The Defense Production Act gives the Committee on Foreign Investment in the United States (CFIUS) the power to review any 'covered transaction' and to mitigate any national security risk that arises as a result of the transaction. The Act also empowers the President to suspend or prohibit any covered transaction if it is deemed to threaten United States national security. Historically, covered transactions would include mergers, acquisitions and takeovers by or with a foreign person that could result in foreign control of a United States business.
On 13 February 2020, regulations implementing reforms brought by the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) came into effect. FIRMMA expands the scope of CFIUS reviews to include certain non-controlling investments in companies involved with critical technologies, critical infrastructure or sensitive personal data, and certain real estate transactions. The reforms also introduced a mandatory notification process for certain investments. In relation to controlling investments, the regulations provide a complex and very broad definition of 'control'. It covers not only the majority of shares, voting rights or board representation, but also a dominant minority or formal or informal arrangements to act in concert.
On 4 April 2020, the U.S. President issued Executive Order 13913 establishing a new Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. The Executive Order, which came into effect on 8 April 2020, also expands federal authority to review license applications involving foreign ownership in telecommunication networks.
On 1 May 2020, the U.S. President issued Executive Order 13920 prohibiting certain transactions involving bulk power system electric equipment that has been developed, manufactured, or supplied by a foreign adversary if the Secretary of Energy, in consultation with the heads of other agencies, determines that the transaction raises significant national security concerns.
Pursuant to the Executive Order 13873 of 15 May 2019, regulations entitled "Securing the information and Communications Technology and Services and Services Supply Chain" (86 Fed. Reg. 4909) were published on 19 January 2021 and came into effect on 22 March 2021. The regulations allow the Secretary of Commerce to identify, assess, and address certain information and communications technology and services transactions that involve persons owned by, controlled by, or subject to the jurisdiction or direction of specified foreign adversaries and pose certain undue or unacceptable risks to critical infrastructure, the digital economy or national security.
"§4565. Authority to review certain mergers, acquisitions, and takeovers 
(a) Definitions - In this section:
(1) Clarification - The term "national security" shall be construed so as to include those issues relating to "homeland security", including its application to critical infrastructure.
(2) Committee; chairperson - The terms "Committee" and "chairperson" mean the Committee on Foreign Investment in the United States and the chairperson thereof, respectively.
(3) Control - The term "control" means the power, direct or indirect, whether exercised or not exercised, to determine, direct, or decide important matters affecting an entity, subject to regulations prescribed by the Committee.
(4) Covered transaction
(A) In general - Except as otherwise provided, the term "covered transaction" means-
(i) any transaction described in subparagraph (B)(i); and
(ii) any transaction described in clauses (ii) through (v) of subparagraph (B) that is proposed, pending, or completed on or after the effective date set forth in section 1727 of the Foreign Investment Risk Review Modernization Act of 2018.
(B) Transactions described - A transaction described in this subparagraph is any of the following:
(i) Any merger, acquisition, or takeover that is proposed or pending after August 23, 1988, by or with any foreign person that could result in foreign control of any United States business, including such a merger, acquisition, or takeover carried out through a joint venture. [...]
(iii) Any other investment, subject to regulations prescribed under subparagraphs (D) and (E), by a foreign person in any unaffiliated United States business that-
(I) owns, operates, manufactures, supplies, or services critical infrastructure;
(II) produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies; or
(III) maintains or collects sensitive personal data of United States citizens that may be exploited in a manner that threatens national security.
(iv) Any change in the rights that a foreign person has with respect to a United States business in which the foreign person has an investment, if that change could result in-
(I) foreign control of the United States business; or
(II) an investment described in clause (iii).
(v) Any other transaction, transfer, agreement, or arrangement, the structure of which is designed or intended to evade or circumvent the application of this section, subject to regulations prescribed by the Committee. [...]
(D) Other investments
(i) Other investment defined - For purposes of subparagraph (B)(iii), the term "other investment" means an investment, direct or indirect, by a foreign person in a United States business described in that subparagraph that is not an investment described in subparagraph (B)(i) and that affords the foreign person-
(I) access to any material nonpublic technical information in the possession of the United States business;
(II) membership or observer rights on the board of directors or equivalent governing body of the United States business or the right to nominate an individual to a position on the board of directors or equivalent governing body; or
(III) any involvement, other than through voting of shares, in substantive decisionmaking of the United States business regarding-
(aa) the use, development, acquisition, safekeeping, or release of sensitive personal data of United States citizens maintained or collected by the United States business;
(bb) the use, development acquisition, or release of critical technologies; or
(cc) the management, operation, manufacture, or supply of critical infrastructure.
(ii) Material nonpublic technical information defined
(I) In general - For purposes of clause (i)(I), and subject to regulations prescribed by the Committee, the term "material nonpublic technical information" means information that-
(aa) provides knowledge, know-how, or understanding, not available in the public domain, of the design, location, or operation of critical infrastructure; or
(bb) is not available in the public domain, and is necessary to design, fabricate, develop, test, produce, or manufacture critical technologies, including processes, techniques, or methods.
(II) Exemption for financial information - Notwithstanding subclause (I), for purposes of this subparagraph, the term "material nonpublic technical information" does not include financial information regarding the performance of a United States business. [...]
(E) Country specification - The Committee shall prescribe regulations that further define the term "foreign person" for purposes of clauses (ii) and (iii) of subparagraph (B). In prescribing such regulations, the Committee shall specify criteria to limit the application of such clauses to the investments of certain categories of foreign persons. Such criteria shall take into consideration how a foreign person is connected to a foreign country or foreign government, and whether the connection may affect the national security of the United States. [...]
(5) Critical infrastructure - The term "critical infrastructure" means, subject to regulations prescribed by the Committee, systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems or assets would have a debilitating impact on national security.
(6) Critical technologies
(A) In general - The term "critical technologies" means the following:
(i) Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations.
(ii) Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled-
(I) pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or
(II) for reasons relating to regional stability or surreptitious listening.
(iii) Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, Code of Federal Regulations (relating to assistance to foreign atomic energy activities).
(iv) Nuclear facilities, equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to export and import of nuclear equipment and material).
(v) Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such Code, or part 73 of title 42 of such Code.
(vi) Emerging and foundational technologies controlled pursuant to section 4817 of this title. [...]
(b) National security reviews and investigations
(1) National security reviews
(A) In general - Upon receiving written notification under subparagraph (C) of any covered transaction, or pursuant to a unilateral notification initiated under subparagraph (D) with respect to any covered transaction, the President, acting through the Committee-
(i) shall review the covered transaction to determine the effects of the transaction on the national security of the United States; and
(ii) shall consider the factors specified in subsection (f) for such purpose, as appropriate.[...]
(C) Written notice
(i) In general
(I) In general - Any party or parties to any covered transaction may initiate a review of the transaction under this paragraph by submitting a written notice of the transaction to the Chairperson of the Committee. [...]
(IV) Mandatory declarations
(aa) Regulations - The Committee shall prescribe regulations specifying the types of covered transactions for which the Committee requires a declaration under this subclause.
(bb) Certain covered transactions with foreign government interests
 (AA) In general - Except as provided in subitem (BB), the parties to a covered transaction shall submit a declaration described in subclause (I) with respect to the transaction if the transaction involves an investment that results in the acquisition, directly or indirectly, of a substantial interest in a United States business described in subsection (a)(4)(B)(iii) by a foreign person in which a foreign government has, directly or indirectly, a substantial interest. [...]
(cc) Other declarations required by Committee - The Committee may require the submission of a declaration described in subclause (I) with respect to any covered transaction identified under regulations prescribed by the Committee for purposes of this item, at the discretion of the Committee, that involves a United States business described in subsection (a)(4)(B)(iii)(II). [...]
(D) Unilateral initiation of review - Subject to subparagraph (G), the President or the Committee may initiate a review under subparagraph (A) of-
(i) any covered transaction (other than a covered transaction described in subparagraph (E)); [...]
(E) Covered transactions described - A covered transaction is described in this subparagraph if-
(i) the Committee has informed the parties to the transaction in writing that the Committee has completed all action under this section with respect to the transaction; or
(ii) the President has announced a decision not to exercise the President's authority under subsection (d) with respect to the transaction. [...]
(2) National security investigations
(A) In general - In each case described in subparagraph (B), the Committee shall immediately conduct an investigation of the effects of a covered transaction on the national security of the United States, and take any necessary actions in connection with the transaction to protect the national security of the United States.
(B) Applicability - Subparagraph (A) shall apply in each case in which-
(i) a review of a covered transaction under paragraph (1) results in a determination that-
(I) the transaction threatens to impair the national security of the United States and the risk has not been mitigated during or prior to the review of a covered transaction under paragraph (1);
(II) the transaction is a foreign government-controlled transaction; or
(III) the transaction would result in control of any critical infrastructure of or within the United States by or on behalf of any foreign person, if the Committee determines that the transaction could impair national security, and that such impairment to national security has not been mitigated by assurances provided or renewed with the approval of the Committee, as described in subsection (l), during the review period under paragraph (1); or
(ii) the lead agency recommends, and the Committee concurs, that an investigation be undertaken. [...]
(d) Action by the President
(1) In general - Subject to paragraph (4), the President may take such action for such time as the President considers appropriate to suspend or prohibit any covered transaction that threatens to impair the national security of the United States. [...]
(k) Committee on Foreign Investment in the United States
(1) Establishment - The Committee on Foreign Investment in the United States, established pursuant to Executive Order No. 11858, shall be a multi agency committee to carry out this section and such other assignments as the President may designate. [...]
(l) Actions by the Committee to address national security risks
(1) Suspension of transactions - The Committee, acting through the chairperson, may suspend a proposed or pending covered transaction that may pose a risk to the national security of the United States for such time as the covered transaction is under review or investigation under subsection (b).
(2) Referral to President - The Committee may, at any time during the review or investigation of a covered transaction under subsection (b), complete the action of the Committee with respect to the transaction and refer the transaction to the President for action pursuant to subsection (d). [...]"( Defense Production Act (50 U.S.C. current through Pub. L. 117-49), § 4565)
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"§ 800.208 Control.
(a) The term control means the power, direct or indirect, whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity, board representation, proxy voting, a special share, contractual arrangements, formal or informal arrangements to act in concert, or other means, to determine, direct, or decide important matters affecting an entity; in particular, but without limitation, to determine, direct, take, reach, or cause decisions regarding the following matters, or any other similarly important matters affecting an entity: 
(1) The sale, lease, mortgage, pledge, or other transfer of any of the tangible or intangible principal assets of the entity, whether or not in the ordinary course of business; 
(2) The reorganization, merger, or dissolution of the entity; 
(3) The closing, relocation, or substantial alteration of the production, operational, or research and development facilities of the entity; 
(4) Major expenditures or investments, issuances of equity or debt, or dividend payments by the entity, or approval of the operating budget of the entity; 
(5) The selection of new business lines or ventures that the entity will pursue; 
(6) The entry into, termination, or non-fulfillment by the entity of significant contracts; 
(7) The policies or procedures of the entity governing the treatment of non-public technical, financial, or other proprietary information of the entity; 
(8) The appointment or dismissal of officers or senior managers or, in the case of a partnership, the general partner; 
(9) The appointment or dismissal of employees with access to critical technology or other sensitive technology or classified U.S. Government information; or 
(10) The amendment of the Articles of Incorporation, constituent agreement, or other organizational documents of the entity with respect to the matters described in paragraphs (a)(1) through (9) of this section. 
(b) In examining questions of control in situations where more than one foreign person has an ownership interest in an entity, consideration will be given to factors such as whether the foreign persons are related or have formal or informal arrangements to act in concert, whether they are agencies or instrumentalities of the national or subnational governments of a single foreign state, and whether a given foreign person and another person that has an ownership interest in the entity are both controlled by any of the national or subnational governments of a single foreign state. 
(c) The following minority shareholder protections shall not in themselves be deemed to confer control over an entity: 
(1) The power to prevent the sale or pledge of all or substantially all of the assets of an entity or a voluntary filing for bankruptcy or liquidation; 
(2) The power to prevent an entity from entering into contracts with majority investors or their affiliates; 
(3) The power to prevent an entity from guaranteeing the obligations of majority investors or their affiliates; 
(4) The right to purchase an additional interest in an entity to prevent the dilution of an investor's pro rata interest in that entity in the event that the entity issues additional instruments conveying interests in the entity; 
(5) The power to prevent the change of existing legal rights or preferences of the particular class of stock held by minority investors, as provided in the relevant corporate documents governing such shares; and 
(6) The power to prevent the amendment of the Articles of Incorporation, constituent agreement, or other organizational documents of an entity with respect to the matters described in paragraphs (c)(1) through (5) of this section. 
(d) The Committee will consider, on a case-by-case basis, whether minority shareholder protections other than those listed in paragraph (c) of this section do not confer control over an entity.
[...]
§ 800.224 Foreign person.
(a) The term foreign person means: 
(1) Any foreign national, foreign government, or foreign entity; or 
(2) Any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity. 
(b) Any entity over which control is exercised or exercisable by a foreign person is a foreign person. [...]"( Code of Federal Regulations, 31 C.F.R. (last amended on 10/06/2021) §§ 800.208 and 800.224)
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"Sec. 2. Definitions. For purposes of this order:
(a) "License" means any license, certificate of public interest, or other authorization issued or granted by the Federal Communications Commission (FCC) after referral of an application by the FCC to the Committee established by subsection 3(a) of this order or, if referred before the date of this order, to the group of executive departments and agencies involved in the review process that was previously in place.
[...]
Sec. 3. Establishment. (a) There is hereby established the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (Committee), the primary objective of which shall be to assist the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the United States telecommunications services sector. 
[...]
Sec. 5. Committee Application Review Process. (a) The Committee shall review and assess applications to determine whether granting a license or the transfer of a license poses a risk to national security or law enforcement interests of the United States.
[...]
Sec. 6. Committee License Review Process. (a) The Committee may review existing licenses to identify any additional or new risks to national security or law enforcement interests of the United States. [...]"( Executive Order No. 13913, 85 Fed. Reg. 19643 (April 4, 2020), Sections 2, 3, 5 and 6)
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"Section 1. Prohibitions and Implementation. (a) The following actions are prohibited: any acquisition, importation, transfer, or installation of any bulk-power system electric equipment (transaction) by any person, or with respect to any property, subject to the jurisdiction of the United States, where the transaction involves any property in which any foreign country or a national thereof has any interest (including through an interest in a contract for the provision of the equipment), where the transaction was initiated after the date of this order, and where the Secretary of Energy (Secretary), in coordination with the Director of the Office of Management and Budget and in consultation with the Secretary of Defense, the Secretary of Homeland Security, the Director of National Intelligence, and, as appropriate, the heads of other executive departments and agencies (agencies), has determined that:
(i) the transaction involves bulk-power system electric equipment designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary; and
(ii) the transaction:
(A) poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of the bulk-power system in the United States;
(B) poses an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the economy of the United States; or
(C) otherwise poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.
(b) The Secretary, in consultation with the heads of other agencies as appropriate, may at the Secretary's discretion design or negotiate measures to mitigate concerns identified under section 1(a) of this order. Such measures may serve as a precondition to the approval by the Secretary of a transaction or of a class of transactions that would otherwise be prohibited pursuant to this order.
[...]
Sec. 2. Authorities. (a) The Secretary is hereby authorized to take such actions, including directing the timing and manner of the cessation of pending and future transactions prohibited pursuant to section 1 of this order, adopting appropriate rules and regulations, and employing all other powers granted to the President by IEEPA as may be necessary to implement this order. [...]" (Executive Order No. 13920, 85 Fed. Reg. 26595 (May 1, 2020), Sections 1 and 2)
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"§ 7.3 Scope of Covered ICTS Transactions.
(a) This part applies only to an ICTS Transaction that:
(1) Is conducted by any person subject to the jurisdiction of the United States or involves property subject to the jurisdiction of the United States;
(2) Involves any property in which any foreign country or a national thereof has an interest (including through an interest in a contract for the provision of the technology or service);
(3) Is initiated, pending, or completed on or after January 19, 2021, [...] ; and
(4) Involves one of the following ICTS:
(i) ICTS that will be used by a party to a transaction in a sector designated as critical infrastructure by Presidential Policy Directive 21—Critical Infrastructure Security and Resilience, including any subsectors or subsequently designated sectors;
(ii) Software, hardware, or any other product or service integral to:
[please see legal source for list]
(iii) Software, hardware, or any other product or service integral to data hosting or computing services, to include software-defined services such as virtual private servers, that uses, processes, or retains, or is expected to use, process, or retain, sensitive personal data on greater than one million U.S. persons at any point over the twelve (12) months preceding an ICTS Transaction, including:
[please see legal source for list]
(iv) Any of the following ICTS products, if greater than one million units have been sold to U.S. persons at any point over the twelve (12) months prior to an ICTS Transaction:
[please see legal source for list]
[...]
§ 7.103 Initial review of ICTS Transactions.
(a) Upon receipt of any information identified in § 7.100(a), upon written request of an appropriate agency head, or at the Secretary's discretion, the Secretary may consider any referral for review of a transaction (referral).
(b) In considering a referral pursuant to paragraph (a), the Secretary shall assess whether the referral falls within the scope of § 7.3(a) of this part and involves ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, and determine whether to:
(1) Accept the referral and commence an initial review of the transaction;
(2) Request additional information, as identified in § 7.100(a), from the referring entity regarding the referral; or
(3) Reject the referral.
(c) Upon accepting a referral pursuant to paragraph (b) of this section, the Secretary shall conduct an initial review of the ICTS Transaction and assess whether the ICTS Transaction poses an undue or unacceptable risk, which may be determined by evaluating the following criteria:
(1) The nature and characteristics of the information and communications technology or services at issue in the ICTS Transaction, including technical capabilities, applications, and market share considerations;
(2) The nature and degree of the ownership, control, direction, or jurisdiction exercised by the foreign adversary over the design, development, manufacture, or supply at issue in the ICTS Transaction;
(3) The statements and actions of the foreign adversary at issue in the ICTS Transaction;
(4) The statements and actions of the persons involved in the design, development, manufacture, or supply at issue in the ICTS Transaction;
(5) The statements and actions of the parties to the ICTS Transaction;
(6) Whether the ICTS Transaction poses a discrete or persistent threat;
(7) The nature of the vulnerability implicated by the ICTS Transaction;
(8) Whether there is an ability to otherwise mitigate the risks posed by the ICTS Transaction;
(9) The severity of the harm posed by the ICTS Transaction on at least one of the following:
(i) Health, safety, and security;
(ii) Critical infrastructure;
(iii) Sensitive data;
(iv) The economy;
(v) Foreign policy;
(vi) The natural environment; and
(vii) National Essential Functions (as defined by Federal Continuity Directive-2 (FCD-2)); and
(10) The likelihood that the ICTS Transaction will in fact cause threatened harm.
(d) If the Secretary finds that an ICTS Transaction does not meet the criteria of paragraph (b) of this section:
(1) The transaction shall no longer be under review; and
(2) Future review of the transaction shall not be precluded, where additional information becomes available to the Secretary.
[...]
§ 7.109 Final determination.
(a) For each transaction for which the Secretary issues an initial determination that an ICTS Transaction is prohibited, the Secretary shall issue a final determination as to whether the ICTS Transaction is:
(1) Prohibited;
(2) Not prohibited; or
(3) Permitted, at the Secretary's discretion, pursuant to the adoption of negotiated mitigation measures. [...]" (Securing the Information and Communications Technology and Services Supply Chain (86 Fed. Reg. 4909, 19 January 2021), 15 C.F.R. 7, §§ 7.3, 7.103 and 7.109)
Defense Production Act (50 U.S.C. current through Pub. L. 117-49), § 4565        
Code of Federal Regulations, 31 C.F.R. (last amended on 10/06/2021) §§ 800.208 and 800.224
Executive Order No. 13913, 85 Fed. Reg. 19643 (April 4, 2020), Sections 2, 3, 5 and 6
Executive Order No. 13920, 85 Fed. Reg. 26595 (May 1, 2020), Sections 1 and 2
Securing the Information and Communications Technology and Services Supply Chain (86 Fed. Reg. 4909, 19 January 2021), 15 C.F.R. 7, §§ 7.3, 7.103 and 7.109
[<a href="https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title50-section4565&num=0&edition=prelim">Code</a>],[<a href="https://www.ecfr.gov/current/title-31/subtitle-B/chapter-VIII/part-800">Regulations</a>],[<a href="https://www.federalregister.gov/documents/2020/04/08/2020-07530/establishing-the-committee-for-the-assessment-of-foreign-participation-in-the-united-states">Order</a>],[<a href="https://www.federalregister.gov/documents/2020/05/04/2020-09695/securing-the-united-states-bulk-power-system">Order</a>],[<a href="https://www.federalregister.gov/documents/2021/01/19/2021-01234/securing-the-information-and-communications-technology-and-services-supply-chain">Reg</a>]