Washington Insider -- Friday

North Dakota's Anti-Corporate Farm Laws

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

EPA Caught in a Crossfire Regarding Its Clean Water Rule

Last month, the Environmental Protection Agency published a joint rule with the U.S. Army Corps of Engineers with the expectation that it would help clarify which "waters of the U.S." would -- and would not -- be subject to federal regulation under the Clean Water Act. Soon after that rule was posted, 29 state attorneys general and a number of business, manufacturing and agricultural organizations filed lawsuits seeking to overturn it. The reason, they said, was that the rule would allow EPA to assert sweeping regulatory authority over even small, insignificant bodies of water to the detriment of landowners and the overall economy.

This week, the other side of the regulatory coin was heard from as a coalition of environmental organizations filed a court challenge to the clean water rule for allegedly failing to protect large bodies of water and waters vital for endangered species. The action, headed by the Waterkeeper Alliance, marks the first time that environmental groups have weighed in on the rule. They charge that EPA and the Army Corps are not being sufficiently strict in their interpretation of how the Clean Water Act should be administered.

This is a position that should be familiar to EPA by now as it struggles to accomplish what it believes various laws require. The agency is being sued for publishing a rule that some see as too strict at the same time it also is being sued for not being strict enough. In the end, lower courts will render decisions that will be appealed up the chain, often with a result that will please very few.

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WTO Agriculture Meeting Makes Little Doha Round Progress

The divide between developed and developing countries in the agriculture negotiations of the World Trade Organization's Doha Round is as strong as ever, as witnessed by the results of an informal meeting of the agricultural negotiation committee in Geneva this week.

During the meeting, two new proposals were submitted and discussed in hope of making progress on the long-stalled Doha Round: a joint proposal from Canada and Australia, as well as one from Norway. But little progress was made in bridging the long-standing gap between countries.

WTO negotiators will discuss the state of their Doha negotiations at a July 31 meeting of the trade negotiations committee and will consider the next steps forward after their six-week summer break, which begins Aug. 1, as does the summer recess of the U.S. Congress. However, the negotiating impasse that was on display again this week likely will impede members' broader efforts to achieve new disciplines in the areas of agricultural goods, industrial goods and services at their Dec. 15-18 ministerial conference in Nairobi, Kenya.

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Washington Insider: North Dakota's Anti-Corporate Farm Laws

One of the nearly ageless ag fights concerns the perceived threat of corporations, such as the interesting new effort currently underway in North Dakota. Typically, producers have seen corporations as evil. In fact, nine states have anti-corporate farm laws, although many of these have exemptions, especially for family corporations. For example, North Dakota's anti-corporate farming law dates to 1932 and allows corporations owned by families of related shareholders to own farms or ranches, as long as the shareholders are related.

However, rather than forging tougher rules to constrain or prevent corporations, North Dakota is considering legislation to relax the law for swine and dairy producers, but, only for fairly modest-sized operations, press reports indicate.

The proposed exemptions were signed into law in March. Supporters say the legislation is needed to revitalize dairy and swine farms after years of decline, and help fuel other agricultural businesses such as feed and fertilizer.

Opponents assert that the law is an invitation for big, out-of-state corporations to set up operations in North Dakota, which is pretty much the usual argument.

The issue still is bitter. A farm group seeking to block the new exemptions has successfully pushed the matter to a public vote, Secretary of State Al Jaeger said Tuesday. Jaeger's office verified that petitions submitted by the North Dakota Farmers Union have enough valid signatures to put the measure on the June 2016 ballot, delaying the law's Aug. 1 effective date until after the election.

North Dakota's constitution gives residents the right to force a statewide vote on bills approved by the legislature.

Observers note that the new exemptions are something of a reversal in long-standing anti-corporate policies. For example, as recently as 1981, North Dakota by limited corporate exemptions to "family farm" and "ranch operations" with 15 or fewer shareholders, all related to each other. Both the officers and directors were to be actively engaged in operating the farm or ranch and at least one of the shareholders would be required to reside there.

In addition, at least 65% of corporate income was required to be derived from agricultural operations and only domestic corporations were eligible to own real estate and engage in farming.

Now, however, key producers -- especially dairy and hog farmers -- seem to feel that anti-corporate measures should be loosened to allow them to compete more effectively. They point out that investments in dairy farms have fallen from about 540 operations in 2002 to fewer than 90 now as dairy cow numbers have declined from 40,000 to less than 18,000. Swine numbers also have declined from about 280,000 in 1995 to about 139,000 in 2014.

It will be interesting to see if the proposed changes in farm structure rules are supported by North Dakota voters, and, if they are, whether the new exceptions have significant effects on farm structure. These currently are widely seen as reflecting powerful and persistent economic trends. So, the fight in North Dakota over whether to loosen their long-standing anti-corporate laws and the subsequent effects on the industry could signal a new Midwestern trend, and should be watched carefully as it evolves, Washington Insider believes.


Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the U.S. Ag Policy, U.S. Farm Bill and DTN Ag News sections on their News Homepage.

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(GH/CZ)