Senate to Vote on Measure Giving Congress a Say in Foreign Investment Review Process

As senators prepare to pass legislation to expand the authorities of an interagency panel that reviews foreign investments for national security risks, the Senate on Thursday will consider an amendment that would also subject the panel, headed by the Treasury Department and known as the Committee on Foreign Investment in the United States (CFIUS), to greater congressional oversight.

The amendment, sponsored by Pennsylvania Republican Pat Toomey, would require congressional approval for CFIUS’s major decisions—those with an annual economic impact greater than $100 million. Toomey’s bill would require only a simple majority in order for proposed CFIUS rules to be approved, circumventing the possibility of a time-consuming filibuster. Toomey introduced his amendment, a version of the REINS (regulations from the executive in need of scrutiny) Act tailored specifically to CFIUS, in response to a bipartisan CFIUS reform bill that is expected to pass the Senate as part of an annual defense authorization measure this week.

Known as FIRRMA, or the Foreign Investment Risk Review Modernization Act of 2017, the underlying reform bill would give CFIUS more power to review direct foreign investments for security hazards. It would allow the panel to examine a wide array of transactions, such as purchases of real-estate in close proximity to U.S. facilities of national security interest. The bill was introduced by Texas Republican John Cornyn and California Democrat Dianne Feinstein, who argued in a recent op-ed that the current CFIUS review process “was not designed, and is not sufficient, to address today’s modern, evolving threats” such as China. “Most alarmingly, many transactions that could pose national security concerns often go unreviewed altogether,” Cornyn and Feinstein wrote. Their bill would broaden CFIUS’s review powers in order to address those threats.

A spokesman for Senator Cornyn told THE WEEKLY STANDARD that the Texas senator is a cosponsor of the original REINS Act, and that he supports Senator Toomey getting a vote on his amendment. “However, Sen. Cornyn has concerns about the unintended consequences of selectively applying it to only national security decisions,” the spokesman said.

While the REINS Act has 39 Republican sponsors, it is unclear how much support Toomey’s amendment will win during Thursday’s vote.

Toomey said during a Senate floor speech Wednesday afternoon that it isn’t as much the powers being granted to CFIUS that concern him, but rather the immense flexibility given to the agency to write its own rules. For example, Toomey pointed to two sectors of particular scrutiny: Critical infrastructure and technology. CFIUS will be able to define which companies qualify as critical infrastructure and technology companies subject to review. Toomey wants to have a say in the rulemaking process.

“The decisions that CFIUS will make as it implements and develops these rules that we’re going to empower them to develop, that’s really going to decide which kinds of transactions will be permitted to go forward, and which ones will not,” Toomey said Wednesday. He suggested that the rules might be written too broadly, which could have a chilling effect on the economy. But on the reverse side, he said, rules that are too narrow could result in CFIUS not having as much authority as it needs to protect the United States from national security threats.

“What we want is the right balance,” said Toomey. “Since we can’t know in advance whether this rulemaking will be done in the appropriate fashion, why wouldn’t we insist on the responsibility of overseeing this and in fact having final say?”

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