The Committee on Foreign Investment in the U.S.’s annual report to Congress (see 2208020043) shows CFIUS is reviewing record numbers of investments and sheds light on how the Biden administration is approaching screening efforts, especially surrounding Chinese companies, law firms said. The report also indicates that companies should expect even more government scrutiny of foreign direct investments in coming years, firms said, including for non-notified transactions.
The U.S. should transform the Committee on Foreign Investment in the U.S. into a new Commission on Foreign Investment and National Security, which would improve transparency and reduce uncertainty around investment reviews, Morgan Lewis lawyers said. Although the process of standing up a new government commission and issuing regulations may be “arduous and expensive,” the lawyers say the benefits will outweigh the costs.
The Committee on Foreign Investment in the U.S. this week issued its annual report to Congress, outlining statistics from the first full calendar year in which CFIUS operated under expanded authorities granted to it by the Foreign Investment Risk Review Modernization Act (see 2002270049 and 2001140060). CFIUS said it received 164 declarations in 2021, an increase from the 126 it received in 2020 2107260017, and 272 notices, up from the 187 from 2020.
Brian Fleming, a former official in the National Security Division at DOJ, has joined Steptoe & Johnson as a partner in the International Trade and Regulatory Compliance Group, the firm announced. Fleming most recently worked as a member at Miller & Chevalier Chartered, advising clients on economic sanctions, export controls and Committee on Foreign Investment in the United States proceedings.
The Committee on Foreign Investment in the U.S. is investigating Swiss renewable energy company Viston United Swiss' proposed acquisition of California-based Petroteq Energy, an oil production and technology company. The CFIUS investigation, disclosed by Petroteq this month, began after CFIUS completed a 45-day review period earlier this year (see 2206130025). CFIUS told Petroteq it plans to complete its investigation by Aug. 22. Viston plans to extend its offer to purchase Petroteq until after Aug. 22.
A potential provision in the bipartisan China package (see 2207120049) that would create an outbound investment screening mechanism received more opposition (see 2206280051 and 2201140038) this week, including from lawmakers on the Senate Banking Committee and former U.S. investment screening officials. While opponents of the provision say some form of outbound screening may eventually be necessary to further restrict sensitive technology transfers to China, they also said the current wording is too broad and leaves too many questions unanswered.
A bipartisan group of senators last week introduced a bill that could place new controls on certain exports of U.S. personal data to foreign companies and governments. The Protecting Americans’ Data From Foreign Surveillance Act would require the Commerce Department, along with other agencies, to identify “categories of personal data” that could harm U.S. national security if they were exported, and to place export restrictions on those items.
There isn’t a “coherent” strategy among the various bills in Congress to address international technology competition, said Jon Bateman, a technology policy expert with the Carnegie Endowment for International Peace. Bateman, speaking during a June 23 event hosted by Foreign Policy magazine, said the lack of coherence isn’t “altogether surprising, partly because the government is “classically plagued with coherence problems.”
Several companies recently updated the status of their ongoing reviews with the Committee on Foreign Investment in the U.S. One of the companies, Swiss renewable energy company Viston United Swiss, was notified that CFIUS officially began its 45-day notice review period into its planned acquisition of California-based Petroteq Energy, an oil production and technology company (see 2204200015). The two companies had filed the notice to CFIUS May 16 and were told the review period started May 24, Viston said in a document filed with the SEC.
Lawyers are continuing to see an uptick in outreaches by the Committee on Foreign Investment in the U.S. related to non-notified deals, especially if they involve Chinese investors. Carl Valenstein, a CFIUS lawyer with Morgan Lewis, said some of his clients in the life sciences sector, even though they weren’t working with critical technologies, have recently been contacted by CFIUS.