Southeast District Judge James Bekken ruled that a law that prohibits corporations from owning or leasing agricultural land does not apply to 848 acres of Crosslands Inc. property in Ward and Griggs counties because the property was donated, unusable for farming or ranching, or necessary to support the management of nearby wetlands.
Attorney General Wayne Stenehjem said Monday the ruling could open a new loophole in North Dakota's anti-corporate farming law. He said he's reviewing the decision and hasn't decided whether to appeal.
Crosslands wanted to keep all its 1,749 acres, contending that North Dakota's anti-corporate farming law violated the U.S. Constitution's protections for interstate commerce.
Bekken rejected those arguments, concluding the law has significant differences when compared to laws against corporate farming in South Dakota and Nebraska that have been declared unconstitutional by a federal appeals court.
"The court agrees with the state's analysis that North Dakota's prohibition on corporate land ownership is essentially all-encompassing, not selective, and not discriminatory," Bekken wrote in his 35-page decision.
Fargo attorney for Crosslands, said he doubted the state would appeal the ruling. James Cook, a Minneapolis precious metals dealer who founded Crosslands more than 20 years ago, did not respond Monday to requests for comment.
In general, the law prohibits corporations from owning or leasing agricultural land, or going into the business of farming or ranching. It has exemptions for family-controlled corporations.
The law allows nonprofit organizations to buy agricultural land to preserve natural areas or wildlife habitat. Acquisitions go through a review process that include the local county commission and a state review board. Any purchases must be approved by the governor.
Crosslands acquired 320 acres in Ward County in 1985, court records show. The organization subsequently bought 949 acres in Griggs County and 480 acres in Cavalier County, with the intent of managing the property as private wildlife preserves.
Crosslands acquired the property without going through the normal review process. When the organization retroactively applied for approval of the Griggs and Cavalier County purchases, Gov. John Hoeven rejected both.
Stenehjem sued Crosslands in January 2005, seeking to force the nonprofit to sell its land. Bekken's ruling, which was issued last week, concluded Crosslands could keep its 320 Ward County acres and 528 of its 949 acres in Griggs County. The remaining 901 acres must be sold by Feb. 1, the judge's order says.
The Ward County land was donated to Crosslands, and thus was not subject to the law's review process, Bekken concluded. The 528 acres of Griggs County land included 267 acres of wetlands and 261 acres of adjacent property that Crosslands could justify keeping to support wetlands management, the judge concluded.
Stenehjem had argued Crosslands had no right to keep the 261 Griggs County acres without the governor's approval. That part of Bekken's ruling "is a problem," Stenehjem said. "It may open up a rather wide hole in our anti-corporate farming statute."