New regs to tighten security reviews of foreign investments

WASHINGTON — The Bush administration, pledging a "strong and continued commitment" to safeguarding national security, issued 90 pages of regulations Monday to implement a new law tightening security reviews of foreign investments.

The law was passed by Congress last year after an uproar in 2006 over a plan by Dubai-owned DP World to manage six of the largest ports in the United States. The deal fell through after lawmakers from both parties contended the administration and the agency responsible for reviewing security issues had not fully considered all of the security concerns that had been raised.

The proposed regulations, which were issued for a 45-day period of public comment, provide an update to regulations issued in 1991, conforming to the new Foreign Investment and National Security Act that Congress passed last July.

"These regulations reflect America's strong and continued commitment to safeguarding U.S. national security in a manner that reinforces the long-standing U.S. policy of welcoming foreign investment," said Clay Lowery, Treasury's assistant secretary for international affairs, in a statement.

They "increase clarity and make additional improvements based on experience," the statement said.

Treasury said that a public comment period on the new regulations will extend for 45 days from their publication later this week in the Federal Register. The regulations were also posted at http://www.treasury.gov/offices/international-affairs/cifius/ on the Web.

The new law ensures that high-level officials, including the director of national intelligence, participate in decisions concerning the security implications of direct foreign investment.

The law extends the scope of national security reviews to cover deals involving critical infrastructure and energy and requires a second-stage review investigation of most proposed acquisitions by state-owned companies.

It gives legal status to the little-known Committee on Foreign Investment in the United States, or CFIUS, a multi-agency group formed in 1975 to monitor U.S. policy on foreign investment. A 1998 law gave the president the authority to stop foreign acquisitions that pose a security threat, and the president delegated authority to investigate the deals to CFIUS.

The plans by the Dubai-owned company to buy and run operations at U.S. ports and details of the CIFIUS review were first reported by The Associated Press. The controversy that erupted derailed the purchase.