On November 1, 2024, the U.S. Department of the Treasury issued a final rule to expand the Committee on Foreign Investment in the United States’ (CFIUS) jurisdiction over certain transactions by foreign persons involving real estate in the United States (Final Rule). The Final Rule introduces significant changes, including:

1. Expansion of CFIUS’s jurisdiction over real estate transactions

  • One-mile radius: CFIUS’s jurisdiction will cover real estate transactions within a one-mile radius of 40 additional military installations.
  • 100-mile radius: CFIUS’s jurisdiction will also include transactions within a 100-mile radius of 19 additional military installations.
  • In total, the Final Rule adds 59 military installations across 30 states, vastly expanding the reach of CFIUS’s real estate jurisdiction.

2. Reclassification of military installations—Part 1 to Part 2 shift:

The Final Rule moves the following eight military installations from Part 1 to Part 2, expanding CFIUS’s jurisdiction over transactions between a one-mile and 100-mile radius:

  • Arnold Air Force Base, Coffee County and Franklin County, Tennessee
  • Joint Base San Antonio, San Antonio, Texas
  • Malmstrom Air Force Base, Great Falls, Montana
  • Moody Air Force Base, Valdosta, Georgia
  • Redstone Arsenal, Huntsville, Alabama
  • Schriever Air Force Base, Colorado Springs, Colorado
  • Tinker Air Force Base, Midwest City, Oklahoma
  • Wright-Patterson Air Force Base, Dayton, Ohio

3. Administrative updates

  • Installation names and locations: The Final Rule updates the names of 14 military installations and the locations of seven military installations, to improve public identification.

  • Removal of installations: The Final Rule removes three military installations from the regulations as they are located within other listed military installations.
  • Terminology revision: The Final Rule revises the definition of a “military installation” to align with these changes, include certain Space Force locations, and broaden the scope of certain categories.

The Final Rule is effective 30 days from the date of publication in the Federal Register. The Final Rule will not apply retroactively to transactions closed before the effective date or where the parties have executed binding documents establishing the transaction’s material terms before the effective date.

The Final Rule significantly impacts foreign persons by expanding CFIUS’s authority to review and potentially block real estate transactions near military installations. Although foreign acquisitions of covered real estate are not subject to mandatory filing requirements, CFIUS retains the discretion to review such transactions under its jurisdiction at any time, including post-completion. In 2023, only two notices and three declarations were filed under CFIUS’s real estate jurisdiction. We expect the Final Rule and increasing concerns about foreign land ownership will lead to an increase in filings.

CFIUS’s expanded jurisdiction aligns with a broader federal and state trend to regulate foreign ownership of U.S. real estate. Examples of recent actions include the following:

  1. In May 2024, President Biden ordered a Chinese-owned crypto mining company to vacate and sell certain real property and remove equipment from land within a one-mile radius of Warren Air Force Base in Cheyenne, Wyoming.
  2. In March 2024, the Consolidated Appropriations Act, 2024 was enacted, providing that the Secretary of Agriculture will be included in CFIUS deliberations on a case-by-case basis, particularly for transactions involving agricultural land, biotechnology, or the agriculture industry.
  3. The Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA) mandates reporting for foreign persons acquiring agricultural land. Under AFIDA, the U.S. Department of Agriculture has the express right to notify CFIUS of transactions that might pose a risk to national security and has received increased funding to assist with foreign investment reviews.
  4. More than 20 states have laws restricting or prohibiting foreign ownership of real property and the majority of states are considering pending legislation.
  5. Recent state and local legislative changes and ongoing federal bills reflect increasing regulatory scrutiny over foreign real estate investments in the United States.

There has also been an increase in the general public’s concerns surrounding foreign ownership of land. Given the heightened concerns, all investors and businesses should be vigilant in conducting thorough due diligence on proposed transactions. Due diligence should ensure compliance with the expanding regulatory landscape and include an assessment of national security risk.