[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1869 Reported in Senate (RS)]

<DOC>





                                                       Calendar No. 196
116th CONGRESS
  1st Session
                                S. 1869

                          [Report No. 116-92]

To require the disclosure of ownership of high-security space leased to 
         accommodate a Federal agency, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 13, 2019

Mr. Peters (for himself and Mr. Portman) introduced the following bill; 
which was read twice and referred to the Committee on Homeland Security 
                        and Governmental Affairs

                           September 10, 2019

               Reported by Mr. Johnson, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
To require the disclosure of ownership of high-security space leased to 
         accommodate a Federal agency, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE; FINDINGS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the ``Secure 
Federal Leases from Espionage And Suspicious Entanglements Act'' or the 
``Secure Federal LEASEs Act''.</DELETED>
<DELETED>    (b) Findings.--Congress finds that--</DELETED>
        <DELETED>    (1) the Government Accountability Office has 
        reported that the Federal Government often leases high-security 
        space from private sector landlords;</DELETED>
        <DELETED>    (2) the General Services Administration collects 
        highest-level and immediate ownership information through the 
        System of Award Management, but it is not currently required to 
        collect beneficial ownership information and lacks an adequate 
        system for doing so;</DELETED>
        <DELETED>    (3) the General Services Administration and 
        Federal agencies with leasing authority may not know if foreign 
        owners have a stake in the buildings leased by the agencies, 
        either through foreign-incorporated legal entities or through 
        ownership in United States-incorporated legal entities, even 
        when the leased space is used for classified operations or to 
        store sensitive data; and</DELETED>
        <DELETED>    (4) according to a report of the Government 
        Accountability Office, dated January 2017, that examined the 
        risks of foreign ownership of Government-leased real estate, 
        ``leasing space in foreign-owned buildings could present 
        security risks such as espionage and unauthorized cyber and 
        physical access''.</DELETED>

<DELETED>SEC. 2. DEFINITIONS.</DELETED>

<DELETED>    In this Act:</DELETED>
        <DELETED>    (1) Beneficial owner.--</DELETED>
                <DELETED>    (A) In general.--Except as provided in 
                subparagraph (B), the term ``beneficial owner'' means, 
                with respect to a covered entity, each natural person 
                who, directly or indirectly, through any contract, 
                arrangement, understanding, relationship, or 
                otherwise--</DELETED>
                        <DELETED>    (i) exercises control over the 
                        covered entity; or</DELETED>
                        <DELETED>    (ii) has a substantial interest in 
                        or receives substantial economic benefits from 
                        the assets of the covered entity.</DELETED>
                <DELETED>    (B) Exceptions.--The term ``beneficial 
                owner'' does not include, with respect to a covered 
                entity--</DELETED>
                        <DELETED>    (i) a minor child;</DELETED>
                        <DELETED>    (ii) a person acting as a nominee, 
                        intermediary, custodian, or agent on behalf of 
                        another person;</DELETED>
                        <DELETED>    (iii) a person acting solely as an 
                        employee of the covered entity and whose 
                        control over or economic benefits from the 
                        covered entity derives solely from the 
                        employment status of the person;</DELETED>
                        <DELETED>    (iv) a person whose only interest 
                        in the covered entity is through a right of 
                        inheritance, unless the person also meets the 
                        requirements of subparagraph (A); or</DELETED>
                        <DELETED>    (v) a creditor of the covered 
                        entity, unless the creditor also meets the 
                        requirements of subparagraph (A).</DELETED>
                <DELETED>    (C) Anti-abuse rule.--The exceptions under 
                subparagraph (B) shall not apply if used for the 
                purpose of evading, circumventing, or abusing the 
                requirements of this Act.</DELETED>
        <DELETED>    (2) Closely held.--The term ``closely held'' means 
        a fund that has less than 100 natural persons as direct or 
        indirect investors.</DELETED>
        <DELETED>    (3) Control.--The term ``control'' means, with 
        respect to a covered entity--</DELETED>
                <DELETED>    (A) having the authority or ability to 
                determine how a covered entity is utilized; 
                or</DELETED>
                <DELETED>    (B) having some decision-making power for 
                the use of a covered entity.</DELETED>
        <DELETED>    (4) Covered entity.--The term ``covered entity'' 
        means a person, copartnership, corporation, or other public or 
        private entity.</DELETED>
        <DELETED>    (5) Executive agency.--The term ``Executive 
        agency'' has the meaning given the term in section 105 of title 
        5, United States Code.</DELETED>
        <DELETED>    (6) Federal agency.--The term ``Federal agency'' 
        means any Executive agency or any establishment in the 
        legislative or judicial branch of the Government.</DELETED>
        <DELETED>    (7) Federal lessee.--The term ``Federal lessee'' 
        means the Administrator of General Services, the Architect of 
        the Capitol, or the head of any Federal agency, other than the 
        Department of Defense, that has independent statutory leasing 
        authority.</DELETED>
        <DELETED>    (8) Foreign entity.--The term ``foreign entity'' 
        means an entity that is headquartered or incorporated in a 
        country that is not the United States.</DELETED>
        <DELETED>    (9) Foreign person.--The term ``foreign person'' 
        means an individual who is not a United States 
        person.</DELETED>
        <DELETED>    (10) Federal tenant.--The term ``Federal tenant'' 
        means a Federal agency that is occupying or will occupy a high-
        security leased space for which a lease agreement has been 
        secured on behalf of the Federal agency.</DELETED>
        <DELETED>    (11) High-security leased space.--The term ``high-
        security leased space'' means a space leased by a Federal 
        lessee that--</DELETED>
                <DELETED>    (A) will be occupied by Federal employees 
                for nonmilitary activities; and</DELETED>
                <DELETED>    (B) has a facility security level of III, 
                IV, or V, as determined by the Federal tenant in 
                consultation with the Interagency Security Committee, 
                the Department of Homeland Security, and the General 
                Services Administration.</DELETED>
        <DELETED>    (12) Highest-level owner.--The term ``highest-
        level owner'' means the entity that owns or controls an 
        immediate owner of the offeror of a lease, or that owns or 
        controls 1 or more entities that control an immediate owner of 
        the offeror.</DELETED>
        <DELETED>    (13) Immediate owner.--The term ``immediate 
        owner'' means an entity, other than the offeror of a lease, 
        that has direct control of the offeror, including ownership or 
        interlocking management, identity of interests among family 
        members, shared facilities and equipment, and the common use of 
        employees.</DELETED>
        <DELETED>    (14) Substantial economic benefits.--The term 
        ``substantial economic benefits'' means, with respect to a 
        natural person described in paragraph (1)(A)(ii), having an 
        entitlement to the funds or assets of a covered entity that, as 
        a practical matter, enables the person, directly or indirectly, 
        to control, manage, or direct the covered entity.</DELETED>
        <DELETED>    (15) United states person.--The term ``United 
        States person'' means an individual who--</DELETED>
                <DELETED>    (A) is a citizen of the United States; 
                or</DELETED>
                <DELETED>    (B) is an alien lawfully admitted for 
                permanent residence in the United States.</DELETED>
        <DELETED>    (16) Widely held.--The term ``widely held'' means 
        a fund that has not less than 100 natural persons as direct or 
        indirect investors.</DELETED>

<DELETED>SEC. 3. DISCLOSURE OF OWNERSHIP OF HIGH-SECURITY SPACE LEASED 
              FOR FEDERAL AGENCIES.</DELETED>

<DELETED>    (a) Required Disclosures.--Before entering into a lease 
agreement with a covered entity or approving a novation agreement with 
a covered entity involving a change of ownership under a lease that 
will be used for high-security leased space, a Federal lessee shall 
require the covered entity to identify and disclose whether the 
immediate or highest-level owner of the leased space, including an 
entity involved in the financing thereof, is a foreign person or a 
foreign entity, including the country associated with the ownership 
entity.</DELETED>
<DELETED>    (b) Notification.--If a disclosure is made under 
subsection (a), the Federal lessee shall notify the Federal tenant of 
the building or other improvement that will be used for high-security 
space in writing, and consult with the Federal tenant, regarding 
security concerns and necessary mitigation measures, if any, prior to 
award of the lease or approval of the novation agreement.</DELETED>
<DELETED>    (c) Timing.--</DELETED>
        <DELETED>    (1) In general.--A Federal lessee shall require a 
        covered entity to provide the information described in 
        subsection (a) to a covered entity when first submitting a 
        proposal in response to a solicitation for offers issued by the 
        Federal lessee.</DELETED>
        <DELETED>    (2) Updates.--A Federal lessee shall require a 
        covered entity to update a submission of the information 
        described in subsection (a) annually, beginning on the date 
        that is 1 year after the date on which the Federal tenant began 
        occupancy, with information including--</DELETED>
                <DELETED>    (A) the list of immediate or highest-level 
                owners of the covered entity during the preceding 1-
                year period of Federal occupancy; or</DELETED>
                <DELETED>    (B) the information required to be 
                provided relating to each such immediate or highest-
                level owner.</DELETED>

<DELETED>SEC. 4. IMMEDIATE, HIGHEST-LEVEL, AND BENEFICIAL 
              OWNERS.</DELETED>

<DELETED>    (a) Proposal.--The General Services Administration shall 
develop a Government-wide proposal for identifying all immediate, 
highest-level, or beneficial owners of high-security leased spaces 
before entering into a lease agreement with a covered entity for the 
accommodation of a Federal tenant in a high-security leased 
space.</DELETED>
<DELETED>    (b) Requirements.--</DELETED>
        <DELETED>    (1) Contents.--The proposal described in 
        subsection (a) shall include a process for collecting and 
        utilizing the following information on each immediate, highest-
        level, or beneficial owner of a high-security leased 
        space:</DELETED>
                <DELETED>    (A) Name.</DELETED>
                <DELETED>    (B) Current residential or business street 
                address.</DELETED>
                <DELETED>    (C) An identifying number or document that 
                verifies identity as a United States person or foreign 
                person.</DELETED>
        <DELETED>    (2) Disclosures and notifications.--The proposal 
        described in subsection (a) shall--</DELETED>
                <DELETED>    (A) require the disclosure of any 
                immediate, highest-level, or beneficial owner that is a 
                foreign person;</DELETED>
                <DELETED>    (B) require that, if the Federal lessee is 
                assigning the building or other improvement that will 
                be used for high-security space to a Federal tenant, 
                the Federal tenant shall be notified of the disclosure 
                described in subparagraph (A); and</DELETED>
                <DELETED>    (C) exclude collecting ownership 
                information on widely held pooled-investment vehicles, 
                mutual funds, trusts, or other pooled-investment 
                vehicles; and</DELETED>
                <DELETED>    (D) include ownership information on 
                closely held pooled-investment vehicles, mutual funds, 
                trusts, or other pooled-investment vehicles.</DELETED>
<DELETED>    (c) Report and Implementation.--The General Services 
Administration shall--</DELETED>
        <DELETED>    (1) not later than 1 year after the date of 
        enactment of this Act, submit the proposal described in 
        subsection (a) to the Committee on Homeland Security and 
        Governmental Affairs of the Senate and the Committee on 
        Oversight and Reform of the House of Representatives; 
        and</DELETED>
        <DELETED>    (2) not later than 6 years after the date of 
        enactment of this Act, implement the proposal described in 
        subsection (a).</DELETED>

<DELETED>SEC. 5. OTHER SECURITY AGREEMENTS FOR LEASED SPACE.</DELETED>

<DELETED>    A lease agreement between a Federal lessee and a covered 
entity for the accommodation of a Federal agency in a building or other 
improvement that will be used for high-security space shall include 
language that provides that--</DELETED>
        <DELETED>    (1) the covered entity and any member of the 
        property management company who may be responsible for 
        oversight or maintenance of the high-security space shall not--
        </DELETED>
                <DELETED>    (A) maintain access to the high-security 
                space; or</DELETED>
                <DELETED>    (B) have access to the high-security space 
                without prior approval from the Federal 
                tenant;</DELETED>
        <DELETED>    (2) access to the high-security space or any 
        property or information located within that space will only be 
        granted by the Federal tenant if the Federal tenant determines 
        that the access is clearly consistent with the mission and 
        responsibilities of the Federal tenant; and</DELETED>
        <DELETED>    (3) the Federal lessee shall have written 
        procedures in place, signed by the Federal lessee and the 
        covered entity, governing access to the high-security space in 
        case of emergencies that may damage the leased 
        property.</DELETED>

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Secure Federal 
Leases from Espionage and Suspicious Entanglements Act'' or the 
``Secure Federal LEASEs Act''.
    (b) Findings.--Congress finds that--
            (1) the Government Accountability Office has reported that 
        the Federal Government often leases high-security space from 
        private sector landlords;
            (2) the General Services Administration collects highest-
        level and immediate ownership information through the System of 
        Award Management, but it is not currently required to collect 
        beneficial ownership information and lacks an adequate system 
        for doing so;
            (3) the General Services Administration and Federal 
        agencies with leasing authority may not know if foreign owners 
        have a stake in the buildings leased by the agencies, either 
        through foreign-incorporated legal entities or through 
        ownership in United States-incorporated legal entities, even 
        when the leased space is used for classified operations or to 
        store sensitive data; and
            (4) according to a report of the Government Accountability 
        Office, dated January 2017, that examined the risks of foreign 
        ownership of Government-leased real estate, ``leasing space in 
        foreign-owned buildings could present security risks such as 
        espionage and unauthorized cyber and physical access''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Beneficial owner.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``beneficial owner'' means, with respect 
                to a covered entity, each natural person who, directly 
                or indirectly, through any contract, arrangement, 
                understanding, relationship, or otherwise--
                            (i) exercises control over the covered 
                        entity; or
                            (ii) has a substantial interest in or 
                        receives substantial economic benefits from the 
                        assets of the covered entity.
                    (B) Exceptions.--The term ``beneficial owner'' does 
                not include, with respect to a covered entity--
                            (i) a minor child;
                            (ii) a person acting as a nominee, 
                        intermediary, custodian, or agent on behalf of 
                        another person;
                            (iii) a person acting solely as an employee 
                        of the covered entity and whose control over or 
                        economic benefits from the covered entity 
                        derives solely from the employment status of 
                        the person;
                            (iv) a person whose only interest in the 
                        covered entity is through a right of 
                        inheritance, unless the person also meets the 
                        requirements of subparagraph (A); or
                            (v) a creditor of the covered entity, 
                        unless the creditor also meets the requirements 
                        of subparagraph (A).
                    (C) Anti-abuse rule.--The exceptions under 
                subparagraph (B) shall not apply if used for the 
                purpose of evading, circumventing, or abusing the 
                requirements of this Act.
            (2) Control.--The term ``control'' means, with respect to a 
        covered entity--
                    (A) having the authority or ability to determine 
                how a covered entity is utilized; or
                    (B) having some decision-making power for the use 
                of a covered entity.
            (3) Covered entity.--The term ``covered entity'' means--
                    (A) a person, corporation, company, business 
                association, partnership, society, trust, or any other 
                nongovernmental entity, organization, or group; or
                    (B) any governmental entity or instrumentality of a 
                government.
            (4) Executive agency.--The term ``Executive agency'' has 
        the meaning given the term in section 105 of title 5, United 
        States Code.
            (5) Federal agency.--The term ``Federal agency'' means any 
        Executive agency or any establishment in the legislative or 
        judicial branch of the Government.
            (6) Federal lessee.--The term ``Federal lessee'' means the 
        Administrator of General Services, the Architect of the 
        Capitol, or the head of any Federal agency, other than the 
        Department of Defense, that has independent statutory leasing 
        authority.
            (7) Federal tenant.--The term ``Federal tenant'' means a 
        Federal agency that is occupying or will occupy a high-security 
        leased space for which a lease agreement has been secured on 
        behalf of the Federal agency.
            (8) Foreign entity.--The term ``foreign entity'' means a 
        covered entity that is headquartered or incorporated in a 
        country that is not the United States.
            (9) Foreign person.--The term ``foreign person'' means an 
        individual who is not a United States person.
            (10) High-security leased space.--The term ``high-security 
        leased space'' means a space leased by a Federal lessee that--
                    (A) will be occupied by Federal employees for 
                nonmilitary activities; and
                    (B) has a facility security level of III, IV, or V, 
                as determined by the Federal tenant in consultation 
                with the Interagency Security Committee, the Department 
                of Homeland Security, and the General Services 
                Administration.
            (11) Highest-level owner.--The term ``highest level owner'' 
        means the entity that owns or controls an immediate owner of 
        the offeror of a lease, or that owns or controls 1 or more 
        entities that control an immediate owner of the offeror.
            (12) Immediate owner.--The term ``immediate owner'' means 
        an entity, other than the offeror of a lease, that has direct 
        control of the offeror, including ownership or interlocking 
        management, identity of interests among family members, shared 
        facilities and equipment, and the common use of employees.
            (13) Substantial economic benefits.--The term ``substantial 
        economic benefits'' means, with respect to a natural person 
        described in paragraph (1)(A)(ii), having an entitlement to the 
        funds or assets of a covered entity that, as a practical 
        matter, enables the person, directly or indirectly, to control, 
        manage, or direct the covered entity.
            (14) United states person.--The term ``United States 
        person'' means an individual who--
                    (A) is a citizen of the United States; or
                    (B) is an alien lawfully admitted for permanent 
                residence in the United States.
            (15) Widely-held.--The term ``widely-held'' means a fund 
        that has not less than 100 natural persons as direct or 
        indirect investors.

SEC. 3. DISCLOSURE OF OWNERSHIP OF HIGH-SECURITY SPACE LEASED FOR 
              FEDERAL AGENCIES.

    (a) Required Disclosures.--Before entering into a lease agreement 
with a covered entity or approving a novation agreement with a covered 
entity involving a change of ownership under a lease that will be used 
for high-security leased space, a Federal lessee shall require the 
covered entity to identify and disclose whether the immediate or 
highest-level owner of the leased space, including an entity involved 
in the financing thereof, is a foreign person or a foreign entity, 
including the country associated with the ownership entity.
    (b) Notification.--If a disclosure is made under subsection (a), 
the Federal lessee shall notify the Federal tenant of the building or 
other improvement that will be used for high-security space in writing, 
and consult with the Federal tenant, regarding security concerns and 
necessary mitigation measures, if any, prior to award of the lease or 
approval of the novation agreement.
    (c) Timing.--
            (1) In general.--A Federal lessee shall require a covered 
        entity to provide the information described in subsection (a) 
        to a covered entity when first submitting a proposal in 
        response to a solicitation for offers issued by the Federal 
        lessee.
            (2) Updates.--A Federal lessee shall require a covered 
        entity to submit an update of the information described in 
        subsection (a) annually, beginning on the date that is 1 year 
        after the date on which the Federal tenant began occupancy, 
        with information including--
                    (A) the list of immediate or highest-level owners 
                of the covered entity during the preceding 1-year 
                period of Federal occupancy; or
                    (B) the information required to be provided 
                relating to each such immediate or highest-level owner.

SEC. 4. IMMEDIATE, HIGHEST-LEVEL, AND BENEFICIAL OWNERS.

    (a) Plan.--The General Services Administration shall develop a 
Government-wide plan for identifying all immediate, highest-level, or 
beneficial owners of high-security leased spaces before entering into a 
lease agreement with a covered entity for the accommodation of a 
Federal tenant in a high-security leased space.
    (b) Requirements.--
            (1) Contents.--The plan described in subsection (a) shall 
        include a process for collecting and utilizing the following 
        information on each immediate, highest-level, or beneficial 
        owner of a high-security leased space:
                    (A) Name.
                    (B) Current residential or business street address.
                    (C) An identifying number or document that verifies 
                identity as a United States person, foreign person, or 
                foreign entity.
            (2) Disclosures and notifications.--The plan described in 
        subsection (a) shall--
                    (A) require the disclosure of any immediate, 
                highest-level, or beneficial owner that is a foreign 
                person;
                    (B) require that, if the Federal lessee is 
                assigning the building or other improvement that will 
                be used for high-security space to a Federal tenant, 
                the Federal tenant shall be notified of the disclosure 
                described in subparagraph (A); and
                    (C) exclude collecting ownership information on 
                widely-held pooled investment vehicles, mutual funds, 
                trusts, or other pooled-investment vehicles.
    (c) Report and Implementation.--The General Services Administration 
shall--
            (1) not later than 1 year after the date of enactment of 
        this Act, submit the plan described in subsection (a) to the 
        Committee on Homeland Security and Governmental Affairs of the 
        Senate and the Committee on Oversight and Reform of the House 
        of Representatives;
            (2) not later than 2 years after the date of enactment of 
        this Act, implement the plan described in subsection (a); and
            (3) not later than 1 year after the implementation of the 
        plan described in subsection (a), and each year thereafter for 
        9 years, submit a report to the Committee on Homeland Security 
        and Governmental Affairs of the Senate and the Committee on 
        Oversight and Reform of the House of Representatives on the 
        status of the implementation of the plan, including the number 
        of disclosures made under subsection (b)(2).

SEC. 5. OTHER SECURITY AGREEMENTS FOR LEASED SPACE.

    A lease agreement between a Federal lessee and a covered entity for 
the accommodation of a Federal agency in a building or other 
improvement that will be used for high-security leased space shall 
include language that provides that--
            (1) the covered entity and any member of the property 
        management company who may be responsible for oversight or 
        maintenance of the high-security leased space shall not--
                    (A) maintain access to the high-security leased 
                space; or
                    (B) have access to the high-security leased space 
                without prior approval from the Federal tenant;
            (2) access to the high-security leased space or any 
        property or information located within that space will only be 
        granted by the Federal tenant if the Federal tenant determines 
        that the access is clearly consistent with the mission and 
        responsibilities of the Federal tenant; and
            (3) the Federal lessee shall have written procedures in 
        place, signed by the Federal lessee and the covered entity, 
        governing access to the high-security leased space in case of 
        emergencies that may damage the leased property.

SEC. 6. APPLICABILITY.

    Except where otherwise provided, this Act shall apply with respect 
to any lease or novation agreement entered into on or after the date of 
the enactment of this Act.
                                                       Calendar No. 196

116th CONGRESS

  1st Session

                                S. 1869

                          [Report No. 116-92]

_______________________________________________________________________

                                 A BILL

To require the disclosure of ownership of high-security space leased to 
         accommodate a Federal agency, and for other purposes.

_______________________________________________________________________

                           September 10, 2019

                       Reported with an amendment