Does the South Dakota Family Farm Act's ban on corporate hog confinement facilities (SDCL 47-9A-13.1) prohibit a cooperative corporation, whether foreign or domestic, from owning or operating a hog confinement facility or a swine farrowing facility?
Plain-English summary
Governor Janklow asked a politically and economically sensitive question: did the SD Family Farm Act bar cooperatives from running hog confinement operations? The Family Farm Act (SDCL chapter 47-9A) had been on the books since 1974 to keep corporate conglomerates out of farming. SDCL 47-9A-13.1 specifically bans corporate hog confinement facilities. In the mid-1990s, the question was whether that ban also reached cooperatives, including foreign cooperatives that might want to enter the SD swine industry.
The 1995 AG read the statutes carefully and answered no. The Family Farm Act's restrictions apply to "corporations," and SDCL 47-9A-2(2) defines "corporation" for purposes of the Act as entities formed under (a) the SD Business Corporation Act (SDCL chapters 47-2 to 47-9) or (b) the SD Limited Liability Company Act (SDCL chapter 47-34). Cooperatives are formed under a different set of chapters (SDCL 47-15 to 47-20) entirely. They are not "corporations" within the Family Farm Act's definition.
The AG anticipated the obvious counter-argument: SDCL 47-15-1(2) refers to a cooperative as a "cooperative corporation." Doesn't that pull cooperatives back into the Family Farm Act? The AG said no. The Legislature wrote a definition in SDCL 47-9A-2(2) and listed exactly which chapters' entities count. Cooperatives were not listed. The Legislature is presumed to have chosen its words deliberately. The use of "cooperative corporation" in SDCL 47-15-1(2) is descriptive of the entity's legal form, but it does not convert cooperatives into "corporations" for purposes of a statute that defines "corporation" by reference to other chapters.
Because the answer to question 1 (does the Act apply to cooperatives at all?) was no, the AG did not need to answer question 2 (whether the conjunctive "and" in SDCL 47-9A-13.1's prohibition of "breeding, farrowing, and raising of swine" means a facility doing fewer than all three activities is exempt). But he referenced Memorandum Opinion No. 89-05, which had previously concluded that an entity engaging in less than all three of those listed activities is not a hog confinement facility under SDCL 47-9A-13.1.
The opinion is short, but the practical impact was substantial. The hog-confinement industry was undergoing major consolidation in the 1990s, and the question of whether cooperatives could expand into confinement was a live one. The opinion gave cooperatives a path that conventional corporations did not have.
Currency note
This opinion was issued in 1995. 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. The Family Farm Act and SD constitutional Article XVII provisions on corporate farming have been the subject of significant litigation and amendment since 1995. Amendment E in 1998 added a constitutional restriction on corporate farming; the U.S. Court of Appeals for the Eighth Circuit later struck down portions on Commerce Clause grounds. Modern questions about cooperative versus corporate farming structures should be analyzed under the current statutory and constitutional framework, not under this 1995 opinion alone.
What the opinion meant at the time
For South Dakota agricultural cooperatives in the mid-1990s, the opinion opened the door to swine-confinement operations that conventional corporations could not run. That was a significant competitive advantage.
For the Governor and the state's agricultural policy framework, the opinion was a clear statutory answer to a politically charged question. The Family Farm Act's restrictions on conventional corporations did not reach cooperatives.
For agricultural attorneys structuring new swine ventures, the opinion meant the cooperative form was the path of least regulatory friction for any operation that would otherwise hit the SDCL 47-9A-13.1 ban.
For hog producers operating individually or in family partnerships, the opinion did not change their position. Family farms remained the protected baseline.
For family-farm advocates concerned about corporate consolidation, the opinion identified a statutory loophole. That concern eventually fed into the constitutional Amendment E debate in 1998.
Common questions
Q: What does the Family Farm Act do?
A: SDCL chapter 47-9A, enacted in 1974, restricts corporate ownership of farming operations in South Dakota. SDCL 47-9A-3 contains the broad prohibition; SDCL 47-9A-13.1 specifically bans corporate hog confinement facilities.
Q: Why are cooperatives treated differently from corporations?
A: The Family Farm Act's definition of "corporation" in SDCL 47-9A-2(2) is limited to Business Corporation Act and LLC Act entities. Cooperatives are organized under a separate set of chapters and fall outside the definition.
Q: Doesn't SDCL 47-15-1(2) call a cooperative a "cooperative corporation"?
A: It does, descriptively. But the Family Farm Act's own definition controls what "corporation" means within that Act. The cooperative-corporation label in chapter 47-15 does not pull cooperatives into the chapter 47-9A definition.
Q: What is the difference between a cooperative and a regular corporation?
A: Structurally, cooperatives are owned by their members (typically producers or consumers), governed by member voting (often one-member-one-vote rather than weighted by shares), and operated for member benefit rather than for outside shareholder return. Different statutory framework, different governance norms.
Q: Can a foreign (out-of-state) cooperative own a hog facility in SD?
A: Per this opinion, yes. The Family Farm Act's restrictions do not apply to cooperatives regardless of where they were organized.
Q: What is the conjunctive-"and" point about SDCL 47-9A-13.1?
A: SDCL 47-9A-13.1 prohibits a corporation from engaging in "the breeding, farrowing, and raising of swine" in confinement. The "and" raises the question of whether an entity doing fewer than all three activities is also banned. Memorandum Opinion No. 89-05 says no, the ban requires all three.
Q: What happened to corporate farming restrictions in SD after this opinion?
A: SD voters passed Amendment E in 1998, adding constitutional restrictions on corporate farming. The Eighth Circuit later struck down portions on Commerce Clause grounds. The current framework is more complex than the 1995 statutory position described in this opinion.
Q: Does this opinion apply to other livestock operations besides hogs?
A: SDCL 47-9A-13.1 specifically addresses swine. Other livestock operations are governed by other provisions of the Family Farm Act. Each provision should be analyzed separately under its own terms.
Background and statutory framework
The Family Farm Act came out of mid-1970s concerns about corporate consolidation in agriculture. SDCL 47-9A-1 contains the legislative finding that family farms were threatened by entry of conglomerates. The Act's response was a broad ban on corporate farming under SDCL 47-9A-3, with specific exceptions for limited categories (livestock feeding under SDCL 47-9A-11, certain kinds of land ownership, family farm corporations, and others).
The SDCL 47-9A-13.1 ban on corporate hog confinement facilities was a later, more specific response to the rise of large-scale concentrated animal feeding operations (CAFOs) in the swine industry. The ban prohibits corporations from engaging in "the breeding, farrowing, and raising of swine" in confinement.
The structural definition of "corporation" in SDCL 47-9A-2(2) is the load-bearing language. The Legislature could have used a broad definition that captured all entities with corporate or quasi-corporate features. It did not. It listed two specific statutory schemes: the Business Corporation Act and the Limited Liability Company Act. Cooperatives, organized under their own separate framework in SDCL chapters 47-15 to 47-20, are outside the listed schemes.
The 1995 AG's analysis turns on standard statutory construction canons. Plain meaning under American Rim and Brake Inc. v. Zoellner and SDCL 2-14-1 supports reading the definition for what it says. The "Legislature meant what it said" rule under Crescent Electric Supply Co. v. Nerison supports treating the definition as exclusive. The fact that the Legislature wrote a definition rather than relying on the general term suggests intent to control the scope.
The descriptive use of "cooperative corporation" in SDCL 47-15-1(2) cuts the other way at first glance but ultimately yields to the controlling definition. The Family Farm Act has its own definition. That definition controls within the Act. Cross-references to other chapters that happen to use similar terminology do not override the Act's internal definition.
The conjunctive-"and" question in SDCL 47-9A-13.1 is a separate analysis the AG did not have to reach. The reference to Memorandum Opinion No. 89-05 preserves the prior office position that fewer-than-all-three activities are not the prohibited "hog confinement facility."
Citations and references
Statutes:
- SDCL chapter 47-9A (Family Farm Act)
- SDCL 47-9A-1, 47-9A-2(2), 47-9A-3, 47-9A-11, 47-9A-13.1
- SDCL 47-2-70 (Business Corporation Act definition)
- SDCL chapters 47-2 to 47-9 (Business Corporation Act)
- SDCL chapter 47-34 (LLC Act)
- SDCL chapters 47-15 to 47-20 (cooperatives)
- SDCL 47-15-1(2) (cooperative corporation definition)
- SDCL 2-14-1 (plain meaning)
Cases:
- American Rim and Brake Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986)
- Border States Paving v. Department of Revenue, 437 N.W.2d 872 (S.D. 1989)
- Whalen v. Whalen, 490 N.W.2d 276 (S.D. 1992)
- Crescent Electric Supply Co. v. Nerison, 232 N.W.2d 76 (S.D. 1975)
Prior AG opinions referenced:
- Memorandum Opinion No. 89-05 (conjunctive activities requirement in SDCL 47-9A-13.1)
Source
Original opinion text
OFFICIAL OPINION NO. 95-02
Family Farm Act/Cooperatives
Dear Governor Janklow:
You have asked my opinion concerning the following facts:
FACTS:
The question is whether the Family Farm Act, and specifically SDCL 47-9A-13.1, prohibits a cooperative corporation, foreign or domestic, from owning or operating a hog confinement facility. The concern settles around whether the term "corporation," defined in SDCL 47-9A-2(2) to include corporations found in the South Dakota Business Corporation Act and limited liability companies found in the South Dakota Limited Liability Company Act, includes cooperatives.
If the Family Farm Act is applicable to cooperatives, the second concern is whether SDCL 47-9A-13.1 would prohibit a foreign or domestic cooperative from owning or operating a swine farrowing facility in South Dakota. Generally, cooperative ownership of agricultural land for livestock feeding purposes is permitted under the Family Farm Act. SDCL 47-9A-11.
In SDCL 47-9A-13.1, the Legislature chose to use a conjunctive term "and," as opposed to the disjunctive term "or," when referring to the acts prohibited by that section. Thus I question whether a corporation which engages in less than all three activities (for example, only breeding and farrowing) would be prohibited from doing so by SDCL 47-9A-13.1.
Based on these facts you asked the following questions:
QUESTIONS:
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Does SDCL 47-9A-13.1 prohibit a cooperative, whether foreign or domestic, from owning or operating a hog confinement facility?
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Does SDCL 47-9A-13.1 prohibit a cooperative, whether foreign or domestic, from owning or operating a swine farrowing facility?
IN RE QUESTION NO. 1:
The Family Farm Act as adopted by the Legislature in 1974 recognizes that family farms are threatened by the entry of conglomerates into farming. SDCL 47-9A-1. In an attempt to protect family farms, the Legislature imposed a broad prohibition on corporate farming. SDCL 47-9A-3. Your first question is whether a cooperative falls within the prohibitions on corporate hog confinement facilities. In my opinion, cooperatives are exempt from the Act.
SDCL 47-9A-2(2) defines the term "corporation" for purposes of the Family Farm Act, as "both corporations under the South Dakota Business Corporation Act and limited liability companies under the South Dakota Limited Liability Company Act." Neither of those acts regulates cooperatives.
The "South Dakota Business Corporation Act" is defined in SDCL 47-2-70 as a distinct set of statutes found at Chapters 47-2 to 47-9, inclusive. Similarly, limited liability companies are regulated under a distinct set of laws. SDCL ch. 47-34. Neither of those chapters deal with cooperatives. Cooperatives are regulated at SDCL chapters 47-15 to 47-20, inclusive.
Resolution of your first question is a matter of statutory construction. The goal is to determine the intent of the Legislature. It is appropriate to look not only to the words used in the statute at issue, but also to examine other statutes on the subject as well. Words used in a statute are to be given their plain, ordinary and popular meaning, unless the context clearly requires otherwise. American Rim and Brake Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986); Border States Paving v. Department of Revenue, 437 N.W.2d 872, 874 (S.D. 1989); Whalen v. Whalen, 490 N.W.2d 276 (S.D. 1992); SDCL 2-14-1. The presumption is that the statutes "mean what they say and that the legislators have said what they meant." Crescent Electric Supply Co. v. Nerison, 232 N.W.2d 76, 80 (S.D. 1975).
The Legislature has specifically described the types of corporations that fall within the purview of the Family Farm Act in SDCL 46-9A-2(2). There is no ambiguity in the language. The definition of corporation does not include those statutes regulating cooperatives. Therefore, even though a cooperative is defined at SDCL 47-15-1(2) as a "cooperative corporation," it is not the type of corporation subject to the Family Farm Act. My answer to your first question is NO.
IN RE QUESTION NO. 2:
In view of my answer to your first question, it is not necessary to address your second inquiry. This office has, however, addressed the issue you raise in your second question. Enclosed is a copy of Memorandum Opinion No. 89-05. That opinion discusses SDCL 47-9A-13.1, and concludes that a corporation that engages in less than all three of the activities described, the breeding, farrowing, and raising of swine, is not a hog confinement facility. Therefore the ban of SDCL 47-9A-13.1 would not apply unless all three activities occur.
MB:HHD