Protecting Initiative 300

April 2008: Restriction on Corporate Farming Rejected in Nebraska Legislature

"While this vote is deeply disappointing, it is only the first round. We will be back. Nebraskans understand the importance of family farms and ranches, as well as corporate responsibility," commented Dan Owens, policy organizer for the Center for Rural Affairs.

Read our full press release here.

See the vote tally here.

March 2008: LB 1174 PASSES AGRICULTURE COMMITTEE 7-1

February 2008: Fight for I300 Replacement Bill at the State Capitol

View our action alert here and find your Senators email and phone number here. For more information on the legislative replacement for I300 download this two page PDF outlining the rational and highlights of the legislative.

In 1982, Nebraska voters went to the polls and approved Initiative 300, a constitutional amendment to limit corporate ownership of agricultural assets within the state of Nebraska. I-300 stood as an expression of the people's will for twenty-five years, strongly embracing family farming and ranching and public policy designed to support rural communities. Unfortunately, in the fall of 2006 a federal judge ruled Initiative 300 violated the United States Constitution's Commerce Clause, a decision we strongly disagree with.

We support Legislative Bill 1174 to protect family farming and ranching and support the spirit of I-300. LB 1174 would address the court's concerns and once again enact a law placing reasonable limits on the corporate ownership of Nebraska's agricultural assets.

The federal court ruled that I-300 discriminated against out of state individuals and business entities, thus violating the Commerce Clause of the United States Constitution. LB 1174 would be very close to the text of the original I-300 constitutional amendment. However, it would explicitly allow family farm corporations based in other states, with owners actively engaged in day to day labor and management, to farm and own farm land and assets in Nebraska. LB 1174 addresses the court's objections to I-300 while preserving its original intent.

LB 1174 restricts the use of limited liability entities in farming or ranching to individuals and families who work and manage their operations. Its rationale is simple. Government has conferred advantages to corporations, limited partnership, limited liability companies and other limited liability entities. They have tax advantages. And most important, they are allowed to shift responsibility for their debts and liabilities to neighbors and those with whom they do business. It is in the public interest to limit the use of these advantages to owner-operated family farms because they are the most socially responsible and socially beneficial form of agriculture. It is critical to prevent the use of limited liability entities by uninvolved investors to gain a competitive advantage over more socially beneficial family farms and ranches.

August 2007: Developing a Legislative Plan to Move Beyond Initiative 300

In the 2007 session of the Nebraska Legislature, Sen. Phil Erdman (chair of the Agriculture Committee) introduced Legislative Resolution 93. The purpose of this Interim Study Resolution is to “examine implications for the future structure, development, and progress of agricultural production in Nebraska” arising from judicial findings that Initiative 300, Nebraska’s constitutional regulation of corporate farming, is unconstitutional and no longer the law of the state.

LR 93 will allow the Agriculture Committee to obtain public comments and ideas on potential policy instruments available to the Legislature and the people of Nebraska related to the structure and development of agricultural production in the Nebraska.

In the 2007 session LB 516 was also adopted by the Legislature and signed into law. LB 516 allows for funding to support the study contemplated by LR 93. LB 516 also allows the Agriculture Committee and the Nebraska Attorney General to contract with legal and economic experts to obtain ideas on what policy instruments are available to the Legislature and the people of Nebraska.

The initial public meetings resulting from this legislation are scheduled for August 27, 28 and 30 in Norfolk, Lincoln and Scottsbluff. More details can be found here.

Initiative 300 Circuit Court Ruling Upholds District Court

On December 13, 2006, a three judge panel of the U.S. 8th Circuit Court of Appeals upheld the ruling of the U.S. District Court that Initiative 300 is an unconstitutional violation of the Commerce Clause in the U.S. Constitution. The next step in the appellate process is a request for review by the entire 8th Circuit Court of Appeals.

Following in the Omaha World-Herald, Nebraska Attorney General Jon Bruning said the state would pursue such action and, if necessary, appeal to the U.S. Supreme Court. Governor Dave Heineman also stated he supports Initiative 300 and that the U.S. Supreme Court should consider the case.

While that doesn’t necessarily impact the legal process, it may eventually bode well if the Legislature has to consider a potential substitute for I-300 (according to the Governor, it is too early to consider legislative action).

Initiative 300 Declared Unconstitutional

On December 15, 2005, a federal judge declared that Initiative 300 interferes with interstate commerce and violates the federal Americans with Disabilities Act and enjoined the state of Nebraska from enforcing the law. Attorney General Jon Bruning promised to appeal the decision. Initiative 300 will remain in effect while the case is appealed.

Others are now debating and will continue to debate the merits of the decision in this case, and that debate may play out in an appeal to the 8th U.S. Circuit Court of Appeals. But, at a time like this, it is also important to remember why the Center for Rural Affairs and our allies have fought so hard and so long to preserve Initiative 300.

I-300 Decision a Blow to State and Local Power over Corporations

The federal court ruling striking down Nebraska’s corporate farm law should send shivers down the spines of all Americans. Its implications reach far beyond agriculture and Nebraska.

The decision will be appealed. But if it stands, it strikes a profound blow to the power of states to control corporate power. And it concentrates power in the federal government. More local and responsive levels of government will be neutered of their ability to control corporate excess.

Nebraska’s Initiative 300 was challenged on grounds that it violates the commerce clause of the U.S. Constitution, by discriminating against out-of-state companies in favor of in-state interests. It was prompted by the successful challenge of the South Dakota corporate farm law. But this ruling went much further – to extreme lengths.

The South Dakota ruling was based on circumstances. The judge there found that the law’s proponents demonstrated through their statements that they intended to favor South Dakota companies over out-of-state companies. We disagree with that finding, but the legal rationale was based on longstanding precedent. States cannot pass laws for the purpose of favoring in-state companies over out-of-state companies in interstate commerce.

But in the Nebraska case, the judge never held a trial to discern the evidence. She ruled that Initiative 300 is unconstitutional on its face, essentially because it is inconvenient for out-of-state interests to comply. She based that conclusion on the fact that to qualify as a family farm corporation allowable under Initiative 300, a family member must either live on or operate the farm.

There are two problems with her finding. First, it’s wrong on the facts. Initiative 300 does not distinguish between in-state and out-of-state corporations. So a resident of Utah who works everyday on his Utah ranch could qualify his operation as a family farm corporation with no more difficulty than a rancher in the Nebraska Sandhills.

And once the Utah ranch qualifies as a family farm corporation, it can place its cattle in Nebraska custom feedlots just like Nebraska ranchers, who don’t drive to the feedlot each day to feed the cattle they own.

But most troubling is the far reaching legal precedent established by the ruling that could undermine a wide range of state laws, thereby transferring power to corporations and the federal government. For example, it is inconvenient for a Floridian to gain certification to teach school in Iowa, compared to an Iowan prepared to meet those requirements in the state’s teachers colleges. If this ruling stands, will state teacher certification laws be struck down and that responsibility handed to the federal government?

In years past, politicians railed about activist judges handing down liberal rulings. We are in a new era. Now, activist judges hand down rulings that are neither conservative nor liberal, but rather designed to protect corporate interests and concentrate power at whatever level of government they can best manipulate.

This ruling is more evidence that elections matter. It calls on each of us to carefully consider the philosophies of candidates for governor and president on regulation of corporate excess before we cast our votes.

Efforts at Modification: Initiative 300 and LB 1086

COMMITTEE HEARS "HANDS OFF I-300"
On February 17, 2004 over 400 supporters of Initiative 300 descended upon the Nebraska State Capitol to tell their state senators “Hands Off” I-300. The occasion was the hearing on LB 1086, a bill that proposed to create a gubernatorial-appointed task force to determine ways to “modify” Nebraska’s anti-corporate farming constitutional amendment.

At the hearing, representatives from the Center, Nebraska Farmers Union, the AFL-CIO, the Nebraska Catholic Conference, Nebraska Grange, Women Involved in Farm Economics (WIFE), the American Corn Growers, the Organization for Competitive Markets, and the Sierra Club all testified about the positive aspects of I-300 and the Pandora’s Box that would be created by opening I-300 for changes.

Dr. William Heffernan of the University of Missouri testified as to the unique position Nebraska enjoys in providing agricultural structural and market access advantages compared to other states. Several farmers and ranchers – including beginning farmers and ranchers – testified to the positives of I-300 and the fact that I-300 has not acted as a barrier in their operations (contrary to the assertions of many proponents of LB 1086).

This activity shows the power of an engaged citizenry. Finally, the legislative clock ran out on LB 1086. Though advanced out of the Agriculture Committee, LB 1086 never received a minute's worth of debate on the legislative floor.

Our view on LB 1086 was well known – we opposed it, thought it unfairly targeted I-300, and thought it an attempt to begin the process of changing I-300 under the guise of a “study.” We look forward to working with the Legislature – both opponents and proponents of LB 1086 – on genuine studies of all issues facing agriculture and rural communities in Nebraska.