1.1                          A bill for an act 
  1.2             relating to agriculture; providing an exemption from 
  1.3             corporate farm law for certain wildlife properties; 
  1.4             amending Minnesota Statutes 1999 Supplement, section 
  1.5             500.24, subdivisions 2 and 3. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.8   500.24, subdivision 2, is amended to read: 
  1.9      Subd. 2.  [DEFINITIONS.] The definitions in this 
  1.10  subdivision apply to this section. 
  1.11     (a) "Farming" means the production of (1) agricultural 
  1.12  products; (2) livestock or livestock products; (3) milk or milk 
  1.13  products; or (4) fruit or other horticultural products.  It does 
  1.14  not include the processing, refining, or packaging of said 
  1.15  products, nor the provision of spraying or harvesting services 
  1.16  by a processor or distributor of farm products.  It does not 
  1.17  include the production of timber or forest products, the 
  1.18  production of poultry or poultry products, or the feeding and 
  1.19  caring for livestock that are delivered to a corporation for 
  1.20  slaughter or processing for up to 20 days before slaughter or 
  1.21  processing. 
  1.22     (b) "Family farm" means an unincorporated farming unit 
  1.23  owned by one or more persons residing on the farm or actively 
  1.24  engaging in farming. 
  1.25     (c) "Family farm corporation" means a corporation founded 
  2.1   for the purpose of farming and the ownership of agricultural 
  2.2   land in which the majority of the voting stock is held by and 
  2.3   the majority of the stockholders are persons or the spouses of 
  2.4   persons related to each other within the third degree of kindred 
  2.5   according to the rules of the civil law, and at least one of 
  2.6   said related persons is residing on or actively operating the 
  2.7   farm, and none of whose stockholders are corporations; provided 
  2.8   that a family farm corporation shall not cease to qualify as 
  2.9   such hereunder by reason of any devise or bequest of shares of 
  2.10  voting stock. 
  2.11     (d) "Authorized farm corporation" means a corporation 
  2.12  meeting the following standards: 
  2.13     (1) it has no more than five shareholders; 
  2.14     (2) all its shareholders, other than any estate, are 
  2.15  natural persons; 
  2.16     (3) it does not have more than one class of shares; 
  2.17     (4) its revenue from rent, royalties, dividends, interest, 
  2.18  and annuities does not exceed 20 percent of its gross receipts; 
  2.19     (5) shareholders holding 51 percent or more of the interest 
  2.20  in the corporation reside on the farm or are actively engaging 
  2.21  in farming; 
  2.22     (6) it does not, directly or indirectly, own or otherwise 
  2.23  have an interest in any title to more than 1,500 acres of 
  2.24  agricultural land; and 
  2.25     (7) none of its shareholders are shareholders in other 
  2.26  authorized farm corporations that directly or indirectly in 
  2.27  combination with the corporation own more than 1,500 acres of 
  2.28  agricultural land. 
  2.29     (e) "Authorized livestock farm corporation" means a 
  2.30  corporation formed for the production of livestock and meeting 
  2.31  the following standards: 
  2.32     (1) it is engaged in the production of livestock other than 
  2.33  dairy cattle; 
  2.34     (2) all its shareholders, other than any estate, are 
  2.35  natural persons or family farm corporations; 
  2.36     (3) it does not have more than one class of shares; 
  3.1      (4) its revenue from rent, royalties, dividends, interest, 
  3.2   and annuities does not exceed 20 percent of its gross receipts; 
  3.3      (5) shareholders holding 75 percent or more of the control, 
  3.4   financial, and capital investment in the corporation are farmers 
  3.5   residing in Minnesota and at least 51 percent of the required 
  3.6   percentage of farmers are actively engaged in livestock 
  3.7   production; 
  3.8      (6) it does not, directly or indirectly, own or otherwise 
  3.9   have an interest in any title to more than 1,500 acres of 
  3.10  agricultural land; and 
  3.11     (7) none of its shareholders are shareholders in other 
  3.12  authorized farm corporations that directly or indirectly in 
  3.13  combination with the corporation own more than 1,500 acres of 
  3.14  agricultural land. 
  3.15     (f) "Agricultural land" means real estate used for farming 
  3.16  or capable of being used for farming in this state. 
  3.17     (g) "Pension or investment fund" means a pension or 
  3.18  employee welfare benefit fund, however organized, a mutual fund, 
  3.19  a life insurance company separate account, a common trust of a 
  3.20  bank or other trustee established for the investment and 
  3.21  reinvestment of money contributed to it, a real estate 
  3.22  investment trust, or an investment company as defined in United 
  3.23  States Code, title 15, section 80a-3.  
  3.24     (h) "Farm homestead" means a house including adjoining 
  3.25  buildings that has been used as part of a farming operation or 
  3.26  is part of the agricultural land used for a farming operation. 
  3.27     (i) "Family farm partnership" means a limited partnership 
  3.28  formed for the purpose of farming and the ownership of 
  3.29  agricultural land in which the majority of the interests in the 
  3.30  partnership is held by and the majority of the partners are 
  3.31  persons or the spouses of persons related to each other within 
  3.32  the third degree of kindred according to the rules of the civil 
  3.33  law, at least one of the related persons is residing on or 
  3.34  actively operating the farm, and none of the partners are 
  3.35  corporations.  A family farm partnership does not cease to 
  3.36  qualify as a family farm partnership because of a devise or 
  4.1   bequest of interest in the partnership.  
  4.2      (j) "Authorized farm partnership" means a limited 
  4.3   partnership meeting the following standards:  
  4.4      (1) it has been issued a certificate from the secretary of 
  4.5   state or is registered with the county recorder and farming and 
  4.6   ownership of agricultural land is stated as a purpose or 
  4.7   character of the business; 
  4.8      (2) no more than five partners; 
  4.9      (3) all its partners, other than any estate, are natural 
  4.10  persons; 
  4.11     (4) its revenue from rent, royalties, dividends, interest, 
  4.12  and annuities do not exceed 20 percent of its gross receipts; 
  4.13     (5) its general partners hold at least 51 percent of the 
  4.14  interest in the land assets of the partnership and reside on the 
  4.15  farm or are actively engaging in farming not more than 1,500 
  4.16  acres as a general partner in an authorized limited partnership; 
  4.17     (6) its limited partners do not participate in the business 
  4.18  of the limited partnership including operating, managing, or 
  4.19  directing management of farming operations; 
  4.20     (7) it does not, directly or indirectly, own or otherwise 
  4.21  have an interest in any title to more than 1,500 acres of 
  4.22  agricultural land; and 
  4.23     (8) none of its limited partners are limited partners in 
  4.24  other authorized farm partnerships that directly or indirectly 
  4.25  in combination with the partnership own more than 1,500 acres of 
  4.26  agricultural land.  
  4.27     (k) "Farmer" means a natural person who regularly 
  4.28  participates in physical labor or operations management in the 
  4.29  person's farming operation and files "Schedule F" as part of the 
  4.30  person's annual Form 1040 filing with the United States Internal 
  4.31  Revenue Service. 
  4.32     (l) "Actively engaged in livestock production" means 
  4.33  performing day-to-day physical labor or day-to-day operations 
  4.34  management that significantly contributes to livestock 
  4.35  production and the functioning of a livestock operation. 
  4.36     (m) "Research or experimental farm" means a corporation, 
  5.1   limited partnership, or pension or investment fund that owns or 
  5.2   operates agricultural land for research or experimental 
  5.3   purposes, provided that any commercial sales from the operation 
  5.4   are incidental to the research or experimental objectives of the 
  5.5   corporation.  A corporation, limited partnership, or pension or 
  5.6   investment fund seeking initial approval by the commissioner to 
  5.7   operate agricultural land for research or experimental purposes 
  5.8   must first submit to the commissioner a prospectus or proposal 
  5.9   of the intended method of operation containing information 
  5.10  required by the commissioner including a copy of any operational 
  5.11  contract with individual participants. 
  5.12     (n) "Breeding stock farm" means a corporation or limited 
  5.13  partnership that owns land for the purpose of raising breeding 
  5.14  stock, including embryos, for resale to farmers or for the 
  5.15  purpose of growing seed, wild rice, nursery plants, or sod.  An 
  5.16  entity that is organized to raise livestock other than dairy 
  5.17  cattle under this paragraph that does not qualify as an 
  5.18  authorized farm corporation must:  
  5.19     (1) sell all castrated animals to be fed out or finished to 
  5.20  farming operations that are neither directly nor indirectly 
  5.21  owned by the business entity operating the breeding stock 
  5.22  operation; and 
  5.23     (2) report its total production and sales annually to the 
  5.24  commissioner.  
  5.25     (o) "Aquatic farm" means a corporation or limited 
  5.26  partnership that owns or leases agricultural land as a necessary 
  5.27  part of an aquatic farm as defined in section 17.47, subdivision 
  5.28  3.  
  5.29     (p) "Religious farm" means a corporation formed primarily 
  5.30  for religious purposes whose sole income is derived from 
  5.31  agriculture.  
  5.32     (q) "Utility corporation" means a corporation regulated 
  5.33  under Minnesota Statutes 1974, chapter 216B, that owns 
  5.34  agricultural land for purposes described in that chapter, or an 
  5.35  electric generation or transmission cooperative that owns 
  5.36  agricultural land for use in its business if the land is not 
  6.1   used for farming except under lease to a family farm unit, a 
  6.2   family farm corporation, or a family farm partnership.  
  6.3      (r) "Benevolent trust" means a pension fund or family trust 
  6.4   established by the owners of a family farm, authorized farm 
  6.5   corporation, authorized livestock farm corporation, or family 
  6.6   farm corporation that holds an interest in title to agricultural 
  6.7   land on which one or more of those owners or shareholders have 
  6.8   resided or have been actively engaged in farming as required by 
  6.9   paragraph (b), (c), (d), or (e). 
  6.10     (s) "Development organization" means a corporation, limited 
  6.11  partnership, or pension or investment fund that owns 
  6.12  agricultural land for which the corporation, limited 
  6.13  partnership, or pension or investment fund has documented plans 
  6.14  to use and subsequently uses the land within six years from the 
  6.15  date of purchase for a specific nonfarming purpose, or if the 
  6.16  land is zoned nonagricultural, or if the land is located within 
  6.17  an incorporated area.  A corporation, limited partnership, or 
  6.18  pension or investment fund may hold agricultural land in the 
  6.19  amount necessary for its nonfarm business operation; provided, 
  6.20  however, that pending the development of agricultural land for 
  6.21  nonfarm purposes, the land may not be used for farming except 
  6.22  under lease to a family farm unit, a family farm corporation, an 
  6.23  authorized farm corporation, an authorized livestock farm 
  6.24  corporation, a family farm partnership, or an authorized farm 
  6.25  partnership, or except when controlled through ownership, 
  6.26  options, leaseholds, or other agreements by a corporation that 
  6.27  has entered into an agreement with the United States under the 
  6.28  New Community Act of 1968 (Title IV of the Housing and Urban 
  6.29  Development Act of 1968, United States Code, title 42, sections 
  6.30  3901 to 3914) as amended, or a subsidiary or assign of such a 
  6.31  corporation.  
  6.32     (t) "Exempt land" means agricultural land owned or leased 
  6.33  by a corporation as of May 20, 1973, agricultural land owned or 
  6.34  leased by a pension or investment fund as of May 12, 1981, or 
  6.35  agricultural land owned or leased by a limited partnership as of 
  6.36  May 1, 1988, including the normal expansion of that ownership at 
  7.1   a rate not to exceed 20 percent of the amount of land owned as 
  7.2   of May 20, 1973, for a corporation; May 12, 1981, for a pension 
  7.3   or investment fund; or May 1, 1988, for a limited partnership, 
  7.4   measured in acres, in any five-year period, and including 
  7.5   additional ownership reasonably necessary to meet the 
  7.6   requirements of pollution control rules.  A corporation, limited 
  7.7   partnership, or pension or investment fund that is eligible to 
  7.8   own or lease agricultural land under this section prior to May 
  7.9   1997 may continue to own or lease agricultural land subject to 
  7.10  the same conditions and limitations as previously allowed.  
  7.11     (u) "Gifted land" means agricultural land acquired as a 
  7.12  gift, either by grant or devise, by an educational, religious, 
  7.13  or charitable nonprofit corporation, limited partnership, or 
  7.14  pension or investment fund if all land so acquired is disposed 
  7.15  of within ten years after acquiring the title.  
  7.16     (v) "Repossessed land" means agricultural land acquired by 
  7.17  a corporation, limited partnership, or pension or investment 
  7.18  fund by process of law in the collection of debts, or by any 
  7.19  procedure for the enforcement of a lien or claim on the land, 
  7.20  whether created by mortgage or otherwise if all land so acquired 
  7.21  is disposed of within five years after acquiring the title.  The 
  7.22  five-year limitation is a covenant running with the title to the 
  7.23  land against any grantee, assignee, or successor of the pension 
  7.24  or investment fund, corporation, or limited partnership.  The 
  7.25  land so acquired must not be used for farming during the 
  7.26  five-year period, except under a lease to a family farm unit, a 
  7.27  family farm corporation, an authorized farm corporation, an 
  7.28  authorized livestock farm corporation, a family farm 
  7.29  partnership, or an authorized farm partnership.  Notwithstanding 
  7.30  the five-year divestiture requirement under this paragraph, a 
  7.31  financial institution may continue to own the agricultural land 
  7.32  if the agricultural land is leased to the immediately preceding 
  7.33  former owner, but must dispose of the agricultural land within 
  7.34  ten years of acquiring the title.  Livestock acquired by a 
  7.35  pension or investment fund, corporation, or limited partnership 
  7.36  in the collection of debts, or by a procedure for the 
  8.1   enforcement of lien or claim on the livestock whether created by 
  8.2   security agreement or otherwise after August 1, 1994, must be 
  8.3   sold or disposed of within one full production cycle for the 
  8.4   type of livestock acquired or 18 months after the livestock is 
  8.5   acquired, whichever is later.  
  8.6      (w) "Commissioner" means the commissioner of agriculture.  
  8.7      (x) "Demonstration corporation" means a nonprofit 
  8.8   corporation organized under state nonprofit corporation law and 
  8.9   formed primarily for the purpose of demonstrating historical 
  8.10  farming practices. 
  8.11     (y) "Wildlife area" means one or more contiguous or 
  8.12  noncontiguous parcels of land designated by the landowner as a 
  8.13  wildlife area and on which farming or the raising of poultry or 
  8.14  the production of timber or forest products occupies no more 
  8.15  than 33 percent of the acreage of any parcel. 
  8.16     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  8.17  500.24, subdivision 3, is amended to read: 
  8.18     Subd. 3.  [FARMING AND OWNERSHIP OF AGRICULTURAL LAND BY 
  8.19  CORPORATIONS RESTRICTED.] No corporation, limited liability 
  8.20  company, pension or investment fund, or limited partnership 
  8.21  shall engage in farming; nor shall any corporation, limited 
  8.22  liability company, pension or investment fund, or limited 
  8.23  partnership, directly or indirectly, own, acquire, or otherwise 
  8.24  obtain any interest, in agricultural land other than a bona fide 
  8.25  encumbrance taken for purposes of security.  This subdivision 
  8.26  does not apply to general partnerships.  This subdivision does 
  8.27  not apply to any agricultural land, corporation, limited 
  8.28  partnership, or pension or investment fund that meet any of the 
  8.29  definitions in subdivision 2, paragraphs (b) to (e), (i), (j), 
  8.30  (m) to (v), ~~and~~ (x), and (y) has a conservation plan prepared 
  8.31  for the agricultural land, and reports as required under 
  8.32  subdivision 4.