Treasury Issues Proposed Rule to Expand CFIUS Coverage of Real Estate Transactions Near Military Installations

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury), as Chair of the Committee on Foreign Investment in the United States (CFIUS), issued a Notice of Proposed Rulemaking (NPRM or proposed rule) that would expand CFIUS’s jurisdiction over certain transactions by foreign persons involving real estate in the United States. Pursuant to legislation that Congress passed in 2018, CFIUS has the authority to review certain real estate transactions near specified military installations and to take action in appropriate circumstances. This proposed rule would add over 50 military installations, across 30 states, to the existing list of installations around which CFIUS has jurisdiction, including over land purchases. This latest update would vastly expand the reach of CFIUS’s real estate jurisdiction, while maintaining its sharp focus on national security.

“President Biden and I remain committed to using our strong investment screening tool to defend America’s national security, including actions that protect military installations from external threats. CFIUS plays an integral role in U.S. national security by thoroughly reviewing real estate transactions near sensitive military installations, and this proposed rule will significantly expand its jurisdiction and ability to accomplish this vital mission,” said Secretary of the Treasury Janet L. Yellen.

“Today’s proposed rule is another example of CFIUS’s continuing commitment to hone our tools to protect U.S. national security, and is a significant milestone in safeguarding critical U.S. military installations,” said Assistant Secretary for Investment Security Paul Rosen. “Working closely with the U.S. Department of Defense and other CFIUS members, we will remain responsive to the evolving nature of the risks we face to ensure we are protecting our military installations and related defense assets.”

CFIUS jurisdiction over real estate transactions, provided by Congress in the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), allows CFIUS to review the purchase or lease by, or concession to, a foreign person of real estate in the United States that is in close proximity to a military installation or another facility or property of the United States Government that is sensitive for reasons relating to national security; could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance. The CFIUS regulations governing real estate transactions identify a subset of military installations around which certain real estate transactions are covered under CFIUS’s jurisdiction.

The U.S. Department of Defense (Department of Defense), a member of CFIUS, continuously assesses its military installations and the geographic scope established under the CFIUS regulations to ensure appropriate application in light of national security considerations. This proposed rule is the result of a recent comprehensive assessment conducted by the Department of Defense regarding its military installations. The proposed rule would enhance CFIUS’s authorities through the following key changes:

• Expand CFIUS’s jurisdiction over real estate transactions to include those within a one-mile radius around 40 additional military installations;
• Expand CFIUS’s jurisdiction over real estate transactions to include those within a 100-mile radius around 19 additional military installations;
• Expand CFIUS’s jurisdiction over real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations;
• Update the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites; and
• Update the location of seven military installations already listed in the current regulations to better assist the public in identifying the relevant sites.

Treasury encourages the public to submit written comments in response to the proposed rule. Comments will be accepted for 30 days following the NPRM’s publication in the Federal Register.

The NPRM is available at https://www.cfius.gov/.

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