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1986 Minnesota Session Laws

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                         Laws of Minnesota 1986 

                        CHAPTER 398-H.F.No. 1599 
           An act relating to agriculture; establishing the rural 
          finance administration; authorizing the sale of state 
          bonds; ratifying and approving an interstate compact 
          on agricultural grain marketing; authorizing 
          development of a plan for a memorial to Native 
          Americans; establishing a mediation procedure; 
          re-enacting an interest buydown program; authorizing 
          certain deficiency judgments; prescribing a procedure 
          to determine the amount of certain agricultural 
          deficiency judgments; providing for farm advocate 
          guidelines; reactivating the data collection task 
          force; authorizing additional interest payments to 
          certain family farm security program sellers; 
          increasing the allowable width of certain trucks; 
          authorizing trucks hauling sugar beets or potatoes to 
          be overweight during certain periods; declaring crop 
          ownership; prescribing a procedure for planting crop 
          owners to recover crop value; providing for a lien; 
          prescribing satisfaction and enforcement of liens; 
          modifying venue to recover possession of personal 
          property; allowing designation, sale and redemption of 
          an agricultural homestead that is executed on and sold 
          as part of other property; allowing designation, sale, 
          and redemption of a homestead foreclosed on or part of 
          other property; establishing filing requirements, 
          enforcement, and priority of veterinarian's liens; 
          declaring state policy relating to wild rice; 
          increasing the homestead exemption to 160 acres; 
          exempting agricultural property for certain purposes; 
          providing certain rights of first refusal; 
          establishing a legal services support program; 
          protecting certain conservation practices; changing 
          the agricultural land preservation pilot program; 
          protecting certain rights-of-way from erosion; 
          changing certain variances requiring a study; 
          authorizing certain soil and water purification tests; 
          appropriating money and authorizing issuance of bonds; 
          excluding certain capital gains; amending Minnesota 
          Statutes 1984, sections 138.585, by adding a 
          subdivision; 160.27, subdivision 5; 169.01, 
          subdivision 7; 169.80, subdivision 1; 169.81, 
          subdivisions 2 and 3; 169.825, subdivisions 8, 10, 11, 
          and by adding a subdivision; 169.832, by adding a 
          subdivision; 169.86, subdivisions 2 and 5; 290.08, by 
          adding a subdivision; 336.9-501; 480.24, by adding a 
          subdivision; 480.242, subdivision 2; 500.24, by adding 
          subdivisions; 510.02; 514.92; 542.06; 572.33, 
          subdivision 1, and by adding a subdivision; 572.35; 
          580.23, subdivision 1; 581.09; Minnesota Statutes 1985 
          Supplement, sections 40.26; 92.50, subdivision 1; 
          92.501, subdivisions 1 and 2; 160.232; 168.013, 
          subdivision 1e; 169.862; 221.033, subdivision 3; 
          256.73, subdivision 2; 290.01, subdivision 20b; 
          290.091, subdivision 2; 290.491; 473H.10, subdivision 
          3; Laws 1985, chapter 19, section 2, subdivision 2, 
          and by adding a subdivision, and section 6, 
          subdivision 6; proposing coding for new law in 
          Minnesota Statutes, chapters 17; 40A; 116; 222; 273; 
          480; 514; 550; 557; 559; 572; 580; 581; 582; and 583; 
          proposing coding for new law as Minnesota Statutes, 
          chapters 41B; and 236A; repealing Minnesota Statutes 
          1984, sections 561.11; 561.12; 561.13; 561.14; 561.15; 
          561.16; and 582.04. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 

                               MEDIATION 
    Section 1.  Minnesota Statutes 1984, section 336.9-501, is 
amended to read:  
    336.9-501 [DEFAULT; PROCEDURE WHEN SECURITY AGREEMENT 
COVERS BOTH REAL AND PERSONAL PROPERTY.] 
    (1) When a debtor is in default under a security agreement, 
a secured party has the rights and remedies provided in this 
part and except as limited by subsection (3) those provided in 
the security agreement.  He may reduce his claim to judgment, 
foreclose, or otherwise enforce the security interest by any 
available judicial procedure.  If the collateral is documents 
the secured party may proceed either as to the documents or as 
to the goods covered thereby.  A secured party in possession has 
the rights, remedies, and duties provided in section 336.9-207.  
The rights and remedies referred to in this subsection are 
cumulative. 
    (2) After default, the debtor has the rights and remedies 
provided in this part, those provided in the security agreement, 
and those provided in section 336.9-207. 
    (3) To the extent that they give rights to the debtor and 
impose duties on the secured party, the rules stated in the 
subsections referred to below may not be waived or varied except 
as provided with respect to compulsory disposition of collateral 
(subsection (3) of section 336.9-504 and section 336.9-505) and 
with respect to redemption of collateral (section 336.9-506) but 
the parties may by agreement determine the standards by which 
the fulfillment of these rights and duties is to be measured if 
such standards are not manifestly unreasonable: 
    (a) Subsection (2) of section 336.9-502 and subsection (2) 
of section 336.9-504 insofar as they require accounting for 
surplus proceeds of collateral; 
    (b) Subsection (3) of section 336.9-504 and subsection (1) 
of section 336.9-505 which deal with disposition of collateral; 
    (c) Subsection (2) of section 336.9-505 which deals with 
acceptance of collateral as discharge of obligation; 
    (d) Section 336.9-506 which deals with redemption of 
collateral; and 
    (e) Subsection (1) of section 336.9-507 which deals with 
the secured party's liability for failure to comply with this 
part. 
    (4) If the security agreement covers both real and personal 
property, the secured party may proceed under this part as to 
the personal property or he may proceed as to both the real and 
the personal property in accordance with his rights and remedies 
in respect of the real property in which case the provisions of 
this part do not apply. 
    (5) When a secured party has reduced his claim to judgment 
the lien of any levy which may be made upon his collateral by 
virtue of any execution based upon the judgment shall relate 
back to the date of the perfection of the security interest in 
such collateral.  A judicial sale, pursuant to such execution, 
is a foreclosure of the security interest by judicial procedure 
within the meaning of this section, and the secured party may 
purchase at the sale and thereafter hold the collateral free of 
any other requirements of this article. 
    (6) A person may not begin to enforce a security interest 
in collateral that is agricultural property subject to sections 
5 to 17 that has secured a debt of more than $5,000 unless:  a 
mediation notice under subsection (7) is served on the debtor 
and a copy filed with the director; and the debtor and creditor 
have completed mediation under sections 5 to 17.  
    (7) A mediation notice under subsection (6) must contain 
the following notice with the blanks properly filled in. 
    "TO:  ....(Name of Debtor)....  
    YOU HAVE DEFAULTED ON THE ....(Debt in Default).... SECURED 
BY AGRICULTURAL PROPERTY DESCRIBED AS ....(Reasonable 
Description of Agricultural Property Collateral).... 
    AS A SECURED PARTY, ....(Name of Secured Party).... INTENDS 
TO ENFORCE THE SECURITY AGREEMENT AGAINST THE AGRICULTURAL 
PROPERTY DESCRIBED ABOVE BY REPOSSESSING, FORECLOSING ON, OR 
OBTAINING A COURT JUDGMENT AGAINST THE PROPERTY. 
    YOU HAVE THE RIGHT TO HAVE THE DEBT REVIEWED FOR 
MEDIATION.  IF YOU PARTICIPATE IN MEDIATION, THE DIRECTOR OF THE 
AGRICULTURAL EXTENSION SERVICE WILL PROVIDE A CREDIT ANALYST TO 
HELP YOU TO PREPARE FINANCIAL INFORMATION.  MEDIATION WILL 
ATTEMPT TO ARRIVE AT AN AGREEMENT FOR HANDLING FUTURE FINANCIAL 
RELATIONS.  
    TO HAVE THE DEBT REVIEWED FOR MEDIATION YOU MUST FILE A 
MEDIATION REQUEST WITH THE DIRECTOR ....(Date of 14 Days after 
Service of the Mediation Notice)....  THE MEDIATION REQUEST FORM 
IS AVAILABLE AT ANY COUNTY RECORDER'S OR COUNTY EXTENSION OFFICE.
    FROM:  ....(Name and Address of Secured Party)...." 
    Sec. 2.  [550.365] [MEDIATION NOTICE AND CONDITIONS FOR 
AGRICULTURAL PROPERTY.] 
    Subdivision 1.  [REQUIREMENT.] A person may not attach, 
execute on, levy on, or seize agricultural property subject to 
sections 5 to 17 that has secured a debt of more than $5,000 
unless:  (1) a mediation notice is served on the judgment debtor 
and a copy filed with the director; and (2) the debtor and 
creditor have completed mediation under sections 5 to 17. 
    Subd. 2.  [CONTENTS.] A mediation notice must contain the 
following notice with the blanks properly filled in. 
    "TO:  ....(Name of Judgment Debtor).... 
    A JUDGMENT WAS ORDERED AGAINST YOU BY ....(Name of 
Court).... ON ....(Date of Judgment). 
    AS A JUDGMENT CREDITOR, ....(Name of Judgment Creditor).... 
INTENDS TO TAKE ACTION AGAINST THE AGRICULTURAL PROPERTY 
DESCRIBED AS ....(Description of Agricultural Property).... TO 
SATISFY THE JUDGMENT. 
    YOU HAVE THE RIGHT TO HAVE THE DEBT REVIEWED FOR 
MEDIATION.  IF YOU PARTICIPATE IN MEDIATION, THE DIRECTOR OF THE 
AGRICULTURAL EXTENSION SERVICE WILL PROVIDE A CREDIT ANALYST TO 
HELP YOU PREPARE FINANCIAL INFORMATION.  MEDIATION WILL ATTEMPT 
TO ARRIVE AT AN AGREEMENT FOR HANDLING FUTURE FINANCIAL 
RELATIONS.  
    TO HAVE THE DEBT REVIEWED FOR MEDIATION YOU MUST FILE A 
MEDIATION REQUEST WITH THE DIRECTOR ....(Date of 14 Days after 
Service of the Mediation Notice)....  THE MEDIATION REQUEST FORM 
IS AVAILABLE AT ANY COUNTY RECORDER'S OR COUNTY EXTENSION OFFICE.
    FROM:  ....(Name and Address of Judgment Creditor)...." 
    Sec. 3.  [559.209] [MEDIATION NOTICE AND CONDITIONS FOR 
AGRICULTURAL PROPERTY.] 
    Subdivision 1.  [REQUIREMENT.] A person may not begin to 
terminate a contract for deed under section 559.21 to purchase 
agricultural property subject to sections 5 to 17 that secured a 
debt of more than $5,000 unless:  (1) a mediation notice is 
served on the contract for deed purchaser and a copy filed with 
the director; and (2) the contract for deed vendor and purchaser 
have completed mediation under sections 5 to 17. 
    Subd. 2.  [CONTENTS.] A mediation notice must contain the 
following notice with the blanks properly filled in.  
    "TO:  ....(Name of Contract for Deed Purchaser).... 
    YOU HAVE DEFAULTED ON THE CONTRACT FOR DEED OF THE 
AGRICULTURAL PROPERTY DESCRIBED AS ....(Size and Reasonable 
Location of Property, Not Legal Description).... 
    AS THE CONTRACT FOR DEED VENDOR, ....(Contract for Deed 
Vendor).... INTENDS TO TERMINATE THE CONTRACT AND TAKE BACK THE 
PROPERTY. 
    YOU HAVE THE RIGHT TO HAVE THE CONTRACT FOR DEED DEBT 
REVIEWED FOR MEDIATION.  IF YOU PARTICIPATE IN MEDIATION, THE 
DIRECTOR OF THE AGRICULTURAL EXTENSION SERVICE WILL PROVIDE A 
CREDIT ANALYST TO HELP YOU PREPARE FINANCIAL INFORMATION.  
MEDIATION WILL ATTEMPT TO ARRIVE AT AN AGREEMENT FOR HANDLING 
FUTURE FINANCIAL RELATIONS. 
    TO HAVE THE CONTRACT FOR DEED DEBT REVIEWED FOR MEDIATION 
YOU MUST FILE A MEDIATION REQUEST WITH THE DIRECTOR BY ....(Date 
of 14 Days after Service of the Mediation Notice).... THE 
MEDIATION REQUEST FORM IS AVAILABLE AT ANY COUNTY RECORDER'S OR 
COUNTY EXTENSION OFFICE. 
    FROM:  ....(Name and Address of Contract for Deed 
                 Vendor)...." 
    Sec. 4.  [581.015] [MEDIATION NOTICE AND CONDITIONS FOR 
AGRICULTURAL PROPERTY.] 
    Subdivision 1.  [REQUIREMENT.] A person may not begin a 
proceeding under this chapter to foreclose a mortgage on 
agricultural property subject to sections 5 to 17 that has a 
secured debt of more than $5,000 unless:  (1) a mediation notice 
is served on the mortgagor and a copy is filed with the 
director; and (2) the mortgagor and mortgagee have completed 
mediation under sections 5 to 17. 
    Subd. 2.  [CONTENTS.] A mediation notice must contain the 
following notice with the blanks properly filled in.  
    "TO:  ....(Name of Record Owner).... 
     YOU HAVE DEFAULTED ON THE MORTGAGE OF THE AGRICULTURAL 
PROPERTY DESCRIBED AS ....(Size and Reasonable Location, Not 
Legal Description).... 
     AS HOLDER OF THE MORTGAGE, ....(Name of Holder of 
Mortgage).... INTENDS TO FORECLOSE ON THE PROPERTY DESCRIBED 
ABOVE. 
    YOU HAVE THE RIGHT TO HAVE THE MORTGAGE DEBT REVIEWED FOR 
MEDIATION.  IF YOU PARTICIPATE IN MEDIATION, THE DIRECTOR OF THE 
AGRICULTURAL EXTENSION SERVICE WILL PROVIDE A CREDIT ANALYST TO 
HELP YOU PREPARE FINANCIAL INFORMATION.  MEDIATION WILL ATTEMPT 
TO ARRIVE AT AN AGREEMENT FOR HANDLING FUTURE FINANCIAL 
RELATIONS.  
    TO HAVE THE MORTGAGE DEBT REVIEWED FOR MEDIATION YOU MUST 
FILE A MEDIATION REQUEST WITH THE DIRECTOR ....(Date of 14 Days 
after Service of the Mediation Notice)....  THE MEDIATION 
REQUEST FORM IS AVAILABLE AT ANY COUNTY RECORDER'S OR COUNTY 
EXTENSION OFFICE. 
    FROM:  ....(Name and Address of Holder of Mortgage)...." 
    Sec. 5.  [583.20] [CITATION.] 
    Sections 5 to 17 may be cited as the "farmer-lender 
mediation act." 
    Sec. 6.  [583.21] [LEGISLATIVE FINDINGS.] 
    The legislature finds that the agricultural sector of the 
state's economy is under severe financial stress due to low farm 
commodity prices, continuing high interest rates, and reduced 
net farm income.  The suffering agricultural economy adversely 
affects economic conditions for all other businesses in rural 
communities as well.  Thousands of this state's farmers are 
unable to meet current payments of interest and principal 
payable on mortgages and other loan and land contracts and are 
threatened with the loss of their farmland, equipment, crops, 
and livestock through mortgage and lien foreclosures, 
cancellation of contracts for deed, and other collection 
actions.  The agricultural economic emergency requires an 
orderly process with state assistance to adjust agricultural 
indebtedness to prevent civil unrest and to preserve the general 
welfare and fiscal integrity of the state. 
    Sec. 7.  [583.22] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 7 to 17. 
    Subd. 2.  [AGRICULTURAL PROPERTY.] "Agricultural property" 
means real property that is principally used for farming as 
defined in section 500.24, subdivision 2, paragraph (a), and 
raising poultry, and personal property that is used as security 
to finance a farm operation or used as part of a farm operation 
including equipment, crops, livestock, and proceeds of the 
security.  "Agricultural property" shall also include 
agriculturally related businesses as defined by the commission. 
    Subd. 3.  [COMMISSION.] "Commission" means the 
commissioners of agriculture, finance, and commerce. 
    Subd. 4.  [CREDITOR.] "Creditor" means the holder of a 
mortgage on agricultural property, a vendor of a contract for 
deed of agricultural property, a person with a lien or security 
interest in agricultural property, or a judgment creditor with a 
judgment against a debtor with agricultural property. 
    Subd. 5.  [DIRECTOR.] "Director" means the director of the 
agricultural extension service or the director's designee. 
    Subd. 6.  [FILE.] "File" means to deliver by the required 
date by certified mail or another method acknowledging receipt. 
    Subd. 7.  [MEDIATOR.] "Mediator" means a farm mediator 
appointed by the director. 
    Subd. 8.  [SERVE.] "Serve" means personal service as in a 
district court civil action.  
    Sec. 8.  [583.23] [FARM MEDIATION.] 
    Subdivision 1.  [TRAINING.] The director must provide 
training and support for mediators. 
    Subd. 2.  [APPOINTMENT.] The director must provide 
mediators by contracting with qualified persons experienced in 
farm finance, agricultural law, and negotiation. 
     Subd. 3.  [ADMINISTRATION.] The director may appoint a farm 
mediation administrator.  The administrator and director shall 
provide training for farm mediators and credit analysts and 
coordinate community legal education programs for farmers. 
    Sec. 9.  [583.24] [APPLICABILITY.] 
    Subdivision 1.  [CREDITORS.] (a) The farmer-lender 
mediation act applies to creditors who are:  
    (1) the United States or an agency of the United States; 
    (2) corporations, partnerships, and other business 
entities; and 
    (3) individuals.  
    (b) The farmer-lender mediation act does not apply to 
creditors of a debtor described under subdivision 2, paragraph 
(b).  
    Subd. 2.  [DEBTORS.] (a) Except as provided in paragraph 
(b) the farmer-lender mediation act applies to a debtor who is: 
    (1) a person operating a family farm as defined in section 
500.24, subdivision 2; 
    (2) a family farm corporation as defined in section 500.24, 
subdivision 2; 
    (3) an authorized farm corporation as defined in section 
500.24, subdivision 2; or 
    (4) an owner of an agriculturally related business. 
    (b) The farmer-lender mediation act does not apply to a 
debtor who owns and leases less than 60 acres with less than 
$20,000 in gross sales of agricultural products the preceding 
year, except for an owner of an agriculturally related business 
as defined by the director.  
    Sec. 10.  [583.25] [VOLUNTARY MEDIATION PROCEEDINGS.] 
    A debtor that owns agricultural property or a creditor of 
the debtor may request mediation of the indebtedness by a farm 
mediator by applying to the director.  The director shall make 
voluntary mediation application forms available at the county 
recorder's and county extension office in each county.  The 
director must evaluate each request and may direct a mediator to 
meet with the debtor and creditor to assist in mediation.  
    Sec. 11.  [583.26] [MANDATORY MEDIATION PROCEEDINGS.] 
    Subdivision 1.  [MEDIATION NOTICE.] A creditor desiring to 
start a proceeding to enforce a debt against agricultural 
property under chapter 580 or 581 or sections 336.9-501 to 
336.9-508, to terminate a contract for deed to purchase 
agricultural property under section 559.21, or to garnish, levy 
on, execute on, seize, or attach agricultural property, must 
serve an applicable mediation notice under sections 1, 2, 3, and 
4 on the debtor and the director.  The creditor may not begin 
the proceeding until the creditor and debtor have completed 
mediation or as allowed under sections 5 to 17.  
    Subd. 2.  [MEDIATION REQUEST.] (a) A debtor must file a 
mediation request form with the director by 14 days after 
receiving a mediation notice.  The mediation request form must 
state all known creditors.  The director shall make mediation 
request forms available in the county recorder's and county 
extension office of each county. 
    (b) A debtor who fails to file a timely mediation request 
waives the right to mediation under the farmer-lender mediation 
act.  The director shall notify a creditor stating that the 
creditor may proceed against the agricultural property because 
the debtor has failed to file a mediation request.  
    (c) If a debtor has not received a mediation notice and is 
subject to a proceeding of a creditor enforcing a debt against 
agricultural property under chapter 580 or 581 or sections 
336.9-501 to 336.9-508, terminating a contract for deed to 
purchase agricultural property under section 559.21, or 
garnishing, levying on, executing on, seizing, or attaching 
agricultural property, the debtor may file a mediation request 
with the commission.  The mediation request form must indicate 
that the debtor has not received a mediation notice. 
    Subd. 3.  [CREDIT ANALYST AND FARM ADVOCATE.] (a) After 
receiving a mediation notice, the director shall provide a 
credit analyst knowledgeable in agricultural and financial 
matters to meet with the debtor and assure that information 
relative to the finances of the debtor is prepared for the 
initial mediation meeting. 
    (b) After receiving the mediation notice, the director 
shall notify the debtor that a farm advocate may be available 
without charge to assist the debtor and the credit analyst.  
    Subd. 4.  [INITIAL MEDIATION MEETING.] (a) By ten days 
after receiving a mediation request, the director shall send: 
(1) a mediation meeting notice to the debtor; and (2) a 
mediation meeting notice and claim form to all known creditors 
of the debtor. 
     (b) The mediation meeting notice must include a time and 
place for an initial mediation meeting between the debtor, all 
known creditors of the debtor, and a list of three mediators.  
An initial mediation meeting must be held within 20 days of the 
notice.  
     (c) Each creditor and the debtor may request the director 
to exclude one mediator from the list by sending the director a 
notice to such effect within 3 days after receiving the 
mediation meeting notice.  In the event that requests from the 
creditors to remove mediators from the list would result in the 
exclusion of all of the remaining mediators the director shall 
appoint the mediator not excluded by the creditor owed the 
largest debt.  In the event that a debtor and creditor request 
the same mediator, the director shall appoint that mediator. 
    Subd. 5.  [EFFECT OF MEDIATION MEETING NOTICE.] (a) Except 
as provided in paragraph (b), if a creditor receives a mediation 
meeting notice under subdivision 4 the creditor and the 
creditor's successors in interest may not continue proceedings 
to enforce a debt against agricultural property of the debtor 
under chapter 580 or 581 or sections 336.9-501 to 336.9-508, to 
terminate a contract for deed to purchase agricultural property 
under section 559.21, or to garnish, levy on, execute on, seize, 
or attach agricultural property.  Time periods under and 
affecting those procedures stop running until (1) 90 days after 
the conclusion of mediation, or (2) a mediation agreement is 
reached. 
    (b) If a creditor is an agency of the United States and 
receives a mediation meeting notice under subdivision 4, the 
creditor and the creditor's successors in interest may not 
continue proceedings to enforce a debt against agricultural 
property of the debtor under chapter 580 or 581 or sections 
336.9-501 to 336.9-508, to terminate a contract for deed to 
purchase agricultural property under section 559.21, or to 
garnish, levy on, execute on, seize, or attach agricultural 
property.  Time periods under and affecting those procedures 
stop running until (1) 180 days after the conclusion of 
mediation, or (2) a mediation agreement is reached. 
    Subd. 6.  [DUTIES OF MEDIATOR.] At the initial mediation 
meeting and subsequent meetings, the mediator shall: 
    (1) listen to the debtor and the creditors desiring to be 
heard; 
    (2) attempt to mediate between the debtor and the creditors;
    (3) advise the debtor and creditors of assistance programs 
available; 
    (4) attempt to arrive at an agreement to fairly adjust, 
refinance, or pay the debts; and 
    (5) advise, counsel, and assist the debtor and creditors in 
attempting to arrive at an agreement for the future conduct of 
financial relations among them. 
    Subd. 7.  [MEDIATOR LIABILITY AND IMMUNITY.] (a) A mediator 
is immune from civil liability for actions within the scope of 
the position as mediator.  A mediator does not have a duty to 
advise a creditor or debtor about the law or to encourage or 
assist a debtor or creditor in reserving or establishing legal 
rights.  This subdivision is an addition to and not a limitation 
of immunity otherwise accorded to a mediator under law. 
    (b) A mediator cannot be examined about a communication or 
document, including worknotes, made or used in the course of or 
because of mediation under this section and section 12.  This 
paragraph does not apply to the parties in the dispute in an 
application to a court by a party to have a mediated settlement 
agreement set aside or reformed.  A communication or document 
otherwise not privileged does not become privileged because it 
is used in the cause of mediation.  This paragraph is not 
intended to limit the privilege accorded to communication during 
mediation by the common law. 
    Subd. 8.  [MEDIATION PERIOD.] The mediator may call 
mediation meetings during the mediation period, which is up to 
60 days after the initial mediation meeting. 
    Subd. 9.  [MEDIATION AGREEMENT.] (a) If an agreement is 
reached among the debtor and creditors the mediator shall draft 
a written mediation agreement, have it signed by the creditors, 
and, if applicable, submit the agreement to the Minnesota rural 
finance administration for approval of debt restructuring.  
    (b) The debtor and creditors who are parties to the 
approved mediation agreement and creditors who have filed claim 
forms and have not objected to the mediation agreement: 
    (1) are bound by the terms of the agreement; 
    (2) may enforce the mediation agreement as a legal 
contract; and 
    (3) may use the mediation agreement as a defense against an 
action contrary to the mediation agreement.  
    Sec. 12.  [583.27] [GOOD FAITH REQUIRED, COURT SUPERVISED 
MEDIATION.] 
    Subdivision 1.  [OBLIGATION OF GOOD FAITH.] The parties 
must engage in mediation in good faith.  Not participating in 
good faith includes:  (1) a failure on a regular or continuing 
basis to attend and participate in mediation sessions without 
cause; (2) failure to provide full information regarding the 
financial obligations of the parties and other creditors; (3) 
failure of the creditor to designate a representative to 
participate in the mediation with adequate authority to fully 
settle, compromise, or otherwise mediate the matter; (4) lack of 
a written statement of debt restructuring alternatives and a 
statement of reasons why alternatives are unacceptable to one of 
the parties; (5) failure of the creditor to release to the 
debtor necessary living and farm operating expenses; or (6) 
other similar behavior which evidences lack of good faith by the 
party.  A failure to agree to reduce, restructure, refinance, or 
forgive debt does not, in itself, evidence lack of good faith by 
the creditor. 
    Subd. 2.  [LACK OF GOOD FAITH AFFIDAVIT; MEDIATOR'S 
RESPONSIBILITY.] If the mediator determines that either party is 
not participating in good faith as defined in subdivision 1, the 
mediator shall file an affidavit indicating the reasons for the 
finding with the agricultural extension service and both parties.
    Subd. 3.  [CREDITOR'S LACK OF GOOD FAITH; COURT SUPERVISED 
MEDIATION.] If the mediator finds the creditor has not 
participated in mediation in good faith, the debtor may require 
court supervised mandatory mediation by filing the affidavit 
with the district court of the county where the property is 
located with a request for court supervision of mediation and 
filing a copy of the request with the creditor.  Upon request 
the court shall require both parties to mediate under the 
supervision of the court in good faith for a period of not less 
than 60 days.  All creditor remedies must be suspended during 
this period.  The court may issue orders necessary to effect 
good faith mediation.  Following the 60-day period, if the court 
finds the creditor has not participated in mediation in good 
faith, the court shall by order suspend the creditor's remedies 
for an additional period of 180 days.  A creditor found by the 
mediator not to have participated in good faith shall pay 
attorneys' fees and costs of the debtor requesting 
court-supervision of mediation or additional suspension of 
creditor's remedies. 
    Subd. 4.  [DEBTOR LACK OF GOOD FAITH.] A creditor may 
immediately proceed with creditor's remedies upon receipt of a 
mediator's affidavit of a debtor's lack of good faith 
notwithstanding any other requirements of sections 5 to 17. 
    Sec. 13.  [583.28] [CREDITOR NOT ATTENDING MEDIATION 
MEETING.] 
    Subdivision 1.  [FILING AND EFFECT OF CLAIM FORM.] A 
creditor that is notified of the initial mediation meeting is 
subject to and bound by a mediation agreement if the creditor 
does not attend mediation meetings unless the creditor files a 
claim form.  In lieu of attending a mediation meeting, a 
creditor may file a notice of claim and proof of claim on a 
claim form with the mediator before the scheduled meeting.  By 
filing a claim form the creditor agrees to be bound by a 
mediation agreement reached at the mediation meeting unless an 
objection is filed within the time specified.  The mediator must 
notify the creditors who have filed claim forms of the terms of 
any agreement reached at the farm mediation board meeting.  
    Subd. 2.  [OBJECTIONS TO AGREEMENTS.] A creditor who has 
filed a claim form may serve a written objection to the terms of 
the agreement on the mediator and the debtor by ten days after 
receiving notice of the agreement.  If a creditor files an 
objection to the terms of an agreement, the mediator may meet 
again with debtors and creditors by ten days after receiving the 
objection to attempt to reach a new agreement.  Notwithstanding 
the mediation period under section 11, subdivision 8, if an 
objection is filed, the mediator may call mediation meetings 
during the ten-day period following receipt of the objection.  
    Sec. 14.  [583.29] [PRIVATE DATA.] 
    All data regarding the finances of individual debtors and 
creditors created, collected, and maintained by the mediators or 
the debt restructuring commission are classified as private data 
on individuals under section 13.02, subdivision 12, or nonpublic 
data under section 13.02, subdivision 9. 
    Sec. 15.  [583.30] [FORMS AND COMPENSATION.] 
    Subdivision 1.  [COMPENSATION.] The director shall set the 
compensation of mediators and credit analysts. 
    Subd. 2.  [FORMS.] The director shall adopt voluntary 
mediation application, mediation request, and claim forms. 
    Sec. 16.  [583.31] [ENFORCEMENT.] 
    The mediation agreement must be enforced by the district 
court. 
    Sec. 17.  [583.32] [INCONSISTENT LAWS.] 
    The farmer-lender mediation act has precedence over any 
inconsistent or conflicting laws and statutes including chapters 
336, 580, and 581, and section 559.21. 
    Sec. 18.  [REPEALER.] 
    Sections 1 to 17 and Minnesota Statutes, section 336.9-501, 
subsections (6) and (7), are repealed on July 1, 1988. 
    Sec. 19.  [EFFECTIVE DATE.] 
    The article is effective the day following final enactment. 

                                ARTICLE 2

                  REDEMPTION OF AGRICULTURAL HOMESTEADS
    Section 1. [550.175] [EXECUTION ON REAL PROPERTY THAT 
INCLUDES HOMESTEAD.] 
    Subdivision 1.  [NOTIFICATION OF HOMESTEAD DESIGNATION.] If 
real property is to be sold on execution and the property 
contains a portion of the homestead of the debtor, the debtor 
must be notified by the executing creditor that the homestead 
may be sold and redeemed separately from the remaining 
property.  The notice in subdivision 2 must be included in the 
notice of execution served on the debtor under section 550.19. 
    Subd. 2.  [HOMESTEAD DESIGNATION NOTICE.] The following 
notice must be included in the execution notice of real property 
containing a homestead that is served on a debtor under section 
550.19.  The notice must be in 10 point capitalized letters. 
    "PART OF THE PROPERTY TO BE SOLD CONTAINS YOUR HOUSE.  YOU 
MAY DESIGNATE THE AREA OF A HOMESTEAD TO BE SOLD AND REDEEMED 
SEPARATELY.  
    YOU MAY DESIGNATE THE HOUSE YOU OCCUPY AND ANY AMOUNT OF 
THE PROPERTY AS A HOMESTEAD.  THE DESIGNATED HOMESTEAD PROPERTY 
MUST CONFORM TO THE LOCAL ZONING ORDINANCES AND BE COMPACT SO 
THAT IT DOES NOT UNREASONABLY REDUCE THE VALUE OF THE REMAINING 
PROPERTY.  
    YOU MUST PROVIDE THE CREDITOR CAUSING THIS PROPERTY TO BE 
SOLD, THE SHERIFF, AND THE COUNTY RECORDER WITH A COPY OF THE 
LEGAL DESCRIPTION OF THE HOMESTEAD YOU HAVE DESIGNATED BY TEN 
BUSINESS DAYS BEFORE THE DATE THE PROPERTY IS TO BE SOLD."  
    Subd. 3.  [DESIGNATION OF HOMESTEAD PROPERTY.] The debtor 
must designate the legal description of the homestead property 
to be sold separately.  The homestead property designated may 
include any amount of the property.  The designation must 
conform to local zoning, include the dwelling occupied by the 
debtor, and be compact so that it does not unreasonably affect 
the value of the remaining property.  The debtor must serve a 
copy of the designation on the executing creditor, the sheriff, 
and the county recorder by ten business days before the sale is 
scheduled. 
    Subd. 4.  [SALE OF PROPERTY.] If the sheriff receives a 
homestead property designation under subdivision 3, the sheriff 
must offer and sell the designated homestead property, and the 
remaining property, separately.  
    Subd. 5.  [REDEMPTION.] The debtor may redeem the 
designated homestead, the remaining property, or the entire 
property including the homestead.  The period of redemption for 
the designated homestead or the remaining property is the same 
as the period of redemption for the entire property including 
the designated homestead.  
    Sec. 2.  [550.205] [REDEMPTION OF HOMESTEAD AFTER 
FORECLOSURE OR EXECUTION SALE.] 
    Subdivision 1.  [APPLICABILITY.] This section applies to 
mortgagors or debtors who have had real property used in 
agricultural production executed on or foreclosed and have not 
received notices under sections 1 and 3, and is effective until 
the redemption period ends. 
    Subd. 2.  [AGREEMENT.] (a) A buyer that purchases real 
property used in agricultural production at a foreclosure or 
execution sale, and a party with the right to redeem, may agree 
to have the homestead redeemed separately.  The written 
agreement must be recorded and include: 
    (1) a legal description of the homestead; and 
    (2) the amount to be paid to redeem the homestead. 
    (b) The homestead must comply with local zoning 
requirements.  
    Subd. 3.  [PETITION.] (a) After a foreclosure or execution 
sale of real property used in agricultural production that 
contains a homestead, the party entitled to redeem the property 
may petition to have the homestead redeemed separately.  The 
petition must be directed to the district court of the county 
where the foreclosure or execution sale was held and include: 
    (1) a request that the homestead be appraised and redeemed 
separately; 
    (2) a description designating the dwelling occupied by the 
mortgagor, and up to 80 acres of the property that conforms to 
local zoning and is compact so that it does not unreasonably 
affect the value of the remaining property. 
    (b) The court shall appoint an appraiser to make the 
appraisal and have the determination returned to the court 
within 30 days after the petition is filed. 
    Subd. 4.  [DETERMINATION OF REDEMPTION COST.] (a) The 
district court shall schedule and hold a hearing within 30 days 
after receiving the appraiser's determination.  The court shall 
consider whether redeeming the homestead separately would 
unjustly affect the party who purchased the property at the 
foreclosure or execution sale.  The court may equitably adjust 
the size of the homestead.  If the petitioner is entitled to 
redeem the homestead separately, the court shall determine the 
cost of redeeming the designated homestead and the remaining 
property.  The cost of redeeming the homestead must include: 
    (1) the appraised value of the homestead; 
    (2) the interest attributable to the portion of the debt 
allocated to the homestead; and 
    (3) the reasonable appraisal, court, and survey costs. 
    (b) The order of the court must be made and filed within 
five days of the hearing. 
    Subd. 5.  [REDEMPTION.] The party entitled to redeem may 
redeem the designated homestead, the remaining property, or the 
entire property including the homestead.  The period of 
redemption is the period for the entire property including the 
designated homestead. 
    Sec. 3.  [582.041] [FORECLOSURE OF MORTGAGE THAT INCLUDES 
HOMESTEAD.] 
    Subdivision 1.  [NOTIFICATION OF HOMESTEAD DESIGNATION.] If 
a mortgage on real property is foreclosed and the property 
contains a portion of the homestead of the mortgagor, the 
mortgagor must be notified by the foreclosing mortgagee that the 
homestead may be sold and redeemed separately from the remaining 
property.  The notice in subdivision 2 must be included in the 
notice of foreclosure served on the mortgagor under section 
580.04 or for a foreclosure by action under chapter 581, in the 
summons and complaint. 
    Subd. 2.  [HOMESTEAD DESIGNATION NOTICE.] (a) The following 
notice must be included in the foreclosure notice of property 
containing a homestead that is served on the mortgagor under 
section 580.04.  The notice must be in 10 point capitalized 
letters. 
    "PART OF THE PROPERTY TO BE SOLD CONTAINS YOUR HOUSE.  YOU 
MAY DESIGNATE THE AREA OF A HOMESTEAD TO BE SOLD AND REDEEMED 
SEPARATELY.  
    YOU MAY DESIGNATE THE HOUSE YOU OCCUPY AND ANY AMOUNT OF 
THE PROPERTY AS A HOMESTEAD.  THE DESIGNATED HOMESTEAD PROPERTY 
MUST CONFORM TO THE LOCAL ZONING ORDINANCES AND BE COMPACT SO 
THAT IT DOES NOT UNREASONABLY REDUCE THE VALUE OF THE REMAINING 
PROPERTY.  
    YOU MUST PROVIDE THE PERSON FORECLOSING ON THE PROPERTY, 
THE SHERIFF, AND THE COUNTY RECORDER WITH A COPY OF THE LEGAL 
DESCRIPTION OF THE HOMESTEAD YOU HAVE DESIGNATED BY TEN BUSINESS 
DAYS BEFORE THE DATE THE PROPERTY IS TO BE SOLD."  
    (b) The following notice must be served with the summons 
and complaint in an action to foreclose a mortgage of property 
containing a homestead under chapter 581.  The notice must be in 
10 point capitalized letters.  
    "PART OF THE PROPERTY TO BE SOLD CONTAINS YOUR HOUSE.  YOU 
MAY DESIGNATE THE AREA OF A HOMESTEAD TO BE SOLD AND REDEEMED 
SEPARATELY.  
    YOU MAY DESIGNATE THE HOUSE YOU OCCUPY AND UP TO 80 ACRES 
OF THE PROPERTY AS A HOMESTEAD.  THE DESIGNATED HOMESTEAD 
PROPERTY MUST CONFORM TO THE LOCAL ZONING ORDINANCES AND BE 
COMPACT SO THAT IT DOES NOT UNREASONABLY REDUCE THE VALUE OF THE 
REMAINING PROPERTY.  
    YOU MUST PROVIDE THE COURT WITH A LEGAL DESCRIPTION OF THE 
HOMESTEAD YOU HAVE DESIGNATED." 
    Subd. 3.  [DESIGNATION OF HOMESTEAD PROPERTY.] The 
mortgagor must designate a legal description of the homestead 
property to be sold separately.  The homestead property 
designated may include any amount of the property.  The 
designation must conform to local zoning, include the dwelling 
occupied by the mortgagor, and be compact so that it does not 
unreasonably affect the value of the remaining property.  The 
mortgagor must serve a copy of the designation on the 
foreclosing mortgagee, the sheriff, and the county recorder by 
ten business days before the sale is scheduled, or for a 
foreclosure by action under chapter 581, a copy of the 
designation must be provided to the court.  
    Subd. 4.  [SALE OF PROPERTY.] If the sheriff receives a 
homestead property designation under subdivision 3, or is 
ordered by the court, the sheriff must offer and sell the 
designated homestead property, and the remaining property, 
separately.  
    Subd. 5.  [REDEMPTION.] The mortgagor may redeem the 
designated homestead, the remaining property, or the entire 
property including the homestead.  The period of redemption is 
the period for the entire property including the designated 
homestead.  
    Sec. 4.  [REPEALER.] 
    Minnesota Statutes 1984, section 582.04, is repealed.  
Section 2 is repealed effective August 30, 1987. 
    Sec. 5.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment and 
applies to all foreclosures or executions on real property that 
have foreclosure notices or summons and complaint served on the 
mortgagor or execution notices served on the debtor on or after 
the effective date. 

                               ARTICLE 3 

                  FAMILY FARM LEGAL ASSISTANCE PROGRAM 
    Section 1.  [480.250] [ADMINISTRATION OF FAMILY FARM LEGAL 
ASSISTANCE PROGRAM.] 
    Subdivision 1.  [CONTRACT AND ADMINISTRATION.] The supreme 
court shall contract with one or more established nonprofit 
corporations to provide a family farmer legal assistance program 
for financially distressed state farmers by 60 days after 
funding is available.  The family farmer legal assistance must 
be directed at farm financial problems, including, but not 
limited to, bankruptcy, discharge of debt, general 
debtor-creditor relations, and tax considerations.  The supreme 
court may delegate responsibility for administering funds under 
the contract to the advisory committee established under section 
480.242, subdivision 1. 
    Subd. 2.  [LEGAL ASSISTANCE PROVIDER.] The supreme court 
may contract only with a legal assistance provider that: 
    (1) is established as a nonprofit corporation under chapter 
317 and tax exempt under section 501(c)(3) of the Internal 
Revenue Code as amended through December 31, 1985; 
    (2) is organized principally to provide legal assistance; 
    (3) has a proven record of delivery of effective, high 
quality legal assistance; 
    (4) has experience and demonstrated expertise in addressing 
legal issues affecting financially distressed family farmers; 
    (5) can begin providing delivery of legal assistance to 
financially distressed farmers within 30 days after the contract 
is awarded; and 
    (6) can provide legal assistance to farmers throughout the 
state.  
    Subd. 3.  [DISTRIBUTION OF FUNDS; LIMITATIONS.] (a) None of 
the funds distributed to recipients selected in accordance with 
the provisions of this section may be used for activities 
promoting nonjudicial changes in the law.  Actions precluded 
include:  
    (1) appearance before legislative or administrative 
rulemaking bodies for the purpose of promoting changes in 
existing law, unless the appearance is requested by a member of 
that body; and 
    (2) preparation or assisting in the preparation of written 
statements promoting changes in existing law intended to be 
entered into the record of a legislative or rulemaking procedure.
    (b) The preceding restrictions limit only those activities 
for which contract funding is received and in no way limit the 
activities of any attorney acting in a pro bono capacity.  
    Sec. 2.  [480.252] [FAMILY FARM LEGAL ASSISTANCE PROGRAM.] 
     Subdivision 1.  [REQUIREMENTS.] The family farmer legal 
support program shall provide:  
    (1) legal backup and research support to attorneys 
throughout the state who represent financially distressed 
farmers; 
    (2)  direct legal advice and representation to eligible 
farmers in the most effective and efficient manner, giving 
special emphasis to enforcement of legal rights affecting large 
numbers of farmers; 
     (3) legal information to individual farmers;  
    (4) general farm related legal education and training to 
farmers, private attorneys, legal services staff, and the public;
     (5) an incoming, statewide, toll free telephone line to 
provide the advice and referral requirements in this 
subdivision; and 
     (6) legal advice and representation to farmers and small 
business operators whose loans are currently held by the Federal 
Deposit Insurance Corporation. 
     Subd. 2.  [PRIORITIES.] In meeting the requirements of 
subdivision 1, recipients of funds under the family farm legal 
support program shall adhere to the following priorities: 
     (1) provide legal services to eligible persons whose bank 
loans are held by the Federal Deposit Insurance Corporation;  
    (2) provide basic legal information relating to liquidation 
of farm property, farm credit, farm foreclosure, repossession of 
farm assets, restructuring of farm debt and other farm financial 
problems upon request by farmers, state and local officials, and 
state-supported farm management advisors; 
    (3) represent and provide advice to individual eligible 
farmers in pursuit of legal remedies relating to liquidation of 
farm property, farm credit, farm foreclosure, repossession of 
farm assets, restructuring of farm debt, and other farm 
financial problems; and 
    (4) provide legal backup and research support to private 
attorneys who are representing farmers in matters relating to 
liquidation of farm property, farm credit, farm foreclosure, 
repossession of farm assets, restructuring of farm debt, and 
other farm financial problems.  
     Subd. 3.  [REPORT.] The legal assistance provider shall 
submit a report to the supreme court each six months during the 
contract period demonstrating that the requirements in 
subdivision 1 have been met.  
    Subd. 4.  [TERMINATION.] A contract under sections 1 to 4 
may be terminated by the supreme court, or denied for renewal, 
upon reasonable written notice and good cause shown.  A contract 
under sections 1 to 4 must be terminated if funds are used in a 
manner inconsistent with section 1. 
    Sec. 3.  [480.254] [LEGAL ASSISTANCE ELIGIBILITY.] 
    (a) A person is eligible for legal assistance under section 
2 if the person: 
     (1) is a state resident; 
    (2) is or has been a farmer, or a family shareholder of a 
family farm corporation within the preceding 24 months; 
    (3) has a debt-to-asset ratio greater than 50 percent;  
    (4) has a reportable federal adjusted gross income of 
$15,000 or less in the previous tax year; and 
    (5) is financially unable to retain legal representation. 
    (b) Qualifying farmers and small business operators whose 
bank loans are held by the Federal Deposit Insurance Corporation 
are eligible for legal assistance under section 2.  
    Sec. 4.  [480.256] [ANNUAL REPORT.] 
    A legal assistance provider shall submit a report to the 
supreme court, the senate committee on agriculture and natural 
resources, and the agriculture committee of the house of 
representatives by January 15 after each year of funding.  The 
report must describe the activities and expenses under the 
contract during the previous calendar year and a summary of 
additional legal representation needed by distressed family 
farmers. 
     Sec. 5.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 4 

                   INTERSTATE COMPACT ON AGRICULTURAL

                            GRAIN MARKETING 
    Section 1.  [236A.01] [INTERSTATE COMPACT ON AGRICULTURAL 
GRAIN MARKETING.] 
    The state of Minnesota ratifies and approves the following 
compact: 
 Interstate Compact on Agricultural 
 Grain Marketing 
 Article I. - Purpose
    It is the purpose of this compact to protect, preserve, and 
enhance: 
    (a) the economic and general welfare of citizens of the 
joining states engaged in the production and sale of 
agricultural grains; 
    (b) the economies and very existence of local communities 
in such states, the economies of which are dependent upon the 
production and sale of agricultural grains; and 
    (c) the continued production of agricultural grains in such 
states in quantities necessary to feed the increasing population 
of the United States and the world. 
 Article II. - Definitions 
    As used in this compact: 
    (a) "State" means any state of the United States in which 
agricultural grains are produced for the markets of the nation 
and world. 
    (b) "Agricultural grains" means wheat, durum, spelt, 
triticale, oats, rye, corn, barley, buckwheat, flaxseed, 
safflower, sunflower seed, soybeans, sorghum grains, peas, and 
beans. 
 Article III. - Commission
 (a) Organization and Management 
    (1) There is hereby created an agency of the member states 
to be known as the Interstate Agricultural Grain Marketing 
Commission, hereinafter called the commission.  The commission 
shall consist of three residents of each member state who shall 
have an agricultural background and who shall be appointed as 
follows:  (i) one member appointed by the governor, who shall 
serve at the pleasure of the governor; (ii) one senator 
appointed in the manner prescribed by the senate of such state, 
except that two senators may be appointed by the Governor of the 
State of Nebraska from the unicameral legislature of the state 
of Nebraska; and (iii) one member of the house of 
representatives appointed in the manner prescribed by the house 
of representatives of such state.  
The member first appointed by the governor shall serve for a 
term of one year and the senator and representative first 
appointed shall each serve for a term of two years; thereafter 
all members appointed shall serve for two-year terms.  The 
attorneys general of member states or assistants designated 
thereby shall be nonvoting members of the commission. 
    (2) Each member shall be entitled to one vote.  A member 
must be present to vote and no voting by proxy shall be 
permitted.  The commission shall not act unless a majority of 
the voting members are present, and no action shall be binding 
unless approved by a majority of the total number of voting 
members present.  
    (3) The commission shall be a body corporate of each member 
state and shall adopt an official seal to be used as it may 
provide. 
    (4) The commission shall hold an annual meeting and such 
other regular meetings as its bylaws may provide and such 
special meetings as its executive committee may determine.  The 
commission bylaws shall specify the dates of the annual and any 
other regular meetings, and shall provide for the giving of 
notice of annual, regular, and special meetings.  Notices of 
special meetings shall include the reasons therefor and an 
agenda of the items to be considered. 
    (5) The commission shall elect annually, from among its 
voting members, a chairperson, a vice-chairperson, and a 
treasurer.  The commission shall appoint an executive director 
who shall serve at its pleasure, and shall fix the duties and 
compensation of such director.  The executive director shall be 
secretary of the commission.  The commission shall make 
provision for the bonding of such of its officers and employees 
as it may deem appropriate. 
    (6) Irrespective of the civil service, personnel, or other 
merit system laws of any member state, the executive director 
shall appoint or discharge such personnel as may be necessary 
for the performance of the functions of the commission and shall 
fix, with the approval of the commission, their duties and 
compensation.  The commission bylaws shall provide for personnel 
policies and programs.  The commission may establish and 
maintain, independently of or in conjunction with any one or 
more of the member states, a suitable retirement system for its 
full-time employees.  Employees of the commission shall be 
eligible for social security coverage in respect of old age and 
survivors insurance provided that the commission takes such 
steps as may be necessary pursuant to federal law to participate 
in such program of insurance as a governmental agency or unit.  
The commission may establish and maintain or participate in such 
additional programs of employee benefits as may be appropriate.  
The commission may borrow, accept, or contract for the services 
of personnel from any state, the United States, or any other 
governmental entity. 
    (7) The commission may accept for any of its purposes and 
functions any and all donations and grants of money, equipment, 
supplies, materials, and services, conditional or otherwise, 
from any governmental entity, and may utilize and dispose of the 
same. 
    (8) The commission may establish one or more offices for 
the transacting of its business. 
    (9) The commission shall adopt bylaws for the conduct of 
its business.  The commission shall publish its bylaws in 
convenient form, and shall file a copy of the bylaws and any 
amendments thereto with the appropriate agency or officer in 
each of the member states. 
    (10) The commission annually shall make to the governor and 
legislature of each member state a report covering its 
activities for the preceding year.  Any donation or grant 
accepted by the commission or services borrowed shall be 
reported in the annual report of the commission, and shall 
include the nature, amount, and conditions, if any, of the 
donation, gift, grant, or services borrowed and the identity of 
the donor or lender.  The commission may make additional reports 
as it may deem desirable.  
 (b) Committees
    (1) The commission may establish such committees from its 
membership as its bylaws may provide for the carrying out of its 
functions. 
 Article IV. - Powers and Duties of Commission 
     (a) The commission shall conduct comprehensive and 
continuing studies and investigations of agricultural grain 
marketing practices, procedures, and controls and their 
relationship to and effect upon the citizens and economies of 
the member states.  
    (b) The commission shall make recommendations for the 
correction of weaknesses and solutions to problems in the 
present system of agricultural grain marketing or the 
development of alternatives thereto, including the development, 
drafting, and recommendation of proposed state or federal 
legislation. 
    (c) The commission is hereby authorized to do all things 
necessary and incidental to the administration of its functions 
under this compact. 
 Article V. - Finance 
    (a) The commission shall submit to the governor of each 
member state a budget of its estimated expenditures for such 
period as may be required by the laws of that state for 
presentation to the legislature thereof. 
    (b) The money necessary to finance the general operations 
of the commission not otherwise provided for in carrying forth 
its duties, responsibilities, and powers as stated herein shall 
be appropriated to the commission by the member states, when 
authorized by the respective legislatures.  Appropriations by 
member states for the financing of the operations of the 
commission in the initial biennium of the compact shall be in 
the amount of $50,000 for each member state; thereafter the 
total amount of appropriations requested shall be apportioned 
among the member states in the manner determined by the 
commission.  Failure of a member state to provide its share of 
financing shall be cause for the state to lose its membership in 
the compact.  
    (c) The commission shall not incur any obligations of any 
kind prior to the making of appropriations adequate to meet the 
same; nor shall the commission pledge the credit of any of the 
member states, except by and with the authority of the member 
state.  
    (d) The commission shall keep accurate accounts of all 
receipts and disbursements.  The receipts and disbursements of 
the commission shall be subject to the audit and accounting 
procedures established under its bylaws.  However, all receipts 
and disbursements of funds handled by the commission shall be 
audited yearly by a certified or licensed public accountant and 
the report of the audit shall be included in and become part of 
the annual report of the commission. 
    (e) The accounts of the commission shall be open for 
inspection at any reasonable time. 
 Article VI. - Eligible Parties, Entry
Into Force, Withdrawal and Termination 
    (a) Any agricultural grain marketing state may become a 
member of this compact. 
     (b) This compact shall become effective initially when 
enacted into law by any five states prior to July 1, 1988, and 
in additional states upon their enactment of the same into law. 
     (c) Any member state may withdraw from this compact by 
enacting a statute repealing the compact, but such withdrawal 
shall not become effective until one year after the enactment of 
such statute and the notification of the commission thereof by 
the governor of the withdrawing state.  A withdrawing state 
shall be liable for any obligations which it incurred on account 
of its membership up to the effective date of withdrawal, and if 
the withdrawing state has specifically undertaken or committed 
itself to any performance of an obligation extending beyond the 
effective date of withdrawal, it shall remain liable to the 
extent of such obligation. 
    (d) This compact shall terminate one year after the 
notification of withdrawal by the governor of any member state 
which reduces the total membership in the compact to less than 
five states. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment. 

                                ARTICLE 5

                            ASSET EXEMPTION 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
256.73, subdivision 2, is amended to read: 
    Subd. 2.  [ALLOWANCE BARRED BY OWNERSHIP OF PROPERTY.] 
Ownership by an assistance unit of property as follows is a bar 
to any allowance under sections 256.72 to 256.87: 
    (1) The value of real property other than the homestead, 
which when combined with other assets exceeds the limits of 
paragraph (2), unless the assistance unit is making a good faith 
effort to sell the nonexcludable real property.  The time period 
for disposal must not exceed nine months and the assistance unit 
shall execute an agreement to dispose of the property to repay 
assistance received during the nine months up to the amount of 
the net sale proceeds.  The payment must be made when the 
property is sold.  If the property is not sold within the 
required time or the assistance unit becomes ineligible for any 
reason the entire amount received during the nine months is an 
overpayment and subject to recovery.  For the purposes of this 
section "homestead" means the house owned and occupied by the 
child, relative or other member of the assistance unit as his 
dwelling place, together with the land upon which it is situated 
in an area no greater than two contiguous lots in a platted or 
laid out city or town or 80 all contiguous acres in rural areas; 
or 
    (2) Personal property of an equity value in excess of 
$1,000 for the entire assistance unit, exclusive of personal 
property used as the home, one motor vehicle of an equity value 
not exceeding $1,500, one burial plot for each member of the 
assistance unit, one prepaid burial contract with an equity 
value of no more than $1,000 for each member of the assistance 
unit, clothing and necessary household furniture and equipment 
and other basic maintenance items essential for daily living, in 
accordance with rules promulgated by and standards established 
by the commissioner of human services. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                                ARTICLE 6

                 MINNESOTA RURAL FINANCE ADMINISTRATION
    Section 1.  [41B.01] [CITATION; PURPOSE.] 
    Subdivision 1.  [CITATION.] This article shall be known as 
and may be cited as the "Minnesota rural finance administration 
act of 1986." 
    Subd. 2.  [PURPOSE.] This article creates and establishes 
the Minnesota rural finance administration and establishes a 
program under which state bonds are authorized to be issued and 
proceeds of their sale are appropriated under the authority of 
article XI, section 5, clause (h) of the Minnesota Constitution, 
to develop the state's agricultural resources by extending 
credit on real estate security.  The purpose of the program and 
of the bonds issued to finance or provide security for the 
program is to purchase participation interests in loans to be 
made available by agricultural lenders to farmers in order to 
restructure existing debt and to make available additional 
credit to farmers who own or purchase agricultural properties on 
terms and conditions not otherwise available from other credit 
sources.  It is hereby found and declared that there presently 
exist in the state economic conditions which have severely 
adversely affected the economic viability of farms to the 
detriment of the rural economy and to the detriment of the 
economy of the state of Minnesota as a whole.  It is further 
found and declared that as a result of public agricultural 
policies, agricultural market conditions, and other causes, the 
condition of the farm economy of the state of Minnesota is such 
as to jeopardize the continued existence and successful 
operation of farms in this state, necessitating the 
establishment of the program in this article to provide new 
sources of credit on favorable terms and conditions.  It is 
further found and declared that providing credit for farmers on 
favorable terms and conditions will serve and promote the public 
welfare by assuring the viability of farm operations, by 
preventing erosion of the tax base in rural areas, by reducing 
foreclosures on farm property, and by enhancing the financial 
stability of farmers and of the businesses which depend on 
farmers as customers.  It is further found and declared that in 
establishing a Minnesota rural finance administration and in 
authorizing the programs in this article, the legislature is 
acting in all respects for the benefit of the people of the 
state of Minnesota to serve the public purpose of improving and 
otherwise promoting their health, welfare, and prosperity and 
that the Minnesota rural finance administration, as created and 
established, is empowered to act on behalf of the people of the 
state of Minnesota in serving this public purpose for the 
benefit of the general public. 
    Sec. 2.  [41B.02] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] For the purposes of this article 
the terms defined in this section have the meanings given them. 
    Subd. 2.  [ADMINISTRATION.] "Administration" means the 
Minnesota rural finance administration created in section 3. 
    Subd. 3.  [FARM.] "Farm" means a family farm as defined in 
section 500.24, located in Minnesota.  
    Subd. 4.  [ELIGIBLE AGRICULTURAL LENDER; ELIGIBLE 
LENDER.] "Eligible agricultural lender" or "eligible lender" 
means an entity of the kind described in section 5, subdivision 
6, which enters into an agreement with the administration 
providing for the purchase by the administration of 
participation interests in eligible agricultural loans 
originated and serviced by the qualified agricultural lender. 
    Subd. 5.  [ELIGIBLE BORROWER.] "Eligible borrower" means a 
borrower who meets the eligibility criteria in section 3. 
    Subd. 6.  [QUALIFIED AGRICULTURAL LOAN.] "Qualified 
agricultural loan" means a loan to an eligible borrower made by 
an eligible agricultural lender which the administration 
purchases or in which the administration purchases a 
participation interest. 
    Subd. 7.  [BONDS.] "Bonds" means bonds, notes, or other 
obligations issued by the administration.  For the purposes of 
section 19, "bonds" also includes bonds or other obligations 
issued by the state. 
    Subd. 8.  [SECURITY ACCOUNT.] "Security account" means the 
rural finance administration security account established in 
section 19, subdivision 5. 
    Subd. 9.  [PRIMARY PRINCIPAL.] "Primary principal" means 
that portion of the principal outstanding on a loan covered by 
this article that is equal to the current market value of the 
property secured by the loan.  
    Subd. 10.  [SECONDARY PRINCIPAL.] "Secondary principal" 
means that portion of the principal outstanding on a loan 
covered by this article that is in excess of the current market 
value of the property secured by the loan.  
    Subd. 11.  [BASIC INTEREST.] "Basic interest" means that 
part of interest on primary principal that is payable annually.  
    Subd. 12.  [DEFERRED INTEREST.] "Deferred interest" means 
that portion of the interest on primary principal and secondary 
principal the payment of which is deferred for the term of the 
loan.  The deferred interest on primary principal may accrue at 
a different rate from the deferred interest on secondary 
principal as described in section 5. 
    Subd. 13.  [CURRENT MARKET VALUE.] "Current market value" 
means the value determined by an appraisal considering 
comparable sales in the area where the real estate is located 
and the reasonable productive value of the property based on 
past production history.  The state and the eligible 
agricultural lender must mutually agree on the current market 
value.  
    Subd. 14.  [BORROWER.] "Borrower" means the person or 
persons liable on a restructured note.  
    Subd. 15.  [ORIGINAL LOAN.] "Original loan" means a loan 
prior to restructuring.  
    Subd. 16.  [RESTRUCTURED LOAN.] "Restructured loan" means a 
loan after it is modified pursuant to section 5.  
    Subd. 17.  [MARKET RATE.] "Market rate" means an interest 
rate based on a formula established in rule and certified each 
month by the commissioner of finance. 
    Sec. 3.  [41B.03] [BORROWER ELIGIBILITY CRITERIA.] 
    To be eligible for a program in this article: 
    (a) A borrower must be a resident of Minnesota or a 
domestic family farm corporation, as defined in section 500.24, 
subdivision 2.  
    (b) The borrower or one of the borrowers must be the 
principal operator of the farm. 
    (c) The borrower or one of the borrowers must have received 
at least 50 percent of his or her annual gross income from 
farming, and farming must be the principal occupation of the 
borrower.  
    (d) The borrower must have a debt to asset ratio equal to 
or greater than 50 percent.  In determining this ratio, the 
assets must be determined by the current market value of the 
assets.  
    (e) The borrower's projected annual expenses, including 
operating expenses, family living, and interest expenses after 
the restructuring, must not exceed 95 percent of the borrower's 
projected annual income considering prior production history and 
projected prices for farm production.  
    (f) The borrower must be unable to meet projected annual 
expenses without restructuring the loan.  
    (g) The borrower must not previously have received 
restructuring assistance pursuant to this article.  
    Sec. 4.  [41B.035] [RURAL FINANCE ADMINISTRATION.] 
    Subdivision 1.  [ESTABLISHMENT.] There is created a public 
body corporate and politic to be known as the "Minnesota rural 
finance administration," which shall perform the governmental 
functions and exercise the sovereign powers delegated to it in 
this article in furtherance of the public policies and purposes 
declared in section 1.  The board of the administration consists 
of the commissioners of agriculture, commerce, and finance, the 
state auditor, and three public members appointed by the 
governor with the advice and consent of the senate.  No public 
member may reside within the metropolitan area, as defined in 
section 473.02, subdivision 5.  Each member shall hold office 
until a successor has been appointed and has qualified.  A 
certificate of appointment or reappointment of any member is 
conclusive evidence of the proper appointment of the member. 
    Subd. 2.  [TERMS; COMPENSATION; REMOVAL; VACANCIES.] The 
membership terms, compensation, removal of members, and filling 
of vacancies for the public members of the administration are as 
provided in section 15.0575. 
    Subd. 3.  [CHAIRPERSON.] The commissioner of finance is the 
chairperson of the board.  The commissioner of agriculture is 
the vice-chairperson of the board.  
    Subd. 4.  [MANAGEMENT AND CONTROL.] The management and 
control of the administration is vested solely in the board in 
accordance with this article. 
    Subd. 5.  [BOARD ACTIONS.] The powers of the board are 
vested in the members in office from time to time.  A majority 
of the members of the board, excluding vacancies, constitutes a 
quorum for the purpose of conducting its business and exercising 
its powers and for all other purposes.  Action may be taken by 
the board upon a vote of a majority of a quorum present. 
    Subd. 6.  [ADMINISTRATIVE CONTROL.] The administration is 
under the administrative control of the commissioner of finance. 
    Subd. 7.  [PERSONAL LIABILITY.] The members and officers of 
the administration are not liable personally, either jointly or 
severally, for any debt or obligation created or incurred by the 
administration. 
    Sec. 5.  [41B.04] [LOAN RESTRUCTURING PROGRAM.] 
    Subdivision 1.  [RESTRUCTURING AUTHORITY.] The 
administration may enter into agreements or programs with 
eligible agricultural lenders for the restructuring of mortgage 
loans on real property located in Minnesota which is farmed by 
Minnesota residents, on such terms and conditions as the 
administration determines are not inconsistent with this article.
This section governs the programs of the administration. 
    Subd. 2.  [IMPLEMENTATION OF PROGRAM.] The administration 
may implement a program to restructure agricultural loans and to 
purchase loan participation interests in qualified restructuring 
loans made by eligible agricultural lenders to eligible 
borrowers.  Each such purchase shall be made only upon 
determination by or on behalf of the administration that the 
loan is a qualified restructuring loan as provided in this 
section.  
    Subd. 3.  [CRITERIA.] Loans must comply with the following 
criteria: 
    (a) Each loan must be for the purpose of developing the 
state's agricultural resources and must be an extension of 
credit on real estate security.  The loan may be secured by 
eligible security in addition to real estate.  The security 
interests granted by the eligible borrower must be senior and 
prior to any other security interest in the pledged assets. 
    (b) No loan may be made to finance activities of the 
borrower which are not an agricultural use as defined in section 
40A.02, subdivision 3. 
    (c) A participation interest in a restructuring loan may be 
purchased by the administration only if the eligible 
agricultural lender has determined and has certified to the 
administration that the borrower is an eligible borrower who has 
the reasonable ability to make timely payment of principal and 
interest on the loan when due over the term of the loan.  The 
eligible agricultural lender shall further certify to the 
administration that the loan is a qualified agricultural loan. 
    Subd. 4.  [PROGRAM AVAILABILITY.] The administration shall 
exercise its best efforts to assure that credit made available 
through the loan restructuring program is made available 
throughout the agricultural areas of the state, and that the 
number or amount of loans are not unduly concentrated in any one 
area of the state. 
    Subd. 5.  [BENEFITS.] The administration shall exercise its 
best efforts to assure that the program provides the maximum 
feasible benefits to as many eligible borrowers as is reasonably 
possible. 
    Subd. 6.  [TYPES OF LENDERS.] Any bank, credit union, 
savings and loan association chartered by the state or federal 
government, unit of the farm credit system, the federal deposit 
insurance corporation, the federal savings and loan insurance 
corporation, and any insurance company, fund, or other financial 
institution doing business as an agricultural lender within the 
state is eligible for consideration as an eligible agricultural 
lender if the administration determines that the lender has 
sufficient personnel and other resources to efficiently and 
properly originate and service the qualified agricultural 
loans.  Each such eligible agricultural lender shall enter into 
one or more agreements with the administration providing for the 
origination and servicing of qualified restructuring loans on 
the terms and conditions the administration determines to be 
appropriate. 
    Subd. 7.  [RESTRUCTURING PROCEDURE.] The eligible 
agricultural lender or borrower shall propose restructuring a 
loan to the administration.  Within 30 days of receiving 
adequate information concerning a proposal, the administration 
and the eligible lender shall notify the borrower of their 
determination of eligibility.  An eligible agricultural lender 
shall then expeditiously conduct necessary appraisals and draft 
the loan restructuring agreement which must be consistent with 
this section and documents previously approved by the 
administration and eligible lenders.  The loan restructuring 
agreement must be approved by the eligible lender, the 
administration, and the borrower.  
     An eligible borrower may participate in the restructured 
loan or the homestead redemption loan, but not both loans. 
    Subd. 8.  [STATE'S PARTICIPATION.] With respect to loans 
that are eligible for restructuring under this article and upon 
acceptance by the administration, the administration shall enter 
into a participation agreement or other financial arrangement 
whereby it shall participate in a restructured loan to the 
extent of one quarter of the primary principal or $50,000, 
whichever is less, except that the administration may 
participate in restructured loans made for the redemption of 
homesteads to the extent of one-half of the primary principal or 
$25,000, whichever is less.  The administration's portion of the 
loan must thereafter be protected by the first mortgage held by 
the eligible lender to the extent of its participation in the 
loan.  
    Subd. 9.  [RESTRUCTURED LOAN AGREEMENT.] (a) All payments 
on the primary and secondary principal of the restructured loan, 
all payments of interest on the secondary principal, and an 
agreed portion of the interest payable to the eligible 
agricultural lender on the primary principal must be deferred to 
the end of the term of the loan. 
    (b)  A borrower may prepay the restructured loan, with all 
primary and secondary principal and interest and deferred 
interest at any time without prepayment penalty.  
    (c) Interest on secondary principal must accrue at a below 
market interest rate.  
    (d) At the conclusion of the term of the restructured loan, 
the borrower owes primary principal, secondary principal, and 
deferred interest on primary and secondary principal.  However, 
part of this balloon payment may be forgiven following an 
appraisal by the lender and the administration to determine the 
current market value of the real estate subject to the 
mortgage.  If the current market value of the land after 
appraisal is less than the amount of debt owed by the borrower 
to the lender and administration on this obligation, that 
portion of the obligation that exceeds the current market value 
of the real property must be forgiven by the lender and the 
administration in the following order:  
     (1) deferred interest on secondary principal;  
     (2) secondary principal;  
     (3) deferred interest on primary principal;  
     (4) primary principal as provided in an agreement between 
the administration and the lender; and 
     (5) accrued but not deferred interest on primary principal. 
     The debt forgiveness may be combined with a renegotiated 
loan on the unforgiven balance due if the borrower is able to 
establish that there are reasonable prospects of repayment on a 
debt equal to the current market value of real estate at then 
existing interest rates.  If so, the loan must be reamortized on 
terms and conditions acceptable to the lender, the 
administration, and the farmer.  
    Subd. 10.  [INTEREST RATE.] The interest rate per annum on 
the portion of the restructuring loan represented by the 
participation interest purchased by the administration must be 
that rate of interest determined by the administration to be 
necessary to provide for the timely payment of principal and 
interest when due on bonds or other obligations issued by the 
administration, and to provide for the reasonable and necessary 
costs of issuing, carrying, administering, and securing the 
bonds or notes and to pay the costs incurred and to be incurred 
by the administration in the implementation of the program.  The 
interest rate per annum borne by the primary principal portion 
of the restructuring loan retained by the eligible agricultural 
lender must be a rate of interest approved by the 
administration.  The administration may specify the points, 
fees, and other charges which the eligible agricultural lender 
may charge to the eligible borrower. 
    Subd. 11.  [ADMINISTRATION.] The eligible lender shall 
administer the loans and shall bear all costs of the loan 
administration.  Ordinary costs of administration include 
appraisals, litigation, abstracts of title, and similar costs.  
The administration agrees to share in any other responsibilities 
common to a loan participation agreement.  
    Subd. 12.  [ASSIGNABILITY.] Loans restructured under this 
section may not be assigned to anyone other than a direct 
descendant of the original borrower and the assignee must intend 
to engage in the direct operation and management of the farm 
which is subject to the mortgage.  If such an assignment is 
contemplated, the borrower must obtain prior written approval of 
the eligible lender and the administration and the assignee 
shall thereafter be subject to the same terms and conditions and 
events of default as the original borrower.  If assigned to some 
other party, the eligible agricultural lender may exercise its 
foreclosure remedies as provided by its contracts and by law. 
    Subd. 13.  [DEFAULT.] In addition to default caused by 
nonpayment of the basic interest on the primary principal, it is 
intended that the documents establishing the restructured loans 
will include the following conditions, which, if violated, 
constitute default. 
    (a) The borrower must submit an annual operating budget to 
the eligible agricultural lender at a time specified by the 
lender. 
    (b) The borrower must submit quarterly, semiannual, and 
annual financial statements which must include balance sheets 
and income and expense records maintained pursuant to an 
acceptable farm record system as specified by the eligible 
agricultural lender. 
    (c) The borrower must comply with capital expenditure 
limitations imposed by the eligible agricultural lender. 
    (d) The borrower must obtain an annual commitment for an 
operating loan or assured sources of operating expenses 
sufficient to adequately operate the farm. 
    (e) The eligible agricultural lender may impose other 
reasonable requirements to reduce overall risk such as requiring 
purchase of crop insurance. 
    The lender may not waive any default specified in this 
subdivision without the consent of the administration. 
    Subd. 14.  [GUARANTEED PAYMENT.] The administration may 
enter into agreements with qualified agricultural lenders, 
insurance companies, or others insuring or guaranteeing to the 
state the payment of all or a portion of qualified agricultural 
loans. 
    Subd. 15.  [ADVANCE RESERVATIONS.] The administration may 
enter into agreements with eligible agricultural lenders 
providing for advance reservations of purchases of participation 
interests in restructuring loans, if the agreements provide that 
the administration may only purchase participation interests in 
restructuring loans pursuant to normal procedure.  The 
administration may provide in an agreement for special 
procedures or requirements designed to meet specific conditions 
or requirements. 
    Subd. 16.  [DATA PRIVACY.] Financial information, including 
but not limited to credit reports, financial statements, and net 
worth calculations, received or prepared by the administration 
regarding any administration loan or grant and the name of each 
individual who is the recipient of a loan are private data on 
individuals, pursuant to section 13.02, subdivision 12. 
    Sec. 6.  [41B.05] [GENERAL POWERS OF THE ADMINISTRATION.] 
    For the purpose of exercising the specific powers granted 
in section 5 and effectuating the other purposes of this article 
the administration has the general powers granted in this 
section. 
    (a) It may sue and be sued. 
    (b) It may have a seal and alter the seal. 
    (c) It may make, and from time to time, amend and repeal 
rules consistent with this article. 
    (d) It may acquire, hold, and dispose of personal property 
for its corporate purposes. 
    (e) It may enter into agreements, contracts, or other 
transactions with any federal or state agency, any person and 
any domestic or foreign partnership, corporation, association, 
or organization, including contracts or agreements for 
administration and implementation of all or part of this article.
    (f) It may acquire real property, or an interest therein, 
in its own name, by purchase or foreclosure, where such 
acquisition is necessary or appropriate. 
    (g) It may provide general technical services related to 
rural finance. 
    (h) It may provide general consultative assistance services 
related to rural finance, and shall make available technical 
assistance to potential lenders and applicants to encourage 
applications for loans. 
    (i) It may promote research and development in matters 
related to rural finance. 
    (j) It may enter into agreements with lenders, borrowers, 
or the issuers of securities for the purpose of regulating the 
development and management of farms financed in whole or in part 
by the proceeds of qualified agricultural loans. 
    (k) It may enter into agreements with other appropriate 
federal, state, or local governmental units to foster rural 
finance.  It may give advance reservations of loan financing as 
part of the agreements, with the understanding that the 
administration will only approve the loans pursuant to normal 
procedures, and may adopt special procedures designed to meet 
problems inherent in such programs. 
    (l) It may undertake and carry out studies and analyses of 
rural financing needs within the state and ways of meeting such 
needs including:  data with respect to geographical 
distribution; farm size; the distribution of farm credit needs 
according to debt ratios and similar factors; the amount and 
quality of available financing and its distribution according to 
factors affecting rural financing needs and the meeting thereof; 
and may make the results of such studies and analyses available 
to the public and may engage in research and disseminate 
information on rural finance. 
    (m) It may survey and investigate the rural financing needs 
throughout the state and make recommendations to the governor 
and the legislature as to legislation and other measures 
necessary or advisable to alleviate any existing shortage in the 
state. 
    (n) It may establish cooperative relationships with such 
county and multicounty authorities as may be established and may 
develop priorities for the utilization of administration 
resources and assistance within a region in cooperation with 
county and multicounty authorities. 
    (o) It may contract with, use, or employ any federal, 
state, regional, or local public or private agency or 
organization, legal counsel, financial advisors, investment 
bankers or others, upon terms it deems necessary or desirable, 
to assist in the exercise of any of the powers granted in this 
article and to carry out the objectives of this article and may 
pay for the services from administration funds. 
    (p) It may establish cooperative relationships with 
counties to develop priorities for the use of administration 
resources and assistance within counties and to consider county 
plans and programs in the process of setting the priorities. 
    Sec. 7.  [41B.07] [RULES.] 
    The administration may adopt rules for the efficient 
administration of this article.  The rules need not be adopted 
in compliance with chapter 14. 
    Sec. 8.  [41B.08] [REVENUE BONDS; PURPOSES, TERMS, 
APPROVAL.] 
    Subdivision 1.  [BONDS FOR PROGRAM.] The administration 
from time to time may issue its negotiable bonds in a principal 
amount which, in the opinion of the administration, is necessary 
to provide sufficient funds for achieving its purposes including 
the making of qualified agricultural loans or the purchase of 
interests in those loans, the payment of interest on bonds of 
the administration, the establishment of reserves to secure the 
bonds, and the payment of all other expenditures of the 
administration incident to and necessary or convenient to carry 
out its corporate purposes and powers.  Bonds of the 
administration may be issued as bonds or notes or in any other 
form authorized by law. 
    Subd. 2.  [REFUNDING OF BONDS.] The administration from 
time to time may issue bonds for the purpose of refunding any 
bonds of the administration then outstanding, including the 
payment of any redemption premiums thereon and any interest 
accrued or to accrue to the redemption date next succeeding the 
date of delivery of those refunding bonds.  The proceeds of any 
refunding bonds may, in the discretion of the administration, be 
applied to the purchase or payment at maturity of the bonds to 
be refunded, or to the redemption of such outstanding bonds on 
the redemption date next succeeding the date of delivery of such 
refunding bonds and may, pending such application, be placed in 
escrow to be applied to such purchase, retirement, or 
redemption.  Any such escrowed proceeds, pending such use, may 
be invested and reinvested in obligations issued or guaranteed 
by the state or the United States or by any agency or 
instrumentality thereof, or in certificates of deposit or time 
deposits secured in a manner determined by the administration, 
maturing at a time or times appropriate to assure the prompt 
payment of the principal of and interest and redemption 
premiums, if any, on the bonds to be refunded.  The income 
earned or realized on any such investment may also be applied to 
the payment of the bonds to be refunded.  After the terms of the 
escrow have been fully satisfied, any balance of such proceeds 
and any investment income may be returned to the administration 
for use by it in any lawful manner.  All refunding bonds issued 
under the provisions of this subdivision must be issued and 
secured in the manner provided by resolution of the 
administration. 
    Subd. 3.  [KIND OF BONDS.] All bonds issued under this 
section must be negotiable investment securities within the 
meaning and for all purposes of the uniform commercial code, 
subject only to any provisions of the bonds and notes for 
registration.  All bonds so issued may be either general 
obligations of the administration, secured by its full faith and 
credit, and payable out of any money, assets, or revenues of the 
administration, subject to the provisions of resolutions or 
indentures pledging and appropriating particular money, assets, 
or revenues to particular bonds, or limited obligations of the 
administration not secured by its full faith and credit, and 
payable solely from specified sources or assets. 
    Subd. 4.  [REQUIRED RATING.] No bonds may be issued unless 
a rating of "A" or better has been awarded to the bonds by a 
national bond rating agency. 
    Sec. 9.  [41B.09] [REVENUE BONDS; RESOLUTIONS AUTHORIZING, 
ADDITIONAL TERMS, SALE.] 
    The bonds of the administration must be authorized by a 
resolution or resolutions adopted by the administration, bear 
such date or dates, mature at such time or times, bear interest 
at such rate or rates, be in such denominations, be in such 
form, carry such registration privileges, be executed in such 
manner, be payable in lawful money of the United States, at such 
place or places within or without the state, and be subject to 
such terms of redemption or purchase prior to maturity as the 
resolutions or certificates may provide.  If, for any reason, 
whether existing at the date of issue of any bonds or at the 
date of making or purchasing any loan or securities from the 
proceeds or after that date, the interest on any bonds is or 
becomes subject to federal income taxation, this shall not 
impair or affect the validity or the provisions made for the 
security of the bonds.  The administration may make covenants 
and take or cause to be taken actions which are in its judgment 
necessary or desirable and possible to comply with conditions 
established by federal law or regulations for the exemption of 
interest on its obligations.  The administration may refrain 
from compliance with those conditions if in its judgment this 
would serve the purposes and policies set forth in this article 
with respect to any particular issue of bonds, unless this would 
violate covenants made by the administration.  The bonds of the 
administration may be sold at public or private sale at a price 
or prices determined by the administration.  The underwriting 
discount, spread, or commission paid or allowed to the 
underwriters of the bonds, however, must be an amount not in 
excess of the amount determined by the administration to be 
reasonable in the light of the risk assumed and the expenses of 
issuance, if any, required to be paid by the underwriters. 
    Sec. 10.  [41B.10] [REVENUE BONDS; OPTIONAL RESOLUTION AND 
CONTRACT PROVISIONS.] 
    Any resolution authorizing any bonds or any issue of bonds 
may contain provisions, which must be a part of the contract 
with the holders of the bonds, as to the matters referred to in 
this section. 
    (a) It may pledge or create a lien on all or any part of 
the money or property of the administration and any money held 
in trust or otherwise by others to secure the payment of the 
bonds or of any issue of bonds, subject to any agreements with 
bondholders which exist. 
    (b) It may provide for the custody, collection, securing, 
investment, and payment of any money of the administration. 
    (c) It may set aside reserves or sinking funds and provide 
for their regulation and disposition and may create other 
special funds into which any money of the administration may be 
deposited. 
    (d) It may limit the loans and securities to which the 
proceeds of sale of bonds may be applied and may pledge 
repayments thereon to secure the payment of the notes or bonds 
or of any issue of notes or bonds. 
    (e) It may limit the issuance of additional bonds, the 
terms upon which additional bonds may be issued and secured, and 
the refunding of outstanding or other bonds. 
    (f) It may prescribe the procedure, if any, by which the 
terms of any contract with bondholders may be amended or 
abrogated, the amount of bonds the holders of which must consent 
to the amendment or abrogation, and the manner in which that 
consent may be given. 
    (g) It may vest in a trustee or trustees property, rights, 
powers, and duties in trust determined by the administration, 
which may include any or all of the rights, powers, and duties 
of the bondholders, or may limit the rights, powers, and duties 
of the trustee. 
    (h) It may define the acts or omissions to act which 
constitute a default in the obligations and duties of the 
administration and may provide for the rights and remedies of 
the holders of bonds in the event of a default, and provide any 
other matters of like or different character, consistent with 
the general laws of the state and other provisions of this 
article, which in any way affect the security or protection of 
the bonds and the rights of the bondholders. 
    Sec. 11.  [41B.11] [PLEDGES.] 
    Any pledge made by the administration is valid and binding 
from the time the pledge is made.  The money or property pledged 
and later received by the administration is immediately subject 
to the lien of the pledge without any physical delivery of the 
property or money or further act, and the lien of any pledge is 
valid and binding as against all parties having claims of any 
kind in tort, contract, or otherwise against the administration, 
whether or not those parties have notice of the lien or pledge.  
Neither the resolution nor any other instrument by which a 
pledge is created need be recorded. 
    Sec. 12.  [41B.12] [REVENUE BONDS; NONLIABILITY OF 
INDIVIDUALS.] 
    Neither the members of the administration nor any person 
executing the bonds is liable personally on the bonds or subject 
to any personal liability or accountability by reason of their 
issuance. 
    Sec. 13.  [41B.13] [REVENUE BONDS; PURCHASE AND 
CANCELLATION BY ADMINISTRATION.] 
    The administration, subject to agreements with bondholders 
which may then exist, has power out of any funds available for 
the purpose to purchase bonds of the administration at a price 
not exceeding (a) if the bonds are then redeemable, the 
redemption price then applicable plus accrued interest to the 
next interest payment date thereon, or (b) if the bonds are not 
redeemable, the redemption price applicable on the first date 
after the purchase upon which the bonds become subject to 
redemption plus accrued interest to that date. 
    Sec. 14.  [41B.14] [REVENUE BONDS; NONLIABILITY OF STATE.] 
    The state of Minnesota is not liable on bonds of the 
administration issued under section 8 and those bonds are not a 
debt of the state.  The bonds must contain on their face a 
statement to that effect. 
    Sec. 15.  [41B.15] [STATE PLEDGE AGAINST IMPAIRMENT OF 
CONTRACTS.] 
    The state pledges and agrees with the holders of any bonds 
issued under section 8, that the state will not limit or alter 
the rights vested in the administration to fulfill the terms of 
any agreements made with the bondholders, or in any way impair 
the rights and remedies of the holders until the bonds, together 
with interest on them, with interest on any unpaid installments 
of interest, and all costs and expenses in connection with any 
action or proceeding by or on behalf of the bondholders, are 
fully met and discharged.  The administration may include this 
pledge and agreement of the state in any agreement with the 
holders of bonds issued under section 8. 
    Sec. 16.  [41B.16] [SECURITY ACCOUNT.] 
     Upon determining that a default may occur in the payment of 
principal or interest on any issue of bonds issued under section 
8, or if any debt service reserve fund established in connection 
with those bonds is drawn upon because the revenues of the 
program are not then sufficient to make any payment of the 
principal or interest on them, the administration shall certify 
those facts to the commissioner of finance and shall request 
that the commissioner of finance transfer from the security 
account established under section 19, subdivision 5, to accounts 
or funds designated by the administration an amount required to 
cure the deficiency. 
    Sec. 17.  [41B.17] [POWERS AND DUTIES OF TRUSTEE.] 
    Subdivision 1.  [GENERAL.] The trustee designated in any 
indenture or resolution securing an issue of bonds may, and upon 
written request of the holders of 25 percent in principal amount 
of the notes or bonds then outstanding shall, in the trustee's 
own name, subject to the provisions of the indenture or 
resolution: 
    (1) enforce all rights of the bondholders, including the 
right to require the administration to collect fees, charges, 
interest, and payments on loans or interests therein held by the 
administration and eligible securities purchased by it adequate 
to carry out any agreement as to, or pledge of, those fees, 
charges, and payments, and to require the administration to 
carry out any other agreements with the holders of the notes or 
bonds and to perform its duties under this article; 
    (2) bring suit upon the bonds; 
    (3) require the administration to account as if it were the 
trustee of any express trust for the holders of the bonds; 
    (4) enjoin any acts or things which may be unlawful or in 
violation of the rights of holders of the bonds; or 
    (5) declare all the bonds due and payable, and if all 
defaults are made good, then, with the consent of the holders of 
25 percent of the principal amount of the bonds then 
outstanding, the trustee may annul the declaration and 
consequences. 
    Subd. 2.  [ADDITIONAL POWERS.] In addition to the powers in 
subdivision 1, the trustee has all of the powers necessary or 
appropriate for the exercise of any functions specifically set 
forth in this section or incident to the general representation 
of bondholders or noteholders in the enforcement and protection 
of their rights. 
    Subd. 3.  [VENUE; NOTICE.] The venue of any action or 
proceedings brought by a trustee under this article, is in 
Ramsey county.  Before declaring the principal of bonds due and 
payable, the trustee shall first give 30 days notice in writing 
to the governor, the administration, and the state treasurer. 
    Sec. 18.  [41B.18] [REVENUE BOND FUND; REPORTS.] 
    Subdivision 1.  [AUTHORITY.] The administration may create 
and establish a special fund or funds for the security of one or 
more or all series of its bonds, which funds are known as debt 
service reserve funds.  The administration may pay into each 
debt service reserve fund: 
    (1) any money appropriated by the state only for the 
purposes of that fund; 
    (2) any money transferred from the security fund for the 
purposes of that fund; 
    (3) any proceeds of sale of bonds to the extent provided in 
the resolution or indenture authorizing their issuance; 
    (4) any funds directed to be transferred by the 
administration to that debt service reserve fund; and 
    (5) any other money made available to the administration 
only for the purpose of that fund from any other source. 
    Subd. 2.  [USE OF MONEY.] The money held in or credited to 
each debt service reserve fund, except as provided in this 
section, must be used solely for the payment of the principal of 
bonds of the administration as the bonds mature, the purchase of 
the bonds, the payment of interest on the bonds, or the payment 
of any premium required when the bonds or notes are redeemed 
before maturity; provided, that money in a debt service reserve 
fund may not be withdrawn at any time in an amount which would 
reduce the amount of the fund to less than the amount which the 
administration determines to be reasonably necessary for the 
purposes of the fund, except for the purpose of paying principal 
or interest due on bonds secured by the fund, for the payment of 
which other money of the administration is not available. 
    Subd. 3.  [LIMITATION.] If the administration creates a 
debt service reserve fund for the security of any series of 
bonds, it shall not issue any additional bonds which are 
similarly secured if the amount of any of the debt service 
reserve funds at the time of issuance does not equal or exceed 
the minimum amount, if any, required by the resolution creating 
that fund, unless the administration deposits in each fund at 
the time of issuance, from the proceeds of the bonds or 
otherwise, an amount which, together with the amount then in the 
fund, will not be less than the minimum amount required. 
    Subd. 4.  [EXCESS FUNDS.] To the extent consistent with the 
resolutions and indentures securing outstanding bonds, the 
administration may, at the close of any fiscal year, transfer to 
any other fund or account from any debt service reserve fund, 
any excess in that fund over the amount deemed by the 
administration to be reasonably necessary for the purpose of the 
fund.  Any excess must be transferred first to the security fund 
to the extent of any prior withdrawals from the security fund 
which have not previously been restored to the security fund. 
    Subd. 5.  [CONSTRUCTION.] Nothing in this section may be 
construed to limit the right of the administration to create and 
establish by resolution or indenture other funds or security in 
addition to debt service reserve funds which are necessary or 
desirable in connection with any bonds or programs. 
    Subd. 6.  [REPORT.] The administration shall submit a 
biennial report of its activities, projected activities, 
receipts, and expenditures for the next biennium, to the 
governor and the legislature on or before January 15 in each 
odd-numbered year.  The report must include the distribution of 
money under each administration program by county.  In addition, 
the report must include the cost to the administration of the 
issuance of its bonds for each issue in the biennium. 
    Subd. 7.  [AUDIT.] The books and records of the 
administration are subject to audit by the legislative auditor 
in the manner prescribed for other state agencies.  The 
administration may also employ and contract in its resolutions 
and indentures for the employment of public accountants for the 
audit of books and records pertaining to any fund. 
    Sec. 19.  [41B.19] [GENERAL OBLIGATION BONDS.] 
    Subdivision 1.  [PROCEDURE.] For the purpose of developing 
the state's agricultural resources by providing for the 
extension of credit on real estate security and to assure the 
timely payment of the principal of and interest on the bonds or 
other obligations issued by the rural finance administration, 
and upon request of the rural finance administration under 
section 8, the commissioner of finance may at the direction of 
the administration, issue general obligation bonds of the state 
in a principal amount not exceeding $50,000,000.  The bonds must 
be secured as provided in the Minnesota Constitution, article 
XI, section 7, and, except as provided in this section, must be 
issued and secured as provided in Minnesota Statutes, section 
16A.641.  The proceeds of the bonds, except any premium and 
accrued interest, must be deposited in the security account 
established by this section and used solely for the purposes 
specified in this section.  The premium and accrued interest, if 
any, must be deposited in the the rural renewal bond account in 
the state bond fund. 
    Subd. 2.  [TERMS OF BONDS.] Notwithstanding any provision 
of section 16A.641 to the contrary, the commissioner of finance 
may fix the terms of the bonds as provided in sections 475.54, 
subdivision 5a, and 475.56, paragraph (b), and may enter into, 
on behalf of the state all agreements deemed necessary for this 
purpose, including those authorized to be entered into by 
municipalities by that section.  The proceeds of the general 
obligation bonds may be used to reimburse the commissioner of 
finance for the costs of issuance of the bonds and the costs of 
development of programs authorized in this article.  
     Subd. 3.  [SALE OF BONDS.] If determined by the 
commissioner of finance to be necessary in order to reduce costs 
of issuance, to secure a favorable prevailing interest rate, or 
to receive the bond proceeds by a specified date, or if the 
terms of the bonds are fixed as provided in sections 475.54, 
subdivision 5a, and 475.56, paragraph (b), the bonds may be sold 
by negotiation and without solicitation of sealed bids.  
     Subd. 4.  [BOND FUND ACCOUNT.] The commissioner of finance 
shall maintain in the state bond fund a separate bookkeeping 
account designated as the rural renewal bond account, to record 
receipts and disbursements of money transferred to the account 
to pay bonds issued under this section and to record income from 
the investment of the money in the account.  The income must be 
credited to the account in each fiscal year in an amount equal 
to the approximate average return that year on all funds 
invested by the commissioner of finance, as determined by the 
commissioner of finance, times the average balance in the 
account that year.  
     Subd. 5.  [RURAL FINANCE ADMINISTRATION SECURITY 
ACCOUNT.] The commissioner of finance shall maintain a separate 
state building fund account designated as the rural finance 
administration security account, into which must be deposited 
the proceeds of the rural renewal general obligation bonds 
issued as provided in this section.  The commissioner of finance 
shall maintain a separate bookkeeping account to record receipts 
and disbursements of money transferred to or from the security 
account and to record income from the investment of money in the 
account.  Upon the written request of the administration, the 
commissioner of finance shall transfer from the security account 
to an account or accounts the administration shall designate, a 
sum of money sufficient in amount, if available, when added to 
the balances then on hand in the designated accounts, to pay 
bonds issued by the administration under this article and the 
interest on them due and to become due on the next succeeding 
date for the payment of the principal of and interest on the 
bonds of the administration or to restore to any debt service 
reserve fund established in connection with the bonds any amount 
withdrawn from the debt service reserve account to pay the 
bonds.  The commissioner of finance shall further transfer from 
the security account on or before the date on which any 
installment of the principal of and interest on bonds authorized 
by this section is due, a sum sufficient in amount, when added 
to the balance then on hand in the rural renewal bond account, 
to pay all bonds issued under this section and the interest on 
them due and to become due on the next succeeding date for 
payment of the bonds. 
    Subd. 6.  [INVESTMENT OF SECURITY ACCOUNT.] Money from time 
to time on deposit in the security account must be invested by 
the state board of investment at the request of the 
administration in any investment authorized by this 
subdivision.  Money on deposit in the security account may be 
invested in (1) certificates of deposit insured by the Federal 
Deposit Insurance Corporation or Federal Savings and Loan 
Insurance Corporation; (2) certificates of deposit issued by 
eligible agricultural lenders, whether or not fully insured or 
secured; (3) deposits secured by obligations of the United 
States or of the state of a market value equal at all times to 
the amount of the deposit and all banks and trust companies are 
authorized to give security for those deposits; (4) in qualified 
agricultural loans or in participation interests in qualified 
agricultural loans; or (5) qualified restructured loans.  If and 
to the extent money has been transferred from the security 
account to provide for the timely payment of the principal of 
and interest on bonds issued by the administration, or to 
transfer money to a debt service reserve fund established in 
connection with the bonds, the administration shall transfer to 
the security account on or before December 1 of each succeeding 
year an amount equal to that previously transferred from the 
security account, provided that the administration's obligation 
to transfer money to the security account is limited to money 
then on hand in funds or accounts of the administration in 
excess of those appropriated to other purposes or required to 
provide for the payment of the principal of and interest on 
bonds issued by the administration and to pay the costs of 
issuing, carrying, administering, and securing the bonds of the 
administration and of administering and implementing the 
programs of the administration financed by the bonds. 
    Subd. 7.  [TRANSFERS, APPROPRIATION.] In addition to the 
money required to be transferred to the rural renewal bond 
account under subdivision 5, and in order to reduce the amount 
of taxes otherwise required by the Minnesota Constitution to be 
levied for the state bond fund, the commissioner of finance 
shall transfer from the general fund to the rural renewal bond 
account, on December 1 in each year, a sum of money sufficient 
in amount, when added to the balance then on hand in that 
account, to pay all bonds issued under this section and the 
interest on them due and to become due to and including July 1 
in the second ensuing year.  All money to be so credited and all 
income from its investment is annually appropriated for the 
payment of the bonds and interest on them, and shall be 
available in the rural renewal bond account before the levy of 
the tax in any year required by the Minnesota Constitution, 
article XI, section 7.  The legislature may also appropriate to 
the rural renewal bond account any other money in the state 
treasury not otherwise appropriated, for the security of bonds 
issued under this section in the event that sufficient money is 
not available in the account from the appropriation in this 
section, before the levy of the tax in any year.  The 
commissioner of finance shall make the appropriate entries in 
the accounts of the respective funds. 
     Subd. 8.  [CONSTITUTIONAL LEVY.] On or before December 1 in 
each year the state auditor shall levy on all taxable property 
within the state whatever tax may be necessary to produce an 
amount sufficient, with all money then in the rural renewal bond 
account, to pay the entire amount of principal and interest due 
on or before July 1 in the second year thereafter on bonds 
issued under this section.  This tax must be levied upon all 
real property used for a homestead, as well as other taxable 
property, notwithstanding section 273.13, subdivision 22.  The 
tax must not be limited in rate or amount until all the bonds 
and interest on them are fully paid.  The proceeds of this tax 
are appropriated and must be credited to the state bond fund, 
and the principal and interest on the bonds are payable from all 
the proceeds.  As much of the proceeds as is necessary is 
appropriated for the payments.  If at any time there is 
insufficient money from the proceeds of the taxes to pay the 
principal and interest when due on the bonds, the principal and 
interest must be paid out of the general fund in the state 
treasury, and the amount necessary for the payment is hereby 
appropriated. 
    Subd. 9.  [COMPLIANCE WITH FEDERAL LAW.] The commissioner 
of finance may covenant and agree with the holders of the bonds 
issued under this section that the state will comply, insofar as 
possible, with the provisions of the United States Internal 
Revenue Code now or hereafter enacted that are applicable to the 
bonds and that establish conditions under which the interest to 
be paid on the bonds will not be includable in gross income for 
federal tax purposes. 
    Subd. 10.  [TAXABILITY OF INTEREST.] Interest on the bonds 
authorized by this section may be issued without regard to 
whether the interest to be paid on them is includable in gross 
income for federal tax purposes.  
    Sec. 20.  [41B.20] [EXEMPTION FROM TAXES.] 
    The property of the administration and its income and 
operation shall be exempt from all taxation by the state or any 
of its political subdivisions. 
    Sec. 21.  [41B.21] [CERTAIN ACTIONS.] 
    Any action brought by any person with respect to the rights 
or powers of the administration or calling into question the 
validity or enforceability of bonds or obligations authorized by 
this article is a remedial case of which the supreme court has 
original jurisdiction pursuant to article VI, section 2 of the 
constitution.  The action may be commenced solely by service 
upon the state auditor, the commissioner of agriculture, or the 
executive director of the administration and by filing of the 
summons and complaint with the supreme court.  Upon filing of an 
answer to the complaint, the court shall order a hearing which 
must be held not later than 30 days from the date of filing of 
the answer.  At the hearing, the court shall establish an 
expedited schedule for the action.  
    Sec. 22.  [41B.22] [CONSTRUCTION.] 
    This article is necessary for the welfare of the state of 
Minnesota and its inhabitants; therefore, it shall be liberally 
construed to effect its purpose. 
    Sec. 23.  [41B.23] [SEVERABILITY; ACTIONS.] 
    Each of the provisions of this article, and each 
application thereof to particular circumstances, is severable.  
If any provision or application is found to be unconstitutional 
and void, it is the intention that the remaining provisions and 
applications shall be valid and enforceable to the full extent 
possible under section 645.20.  The supreme court shall have 
original jurisdiction, pursuant to article VI, section 2 of the 
constitution, in all cases seeking a remedy based upon an issue 
raised as to the validity of any such provision or application. 
    Sec. 24.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment. 

                                ARTICLE 7

                  PROTECTION OF CONSERVATION PRACTICES 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
40.26, is amended to read: 
    40.26 [APPLICATION FOR COST-SHARING FUNDS.] 
    Subdivision 1.  [COST-SHARE REQUIRED.] (a) Except for a 
development activity, a land occupier may not be required to 
establish soil conservation practices unless state cost-sharing 
funds have been specifically approved for that land and have 
been made available to the land occupier under sections 40.23 
and 40.242, equal to at least 75 percent of the cost of the 
permanent conservation practices on a voluntary basis, or a 50 
percent cost share if an application for cost share is not made 
within 90 days after the board approves a mediated written 
agreement or within 90 days after the court orders 
implementation of a plan and time schedule prepared by the 
landowner or the court.  For mediated settlements, a court order 
that implements the landowner's alternatives or the court's 
alternatives must state the time schedule for application for 50 
percent cost share.  If the court orders implementation of the 
district's plan and time schedule, a landowner is only eligible 
for 50 percent cost share. 
    Subd. 2.  [REVIEW OF REQUIREMENTS.] (b) The state soil and 
water conservation board shall review these requirements at 
least once each year, and may authorize a district to provide a 
higher percentage of cost sharing than is required by this 
section.  To aid in this determination, the state board may 
consider the location of the affected area in relation to the 
priority areas as established in the soil and water conservation 
district annual and long-range plans. 
    Subd. 3.  [RECORDING.] The permanent conservation practices 
must be recorded with the county recorder on the tracts where 
they occur if the cost-sharing funds are issued to the landowner.
    Sec. 2.  Minnesota Statutes 1984, section 500.24, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [LEASE AGREEMENT; CONSERVATION PRACTICE 
PROTECTION CLAUSE.] A corporation, other than a family farm 
corporation or an authorized farm corporation, when leasing farm 
land to a family farm unit, a family farm corporation, or an 
authorized farm corporation under provisions of section 500.24, 
subdivision 3, clause (i), must include within the lease 
agreement a provision prohibiting intentional damage or 
destruction to a conservation practice on the agricultural land. 
    Sec. 3.  Minnesota Statutes 1984, section 500.24, is 
amended by adding a subdivision to read: 
    Subd. 3b.  [PROTECTION OF CONSERVATION PRACTICES.] If a 
corporation, other than a family farm corporation or an 
authorized farm corporation, during the period of time it holds 
agricultural land under section 500.24, subdivision 3, clause 
(i), intentionally destroys a conservation practice as defined 
in section 40.19, subdivision 5, to which the state has made a 
financial contribution, the corporation must pay the 
commissioner of agriculture, for deposit in the general fund, an 
amount equal to the state's total contributions to that 
conservation practice plus interest from the time of investment 
in the conservation practice.  Interest must be calculated at an 
annual percentage rate of 12 percent. 
     Sec. 4.  [EFFECTIVE DATE.] 
     This article is effective April 1, 1986. 

                                ARTICLE 8

                 FAMILY FARM SECURITY INTEREST EXCLUSION
    Section 1.  [FAMILY FARM SECURITY INTEREST EXCLUSIONS.] 
    (a) The commissioner shall annually pay to qualified 
sellers of property, financed by a family farm security loan, an 
amount approximately equal to the additional state income tax 
paid as a result of the inclusion in gross income of the 
interest and payment adjustment earned on a seller-sponsored 
family farm security loan. 
    (b) The payment amount must be determined as follows: 
    (1) In order to qualify for a payment, the seller must 
apply to the commissioner.  The application must include a copy 
of the seller's 1985 state income tax return and any other 
information that the commissioner requests to verify that the 
applicant is a qualified seller.  The commissioner shall 
recompute the seller's total state income tax liability that 
would be due if the interest and payment adjustment amounts were 
not includable in gross income for state income tax purposes.  
The commissioner may require the seller to compute these amounts 
as part of the application.  For calendar year 1986 the amount 
of the payment equals the reduction in state income tax 
liability that would occur if the interest and payment 
adjustment were not included in gross income for state tax 
purposes. 
    (2) For calendar years beginning with 1987, the additional 
payment amount must be determined as follows: 
     (i) The calendar year 1986 payment must be divided by the 
amount of interest and payment adjustment received during 
calendar year 1986. 
     (ii) The resulting quotient must be multiplied by the 
interest and payment adjustment received for the calendar year. 
     (iii) The product determined under clause (ii) is the 
payment for the calendar year. 
    (c) If for a tax year after 1986 the qualified seller's 
taxable income has changed substantially, the commissioner may 
provide by rule that upon reapplication a later tax year will be 
used to compute the quotient under clause (b)(2)(i). 
    (d) The commissioner may make the payments under this 
subdivision in the same manner provided for the payment 
adjustment under subdivision 2. 
    (e) For purposes of this subdivision, the following terms 
have the meanings given: 
    (1) "Gross income" means gross income as defined for 
purposes of chapter 290. 
    (2) "Qualified seller" means an individual who sold farm 
land under a seller-sponsored loan prior to July 1, 1985, and 
who is a resident of Minnesota during the calendar year and 
subject to the payment of Minnesota income taxes. 
     Sec. 2.  [EFFECTIVE DATE.] 
     This article is effective the day following final enactment.

                                ARTICLE 9

                            VETERINARIAN LIEN
    Section 1.  Minnesota Statutes 1984, section 514.92, is 
amended to read: 
    514.92 [VETERINARIAN'S LIEN; STATEMENT OF CLAIM; 
FORECLOSURE.] 
    Subdivision 1.  [ATTACHMENT.] Every duly A licensed and 
registered veterinarian shall have a lien for all who performs 
emergency veterinary services over that cost more 
than $25 rendered upon any animal or for animals at the request 
of the owner or lawful possessor of same, including but not 
limited to a person in possession of the animals has a lien on 
the animals for the value of the services.  Veterinary services 
include emergency surgical procedures, administering vaccines, 
antisera, virus, and antibiotics, or and other veterinary 
treatment, from the date of filing the lien.  Within 180 days 
from the day on which the treatment was completed, the claimant 
of the lien shall file in the appropriate filing office under 
the Uniform Commercial Code, Minnesota Statutes, section 
336.9-401, a verified lien statement setting forth the kind and 
number of animals treated, the reasonable value for the 
treatment or services rendered, or the price contracted between 
the parties, the name of the person for whom the treatment was 
done, the reasonable identification of the animal or group of 
animals treated, dates when the treatment was commenced and was 
completed, the name of the owner, or reputed owner, of the 
animals, the name and address of the veterinarian claiming the 
lien.  Within one year after the date the last service was 
rendered, but not thereafter, the lien claimant may foreclose 
his lien in the manner prescribed for security interests under 
article 9 of the Uniform Commercial Code medicines and 
treatments.  Veterinary services also include services performed 
primarily to protect human health, prevent the spread of animal 
diseases, or to preserve the immediate health of an animal.  
    Subd. 1a.  [FILING AND PERFECTING LIEN.] The veterinarian 
must file a lien statement in the appropriate filing office for 
a financing statement covering the animals to be filed under 
section 336.9-401 by 180 days after the veterinary services are 
performed.  The lien is perfected by properly filing the lien 
statement. 
    Subd. 2.  [LIEN STATEMENT.] Minnesota Statutes, Section 
514.74 shall apply to all liens created under subdivision 
1.  (a) A lien statement must be verified and state: 
    (1) the name of the owner, or reputed owner, of the animals;
    (2) the name of the person for whom the veterinary services 
were performed; 
    (3) the kind, number, and reasonable identification of 
animals treated; 
    (4) the dates when the veterinary services were begun and 
finished; 
    (5) the fraction of veterinary services performed which 
were primarily for the purpose of protecting human health, 
preventing the spread of animal diseases, or preserving the 
health of the animal or animals treated; 
    (6) the reasonable value of the veterinary services 
rendered, or the price contracted between the parties; and 
    (7) the name and address of the veterinarian claiming the 
lien.  
    (b) The provisions of section 514.74 relating to 
inaccuracies in lien statements apply to lien statements under 
this subdivision.  
    Subd. 3.  [ENFORCEMENT OF LIEN.] An action to enforce a 
perfected lien under this section must be started by one year 
after the date the last veterinary service was performed.  A 
perfected lien may be enforced in the manner prescribed for 
security interests under section 336.9-501 to 336.9-508. 
    Subd. 4.  [PRIORITY OF LIEN.] (a) A perfected 
veterinarian's lien under this section has priority over other 
liens and security interests on the same animals to the extent 
the veterinary services were performed primarily for the purpose 
of protecting human health, preventing the spread of animal 
diseases, or preserving the health of the animal or animals 
treated. 
     (b) A veterinarian's lien has priority over a security 
interest perfected before the veterinarian's lien only if the 
security interest is perfected after the effective date of this 
article.  
     (c) The priority among veterinarian's liens filed under 
this section is according to the first lien filed.  
    Subd. 5.  [TERMINATION.] (a) A veterinarian's lien under 
this section terminates: 
    (1) 180 days after the last veterinarian's services was 
performed if a proper lien statement is not filed; or 
    (2) one year after the lien is filed if an action to 
enforce the lien has not been started. 
    (b) A filing officer may remove and destroy terminated lien 
statements in the same manner as provided for a financing 
statement under section 336.9-410. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 10

                        NATIVE AMERICAN MEMORIAL
    Section 1.  [NATIVE AMERICAN MEMORIAL PLAN.] 
    The Minnesota historical society shall develop a plan for 
selecting a design for a capitol mall memorial to Native 
Americans.  The selection may involve a design competition with 
a prize for the winning design.  Funding may involve state funds 
or gifts from private or public sources. 
    Sec. 2.  Minnesota Statutes 1984, section 138.585, is 
amended by adding a subdivision to read: 
    Subd. 31.  Native American monument, in Ramsey county, to 
memorialize Native Americans, located in a place of honor in the 
capitol complex in St. Paul. 

                               ARTICLE 11

                      AGRICULTURAL DATA TASK FORCE
    Section 1.  [138.95] [REACTIVATION OF THE AGRICULTURAL DATA TASK 
FORCE.] 
    The agricultural data collection task force created by Laws 
1985, chapter 19, is reactivated. 
    Sec. 2.  Laws 1985, chapter 19, section 2, subdivision 2, 
is amended to read: 
    Subd. 2.  [DUTIES.] The duties of the data collection task 
force are to: 
    (1) develop a continue the uniform procedure for collecting 
data on the financial status of agriculture in Minnesota; 
    (2) oversee the implementation of the farm crisis 
intervention act; and 
    (3) report the results of the program to the legislature no 
later than December 31, 1985 1986. 
    Sec. 3.  Laws 1985, chapter 19, section 2, is amended by 
adding a subdivision to read: 
    Subd. 3a.  [INFORMATION HELD BY TASK FORCE "NOT PUBLIC DATA"
UNTIL RELEASED.] All information gathered by or for the task 
force or processed by staff and provided to the task force is 
"not public data" as defined in Minnesota Statutes, section 
13.02, subdivision 8a, until it is released by a majority vote 
of the members of the task force. 
    Sec. 4.  Laws 1985, chapter 19, section 6, subdivision 6 is 
amended to read: 
    Subd. 6.  [EXPIRATION.] The data collection task force 
shall cease to exist within ten days of submitting its 
report expires January 15, 1987, or 15 days after reporting to 
the legislature whichever date comes later, but in no 
circumstance later than March 1, 1987. 
     Sec. 5.  [EFFECTIVE DATE.] 
     This act is effective the day following final enactment. 

                               ARTICLE 12

                     CROP RIGHTS ON FORECLOSED LAND
    Section 1.  Minnesota Statutes 1984, section 542.06, is 
amended to read:  
    542.06 [REPLEVIN.] 
    Actions to recover the possession of personal property 
wrongfully taken shall be tried in the county in which the 
taking occurred, or, at claimant's election, in the county in 
which he resides; in other cases in the county in which the 
property is situated. 
    Sec. 2.  [557.10] [OWNERSHIP OF CROPS.] 
    Planted and growing crops are personal property of the 
person or entity that has the property right to plant the crops. 
    Sec. 3.  [557.11] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to this section and section 4. 
    Subd. 2.  [PLANTING CROP OWNER.] "Planting crop owner" 
means the person or entity that has a property right to plant 
crops, including a leasehold interest, the interest of a 
contract for deed vendee, and the redemption interest of a 
foreclosed mortgagor.  
    Subd. 3.  [CROP VALUE.] "Crop value" means the value of the 
crop and crop inputs, including the real property fair market 
rental value, up to the time the planting crop owner's property 
right to harvest the crop is terminated.  
    Sec. 4.  [557.12] [HARVESTING CROPS AFTER TERMINATION OF 
PROPERTY INTERESTS.] 
    Subdivision 1.  [TERMINATION OF PROPERTY INTEREST AFTER 
CROPS ARE PLANTED.] If the planting crop owner's property right 
to harvest crops is involuntarily terminated before the crops 
are harvested, the person or entity with the property right to 
harvest the crops is liable to the planting crop owner for the 
crop value.  
    Subd. 2.  [PLANTING CROP OWNER'S LIEN.] A planting crop 
owner has a lien for the crop value that attaches to the crop 
and crop products, and if the lien is not satisfied under 
subdivision 3, a planting crop owner has a lien for the crop 
value that attaches to the real property where the crop was 
planted.  
    Subd. 3.  [SATISFACTION OF CROP OWNER'S LIEN.] (a) A person 
with the right to harvest a crop that is subject to a planting 
crop owner's lien may satisfy the lien by:  
    (1) compensating the planting crop owner for the crop 
value; or 
    (2) allowing the planting crop owner to enter the property 
to grow and harvest the crops, and charging the planting crop 
owner the fair market rental value of the property where the 
crop was grown for the period when the planting crop owner's 
right to harvest the crops was terminated until the crops are 
harvested.  
    (b) If the person with the right to harvest the crop does 
not notify the planting crop owner within 30 days after 
termination of the planting crop owner's right to harvest the 
crops that the lien will be satisfied under paragraph (a), 
clause (2), the person with the right to harvest the crop must 
satisfy the lien under clause (1) unless otherwise agreed by the 
planting crop owner. 
    Subd. 4.  [LIEN ON CROPS HARVESTED BY PLANTING CROP OWNER; 
PRIORITY.] If the person with the right to harvest the crop 
satisfies the planting crop owner's lien by allowing the 
planting crop owner to harvest the crops, the person with the 
right to harvest the crops has a lien for the fair market rental 
value of the property where the crop was grown that attaches to 
the crops and crop products.  The perfected lien has priority 
over all other liens and security interests in the crop and crop 
products.  
    Subd. 5.  [FILING AND ENFORCEMENT OF LIENS.] (a) A planting 
crop owner's lien under subdivision 2 and a lien for the fair 
market rental value where the crop was grown under subdivision 4 
are perfected against the crop and crop products by attaching 
and filing a financing statement covering the crop and crop 
products as provided under sections 336.9-401 to 336.9-410 by 90 
days after the planting crop owner's right to harvest the crop 
is terminated.  The financing statement must include a statement 
indicating whether it is a planting crop owner's lien or a lien 
for a crop harvested by a planting crop owner.  A perfected lien 
may be enforced in the same manner as a security interest under 
sections 336.9-501 to 336.9-508. 
    (b) A lien against the real property under subdivision 2 
must be recorded and foreclosed in the same manner as a 
mechanics' lien under sections 514.08 to 514.15 as if the 
planting crop owner was a contractor.  For purposes of this 
paragraph, the lien statement must be filed and served under 
section 514.08, subdivision 1, by 120 days after the crop was 
harvested, or if the crop was not harvested, by 12 months after 
the crop was planted. 
    Sec. 5.  [REPEALER.] 
    Minnesota Statutes 1984, sections 561.11; 561.12; 561.13; 
561.14; 561.15; and 561.16, are repealed. 
    Sec. 6.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment. 

                               ARTICLE 13

                             TRANSPORTATION
    Section 1.  Minnesota Statutes 1985 Supplement, section 
168.013, subdivision 1e, is amended to read: 
    Subd. 1e.  [TRUCKS; TRACTORS; COMBINATIONS; EXCEPTIONS.] On 
trucks and tractors except those in this chapter defined as farm 
trucks, on truck-tractor and semitrailer combinations except 
those defined as farm combinations, and on commercial zone 
vehicles, the tax based on total gross weight shall be graduated 
according to the Minnesota base rate schedule prescribed in this 
subdivision, but in no event less than $120. 

                      Minnesota Base Rate Schedule 
          Scheduled taxes include five percent
          surtax provided for in subdivision 14
          TOTAL GROSS WEIGHT
              IN POUNDS                    TAX
          A       0 -  1,500             $  15
          B   1,501 -  3,000                20
          C   3,001 -  4,500                25
          D   4,501 -  6,000                35
          E   6,001 -  9,000                45
          F   9,001 - 12,000                70
          G  12,001 - 15,000               105
          H  15,001 - 18,000               145
          I  18,001 - 21,000               190
          J  21,001 - 26,000               270
          K  26,001 - 33,000               360
          L  33,001 - 39,000               475
          M  39,001 - 45,000               595
          N  45,001 - 51,000               715
          O  51,001 - 57,000               865
          P  57,001 - 63,000              1015
          Q  63,001 - 69,000              1185
          R  69,001 - 73,280              1325
          S  73,281 - 78,000              1525 1595
          T  78,001 - 81,000              1625 1760
    For each vehicle with a gross weight in excess of 81,000 
pounds an additional tax of $50 is imposed for each ton or 
fraction thereof in excess of 81,000 pounds, subject to 
subdivision 12. 
    Truck-tractors except those herein defined as farm and 
commercial zone vehicles shall be taxed in accord with the 
foregoing gross weight tax schedule on the basis of the combined 
gross weight of the truck-tractor and any semitrailer or 
semitrailers which the applicant proposes to combine with the 
truck-tractor.  
    Commercial zone trucks include only trucks, truck-tractors, 
and semitrailer combinations which are: 
    (1) used by an authorized local cartage carrier operating 
under a permit issued under section 221.296 and whose gross 
transportation revenue consists of at least 60 percent obtained 
solely from local cartage carriage, and are operated solely 
within an area composed of two contiguous cities of the first 
class and municipalities contiguous thereto as defined by 
section 221.011, subdivision 17; or, 
      (2) operated by an interstate carrier registered under 
section 221.60, or by an authorized local cartage carrier or 
other carrier receiving operating authority under chapter 221, 
and operated solely within a zone exempt from regulation by the 
interstate commerce commission pursuant to United States Code, 
title 49, section 10526(b). 
       The license plates issued for commercial zone vehicles 
shall be plainly marked.  A person operating a commercial zone 
vehicle outside the zone or area in which its operation is 
authorized is guilty of a misdemeanor and, in addition to the 
penalty therefor, shall have the registration of the vehicle as 
a commercial zone vehicle revoked by the registrar and shall be 
required to reregister the vehicle at 100 percent of the full 
annual tax prescribed in the Minnesota base rate schedule, and 
no part of this tax shall be refunded during the balance of the 
registration year. 
       On commercial zone trucks the tax shall be based on the 
total gross weight of the vehicle and during the first eight 
years of vehicle life shall be 75 percent of the Minnesota base 
rate schedule.  During the ninth and succeeding years of vehicle 
life the tax shall be 50 percent of the Minnesota base rate 
schedule, except as otherwise provided in this subdivision.  On 
commercial zone trucks, during the ninth and succeeding years of 
vehicle life, the tax shall be 50 percent of the tax imposed in 
the Minnesota base rate schedule. 
    On trucks, truck-tractors and semitrailer combinations, 
except those defined as farm trucks and farm combinations, and 
except for those urban trucks and combinations and commercial 
zone vehicles specifically provided for in this subdivision, the 
tax for the first eight years of vehicle life shall be 100 
percent of the tax imposed in the Minnesota base rate schedule, 
and during the ninth and succeeding years of vehicle life, the 
tax shall be 75 percent of the Minnesota base rate prescribed by 
this subdivision, except as otherwise provided in this 
subdivision. 
    On trucks, truck-tractors and semitrailer combinations, 
except those defined as farm trucks and farm combinations, and 
except for those commercial zone vehicles specifically provided 
for in this subdivision, during each of the first eight years of 
vehicle life the tax shall be 100 percent of the tax imposed in 
the Minnesota base rate schedule. 
    Sec. 2.  Minnesota Statutes 1984, section 169.01, 
subdivision 7, is amended to read:  
    Subd. 7.  [TRUCK-TRACTOR.] "Truck-tractor" means: 
    (a) a motor vehicle designed and used primarily for drawing 
other vehicles and not constructed to carry a load other than a 
part of the weight of the vehicle and load drawn; and 
    (b) a motor vehicle designed and used primarily for drawing 
other vehicles used exclusively for transporting motor 
vehicles or boats and capable of carrying motor vehicles or 
boats on its own structure. 
    Sec. 3.  Minnesota Statutes 1984, section 169.80, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LIMITATIONS.] It is a misdemeanor for a 
person to drive or move, or for the owner to cause or knowingly 
permit to be driven or moved, on a highway a vehicle or vehicles 
of a size or weight exceeding the limitations stated in sections 
169.80 to 169.88, or otherwise in violation of sections 169.80 
to 169.88, and the maximum size and weight of vehicles as 
prescribed in sections 169.80 to 169.88 shall be lawful 
throughout this state, and local authorities shall have no power 
or authority to alter these limitations except as express 
authority may be granted in sections 169.80 to 169.88. 
    When all the axles of a vehicle or combination of vehicles 
are weighed separately the sum of the weights of the axles so 
weighed shall be evidence of the total gross weight of the 
vehicle or combination of vehicles so weighed. 
    When each of the axles of any group that contains two or 
more consecutive axles of a vehicle or combination of vehicles 
have been weighed separately the sum of the weights of the axles 
so weighed shall be evidence of the total gross weight on the 
group of axles so weighed. 
    When, in any group of three or more consecutive axles of a 
vehicle or combination of vehicles any axles have been weighed 
separately and two or more axles consecutive to each other in 
the group have been weighed together, the sum of the weights of 
the axles weighed separately and the axles weighed together 
shall be evidence of the total gross weight of the group of 
axles so weighed. 
     The provisions of sections 169.80 to 169.88 governing size, 
weight, and load shall not apply to fire apparatus, or to 
implements of husbandry temporarily moved upon a highway, or to 
loads of loose hay or corn stalks if transported by a 
horse-drawn vehicle or drawn by a farm tractor, or to a vehicle 
operated under the terms of a special permit issued as provided 
by law.  For purposes of sections 169.80 to 169.88, a 
specialized vehicle resembling a low-slung two wheel trailer 
having a short bed or platform shall be deemed to be an 
implement of husbandry when the vehicle is used exclusively to 
transport implements of husbandry; and the term "temporarily 
moved upon a highway" shall mean a movement not to exceed 50 
miles. 
     In addition to any other special permits authorized, an 
annual permit may be issued authorizing movements on interstate 
highways and movements exceeding 50 miles on non-interstate 
highways of oversize vehicles and loads when the vehicles or 
combination of vehicles are used exclusively to transport 
implements of husbandry.  Annual permits are issued in 
accordance with the applicable provisions of section 169.86, 
except that the transporting vehicle or combination of vehicles 
may be moved at the discretion of the permittee without prior 
route approval from the permit issuing office of the department 
of transportation if: 
    (a) The overall width of the transporting vehicle, 
including load, does not exceed 12 14 feet; 
    (b) The transporting vehicle otherwise complies with 
equipment requirements and length, height and weight limitations 
prescribed by this chapter; 
    (c) The movement is made after the hour of sunrise and not 
later than 30 minutes after sunset; 
    (d) The movement is not made when visibility is impaired by 
weather, fog or other conditions rendering persons and vehicles 
not clearly visible at a distance of 500 feet, or on Sundays 
after twelve o'clock noon, and holidays; 
    (e) The transporting vehicle shall display at the front and 
rear end of the load or vehicle a pair of flashing amber lights, 
as provided in section 169.59, subdivision 4, whenever the 
overall width of the vehicle exceeds ten feet, six inches; and 
    (f) The movement, if made on a trunk highway, is made on a 
trunk highway with a surfaced roadway width of not less than 24 
feet. 
    The fee for an annual permit is $24.  
    Sec. 4.  Minnesota Statutes 1984, section 169.81, 
subdivision 2, is amended to read: 
    Subd. 2.  [LENGTH OF VEHICLES.] (a) No single unit motor 
vehicle, except truck cranes which may not exceed 45 feet, 
unladen or with load may exceed a length of 40 feet extreme 
overall dimensions inclusive of front and rear bumpers, except 
that the governing body of a city is authorized by permit to 
provide for the maximum length of a motor vehicle, or 
combination of motor vehicles, or the number of vehicles that 
may be fastened together, and which may be operated upon the 
streets or highways of a city; provided, that the permit may not 
prescribe a length less than that permitted by state law.  A 
motor vehicle operated in compliance with the permit on the 
streets or highways of the city is not in violation of this 
chapter.  
    (b) No single semitrailer may have an overall length, 
exclusive of non-cargo-carrying accessory equipment, including 
refrigeration units or air compressors, necessary for safe and 
efficient operation mounted or located on the end of the 
semitrailer adjacent to the truck or truck-tractor, in excess of 
48 feet, except as provided in paragraph (d) that a single 
semitrailer may have an overall length in excess of 48 feet if 
(1) the distance from the kingpin to the centerline of the rear 
axle group of the semitrailer does not exceed 41 feet, and (2) 
if the semitrailer is operated only in a combination of vehicles 
which does not exceed an overall length of 65 feet.  No single 
trailer may have an overall length inclusive of tow bar assembly 
and exclusive of rear protective bumpers which do not increase 
the overall length by more than six inches, in excess of 45 feet.
For determining compliance with the provisions of this 
subdivision, the length of the semitrailer or trailer must be 
determined separately from the overall length of the combination 
of vehicles.  
    (c) No semitrailer or trailer used in a three-vehicle 
combination may have an overall length, exclusive of 
non-cargo-carrying accessory equipment, including refrigeration 
units or air compressors, necessary for safe and efficient 
operation mounted or located on the end of the semitrailer or 
trailer adjacent to the truck or truck-tractor, and further 
exclusive of the tow bar assembly, in excess of 28-1/2 feet.  
The commissioner may not grant a permit authorizing the 
movement, in a three-vehicle combination, of a semitrailer or 
trailer that exceeds 28-1/2 feet, except that the commissioner 
may renew a permit that was granted before April 16, 1984 for 
the movement of a semitrailer or trailer that exceeds the length 
limitation in this paragraph.  
    (d) The commissioner may issue an annual permit for a 
semitrailer in excess of 48 feet in length, if the distance from 
the kingpin to the centerline of the rear axle group of the 
semitrailer does not exceed 41 feet and if a combination of 
vehicles, which includes a semitrailer in excess of 48 feet for 
which a permit has been issued under this paragraph, does not 
exceed an overall length of 65 feet.  The annual fee for a 
permit issued under this paragraph is $36.  
    Sec. 5.  Minnesota Statutes 1984, section 169.81, 
subdivision 3, is amended to read: 
    Subd. 3.  [LENGTH OF VEHICLE COMBINATIONS.] (a) Statewide, 
except as provided in paragraph (b), no combination of vehicles 
coupled together, including truck-tractor and semitrailer, may 
consist of more than two units and no combination of vehicles, 
unladen or with load, may exceed a total length of 65 feet.  The 
length limitation does not apply to the transportation of 
telegraph poles, telephone poles, electric light and power 
poles, piling, or pole length pulpwood, and is subject to the 
following further exceptions:  the length limitations do not 
apply to vehicles transporting pipe or other objects by a public 
utility when required for emergency or repair of public service 
facilities or when operated under special permits as provided in 
this subdivision, but with respect to night transportation, a 
vehicle and the load must be equipped with a sufficient number 
of clearance lamps and marker lamps on both sides and upon the 
extreme ends of a projecting load to clearly mark the dimensions 
of the load.  Mount combinations may be drawn but the 
combinations may not exceed 65 feet in length.  The limitation 
on the number of units does not apply to vehicles used for 
transporting milk from point of production to point of first 
processing, in which case no combination of vehicles coupled 
together unladen or with load, including truck-tractor and 
semitrailers, may consist of more than three units and no 
combination of those vehicles may exceed a total length of 65 
feet.  Notwithstanding other provisions of this section, and 
except as provided in paragraph (b), no combination of vehicles 
consisting of a truck-tractor and semitrailer designed and used 
exclusively for the transportation of motor vehicles or boats 
may exceed 65 feet in length.  The load may extend a total of 
seven feet, but may not extend more than three feet beyond the 
front or four feet beyond the rear, and in no case may the 
overall length of the combination of vehicles, unladen or with 
load, exceed 65 feet.  For the purpose of registration, trailers 
coupled with a truck-tractor, semitrailer combination are 
semitrailers.  The state as to state trunk highways, and a city 
or town as to roads or streets located within the city or town, 
may issue permits authorizing the transportation of combinations 
of vehicles exceeding the limitations in this subdivision over 
highways, roads, or streets within their boundaries.  
Combinations of vehicles authorized by this subdivision may be 
restricted as to the use of highways by the commissioner as to 
state trunk highways, and a road authority as to highways or 
streets subject to its jurisdiction.  Nothing in this 
subdivision alters or changes the authority vested in local 
authorities under the provisions of section 169.04.  
    (b) The following combination of vehicles regularly engaged 
in the transportation of commodities may operate only on divided 
highways having four or more lanes of travel, and on other 
highways as may be designated by the commissioner of 
transportation subject to section 169.87, subdivision 1, and 
subject to the approval of the authority having jurisdiction 
over the highway, for the purpose of providing reasonable access 
between the divided highways of four or more lanes of travel and 
terminals, facilities for food, fuel, repair, and rest, and 
points of loading and unloading for household goods carriers, 
livestock carriers, or for the purpose of providing continuity 
of route:  
    (1) a truck-tractor and semitrailer exceeding 65 feet in 
length;  
    (2) a combination of vehicles with an overall length 
exceeding 55 feet and including a truck-tractor and semitrailer 
drawing one additional semitrailer which may be equipped with an 
auxiliary dolly;  
    (3) a combination of vehicles with an overall length 
exceeding 55 feet and including a truck-tractor and semitrailer 
drawing one full trailer; and 
    (4) a truck-tractor and semitrailer designed and used 
exclusively for the transportation of motor vehicles or boats 
and exceeding an overall length of 65 feet including the 
load except as restricted by applicable federal law. 
    Vehicles operated under the provisions of this section must 
conform to the standards for those vehicles prescribed by the 
United States Department of Transportation, Federal Highway 
Administration, Bureau of Motor Carrier Safety, as amended. 
    Sec. 6.  Minnesota Statutes 1984, section 169.825, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [TANDEM.] "Tandem axles" means two consecutive 
axles whose centers are spaced more than 40 inches and not more 
than 96 inches apart. 
    Sec. 7.  Minnesota Statutes 1984, section 169.825, 
subdivision 8, is amended to read: 
    Subd. 8.  [PNEUMATIC-TIRED VEHICLES.] No vehicle or 
combination of vehicles equipped with pneumatic tires shall be 
operated upon the highways of this state:  
    (a) Where the gross weight on any wheel exceeds 9,000 
pounds, except that on designated local routes and state trunk 
highways the gross weight on any single wheel shall not exceed 
10,000 pounds;  
    (b) Where the gross weight on any single axle exceeds 
18,000 pounds, except that on designated local routes and state 
trunk highways the gross weight on any single axle shall not 
exceed 20,000 pounds;  
    (c) Where the maximum wheel load exceeds 600 pounds per 
inch of tire width or the manufacturer's recommended load, 
whichever is less;  
    (d) Where the gross weight on any axle of a tridem exceeds 
15,000 pounds, except that for vehicles to which an additional 
axle has been added prior to June 1, 1981, the maximum gross 
weight on any axle of a tridem may be up to 16,000 pounds 
provided the gross weight of the tridem combination does not 
exceed 37,000 pounds where the first and third axles of the 
tridem are spaced seven feet apart; 38,500 pounds where the 
first and third axles of the tridem are spaced eight feet apart; 
and 39,900 pounds where the first and third axles of the tridem 
are spaced nine feet apart.  
    (e) Where the gross weight on any group of axles exceeds 
the weights permitted under this section with any or all of the 
interior axles disregarded and their gross weights subtracted 
from the gross weight of all axles of the group under 
consideration. 
    Sec. 8.  Minnesota Statutes 1984, section 169.825, 
subdivision 10, is amended to read: 
    Subd. 10.  [GROSS WEIGHT SCHEDULE.] (a) No vehicle or 
combination of vehicles equipped with pneumatic tires shall be 
operated upon the highways of this state where the total gross 
weight on any group of two or more consecutive axles of any 
vehicle or combination of vehicles exceeds that given in the 
following table for the distance between the centers of the 
first and last axles of any group of two or more consecutive 
axles under consideration; the distance between axles being 
measured longitudinally to the nearest even foot, and when the 
measurement is a fraction of exactly one-half foot the next 
largest whole number in feet shall be used, except that when the 
distance between axles is more than three feet four inches and 
less than three feet six inches the distance of four feet shall 
be used:  
             Maximum gross weight in pounds on a group of 
                   2                 3                 4  
Distances     consecutive       consecutive       consecutive  
in feet       axles of          axles of          axles of 
between       a 2-axle          a 3-axle          a 4-axle 
centers       vehicle           vehicle           vehicle 
of fore-      or of any         or of any         or any com- 
most and      vehicle or        vehicle or        bination of 
rearmost      combination       combination       vehicles 
axles of      of vehicles       of vehicles       having a 
a group       having a          having a          total of 4 
              total of 2        total of 3        or more axles 
              or more axles     or more axles 
   4          34,000 
   5          34,000 
             (35,000) 
   6          34,000 
             (36,000) 
   7          34,000            41,500
             (37,000) 
   8          34,000            42,000 
             (38,000) 
   9          35,000            43,000 
             (39,000) 
  10          36,000            43,500            49,000
             (40,000)
  11          36,000            44,500            49,500
  12                            45,000            50,000 
  13                            46,000            51,000 
  14                            46,500            51,500 
  15                            47,500            52,000 
  16                            48,000            53,000 
  17                            49,000            53,500 
  18                            49,500            54,000 
  19                            50,500            55,000 
  20                            51,000            55,500 
  21                            52,000            56,000 
  22                            52,500            57,000 
  23                            53,500            57,500 
  24                            54,000            58,000 
  25                           (55,000)           59,000 
  26                           (55,500)           59,500 
  27                           (56,500)           60,000 
  28                           (57,000)           61,000 
  29                           (58,000)           61,500 
  30                           (58,500)           62,000 
  31                           (59,500)           63,000 
  32                           (60,000)           63,500 
  33                                              64,000 
  34                                              65,000 
  35                                              65,500 
  36                                              66,000 
  37                                              67,000 
  38                                              67,500 
  39                                              68,000 
  40                                              69,000  
  41                                              69,500 
  42                                              70,000 
  43                                              71,000 
  44                                              71,500 
  45                                              72,000 
  46                                              72,500 
  47                                             (73,500)
  48                                             (74,000)
  49                                             (74,500)
  50                                             (75,500)
  51                                             (76,000)
        Maximum gross weight in pounds on a group of 
                  5                 6                 7 
Distances     consecutive       consecutive       consecutive 
in feet       axles of a        axles of          axles of  
between       5-axle vehicle    a combination     a combination 
centers       or any com-       of vehicles       of vehicles 
of fore-      bination of       having a total    having a total 
most and      vehicles          of 6 or more      of 7 or more 
rearmost      having a total    axles             axles 
axles of      of 5 or more 
a group       axles 
  14          57,000
  15          57,500
  16          58,000 
  17          59,000 
  18          59,500 
  19          60,000 
  20          60,500            66,000            72,000 
  21          61,500            67,000            72,500 
  22          62,000            67,500            73,000 
  23          62,500            68,000            73,500 
  24          63,000            68,500            74,000 
  25          64,000            69,000            75,000 
  26          64,500            70,000            75,500 
  27          65,000            70,500            76,000 
  28          65,500            71,000            76,500 
  29          66,500            71,500            77,000 
  30          67,000            72,000            77,500 
  31          67,500            73,000            78,500 
  32          68,000            73,500            79,000 
  33          69,000            74,000            79,500 
  34          69,500            74,500            80,000 
  35          70,000            75,000 
  36          70,500            76,000 
  37          71,500            76,500 
  38          72,000            77,000 
  39          72,500            77,500 
  40          73,000            78,000 
  41          74,000 (74,000)   79,000 
  42          74,500 (74,500)   79,500 
  43          75,000 (75,000)   80,000 
  44          75,500 (75,500) 
  45          76,500 (76,500) 
  46          77,000 (77,000) 
  47          77,500 (77,500) 
  48          78,000 (78,000) 
  49          79,000 (79,000) 
  50          79,500 (79,500) 
  51          80,000 (80,000) 
    The gross weights shown in parentheses in this clause are 
permitted only on state trunk highways and routes designated 
under section 169.832, subdivision 11.  
    (b) Notwithstanding any lesser weight in pounds shown in 
this table but subject to the restrictions on gross vehicle 
weights in clause (c), two consecutive sets of tandem axles may 
carry a gross load of 34,000 pounds each and a combined gross 
load of 68,000 pounds provided the overall distance between the 
first and last axles of the consecutive sets of tandem axles is 
36 feet or more.  
    (c) Notwithstanding the provisions of section 169.85, the 
gross vehicle weight of all axles of a vehicle or combination of 
vehicles shall not exceed the following:  
    (1) 80,000 pounds for any vehicle or combination of 
vehicles on all state trunk highways as defined in section 
160.02, subdivision 2, and for all routes designated under 
section 169.832, subdivision 11; and 
    (2) 73,280 pounds for any vehicle or combination of 
vehicles with five axles or less on all routes, other than state 
trunk highways and routes that are not designated under section 
169.832, subdivision 11; and 
    (3) 80,000 pounds for any vehicle or combination of 
vehicles with six or more axles on all routes, other than state 
trunk highways and routes that are not designated under section 
169.832, subdivision 11;.  
    (d) The maximum weights specified in this subdivision for 
five consecutive axles shall not apply to a combination of 
vehicles that includes a three axle semi-trailer first 
registered before August 1, 1981.  All other weight limitations 
in this section are applicable;.  
    (e) The maximum weights specified in this subdivision for 
five consecutive axles shall not apply to a four axle ready mix 
concrete truck which was equipped with a fifth axle prior to 
June 1, 1981.  The maximum gross weight on four or fewer 
consecutive axles of vehicles excepted by this clause shall not 
exceed any maximum weight specified for four or fewer 
consecutive axles in this subdivision. 
    Sec. 9.  Minnesota Statutes 1984, section 169.825, 
subdivision 11, is amended to read: 
    Subd. 11.  [GROSS WEIGHT SEASONAL INCREASES.] (a) The 
limitations provided in this section are increased:  
    (1) by ten percent from January 1 to March 7 each winter, 
statewide;  
    (2) by ten percent from December 1 through December 31 each 
winter in the zone bounded as follows:  beginning at Pigeon 
River in the northeast corner of Minnesota; thence in a 
southwesterly direction along the north shore of Lake Superior 
along Trunk Highway No. 61 to the junction with Trunk Highway 
No. 210; thence westerly along Trunk Highway No. 210 to the 
junction with Trunk Highway No. 10; thence northwesterly along 
Trunk Highway No. 10 to the junction with Trunk Highway No. 59;  
thence northerly along Trunk Highway No. 59 to the junction with 
Trunk Highway No. 2; thence westerly along Trunk Highway No. 2 
to the junction with Trunk Highway No. 32; thence northerly 
along Trunk Highway No. 32 to the junction with Trunk Highway 
No. 11; thence northeast along Trunk Highway No. 11 to the east 
line of Range 43W to the Minnesota-North Dakota border; thence 
northerly along that border to the Minnesota-Canadian Border; 
thence easterly along said Border to Lake Superior; and 
    (3) by ten percent from October 1 to November 30 each year 
for the movement of sugar beets and potatoes from the field of 
harvest to the point of the first unloading.  The commissioner 
shall not issue permits under this clause if to do so will 
result in a loss of federal highway funding to the state. 
    (b) The duration of a ten percent increase in load limits 
is subject to limitation by order of the commissioner, subject 
to implementation of springtime load restrictions, or March 7.  
    (c) When the ten percent increase is in effect, a permit is 
required for a motor vehicle, trailer, or semitrailer 
combination that has a gross weight in excess of 80,000 pounds, 
an axle group weight in excess of that prescribed in subdivision 
10, or a single axle weight in excess of 20,000 pounds and which 
travels on interstate routes.  
    (d) In cases where gross weights in an amount less than 
that set forth in this section are fixed, limited, or restricted 
on a highway or bridge by or under another section of this 
chapter, the lesser gross weight as fixed, limited, or 
restricted may not be exceeded and must control instead of the 
gross weights set forth in this section.  
    (e) Notwithstanding any other provision of this 
subdivision, no vehicle may exceed a total gross vehicle weight 
of 80,000 pounds on routes which have not been designated by the 
commissioner under section 169.832, subdivision 11. 
    Sec. 10.  Minnesota Statutes 1984, section 169.832, is 
amended by adding a subdivision to read: 
    Subd. 13.  [RESTRICTIONS ON TRUNK HIGHWAYS.] (a) For 
purposes of this section a "market artery" is a trunk highway or 
segment thereof that: 
    (i) connects significant centers of population or commerce; 
    (ii) connects highways described in clause (i); 
    (iii) provides access to a transportation terminal; or 
    (iv) provides temporary emergency service to a particular 
shipping or receiving point on a market artery. 
    (b) The commissioner may impose seasonal load restrictions 
under section 169.87 on a market artery only after giving 30 
days' notice to the chairs of the transportation and 
appropriations committees of the house of representatives, and 
the chairs of the transportation and finance committees of the 
senate.  The commissioner shall provide with each notice a plan 
to improve the market artery within the next three years so that 
seasonal load restrictions will not be necessary on it. 
    (c) The commissioner shall adopt rules under chapter 14 
defining "significant centers of population and commerce" and 
"temporary emergency service" for purposes of this section.  In 
drafting the rules, the commissioner shall consult with major 
highway users, representatives of manufacturing, retail trade 
and agriculture, local government and regional development 
commissions.  The commissioner shall consider the importance of 
manufacturing, retailing, agriculture and natural resources in 
promulgating the rule, and shall hold at least four public 
meetings in various parts of the state prior to preparing the 
final draft of the rule.  Between the effective date of this 
section and the effective date of the rule, "significant centers 
of population and commerce" means all home rule charter or 
statutory cities that had total retail sales of at least 
$50,000,000 as reported in the 1982 census of retail trade of 
the United States department of commerce. 
    Sec. 11.  Minnesota Statutes 1984, section 169.86, 
subdivision 2, is amended to read: 
    Subd. 2.  [REQUIRED INFORMATION.] The application for any 
such a permit shall specifically describe in writing the vehicle 
or vehicles and loads to be moved and the particular highways 
for which permit to so use is requested, and the period of time 
for which such a permit is requested. 
    Sec. 12.  Minnesota Statutes 1984, section 169.86, 
subdivision 5, is amended to read: 
    Subd. 5.  [FEES.] The commissioner, with respect to 
highways under his jurisdiction, may charge a fee for each 
permit issued.  All such fees for permits issued by the 
commissioner of transportation shall be deposited in the state 
treasury and credited to the trunk highway fund.  Except for 
those annual permits for which the permit fees are specified 
elsewhere in this chapter, the fees shall be: 
    (a) $15 for each single trip permit. 
    (b) $36 for each job permit.  A job permit may be issued 
for like loads carried on a specific route for a period not to 
exceed two months.  "Like loads" means loads of the same 
product, weight and dimension. 
    (c) $60 for an annual permit to be issued for a period not 
to exceed 12 consecutive months.  Annual permits may be issued 
for: 
    (1) refuse compactor vehicles that carry a gross weight up 
to but not in excess of 22,000 pounds on a single rear axle and 
not in excess of 38,000 pounds on a tandem rear axle; 
    (2) motor vehicles used to alleviate a temporary crisis 
adversely affecting the safety or well-being of the public; 
    (3) motor vehicles which travel on interstate highways and 
carry loads authorized under subdivision 1a; 
    (4) motor vehicles operating with gross weights authorized 
under section 169.825, subdivision 11, paragraph (a), clause (3).
    (d) $120 for an oversize annual permit to be issued for a 
period not to exceed 12 consecutive months.  Annual permits may 
be issued for:  
    (1) truck cranes;  
    (2) construction equipment, machinery, and supplies;  
    (3) manufactured homes;  
    (4) farm equipment when the movement is not made according 
to the provisions of section 169.80, subdivision 1, paragraphs 
(a) to (f);  
    (5) double-deck buses;  
    (6) commercial boat hauling.  
    (e) for vehicles which have axle weights exceeding the 
weight limitations of section 169.825, an additional cost added 
to the fees listed above.  The additional cost is equal to the 
product of the distance traveled times the sum of the overweight 
axle group cost factors shown in the following chart:  

                  Overweight Axle Group Cost Factors 
 Weight (pounds)          Cost Per Mile For Each Group Of:
 exceeding         Two consec-    Three consec-   Four consec-
 weight limi-      utive axles    utive axles     utive axles
 tations on        spaced within  spaced within   spaced with- 
 axles             8 feet or      9 feet or       in 14 feet 
                   less           less            or less
      0-2,000      .100           .040            .036
  2,001-4,000      .124           .050            .044
  4,001-6,000      .150           .062            .050
  6,001-8,000      Not permitted  .078            .056
  8,001-10,000     Not permitted  .094            .070
 10,001-12,000     Not permitted  .116            .078
 12,001-14,000     Not permitted  .140            .094
 14,001-16,000     Not permitted  .168            .106
 16,001-18,000     Not permitted  .200            .128
 18,001-20,000     Not permitted  Not permitted   .140
 20,001-22,000     Not permitted  Not permitted   .168
    The amounts added are rounded to the nearest cent for each 
axle or axle group.  The additional cost does not apply to 
paragraph (c), clauses (1) and (3).  
    (f) As an alternative to paragraph (e), an annual permit 
may be issued for overweight, or oversize and overweight, 
construction equipment, machinery, and supplies.  The fees for 
the permit are as follows:  
Gross Weight (pounds) of vehicle          Annual Permit Fee
     90,000 or less                             $200.00
     90,001 - 100,000                           $300.00
    100,001 - 110,000                           $400.00
    110,001 - 120,000                           $500.00
    120,001 - 130,000                           $600.00
    130,001 - 140,000                           $700.00
    140,001 - 145,000                           $800.00
    If the gross weight of the vehicle is more than 140,000 
145,000 pounds the permit fee is determined under paragraph (e). 
    (g) for vehicles which exceed the width limitations set 
forth in section 169.80 by more than 72 inches, an additional 
cost equal to $120 added to the amount in paragraph (a) when the 
permit is issued while seasonal load restrictions pursuant to 
section 169.87 are in effect. 
    Sec. 13.  Minnesota Statutes 1985 Supplement, section 
169.862, is amended to read: 
    169.862 [PERMITS FOR WIDE LOADS OF BALED AGRICULTURAL 
PRODUCTS.] 
    The commissioner of transportation with respect to highways 
under the commissioner's jurisdiction, and local authorities 
with respect to highways under their jurisdiction, may issue an 
annual permit to enable a vehicle carrying round bales of 
agricultural products hay, straw, or cornstalks, with a total 
outside width of the vehicle or the load not exceeding 11-1/2 
feet, to be operated on public streets and highways.  Permits 
issued under this section are governed by the applicable 
provisions of section 169.86 except as otherwise provided herein 
and, in addition, carry the following restrictions:  
    (a) The vehicles may not be operated between sunset and 
sunrise, when visibility is impaired by weather, fog, or other 
conditions rendering persons and vehicles not clearly visible at 
a distance of 500 feet, or on Sunday from noon until sunset, or 
on the days the following holidays are observed:  New Year's 
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving 
Day, and Christmas Day.  
    (b) The vehicles may not be operated on interstate highways.
    (c) The vehicles may not be operated on a trunk highway 
with a pavement less than 24 feet wide.  
    (d) A vehicle operated under the permit must be equipped 
with a retractable or removable mirror on the left side so 
located that it will reflect to the driver a clear view of the 
highway for a distance of at least 200 feet to the rear of the 
vehicle.  
    (e) A vehicle operated under the permit must display red, 
orange, or yellow flags, 18 inches square, as markers at the 
front and rear and on both sides of the load.  The load must be 
securely bound to the transporting vehicle.  
     (f) Farm vehicles not for hire carrying round baled hay 
less than 20 miles are exempt from the requirement to obtain a 
permit.  All other requirements of this section apply to 
vehicles transporting round baled hay. 
    The fee for the permit is $24. 

                               ARTICLE 14 

                    RAILROAD PROPERTY FIRST REFUSAL 
    Section 1.  [222.631] [DEFINITIONS.] 
    Subdivision 1.  [TERMS.] For purposes of sections 1 to 3, 
the following terms have the meanings given them. 
    Subd. 2.  [FAIR MARKET VALUE.] "Fair market value" means 
the price negotiated between the parties under section 2, or the 
market value of the property minus the value of any leasehold 
improvements, as determined by independent appraisers. 
    Subd. 3.  [LEASEHOLDER.] "Leaseholder" means a person who 
holds a lease, license, or permit with respect to property 
within a right-of-way, and who has erected eligible leasehold 
improvements on the property with a total fair market value of 
$7,500 or more. 
    Subd. 4.  [RAILROAD INTEREST.] "Railroad interest" includes 
a railroad corporation, its trustee or successor in interest, a 
railroad corporation which is in proceedings for bankruptcy 
under federal law, and a nonrailroad holding corporation that 
owns a controlling interest in a railroad. 
    Subd. 5.  [RIGHT-OF-WAY.] "Right-of-way" has the meaning 
given it in section 222.63, subdivision 1. 
    Sec. 2.  [222.632] [RIGHT OF FIRST REFUSAL.] 
    A railroad interest that is in bankruptcy proceedings may 
not sell or offer for sale an interest in real property that is 
within the right-of-way, and a railroad interest that is 
abandoning a railroad line may not sell or offer for sale an 
interest in real property within the right-of-way to be 
abandoned, unless it first extends a written offer to sell that 
interest at a fair market value price to each person who is a 
leaseholder with respect to the property.  Leaseholders must 
respond to the offer within 60 days of receipt of the notice and 
the railroad interest must negotiate in good faith with an 
interested leaseholder for a period of 90 days following the 
leaseholder's response.  After the 90-day negotiation period, 
either party may file a notice of dispute with the board under 
section 3.  The property may not be sold to a party other than 
the leaseholder during the response and negotiation periods or 
while a dispute is pending before the board.  This section does 
not apply to a sale of an entire operating railroad line by one 
operating railroad to another for the purpose of operating a 
railroad. 
    Sec. 3.  [222.633] [TRANSPORTATION REGULATION BOARD TO 
RESOLVE DISPUTES.] 
    (a) A railroad interest or leaseholder may apply to the 
transportation regulation board to resolve a dispute concerning 
fair market value or other terms arising from negotiations under 
section 2.  The board must adopt guidelines without regard to 
chapter 14 to implement section 2 and this section.  The 
guidelines must define the terms "leaseholders" and "railroad 
interest," establish a procedure to resolve disputes, and 
provide for the use of independent appraisers.  Final rules must 
be adopted no later than 360 days from the effective date of 
this section.  
    (b) The board's decision is final for purposes of judicial 
review and may be reviewed in the district court for the 
jurisdiction where the property is located.  The scope of 
judicial review is limited to a determination whether 
substantial evidence exists to support the board's decision. 
    Sec. 4.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 15 

                             LANDLORD LIEN 
    Section 1.  [514.960] [LANDLORD LIEN.] 
    Subdivision 1.  [LIEN; ATTACHMENT.] A person or entity that 
leases property for agricultural production has a lien for 
unpaid rent on the crops produced on the property in the crop 
year and on the crop products and their proceeds.  
    Subd. 2.  [PERFECTION.] (a) To perfect a landlord lien, the 
lien must attach and the person or entity entitled to the lien 
must file a lien statement with the appropriate filing office 
under section 336.9-401 by 30 days after the crops become 
growing crops.  
    (b) A landlord lien that is not perfected has the priority 
of an unperfected security interest under section 336.9-312.  
    Subd. 3.  [DUTIES OF FILING OFFICER.] The filing officer 
shall enter on the lien statement the time of day and date of 
filing.  The filing officer shall file, amend, terminate, note 
the filing of a lien statement, and charge the fee for filing 
under this section in the manner provided by section 336.9-403 
for a financing statement.  A lien statement is void and may be 
removed from the filing system 18 months after the date of 
filing.  The lien statement may be physically destroyed after 30 
months from the date of filing.  
    Subd. 4.  [PRIORITY.] A landlord lien has priority over all 
other liens or security interests in crops grown or produced on 
the property that was leased and the crop products and proceeds. 
    Subd. 5.  [ENFORCEMENT OF LIEN.] The holder of a landlord 
lien may enforce the lien in the manner provided in sections 
336.9-501 to 336.9-508, subject to section 550.17.  For 
enforcement of the lien, the lienholder is the secured party and 
the person leasing the property is the debtor, and each has the 
respective rights and duties of a secured party and a debtor 
under sections 336.9-501 to 336.9-508.  If a right or duty under 
sections 336.9-501 to 336.9-508 is contingent upon the existence 
of express language in a security agreement or may be waived by 
express language in a security agreement, the requisite language 
does not exist.  
    Subd. 6.  [ENFORCEMENT ACTIONS; LIEN EXTINGUISHED.] An 
action to enforce a landlord lien may be brought in district 
court in a county where the property is located after the lien 
is perfected.  A lien statement may be amended, except the 
amount demanded, by leave of the court in the furtherance of 
justice.  A landlord lien is extinguished if an action to 
enforce the lien is not brought within 18 months after the date 
the lien statement is filed. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                              ARTICLE 16 

                    160 ACRE HOMESTEAD DECLARATION 
    Section 1.  Minnesota Statutes 1984, section 510.02, is 
amended to read: 
    510.02 [AREA, HOW LIMITED.] 
    The homestead may include any quantity of land not 
exceeding 80 160 acres, and not included in the laid out or 
platted portion of any city.  If it be within the laid out or 
platted portion of such place its area shall not exceed one-half 
of an acre. 
     Sec. 2.  [EFFECTIVE DATE.] 
     This article is effective the day following final enactment.

                               ARTICLE 17

                     ALTERNATIVE DISPUTE RESOLUTION 
    Section 1.  Minnesota Statutes 1984, section 480.24, is 
amended by adding a subdivision to read: 
    Subd. 5.  [NONPROFIT REGIONAL ALTERNATIVE DISPUTE 
RESOLUTION CORPORATION.] "Nonprofit regional alternative dispute 
resolution corporation" means a nonprofit corporation which 
trains and makes available to the public individuals who provide 
fact-finding, conciliation, mediation, or nonbinding or binding 
arbitration services. 
    Sec. 2.  Minnesota Statutes 1984, section 480.242, 
subdivision 2, is amended to read: 
    Subd. 2.  [REVIEW OF APPLICATIONS; SELECTION OF 
RECIPIENTS.] At times and in accordance with any procedures as 
the supreme court adopts in the form of court rules, 
applications for the expenditure of funds collected pursuant to 
section 480.241 shall be accepted from qualified legal services 
programs or from local government agencies and nonprofit 
organizations seeking to establish qualified alternative dispute 
resolution programs.  The applications shall be reviewed by the 
advisory committee, and the advisory committee, subject to 
review by the supreme court, shall distribute the funds received 
pursuant to section 480.241, subdivision 2 to qualified legal 
services programs or to qualified alternative dispute resolution 
programs submitting applications.  Subject to the provisions of 
subdivision 4, the funds shall be distributed in accordance with 
the following formula:  
     (a) Eighty-five percent of the funds distributed shall be 
distributed to qualified legal services programs that have 
demonstrated an ability as of July 1, 1982, to provide legal 
services to persons unable to afford private counsel with funds 
provided by the federal Legal Services Corporation.  The 
allocation of funds among the programs selected shall be based 
upon the number of persons with incomes below the poverty level 
established by the United States Census Bureau who reside in the 
geographical area served by each program, as determined by the 
supreme court on the basis of the 1980 national census.  All 
funds distributed pursuant to this clause shall be used for the 
provision of legal services in civil matters to eligible clients.
    (b) Fifteen percent of the funds distributed may be 
distributed (1) to other qualified legal services programs for 
the provision of legal services in civil matters to eligible 
clients, including programs which organize members of the 
private bar to perform services and programs for qualified 
alternative dispute resolution, or (2) to programs for training 
mediators operated by nonprofit alternative dispute resolution 
corporations.  Grants may be made pursuant to this clause only 
until June 30, 1987.  If all the funds to be distributed 
pursuant to this clause cannot be distributed because of 
insufficient acceptable applications, the remaining funds shall 
be distributed pursuant to clause (a). 
    Sec. 3.  Minnesota Statutes 1984, section 572.33, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCOPE.] When used in Laws 1984, chapter 
646, sections 1 to 7 sections 572.31 to 572.40 and section 6 the 
terms defined in this section have the meanings given them.  
    Sec. 4.  Minnesota Statutes 1984, section 572.33, is 
amended by adding a subdivision to read: 
    Subd. 5.  [NONPROFIT REGIONAL ALTERNATIVE DISPUTE 
RESOLUTION CORPORATION.] "Nonprofit regional alternative dispute 
resolution corporation" has the meaning given in section 1. 
    Sec. 5.  Minnesota Statutes 1984, section 572.35, is 
amended to read: 
    572.35 [EFFECT OF MEDIATED SETTLEMENT AGREEMENT.] 
    Subdivision 1.  [GENERAL.] The effect of a mediated 
settlement agreement shall be determined under principles of law 
applicable to contract.  A mediated settlement agreement is not 
binding unless it contains a provision stating that it is 
binding and a provision stating substantially that the parties 
were advised in writing that (a) the mediator has no duty to 
protect their interests or provide them with information about 
their legal rights; (b) signing a mediated settlement agreement 
may adversely affect their legal rights; and (c) they should 
consult an attorney before signing a mediated settlement 
agreement if they are uncertain of their rights.  
    Subd. 2.  [DEBTOR AND CREDITOR MEDIATION.] In addition to 
the requirements of subdivision 1, a mediated settlement 
agreement between a debtor and creditor is not binding until 72 
hours after it is signed by the debtor and creditor, during 
which time either party may withdraw consent to the binding 
character of the agreement. 
    Sec. 6.  [572.41] [DEBTOR AND CREDITOR MEDIATION.] 
    Subdivision 1.  [GENERAL.] The debtor and creditor in any 
transaction may request the other party to the transaction to 
enter mediation concerning possible adjustment, refinancing, or 
payment under this section and sections 572.31 to 572.40. 
    Subd. 2.  [MEDIATORS.] An individual who meets the 
qualifications established under subdivision 5 and who is 
willing to mediate in matters involving debtors and creditors 
may register with a nonprofit regional alternative dispute 
resolution corporation or, in a county where one does not exist, 
with the court administrator.  The court administrator shall 
develop a list of mediators available in the county.  It is 
desirable but not necessary that mediators under this section 
have knowledge of debtor and creditor law and relevant areas of 
finance.  A mediator must not mediate a matter involving a 
debtor or creditor with whom the mediator has or has had a 
credit relationship. 
    Subd. 3.  [REQUEST FOR MEDIATOR.] A debtor and creditor who 
agree to mediate may submit a written request for referral to a 
mediator to the court administrator in the county where either 
party resides or has a place of business.  The court 
administrator shall assign a mediator from the list developed 
under subdivision 2.  The court administrator may charge a fee 
for the referral not to exceed the conciliation court fee in 
that county. 
    Subd. 4.  [COMPENSATION.] Prior to commencing mediation the 
debtor and creditor shall agree with each other and the mediator 
on the amount and allocation between them of any fee for the 
mediator's services. 
    Subd. 5.  [RULES.] The state court administrator, in 
consultation with the bureau of mediation services, shall adopt 
rules to implement this section and may use portions of existing 
rules on certification of alternative dispute resolution 
programs that satisfy the purposes of this section.  The rules 
must include qualifications of mediators under this section and 
grounds for challenging and removing mediators.  
    Sec. 7.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 18 

                             WILD RICE LAND 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
92.50, subdivision 1, is amended to read: 
    Subdivision 1.  [LEASE TERMS.] The commissioner of natural 
resources may lease, at public or private vendue and at the 
prices and under the terms and conditions he or she may 
prescribe, any state-owned lands under his or her jurisdiction 
and control for the purpose of taking and removing sand, gravel, 
clay, rock, marl, peat, and black dirt, for storing ore, waste 
materials from mines, or rock and tailings from ore milling 
plants, for roads or railroads, or for any other uses consistent 
with the interests of the state.  Except as otherwise provided 
in this subdivision, the term of the lease may not exceed ten 
years.  Leases of lands for storage sites for ore, waste 
materials from mines, or rock and tailings from ore milling 
plants, for the removal of peat, or for the use of peat lands 
for agricultural purposes may not exceed a term of 25 years.  
Leases for the removal of peat must be approved by the executive 
council. 
    All leases must be subject to sale and leasing of the land 
for mineral purposes and contain a provision for cancellation 
for just cause at any time by the commissioner upon three six 
months' written notice.  A longer notice period, not exceeding 
three years, may be provided in leases for storing ore, waste 
materials from mines or rock or tailings from ore milling 
plants.  The commissioner may determine the terms and 
conditions, including the notice period, for cancellation of a 
lease for the removal of peat.  Money received from leases under 
this section must be credited to the fund to which the land 
belongs. 
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 
92.501, subdivision 1, is amended to read: 
    92.501 [LEASING OF PEAT LANDS FOR WILD RICE FARMING.] 
    Subdivision 1.  [AUTHORITY TO LEASE.] The commissioner of 
natural resources in consultation with the commissioner of 
agriculture may, at a public or private lease sale and at the 
prices and under the terms and conditions the commissioner 
commissioners may prescribe, lease any state-owned lands under 
the commissioner's jurisdiction and control for the purpose of 
farming of wild rice.  Priority must be given to lands which are 
accessible and adjacent to existing wild rice production areas 
and requested for leasing by wild rice producers.  The term of a 
lease under this section shall must be offered for a minimum of 
20 years but may be for a shorter period at the option of the 
lessee.  If a lease is issued prior to the adoption of the rules 
for the implementation of this section and for a period of less 
than 20 years, the lease must be converted to a minimum 20-year 
lease after the rules have been adopted, at the option of the 
lessee.  Leases must be accepted or denied within 60 days of 
application.  If a lease is denied, written notice must be given 
stating reasons for denial.  The lease rate shall must be 
adjusted every five years to reflect market values. The money 
received from the leases under this section shall must be 
credited to the account that receives the proceeds of a sale of 
the land. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
92.501, subdivision 2, is amended to read: 
    Subd. 2.  [WILD RICE LAND DESIGNATION AND DEVELOPMENT.] The 
commissioner of natural resources and the commissioner of 
agriculture shall prepare a plan that designates state land for 
wild rice production including an inventory of the number of 
acres of land appropriate and suitable for wild rice development 
and leasing in each county.  Proposed mineral exploration does 
not exempt land from being designated for wild rice development. 
     Sec. 4.  [EFFECTIVE DATE.] 
     This article is effective the day following final enactment.

                               ARTICLE 19 
DEFICIENCY JUDGMENTS 
    Section 1.  [LEGISLATIVE FINDINGS.] 
    The legislature finds that there is a rural economic 
emergency resulting from the agricultural economic depression.  
Foreclosure sales and subsequent deficiency judgments are 
debilitating the people foreclosed and taking away their hope 
for readjustment after foreclosure, which is detrimental to the 
welfare of the state.  
    Sec. 2.  [580.225] [SATISFACTION OF JUDGMENT.] 
    The amount received from foreclosure sale under this 
chapter is full satisfaction of the mortgage debt, except as 
provided in section 5.  
    Sec. 3.  Minnesota Statutes 1984, section 580.23, 
subdivision 1, is amended to read:  
    580.23 [REDEMPTION BY MORTGAGOR.] 
    Subdivision 1.  When lands have been sold in conformity 
with the preceding sections of this chapter the mortgagor, his 
personal representatives or assigns, within six months after 
such sale, except as otherwise provided in subdivision 2, may 
redeem such lands, as hereinafter provided, by paying the sum of 
money for which the same were sold, with interest from the time 
of sale at the rate provided to be paid on the mortgage debt 
and, if no rate be provided in the mortgage note, at the rate of 
six percent per annum, together with any further sums which may 
be payable pursuant to section 582.03.  Where the redemption 
period is as provided in this subdivision the mortgagee, or his 
successors, assigns, or personal representative, or any other 
purchaser so purchasing at the sheriff's sale shall by 
purchasing the property at the sheriff's sale thereby waive his 
right to a deficiency judgment against the mortgagor.  
    Sec. 4.  Minnesota Statutes 1984, section 581.09, is 
amended to read:  
    581.09 [SATISFACTION OF JUDGMENT; EXECUTION FOR 
DEFICIENCY.] 
    Upon confirmation of the report of sale, the clerk shall 
enter satisfaction of the judgment to the extent of the sum bid 
for the premises, less expenses and costs, and for any balance 
of such judgment, execution may issue as in other cases; but no 
such execution shall issue on the judgment until after a sale of 
the mortgaged premises, and the application of the amount 
realized as aforesaid.  The amount entered is full satisfaction 
of the judgment unless a deficiency is allowed under section 5.  
If a deficiency judgment is allowed under section 5, the balance 
of the judgment remaining unpaid may be executed and satisfied 
in the same manner as a personal judgment against the mortgagor. 
    Sec. 5.  [582.30] [DEFICIENCY JUDGMENTS.] 
    Subdivision 1.  [DEFICIENCY ALLOWED.] (a) Except as 
provided in this section, a person holding a mortgage may obtain 
a deficiency judgment against the mortgagor if the amount a 
person holding a mortgage receives from a foreclosure sale is 
less than: 
    (1) the amount remaining unpaid on the mortgage under 
chapter 580; or 
    (2) the amount of the judgment entered under chapter 581. 
    (b) Except as provided in subdivision 3, the judgment may 
not be for more than the difference between the amount received 
from the foreclosure sale less expenses and costs and: 
    (1) for a foreclosure by advertisement, the total amount 
that attaches to the sale proceeds under chapter 580; or 
    (2) for a foreclosure by action, the amount of the judgment 
entered under chapter 581. 
    Subd. 2.  [GENERAL PROHIBITION FOR PROPERTY WITH A 
SIX-MONTH REDEMPTION PERIOD.] A deficiency judgment is not 
allowed if a mortgage is foreclosed by advertisement under 
chapter 580, and has a redemption period of six months under 
section 580.23, subdivision 1.  
    Subd. 3.  [MORTGAGE ON AGRICULTURAL PROPERTY ENTERED AFTER 
THE EFFECTIVE DATE OF THIS ARTICLE.] (a) If a mortgage entered 
after the effective date of this article on property used in 
agricultural production is foreclosed and sold, a deficiency 
judgment may only be obtained by filing a separate action for a 
deficiency judgment within 90 days after the foreclosure sale.  
A court may allow a deficiency judgment only if it determines 
that the sale of the property was conducted in a commercially 
reasonable manner. 
    (b) The amount of the deficiency judgment is limited to the 
difference of the fair market value of the property, and the 
amount remaining unpaid on the mortgage if the foreclosure is 
under chapter 580 or the amount of the judgment if the 
foreclosure is under chapter 581.  A separate jury proceeding 
must be brought to determine the fair market value of the 
property.  The property may not be presumed to be sold for its 
fair market value.  A party adversely affected by a deficiency 
judgment may submit evidence relevant to establishing the fair 
market value of the property.  Notice of the time and place 
where the fair market value of the property is to be determined 
must be given to all parties adversely affected by the judgment. 
    Subd. 4.  [JUDGMENT ON MORTGAGE NOTE.] A personal judgment 
may not be executed against a mortgagor liable on a mortgage 
note entered after the effective date of this article secured by 
real property used in agricultural production, unless the fair 
market value of the property is determined by a jury in a 
separate proceeding as provided in subdivision 3, paragraph 
(b).  The personal judgment on the mortgage note may not be for 
more than the difference of the amount due on the note and the 
fair market value of the property. 
    Subd. 5.  [MORTGAGE ON AGRICULTURAL PROPERTY ENTERED ON OR 
BEFORE THE EFFECTIVE DATE OF THIS ARTICLE.] (a) If a mortgage 
entered on or before the effective date of this article on 
property used in agricultural production is foreclosed and sold, 
a deficiency judgment may only be obtained by filing a separate 
action for a deficiency judgment within 90 days after the 
foreclosure sale.  A court may allow a deficiency judgment only 
if it determines that the sale of the property was conducted in 
a commercially reasonable manner. 
    (b) The amount of the deficiency judgment is limited to the 
difference of the fair market value of the property, and the 
amount remaining unpaid on the mortgage if the foreclosure is 
under chapter 580 or the amount of the judgment if the 
foreclosure is under chapter 581.  A separate jury proceeding 
must be brought to determine the fair market value of the 
property.  The property may not be presumed to be sold for its 
fair market value.  A party adversely affected by a deficiency 
judgment may submit evidence relevant to establishing the fair 
market value of the property.  Notice of the time and place 
where the fair market value of the property is to be determined 
must be given to all parties adversely affected by the judgment. 
    Subd. 6.  [JUDGMENT ON MORTGAGE NOTE.] A personal judgment 
may not be executed against a mortgagor liable on a mortgage 
note entered on or before the effective date of this article 
secured by real property used in agricultural production, unless 
the fair market value of the property is determined by a jury in 
a separate proceeding as provided in subdivision 5, paragraph 
(b).  The personal judgment on the mortgage note may not be for 
more than the difference of the amount due on the note and the 
fair market value of the property. 
    Subd. 7.  [STATUTE OF LIMITATIONS ON EXECUTING JUDGMENT.] A 
deficiency judgment or personal judgment obtained to enforce a 
mortgage debt on property used in agricultural production may be 
enforced by execution, but the judgment may not be executed 
after three years from the date judgment was entered.  
    Subd. 8.  [POSTPONEMENT ON EXECUTING JUDGMENTS ON OR BEFORE 
THE EFFECTIVE DATE OF THIS ARTICLE.] For a mortgage on property 
used in agricultural production entered on or before the 
effective date of this article, a deficiency judgment or 
personal judgment to enforce the mortgage debt may not be 
executed on real or personal property used for agricultural 
production until one year after the effective date of this 
article.  
    Subd. 9.  [ATTACHMENT OF JUDGMENT AFTER JUDGMENT IS 
ENTERED.] A deficiency judgment or personal judgment obtained to 
enforce a mortgage debt on property used in agricultural 
production does not attach to real or personal property that is 
acquired by the mortgagor or debtor after the judgment is 
entered. 
    Sec. 6.  [582.31] [ONE ACTION ALLOWED TO ENFORCE 
AGRICULTURAL MORTGAGE.] 
    (a) For a mortgage on property used in agricultural 
production entered into on or before the effective date of this 
article, the mortgagee may only proceed to: 
    (1) obtain a personal judgment for the debt owed on the 
note secured by the mortgage and execute on the judgment; or 
    (2) foreclose the mortgage and obtain a deficiency 
judgment, if allowed. 
    (b) An action under paragraph (a), either clause (1) or 
(2), bars an action under the other clause. 
     Sec. 7.  [EFFECTIVE DATE.] 
     This article is effective the day after final enactment. 

                               ARTICLE 20

                         RIGHT OF FIRST REFUSAL
    Section 1.  Minnesota Statutes 1984, section 500.24, is 
amended by adding a subdivision to read: 
    Subd. 6.  [DISPOSAL OF LAND.] A state or federal agency or 
a corporation, other than a family farm corporation or an 
authorized farm corporation, when leasing or selling farm land 
or a farm homestead, must offer or make a good faith effort to 
offer land for sale or lease to the immediately preceding former 
owner at a price no higher than the highest price offered by a 
third party that is acceptable to the seller or lessor.  An 
offer delivered by certified mail to the former owner's last 
known address is a good faith offer.  This subdivision does not 
apply to a sale or lease that occurs after the seller or lessor 
has held the property for five years. 
    The former owner must exercise the right to lease farm land 
within 30 days after receiving an offer to lease under this 
subdivision.  The former owner must exercise the right to buy 
farm land within 90 days after receiving an offer to buy under 
this subdivision. 
     Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 21 

               INVOLUNTARY FARM TRANSFER INCOME EXCLUSION 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
290.01, subdivision 20b, is amended to read: 
    Subd. 20b.  [MODIFICATIONS REDUCING FEDERAL ADJUSTED GROSS 
INCOME.] There shall be subtracted from federal adjusted gross 
income: 
    (1) interest income on obligations of any authority, 
commission or instrumentality of the United States to the extent 
includible in gross income for federal income tax purposes but 
exempt from state income tax under the laws of the United States;
    (2) the portion of any gain, from the sale or other 
disposition of property having a higher adjusted basis for 
Minnesota income tax purposes than for federal income tax 
purposes, that does not exceed such difference in basis; but if 
such gain is considered a long-term capital gain for federal 
income tax purposes, the modification shall be limited to 40 per 
centum of the portion of the gain; 
    (3) losses, not otherwise reducing federal adjusted gross 
income assignable to Minnesota, arising from events or 
transactions which are assignable to Minnesota under the 
provisions of sections 290.17 to 290.20, including any capital 
loss or net operating loss carryforwards or carrybacks or out of 
state loss carryforwards resulting from the losses, and 
including any farm loss carryforwards or carrybacks; 
     (4) if included in federal adjusted gross income, the 
amount of any overpayment of income tax to Minnesota, or any 
other state, for any previous taxable year, whether the amount 
is received as a refund or credited to another taxable year's 
income tax liability; 
     (5) the amount of any distribution from a qualified pension 
or profit-sharing plan included in federal adjusted gross income 
in the year of receipt to the extent of any contribution not 
previously allowed as a deduction by reason of a change in 
federal law which was not adopted by Minnesota law for a taxable 
year beginning in 1974 or later; 
     (6) pension income as provided by section 290.08, 
subdivision 26; 
     (7) the first $3,000 of compensation for personal services 
in the armed forces of the United States or the United Nations, 
and the next $2,000 of compensation for personal services in the 
armed forces of the United States or the United Nations wholly 
performed outside the state of Minnesota.  This modification 
does not apply to compensation defined in clause (6); 
     (8) unemployment compensation to the extent includible in 
gross income for federal income tax purposes under section 85 of 
the Internal Revenue Code of 1954; 
     (9) for an estate or trust, the amount of any income or 
gain which is not assignable to Minnesota under the provisions 
of section 290.17; 
     (10)(a) income from the business of mining as defined in 
section 290.05, subdivision 1, clause (a) which is not subject 
to the Minnesota income tax; (b) to the extent included in 
computing federal adjusted gross income, expenses and other 
items allocable to the business of mining or producing iron ore, 
the mining or production of which is subject to the occupation 
tax imposed by section 298.01, subdivision 1, shall be allowed 
as a subtraction to the extent that the expenses or other items 
are included in computing the modifications provided in section 
290.01, subdivision 20a, clause (7) or paragraph (a) of this 
clause and to the extent that the expenses or other items are 
not deductible, capitalizable, retainable in basis, or taken 
into account by allowance or otherwise in computing the 
occupation tax.  Occupation taxes imposed under chapter 298, 
royalty taxes imposed under chapter 299, and depletion expenses 
may not be subtracted under this paragraph; 
     (11) to the extent included in federal adjusted gross 
income, distributions from a qualified governmental pension plan 
which represent a return of designated employee contributions to 
the plan and which contributions were included in gross income 
pursuant to Minnesota Statutes 1984, section 290.01, subdivision 
20a, clause (18).  The provisions of this clause shall apply 
before the provisions of clause (6) apply and an amount 
subtracted under this clause may not be subtracted under clause 
(6); and 
     (12) to the extent included in federal adjusted gross 
income, distributions from an individual retirement account 
which represent a return of contributions if the contributions 
were included in gross income pursuant to Minnesota Statutes 
1984, section 290.01, subdivision 20a, clause (17).  The 
distribution shall be allocated first to return of contributions 
included in gross income until the amount of the contributions 
has been exhausted; 
    (13) to the extent included in federal adjusted gross 
income, income related to disposition of property used in a 
family farm business as provided by section 290.08, subdivision 
27. 
    Sec. 2.  Minnesota Statutes 1984, section 290.08, is 
amended by adding a subdivision to read: 
    Subd. 27.  [FARM PROPERTY DISPOSITION INCOME.] For a 
person, a family farm corporation, or an authorized farm 
corporation, gross income does not include any gain realized 
upon termination of a contract for deed, foreclosure of a 
mortgage, or deed in lieu of foreclosure if a foreclosure 
proceeding has been initiated or threatened in writing on real 
or personal property used in a farm business that was owned and 
operated by the taxpayer as the taxpayer's principal business.  
For the purposes of this subdivision, real property includes any 
dwellings located on the property.  This modification does not 
apply to any net cash proceeds distributed to the taxpayer after 
discharge of the debt.  For purposes of this subdivision "family 
farm corporation" and "authorized farm corporation" are as 
defined in section 500.24, subdivision 2, except that the term 
"farming" as used in those definitions includes the production 
of livestock, dairy animals or dairy products, poultry or 
poultry products, fur-bearing animals, horticultural and nursery 
stock that is covered by sections 18.44 to 18.61, fruit, 
vegetables, forage, grain, and bees and apiary products. 
    Sec. 3.  Minnesota Statutes 1985 Supplement, section 
290.091, subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
this section, the following terms have the meanings given: 
    (a) "Alternative minimum taxable income" means the sum of 
the following for the taxable year: 
    (1) the taxpayer's federal adjusted gross income as defined 
in the Internal Revenue Code; 
    (2) the taxpayer's federal tax preference items; less the 
sum of 
    (i) interest income as defined in section 290.01, 
subdivision 20b, clause (1); and 
    (ii) the amount of interest paid or accrued within the 
taxable year on indebtedness to the extent that the amount does 
not exceed qualified net investment income, as defined in 
section 55(e)(5) of the Internal Revenue Code.  Interest does 
not include amounts deducted in computing federal adjusted gross 
income or amounts that are not allowable under section 55(e)(8) 
of the Internal Revenue Code; and 
    (iii) to the extent included in the taxpayer's federal 
adjusted gross income, gain excluded from gross income under 
section 290.01, subdivision 20b, clause (13). 
    In the case of an estate or trust, adjusted gross income 
must be modified as provided in section 55(e)(6)(B) of the 
Internal Revenue Code. 
    (b) "Federal tax preference items" means items as defined 
in sections 57, 58, and 443(d) of the Internal Revenue Code, 
modified as follows: 
    (1) The capital gain preference item shall be reduced 
    (i) where the gain would be modified because some or all of 
the assets have a higher basis for Minnesota purposes than for 
federal purposes; and 
    (ii) to the extent it includes gain excluded from gross 
income under section 290.01, subdivision 20b, clause (13).  
    (2) In the case of a nonresident individual, or an estate 
or trust, with a net operating loss that is a larger amount for 
Minnesota than for federal, the capital gain preference item 
shall be reduced to the extent it was reduced in the allowance 
of the net operating loss.  
    (3) Federal preference items from the business of mining or 
producing iron ore and other ores which are subject to the 
occupation tax and exempt from taxation under section 290.05, 
subdivision 1, shall not be a preference item for Minnesota.  
    (4) Other federal preference items to the extent not 
allowed in the computation of Minnesota gross income, as 
determined by the commissioner, are not preference items for 
Minnesota. 
    (c) "Internal Revenue Code" means the Internal Revenue Code 
of 1954, as amended through December 31, 1984. 
    (d) "Regular tax" means the tax that would be imposed under 
this chapter (without regard to this section), reduced by the 
sum of the nonrefundable credits allowed under this chapter.  
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
290.491, is amended to read: 
    290.491 [TAX ON GAIN; DISCHARGE IN BANKRUPTCY.] 
    (a) Any tax due under this chapter on a gain realized on a 
forced sale pursuant to foreclosure of a mortgage or other 
security interest in agricultural production property, other 
real property, or equipment, used in a farm business that was 
owned and operated by the taxpayer shall be a dischargeable debt 
in a bankruptcy proceeding under United States Code, title 11, 
section 727. 
    A gain (b) Income realized on a sale or exchange of 
agricultural production property, other real property, or 
equipment, used in a farm business that was owned and operated 
by the taxpayer shall be exempt from taxation under this 
chapter, if the taxpayer was insolvent at the time of the sale 
and the proceeds of the sale were used solely to discharge 
indebtedness secured by a mortgage, lien or other security 
interest on the property sold.  For purposes of this section, 
"insolvent" means insolvent as defined in section 108(d)(3) of 
the Internal Revenue Code of 1954, as amended through December 
31, 1984.  This paragraph applies only to the extent that the 
gain is includable in federal adjusted gross income or in the 
computation of the alternative minimum taxable income under 
section 290.091 for purposes of the alternative minimum tax.  
The amount of the exemption is limited to the excess of the 
taxpayer's (1) liabilities over (2) the total assets and any 
exclusion claimed under section 108 of the Internal Revenue Code 
of 1954, as amended through December 31, 1985, determined 
immediately before application of this paragraph. 
    (c) For purposes of this section, any tax due under this 
chapter specifically includes, but is not limited to, tax 
imposed under sections 290.02 and 290.03 on income derived from 
a sale or exchange, whether constituting gain, discharge of 
indebtedness or recapture of depreciation deductions, or the 
alternative minimum tax imposed under section 290.091. 
    Sec. 5.  [AMENDED RETURNS.] 
    Subdivision 1.  [SPECIAL RULES.] An amended return filed on 
the basis of this article for a taxable year beginning after 
December 31, 1982, and before January 1, 1985, shall be filed no 
later than June 30, 1987.  Such a return may include a reduction 
in gross income to effect subtraction of any amount added to 
gross income for that year pursuant to Minnesota Statutes 1984, 
section 290.01, subdivision 20a, clause (3), if the increase in 
the federal tax liability was a result of recapture of the 
investment tax credit attributable to disposition of property 
described in section 2.  Any reduction in income arising from a 
farm pursuant to this article shall not be considered in the 
computation of the farm loss modification under Minnesota 
Statutes 1984, section 290.09, subdivision 29, in an amended 
return.  On an amended return for a taxable year beginning after 
December 31, 1982, and before January 1, 1985, the minimum tax 
imposed under Minnesota Statutes 1984, section 290.091, shall be 
computed by subtracting from federal preference items the amount 
of any gain excluded from gross income under section 290.01, 
subdivision 20b, clause (13), that was included in the 
taxpayer's federal preference items in that taxable year. 
    Subd. 2.  [PAYMENT OF REFUNDS.] The commissioner of revenue 
shall pay refunds to claimants who file amended returns based on 
this article notwithstanding expiration of the period of 
limitations in Minnesota Statutes, section 290.50, or any other 
law.  No interest will be paid on refunds paid on claims filed 
for periods for which the statute of limitations had expired. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1, 2, and 4 are effective for taxable years 
beginning after December 31, 1982.  Section 3 is effective for 
taxable years beginning after December 31, 1984. 

                               ARTICLE 22

                    FARM ADVOCATE ETHICAL GUIDELINES
    Section 1.  [17.039] [ETHICAL GUIDELINES FOR FARM 
ADVOCATES.] 
     The commissioner of agriculture shall establish not later 
than August 1, 1986, ethical guidelines for farm advocates who 
perform the duties of an advocate.  The ethical guidelines must 
be part of the contract with each advocate. 
     Sec. 2.  [EFFECTIVE DATE.] 
     This article is effective the day following final enactment.

                               ARTICLE 23

                       FARM LOAN INTEREST BUY-DOWN
    Section 1.  [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 1 to 9. 
    Subd. 2.  [APPROVED ADULT FARM MANAGEMENT PROGRAM.] 
"Approved adult farm management program" means a farm management 
training program designed for persons currently engaged in 
farming that has been approved by the commissioner under section 
4, subdivision 4. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of commerce. 
    Subd. 4.  [COMMISSIONER'S INTEREST INDEX.] "Commissioner's 
interest index" means an interest rate that is three percent 
above the current lending rate of the Federal Interest Credit 
Bank to production credit associations as certified each month 
by the commissioner. 
    Subd. 5.  [ELIGIBLE BORROWER.] "Eligible borrower" means a 
farmer who applies to a lender for a farm operating loan between 
the dates January 1, 1986, and December 30, 1986, and who meets 
all qualifications established in section 2 and any further 
qualifications that may be established in the program quidelines 
adopted by the commissioner under section 4, subdivision 1. 
    Subd. 6.  [FARM OPERATING LOAN.] "Farm operating loan" 
means an original, extended, or renegotiated loan or line of 
credit obtained by a farmer from a lender for the purpose of 
financing the operations of a farm.  A farm operating loan 
includes an open line of credit even though the maximum 
principal amount of the line of credit may not be drawn at any 
one time.  A farm operating loan eligible for interest rate 
buy-down must have a maturity date of June 30, 1987, or earlier. 
    Subd. 7.  [FARMER.] "Farmer" means a state resident or a 
domestic family farm corporation as defined in section 500.24, 
subdivision 2, operating a farm within the state. 
    Subd. 8.  [INTEREST RATE BUY-DOWN; BUY-DOWN.] "Interest 
rate buy-down" or "buy-down" means a reduction in the effective 
interest rate on a farm operating loan made pursuant to sections 
1 to 9 to an eligible borrower due to partial payment of 
interest costs by the commissioner and partial payment of 
interest costs by the participating lender. 
    Subd. 9.  [LENDER.] "Lender" means a bank, a credit union, 
or a savings and loan association chartered by the state or 
federal government, a unit of the farm credit system, the 
federal deposit insurance corporation, and other financial 
institutions that the commissioner deems appropriate. 
    Subd. 10.  [PARTICIPATING LENDER.] "Participating lender" 
means a lender who has been granted participating lender status 
by the commissioner. 
    Sec. 2.  [FARMER ELIGIBILITY.] 
    Subdivision 1.  [DEBT-TO-ASSET RATIO.] Only a farmer with a 
debt-to-asset ratio exceeding 50 percent at the time of 
application for a farm operating loan is an eligible borrower 
for purposes of interest rate buy-down.  The debt-to-asset ratio 
of a farmer must be determined by the lender.  A debt-to-asset 
ratio determined by a lender is deemed to be reasonable and 
accurate without further audit or substantiation. 
    Subd. 2.  [ASSESSMENT OF CONTINUED VIABILITY.] Only a 
farmer determined by the lender to have a reasonable opportunity 
for long-term financial viability in the farmer's current farm 
operation is an eligible borrower.  A determination of financial 
viability by a lender is deemed to be reasonable and accurate 
without further audit or substantiation. 
    Subd. 3.  [ENROLLMENT IN ADULT FARM MANAGEMENT PROGRAM.] To 
be an eligible borrower, a farmer must agree to enroll in an 
approved adult farm management program offered not more than 50 
miles from the farmer's residence if enrollment is a condition 
of receiving a farm operating loan from a participating lender. 
    Sec. 3.  [LENDER ELIGIBILITY.] 
    Subdivision 1.  [ELIGIBLE PARTICIPATING LENDER STATUS.] A 
lender who meets all requirements established by the 
commissioner must be certified as a participating lender. 
    Subd. 2.  [PARTIAL PAYMENT FOR ADULT FARM MANAGEMENT 
TRAINING.] A participating lender must agree to pay one-half of 
the enrollment and tuition costs of an approved adult farm 
management program for an eligible borrower approved by the 
commissioner for interest rate buy-down.  A participating lender 
is not required to assist with enrollment or tuition costs for a 
period longer than the term of the farm operating loan, and a 
lender is not required to assist with the enrollment and tuition 
costs for more than one individual for each farm operating loan. 
    Sec. 4.  [RESPONSIBILITIES OF THE COMMISSIONER.] 
    Subdivision 1.  [ADOPTION OF PROGRAM GUIDELINES.] Within 30 
days after the effective date of sections 1 to 9, the 
commissioner shall adopt and make available to any interested 
party guidelines for the interest rate buy-down program 
established in sections 1 to 9.  To the maximum extent 
practicable, the commissioner shall adopt guidelines that 
coordinate the state program with any federal farm financial 
relief program and make benefits of the state interest rate 
buy-down program additive to the federal program.  The 
commissioner may adopt program guidelines without regard to 
chapter 14. 
    Subd. 2.  [PREPARATION AND DISTRIBUTION OF LENDER 
PARTICIPATION FORMS.] The commissioner shall prepare and 
distribute to all lenders in the state forms and instructions 
for the program.  
    Subd. 3.  [PREPARATION AND DISTRIBUTION OF LOAN APPLICATION 
FORMS.] The commissioner shall prepare and distribute to all 
participating lenders forms and instructions to be used in 
applying for state interest rate buy-down payments. 
    Subd. 4.  [APPROVAL OF ADULT FARM MANAGEMENT PROGRAMS.] The 
commissioner, in consultation with the commissioner of 
agriculture, shall prepare and distribute to all participating 
lenders a list of adult farm management training programs 
approved for eligible borrowers. 
    Subd. 5.  [REVIEW OF APPLICATIONS FOR BUY-DOWN 
PAYMENT.] The commissioner must review within five working days 
of submission by a participating lender a properly completed 
application for interest rate buy-down payments on a farm 
operating loan made to a farmer.  If a qualified lender does not 
receive written notice that the commissioner has denied interest 
rate buy-down payments within seven working days, the farmer is 
an eligible borrower and interest rate buy-down payments on the 
farm operating loan are approved by the commissioner. 
    Subd. 6.  [BUY-DOWN PAYMENTS TO PARTICIPATING LENDERS.] The 
commissioner shall make interest rate buy-down payments to 
participating lenders as provided in this subdivision.  An 
amount equal to half of the expected interest rate buy-down 
amount may be paid to the participating lender 30 days after the 
loan is reviewed by the commissioner.  If the participating 
lender elects to receive the first half payment at a date later 
than 30 days after the loan is reviewed by the commissioner, the 
commissioner shall make the payment on the date requested.  The 
balance of the interest rate buy-down payment must be paid to 
the participating lender not more than 30 days after the request 
for final payment is received. 
    Sec. 5.  [FARMER APPLICATION FOR INTEREST RATE BUY-DOWN.] 
    A participating lender must receive and evaluate loan 
applications from any farmer who has transacted farm-related 
borrowing with the lender within the prior three years or from a 
farmer who has not previously established farm-related borrowing 
or whose previous lender is no longer in the business of making 
farm-related loans.  The participating lender may use criteria 
beyond those in section 2 in determining whether to make a farm 
operating loan to a farmer. 
    Sec. 6.  [APPLICATION BY PARTICIPATING LENDERS.] 
    In order to receive interest rate buy-down payments from 
the state, a participating lender must submit to the 
commissioner a properly completed application form for each farm 
operating loan eligible for interest rate buy-down payments. 
    Sec. 7.  [MAXIMUM INTEREST RATE.] 
    To qualify for interest rate buy-down payments, a 
participating lender must offer to make a farm operating loan to 
an eligible borrower at a rate of interest equivalent to that 
offered to other farmers having similar security and financial 
status but in no case may the interest rate exceed the current 
commissioner's interest index.  The commissioner may use 
appropriate means to verify that the operating loan interest 
rate available to an eligible borrower is substantially the same 
as that available to other borrowers. 
    Sec. 8.  [STATE CONTRIBUTION TO INTEREST BUY-DOWN.] 
    As provided in section 4, subdivision 6, the commissioner 
shall pay to a participating lender for the first $100,000 of a 
farm operating loan made to an eligible borrower an amount 
equivalent to 37.5 percent of the contract interest to be paid 
during the term of the farm operating loan. 
    Sec. 9.  [LENDER CONTRIBUTION TO INTEREST BUY-DOWN.] 
    A participating lender must provide a reduction in interest 
rate for the first $100,000 of a farm operating loan made to an 
eligible borrower in an amount equivalent to 12.5 percent of the 
contract interest rate to be paid during the term of the farm 
operating loan. 
    Sec. 10.  [EXISTING RESTRUCTURING PROGRAM; DEFINITIONS.] 
     Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 10 to 12. 
     Subd. 2.  [CLASSIFIED FARM LOAN.] "Classified farm loan" 
means a farm loan that the lender determines to have a 
substantial risk of nonpayment, so that the lender is likely to 
sustain some loss if the borrower's paying capacity, net worth, 
or collateral is not improved.  The loan need not already have 
been classified by a bank examiner. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of commerce. 
    Subd. 4.  [COMMISSIONER'S INTEREST INDEX.] "Commissioner's 
interest index" means an interest rate that is 2.3 percent above 
the current lending rates of the federal intermediate credit 
bank to production credit associations as certified each month 
by the commissioner. 
    Subd. 5.  [FARMER.] "Farmer" means a state resident 
individual, or a domestic family farm corporation defined in 
Minnesota Statutes, section 500.24, engaged in the business of 
farming property in this state. 
    Subd. 6.  [FARMERS HOME ADMINISTRATION.] "Farmers home 
administration" means the farmers home administration of the 
United States Department of Agriculture. 
    Subd. 7.  [FARM LOAN.] "Farm loan" means a loan for 
operating expenses or the purchase of property for a farm 
business. 
    Subd. 8.  [LENDER.] "Lender" means a bank, savings and loan 
association, or credit union chartered by the state or federal 
government, a farm credit system lender, and the Federal Deposit 
Insurance Corporation. 
    Sec. 11.  [QUALIFICATION OF LENDERS.] 
    (a) To qualify for an interest payment under sections 10 to 
12, a lender must first sign an agreement with the commissioner 
to follow the guidelines. 
    (b) A lender may not foreclose on a farm loan of a farmer 
who has had a loan application submitted to the farmers home 
administration under section 12 until (1) the lender certifies 
to the commissioner that the farmer's loans have been submitted 
to the farmers home administration for debt restructuring and 
that the loan debt restructuring has been approved or denied, or 
(2) 90 days have expired, whichever is earlier. 
    (c) The commissioner may not make an interest payment to a 
lender for a loan under sections 10 to 12, if the lender has 
foreclosed the loan. 
    Sec. 12.  [INTEREST PAYMENT PROGRAM ON EXISTING FARM 
LOANS.] 
    Subdivision 1.  [COMMISSIONER PAYS INTEREST.] The 
commissioner shall pay the interest attributable to the first 60 
days of a 120-day period, on the first $25,000 of operating farm 
loans and the first $25,000 of ownership farm loans of each 
borrower submitted by a lender that signs an agreement under 
section 11 to the farmers home administration for loan 
guarantees and debt restructuring. 
     Subd. 2.  [INTEREST.] The interest to be paid is the amount 
that becomes attributable to the first 60-day period after the 
lender signs the agreement with the commissioner under section 
11.  The amount to be paid is determined by the loan agreement 
between the lender and the borrower. 
     Subd. 3.  [CLASSIFIED FARM LOAN REVIEW.] During the first 
60 days of the 120-day period after the agreement with the 
commissioner in section 11 is signed, the lender must review all 
classified farm loans and determine which farm loans the lender 
will submit to the farmers home administration for loan 
guarantees and debt restructuring. 
     Subd. 4.  [LENDER-BORROWER AGREEMENT.] For each farm loan 
that the lender submits to the farmers home administration for 
loan guarantees and debt restructuring, the lender and the 
borrower of the farm loan must sign an agreement.  The agreement 
must: 
     (1) state that the lender has agreed with the commissioner 
not to foreclose on farm loans submitted, as specified in 
section 11; 
     (2) state that the commissioner will pay the interest 
attributable to the eligible portion of the farm loan submitted 
to the farmers home administration for the first 60 days of the 
120-day period if the lender qualifies for state interest 
payment; 
     (3) state that the borrower is not liable for interest paid 
by the commissioner; 
     (4) provide that if the lender qualifies for state interest 
payments, the lender will assume responsibility for the interest 
attributable to the eligible portion of the farm loan submitted 
and the borrower is not liable for the interest except as 
provided in clause (5); and 
     (5) provide that if the borrower agrees to have the farm 
loan submitted and the farmers home administration guarantees 
the loan, the lender may add the interest attributable to the 
second 60 days of the period to the principal of the borrower's 
farm loan. 
     Subd. 5.  [PAYMENT APPLICATION.] The lender must apply to 
the commissioner for the 60-day state interest payment on a farm 
loan that is submitted to the farmers home administration.  The 
lender must give the commissioner evidence of the farm loan 
submitted to the farmers home administration guaranteed loan 
program and application for the farmers home administration 
approved lenders program.  A lender that complies with this 
section is qualified to receive payment from the commissioner. 
    Sec. 13.  [ELIGIBLE FARM OPERATING LOANS.] 
    Notwithstanding Laws 1985, chapter 4, as amended by Laws 
1985, chapter 114, a farm operating loan due and payable by 
April 1, 1986, and is otherwise eligible for the state interest 
payment and the commissioner of commerce shall make the payment 
if the loan was submitted by December 31, 1985. 
    Sec. 14.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 24 

                              TANK SAFETY 
     Section 1. Minnesota Statutes 1985 Supplement, section 
221.033, subdivision 3, is amended to read: 
    Subd. 3.  [VARIANCE, RULES.] The commissioner shall adopt 
rules which provide a procedure for granting a variance from 
those regulations adopted under subdivision 1 which prescribe 
specifications for tank motor vehicles used to transport 
gasoline.  The variance may be granted only to persons who 
transport gasoline in for tank motor vehicles with a capacity of 
3,000 gallons or less which are used to transport gasoline and 
were designed and manufactured between 1950 and 1975 according 
to American society of mechanical engineers specifications in 
effect at the time of manufacture to transport petroleum 
products.  The commissioner shall prescribe alternative 
requirements to assure the safety of the tank motor vehicles 
operated under the variance, and shall register each tank motor 
vehicle operated under the variance.  

                               ARTICLE 25 

                           PRIORITY LIEN STUDY
    Section 1.  [PRIORITY LIEN STUDY.] 
    The chairs of the house agriculture committee and the 
senate agriculture and natural resources committee shall each 
appoint eight members to a joint interim legislative committee 
to study priority liens on agricultural products and the impact 
of restricting short sales of raw agricultural products.  At 
least three members from each political party must be 
represented by each house.  The joint committee shall submit a 
written report to the legislature by December 15, 1986.  
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment. 

                               ARTICLE 26 

                    SOIL AND WATER PURIFICATION TEST 
    Section 1.  [116.54] [INJECTION OF CERTAIN MATERIALS.] 
    Subdivision 1.  [POLLUTION CONTROL AGENCY TO AUTHORIZE, 
MONITOR.] The pollution control agency shall authorize and may 
monitor not less than one or more than five projects to test the 
controlled injection of oxygen-bearing materials and appropriate 
microbiological systems into sites of water or soil 
contamination.  An applicant for authority to conduct one of the 
tests shall describe to the agency plans for the test injection 
project including at least the following: 
    (1) the quantity and type of chemicals and microbes to be 
used in the injection project; 
    (2) the frequency and planned duration of the injections; 
    (3) test monitoring and evaluation equipment that will be 
maintained at the site; and 
    (4) procedures for recording, analyzing, and maintaining 
information on the injection project. 
    The applicant shall make available to the agency all 
significant test results from the injection project.  Trade 
secret information, as defined in section 13.37, made available 
by an applicant is classified as nonpublic data, pursuant to 
section 13.02, subdivision 9, or private data on individuals, 
pursuant to section 13.02, subdivision 12. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 27 

                          DITCH CONSERVATION  
    Section 1.  Minnesota Statutes 1985 Supplement, section 
160.232, is amended to read: 
    160.232 [MOWING DITCHES OUTSIDE CITIES.] 
    Road authorities may not mow or till the right-of-way of a 
highway located outside of a home rule charter or statutory city 
except as allowed in this section and section 160.23. 
    (a) On any highway, the first eight feet away from the road 
surface, or shoulder if one exists, may be mowed at any time. 
    (b) An entire right-of-way may be mowed after July 31.  
From August 31 to the following July 31, the entire right-of-way 
may only be mowed if necessary for safety reasons, and may not 
be mowed to a height of less than 12 inches. 
    (c) A right-of-way may be mowed as necessary to maintain 
sight distance for safety and may be mowed at other times under 
rules of the commissioner, or by resolution of a local road 
authority. 
    (d) A right-of-way may be mowed, burned, or tilled to 
prepare the right-of-way for the establishment of permanent 
vegetative cover or for prairie vegetation management.  
    Sec. 2.  Minnesota Statutes 1984, section 160.27, 
subdivision 5, is amended to read: 
    Subd. 5.  [MISDEMEANORS.] Except for the actions of the 
road authorities, their agents, employees, contractors, and 
utilities in carrying out their duties imposed by law or 
contract, and except as herein provided, it shall be unlawful to:
    (1) Obstruct any highway or deposit snow or ice thereon; 
    (2) Plow or perform any other detrimental operation within 
the road right of way except in the preparation of the land for 
planting a perennial hay crop, and the harvesting of said 
crop permanent vegetative cover; 
    (3) Erect a fence on the right of way of a trunk highway, 
county state-aid highway, county highway or town road, except to 
erect a lane fence to the ends of a livestock pass; 
    (4) Dig any holes in any highway; except to locate markers 
placed to identify sectional corner positions and private 
boundary corners.  
    (5) Remove any earth, gravel or rock from any highway; 
    (6) Obstruct any ditch draining any highway or drain any 
noisome materials into any ditch; 
    (7) Place or maintain any building or structure within the 
limits of any highway; 
    (8) Place or maintain any advertisement within the limits 
of any highway; 
    (9) Paint, print, place, or affix any advertisement or any 
object within the limits of any highway; 
    (10) Deface, mar, damage, or tamper with any structure, 
work, material, equipment, tools, signs, markers, signals, 
paving, guardrails, drains, or any other highway appurtenance on 
or along any highway; 
    (11) Remove, injure, displace, or destroy right of way 
markers, or reference or witness monuments, or markers placed to 
preserve section or quarter section corners; 
    (12) Improperly place or fail to place warning signs and 
detour signs as provided by law; 
    (13) Drive over, through, or around any barricade, fence, 
or obstruction erected for the purpose of preventing traffic 
from passing over a portion of a highway closed to public travel 
or to remove, deface, or damage any such barricade, fence, or 
obstruction. 
    Violations hereof shall be prosecuted by the county 
attorney of the county where the violations occur.  Any person 
convicted of such violations shall be guilty of a misdemeanor. 
    Sec. 3.  [REPORT.] 
    Subdivision 1.  [INVESTIGATION.] The state soil and water 
conservation board shall determine the length and area of 
drainage ditches that are required to be planted with permanent 
grass under section 106A.021 and prior law, and the enforcement 
actions taken by the commissioner of natural resources or 
enforcement personnel to maintain the grass strips. 
    Subd. 2.  [COOPERATION.] The commissioner of 
transportation, county highway engineers, the road authorities, 
drainage authorities, and county auditors shall cooperate with 
the state soil and water conservation board in conducting the 
investigations.  
    Subd. 3.  [REPORT TO LEGISLATURE.] The state soil and water 
conservation board shall prepare a report on the information 
collected under subdivision 1 and submit it to the legislature 
by January 15, 1987. 
    Sec. 4.  [EFFECTIVE DATE.] 
    This article is effective the day after final enactment. 

                               ARTICLE 28 

                     AGRICULTURAL LAND PRESERVATION 
    Section 1.  [40A.151] [MINNESOTA CONSERVATION FUND.] 
    Subdivision 1.  [ESTABLISHMENT.] The Minnesota conservation 
fund is established as an account in the state treasury.  Money 
from counties under section 2 must be deposited in the state 
treasury and credited to the Minnesota conservation fund account.
    Subd. 2.  [USE OF FUND.] Money in the fund is annually 
appropriated to the commissioner of revenue to reimburse taxing 
jurisdictions as provided in section 3 and section 473H.10. 
    Sec. 2.  [40A.152] [COUNTY CONSERVATION FEE; ACCOUNT.] 
    Subdivision 1.  [FEE.] A county that has allowed exclusive 
agricultural zones to be created under chapter 40A, that has 
designated lands eligible for agricultural preserves under 
section 473H.04, or that has elected to become an agricultural 
land preservation pilot county, shall impose an additional fee 
of $3 per transaction on the recording or registration of a 
mortgage subject to the tax under section 287.05 and an 
additional $3 on the recording or registration of a deed subject 
to the tax under section 287.21.  One-half of the fee must be 
deposited in a special conservation account to be created in the 
county general revenue fund and one-half must be transferred to 
the commissioner of revenue for deposit in the state treasury 
and credited to the Minnesota conservation fund. 
    Subd. 2.  [USE OF ACCOUNT.] Money from the county 
conservation account must be spent by the county to reimburse 
the county and taxing jurisdictions within the county for 
revenue lost under the conservation tax credit under section 3 
or the valuation of agricultural preserves under section 
473H.10.  Money remaining in the account after those payments 
may be spent for the following purposes: 
    (1) agricultural land preservation and conservation 
planning and implementation of official controls under this 
chapter or chapter 473H; 
    (2) soil conservation activities and enforcement of soil 
loss ordinances; 
    (3) incentives for landowners who create exclusive 
agricultural use zones; 
    (4) payments to municipalities within the county for the 
purposes of clauses (1) to (3). 
    Subd. 3.  [TRANSFER TO STATE FUND.] Money in the county 
conservation account that is not encumbered by the county within 
one year of deposit in the account must be transferred to the 
commissioner of revenue for deposit in the Minnesota 
conservation fund. 
    Sec. 3.  [273.119] [CONSERVATION TAX CREDIT.] 
    Subdivision 1.  [ELIGIBILITY; AMOUNT OF CREDIT.] Land 
located in an exclusive agricultural use zone created under 
chapter 40A is eligible for a property tax credit of $1.50 per 
acre.  To qualify for the tax credit in any year the owner shall 
file with the assessor by June 30 of that year a record of the 
restrictive covenant received by the owner under section 40A.10, 
subdivision 3.  An owner who has given notice of termination of 
the exclusive agricultural use zone under section 40A.11, 
subdivision 2, is not eligible for the credit.  The assessor 
shall indicate the amount of the property tax reduction on the 
property tax statement of each taxpayer receiving a credit under 
this section.  The credit paid pursuant to this section shall be 
deducted from the tax due on the property before computation of 
the homestead credit paid pursuant to section 273.13 and the 
state agricultural credit paid pursuant to section 124.2137. 
    Subd. 2.  [REIMBURSEMENT FOR LOST REVENUE.] The county may 
transfer money from the county conservation account created in 
section 2 to the county revenue fund to reimburse the fund for 
the cost of the property tax credit.  The county auditor shall 
certify to the commissioner of revenue on or before June 1 of 
each year the amount of tax lost to the county from the property 
tax credit under subdivision 1 and the extent that the tax lost 
exceeds funds available in the county conservation account.  On 
or before July 15 of each year, the commissioner shall reimburse 
the county from the Minnesota conservation fund under section 1 
for the taxes lost in excess of the county account.  
    Sec. 4.  Minnesota Statutes 1985 Supplement, section 
473H.10, subdivision 3, is amended to read: 
    Subd. 3.  [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 
After the assessor has determined the market value of all land 
valued according to subdivision 2, he shall compute the assessed 
value of those properties by applying the appropriate 
classification percentages.  When the county auditor computes 
the rate of tax pursuant to section 275.08, he shall include the 
assessed value of land as provided in this clause.  
    (b) The county auditor shall compute the tax on lands 
valued according to subdivision 2 and nonresidential buildings 
by multiplying the assessed value times the total rate of tax 
for all purposes as provided in clause (a).  
    (c) The county auditor shall then compute the maximum ad 
valorem property tax on lands valued according to subdivision 2 
and nonresidential buildings by multiplying the assessed value 
times 105 percent of the previous year's statewide average mill 
rate levied on property located within townships for all 
purposes.  
    (d) The tax due and payable by the owner of preserve land 
valued according to subdivision 2 and nonresidential buildings 
will be the amount determined in clause (b) or (c), whichever is 
less.  If the gross tax in clause (c) is less than the gross tax 
in clause (b), the state shall reimburse the taxing 
jurisdictions for the amount of difference.  Residential 
buildings shall continue to be valued and classified according 
to the provisions of sections 273.11 and 273.13, as they would 
be in the absence of this section, and the tax on those 
buildings shall not be subject to the limitation contained in 
this clause.  
    The county may transfer money from the county conservation 
account created in section 2 to the county revenue fund to 
reimburse the fund for the tax lost as a result of this 
subdivision or to pay taxing jurisdictions within the county for 
the tax lost.  The county auditor shall certify to the 
commissioner of revenue on or before June 1 the total amount of 
tax lost to the county and taxing jurisdictions located within 
his county as a result of this subdivision and the extent that 
the tax lost exceeds funds available in the county conservation 
account.  Payments shall be made by the state as provided in 
section 273.13, subdivision 15a to each of the affected taxing 
jurisdictions if the county conservation account is insufficient 
to make the reimbursement.  There is annually appropriated from 
the general fund in the state treasury Minnesota conservation 
fund under section 1 to the commissioner of revenue an amount 
sufficient to make the reimbursement provided in this 
subdivision.  
    Sec. 5.  [EFFECTIVE DATE.] 
    Section 3 is effective for taxes levied in 1987 and payable 
in 1988 and after.  Section 4 is effective June 1, 1987. 

                               ARTICLE 29

                              APPROPRIATION
    Section 1.  [APPROPRIATIONS.] 
    Subdivision 1.  [LEGAL ASSISTANCE PROGRAM.] $650,000 is 
appropriated from the general fund to the supreme court for the 
purposes of article 3, for the biennium ending June 30, 1987. 
    Subd. 2.  [MEDIATION.] $360,000 is appropriated from the 
general fund to the University of Minnesota agricultural 
extension service for purposes of article 1 for the biennium 
ending June 30, 1987. 
    Subd. 3.  [INTEREST RATE BUY-DOWN.] $5,000,000 is 
appropriated from the general fund to the commissioner of 
commerce for purposes of article 23 and $75,000 of it may be 
spent for administrative expenses related to article 23 for the 
biennium ending June 30, 1987. 
    Subd. 4.  [FAMILY FARM ADVOCATE PROGRAM.] $300,000 is 
appropriated from the general fund to the commissioner of 
agriculture for the farm advocates program, for the biennium 
ending June 30, 1987. 
    Subd. 5.  [DATA COLLECTION TASK FORCE.] $10,500 is 
appropriated from the general fund to the legislative advisory 
commission to fund the activities of the agricultural data 
collection task force pursuant to article 11.  
    Subd. 6.  [FAMILY FARM SECURITY ACT ADDITIONAL INTEREST 
PAYMENTS.] $740,000 is appropriated to the commissioner of 
agriculture from the general fund for the biennium ending June 
30, 1987 in order to make the payments required by article 8. 
    Subd. 7.  [AVTI AND UNIVERSITY OF MINNESOTA TECHNICAL 
COLLEGES TUITION SUPPLEMENT.] $1,350,000 is appropriated from 
the general fund to the state board of vocational technical 
education, for the biennium ending June 30, 1987, for the 
following services in proportions deemed necessary by the board 
to the agricultural vocational technical institutes and the 
University of Minnesota two-year technical colleges for: 
    (1) reduced tuition costs for existing farm business 
management and small business management programs; and 
    (2) additional farm business management programs and 
workshops.  
    Subd. 8.  [AGRICULTURAL EXTENSION SERVICE PROJECTS.] 
$1,250,000 is appropriated from the general fund to the board of 
regents of the University of Minnesota, to be available until 
June 30, 1987, for the following agricultural extension service 
projects:  voluntary mediation training, project support 
program, farm financial management program, family financial and 
stress management education, community economy development 
education, information exchange for sustainable farming methods 
including methods that decrease per unit cost of production and 
increase net income, and forest product marketing. 
    Subd. 9.  [MINNESOTA RURAL FINANCE ADMINISTRATION.] $4,802,000 
is appropriated to the commissioner 
 of finance from the general fund for purposes of article 6.  Of 
this amount, $4,564,000 is exclusively for debt service of bonds 
issued under article 6, and $238,000 is for administrative 
costs.  The complement of the department is increased by 5.0 
positions.  If the program is found to be unconstitutional, the 
balance of this appropriation shall be transferred to the 
interest buy-down program in article 23. 
    Subd. 10.  ["FINPAC."] $72,500 is appropriated from the 
general fund to the commissioner of finance to be available for 
grants to the Farmers Home Administration to continue the 
administration's FINPAC capability on the University of 
Minnesota's mainframe computer and to upgrade the 
administration's "FINPAC" farm financial analysis software for 
micro computers as needed to establish compatibility with 
"FINPAC" analyses prepared by county extension agents or adult 
farm management instructors.  This appropriation is for the 
biennium ending June 30, 1987. 
    Subd. 11.  [AGRICULTURAL EXPERIMENT STATION RESEARCH 
PROJECTS.] $250,000 is appropriated from the general fund to the 
board of regents of the University of Minnesota for agricultural 
experiment station research projects relating to water quality 
problems associated with the application of chemical inputs in 
production agriculture, for the biennium ending June 30, 1987. 
    Subd. 12.  [AGRICULTURAL EXTENSION SERVICE RETRENCHMENT.] 
$115,000 is appropriated from the general fund to the board of 
regents of the University of Minnesota for the Minnesota 
extension service to offset scheduled reduction of county 
extension agents.  It is requested that consideration be made 
for those counties with the greatest need for mediation 
services.  This appropriation is for the biennium ending June 
30, 1987. 
    Subd. 13.  [SWEET SORGHUM RESEARCH.] $60,000 is 
appropriated to the state board of vocational technical 
education for continuation of a demonstration project at the 
Mankato vocational technical institute involving butanol and 
ethanol production from sweet sorghum, for the biennium ending 
June 30, 1987. 
    Subd. 14.  [WILD RICE RESEARCH.] $40,000 is appropriated 
from the general fund to the University of Minnesota 
agricultural experimental stations for wild rice research to be 
available until June 30, 1987, as follows:  
(a)  for elimination of volunteer seeds                 $10,000 
(b)  to develop plants resistant to leaf 
diseases                                                 10,000 
(c)  to develop higher yielding wild rice                10,000 
(d)  acquisition and preparation of a peat
research site                                             5,000 
(e)  approving herbicides and pesticides 
that will not affect food value of 
rice                                                      5,000 
    Subd. 15.  [FARM LAND CAPITAL GAIN EXCLUSION.] $1,000,000 
is appropriated from the general fund to the commissioner of 
revenue to make the payments required in article 21, to be 
available for the biennium ending June 30, 1987. 
    Approved March 21, 1986

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569