CFIUS Authority on Real Estate Expanded

The Treasury Department on Friday issued a final rule that significantly expands the ability of the inter-agency Committee on Foreign Investment in the United States to review certain real estate transactions by foreign persons near more than 60 military bases and installations across 30 states.

CFIUS has the authority to review certain real estate transactions near specified military installations and to take action in appropriate circumstances. Nearly 60 military installations will be added to an existing list of military installations around which CFIUS has jurisdiction over real estate transactions and CFIUS jurisdiction around nearly 10 existing installations will be extended.

This latest update expands the reach of CFIUS’s real estate jurisdiction while maintaining its sharp focus on national security, Treasury said.

“Today’s final rule is a significant milestone in safeguarding critical U.S. military and defense installations,” said Assistant Secretary for Investment Security Paul Rosen. “The expansion of CFIUS jurisdiction around more than 60 military installations across 30 states highlights the work of CFIUS to be nimble and responsive to the evolving nature of the threats we face in the context of foreign investment that raises national security concerns.”

CFIUS jurisdiction over real estate transactions, provided by Congress in the Foreign Investment Risk Review Modernization Act of 2018, allows CFIUS to review the purchase or lease by, or concession to, a foreign person of real estate in the United States that is in close proximity to a military installation or another facility or property of the US government that is sensitive for reasons relating to national security; could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance.

The CFIUS regulations governing real estate transactions identify a subset of military installations around which certain real estate transactions are covered under CFIUS’s jurisdiction.

The Defense Department, a member of CFIUS, regularly assesses its military installations and the geographic scope established under the CFIUS regulations to ensure appropriate application in light of evolving national security considerations.

Key Changes

The final rule enhances CFIUS’s authorities through the following key changes:

• Expands CFIUS’s jurisdiction over certain real estate transactions to include those within a one-mile radius around 40 additional military installations;

• Expands CFIUS’s jurisdiction over certain real estate transactions to include those within a 100-mile radius around 19 additional military installations;

• Expands CFIUS’s jurisdiction over certain real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations;

• Updates the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites; and

• Updates the locations of seven military installations already listed in the current regulations to better assist the public in identifying the relevant sites.

Attacks on Gotion Project Fail.

During the public comment period, the Treasury Department received more than 40 comment submissions, quite a few related to the initiative of Rep John Moolenaar (R-MI) to stop the construction of an EV battery plant in his district. 

“Multiple commenters referenced a particular company, and some expressed the view that the company should not be permitted to build an electric vehicle battery facility in Michigan,” the rule reads.  “. One commenter also suggested that the Proposed Rule should apply retroactively so that CFIUS can review the particular transaction noted.”

“It would be inappropriate and outside the scope of the Committee’s rulemaking authority to specify the application of the regulations to a particular entity or a specific transaction in the course of a rulemaking…[T]his Final Rule does not apply retroactively to any transaction for which (1) the completion date is prior to the effective date set forth herein; or (2) the parties to the transaction have executed, prior to the effective date set forth herein, a binding written agreement, or other binding document, establishing the material terms of the transaction.”

• Final Rule: Definition of Military Installation and the List of Military Installations in the Regulations Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States