FOREIGN INVESTMENT REQUIREMENTS – CFIUS PILOT PROGRAM
November 8, 2018
As required by the August 2018 Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), the Treasury Department has formed a Critical Technology Pilot Program (Pilot Program), going into effect November 10, 2018, which will institute a new review process for foreign investments with the ultimate goal of formulating permanent updated regulations for the CFIUS process.
Under the Pilot Program, CFIUS will review any purchase, lease, or concession to a foreign person of real estate located in proximity to sensitive U.S. government facilities. The Pilot Program regulations focus on whether or not the investment affords “access to any material nonpublic technical information in the possession of the pilot program U.S. business,” among other considerations. Material information means that which is necessary to design, fabricate, develop, test, produce, or manufacture critical technologies. Critical technologies include existing export-controlled and military technologies but also an as-of-yet undetermined list of “emerging and foundational technologies” that will be filled out through federal interagency coordination. There are 27 advanced manufacturing industries covered by the Pilot Program, including “Aircraft Manufacturing” and “Aircraft Engine and Engine Parts.” Companies looking to invest in sensitive U.S. industries should pay particular attention to these new rules, as they make the review process obligatory and penalize noncompliance. Companies conducting transactions covered by the Pilot Program rules must submit mandatory notices or simplified declarations to CFIUS, which then has up to 45 days to investigate. Companies who fail to submit the required filings are subject to fines.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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