Easterday family gives up attempt to resurrect controversial Oregon mega dairy

Months after a closed-door settlement, the Easterday family is giving up its attempt to bring a controversial Boardman, Ore., mega dairy back online.

Easterday Dairy told a federal judge in March that they had reached an agreement with the former landowner, Canyon Farms II and Fall Line Capital, in a $14 million lawsuit over how the land was being managed.

The details of that settlement were unclear at the time because it was agreed to outside of court, with no public records entered explaining the settlement. They asked for an extension in May to work out the deal, but the case had effectively been closed.

Easterday Dairy is run by Cole Easterday and his brothers, Clay and Cutter. They’re the sons of former Easterday Farms and Easterday Ranches president Cody Easterday.

Their father is currently serving an 11-year prison sentence for a “ghost cattle” scheme that defrauded Tyson Foods out of more than $250 million.

Canyon Farms, which bought the Lost Valley mega dairy after its bankruptcy in 2019, wanted Easterday off the property after new allegations of nitrate contamination were brought to light by the Oregon Department of Agriculture last summer.

Easterday was asking to be paid out of their self-financed purchase of the dairy property or given a new easement to monitor nitrate used on adjacent leased farm land they no longer had access to.

Now it appears Easterday Dairy and Canyon Farms came to an agreement to sell the property back to the California-based company. The $15.2 million sale of the property was recorded by Morrow County last week.

It’s still unclear how the sale breaks down, but Canyon Farms is once again the property’s owner. Lost Valley ran the dairy, the second largest in the state at the time, in the 73000 block of Homestead Lane in Boardman for about 18 months before shutting down and declaring bankruptcy.

Easterday initially bought about 700 acres where the dairy sat, and leased the other 6,500 acres to farm.

They entered an animal waste management plan that required nitrate monitoring and remediation from the ODA required to obtain a Concentrated Animal Feeding Operation permit that would eventually allow them to bring cattle back on the property. After the first year, Canyon Farms declined to renew their lease, bringing in Walther Farms as the new tenant.

They paid Easterday $2 million to terminate the lease at the time, according to court records from the family’s bankruptcy case.

Easterday had recently asked the ODA to reconsider an alleged violation and notice of noncompliance of the animal waste management plan involving fertilizer spills that allegedly happened last summer on the adjacent property because they did not have access to the area where the spills were said to have occurred.

In a request for reconsideration sent to the ODA, Easterday said the spills had actually occurred on the portion of the land Walther Farms had been managing and provided what details they could about the spills given their inability to directly access the area. Easterday Dairy had been removed from that property in the months before the ODA inspector found the fertilizer spills.

They did provide documentation showing that the only tank they owned that was noted by the inspector was not leaking.

Overfertilizing allegations

Easterday Dairy had originally bought the 736-acre production area in 2019 in a self-financed deal for $16 million and was leasing the larger 6,542-acre farm land. At the time Cody Easterday was still running the company.

The ODA found that in the first season after the brothers took over farming the property, Easterday Dairy had intentionally overfertilized the property, according to ODA documents.

Fall Line cited the ongoing bankruptcy of the Easterday family businesses and findings by the state that said Easterday Dairy had been intentionally over-applying liquid fertilizer, in their bid to oust Easterday from the leased property last summer.

Revoking the easement that allowed Easterday to access the property left the Easterdays responsible for monitoring nitrate application on land they couldn’t access.

Walther Farms continued monitoring and reporting to the ODA during this time, according to court documents.

The bankruptcy case, which did not include the spun-off Easterday Dairy, was settled late last summer. Around the same time, Easterday Dairy filed the lawsuit against Canyon Farms because the dairy said they could not comply with the nitrate plan without having access to the property.

The dairy was asking for $14 million of their investment back in order to quit the production land, or for damages.

Easterday Dairy was denied a Confined Animal Feeding Operations permit because of the heavy nitrate contamination caused by the former owner, Lost Valley Farms mega dairy, and the ODA’s findings that the Easterdays over applied nitrate-based fertilizer after taking over the property.

Without that permit, restarting the dairy would be impossible, as they could not have animals on the land.

The water source for the dairy is an aquifer that is at particularly high risk for contamination.

According to a 2018 Statesman Journal article, the aquifer was classified as protected in 1976 due to dwindling water levels. Nitrate contaminated water cannot be boiled to make it safer.

While animals have not been on the property since Easterday Dairy took over, they have farmed the fields and the liquid fertilizer used contains nitrates.

It is the over-application of fertilizer at issue. The remediation plan breaks down the 7,500-acres into fields with allowable amounts of fertilizer that can be applied to each. Some fields allow for none at all.

Easterday Dairy is required to regularly monitor nitrate levels and take corrective measures.

Easterday Dairy was ordered to adhere to the animal waste management plan to remediate the nitrate for nine consecutive months after it was found that they had allegedly intentionally over fertilized the property by more than 800,000 pounds of nitrate-based fertilizer during the 2021 crop season, according to ODA documents included in the lawsuit. In subsequent filings the Easterdays have maintained they did not overfertilize the fields.

In order for Oregon officials to reconsider the animal feeding permit, Easterday would have had to show they were complying with the remediation plan for nine consecutive months.

The cutoff date for consideration for the permit was originally set for December 2022, making it increasingly unlikely they would have been able to obtain the permit if the clock was reset in June 2022 due to the notice of noncompliance related to the spills on the land they were no longer managing.

Canyon Farms could choose to lease the dairy portion of the land for farming, as long as they abide by the nitrate plan.

Family legal issues

The Easterday family has been embroiled in legal issues since December 2020 when it came to light that Cody Easterday had stolen more than $250 million in a wire fraud scam that federal prosecutors dubbed a “ghost cattle” scheme.

Easterday had been charging Tyson Foods for the care of more than 265,000 head of cattle that never existed. Segale Properties was also defrauded after loaning Easterday money for the care and feed of the ghost cattle.

Cody Easterday pleaded guilty to one count of wire fraud, but remained out of prison for more than a year while he helped navigate a massive bankruptcy lawsuit for the family’s Easterday Farms and Easterday Ranches businesses.

The bankruptcy settlement schedule was finalized last summer, and Cody Easterday was sentenced to 11 years in prison in October 2022.

Tyson estimated their total loss, including lawyers fees and other costs, added up to more than $260 million. Segale was owed about $11 million. Judge Stanley Bastian set Easterday’s total restitution at $244 million.

He reported to a federal prison in California in December, but has filed two lawsuits against Tyson Foods in an attempt to reduce the amount of money he has been ordered to pay back.

So far only about $70 million total has been paid back, leaving Cody Easterday owing more than $170 million to Tyson and $7.5 million to Segale.