TARS policy addresses regulatory inconsistency

Assists farmers and ranchers deal with environmental claims

CALIFORNIA – A new, first-of-its-kind insurance service aimed at fending off costly environmental claims against farmers and ranchers has the potential to level the playing field between regulatory agencies and the agricultural community, according to those in the North Bay familiar with the policy.

The Agricultural Regulatory Services, or TARS, was launched by Newport Beach-based Alliant Insurance Services in late August as a counter balance to what many describe as heavy-handed and inconsistent enforcement practices from a wide web of governmental agencies.

It has been met with much acclaim from brokers who will administer it as well as the Sonoma County Farm Bureau.

“In spite of a lot of conservation efforts that farmers take part in, sometimes there is a regulatory quagmire,” said Lex McCorvey, executive director of the Sonoma County Farm Bureau.

Santa Rosa-based Vantreo Insurance Brokerage was endorsed as a brokerage with enough specialty experience in the agriculture sector, one of 25 such firms throughout the state that will work with Alliant in delivering coverage. It just began rolling out the service last week, according to Vice President Pam Chanter.

“They just recently rolled it out, and it’s proven to have a great response in the agricultural industry,” Ms. Chanter said, adding that the service will further add to its agricultural specialties, which have been endorsed by six out of Sonoma County’s 12 American Viticulture Areas.

The policy will act as a legal defense fund for agricultural business owners accused of environmental violations by offering an average of $250,000 worth of coverage for discovery and legal fees, with a premium of $2,500 annually.

Ms. Chanter said premiums could range slightly depending on size of farm, the type of livestock, whether there is pesticide manufacturing, as well as other factors. Ultimately, though, the variations will be modest, she said.

It also offers a $5,000 sub-limit on water issues and a $2,500 sub-limit for criminal charges that are often tacked onto a list of alleged environmental violations, according to Matt Gowan, vice president of Alliant in Sacramento.

“If it turns out an allegation is true, that’s not a covered loss,” he said, adding that environmental engineers will be dispatched by the insurers to investigate any alleged violation.

It’s a unique policy, Ms. Chanter said, because it’s specifically geared toward agriculture, whereas other defense policies were broader in industries and didn’t provide specialty counsel.

Brokers will work with attorneys who specialize in environmental law and are well-suited to combat environmental charges from agencies ranging from the U.S. Fish and Wildlife Service to the U.S. Army Corps of Engineers.

The policy, only available in California, does not insure against groups like the Sierra Club or People for the Ethical Treatment of Animals. That may occur in the future, Mr. Gowan said. The service may also be expanded into other Western states like Oregon and Washington, where Mr. Gowan said farmers have faced similarly inconsistent regulation. Farmers in the Midwest seem to be facing fewer issues with regulation, he added.

The initial focus for the policy was ranchers and farmers throughout the Central Valley, but inquiries from all sectors within agriculture prompted a broader target of clientele, Mr. Gowan said.

“We’ve got a pretty good spread across the state,” he said. “Most of the market is the valley from Bakersfield and north. To my surprise, early on in this, we were hearing a lot of stories from ranchers in Shasta, Tulare, but once we launched, now we’ve noticed there’s a lot of interest in Napa, Sonoma and Mendocino as well.”

An educational session will take place in Mendocino County sometime in November, Mr. Gowan said.

Grapegrowers and farmers in Sonoma County have faced a similar plight to ranchers and farmers in other regions of state – overzealous, often conflicting and inconsistent regulations from a variety of local, state and federal agencies, said Mr. McCorvey of the farm bureau, which held an educational session with insurers, the agricultural community and environmental law attorneys recently.

“I think the agricultural community is using TARS as sort of a new opportunity for farmers and ranchers to approach regulatory requirements in a new way,” he said. “Oftentimes, in regulations there is a lot fine print, and sometimes regulatory agencies’ personnel interpret it differently, so I think it will be a leveling of the playing field on behalf of agriculture.”

Environmental violations and associated fines can devastate a small or medium-sized farmer or grapegrower, Mr. McCorvey said, and legal costs to challenge such violations are equally crippling for many.

“It’s a unique opportunity for the agricultural community because legal fees are expensive, and most small farmers don’t have the expenses to protect themselves in that arena,” Mr. McCorvey said. “Most agricultural operations, they’re already upside down financially. There’s very little profitability in the industry.”

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