1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to agriculture; changing limitations on 1.3 ownership of agricultural land by corporations, 1.4 limited liability companies, pension or investment 1.5 funds, and limited partnerships; amending Minnesota 1.6 Statutes 1996, section 500.24, subdivisions 2, 3, 3a, 1.7 3b, and 4. 1.8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.9 Section 1. Minnesota Statutes 1996, section 500.24, 1.10 subdivision 2, is amended to read: 1.11 Subd. 2. [DEFINITIONS.]For the purposes of this section,1.12the terms definedThe definitions in this subdivisionhave the1.13meanings here given them:apply to this section. 1.14 (a) "Farming" means the production of (1) agricultural 1.15 products; (2) livestock or livestock products; (3) milk or milk 1.16 products; or (4) fruit or other horticultural products. It does 1.17 not include the processing, refining, or packaging of said 1.18 products, nor the provision of spraying or harvesting services 1.19 by a processor or distributor of farm products. It does not 1.20 include the production of timber or forest productsor, the 1.21 production of poultry or poultry products, or the feeding and 1.22 caring for livestock that are delivered to a corporation for 1.23 slaughter or processing for up to 20 days before slaughter or 1.24 processing. 1.25 (b) "Family farm" means an unincorporated farming unit 1.26 owned by one or more persons residing on the farm or actively 2.1 engaging in farming. 2.2 (c) "Family farm corporation" means a corporation founded 2.3 for the purpose of farming and the ownership of agricultural 2.4 land in which the majority of the voting stock is held by and 2.5 the majority of the stockholders are persons or the spouses of 2.6 persons related to each other within the third degree of kindred 2.7 according to the rules of the civil law, and at least one of 2.8 said related persons is residing on or actively operating the 2.9 farm, and none of whose stockholders are corporations; provided 2.10 that a family farm corporation shall not cease to qualify as 2.11 such hereunder by reason of any devise or bequest of shares of 2.12 voting stock. 2.13 (d) "Authorized farm corporation" means a corporation 2.14 meeting the following standardsunder clause (1) or (2): 2.15 (1)(i) itsit has no more than five shareholdersdo not2.16exceed five in number; 2.17(ii)(2) all its shareholders, other than any estate, are 2.18 natural persons; 2.19(iii)(3) it does not have more than one class of shares; 2.20and2.21(iv)(4) itsrevenuesrevenue from rent, royalties, 2.22 dividends, interest, and annuities does not exceed 20 percent of 2.23 its gross receipts;and2.24(v)(5) shareholders holding 51 percent or more of the 2.25 interest in the corporationmust be residingreside on the farm 2.26 or are actively engaging in farming; 2.27(vi) the authorized farm corporation(6) it does not, 2.28 directly or indirectly,ownsown or otherwisehashave an 2.29 interest, whether legal, beneficial, or otherwise,in any title 2.30 tonomore than 1,500 acres ofreal estate used for farming or2.31capable of being used for farming in this stateagricultural 2.32 land; and 2.33(vii) a shareholder of the authorized farm corporation is2.34not a shareholder(7) none of its shareholders are shareholders 2.35 in other authorized farm corporations that directly or 2.36 indirectly in combination with theauthorized farmcorporation 3.1 ownnotmore than 1,500 acres ofreal estate used for farming or3.2capable of being used for farming in this state; oragricultural 3.3 land. 3.4(2)(i) the corporation(e) "Authorized livestock farm 3.5 corporation" means a corporation formed for the production of 3.6 livestock and meeting the following standards: 3.7 (1) it is engaged in the production of livestock other than 3.8 dairy cattle;and not engaged in farming activities otherwise3.9prohibited under this section;3.10(ii)(2) all its shareholders, other thananany estate, 3.11 are natural persons orafamily farmcorporationcorporations; 3.12(iii)(3) it does not have more than one class of shares; 3.13(iv)(4) its revenue from rent, royalties, dividends, 3.14 interest, and annuities does not exceed 20 percent of its gross 3.15 receipts; 3.16(v)(5) shareholders holding 75 percent or more of the 3.17 controland, financial, and capital investment in the 3.18 corporationmust beare farmers residing in Minnesota and at 3.19 least 51 percent of the required percentage of farmersmust be3.20 are actively engaged in livestock production; 3.21(vi) the authorized farm corporation(6) it does not, 3.22 directly or indirectly,ownsown or otherwisehashave an 3.23 interest, whether legal, beneficial, or otherwise,in any title 3.24 tonomore than 1,500 acres ofreal estate used for farming or3.25capable of being used for farming in this stateagricultural 3.26 land; and 3.27(vii) a shareholder of the authorized farm corporation is3.28not a shareholder(7) none of its shareholders are shareholders 3.29 in other authorized farm corporations that directly or 3.30 indirectly in combination with theauthorized farmcorporation 3.31 ownnotmore than 1,500 acres ofreal estate used for farming or3.32capable of being used for farming in this state; and3.33(viii) the corporation was formed for the production of3.34livestock other than dairy cattle by natural persons or family3.35farm corporations that provide 75 percent or more of the capital3.36investmentagricultural land. 4.1(e)(f) "Agricultural land" meanslandreal estate used for 4.2 farming or capable of being used for farming in this state. 4.3(f)(g) "Pension or investment fund" means a pension or 4.4 employee welfare benefit fund, however organized, a mutual fund, 4.5 a life insurance company separate account, a common trust of a 4.6 bank or other trustee established for the investment and 4.7 reinvestment of money contributed to it, a real estate 4.8 investment trust, or an investment company as defined in United 4.9 States Code, title 15, section 80a-3."Pension or investment4.10fund" does not include a benevolent trust established by the4.11owners of a family farm, authorized farm corporation or family4.12farm corporation.4.13(g)(h) "Farm homestead" means a house including adjoining 4.14 buildings that has been used as part of a farming operation or 4.15 is part of the agricultural land used for a farming operation. 4.16(h)(i) "Family farm partnership" means a limited 4.17 partnership formed for the purpose of farming and the ownership 4.18 of agricultural land in which the majority of the interests in 4.19 the partnership is held by and the majority of the partners are 4.20 persons or the spouses of persons related to each other within 4.21 the third degree of kindred according to the rules of the civil 4.22 law,andat least one of the related persons is residing on or 4.23 actively operating the farm, and none of the partners are 4.24 corporations. A family farm partnership does not cease to 4.25 qualify as a family farm partnership because of a devise or 4.26 bequest of interest in the partnership. 4.27(i)(j) "Authorized farm partnership" means a limited 4.28 partnership meeting the following standards: 4.29 (1) it has been issued a certificate from the secretary of 4.30 state or is registered with the county recorder and farming and 4.31 ownership of agricultural land is stated as a purpose or 4.32 character of the business; 4.33 (2)itsno more than five partnersdo not exceed five in4.34number; 4.35 (3) all its partners, other thananany estate, are natural 4.36 persons; 5.1 (4) itsrevenuesrevenue from rent, royalties, dividends, 5.2 interest, and annuities do not exceed 20 percent of its gross 5.3 receipts; 5.4 (5) its general partners hold at least 51 percent of the 5.5 interest in the land assets of the partnership and reside on the 5.6 farm or are actively engaging in farming not more than 1,500 5.7 acres as a general partner in an authorized limited partnership; 5.8 (6) its limited partners do not participate in the business 5.9 of the limited partnership including operating, managing, or 5.10 directing management of farming operations; 5.11 (7)the authorized farm partnershipit does not, directly 5.12 or indirectly,does notown or otherwise have an interest,5.13whether legal, beneficial, or otherwise,inaany title to more 5.14 than 1,500 acres ofreal estate used for farming or capable of5.15being used for farming in this stateagricultural land; and 5.16 (8)a limited partner of the authorized farm partnership is5.17not anone of its limited partners are limitedpartnerpartners 5.18 in other authorized farm partnerships that directly or 5.19 indirectly in combination with theauthorized farmpartnership 5.20 ownnotmore than 1,500 acres ofreal estate used for farming or5.21capable of being used for farming in this stateagricultural 5.22 land. 5.23(j)(k) "Farmer" means a natural person who regularly 5.24 participates in physical labor or operations management in 5.25 thefarmer'sperson's farming operation and files "Schedule F" 5.26 as part of the person's annual Form 1040 filing with the United 5.27 States Internal Revenue Service. 5.28(k)(l) "Actively engaged in livestock production" means 5.29that a person performsperforming day-to-day physical labor or 5.30 day-to-day operations management that significantly contributes 5.31 to livestock production and the functioning of a livestock 5.32 operation. 5.33 (m) "Research or experimental farm" means a corporation, 5.34 limited partnership, or pension or investment fund that owns or 5.35 operates agricultural land for research or experimental 5.36 purposes, provided that any commercial sales from the operation 6.1 are incidental to the research or experimental objectives of the 6.2 corporation. A corporation, limited partnership, or pension or 6.3 investment fund seeking initial approval by the commissioner to 6.4 operate agricultural land for research or experimental purposes 6.5 must first submit to the commissioner a prospectus or proposal 6.6 of the intended method of operation containing information 6.7 required by the commissioner including a copy of any operational 6.8 contract with individual participants. 6.9 (n) "Breeding stock farm" means a corporation or limited 6.10 partnership that owns land for the purpose of raising breeding 6.11 stock, including embryos, for resale to farmers or for the 6.12 purpose of growing seed, wild rice, nursery plants, or sod. An 6.13 entity that is organized to raise livestock other than dairy 6.14 cattle under this paragraph that does not qualify as an 6.15 authorized farm corporation must: 6.16 (1) sell all castrated animals to be fed out or finished to 6.17 farming operations that are neither directly nor indirectly 6.18 owned by the business entity operating the breeding stock 6.19 operation; and 6.20 (2) report its total production and sales annually to the 6.21 commissioner. 6.22 (o) "Aquatic farm" means a corporation or limited 6.23 partnership that owns or leases agricultural land as a necessary 6.24 part of an aquatic farm as defined in section 17.47, subdivision 6.25 3. 6.26 (p) "Religious farm" means a corporation formed primarily 6.27 for religious purposes whose sole income is derived from 6.28 agriculture. 6.29 (q) "Utility corporation" means a corporation regulated 6.30 under Minnesota Statutes 1974, chapter 216B, that owns 6.31 agricultural land for purposes described in that chapter, or an 6.32 electric generation or transmission cooperative that owns 6.33 agricultural land for use in its business if the land is not 6.34 used for farming except under lease to a family farm unit, a 6.35 family farm corporation, or a family farm partnership. 6.36 (r) "Benevolent trust" means a pension fund or family trust 7.1 established by the owners of a family farm, authorized farm 7.2 corporation, authorized livestock farm corporation, or family 7.3 farm corporation that holds an interest in title to agricultural 7.4 land on which one or more of those owners or shareholders have 7.5 resided or have been actively engaged in farming as required by 7.6 paragraph (b), (c), (d), or (e). 7.7 (s) "Development organization" means a corporation, limited 7.8 partnership, or pension or investment fund that owns 7.9 agricultural land for which the corporation, limited 7.10 partnership, or pension or investment fund has documented plans 7.11 to use and subsequently uses the land within six years from the 7.12 date of purchase for a specific nonfarming purpose, or if the 7.13 land is zoned nonagricultural, or if the land is located within 7.14 an incorporated area. A corporation, limited partnership, or 7.15 pension or investment fund may hold agricultural land in the 7.16 amount necessary for its nonfarm business operation; provided, 7.17 however, that pending the development of agricultural land for 7.18 nonfarm purposes, the land may not be used for farming except 7.19 under lease to a family farm unit, a family farm corporation, an 7.20 authorized farm corporation, an authorized livestock farm 7.21 corporation, a family farm partnership, or an authorized farm 7.22 partnership, or except when controlled through ownership, 7.23 options, leaseholds, or other agreements by a corporation that 7.24 has entered into an agreement with the United States under the 7.25 New Community Act of 1968 (Title IV of the Housing and Urban 7.26 Development Act of 1968, United States Code, title 42, sections 7.27 3901 to 3914) as amended, or a subsidiary or assign of such a 7.28 corporation. 7.29 (t) "Exempt land" means agricultural land owned or leased 7.30 by a corporation as of May 20, 1973, agricultural land owned or 7.31 leased by a pension or investment fund as of May 12, 1981, or 7.32 agricultural land owned or leased by a limited partnership as of 7.33 May 1, 1988, including the normal expansion of that ownership at 7.34 a rate not to exceed 20 percent of the amount of land owned as 7.35 of May 20, 1973, for a corporation; May 12, 1981, for a pension 7.36 or investment fund; or May 1, 1988, for a limited partnership, 8.1 measured in acres, in any five-year period, and including 8.2 additional ownership reasonably necessary to meet the 8.3 requirements of pollution control rules. A corporation, limited 8.4 partnership, or pension or investment fund that is eligible to 8.5 own or lease agricultural land under this section prior to May 8.6 1997 may continue to own or lease agricultural land subject to 8.7 the same conditions and limitations as previously allowed. 8.8 (u) "Gifted land" means agricultural land acquired as a 8.9 gift, either by grant or devise, by an educational, religious, 8.10 or charitable nonprofit corporation, limited partnership, or 8.11 pension or investment fund if all land so acquired is disposed 8.12 of within ten years after acquiring the title. 8.13 (v) "Repossessed land" means agricultural land acquired by 8.14 a corporation, limited partnership, or pension or investment 8.15 fund by process of law in the collection of debts, or by any 8.16 procedure for the enforcement of a lien or claim on the land, 8.17 whether created by mortgage or otherwise if all land so acquired 8.18 is disposed of within five years after acquiring the title. The 8.19 five-year limitation is a covenant running with the title to the 8.20 land against any grantee, assignee, or successor of the pension 8.21 or investment fund, corporation, or limited partnership. The 8.22 land so acquired must not be used for farming during the 8.23 five-year period, except under a lease to a family farm unit, a 8.24 family farm corporation, an authorized farm corporation, an 8.25 authorized livestock farm corporation, a family farm 8.26 partnership, or an authorized farm partnership. Notwithstanding 8.27 the five-year divestiture requirement under this paragraph, a 8.28 financial institution may continue to own the agricultural land 8.29 if the agricultural land is leased to the immediately preceding 8.30 former owner, but must dispose of the agricultural land within 8.31 ten years of acquiring the title. Livestock acquired by a 8.32 pension or investment fund, corporation, or limited partnership 8.33 in the collection of debts, or by a procedure for the 8.34 enforcement of lien or claim on the livestock whether created by 8.35 security agreement or otherwise after August 1, 1994, must be 8.36 sold or disposed of within one full production cycle for the 9.1 type of livestock acquired or 18 months after the livestock is 9.2 acquired, whichever is later. 9.3 (w) "Commissioner" means the commissioner of agriculture. 9.4 Sec. 2. Minnesota Statutes 1996, section 500.24, 9.5 subdivision 3, is amended to read: 9.6 Subd. 3. [FARMING AND OWNERSHIP OF AGRICULTURAL LAND BY 9.7 CORPORATIONS RESTRICTED.] No corporation, limited liability 9.8 company, pension or investment fund, or limited partnership 9.9 shall engage in farming; nor shall any corporation, limited 9.10 liability company, pension or investment fund, or limited 9.11 partnership, directly or indirectly, own, acquire, or otherwise 9.12 obtainanany interest,whether legal, beneficial or otherwise,9.13in any title to real estate used for farming or capable of being9.14used for farming in this state. Livestock that are delivered9.15for slaughter or processing may be fed and cared for by a9.16corporation up to 20 days prior to slaughter or processing.9.17Provided, however, that the restrictions in this subdivision do9.18not apply to corporations or partnerships in clause (b) and do9.19not apply to corporations, limited partnerships, and pension or9.20investment funds that record its name and the particular9.21exception under clauses (a) to (s) under which the agricultural9.22land is owned or farmed, have a conservation plan prepared for9.23the agricultural land, report as required under subdivision 4,9.24and satisfy one of the following conditions under clauses (a) to9.25(s):in agricultural land other than a bona fide encumbrance 9.26 taken for purposes of security. This subdivision does not apply 9.27 to general partnerships. This subdivision does not apply to any 9.28 agricultural land, corporation, limited partnership, or pension 9.29 or investment fund that meet any of the definitions in 9.30 subdivision 2, paragraphs (b) to (e), (i), (j), and (m) to (v), 9.31 has a conservation plan prepared for the agricultural land, and 9.32 reports as required under subdivision 4. 9.33(a) a bona fide encumbrance taken for purposes of security;9.34(b) a family farm corporation, an authorized farm9.35corporation, a family farm partnership, or an authorized farm9.36partnership as defined in subdivision 2 or a general10.1partnership;10.2(c) agricultural land and land capable of being used for10.3farming owned by a corporation as of May 20, 1973, or a pension10.4or investment fund as of May 12, 1981, including the normal10.5expansion of such ownership at a rate not to exceed 20 percent10.6of the amount of land owned as of May 20, 1973, or, in the case10.7of a pension or investment fund, as of May 12, 1981, measured in10.8acres, in any five-year period, and including additional10.9ownership reasonably necessary to meet the requirements of10.10pollution control rules;10.11(d) agricultural land operated for research or experimental10.12purposes with the approval of the commissioner of agriculture,10.13provided that any commercial sales from the operation must be10.14incidental to the research or experimental objectives of the10.15corporation. A corporation, limited partnership, or pension or10.16investment fund seeking to operate agricultural land for10.17research or experimental purposes must submit to the10.18commissioner a prospectus or proposal of the intended method of10.19operation, containing information required by the commissioner10.20including a copy of any operational contract with individual10.21participants, prior to initial approval of an operation. A10.22corporation, limited partnership, or pension or investment fund10.23operating agricultural land for research or experimental10.24purposes prior to May 1, 1988, must comply with all requirements10.25of this clause except the requirement for initial approval of10.26the project;10.27(e) agricultural land operated by a corporation or limited10.28partnership for the purpose of raising breeding stock, including10.29embryos, for resale to farmers or operated for the purpose of10.30growing seed, wild rice, nursery plants or sod. An entity that10.31is organized to raise livestock other than dairy cattle under10.32this clause that does not meet the definition requirement for an10.33authorized farm corporation must:10.34(1) sell all castrated animals to be fed out or finished to10.35farming operations that are neither directly nor indirectly10.36owned by the business entity operating the breeding stock11.1operation; and11.2(2) report its total production and sales annually to the11.3commissioner of agriculture;11.4(f) agricultural land and land capable of being used for11.5farming leased by a corporation or limited partnership in an11.6amount, measured in acres, not to exceed the acreage under lease11.7to such corporation as of May 20, 1973, or to the limited11.8partnership as of May 1, 1988, and the additional acreage11.9required for normal expansion at a rate not to exceed 20 percent11.10of the amount of land leased as of May 20, 1973, for a11.11corporation or May 1, 1988, for a limited partnership in any11.12five-year period, and the additional acreage reasonably11.13necessary to meet the requirements of pollution control rules;11.14(g) agricultural land when acquired as a gift (either by11.15grant or a devise) by an educational, religious, or charitable11.16nonprofit corporation or by a pension or investment fund or11.17limited partnership; provided that all lands so acquired by a11.18pension or investment fund, and all lands so acquired by a11.19corporation or limited partnership which are not operated for11.20research or experimental purposes, or are not operated for the11.21purpose of raising breeding stock for resale to farmers or11.22operated for the purpose of growing seed, wild rice, nursery11.23plants or sod must be disposed of within ten years after11.24acquiring title thereto;11.25(h) agricultural land acquired by a pension or investment11.26fund or a corporation other than a family farm corporation or11.27authorized farm corporation, as defined in subdivision 2, or a11.28limited partnership other than a family farm partnership or11.29authorized farm partnership as defined in subdivision 2, for11.30which the corporation or limited partnership has documented11.31plans to use and subsequently uses the land within six years11.32from the date of purchase for a specific nonfarming purpose, or11.33if the land is zoned nonagricultural, or if the land is located11.34within an incorporated area. A pension or investment fund or a11.35corporation or limited partnership may hold such agricultural11.36land in such acreage as may be necessary to its nonfarm business12.1operation; provided, however, that pending the development of12.2agricultural land for nonfarm purposes, such land may not be12.3used for farming except under lease to a family farm unit, a12.4family farm corporation, an authorized farm corporation, a12.5family farm partnership, or an authorized farm partnership, or12.6except when controlled through ownership, options, leaseholds,12.7or other agreements by a corporation which has entered into an12.8agreement with the United States of America pursuant to the New12.9Community Act of 1968 (Title IV of the Housing and Urban12.10Development Act of 1968, United States Code, title 42, sections12.113901 to 3914) as amended, or a subsidiary or assign of such a12.12corporation;12.13(i) agricultural lands acquired by a pension or investment12.14fund or a corporation or limited partnership by process of law12.15in the collection of debts, or by any procedure for the12.16enforcement of a lien or claim thereon, whether created by12.17mortgage or otherwise; provided, however, that all lands so12.18acquired be disposed of within ten years after acquiring the12.19title if acquired before May 1, 1988, and five years after12.20acquiring the title if acquired on or after May 1, 1988,12.21acquiring the title thereto, and further provided that the land12.22so acquired shall not be used for farming during the ten-year or12.23five-year period except under a lease to a family farm unit, a12.24family farm corporation, an authorized farm corporation, a12.25family farm partnership, or an authorized farm partnership. The12.26aforementioned ten-year or five-year limitation period shall be12.27deemed a covenant running with the title to the land against any12.28grantee, assignee, or successor of the pension or investment12.29fund, corporation, or limited partnership. Notwithstanding the12.30five-year divestiture requirement under this clause, a financial12.31institution may continue to own the agricultural land if the12.32agricultural land is leased to the immediately preceding former12.33owner, but must divest of the agricultural land within the12.34ten-year period. Livestock acquired by a pension or investment12.35fund, corporation, or limited partnership in the collection of12.36debts, or by a procedure for the enforcement of lien or claim on13.1the livestock whether created by security agreement or otherwise13.2after August 1, 1994, must be sold or disposed of within one13.3full production cycle for the type of livestock acquired or 1813.4months after the livestock is acquired, whichever is later;13.5(j) agricultural land acquired by a corporation regulated13.6under the provisions of Minnesota Statutes 1974, chapter 216B,13.7for purposes described in that chapter or by an electric13.8generation or transmission cooperative for use in its business,13.9provided, however, that such land may not be used for farming13.10except under lease to a family farm unit, a family farm13.11corporation, or a family farm partnership;13.12(k) agricultural land, either leased or owned, totaling no13.13more than 2,700 acres, acquired after May 20, 1973, for the13.14purpose of replacing or expanding asparagus growing operations,13.15provided that such corporation had established 2,000 acres of13.16asparagus production;13.17(l) all agricultural land or land capable of being used for13.18farming which was owned or leased by an authorized farm13.19corporation as defined in Minnesota Statutes 1974, section13.20500.24, subdivision 1, clause (d), but which does not qualify as13.21an authorized farm corporation as defined in subdivision 2,13.22clause (d);13.23(m) a corporation formed primarily for religious purposes13.24whose sole income is derived from agriculture;13.25(n) agricultural land owned or leased by a corporation13.26prior to August 1, 1975, which was exempted from the restriction13.27of this subdivision under the provisions of Laws 1973, chapter13.28427, including normal expansion of such ownership or leasehold13.29interest to be exercised at a rate not to exceed 20 percent of13.30the amount of land owned or leased on August 1, 1975, in any13.31five-year period and the additional ownership reasonably13.32necessary to meet requirements of pollution control rules;13.33(o) agricultural land owned or leased by a corporation13.34prior to August 1, 1978, including normal expansion of such13.35ownership or leasehold interest, to be exercised at a rate not13.36to exceed 20 percent of the amount of land owned or leased on14.1August 1, 1978, and the additional ownership reasonably14.2necessary to meet requirements of pollution control rules,14.3provided that nothing herein shall reduce any exemption14.4contained under the provisions of Laws 1975, chapter 324,14.5section 1, subdivision 2;14.6(p) an interest in the title to agricultural land acquired14.7by a pension fund or family trust established by the owners of a14.8family farm, authorized farm corporation or family farm14.9corporation, but limited to the farm on which one or more of14.10those owners or shareholders have resided or have been actively14.11engaged in farming as required by subdivision 2, clause (b),14.12(c), or (d);14.13(q) agricultural land owned by a nursing home located in a14.14city with a population, according to the state demographer's14.151985 estimate, between 900 and 1,000, in a county with a14.16population, according to the state demographer's 1985 estimate,14.17between 18,000 and 19,000, if the land was given to the nursing14.18home as a gift with the expectation that it would not be sold14.19during the donor's lifetime. This exemption is available until14.20July 1, 1995;14.21(r) the acreage of agricultural land and land capable of14.22being used for farming owned and recorded by an authorized farm14.23corporation as defined in Minnesota Statutes 1986, section14.24500.24, subdivision 2, paragraph (d), or a limited partnership14.25as of May 1, 1988, including the normal expansion of the14.26ownership at a rate not to exceed 20 percent of the land owned14.27and recorded as of May 1, 1988, measured in acres, in any14.28five-year period, and including additional ownership reasonably14.29necessary to meet the requirements of pollution control rules;14.30(s) agricultural land owned or leased as a necessary part14.31of an aquatic farm as defined in section 17.47, subdivision 3.14.32 Sec. 3. Minnesota Statutes 1996, section 500.24, 14.33 subdivision 3a, is amended to read: 14.34 Subd. 3a. [LEASE AGREEMENT; CONSERVATION PRACTICE 14.35 PROTECTION CLAUSE.] A corporation, pension or investment fund, 14.36 or limited partnership, other than a family farm corporation, an 15.1 authorized farm corporation, an authorized livestock farm 15.2 corporation, a family farm partnership, or an authorized farm 15.3 partnership, when leasing farm land to a family farm unit, a 15.4 family farm corporation, an authorized farm corporation, an 15.5 authorized livestock farm corporation, a family farm 15.6 partnership, or an authorized farm partnership under provisions 15.7 of subdivision3, clause (i)2, paragraph (v), must include 15.8 within the lease agreement a provision prohibiting intentional 15.9 damage or destruction to a conservation practice on the 15.10 agricultural land. 15.11 Sec. 4. Minnesota Statutes 1996, section 500.24, 15.12 subdivision 3b, is amended to read: 15.13 Subd. 3b. [PROTECTION OF CONSERVATION PRACTICES.]IfA 15.14 corporation, pension or investment fund, or limited partnership, 15.15 other than a family farm corporation, an authorized farm 15.16 corporation, an authorized livestock farm corporation, a family 15.17 farm partnership, or authorized farm partnership, which, during 15.18 the period of time it holds agricultural land under subdivision 15.193, clause (i)2, paragraph (v), intentionally destroys a 15.20 conservation practice as defined in section 103F.401, 15.21 subdivision 3, to which the state has made a financial 15.22 contribution,the corporation, pension or investment fund, or15.23limited partnershipmust pay the commissionerof agriculture, 15.24 for deposit in the general fund, an amount equal to the state's 15.25 total contributions to that conservation practice plus interest 15.26 from the time of investment in the conservation practice. 15.27 Interest must be calculated at an annual percentage rate of 12 15.28 percent. 15.29 Sec. 5. Minnesota Statutes 1996, section 500.24, 15.30 subdivision 4, is amended to read: 15.31 Subd. 4. [REPORTS.] (a) The chief executive officer of 15.32 every pension or investment fund, corporation, or limited 15.33 partnership, except a family farm corporation or a family farm15.34limited partnership,that holds any interest in agricultural 15.35 land or land used for the breeding, feeding, pasturing, growing, 15.36 or raising of livestock, dairy or poultry, or products thereof, 16.1 or land used for the production of agricultural crops or fruit 16.2 or other horticultural products, other than a bona fide 16.3 encumbrance taken for purposes of security, or which is engaged 16.4 in farming or proposing to commence farming in this state after 16.5 May 20, 1973, shall file with the commissionerof agriculturea 16.6 report containing the following information and documents: 16.7 (1) the name of the pension or investment fund, 16.8 corporation, or limited partnership and its place of 16.9 incorporation, certification, or registration; 16.10 (2) the address of the pension or investment plan 16.11 headquarters or of the registered office of the corporation in 16.12 this state, the name and address of its registered agent in this 16.13 state and, in the case of a foreign corporation or limited 16.14 partnership, the address of its principal office in its place of 16.15 incorporation, certification, or registration; 16.16 (3) the acreage and location listed by quarter-quarter 16.17 section, township, and county of each lot or parcel 16.18 of agricultural land or land used for the keeping or feeding of 16.19 poultry in this state owned or leased by the pension or 16.20 investment fund, limited partnership, or corporationand used16.21for the growing of crops or the keeping or feeding of poultry or16.22livestock; 16.23 (4) the names and addresses of the officers, 16.24 administrators, directors, or trustees of the pension or 16.25 investment fund, or of the officers, shareholders owning more 16.26 than ten percent of the stock, including the percent of stock 16.27 owned by each such shareholder, and the members of the board of 16.28 directors of the corporation, and the general and limited 16.29 partners and the percentage of interest in the partnership by 16.30 each partner; 16.31 (5) the farm products which the pension or investment fund, 16.32 limited partnership, or corporation produces or intends to 16.33 produce on its agricultural land; 16.34 (6) with the first report, a copy of the title to the 16.35 property where the farming operations are or will occur 16.36 indicating the particular exception claimed under subdivision 3,17.1clauses (a) to (r); and 17.2 (7) with the first or second report, a copy of the 17.3 conservation plan proposed by the soil and water conservation 17.4 district, and with subsequent reports a statement of whether the 17.5 conservation plan was implemented. 17.6 The report of a corporation seeking to qualify hereunder as 17.7 a family farm corporation, an authorized farm corporation, an 17.8 authorized livestock farm corporation, a family farm 17.9 partnership, or authorized farm partnership shall contain the 17.10 following additional information: the number of shares or the 17.11 partnership interests owned by persons residing on the farm or 17.12 actively engaged in farming, or their relatives within the third 17.13 degree of kindred according to the rules of the civil law or 17.14 their spouses; the name, address, and number of shares owned by 17.15 each shareholder or partnership interests owned by each partner; 17.16 and a statement as to percentage of gross receipts of the 17.17 corporation derived from rent, royalties, dividends, interest, 17.18 and annuities. No pension or investment fund, limited 17.19 partnership, or corporation shall commence farming in this state 17.20 until the commissionerof agriculturehas inspected the report 17.21 and certified that its proposed operations comply with the 17.22 provisions of this section. 17.23 (b) Every pension or investment fund, limited partnership, 17.24 or corporation as described inclauseparagraph (a) shall, prior 17.25 to April 15 of each year, file with the commissionerof17.26agriculturea report containing the information required 17.27 inclauseparagraph (a), based on its operations in the 17.28 preceding calendar year and its status at the end of the year. 17.29 A pension or investment fund, limited partnership, or 17.30 corporation that does not file the report by April 15 must pay a 17.31 $500 civil penalty. The penalty is a lien on the land being 17.32 farmed under subdivision 3 until the penalty is paid. 17.33 (c) The commissioneror the commissioner's authorized17.34representativemayenter into a written agreement with a person17.35required to file a report under this subdivision who, for good 17.36 cause shown,has failedissue a written waiver or reduction of 18.1 the civil penalty for failure to make a timely filing of the 18.2 annual report required by this subdivision.An agreement must18.3be construed as a "no contest" pleading and may encompass a18.4reduction or waiver of the civil penalty for late filing.The 18.5agreementwaiver or reduction is final and conclusive with 18.6 respect to the civil penalty, and may not be reopened or 18.7 modified by an officer, employee, or agent of the state, except 18.8 upon a showing of fraud or malfeasance or misrepresentation of a 18.9 material fact.The matter agreed upon in the agreement may not18.10be reopened or modified by an officer, employee, or agent of the18.11state.The report required under paragraph (b) must be 18.12 completed prior to a reduction or waiver under this 18.13 paragraph.The commissioner may enter into an agreement under18.14this paragraph only once for each person required to file under18.15this subdivision.The commissioner may enter into an agreement 18.16 under this paragraph only once for each corporation or 18.17 partnership. 18.18 (d) Failure to file a required report,or the willful 18.19 filing of false information, shall constituteis a gross 18.20 misdemeanor. 18.21 Sec. 6. [RENUMBERING INSTRUCTION.] 18.22 The revisor of statutes shall renumber Minnesota Statutes, 18.23 section 500.24, subdivisions 6, 7, and 8 to be subdivisions 1, 18.24 2, and 3 of a new section 500.245 with the section heading 18.25 "RIGHT OF FIRST REFUSAL FOR AGRICULTURAL LAND" and correct all 18.26 references to those subdivisions in Minnesota Statutes and 18.27 Minnesota Rules. 18.28 Sec. 7. [EFFECTIVE DATE.] 18.29 Sections 1 to 6 are effective the day after final enactment.