National Security Reviews of Foreign Investments in the US - McDermott

CFIUS Developments: National Security Reviews of Foreign Investments in the United States


In this article, we discuss two notable recent developments in CFIUS reviews: First, CFIUS’s expanded jurisdiction over foreign investments in companies that receive emergency COVID-19-related DPA financing, and second, the filing fee CFIUS now imposes for its reviews.

In Depth

During the COVID-19 pandemic, while much of the staff of the Committee on Foreign Investment in the United States (CFIUS) has been working remotely, CFIUS has maintained a robust workload. So far, the committee has continued to accept notifications of covered transactions and to conduct timely national security reviews. Among other evolving aspects of CFIUS reviews, two particular recent developments are notable: (1) CFIUS review authority has specifically extended to foreign investments in companies that receive emergency COVID-19-related DPA financing, and (2) CFIUS now imposes a filing fee for its reviews.

CFIUS Jurisdiction Over Foreign Investments in Critical US Infrastructure Includes Businesses Receiving COVID-19-Related DPA Funding

CFIUS, an interagency federal committee chaired by the US Treasury Department, is authorized by Title VII of the Defense Production Act (DPA) to review acquisitions of, and certain investments in, US businesses by foreign parties, in order to determine any threats to US national security. A principal feature of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) was an expansion of CFIUS’s jurisdiction to review certain controlling and non-controlling investments in US businesses involving critical technology, critical infrastructure and sensitive personal data of US citizens. In its new regulations implementing FIRRMA, CFIUS included an exhaustive list of the types of critical infrastructure within its mandate (Appendix A to 31 CFR Part 800), specifically including foreign investments in US businesses that:

Manufacture any industrial resource other than commercially available off-the-shelf items, as defined in 41 USC 104, as amended, or operate any industrial resource that is a facility, in each case, that has been funded, in whole or in part by …. {a} Defense Production Act of 1950 Title III program, as amended (50 USC 4501 et seq.). (31 CFR Part 800 Appendix A)

Based on this critical infrastructure definition, certain foreign investments in US businesses with COVID-19-related DPA Title III contracts would be subject to possible CFIUS review for a period of five years (60 months) following receipt of DPA Title III funding.

CFIUS Now Imposes Filing Fees for Most Reviews

Pursuant to recently published interim regulations, for the first time, CFIUS will impose filing fees for any formal written notice of a “covered transaction” or “covered real estate transaction” filed with CFIUS on or after May 1, 2020. (No fee will be charged for submission of short-form declarations submitted by parties in lieu of full notices.) Applicable fees must be paid before CFIUS will accept a notice and begin a review. Fee amounts will vary depending on the value of the transaction at issue, generally based on the total value of all consideration paid by or on behalf of the foreign party to the transaction. Following is a table of the required fee amounts.

  Transaction Value                               CFIUS Filing Fee

$0 to $499,999.99


$500,000 to $4,999,999.99


$5,000,000 to $49,999,999.99


$50,000,000 to $249,999,999.99


$250,000,000 to $749,999,999.99


$750,000,000 +


CFIUS has the discretion to grant waivers for the filing fee, in whole or in part, and refunds are available in limited circumstances, including when CFIUS determines the transaction is not a “covered transaction” or “covered real estate transaction.” In cases where CFIUS allows parties to withdraw and refile a notice, the filing fee would not need to be paid again unless a material change to the transaction has occurred or the filing contained a material inaccuracy or omission.