Farm-to-Consumer Legal Defense Fund
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Maryland Herdshare Case Appealed

By Pete Kennedy

On October 13, attorneys for Buckeystown Dairy farmer Kevin Oyarzo filed a petition for a writ of certiorari to the Maryland Court of Appeals asking the court to review an adverse ruling by the State Court of Special Appeals.  On August 26, that court had affirmed a lower court ruling that rejected Oyarzo's challenge to the state regulatory ban on herd/cow-share arrangements [Kevin Oyarzo v. Maryland Department of Health and Mental Hygiene, et al.]. 

Under Maryland law, the sale of raw milk is prohibited.  In 2006 shortly after Oyarzo presented a herdshare contract to the Maryland Department of Health and Mental Hygiene (MDHMH) for approval, the agency issued a regulation expanding the definition of "sale" to cover the "transfer or dispensing of milk and milk products" and "the sale of shares or interest in a cow, goat, or other lactating hooved mammal, or herd of cows, or other lactating hooved mammals."  Oyarzo's herdshare contract called for the farmer to "sell fractional ownership interests in a herd of dairy cattle, after which he would board and care for the cows, and then provide the raw milk produced by those cows to the owners of the herd in accordance with their percentages of ownership."

In ruling for MDHDH, the Court of Special Appeals found that "[e]ven if the transaction proposed by Oyarzo does not fit within the traditional framework of the sale of milk by one party to another, when the entire package is considered--including the fact that the specific agister's services are a mandatory component of the purchase of the interest in the herd, the fact that the arrangement requires the recipients of the raw milk to continue paying ongoing fees to the dairy farmer for as long as the ownership interest in the herd continues, and the fact that the most apparent benefit, if not the only benefit, the contracting parties receive for monies paid to Oyarzo would be the right to receive raw milk--the scheme has sufficient characteristics of a sale of milk to be an arrangement the Department may regulate and prohibit."

Despite ruling against Oyarzo, the Court of Special Appeals did acknowledge that cow-share and herd-share arrangments can be valid under the law, stating that "(a) it is not illegal in Maryland for the owner of a dairy cow to drink the raw milk which that cow produces; (b) it is not illegal in Maryland to sell a fractional interest in a herd of dairy cattle; and (c) it is not illegal in Maryland for an agister to provide agistment services by boarding and caring for dairy cows owned by others."

A major contention of Oyarzo in his petition to the Maryland high court is that, in effect, the Court of Special Appeals made these types of conduct illegal by upholding the regulation banning herdshares.   The petition also claims that the Court of Special Appeals has improperly held that MDHMH can regulate any transaction involving the distribution of milk instead of only transactions concerning sales.  The Court of Appeals is expected to make its decision on whether to hear the case sometime later this month.

Last edited: Nov 02, 2009

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