. 1998. NPDES authority over CAFOs.15 zoning ordinance prior to June 1, 1998.25
Reproduced with permission of the pub- Due to litigation pressure,16 the EPA At least 35 of Mississippi’s 82 counties
lisher via Copyright Clearance Center, has more heavily emphasized water qual- took advantage of this new zoning au-
Inc. ity standards, particularly on a water- thority.26 However, a federal court has
shed basis, under section 303(d) of the now enjoined the enforcement of these
Clean Water Act. To achieve these water ordinances in three counties.27 Finally
quality standards, the EPA is working for Mississippi, the Department of Envi-
closely with the states to develop lists of ronmental Quality has proposed that new

6 AGRICULTURAL LAW UPDATE FEBRUARY 1999
22
OMNIBUS/Cont. from page 6 1999 Omnibus Bill, Div. A, Agriculture, Title VII, § 748.
32
§ 741(e). Act of June 23, 1998, Pub. L. No. 105-185, Title V,
23
5
1999 Omnibus Bill, Div. A, Agriculture, Title VII, 1999 Omnibus Bill, Div. A, Agriculture, Title VII, Subtitle C, § 532, 112 Stat. 581.
33
§ 726. § 741(b). Conference Report at H11295-96.
24 34
6
1999 Omnibus Bill, Div. A, Agriculture, Title VII, The language provides: “The complainant may, in Conference Report at H11301.
35
§ 730. lieu of filing a civil action, seek a determination on the Conference Report at H11301.
36
7
1999OmnibusBill,Div.A,Agriculture,TitleVII,§ 751 merits of the eligible complaint by the Department of Conference Report at H11302.
37
(amending 16 U.S.C. § 3837d(c)(1)). Agriculture if such complaint was filed not later than 2 Conference Report at H11301.
38
8
1999OmnibusBill,Div.A,Agriculture,TitleVII,§ 752 years after the date of enactment of this Act.” 1999 Conference Report at H11301.
39
(adding 16 U.S.C. § 3837(b)(2)(C)). OmnibusBill,Div.A,Agriculture,TitleVII,§ 741(b).The 1999 Omnibus Bill, Div. A, Agriculture, Title VII,
9
Conference Report at H11300. confusionisgeneratedbythefactthat“eligiblecomplaint” § 740.
40
10
Conference Report at H11302. is defined as: “a nonemployment related complaint that 1999 Omnibus Bill, Div. J, Tax and Trade Relief
11
1999 Omnibus Bill, Div. A, Agriculture, Title XI, was filed with the Department of Agriculture before July Extension Act of 1998, Title II, § 2002.
41
§ 1127(a). 1,1997,andallegesdiscriminationatanytimeduringthe 26 U.S.C. § 1301.
42
12
Conference Report at H11303. period beginning on January 1, 1981 and ending Decem- Taxpayer Relief Act of 1997, Pub. L. No. 105-34,
13
1999 Omnibus Bill, Div. A, Agriculture, Title XI, ber 31, 1996... ” 1999 Omnibus Bill, Div. A, Agriculture, § 933(c).
43
§ 1127(a). TitleVII,§741(e). 1999 Omnibus Bill, Div. J, Tax and Trade Relief
25
14
Conference Report at H11301. 1999 Omnibus Bill, Div. A, Agriculture, Title Extension Act of 1998, Title II, § 2011.
44
15
1999 Omnibus Bill, Div. A, Agriculture, Title XI, VII,§741(b)(1),(2). 1996 FAIR Act, § 112(d)(2) (codified at 7 U.S.C.
26
§ 1127(b). 1999 Omnibus Bill, Div. A, Agriculture, Title VII, § 7212(d)(2)).
45
16
Conference Report at H11295, H11301. § 741(d).TheEqualCreditOpportunityActisfoundat15 The Emergency Farm Financial Relief Act of 1998,
17
1996 FAIR Act, § 143. U.S.C. §§ 1691 et seq. Pub. L. No. 105-228 , § 2 (codified at 7 U.S.C.
27
18
1999 Omnibus Bill, Div. A, Agriculture, Title VII, 1999 Omnibus Bill, Div. A, Agriculture, Title VII, § 7212(d)(3)).
46
§ 738. § 741(b)(3). 1999 Omnibus Bill, Div. J, Tax and Trade Relief
28
19
1999 Omnibus Bill, Div. A, Agriculture, Title VII, 1999 Omnibus Bill, Div. A, Agriculture, Title VII, Extension Act of 1998, Title II, § 2012.
47
§ 739. § 741(c). 1999 Omnibus Bill, Div. J, Tax and Trade Relief
29
20
1999 Omnibus Bill, Div. A, Agriculture, Title VII, 1999 Omnibus Bill, Div. A, Agriculture, Title VII, Extension Act of 1998, Title II, § 2013.
§ 741. § 742. — Karen R. Krub, Farmers’ Legal
30
21
1999 Omnibus Bill, Div. A, Agriculture, Title VII, Conference Report at H11291. Action Group, Inc., St. Paul, MN
31
§ 741(a). 1999 Omnibus Bill, Div. A, Agriculture, Title VII,

CAFOs/Cont. from page 6 participants will address issues relating 5
Carrv.AltaVerdeIndustries,Inc.,931F.2d1055(5th
CAFOs be required to obtain either an air to CAFOs and agriculture generally. Cir.1991); Concerned Area Residents for the Environ-
pollution control permit or a multimedia · In May 1999, in Minneapolis at the ment v. Southview Farm,34F.2d114(2nd Cir.1994) cert.
(water and air) permit in order to conference facilities of the Whitney & denied 514 U.S. 1082 (1995), overruling 834 f. Supp.
strengthen odor control. Dorsey law firm, the Special Committee 1422 (W.D. N.Y. 1993).
6
The courts of Iowa and Minnesota de- will host its second Roundtable on Envi- EPA, NPDES General Permit for Discharges From
cided cases disputing the use of local land ronmental Issues in Animal Feedlots. Concentrated Animal Feeding Operations,58F.R.7610
use laws in cases involving swine opera- This Roundtable focuses solely on federal (Feb. 8, 1993; eff. March 10, 1993). For information
about the Erath County donnybrook, read e.g. Helen
tions. The Iowa Supreme Court ruled and state developments concerning
Thompson, StinkBig,21 Tex. Mon.66 (Aug. 1993).
that local political subdivisions had lim- CAFOs. 7
David Shorr, Director, Mo. Dept. Natural Resources
ited authority to regulate swine opera- · The Special Committee has proposed as reported in Law and Policy for Feedlots: A Report of
tions through local ordinances.28 By con- a break-out session on CAFOs, entitled the ABA-Special Committee on Agricultural Manage-
trast, the Minnesota Court of Appeals “Animal Feeding Operations and the ment Roundtable on Environmental Issues in Animal
affirmed a local ordinance regulating the Environment,” to take place at the Fall Feedlots,< http://www.cast-science.org/9711aba2.htm
odor of a swine operation.29 1999 SONREEL meeting. If accepted, >; Paul Strandberg, Off. Att’y Gen. Minn., State Animal
The Iowa Supreme Court ruled on Sep- the break-out session will include infor- Feeding Regulations,19th Ann. Mtg. & Educ. Symp.,
tember 23, 1998 that the Iowa statutory mation from the all-day May Roundtable American Agricultural Law Assoc. (Oct. 1998).
immunity from nuisance suits for agri- in order to acquaint the non-agricultural 8
62 Fed. Reg. 60448 (Nov. 7, 1997).
9
cultural operations resulted in a taking lawyer with CAFO issues. 63 Fed. Reg. 50192 (Sept. 21, 1998).
of neighbors’ private property rights to a — Drew L. Kershen, Earl Sneed
common law nuisance remedy. The court Centennial Professor of Law, University
declared the immunity unconstitutional.30 of Oklahoma, College of Law.
dri
P esticide dr aw
ift law
Special Committee on Agricultural
Management Programs 1
For general discussion of these issues, read e.g., compilation
In light of the importance of these Comment, Saving the Wetlands from Agriculture: An A compilation of state statutes and regu-
issues relating to CAFOs, SONREEL has Examination of Section 404 of the Clean Water Act and lations related to pesticide drift has been
requested the Special Committee to the Conservation Provisions of the 1985 and 1990 Farm prepared by Theodore A. Feitshans, J.D.,
present three educational programs on Bills, 7 J. Land Use & Envtl. L. 299(1992); Comment, Department of Agricultural and Resource
CAFOs in 1999. Protecting Wetlands Through the Clean Water Act and Economics, North Carolina State Uni-
· At the Keystone Conference in Key- the 1985 and 1990 Farm Bills: A Winning Trio,28U.Tol. versity. The compilation includes stat-
stone, Colorado in March 1999, the Spe- L. Rev. 867 (1997). utes and regulations covering drift di-
2
33 U.S.C. §§ 1311(l)(1), 1362(14) (1998).
cial Committee has helped design and 3 rectly as well as others, such as financial
Id. § 1362(14).
organized a general session–“The 4 responsibility, that implicate drift only
Id. See also, 40 C.F.R. § 122.23 and Appendix B to
Administration’s Clean Water Act Initia- Part122(1998). AppendixBgivesthedetaileddefinition indirectly. The compilation is contained
tive: Political Packaging or a Paradigm of CAFOs but also states, “Provided, however, that no in two volumes. Order and billing infor-
Shift?” The session will focus on water- animal feeding operation is a concentrated animal feed- mation is available from Copytron, tele-
shed planning under section 303(d) of the ing operation as defined above if such animal feeding phone (919) 233-6862; fax (919) 233-6871.
Clean Water Act for a hypothetical Bliss operation discharges only in the event of a 25 year, 24- —Theodore A. (Ted) Feitshans, North
River. As part of the watershed planning, hour storm event.” Carolina State Univ., Raleigh, NC.

FEBRUARY 1999 AGRICULTURAL LAW UPDATE 7