South Dakota has one record of acting on 44-year-old foreign ag land law

In the late 1970s, amid national worry that foreigners might be buying up agricultural land and driving up the price, South Dakota lawmakers decided to act. They passed a law limiting foreign ownership of farm and ranch land to 160 acres.

Now, 44 years later, as the issue of foreign ownership is back in the public eye, that law is little known and rarely used. State officials say they can only find records of a single time when they acted on the law, in 2022.

A Searchlight review also found 88% of foreigners’ ag-land acquisitions in South Dakota have involved less than a 100% ownership stake, or have involved the purchase of an easement rather than actual ownership. An easement is an agreement that grants a right to use somebody else’s land for a single purpose, like erecting a wind turbine.

Meanwhile, South Dakota’s state and federal lawmakers have increasingly characterized foreign ownership of ag land as a threat in recent years and, in some cases, have introduced legislation on the topic while seemingly ignoring or being unaware of the existing state law.

One recent bill came from Gov. Kristi Noem, who last winter tried to convince legislators to establish a state board to vet foreign purchases of ag land.

“With this new process, we will be able to prevent nations who hate us – like Communist China – from buying up our state’s agriculture land,” Noem said in a news release at the time.

The state Senate rejected the bill. Doug Sombke, president of the South Dakota Farmers Union, said the issue has become politicized.

“Governor Noem is putting on a show when she pretends to care about foreign ag land,” Sombke said.

What existing law says

The existing state law, which dates to 1979, prohibits foreign people and governments from owning more than 160 acres of agricultural land in South Dakota. There are exceptions for land that’s inherited or held as security for debt, for foreign people and governments whose right to hold land is secured by treaties, and for foreigners who’ve established residency in the United States.

The law also requires the state Department of Agriculture and Natural Resources to monitor annual federal government reports on foreign ownership of ag land. The department is required to scrutinize the reports for any indications of illegal ownership, and to refer such findings to the state attorney general. The attorney general is supposed to investigate the findings and take appropriate legal action, potentially including the forfeiture of illegally owned land.

South Dakota Searchlight asked the Department of Agriculture and Natural Resources to disclose the number of times it has referred information to the attorney general, and to provide copies of any such records.

“Prior to 2022, DANR has no records responsive to your request,” the department replied in writing. “Since 2022, DANR has record of one referral attempt made to the Attorney General’s office.”

The department declined to disclose further information about that one “referral attempt,” citing state laws that exempt investigatory records from public disclosure.

That referral happened during a time of heightened national scrutiny of foreign ag-land ownership, sparked by a Chinese company’s attempt to purchase land near an Air Force base in North Dakota.

South Dakota Searchlight also asked the Attorney General’s Office for records of referrals it has received from the Department of Agriculture and Natural Resources, and for records of investigations or enforcement actions pursued. A joint written statement from spokesmen for both offices said that “the Attorney General’s Office has no record of receiving any USDA reports with sufficient evidence of noncompliance to initiate an investigation based on the existing South Dakota law.”

Federal law and data

Beyond the state law, federal laws require disclosure of foreign ownership. Congress and the president enacted the Agricultural Foreign Investment Disclosure Act in 1978. It requires the federal Department of Agriculture to produce annual reports on foreign acquisitions of U.S. ag land. The data is reliant on self-reporting, and the USDA does not check it for completeness or accuracy.

According to the most recent federal data, South Dakota has had 307 instances of foreign people or entities acquiring more than 160 acres of ag land since the passage of the federal and state laws in the late 1970s. The latest USDA report says the total area of South Dakota agricultural land held by foreigners stands at about 380,000 acres, or about 595 square miles — representing a 3,000% increase from when the laws were enacted over four decades ago, but comprising less than 1% of all the land in the state.

Most of those acquisitions happened after 2015. Primarily, they involved European and Canadian wind energy companies.

About one-third of the foreign-controlled ag land in South Dakota was acquired by Canadians, with the majority of the remainder being from European countries including the United Kingdom, France, Spain and Germany. The rest totals less than 4,000 acres held by people or entities scattered across locations including the Bahamas, Mexico and Saudi Arabia.

Federal reports do not list any Chinese-owned ag land in South Dakota, although a Chinese company does own the Smithfield meatpacking plant in Sioux Falls, which is zoned as industrial land.

One of the entities listed in the USDA reports is Engie, a French wind energy company with over 50,000 acres in Roberts and Grant counties, including easements and some land owned for operations buildings and substations. A spokesperson for the company said he had not heard of the state law limiting ownership by foreign entities.

Wind energy projects have to obtain permits from South Dakota’s Public Utilities Commission. One of the commissioners, Chris Nelson, said he had not heard of the 1979 state law prior to it coming up recently; however, he said when a wind farm is developed, the only land that’s bought is typically for electrical substations or operations sheds. And that land could be under the 160-acre legal limit.

“What they do purchase is easements for the location of their wind towers and connector lines,” Nelson said. “And easements are considered to be real estate, but how they fit into that statute, I have no idea.”

A closer look at the latest federal report shows that among the 307 ag-land acquisitions over 160 acres in South Dakota by foreigners, only 24 involve an ownership stake greater than zero, with the rest presumably being easements.

The federal report lists foreign wind energy companies holding land in Deuel, Hyde, Roberts and Grant counties. Representatives of the register of deeds or equalization offices in each county told South Dakota Searchlight that all of those companies primarily have easements, not actual land ownership, with the exception of operations buildings and electrical substations. An example is Dakota Range III, of France, which owns 5.2 acres for its operating building in Grant County.

Mary Etsep, USDA’s Agricultural Foreign Investment Disclosure Act program manager, did not reply to South Dakota Searchlight’s multiple requests for information about how easements are handled in the federal data.

Lawmakers’ response

State Sen. Lee Schoenbeck, R-Watertown, is the Senate president pro tempore. He contends the state knowingly does not enforce the existing state laws on foreign ag-land ownership because, in his opinion, they’re unconstitutional.

“People knew the law exists, I knew the law exists,” Schoenbeck said. “Nobody cared. This is still America. What, are we supposed to tell people who they can sell their land to?”

But not every leading lawmaker knew the laws existed. Rep. Tony Venhuizen, R-Sioux Falls, who previously served in the Noem and Daugaard gubernatorial administrations, said he first heard of the laws during the most recent legislative session.

House Majority Leader Will Mortenson, R-Pierre, views the laws as useful.

“The law prioritizes South Dakotans and recognizes the importance of our ag land,” Mortenson said. “What could be more American than that?”

Rep. Karla Lems, R-Canton, said she’d never heard of the 1979 laws, despite all the recent rhetoric she’s heard about foreign-owned land. She was surprised to learn there’s only one known instance of state officials acting on the law.

“This is absolutely breathtaking,” Lems said. “Wow.”

1979 bill sponsor’s response

Former legislator Kent Frerichs, a Democrat from Wilmot, sponsored the 1979 bill that created the state’s current laws. Congress had recently passed the law requiring USDA reports of foreign purchases of ag land, and those reports showed 11,201 acres in the state were under foreign ownership at the time — up by 8,302 acres in the preceding two years. Frerichs said many South Dakotans were worried at the time about the rising cost of land and how foreign ownership was impacting supply and demand.

Frerichs said politicians today are more interested in looking like they’re concerned about the problem of foreign ownership than actually solving it.

“Looks to me like they forgot all about this law, or ignored it,” Frerichs said. “But instead of starting from square one as they have been, they need to start with enforcing the laws we already have.”

This article originally appeared on Sioux Falls Argus Leader: SD has one record of acting on 44-year-old foreign ag land law