[Congressional Record Volume 152, Number 28 (Tuesday, March 7, 2006)]
[Senate]
[Pages S1835-S1838]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DODD:
  S. 2380. A bill to add the heads of certain Federal intelligence 
agencies to the Committee on Foreign Investment in the United States, 
to require enhanced notification to Congress and for other purposes; to 
the Committee on Banking, Housing, and Urban Affairs.
  Mr. DODD. Mr. President, today I have introduced a bill entitled the 
U.S. National Security Protection Act of 2006. This legislation would 
enact some critical reforms with respect to the Committee on Foreign 
Investment in the United States, CFIUS. I look forward to working with 
my colleagues in the coming days on this bill.
  One thing is clear. The importance of reforming CFIUS has been 
brought into sharp focus by the proposed acquisition of P&O Steamship 
Navigation Company's U.S. port operations by Dubai Ports, DP, World, a 
company based in Dubai in the United Arab Emirates, UAE. The reason so 
many people are concerned about that particular deal is obvious: while 
security threats are dynamic, assets such as our ports are, and always 
will be, a national security concern.
  CFIUS's role is to vet these deals for possible national security 
dangers. But the problem here is that the CFIUS process is broken. 
Indeed, the DP World deal was approved in less than 30

[[Page S1836]]

days--even though U.S. law clearly required there to be a full 45-day 
investigation.
  Many of us here in Congress have for a while now expressed concerns 
over whether the current CFIUS structure is adequately protecting our 
national security. The GAO also expressed these concerns in a report it 
released last September. So again, it's not like the cat has suddenly 
been let out of the bag that the CFIUS process needs reform.
  Yet despite all the evidence to the contrary--most prominently, the 
DP World-P&O deal--the administration does not seem to believe that 
there is anything wrong with the CFIUS process.
  The bill I introduced today--the National Security Protection Act of 
2006--goes to the heart of three very simple principles. First, since 
CFIUS is set up to protect our national security, the intelligence 
community--whose fundamental purpose is to promote national security--
needs to have a formal and expanded role in CFIUS. Second, 
accountability and transparency need to be made a permanent part of the 
CFIUS process. And third, when critical U.S. infrastructure might be 
acquired by a foreign government-controlled entity, CFIUS must perform 
a full 45 day investigation--no exceptions.
  My bill would address these issues by doing the following: First, it 
would add the Director of National Intelligence, DNI, and Director of 
the CIA, DCI, to the CFIUS panel.
  Second, it would create a CFIUS Subcommittee on Intelligence whose 
members would represent the heads of all of the intelligence agencies 
of the U.S. government. That subcommittee, chaired by the Director of 
National Intelligence, would review and provide comments on matters to 
come before CFIUS--including comments on 30 day reviews which do not 
result in 45 day investigations and comments on the results of 45 day 
investigations. This subcommittee would also conduct 15 day initial 
reviews of all cases filed with CFIUS.

  Some might ask why the DNI would need to serve on both the full CFIUS 
panel and on the subcommittee. The reasoning behind this is simple--the 
DNI has two important roles in the process. On the full committee, the 
DNI should fill a role of providing policy advice from the perspective 
of the intelligence community. On the subcommittee level, the DNI 
should oversee the collection, analysis, and reporting on specific, 
case-related intelligence that is vital to the CFIUS process.
  Third, the National Security Protection Act would create two Vice 
Chair positions on the full CFIUS panel, to be filled by the 
Secretaries of Defense and Homeland Security. That will help to ensure 
that economic, intelligence, and security matters are given appropriate 
weight in the decision making process. Economic interests, while 
important, must never come ahead of the protection of our national 
security.
  Fourth, this legislation would mandate that only the CFIUS chair, 
with the concurrence of the two Vice Chairs, or the President acting on 
his own authority, can sign off on a 30-day review which concludes that 
a potential deal poses no security threat. In addition, it would 
require that this determination be made in writing with the appropriate 
signatures, and mandate that the CFIUS Chair and Vice Chairs who make 
such a determination be at the level of Secretary so that this 
responsibility is not delegated to subordinates. Furthermore, if either 
of the Vice Chairs dissent with respect to the decision to not conduct 
a 45-day investigation, my bill would mandate that the matter be sent 
to the President for a final determination.
  Fifth, my bill would require the President or CFIUS to notify 
Congress not later than 15 days after paperwork is submitted by 
companies for CFIUS review, and not later than 15 days after the 
commencement of all 30-day reviews and 45-day investigations.
  Sixth, this bill would also require the President to provide 
quarterly reports to Congress detailing all 30- and 50-day actions. 
These reports would include the intelligence subcommittee's comments on 
each case, and they would be submitted in unclassified form with a 
classified annex.
  Seventh, for any transaction where a foreign-owned company is seeking 
to acquire U.S. critical infrastructure, this bill would mandate that 
the company provide the appropriate notification to CFIUS of the 
proposed transaction as well as the required information for CFIUS to 
examine the case. Currently that process is voluntary and it shouldn't 
be.
  Eighth and finally, the National Security Protection Act would amend 
existing U.S. law, which governs under what conditions the President 
must conduct a full 45-day investigation. Currently, U.S. law requires 
a full investigation if ``an entity controlled by or acting on behalf 
of a foreign government'' attempts to acquire a U.S. entity engaged in 
interstate commerce that could affect U.S. national security. My bill 
would clarify this provision by requiring a 45-day investigation 
whenever the U.S. entity to be acquired controls, owns, or operates 
critical infrastructure in the U.S.
  I don't want anyone to misinterpret what I am saying here. Foreign 
investment in the U.S. economy provides an important influx of capital. 
In today's globalized world, we would do tremendous damage to our 
economy by cutting off foreign investment. And I do not think anyone 
here is talking about that.
  Just to provide some reference, according to the Commerce Department, 
in 2004, foreigners invested $113 billion in U.S. businesses and real 
estate. But that amount is only about half as much as U.S. firms 
invested abroad. So while we rightly have concerns about outsourcing 
and enforcement of fair trade practices, the U.S. obviously gets 
significant benefits from participating in the global economy.
  But supporting free and fair trade, and working to protect the 
national interest, are not mutually exclusive. Because we are not just 
working to protect the American worker, we are also trying to protect 
his or her family, and the generations to come.
  Simply put, national security should never be subordinated to 
commercial interests.
  Some would suggest that this is an issue of race-baiting, ill will, 
or bias toward the Arab world. Let me be clear on that point. Nothing 
we say with respect to DP World or the situation in the UAE--or any 
other potential deal--should be construed as such.
  To that end, I wholly reject the views of those who suggest that our 
concern with the DP World acquisition, and with other foreign 
government acquisitions of U.S. critical infrastructure, is somehow 
rooted in a xenophobic ideology.
  Rather, when it comes to international business, there are two main 
issues that I think we as Americans are concerned with. One is the 
protection of the U.S. economy, our industrial base, and American 
workers. The other is the safeguarding of our national security. With 
respect to the DP World-P&O deal, we're mainly talking about that 
second issue.
  According to United Press International, UPI, operations at up to 22 
U.S. ports would come under the control of DP World if it is allowed to 
acquire P&O's U.S. port operations. This includes critical ports in New 
York, New Jersey, Baltimore, Miami, New Orleans, Mississippi, and 
Texas. And it reportedly includes two ports in Texas used by the Army, 
and through which approximately 40 percent of equipment shipped to our 
troops in Iraq has flowed.
  Yet, CFIUS decided in less than 30 days that this deal did not pose a 
security threat to the U.S. There was no full and thorough 45 day 
investigation, which in my view was mandated by law. Indeed, the Byrd 
Amendment to Exon-Florio requires a full 45 day investigation if two 
conditions are met: first, that the acquirer is controlled or acting on 
behalf of a foreign government; and second, if the acquisition could 
affect U.S. national security. Both of these conditions are clearly met 
in this case.
  There also appears to have been no consultation with Members of 
Congress on the DP World issue. In October, Deputy Treasury Secretary 
Kimmitt testified that he and his agency support more effective 
communication with Members of Congress to enhance the transparency of 
CFIUS. I ask where that communication was with respect to DP World.
  Certainly, I understand the desire for protecting privacy, but that 
does not

[[Page S1837]]

excuse the lack of any real consultation with Congress and the 
resulting lack of transparency. This is an issue of checks and 
balances, which exist to protect Americans. And the protection of 
Americans must never be subordinated to foreign interests.
  But there are other problems with CFIUS that have become apparent 
through the DP World case. Indeed, we recently learned that neither 
Secretary Snow nor President Bush knew about the DP World acquisition. 
Not even Secretary Snow's deputy knew about the matter while it was 
undergoing the initial 30 day review.
  Now, given Secretary Snow's history with CSX, whose port operations 
were acquired by DP World in 2004, his lack of involvement was the 
right thing. I only wish that it had been intentional.
  And when it comes to the President, I would simply ask this question: 
When operations at 22 critical U.S. ports are to be sold to a company 
controlled and owned by a foreign government, one with a questionable 
security history with respect to terrorism and WMD proliferation, why 
wasn't the President made aware of the deal?
  In a March 1 New York Times article, the President was quoted as 
saying that ``If there was any doubt in my mind, or people in my 
Administration's mind, that our ports would be less secure or the 
American people endangered, this deal wouldn't go forward.''
  I frankly have no idea how the President could reach this conclusion. 
There has been no thorough investigation, as required by law. The 
President did not even apparently know about the DP World deal until 
very recently. It is precisely this kind of superficial determination 
that has the American people so worried about their security--and 
rightly so.
  If all of this is not evidence of a broken CFIUS process, then I do 
not know what is.
  I know that some people would argue that the issue is not CFIUS--that 
the real issue is having adequate measures to protect our ports. 
Frankly, I think that both of these are major Issues.
  And if we look at the pathetic security situation at our Nation's 
ports today, that becomes quite clear. Only about 5 percent of the 
cargo that comes through our ports is actually inspected. Indeed, the 
resources available to the Department of Homeland Security to undertake 
port and container security are woefully inadequate. According to 
reports, U.S. Customs has only 80 inspectors to monitor the compliance 
of nearly 6,000 importers, who are currently charged with maintaining 
the security of their goods during transit. The Coast Guard is even 
worse off with 20 inspectors dedicated to assessing worldwide 
compliance with relevant international shipping and port facility 
security codes. That's 100 people for the whole world. And it is a 
problem that needs to be fixed.
  But CFIUS reform is an indispensable part of the process of 
strengthening U.S. national security. Indeed, the current problems are 
evident in other cases besides DP World. Most recently we learned about 
another deal with a Dubai-based company. That company, Dubai 
International Capital is seeking, as part of a $1.2 billion deal, to 
acquire London-based Doncasters Group Ltd. Doncasters has operations in 
the U.S.--primarily in my home state of Connecticut and in Georgia.
  True, in this case, CFIUS has decided to perform the full 45-day 
investigation. I'm glad that they have, because Doncasters is involved 
in the production of components for some of our most critical military 
equipment, including the M1 Abrams tank.
  But while I'd like to think that the Doncasters investigation was 
begun on its own merits, I must admit that I find the timing of this 
investigation highly suspect. In fact, it appears that this 
investigation was not even launched until the DP World issue became 
public and stirred up some very legitimate concerns.
  So as we can see, it is critically important that we reform the CFIUS 
process. We can not afford to sit and wait on this. The U.S. National 
Security Protection Act of 2006 would significantly strengthen CFIUS 
and thus our national security. I urge my colleagues to support this 
bill.
  I ask unanimous consent that the text of my bill, the U.S. National 
Security Act of 2006, be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2380

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``U.S. National Security 
     Protection Act of 2006''.

     SEC. 2. DEFINITIONS.

       As used in this Act--
       (1) the term ``Committee on Foreign Investment in the 
     United States'' or ``CFIUS'' means the committee established 
     by the President under Executive Order 11858, May 7, 1975, 
     and any successor thereto; and
       (2) the term ``intelligence community'' has the same 
     meaning as in section 3(4) of the National Security Act of 
     1947 (50 U.S.C. 401a(4)).

     SEC. 3. COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES.

       (a) CFIUS Membership.--
       (1) Directors of national intelligence and central 
     intelligence.--Notwithstanding any other provision of law, 
     the Director of National Intelligence and the Director of 
     Central Intelligence shall be members of the Committee on 
     Foreign Investment in the United States.
       (2) Vice chairs.--The Secretary of Homeland Security and 
     the Secretary of Defense shall serve as vice chairs of the 
     Committee on Foreign Investment in the United States.
       (b) Subcommittee on Intelligence.--Not later than 30 days 
     after the date of enactment of this Act, the President shall 
     establish within the Committee on Foreign Investment in the 
     United States a Subcommittee on Intelligence, which shall 
     be--
       (1) chaired by the Director of National Intelligence; and
       (2) comprised of the head of each member of the 
     intelligence community.

     SEC. 4. SUBCOMMITTEE REVIEW OF CFIUS INVESTIGATIONS.

       Section 721 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2170) is amended by adding at the end the 
     following:
       ``(l) Intelligence Subcommittee Reviews of 
     Investigations.--
       ``(1) Pre-investigation review and comment.--The 
     Subcommittee on Intelligence of the Committee on Foreign 
     Investment in the United States shall--
       ``(A) review information relating to a proposed merger, 
     acquisition, or takeover, during the 15-day period following 
     the date of receipt of such information, and before the 
     commencement of any investigation under subsection (a) or 
     (b); and
       ``(B) provide written comments on any determination by the 
     President or CFIUS not to conduct an investigation under 
     subsection (a).
       ``(2) Post-investigation review and comment.--The 
     Subcommittee on Intelligence of the Committee on Foreign 
     Investment in the United States shall--
       ``(A) review each investigation conducted by the President 
     or CFIUS under subsections (a) and (b); and
       ``(B) provide written comments on the results of each such 
     investigation.''.

     SEC. 5. TREATMENT OF CRITICAL INFRASTRUCTURE AS AFFECTING 
                   NATIONAL SECURITY.

       Section 721(b) of the Defense Production Act of 1950 (50 
     U.S.C. App. 2170(b)) is amended by inserting after ``commerce 
     in the United States'' the following: ``, including any 
     person that owns, controls, or operates any critical 
     infrastructure, as defined in section 1016(e) of the USA 
     PATRIOT Act (42 U.S.C. 5195c(e)),''.

     SEC. 6. CERTIFICATION OF NATIONAL SECURITY DETERMINATIONS.

       ``(m) Presidential or Chair Certification of Threat 
     Determinations.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, a final determination that an investigation under 
     subsection (a) is not required with respect to a merger, 
     acquisition, or takeover may be made only--
       ``(A) by the President, in any case in which the President 
     is acting on the President's own behalf under subsection (a); 
     or
       ``(B) by the Secretary of the Treasury, with the 
     concurrence of the Secretary of Homeland Security and the 
     Secretary of Defense, in their respective capacities as chair 
     and vice chairs of CFIUS, in any case in which CFIUS is 
     acting as the President's designee under subsection (a).
       ``(2) Certifications required.--
       ``(A) Presidential determinations.--In any instance in 
     which the President is acting on his or her own behalf under 
     subsection (a), the President shall certify in writing to a 
     final determination that an investigation under subsection 
     (a) is not required with respect to a merger, acquisition, or 
     takeover, and such certification requirement may not be 
     delegated to any person.
       ``(B) CFIUS determinations.--In any instance in which CFIUS 
     is acting as the President's designee under subsection (a), 
     the Secretary of the Treasury, the Secretary of Homeland 
     Security, and the Secretary of Defense shall each certify in 
     writing to a final determination that an investigation under 
     subsection (a) is not required with respect to a merger, 
     acquisition, or takeover, and such certification requirement 
     may not be delegated to any person.
       ``(3) Nonconcurrence.--If there is not concurrence among 
     the chair and vice chairs of CFIUS for purposes of paragraph 
     (1)(B), the President shall make the final determination that 
     an investigation under subsection

[[Page S1838]]

     (a) is not required with respect to a merger, acquisition, or 
     takeover, and the President shall certify such determination 
     in writing.''.

     SEC. 7. MANDATORY SUBMISSION OF INFORMATION.

       Section 721(c) of the Defense Production Act of 1950 (50 
     U.S.C. App. 2170(c)) is amended--
       (1) in the subsection heading, by striking 
     ``Confidentiality of'' and inserting ``Submission of'';
       (2) by striking ``Any information or documentary material 
     filed'' and inserting the following:
       ``(1) Required submissions.--Each person controlled by or 
     acting on behalf of a foreign government or foreign person 
     shall--
       ``(A) notify the President or the President's designee in 
     writing of any proposed merger, acquisition, or takeover of 
     any United States critical infrastructure (as defined in 
     section 1016(e) of the USA PATRIOT Act (42 U.S.C. 5195c(e))) 
     ; and
       ``(B) provide such information to the President or the 
     President's designee with respect to such proposed 
     transaction as may be necessary for purposes of this section.
       ``(2) Confidentiality of information.--Any information or 
     documentary material filed, either voluntarily or under 
     paragraph (1),''.

     SEC. 8. NOTICES OF REVIEWS AND INVESTIGATIONS AND QUARTERLY 
                   REPORTS REQUIRED.

       Section 721 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2170) is amended by adding at the end the 
     following:
       ``(n) Notices of Reviews and Investigations and Quarterly 
     Reports to Congress.--
       ``(1) Notices to congress.--The President or the 
     President's designee shall notify the appropriate committees 
     of Congress--
       ``(A) not later than 15 days after the date of receipt of 
     written notification of a proposed or pending merger, 
     acquisition, or takeover described in subsection (a) or (b); 
     and
       ``(B) at the commencement of each investigation under 
     subsection (a) or (b).
       ``(2) Quarterly reports to congress.--
       ``(A) In general.--The President shall, on a quarterly 
     basis, submit to Congress a report on all mergers, 
     acquisitions, and takeovers that were the subject of 
     investigation or review under this section during the 
     quarter, including any comments submitted under subsection 
     (l)(2).
       ``(B) Form.--Each report required under subparagraph (A) 
     may be submitted in unclassified form, and may contain a 
     classified annex.''.

     SEC. 9. CFIUS AS PRESIDENT'S DESIGNEE UNDER DEFENSE 
                   PRODUCTION ACT.

       Section 721 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2170) is amended by adding at the end the 
     following:
       ``(o) Designee.--Notwithstanding any other provision of 
     law, the President's designee for purposes of this section 
     shall be the Committee on Foreign Investment in the United 
     States, established by order of the President in Executive 
     Order 11858, May 7, 1975 (in this section referred to as 
     `CFIUS'), or any successor thereto.''.
                                 ______