Expect Increasing CFIUS Focus on Energy, Biotech Sector, Law Firm Says

Investors in the American energy and biotechnology sectors should be paying close attention to investment review risks based on remarks made by officials during the Committee on Foreign Investment in the U.S. conference earlier this month (see 2309150038), Dechert said in a client alert. The firm said the Biden administration’s focus on clean energy “appears to be an increasingly important consideration in CFIUS’ case reviews,” adding that “a number of officials” at the conference stressed the “importance of preserving U.S. leadership in the energy infrastructure space.” The firm said it expects to see “increasing interest” from CFIUS in transactions involving clean energy products that could be used to fight climate change, such as batteries, aerial vehicles, hydrogen and other energy alternatives.

The firm also noted that Paul Rosen, the Treasury Department’s assistant secretary for investment security, said companies can expect more on-site compliance checks. When preparing for on-site visits, companies should prepare “backward- and forward-looking materials” and should expect interviews to be conducted with all employees, including “line-level staff.”

Other officials stressed that U.S. companies subject to CFIUS mitigation agreements should develop “effective compliance programs and must focus on doing so rapidly.” Some said they have found “many potential compliance exceptions” during the first few months following the effective date of the mitigation agreement “and advised the compliance community not to kick the can down the road,” the firm said.