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16 April 20248 minute read

Treasury proposes changes to CFIUS penalties, authority to request information, and mitigation negotiations

On April 11, 2024, the US Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), issued a Notice of Proposed Rulemaking (NPRM) regarding CFIUS’s authority to review inbound investments.[1]

The proposed rule would impose significant changes to the maximum penalty amount for certain violations of the CFIUS regulations, the scope of questions that CFIUS may pose to the parties at various points of engagement, and the time allowed to respond to CFIUS information requests and mitigation agreement proposals. 

NPRM key takeaways

The NPRM makes the following three major changes to CFIUS’s current authority: 

  • Broadens CFIUS’s ability to request information from parties. Even in situations where a filing with CFIUS may not be required, parties are encouraged to prepare for more exposure and scrutiny due to an expansion of investigative powers in the context of monitoring and enforcement.

  • Shortens the timeframe for parties to respond to proposed mitigation terms. Parties are encouraged to engage in additional contingency planning to ensure they are well positioned in the event they must negotiate mitigation terms with CFIUS, due to a newly proposed three-day response time in the context of such negotiations.

  • Increases the maximum amount for civil monetary penalties. Parties are encouraged to invest appropriate time and diligence into the CFIUS process to ensure that they are not penalized for errors and omissions, as the maximum penalty has increased by from $250,000 to $5,000,000.

The NPRM comes amid the US government’s increased focus on inbound and outbound investment. Recent developments include the following: 

  • On September 15, 2022, President Joe Biden issued Executive Order 14083, “Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States,” which elaborated on existing statutory risk factors and added new factors for CFIUS to consider in its review of transactions (as previously described here).
  • On October 20, 2022, CFIUS released Enforcement and Penalty Guidelines, which included information on the types of conduct that may constitute a violation, the sources of information on which CFIUS relies to investigate a potential violation, and the penalty process and specific factors CFIUS considers in determining if a penalty is warranted (as previously described here). 

  • On August 9, 2023, President Biden issued Executive Order 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” which established new notification requirements and potential prohibitions on certain types of outbound investments into “countries of concern” (as previously described here). 

These changes, taken as a whole along with the NPRM, signal that CFIUS and Treasury’s authority to review transactions and investments involving foreign entities will continue to expand.

NPRM changes

The proposed rule would include the following changes:

  • Broadening CFIUS’s ability to request information from parties. First, the NPRM would expand CFIUS’s authority to obtain information regarding transactions that CFIUS could have jurisdiction over due to potential national security concerns, but which were not notified to CFIUS (referred to as “non-notified” inquiries). Currently, CFIUS may request that parties to a non-notified transaction provide the Committee with information necessary to determine whether a transaction is “covered” under CFIUS regulations. The NPRM would expand CFIUS’s authority to, in the non-notified context, request any information regarding whether the transaction raises national security considerations and whether a CFIUS filing may have been mandatory and, in the monitoring and enforcement context, request additional information to monitor compliance with a mitigation agreement, or assess whether transaction parties made a material misstatement or omitted material information in their correspondence with CFIUS. The proposed changes would likely intensify pressure on parties to submit prompt and accurate responses to CFIUS inquiries during a time when CFIUS enforcement actions are at an all-time high. 

    Additionally, the NPRM would expand CFIUS’s authority to issue a subpoena to gather relevant information if “appropriate” to ascertain information (as opposed to the current “necessary” standard for issuing subpoenas). Although penalties under CFIUS regulations are civil, violations under the subpoena process may result in criminal penalties under 50 U.S.C. 4555(a), including up to a year of imprisonment. The proposed broadening of subpoena power appears to signal CFIUS’s interest in relying more heavily on such authority to compel information from parties that frequently exceed the information request deadline under the non-notified process or when assessing enforcement action.  This, in turn, may foreshadow that CFIUS plans to reduce the timeframe for non-notified inquiries, which CFIUS currently investigates for many months or even years before making a decision to request a filing.  
  • Shortening the timeframe for parties to respond to proposed mitigation terms. Second, the NPRM would limit the amount of time that parties have to respond to CFIUS’s requests regarding draft mitigation terms during an investigation. Statutorily, CFIUS has 45 days to complete an investigation, but there is currently no time limit for responding to CFIUS regarding draft mitigation terms during that 45-day window. The proposed rule would require parties to provide substantive responses to proposed mitigation terms within three business days, including for an acceptance of terms, a counterproposal, or a detailed statement as to why the parties cannot comply.

    Mitigation agreements negotiated and executed without experienced CFIUS counsel could result in significant costs, avoidable violations, and deterioration of CFIUS’s trust and confidence in the parties as violations accumulate and such parties are forced to ask CFIUS to grant waivers and amendments.  Each turn of a draft mitigation agreement requires thoughtful analysis with all relevant parties, stakeholders, and operations staff to ensure the mitigation agreement is feasible.  Although CFIUS may ultimately increase the proposed three-day window to revert mitigation agreement drafts and for extensions to be granted on a case-by-case basis, CFIUS’s current proposal shows a focus on ensuring resolution in the required window via requiring prompt party responses (in recent years, CFIUS has also been more resistant to grant extensions for question set responses). 

  • Increasing the maximum amount for civil monetary penalties. Finally, the NPRM would increase the maximum penalty that CFIUS may impose for submitting a declaration or notice with a material misstatement or omission, as well as expand the circumstances under which a penalty may be imposed. Currently, the maximum penalty is either USD250,000 or the value of the transaction, whichever is greater. The NPRM would increase the maximum penalty to either USD5 million, the value of the violating party’s interest in the US business at the time of the transaction, the value of the violating party’s interest in the US business at the time of the violation, or the value of the transaction, whichever is greatest. CFIUS noted that it believes the current maximum is insufficient to deter violations given the median value for declarations filed between 2018 and 2022 is over USD38 million – far greater than USD250,000.[2]  Additionally, the NPRM would expand the list of circumstances under which a penalty may be imposed due to material misstatements or omissions in responses to CFIUS’s requests for information.

Thus, under the NPRM, the minimum threshold for each violation or material misstatement/omission would be set at USD 5,000,000, and a chain of poorly drafted responses may quickly aggregate to a significant penalty cap and the ultimate penalty amount.

Path forward

Treasury has requested comments from the public on the NPRM, which must be submitted by May 15, 2024. DLA Piper is prepared to work with clients should they wish to submit comments to the proposed rules, and we will continue to monitor and report on the practical impacts of the NPRM.

Parties are encouraged to utilize experienced counsel to advise on all aspects of the CFIUS process. Our firm maintains a robust, cross-disciplinary CFIUS practice consisting of Corporate and Regulatory and Government Affairs professionals. Please contact any of the authors, our CFIUS attorneys, or any of the partners in the firm’s National Security and Global Trade group, including Ignacio Sanchez, Nate Bolin, Christine Daya, Melanie Garcia, Nick Klein, or Rick Newcomb, should you have any questions.


[1] Amendments to Penalty Provisions, Provision of Information, Negotiation of Mitigation Agreements, and Other Procedures Pertaining to Certain Investments in the United States by Foreign Persons and Certain Transactions by Foreign Persons Involving Real Estate in the United States, 89 Fed. Reg. 26,107 (proposed April 15, 2024),

[2] See id. at 26,109.