Category: Homeland Security

The House of Representatives on June 26 voted 400-2 to pass legislation (H.R. 5841) that overhauls federal review of transactions involving foreign companies or countries, including certain real estate transactions. The Senate on June 18 passed its version of the legislation (S. 2098).  (Dechert, June 2018) 

Both the House and Senate FIRRMA bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities.

• The bills would update the review authority of the Committee on Foreign Investment in the U.S. (CFIUS) to review national security implications of transactions that could result in control of a U.S. business by a foreign person – and to block transactions or impose measures to mitigate any threats to U.S. security.
• Both the House and Senate bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities.  Responding to concerns raised by The Roundtable and other industry groups, each bill includes similar language designed to exempt real estate located in ‘urbanized areas’ from the criteria of a covered transaction.  [See Title II, Sec. 201in the House’s Foreign Investment Risk Review Modernization Act of 2018 (FIRMMA) and for S. 2098, see  pages 7 through 9].  The Census defines an urbanized area as one comprising more than 50,000 people.

While the House and Senate bills are similar, the definition of “critical technology” differs and will require reconciliation before a final vote in each chamber. The Trump Administration has shown support for reforming FIRRMA to strengthen CFIUS’ oversight.

Separate bills that would overhaul the process for reviewing foreign investment risk – including a purchase or lease by a foreign party of domestic properties located close to sensitive U.S. facilities – received unanimous approval Wednesday by the Senate Banking and House Financial Services Committees.  (Lexology, May 23)

Real estate provisions in  S. 2098  appear on pages 7 through 9.

• The committees’ revised versions of the Foreign Investment Risk Review Modernization Act (FIRRMA) – S. 2098 and HR 5841 – seek to modernize and strengthen how the Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions, mergers, and other foreign investments in the United States for national security risks.  Both bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities. (Real estate provisions in S. 2098 appear on pages 7 through 9.)
• As a result of industry discussions with Senate and Treasury staff, the new legislative drafts include the addition of language designed to exempt real estate in ‘urbanized areas’ from the criteria of a covered transaction.  The Census defines an urbanized area as one comprising more than 50,000 people. 

FIRRMA may be ready for floor consideration in the House and Senate before the August congressional recess. The Trump Administration has shown support for reforming FIRRMA to strengthen CFIUS’ oversight.