USDA Proposes Major Overhaul of AFIDA Rules: In Focus on the Expansion of “Any Interest” and Commercial Real Estate Implications

This Advisory is the third in our series on the proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) published by the U.S. Department of Agriculture (USDA) on June 25, 2026. Our June 2026 Advisory provided a comprehensive overview of the proposed changes to the Agricultural Foreign Investment Disclosure Act (AFIDA) framework. Our July 2026 Advisory focused on the expanded “beneficial owner” definition and shift from a purely equity-based inquiry to a broader review of corporate governance and operational control as it related to foreign ownership disclosure. Here, we turn to an issue that may be of particular interest to commercial real estate practitioners: how the proposed rule’s expanded definition of “agricultural land” and its narrowed exemptions for leases and easements could bring a wider range of commercial real estate assets and transactions within AFIDA’s scope.

The Existing Framework: What Counts as “Agricultural Land” Today

Before examining the proposed changes, it is worth understanding the current landscape. Under 7 CFR 781.2(b), “agricultural land” includes all land currently used for, or if currently idle, land last used within the past five years for, farming, ranching, or timber production. The implementing regulations classify covered activities using 1987 Standard Industrial Classification (SIC) codes, primarily Division A (agriculture, forestry, and fishing).

Three existing exemptions have historically kept many commercial real estate transactions outside AFIDA’s practical reach: (1) tracts of land not exceeding10 acres in the aggregate where annual gross receipts from agricultural activity do not exceed $1,000; (2) leaseholds of less than 10 years (inclusive of all options to renew or extend); and (3) easements and rights-of-way used for purposes unrelated to agricultural production. 7 CFR 781.2(b), (c).

Notably, the existing definition already sweeps more broadly than many commercial practitioners realize. The five-year look-back period for idle land means that recently farmed parcels remain “agricultural land” regardless of current zoning or platting or future development plans. Additionally, the inclusion of forestry and timber production means that large tracts of timberland, whether actively managed or passively held, have always been subject to AFIDA. However, the reliance on outdated SIC codes, the de minimis acreage threshold, and the lease and easement exemptions have, until now, collectively shielded a significant volume of commercial real estate activity from filing obligations.

The Proposed Definition: What Changes

Proposed Section 5100.2(b) would expand the definition of “agricultural land,” and proposed Section 5100.2(c) would separately revise the definition of “any interest.” Taken together, these terms determine which property interests are reportable under AFIDA. Under the proposed rule, both definitions would change in several significant respects:

• Replacement of SIC codes with 2022 NAICS codes. The proposed rule would abandon the 1987 SIC classification system in favor of current North American Industry Classification System (NAICS) codes. This update alone broadens the scope of covered activities, because NAICS codes capture commercial categories that did not exist or were not separately classified in the 1987 SIC system.
• Express inclusion of energy and infrastructure uses. Through the incorporation of the 2022 NAICS codes, the proposed definition of “agricultural land” includes solar electric power generation (NAICS 221114), wind electric power generation (NAICS 221115), pipeline transportation (NAICS 486), agricultural research and development (NAICS 541714 and 541715), and support activities for agriculture and forestry (NAICS 115). Agricultural supply-chain operations, including farm product warehousing and storage, livestock wholesaling, and animal slaughtering and processing, as well as research and development activities in categories such as agriculture, botany, biology, fisheries, forests, veterinary science, and agricultural biotechnology are also included within the expanded definition of “agricultural land”.
• Conservation land expressly captured. Land that “could be used” for farming, ranching, forestry, or timber production “despite its conservation designation or under the terms of its conservation designation” would be classified as agricultural land and subject to disclosure under AFIDA. This classification captures Conservation Reserve Program (CRP) enrollments, Agricultural Conservation Easement Program (ACEP) holdings, and similar arrangements.
• Elimination of the de minimis exemption. The current exemption for tracts of land that do not exceed 10 acres with less than $1,000 of annual agricultural production would be removed entirely.
• Lease exemption narrowed. The exemption for leases of less than 10 years would be reduced to leases of less than one year (measuring the aggregate of multiple leases over a continuous or discontinuous period). For foreign adversaries and Foreign Adversary Controlled Entities, the exemption is entirely eliminated.
• Easement and right-of-way exemption removed. The current exemption for easements “used for purposes unrelated to agricultural production” would be deleted in its entirety. Any easement or right-of-way across land meeting the agricultural land definition would become reportable under AFIDA. Together with the narrowed lease exemption, these changes substantially broaden the property interests subject to AFIDA reporting.
• Remaining exclusions unchanged. The proposed rule leaves undisturbed the other categorical exclusions from AFIDA: security interests, contingent future interests, and interests held solely in mineral rights all continue to fall outside AFIDA’s reporting obligations.
• Zoning irrelevance. While the existing USDA guidelines note that zoning designations are not dispositive, the proposed rule clarifies that land meeting the definition of “agricultural land” is agricultural “regardless of local government zoning classifications.” Thus, rezoning alone does not remove otherwise reportable land from the bounds of AFIDA.

Five Scenarios: How Commercial Real Estate Is Affected

The following scenarios illustrate how the proposed rule changes could affect common commercial real estate transaction types.

Scenario 1: Developers Acquiring Agricultural Land for Commercial Purposes

Context: A commercial developer acquires a 500-acre parcel on the urban fringe that was used for row-crop farming until two years ago. The parcel has been rezoned for mixed-use development and no farming is occurring at closing.

Current rule: The five-year look-back already applies, so the land is “agricultural land” under the existing definition. If the developer is a “foreign person” under the current 50%-aggregate threshold, an FSA-153 filing is required within 90 days.

Proposed rule: The same five-year look-back applies (this is not new). However, the proposed rule has three changes that will bring more commercial projects into the AFIDA orbit: (a) the “regardless of local zoning” clarification removes any argument that rezoning takes land out of the definition; (b) the de minimis exemption is eliminated, so even small parcels are covered; and (c) the lowered 10%-aggregate threshold (down from 50%) means significantly more developers will be “foreign persons.”

Example: A European-headquartered development fund acquires a rezoned 200-acre site outside a Sunbelt metro area. The site was in active cotton production until 18 months before closing. The fund is organized as a Delaware LLC, but a consortium of European pension funds holds 35% of the equity. Under current law, the 50%-non-concert threshold means the fund is not a “foreign person.” Under the proposed rule, the 10%-aggregate threshold is met, the fund is a “foreign person,” and the land is “agricultural” regardless of zoning. Filing is required within 90 days.

Practical notes: Developers should conduct agricultural-use due diligence on rural and path-of-growth parcels, including checking USDA records, county assessor classifications, and actual use within the prior five years, even when the land is zoned for non-agricultural uses.

Scenario 2: Easements and Rights-of-Way Through Agricultural Land

Context: A utility company acquires pipeline or transmission easements across hundreds of miles of farmland, a commercial developer acquires a 30-foot-wide access easement across a neighboring farm to reach a development parcel, or a foreign person acquires an easement across a neighbor’s timberland tract to access a personal residence.

Current rule: Easements and rights-of-way “used for purposes unrelated to agricultural production” are expressly exempt from the definition of “any interest.” The access easement and utility easement both qualify for this exemption.

Proposed rule: The easement exemption would be removed. Any easement or right-of-way across land meeting the “agricultural land” definition would be a reportable interest.

Example: A foreign-owned pipeline company holds transmission easements across 2,000 parcels of farmland in 15 states. Under current law, none of these easements are reportable. Under the proposed rule, each easement across land meeting the agricultural-land definition would be a separately reportable interest. Because the NAICS definition now includes pipeline transportation (NAICS 486), both the land and the interest are captured.

Practical notes: Linear infrastructure operators should inventory existing easement portfolios for AFIDA exposure. The transition window for filing on newly reportable holdings (90 days from the final rule’s effective date) may be insufficient to inventory thousands of easements across multiple states.

Scenario 3: Timberland, Conservation Holdings, and Buffer Land

Context: A utility or infrastructure company holds timberland as a buffer around a manufacturing facility, or an investor holds land enrolled in a USDA conservation program such as CRP or ACEP.

Current rule: Timberland already qualifies as agricultural land. Conservation land is less clear; if the land has not been used for farming or timber in the past five years, it may fall outside the existing definition.

Proposed rule: Conservation land is now expressly included if it “could be used for farming, ranching, forestry, or timber production despite its conservation designation or under the terms of its conservation designation.” The de minimis exemption is eliminated.

Example: A foreign sovereign wealth fund holds a portfolio of 50,000 acres of timberland surrounding a manufacturing complex. The timberland is already reportable. But 8,000 acres of adjacent conservation land enrolled in CRP were previously outside the definition. Under the proposed rule, the conservation acreage is now “agricultural land,” and the fund must file on those parcels as well.

Practical notes: Conservation enrollment does not remove land from AFIDA. Filers must also keep the land-use breakdown current on the new geospatial map; moving acreage from cropland to conservation is a reportable use change under proposed Section 5100.3(j).

Scenario 4: Renewable Energy and Data Centers on Rural Land

Context: A solar or wind developer leases 5,000 acres of farmland under a 30-year site-control lease. A data center developer acquires a 300-acre site that was in active crop production until three years ago.

Current rule: The lease is reportable if 10 years or longer and the lessee is a “foreign person.” However, solar and wind generation are not covered by the existing SIC codes so if the original solar or wind developer is mid-stream on its project and has converted the land out of agricultural land, and thereafter assigns the lease to a new foreign person, the new assignee would not have an obligation to file (note, however, that the original lessee would have triggered a filing obligation upon the disposition of its interest). For the data center, the five-year look-back applies, but data center development is not itself a covered activity.

Proposed rule: Solar electric power generation (NAICS 221114) and wind electric power generation (NAICS 221115) are now expressly included as part of the definition of “agricultural land,” so the subsequent acquisition of operating projects that were not previously reportable by the assignee would not become reportable. The lease exemption narrows from under 10 years to under one year; the vast majority of renewable leases will be reportable under this revised framework. The USDA preamble notes that it is “aware that agricultural land is often leased to develop or explore the potential development of land for particular purposes, including energy projects” and specifically requests comment on how to calculate fair market value for such leases. (91 Fed. Reg. at 38319.)

Example: A Danish renewable energy company holds renewable leases on 20,000 acres of cropland across the Midwest for a portfolio of wind projects. The leases are structured such that the lease commences as of the execution date (and not a later exercise of an option thereunder) and continue through the decommissioning period a total of 45 years. Under current law, the company files on the leases (10-plus years). Under the proposed rule, wind electric power generation is itself a covered NAICS code. Accordingly, any subsequent transfers of the leasehold interest would also be subject to filing obligations for not just the original lessee, but also any subsequent foreign persons, regardless of what stage the wind project is in for its development, so long as one year or more remains on the lease. The company should inventory all lease interests, including short-term options and extensions, for new filing exposure.

Practical notes: Renewable energy developers that are already AFIDA filers should review whether the expanded definition captures additional interests or parcels. Developers structuring new leases or other site control arrangements should consider how the one-year lease threshold and the inclusion of solar and wind NAICS codes affect phased development timelines.

Scenario 5: Path-of-Growth Portfolios and Pre-Development Holdings

Context: A developer or institutional investor acquires and holds parcels of farmland in anticipation of future rezoning and development, leasing the land to local farmers in the interim.

Current rule: The land is “agricultural land” while being farmed (and for five years after farming ceases). The lease exemption (under 10 years) shields farm leases from creating independent filing obligations for foreign tenants.

Proposed rule: (a) The zoning-irrelevance rule means that rezoning the parcel during the hold period does not remove it from the definition; (b) the lease exemption narrows to under one year, so a three-year farm lease to a foreign tenant now triggers the tenant’s independent filing obligation; (c) the lowered 10%-aggregate threshold means the developer is more likely to be a “foreign person”; and (d) the ongoing obligation to update the geospatial map and land-use breakdown means that changes in how the land is farmed (rotating crops, enrolling acreage in conservation) must be reported.

Example: A U.S. real estate fund with 12%-aggregate foreign LP ownership holds 15,000 acres of Midwestern cropland as a path-of-growth portfolio, leasing the land to local farmers under rolling three-year leases. Under current law, the fund is not a “foreign person” (50%-non-concert threshold not met; three-year leases are exempt). Under the proposed rule, the fund is a “foreign person” (10%-aggregate threshold met), the three-year farm leases are reportable (over one year), and any foreign tenant-farmers also have independent filing obligations.

Practical notes: Developers holding path-of-growth portfolios should: (1) map upstream foreign ownership to assess whether the 10%-aggregate threshold is met; (2) review lease arrangements with tenant-farmers for potential tenant filing obligations; and (3) establish a monitoring process for land-use changes that trigger update filings. Consider adding AFIDA representation and notice covenants to farm leases.

Key Takeaways for Commercial Real Estate Practitioners

• Developers: Conduct agricultural-use due diligence on all rural and transitional land acquisitions, even when the land is rezoned. The five-year look-back and zoning-irrelevance rule can surprise.
• Infrastructure and pipeline companies: Inventory existing easement and right-of-way portfolios for newly reportable interests. Consider the 90-day transition window.
• Renewable energy developers: Solar, wind, and pipeline NAICS codes are now expressly covered. Review all site-control leases, including short-term options, for filing exposure under the narrowed lease exemption.
• Asset managers and fund sponsors: Map upstream foreign ownership. The 10%-aggregate threshold (down from 50%) and the beneficial-owner trigger (control-based, no equity floor) mean more vehicles will be “foreign persons.”
• Landlords with foreign tenants: A foreign tenant’s lease of one year or more now triggers the tenant’s independent filing obligation. Consider AFIDA representations and notice covenants in leases.

Final Points

In addition to the expanded AFIDA disclosure requirements, it is worth noting two important points. First, AFIDA filing obligations are often used as a trigger for separate filing obligations under state analogous statutes. Accordingly, a broader filing pool under AFIDA will result in a broader filing pool under many state reporting regimes. Furthermore, many of these state regimes also include their own prohibitions, acreage limitations, or other use restrictions. And, second, while not currently in effect, there are federal legislative proposals to align the administration of AFIDA with the Committee on Foreign Investment in the United States’ national security mission.¹

The comment period on the proposed rule closes on August 10, 2026. We are continuing to monitor developments and can assist with assessing exposure, structuring analysis, and preparing public comments.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.