Thursday, February 25, 2016

US Lawmaker to Introduce Bill to Broaden CFIUS Mandate Beyond Security Concerns

by Amanda Rosenberg, in Los Angeles

A Democrat plans to introduce legislation in the House of Representatives today that would expand the scope of CFIUS reviews. News reports indicate that the legislation will allow CFIUS -- the Committee on Foreign Investment in the United States -- to review deals to determine whether there is a "net benefit" to the United States.  It also would permit CFIUS to consider a deal's effect on US employment, product innovation, public health and safety and whether a foreign company purchasing a US company abides by US rules concerning disclosure and transparency.

If passed, the legislation will have a significant impact on acquisitions of US companies by foreigners. Currently, CFIUS reviews acquisitions of US businesses by foreign acquirers for national security issues, meaning that only certain types of businesses and acquirers raise concerns. If the committee's mandate is expanded by the proposed bill , then potentially all M&A deals with foreign acquirers will be subject to the CFIUS regime. This would have the effect of slowing down and increasing the costs of completing deals. The CFIUS process can be costly and time-intensive. Additionally, parties will have to allocate the risk that CFIUS could block or unwind a deal. This likely would affect acquisition prices.

Monday, February 15, 2016

Clean Power Plan Speculation Following the Death of US Supreme Court Justice Scalia

by Sue Cowell, in Washington
US Supreme Court Justice Scalia's unexpected death changes speculation about the fate of the Clean Power Plan.  This is because the US Supreme Court's decision to stay implementation of the Clean Power Plan was decided by a vote of 5-4.  Justice Scalia voted to grant the stay.

Although the US Supreme Court's split of 5-4 to issue the stay shouldn’t be read to equate to votes to ultimately uphold the Clean Power Plan, it does provide guidance.  As a result, any Obama administration nominee may have to pass a Clean Power Plan litmus test given the administration's clear support of the Clean Power Plan and pledge to limit global warming under the 21st Conference of the Parties (or COP21) agreement.  COP21 was the 21st meeting of the parties to the 1992 United Nations Framework Convention on Climate Change.  The agreement reached at the COP21 aims to keep the increase in global average temperature to a maximum of 2° Celsius, but to try to limit the increase to 1.5° Celsius or lower.  The Clean Power Plan figures prominently in the US' pledge under this agreement. 

Tuesday, February 9, 2016

Supreme Court Stops Clean Power Plan in Its Tracks

by Sue Cowell, in Washington

The US Supreme Court stayed implementation of the Clean Power until the DC Circuit Court hears the pending litigation.  States and others requesting a stay argued that they would suffer irreparable harm during the pendency of the litigation. 

The US Supreme Court's stay remains in place until it issues a decision should it agree to hear an appeal of the DC Circuit Court's decision.  If the US Supreme Court hears an appeal, it's possible that its decision would not be issued before President Obama leaves office.  The US Supreme Court did not offer any explanation for the stay, but its decision was not unanimous.  Justices Ginsburg, Breyer, Sotomayor, and Kagan would not have granted the stay.

Thursday, February 4, 2016

Proposed Syngenta-ChemChina Deal Raises CFIUS Issues

by Amanda Rosenberg

Chinese state-owned ChemChina's proposed acquisition of the Swiss seed and pesticide company Syngenta likely will attract the attention of the Committee on Foreign Investment in the United States (CFIUS). CFIUS reviews transactions where a foreign person gains control over a US business. It focuses on national security issues.

There are at least two national security issues at play in the Syngenta-ChemChina deal.

First, Syngenta owns manufacturing facilities outside of Baton Rouge, Louisiana and in Houston, Texas that are registered with the Chemical Facility Anti-Terrorism Standards program under the US Department of Homeland Security, which regulates high-risk chemical facilities. These facilities likely will be classified as "critical infrastructure" for CFIUS purposes, meaning that the deal will be subject to a higher level of scrutiny. Syngenta also has a research and development facility in North Carolina. There may be other US facilities.

#TBT: Tactics When Caught in an Expropriation

This post is part of an occasional series highlighting a project finance article or news item from the past. It is often interesting and thought provoking to look back on these items with the perspective of months, years or decades of further experience. 

With this installment, we turn to an article that was published in the February 2013 Project Finance Newswire and written by Kenneth W. Hansen, a partner of Chadbourne's Project Finance group.