On August 13, 2018, the Foreign Investment Risk Review Modernization Act of 2018 ("F.I.R.R.M.A.") was signed into law after receiving broad bipartisan support in Congress.  F.I.R.R.M.A. strengthens and modernizes the Committee on Foreign Investment in the United States ("C.F.I.U.S.") review process and marks the most sweeping changes to C.F.I.U.S. in over a decade.  C.F.I.U.S. operates pursuant to Section 721 of the Defense Production Act of 1950.  It is an interagency committee authorized to review certain transactions involving foreign investment in the U.S. ("covered transactions").  Its mandate is to determine the effect of such transactions on the national security of the U.S. and, where appropriate, to deny approval to the transaction.  F.I.R.R.M.A. addresses national security concerns arising from certain foreign non-controlling investments and real estate transactions that previously fell outside C.F.I.U.S.'s jurisdiction.

At the time of adoption of F.I.R.R.M.A., C.F.I.U.S. was directed to consider the following matters in making its determinations:

  • Does a foreign person engaging in a covered transaction with a U.S. business have a history of complying with U.S. laws?
  • How likely is it that a covered transaction will expose personally identifiable information, genetic information, or other sensitive data of U.S. citizens to a foreign government or foreign person that may exploit that information in a manner that threatens national security?
  • How likely is it that a covered transaction will exacerbate or create new cybersecurity vulnerabilities in the U.S. or is likely to result in a foreign government gaining a significant new capability to engage in malicious cyber-enabled activities against the U.S., including such activities designed to affect the outcome of any election for Federal office?

Given the timing of the enactment of F.I.R.R.M.A., it is likely that ongoing concerns about Chinese investment in the U.S. and the activities of Russia around the election played a significant part in its drafting.

More than one year after its enactment., the Department of the Treasury has now issued proposed regulations that would comprehensively implement F.I.R.R.M.A.  The public has been given until October 17, 2019, to provide the Treasury Department with comments on the proposed regulations.  The comment period concludes on October 17, 2019.

The F.I.R.R.M.A. statutory provisions and the regulations issued by the Department of the Treasury are laid out below.

Download F.I.R.R.M.A. Proposed Regulations Expand C.F.I.U.S. Oversite On Foreign Investment

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