Under CFIUS’s real estate regulations, 31 C.F.R. Part 802 (Part 802), CFIUS has the authority to review the purchase or lease by, or concession to, a foreign person of certain real estate in the United States for reasons relating to national security. Appendix A to 31 C.F.R. Part 802 (Appendix A) identifies certain U.S. military installations and other U.S. government sites the proximity to which can trigger CFIUS’s jurisdiction, assuming certain other criteria are met. Specifically, CFIUS may have jurisdiction over purchases or leases of real estate affording certain rights to foreign persons in real estate located:

• Within “close proximity” (i.e., 1 mile) of any installations identified in Part 1 and Part 2 of Appendix A; and

• Within the “extended range” (i.e., 100 miles) of any installations identified in Part 2 of Appendix A.

The  installations and sites identified in Appendix A were determined by the U.S. Department of Defense (DoD) based on national security considerations, including the ability of a foreign person to collect intelligence on activities being conducted at such installations or to engage in foreign surveillance; the preamble to the final rule establishing Part 802  stated that DoD would continue on an ongoing basis to assess the installations and sites listed in Appendix A in light of national security considerations.

As part of DOD’s continued assessment pursuant to Part 802, the proposed rule identifies 59 additional U.S. military installations for inclusion in Appendix A. The rule proposes to add 40 installations to Part 1, and 19 installations to Part 2. The installations identified in the proposed rule reflect a diverse array of U.S. geographic regions, including installations located in 33 states and U.S. territories.

The proposed rule also would move eight installations currently listed in Part 1 of Appendix A to Part 2 of Appendix A. The proposed rule does not provide a specific justification for the movement of these eight installations to Part 2, but the movement of the installations from Part 1 to Part 2 would appear to reflect a determination by DOD of heightened national security sensitivity related to these installations. Subject to the conditions and exceptions of Part 802, under the proposed rule, foreign purchases or leases of real estate located within 100 miles of these Part 2 facilities would be subject to CFIUS’s jurisdiction to review. 

The expansion of the list of installations in Part 1 and Part 2 of Appendix A would expand the geographic area of the United States over which CFIUS would have jurisdiction to review foreign real estate transactions that also meet certain other criteria. The proposed rule follows continued calls from U.S. legislators for an expansion of CFIUS’s jurisdiction to review foreign persons’ purchases or leases of U.S. real estate, comes against the backdrop of significant concern on the part of state legislatures about foreign (particularly Chinese) ownership of land and follows the addition by CFIUS of eight military installations to Appendix A in August 2023. In addition, as described in our prior alert, on May 13, 2024, President Biden issued an order forcing divestiture by MineOne Partners Limited and certain related entities of their ownership of real estate within one mile of F.E. Warren Air Force Base, home to an intercontinental ballistic missile base in Cheyenne, Wyoming. The order forcing divestiture reflects the clear identification of national security concerns stemming from a foreign person’s ownership of real estate located near a U.S. Government installation.

The proposed rule also includes a certain technical amendments to Part 802, including:

• Technical updates to the names of 9 installations identified in Parts 1 and 2 of Appendix A (e.g., updates resulting from the establishment of the U.S. Space Force);

• Replacement of the names of 5 installations identified in Appendix A that were updated according to the recommendations of the DOD Naming Commission; and

• Conforming revisions to the definition of “military installation” in Part 802 to account for the installations added to Appendix A.

Next steps

Interested persons may submit comments electronically through the Federal Government’s  Rulemaking Portal at https://www.regulations.gov or by mailing comments to: U.S. Department of the Treasury, Attention: Meena Sharma, Deputy Director, Office of Investment Security, 1500 Pennsylvania Avenue, NW, Washington, DC 20220. As noted above, written comments must be received by August 19, 2024.  Please let us know if you are interested in submitting comments regarding the proposed rule.