Review of Proposed United States Steel Corporation Acquisition
President Biden issued a memorandum ordering the Committee on Foreign Investment in the United States (CFIUS) to conduct a thorough review of Nippon Steel's proposed acquisition of U.S. Steel.
This action, based on concerns about potential national security risks, mandates a de novo review by CFIUS, which must submit a recommendation within 45 days on whether proposed mitigation measures are sufficient.
The President's order builds upon a prior prohibition of the acquisition and reserves the right to take further action if deemed necessary.
Arguments For
National Security: The President's action is justified to protect national security interests, potentially involving the steel industry's role in defense production and economic stability.
CFIUS Review Process: A thorough review by CFIUS provides a structured, transparent, and legally sound process for evaluating national security implications of foreign investments.
Due Process: The memorandum allows the parties involved to present their case and address potential concerns, ensuring due process and fairness throughout the investigation.
Legal Precedent: The action aligns with existing laws like Section 721 of the Defense Production Act of 1950, providing a framework and legal basis for the review.
Arguments Against
Potential Economic Disruption: The review could delay or prevent the acquisition, leading to uncertainty and potential negative impacts on U.S. Steel, its employees, and the broader economy.
Regulatory Burden: The review process might impose a significant burden on the companies involved, requiring them to spend time and resources complying with the investigation.
International Relations: The action could strain relationships with Japan, leading to potential trade and diplomatic complications.
Unintended Consequences: The outcome of the review could stifle foreign investment in the United States, negatively affecting economic growth and competitiveness.
Memorandum for THE SECRETARY OF THE TREASURY
THE SECRETARY OF STATE
THE ATTORNEY GENERAL
THE SECRETARY OF HOMELAND SECURITY
THE SECRETARY OF DEFENSE
THE SECRETARY OF COMMERCE
THE SECRETARY OF LABOR
THE SECRETARY OF ENERGY
THE UNITED STATES TRADE REPRESENTATIVE
THE DIRECTOR OF NATIONAL INTELLIGENCE
THE Director of the Office of Science
and Technology Policy
SUBJECT: Review of Proposed United States Steel Corporation Acquisition
On January 3, 2025, President Biden issued an order prohibiting the acquisition of United States Steel Corporation (U.S. Steel) by Nippon Steel Corporation, Nippon Steel North America, Inc., and 2023 Merger Subsidiary, Inc. (collectively, the Purchasers, and collectively with U.S. Steel, the Parties). In that order, President Biden reserved the right of the President “to issue further orders with respect to the Purchasers or U.S. Steel as shall in my judgment be necessary to protect the national security of the United States.”
This section is the memorandum's introduction.
It addresses the recipients (various cabinet secretaries and agency heads), states the subject, and summarizes a prior presidential order prohibiting the acquisition of U.S. Steel by Nippon Steel due to national security concerns.
The President retains the authority to take further action.
Section 1. Review. (a) Consistent with my authority under Article II of the Constitution and the laws of the United States, including section 721 of the Defense Production Act of 1950 (section 721), as amended, 50 U.S.C. 4565, I direct the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of the acquisition of U.S. Steel by the Purchasers to assist me in determining whether further action in this matter may be appropriate.
(b) CFIUS’s review shall be conducted de novo, confidentially, and consistent with the procedures set forth for national security reviews under section 721, including, but not limited to, identifying potential national security risks associated with the proposed transaction and providing adequate opportunity to the parties to respond to such concerns.
Section 1 directs the Committee on Foreign Investment in the United States (CFIUS) to conduct a comprehensive review of the proposed acquisition.
The review is based on the President's constitutional authority and the Defense Production Act of 1950.
Subsection (a) indicates the purpose: to inform the President on whether additional action is warranted.
Subsection (b) specifies that the review must be thorough, confidential, and adhere to national security review procedures.
Sec. 2. Recommendation. Consistent with the procedures set forth in section 721, within 45 days of the date of this memorandum, CFIUS shall submit a recommendation to me describing whether any measures proposed by the parties are sufficient to mitigate any national security risks identified by CFIUS. This recommendation shall include a statement describing each member agency’s position, including the reasons for such position.
Section 2 outlines the timeline and required content of CFIUS's recommendation to the President.
CFIUS must submit its findings within 45 days, detailing whether the proposed mitigation actions address any identified national security threats.
The recommendation must also encompass each member agency's stance and rationale.
Sec. 3. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department, agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Section 3 contains general provisions.
Subsection (a) clarifies that the memorandum does not limit the authority of other executive departments or the Office of Management and Budget.
Subsection (b) states that implementation must align with existing laws and funding availability.
Subsection (c) is a standard legal clause stating that the memorandum does not create any legally enforceable rights.