Proposed revisions to the Agricultural Foreign Investment Disclosure Act: an overview

Background

AFIDA requires “foreign persons” that acquire, transfer or hold interests in US agricultural land to report such transactions and holdings to the Farm Service Agency (FSA) through Form FSA-153. Among other requirements under AFIDA, a Form FSA-153 report must be filed within 90 days of any of the following events: (1) the acquisition or transfer by a foreign person of an interest in US agricultural land; (2) a change in use of US land held by a foreign person that causes it to become agricultural land; or (3) a change in the status of a person that holds or acquires an interest in US agricultural land that causes them to become a foreign person. Failure to make the required disclosures can result in substantial civil penalties.

The proposed rule follows a January 2024 Government Accountability Office report that identified deficiencies in the USDA’s AFIDA processes, including failures to timely share data with the Committee on Foreign Investment in the United States member agencies and inadequate verification and monitoring of collected data. More broadly, the proposed rule reflects heightened national security concerns regarding foreign ownership of US agricultural land—concerns that have grown since the AFIDA regulations were last updated in 2006. 

Foreign adversaries

As described in more detail below, the proposed rule places significant emphasis on “foreign adversaries” and “Foreign Adversary Controlled Entities,” imposing more stringent reporting obligations and stricter enforcement mechanisms for these categories of filers. The proposed rule would define “foreign adversary” to include any foreign government, citizen or entity headquartered in a foreign country of concern as defined by 42 U.S.C. 19237(2), which includes the People’s Republic of China, the Democratic People’s Republic of Korea, the Russian Federation, and the Islamic Republic of Iran, as well as any other country designated as such by the Secretary of State. To ensure comprehensive coverage, the proposed rule would also add a definition for “Foreign Adversary Controlled Entity,” which would encompass “any entity, including any corporation, partnership, trust or association, that is owned by, controlled by or subject to” a foreign adversary. This new definition is intended to capture all connections to foreign adversaries, including those involving individuals, shell companies and governmental entities.

Expanded definitions and covered interests

Foreign persons and significant interest or substantial control

One of the determining factors of whether a person is a “foreign person” under AFIDA is whether a “significant interest or substantial control” is directly or indirectly held by a foreign individual, business entity or government. Current AFIDA regulations define “significant interest or substantial control” as being (i) 10% or more held by a single foreign individual, business entity or government; (ii) 10% or more held by foreign persons acting in concert; or (iii) 50% or more held in aggregate by foreign persons even if not acting in concert.

The proposed rule would reduce the threshold at which aggregate interest constitutes “significant interest or substantial control” to 10%, and is clarified to include shell corporations, trusts and partnerships, with no requirement that such persons act in concert. Additionally, “significant interest or substantial control” under the proposed rule would include any interest held by a “beneficial owner” and any interest, regardless of ownership percentage, held by a “foreign adversary” or “Foreign Adversary Controlled Entity.” 

As defined in the proposed rule, a “beneficial owner” would include a foreign person that directly or indirectly exercises decision-making authority over the agricultural land or the legal entity holding the land, regardless of ownership percentage.

Agricultural land

The current definition of “agricultural land” references codes in the Standard Industrial Classification (SIC) Manual of 1987. The proposed rule would replace the SIC codes with the codes in the 2022 version of the North American Industry Classification System (NAICS) and would add additional categories of uses that would expand the scope of “agricultural land.” With this change, “agricultural land” would be broadened to cover land with uses beyond traditional agriculture, such as pipeline transportation, solar electric and wind electric power generation, agricultural research and activities related to agriculture and forestry production. The proposed rule makes clear that land meeting the definition of “agricultural land” is deemed such regardless of its local zoning classification and regardless of its conservation status if such land could be used for farming, ranching, forestry or timber production.

The proposed rule would also remove the exemption under the current regulations for agricultural and forestry land not exceeding 10 acres in the aggregate if the annual gross receipts from the sale of the farm, ranch or timber products produced on the land do not exceed $1,000.

Leasehold interests, easements and rights of way

Under the current AFIDA regulations, leases of agricultural land for less than 10 years are not considered “interests” and are therefore exempt from reporting obligations. However, the proposed rule would redefine “any interest” to narrow the exemption to leases of less than one year for lessees that are not foreign adversaries or Foreign Adversary Controlled Entities. The lease term is measured either as a single period or as an aggregate of multiple leases over a continuous or discontinuous period. Any leasehold interest held by a foreign adversary or Foreign Adversary Controlled Entity is considered an “interest” and is subject to reporting, regardless of duration.

Current AFIDA regulations also exempt from reporting obligations “surface or subsurface easements and rights of way used for a purpose unrelated to agricultural.” The proposed regulations would remove this exemption. This change would require foreign persons to make filings with respect to easements and rights of way, including for infrastructure, pipelines, access or those related to energy or utility projects.

Reporting requirements

Addition of geospatial data

In addition to the required legal description and acreage of agricultural land under the current regulations, the proposed rule would require that filers submit a digital, open-source geospatial map that delineates property boundaries of the land. Such geospatial maps would be required to further subdivide the land based on crops, pasture, forest, research, other agriculture and non-agricultural land usage.

Identifying information

The proposed rule would require foreign persons to provide their tax identification numbers, foreign passport numbers and other unique identifiers, if the same exists.

Increased corporate disclosure

The proposed rule would significantly increase corporate disclosures to require disclosure of all foreign persons holding “significant interest or substantial control,” the nature of each interest, percentage interests by person and country, aggregate interests by country and ownership diagrams showing the relationship of each person. Additionally, each foreign person would be required to disclose their tax identification numbers, foreign passport numbers and other unique identifiers.

Pre-existing relationships

The proposed rule would require disclosure of any preexisting relationships between the foreign person now owning the land and the previous management of the land, including involvement in day-to-day operations of the land being reported.

Assessment of penalties

The USDA proposes separate penalty schemes based on the designation of the filer and the subject of the filing. 

Scheme one – Acquisitions and holdings

For late-filed reports involving an acquisition or holding:

• An initial civil penalty of $250 is assessed on the 91^st day after the acquisition date or the change in holding status that triggers a reporting obligation.
• Additional penalties accrue every seven days after the 91^st day, at the following rates:
  • non-foreign adversaries and non-Foreign Adversary Controlled Entities: 1.5% of the fair market value of the foreign person’s interest in the agricultural land, per assessment
  • foreign adversaries and Foreign Adversary Controlled Entities: 2.5% of the fair market value of the foreign person’s interest in the agricultural land, per assessment
• In all cases, total penalties are capped at 25% of the fair market value of the foreign person’s interest in the agricultural land.

Scheme two – Transfer or land acquired by inheritance 

For late-filed reports involving transfers or land acquired by inheritance:

• An initial civil penalty of $250 is assessed on the 91^st day after the transfer or, for inherited interests, on the 91st day after the foreign person knew, had reason to know, or should have reasonably become aware of the inheritance.
• Additional penalties accrue at days 15 and 31 after the initial assessment, and every seven days thereafter, at the following rates:
  • non-foreign adversaries and non-Foreign Adversary Controlled Entities: 1.5% of the fair market value of the foreign person’s interest in the agricultural land per assessment
  • foreign adversaries and Foreign Adversary Controlled Entities: 2.5% of the fair market value of the foreign person’s interest in the agricultural land per assessment
• In all cases, total penalties are capped at 25% of the fair market value of the foreign person’s interest in the agricultural land.

Scheme three – Newly reportable holdings

For late-filed reports involving land holdings that are not subject to current regulations but will become reportable under the proposed rule:

• An initial civil penalty of $250 is assessed on the 91^st day after the filing deadline for newly reportable land holdings (the specific date is to be determined).
• Additional penalties accrue for all filers (regardless of foreign adversary or Foreign Adversary Controlled Entity status) at days 15 and 31 after the initial assessment, and every seven days thereafter, at a rate of 1.5% of the fair market value of the foreign person’s interest in the agricultural land, per assessment.
• Total penalties are capped at 25% of the fair market value of the foreign person’s interest in the agricultural land.
• This scheme expires one year after the effective date of the final rule. After expiration, filers will be subject to Scheme One described above. 

Additional penalties

Under the proposed rule, filers are also subject to a penalty that will not exceed 25% of the fair market value of the foreign person’s interest in the agricultural land for “submission of an incomplete report that is not remediated within 30 days, submission of a report containing misleading or false information or failure to maintain a submitted report with accurate information that is not remediated within 30 days.”

Elimination of downward adjustments

Under current AFIDA regulations, penalties may be adjusted downward based on a variety of factors, including total time that the violation existed and the method of discovery of the violation. The proposed rule would remove discretionary authority to make downward adjustments.

Retroactive application

Notably, upon passage of the proposed rule, land holdings that are not subject to the currently enacted AFIDA regulations, but would be subject to the proposed rule and would be required to file for such land holdings within 90 days after the enactment of the proposed rule.

Online reporting portal

The proposed rule would eliminate the paper-based FSA-153 option and would require reports to be filed solely through the online portal. The online submission portal is currently located at https://afida.landmark.usda.gov/.

Practical takeaways and next steps

The USDA’s additional proposed definitions would expand the categories of foreign persons required to file reports and the types of interest required to be reported. It is important to be aware of the proposed reporting requirements for all filers, especially the additional requirements for corporate entities. Filers that would qualify as foreign adversaries or Foreign Adversary Controlled Entities should review the various regulations applying specifically to them. All filers should take note of the new penalty schemes and appeals process and understand the differences among the three schemes. Given the retroactive nature of the proposed rule, entities not currently subject to AFIDA should evaluate their ownership and land holdings to determine whether the proposed rule would require future filings.

Comments on the proposed revisions must be submitted by August 10, 2026. Submit comments via the Federal eRulemaking Portal, www.regulations.gov, under Docket ID: USDA-2026-0001. All comments will be made publicly available.

Special thank you to summer associate Kit Turner for her contributions to this Legal Briefing.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.