Jim JONES; Terrence M. Schumacher Shad Dahlgren; Harold G. Rickertsen; Todd Ehler; Robert E. Beck, III, Appellees,
v.
John GALE, in his official capacity as Secretary of State of Nebraska; Jon Bruning, in his official capacity as Attorney General of Nebraska, Appellants.
Organization for Competitive Markets; R-Calf USA; Oregon Livestock Producers Association; Spokane County Cattle Producers; Icon; The Independent Beef Association of North Dakota; Montana Cattleman's Association; Nevada Livestock Association; State of Minnesota; State of Iowa; State of Missouri; State of North Dakota; State of West Virginia; Nebraska Farmer Union; The Center for Rural Affairs The Nebraska Grange; Women Involved in Farm Economics The Nebraska Catholic Conference; The American Corn Growers of Nebraska; Nebraska Appleseed Center for Law in the Public Interest Sierra Club; The Great Plains Environmental Law Center; Nebraska Environmental Action Coalition; Michael Jacobson; Nebraska League of Rural Voters; Nebraskans for Peace; National Farmers Union; National Family Farm Coalition; American Corn Growers; Minnesota Farmers Union; Land Stewardship Project; North Dakota Farmers Union; Dakota Resource Council; South Dakota Farmers Union; Dakota Rural Action; Iowa Farmers Union; Iowa Citizens for Community Improvement; Missouri Farmers Union; Missouri Rural Crisis Center; AR Farmers Union; Campaign For Family Farms; Western Organization of Resource Councils; Federation of Southern Cooperatives; Illinois Farmers Union; Illinois Stewardship Alliance; IN Farmers Union; Citizens Action Coalition of Indiana; Powder River Basin Resource Council; KS Farmers Union; WI Farmers Union; OH Farmers Union; MI Farmers Union; Pennsylvania Farmers Union; Rocky Mountain Farmers Union; Montana Farmers Union; Utah Farmers Union; Texas Farmers Union; Alaska Farmers Union; Oregon Farmers Union; WA Farmers Union; California Farmers Union, Amici on behalf of Appellants.
Nebraska Bankers Association; Nebraska Chamber of Commerce and Industry, Inc.; The Nebraska Realtors Association; South Dakota Farm Bureau, Amici on Behalf of Appellees.
United States of America, Amicus on Behalf of Appellees.
No. 06-1308.
United States Court of Appeals, Eighth Circuit.
Submitted: September 28, 2006.
Filed: December 13, 2006.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Katherine J. Spohn, Asst. Atty. General, argued, Lincoln, NE (John Bruning, Nebraska Atty. General, David D. Cookson and Justin D. Lavene, Asst. Attys. General, Lincoln, NE, on the brief), for appellants.
L. Steven Grasz, argued, Omaha, NE (Thomas H. Dalik, Michael S. Degan, Rebecca B. Gregory, Blackwell & Sanders, Omaha, NE; David A. Jarecke, Crosby & Guenzel, Lincoln, NE, Stephen D. Mossman, Mattson & Ricketts, Lincoln, NE, on the brief), for appellees.
Michael C. Stumo, Domina Law Group, Omaha, NE, Thomas K. Overton, Attorney General's Office, St. Paul, MN, Robert Vail Broom, Jeffery R. Kirkpatrick, McHenry & Haszard, Patricia A. Knapp, University of Nebraska College of Law, Lincoln, NE, Steven M. Virgil, Community Economic Development Clinic, Omaha, NE, Lynn Ann Hayes, Karen R. Krub, Jessica A. Shoemaker, Farmers Legal Action Group, St. Paul, MN, for Amici on behalf of Appellants.
Robert J. Hallstrom, Brandt & Horan, Syracuse, NE, Ronald J. Sedlacek, Nebraska Chamber of Commerce, Lincoln, NE, for Amici on Behalf of Appellees.
Jessica Dunsay Silver, Sarah E. Harrington, U.S. Department of Justice Civil Rights Division-Appellate Section Ben Franklin Station, Washington, DC, for Amicus on Behalf of Appellees.
Before ARNOLD, BYE, and MELLOY, Circuit Judges.
ARNOLD, Circuit Judge.
The plaintiffs, six people who own various interests in Nebraska farm and ranch land operations, filed this action against Nebraska's secretary of state and attorney general in their official capacities (State Officials). The plaintiffs claimed that Initiative 300, which voters adopted as part of the state constitution in 1982, see Neb. Const. art. XII, § 8, violates the commerce clause, privileges and immunities clause, and equal protection clause of the United States Constitution and the Americans with Disabilities Act (ADA). All parties moved for summary judgment. The district court1 granted summary judgment to the plaintiffs on their commerce clause and ADA claims, and granted summary judgment to the State Officials on the remaining claims. The State Officials appeal, and we affirm the district court's judgment that the amendment based on Initiative 300 is unconstitutional because it violates the dormant commerce clause.
I.
Initiative 300 prohibits corporations or syndicates (non-family-owned limited partnerships) from acquiring an interest in "real estate used for farming or ranching in [Nebraska]" or "engag[ing] in farming or ranching," with certain exceptions. See Neb. Const. art. XII, § 8. The initiative originated as a constitutional amendment proposed through the initiative process and appeared as a ballot question on Nebraska's 1982 general election ballot. The Nebraska Attorney General prepared a ballot title and explanatory statement for Initiative 300. See Neb. Stat. § 32-1410(1). The title read: "Shall a constitutional prohibition be created prohibiting ownership of Nebraska farm or ranch land by any corporation, domestic or foreign, which is not a Nebraska family farm corporation ... ?" An explanatory statement defines the effect of a vote for and against a measure. Id. The explanatory statement presented to Nebraska voters for Initiative 300 read: "A vote FOR will create a constitutional prohibition against further purchase of Nebraska farm and ranch lands by any corporation or syndicate other than a Nebraska family farm corporation. A vote AGAINST will reject such a constitutional restriction on ownership of Nebraska farm and ranch land." The voters adopted Initiative 300, and it became part of the Nebraska constitution upon the issuance of a proclamation by the governor in 1982.
The Initiative defines a "family farm or ranch corporation," which is specifically excepted from the initiative's restrictions, as "a corporation engaged in farming or ranching or the ownership of agricultural land, in which the majority of the voting stock is held by members of a family ... at least one of whom is a person residing on or actively engaged in the day to day labor and management of the farm or ranch." Neb. Const. art. XII, § 8. In addition, an exemption from the corporate farming ban is provided, inter alia, to former "family farm corporations" for a period of fifty years after they cease to meet the criteria for that designation, provided that majority ownership of the corporation remains within the family. Id.
II.
The State Officials contend that none of the plaintiffs had standing to bring the commerce clause claim and therefore the district court erred in concluding that it had jurisdiction. A plaintiff has the burden of establishing subject matter jurisdiction, Hoekel v. Plumbing Planning Corp.,
We review the district court's conclusion that the plaintiffs had standing de novo. St. Paul Area Chamber of Commerce v. Gaertner,
Plaintiff Terrence Schumacher, a resident of Boulder, Colorado, has an ownership interest in Nebraska farmland in five counties. Neither he nor any of his relatives reside on his farmland and he does not live close enough to the land to perform the day-to-day labor and manage it. Mr. Schumacher would like to transfer his farmland to a limited liability entity, which would, inter alia, allow for improved fiscal planning and operational management of the farmland as an operating unit and provide more favorable options for estate planning. Initiative 300 precludes Mr. Schumacher from creating a limited liability farm operation because he does not meet the conditions of the family farm exemption, and as a result he has suffered and continues to suffer economic loss based on reduced fiscal and operational management efficiencies, marketing opportunities, and borrowing power, as well as increased administration expenses and federal estate taxes. Because Mr. Schumacher cannot qualify for the family farm exemption, he is exposed to personal liability for the debts, obligations, contracts, and torts related to his Nebraska farmland.
The State Officials acknowledge that Mr. Schumacher may not purchase farmland on a limited liability basis unless he or a member of his family resides on the farmland or is engaged in the farm's day-to-day labor and management. But they argue that he nevertheless lacks standing because the family-farm requirements apply to everyone and thus do not unduly burden Mr. Schumacher's interests. We think, however, that the question of interstate commerce `burdens' pertains to the merits of Mr. Schumacher's claim and is "analytically distinct from the `injury-in-fact' determination that is central to standing." Adams v. Watson,
Robert Beck III, another plaintiff, resides in rural Kearney, Nebraska, where he owns a cattle feedlot that provides for the daily care and feeding of cattle owned by his customers, many of whom live outside of Nebraska. Mr. Beck cannot contract with non-exempt out-of-state corporate entities for the purpose of raising and feeding livestock for slaughter. Mr. Beck alleges that as a result, he has lost business, income, and borrowing power. He further alleges that Initiative 300 has prevented him from gaining unfettered access to the national cattle market, and thereby reduced his competitiveness and ability to gain new customers resulting in economic loss. In addition, Mr. Beck's access to working capital from out-of-state corporations is restricted because Initiative 300 prohibits non-exempt entities that provide equity in the form of ownership of cattle from feeding cattle at Mr. Beck's feedlot. The initiative prohibits him from freely changing ownership of his commercial cattle feeding operations and limits his ability to pool assets and resources with other unrelated Nebraska farmers and out-of-state corporations to acquire more land and personal assets for future development of his cattle operation. Finally, Initiative 300 prevents Mr. Beck from establishing succession plans that would allow him to transfer ownership gradually to employees who provide the day-to-day labor while he continues to manage the operation.
The State Officials acknowledge that under Hazeltine,
But we agree with the district court that the predicaments of Messrs. Schumacher and Beck are comparable to those of the plaintiffs in Hazeltine, who we concluded had standing to challenge an amendment to the South Dakota Constitution that prohibited corporations and syndicates from holding land in the state. See Hazeltine,
III.
We turn now to the question of whether Initiative 300 violates the dormant commerce clause of the United States Constitution. Where the relevant facts are not in dispute, we review de novo the question of whether a state constitutional provision violates the commerce clause. See R & M Oil & Supply, Inc. v. Saunders,
The dormant commerce clause prohibits states from enacting laws that "discriminate against or unduly burden interstate commerce." Hazeltine,
A.
We consider first whether Initiative 300 is discriminatory on its face. The State Officials argue that because Initiative 300 does not expressly prohibit the owning of agricultural land by out-of-state citizens and does not exclude solely out-of-state corporations, it cannot be interpreted to discriminate facially against interstate commerce. We do not think that an interstate-commerce claim is precluded by the absence of an express prohibition on non-resident ownership or the fact that some Nebraska corporations (those that are not "family farm corporations") may suffer a negative impact under Initiative 300, see C & A Carbone, Inc. v. Town of Clarkstown,
The State Officials maintain that this is an incorrect interpretation of Initiative 300. They argue that the law does not require the majority shareholder to live or work on farmland in Nebraska to qualify for the exception; they assert that a Colorado family farm corporation, for example, could operate on land in Nebraska as long as its majority shareholder or one of his or her family members lived or worked at the location of the corporation's Colorado farm. This argument is meritless. Although, as the officials observe, "[i]f a law is susceptible of a reasonable interpretation which supports its constitutionality, the court must accord the law that meaning," Planned Parenthood of Minnesota v. State of Minnesota,
We give the words of Initiative 300 their most natural and obvious meaning. See Pig Pro Nonstock Coop. v. Moore,
Our reading acquires further support from the ballot language that accompanied the text when Initiative 300 was voted on. As we have already said, the ballot stated that the amendment's purpose was to prohibit further purchases of agricultural land "by any corporation ... other than ... a Nebraska family farm corporation." Jones,
The Nebraska Supreme Court's interpretation of Initiative 300 also undermines the State Officials' proposed construction. The court stated that "the plain language of Article XII § 8" prohibits "absentee ownership and operation of farm and ranch land by a corporate entity." Pig Pro.,
The State Officials quote Dempsey for the proposition that when "an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems." See Dempsey,
Thus, we read Initiative 300 as the district court did and hold that Initiative 300 is discriminatory on its face because it affords "differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." Hazeltine,
B.
Although we have already determined based on a facial review that Initiative 300 is discriminatory, we agree with the district court that there is another, independent reason for concluding that it burdens out-of-state interests: The initiative has a discriminatory intent. Cf. Hazeltine,
The text of Initiative 300 and the ballot title reveal its discriminatory purpose. Under Nebraska law, a "ballot title shall express the purpose of the measure" submitted to the voters, Neb. Stat. § 32-1410(1), and here the ballot title told voters that Initiative 300 would "prohibit[] ownership of Nebraska farm or ranch land by any corporation, domestic or foreign, which is not a Nebraska family farm corporation." We agree with the district court that the "ballot title, and the language of Initiative 300 defining limited-liability-entity exemptions for family farms and ranches, clearly indicate that people living and working in Nebraska, and their families, will be given ... favored treatment." Jones,
Further, while we deem it unnecessary to discuss in detail the history preceding the adoption of Initiative 300, we believe that that history bolsters the plaintiffs' contention that discriminatory intent motivated voters to adopt Initiative 300. To name but one example, television advertisements that supporters of Initiative 300 produced before its adoption concluded by stating: "Let's send a message to those rich out-of-state corporations. Our land's not for sale, and neither is our vote. Vote for Initiative 300." It is clear beyond cavil that these ads bristle with an animus against out-of-state corporations.
C.
We have concluded that Initiative 300 discriminates against out-of-state entities both on its face and because of its discriminatory intent. And if a state constitutional provision "is indeed discriminatory, it is `per se invalid' unless the [State] `can demonstrate, under rigorous scrutiny, that [it has] no other means to advance a legitimate local interest.'" Hazeltine,
The State Officials argue that some of the threats that stem from unrestricted corporate ownership of Nebraska farm and ranch land include absentee owners of land, negative effects on the social and economic culture of rural Nebraska, and a lack of good stewardship of the state's land, water, and natural resources. While the State Officials concede the district court's finding that the third problem could be resolved through other means, as, for instance, by regulation, they assert that the first two issues require the intervention of Initiative 300.
As the plaintiffs point out, however, the State Officials' argument with respect to preventing absentee ownership of land is directly contradicted by their interpretation of the family farm exception, under which an out-of-state corporation could own farmland or engage in farming operations without residing or performing daily labor in Nebraska. In addition, the State Officials do not indicate why land use and environmental regulations could not resolve any difficulties associated with absentee ownership. We think that the same holds true for the State Officials' claim about the "negative effects on the social and economic culture of rural Nebraska," though we cannot be sure what is meant by these terms. It appears in fact that the State Officials are attempting to obfuscate the issue by using such a vague definition of these "negative effects" that the definition itself is what prevents us from suggesting concrete alternative measures. Were the state interests more clearly defined, we would be able to discern whether specific regulations could address the particular difficulties that frustrate the promotion of those interests. We assume that a mere desire to maintain the status quo cannot in itself be a "legitimate local interest." Indeed, it is that kind of xenophobia that the dormant commerce clause sets its face against.
The State Officials failed to meet their burden of showing that Nebraska could not advance a legitimate local interest without discriminating against non-resident farm corporations and limited partnerships. The amendment passed as a result of Initiative 300 thus fails the conditions that we set out in Hazeltine, and we affirm the district court's holding that Neb. Const. art. XII, § 8 violates the dormant commerce clause both on its face and based on its discriminatory intent.
IV.
The State Officials urge us not to hold the entire amendment unconstitutional even if part of it is unconstitutional in its current form; rather, they say, we should sever its unconstitutional portions. As the district court explained, the Nebraska Supreme Court has held that a portion of a statute is severable if a "workable plan" remains after severance, the valid portions are "independently enforceable," the invalid portion did not serve as "such an inducement to the valid parts that the valid parts would not have passed without the invalid part," and severance will not violate the "intent of the Legislature." Jaksha v. State,
While severing the unconstitutional portion of the initiative amendment here leaves a workable plan that is independently enforceable, a severance would not satisfy the conditions that the Nebraska Supreme Court has outlined for a severance. Initiative 300 contains no severability clause and, like the district court, we "cannot conclude that the residency or day-to-day labor-and-management provisions in the family-farm exemption were not an inducement to the passage of Initiative 300," Jones,
V.
The State Officials also argue that six witness declarations, three depositions, certain deposition exhibits, and two videotape exhibits, all of which the plaintiffs offered in support of their motion for summary judgment, contained information that was not relevant to the adjudication of this case. We have considered the State Officials' objections and conclude that they are meritless.
VI.
Because we agree with the district court's decision on the grounds that Neb. Const. art. XII, § 8 violates the dormant commerce clause, we have no occasion to reach the question of whether it also violates the ADA. We note that it may become necessary to address that question if the plaintiffs pressing the ADA claim move for and receive attorneys' fees in the district court. Until that happens, however, we see no reason to rule on the question of the applicability and effect of the ADA in the current circumstances of the case.
Affirmed.
Notes:
Notes
The Honorable Laurie Smith Camp, United States District Judge for the District of Nebraska