Developers of renewable energy projects, many of which are built on agricultural land, should understand local laws and restrictions on foreign ownership and investment in these parcels. Roughly half of US States have express limits on foreign investment in or purchase of privately held agricultural land. A large swath of the Midwest, plus states in the mid-Atlantic and Florida, among others, have some restrictions. Between January and June of 2023, fifteen states enacted restrictions on foreign ownership of land.
Texas is currently among the US States that do not have such express limits. However, Texas legislators have been working to pass this type of legislation for years. In June of 2021, Governor Greg Abbott signed the Lone Star Infrastructure Protection Act (“Lone Star IPA”), seeking to limit foreign investment in “critical infrastructure.” In November of 2022, the first version of Texas Senate Bill 147 (“SB147”) was filed in the Texas Senate. SB147 in its original form sought to prohibit ownership of land in Texas by foreign entities including citizens of certain countries, government agencies, and businesses. Federally, there are not yet any severe restrictions or prohibitions in the same form as many states have adopted, but there are compliance requirements and oversight measures that must be addressed.
As background, Canada, the Netherlands, Italy, the UK, and Germany collectively own 62% of foreign-owned U.S. private land. China, often cited or alluded to in states’ proposed restrictions on foreign land ownership, owned about 0.9% of foreign-owned land as of year-end 2021.[1] About 3% of privately held land in Texas was held by foreign owners, with approximately .03% being held by China.[2] Regardless of the amount of acreage, many legislators were more concerned with the placement of acquisitions being near military bases, rather than the sheer amount of land being acquired, sparking action nationwide.[3] While Texas has not yet passed into law restrictions on acquisitions of agricultural land, the Lonestar IPA limits foreign entity involvement in communication infrastructure, cybersecurity, electrical grids, and hazardous waste and water treatment facilities.
Reacting to concerns of foreign adversaries acquiring Texas land and rising tensions with China, legislators have gained national attention with their attempt to address these issues. SB147 sparked controversy after it was written in November of 2022, after inciting concerns that it was targeting specific groups within the US, and would, if passed, function to unfairly restrict property rights of individuals. Rather than targeting foreign governments, it had the potential to impact lawful permanent residents and dual citizens of certain nations. This first draft of SB147 failed to gain Senate approval. SB147 was amended in April of 2023 in response to these concerns, and in its latest, watered-down form, made it through the Texas Senate and into the House before it was killed in May of 2023.[4]
As of November 2023, about half of all US states have some form of restriction on foreign investment in private agricultural lands. There are no states with an absolute prohibition on foreign ownership, though there are several with severe restrictions that amount to about the same thing in practice. These restrictions, depending on the state, may forbid or limit nonresident aliens, foreign businesses and corporations, and foreign governments from acquiring or owning an interest in agricultural land in a particular state. States currently restricting foreign investment in private agricultural land include Indiana, Iowa, Kentucky, Kansas, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Wisconsin, and Virginia.[5]
Some of the largest U.S. states in the renewable energy arena have some of the most restrictive laws regarding who can control and invest in private agricultural land. From North Dakota to Oklahoma, nearly the entire central midwestern chain of states limits foreign ownership in some way. North Dakota has a total limit on alien ownership of agricultural land unless they comply with a list of statutory requirements.[6] South Dakota limits the acreage that can be owned by foreign citizens or governments. [7] Nebraskahas what almost amounts to blanket ban on aliens owning land or acquiring title except under treaty of the United States, except for certain time limits.[8] Kansas limits corporate ownership of agricultural land.[9] Oklahoma has a blanket ban on acquiring title and requires those that acquire title via devise or bequest to get rid of the title within 5 years.[10] Who exactly is forbidden from controlling agricultural land, in what amount, and for what duration, may depend on where any particular person or entity secures their funding from, their citizenship, or even their affiliations with certain foreign nations.
On the East Coast of the United States, states such as South Carolina and Florida – two more large participants in the renewables sector – have passed their own restrictions. In South Carolina, there are severe limits for foreign entities on both the amount of land that can be held, and the duration for which it can be controlled.[11] Florida’s restrictions bar particular foreign nations from owning a controlling interest in certain real estate and prohibits government entities from entering certain contracts.[12]
Compliance with each states’ restrictions may be as easy as restructuring a lease in a particular way or allowing controlling interests to vest in particular parties or entities. In each of the states, there are ways to ensure that a development is not interrupted by running afoul of local laws. The most prudent course of action in the first steps of developing projects is to hire local counsel. A thorough understanding of and ability to navigate through local laws, is critical for the foundation of a renewables project and can help avoid disaster.
Conclusion
With the current instability of the legislative landscape on foreign ownership restrictions, it is critical that renewable energy project developers assess the laws of each state before entering into leases or easements. With fifteen states passing such restrictions in the first half of 2023, this area of the law is expected to continue to change rapidly in the coming year. And with thirty-six states having proposed legislation addressing this issue in 2023 alone, restrictions are trending upwards with no indication that the restrictions will be lessened or undone any time soon.[13] Stay tuned in Texas in particular, as future sessions may bring similar restrictions. As the political situation changes both at home and abroad, the issue of restrictions on foreign ownership of U.S. land continues to hold the attention of legislators across the country.
[1] Renee Johnson, Foreign Ownership and Holdings of U.S. Agricultural Land (2023).
[2] Jon Taylor, Commentary: Ban On Foreign Ownership Of Property Not The Texas Way News (2023), https://www.expressnews.com/opinion/commentary/article/commentary-ban-on-foreign-ownership-of-property-17769857.php (last visited Dec 10, 2023).
[3] Dan DeLuce, Foreign purchase of land near U.S. military bases would require government approval under proposed rule NBCNews.com (2023), https://www.nbcnews.com/politics/national-security/foreign-china-buy-land-us-military-bases-require-government-approval-rcna83152 (last visited Dec 10, 2023).
[4] Sakshi Venkatraman, Bill that set out to restrict Chinese property ownership dies in Texas house NBCNews.com (2023), https://www.nbcnews.com/news/asian-america/bill-set-restrict-chinese-property-ownership-dies-texas-house-rcna86257 (last visited Dec 10, 2023).
[5] Micah Brown & Nick Spellman, Ownership of agricultural lands National Agricultural Law Center (2023), https://nationalaglawcenter.org/state-compilations/aglandownership/ (last visited Dec 10, 2023).
[6] Nd. Code §47-10.1-01 (2021).
[7] Sd. Code §43-2A-2 (2021).
[8] Ne. Statutes Rev. §76-402 (2021).
[9] Ks. Statutes §17-5904 (2021).
[10] Ok. Statutes §18 (2020).
[11] Sc. Code §27-13-10 (2020).
[12] Fla. S.B. 264, 2023, 2nd.
[13] Kevin Hardy, This Land Is Our Land: States Crack Down On Foreign-Owned Farm Fields, Virginia Mercury (2023), https://www.virginiamercury.com/2023/12/05/this-land-is-our-land-states-crack-down-on-foreign-owned-farm-fields/ (last visited Dec 10, 2023).
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