Nonprofits Call for Clarity on CFIUS Jurisdiction, Curbing of State Land Laws

The two organizations, Asian Americans Advancing Justice/AAJC and the National Iranian American Council (NIAC), submitted the comments to Treasury as the agency considers adding 59 military bases across 30 states to the jurisdiction of CFIUS, which the agency said would “vastly expand the reach” of the committee’s powers over sensitive foreign purchases of American land (see 2407090003).

Treasury issued the proposed rule as Congress considers multiple bills that could expand U.S. investment restrictions, including the Promoting Agriculture Safeguards and Security Act, which could block China, Russia, Iran and North Korea from investing in American land or agricultural companies (see 2306020027).

NIAC called the bill “discriminatory.” Advancing Justice/AAJC also said it has noticed a “disturbing resurgence of xenophobic legislation on both the state and the federal level that seeks to restrict purchases and acquisitions of land by individuals or corporations from certain countries,” including China. The group said, as of May, it has tracked at least 30 states that have either introduced or “pre-filed” a version of a similar land law.

It called on Treasury to “robustly engage with states” that are considering these laws, saying they may violate “the Supremacy clause of the United States Constitution by purporting to protect federal military installations.”

“Like our many civil society partners, we believe CFIUS -- not a state -- is the appropriate governmental entity for investigating potential threats to national security within foreign investment in U.S. land, including real estate,” the group said.

NAIC suggested CFIUS issue new guidance to stress that the committee recognizes federal government protections against discrimination and is trying to “target enforcement narrowly and appropriately at actors who could implicate national security concerns based on their actions, rather than subjecting them to suspicion on the basis of their heritage.”

The group pointed to restrictive land laws introduced in Texas and Florida, and said it’s especially concerned about a law enacted in Indiana that it said blocks any citizen of China, Iran, North Korea or Russia from buying or leasing Indiana property that is “directly adjacent” to a military facility or base.

“This law adopts a discriminatory approach to the mandate of CFIUS, and risks interfering with efforts by CFIUS to appropriately protect national security interests,” NAIC said.

CFIUS “has a role to educate lawmakers at the Congressional, state and municipality level regarding how CFIUS is investigating valid national security concerns regarding real estate transactions,” the group said. “In so doing, CFIUS can help uphold the federal government’s interest and mandate to prevent discrimination, including the right to purchase property irrespective of one’s national origin.”

Advancing Justice/AAJC acknowledged that some Chinese-owned companies may be looking to buy U.S. land in a way that harms American national security, but it also said “the validity of this threat is notably uninterrogated and the perceived threat that this poses to U.S. food production and cascading supply chains is greatly exaggerated.”

It pointed to data compiled by the Congressional Research Service that shows foreign people and entities held an interest in 40.8 million acres of U.S. agricultural land in 2021, accounting for 3% of total private land. The data also showed that five countries accounted for about 62% of all foreign-owned U.S. agricultural land in 2021: Canada (31%), the Netherlands (12%), Italy (7%), the U.K. (6%) and Germany (6%).

“Absent in this list of top foreign investors is China,” it said.

The group asked Treasury to clarify how CFIUS will be “equipped to manage” the agency’s proposed addition of 59 military bases to the committee’ jurisdiction. Advancing Justice/AAJC noted that real-estate transactions have historically comprised a relatively small portion of the CFIUS workload, and it’s wondering how this latest expansion “may impact newly covered individuals and the overall CFIUS review process,” especially because 19 of the proposed military installations would give CFIUS jurisdiction over land purchases as far as 100 miles outside those bases.

“As such, the Treasury Department should clarify how this jurisdictional expansion of covered military bases specifically within more population-dense environments -- such as the Wright-Patterson Air Force Base in downtown [Dayton], OH that is located within 5 miles of at least ten different colleges or universities -- impacts newly covered individuals and may or may not impact CFIUS’ ability to review transitions,” Advancing Justice/AAJC said.

The group also said Treasury should say whether CFIUS needs more funding, staffing or “any additional such resources” to manage this increased jurisdiction “while also ensuring that review process is less burdensome on all parties involved.”

It also said U.S. agency officials that work on CFIUS issues should “regularly consult” with their agency’s civil rights components. The DOJ’s lead CFIUS official, for example, should “establish strong lines of communication” with the agency’s Civil Rights Division so that CFIUS reviews are tackling national security issues and not damaging civil rights protections.

Aside from Advancing Justice/AAJC’s concerns about civil rights, it also said the broad range of land laws being introduced across the country creates legal and other challenges for companies and people who may be restricted from making certain purchases in one state but not another.

“The current patchwork of land laws across the country is unsustainable in many ways,” it said, adding that some include “overly punitive” criminal and civil penalties against violators.

“Though they are ostensibly designed to protect U.S. agricultural land, real property, and critical infrastructure from malign foreign influence, in reality, they not only fail to address legitimate threats in a targeted and proportional manner," Advancing Justice/AAJC said, "but also raise serious concerns regarding the balance of national security interests with civil rights."