In December 2022, Congress passed a $1.7 trillion spending package for FY23 known as the Consolidated Appropriations Act, 2023 (“CAA”), which included approximately $25 billion in agriculture-related spending. Aside from the funding provisions under the legislation, the CAA also included a provision that amends the Agricultural Foreign Investment Disclosures Act (“AFIDA”) of 1978. This is the first amendment to AFIDA since 1998. Overall, these amendments to the law may have the ability to increase the federal government’s oversight on foreign ownership and investments in U.S. agricultural land.
Background
Enacted by Congress in 1978, AFIDA established a nationwide system for collecting certain information about foreign ownership and investments of U.S. agricultural land. Under AFIDA, a “foreign person who acquires or transfers any interest…in agricultural land” is required to disclose their interest in the land to the U.S. Department of Agriculture (“USDA”). 7 U.S.C. § 3501(a). Thus, a foreign person who acquires, holds, transfers, or disposes an interest in agricultural land within located within the U.S. is required to disclose certain information concerning such transactions, investments, and acquisitions.
The information foreign persons must disclose under AFIDA is listed at 7 C.F.R. § 781.3, which includes information such as their name, address, citizenship, the type of interest acquired or transferred, legal description of the land, and the acreage. The data collected from these disclosures are compiled into an annual report and made public by USDA’s Farm Service Agency (“FSA”). The most recent report contains data on foreign ownership of U.S. farmland through December 31, 2021.
Although some states have their own reporting laws, AFIDA serves as the primary source of statistical data concerning foreign ownership and investments in U.S. agricultural land. To learn more about AFIDA, read NALC’s article titled Answering to AFIDA: Reporting Requirements of Foreign Agricultural Land Investments here.
Over the past decade, foreign ownership in agricultural land has increased over 35%. At the start of 2022, foreign persons held an interest in over 40 million acres of U.S. farmland according FSA. As a result, lawmakers have become increasingly concerned about foreign ownership and investments in farmland. Specifically, some members of Congress have become concerned about USDA’s process for compiling data, monitoring changes in land usage, and reporting on foreign purchases of U.S. farmland under AFIDA, and whether these procedures ensure accurate disclosure of foreign ownership in U.S. agricultural land. According to U.S. House Republicans, users of the AFIDA data “have found inaccuracies and express concerns that estimates of foreign ownership of agricultural land may be underreported due to the data’s lack of reliability….” Additionally, Senators Tammy Baldwin (D-WI) and Chuck Grassley (R-IA) have expressed concerns over the lack of Congressional and public access to the disaggregated foreign ownership data collected under AFIDA.
In response to these concerns, a few bills were introduced in the 117th Congress (2021-2022) that sought to amended certain provisions of AFIDA to mitigate some of the concerns raised by Congress. However, the CAA was the only legislative measure enacted into law during the 117th Congress that amends AFIDA.
CAA’s AFIDA Amendments
Section 773 of the CAA does not change the language of any provision contained under AFIDA, rather it amends AFIDA by directing USDA to assume new responsibilities under the federal reporting law. First, the CAA requires USDA to report to Congress on “foreign investments in agricultural land in the United States, including the impact foreign ownership has on family farms, rural communities, and the domestic food supply.” A similar type of report was required by USDA under the original language of AFIDA at 7 U.S.C. § 3504, but that provision was repealed in 1998.
The CAA does not specify a schedule or timeframe USDA is required to provide this report, but it states that the agency must provide this report “as part of the report on foreign land-holding required under” AFIDA. Currently, USDA releases an annual report containing the data obtained from each FSA-153 disclosure from the previous year. Thus, it is likely USDA will be required to report to Congress on the agency’s findings each year in order to satisfy this provision of the CAA.
Second, the law requires USDA, by December 29, 2025, to establish a process so that “foreign persons” required to report their agricultural landholdings under AFIDA can submit their disclosure electronically. Currently, foreign persons required to disclose their farmland landholdings must generally complete and submit form FSA-153 to the FSA office in the county where the land is located. However, within three years, foreign persons will be able to disclose their agricultural landholdings online.
Third, the CAA directs USDA to establish “an internet database that contains disaggregated data from each disclosure submitted.” This type of database was proposed in other bills introduced during the 117th Congress that sought to amend AFIDA (see S. 4661; S. 4667; H.R. 4521; H.R. 9395). The database will include data from every disclosure submitted to USDA since the implementation of AFIDA, and all future disclosures submitted to the agency.
Under the CAA, USDA is required to organize the database information into two separate categories of foreign persons: (1) foreign individuals and (2) foreign persons that are not individuals or a government (i.e., foreign business entities). For investments of a foreign individual, the database will indicate and be organized based on the citizenship of the individual. If the “foreign person” is a foreign business, the data will be organized based on (i) the nature of the business entity; (ii) the country where foreign business entity is organized; and (iii) its principal place of business.
Although the CAA requires USDA to establish a database that provides information concerning foreign ownership and investments in U.S. agricultural land, the law requires the agency to implement a “process to ensure the protection of personally identifiable information.” The CAA does not define “personally identifiable information,” so it is unclear what information constitutes “personally identifiable.” Accordingly, USDA may implement a regulatory definition of the phrase when establishing what information will be available in the online database.
Conclusion
As foreign investments in U.S. agricultural land continue to increase, Congress has become concerned about the lack of publicly available information on foreign ownership of farmland and the ability to accurately monitor these interests. As a result, Congress amended AFIDA by enacting § 773 of the CAA. Overall, § 773 increases the information available to Congress and the public concerning foreign ownership and investments in agricultural land by requiring USDA to (1) report to Congress on the impact foreign investments have on family farms, rural communities, and the nation’s food supply, and (2) establish an online database that includes certain information obtained by AFIDA disclosures.
For more information on proposals that sought to amend AFIDA during the 117th Congress, click here.
To learn more about AFIDA, click here.
To learn more about federal proposals that sought to restrict foreign ownership and investments in U.S. farmland, click here.
To view a recent NALC webinar discussing the federal and state legislative proposals concerning foreign ownership of agricultural land, click here.
For more information and resources on foreign ownership of agricultural land, view NALC’s “Foreign Investments in Agricultural Land: FAQs & Resource Library” here.