1.1                          A bill for an act
  1.2             relating to agriculture; modifying restrictions on 
  1.3             corporate ownership of farm land; proposing coding for 
  1.4             new law in Minnesota Statutes, chapter 500; repealing 
  1.5             Minnesota Statutes 1998, section 500.24, subdivisions 
  1.6             1, 2, 3, 3a, 3b, 4, and 5. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  [500.242] [CORPORATIONS; OWNERSHIP OF FARM 
  1.9   LAND; FARMING.] 
  1.10     Subdivision 1.  [PROHIBITION.] No corporation may acquire 
  1.11  or otherwise obtain an interest, whether legal, beneficial, or 
  1.12  otherwise, in any real estate used or capable of being used for 
  1.13  farming in this state, or engage in farming. 
  1.14     For purposes of this section, "corporation" means a 
  1.15  corporation organized under the laws of a state of the United 
  1.16  States or another country or a limited partnership, limited 
  1.17  liability partnership, business trust, or limited liability 
  1.18  company organized under the laws of a state of the United States 
  1.19  or another country.  "Corporation" does not include a general 
  1.20  partnership, except a general partnership in which nonfamily 
  1.21  farm corporations are partners. 
  1.22     "Farming" means the cultivation of land for the production 
  1.23  of agricultural crops, fruit, or other horticultural products, 
  1.24  or the ownership, keeping, or feeding of animals for the 
  1.25  production of livestock or livestock products. 
  1.26     Subd. 2.  [EXCEPTIONS.] The restrictions in subdivision 1 
  2.1   do not apply to: 
  2.2      (1) a family farm corporation, which is a corporation 
  2.3   engaged in farming or the ownership of agricultural land, in 
  2.4   which a majority of the partnership interests, shares, stock, or 
  2.5   other ownership interests are held by members of a family or a 
  2.6   trust created for the benefit of a member of that family.  For 
  2.7   purposes of this clause, "family" means natural persons related 
  2.8   to one another within the fourth degree of kinship according to 
  2.9   civil law and their spouses.  At least one of the family members 
  2.10  in a family farm corporation must reside on or be actively 
  2.11  engaged in the day-to-day labor and management of the farm, 
  2.12  which requires both daily or routine substantial physical 
  2.13  exertion and administration.  None of the corporation's 
  2.14  partners, members, or stockholders may be nonresident aliens, or 
  2.15  other corporations, unless all of the stockholders, members, or 
  2.16  partners of those corporations are persons related within the 
  2.17  fourth degree of kinship to the majority of partners, members, 
  2.18  or stockholders in the family farm corporation; 
  2.19     (2) agricultural land acquired or leased, or livestock 
  2.20  kept, fed or owned, by a cooperative organized under the laws of 
  2.21  any state, if a majority of the shares or other interests of 
  2.22  ownership in the cooperative are held by members in the 
  2.23  cooperative who are natural persons actively engaged in the 
  2.24  day-to-day labor and management of a farm or family farm 
  2.25  corporations, and who either acquire from the cooperative, 
  2.26  through purchase or otherwise, such livestock, or crops produced 
  2.27  on such land, or deliver to the cooperative, through sale or 
  2.28  otherwise, crops to be used in the keeping or feeding of such 
  2.29  livestock; 
  2.30     (3) nonprofit corporations organized under state nonprofit 
  2.31  corporation law; 
  2.32     (4) agricultural land, which, as of the effective date of 
  2.33  this section, is being farmed, or which is owned or leased, or 
  2.34  in which there is a legal or beneficial interest, directly or 
  2.35  indirectly owned, acquired, or obtained by a corporation, if the 
  2.36  land or other interest is held in continuous ownership or under 
  3.1   continuous lease by the same corporation.  For the purposes of 
  3.2   this clause, land purchased on a contract signed as of the 
  3.3   effective date of this section is considered as owned on that 
  3.4   date; 
  3.5      (5) livestock, which as of the effective date of this 
  3.6   section, is owned by a corporation.  For the purposes of this 
  3.7   exemption, livestock to be produced under contract for a 
  3.8   corporation are considered as owned, if the contract is for the 
  3.9   keeping or feeding of livestock and is signed as of the 
  3.10  effective date of this section, and if the contract remains in 
  3.11  effect and is not terminated or materially amended by either 
  3.12  party to the contract.  This exemption does not extend beyond 
  3.13  the term of any contract signed as of the effective date of this 
  3.14  section; 
  3.15     (6) a farm operated by a corporation for research or 
  3.16  experimental purposes, if any commercial sales from the farm are 
  3.17  only incidental to the research or experimental objectives of 
  3.18  the corporation; 
  3.19     (7) agricultural land operated for the purpose of growing 
  3.20  seed, nursery plants, or sod; 
  3.21     (8) mineral rights on agricultural land; 
  3.22     (9) agricultural land acquired or leased by a corporation 
  3.23  for immediate or potential nonfarming purposes, for a period of 
  3.24  five years from the date of purchase.  A corporation may hold 
  3.25  that agricultural land in whatever acreage is necessary to its 
  3.26  nonfarm business operation, but pending the development of the 
  3.27  agricultural land for nonfarm purposes, the land may not be used 
  3.28  for farming except under lease to a noncorporate farm or a 
  3.29  family farm corporation; 
  3.30     (10) agricultural land or livestock acquired by a 
  3.31  corporation by process of law in the collection of debts, or by 
  3.32  any procedures for the enforcement of a lien, encumbrance, or 
  3.33  claim on the land or livestock, whether created by mortgage or 
  3.34  otherwise.  Any lands so acquired must be disposed of within a 
  3.35  period of five years and may not be used for farming before 
  3.36  being disposed of, except under a lease to a noncorporate farm 
  4.1   or a family farm corporation.  Any livestock so acquired must be 
  4.2   disposed of within six months; 
  4.3      (11) agricultural land held by a state or nationally 
  4.4   chartered bank as trustee for a person, or a corporation that is 
  4.5   otherwise exempt from the provisions of this section; 
  4.6      (12) a bona fide encumbrance taken for purposes of 
  4.7   security; 
  4.8      (13) custom spraying, fertilizing, or harvesting; and 
  4.9      (14) livestock futures contracts, livestock purchased for 
  4.10  slaughter not more than two weeks prior to the date of 
  4.11  slaughter, or livestock purchased and resold within two weeks. 
  4.12     Subd. 4.  [LOSS OF QUALIFICATION.] If a family farm 
  4.13  corporation that has qualified under all the requirements of a 
  4.14  family farm corporation ceases to meet the defined criteria, it 
  4.15  has 20 years, if the ownership of the majority of the stock of 
  4.16  such corporation continues to be held by persons related to one 
  4.17  another within the fourth degree of kinship or their spouses, 
  4.18  and their land holdings are not increased, to either requalify 
  4.19  as a family farm corporation or dissolve and return to personal 
  4.20  ownership. 
  4.21     Subd. 5.  [REPORTS REQUIRED; ENFORCEMENT.] A corporation 
  4.22  that owns agricultural land or engages in farming shall report 
  4.23  information necessary for the enforcement of this section to the 
  4.24  commissioner of agriculture on an annual basis, under rules 
  4.25  adopted by the commissioner.  The commissioner shall monitor 
  4.26  those reports and investigate possible violations.  Any resident 
  4.27  of the state may also notify the commissioner of possible 
  4.28  violations.  If a corporation violates this section, the 
  4.29  commissioner may commence an action to enjoin any pending 
  4.30  illegal purchase of land or livestock, or to force divestiture 
  4.31  of land or livestock held in violation of this section.  The 
  4.32  court shall order any land held in violation of this section to 
  4.33  be divested within two years and any livestock to be divested 
  4.34  within six months.  If land so ordered by the court has not been 
  4.35  divested within two years, the court shall declare the land 
  4.36  escheated to the state.  If the commissioner fails to bring an 
  5.1   action to enforce this section, any resident of the state has 
  5.2   standing to sue for enforcement. 
  5.3      Sec. 2.  [REPEALER.] 
  5.4      Minnesota Statutes 1998, section 500.24, subdivisions 1, 2, 
  5.5   3, 3a, 3b, 4, and 5, are repealed.