April 24, 2024

Federal, State Governments Scrutinize Foreign Investment in U.S. Agricultural Land

Recent State-Level Efforts Follow GAO Report That Highlights Gaps in Federal Monitoring of Foreign Acquisitions of Agricultural Land
Holland & Knight Alert
Antonia I. Tzinova | Jacob Marco


  • The U.S. Government Accountability Office (GAO) recently published a report highlighting deficiencies in the U.S. Department of Agriculture's reporting process regarding foreign investment in agricultural land. The report identified a large increase in foreign ownership of U.S. agricultural land, but noted deficiencies in reporting processes that result in little scrutiny over the investments.
  • GAO's recommendations to increase oversight of such investments are likely to increase reporting obligations of foreign investors in U.S. agricultural land in the coming years. Notably, states are increasingly attempting to fill perceived gaps in the review power of the Committee on Foreign Investment in the United States (CFIUS) over real estate transactions.
  • Federal lawmakers continue to express concern over foreign investments in U.S. agricultural land, and scrutiny is likely to increase in the future.

The U.S. Government Accountability Office (GAO) published a report on Jan. 18, 2024, evaluating foreign investment in U.S. agricultural land. The report found that foreign investment in U.S. agricultural land grew to over 40 million acres in 2022, an increase of 50 percent since 2017. Much of this increase was due to foreign-owned wind companies that obtained long-term leases to build wind turbines on agricultural land.

The report also noted a number of national security concerns related to such investments. In one high-profile example, a subsidiary of Chinese food manufacturer Fufeng Group acquired land near a U.S. military installation in North Dakota, prompting a review by the Committee on Foreign Investment in the United States (CFIUS) that determined CFIUS did not have jurisdiction over the transaction. (See Holland & Knight's previous alert, "CFIUS Says Chinese Investment in North Dakota Agricultural Land Is Outside Its Jurisdiction," Jan. 24, 2023. Ultimately, the Grand Forks City Council withdrew support from the proposed project, and CFIUS then updated its list of designated military facilities.) Other federal officials and lawmakers have also raised concerns over the security of the agricultural supply chain in light of increasing foreign ownership.

Gaps in Federal Enforcement Power

The GAO's report found a number of gaps in the U.S. government's review of such foreign investment, which may limit the government's visibility into the nature and extent of associated national security risks. CFIUS, the federal government's interagency committee that reviews national security risks of foreign investments, reviews transactions involving land near certain sensitive military facilities, but many foreign acquisitions of agricultural land fall outside of CFIUS jurisdiction. However, foreign investors in U.S. agricultural land are required to report the transactions to the U.S. Department of Agriculture (USDA) within 90 days of an agricultural land transaction. The GAO found that USDA found this reporting to be inadequate for several reasons:

  • USDA's reporting program was not designed as a national security program and does not collect all items of interest to the national security community such as the investor's parent companies or major shareholders.
  • USDA does not share complete and timely data with CFIUS agencies.
  • USDA's collection processes involve paper-based reporting that is compiled in a manual, error-prone process, and its data is not always accurate. Congress required USDA to create an online submission database but has not provided funding to do so.
  • USDA can assess penalties for failing to report transactions but cannot unwind sensitive transactions or impose mitigation terms or agreements to address potential national security risks.

The report also made six recommendations to improve current reporting processes involving these transactions, ranging from improving the accuracy and extent of data collection to improving information sharing with CFIUS.

Proposed Federal Legislation and Recent State Laws

The GAO's report was conducted at the request of more than 100 federal lawmakers. Several high-profile acquisitions of U.S. agricultural land, including some by Chinese companies, have prompted concerns from federal officials and lawmakers over the extent and nature of foreign investment in U.S. agricultural land. Various legislative proposals have been introduced to improve oversight of such investment, including by 1) restricting the ability of foreign persons to pursue greenfield investments in U.S. agricultural land,1 2) making USDA a permanent member of CFIUS2 or 3) defining "critical infrastructure" to include "agricultural systems and supply chains."3 In fact, a recent proposal by U.S. House of Representatives Committee on Appropriations Chair Tom Cole (R-Okla.) would make USDA a member of CFIUS for any covered transactions involving agricultural land, agriculture biotechnology or the agriculture industry as determined by the CFIUS chair in coordination with USDA. The proposal also calls for added scrutiny of investments from Chinese, Russian, North Korean or Iranian investors. Any of these proposals would substantially increase reporting obligations of businesses involved in foreign investment in U.S. agricultural land.

Meanwhile, approximately three dozen states have enacted or introduced bills that would regulate or restrict foreign ownership of real property, a number of which apply specifically to agricultural land. Such state-level investment reviews may be aided by other proposed legislation that would increase coordination between CFIUS and state-level authorities and potentially increase the number of transactions being reviewed. For example, Sen. Kevin Cramer (R-N.D.) recently proposed a bill that would require CFIUS to respond to governors' requests to determine whether certain transactions qualify as "covered transactions."

At the same time, the U.S. Court of Appeals for the Eleventh Circuit recently issued an injunction blocking Florida's bill restricting such foreign investment in real estate, though litigation remains pending. (See Holland & Knight's previous alert, "Update on Florida Law Limiting Persons from 'Foreign Countries of Concern'," April 1, 2024.) This may complicate state-level efforts to regulate foreign purchases of real estate or agricultural land. Even so, foreign investors will have to consider both federal and state regulatory mechanisms when evaluating potential investments in in U.S. agricultural land.

Implications for Investors

The GAO's report is one signal of increasing scrutiny of foreign investment in U.S. agricultural land. As federal and state scrutiny over such investment grows, businesses involved in such transactions should be prepared for heightened scrutiny and increased reporting requirements, both at the federal and state level, especially for land near sensitive military facilities or critical infrastructure. Note also that some of the state laws go beyond a pure investment or transaction and might affect the purchase of equipment that would be installed in critical infrastructure assets if that would allow the manufacturer access to the critical infrastructure assets.4

If you have any questions about this alert or seek assistance formulating a CFIUS strategy, please contact the authors or another member of Holland & Knight's CFIUS and Industrial Security Team. The team's attorneys have the knowledge and experience to conduct the necessary due diligence to identify covered real estate transactions, prepare the necessary CFIUS risk assessments to equip business leaders with tools to evaluate regulatory risk and help navigate the evolving national security landscape.


1 See, e.g., FARM Act, S. 2931, 117th Congress (2021); Food Security is National Security Act of 2021, S. 3089, 117th Congress (2021); Exposing China's Belt and Road Investment in America Act of 2021, S. 3038, 117th Congress (2021); Prohibition of Agricultural Land for the People's Republic of China Act, H.R. 7892, 117th Congress (2022); and National Security Moratorium on Foreign Purchases of U.S. Land, H.R. 6383, 117th Congress (2022).

2 FARM Act, S. 2931, 117th Congress (2021).

3 Food Security is National Security Act of 2021, S. 3089, 117th Congress (2021).

4 See, e.g., Lone Star Infrastructure Protection Act, 87th Leg. R.S., Tex. S.B. 2116 (codified at Tex. Bus & Comm. Code §§ 113.001–.003, Tex. Gov. Code §§2274.0101–.0103).

Related Insights