Acquisition Bans, Taxes and More: An Introduction to Farm-Based Bill 86!

Acquisition Bans, Taxes and More: An Introduction to Farm-Based Bill 86!

The Québec government recently tabled Bill 86 in the National Assembly, An Act to ensure the long-term preservation and vitality of agricultural land (the “Bill” or “Bill 86”).

The Bill introduces several significant amendments to the Act respecting the preservation of agricultural land and agricultural activities (the “APALAA”). It imposes certain restrictions on the acquisition of agricultural land by non-farmers, and provides for a robust system of oversight and penalties for non-compliance with the new rules. In addition, municipalities have been given the power to impose a tax on units of assessment that include workable but unworked agricultural land.

Definition of “agriculture”

First, Bill 86 proposes to amend to the definition of “agriculture” in the APALAA, to exclude the construction or utilization of greenhouses having a total area of two hectares or more, and plant production buildings other than greenhouses having a total area of 5,000 m² or more, if, in either case, they are situated mainly on soils in Classes 1 to 3 of the Canada Land Inventory. These classes cover soils with no significant limitations in use for crops (Class 1), soils with moderate limitations that, for example, restrict the range of crops (Class 2), and soils that have moderately severe limitations requiring special conservation practices (Class 3).

Restrictions on the acquisition of agricultural land

Moreover, if passed, Bill 86 will introduce a moratorium retroactive to December 5, 2024, the date on which Bill 86 was introduced, on the purchase of agricultural land by investment funds and, under certain conditions, legal persons that are not agricultural operations registered under the Act respecting the Ministère de l’Agriculture, des Pêcheries et de l’Alimentation. This absolute ban will end when the Bill comes into force, at which point many potential acquirers, other than farmers, will be required to obtain approval from the Commission de protection du territoire agricole du Québec (the “CPTAQ”) before acquiring agricultural land. Non-farmer buyers will have to convince the CPTAQ that they intend to use the land for agricultural rather than financial or speculative purposes. In examining an application for acquisition, the CPTAQ must take into consideration, among other things, the intended use of the land, in particular the acquirer’s intention to cultivate the soil or raise livestock; the suitability of the land for the cultivation of the soil or for pasture; the impact of the acquisition on the price of farm land in the region; and the effects of the acquisition on the economic development of the region. Note that sales made between December 5, 2024, and the date on which the Bill comes into force, i.e., sales made in breach of the moratorium, may be annulled or confirmed after the fact by the Commission.

Bill 86 also strengthens the analytical framework that the CPTAQ must apply when reviewing requests for authorization (in other words, requests to authorize a new use of land for purposes other than agriculture), as well as requests to exclude a lot from an agricultural zone. New criteria which the CPTAQ must take into consideration will be added, including the dynamism of the agricultural land; the impact of a farm tourism-related use, if any, on the viability of neighboring agricultural operations; and the application’s consistency (or inconsistency) with the region’s land use planning and development plan. The Bill also prescribes the imposition of impact reduction measures when non-agricultural uses are authorized.

The Bill also adds to restrictions on the acquisition of agricultural land by non-residents. Among other things, a non-resident must now obtain the authorization of the CPTAQ before purchasing shares in a corporation that holds agricultural land as one of its assets (as opposed to agricultural land being its principal asset), if the acquisition would cause the corporation to become a non-resident of Québec.

Transaction registry

To improve the transparency of land transactions and assess, in real time, the status of agricultural lands in Québec, Bill 86 provides for a mechanism to monitor certain land rights. Accordingly, certain rights relating to lots situated in agricultural zones will have to be registered in the land register. The specific rights subject to registration will be determined by regulation. The Registrar of Québec will then make this information available to the CPTAQ, which will, in turn, provide it to the Minister of Agriculture, Fisheries and Food to support the Minister in developing projects and programs aimed at ensuring the preservation and development of agriculture in Québec.

Similarly, the CPTAQ will now maintain a new register relating to monetary administrative penalties imposed under the APALAA. Among other things, the register will specify the name of the offender, the date and nature of the breach that led to the imposition of the penalty, and the amount of the penalty imposed.

Municipal taxation powers

Bill 86 also gives municipalities the power to impose a tax on units of assessment that include workable but unworked agricultural land, calculated on the taxable value of the said agricultural land. This measure is designed to encourage owners of agricultural land to actively work it rather than leave it uncultivated.

The definition of workable but unworked agricultural land excludes land that is already the subject of a right of use for a use other than agricultural, land that constitutes the site of a building with a value equal to or greater than $10,000, and land with an area not exceeding one-half hectare. Municipalities that choose to impose such a tax can also provide for other exemptions.

Immunity from prosecution

Bill 86 broadens immunity from civil suits for farmers. They continue to be protected from claims due to dust, noise or odours resulting from agricultural activities. And the Bill now extends this immunity to nuisances caused by light, smoke, vibrations and insects resulting from the practice of agriculture.

Agricultural innovation park

The Bill also establishes an agricultural innovation park, whose mission is to protect the farm land that makes up the park and to encourage the implementation of innovative agricultural models and practices. The government will determine which land makes up the park.

Administrative and penal penalties

To ensure compliance with the norms governing the protection of agricultural land, the Bill introduces a monetary administrative penalty system. For example, administrative penalties may be imposed on non-farmers who purchase agricultural land without prior approval from the CPTAQ, as well as on persons who fail to provide information or documents required by the CPTAQ, or who neglect to provide the information required by regulation. Exact penalty amounts will be determined by regulation and, generally speaking cannot exceed $5,000 for natural persons and $10,000 for other entities. Other penalties are provided specifically for non-residents who infringe the norms applicable to them. Bill 86 also sets out aggravating factors for the purposes of determining the penalty in the case of penal proceedings.

Investigative powers

Bill 86 also establishes a robust inspection regime to oversee compliance with agricultural land protection rules, by giving inspectors and investigators the power to conduct in-depth investigations. Inspectors are authorized to enter any lot situated in an agricultural zone, including non-residential buildings and vehicles, at any reasonable time, and may take soil samples, perform all manner of tests, and even use any computer or equipment located on the premises to access data contained therein relating to the application of the rules. Anyone who hinders, impedes or misleads an inspector or investigator in the performance of their functions is liable for a fine of several thousand dollars.

Coming into force

Lastly, the Bill provides that certain measures will come into force only once the Québec government has adopted one or more regulations. As stated above, the specific agricultural land rights to be registered in the land register, as well as the exact amount of monetary administrative penalties, will be prescribed by regulation. In addition, since Bill 86 further restricts the ability of persons who own a certain area of farm land from acquiring more without the CPTAQ’s approval, the government will have to determine that area by regulation before this measure takes effect.

Conclusion

Unsurprisingly, the Bill was generally well received by those operating in the agricultural sector. However, we doubt that the same will be true for passive owners of agricultural land, or for those wishing to develop a non-agricultural project on such land. It also remains to be seen what guidelines will be imposed on municipalities’ powers to impose the tax, or for the creation of the agricultural innovation park. There are many uncertainties surrounding the application of this Bill and the financial burden it could place on certain landowners. Our team will follow the development of Bill 86 over the coming months.

By Sonia Rainville, Marie-Lou Beaumont, Martin Thiboutot and Noah Davis-Assil (articling student)

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2024