On August 13, 2018 the Foreign Investment Risk Review Modernization Act (FIRRMA) was passed when President Trump signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019. On Saturday, as part of its efforts to implement FIRRMA, the Committee on Foreign Investment in the United States (CFIUS) activated a “pilot program” that, pending the implementation of FIRRMA, expands CFIUS’ jurisdiction with respect to a specific category of transactions and imposes mandatory filing requirements on transactions that are within the scope of the program. Prior to accepting foreign investments, U.S. businesses are advised to review the pilot program’s broad scope and mandatory declaration requirements.

The Who

The pilot program applies to two categories of U.S. businesses:

  • 1. A U.S. business that produces, designs, tests, manufactures, fabricates, or develops a “critical technology,” as such term is defined under FIRRMA, in at least one of the pilot program industries identified in Annex A to 31 CFR 801 (the Pilot Program Industries).1

  • 2. A U.S. business that designs, tests, manufactures, fabricates, or develops a critical technology that is designed specifically for use in at least one of the Pilot Program Industries. 

The What

Consistent with FIRRMA, and in a significant departure from the existing CFIUS regulations, the pilot program imposes mandatory notification requirements on parties to a transaction subject to the pilot program under two circumstances:

  • 1. Where, as a result of the acquisition/investment, a foreign person could gain control over the U.S. business; or
  • 2. Where a foreign person will not gain control over the U.S. business but will have any of the following rights or authorities:

          a. Access to any material nonpublic technical information in the possession of the target U.S. business;

          b. Membership or observer rights on the board of directors or equivalent governing body of the U.S. business, or the right to nominate an individual to a position on the board of directors or equivalent governing body of the U.S. business; or

          c. Any involvement other than through voting of shares, in substantive decision making of the U.S. businesses regarding the use, development, acquisition, or release of critical technology.

Under either circumstance, the parties must, within 45 days of the transaction’s closing date, file with CFIUS either the standard notice or the abbreviated “declaration” described in FIRRMA. CFIUS guidance indicates that abbreviated declarations must not exceed 5 pages.

The When

The pilot program goes into effect on NOVEMBER 10, 2018 and, as such, applies to pilot program transactions that will close on or before DECEMBER 25, 2018.  The pilot program is temporary and must end no later than March 5, 2020.

The Why

It will take some time before FIRRMA has been fully implemented. In the interim, the pilot program endeavors to address pressing national security vulnerabilities and keep pace with the fast-paced evolution of critical U.S. technology and the growth of foreign investment in the Pilot Program Industries.  


1. Pilot Program Industries: Aircraft Engine and Engine Parts Manufacturing; Alumina Refining and Primary Aluminum Production; Ball and Roller Bearing Manufacturing; Computer Storage Device Manufacturing; Guided Missile and Space Vehicle Manufacturing; Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Part Manufacturing; Military Armored Vehicle, Tank, and Tank Component Manufacturing; Nuclear Electric Power Generation; Optical Instrument and Lens Manufacturing; Other Basic Inorganic Chemical Manufacturing; Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing; Petrochemical Manufacturing; Powder Metallurgy Part Manufacturing; Power, Distribution, and Specialty Transformer Manufacturing; Primary Battery Manufacturing; Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing; Research and Development in Nanotechnology; Research and Development in Biotechnology (except Nanobiotechnology); Secondary Smelting and Alloying of Aluminum; Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing; Semiconductor Machinery Manufacturing; Storage Battery Manufacturing; Telephone Apparatus Manufacturing; and Turbine and Turbine Generator Set Units Manufacturing.

About the Authors

Jennifer Huber and Adam Munitz are Partners in Fluet’s International Trade + Transactions Practice.  Focusing primarily on the defense, security, and intelligence sectors, Jennifer and Adam position U.S. businesses for overseas growth and help foreign investors/acquirers and U.S. sellers navigate the CFIUS review process.

Fluet Of Counsel Mary Beth Long is the first-ever Senate confirmed female Assistant Secretary of Defense and worked directly with Secretaries of Defense Rumsfeld and Gates on the Department’s highest priority issues. As the Defense Secretary’s principle advisor on the Middle East, Europe and Africa, including Iraq and Afghanistan, Ms. Long represented the Department of Defense at the National Security Council and the White House, and with foreign Ministers of Defense. She has expertise in export compliance, securities regulations, and other regulatory regimes.

Additional information regarding the Fluet International Trade + Transactions Practice and previous representations can be found here.