On May 13, 2024, President Biden issued an Executive Order requiring MineOne Partners Limited and its affiliates (together, “MineOne”) to divest their interest in real property located less than one mile from Francis E. Warren Air Force Base in Cheyenne, Wyoming. The order cites national security risks posed by MineOne’s ultimate Chinese ownership, the property’s proximity to the Air Force base, and the presence of foreign-sourced cryptocurrency mining equipment on the property. The order requires MineOne to remove all equipment and installations on the property.

The order is the first-ever presidential order blocking a transaction involving real estate, and just the ninth ever public presidential order stemming from a referral from the Committee on Foreign Investment in the United States (CFIUS). The action is also the first publicly acknowledged CFIUS review of a specific non-notified transaction initiated by a public tip. The order marks CFIUS’s most aggressive use of its expanded jurisdiction over real estate transactions and demonstrates the Committee’s capacity and commitment to scrutinizing real estate and non‑notified transactions.

Background

The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) expanded CFIUS’s jurisdiction to include certain real estate transactions. Covered real estate transactions subject to CFIUS review include acquisitions by foreign persons of real property in “close proximity” to specified U.S. military installations, combined with rights to access and build on the property. “Close proximity” is defined as within “one mile from the boundary of such military installation[s].” 

It is not mandatory for parties to a covered real estate transaction to notify CFIUS. But as with other transactions within the ambit of CFIUS jurisdiction, CFIUS retains authority to review covered real estate transactions before or any time after they have closed. If the Committee determines after its review that a transaction poses national security concerns that cannot be mitigated, it can recommend to the president that the transaction be prohibited.

Presidential prohibitions of foreign acquisitions are rare. This is partly because parties often abandon controversial transactions once CFIUS indicates that it will refer them to the president for review. Prior to the latest order, only eight transactions had been subject to a CFIUS-related presidential order:

• 1990: China National Aero-Technology Import and Export Corporation’s acquisition of MAMCO.
• 2006: Alcatel’s acquisition of Lucent.
• 2012: Ralls Corporation’s acquisition of four U.S. wind farm projects.
• 2016: Grand Chip Investment’s acquisition of Aixtron.
• 2017: Canyon Bridge’s acquisition of Lattice Semiconductor.
• 2018: Broadcom’s acquisition of Qualcomm.
• 2020: Shiji Information Technology’s acquisition of StayNTouch.
• 2020: ByteDance’s acquisition of Musical.ly.

Including the MineOne order, seven out of nine presidential orders have involved a Chinese acquiror. All presidential orders have been to prohibit the transaction at issue, except for Alcatel’s acquisition of Lucent, where the president, at CFIUS’s recommendation, permitted the transaction subject to mitigation agreements.

The MineOne Transaction and Divestment Order

According to the divestment order, MineOne, a British Virgin Islands entity majority owned by Chinese nationals, acquired the property at issue in June 2022. The property is located less than a mile from the nearest boundary of Warren Air Force Base, home to Minuteman III intercontinental ballistic missiles—equipment critical to the U.S. nuclear triad. Following its acquisition of the land, MineOne built a cryptocurrency mining operation on the property. Cryptocurrency mining utilizes significant computing power and related hardware.

Neither MineOne nor the original seller of the land notified CFIUS at the time of the transaction. According to the presidential order, CFIUS learned of MineOne’s ownership from a public tip, reportedly from Microsoft, which operates a nearby data center. CFIUS’s dedicated team in charge of non-notified transactions subsequently analyzed the transaction and requested the parties file a notice with CFIUS.

In addition to MineOne’s ultimate Chinese ownership and the facility’s proximity to the military installation, adding to CFIUS’s concerns was that the cryptocurrency mining operation utilized “specialized” (for cryptocurrency mining) and “foreign-sourced” equipment deemed “potentially capable of facilitating surveillance and espionage activities.” The president’s order not only requires MineOne to divest its interest in the land within 120 days, but also to remove “all items, structures, or other physical objects or installations of any kind” (“Equipment”) and utilities, improvements, and underground and above ground construction (“Improvements”) within 90 days.

Interestingly, it appears that MineOne reached an agreement on May 8, 2024, to sell the property at issue to a U.S. acquiror, publicly traded cryptocurrency mining company CleanSpark. President Biden’s order makes no mention of this agreement. Although any number of factors could have disrupted the sale, it is possible that the president went forward with the order despite the planned sale to ensure that the national security concerns CFIUS identified were fully addressed. CFIUS may not, and likely did not, view the sale as fully mitigating the risks it identified with MineOne’s operations. The order goes beyond merely requiring the property to be sold. It also mandates that MineOne remove its Equipment and Improvements to the property, and gives CFIUS authority to inspect the property, removals, and any data in MineOne’s possession, as well as to review the divestment of the property to a third party and object to any proposed sale if it disproves of the buyer.

Takeaways

CFIUS’s referral of the case to the president and the president’s rare use of his authority signal the level of unease that the Biden administration and CFIUS felt about a Chinese-owned entity operating advanced technology so close to a sensitive military site.

The fact that the president issued his order even after MineOne had apparently reached a deal to divest its ownership of the property to a U.S. company further underscores the forcefulness of the U.S. government’s response to the perceived threat.

The case also illuminates limitations of the CFIUS real estate regulations that have prompted congressional and other interest. Had the MineOne property been another mile farther from Warren Air Force Base, it would not have been in “close proximity,” and the acquisition of the undeveloped property would likely not have been a covered real estate transaction. The regulations designate a small number of installations with a 100-mile “extended range” proximity radius, but Warren Air Force Base is not one of them. The regulations also provide that real estate within large areas of Wyoming (and several other states) associated with ballistic missile fields is covered, but the MineOne property is outside of those areas. Perhaps anticipating these concerns, the Department of Defense (DoD)’s statement on the president’s decision notes that DoD “regularly assesses its military installations and the geographic areas around them to ensure appropriate application” of the real estate regulations.

Finally, the case demonstrates the risks of not notifying CFIUS of potentially sensitive transactions, even when notification is optional. Failing to notify CFIUS may engender additional skepticism from the Committee when it later learns of the transaction. As the Treasury Department noted in its statement regarding the president’s order, “In all CFIUS reviews, the parties’ conduct can impact the Committee’s assessment of what steps or actions are needed to resolve national security risks.” Proactive notification and cooperation can help ensure that the Committee is not predisposed against clearing a transaction.

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