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USDA and Tribes at Odds Over Hemp Production Plans

By Joe Morey

News Editor

The United States Department of Agriculture (USDA) held a two- day tribal consultation in Washington, D.C. on May 1, regarding the 2018 Farm Bill where many tribal leaders shared their ideas, concerns and suggestions on implementation of the bill.

LCO Council Member Tweed Shuman attended the consultation to discuss hemp, which is an important part of the farm bill to Lac Courte Oreilles because of its consideration of hemp as a form of economic development.

Bill Allen, Legislative Director at the USDA’s Agricultural Marketing Service (AMS) discussed the hemp production program. Allen gave technical assistance to Congress when they drafted the hemp legislation in the farm bill and is now responsible for regulatory actions of the hemp provisions.

Currently, the USDA is proposing a delay in the approval process of tribal ordinances governing their own hemp operations.

Shuman told the AMS, “This delay would put tribes at a disadvantage in states that have pilot programs like Wisconsin, putting the tribes another year behind.”

Shuman said the USDA is allowing states to have pilot programs and that tribes should’ve had the same considerations.

Shuman explained at the consultation that LCO’s agricultural land is soil tested and ready for planting right now. He said he disagrees with the USDA’s position that regulations must be in place prior to any tribal regulatory plans.

“Since the statute does not explicitly require a final rule before approval of regulatory plans, the USDA can approve tribal regulatory plans now,” Shuman stated. Allen disagreed and stated it was a statutory mandate for regulations to be in place prior to approval of regulatory plans.

Allen added his goal is to have regulations in place by the 2020 crop year and is working towards a speedy effective date for the plans.

A council representative from the Ft. Belknap tribe said she agreed with Shuman. She said tribes are sovereign and the USDA has the authority to temporarily approve tribal regulatory plans with pending adjustments after the final USDA regulations are published. She further urged the USDA to implement a waiver for tribal governments of the final hemp regulations.

Shuman told LCO News that LCO needs the go head from the USDA before ordering seeds and beginning their hemp operations. He said they already have land tilled and ready to go near the Wastewater Treatment facility. Shuman added he has high hopes the tribe will get a crop in this year.

Shuman said he is disappointed the USDA allowed states to start pilot programs and left the tribes out of this process.

“We respectfully ask the USDA to consider creative solutions to allow tribes to produce hemp prior to enactment of the USDA regulations, while staying within the confines of the law,” Shuman said at the consultation. “We believe that the relevant statutory language in the 2018 Farm Bill allows for the USDA to exercise its discretion and approve tribal regulatory plans prior to implementing final regulations.

“As discussed during the recent tribal consultation session, many tribes, like LCO, are interested in utilizing hemp production as a form of economic development, yet are concerned that tribes will be left out of the market due to the delay in approving tribal regulatory plans,” Shuman continued. “Although the legalization of hemp only occurred with the passage of the 2018 Farm Bill in December 2018, hemp is reportedly already a one-billion-dollar market, with projections showing it doubling by 2022. Should tribes, like ours, be forced to wait until the 2020 planting season to begin hemp production, as contemplated by the USDA, we will miss out on an entire year of potential revenue. This will provide even longer lead time for large hemp producers to corner the market and leave little space for tribes to enter.”

Shuman also stated, “Unlike tribes, states were included in the 2014 Farm Bill, which allowed for state departments of agriculture or institutions of higher education to grow industrial hemp for research purposes through a pilot program. Until the 2018 Farm Bill hemp provisions are implemented, the USDA has made it clear that the 2014 Farm Bill hemp provisions will stay in effect. This essentially allows states to engage in the production of hemp, while prohibiting tribes from engaging in the same activity.”

A summary report of the consultation released by the AMS stated a Narragansett Indian Tribe representative said states are already involved in hemp production and Rhode Island is considering taxing cannabidiol (“CBD”) products at forty percent, leaving no room for tribes in the market.

“A tribal representative from the Sault St. Marie Tribe asserted that the hemp regulations do not fall in line with the regulation of other crops. She stated that the testing of spruce trees is not required, but the trees can be used for medicinal purposes or lumber,” the report stated.

Shuman added, “As sovereign governments that are owed a trust responsibility from the federal government, the effects of federal policies tend to have a different impact on tribes than states. This impact can be seen through the discussion surrounding the hemp provisions, where the delay in approval for regulatory plans has a much greater effect on tribes, essentially temporarily stifling an economic development opportunity which could provide revenue for tribal governmental services and tribal citizens.”

The US Secretary of Agriculture, Sonny Perdue, told the tribal leaders that he would like tribes to be allowed to participate in hemp production under the 2014 Farm Bill, while waiting for the 2018 Farm Bill regulations to be in place. He planned to talk to his legal team and look for creative solutions to implement this opportunity.

According to the summary report, Angela Kennedy from the Seneca Nation also added to the hemp conversation by offering that the USDA is selectively implementing portions of the 2018 Farm Bill. Under the 2014 Farm Bill, U.S. territories (Puerto Rico) were not included in the definition of states; instead, territories were included in the 2018 Farm Bill—similar to tribes. However, the USDA has given U.S. territories the green light to grow under the 2014 Farm Bill, but has yet to allow the same for tribes.

Shuman added to this stating not only does this affect individual tribes, like LCO, who may need the revenue that hemp production could bring in, but it affects the tribal hemp industry as a whole.

“Many companies have already been involved in the hemp industry and now have the upper hand to easily corner the market, leaving little space for tribes to enter,” Shuman said. “As an example, one company reported selling 25,000 pounds of hemp in 2018 with expectations to sell 350,000 pounds in 2019 and 2 million pounds in 2020. This is the competition that tribes will have to face entering the market late, competition that is increasing in exponential numbers by the time the 2020 planting season occurs.”

Shuman also said the 2018 Farm Bill removed hemp from the schedule I drug category under the Controlled Substances Act.

“If hemp is no longer a controlled substance, but rather an agricultural crop, it should no longer be treated as a controlled substance. The USDA continues to treat hemp as a controlled substance by making tribes jump through hoops in order to grow hemp in their own territory,” Shuman said.

According to Shuman, the USDA could easily work within the confines of the 2018 Farm Bill while still respecting and acknowledging tribal sovereignty. “The 2018 Farm Bill delegates to the USDA the power to implement any federal regulations and guidelines related to hemp production. The USDA should issue temporary guidance allowing tribes to begin cultivating hemp within their territories prior to implementation of the USDA’s final regulations. The USDA could do this by approving tribal regulatory plans that meet the statutory criteria, since the 2018 Farm Bill also does not allow for the USDA to require more stringent regulations in tribal regulatory plans that the statute sets forth.”

Summary Report of the Hemp Listening Session

The hemp listening session was not part of the 2018 Farm Bill tribal consultation, but took place at the close of the tribal consultation and was hosted by Bill Hoffman, chief of staff for the USDA National Institute of Food and Agriculture and Sonia Jimenez, Deputy Administrator for the USDA AMS. Representatives from the BIA and AS-IA’s office were also invited and in attendance, but did not participate in the session. USDA representatives opened by explaining that there have been informal meetings with tribes prior to this consultation, and they will continue to informally gather information from tribes while developing the hemp regulations. The USDA representatives also noted that once the regulations are published, ex- parte proceedings begin and the USDA officials can no longer speak to anyone about the regulations.

Heather Dawn Thompson opened the conversation on behalf of tribes by bringing six issues into consideration for the USDA representatives. First, she asked that the USDA either read tribes into the definition of states under the 2014 Farm Bill or waive tribes from complying with the 2018 Farm Bill hemp provisions and grant temporary authorization for the 2019 growing season with the understanding that another review of tribal regulatory plans will take place after the regulations are finalized. Second, she flagged the issue of the word “interstate” in the 2018 Farm Bill, which allows for interstate commerce of hemp, versus intrastate commerce, which would encompass moving hemp off the reservation into the state. She explained and hoped that states would not attempt to use the interstate terminology included in the Farm Bill against tribes. Third, Ms. Thompson explained that the definition of Indian Territory should not be included in the USDA regulations because Indian Territory is already defined through statutes and case law outside of the USDA’s authority. Fourth, she noted that the statute only requires disposal of hemp that falls outside of the legal tetrahydrocannabinol (“THC”) level and does not require destruction, and she hopes that the USDA regulations will not mandate destruction of the crop. Fifth, she asked that the required land descriptions for tribal regulatory plans utilize pre- existing processes so that new descriptions do not need to be created. Finally, she asked for the inclusion of Indian law experts in drafting the USDA regulations.

Councilman Shuman of LCO followed on these issues by explaining that tribes would like a waiver as described by Ms. Thompson and do not want to wait a full year to begin producing hemp. Ms. Houle, on behalf of the Seminole Tribe of Florida, asserted that the hemp playing field is not level for tribes, as Kentucky just announced that it made $50 million in hemp production last year. Acting Director Cullo promised that the Office of Tribal Relations would distribute information as it is received now that the USDA is reconsidering tribes within the context of hemp. Discussion also took place surrounding the fact that “states” were not defined under the 2014 Farm Bill, and that the interpretation meant the fifty states, leaving tribes out. A tribal representative pointed out that “territory” was also not included under “state” in the 2014 Farm Bill, until the USDA just recently decided to grant Puerto Rico the ability as a territory to grow under the 2014 Farm Bill, as announced during the tribal consultation.

Ms. Thompson then laid out three legal alternatives for the consideration of the USDA to allow tribes to produce hemp under the 2018 Farm Bill. First, she stated that tribes are nations and hold status as a political class, not racial. Second, the U.S. Office of Personnel Management has the short-term authority to hire Indian law experts to assist in implementation of the hemp provisions. Third, she reiterated points surrounding the waiver provision under Executive Order 13175, which allows for tribal waivers for any discretionary decision of a statutory or regulatory requirement. She explained that when the USDA included territories under the definition of states in the 2014 Farm Bill, it implemented a portion of the 2018 Farm Bill, triggering a discretionary decision. Tribes have submitted a request for a waiver, and she asked the USDA to fulfill that request. Ms. Thompson further discussed that states were legal signatories to the U.S. Constitution, while tribes pre-date the Constitution and require different, but not special, treatment. She also discussed the Supreme Court caselaw that sets out the Indian canons of construction to resolve any ambiguity in federal statutes involving tribes to be resolved in favor of the tribes.

Patty Marks, on behalf of the Oglala Lakota Nation, then discussed her work on the hemp provisions in the 2018 Farm Bill during its drafting stage, and announced that she had received assurance that the language in the bill was adequate for a tribe to grow hemp in a state where hemp was not legalized. She mentioned that the language in the Farm Bill does not call for a national procedure for hemp production, and that the USDA is attempting to reinvent the wheel when hemp pilot programs already implement testing procedures and other processes. She also noted that tribes should not have to follow the same procedures as states as long as they accomplish the same result. Ms. Marks then closed by reiterating her earlier point that the USDA does not have the authority to determine what constitutes tribal territory.

Rob Porter discussed self-governance programs with tribes and other agencies. He explained that a self-governance compact essentially requires tribes to follow the law while implementing the programs and governing themselves, but subjects tribes to audits to ensure compliance. He noted that the hemp provisions are a skeletal framework and the agency does not need to complicate the process as tribes have proven that they can self-regulate, i.e. in the context of Indian gaming.

Other tribal leaders chimed in that the USDA is making the process more difficult for tribes and asked the USDA to tentatively approve tribal regulatory plans so that tribes may begin economic development. USDA representatives announced that they plan to issue an inter-final rule in November 2019 and that it will be effective immediately, but are still discussing the plan internally.

The hemp listening session was also an important avenue for tribes to provide feedback specifically on the hemp provisions, and make USDA officials aware that tribes are ready and able to produce hemp in a lawful and regulated manner. As the USDA disseminates information related to its exploration of solutions for tribes to produce hemp prior to the implementation of final regulations, the Firm will ensure that the Tribe receives the latest updates.

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