Presidential Memorandum Orders Review of the Proposed U.S. Steel Acquisition by Nippon Steel Corporation
On April 7, 2025, President Biden issued a memorandum directing the Committee on Foreign Investment in the United States to conduct an in-depth review of the proposed acquisition of United States Steel Corporation by Nippon Steel Corporation, along with its subsidiaries Nippon Steel North America, Inc., and 2023 Merger Subsidiary, Inc.. This acquisition, initially blocked by a Presidential order on January 3, 2025, raised concerns about its potential impact on U.S. national security.
The memorandum aims to ensure that the U.S. government thoroughly assesses all possible risks that could arise from allowing a foreign entity, especially a company in a strategic industry like steel, to acquire a significant U.S. producer. The review is an essential part of safeguarding U.S. national security interests, especially given steel’s critical role in national defense and infrastructure.
Key Components of the Presidential Memorandum
1. CFIUS Review of the Acquisition:
The memorandum orders CFIUS to conduct a de novo review of the acquisition, meaning that the committee will examine the transaction from the beginning without being bound by prior assessments or opinions. The review will be confidential, allowing CFIUS to analyze the transaction away from public scrutiny. The purpose of this review is to evaluate whether the proposed acquisition could pose any national security risks that might require further government action.
• National Security Risks:
CFIUS will specifically focus on evaluating whether the acquisition of U.S. Steel by a foreign entity could affect the United States' ability to produce steel for military purposes or critical infrastructure projects. Steel is considered a foundational material for the manufacturing of defense equipment, energy infrastructure, and construction. Therefore, foreign control of such an essential industry may present vulnerabilities, especially during times of geopolitical tension or conflict.
Additionally, CFIUS will consider whether the foreign ownership of U.S. Steel could give Nippon Steel access to sensitive technologies or proprietary knowledge that could be leveraged to the advantage of a foreign nation, potentially undermining U.S. technological and military superiority.
• Party Responses:
The memorandum ensures that the acquiring parties (Nippon Steel and its subsidiaries) will have the opportunity to respond to any national security concerns identified by CFIUS. This process allows the involved parties to propose mitigation strategies or safeguards to address any risks identified during the review. This could involve structural changes to the acquisition, such as limitations on foreign access to certain facilities or assets within the company.
2. Timeline for CFIUS’ Recommendation:
Under the terms outlined in the memorandum, CFIUS has 45 days from the date of the memorandum (April 7, 2025) to submit its recommendation to President Biden. This period is designed to give CFIUS enough time to conduct its review, consult with relevant agencies, and provide a comprehensive assessment of the national security implications of the acquisition.
• Agency Positions:
Each member agency of CFIUS will be required to provide its position on the transaction. This includes agencies such as the Department of Defense, Department of Commerce, Department of Homeland Security, and Department of State, each of which has a vested interest in ensuring the U.S. government’s national security priorities are upheld. These agencies will outline their reasons for supporting or opposing the acquisition and may suggest additional actions or conditions that would mitigate any identified risks.
• Risk Mitigation Measures:
CFIUS will also examine whether any mitigation measures proposed by the parties involved are adequate to address the concerns raised during the review process. These measures might include changes to the structure of the deal, such as the imposition of restrictions on foreign control, operational limitations, or increased scrutiny of sensitive technologies or assets.
3. General Provisions of the Memorandum:
The memorandum includes several general provisions that clarify the scope and implementation of the review process:
• Authority of Executive Agencies:
The memorandum makes it clear that it does not interfere with or impair the authority granted to executive departments and agencies by law. It does not alter the existing legal authority of agencies such as the Department of Defense or Department of Energy to take independent actions related to national security concerns, should they arise during the review process.
• Office of Management and Budget:
The memorandum also clarifies that the functions of the Office of Management and Budget are not impacted by the review. OMB’s role remains focused on overseeing budgetary, administrative, and legislative proposals, ensuring that the review process does not impede the overall functioning of the government.
• Legal and Procedural Clarity:
The memorandum specifies that the actions outlined in the document do not create any enforceable rights or benefits for any party involved in the transaction. This means that while the review process is critical, it does not grant any legal standing to Nippon Steel, U.S. Steel, or other stakeholders in terms of challenging or enforcing the outcome of the review. The U.S. government’s actions will be based on national security considerations, rather than legal disputes.
4. Implications for U.S. Steel and Nippon Steel:
The memorandum highlights that the outcome of the CFIUS review could significantly impact the future of the acquisition. If CFIUS identifies substantial national security risks that cannot be mitigated, the President may choose to block the acquisition or require additional safeguards. On the other hand, if the review concludes that the transaction poses minimal risk, the acquisition could proceed, possibly with modifications to ensure U.S. interests are protected.
This review process is vital not only for U.S. Steel and Nippon Steel but also for the broader U.S. economy, as steel production plays a foundational role in various sectors, including defense, construction, and energy. The decision will also serve as a key indicator of how the U.S. government is balancing foreign investment in critical industries with the need to maintain sovereignty and security in strategically important sectors.
Key Takeaways:
• President Biden’s Memorandum orders a review of the proposed acquisition of U.S. Steel by Nippon Steel to assess national security risks.
• CFIUS will conduct a confidential, de novo review of the transaction to evaluate its impact on U.S. national security.
• National Security Concerns: Key issues include steel’s role in defense and sensitive technologies within U.S. Steel that could be compromised by foreign control.
• 45-Day Timeline: CFIUS is required to submit a recommendation to the President within 45 days on whether the acquisition can proceed or if additional actions are necessary.
• Each CFIUS agency will provide a position on the proposed acquisition, including Department of Defense, Department of Commerce, and other national security agencies.
• Mitigation Measures: The parties involved can propose measures to address security concerns, such as structural changes or operational restrictions.
• The memorandum clarifies that executive agencies' authority is not impacted, and no enforceable rights are created through the review process.
• The outcome of the review could determine whether the acquisition moves forward, gets modified, or is blocked to protect U.S. interests.
