The Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) recently released the unclassified public version of its Annual Report to Congress regarding its review of certain transactions involving foreign investment during 2024 (the “2024 Report”).
Although the 2024 Report illustrates recent trends in CFIUS’s review and enforcement processes, as discussed below, it covers only calendar year 2024, meaning that the data reflects the regulatory environment in the last year of the Biden Administration. In the early days of the Trump Administration, the President issued the America First Investment Policy (“AFIP”), which in some ways reflected continuity with the Biden Administration (e.g., an emphasis on economic security as a critical aspect of CFIUS’s national security assessments) but in other ways marked departure (e.g., a stated intention to shift away from complex ongoing mitigation agreements towards simpler, more categorical approaches to addressing risk).
We have already begun to see the effects of this shift in the first months of 2025, such as in a more balanced approach to enforcement and case management, as we discussed in our previous alert here. Accordingly, some of the 2024 Report’s data may not be predictive of CFIUS’s practice going forward under the Trump Administration, especially in areas such as mitigation and enforcement (though note our discussion of the rise of informal mitigation below). On the other hand, some of the trends in the 2024 Report’s data may reflect continuity between the Biden and Trump Administrations, and thus be more indicative of the near-term regulatory environment, such as with respect to the nationalities of specific foreign investors.
Overall, taking into account the limitations of its data, we believe the 2024 Report bears out the conclusions in our prior analyses: that CFIUS is increasingly focused on geopolitical and strategic considerations and that the CFIUS process is likely to become increasingly differentiated based on the type of investor—becoming more efficient and predictable for reputable investors from ally and partner countries and more assertive and policy-driven for deals that relate to critical U.S. industry sectors or that involve countries or investors with a more ambivalent geopolitical reputation among the CFIUS agencies and their leadership.
You can find our alerts for the Committee’s Annual Reports for the preceding two years here (2023) and here (2022). Notable points from the 2024 Report are highlighted below, and include:
1. The Declarations Process is Stabilizing. In 2024, CFIUS reviewed 116 Declarations compared to 109 in 2023, representing a leveling off after a sharp decline from 154 in 2022 and a peak of 164 in 2021. 2023 and 2024 also saw an increase in the number of Declarations resulting in successful approvals—76.1 percent and 78.4 percent respectively—and fewer notice requests or non-clearances without a request for a notice (i.e., “shoulder shrugs”) as compared to 2022. These trends likely reflect, in part, both a shift toward parties filing Declarations more strategically and that CFIUS is growing more comfortable with the abbreviated review process (and is therefore more willing to conclude action on the basis of a Declaration alone). Although it is difficult to pinpoint the reason for these trends, we believe they generally reflect an increasingly favorable CFIUS environment for repeat investors from friendly jurisdictions and demonstrate that Declarations remain an attractive option for transactions involving such investors where the U.S. business does not implicate the most sensitive sectors and industries.
2. Notices Filed Remain Low and Resulted in Slightly Better Outcomes. 2024 saw a slight decline in the number of Notices filed, from 233 in 2023 to 209 in 2024, a decline of a little more than 10 percent. This is likely the result of both a slowdown in global M&A activity and, potentially, more judicious use of voluntary filings by transaction parties, especially after a period of a couple years where more transactions than usual resulted in mitigation agreements. In an increasingly challenging geopolitical environment, some parties may have judged it better to take their chances and not file voluntarily for borderline transactions, or otherwise avoided undertaking transactions requiring a CFIUS filing.
Similarly, Notices resulted in similar outcomes in 2024 as in 2023. The percentage of Notices that resulted in an investigation (an additional 45-day review period which CFIUS imposes on filings for which it cannot conclude action within the initial 45-day review period) remained around 55 percent. However, the number of Notices resulting in withdrawals ticked down modestly from roughly 30 percent in 2022 to the low 20s in 2023 and 2024. Like the increasing success rate for Declarations, this may suggest either a greater selectivity on the part of parties in deciding to enter transactions that will result in CFIUS review (which may also be reflected in the reduction in the total number of Notices filed) or improved preparation for and navigation of the CFIUS review process on the part of filing parties, or both. Also consistent with our view of the trends in Declarations, we believe this generally reflects an increasingly positive environment for repeat investors from friendly jurisdictions investing in lower-sensitivity U.S. businesses and an increasing wariness toward entering investments subject to CFIUS’s jurisdiction on the part of perceived higher-threat investors or U.S. businesses operating in sensitive sectors.
We also note that two Notices resulted in presidential decisions in 2024, which is an exceptional result—in the period from 2015 to the present, no year saw more than one presidential decision and many saw zero. While not wanting to exaggerate the statistical significance of this, given the very small sample size, it may be seen to underscore the heightened risk for politically salient transactions (a consideration we also noted in our review of U.S. national security regulations under the Trump Administration so far). However, 2024 was a contentious election year in which economic security and industrial policy played an unusually prominent role in public policy discussions. Furthermore, as noted, it remains very rare for a notice to result in such an outcome, as parties generally will withdraw from the process where CFIUS indicates that it intends to refer a transaction to the President. Therefore, we caution against drawing too strong a conclusion from these limited examples.
3. Fewer Chinese Filers. Filings involving Chinese investors—i.e., both Declarations and Notices—have continued their long decline from their peak in the mid-2010s. Such filings declined steadily from 41 in 2022 to 35 in 2023 and 28 in 2024. This is consistent with a national security regulatory environment that is increasingly focused on addressing risks arising from geopolitical competition between the United States and China and motivated by concern over potential access by Chinese parties to sensitive U.S. businesses, technologies, and data.
There have also been shifts in CFIUS filings from other countries—the filings submitted by investors in Canada, Singapore, and the United Kingdom have trended down in recent years whereas the filings for investors from Japan and the United Arab Emirates have trended up. However, we believe those changes may be attributed to the specific composition of the investments being made from such countries, rather than signaling any significant changes in how the Committee approaches deals involving investors from those countries. We believe similar compositional effects likely explain the trends observable in the industrial sectors occupied by the U.S. businesses that are parties to CFIUS filings (i.e., downward trends for Electric Power Generation, Scientific Research, and Software Publishing companies, and an upward trend for Computer Systems Design companies).
4. Fewer Formal Mitigation Agreements. The share of Notices that resulted in a formal mitigation agreement dropped from just above 20 percent in 2022 and 2023 down to 9 percent in 2024. This drop reflects a return to a more normal rate after a period of two years where CFIUS required mitigation in an unusually high number of transactions, reflecting certain dynamics within the Committee and the use of CFIUS’s authority to address national security risks (such as those related to sensitive personal data) where senior officials perceived a lack of other sufficient authorities to address identified risks. Relatedly, the number of Notices withdrawn and not refiled (because either CFIUS informed the parties that it was unable to identify mitigation measures that would resolve the national security risk or the parties chose not to accept CFIUS’s proposed mitigation measures) dropped from 12 in 2022 to 4 in 2024. These reductions may be driven in part by parties anticipating CFIUS’s concerns and addressing potential national security issues through prudent deal structuring before the Committee reviews the transaction and/or parties are becoming increasingly sophisticated and therefore avoiding transactions that would be anticipated to require significant mitigation.
We previously noted that the Committee was monitoring a record 246 mitigation agreements as of 2023. In what is likely an effort to reduce the compliance burden imposed on both transaction parties and CFIUS monitoring agencies with respect to agreements that no longer meaningfully address national security risks, the Committee terminated 25 mitigation agreements in 2024, a significant increase over the 15 agreements terminated in 2023. Given mitigation agreements generally do not have sunset dates and require significant buy-in from political leadership (both to consummate and to terminate), terminating 25 agreements in a year is remarkable and suggests that streamlining compliance burdens may continue to be a CFIUS focus for the foreseeable future.
5. Rise of Informal Mitigation. Both 2024 and 2023 saw six instances of CFIUS allowing parties to withdraw a notice and proceed with a transaction subject to binding mitigation conditions under the terms of the withdrawal. This “mitigation-by-withdrawal”—rather than by formal agreement—gives CFIUS more flexibility, especially for deals that pose low-to-moderate risk. In these cases, CFIUS does not approve the transaction, and no legal safe harbor applies, so CFIUS retains the full scope of its authorities if facts were to change in the future. This option also does not require senior officials to sign the certification to Congress that accompanies a formal approval. These informal mitigation agreements also allow the government to avoid the resource-intensive compliance regimes required to oversee formal mitigation agreements. AFIP, issued toward the beginning of the second Trump Administration, stated that:
[in order to] reduce administrative burden, and increase Government efficiency, [President Trump’s] Administration will cease the use of overly bureaucratic, complex, and open-ended “mitigation” agreements for United States investments from foreign adversary countries. In general, mitigation agreements should consist of concrete actions that companies can complete within a specific time rather than ongoing processes which can create costly compliance burdens. More administrative resources, in turn, will be directed toward facilitating investments from key partner countries.
Mitigation-by-withdrawal may become a more frequently used tool in 2025 and beyond as CFIUS seeks to execute on the Administration’s desire for a less burdensome compliance regime.
6. Enforcement Action Remains Rare but Real. Consistent with the increased focus on enforcement we observed in our analysis of the 2023 Annual Report, CFIUS formally imposed four penalties for breaches of material provisions of mitigation agreements in 2024. According to the Committee, eight of the ten formal enforcement actions the Committee has taken in its entire history have occurred in the last two years (although by our count there were an additional two such penalties previously along with one liquidated damages matter, so there are arguably 13 total penalties). Additionally, CFIUS increased the number of site visits it carried out to ensure compliance with mitigation agreements to 79 in 2024, up from 43 in 2023 and 42 in 2022. Furthermore, in August 2024, CFIUS issued its largest monetary penalty for violation of an agreement to date. While formal enforcement actions remain rare, these facts clearly indicate that CFIUS remains focused on oversight and enforcement.
CFIUS also continued to monitor transactions not proactively notified to the Committee. CFIUS uses this “non-notified” process to address potential national security risks it perceives but which the parties to the transactions may not (or where those parties may intentionally seek to avoid scrutiny), as well as to police and enforce the mandatory filing requirements. In 2024, CFIUS hired additional staff, evaluated new tools and data sets, and regularly coordinated across CFIUS member agencies to advance its ability to identify non-notified transactions. The Committee increased the number of formal inquiries into non-notified transactions to 76 in 2024 from 60 in 2023. Indeed, one of these inquiries, which was originally notified to the Committee from a public tip, ultimately resulted in the non-notified transaction being prohibited by presidential order.
7. Real Estate Authority Starting to Yield Outcomes. Filings for transactions involving real estate that does not constitute a “U.S. business” remain low as compared to other filings (only nine were filed in 2024). However, 2024 saw the first meaningful use of this authority to order the divestment of MineOne. As we discussed in a prior client alert, this divestment marked the first time CFIUS ordered such an action based solely on proximity to “covered real estate” under the its real estate authorities. The MineOne order serves as a firm reminder that CFIUS can—and does—review real estate transactions falling within its jurisdiction and is willing to take action where it perceives national security risk in relation to such transactions.
If you have any questions concerning the material discussed in this client alert, please contact the members of our CFIUS practice.
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