Session of 1999
         
HOUSE BILL No. 2079
         
By Representatives Larkin and Faber, McKinney and Mollenkamp
          
1-21
          
  9             AN  ACT concerning agriculture; prohibiting certain processors from
10             owning, controlling or operating feedlots or from entering into certain
11             production contracts; prescribing penalties for violations; amending
12             K.S.A. 1998 Supp. 17-5903 and repealing the existing section.
13      
14       Be it enacted by the Legislature of the State of Kansas:
15             New Section  1. (a) In order to preserve free and private enterprise,
16       prevent monopoly and protect consumers, it is unlawful for any processor
17       of beef or pork or limited partnership in which a processor holds part-
18       nership shares as a general partner or partnership shares as a limited
19       partner: (1) To own, control or operate a feedlot in Kansas in which hogs
20       or cattle are fed for slaughter; or (2) to contract for the production of
21       hogs or cattle of which the processor is the owner. The provisions of this
22       subsection shall not prevent processors or educational institutions from
23       carrying on legitimate research, educational or demonstration activities,
24       nor shall it prevent processors from owning and operating facilities to
25       provide normal care and feeding of animals for a period not to exceed 10
26       days immediately prior to slaughter, or for a longer period in an emer-
27       gency. The provisions of this subsection shall not apply to any feedlot
28       owned, controlled or operated by a processor on the effective date of this
29       act while the feedlot is under the ownership, control or operation of the
30       processor.
31             (b) The violation of the provisions of this section shall subject the
32       violator to a fine of not more than $50,000 per day, and the violater shall
33       divest itself of any feedlot acquired in violation of this section within one
34       year after judgment is entered in the action. The district courts of this
35       state may prevent and restrain violations of this section through the is-
36       suance of an injunction or other equitable and legal relief which the court
37       may find appropriate. The attorney general or district or county attorney
38       shall institute suits on behalf of the state to enforce the provisions of this
39       section.
40             (c) The provisions of this section shall be part of and supplemental
41       to the provisions of K.S.A. 17-5902 et seq. and amendments thereto.
42             Sec.  2. K.S.A. 1998 Supp. 17-5903 is hereby amended to read as
43       follows: 17-5903. As used in this act:

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  1             (a) "Corporation" means a domestic or foreign corporation organized
  2       for profit or nonprofit purposes.
  3             (b) "Nonprofit corporation" means a corporation organized not for
  4       profit and which qualifies under section 501(c)(3) of the federal internal
  5       revenue code of 1986 as amended.
  6             (c) "Limited partnership" has the meaning provided by K.S.A. 56-
  7       1a01, and amendments thereto.
  8             (d) "Limited agricultural partnership" means a limited partnership
  9       founded for the purpose of farming and ownership of agricultural land in
10       which:
11             (1) The partners do not exceed 10 in number;
12             (2) the partners are all natural persons, persons acting in a fiduciary
13       capacity for the benefit of natural persons or nonprofit corporations, or
14       general partnerships other than corporate partnerships formed under the
15       laws of the state of Kansas; and
16             (3) at least one of the general partners is a person residing on the
17       farm or actively engaged in the labor or management of the farming
18       operation. If only one partner is meeting the requirement of this provision
19       and such partner dies, the requirement of this provision does not apply
20       for the period of time that the partner's estate is being administered in
21       any district court in Kansas.
22             (e) "Corporate partnership" means a partnership, as defined in
23       K.S.A. 1998 Supp. 56a-101, and amendments thereto, which has within
24       the association one or more corporations or one or more limited liability
25       companies.
26             (f) "Feedlot" means a lot, yard, corral, or other area in which livestock
27       fed for slaughter are confined. The term includes within its meaning
28       agricultural land in such acreage as is necessary for the operation of the
29       feedlot.
30             (g) "Agricultural land" means land suitable for use in farming.
31             (h) "Farming" means the cultivation of land for the production of
32       agricultural crops, the raising of poultry, the production of eggs, the pro-
33       duction of milk, the production of fruit or other horticultural crops, graz-
34       ing or the production of livestock. Farming does not include the produc-
35       tion of timber, forest products, nursery products or sod, and farming does
36       not include a contract to provide spraying, harvesting or other farm
37       services.
38             (i) "Fiduciary capacity" means an undertaking to act as executor, ad-
39       ministrator, guardian, conservator, trustee for a family trust, authorized
40       trust or testamentary trust or receiver or trustee in bankruptcy.
41             (j) "Family farm corporation" means a corporation:
42             (1) Founded for the purpose of farming and the ownership of agri-
43       cultural land in which the majority of the voting stock is held by and the

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  1       majority of the stockholders are persons related to each other, all of whom
  2       have a common ancestor within the third degree of relationship, by blood
  3       or by adoption, or the spouses or the stepchildren of any such persons,
  4       or persons acting in a fiduciary capacity for persons so related;
  5             (2) all of its stockholders are natural persons or persons acting in a
  6       fiduciary capacity for the benefit of natural persons; and
  7             (3) at least one of the stockholders is a person residing on the farm
  8       or actively engaged in the labor or management of the farming operation.
  9       A stockholder who is an officer of any corporation referred to in this
10       subsection and who is one of the related stockholders holding a majority
11       of the voting stock shall be deemed to be actively engaged in the man-
12       agement of the farming corporation. If only one stockholder is meeting
13       the requirement of this provision and such stockholder dies, the require-
14       ment of this provision does not apply for the period of time that the
15       stockholder's estate is being administered in any district court in Kansas.
16             (k) "Authorized farm corporation" means a Kansas corporation, other
17       than a family farm corporation, all of the incorporators of which are Kan-
18       sas residents, family farm corporations or family farm limited liability
19       agricultural companies or any combination thereof, and which is founded
20       for the purpose of farming and the ownership of agricultural land in
21       which:
22             (1) The stockholders do not exceed 15 in number; and
23             (2) the stockholders are all natural persons, family farm corporations,
24       family farm limited liability agricultural companies or persons acting in a
25       fiduciary capacity for the benefit of natural persons, family farm corpo-
26       rations, family farm limited liability agricultural companies or nonprofit
27       corporations; and
28             (3) if all of the stockholders are natural persons, at least one stock-
29       holder must be a person residing on the farm or actively engaged in labor
30       or management of the farming operation. If only one stockholder is meet-
31       ing the requirement of this provision and such stockholder dies, the re-
32       quirement of this provision does not apply for the period of time that the
33       stockholder's estate is being administered in any district court in Kansas.
34             (l) "Trust" means a fiduciary relationship with respect to property,
35       subjecting the person by whom the property is held to equitable duties
36       to deal with the property for the benefit of another person, which arises
37       as a result of a manifestation of an intention to create it. A trust includes
38       a legal entity holding property as trustee, agent, escrow agent, attorney-
39       in-fact and in any similar capacity.
40             (m) "Family trust" means a trust in which:
41             (1) A majority of the equitable interest in the trust is held by and the
42       majority of the beneficiaries are persons related to each other, all of whom
43       have a common ancestor within the third degree of relationship, by blood

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  1       or by adoption, or the spouses or stepchildren of any such persons, or
  2       persons acting in a fiduciary capacity for persons so related; and
  3             (2) all the beneficiaries are natural persons, are persons acting in a
  4       fiduciary capacity, other than as trustee for a trust, or are nonprofit
  5       corporations.
  6             (n) "Authorized trust" means a trust other than a family trust in
  7       which:
  8             (1) The beneficiaries do not exceed 15 in number;
  9             (2) the beneficiaries are all natural persons, are persons acting in a
10       fiduciary capacity, other than as trustee for a trust, or are nonprofit cor-
11       porations; and
12             (3) the gross income thereof is not exempt from taxation under the
13       laws of either the United States or the state of Kansas.
14             For the purposes of this definition, if one of the beneficiaries dies, and
15       more than one person succeeds, by bequest, to the deceased beneficiary's
16       interest in the trust, all of such persons, collectively, shall be deemed to
17       be one beneficiary, and a husband and wife, and their estates, collectively,
18       shall be deemed to be one beneficiary.
19             (o) "Testamentary trust" means a trust created by devising or be-
20       queathing property in trust in a will as such terms are used in the Kansas
21       probate code.
22             (p) "Poultry confinement facility" means the structures and related
23       equipment used for housing, breeding, laying of eggs or feeding of poultry
24       in a restricted environment. The term includes within its meaning only
25       such agricultural land as is necessary for proper disposal of liquid and
26       solid wastes and for isolation of the facility to reasonably protect the con-
27       fined poultry from exposure to disease. As used in this subsection, "poul-
28       try" means chickens, turkeys, ducks, geese or other fowl.
29             (q) "Rabbit confinement facility" means the structures and related
30       equipment used for housing, breeding, raising, feeding or processing of
31       rabbits in a restricted environment. The term includes within its meaning
32       only such agricultural land as is necessary for proper disposal of liquid
33       and solid wastes and for isolation of the facility to reasonably protect the
34       confined rabbits from exposure to disease.
35             (r) "Swine marketing pool" means an association whose membership
36       includes three or more business entities or individuals formed for the sale
37       of hogs to buyers but shall not include any trust, corporation, limited
38       partnership or corporate partnership, or limited liability company other
39       than a family farm corporation, authorized farm corporation, limited lia-
40       bility agricultural company, limited agricultural partnership, family trust,
41       authorized trust or testamentary trust.
42             (s) "Swine production facility" means the land, structures and related
43       equipment owned or leased by a corporation or limited liability company

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  1       and used for housing, breeding, farrowing or feeding of swine. The term
  2       includes within its meaning only such agricultural land as is necessary for
  3       proper disposal of liquid and solid wastes in environmentally sound
  4       amounts for crop production and to avoid nitrate buildup and for isolation
  5       of the facility to reasonably protect the confined animals from exposure
  6       to disease.
  7             (t) "Limited liability company" has the meaning provided by K.S.A.
  8       17-7602, and amendments thereto.
  9             (u) "Limited liability agricultural company" means a limited liability
10       company founded for the purpose of farming and ownership of agricul-
11       tural land in which:
12             (1) The members do not exceed 10 in number; and
13             (2) the members are all natural persons, family farm corporations,
14       family farm limited liability agriculture companies, persons acting in a
15       fiduciary capacity for the benefit of natural persons, family farm corpo-
16       rations, family farm limited liability agricultural companies or nonprofit
17       corporations, or general partnerships other than corporate partnerships
18       formed under the laws of the state of Kansas; and
19             (3) if all of the members are natural persons, at least one member
20       must be a person residing on the farm or actively engaged in labor or
21       management of the farming operation. If only one member is meeting
22       the requirement of this provision and such member dies, the requirement
23       of this provision does not apply for the period of time that the member's
24       estate is being administered in any district court in Kansas.
25             (v) "Dairy production facility" means the land, structures and related
26       equipment used for housing, breeding, raising, feeding or milking dairy
27       cows. The term includes within its meaning only such agricultural land
28       as is necessary for proper disposal of liquid and solid wastes and for iso-
29       lation of the facility to reasonably protect the confined cows from expo-
30       sure to disease.
31             (w) "Family farm limited liability agricultural company" means a lim-
32       ited liability company founded for the purpose of farming and ownership
33       of agricultural land in which:
34             (1) The majority of the members are persons related to each other,
35       all of whom have a common ancestor within the third degree of relation-
36       ship, by blood or by adoption, or the spouses or the stepchildren of any
37       such persons, or persons acting in a fiduciary capacity for persons so
38       related;
39             (2) the members are natural persons or persons acting in a fiduciary
40       capacity for the benefit of natural persons; and
41             (3) at least one of the members is a person residing on the farm or
42       actively engaged in the labor or management of the farming operation.
43       If only one member is meeting the requirement of this provision and

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  1       such member dies, the requirement of this provision does not apply for
  2       the period of time that the member's estate is being administered in any
  3       district court in Kansas.
  4             (x) "Hydroponics" means the growing of vegetables, flowers, herbs,
  5       or plants used for medicinal purposes, in a growing medium other than
  6       soil.
  7             (y) "Processor" means a person, firm, corporation or limited part-
  8       nership, which alone or in conjunction with others, directly or indirectly,
  9       controls the manufacturing, processing or preparation for sale of beef or
10       pork products having a total annual wholesale value of $20,000,000 or
11       more. Any person, firm, corporation or limited partnership with a 10%
12       or greater interest in another person, firm, corporation or limited part-
13       nership involved in the manufacturing, processing or preparation for sale
14       of beef or pork products having a total annual wholesale value of
15       $20,000,000 or more shall also be considered a processor. The term "pro-
16       cessor" shall not include collective bargaining units or farmer-owned
17       cooperatives. 
18       Sec.  3. K.S.A. 1998 Supp. 17-5903 is hereby repealed.
19        Sec.  4. This act shall take effect and be in force from and after its
20       publication in the Kansas register.