Bill aims to limit nonprofit land buys; opponents see infringement on property rights

HELENA - The title of Rep. Dan Bartel’s bill, House Bill 677, seems broad enough: “An act prohibiting certain nonprofit corporations from purchasing agricultural lands.”

That was the one thing both opponents and proponents seemed to agree on — the bill would stop ag land sales. They also agreed that the certain nonprofit addressed in the bill seemed squarely aimed at the American Prairie Reserve, a large nonprofit that has acquired large tracts of land in central and northern Montana for conservation, public access and bison.

In a long, late afternoon hearing on Tuesday, ranchers spoke against other ranchers, Republicans were shocked at fellow lawmakers, and lawyers argued whether the Lewistown Republican’s bill would pass constitutional muster at either the state or federal level.

The one-and-a-half page bill is among the shortest in a tidal wave of legislation at the Capitol this session. The main thrust and sticking point says, “Nonprofit corporations may not purchase agricultural land in parcels larger than 80 acres.”

The bill goes on to exempt certain nonprofit groups, including churches, schools, universities, hospitals and cemeteries, among others. But land trust, public lands and conservation organizations would be subject to the new law.

Proponents of the bill, mostly ranchers and farmers, testified that they’re at an unfair advantage by having to market rates against large out-of-state interest groups, which drive property values so high the land cannot be acquired by individuals. They argue that once taken out of agricultural production, Montana loses the opportunity to produce and add to the economy. Farmers and ranchers warned that if land continues to be sold away, America’s food stability will hang in the balance. They told lawmakers that agricultural land must be protected.

Opponents, including many Republicans, told legislators that having the government regulate to whom they could sell land is overreach and a breach of property rights. Attorneys argued that singling out one group of nonprofits was not only unfair, but gives some groups special privileges.

“I believe a nonprofit which purchases agriculture land is an abuse of the tax code,” Bartel said.

He pointed out that 70 legislators had signed on to the bill, and that nonprofits could use tax-free donations to pay for the land, an unfair advantage. Bartel said nine other states have enacted similar legislation, including North Dakota and South Dakota, and those have withstood legal challenges.

“This is not a charitable purpose worthy of protection,” said Chuck Denowh, representing the United Property Owners of Montana.

Dick Dolan of the Northern Rockies Trust for Public Lands said the focus on tax exemptions and status was a red herring.

“There’s some idea that nonprofits and land trusts pay more than fair-market value,” Dolan said. “That’s false. The IRS would shut that down in a heartbeat.”

Glenn Marx of the Montana Association of Land Trusts said that nonprofits, like the American Prairie Reserve, have the highest respect for property rights — which he said are essential to them.

“This erodes private property rights. It allows the state to dictate who you can sell your land to,” Marx said. “It’s aimed at one group, but it punishes a wide spectrum of business, nonprofits and land owners.”

One of those groups, Prickly Pear Land Trust, has helped preserve Fort Harrison, near Helena. Jim Utterback, one of the board members of the trust, said it would not be able to acquire land to expand the historic location.

“This hurts our military. It hurts our veterans. And it hurts our state,” Utterback said.

Brett Doney, the chief executive of the Great Falls Development Authority, said that the change in the law could cost his area millions. He warned legislators if the law passes, the community would lose a $2.1 million food processing plant that is secured with ag land.

“If you pass it, it will kill it,” Doney said.

John Tietz, the vice president of the trust and an attorney, also disagreed with Bartel, saying he believed the bill to be unconstitutional.

“The government would have to show a compelling state interest and the least onerous means to achieve the objective,” Tietz said. “HB677 gives no such compelling state interest to discriminate against nonprofits. It would not pass constitutional muster.”

Tietz wasn’t the only lawyer to voice skepticism.

James Huffman established the Western Resources Legal Center to help many agricultural land owners.

He spoke in opposition to the bill, pointing out three ways he thought the bill raised serious equal protection concerns. Huffman said this discriminated against some nonprofits and exempted others. It also picked an arbitrary amount of acreage, and it allows a private party to buy agricultural land and take it out of production. He asked why a celebrity, for example, Ted Turner, could buy ag property and take it out of production, and yet APR or another land trust could not.

“It’s not only unconstitutional. It’s bad policy,” Huffman said.

Some supporters of the bill said this is about protecting the land so that future generations could continue with agriculture.

“These nonprofits threaten my future,” said Dalton Bliss of Garfield County. “We cannot compete with out-of-state money.”

Leah Latray, a Lewistown area farmer, said that she was depending on lawmakers to protect her from the domestic threat of the nonprofits, which she described as creating a “free-for-all.”

As folks lined up against the bill, several different groups, including the Montana Nonprofit Association, timber organizations, and agricultural groups dedicated to feeding hungry Montanans and establishing food sovereignty said the bill would affect them, even though a handful of nonprofits are exempted.

Liz Moore, executive director of the Montana Nonprofit Association, represents more than 600 groups statewide, and said that food cooperatives, 4H clubs and even rodeo and fair clubs would be affected if HB677 becomes law.

“It reaches farther than you think it would at first glance, and it makes the assumption that certain groups may or may not need to acquire land,” Moore said.

She told the committee that she, too, grew up on a ranch in Garfield County.

“It’s not the place of the government to interfere in the marketplace by telling who a person can sell the land to and who can purchase it,” Moore said. “I’m the daughter and sister of ranchers, and I can tell you what they’d say about who we can sell our land to.”

Others said the legislation only put some rules on how the land is used.

“It’s time to put some sideboards on these nonprofit organizations,” said Ross Morgan of the Rocky Mountain Stockgrowers. “They’re after ag land for one reason — that ag land has kept Montana, Montana. They’re after it because we preserved it. We have to start reining them in. This is only the start.”

But stockgrowers found themselves arguing with other stockgrowers and agricultural advocates.

“I find it quite unbelievable that you would consider this assault on private property rights,” said Les Gilman, a fifth-generation landowner from Madison County who also identified as a Republican. “I can’t imagine a situation where the government tells me who I can or cannot sell my property to. I am not a proponent of the APR, but there has to be a better way to accomplish what you want to do.”