States Taking on National Security Duties Create Role Conflicts

The Bottom Line

• A growing number of US states are assuming a new role in national security regulation.
• Among other states, Florida, Texas, Utah, and Montana have used legislation, litigation, or the threat thereof to target what they perceive as malign foreign activities.
• This rapidly evolving trend creates a more fragmented and unpredictable compliance landscape for multinational companies and investors.

When a company sought to buy property near Provo Airport last year, Utah state officials concluded that it wasn’t a routine land deal. The buyer was connected to the Aviation Industry Corporation of China, a company the Pentagon considers a “Chinese military company.” Utah authorities, invoking a new state statute, intervened and blocked the transaction, later forcing divestment.

This year, Texas sued a technology company for alleged deceptively marketed networking devices that Texas claims allows the Chinese Communist Party to access American consumers’ devices in their homes, threatening “to compromise our nation’s security,” and initiated a number of other lawsuits, challenging multiple companies over their alleged ties to China.

These episodes exemplify a broader and accelerating trend. By enacting legislation and pursuing targeted enforcement, US state governments are assuming a role in national security regulation that has been—until now—largely the exclusive responsibility of the federal government.

State Role Expansion

The federal government employs a range of tools to safeguard national security. Foreign investment reviews, supply-chain security measures, foreign agent regulations, export controls, tariffs, economic sanctions, and foreign terrorist designations are all familiar instruments of national security law.

But new initiatives are allowing state legislatures and attorneys general to stake out their own role in national security matters by arguing that state action is needed to counter international threats.

Relying on state police powers, legislatures are enacting laws to restrict the use of certain technologies and impose limits on foreign land ownership. And state attorneys general are wielding consumer-protection lawsuits and enforcement initiatives to target companies with alleged ties to foreign nations and foreign data transactions perceived to threaten US national security.

The result of these actions is to impose an additional layer of national security regulation that may not always be coordinated with federal authorities. The new layer may create new compliance burdens and potential litigation exposure for multinational businesses.

Although aspects of this trend have received limited academic and media attention, these state actions potentially have significant implications for international investment and business relationships.

Addressing Foreign Threats

States have passed a variety of new laws aimed—explicitly or implicitly—at perceived foreign threats. Recent legislation has imposed restrictions on the use of TikTok on state devices, limited Chinese-made drones by state agencies, established procurement rules targeting foreign vendors, and limited foreign ownership of land.

A particularly visible subset of this trend involves laws restricting foreign ownership of real property. Since 2021, numerous states have enacted or considered such measures, frequently framing them as national security safeguards.

The laws vary widely. Some require disclosure of foreign ownership; others restrict purchases of specific categories of land (such as agricultural land or property near military installations or critical infrastructure). Still others single out persons or entities associated with designated countries.

Recent enactments underscore how quickly this area of law is evolving.

Florida: Enacted in 2023, SB 264 restricts ownership of agricultural land and property near military installations or critical infrastructure in Florida by persons and entities associated with designated “foreign countries of concern.” It separately imposes a near-total ban on real property ownership by Chinese persons and entities that aren’t US citizens or lawful permanent residents.

Utah: Also enacted in 2023, Utah’s statute limits real estate purchases by “restricted foreign entities,” defined in part by reference to federal designations such as the Department of War’s list of Chinese military companies. Utah’s enforcement actions—including blocking the AVIC-related purchase near Provo—show that its law isn’t merely symbolic. According to Utah’s governor, the law has caused divestment of about 35,000 acres of land previously owned by Chinese companies.

Texas: Passed in 2025, SB 17 bars individuals domiciled in, or entities headquartered in, designated countries—including China, Russia, Iran, and North Korea—from acquiring interests in real property in Texas.

Challenges to these statutes have been largely unsuccessful. The US Courts of Appeals for the Fifth and Eleventh Circuits mostly dismissed early suits against Texas’ and Florida’s laws for lack of standing, declining to reach the merits of the prohibitions themselves. Those rulings leave core constitutional and statutory questions unresolved.

Texas became the first state in 2025 to propose a formal, state-level analogue to the Committee on Foreign Investment in the United States: the Texas Committee on Foreign Investment. Although the proposal hasn’t advanced, it would require notification and potential mitigation of certain foreign-involved transactions affecting businesses or real property in the state.

State AG Enforcement

Framing their actions as necessary to mitigate foreign threats, some state attorneys general have turned to traditional tools—consumer protection, privacy, and deceptive practices statutes—to pursue what are, in substance, national security objectives.

Florida: In February, Florida Attorney General James Uthmeier launched the Consumer Harm from International Nefarious Actors, or CHINA, Prevention Unit, a first-of-its-kind state enforcement group. Consistent with that mandate, the CHINA Unit has used Florida’s consumer-protection authority to scrutinize companies with alleged ties to China and demanded internal audits from several medical device companies amid concerns that Chinese-made devices could transmit sensitive data overseas.

Texas: Also in February, Texas Attorney General Ken Paxton filed a series of lawsuits under the state’s Deceptive Trade Practices Act against five separate companies alleging that each company misrepresented its ties to China and its data practices. One complaint characterized consumer networking devices as enabling access by the Chinese Communist Party, while another alleged that a drone manufacturer functioned as a passthrough for Chinese drone company despite claims of corporate independence.

These cases show how state attorneys general are increasingly using consumer laws as a vehicle for addressing geopolitical concerns.

Preemption, Constitutional Limits

These state actions raise an inevitable question: How far can states go in addressing perceived national security concerns before they tread on what traditionally has been considered federal responsibility?

The US Supreme Court has long expressed skepticism of state laws that intrude into foreign affairs, a domain “entrusted to the President and the Congress.”

Montana’s 2023 law banning TikTok statewide, justified on national security grounds, was later enjoined by a federal district court that found the law was likely preempted by federal foreign affairs power. The social media company and the state agreed to dismiss the case in February after a new US-based entity agreed to manage the app.

Also in 2023, a federal district court in New Jersey concluded that the state’s law imposing “restrictions on Russian-affiliated entities far broader than those imposed by the federal government” was preempted by federal law. The judge wrote, “Whatever the earnest motive, the Russia Act intrudes on the exclusive province of the federal government to speak for the country in foreign affairs in seeking to influence Russia’s conduct.”

These cases suggest that state laws closely tracking—or competing with—federal foreign policy tools face heightened preemption risk.

Not all federal courts have found state national security laws to be preempted. The Eleventh Circuit’s 2025 decision denying plaintiffs’ challenge to Florida’s land purchase restriction for a lack of standing did reach the merits of the law’s registration and affidavit requirements applicable to certain foreign owners.

In that case, plaintiffs argued that the federal government’s foreign investment regime—CFIUS—occupied the field and conflicted with the Florida law’s requirements. But the court held that CFIUS didn’t occupy the field of real estate regulation, and that the law’s requirements didn’t “interfere” with CFIUS “review of covered transactions under the foreign investment review regime.”

Instead, the court held that the law served as a “complement” to CFIUS and it therefore left intact the law’s key compliance architecture. This signaled to companies and investors that even if purchase prohibitions are later determined to be preempted, burdensome ancillary obligations—disclosure, attestations, registration regimes, and reporting triggers—may still remain.

Even some in Congress believe that states have a role to play in national security regulation. For example, members of Congress recently proposed a bill that would, among other things, broaden CFIUS jurisdiction to include “a new category of ‘elevated risk real estate transactions,’ ensuring mandatory [CFIUS] review of purchases involving farmland, ports, telecommunications infrastructure, and locations in proximity to military installations and intelligence facilities.”

But in a nod to the recent state national security legislation described above, the bill also includes a proposed amendment to federal law to preserve state laws that restrict or prohibit “the purchase, lease, or acquisition of real estate or agricultural land by a foreign adversary person” against federal preemption arguments like those made against Florida’s SB 264.

Going Forward

The blocked land purchase near a Utah airport and Texas’ effort to prevent a foreign government from accessing US data aren’t outliers—they likely preview more state-level national security efforts to come.

For multinational companies and investors, states’ increasing use of their traditional regulatory powers to address national security goals creates a more fragmented and unpredictable compliance landscape. Real estate transactions, data practices, supply chains, and public-facing representations all may trigger state-level national security concerns.

The legal boundaries of these state efforts—particularly under federal preemption and constitutional doctrines—remain unsettled. As courts and Congress begin to grapple with these issues, the balance between state initiative and federal primacy in national security regulation will be a critical area to watch.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

David K. Kessler is a litigation partner at Paul, Weiss and a former assistant US attorney in the Eastern District of New York.

Ian Richardson is a litigation partner at Paul, Weiss and served as a chief counsel at the US Department of Justice.

Samuel Rebo is a litigation associate at Paul, Weiss.

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