On June 25, 2026, the USDA published a proposed rule overhauling the regulations that implement the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA). The proposed rule moves administration from the Farm Service Agency to USDA’s Office of Homeland Security, signaling a shift toward national security goals. The key changes:
Expanded definition of “agricultural land”: The proposed definition now covers solar and wind energy generation, pipelines, supply chain facilities, conservation land, and agricultural research, using updated NAICS codes. The 10-acre/$1,000 de minimis exemption is removed, and land qualifies regardless of local zoning, even if rezoned for non-agricultural use.
Revised “significant interest or substantial control” test: The aggregate foreign ownership threshold for reporting drops from 50% to 10%, and a new “beneficial owner” concept captures any foreign person who exercises decision-making authority over the land, regardless of equity.
Lease threshold reduction: The lease exemption drops from 10 years to 1 year for non-adversary foreign persons and is eliminated entirely for foreign adversaries and Foreign Adversary Controlled Entities.
New foreign adversary framework: Definitions for “foreign adversary” (tied to countries of concern including China, North Korea, Russia, and Iran) and “Foreign Adversary Controlled Entity” create a tiered enforcement regime.
Mandatory electronic filing: All reports must be submitted through the USDA’s online portal.
Increased penalties: Late-filing penalties accrue at 1.5% of fair market value per week (2.5% for foreign adversaries), capped at 25% of FMV per violation. Downward adjustments are eliminated. The appeal window shrinks from 60 to 30 days, written statements and hearings are replaced by a single review by the OHS Director, and decisions are administratively final, with unpaid penalties referred to DOJ.
Easements and rights of way now reportable: The prior exemption for surface and subsurface easements unrelated to agriculture is removed.
Issues
I. The proposed rule will likely expand reporting requirements for the agricultural real estate sector given the proposed rule’s revised “significant interest or substantial control” test, including the new “beneficial owner” definition.
II. The proposed rule likely extends beyond Congress’s original 1978 intent for AFIDA.
III. Compliance with state reporting requirements and ownership restrictions remain in addition to AFIDA rules.
Explanation
The proposed rule fundamentally reorients AFIDA from a passive data-collection statute into a disclosure tool aimed at national security. AFIDA still cannot block, condition, or unwind a transaction; that review authority stays with CFIUS. The biggest change for our industry is the revised “significant interest or substantial control” test and its new beneficial owner concept. It will expand the compliance obligations of companies and require the land management industry to integrate AFIDA awareness.
Context: What the Current AFIDA Data Show
The national security framing rests largely on one figure: about 46 million acres reported under AFIDA. Two 2026 analyses by farmdoc at the University of Illinois show that this figure substantially overstates confirmed foreign ownership of cropland and[1] [2] long-term leases, mostly for wind and solar development, account for 16.3 million acres, or about a third of all reported acres. Records with no predominant country or no foreign investor listed add about 2.9 million more. Confirmed foreign interests equal 0.67% of U.S. land in farms, and 88.5% of those acres are forestland. Counting only cropland, pasture, and other farmland, foreign owners hold about 690,000 acres, or less than one-tenth of one percent. Interests attributed to China total about 0.5% of reported foreign interests, even counting all confirmed affiliated entities.
Applying the same filters, foreign-held long-term leases total 6.9 million acres, and 6.3 million of those acres (90%) are tied to wind or solar projects. Wind accounts for 85% of the energy lease acres, solar for 11%, and combined projects for 4%. These leases cover about 0.7% of U.S. land in farms. They appear in 555 counties across 42 states, but the share is under 1% of farmland in 312 of those counties, and only 6 counties reach 25% or more. Oklahoma leads with nearly one million acres, or 3.1% of its farmland. Illinois ranks seventh at 1.4%, where lease acres are about 14 times larger than foreign-owned acres.
Two features of the lease data matter for the proposed rule. First, AFIDA respondents typically report the entire parcel tied to a lease, not the area actually used in the project. On wind leases, the vast majority of the leased parcel typically stays in crop or livestock production with no material change in use; solar takes the project area out of production for the life of the project. Second, a lease does not transfer ownership, and the land stays with the owner when the lease ends. On national security, nearly all foreign-held energy lease acres trace to investors from Canada and Western Europe. Canada alone accounts for 59%, and ten countries in North America, Europe, and Australia account for 99%.
Peoples Company’s Dave Muth reaches similar conclusions in Perspective on Foreign Farmland Ownership. He notes that AFIDA does not distinguish passive capital from controlling interests. He also notes that AFIDA counts an entire parcel even when a lease covers only a portion, and that fund managers often over-report defensively to remain compliant. These points matter because the proposed rule widens each of these features. Readers can explore the data by county, land type, and country using the University of Illinois TIAA Center for Farmland Research’s interactive map: https://farmdoc.illinois.edu/farmland-center/tools-data/foreign-agricultural-land-ownership-map.
I. Impact of the “Significant Control” Test
The proposed rule restructures “significant interest or substantial control” into three independent channels:
(1) Equity threshold: An interest of 10% or more held by any foreign person or combination of foreign persons, including through shell corporations, trusts, and partnerships, regardless of whether the persons act in concert. This represents a significant tightening from the current rule, which requires 50% aggregate foreign ownership for non-concerted interests; the proposed rule reduces that to 10%. This change will reach many passive investors. As noted in the Peoples Company report, shareholders in public companies and REITs, and limited partners in institutional farmland funds, typically have no control over how individual farms are used.
(2) Beneficial ownership: Any interest held by a foreign person who “directly or indirectly, through any contract, understanding, relationship, or other arrangement, exercises decision-making authority over the agricultural land or the legal entity holding the land, including but not limited to the power to direct the sale, lease, or use of the property.” A beneficial owner is deemed to have significant interest or substantial control regardless of equity.
(3) Foreign adversary interest: Any interest of any size held by a foreign adversary or Foreign Adversary Controlled Entity.
These changes represent fundamental shifts. Current rules define the test purely by equity: 10% for a single holder, 10% for holders acting in concert, or 50% in aggregate for non-concerted holders. The proposed rule keeps the equity prong but adds two channels untethered from equity percentages.
Impact on Land Management Operations
The beneficial owner prong is a control-based test that captures any foreign person who exercises “decision-making authority” through “any contract, understanding, relationship, or other arrangement.” That language is broad enough to reach management agreements, advisory arrangements, and other deals that vest operational authority in someone other than the equity owner.
The proposed rule creates indirect exposure for land management firms in two ways. First, foreign landowners must disclose “information on the current management of the land” and any prior relationships with previous management, including day-to-day involvement. A firm’s management role thus becomes part of the AFIDA record for any foreign client. Second, foreign persons who sit on the boards of landowning entities, or who hold contractual authority to direct land use, could themselves be captured as beneficial owners under the proposed rule.
The undefined scope of “decision-making authority” is a real concern. USDA’s preamble concedes that its beneficial owner definition differs from other federal definitions, including the SEC’s, because it focuses on decision-making authority rather than financial interest. The preamble gives one example (a foreign non-profit’s board) but never defines the outer limits of “decision-making authority” or offers a safe harbor for customary protective rights, advisory input, or minor management functions.
Impact on Land Brokerage Operations
Brokerage activities carry lower risk than land management. A broker facilitating a deal does not “hold, acquire, or transfer any interest” in the land, which is what triggers AFIDA reporting. The relationship is a transactional agency, not ownership or control. A broker recommends and facilitates; it does not independently “direct the sale, lease, or use of the property” the way the beneficial owner definition requires.
The real impact is operational and transactional: brokers representing foreign buyers or sellers should make sure clients understand and meet the expanded requirements. The proposed rule calls for disclosure of information that usually surfaces in a deal anyway, including purchase price, current and intended land use with geospatial mapping, ownership diagrams, beneficial owner identification, and tax IDs.
Practical Scenarios
The following scenarios illustrate when the proposed “significant control” test would be triggered in typical agricultural real estate transactions:
Scenario 1: Direct foreign acquisition. A Canadian family office acquires 2,000 acres of cropland through a land brokerage firm. Since the family office is likely a “foreign person,” it must file an AFIDA report within 90 days including all § 5100.3(e) information, plus the § 5100.3(f) ownership diagram and beneficial owner identification. The brokerage firm is not a reporting obligor but should ensure the client is aware of the obligation.
Scenario 2: Layered entity structure. A Luxembourg fund acquires farmland through a Delaware LLC in which it holds 15% equity. The LLC is itself a “foreign person” because a foreign person holds a 10%+ interest, even though the LLC is domestic. The fund must appear in the ownership diagram, and any foreign nationals on the fund’s board who direct the land are “beneficial owners” who must also be identified. The rule’s broad “shell corporation” definition may also capture the LLC and similar holding vehicles, triggering disclosure of every intermediary tier.
Scenario 3: Land management with foreign owner. A domestic firm manages 5,000 acres under a management agreement with day-to-day control for a German institutional investor. The firm is not a “beneficial owner” because that definition reaches only foreign persons, and the firm is domestic with no reportable foreign ownership. But the German investor must disclose the land’s current management and day-to-day operations, which will name the firm’s role.
Scenario 4: Energy lease on managed farmland. A Delaware LLC, with a Canadian investor that owns 25% membership interest, holds a 5-year solar lease on agricultural land. Under the proposed rule, this lease is reportable because it exceeds the 1-year threshold for non-adversary lessees, and the land qualifies as “agricultural land.” The lessee must file an AFIDA report. Leases already make up a large share of AFIDA data.
Tabulations in the farmdoc article show that 16.3 million acres of the total reported are in long-term leases, or about a third of the total, with energy leases accounting for 96% of reported acres in Kansas and 77% in Illinois. As Muth notes, AFIDA largely counts the whole parcel even when a lease covers only part of it, so the shorter threshold would further inflate reported acres well beyond the land actually used.
Scenario 5: Foreign adversary connection. An entity with indirect ties to a country of concern (e.g., through a minority investor from the People’s Republic of China, Iran, North Korea, or the Russian Federation) acquires farmland. Any interest of any size held by a foreign adversary or Foreign Adversary Controlled Entity constitutes “significant interest or substantial control.” The entity must file, and the foreign adversary penalty track applies.
Transition Period
The proposed rule gives a 90-day window after the effective date for parties with newly reportable holdings to comply. During that window, holders whose interests become reportable only because of the revised rule may file without penalty. A one-year reduced-penalty transition period follows, with lower late-filing accrual rates. Parties with existing holdings should check whether the expanded definitions and lower thresholds create new obligations and, if so, plan to file within the 90-day window.
Industry-Wide Implications
For the broader agricultural real estate intermediary sector, the proposed rule creates several categories of impact:
Transaction attorneys and title companies will need to conduct expanded due diligence on beneficial ownership and foreign person status, particularly for entity buyers.
Farm managers and operators who are domestic entities are not directly captured, but their roles will be disclosed in AFIDA filings by foreign owners.
U.S.-organized entities with upstream foreign ownership should not assume AFIDA does not apply. A domestic fund, partnership, or holding company becomes a “foreign person” if foreign persons hold a 10% or greater aggregate interest or a foreign person acts as a beneficial owner. What matters is who holds direct and indirect interests, not where the entity is organized.
The proposed rule’s revised definition of “transfer” presents an additional compliance concern for institutional investors. Under the proposed definition, any action resulting in alienation or change in ownership, including retitling or conveyance of property rights, constitutes a reportable transfer. This would capture intercompany transfers, fund restructurings, and changes in upstream fund ownership that do not alter operational control of the underlying agricultural land. Because modern investment fund ownership structures are fluid and subject to change through monthly or quarterly investor trades, the revised definition could trigger frequent reporting obligations for routine portfolio activity that has no bearing on who controls or uses the land. Muth observes that fund managers already over-report because they often cannot see the full capital stack at acquisition. A broader transfer definition will likely compound that problem and further inflate AFIDA totals.
II. Congressional Intent
Congressional intent shifted in 2022-2023, driven by concerns about Chinese purchases near military installations. The Consolidated Appropriations Act of 2023 required USDA to build an electronic submission system and database. The 2024 and 2025 Acts went further, directing USDA to notify CFIUS of agricultural land transactions believed to be covered transactions. The 2025 Act also made the Secretary of Agriculture a CFIUS member for certain transactions involving agricultural land, agriculture biotechnology, or the agriculture industry, though without the full authority of permanent membership under 50 U.S.C. § 4565.
This turns AFIDA from a passive data-collection tool into part of the national security screening apparatus, even though its legal authority is still limited to disclosure, not transaction review or approval. Congress has grafted national security goals onto what began as an agricultural census.
Comparison: Proposed Rule vs. Original Intent
The proposed rule implements this evolved congressional mandate, and in several respects extends beyond what Congress has expressly directed:
(1) Several provisions implement recent congressional directives: the electronic submission portal, data sharing with CFIUS, and the disaggregated internet database all respond directly to statutory requirements in the Consolidated Appropriations Acts. The transfer of administration to the Office of Homeland Security aligns with the explicit national security framing Congress adopted.
(2) The beneficial owner concept, the foreign adversary definitions, the tiered penalty structure, and the end of downward penalty adjustments are regulatory innovations without express congressional authorization. Congress told USDA to strengthen enforcement, but AFIDA’s text never mentions beneficial owners, foreign adversaries, or differentiated penalty tracks. USDA is defining these concepts under its delegated rulemaking authority.
(3) The original Act focused on the effects of foreign holdings “particularly on family farms and rural communities.” The rule’s preamble reframes the purpose around national security risk. It also rejects the comment that AFIDA is “a reporting and financial disclosure statute without the intent of stringent enforcement,” calling that view contrary to a plain reading of the statute and to the national security aims Congress has stressed.
(4) The shift from a quantitative equity test to a control-based beneficial owner test is the clearest expansion beyond the original framework. Congress left “significant interest or substantial control” undefined, but legislative history and four decades of practice treated it as an equity-percentage test. The rule’s new facts-and-circumstances “decision-making authority” test is a fundamentally different approach. The statutory text can arguably bear it, since Congress used both “interest” and “control,” but no legislative history suggests Congress intended a control test independent of ownership.
Areas of Potential Deviation
First, the “beneficial owner” definition’s focus on “decision-making authority” rather than financial interest transforms a disclosure requirement into something closer to a control-person identification regime, which is more characteristic of securities regulation than agricultural census-taking.
Second, the expansion of “agricultural land” to include solar, wind, and pipeline uses stretches the statutory concept of “farming, ranching, forestry, or timber production” into energy and infrastructure.
III. Interaction with State Law
Roughly two dozen states currently restrict foreign ownership of agricultural land or impose their own reporting requirements, and these vary widely in scope, triggers, and penalties. The proposed rule states that conflicting state and local laws would be preempted, while also providing that USDA will continue sharing AFIDA filings with state departments of agriculture and reminding filers that they must continue to comply with applicable state and local restrictions that do not conflict with federal requirements. Filers must comply with both federal and state reporting requirements. As noted by Sherrick and Tsay, these state-by-state differences can affect the availability of investor capital unevenly across state lines.
Conclusion
The proposed AFIDA rule represents the most significant overhaul of agricultural foreign investment disclosure requirements since the Act’s passage in 1978. While the rule implements several recent congressional directives, its expansion of the “significant interest or substantial control” test through the beneficial owner concept, and its broader reorientation toward national security, extend beyond the statute’s original information-gathering mandate. The current data suggest confirmed foreign ownership of U.S. farmland is far smaller than the headline figures imply. The comment period closed August 10, 2026, and the final rule remains an opportunity to protect legitimate agricultural investment while supporting USDA’s national security objectives.
[1] Sherrick, B. and J. Tsay. "Wind and Solar Leases in Foreign-Held U.S. Agricultural Land." farmdoc daily (16):186, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 14, 2026
[2] Sherrick, B. and J. Tsay. "Foreign Ownership of U.S. Agricultural Land." farmdoc daily (16):171, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 23, 2026
