Minnesota Task Force Looks at Ways to Protect the State’s Bees

Josephine Marcotty reported recently at the Minneapolis Star Tribune Online that, “After two years of sometimes fractious discussion, a task force charged with finding ways to protect the state’s bees and butterflies is proposing dozens of ideas to make Minnesota’s landscape more hospitable to pollinators.

“Chief among them: programs to add more clover and other flowers to lawns and farm fields, and tightening up on the wide use of the insecticide that carries much of the blame for their declining numbers.

“The task force, appointed by Gov. Mark Dayton, will present its findings to the state Environmental Quality Board, which is made up of the heads of key state agencies. The report is likely to result in proposals at the 2019 Legislature to create and fund some of the suggested programs.”

The article noted that, “The detailed, 60-page report also revealed a clear dividing line between the committee members who represented agriculture and those who represented environmental and conservation groups on the issues of insecticide use and regulation. While there was broad support for more education and improved habitat for pollinators, committee members were unable to reach consensus on ways to reduce insects’ exposure to neonicotinoids, the widely used class of insecticides that has proved to be one of the culprits in the pollinators’ decline. Instead, the report tallied the votes on each proposal and noted how each committee member voted.”

The Star Tribune article added that, “Dayton appointed the 15-member committee in 2016 in an effort to find common ground among disparate interests on how to protect bees and rapidly declining populations of wild pollinators.

“It included representatives from Syngenta, one of the leading manufacturers of neonicotinoid products; farmers from the state’s largest commodity groups; the Xerces Society for Invertebrate Conservation, a nonprofit; two U scientists; a beekeeper; educators; and a representative from the Pesticide Action Network, an environmental advocacy group.”

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DTN: New Dicamba Registration Complicates Lawsuit in the Ninth Circuit Court of Appeals

DTN writer Emily Unglesbee reported this week that, “EPA’s decision to continue the registration of three dicamba herbicides has reverberated far beyond D.C. — through Midwest soybean fields, Southern cotton fields and all the way to Seattle, Washington, where the U.S. Ninth Circuit Court of Appeals is mulling a lawsuit over these very herbicides.

“Monsanto and EPA are now arguing that this lawsuit, which claims the original dicamba registrations are illegal and should be vacated, is ‘moot’ and should be dismissed entirely.

The court’s decision could have repercussions for U.S. farmers, who — operating under the expectation that dicamba applications will remain legal — plan to plant 60 million acres of dicamba-tolerant soybeans and cotton in 2019.”

The DTN article stated that, “The lawsuit was first filed against EPA in 2017 by four farm and environmental groups: National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity and Pesticide Action Network North America. The groups argue that the federal agency broke the law when it first registered three dicamba herbicides (XtendiMax, FeXapan and Engenia) in 2016 for over-the-top use on Xtend soybean and cotton crops, by ignoring key requirements of the Endangered Species Act and the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

“In August, three judges from the Ninth Circuit Court of Appeals heard arguments from both sides (see the video here: https://www.youtube.com/…) and then retired to consider their ruling.

“Then just two days after EPA’s dicamba registration decision landed late on Halloween night 2018, lawyers for Monsanto (now part of Bayer) filed a motion to dismiss the lawsuit entirely.

“‘As a result of EPA’s issuance of the new, superseding 2018 Registration, the 2016 Registration that Petitioners challenge is no longer in force, and a court order vacating that registration would have no legal or practical effect,’ the lawyers wrote in their motion, available via the court’s electronic case filing system. ‘The petition for review of the 2016 Registration is therefore moot, and this Court accordingly should dismiss the petition for lack of jurisdiction.'”

Ms. Unglesbee noted that, “Now all eyes rest on the judges of the Ninth Circuit, who will issue a decision on Monsanto’s motion in the coming weeks or months.”

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Recent Index Shows Slow Growth in Home-Prices

Bloomberg writer Sho Chandra reported yesterday that, “Home-price gains in 20 U.S. cities grew in September at the slowest pace in almost two years, adding to signs that buyer interest is waning amid higher mortgage rates and elevated property values.

“The 20-city index of property values increased 5.1 percent from a year earlier, the least since November 2016, after rising 5.5 percent in the prior month, according to S&P CoreLogic Case-Shiller data released Tuesday. The median estimate in a Bloomberg survey of economists called for a gain of 5.2 percent. Nationally, home prices were up 5.5 percent from September 2017.”

“Home Prices in 20 U.S. Cities Rise Least in Almost Two Years,” by Sho Chandra. Bloomberg News (November 27, 2018).

The Bloomberg article added, “The report marks the sixth straight deceleration in price gains. It’s the latest in a spate of reports indicating housing is in a broad slowdown, with sales and home-building also showing signs of weakness.”

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Tax Reform Lessens Burdens to Converting Your C-Corporation

Elizabeth Williams reported recently at DTN that, “There was a time when C-corporations made a lot of sense for farmers, but as tax laws changed and the benefits eroded, farmers found changing their business structure could be cumbersome and expensive. Tax advisers say 2017’s Tax Cuts and Jobs Act makes it easier than ever to make the switch.

“‘If you’ve been sitting on the sidelines waiting for a better time to get out of your C-corp, today is a good time,’ said Doug Claussen, certified public accountant with KCoe Isom in Goodland, Kansas.

“Many farm corporations were formed in the 1970s because of lower corporate tax rates, ease of farm succession and deductible fringe benefits.”

The DTN article noted that, “‘C-corporations were the best thing for many years until the 1986 tax law,’ Claussen said. But for many, the tax consequences of converting were too steep to justify a change.

The new law lessens the penalties for converting from a C-corporation to an S-corporation, and tax experts say it’s especially beneficial for farmers with an heir or heirs that aren’t involved in business operations. C-corporations also aren’t eligible for the new Section 199A deduction.”

Ms. Williams added that, “C-Corporations are not eligible for the new Section 199A deduction, which is reserved for individuals and pass through-entities like S-corporations.

“The new tax law cut the top corporate tax rate from 35% to 21%, while pass-through entities only saw their top rate decrease from 39.6% to 37%. The new Section 199a deduction of 20% for sole proprietors and pass-throughs was seen as a way to level the playing field with the new tax cut for C corporations.”

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Wind Developers Take Down Turbines After Losing Iowa Legal Battle

Des Moines Register writer Donnelle Eller reported last week that, “Developers who invested $11 million to install three wind turbines in eastern Iowa are tearing them down, after losing a legal battle waged by nearby residents.

“It’s only the second time nationally a judge has ordered wind turbines to be torn down and a first in Iowa.

“‘It’s great. We love it,’ said Cheyney Hershey, whose young family lives near the turbines. ‘You can’t sit outside on the deck and have a conversation without the constant thumping of the blades going round.'”

Ms. Eller indicated that, “Opponents to the 450-foot turbines believe the legal battle will empower other rural landowners and small towns to take on wind.

“Residents in Palo Alto, Black Hawk and other counties are challenging wind projects as well.”

The Register article explained that, “In 2015, the Fayette County Zoning Board provided permits that allowed the wind developers to build the turbines.

“Nearby landowners challenged the permits in district court, where a judge agreed with them, saying the permits were ‘illegal and void.'”

“Developers appealed the decision, and decided to move ahead with construction.

But the Iowa Court of Appeals this year ruled in the city and residents’ favor. And the Iowa Supreme Court declined to consider the case, forcing the developers to tear down the turbines.”

Last week’s article added, “Wind energy supporters say the order could hurt new investment, jeopardizing jobs, landowner payments and tax revenue that come with the projects.”

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Farmers Watching EPA Chlorpyrifos Case Closely

Adam Belz reported recently at the Minneapolis Star Tribune Online that, “Farmers in Minnesota and across the country are watching closely as a battle over a key agricultural pesticide plays out in court.

“A panel of judges in the Ninth Circuit Court of Appeals in August ordered the Environmental Protection Agency to ban the pesticide chlorpyrifos because of studies that show its residue on food can cause brain damage in children.

“Farm groups say the ruling would ‘wreak havoc’ on American agriculture, arguing there are no good alternatives to the pesticide for many crops.”

Mr. Belz explained that, “The dilemma for farmers is compounded because soybean aphids have developed resistance to a class of pesticides called pyrethroids. Meanwhile, another type of pesticides that still work on soybean aphids, neonicotinoids, is a danger to bees.”

“Minnesota farmers watch a pesticide battle play out in courts,” by Adam Belz. Minneapolis Star Tribune (November 17, 2018).

The Star Tribune article noted that, “In the last two years of the Obama administration, it appeared the EPA was on course to ban the chemical, but in 2017, then-EPA Administrator Scott Pruitt denied the petition. His order said that chlorpyrifos needs further study and said the agency would need ‘greater certainty as to whether the potential exists for adverse neurodevelopmental effects to occur from current human exposure to chlorpyrifos.’

The Ninth Circuit stepped in this past August, ruling that ‘there was no justification for the EPA’s decision in its 2017 order to maintain a tolerance for chlorpyrifos in the face of scientific evidence that its residue on food causes neurodevelopmental damage to children.’

“The EPA is now asking the court to rehear the case, and the appellate court has not decided whether to do so.”

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New Madrid County (Missouri) Man and Farm Indicted on Illegally Applying Dicamba on Crops

A New Madrid County man accused of using the weedkiller dicamba on his cotton and soybean crops outside of Environmental Protection Agency guidelines likely caused significant damage to neighboring crops, the U.S. Department of Justice announced Tuesday.

“Bobby David Lowrey, 51, of Parma, is also accused of providing false documentation and making false statements about his use of dicamba on Lowrey Farms when the Missouri Department of Agriculture investigated crop damage reported by several neighboring farmers in June 2016.

The federal indictment against Lowrey alleges 49 instances of misapplication of a pesticide, a false statement and three acts of obstruction of justice.”

The Post-Dispatch article noted that, “Lowrey is accused of disregarding guidelines that dicamba cannot be used in post-planting of cotton crops. He also allegedly violated the EPA’s guidelines regarding the limited application of dicamba on soybean crops. The Department of Justice reports that Lowrey’s crops, which span 6,700 acres, were genetically modified to be resistant to dicamba.

If found guilty, Lowrey faces up to 20 years in prison and a fine up to $250,000.”

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Tax Treatment of Equipment Trade-ins Gets Complicated

DTN Special Correspondent Elizabeth Williams reported today that, “Tax treatment of equipment trade-ins got a tune-up in 2017’s tax reform legislation. Experts say provisions restricting like-kind exchanges for machinery are offset by more generous rules on depreciation, resulting in little change to federal tax returns.

The complication: many states didn’t follow suit, especially on like-kind exchanges, which are also known as 1031 exchanges and allow taxpayers to trade equivalent properties without a taxable event taking place.

“‘In my state, Minnesota, if the legislature does not fix the 1031 issue we may have farmers owing more to the state than to the IRS,’ said Rod Mauszycki, principal with CliftonLarsonAllen in Minneapolis, and DTN/The Progressive Farmer’s tax columnist. ‘Although I’m confident that a fix will be adopted, it might not be quick enough. As a result, we may have to delay filing the 2018 tax returns.'”

The DTN item noted that, “Without 1031 exchanges, the tax treatment of trade-ins becomes more complicated. It’s just one way changes to the tax code are forcing farmers to change their mindset.”

Ms. Williams pointed out that, “The amount of equipment and software that can be depreciated in a given year has been increased from $500,000 in 2017 to $1 million in 2018. The phase out for the $1-million availability begins after equipment purchases exceed $2.5 million in a given year. However, beginning Sept. 28, 2017, until the end of 2022, 100% bonus depreciation applies to almost all purchases of farm property, including used property. The bonus depreciation phases out beginning in 2023.

“Additionally, new farm equipment can now be depreciated over five years rather than the seven years previously allowed. However, used farm equipment depreciation continues with a seven-year life.

Because Congress eliminated like-kind exchanges for equipmentit kept the provision for real estate transactionsequipment trades will now be considered as two transactions for tax purposes.”

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Big Tech vs. Flyover Country

An update last week at the Real Time Economics Blog (The Wall Street Journal), stated that, “Amazon.com and Google’s decisions to add tens of thousands of jobs to New York and the Washington area reflect a growing divide in the U.S. A few big cities, particularly on the coasts, are soaking up high-tech talent and are also becoming wealthier, more liberal and more ethnically diverse—shifting the economic, political and cultural landscape of the nation, Shayndi Raice and Janet Adamy write.

Smaller cities are also pulling in educated workers, but are having trouble competing for the nation’s most prized jobs and biggest projects, while rural areas are falling behind.”

The Journal indicated that, “As global competition dried up manufacturing jobs in small towns, the U.S. became more dependent on the growth of knowledge and service jobs that tend to proliferate in dense places. Five cities—New York, Chicago, Dallas, Houston, San Francisco—accounted for a third of all Fortune 500 headquarters and half of Fortune 500 firms’ profits last year, according to the University of Toronto’s Richard Florida. The Washington area, which had just four corporate headquarters in 1975, was home to 17 last year. New York had 70, more than any other U.S. city.

“In the past 10 years, employment in U.S. cities has grown 7% and the number of businesses has grown 11%, while employment has contracted in nonmetro areas and the number of businesses there has barely changed.”

In its annual Rural America at a Glance publication, the USDA’s Economic Research Service (ERS) pointed out that, “Since peaking at 10.3 percent in 2010, the rural unemployment rate steadily declined to 4.4 percent in 2017; urban areas followed suit, with unemployment dropping from 9.9 to 4.1 percent.”

However, ERS also pointed out that, “Although urban (metro) and rural (nonmetro) unemployment rates have declined at a similar pace since their peak in 2010, and both are now below their pre-recession levels, growth in employment has been slower in rural areas. Urban employment has grown steadily at about 1.6 percent per year since the fourth quarter of 2009 and had risen 8.2 percent above its pre-recession level by the second quarter of 2018. Rural employment has grown at about 0.5 percent per year, with periods of stagnation (2012-13 and 2016). Estimated rural employment in the second quarter of 2018 was still 1.8 percent below its pre-recession level. Rural America includes 14 percent of the Nation’s population but has accounted for only 4 percent of employment growth since 2013.”

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Real-Estate Use of So-Called 1031 Exchanges, Survived the GOP Tax Overhaul

Robyn A. Friedman indicated this week at The Wall Street Journal Online that, “The tax overhaul enacted last year made a lot of changes, but one provision cherished by real-estate investors survived: so-called 1031 exchanges.

It’s the name for a tax break that lets you defer capital-gains taxes on the sale of a property used for business or investment if you reinvest the proceeds in another business or investment property. It’s often used by large real-estate investment companies, but individual investors—even those who own a single rental-income property—can take advantage of it as well. The ‘1031’ name refers to section 1031 of the U.S. tax code.

“‘You don’t have to be a professional investor to use this tax break to your advantage,’ says Andy Weiser, a real-estate agent with Better Homes and Gardens Florida 1st Real Estate in Fort Lauderdale, Fla. ‘You just have to be a smart investor.'”

The Journal item noted that, “The provision only applies to properties held for business or investment; a personal residence is not eligible for the tax break. You also must complete certain steps at set times. You have 45 days from the date of the sale of the old property to identify potential replacement properties. And you must acquire the new property no later than 180 days after the sale.”

Friedman added that, “Before the tax code overhaul this year, a variety of transactions—not just real estate—qualified for 1031 exchange treatment. These transactions, also called ‘like-kind exchanges,’ were allowed for any type of property used for business or held as an investment, including exchanges of personal or intangible property such as artwork or other collectibles. The new rules now limit exchanges to real estate only.

But many types of real estate qualify. An investor can exchange a single-family home held for investment in New York for a farm in Colorado or a small strip shopping center in Las Vegas, as long as all those properties are used for business or investment purposes.”

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