SB 245: RELATING TO OWNERSHIP OF AGRICULTURAL LAND.

A BILL FOR AN ACT

RELATING TO OWNERSHIP OF AGRICULTURAL LAND.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that the preservation of family farms, protection of agricultural resources, and promotion of locally rooted agricultural operations are essential to the economic vitality, food security, and cultural sustainability of Hawaii.

     Accordingly, the purpose of this Act is to promote the conservation, protection, and sustainable development of the State's agricultural resources by prohibiting certain entities from:

     (1)  Acquiring or holding any interest in agricultural land within the State; and

     (2)  Engaging in farming operations in the State.

     This Act is intended to ensure that agricultural land and farming operations remain accessible to Hawaii residents and are used in a manner that supports community well-being and sustainable agriculture.  This Act does not seek to burden or discriminate against interstate commerce but is narrowly tailored to address legitimate state interests, including mitigating land speculation, fostering sustainable land stewardship, and preserving Hawaii's unique cultural and environmental resources.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to title 11 to be appropriately designated and to read as follows:

"Chapter

limitations on ownership of and activities on agricultural land

     §   -1  Purpose.  The legislature declares that Hawaii has a compelling interest in ensuring the long-term sustainability and viability of its agricultural sector, which is vital to the State's economy, food security, and rural communities.

     This chapter is narrowly tailored to address these interests without discriminating against interstate commerce or imposing undue burdens on entities engaged in lawful agricultural activities.  The provisions of this chapter shall apply equally to all entities regardless of their state of origin, ensuring fairness and compliance with constitutional requirements.

     This chapter shall not be construed to prohibit entities or individuals from participating in agricultural production or ownership; provided that they comply with the requirements of this chapter, ensuring the same rights and obligations apply uniformly to in-state and out-of-state entities.

     §   -2  Definitions.  As used in this chapter:

     "Agricultural land" means any real property classified as an agricultural district pursuant to section 205-2.

     "Department" means the department of agriculture.

     "Exempt entity" means a registered nonprofit organization operating under section 501(c)(3) of the Internal Revenue Code, that owns or leases agricultural land for purposes aligned with its demonstrated primary mission to support agriculture, education, or community development.

     "Farming" means the cultivation of crops, raising of livestock or aquaculture, or horticultural production.  "Farming" does not include processing, refining, or packaging of agricultural products.

     "Prohibited entity" means a corporation, trust, non-resident entity, or investment fund.  "Prohibited entity" does not include an exempt entity.

     "Resident" means a person who resides and files income tax returns in the State.

     §   -3  Prohibited activities.  (a)  No prohibited entity shall:

     (1)  Acquire or hold any interest in agricultural land within the State; or

     (2)  Engage in farming operations in the State.

     (b)  This section shall apply equally to all entities regardless of their state of origin, except for exempt entities.

     §   -4  Restrictions on ownership and operations.  A prohibited entity that acquires agricultural land or engages in farming operations in violation of this chapter shall divest the land in accordance with section    -8 or cease operations.

     §   -5  Exemptions.  (a)  Notwithstanding section    -3, a prohibited entity may qualify for exemption from this chapter if:

     (1)  The entity's ownership is composed of a majority of Hawaii residents; provided that a majority of shareholders, members, or beneficiaries are actively engaged in farming; provided further that the entity has no more than fifteen shareholders, members, or beneficiaries;

     (2)  The primary business activity of the entity is farming; and

     (3)  The entity is not engaged in speculative landholding or investment.

     (b)  This chapter shall not apply to exempt entities with the exception of reporting requirements established by the department pursuant to section    -6.

     (c)  All exempt entities that acquire or hold any interest in agricultural land within the State or engage in farming operations in the State shall submit an annual report to the department demonstrating continued compliance with this chapter.

     §   -6  Enforcement; rules.  (a)  The department shall enforce compliance with this chapter.  Enforcement shall be conducted in a manner that does not unduly burden interstate commerce and aligns with legitimate state interests in preserving local agricultural sustainability.

     (b)  The department may:

     (1)  Assess fines and other penalties in addition to those under section    -7; and

     (2)  Oversee the orderly divestiture of agricultural land pursuant to section    -8.

     (c)  The department shall adopt rules pursuant to chapter 91 to carry out the purposes of this chapter, including procedures for annual reporting by exempt entities.

     §   -7  Penalties.  Any prohibited entity found in violation of this chapter shall be subject to:

     (1)  A fine of not less than $50,000 for each year that the entity remains non-compliant; and

     (2)  Mandatory divestiture in accordance with section    -8 or cessation of farming operations.

     §   -8  Divestiture of agricultural land; restructuring farming operations.  (a)  Beginning           , prohibited entities holding agricultural land or engaging in farming operations shall have five years to comply with this chapter by divesting the agricultural land or restructuring operations to meet the exemption criteria under section    -5.

     (b)  The department shall not grant any extensions to the five-year transition period under subsection (a)."

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

Agricultural Lands; Ownership; Farming Operations; Prohibition; Exemptions

Description:

Prohibits certain entities from acquiring or holding any interest in agricultural land within the State and from engaging in farming operations in the State.  (Proposed SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to ownership of agricultural land.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that it is an objective of the State to ensure that the agricultural industry continues to constitute a dynamic and essential component of Hawaii's strategic, economic, and social well-being.  The legislature further finds that small-scale locally owned farms in Hawaii are crucial for boosting the local economy, preserving cultural heritage, promoting food security, and minimizing environmental impact by keeping money within the community, reducing reliance on imported goods, and supporting sustainable agricultural practices.  However, there is growing concern in Hawaii that a large portion of the State's agricultural lands are owned by large corporations and businesses, leading to limited access for small-scale producers, potential issues with land development over farming, and a struggle for Native Hawaiians to regain control of ancestral lands, which in turn can impact food security and the sustainability of the local agricultural industry.

     Accordingly, the purpose of this Act is to promote the conservation, protection, and sustainable development of the State's agricultural resources by prohibiting certain entities from owning, purchasing, or acquiring ownership of agricultural lands.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to title 11 to be appropriately designated and to read as follows:

"Chapter

limitations on ownership and acquisition of agricultural lands

     §   -1  Definitions.  As used in this chapter, unless the context otherwise requires:

     "Agricultural lands" means any real property within the agricultural district classified pursuant to section 205-2.

     "Family farm" means an unincorporated farm owned or leased by one or more members of a family related to each other within the third degree of consanguinity or affinity, including spouses and in-laws.

     "Family farm corporation" means a corporation incorporated for the purpose of farming and the ownership of agricultural land in which at least one-half of the voting stock is held by and at least one-half of the stockholders are members of a family related to each other within the third degree of consanguinity or affinity, including spouses and in-laws, and at least one of whose stockholders is a person residing on or actively operating the farm.

     "Real property" means lands, structures, and interests in land and natural resources including water, minerals, and all things connected with land, including lands under water and riparian rights, space rights, air rights, and any and all other things and rights usually included within the term.  "Real property" also means any and all interests in the property less than full title, such as easements, incorporeal hereditaments, and every estate, interest, or right, legal or equitable, including terms for years and liens thereon by way of judgments, mortgages, or otherwise.

     §   -2  Restrictions; exemptions.  (a)  Notwithstanding any other law to the contrary, no corporation, limited liability company, trust, partnership, or limited partnership shall, either directly or indirectly, own, purchase, acquire, or otherwise obtain or lease any agricultural lands in the State.

     (b)  The restrictions in this section shall not apply to the following:

     (1)  A corporation, limited liability company, trust, partnership, or limited partnership that owned or acquired agricultural land before January 1, 2026;

     (2)  A bona fide family farm or family farm corporation;

     (3)  Agricultural land owned or leased by the federal government, State, or counties and any political subdivision, agency, or instrumentality, corporate or otherwise, of the federal government, State, or counties; or

     (4)  Agricultural land that is acquired by a trust company or bank in a fiduciary capacity or as a trustee for a nonprofit corporation."

     SECTION 3.  This Act shall take effect upon its approval.

Report Title:

Agricultural Lands; Real Property; Restrictions on Ownership; Exemptions

Description:

Beginning 1/1/2026, prohibits certain entities from owning, purchasing, or acquiring ownership of agricultural lands.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.