BUSINESS AND AG
WEDNESDAY, JULY 27, 2022
HERMISTONHERALD.COM • A7
Easterday wants $14M+ to get out of dairy
BY CORY MCCOY
Tri-City Herald
BOARDMAN — Easterday Dairy
has been trying to reopen a Boardman
dairy plant for several years, but new
documents show that after repeated
setbacks and water quality violations
the company may be ready to throw in
the towel.
In February the company was cited
for failing to bring nitrate levels in wa-
ter under control, even with the cattle
long gone from the property.
The site is the former home of Lost
Valley Farms dairy. Now Easterday is
suing the former owners for breach of
contract, saying it’s their fault they have
been unable to clean the site up.
Easterday Dairy is asking for mil-
lions in damages or to be released from
the purchase agreement.
Since his father’s arrest the dairy por-
tion of the Easterday family businesses
is being spearheaded by Cole Easter-
day. Their other businesses Easterday
Farms and Easterday Ranches, based in
the Tri-Cities area, are in the midst of a
massive bankruptcy lawsuit after Cody
Easterday was prosecuted on federal
wire fraud charges in a “ghost cattle”
scheme that defrauded Tyson Foods
and other businesses out of hundreds
of millions of dollars.
Cody Easterday’s sentencing has
been delayed while he helps manage
the bankruptcy settlement. His next
court date is set for September.
Cody Easterday is the son of long-
time Easterday head Gale Easterday,
who died in a wrong-way traffic acci-
dent in Pasco after leaving work in De-
cember 2020.
WATER QUALITY ISSUES
At the crux of the conflict over the
dairy plant is a permit that would al-
low Cole Easterday to reopen the dairy
facility.
That permit was suspended during
Lost Valley’s bankruptcy.
The Oregon Department of Agri-
culture has so far refused to issue East-
erday a permit for Confined Animal
Feeding Operations until the nitrate
levels in the ground water are brought
back into compliance and a plan for
maintaining safe levels is approved.
That means the company cannot re-
sume dairy operations until then.
According to the National Institute
for Health, nitrate contamination in
ground water has been linked to in-
creased risk of cancer, thyroid disease
and birth defects.
George Plaven/Capital Press, File
Cody Easterday, president of Easterday Farms, is shown in this file photo at the Easterday Dairy outside of Boardman. He faces time
in federal prison for wire fraud in a ghost cattle scam involving Tyson Foods. His 24-year-old son has applied to run the Oregon dairy.
Boiling water does not make nitrate
contaminated water safer to drink, in
fact it does the opposite by increasing
the nitrate concentrations in the water.
Over the course of the past two
years, documents show that the state
has repeatedly inspected the site and
recommended courses of action, which
Easterday Dairy failed to implement
quickly enough.
That led to inspections showing
they were in violation of nitrate levels
monthly from November 2020 through
November 2021.
The Department of Agriculture doc-
uments show that they were finally able
to bring the nitrate levels within accept-
able range by December 2021.
In the February 2022 letter, the de-
partment ordered Easterday to con-
tinue to submit water samples until
they can show the nitrate levels are
within acceptable range for nine con-
secutive months.
In a lawsuit filed this month, Easter-
day appears to be placing the blame for
the poor water quality on the previous
owners, and a farm currently leasing
the adjoining property.
Lawyers for Easterday claim that on-
going and deliberate action by the two
groups has prevented them from meet-
ing state standards.
Tarah Heinzen, the legal director for
Food and Water Watch, said she hopes
the state will continue to hold East-
erday accountable because the water
source for the dairy is an aquifer that
is at particularly high risk for contami-
nation. According to a 2018 Statesman
Journal article, the aquifer was classi-
fied as protected in 1976 due to dwin-
dling water levels.
Food and Water Watch is a nonprofit
that focuses on corporate and govern-
mental accountability relating to food
and water.
Heinzen said mega dairies are huge
contributors to nitrate contamina-
tion, noting that even without a single
animal on site for the past few years,
Easterday struggled to meet acceptable
ranges.
She said the new lawsuit could pro-
vide Easterday an exit from the dairy,
but the risk of water contamination
remains high and the state will need to
continue to press Easterday or any fu-
ture owners to protect the water source.
“It looks to me like if Easterday can’t
have the dairy it wants, it doesn’t want
the dairy parcel (at all),” Heinzen said.
LAND USE
Easterday is suing Fall Line Capital
and Canyon Farm, which bought the
property after Lost Valley’s bankruptcy.
The nearly 7,300-acre site was parti-
tioned into two parcels — 736 acres for
the dairy and the remaining 6,542 for
farm land.
In January 2019, Easterday Dairy en-
tered into a $16 million self-financed
agreement to buy the dairy facility por-
tion. Later that year they signed a com-
mercial lease for the farm portion, but
did not buy it.
Easterday was to pay $2.67 million
plus interest annually for the purchase
of the dairy. To date they have paid
$10.5 million, leaving a balance owing
of $8 million including interest.
Easterday intended to secure a new
Confined Animal Feeding Operations
permit and resume dairy operations.
Easterday’s lawyers said in the law-
suit that the purchase contract included
clauses that would render the purchase
ineffective under several instances if
Easterday was unable to obtain a new
permit. At the time, they moved for-
ward under the impression that Easter-
day would be able to get that on or be-
fore Dec. 31, 2022.
In March 2021, Easterday ended the
commercial lease on the farm portion
and Michigan-based Walther Farms
took over the land. At that time East-
erday signed an amended easement
guaranteeing access in order to comply
with Department of Agriculture
requirements.
EASTERDAY SUES
Lawyers for Easterday claim that at
this point, Walther Farms refused to
provide Easterday with the necessary
reporting under the state’s orders, and
then denied Easterday access to the
farm parcel in order to perform testing.
Separate bankruptcy filings in the
Easterday Farms and Ranches cases
show Canyon Farms paid Easterday $2
million to terminate the farm parcel
lease.
That agreement included language
to ensure Easterday was granted access
to certain areas, such as a storage com-
plex and feed storage area.
Canyon Farms and Walther then
sued Easterday in March 2022 to have
the easement thrown out, according to
the filings.
Lawyers for Easterday claim this is a
bad faith attempt to hinder or prevent
the company from obtaining a new
feeding operations permit, at the direc-
tion of Canyon Farm parent company
Fall Line.
With that lawsuit open, the depart-
ment put the permit application on
pause. Easterday claims that a lawyer
named Jonathan Septor then filed an
unauthorized “Notice and Termination
of Amended and Restate Easement”
with Morrow County property records
on behalf of Fall Line. They then filed
a notice of dismissal in the easement
proceedings.
Easterday claims that together these
actions amount to Fall Line preventing
them from obtaining a new feeding op-
erations permit by denying their access
to the farm parcel.
They are asking the judge to:
• Reinstate the easement and access
requirements that guarantees that East-
erday will have access and authority
over any irrigation or nutrients used at
the farm.
• Declare the easement termination
was made in bad faith and payment for
damages for both slander and the de-
lays caused.
In the event the court does not agree
to those terms, Easterday is asking to
be paid out of the purchase agreement.
They want payment for the money
paid toward the purchase so far, and for
improvements and work done on the
land. Easterday is asking for the $10.5
million paid to be returned and up to
$4 million in addition to offset their in-
vestment. That path would ultimately
result in Easterday abandoning plans to
bring the dairy back online.
Fall Line has not yet filed a response.
Low-Cost Loans to Power Your Life
ENERGY SAVER LOAN PROGRAM
Finance energy efficiency with
low interest rates at:
1.99 %
On-Bill Financing
Terms and conditions apply. Contact
Umatilla Electric Cooperative for details.
For more information on how UEC can
help you save energy and money visit:
Hermiston Office
Boardman Office
750 W. Elm Ave.
Hermiston, OR 97838
(541) 567-6414
400 N.E. Eldrige Drive
Boardman, OR 97818
(541) 481-2220