Treasury Proposes to 'Vastly Expand' List of CFIUS Covered Military Bases

The Treasury Department is proposing to add 59 military bases across 30 states to the jurisdiction of the Committee on Foreign Investment in the U.S., a move the agency said would “vastly expand the reach” of CFIUS powers over sensitive foreign purchases of U.S. land. Treasury is also proposing to increase the scope of transactions it can examine for land purchases near eight other military bases, amend the definition of “military installation” and make other technical changes to the list of bases.

Paul Rosen, the agency’s assistant secretary for investment security, said the proposed changes are a “significant milestone in safeguarding critical U.S. military installations.” Treasury last added eight military bases to CFIUS jurisdiction in August (see 2308220019). “Working closely with the U.S. Department of Defense and other CFIUS members, we will remain responsive to the evolving nature of the risks we face to ensure we are protecting our military installations and related defense assets,” Rosen said.

Treasury Secretary Janet Yellen said she and President Joe Biden are “committed to using our strong investment screening tool to defend America’s national security, including actions that protect military installations from external threats.”

Public comments on the updates are due 30 days after the proposed rule is published in the Federal Register.

The proposed additions come amid rising concern from some lawmakers that U.S. adversaries, including entities tied to the Chinese government, are buying land near sensitive American military sites to conduct spying (see 2303010036), or are buying land that could jeopardize the U.S. food supply (see 2302070025).

One lawmaker called on CFIUS in January to prevent a subsidiary of a China-based technology company from opening an electric vehicle part manufacturing plant 70 miles from Whiteman Air Force Base in Kansas, among other military sites (see 2401160077). Treasury is now proposing to add Whiteman Air Force Base to the CFIUS list of military installations.

Another proposed addition, Camp Grayling in Michigan, is near land purchased by Chinese lithium battery supplier Guoxuan High-Tech and its U.S. subsidiary, Gotion. Lawmakers last year asked Treasury Secretary Janet Yellen to use CFIUS to block the deal (see 2309200080).

Others that could be added to the list include Army sites, Air Force bases, Navy support centers and military logistics facilities in states ranging from Alaska to California to Alabama and elsewhere. Treasury is proposing to add 40 military installations to Part 1 of the list, over which CFIUS jurisdiction generally extends one mile from the site’s boundary, and 19 installations to Part 2 of the list, over which the committee’s jurisdiction generally extends for 100 miles outside the base. The rule would also move eight military bases from Part 1 to Part 2.

Treasury said the Pentagon recommended adding the bases because nearby foreign purchases of land “could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance.”

The rule also would update the definition CFIUS uses for “military installation” to include Space Force bases, stations and “major annexes thereof,” and would broaden the category of covered real estate transactions to include “any military range as appropriate” near bases owned by the U.S. military. Another change would remove the reference to the Submarine Force Atlantic and Submarine Force Pacific commands and add “major support activities and annexes,” which “would broaden the category to include any relevant Naval base and air station and major support activities and annexes thereof, as identified by the Department of Defense.”

Rep. John Moolenaar, R-Mich, chair of the House Select Committee on China, applauded the proposed rule, including the addition of Camp Grayling. He said that base is within 100 miles of land purchased by China's Gotion.

"Treasury’s first move under this expanded authority should be to deny the land purchase by [Chinese Communist Party]-backed firm Gotion," he said.

While the rule is a "good step," he also said CFIUS still allows foreign adversaries to buy American land "without mandatory national security vetting, continuing to leave our military facilities susceptible to surveillance. Congress needs to close this gaping loophole to protect American national security.”