Updated May 2, 2019
Deadlines, Programs, and Regulations Mandated by FIRRMA
Overview
intercity passenger rail systems in the United States. The
On August 13, 2018, President Trump signed the Foreign
Secretary of Homeland Security is also required to consult
Investment Risk Review Modernization Act of 2018
with the Secretary of Transportation and any agency head
(FIRRMA) (Subtitle A, Title XVII, P.L. 115-232). Various
not represented on CFIUS with significant relevant
provisions became effective upon implementation, while
technical expertise.
interim rules for some provisions became effective on
October 11, 2018. Among other items, FIRRMA required
Assessing CFIUS resources. The President is required to
the Committee on Foreign Investment in the United States
determine for FY2019 and each year thereafter, the extent
(CFIUS) to meet certain deadlines in programs and
to which the expansion of responsibilities requires
reporting and develop new regulations. In addition, in
additional resources for CFIUS; member departments and
October 2018, the Treasury Department published in the
agencies are required to request additional resources in the
Federal Register preliminary rules implementing certain
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 and submit a report on the plan to
and “critical technologies”; (2) refine CFIUS procedures,
appropriate congressional committees, including a
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 1 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 the following:
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
used in freight rail, public transportation rail systems, or
permanent regulatory response. The pilot program
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Deadlines, Programs, and Regulations Mandated by FIRRMA
implements authorities in two sections of FIRRMA by (1)
Changes in Regulations
expanding the scope of transactions subject to a CFIUS
FIRRMA also changed the existing CFIUS statute through
review to include certain investments involving foreign
new regulations. Seven of 15 mandated regulations concern
persons and critical technologies; and (2) implementing
the definition of a covered transaction, or a merger,
mandatory declarations for transactions within the
acquisition, or takeover (including joint ventures) of a U.S.
program’s scope. The pilot program is to end no later than
firm that could result in foreign control. The changes
March 5, 2020.
broaden the scope of a CFIUS review by including certain
real estate transactions located within, or that function as
Mandatory CFIUS Reviews for Certain Non-
part of, an air or maritime port, or are located within “close
Controlling Investments
proximity” to certain U.S. military installations. Changes in
FIRRMA altered the CFIUS process for reviewing foreign
investor rights that could result in foreign control and other
investment by shifting from a voluntary filing process to a
transactions designed to evade CFIUS review are also
mandatory filing and review process. Filings will be
covered. In addition, CFIUS can now regulate investments
through declarations for some investments in certain U.S.
in an unaffiliated U.S. business that (1) owns, operates,
businesses that produce, design, test, manufacture,
manufactures, supplies, or services critical infrastructure;
fabricate, or develop one or more critical technologies in 27
(2) produces, designs, tests, manufactures, fabricates, or
specified industries. This applies to critical technologies
develops critical technologies; and/or (3) maintains or
that are (1) used in a U.S. business’s activity in one or more
collects sensitive personal data of U.S. citizens.
specified industries, or (2) designed by the U.S. business
CFIUS was directed to regulate critical infrastructure, or
specifically for use in those industries. The shift expands a
“systems and assets, whether physical or virtual, so vital to
CFIUS review to include investments in which foreign
the United States that the incapacity or destruction of such
investors do not have a controlling interest. Prior to this
systems or assets would have a debilitating impact on
change, a controlling interest was determined to be 10% of
national security.” In addition, the meanings of material
the voting shares of a publicly traded company, or 10% of
nonpublic technical information, or “information not
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
Aircraft Manufacturing
transactions, such as indirect investment, foreign person,
Electronic Computer Manufacturing
and substantial interest are subject to regulations. CFIUS
Guided Missile and Space Manufacturing
was also directed to develop regulations concerning transfer
Nuclear Electric Power Generation
of assets via bankruptcy or other debt default.
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
FIRRMA provisions also target international cooperation.
declarations of a pending transaction, in addition to written
CFIUS was directed to establish a formal process for
notices. Declarations and written notices are distinguished
exchanging information with governments of U.S. allies or
by the length of the submission, the time for CFIUS’s
partners to protect U.S. and other countries’ national
consideration, and the Committee’s options for disposition
security, harmonize actions regarding trends in investment
of the submission. Declarations are described as short
and technology that could pose risks to national security,
notices that do not exceed five pages. The pilot program
provide for information sharing on specific technologies
lists information required as part of a declaration or a
and entities acquiring technologies, and include recurring
written notification. The parties involved could voluntarily
consultations with other governments. The final regulations
stipulate that a transaction is a covered transaction, could
will likely play a key role in determining the scope of
result in control of a U.S. business by a foreign person, and
transactions subject to CFIUS review.
is foreign-government controlled. CFIUS would be required
to respond within 30 days to the filing of a declaration, and
For more information, see CRS In Focus IF10177, The
within 45 days for a written notification.
Committee on Foreign Investment in the United States, and
CRS In Focus IF10952, CFIUS Reform: Foreign
CFIUS can respond in one of four ways to a declaration: (1)
Investment National Security Reviews.
request that the parties file a written notice; (2) inform that
CFIUS cannot complete the review on the basis of the
James K. Jackson, Specialist in International Trade and
declaration and request the parties seek a written
Finance
notification from CFIUS that it has completed all relevant
Cathleen D. Cimino-Isaacs, Analyst in International Trade
actions; (3) initiate unilateral review of the transaction; or
(4) notify the firms that CFIUS has completed its action
and Finance
under statute.
IF11135
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Deadlines, Programs, and Regulations Mandated by FIRRMA
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https://crsreports.congress.gov | IF11135 · VERSION 3 · UPDATED