On September 15, 2022, President Biden issued a new executive order (EO), entitled “Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States,” that directs CFIUS to consider certain risk factors when reviewing covered transactions. CFIUS-related executive orders are rare and have typically been used to establish procedures and processes, rather than provide substantive guidance to the Committee. President Biden’s order is unusual in that it goes beyond process considerations and directs the Committee to consider specific substantive risks as part of its reviews. According to a White House fact sheet, this is the first EO “since CFIUS was established in 1975 to provide formal Presidential direction on the risks that the Committee should consider when reviewing a covered transaction.”
The EO does not alter the legal powers granted to CFIUS, including the scope of transactions which it can review. Nor does it contain any provisions regarding outbound investments (sometimes called “reverse CFIUS”), which was recently proposed in Congress and on which the Administration is considering taking executive action in the near term.
However, it provides important insight into the Administration’s thinking with respect to national security issues linked to foreign investment and puts both US businesses and foreign investors involved in certain industries, or engaged in certain activities, on notice that CFIUS may more closely scrutinize their deals.