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CFIUSQ: What is CFIUS?A: CFIUS stands for the Committee on Foreign Investment in the United States and is part of the Department of Treasury. Q: What does CFIUS do? A: As a result of the Exon-Florio Amendment to the National Defense to the Defense Production Act of 1950, CFIUS, on behalf of the President, investigates the impact of foreign acquisitions, mergers and takeovers of, or investments in, U.S. companies on national security. Q: Who makes up CFIUS? A: CFIUS is composed of ten permanent members including the Secretary of the Treasury (Chair), Secretary of Homeland Security, Secretary of Commerce, Secretary of Defense, Secretary of State, Attorney General, Secretary of Energy, Secretary of Labor (nonvoting), Director of National Intelligence (nonvoting), and the Assistant to the President for Homeland Security and Counterterrorism. Q: Are there any non-permanent members? A: Yes, the President may determine that the heads of any other executive department, agency or office are appropriate for the process. Q: When determining if a certain transaction poses a threat to national security, how does CFIUS define "national security"? A: Legislative history indicates that "national security" should be interpreted broadly and that CFIUS members should consider the following criteria:
A: No, the U.S. Treasury regulations regarding this process make it clear that the President's authority to protect the national security is not limited to those criteria. Q: How does CFIUS become involved in these transactions? A: Either a party to the transaction voluntarily files a notice or one of the committee's members files an agency notice with CFIUS regarding the transaction. Q: What happens when a notice is filed? A: Filing a notice starts the 30-day review period in which CFIUS reviews intelligence data, conducts analysis, asks questions of the parties and conducts internal discussions to identify any national security issues. Q: If, during the 30-day review period, the committee finds that no national security issues exist, what happens? A: CFIUS grants approval, and a high-level official of the Treasury Department and at the lead agency must certify to Congress that there are no unresolved national security concerns unless:
Q: Are there any exceptions to the situations above involving the automatic 45-day investigation period? A: Yes, if the Secretary of the Treasury and the head of the lead agency jointly determine during the initial review that a foreign government-controlled transaction or a transaction involving critical infrastructure will not impair U.S. national security, CFIUS may grant approval without conducting the additional investigation. Q: What happens if, during the 30-day review period, the committee finds that national security issues do exist? A: In most cases, CFIUS attempts to mitigate the national security issues through security agreements with the parties. If CFIUS finds that the national security issues cannot be mitigated, or cannot reach an agreement on mitigation, the process continues to a 45-day national security investigation. If the parties reach an agreement during this period, CFIUS grants its approval. Q: Do the parties have any other options if they cannot reach a security mitigation agreement with CFIUS during the 30-day review period? A: Yes, the parties are free to withdraw their notice and abandon the transaction. Q: What are the possible outcomes of the 45-day investigation period? A: If a security agreement is reached, the parties may withdraw and re-file to get CFIUS approval after the initial period, or the parties may choose to continue the process without re-filing. If no security agreement is reached, or the parties choose to continue the process without re-filing, CFIUS will submit a report to the President. Q: What does the President do once he has received CFIUS’s report? A: The President has 15 days to decide whether he will block the transaction or approve it. Regardless of what he decides, he must then send a report to Congress regarding his decision. Q: What would the President need to establish to block a transaction? A: To block a transaction, the President must first find that there is credible evidence leading him to believe that the foreign interest exercising control might take action that threatens to impair the national security. The President must also find that provisions of law do not provide adequate and appropriate authority for him to protect the national security based on the transaction. Q: If the President decides to block a transaction, can the parties seek to have his decision reviewed in a US court? A: No. The President’s decision to block the transaction is not subject to judicial review. Q: What if the transaction has already been completed before CFIUS or the President decides to block the transaction? A: That is not relevant according to the laws implementing the CFIUS review. The Attorney General is authorized to seek divestment and other relief in the courts in implementing a decision to block a transaction. The CFIUS review can be initiated at any time, either upon a voluntary filing or if a CFIUS member instigates the review. Q: Has this process changed recently? A: Yes. The Foreign Investment and National Security Act of 2007 has expanded the amount of Congressional oversight and delineates additional factors for consideration in determining whether a transaction may impair national security. Q: Since FINSA provides for more Congressional oversight of these transactions, does that mean transactions may become politicized? A: Absolutely. | |