[Congressional Record Volume 152, Number 100 (Wednesday, July 26, 2006)]
[House]
[Pages H5863-H5873]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED
TRANSPARENCY ACT OF 2006
Mr. OXLEY. Mr. Speaker, I move to suspend the rules and pass 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, as amended.
The Clerk read as follows:
H.R. 5337
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 ``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:
[[Page H5864]]
``(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.
``(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
the effects on the national security of the United States.
``(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 Chairpersons, of
the Committee.
``(iii) Continuing discussions.--The approval of a
withdrawal request under clause (ii) shall not be construed
as precluding any party to the covered transaction from
continuing informal discussions with the Committee or any
Committee member regarding possible resubmission for review
pursuant to this paragraph.
``(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;
``(ii) a roll call vote pursuant to paragraph (3)(A) in
connection with a review under paragraph (1) of any covered
transaction results in at least 1 vote by a Committee member
against approving the transaction; or
``(iii) the Director of National Intelligence identifies
particularly complex intelligence concerns 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 chairpersons
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 by a majority
of the members of the Committee in a roll call vote and
signed by the Secretary of the Treasury, the Secretary of
Homeland Security, and the Secretary of Commerce (and such
authority of each such Secretary may not be delegated to any
person other than the Deputy Secretary of the Treasury, the
Deputy Secretary of Homeland Security, or the Deputy
Secretary of Commerce, respectively).
``(B) Additional action required in certain cases.--In the
case of any roll call vote pursuant to subparagraph (A) in
connection with an investigation under paragraph (2) of any
foreign government-controlled transaction in which there is
at least 1 vote by a Committee member against approving the
transaction, the investigation shall not be treated as final
or complete until the findings and report resulting from such
investigation are signed by the President (in addition to the
Chairperson and the Vice Chairpersons 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 affected or appropriate
intelligence agencies.
``(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)(iii).
``(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.--
[[Page H5865]]
``(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 Secretary of Energy.
``(H) The Chairman of the Council of Economic Advisors.
``(I) The United States Trade Representative.
``(J) The Director of the Office of Management and Budget.
``(K) The Director of the National Economic Council.
``(L) The Director of the Office of Science and Technology
Policy.
``(M) The President's Assistant for National Security
Affairs.
``(N) Any other designee of the President from the
Executive Office of the President.
``(3) Chairperson; vice chairpersons.--The Secretary of the
Treasury shall be the Chairperson of the Committee. The
Secretary of Homeland Security and the Secretary of Commerce
shall be the Vice Chairpersons 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 Chairpersons, 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 or any agency designated
by the Chairperson and Vice Chairpersons 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
Chairpersons 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
Chairpersons 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 a 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, including the
Committee on International Relations, the Committee on
Financial Services,
[[Page H5866]]
and the Committee on Energy and Commerce of the House of
Representatives.
``(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 a Vice Chairperson (or such other person
as the Chairperson or a 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, including the
Committee on International Relations, the Committee on
Financial Services, and the Committee on Energy and Commerce
of the House of Representatives, 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 chairman and ranking member of each
committee of the House of Representatives and the Senate with
jurisdiction over any aspect of the report, including the
Committee on International Relations, the Committee on
Financial Services, and the Committee on Energy and Commerce
of the House of Representatives, 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 chairman and ranking member of each
committee of the House of Representatives and the Senate with
jurisdiction over any aspect of the report, including the
Committee on International Relations, the Committee on
Financial Services, and the Committee on Energy and Commerce
of the House of Representatives, 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
[[Page H5867]]
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.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Oxley) and the gentlewoman from New York (Mrs. Maloney) each
will control 20 minutes.
The Chair recognizes the gentleman from Ohio.
General Leave
Mr. OXLEY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today to urge all Members to support H.R. 5337,
the National Security FIRST Act, which makes important reforms to the
process by which the Committee on Foreign Investment of the United
States scrutinizes purchases of U.S. businesses by foreign ones, to
ensure that there is no threat to national security.
As we consider this legislation, we must remember that the result of
foreign investment in the United States has been spectacular. U.S.
subsidiaries of foreign-owned companies employ nearly 5\1/2\ million
Americans. The average salary for those workers is a healthy $60,000
and a third of those jobs are in manufacturing.
At a time when we are concerned about our balance of trade, it is
important to note that more than 20 percent of U.S. exports are
produced by U.S. subsidiaries of foreign companies. Mr. Speaker, we all
know why we are here today.
Congress and the country went through a very difficult period this
spring after we learned about the Dubai Ports sale.
{time} 1245
As a response, in one of the best examples of bipartisanship I have
seen in my tenure here, H.R. 5337 was introduced by Majority Whip
Blunt, Chairwoman Pryce, Mrs. Maloney and Mr. Crowley and now has
nearly 90 cosponsors. It is a very good bill that addresses what some
see as flaws in the CFIUS process without creating new problems or
barriers to investment.
I would particularly like to compliment Chairwoman Pryce for her
leadership on this complex issue. In three very thorough hearings, she
made certain,ky018 members were well-versed in the details of the CFIUS
process before any legislating was done. The result was a unanimous 64-
0 vote for passage in the Financial Services Committee.
The language we are considering today is nearly identical, with a
manager's amendment that makes only a few changes made to further
strengthen the process. Among those changes are the addition of
Commerce Secretary as a second Vice Chair of CFIUS; the addition of the
Energy Secretary to CFIUS itself; clarification that CFIUS reviews are
to be done to determine the effects of a transaction on national
security; the requirement that the 30-day review period end with a roll
call vote, with any single dissenting vote sending the transaction into
the 45-day investigative period; and further clarification of the role
of the Director of National Intelligence in the CFIUS process.
Mr. Speaker, what we need to accomplish is to strengthen the national
security in two ways: by increasing administration accountability and
by improving the ability of Congress to perform necessary oversight.
This bill does both. The result will be a process that stops what
should be disapproved and gives a green light to what should be
approved, including, of course, any modifications needed to protect
against the loss of the defense industrial base or a critical
technology.
This is a strong and effective bill here that corrects exactly what
was wrong with the CFIUS process without overreaching and causing
further problems. It continues to give CFIUS the flexibility to
exercise discretion, allowing it to focus on investments that raise
national security concerns. I do not and will not support some of the
other proposals that have been put forward, such as any additional time
delays or directly involving Congress in the decisionmaking process. I
believe we need to take great care to refrain from inserting politics
into the consideration process, and that goal has been achieved here.
Mr. Speaker, we must protect our national security, but national
security includes economic security. Let's remember that it is our
economic security and prosperity that give us the resources to provide
adequately for our internal and external defenses. We simply must not
drive off those who want to make the wise investment in our great
economy.
Our friends in the other body should understand that no bill would be
a preferable alternative to a bad bill, and we in the House will not
sacrifice American prosperity and job growth when there is no real
improvement to American security.
Mr. Speaker, this is an excellent bill; and I think the CFIUS process
and our national security would be improved by enacting it exactly as
written.
Mr. Speaker, I reserve the balance of my time.
Mrs. MALONEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am delighted to join my colleagues, Representatives
Oxley, Pryce, Crowley and Majority Whip Blunt in bipartisan support of
H.R. 5337, the National Security FIRST Act.
After the Dubai Ports World disaster, it was clear that there was a
pressing need to reform the process by which the United States
Government reviews foreign acquisitions of businesses in the United
States for national security threats, the Committee for Foreign
Investment in the United States, or CFIUS.
This bill was unanimously approved by the Financial Services
Committee and has received strong bipartisan support in the Homeland
Security Committee. It also reflects the input of the Energy and
Commerce, Armed Services and International Relations Committees.
We have all worked hard together to achieve a strong and sensible
bill, and I would like to thank the members and staff of these
committees as well as my own staff for their support and hard work.
H.R. 5337, the National Security FIRST Act, is widely recognized as a
balanced approach which protects national security, first, while
continuing to encourage safe and important foreign investment, to
create American jobs and improve our economy.
Many observers, both domestic and foreign, think our bill has struck
this balance successfully. The National Security FIRST Act incorporates
and builds on a bipartisan bill I introduced earlier, based on reforms
proposed by the General Accounting Office even before Dubai Ports World
brought this issue into the spotlight. These recommendations of the GAO
were obviously not knee-jerk reactions to the Dubai crisis but
addressed structural problems in the CFIUS process and so provided a
sound and farsighted basis for long-term reform.
This bill addresses three core issues.
First, the bill strengthens national security protections. All
foreign government-controlled entities must go through a 45-day
rigorous investigation in addition to the 30-day review. This is
necessary because government-controlled entities could have agendas
other than profit and can pay whatever they want to accomplish them.
Private companies would not be able to compete.
To ensure greater accountability and better judgment, all reviews and
investigations by CFIUS will require sign-off at the highest levels.
The Secretary or Deputy Secretary of Treasury, Homeland Security and
Commerce must sign the CFIUS recommendation. The Dubai Ports deal was
approved by 12 people and agencies. No one had ever heard of these
particular people. This bill makes Cabinet officers responsible to the
American people for their decisions.
Also important, all reviews and investigations will be analyzed by
the Director of National Intelligence, whose input is required under
the bill.
For the first time, CFIUS will have a set of mandatory factors to
consider in determining whether the purchase could affect national
security, including whether it affects critical infrastructure such as
ports, energy transmission or voting machines.
[[Page H5868]]
Second, the bill builds in congressional oversight by requiring
twice-annual reporting to Congress of all completed actions by CFIUS.
In order to ensure that this administration does not evade its
responsibility by only reporting to one or two members, the bill
specifies that both majority and minority members of the relevant
committees will be notified.
Additionally, Congress would be notified promptly of any extensive
investigation or transaction involving a foreign government purchase.
Involving Congress can help the CFIUS agencies be more aware of
transactions that raise a red flag. For example, recently I wrote a
letter to Secretary Snow urging CFIUS to review a transaction in which
a company with strong Venezuelan ties acquired a major electronic
voting company in the United States. Treasury says it is conducting a
pre-review of whether the company is owned by the Venezuelan Government
and whether the deal puts our electoral system at risk. Regardless of
the outcome, this is a good example of why this bill is needed.
The third impact of the bill is to strengthen the CFIUS enforcement
and monitoring systems. In many cases, the U.S. Government enters into
a contract with a foreign purchaser to ensure U.S. Government concerns
regarding national security are met. This bill strengthens these
contracts and adds provisions to follow up on whether the foreign
purchasers are complying.
Also, the bill provides for greater oversight of withdrawals from the
CFIUS process. The GAO, the Government Accountability Office, noted a
pattern of applicants withdrawing if they needed or received
indications of concern and then going ahead with the flawed transaction
anyway without the CFIUS approval. These off-the-radar deals pose great
risk and great incentives, and we need to adopt better monitoring of
them.
In sum, this bill is a sensible, balanced approach to making sure
foreign acquisitions do not jeopardize our national security, while not
killing foreign investment in our country. I urge my colleagues to
support the bill. Ninety of our colleagues are cosponsors.
Mr. Speaker, I reserve the balance of my time.
Mr. OXLEY. Mr. Speaker, I am pleased now to yield 4 minutes to the
gentleman from Missouri (Mr. Blunt), the majority whip and the lead
sponsor of this important legislation.
Mr. BLUNT. Mr. Speaker, I thank the chairman for yielding time and
for the great work he has done on this bill, the work that his
committee has done, particularly the work that Chairman Pryce and her
subcommittee has done not only to look at this bill carefully in
hearings but have significant input and then crafting what a bill would
look like that protects our country in a post-9/11 world but still also
protects our economy and American companies and American pension plans
and others that invest in those companies. The tremendous efforts that
Mrs. Maloney has made and is making again today on the floor, as well
as the efforts of Mr. Crowley, have all been significant in trying to
take a problem and create the right solution. Chairman Barton, Chairman
King, Chairman Hoekstra, all original cosponsors of the bill and who
have all helped this bill as it worked its way through the process.
Chairman Hyde and Chairman Hunter had significant input. Certainly the
ranking member of the Financial Services Committee, Mr. Frank, had
input and was very helpful in what I think is a product that we can be
pleased with here, as was Mr. Smith from Texas.
A few months ago, the country and, frankly, many Members, virtually
everybody in the legislature, and even more frankly almost everybody in
the administration, was surprised when the announcement was made that
this particular decision had been made regarding one of our ports. That
called attention to the fact that the CFIUS process was a process that
might have worked well in a previous time, but the Committee on Foreign
Investment in the United States was not designed to meet our time. The
attacks on September 11 changed that. That world needs to be balanced
with a global economy, where even if you don't know that you own stock
in an American company that may be the subject of purchase, your
pension plan may be very dependent on the value of that company.
So what this bill does, Mr. Speaker, is I think arrive at the right
balance that, first and foremost, does protect our security but does
that in a way that doesn't needlessly impact the value of American
companies and American assets in the marketplace.
The points that have been made by the previous speakers are certainly
the points that need to be made. Congress reaffirmed the intent of the
Congress to look more carefully at companies that are owned by foreign
governments in light of particularly some of the examples that have
been given. The example that was just given by Mrs. Maloney would be an
example.
We have increased the accountability of CFIUS by establishing the
process more fully in statute, by adding the Department of Homeland
Security and the Secretary of Homeland Security, the Secretary of
Commerce as vice chairmen. We have also added the Department of Energy
to the committee and formalized the importance of each of the agencies
in reaching a conclusion. We have increased congressional oversight and
done the right things here.
I think the key to this legislation as it hopefully moves forward
today is the tremendous bipartisan effort that has been made. If our
colleagues approve this bill today, I know we all look forward to
working with Senators Shelby and Sarbanes in conference and getting
this problem solved in this Congress. We have a tough bill on the floor
today. We improve our security in the right way.
And, again, before, as I close, I would like to thank the staff that
has worked so hard: Joe Pinder, Bob Foster, Jackie Moran, Sam Geduldig
on my staff, and many other staffers on all of these committees whose
chairmen have been mentioned who have worked this bill in a way that
solves a complicated problem in the right way.
Mrs. MALONEY. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman
from Massachusetts (Mr. Frank), ranking member of the Financial
Services Committee.
{time} 1300
Mr. FRANK of Massachusetts. Mr. Speaker, I thank the gentlewoman. She
and the gentleman from New York (Mr. Crowley) and others on our
committee on both sides of the aisle worked constructively on a good
bill. I appreciate the kind words of the majority whip.
There was a threatening climate towards foreign direct investment a
few months ago as a result of the reaction to the Dubai Ports. I
thought it was a mistake to allow Dubai to be able to buy those ports,
but I did think that the reaction against that threatened to jeopardize
a very important source of support for the American economy, and that
is foreign direct investment.
There was among some of our colleagues a kind of reaction to say,
``We don't want them bringing their money in here and investing in
America.'' That was unwise, and I think cooler heads on both sides of
the aisle have prevailed, and we have a bill that recognizes that
foreign direct investment, the foreign investment in building plants
and running enterprises in America, is a good thing.
Many Americans complain when American corporations invest their money
in physical facilities overseas. Well, it then does not make sense to
complain about the reciprocal. Yes, we want to make sure that nothing
is done that jeopardizes our security.
I think we have a bill today that improves the situation without any
kind of drastic change of a sort that would have endangered foreign
direct investment, and I have to say there was a terrible mistake made
by the Bush administration, in my judgment, in not shutting down the
Dubai Ports thing before we got to it.
I do think we should be very clear, though, we have to differentiate
between laws which are badly administered and laws which are badly
structured. We have had cases, in my view, where this administration
has messed up on a number of occasions. I think they badly handled
Katrina. They made a terrible mistake with Dubai, but if we were going
to drastically wrench out of shape every law that this administration
administers poorly, we would not be taking an August recess. That would
keep us busier than we already are.
What we have to do is make a separation. We have to be able to
differentiate between the incompetence of an
[[Page H5869]]
administration and a structural failing in the law.
Now, we have done that in this case. I understand the bipartisanship
extends here to the restructuring, in a reasonable way, in the law and
not to recognition in my part on the incompetency of the
administration. I do not mean to include my colleagues in saying that,
but I do think this is the principle we have tried to follow on our
side.
When this administration messes something up, we should not overreact
and wrench the structure out of shape. We should make those structural
changes that might be called for. That is what we are doing here, and
we are preserving the role that foreign direct investment can play in
the United States. We can express the hope that this administration in
its remaining time will not misadminister this as badly as they did
before.
Mr. OXLEY. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Ohio (Ms. Pryce), the chairman of the appropriate subcommittee who has
shown enormous leadership on this issue.
Ms. PRYCE of Ohio. Mr. Speaker, I want to thank the chairman for
yielding me the time and his invaluable leadership on this piece of
legislation. His leadership led us very thoughtfully through this
process, and we did not have a knee-jerk reaction that so often happens
around here. Your valued experience and insights have made this much
better legislation. Thank you.
Over the last few months, we have heard very much about CFIUS. Media
reports of CFIUS transactions such as the Dubai Ports deal have given
pause to most Americans and awakened this Congress to the need to
reform the process of allowing foreign investment in the United States.
Congress has taken a strong position on national security since 9/11,
and this legislation updates CFIUS for a post-9/11 world where national
security and homeland security need to be considered much more strongly
than in years past. National security, however, is not mutually
exclusive of economic security. This legislation strives to ensure
national security while promoting the creation and maintenance of jobs.
This legislation institutes vice chair positions in CFIUS to be
filled by the Secretary of Homeland Security and the Secretary of
Commerce. We believe it shows how America continues to think globally
for investment and locally for security.
While strengthening our security, we have also continued our work to
strengthen our relationships and open markets with nations abroad.
These countries have a growing appetite for foreign goods and products,
American products and American investments.
American companies and brand names that we all recognize have grown
exponentially because of these market openings, and growing American
companies mean growing American jobs.
In Ohio, we have seen the benefits of open markets and foreign
investment, welcoming into our communities Siemens, Sodexho, Honda,
Lexis-Nexis, and many, many more.
Honda Motor Corporation has become the largest auto producer in Ohio
beginning production in 1979 with an initial investment of $35 million
in Marysville, Ohio. To date, Honda's capital investment in Ohio tops
$6.3 billion over 26 years. Honda's North American plants purchased
more than $6.5 billion in parts from 150 different Ohio suppliers just
in 2005. Honda's investment in the people of Ohio keeps approximately
8,500 people employed.
When a foreign company looks to invest in the U.S., they are looking
to grow their business, and that equals growing jobs in the United
States. The U.S. Commerce Department says that foreign firms doing
business in the U.S. employed nearly 5.1 million employees in 2004,
slightly less than one out of every 20 workers in the private sector.
This process of reforming CFIUS has the potential to undercut the
United States' long-standing support for capital market access and the
free movement of capital. Thanks to the chairman's leadership and a
very thoughtful approach to this reform effort, I believe this
legislation continues to focus our efforts in securing our Nation,
while remaining committed to free trade as one of the greatest engines
of prosperity.
In recent months, the Treasury Department has made strides in
congressional notification of pending deals that could potentially
affect national security, but that is simply not enough. This
legislation ensures that a Dubai Ports World situation does not happen
again in a post-9/11 world. When questions of national security or
foreign government ownership arise, accountability is clear, and the
transaction moved immediately to investigation.
The American people can feel confident that this legislation
institutes the oversight and protections needed to determine if a
foreign investment transaction is in the best interests of the United
States' national security.
In a world intertwined by global companies, it is important we
continue to protect U.S. national and economic security while promoting
foreign investment. This issue touches every American who wants to know
that each day they are safe.
I want to thank the chairman and Ranking Member Frank, my good
friend, Ranking Member Maloney, our whip, Mr. Blunt, and Representative
Crowley and everyone who worked so hard on this, and I urge support.
Mrs. MALONEY. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman
from New York (Mr. Crowley) who has worked very hard on this bill.
(Mr. CROWLEY asked and was given permission to revise and extend his
remarks.)
Mr. CROWLEY. Mr. Speaker, I thank the gentlewoman from New York for
yielding me the time, and I rise in strong support of this bipartisan
piece of legislation.
I want to commend the work of Majority Whip Blunt, a good friend, as
well as Representative Pryce and Representative Maloney for their
leadership of working on this legislation. I also want to recognize the
outgoing chairman and my good friend, Mike Oxley, for all of his work
on this and the many pieces of legislation we have worked together on
in a bipartisan way, and particularly Barney Frank, who saw through all
of this, cut through the politics and right to the chase and worked
very hard in seeing that this important bill passed today.
H.R. 5337 works to keep the flow of direct foreign investment in the
U.S.A. strong while putting national security first. This is a good
jobs bill, pro-business. It is pro-labor, and this bill does all things
to help to secure our Nation, yet not stop investment here in the
United States. I am pleased to say this bill enjoyed unanimous support
in the Committee on Financial Services, passing on a 64-0 vote.
This bill enjoys the support of everyone from the Center for American
Progress to the Chamber of Commerce.
This bill is about keeping the flow of foreign investment coming to
the U.S. and not driving these funds and their subsequent jobs out of
the country.
But H.R. 5337 includes new, tough safeguards put in place to ensure
the security of America first. This entire legislative initiative,
which has been pursued in a bipartisan fashion, is a result of the
botched handling of the DPW transaction, the Dubai Ports deal. That
transaction involved a government-owned company from Dubai buying into
various port assets here in the United States.
As a result, a significant and appropriate focus of the committee has
been to toughen the scrutiny for acquisitions by government-owned
companies since some government-owned companies will make decisions
based on government interests and not commercial interests. No job, no
deal, no transaction is worth threatening the safety of Americans, and
this bill puts those conditions in place. We all know this to be true,
but being from New York City, it is even more true.
This bill will provide strong, new safeguards to ensure our Nation's
security and protect critical infrastructure, but also continues to
give CFIUS flexibility to exercise discretion, allowing CFIUS to focus
on the deals that raise real national security issues and not get
bogged down into those deals with no national security implications at
all.
For example, this bill will allow CFIUS to go straight to an
investigation phase if CFIUS so decides that the concerns are so
serious as to merit this.
This is a good bill, protecting national security, guaranteeing the
flow of direct foreign investment in the
[[Page H5870]]
U.S., and ensuring we will not have another Dubai Ports debacle, and I,
therefore, urge its passage in the House today.
And finally, I understand the Senate is in the process of moving
their bill forward, and I look forward to a constructive conference
with the Senate, but this issue is far too important to compromise our
national security or our Nation's economic security on backroom
wheeling and dealing.
We, in the House, in a bipartisan manner, recognize the diligence
that went into crafting this bill, and we will work for this to be the
lead text in any conference.
The Senate bill does not meet our important threshold on national or
economic security. This bill does, and I know we in House who have
worked as hard as we have will fight in conference for a good bill or
we will take no bill at all.
I urge a ``yes'' vote on this bill. It protects national security,
enhances the ability of more foreign investment here in the U.S.A. and
ensures the transparency of CFIUS.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida (Mr. Foley), a distinguished member of the Ways and Means
Committee.
Mr. FOLEY. Mr. Speaker, I thank the chairman for his work on this, as
well as many, many others.
We know how we got here on this important bill, and it was the Dubai
Ports deal. It shocked America, and it shocked me as a member of the
Ways and Means Committee. Not that we were thumbing our noses at
investors who would feel comfortable investing in the United States.
That was not the question. It was not a question about our support for
their efforts in the war on terrorism. We support their efforts.
But as was stated by Mr. Crowley, it was a foreign government, and
foreign governments behave differently than foreign corporations.
Corporations do not care about the politics. They care about the
profits. Governments take a different view of the world and have to
think of external and internal political calculations.
What startled me about the deal was the fact when then-Secretary of
the Treasury, John Snow, appeared before our panel, when the news first
broke about this transaction, when I asked him what was involved in the
vetting process, he looked at me as if he had no idea about the
transaction at all. Then we came to find out mid-level managers at the
Department decided this on their own. They had not properly vetted it
through the necessary agencies to ensure that we had covered the gamut
of questions that may have arose from this transaction.
Fortunately, based on the leadership that has been displayed here in
crafting this bill in a bipartisan fashion, we will now have a process
by which we can analyze and investigate and give comfort to the
American public that a transaction involving six strategic ports or any
other facility will have the proper authorities reviewing the intricacy
of the details.
They always say the devil's in the details. In this transaction, we
knew very little about the intentions of the port companies, their
expansion capabilities, their leasehold interests, how they may be
transferrable to other entities. We had a blank slate on which to
review this transaction.
This bill brings to the floor and to the process transparency,
clarity and an ability to tell our constituents we know the
transaction.
Mrs. MALONEY. Mr. Speaker, may I inquire as to the time remaining.
The SPEAKER pro tempore. The gentlewoman from New York (Mrs. Maloney)
has 7 minutes remaining. The gentleman from Ohio (Mr. Oxley) has 7
minutes remaining.
Mrs. MALONEY. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Illinois (Ms. Schakowsky).
Ms. SCHAKOWSKY. Mr. Speaker, I thank the gentlewoman for yielding,
and I rise in support of H.R. 5337 and want to add some important
history and context to our discussion.
The Omnibus Trade Act of 1988 was referred to the Committee on Energy
and Commerce on which I sit. During its consideration, our committee
produced the Exon-Florio provision which determines what can be bought
in the United States by foreign entities, and it was included in the
final version of the Omnibus Trade Act.
Exon-Florio authorized the President to suspend or prohibit the
acquisition of a U.S. corporation by a foreign entity. Responsibility
for executing Exon-Florio was delegated to the Committee on Foreign
Investment in the United States, CFIUS, the interagency committee that
was formed to protect the United States' economic well-being and
national security.
{time} 1315
In the past, the Energy and Commerce Committee has conducted numerous
oversight hearings, aggressively evaluating how well CFIUS has complied
with the requirements of Exon-Florio. When the Senate amended Exon-
Florio and passed the Byrd amendment in 1993, members of Energy and
Commerce were conferees for those provisions.
While I am pleased that the Energy and Commerce Committee conducted a
hearing on CFIUS and considered it in open markup, and while we support
the legislation, we are disappointed that a number of the provisions we
added to the bill are not in the version we are considering today.
These are matters of the utmost importance to our economic and national
security. As we proceed, I encourage my colleagues to be vigilant and
consider these matters carefully.
I look forward to continuing our work in the Committee on Energy and
Commerce, consistent with its long-standing involvement with this
issue, and working with my other colleagues in the House who have also
put much thought and effort into this legislation.
Mr. OXLEY. Mr. Speaker, I am now pleased to yield 2 minutes to the
gentleman from Florida (Mr. Stearns) of the aforementioned Energy and
Commerce Committee.
(Mr. STEARNS asked and was given permission to revise and extend his
remarks.)
Mr. STEARNS. Mr. Speaker, I rise, like my other colleagues, in
support of H.R. 5337, the Reform of National Security Reviews of
Foreign Direct Investments Act. Obviously, we all agree this is a bill
that will strengthen the American economy by encouraging others to
invest in America, while at the same time, fortifying our national
security.
Myself and Ranking Member Schakowsky had a hearing dealing with this
bill, which showed the importance of it. We had a very small part. I
think the Department of Commerce is now co-vice chair in the bill, but
I want to commend Mr. Blunt for his leadership on this, and also for
the continuing leadership of Chairman Oxley, who did all the vitally
important work for this. We had a very small part in it, my
subcommittee, which is the Subcommittee on Commerce, Consumer
Protection, and Trade.
We all know that open investment policy has made the United States a
favorite destination for foreign direct investment, with over $115
billion invested in 2004, supporting over 5 million American jobs found
in every State of this union, from car manufacturing plants in Missouri
to aircraft production in my home State of Florida.
This bill will ensure that the United States is and will remain the
world's benchmark for open, transparent investment policy. This
openness and this transparency in our vibrant markets at home has
basically allowed American companies to export those principles abroad,
principles that ultimately increase prosperity and, most importantly,
encourage better acceptance of the democratic and free markets,
principles that form the bedrock of the American way of life.
So, again, I support this bill, I urge my colleagues to do so, and I
thank my colleague for the time.
Mrs. MALONEY. Mr. Speaker, I take this opportunity to thank Chairman
Oxley for his distinguished service to this body and to this country.
He has been a very fine chairman of the Financial Services Committee,
on which I serve. An example of his leadership is the bill that is
before us today, which had very strong bipartisan input, was balanced,
took into consideration concerns first of all for national security but
also for the business community and all concerned.
In sum, the bill has over 90 cosponsors. It is a balanced approach,
making sure that foreign acquisitions do not jeopardize our national
security while continuing to encourage appropriate foreign investment.
[[Page H5871]]
Mr. Speaker, I reserve the balance of my time.
Mr. OXLEY. Mr. Speaker, I am now pleased to yield 1 minute to the
distinguished chairman of the Armed Services Committee, the gentleman
from California (Mr. Hunter).
Mr. HUNTER. I thank the gentleman for yielding, and I just wanted to
say that I am going to support this legislation. We have several
important issues that we think were decided in the right way,
particularly the one that gives the Secretary of Defense a veto of the
process if he finds that national security interests are impaired or
are affected. And that is very, very important to us.
There are several issues that we think still need to be resolved that
are important to the Armed Services Committee, but we support the bill
in terms of moving it forward into the conference and getting this very
important legislation, intended to tighten up the CFIUS process, in
place so that we can apply it to pending transactions.
So, Mr. Speaker, I intend to vote ``yes'' on this, but to work very
closely with the gentleman from Ohio, my good friend, and with all the
other Members who have been putting this legislation together as we
move through conference to try to firm up a few other important defense
issues as we go through the conference.
Mrs. MALONEY. Mr. Speaker, I do not have any further requests at this
time, and I yield back the balance of my time and urge a ``yes'' vote.
Mr. OXLEY. Mr. Speaker, I will be brief. I do not think anybody could
have predicted, certainly not me, that a few weeks after the firestorm
that came about with the announcement of the Dubai Ports deal that we
would be on the floor today debating legislation that was considered by
our committee and others and passed in our committee overwhelmingly
with a 64-0 bipartisan vote, with cooperation on both sides of the
aisle, to deal with a real problem.
Even though I personally felt there was a great deal of overreaction
about the Dubai Ports deal, the fact is that it revealed some very deep
concerns that people like the gentleman from California had, and
others, about how the CFIUS process works. We set about with great
care, working with Mr. Frank, our ranking member, Mrs. Maloney and Mr.
Crowley, to craft a bill under the guidance of Chairwoman Pryce and Mr.
Blunt from Missouri, to craft a bill that met the balance, met the test
of dealing with our very real concerns about national security and, at
the same time, encouraging foreign investment into our country.
I have to say that of all the bills I have been involved in since I
have been chairman, and, frankly, all the bills I have been involved in
since I have been here in 25 years, this was one that gave me a great
deal of satisfaction because it showed the legislative process at its
very best, with input from people who had a great deal of knowledge,
who worked very hard on the issue, from the staff to the Members, to
craft this legislation and stand here today, just a few weeks after
that firestorm, with a product that is going to pass overwhelmingly in
this House and that really says that this House, when we want to, can
deal in a bipartisan way with some very difficult issues in a very
professional manner.
Mr. FRANK of Massachusetts. Mr. Speaker, will the gentleman yield?
Mr. OXLEY. I will be glad to yield to my friend from Massachusetts.
Mr. FRANK of Massachusetts. Mr. Speaker, I would just like to note
that I agree with what the chairman has just said. But this is not the
first example of a bill coming out of the Financial Services Committee
on a subject which could have been very contentious but, in fact, came
to the floor in a form that reflected a very good process, a very open
process, with hearings and subcommittee, committee markups, and full
participation and, as a result, received overwhelming votes.
We saw this on the GSE bill, we saw it in the bill dealing with the
extension of credit, called the FACT Act, and we have seen it on a
number of bills, and the chairman deserves a great deal of credit on
this. And as his career here draws to a close, I just want to note that
this is a very good example of the chairman's willingness to help us
bring out the best in ourselves in this process.
And he is correct, this could have been the source of a lot of
demagoguery, a lot of political sniping, of frankly some
destabilization to the economy because of the negative impact a badly
handled bill could have had. So I just want to acknowledge that as the
ranking member, it has been my privilege to work with the gentleman
from Ohio, and this is only one of a series of bills where we have
worked together, under his leadership, to take subjects that, as I
said, could have been contentious and destabilizing, and brought the
House a product with overwhelming support.
I thank the gentleman for yielding.
Mr. OXLEY. I can't match the eloquence of the gentleman from
Massachusetts, so I yield back
Mr. LANTOS. Mr. Speaker, I rise in support of H.R. 5337, the National
Security Foreign Investment Reform and Strengthened Transparency Act of
2006.
As we have seen over the past year, greater oversight is needed
regarding foreign investment in the United States. I have expressed
serious concern regarding the acquisition of U.S. port operating
companies by foreign companies. I want to commend Chairman Oxley and
Ranking Democratic Member Frank for the work they have done to bring
this legislation to the floor.
Mr. Speaker, I want to call attention to one critical issue, the
acquisition of U.S. domestic oil companies by Russian firms with close
ties to the Russian Government. News reports suggest that Russian oil
interests seek to acquire U.S. pipelines and liquefied gas facilities
in order to control the entire supply chain of Russian gas exports to
the United States, from extraction to consumer sales and distribution.
At the same time, however, Russia is preventing American and other
foreign oil companies from acquiring more than a 49 percent stake in
all but the country's smallest oil and gas fields.
This effort to gain political control of energy markets is not
surprising, but it is totally unacceptable.
Acquisition by Russian firms of portions of our energy distribution
system poses an extremely serious national security threat to the
United States. Russian energy companies such as Gazprom and Rosneft are
state-controlled entities and are not simply foreign-owned companies
that act as independent commercial entities. These Russian energy firms
are run by friends and former colleagues of Russian President Vladimir
Putin and their officers include individuals who occupy high level
positions in the Putin administration. For example, Rosneft Chairman
Igor Sechin is Putin's Deputy Chief of Staff.
These state-dominated companies operate as tools of the Russian
Government and the strategy to use Russia's vast oil and gas exports as
an instrument of political and economic power. One needs to remember
the problems faced earlier this year when Russian firms briefly cut off
natural gas to Ukraine, and this irresponsible action raised serious
concerns about political manipulation of Russian energy supplies
throughout Western Europe.
Mr. Speaker, Putin effectively re-nationalized the Russian energy
industry in 2003 by expropriating the assets of Russia's largest
privately-owned energy company, Yukos, and by failing to pay
appropriate compensation to its owners. Yukos shares were held by
numerous United States citizens and shareholders, and they lost some $6
billion.
Rosneft's acquisition of assets from Yukos, a publicly traded
company, violated the basic norms of a free market. Public accounts of
the transaction suggest that Rosneft's senior officers and directors,
some of whom are senior officials of the Russian Government, personally
profited from the theft of these assets through their involvement in a
sham transaction. In that transaction, a front-company of unknown
ownership acquired the assets at billions of dollars below their market
value in a forced auction arranged by these very officials, who in turn
secured the prompt transfer of these assets from the front-company to
Rosneft--a sequence of events that has raised serious questions of
corruption.
The Council on Foreign Relations recently released a report on
Russia's slide toward authoritarianism that called the Russian
Government's forced breakup of Yukos and the long-term
[[Page H5872]]
imprisonment of its senior officials on charges of tax evasion as ``the
most consequential single episode in the refashioning of the Russian
state in this decade.''
Mr. Speaker, I am pleased that the Financial Services Committee
recognizes the seriousness of these issues. The Committee report on
H.R. 5337 makes clear that the Congress expects the acquisitions of
U.S. energy assets or companies by foreign governments or companies
controlled by foreign governments will be reviewed closely for their
national security impact. I fully endorse the Committee's view that
Congress should continue its long-standing efforts to ensure that U.S.
investors are treated fairly in foreign markets and that foreign
governments honor their commitments in international agreements.
Mr. Speaker, I urge careful consideration of any future acquisition
of U.S. oil interests by Russian firms, and I urge my colleagues to
support this legislation.
Mr. BARTON of Texas. Mr. Speaker, I rise in support of H.R. 5337, the
Reform of National Security Reviews of Foreign Direct Investment Act. I
want more foreign investment in America, not less, but I do not want
the kind that threatens our security. CFIUS exists to make the
distinction, and we need to know that it's doing a good job.
We don't automatically fear foreign investors here in America. The
money provided by foreign investors creates jobs, growth, and
opportunity here at home. I just want to ensure the investment we
attract does not jeopardize national security.
H.R. 5337 provides consistent criteria with appropriate discretion
and will improve the review process without impairing our ability to
attract significant and needed foreign investment.
Mr. Speaker, the Energy and Commerce Committee shares jurisdiction
over this matter and we marked up the bill in my Committee with some
changes. While the amended bill we are considering today contains some
differences than the version my Committee reported, I support it.
Importantly, it provides for mandatory review of foreign government-
controlled transactions. Additionally, it provides clear and consistent
review criteria for all other commercial investments, it adds the
Secretary of Energy to the Committee, and it makes the Secretary of
Commerce a co-vice chair of the Committee. Most important, it adds
transparency in the process for Congressional oversight and establishes
new reporting requirements many of us feel are essential to this
process.
I support H.R. 5337 and urge my colleagues to approve the measure.
Mr. THOMPSON of Mississippi. Mr. Speaker, I stand here today as
Ranking Member of the Committee on Homeland Security in support of H.R.
5337, the Reform of National Security Reviews of Foreign Investments
Act. This bill provides needed reform by formalizing and streamlining
the structure and duties of the Committee on Foreign Investment in the
United States (CFIUS). Indeed, this bill addresses many of the concerns
raised about CFIUS during the past 6 months, especially its current
lack of transparency and oversight. This bill rectifies these concerns
by formally establishing CFIUS, its membership, streamlines how and
when a CFIUS review will be conducted.
Mr. Speaker, the bill formalizes the CFIUS membership and requires
the following to serve: (1) Secretaries of Treasury, Homeland Security,
Commerce, Defense, State, and Energy; (2) Attorney General; Chair of
the Council of Economic Advisors; the U.S. Trade Representative;
Director of Office of Management and Budget; Director of National
Economic Council; and (3) The Director of Office of Science and
Technology Policy; the President's assistant for national security
affairs; and any other designee of the President from the Executive
Office.
Under this bill, the Treasury Department will be the Chair with the
Secretaries of Commerce and Homeland Security as the Vice Chairs. CFIUS
will conduct a review of any national security related business
transaction in which the outcome could result in foreign control of any
business engaged in interstate commerce in the U.S. After reviewing the
proposed business transaction, CFIUS will make a determination, the
outcome of which could require conducting a full investigation if one
of three circumstances exists: transaction involves a foreign
government-controlled entity; transaction threatens to impair national
security and the review cannot mitigate concerns; or National
Intelligence Director identifies intelligence concerns and CFIUS could
not agree upon methods to mitigate the concerns.
Incidents such as the Dubai Ports World (DPW) and the China National
Offshore Oil Corporation's attempted bid for control of oil company
Unocal raised and increased awareness around transactions that should
receive CFIUS review. These incidents highlighted the need for
meaningful CFIUS reform.
The bill balances the need for continued foreign investment in the
United States, but reviewing that investment to determine if it would
impair or threaten national security or critical infrastructure.
This bill establishes accountability to key Cabinet level agencies
and, much like other corporate reform, requires personal action by the
Secretaries of Treasury, Commerce, and Homeland Security. Congressional
Research Service's independent report found that for all merger and
acquisition activity in 2005, 13 percent of it was from foreign firms
acquiring U.S. firms. This is up from 9 percent almost 10 years before.
This statistic shows that foreign investment in the U.S. is vital to
the economy.
Only through this legislation will CFIUS have a formal budget,
membership, and clear mission--protecting American security while
maintaining a free and growing economy.
In closing, let me thank my colleagues on the Financial Services
Committee for their leadership on this legislation, especially my
Democratic colleagues Representative Carolyn Maloney and Joseph Crowley
of New York for their efforts. Congresswoman Maloney actually testified
before the Committee on Homeland Security on this legislation,
explaining its necessity and importance.
Mr. BARTON of Texas. Mr. Speaker, although the legislation adds the
Secretary of the Department of Homeland Security as a co-Vice Chair of
CFIUS, I would like to enter into the Record a letter from Chairman
King of the Homeland Security Committee. The letter states that this
designation does not affect, alter, or add to that Committee's
jurisdiction.
U.S. House of Representatives,
Committee on Homeland Security,
Washington, DC, July 19, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Chairman Oxley: I write in regard to H.R. 5337, Reform
of National Security Reviews of Foreign Direct Investments
Act.
I understand that nothing in H.R. 5337 or the amendments to
H.R. 5337 affects, alters, or adds to the jurisdiction of the
Committee on Homeland Security. Specifically, H.R. 5337's
designation of the Department of Homeland Security as a vice-
chairperson of CFIUS and the imposition of any additional
duties associated with the appointment of the Department of
Homeland Security as a vice-chairperson does not affect,
alter, or add to my Committee's jurisdiction.
I'm pleased that we can continue to move this bill forward,
and I look forward to working with you in that process.
Sincerely,
Peter T. King,
Chairman.
____
Ms. WATERS. Mr. Speaker, I rise in strong support of, H.R. 5337, the
Reform of National Security Reviews of Foreign Investments bill. First,
I want to once again acknowledge the work of the distinguished
gentleman, Mr. Oxley, Chairman of the Committee on Financial Services
for supporting this bill, and Ranking Member Frank for recognizing the
importance of this issue. Let me congratulate Chairwoman Pryce, of the
Subcommittee on Domestic and International Monetary Policy, Trade and
Technology, for working to move this legislation through the Committee
and onto the Floor. The bill we consider today represents a
comprehensive set of reforms to the Committee on Foreign Investment in
the United States' (CFIUS) procedures. It is a testament to the
diligence of the Subcommittee Chair and its Members that there is
strong bi-partisan support for H.R. 5337, also sponsored by the
Subcommittee Ranking Member Ms. Maloney, Mr. Crowley and Mr. Blunt.
It has been more than 4 months since we were made aware of the
Committee of Foreign Investment's (CFIUS) activities related to Dubai
World Ports and the implications of the proposed deal for national
security. I can genuinely say that the Members of the Committee on
Financial Services have been deeply involved in this issue since the
deal was analyzed by Congress. H.R. 5337 is designed to reform the
CFIUS process based on the information gleaned from hearings on the
subject. I am the first to say that no one is interested in cutting off
foreign direct investment in the U.S., but we do expect such
investments to be prudently made and that they are in the best interest
of the country. As the leader of the world economy, it would be foolish
to assume that we could take such steps to prohibit foreign direct
investment. What we really need are safeguards to ensure that the CFIUS
process is consistent with the original Congressional intent about
national security and investments.
This bill will guarantee that CFIUS operates within the law, and it
makes clear who is responsible for what, since it was revealed that no
one was sure who was responsible for the Ports decision. Another
critical issue is how decisions are actually made and what entity is
principally responsible for protecting the national security interests
of the nation as they
[[Page H5873]]
pertain to foreign direct investment. The bill enables CFIUS to
unilaterally initiate a review where an national security issue is
raised; any foreign government backed deal would be subject to review;
both the Secretaries of Treasury and Homeland Security must sign off on
reviews, while the Homeland Security Secretary would be vice-chair of
the Committee; and all reviews are subject to review by the Director of
National intelligence.
Most importantly, everyone knows that transparency and accountability
were, in part, at the heart of Congress' uproar over the Dubai World
Ports deal. H.R. 5337 requires that CFIUS report bi-annually to
Congress on its activities, which should prevent Congress from being
alerted to such deals after the fact. I would submit that this is
strong legislation that will only make Congress' job less difficult on
the issue of national security and foreign direct investment.
Therefore, I urge my Colleagues to support this major reform bill.
Mr. BACA. Mr. Speaker, I rise in strong support as a cosponsor of
H.R. 5337, National Security Foreign Investment Reform and Strengthened
Transparency Act of 2006.
This legislation clarifies and strengthens the authority of the
Committee on Foreign Investment in the United States to ensure that
foreign acquisitions of U.S. companies or assets do not threaten
national security.
As the tragic events of September 11, 2001 demonstrate, the threats
to the security of the United States have increased and evolved in ways
that could not have been anticipated when Congress enacted the Exon-
Florio provision in 1988. As a result, we can no longer view national
security only through the lens of conventional military threats. We
must also guard against other types of threats that could seriously
harm our Nation such as a disruption of U.S. energy supplies.
With global energy supplies tight, and oil and gas prices
skyrocketing, a major disruption of U.S. energy supplies would pose a
grave danger to the Nation's economy and the safety and security of the
American people. This bill recognizes this fact and includes strong
measures to ensure that foreign takeovers of U.S. energy companies or
assets do not threaten the energy security of the United States.
The Committee's Report states: ``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.''
Russia is a perfect example. Russia has made it clear that it wants
to acquire pipelines and natural gas conversion facilities in the
United States. I strongly believe, however, the United States should
tread very carefully before permitting such acquisitions. Here's why.
In 2003, Russian President Vladimir Putin reasserted government
control over Russia's energy industry through the expropriation of
Russia's largest privately-owned energy company, Yukos, without paying
any compensation to its owners, including U.S. shareholders who lost
approximately $6 billion.
As a result, Russian energy companies such as Gazprom and Rosneft are
controlled by friends and associates of Putin, including individuals
who occupy high level positions in the Putin Administration. Putin
appears to be using these companies to implement his strategy of using
Russia's oil and gas exports as an instrument of political and economic
coercion to advance the interests of the Kremlin. If these Russian
government-controlled companies gain control of U.S. energy assets,
U.S. energy security could easily be put at risk just as was the case
when Russia cut off natural gas supplies to Ukraine in January, and
later this spring, when Gazprom not-so-subtlety warned European leaders
that Russia would sell its natural gas to Asia instead of Europe if
they tried to interfere in Russia's plans to control the entire sales
and distribution of natural gas throughout Europe.
Mr. Speaker, this would be a disaster for America. We must not let
this happen to the United States.
Mr. SHAYS. Mr. Speaker, I rise in strong support of H.R. 5337, the
National Security Foreign Investment Reform and Strengthened
Transparency Act.
I am an original cosponsor of this legislation, which would require
that all transactions involving state-owned companies be automatically
subject to a full 45-day investigation. The legislation would also name
make the Homeland Security secretary the vice chairman of the Committee
for Foreign Investment in the United States (CFIUS), which is chaired
by the Treasury Department.
The recent attempt by Dubai Ports World (DP World), a port operations
company owned by the government of the United Arab Emirates (UAE), to
purchase operating terminals at six U.S. ports, was a clear indicator
we must reform the CFIUS process.
Whenever a foreign investment affects homeland security, it deserves
greater scrutiny. This legislation strikes the proper balance between
strengthening our economy and protecting the American people.
Mr. Speaker, I urge my colleagues to support this legislation.
Mr. MORAN of Virginia. Mr. Speaker, I support H.R. 5337, and I would
like to applaud the floor managers of the bill for their efforts on the
legislation. The CFIUS process is in need of reform, and this bill
provides reforms that effectively balance the country's need for strong
national security protections with its need for continued foreign
investment.
While our national security objectives must be paramount in this
area, I do have some concern about the time CFIUS could take under the
bill's provisions to review an acquisition that it ultimately
determines presents no national security issues. The bill allows for a
CFIUS review period of up to 30 days, followed by an investigation of
up to 45 days when certain conditions specified in the bill are
determined to be present. The investigation period can then be extended
under certain circumstances. Notably, there is a mandatory
investigation of all acquisitions by state-owned companies even in the
absence of any showing of a possible national security concern.
I would prefer to see the process shortened where it is apparent at
an early stage that national security is not an issue, and I urge my
colleagues to consider changes in this regard in conference. It would
be unfortunate if CFIUS resources were diverted from acquisitions with
real national security implications to those with no such implications.
I am comforted on this point, however, by the fact that the review and
investigation provisions would not preclude a person from petitioning
CFIUS to dispense with the initial review period and to go directly to
the investigative stage, thereby shortening the process in situations
that do not present significant security risks. My understanding is
that such a petition could be filed under the current CFIUS regime, and
I do not read the bill as changing the law in that regard. I would
assume that CFIUS would consider any such petition on a case-by-case
basis and would decide whether or not to grant it depending on various
factors affecting national security. Such factors, I assume, would
include whether the acquirer had established its national security
credentials in previous CFIUS proceedings or otherwise, whether in the
case of a government-owned acquirer the government was a U.S. ally, and
many other factors bearing one way or another on national security. I
am also encouraged by the fact that the bill's review and investigation
provisions prescribe a maximum, not a minimum, number of days.
Mr. Speaker, again I want to compliment the floor managers on a bill
that puts national security first but that also will allow our
continued need for foreign investment to be satisfied rather than
ignored.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Ohio (Mr. Oxley) that the House suspend the rules and
pass the bill, H.R. 5337, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. OXLEY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this question will
be postponed.
____________________