Fifth Circuit: CFIUS Does Not Preempt Texas Grid-Access Ban on China Firms
The Fifth Circuit ruled October 16, 2026, that CFIUS neither conflicts with nor occupies the field of Texas's Lone Star Infrastructure Protection Act, leaving state restrictions on foreign access to critical infrastructure standing.
On October 16, 2026, the Fifth Circuit affirmed dismissal in GH America Energy, L.L.C. v. Fohn, holding that the federal CFIUS regime neither conflict-preempts nor field-preempts Texas's Lone Star Infrastructure Protection Act, which bars agreements giving companies headquartered in, owned or controlled by, or majority-owned by persons of China, Iran, North Korea, Russia or other designated states direct or remote access to Texas critical infrastructure. The court treated LSIPA as regulating intrastate grid-access agreements rather than corporate control transactions, found the two regimes complementary, applied the heightened presumption against preemption in utility regulation, and declined policy balancing. The ruling does not necessarily reach state land-ownership restrictions, since CFIUS regulates real estate under Part 802; the Eighth Circuit heard argument in Arkansas Cryptomining Ass'n v. York on October 20, 2026, on CFIUS preemption of Arkansas Act 174. Sophisticated clients should screen ownership and control through the chain against LSIPA's ERCOT 20% affiliate threshold, and draft compliance covenants, vendor certifications and termination triggers into purchase, offtake and financing documents. Supreme Court review remains possible and would supply the first nationwide guidance.