On January 25, 2024, Senator Mike Braun (R-IN) introduced the AFIDA Improvements Act of 2024 (S. 3666) which seeks to amend certain provisions of the Agricultural Foreign Investment Disclosure Act (“AFIDA”)—the federal law that requires certain foreign investors to disclose their agricultural landholdings. Recently, the U.S. Government Accountability Office (“GAO”) published a report detailing its findings from a review of foreign investments in U.S. farmland. In the report, GAO provides recommendations as to how USDA can improve the reliability of AFIDA data and enhance sharing this data with other federal authorities. As a result, Senator Braun, along with a bipartisan group of senators, proposed S. 3666 to address some of the recommendations contained in GAO’s report.
Enacted by Congress in 1978, AFIDA established a nationwide system for collecting certain information about foreign investments and ownership of U.S. agricultural land. Under AFIDA, a foreign person who acquires, holds, transfers, or disposes an interest in agricultural land within the U.S. is required to disclose—by filing an FSA-153 form—to the U.S. Department of Agriculture (“USDA”) certain information, such as their name, address, citizenship, the type of interest acquired or transferred, legal description of the land, and the acreage. An “interest” includes fee simple ownership of agricultural land as well as leases that are 10 or more years. This data is compiled into an annual publication that reports the amount of cropland, pastureland, forestland, and other types of agricultural land that is foreign owned.
A “foreign person” under AFIDA includes nonresident individuals of the U.S., foreign business entities, and foreign governments with an interest in agricultural land, which includes land used for agricultural, forestry, or timber production purposes. Further, a U.S. entity where a foreign individual, entity, or government holds a significant interest or substantial control over the domestic entity is a “foreign entity” under AFIDA, meaning the domestic entity is required to report their agricultural land interests to USDA.
For more information on AFIDA, read NALC’s article “Answering to AFIDA: Reporting Requirements of Foreign Agricultural Land Investments,” here. FAQs concerning AFIDA is available on NALC’s website here.
Minority Interest Reporting
According to the proponents of S. 3666, they want to collect information on almost every foreign investor with an interest in U.S. agricultural land. The legislation, as introduced, seeks to require a disclosure from each foreign person, when more than one foreign person has an interest in the same agricultural land, that holds at least a 1% interest in the land either “(1) directly through the first tier of ownership; or (2) in the aggregate through an interest in other entities at various tiers.”
Currently, the individual or entity that holds the legal interest in the farmland (i.e., holds title or is named as the lessee under a lease agreement) is the party that files the FSA-153 form. Also, according to FSA, foreign persons are currently required to report to the third tier of ownership (the first tier of ownership is the individual or entity that holds the legal interest in the land). This means details concerning investments and ownership beyond those three tiers may not be included on the foreign person’s FSA-153 form. Under S. 3666, in instances where farmland is owned by multiple foreign persons, each foreign person holding a 1% or more interest in an investor or entity that owns farmland is likely required to disclose their interest in that land, even if the foreign investment is beyond the third tier of ownership.
For example, suppose two separate foreign business entities which both qualify as a “foreign person” under AFIDA each hold a 5% ownership interest in Corporation C. Corporation C (third tier) owns Corporation B (second tier), who owns Corporation A (first tier), which holds title to 100 acres of U.S. agricultural land. Even though the foreign business entities are at the fourth tier of ownership, S. 3666 would likely require the entities to report their interests in the agricultural land owned by Corporation A because they each hold more than a 1% interest in Corporation A through each tier of ownership.
In general, this provision of S. 3666 seeks to require most foreign persons with an interest—including minority interests—in U.S. agricultural land through other investors or entities to disclose this interest to USDA. However, it is unclear whether each foreign person holding at least a 1% interest is required to submit their own FSA-153 form or if the individual or entity holding the actual interest to the land is required to submit a disclosure that reflects each foreign persons’ interest under one form. Further, a domestic entity that contains some level of foreign ownership is not always considered a “foreign person”—and is thus not required to report their agricultural landholdings—when the foreign interest in the entity does not satisfy the “significant interest or substantial control” definition under AFIDA. Because of this, it is unclear whether S. 3666 would require each foreign minority interest holder of agricultural land to submit an FSA-153 form, even if the individual or entity that holds the interest in the farmland is not itself a “foreign person” under AFIDA.
Investigative Action Provision
The measure also seeks to amend the investigation provisions under AFIDA. Currently, USDA has the discretion to monitor compliance and determine compliance of all foreign persons’ FSA-153 forms that are submitted to the agency. If enacted, S. 3666 would direct the Farm Production and Conservation Business Center (“FPAC-BC”) to assist USDA in the investigative process. FPAC-BC is an organization that supports and improves operations and efficiency for three USDA-administered agencies, including the Natural Resources Conservation Service, the Risk Management Agency, and FSA. Specifically, the proposed legislation would require FPAC-BC to validate the data USDA receives from each foreign persons’ FSA-153 form. Further, S. 3666 would require FPAC-BC to “take such actions as are necessary to ensure compliance” with AFIDA and to coordinate with FSA to identify any foreign person that has failed to properly comply with the federal reporting requirements.
Under S. 3666, USDA would be required to enter at least one memoranda of understanding (“MOU”) with the Committee on Foreign Investment in the United States (“CFIUS”) where USDA would implement a process to provide detailed and timely information it receives on foreign ownership of farmland through AFIDA. CFIUS is an interagency committee that is authorized by the DPA (50 U.S.C. § 4565) to serve the President in reviewing certain transactions involving foreign investments and acquisitions of American companies and real estate to determine whether a transaction presents a threat to U.S. national security. CFIUS has the power to renegotiate, enforce, and impose conditions to transactions (whether pending or already completed) to mitigate any threat a transaction that could potentially impair to U.S. national security. The bill would require USDA to enter an MOU with CFIUS no later than one year after the enactment of the measure.
AFIDA Handbook Update
If enacted, S. 3666 would require FSA to update the agency’s AFIDA handbook, which was last updated in 2006, within one year from the date of enactment. Essentially, the AFIDA handbook provides instructions to USDA and county FSA employees as to how a foreign person complies with the reporting requirements. The federal proposal would direct FSA to update the handbook’s current version so that USDA employees understand their responsibilities for completing disclosure forms, verifying the accuracy of each form, as well as identifying any missing information. Further, the bill would require FSA to update the AFIDA handbook every 10 years.
Electronic AFIDA Reports
Additionally, the federal proposal seeks to require USDA satisfy the requirements of the Consolidated Appropriations Act, 2023 (“CAA”) by establishing a “streamlined process for electronic submission and retention” of FSA-153 disclosures. In December 2022, Congress enacted the CAA which requires USDA to create a process so that foreign persons can electronically file their FSA-153 forms and establish an online database that contains data from each FSA-153. Currently, foreign persons required to report their agricultural landholdings under AFIDA submit a paper FSA-153 form to the county FSA office in which the agricultural land is located or directly to USDA headquarters.
However, if the agency determines it is unable to satisfy the CAA’s requirements within the three-year timeframe, S. 3666 would require FPAC-BC and FSA to create a report that identifies what steps USDA must take to establish the online submission form and database. The report must also include a timeline for the implementation of these steps. The legislation would require USDA to submit this report to the Senate and House agricultural committees.
Over the past few years, multiple legislative proposals that seek to amend AFIDA have been introduced in Congress. The AFIDA Improvements Act is just the latest action from the federal government to increase oversight and transparency of foreign acquisitions and interests in U.S. agricultural land. Back in December 2023, USDA’s Farm Service Agency (“FSA”) announced that it is seeking public feedback—due by February 16, 2024—on how foreign persons report their U.S. agricultural land holdings under AFIDA. Specifically, the agency is proposing to update the AFIDA Report form (FSA-153) so that the reports can include data on long-term leases, data concerning the impacts of foreign investments in farmland on agricultural producers and rural communities, and to gather certain geographic information. A recent NALC article discussing FSA’s proposed changes to the FSA-153 form is available here. To submit a comment, click here and follow the instructions for submitting a comment.
To read the AFIDA Improvements Act of 2024, click here.
For NALC resources on AFIDA and foreign ownership of U.S. land, click here.
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