CFIUS and Restrictions on Ownership of Land by Foreign Nationals
If you are involved in purchasing land near Camp Shelby in Forrest and Perry Counties, the Meridian Naval Air Station in Meridian, or the Naval Research Laboratory-Stennis Space Center in Hancock County, you need to be aware of the Committee on Foreign Investment in the United States (“CFIUS”).
The Defense Production Act of 1950 as amended by the Foreign Investment Risk Reform Modernization Act of 2018 gives the President of the United States the authority to suspend or prohibit any covered real estate transaction when the President believes that a foreign person engaging in the covered real estate transaction might take action that threatens the national security of the United States. See Ralls Corp. v. Committee on Foreign Investment in the United States, 758 F. 3d 296 (D.C. Cir. 2014)(CFIUS ordered corporation owned by Chinese nationals to sell windfarm project located near US Navy installation). Review of real estate transactions is vested in the CFIUS. Regulations outlining the authority and jurisdiction of CFIUS are in 31 CFR 802.
The regulations define a covered real estate transaction as one involving land within one mile of certain military installations. Three military installations in Mississippi are listed in the regulations: the Naval Research Laboratory-Stennis Space Center in Hancock County, Camp Shelby in Forrest and other counties, and the Naval Air Station in Meridian. Also, any land within ninety-nine miles offshore of Mississippi is covered (e.g., barrier islands).
The list of exempted transactions includes single-family housing units.
A party to a transaction may file a voluntary notice of the transaction with CFIUS, and CFIUS can determine whether the transaction is a covered real estate transaction. The United States Department of the Treasury has information on its website regarding CFIUS, including a form of application for submitting a voluntary notice of a transaction: https://home.treasury.gov/policyissues/international/the-committee-on-foreign-investment-in-the-united-states-cfius
CFIUS has been in the news recently because of a Chinese company’s recent purchase and development of a corn milling facility near the Grand Forks Air Force Base in North Dakota. CFIUS concluded that it did not have jurisdiction over this transaction because the facility was more than one mile from the base. As a result, the Treasury Department has increased the onemile distance to ninety-nine miles for certain military installations, but not for the three installations in Mississippi.
CFIUS also applies to certain business acquisitions not involving real estate. For example, an article in the August 12, 2023 online edition of the Wall Street Journal describes CFIUS’s review of a sale by DuPont of its sustainable nylon business, which review resulted in CFIUS imposing conditions on the sale: https://www.wsj.com/articles/a-dupont-china-deal-reveals-cracks-in-u-snational-security-screening-665cb50c?mod=Searchresults_pos1&page=1
Note 1: The regulations are definition-heavy and very detailed. It appears to the editor that preparing and submitting a voluntary notice of a transaction would be a time-consuming undertaking.
Note 2: The editor’s reading of the statutes and CFIUS regulations is that in Mississippi they only apply to the three specified military installations. So presumably there’s no problem with a foreign national purchasing land adjacent to Keesler Air Force Base or any other military installation in Mississippi other than the three specified installations.
Note 3: In addition to these federal restrictions, some state legislatures have undertaken to restrict the purchase of land near military installations and in other circumstances by foreign nationals. Florida, South Carolina, Utah, North Dakota and other states have passed such bills, and Texas and Louisiana are considering such bills. The United States Justice Department, the American Civil Liberties Union and groups supporting rights of Asian-Americans have challenged the constitutionality of these state laws. For a scholarly article that reviews the history of state laws limiting the rights of foreign nationals to purchase land, see James Alan Hastings, Alien Land Laws: Constitutional Limitations on the State Power to Regulate, 32 Hastings L.J. 251 (1980). Mississippi has not yet adopted such restrictions but see Note 4 below.
Note 4: Mississippi limits purchases of real estate by “aliens” (aka foreign nationals). Section 291-75 of the Mississippi Code prohibits nonresident aliens and “any association of persons composed in whole or in part of nonresident aliens” from directly or indirectly purchasing public lands. Section 89-1-23 of the Mississippi Code prohibits a nonresident alien from acquiring more than 320 acres, with some exceptions. Section 89-1-23 does not prohibit the purchase of land by “corporations in which the stock thereof is partially or wholly owned by nonresident aliens.” The CFIUS regulations on the other hand apply to corporations and other entities when the equity interests are owned by foreign nationals. Several bills were introduced in the 2023 Mississippi Legislature to further limit the acquisition of land in Mississippi by foreign nationals, but the bills died in committee. See, e.g., HB 984 (prohibit purchases of land by China); HB 1275 (prohibit foreign persons from purchasing land at tax sales). The Legislature in HB 280 did authorize a study committee to consider possible restrictions on the purchase of real estate in the state by foreign nationals. According to an article in the online edition of MPB News on August 28, 2023, the study committee has met and elected Secretary of Agriculture Andy Gipson as its chair. https://www.mpbonline.org/blogs/news/new-committee-looks-into-foreignowned-farmland-inmississippi/ The committee’s report to the Legislature is due on December 1, 2023.
Note 5: Another federal statute requires foreign nationals who purchase agricultural lands to file disclosure reports with the Department of Agriculture. This is the Agriculture Foreign Investment Disclosure Act of 1978, 7 U.S.C. § 3501 et seq. and regulations beginning at 7 CFR § 781.
Note 6: CFIUS is intended to protect America’s highest-value military installations. In case you were wondering where these military installations are located, the Treasury Department helpfully has posted a detailed ARC/GIS map on its CFIUS website that shows the exact location of these military installations, including specific latitude and longitude references for each site: https://mtgisportal.geo.census.gov/arcgis/apps/webappviewer/index.html?id=0bb1d5751d76498181b4b53198 7ce263