Questions Still Surround CFIUS Fast-Track Process, Former Official Says
The new fast-track pilot program of the Committee on Foreign Investment in the U.S. appears to be open to only a very small number of investors, and the Treasury Department may not be ready to deploy it more broadly until next year, a former senior U.S. official said last week.
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Treasury unveiled the fast-track process in May, saying it would help encourage close U.S. allies to increase their investment in American businesses by expediting certain reviews by the committee (see 2505080040). But close to one year later, not much more information has been released, said David Plotinsky, a national security lawyer with Morgan Lewis and former head of DOJ's Foreign Investment Review Section.
“We've got an awful lot of clients of ours who are frequent flyers in front of CFIUS, and not a single one, to my knowledge, was invited to be a part of this pilot program,” he said during a webinar hosted by his law firm. “So they are out there, but it does seem like it's a relatively small list and not a lot of transparency in terms of who is on it.”
Plotinsky said he views the fast-track pilot similarly to the Transportation Security Administration's pre-check process. Just as airline passengers can give personal data to the government ahead of time in exchange for a quicker security screening process, the CFIUS fast-track process will likely “involve giving a bunch of information about yourself to Treasury so they can pre-vet you,” he said, which could lead to a quicker review process when the investor actually files with CFIUS.
But he noted that there has “not been a lot of action in the past year” on the process, and it’s unclear how long it will take Treasury to make progress, considering that Christopher Pilkerton, Treasury’s assistant secretary for investment security, just started at the agency in January.
Plotinsky also pointed to Pilkerton's testimony before Congress one week after being sworn in (see 2601140043), when he said the pilot program “is going to continue through 2026.” That seems to suggest that it may continue until next year, “and then maybe in 2027 you would see it deployed more broadly,” Plotinsky said. “It could be a slip of the tongue. He might have just meant, you know, in 2026. But if you take him literally, that could mean that we're not going to get out of the pilot phase until 2027, which would really mean a two-year delay in fully deploying this thing.”
Investors might see a similarly lengthy implementation process for changes to Treasury’s outbound investment program mandated by the Coins Act, Plotinsky said, which codified those outbound restrictions (see 2512290037). The law also requires Treasury to create an advisory opinion process for outbound investments, which would allow investors to first seek feedback from the agency about whether a particular transaction would be covered by the outbound prohibitions before going forward with a deal.
Plotinsky said Treasury may use the full 450 days it was allotted under the Coins Act to implement those changes, noting that Pilkerton didn’t give a “concrete answer” to lawmakers when asked during the hearing how long it might take for Treasury to issue rules.
“Reading between the lines, I at least interpreted him to maybe be managing expectations, to indicate that they may take most or all of that period, in which case we wouldn't see new regs until 2027,” Plotinsky said. “So it may very well be that we're going to be under the existing regulations for another year-plus before we see any changes.”
Although the White House vowed in February to expand both inbound and outbound foreign investment restrictions as part of its America-first trade policy memo, the administration hasn’t made more specific, public announcements about what that will entail.
“I think they probably are doing things internally, but in terms of anything outward-facing, there's been no notice of proposed rulemaking issued,” Plotinsky said. “There's really been no public statement of what they might do. So all we know is it's going to look more stringent than it currently is.”