US Senate Introduces New CFIUS Legislation
On March 14, 2017, U.S. Senators Chuck Grassley (R-IA) and Debbie Stabenow (D-MI) introduced new legislation to “give top U.S. agriculture and food officials permanent representation on the Committee on Foreign Investment in the United States (CFIUS).” (Senator Grassley Press Release, Grassley, Stabenow Introduce Bipartisan Legislation to Protect American Agricultural Interests in Foreign Acquisitions, Mar. 14, 2017.) The proposed Bill, titled the “Food Security is National Security Act of 2017,” would amend Section 721 of the Defense Production Act of 1950 (the statute authorizing CFIUS) by: (1) adding new members to CFIUS relating to health and food security; and (2) adding a new factor concerning food security to the statutory list of factors that CFIUS must consider during its national security reviews.
First, the Bill proposes adding the Secretary of Agriculture and the Secretary of Health and Human Services as full-time members of CFIUS. CFIUS presently has nine voting members, five observer members that may participate in proceedings “as appropriate”, and two non-voting members. The number of members is important because transactions under review by CFIUS can only be cleared during the 30-day review period if all the voting members of the Committee agree to clear the transaction; otherwise, it moves to a 45-day investigation period, which is more onerous on businesses and burdensome to the Committee’s resources. Adding additional members to the Committee, therefore, may increase the number and duration of investigations conducted by CFIUS.
Second, the proposed Bill would add a new national security consideration to the enumerated list of required considerations in Section 721, such that CFIUS will now be required to consider “the potential effects of the proposed or pending transaction on the security of the food and agriculture systems of the United States, including any effects on the availability of, access to, or safety and quality of food.” This additional change, however, is not expected to expand the issues that CFIUS already reviews because it is already empowered to consider any “such other factors as the President or the Committee may determine to be appropriate, generally or in connection with a specific review or investigation.’’ .