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Xenophobia* Is Unconstitutional PDF Print E-mail
Written by Steve Dittmer   
Saturday, 24 February 2007
AFF Sentinel Vol.4 #2
Or Why Oklahoma's Football Team May or May Not Be Better, But Their Money Is Just As Good

Striking a blow for agricultural economic freedom, a federal appeals court has affirmed as unconstitutional another state's restrictions on agricultural corporations or partnerships.

The Eighth Circuit Court of Appeals has affirmed a district court opinion overturning a Nebraska law derived from Initiative 300. This referendum prohibited any corporation from engaging Nebraska agriculture unless they were a "Nebraska family farm corporation."

Initiative 300 prohibited corporations and non- family-owned limited partnerships from buying farm or ranch land, or engaging in farming or ranching in Nebraska. It specified that a Nebraska family farm or ranch corporation - specifically exempted from the restrictions - was a corporation 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" in Nebraska.

The court said the "dormant commerce" clause of the Constitution prohibits state laws that "discriminate against or unduly burden interstate commerce." It agreed with the district court that Initiative 300 was discriminatory on its face, affording "differential treatment of in-state and out- of-state economic interests." (Hazeltine) It further ruled that it was intentionally discriminatory. The opinion quoted a pro-300 television ad that concluded, "Let's send a message to those rich out- of-state corporations. Our land's not for sale and neither is our vote."

And what about Nebraska farm corporations that consisted of friends but not family? They were out of luck, too. In fact, the effects of Initiative 300 illustrate how abandoning free market approaches destroys economic freedom.

Rob Beck is a cattle feeder near Kearney, NE., and a plaintiff in the suit. The law's restrictions kept out-of-state ranching corporations from contracting to feed cattle in Beck's feedlot. If a ranching corporation made up of partners in Oklahoma wanted to geographically spread risk by feeding cattle in several states, they couldn't feed in Nebraska. Cattlemen couldn't even partner with Beck on their cattle placed in his lot because the cattle were equity in an agricultural enterprise.

In effect, Beck and other Nebraska feeders were restricted to Nebraska cattlemen or Nebraska family farm corporations for customers. Such limitations restricted their customer base, reduced revenue potential and limited their borrowing power.

Long term, it also devalued Nebraska agricultural land by limiting the pool of buyers -- a "taking" from farmers and ranchers. On top of that, it made Nebraska farm and ranch holdings susceptible to more Death Tax liability. Restricting ownership by out-of- state children, restricting employee ownership, and otherwise limiting estate-planning options accomplished this.

Interestingly, the list of amici organizations lined up against cattlemen like Beck -- and amenable to such far-reaching detrimental effects on making money, land values and estate tax prevention -- included R-CALF, the Organization for Competitive Markets, National Farmers Union, the Western Organization of Resource Councils, Sierra Club, Nebraska Catholic Conference and states which themselves have restrictive farming laws: Minnesota, Iowa, Missouri, North Dakota and West Virginia.

The state had argued Initiative 300 was necessary to counter detrimental effects from absentee land ownership, negative effects on rural Nebraska's social and economic culture, and a lack of good stewardship of the state's natural resources.

The court said that if a 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 court said Nebraska had not defined the problems or shown why land use and environmental regulations could not resolve the difficulties.

"It appears that State Officials are attempting to obfuscate the issue by using such a vague definition of these `negative effects...'" the court said. "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."

In other words, our Founding Fathers forged a national Constitution. Constant bickering and taxing disputes between states would throttle commerce. States can't be allowed to hold their residents commercial prisoners.

The court has held that being against change, just because, isn't a good enough - or legal - reason.

*n. Fear or dislike of strangers or foreigners.

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Last Updated ( Saturday, 24 February 2007 )
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