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First it was wind and now solar is all the rage. Much like wind easements, solar farm easements are not to be taken lightly nor signed up for without due consideration.

Most of the of the time, the solar farm lease is an exploratory lease that signs up all your acres for a potential installation of solar. You can do quick math on the per acre amount if a farm is installed on your fields and see nothing but easy street ahead. A close reading of the actual terms and conditions could result in the solar farm optioning just a piece of your property and leaving you with an odd shaped parcel to farm around that grows palmer amaranth all season long and frustrates your remaining acres into less productivity, not more.

Here are some things to consider when contemplating your new bright sun shinny day.

  1. How long is the courtship? The developer may seek to simply tie up your acres under their umbrella and shade out the competition from offering a competitive lease.
  2. How long is the actual installation going to be on site?
  3. How much? Does the developer have to take the whole acres offered under contract or just sum? Can you impact the shape of the final solar farm? How much can they back off of their original leased footprint and shave your payments down?
  4. How about inflation? We know the dollar movie theatre in town had to finally move to $5.00 to stay with the times. If this is a 50-year lease, what is a deal today is a deal breaker down the road. Look for an escalator clause or an indexing mechanism to keep up with changing costs.
  5. Who gets the goodies? These farms have carbon credits, tax credits and other incentives to install. Who gets those, you or the developer?
  6. Who is going to clean this mess up? To the solar farm developer, what happens under the panels isn’t important, the sunshine is. Do they care about keeping weeds out of the under carriage of the solar array? Who can spray what and how do we keep the solar farm up to your standard are questions that need to be addressed? Also, who pays to take all this stuff away when its out of date and one or the company is bankrupt. A bond might be a great thing to ensure that money is available to sweep up the broken glass and twisted frames after the next straight-line wind puts the company out of business.
  7. How is this installation going to impact run off and sub surface drainage?
  8. Who is responsible for liability coverage on things going wrong on the solar farm?
  9. How will future bankers feel about mortgaging this property subject to these long-term leases?
  10. How do I get out of this lease if I can?
  11. Will my county zoning ordinance allow it?
  12. Who fixes things and who pays for damage to surrounding crops when equipment needs to come in to fix things? How is the crop damage calculated?

Every ag equipment operator has had it happen, a high dollar piece of equipment, with weather threatening on a weekend, is ground to a halt for a simple mechanical failure, like a shear bolt doing its job and well, shearing.

That simple break can bring a series of operations that rely upon each other to stand still unless another shear pin is available. Those are usually stocked after the first time a shear bolt strands the operation.

While shear bolts don’t physically manifest in other portions of an ag operation, they are metaphorically sure do. Taking time to identify in advance breaking points in an operation can cause you the pain and misery of threading a new bolt in the dark, with a little drizzle, while a semi waits to be loaded.

Hear are some “shear bolt” areas that your operation should be prepared to deal with

  1. The insurance companies do three things well, deny claims, delay claims, and defend claims. They have read your policy backwards and forwards a number of times and know distinctly what is and isn’t covered by their contract with you. Your agent is not responsible for you understanding your coverage, you are. When was the last time you looked at listed property items, valuations, costs of replacement and the like? After the storm is no time to get familiar with your coverage. Of particular note is a trend for insurance companies to demand all claims be submitted in a short period of time that doesn’t match up with traditional understanding of how long you have to bring an action. By contract, they can do this and by the contract you will be hung.
  2. Knowledge retention. Many operations have one person do the marketing for the operation, manage contract delivery dates, input deliver and pricing and coordination with third party vendors. What happens if that person leaves, quits, gets fired, or straight up just dies. Is it all on a cell phone that may or may not survive a car crash (or get impounded as evidence until the accident is fully investigated)? What are your redundant systems to pick up and move forward? Does anybody else know the truck driver’s cell phone number? Who is the guy who does the IT work for the operation and how do we get ahold of them?
  3. Title to assets. What was a great plan in 1995 (split ownership to avoid estate tax) is now an avoidable cost?  By changing from tenants in common or sole ownership to joint ownership you may avoid having to have two estates. You can’t expect your estate planning lawyer from 1995 to run you down and remind you, it is incumbent upon you to do a review of your documents and understand what is going on.
  4. Security in assets. Signing a general pledge of equipment and inventory to a lender is a big deal. It’s a promise that your equipment stands to pay for the operating note if the crop doesn’t. You selling items from that equipment line is a violation of that agreement and can expose you to financial responsibility that you could have avoided with a simple email or note to the lender about your plan to liquidate that old manure spreader. Likewise, you buying a tedder from a Facebook ad for cash may result in you having a tedder that is subject to a bank’s lien. The bank will get to come take that tedder and sell it to satisfy its lien and you are left with hunting down @genericironfordays to try to get your funds back. Better course of action is to do your research on the Iowa Secretary of State’s website and get a release from the lender that holds a security interest in that old iron.

To the delight of comedians everywhere the FTC is reportedly looking into why McDonald's ice cream machines often seem to be out of order. At first this seems pretty much like a waste of time, and nothing do with ag law, but it does.

It's because the McDonald's franchisees may be restricted from repairing the machines. The technicians are hard to come by and the four-hour cleaning cycle seems overly complex, but if you can’t even hire somebody other than a previously anointed technician, the market doesn’t work right. That is high prices and less quality. The ice cream machine with a repair restriction is legally the same critter as a yield monitor or a tractor that has the same rules. Imagine the delay when only a factory authorized representative can adjust, or trouble shoot a wonky seed tube sensor.

The concept is that an owner of a piece of equipment has right to repair, and the right would be expanded to require manufacturers publish diagnostic tools and documentation they use to fix repair their goods. This concept has traction in some states out east, where it was on a the ballot in Massachusetts as measure requiring data on cars that manufactures don’t like to make public. In fact, 27 states have kicked around right to repair measures in various formats.

Another concept being pushed is requiring manufacturers to create products that can be easily fix. Consider Apple products and how they are seemingly impossible to access, like the iPods. They have small batteries in them that fail after a number of years and right now, you or a third party that attempts to replace them will void the warranty if you do manage to figure out how to open them up. The other option is to toss them and buy new, which environmental advocates are against.

Who would be against this? The people who build things don’t want their products easily copied and they raise concerns that non authorized non trained people modifying their product makes the product dangerous in some cases.

Ag relies upon tech and this issue is as important to the future of ag as climate change, land use, and taxation.

Back in 2018, California, which can change the law with a ballot procedure that allows the voters to bypass the legislature and essentially enact whatever, passed a law that prevents farm owners in the state from using confinement systems for veal, bred hogs, or layers that are “cruel”. To not be cruel, the animal must be able to do the Hokey Pokey in the area, that is, the animal must be able to lie down, stand up and turn all the way around and each animal has a minimum square footage required.

Also, it is illegal in California to sell products that are derived from facilities that do not meet the Hokey Pokey test starting 1 Jan 2022. California raises about 4% of the bacon it needs, most of it comes from the Midwest. So essentially, the Californian’s are telling Iowa how to raise hogs, chicken and beef.

Since we are talking about it here, it should be no surprise that it went to court. American Farm Bureau and the National Pork Producers took the lead. They lost. They lost in the appeals court, even though the court acknowledges that the rule will cause changes throughout the nation. This appeals court, the 9th Circuit, is referred to in some legal circles as the 9th Circus, as it has a long history of adopting liberally liberal interpretations of the law to further social agendas.

Back in the dark ages when I went to law school, we read about Wickard, a farmer who was growing wheat in violation of an ordinance enacted by the state. The federal court pointed out that the Constitution says the feds regulate Commerce between states and since wheat makes the flour and people in all states buy flour, the fed gets a say in by making sure that one state doesn’t make an undue burden on the other state residents. This is referred to as the dormant commerce clause. It is a wide-reaching grant of federal authority, but it has always been viewed by the courts as a narrow power.

The court didn’t care that the Hokey Pokey rule, while limited to California Agri business, has an impact on ag business in other states. 87% of all pork is consumed outside of California, but the 13% who now have to have Hokey Pokey approved production raise the price for all. Since it impacts everybody, the court found it okay.

The price increase has restaurant owners simply considering removing pork from the menu, which of course, is the ultimate goal of those who seek to dismantle and eliminate ag production as we currently know it.

This ruling can go up for appeal to the US Supreme court, so it is not over for Bacon in San Francisco, but it doesn’t look great.

Public service reminders

HIPPA means your doctor can’t tell your neighbor about that weird growth on your arm pit or ask about your vaccination status. HIPPA applies to covered entities who get your health information, like doctors, insurance companies and hospitals. It does not cover Aunt Maude asking if you have to continue to take penicillin or if that rash is all cleared up.

Free Speech does not mean you can say whatever you want to say at any time. All rights are subject to other people’s enjoyment of their rights. For example, you cannot yell fire, or we are all going to die in a crowded theatre unless it is factual. Also, certain words are “Fighting words’ and are essentially off limits for expressing yourself. Also, certain images are pornographic and not artistic. In the words of a Supreme Court justice “I will know it when I see it.”. So, we do have limits on our conduct as part of our social compact with one another.

It has been tested recently in court and private companies can ask their employees to be vaccinated against whatever they ask them to be, or the employee can and work for a company that doesn’t ask or doesn’t care. If you work for government agency, which government (local, state or federal) will determine what they can and cannot ask you do to continue employment.

Friday, August 19, 2022
  • Patrick B. Dillon
  • Jill Dillon
Dillon Law PC
Patrick B. Dillon enjoys finding solutions to legal issues and catching problems for clients. Pat practices in the Sumner office regularly represents clients in district, associate district and magistrate courts for agricultural, real estate, criminal and collection issues. He drafts wills and trusts, creates estate plans and helps clients through the probate process.
Dillon Law PC
Jill is a University of Northern Iowa undergraduate (Political Science Cum Laude) and a Drake University Law School graduate. Jill is the assistant Fayette County Prosecutor and a certified family law mediator. Jill still has ties to her family farm operation which includes a dairy herd. Jill Dillon focuses on bankruptcy, adoptions, and mediations.

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