SB1388 amends Section 721 of the Defense Production Act to treat certain greenfield and brownfield investments by foreign countries of concern as covered transactions subject to review by the Committee on Foreign Investment in the United States (CFIUS). The change specifically captures transactions that involve the purchase, lease, or concession of U.S. real estate where the foreign party establishes a U.S. business to operate a factory or other facility and where that business could be controlled—directly or indirectly—by a government of concern or entities tied to such a government.
The bill also adds a mandatory declaration requirement: parties to these newly covered transactions must submit the DPA declaration described in Section 721. In practice, the measure expands CFIUS’s reach to land-based investments and low-threshold ownership and appointment arrangements, creating new compliance obligations for investors and earlier visibility for national-security reviewers without changing CFIUS’s existing mitigation and enforcement authorities.
At a Glance
What It Does
The bill adds a new category of covered transactions to 50 U.S.C. 4565(a)(4): investments that involve purchase, lease, or concession of U.S. real estate combined with the establishment of a U.S. business to operate a factory or facility, where control could be exercised by a foreign government of concern or related entities. It also requires the parties to such transactions to submit the declaration form described in the statute.
Who It Affects
Foreign states designated as ‘countries of concern’ and entities they own, control, or act on behalf of; foreign investors seeking to build or redevelop sites in the U.S.; U.S. developers and companies establishing facilities on those sites; and CFIUS/Treasury, which will receive additional filings and review responsibilities.
Why It Matters
CFIUS historically focused on acquisitions of existing U.S. businesses; this bill brings greenfield and brownfield projects—land purchases, leases, and concessions—squarely into mandatory review when linked to governments of concern. That expands early-stage scrutiny of investments that can give foreign states operational footholds on U.S. soil.
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What This Bill Actually Does
The bill modifies the Defense Production Act’s definition of a “covered transaction” to include a new type of investment: any transaction where a foreign person buys, leases, or secures a concession over U.S. real estate and establishes a U.S. business to run a factory or other facility on that site, provided the arrangement could give control of the U.S. business to a foreign government of concern or entities tied to that government. Control is framed broadly: it can arise through formal or informal concerted action, ownership interests, or rights to appoint key board members or officers.
To identify which foreign actors qualify, the bill cross-references the term “foreign country of concern” as defined in section 10612(a) of the Research and Development, Competition, and Innovation Act (42 U.S.C. 19221(a)). The control standard includes several routes: the foreign government itself; persons owned or controlled by that government or acting on its behalf; entities in which the government has a 5 percent or greater interest; or entities where the government had the right or power to appoint or approve key governance figures (with a three-year lookback for such appointments).The bill applies to transactions proposed or pending on or after enactment and inserts the new category into the existing DPA framework, meaning CFIUS retains its current investigative and mitigation toolkit.
Practically, it turns certain greenfield and brownfield projects—projects that previously might not have required CFIUS attention—into transactions that must be declared, elevating national-security review to an earlier phase of the investment lifecycle.Finally, the bill amends the DPA’s declaration rules to require the parties to these transactions to submit the statutorily described declaration. The text does not change the substance of CFIUS’s authority to negotiate mitigation agreements or order divestment; it only expands what transactions fall within CFIUS’s gatekeeping remit and which transactions trigger the filing requirement.
The Five Things You Need to Know
SB1388 inserts a new clause—subparagraph (B)(vi)—into 50 U.S.C. 4565(a)(4) to designate specified greenfield and brownfield investments as covered transactions.
It captures deals that combine (1) purchase, lease, or concession of private or public U.S. real estate with (2) establishment of a U.S. business to operate a factory or facility on that site.
The bill defines possible 'control' to include the government of a foreign country of concern, entities owned or controlled by such a government, entities with a 5% or greater interest tied to that government, or entities where the government had appointment or approval power over key directors or officers within the prior three years.
The new coverage applies to transactions proposed or pending on or after the date of enactment, so ongoing greenfield/brownfield projects may fall within the expanded CFIUS jurisdiction.
Section 2(b) requires parties to any transaction covered by the new clause to submit the DPA declaration described in Section 721 (i.e.
parties must file the statutory declaration that begins CFIUS review).
Section-by-Section Breakdown
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Short title
Provides the Act’s name: the 'Providing Rigorous Oversight Through Evaluation of Concerning Transactions Act of 2025' or 'PROTECT Act of 2025.' This is purely stylistic; it does not affect substance but signals the bill’s focus on expanding oversight of certain foreign-linked transactions.
Add cross-reference to new covered-transaction clause
This subsection inserts a new clause (iii) into subparagraph (A) to ensure that the newly defined category in subparagraph (B)(vi) is treated as a 'covered transaction' under the statutory scheme. The drafting makes the new category effective for transactions proposed or pending on or after enactment, avoiding retroactive application to closed deals but capturing deals already underway.
Defines greenfield and brownfield investments that trigger review
Subparagraph (B)(vi) is the core substantive change: it captures any foreign-person investment that (I) involves the purchase, lease, or concession of U.S. real estate together with establishing a U.S. business to run a factory/facility on that real estate, and (II) could result in control by a foreign government of concern or entities linked to it. The provision lists multiple routes to 'control'—direct government ownership, acting on behalf of a government, a 5% or greater interest, or the right to appoint key governance figures—with a three-year lookback for appointment links. Because the provision references control via 'formal or informal arrangements to act in concert,' it leaves room for CFIUS to examine coordination beyond clear ownership percentages.
Mandatory declaration filing for newly covered transactions
This subsection amends the DPA’s declaration rules to require parties to transactions captured by the new (a)(4)(B)(vi) category to submit the statutory declaration described elsewhere in Section 721. In practice, that means parties cannot rely on voluntary notice for these deals; they must file the statutory declaration that initiates CFIUS awareness and possible review, producing an earlier paperwork obligation and potential delay in project timelines.
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Explore Foreign Affairs in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- CFIUS and Treasury Department — The agency gains visibility over greenfield and brownfield projects that could create operational footholds for hostile or strategic state actors, improving early detection of national-security risks.
- U.S. national security and intelligence community — Early notice of land-based investments tied to governments of concern allows for risk assessment before facilities become operational, preserving options for mitigation.
- Local communities and critical-infrastructure operators — Communities near proposed facilities stand to gain increased scrutiny over projects that could pose espionage, dual-use, or critical-infrastructure risks.
- Domestic competitors and supply-chain partners — Firms competing with or supplying the new facility gain a clearer regulatory path for challenging or responding to foreign-state-backed entrants that might otherwise avoid review.
Who Bears the Cost
- Foreign governments of concern and related entities — They face expanded hurdles, including mandatory filings and heightened scrutiny for greenfield/brownfield projects that previously might not have been reviewable.
- Foreign and domestic investors/developers — Parties to captured transactions must prepare and file declarations, face potential delays, mitigation demands, or forced divestment, and absorb additional transaction costs and legal compliance expenses.
- CFIUS/Treasury (resource burden) — The agency will receive more filings and must allocate investigative resources, potentially requiring more staff, technical expertise, or timelines to process greenfield projects effectively.
- U.S. small businesses seeking capital — Startups or local developers might see reduced investment appetite or longer timelines when potential funders are tied to countries of concern, potentially constraining local economic development.
Key Issues
The Core Tension
The central trade-off is straightforward but painful: the bill tightens national-security oversight by bringing land-based, new-construction, or redeveloped projects into CFIUS’s purview—an effective way to prevent state actors from gaining operational footholds—but it does so at the price of broader regulatory ambiguity, heavier compliance costs, and potential deterrence of otherwise legitimate foreign investment. Deciding how aggressively to police those risks requires balancing sovereign security concerns against the economic benefits of openness and the administrative capacity to review hundreds more transactions.
The bill expands CFIUS coverage into a space that has long been treated differently from standard acquisitions: land-based, greenfield investment. That expansion raises immediate interpretation issues.
The phrase 'establishment of a United States business to operate a factory or other facility' could be read narrowly (a full, employer-operated factory) or broadly (including leased production space, contract manufacturing, or even warehousing). The statute’s reach also hinges on terms like 'concession' and 'acting in concert,' which are not defined here and will require administrative guidance or litigation to settle.
Those definitional gaps create uncertainty for deal structuring and timing.
The bill sets a low ownership/control trigger in parts of its definition: a 5 percent interest or rights to appoint critical directors or officers (with a three-year lookback) can subject a deal to review. That combination of percentage and governance-based triggers extends CFIUS reach into minority-investment and indirect-influence territory.
The cross-reference to the Research and Development, Competition, and Innovation Act’s definition of 'foreign country of concern' centralizes coverage on a moving list created in a different statute; changes to that list, or challenges to its scope, will directly expand or contract who falls under this bill. Finally, the bill mandates filings but does not pair that mandate with additional resources or procedural timelines for Treasury; absent funding or administrative updates, the expanded workload risks longer processing times and transactional uncertainty for all parties involved.
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