PIERRE, S.D. — The attempt by Gov. Kristi Noem to create a review process monitoring foreign counties that want to purchase South Dakota farmland is not a new phenomenon in the state.
A similar discussion took place in the late 1970s, culminating in a 1979 law that barred certain foreign “aliens” and governments from purchasing more than 160 acres of land.
Rather than fears over an expansionist Chinese Communist Party, the discussion at that time centered around fears that nations flush with oil cash were planning to buy up land in the Midwest and drive up prices for local farmers.
“There was talk that Saudi Arabia had a lot of extra money and they were going to start to buy up land in rural states,” Kent Frerichs, a sponsor on the 1979 law dealing with foreign ownership of agriculture land, recalled. “And that was what spurred my thought at the time.”
The bipartisan effort, though initially opposed by some landowners keen on making a pretty penny selling to foreign interests willing to pay a premium, culminated in the inscription of Chapter 43-2A into South Dakota law.
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That law has earned renewed interest this legislative session, with the governor pushing a new set of processes — managed by a board called the Committee on Foreign Investment in the United States - South Dakota — to address what her administration appears to see as the inadequacies of the current law.
“It allows a board of experts to come in and look at land purchases,” Noem told Fox News host Brett Baier in an interview this week. “And if it’s a country that hates us, then they make a recommendation to the governor to move forward or not.”
In defending farmland, the question of enforcement
During the Feb. 14 hearing in the Senate Agriculture and Natural Resources committee hearing, which advanced Noem’s CFIUS-SD proposal, Senate Bill 185, to the Senate floor on a 7-0 vote, several proponents indicated that the 1979 law banning certain foreign purchases of large tracts of agriculture land had “never been enforced.”
If that’s the case, Frerichs says, it’s not due to the lack of a mechanism.
Under current law, the Department of Agriculture and Natural Resources is supposed to regularly monitor federal reports of foreign ownership of South Dakota farmland.
If anything stands out, the secretary of agriculture can refer an investigation to the state’s attorney general; were the investigation to reveal that the law was broken, the land could be forfeited to the state.
A spokesperson for the governor did not comment on whether any investigations have been referred to the attorney general over the past four years.
“It had good bipartisan support when it did pass and I think we were quite pleased with the fact that it did go into effect,” said Frerichs, who served in the South Dakota Legislature from 1975 to 1989. “The disappointment is that it hasn't really been followed up on as far as trying to enforce it.”
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One potential reason for a lack of enforcement is a lack of lawbreaking; while foreign nationals from Austria and Italy potentially broke the law on its face, the discretion offered to the secretary of agriculture and attorney general could mean these purchases were not deemed critical to counteract.
An analysis of federal records up to the end of 2021 indicates that the vast majority of large land holdings in the state belong to nations friendly to the United States like Canada, France and the United Kingdom.
Still, for proponents of Noem’s bill, the worries lie in the future, not the past.
“China is becoming more brazen in its attempts to gain intelligence on our critical infrastructure,” Alan Vester, Noem’s deputy general counsel, told the agriculture committee. “We must combat these threats at the state level.”
The CFIUS-SD, rather than being a backward-facing mechanism like the 1979 law, is forward-facing. It would review purchases of land prior to these purchases taking effect.
Of course, that change is where much of the opposition stems from: a lengthy waiting period and an ultimately unilateral decision-making process by the governor is an infringement on property rights and would hurt the state’s largest industry, a long line of opponents said.
“Putting this decision in the hands of one individual, whoever that individual is, that doesn't further democracy,” said Jeremiah Murphy, a lobbyist with the South Dakota Stockgrowers Association.
Talking point or thought-out policy?
Over the past few days, Gov. Kristi Noem has touted the CFIUS-SD proposal and other legislative priorities in front of Washington think tanks and national news cameras.
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Frerichs, who admitted there may be some needed updates to the 1979 law, couldn’t help but wonder whether the proposed committee is at least partly for show.
“I'm sure that the governor wants to make people around the country and around the state think that she's really fighting to keep China and other countries that she refers to as our enemies from coming into the state to buy ag land,” he said. “But something like this that is so cumbersome and so many layers of bureaucracy, I wouldn't think that anybody would want to go along with that.”
If the administration is worried about spying attempts on Ellsworth Air Force base — and the potential for a repeat of the federal government’s lack of interference in the Grand Forks scandal — Frerichs noted that a board could simply review purchases within a radius of 100 miles or so around the base.
One area Frerichs and the administration potentially agree is the need to update the law to reflect current business practices. The 1979 law applies to “aliens” and foreign governments; it’s up to interpretation whether the restriction on land purchases applies to corporations.
Rather than creating an entirely new board, however, a simple update to the law’s language to include corporate entities could suffice.
Moving forward, the proposal creating the board, Senate Bill 185, is set for a floor debate on Tuesday, Feb. 21.
An amendment proposed by the bill’s prime sponsor, Rep. Erin Tobin, of Winner, appears to weave some opponent concerns into the bill, lowering the review period from 180 days to 90 days and a change that might make the administrative process less burdensome on the register of deeds in a requisite county.
The process of improving the law over the final weeks of the session was a major reason committee members kept it alive in the first place.
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“I understand if there are concerns out there,” Sen. Josh Klumb, of Mitchell, said in explaining his favorable vote in committee. “But we have got to come to the table and talk, and keeping this bill alive allows that to happen.”
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or jharward@forumcomm.com.
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