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. This article is the sixth of a series that discusses recent state proposals that seek to restrict foreign ownership of agricultural land. This article discusses the proposals introduced in Michigan and Mississippi. To read the other articles in this series, click here.
Under current Michigan state law, foreign investments and acquisitions of land are permitted. Mich. Comp. Laws Ann. § 554.135. However, in 2023, the Michigan state legislature has considered several different measures that seek to amend the state’s current law on foreign ownership. One measure being considered by the Michigan legislature is HB 4134, which seeks to foreign governments and “state-sponsored enterprises”, or individuals acting on their behalf, from purchasing or acquiring farmland located within the state. Specifically, this proposal would prohibit these types of foreign investors from acquiring an interest in farmland after October 1, 2023.
HB 4134 defines “state-sponsored enterprise” as “any enterprise, company, or corporate entity in which a foreign government has a primary investment or controlling interest.” A “primary interest” is an interest in a business entity that “shares the geopolitical aims of a foreign government or invests in a belligerent interest against the United States,” and a “controlling interest” is an ownership interest, direct or indirect, of more than 50% in a business entity. Therefore, a business entity that is primarily owned by a foreign government, is aligned with a foreign government’s political interests, or operates against U.S. interests are likely prohibited from acquiring farmland under HB 4134. Currently, this bill is being considered by the Committee on Local Government and Municipal Finance.
On March 14, 2023, a Michigan state lawmaker proposed HB 4283, which seeks to restrict a “foreign person” from acquiring an interest in the state’s agricultural land. Under this proposal, a “foreign person” includes foreign governments and foreign businesses directly or indirectly owned by a foreign government. The state legislature also considered HB 4329. This proposal is like HB 4283 but seeks to restrict a “foreign person” from owning or holding land within the state, not just agricultural land. This bill was referred to the Committee on Government Operations.
Additionally, the Michigan Senate is considering two bills—SB 260 and SB 270—that are aimed at establishing a foreign ownership law. Specifically, SB 260 seeks to restrict foreign governments, state-sponsored enterprises, and individuals operating on behalf of these entities from purchasing or acquiring Michigan farmland. However, these foreign parties are exempt from the restriction prescribed under SB 260 if they held an interest in farmland before October 1, 2023. This proposal has been referred to the Committee on Natural Resources and Agriculture.
Under SB 270, a “foreign person” would be prohibited from owning, purchasing, leasing, possessing, or exercising control over “agricultural land” within the state. A “foreign person” under this proposal includes nonresident aliens, foreign businesses, and foreign governments. This restriction does not apply to foreign persons that own or hold agricultural land before the effective date of the bill; however, foreign persons would be prohibited from acquiring additional agricultural land after the bill’s effective date. Further, the proposal exempts interests in agricultural land a foreign person obtains by inheritance or as security for a loan.
If a foreign person acquires any interest in agricultural land after SB 270’s effective date, the bill directs the foreign person to petition the state’s Commission of Agriculture and Rural Development (“Commission”) for a waiver from the restriction to continue holding their interest in the land or to sell of their interest in the land. According to the proposal, the Commission denies the foreign person’s request, they must dispose or sell their interest in the agricultural land within 1 year of the denial. SB 270 directs the Michigan Department of Agriculture and Rural Development (“MDARD”) to establish regulations to implement the waiver process within 6 months after the bill’s effective date.
Violations of the restriction discovered by MDARD must be reported to the state’s attorney general. After receiving a report of a potential violation, SB 270 would require the state’s attorney general to file a lawsuit against the foreign person suspected of violating the law. If a court determines the foreign person has violated the restriction, SB 270 directs the court to order the agricultural land escheated to the state, meaning the state takes legal ownership of the land. On April 19, 2023, this bill was referred to the Committee on Government Operations.
Mississippi is one of eighteen states that have a foreign ownership law. While Mississippi’s law does not specifically restrict foreign parties from purchasing or acquiring an interest in agricultural land, the state’s law restricts investments and acquisitions in all land within the state. See Miss. Const. Art. 4, § 84; Miss. Code Ann. § 89-1-23. The state’s law restricts “nonresident aliens” from acquiring or holding private land with some exceptions.
During the 2023 legislative session, the Mississippi state legislature proposed several measures that sought to restrict certain foreign investments in the state’s real property, including agricultural land. One measure the state legislature considered was HB 280, which, under the original version of the bill, sought to restrict a “foreign government” from purchasing, leasing, holding, or acquiring any interest in farmland located within the state. The Mississippi legislature enacted HB 280, but this law is entirely different from the original version that was proposed. In fact, the law does not restrict foreign governments from purchasing or otherwise acquiring an interest in the state’s agricultural land. Rather, the law establishes a nine-member committee to study agricultural landholdings of foreign governments within the state.
Some members of this committee include the commissioner of the Mississippi Department of Agriculture and Commerce (“MDAC”), the state’s attorney general, one person appointed by the governor, and one person appointed by state’s speaker of the house, “who shall be a representative of Farm Bureau.” The law directs the committee to study certain information and data, including changes or trends of foreign-owned agricultural land, any recent changes in and the extent of foreign-owned water rights, the scope of “foreign ownership of energy production, storage, or distribution facilities,” and any current prohibitions imposed on foreign investors of Mississippi land and “why such prohibitions are not being enforced.” The committee is required to report this information and data to the state legislature on or before December 1, 2023, along with “[a]ny legislative, regulatory or administrative policy changes the [MDAC] recommends in light of the information in the report.”
HB 280 goes into effect on July 1, 2023.
Several other proposals were introduced in the Mississippi legislature (HB 984; HB 1236; HB 1275; SB 2089; SB 2092; SB 2632; SB 2828) that sought to restrict foreign ownership and investments in real property located within the state, not just agricultural land. However, each of these measures failed to make it out of its assigned committee. Although these proposals did not become law in 2023, the Mississippi legislature may consider similar measures in the state’s next legislative session.
In 2023, the issue of restricting foreign ownership and investments in farmland has emerged or reemerged in the majority of states. In fact, as of April 2023, five states—Arkansas, Idaho, North Dakota, Utah, and Virginia—have amended or enacted a law that seeks to restrict certain foreign investments in land located within their state. NALC is tracking each states’ foreign ownership proposal(s) and will update its Statutes Regulating Ownership of Agricultural Land compilation when there are changes to a state’s law.
To read the other articles in this series, click here.
To learn more about foreign ownership of agricultural land, click here.
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