U.S. District Court Judge Daniel Hovland has upheld North Dakota’s Corporate Farming Law. The order comes as a result of a lawsuit filed in August of 2016 by the North Dakota Farm Bureau and several farmers who claimed that the Corporate Farming Law was unconstitutional.
The Corporate Farming Law prohibits most corporations from farming or owning farmland in North Dakota. However, small family farms are excluded from this prohibition. The family farm exception in the Corporate Farming Law allows both in-state and out-of-state small family farmers to take advantage of forming corporations for agricultural purposes. The Office of the Attorney General and the Office of the Secretary of State have consistently permitted both North Dakota and out-of-state corporations to be eligible for the family farm exception in the Corporate Farming Law.
In Friday’s court order, Judge Hovland interpreted the family farm exception in the Corporate Farming Law. Because this exception referred to “domestic corporations,” he ruled that the exception only allowed North Dakota corporations to take advantage of it but that the Commerce Clause of the U.S. Constitution requires that all corporations within the United States be permitted to take advantage of the family farm exception. This ruling is consistent with the way the Office of Attorney General and the Office of the Secretary of State have historically interpreted and implemented the Corporate Farming Law. “In accordance with the court order, my office and the Office of the Secretary of State will continue to permit qualifying family corporations to take advantage of the family farm exception,” said Attorney General Wayne Stenehjem.
Additionally, Judge Hovland concurred with the State’s longstanding position that there is no requirement under the family farm exception that a farmer maintain a physical presence on the farm. He agreed with how the State has, since 1982, implemented and enforced operational requirements of the family farm exception. Accordingly, Judge Hovland concluded that these operational requirements in the exception are constitutional.
