A new legislative trend is emerging regarding international investment in the United States. Lawmakers are pushing for stricter regulations on Foreign Direct Investment (FDI), particularly concerning Greenfield projects, through the Committee on Foreign Investment in the United States (CFIUS).
CFIUS currently serves as a review committee for specific inbound FDI transactions, assessing their potential risks to national security. To address concerns about foreign adversary entities acquiring land near sensitive sites, including military facilities, members of the U.S. House have introduced the Protecting U.S. Farmland and Sensitive Sites From Foreign Adversaries Act.
This bill aims to grant CFIUS jurisdiction over real estate transactions involving foreign adversaries, such as China, Cuba, Iran, North Korea, Russia, and Venezuela. In its reviews, CFIUS would also consider food security issues, including biotechnology acquisitions and farmland purchases near sensitive sites. Additionally, the bill mandates that the Secretary of Agriculture has a vote in transactions involving farmland or agriculture technology.
Furthermore, the bill introduces a “presumption of non-resolvability” for CFIUS reviews, meaning transactions by foreign adversary entities purchasing land near sensitive sites would face a higher approval threshold. Under this presumption, CFIUS would review such transactions with the assumption that national security concerns cannot be resolved. This could make it challenging for investors to proceed with such transactions, where significant mitigation measures are expected. Currently, CFIUS reviews each case individually without presumptions. If passed, this bill would likely limit Chinese real estate transactions, such as the Fufeng Group deal mentioned in a previous blog post.
Other provisions of the Protecting U.S. Farmland and Sensitive Sites From Foreign Adversaries Act include:
- Requiring foreign adversary entities making land purchases near sensitive sites to file mandatory CFIUS reports.
- Expanding the list of sensitive national security sites under CFIUS jurisdiction to include intelligence sites, national laboratories, defence-funded university research centres, and more.
It’s important to note that the heightened scrutiny is specifically targeted at foreign adversaries, while current key trading partners would continue to undergo standard review processes.