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May 2013 Archive for Ag in the Courtroom

RSS By: John Dillard, AgWeb.com

John Dillard grew up on a beef cattle farm and now works as an agricultural and environmental litigation attorney with OFW Law. His blog analyzes legal issues and court decisions that affect America’s farmers and ranchers.

 

 

 

Hurting Farmers to Spite Biotech Companies

May 24, 2013

Imagine that you have purchased a new car.  Like every other new car, your car is the cumulative result of years of research, design, and testing.  Your car was tested under and has met the safety standards established by the National Highway Traffic Safety Administration (NHTSA).  By meeting NHTSA standards, you are assured that your car meets minimal safety standards. 

After you purchase your vehicle, an extremist environmental group files a lawsuit against NHTSA because the group believes we should stop using internal combustion engines for transportation.  The group alleges that NHTSA failed to follow its own protocol in testing the safety of your new car.  While their suit is pending, they request the judge to order that all sales of your car model cease.  Furthermore, they request the judge to issue an order requiring all current owners, including you, to promptly dispose of your vehicle at a junkyard.  Much to your chagrin, the judge complies with the request.  You do not receive any compensation for your lost vehicle.  However, when the judge finally hears the substance of the case, she sides with the NHTSA and rules that the environmental group’s suit was unmerited.  Nonetheless, you are out of a car the money that you spent on it.

The above scenario is not as far-fetched as you might think.  Anti-biotech activists have nearly done as much to prevent the growth of labor-saving and environmentally beneficial genetically-modified seeds.  For instance, activists sued when USDA approved Roundup Ready alfalfa for planting.  In their suit, the activists sought and received an injunction that prevented farmers from planting the crop.  This injunction was in place for four years until it was finally lifted by a 7-1 decision in the Supreme Court.  In another case, anti-GM activists sued to halt the planting of Roundup Ready sugar beets.  Here, activists convinced a district court judge to issue an order requiring farmers that had already planted their crops to destroy the seedlings – without compensation.  Fortunately, an appeals court reversed the judge’s order before it could go into effect.  In both cases, it was ultimately determined that USDA complied with its responsibility under the law in regulating these new seeds and that the suits were without merit.

With this history of frivolous lawsuits in mind, Congress passed Section 735, the "Farmer Assurance Provision," in its latest continuing resolution.  Although maligned as the "Monsanto Protection Act," Section 735 is intended to help farmers.  Under Section 735, if USDA finds that a new seed variety does not pose a "plant pest" risk under the Plant Protection Act and that finding is later challenged in a lawsuit, USDA must, upon request, grant temporary deregulation for that seed during the pendency of the lawsuit.  The Secretary of Agriculture already has this authority; Section 735 merely reinforces his authority on the matter.

Section 735 ensures that farmers are not caught literally and figuratively holding the bag wondering how they are going to absorb the sunk costs of now-illegal seed.  It also ensures that farmers will not have to plow under crops that they have already invested in.  The Farmer Assurance Provision provides farmers with the confidence that they will be able to purchase new, cutting-edge seeds and recover their investment.  Certainly, Monsanto and other biotech companies do stand to benefit from Section 735 because their customer base is not scared away by the prospect of becoming collateral damage in a frivolous lawsuit.

Nonetheless, there is something visceral about Monsanto and biotech seeds that coastal intellectuals latch onto like prickle-burrs.  It should be no surprise that some in Congress want to overturn Section 735 (which expires this fall) and prevent similar measures from arising in future legislation.  Opponents of Section 735 would have you believe that Congress capitulated the federal judiciary to corporate interests.  They argue that the provision places Monsanto above the law and gives it a blank check to wreak environmental havoc.  However, missing from this argument is the damage that frivolous lawsuits can do to farmers who purchase a legal product.

Genetically-modified seeds undergo several years of testing and scrutiny.  GM crops destined for human consumption must receive FDA approval.  GM crops with insect-resistant traits, such as Bt Cotton, must undergo EPA scrutiny.  All GM crops must receive approval from USDA under the Plant Protection Act.  This testing process is lengthy and costs millions of dollars.  However, each instance of litigation has proven that these crops have met the necessary rigors under the law.  The threat of litigation has made GM seed approval a much more deliberate process because all participants know their actions will be second-guessed in court.

Anti-biotech activists will always have an axe to grind against Monsanto, Pioneer and other biotech companies.  They will receive more opportunities to make sparks in the coming years as new genetic traits hit the marketplace.  However, they should not be able to use farmers as collateral damage in their war against modern agriculture by forcing them to destroy their crop without compensation.  Farmers are simply trying to do the best they can with the technology that is available to them.  Section 735 should not be overturned.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA.  John focuses his practice on agricultural and environmental law.  He occasionally tweets at @DCAgLawyer.

Supreme Court Decision a Win for Agricultural Innovation

May 13, 2013

 [Disclosure: The author contributed to an amicus curiae brief supporting Monsanto in this case]

Today, the U.S. Supreme Court issued a unanimous opinion in the patented soybean case, Bowman v. Monsanto.  The Court held that a farmer who buys patented seeds may not reproduce and replant patented seeds without the patent holder's permission.  This decision is a major win for agricultural innovation and will ensure that investments in biotechnology research will continue in the future.  

Background

Vernon Bowman, an Indiana farmer, found a novel way to access Roundup Ready technology without paying license fees.  He purchased commodity soybeans from a local elevator and planted them as seed.  When the crop emerged, he sprayed the crop with glyphosate.  Only the soybeans containing the Roundup Ready trait survived the burndown spray.  He subsequently harvested and saved seed from this crop, ensuring that future crops would contain the patented Roundup Ready biotechnology.  Mr. Bowman notified Monsanto of his plans and continued to save the Roundup Ready beans for eight years.  Monsanto sued Mr. Bowman for patent infringement.

What was at stake?

If the Supreme Court ruled in Mr. Bowman's favor, it would have created a loophole to allow seed saving.  While a typical technology agreement between a seed dealer and a farmer includes a contract provision prohibiting saved seed, grain elevators are not usually a party in such contracts.  Farmers could avoid paying tech fees by following Mr. Bowman's lead and purchasing bin-run beans from grain elevators and using them as seed.  These bin-run beans would not be subject to technology agreements.  Patent protection is the only tool that biotech companies can use to protect their investment in research and development.

While many farmers often fantasize about a world without tech fees, the vast majority recognize that these fees are worth the cost.  The numbers do not lie.  Well over 85% of the soybeans, corn, and cotton produced in this country is improved with genetic modification.  Glyphosate-resistant and insect-resistant varieties make crop management easier, reduce soil erosion, improve carbon sequestration, and reduce headaches in general.  

Developing these traits is a time and resource-intensive process that costs well over $100 million per trait.  Biotech companies will not make the investment of time and money without an assurance that they will be compensated for their risk and effort.  Like other innovators, biotech seed companies rely on patents to protect their investment.  Without patent protection, biotech companies would have little incentive to invest research in self-pollinating crops, like soybeans, because there is no guarantee that they would be able to recover their investment beyond their first year's crop.

Looking Forward

This decision further cements the patent protection that biotech companies enjoy.  With assurance that they can enforce their patents, seed developers can confidently invest the resources necessary to develop new, useful cutting-edge genetic traits.  Traits in the pipeline, such as improved drought resistance, yield boosters, and neutraceuticals will eventually make their way to the marketplace.  Yes, farmers will have to pay for these patented traits if they choose to use them; however, without patent protection, it is unlikely that the new traits would ever see the light of day.  

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA.  John focuses his practice on agricultural and environmental law.  He occasionally tweets at @DCAgLawyer.

Vermont House of Representatives Passes GMO Labeling Bill

May 10, 2013

As expected, the Vermont House of Representatives approved a measure that will require certain foods containing genetically-modified ingredients sold in the state to have labels indicating the presence of GM material.  The legislation passed the House on a vote of 107-37.   Because the legislation was passed late in the session, the Vermont Senate will not have an opportunity to vote on the measure until 2014.

The law exempts labeling for alcoholic beverages as well as products derived from animals, such as meat or cheese.  As we all know, the great state of Vermont will not apologize for its cheese.

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The Vermont measure is one of a handful of labeling proposals that are being considered in state legislatures and statewide ballot initiatives.  There have also been bills proposed in the U.S. Senate and House of Representatives that would require labeling across the United States.  However, observers have noted that it is unlikely that a federal GMO-labeling bill will survive a vote in both houses of Congress.

As I discussed in my previous post about state GMO-labeling measures, these bills may run afoul of the Dormant Commerce Clause.  The Dormant Commerce Clause is a principle that promotes national markets and prohibits state laws that discriminate against or burden interstate commerce.  

One exception to the Dormant Commerce Clause is the "health and safety" exemption.  This allows an otherwise discriminatory or burdensome provision to stand if the state legislature based its decision-making on its inherent power to protect the health and safety of its citizens.  The drafters of the Vermont legislation, H. 112, appear to have written the GMO-labeling bill with this exception in mind.

If Vermont does pass such legislation in 2014, there is sure to be a lawsuit over the measure.  When that happens, we will get to see whether the Dormant Commerce Clause will come out of hibernation.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA.  John focuses his practice on agricultural and environmental law.  He occasionally tweets at @DCAgLawyer.

Can Activist Groups Use Drones to Spy on Farmers?

May 07, 2013

The short answer to this question is likely a qualified "yes." 

Unmanned aircraft’s use in warfare has been the subject of international debate for the past few years as our military increasingly relies on drones to target al-Qaeda and associated groups.  Libertarians and privacy activists have raised concerns over law enforcement’s use of drones domestically.  Now, some in agriculture are concerned that drones will be used by activists groups to harass farmers and ranchers.

It does not require a substantial logical leap to believe that activist groups may use drones to spy on animal operations in hopes of finding environmental violations.  PETA recently announced that it intends to deploy a fleet of drones to monitor hunters to spot poachers and wildlife violations.  Given the potential annoyance that activist drones could cause producers, I have received several inquiries as to whether farmers have any legal protections against drones snooping on their operation.

There is often a lag between the commercialization of a new technology and laws designed to address and regulate that technology.  For example, Congress is still struggling to address a broad array of issues related to internet commerce.  Drones are no exception.  Some states have adopted laws that limit or outlaw state and local police’s use of drones in law enforcement activities.  However, private use of drones is lightly regulated.  The small drones contemplated by PETA are considered model aircraft by the FAA.  According to FAA regulations, these drones are legal to operate so long as they are flown in the line of sight of the operator, fly lower than 400 feet, and avoid aircraft and flight patterns.

At this time, there are only two common legal protections in place to prevent harassment from drones: trespass and nuisance.  Trespass occurs when someone invades, or in the case of drones, causes something to invade property that a landowner exclusively controls.  Trespass is easy to prove when, for instance, your neighbor’s cows escape their fence and trample your crop.  Trespass is much harder to prove when it involves an invasion of airspace.  A low-flying drone could potentially result in a trespass; however the drone would have to interfere with airspace that the farmer actually controls – such as below a roofline.

Nuisance claims can also be filed against activists groups if drone activity leads to a "substantial and unreasonable interference" with the "quiet use and enjoyment" of your property.  Drones can be noisy, frighten livestock, and annoy landowners.  There is a possibility that a drone could be deemed a nuisance if there is proof of damages in the form of reduced agricultural production, decreased property value or the landowner’s stress from constant surveillance by overzealous activists. 

With limited options to regulate the private usage of drones, there may be calls for additional state laws designed to curb private usage of unmanned aircraft.   However, we in agriculture should be cautious about cutting off our nose to spite our face.  While activists may be able to add drones to their bag of tricks to harass agriculture, drones also present a great opportunity for farms and ranches.  Drones are already being used for crop monitoring, weed scouting, and precision agriculture.  We are not far from the day when drones can be used to "ride fence" and assist in monitoring animal health.

It will be a while before we fully understand the role that drone technology will play in both agriculture and activist’s efforts against agriculture.  If they do play a substantial role, I imagine the law related to drones will evolve.  In the meantime, if you have a problem with activist drones monitoring your operation, you should consult your attorney for legal advice.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA.  John focuses his practice on agricultural and environmental law.  He occasionally tweets at @DCAgLawyer.  This column is not a substitute for legal advice.

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