Foreign Investment Watch Quotes Laura Black on CFIUS and China Battery Factory Deal

For its article “CFIUS may have lacked jurisdiction in battery deal with China’s Gotion,” Foreign Investment Watch quoted Akin international trade senior counsel Laura Black. The article looks at reports that China-based battery company Gotion was given clearance by the Committee on Foreign Investment in the United States (CFIUS) to build a battery factory in the southern U.S. FIW writes that it is unclear whether CFIUS found no national security concerns or whether the deal was outside the Committee’s jurisdiction.

Laura, who served at the Department of the Treasury, most recently as Director of Policy and International Relations for CFIUS, said of the matter, “Based on available information and what appears to be a short timeline, this may have been a greenfield project over which CFIUS didn’t have jurisdiction.” She added that CFIUS does have jurisdiction over some greenfield transactions.

Laura was the chief drafter of the regulations implementing the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which strengthens CFIUS. Here, she noted that FIRRMA gave CFIUS authority to review real estate transactions near sensitive government facilities, along with discretion in defining which sensitive facilities and land would be covered. She said, “CFIUS implemented this authority through regulations setting forth specific sites—certain airports, maritime ports, military installations, and other facilities or properties of the U.S. government—and specific areas in or around those sites for coverage,” adding that, while CFIUS can update the list over time, the underlying authority from FIRRMA focuses on intelligence collection and exposure of national security activities.

She noted that the Gotion deal may not have involved investment in an existing U.S. entity, saying that, if this were a real estate acquisition aimed at building a plant, “there wouldn’t be an investment in a U.S. business that would trigger jurisdiction, so jurisdiction would only available if the land is within the definition of covered real estate under the regulations.”

On the topic of additional clarity provided by recent outreach by the head of CFIUS, as well as by the September 2022 Biden White House executive order on CFIUS, Laura said that market participants always want as much information as possible, “but given the fact-specific nature of CFIUS, it would be hard to release even redacted ‘opinions’.”