Electronically Served 37-CV-20-30

4/26/2021 12:10 PM
Lac qui Parle County, MN

April 26, 2021

STATE OF MINNESOTA IN DISTRICT COURT

COUNTY OF LAC QUI PARLE EIGHTH JUDICIAL DISTRICT

Court File: 37-CV-20-30

Jo’s Family Farm’s, LLC, Phillip Sonstegard,

Plaintiffs, ORDER
v.

Lac qui Parle County,

Defendant.

The above-entitled matter came before the Court on January 27, 2021, for a hearing via

ZOOM. On May 13, 2020, the parties advised the Court that the facts are not disputed and that the

issue to be decided is a purely legal one. The parties were to file a stipulation of facts and briefs.

The parties filed briefs, but no stipulation of facts. The hearing on January 27, 2021, was scheduled

by the Court because the record was incomplete.

On January 27, 2021, the parties filed a stipulation of facts and confirmed that the record

includes Exhibits 1-6.

Based on the documents submitted, the arguments of counsel, and the entire Court file

herein, the Court makes the following:

FINDINGS OF FACT 1

1. This matter involves real estate located in Lac Qui Parle County, Minnesota, described

as follows: South half of the Southwest Quarter (5 1/2 SW14),- Section 4, Township

117 North, Range 42 West. - and the owner of the property described above is Jo’s

1
Findings 1 – 14 are taken directly from the parties’ stipulation. Factual findings 15–19 are found in the exhibits
submitted. Neither party offered testimony. A written statement, rather than a transcript or detailed meeting minutes,
contains the board’s reasons for disapproving the proposed sale.

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Family Farm’s, LLC, and said company is owned by Phillip Sonstegard, hereinafter

referred to as “Seller”.

2. Defendant is Lac qui Parle County, acting through its Board of Commissioners,

hereinafter referred to as the Defendant.

3. The plaintiff in the above-captioned matter was notified that the Minnesota Department

of Natural Resources was exercising its option to purchase the land described in

paragraph one.

4. The property in controversy is considered marginal farmland, susceptible to flooding

or wet conditions, and when farmed it is significantly below average for production of

crop in the area.

5. The property in controversy also borders on another piece of land owned by the DNR,

which also met the DNR standards when it was purchased.

6. To date, Plaintiff has already invested significant time and money for the sale of the

Property which is further compounded by the delay.

7. The property is still under the purchase agreement, but closing date has not been set

pending a decision on this matter.

8. At their February 19, 2019, meeting, a representative of the DNR appeared before the

Defendant to advise the Defendant of the pending purchase, describe the land in

question, and to seek local approval. After much discussion, together with its known

previous position on the acquisition of land within the County by the DNR, the

Defendant motioned to decline approval of the purchase of the property.

9. The Land Exchange Board decided to take no formal action because it lacked

jurisdiction of the matter.

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10. On November 2, 2018 the Department of Natural Resources (hereinafter referred to

DNR) put the county on notice that the DNR had exercised its option to purchase the

land. The DNR sought approval of the purchase of the land pursuant to MN Stat. 97.481

[sic] from Defendant.

11. On February 5, 2019 the Defendant met with DNR specialist and the DNR specialist

pointed out the reasons why the sale should be approved.

12. On February 14, 2019 the DNR granted a 30-day extension to the Defendant to give

reasons why the land sale had been disapproved.

13. On February 19, 2019 the Defendant passed a resolution disapproving of the sale but

the Defendant failed to approve the sale of land.

14. The DNR (Land Exchange Board) in a letter. from the DNR to legal counsel for the

Plaintiff dated October 17, 2019 notified plaintiff that the Land Exchange Board cannot

reach a decision or approve the sale because in this particular case the legislature gave

the board the power to act only when: (1) the County board does not give reason for

disapproval, or (2) the County board does not approve or disapprove the acquisition

within the prescribed time.

15. The DNR identified the conservation benefits of the transaction and provided

information about any economic impact. Exhibit 3 is a summary of Appleton Area

Wildlife Supervisor Curt Vacek’s presentation to the county board.

16. The Lac qui Parle County Board in a 4-1 vote disapproved the proposed sale. The Board

based its decision on these stated reasons: (a) too much land is converted to

conservation land in Minnesota generally and in Lac qui Parle County in particular; (b)

the percentage of land placed into conservation uses in Lac qui Parle is significantly

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greater than the percentage of such land throughout Minnesota, and this acquisition is

not “critically necessary” to achieve conservation goals; (c) “privately-owned land is

significantly more valuable to the local economy as compared to land that is owned by

the DNR;” (d) “continued government [agricultural] land acquisitions… are a factor

that will lead to additional population loss;” (e) the board discredited Plaintiffs’

assertion that the land is not suitable for agricultural production; (f) DNR acquisition

of farmland is irreversible; (g) private landowners should have the right to sell to

whomever they wish; (h) the payment in lieu of taxes may fall short of tax revenues in

the future; (i) public opinion weighs against the sale. Exhibit 5 is the Board’s statement

of reasons.

17. In 2018, the DNR owned 4.6 percent of land in Lac qui Parle County and 2.2 percent

of land throughout Minnesota. In 2018, 15.0 percent of land in Lac qui Parle County

and 6.2 percent of land in Minnesota was owned by public conservation entities or

subject to state or federal conservation easements. (Exhibit 5.) The rate of acquisition

of land has averaged 128 acres per year since 2000. (Exhibit 3.)

18. The property in question has poor production. It is an 80-acre parcel and 71 acres are

designated as “tillable.” However, only 54 of the 71 acres were “farmable” in the years

2015 to 2020. Crop yields on the “farmable” acres are below average yields for the

operators’ other farm land and below average yields for all farms in Lac qui Parle

County. The average soybean yield on the “farmable” acres on the subject parcel in the

years 2015 to 2019 was 73% of the average soybean yield in Lac qui Parle County

(38.25/52.00).

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19. The tax due on the parcel is $1,398.00 for year 2019. The payment in lieu of taxes is

$2,077. Tax calculations are subject to change and for this parcel a school referendum

in an unknown amount will increase the taxes due.

CONCLUSIONS OF LAW

1. The disapproval of the Lac qui Parle County Board of the proposed sale from Plaintiff

to the DNR was arbitrary and capricious.

2. The reasons stated for the disapproval are invalid.

ORDER

1. The Conclusions of Law above constitute the Judgment of this Court.

2. Let Judgment be entered.

Van Hon, Thomas
(Judge)
2021.04.26 11:02:38
____________________________________
Thomas Van Hon -05'00'
District Court Judge

JUDGMENT

I hereby certify that the above Conclusions of Law constitute the Judgment and Decree of

this Court.

COURT ADMINISTRATOR

By: _______________________________
Deputy

April 26, 2021

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MEMORANDUM

Minnesota Statutes § 97A.145, entitled “Wetlands for Wildlife,” provides authority for the

state to acquire property for conservation purposes. The statute mandates the following procedure

for acquisition:

“Subd. 2. Acquisition procedure. (a) Lands purchased or leased under this section must be
acquired in accordance with this subdivision.

(b) The commissioner must notify the county board and the town officers where the land
is located and furnish them a description of the land to be acquired. The county board must
approve or disapprove the proposed acquisition within 90 days after being notified. The
commissioner may extend the time up to 30 days. The soil and water conservation district
supervisors shall counsel the county board on drainage and flood control and the best
utilization and capability of the land.

(c) If the county board approves the acquisition within the prescribed time, the
commissioner may acquire the land.

(d) If the county board disapproves the acquisition, it must state valid reasons. The
commissioner may not purchase or lease the land if the county board disapproves the
acquisition and states its reasons within the prescribed time period. The landowner or the
commissioner may appeal the disapproval to the district court having jurisdiction where
the land is located.

(e) The commissioner or the owner of the land may submit the proposed acquisition
to the Land Exchange Board if:

(1) the county board does not give reason for disapproval, or does not approve or
disapprove the acquisition within the prescribed time period; or

(2) the court finds that the disapproval is arbitrary and capricious, or that the reasons
stated for disapproval are invalid.

(Emphasis supplied.)

Arbitrary and Capricious

A decision is arbitrary and capricious if “‘it represents the agency’s will and not its

judgment.’” In re Minnesota Power, 807 N.W.2d 484, 490 (Minn. Ct. App. 2011) (quoting Petition

of Ottertail Power Co., 417 N.W.2d 677, 680 (Minn. Ct. App. 1988)). A decision is also arbitrary

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and capricious if the governmental body “relied on factors the legislature never intended it to

consider, if it entirely failed to consider an important aspect of the problem, if it offered an

explanation for the decision that runs counter to the evidence, or if the decision is so implausible

that it could not be ascribed to a difference in view or the result of agency expertise.” Pope County

Mothers v. Minn. Pollution Control Agency, 594 N.W.2d 233, 236 (Minn. Ct. App. 1999). “[A]

prima facie case of arbitrariness exists if the [municipality’s] decision is not accompanied by

findings to show that its action was reached upon a consideration of the facts and was based upon

reason rather than the mere individual whim of the members.” Crystal Beach Bay Ass'n, Island

View Route, Int'l Falls v. Koochiching Cnty., 243 N.W.2d 40, 42 (1976) (quotations omitted).

“If a contesting party demonstrates that there is no rational basis relating to the promotion

of the public health, safety, morals, or general welfare, or that the act is arbitrary and capricious,

[the court] may override such an action.” Id. (citing State, by Rochester Ass'n of Neighborhoods

v. City of Rochester, 268 N.W.2d 885, 888 (Minn.1978); Almquist v. Town of Marshan, 245

N.W.2d 819, 825–26 (1976)). A reviewing court will reverse the decision of a governmental body

“where there is ‘a combination of danger signals [that] suggest the agency has not taken a hard

look at the salient problems and has not genuinely engaged in reasoned decision-making.’” Pope

County Mothers v. Minn. Pollution Control Agency, 594 N.W.2d 233, 236 (Minn. Ct. App. 1999)

(quoting Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 825 (Minn. 1977)).

The Minnesota Supreme Court has considered Minnesota Statutes section 97.481 in light

of a county board’s decision to disapprove a proposed DNR purchase of property. Kasch v.

Clearwater Cty., 289 N.W.2d 148, 152 (Minn. 1980). Section 97.481 is a prior version of section

97A.145, and had no standards or consequences for failure to act. The board in Kasch refused to

act on a proposed sale to the DNR and refused to give reasons for not acting on the request. The

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Court found that the county’s refusal to act and refusal to provide reasons for its decision to be

arbitrary. The case was remanded to the district court to direct the county board to approve or

disapprove the sale. Section 97.481 was replaced by section 97A.145, but the new statute also did

not provide standards for approving or disapproving a sale, other than to state the reasons for

disapproval must be both “valid” and not “arbitrary and capricious.” The Kasch court’s

determination of the role of county boards in approving or disapproving a sale, therefore, remains

binding precedent, despite enactment of the new statute:

We conclude that the requirement in § 97.481 that land sales to the DNR be approved by
the county board was included to give county boards an opportunity to consider local
concerns affected by sales to the DNR that may outweigh the state policies advanced by
the statute, not to give the board an unlimited veto power over such sales. Thus, unless a
valid local interest is threatened by a proposed sale, a county board must, as an agency of
the state, approve those sales to the DNR that advance established state policies. While it
is impossible to foresee all of the circumstances that would justify a county board's
disapproval of a proposed sale to the DNR, a sale may be inappropriate where a board
determines, for example, that the land to be sold is not suitable for wildlife development,
or that wildlife development does not constitute the best utilization of the land, or that the
proposed use is inconsistent with proper drainage and flood control. Kasch at 152.

The Lac qui Parle County Board of Commissioners identified nine reasons for

disapproving the proposed sale of land by Plaintiffs to the DNR. Reasons for Disapproval of

Proposed State Land Acquisition: Baxter T6 (Exhibit 5). The statement is more akin to an analysis

of factors considered by the Board. Some factors weigh in favor of approval, and some against. In

the end, the Board disapproved the sale because it found the ongoing transfer of Lac qui Parle

County farm land from crop production to conservation use to be contrary to best interests of

people who live in Lac qui Parle County. Following the logic of the Board of Commissioners, any

land capable of producing crops should be excluded from sale to the DNR. The Board weighed

most of the factors or considerations in support of disapproval, even if the evidence did not support

the conclusion.

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First, the Board found that too much land is converted to conservation land in Minnesota

generally and Lac qui Parle County in particular. The Board stated that historically “limited

funding provided a healthy balance between conservation-driven interests (DNR and FWS) and

the economically-driven private landowners.” The Board lamented that the Clean Water, Land

and Legacy Amendment provided the “DNR and FWS [with] access to hundreds of millions of

taxpayer dollars with which to pursue additional acres with only the narrow and singular focus of

conservation in mind.” Following the directive in Kasch, however, disapproving this sale because

too much land is placed in conservation programs is tantamount to “unlimited veto power” over

such sales. County boards are required to, “as an agency of the state, approve those sales to the

DNR that advance established state policies.” The Lac qui Parle County Board may be absolutely

correct that “a massive influx of available funding” may place too many acres into conservation

programs, but this is a political question that has been determined at the state and federal levels.

A county board in this instance cannot substitute its judgment for that of the state on matters of

conservation policy. 2 The Kasch court identified examples of “valid local interests,” but the

placement of land in conservation programs, generally, and the availability of funding to do so, is

not a “valid local interest.”

Second, the Board found that the percentage of land placed into conservation uses in Lac

qui Parle County is significantly greater than the percentage of such land throughout Minnesota,

and this acquisition is not “critically necessary” to achieve conservation goals. In short, the Board

determined that “Lac qui Parle County is clearly doing its part [to contribute to conservation

practices].” In 2018, the DNR owned 4.6 percent of land in Lac qui Parle County and 2.2 percent

2
As long as the county board has authority to act, judicial review of action of a political subdivision requires the Court
to examine the record and decide whether the decision is supported by evidence in the record. If there is evidence in
the record to support the decision, the Court must affirm the decision even if the Court would have decided the question
differently. The Court cannot go outside the record to find evidence to support a different result.

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of land throughout Minnesota. In 2018, 15.0 percent of land in Lac qui Parle County and 6.2

percent of land in Minnesota was owned by all public conservation entities or subject to state or

federal conservation easements. 3 The rate of DNR acquisition of land since 2000 averages 128

acres per year. There is no information in the record whether the acquisitions in the previous two

decades were under section 97A.145 and subject to county board review. Consequently, there is

no information in the record about the history of approvals and disapprovals by the Board under

section 97A.145, subd. 2. Like the previous reason for disapproval, this reason is based on the

acquisition of land by the DNR generally, rather than the acquisition of this particular parcel. If

the Lac qui Parle County Board denies every proposed sale of a parcel except those “critical” to

advancing conservation goals, the County is substituting its judgment for that of the state on the

issue of placement of land in conservation programs.

Third, the Board determined that “privately-owned land is significantly more valuable to

the local economy as compared to land that is owned by the DNR.” The Board compared the value

of agricultural property to the value of conservation property to the local economy. The analysis

provided by the Board was anecdotal, not empirical, and applies to all proposed acquisitions of

property with any capability of agricultural production. The finding is not specific to the parcel in

the current proposed acquisition. This is not a “valid local interest” under the Kasch decision. The

Board stated that “Lac qui Parle County is suffering permanent and cumulative damage with each

completed DNR acquisition.” However, the Board does not have “unlimited veto power” over

acquisitions, even if this is true. The Board can disapprove a specific proposed acquisition that

3
There is no evidence in the record to explain why Lac qui Parle County has a greater proportion of its land in
conservation uses. The Court notes that under special legislation, the Lac qui Parle Water Control Project, authorized
acquisition of lands for the maintenance and operation of the project. Minnesota Statutes, section 84.154, subd. 3.
The statute further states “These lands, which consist of 22,000 acres, more or less, located in the north and east edge
of Lac qui Parle County and portions of the south and west edges of Chippewa, Swift and Big Stone Counties, shall
be used and developed as a game refuge and public hunting grounds as the commissioner of natural resources may
designate and shall include all state-owned lands acquired pursuant to the provisions of law above stated.”

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would have a particular economic impact on the local economy, but there is no evidence in the

record to suggest that the transfer of Plaintiffs’ land to the state will threaten a valid local interest.

Fourth, the Board determined that “continued government [agricultural] land

acquisitions… are a factor that will lead to additional population loss.” Like the previous reason

for disapproval, this reason applies to all proposed acquisitions and not to the particular acquisition

in question. Like the previous reason, the Board could disapprove a specific proposed acquisition

that would have a particular impact on population.

Fifth, the Board determined that the acquisition of private land for conservation purposes

is irreversible. The finding is inaccurate. The DNR has the authority to sell and exchange land.

The Board’s statement suggests that the DNR does not sell land after it has been acquired:

“Historical practices indicate that once the DNR buys land, it has no intention of ever re-selling

it.” If this factor were a proper consideration for the Board, the factual inquiry should be on

whether land acquired by the DNR is sold when circumstances change so that it is proper to do,

not on the “intention” of the DNR. 4 The basis for this finding is anecdotal speculative rather than

empirical. The decision whether it is good policy to place land into conservation programs does

not belong to the county. Under Kasch, the County’s concern in approving or disapproving a

proposed sale under section 97.145 is whether a valid local interest is threatened by a proposed

sale.

Sixth, the Board determined that the land may have greater value for agricultural

production than asserted by the plaintiffs. The Board discredited Plaintiffs’ assertion that the land

is not suitable for agricultural production because it found that the degree of productivity varies

4
The Board’s statement suggests the DNR would not “reverse” a transaction but cites no examples of it failing to do
so: “…converting land to government ownership is instead an inflexible restriction being placed on future generations.
… There may be some unforeseen circumstance, a problem that cannot even be considered in 2019, for which usage
of this land for conservation purposes is not in the best interest of the public.” (Emphasis original.)

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from farmer to farmer: “‘[M]arginal land’ is highly subjective. A landowner that is able to

minimize operating costs through means such as personal labor, using older equipment, and other

decisions could foreseeably generate net income on this property. Moreover, ‘marginal’ properties

such as these can be very attractive to those prospective farm operators who cannot afford top-

quality land and are therefore pursuing properties such as this with lower barriers to entry.” The

court in Kasch offered examples for when a proposed sale may be subject to county board

disapproval: “for example, that the land to be sold is not suitable for wildlife development, or that

wildlife development does not constitute the best utilization of the land, or that the proposed use is

inconsistent with proper drainage and flood control.” (Emphasis supplied.) The record establishes

that the property in question has poor production. The parties agree on this in their stipulation of

facts. It is an 80-acre parcel and 71 acres are designated as “tillable.” However, only 54 of the 71

acres were “farmable” in the years 2015 to 2020. Crop yields for soybeans on the “farmable” acres

are 73% of average yields for all farms in Lac qui Parle County. The Board’s determination that

the best utilization of this specific parcel is as farm land for those who want to enter farming is

consistent with the Board’s concerns about declining population and the advantages to maintaining

agriculture to the local economy. Under Kasch, whether conservation practices are the best

utilization of the land is a proper concern for a county board in approving or disapproving a

proposed sale under the statute. 5 This analysis is the heart of this case. In determining whether the

Board acted arbitrarily, the Court does not weigh the credibility of evidence or substitute its

judgment for that of the governing body, but instead reviews the record to determine whether there

is support in it for the governing body’s decision. Billy Graham Evangelistic Assn. v. City of

5
The Lac qui Parle County Board did not specifically state that the property’s best use was for farming. Instead the
Board’s findings rejected the Plaintiffs’ and the DNR’s argument that the poor production capability of the land
supports approval of the sale. The Board’s statement of reasons however supports an inference that the disapproval
was based on this reason.

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Minneapolis, 667 N.W.2d 117 (Minn. 2003). The record overall is very limited. No detailed

minutes or transcript of meetings was provided to the Court. The record does not indicate whether

Mr. Vacek’s four-page statement and one-page talking points (Exhibit 3) or the farm land

information (Exhibit 2) was considered by the Board. The Board concluded that farming was a

better utilization of this land—despite its poor agricultural quality—than permitting the land to be

used for conservation purposes, but significant gaps in the record do not permit the Court to

determine whether this is an accurate assessment. For example, the following questions remain

unanswered: Did the Board know the production history of the property? Was the Board aware

that the property was earlier placed in a conservation reserve program easement? What are the

operating costs and market prices used by the Board to determine whether a farmer using older

equipment and personal labor could generate net income on this property? How many farmers seek

this type of “marginal” land? How many acres of similar land are available in the county? What

is the annual rent on this “marginal” parcel? What is the annual return on investment that makes

the utilization of the property as farm property its best use? ($1.00? 1% of value?, 6%?, 10%?,

some other rate of return?). The Board’s determination was not accompanied by factual findings

to support its action, and in the absence of facts, the Board’s decision is arbitrary.

Seventh, the Board found that private landowners should have the right to sell to whomever

they wish. This consideration is unrelated to the approval process because like declining

population and general economic effect, it is not a “valid local interest [promoted] by the proposed

sale.”

Eighth, the Board found that the payment in lieu of taxes (PITL) for the parcel may fall

short of tax revenues in the future. The PITL is greater than the current taxes by $679.00. The

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Board speculated that taxes would increase because of a school referendum in an unknown amount.

This reason is unsupported by the record.

Ninth, the Board determined that local public opinion weighs against the sale. This is not

a valid local interest threatened by the proposed sale.

Validity of Stated Reasons for Disapproval

For the reasons set forth above, the Court finds the reasons for disapproval invalid. The

Court distinguishes between the meaning of the word “valid” for purposes of section 97A.1145

and its meaning in ordinary terms. The statute refers to reasons for disapproval that are outside the

scope of a county board’s review under section 97A.145 or are unsupported by the evidence.

Declining population and the transfer of land from farm production to conservation use

unquestionably have an effect on the local citizens and the local economy. But banning the transfer

of all agricultural property from private ownership to conservation purposes is not a policy

determination afforded to the counties under the statute. When considering local interests in a

proposed acquisition, such as suitability for wildlife, the best utilization of the land, or drainage

and flood control, a county board must carefully consider the characteristics of a particular parcel

to determine whether the sale threatens those interests.

Conclusion

The Court’s Order is not an approval of the sale of the property to the DNR. That is up to

the Land Exchange Board. The Court has simply applied the rule set forth in Kasch to the Lac qui

Parle County Board’s action in this case. The statute contains a procedure to submit the question

of acquisition of property to the Land Exchange Board if a court finds that the county Board’s

disapproval is arbitrary and capricious or if the stated reasons are invalid. Because the Court has

done so, Plaintiffs may submit the proposed acquisition to the Land Exchange Board.

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