Both Houses of Congress Pass FIRRMA Bills to Enhance CFIUS Capabilities

On June 18, 2018, the Senate passed its version of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) as an attachment to defense appropriations legislation. The bill would expand the statutory definition of “covered transactions” to include foreign non-passive investments in any U.S. critical technology or infrastructure, purchases of real estate located close to ports and other sensitive U.S. government facilities, changes in a foreign investor’s rights resulting in foreign control or a non-passive investment in a U.S. business, and any other transaction designed to circumvent CFIUS’s jurisdiction. The legislation would also update the definition of “critical technologies” to include newly identified emerging and foundational technologies key to U.S. national security. If the bill is enacted, the initial review process would be extended from 30 to 45 days and up to 75 days under extraordinary circumstances, and a light filing “declaration” process would be created for simpler cases.

On June 26, 2018, the House also passed a FIRRMA bill which would alter the scope of transactions subject to CFIUS review and institute fees capped at the lesser of $300,000 or 1% of the value of the proposed transaction to help fund its operations. This bill would no longer expand the committee’s jurisdiction beyond acquisitions of U.S. companies to other transaction structures like joint ventures that would result in outbound technology transfers, as the first draft of the bill proposed. Instead, these transfers would be regulated by other government bodies such as the Department of Commerce. The bill would also cover transactions where investors from certain “countries of special concern” would gain access to personal information of U.S. citizens, and would allow CFIUS to consider whether an investment could threaten U.S. jobs and skills that are critical to national security.