Possession of U.S. land, particularly agricultural lands, by overseas individuals or entities has been a difficulty that traces to the origins of the US. Right this moment, roughly fourteen states particularly forbid or restrict nonresident aliens, overseas companies and firms, and overseas governments from buying or proudly owning an curiosity in agricultural land inside their state. To see a compilation of the varied restrictions enacted by every state, take a look at the Nationwide Agricultural Legislation Middle’s Statutes Regulating Possession of Agricultural Land chart right here. Though these states have instituted restrictions, every state has taken its personal method. In different phrases, a uniform method to proscribing overseas possession has not been established as a result of state legal guidelines differ extensively.
Up to now yr or so, the problem of proscribing overseas investments and possession in privately held farmland emerged or reemerged in Alabama (SB 14), Arkansas (SB 312) (authentic model), California (SB 1084), Indiana (SB 388), Missouri (HB 1947/SB 791), Oklahoma (HB 1497/SB 1534), Tennessee (SB 1070/HB 1451), and Texas (HB 58/HB 69/HB 305). This reemerging curiosity in proscribing overseas investments in U.S. land, particularly agricultural land, is partly on account of a Chinese language-owned firm buying over 130,000 acres close to a U.S. Air Power base in Texas. One other transaction that raised issues amongst some lawmakers is the buy of 300 acres close to an Air Power base in North Dakota by the Chinese language firm Fefang Group.
Every of those states proposed laws that might prohibit overseas possession or investments in agricultural land to a point. Just like the states that at the moment have legal guidelines, these states—apart from Alabama and Tennessee—have launched payments that take its personal method to proscribing overseas purchases of agricultural land inside their state. Of those eight states, Indiana was the one state to enact a overseas possession legislation. This text is the primary of a two-part sequence that highlights current state proposals searching for to limit overseas possession of agricultural land. This text discusses the proposals launched in Alabama, Arkansas, California, and Indiana.
Alabama
In December 2021, an Alabama state lawmaker proposed SB 14 to “prohibit possession of agricultural land to United States residents and resident aliens solely.” Regardless of no uniformity amongst states’ overseas possession legal guidelines, Alabama’s SB 14 took the same method to Iowa’s overseas possession legislation. In actual fact, the invoice contained lots of the identical statutory provisions contained in Iowa’s legislation.
Beneath SB 14, three classifications of overseas individuals and entities could be prohibited from buying or buying an curiosity in Alabama “agricultural land”: (1) nonresident aliens; (2) overseas companies; and (3) overseas governments. Solely three states with overseas possession legal guidelines—Iowa, South Dakota, and Wisconsin—prohibit these three lessons of overseas traders. Beneath the proposal, “agricultural land” was outlined as “agricultural land” as “[l]and appropriate to be used in farming,” which incorporates the manufacturing of agricultural crops, eggs, milk, horticultural crops, together with fruit, elevating poultry, and grazing or producing livestock. Additional, the manufacturing of timber, forest merchandise, nursery merchandise, and sod additionally certified as “farming” beneath SB 14. Subsequently, beneath this proposal, overseas events could be prohibited from buying farmland appropriate for producing these agricultural commodities.
Nevertheless, like all overseas possession legal guidelines, SB 14 contained some exceptions to the proposed restriction, most of that are widespread to look in different states’ legal guidelines. For instance, the invoice would have permitted overseas traders to accumulate farmland by inheritance or by taking a safety curiosity within the land. Though these exceptions would have supplied possession rights to restricted overseas events, these exceptions had been restricted. Particularly, if a overseas get together acquired possession of farmland beneath both of those exceptions, SB 14 would have required the get together to promote or get rid of their possession curiosity within the property inside two years from the date they gained their curiosity. Finally, SB 14 was not enacted which suggests nonresident aliens are nonetheless permitted to take and maintain actual property, together with agricultural land, inside the state of Alabama. See Ala. Code § 35-1-1. For an in depth dialogue on every provision of SB 14, learn NALC’s “Proscribing Overseas Farmland Investments: Alabama’s Proposed Constraints on Overseas Possession” article right here.
Arkansas
Alabama isn’t the one state that just lately tried to undertake one other state’s overseas possession legislation in their very own state. In 2021, the Arkansas state legislature launched SB 312 that, beneath the authentic model of the invoice, included an identical language and provisions contained in Missouri’s overseas possession legislation. The Arkansas legislature enacted SB 312, which is codified at Ark. Code Ann. § 2-3-111, however the legislation is fully totally different from the unique model that was proposed. In actual fact, the legislation doesn’t prohibit overseas possession of agricultural land. Fairly, the brand new legislation merely requires sure “overseas individuals” to report their possession curiosity in agricultural land inside the state to the Secretary of the Arkansas Division of Agriculture. Primarily, this reporting requirement corresponds with the federal reporting legislation beneath the Agricultural Overseas Funding Disclosure Act (“AFIDA”) of 1978.
The unique model of SB 312 underwent this entire transformation partly as a result of it used Missouri’s legislation as a template for the laws. In 2013, the Missouri state legislature amended the state’s overseas possession legislation to help the Chinese language firm Shuanghui Worldwide Holdings in its buy of Smithfield Meals. Primarily, the modification permitted overseas purchasers to accumulate and come clean with “one % of the full mixture agricultural acreage” inside the state. Mo. Rev. Stat. § 442.571(1). This enabled the Chinese language firm to maneuver ahead with its acquisition of Smithfield Meals. Due to this authorized historical past and the truth that overseas traders already owned over one % of Arkansas agricultural land, the unique model of SB 312 was doubtless impractical to limit overseas investments within the state’s farmland.
California
On September 13, 2022, California’s state legislature handed SB 1084 which sought to limit sure overseas investments within the state’s agricultural land. Based on the textual content of SB 1084, its goal was to limit potential “overseas authorities management of California’s agricultural land and pure assets” and to “safe the integrity” of the state’s farmland “as a result of results it has on the worldwide meals safety.” To perform this, the invoice supplies that “a overseas authorities shall not buy, purchase, lease, or maintain any curiosity in agricultural land within the State of California.”
Moreover, the proposed laws additionally sought to limit “state controlled-enterprises” from buying the state’s farmland. SB 1084 specifies {that a} “state controlled-enterprise” is a “enterprise enterprise by which the federal government has a controlling curiosity.” A overseas authorities has a “controlling curiosity” if it owns (1) 51% or extra of an curiosity in an entity, or (2) lower than 51% of an curiosity in an entity, however directs the enterprise actions of the enterprise with out affect of one other get together. Accordingly, overseas governments which have a “controlling curiosity” in a enterprise entity that holds an curiosity in California agricultural land could be topic to the restriction and is probably going in violation of SB 1084.
Beneath SB 1084, the definition of “agricultural land” has the identical that means as outlined beneath federal legislation, which states agricultural land is “any land positioned in a number of States and used for agricultural, forestry, or timber manufacturing functions….” 7 U.S.C. § 3508(1). Subsequently, if a chunk of property is getting used to provide agricultural commodities or timber, it could doubtless qualify as “agricultural land” beneath SB 1084.
Moreover, SB 1084 directed the California Division of Meals and Agriculture (“CDFA”) to publish an annual report based mostly on data supplied to it by USDA by AFIDA. The invoice searched for this report to incorporate data regarding modifications or tendencies of foreign-owned farmland and the extent of foreign-owned water rights and foreign-owned water desalination services. Nevertheless, the proposal didn’t specify that the report embody data regarding solely overseas governments, however agricultural land beneath “overseas possession.” As a result of “overseas possession” was not outlined, it’s unclear whether or not the invoice sought to require CDFA to incorporate within the report farmland funding data of overseas people, overseas enterprise entities, and overseas governments.
Though each chambers of California’s legislature unanimously handed SB 1084, Governor Newsom vetoed the invoice. Based on a veto message to the California State Senate, Governor Newsom claims he didn’t signal SB 1084 as a result of federal legislation already requires overseas governments to report their farmland pursuits to the U.S. Division of Agriculture (“USDA”) beneath AFIDA, and invoice’s information reporting necessities “would create new and arduous tasks for the [CDFA].” As a result of the state legislature didn’t override the governor’s veto, SB 1084 was not enacted into legislation. To study extra on California’s SB 1084, learn NALC’s “California’s Try and Prohibit Overseas Agricultural Land Investments” right here.
Indiana
In 2022, Indiana enacted SB 388 which restricts a “overseas enterprise entity” from buying sure varieties of agricultural land positioned inside the state. The overseas possession legislation, which is codified at Ind. Code Ann. §§ 32-22-3-0.5 et seq., prohibits overseas enterprise entities—resembling firms, LLCs, and partnerships—from buying agricultural land “by grant, buy, devise, descent, or in any other case…positioned inside Indiana for the needs of crop farming or timber manufacturing.” Ind. Code Ann. § 32-22-3-4(a). The time period “crop farming” beneath the legislation means “cultivation of land for the manufacturing of agricultural crops, consisting of vegetation or plant merchandise that may be grown and harvested completely for revenue or subsistence.” Ind. Code Ann. § 32-22-3-2. The legislation additionally prohibits a overseas enterprise entity that owned agricultural land earlier than July 1, 2022 from promoting or transferring the land to a different overseas enterprise entity “for the needs of crop farming after June 30, 2022.” Ind. Code. Ann. § 32-22-3-4(b).
Typically, Indiana’s overseas possession legislation doesn’t utterly prohibit or prohibit overseas enterprise entities from buying or holding agricultural land inside the state. It solely prohibits crop and timber manufacturing on foreign-owned agricultural land. Accordingly, the legislation doesn’t prohibit a overseas enterprise from buying farmland to provide another kind of agricultural commodity, resembling livestock or poultry. Additional, the legislation wouldn’t stop a overseas enterprise from buying agricultural land with a view to convert the land into some nonfarming enterprise.
Like each overseas possession legislation, Indiana’s legislation contains exceptions to the restriction. One exception is an acreage limitation which allows overseas companies to buy as much as 320 acres of agricultural land for crop and 10 acres for timber manufacturing. Ind. Code Ann. § 32-22-3-0.5(a)(2)(A). The legislation additionally exempts overseas enterprise investments in agricultural land for the aim of working and/or developing a confined feeding operation or for the manufacturing of eggs or poultry from the restriction. Ind. Code Ann. § 32-22-3-0.5(a)(3)–(4).
Indiana’s legislation additionally features a reporting requirement. Beneath the legislation, overseas enterprise entities should report an acquisition, sale, or switch of agricultural land for the needs of crop farming or timber manufacturing to the state’s secretary of state and lawyer normal. This provision directs the lawyer normal to “overview the stories…and examine an acquisition, sale, or switch of agricultural land if the lawyer normal believes” the transaction violates the state’s overseas possession legislation. Ind. Code Ann. § 32-22-3-6(a). All agricultural land in violation of this legislation “is topic to forfeiture to the state.” Ind. Code Ann. § 32-22-3-6(b).
Conclusion
Within the coming months, a number of states throughout the nation will start a brand new legislative session. Because of this, some states could try to enact a restriction on overseas possession in agricultural land. The following article on this two-part sequence will talk about the overseas possession proposals launched in Missouri, Oklahoma, Tennessee, and Texas.
On January 18, 2023, NALC is internet hosting a webinar that can give attention to the federal and state legislative proposals that search to extend oversight and prohibit overseas investments and acquisitions of land positioned inside the U.S. Extra data on this upcoming webinar will quickly be out there on NALC’s web site right here.
To study concerning the federal proposals to proscribing overseas investments in agricultural land, click on right here.
For compilation of state legal guidelines governing overseas possession of agricultural land, click on right here.
For extra on overseas possession of agricultural land, view NALC’s Overseas Investments in Agricultural Land: FAQs & Useful resource Library right here.
