Type: Law Bulletins
Date: 07/21/2023

CFIUS May Expand to Cover Farmland

The Committee on Foreign Investment in the United States (CFIUS or the Committee) is a federal interagency consortium that evaluates whether a foreign entity’s acquiring certain U.S. assets presents a national security risk. Though CFIUS is based in the U.S. Department of the Treasury, 16 federal agencies and offices may count as its decision-makers and stakeholders.

A short background is apt. Soon after the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) was enacted, FIRRMA-derived regulations followed. The Committee is authorized to assess the national security propriety of these kinds of transactions: (1) certain non-controlling investments in some U.S. businesses involved with critical technology, critical infrastructure, or sensitive personal data — recognized as “TID US businesses” — and (2) certain real estate transactions. CFIUS usually works out mitigation agreements with the acquirers, though the President may block a transaction. Highly restricted judicial review may happen, but it is limited to the procedural aspects of the Executive decision itself.1 CFIUS’ role has been explained in several prior Taft law bulletins (at least here, here, and here).

A third major category — farmland — may enter that firmament. To that end, U.S. Senators Jon Tester (Montana) and Mike Rounds (South Dakota) have introduced bipartisan legislation in their chamber to stop China, Russia, Iran, and North Korea from investing in, purchasing, leasing, or in any way acquiring farmland in the U.S. In the U.S. House of Representatives, a similar bipartisan bill has been introduced by Chairman of the Select Committee on China, Mike Gallagher, and Representatives Ashley Hinson and Mike Thompson. Along the same lines, 38 members of the House, led by Representative Elise Stefanik, have also co-sponsored similar legislation.

The ostensible, and unifying, objective of all these bills is to protect the food supply of the U.S. This is triggered by the concern in many quarters that U.S. farmland, both public and private, is being acquired — and controlled — by foreign adversaries to imperil the U.S.’ food security and, thus, in a way, its national security. “Protecting national security and food security go hand in hand in our region – which is why it is vital to know who owns land around national security sites,” as Representative Thompson has characterized the current state of CFIUS play. Although much of Congress’ attention has been directed at China, other adversaries are also being scrutinized.

For his part, Chairman Gallagher has stated that his “bill gives CFIUS jurisdiction over foreign adversary real estate transactions to guard against the threat of the [Chinese Communist Party (CCP)] and other adversaries purchasing land for malign purposes, and it also encourages CFIUS to consider food security issues as it evaluates the national security risk of a given transaction.” On this score, Representative Hinson has observed that through such acquisitions, certain foreign adversaries are “deliberate[ly]” attempting “to exert control over our food supply and have easier access to military sites.” The aim of her co-sponsored bill is, in her words, to “strengthen oversight of foreign land purchases and prevent [foreign adversaries] from buying up American farmland to protect our food supply and national security.”

The proposed CFIUS reforms, if Congress enacts them into law, would:

  • Confer CFIUS’ jurisdiction over almost all land purchases by foreign adversary entities.
  • Add the Secretary of Agriculture as a standing member of CFIUS for farmland or agriculture technology transactions.
  • Empower CFIUS to consider the nation’s food security, including through biotechnology acquisition, when assessing transactions.
  • Mandate CFIUS to adopt a negative presumption — what is being called a “presumption of non-resolvability” — for transactions by foreign adversary entities that are acquiring land close to sensitive sites such as intelligence facilities and major military sites.
  • Require the U.S. Department of Agriculture (USDA) to report to Congress the risks generated when foreign entities acquire agrarian businesses in the U.S.
  • Require CFIUS filings for foreign adversary entities that are buying land close to sensitive sites.
  • Expand what CFIUS will regard as sensitive national security sites.

1See Ralls Corp. v. CFIUS, 758 F.3d 296, 325 (D.C. Cir. 2014) (recognizing that the acquirer is entitled to “requisite [due] process …, which should include access to the unclassified evidence on which the President relied and an opportunity to respond thereto.”).

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