The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA” or the “Act”) was enacted on August 13, 2018. The Act gives the Committee on Foreign Investment in the U.S. (“CFIUS”) modern and broader powers to ... ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­

Congress Passes FIRRMA, Giving CFIUS More Power

Government Relations

The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA” or the “Act”) was enacted on August 13, 2018. The Act gives the Committee on Foreign Investment in the U.S. (“CFIUS”) modern and broader powers to keep sensitive technology that could pose a risk to national security out of the control of foreign countries. While not as well publicized as the provisions addressing covered transactions, the Act contains provisions to monitor compliance with mitigation agreements.


Intense effort by the Senate (S. 2098) and House (H.R. 5841) resulted in this legislation. Both bills passed their respective chambers by wide majorities. The Act states the sense of Congress “that U.S. policy enthusiastically welcomes and supports foreign investment, consistent with protection of national security.” FIRRMA was added by amendment as Section 17 to H.R. 5515, the National Defense Authorization Act for Fiscal Year 2019 (“NDAA”). The Act was signed by President Trump on August 13, 2018. Most provisions are effective immediately.

Risk, Compliance and Monitoring Provisions

Within FIRRMA, provisions that affect risk, compliance and monitoring are in section 1718. This section addresses actions to be taken by the Committee to address national security risks. These include:

1. For purposes of mitigating any risk to national security, agreements and conditions can be negotiated, entered into or imposed, and enforced by the Committee.

2. In reaching an agreement or condition, the Committee will use a risk-based analysis that includes an assessment of the threat, vulnerabilities and consequence to national security

3. The agreement or condition needs to be reasonably calculated. This means it must be effective, must allow for compliance in an “appropriately verifiable way” and must enable “effective monitoring of compliance with and enforcement of the terms

4. For each covered transaction subject to an agreement or condition, the Committee needs to create a compliance plan whose elements include assignment of primary responsibility, defining how compliance will be monitored and how frequently reviews will be conducted, indicating whether an independent entity will conduct compliance reviews and anticipating consequences if parties fail to cooperate “regarding monitoring compliance.

5. FIRRMA explicitly provides for the use of independent entities to monitor compliance with the agreement and requires monitor independence from the parties.
Section 1727, Effective Date, states that Section 1718 is effective immediately and applies to a review or investigation initiated on or after August 13, 2018

Our Outlook*

The clearer “rules of the road” will benefit the applicants and the U.S. The broader definition of covered transactions and the favorable investment environment will translate to hundreds or thousands more applicants. The applicants will be subject to greater scrutiny such as in their risk mitigation processes, procedures and compliance plans.

The U.S. Department of the Treasury issued proposed CFIUS regulations this Spring. As the Act is being implemented, it is expected there will be additional rules and regulations. In our view, foreign investors should begin now to evaluate their situations and not wait for the final regulations.

If you would like more information on CFIUS or have questions, please feel free to reach out to us.

*Current as of August 30, 2018

Calfee Strategic Solutions, LLC is a national consulting firm based out of Washington DC, that is affiliated with Calfee, Halter & Griswold LLP. Calfee Strategic Solutions, LLC is not a law firm and is not authorized to engage in the practice of law. Accordingly, its advice should not be regarded as legal advice, and its services should not be considered the practice of law.


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