Trump Signs Bill Expanding Jurisdiction of Committee on Foreign Investment in the United States

  • President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law on August 13, 2018, broadening the powers of the Committee on Foreign Investment in the United States (CFIUS) to review mergers and acquisitions. FIRRMA amends the definition of “covered transaction” to include: (1) an investment by a foreign person in any U.S. business involved in critical infrastructure or the production, design or testing of critical technologies, or that maintains or collects sensitive personal data that could be exploited in a manner that threatens national security; (2) any change in a foreign investor’s rights that could result in foreign control of a U.S. business or an investment described in (1); (3) the purchase or lease by a foreign person of, or a concession to a foreign person with respect to, an air or maritime port, real estate in close proximity to military or other sensitive national security facilities, or real estate that could potentially expose national security activities to foreign intelligence collection or surveillance; and (4) any other transaction, transfer, agreement, or arrangement designed to circumvent or evade CFIUS review.

  • In addition to expanding the definition of a “covered transaction,” FIRRMA lengthens the CFIUS review process and makes filing with CFIUS mandatory for certain covered transactions. This is a departure from past practices, where all CFIUS filings were voluntary. FIRRMA also allows CFIUS to suspend certain transactions that pose national security threats during the review process.

  • The Treasury Department also released FAQs addressing the regulatory implementation of FIRRMA and stating when certain provisions become effective. According to the FAQs, FIRRMA enables CFIUS to “conduct pilot programs to implement provisions of the legislation that are not immediately effective” and to “issue interim regulations and guidance.” Read more in S&C’s previously released client memo.

  • CFIUS also announced it will hire additional personnel to handle the increased caseload resulting from FIRRMA’s expansion of CFIUS’s review powers. FIRRMA allows up to $20 million annually to fund CFIUS and permits CFIUS to offer prioritization fees and implement filing fees for covered transactions.

  • On October 10, 2018, the Treasury Department issued interim regulations for its first pilot program, requiring mandatory filings for control and non-control transactions by foreign investors in 27 industries involving critical technology beginning on November 10, 2018.