SUPPLEMENTARY INFORMATION:

I. Background

A. Proposed Definition of Military Installation and Appendix A

On May 5, 2023, the U.S. Department of the Treasury (Treasury Department) published in the Federal Register a proposed rule (88 FR 29003) amending the definition of “military installation” and adding eight military installations to the list at appendix A of the regulations in part 802 to title 31 of the Code of Federal Regulations (part 802) that implement the provisions relating to real estate transactions pursuant to section 721 of the Defense Production Act of 1950, as amended (section 721). Part 802 sets forth the processes and procedures of the Committee on Foreign Investment in the United States (CFIUS) for reviewing transactions involving the purchase or lease by, or concession to, a foreign person of certain real estate in the United States. Appendix A identifies, among other things, the bases, ranges, and other installations ( printed page 57349) that meet the definition of “military installation” at § 802.227. The amendments were proposed as a result of the ongoing evaluation of military installations by the U.S. Department of Defense (Defense Department).

B. Additional Technical Amendments To Update the Names of Certain Military Installations

This final rule also includes technical amendments to update the names of five military installations at appendix A: Fort Cavazos (formerly Fort Hood); Fort Gregg-Adams (formerly Fort Lee); Fort Johnson (formerly Fort Polk); Fort Liberty (formerly Fort Bragg); and Fort Moore (formerly Fort Benning). These are name changes to installations already on the list at appendix A and reflect decisions made by the Defense Department to implement the recommendations of the Defense Department Naming Commission. The military installation name changes in this final rule are those that have officially been changed by the Defense Department as of the publication date of this rule in the Federal Register . Additional bases may be renamed in the future, and information on the full list of recommended name changes is available at https://media.defense.gov/​2022/​Oct/​06/​2003092544/​-1/​-1/​1/​IMPLEMENTATION-OF-THE-NAMING-COMMISSIONS-RECOMMENDATIONS.PDF and https://www.defense.gov/​News/​News-Stories/​Article/​Article/​3260434/​dod-begins-implementing-naming-commission-recommendations/​.

C. Additional Guidance

The Treasury Department, in coordination with the Defense Department and the U.S. Department of Commerce's Census Bureau (Census Bureau), makes available a web-based tool to help the public understand the geographic coverage of part 802. This web-based tool is available at https://mtgis-portal.geo.census.gov/​arcgis/​apps/​webappviewer/​index.html?​id=​0bb1d5751d76498181b4b531987ce263 and allows users to input an address and determine the distance to certain military installations. The tool was developed to assist the public and is provided for reference only; it should not be interpreted as guidance or an advisory opinion by CFIUS with respect to any particular transaction.

II. Summary of Comments

The public was provided an opportunity to comment on the proposed rule, and comments were due by June 5, 2023. During the public comment period, the Treasury Department received five comments reflecting a range of views. All comments received are available on the public rulemaking docket at https://www.regulations.gov and are addressed herein.

The Treasury Department considered each comment submitted on the proposed rule. One commenter expressed the view that these provisions should be expanded to U.S. developers and realtors to address the overdevelopment of U.S. land located in natural disaster zones. The rule makes no change in response to this comment as it is outside the scope of section 721.

One commenter expressed the view that the regulations should further address risks posed by incompatible development around military installations such as from the construction of obstructions, visual and other interference from certain land uses, and light emissions, among other things. The commenter further expressed a view with respect to adding air installations to appendix A and related operational security risks. The rule makes no change in response to these comments. The Treasury Department and the Defense Department consult on the composition of appendix A and part 802 more broadly, taking into account the statutory requirements under section 721 and a variety of considerations.

One commenter requested guidance regarding whether legal name changes, inherited property, and gifts to relatives would be within the definition of a covered real estate transaction under part 802. The rule makes no change in response to this comment. Consistent with section 721 and as defined in § 802.212(a), a covered real estate transaction includes any purchase or lease by, or concession to, a foreign person of covered real estate that affords the foreign person at least three property rights under § 802.233. Real estate acquired by gift or inheritance is distinct from a purchase, lease, or concession as those terms are defined in part 802. By contrast, a person or entity that amends a property record or document to reflect a legal name change may or may not have engaged in a purchase, lease, or concession as those terms are defined in part 802—further analysis of the underlying reason for the name change would be required. For example, a corporate name change may follow an acquisition transaction, which, depending on the rights conveyed in that transaction, could be a covered real estate transaction (or be subject to CFIUS's jurisdiction relating to foreign investment in U.S. businesses which is detailed in 31 CFR part 800). As a general reminder, the Treasury Department notes that pursuant to § 802.212, the definition of a “covered real estate transaction” includes any transaction, transfer, agreement, or arrangement, the structure of which is designed or intended to evade or circumvent the application of section 721 as it relates to real estate transactions.

One commenter suggested adding Whiteman Air Force Base in Missouri to the list of military installations at appendix A. The rule makes no change in response to this comment. As noted in the proposed rule, the Defense Department will continue on an ongoing basis to assess its military installations and the geographic scope set under the rule to ensure appropriate application in light of national security considerations.

One commenter suggested an amendment to § 802.216(c) to exclude from the definition of “excepted real estate transaction” any purchase, lease, or concession of covered real estate by a person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary. The rule makes no change in response to this comment. The Treasury Department and the Defense Department consult on the definition of “excepted real estate transaction” taking into account the statutory requirements under section 721 and a variety of considerations.

No additional comments were received. The final rule therefore adopts the proposed rule without change other than the technical amendments described above.

III. Rulemaking Requirements

Executive Order 12866

This rule is not subject to the general requirements of Executive Order 12866, as amended, which covers review of regulations by the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB), because it relates to a foreign affairs function of the United States, pursuant to section 3(d)(2) of that order. In addition, this rule is not subject to review under section 6(b) of Executive Order 12866 pursuant to section 1(d) of the June 9, 2023, Memorandum of Agreement between the Treasury Department and OMB, which states that CFIUS regulations are not subject to OMB's standard centralized review process under Executive Order 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to prepare a regulatory flexibility analysis, unless the agency ( printed page 57350) certifies that the rule, once implemented, will not have a significant economic impact on a substantial number of small entities. The final rule makes amendments to part 802 (see 85 FR 3158), which the Treasury Department previously determined would not significantly impact a substantial number of small entities. The amendments in this rule do not change that analysis or determination.

Congressional Review Act

This rule has been submitted to the OMB's Office of Information and Regulatory Affairs, which has determined that the rule is not a “major” rule under the Congressional Review Act.

For the reasons set forth in the preamble, the Treasury Department amends 31 CFR part 802 as follows:

88 FR 57348