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VOLUME 22, NUMBER 7, WHOLE NUMBER 260 JUNE 2005

Peanut farmers’ claims dismissed for lack of
subject matter jurisdiction
In Texas Peanut Farmers v. United States, 409 F.3d 1370 (Fed. Cir. 2005), the United States
Court of Appeals for the Federal Circuit dismissed an action brought by several peanut
farmers for lack of subject matter jurisdiction.
Multiple Peril Crop Insurance (MPCI) policies are crop insurance policies that are
issued by private insurers and reinsured by the Federal Crop Insurance Corporation

INSIDE (FCIC) for protection against weather-related crop losses. See Texas Peanut Farmers, 409
F.3d at 1370. Prior to 2002, MPCI coverage for peanuts was based upon whether lost
peanut crops were considered “quota” or “non-quota.” See id. at 1372. Quota peanuts
were covered at $0.31 per pound and non-quota peanuts were covered at $0.16 per
pound. See id. The Farm Security and Rural Investment Act of 2002, commonly referred
• Wisconsin insurance to as the 2002 Farm Bill, repealed the peanut quota “and caused all peanuts to become
company subject to non-quota with a per-pound-coverage rate of $0.1775.” Id.
jurisdiction in Arkansas Several peanut farmers from South Carolina, Georgia, Alabama, Texas, and Florida
purchased MPCI coverage for their 2001 and 2002 peanut crops. See id. After the
• The Nebraska hog wars farmers’ peanut crops suffered weather-related damage in 2002, they filed claims for
their losses in accordance with their MPCI policies, expecting that their losses would
• Regulation of be covered at $0.31 per pound. See id. They were informed, however, that due to the
hydrologically- repeal of the peanut quota by the 2002 Farm Bill their losses would only be covered
connected ground at $0.1775 per pound. See id.
water in Nebraska The farmers brought a breach of contract action against the United States in the
United States Court of Federal Claims for breach of contract and argued that their
damages equaled the difference between the $0.31 per-pound and $0.1775 per-pound-
coverage rates. See id. The Court of Federal Claims dismissed the farmers’ claims for
lack of jurisdiction, holding that 7 U.S.C. §§ 1508(j) and 1506(d) placed exclusive
jurisdiction in the federal district courts. See id. See also Texas Peanut Farmers v. United
States, 59 Fed. Cl. 70 (Fed. Cl. 2003). The farmers appealed that decision to the Federal
Solicitation of articles: All AALA Circuit. See id.
members are invited to submit articles The farmers argued that 7 U.S.C. §§ 1508(j) and 1506(d) did not apply because they
to the Update. Please include copies of did not name the FCIC as a defendant. See id. The farmers also argued that the Court
of Federal Claims has concurrent jurisdiction with the federal district courts under the
decisions and legislation with the ar-
Tucker Act, 28 U.S.C. § 1491(a)(1), and the Little Tucker Act, 28 U.S.C. § 1346(a)(2).
ticle. To avoid duplication of effort,
Cont. on page 2
please notify the Editor of your pro-
posed article.

Federal Register summary from June 11 to
July 6, 2005
IN FUTURE COTTON. The CCC has issued interim regulations changing the Extra Long Staple
cotton price used to calculate the payment rate from the average domestic spot price

ISSUES
quotation for base quality U.S. Pima cotton to the American Pima c.i.f. Northern Europe
price. 70 Fed. Reg. 35367 (June 20, 2005).
The CCC has issued proposed regulations which implement provisions of the
Military Construction Appropriations and Emergency Hurricane Supplemental Ap-
propriations Act, 2005, to provide assistance to producers and first-handlers of the 2004
crop of cottonseed in counties declared a disaster by the President due to 2004
• International trade and hurricanes and tropical storms. 70 Fed. Reg. 36536 (June 24, 2005).
CROP INSURANCE. The FCIC has adopted as final regulations amending the
the future of farm
Nursery Crop Insurance provisions to (1) make container and field grown plants
programs separate crops; (2) provide coverage for plants in containers that are equal to or
greater than one inch in diameter; (3) provide separate basic units by share which will
be further divided into basic units by plant type and a basic unit for all liners when
additional coverage is purchased; (4) offer one coverage level and price election for
each basic unit when additional coverage is purchased; (5) offer optional units by
Cont. on page 2

JUNE 2005 AGRICULTURAL LAW UPDATE 1
PEANUT FARMER/ CONTINUED FROM PAGE 1

Section 1508(j) provides that if a claim of 1370, 1372 (Fed. Cir. 2005). The court re- farmers “are suing the FCIC for breach,
loss is denied, “an action on the claim may jected the farmers’ argument, stating that sections 1508(j) and 1506(d), by which Con-
be brought against the Corporation or “[t]his theory does not bear scrutiny. It is gress has granted courts exclusive juris-
Secretary only in the United States district well settled that this court ‘look[s] to the diction over claims against the FCIC, gov-
court for the district in which the insured true nature of the action in determining ern.” Id.
farm is located.” 7 U.S.C. 1508(j). Section the existence or not of jurisdiction.’” —Harrison M. Pittman, National
1506(d) provides that the FCIC, Id. (citation omitted). It added that “[a]n Agricultural Law Center, Research Assistant
subject to the provisions of section 1508 inspection of the contract and ... pleadings Professor of Law
(j) ... , may sue and be sued in its corpo- reveals the true nature of this action: a suit
rate name .... The district courts of the against the FCIC for breach of the MPCI. This material is based on work supported by
United States, including the district courts ... [The farmers’] strategic decision not to the U.S. Department of Agriculture under
of the District of Columbia and of any name the FCIC as a defendant is merely Agreement No. 59-8201-9-115. Any opinions,
territory or possession, shall have ex- an attempt to avoid the strictures of the findings, conclusions, or recommendations ex-
clusive original jurisdiction, without re- MPCI and sections 1508(j) and 1506(d). pressed in this article are those of the author and
gard to the amount in controversy, of all The court also rejected the farmers’ do not necessarily reflect the view of the U.S.
suits brought by or against the Corpora- arguments that the Court of Federal Department of Agriculture.
tion. The Corporation may intervene in Claims possessed jurisdiction concurrent
any court in any suit, action, or proceed- with the federal district courts. See id. at The National AgLaw Center is a federally
ing in which it has an interest.... 1373. The court explained that Congress funded research institution located at the Uni-
Id. at § 1506(d). is permitted to withdraw any grant of versity of Arkansas School of Law, Fayetteville.
Tucker Act jurisdiction. See id. (citing Web site: www.NationalAgLawCenter.org
The court first considered the farmers’ Ruckelshaus v. Monsanto Co., 467 U.S. 986, | Phone: (479)575-7646 | Email:
argument that 7 U.S.C. §§ 1508(j) and 1016-17 (1984); Wilson v. United States, 405 NatAgLaw@uark.edu
1506(d) did not apply because the FCIC F.3d 1002 (Fed. Cir. 2005); and Massie v.
was not named as a defendant in their United States, 166 F.3d 1184 (Fed. Cir. 1999)).
complaint. Texas Peanut Farmers, 409 F.3d The court concluded that because the

Federal Register/Cont. from page 1
VOL. 22, NO. 7, WHOLE NO. 260 June 2005
AALA Editor..........................Linda Grim McCormick location for field grown plants; (6) allow Me. June 9, 2005). The court issued a de-
increases to the plant inventory value claratory judgment that 7 CFR 205.606
2816 C.R. 163, Alvin, TX 77511
Phone: (281) 388-0155
report if made on or before August 31 of shall be interpreted to permit the use of a
E-mail: apamperedchef@ev1.net the crop year; (7) change the provision nonorganically produced agricultural
that precludes acceptance of an applica- product only when the product has been
Contributing Editors: Robert A. Achenbach, Eugene, OR;
Harrison M. Pittman, Fayetteville, AR; Joshua T. Crain, tion for insurance for any current crop listed in Section 205.606 pursuant to Na-
Fayetteville, AR; J. David Aiken, Lincoln, NE. year after May 31 of the crop year; and (8) tional List procedures, and when an ac-
For AALA membership information, contact Robert make other policy changes to improve credited certifying agent has determined
Achenbach, Interim Executive Director, AALA, P.O. Box coverage of nursery plants. 70 Fed. Reg. that the organic form of the agricultural
2025, Eugene, OR 97405. Phone 541-485-1090. E-mail
RobertA@aglaw-assn.org.
37221 (June 28, 2005). product is not commercially available.
GUARANTEED FARM LOANS. The FSA The court’s order limited an accredited
Agricultural Law Update is published by the American has issued proposed regulations which certifying agents commercially available
Agricultural Law Association, Publication office: County
Line Printing 6292 NE 14th Street, Des Moines, IA 50313. revise the Interest Assistance Program determinations for nonorganic agricul-
All rights reserved. First class postage paid at Des Moines, as to how a guaranteed loan borrower tural products used in or on processed
IA 50313.
may obtain a subsidized interest rate on a organic products to the five substances
This publication is designed to provide accurate and guaranteed farm loan. The changes in- contained in 7 CFR 205.606. The products
authoritative information in regard to the subject matter
covered. It is sold with the understanding that the
clude (1) deletion of annual review re- involved are native cornstarch, water
publisher is not engaged in rendering legal, accounting, or quirements, (2) limitations on loan size extracted gums, kelp when used as a thick-
other professional service. If legal advice or other expert and period of assistance, and (3) stream- ener and dietary supplement, unbleached
assistance is required, the services of a competent
professional should be sought. lining of claim submission. 70 Fed. Reg. lecithin, and high methoxy pectin. 70 Fed.
36055 (June 22, 2005). Reg. 38090 (July 1, 2005).
Views expressed herein are those of the individual
authors and should not be interpreted as statements of ORGANIC FOODS. The AMS has is- TOBACCO. The CCC has issued a re-
policy by the American Agricultural Law Association. sued advance notice of proposed quest for public comment on the docu-
Letters and editorial contributions are welcome and
rulemaking concerning the expiration, on ments to be used by the CCC in the admin-
should be directed to Linda Grim McCormick, Editor, 2816 October 21, 2007, of the allowed use of 165 istration of the Tobacco Transition Pay-
C.R. 163, Alvin, TX 77511, 281-388-0155. synthetic and non-synthetic substances ment Program with respect to successor-
Copyright 2005 by American Agricultural Law in organic production. On the same date in-interest contracts, which allow a to-
Association. No part of this newsletter may be reproduced the prohibition of nine non-synthetic sub- bacco quota holder or a tobacco producer
or transmitted in any form or by any means, electronic or
mechanical, including photocopying, recording, or by any stances will also expire. The AMS seeks who is participating in this program to
information storage or retrieval system, without permission public comment on the changes. 70 Fed. transfer their rights and obligations to a
in writing from the publisher.
Reg. 35177 (June 17, 2005). third-party. 70 Fed. Reg. 36919 (June 27,
ORGANIC FOODS. The AMS has is- 2005).
sued a notice pursuant to a consent final —Robert P. Achenbach, Jr., AALA
judgment and order issued in the case Executive Director
Harvey v. Johanns, Civil No. 02-216-P-H (D.

2 AGRICULTURAL LAW UPDATE JUNE 2005
Wisconsin insurance company subject to jurisdiction in Arkansas
In Ferrell v. West Bend Mutual Insurance Com- Bend chose to extend its coverage into stated that there was an “occurrence”
pany, 393 F.3d 786 (8th Cir. 2005), the United Arkansas and was therefore subject to within the meaning of the policy. See id. It
States Court of Appeals for the Eighth personal jurisdiction in Arkansas. See id. It noted that the plants were accidentally
Circuit held (1) that a Wisconsin crop in- also determined that the “territory-of- and unintentionally damaged due to the
surer was subject to personal jurisdiction coverage clause” in the policy satisfied faulty film. See id. The court further ex-
in Arkansas, (2) that the insurance policy’s the minimum contacts requirement of the plained that the plants were exposed to
“right-to-sue-insurer” clause was enforce- Due Process Clause. See id. blight, overwatering, and underwatering.
able in Arkansas, (3) that the action was West Bend also argued that the grow- See id. The court further determined that
not precluded by a previous declaratory ers’ only cause of action arose out of § 23- because there was no agreement or con-
judgment in Wisconsin, (4) that damage to 89-101 of the Arkansas Code, which pro- tract between the growers and Hi-Tech
a tomato crop was “property damage” vides for direct actions against an insurer assuming liability for damages, West
under the policy, (5) that damage to the based on an insurance policy issued or Bend’s contention that the policy’s exclu-
tomato crop constituted an “occurrence” delivered in Arkansas. See id. Although sion of coverage for contractual liability
under the policy, (6) that a contractual the growers abandoned their reliance applied was erroneous. See id.
liability exclusion did not apply, and (7) upon this section because the insurance West Bend also argued that the grow-
that Arkansas’ penalty statute applied. policy at issue was neither issued nor ers were not entitled to a penalty and
See id. delivered in Arkansas, the court explained attorney’s fees under § 23-79-208(a)(1) of
Arkansas tomato growers Phillip and that the express language of the policy the Arkansas Code. See id. That section
Tommy Ferrell and Clay and Donny Lowry provided for a cause of action. See id. The provides that if an insurance company
(growers) purchased a plastic film from court explained that the language of the fails to pay in accordance with the policy
Hi-Tech Film, Inc. (Hi-Tech) designed to policy providing that “[a] person or orga- after demand is made, they are liable to
prevent soil from splashing onto toma- nization may sue us to recover . . . on a final pay a 12% penalty on the amount of the
toes and causing blight. See id. After judgment against an insured obtained loss and reasonable attorney’s fees. See
placing the film on their fields, the film after an actual trial.” Id. at 792. The court id. The court explained that even where
began to deteriorate causing holes in parts explained that § 23-89-101 of the Arkansas the law of another state governs the sub-
of the film. See id. Because of these holes, Code did not preclude a claim based upon stantive issues, the award of the 12% pen-
the growers’ tomatoes were splashed with the express language of a policy and the alty and attorney’s fees is procedural and
soil when it rained, causing blight. See id. common law. See id. therefore governed by Arkansas law. See
As a result, the tomatoes were smaller West Bend further argued that the grow- id. The court cited USAA Life Ins. Co. v.
than normal and suffered from sunburn, ers’ claim was foreclosed by a previously Boyce, 745 S.W.2d 136 (Ark. 1988), an Arkan-
rain damage, and cracking. See id. There- issued declaratory judgment in Wiscon- sas Supreme Court decision, for that
fore, in August of 2000 the growers sued sin that West Bend “had no duty to defend proposition. See id. The court explained
Hi-Tech in Arkansas federal district court or indemnify Hi-Tech.” Id. at 792. West that under § 23-79-208 of the Arkansas
and were awarded damages and Bend argued that such judgment should Code, there must be a connection with
attorney’s fees due to the breach of war- be given full faith and credit in Arkansas. Arkansas for the court to award the pen-
ranties of merchantability and fitness. See See id. The court explained that the district alty and attorney’s fees on a policy. See id.
id. The growers then sought indemnifica- court had concluded that “the Wisconsin The court further explained that the “in-
tion from West Bend Mutual Insurance judgment did not bar the tomato growers’ surance policy matured in Arkansas, the
Company, the insurance company that action in Arkansas, because the growers injury occurred in Arkansas, the damaged
insured Hi-Tech. See id. The court were not a party to the Wisconsin action, property was owned by Arkansas resi-
“awarded the tomato growers the under- and Hi-Tech had little or no incentive to dents, and the Arkansas residents brought
lying judgment, plus attorney’s fees and obtain a full and fair adjudication in that suit and obtained a judgment in Arkan-
costs, a penalty, prejudgment interest, case.” Id. at 792-93. The court agreed with sas.” Id. at 797. The court concluded that
and postjudgment interest.” Id. at 790. the district court that the Wisconsin judg- because of these factors there was a suf-
West Bend appealed the decision to the ment did not bar this action. See id. It stated ficient connection to apply § 23-79-208.
Eighth Circuit. See id. that the growers would not have been —Joshua T. Crain, National AgLaw
West Bend argued that the district court precluded in Wisconsin and that the grow- Research Center Graduate Assistant,
did not have personal jurisdiction over it ers’ interests cannot be deemed to have Fayetteville, AR
because it lacked sufficient minimum con- been litigated in the Wisconsin action. See
tacts with Arkansas. See id. West Bend id. This material is based on work supported by
asserted that it was a Wisconsin company West Bend next argued that the breach- the U.S. Department of Agriculture under
with its principal place of business in Wis- of-warranty damages were for economic Agreement No. 59-8201-9-115. Any opinions,
consin, that it conducted no business and losses not covered by the policy and that findings, conclusions, or recommendations ex-
had no offices or agents in Arkansas, that the policy’s contractual liability exclusion pressed in this article are those of the author and
it had no bank accounts or property in applied. See id. The court explained that do not necessarily reflect the view of the U.S.
Arkansas, that it solicited no business in the growers did sustain property damage Department of Agriculture.
Arkansas, and that it was not licensed to as a result of the defective film purchased
operate in Arkansas. See id. The court from Hi-Tech. See id. It noted that the The National AgLaw Center is a federally
explained that the policy covering Hi-Tech tomato plants were “stunted, undersized, funded research institution located at the Uni-
contained a territory-of-coverage clause sunburned, or waterlogged, and they were versity of Arkansas School of Law, Fayetteville.
providing that the policy covered Hi-Tech cracked in parts.” Id. at 795. The court Web site: www.NationalAgLawCenter.org
“against injury or property damage from stated that measuring the damage in terms | Phone: (479)575-7646 | Email:
occurrences in ‘[t]he United States of of lost profits or diminished gross receipts NatAgLaw@uark.edu
America . . . Puerto Rico, and Canada.’” Id. did not alter the fact that property (toma-
at 790. The court determined that West toes) was damaged. See id. The court also

JUNE 2005 AGRICULTURAL LAW UPDATE 3
The Nebraska hog wars
By J. David Aiken

Nebraska has always been a major live- first proposed in 1998 but was not adopted contending that the county zoning permit
stock producing state. Until the 1980s, most until 1999, as confinement developers lob- requirement was illegal and unenforce-
livestock production was on small to me- bied hard to have the law delayed. This able. The county then took Premium Farms
dium-sized family operations. Nebraska allowed some confinement operations to to court for beginning construction with-
has always had some large cattle feed- be developed before counties could regu- out the zoning permit.
lots, but most feedlots have been smaller. late them through temporary zoning regu- Premium Farms argued that Nebraska
Swine production traditionally has been lations. See Neb. Rev. Stat. §§ 23-115 to - zoning statutes prohibited counties from
on small and medium-sized operations. 115.02 (2004 Supp.). Now most Nebraska requiring permits for farm buildings. Pre-
Just over one-third of Nebraska counties counties are zoned; some regulations are mium Farms argued that because they
were zoned by the late 1970s, with quarter- strict enough to make development of were constructing a farm building, they
mile (or smaller) setbacks being a com- new confinements difficult if not either were not subject to county permit require-
mon livestock zoning regulation. impossible or uneconomical. ments. The county argued that the farm
Beginning in the late 1960s, large con- In most zoned counties, new livestock buildings statute applied only to building
fined swine production facilities were de- facilities need both (1) a state livestock permits and not to zoning permits. The
veloped in the eastern US, similar to the waste control permit from the Nebraska county also argued that Nebraska zoning
poultry industry. Initiative 300’s corpo- Department of Environmental Quality and statutes clearly authorized counties to
rate farming restrictions no doubt slowed (2) a county zoning permit. Often counties regulate agricultural land uses.
the development of large swine confine- will require the producer to first obtain the The district court ruled that the zoning
ments in Nebraska until the late 1980s and DEQ livestock waste permit before the statute prohibited counties from regulat-
early 1990s. This development then be- county will issue the zoning permit. Some ing farm buildings. The district court con-
came a high-profile public policy issue. livestock producers have received their cluded that the county could regulate the
Strident opposition to large swine confine- state DEQ livestock permit, only to then use of the land surrounding the farm build-
ment operations from smaller swine pro- have their county zoning permit denied. A ing but not the farm building itself. This
ducers and neighbors concerned about livestock producer may spend hundreds ruling was overturned by the Nebraska
odors and pollution led to a state morato- or even thousands of dollars to obtain the Supreme Court, which ruled that the farm
rium on processing livestock waste per- DEQ permit. Most producers would prefer building statute applied only to building
mits until regulations could be changed to to know whether or not the county will permits and not to zoning permits. The
deal with larger operations. Many fea- issue the zoning permit before spending Supreme Court also ruled that the Holt
tures of the new state livestock waste the money to obtain the DEQ permit, an County zoning permit requirements for
regulations were ultimately included in issue addressed as part of 2003 “livestock the hog buildings were legal.
the 1998 Nebraska Livestock Waste Man- friendly” legislation. The Premium Farms decision is a major
agement Act, Neb. Rev. Stat. §§ 54-2401 to The Nebraska system of dual livestock legal decision. The Iowa Supreme Court
-2435 (2004 Supp). facility regulation is in contrast to Iowa’s, had ruled in similar cases that Iowa coun-
A major focus of the Nebraska “hog where counties cannot zone agricultural ties are not authorized to zone agricul-
wars” has been county livestock zoning land or buildings. In Iowa, the Department tural land. DeCoster v. Franklin County, 497
regulations. The Nebraska Supreme Court of Natural Resources issues environmen- N.W.2d 849 (Iowa 1993); Thompson v.
ruled in 2000 that counties could not regu- tal permits for livestock operations with Hancock County, 539 N.W.2d 181 (Iowa 1995);
late livestock facilities except through state setbacks of 750-1,875 feet depending Kuehl v. Cass County, 555 N.W.2d 686 (Iowa
county zoning regulations. Enterprise Part- upon the facility waste handling system. 1996). A similar decision by the Nebraska
ners v. Perkins County, 260 Neb. 650, 619 In contrast, most county zoning regula- Supreme Court would have required most
N.W.2d 464 (2000). See County feedlot regu- tions of livestock facilities in Nebraska Nebraska counties to rewrite their zoning
lations invalidated, 17 Agric. L. Update 12 have much larger setback requirements regulations, and would allow new live-
(November, 2000). Thereafter, develop- (up to four miles), and some have capacity stock facilities to be developed through-
ing restrictive county AFO (animal feed- limits, putting a ceiling on larger facilities. out the state if they met DEQ environmen-
ing operation) zoning regulations became Livestock industry advocates have pro- tal regulations (which contain no setback
the principal strategy for limiting the de- posed that county zoning of livestock fa- requirement).
velopment of mega-livestock facilities. cilities be limited or prohibited, but have County livestock zoning has continued
Many unzoned counties sought to de- been unsuccessful in implementing re- to generate controversy. Most zoned coun-
velop zoning to give them control over the strictions on county zoning authorities. ties establish zoning setbacks for live-
location (and size) of large swine confine- stock operations, and some counties have
ment operations. Anti-confinement County AFO zoning upheld larger setbacks (up to 4 miles) for very
groups sought changes in county zoning In Premium Farms v. Holt County, 263 Neb large facilities. These types of zoning regu-
laws to allow temporary zoning so that 415, 640 N.W.2d 633 (2002), the Nebraska lations will make livestock expansion (es-
counties had time to develop permanent Supreme Court ruled that a Holt County pecially swine expansion) difficult in much
zoning. Temporary zoning legislation was zoning regulation could require a condi- of Nebraska.
tional use zoning permit before hog pro-
duction facilities could be developed. Pre- Open meetings law
mium Farms wanted to build a large swine In Nebraska, as in most other states,
J. David Aiken is Professor of Agricultural facility in Holt County. The county’s zon- most actions by public officials are subject
Economics (Water & Agricultural Law Special- ing regulations required Premium Farms to compliance with state public meeting or
ist), University of Nebraska-Lincoln. He is a to obtain a conditional use zoning permit open meeting law requirements. Failure
member of the Nebraska and District of Colum- before constructing the hog confinement to comply with open meeting require-
bia Bar Associations. facility. Premium Farms began construc- ments can lead to a court’s declaring the
tion without obtaining the zoning permit, action taken by public officials to be in-
valid. Such was the case in a zoning deci-

4 AGRICULTURAL LAW UPDATE JUNE 2005
sion involving a dairy expansion in Ante- 7-2 to grant the third application. On March considering any information obtained
lope county. Alderman v County of Antelope, 7, 2000 the county board approved the at the illegal meeting.
11 Neb. App. 412, 653 N.W.2d 1 (2002). third zoning application after a public hear- Id. at 422-23.
The teVelde brothers filed an applica- ing.
tion with the Antelope County board of On June 1, 2000 the plaintiffs filed a The teVelde’s ultimately filed for bank-
supervisors for a zoning permit to expand lawsuit challenging the validity of the grant ruptcy and abandoned the dairy opera-
their dairy. The dairy is located in the of the third zoning permit application. At tion. Part of the controversy in this case is
watershed of East Verdigree Creek, a trial, two planning commission members that the teVelde’s has been recruited to
cold-water stream that provides 40% of indicated that their votes in favor of the Nebraska by the Nebraska Department of
the trout stocked in Nebraska. third zoning permit application were influ- Economic Development dairy expansion
On August 10, 1999, before any action enced by information received at the ille- program. Significant state economic de-
was taken on the zoning permit applica- gal dairy meeting. Two county board velopment grants were made to the
tion, the county board approved a $158,000 members indicated that their votes in teVelde’s in addition to county economic
loan to the teVelde brothers for their dairy favor of the dairy expansion application development funding. The case was a
expansion. On August 24, 1999, after the were influenced by the vote of the plan- train wreck that the state of Nebraska
loan for the dairy expansion had been ning commission. Despite this testimony, would no doubt like to avoid in the future.
approved, the Antelope County planning the district court ruled that the approval of
commission held a public hearing on the the third zoning permit application was Livestock friendly legislation
proposed zoning permit for the teVelde legal. In 2002, and in response to the Alder-
dairy expansion. (Under Nebraska zoning This determination was overruled by man decision (as well as more widespread
law, the planning commission makes a the Nebraska Court of Appeals. The Court livestock developer frustration with in-
recommendation to the county board, of Appeals ruled that the votes on the third creasingly restrictive county AFO zoning
which makes the final decision on condi- zoning permit application were tainted by regulations), livestock and other agricul-
tional use zoning permits such as the one reliance upon information presented at tural interests sought a state study of the
requested by the teVeldes.) Because the the illegal dairy meeting, and invalidated economic importance of the Nebraska
public notice of the planning commission the dairy expansion zoning permit. The livestock industry. That proposal was de-
meeting was not legally adequate, the Court of Appeals noted that in Nebraska feated by counties, anti-confinement ad-
commission continued (i.e. delayed) its “the public meetings laws are to be broadly vocates, and others who saw it as laying
meeting to September 7, 1999. interpreted and liberally construed to the foundation for a political attack on
Between these two meetings the plan- obtain the objective of openness in favor county livestock zoning. Livestock sup-
ning commission and the teVeldes ar- of the public.” In a sharp rebuke, the court porters returned in 2003 with LB754, a state
ranged a tour of the dairy at which a continued: livestock-friendly-county program, which
University of Nebraska livestock environ- It is unthinkable that after a court has was enacted. Neb. Rev. Stat. §§ 54-2801 to
mental engineer could address issues voided a board’s action after determin- -2802 (2004). The statute (1) allows the
concerning the dairy expansion raised in ing that a meeting was held in violation Nebraska Department of Agriculture to
the August 24 hearing. The meeting was of the public meetings law, the law would designate counties as livestock friendly,
held August 31, 1999 and was attended by still allow members of that board to and (2) changed procedures for county
seven of nine planning commission mem- consider information obtained at that livestock zoning permits.
bers, and five of seven county board illegal meeting. To do so would com-
members. The August 31 meeting was not pletely contradict the stated intent of Livestock friendly counties
advertised as a public meeting pursuant the public meetings law, which is to Nebraska Revised Statute section 54-
to open meeting requirements. ensure that the formation of public policy 2801 declares that “the growth and vitality
On September 7, 1999, after the unad- is public business, not conducted in se- of the state’s livestock sector are critical to
vertised meeting at the dairy, the plan- cret, and to allow citizens to exercise the continued prosperity of the state and
ning commission voted 6-2 to grant the their democratic privilege of attending its citizens.” Section 54-2802 authorizes
dairy expansion conditional use permit. and speaking at meetings of public bod- the Nebraska Department of Agriculture
On September 14, 1999, the county board ies. We simply do not know the content (NDA) to establish criteria to recognize
approved the dairy expansion conditional and extent of the information that was and assist county efforts to maintain or
use permit. On October 1, 1999, the plain- presented at the illegal meeting. Fur- expand their livestock sector. Counties
tiffs filed a lawsuit to invalidate the dairy thermore, official reports of closed may be designated as livestock friendly if
expansion conditional use permit. On meetings, even if issued, will seldom they request the NDA designation and
November 17, 1999 the district court invali- furnish a complete summary of the dis- meet the NDA livestock-friendly criteria.
dated the dairy expansion conditional use cussion leading to a particular course of Livestock friendly criteria include setbacks
permit because the unadvertised meet- action. of no more than 3/4 mile. 29 Neb. Adm.
ing at the dairy constituted a violation of 11 Neb. App. at 422. Code § 008.05F (2004). Counties may also
the open meetings law. designate themselves as being livestock
On November 18, 1999 the teVeldes The court concluded: friendly. The implicit objective of the NDA
filed a second application for a dairy ex- To allow board members to consider livestock friendly designation process is
pansion conditional use zoning permit. On information obtained at a meeting that to allow counties to signal to producers
January 24, 2000 the planning commission has been judicially determined to be in whether or not they are receptive to new
held a public hearing to consider the sec- violation of the public meetings law and/or expanded livestock operations.
ond zoning permit application. After plain- would allow those board members to Certainly the state would be justified in
tiffs pointed out fatal deficiencies in the consider information that has not been limiting the spending state economic de-
second application, the hearing was ad- brought before the public and thus would velopment funds for livestock develop-
journed and no action was taken. deprive citizens of both hearing said ment to livestock-friendly counties. Some
On February 3, 2000 the teVeldes filed a information and speaking either for or opponents fear that the NDA livestock
third zoning permit application. On Febru- against it. Thus, we hold that once a friendly zoning criteria (which would make
ary 15 and 16, 2000, the planning commis- meeting has been declared void pursu- it difficult for a recently zoned county to
sion held a public hearing to consider the ant to Nebraska’s public meetings law, qualify as livestock friendly) may be the
third zoning permit application, and voted board members are prohibited from Cont. on p. 6

JUNE 2005 AGRICULTURAL LAW UPDATE 5
Hog wars/Cont. from p. 5

basis for restricting county AFO zoning municipal water pollution control author- operation of animal feeding operations
regulations to those that do not conflict ity was preempted by the Nebraska Envi- (AFOs). It is not surprising, then, that a
with the NDA livestock friendly zoning ronmental Protection Act (NEPA), and firm attempted to develop two AFOs in
criteria. However, the NDA has recently since FCF had received its state permits Red Willow county before county zoning
approved the first county (which is zoned) from the DEQ, FCF was legally entitled to regulations restricting AFOs were
as livestock friendly that has setbacks construct its livestock facilities without adopted, seeking to grandfather them.
slightly in excess of the NDA livestock regard to the Alma ordinances. The dis- This was the issue before the Nebraska
friendly zoning criteria. Counties want to be trict judge ruled in favor of Alma. An Supreme Court in Hanchera v. Board of
friendly, Nebraska Farmer (July 2005) at 7. appeal to the Nebraska Supreme Court Adjustment, 269 Neb. 623, 694 N.W.2d 641
resulted in the matter being returned to (2005).
County livestock zoning permits the district court in 2001 for further pro- In Hanchera, Furnas County Farms was
Nebraska Revised Statutes section 23- ceedings. The district judge again ruled attempting to develop two swine AFOs in
114.01 (2004 Supp.) establishes that a live- for Alma, and this decision was again Red Willow County before the county’s
stock producer applying for a county AFO appealed. new zoning regulation took effect. Mr.
zoning permit may request the county to The Nebraska Supreme Court ruled that Hanchera filed a complaint with the county
specify what requirements the producer the 15-mile municipal water pollution con- zoning administrator that Furnas County
must meet in order to receive county trol authorities were not preempted by Farms’ two AFOs did not meet the new
zoning approval. The statute also requires NEPA. Normally, the courts will try to county zoning regulations. The zoning
a written statement of the reasons why a sustain both state law and local ordinances administrator concluded that the two
the livestock zoning permit was granted if they are not mutually exclusive. In its AFOs qualified as non-conforming uses
or denied. The implicit objective of the §23- NEPA analysis, the court noted several and were grandfathered. This conclusion
114.01 zoning requirements is to allow NEPA provisions encouraging municipali- was affirmed by the county zoning board
applicants to get an advance written de- ties to establish their own local pollution of adjustment and the county district court,
termination of whether or not their permit control programs. The court did, however, but was reversed on appeal to the Ne-
will be granted before they seek the more invalidate the Alma cleanup bond require- braska Supreme Court.
expensive DEQ permit. The statute also ment as being inconsistent with NEPA. The court noted that in 2001 the county
makes the record clearer if county AFO The court also ruled that FCF could not was in the process of adopting a compre-
zoning decisions are appealed. raise the issue of whether the Alma ordi- hensive development plan and accompa-
nances conflicted with DEQ livestock waste nying zoning regulations, which would
Municipal AFO regulations upheld control facility regulations and the 1998 have restricted AFO location. Furnas
While much of the hog-war battles have Livestock Waste Management Act be- County Farms had participated in this
involved county zoning, at least one com- cause such issues had not been raised in process by attending public hearings and
munity has joined the fray. In 1997, the the district court. The Alma decision is public meetings on the proposed zoning
community of Alma (pop. 1,214) learned another judicial warning to livestock facil- regulations. The comprehensive plan and
that Furnas County Farms (FCF) and Sand ity developers that they ignore local regu- zoning regulations were adopted by the
Livestock Systems planned to build a large lations at their peril. Red Willow Planning Commission and
swine confinement approximately eight recommended to the county commission-
miles northwest of the Alma city limits in Failure to establish a non-conforming use ers on September 24, 2001. On the next day
Harlan County. The city hired an environ- One of the most misunderstood con- the county commissioners adopted the
mental engineer to prepare a report on cepts in zoning law is that of non-conform- comprehensive plan and zoning regula-
the potential impact of the swine facility ing uses, or “grandfathering.” Most zon- tions, with the effective date of October 16,
upon Alma’s water supply. On the basis of ing regulations exempt existing uses that 2001.
the consultant’s report, Alma adopted five would not conform to the new (or revised) Regarding Furnas County Farm’s at-
municipal ordinances, based upon Neb. zoning regulation. These uses (land uses tempt to grandfather their two new AFOs,
Rev. Stat. §§17-536 and 17-537. Section 17- or buildings) are called non-conforming the court indicated the following activities:
536 establishes that the authority of cities uses because they do not conform to the
of the second class (including Alma) and new (or revised) zoning regulation. The I. $1,320 spent for easements and state
villages “to prevent any pollution or injury often mistaken belief is that zoning regula- AFO environmental permit applications,
to the stream or source of water for the tions must leave non-conforming uses Aug. 1-6, 2001;
supply of such [community] waterworks, alone. This is incorrect: Nebraska Revised II. $93,533 spent as down payments to
shall extend fifteen miles beyond its cor- Statutes § 23-173.01 allows non-conform- purchase the two sites, Sep. 30, 2001;
porate limits.” The Alma ordinances re- ing uses to be terminated, continued, or III. $4,000 spent for down payment for
quired livestock producers to obtain per- regulated by a county zoning regulation. one site, October 5, 2001;
mits from the city before developing live- As a practical matter, however, most coun- IV. $11,480 spent for pouring concrete,
stock facilities within 15 miles of Alma’s ties will not regulate or terminate non- October 13, 2001; and
city limits. The permit process required conforming uses; doing so would often V. $138 spent for electrical inspections,
the applicant to line waste lagoons with a make adoption of the proposed zoning October 15, 2001.
synthetic liner, to install monitoring wells regulation or amendment difficult if not
to detect ground water pollution, and to impossible. The court also noted that Furnas County
submit a financial bond for cleanup. When zoning is being adopted for the Farm had not entered into a land purchase
The city notified FCF of the permit re- first time, some property owners may agreement on the two sites until October
quirements. FCF informed the city that it attempt to establish a non-conforming 4, 2001 and did not take title to the land until
believed the city ordinances to be invalid, use before the zoning regulation is legally December 2001. The decision does not
and stated its intention to proceed with implemented in order to qualify for the indicate whether Furnas County Farms
construction activities. The city filed suit to zoning regulation’s non-conforming use had received the state AFO permits, but it
stop construction, and construction exception. In Nebraska, many county zon- is not likely that they had in 2001 as it often
stopped when the suit was filed. ing regulations have been adopted in re- takes several months for the DEQ AFO
FCF contended in court that the 15-mile cent years to restrict the location and Cont. on p. 7

6 AGRICULTURAL LAW UPDATE JUNE 2005
Hog wars/cont. from page 6
Regulation of hydrologically-connected ground
permitting process to be completed.
After reviewing these facts, the court water in Nebraska
noted that under previous Nebraska court Nebraska has traditionally kept surface fully appropriated or over-appropriated,
decisions, a new zoning regulation will not water law and ground water law separate. the DNR and NRD (or NRDs) must coop-
have a retroactive effect where a land- Surface water is subject to the statutory eratively prepare an integrated manage-
owner, in good faith reliance on existing doctrine of prior appropriation, and ground ment plan (IMP). Id. § 46-715. For over-
zoning regulations, has spent substan- water is subject to the common-law doc- appropriated basins (primarily the Platte
tially on construction where the new con- trine of reasonable use and correlative and Republican River basins), the goal of
struction would not meet the new zoning rights, supplemented by natural resource the IMP is to restore streamflows to their
regulations. The landowner, however, has district (NRD) regulation in ground water July 1, 1997 condition (this is the date the
the burden of proving that it did not know management areas. See Spear T Ranch v. Platte River endangered species coop-
that the new construction would violate Knaub, 269 Neb. 177, 691 N.W.2d 116 (2005), erative agreement was signed).
the new zoning regulations. The court noted at 22 Agric. L. Update 6 (May, 2005). Streamflow restoration can be accom-
then quoted from a North Carolina deci- This bifurcated approach poses major dif- plished by limiting ground water with-
sion, ficulties when, for example, ground water drawals and by leasing (and essentially
Good faith ... is not present when the pumping interferes with streamflow. Un- retiring) surface water rights. IMPs will be
landowner, with knowledge that the der the 1997 Platte River cooperative implemented in 10-year increments.
adoption of the zoning ordinance is im- agreement, Nebraska must protect Platte The 2004 statute puts Nebraska in the
minent and that, if adopted, will forbid River streamflows from inter alia ground forefront in terms of attempting to antici-
his proposed construction and use of water pumping in order to meet endan- pate and prevent future conflicts between
the land, hastens, in a race with the town gered species requirements. See Aiken, HC ground water users and surface water
commissioners, to make expenditures Balancing Endangered Species Protection and users. However, the statute does nothing
or incur obligations [such as land pur- Irrigation Water Rights: the Platte River Co- to deal with surface water appropriators
chase agreement or a construction con- operative Agreement, 3 Great Plains Nat. who have already been harmed by
tract] before the town can take its con- Res. J. 119 (1999). Nebraska must also streamflow reductions caused by HC wells.
templated action so as to avoid what protect Republican River streamflows into Under Spear T, such disputes will be re-
would otherwise be the effect of the Kansas in order to comply with the settle- solved by § 858 of the Second Restatent of
ordinance upon him. ment of Republican River Compact litiga- Torts. The late Frank Trelease, the special
269 Neb. at 629. tion. See Aiken, The Western Common Law of ALI reporter for the Restatement water
Tributary Ground Water: Implications for Ne- law provisions, favored priority (first in
The court ruled that Furnas County braska, 83 Neb. L. Rev. 541 (2004). time is first in right) as the legal basis for
Farms was aware that Red Willow County In response to the state’s Platte and resolving such disputes. See Aiken, Hydro-
was in the process of adopting zoning Republican River legal obligations, Ne- logically-Connected Ground Water, § 858 and
regulations that would restrict if not pro- braska enacted 1996 ground water man- the Spear T Decision, 84(2) Neb. L. Rev.
hibit its proposed AFOs. All the AFO con- agement legislation authorizing NRDs to (forthcoming). However there is sufficient
struction activities at the two sites oc- prohibit well drilling and limit ground wa- leeway in § 858 to argue that only a narrow
curred after the zoning regulations were ter withdrawals to protect streamflows. range of ground water users should be
adopted by the county commissioners on The Nebraska Department of Natural liable for interfering with streamflow.
September 25, 2001. The court character- Resources (DNR) was also authorized to Additional litigation is necessary to more
ized these construction activities as an exercise these same authorities if neces- fully define what § 858 means for resolving
obvious attempt to circumvent the zoning sary to insure compliance with interstate HC water conflicts in Nebraska.
regulations, and therefore were not un- water obligations. The DNR authorities —J. David Aiken, University of Nebraska,
dertaken in good faith. The court ruled that were expanded in 2004, authorizing it to Lincoln. NE
the two AFOs were not grandfathered, designate all or parts of river basins state-
and that they were required to comply wide as being “fully appropriated,” which
with the new county zoning regulations. triggered an immediate ban on new wells
The AFOs will likely have to be abandoned and new surface water appropriations. FLAG Executive
as a result of this decision. Neb. Rev. Stat. §§ 46-713, -714 (2004). Ar-
What does the future hold? For many eas subject to NRD well bans under the Director search
years Nebraska’s corporate farming re- 1996 statute were designated in the 2004 Farmers’ Legal Action Group, Inc.
strictions slowed the development of statute as “over-appropriated” basins and (FLAG) is searching for an executive di-
mega-livestock facilities in the state. How- the temporary NRD well bans were ex- rector to lead this nineteen-year old na-
ever, given the 8th Circuit’s ruling in South tended. Id. § 713(4). Consequently, ap- tional nonprofit public interest law firm,
Dakota Farm Bureau v Hazeltine, 340 F.3d 583 proximately one third of Nebraska has based in St. Paul, MN. FLAG provides legal
(8th Cir. 2003), cert den. 2004 U.S. Lexis been closed to new wells pumping more services to protect family farms and their
3351 (May 3, 2004), the validity of state than 50 gallons per minute, This is a dra- rural communities. Requirements include
corporate farming restrictions is in doubt. matic break with Nebraska’s traditionally a law degree or substantial knowledge of
If Nebraska’s Initiative 300 is invalidated, wide-open approach to ground water de- agriculture issues, foundation fundraising
out-of-state livestock developers may be velopment. Furthermore, by January 1, ability, commitment to public interest/so-
interested in locating livestock production 2006 the DNR must decide whether addi- cial justice work, and senior management
facilities in Nebraska. This may lead to tional areas should be designated as fully experience. Experience with agricultural
additional county AFO zoning challenges. appropriated and closed to new water law and/or legal services is a plus. For
The hog wars are a long way from being rights and wells. Id. § 46-713(1). This deter- information on FLAG, visit:
over, at least in Nebraska. mination will include a consideration of www.flaginc.org. To discuss the position
the effects of withdrawing “hydrologically- or recommend a candidate, call Don Tebbe
connected” ground water (HC ground at (301) 330-4624 or email
water) on streamflow. FLAG@transitionguides.com
Once an area has been designated as

JUNE 2005 AGRICULTURAL LAW UPDATE 7
From the Executive Director:
Annual Conference: All members should have received or will soon receive the brochure for the 2005 Annual
Agricultural Law Symposium on October 7 & 8, 2005 at the Marriott Country Club Plaza in Kansas City, MO. Because
of minor changes and updates to the conference schedule, please check the conference brochure posted on the AALA
web site for the latest information. See the link on the main home page.
The conference brochure contains a reminder about the 2005 Membership Recruitment Program and three
membership brochures. If you recruit a non-member to attend the 2005 conference, you will receive four chances
in a drawing to win $345.00, the cost of a member registration to the conference. You can request additional conference
brochures from me. Be sure to add your name to the conference registration form for any non-member you recruit
for the conference.
If your firm would like to sponsor one of the food breaks, breakfasts, lunches or the Friday evening reception,
please let me know. We also will need to borrow three LCD projectors for both days of the conference. This will save
the association very expensive rental costs.
Nominations for Annual Scholarship Awards. The Scholarship Awards Committee is seeking nominations of
articles by professionals and students for consideration for the annual scholarship awards presented at the annual
conference. Please contact Jesse Richardson, Associate Professor, Urban Affairs and Planning, Virginia Tech,
Blacksburg, Virginia 24061-0113,(540) 231-7508 (phone) (540) 231-3367 (fax) email: jessej@vt.edu

Robert Achenbach, Exec. Dir., RobertA@aglaw-assn.org, 541-485-1090

8 AGRICULTURAL LAW UPDATE JUNE 2005