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Foreign ownership restriction likely in 2023 Farm Bill

Part 3: Proposals to restrict foreign investments and acquisitions of U.S. land increase. Legislation is introduced to restrict foreign persons from participating in USDA-administered programs.

June 1, 2023

11 Min Read
farmland wheat-chopper
Foreign ownership restrictions are likely proposals in the upcoming farm bill. Shelley E. Huguley

As foreign ownership of U.S. agricultural land grows, interest by federal and state lawmakers to restrict and monitor foreign ownership has increased, according to the National Agriculture Law Center. Learn more in Part 3 of this series about the federal proposals and whether foreign persons can receive or benefit from USDA-administered programs. (Part 1: Foreign farmland ownership laws vary by state; Part 2: Does U.S. have a federal foreign ownership law?)

Q: Is there a federal foreign ownership?

Currently, no federal law exists that restricts foreign persons from acquiring or holding U.S. agricultural land. The federal government only monitors foreign investments in U.S. agricultural land through AFIDA.

Q: Has Congress proposed a federal restriction?

Yes, there were numerous proposals introduced in the 117th Congress (2021-2022) that sought to increase oversight and restrict foreign investments and acquisitions of U.S. land. Some of these measures sought to only prohibit the Chinese government and Chinese-owned entities from owning or investing in agricultural land, such as the Countering Communist China Act (H.R. 4792) and the Prohibition of Agricultural Land for the People’s Republic of China (H.R. 7892). Other measures (H.R. 4502H.R. 8239H.R. 8294) sought to compel USDA to take steps to prevent companies owned by China, Russia, North Korea, and Iran from purchasing agricultural land within the U.S. The 117th Congress also considered measures that sought to restrict foreign investments not only in agricultural land, but all public and private real estate located in the U.S., such as the Securing America’s Land from Foreign Interference Act (S. 4703/H.R. 3847) and the Protecting our Land Act (H.R. 8652).

Related:Foreign farmland ownership laws vary by state

For more information on the federal proposals introduced in the 117th Congress, read NALC’s article “Congressional Considerations on Restricting Foreign Investments in U.S. Agriculture” here.

Currently, the 118th Congress (2023-2024) is considering several proposals that seek to restrict certain foreign purchases and acquisitions of U.S. land. Some of these measures were considered during the previous legislative session, but have been reintroduced during the current congressional session, such as the Prohibition of Agricultural Land for the People’s Republic of China Act (H.R. 809), the protecting our Land Act (H.R. 212), and the Securing America’s Land from Foreign Interference Act (H.R. 344).

The Protecting Our Land Act seeks to require the President to “direct the heads of Federal departments and agencies to promulgate rules and regulations to prohibit the purchase of public of private real estate…by a foreign adversary, a state sponsor of terrorism,…any agent or instrumentality…or any person owned or controlled by, or affiliated with” such foreign parties. The Securing America’s Land from Foreign Interference Act would direct the President to “take such actions as may be necessary to prohibit the purchase of public and private real estate…by members of the Chinese Communist Party and entities that are under the ownership, control, or influence” of the Chinese government.

Related:Does U.S. have a federal foreign ownership law?

Additionally, the Promoting Agriculture Safeguards and Security Act (“PASS Act”) of 2023 (S. 168/H.R. 683) has been reintroduced in the 118th Congress.

This measure would require the President to prohibit transactions that “would result in control by a covered foreign person of or investment by a covered foreign person in a United States business engaged in agriculture or private real estate used in agriculture.” Under the PASS Act, a “covered foreign person” includes individuals or entities and its subsidiaries that are domiciled or acting on behalf of China, Russia, Iran, or North Korea.

Other measures that have been introduced in the 118th Congress include the This Land Is Our Land Act (S. 684), which seeks to restrict certain foreign individuals and entities domiciled in or associated with China from obtaining an interest in farmland, and the Saving American Farms from Adversaries Act (H.R. 840), which would require the President to take actions necessary “to prohibit the purchase of public or private real estate…by any foreign person” for a five-year period.

Related:Lawmakers looking to restrict foreign investment in agricultural lands

Q: What about the 2023 Farm Bill?

Because federal policymakers have become increasingly concerned about foreign investments in U.S. agricultural land, coupled with the number of federal foreign ownership proposals being considered in Congress, it is likely a foreign ownership restriction will be proposed as part of the upcoming 2023 Farm Bill. The information provided here will be updated once more information is available.


Q: Can foreign persons participate and receive benefits through USDA programs? What about foreign persons participating in USDA programs?

There are some USDA-administered programs, such as certain Disaster Assistance Programs and the Market Facilitation Program, which foreign persons are not eligible to participate. Other farm programs, like the Agricultural Risk Coverage and Price Loss Coverage programs, exclude foreign persons from receiving program benefits unless they satisfy the “foreign person rule.” To satisfy this rule, a foreign person must contribute significant capital, land, and labor to a farming operation in order to receive program benefits.

Q: Is Congress considering any proposals to prevent foreign participation in farm programs?

Yes, there is legislation that has been introduced in the 117th Congress (2021-2022) that seeks to restrict foreign persons from participating in certain USDA-administered programs. For example, the Countering Communist China Act (H.R. 4792) seeks to restrict farmland owned by China or companies owned by China from participating in USDA programs. Another bill, known as the Farm Credit for Americans Act of 2022 (S. 4954), seeks to amend the Farm Credit Act by making foreign persons ineligible for “any credit or financial services provided by a Farm Credit System institution.”

For more information on recent federal proposals to restrict foreign persons from investing and participating in the agricultural sector, read the NALC’s “Congressional Considerations on Restricting Foreign Investments in U.S. Agriculture” here.

Q: Has Congress proposed legislation to increase oversight of foreign investments in agriculture?

During the 117th Congress, a number of bills were introduced that sought to amend the Defense Production Act (“DPA”) of 1950 to place the Secretary of USDA in the Committee on Foreign Investment in the United States (“CFIUS”). The proposals that sought to add USDA as a member of CFIUS include:

  • Foreign Adversary Risk Management Act (“FARM” Act) (H.R. 5490)

  • Agricultural Security Risk Act (H.R. 3413/S.1755)

  • Food Security is National Security Act (S. 3089)

  • Promoting Agriculture Safeguards and Security Act (“PASS” Act) (H.R. 8274/S. 4786)

  • Security and Oversight for International Landholdings Act (“SOIL Act”) of 2022 (S. 4821)

Some of these measures have been reintroduced in the 118th Congress, such as the FARM Act (S. 68/H.R. 513) and the PASS Act (S. 168/H.R. 683)

Q: What is CFIUS?

CFIUS is a multi-government agency entity that is authorized by the DPA (50 U.S.C. § 4565) to review certain transactions involving foreign investments and acquisitions of American companies and real estate to determine whether there is a threat to national security. Essentially, CFIUS has the power to suspend, renegotiate, and impose conditions to transactions (whether pending or already completed) that may pose a risk to the national security of the U.S. In other words, the Committee uses these measures to mitigate any threat to national security that arises from a transaction. Transactions that may pose a risk to the national security, for example, are investments and acquisitions of critical infrastructure, such as transportation, telecommunication, public health, and energy. CFIUS also closely reviews investments in critical technologies. In general, these technologies are created or used by certain U.S. businesses and industries that are essential to the nation’s economic and national security.

Q: How does adding USDA as a member of CFIUS increase oversight of foreign investments in agriculture?

Specifically, these bills seek to require CFIUS to consider agriculture-specific criteria when determining whether a foreign investment poses a risk to the United States national security. For example, some proposals incorporate provisions that direct CFIUS to review or investigate transactions that could result in foreign control of a U.S. business that engages in agriculture. Other proposals seek to include “security of food and agriculture systems” and “biotechnology related to the agriculture sector” as “critical infrastructure under the DPA. As a result, this would place the agricultural industry and food supply chains as areas CFIUS can consider as it relates to national security, meaning agriculture and food security will be considered as matters of national security. According to some sponsors of these bills, placing USDA as a CFIUS member will provide leverage to protect the interests of the agricultural industry in foreign investments and acquisitions of U.S. agricultural businesses.

Q: Why are there foreign investments in states that have enacted a foreign ownership law?

Each state that currently restricts foreign ownership includes exceptions to their restriction. In other words, states’ laws exempt certain foreign parties, agricultural practices, landholdings, and land use activities from the restriction. Many of these states’ laws include an acreage limit or cap to its restriction. In other words, a state’s foreign ownership law will only restrict a foreign investment in farmland if the investment exceeds a specified number of acres. For example, Wisconsin’s foreign ownership law caps foreign ownership to 640 acres before the restriction applies.

Some states also permit foreign persons to convert agricultural land into some use other than farming. Other states have an “estate exception” for situations where a foreign person obtains ownership of agricultural land by inheritance or through the terms of a person’s will. Further, other states’ laws permit foreign persons to acquire and hold title to farmland resulting from their enforcement of a lien against the property.

Additionally, foreign persons obtain an interest in real estate using different types of business entities and trusts that invests in property, such as a real estate investment trust (“REIT”).

Q: What is a REIT?

In general, a REIT is an entity that invests, owns, and operates real estate that generates income. Created in 1960 with the enactment of the REIT Act (a provision of the Cigar Excise Tax Extension Act), REITs were established to provide real estate investors the same benefits offered to mutual funds investing in stocks. REITs invest in various types of real property, such as office buildings, housing units, farmland, and forestland. The income generated from REIT-owned property is then distributed to its investors. Thus, REITs provide persons the ability to invest in real estate without having to hold the property directly.

Investing in REITs are sometimes attractive to foreign investors for a couple of reasons. First, a foreign person investing in a REIT is not taxed on their worldwide income, just the dividends from their REIT investment. Second, investing in REITs permit foreign investors the ability to hold an ownership interest in U.S. property without having to manage the day-to-day activities of the property. In other words, foreign persons do not have to reside—or spend a significant number of days—in the U.S. to profit on income-producing U.S. property.

For more information on REITs and foreign investments in REITs, see the Congressional Research Service’s article titled Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA): Overview and Recent Tax Revisions here.

Q: What are some resources to learn more on foreign ownership of agricultural land and foreign investments in U.S. agriculture?

NALC Publications

Other Publications and Resources

Statutes and Regulations

Source: National Agriculture Law Center

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