The Republican-controlled Kansas Legislature on Tuesday approved a measure that will largely ban companies from China and other foreign adversaries from owning real estate, likely blocking a sprawling facility under construction in Johnson County.
The legislation appears intended to thwart Cnano Technology, a U.S. subsidiary of a Chinese firm that is building a $95 million, 333,000-square-foot facility in the business park of New Century AirCenter. Republicans have been voicing fears for months about the potential for foreign influence by Cnano and other companies.
The House on Monday approved the legislation, SB 172 , on an 86-39 vote. The Senate followed Tuesday in a 24-14 vote, sending the bill to Democratic Gov. Laura Kelly for her signature or veto.
The measure comes amid growing U.S. concern over foreign influence as China and the United States compete for dominance and Russia continues its invasion of Ukraine, which receives significant American aid. President Joe Biden recently signed a foreign aid bill into law that will lead to a ban on Chinese-owned TikTok if the app is not sold, a development supporters of the Kansas bill pointed to this week.
“This is a very serious issue and if we can get bipartisan support at the federal level for TikTok, we should be able to do it here in Kansas,” said Rep. Sean Tarwater, a Stilwell Republican who chairs the House Commerce, Labor and Economic Development Committee.
The Kansas legislation with limited exceptions bans citizens and companies – along with subsidiaries – of China, Russia, Iran, North Korea, and Venezuela from owning non-residential real estate within 100 miles of any military installation amid fears of foreign interference and espionage.
The radius would effectively apply the restrictions to most areas of the state, given the presence of McConnell Air Force Base in Wichita, Fort Riley near Junction City, and Fort Leavenworth. The Army Reserve also has a presence at New Century.
“I don’t have a choice on that. We have a military base there,” Rep. William Sutton, a Gardner Republican whose district includes the Cnano site, said of his support for the measure.
While Kelly hasn’t said whether she will veto the measure, Democrats largely opposed it. Kelly previously vetoed a bill that would prohibit government agencies from purchasing drones made by – or with parts from – countries “of concern,” citing overly broad language in the legislation.
This week marked the second time lawmakers tried to pass the measure. In early April, the House passed a similar bill but the Senate came one vote short.
The bill passed Tuesday would require any “foreign principal” – defined as any government official, any political party member, corporation, or citizen – of a foreign adversary to divest, in other words, sell-off, real estate holdings within the 100-mile radius. Property owners could seek permission from the Committee on Foreign Investment in the United States, a federal panel that reviews transactions that could lead to a U.S. business coming under foreign control, to keep their land.
The bill does not apply to U.S. citizens and lawful permanent residents, but would otherwise apply to citizens of foreign adversary countries, even if they are in the United States legally.
Under the Kansas legislation, foreign principals affected by the legislation would have until the end of September to register their property with the Kansas Attorney General’s Office. The landowners would then enter into agreements with the office to divest their holdings within a year.
Attorney General Kris Kobach, a Republican, would be empowered to investigate violations of the law and could seek court orders to force companies or individuals to surrender their property.
The measure allows foreign principals who own land before July 1, 2024, to file a claim against the state if divestiture leads to a reduction in the sales price. The special claims process allows – but does not guarantee – that the Legislature will approve a payment.
Sen. Jeff Pittman, a Leavenworth Democrat, said lawmakers should work with the military and other federal agencies to develop a better version of the legislation. He said he hadn’t heard from anyone in the Department of Defense or elsewhere in the federal government telling him that Kansas needs to improve security around military bases.
“It makes me suspicious about whether we need to enact this legislation today,” Pittman said.
Critics of the bill have voiced concerns about its constitutionality given that it allows for the taking of private property without guaranteed compensation. Johnson County Democrats have raised particular concern about the potential economic impact to the county if Cnano is forced to abandon the plant, which is expected to employ about 120 workers.
The Cnano plant has been at the center of the debate over the bill. The company makes carbon nanotubes and graphene, which are used in electric car batteries, and its Kansas investment comes after Panasonic announced plans to create a $4 billion electric battery plant in nearby De Soto.
Company officials have said accusations of foreign influence hold “no semblance of reality.”
“Contrary to what’s being portrayed, Cnano poses absolutely no threat,” Shawn Montgomery, president of Cnano Technology USA, said in March . “The notion that CNANO USA could be used as a conduit to steal America’s military and intellectual secrets is completely incorrect.”
J. Pieratt, a partner at DLA Piper, which is serving as outside counsel to Cnano, said in a statement on Tuesday said the company is disappointed by the bill’s passage, which he said endorses “a blanket decree of ‘guilty’ for many businesses across Kansas, with absolutely no opportunity to prove there are no ill-intentions or threats to national security.”
“With no Legislative review or due diligence of any kind the Kansas Legislature is forcing companies both large and small to divest their property and lawful investments and leave the state,” Pieratt said. “We chose Kansas as a favorable place to do business, have followed the letter of the law, invested tens of millions of dollars into a state-of-the-art facility to support the emerging electric battery industry, and have brought both construction and permanent jobs to Kansas. Beyond disappointing, this is wrong, unfair, and unconstitutional.”
At least 15 states enacted restrictions on foreign ownership of real property during the first six months of 2023, according to a July report from the Congressional Research Service. Members of Congress are also weighing federal legislation.
Last March, U.S. Sen. Jerry Moran, a Kansas Republican, cosponsored a bill to prevent China, Russia, Iran, and North Korea from owning U.S. agricultural land and companies, though the president would have the ability to allow purchases on a case-by-case basis if vital to national security interests.
The bill would also place the U.S. secretary of agriculture on the Committee for Foreign Investment in the United States to review transactions involving the agricultural industry. It has yet to receive a vote in committee.
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