Revised
February, 2007
Administration: These statutes assign certain responsibilities to the Nebraska Department of Agriculture, State Office Building, 301 Centennial Mall South, Lincoln, Nebraska 68509, telephone: (402) 471-2341.
Revision: These statutes were initiated during the 2006 session of the Nebraska Legislature.
Rules: The Department has no authority to promulgate regulations under these statutes.
2-5501 Act, how cited.
2-5502 Legislative findings.
2-5503 Terms, defined.
2-5504 Railroad land; lease renewal; conditions; controversy;
department; duties.
2-5505 Railroad land; substantial improvements; offer to sell;
agricultural tenant; rights; department; duties.
2-5506 Department of Agriculture; employ appraiser;
costs.
2-5507 Act; applicability; effect.
2-5508 Agricultural Suppliers Lease Protection Cash Fund;
created; use; investment.
2-5501. Act, how cited. Sections
2-5501 to 2-5508 shall be known and may be cited as the Agricultural Suppliers Lease
Protection Act.
2-5502. Legislative findings. The
Legislature finds that agricultural production in this state is highly dependent upon
businesses providing inputs for agricultural producers and markets for agricultural
commodities which have historically located on lands owned and served by railroads. It
is vital to the continued prosperity of agriculture that such businesses maintain
reasonable access to rail service and maintain reasonable terms of tenancy upon land
owned by railroads or their successors in interest. The Legislature also finds that
agribusiness leaseholders' substantial investments in structures and improvements
unique to their rail location, as well as dependency on rail access, place them at a
disadvantage in negotiating lease renewals. The Legislature further finds that given the
substantial investment in structures and improvements made by agribusiness
leaseholders, it is equitable that such agribusiness leaseholders have a right of first
refusal to purchase the land they lease, should it be offered for sale. The purpose of
the Agricultural Suppliers Lease Protection Act is to establish a system for fair
resolution of lease disputes that may arise between railroad property owners or their
successors and agribusiness tenants and to guard against unreasonable lease renewal
terms or unjust lease termination.
2-5503. Terms, defined. For
purposes of the Agricultural Suppliers Lease Protection Act:
(2) Fair market lease rate means the lease rate of comparable commercial properties
adjusted according to accepted appraisal standards which may include, but are not
necessarily limited to, lease terms, market conditions, location, physical characteristics,
economic characteristics stipulated in the lease, and nonrealty components or, in the
absence of comparability, the lease rate as determined by comparable rates of return
realized on the lease of other commercial property in proximity to the lease site;
(3) Good faith means honesty in fact in the conduct of the transaction concerned;
(4) Lease means any agreement between a railroad and a tenant under the terms of
which a tenant occupies the surface of railroad land;
(5) Railroad land means any land acquired by a railroad in strips for right-of-way and
any parcel or tract acquired by a railroad adjacent to its right-of-way to aid in the
construction, maintenance, and accommodation of its railway and which is occupied
pursuant to a lease by a tenant who owns substantial improvements thereon;
(6) Substantial improvements means buildings or other structures or fixtures to
structures that are permanent in nature and includes equipment that is affixed to real
property or structures; and
(7) Successor in interest includes any agent, successor, assignee, trustee, receiver, or
other person acquiring interests or rights in railroad land, including, but not limited to,
the owner or holder of any servient estate or right of reversion relating to railroad land.
2-5504. Railroad land; lease renewal; conditions;
controversy; department; duties.
(2) All controversies regarding application and reasonableness of lease terms and
conditions or fair market lease rate arising between a railroad or its successor in
interest and an agricultural tenant who is the owner, lessee, or licensee of a substantial
improvement situated on railroad land owned or controlled by the railroad or its
successor in interest shall be resolved by negotiation or by Department of Agriculture
action.
(3) The parties shall first negotiate in good faith to resolve any controversy. If any such
controversy is not resolved within sixty days after notification is given to an agricultural
tenant by a railroad or its successor in interest that it wishes to (a) renew a lease upon
new terms, (b) terminate a lease, (c) not renew a lease upon the expiration of a current
lease, or (d) change the terms of an existing lease, then either party may file a
complaint with the department setting forth facts upon which such complaint is based.
(4) The department, after reasonable notice to the parties, shall hear and determine all
matters in controversy and make such order as the facts of the controversy warrant. In
conducting its hearing, the department shall have those powers granted to it under the
Administrative Procedure Act. Any person shall have the right to appeal from such
order in accordance with the act.
2-5505 Railroad land; substantial improvements; offer to
sell; agricultural tenant; rights; department; duties.
(b) If a bona fide third-party offer that a railroad or its successor in interest desires to
accept has been made to purchase property leased to an agricultural tenant upon
which substantial improvements owned by the agricultural tenant are located, the
railroad or its successor in interest shall first extend to the agricultural tenant a written
offer to sell the railroad land at a price that is substantially equal in value to such
third-party offer of purchase. If the agricultural tenant does not accept such written offer
within thirty days after receipt of the offer, then the railroad or its successor in interest
may sell the property to the third party, and such third party is not bound under this
section.
(3) The Department of Agriculture, after reasonable notice to the parties, shall hear and
determine the fair market value of the land offered for sale and make such order as the
facts of the controversy warrant. In conducting its hearing, the department shall have
those powers granted it under the Administrative Procedure Act. Any person shall have
the right to appeal from such order in accordance with the act.
(4) If the agricultural tenant fails to give timely notice or to file a timely complaint under
subsection (2) of this section or fails to complete the purchase of the railroad land within
sixty days after the fair market value has been accepted by the agricultural tenant or
determined by the department, unless the delay in completing the purchase is
attributable to the railroad or its successor in interest, the railroad or its successor in
interest may sell or offer to sell the railroad land to any purchaser and such purchaser
shall not be bound by this section. If the railroad land is sold to a purchaser which will
use the railroad land for railroad operating purposes or for interim trail use as described
in subdivision (1)(a) of this section, then the purchaser shall be bound by all of the
provisions of the Agricultural Suppliers Lease Protection Act.
2-5506. Department of Agriculture; employ appraiser;
costs.
(2) All costs incurred by the department hearing and determining all matters in
controversy pursuant to the Agricultural Suppliers Lease Protection Act shall be paid
equally by the parties.
2-5507. Act; applicability; effect.
(2) Any party having a right of first refusal or right of renewal under the Agricultural
Suppliers Lease Protection Act shall be barred from making any subsequent claim to
possession or title to the railroad land if it fails to bring an action asserting that it has
been denied its right of first refusal or right of renewal in violation of the act within six
months after the date of a lease or after the expiration of a lease or sale by the railroad
to a party other than the agricultural tenant.
2-5508. Agricultural Suppliers Lease Protection Cash
Fund; created; use; investment. The Agricultural Suppliers Lease
Protection Cash Fund is created. All funds collected by the Department of Agriculture
under the Agricultural Suppliers Lease Protection Act shall be remitted to the State
Treasurer for credit to the fund. The fund shall be used by the department to aid in
defraying the expenses of administering the act. Any money in the fund available for
investment shall be invested by the state investment officer pursuant to the Nebraska
Capital Expansion Act and the Nebraska State Funds Investment Act.
(1) Agricultural tenant means any public warehouse licensee as defined in section
88-526, any livestock auction market as defined in section 54-1158, or any other
persons primarily engaged in the sale or distribution of fertilizer or agricultural chemicals
or farm implements, machinery, or equipment occupying railroad land owned or
controlled by a railroad or its grantee or successor in interest;
(1) Except when an owner of railroad land has received a bona fide third-party offer to
lease the property that the owner desires to accept, at the expiration of an existing
lease, the agricultural tenant shall be given the opportunity to renew the lease at fair
market lease rate. If a bona fide third-party offer has been made to lease the property
that the owner desires to accept, then the agricultural tenant shall be given first
opportunity for a period of thirty days after receipt of written notice of such third-party
offer to renew the lease at a rate that is substantially equal in value to the third-party
offer.
(1)
(a) Except when an owner of railroad land has received a bona fide third-party offer to
purchase the property that the owner desires to accept, if a railroad or its successor in
interest wishes to sell or offer to sell property leased to an agricultural tenant upon
which substantial improvements owned by the agricultural tenant are located, then,
except when the sale or offer to sell is made to a purchaser who is a common carrier
who intends to operate a railroad on railroad right-of-way adjacent to the leased
property for the public benefit or a purchaser who intends to use the railroad land for
interim trail use under the National Trails System Act, 16 U.S.C. 1243, as such act
existed on July 20, 2002, the railroad or its successor in interest shall first extend to the
agricultural tenant a written offer to sell the railroad land to the agricultural tenant at fair
market value.
(2) The agricultural tenant shall have thirty days after a written offer made to the
agricultural tenant pursuant to subdivision (1)(a) of this section to give written notice of
either (a) acceptance of the offer to sell and of the offerer's determination of fair market
value or (b) acceptance of the offer to sell and rejection of the offerer's determination of
fair market value in which case the parties shall negotiate the fair market value and, if
the parties cannot agree, the agricultural tenant shall have sixty days after the
agricultural tenant gives notice of rejection to file a complaint with the Department of
Agriculture seeking determination of fair market value.
(1) The Department of Agriculture, in consultation with the parties, may employ the
services of a certified general real property appraiser when determination of market
value is a matter in controversy or relevant to the hearing and determination of the
matter in controversy.
(1) The Agricultural Suppliers Lease Protection Act shall not apply to any valid lease
entered into prior to July 20, 2002, or any renewal or extension thereof on the same
terms and conditions, but the provisions of the act shall apply to and govern any
renewal or extension of such lease on any different terms or conditions or any material
modifications of any such lease effected on or after July 20, 2002.