On June 25, 2026, the U.S. Department of Agriculture (USDA) published a proposed rule that would significantly expand the scope and enforcement of the Agricultural Foreign Investment Disclosure Act (AFIDA), the federal law requiring foreign persons who acquire, transfer, or hold interests in U.S. agricultural land to report those transactions to USDA. If the rules go into effect as proposed, solar and wind generation will be, for the first time, explicitly addressed in AFIDA regulations, strict penalties will apply, exceptions will be more limited, and enforcement will be more likely. Comments on the proposed rule are due by August 10, 2026.

Background

AFIDA has historically functioned as a data-collection tool administered through a paper-based filing process. The proposed rule seeks to change this. Driven by national security concerns and a 2025 National Farm Security Action Plan, on April 13, 2026 USDA issued a final administrative rule (91 FR 18767-18769) transferring authority to administer AFIDA from the Farm Service Agency of the USDA, to the Assistant Secretary for Administration (ASA) for the USDA. Now the proposed rule seeks to transfer AFIDA administration to its Office of Homeland Security (OHS) and proposes to overhaul the program’s scope, disclosures, and penalties. Data collected under AFIDA will also be shared with the Committee on Foreign Investment in the United States (CFIUS), adding a national security review dimension to what was previously a routine agricultural filing.

Significantly Higher Penalties and Stricter Enforcement

The proposed rule replaces the current penalty of 0.1% of fair market value per week with a new tiered structure. Penalties begin on the 91st day after a report was required, with an initial $250 civil penalty and then accruing at 2.5% of fair market value every seven days for foreign adversaries and 1.5% for all other foreign persons, capped at 25% of fair market value per violation. The proposed rule would also remove all existing downward adjustments to penalties, eliminate USDA’s discretion to reduce penalties for mitigating circumstances, halve the appeal window from 60 to 30 days, and limit appeals to a single paper-based review.

The proposed rule also raises an important valuation question: how to calculate the fair market value of leased agricultural land for penalty purposes. USDA used the example of a 50-year energy project lease with nominal payments in early years but a much higher rate beginning in year 11, noting that the early-stage lease rate does not reflect the fair market value of the underlying land, which is the value subject to penalty under AFIDA. USDA is seeking comment on how to resolve this question, and the answer will directly determine potential penalty exposure for renewable energy parties.

This increased penalty exposure makes front-end diligence more important. Renewable energy developers and financing parties should evaluate AFIDA compliance during site acquisition, lease option execution, project company transfers, tax equity closings, construction financing, refinancing, and project sales.

Solar and Wind Generation Now Expressly Covered

Additionally, the proposed rule specifically expands the definition of “agricultural land” to include land used for solar electric power generation (NAICS code 221114) and wind electric power generation (NAICS code 221115). USDA acknowledged this change directly, noting that land once used exclusively for farming is increasingly being used for wind and solar, and that the U.S. government has recorded instances where developers add agricultural uses to project sites after development.

For renewable energy developers, this change is significant because land used for solar or wind generation may remain subject to AFIDA reporting even if the project converts historically agricultural property to energy generation. Similarly, certain utility-scale solar or wind projects may now be required to file an AFIDA disclosure report where they were not previously.

The proposed rule also reduces the lease exemption from leases of less than 10 years to leases of less than one year for most foreign persons and eliminates it entirely for “Foreign Adversaries” and “Foreign Adversary Controlled Entities.” It also eliminates the existing exemption for surface and subsurface easements and rights of way used for non-agricultural purposes. This means transmission line easements and access road rights of way held by foreign parties could now be reportable. The proposal also indicates that land may be treated as agricultural land regardless of local zoning classifications, which could reduce the usefulness of zoning status as a screening tool for AFIDA compliance.

Lower Ownership Thresholds

The proposal would revise the definition of “significant interest or substantial control” and add new concepts such as “beneficial owner,” “foreign adversary,” “foreign adversary-controlled entity,” and “shell corporation.” Under the existing rules “significant interest or substantial control” refers to (i) an interest of 10% or more held by a single foreign individual or entity, (ii) an interest of 10% or more held by multiple foreign individuals or entities acting in concert, or (iii) an interest of 50% or more held by foreign individuals or entities in the aggregate, regardless of whether the foreign parties are acting in concert. The proposed rule lowers the aggregate foreign ownership reporting threshold from 50% to 10%, regardless of whether the foreign persons are acting in concert to align with the single foreign entity threshold. This change will capture common renewable energy project financing structures where one or more foreign-owned investors hold modest equity stakes. In addition, under the proposed rule if any interest, regardless of the amount held, is held by a foreign party meeting the newly proposed definition of “beneficial owner” reporting would be required. Under the proposed rule a “beneficial owner” is defined as a foreign party or entity exercising decision-making authority over the land or the entity holding it, including through intermediary tiers of ownership.

This is particularly relevant to renewable energy projects, which often involve tax equity investors, infrastructure funds, foreign parent companies, joint ventures, and special purpose entities. A U.S.-organized project company should not assume AFIDA is inapplicable simply because it is formed in the United States. The relevant analysis may turn on direct and indirect ownership, control rights, and beneficial ownership through the project ownership chain.

Additional Reporting Information

The proposed rule would require more detailed reporting, including geospatial information regarding the agricultural land subject to the report. USDA has described the proposal as part of a broader effort to modernize AFIDA reporting, improve data quality, and support timely sharing of AFIDA information with the Committee on Foreign Investment in the United States (“CFIUS”). Additionally, the proposed rule also requires more detailed disclosure of upstream ownership and control relationships, and information about land use changes, which could create practical compliance challenges for large, multi-parcel renewable energy projects.

Specifically, corporate filers would be required to submit an ownership diagram depicting the connections between all interest holders, report percentage interests individually by person and in aggregate by country, and file an updated report within 90 days any time the actual use of the land changes from the intended use reported at the time of filing; failure to do so would itself constitute a reportable violation, a requirement that could be triggered by operational changes in land management practices across individual parcels.

Developers should consider whether existing project land databases, title materials, survey files, GIS layers, and organizational charts contain the information that would be needed to support timely AFIDA filings if the rule is finalized.

What Renewable Energy Developers and Financing Parties Should Do Now

The proposed rule transforms AFIDA from a modest reporting exercise into an active national security enforcement tool. There are several steps that foreign-owned or foreign-invested renewable energy businesses should take now.

• Review existing land interests. Foreign entities with interests in operating wind or solar projects should determine whether those interests already require AFIDA filings, and get those into compliance, or whether that interest will now require filings under the expanded “agricultural land” definition.
• Address historical deficiencies proactively. The proposed rule signals a more robust enforcement environment, and voluntary disclosure now may be more favorable than enforcement later.
• Integrate AFIDA into deal diligence. Given the proposed expansion to solar and wind sites, AFIDA analysis should be a standard part of transaction due diligence alongside CFIUS and state-level foreign ownership reviews.
• Consider submitting comments before August 10, 2026. The proposed rule raises open questions directly relevant to renewable energy, including how to value energy project leases and whether the solar and wind NAICS code inclusions are appropriately scoped. Stakeholders with views on these issues should make them known before the deadline.

Foreign-owned developers and investors should not wait for a final rule to assess their exposure. The scope of the proposed changes, combined with USDA’s stated intention to enforce AFIDA more aggressively, creates an urgent need to evaluate compliance obligations under both the current and proposed frameworks.

Contact us

If you have questions about how the USDA’s proposed changes to AFIDA could affect renewable energy development, foreign investment reporting obligations, or ownership disclosure requirements, contact Daniel Fanning, Brynna Krough-Deaton, or your Husch Blackwell attorney.