Partner Eric McClafferty and trade analyst, Wyatt Mince, co-authored the World Pumps Magazine article “Regulatory Issues When Acquiring U.S. Pump Companies.” When a non-U.S. pump company is buying a U.S. pump company, the proposed acquisition may need to be reviewed by the Committee on Foreign Investment in the United States (CFIUS). In this
CFIUS
CFIUS Issues New Enforcement and Penalty Guidance
On October 20, the Committee on Foreign Investment in the United States (CFIUS or the Committee) issued a press release laying out new guidance to provide clarity about how the Committee assesses violations of the laws and regulations that govern transaction parties, including potential breaches of CFIUS mitigation agreements.
Penalties are possible for the following…
How New CFIUS Rules on Critical Technology Affect CFIUS Filing Strategy
The Department of Treasury’s office that administers reviews of foreign investments in U.S. companies is changing how it identifies critical technology businesses and related technologies that require mandatory review during a foreign investment process. The Committee on Foreign Investment in the United States (CFIUS or the Committee) issued a final rule effective October 15, 2020…
CFIUS Proposes to Collect Filing Fees for Certain Transactions
On March 9, the Department of the Treasury published in the Federal Register a proposed rule to allow the Committee on Foreign Investment in the United States (“CFIUS”) to collect filing fees for certain notified transactions. This proposed rule continues the implementation of the Foreign Investment Risk Review Modernization Act (“FIRRMA”), an overhaul of CFIUS…
CFIUS finalizes expanded jurisdiction over foreign transactions in U.S. real estate
On January 17, 2020, the U.S. Treasury Department published final rules in the Federal Register implementing the Foreign Risk Review Modernization Act (“FIRRMA”), one of which implements FIRRMA’s provisions regarding foreign investments in U.S. real estate. In accordance with FIRRMA’s expansion of Committee on Foreign Investment in the United States (“CFIUS”) jurisdiction, these final rules…
CFIUS to Cover More Foreign Investments in U.S. Companies
Companies outside the U.S. contemplating purchases of U.S. business (and potential U.S. acquisition targets) are continuing to parse the Department of the Treasury’s two proposed regulations continuing implementation of the Foreign Investment Risk Review Modernization Act (“FIRRMA”). The proposed rules change the Committee’s jurisdiction and certain procedures related to the national security reviews undertaken by the Committee on Foreign Investment in the United States (“CFIUS”). These proposed regulations provide additional clarity regarding how CFIUS intends to implement the FIRRMA amendments. When implemented, these regulations will formally expand CFIUS jurisdiction – but will also formalize current CFIUS practice in most respects. Implementation is scheduled to occur on or before February 13, 2020.[1]
Jurisdiction over non-controlling investments
Traditionally, CFIUS exercised jurisdiction over investments that result in the “control” of a non-U.S. person over a U.S. business. After FIRRMA implementation, CFIUS will have jurisdiction over certain investments that do not result in control by a non-U.S. person. Specifically, CFIUS will have jurisdiction over non-controlling investments if the investment is in a specific company type, and if it affords the investor specific, enumerated rights.
The draft regulations identify several company types that satisfy the first part of the test. The first type is a business that produces or otherwise deals in certain “critical technologies.” A separate statute[2] authorizes the Department of Commerce to identify these critical technologies. Although the Department of Commerce did identify examples of these technologies in a 2018 rulemaking, that process is not yet complete.
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Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA)
After months of negotiation, Congress recently passed, and the president is expected to sign, the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”).[1] FIRRMA updates the national security review of inbound investments undertaken by the Committee on Foreign Investments in the United States (“CFIUS” or “the Committee”), an interagency body located within the…

Congress Proposes Increased Scrutiny on Foreign Investments in the U.S.
A bipartisan group of co-sponsors in both the House and the Senate recently introduced the Foreign Investment Risk Review Modernization Act (“FIRRMA”). These substantively identical bills demonstrate that Congress is now considering increasing the scrutiny of foreign investment in the U.S., particularly from China.
The Committee on Foreign Investment in the United States (“CFIUS”) is the interagency body is responsible for reviewing incoming foreign investments for national security risks, so long as they are “covered transactions.” FIRRMA would broaden the scope of “covered transactions” to include, among other things: the purchase or lease by a foreign person of real estate located near U.S. military or national security interests; non-passive investments in critical technologies or critical infrastructure; and the contribution of U.S. critical technology to a foreign person, including through joint ventures, among others. The bills would also update certain terms and definitions, including “critical technology,” which can include emerging technologies that are not necessarily controlled for export. Notably, FIRRMA would not extend CFIUS jurisdiction to “greenfield” investments, which the regulations carve out from CFIUS review. …
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