This week, the U.S. Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), issued a Notice of Proposed Rulemaking (NPRM) that would expand CFIUS’s jurisdiction over certain transactions by foreign persons involving real estate in the United States. (Treasury Press Release, July 8)

Proposed Rule

• As chair of the Committee on Foreign Investment in the United States (CFIUS), the Treasury has the authority to review certain real estate transactions near specified military installations and to act in appropriate circumstances.

• Under the new proposal, foreign land transactions within a mile of 40 additional military installations and within 100 miles of 19 additional military sites would trigger a CFIUS review.

• The proposed rule would add over 50 military installations across 30 states to the existing list of installations for which CFIUS has jurisdiction.

• The national security review panel has the power to block transactions entirely or impose restrictions on foreign transactions.

• The U.S. Department of Defense (DOD), 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 DOD regarding its military installations.

Other Key Changes

• This latest update would vastly expand the reach of CFIUS’s real estate jurisdiction while maintaining its sharp focus on national security.

• The proposed rule would also make other key changes:

• Expand CFIUS’s jurisdiction over real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations; and

• Update the names or locations of 21 military installations already listed in the regulations to better assist the public in identifying the relevant sites.

Implications and Next Steps

• The rulemaking comes amid growing bipartisan concern in Congress over the purchase of U.S. agricultural land and other property by China and other foreign adversaries.

• Several GOP-led states have considered or enacted new restrictions on foreign ownership of land, targeting investors with ties to China and other countries. (PoliticoPro, July 8)

• In response to the proposed rule, written comments will be accepted for 30 days following the NPRM’s publication in the Federal Register.

The Real Estate Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to monitor the proposed rulemaking and plans to submit comments.