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GSA Interim Rule to Implement the Secure Federal Leases from Espionage and Suspicious Entanglements Act

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The Secure Federal Leases from Espionage and Suspicious Entanglements Act is a bipartisan bill signed into law late last year. The bill was introduced by Sens. Gary Peters, D-Mich., and Rob Portman, R-Ohio, after the findings from a 2017 report. The GAO found the GSA had leased high-security spaces from foreign owners in 20 buildings, including six FBI field offices. Some of the spaces hosted classified operations, were used for evidence storage, and housed sensitive data. Most of the federal tenants were unaware of the foreign ownership of the physical space used for the operation of sensitive activities. Of the GSA active leases for high-security facilities, the GAO was unable to identify the ownership for one-third of the locations. The law requires the disclosure of immediate and highest-level foreign ownership of facilities leased to the government. It also mandates lease language that would restrict property owners’ physical access to high-security spaces. The bill requires the GSA to identify any foreign owners of “high-security spaces” — properties with a security level of three or higher — as well as any foreigners who benefit from partial ownership of the properties.

To implement provisions of the Secure Federal Leases from Espionage and Suspicious Entanglements Act, the General Services Administration unveiled an interim rule (that went into effect on Wednesday June 30, 2021), requiring the “immediate owners” of high-security space rented to the federal government to disclose foreign ownership. According to the interim rule, the GSA holds approximately 1,263 leases for high-security spaces as of June 2021, that fall under the Secure Federal Leases from Espionage and Suspicious Entanglements Act.

The interim rule does not address provisions of the Secure Federal Leases Act requiring the disclosure of foreign “beneficial owners,” that is, individuals who exercise direct or indirect control over, or have economic interests in high-security spaces through “any contract, arrangement, understanding, relationship, or otherwise.” The GSA has stated this will be addressed in the future, and that the GSA is seeking some form of electronic means to implement the Federal Secure Leases Act. The GSA seeks public comments on the potential impact of the Thursday rule on federal lessors. “Comments are welcome on foreign ownership, including beneficial ownership, with the understanding that such comments may help inform a future regulatory action,” the GSA said.

Have questions about the Interim Rule? Don’t hesitate to contact Centre.

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