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Reversing CFIUS: Analyzing the International and Constitutional Implications of the Revised National Critical Capabilities Defense Act

by Madison Cash

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Abstract

In 2022, congressional consideration of the Revised National Critical Capabilities Defense Act (Revised NCCDA), colloquially known as "Reverse CFIUS", caused a flurry of conversation amongst congressional committees, legal practitioners, and private companies. The bill proposed a broad outbound foreign investment review regime for industries implicating national critical capabilities. While Congress ultimately declined to pass the Revised NCCDA, a similar outbound review mechanism is soon likely to be promulgated by the Executive Branch or the Legislative Branch. This note discusses the legislative history resulting in the proposal of an outbound investment review mechanism. It criticizes the breadth and ambiguity of the most recently available version of the Revised NCCDA's proposal in comparison to current national security investment review mechanisms and export control statutes, such as FIRRMA and IEEPA. This note embarks on a constitutional and international law analysis of executive authority to review foreign and domestic investments abroad. Finally, this note recommends specific ways in which the Revised NCCDA should be reworked before any congressional or executive action is taken to best comply with international standards and constitutional limits on executive power. It concludes by proposing that outbound foreign investment review could be attached to an existing regulatory framework to expand gradually by sequential congressional and presidential authorizations, in a similar fashion to other national security review regimes. This process would sculpt a more workable and durable outbound investment review regime, placed on more stable legal footing.

Reversing CFIUS: Analyzing the International and Constitutional Implications of the Revised National Critical Capabilities Defense Act

by Madison Cash

Click here for a PDF file of this article

Abstract

In 2022, congressional consideration of the Revised National Critical Capabilities Defense Act (Revised NCCDA), colloquially known as "Reverse CFIUS", caused a flurry of conversation amongst congressional committees, legal practitioners, and private companies. The bill proposed a broad outbound foreign investment review regime for industries implicating national critical capabilities. While Congress ultimately declined to pass the Revised NCCDA, a similar outbound review mechanism is soon likely to be promulgated by the Executive Branch or the Legislative Branch. This note discusses the legislative history resulting in the proposal of an outbound investment review mechanism. It criticizes the breadth and ambiguity of the most recently available version of the Revised NCCDA's proposal in comparison to current national security investment review mechanisms and export control statutes, such as FIRRMA and IEEPA. This note embarks on a constitutional and international law analysis of executive authority to review foreign and domestic investments abroad. Finally, this note recommends specific ways in which the Revised NCCDA should be reworked before any congressional or executive action is taken to best comply with international standards and constitutional limits on executive power. It concludes by proposing that outbound foreign investment review could be attached to an existing regulatory framework to expand gradually by sequential congressional and presidential authorizations, in a similar fashion to other national security review regimes. This process would sculpt a more workable and durable outbound investment review regime, placed on more stable legal footing.