In 2021, a Chinese agribusiness called the Fufeng Group announced a now-infamous plan to build a corn milling plant in Grand Forks, North Dakota. This new plant also happened to be around 12 miles from an Air Force base home to sensitive surveillance and space-networking technology. The matter was referred to the Committee on Foreign Investment in the United States (CFIUS) the US government’s interagency committee that evaluates the potential national security risks of foreign investments.
However, CFIUS lacked jurisdiction over Fufeng’s land purchase for two reasons: a local loophole in which the undeveloped farmland was considered a “greenfield” investment, and because at the time, Grand Forks Air Force Base had not been designated sensitive under the CFIUS regulations. The project ultimately was blocked by the Grand Rapids City Council, urged on by the U.S. Air Force, proving a crucial lesson: foreign investment in American real estate can be of acute concern to national security and the federal government is no longer the only regulatory regime scrutinizing it.
Regulatory Fragmentation in Foreign Investment Regimes
Over the past several years, individual states have begun moving aggressively into territory once perceived exclusive to the federal government. As of mid-2026, roughly 28 states now employ some form of restrictions on investors tied to China, Iran, Russia, and other countries under some type of US government sanctions regime. Statutes vary state to state, but they generally focus on banning ownership of agricultural land by foreign adversaries, prohibiting ownership of property near military installations and critical infrastructure, imposing registration and affidavit requirements for foreign buyers, and imposing penalties ranging from civil fines to forced divestiture. This trend is intensifying and expanding, with some states now mandating that foreign actors be compelled to divest from existing holdings. To complicate things further, partisan differences have produced different foreign investment regulatory regimes, even within the same state.
Right now, Florida and Texas firmly anchor the movement. Florida’s SB264, passed in 2023, created two tiers of restrictions: one for all “countries of concern,” and another aimed explicitly at China. In Shen v. Simpson, the Eleventh Circuit upheld SB264 in late 2025, and treated its registration and affidavit requirements as complementing CFIUS rather than conflicting with it. Texas’s SB17, passed in 2025, was broader, reaching nearly every category of real property: agricultural, commercial, industrial, and residential, along with mineral, water, and timber rights. It was also challenged in Wang v. Paxton, but the Fifth Circuit dismissed that challenge in 2025. The takeaway is that early challenges to these new, local regulatory regimes have had little effect. As state-level regimes have expanded, recent federal efforts have widened CFIUS’s own reach. New measures include creating a 99-mile buffer zone around sensitive military installations to trigger CFIUS reviews, the America First Investment Policy’s focus on greenfield projects and Chinese investment in strategic sectors, and the proposed Agricultural Risk Review Act, which would seat the Secretary of Agriculture permanently on CFIUS for transactions involving farmland and agribusiness. The result is that both state and federal screening mechanisms are growing concurrently, but without any formal coordination.
As a result, potential dealmakers may need to contend with two regulatory tracks at once. A single transaction may require both CFIUS and state-level compliance reviews, which may not always align. A state might block what CFIUS would clear, or stymie a deal CFIUS never had jurisdiction to touch.
Managing Exposure
A potential foreign investor in US property should not assume that CFIUS is the only review they need to clear, or take the federal government’s decision not to review a transaction as an unconditional signal to move forward. American property owners need to be aware that accepting an offer from a foreign buyer carries real exposure. The wrong assumption can mean penalties, a voided sale, or a divestiture order well after closing, with a uniform framework a long way from emerging. Both parties to a transaction would be well advised to seek experienced guidance to shed light on the regulatory patchwork that is now the de facto operating environment. Making hasty decisions now can have serious consequences later.
This Article is written by: Noah Seligman, Consultant