Renewed AFIDA Enforcement: Key Considerations For Energy And Infrastructure Projects

The renewed focus by the Trump Administration and Congress on enforcement of the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA) marks a significant shift for foreign-owned developers of energy and infrastructure projects. Since its enactment, few enforcement penalties were imposed under AFIDA. Now, with increasing scrutiny on foreign investment in agricultural land as a national security issue—and amid several recent Congressional proposals to expand oversight and tighten reporting requirements—AFIDA has re-emerged as a compliance risk for energy projects, particularly with increased reliance on foreign capital in the industry.

This renewed enforcement environment raises several legal, transactional, and compliance considerations for project sponsors, investors, and counsel.

Overview: AFIDA and Its Reach

AFIDA was enacted for the collection of information regarding foreign ownership of U.S. agricultural land. Under AFIDA and its authorizing regulations, entities with at least 10% direct or indirect foreign ownership must report certain acquisitions, dispositions, and changes in use of U.S. agricultural land to the Farm Service Agency within the United Stated Department of Agriculture (USDA). “Agricultural land” is defined broadly to include parcels used for farming, ranching, orchard, vineyard or timber production within the previous five years—categories that often capture sites being repurposed for energy and infrastructure development.

While AFIDA does not prohibit foreign ownership, it does impose mandatory reporting obligations and authorizes significant civil penalties for failure to file or for submitting false or incomplete information—potentially up to 25% of the property's fair market value.

Importantly, AFIDA applies not only to direct fee ownership of land but also to leasehold interests of 10 years or longer. Easement interests and contingent future interests (including options) are expressly excluded. 

Energy and infrastructure projects with long-term site rights often fall under the purview of AFIDA, particularly during the construction and operation periods, creating a reporting obligation that is easily overlooked.

Many states also impose reporting and ownership restrictions on foreign-owned agricultural land that can vary widely from those under AFIDA.

AFIDA Enforcement

The USDA is tasked with collecting, tracking and reporting data under AFIDA, as well as assessing civil penalties up to 25% of the fair market value of the property for non-compliance. 

While AFIDA has existed for nearly five decades, enforcement activity has historically been limited due largely to funding and staffing constraints at USDA. In recent years, however, foreign ownership of interests in U.S. agricultural land has exploded—with approximately 45 million acres of U.S. agricultural land held by foreign entities as of December 2023—with calls for renewed regulatory scrutiny. Recent penalty assessment data underscores this trend:

Many recent enforcement actions have targeted renewable and other energy and infrastructure projects, reflecting both the scale of their landholdings and the increasing presence of foreign capital in energy infrastructure investment. Further, with the increased awareness of AFIDA, several legislative and regulatory proposals have been advanced in recent years that would affect its scope and operation, including more than three bills introduced in the current Congress largely aimed at increasing reporting requirements and strengthening enforcement. 

Accordingly, compliance with AFIDA and other state restrictions should be considered when acquiring, leasing, or developing land with any level of foreign ownership or investment participation. Project participants should anticipate enhanced data collection, more frequent audits, and higher penalty assessments in the years ahead and stay updated on legislative and regulatory developments in this area insofar as any changes are likely to impact compliance requirements. 

Conclusion

AFIDA enforcement, once largely perfunctory, is becoming a meaningful compliance risk for the energy and infrastructure sectors. With foreign investment continuing to play a critical role in project development and financing, project participants cannot afford to treat AFIDA as an afterthought.

Instead, investors and developers should identify potential AFIDA triggers early in site acquisition, leasing, and financing stages; incorporate compliance representations and covenants into transaction documents; and prepare for heightened scrutiny from the USDA, Congress, and state regulators—all of whom increasingly view agricultural and rural land use through a national security lens. And with multiple recent Congressional proposals to further expand oversight and tighten reporting requirements, participants must remain vigilant and up to date on legislative developments to ensure continued compliance in a rapidly evolving compliance landscape.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.