February 4, 2026
The statute’s definition of a “foreign adversarial company” is extraordinarily broad. It can include a company that:
The six countries are China, Cuba, North Korea, Russia, Iran, and the Maduro Regime in Venezuela. Together, these companies represent over 20% of the world’s GDP (with the vast majority coming from China).
Under that definition, a company could be deemed a “foreign adversarial company” merely for having, for example, a Chinese subsidiary—or even because one of those governments, such as through a sovereign investment fund, acquires a single share of its stock.
The State’s First Retroactive Change to Incentive Contracts
Crucially, LB 644 contains no grandfather clause for existing incentive contracts. The Nebraska Department of Revenue has indicated—both in its initial guidance and in recent discussions—that it intends to apply LB 644 to existing projects, even where the company already has an incentive contract with the State. Those contracts, of course, do not contain the new LB 644 restrictions.
This marks the first time that we are aware of where Nebraska has attempted to impose a substantive, adverse, retroactive change to an existing project incentive contract.
In addition, the Department of Revenue has interpreted this law to mean that it will not pay incentive claims filed before October 1, 2025 if the Department believes the company may be a “foreign adversarial company.”
Some of the Legal Problems with the State’s Action
The State’s intended approach raises serious contractual and constitutional issues, some of which may include the following.
The Nebraska Department of Revenue is now adding a “Yes/No” question to all incentive claims and incentive filings, asking whether the company constitutes a “foreign adversarial company.”
To protect their rights, we are recommending that every company with an existing Nebraska incentive contract should do the following:
There are a variety of ways to express the bigger picture on this. At a minimum, if applied to existing contracts, LB 644 sends an unfortunate message to the national and local business communities and to the national site selection community that they cannot rely on the commitment Nebraska has made in its job and investment incentives. The ripple effect is yet to be seen.
The Impact of Nebraska's LB 644 on Existing Incentive Contracts
What Companies and Advisors Should Do NowWhat Companies and Advisors Should Do Nowg the 2025 Legislative Session. Section 31 (now codified at Neb. Rev. Stat. §77-3,114) of that bill declares that, as of October 1, 2025, any “foreign adversarial company” is ineligible to receive benefits under any incentive program of the State of Nebraska.The statute’s definition of a “foreign adversarial company” is extraordinarily broad. It can include a company that:
- Has a subsidiary organized in any of six listed countries, or
- Has any ownership interest held by one of those governments.
The six countries are China, Cuba, North Korea, Russia, Iran, and the Maduro Regime in Venezuela. Together, these companies represent over 20% of the world’s GDP (with the vast majority coming from China).
Under that definition, a company could be deemed a “foreign adversarial company” merely for having, for example, a Chinese subsidiary—or even because one of those governments, such as through a sovereign investment fund, acquires a single share of its stock.
The State’s First Retroactive Change to Incentive Contracts
Crucially, LB 644 contains no grandfather clause for existing incentive contracts. The Nebraska Department of Revenue has indicated—both in its initial guidance and in recent discussions—that it intends to apply LB 644 to existing projects, even where the company already has an incentive contract with the State. Those contracts, of course, do not contain the new LB 644 restrictions.
This marks the first time that we are aware of where Nebraska has attempted to impose a substantive, adverse, retroactive change to an existing project incentive contract.
In addition, the Department of Revenue has interpreted this law to mean that it will not pay incentive claims filed before October 1, 2025 if the Department believes the company may be a “foreign adversarial company.”
Some of the Legal Problems with the State’s Action
The State’s intended approach raises serious contractual and constitutional issues, some of which may include the following.
- Contract Violation: Nebraska’s Supreme Court has confirmed that incentive agreements are binding contracts between the company and the State. A unilateral refusal by the State to honor those contracts by imposing new terms certainly appears to be in contradiction to the express terms of the agreement and would seemingly constitute a breach under ordinary contract law principles.
- Constitutional Impairment of Contract: The framers of both the U.S. and Nebraska Constitutions anticipated this very danger. The Contracts Clause—found in U.S. Const. Art. I, §10 and Neb. Const. Art. I, §16—expressly prohibits States from enacting any law that “impairs the obligation of contracts.” As the principal designers and drafters of Nebraska’s main incentive statutes since 1987, we specifically included the contract-requirement language in the statutes to prevent exactly this type of retroactive change. By imposing new LB 644 restrictions not contained in the original agreements, the State would impair vested contractual rights.
- Other Constitutional Defects: LB 644 may also be running afoul of the Foreign Commerce Clause and the Federal Preemption Doctrine, among other federal standards. The State risks intruding into areas reserved for federal authority over foreign relations and trade.
The Nebraska Department of Revenue is now adding a “Yes/No” question to all incentive claims and incentive filings, asking whether the company constitutes a “foreign adversarial company.”
To protect their rights, we are recommending that every company with an existing Nebraska incentive contract should do the following:
- Attach a Legal Defense Positioning Statement: Regardless of how you presently answer the “Yes/No” question, we are working with companies and their CPAs on the specific written statement that should be attached to their incentive claims and filings, outlining the company’s specific facts and corporate structure, expressing the presence of a binding contract and invoking the contractual legal and constitutional defenses discussed above. This will help avoid a waiver situation by preserving your legal and constitutional rights and help prevent the State from successfully contending that the company implicitly accepted this new condition (as well as other new conditions that may be enacted later).
- Monitor Ownership and Structure: Review corporate ownership and subsidiary relationships to minimize exposure to the “foreign adversarial company ” definition—while balancing business, legal, and global operational considerations.
- Preserve What’s Needed for Your Legal Defense: We are guiding companies as to what project decision and performance records they should maintain and develop to be prepared to best defend if your incentives are denied.
There are a variety of ways to express the bigger picture on this. At a minimum, if applied to existing contracts, LB 644 sends an unfortunate message to the national and local business communities and to the national site selection community that they cannot rely on the commitment Nebraska has made in its job and investment incentives. The ripple effect is yet to be seen.
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