GAO Says USDA Tracking of Foreign Land Ownership 'Flawed'
The GAO report released Thursday details a list of challenges plaguing the USDA's efforts to track foreign landholdings, including a handbook that provides "limited instructions" on collecting information, data entry errors in agency spreadsheets, and funding constraints limiting the creation of a searchable database of foreign landholdings.
These challenges, the report says, make it difficult to know how accurate the data the agency collects under the Agricultural Foreign Investment Disclosure Act really is.
"USDA has begun efforts to identify AFIDA non-compliance through data mining, according to officials, and has opportunities to expand this practice," the report says. "But without improving its internal processes, USDA cannot report reliable information to Congress or the public about where and how much agricultural land is held by foreign persons."
The GAO audit was requested in October 2022 by House Ag Committee Chairman Glenn Thompson, R-Penn., and 129 other GOP House members amid concern over the accuracy of current AFIDA information.
Under AFIDA, which was enacted in 1978, foreign investors must file documentation with USDA detailing land acquisitions and dispositions or incur a late fee worth 0.1% of the land's value for each week purchases go unreported, with the penalty capped at 25% of the land's value.
Agency staff then review the forms and, if satisfied with their accuracy and completeness, type the information into a spreadsheet.
Not every foreign entity that holds land files reports on time, however, and the USDA in recent years has struggled with the task of penalizing those that don’t.
Talking points prepared for Ag Secretary Tom Vilsack in 2023, obtained by Agri-Pulse through a Freedom of Information Act request, say “poor record keeping” at the agency “resulted in inconsistent reports that could not be used as the basis to assess penalties” between 2016 and 2020. The document said “very limited staffing” also posed a challenge from 2015 to 2018.
The GAO recommended that the agency ensure it has processes to provide "detailed and timely" AFIDA transaction data to CFIUS members and analyze how far it could come in satisfying the FY2023 Appropriations Act without more resources. It also said the chief officer of the FPAC business center should work to continue scanning farm program records for noncompliance, find ways to ensure AFIDA reporting is complete and improve processes to review and validate collected information.
Allan Rodriguez, a USDA spokesperson, told Agri-Pulse in a statement that fulfilling some of these recommendations would require more resources and changes in current laws.
"The GAO’s recommendations would require changes by Congress, starting with the funding needed to increase staff and modernize our processes, in addition to a change in data collection mandates down to the county level," Rodriguez said in the statement.
He added that creating a national system for tracking land purchases would be "complicated, expensive, and create a potential risk to producer privacy, the price of agricultural land, and individual American seller interests."
"As Congress considers the issues around the ownership of agricultural land it will be essential for them to consider a system that balances these issues and is workable for USDA, producers, landowners, and county government staff on the ground,” Rodriguez said.
The process of tracking landholdings relies on collaboration between the Farm Service Agency's AFIDA office in Washington and the hundreds of state and county offices located across the country. The handbook that employees at these offices use for guidance "provides limited instructions on how FSA state and county offices should collect reliable AFIDA information, and lacks guidance on how to verify information on AFIDA forms," the report says.
The AFIDA form, for instance, is supposed to include the names of titleholders and not shareholders, according to the current handbook. But the book does not explain how to verify whether the name submitted is, in fact, the titleholder, which can be done by reviewing the deed, the report says.
GAO also found missing information on some of the submitted forms, according to the report. Agency officials told GAO they do reach out to filers about missing information, but sometimes do not get a response.
Some of the agency's spreadsheets also contain duplicate information. Over 27,000 acres of land owned by the China-based Brazos Highland Properties, for instance, "is duplicated in both the AFIDA spreadsheet and the most recent FSA annual report" due to the ownership changing, but the old record not being removed.
Many of these errors, GAO says, happened when data was being entered into the agency's spreadsheet.
"AFIDA data entry errors often occur because headquarters staff manually enters information from AFIDA forms into a spreadsheet without sufficient internal controls to prevent or identify these errors," the report says. "USDA officials said they cannot prevent multiple users from accessing the AFIDA spreadsheet at the same time, so they coordinate access internally to prevent duplicate entries."
Agency officials told the GAO they were making efforts to correct missing information by following up with filers about missing values and doing additional data checks.
Lawmakers included language in the fiscal 2023 appropriations bill requiring the agency to accept filings online and to create a searchable database of foreign investment information. The USDA requested $1 million from Congress in fiscal 2024 to design the new database, although agency officials told GAO they would need around $25 million if they were to include all historical disclosures, due to the need to scan and digitize records dating back to 1978.
So far, the USDA's Farm Production and Conservation Center has published Excel spreadsheets with yearly data from 2021 to 2021 on its website to comply with the requirement, though it has not yet posted one for 2022. The agency is also looking at revisions to its FSA-153 form to capture more detailed information, particularly on long-term leases.
FPAC Deputy Secretary Gloria Montaño Greene told GAO in a letter that doing more would require additional funds from Congress.
"Beyond revising and updating the FSA-153 form, we have communicated to Congress that we cannot make progress on IT development until funding is provided for IT system creation and additional IT staffing," she wrote.
Montaño Greene told GAO the agency has combed through other farm program data to find non-U.S. citizens and non-residents that did not file AFIDA paperwork and sent letters alerting them to the requirements. Only a few of these producers, most of whom farm only 10 to 20 acres, responded, she said.
"It is possible that many letter recipients discerned that they could face a large penalty (up to 25 percent of the fair market value of the land) and decided to not respond, thinking that the U.S. government is not going to pursue them for such small acreage," she wrote. "It is also possible that low-resourced producers may not be able to fully respond to the letter."
Montaño Greene also said the agency is currently working on updates the existing AFIDA handbook.
The USDA does provide information annually to the Committee on Foreign Investment in the U.S., an interagency body tasked with screening foreign investments in U.S. companies or property for potential threats to national security. But the Department of Defense, a member of the committee, told GAO that this information is not submitted on a timely enough basis to be used in their reviews. The agency currently must search the website of each municipality when looking for information on land transactions, rather than looking in one place, the report said.
Montaño Greene told GAO that AFIDA staff do send copies of FSA-153 filings affiliated with investors from China, Russia, North Korea or Iran to the Department of Defense and FBI. But this process currently relies on employees to manually scan and email the documents, which she said makes providing other real-time submissions to agencies difficult without an online AFIDA portal.
"If funding becomes available for a filing portal, the Farm Production and Conservation-Business Center (FPAC-BC) will work to ensure that our inter-agency partners have access to more real-time data, either directly through the portal or through weekly or monthly FSA-153 filing summaries," she wrote in the letter.