Justice Department Making Progress on FIRRMA Regulations

The Department of Justice is drawing closer to completing regulations for the Foreign Investment Risk Review Modernization Act of 2018, Deputy Assistant Attorney General Adam Hickey said, and is “working closely” with the Treasury Department to develop regulations for the “expanded authority” it grants the Committee on Foreign Investment in the United States (CFIUS). Speaking at the National Conference on CFIUS and Team Telecom on April 24, Hickey presented FIRRMA and CFIUS as making the U.S. a more “attractive” alternative for investment than China while criticizing that country’s “foreign ownership restrictions, joint venture requirements” and “vague” approval processes that allow the Chinese government to “pressure [U.S. companies] to transfer their technology as a condition of market access.”

Hickey called FIRRMA “the most significant reform of the CFIUS process in more than a decade.” FIRRMA, passed in 2018, expands the jurisdiction of CFIUS when the committee reviews transactions by foreign entities in the U.S. to determine their effect on national security, according to a Treasury fact sheet. FIRRMA also expands which transactions CFIUS can review and allows it to undertake lengthier investigations. While FIRRMA’s pilot program was implemented in November 2018, according to a notice from Treasury, it is unclear when the full regulations implementing FIRRMA will take effect, although they are expected by early 2020. Hickey said the Justice Department fully supported the act, saying it “reflects a commitment to increased transparency, predictability, and efficiency in the CFIUS process.”

Specifically, Hickey said FIRRMA introduces a “new declaration process” that requires companies that are “contemplating qualifying transactions” to file “short notifications” before completing the transactions. Hickey also said it extends the “initial review period” by 15 days, which will allow CFIUS to “clear more transactions” and “reduce the need to re-file cases.”

In April, Reps. Denny Heck, D-Wash., and Mike Gallagher, R-Wis., urged the House Appropriations Subcommittee on Financial Services to fully fund CFIUS in the wake of the Treasury's budget request. In a letter, the representatives stressed the importance of granting “dedicated funds” to CFIUS to provide for its “critical national security role,” as the Treasury recommended (see 1904050018).