Renewable energy developers and financing parties are likely aware of the Agricultural Foreign Investment Disclosure Act (“AFIDA”), a federal law requiring disclosure of foreign investment in agricultural land. Increasingly, U.S. states are imposing AFIDA-like disclosure requirements and restrictions on foreign land ownership, including with respect to renewable energy project sites. This trend is driven by national security, economic competitiveness, and sensitive resource protection concerns. Energy industry participants should consider these restrictions, which generally deal with ownership limits and disclosure obligations.
Ownership Limits
Many states are imposing limits on foreign land ownership, especially in the context of agricultural land, which is often essential for renewable energy projects. These limitations prohibit various legal interests in land being held by nonresident aliens, foreign business entities, or foreign governments, and define these terms differently by state.
Indiana, for instance, specifically prohibits foreign businesses from acquiring agricultural land for the purpose of crop farming or timber production but permits exemptions likely applicable to renewable energy projects.
In Kansas, corporations, both foreign and domestic, are prohibited from owning or leasing agricultural land for farming purposes, but an entity owning or leasing land for nonagricultural purposes may lease the land to a tenant farmer.
Nebraska prohibits aliens and corporations not incorporated under the laws of Nebraska from acquiring real estate, any leasehold interest extending for more than five years, or any other interest less than fee in any real estate in the state. Both domestic and foreign corporations that run afoul of these prohibitions face penalties that could affect their ability to do business in Nebraska.
Montana prohibits countries identified as foreign adversaries from buying, leasing, or renting land used for agricultural production. Additionally, a foreign adversary may not enter into a contract that results in its control of agricultural land. At present, the U.S. Department of Commerce lists six countries as “foreign adversaries”: the People’s Republic of China, the Republic of Cuba, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Russian Federation, and Nicolas Maduro’s political regime in Venezuela.
Recently, many states have begun to designate some combination of China, Iran, North Korea, Russia, Cuba, Venezuela, and Syria as countries of concern and have restricted real estate ownership based upon an entity’s connections to that country. Other states have begun imposing ownership interests in transactions involving countries on certain federal lists, like those under U.S. sanctions, or using the federal regulatory definition of foreign adversaries, terrorists, supporters of terrorists, and those otherwise designated by the president, or those countries subject to the International Traffic in Arms Regulations.
Arkansas prohibits prohibited foreign parties that are not resident aliens from acquiring interest in agricultural land. Under this statute, “prohibited foreign party” means:
- A citizen or resident of a country subject to International Traffic in Arms Regulations, 22 C.F.R. § 126.1;
- A foreign government formed within a country subject to International Traffic in Arms Regulations, 22 C.F.R. § 126.1;
- A party other than an individual or a government, that is created or organized under the laws of a foreign government within a country subject to International Traffic in Arms Regulations, 22 C.F.R. § 126.1;
- Any party other than an individual or a government:
- (i) That is created or organized under the laws of any state; and
- (ii) In which a significant interest or substantial control is directly or indirectly held or is capable of being exercised by:
- (a) An individual referred to in subdivision (5)(A) of this section;
- (b) A foreign government referred to in subdivision (5)(B) of this section;
- (c) A party referred to in subdivision (5)(C) of this section; or
- (d) A combination of the individuals, parties, or governments referred to in this subdivision (5)(D)(ii);
Each state’s laws impacting foreign ownership of land must be analyzed on a project-by-project basis to determine what ownership restrictions may apply to the purchase, lease, financing, or sale of a project.
Disclosure Requirements
Foreign entities may be required to disclose their ownership interests in land at certain stages or even on a periodic basis. These reporting requirements are meant to allow states to monitor foreign investment and enforce any prohibitions. At a federal level, AFIDA requires a foreign entity with an interest in agricultural land to report such an interest within 90 days of: acquiring it, disposing of it, and changing the use of that land to non-agricultural or vice versa. Although AFIDA does not prohibit any such interest, its reporting requirements can be quite arduous for a foreign entity with an interest in agricultural land across the country.
Similar state-level reporting requirements exist in some jurisdictions. Some mimic the federal requirement and even allow the federal form to be submitted to the relevant state agency. In Arkansas, foreign entities must report under the same circumstances as under AFIDA to the Arkansas Department of Agriculture and can simply submit the AFIDA form to the state. In Wisconsin, those who must file under AFIDA must also file duplicates of the report with the Wisconsin Secretary of Agriculture, Trade and Consumer Protection.
Indiana requires a foreign business that acquires, sells, or transfers agricultural land for the purpose of crop farming or timber production to report within 30 days to the Secretary of State and the Attorney General. Agricultural land transferred in violation of this statute could be subject to forfeiture to the state.
Some states also have periodic filing requirements not based on real estate transactions or transfers. Iowa requires foreign businesses that own agricultural land to file a biennial report with Iowa’s Secretary of State regarding their land holdings in the state. Kansas also requires all corporations that own or lease more than ten acres of agricultural land in Kansas to file a biennial report with the Secretary of State.
Maine requires reporting on the same basis as AFIDA but also requires annual filings. These filings can all be satisfied in Maine by submitting copies of the same forms submitted under AFIDA.
Other Notes
Many of the same terms are used across state statutes, but those same terms are often defined in different ways by each state.
In Missouri, for instance, “agricultural land” is defined as land used for farming, and farming is using or cultivating land for the production of various products, including crops, livestock, dairy, and other similar products, including horticultural products. In Minnesota, on the other hand, “agricultural land” means land capable of use in the production of agricultural crops, livestock or livestock products, poultry or poultry products, milk or dairy products, or fruit and other horticultural products but does not include any land zoned by a local government for a use other than and nonconforming with agricultural use. In Maine, “agricultural land” means any land which is used or capable of use without substantial modification for the production of agricultural products including, but not limited to, crops, livestock, poultry, dairy products and sod.
These statutes often have a variety of exceptions that may limit their applicability. Some states provide just a few exceptions, while others provide a long list. For instance, one Arkansas statute limits the definition of agricultural land to only the land outside the corporate limits of a municipality. Many states also exempt entities utilizing the land for experimental purposes or research and development, as long as sales of agricultural products are below a certain percentage or incidental to the stated purpose. Some entities from countries where such rights are secured by treaty are also exempted from certain state prohibitions.
It is also important to note that failure to comply with these laws can result in significant penalties, including fines and, in some instances, divestiture of the legal interest or forfeiture to the state. Under one Arkansas statute, violating the reporting requirement can result in a penalty of up to 20% of the fair market value of the property. However, in a separate Arkansas statute related to “Prohibited Foreign Parties,” violations can result in up to two years’ imprisonment or a fine of $15,000. In Indiana, agricultural land transferred in violation of the law is subject to forfeiture to the state.
The increasing number of state-level restrictions on foreign investment in renewable energy project land highlights the evolving nature of the geopolitical landscape and the growing focus on energy security and agricultural resource protection. This is a constantly changing area, with new laws being enacted, and existing laws being amended, at a rapid pace. For instance, Tennessee enacted a statute effective July 1, 2023, which prohibited a sanctioned foreign business from acquiring real property in the state. That statute was completely overhauled, effective January 1, 2025, and now prohibits prohibited foreign parties or prohibited foreign-party-controlled businesses from acquiring any interest in agricultural land. The law also requires prohibited foreign-party-controlled business to register their non-agricultural land with the secretary of state. This new limitation focuses on entities related to countries subject to international traffic in arms regulations under 22 C.F.R. § 126.1.
Renewable energy developers and investors should be prepared to comply with all federal and state foreign ownership restrictions and requirements to avoid the potential of costly penalties.
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