Agricultural Management Committee Newsletter

Author:Waller Law
Profession:Waller Lansden Dortch & Davis
 
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A joint newsletter of the Agricultural Management Committee and the Environmental Litigation and Toxic Torts Committee

CHAIR MESSAGE

As the chairs of Agricultural Management and Environmental Litigation and Toxic Torts (ELTT) Committees we want to welcome all of you and encourage participation in committee activities. Both committees are planning another active year with a steady stream of newsletters and interesting programming. This issue of our newsletter combines the interests of agriculture and litigation, which are among the highest profile issues in environmental law.

The Section had a very successful Fall Meeting in Austin, Texas, this past October, with programs on agriculture and a plenary session on the Clean Water Act. Continuing this focus on the Supreme Court's approach to the law of water pollution, our program vice chairs have already submitted program proposals for the 21st Fall Conference in Baltimore, Maryland. We encourage members to attend and enjoy interesting "CLE" content, and network with colleagues. We are committed to providing the information and assistance that our members need to be better lawyers. Our committees have always had solid member participation, with quality programs arising from member involvement. If you would like to be a part of program planning or committee activities, please let us or Agricultural Management Programs Vice Chairs Brandee Ketchum and Brandon Neuschafer or ELTT Program Vice Chair Rich Beaulieu know about your interest and ideas.

With the New Year here, it is time to make plans to get out to Salt Lake City in March for the 42nd Spring Conference. SEER's annual conference on environmental law will once again touch upon climate change regulation and litigation, which has agricultural angles, and will have content relating to agriculture and water conservation and include programs on hydraulic fracturing and expanding litigation under the Resource Conservation and Recovery Act.

This newsletter opens with a case law update from Corey Parton. Chad Burchard writes on trace-back liability risks and the availability of recall insurance to manage those risks. Christopher W. Hayes discusses the impending Farm Bill and associated litigation issues. Deanne Miller and Roger Smith sum up EPA Enforcement activity under President Obama. Lastly, Katelyn Atwood looks at state legislatures' efforts to manage the legal implications of raw milk sales.

Our committees have new "social media" vice chairs, who will assist with making the best possible use of social media. ELTT's social media vice chair is David Scriven-Young. Agricultural Management has appointed Stan Benda and Devan Flahive as its social media co- vice chairs, and looks forward to creating specialized groups on LinkedIn. In keeping with the theme of this newsletter, the Agricultural Management Committee plans to create a group focusing on the laws relating to water pollution in agriculture.

CASE LAW UPDATE

NPDES and State Permits: Commonwealth of Kentucky v. Sharp (Unreported in S.W.3d, 2012 WL 1889307 (Ky. App. 2012))

The Kentucky Court of Appeals contemplated whether a group of farmers, who proposed building several concrete pits to store the waste of over 10,000 hogs, were required to obtain Kentucky state Pollutant Discharge Elimination System (KPDES) permits. The issue was presented to the court after neighboring residents decided to challenge the State Energy and Environment Cabinet's (cabinet) decision that the farmers would not be required to obtain the permits. In an administrative hearing on the matter, the cabinet had made factual findings that the structures would produce large volumes of manure and would result in considerable potential for pollution, but would not actually directly discharge pollutants into state waters; thus, a permit was not necessary.

The court first upheld the cabinet's factual finding that the farmers' operations were not large enough to constitute concentrated animal feeding operations (CAFOs), which are required under Kentucky and federal law to obtain National Pollutant Discharge Elimination System (NPDES) permits, by relying on a substantial deference standard of review. See also U.S.C. § 1362 (14); 401 Ky. Admin. Reg. 5.002, .005 § 25(6) (Sept. 2012). The court then addressed whether the Kentucky statute governing KPDES permits nevertheless required the farmers to obtain permits due to the facilities' high potential to discharge pollutants which could indirectly make their way into local waterways. Sharp, WL 1889307 at 9. According to the court, Kentucky law prohibits direct or indirect discharges of pollutants, and is therefore broader than its Clean Water Act (CWA) counterpart, which, on its face, applies to only direct discharges when made in accordance with the terms of a permit. Ky. Rev. Stat. § 224.70-110 (2012); Sharp, WL 1889307 at 6, 9.

However, Kentucky law also contains an express mandate that Kentucky permits may not impose limitations or conditions more stringent than would be required under the CWA. Id. § 224.16-050(4). Thecourt found the latter provision limited the former in holding that the Kentucky statute was confined to the scope of the CWA. Because the CWA does not require an NPDES permit for discharges that may only indirectly impact navigable waterways, the court found it was unnecessary for the farmers to acquire permits.

Conservation Easements: Nature Conservancy, Inc. v. Sims (680 F.3d 674 (6th Cir. 2012))

In Nature Conservancy, Inc. v. Sims, the Sixth Circuit U.S. Court of Appeals considered whether filling a sinkhole with materials from an excavated pond violated a conservation easement (easement) created with the stated purpose of assuring the property would be "retained forever substantially undisturbed in its natural condition(. . .)." Id. at 674. The easement, purchased by the Sims for a discount from Nature Conservancy, Inc., prohibited ditching, draining, filling, excavating, removing topsoil and other materials, and any changing of the land's topography except in conjunction with specifically authorized activities, which included farming, fence installation, driveways, and landscaping. The easement reserved any rights not expressly prohibited to the landowner and provided that the landowner was not required to maintain the property as it existed on the date of the easement.

The court rejected the Sims' argument that since creating ponds was authorized, and the easement did not provide for what should happen with dirt excavated pursuant thereto, an implied authorization to dispose of the dirt on the property existed. In doing so, the court, relying primarily on the easement's stated purpose, broadly construed the prohibitions on filling and changing the topography and found the easement was violated.

The court noted its obligation "to read [the Easement] as a whole, and when possible, to embrace an interpretation that promotes harmony between (. . .) provisions." Sims, 680 F.3d at 676. The court, however, essentially ignored the provision giving the landowner all the rights not expressly prohibited, and seemingly went out of its way to effectuate the easement's conservation purpose.

Programmatic NEPA Documents: League of Wilderness Defenders v. U.S. Forest Service (LEXIS 90574 (D. Or. 2012))

The U.S. District Court for the District of Oregon recently considered the adequacy of a U.S. Forest Service impact analysis pursuant to a proposed plan to control invasive plant species largely through the use of herbicides. The analysis mentioned impacts of the proposed activities and contained conclusions like: "given (. . .) the low rainfall available to transport herbicides off site, it is unlikely that treatments would have a cumulative effect . . ."; and "given the large percentage of sites where [herbicides] may be effective (. . .) cumulative impacts (. . .) cannot be ruled out." Id. at 91-92. The court held the Forest Service could not simply describe the direct impacts of the proposed action and then generally conclude that there are no cumulative impacts. Instead, there must be quantified or detailed assessment of the combined environmental impacts.

Once it has performed the requisite analysis, the agency is free to decide that other values outweigh any environmental costs. The court agreed with the Forest Service's argument that site-specific proposals that are part of a larger plan may "incorporate" the impact analysis done previously as part of a larger plan. In explaining, the court recognized that "[impacts analysis] at a regional/programmatic level will necessarily be more generalized and less contextual than (. . .) required for site-specific projects." In the future, this language could assist an agency defending an impact analysis pursuant to a high-level proposal. The court was sure to clarify, however, that analysis is insufficient where it merely incorporates the former analysis in lieu of undertaking its own. This is especially so where the impacts analysis relied upon did not consider the specific cumulative effects of the proposed project. According to the court, reliance on these generalized impact analyses is necessarily insufficient, since "the very point of a cumulative impacts analysis is to draw attention to combined impacts that might otherwise be overlooked when considered separately."

FOOD CONTAMINATION INSURANCE LITIGATION

The following cases address the availability of insurance coverage for the costs involved in recalling contaminated food.

Fresh Express, Inc. v. Beazley Syndicate 2623/623 at Lloyd's et al., 131 Cal. Rptr. 3d 129 (Cal. Ct. App. 2011)

On September 8, 2011, the Court of Appeal of California, Sixth District, reversed a trial court's award of $12 million in damages to Fresh Express (FE) in a breach of contract suit against its insurers (collectively, "Beazley"), which had denied coverage to FE for losses suffered as a result of potential product contamination.

FE had purchased a...

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