Since January 2024, the majority of states have proposed at least one piece of legislation to prohibit or restrict foreign investments and landholdings in land, particularly private agricultural land, located within the boundaries of their states to some degree. As previously discussed in this NALC article, South Dakota became the first state in 2024, and the fourteenth state in two years, to enact a foreign ownership law. Since then, other state legislatures have enacted measures that seek to restrict certain foreign investments in land located within their state. Specifically, the state legislatures in Idaho, Indiana, and Utah have enacted measures that amend certain provisions of their states’ foreign ownership law.

Idaho

In 2023, the Idaho state legislature enacted House Bill 173 (“HB 173”) to restrict certain foreign purchases of farmland located within the state. Before the enactment of this measure, Idaho state law permitted foreign investors to acquire any real property within the state. HB 173 amended this by prohibiting foreign governments and foreign state-controlled enterprises from purchasing, acquiring, or holding an interest in agricultural land, water rights, mining claims, or mineral rights in the state.

On March 11, 2024, Idaho Governor Brad Little signed into law House Bill 496 (“HB 496”) which amends certain provisions of the foreign ownership law enacted one year earlier. One change HB 496 makes to the state’s foreign ownership law is the inclusion of forest land as a type of real property subject to the restriction. In general, the definitions contained in any piece of legislation are important because they provide context to how the words or phrases are to be understood throughout the legislative text. This is especially true for legislation that seeks to restrict certain foreign investors from purchasing specific types of real estate within the state. The measure defines forest land as private or public land “being held and used primarily for the continuous purpose of growing and harvesting trees of a marketable species.” Accordingly, foreign governments and foreign government-owned entities are prohibited from acquiring Idaho forest land.

Further, HB 496 also amends the definition of “foreign government” under the state law. Specifically, the legislation includes federally recognized Indian tribes as a type of governing body that is not considered a “foreign government” subject to the restriction. Previously, Idaho’s foreign ownership law defined “foreign government” as a “government other than the federal government of the United States or the government of any state,…territory, or possession” of the U.S. Because federally recognized Indian tribes have certain self-governing rights, it was unclear whether these tribes were considered “foreign governments” that are subject to the restriction. However, HB 496 amends the law’s definition by expressly stating that these Indian tribes do not qualify as a “foreign government” subject to the foreign ownership restriction.

Indiana

During the 2022 legislative session, the Indiana state legislature enacted Senate Bill 388 (“SB 388”) which prohibits, with some exception, any foreign business entity from acquiring an interest in agricultural land used for crop farming or timber production. Under the law, this means foreign businesses are permitted to acquire land for any other purpose besides crop farming or timber production, such as raising livestock and poultry or for industrial development. The Indiana state legislature enacted House Bill 1183 (“HB 1183”) which amends certain provisions of the state’s 2022-enacted foreign ownership law, and was signed into law by Indiana Governor Eric Holcomb on March 15, 2024. HB 1183 goes into effect on July 1, 2024.

Essentially, HB 1183 prohibits a “prohibited person” from purchasing, leasing, or otherwise acquiring any real property located within the state. The legislation defines “prohibited person” as individuals who are citizens of and business entities headquartered in country identified as a “foreign adversary” by the U.S. Secretary of Commerce. See 15 C.F.R. § 7.4(a). Currently, the foreign adversary list includes China, Cuba, Iran, North Korea, Russia, and Venezuela’s Maduro Regime. Business entities that are owned or controlled by individuals, businesses, or governments of a foreign adversary nation are also considered prohibited persons under HB 1183. While the legislation restricts prohibited persons from acquiring or leasing real property, including agricultural land, within the state, it also restricts these investors from acquiring or leasing any mineral, water, or riparian rights on any agricultural land.

Utah

On March 13, 2023, Utah Governor Spencer Cox signed into law House Bill 186 (“HB 186”)—also known as the “Restrictions on Foreign Acquisitions of Land Act”—which restricts certain foreign purchases of real property located within the state. Essentially, this law prohibits a “restricted foreign entity” from acquiring land, which includes private and public agricultural land and waters located within the state. The law defines “restricted foreign entity” as a military company required to be identified by the U.S. Department of Defense (“DOD”) under Section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (“NDAA 2021”). Under Section 1260H, DOD is required to identify Chinese military companies operating directly or indirectly in the U.S.

On March 1, 2024, the Utah state legislature enacted House Bill 516 (“HB 516”) which amends the state’s foreign ownership law by expanding the list of restricted foreign entities. Specifically, the legislation restricts entities owned or directly controlled by the government of China, Iran, North Korea, or Russia. However, it is unclear how a government of one of these countries exercises direct control over an entity because the legislation does not define the term. Also, any business entity, whether foreign or domestic, that contains a 51% ownership interest held by a restricted foreign entity is considered a restricted foreign entity subject to the restriction.

Unlike any other states’ foreign ownership law, HB 516 requires the state’s Department of Public Safety (“DPS”) to establish a process for county recorders to report any land conveyances they suspect are in violation of Utah’s restriction. The legislation also requires DPS to provide an annual notice to each county recorder that (1) provides instructions on how to identify restricted foreign entities and (2) the process which county recorders may report potential violations of the state’s foreign ownership law.

When a county recorder reports a potential violation, HB 516 requires DPS to investigate the validity of the conveyance. If DPS determines that a violation has occurred, the department is required to give notice to the restricted foreign entity that they have one year to divest of their interest in the land held in violation of the law. If the restricted foreign entity fails to divest of their interest within the one-year period, DPS must coordinate with the state’s Division of Facilities Construction and Management for the public sale of the land.

Last, the measure includes a provision that establishes the retroactive application of the restriction. In other words, if a restricted foreign entity holds an interest in Utah land, even before the enactment date of the measure, the restriction still applies, and they are required to divest of their interest in the land. Under HB 516, restricted foreign entities that acquired an interest in land before May 1, 2024, are required to divest of their interest in the land on or before May 1, 2025.

Currently, HB 516 is awaiting approval from their state’s governor. If signed into law, the legislation goes into effect on May 1, 2024.

Conclusion

Within the past two years, fourteen states have enacted legislation that restricts certain foreign investments in land located within the boundaries of their state. Some states, such as Idaho, Indiana, and Utah have enacted more than one foreign ownership measure within the previous two years. Further, are likely not the only states to enact some piece of legislation restricting certain foreign investments as the majority of states are considering similar restrictions. NALC is tracking each states’ foreign ownership proposals and will update this Statutes Regulation Ownership of Agricultural Land compilation when there are changes to a state’s law.

To read Idaho’s HB 496, click here.

To read Indiana’s HB 1183, click here.

To read Utah’s HB 516, click here.

For NALC resources on foreign ownership of ag land, click here.

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