Session of 1998
                   
HOUSE BILL No. 2930
         
By Representatives Larkin, Feuerborn, Garner, Grant, Henry, John-
         
ston, Krehbiel, McClure, E. Peterson and Sawyer
         
2-13
          10             AN ACT concerning agricultural corporations; relating to restrictions; ex-
11             ceptions; establishment of swine production facilities, procedure;
12             amending K.S.A. 17-5908 and K.S.A. 1997 Supp. 17-5903 and 17-5904
13             and repealing the existing sections.
14            
15       Be it enacted by the Legislature of the State of Kansas:
16           Section 1. K.S.A. 1997 Supp. 17-5903 is hereby amended to read as
17       follows: 17-5903. As used in this act:
18           (a) ``Corporation'' means a domestic or foreign corporation organized
19       for profit or nonprofit purposes.
20           (b) ``Nonprofit corporation'' means a corporation organized not for
21       profit and which qualifies under section 501(c)(3) of the federal internal
22       revenue code of 1986 as amended.
23           (c) ``Limited partnership'' has the meaning provided by K.S.A. 56-
24       1a01, and amendments thereto.
25           (d) ``Limited agricultural partnership'' means a limited partnership
26       founded for the purpose of farming and ownership of agricultural land in
27       which:
28           (1) The partners do not exceed 10 in number;
29           (2) the partners are all natural persons, persons acting in a fiduciary
30       capacity for the benefit of natural persons or nonprofit corporations, or
31       general partnerships other than corporate partnerships formed under the
32       laws of the state of Kansas; and
33           (3) at least one of the general partners is a person residing on the
34       farm or actively engaged in the labor or management of the farming
35       operation. If only one partner is meeting the requirement of this provision
36       and such partner dies, the requirement of this provision does not apply
37       for the period of time that the partner's estate is being administered in
38       any district court in Kansas.
39           (e) ``Corporate partnership'' means a partnership, as defined in
40       K.S.A. 56-306, and amendments thereto, which has within the association
41       one or more corporations or one or more limited liability companies.
42           (f) ``Feedlot'' means a lot, yard, corral, or other area in which live-
43       stock, except swine, fed for slaughter are confined. The term includes

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  1       within its meaning agricultural land in such acreage as is necessary for
  2       the operation of the feedlot.
  3           (g) ``Agricultural land'' means land suitable for use in farming.
  4           (h) ``Farming'' means the cultivation of land for the production of
  5       agricultural crops, the raising of poultry, the production of eggs, the pro-
  6       duction of milk, the production of fruit or other horticultural crops, graz-
  7       ing or the production of livestock. Farming does not include the produc-
  8       tion of timber, forest products, nursery products or sod, and farming does
  9       not include a contract to provide spraying, harvesting or other farm serv-
10       ices.
11           (i) ``Fiduciary capacity'' means an undertaking to act as executor, ad-
12       ministrator, guardian, conservator, trustee for a family trust, authorized
13       trust or testamentary trust or receiver or trustee in bankruptcy.
14           (j) ``Family farm corporation'' means a corporation:
15           (1) Founded for the purpose of farming and the ownership of agri-
16       cultural land in which the majority of the voting stock is held by and the
17       majority of the stockholders are persons related to each other, all of whom
18       have a common ancestor within the third degree of relationship, by blood
19       or by adoption, or the spouses or the stepchildren of any such persons,
20       or persons acting in a fiduciary capacity for persons so related;
21           (2) all of its stockholders are natural persons or persons acting in a
22       fiduciary capacity for the benefit of natural persons; and
23           (3) at least one of the stockholders is a person residing on the farm
24       or actively engaged in the labor or management of the farming operation.
25       A stockholder who is an officer of any corporation referred to in this
26       subsection and who is one of the related stockholders holding a majority
27       of the voting stock shall be deemed to be actively engaged in the man-
28       agement of the farming corporation. If only one stockholder is meeting
29       the requirement of this provision and such stockholder dies, the require-
30       ment of this provision does not apply for the period of time that the
31       stockholder's estate is being administered in any district court in Kansas.
32           (k) ``Authorized farm corporation'' means a Kansas corporation, other
33       than a family farm corporation, all of the incorporators of which are Kan-
34       sas residents, family farm corporations or family farm limited liability
35       agricultural companies or any combination thereof, and which is founded
36       for the purpose of farming and the ownership of agricultural land in
37       which:
38           (1) The stockholders do not exceed 15 in number; and
39           (2) the stockholders are all natural persons, family farm corporations,
40       family farm limited liability agricultural companies or persons acting in a
41       fiduciary capacity for the benefit of natural persons, family farm corpo-
42       rations, family farm limited liability agricultural companies or nonprofit
43       corporations; and

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  1           (3) if all of the stockholders are natural persons, at least one stock-
  2       holder must be a person residing on the farm or actively engaged in labor
  3       or management of the farming operation. If only one stockholder is meet-
  4       ing the requirement of this provision and such stockholder dies, the re-
  5       quirement of this provision does not apply for the period of time that the
  6       stockholder's estate is being administered in any district court in Kansas.
  7           (l) ``Trust'' means a fiduciary relationship with respect to property,
  8       subjecting the person by whom the property is held to equitable duties
  9       to deal with the property for the benefit of another person, which arises
10       as a result of a manifestation of an intention to create it. A trust includes
11       a legal entity holding property as trustee, agent, escrow agent, attorney-
12       in-fact and in any similar capacity.
13           (m) ``Family trust'' means a trust in which:
14           (1) A majority of the equitable interest in the trust is held by and the
15       majority of the beneficiaries are persons related to each other, all of whom
16       have a common ancestor within the third degree of relationship, by blood
17       or by adoption, or the spouses or stepchildren of any such persons, or
18       persons acting in a fiduciary capacity for persons so related; and
19           (2) all the beneficiaries are natural persons, are persons acting in a
20       fiduciary capacity, other than as trustee for a trust, or are nonprofit cor-
21       porations.
22           (n) ``Authorized trust'' means a trust other than a family trust in
23       which:
24           (1) The beneficiaries do not exceed 15 in number;
25           (2) the beneficiaries are all natural persons, are persons acting in a
26       fiduciary capacity, other than as trustee for a trust, or are nonprofit cor-
27       porations; and
28           (3) the gross income thereof is not exempt from taxation under the
29       laws of either the United States or the state of Kansas.
30           For the purposes of this definition, if one of the beneficiaries dies, and
31       more than one person succeeds, by bequest, to the deceased beneficiary's
32       interest in the trust, all of such persons, collectively, shall be deemed to
33       be one beneficiary, and a husband and wife, and their estates, collectively,
34       shall be deemed to be one beneficiary.
35           (o) ``Testamentary trust'' means a trust created by devising or be-
36       queathing property in trust in a will as such terms are used in the Kansas
37       probate code.
38           (p) ``Poultry confinement facility'' means the structures and related
39       equipment used for housing, breeding, laying of eggs or feeding of poultry
40       in a restricted environment. The term includes within its meaning only
41       such agricultural land as is necessary for proper disposal of liquid and
42       solid wastes and for isolation of the facility to reasonably protect the con-
43       fined poultry from exposure to disease. As used in this subsection, ``poul-

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  1       try'' means chickens, turkeys, ducks, geese or other fowl.
  2           (q) ``Rabbit confinement facility'' means the structures and related
  3       equipment used for housing, breeding, raising, feeding or processing of
  4       rabbits in a restricted environment. The term includes within its meaning
  5       only such agricultural land as is necessary for proper disposal of liquid
  6       and solid wastes and for isolation of the facility to reasonably protect the
  7       confined rabbits from exposure to disease.
  8           (r) ``Swine marketing pool'' means an association whose membership
  9       includes three or more business entities or individuals formed for the sale
10       of hogs to buyers but shall not include any trust, corporation, limited
11       partnership or corporate partnership, or limited liability company other
12       than a family farm corporation, authorized farm corporation, limited lia-
13       bility agricultural company, limited agricultural partnership, family trust,
14       authorized trust or testamentary trust.
15           (s) ``Swine production facility'' means the land, structures and related
16       equipment owned   or, leased by a corporation   or, limited liability com-
17       pany, limited partnership, corporate partnership or trust and used for
18       housing, breeding, farrowing   or, feeding or finishing of swine or a nursery
19       for swine. The term includes within its meaning only such agricultural
20       land as is necessary for proper disposal of liquid and solid wastes in en-
21       vironmentally sound amounts for crop production and to avoid nitrate
22       buildup and for isolation of the facility to reasonably protect the confined
23       animals from exposure to disease. The term also includes a lot, yard, corral
24       or other area in which swine fed for slaughter are confined.
25           (t) ``Limited liability company'' has the meaning provided by K.S.A.
26       17-7602, and amendments thereto.
27           (u) ``Limited liability agricultural company'' means a limited liability
28       company founded for the purpose of farming and ownership of agricul-
29       tural land in which:
30           (1) The members do not exceed 10 in number; and
31           (2) the members are all natural persons, family farm corporations,
32       family farm limited liability agriculture companies, persons acting in a
33       fiduciary capacity for the benefit of natural persons, family farm corpo-
34       rations, family farm limited liability agricultural companies or nonprofit
35       corporations, or general partnerships other than corporate partnerships
36       formed under the laws of the state of Kansas; and
37           (3) if all of the members are natural persons, at least one member
38       must be a person residing on the farm or actively engaged in labor or
39       management of the farming operation. If only one member is meeting
40       the requirement of this provision and such member dies, the requirement
41       of this provision does not apply for the period of time that the member's
42       estate is being administered in any district court in Kansas.
43           (v) ``Dairy production facility'' means the land, structures and related

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  1       equipment used for housing, breeding, raising, feeding or milking dairy
  2       cows. The term includes within its meaning only such agricultural land
  3       as is necessary for proper disposal of liquid and solid wastes and for iso-
  4       lation of the facility to reasonably protect the confined cows from expo-
  5       sure to disease.
  6           (w) ``Family farm limited liability agricultural company'' means a lim-
  7       ited liability company founded for the purpose of farming and ownership
  8       of agricultural land in which:
  9           (1) The majority of the members are persons related to each other,
10       all of whom have a common ancestor within the third degree of relation-
11       ship, by blood or by adoption, or the spouses or the stepchildren of any
12       such persons, or persons acting in a fiduciary capacity for persons so
13       related;
14           (2) the members are natural persons or persons acting in a fiduciary
15       capacity for the benefit of natural persons; and
16           (3) at least one of the members is a person residing on the farm or
17       actively engaged in the labor or management of the farming operation.
18       If only one member is meeting the requirement of this provision and
19       such member dies, the requirement of this provision does not apply for
20       the period of time that the member's estate is being administered in any
21       district court in Kansas.
22           (x) ``Hydroponics'' means the growing of vegetables, flowers, herbs,
23       or plants used for medicinal purposes, in a growing medium other than
24       soil.
25           Sec. 2. K.S.A. 1997 Supp. 17-5904 is hereby amended to read as
26       follows: 17-5904. (a) No corporation, trust, limited liability company, lim-
27       ited partnership or corporate partnership, other than a family farm cor-
28       poration, authorized farm corporation, limited liability agricultural com-
29       pany, family farm limited liability agricultural company, limited
30       agricultural partnership, family trust, authorized trust or testamentary
31       trust shall, either directly or indirectly, own, acquire or otherwise obtain
32       or lease any agricultural land in this state. The restrictions provided in
33       this section do not apply to the following:
34           (1) A bona fide encumbrance taken for purposes of security.
35           (2) Agricultural land when acquired as a gift, either by grant or devise,
36       by a bona fide educational, religious or charitable nonprofit corporation.
37           (3) Agricultural land acquired by a corporation or a limited liability
38       company in such acreage as is necessary for the operation of a nonfarming
39       business. Such land may not be used for farming except under lease to
40       one or more natural persons, a family farm corporation, authorized farm
41       corporation, family trust, authorized trust or testamentary trust. The cor-
42       poration shall not engage, either directly or indirectly, in the farming
43       operation and shall not receive any financial benefit, other than rent, from

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  1       the farming operation.
  2           (4) Agricultural land acquired by a corporation or a limited liability
  3       company by process of law in the collection of debts, or pursuant to a
  4       contract for deed executed prior to the effective date of this act, or by
  5       any procedure for the enforcement of a lien or claim thereon, whether
  6       created by mortgage or otherwise, if such corporation divests itself of any
  7       such agricultural land within 10 years after such process of law, contract
  8       or procedure, except that provisions of K.S.A. 9-1102, and amendments
  9       thereto, shall apply to any bank which acquires agricultural land.
10           (5) A municipal corporation.
11           (6) Agricultural land which is acquired by a trust company or bank in
12       a fiduciary capacity or as a trustee for a nonprofit corporation.
13           (7) Agricultural land owned or leased or held under a lease purchase
14       agreement as described in K.S.A. 12-1741, and amendments thereto, by
15       a corporation, corporate partnership, limited corporate partnership or
16       trust on the effective date of this act if: (A) Any such entity owned or
17       leased such agricultural land prior to July 1, 1965, provided such entity
18       shall not own or lease any greater acreage of agricultural land than it
19       owned or leased prior to the effective date of this act unless it is in com-
20       pliance with the provisions of this act; (B) any such entity was in compli-
21       ance with the provisions of K.S.A. 17-5901 prior to its repeal by this act,
22       provided such entity shall not own or lease any greater acreage of agri-
23       cultural land than it owned or leased prior to the effective date of this act
24       unless it is in compliance with the provisions of this act, and absence of
25       evidence in the records of the county where such land is located of a
26       judicial determination that such entity violated the provisions of K.S.A.
27       17-5901 prior to its repeal shall constitute proof that the provisions of this
28       act do not apply to such agricultural land, and that such entity was in
29       compliance with the provisions of K.S.A. 17-5901 prior to its repeal; or
30       (C) any such entity was not in compliance with the provisions of K.S.A.
31       17-5901 prior to its repeal by this act, but is in compliance with the
32       provisions of this act by July 1, 1991.
33           (8) Agricultural land held or leased by a corporation or a limited li-
34       ability company for use as a feedlot, a poultry confinement facility or
35       rabbit confinement facility.
36           (9) Agricultural land held or leased by a corporation for the purpose
37       of the production of timber, forest products, nursery products or sod.
38           (10) Agricultural land used for bona fide educational research or sci-
39       entific or experimental farming.
40           (11) Agricultural land used for the commercial production and con-
41       ditioning of seed for sale or resale as seed or for the growing of alfalfa by
42       an alfalfa processing entity if such land is located within 30 miles of such
43       entity's plant site.

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  1           (12) Agricultural land owned or leased by a corporate partnership or
  2       limited corporate partnership in which the partners associated therein are
  3       either natural persons, family farm corporations, authorized farm corpo-
  4       rations, limited liability agricultural companies, family trusts, authorized
  5       trusts or testamentary trusts.
  6           (13) Any corporation, either domestic or foreign, or any limited lia-
  7       bility company, organized for coal mining purposes which engages in
  8       farming on any tract of land owned by it which has been strip mined for
  9       coal.
10           (14) Agricultural land owned or leased by a limited partnership prior
11       to the effective date of this act.
12           (15) Except as provided by K.S.A. 17-5908 and amendments thereto,
13       agricultural land held or leased by a corporation or a limited liability
14       company for use as a swine production facility in any county which has
15       voted favorably pursuant to K.S.A. 17-5908 and amendments thereto,
16       either by county resolution or by the electorate.
17           (16) Agricultural land held or leased by a corporation or a limited
18       liability company for use as a dairy production facility in any county which
19       has voted favorably pursuant to K.S.A. 17-5907 and amendments thereto,
20       either by county resolution or by the electorate.
21           (17) Agricultural land held or leased by a corporation or a limited
22       liability company used in a hydroponics setting.
23           (18) Agricultural land held or leased by a corporation or a limited
24       liability company prior to July 1, 1998, for use as a swine feedlot.
25           (19) Agricultural land held or leased by any business entity listed in
26       K.S.A. 17-5903 and amendments thereto, or any individual person prior
27       to July 1, 1998, for use as a swine production facility.
28           (20) Agricultural land held or leased by any swine production facility
29       that is located in a county which upon a proposition was resubmitted to
30       the electors as provided in subsection (f) of K.S.A. 17-5908 and amend-
31       ments thereto and the electors voted not to allow a swine production
32       facility to be established in such county if such agricultural land was held
33       or leased prior to the time of the election.
34           (b) No business entity, listed in K.S.A. 17-5903 and amendments
35       thereto, or any individual person who owns over 50,000 sows in total
36       ownership regardless of whether the sows are located in Kansas or else-
37       where, whether currently owning such sows or anticipating building a
38       swine production facility or facilities which will house sows, either directly
39       or indirectly, shall own, acquire or otherwise obtain or lease any agri-
40       cultural land in any county in this state until such county has voted fa-
41       vorable pursuant to K.S.A. 17-5908, and amendments thereto, either by
42       county resolution or by the electorate.
43           (c) Production contracts entered into by a corporation, trust, limited

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  1       liability company, limited partnership or corporate partnership and a per-
  2       son engaged in farming for the production of agricultural products shall
  3       not be construed to mean the ownership, acquisition, obtainment or lease,
  4       either directly or indirectly, of any agricultural land in this state.
  5             (c) (d) Any corporation, trust, limited liability company, limited part-
  6       nership or corporate partnership, other than a family farm corporation,
  7       authorized farm corporation, limited liability agricultural company, family
  8       farm limited liability agricultural company, limited agricultural partner-
  9       ship, family trust, authorized trust or testamentary trust, violating the
10       provisions of this section shall be subject to a civil penalty of not more
11       than $50,000 and shall divest itself of any land acquired in violation of
12       this section within one year after judgment is entered in the action. The
13       district courts of this state may prevent and restrain violations of this
14       section through the issuance of an injunction. The attorney general or
15       district or county attorney shall institute suits on behalf of the state to
16       enforce the provisions of this section.
17             (d) (e) Civil penalties sued for and recovered by the attorney general
18       shall be paid into the state general fund. Civil penalties sued for and
19       recovered by the county attorney or district attorney shall be paid into
20       the general fund of the county where the proceedings were instigated.
21           Sec. 3. K.S.A. 17-5908 is hereby amended to read as follows: 17-
22       5908. (a) (1) The board of county commissioners, by resolution, may per-
23       mit a swine production facility, as defined in K.S.A. 17-5903, and amend-
24       ments thereto, or pursuant to subsection (b) of K.S.A. 17-5904, and
25       amendments thereto to be established within the county. Such resolution
26       shall be published once each week for two consecutive weeks in the of-
27       ficial county newspaper. The resolution shall take effect 60 days after final
28       publication unless a valid petition in opposition to the same is filed.
29           (2) If within 60 days of the final publication of the resolution, a valid
30       protest petition to submit the resolution to the qualified voters of the
31       county is signed by qualified electors of the county equal in number to
32       not less than 5% of the electors of the county who voted for the office of
33       secretary of state at the last preceding general election at which such
34       office was elected and is filed with the county election officer, the county
35       election officer shall submit the question of whether a swine production
36       facility shall be allowed to be established in such county at the next state
37       or county-wide regular or special election.
38           (b) (1) The board of county commissioners, upon a petition filed in
39       accordance with paragraph (b)(2), shall submit to the qualified electors
40       of the county a proposition to permit a swine production facility, as de-
41       fined in K.S.A. 17-5903, and amendments thereto, or pursuant to sub-
42       section (b) of K.S.A. 17-5904, and amendments thereto, to be established
43       within the county.

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  1           (2) A petition to submit a proposition to the qualified voters of a
  2       county pursuant to this section shall be filed with the county election
  3       officer. The petition shall be signed by qualified electors of the county
  4       equal in number to not less than 5% of the electors of the county who
  5       voted for the office of secretary of state at the last preceding general
  6       election at which such office was elected. The following shall appear on
  7       the petition:
  8           ``We request an election to determine whether a corporate swine pro-
  9       duction facility shall be allowed to be established in ____________
10       county, pursuant to K.S.A. 17-5904.''
11           (3) Upon the submission of a valid petition calling for an election
12       pursuant to this subsection, the county election officer shall submit the
13       question of whether a swine production facility shall be allowed to be
14       established in such county at the next state or county-wide regular or
15       special election which occurs more than 60 days after the petition is filed
16       with the county election officer.
17           (c) If a majority of the votes cast and counted are in opposition to
18       allowing swine production facilities to be established in such county, the
19       county election officer shall transmit a copy of the result to the secretary
20       of state who shall publish in the Kansas register the result of such election
21       and that swine production facilities are not allowed to be established in
22       such county.
23           (d) If a majority of the votes cast and counted is in favor of the prop-
24       osition, the county election officer shall transmit a copy of the result to
25       the secretary of state who shall publish in the Kansas register the result
26       of such election and that swine production facilities are allowed to be
27       established in such county.
28           (e) The election provided for by this section shall be conducted, and
29       the votes counted and canvassed, in the manner provided by law for
30       question submitted elections of the county.
31           (f) When the proposition of whether a swine production facility shall
32       be allowed to be established in a county has been submitted to the electors
33       or a resolution permitting the establishment of a swine production facility
34       has been adopted, such proposition may be resubmitted to the electors of
35       such county or the resolution may be submitted to the electors not more
36       often than once every two years thereafter, whenever a valid petition has
37       been submitted to the board of county commissioners signed by qualified
38       electors of the county equal in number to not less than 5% of the electors
39       of the county who voted for the office of secretary of state at the last
40       preceding general election at which such office was elected. The county
41       election officer shall submit the question at the next state or county-wide
42       regular or special election which occurs more than 60 days after the pe-
43       tition is filed with the county election officer. The results of such election

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  1       shall be binding and shall supersede any previous election or resolution.
  2           Sec. 4. K.S.A. 17-5908 and K.S.A. 1997 Supp. 17-5903 and 17-5904
  3       are hereby repealed.
  4           Sec. 5. This act shall take effect and be in force from and after its
  5       publication in the statute book.
  6      
  7