Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

The United States generally places very few restrictions on foreign investment. However, some restrictions do apply to the ownership of certain natural resources and production facilities and certain assets that are deemed material for national security.

For example, deposits of certain natural resources, including oil, oil shale, coal and gas, and lands containing such deposits that are owned by the United States may only be sold to US citizens or US entities. Similarly, licences for the construction and operation of facilities for the development, transmission or utilisation of power on land controlled by the federal government may only be issued to US citizens or US corporations.

Foreign investment or ownership in a project may also be subject to national security-based reviews and restrictions. Under the Foreign Investment and National Security Act of 2007, the Committee on Foreign Investment in the United States (CFIUS) holds the power of review for transactions involving foreign investment or control over a US business that may have an impact on national security. CFIUS can recommend to the President of the United States to suspend, block, or renegotiate such a transaction. CFIUS has the authority to review a transaction where a change of control would result from foreclosure.

The US is party to some free trade agreements that provide protections to foreign investors, including multilateral treaties such as the North American Free Trade Agreement and the Dominican Republic-Central American Free Trade Agreement, and bilateral free trade agreements with countries such as Chile, Colombia, Peru, Singapore and Korea. Generally, registration with a government authority is not required for a foreign investor to benefit from these treaties.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

While there are no general restrictions on obtaining insurance policies issued or guaranteed by foreign insurance companies, certain restrictions, conditions and tax implications may apply to the issuance of such policies. For example, a federal excise tax may be levied on the premiums paid to foreign insurance companies for certain types of insurance and reinsurance coverage. In addition, many states provide certain guarantees for insurance policies issued by insurers that meet state regulatory requirements and these guarantees may not be available for insurance policies issued by foreign insurance companies that are not deemed admitted to conduct business in the relevant jurisdiction.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

US companies must apply for work authorisation for foreign workers under the Immigration Reform and Control Act of 1986, and must verify each worker’s immigration status that permits him or her to lawfully work in the United States and maintain specified employment documentation for each new foreign national hire. Employers may sponsor foreign workers for a number of temporary visa categories, eligibility for which will depend on the experience and qualifications of the worker. Some of the free trade agreements entered into by the United States create special categories of workers that may apply for special visa categories that allow them to work in the United States.

Equipment restrictions

What restrictions exist on the importation of project equipment?

All imported equipment or products must be declared with the US Customs and Border Protection Agency. Customs duties or tariffs apply, but can, in some cases, be reduced or eliminated in accordance with the relevant trade agreement that governs the trade relationship with the exporting country. The Office of Foreign Assets Control administers and enforces import restrictions and bans on a number of countries and persons.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

The United States government or any state government may seize private property without consent, provided that the private property owner receives just compensation under the doctrine of eminent domain. While the power of eminent domain is limited by the Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment of the United States Constitution, the US Supreme Court has expanded the definition of ‘public use’ regarding eminent domain to allow private development of projects that serve a ‘public purpose’.

In addition to the protections provided by the Fifth Amendment, many multilateral and bilateral investment treaties (including free trade agreements) include expropriation provisions that offer protections to foreign investors.