The emergence of state laws restricting foreign entities from acquiring property: a new front in U.S.-China tensions and a constitutional challenge to FL SB 264 in Shen v. Simpson

Geopolitical tensions and strategic competition between the United States and China have increasingly affected the investment environment in recent years, affecting established regulatory frameworks such as the Committee on Foreign Investment in the United States (CFIIS) and forcing nongovernmental entities to take action.

Recently, plans to build a grain mill in North Dakota have caused state governments to reflect on their role in protecting state and national security. In December 2022, the CFIIS concluded that it lacked jurisdiction to review the proposed acquisition of land in North Dakota by China's Fufeng Group to build a $700 million grain mill.

Since then, lawmakers in many U.S. states have been quick to introduce and, in some cases, pass legislation restricting foreign ownership of land within their borders by governments, individuals, or organizations associated with certain foreign "adversaries" of the United States. In most cases, these laws primarily affect China and Chinese investments.

The list of states that have passed such legislation in 2023 includes Alabama, Arkansas, Florida, Idaho, Indiana, Louisiana, Mississippi, Montana, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Virginia - 20 more states have introduced bills delineating foreign ownership of real estate, if passed.