March 14, 2019
Deadlines, Programs, and Regulations Mandated by FIRRMA
Overview
used in freight rail, public transportation rail systems, or
On August 13, 2018, President Trump signed the Foreign
intercity passenger rail systems in the United States. The
Investment Risk Review Modernization Act of 2018
Secretary of Homeland Security is also required to consult
(FIRRMA) (Subtitle A, Title XVII, P.L. 115-232). Various
with the Secretary of Transportation and any agency head
provisions became effective upon implementation, while
not represented on CFIUS with significant relevant
interim rules for some provisions became effective on
technical expertise.
October 11, 2018. Among other items, FIRRMA required
the Committee on Foreign Investment in the United States
Assessing CFIUS resources. The President is required to
(CFIUS) to meet certain deadlines in programs and
determine for FY2019 and each year thereafter, the extent
reporting and develop new regulations. In addition, in
to which the expansion of responsibilities require additional
October 2018, the Treasury Department published in the
resources for CFIUS; member departments and agencies are
Federal Register preliminary rules implementing certain
required to request additional resources in the budget.
provisions of FIRRMA through a pilot program, which took
effect on November 10. FIRRMA’s implementation may
Prioritization fee. Not later than 270 days after enactment,
raise several questions for the 116th Congress. Such as the
the CFIUS chair is required to complete a study of the
extent to which modernization of CFIUS and its review of
feasibility and merits of establishing a fee or fee scale to
foreign direct investment transactions for their national
prioritize the timing of a response by CFIUS to a draft or
security implications will safeguard U.S. national security
formal written notice during the period before the
interests, particularly those related to strategic competition
Committee accepts the formal written notice. CFIUS is
for leading edge technology.
required to submit a report of the findings to the Senate
Banking and House Financial Services Committees.
Deadlines
Under FIRRMA, a number of provisions became effective
Implementation plans. Not later than 180 days after
upon enactment to: (1) expand the scope and jurisdiction of
enactment, CFIUS is required to develop plans to
CFIUS by defining such terms as “covered transactions”
implement FIRRMA, submit a report on the plan to
and “critical technologies”; (2) refine CFIUS procedures,
appropriate congressional committees, including
such as timing for reviews and investigations; and (3)
description of the timeline and process for implementation,
require actions by CFIUS to address national security risks
and any necessary additional staff and resources.
related to mitigation agreements, among other areas.
Treasury’s interim rules updated and amended existing
Annual resource needs. Not later than one year after
regulations in order to implement certain provisions
enactment and annually thereafter for 7 years, each agency
immediately. FIRRMA also required CFIUS to take certain
and department represented on CFIUS is required to submit
actions within prescribed deadlines for various programs,
to the appropriate congressional committees a detailed
reporting, and other plans. These include:
spending plan, including estimated expenditures and
staffing levels for not less than the following fiscal year.
Recusal of CFIUS members. Within 90 days of enactment
of FIRRMA, CFIUS is required to: establish procedures for
Testimony. Not later than March 31st of each year, the
members of CFIUS to recuse themselves in cases where
chairperson or designee of CFIUS is required to appear
they may have a conflict of interest, prepare a report on
before the House Financial Services and Senate Banking
recusal for the Senate Committee on Banking, Housing, and
Committees to provide testimony on various topics,
Urban Affairs and House Committee on Financial Services,
including: anticipated resource needs, the adequacy of
and brief the committees on the report.
appropriations, the expeditious nature of reviews and
investigations, mitigation agreements, and transactions in
Report on Chinese investment. Within two years of
which a written notification or a declaration was not
enactment and every two years through 2026, the Secretary
provided to CFIUS.
of Commerce is required to submit to Congress and CFIUS
a report on foreign direct investment by Chinese entities.
Pilot Program
The impetus for FIRRMA emerged from concerns that ‘‘the
Report on rail investments. Within one year after
national security landscape has shifted in recent years, and
enactment, the Secretary of Homeland Security, in
so has the nature of the investments that pose the greatest
coordination with CFIUS, is required to submit a report to
potential risk to national security….’’ As a result, FIRRMA
Congress assessing the national security risks related to
directed Treasury to develop a pilot program to address
investments by state-owned or state-controlled entities in
concerns related to some provisions and allow time for
the manufacture or assembly of rolling stock or other assets
additional resources to be directed at developing a more
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Deadlines, Programs, and Regulations Mandated by FIRRMA
permanent regulatory response. The pilot program
Changes in Regulations
implements authorities in two sections of FIRRMA by: (1)
FIRRMA also changed the existing CFIUS statute through
expanding the scope of transactions subject to a CFIUS
new regulations. Seven of 15 mandated regulations concern
review to include certain investments involving foreign
the definition of a covered transaction, or a merger,
persons and critical technologies; and (2) implementing
acquisition, or takeover (including joint ventures) of a U.S.
mandatory declarations for transactions within the
firm that could result in foreign control. The changes
program’s scope. The pilot program is to end no later than
broaden the scope of a CFIUS review by including certain
March 5, 2020.
real estate transactions located within, or function as part
of, an air or maritime port, or are located within “close
Mandatory CFIUS Reviews for Certain Non-
proximity” to certain U.S. military installations. Changes in
Controlling Investments
investor rights that could result in foreign control and other
FIRRMA altered the CFIUS process for reviewing foreign
transactions designed to evade CFIUS review are also
investment by shifting from a voluntary filing process to a
covered. In addition, CFIUS can now regulate investments
mandatory filing and review process. Filings will be
in an unaffiliated U.S. business that: (1) owns, operates,
through declarations for some investments in certain U.S.
manufactures, supplies, or services critical infrastructure;
businesses that produce, design, test, manufacture,
(2) produces, designs, tests, manufactures, fabricates, or
fabricate, or develop one or more critical technologies in 27
develops critical technologies; and/or (3) maintains or
specified industries. This applies to critical technologies
collects sensitive personal data of U.S. citizens.
that are: (1) used in a U.S. business’s activity in one or
more specified industries, or (2) designed by the U.S.
CFIUS was directed to regulate critical infrastructure, or
business specifically for use in those industries. The shift
“systems and assets, whether physical or virtual, so vital to
expands a CFIUS review to include investments in which
the United States that the incapacity or destruction of such
foreign investors do not have a controlling interest. Prior to
systems or assets would have a debilitating impact on
this change, a controlling interest was determined to be
national security.” In addition, the meanings of material
10% of the voting shares of a publicly-traded company, or
nonpublic technical information, or “information not
10% of total assets of a non-publicly-traded U.S. company.
available in the public domain that is necessary to design,
fabricate, develop, test, produce, or manufacture critical
Selected Sample of 27 Industries in Pilot Program
technologies,” and other important determinants of covered
transactions, such as indirect investment, foreign person,
Aircraft Manufacturing
and substantial interest are subject to regulations. CFIUS
Electronic Computer Manufacturing
was also directed to develop regulations concerning transfer
Guided Missile and Space Manufacturing
of assets via bankruptcy or other debt default.
Nuclear Electric Power Generation
Petrochemical Manufacturing
Regarding notice and filing procedures, CFIUS can regulate
Primary Battery Manufacturing
fee collection on transactions for which a written notice was
Broadcasting and Wireless Communications Equipment
submitted to CFIUS. Regarding submission of declarations,
Research & Development in Nanotechnology
CFIUS is required to develop regulations concerning the
Semiconductors Manufacturing
type and extent of information investors are required to
provide, and the types of transactions that must submit a
Declarations and Written Notices
mandatory declaration.
FIRRMA expanded CFIUS notifications to include
declarations of a pending transaction, in addition to written
FIRRMA provisions also target international cooperation.
notices. Declarations and written notices are distinguished
CFIUS was directed to establish a formal process for
by: the length of the submission, the time for CFIUS’s
exchanging information with governments of U.S. allies or
consideration, and the Committee’s options for disposition
partners to: protect U.S. and other countries’ national
of the submission. Declarations are described as short
security, harmonize actions regarding trends in investment
notices that do not exceed five pages. The pilot program
and technology that could pose risks to national security,
lists information required as part of a declaration or a
provide for information sharing on specific technologies
written notification. The parties involved could voluntarily
and entities acquiring technologies, and include recurring
stipulate that a transaction: is a covered transaction, could
consultations with other governments. The final regulations
result in control of a U.S. business by a foreign person, and
will likely play a key role in determining the scope of
is foreign-government controlled. CFIUS would be required
transactions subject to CFIUS review.
to respond within 30 days to the filing of a declaration, and
within 45 days for a written notification.
For more information, see CRS In Focus IF10177, The
Committee on Foreign Investment in the United States, and
CFIUS can respond in one of four ways to a declaration: (1)
CRS In Focus IF10952, CFIUS Reform: Foreign
request that the parties file a written notice; (2) inform that
Investment National Security Reviews.
CFIUS cannot complete the review on the basis of the
declaration and request the parties seek a written
James K. Jackson, Specialist in International Trade and
notification from CFIUS that it has completed all relevant
Finance
actions; (3) initiate unilateral review of the transaction; or
Cathleen D. Cimino-Isaacs, Analyst in International Trade
(4) notify the firms that CFIUS has completed its action
and Finance
under statute.
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Deadlines, Programs, and Regulations Mandated by FIRRMA
IF11135
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