Minnesota Court of Appeals allows Goodhue Wind Farm

Posted on July 22, 2012 by mnfarmbusinesslaw

In June 2011, the Minnesota Court of Appeals ruled that a permit issued to AWA Goodhue Wind was validly issued. The Minnesota Public Utilities Commission (“PUC”) issued a permit in Fall 2012 that allowed 50 wind turbines to be built about 1,500 feet away from homes. In issuing the permit, the PUC disregarded a Goodhue County ordinance that required wind turbines in the project to be built about 2,701 feet away from residences that are not participating in the project.The Court ruled that the PUC had “good cause” to disregard the ordinance.

The setback required by the ordinance is intended to reduce exposure from turbines. Advocates of the ordinance are concerned about the noise and “shadow flicker” from turbines, which they claim negatively impacts health and safety of the turbines. Shadow flicker is the effect of alternating light intensity caused by the rotating blades of a turbine. See link below for a video demonstrating this effect. The PUC and the Court relied, in part, on a study conducted by an engineering consulting firm on behalf of AWA Goodhue Wind, which concluded that the turbine noise and shadow flicker would be “minimal.” See link below for study. The Court also agreed the PUC’s finding that substantial evidence shows the proposed siting does not present adverse health or safety impacts due to turbine noise or shadow flicker.

The Court of Appeals also scrutinized the impact of the county ordinance. Looking to Minnesota’s 2007 Renewable Energy Mandate, which calls for 25% renewable energy by 2025, the Court noted that the ordinance could interfere with that agenda. The Court stated that the setback required by the ordinance would essentially prevent all wind energy projects in Goodhue County, noting that it is an ideal location for wind development.

With the blessing of the appellate court, AWA Goodhue Wind can now move forward with the rest of the extensive permitting process. The project will reportedly require about $180 million in financing. In addition, a permit for incidental take for bald eagles and completion of an avian and bat protection plan will be required. On top of that, the turbines must be operational by the end of this year to be eligible for an energy production tax credit, which amounts to millions of dollars that will not be there January 1 as the credit will expire after this year.

What this case really demonstrates is how vitally important it is to be fully prepared at the administrative level for review by a court. The courts in this case relied on evidence presented to the PUC on application for a permit, which was appealed. The Court’s approach also raises concerns for future wind projects in Goodhue County, though the Court did make it clear that the county has the authority to enact such ordinances. The question is whether “good cause” exists for a proposed project to disregard the increased setback requirement, which is made on a case-by-case basis. Ultimately, what worries many is that sidestepping the ordinance will give the state too much local control and pit neighbor against neighbor. It remains to be seen whether the case will proceed to the Minnesota Supreme Court.

As the state and nation work to expand our energy options, knowing the ground rules is important for anyone with skin in the game.

Shadow Flicker Video

http://legalectric.org/f/2011/02/awa-ex7-a-20111-59007-09.pdf

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Minnesota Estate Tax Changes 2011

Posted on July 19, 2012 by mnfarmbusinesslaw

Last summer, as part of ending the 20-day state government shutdown that began July 1, 2011, Governor Dayton signed an omnibus tax bill that contains estate tax relief for qualifying small business and farms.  The bill’s stated purpose is to allow farms and small businesses to stay in the family. This post provides a brief overview of the estate tax changes and what it means to Minnesota families.

Being raised on a farm in southeastern Minnesota, I know how important it is to keep the family’s farm heritage preserved for future generations. 

The new estate tax law changes the exemption amount for certain small business and farm properties. The law essentially attempts to align the Minnesota exemption with the federal exemption of $5 million. Currently, under Minnesota law the exemption is only $1 million per person. However, for those meeting the necessary requirements the exemption goes up to $5 million. Qualifying small business and farm properties are those that will pass to a qualifying heir – that is, one who will continuously use the property for three years after the date of death. This would allow most family small businesses and farms to avoid paying any estate tax at all so long as they qualify.

A small business must satisfy all of the following requirements to qualify for the exemption:

  1. Its value was included in the federal adjusted taxable estate;
  2. It must be a closely held business;
  3. The decedent or decedent’s spouse must have been engaged in or materially participated in the trade or business;
  4. The gross annual sales of the business are $10 million or less;
  5. The decedent continuously owned the property for the three-year period before the date of death;
  6. The business must pass to a qualifying heir who must use it continuously in the operation of the trade or business for three years following the date of death of the decedent; and
  7. The estate and the qualified heir elect to treat the property as a qualified small business property.

A farm property must satisfy all of the following requirements to qualify for the exemption:

  1. Its value was included in the federal adjusted taxable estate;
  2. The property consists of a farm, as defined by section 500.24 of Minnesota law (farm organizations statute), and was classified as the decedent’s or decedent’s spouse’s agricultural homestead, and as a class 2a property;
  3. The decedent continuously owned the property for the three-year period before the date of death;
  4. The farm property must pass to a qualifying heir who must use it continuously in the operation of the trade or business for three years following the date of death of the decedent; and
  5. The estate and the qualified heir elect to treat the property as a qualified farm property.

The new law is an attempt to make it easier to keep farms and small business in the family by recognizing the increasing value of such property. Ensuring strict compliance with the law will be key for any family wanting to take advantage of this relief.

 UPDATE: the qualified farm property deduction requirements were changed so that the property must continue to be class 2a property only; there is no longer a requirement that the qualifying heir actually farm the property.
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MN Court of Appeals: Ag Workers Paid on an Hourly Basis Must Receive Premium Overtime Compensation

Posted on July 17, 2012 by mnfarmbusinesslaw

Last week, the Minnesota Court of Appeals affirmed an order by the Minnesota Department of Labor and Industry (DLI) that Daley Farm must pay overtime premium wages to its agricultural employees. The Court ruled that the exemption in the Minnesota Fair Labor Standards Act (MFLSA) for agricultural workers, Minnesota Statutes § 177.23, subd. 7(2) (2010), does not apply to workers who are paid on an hourly basis.

Under the MFLSA, employers must pay minimum wages and overtime compensation to all employees unless the employees are specifically exempt under the law. Workers working more than 48 hours in a workweek must be paid at a premium pay rate of 1-1/2 times their regular rate. The effect is that workers paid on an hourly basis have a right to premium overtime compensation. To be in compliance with the decision, and the law, farm employers should pay the premium overtime compensation to those employees that work over 48 hours in a workweek and are paid on an hourly basis.  

The issue in the case was a matter of statutory interpretation, specifically on the word “salary.” Minnesota Statutes § 177.23, subd. 7(2) provides that an employer does not have to provide premium overtime compensation for certain agricultural workers. The statute excludes from the definition of employee “any individual employed in agriculture on a farming unit or operation who is paid a salary greater than the individual would be paid if the individual worked 48 hours at the state minimum wage plus 17 hours at 1-1/2 times the state minimum wage per week.” Daley Farm argued that its employees meet the statutory exemption because their weekly wages exceed the threshold set by the statute. The DLI argued that agricultural workers must be paid on a salaried – rather than hourly – basis in order to fit within the exemption. 

The Court relied on the rule promulgated by the DLI that states “a salary is not an hourly rate. An employee is paid a salary if the employee, through agreement with an employer, is guaranteed a predetermined wage for each workweek.” Minn. R. 5200.0211. The Court rejected Daley Farm’s argument that the federal FLSA, which exempts agricultural workers without regard to their salaried or hourly status, preempts a narrower MFLSA agricultural exemption and instead held that employers should comply with the law that sets the higher standard. The takeaway is that the MFLSA and the DLI rule requires employers to pay their hourly ag workers premium overtime compensation. 

 
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Cheers!

Posted on July 16, 2012 by mnfarmbusinesslaw

This is my first post. I will use this space to compile my thoughts and observations on agriculture and business and the law, particularly in Minnesota. Stay tuned as I find the best way to use this new tool.

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