\n<\/p>\n
Over the past several years, foreign ownership and investment in U.S. agricultural land has received increased attention from Congress, state legislatures, and federal agencies. Although more than half of the states have enacted laws restricting certain foreign acquisitions of private and public real property, including agricultural land, the federal government only restricts certain foreign acquisitions in public lands<\/em> located within the boundaries the United States (see<\/em> 48 U.S.C. \u00a7 1501 et seq.<\/em><\/a>). However, the federal government does monitor certain foreign acquisitions and landholdings in private agricultural land through the Agricultural Foreign Investment Disclosure Act of 1978<\/a> (\u201cAFIDA\u201d). While AFIDA does not prohibit foreign persons from acquiring agricultural land, it requires certain foreign persons to disclose their interests in agricultural land to the U.S. Department of Agriculture (\u201cUSDA\u201d).<\/p>\n On June 25, 2026, USDA published a proposed rule<\/a> that seeks to substantially revise the regulations implementing AFIDA, removing the current regulations from 7 C.F.R. Part 781<\/a> and a new set of AFIDA regulations under 7 C.F.R. Part 5100. If adopted, the proposal represents what will be the most significant revision to AFIDA\u2019s regulations since they were first established in 1979.\u00a0 The proposal is open for public comment<\/a> until August 10, 2026.<\/p>\n The proposed rule seeks to significantly expand the scope of persons and property interests subject to AFIDA reporting, require the disclosure of more information from reporting foreign persons, require all disclosures be filed through an electronic reporting system, a new appeals process, and establish a more stringent civil penalty framework. According to USDA, the proposed revisions are intended to modernize the reporting process, improve the quality and transparency of AFIDA data, strengthen enforcement of the statute\u2019s reporting requirements, and better identify the individuals and entities that actually own or control U.S. agricultural land.<\/p>\n This article is the first in a multi-part series discussing proposed revisions to the AFIDA regulations. This article discusses proposed amendments to certain existing definitions and how those changes will affect the overall AFIDA reporting framework.<\/p>\n Congress enacted AFIDA in 1978 to establish a nationwide reporting system for foreign ownership and investments in U.S. agricultural land. At the time, Congress expressed concern that the federal government lacked sufficient information to determine the extent of foreign investment in agricultural land and the potential effects such investments can have on family-farm operations.<\/p>\n Under AFIDA, a \u201cforeign person\u201d who acquires, transfers, or holds an interest in U.S. agricultural land generally must report that interest to USDA. Under the law, a \u201cforeign person\u201d is a nonresident individual, foreign business entity, or foreign government. Further, a U.S. entity is a \u201cforeign person\u201d if a foreign individual, entity, or government holds a \u201csignificant interest or substantial control\u201d over the domestic entity.<\/p>\n AFIDA disclosures have historically been made by filing form FSA-153<\/a> with the appropriate Farm Service Agency (\u201cFSA\u201d) county office. However, as part of USDA\u2019s 2025 National Farm Security Action Plan<\/a>, these disclosures may be filed electronically online. USDA compiles the information received through AFIDA filings into an annual report<\/a> detailing foreign ownership of U.S. agricultural land.<\/p>\n Although AFIDA\u2019s statutory reporting requirements have remained largely unchanged since 1978, USDA explains that the implementing regulations are trailing increasingly complex ownership structures, technological advancements, and evolving national security concerns. USDA also notes that recent reviews by the U.S. Government Accountability Office recommended improvements to AFIDA\u2019s reporting and enforcement framework. Further, the proposed rule also reflects priorities outlined in the National Farm Security Action Plan, which emphasized integrating agriculture into the federal government\u2019s broader national security strategy and improving oversight of foreign investments involving agricultural assets.<\/p>\n There are several important definitions the proposed rule seeks to amend under the current AFIDA regulations. Like any agency regulation, the definitions contained in a rule are important because they provide context to how the words or phrases are to be understood throughout the regulatory text.<\/p>\n As previously stated, AFIDA requires a foreign person that holds an interest in U.S. \u201cagricultural land\u201d to report their landholding to USDA. Under AFIDA, the term \u201cagricultural land\u201d means \u201cany land located in one or more States and used for agricultural, forestry, or timber production purposes.\u201d 7 C.F.R. \u00a7 781.2(b). AFIDA\u2019s associated regulations further define \u201cagricultural land\u201d as land totaling 10 or more acres in the aggregate that is used for forestry production or land currently used, or used within the past 5 years, for farming, ranching, or timber production. Land totaling less than 10 acres in the aggregate that generates annual gross receipts exceeding $1,000 from the sale of agricultural or timber products is considered \u201cagricultural land.\u201d Land used for forestry production is considered \u201cagricultural land\u201d when 10% of the land is \u201cstocked by trees of any size, including land that formerly had such tree cover and that will be naturally or artificially regenerated.\u201d 7 C.F.R. \u00a7 781.2(b).<\/p>\n In general, farming, ranching, and timber production means growing crops, livestock, or trees. Under AFIDA, farming, ranching, and timber production includes activities listed under the U.S. Department of Labor\u2019s 1987 Standard Industrial Classification Manual (\u201c1987 Manual\u201d), except for certain activities such as soil preparation services, contracted timber production services, forestry marketing and management plans, and catching or taking of certain fish for a commercial purpose. Accordingly, engaging in these types of activities will not warrant an AFIDA disclosure. The proposed rule replaces the 1987 Manual categories with activities that \u201cincludes but is not limited to\u201d those activities identified under the 2022 North American Industry Classification System (NAICS). However, the proposal will do more than update the classification system, it will substantially expand the activities that cause property to qualify as agricultural land.<\/p>\n The proposed definition will continue covering land currently used, or last used within 5 years, for farming, ranching, forestry, or timber production. It will also expressly include conservation land that could be used for farming, ranching, forestry, or timber production, either despite the property\u2019s conservation designation or under the terms of that designation.<\/p>\n Further, the proposal will include land associated with crop production, animal production and aquaculture, forestry and logging, and support activities for agriculture and forestry. It will also include certain agricultural supply-chain activities, such as livestock wholesaling, animal slaughtering and processing, and farm-product warehousing and storage.<\/p>\n The proposed definition will additionally cover certain land used for agricultural, biological, forestry, fisheries, veterinary, and biotechnology research. Thus, property used for agricultural research or experimental development can qualify as agricultural land even when ordinary crop or livestock production does not occur on the property.<\/p>\n One significant change under the proposal is the inclusion of solar electric power generation, wind electric power generation, and pipeline transportation within AFIDA\u2019s definition of agricultural land. According to USDA, agricultural land is increasingly used for both agricultural and energy production, while pipelines frequently cross farmland through easements and rights-of-way. Including these activities will allow USDA to collect information about foreign interests in property used for these purposes.<\/p>\n The proposal also clarifies that land meeting this AFIDA definition will be considered agricultural land regardless of its local zoning classification. Therefore, a foreign person cannot rely solely on municipal or county zoning records when determining whether property is subject to AFIDA.<\/p>\n Finally, the proposed rule will eliminate the 10-acre and $1,000 gross-receipts exception. As a result, a relatively small tract can become reportable if it otherwise meets the expanded definition of agricultural land.<\/p>\n Collectively, these changes will significantly increase the amount and types of property potentially covered under AFIDA.<\/p>\n AFIDA applies when a foreign person acquires, transfers, or holds \u201cany interest, other than a security interest\u201d in agricultural land. Current regulations define \u201cany interest\u201d broadly but exclude certain property interests, including security interests, leaseholds of less than 10 years, certain future interests, surface and subsurface easements and rights-of-way used for nonagricultural purposes, and interests solely in mineral rights. 7 C.F.R. \u00a7 781.2(c). The proposed rule will narrow two important exceptions.<\/p>\n First, USDA proposes reducing the lease exemption from leaseholds of less than 10 years to leases totaling less than 1 year. The 1-year period will be measured either as a single lease term or as the combined duration of multiple leases over continuous or discontinuous periods. Thus, a foreign person holding a lease of 1 year or longer generally will be required to file an AFIDA disclosure. Multiple short-term leases can also become reportable if their combined duration reaches 1 year.<\/p>\n If adopted, the proposed rule will add the definitions \u201cforeign adversary\u201d and \u201cForeign Adversary Controlled Entity\u201d. \u201cForeign adversary\u201d is defined as a foreign government or foreign nongovernment person from, a citizen of, or a controlled entity headquartered in a \u201cforeign country of concern,\u201d as defined under 42 U.S.C. \u00a7 19237(2), which includes China, Iran, North Korea, Russia, and any other country designed by the U.S. Secretary of State. Further, \u201cForeign Adversary Controlled Entity\u201d is defined as any corporation, partnership, trust, association, or other entity that is owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.<\/p>\n The proposed rule\u2019s distinction between these terms is to eliminate the lease exemption entirely for a foreign adversary and Foreign Adversary Controlled Entity. Accordingly, those persons and entities will be required to report leases of any duration, including leases 1 year or less.<\/p>\n Second, the proposal will remove the current exclusion for surface and subsurface easements and rights-of-way used for purposes unrelated to agricultural production. If adopted, a foreign person that acquires, transfers, or holds an easement or right-of-way involving agricultural land may be required to file an AFIDA report, even when the interest is associated with a nonagricultural use such as pipeline transportation. The exclusions for security interests, certain future interests, and interests solely in mineral rights will remain in the AFIDA regulations.<\/p>\n One of the most significant proposed changes involves the definition of \u201csignificant interest or substantial control,\u201d as this definition is central to determining whether a domestic entity is considered a \u201cforeign person\u201d under AFIDA. Under the current regulations, significant interest or substantial control exists when a single foreign person holds an interest of at least 10%. It also exists when foreign persons acting in concert hold at least 10%, even though no individual foreign person reaches that threshold. When foreign persons are not acting in concert, the current regulations generally require aggregate foreign ownership of at least 50%. Unfortunately, the term \u201cacting in concert\u201d is not clear because AFIDA, including the associated regulations and handbook, does not define the term or provide guidance on the meaning of the term, and the proposed rule does not attempt to provide a definition for the term.<\/p>\n The proposed rule seeks to eliminate the 50% aggregate threshold. USDA proposes that an aggregate foreign interest of 10% will constitute significant interest or substantial control, regardless of whether the foreign persons are acting in concert. For example, under the current rule, several unrelated foreign investors collectively holding 40% of a domestic landowning entity might not cause the entity to qualify as a foreign person if they are not acting together. Under the proposed rule, an aggregate foreign interest of only 10% can trigger AFIDA reporting.<\/p>\n The proposed definition will expressly include interests held through shell corporations, trusts, and partnerships. This language is intended to allow USDA to examine foreign interests held through complex ownership structures\u2014business structures that contain multiple entities or ownership tiers\u2014rather than focusing only on the entity that directly owns the land.<\/p>\n Further, the proposal will also establish two circumstances where no minimum ownership percentage applies. Any interest held by a person qualifying as a \u201cbeneficial owner\u201d\u2014a foreign person that has direct or indirect decision-making authority over an entity holding agricultural land\u2014will constitute significant interest or substantial control. Similarly, any interest held by a foreign adversary or Foreign Adversary Controlled Entity will satisfy the definition regardless of the percentage held.<\/p>\n Accordingly, the revised definition will expand AFIDA beyond a percentage-based ownership test and incorporate indirect control and decision-making authority as to whether a person must disclose its U.S. agricultural landholdings.<\/p>\n The definitions contained in the AFIDA regulations determine the persons, land, ownership structures, and transactions subject to federal disclosure requirements. USDA\u2019s proposed amendments will significantly expand that framework. The revised definition of \u201cagricultural land\u201d will cover additional agricultural, research, energy, pipeline, conservation, processing, and storage activities while eliminating the existing small-tract exemption. The revised definition of any \u201cinterest will\u201d capture many leases, easements, and rights-of-way currently excluded from reporting. A change to this definition will also place different leasehold reporting requirements on a \u201cforeign adversary\u201d and \u201cForeign Adversary Controlled Entity\u201d. Meanwhile, the revised definition of \u201csignificant interest or substantial control\u201d will reduce the aggregate foreign ownership threshold from 50% to 10%. Overall, if adopted, these definitional revisions under the proposed rule will cause certain persons and landholdings that are not reportable under the current regulations to become subject to AFIDA.<\/p>\n USDA is currently seeking public comments<\/a> until August 10, 2026, at which time the agency will evaluate the feedback before withdrawing or amending the proposed rule, or moves forward with publishing a final rule.<\/p>\n To read USDA\u2019s proposed rule, click here<\/a>.<\/p>\n To learn more about foreign ownership of U.S. land, click\u00a0here<\/a>.<\/p>\n To view a recording of NALC\u2019s recent webinar \u2018Foreign Ownership of Ag Land: Federal & State Legislative and Litigation Update,\u2019 click\u00a0here<\/a>.<\/p>\n Subscribe to NALC\u2019s bi-weekly newsletter The Feed for recent legal developments affecting agriculture, including foreign ownership of agricultural land\u00a0here<\/a>.<\/p>\nBackground<\/strong><\/h3>\n
Amending Definitions<\/strong><\/h4>\n
Agricultural Land<\/em><\/h5>\n
Any Interest<\/em><\/h5>\n
Significant Interest or Substantial Control<\/em><\/h5>\n
Conclusion<\/strong><\/h3>\n