In the past two years or so, as discussed in the first article of this series, the issue of restricting foreign investments and ownership in privately held farmland emerged or reemerged in the majority of states. 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 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 these states, Indiana is currently the only state to enact a foreign ownership law within the previous two years.

This article is the fifth of a series that discusses recent state proposals that seek to restrict foreign ownership of agricultural land. This article discusses the proposals introduced in Kentucky, Louisiana, and Maryland. To read the other articles in this series, click here.

Kentucky

The Kentucky legislature is currently considering HB 500 which seeks to restrict certain foreign investors from acquiring an interest in any public or private agricultural land located within the state. Specifically, this proposal would restrict nonresident aliens, foreign business entities, and persons associated with a foreign government of any country designated by the U.S. Secretary of State under 22 C.F.R. § 126.1. Additionally, HB 500 would restrict these foreign parties from participating in any program administered by the state’s Department of Agriculture, Agricultural Development Board, and the Kentucky Agricultural Finance Corporation. On March 8, 2023, the Kentucky House passed HB 500 and sent the measure to the Senate for consideration.

Louisiana

On March 16, 2023, HB 125 was introduced in the Louisiana state legislature. This proposal seeks to restrict a “foreign adversary” with an interest in a business entity from purchasing, leasing, or otherwise owning an interest in agricultural land within the state. Currently, Louisiana’s state constitution expressly permits foreign ownership of real property. See La. Const. Ann. art. I, § 4.

The measure defines “foreign adversary” as “any foreign government or nongovernmental person…to have engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the” U.S. as determined by the U.S. Secretary of Commerce. The current list of “foreign adversaries” is available at 15 C.F.R. § 7.4(a). HB 125 does provide some exceptions to the proposed restriction. For example, the restriction does not apply to foreign adversaries who’s right to own U.S. land is secured by a federal treaty. The proposal also provides an exemption for “religious, educational, charitable, and scientific corporations.”

Further, the bill seeks to require foreign businesses that purchase, sale, or transfer farmland located within the state after July 30, 2023, to report this transaction to Louisiana’s secretary of state and attorney general. The attorney general would be required to evaluate the reports and investigate any transaction they believe to violate the restriction proposed under this measure. Entities of a foreign adversary that violate the restriction would be subject to a $50,000 penalty and forfeiture of the farmland if they do not divest their ownership interest in the land within one year after a judgment is entered against them by a court.

Maryland

In 2023, two bills have been introduced in the Maryland legislature that seek to restrict foreign ownership of agricultural land within the state. One proposal, HB 842, would prohibit nonresident aliens, foreign business entities, and foreign governments from acquiring any interest in agricultural land. This piece of legislation did include some exceptions to the restriction, such as permitting restricted foreign parties to hold a security interest in farmland and acquire leaseholds in agricultural land that are less than 10 years. On March 18, 2023, the sponsor of this bill withdrew HB 842 for consideration by the state legislature.

Maryland’s legislature is also considering HB 968 which would prohibit nonresident alien citizens of China, business entities incorporated in China, and individuals employed by or associated with the Chinese government from purchasing farmland within the state. Additionally, this proposal seeks to restrict these foreign parties from participating in state agricultural programs, except for food and food safety regulatory requirements.

Conclusion

In 2023, the issue of restricting foreign ownership and investments in farmland has emerged or reemerged in the majority of 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 other articles in this series, click here.

For compilation of state laws governing foreign ownership of agricultural land, click here.

To learn more about foreign ownership of agricultural land, click here.

Subscribe to NALC’s bi-weekly newsletter The Feed for recent legal developments affecting agriculture, including foreign ownership of agricultural land here.

For previous issues of The Feed, click here.