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North Dakota must pay $175,000 in attorney fees in federal lawsuit over farming law

BISMARCK — A federal judge has ordered the North Dakota attorney general’s office to pay $175,000 in attorney fees to a farm group that sued over the state’s Depression-era anti-corporate farming law.

U.S. District Judge Daniel Hovland also criticized the state’s “attempt to recast” his September 2018 ruling.

Hovland a year ago upheld the law that state voters approved in 1932 to protect the state’s family farming heritage by barring corporations from owning or operating farms. However, he said a change made by state lawmakers in 1981 to allow exceptions for small “domestic” family farm corporations — primarily as a tax- and estate-planning tool — violates the Commerce Clause of the U.S. Constitution if it is applied only to in-state operations. He ordered North Dakota to extend the exception beyond state borders.

The North Dakota Farm Bureau sued in 2016 to try to do away with the law. The group maintained that even though Hovland didn’t do that, his ruling removed the state’s ability to discriminate against nonresident families who want to farm in North Dakota.

The Farm Bureau in April asked Hovland to award the group more than $250,000 in attorney fees and costs, maintaining it was “the prevailing party” in the lawsuit.

“Plaintiffs won a clear and permanent judicial order mandating protection of their constitutional interests,” attorney John Sullivan wrote in court documents.

But state officials also hailed Hovland’s ruling as a victory, saying it upheld the law and only confirmed how they were already interpreting and implementing it.

The attorney general’s office asked Hovland to reject the Farm Bureau’s request for attorney fees, arguing in court documents that the plaintiffs didn’t prevail because they “gained nothing in this litigation.”

“The state of North Dakota has long interpreted ... (the family farm exception) in a manner that does not discriminate against out-of-state family farm corporations,” Assistant Attorney General J.P. Bialke and Solicitor General Matt Sagsveen wrote.

They also argued the amount requested by the Farm Bureau was “unreasonable and excessive.”

Hovland agreed with that, saying the Farm Bureau’s “success in this case was limited” and reducing the amount by about $75,000.

But he disagreed with the contention of the attorney general’s office that Farm Bureau’s victory was at most “psychological.” Hovland said “it is clear that the plaintiffs are a prevailing party” and that “the state’s claim that plaintiffs ‘gained nothing’ is also incorrect.”

“The state’s attempt to recast the court’s grant of summary judgement in favor of the plaintiffs falls flat,” he said.

Farm Bureau declined comment, citing ongoing litigation. Attorney General Wayne Stenehjem said the state won't appeal.

The 2021 Legislature will need to appropriate money to pay the Farm Bureau, he said. The money will come from the state's taxpayer-funded general fund.