foreign entities; land; legislative approval

SB1075 - 572R - S Ver

Senate Engrossed

foreign
entities; land; legislative approval

(now: foreign
entities; land; review commission)

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SENATE BILL 1075

AN
ACT

amending
title 33, chapter 4, article 4, Arizona Revised Statutes, by adding section 33-459;
amending sections 37-231 and 37-240, Arizona Revised Statutes;
relating to land sales.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section
1. Title
33, chapter 4, article 4, Arizona Revised Statutes, is amended by adding
section 33-459, to read:

START_STATUTE
33-459.

Conveyance to foreign entity; prohibition; identification;
foreign entity review commission; civil penalty; violation; classification;
definitions

A. Beginning on the effective date of
this section, land in this state may not be conveyed to a hostile foreign
entity without approval of the foreign ENTITY review commission ESTABLISHED
PURSUANT to this section.

B. A grantor in this state and the
grantor's agent, including a real estate professional licensed pursuant to
title 32, chapter 20, shall submit to the state real estate

department a valid identification of any grantee.� If the grantee is
not a natural person, the grantor and the grantor's agent shall submit a valid identification
of the grantee's agent and the name and principal place of business of the
grantee.� The grantor, the grantor's agent and the state real estate

department shall maintain a copy of the identification provided by the
grantee or, if the grantee is not a natural person, the identification of the
grantee's agent and the grantee's name and principal place of business.

C. Identification is deemed valid
unless it can be determined on its face that the identification has expired.

D. The foreign ENTITY review
commission is ESTABLISHED in the state real estate department consisting of the
following PERSONS:

1. The commissioner of the state real
estate department.

2. Two persons who are appointed by
the governor.

3. One PERSON who is appointed by the
PRESIDENT of the senate.

4. One PERSON who is appointed by the
speaker of the house of representatives.

E. each member of the foreign entity
review commission EXCEPT the commissioner of the state real estate DEPARTMENT
shall serve a four-year term.� At the first meeting of the commission,
the members shall elect a chairperson from among their membership.� The
commission shall meet at the call of the chairperson to consider any proposed
purchases, leases or SUBLEASES of land in this state by a possible hostile
foreign entity as PROHIBITED by this section or as prohibited by section
37-240.� On review of the proposed transaction, the commission may vote to
approve or reject the transaction, and if rejected, the proposed transaction is
void.

F.
A person or
entity that violates this section is subject to a civil penalty.� The attorney
general may bring an action against a person or entity that violates this
section.� The civil penalty shall be the greater of the following:

1. $250,000.

2. Fifty percent of the fair market
value of the interest in real property that is the subject of the violation.

G.
A person who
knowingly violates this section is guilty of a class 1 misdemeanor, except as
follows:

1. If any portion of the land is
located within twenty-five miles of a military installation or critical
infrastructure, the person is guilty of a class 6 felony.

2. If the person knowingly acted as
an agent of a foreign government or received compensation or direction from a
FOREIGN government, the person is guilty of a class 6 felony.

H. For the purposes of this section:

1. "Foreign entity" means a
foreign government, a state-controlled enterprise of a foreign government
or an entity acting as an agent for a foreign government or state-controlled
enterprise of a foreign government.

2. "Hostile" means a
foreign entity that is listed as a threat or a country of concern by the
director of national intelligence or the United States department of state.

3. "Valid identification"
includes:

(
a
) Any
document that bears the photograph, name and address of the grantee or
, if the grantee is not a natural person, the grantee's agent.

(
b
) An Arizona
driver license, an Arizona nonoperating identification license, a tribal
enrollment card or another form of tribal identification or a United States,
state or local government-issued identification.
END_STATUTE

Sec. 2. Section 37-231, Arizona Revised
Statutes, is amended to read:

START_STATUTE
37-231.

State lands subject to sale; rights reserved in lands sold; state
lands not subject to sale; development agreements

A. All state lands, except as otherwise provided for
in this title, including all improvements made or placed on or connected with
state lands, shall be subject to appraisal and sale as provided in this title.

B. Any person over eighteen years of age is entitled
to purchase any of the state lands
except as provided in section
37-240.

C. All sales, grants, deeds or patents to any state
lands sold between July 9, 1954 and March 18, 1968 shall be subject to and
shall contain a reservation to
the

this

state of an undivided one-sixteenth of all oil, gases and other
hydrocarbon substances, coal or stone, metals, minerals, fossils and fertilizer
of every name and description, together with all uranium, all thorium, or any
other material
which

that
is or may
be determined by the laws of
the

this

state or the United States or decisions of courts to be peculiarly essential to
the production of fissionable materials, whether or not of commercial value,
subject to the following:

1.
For the purpose of promoting

To promote
the sale of state lands and the more active
cooperation of the owner of the soil, and to facilitate the development of its
mineral resources,
the

this
state
constitutes the purchaser of the land its agent for the purposes specified in
this section, and in consideration hereof, relinquishes to and vests in the
purchaser of the state land an undivided fifteen-sixteenths of all oil,
gas and the value thereof which may be
upon

on
or within any state land purchased after July 9, 1954
and before March 18, 1968.

2. The purchaser of the soil may sell or lease to
any person, firm or corporation the oil and gas and other minerals
which

that
may be on or in the land,
upon

on
terms and conditions
that
the purchaser and the owner deem best, subject to the
provisions and reservations of this section, but the lessee or purchaser shall
pay to
the

this
state an undivided
one-sixteenth of the mineral produced or the value of the mineral
produced at the well or mine as determined by the
state land

department.

3.
Upon

On

discovery of oil and gas in paying quantities on land adjoining state lands
purchased under the authority of this section, the purchaser or the purchaser's
lessee shall drill and produce all wells necessary to protect the land so
purchased from drainage by wells on lands in which
the

this
state has no royalty interest
,

or has a lesser royalty interest. If the purchaser or the
purchaser's lessee fails to protect against such drainage,
the

this
state, acting through the
state land

department,
may,
three months after demand therefor in
writing by the
state land
department to such purchaser and
the purchaser's lessee,
may
enter
upon

on
such lands and drill all wells necessary to protect
the

this
state against such drainage.

4. The interest reserved by
the

this
state in any state lands sold may be committed to a
drilling unit or cooperative or unit plans of development and operation of oil
and gas pools with the United States, its agencies and its and their lessees
and permittees, and with private owners and persons holding oil and gas leases
on private lands or on state lands. The
state land

department
may
, insofar as the interest of
the

this
state may be affected thereby,
may

join in and consent to any such plan on behalf of
the

this
state. Such agreements shall provide for the
equitable division on an agreed basis of the oil and gas produced from the
unit, but
no
such agreement shall
not

relieve any operator from the obligation to develop reasonably the lands and
leases as a whole committed thereto. The royalties to which
the

this
state is entitled on production
from land purchased under this section shall be computed only on that part of
the production allocated to such tract. When the agreements made
under this section provide for the return of gas to a formation underlying the
unit, they may provide that no royalties are required to be paid on the gas so
returned.

D. State lands known to contain oil, gases and other
hydrocarbon substances, geothermal resources, coal or stone, metals, minerals,
fossils and fertilizer of every name and description, in paying quantities, or
uranium, thorium or any other material
which

that
is or may be determined by the laws of
the

this
state
or
the United States or
BY
decisions of court to be peculiarly essential to the
production of fissionable materials, whether or not of commercial value, and
state lands adjoining lands
upon

on
which
there are producing oil, gas or geothermal wells or adjoining lands known to
contain any of such substances in paying quantities, or uranium, thorium or any
other material peculiarly essential to the production of fissionable materials,
whether or not of commercial value, shall not be sold. The
prohibition against sale shall not operate to prevent the sale of lands known
to contain, in paying quantities, common variety minerals as defined in section
27-271 or to prevent the sale of lands where
the

this
state does not own such substances, minerals or metals in
the lands sought to be sold.
The provisions of

This subsection
shall

does
not
prohibit the sale of such lands located within the exterior boundaries of an
incorporated city or town, in which case the commissioner may offer the land
for sale, provided the land shall be used solely for a public
purpose. Such land shall revert to
the

this
state if it is used other than for a public purpose.

E. Notwithstanding
the provisions of

subsection C of this section, all state lands sold after March 18, 1968 shall
be sold with the reservation that all oil, gas, other hydrocarbon substances,
helium or other substances of a gaseous nature, geothermal resources, coal,
metals, minerals, fossils, fertilizer of every name and description, together
with all uranium, all thorium or any other material
which

that
is or may be determined by the laws of the United States
or of this state
,
or
by

decisions of court
,
to be peculiarly essential to
the production of fissionable materials, whether or not of commercial value,
and the exclusive right thereto, on, in, or under such land, shall be and
remain and be reserved in and retained by
the

this
state, regardless of any sale under this section and the
issuance of any certificate of purchase to any purchaser of state lands
pursuant to this section, provided, that the reservation shall not include
common variety minerals as defined in section 27-271, subject to the
following:

1. The
state land
department
shall adopt rules providing for the protection of the patentee or contract
purchaser of state lands, or their successors in interest, and
the

this
state
of Arizona
, against
damage to the lands, livestock, water, crops
,
or
other tangible improvements on lands held by such patentee or contract
purchaser, and suffered by reason of the use or occupation of such lands by
lessees or permittees engaged in mining and oil, gas and geothermal resource
exploration and development under leases or permits executed by the
department. The
state land
department
may
, at any time,
may
require each of its
lessees or permittees to execute a bond in a reasonable principal amount
conditioned
upon

on
payment for all
such damages.

2. The mineral rights reserved to
the

this
state in the lands sold shall be closed to entry and
location as a mineral claim or claims, but the department may issue,
upon

on
application, mineral exploration
permits embracing the reserved mineral rights when such issuance is deemed in
the best interest of
the

this
state,
provided that the surface owner or owners shall have the first right of refusal
to acquire such mineral exploration permits.
END_STATUTE

Sec. 3. Section 37-240, Arizona Revised
Statutes, is amended to read:

START_STATUTE
37-240.

Limits on sales of state lands; foreign entity review commission;
civil penalty; violation; classification; definitions

A.
No

A

person may
not
purchase more than six hundred forty acres
of grazing land
,
or more than one hundred sixty
acres of agricultural land.

B.
No
Sales, leases or
subleases of state lands
shall

may not

be made to
corporations

a corporation

or
associations

association that is

not qualified to transact business in
the

this

state.

C. Beginning on the effective date of
this amendment to this section, sales
, leases or
subleases of state lands may not be made to a hostile foreign entity without
the approval of The foreign entity review commission ESTABLISHED by section
33-459.� The commissioner may refer any proposed sales, leases or subleases of
state lands to a foreign entity to the foreign entity review commission for
review and approval as prescribed by section 33-459.

D. A person or entity that violates
subsection C of this section is subject to a civil penalty. The
attorney general may bring an action against a person or entity that violates
this section.� The civil penalty shall be the greater of the following:

1. $250,000.

2. Fifty percent of the fair market
value of the interest in real property that is the subject of the violation.

E. A person who knowingly violates
this section is guilty of a class 1 misdemeanor, except as follows:

1. If any portion of the land is
located within twenty-five miles of a military installation or critical
infrastructure, the person is guilty of a class 6 felony.

2. If the person knowingly acted as
an agent of a foreign government or received compensation or direction from a
FOREIGN government, the person is guilty of a class 6 felony.

F. For the purposes of this section:

1. "Foreign entity" means a
foreign government, a state-controlled enterprise of a foreign government
or an entity acting as an agent for a foreign government or state-controlled
enterprise of a foreign government.

2. "Hostile" means a
foreign entity that is listed as a threat or a country of concern by the
director of national intelligence or the United States department of state.
END_STATUTE