(CNN) — The Committee on Foreign Investment in the United States is probing a secretive company that has been buying up land around a key Air Force base in California, sources familiar with the matter and a California lawmaker told CNN.
The ongoing review by CFIUS, an interagency panel chaired by the Treasury Department that is tasked with examining the national security implications of foreign investments, has not been previously reported.
But it comes as several California congressmen have raised concerns about the hundreds of millions of dollars worth of land bought up in recent years in Solano County, California, by Flannery Associates, a limited liability company registered in Delaware whose owners are publicly unknown.
“They’re right at the fence line with Travis Air Force Base, on three sides of the fence,” Rep. John Garamendi, a California Democrat whose district includes the base, told CNN.
Flannery is not required by Delaware law to disclose its owners. Attorneys representing the company did not return CNN’s requests for comment, but previously told the Wall Street Journal that British and Irish investors make up 3% of the company’s invested capital, with the rest being from US investors. They also denied that Flannery’s purchases were motivated by the proximity to Travis Air Force Base.
A Treasury Department spokesperson said in a statement to CNN that “CFIUS is committed to taking all necessary actions within its authority to safeguard US national security. Consistent with law and practice, CFIUS does not publicly comment on transactions that it may or may not be reviewing.”
Now that CFIUS is examining Flannery, the Treasury Department could subpoena the company for more information on the nationalities of its investors. It is not clear whether the department has taken that step. In the most extreme cases following an investigation, CFIUS can recommend that the president move to block or unwind a transaction.
“The question will become, if the investigation determines that the purchasers are a national security risk, does CFIUS have the authority to unwind and at what cost? So, that is an open question,” Garamendi said.
A statement from Travis Air Force Base provided to CNN said, “We can confirm that base senior officials are aware of this land acquisition and are actively supporting all involved federal and Solano County agencies,” but said it could not comment further.
Garamendi said he and Democratic Rep. Mike Thompson, who also represents parts of Solano County, contacted the FBI and CFIUS last year to urge them to investigate the transactions, expressing concern that the land could be used for spying. He pointed to a situation that played out earlier this year near Grand Forks Air Force Base in North Dakota, when a Chinese company’s plans to build a corn mill roughly 12 miles from the base were blocked by county officials on national security grounds.
While the reviews of Flannery are ongoing, Garamendi said, as of a month ago federal officials told him that they still did not know the identities of the company’s investors or what they intended to do with the land.
“I’ve had a ton of briefings,” Thompson told CNN, adding that he knows “for a fact” that CFIUS is reviewing the matter. “I don’t know that we’re any closer to figuring out who these folks are, or in resolving the problems that they’re causing for my constituents, and for, I believe, the national security of our country. They’re trying to investigate it, but I think it’s much more difficult than you or I might imagine.”
Thompson also said he had tried to contact Flannery himself and hadn’t heard back.
Treasury Secretary Janet Yellen has been briefed on the land buys and has been in touch with the lawmakers, including Thompson, about their national security concerns, people familiar with the conversations told CNN.
“Members of Congress and members of the public can often reach out to government agencies who are generally open to receiving their tips and referrals,” said a source familiar with the matter.
Garamendi said the fact that the company owns land so close to Travis Air Force Base, home of the largest wing of the Air Force’s Air Mobility Command, creates “the potential for any sort of nefarious activity.”
“The planes are taking off and landing there every hour of the day, moving military personnel and, right now, munitions to Poland” to support Ukraine’s fight against Russia, he added.
Republican Rep. Mike Gallagher of Wisconsin, who chairs the Select Committee on Strategic Competition between the United States and the Chinese Communist Party, went a step further, telling CNN in a statement that Flannery’s purchases could impact US military readiness.
“Travis Air Force base is a critical node for military logistics and would be essential to our ability to surge hard power to the Indo-Pacific if we found ourselves in a confrontation with China over Taiwan,” he said. “One risk [of this land purchase] is that this could be an effort to slow our ability to surge resources to the Indo-Pacific and slow us down in the event of a war.”
Adding to the lawmakers’ concerns, they say, it is also still unclear to them what the company intends to do with the more than 50,000 acres of land it has purchased, often at rates much higher than the nominal value of the land, the lawmakers told CNN.
In a lawsuit filed in May, attorneys for Flannery acknowledged they were making “above-market offers” to landowners, with the aggregate amount invested in, or committed to, purchases in Solano County over the last five years exceeding $800 million.
“Except for the initial few purchases, Flannery’s purchases have been at a substantial premium to fair market values,” the lawyers wrote. The lawsuit accused some local landowners of taking advantage of Flannery’s high offers and colluding to price-fix and drive up prices further.
“There’s no economic reason to pay the prices that they’re paying for basically dryland farming, and sheep and cattle grazing,” Garamendi said. “The prices they pay – no way will there be an economic return. It’s going to be a negative return.”
In the lawsuit, Flannery’s lawyers write that the company has purchased or is under contract to purchase 140 properties, all of which it intends to use for “interstate commerce,” including wind farming and other renewable energy projects. A new electrical substation may also be built on Flannery-owned land, the lawsuit says.
But lawyers for the defendants responded in a filing last month, also raising questions about Flannery’s intentions.
“Why has Flannery acted so aggressively to re-make the Solano County real estate market? What is its business objective? What legitimate commercial purpose requires such massive, concentrated property ownership within Solano County? Flannery will not say,” the attorneys wrote. “Flannery’s ownership and objectives have remained shrouded throughout its interaction with the Solano County community.”
The lawmakers say they are hoping that CFIUS’ review will result in action taken against Flannery to prevent it from keeping or expanding its holdings further around the base. In the Grand Forks case, CFIUS reviewed the matter but ultimately determined that it did not have the jurisdiction to block the project. City officials ultimately voted to strike down the Chinese company’s proposal.
Travis Air Force Base is on the list of sensitive military installations under CFIUS’ jurisdiction, but Thompson and Garamendi say its authorities need to be updated to, among other things, give it jurisdiction over “all land purchases…by foreign adversary entities” and expand the list of sensitive national security sites the panel can oversee. He and Republican Rep. Gallagher introduced legislation to that effect last month.
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