Arkansas orders Chinese-owned company to divest farmland

Farmstead (Journal photo by Jennifer Carrico.)

Arkansas first to take enforcement action on foreign-ownership law as AG tells Chinese-owned company to divest farmland, levies fine

Arkansas became the first in the nation to enforce a state law banning certain foreign entities from owning agricultural land when its attorney general recently ordered a Chinese-owned company divest itself of farmland in Craighead County.

“This is the first time that we’ve seen some kind of foreign ownership law enforcement action,” said Micah Brown, staff attorney for the National Agricultural Law Center, who specializes in the issue. “There’s been a lot of attention on states enacting these laws, but there wasn’t much enforcement action, if any at all.”

Attorney General Tim Griffin recently announced, “I am ordering ChemChina, as a ‘prohibited foreign-party-controlled business’ to divest this land within two years or I will commence an enforcement action in Craighead County circuit court.”

Griffin also imposed a $280,000 fine for failing to make a timely filing of documents with the state Secretary of Agriculture Wes Ward.

Griffin’s order comes under Act 636, passed this spring by the state legislature. The law prevents “prohibited foreign-party-controlled business” from acquiring or holding public or private land in Arkansas either directly or through affiliated parties. Among the definitions of a “prohibited foreign party” in state law are individuals or entities with a connection to a country subject to the federal International Traffic in Arms Regulations, or ITAR. China, the country at issue in the current enforcement action, is subject to ITAR.

Hot topic

Foreign ownership of agricultural land in the United States has been a hot topic over the past two years. This year alone, Alabama, Arkansas, Florida, Idaho, Louisiana, Montana, North Dakota, Ohio, Oklahoma, Tennessee, Utah and Virginia have enacted or amended a law restricting certain foreign investments in land located within their states.

The issue of foreign ownership isn’t new in the U.S., Brown said. “Some states have had a law since the founding of our nation—since the 1700s—and these laws were specifically directed toward certain kinds of investments particularly by British subjects and those seen as loyalists” to King George III.

Since then, attention to the issue “has come in waves or during political flashpoints through our nation’s history,” Brown said. While such laws may have been on the books for years, “a political flashpoint will pop up and enforcement becomes more prevalent.”

Brown said the laws enacted in the last two years have a different character from those in the 1700s or even during World War II.

“Most of the 2023 enactments were directed towards what I call the ‘Big Four’—it’s China, Iran, North Korea and Russia,” he said, adding that heightened tensions between the U.S. and those countries brings increased attention to the issue.