Bill Text: CA SB224 | 2023-2024 | Regular Session | Amended

California Senate Bill 224

Bill Title: Agricultural land: foreign ownership and interests: foreign governments.

Spectrum: Bipartisan Bill

Status: (Failed) 2024-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB224 Detail]

Download: California-2023-SB224-Amended.html

Amended IN Senate April 13, 2023

Amended IN Senate March 20, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 224

Introduced by Senator Hurtado
(Coauthors: Senators Cortese, Grove, Nguyen, and Ochoa Bogh)
(Coauthors: Assembly Members Alanis, Bauer-Kahan, Flora, Hoover, Weber, and Wilson)

January 19, 2023

An act to add Chapter 5 (commencing with Section 745) to Title 2 of Part 1 of Division 2 of the Civil Code, relating to property, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL'S DIGEST

SB 224, as amended, Hurtado. Agricultural land: foreign ownership and interests: foreign governments.

Existing law provides that all property has an owner, whether that owner is the state, and the property is public, or the owner is an individual, and the property is private.

Existing law, the California Emergency Services Act, establishes the Office of Emergency Services, which is responsible for the state’s emergency and disaster response services for natural, technological, or man-made disasters and emergencies, among other duties.

This bill would prohibit a foreign government from purchasing, acquiring, leasing, or holding a controlling interest, as defined, in agricultural land within the State of California. The bill would exempt land held by foreign governments before January 1, 2024, from that prohibition. The bill would provide that land transferred in violation of these provisions would be subject to divestiture, as specified.

Existing federal law requires any foreign person, defined to include foreign governments, who acquires or transfers any interest, other than a security interest, in agricultural land to submit to the United States Secretary of Agriculture a report containing specified information relating to, among other things, the type of interest the foreign person acquired or transferred and their legal name, address, and citizenship or country in which they are created or organized. Existing federal law requires the secretary every 6 months to transmit to each state department of agriculture a copy of each report that was submitted to the secretary in the most recent 6-month period and that involved agricultural land located in that state.

This bill would require the Office of Emergency Services, in consultation with the appropriate boards or departments and based on the above-described reports from the United States Secretary of Agriculture, and other information the office deems appropriate, to compile an annual report containing, among other information, the total amount of agricultural land that is under foreign ownership, how that land is currently being put to use, and any legislative, regulatory, or administrative policy recommendations in light of the information from the annual report. The bill would require the office to publish the inaugural annual report on its website by December 31, 2024, and by March 31 every year thereafter. The bill would require the office to deliver copies of any recommendations for legislative policy changes contained in the report to the Governor and the Assembly and Senate Committees on Agriculture. The bill would require the office to be reimbursed for costs incurred for compiling data, printing, and mailing the report, as specified. The bill would make its provisions operative upon appropriation by the Legislature.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Chapter 5 (commencing with Section 745) is added to Title 2 of Part 1 of Division 2 of the Civil Code, to read:

CHAPTER 5. Foreign Entities and Property Ownership

745.

For purposes of this chapter, the following definitions apply:

(a) “Agricultural land” has the same meaning as defined in Section 3508 of Title 7 of the United States Code.

(b) “Controlling interest” means either of the following:

(1) Possession of 51 percent or more of the ownership interests in an entity.

(2) A percentage ownership interest in an entity of less than 51 percent, if the foreign government actually directs the business and affairs of the entity without the requirement or consent of any other party.

(c) “Foreign government” means a government or the state controlled-enterprise of a foreign government, except “foreign government” does not include the government of the United States, its states, territories, or possessions, or federally recognized tribes or their government units and enterprises.

(d) “Interest” means any estate, remainder, or reversion enumerated in Chapter 1 (commencing with Section 761) of Title 2 of Part 2, or portion of the estate, remainder, or reversion, or an option pursuant to which one party has a right to cause legal or equitable title to agricultural land to be transferred.

(e) “State-controlled enterprise” means a business enterprise, however denominated, in which the government has a controlling interest.

746.

(a) Notwithstanding any other law, on and after January 1, 2024, a foreign government shall not purchase, acquire, lease, or hold any controlling interest in agricultural land in the State of California.

(b) This section does not apply to any controlling interest in agricultural land held by a foreign government before January 1, 2024.

(c) A transfer of an interest in land in violation of this section ~~is void.~~ shall be subject to divestiture, as set forth in Section 746.5.

(d) This section shall not be applied in a manner inconsistent with any provision of any treaty between the United States and another country.

746.5.
(a) The Attorney General, upon the request of any person or upon receipt of any information which leads the Attorney General to believe that a violation of Section 746 may have occurred, may issue subpoenas requiring the appearance of witnesses, the production of relevant records, and the giving of relevant testimony.
(b) (1) If, after examining the evidence, the Attorney General concludes that a violation of Section 746 has occurred, the Attorney General shall order the prohibited foreign government to divest itself of all interests in the land within 90 days after service of the order upon the foreign government.
(2) The order of divestiture, described in paragraph (1), shall be served personally or by mail.
(c) (1) If the holder of the interest that is ordered to be divested disputes the determination of the Attorney General that a violation of Section 746 has occurred, the holder may submit a written request for a judicial determination to the Attorney General.
(2) The written request, described in paragraph (1), shall be delivered to the Attorney General within 60 days after service of the order of divestiture. If no written request is received within this time, the determination of the Attorney General shall become final.
(d) (1) If the foreign government fails to divest itself of all interests pursuant to subdivision (b), or if a holder of the interest submits a written request pursuant to subdivision (c), the Attorney General shall bring an action in superior court to divest the interest.
(2) Venue for the action described in paragraph (1) shall either be the County of Sacramento or a county in which a portion of the subject land is located, as determined by the Attorney General.
(3) The Attorney General shall promptly record with the county recorder of each county in which any portion of the land is located a notice of pendency of the action pursuant to Title 4.5 (commencing with Section 405) of Part 2 of the Code of Civil Procedure.
(e) If the holder of the interest has submitted a written request pursuant to subdivision (c), the court shall conduct an evidentiary hearing to determine, by a preponderance of the evidence, if a violation of Section 746 has occurred, prior to taking any other action. If the court determines that there has been no violation, the court shall dismiss the action and expunge the notice of pending action.
(f) (1) If the court determines that a violation of Section 746 occurred, the court shall order that the land be sold. Unless the court determines for good cause that another procedure for conducting the sale is appropriate, the court shall appoint a referee pursuant to Article 1 (commencing with Section 873.010) of Chapter 4 of Title 10.5 of Part 2 of the Code of Civil Procedure.
(2) The referee shall make a sale of the property and convey the interest to the purchaser.
(3) The proceeds from the sale shall be distributed in the following order:
(A) The payment of authorized costs of the sale, including all approved fees and expenses of the referee and any taxes and assessments due.
(B) The payment, in an amount approved by the court, to the Attorney General for reimbursement of investigation and litigation costs and expenses.
(C) The payment to lienholders who did not have actual knowledge of a violation of Section 746 in their order of priority, except for liens which under the terms of the sale are to remain on the property.
(D) The payment of a penalty, in an amount determined by the court, not to exceed 10 percent of the sales price of the property, to be paid to the fund designated by the Attorney General for enforcement of this chapter.
(E) The payment to any lienholders not included in subparagraph (C) in their order of priority.
(F) All remaining proceeds to the prohibited foreign government, in an amount that shall not exceed the original amount paid by the foreign government for the property, payable to the person or entity that held the interest.

747.

(a) Based on the reports submitted to it pursuant to Section 3505 of Title 7 of the United States Code, and other information the Office of Emergency Services, at its discretion, deems appropriate, the office shall compile an annual report in consultation with the appropriate boards or departments for each calendar year containing all of the following:

(1) The total amount of agricultural land that is under foreign ownership.

(2) The percentage change in foreign ownership of agricultural land in California, by year, over the past 10 years.

(3) The purpose to which foreign-owned agricultural land in California is being put to use currently. The office shall also include any significant recent changes or trends in the use to which foreign-owned agricultural land in California is being put to use.

(4) Information regarding the extent of, and any recent changes in, foreign ownership of water rights in California.

(5) Information regarding the extent of, and any recent changes in, foreign ownership of water desalination facilities in California.

(6) Information regarding the extent of, and any recent changes in, foreign ownership of energy production, storage, or distribution facilities in California.

(7) The Office of Emergency Services’ assessment of the impact of any recent changes in foreign ownership of agricultural land in California, water rights, or water desalination facilities on Californians’ food security.

(8) Any legislative, regulatory, or administrative policy changes the Office of Emergency Services recommends in light of the information in the report.

(b) The report required by subdivision (a) shall also include information on agricultural land that is leased by a foreign government for each of the categories set forth in paragraphs (1) to (8), inclusive, of subdivision (a), as applicable.

(c) (1) The Office of Emergency Services shall publish the inaugural report described in subdivision (a) on its website by December 31, 2024, and by March 31 of each following year thereafter.

(2) The Office of Emergency Services shall publish each subsequent report described in subdivision (a) on its website by March 31 of each following year.

(3) If the report contains recommendations for legislative policy changes pursuant to paragraph (8) of subdivision (a), the Office of Emergency Services shall also deliver copies of those recommendations to the Governor and the Assembly and Senate Committees on Agriculture pursuant to Section 9795 of the Government Code.

(d) The Office of Emergency Services shall be reimbursed from the funds appropriated pursuant to Section 747.5 in an amount to cover the costs incurred for compiling data, printing, and mailing the report.

747.5.

This chapter shall become operative upon appropriation by the Legislature for the purpose of implementing the provisions of this chapter.

SEC. 2.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to secure the integrity of California’s agricultural land due to the effects it has on global food security, and in order to address the potential of foreign government control of California’s agricultural land and natural resources, it is necessary for this act to take effect immediately.