CFIUS Issues Final Rule Expanding the Scope of Its Real Estate Transaction Purview

On November 1, 2024, the US Department of the Treasury, in its capacity as chair of the Committee on Foreign Investment in the United States (CFIUS), issued a final rule (“Final Rule”) expanding the list of military and government sites designated as sensitive. Based on CFIUS’s authority to review “covered real estate transactions” involving foreign persons in proximity to these sites, the expanded list substantially increases the scope of real estate transactions subject to CFIUS jurisdiction. The Final Rule adopts changes that were proposed in a June Notice of Proposed Rulemaking (which we analyzed in our Legal Update CFIUS Proposes Rules to Expand Its Real Estate Transaction Purview). We highlight some of the changes to the list in this Legal Update.

Background

The Final Rule is the latest in a string of recent Executive Branch actions to address the increasing concern about risks presented by foreign ownership of real estate near sensitive national security sites. Specifically, the list of military and government installations was expanded once before, via a final rule published on September 22, 2023. Additionally, in May 2024, President Joseph Biden issued an Order blocking the purchase and requiring the divestment of foreign-owned real estate located near F.E. Warren Air Force Base. (Read our related Legal Updates, CFIUS Proposes to Expand Jurisdiction to Include Real Estate Transactions Near Additional Military Installations (May 2023) and US President Orders First-Ever Real Estate Divestment Following CFIUS Review (May 2024)).

“Nimble and responsive”

In a Treasury press release announcing the final rule, Assistant Secretary for Investment Security Paul Rosen stated, “Today’s final rule is a significant milestone in safeguarding critical U.S. military and defense installations. The expansion of CFIUS jurisdiction around more than 60 military installations across 30 states highlights the work of CFIUS to be nimble and responsive to the evolving nature of the threats we face in the context of foreign investment that raises national security concerns.”

Key updates

The final rule includes the following key updates:

Expansion of CFIUS’s jurisdiction over real estate transactions to include those within a 1-mile radius of 40 additional military installations, including:

Naval Air Station Corpus Christi, TX
Military Ocean Terminal Concord, CA
Joint Base Myer-Henderson Hall, VA
Detroit Arsenal, MI
Naval Logistics Support Facility Aguada, PR

Expansion of CFIUS’s jurisdiction over real estate transactions to include those within a 100-mile radius of 19 additional military installations, including:

Camp Grayling, MI
Dover Air Force Base, DE
Whiteman Air Force Base, MO

Expansion of CFIUS’s jurisdiction over real estate transactions from 1 mile to 100 miles of 8 military installations already listed in the regulations, including:

Malmstrom Air Force Base, MT
Joint Base San Antonio, TX
Redstone Arsenal, AL

An update of the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites, including:

Buckley Space Force Base (formerly Buckley Air Force Base)
Cape Canaveral Space Force Station (formerly Cape Canaveral Air Force Station)

Filing considerations

Parties considering a covered real estate transaction, or an investment in or acquisition of an existing US business that holds property interests in covered real estate, should take note of the expansion of CFIUS jurisdiction in the Final Rule.

Although it is voluntary to file for most transactions subject to CFIUS jurisdiction (and filings for all covered real estate acquisitions are voluntary), a filing followed by CFIUS approval is the only way for parties to receive legal certainty that CFIUS will not alter or divest the transaction after closing.