Amendments to the Defense Production Act of 1950

Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 2170) is amended to read as follows:

721.

Review and investigation of transactions involving foreign persons and governments

(a)

Review of transactions involving foreign persons and governments

(1)

Reviews required

(A)

In general

CFIUS shall review any transaction proposed or pending on or after the date of enactment of this section by, with, or on behalf of a foreign person or foreign government which could result in foreign control of a person engaged in interstate commerce in the United States, for which a review is requested, in the manner prescribed by regulations promulgated under this section. (B)

Purposes

The purpose of such review shall be to determine the effect on national security of such transaction, whether an investigation of such transaction is required under subsection (b), or both. (2)

Timing of reviews

(A)

In general

A review of a proposed or pending transaction described in paragraph (1) shall be completed not later than 30 days after the date of receipt by CFIUS of written notification of the proposed or pending transaction, as prescribed by regulations promulgated under this section. (B)

Extensions upon request

Upon written request by the Secretary, Deputy Secretary, or Under Secretary, or the equivalent thereof, of one or more of the agencies that make up CFIUS (including any agency described in subsection (c)(4)(I)) for additional time to review a case, the 30-day period described in subparagraph (A) shall be extended by not longer than an additional 30 days, if the Secretary, Deputy Secretary, or Under Secretary, or the equivalent thereof, concludes that there is credible evidence to believe that if permitted to proceed with the transaction, the foreign acquiring entity may take action that threatens to impair the national security. (b)

Investigations of certain transactions

(1)

In general

CFIUS shall undertake an investigation to determine the effects on national security of any transaction described in subsection (a)(1) proposed or pending on or after the date of enactment of this section— (A)which would— (i)result in control of any person engaged in interstate commerce in the United States by a foreign government, or a person acting by, with, or on behalf of a foreign government; or (ii)result in control of any critical infrastructure of or within the United States by, with, or on behalf of any foreign person, if CFIUS determines that any possible impairment to national security has not been mitigated by additional assurances, as described in subsection (i), during the review period under subsection (a); and (B)if the review by CFIUS under subsection (a) produces sufficient information to indicate the possibility of an impairment to national security, after consideration of the factors listed in subsection (g). (2)

Timing of investigations

An investigation required to be undertaken under this subsection— (A)shall commence at such time as CFIUS determines under subsection (a) that such investigation is required, as prescribed by regulations promulgated pursuant to this section; and (B)shall be completed not later than 45 days after the date of its commencement. (3)

Resubmitted filings

An investigation of a transaction under this subsection which is interrupted because the notification or filing is withdrawn by the applicant, and which is subsequently resubmitted, shall require up to a 45-day investigation from the date on which CFIUS receives the new submission. The investigation shall include a review of the rationale for the withdrawal and resubmission of the proposed transaction to CFIUS. (4)

Completion of investigations required

An investigation of a transaction under this subsection shall be completed, even if the notification or filing of the pending transaction is withdrawn or rescinded, and CFIUS shall continue to monitor such withdrawn or rescinded transaction, except that no completed investigation or continued monitoring shall be required for any pending transaction that is terminated by agreement of the parties to the transaction. (5)

Mandatory notification related to certain transactions affecting national security

(A)

Chairperson and vice chairperson

The chairperson and vice chairperson of CFIUS shall jointly agree to issue rules that require each person controlled by or acting on behalf of a foreign government to notify the chairperson of CFIUS in writing of any proposed transaction involving such person of United States critical infrastructure relating to United States national security. (B)

Regulations

The Secretary of the Treasury shall promulgate regulations for the implementation of this paragraph, including the imposition of appropriate penalties for failure to comply with this paragraph. (c)

Committee on Foreign Investment in the United States

(1)

Establishment

There is established the Committee on Foreign Investment in the United States, which shall serve as the President's designee for all purposes under this section. (2)

Chairperson

The Secretary of the Treasury shall serve as the chairperson of CFIUS. (3)

Vice chairperson

The Secretary of Defense shall serve as the vice chairperson of CFIUS. (4)

Membership

The members of CFIUS shall include— (A)the Secretary of the Treasury; (B)the Secretary of State; (C)the Secretary of Defense; (D)the Secretary of Commerce; (E)the Secretary of Homeland Security; (F)the Attorney General of the United States; (G)the Director of the Office of Management and Budget; (H)the Director of National Intelligence; and (I)the heads of those other executive departments or agencies as the President determines appropriate, on a case-by-case basis. (5)

Referral to appropriate members of CFIUS

Upon receipt of notification of a proposed or pending transaction under this section, the chairperson of CFIUS shall assign the appropriate member of CFIUS to lead the review and investigation of such proposed or pending transaction under this section. (6)

Intelligence reviews

The Director of National Intelligence shall— (A)direct the intelligence community, to collect and analyze information related to any proposed or pending transaction pursuant to this section, and to prepare a report of its findings, which the Director shall make available to members of CFIUS not later than 15 days after the date of the commencement by CFIUS of a 30-day (or longer) review of any such transaction under subsection (a), and before the commencement of any investigation under subsection (b); and (B)ensure that the intelligence community remains engaged in the collection, analysis, and dissemination to CFIUS of any additional relevant information that may become available during the course of any investigation conducted under subsection (b) with respect to a transaction. (7)

Assessments and Classifications of Foreign Countries for Use in Reviews and Investigations

(A)

In general

Not later than 120 days after the date of enactment of the Foreign Investment and National Security Act of 2006, the chairperson and vice chairperson of CFIUS, in consultation with the Secretary of State, the Secretary of Commerce, the Secretary of Energy, the Chairman of the Nuclear Regulatory Commission, and the Director of National Intelligence, shall develop and implement a system for assessing and classifying individual countries, including— (i)an assessment of the adherence of the country to nonproliferation control regimes, including treaties and multilateral supply guidelines, which shall draw on, but not be limited to, the annual report on Adherence to and Compliance with Arms Control, Nonproliferation and Disarmament Agreements and Commitments required by section 403 of the Arms Control and Disarmament Act; (ii)an assessment of the relationship of such country with the United States, specifically on its record on cooperating in counter-terrorism efforts, which shall draw on, but not be limited to, the report of the President to Congress under section 7120 of the Intelligence Reform and Terrorism Prevention Act of 2004; and (iii)an assessment of the potential for transshipment or diversion of technologies with military applications, including an analysis of national export control laws and regulations. (B)

Confidentiality

The assessment and classification system required by subparagraph (A) and any information or documentary material maintained or developed thereunder— (i)shall be used solely by those agencies involved in reviewing and investigating acquisitions, mergers, and takeovers pursuant to this section; (ii)may not be made available to the public; and (iii)shall be exempt from disclosure under section 552 of title 5, United States Code. (8)

Staff of cfius

Employees of the Department of the Treasury who serve as staff for CFIUS shall report directly to the Deputy Secretary of the Treasury, and shall perform no official functions other than as CFIUS staff. (d)

Action by the president

(1)

In general

Subject to subsection (e), the President may take such action for such time as the President considers appropriate to suspend or prohibit any transaction which would result in control of any critical infrastructure or 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 a foreign person or government, so that such control will not threaten to impair the national security. (2)

Announcement by the president

The President shall announce the decision on whether or not to take action pursuant to this subsection not later than 15 days after an investigation described in subsection (b) is completed. (3)

Enforcement

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 subsection. (e)

Findings of the president

The President may exercise the authority conferred by subsection (d) only if the President finds that— (1)there is credible evidence that leads the President to believe that the foreign interest exercising control might take action that threatens to impair the national security; and (2)provisions of law, other than this section and the International Emergency Economic Powers Act, do not, in the judgment of the President, provide adequate and appropriate authority for the President to protect the national security in the matter before the President. (f)

Actions and Findings nonreviewable

The actions of the President under subsection (d) and the findings of the President under subsection (e) shall not be subject to judicial review. (g)

Factors To be considered

For purposes of determining whether to take action under subsection (d) and for purposes of reviews and investigations under this section, the President and CFIUS, respectively, shall consider, among other factors— (1)potential effects on United States critical infrastructure, including major energy assets; (2)potential effects on United States critical technologies; (3)domestic production needed for projected national defense requirements; (4)the capability and capacity of domestic industries to meet national defense requirements, including the availability of human resources, products, technology, materials, and other supplies and services; (5)the control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the United States to meet the requirements of national security; (6)the potential effects of the proposed or pending transaction on sales of military goods, equipment, or technology to any country— (A)identified by the Secretary of State— (i)under section 6(j) of the Export Administration Act of 1979, as a country that supports terrorism; (ii)under section 6(l) of the Export Administration Act of 1979, as a country of concern regarding missile proliferation; or (iii)under section 6(m) of the Export Administration Act of 1979, as a country of concern regarding the proliferation of chemical and biological weapons; (B)identified by the Secretary of Defense as posing a potential regional military threat to the interests of the United States; or (C)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; (7)the potential effects of the proposed or pending transaction on United States international technological leadership in areas affecting United States national security; (8)the long term projection of United States requirements for sources of energy and other critical resources and materials; and (9)the ranking developed under subsection (c)(7) of the country in which the foreign persons acquiring United States entities are based. (h)

Confidentiality of information

(1)

In general

Any information or documentary material filed with CFIUS 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 may be made public, except as may be relevant to any administrative or judicial action or proceeding. (2)

Notification to governor

Notwithstanding paragraph (1), CFIUS shall notify the Governor of any State regarding a transaction involving critical infrastructure in that State for the purpose of discussing any security concerns that arise or may arise from that transaction. Information or documentary material made available to a Governor under this paragraph may not be made public, including under any law of a State pertaining to freedom of information or otherwise, but the exception in paragraph (3) for disclosures to either House of Congress or Congressional Committees shall not apply to Governors who receive information under this paragraph. (3)

Disclosure

Nothing in this subsection shall be construed to prevent disclosure to either House of Congress or to any duly authorized committee or subcommittee of Congress. (i)

Additional Assurances

(1)

In general

This subsection shall govern the provision of any assurances to one or more agencies of the United States in connection with the review or investigation of, or any Presidential decision concerning, any transaction under this section. (2)

Condition to determination

Any such assurances shall be deemed to be a continuing covenant of the persons on whose behalf such review is sought (and of all persons controlling such person), the observance of which shall be a condition of the determination of CFIUS, the President, or both, on whether to take any action with respect to such transaction. (3)

Contract with the United States

Such assurances shall be embodied in an agreement executed by the foreign person or foreign government on whose behalf a review of a transaction is sought under this section and the chairperson or vice chairperson of CFIUS, on behalf of the United States. (4)

Monitoring of Agreement

Compliance with assurances provided under this subsection shall be monitored, and may be investigated, in the same manner as a violation of a civil statute, by the agency designated by the chairperson of CFIUS, in consultation with the vice chairperson and the Attorney General of the United States. (5)

Grant of Jurisdiction; Remedies

The United States District Court for the District of Columbia shall have jurisdiction to enforce an agreement referred to in this subsection upon application by the Attorney General. Available remedies shall include divestiture, injunctive relief, enforcing the terms of such agreement, and monetary damages, as appropriate. (j)

Notice and reports to congress

(1)

Notice regarding reviews

(A)

Notice at initiation of review

CFIUS shall transmit written notice of a proposed or pending transaction subject to this section to the members of Congress specified in paragraph (3)(C), not later than 10 days after the date of receipt of a notice of such proposed or pending transaction, including the identities of all parties involved and any foreign government ownership or control of any such party. (B)

Certification at completion of review

Upon completion of a review under subsection (a), the chairperson and vice chairperson of CFIUS and the head of the lead agency assigned under subsection (c)(5), shall transmit a certified notice to the members of Congress specified in paragraph (3)(C). (2)

Notice regarding investigations

(A)

Notice at initiation of investigations

Upon commencement of an investigation under subsection (b), CFIUS shall notify in writing the members of Congress specified in paragraph (3)(C). (B)

Certification at completion of investigations

As soon as practicable after completion of an investigation under subsection (b), the chairperson and vice chairperson of CFIUS and the head of the lead agency assigned under subsection (c)(5), shall transmit to the members of Congress specified in paragraph (3)(C) a certified written report (consistent with the requirements of subsection (h)) on the results of the investigation, unless the matter under investigation has been sent to the President for decision. (3)

Certifications

(A)

In general

Each certified notice and report required by this subsection shall be submitted to the members of Congress specified in subparagraph (C), and shall include— (i)information on whether or not an investigation occurred under subsection (b) and has been completed; (ii)a description of the actions taken by CFIUS with respect to the transaction, including the details of any legally binding assurances provided by the foreign entity that were negotiated as a condition for approval; and (iii)identification of the determinative factors considered under subsection (g). (B)

Content of certification

Each notice required to be certified by this subsection shall be signed by the chairperson and vice chairperson of CFIUS and the head of the lead agency assigned under subsection (c)(5), and shall contain a specific attestation of each such person that, in the determination of CFIUS, the transaction that is the subject of the notice does not impair the national security. (C)

Members of congress

The notices and reports required by this subsection shall be transmitted to— (i)the Majority Leader and the Minority Leader of the Senate; (ii)the chair and ranking member of the Committee on Banking, Housing, and Urban Affairs of the Senate and of any committee of the Senate having oversight over the agency assigned to lead a review or investigation under subsection (c)(5); (iii)the Speaker and the Minority Leader of the House of Representatives; and (iv)the chair and ranking member of the Committee on Financial Services of the House of Representatives and of any committee of the House of Representatives having oversight over the agency assigned to lead a review or investigation under subsection (c)(5). (D)

Transmittal to other members of Congress

The Majority Leader or the Minority Leader, in the case of the Senate, and the Speaker or the Minority Leader, in the case of the House of Representatives, may provide the notices and reports required by this paragraph regarding a proposed or pending transaction involving critical infrastructure— (i)in the case of the Senate, to members of the Senate from the State in which such critical infrastructure is located; and (ii)in the case of the House of Representatives, to a member from a Congressional District in which such critical infrastructure is located. (E)

Limitation on delegation of certifications

Notices and reports required to be certified under this subsection shall be signed by the chairperson and vice chairperson of CFIUS, and such certification requirement may not be delegated. (4)

Annual reports

(A)

Report required

The Secretary of the Treasury, on behalf of and after consultation with the members of CFIUS, shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, on or before March 15 of each year, a written report on the policy of the United States with respect to the preservation of the Nation’s defense production and critical infrastructure. The Secretary shall appear before both committees to provide testimony on such reports. (B)

Contents of report

Each report submitted under subparagraph (A) shall contain— (i)an analysis of each transaction involving a foreign person or foreign government affecting national security that has occurred during the preceding year to which the report relates, including the nature of the acquisitions and the effect or potential impact of such acquisitions on the United States defense industrial base and critical infrastructure; (ii)a similar updated analysis for any transaction that occurred during the 4 years immediately preceding the year dealt with in the report in clause (i), including a separate section discussing the impact of transactions involving foreign governments or persons acting on behalf of or in concert with foreign governments; (iii)a detailed discussion of all perceived risks to national security or United States critical infrastructure that CFIUS will take into account in its deliberations during the year in which the report is delivered to the committees; (iv)a table showing on a cumulative basis, by sector, product, and country of foreign ownership, the number of acquisitions reviewed, investigated, or both, by CFIUS, to provide a census of production potentially relevant to the Nation’s defense industrial base owned or controlled by foreign persons or foreign governments; (v)a summary of any cases before CFIUS, during the year to which the report relates, in which there were disagreements among the members of CFIUS; (vi)an evaluation of whether there is credible evidence of a coordinated strategy by 1 or more countries or companies to acquire critical infrastructure of or within the United States or United States companies involved in research, development, or production of critical technologies for which the United States is a leading producer; (vii)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 or critical infrastructure; and (viii)such other matters as are necessary to give a complete disclosure and analysis of the work of CFIUS during the year to which the report relates. (C)

Classified reports

The evaluations required by clauses (v) and (vi) of subparagraph (B) may be classified. If they are submitted in classified form, an unclassified version of such evaluations shall be made available to the public. (D)

Other information withheld from public reports

(i)

Proprietary information

The chairperson of CFIUS, in consultation with the vice chairperson of CFIUS, may withhold from public release other such information as the chairperson determines is proprietary information. (ii)

Rule of construction

Nothing in this subparagraph shall prohibit such information from being provided to relevant Committees of Congress. (5)

Appearances before congress

The chairperson and vice chairperson of CFIUS, and the heads of such additional CFIUS member agencies specified in a written request by the Chairman of the Committee on Banking, Housing, and Urban Affairs of the Senate shall annually appear before the Committee on Banking, Housing, and Urban Affairs and the Committee on Financial Services of the House of Representatives to provide testimony on the activities of CFIUS. (k)

Regulations

(1)

In general

The Secretary shall issue 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. (2)

Regulations relating to definitions

Not later than 30 days after the date of enactment of the Foreign Investment and National Security Act of 2006, the Secretary of the Treasury and the Secretary of Defense shall jointly agree to and issue rules concerning the manner in which the definition of the term critical infrastructure in subsection (m)(2) shall be applied to particular acquisitions, mergers, and takeovers, for purposes of the mandatory investigation requirement of subsection (b)(1)(A), except that, until such rules are issued in final form and become effective, such definition shall be applied without regard to any such rules (whether proposed or otherwise). (l)

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, including the International Emergency Economic Powers Act, or of the President or Congress. (m)

Definitions

As used in this section— (1)the term critical infrastructure means, subject to rules issued under subsection (k)(2), any systems and assets, whether physical or cyber-based, so vital to the United States that the degradation or destruction of such systems or assets would have a debilitating impact on national security, including national economic security and national public health or safety; (2)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)the terms Committee on Foreign Investment in the United States and CFIUS mean the committee established under subsection (c); (4)the term foreign government means any government or body exercising governmental functions, other than the Government of the United States or of a State or political subdivision thereof. The term includes national, State, provincial, and municipal governments, including their respective departments, agencies, government-owned enterprises, and other agencies and instrumentalities; (5)the term foreign person means any non-United States national, any organization owned or controlled by such a person, and any entity organized under the laws of a country other than the United States, and any entity owned or controlled by such entity; (6)the term intelligence community has the same meaning as in section 3 of the National Security Act of 1947 (50 U.S.C. 401a); and (7)the term transaction means a proposed or pending merger, acquisition, or takeover