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ANNOUNCEMENT: We have created a new set of resources to address the unique legal concerns of Community Supported Agriculture ("CSA") farms. Click on our CSA page to learn about creating a CSA membership agreement, worker share agreement, and volunteer waiver. Our CSA page hosts model contracts for a CSA membership agreement, worker share agreement, and volunteer waiver and a link to watch a webinar on CSA legal issues.

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If you are reading this Website, then you are probably well aware of the growing interest in local foods. Consumers seek out local producers for a variety of reasons: some believe that locally-grown food is healthier, safer and tastier.  Others hope that local farmers are more invested in the community and stewardship of the land.  And many people buy locally because they want to learn more about where their food comes from and make connections with the people who produce it.   

 Although consumer demand is the primary motivation for expanded local food networks, national leaders, in an era of bioterrorism threats and increased energy costs, have recognized that direct farm businesses can play a critical role in local and regional food security plans.  For example, the Federal Farmer-to-Consumer Direct Marketing Act (7 U.S.C. Chapter 63) recognizes the importance of direct farm businesses by funding state direct marketing assistance programs and directing a yearly survey to determine what methods of direct farm marketing are being used.

Direct farm businesses can meet these demands while increasing profitability for farmers and local producers.  Selling directly to consumers increases the farmer’s share of the consumer’s food dollar, which often goes predominantly to brokers and processors in conventional food supply systems.  Furthermore, building a connection with customers and the community can make farming a more enjoyable and rewarding experience.

However, managing a successful direct farm business can be difficult due to a labyrinthine set of laws and regulations.  These rules touch upon nearly every action a producer might take, from the obvious (such as paying taxes or hiring employees) to the unexpected (such as designing livestock barns).  Adding to the complexity, direct farm business rules are implemented and enforced by more than a dozen local, state, and federal government authorities that each have their own (sometimes overlapping) requirements.  Just figuring out who to contact about a particular law or regulation can sometimes be a daunting task.  Therefore, the authors developed this Website to help clarify some of the most important rules pertaining to direct farm businesses and to provide guidance on how and where to get correct information about them.  The goal of this Website is to foster a more vibrant direct farm business environment – not only for the farmers who bring locally-grown food to markets within their communities, but also for the consumers who buy that food. 

The introductory section of this Website is divided into four sections, each of which offers some basic information that should be helpful in understanding the other chapters of this Website.  These first four sections provide the general rules, but in some cases exceptions to those rules will apply.  As noted below, farmers who are considering starting (or expanding) a direct farm business should consult with an attorney to ensure full compliance with all applicable rules and regulations.

Acknowledgements

This Guide was made possible, in part, by an Illinois Bar Foundation gift to the University of Illinois Agricultural Law Group and a grant from the Illinois Council on Food and Agricultural Research (CFAR) and the North Central Risk Management Center.  A. Bryan Endres, an Associate Professor of Agricultural Law at the University of Illinois, along with attorneys Jody M. Endres, Michaela Tarr, and Nicholas R. Johnson, developed the content for this Guide.  Chris Bualon and Timothy Smith provided web support and development.  A special thank you goes to Jody Endres for initially conceptualizing and developing a framework for this project. 

 Legal Disclaimers

This Website is not intended as legal advice.  It is not intended to, and cannot, substitute for sound legal advice from a competent, licensed attorney.  Rather, it is meant to help readers understand the many issues that must be considered when establishing and operating a direct farm business.  There is more to farming than just growing crops and selling to customers.  The authors’ hope is that this Website will illustrate the legal issues that direct farm entrepreneurs must consider and then guide them towards experts and additional resources that will set their direct farm businesses on a track towards success.  

The legal information provided by this Website is a general overview of the many laws and regulations that may be applicable to a direct farm business.  The reader should never assume that the information contained herein applies to his or her specific situation without consulting a competent attorney in his or her home state.  Further, though the authors have made every effort to ensure the accuracy of the information in this Website, they cannot guarantee that all of it is correct.  Laws, regulations, and guidelines can change at any time, and the status of laws and regulations in the future cannot be predicted with any certainty.  Therefore, every user of this Website should at all times independently ensure that the legal information is up-to-date before using it in any way.  

Any URLs provided herein are purely for the convenience of the user, and the authors of this Website disclaim any liability for the content of the referenced websites. 

Finally, any opinions, findings and conclusions, or recommendations expressed in this Guide are those of the authors and do not necessarily reflect the view of the funding organizations.

Section II: Using This Website

This Website is divided into two primary sections.  Section I outlines rules that apply to all farming operations, regardless of agricultural product and marketing strategy.  Section II is organized according to agricultural products.  Whether the reader starts with Section I or Section II probably doesn’t matter, but it’s important to consider the information from both sections when constructing a business plan.  Following are a few additional notes about the guide.

Legal-eze: Because this Website attempts to explain the law, the authors must use terms that have precise meaning to lawyers.  Some common English words have a legal meaning that is different or more exact than the common usage, and others are phrases based in Latin.  For the reader’s convenience, there is a glossary of terms at the back of the guide.  For further reference, Law.com’s legal dictionary is a useful website with explanations of many common legal terms.

Internet Links: Throughout this Website, the authors have provided links to websites that provide additional information and resources.  These online resources are highlighted in bold text; for ease of reading, the website URLs are provided in footnotes to the bolded terms.  Internet links and resources do not always remain in one place, but the supporting documents referenced in this Website are public, and a simple Google search on key terms can in some cases locate a broken link or its updated version or location.     

Statutes and Regulations: References to specific statutes or regulations are accompanied by citations in parentheses so that the reader can look up the exact language of the text.  Citations are also a helpful starting point for searching the Internet for more information or contacting the regulatory agency or an attorney.  Below is an explanation of the most common citation formats and websites where the statutes and regulations can be obtained.  In most cases, the first number is the Title, and the numbers following the code’s name are chapters or subsections.

### U.S.C. § ## are federal laws – otherwise collectively known as the U.S. Code.  They can easily be accessed at www.gpoaccess.gov (official site) or at www.law.cornell.edu/uscode/ (Cornell University).  Three of the most common federal statutes cited in this book are the Tax Code, which is in Title 26; the Food, Drug and Cosmetic Act, which is in Title 21; and Agriculture, which is in Title 7.

## C.F.R. ### are regulations implemented by federal agencies.  IRS regulations are in Title 26 and FDA regulations are in Title 21.  Department of Agriculture regulations are divided between Title 7 and Title 9.  Selected CFR titles are available online at  http://www.access.gpo.gov/nara/cfr/cfr-table-search.html

### ILCS ##/#### are Illinois laws.  Unlike the other codes, the number preceding ILCS is the chapter, and the numbers following ILCS are the sections and subsections.  The statutes are available online at http://www.ilga.gov/legislation/ilcs/ilcs.asp.

## IAC ###.### is the Illinois Administrative Code.  It is available online at http://www.ilga.gov/commission/jcar/admincode/titles.html.

Finally, a brief article on how to find laws in Illinois can be found on the University of Illinois Farmdoc website.

Federal vs. State Law: Federal and state law do not always impose the same requirements, and often one establishes stricter standards.  Always comply with the strictest standards – the existence of a more lenient law does not excuse non-compliance with the other government’s standards.

Checklists and Further Resources: At the end of each chapter there is a short checklist of the important issues to consider and/or information on additional resources.

 

Section III: Overview of Administrative Agencies

Before delving into the specifics of the laws and regulations, it may be useful to have a basic understanding of the state-federal regulatory system and which agencies have authority over what operations.  The Constitution gives the U.S. Congress power to regulate any goods traveling in interstate commerce (i.e., goods that cross state lines).  The U.S. Supreme Court has interpreted this to include regulatory power over activities that affect goods traveling in interstate commerce, even if those activities might take place completely within state lines.  In addition, however, the Constitution allocates to the states the power to regulate everything not exclusively reserved for the federal government or protected by the Constitution.  Therefore, states can impose additional regulations on items within their borders that are already subject to federal regulations, as well as regulate items and activities over which the federal government does not have authority.  The one limit on this allocation of power is that federal law is supreme over state law, so if the federal law contradicts or is inconsistent with a state law, the federal law controls.

Federal Agency Rulemaking

When Congress appoints a federal agency to implement rules, it is delegating congressional authority. Therefore, properly implemented regulations have the same authority as a statute written by Congress. “Properly implemented” means that the agency has promulgated the rules according to the Administrative Procedure Act (5 U.S.C. §§ 551 et seq.), which outlines procedures for agency operation.  The most common type of rulemaking procedure is notice and comment rulemaking, in which the agency issues a notice of proposed rulemaking in the Federal Register, receives comments from the public, and issues a final rule that takes into consideration the public’s comments.  The less common form of rulemaking is known as formal rulemaking, which requires a trial-like procedure with hearings, testimony, and final decisions made on the record.  Whether developed through notice and comment or formal rulemaking, all final agency rules are published in the Code of Federal Regulations (CFR).

Agencies also use guidance documents to establish policies that help the agency interpret and apply its own rules.  These documents are also often called policy guides, technical information bulletins, or interpretive manuals.  If not established through notice and comment or formal rule making, policies set forth in guidance documents are not binding upon the agency.  Nonetheless, they help to guide and inform much of agency procedure, and many courts consider them to be persuasive evidence when determining the legitimacy or scope of an agency action.  

State Rulemaking

Illinois has a comparable Administrative Procedure Act (5 ILCS 100) which imposes the notice and comment rulemaking procedure, with notices published in the Illinois Register and final rules codified in the Illinois Administrative Code (IAC).  As noted above, federal laws often overlap with Illinois laws on the same subject.  For example, although the United States Congress has Constitutional authority to regulate all foods that affect interstate commerce, the Food, Drug and Cosmetic Act gives the Food and Drug Administration (FDA) authority only over foods shipped in interstate commerce (21 U.S.C. § 331).  However, Illinois regulates all food –  including that produced and sold entirely within the state - under its own Food, Drug, and Cosmetic Act (IL FDCA) (410 ILCS 620).  Often, the IL FDCA incorporates federal standards as Illinois law.

One exception to this jurisdictional division based on inter- vs. intra-state food sales pertains to product labeling.  Congress has exercised its power over all foods affecting interstate commerce by giving FDA the exclusive authority to regulate labeling of packaged foods (21 U.S.C. § 343-1); for the most part, then, states may not impose additional requirements. 

 

Section IV: The Food and Drug Administration’s Food Code

Every four years, the FDA publishes the FDA Food Code, which is a model regulation for state and local officials to use in regulating food retail and food service establishments.  The Code’s purpose is to provide regulators with a scientifically sound legal basis for regulating the food industry.  States are not required to adopt the Food Code, but a significant number of states nonetheless incorporate it nearly verbatim into their regulations.  Illinois has in large part adopted the Food Code, though it does differ from the federal model language on a few points.  This has several important ramifications for producers in Illinois.

First, FDA publishes many guidance manuals and standards for interpreting and applying the Food Code, as well as the scientific rationale for the rules the Code proposes.  Therefore, if an Illinois inspector, operating under the rules of the Illinois Department of Public Health, requires a particular material or process for production, the mandate likely has roots in the FDA’s standards.  Looking to the FDA’s model rule may help the producer understand the purpose of the requirement or work with the inspector to reach an alternative solution that meets the food safety standards inspectors strive for.

The second consequence of the Food Code’s near-universal adoption is that producers may find it easier to sell products out-of-state.  All of Illinois’s neighbors have adopted some version of the Food Code.  Since the Food Code standardizes the rules, complying with Illinois’s rules brings a producer very close to satisfying both federal and neighboring states’ food safety rules.  To be sure, some additional steps (or inspection certificates) may be necessary in order to sell products across state lines, but most producers who are in compliance with Illinois’s requirements should find the rules for other jurisdictions to be relatively familiar and easy to comply with.

 

Section V: Illinois Department of Public Health

Numerous Illinois agencies regulate agricultural production and marketing - topics which individual chapters of this Guide cover in more detail.  However, the Illinois Department of Public Health has issued general rules that apply to all food sales, which are addressed below.

Adulterated Food

The IL FDCA prohibits the sale of adulterated food (410 ILCS 620/3).  “Adulterated” means “produced, prepared, packed, or held under unsanitary conditions whereby it may have become contaminated with filth or whereby it may have been rendered diseased, unwholesome, or injurious to health” (410 ILCS 620/10(a)(4)).  Further, Illinois Department of Public Health (“IDPH”) regulations require all food sold at retail or at food service establishments to be from sources that comply with all applicable food safety and labeling laws (77 IAC 760.100; 77 IAC 750.100).  This means everything sold in Illinois, other than raw, unprocessed commodities, must come from an inspected and licensed facility.

Construction and Sanitation of Food Processing Facilities

In addition to oversight of food content and labeling, the IDPH also has the authority to regulate the construction and sanitation of food production and processing facilities under the Illinois Sanitary Food Preparation Act (ISFPA) (410 ILCS  650).  The Illinois Department of Agriculture (“IDOA”) enforces the ISFPA for meat and poultry facilities (410 ILCS  650/11).

IDPH inspectors certify facility compliance subject to general regulations concerning the construction, equipment, and processes for producing food (77 IAC Part 730).  These regulations mandate surface sanitization, vermin control,  sewage disposal, adequate clean water, sanitary facilities for employees, and adequate sanitation principles and processes.  The regulations are necessarily vague because they apply to a variety of production facilities, and inspectors will interpret each regulation based on its applicability to a particular operation.

Food Processing Requirements

Processors must also comply with requirements that are specific to the type of food processed.  IDPH bases these requirements on the unique health and safety risks inherent to each food, and many times, decisions on adequacy are made by local regulators or individual inspectors.  IDPH communicates guidance to its inspectors through training and technical bulletins, which are guidance documents that facilitate consistent interpretation and application of the regulations, but are not binding rules.  Therefore, an individual inspector’s or local IDPH office’s interpretation of the applicability of rules to unique facts may differ.  In any case, inspectors cannot allow a facility to fall below the general standards established in the regulations.

Although IDPH is the primary agency regulating direct-to-consumer sales of food in Illinois, additional agencies have significant regulatory authority over the food supply chain.  The following chart summarizes the agency activities.

 

AGENCY OVERSIGHT OF DIRECT FARM BUSINESS ACTIVITIES

Activity

Federal

State

Environmental Permits

Environmental Protection Agency

- Illinois Environmental Protection Agency

- Illinois Department of Natural Resources

- Illinois Department of Agriculture

- Local and County zoning boards

Employees & Taxes

- Internal Revenue Service

- Occupational Safety and Health Administration

- Illinois Department of Revenue

- Illinois Department of Labor

- Illinois Workers Compensation Commission

Animal Welfare

USDA Animal and Plant Health Inspection Service

Illinois Department of Agriculture

Meat, Poultry and Eggs

USDA Food Safety Inspection Service, for products shipped across state lines

Illinois Department of Agriculture, for products produced and sold entirely within Illinois

Food other than Meat, Poultry and Eggs

Food and Drug Administration, for products shipped across state lines and for labeling of all packaged foods

Illinois Department of Public Health, Division of Food, Drugs and Dairies, for all food sold in Illinois

Organics

USDA Agricultural Marketing Service

n/a