Foreign Countries Of Concern And The States

A growing number of states have enacted laws limiting the rights of persons associated with foreign countries of concern in areas such as purchase and ownership of real property, public contracting and incentives, university research, travel, data handling and storage, public employment, gift law, scholarships, healthcare licensing, donations and criminal law. Challenges to several of these laws are pending focused on equal protection, due process, the Fair Housing Act and federal preemption.

On Nov. 4, 2025, the U.S. Court of Appeals for the Eleventh Circuit, in Shen v. Comm'r, Fla. Dep't of Agric. and Consumer Servs., considered Florida's 1) limitations on purchase of real property, 2) real property registration requirement and 3) seller's affidavit requirement. The court decided that the plaintiffs lacked standing to challenge the first limitation but upheld the last two. This Holland & Knight article examines the Shen case, alongside other recent case law bearing on limitations on persons from foreign countries of concern.

In Florida, "foreign countries of concern" include the People's Republic of China (PRC), Russian Federation, Islamic Republic of Iran, Democratic People's Republic of Korea, Republic of Cuba, Venezuela and Syrian Arab Republic. A similar list of countries is common in other states otherwise denoted. For convenience, we adopt the phrase "foreign country of concern" to refer generally to similar lists of countries.

Purchase and Ownership

Many states have imposed restrictions on persons from foreign countries of concern owning, having a controlling interest in and/or acquiring an interest in real property subject to various exceptions. Additional states are considering similar bills. The limitations are commonly linked to agricultural land and proximity to critical infrastructure facilities and military installations. In Florida, they are comprehensive for persons associated with the PRC subject to various exceptions.

The court of appeals in Shen did not reach the merits of whether Florida's limitation on purchase and ownership is lawful. The court of appeals decided that none of the plaintiffs had standing to challenge the purchase and owner limitation and so reversed the district court's decision on the merits not to enjoin the law. The district court ruled that the purchase and owner limitation was lawful because it classifies based on where an alien is domiciled rather than on the basis of race and national origin and for the reason that the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which powers the Committee on Foreign Investment in the United States (CFIUS), does not preempt it.

The court of appeal's decision on standing rested on its conclusion that domicile in Florida depends on presence plus an intent to make one's home permanent or for an indefinite period there. This may vary by state. In his dissent, Judge Charles Wilson observed that some of the plaintiffs' visas forbade them from remaining in the U.S. permanently or indefinitely. Unlike the district court, the majority did not consider this relevant for domicile as compared to homestead exemption. Judge Wilson also agreed with the district court that at least one plaintiff had standing to challenge the purchase and ownership limitation because of his intention to purchase property, whereas the majority ruled that, as a Florida domiciliary, he was permitted to make the purchase under the act.

Another case is on appeal that may reach the merits of the limitation on purchase and ownership. The district court in Jones Eagle LLC v. Ward, No. 4:24-cv-00990-KGB, 2024 WL 5112477 (E.D. Ark. Dec. 9, 2024), concluded, "Arkansas's blanket ban on certain categories of foreign ownership ... clearly conflicts with the cautious, transaction-specific approach taken by Congress to foreign investments in FIRRMA" and with respect to "how they define foreign ownership." The court also found a conflict with the definition of foreign ownership and foreign control set forth in the International Traffic in Arms Regulation (ITAR).

Registration and Affidavit

On the merits, the court of appeals in Shen did consider Florida's statute requiring persons who are domiciled in China and who are not citizens or lawful permanent residents to register real property they already own and requiring a purchaser to sign an affidavit averring compliance. Other states also require registration. The court of appeals in Shen affirmed the district court's decision to deny the plaintiffs' preliminary injunction motion because they failed to show a substantial likelihood of success on the merits.

Beginning with equal protection, the court of appeals in Shen determined that the registration requirement does not facially classify based on national origin because it applies only to those who are domiciled in China, and the plaintiffs failed to support their claim that Chinese domicile is a "fig leaf" for Chinese national origin. Likewise, the court of appeals determined that the seller's affidavit requirement does not facially classify based on national origin or alienage because everyone who buys Florida property has to submit the same affidavit. But the court of appeals agreed that the registration requirement does facially classify based on alienage.

That said, the court of appeals in Shen agreed with the district court that dated U.S. Supreme Court precedent is binding, concluding that a state may deny landownership to noncitizens (and, thus, has the lesser power to require registration), so long as the denial is not arbitrary or capricious. The court of appeals also affirmed the district court on the grounds that the registration requirement applies to nonimmigrant aliens (i.e., noncitizens who are not lawful permanent residents). Last, the court of appeals agreed with the district court there was no evidence of intentional discrimination based on national origin, alienage, race or ethnicity.

Turning to the Fair Housing Act, the court of appeals in Shen affirmed the district court's ruling that the registration and affidavit requirements are not discriminatory housing practices. Neither registration nor the affidavit restricts anyone from owning property and does not require or permit a person to refuse to sell to, rent to or negotiate with anyone. Furthermore, the court of appeals affirmed the district court's ruling that the registration and affidavit requirements are not unconstitutionally "void for vagueness."

Last, the court of appeals in Shen affirmed the district court's ruling that the registration and affidavit requirements are not preempted under FIRRMA because 1) they do not conflict with FIRRMA's purpose or intended effects, but complement them; 2) they do not prohibit any kind of transaction; and 3) the foreign countries of concern are already "of concern" under federal law. Dissenting, Judge Wilson disagreed but with a focus on the purchase limitation not reached by the court.

Critical Infrastructure

Property ownership near critical infrastructure is the subject of several state statutes. Texas adopted a bill impacting its grid. The law prohibits entities from entering into an agreement that would grant "direct or remote access to or control of critical infrastructure in this state" with a person associated with a foreign country of concern. The district court in GH Am. Energy, LLC v. Vegas, Case No. 1:24-cv-648-RP (W.D. Tex. Sept. 16, 2025), ruled that the CFIUS regime does not preempt the law because CFIUS "does not have jurisdiction over intrastate activities. Nor does it have jurisdiction over real-estate transactions everywhere in Texas – its main concern is interference with military or activities or federal properties."

The district court rejected the applicability of the "dormant foreign affairs preemption doctrine," concluded that the Texas law is "narrowly concerned with protecting Texas's intrastate electric grid," a historic state interest, and ruled that foreign citizens "have no constitutional rights and thus face no unconstitutional discrimination" under the Equal Protection Clause. This case is on appeal.

Public Contracting and Incentives

Also in the bill containing the restrictions reviewed in Shen, Florida state and local governmental agencies are prohibited from contracting with or offering economic incentives to persons affiliated with foreign countries of concern. Texas also ordinarily requires state agencies controlled by the governor to require any company that submits a bid or proposal with respect to a contract for goods or services to certify that the company and its holding companies or subsidiaries are not foreign countries of concern.

The court of appeals did not review the Florida law in Shen, but in Odebrecht Constr., Inc. v. Sec'y, Fla. Dep't of Transp., 715 F. 3d 1268 (11th Cir. 2013), it ruled that the federal foreign affairs power preempted Florida's then-"Cuba Amendment," which prevented a company that did business in Cuba (or that was related to one) from bidding on state or local public contracts in Florida. The court of appeals said Florida had singled out a specific country and effectively declared an economic war on it, despite the U.S. Congress remaining active in legislating with respect to Cuba and the president's considerable authority and discretion in the field of Cuban sanctions.

Likewise, a district court in Indiana ruled in St.-Hilaire v. Comm'r of Ind. Bureau of Motor Vehicles, 711 F. Supp.3d 1028 (S.D. Ind. 2024), that Haitian nationals were likely to succeed on the merits of their claim that a motor vehicle licensing legislation creating a pathway for humanitarian parolees to obtain state credentials, but limiting the pathway to certain Ukrainian parolees, failed strict scrutiny. But the court of appeals in St.-Hilaire v. Comm'r of the Ind. Bureau of Motor Vehicles, No. 24-1187, 2024 WL 3652884 (7th Cir. Ap. 12, 2024), granted a joint motion to vacate and remand the case.

University Research

Florida public colleges and universities may not ordinarily accept grants from or enter into agreements or partnerships with any college or university based in foreign countries of concern. Texas also ordinarily requires public institutions of higher education to require any company that submits a bid or proposal with respect to a contract for goods or services certify that the company and its holding companies or subsidiaries are not foreign countries of concern. All public institutions that must report on foreign gifts and contract disclosures under federal law must also report to the Texas Higher Education Coordinating Board.

In 2025, a Florida district court in Yin v. Diaz, 773 F. Supp. 3d 1344 (S.D. Fla. 2025), ruled that Chinese post-graduate students had a substantial likelihood of success on the merits of their claim that the statute was preempted by the federal government's foreign affairs power, including its exclusive immigration power, and enjoined Section 288.860(d)-(e), Florida Statutes, to the extent it prohibits student employment at Florida's state universities and colleges that has already been authorized by F-1 visas.

The district court determined that a Chinese tenured university professor who alleged the law undermined his ability to hire the best graduate assistants lacked standing to challenge the law, rejected the plaintiffs' preemption challenge to the law as an alien registration statute, rejected their void for vagueness claim and rejected their equal protection claim. Concerning the last of these, the district court decided that the law is focused on alienage, that the plaintiffs failed to show this is a proxy for race or national origin, and that the law was subject to rational basis review as applied to nonimmigrant students. This case is on appeal.

Travel

Florida law makes it unlawful for a person knowingly and willfully to transport into the state an individual whom the person knows, or reasonably should know, has entered the U.S. unlawfully. A district court ruled in Farmworker Ass'n of Fla., Inc. v. Moody, 734 F. Supp. 3d 1311 (S.D. Fla. 2024), that the plaintiffs were likely to succeed on the merits of their claim that the statute was field- and conflict-preempted by the Immigration and Nationality Act (INA) and enjoined it as to the contestants. This case is on appeal.

Texas requires certain agency and post-secondary employees who plan to travel to a foreign country of concern to provide notice and submit a post-travel brief outlining details of the trip, dates and purpose of travel. Florida prohibits the use, in connection with travel to state sponsors of terror, of funds made available by the state to public universities. Reviewing this law several years ago, the court of appeals in Faculty Senate of Fla. Int'l Univ. v. Winn, 616 F. 3d 1206 (11th Cir. 2010), ruled that it was not preempted by federal foreign affairs power.

Other Limitations

There are many more laws limiting persons associated with foreign countries of concern that have not yet been litigated.

Data Handling and Storage. For example, in the same bill that led to the restrictions reviewed in Shen, Florida prohibited state and local governmental agencies from granting access to an individual's personal identifying information (PII) to persons affiliated with foreign countries of concern and prohibits healthcare providers from storing patient information outside the U.S. or Canada. Several states have banned the use of DeepSeek, Manus and other technologies on state devices and the state network, including state universities. Arkansas has also prohibited foreign party control of data centers. No court has yet reviewed these limitations.

Public Employment. Texas requires an attestation that an applicant for public employment is not employed by and does not have any connection to any governmental entity or political apparatus of a foreign country of concern.

Gift Law. Texas prohibits certain state agencies or public institutions of higher education personnel from accepting any gifts for an entity associated with or travel to a foreign country of concern and from accepting positions involving research, work on or access to critical infrastructure.

Scholarships. A private school participating in a Florida educational scholarship program cannot be owned or operated by a person or an entity domiciled in, owned by or in any way controlled by a foreign country of concern or foreign principal.

Healthcare Licensing. To receive a Florida license, certain healthcare providers must attest that a person or entity who possesses a controlling interest does not hold, either directly or indirectly, an interest in an entity that has a business relationship with a foreign country of concern and complies with Florida's cyber storage requirement.

Donations. Florida prohibits nonprofits, fundraisers and related entities from soliciting or accepting contributions from persons associated with foreign countries of concern. Charities registered to solicit contributions or that have funds solicited on their behalf in Florida, no matter where a charity is formed, must file an attestation of compliance to register.

Criminal Law. Florida has made it a first-degree felony to threaten or extort a person in Florida on behalf of China.

Interpretive Challenges

The court of appeals in Shen did not raise an impediment to the kinds of limitations on foreign countries of concern that states are enacting. To the contrary, the court of appeals found registration and affidavit requirements lawful and suggested that, as long as countries defined as "of concern" under state law are also "of concern" under federal law, this will be a favorable factor for the preemption analysis, whereas prohibiting transactions may be an unfavorable factor according to Odebrecht.

District courts in Shen and Jones Eagle have split over whether purchase and ownership limitations are preempted. The district court in GH Am. Energy ruled that a law protecting critical infrastructure is not preempted. The district court in Farmworker Ass'n and St.-Hilaire ruled that limitations on transport are preempted. The district court in Diaz ruled that limitations on employment related to university research are also preempted. Several of these cases are on appeal, meaning there could soon be appellate rulings on these issues as well.

Most challenges under the equal protection clause to laws limiting persons associated with foreign countries of concern are not succeeding. The court of appeals in Shen anticipates a day when the U.S. Supreme Court may reverse its dated precedent holding that a state may deny landownership to noncitizens for only rational reasons, but any such change may not benefit nonimmigrant aliens. The district court in Yin reached a similar conclusion that nonimmigrant students cannot benefit from strict scrutiny review.

International investors, buyers, donors and contractors will need to remain alert to state limitations on persons associated with foreign countries of concern and the requirements of federal regimes such as FIRRMA, ITAR, INA and miscellaneous federal statutes such as Section 117 of the Higher Education Act, which requires universities to report foreign gifts and contracts valued at $250,000 or more. State law will dictate individual domicile and the subsidiaries impacted, as well as the types of interests in real property and controlling interests that are limited.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.