LINCOLN, Neb. (DTN) -- A once-sleepy 1978 federal disclosure law that requires any foreign person or business entity to report ag land transactions in the U.S. is about to be fundamentally rewritten.

Agribusinesses and farms should monitor closely USDA's proposed rule to rework the Agriculture Foreign Investment Disclosure Act, or AFIDA, an attorney at the National Agricultural Law Center said during a webinar on Wednesday. The rule covers land purchases, acquisitions, holdings, transfers and leases in the U.S.

"This is going to be a landmark change," said Harrison Pittman, director of the center.

"If you look at this historically, the first time Congress ever weighed in at all on this issue of foreign ownership was AFIDA in 1978. We've had, frankly, very few amendments to the regs over the years, very few real amendments to the statute itself. This is the most."

The latest USDA data through Dec. 31, 2024, shows 46 million acres -- or 3.6% -- of all private U.S. agricultural land is in some form of foreign ownership or qualifying lease. Pittman said that number has increased year-over-year with the largest recent growth seen in New Mexico, Texas and Oklahoma.

Although China has been a focus in Congress and a target of state legislatures, Pittman said Chinese-held acreage decreased by about 30,000 acres.

Perhaps the most significant proposed change to the law for domestic agribusiness is the foreign-ownership percentage that triggers reporting requirements.

Under current law, a U.S.-organized company must have 50% or more foreign ownership before it triggers reporting requirements.

The proposed revision, up for public comment until Aug. 10, 2026, would cut that threshold to 10%, Pittman said, with a chance that it could be as low as 5%.

So, any agribusiness, farm corporation, real estate investment trust, or investment fund with even a modest foreign minority investor could have to report to USDA.

It could affect grain companies, food processors, land investment firms and others throughout the ag supply chain.

REPORTING BURDENS

The reporting rule could essentially shift reporting burdens to farms to vet beneficial owners of any corporate entity renting their acreage.

Pittman said the proposed rule also adds new definitions targeting shell corporations and beneficial owners.

Anyone who "directly or indirectly exercises decision-making authority" over ag land -- including "circular ownership, shell corporations, trust partnerships" -- could be required to report to the online database.

"Beneficial owners are automatically meeting this SISC (significant interest or substantial control) threshold simply by virtue of being a beneficial owner, regardless of the percentage or quantity of interest that they possess," Pittman said.

The proposed rule also may attach the reporting requirements to wind energy and other leases, he said, by expanding the definition of reportable agricultural land to include wind and solar energy generation.

That includes anything that has the NAICS (North American Industry Classification System) code 486 associated with it, Pittman said. That covers businesses that use pressurized transmission pipelines to transport crude oil, refined petroleum products and natural gas.

Another possible sleeper category is land currently in conservation programs would be required to report if the land could be used for farming, ranching, forestry or timber.

That would include land in the Conservation Reserve Program and voluntary USDA conservation programs, as well as non-USDA conservation programs.

The proposed rule specifically targets supply chain infrastructure, including livestock merchant wholesalers, animal slaughtering and processing plants, farm product warehousing and storage, as well as refrigerated farm product storage.

Also included in the rule are soil preparation and tilling services, crop harvesting and threshing contractors, farm labor contractors, veterinary services on farms and forestry support activities.

AFIDA TO HAVE MORE TEETH

Administration of the AFIDA rule was moved from the Farm Service Agency to the USDA assistant secretary for administration, Pittman said, with the possibility of moving it to the Office of Homeland Security.

USDA and the Committee on Foreign Investment in the U.S., or CFIUS, will now share data "more than they ever have," Pittman said.

CFIUS is a multi-agency national security review body.

This means the AFIDA reporting rule is being transformed into an active national security enforcement tool.

"We're now fully transitioning," Pittman said.

"It's become much more formalized where USDA and CFIUS are going to talk more than they ever have. They're going to be able to share data more than they ever have. And that's a significant change going forward. And that's kind of a macro level. It's going to matter all the way down to the bottom."

CHINA CONCERNS

Pittman said there's been a sea change in how states look at foreign ownership of ag and other land.

As of December 2022, 14 states had laws in place restricting foreign land ownership to some degree, Pittman said. By July 2026, 29 states have restriction laws.

The trend is toward states targeting foreign adversary nations, including China, Russia, Iran, North Korea and others, aimed at protecting military installations and critical infrastructure, along with natural resources including water rights and minerals.

Lawmakers across the country over the past five years have put a greater emphasis on reporting and blocking foreign ownership of land by Chinese investors.

Congress also has sought to restrict Chinese purchases of agricultural land. In some cases, companies with Chinese parent ownership have faced state penalties for failing to file with the state despite meeting USDA filing guidelines.

That was highlighted when Arkansas officials fined Syngenta $280,000 and ordered the company to sell more than 150 acres from a research farm in the state for not filing its ownership interests with state officials.

The proposed rule would dramatically step up the delayed penalties for not reporting to a highly punitive and tiered weekly penalty system.

A provision in U.S. Senate farm bill text would strengthen enforcement of the AFIDA by increasing penalties for false filings. Foreign landowners who knowingly submit incomplete, misleading or false reports would face a minimum civil penalty equal to 5% of the fair market value of their agricultural land interest.

The legislation maintains a maximum penalty of 25%. The changes are intended to improve compliance and oversight of foreign ownership of U.S. farmland.

View the proposed rule here: https://www.regulations.gov/….

Read more on DTN:

"Foreign US Ag Land Ownership Grows," https://www.dtnpf.com/….

"New Land Ownership Reporting Rules Eyed," https://www.dtnpf.com/….

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on social platform X @DTNeeley

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