State Proposals on Restricting Foreign Ownership of Farmland: Part Three
In the past two years or so, as discussed in the first article of this seven-part series, the issue of restricting foreign investments and ownership in privately held farmland emerged or reemerged in at least twenty-three states, including Alabama, Arkansas, California, Colorado, Florida, Hawaii, Illinois, Indiana, Kansas, Mississippi, Missouri, Montana, New Jersey, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, and Wyoming. This reemerging interest in restricting foreign investments in U.S. land, especially agricultural land, is partly due to a Chinese-owned company purchasing over 130,000 acres near a U.S. Air Force base in Texas. Another transaction that raised concerns among some lawmakers is the purchase of 300 acres near an Air Force base in North Dakota by the Chinese company Fefang Group.
Each of these states have proposed, or have plans to propose, legislation that would restrict foreign ownership or investments in agricultural land to some degree. Like the states that currently have laws, many of these states have introduced bills that take its own approach to restricting foreign ownership and investments in agricultural land within their states. Of the twenty-three states, Indiana is currently the only state to enact a foreign ownership law within the previous two years.
This article is the third of a seven-part series that discusses recent state proposals that seek to restrict foreign ownership of agricultural land. This article discusses the proposals introduced in Colorado, Hawaii, Illinois, and Kansas. To read the first and second articles of this series, click here and here.
On January 31, 2023, a Colorado state lawmaker proposed HB 23-1152 which seeks to restrict nonresident aliens, foreign business entities, and foreign governments of China, Russia, or any country declared a “state sponsor of terrorism” determined by the U.S. Secretary of State from acquiring a “controlling ownership share” in agricultural land, mineral rights, or water rights. HB 23-1152 defines a “controlling ownership share” as “an ownership share of more than fifty percent.” Currently, the countries considered a state sponsor of terrorism includes Cuba, North Korea, Iran, and Syria.
There are some exceptions to the restriction proposed under HB 23-1152. For example, restricted foreign persons may inherit agricultural land or obtain an ownership interest in agricultural land through a security interest. Further, this proposal permits restricted foreign persons to own and continue to own agricultural land if they hold the on December 31, 2023. Last, HB 23-1152 would require the Colorado Attorney General to bring a divestment action against any restricted foreign person that is in violation of the law. In other words, the state would take ownership of agricultural land found to be in violation of the proposed restriction.
Under Hawaii state law, nonresident individuals are prohibited from acquiring an interest in public agricultural land. Hence, the state does not restrict foreign persons and entities from acquiring or holding private land within the state. Recently, HB 505 was introduced in the Hawaii state legislature which seeks to restrict the “sale or transfer of real estate…to the Chinese Communist Party,” its members, and “other Hostile Foreign Influence.” While this proposal does not specifically restrict agricultural landholdings, it does have the ability to restrict such interests because the restriction applies to all real estate within Hawaii. HB 505 defines “hostile foreign influence” as “any entity which has partial ownership held by a foreign government hostile to the United States,” but it does not specify the process of determining which foreign entities are “hostile.”
Another bill (HB 929) also being considered by the state’s legislature seeks to restrict foreign individuals and foreign entities from owning or holding real estate “whose country of origin also prohibits foreign individuals from holding private real estate interests.” In other words, if U.S. citizens are prohibited from owning land in a country, the citizens and business entities of that country are restricted from obtaining an interest in real estate within Hawaii.
Illinois is one of thirteen states that require certain foreign persons to disclose their agricultural landholdings to the state’s Department of Agriculture; however, there is no restriction on foreign investors from owning or acquiring land within the state. See 765 Ill. Comp. Stat. Ann. 60/7. On January 19, 2023, an Illinois state lawmaker proposed HB 1267 which would require the governor to “take such actions as may be necessary to prohibit the purchase of public or private real estate by noncitizens.” Under HB 1267, “noncitizen” means a nonresident alien, foreign business entity, and foreign government. Further, the bill seeks to require the Commission on Government Forecasting and Accountability to provide the state legislature with a report that details noncitizen purchases of real estate and percentage of noncitizen-owned real estate, and “offers recommendations to make it easier for citizens and harder for noncitizens to purchase real estate” within the state.
On January 25, 2023, SB 100 was introduced in the Kansas state legislature which seeks to restrict a foreign national, foreign business entity, and foreign government from acquiring, purchasing, or holding any interest in land within the state. Currently, Kansas state law only prohibits foreign business entities from owning, leasing, or otherwise holding an interest in agricultural land under the state’s corporate farming law. See Kan. Stat. Ann. § 17-5904. SB 100 would authorize the state’s Attorney General to investigate any transaction they believe violates the restriction proposed under the bill. Further, the bill specifies that land held in violation of the restriction is subject to forfeiture, meaning the state takes possession of the land.
As states across the nation enter into new legislative sessions in 2023, the issue of restricting foreign ownership and investments in farmland has emerged or reemerged in multiple states. As a result, other states may begin to consider the issue of restricting foreign ownership of agricultural land located within their state.
On January 18, 2023, NALC hosted a webinar that focused on the federal and state legislative proposals that seek to increase oversight and restrict foreign investments and acquisitions of land located within the U.S. To watch a recording of that webinar, click here.
To read the first article in this series, click here.
To read the second article in this series, click here.
To learn about the federal proposals to restricting foreign investments in agricultural land, click here.
For compilation of state laws governing foreign ownership of agricultural land, click here.
For more on foreign ownership of agricultural land, view NALC’s Foreign Investments in Agricultural Land: FAQs & Resource Library here.