[DOCID: f:hr523p1.109]
From the House Reports Online via GPO Access
[wais.access.gpo.gov]
109th Congress Rept. 109-523
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED
TRANSPARENCY ACT OF 2006
_______
June 22, 2006.--Ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 5337]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 5337) to ensure national security while
promoting foreign investment and the creation and maintenance
of jobs, to reform the process by which such investments are
examined for any effect they may have on national security, to
establish the Committee on Foreign Investment in the United
States, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 9
Background and Need for Legislation.............................. 10
Hearings......................................................... 13
Committee Consideration.......................................... 14
Committee Votes.................................................. 14
Committee Oversight Findings..................................... 15
Performance Goals and Objectives................................. 15
New Budget Authority, Entitlement Authority, and Tax Expenditures 15
Committee Cost Estimate.......................................... 15
Congressional Budget Office Estimate............................. 15
Federal Mandates Statement....................................... 17
Advisory Committee Statement..................................... 18
Constitutional Authority Statement............................... 18
Applicability to Legislative Branch.............................. 18
Section-by-Section Analysis of the Legislation................... 18
Changes in Existing Law Made by the Bill, as Reported............ 20
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SEC. 1. SHORT TITLE.
This Act may be cited as the ``National Security Foreign Investment
Reform and Strengthened Transparency Act of 2006''.
SEC. 2. UNITED STATES SECURITY IMPROVEMENT AMENDMENTS; CLARIFICATION OF
REVIEW AND INVESTIGATION PROCESS.
Section 721 of the Defense Production Act of 1950 (50 U.S.C. App.
2170) is amended by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Committee.--The term `Committee' means the Committee on
Foreign Investment in the United States.
``(2) Control.--The term `control' has the meaning given to
such term in regulations which the Committee shall prescribe.
``(3) Covered transaction.--The term `covered transaction'
means any merger, acquisition, or takeover by or with any
foreign person which could result in foreign control of any
person engaged in interstate commerce in the United States.
``(4) Foreign government-controlled transaction.--The term
`foreign government-controlled transaction' means any covered
transaction that could result in the control of any person
engaged in interstate commerce in the United States by a
foreign government or an entity controlled by or acting on
behalf of a foreign government.
``(5) Clarification.--The term `national security' shall be
construed so as to include those issues relating to `homeland
security', including its application to critical infrastructure
(as defined in the Homeland Security Act of 2002).
``(b) National Security Reviews and Investigations.--
``(1) National security reviews.--
``(A) In general.--Upon receiving written
notification under subparagraph (C) of any covered
transaction, or on a motion made under subparagraph (D)
with respect to any covered transaction, the President,
acting through the Committee, shall review the covered
transaction to determine whether the transaction
threatens to impair the national security of the United
States and whether such threat can be mitigated.
``(B) Control by foreign government.--If the
Committee determines that the covered transaction is a
foreign government-controlled transaction, the
Committee shall conduct an investigation of the
transaction under paragraph (2).
``(C) Written notice.--
``(i) In general.--Any party to any covered
transaction may initiate a review of the
transaction under this paragraph by submitting
a written notice of the transaction to the
Chairperson of the Committee.
``(ii) Withdrawal of notice.--No covered
transaction for which a notice was submitted
under clause (i) may be withdrawn from review
unless--
``(I) a written request for such
withdrawal is submitted by any party to
the transaction; and
``(II) the request is approved in
writing by the Chairperson, in
consultation with the Vice Chairperson,
of the Committee.
``(D) Unilateral initiation of review.--The
President, the Committee, or any member of the
Committee may move to initiate a review under
subparagraph (A) of--
``(i) any covered transaction;
``(ii) any covered transaction that has
previously been reviewed or investigated under
this section, if any party to the transaction
submitted false or misleading material
information to the Committee in connection with
the review or investigation or omitted material
information, including material documents, from
information submitted to the Committee; or
``(iii) any covered transaction that has
previously been reviewed or investigated under
this section, if any party to the transaction
or the entity resulting from consummation of
the transaction intentionally materially
breaches a mitigation agreement or condition
described in subsection (l)(1)(A), and--
``(I) such breach is certified by the
lead department or agency monitoring
and enforcing such agreement or
condition as an intentional material
breach; and
``(II) such department or agency
certifies that there is no other remedy
or enforcement tool available to
address such breach.
``(E) Timing.--Any review under this paragraph shall
be completed before the end of the 30-day period
beginning on the date of the receipt of written notice
under subparagraph (C) by the Chairperson of the
Committee, or the date of the initiation of the review
in accordance with a motion under subparagraph (D).
``(2) National security investigations.--
``(A) In general.--In each case in which--
``(i) a review of a covered transaction under
paragraph (1) results in a determination that--
``(I) the transaction threatens to
impair the national security of the
United States and that threat has not
been mitigated during or prior to the
review of a covered transaction under
paragraph (1); or
``(II) the transaction is a foreign
government-controlled transaction; or
``(ii) the Director of National Intelligence
identifies particularly complex national
security or intelligence issues that could
threaten to impair the national security of the
United States and Committee members were not
able to develop and agree upon measures to
mitigate satisfactorily those threats during
the initial review period under paragraph (1),
the President, acting through the Committee, shall
immediately conduct an investigation of the effects of
the transaction on the national security of the United
States and take any necessary actions in connection
with the transaction to protect the national security
of the United States.
``(B) Timing.--
``(i) In general.--Any investigation under
subparagraph (A) shall be completed before the
end of the 45-day period beginning on the date
of the investigation commenced.
``(ii) Extensions of time.--The period
established under subparagraph (B) for any
investigation of a covered transaction may be
extended with respect to any particular
investigation by the President or by a rollcall
vote of at least 2/3 of the members of the
Committee involved in the investigation by the
amount of time specified by the President or
the Committee at the time of the extension, not
to exceed 45 days, as necessary to collect and
fully evaluate information relating to--
``(I) the covered transaction or
parties to the transaction; and
``(II) any effect of the transaction
that could threaten to impair the
national security of the United States.
``(3) Approval of chairperson and vice chairperson
required.--
``(A) In general.--A review or investigation under
this subsection of a covered transaction shall not be
treated as final or complete until the findings and the
report resulting from such review or investigation are
approved and signed by both the Secretary of the
Treasury and the Secretary of Homeland Security (and
such authority of each such Secretary may not be
delegated to any person other than the Deputy Secretary
of the Treasury or the Deputy Secretary of Homeland
Security, respectively).
``(B) Additional actions required in certain cases.--
In the case of an investigation under paragraph (2) of
any foreign government-controlled transaction, an
investigation shall not be treated as final or complete
until the findings and report resulting from such
investigation--
``(i) are approved by a majority of the
members of the Committee in a roll call vote;
and
``(ii) in the case of any roll call vote
pursuant to clause (i) in which there is at
least 1 vote by a Committee member against
approving a foreign government-controlled
transaction, are signed by the President (in
addition to the Chairperson and the Vice
Chairperson of the Committee under subparagraph
(A)).
``(4) Analysis by director of national intelligence.--
``(A) In general.--The Director of National
Intelligence shall expeditiously carry out a thorough
analysis of any threat to the national security of the
United States of any covered transaction, including
making requests for information to the Director of the
Office of Foreign Assets Control within the Department
of the Treasury and the Director of the Financial
Crimes Enforcement Network. The Director of National
Intelligence also shall seek and incorporate the views
of all appropriate intelligence agencies, including in
particular the Defense Intelligence Agency.
``(B) 30-day minimum.--The Director of National
Intelligence shall be provided no less than 30 days to
complete the analysis required under subparagraph (A),
except in any instance described in paragraph
(2)(A)(ii).
``(C) Independent role of director.--The Director of
National Intelligence shall not be a member of the
Committee and shall serve no policy role with the
Committee other than to provide analysis under
subparagraph (A) in connection with a covered
transaction.
``(5) Resubmittals of notice and requests for additional
review or investigation.--
``(A) In general.--No provision of this subsection
shall be construed as prohibiting any party to a
covered transaction from--
``(i) submitting additional information
concerning the transaction, including any
proposed restructuring of the transaction or
any modifications to any agreements in
connection with the transaction, while any
review or investigation of the transaction is
on-going; or
``(ii) requesting a review or investigation
of the transaction after any previous review or
investigation of the same or a similar
transaction has become final if information
material to the prior review or investigation
and not previously submitted to the Committee
becomes known or if any material change in
circumstances to the covered transaction has
occurred since the review or investigation.
``(B) Approval of request.--In the case of a request
referred to in subparagraph (A)(ii), the Committee
shall determine by consensus whether to grant a
request.
``(6) Regulations.--Regulations prescribed under this section
shall include standard procedures for--
``(A) submitting any notice of a proposed or pending
covered transaction to the Committee;
``(B) submitting a request to withdraw a proposed or
pending covered transaction from review; and
``(C) resubmitting a notice of proposed or pending
covered transaction that was previously withdrawn from
review.''.
SEC. 3. STATUTORY ESTABLISHMENT OF THE COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES.
(a) In General.--Section 721 of the Defense Production Act of 1950
(50 U.S.C. App. 2170) is amended by striking subsection (k) and
inserting the following new subsection:
``(k) Committee on Foreign Investment in the United States.--
``(1) Establishment.--The Committee on Foreign Investment in
the United States established pursuant to Executive Order No.
11858 shall be a multi-agency committee to carry out this
section and such other assignments as the President may
designate.
``(2) Membership.--The Committee shall be comprised of the
following members or the designee of any such member:
``(A) The Secretary of the Treasury.
``(B) The Secretary of Homeland Security.
``(C) The Secretary of Commerce.
``(D) The Secretary of Defense.
``(E) The Secretary of State.
``(F) The Attorney General.
``(G) The Chairman of the Council of Economic
Advisors.
``(H) The United States Trade Representative.
``(I) The Director of the Office of Management and
Budget.
``(J) The Director of the National Economic Council.
``(K) The Director of the Office of Science and
Technology Policy.
``(L) The President's Assistant for National Security
Affairs.
``(M) Any other designee of the President from the
Executive Office of the President.
``(3) Chairperson; vice chairperson.--The Secretary of the
Treasury shall be the Chairperson of the Committee. The
Secretary of Homeland Security shall be the Vice Chairperson of
the Committee.
``(4) Other members.--Subject to subsection (b)(4)(B), the
Chairperson of the Committee shall involve the heads of such
other Federal departments, agencies, and independent
establishments in any review or investigation under subsection
(b) as the Chairperson, after consulting with the Vice
Chairperson, determines to be appropriate on the basis of the
facts and circumstances of the transaction under investigation
(or the designee of any such department or agency head).
``(5) Meetings.--The Committee shall meet upon the direction
of the President or upon the call of the Chairperson of the
Committee without regard to section 552b of title 5, United
States Code (if otherwise applicable).
``(6) Collection of evidence.--Subject to subsection (c), the
Committee may, for the purpose of carrying out this section--
``(A) sit and act at such times and places, take such
testimony, receive such evidence, administer such
oaths; and
``(B) require the attendance and testimony of such
witnesses and the production of such books, records,
correspondence, memoranda, papers, and documents as the
Chairperson of the Committee may determine advisable.
``(7) Authorization of appropriations.--There are authorized
to be appropriated to the Secretary of the Treasury for each of
fiscal years 2007, 2008, 2009, and 2010, expressly and solely
for the operations of the Committee that are conducted by the
Secretary, the sum of $10,000,000.''.
(b) Technical and Conforming Amendment.--The first sentence of
section 721(c) of the Defense Production Act of 1950 (50 U.S.C. App.
2170(c)) is amended--
(1) by striking ``material filed with'' and inserting
``material, including proprietary business information, filed
with, or testimony presented to,''; and
(2) by striking ``or documentary material'' the 2nd place
such term appears and inserting ``, documentary material, or
testimony''.
SEC. 4. ADDITIONAL FACTORS REQUIRED TO BE CONSIDERED.
Section 721(f) of the Defense Production Act of 1950 (50 U.S.C. App.
2170(f)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``may'' and inserting ``shall''; and
(B) by striking ``among other factors'';
(2) by striking ``and'' at the end of paragraph (4);
(3) by striking the period at the end of paragraph (5) and
inserting a semicolon; and
(4) by adding at the end the following new paragraphs:
``(6) whether the covered transaction has a security-related
impact on critical infrastructure in the United States;
``(7) whether the covered transaction is a foreign
government-controlled transaction; and
``(8) such other factors as the President or the President's
designee may determine to be appropriate, generally or in
connection with a specific review or investigation.''.
SEC. 5. NONWAIVER OF SOVEREIGN IMMUNITY.
Section 721(d) of the Defense Production Act of 1950 (50 U.S.C. App.
2170(d)) is amended by adding at the end the following new sentence:
``The United States shall not be held liable for any losses or other
expenses incurred by any party to a covered transaction as a result of
actions taken under this section after a covered transaction has been
consummated if the party did not submit a written notice of the
transaction to the Chairperson of the Committee under subsection
(b)(1)(C) or did not wait until the completion of any review or
investigation under subsection (b), or the end of the 15-day period
referred to in this subsection, before consummating the transaction.''.
SEC. 6. MITIGATION, TRACKING, AND POST-CONSUMMATION MONITORING AND
ENFORCEMENT.
Section 721 of the Defense Production Act of 1950 (50 U.S.C. App.
2170) is amended by inserting after subsection (k) (as amended by
section 3 of this Act) the following new subsection:
``(l) Mitigation, Tracking, and Postconsummation Monitoring and
Enforcement.--
``(1) Mitigation.--
``(A) In general.--The Committee may negotiate, enter
into or impose, and enforce any agreement or condition
with any party to a covered transaction in order to
mitigate any threat to the national security of the
United States.
``(B) Risk-based analysis required.--Any agreement
entered into or condition imposed under subparagraph
(A) shall be based on a risk-based analysis of the
threat to national security of the covered transaction.
``(2) Tracking authority for withdrawn notices.--
``(A) In general.--If any written notice of a covered
transaction that was submitted to the Committee under
this section is withdrawn before any review or
investigation by the Committee under subsection (b) is
completed, the Committee shall establish, as
appropriate--
``(i) interim protections to address specific
concerns with such transaction that have been
raised in connection with any such review or
investigation pending any resubmission of any
written notice under this section with respect
to such transaction and further action by the
President under this section;
``(ii) specific timeframes for resubmitting
any such written notice; and
``(iii) a process for tracking any actions
that may be taken by any party to the
transaction, in connection with the
transaction, before the notice referred to in
clause (ii) is resubmitted.
``(B) Designation of agency.--The Committee may
designate an appropriate Federal department or agency,
other than any entity of the intelligence community (as
defined in the National Security Act of 1947), as the
lead agency to carry out the requirements of
subparagraph (A) with respect to any covered
transaction that is subject to such subparagraph.
``(3) Negotiation, modification, monitoring, and
enforcement.--
``(A) Designation of agency.--The Committee shall
designate a Federal department or agency as the lead
agency to negotiate, modify, monitor, and enforce any
agreement entered into or condition imposed under
paragraph (1) with respect to a covered transaction
based on the expertise with and knowledge of the issues
related to such transaction on the part of the
designated department or agency.
``(B) Reporting by designated agency.--
``(i) Implementation reports.--The Federal
department or agency designated by the
Committee as a lead agency under subparagraph
(A) in connection with any agreement entered
into or condition imposed under paragraph (1)
with respect to a covered transaction shall--
``(I) provide periodic reports to the
Chairperson and Vice Chairperson of the
Committee on the implementation of such
agreement or condition; and
``(II) require, as appropriate, any
party to the covered transaction to
report to the head of such department
or agency (or the designee of such
department or agency head) on the
implementation or any material change
in circumstances.
``(ii) Modification reports.--The Federal
department or agency designated by the
Committee as a lead agency under subparagraph
(A) in connection with any agreement entered
into or condition imposed with respect to a
covered transaction shall--
``(I) provide periodic reports to the
Chairperson and Vice Chairperson of the
Committee on any modification to any
such agreement or condition imposed
with respect to the transaction; and
``(II) ensure that any significant
modification to any such agreement or
condition is reported to the Director
of National Intelligence and to any
other Federal department or agency that
may have a material interest in such
modification.''.
SEC. 7. INCREASED OVERSIGHT BY THE CONGRESS.
(a) Report on Actions.--Section 721(g) of the Defense Production Act
of 1950 (50 U.S.C. App. 2170) is amended to read as follows:
``(g) Reports to the Congress.--
``(1) Reports on completed committee investigations.--
``(A) In general.--Not later than 5 days after the
completion of a Committee investigation of a covered
transaction under subsection (b)(2), or, if the
President indicates an intent to take any action
authorized under subsection (d) with respect to the
transaction, after the end of 15-day period referred to
in subsection (d), the Chairperson or Vice Chairperson
of the Committee shall submit a written report on the
findings or actions of the Committee with respect to
such investigation, the determination of whether or not
to take action under subsection (d), an explanation of
the findings under subsection (e), and the factors
considered under subsection (f), with respect to such
transaction, to--
``(i) the Majority Leader and the Minority
Leader of the Senate;
``(ii) the Speaker and the Minority Leader of
the House of Representatives; and
``(iii) the chairman and ranking member of
each committee of the House of Representatives
and the Senate with jurisdiction over any
aspect of the covered transaction and its
possible effects on national security.
``(B) Notice and briefing requirement.--If a written
request for a briefing on a covered transaction is
submitted to the Committee by any Senator or Member of
Congress who receives a report on the transaction under
subparagraph (A), the Chairperson or Vice Chairperson
(or such other person as the Chairperson or Vice
Chairperson may designate) shall provide 1 classified
briefing to each House of the Congress from which any
such briefing request originates in a secure facility
of appropriate size and location that shall be open
only to the Majority Leader and the Minority Leader of
the Senate, the Speaker and the Minority Leader of the
House of Representatives, (as the case may be) the
chairman and ranking member of each committee of the
House of Representatives or the Senate (as the case may
be) with jurisdiction over any aspect of the covered
transaction and its possible effects on national
security, and appropriate staff members who have
security clearance.
``(2) Application of other provision.--
``(A) In general.--The disclosure of information
under this subsection shall be consistent with the
requirements of subsection (c). Members of Congress and
staff of either House or any committee of the Congress
shall be subject to the same limitations on disclosure
of information as are applicable under such subsection.
``(B) Proprietary information.--Proprietary
information which can be associated with a particular
party to a covered transaction shall be furnished in
accordance with subparagraph (A) only to a committee of
the Congress and only when the committee provides
assurances of confidentiality, unless such party
otherwise consents in writing to such disclosure.''.
(b) Semi-Annual Report.--Section 721 of the Defense Production Act of
1950 (50 U.S.C. App. 2170) is amended by inserting after subsection (l)
(as added by section 6 of this Act) the following new subsection:
``(m) Semi-Annual Report to the Congress.--
``(1) In general.--The Chairperson of the Committee shall
transmit a report to the Congress before January 31 and July 31
of each year on all the reviews and investigations of covered
transactions conducted under subsection (b) during the 6-month
period covered by the report.
``(2) Contents of report relating to covered transactions.--
The report under paragraph (1) shall contain the following
information with respect to each covered transaction:
``(A) A list of all notices filed and all reviews or
investigations conducted during the period with basic
information on each party to the transaction, the
nature of the business activities or products of all
pertinent persons, along with information about the
status of the review or investigation, information on
any withdrawal from the process, any rollcall votes by
the Committee under this section, any extension of time
for any investigation, and any presidential decision or
action under this section.
``(B) Specific, cumulative, and, as appropriate,
trend information on the numbers of filings,
investigations, withdrawals, and presidential decisions
or actions under this section.
``(C) Cumulative and, as appropriate, trend
information on the business sectors involved in the
filings which have been made, and the countries from
which the investments have originated.
``(D) Information on whether companies that withdrew
notices to the Committee in accordance with subsection
(b)(1)(C)(ii) have later re-filed such notices, or,
alternatively, abandoned the transaction.
``(E) The types of security arrangements and
conditions the Committee has used to mitigate national
security concerns about a transaction.
``(F) A detailed discussion of all perceived adverse
effects of covered transactions on the national
security or critical infrastructure of the United
States that the Committee will take into account in its
deliberations during the period before delivery of the
next such report, to the extent possible.
``(3) Contents of report relating to critical technologies.--
``(A) In general.--In order to assist the Congress in
its oversight responsibilities with respect to this
section, the President and such agencies as the
President shall designate shall include in the semi-
annual report submitted under paragraph (1) the
following:
``(i) An evaluation of whether there is
credible evidence of a coordinated strategy by
1 or more countries or companies to acquire
United States companies involved in research,
development, or production of critical
technologies for which the United States is a
leading producer.
``(ii) An evaluation of whether there are
industrial espionage activities directed or
directly assisted by foreign governments
against private United States companies aimed
at obtaining commercial secrets related to
critical technologies.
``(B) Critical technologies defined.--For purposes of
this paragraph, the term `critical technologies' means
technologies identified under title VI of the National
Science and Technology Policy, Organization, and
Priorities Act of 1976 or other critical technology,
critical components, or critical technology items
essential to national defense or national security
identified pursuant to this section.
``(C) Release of unclassified study.--That portion of
the semi-annual report under paragraph (1) that is
required by this paragraph may be classified. An
unclassified version of that portion of the report
shall be made available to the public.''.
(c) Investigation by Inspector General.--
(1) In general.--The Inspector General of the Department of
the Treasury shall conduct an independent investigation to
determine all of the facts and circumstances concerning each
failure of the Department of the Treasury to make any report to
the Congress that was required under section 721(k) of the
Defense Production Act of 1950 (as in effect before the date of
the enactment of this Act).
(2) Report to the congress.--Before the end of the 270-day
period beginning on the date of the enactment of this Act, the
Inspector General of the Department of the Treasury shall
submit a report to the Congress on the investigation under
paragraph (1) containing the findings and conclusions of the
Inspector General.
(d) Study and Report.--
(1) Study required.--Before the end of the 120-day period
beginning on the date of the enactment of this Act, the
Secretary of the Treasury, in consultation with the Secretary
of State and the Secretary of Commerce, shall conduct a study
on investments in the United States, especially investments in
critical infrastructure and industries affecting national
security, by--
(A) foreign governments, entities controlled by or
acting on behalf of a foreign government, or persons of
foreign countries which comply with any boycott of
Israel; or
(B) foreign governments, entities controlled by or
acting on behalf of a foreign government, or persons of
foreign countries which do not ban organizations
designated by the Secretary of State as foreign
terrorist organizations.
(2) Report.--Before the end of the 30-day period beginning
upon completion of the study under paragraph (1) or in the next
semi-annual report under section 721(m) of the Defense
Production Act of 1950 (as added by subsection (b)), the
Secretary of the Treasury shall submit a report to the
Congress, for transmittal to all appropriate committees of the
Senate and the House of Representatives, containing the
findings and conclusions of the Secretary with respect to the
study, together with an analysis of the effects of such
investment on the national security of the United States and on
any efforts to address those effects.
SEC. 8. CERTIFICATION OF NOTICES AND ASSURANCES.
Section 721 of the Defense Production Act of 1950 (50 U.S.C. App.
2170) is amended by inserting after subsection (m) (as added by section
7(b) of this Act) the following new subsection:
``(n) Certification of Notices and Assurances.--Each notice required
to be submitted, by a party to a covered transaction, to the President
or the President's designee under this section and regulations
prescribed under such section, and any information submitted by any
such party in connection with any action for which a report is required
pursuant to paragraph (3)(B)(ii) of subsection (l) with respect to the
implementation of any mitigation agreement or condition described in
paragraph (1)(A) of such subsection, or any material change in
circumstances, shall be accompanied by a written statement by the chief
executive officer or the designee of the person required to submit such
notice or information certifying that, to the best of the person's
knowledge and belief--
``(1) the notice or information submitted fully complies with
the requirements of this section or such regulation, agreement,
or condition; and
``(2) the notice or information is accurate and complete in
all material respects.''.
SEC. 9. REGULATIONS.
Section 721(h) of the Defense Production Act of 1950 (50 U.S.C. App.
2170(h)) is amended to read as follows:
``(h) Regulations.--The President shall direct the issuance of
regulations to carry out this section. Such regulations shall, to the
extent possible, minimize paperwork burdens and shall to the extent
possible coordinate reporting requirements under this section with
reporting requirements under any other provision of Federal law.''.
SEC. 10. EFFECT ON OTHER LAW.
Section 721(i) of the Defense Production Act of 1950 (50 U.S.C. App.
2170(i)) is amended to read as follows:
``(i) Effect on Other Law.--No provision of this section shall be
construed as altering or affecting any other authority, process,
regulation, investigation, enforcement measure, or review provided by
or established under any other provision of Federal law, including the
International Emergency Economic Powers Act, or any other authority of
the President or the Congress under the Constitution of the United
States.''.
Purpose and Summary
H.R. 5337, the ``National Security Foreign Improvement
Reform and Strengthening Transparency Act of 2006'' (``National
Security FIRST'') strengthens national security by improving
the process by which foreign direct investment in the United
States is scrutinized to determine if it threatens to impair
national security in any way. The bill, introduced May 10,
2006, makes a number of reforms to Section 721 of the Defense
Production Act of 1950 (DPA)--the so-called Exon-Florio
amendment to the DPA--improving an existing review process that
has existed in some form since 1975. It reforms the Exon-Florio
process, which became law in 1988, by correcting perceived
problems with the process of examining such investment while
not creating new hurdles for investment into the United States
that in turn could trigger retaliatory investment barriers to
U.S. investment overseas. The legislation improves
accountability for the process within the Administration and
codifies the existence of the Committee on Foreign Investment
in the United States (CFIUS), adding the Secretary of Homeland
Security as vice chairman of the cross-agency review panel. It
establishes clear and transparent processes for examining
proposed investment, designing and monitoring arrangements to
mitigate any threat to national security short of refusing the
transaction, and reporting to Congress regularly and clearly on
CFIUS actions so that Congress can perform its necessary
oversight. The bill addresses apparent voids in the current
examination process--for example, establishing monitoring and
interim security measures if a transaction is withdrawn from
the examination process, even temporarily--and ensures that
transactions may only be considered approved after the chairman
and vice chairman of CFIUS sign off. Additionally, addressing
what many in Congress view as a potential misreading of
Congressional intent in the so-called ``Byrd amendment'' to
Exon-Florio, the bill closes a loophole by mandating that all
investments that are controlled by foreign governments undergo
both a review and a national security investigation. The bill
changes current practice, ensuring that a list of factors that
currently ``may'' be considered while examining a proposal, in
the future ``shall'' be considered, and adds security threats
to critical infrastructure as a factor to be considered.
Finally, the bill adds a formal analysis of every proposed
transaction, to be performed by the Director of National
Intelligence, but makes clear that the director has no policy
role in the examination process, and makes appropriate
provision for protection of classified and proprietary business
information about a deal.
Background and Need for Legislation
The events following public disclosure early in 2006 of the
proposal by a Dubai-based ports operator to buy the global port
operations business of a British ports operator raised a series
of concerns about the process by which the United States
government scrutinizes foreign direct investment in the U.S.
and raised calls for reform of that process.
Formed under a 1975 executive order to monitor U.S. policy
on foreign direct investments, the Committee on Foreign
Investment in the United States is an interagency committee
chaired by the Department of the Treasury. Other participating
agencies are the Department of Commerce; Department of State;
Department of Homeland Security; Department of Defense;
Department of Justice; National Security Council; Council of
Economic Advisors; Office of Management & Budget; Office of
Science and Technology Policy; U.S. Trade Representative;
National Economic Council; and Council of Economic Advisors. In
1988, as part of the Omnibus Trade Act, Congress expanded the
role of CFIUS by passing the Exon-Florio amendment to the
Defense Production Act of 1950. Under Exon-Florio, the
President is authorized to suspend or prohibit foreign
acquisitions of U.S. companies if the foreign controlling
interest might threaten national security. The President
delegated the Exon-Florio investigative authority to CFIUS.
Exon-Florio established a four-step process for examining a
foreign acquisition: (1) voluntary notice by the companies; (2)
a 30-day review to identify any national security concerns; (3)
an optional 45-day investigation to determine whether
identified concerns require more extensive mitigation efforts
or a recommendation to the President for possible action; and
(4) a Presidential decision to permit, suspend, or prohibit an
acquisition in those instances where potential national
security concerns are identified.
During the standard review period, the CFIUS responds to
the requesting company within 30 days--after each CFIUS
component agency has reviewed the proposed transaction. As
companies often withdraw and restructure deals, however, this
``30-day review'' often takes much longer. If concerns are
raised, the CFIUS can begin a 45-day investigation. By law,
CFIUS is limited in what information it can provide to the
public and to Congress because its statute requires
confidentiality. It should be noted that the 30-day review
period is equal to the antitrust review period under Hart-
Scott-Rodino.
In general, most CFIUS referrals are routine: either the
company agrees to minor mitigation procedures ranging from
minor changes in the sales agreement to divestiture of a
division, or else the company withdraws from the process. A
withdrawal is most often made when it becomes clear that any
mitigation that would prevent a recommendation to the President
would render the remainder of the deal unattractive to the
buyer or seller. Occasionally, a company will withdraw from the
process during the ``review'' period, restructure the deal and
re-submit its proposal. More than 1500 CFIUS reviews have been
conducted since 1988, with the annual rate rising dramatically
following 9/11. In 2005, the CFIUS handled about 65 proposed
deals.
Of necessity, the reviews and investigations, which contain
classified evaluations of national security vulnerabilities as
well as extensive proprietary business information, are
conducted in secret. Given this lack of transparency, there
have been concerns over the years about CFIUS's accountability
to Congress and to the public, particularly with regard to
fundamental questions of whether CFIUS policies are consistent
with the statute that governs its operations and whether CFIUS
policies are applied consistently and according to the statute
in each transaction that comes before CFIUS.
The Committee has relied on expert testimony from public
and private officials to assess concerns about CFIUS policies
and procedures. Some of those concerns were examined in a
report by the Government Accountability Office (GAO) released
in September, 2005. The GAO report expressed concern about an
overly narrow working definition of national security, the lack
of clear and consistent procedures for monitoring transactions
that have been withdrawn from CFIUS, and the lack of adequate
reporting to Congress on CFIUS activities. The GAO also
suggested that CFIUS has been too reluctant to initiate formal
45-day investigations.
This concern was evident in the aftermath of the ports-
operations transaction when critics charged that CFIUS
improperly ignored the second part of the so-called ``Byrd
Amendment'' test requiring a 45-day investigation if a buyer
were controlled by a foreign government and if national
security concerns were implicated.
Another criticism in the aftermath of the ports transaction
was that there has not been consistent or adequate senior-level
accountability for CFIUS decision making, reflected in this
case in the fact that senior officials in the Administration,
including those directly charged with CFIUS responsibilities,
were unaware of the Dubai transaction until it was reported in
the media.
H.R. 5337, the National Security FIRST Act of 2006, seeks
to address legitimate concerns about CFIUS procedures and
policies. It creates a ``regular order'' process by which no
proposed transaction could appear to disappear temporarily or
permanently from the security-review process and establishing a
clear process by which any potential minor security issues
could be addressed along with a clear and permanent process of
post-transaction monitoring. The bill seeks to increase
Administration accountability, make it far easier for Congress
to perform its necessary oversight of the CFIUS process, better
protect classified and proprietary business information
involved in the examination process--all without creating any
unnecessary new barriers to normal investment in the United
States. The bill envisions a process in which a threat analysis
would be conducted by the Director of National Intelligence
(DNI)--who would not be a member of CFIUSand who would play no
policy role--and decisions made in such a way that no individual CFIUS
member's concerns might be masked or ignored. Additionally, the CFIUS
chairman and vice-chairman (or their deputies) are both required to
sign all CFIUS decisions, ensuring that while the review or
investigation process remains objective, there is a clear and direct
senior level responsibility for CFIUS decisions. The Committee
specifically requires that the DNI make requests for information from
the Office of Foreign Assets control and the Financial Crimes
Enforcement Network, to determine any terrorism, sanction or financial
crime nexus with funding sources or principals in a transaction, and
requires the DNI to affirmatively check with all national intelligence
sources, particularly the Defense Intelligence Agency, and incorporate
any pertinent information from them in his report to CFIUS.
In making the changes, the legislation also strengthens the
President's capacity to refuse, suspend, modify or reverse any
transaction if a written notice of such transaction is not
filed with CFIUS or if there is an intentional material
omission or falsehood in any filing with the CFIUS or an
intentional material breach in any post-transaction mitigation
agreement, and establishes a formal requirement that all
filings with CFIUS must be complete and accurate to the best of
the filing party's ability. Thus, the Committee establishes a
clear signal that all violations of such notice certification
should be considered in the context of Title 18, Section 1001,
and all intentional breaches or misstatements could also lead
to severe modification or unwinding of any transaction at any
time.
H.R. 5337 makes clear that national security encompasses
threats to critical U.S. infrastructure, including energy-
related infrastructure. The Committee expects that acquisitions
of U.S. energy companies or assets by foreign governments or
companies controlled by foreign governments will be reviewed
closely for their national security impact. If such
acquisitions raise legitimate concerns about threats to U.S.
national security, appropriate protections as set forth in the
statute should be instituted including potentially the
prohibition of the transaction.
The Committee expects, however, that such determinations
will be objective, based upon criteria that are reasonably
related to protecting the security of the United States while
encouraging and respecting the need for free flows of
investment globally and the international agreements that
govern those flows. The Committee notes that these CFIUS
procedures stand in stark contrast to actions taken by some
foreign governments, where expropriations of assets, often in
the energy sector, have occurred arbitrarily, without
justification, and without recompense for U.S. investors. The
Committee rejects in the strongest possible terms any
suggestion that CFIUS reforms contained in H.R. 5337 represent
a mistreatment of foreign capital and that there is equivalence
between CFIUS reform efforts and the actions of foreign
governments that violate international agreements on the
treatment of foreign capital. The Committee will continue in
its longstanding efforts to seek to ensure that U.S. investors
are treated fairly in foreign markets and that foreign
governments honor their commitments in international
agreements.
The Committee expects that CFIUS will consider all aspects
of a covered transaction to determine if the investment
threatens to impair national security. The participation by
foreign governments in the boycott of vital allies of the
United States, such as Israel, or the failure of foreign
governments to ban groups the Department of State designates as
foreign terrorist organizations, may have an impact on U.S.
national security, and such factors should be considered when
companies that are owned or controlled by such a government
seek to acquire or invest in a U.S. company, particularly one
involved in critical defense production infrastructure. The
Committee believes that affirmative requests by the Director of
National Intelligence for information from the Treasury
Department's Office of Foreign Assets Control, as required by
this Act for every covered transaction, will make clear in the
future such connections in any investment proposals. However,
the committee is concerned about a general lack of knowledge
about the investments in the United States by state-owned or
state-controlled companies that are from governments that
participate in the boycott of Israel or that decline to ban
terrorist organizations. The Committee therefore requires in
this Act that CFIUS report within six months on all such
investments, with such report also to include any
recommendations from CFIUS members on how the government should
consider and treat any future proposed investment in the United
States by such governments or persons.
Hearings
The Subcommittee on Domestic and International Monetary
Policy, Trade and Technology held a hearing on March 1, 2006,
entitled ``Foreign Investment, Jobs and National Security: The
CFIUS Process.'' The following witnesses testified: The
Honorable Robert M. Kimmitt, Deputy Secretary, U.S. Department
of Treasury; The Honorable Michael P. Jackson, Deputy
Secretary, U.S. Department of Homeland Security; The Honorable
Eric S. Edelman, Under Secretary of Defense for Policy, U.S.
Department of Defense; The Honorable C. David Welch, Assistant
Secretary, Bureau of Near Eastern Affairs, U.S. Department of
State; Mr. James K. Glassman, Resident Fellow, American
Enterprise Institute; Mr. Todd M. Malan, President and CEO,
Organization for International Investment; Mr. David M.
Marchick, Partner, Covington and Burling; Mr. William A.
Reinsch, President, National Foreign Trade Council; and Mr.
Clark Ervin, Director, Homeland Security Institute, The Aspen
Institute.
The Subcommittee held a second hearing on April 27, 2006,
entitled ``CFIUS and the Role of Foreign Direct Investment in
the United States.'' The following witnesses testified: The
Honorable Donald L. Evans, Chief Executive Officer, The
Financial Services Forum; Mr. Paul L. Vikner, President and
CEO, Mack Trucks Inc.; Mr. Jeffrey M. Anderson, Executive
Director, Virginia Economic Development Partnership; and Mr.
Daniel K. Tarullo, Professor of Law, Georgetown University Law
Center.
Finally, the Subcommittee held a legislative hearing on
H.R. 5337 on May 17, 2006. The following witnesses testified:
The Honorable Clay Lowery, Assistant Secretary for
International Affairs, U.S. Department of the Treasury; The
Honorable Stewart A. Baker, Assistant Secretary for Policy,
Planning and International Affairs, U.S. Department of Homeland
Security; The Honorable Alice Fisher, Assistant Attorney
General, Criminal Division, U.S. Department of Justice; The
Honorable Peter C.W. Flory, Assistant Secretary for
International Security Policy, U.S. Department of Defense; Mr.
Douglas Holz-Eakin, Director of the Maurice R. Greenberg Center
for Geoeconomic Studies, Council on Foreign Relations; Mr.
David M. Marchick, Partner, Covington and Burling; and Mr. John
H. Veroneau, Partner, DLA Piper Rudnick Gray Cary.
Committee Consideration
The Committee on Financial Services met in open session on
June 14, 2006, and ordered H.R. 5337, as amended, favorably
reported to the House by a record vote of 64 yeas and 0 nays.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Oxley to order the bill, as amended, reported to
the House with a favorable recommendation was agreed to by a
record vote of 64 yeas and 0 nays (Record vote no. FC-19). The
names of Members voting for and against follow:
RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley...................... X ........ ......... Mr. Frank (MA)... X ........ .........
Mr. Leach...................... X ........ ......... Mr. Kanjorski.... X ........ .........
Mr. Baker...................... X ........ ......... Ms. Waters....... X ........ .........
Ms. Pryce (OH)................. ........ ........ ......... Mr. Sanders...... X ........ .........
Mr. Bachus..................... ........ ........ ......... Mrs. Maloney..... X ........ .........
Mr. Castle..................... X ........ ......... Mr. Gutierrez.... X ........ .........
Mr. Royce...................... X ........ ......... Ms. Velazquez.... X ........ .........
Mr. Lucas...................... X ........ ......... Mr. Watt......... X ........ .........
Mr. Ney........................ X ........ ......... Mr. Ackerman..... X ........ .........
Mrs. Kelly..................... X ........ ......... Ms. Hooley....... X ........ .........
Mr. Paul....................... X ........ ......... Ms. Carson....... X ........ .........
Mr. Gillmor.................... X ........ ......... Mr. Sherman...... X ........ .........
Mr. Ryun (KS).................. X ........ ......... Mr. Meeks (NY)... X ........ .........
Mr. LaTourette................. X ........ ......... Ms. Lee.......... X ........ .........
Mr. Manzullo................... X ........ ......... Mr. Moore (KS)... X ........ .........
Mr. Jones (NC)................. X ........ ......... Mr. Capuano...... ........ ........ .........
Mrs. Biggert................... X ........ ......... Mr. Ford......... X ........ .........
Mr. Shays...................... X ........ ......... Mr. Hinojosa..... X ........ .........
Mr. Fossella................... X ........ ......... Mr. Crowley...... X ........ .........
Mr. Gary G. Miller (CA)........ X ........ ......... Mr. Clay......... X ........ .........
Mr. Tiberi..................... X ........ ......... Mr. Israel....... X ........ .........
Mr. Kennedy (MN)............... X ........ ......... Mrs. McCarthy.... X ........ .........
Mr. Feeney..................... X ........ ......... Mr. Baca......... X ........ .........
Mr. Hensarling................. X ........ ......... Mr. Matheson..... X ........ .........
Mr. Garrett (NJ)............... X ........ ......... Mr. Lynch........ ........ ........ .........
Ms. Brown-Waite (FL)........... X ........ ......... Mr. Miller (NC).. X ........ .........
Mr. Barrett (SC)............... X ........ ......... Mr. Scott (GA)... X ........ .........
Ms. Harris..................... X ........ ......... Mr. Davis (AL)... X ........ .........
Mr. Renzi...................... X ........ ......... Mr. Al Green (TX) X ........ .........
Mr. Gerlach.................... X ........ ......... Mr. Cleaver...... ........ ........ .........
Mr. Pearce..................... X ........ ......... Ms. Bean......... ........ ........ .........
Mr. Neugebauer................. X ........ ......... Ms. Wasserman X ........ .........
Schultz.
Mr. Price (GA)................. X ........ ......... Ms. Moore (WI)... X ........ .........
Mr. Fitzpatrick (PA)........... X ........ ......... ................. ........ ........ .........
Mr. Davis (KY)................. X ........ ......... ................. ........ ........ .........
Mr. McHenry.................... X ........ ......... ................. ........ ........ .........
Mr. Campbell................... X ........ ......... ................. ........ ........ .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an Independent, but caucuses with the Democratic Caucus.
During the consideration of the bill, the following amendments
were considered:
An amendment in the nature of a substitute by Ms. Pryce,
No. 1, making technical and substantive changes, was AGREED TO
by a voice vote.
An amendment by Mr. Capuano, No. 1a, regarding
consideration of foreign countries' law as an additional
factor, was WITHDRAWN.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held hearings and made
findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The Committee on Foreign Investment in the United States
shall immediately adopt the procedures set forth in this Act,
and begin filing such notices and reports to Congress and doing
such post-transaction monitoring as called for in this Act, in
a timely fashion. The Committee intends that the procedures set
forth in this Act apply to all covered transactions henceforth,
except that those covered transactions under review or
investigation by the CFIUS on the day before the date of
enactment shall be considered using the practices and
procedures in place the day before enactment. Such transactions
as are under review or investigation on the day before
enactment of this Act shall, however, be subject to all post-
transaction monitoring and other procedures as set forth in
this Act, and all other portions of this Act shall apply to
such transactions except the procedures for initial review or
investigation.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, tax expenditures or revenues contained in the cost
estimate prepared by the Director of the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
June 16, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5337, the National
Security Foreign Investment Reform and Strengthened
Transparency Act of 2006.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Donald B. Marron,
Acting Director.
Enclosure.
H.R. 5337--National Security Foreign Investment Reform and Strengthened
Transparency Act of 2006
Summary: H.R. 5337 would amend the Defense Production Act
of 1950 to establish in law the Committee on Foreign Investment
in the United States (CFIUS). The committee would consist of at
least 12 members (including six cabinet secretaries). In
addition, the legislation would authorize the appropriation of
$10 million annually over the 2007-2010 period for the
Secretary of the Treasury to pay for activities of the
committee that are conducted by the Department of the Treasury.
Assuming appropriation of the authorized amounts, CBO
estimates that implementing H.R. 5337 would cost $40 million
over the 2007-2011 period. In addition, CBO expects that
complying with the bill's provisions would increase the
administrative expenses of some federal agencies, but because
of the confidential nature of the CFIUS review process, the
number of agencies involved, and the confidential information
needed to prepare an estimate for some provisions of the
legislation, CBO cannot determine a precise estimate of the
likely total costs of this bill. Enacting the bill would not
affect direct spending or revenues.
H.R. 5337 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 5337 is shown in the following table.
The costs of this legislation fall within budget function 800
(general government).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization level1............................................... 10 10 10 10 0
Estiamted outlays.................................................. 9 10 10 10 1
----------------------------------------------------------------------------------------------------------------
1In addition, CBO expects that complying with the bill's provisions would increase the administrative expenses
of some federal agencies, but because of the confidential nature of the CFIUS review process, the number of
agencies involved, and the confidential information needed to prepare an estimate for some provisions of the
legislation, CBO cannot determine a precise estimate of the likely total costs of this bill.
Basis of estimate: For this estimate, CBO assumes that H.R.
5337 will be enacted by the end of fiscal year 2006. We assume
that the necessary amounts will be appropriated for each year
and that outlays will occur at historical rates for similar
programs.
H.R. 5337 would establish in law the CFIUS. Under the bill,
the committee would consist of at least 12 permanent members
including the Secretaries of the Departments of Treasury,
State, Defense, Commerce, and Homeland Security; as well as the
Attorney General, Director of the Office of Management and
Budget, the United States Trade Representative, the Chairman of
the Council of Economic Advisors, the Director of the National
Economic Council, the Director of the Office of Science and
Technology Policy; and the President's Assistant for National
Security Affairs. The committee would coordinate reviews of
foreign investment in the United States that involves national
security or critical infrastructure in the United States. The
legislation would formalize and expand this review and
investigation process.
The legislation also would authorize the appropriation of
$10 million annually over the 2007-2010 period for the
operations of the committee. Assuming the appropriation of the
authorized amounts, CBO estimates that the provision would cost
$40 million over the 2007-2011 period.
In addition, CBO expects that complying with the bill's
provisions would increase the administrative expenses of
federal agencies that are represented on the committee, but
because of the confidential nature of the CFIUS review process,
the number of agencies involved, and the confidential
information needed to prepare an estimate for some provisions
of the legislation, CBO cannot determine a precise estimate of
the likely total costs of this bill. Additional costs over the
2007-2011 period, however, would generally come from agencies'
salary and expense budgets which are subject to annual
appropriation. Such costs would probably total at least a few
million dollars per year.
Intergovernmental and private-sector impact: H.R. 5337
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Previous CBO estimate: On May 3, 2006, CBO transmitted a
cost estimate for the Foreign Investment and National Security
Act of 2006, as ordered reported by the Senate Committee on
Banking, Housing, and Urban Affairs on March 30, 2006. The two
pieces of legislation are both concerned with CFIUS but have
some different provisions. H.R. 5337 would authorize the
appropriation of $10 million annually over the 2007-2010 period
while the legislation approved by the Senate committee would
not authorize a specific amount to be appropriated.
Estimate prepared by: Federal costs: Matthew Pickford;
impact on state, local, and tribal governments: Sarah Puro;
impact on the private sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1.--This section establishes the short title of the
bill as the ``National Security Foreign Investment Reform and
Strengthening Transparency Act of 2006.''
Section 2.--This section amends Section 721 of the Defense
Production Act of 1950 to reform and clarify the way
acquisitions of United States companies by foreign companies
are analyzed for their effect on national security.
Subsection (a) defines a number of terms used often
in the bill: Committee, control, covered transaction,
foreign government-controlled transaction. It also
clarifies that for the purposes of Section 721,
``national security'' will be construed to include
``homeland security'' including its application to
critical infrastructure.
Subsection (b) establishes the method by which
covered transactions are reviewed and investigated by
the Committee on Foreign Investment in the United
States to determine if they threaten to impair United
States national security; establishes that any
transaction involving a foreign government-controlled
company must undergo an ``investigation'' by CFIUS;
establishes the process for notifying CFIUS of a
proposed transaction and a procedure for treating
transactions that are withdrawn from the CFIUS process
and later re-submits notice; establishes a procedure
for the President to unilaterally initiate a review of
a transaction in the case of submission of false or
misleading information to CFIUS or intentional material
breach of mitigation agreements; makes clear that
national security reviews of transactions take no
longer than 30 days and, if necessary, investigations
that follow reviews take no longer than 45 days unless
2/3 of the members of CFIUS vote to extend, and then by
no longer than 45 days; describes reasons for a
transaction to undergo an investigation; establishes
that no review or investigation is complete until the
chairman and vice chairman of CFIUS sign the resulting
reports; requires that any investigation must be
approved by a majority of CFIUS members in a rollcall
vote; specifies that in the case of a dissenting vote
by any CFIUS member, the decision on a foreign
government-controlled transaction must be made by the
President; and specifies that the Director of National
Intelligence must conduct an analysis of each
transaction.
Section 3.--This section formally establishes the Committee
on Foreign Investment in the United States; establishes its
membership; specifies that the Secretary of the Treasury shall
be the chairman and the Secretary of Homeland Security the vice
chair; allows the temporary addition of non-member Executive
Branch agencies; establishes guidelines for meeting and
gathering information; and authorizes the appropriation of $10
million annually for the operation of the Committee.
Section 4.--This section establishes that the list of
factors in Section 721 that currently ``may'' be considered
when reviewing or investigating any transaction, instead
``must'' all be considered, and adds as new factors whether a
transaction is a foreign government-controlled transaction and
whether a transaction has a security-related impact on critical
infrastructure in the United States.
Section. 5--This section makes clear that while submitting
notice to CFIUS remains voluntary, if the United States must
take action to dissolve, suspend or modify a transaction, the
U.S. is not liable for any losses or other expenses by any
party to a completed transaction if a notice of such
transaction was not filed with the CFIUS prior to completion of
the transaction.
Section 6.--This section establishes that the CFIUS may
enter into agreements with parties to a transaction to mitigate
any threats to national security; establishes that the CFIUS
shall name an appropriate lead Federal agency to monitor
compliance with such agreements, negotiate any changes in such
agreements and report back to the CFIUS on compliance and
modifications; and establishes a method of tracking
transactions that are withdrawn from the review or
investigation process as well as a process for setting interim
protections on such transactions to address specific national
security concerns.
Section 7.--This section establishes a broad new system for
reporting information on CFIUS activities to Congress so that
it may conduct appropriate oversight of the CFIUS. This
includes reports to Congress within 5 days after the final
action in an investigation; a mechanism for Congress to request
a detailed, classified briefing on a transaction; and
affirmative protections for proprietary business information.
The CFIUS is required to file semi-annual reports with Congress
that contain information on transactions handled by the CFIUS,
cumulative and trend analysis of transactions by business
sector and country of origin, information on security and
mitigation agreements, folds into the semi-annual reporting the
contents of the previously required quadrennial reporting on
foreign industrial espionage in the U.S. and on foreign
attempts to control a particular U.S. business or industrial
sector, and requires a report on investments in the U.S. by
countries that do not ban foreign terrorist organizations and
by countries that support the boycott of Israel. The
quadrennial report is repealed as redundant.
Section 8.--This section makes clear that parties to a
transaction must certify that the information they file with
CFIUS is complete and correct.
Section 9.--This section directs the President to cause
regulations to be issued to carry out the requirements of
Section 721, and specifies that to the extent possible they
minimize paperwork burden and coordinate new reporting
requirements with existing ones.
Section 10.--This section clarifies that no portion of the
bill should be construed as affecting or altering other
existing law or regulation.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 721 OF THE DEFENSE PRODUCTION ACT OF 1950
AUTHORITY TO REVIEW CERTAIN MERGERS, ACQUISITIONS, AND TAKEOVERS
Sec. 721. [(a) Investigations.--The President or the
President's designee may make an investigation to determine the
effects on national security of mergers, acquisitions, and
takeovers proposed or pending on or after the date of enactment
of this section by or with foreign persons which could result
in foreign control of persons engaged in interstate commerce in
the United States. If it is determined that an investigation
should be undertaken, it shall commence no later than 30 days
after receipt by the President or the President's designee of
written notification of the proposed or pending merger,
acquisition, or takeover as prescribed by regulations
promulgated pursuant to this section. Such investigation shall
be completed no later than 45 days after such determination.
[(b) Mandatory Investigations.--The President or the
President's designee shall make an investigation, as described
in subsection (a), in any instance in which an entity
controlled by or acting on behalf of a foreign government seeks
to engage in any merger, acquisition, or takeover which could
result in control of a person engaged in interstate commerce in
the United States that could affect the national security of
the United States. Such investigation shall--
[(1) commence not later than 30 days after receipt by
the President or the President's designee of written
notification of the proposed or pending merger,
acquisition, or takeover, as prescribed by regulations
promulgated pursuant to this section; and
[(2) shall be completed not later than 45 days after
its commencement.]
(a) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Committee.--The term ``Committee'' means the
Committee on Foreign Investment in the United States.
(2) Control.--The term ``control'' has the meaning
given to such term in regulations which the Committee
shall prescribe.
(3) Covered transaction.--The term ``covered
transaction'' means any merger, acquisition, or
takeover by or with any foreign person which could
result in foreign control of any person engaged in
interstate commerce in the United States.
(4) Foreign government-controlled transaction.--The
term ``foreign government-controlled transaction''
means any covered transaction that could result in the
control of any person engaged in interstate commerce in
the United States by a foreign government or an entity
controlled by or acting on behalf of a foreign
government.
(5) Clarification.--The term ``national security''
shall be construed so as to include those issues
relating to ``homeland security'', including its
application to critical infrastructure (as defined in
the Homeland Security Act of 2002).
(b) National Security Reviews and Investigations.--
(1) National security reviews.--
(A) In general.--Upon receiving written
notification under subparagraph (C) of any
covered transaction, or on a motion made under
subparagraph (D) with respect to any covered
transaction, the President, acting through the
Committee, shall review the covered transaction
to determine whether the transaction threatens
to impair the national security of the United
States and whether such threat can be
mitigated.
(B) Control by foreign government.--If the
Committee determines that the covered
transaction is a foreign government-controlled
transaction, the Committee shall conduct an
investigation of the transaction under
paragraph (2).
(C) Written notice.--
(i) In general.--Any party to any
covered transaction may initiate a
review of the transaction under this
paragraph by submitting a written
notice of the transaction to the
Chairperson of the Committee.
(ii) Withdrawal of notice.--No
covered transaction for which a notice
was submitted under clause (i) may be
withdrawn from review unless--
(I) a written request for
such withdrawal is submitted by
any party to the transaction;
and
(II) the request is approved
in writing by the Chairperson,
in consultation with the Vice
Chairperson, of the Committee.
(D) Unilateral initiation of review.--The
President, the Committee, or any member of the
Committee may move to initiate a review under
subparagraph (A) of--
(i) any covered transaction;
(ii) any covered transaction that has
previously been reviewed or
investigated under this section, if any
party to the transaction submitted
false or misleading material
information to the Committee in
connection with the review or
investigation or omitted material
information, including material
documents, from information submitted
to the Committee; or
(iii) any covered transaction that
has previously been reviewed or
investigated under this section, if any
party to the transaction or the entity
resulting from consummation of the
transaction intentionally materially
breaches a mitigation agreement or
condition described in subsection
(l)(1)(A), and--
(I) such breach is certified
by the lead department or
agency monitoring and enforcing
such agreement or condition as
an intentional material breach;
and
(II) such department or
agency certifies that there is
no other remedy or enforcement
tool available to address such
breach.
(E) Timing.--Any review under this paragraph
shall be completed before the end of the 30-day
period beginning on the date of the receipt of
written notice under subparagraph (C) by the
Chairperson of the Committee, or the date of
the initiation of the review in accordance with
a motion under subparagraph (D).
(2) National security investigations.--
(A) In general.--In each case in which--
(i) a review of a covered transaction
under paragraph (1) results in a
determination that--
(I) the transaction threatens
to impair the national security
of the United States and that
threat has not been mitigated
during or prior to the review
of a covered transaction under
paragraph (1); or
(II) the transaction is a
foreign government-controlled
transaction; or
(ii) the Director of National
Intelligence identifies particularly
complex national security or
intelligence issues that could threaten
to impair the national security of the
United States and Committee members
were not able to develop and agree upon
measures to mitigate satisfactorily
those threats during the initial review
period under paragraph (1),
the President, acting through the Committee,
shall immediately conduct an investigation of
the effects of the transaction on the national
security of the United States and take any
necessary actions in connection with the
transaction to protect the national security of
the United States.
(B) Timing.--
(i) In general.--Any investigation
under subparagraph (A) shall be
completed before the end of the 45-day
period beginning on the date of the
investigation commenced.
(ii) Extensions of time.--The period
established under subparagraph (B) for
any investigation of a covered
transaction may be extended with
respect to any particular investigation
by the President or by a rollcall vote
of at least 2/3 of the members of the
Committee involved in the investigation
by the amount of time specified by the
President or the Committee at the time
of the extension, not to exceed 45
days, as necessary to collect and fully
evaluate information relating to--
(I) the covered transaction
or parties to the transaction;
and
(II) any effect of the
transaction that could threaten
to impair the national security
of the United States.
(3) Approval of chairperson and vice chairperson
required.--
(A) In general.--A review or investigation
under this subsection of a covered transaction
shall not be treated as final or complete until
the findings and the report resulting from such
review or investigation are approved and signed
by both the Secretary of the Treasury and the
Secretary of Homeland Security (and such
authority of each such Secretary may not be
delegated to any person other than the Deputy
Secretary of the Treasury or the Deputy
Secretary of Homeland Security, respectively).
(B) Additional actions required in certain
cases.--In the case of an investigation under
paragraph (2) of any foreign government-
controlled transaction, an investigation shall
not be treated as final or complete until the
findings and report resulting from such
investigation--
(i) are approved by a majority of the
members of the Committee in a rollcall
vote; and
(ii) in the case of any rollcall vote
pursuant to clause (i) in which there
is at least 1 vote by a Committee
member against approving a foreign
government-controlled transaction, are
signed by the President (in addition to
the Chairperson and the Vice
Chairperson of the Committee under
subparagraph (A)).
(4) Analysis by director of national intelligence.--
(A) In general.--The Director of National
Intelligence shall expeditiously carry out a
thorough analysis of any threat to the national
security of the United States of any covered
transaction, including making requests for
information to the Director of the Office of
Foreign Assets Control within the Department of
the Treasury and the Director of the Financial
Crimes Enforcement Network. The Director of
National Intelligence also shall seek and
incorporate the views of all appropriate
intelligence agencies, including in particular
the Defense Intelligence Agency.
(B) 30-day minimum.--The Director of National
Intelligence shall be provided no less than 30
days to complete the analysis required under
subparagraph (A), except in any instance
described in paragraph (2)(A)(ii).
(C) Independent role of director.--The
Director of National Intelligence shall not be
a member of the Committee and shall serve no
policy role with the Committee other than to
provide analysis under subparagraph (A) in
connection with a covered transaction.
(5) Resubmittals of notice and requests for
additional review or investigation.--
(A) In general.--No provision of this
subsection shall be construed as prohibiting
any party to a covered transaction from--
(i) submitting additional information
concerning the transaction, including
any proposed restructuring of the
transaction or any modifications to any
agreements in connection with the
transaction, while any review or
investigation of the transaction is on-
going; or
(ii) requesting a review or
investigation of the transaction after
any previous review or investigation of
the same or a similar transaction has
become final if information material to
the prior review or investigation and
not previously submitted to the
Committee becomes known or if any
material change in circumstances to the
covered transaction has occurred since
the review or investigation.
(B) Approval of request.--In the case of a
request referred to in subparagraph (A)(ii),
the Committee shall determine by consensus
whether to grant a request.
(6) Regulations.--Regulations prescribed under this
section shall include standard procedures for--
(A) submitting any notice of a proposed or
pending covered transaction to the Committee;
(B) submitting a request to withdraw a
proposed or pending covered transaction from
review; and
(C) resubmitting a notice of proposed or
pending covered transaction that was previously
withdrawn from review.
(c) Confidentiality of Information.--Any information or
documentary [material filed with] material, including
proprietary business information, filed with, or testimony
presented to, the President or the President's designee
pursuant to this section shall be exempt from disclosure under
section 552 of title 5, United States Code, and no such
information [or documentary material], documentary material, or
testimony may be made public, except as may be relevant to any
administrative or judicial action or proceeding. Nothing in
this subsection shall be construed to prevent disclosure to
either House of Congress or to any duly authorized committee or
subcommittee of the Congress.
(d) Action by the President.--Subject to subsection (d), the
President may take such action for such time as the President
considers appropriate to suspend or prohibit any acquisition,
merger, or takeover, of a person engaged in interstate commerce
in the United States proposed or pending on or after the date
of enactment of this section by or with foreign persons so that
such control will not threaten to impair the national security.
The President shall announce the decision to take action
pursuant to this subsection not later than 15 days after the
investigation described in subsection (a) is completed. The
President may direct the Attorney General to seek appropriate
relief, including divestment relief, in the district courts of
the United States in order to implement and enforce this
section. The United States shall not be held liable for any
losses or other expenses incurred by any party to a covered
transaction as a result of actions taken under this section
after a covered transaction has been consummated if the party
did not submit a written notice of the transaction to the
Chairperson of the Committee under subsection (b)(1)(C) or did
not wait until the completion of any review or investigation
under subsection (b), or the end of the 15-day period referred
to in this subsection, before consummating the transaction.
* * * * * * *
(f) Factors To Be Considered.--For purposes of this section,
the President or the President's designee [may] shall, taking
into account the requirements of national security, consider
[among other factors]--
(1) * * *
* * * * * * *
(4) the potential effects of the proposed or pending
transaction on sales of military goods, equipment, or
technology to any country--
(A) * * *
(B) listed under section 309(c) of the
Nuclear Non-Proliferation Act of 1978 on the
``Nuclear Non-Proliferation-Special Country
List'' (15 C.F.R. Part 778, Supplement No. 4)
or any successor list; [and]
(5) the potential effects of the proposed or pending
transaction on United States international
technological leadership in areas affecting United
States national security[.];
(6) whether the covered transaction has a security-
related impact on critical infrastructure in the United
States;
(7) whether the covered transaction is a foreign
government-controlled transaction; and
(8) such other factors as the President or the
President's designee may determine to be appropriate,
generally or in connection with a specific review or
investigation.
[(g) Report to the Congress.--The President shall immediately
transmit to the Secretary of the Senate and the Clerk of the
House of Representatives a written report of the President's
determination of whether or not to take action under subsection
(d), including a detailed explanation of the findings made
under subsection (e) and the factors considered under
subsection (f). Such report shall be consistent with the
requirements of subsection (c) of this Act.
[(h) Regulations.--The President direct the issuance of
regulations to carry out this section. Such regulations shall,
to the extent possible, minimize paperwork burdens and shall to
the extent possible coordinate reporting requirements under
this section with reporting requirements under any other
provision of Federal law.
[(i) Effect on Other Law.--Nothing in this section shall be
construed to alter or affect any existing power, process,
regulation, investigation, enforcement measure, or review
provided by any other provision of law.]
(g) Reports to the Congress.--
(1) Reports on completed committee investigations.--
(A) In general.--Not later than 5 days after
the completion of a Committee investigation of
a covered transaction under subsection (b)(2),
or, if the President indicates an intent to
take any action authorized under subsection (d)
with respect to the transaction, after the end
of 15-day period referred to in subsection (d),
the Chairperson or Vice Chairperson of the
Committee shall submit a written report on the
findings or actions of the Committee with
respect to such investigation, the
determination of whether or not to take action
under subsection (d), an explanation of the
findings under subsection (e), and the factors
considered under subsection (f), with respect
to such transaction, to--
(i) the Majority Leader and the
Minority Leader of the Senate;
(ii) the Speaker and the Minority
Leader of the House of Representatives;
and
(iii) the chairman and ranking member
of each committee of the House of
Representatives and the Senate with
jurisdiction over any aspect of the
covered transaction and its possible
effects on national security.
(B) Notice and briefing requirement.--If a
written request for a briefing on a covered
transaction is submitted to the Committee by
any Senator or Member of Congress who receives
a report on the transaction under subparagraph
(A), the Chairperson or Vice Chairperson (or
such other person as the Chairperson or Vice
Chairperson may designate) shall provide 1
classified briefing to each House of the
Congress from which any such briefing request
originates in a secure facility of appropriate
size and location that shall be open only to
the Majority Leader and the Minority Leader of
the Senate, the Speaker and the Minority Leader
of the House of Representatives, (as the case
may be) the chairman and ranking member of each
committee of the House of Representatives or
the Senate (as the case may be) with
jurisdiction over any aspect of the covered
transaction and its possible effects on
national security, and appropriate staff
members who have security clearance.
(2) Application of other provision.--
(A) In general.--The disclosure of
information under this subsection shall be
consistent with the requirements of subsection
(c). Members of Congress and staff of either
House or any committee of the Congress shall be
subject to the same limitations on disclosure
of information as are applicable under such
subsection.
(B) Proprietary information.--Proprietary
information which can be associated with a
particular party to a covered transaction shall
be furnished in accordance with subparagraph
(A) only to a committee of the Congress and
only when the committee provides assurances of
confidentiality, unless such party otherwise
consents in writing to such disclosure.
(h) Regulations.--The President shall direct the issuance of
regulations to carry out this section. Such regulations shall,
to the extent possible, minimize paperwork burdens and shall to
the extent possible coordinate reporting requirements under
this section with reporting requirements under any other
provision of Federal law.
(i) Effect on Other Law.--No provision of this section shall
be construed as altering or affecting any other authority,
process, regulation, investigation, enforcement measure, or
review provided by or established under any other provision of
Federal law, including the International Emergency Economic
Powers Act, or any other authority of the President or the
Congress under the Constitution of the United States.
* * * * * * *
[(k) Quadrennial Report.--
[(1) In general.--In order to assist the Congress in
its oversight responsibilities with respect to this
section, the President and such agencies as the
President shall designate shall complete and furnish to
the Congress, not later than 1 year after the date of
enactment of this section and upon the expiration of
every 4 years thereafter, a report which--
[(A) evaluates whether there is credible
evidence of a coordinated strategy by 1 or more
countries or companies to acquire United States
companies involved in research, development, or
production of critical technologies for which
the United States is a leading producer; and
[(B) evaluates whether there are industrial
espionage activities directed or directly
assisted by foreign governments against private
United States companies aimed at obtaining
commercial secrets related to critical
technologies.
[(2) Definition.--For the purposes of this
subsection, the term ``critical technologies'' means
technologies identified under title VI of the National
Science and Technology Policy, Organization, and
Priorities Act of 1976 or other critical technology,
critical components, or critical technology items
essential to national defense identified pursuant to
this section.
[(3) Release of unclassified study.--The report
required by this subsection may be classified. An
unclassified version of the report shall be made
available to the public.]
(k) Committee on Foreign Investment in the United States.--
(1) Establishment.--The Committee on Foreign
Investment in the United States established pursuant to
Executive Order No. 11858 shall be a multi-agency
committee to carry out this section and such other
assignments as the President may designate.
(2) Membership.--The Committee shall be comprised of
the following members or the designee of any such
member:
(A) The Secretary of the Treasury.
(B) The Secretary of Homeland Security.
(C) The Secretary of Commerce.
(D) The Secretary of Defense.
(E) The Secretary of State.
(F) The Attorney General.
(G) The Chairman of the Council of Economic
Advisors.
(H) The United States Trade Representative.
(I) The Director of the Office of Management
and Budget.
(J) The Director of the National Economic
Council.
(K) The Director of the Office of Science and
Technology Policy.
(L) The President's Assistant for National
Security Affairs.
(M) Any other designee of the President from
the Executive Office of the President.
(3) Chairperson; vice chairperson.--The Secretary of
the Treasury shall be the Chairperson of the Committee.
The Secretary of Homeland Security shall be the Vice
Chairperson of the Committee.
(4) Other members.--Subject to subsection (b)(4)(B),
the Chairperson of the Committee shall involve the
heads of such other Federal departments, agencies, and
independent establishments in any review or
investigation under subsection (b) as the Chairperson,
after consulting with the Vice Chairperson, determines
to be appropriate on the basis of the facts and
circumstances of the transaction under investigation
(or the designee of any such department or agency
head).
(5) Meetings.--The Committee shall meet upon the
direction of the President or upon the call of the
Chairperson of the Committee without regard to section
552b of title 5, United States Code (if otherwise
applicable).
(6) Collection of evidence.--Subject to subsection
(c), the Committee may, for the purpose of carrying out
this section--
(A) sit and act at such times and places,
take such testimony, receive such evidence,
administer such oaths; and
(B) require the attendance and testimony of
such witnesses and the production of such
books, records, correspondence, memoranda,
papers, and documents as the Chairperson of the
Committee may determine advisable.
(7) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary of the
Treasury for each of fiscal years 2007, 2008, 2009, and
2010, expressly and solely for the operations of the
Committee that are conducted by the Secretary, the sum
of $10,000,000.
(l) Mitigation, Tracking, and Postconsummation Monitoring and
Enforcement.--
(1) Mitigation.--
(A) In general.--The Committee may negotiate,
enter into or impose, and enforce any agreement
or condition with any party to a covered
transaction in order to mitigate any threat to
the national security of the United States.
(B) Risk-based analysis required.--Any
agreement entered into or condition imposed
under subparagraph (A) shall be based on a
risk-based analysis of the threat to national
security of the covered transaction.
(2) Tracking authority for withdrawn notices.--
(A) In general.--If any written notice of a
covered transaction that was submitted to the
Committee under this section is withdrawn
before any review or investigation by the
Committee under subsection (b) is completed,
the Committee shall establish, as appropriate--
(i) interim protections to address
specific concerns with such transaction
that have been raised in connection
with any such review or investigation
pending any resubmission of any written
notice under this section with respect
to such transaction and further action
by the President under this section;
(ii) specific timeframes for
resubmitting any such written notice;
and
(iii) a process for tracking any
actions that may be taken by any party
to the transaction, in connection with
the transaction, before the notice
referred to in clause (ii) is
resubmitted.
(B) Designation of agency.--The Committee may
designate an appropriate Federal department or
agency, other than any entity of the
intelligence community (as defined in the
National Security Act of 1947), as the lead
agency to carry out the requirements of
subparagraph (A) with respect to any covered
transaction that is subject to such
subparagraph.
(3) Negotiation, modification, monitoring, and
enforcement.--
(A) Designation of agency.--The Committee
shall designate a Federal department or agency
as the lead agency to negotiate, modify,
monitor, and enforce any agreement entered into
or condition imposed under paragraph (1) with
respect to a covered transaction based on the
expertise with and knowledge of the issues
related to such transaction on the part of the
designated department or agency.
(B) Reporting by designated agency.--
(i) Implementation reports.--The
Federal department or agency designated
by the Committee as a lead agency under
subparagraph (A) in connection with any
agreement entered into or condition
imposed under paragraph (1) with
respect to a covered transaction
shall--
(I) provide periodic reports
to the Chairperson and Vice
Chairperson of the Committee on
the implementation of such
agreement or condition; and
(II) require, as appropriate,
any party to the covered
transaction to report to the
head of such department or
agency (or the designee of such
department or agency head) on
the implementation or any
material change in
circumstances.
(ii) Modification reports.--The
Federal department or agency designated
by the Committee as a lead agency under
subparagraph (A) in connection with any
agreement entered into or condition
imposed with respect to a covered
transaction shall--
(I) provide periodic reports
to the Chairperson and Vice
Chairperson of the Committee on
any modification to any such
agreement or condition imposed
with respect to the
transaction; and
(II) ensure that any
significant modification to any
such agreement or condition is
reported to the Director of
National Intelligence and to
any other Federal department or
agency that may have a material
interest in such modification.
(m) Semi-Annual Report to the Congress.--
(1) In general.--The Chairperson of the Committee
shall transmit a report to the Congress before January
31 and July 31 of each year on all the reviews and
investigations of covered transactions conducted under
subsection (b) during the 6-month period covered by the
report.
(2) Contents of report relating to covered
transactions.--The report under paragraph (1) shall
contain the following information with respect to each
covered transaction:
(A) A list of all notices filed and all
reviews or investigations conducted during the
period with basic information on each party to
the transaction, the nature of the business
activities or products of all pertinent
persons, along with information about the
status of the review or investigation,
information on any withdrawal from the process,
any rollcall votes by the Committee under this
section, any extension of time for any
investigation, and any presidential decision or
action under this section.
(B) Specific, cumulative, and, as
appropriate, trend information on the numbers
of filings, investigations, withdrawals, and
presidential decisions or actions under this
section.
(C) Cumulative and, as appropriate, trend
information on the business sectors involved in
the filings which have been made, and the
countries from which the investments have
originated.
(D) Information on whether companies that
withdrew notices to the Committee in accordance
with subsection (b)(1)(C)(ii) have later re-
filed such notices, or, alternatively,
abandoned the transaction.
(E) The types of security arrangements and
conditions the Committee has used to mitigate
national security concerns about a transaction.
(F) A detailed discussion of all perceived
adverse effects of covered transactions on the
national security or critical infrastructure of
the United States that the Committee will take
into account in its deliberations during the
period before delivery of the next such report,
to the extent possible.
(3) Contents of report relating to critical
technologies.--
(A) In general.--In order to assist the
Congress in its oversight responsibilities with
respect to this section, the President and such
agencies as the President shall designate shall
include in the semi-annual report submitted
under paragraph (1) the following:
(i) An evaluation of whether there is
credible evidence of a coordinated
strategy by 1 or more countries or
companies to acquire United States
companies involved in research,
development, or production of critical
technologies for which the United
States is a leading producer.
(ii) An evaluation of whether there
are industrial espionage activities
directed or directly assisted by
foreign governments against private
United States companies aimed at
obtaining commercial secrets related to
critical technologies.
(B) Critical technologies defined.--For
purposes of this paragraph, the term ``critical
technologies'' means technologies identified
under title VI of the National Science and
Technology Policy, Organization, and Priorities
Act of 1976 or other critical technology,
critical components, or critical technology
items essential to national defense or national
security identified pursuant to this section.
(C) Release of unclassified study.--That
portion of the semi-annual report under
paragraph (1) that is required by this
paragraph may be classified. An unclassified
version of that portion of the report shall be
made available to the public.
(n) Certification of Notices and Assurances.--Each notice
required to be submitted, by a party to a covered transaction,
to the President or the President's designee under this section
and regulations prescribed under such section, and any
information submitted by any such party in connection with any
action for which a report is required pursuant to paragraph
(3)(B)(ii) of subsection (l) with respect to the implementation
of any mitigation agreement or condition described in paragraph
(1)(A) of such subsection, or any material change in
circumstances, shall be accompanied by a written statement by
the chief executive officer or the designee of the person
required to submit such notice or information certifying that,
to the best of the person's knowledge and belief--
(1) the notice or information submitted fully
complies with the requirements of this section or such
regulation, agreement, or condition; and
(2) the notice or information is accurate and
complete in all material respects.
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