CFIUS Expands List of Sensitive Military and Government Facilities

A final rule issued by the US Department of Treasury, which chairs the Committee on Foreign Investment in the United States (“CFIUS”), adds several new facilities to CFIUS’s list of sensitive military and government installations. As a result, CFIUS now has jurisdiction over acquisitions of real estate located near these facilities. The additions finalize a proposed rule issued in May 2023 (see our Legal Update on the proposed rule).

In addition to its jurisdiction over transactions by foreign persons involving “US businesses,” CFIUS also has jurisdiction over “covered real estate transactions.” These are transactions where foreign persons acquire certain property rights with respect to “covered real estate,” i.e., real estate that is located in proximity to designated ports and military or government facilities.

A list of the designated facilities is available at Appendix A to Part 802 of the CFIUS regulations. The list provides several different subsets of “covered real estate;” while real estate located within one mile of certain facilities is considered “covered real estate,” that radius expands to 99 miles for other designated facilities. Under the final rule, eight new facilities have been added to the “99 mile” list:

• Air Force Plant 42 (Palmdale, California)
• Dyess Air Force Base (Abilene, Texas)
• Ellsworth Air Force Base (Box Elder, South Dakota)
• Grand Forks Air Force Base (Grand Forks, North Dakota)
• Iowa National Guard Joint Force Headquarters (Des Moines, Iowa)
• Lackland Air Force Base (San Antonio, Texas)
• Laughlin Air Force Base (Del Rio, Texas)
• Luke Air Force Base (Glendale, Arizona)

Earlier this year, CFIUS determined that it did not have jurisdiction over the proposed purchase of a 370-acre site located approximately 12 miles from Grand Forks Air Force Base by Fufeng Group Limited, a Chinese company (see our Legal Update on that development). That proposed purchase faced significant political backlash on the local, state, and federal levels, and was ultimately terminated by city officials. The addition of Grand Forks Air Force Base and the other seven facilities appears to be in direct response to this development, providing CFIUS with jurisdiction it did not previously have to review such transactions.

Implications for Investors

Qualifying real estate transactions involving foreign persons are now subject to CFIUS’s jurisdiction. Parties to these transactions may submit voluntary filings to CFIUS; obtaining clearance from CFIUS for such transactions is the only way to receive a legal guarantee that CFIUS will not require changes to the transaction—or force a divestment—after closing.

CFIUS’s real estate jurisdiction is also informative for parties to transactions involving US businesses. Parties to such transactions involving facilities, offices, or other assets located near the newly-added facilities should take note of the new designations.

The expansion of CFIUS’s jurisdiction is part of an ongoing assessment of “military installations and the geographic scope set under the rules … in light of national security considerations.”¹ It is highly likely that CFIUS will continue to refine and expand the list of sensitive facilities going forward, so parties to transactions should closely monitor future updates.

¹ 85 Fed. Reg. 3158, 3160 (Jan. 17, 2020).