PRINTER'S NO. 1159
No. 1042 Session of 1979
INTRODUCED BY STUBAN, HASAY, KUKOVICH, McCALL, COLE, COSLETT, WENGER, D. R. WRIGHT AND YAHNER, APRIL 24, 1979
REFERRED TO COMMITTEE ON AGRICULTURE AND RURAL AFFAIRS, APRIL 24, 1979
AN ACT 1 Restricting the ownership of agricultural lands by certain 2 corporations. 3 The General Assembly of the Commonwealth of Pennsylvania 4 hereby enacts as follows: 5 Section 1. Short title. 6 This act shall be known and may be cited as the "Family Farm 7 Act." 8 Section 2. Declaration of legislative intent. 9 The General Assembly finds that it is in the interests of the 10 Commonwealth to encourage and protect the family farm as a basic 11 economic unit, to insure it as the most socially desirable mode 12 of agricultural production, and to enhance and promote the 13 stability and well-being of rural society in Pennsylvania and 14 the nuclear family. 15 Section 3. Definitions. 16 The following words and phrases when used in this act shall 17 have, unless the context clearly indicates otherwise, the
1 meanings given to them in this section: 2 "Agricultural land." Land used for farming. 3 "Authorized farm corporation." A corporation meeting the 4 following standards: 5 (1) its shareholders do not exceed five in number; 6 (2) all its shareholders, other than any estate are 7 natural persons; 8 (3) it does not have more than one class of shares; 9 (4) its revenues from rent, royalties, dividends, 10 interest and annuities do not exceed 20% of its gross 11 receipts; and 12 (5) a majority of the shareholders reside on the farm or 13 are actively engaged in farming. 14 "Family farm." An unincorporated farming unit owned by one 15 or more persons residing on the farm or actively engaging in 16 farming. 17 "Family farm corporation." A corporation founded for the 18 purpose of farming and the ownership of agricultural land in 19 which the majority of the voting stock is held by and the 20 majority of the stockholders are persons or the spouses of 21 persons related to each other within the third degree of kindred 22 according to law, and at least one of such related persons is 23 residing on or actively operating the farm, and none of whose 24 stockholders are corporations: Provided, however, That a family 25 farm corporation shall not cease to qualify as such hereunder by 26 reason of any devise or bequest of shares of voting stocks. 27 "Farming." The production of: 28 (1) agricultural products; 29 (2) livestock or livestock products; 30 (3) milk or milk products; or 19790H1042B1159 - 2 -
1 (4) fruit or other horticultural products. 2 It does not include the processing, refining or packaging of 3 such products, or spraying or harvesting services by a processor 4 or distributor of farm products. It does not include the 5 production of timber or forest products or the production of 6 poultry or poultry products. 7 Section 4. Farming and ownership of agricultural land by 8 corporations restricted. 9 After December 31, 1979, no corporation shall engage in 10 farming; nor shall any corporation, directly or indirectly, own, 11 acquire, or otherwise obtain an interest, whether legal, 12 beneficial or otherwise, in any title to real estate used for 13 farming or capable of being used for farming in this State: 14 Provided, however, That the restrictions provided in this 15 section shall not apply to the following: 16 (1) a bona fide encumbrance taken for purposes of 17 security; 18 (2) a family farm corporation or an authorized farm 19 corporation as defined in section 2; 20 (3) agricultural land and land capable of being used for 21 farming owned by a corporation as of December 31, 1979, 22 including the normal expansion of such ownership at a rate 23 not to exceed 20% of the amount of land owned as of December 24 31, 1979, measured in acres, in any five-year period, and 25 including additional ownership reasonably necessary to meet 26 the requirements of pollution control regulations; 27 (4) agricultural land operated for research or 28 experimental purposes: Provided, That any commercial sales 29 from such farm shall be incidental to the research or 30 experimental objectives of the corporation; 19790H1042B1159 - 3 -
1 (5) agricultural land operated by a corporation for the 2 purpose of raising breeding stock for resale to farmers or 3 operated for the purpose of growing seed, wild rice, nursery 4 plants or sod; 5 (6) agricultural land and land capable of being used for 6 farming leased by a corporation in an amount, measured in 7 acres, not to exceed the acreage under lease to such 8 corporation as of December 31, 1979 and the additional 9 acreage required for normal expansion at a rate not to exceed 10 20% of the amount of land leased as of December 31, 1979 in 11 any five-year period, and the additional acreage reasonably 12 necessary to meet the requirements of pollution control 13 regulations; 14 (7) agricultural land when acquired as a gift (either by 15 grant or a devise) by an educational, religious or charitable 16 nonprofit corporation: Provided, however, That all lands so 17 acquired which are not operated for research or experimental 18 purposes, or are not operated for the purpose of raising 19 breeding stock for resale to farmers or operated for the 20 purpose of growing seed, wild rice, nursery plants or sod 21 must be disposed of within ten years after acquiring title 22 thereto; 23 (8) agricultural land acquired by a corporation other 24 than a family farm corporation or authorized farm 25 corporation, as defined in section 2, for which the 26 corporation has documented plans to use and subsequently uses 27 the land within six years from the date of purchase for a 28 specific nonfarming purpose, or land zoned nonagricultural, 29 or land located within an incorporated town. A corporation 30 may hold such agricultural land in such acreage as may be 19790H1042B1159 - 4 -
1 necessary to its nonfarm business operation: Provided, 2 however, That pending the development of agricultural land 3 for nonfarm purposes, such land may not be used for farming 4 except under lease to a family farm unit, a family farm 5 corporation or an authorized farm corporation, or except when 6 such agricultural land is controlled through ownership, 7 options, leaseholds, or other agreements by a corporation 8 which has entered into an agreement with the United States of 9 America pursuant to the New Community Act of 1968 (Title IV 10 of the Housing and Urban Development Act of 1968, 42 U.S.C. 11 3901-3914), as amended, or a subsidiary or assign of such a 12 corporation; 13 (9) agricultural lands acquired by a corporation by 14 process of law in the collection of debts, or by any 15 procedure for the enforcement of a lien or claim thereon, 16 whether created by mortgage or otherwise: Provided, however, 17 That all lands so acquired shall be disposed of within ten 18 years after acquiring the title thereto: And, further 19 provided, That the land so acquired shall not be used for 20 farming during the ten-year period except under a lease to a 21 family farm unit, a family farm corporation or an authorized 22 farm corporation. The aforementioned ten-year limitation 23 period shall be deemed a covenant running with the title to 24 the land against any corporate grantee or assignee or the 25 successor of such corporation; 26 (10) agricultural land acquired by a public utility for 27 use in its business: Provided, however, That such land may 28 not be used for farming except under lease to a family farm 29 unit, or a family farm corporation; 30 (11) agricultural land, either leased or owned, totally 19790H1042B1159 - 5 -
1 no more than 2700 acres, acquired after December 31, 1979 for 2 the purpose of replacing or expanding asparagus growing 3 operations, provided that such corporation had established 4 2000 acres of asparagus production; or 5 (12) a corporation formed primarily for religious 6 purposes whose sole income is derived from agriculture. 7 Section 5. Reports. 8 (a) Every corporation which holds any interest in 9 agricultural land or land used for the breeding, feeding, 10 pasturing, growing, or raising of livestock, daily or poultry or 11 products thereof, or land used for the production of 12 agricultural crops or fruit or other horticultural products, 13 other than a bona fide encumbrance taken for purposes of 14 security, or which is engaged in farming or proposing to 15 commence farming in this State after December 31, 1979, shall 16 file with the Secretary of Agriculture a report containing the 17 following information: 18 (1) the name of the corporation and its place of 19 incorporation; 20 (2) the address of the registered office of the 21 corporation in this State, the name and address of its 22 registered agent in this State and, in the case of a foreign 23 corporation, the address of its principal office in its place 24 of incorporation; 25 (3) the acreage and location listed by township and 26 county of each lot or parcel of land in this State owned or 27 leased by the corporation and used for the growing of crops 28 or the keeping or feeding of poultry or livestock; 29 (4) the names and addresses of the officers, 30 shareholders owning more than 10% of the stock, including the 19790H1042B1159 - 6 -
1 percentage of stock owned by each such shareholder and the 2 members of the board of directors of the corporation; and 3 (5) the farm products which the corporation produces or 4 intends to produce on its agricultural land. 5 The report of a corporation seeking to qualify hereunder as a 6 family farm corporation or an authorized farm corporation shall 7 contain the following additional information: 8 (i) the number of shares owned by persons residing 9 on the farm or actively engaged in farming, or their 10 relatives within the third degree of kindred according to 11 law or their spouses; 12 (ii) the name, address and number of shares owned by 13 each shareholder; and 14 (iii) a statement as to the percentage of gross 15 receipts of the corporation derived from rent, royalties, 16 dividends, interests and annuities. 17 No corporation shall commence farming in this State until the 18 Secretary of Agriculture has inspected the report and certified 19 that its proposed operations comply with the provisions of this 20 act. 21 (b) Every corporation described in subsection (a) shall, 22 prior to April 15 of each year, file with the Secretary of 23 Agriculture, a report containing the information required by 24 subsection (a), based on its operations in the preceding 25 calendar year and its status at the end of such year. 26 (c) Failure to file a required report, or the willful filing 27 of false information, shall constitute a misdemeanor of the 28 third degree. 29 Section 6. Enforcement. 30 If the Attorney General has reason to believe that a 19790H1042B1159 - 7 -
1 corporation is violating the provisions of this act, he shall 2 commence an action in the court of common pleas of the county in 3 which any agricultural lands relative to such violation are 4 situated, or if situated in two or more counties, in any county 5 in which a substantial part of the lands are situated. The 6 Attorney General shall file for record with the recorder of 7 deeds of each county in which any portion of said lands is 8 located a notice of the pendency of the action. If the court 9 finds that the lands in question are being held in violation of 10 this act, it shall enter an order so declaring. The Attorney 11 General shall file for record any such order with the recorder 12 of deeds of each county in which any portion of said lands is 13 located. Thereafter, the corporation owning such land shall have 14 a period of five years from the date of such order to divest 15 itself of such lands. The five-year limitation period shall be 16 deemed a covenant running with the title to the land against any 17 corporate grantee or assignee or the successor of such 18 corporation. Any lands not so divested within the time 19 prescribed shall be sold at public sale in the manner prescribed 20 by law for the foreclosure of a mortgage. In addition, any 21 prospective or threatened violation may be enjoined by an action 22 brought by the Attorney General in the manner provided by law or 23 general rule. 24 Section 7. Repeals. 25 All acts and parts of acts are repealed insofar as they are 26 inconsistent herewith. 27 Section 8. Effective date. 28 This act shall take effect in 60 days. C20L1WMB/19790H1042B1159 - 8 -