USDA Pioneers FOCI Limits for Non-Defense Agencies

Read our August 2025 alert here.

In fulfillment of the National Farm Security Action Plan put forth by US Department of Agriculture (USDA) Secretary Brooke Rollins that was released on July 8, 2025, and in connection with a memorandum from Secretary Rollins declaring policies intended to put “America First,” the USDA ended the year by revising its general terms and conditions for USDA financial assistance to require recipients to certify that: 

They are not currently, and will not in the future, enter into any subawards, contracts, or other agreements, or otherwise provide any form of benefit (material or non-material) through either funded or unfunded work to any foreign person, foreign entity, U.S. citizen, or U.S. entity, that is subject to FOCI by a foreign country of concern or another foreign adversary. 

Notably, Secretary Rollins’ memorandum cites no statute, executive order (EO), or regulatory authority for requiring such a certification. Many provisions of the memorandum and revisions to the terms and conditions are directly based on presidential action. See EO 14332, Improving Oversight of Federal Grantmaking (directing agencies to revise grant terms and conditions to ensure easier termination and cancellation of grants failing to meet Administration priorities); EO 14292, Improving the Safety and Security of Biological Research (seeking to limit biological research “that could cause significant societal consequences or generate unnecessary national security risks.”); National Security Presidential Memorandum 33 (2021) (addressing foreign malign talent recruitment programs). In contrast, these presidential actions do not appear to directly require the foreign ownership, control, or influence (FOCI) provision, which could subject the provision, which has not gone through notice and comment rulemaking, to potential legal challenge.

Leaving aside those questions, this alert discusses the practical implications for recipients of USDA financial assistance awards that include the new FOCI provision and require the certification. 

Key Definitions

FOCI has long been used in the National Industrial Security Program to assess eligibility of firms for a facility security clearance and access to classified information, and the USDA uses the same definition. An entity is subject to FOCI when:

1. A “foreign interest” has the power to direct or decide matters affecting the entity’s management or operations in a manner that could: 
   1. Result in unauthorized access to classified information. 
   2. Adversely affect performance of a contract or agreement requiring access to classified information. 
2. The foreign interest exercises that power: 
   1. Directly or indirectly. 
   2. Through ownership of the US entity’s securities, by contractual arrangements, or other similar means. 
   3. By the ability to control or influence the election or appointment of one or more members to the entity’s governing board (e.g., board of directors, board of managers, board of trustees) or its equivalent. 
   4. Prospectively (i.e., is not currently exercising the power, but could).

A “foreign interest” includes foreign persons (i.e., any natural person who is not a US citizen) and foreign entities, which in turn includes foreign governments, foreign non-government entities (e.g., foreign corporations, business associations, partnerships, trusts, societies), foreign government instrumentalities, or multilateral organizations whose members are primarily foreign governments or non-government entities.

The new provision targets FOCI by a “foreign country of concern” (i.e., China, North Korea, Russian, and Iran) or another foreign adversary as defined or determined by the Secretary of the US Department of Commerce.

A Seemingly Required Flow-Down, But Important Uncertainties Remain

The FOCI provision covers two distinct time periods: the present and the future. With respect to future action, the provision has clear meaning. The recipient must certify that it will not “in the future” enter into arrangements or provide benefits to entities or individuals subject to FOCI by a foreign country of concern or another foreign adversary. 

But how would a recipient know whether an unrelated entity, whether subawardee or subcontractor, is subject to FOCI? In the facility security clearance context, an entity is only required to assess the FOCI of itself and its affiliates, subsidiaries, and corporate parents. A recipient of USDA financial assistance generally is not privy to the ownership structure, affiliations, and contractual relationships of its subcontractors and subawardees. While in theory a recipient could attempt to perform its own due diligence to assess whether its subcontractors and subawardees are subject to FOCI, it is far more likely that the recipient would simply flow down the certification to its lower tier awardees and contractors. A recipient should be able to rely on such a certification to avoid false claims liability in making its own certification (unless the recipient has affirmative knowledge the certification is inaccurate).

With respect to what a recipient of USDA financial assistance is doing “currently,” the FOCI provision is ambiguous. Either the recipient must certify that it itself is “not currently … [a] foreign person, foreign entity, U.S. citizen, or U.S. entity, that is subject to FOCI,” or the recipient must certify that it is “not currently … [a party to] any subawards, contracts, or other agreements, or otherwise provid[ing] any form of benefit” to one of the proscribed individuals or entities. There are reasonable arguments for either construction of the term, and either reading adds complexity. 

To the extent the certification is understood to require a recipient to certify that the entity itself is not under FOCI, then the recipient likely will desire greater insight and guidance as to how to apply the FOCI standard and whether traditional FOCI mitigation measures might be taken into account. Presently, the USDA general terms and conditions do not provide additional guidance or any safe harbor. In the security clearance context, the Certificate Pertaining to Foreign Interests, SF328, has long been used to assess the existence of FOCI, and assessing FOCI using the questions in that document (most recent version here), though not required, would be objectively reasonable and defensible.

Lack of Clarity

While the FOCI provision establishes significant compliance obligations, several aspects of the FOCI provision language present interpretive challenges:

• Scope of “benefit” is undefined. The provision prohibits providing “any form of benefit (material or non-material)” to FOCI-affected entities but does not define the boundaries of what constitutes a material or non-material benefit, leaving recipients uncertain about whether routine academic collaborations, conference presentations, or information exchanges might trigger compliance concerns. 

• “Funded or unfunded work” is expansive but unclear. The prohibition extends to both funded and unfunded work but provides no guidance on how recipients should track or monitor activities that fall outside the formal scope of the federal award. As noted above, extending the restriction to unfunded work increases the likelihood of a successful challenge to at least that aspect of the provision.

• Relationship between FOCI and classified information is unclear in non-classified contexts. The definition of FOCI is based on whether a foreign interest has the power to direct or decide matters affecting an entity’s management or operations in a manner that could result in unauthorized access to classified information or adversely affect performance of a contract or agreement requiring access to classified information. USDA awards rarely involve classified information. This raises questions about whether an entity that in every practical sense is owned, controlled, or influenced by a foreign interest in a country of concern may nonetheless certify it is not under FOCI due to the absence of classified information. 

Harbinger or Outlier? Implications and Recommendations

Organizations receiving or applying for USDA federal awards may wish to conduct a comprehensive review of their own foreign relationships using the SF 328 framework, implementing flowdown requirements and ongoing monitoring procedures for foreign affiliations, establishing clear protocols for assessing whether prospective collaborations may implicate FOCI concerns, and potentially adopting traditional FOCI mitigation measures. Given the uncertainties identified above, however, recipients may need to seek clarification from the relevant USDA awarding agency on specific compliance questions.

The USDA FOCI provision reflects broader federal policy concerns regarding foreign influence in research and development, particularly from countries of concern. The provision is potentially important to more than USDA recipients because it may be a harbinger of things to come. As we observed during the first few months of the Trump Administration, federal agencies shared broad themes in their approaches even if there was individual adaptation. The USDA’s America First and national security justifications for the FOCI provision is consistent with Trump Administration priorities and is potentially scalable (i.e., to other agencies). The inclusion of FOCI provisions in federal award terms signals increased scrutiny of foreign relationships across the research enterprise.

This client alert is for informational purposes only and does not constitute legal advice. Please contact Kevin Pinkney, Travis Mullaney, and Karen Carr with questions regarding the application of these provisions to your specific circumstances.