Restrictions on agricultural land holdings and exceptions

(a) In general Except as provided in subsection (b), an unauthorized legal entity shall not, directly or indirectly, acquire or otherwise hold an ownership interest in any agricultural land. (b) Exceptions (1) In general Subsection (a) shall not apply to the following: (A) A bona fide encumbrance taken for purposes of security. (B) Agricultural land acquired for research or experimental purposes. (C) Agricultural land acquired and operated— (i) by or for a public institution of higher education for research, experimental, demonstration, or test purposes; or (ii) by or for a nonprofit corporation organized specifically for research, experimental, demonstration, or test purposes in support of or in conjunction with an institution of higher education. (D) Agricultural land acquired by a legal entity for immediate use in non-agricultural purposes, subject to the condition that the land remain in use for non-agricultural purposes. (E) Agricultural land acquired by a legal entity by process of law in the collection of debts, pursuant to a contract for deed executed prior to the date of enactment of this Act, or by any procedure for the enforcement of a lien or claim on the agricultural land, whether created by mortgage or otherwise, if all agricultural land acquired is disposed of not later than 5 years after the date on which the legal entity acquires the title to the agricultural land. (F) Agricultural land acquired or owned by a municipal corporation. (G) Agricultural land acquired or owned by a nonprofit legal entity that— (i) is organized under the laws of any State as a nonprofit legal entity; and (ii) qualifies as tax exempt under section 501 of the Internal Revenue Code of 1986. (H) Agricultural land that is acquired or owned by a legal entity in a fiduciary capacity. (I) Agricultural land that is acquired or owned by a legal entity formed by owners of heirs' property (as defined in section 761.2(b) of title 7, Code of Federal Regulations (or a successor regulation)). (J) Agricultural land that is acquired or owned by an authorized farmer or rancher cooperative. (K) Agricultural land owned by a legal entity on the date of enactment of this Act, subject to the condition that the legal entity owning the land on that date of enactment continues to own the agricultural land. (2) Research or experimental purposes For purposes of paragraph (1)(B), agricultural land is acquired for research or experimental purposes if the agricultural land is used in accordance with any of the following: (A) Research and experimental activities (i) In general Research and experimental activities are carried out on the agricultural land and commercial sales of products produced from farming the agricultural land do not occur or are incidental to those research or experimental activities. (ii) Incidental sales For purposes of clause (i), commercial sales are sales that are incidental to the research or experimental purposes of the legal entity when the sales are less than 25 percent of the gross sales of the primary product of the research and experimental activities carried out on the agricultural land. (B) Public seed varieties (i) In general The agricultural land is used for the primary purpose of testing, developing, or producing public seed varieties or plants for sale or resale to farmers as seed stock and commercial sales of other products produced from farming the agricultural land do not occur or are incidental. (ii) Incidental sales For purposes of clause (i), commercial sales described in that clause are incidental if the sales are less than 25 percent of the gross sales of the primary product of the testing, development, or production of public seed varieties or plants for sale or resale to farmers as seed stock carried out on the agricultural land. (3) Land acquired by law For purposes of paragraph (1)(E)— (A) the 5-year period described in that paragraph shall be a covenant running with the title to the agricultural land against any grantee, assignee, or successor of the legal entity; and (B) any agricultural land acquired shall not be used for farming during the 5-year period described in that paragraph, except under a lease to an authorized legal entity in accordance with this Act.