“CFIUS Reform Flies, But With Clipped Wings”
The House of Representatives has approved the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which significantly expands the scope of the Committee on Foreign Investment in the United States (“CFIUS”). The bill is included in H.R. 5515, the John S. McCain National Defense Authorization Act for Fiscal Year (FY) 2019 (“NDAA”). The House-Senate conference report on the defense bill was approved by a vote of 359-54. Senate approval is expected shortly. The President is expected to approve the bill. Among other things, the legislation broadens CFIUS review to include real estate transactions (including leases) in proximity to sensitive government installations, as well as non-controlling foreign investments in critical infrastructure and critical technology companies. The bill also seeks to streamline the CFIUS process.
This Stroock Special Bulletin provides an overview of the key reforms effected through FIRRMA. CFIUS is the multi-agency government panel that reviews foreign acquisitions to assess their impact on national security. Following CFIUS review, the President can veto or unravel deals deemed to threaten U.S. national security.