Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 622-S.F.No. 1948
An act relating to agriculture; providing for
cooperative farming agreements on certain lands;
changing the law limiting corporate farming; changing
liability of certain agricultural operations; creating
corporate farming law task force and requiring
legislative report; amending Minnesota Statutes 1992,
sections 97A.135, subdivision 3; 500.24, subdivisions
2 and 3; and 561.19, subdivisions 1 and 2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1992, section 97A.135,
subdivision 3, is amended to read:
Subd. 3. [COOPERATIVE FARMING AGREEMENTS.] On any public
hunting, game refuge, or wildlife management area, or scientific
and natural area lands, the commissioner may enter into written
cooperative farming agreements with nearby farmers on a
sharecrop basis, without competitive bidding, for the purpose of
establishing or maintaining wildlife food or cover for habitat
purposes and plant management. Cooperative farming agreements
may also be used to allow pasturing of livestock. The
agreements may provide for the bartering of a share of any crop,
not exceeding $1,500 in value and produced from these lands, for
services such as weed control, planting, cultivation, or other
wildlife habitat practices or products that will enhance or
benefit the management of state lands for plant and animal
species. Cooperative farming agreements pursuant to this
section shall not be considered leases for tax purposes under
section 272.01, subdivision 2, or 273.19.
Sec. 2. Minnesota Statutes 1992, section 500.24,
subdivision 2, is amended to read:
Subd. 2. [DEFINITIONS.] For the purposes of this section,
the terms defined in this subdivision have the meanings here
given them:
(a) "Farming" means the production of (1) agricultural
products; (2) livestock or livestock products; (3) milk or milk
products; or (4) fruit or other horticultural products. It does
not include the processing, refining, or packaging of said
products, nor the provision of spraying or harvesting services
by a processor or distributor of farm products. It does not
include the production of timber or forest products or the
production of poultry or poultry products.
(b) "Family farm" means an unincorporated farming unit
owned by one or more persons residing on the farm or actively
engaging in farming.
(c) "Family farm corporation" means a corporation founded
for the purpose of farming and the ownership of agricultural
land in which the majority of the voting stock is held by and
the majority of the stockholders are persons or the spouses of
persons related to each other within the third degree of kindred
according to the rules of the civil law, and at least one of
said related persons is residing on or actively operating the
farm, and none of whose stockholders are corporations; provided
that a family farm corporation shall not cease to qualify as
such hereunder by reason of any devise or bequest of shares of
voting stock.
(d) "Authorized farm corporation" means a corporation
meeting the following standards under clause (1) or (2):
(1)(i) its shareholders do not exceed five in number;
(2) (ii) all its shareholders, other than any estate are
natural persons;
(3) (iii) it does not have more than one class of shares;
and
(4) (iv) its revenues from rent, royalties, dividends,
interest and annuities does not exceed 20 percent of its gross
receipts; and
(5) (v) shareholders holding 51 percent or more of the
interest in the corporation must be residing on the farm or
actively engaging in farming;
(6) (vi) the authorized farm corporation, directly or
indirectly, owns or otherwise has an interest, whether legal,
beneficial, or otherwise, in any title to no more than 1,500
acres of real estate used for farming or capable of being used
for farming in this state; and
(7) (vii) a shareholder of the authorized farm corporation
is not a shareholder in other authorized farm corporations that
directly or indirectly in combination with the authorized farm
corporation own not more than 1,500 acres of real estate used
for farming or capable of being used for farming in this state.;
or
(2)(i) the corporation is engaged in the production of
livestock other than dairy cattle; and not engaged in farming
activities otherwise prohibited under this section;
(ii) all its shareholders other than an estate, are natural
persons or a family farm corporation;
(iii) it does not have more than one class of shares;
(iv) its revenue from rent, royalties, dividends, interest
and annuities does not exceed 20 percent of its gross receipts;
(v) shareholders holding 75 percent or more of the control
and financial investment in the corporation must be farmers
residing in Minnesota and at least 51 percent of the required
percentage of farmers must be actively engaged in livestock
production;
(vi) the authorized farm corporation, directly or
indirectly, owns or otherwise has an interest, whether legal,
beneficial, or otherwise, in any title to no more than 1,500
acres of real estate used for farming or capable of being used
for farming in this state;
(vii) a shareholder of the authorized farm corporation is
not a shareholder in other authorized farm corporations that
directly or indirectly in combination with the authorized farm
corporation own not more than 1,500 acres of real estate used
for farming or capable of being used for farming in this state;
and
(viii) the corporation was formed for the production of
livestock other than dairy cattle by natural persons or family
farm corporations that provide 75 percent or more of the capital
investment.
(e) "Agricultural land" means land used for farming.
(f) "Pension or investment fund" means a pension or
employee welfare benefit fund, however organized, a mutual fund,
a life insurance company separate account, a common trust of a
bank or other trustee established for the investment and
reinvestment of money contributed to it, a real estate
investment trust, or an investment company as defined in United
States Code, title 15, section 80a-3. "Pension or investment
fund" does not include a benevolent trust established by the
owners of a family farm, authorized farm corporation or family
farm corporation.
(g) "Farm homestead" means a house including adjoining
buildings that has been used as part of a farming operation or
is part of the agricultural land used for a farming operation.
(h) "Family farm partnership" means a limited partnership
formed for the purpose of farming and the ownership of
agricultural land in which the majority of the interests in the
partnership is held by and the majority of the partners are
persons or the spouses of persons related to each other within
the third degree of kindred according to the rules of the civil
law, and at least one of the related persons is residing on or
actively operating the farm, and none of the partners are
corporations. A family farm partnership does not cease to
qualify as a family farm partnership because of a devise or
bequest of interest in the partnership.
(i) "Authorized farm partnership" means a limited
partnership meeting the following standards:
(1) it has been issued a certificate from the secretary of
state or is registered with the county recorder and farming and
ownership of agricultural land is stated as a purpose or
character of the business;
(2) its partners do not exceed five in number;
(3) all its partners, other than an estate, are natural
persons;
(4) its revenues from rent, royalties, dividends, interest,
and annuities do not exceed 20 percent of its gross receipts;
(5) its general partners hold at least 51 percent of the
interest in the land assets of the partnership and reside on the
farm or are actively engaging in farming not more than 1,500
acres as a general partner in an authorized limited partnership;
(6) its limited partners do not participate in the business
of the limited partnership including operating, managing, or
directing management of farming operations;
(7) the authorized farm partnership, directly or
indirectly, does not own or otherwise have an interest, whether
legal, beneficial, or otherwise, in a title to more than 1,500
acres of real estate used for farming or capable of being used
for farming in this state; and
(8) a limited partner of the authorized farm partnership is
not a limited partner in other authorized farm partnerships that
directly or indirectly in combination with the authorized farm
partnership own not more than 1,500 acres of real estate used
for farming or capable of being used for farming in this state.
(j) "Farmer" means a person who regularly participates in
physical labor or operations management in the farmer's farming
operation and files "Schedule F" as part of the person's annual
Form 1040 filing with the United States Internal Revenue Service.
(k) "Actively engaged in livestock production" means that a
person performs day-to-day physical labor or day-to-day
operations management that significantly contributes to
livestock production and the functioning of a livestock
operation.
Sec. 3. Minnesota Statutes 1992, section 500.24,
subdivision 3, is amended to read:
Subd. 3. [FARMING AND OWNERSHIP OF AGRICULTURAL LAND BY
CORPORATIONS RESTRICTED.] No corporation, limited liability
company, pension or investment fund, or limited partnership
shall engage in farming; nor shall any corporation, limited
liability company, pension or investment fund, or limited
partnership, directly or indirectly, own, acquire, or otherwise
obtain an interest, whether legal, beneficial or otherwise, in
any title to real estate used for farming or capable of being
used for farming in this state. Livestock that are delivered
for slaughter or processing may be fed and cared for by a
corporation up to 20 days prior to slaughter or processing.
Provided, however, that the restrictions in this subdivision do
not apply to corporations or partnerships in clause (b) and do
not apply to corporations, limited partnerships, and pension or
investment funds that record its name and the particular
exception under clauses (a) to (s) under which the agricultural
land is owned or farmed, have a conservation plan prepared for
the agricultural land, report as required under subdivision 4,
and satisfy one of the following conditions under clauses (a) to
(s):
(a) a bona fide encumbrance taken for purposes of security;
(b) a family farm corporation, an authorized farm
corporation, a family farm partnership, or an authorized farm
partnership as defined in subdivision 2 or a general
partnership;
(c) agricultural land and land capable of being used for
farming owned by a corporation as of May 20, 1973, or a pension
or investment fund as of May 12, 1981, including the normal
expansion of such ownership at a rate not to exceed 20 percent
of the amount of land owned as of May 20, 1973, or, in the case
of a pension or investment fund, as of May 12, 1981, measured in
acres, in any five-year period, and including additional
ownership reasonably necessary to meet the requirements of
pollution control rules;
(d) agricultural land operated for research or experimental
purposes with the approval of the commissioner of agriculture,
provided that any commercial sales from the operation must be
incidental to the research or experimental objectives of the
corporation. A corporation, limited partnership, or pension or
investment fund seeking to operate agricultural land for
research or experimental purposes must submit to the
commissioner a prospectus or proposal of the intended method of
operation, containing information required by the commissioner
including a copy of any operational contract with individual
participants, prior to initial approval of an operation. A
corporation, limited partnership, or pension or investment fund
operating agricultural land for research or experimental
purposes prior to May 1, 1988, must comply with all requirements
of this clause except the requirement for initial approval of
the project;
(e) agricultural land operated by a corporation or limited
partnership for the purpose of raising breeding stock, including
embryos, for resale to farmers or operated for the purpose of
growing seed, wild rice, nursery plants or sod. An entity that
is organized to raise livestock other than dairy cattle under
this clause that does not meet the definition requirement for an
authorized farm corporation must:
(1) sell all castrated animals to be fed out or finished to
farming operations that are neither directly or indirectly owned
by the business entity operating the breeding stock operation;
and
(2) report its total production and sales annually to the
commissioner of agriculture;
(f) agricultural land and land capable of being used for
farming leased by a corporation or limited partnership in an
amount, measured in acres, not to exceed the acreage under lease
to such corporation as of May 20, 1973, or to the limited
partnership as of May 1, 1988, and the additional acreage
required for normal expansion at a rate not to exceed 20 percent
of the amount of land leased as of May 20, 1973, for a
corporation or May 1, 1988, for a limited partnership in any
five-year period, and the additional acreage reasonably
necessary to meet the requirements of pollution control rules;
(g) agricultural land when acquired as a gift (either by
grant or a devise) by an educational, religious, or charitable
nonprofit corporation or by a pension or investment fund or
limited partnership; provided that all lands so acquired by a
pension or investment fund, and all lands so acquired by a
corporation or limited partnership which are not operated for
research or experimental purposes, or are not operated for the
purpose of raising breeding stock for resale to farmers or
operated for the purpose of growing seed, wild rice, nursery
plants or sod must be disposed of within ten years after
acquiring title thereto;
(h) agricultural land acquired by a pension or investment
fund or a corporation other than a family farm corporation or
authorized farm corporation, as defined in subdivision 2, or a
limited partnership other than a family farm partnership or
authorized farm partnership as defined in subdivision 2, for
which the corporation or limited partnership has documented
plans to use and subsequently uses the land within six years
from the date of purchase for a specific nonfarming purpose, or
if the land is zoned nonagricultural, or if the land is located
within an incorporated area. A pension or investment fund or a
corporation or limited partnership may hold such agricultural
land in such acreage as may be necessary to its nonfarm business
operation; provided, however, that pending the development of
agricultural land for nonfarm purposes, such land may not be
used for farming except under lease to a family farm unit, a
family farm corporation, an authorized farm corporation, a
family farm partnership, or an authorized farm partnership, or
except when controlled through ownership, options, leaseholds,
or other agreements by a corporation which has entered into an
agreement with the United States of America pursuant to the New
Community Act of 1968 (Title IV of the Housing and Urban
Development Act of 1968, United States Code, title 42, sections
3901 to 3914) as amended, or a subsidiary or assign of such a
corporation;
(i) agricultural lands acquired by a pension or investment
fund or a corporation or limited partnership by process of law
in the collection of debts, or by any procedure for the
enforcement of a lien or claim thereon, whether created by
mortgage or otherwise; provided, however, that all lands so
acquired be disposed of within ten years after acquiring the
title if acquired before May 1, 1988, and five years after
acquiring the title if acquired on or after May 1, 1988,
acquiring the title thereto, and further provided that the land
so acquired shall not be used for farming during the ten-year or
five-year period except under a lease to a family farm unit, a
family farm corporation, an authorized farm corporation, a
family farm partnership, or an authorized farm partnership. The
aforementioned ten-year or five-year limitation period shall be
deemed a covenant running with the title to the land against any
grantee, assignee, or successor of the pension or investment
fund, corporation, or limited partnership. Notwithstanding the
five-year divestiture requirement under this clause, a financial
institution may continue to own the agricultural land if the
agricultural land is leased to the immediately preceding former
owner, but must divest of the agricultural land within the
ten-year period. Livestock acquired by a pension or investment
fund, corporation, or limited partnership in the collection of
debts, or by a procedure for the enforcement of lien or claim on
the livestock whether created by security agreement or otherwise
after the effective date of this act, must be sold or disposed
of within one full production cycle for the type of livestock
acquired or 18 months after the livestock is acquired, whichever
is later;
(j) agricultural land acquired by a corporation regulated
under the provisions of Minnesota Statutes 1974, chapter 216B,
for purposes described in that chapter or by an electric
generation or transmission cooperative for use in its business,
provided, however, that such land may not be used for farming
except under lease to a family farm unit, a family farm
corporation, or a family farm partnership;
(k) agricultural land, either leased or owned, totaling no
more than 2,700 acres, acquired after May 20, 1973, for the
purpose of replacing or expanding asparagus growing operations,
provided that such corporation had established 2,000 acres of
asparagus production;
(l) all agricultural land or land capable of being used for
farming which was owned or leased by an authorized farm
corporation as defined in Minnesota Statutes 1974, section
500.24, subdivision 1, clause (d), but which does not qualify as
an authorized farm corporation as defined in subdivision 2,
clause (d);
(m) a corporation formed primarily for religious purposes
whose sole income is derived from agriculture;
(n) agricultural land owned or leased by a corporation
prior to August 1, 1975, which was exempted from the restriction
of this subdivision under the provisions of Laws 1973, chapter
427, including normal expansion of such ownership or leasehold
interest to be exercised at a rate not to exceed 20 percent of
the amount of land owned or leased on August 1, 1975, in any
five-year period and the additional ownership reasonably
necessary to meet requirements of pollution control rules;
(o) agricultural land owned or leased by a corporation
prior to August 1, 1978, including normal expansion of such
ownership or leasehold interest, to be exercised at a rate not
to exceed 20 percent of the amount of land owned or leased on
August 1, 1978, and the additional ownership reasonably
necessary to meet requirements of pollution control rules,
provided that nothing herein shall reduce any exemption
contained under the provisions of Laws 1975, chapter 324,
section 1, subdivision 2;
(p) an interest in the title to agricultural land acquired
by a pension fund or family trust established by the owners of a
family farm, authorized farm corporation or family farm
corporation, but limited to the farm on which one or more of
those owners or shareholders have resided or have been actively
engaged in farming as required by subdivision 2, clause (b),
(c), or (d);
(q) agricultural land owned by a nursing home located in a
city with a population, according to the state demographer's
1985 estimate, between 900 and 1,000, in a county with a
population, according to the state demographer's 1985 estimate,
between 18,000 and 19,000, if the land was given to the nursing
home as a gift with the expectation that it would not be sold
during the donor's lifetime. This exemption is available until
July 1, 1995;
(r) the acreage of agricultural land and land capable of
being used for farming owned and recorded by an authorized farm
corporation as defined in Minnesota Statutes 1986, section
500.24, subdivision 2, paragraph (d), or a limited partnership
as of May 1, 1988, including the normal expansion of the
ownership at a rate not to exceed 20 percent of the land owned
and recorded as of May 1, 1988, measured in acres, in any
five-year period, and including additional ownership reasonably
necessary to meet the requirements of pollution control rules;
(s) agricultural land owned or leased as a necessary part
of an aquatic farm as defined in section 17.47, subdivision 3.
Sec. 4. Minnesota Statutes 1992, section 561.19,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the following terms have the meanings given them:
(a) "Agricultural operation" means a facility and its
appurtenances for the production of crops, livestock, poultry,
dairy products or poultry products, but not a facility primarily
engaged in processing agricultural products.
(b) "Established date of operation" means the date on which
the agricultural operation commenced. If the agricultural
operation is subsequently expanded or significantly altered, the
established date of operation for each expansion or alteration
is deemed to be the date of commencement of the expanded or
altered operation. As used in this paragraph, "expanded or
significantly altered" means:
(1) an expansion by at least 25 percent in the amount of a
particular crop grown or the number of a particular kind of
animal or livestock located on an agricultural operation; or
(2) a distinct change in the kind of agricultural
operation, as in changing from one kind of crop, livestock,
animal, or product to another, but not merely a change from one
generally accepted agricultural practice to another in producing
the same crop or product.
(c) "Family farm" means an unincorporated farm unit owned
by one or more persons or spouses of persons related to each
other within the third degree of kindred according to the rules
of the civil law at least one of whom is residing or actively
engaged in farming on the farm unit, or a "family farm
corporation," as that term is defined in section 500.24,
subdivision 2.
Sec. 5. Minnesota Statutes 1992, section 561.19,
subdivision 2, is amended to read:
Subd. 2. [AGRICULTURAL OPERATION NOT A NUISANCE.] (a) An
agricultural operation which is a part of a family farm is not
and shall not become a private or public nuisance after six two
years from its established date of operation if the operation
was not a nuisance at its established date of operation.
(b) An agricultural operation is operating according to
generally accepted agricultural practices if it is located in an
agriculturally zoned area and complies with the provisions of
all applicable federal and state statutes and rules or any
issued permits for the operation.
(c) The provisions of this subdivision do not apply:
(a) (1) to a condition or injury which results from the
negligent or improper operation of an agricultural operation or
from operations contrary to commonly accepted agricultural
practices or to applicable state or local laws, ordinances,
rules, or permits;
(b) (2) when an agricultural operation causes injury or
direct threat of injury to the health or safety of any person;
(c) (3) to the pollution of, or change in the condition of,
the waters of the state or the overflow of waters on the lands
of any person;
(d) (4) to an animal feedlot facility with a swine capacity
of 1,000 or more animal units as defined in the rules of the
pollution control agency for control of pollution from animal
feedlots, or a cattle capacity of 2,500 animals or more; or
(e) (5) to any prosecution for the crime of public nuisance
as provided in section 609.74 or to an action by a public
authority to abate a particular condition which is a public
nuisance.
Sec. 6. [CORPORATE FARMING LAW TASK FORCE.]
Subdivision 1. [PURPOSE.] Current Minnesota law generally
precludes corporations from owning farm land or operating a
farming enterprise. Corporate farming law has been developed
over a period of 14 decades, and the development has included
numerous changes to accommodate shifting priorities in
agriculture and a recognition that the economic and social
climate of the state is not static. There is a concern whether
current corporate farming law, especially as it relates to the
breeding and raising of swine, represents the appropriate
balance between protection of family farms and opportunity for
creative new enterprise structures organized by multiple farmers.
Farmers wish to support a corporate farming law that is in the
overall best interest of production agriculture and preservation
of the family farm unit as the main component of the
agricultural economy in the state. The study, legislative
report, and legislative recommendations authorized by this
section will increase public and legislative understanding of
the issues involved.
Subd. 2. [CREATION; MEMBERSHIP.] (a) There is hereby
created a corporate farming law task force with ten members
appointed as follows:
(1) the chairs of the agriculture policy committees of the
Minnesota senate and house of representatives, or their
designees;
(2) two members of the Minnesota house of representatives
appointed by the speaker of the house;
(3) one member of the Minnesota house of representatives
appointed by the minority leader of the house;
(4) two members of the Minnesota senate appointed by the
senate committee on rules and administration;
(5) one member of the Minnesota senate appointed by the
minority leader of the senate;
(6) one member with education and experience in the area of
agricultural economics appointed by the governor of Minnesota;
and
(7) one member who is the operator of a production
agriculture farm in Minnesota appointed by the governor.
(b) Each of the appointing authorities must make their
respective appointments not later than June 15, 1994.
(c) Citizen members of the task force may be reimbursed for
expenses as provided in Minnesota Statutes, section 15.059,
subdivision 6.
(d) The first meeting of the task force must be called and
convened by the chairs of the agriculture policy committees of
the senate and the house of representatives. Task force members
must then elect a permanent chair from among the task force
members.
Subd. 3. [CHARGE.] The task force must examine current and
projected impacts of corporate, partnership, and limited
liability company farming enterprises on the economic, social,
and environmental conditions and structures of rural Minnesota.
The study should consider probable impacts on both agriculture
related and nonagricultural businesses in rural communities.
Issues of nonpoint source pollution and other environmental
issues must also be considered. The task force shall also
examine the issue of responsibility for potential pollution
damage.
Subd. 4. [RESOURCES; STAFF SUPPORT; CONTRACT SERVICES.]
The commissioner of agriculture shall provide necessary
resources and staff support for the meetings, hearings,
activities, and report of the task force. To the extent the
task force determines it appropriate to contract with nonstate
providers for research or analytical services, the commissioner
shall serve as the fiscal agent for the task force.
Subd. 5. [PUBLIC HEARINGS.] The task force shall hold at
least four public hearings on the issue of corporate farming law
and the impacts of other potential legal structures of farming
operations, with specific emphasis on appropriate regulation of
business structures involved in swine breeding and raising. At
least three of the hearings must be held in greater Minnesota.
Subd. 6. [REPORT.] Not later than February 15, 1995, the
corporate farming law task force shall report to the legislature
on the findings of its study. The report must include
recommendations for improvements in Minnesota Statutes that are
in the best interests of production agriculture in the state and
the economic, environmental, and social environment and
preservation of the family farm.
Subd. 7. [EXPIRATION.] The corporate farming law task
force expires 45 days after its report and recommendations are
delivered to the legislature or on May 15, 1995, whichever date
is earlier.
Sec. 7. [EFFECTIVE DATE.]
Section 6 is effective the day following final enactment.
Presented to the governor May 6, 1994
Signed by the governor May 10, 1994, 3:54 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes