Rule change would make foreign purchases near Ellsworth reviewable

When a Chinese company was on the verge of building a corn milling plant last year near an Air Force base in North Dakota, people concerned about national security wondered why the federal government hadn’t stopped it.
As it turned out, a federal committee tasked with reviewing foreign investments in the U.S. lacked jurisdiction over the area around Grand Forks Air Force Base.
After Congress passed a law in 2018 empowering the committee to review foreign purchases of real estate near sensitive government facilities, the committee went through a rulemaking process to craft a list of those facilities.
The resulting list didn’t include the base in Grand Forks, or Ellsworth Air Force Base in South Dakota, or some other military installations.
That could soon change. Earlier this month, the U.S. Committee on Foreign Investment proposed adding the Grand Forks and Ellsworth bases and six other military installations to the committee’s list of sensitive government facilities. That would enable the committee to review and make recommendations to the president, who could block foreign real estate purchases within 100 miles of those installations.
Rule proposed after Biden order
The proposed rule change follows an executive order issued by President Joe Biden last year, after the Grand Forks controversy erupted. The order instructed the committee to expand the scope of its reviews.
“The United States’ commitment to open investment is a cornerstone of our economic policy,” the Biden administration said in a fact sheet explaining the order. “However,” the fact sheet added, “the United States has long recognized that certain investments in the United States from foreign persons, particularly those from competitor or adversarial nations, can present risks to U.S. national security.”
When foreign people or entities want to buy property in an area under the Committee on Foreign Investment’s jurisdiction – or gain control of certain U.S. businesses, technologies, infrastructure or data – they are required by law to report it. After a 45-day review, the transaction may proceed or be subjected to an investigation. Parties subject to an investigation sometimes withdraw from the transaction. Otherwise, if the committee believes a transaction endangers national security, it can recommend that the president suspend or prohibit the transaction.
According to a report issued this month by the Congressional Research Service, the committee conducted 661 investigations from 2017 to 2021, and 264 of those ended with the affected parties withdrawing. There were four presidential decisions during that five-year period, including one by former President Donald Trump ordering the Chinese company ByteDance to divest from Musical.ly, a social media company that was merged into TikTok. ByteDance has challenged the decision in court.
The proposed Grand Forks project by the Chinese company Fufeng Group has faced public opposition and has not proceeded. If the Committee on Foreign Investment’s proposed rule change is adopted, the committee could review future land purchases by foreign companies in the vicinity of the base.
Among other locations proposed by the rule change to come under the committee’s jurisdiction, several have ties to the B-21 Raider, a stealth bomber plane under development by the Air Force. One of those locations is Ellsworth Air Force Base near Rapid City, which will host B-21s.
Sen. John Thune, R-South Dakota, said the power granted to the committee to review foreign purchases near a base is a balancing act.
“The proposed designation affirms Ellsworth’s critical role in America’s national security strategy, which will only increase with the arrival of the B-21 mission,” Thune said in a written response to South Dakota Searchlight questions. “We need to make sure any proposal balances these security needs while fostering continued economic growth in West River communities surrounding military installations.”
Rounds supports
law change
After the controversy over the proposed Chinese-owned plant near the Grand Forks Air Force Base last year, Sen. Mike Rounds, R-South Dakota, introduced the Promoting Agriculture Safeguards and Security Act, and then reintroduced it this year.
The act would prohibit China, Russia, Iran and North Korea from purchasing U.S. farmland and agricultural companies; require the president to report on any waivers granted to prohibited countries; add the U.S. secretary of agriculture as a member of the Committee on Foreign Investment; and require reports from the secretary on the risks of foreign purchases of ag companies.
Rounds said the committee’s proposed rule change and his bill are complementary, but he believes the issue is important enough to merit more than just an amended rule.
“Rules get changed up there sometimes for the good, but a lot of times for the bad, and that’s the reason why it would be better if we put it into law,” Rounds said.
While Rounds commended the effort to expand the committee’s real estate jurisdiction, he criticized how long it takes to change rules.
“The federal government is a huge bureaucracy, and by the time it works its way through to where the Treasury is actually doing the rulemaking, it can literally take years to get something done,” Rounds said. “Even on really simple stuff.”
A public comment period is open until June 5 on the proposal to add eight military installations to the Committee on Foreign Investment’s jurisdiction. To make a comment, search the docket number “2023-09259” at regulations.gov.
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