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by Micah Brown, Research Specialist<\/em><\/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 <\/span>public lands<\/span><\/i> located within the boundaries the United States (<\/span>see<\/span><\/i> 48 U.S.C. \u00a7 1501 <\/span>et seq.<\/span><\/i><\/a>). However, the federal government does monitor certain foreign acquisitions and landholdings in private agricultural land through the <\/span>Agricultural Foreign Investment Disclosure Act of 1978<\/span><\/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).<\/span>\u00a0<\/span><\/p>\n On June 25, 2026, USDA published a <\/span>proposed rule<\/span><\/a> that seeks to substantially revise the regulations implementing AFIDA, removing the current regulations from <\/span>7 C.F.R. Part 781<\/span><\/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.<\/span>\u00a0<\/span><\/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.<\/span>\u00a0<\/span><\/p>\n This article is the second in a multi-part series discussing proposed revisions to the AFIDA regulations. This article discusses the proposed new definitions and how these additional terms affect the overall AFIDA reporting framework.<\/span>\u00a0<\/span><\/p>\n Background<\/span><\/b>\u00a0<\/span><\/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 could have on family-farm operations.<\/span>\u00a0<\/span><\/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.<\/span>\u00a0<\/span><\/p>\n AFIDA disclosures have historically been made by filing form <\/span>FSA-153<\/span><\/a> with the appropriate Farm Service Agency (\u201cFSA\u201d) county office. However, as part of USDA\u2019s <\/span>2025 National Farm Security Action Plan<\/span><\/a>, these disclosures may be filed electronically online. USDA compiles the information received through AFIDA filings into an <\/span>annual report<\/span><\/a> detailing foreign ownership of U.S. agricultural land.<\/span>\u00a0<\/span><\/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.<\/span>\u00a0<\/span><\/p>\n Proposed New Terms<\/span><\/b>\u00a0<\/span><\/p>\n There are several important definitions the proposed rule seeks to add 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.<\/span>\u00a0<\/span><\/p>\n Foreign Adversary<\/span><\/i>\u00a0<\/span><\/p>\n One term the proposed rule seeks to add under the AFIDA regulatory framework is \u201cforeign adversary\u201d. The proposed rule defines foreign adversary 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 <\/span>42 U.S.C. \u00a7 19237(2)<\/span><\/a>. Currently, a foreign country of concern includes China, Iran, North Korea, Russia, and any other country designed by the U.S. Secretary of State. Therefore, any citizen, business entity, or governmental entity of these nations is considered a foreign adversary under the proposed rule.<\/span>\u00a0<\/span><\/p>\n This classification will affect both reporting and enforcement under AFIDA. Any interest held by a foreign adversary will constitute \u201csignificant interest or substantial control\u201d regardless of the size of the interest. Under AFIDA, a foreign person must report their U.S. agricultural landholdings if they have a significant interest or substantial control of an entity, including domestic entities, that owns agricultural land. As previously discussed in the first article of this series, the proposed rule seeks to require all foreign adversaries to disclose their interest in business entities which have an interest in agricultural land, no matter what level or percentage of ownership the foreign adversary holds in that entity.<\/span>\u00a0<\/span><\/p>\n The proposed rule also makes a distinction between foreign adversary and non-foreign adversary investors when penalties are imposed under AFIDA. Essentially, foreign investors that fail to properly or timely file an AFIDA disclosure are subject to a civil penalty in the amount of $250 after 91 days after the acquisition of the interest in agricultural land or holding status. For every subsequent 7 days following the 91st day, a civil penalty of 2.5% of the fair market value of a foreign adversary\u2019s interest in agricultural land is assessed, not to exceed 25%. Non-foreign adversaries are subject to the same penalty structure, but only 1.5% of the fair market value of their interest\u2014not to exceed 25%\u2014is assessed every 7 days.<\/span>\u00a0<\/span><\/p>\n Overall, this definition will create a separate category of foreign persons subject to heightened scrutiny under AFIDA.<\/span>\u00a0<\/span><\/p>\n Foreign Adversary Controlled Entity<\/span><\/i>\u00a0<\/span><\/p>\n The proposed rule also seeks to add the term \u201cForeign Adversary Controlled Entity\u201d, which 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. Therefore, any entity, including U.S. entities, which is owned or controlled by a foreign adversary satisfies the definition of Foreign Adversary Controlled Entity.<\/span>\u00a0<\/span><\/p>\n Like a foreign adversary, any interest in agricultural land located within the U.S. held by a Foreign Adversary Controlled Entity will constitute significant interest or substantial control, regardless of the ownership percentage. Thus, these entities will also be required to report leases of any duration and will be subject to the same penalty structure which a foreign adversary faces under the proposed rule.<\/span>\u00a0<\/span><\/p>\n Beneficial Owner<\/span><\/i>\u00a0<\/span><\/p>\n The proposed rule will add a new definition of \u201cbeneficial owner\u201d. A beneficial owner will be any foreign person that directly or indirectly exercises decision-making authority over agricultural land or the legal entity holding the land. This authority may arise through a contract, understanding, relationship, or other arrangement and includes the power to direct the sale, lease, or use of the property.<\/span>\u00a0<\/span><\/p>\n The definition of indirect authority will extend through all intermediary ownership tiers, including multi-layered business structures, circular ownership arrangements, shell corporations, trusts, and partnerships.<\/span>\u00a0<\/span><\/p>\n Importantly, the proposed definition focuses on decision-making authority rather than solely on financial or percentage-based ownership. A foreign person can potentially qualify as a beneficial owner even if the person holds less than 10% interest\u2014or possibly no direct equity interest\u2014when that person has authority to direct how the land is sold, leased, or used.<\/span>\u00a0<\/span><\/p>\n Because any interest held by a beneficial owner will constitute significant interest or substantial control, this definition could cause a domestic entity to be treated as a foreign person required to report their agricultural landholdings, even when the traditional AFIDA ownership thresholds are not met.<\/span>\u00a0<\/span><\/p>\n Shell Corporation<\/span><\/i>\u00a0<\/span><\/p>\n USDA also proposes defining \u201cshell corporation\u201d as any company, partnership, trust, or legal entity that has no or nominal operations and is used to hold an interest in agricultural land. The addition of this term does not independently state that every shell corporation is a foreign person; rather, it supports USDA\u2019s effort to identify and monitor foreign ownership and foreign control of U.S. agricultural land through business entities or complex business structures.<\/span>\u00a0<\/span><\/p>\n The term is incorporated into both the \u201cbeneficial owner\u201d definition and the revised definition of \u201csignificant interest or substantial control\u201d, as discussed in the previous article of this series. As a result, foreign interests held through shell corporations can be aggregated when determining whether a domestic entity is a foreign person required to disclose its agricultural landholdings, and USDA can trace decision-making authority through such entities to identify beneficial owners.<\/span>\u00a0<\/span><\/p>\n Transfer<\/span><\/i>\u00a0<\/span><\/p>\n The proposed rule will also define \u201ctransfer\u201d as any action resulting in the alienation or change in ownership of agricultural land, including sale, gift, retitling, or conveyance of property rights. The current regulations use both \u201cdispose\u201d and \u201ctransfer,\u201d while AFIDA\u2019s statutory text exclusively uses the term \u201ctransfer\u201d. The new definition under the proposed rule will establish consistent terminology and clarify that reportable transfers of agricultural land are not limited to only traditional sales. Rather, gifts, changes in title, and other conveyances also trigger the AFIDA reporting requirement.<\/span>\u00a0<\/span><\/p>\n Director<\/span><\/i>\u00a0<\/span><\/p>\n USDA proposes defining \u201cDirector\u201d as the Director of USDA\u2019s Office of Homeland Security (\u201cOSH\u201d) or a person authorized to act on the Director\u2019s behalf. This definition reflects the proposed transfer of certain AFIDA administrative tasks from the Farm Service Agency to OHS and authorizes the Director of OHS as the official responsible for enforcement and appeal decisions under AFIDA\u2019s regulatory framework.<\/span>\u00a0<\/span><\/p>\n Conclusion<\/span><\/b>\u00a0<\/span><\/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 foreign adversary and Foreign Adversary Controlled Entity definitions create heightened reporting requirements for certain foreign persons, regardless of the size or duration of their interests. The proposed definitions of beneficial owner and shell corporation will allow USDA to examine decision-making authority and trace foreign control through layered ownership structures. Additionally, the definition of transfer will reflect consistency with the AFIDA statute and clarify the transactions that may trigger reporting. Finally, the definition of Director reflects the transfer of certain administrative duties, enforcement, and appeal decisions of AFIDA to OHS.<\/span>\u00a0<\/span><\/p>\n Overall, if adopted, these proposed definitions will cause certain persons and landholdings that are not reportable under the current regulations to become subject to AFIDA\u2019s disclosure requirements.<\/span>\u00a0<\/span><\/p>\n Public comments on the proposal\u2014which are available <\/span>here<\/span><\/a>\u2014closed on August 10, 2026. Now that the public comment period has closed, USDA will evaluate the feedback before withdrawing or amending the proposed rule or moves forward with publishing a final rule.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n To read USDA\u2019s proposed rule, click <\/span>here<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n To learn more about foreign ownership of U.S. land, click\u202f<\/span>here<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n To view a recording of NALC\u2019s recent webinar \u2018Foreign Ownership of Ag Land: Federal & State Legislative and Litigation Update,\u2019 click\u202f<\/span>here<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n Subscribe to NALC\u2019s bi-weekly newsletter The Feed for recent legal developments affecting agriculture, including foreign ownership of agricultural land\u202f<\/span>here<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n