Should land in Day County owned by South Dakota and managed by the Department of Game, Fish and Parks as a game production area be classified as 'agricultural' for property tax mill-levy purposes?
Plain-English summary
Day County had been classifying state-owned game production land as agricultural for property-tax mill-levy purposes, on the same footing as private agricultural land used to produce livestock, grain, or dairy. The county's State's Attorney asked AG Mark Meierhenry whether that classification was correct.
The answer turned on SDCL 10-6-31.3, adopted in 1979 (Ch. 65, S.L. 1979). That statute set up a three-factor test for agricultural-land classification, requiring satisfaction of at least two of three criteria:
- Income test: at least 33% of the owner's total family gross income from production from the land, or agricultural production from the land exceeding $2,500 in three of the last five years.
- Use test: devotion to livestock, dairy, poultry, fish, horticulture, fruit, vegetables, forage, grains, or bees and apiary products. Slough, wasteland, and woodland contiguous to or surrounded by other agricultural land counted if under the same ownership or management.
- Acreage test: at least 5 acres of unplatted land, or part of a management unit of more than 40 unplatted acres (with county commission discretion to increase up to 40 acres for minimum).
The AG reviewed the specific facts. The Day County game production area was part of a 10,000-acre state-managed program under the Department of Game, Fish and Parks. About 10% of the acreage was actively cultivated (small grain or row crops). Another 20-30% was grazed or hayed. The remaining 60-70% was marshland, brushland, or woodland not capable of cultivation. State income from these operations in Day County the prior year had been $6,609, and the total realized from agricultural operations on the broader 10,000-acre program approached $20,000.
Meierhenry concluded that the property met all three criteria of SDCL 10-6-31.3. The income exceeded $2,500. The use was for grains and grazing and the non-agricultural portions (slough/brush/woodland) were contiguous to the ag portions and under the same ownership and management, so the use test applied to the whole. The acreage was clearly above any minimum. So the classification was agricultural.
The AG also cited prior reasoning that "agriculture" is a broad term that does not require the land to be primarily income-producing or to be the owner's primary livelihood. Milne v. McKinney (S.D. 1913) had held that even prairie or timbered land that had never been cultivated was "agricultural in character" for some statutory purposes. Nielson v. Erickson (S.D. 1978) had held that agricultural classification did not require the land to be economically self-sufficient.
Currency note
This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SDCL 10-6-31.3 has been amended multiple times since 1982; the income thresholds, acreage minimums, and use categories may have changed in ways that affect the analysis. Modern questions about classification of state-owned game-production land should be analyzed under current SDCL Chapter 10-6.
What the opinion meant at the time
The opinion settled what could have been a county-level tax dispute. Day County had been treating the state-owned game land as agricultural; the alternative would have been some non-agricultural category with potentially different tax effects. The AG endorsed the county's existing practice.
For other counties with significant state-owned game-production or wildlife-management land, the opinion gave a path: focus on whether the operational portions of the land qualify under SDCL 10-6-31.3 use and income tests, and whether non-operational portions are contiguous and commonly managed. If yes, the agricultural classification applies, even if 60-70% of the acreage is wetland or woodland.
The opinion also indirectly addressed a political question. State-owned land does not pay state property tax in the same way private land does, but counties may receive payments in lieu of taxes or share in tax-equivalent calculations. The classification determined the calculation method.
Common questions
Q: Is this opinion still good law?
A: SDCL 10-6-31.3 has been amended multiple times since 1982. The income thresholds ($2,500 in three of five years, 33% of family gross income) and acreage requirements may differ in current text. The general principle, that contiguous non-cultivated land under the same management as ag land takes on the ag classification, broadly persists. Verify current text before relying on specific thresholds.
Q: Did the AG address payment in lieu of taxes (PILT) on state-owned land?
A: No. The opinion addressed classification, not the payment mechanism. PILT and tax-equivalent arrangements for state-owned land are separate questions governed by different statutes.
Q: What if a parcel is entirely wetland with no cultivation?
A: Under SDCL 10-6-31.3 as construed in this opinion, contiguous wetland under common management with ag land can still qualify. A parcel that is entirely wetland and not contiguous to ag land would face a harder argument; it may need to qualify under a different category or seek special legislative treatment.
Q: Does the classification affect the public's right to use the land?
A: No. Classification is for tax purposes. The public's right of access to state-owned game production land is governed by Game, Fish and Parks regulations and hunting/fishing licensing rules, not by property-tax classification.
Q: Could a private landowner managing only wildlife habitat (no cultivation, no grazing) claim agricultural classification?
A: The opinion does not directly address that, but the statutory language requires devotion to ag activities (livestock, crops, etc.) and the income or family-income tests. Pure wildlife-habitat use without ag production likely would not qualify under SDCL 10-6-31.3 alone, although the slough/wasteland-as-contiguous-ag rule might pull in some non-productive portions.
Q: Why does the contiguous-slough rule exist?
A: It reflects the practical reality of South Dakota agriculture: a working farm or ranch often includes wetlands, woodlots, and untillable parcels alongside the productive land. Treating those non-productive portions as separate non-agricultural property for tax purposes would penalize practical farm management. The statute counts the whole.
Background and statutory framework
South Dakota property-tax classification is layered. The state Constitution and SDCL Chapter 10-6 establish the basic framework. SDCL 10-6-31 distinguishes agricultural property from non-agricultural. The 1979 amendment (Ch. 65, codified as SDCL 10-6-31.3) replaced a vague single-factor test with the three-factor structure analyzed in this opinion.
The 1979 amendment was a legislative response to inconsistent county practices in the wake of Nielson v. Erickson, which had let counties classify a broad range of rural land as agricultural without strict income or use tests. The three-factor test gave assessors clearer rules and somewhat narrowed the universe of "ag" land. But the AG's reading of "contiguous slough, wasteland or woodland" preserved the practical reach of the classification for working ag operations.
State-owned wildlife and game-production lands present a special case because the state's "income" from the land may not be the kind of income contemplated by the family-income test. The AG sidestepped this by using the alternative income test ($2,500 in three of five years from agricultural production from the land) and the contiguous-land use test. The opinion's structure suggested the AG saw the income test as easily met where the state was generating any agricultural revenue from leases, grazing fees, or sale of grain.
Citations and references
Statutes:
- SDCL 10-6-31 (agricultural vs. non-agricultural classification)
- SDCL 10-6-31.3 (three-factor agricultural-land test; Ch. 65, S.L. 1979)
Cases:
- Milne v. McKinney, 144 N.W. 117 (S.D. 1913) (broad "agricultural in character" reading)
- Nielson v. Erickson, 272 N.W.2d 82 (S.D. 1978) (no income-self-sufficiency requirement)
Prior AG opinions:
- 1939-40 AGR 633 (broad meaning of "agriculture")
- Official Opinion 79-43 (general agricultural classification questions)
Source
Original opinion text
September 22, 1982
Mr. Leon J. Vander Linden
Day County State's Attorney
Holland, Delaney & Vander Linden
P.O. Box 615
Webster, South Dakota 57274
Official Opinion No. 82-49
RE: Tax Classification of Game Production Land
Dear Mr. Vander Linden:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
Game production land situated in Day County and used only for game production is being classed as agricultural for taxation (mill levy) purposes the same as agricultural land used exclusively for agricultural purposes such as production of livestock, grain, dairy, etc.
Covering this you have asked the following question:
QUESTION:
Should game production land owned by the State of South Dakota in Day County be classed as agricultural for taxation purposes?
Land devoted to agricultural use is classified and taxed in a manner different from nonagricultural property. SDCL 10-6-31. Prior to 1979 there was only a general criterion for the assessment of agricultural property and as this office noted in 1939-40 AGR 633:
The term 'agriculture' is an indefinite word, including in its broad sense, farming, horticulture and forestry, together with such subjects as butter, cheese and sugar making, and the words 'agricultural purposes' have generally been given a comprehensive meaning unless restricted by the context of the statute in which it is used.
In that opinion, citing from the case of Milne v. McKinney, et al., 144 N.W. 117 (S.D. 1913) the Attorney General held that even though only five acres of land were suitable for agricultural purposes out of a tract of one hundred eighty (180) acres, it nevertheless was all agricultural in character. Milne perhaps represents an extreme insofar as agricultural use is concerned; however, the Supreme Court stated:
Appellant has never during its ownership thereof, during a period of over seven years, used the same for any purpose nor received any rent therefrom. The tract is of little or no value for any purpose and could not be in the least degree affected by the drainage ditch in question nor benefited by the construction and establishment of the same. Can it be claimed that the complaint states facts showing that the land west of the river is not agricultural land? Certainly a tract of land need not be in use and cultivated for agricultural purposes in order for it to be agricultural land. The unbroken prairie, the timber covered valleys and hillsides are agricultural lands before they have been prepared for husbandry as well as after they have been so prepared. It certainly does not appear that this tract of land is not agricultural land.
Subsequent to this the Court in 1978, in deciding that certain tracts of land were rural and agricultural and should receive the agricultural classification, found there was nothing in the statute which required the land to be economically self-sufficient or that the owners' primary source of income had to be connected to the land. The assessor at that time was confined to determining whether the land or property was used exclusively for agricultural purposes. The land was used for crops, pasture, or livestock and some was rented to people who raised livestock or crops on the land. Nielson v. Erickson, 272 N.W.2d 82.
Following this decision, the 1979 Legislature adopted chapter 65, Laws of 1979, now codified as SDCL 10-6-31.3 which sets forth criteria for determining whether or not land is agricultural and requires that the land meet two of the three criteria. These are as follows:
(1) At least thirty-three per cent of the total family gross income of the owner is derived from production from the land, or the total value of agricultural production from the land produced or sold exceeds two thousand five hundred dollars in three of the last five years;
(2) It is devoted to the production of livestock, dairy animals, dairy products, poultry and poultry products, furbearing animals, fish, horticulture and nursery stock, fruit of all kinds, vegetables, forage, grains, or bees and apiary products. Any slough wasteland or woodland contiguous to or surrounded by other agricultural land shall be considered as agricultural land if it is under the same ownership or management;
(3) It consists of not less than five acres of unplatted land or is a part of a management unit of more than forty acres of unplatted land. However, the board of county commissioners may increase the general minimum acre requirement up to forty acres at their discretion.
In connection with this statute, I rendered Official Opinion 79-43 answering certain questions with respect to agricultural property. Perhaps so far as applicable here question number five having to do with the raising of plants or grasses not qualifying property for an exemption would be appropriate if this land were in fact not being used for any purpose other than game production as suggested in the opinion request. However, I cannot reach that conclusion based on information I have as contained in the records of the State Board of Equalization and the Department of Game, Fish and Parks. This land is a part of some ten thousand acres of game production land in Day County which is intensively managed by the Department of Game, Fish and Parks under a five-year management program. Approximately ten percent of this acreage is in cultivation--either small grain or row crops--and twenty to thirty percent additional acreage is grazed or hayed. There are in effect annual contracts with cooperators. In some instances, however, the Department crews themselves plant the crops or harvest the grain. Somewhere from sixty to seventy percent of the land is either marshland, brushland, or woodland which is not capable of being cultivated or otherwise used for farming operations. The income from this property in Day County last year to the State alone was $6,609 from the grazing, having, and the crops sold. This would indicate that the total realized from the agricultural operations approached twenty thousand dollars ($20,000).
In answer to your question it is clear that approximately thirty percent of the property is actively under cultivation or grazing or haying and that sixty to seventy percent of it is in the nature of a slough, wasteland or woodland; however, the same is contiguous to the agricultural land and is certainly under the same ownership or management. It is my opinion that the property in question fulfills all three of the criteria of SDCL 10-6-31.3 and therefore is property classified as agricultural land.
Respectfully submitted,
Mark V. Meierhenry
Attorney General