Bill forces divesture of property

Legislature adopts potentially unconstitutional ban on ‘foreign adversary’ property ownership. The controversial bill targets China, Cuba, Iran, North Korea, Russia and Venezuela.

By

News

May 3, 2024 - 2:42 PM

Emporia Republican Sen. Jeff Longbine, left, said Senate Bill 172 designed to strip real property in Kansas from citizens of foreign adversary countries was unconstitutional and a violation of the oath taken by every Kansas legislator to uphold the state and federal constitutions. Photo by Sherman Smith/Kansas Reflector

TOPEKA — Republican Sen. Jeff Longbine says a bill passed by the Legislature stripping Kansas property from companies and individuals tied to China, Iran, North Korea and other adversarial nations was so profoundly unconstitutional that $10 million should be set aside in the budget to defend against lawsuits.

The bill would prohibit people or entities from “countries of concern” from acquiring nonresidential property within a 100-mile radius of Kansas military installations or comparable facilities in adjacent states. Anyone holding substantial property within the security zones must register with the attorney general and divest of the property unless granted an exemption by federal officials.

Attorney General Kris Kobach would be responsible for investigating reports of illegal ownership and for seeking court orders to force divestiture of property held by national security risks. A separate provision would allow those forced to sell property to file claims against the state for compensation if fire-sale transactions generated prices below fair-market value.

“There is nothing constitutional about this bill,” Longbine said. “You cannot take legally owned land away from somebody. In fact, this is so unconstitutional that we’re going to bribe the affected party by paying them back their losses.”

Sen. Ethan Corson, a Johnson County Democrat and an attorney, said the state-sanctioned dragnet would trigger a landslide of lawsuits. Flipping a switch to redefine legal ownership of property to illegal possession of property would justifiably raise due process claims and inspire breach of contract suits, he said.

In the Senate, the vote for Senate Bill 172 was 24-14. The tally in the House was 86-39. A veto by Gov. Laura Kelly would be a possibility. She rejected a related bill blocking government agencies in Kansas from acquiring drones made from parts manufactured in the same countries of concern.

‘I’m here to spy on you’

Rep. Sean Tarwater, a Stilwell Republican who led House negotiations on the bill, said it was among the important pieces of legislation considered by the 2024 Legislature. He said he was part of closed-door briefings hosted by the Kansas Bureau of Investigation that outlined consequential threats posed by foreign nationals.

“The exposure and the risk are very real,” Tarwater said. “This could be the most important bill that we look at this year, and probably in the last five years and maybe the next several. This is very serious to me.”

He said the Legislature should follow the lead of Congress, which delivered bipartisan support for legislation challenging ownership of the video-sharing app TikTok. A bill signed by President Joe Biden offered TikTok’s Beijing-based parent company ByteDance one year to sell the company or deal with a U.S. ban.

Shawnee Republican Mike Thompson, the Republican who negotiated on behalf of the Senate, said covert operatives from China, Cuba, Iran, North Korea, Russia and Venezuela had set their sights on harming the United States. Targets included value-rich military installations and other national security infrastructure. Beyond Fort Riley, Fort Leavenworth and McConnell Air Force Base, Thompson said the state had to protect Kansas National Guard or U.S. Army Reserve facilities as well as infrastructure that included the National Bio and Agro-Defense Facility in Manhattan.

Advocates of the bill expressed alarm with construction of a $94.7 million plant in Johnson County by Cnano Technology USA. The American company, owned by a company in China, would operate a 330,000-square-foot manufacturing facility, with nearly 100 employees, to produce liquid conductive paste used in power tools, cell phones and vehicle batteries.

“Understand that China is a communist country,” Thompson said. “There may be some people here in the United States from China that do not have any nefarious intent. It’s very difficult to identify the ones that are. They’re not going to hold up a sign and say, ‘Hey, by the way, I’m here to spy on you.’”

Thompson speculated securing a U.S. Department of Commerce exemption from the state law could be as easy as filling out an online form, but an attorney with expertise in work of the federal Committee on Foreign Investment in the United States said a review by CFIUS was a lengthy and expensive process.

Heart of the bill

The bill, known as the Kansas Land and Military Installation Protection Act, would exempt anyone with a CFIUS clearance or a national security agreement with the U.S. Department of Defense. It wouldn’t apply to citizens or companies associated with a country of concern unless ownership exceeded 10% of the value of a business or land in Kansas.

If divesture was mandated, the owner must register with the attorney general within 30 days of the divesture’s effective date. The foreign principal would have 360 days to sell the property.

Related
February 11, 2022
May 10, 2021
May 6, 2021
February 26, 2020