SSB 3113 (LSB 5027XL (5) 90)

SENATE/HOUSE FILE _____

BY  (PROPOSED GOVERNOR BILL)

A BILL FOR

An Act relating to interests in agricultural land acquired or held by foreign businesses, foreign governments, or nonresident aliens, or by agents, trustees, or fiduciaries thereof, by providing for registration and reporting requirements, providing for enforcement, and providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

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