Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 1 of 11 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NORTH DAKOTA

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1 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 1 of 11 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NORTH DAKOTA North Dakota Farm Bureau, Inc.; Galegher Farms, Inc.; Brian Gerrits; Breeze Dairy Group, LLC; Paul Ivesdal; North Dakota Pork Council; Bill Price; and Global Beef Consultants, LLC, Plaintiffs, ORDER GRANTING MOTIONS TO INTERVENE vs. Wayne Stenehjem, in his official Capacity as Attorney General of North Dakota, Case No. 1:16-cv-137 Defendant, Farmers Educational and Cooperative Union of America North Dakota Division, d/b/a North Dakota Farmers Union, Movant for Intervention, Dakota Resource Council, a North Dakota Nonprofit Corporation, Movant for Intervention. Before the Court is a motion to intervene filed by the Farmers Educational and Cooperative Union of America North Dakota Division ( Farmers Union on October 12, See Docket No. 30. The Plaintiffs filed a response in opposition to the motion on October 24, See Docket No. 49. The Defendant filed a notice of non-objection on October 24, See Docket No. 48. Farmers Union filed a reply brief on October 31, See Docket No. 54. Also before the Court is a motion to intervene filed by the Dakota Resource Council ( DRC on October 17, See Docket No. 35. The Plaintiffs filed a response in opposition to 1

2 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 2 of 11 the motion on October 27, See Docket No. 51. The Defendant filed a notice of objection to the motion on October 27, See Docket No. 53. The DRC filed a reply brief on November 7, See Docket No. 55. For the reasons set forth below, the motions are granted. I. BACKGROUND On June 2, 2016, the Plaintiffs initiated this lawsuit challenging the constitutionality of Chapter of the North Dakota Century Code. Chapter is officially known as the Corporate or Limited Liability Company Farming law ( Corporate Farming Law. Chapter protects family farms by making unlawful, with some exceptions, corporate farming and corporate ownership of farms. The Plaintiffs contend Chapter violates the Commerce Clause, Privileges and Immunities Clause, and the Equal Protection Clause of the United States Constitution and 42 U.S.C The Plaintiffs filed an amended complaint on August 17, The Defendant, Wayne Stenehjem, in his official capacity as Attorney General of North Dakota, ( State filed an answer on October 11, On October 12, 2016, the Farmers Union filed a motion to intervene. The DRC filed a motion to intervene on October 17, Plaintiff North Dakota Farm Bureau ( Farm Bureau is a non-profit corporation organized under the laws of North Dakota, with its principle place of business in Fargo, North Dakota. The Farm Bureau's voluntary membership consists of more than 26,000 farm, ranch, and rural families residing in North Dakota, whose agricultural, social, and economic interests it strives to advance. Plaintiff Galegher Farms, Incorporated is a farming corporation organized under the laws of North Dakota, with its principle place of business in Thompson, North Dakota. Galegher Farms currently meets the kinship requirements of Chapter but contends it may have difficulty 2

3 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 3 of 11 doing so in the future as extended family members who do not meet the kinship requirements have expressed an interest in joining the business. Plaintiff Brian Gerrits is an individual who resides in De Pere, Wisconsin. Gerrits is a member of a Wisconsin limited liability company, Breeze Dairy Group, LLC, that engages in dairy farming in Wisconsin. Chapter prohibits Gerrits and the Wisconsin limited liability company he is a member of from expanding into North Dakota. Plaintiff Breeze Dairy Group, LLC ( Breeze Dairy is a limited liability corporation organized under the laws of Wisconsin. Breeze Dairy is a dairy farming operation in Wisconsin with over one hundred employees. Chapter prohibits Breeze Dairy from expanding into North Dakota. Plaintiff Paul Ivesdal is an individual who resides in Edmore, North Dakota. Ivesdal is a partner in North Dakota Sow Center, LLLP, which owns and operates multiple isowean facilities. Ivesdal contends Chapter prohibits him from utilizing the corporate business structure he would prefer. Plaintiff North Dakota Pork Council is a nonprofit corporation organized under the laws of North Dakota. The North Dakota Pork Council promotes the interests of pork producers and provides pork producers with educational resources and services which enhance profitability. The North Dakota Pork Council contends Chapter interferes with its ability to fulfill its mission. Plaintiff Bill Price is an individual who resides in Center, North Dakota. Price is a farmer and rancher involved in multiple farming and ranching operations in North Dakota, including the Price Cattle Ranch which is organized as a limited liability partnership. Price and the Price Cattle Ranch contend they would prefer to operate as a corporation or limited liability company but are 3

4 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 4 of 11 prohibited by Chapter from doing so. Plaintiff Global Beef Consultants, LLC ( Global Beef is a limited liability corporation organized under the laws of North Dakota. Global Beef provides cattle consulting and export services, often to foreign countries, and owns and operates two ranches in Kazakhstan. Global Beef contends it has been prohibited by Chapter from establishing its base of operations in North Dakota. Farmers Union is a nonprofit organization founded in 1927 to help create and maintain security on the land for farm families. Farmers Union is the largest general farm organization in North Dakota, with 45,500 member families. Farmers Union works to advance family farms and ranches and the quality of life for North Dakotans through member advocacy, educational programs, cooperative initiatives, and insurance services. In the early 1930s, Farmers Union drafted the language for what would ultimately become North Dakota's Corporate Farming Law through initiated measure in Farmers Union has long been committed to preserving and has actively defended North Dakota s Corporate Farming Law which it sees as the foundation of family farms, rural communities, the state s agrarian heritage, and stewardship of natural resources. The DRC is a nonprofit organization formed in 1978 with the purpose of protecting North Dakota s rural communities, agricultural economy, soil, land, and water. The DRC works for preservation of family farms, enforcement of corporate farming laws, soil and water conservation, regulation of coal mining and oil and gas development, protection of groundwater and clean air, renewable energy, and sound management of solid and toxic wastes. The DRC consists of its approximately 1,000 members, more than half of whom are farmers and ranchers. Since the DRC was founded, its members have repeatedly listed the viability of North Dakota s family farms as a 4

5 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 5 of 11 foundational issue, and advocacy, education, and enforcement of North Dakota s Corporate Farming Law as central to DRC s organizational purpose and existence. Farmers Union and the DRC seek intervention as a matter of right, or alternatively, permissive intervention, under Rule 24 of the Federal Rules of Civil Procedure. The Plaintiffs are opposed to intervention by Farmers Union and the DRC. The State is not opposed to Farmers Union s motion to intervene, but is opposed to the motion to intervene filed by the DRC. II. LEGAL DISCUSSION Rule 24 of the Federal Rules of Civil Procedure governs intervention by third parties. Farmers Union and the DRC seek intervention as a matter of right pursuant to Rule 24(a. Alternatively, they seek permissive intervention pursuant to Rule 24(b. It is undisputed that Farmers Union and the DRC have standing. Rule 24(a(2 of the Federal Rules of Civil Procedure provides for intervention as a matter of right by an interested third party who, on timely motion: claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant s ability to protect its interest, unless existing parties adequately represent that interest. Fed. R. Civ. P. 24(a(2. The Eighth Circuit requires that an application for intervention must satisfy the following tri-partite test in order to intervene pursuant to Fed. R. Civ. P. 24(a(2: 1 the party must have a recognized interest in the subject matter of the litigation; 2 that interest must be one that might be impaired by the disposition of the litigation; and 3 the interest must not be adequately protected by the existing parties. United States v. Union Elec. Co., 64 F.3d 1152, (8th Cir It 5

6 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 6 of 11 is well-established that Rule 24 is to be given a liberal construction. Courts must assess a motion to intervene in a light most favorable to the prospective intervenor, construe the motion in favor of the prospective intervenor, and accept all material allegations in the motion as true. Nat l Parks Conservation Ass n v. United States Envtl. Prot. Assoc., 759 F.3d 969, (8th Cir It is undisputed that both Farmers Union and the DRC have filed timely motions and have a recognized interest in the subject matter of the litigation that may be impaired by the disposition of the lawsuit. The only disputed issue is whether the State will adequately represent the interests of Farmers Union and the DRC. A prospective intervenor bears the burden of showing that [its] interests are not adequately represented by the existing parties. Chiglo v. City of Preston, 104 F.3d 185, 187 (8th Cir A prospective intervenor typically carries only a minimal burden of showing that existing parties do not adequately represent its interests. Mille Lacs Band of Chippewa Indians v. Minn., 989 F.2d 994, (8th Cir. 1993; Mausolf v. Babbitt, 85 F.3d 1295, 1303 (8th Cir However, a prospective intervenor has a heavier burden when an existing party has an obligation to represent its interests. Mille Lacs, 989 F.2d at Under the concept of parens patriae (parent of the country, if an arm or agency of the government is a party in litigation involving a matter of sovereign interest, the government is presumed to represent the interest of all its citizens. Id. at 1000; Nat l Parks, 759 F.3d at 976. The parens patriae presumption only applies to the extent the prospective intervenor s interests coincide with the public interest. Nat l Parks, 759 F.3d at 977. If the prospective intervenor stands to lose or gain from the lawsuit in a way different than the public at large, the parens patriae presumption does not apply. Chiglo, 104 F.3d at 188. Even when such a presumption of adequate representation arises on this basis, it may be rebutted by showing that the 6

7 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 7 of 11 prospective intervenor s interest cannot be subsumed within the shared interest of state. Mille Lacs, 989 F.2d at ; Mausolf, 85 F.3d at In this case, the interests of Farmers Union are narrower than the public interest and cannot be subsumed within the broad public interest represented by the State. The State and Farmers Union share the common legal goal of protecting North Dakota s Corporate Farming Law, but their interests in the law are different. The State has a broad interest in protecting its laws from federal constitutional challenges and must represent the varied interests of all its citizens including rural, urban, farm, non-farm, Native American, corporate, non-profit, conservation, coal, oil and many more. In addition, the State agrees that Farmers Union should be allowed to intervene and essentially concedes it is unable to adequately represent the interests of Farmers Union. Farmers Union is North Dakota s largest farm organization and has a unique interest in defending a law it drafted over 80 years ago. The law was first enacted through an initiated measure in 1932 and has been amended a number of times since then. Farmers Union, as the law s leading supporter, has been heavily involved in protecting the law since its enactment and has a deep and thorough knowledge of the law s legislative history. Farmers Union, as the law s primary advocate, will be able rely on its institutional knowledge regarding the reasons for and purpose of the statute garnered over its more than eighty years of active support of the law to vigorously defend it. See Coalition of Ariz./N.M. Counties for Stable Econ. Growth v. Dep t of Interior, 100 F.3d 837, 843 (10th Cir (allowing a primary advocate for the Mexican Spotted Owl to intervene to defend the decision of the United States Fish and Wildlife Service to list it as threatened because the intervenor would vigorously defend the decision. In addition, Farmers Union members have personal interests in the outcome of this litigation, which they see as jeopardizing their economic, 7

8 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 8 of 11 social, and cultural interests and welfare. While Farmers Union has consistently supported and defended the law since 1932, the State s position regarding the law has varied. For instance, in 2015, the Governor and Agriculture Commissioner supported certain exemptions for hog and dairy operations which Farmers Union vigorously opposed and successfully referred. Clearly, the interests of the State and Farmers Union are not shared. Resolving the Plaintiffs constitutional challenge will likely require assessing whether any burden the law imposes on interstate commerce is clearly excessive in relation to the putative local benefits. Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970 (citing Huron Cement Co. v. Detroit, 362 U.S. 440, 443 (1960; see also Jones v. Gale, 470 F.3d 1261, 1270 (8th Cir ( legitimate local interests that cannot be advanced by any other means can save a law from a dormant commerce clause challenge. This analysis will require considering information which Farmers Union and its members have a deep knowledge of and decades of experience defending. Courts recognize that where a proposed intervenor can supplement the defense of a challenged law, intervention is allowed to further a more informed adjudication. Natural Res. Def. Council v. Costle, 561 F.2d 904, (D.C. Cir Finally, permitting Farmers Union to intervene will assist the Court in deciding the claims raised in this declaratory judgment action. The Farm Bureau and Farmers Union are the two largest farm organizations in North Dakota. The Farm Bureau is opposed to the Corporate Farming Law while Farmers Union supports it. Much is at stake and both should be heard. Like Farmers Union, the DRC has unique interests which arguably cannot be adequately represented by the State. Although the State maintains it can adequately represent the interests of the DRC, it provides little explanation as to why the DRC should be treated differently than Farmers 8

9 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 9 of 11 Union whose intervention it supports. One inference that can be drawn from the State s opposition is that the interests of the State and the DRC are in fact very different and cannot be adequately represented by the State. DRC s members are predominantly rural family farmers and ranchers with an interest in protecting their land, air, water, rural communities, and North Dakota s agricultural economy. The DRC and its members stand to be directly impacted by the litigation in ways different from the public at large. First, the DRC s organizational interests are at stake. These organizational interests including its membership and direction of the organization are very different from those of the rest of the public. Second, individual DRC members have property interests at stake. Several DRC members are concerned that they will lose their farms and their livelihoods if the Corporate Farming Law is struck down. Another member is concerned that it will be more difficult to maintain his farm s organic certification if the law is struck down. These are specific harms that are not shared by the public at large, and are not subsumed by the State s interests. The DRC s interests are clearly narrower than the broad interests of the State. The State cannot focus on the narrower interests of family farmers and ranchers who support the Corporate Farming Law because if it did so it would be doing a disservice to its other citizens who are not farmers and ranchers and who do not live in rural communities. The State must balance the interests of all its citizens, including those who oppose the law. In addition, the DRC has rebutted the parens patriae presumption that the State will adequately represent the interests of the DRC. As explained above in relation to Farmers Union, the State has not always vigorously defended the law. The DRC worked hard to defeat the 2015 legislation signed by the Governor and promoted by the Agriculture Commissioner which exempted 9

10 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 10 of 11 certain hog and dairy operations from the law. After the 2015 legislation became law, the DRC, along with Farmers Union, worked to challenge the law through the referendum process. That referendum was successful with nearly 76% of the voters rejecting the newly enacted exemptions. Under these circumstances, it is not unreasonable for the DRC to argue the State will not adequately represent its interests. Further, North Dakota s Corporate Farming Law is lengthy and complicated, the result of decades of fine-tuning and tailoring to maintain a ban on corporate farming while allowing limited exemptions for interests that do not adversely affect the purposes for which the law was enacted. Some of these interests include carefully tailored exemptions for industrial use, coal mining, certain family-owned and operated farms, cooperatives, and not-for-profit conservation ownership of land. The Plaintiffs have challenged the Corporate Farming Law as a whole, and the State must balance all of these interests in its defense of the law. The interests of DRC and its members that may be affected by this case are both different and narrower from the broad interests of the State. Finally, in reviewing the DRC s motion to intervene, the Court is cognizant of the liberal construction to be given Rule 24. Nat l Parks, 759 F.3d at The Court agrees with the DRC that its participation would ultimately sharpen[] the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions. See Baker v. Carr, 369 U.S. 186, 204 (1962. Having determined that Farmers Union and the DRC are entitled to intervention as of right, the Court need not address their requests for permissive intervention. 10

11 Case 1:16-cv DLH-CSM Document 56 Filed 01/11/17 Page 11 of 11 III. CONCLUSION The Court concludes both Farmers Union and the DRC have satisfied the requirements for intervention as of right under Rule 24(a(2 of the Federal Rules of Civil Procedure. Accordingly, the motions to intervene (Docket Nos. 30 and 35 are GRANTED. Farmers Union and the DRC will have seven (7 days from the date of this order to file their respective answers to the Plaintiffs complaint. IT IS SO ORDERED. Dated this 11th day of January, /s/ Daniel L. Hovland Daniel L. Hovland, Chief Judge United States District Court 11