Agriculture Law: 04-07

8/14/2019 Agriculture Law: 04-07

1/8APRIL 2007 AGRICULTURAL LAW UPDATE 1

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VOLUME 24, NUMBER 4, WHOLE NUMBER 281 APRIL 2007

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Solicitation of articles: All AALAmembers are invited to submit ar-ticles to the Update. Please include

copies of decisions and legislationwith the article. To avoid duplica-tion of effort, please notify the Edi-tor of your proposed article.

Cont. on page 6

Ag law bibliography

What farmers shouldknow about migrantand seasonal workers

Pennsylvanias milkmarketing structureroundup

Potential revisions tocurrent productionregulations under

FIFRA

Cont. on p. 2

Employers attempts to verify employees right towork and Title VIIUnder the Immigration and Nationality Act (INA), it is unlawful for an employer toknowingly recruit, hire or continue to employ an alien who is not authorized to work inthe United States. The Immigration Reform and Control Act of 1986 (IRCA) requiresemployers to examine documents presented by new hires to verify identity and workeligibility and to complete and retain the Form I-9.

Complying with IRCA has become increasingly more difficult for employers given therenewed legislative focus on immigration reform and attention to criminal enforcemenof the IRCA, post-9/11. In a recent case, Zamora v. Elite Logistics, Inc., 478 F.3d 1160 (10t

Cir. 2007), the Tenth Circuit Court of Appeals addressed whether an employer unlawfullydiscriminated against an employee because of race and national origin on the basis that

it suspended him from work until he presented proof of his right to work in the U.S. andthen terminated him after he demanded an apology. The case illustrates the potentiaCatch-22 an employer might face when attempting to verify identity and work eligibilityof employees and hires.

Elite Logistics, Inc. (Elite) operates a grocery warehouse in Kansas City, MissouriRamon Zamora (Zamora) was an employee for Elite. As part of the pre-employmenprocess Zamora presented Elite with his social security card and alien registration carddemonstrating proof of the right to work in the U.S. in compliance with the IRCA. Zamoraalso accurately completed an I-9 form indicating that he was a Mexican citizen and alawful permanent resident of the U.S.

Four months after being hired, Elite received a tip that the Immigration and Natural-ization Service (INS) would be investigating companies in the area for compliance withIRCA. In response, Elite, through independent contractors, checked the social securitynumbers of all 650 Elite employees. The check revealed that someone other than Zamorahad been using the social security number Zamora presented when hired. Thirty-five

other employees had discrepancies. Most of those other employees simply quit whenElite attempted to follow up.As for Zamora, Elite, as it did with the other employees whose social security number

were investigated, issued a memorandum that gave him ten days in which to show

Two recent rulings, one by the U.S. Tax Court, and the other by the IRS, are of importanceto the grape-growing industry. While the industry is very significant in California, it isgrowing in importance in other areas of the country. The Tax Court opinion has beenanticipated since last fall and could also have implications beyond the grape-growingindustry to agriculture in general.

The case involved a Sonoma County, California, vineyard and a dispute over theappropriate depreciation of trellises and irrigation systems. The case had been watchedclosely not only by the grape-growing industry, but by agriculture in general. IRS hadtaken the position that vineyard trellises and above-ground irrigation systems weredepreciable land improvements rather than depreciable agricultural equipment. Landimprovements are depreciable over 15 years as property with a 20-year class life, whileag equipment is depreciable over 7 years with a 10-year class life. The taxpayers treatedall of the property (trellises, drip irrigation systems and a well) as ag equipment, anddepreciated the property over seven years. The impact of the IRS position on thetaxpayer meant that they owed an additional $30,000 on their 2002 tax return.

Both IRS and the taxpayer cited the same 1975 Tax Court case for the tests to be utilizedin determining whether an item is depreciable tangible personal property. There are sixfactors for consideration (1) whether the property is capable of being moved; (2whether the property is designed or constructed to remain permanently in place; (3)whether there are circumstances that show that the property may or will have to be

Important rulings to the grape-growing industry


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Cont. on page 7

Animals animal rightsLinzey, The Ethical Case for European Legislation

Against Fur Farming, 13 Animal L. 147-165 (2006).

AquacultureGlenn & White, Legal Traditions, Environmental

Awareness, and a Modern Industry: Comparative LegalAnalysis and Marine Aquaculture, 38 Ocean Dev. & Intl

L. 71-99 (2007).

BankruptcyProcessors, elevators, warehousesKarney & Fatino, The Surety Relationship In the

Agricultural Commodity Storage Context and GrainIndemnity Funds: A Jurisdictional Survey, 40 CreightonL. Rev. 41-134 (2006).

Corporate farming (restrictions on corporate farm-ing/family farm preservation)

Schutz,Nebraska Corporate-Farming Ban Unconsti-tutional: What Does the Farm Mean?, 24 Agric. L.Update 4-7 (2-2007).

Energy issuesComment, The Way the Winds Are Blowing These

Days: The Rapid Growth of Wind Energy and LegalHurdles of North Carolinas General Statutes, 8 N.C. J.L. & Tech. 117-157 (2006).

Comment, Who Owns the Wind?: The Growth of theWind Energy Industry in Texas and the Need for Lawsto Regulate It, 39 Tex. Tech. L. Rev. 101-132 (2006).

Environmental IssuesCentner, Clarifying NPDES Requirements for Con-

centrated Animal Feeding Operations, (National AgLawCenter Publications) 3-2007 http://www.nationalaglawcenter.org

B. Johnson, The Conservation Security Program in

the 2002 Farm Bill, CONGRESSIONAL RESEARCHSERVICE, REPORT FOR CONGRESS pp. 1-6 2-2004 http://www.nationalaglawcenter.org/assets/crs/RS21739.pdf

Kennett, Kwasniak & Lucas,Property Rights and theLegal Framework for Carbon Sequestration on Agricul-tural Lands, 37 Ottawa L. Rev. 171-213 (2006).

Note, EPA Gives Animal Feeding Operations Immu-nity from Environmental Statutes in a SweetheartDeal, 8 Vt. J. Envtl. L. 115-144 (2006).

J. Zinn, Resource Conservation Title of the 2002Farm Bill: A Comparison of New Law with Bills Passedby the House and Senate, and Prior Law, CONGRES-SIONAL RESEARCH SERVICE, REPORT FORCONGRESS pp. 1-36 6-2002 http://www.nationalaglawcenter.org/assets/crs/RL31486.pdf

Farm laborAliensComment,Process Theory and Emerging Thirteenth

Amendment Jurisprudence: The Case of AgriculturalGuestworkers, 41 U. San Francisco L. Rev. 233-260(2006).

Farm policy and legislative analysisDomesticFraas,The 2007 Farm Bill The Drafting Process and

Provisions that Could Affect Your Clients, 24 Agric. L.Update 4-5 (3-2007).

Note,Silly Rabbit, Farm Subsidies Dont Help America,

31 Wm. & Mary Envtl. L. & Poly Rev. 183-210 (2006).Sciullo, This Womans Work in a Mans World: A

Feminist Analysis of the Farm Security and RuralInvestment Act of 2002, 28 Whittier L. Rev. 709-739(2006).

InternationalNote, Much Ado about Decoupling: Evaluating the

Environmental Impact of Recent European Union Agri-cultural Reform, 31 Harv. Envtl. L. Rev. 279-320 (2007).

Food and drug lawApel,Tolerance of Food Contamination in Europe, 24

Agric. L. Update 1-3, 7 (2-2007).

Hunger & food issuesNiada, Hunger and International Law: The Far-

Reaching Scope of the Human Right to Food, 22 Conn.J. Intl L. 131-201 (2006).

International tradeBhala & Gantz, WTO Case Review 2005: United

States Subsidies on Upland Cotton, 23 Ariz. J. Intl &

Comp. L. 214-287 (2006).Cardwell & Rodgers, Reforming the WTO Legal

Order for Agricultural Trade: Issues for European RuralPolicy in the Doha Round, 55 Intl & Comp. L. Q. 805-838 (2006).

Cross, King Cotton, Developing Countries and thePeace Clause: The WTOs US Cotton SubsidiesDecision, 9 J. Intl Econ. L. 149-195 (2006).

Gonzalez, Markets, Monocultures, and Malnutrition:Agricultural Trade Policy through an EnvironmentalJustice Lens, 14 Mich. St. J. Intl L. 345-382 (2006).

Note, EC-Hormones and the Case for an ExpressWTO Postretaliation Procedure(Appellate Body Re-port, European CommunitiesMeasures ConcerningMeat and Meat Products, WT/DS26/AB/R, WT/DS48/

AB/R, Jan. 16, 1998 [Hormones Appellate Body Re-port]), 107 Colum. L. Rev. 131-168 (2007).Peel, A GMO by Any Other Name ... Might be an

SPS Risk!: Implications of Expanding the Scope of theWTO Sanitary and Phytosanitary Measures Agree-ment, 17 Eur. J. Intl L. 1009-1031 (2006).

Porterfield,U.S. Farm Subsidies and the Expirationof the WTOs Peace Clause, 27 U. Penn. J. Intl Econ.L. 999-1042 (2006).

Land reformKeliang et al., The Rural Land Question in China:

Analysis and Recommendations Based on a Seven-teen-Province Survey, 38 N.Y.U. J. Intl L. & Poly 761-839 (2006).

Land use regulationLand use planning and farmland preservation

techniquesBook Note,Conservation Easement Design: Saving

the Ranch, or Paved With Good Intentions, 45 Nat. Res.J. 239-269 (2005).

Centner,Creating an Undeveloped Lands ProtectionAct for Farmlands, Forests, and Natural Areas, 17 DukeEnvtl. L. & Poly F. 1-61 (2006).

Livestock and Packers & StockyardsComment,To What Extent Does Wealth Maximiza-

tion Benefit Farmed Animals? A Law and EconomicsApproach to a Ban on Gestation Crates in Pig Produc-tion, 13 Animal L. 167-195 (2006).

Pendergrass, State Identification Statutes: Confidentiality Provisions Relating to Animal and PremiseIdentification(National AgLaw Center Publications) 12007 http://www.nationalaglawcenter.org

Pendergrass, Varying State Approaches to Confidentiality with Premises and Animal Identification Systems(National AgLaw Center Publications) 1-2007http://www.nationalaglawcenter.org

Patents, Trademarks & trade secretsComment, Travels with My Plant: Monsanto v

Schmeiser Revisited, 2 U. Ottawa L. & Tech. J. 493509 (2005).

Gepts, Who Owns Biodiversity, and How Should theOwners be Compensated?134 Plant Physiology 12951307 (2004).

Hughes, Champagne, Feta, and Bourbon: TheSpirited Debate about Geographical Indications, 58Hastings L.J. 299-386 (2006).

Kennedy, International Conflicts over Plant GeneticResources: Future Developments?20 Tulane Envtl. LJ. 1-42 (2006).

Kesan & Gallo, Property Rights and Incentives to

Invest in Seed Varieties: Governmental Regulations inArgentina, 8 Agbioforum 118-126 (2005).

Robertson,Re-Imagining Economic Alterity: A Feminist Critique of the Juridical Expansion of Bioproperty inthe Monsanto Decision at the Supreme Court of Canada2 U. Ottawa L. & Tech. J. 227-253 (2005).

Student Article, A Rose By Any Other NameProtecting Geographical Indications for Wines andSpirits in China, 3 Loyola U. Chicago Intl L. Rev. 257279 (2006).

Symposium: Monsanto v. Scruggs: The Scope oDownstream Licensing Restrictions, 16 Fordham IntelProp., Media & Ent. L. J. 1025-1091 (2006).

Panel One:Discussion, 1025-1052.Carstensen,Post-Sale Restraints via Paten

Licensing: A Seedcentric Perspective, 1053-1080.Kesan,Licensing Restrictions and Appropriating Market Benefits from Plant Innovation, 1081-1091

Public landsNicoll,The Death of Rangeland Reform, 21 J. Envtl

L. & Litig. 47-111 (2006).

Rural developmentPruitt, Rural Rhetoric, 39 Conn. L. Rev. 159-240

(2006).Strother & Allen, Wine Tasting Activities in Virginia

Is Americas First Wine Producing State Destined toWither on the Vine Due to Overregulation?23 T.MCooley L. Rev. 221-261 (2006).

Symposium Issue: Forgotten America: Fighting

Poverty in Rural Communities, 13 Georgetown J. onPoverty L. & Poly 1-185 (2006).

Bassett, Distancing Rural Poverty, 3-32.Rosser,Rural Housing and Code Enforce

ment: Navigating Between Values and Housing Types33-93.

MacTavish & Salamon,Housing Vulnerability among Rural Trailer-Park Households, 95-117.

Gennetian, Redcross & Miller, RegionaDifferences in the Effects of Welfare Reform: Evidencefrom an Experimental Program in Rural and UrbanMinnesota, 119-150.

Agricultural law bibliography: 1stQ. 2007


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site/uscis/menuitem, then enter Form I-9 in the search box.

Employers may want to consider partici-pating in the federal governments Em-ployment Eligibility verification (EEV)/Ba-sic Pilot Program (Basic Pilot). The EEV iscurrently a voluntary program through theU.S. Department of Citizenship and Immi-gration Services (USCIS). It is antici-pated the program will become mandatoryin the near future. EEV electronically veri-fies the employment eligibility of their newlyhired employees. The employer should beaware that use of the EEV program placessome additional requirements on the em-ployer. The employer should carefully readthe compliance procedures before utilizingthe EEV. More information regarding theEEV can be obtained from the USCISwebsite: http://www.uscis.gov/portal/site/uscis, then enter EEV into the search box.

Farmer/employers should also note thatImmigration Reform and Control Act(IRCA) makes it unlawful for an em-ployer to continue to employ [an] alien in

the United States knowing the alien is (orhas become) an unauthorized alien withrespect to such employment.. 8 U.S.C. 1324a (a) (2). Consequently, if a new workeris unable to produce the documents neededto complete the I-9 form within three daysof hiring, or the employee is unable topresent a receipt from the USCIS verifyingthat he/she applied for replacement docu-ments (which must then be provided to theemployer within 90 days of hire), the newworker must be terminated.

Record keeping for certified H-2A employerCertified H-2A employers must keep

detailed work records for each worker. Therecords must indicate the number of hoursactually worked, the number of hours of-fered, and the number of hours refused.Each worker must also receive a wagestatement that states the number of hoursworked, number of hours offered, numberof hours refused, the pay for each type ofcrop, and the basis for the pay (i.e. whetherpaid by the hour, by the piece, or by thetask). The wage statement must indicatethe total earnings for the pay period and alldeductions from the wages, with a state-ment explaining why the deductions weremade.

Terminated workersEmployers must also maintain records

of any workers voluntarily or involuntarilyleaving the job. To prevent further liabilityfor wages and benefits to the worker, theemployer must notify the local job serviceof the state workforce agency in writing ofeither the termination or abandonment ofthe worker. The report should state the dateof the termination or abandonment and thereason. The employer should also state ifhe wants to replace the worker.

To assist H-2A Certified Employers tocomply with the above requirement, the

DOL has established a questionnaire toprovide guidance. The full questionnairecan be viewed at http://www.dol.gov/esa/regs/compliance/whd/h2A.htm

Fair Labor Standard Act (FLSA)The FLSA applies to all enterprises en-

gaged in interstate commerce, or that pro-duce goods or materials moved in or pro-duced for interstate commerce. Thus, theFLSA covers virtually all agricultural em-ployees.

Exemptions from FLSA requirementsMost employers are aware that the FLSA

requires employers to pay employees aminimum wage. The law also specifiesthat any work performed in excess of themaximum work hours for a work week(i.e. 40 hours in a 7-day period) must be paidat an overtime rate equivalent to 1.5times the employees regular rate of payfor all hours worked in excess of the maxi-mum. However, few employers may knowor understand that there are certain ex-

emptions in the FLSA that may benefitfarmers.

Agricultural workers involved in the farm-ing operation are exempt from overtimepay provisions. Also, any farmer/employerwho does not utilize more than 500 mandays of agricultural labor in any calendarquarter of the preceding calendar year isexempt from the minimum wage and over-time pay provisions of the FLSA for thecurrent calendar year. A man day isdefined as any day during which an em-ployee performs agricultural work for atleast one hour.

The following are additional exemptions

from the minimum wage and overtimeprovisions of the FLSA for agriculturalemployees:

Agricultural employees who are imme-diate family members of their employer;

Those principally engaged on the rangein production livestock;

Local hand harvest laborers who com-mute daily from their permanent residence,and are paid on a piece rate basis; and

Local hand harvest laborers who: (1)commute daily from their permanent resi-dence, (2) are paid on a piece rate basis intraditionally piece-rated occupations, and(3) were engaged in agriculture less thanthirteen weeks during the preceding calen-dar year.

The DOL provides a reference guide forthe FLSA at http://www.dol.gov/esa/regs/compliance/whd/hrg.htm#8 and specificguidance for agricultural employers at:http://www.dol.gov/esa/regs/compliance/whd/whdfs12.htm.

Child labor and hazardous occupations.The FLSA also sets the standards for

child labor and hazardous occupations forminors working in agriculture. If the em-ployer hires youths under 16 years of age,he should be aware of the FLSA restrictions

relating to employment of youth and thetypes of activities they may perform. Formore information relating to the child laborrestrictions, see http://www.dol.gov/esaregs/compliance/whd/whdfs40.htm. Ocourse, youths of any age may work at anytime in any job on a farm owned or operated

by their parents.

Migrant and Seasonal Worker ProtectionAct (MSPA)

The MSPA governs safety and healthstandards for migrant and seasonal work-ers, transportation safety, disclosing theterms and conditions of employment to themigrant and seasonal workers, payingproper wages to the workers, and the re-quired record keeping. Under MSPA, amigrant agricultural worker is defined as aworker employed in agricultural work ofseasonal or temporary nature who cannoreturn to their permanent residence atnight. The MSPA defines seasonal workersas workers who are employed in agricultural work of a seasonal or temporary na-

ture, but who are able to return to theirpermanent residence at night.

Employers must assure that vehiclesused to transport workers are properlyinsured, operated by licensed drivers, andmeet federal and state safety standardsUnder MSPA, transportation safety standards are either DOL standards or theDepartment of Transportation (DOTstandards incorporated by DOL into MSPAThe type of vehicle, how it is used, and thedistance it is driven, dictates the applicablestandard.

For passenger vehicles used for transporting workers less than seventy-five

miles, the safety regulations include: thevehicle must have proper external lightsbe properly equipped with brakes, and tiresmust have at least 2/32 inch tread depth andno cracks in the sidewalls.

There are additional requirements forvehicles driven more than seventy-fivemiles. For additional information regardingthe transportation safety restrictionsplease see: http://www.dol.gov/dol/allcfrESA/Title_29/Part_500/29CFR500.104.htmand http://www.dol.gov/dol/allcfr/ESATitle_29/Part_500/29CFR500.105.htm. Foradditional information regarding MSPAcompliance assistance, go to: http://www.dol.gov/compliance/laws/compmsawpa.htm

Occupational Safety and Health Ac(OSHA)

OSHA covers all employers engaged ina business affecting commerce who hasemployees. Therefore, it applies to agricultural employers. However, OSHA doesnot apply to farms that employ only immediate family members of the farmer/employer.

Cont. on p. 6


6/86 AGRICULTURAL LAW UPDATE APRIL 2007

Migrant and seasonal workers/ cont. from p. 5

Cont. on page 7

General requirementsUnder OSHA, employers are required to

provide personal protective equipment tothe employees and ensure they are prop-erly trained to use the equipment. Employ-ers must also use material safety datasheets (MSDS) to train the employees torecognize and avoid hazardous material.OSHA also gives an employee the right toobtain information related to thatemployees exposure to toxic substances.

Sanitation regulationsIn 1987, the Occupational Safety and

Health Administration issued regulationsestablishing minimum standards for fieldsanitation in covered agricultural settings.Authority for enforcing these field sanita-tion standards in most states has beendelegated to the Wage and Hour Divisionof the DOL.

The OSHA field sanitation standards re-quire covered employers to provide: toi-lets, potable drinking water, and hand-wash-

ing facilities to hand-laborers in the field.Covered employers who fail to comply withthe statute or regulations may be subjectedto a range of sanctions, including the ad-ministrative assessment of civil moneypenalties and civil or criminal legal action.

In general, the field sanitation standardsapply to any agricultural establishmentemploying 11 or more workers on any oneday during the previous 12 months, to per-form hand labor field work. Hand laborincludes hand-cultivation, hand-weeding,hand-planting, and hand-harvesting of veg-etables, nuts, fruits, seedlings, or othercrops, including mushrooms, and the hand-

packing of produce in the field into contain-ers, whether performed on the ground, onmoving machinery, or in a shed. Handlabor does not include the care and feed-ing of livestock.

Employers must provide potable drink-ing water, suitably cool and in sufficientamounts, dispensed in single-use cups or

by fountains, readily accessible to all em-ployees. In addition, employers must pro-vide one toilet and hand washing facility forevery 20 employees, located within a quar-ter-mile walk, or if not feasible, at the closestpoint of vehicular access.

Recordkeeping requirementsEvery employer covered by OSHA withmore than 10 employees, must maintainthree types of OHSA specific records of jobrelated injures and illness: OSHA Form 300 injury/illness log and Form 300 A - asummary of the previous years work re-lated injuries, which must be posted in theworkplace by February 1. The third docu-ment is OSHA Form 301 the individualincident report that provides details aboutthe specific recordable injury or illness.

Each employer must advise the nearestOSHA office within eight hour of the occur-

rence of any accident that results in one ormore fatalities or hospitalization of three ormore employees.

Bottom line for farmer/employerEmployment of migrant and/or foreign

workers can get complicated because ofthe many laws that govern an employer ofsuch workers. Employers must complywith these and other labor and employ-

ment laws or risk administrative penalties,civil lawsuits filed by their workers, andeven criminal sanctions in certain situa-tions. Consequently, the best thing to do islearn what is required and how to comply.

moved; (4) how difficult and time-consum-ing it is to move the property; (5) how muchdamage the property will sustain if moved;and (6) how the property is affixed to theland. The taxpayer argued that the trellisesand above-ground irrigation systems arenot inherently permanent and are used asan integral part of the taxpayers produc-

tion activity. IRS argued that the trellisesand irrigation systems, as a whole, are notmoveable and are, therefore, land improve-ments with the same 20-plus-year lifespanas the vines. IRS pointed to the industry-standard long-term vineyard leases thatprotect the large investment in such sys-tems and describe them as land improve-ments. Key to the IRS argument was thatto move the system, the taxpayer had totake the entire system apart and, in theprocess of taking it apart, pieces of thetrellises and irrigation system are de-stroyed.

The Tax Court agreed with the IRS as to

the irrigation system and the well. Theevidence established that the well, whichwas permanently affixed to and not readilyremovable from the earth, was a perma-nent land improvement that could be ex-pected to work for a long timeapproxi-mately 30 years. While some of the irriga-tion system components were above-ground and could be removed, repaired,and maintained, land improvement cat-egorization was overall supported by thefact that the systems in great part were

buried underground. As such, the courtviewed them as permanent structures thatwere not readily movable. So, the entireirrigation system, including the above-ground drip lines were held to be landimprovements that are depreciable over15 years.

However, the court held that the trelliseswere depreciable ag equipment. The courtreasoned that trellises are synonymouswith fencing (fencing is ag equipment) inthat they use posts that are not affixed inconcrete (even posts affixed in concretehave been held to not be land improve-ments). The trellises could also be dis-mantled and moved, the court noted, andthe taxpayer had actually done so in thepast. The court also reasoned that the trel-lises were like machines inasmuch as the

posts, stakes, and wires could be adjustedto train grapevines to produce high-qualitygrapes.

The courts holding that trellises can bedepreciated as farm equipment is a big winfor the wine industry. Indeed, that was themost expensive part of the case for thetaxpayers. If the Tax Courts opinion iappealed, the main focus of the case may

be on the proper classification of the above-

ground irrigation drip lines. Also, the appellate court may address the potential appli-cation of a 1974 U.S. Court of Claims opinionwhere the court held that something aspermanent as a whiskey maturation facility (warehouse), when integral to the production of the product, is tangible personaproperty. The Tax Court did not address thepotential application of that case (it wasraised in the taxpayers brief, however). Iit were deemed applicable, that could meanthat all of the items at issue are depreciableas ag equipment. Now, that would really be

big news. Trentadue v. Comr., 128 T.C. No. 8(2007).

The second development is an IRS rulinginvolving the uniform capitalization rulesas applied to grapes. Those rules apply totaxpayers that have a long-term crop withmore than a two-year pre-productive pe-riod, and operate to bar deductions for thecosts associated with that crop during thepre-productive period. Instead, the taxpayer has to add the associated costs totheir tax basis in the crop. Production costscan include everything from direct laborand material costs to indirect rents, taxesand other costs.

The rule is a big deal for farmers in thenursery business, and almost all tree, vine

or bush crops that require at least two yearsto reach production. For plants, the preproductive period begins when the seed isplanted or the plant is first acquired by thetaxpayer. The pre-productive period endwhen the plant is ready to be produced inmarketable quantities or when the plantcan reasonably be expected to be sold orotherwise disposed of. The pre-productiveperiod, however, is determined not in lighof the taxpayers personal experience buin light of the weighted average pre-productive period determined on a nationwide

basis. The IRS has provided a list of plantgrown in commercial quantities in the U.Sthat have a nationwide weighted averagepre-productive period in excess of two years

The rule is particularly problematic forgrape growers. One question has beenwhether they have to capitalize all of theirexpenses up until the time the wine is soldThat would be a really tough rule for winer-ies because the wine-making process cantake many years. But, a recent IRS rulingsoftens the blow. The ruling says that theIRS will treat grape growing and wineryfunctions as separate businesses. Thatsthe case, even though (1) the grapes arenever subject to sale or other disposition

Grapes/Cont. from p. 1



Ag law bibliography/Cont. from p. 3Berube, Individual Income Tax Credits as

Social Policy in Rural America,151-167.Mosley & Miller, Spatial Variations in the

Extent, Causes, and Consequences of Poverty: AComparison of Rural and Urban Places,169-177.

Dickerson, Brought into Focus: The Factorof Mental Illness in a Rural Legal Services Practice, 179-185.

Sustainable & organic farmingEnvironmental Defense Fund et al,Food for Thought:

The Case for Reforming Farm Programs to Preserve theEnvironment and Help Family Farmers, Ranchers, andForesterspp. 1-45 2001.

http://www.environmentaldefense.org/documents/160_FoodForThought.pdf.

TaxationMcEowen, Summary of Selected Provisions in the

Tax Relief and health Care Act of 2006, 24 Agric. L.Update 4-5, 7 (1-2007).

Torts and insuranceHeald & Smith, The Problem of Social Cost in a

Genetically Modified Age, 58 Hastings L. J. 87-151(2006).

TransportationDubovec, The Problems and Possibilities for Using

Electronic Bills of Lading as Collateral, 23 Ariz. J. Intl& Comp. L. 437-466 (2006).

If you desire a copy of any article or further information,please contact the Law School Library nearest youroffice. The National AgLaw Center website http://www.aglaw-assn.org has a very extensive Agricultural Law Bibliog-raphy. If you are looking for agricultural law articles,please consult this bibliographic resource on the NationalAgLaw Center website.

Drew L. Kershen, Professor of Law, TheUniversity of Oklahoma, Norman, OK

rization. TheZamoradecision demonstratesthat well-meaning employers that attemptto comply with IRCA could run afoul of bothIRCA and Title VIIs anti-discriminationprovisions. Indeed, in Zamora the em-ployer was initially presented with both asocial security card and alien registrationcard when it hired Zamora, which is morethan what the current I-9 form requires.

Requiring presentation of both documentscould form a basis for a discriminationclaim under both IRCA and Title VII.

2. Understand that the process of verify-ing acceptable I-9 documents could trig-ger the anti-discrimination provisions inIRCA and Title VII. While it is not uncom-mon for an employer to discover that anundocumented worker has been hired, it iscritical that the employer understand thelimits on its ability to investigate the legiti-macy of documents establishing identityand employment eligibility.

While in Zamora,Elites investigation wasultimately vindicated by the Tenth Circuit,

employers need to understand the issuescould be viewed differently in other juris-dictions, especially considering Elites re-

jection of Zamoras naturalization certifi-cate, which Elite had identified as sufficientto show lawful work status in its memoran-dum.

3. Understand the companys responsi-bility in determining the authenticity of I-9documents. The controversy in Zamoraquickly developed when Elite attempted tovalidate the authenticity of the documentsinitially submitted by Zamora. Under thelaw, an employer must examine thedocument(s) and accept them if they rea-

sonably appear on their face to be genuine

and relate to the person presenting themNot accepting documents that reasonablyappear genuine violates IRCA and in somecases Title VII. Conversely, an employerviolates IRCA by accepting documentsthat do not reasonably appear to be genuine. If there is any question regarding thevalidity of the documents, the employershould contact the Bureau of Immigration

and Customs Enforcement for guidance.4. Keep your house in order. Employer

should take a proactive approach regarding pre-employment hiring practices, including establishing procedures and policies on the processing of I-9 forms. Sincethe federal government and public interesgroups have taken a renewed interest inimmigration issues, employers should regularly train supervisors on IRCA-relatedissues and regularly audit their I-9 formsKeeping your house in order should in-clude training on Title VII and IRCAs nondiscrimination provision, which prohibitsdiscrimination against any individual ..

with respect to the hiring, or recruitment orreferral for a fee, of the individual for em-ployment or the discharging of the individual from employment.

5. Be aware of the latest developmentsaffecting the hiring of immigrant employees. Employers should continue to educatethemselves on the latest immigration-re-lated developments, including legislationOne area that deserves increased atten-tion involves Social Security mismatch let-ters and the safe harbor rule proposed bythe Department of Homeland Security(DHS) and Bureau of Immigration andCustoms Enforcement (ICE).

SSA sends mismatch letters to employ-ers whose employee name and Social Security number combinations do not matchSSA records. The proposed rule contains asafe harbor provision on SSA mismatchletters. The proposed rule would requireemployers to check their records for cleri-cal mistakes within 14 days of receiving amismatch letter, to correct the error andverify the resolution with SSA.

If the issue is not resolved within 60 daysof receipt of the mismatch, the proposedrule would require the employer, withinthree days, to complete new paper workusing only documents issued with a photoand not containing the questioned sociasecurity number, or to terminate the em-ployment. The method for doing this would

be to process a new I-9 form, with the statedconditions.

Even if the employee turns out to be anunauthorized worker, the government wilnot deem employers that follow this proce-dure to have constructive knowledge othat fact.

Roman F. Amaguin, Honolulu, Hawai

Employers attempts/Cont. from page 2

Grapes/Cont. from page 6

(as those terms are used in tax law); and (2)the taxpayer does not operate their busi-ness as two separate and distinct busi-nesses.

In conjunction with that reasoning, theIRS ruled that the actual pre-productiveperiod of a grape crop grown for self-useends no later than the crushing of the grapes.Extending the pre-productive period be-yond crushing would result in the capitaliza-tion of inappropriate costs into a crop thatno longer exists.

As for the costs incurred between theharvest of the grapes and blossoming of alater crop, IRS ruled that a taxpayer mustcapitalize the direct costs and an allocableportion of the indirect costs of producing thevine (such direct and indirect costs wouldinclude, for example, administration costs,depreciation and repairs on farm buildingsand farm overhead). A special exceptionfor field costs (irrigating, fertilizing, spray-ing and pruning) applies to the period be-tween harvesting and the sale of the crop.These costs are not required to be capital-

ized because they dont benefit, and areunrelated to, the harvested crop. Theymerely maintain and improve the health ofthe vines, but they dont provide any ben-efits to the crop (which has already beensevered from the vines). That field cropexception, however, ends when the pre-productive period of the crop ends, whichis the onset of the crush. So, IRS concludedthat pre-productive period costs incurred

between the end of the pre-productiveperiod and the blossoming of the later cropare generally deductible as the cost ofmaintaining the vine.

The bottom line, therefore, is that costsincurred between the harvest of the cropand the end of the pre-productive periodmust be capitalized unless they are fieldcosts that provide no benefit to the al-ready severed crop. ILM 2007 13023 (Nov.20, 2006).

Roger A. McEowen, Iowa StateUniversity, Ames, IA.


8/88 AGRICULTURAL LAW UPDATE APRIL 2007

Robert P. Achenbach, Jr,

AALA Executive Director

[email protected]

Ph 541-485-1090 Fax 541-302-1958

AALA Board NominationsThe AALA Board Nominations Committee is seeking suggestions for nomination for the 2008-2010 board and the

2008 president-elect. Please contact Don Uchtmann, e-mail: [email protected] by May 1, 2007.

2007 Annual ConferencePresident-elect Roger McEowen has almost completed the planning of an excellent program for the 2007 Annual

Agricultural Law Symposium at the Westin San Diego Hotel in sunny downtown San Diego, CA, October 19-20, 2007.As soon as the program is virtually complete, we will post it on the AALA web site. Mark your calendars and plan atrip to enjoy the sights, sounds, animals and sunshine. Brochures will be printed and mailed as soon as the programplans are complete.

2006 Conference Handbook on CD-ROMDidnt attend the conference in Savannah but still want a copy of the papers? Get the entire written handbook plus

the 1998-2006 past issues of theAgricultural Law Update on CD. The files are in searchable PDF with a table of contentsthat is linked to the beginning of each paper. Order for $45.00 postpaid from AALA, P.O. Box 2025, Eugene, OR 97402or e-mail [email protected] Copies of the printed version are also available for $90.00. Both items can also

be ordered using PayPal or credit card using the 2006 conference registration form on the AALA web site.

Documents

Agriculture Law: 04-07