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.
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Categories: Indiana, Business