Property as National Security

Matthew S. Erie, Wisconsin Law Review (forthcoming)

November 6, 2023

Available on SSRN here.

Abstract

Two historically disparate fields of law—property and national security—are colliding and they are doing so through the hyper-activity of state governments. Against the backdrop of the U.S.-China trade/tech war, state governors and legislatures try to out-compete each other in introducing China-related bills to sever all ties with China, stunt the growth of Sinocentric supply chains, and neutralize China’s soft power in the world. While the state bills operate in parallel to federal legislation and regulation, in many instances, states’ activities go much farther than federal efforts. States are laboratories of China-delinking. The China-related bills which have been passed to date address a wide range of subjects from TikTok and semiconductors to educational exchange and Confucius Institutes to human rights and forced labor in Xinjiang. National security is often the justification for these laws. While the state statutes are strong symbolic aspects, they are already affecting property relationships, and raise a host of constitutional and foreign affairs questions. These issues have galvanized litigation that is, as of the time of this writing, working its way through the federal court system. The infusion of national security into property law has potentially far-reaching consequences not only for Chinese citizens resident in the U.S. and also for U.S.-China relations, but also for the future development of property law.

This Article is the first to try to make sense of these bills and laws, by diagnosing their common features and analyzing their constitutional implications. Specifically, the Article focuses on those state legislative sources regulating property broadly conceived, including, land, corporate interests, and data, arguing that while there are national security threats posed by Chinese actors in the United States, the state statutes often go too far, violate the Constitution, and show U.S. property law trending towards illiberalism. States have become sites for the integration of national security into property law because of traditional state rights to regulate real property. Yet the state statutes affect immigration and other foreign affairs matters with China, thus opening the door to federal pre-emption. The state laws have been met with lawsuits, one of which Shen v. Simpson is on appeal in the Eleventh Circuit and a focus of this Article.

An analysis of a bespoke set of 152 state bills and laws regulating property rights reveals their features and potential pitfalls. Promoted by ambitious politicians and corporate lobbyists, and a bipartisan phenomenon, the bills have many common features. They also diverge in important ways given they reflect specific state interests and the bills must be harmonized into existing state codes. Yet many violate the federal Constitution. For example, those pertaining to real estate may fail on grounds of equal protection and federal preemption. Some statutes are over-generalizing by equating Chinese citizens with the Chinese Communist Party (CCP).

This Article finds that the root of these issues is both epistemic and doctrinal. On the one hand, political and corporate interests promote anti-China agendas through lawmaking, and, on the other hand, these sentiments are not wholly new and in fact they benefit from enduring structures in property law, even if they have become supercharged through national security. Correcting these issues requires an approach that creates structural centralization of such foreign affairs-related matters in the federal government while balancing this centralization with state interests. Mirroring the causes of the current problem, this balanced centralization necessitates both epistemic and doctrinal reforms. First, in terms of legislation, federal preemption of state statutes that touch on foreign affairs should obtain particular salience during periods of heightened bilateral tension. At the same time, the federal government cannot sideline state government concerns. Rather, state concerns can continue to play an important role in lawmaking regarding China. Second, regarding judicial review, courts need to fine-tune standards, for example, for equal protection concerns, pursuant to the level of risk posed by a Chinese entity or person. Vitally, for both law-making and judicial review, China expertise needs to be more tightly integrated into both processes.

This Article is organized as the following: Part I sets the stage in terms of the increasing role of state and city governments in shaping the U.S.-China relationship. Whereas in the period of the “opening and reform,” the United States had become economically linked to China, the U.S.-China trade/tech war has necessitated a U-turn and state governments have provided much of the impetus for the change in direction. Part II introduces the integration of national security concerns into property law to explain the state’s response to the perceived problem. Part III is a descriptive assessment of the bills and laws. Part IV provides a doctrinal analysis of the statutes, including constitutional concerns regarding equal protection and federal preemption. It does so through the case of Shen v. Simpson, one of the first cases to challenge the China-related statutes. Part V suggests correctives to the current situation, and a conclusion follows.