OFFA Lobbyists, Richard Kosesan and George Okulitch

OFFA Lobbyists, Richard Kosesan and George Okulitch

BY RICHARD KOSESAN

Oregon’s 2017 Legislative Session convened on February 1, and came to a close on July 7, 2017, just three days ahead of the Constitutional deadline.

Financial issues, and balancing the state’s 2017-2019 General Fund budget, were at the forefront of nearly all discussions throughout the session.  Despite the rhetoric, legislators were able to balance the budget without a significant personal or business income tax increase.  The only exceptions were what is referred to as a “provider tax,” to assist with funding the Oregon Health Plan, and a major increase in transportation taxes and fees (not in the “General Fund”).

Oregon did not face a revenue shortfall, nor did it face the massive budget deficit that legislators and the media opined about early in the session.  When the dust settled, legislators had adopted a General Fund budget of $19,858,791,680 for the 2017-2019 budget period, an increase of approximately 10.4 percent over the 2015-2017 budget period.  Not exactly “the sky is falling” hype heard from the media.

ln general, this legislative session was a very hostile environment for Oregon farmers, ranchers, and business owners; especially small or family operations that do not have particular “political pull” with the majority politicians in Salem.  It was a session that agriculture, natural resource, and small business lobbyists were happy to have survived without terrible and long-term damage to our clients.

Positive Momentum

On the positive side, several of the Oregon Family Farm Association’s (OFFA) proposals were successfully passed and signed into law.

SB 520, introduced by OFFA, brings clarity to some of the election provisions associated with irrigation districts; a positive step forward to avoid local conflicts.

A second bill, SB 634, will have a very positive impact for agriculture. Our amendments to SB 634 were adopted, expanding the definition of “woody biomass” (for renewable energy generation) to materials that grow on a farm or rangeland or are a by-product of agriculture or related activities.  The definitional change will likely result in turning what has traditionally been considered waste debris into what may be profitable by-products.

Livestock-Related Issues

Governor Brown originally proposed to eliminate much needed funding for “wildlife services.”  Effective lobbying by agricultural lobbyists ensured that funding was maintained through both the Department of Agriculture and the Department of Fish & Wildlife budgets.  A close call, but a win.

SB 785 aimed to curb the reasonable use of animal antibiotics, but was ultimately defeated.  Additionally, legislation requiring a licensed veterinarian to provide a written prescription for animal pharmaceuticals (SB 222) was rejected.

Another issue that failed was SB 6, which would have required anyone engaged in trapping activities to check traps at least once during each 24-hour period and to post signage within five feet of any trap set on public land.  The bill died in the Senate.

Pesticide-Related Issues

SB 499 would have dramatically expanded potential liability for those engaged in farming or forestry practices using pesticides.  The measure would have allowed a private right of action against the farmer or forester, in certain pesticide related conflicts.  This very dangerous bill died, but we will see it again soon.

SB 954 was directed at forestry practices and would have required anyone applying pesticides by air to ensure an application does not occur within a watershed supplying water for human consumption to a residence or school, or within a strip of at least 60 feet in width adjacent to the boundaries of such a watershed.  Obviously the OFFA supported our friends in the forestry industry, as regulations applied to forest practices typically make their way into bills proposing further regulation of farming practices. This measure died in the Senate Committee.

Water-Related Issues

HB 2706 represented the introduction of a “water tax.” The measure would have established an annual “management fee” of $100 on each primary and supplemental water right held by an individual.  The fee would have been capped at $1,000 for those individuals holding multiple rights.  Fortunately, the measure did not advance during the legislative session.

HB 2705 would have required agricultural water users to install measuring devices and report their water use on a schedule set by the Water Resources Commission.  Failure to install such devices, and comply with the associated reporting requirements, could have resulted in a civil penalty of up to $500 each day.  The measure failed to advance.

Cooperative Reform

With the recent failure of Pendleton Grain Growers (PGG) appearing to be heading towards costing farmers a great deal of money, and other high profile cooperative failures in the recent past that have cost Oregon family farmers tens of millions of dollars, OFFA introduced two simple and straight-forward reforms to Oregon cooperative law to protect individual farmers.  Cooperatives have special exemptions in Oregon state statue, contained in Oregon Revised Statues Chapter 62.

SB 523 would have restated the current federal law that board members of a cooperative owe the members of the cooperative a fiduciary duty (A legal obligation of one party to act in the best interest of another.), and then the bill would have specifically added that officers/executive staff also owe the members a fiduciary duty.  This is a very important change so that an executive of a co-op is not motivated to hide, or misstate, financial difficulties to the farmer/members in order to protect the manager’s high paying job in the short-term — but which ends up costing family farms millions of dollars in the long-run.

SB 524 would have provided that a grower’s contract is void if a board member, officer, employee or agent of a cooperative misrepresents the financial condition of the cooperative or misrepresents the terms or conditions of the contract to induce a grower to enter into a contract.  Basically if a farmer is defrauded into signing a long-term contract with a cooperative, the contract could not be enforced against that farmer/member.

OFFA’s two common sense bills were fiercely opposed by aggressive paid lobbyists for cooperative management.  This sent a very alarming message: why would cooperative managers oppose bills that protected their own members from a bad player among them?  One Oregon agricultural cooperative’s management even asserted that the two bills were specifically aimed at them, which, based on how the two bills would have protected cooperative farmers/ members, is a very shocking statement to claim.  The two bills were aimed at stopping cooperative executives from putting their own interests before those of their members, and the bills clearly hit a tender nerve with cooperative management.

With the inexplicably strong opposition to these simple and common sense fiduciary reforms, the OFFA board chose to focus on other issues in 2017.  However, the fierce intensity of opposition from cooperative management, along with the recent high profile financial failures of cooperatives, demonstrates that there are major issues for agriculture to address in the near future.

The Oregon Family Farm Association will be working with farmers and ranchers around the state to make sure that a few rogue executives do not seek short term personal gain by exposing farmers/ranchers to extreme financial risks, nor undermining the confidence and legitimacy of agricultural cooperatives in the future.