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Newly Expanded CFIUS Jurisdiction

Investments and Real Estate Transactions Involving Foreign Investors

On February 13, 2020, new regulations will take effect that will significantly broaden the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”), an interagency body chaired by the Treasury Department, by granting CFIUS significant new review power over foreign investments in United States businesses and real estate. See 31 CFR §§ 800, 802. The new regulations will implement the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which was enacted by Congress in August 2018 with an eye towards allowing CFIUS to better address national security concerns resulting from foreign investments and real estate transactions. The regulations generally cover two categories of transactions: i) foreign investments in certain U.S. businesses; and ii) foreign investments in certain U.S. real estate transactions. The new regulations apply to transactions that are proposed or pending on or after February 13, 2020, the date the regulations take effect.

Foreign Investments in U.S. Businesses (31 CFR § 800)

Under the new regulations, CFIUS will have express jurisdiction to review certain foreign investments in TID U.S. businesses. A “TID U.S. business” is one that deals in specific types of Technology, Infrastructure, or Data, and is defined in the regulations as “any U.S. business that: (a) [p]roduces, designs, tests, manufactures, fabricates, or develops one or more critical technologies;” (b) performs certain enumerated functions “with respect to covered investment critical infrastructure; or (c) [m]aintains or collects, directly or indirectly, sensitive personal data of U.S. citizens.” 31 CFR § 800.248. If these criteria are met, even a minority “Covered Investment” may be subject to CFIUS review. Section 800.211 defines a “Covered Investment” to include “an investment, direct or indirect, by a foreign person other than an excepted investor, in an unaffiliated TID U.S. business” which gives the foreign person: “(1) Access to any material nonpublic technical information in the possession of the TID U.S. business; (2) Membership or observer rights on, or the right to nominate an individual to a position on, the board of directors or equivalent governing body of the TID U.S. business; or (3) Any involvement, other than through voting of shares, in substantive decisionmaking of the TID U.S. business” regarding subjects including sensitive personal data of American citizens, critical technologies, and/or critical infrastructure.

For most foreign investments, CFIUS review will continue to be voluntary, whereby parties may file a CFIUS joint voluntary notice or a short-form declaration — new under the regulatory regime — if they wish to seek CFIUS clearance and a statutory safe harbor. CFIUS review is mandatory, however, for transactions that result in a foreign government-controlled entity acquiring a substantial interest in a TID U.S. business, including if a foreign government has a substantial interest[1] in a foreign person involved in the transaction. As discussed below, however, transactions involving government-controlled entities from certain foreign states are excepted from these requirements. Mandatory filings must be made at least 30 days before the transaction is completed and can be completed via either the traditional CFIUS notice or the new short-form declaration.

Foreign Investments in U.S. Real Estate Transactions (31 CFR § 802)

Under the new regulations, CFIUS will have the express authority to review any sale, lease, or concession to a foreign person (defined to include any foreign national, government, or entity, as well as any entity controlled by such a national, government, or entity) if that foreign person is granted three of the following four rights: i) the right to physically access the property; ii) the right to exclude others from doing so; iii) the right to improve/develop the property; and iv) the right to attach structures to the property. In addition, CFIUS will have the power to review any real estate acquisitions of “covered real estate,” which includes real estate within maritime ports and airports, as well as real estate within specified proximities of military facilities and other U.S. government property that is considered sensitive for national security reasons. In particular, certain military installations and government facilities designated in an appendix to the regulations are subject to a one-mile radius for CFIUS review (“close proximity”), while others are designated with an extended radius of generally up to 100 miles (“extended range”). Covered real estate also includes real estate within certain designated U.S. geographic areas (provided in an appendix to the regulations) and certain U.S. government offshore installations within U.S. territorial seas.

In addition to the exemptions for excepted investors described below, there are other exemptions to CFIUS’s real estate review jurisdiction for certain transaction types. Specifically, transactions involving single housing units, real estate in “urbanized areas” or an “urban cluster” (in each case, unless within close proximity to those military installations and government facilities designated in the appendix or part of a covered port), real estate leases in airports and ports by foreign air carriers for retail purposes, and certain commercial spaces in multiunit commercial buildings are exempt from this new CFIUS jurisdiction.

Importantly, CFIUS review for transactions purely in real estate remains voluntary. Under the new regulations, there will be no mandatory notice requirements applicable to real estate transactions. If parties wish to seek CFIUS review and clearance, then the regulations provide, in addition to the existing voluntary notice procedures, the option of filing a short-form declaration, which will be subject to a shorter review period. Upon reviewing such a notice or declaration, CFIUS may provide a statutory safe harbor letter for a particular transaction. Without such review, however, parties may be subjected to a review initiated by CFIUS, which can occur even after the closing of a transaction, and CFIUS is empowered to block transactions as well as require divestment by foreign persons in order to mitigate national security concerns.

Exceptions to the Regulations

The regulations designate “excepted foreign states”—currently only the United Kingdom, Australia, and Canada—from which certain investors will be exempt from parts of the regulatory scheme due to decreased national security concerns. These countries’ excepted foreign state status will last for two years and then be subject to review based on separately determined requirements, which are forthcoming from the Treasury Department. It is possible that other states may be added to the excepted foreign states list in the future.

Certain “excepted investors” from these countries will be exempt from CFIUS’s review of non-controlling investments in U.S. TID businesses and from scrutiny of certain of the real estate transactions CFIUS is now empowered to review. However, such an investor first must demonstrate substantial ties to one of the excepted foreign states or to the United States (e.g., be organized under the laws of that state or have its principal place of business there) and must have less than 25% board membership from other non-excepted jurisdictions, as well as have no individual foreign investors from non-excepted states with holdings (individually or as part of a group) exceeding 10% of the voting interests. In addition, investors who have violated certain CFIUS requirements or other laws in the past may be disqualified from achieving excepted status.

The regulations also include exemptions for non-controlling investments made in TID U.S. businesses through “investment funds managed and controlled by U.S. persons” as long as the investor is not the general partner or managing member of the fund, does not have access to material nonpublic technical information of the business, and does not have the ability to control the investment fund in certain specified ways. The regulations make clear that advisory board actions do not constitute fund control.


The new regulations represent an historic broadening of CFIUS’s express authority, and although CFIUS has exercised implied authority in many of these areas for some time, the change could result in an overwhelming volume of notifications for which the Committee lacks sufficient capacity. It is unclear how actively CFIUS will pursue its new jurisdiction, but it is important that parties to investment and real estate transactions be aware of the new possibility of triggering CFIUS’s jurisdiction. All parties engaging in any investment or real estate transaction involving a foreign person should carefully consider, and consider seeking counsel regarding, the applicability of these new regulations.


1 In the case of a TID U.S. business, a “substantial interest” means an at least 25% voting share (whether direct or indirect). In the case of a foreign person, a foreign government has a “substantial interest” if the foreign government has an at least 49% voting interest in the foreign person.

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About this Author

Steve Ganis, Mintz Levin, Derivatives Litigation Attorney, AML Sanctions Lawyer

Steve has over 15 years of experience as a government and private-sector lawyer practicing financial services law, specializing in the federal banking, securities, and derivatives laws. He is globally recognized for his knowledge of anti-money laundering (AML) and sanctions regulations.

He handles a wide range of matters for institutions and high-level financial services executives involving regulation of clearing and introducing broker-dealers, mutual funds, hedge funds, transfer agents, private equity funds, institutional investors, banks,...

Robert G. Kidwell Member Mintz DC Antitrust Health Care Enforcement & Investigations Communications Complex Commercial Litigation

Rob’s Washington, DC-based competition and trade regulation practice involves counseling on the regulatory implications of business strategies, regulatory matters, policymaking, and litigation. He defends clients in complex litigation and in merger and regulatory reviews by the US Department of Justice, the Federal Trade Commission, the Committee on Foreign Investment in the US, and the Federal Communications Commission. Rob’s clients include media and telecommunications companies, health systems and providers, national retailers, trade associations, and life sciences and technology companies.

Rob counsels a broad range of clients on business and investment strategy, M&A, litigation, and regulatory matters. He specializes in clearly explaining strategic risks and their relative values in order to help senior executives make informed decisions. Rob provides advice to clients from across the country and around the world, in high-profile matters including:

  • Strategic business planning and risk management 

  • Antitrust issues in mergers and acquisitions / second requests

  • Complex litigation (class action and otherwise)

  • Regulatory issues arising from foreign investments in U.S. businesses

  • Federal and state regulatory investigations

  • Policy advocacy and notice-and-comment rulemaking 

  • Appellate review of agency action

  • Trade association counseling

  • Privacy and data security

  • Unfair/deceptive conduct and false advertising

Rob represents clients in numerous markets, including:

  • Media content and distribution
  • Wireless communications
  • Health care providers and services
  • Life sciences
  • Technology
  • Retail & Consumer Products
  • Trade associations and non-profits

He has written and spoken widely on litigation risk management and cost containment, developments in the law, and on issues faced by businesses when they interact with federal and state enforcers and administrative agencies.

Rob is an active supporter of the firm’s pro bono program, providing representation to numerous indigent clients before the Social Security Administration and in local family and domestic relations courts. He has provided corporate and business planning advice to the National Network to End Domestic Violence and other non-profit clients. He is also an active supporter of the firm’s mentoring and sponsorship program.

Prior to his career in the law, Rob was an on-air radio personality and station production director in Lexington, KY.