House Study Bill 663 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED GOVERNOR BILL) A BILL FOR An Act relating to interests in agricultural land acquired 1 or held by foreign businesses, foreign governments, or 2 nonresident aliens, or by agents, trustees, or fiduciaries 3 thereof, by providing for registration and reporting 4 requirements, providing for enforcement, and providing 5 penalties. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5027XL (5) 90 da/ns
S.F. _____ H.F. _____ Section 1. Section 9I.1, Code 2024, is amended by adding the 1 following new subsections: 2 NEW SUBSECTION . 4A. Interest means any estate, remainder, 3 or reversion, or portion of the estate, remainder, or 4 reversion, or an option pursuant to which one party has a right 5 to cause legal or equitable title to agricultural land to be 6 transferred. 7 NEW SUBSECTION . 4B. Intermediary means any person, 8 including a bank, broker, or dealer, that makes business or 9 financial arrangements between companies or organizations that 10 do not deal with each other directly. 11 NEW SUBSECTION . 6. Parent means any corporation which 12 directly, or indirectly through one or more intermediaries, 13 controls more than fifty percent of the voting stock of another 14 corporation. 15 Sec. 2. Section 9I.7, Code 2024, is amended to read as 16 follows: 17 9I.7 Registration. 18 A nonresident alien, foreign business , or foreign 19 government, or an agent, trustee , or fiduciary thereof, which 20 owns an interest in agricultural land within this state on or 21 after January 1, 1980, shall register the agricultural land 22 with the secretary of state. The registration shall be made 23 within sixty days after January 1, 1980, or within sixty days 24 after acquiring the land or the interest in land, whichever 25 time is the later. The registration shall be in the form 26 and manner prescribed by the secretary and shall contain the 27 name of the owner and the location and number of acres of 28 the agricultural land by township and county of state . If 29 the owner of the agricultural land or owner of the interest 30 in agricultural land is an agent, trustee or fiduciary of a 31 nonresident alien, foreign business or foreign government, 32 the registration shall also include the name of any principal 33 for whom that land, or interest in that land was purchased as 34 agent. Information described in this section is a confidential 35 -1- LSB 5027XL (5) 90 da/ns 1/ 8
S.F. _____ H.F. _____ record and subject to use in the same manner as provided in 1 section 10B.5. As part of the registration, the nonresident 2 alien, foreign business, or foreign government, or an agent, 3 trustee, or fiduciary thereof, shall file all of the following 4 information: 5 1. The legal name, street address, mailing address, 6 if different, and the birthplace and nationality of the 7 nonresident alien, foreign business, or foreign government that 8 owns the interest in the agricultural land. 9 2. The legal name, street address, mailing address, 10 if different, and the birthplace and nationality of the 11 agent, trustee, or fiduciary of the nonresident alien, 12 foreign business, or foreign government in subsection 1, if 13 specifically authorized to do any of the following: 14 a. Purchase the agricultural land. 15 b. Supervise the daily operations on the agricultural land. 16 3. A statement of the purpose for conducting business in 17 this state. 18 4. A description of the purpose of the interest in the 19 agricultural land in this state as it relates to the stated 20 business purpose in subsection 3. 21 5. The legal name, street address, and mailing address 22 of any parent of the registering party, including the legal 23 name, street address, and mailing address of any subsidiary or 24 intermediary of the parent. 25 6. The legal name, street address, and mailing address of 26 any subsidiary of the registering party. 27 7. A listing of all other interests in agricultural land 28 that are held directly or indirectly by the registering party, 29 parent of the registering party, or subsidiary or intermediary 30 of the parent in the United States that exceeds two hundred 31 fifty acres. 32 Sec. 3. Section 9I.10, subsection 1, Code 2024, is amended 33 to read as follows: 34 1. If the secretary of state finds that a nonresident alien, 35 -2- LSB 5027XL (5) 90 da/ns 2/ 8
S.F. _____ H.F. _____ foreign business, foreign government, or an agent, trustee, 1 or other fiduciary thereof, has acquired or holds title to or 2 interest in agricultural land in this state in violation of 3 this chapter or has failed to timely register as required under 4 section 9I.7 or has failed to timely report as required under 5 section 9I.8 10B.4 , the secretary shall report the violation 6 to the attorney general. 7 Sec. 4. Section 9I.10, Code 2024, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 4. The attorney general may conduct an 10 inquiry or investigation regarding a violation of this chapter 11 or section 10B.4. As part of that inquiry or investigation, 12 and in accordance with the Iowa rules of civil procedure, the 13 attorney general may issue a subpoena for the production of 14 records, including but not limited to books, accounts, papers, 15 correspondence, memoranda, purchase agreements, files, or other 16 documents in a print or electronic format. If a person refuses 17 compliance, the attorney general may seek enforcement by the 18 district court. 19 Sec. 5. Section 9I.12, Code 2024, is amended to read as 20 follows: 21 9I.12 Penalty failure to timely file. 22 A civil penalty of not more than two thousand dollars to 23 exceed twenty-five percent of the countys assessed value of 24 the subject agricultural land for the previous year shall be 25 imposed, for each offense, upon a nonresident alien, foreign 26 business , or foreign government, or an agent, trustee , or other 27 fiduciary thereof, who fails to timely file the registration as 28 required by section 9I.7 , or who fails to timely file a report 29 required by section 9I.8 . 30 Sec. 6. Section 10B.4, subsection 2, unnumbered paragraph 31 1, Code 2024, is amended to read as follows: 32 A report required pursuant to this section shall contain 33 information for the reporting period regarding the reporting 34 entity as required by the secretary of state which shall at 35 -3- LSB 5027XL (5) 90 da/ns 3/ 8
S.F. _____ H.F. _____ least include any updates to the information provided in the 1 registration to the secretary of state in section 9I.7 and all 2 of the following: 3 Sec. 7. Section 10B.4, Code 2024, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 4. The attorney general may conduct an 6 inquiry or investigation regarding a violation of this section 7 as provided in section 9I.10. 8 Sec. 8. Section 10B.4A, Code 2024, is amended to read as 9 follows: 10 10B.4A Suspension of other filing requirements. 11 The secretary of state shall not prepare or distribute forms 12 for reports or file reports otherwise required pursuant to 13 section 9I.8 or 501.103 . A person required to file a report 14 pursuant to this chapter is not required to file a report under 15 those sections section 501.103 . A person required to file a 16 report pursuant to this chapter is not required to register 17 with the secretary of state as otherwise required in section 18 9I.7 . 19 Sec. 9. NEW SECTION . 10B.5A Annual summary to governor and 20 general assembly. 21 The secretary of state shall prepare an annual summary of 22 foreign landholding. The summary must be a report summarizing 23 the compiled information included in the current registrations 24 filed pursuant to section 9I.7 and the last reports filed 25 pursuant to section 10B.4. The information is a confidential 26 record as provided in section 22.7. The attorney general may 27 have access to the annual summary and may use information 28 in the annual summary in any action to enforce state law, 29 including but not limited to chapters 9H and 9I, and this 30 chapter. The annual summary shall be made available to the 31 governor, members of the general assembly, and appropriate 32 committees of the general assembly in order to determine the 33 extent that agricultural land is held in this state by foreign 34 entities and the effect of such land ownership upon the economy 35 -4- LSB 5027XL (5) 90 da/ns 4/ 8
S.F. _____ H.F. _____ of this state. Upon request, the secretary of state shall 1 assist any committee of the general assembly studying these 2 issues. 3 Sec. 10. Section 10B.6, subsection 1, Code 2024, is amended 4 to read as follows: 5 1. a. The Except as provided in paragraph b , the failure 6 to timely file a report or the filing of false information in a 7 report as provided in section 10B.4 is punishable by a civil 8 penalty not to exceed one thousand dollars. 9 b. The failure to file a report or the filing of false 10 information in a report by a nonresident alien, foreign 11 business, or foreign government, or an agent, trustee, or other 12 fiduciary thereof as provided in section 10B.4 is punishable by 13 a civil penalty of up to ten thousand dollars for each offense. 14 Sec. 11. REPEAL. Section 9I.8, Code 2024, is repealed. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanations substance by the members of the general assembly. 18 BACKGROUND GENERAL (CODE CHAPTERS 9H, 9I, AND 10B). 19 Currently, three related Code chapters impose requirements upon 20 the acquisition or holding of agricultural land suitable for 21 farming in this state. 22 BACKGROUND FARMING BY A DOMESTIC OR FOREIGN BUSINESS 23 ENTITY (CODE CHAPTER 9H). Code chapter 9H, which is referred 24 to but not amended by this bill, restricts certain business 25 entities classified as either domestic (meaning formed in the 26 state) or foreign (meaning formed outside the state) from 27 acquiring or holding agricultural land, subject to a number 28 of exceptions such as a family farm corporation (Code section 29 9H.4). The Code chapters reporting requirement was repealed 30 in 2003 (2003 Iowa Acts, chapter 115, sections 17 and 19). 31 BACKGROUND FARMING BY A FOREIGN PERSON (CODE CHAPTER 32 9I). Code chapter 9I, amended by the bill, restricts a foreign 33 person from acquiring agricultural land suitable for use in 34 farming in this state (Code section 9I.3). The Code chapter 35 -5- LSB 5027XL (5) 90 da/ns 5/ 8
S.F. _____ H.F. _____ specifically describes a foreign person as a foreign business, 1 foreign government, or nonresident alien and any authorized 2 representative of the foreign business, foreign government, or 3 nonresident alien. Similarly, the Code chapter describes an 4 authorized representative as an agent, trustee, or fiduciary. 5 A foreign business is a corporation incorporated under the 6 laws of a foreign country or any other type of business entity 7 (e.g., limited liability company) if the majority interest 8 is owned directly or indirectly by one or more nonresident 9 aliens. A foreign person must file two documents with the 10 secretary of state, including a one-time registration (Code 11 section 9I.7) and an annual report (Code section 9I.8). The 12 annual report must be filed by a foreign person that acquires 13 agricultural land for development and is required to convert 14 it for a nonfarming purpose within five years (Code section 15 9I.4). Information in the registration or annual report is 16 not a confidential record under Iowas open records law (Code 17 chapter 22). A foreign person who fails to file a timely 18 annual report is subject to a civil penalty of not more than 19 $2,000 (Code section 9I.12). If the foreign person acquires 20 or fails to convert agricultural land to a purpose other than 21 farming within five years, the agricultural land escheats to 22 the state pursuant to an enforcement action by the attorney 23 general (Code section 9I.11). 24 BACKGROUND SUPERSEDING FILING REQUIREMENTS (CODE CHAPTER 25 10B). Code chapter 10B requires that a business entity 26 described in Code chapter 9H, or a foreign person described 27 in Code chapter 9I, acquiring or holding agricultural land, 28 file a biennial report with the secretary of state (Code 29 section 10B.4). In addition, a foreign persons duty to 30 file a registration and annual report under Code chapter 9I 31 is permanently suspended (Code section 10B.4A). Information 32 published in the biennial report is a confidential record but 33 may be released to the attorney general and members of the 34 general assembly (Code section 10B.5). 35 -6- LSB 5027XL (5) 90 da/ns 6/ 8
S.F. _____ H.F. _____ BILLS PROVISIONS REGISTRATION REQUIREMENT (CODE 1 CHAPTERS 9I AND 10B). The bill eliminates the suspension 2 of the registration requirement (Code section 10B.4A). The 3 same confidentiality requirements that currently apply to 4 information in a biennial report (Code section 10B.5) apply 5 to information in the reinstated registration under Code 6 section 9I.7. The bill requires specific information to 7 be included in the registration. A foreign person must 8 provide its legal name, mailing address, and nationality. An 9 authorized representative of a foreign person must state the 10 representatives legal name, street and mailing address, and 11 nationality; and its authority to purchase the agricultural 12 land and supervise any daily operations on the agricultural 13 land. The foreign person must include a statement of the 14 purpose of conducting a business in this state; a description 15 of the purpose in the interest in the agricultural land; the 16 legal name and mailing address of a parent corporation, or an 17 intermediary or subsidiary of the parent corporation; and a 18 listing of all other interests in agricultural land totaling 19 more than 250 acres held in the United States by the foreign 20 person, a parent of the foreign corporation, or intermediary or 21 subsidiary of the parent. 22 BILLS PROVISIONS INQUIRY OR INVESTIGATION BY THE 23 ATTORNEY GENERAL (CODE CHAPTERS 9I AND 10B). The bill 24 authorizes the attorney general to conduct an inquiry or 25 investigation regarding a violation of Code chapter 9I (Code 26 section 9I.10) or the biennial reporting requirements in Code 27 chapter 10B (Code section 10B.4). This includes the power to 28 issue a subpoena for the production of records, and to seek 29 compliance of the subpoena in district court. 30 BILLS PROVISIONS PENALTIES (CODE CHAPTER 9I). The bill 31 changes the civil penalty imposed for failing to timely file 32 a registration to an amount not more than 25 percent of the 33 countys assessed value of the subject agricultural land for 34 the previous year, and retains language referring to each 35 -7- LSB 5027XL (5) 90 da/ns 7/ 8
S.F. _____ H.F. _____ offense. 1 BILLS PROVISIONS REPORTING REQUIREMENTS (CODE CHAPTERS 2 9I AND 10B). The bill eliminates the suspended annual 3 reporting requirements in Code chapter 9I (Code section 4 10B.4A). Unlike the reinstated registration requirement, the 5 annual reporting requirement is repealed (Code section 9I.8). 6 The bill amends the biennial reporting requirements in Code 7 chapter 10B (Code section 10B.4). Specifically, the biennial 8 report must include any updates to the information stated 9 in the registration. The secretary of state must prepare 10 an annual summary of compiled information in the current 11 registrations and last filed reports (Code section 10B.5A). 12 The information is a confidential record. However, the bill 13 creates an exception allowing access to the record by the 14 attorney general for enforcement purposes, and the governor and 15 general assembly for public policy purposes. 16 BILLS PROVISIONS PENALTIES (CODE CHAPTER 10B). The 17 civil penalty for failing to timely file a biennial report or 18 filing false information in such report is increased to an 19 amount of not more than $10,000 for violations by a foreign 20 person. There is another reference to each offense (Code 21 section 10B.6). 22 -8- LSB 5027XL (5) 90 da/ns 8/ 8