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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On February 13, 2020, the Committee on Foreign Investment in the United States (CFIUS) fully implemented the Foreign Investment Risk Review Modernization Act (FIRRMA) (see <a href="https://www.trumpandtrade.com/2020/01/cfius-publishes-final-regulations-to-reform-national-security-reviews-for-certain-foreign-investments-and-real-estates-transactions-in-the-united-states/">Trump and Trade Update of January 22, 2020</a>). Under FIRRMA, CFIUS was granted additional authority to review certain real estate transactions involving foreign persons when the public or private real estate is located near designated airports, maritime ports, military installations or sensitive government facilities.
As such, CFIUS issued regulations effective February 13 pertaining to <a href="https://home.treasury.gov/system/files/206/Part-802-Final-Rule-Jan-17-2020.pdf">&ldquo;Certain Transactions by Foreign Persons Involving Real Estate in the United States.&rdquo;</a> To fall under these regulations, the foreign person would have to gain at least three of the following property rights in covered real estate &ndash; (i) physical access to the property; (ii) the right to exclude others from the property; (iii) right to improve or develop the property; or (iv) the right to attach structures to the property. In working with other national security-related agencies, CFIUS prepared a list of designated airports, maritime ports, military bases and other sensitive government installations.
Covered real estate is defined as:
<ul>
<li>Ports: Is a covered port, located within, or will function as part of a covered port;</li>
<li>Close proximity: Areas within one mile of a certain identified military installations or other property;</li>
<li>Extended range: Areas within 100 miles of certain identified military installations;</li>
<li>Facilities located within designated counties and geographic areas: As designated in Appendix A of the regulations (see below); and</li>
<li>Off-shore ranges: Within any part of military installations, identified in the Appendix, that is within the territorial seas (12 nautical miles) of the United States</li>
</ul>
The list of designated airports and maritime ports can be accessed here:
<ol>
<li style="list-style-type: none">
<ul>
<li><a href="https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/" target="_blank" rel="noopener noreferrer">Large hub airports</a>. Note: See file &ldquo;Enplanements at All Commercial Service Airports (by Rank)&rdquo; (large hub airports are identified with an &ldquo;L&rdquo; under the column heading &ldquo;Hub.&rdquo;)</li>
<li><a href="https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/" target="_blank" rel="noopener noreferrer">All-cargo airports &gt; 1.24 billion pounds</a>. Note: See file under &ldquo;All-Cargo Airports by Landed Weight&rdquo;</li>
<li><a href="https://www.faa.gov/airports/planning_capacity/joint_use_airports/" target="_blank" rel="noopener noreferrer">Joint use airports</a>.</li>
<li><a href="https://www.maritime.dot.gov/ports/strong-ports/national-port-readiness-network-nprn" target="_blank" rel="noopener noreferrer">Strategic seaports</a>.</li>
<li><a href="https://www.bts.gov/content/list-top-25-tonnage-container-and-dry-bulk-ports" target="_blank" rel="noopener noreferrer">Top 25 tonnage, container, or dry bulk port</a>.</li>
</ul>
</li>
</ol>
The list of 190 military and sensitive government installations can be accessed here:
<ol>
<li style="list-style-type: none">
<ul>
<li>Military installations primarily located onshore are listed in Parts 1-3 of <a href="https://www.ecfr.gov/cgi-bin/text-idx?SID=0a212ef869eb46f9d47ca9d4589cc8a4&amp;mc=true&amp;node=pt31.3.802&amp;rgn=div5#ap31.3.802_11002.a" target="_blank" rel="noopener noreferrer">Appendix A to 31 C.F.R. Part 802</a>.</li>
<li>Military installations primarily located offshore are listed in Part 4 of the Appendix. Further, CFIUS has noted that the <a href="https://marinecadastre.gov/nationalviewer/" target="_blank" rel="noopener noreferrer">Marine Cadastre National Viewer</a> may also be helpful (users must apply the &ldquo;Military Operating Area Boundaries&rdquo; layer in order to see the different offshore zones).</li>
</ul>
</li>
</ol>
There are various exceptions for certain real estate transactions, including investment in an &ldquo;urbanized area&rdquo; or &ldquo;urban cluster,&rdquo; as defined by the Census Bureau, a foreign person&rsquo;s purchase or lease of a single housing unit, transactions involving certain commercial office space in a multi-unit commercial office building, and for certain &ldquo;excepted foreign states.&rdquo;&nbsp; For more details on such exceptions, see <a href="https://www.thompsonhine.com/uploads/1345/doc/Business_Law_Update_-_Winter_2020.pdf">Thompson Hine&rsquo;s Business Law Update &ndash; Winter 2020</a>.
Recently, CFIUS released a <a href="https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius/cfius-real-estate-instructions-part-802" target="_blank" rel="noopener noreferrer">&ldquo;CFIUS Part 802 Geographic Reference Tool&rdquo;</a> as a resource to locate specific real estate in relation to the listed military installations. This mapping tool allows users to input an address and determine the distance to certain military installations, but is provided for reference purposes only. In other words, it is not intended to be legally definitive as to whether a location is within the geographic range.
Notification to CFIUS for covered real estate transactions remains voluntary; however, only by receiving clearance from CFIUS will a transaction be exempt from future CFIUS action to unwind.

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

CFIUS and Covered Real Estate Transactions: Update on Geographic Reference Tools