As of June 7, 2023, a bill aiming to prohibit entities controlled by “foreign adversaries” from buying, leasing, or otherwise acquiring immovable property in the state has passed both the Louisiana House and Senate and is now awaiting the Governor’s approval. Sponsored by Rep. Valerie Hodges, Louisiana House Bill No. 537 would block acquisition of immovable property in the state by foreign adversary nations and entities associated with those nations and empower the attorney general to bring action for injunctive relief to block any such sales of immovable property, investigate transactions, and petition the state’s courts to act. However, HB 537 provides an exception for those “adversary” entities who have already been conducting oil and gas operations in the state.
HB 537 applies to property acquired by a “foreign adversary or person connected with a foreign adversary” on or after August 1, 2023. The bill ties the definition of “foreign adversaries” to 15 CFR 7.4(a), an existing list from the United States Department of Treasury that includes China, Cuba, Iran, North Korea, the Russian Federation, and Venezuela. The bill defines a “person connected with a foreign adversary” as entities (such as corporations and partnerships) in which a “foreign adversary” has the power to “direct or cause the direction of the management or policies” of the entity whether through ownership of securities, contract, or other means. In sum, HB 537 will effectively halt any purchase or lease of immovable property in the State of Louisiana by a business which is deemed to be controlled by non-US citizens residing in a nation deemed to be an enemy of the United States.
Despite its purported goal of protecting national security, several groups protested the bill at the state capitol in the past few weeks. For example, many testified to oppose the bill citing concerns that the bill would lead to a dangerous and discriminatory future for people in the state with ties to nations deemed “adverse” to the United States. Additionally, concerns about a potential “chilling effect” on the state’s real estate industry have been raised, along with likely complications associated with the task of identifying whether every entity buying or leasing property in the state is sufficiently tied to an adversarial government to fall under the purview of this bill. The bill’s author, Rep. Valerie Hodges, answered these concerns by assuring that the bill will not affect U.S. Citizens, legal immigrants, or visa holders form owning or leasing property. Rather, the bill is meant to only impact corporations directly involved with the aforementioned “foreign adversaries” such as China, Russia, and Venezuela. In further support of her bill, Hodges pointed to data from the U.S. Department of Agriculture that found China’s ownership of U.S. farmland grew 20-fold in the last decade, from 81 million to 1.8 billion dollars’ worth of holdings in 2020. Of these holdings, Louisiana has the most foreign landowners overall at 5.89%, but it is unclear how many of those landowners would fall under the provisions of HB 537.
On its face, such a sweeping ban on the acquisition of immovable property by foreign corporations in Louisiana could have the potential to negatively affect the state’s future in oil and gas industry. According to the American Petroleum Corporation, Louisiana’s oil and gas resources provide over 54 billion dollars in economic, trade, and job benefits. Based on these figures, the president of the Louisiana Mid-Continent Oil and Gas Association predicts that the state’s long-term economic future will depend on a “strong, robust oil and natural gas industry.” With the state’s future so thoroughly reliant on oil and gas exploration and production, legislation aimed at blocking entities that could otherwise be willing and able to participate in the state’s energy industry could seem ill-advised. However, the most recent version of the bill seems to answer these concerns.
The final draft of HB 537 is careful to specifically exempt from its provisions all entities that “owned and conducted oil and gas operations located in Louisiana prior to July 1, 2023,” is granted a general license by the United States Department of the Treasury, Office of Foreign Assets Control (OFAC General License), and “purchases or acquires property in Louisiana with a party or parties that are subject to the OFAC General License.” Therefore, despite HB 537 being geared toward effectively blocking all future land acquisition by entities associated with foreign adversaries, the exception for these entities already engaged in oil and gas operations in the state makes it clear that the Louisiana Legislature has no intention of impeding the state’s oil and gas industry, even if foreign adversaries such as China or Russia are involved.
Currently, HB 537 is awaiting executive approval by the Governor. This bill is among several in the current session aimed at the issue of restricting property ownership by foreign adversaries, with HB 125, sponsored by Rep. Michael Echols, providing for a similar ban on immovable property acquisition but is limited to agricultural land. Regardless of the fate of HB 537, it is clear based on its language that Louisiana’s reliance on its oil and gas industry as a source of jobs and commerce will persist despite this legislative session’s efforts toward an end to acquisition of Louisiana land by foreign adversaries in the name of national security.
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