Arkansas’ unique law on foreign ownership of agricultural lands

Nearly half of our nation’s states have laws that put some kind of limits on foreign ownership of agricultural land. Arkansas’ law, however, has aspects that no other state does, including an Office of Agricultural Intelligence established to investigate potential violations, according to Micah Brown, staff attorney for the National Agricultural Law Center.

Brown, who has focused on this issue since 2021, provided an overview during his Sept. 20 NALC webinar, “Who owns the farm? Foreign Ownership Legislative Update.” The webinar was recorded and is available to watch online.

In April, Arkansas enacted its own foreign ownership law, Senate Bill 383. In 2021, Arkansas put into effect a law that contained a reporting requirement alone, not a restriction of foreign ownership.

The 2023 Arkansas law restricts a “prohibited foreign party,” or PFP, from acquiring any interest in ag land and forestland.

Brown noted that, like some states’ laws, Arkansas attaches its definition of foreign ownership—or who is prohibited from purchasing—to a federal definition. Specifically, PFPs are individuals, entities, and governments of a country subject to the U.S. Secretary of State’s International Traffic in Arms Regulations.

Arkansas’s attorney general enforces the law. The law directs the AG to investigate and bring a judicial foreclosure, and if a court deems there is a violation, the land will go up for public sale.

Unlike other states, Arkansas created a separate investigative office—the Office of Agricultural Intelligence, or OAI. The department is under the Arkansas Department of Agriculture.

“They are directed to investigate potential violations of this law,” Brown said. “And if they see violations, they report it to the AG, and that’s when the AG will bring a judicial foreclosure action against a PFP.”

The law also extends beyond agricultural lands. Arkansas does not allow “PFP-controlled businesses” to acquire any real estate within the state. Arkansas was also the first, and at the time the only, state to attach criminal liability to its foreign ownership law, meaning foreign investors owning land in violation of the law can be convicted of a felony. This can result in a prison sentence up to two years or a $15,000 fine.

Florida was the only other state to attach criminal liability to its foreign ownership law.

No grandfather clause

There are other unique aspects to Arkansas’ law.

“Generally, a lot of these foreign ownership laws have a grandfather clause or exempt any foreign-owned ag land before the enactment date of the law to continue to hold,” Brown said. Arkansas’ law does not expressly contain a grandfather clause, which means there is possibly some uncertainty as to whether PFPs may continue to hold agricultural land they acquired before the effective date of the law.

The law also contains no exemptions for research and experimentation. Generally, these types of exceptions are important for foreign-owned businesses that require research and testing of agricultural products, such as crop protection companies.

Old issue

“This issue of restricting foreign ownership goes back all the way to the founding of our nation,” Brown said during the presentation. “And it’s popped back up at different political flashpoints through our nation’s history.”

The resurgence in interest in foreign ownership started in 2021, when media attention was drawn to Chinese companies in Texas and North Dakota that purchased ag land near U.S. Air Force bases.

From 2021-22, “we had 12 states that had some kind of proposal” to restrict foreign ownership, Brown said. In 2023, 35 states had some kind of proposal to restrict foreign ownership. Of those 35, 12 states enacted a foreign ownership law, and 10 of which are new states that did not have prior restrictions. North Dakota and Oklahoma had restrictions in place but amended their restrictions.

Overall, there are “24 states that have some kind of law that restricts foreign investments, foreign ownership, foreign leases within their state,” Brown said.