{"id":63366,"date":"2025-06-11T10:01:03","date_gmt":"2025-06-11T14:01:03","guid":{"rendered":"https:\/\/seidenlaw.flywheelsites.com\/?p=63366"},"modified":"2025-06-11T10:01:03","modified_gmt":"2025-06-11T14:01:03","slug":"chinese-acquisition-of-new-hampshire-industrial-site-raises-cfius-concerns","status":"publish","type":"post","link":"https:\/\/seidenlaw.com\/ru\/blog\/2025\/06\/chinese-acquisition-of-new-hampshire-industrial-site-raises-cfius-concerns\/","title":{"rendered":"\u041f\u0440\u0438\u043e\u0431\u0440\u0435\u0442\u0435\u043d\u0438\u0435 \u043a\u0438\u0442\u0430\u0439\u0441\u043a\u043e\u0439 \u043a\u043e\u043c\u043f\u0430\u043d\u0438\u0435\u0439 \u043f\u0440\u043e\u043c\u044b\u0448\u043b\u0435\u043d\u043d\u043e\u0433\u043e \u043e\u0431\u044a\u0435\u043a\u0442\u0430 \u0432 \u041d\u044c\u044e-\u0413\u044d\u043c\u043f\u0448\u0438\u0440\u0435 \u0432\u044b\u0437\u0432\u0430\u043b\u043e \u043e\u0437\u0430\u0431\u043e\u0447\u0435\u043d\u043d\u043e\u0441\u0442\u044c \u0443 CFIUS"},"content":{"rendered":"

By Andrew Astuno, Esq.<\/strong><\/a><\/p>\n

A recent report disclosing the purchase earlier this year of a 23-acre industrial site in Nashua, New Hampshire by a Chinese billionaire for $67 million USD<\/strong><\/a> has sparked national security concerns, particularly given the site\u2019s proximity to several prominent defense contractors, including BAE Systems and other firms providing services under sensitive U.S. government contracts. While the transaction has drawn public and media attention, an accurate legal assessment of the matter requires careful consideration of the regulatory framework imposed by the U.S. Committee on Foreign Investment in the United States (CFIUS), most notably the implementing regulations administered by the U.S. Department of the Treasury (Treasury) at Parts 800 and 802 of Title 31 of the Code of Federal Regulations. Detailed below are the key considerations, beginning with an examination of the geographic setting of the industrial site in the northeastern United States.<\/p>\n

Location and Context<\/strong>
\nNashua, New Hampshire is in close proximity to multiple defense contractor facilities and federal operations in the greater New England corridor. The site reportedly was acquired for industrial use, potentially in the bottled water sector, although current use, employment generation, and tax contributions remain publicly unclear. Although CFIUS jurisdiction is assessed based on the circumstances existing at the time of acquisition, the additional facts surrounding the site continue to carry weight in shaping public perception and national security narratives.<\/p>\n

Covered Control vs. Covered Real Estate Jurisdiction<\/strong>
\nAlthough the transaction appears real estate-focused, its characteristics suggest it likely constituted a \u201cU.S. business\u201d under Part 800. Again, under CFIUS rules, jurisdiction is assessed at the time of acquisition, not based on post-closing development activities. Federal courts and CFIUS interpret the term “U.S. business” broadly[1]<\/a> such that the acquisition of even minimal commercial rights\u2014such as permits, easements, or contracts, in conjunction with real property\u2014may suffice to trigger Part 800 jurisdiction.<\/p>\n

In transactions involving majority or full ownership acquisitions (i.e., foreign \u201ccontrol\u201d is obtained), even though the deal involves real estate, it very likely would be treated as a \u201ccovered control transaction\u201d under Part 800 and not as a \u201ccovered real estate transaction\u201d under Part 802. This follows from 31 C.F.R. \u00a7 802.216(b), which states that if a transaction is subject to Part 800, it is automatically excluded from coverage under Part 802. Notably, the framework does not impose a hierarchy or heightened standard of review; rather, it establishes a jurisdictional threshold that, once met, preempts other review processes.<\/p>\n

Greenfield vs. Covered Real Estate Investments<\/strong>
\nCFIUS cannot assert jurisdiction merely because foreign ownership exists. If the transaction truly involved only undeveloped land or assets not engaged in commercial activity at the time of acquisition (i.e., a greenfield investment), there may be no reviewable transaction under the relevant regulations. Instead, a separate basis for jurisdiction must exist, such as a non-excepted investor acquiring \u201ccovered real estate\u201d\u2014defined as certain real estate interests located in close proximity to pre-identified, U.S. Government-owned military installations.<\/p>\n

Chinese Ownership and Heightened Risk Perception<\/strong>
\nWhere Chinese acquirers are involved, CFIUS inherently applies heightened scrutiny. Treasury, as chair of the interagency, may even presume that certain Chinese investors\u2014even those privately incorporated\u2014are subject to government influence or control. This increases the likelihood of a heightened review and the potential for mitigation or a divestment order, even if a minority or non-controlling \u201ccovered investment\u201d[2]<\/a> is acquired but in a highly sensitive U.S. business. Notably, mandatory CFIUS jurisdiction is broader for acquirers deemed to be foreign government-owned or controlled. In such cases, the mandatory filing requirement applies not only to transactions involving \u201ccritical technologies,’\u201d but also where the U.S. business performs other enumerated sensitive functions\u2014such as operating \u201ccritical infrastructure\u201d or collecting or maintaining \u201csensitive personal data\u201d of over one million individuals, including U.S. citizens.<\/p>\n

Congressional and Publius Pressure vs. CFIUS Process<\/strong>
\nWhile elected officials may publicly demand CFIUS action on a given transaction, these calls typically have little effect on the actual review process. CFIUS\u2019s reputable non-notified team<\/strong><\/a> is well-resourced, supported by daily intelligence briefings, and already prioritizes all known Chinese-origin transactions. The fact that a transaction garners public attention should not materially influence the outcome of CFIUS\u2019s review. Moreover, public attention has no bearing whatsoever on the Committee\u2019s jurisdictional determination, which is governed strictly by statutory and regulatory criteria.<\/p>\n

Confidentiality and Non-Notified Reviews<\/strong>
\nCFIUS filings are confidential by law. While this transaction is widely presumed to be non-notified, it remains possible that a review is already underway\u2014for example, if the acquirer submitted a filing but has not publicly disclosed its engagement with CFIUS or related compliance efforts. If the target qualifies as a TID U.S. business and the acquirer is foreign government-controlled, a mandatory filing (barring certain exceptions, notably the acquirer qualifying as an \u201cexcepted investor\u201d[3]<\/a>) would have been required no later than 30 days before the transaction\u2019s completion date.[4]<\/a> However, the absence of enforcement actions (which are public) or related disclosures to date may suggest that the transaction fell outside the scope of CFIUS\u2019s mandatory jurisdiction.<\/p>\n

Appendix A and Real Estate Jurisdiction Limits<\/strong>
\nCFIUS real estate jurisdiction under Part 802 is limited to proximity to U.S. government-owned or operated sites listed in Appendix A. That list does not encompass privately owned defense contractor sites, even where such facilities perform sensitive functions or hold Facility Security Clearances (FCLs). Specifically, real estate jurisdiction is triggered only<\/em> by proximity to specific U.S. Government-owned sites\u2014either within one mile of facilities listed in Part 1 of Appendix A, or within 100 miles of certain highly sensitive sites designated in Part 2. These proximity limits may apply even in urban areas, subject to certain exemptions.[5]<\/a><\/p>\n

The MineOne Case as Precedent<\/strong>
\nThe 2024 Presidential Divestment Order<\/strong><\/a> targeting Chinese-owned MineOne Wyoming Data Center, LLC (MineOne) illustrates how proximity to a sensitive contractor site may be treated. In that case, MineOne was operating a bitcoin mining facility in close proximity to a Microsoft-leased data center handling classified information for the Defense Information Systems Agency, a component within the Department of Defense. However, this proximity did not create regulatory jurisdiction; rather, MineOne\u2019s North Range facility was also<\/em> in close proximity to Francis\u202fE.\u202fWarren Air Force Base \u2014 a site listed in Part 1 of Appendix A. That said, the close proximity of Microsoft\u2019s presence and sensitive activities likely influenced CFIUS\u2019s risk assessment\u2014ultimately contributing to its formal recommendation to the President, following an extensive review, to unwind the transaction\u2014once jurisdiction under Part 802 had been established. This demonstrates a core principle: vulnerabilities\u2014even significant ones\u2014do not confer jurisdiction. Rather, they are assessed\u2014often with substantial weight\u2014only after<\/em> jurisdiction is independently established. Coincidentally, Andrew Astuno was retained to testify as an expert witness on CFIUS-related issues in federal litigation successfully brought by a Wyoming-based services provider against MineOne following its ordered divestment (S<\/em>ee Civil Action No. 23CV-79-ABJ<\/strong><\/a> – U.S. District Court for the District of Wyoming).<\/p>\n

Defense Contractors and Contracting Agency Actions<\/strong>
\nContractors determined to be operating in proximity to recently acquired sites by foreign persons may become subject to unilateral or enhanced security requirements imposed by their contracting agencies. These requirements may be triggered independently of any CFIUS action, pursuant to pre-existing contractual clauses that allow the government to reassess or modify security obligations in response to evolving risk assessments. Separately, similarly situated government contractors may face increased scrutiny or obligations from the Defense Counterintelligence and Security Agency (DCSA) or other relevant agency security offices, particularly where classified contracts or facility clearances are involved. Notably, Seiden Law\u2019s Regulatory Group<\/strong><\/a> is available to represent government contractors in addressing these strategic and contractual challenges, including engagement with agency security officials, mitigation planning, and compliance with DCSA and CFIUS-related obligations.<\/p>\n

Key Takeaways<\/strong><\/p>\n

    \n
  1. Proximity to sensitive sites\u2014including contractor-operated ones\u2014does not<\/em> trigger jurisdiction under Part 802, unless the site is government-owned and listed in Appendix A.<\/li>\n
  2. However, once CFIUS jurisdiction is established under Part 800 or 802, proximity to sensitive facilities will<\/em> be considered as part of the national security risk analysis. See again <\/em>the MineOne case study.<\/li>\n
  3. Treasury could, in theory, amend Appendix A to include certain privately operated contractor sites; however, doing so would require formal rulemaking and raise significant regulatory and constitutional concerns. In particular, such an expansion would implicate the Fifth Amendment, which affords robust property rights and protections to private landowners. (Because this would involve federal\u2014not state\u2014action, it would not implicate the Fourteenth Amendment, but rather the Due Process Clause and Takings Clause of the Fifth Amendment.) Expanding Appendix A to regulate land use based solely on proximity to sensitive activities would likely prompt legal challenges on the grounds that such regulation is either impermissibly vague or constitutes a regulatory taking\u2014effectively depriving property owners of economically viable use of their land without just compensation.<\/li>\n
  4. Contractors determined to be operating in proximity to recently acquired sites by foreign persons\u2014particularly non-excepted investors\u2014may become subject to unilateral or enhanced security requirements imposed by their contracting agencies. These requirements may be triggered independently of any CFIUS or DCSA action, pursuant to pre-existing contractual clauses allowing the government to reassess or modify security obligations in response to evolving risk assessments.<\/li>\n
  5. The latest reported $67 million USD acquisition in New Hampshire by China\u2019s largest bottled water company underscores the expansive jurisdictional reach of Part 800: even transactions that appear to involve only real estate may, in fact, constitute a covered acquisition of a U.S. business. Accordingly, proximity concerns arising from co-location with privately operated facilities leased to sensitive government contractors\u2014while very real\u2014are already substantially addressed under the existing scope of Part 800. This regulatory authority remains remarkably broad and, at times, unanticipated in its reach and, in the author\u2019s assessment, indicates that the current framework effectively mitigates the need for any immediate expansion of Appendix A under the CFIUS real estate rules.<\/li>\n<\/ol>\n

    For further information or case-specific CFIUS analysis, please contact Andrew Astuno or one of Seiden Law\u2019s other Regulatory Group<\/strong><\/a> practitioners. Our firm\u2019s regulatory practice is also well-equipped to represent government contractors in their engagements with agency security officials, including mitigation planning and ongoing compliance efforts.<\/p>\n

    Acknowledgment<\/em>: <\/strong>Special thanks to Albert Schultz<\/strong><\/a>, President of Kaerus Consulting LLC\u2014a firm of former intelligence officers specializing in CFIUS, DCSA, and Team Telecom matters\u2014for his inspiration to evaluate this matter and related insights.<\/p>\n

    Disclaimer<\/em>:<\/strong> The information contained herein is provided for educational and informational purposes only and does not constitute legal advice. Recipients of this material should not act or rely upon it without seeking independent legal counsel. This communication does not create, and is not intended to create, an attorney-client relationship between Seiden Law LLP and any recipient or other party.<\/p>\n

    [1]<\/a> See, e.g.,<\/em> Ralls Corp. v. CFIUS<\/em>, 758 F.3d 296, 308 (D.C. Cir. 2014) (noting the breadth of CFIUS authority); 31 C.F.R. \u00a7 800.252 (defining “U.S. business” as \u201cany entity, irrespective of the nationality of the persons that control it, engaged in interstate commerce in the United States\u201d).<\/p>\n

    [2]<\/a> 31 C.F.R. \u00a7 800.211, referring to an investment in a \u201cTID U.S. business\u201d (defined at 31 C.F.R. \u00a7 800.248 to mean any U.S.-based company that produces, designs, tests, manufactures, fabricates, or develops one or more critical T<\/strong>echnologies, (b) performs specified functions related to covered investment critical I<\/strong>nfrastructure, or (c) maintains or collects sensitive personal D<\/strong>ata on greater than one million individuals, including U.S. citizens).<\/p>\n

    [3]<\/a> An \u201cexcepted investor\u201d is a foreign person who meets the criteria under 31 C.F.R. \u00a7\u202f800.219, including being from an \u201cexcepted foreign state\u201d (e.g., the UK, Australia, New Zealand or Canada) and satisfying specific ownership, governance, and compliance requirements, thereby exempting them from CFIUS jurisdiction over certain non-controlling investments and real estate transactions.<\/p>\n

    [4]<\/a> 31 C.F.R. \u00a7 800.206 (defining \u201ccompletion date\u201d as the earliest date upon which any ownership interest is conveyed, assigned, delivered, or otherwise transferred to a person). In a transaction where the ownership interest is conveyed before the foreign person receives the corresponding rights, the \u201ccompletion date\u201d is the earliest date upon which the foreign person acquired any of the equity interest. See <\/em>pertinent FAQs on CFIUS\u2019s website, updated in May 2023 and available online at: https:\/\/home.treasury.gov\/policy-issues\/international\/the-committee-on-foreign-investment-in-the-united-states-cfius\/cfius-frequently-asked-questions<\/a><\/p>\n

    [5]<\/a> 31 C.F.R. \u00a7 802.216(c), establishing an \u201curbanized area\u201d or \u201curban cluster\u201d exemption which may exclude certain transactions from CFIUS jurisdiction if the property is located entirely within an urbanized area and not in close proximity to a pre-identified sensitive site.<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

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