Agricultural Law Addendum
Construction/Operation of confinement facilities.
For Confinement Operations exceeding minimum sizes (for the particular livestock involved) the initial construction of facilities in Iowa requires pre-submission and approval of the location and plans to the Iowa Department of Natural Resources ("DNR"). Other states (Ohio for example), require 5 year operating permits that can place a substantial number of restrictions and requirements on the operator. Typically, making any material modifications to the facilities will also require pre-approval from the relevant agency and in most states the maximum numbers of animals that can be housed in the confinement facility is set by the construction or operating permit. Returning to Iowa, it initially uses a matrix system (weighing a number of factors) to determine the suitability of the location proposed for the facility. That matrix includes "points" for a variety of factors including the distance from neighbors environmentally sensitive areas (rivers for example), the size of the proposed facilities, the type of manure storage structure and manure control plans that are proposed and odor control plans. Any such project will normally require the services of an engineer as well as binding commitments of nearby landowners to take (for land application) the manure projected to be produced by the project (unless to be sold for commercial application as, for example, chicken manure typically is). In addition, permits and requirements for erosion control, local construction and building codes and zoning ordinances may need to be considered. In Iowa (unlike a number of other states), operating permits normally are not required once the project is completed pursuant to the approved construction permits of the DNR. Water withdrawal permits may be necessary for operations using wells (typically the case) and LP tanks may require permits in certain situations.
A large number of employment issues now confront employers in large agricultural operations. While all employers are subject to a variety of issues relative to employment, large agricultural operations receive particular attention. The many issues include:
- All employers are required to verify employees' eligibility to work and complete I-9 forms. While the I-9 forms are simple and straightforward, the technical compliance requirements can become quite complex with regard to the types of documents that can or must be accepted and how the form must be completed when particular documents are presented. Administrative inspections of the I-9 forms can result in fines for improperly completing the form or can lead to a criminal investigation. Employment of so called undocumented workers (more likely workers with documents that appear legitimate but which in fact are not) can and are being prosecuted on a frequent basis. So called harboring (employing illegal aliens constitutes harboring) is a felony (it can also be charged as a misdemeanor) which can also give rise to further charges of identity theft (mandatory two year prison term), RICO (racketeering charges that can lead to forfeiture of a portion of the business) and similar issues.
- Equal employment opportunity and civil rights issues (discrimination, harassment and equal access to employment) are frequently raised by employees of agricultural businesses. Employers should have harassment, discrimination and non-retaliation policies in place to maximize their defenses to these types of claims and owners and managers of agricultural businesses need to understand their obligations to prevent, investigate and remedy harassment or discrimination issues as they occur.
- Wage and hour issues also affect agricultural employers. Employers are required to make and maintain records of the time employees work and ensure that employees are paid for all hours worked. While normally agriculture is exempt from the requirements to pay time and one-half for time worked over 40 hours of work during a week that exemption does not apply where activities are not restricted to that farmer's farm operation. Issues often arise when, for example, outside products are brought into a modern farm operation to supplement the production or provide additional products for the consumer. A laying facility that brings in third party eggs and/or cheese to package with its own production for shipment to markets loses its exemption for time and half overtime (at least in the processing and shipping areas). Failure to understand and comply with these requirements can leave the producer liable for substantial claims for back wages and penalties.
- OSHA (workplace safety) violations are also particular issues with larger farm operations. While agricultural businesses have some special rules that apply to their operations, many typical OSHA rules also apply.
In dealing with livestock, the rules in Iowa basically require manure to remain contained until it is to be disposed of by land application or other approved disposal method (it will be a violation of the law if it is discharged off the land whether by accident or otherwise). For the most part such violations are so called "strict liability" violations (it does not matter how many precautions were taken or unforeseen the events were that led to the discharge, the operator is liable for fines). Of considerable more concern in recent years has been the follow up by the Federal EPA (after Iowa has completed its review of the matter and perhaps fined the operator or referred the matter to the Iowa Attorney General's office). The EPA's review typically includes the very real risk of criminal prosecution of the company and/or the individuals involved in the discharge. Typically, negligent discharges may be viewed as misdemeanors and willful or reckless actions as perhaps felonies. False or misleading statements to investigators may also be chargeable as felonies as well.
Modern livestock operations in particular have become so expensive to construct and operate that combinations of owners and/or corporate investors are becoming commonplace. Iowa restricts the number of acres of farm land that can be owned (directly or indirectly) by corporations (which for this purpose includes limited liability companies and limited partnerships (under certain conditions) and prohibits foreign owners from controlling agricultural land (thus foreign investors must own 50% or less of the equity and voting control of farm operations and further comply, assuming a corporation, with the acre restrictions applicable to corporations that are not "family farm" corporations). At least partially as a result of the corporate farming land restrictions, a number of confinement operations are formed and operated as Iowa limited liability partnerships (essentially similar limited liability protection as a limited liability company) which permits limited liability while still allowing all partners to participate in management (which is prohibited in limited partnerships to all but the general partner). Individual ownership of the limited liability partnership interests are generally held by "shell" limited liability companies where ownership in more than one operation by some of the partners is contemplated.