(Amendment E)
Initiated constitutional amendment
to prohibit certain types of corporate farming.
Section
1.
That Article XVII of the Constitution of the State of South Dakota be amended
by adding thereto NEW SECTIONS to read as follows:
§
21. No corporation or syndicate may acquire, or otherwise obtain an interest, whether
legal, beneficial, or otherwise, in any real estate used for farming in this state, or engage in
farming. The term, corporation, means any corporation organized under the laws of any state
of the United States or any country. The term, syndicate, includes any limited partnership,
limited liability partnership, business trust, or limited liability company organized under the
laws of any state of the United States or any country. A syndicate does not include general
partnerships, except general partnerships in which nonfamily farm syndicates or nonfamily farm
corporations are partners. The term, farming, means the cultivation of land for the production
of agricultural crops, fruit, or other horticultural products, or the ownership, keeping, or feeding
of animals for the production of livestock or livestock products.
§
22. The restrictions in
§
21 of this Article do not apply to:
(1) A family farm corporation or syndicate. A family farm corporation or syndicate is a
corporation or syndicate engaged in farming or the ownership of agricultural land,
in which a majority of the partnership interests, shares, stock, or other ownership
interests are held by members of a family or a trust created for the benefit of a
member of that family. The term, family, means natural persons related to one
another within the fourth degree of kinship according to civil law, or their spouses.
At least one of the family members in a family farm corporation or syndicate shall
reside on or be actively engaged in the day-to-day labor and management of the farm.
Day-to-day labor and management shall require both daily or routine substantial
physical exertion and administration. None of the corporation's or syndicate's
partners, members, or stockholders may be nonresident aliens, or other corporations
or syndicates, unless all of the stockholders, members, or partners of such entities are
persons related within the fourth degree of kinship to the majority of partners,
members, or stockholders in the family farm corporation or syndicate;
(2) Agricultural land acquired or leased, or livestock kept, fed or owned, by a
cooperative organized under the laws of any state, if a majority of the shares or other
interests of ownership in the cooperative are held by members in the cooperative who
are natural persons actively engaged in the day-to-day labor and management of a
farm, or family farm corporations or syndicates, and who either acquire from thecooperative, through purchase or otherwise, such livestock, or crops produced on
such land, or deliver to the cooperative, through sale or otherwise, crops to be used
in the keeping or feeding of such livestock;
(3) Nonprofit corporations organized under state nonprofit corporation law;
(4) Agricultural land, which, as of the approval date of this amendment, is being farmed,
or which is owned or leased, or in which there is a legal or beneficial interest, directly
or indirectly owned, acquired, or obtained by a corporation or syndicate, if such land
or other interest is held in continuous ownership or under continuous lease by the
same such corporation or syndicate. For the purposes of this exemption, land
purchased on a contract signed as of the approval date of this amendment is
considered as owned on that date;
(5) Livestock, which as of the approval date of this amendment, is owned by a
corporation or syndicate. For the purposes of this exemption, livestock to be
produced under contract for a corporation or syndicate are considered as owned, if
the contract is for the keeping or feeding of livestock and is signed as of the approval
date of this amendment, and if the contract remains in effect and is not terminated by
either party to the contract. This exemption does not extend beyond the term of any
contract signed as of the approval date of this amendment;
(6) A farm operated for research or experimental purposes, if any commercial sales from
the farm are only incidental to the research or experimental objectives of the
corporation or syndicate;
(7) Land leases by alfalfa processors for the production of alfalfa;
(8) Agricultural land operated for the purpose of growing seed, nursery plants, or sod;
(9) Mineral rights on agricultural land;
(10) Agricultural land acquired or leased by a corporation or syndicate for immediate or
potential nonfarming purposes, for a period of five years from the date of purchase.
A corporation or syndicate may hold such agricultural land in such acreage as may
be necessary to its nonfarm business operation, but pending the development of the
agricultural land for nonfarm purposes, such land may not be used for farming except
under lease to a family farm corporation or family farm syndicate or a non syndicate
or noncorporate farm;
(11) Agricultural lands or livestock acquired by a corporation or syndicate by process of
law in the collection of debts, or by any procedures for the enforcement of a lien,
encumbrance, or claim thereon, whether created by mortgage or otherwise. Any lands
so acquired shall be disposed of within a period of five years and may not be used for
farming before being disposed of, except under a lease to a family farm corporation
or syndicate, or a nonsyndicate or noncorporate farm. Any livestock so acquired shall
be disposed of within six months;
(12) Agricultural lands held by a state or nationally chartered bank as trustee for a person,
corporation or syndicate that is otherwise exempt from the provisions of sections 21
to 24, inclusive, of this Article;
(13) A bona fide encumbrance taken for purposes of security;
(14) Custom spraying, fertilizing, or harvesting;
(15) Livestock futures contracts, livestock purchased for slaughter within two weeks of
the purchase date, or livestock purchased and resold within two weeks.
§
23. If a family farm corporation or family farm syndicate that has qualified under all the
requirements of a family farm corporation or a family farm syndicate ceases to meet the defined
criteria, it has twenty years, if the ownership of the majority of the stock of such corporation,
or the majority of the ownership interest of such syndicate, continues to be held by persons
related to one another within the fourth degree of kinship or their spouses, and their land
holdings are not increased, to either requalify as a family farm corporation or family farm
syndicate or dissolve and return to personal ownership.
§
24. Any corporation or syndicate that owns agricultural land or engages in farming is
required to report information necessary for the enforcement of sections 21 to 24, inclusive, of
this article to the secretary of state on an annual basis, under rules promulgated by the secretary
pursuant to state law. The secretary of state shall monitor such reports and notify the attorney
general of any possible violations, and any resident of the state may also notify the attorney
general of any possible violations. If a corporation or syndicate violates any provision of
sections 21 to 24, inclusive, of this article, the attorney general shall commence an action in
circuit court to enjoin any pending illegal purchase of land or livestock, or to force divestiture
of land or livestock held in violation of sections 21 to 24, inclusive, of this article. The court
shall order any land held in violation of sections 21 to 24 of this article to be divested within
two years and any livestock to be divested within six months. If land so ordered by the court has
not been divested within two years, the court shall declare the land escheated to the state. If the
attorney general fails to bring an action in circuit court to enforce sections 21 to 24, inclusive,
of this article, any resident of the state has standing in circuit court to sue for enforcement.