Recently, the U.S. Department of Agriculture’s (“USDA”) announced that it is seeking public feedback—due by February 16, 2024—on how foreign persons report their U.S. agricultural land holdings under the Agricultural Foreign Investment Disclosure Act (“AFIDA”). USDA’s Farm Service Agency (“FSA”) 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. According to FSA, these updates to the FSA-153 form will ensure that foreign persons required to report farmland holdings have clear instructions and will help the agency collect the “most precise and meaningful data” as it administers AFIDA.
On January 18, 2024, 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 claims it found FSA’s process to collecting data through the FSA-153 paper form is “flawed,” and provides recommendations as to how the agency can improve the reliability of the data collected under AFIDA.
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 to 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. NALC has also published FAQs concerning AFIDA, which is available here.
Geographic Location of Land
FSA’s proposed update to the FSA-153 form seeks to revise the information required about the location of the agricultural land being reported. Currently, the FSA-153 requires foreign persons to report the legal description or FSA tract number, which is an identification number an FSA county office assigns to a specific farm. According to FSA, most foreign persons choose to provide only the legal description of the agricultural land they possess. As a result, the data FSA receives from a foreign person about the actual location of their agricultural land is similar to a plat map, which generally provides the metes and bounds of a parcel, and “has no context allowing immediate geo-spatial interpretation.” See 88 Fed. Reg. 87,387 (Dec. 18, 2023).
Although FSA does not have authority under AFIDA to require foreign persons to provide additional information about geographical location of their agricultural land, the agency is asking foreign persons to include one or more of the following: the latitude and longitude of each parcel; the property tax ID number assigned by the county where the land is located; and the FSA tract number and the FSA farm number. FSA is requesting public input into whether requesting this additional information causes an undue burden on foreign persons and whether there are additional alternatives to identify or gather geographical information about a foreign person’s agricultural land.
As previously stated, a foreign person that holds a lease in agricultural land that is for a period of 10 or more years is required to report this leasehold under AFIDA. However, the FSA-153 form does not provide questions about leases. Thus, FSA has proposed several changes to the FSA-153 form and is requesting insight to capture data on the types of agricultural land leases and the value of these types of leases.
FSA is seeking public feedback on whether long-term leaseholds, especially leases for wind and solar energy projects, are “different enough” from land ownership that a separate version of the FSA-153 form is necessary. The agency is also asking the public how an interest in agricultural land should be defined when determining the value of leases. According to FSA, some foreign persons provide a low estimate of the value of the lease on their FSA-153 form while other foreign persons report the estimated value of the entire parcel they lease.
Further, AFIDA requires foreign persons to disclose the entire acreage of a parcel they are leasing even if the person leasing the land, such as a wind energy company, does not know the exact amount of acreage they will use for their business activities. FSA is asking whether this approach overstates foreign energy company activity on U.S. agricultural land and whether there are alternatives to gathering the acreage data associated with these leases.
Impacts of Foreign Ownership
AFIDA requires USDA to provide an annual report to Congress that details the impact foreign ownership of agricultural land has on family farms and rural communities. FSA is seeking public input on what questions the FSA-153 form should ask foreign persons in order to determine the impacts of foreign investments in U.S. agricultural land. For example, FSA has asked whether foreign persons should disclose more details about their ownership structure. Currently, by regulation, foreign persons are required to report to the third tier of ownership, which means details concerning investments and ownership beyond those three tiers may not be included on the foreign person’s FSA-153 form. Thus, FSA is asking if the ultimate owning country or countries should be disclosed on the FSA-153 form and whether foreign persons should be required to disclose ownership of agricultural land beyond the third tier of ownership.
In recent years, an interest to increase oversight and regulation of foreign investments in U.S. land, particularly agricultural land, has grown among both the federal and state governments. In 2022, Congress enacted the Consolidated Appropriations Act, 2023, which amended certain provisions of AFIDA to require USDA to publish an online database that contains disaggregated data from each FSA-153 form submitted to the agency. FSA’s request for information on its proposed revisions to the FSA-153 form is just the latest action from the federal government to increase oversight of foreign acquisitions and interests in U.S. agricultural land. Although the recent GAO report states that the current data collection process is “flawed,” FSA claims that its proposed updates to the FSA-153 form will help the agency collect the “most precise and meaningful data” as it administers AFIDA.
FSA is accepting public comments until February 16, 2024. To submit a comment, click here and follow the instructions for submitting a comment.
FSA’s notice for public comment is available here.
NALC resources on AFIDA and foreign ownership of U.S. land are available here.
Subscribe to NALC’s bi-weekly newsletter The Feed for recent legal developments affecting agriculture, including foreign ownership of agricultural land here.
For previous issues of The Feed, click here.
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Author: Micah Brown