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Stenehjem gives Dakota Access 30 days to explain land purchase

The Dakota Access Pipeline, pictured under construction on Friday, July 29, 2016, in northwest North Dakota, is expected to be complete by the end of 2016. Forum News Service file photo by Eric Hylden

BISMARCK — Attorney General Wayne Stenehjem on Tuesday gave the company building the Dakota Access Pipeline 30 days to explain how it intends to use thousands of acres of ranchland purchased last week around the pipeline route in Morton County — and how it complies with the state's anti-corporate farming law.

Stenehjem said he received the deed on Tuesday, Sept. 27, for the sale in which Dakota Access LLC, a subsidiary of Dallas-based Energy Transfer Partners LP, acquired most of the historic Cannonball Ranch from ranchers David and Brenda Meyer of Flasher in a deal totaling more than 7,000 acres for an undisclosed price.

The property in southern Morton County is just north of where thousands of American Indians and other pipeline opponents have been camping for weeks, drawing international attention. It also includes the land where the Standing Rock Sioux Tribe alleges Dakota Access bulldozers disturbed ancestral burials and other sacred sites, a claim the company denies.

Stenehjem said his office will review the case for compliance with the anti-corporate farming law, which prohibits corporations and limited liability companies from owning or leasing farmland and ranchland and from engaging in farming or ranching, with an exception for family corporations and LLCs with up to 15 related shareholders.

"We'll treat this just like we do every case," he told Forum News Service.

The law also contains exceptions for corporations to own farmland or ranchland when it's "necessary" for residential or commercial development and industrial or business purposes. Dakota Access indicated on the deed that it intends to change the use of the agricultural land, but it didn't say how.

In a letter Tuesday to Dakota Access, the attorney general's office asked the company to reply within 30 days "stating the purpose for which the land is used and, if it is farm or ranch land, whether it meets any exceptions to the law."

Bismarck attorney Sarah Vogel, a former assistant attorney general and state agriculture commissioner familiar with the anti-corporate farming law, said she "just can't imagine" why Dakota Access needs more than 7,000 acres for the crude oil pipeline, when it already has a 50-foot-wide pipeline easement and 100-foot-wide construction easement from the Meyers.

"That's going to be the challenge that they've got is proving the necessity," she said.

Dakota Access spokeswoman Vicki Granado responded to an email Tuesday but did not answer questions related to the anti-corporate farming law and how the company intends to use the land. Bismarck attorney Lawrence Bender, who represented Dakota Access in the transaction, did not respond to messages.

If Stenehjem has reason to believe that the company isn't in compliance, the law requires him to file an action in district court. If the court agrees, the company must divest itself of the land within the time set by the judge — not to exceed one year — or face a civil penalty of up to $100,000 and risk being dissolved by the secretary of state.

Vogel said the land deal underscores why the state needs the anti-corporate farming law, which was passed by state voters in 1932 to protect family farmers and is being challenged as unconstitutional by the North Dakota Farm Bureau in a federal lawsuit filed in June.

"This is a demonstration of what the world would be like without the law. Now we have something we can do about it — if the attorney general does something," she said.

North Dakota Farm Bureau President Daryl Lies said without knowing the details, the organization won't comment on whether Dakota Access can lawfully own the land. But generally speaking, he said, "We feel part of private property rights is the ability to do with your land as you please, which includes the sale of land."

North Dakota Farmers Union President Mark Watne, whose group helped force a referendum in June in which voters rejected lifting the corporate farming ban for dairy and swine, said it's sometimes in the public's interest for corporations to purchase farmland for things such as electrical lines. But the Dakota Access purchase begs the question of how much land is needed, "and that's got to be determined by the legal system," he said.

"On the surface, it appears that they would probably have to divest it at some time and they couldn't farm it," he said.

The attorney general's office reviewed 238 deeds last year and has reviewed 186 so far this year, spokeswoman Liz Brocker said. Those that don't comply with the anti-corporate farming law are usually resolved through voluntary corrective action such as deeding the land to someone who can legally hold it, without the need for formal enforcement action through the courts, she said.

But the office has taken court action when necessary, Brocker said, citing as an example the purchase of 949 acres in Griggs County by Crosslands Inc., a Minneapolis nonprofit that developed duck nesting grounds. The North Dakota Supreme Court issued an opinion in May 2010 ordering the nonprofit to sell the land because most of it was used as farmland or ranchland, the Associated Press reported.

Requests by nonprofits to purchase farmland or ranchland must go through an advisory committee that recommends to the governor whether to approve or deny the purchase — a process Crosslands skipped. Former Gov. John Hoeven rejected multiple land purchases proposed by Ducks Unlimited last decade, and current Gov. Jack Dalrymple also followed the advisory panel's recommendation when he denied Ducks Unlimited's request to acquire 47 acres of drained wetlands in Foster County in 2014.

Brocker said it's been at least five years since the office took legal action against a for-profit company in connection with the law.

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