On September 17, 2019, the Department of the Treasury issued two new proposed regulations to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) which expand the scope of transactions subject to review by the Committee on Foreign Investment in the United States (CFIUS). The first proposed regulation (31 CFR Part 800) expands CFIUS jurisdiction to review non-controlling foreign investments in U.S. businesses involved in critical technology, critical infrastructure, or sensitive personal data. These businesses are referred to as "TID businesses"— technology, infrastructure, and data. The proposed rule adds a mandatory filing requirement for certain transactions that result in a foreign government gaining a "substantial interest" in a U.S. business. Filing is also mandatory for covered transactions involving U.S. businesses related to critical technologies.
The second proposed regulation (31 CFR Part 802) would expand CFIUS authority to review certain types of real estate transactions involving "foreign persons." Under the proposed regulation, CFIUS would be able to review certain real estate transactions where a foreign person gains property rights even absent control of a U.S. entity. CFIUS review would be triggered in those transactions if the real estate is related to an airport and maritime port, or located near U.S. government properties with national security importance, such as military facilities. This includes real estate that will function as, is included within, or is part of an airport or maritime port; real estate in physical to certain military/national security sites; and real estate that is within a specified geographic area around missile fields and off-shore ranges.
The final regulations will be put into effect by February 13, 2020. Department of the Treasury FAQs regarding the proposed regulations can be found here; a Fact Sheet is available here; and more information can be found on the CFIUS webpage.
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