 Financing and Debt Issues - Recent Legislative Issues in Farm and Ranch Financing and Business Operations
Introduction
Many of us act as lawyers for farm business and lenders to farm businesses or, in many cases, for both. The purpose of this paper is to provide an overview of, and resource material for lawyers in dealing with, the Agricultural Operation Practices Act ["AOPA"] and the Natural Resources Conservation Board Act ["NRCB Act"]. The AOPA and NRCB Act must be read together as the two separate pieces of legislation jointly impose a regulatory registration, compliance and enforcement regime that can impose significant up-front and compliance costs for our farming clients, and expose lenders to significant risks in asset depreciation, customer cash flow and realization on security.
As legal counsel, we have a duty to consider the implications of the AOPA in our advice to our farming and lending clients as we act in estate planning matters and in purchase, sale and financing transactions. At the very least, we should inquire into whether or not our farming clients (or their lenders) are aware of the AOPA and advise them to consider the AOPA before making important business decisions.
The AOPA is potentially relevant to more than just our clients who operate a confined feedlot operation ["CFO"]. For example, many of our farming clients invest heavily in developing beautiful yard sites and residences, the value of which can be dramatically affected if an adjacent CFO is developed or spreads manure within the permitted buffer zone of 150 metres.
An understanding of the legislation should allow us to advise our clients who are CFO operators as to their obligations so as to avoid potential complaints, and also to provide opinions and strategies to those who wish to oppose development or make a complaint about a CFO. For example, Section 11 of the NRCB Act provides for funding for interveners to assist in the preparation and presentation at a proceeding of the Board (for example: legal and consultant's fees). Advising a client to consider such an application could make you even more popular than you already are. An indirect benefit should be that lender security is improved as farmers and farm businesses become aware of the AOPA and NRCB Act and learn how to operate within the regulatory regime.
Finally, we should consider the AOPA in the advice and legal opinions we provide to lenders.
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pdobbie@dcllp.com
