Rep. Robert Pittenger

Rep. Robert Pittenger

WASHINGTON – The U.S. Department of the Treasury, as chair of the Committee on Foreign Investment in the United States (CFIUS), issued temporary regulations to protect critical American technology and intellectual property from potentially harmful foreign acquisitions.

This new law effectively blocks strategic Chinese acquisition of sensitive American technology and infrastructure.

Editor’s note:  The Richmond Observer strives to provide fair and objective coverage of any and all political issues, situations, and/or developments, regardless of party affiliation.  As part of this commitment, the Observer is offering this press release for your review.  It is also our policy to print news release material in its original format, as it was received, with minimal, if any, editorial adjustments. 

WASHINGTON - Regulations provide first window into Trump administration’s interpretation of new Cfius law targeting Chinese investment 

Treasury’s new rules are more expansive than some had advocated and are likely to bring an unprecedented number of transactions under Cfius review. 

15 COMMENTS

By Kate O’Keeffe 

Updated Oct. 10, 2018 2:50 p.m. ET

Treasury officials Wednesday issued new rules requiring all foreign investors in certain deals involving critical U.S. technology to submit to national-security reviews or face fines as high as the value of their proposed transactions.

The new regulations, which implement a recently passed law to tighten foreign-investment reviews, are more expansive than some had advocated and are likely to bring an unprecedented number of transactions into the purview of the Committee on Foreign Investment in the U.S., known as Cfius. 

The Treasury-led interagency committee will now require foreign investors to alert it to all deals giving them access to critical technology across 27 industries—including semiconductors, telecommunications and defense—that the committee believes could threaten U.S. national security and technological superiority, according to Cfius officials.

Previously, Cfius focused more narrowly on deals where foreigners took controlling stakes in U.S. businesses, and filing for reviews was optional. Investors were historically incentivized to file and seek Cfius approval because, if they didn’t, the committee might choose to review their deal anyway and recommend the president block or unwind it, creating substantial risk.

In recent years, however, lawmakers and officials came to believe that many deals involving important U.S. technology were flying under the committee’s radar, creating national-security risks. They have been particularly concerned about a spate of Chinese technology deals in Silicon Valley.  

A February 2017 report by the Defense Department’s Defense Innovation Unit, which was influential in the crafting of the Cfius measure, mapped out various ways Chinese investors participate in U.S. technology deals in the valley, including through investments made by Chinese venture-capital and private-equity firms and by Chinese tech giants Baidu Inc.,Tencent Holdings Ltd. , Alibaba Group Holding Ltd. and JD.com Inc. 

The new rules expand Cfius’s mandate to noncontrolling U.S. business investments giving foreigners access to material nonpublic technical information, membership or observer rights on the company’s board of directors, or any involvement—-other than through the voting of shares—in making major decisions for that business regarding critical technology, Treasury officials said. “Critical technology” refers to items on U.S. export controls lists, which are also being updated.

“This significantly changes the importance of Cfius for foreign investors because it is now a mandatory process for a broad swath of technological acquisitions,” said Nova Daly, an adviser at law firm Wiley Rein LLP and a former Treasury official who once ran the Cfius process.

The new rules mean that a range of foreign investors who made early-stage investments in areas such as artificial intelligence and autonomous driving in Silicon Valley without having to file for Cfius reviews could be required to do so for such deals in the future, said Ivan Schlager, who runs the national-security practice at law firm Skadden, Arps, Slate, Meagher & Flom LLP.

In August, President Trump signed the Cfius measure into law as part of a broader annual defense-authorization bill. Led by Sen. John Cornyn (R., Texas) and Rep. Robert Pittenger (R., N.C.), the Cfius initiative received broad, bipartisan support, but some businesses and free marketeers in Congress worked to keep the measure’s scope as narrow as possible because they worried it could unnecessarily stifle foreign investment, which the U.S. has long welcomed as a source of economic growth and jobs. 

Lawyers representing deal makers before Cfius have said that, while the measure’s passage represented a sharply different approach to foreign investment, the true scope of the new rules and how they would practically affect businesses would be revealed only in the lengthy regulation-writing process left to the executive branch.

For example, the legislation specified that investors would now also be required to file abbreviated notices for reviews of noncontrolling investments if the deals were backed by foreign governments and involved critical technology, but it left the committee discretion to determine what other types of transactions deal makers would have to submit for Cfius review, according to an initial assessment of the measure by law firm Covington & Burling LLP.

The new, temporary regulations take effect in a month and will be superseded by permanent regulations some 15 months later. Under the new regime, even nongovernment-backed foreign investors involved in such technology deals would have to file.

And the pilot regulations don’t specify Chinese and Russian investors as priorities for review, as House Financial Services Chairman Jeb Hensarling (R., Texas) and ranking member Maxine Waters (D., Calif.,), whose committee has jurisdiction over Cfius, had asked in a September letter to the Treasury that sought favorable treatment for allies. 

Typical venture-capital and private-equity funds led by U.S. general partners will be exempt from filing for Cfius reviews as long as any foreign limited partners don’t gain access to material nonpublic technical information or the powers enumerated under the pilot program, the new regulations indicate.

Write to Kate O’Keeffe at This email address is being protected from spambots. You need JavaScript enabled to view it.

Appeared in the October 11, 2018, print edition as 'Foreign Investments Face Tougher Rules.'  

 

Jamie Bowers

Deputy Chief of Staff and Communications Director

Congressman Robert Pittenger  I  NC09

5970 Fairview Rd., Suite 430

Charlotte, North Carolina 28210

O: 704.365.6234  I  M: 704.619.3288

 

Editor’s note:  Given the state of emergency and consequent need for dissemination of immediate information during Hurricane Florence, Congressman Pittenger’s statement in recognition of the anniversary of the 9/11 terrorist attacks was not posted on the designated date last week.  The Richmond Observer wishes to offer Congressman Pittenger due appreciation for his statement and is thus posting such as a delayed publication.

CHARLOTTE – Congressman Robert Pittenger (NC-09) released this statement as he reflected on the 17th anniversary of the September 11, 2001 terrorist attacks: 

“We forget how complacent America had become, confident in a false sense of peace and security that was shattered at 8:46 a.m. on September 11th.  Yet 17 years later, some are once again becoming complacent, with foolish calls to abolish ICE and American companies selling critical technology to foreign adversaries.

WASHINGTON – Congressman Robert Pittenger has received a letter from Secretary of Defense Jim Mattis expressing “sincere appreciation” for serving as the architect of the Foreign Investment Risk Review Modernization Act, which President Trump recently signed into law. 

WASHINGTON – The U.S. House of Representatives today gave final approval to Congressman Robert Pittenger’s historic legislation to protect America’s critical national security technology and infrastructure from malicious foreign investment. 

Congressman Pittenger’s Foreign Investment Risk Review Modernization Act (FIRRMA, H.R. 5841) was included in the National Defense Authorization Act (NDAA), which was approved by an overwhelming bipartisan vote of 359-54.  President Trump is expected to sign NDAA, including Congressman Pittenger’s provisions, into law.

WASHINGTON – Congressman Robert Pittenger (NC-09) released the following statement applauding Congressional negotiators for agreeing upon a final version of the Foreign Investment Risk Review Modernization Act (FIRRMA, H.R. 4311). FIRRMA is landmark national security legislation that strengthens how the Committee on Foreign Investment in the United States (CFIUS) reviews the national security risks of potential foreign investments.

LUMBERTON – Congressman Robert Pittenger (NC-09) today announced the Federal Emergency Management Agency (FEMA) will provide over $11 million to buy out, elevate, or replace 119 flood-ravaged homes in Robeson County.

 

WASHINGTON – Congressman Robert Pittenger (NC-09) issued this statement after reviewing a USA Today report uncovering very low ratings for a nursing home facility run by the Salisbury VA Medical Center: 

“Throughout my time in Congress, I have regularly and consistently received complaints about care and service at Salisbury VA medical facilities.

This new report by USA Today, if accurate, is alarming and offensive to all veterans, and follows other previous reviews with highly unfavorable outcomes. 

“My expectation is that the new Salisbury VA Director will ‘inspect for what you expect’ and take corrective action.

Last year, I helped pass VA accountability legislation to make it easier to fire and demote incompetent employees. 

“As always, veterans in the 9th District are welcome to call my office to receive assistance cutting through VA red tape."

"We are honored to serve veterans.” 

9th Congressional District veterans needing assistance from Congressman Pittenger should call 704-362-1060.

 

Editor’s note:  The Richmond Observer strives to provide fair and objective coverage of any and all political issues, situations, and/or developments, regardless of party affiliation.  As part of this commitment, the Observer is offering this press release for your review.  It is also our policy to print news release material in its original format, as it was received, with minimal, if any, editorial adjustments. 

 

WASHINGTON – On Monday, the United States Senate gave strong bipartisan approval to the National Defense Authorization Act (NDAA), which includes key provisions drafted by Congressman Robert Pittenger (NC-09) and Senate Majority Whip John Cornyn (R-TX) to block China from acquiring sensitive national security technology. 

WASHINGTON – President Donald Trump signed major regulatory reform legislation into law, including a key provision written by Congressman Robert Pittenger (NC-09).  

As part of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), Congressman Pittenger’s provision clarifies and improves Obama-era regulations which have created confusion in commercial real estate lending, leading to fewer jobs and slower economic growth. 

“This is a major win for communities and cities around the country. By providing much needed clarification and reducing bureaucratic red tape, this legislation will create the stability necessary to attract investment, create jobs, and spark economic growth,” said Congressman Pittenger. 

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