FARGO, N.D. (CN) — Backed by the North Dakota Farm Bureau, farmers in two states slapped North Dakota with a federal complaint, challenging a law that severely restricts out-of-state corporations from farming or ranching there.
“North Dakota’s ban on corporate farming started in 1932 through an initiated measure,” the state Farm Bureau and farmers in North Dakota and Wisconsin say in the June 2 complaint. “The law prohibited all corporations from engaging in the business of farming and prohibited all corporations from owning farm land.”
The Anti-Corporate Farming Act has been amended repeatedly. A major revision in 1981 created exceptions for family-owned domestic corporations.
Other revisions followed in 1985, 1993 and 2015. The law is codified as Chapter 10-06.1 in the North Dakota Century Code. It still prohibits out-of-state corporations from keeping farmland, even if those entities are family-owned.
The Farm Bureau claims that violates the Commerce, Equal Protection, and Privileges and Immunities Clauses of the Constitution.
In 2015, North Dakota Senate Bill 2351 proposed “a narrow exception to domestic corporations involved in operating small dairy or swine operations,” according to the complaint. Those operations could not exceed 640 acres, under SB 2351.
Exemptions or not, in testimony and debate on the bill, legislators said they believe the law is unconstitutional on a number of grounds:
it is an “undue burden to interstate commerce;”
it “limits the ability of North Dakota farmers to obtain investors, which adversely affects their ability to secure financing, which is crucial to keeping their farm operations viable;”
and it “treats similarly situated individuals differently, affording to some corporations, limited liability companies and other persons opportunities while denying this opportunity to others.”
SB 2351 is making headlines in North Dakota, as a referendum to overturn it — Referred Measure 1 — will appear on the June 14 ballot. It is the only referendum issue on the ballot, which will be the state’s primary election for state offices.
SB 2351 and Referred Measure 1 have created a schism among North Dakota farmers.
The Farm Bureau wants to open the door wider for corporate farms. The Farmers Union defends the interests of family farms from corporate competition.
The Farmers Union describes itself as the largest farm organization in the state, with more than 40,000 member families. It backs legislation that supports agricultural co-ops.
The North Dakota Farmers Union fought to get Referred Measure 1 on the ballot. A vote “For” the measure would uphold SB 2351 as amended, allowing domestic corporations and LLCs to own and operate dairy and swine farms on no more than 640 acres.
A vote “Against” Referred Measure 1 would repeal SB 2351.
The Farm Bureau supports the ballot measure.
Farm Bureau President Daryl Lies told The Bismarck Tribune that “the state’s farmers should have the same opportunities as other businesses in the state to craft a corporate structure from which to operate.” Lies said similar anti-corporate laws have been overturned in South Dakota and Nebraska.
North Dakota is one of nine states — all in the Midwest and Great Plains — with anti-corporate farm laws.
North Dakota Attorney General Wayne Stenehjem, the defendant, told the Bismarck Tribune his office had not been served with the lawsuit and could not comment.
Representatives from the North Dakota Farmers Bureau did not respond to a phone call requesting comment.
Jumping on a chance to weigh in on a contention issue, the Farm Bureau’s lawsuit also claims that allowing corporate farming will hurt North Dakota by encouraging illegal immigration.
During debate on SB 2351, according to the complaint, “new comments emerged from members of the North Dakota Legislature, stating they were concerned that outside migrant workers would be coming into the state in order to work for the farming corporations and those migrant workers would utilize North Dakota tax dollars for benefits such as food stamps.”
The Farm Bureau asks the court to declare the Anti-Corporate Farming Act unconstitutional, and enjoin its enforcement.
It is represented by Sarah Andrews Herman, with Dorsey & Whitney.
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