dissenting.
Preservation of the “family farm” is not the purpose of article VIII, section 1-d-l of the Texas Constitution. Contrary to the assertion of the majority, Gragg states:
The provision also has the salutary purpose of encouraging not only that agricultural and ranch land be continued in production but that farmers and ranchers remain in the business of such production.1
*377Moreover, section 28.56 of the Texas Tax Code does not deny the tax benefits of agricultural use to domestic corporations,2 It is agricultural production — the business of farming and ranching, that is encouraged, not family ownership. The failure of the majority to recognize the true purposes of article VIII 1-d-l produces the anomalous result of forcing foreign-owned corporations, who are in fact not prohibited from buying Texas land, to cease lower yield agricultural production in favor of higher yield commercial development.
I agree with the majority that HL Farm is entitled to equal protection of the law. I also agree that the State is entitled to substantial deference in making classifications. "The Equal Protection Clause does not demand a surveyor’s precision in fashioning classifications.”3 However, I disagree with the majority’s conclusion that there is a rational basis for denying HL Farm the open-space land designation. I find no rational basis.
“The State must proceed upon a rational basis and may not resort to a classification that is palpably arbitrary.”4 Indeed, it must rest upon some ground of difference that has a fair and substantial relation to the object of the legislation.5 In determining whether the classification for HL Farm is permissible, two questions must be answered: (1) Does the challenged legislation have a legitimate purpose; and (2) was it reasonable for the lawmakers to believe that use of the challenged classification would promote that purpose? 6
The State advances thirteen reasons why its classification is permitted:
(1) prices of farmland are forced upward;
(2) property taxes are forced up;
(3) prospective farmers are less able to purchase farmland;
(4) existing farmers are less able to expand or consolidate their holdings;
(5) land ownership by farmers may be supplanted by leasing from distant investors, threatening the traditional owner-operator pattern of our family farm system;
(6) increase in absentee land ownership may contribute to the concentration of farm operations in the hands of a few;
(7) farm income leaves the country;
(8) local businesses are bypassed in the purchase of supplies, machinery, and equipment;
(9) foreign owners may have little incentive to participate in conservation programs;
(10) foreign owners are more likely to sell out to the developers of housing projects, shopping centers, and industrial parks;
(11) foreign ownership interferes with the transfer of farms from parents to offspring;
(12) foreign ownership separates the interests of landowners from that of the actual land operators; and
(13) less capital will be available to local banks to assist area farmers and businessmen.
Certainly, the preservation of agricultural production and the business of farming and ranching are legitimate purposes. The real question is whether it was reasonable for the Texas legislature to believe that use of the classification would promote these purposes. Here, the legislature has crossed that “point beyond which the state cannot go without violating the Equal Protection Clause.”7
*378I am at a total loss to understand how the fact that foreign-owned corporations are a part of the buying public contributes any greater pressure for the upward movement of land prices. Regardless, I noted at the outset that foreigners are not prohibited from buying. Likewise, the dangers of absentee land ownership advanced by the State are not rationally related to the classification. There is no distinction between the absentee ownership of a New York corporation which is registered to do business in Texas and HL Farm, a Virginia corporation registered to do business in Texas. The dangers of absentee ownership apply equally to all corporate landowners. Finally, I dare say that unless circumstances are quite unusual, market factors drive the decision on whether to sell the land, not the country where the owner happens to live. To be sure, the legislature recognizes that a tax break for agricultural use is a market factor.
As for local purchase of supplies, machinery, etc., the land isn’t going anywhere. If the land is going to be farmed, it must be farmed here. Consequently, most if not all of the operating and capital costs will be incurred here and paid here. Which brings me back to my original point. The purpose of the open-space designation is to encourage agricultural production and to keep farmers and ranchers in the business. Foreigners are allowed to buy Texas land. They, like all other owners of open land, should be discouraged from commercially developing the open space and encouraged to continue agricultural production. The statute in question has the opposite effect. The State has presented no rational basis for the denial of the open-space designation to HL Farm.
There is another point which I think is critical, but which was not addressed by the parties. The fair and substantial relationship of the classification to the legislative object is further undermined by its application to a corporation registered to do business in Texas because the Texas Business Corporation Act provides that “[a] foreign corporation which shall have received a certificate of authority under this Act shall, ... enjoy the same ... rights and privileges as a domestic corporation_8 State v. Hillcrest Inv., Ltd., 630 P.2d 1253 (Okla.1981), is instructive. In Hillcrest, the Oklahoma Supreme Court determined that Hillcrest, a Canadian corporation, was a resident of Oklahoma. An Oklahoma statute provided that non-resident aliens could not own land located within an incorporated town or city. However, another statute provided that a foreign corporation licensed to do business in Oklahoma was a domesticated corporation. By statute, domesticated corporations were entitled to the same rights and privileges as domestic corporations. Therefore, the Court reasoned that because Hillcrest was licensed to do business in Oklahoma, it could own land within an incorporated town or city.
I would hold section 23.56(3) of the Texas Tax Code unconstitutional under both the Fourteenth Amendment of the United States Constitution and article VIII, section 1-d-l of the Texas Constitution as applied to HL Farm. Therefore, I respectfully dissent.
. Gragg v. Cayuga Indep. School Dist., 539 S.W.2d 861, 865 (Tex.), appeal dism’d, 429 U.S. *377973, 97 S.Ct. 478, 50 L.Ed.2d 581 (1976) (emphasis added).
. Tex.Tax Code Ann. § 23.56 (Vernon 1982).
. Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869, 898, 105 S.Ct. 1676, 1692, 84 L.Ed.2d 751 (1985).
. Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 527, 79 S.Ct. 437, 441, 3 L.Ed.2d 480 (1959).
. Allied Stores, 358 U.S. at 527, 79 S.Ct. at 441.
. Western & S. Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648, 668, 101 S.Ct. 2070, 20, 68 L.Ed.2d 514 (1981).
.Id.
. Tex.Bus.Corp.Act Ann. art. 8.02 (Vernon Supp. 1991) (emphasis added).