Dean Mead’s Tax Department handles tax planning issues for businesses and individuals. The attorneys in our department have extensive experience in a full range of…
Florida’s citrus industry has been battling the spread of the citrus canker disease for more than a decade. A product of this battle was the Citrus Canker Eradication Program (the “CCEP”), which was created and managed by federal and state officials for the stated purpose of stopping the spread of citrus canker and eradicating it from Florida. In an attempt to control the disease, the CCEP developed and pursued a system for detection of the disease on a large scale; created strict quarantine, marketing and shipping procedures; and demanded mandatory eradication of diseased trees, as well as healthy trees within a 1,900 foot radius of a diseased tree.
Compensation for this involuntary eradication was handled through the CCEP in Miami, which provided owners compensation for lost trees and lost production income. In the Fall of 2005, the United States Department of Agriculture (the “USDA”) appropriated $200 million in funds to the CCEP for the compensation of claims, an amount projected to handle claims for trees destroyed due to canker identified through June 2005. Recently, the federal government has stated that it will not fund the eradication of citrus trees any longer, but USDA officials have indicated they will seek funding to cover existing claims, i.e., trees eradicated pursuant to an Immediate Final Order as of January 11, 2006. Due to this lack of federal funding and support, the CCEP has put a moratorium on pushing and eradicating healthy trees and will be undergoing major, if not complete, reorganization.
As a proactive response to the impact of citrus canker upon the Florida citrus industry, Dean Mead established the Citrus Canker Task Force (the “Task Force”) early last year. This Task Force consists of attorneys from each of Dean Mead’s offices who practice in different areas of the law such as taxation, real estate, environmental regulation, litigation, and eminent domain. The Task Force devotes research and guidance to Florida citrus growers and their advisors (such as attorneys and accountants) on a variety of legal issues, including: tax consequences and planning opportunities related to receipt of compensation payment under CCEP; protecting property rights and preserving claims for compensation; and a variety of contract issues related to insurance claims, loan covenants, and marketing and fruit purchase agreements.
The Task Force has participated in four seminars throughout the State. The first seminar, hosted in October 2005 by Saunders Real Estate, LLC, was attended by approximately 100 growers and addressed the following topics:
1. the mechanics of the eradication program; 2. the legal matters and concerns associated with the Immediate Final Order and required Waiver from grove owners; 3. the types of compensation available to grove-owners; 4. how crop insurance effects claims for compensation; 5. how the IRS treats such compensation payments; and 6. how to maximize return on compensation payments and reduce tax liability by deferring the tree and lost production compensation payments under §1033, IRC, and expensing replanting costs under §263A, IRC.
The second seminar was hosted in November 2005 by the Indian River Citrus League in Vero Beach. For this presentation, the Task Force teamed up with Ken Bedat from the CCEP office in Miami. In addition to the Task Force presenting the material above, Ken Bedat provided informative insight regarding the policy used by the CCEP for compensating grove owners whose trees were eradicated pursuant to an Immediate Final Order.
The Task Force recently made two presentations at the Indian River Citrus Seminar held in Fort Pierce in January 2006. These presentations were part of a two day round of seminars and conferences for grove owners from around the State. Since the USDA had just recently announced that it would not continue to fund the CCEP, and the CCEP was in the wake of major changes, the Task Force focused on the steps grove owners need to take to preserve their property rights while the new program is being developed. The Task Force attempted to ease grove owners concerns about the new developments with the CCEP and address the direction in which the CCEP is likely headed, which is implementation of a program based on best management practices (“BMPs”). Other new developments were discussed such as Agricultural Commissioner Charles Bronson’s efforts to restructure or invalidate the 1,900 foot rule and some of the proposed changes to crop insurance policies. The Task Force also briefly covered the tax issues described above.
One of the main functions of the Task Force is to keep our clients apprised of the most current information and developments associated with the CCEP. The Task Force will endeavor to take a proactive role to help shape some of the new polices for the program, including, but not limited to, helping to establish the new BMPs for grove owners, supporting legislative changes to the tax code and other areas of Florida law to encourage the retention of a viable citrus industry in Florida. On a smaller scale, but no less important than helping shape policy and law, the Task Force works with our clients to make sure that their claims for compensation are adequately protected and that they are maximizing their benefit from a tax perspective.
Our Citrus Canker Task Force is committed to being at the forefront of guiding our clients through these rough waters and providing leadership on issues that may dictate the future of the Florida citrus industry.