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Published February 25, 2013, 09:31 AM

Tackling state ag issues

In a two-part series, Agweek gives legislative updates for its four-state coverage area, starting with South Dakota and Minnesota. Check the March 4 issue for updates from North Dakota and Montana.

By: Mikkel Pates, Agweek

SD talks land rights, elevator reporting

PIERRE, S.D. — The South Dakota Legislature is involved in numerous landowner rights and hunting-related bills, as well as grain elevator reporting in the wake of the Anderson Seed Co. sunflower fiasco that left farmers unpaid.

State Sen. Shantel Krebs, R-Renner, chairwoman of the South Dakota Senate Agriculture and Natural Resources Committee, and Rep. Charlie Hoffman, R-Eureka, S.D., a cattle rancher and chairman of the House Agriculture and Natural Resources Committee, talked to Agweek about highlights in bills involving agriculture — an industry that accounts for $21 billion of the state’s $40 billion in gross state product.

One of the headline issues this session is landowner rights stemming from bills recommended by an interim summer task force in response to North Dakota’s oil and gas boom. Krebs says theSouth Dakota Legislature wants to make sure South Dakota landowners have protections similar to North Dakota’s.

South Dakota has seen the development of 12 new wells per year and produces 1.6 million barrels of oil from a total of 150 wells. Severance taxes produce about $5 million to $6 million a year. “We do know there will be more drilling in northwest South Dakota, but not to the extent of North Dakota,” Krebs says.

Among this year’s ag-related bills:

•SB 1 — Oilfield bonds. This legislation revises provisions regarding plugging and performance bonds, or bonding in general. For the past 30 years, the state required only $5,000 in bonding per well drilled. With more wells being drilled in northwest South Dakota, the bonds were increased to $50,000. The state department of Environment and Natural Resources did some research to follow North Dakota’s lead on the issue and will monitor to make sure South Dakota follows suit. The bill is expected to get a unanimous vote in favor.

•SB 59 — Oilfield wastes. This bill says North Dakota oil drillers cannot cross the border and dispose of oil and gas field wastes in South Dakota. It passed in the Senate Jan. 28 with a 26-7 vote and is now in the House Agriculture and Natural Resources Committee.

•SB 6 — Ag land taxes. This legislation passed the Senate on Jan. 30 by a 24-11 vote and is now in the House Agriculture and Natural Resources Committee.

In 2008, South Dakota began taxing land using a productivity model instead of market value. “We’ve had a continuing ag land assessment task force to just watch every year to see if there is anything that needs to be tweaked,” Krebs says. SB 6 provides a tweak involving the actual use versus the highest and best use.

“If an individual says, ‘I’m not going to put it in crop this year, but for management purposes, I’m going to decide to put it in grazing or grassland,’ that’s his personal choice,” Krebs says. “And maybe it’s because of a typography issue, or maybe it’s got challenges that go with it.” When the landowner asks for it, the assessor will come out and look at the topography of that land to see if it’s appropriately taxed, she adds.

In the past few years, the Legislature has changed the cap on land valuation assessments to 15 percent per year. One example is Brown County, an area where land values had typically been under-assessed and have had to catch up, Krebs says.

•SB 183 — Hunting trespass. This bill increases penalties for hunters going on land without proper notification. It passed the Senate Agriculture and Natural Resources Committee unanimously.

•SB 238 — Wildlife damage control. This legislation asks the state to appropriate $300,000 to the South Dakota Game, Fish and Parks Department’s animal damage control fund on an emergency, or immediate basis. This is especially aimed at helping landowners deal with wolf and coyote depredation problems. It is not to pay farmers for losses, but pays for control. The bill is pending in the Senate Agriculture and Natural Resources Committee.

Sheep producers in the northwest and northeast parts of the state are among the most affected, Krebs says.

•SB 171 — Animal cruelty. This would change “aggravated cruelty” to a felony offense relating to dogs, cats and horses. Horses in South Dakota statutes are defined as livestock, Krebs says, and that opens a gateway to other areas of concern for agricultural producers. On Feb. 12, the Senate Agriculture and Natural Resources Committee voted 7-1 to defer it to the 41st day, effectively killing the bill because the session is only 40 days.

•SB 155 — Ag development infrastructure. Krebs is the primary sponsor of a bill that would create an agricultural development grant fund, open for applications from townships or counties. This would come into play where a county might otherwise reject a conditional use permit for an agricultural enterprise such as a co-op, facility or dairy where there is no local way to improve and maintain a road for that development. It was proposed at $5 million in one-time funding, administered by the South Dakota Transportation Commission.

“The dairy industry came and shared these challenges that they had with conditional use permits not being granted for one reason — infrastructure,” Krebs says. “We have a lot of dairy opportunities in South Dakota. We have 92,000 head of dairy in South Dakota and on that I-29 corridor, we have two large processing plants and a third coming in.” The Senate Agriculture and Natural Resources Committee on Feb. 5 voted 7-0 to refer it to Senate Appropriations, where it passed 8-0 and then the full Senate, where it passed 32-1.

•HB 1123 — Wildlife depredation control. This bill would increase the surcharge on hunting licenses from $5 to $6. Currently, half of the $5 surcharge goes to wildlife management for goose and deer depredation and the other half goes to a walk-in program for hunting.

Rep. Betty Olson, R-Prairie City, a member of the ag committee in her last term in office, proposed a $1 increase in the surcharge. Money raised from the increase would be used entirely for wildlife management, hiring two to four state trappers. “Predators are not only killing our livestock, but also wildlife,” Olson says. The House passed the bill 55-13 on Feb. 4 and the bill is now in the Senate Agriculture and Natural Resources Committee.

•HB 1017 — Grain warehouse finance reporting. Sponsored by the South Dakota Public Utilities Commission, the bill would increase the bonding for some areas, widen reporting ranges and shorten the window for financial reporting to the PUC.

The bill was prompted by the failure of Anderson Seed, a Mentor, Minn.-based company that had a major facility in Redfield, S.D. The company failed in February 2012, with more than $5 million unpaid to farmers in the Dakotas.

“If there is a bad actor, and there are some problems with the integrity of that business, we’re going to find out about them before they create harm to a producer,” Hoffman says. It passed the House 66-2 and is now in the Senate Agriculture and Natural Resources Committee.

•HB 1228 — Farmer priority in insolvencies. This bill would put farmers ahead of co-ops, trucking companies and other creditors to get paid in an insolvency case. The House Agriculture and Natural Resources Committee voted in favor of it, but Hoffman, who voted in favor of it in committee, opposed it on the House floor Feb. 19, where it failed 18-52. He says he doesn’t want to pick “winners and losers” among farmers, truckers and bankers in insolvencies. He predicted a debacle similar to Anderson Seed’s will never happen again because of better financial reporting in HB 1017.

•HB 1156 — Waterfowl licenses. The bill allows the South Dakota Game, Fish and Parks Commission to consider waterfowl hunting permit adjustments based on waterfowl numbers and habitat availability. “We see a lot of nonresident hunters coming in for pheasant seasons,” Hoffman says. “None can go out into the country and buy a waterfowl tag. This would allow them, in areas like McPherson County, to adjust the numbers based on science.”

•HB 1083 — Sheep and goat rustling. This bill revises the crime of rustling to include sheep and goats. It passed the House 66-2, and is now in the Senate Agriculture and Natural Resources Committee.

•HB 1003 — Ag mediation. Under this bill, the South Dakota Department of Agriculture would add oil and gas disputes to its mediation program. The mediation service offers an advisory role with no decision-making authority, but attempts to deal with matters before they go to court. The House passed it 70-0 and the Senate Agriculture Committee passed it 6-0.

Minn. budget drives ag bill topics

Minnesota’s budget concerns are the overarching factor in agriculture-related legislation for the 2013 session. Gov. Mark Dayton and legislators are working to eliminate a $1.1 billion budget deficit, based on November 2012 forecasts.

This year’s Legislature convened Jan. 8. Both the Minnesota Farmers Union and the Minnesota Farm Bureau have been active throughout the first six weeks.

The Legislature will work on its own budget, which will be based on the February forecast, set to be released in mid-March. “One of the big things we’re looking at right now is the impact of the governor’s proposal to increase the sales tax base on more goods and services,” says Chris Radatz, MFB’s policy team director.

Dayton proposed cutting the state rate from 6.875 percent to 5.5 percent, but applying it to a wider number of services, including legal, accounting, environmental consulting, crop consulting and labor on farm machinery repair. “Now that we have more of the details, we’re examining it to see what the impact is for Minnesota farmers and ranchers,” Radatz says.

Thom Petersen, director of government relations for the MFU, says his organization is studying the tax bill and will decide whether to support it, but likely will raise concerns about things such as new taxes on crop consulting.

“We haven’t come to a conclusion yet on the overall bill and we’re looking at the grand scheme of what we’re going to support on a tax basis,” Petersen says, noting that property tax limits likely will be accompanied by increases in other taxes.

Both the MFB and the MFU have wanted to make sure that money in the Agricultural Growth Research and Innovation Program will go toward agricultural programming. The $10 million appropriations formerly had been targeted for ethanol producer payments. The payments ran for 10 years, but expired during the past biennium. Petersen says his organization wants the funds in next-generation biofuels, livestock investment grants or rural development.

Among ag-related bills in Minnesota:

•HF 632 — Forever green agriculture. This bill appropriates $1.4 million each for fiscal years 2014 and 2015, running through June 30 of each year. The bill allows the University of Minnesota to study the increased incorporation of perennial and winter-annual crops into existing agricultural practices. It was introduced Feb. 18.

•HF 473 — Minnesota Department of Agriculture appropriation. This bill appropriates $40.447 million each year in 2014 and 2015 for the MDA, the Board of Animal Health and the Agricultural Utilization Research Institute. It modifies provisions related to animal waste technicians and includes $10.2 million each year for grants through AGRIP. Bioenergy companies and service providers can qualify.

The bill had its first reading Feb. 11 and is in the House Agriculture Policy Committee. Radatz says his organization is pleased that key programs in the MDA budget involving food inspection, food safety and consumer protection programs were protected. Petersen is also grateful that Dayton didn’t propose cuts to agriculture.

•HF 407 — This bill puts $2 million from AGRIP into annual appropria-

tion. It would be split into $500,000 for the Agricultural Utilization and Research Institute; $500,000 for Minnesota Agriculture Education Leadership Council for grants to restart high school agriculture education programs; $200,000 to the Minnesota Extension Service for 4-H; $800,000 to the commissioner of agriculture to put $200,000 each into the Center for Rural Policy and Development, “Farmamerica,” a state agricultural interpretive center, Minnesota FFA and the Minnesota Agriculture and Rural Leadership Program. It was introduced Feb. 7 and is now in the Agriculture Policy Committee. This conflicts with MFU’s preference to have that money available in general categories in the MDA and under competitive grants.

•HF 349 — Biofuel blender pump cost-share grants. The bill was introduced Feb. 4 and is in the House Environment, Natural Resources and Agriculture Finance Committee. It appropriates $200,000 each for fiscal years 2014 and 2015 to allow the MDA to reimburse gas station owners for up to 75 percent of the cost of installing a biofuel blender pump, up to $20,000 per pump. Both MFU and MFB are in favor of it.

•HF 251 — This bill would extend the Farmer-Lender Mediation Act through fiscal year 2018. The bill passed the House 124-5 on Feb. 14 and on Feb. 18, was introduced in the Senate and referred to the Senate’s Jobs, Agriculture and Rural Development Committee.

•HF 230 — Industrial hemp development. This bill provides for regulation, possession and cultivation of industrial hemp. Radatz says the bill is a perennial effort that faces difficulties in complying with federal laws.

•HF 151 — Pesticide gross sales fee increase. The fees would increase with a temporary .1 percent surcharge through calendar year 2017. The money would be dedicated to updating pesticide applicator education and certification. MFU is supporting the bill, but Petersen says fees will be removed.

•HF 66 — Drainage law changes. The House Environment and Natural Resources Policy Committee passed this bill, which makes changes recommended by a drainage work group. It clarifies the transfer of drainage system records between a county and a watershed district when drainage authority is transferred and enables re-establishment of drainage system records that are lost or destroyed.

MFB has legislative visit days scheduled — March 5 for members in the northern part of the state and March 19 for members in the south-central and southwest regions, Radatz says.

Petersen expects there will be a bill to repeal wolf hunting in the state and that his organization will oppose it.

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