[Congressional Record Volume 164, Number 107 (Tuesday, June 26, 2018)]
[House]
[Pages H5674-H5696]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FOREIGN INVESTMENT RISK REVIEW MODERNIZATION ACT OF 2018
Mr. ROYCE of California. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 5841) to modernize and strengthen the Committee on
Foreign Investment in the United States to more effectively guard
against the risk to the national security of the United States posed by
certain types of foreign investment, and for other purposes, as
amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5841
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Foreign
Investment Risk Review Modernization Act of 2018''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--FINDINGS AND SENSE OF CONGRESS
Sec. 101. Findings and sense of Congress.
TITLE II--DEFINITIONS
Sec. 201. Definitions.
TITLE III--IMPROVEMENTS TO THE OPERATIONS OF THE COMMITTEE ON FOREIGN
INVESTMENT IN THE UNITED STATES
Sec. 301. Inclusion of partnership and side agreements in notice.
Sec. 302. Declarations relating to certain covered transactions.
Sec. 303. Timing for reviews and investigations.
Sec. 304. Submission of certifications to Congress.
Sec. 305. Analysis by Director of National Intelligence.
Sec. 306. Information sharing.
Sec. 307. Action by the President.
Sec. 308. Factors to be considered.
Sec. 309. Mitigation and other actions by the Committee to address
national security risks.
Sec. 310. Certification of notices and information.
Sec. 311. Additional regulations.
TITLE IV--MODIFICATION OF ANNUAL REPORT
Sec. 401. Modification of annual report.
Sec. 402. Report on transactions with censorship implications.
Sec. 403. Notice to Congress by the Committee.
TITLE V--RESOURCES, SPECIAL HIRING AUTHORITY, AND OUTREACH
Sec. 501. Centralization of certain Committee functions.
Sec. 502. CFIUS resource needs.
Sec. 503. Funding.
TITLE VI--MISCELLANEOUS FIRRMA PROVISIONS
Sec. 601. Conforming amendment.
Sec. 602. Regulatory certainty for United States businesses.
Sec. 603. Cooperation with United States allies and partners.
TITLE VII--COMMON SENSE CREDIT UNION CAPITAL RELIEF
Sec. 701. Delay in effective date.
TITLE VIII--EXPORT CONTROL REFORM
Sec. 801. Short title.
Sec. 802. Definitions.
[[Page H5675]]
Subtitle A--Authority and Administration of Controls
Sec. 811. Short title.
Sec. 812. Statement of policy.
Sec. 813. Authority of the President.
Sec. 814. Additional authorities.
Sec. 815. Administration of export controls.
Sec. 816. Licensing.
Sec. 817. Compliance assistance.
Sec. 818. Requirements to identify and control emerging, foundational,
and other critical technologies in export control
regulations.
Sec. 819. Review relating to countries subject to comprehensive United
States arms embargo.
Sec. 820. Penalties.
Sec. 821. Enforcement.
Sec. 822. Administrative procedure.
Sec. 823. Review of interagency dispute resolution process.
Sec. 824. Coordination with other agencies on commodity classification
and removal of export controls.
Sec. 825. Annual report to Congress.
Sec. 826. Repeal.
Sec. 827. Effect on other Acts.
Sec. 828. Transition provisions.
Subtitle B--Anti-Boycott Act of 2018
Sec. 831. Short title.
Sec. 832. Statement of policy.
Sec. 833. Foreign boycotts.
Sec. 834. Enforcement.
Subtitle C--Sanctions Regarding Missile Proliferation and Chemical and
Biological Weapons Proliferation
Sec. 841. Missile proliferation control violations.
Sec. 842. Chemical and biological weapons proliferation sanctions.
Subtitle D--Administrative Authorities
Sec. 851. Under Secretary of Commerce for Industry and Security.
TITLE I--FINDINGS AND SENSE OF CONGRESS
SEC. 101. FINDINGS AND SENSE OF CONGRESS.
(a) Findings.--The Congress finds the following:
(1) According to a February 2016 report by the Department
of Commerce's International Trade Administration, 12 million
United States workers, equivalent to 8.5 percent of the labor
force, have jobs resulting from foreign investment, including
3.5 million jobs in the manufacturing sector alone.
(2) In 2016, new foreign direct investment in U.S.
manufacturing totaled $129.4 billion.
(3) The Department of Commerce's Bureau of Economic
Analysis concluded that in 2015, foreign-owned affiliates in
the United States--
(A) Contributed $894.5 billion in value added to the U.S.
economy;
(B) exported goods valued at $352.8 billion, accounting for
nearly a quarter of total U.S. goods exports;
(C) undertook $56.7 billion in research and development;
and
(D) the seven largest investing countries, all of which are
United States allies - the United Kingdom, Japan, Germany,
France, Canada, Switzerland, and the Netherlands - accounted
for 72.1 percent of U.S. affiliate value added and over 80
percent of affiliates' R&D expenditures.
(4) According to the Government Accountability Office
(GAO), from 2011 to 2016, the number of transactions reviewed
by the Committee on Foreign Investment in the United States
(CFIUS) grew by 55 percent, while agency staff assigned to
the reviews increased by 11 percent.
(5) According to a February 2018 report (GAO-18-249), GAO
noted: ``Officials from Treasury and other member agencies
are aware of pressures on their CFIUS staff given the current
workload and have expressed concerns about possible workload
increases.''. GAO concluded: ``Without attaining an
understanding of the staffing levels needed to address the
current and future CFIUS workload, particularly if
legislative changes to CFIUS's authorities further expand its
workload, CFIUS may be limited in its ability to fulfill its
objectives and address threats to the national security of
the United States.''.
(6) On March 30, 1954, Dwight David Eisenhower - five-star
general, Supreme Allied Commander, and 34th President of the
United States - in his ``Special Message to the Congress on
Foreign Economic Policy'', counseled: ``Great mutual
advantages to buyer and seller, to producer and consumer, to
investor and to the community where investment is made,
accrue from high levels of trade and investment.''. He
continued: ``The internal strength of the American economy
has evolved from such a system of mutual advantage. In the
press of other problems and in the haste to meet emergencies,
this nation - and many other nations of the free world - have
all too often lost sight of this central fact.''. President
Eisenhower concluded: ``If we fail in our trade policy, we
may fail in all. Our domestic employment, our standard of
living, our security, and the solidarity of the free world -
all are involved.''.
(b) Sense of Congress.--It is the sense of Congress that--
(1) foreign investment provides substantial benefits to the
United States, including the promotion of economic growth,
productivity, innovation, competitiveness, and job creation,
thereby enhancing U.S. national security;
(2) maintaining the commitment of the United States to an
open investment policy encourages other countries to act
similarly and helps expand foreign markets for U.S.
businesses;
(3) at the same time, national security risks related to
foreign investment, particularly those emanating from
countries such as China and Russia, warrant an appropriate
modernization of the processes and authorities of the
Committee on Foreign Investment in the United States;
(4) the Committee on Foreign Investment in the United
States, as a complement to domestic and multilateral export
control regimes, plays a critical role in protecting the
national security of the United States;
(5) in order to maintain the Committee's effectiveness and
guard against mission creep, CFIUS should remain narrowly
focused on confronting risks related to national security;
(6) it is essential that the member agencies of the
Committee are adequately resourced and able to hire
appropriately qualified individuals in a timely manner so
that CFIUS may promptly complete transaction reviews,
identify and respond to evolving national security risks, and
enforce mitigation agreements effectively;
(7) the President should carry out international outreach
to promote the benefits of foreign investment for global
economic growth, while also assisting United States partners
to address national security risks; and
(8) it is the policy of the United States to
enthusiastically welcome and support foreign investment,
consistent with national security considerations.
TITLE II--DEFINITIONS
SEC. 201. DEFINITIONS.
Section 721(a) of the Defense Production Act of 1950 (50
U.S.C. 4565(a)) is amended--
(1) by striking paragraphs (2), (3), and (4) and inserting
the following:
``(2) Control.--The term `control' means the power, direct
or indirect, whether or not exercised, to determine, direct,
or decide important matters affecting an entity, subject to
regulations prescribed by the Committee.
``(3) Covered transaction.--
``(A) In general.--The term `covered transaction' means any
transaction described in subparagraph (B) or (C) that is
proposed, pending, or completed on or after the date of the
enactment of the Foreign Investment Risk Review Modernization
Act of 2018.
``(B) Transactions described.--A transaction described in
this subparagraph is any of the following:
``(i) Any merger, acquisition, takeover, or joint venture
that is proposed or pending after August 23, 1988, by or with
any foreign person that could result in foreign control of
any United States business.
``(ii) The purchase or lease by, or concession to, a
foreign person of private or public real estate that--
``(I) is located in the United States and--
``(aa) is, or is in close proximity to, a United States
military installation or another facility or property of the
United States Government that is sensitive for reasons
relating to national security and--
``(AA) could reasonably provide the foreign person the
ability to collect intelligence on activities being conducted
at such an installation, facility, or property; or
``(BB) could otherwise expose national security activities
at such an installation, facility, or property to the risk of
foreign surveillance; or
``(bb) is itself, or is located at and could function as
part of, an air or sea port;
``(II) is not a single housing unit, as defined by the
Bureau of the Census;
``(III) is not in an urbanized area, as set forth by the
Bureau of the Census in its most recent census, except as
otherwise prescribed by the Committee in regulations in
consultation with the Secretary of Defense; and
``(IV) meets such other criteria as the Committee
prescribes by regulation, except that such criteria may not
expand the categories of real estate to which this clause
applies beyond the categories described in this clause.
``(iii) Any change in the rights that a foreign person has
with respect to a United States business in which the foreign
person has an investment, if that change could result in--
``(I) foreign control of the United States business; or
``(II) an investment described in subparagraph (C).
``(iv) Any transaction or other device entered into or
employed for the purpose of evading this section, subject to
regulations prescribed by the Committee.
``(C) Sensitive transactions involving countries of special
concern.--
``(i) In general.--A transaction described in this
subparagraph is any investment in an unaffiliated United
States business by a foreign person that--
``(I) is--
``(aa) a national or a government of, or a foreign entity
organized under the laws of, a country of special concern; or
``(bb) a foreign entity--
``(AA) over which control is exercised or exercisable by a
national or a government of, or by a foreign entity organized
under the laws of, a country of special concern; or
``(BB) in which the government of a country of special
concern has a substantial interest; and
``(II) as a result of the transaction, could obtain---
``(aa) sensitive personal data, as defined by regulations
prescribed by the Committee, of
[[Page H5676]]
United States citizens, if such data may be exploited in a
manner that threatens national security;
``(bb) involvement, other than through voting of shares, in
substantive decisionmaking of the United States business
regarding--
``(AA) the use, development, acquisition, or release of
sensitive personal data of United States citizens (as
described in item (aa));
``(BB) the use, development, acquisition, or release of
critical technologies; or
``(CC) the management or operations of United States
critical infrastructure, as specified in regulations
prescribed by the Committee; or
``(cc) material nonpublic technical information in the
possession of the United States business.
``(ii) Country of special concern.--For the purposes of
this subparagraph, the term `country of special concern'
means--
``(I) any foreign country that is subject to export
restrictions pursuant to section 744.21 of title 15, Code of
Federal Regulations;
``(II) any country determined by the Secretary of State to
be a state sponsor of terrorism; and
``(III) any country that--
``(aa) is subject to a United States arms embargo, as
specified in list D:5 of Country Group D in Supplement No. 1
to part 740 of title 15, Code of Federal Regulations; and
``(bb) is specified in regulations prescribed by the
Committee.
``(iii) Investment defined.--For the purposes of this
subparagraph, the term `investment' means the acquisition of
an equity interest, including contingent equity interest, as
further defined in regulations prescribed by the Committee.
``(iv) Material nonpublic technical information defined.--
``(I) In general.--For the purposes of this subparagraph,
and subject to regulations prescribed by the Committee, the
term `material nonpublic technical information' means
information that--
``(aa) could create or reveal significant vulnerabilities
in United States critical infrastructure, as specified in
regulations prescribed by the Committee; or
``(bb) could be essential to design, develop, test,
produce, or manufacture critical technologies, as specified
in regulations prescribed by the Committee.
``(II) Exemption for financial information.--
Notwithstanding subclause (I), for the purposes of this
subparagraph, the term `material nonpublic technical
information' does not include financial information regarding
the performance of a United States business.
``(v) Regulations with respect to critical
infrastructure.--For purposes of this subparagraph,
regulations prescribed by the Committee regarding United
States critical infrastructure shall include criteria to
limit application to critical infrastructure that is likely
to be of importance to the national security of the United
States.
``(vi) Unaffiliated united states business defined.--For
the purposes of this subparagraph, with respect to an
investment described under clause (i), and as further defined
in regulations prescribed by the Committee, the term
`unaffiliated United States business' means a United States
business that is not subject to the same ultimate ownership
of the foreign person undertaking the investment.
``(vii) Exemption.--The President may exempt a country from
the definition of a country of special concern under clause
(ii), for up to one year at a time, upon reporting to the
Committees on Financial Services and Foreign Affairs of the
House of Representatives and the Committees on Banking,
Housing, and Urban Affairs and Foreign Relations of the
Senate that the exemption is important to the national
interest of the United States, with a detailed explanation of
the reasons therefor.
``(D) Exception for air carriers.--Subparagraph (B)(iii)
shall not apply to a change in the rights of a person with
respect to an investment involving an air carrier, as defined
in section 40102(a)(2) of title 49, United States Code, that
holds a certificate issued under section 41102 of that title.
``(E) Transfers of certain assets pursuant to bankruptcy
proceedings or other defaults.--The Committee shall prescribe
regulations to clarify that the term `covered transaction'
includes any transaction described in subparagraph (B) or (C)
that arises pursuant to a bankruptcy proceeding or other form
of default on debt.
``(F) Definition of close proximity.--In prescribing
regulations with respect to subparagraph (B)(ii)(I)(aa), the
Committee shall ensure that the term `close proximity' only
applies to a distance or distances within which the purchase,
lease, or concession of real estate could pose a national
security risk in connection with a United States military
installation or another facility or property of the United
States Government.
``(4) Foreign government-controlled transaction.--The term
`foreign government-controlled transaction' means any covered
transaction that could result in control of a United States
business by--
``(A) a foreign government;
``(B) a person controlled by or acting on behalf of a
foreign government; or
``(C) a foreign company or entity of a country of special
concern (as defined under paragraph (3)(C)(ii)) domiciled or
having its principal place of business in a county of special
concern that is a non-market economy, except to the extent
the Committee promulgates regulations exempting any such
company, entity, or country from this presumption.'';
(2) by amending paragraph (7) to read as follows:
``(7) Critical technologies.--The term `critical
technologies' means--
``(A) defense articles or defense services covered by the
United States Munitions List (USML), which is set forth in
the International Traffic in Arms Regulations (ITAR) (22
C.F.R. parts 120-130);
``(B) those items specified on the Commerce Control List
(CCL) set forth in Supplement No. 1 to part 774 of the Export
Administration Regulations (EAR) (15 C.F.R. parts 730-774)
that are controlled pursuant to multilateral regimes (i.e.
for reasons of national security, chemical and biological
weapons proliferation, nuclear nonproliferation, or missile
technology), as well as those that are controlled for reasons
of regional stability or surreptitious listening;
``(C) specially designed and prepared nuclear equipment,
parts and components, materials, software, and technology
specified in the Assistance to Foreign Atomic Energy
Activities regulations (10 C.F.R. part 810), and nuclear
facilities, equipment, and material specified in the Export
and Import of Nuclear Equipment and Material regulations (10
C.F.R. part 110);
``(D) select agents and toxins specified in the Select
Agents and Toxins regulations (7 C.F.R. part 331, 9 C.F.R.
part 121, and 42 C.F.R. part 73); and
``(E) emerging, foundational, or other critical
technologies that are controlled pursuant to section 818 of
the Foreign Investment Risk Review Modernization Act of
2018.''; and
(3) by adding at the end the following:
``(9) Foreign person.--The term `foreign person' means--
``(A) any foreign national, foreign government, or foreign
entity; or
``(B) any entity over which control is exercised or
exercisable by a foreign national, foreign government, or
foreign entity.
``(10) Substantial interest.--The term `substantial
interest' has the meaning given to such term in regulations
prescribed by the Committee, but does not include a voting
interest of less than ten percent or ownership interests held
or acquired solely for the purpose of passive investment.
``(11) United states business.--The term `United States
business' means any entity, irrespective of the nationality
of the persons that control it, engaged in interstate
commerce in the United States, but only to the extent of its
activities in interstate commerce.''.
TITLE III--IMPROVEMENTS TO THE OPERATIONS OF THE COMMITTEE ON FOREIGN
INVESTMENT IN THE UNITED STATES
SEC. 301. INCLUSION OF PARTNERSHIP AND SIDE AGREEMENTS IN
NOTICE.
Section 721(b)(1)(C) of the Defense Production Act of 1950
(50 U.S.C. 4565(b)(1)(C)) is amended by adding at the end the
following:
``(iv) Inclusion of partnership and side agreements.--
Subject to regulations prescribed by the Committee, the
Committee may require a written notice submitted under clause
(i) by a party to a covered transaction to include a copy of
any partnership agreements, integration agreements, or other
side agreements relating to the transaction.''.
SEC. 302. DECLARATIONS RELATING TO CERTAIN COVERED
TRANSACTIONS.
(a) In General.--Section 721(b)(1)(C) of the Defense
Production Act of 1950 (50 U.S.C. 4565(b)(1)(C)), as amended
by section 301, is further amended by adding at the end the
following:
``(v) Declarations with respect to certain covered
transactions.--
``(I) Voluntary declarations.--For the purpose of
expediting the review of certain covered transactions that
the Committee determines are likely to pose limited risk, the
Committee may prescribe regulations to permit parties to the
transaction to submit a declaration with basic information
regarding the transaction, unless the parties submit a
written notice under clause (i).
``(II) Mandatory declarations.--
``(aa) In general.--The Committee shall prescribe
regulations to require the parties to a covered transaction
to submit a declaration described in subclause (I) with
respect to the transaction if the transaction involves an
investment that results in the release of critical
technologies by an unaffiliated United States business (as
defined under subsection (a)(3)(C)(vi)) to a foreign person
in which a foreign government has, directly or indirectly, a
substantial interest.
``(bb) Submission of written notice as an alternative.--
Parties to a covered transaction for which a declaration is
required under this clause may instead elect to submit a
written notice under clause (i).
``(cc) Timing of submission.--With respect to the
regulations described under subclause (I), the Committee may
not require a declaration to be submitted more than 45 days
in advance of the completion of the transaction.
``(III) Penalties.--The Committee may impose a penalty
pursuant to subsection (h)(3)(A) with respect to a party that
fails to comply with this clause.
``(IV) Committee response to declaration.--
``(aa) In general.--Upon receiving a declaration under this
clause with respect to a transaction, the Committee may, at
its discretion--
``(AA) request that the parties to the transaction file a
written notice under
[[Page H5677]]
clause (i), provided that the Committee includes an
explanation of the reasons for the request;
``(BB) inform the parties to the transaction that the
Committee is not able to complete action under this section
with respect to the transaction on the basis of the
declaration and that the parties may file a written notice
under clause (i) to seek written notification from the
Committee that the Committee has completed all action under
this section with respect to the transaction;
``(CC) initiate a unilateral review of the transaction
under subparagraph (D); or
``(DD) notify the parties in writing that the Committee has
completed all action under this section with respect to the
transaction.
``(bb) Timing.--The Committee shall take action under item
(aa) within 30 days of receiving a declaration under this
clause.
``(cc) Refiling of declaration.--The Committee may not
request or recommend that a declaration be withdrawn and
refiled, except to permit parties to a transaction to correct
material errors or omissions.
``(V) Regulations.--In prescribing regulations establishing
requirements for declarations submitted under this clause,
the Committee shall ensure that such declarations are
submitted as abbreviated notifications that do not generally
exceed 5 pages in length.
``(VI) Investment defined.--For the purposes of this
clause, the term `investment' means the acquisition of an
equity interest, including contingent equity interest, as
further defined in regulations prescribed by the
Committee.''.
(b) Stipulations Regarding Transactions.--Section
721(b)(1)(C) of the Defense Production Act of 1950 (50 U.S.C.
4565(b)(1)(C)), as amended by this section, is further
amended by adding at the end the following:
``(vi) Stipulations regarding transactions.--
``(I) In general.--In a written notice submitted under
clause (i) or a declaration submitted under clause (v) with
respect to a transaction, a party to the transaction may--
``(aa) stipulate that the transaction is a covered
transaction; and
``(bb) if the party stipulates that the transaction is a
covered transaction under item (aa), stipulate that the
transaction is a foreign government-controlled transaction.
``(II) Basis for stipulation.--A written notice submitted
under clause (i) or a declaration submitted under clause (v)
that includes a stipulation under subclause (I) shall include
a description of the basis for the stipulation.''.
SEC. 303. TIMING FOR REVIEWS AND INVESTIGATIONS.
Section 721(b) of the Defense Production Act of 1950 (50
U.S.C. 4565(b)) is amended--
(1) in paragraph (1)(E), by striking ``30-day'' and
inserting ``45-day'';
(2) in paragraph (2), by striking subparagraph (C) and
inserting the following:
``(C) Timing.--
``(i) In general.--Except as provided in clause (ii), any
investigation under subparagraph (A) shall be completed
before the end of the 45-day period beginning on the date on
which the investigation commenced.
``(ii) Extension for extraordinary circumstances.--
``(I) In general.--In extraordinary circumstances (as
defined by the Committee in regulations), the chairperson
may, at the request of the head of the lead agency, extend an
investigation under subparagraph (A) for not more than one
15-day period.
``(II) Nondelegation.--The authority of the chairperson and
the head of the lead agency referred to in subclause (I) may
not be delegated to any person other than the Deputy
Secretary of the Treasury or the deputy head (or equivalent
thereof) of the lead agency, as the case may be.
``(III) Notification to parties.--If the Committee extends
the deadline under subclause (I) with respect to a covered
transaction, the Committee shall notify the parties to the
transaction of the extension.''; and
(3) by adding at the end the following:
``(8) Tolling of deadlines during lapse in
appropriations.--Any deadline or time limitation under this
subsection shall be tolled during a lapse in
appropriations.''.
SEC. 304. SUBMISSION OF CERTIFICATIONS TO CONGRESS.
Section 721(b)(3)(C) of the Defense Production Act of 1950
(50 U.S.C. 4565(b)(3)(C)) is amended--
(1) in clause (i), by amending subclause (II) to read as
follows:
``(II) a certification that all relevant national security
factors, including factors enumerated in subsection (f), have
received full consideration.''; and
(2) by adding at the end the following:
``(v) Authority to consolidate documents.--Instead of
transmitting a separate certified notice or certified report
under subparagraph (A) or (B) with respect to each covered
transaction, the Committee may, on a monthly basis, transmit
such notices and reports in a consolidated document to the
Members of Congress specified in clause (iii).''.
SEC. 305. ANALYSIS BY DIRECTOR OF NATIONAL INTELLIGENCE.
Section 721(b)(4) of the Defense Production Act of 1950 (50
U.S.C. 4565(b)(4)) is amended--
(1) by striking subparagraph (A) and inserting the
following:
``(A) Analysis required.--
``(i) 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 posed by
any covered transaction, which shall include the
identification of any recognized gaps in the collection of
intelligence relevant to the analysis.
``(ii) Views of intelligence agencies.--The Director shall
seek and incorporate into the analysis required by clause (i)
the views of all affected or appropriate intelligence
agencies with respect to the transaction.
``(iii) Updates.--At the request of the lead agency, the
Director shall update the analysis conducted under clause (i)
with respect to a covered transaction with respect to which
an agreement was entered into under subsection (l)(3)(A).
``(iv) Independence and objectivity.--The Committee shall
ensure that its processes under this section preserve the
ability of the Director to conduct an analysis under clause
(i) that is independent, objective, and consistent with all
applicable directives, policies, and analytic tradecraft
standards of the intelligence community.''.
(2) by redesignating subparagraphs (B), (C), and (D) as
subparagraphs (C), (D), and (E), respectively;
(3) by inserting after subparagraph (A) the following:
``(B) Basic threat information.--
``(i) In general.--The Director of National Intelligence
may provide the Committee with basic information regarding
any threat to the national security of the United States
posed by a covered transaction described in clause (ii)
instead of conducting the analysis required by subparagraph
(A).
``(ii) Covered transaction described.--A covered
transaction is described in this clause if--
``(I) the transaction is described in subsection
(a)(3)(B)(ii);
``(II) the Director of National Intelligence has completed
an analysis pursuant to subparagraph (A) involving each
foreign person that is a party to the transaction during the
12 months preceding the review or investigation of the
transaction under this section; or
``(III) the transaction otherwise meets criteria agreed
upon by the Committee and the Director of National
Intelligence for purposes of this subparagraph.'';
(4) in subparagraph (C), as so redesignated, by striking
``20 days'' and inserting ``30 days''; and
(5) by adding at the end the following:
``(F) Assessment of operational impact.--The Director may
provide to the Committee an assessment, separate from the
analyses under subparagraphs (A) and (B), of any operational
impact of a covered transaction on the intelligence community
and a description of any actions that have been or will be
taken to mitigate any such impact.
``(G) Submission to congress.--The Committee shall include
the analysis required by subparagraph (A) with respect to a
covered transaction in the report required under subsection
(m)(1), subject to the requirements of subsection (m)(5).''.
SEC. 306. INFORMATION SHARING.
Section 721(c) of the Defense Production Act of 1950 (50
U.S.C. 4565(c)) is amended--
(1) by striking ``Any information'' and inserting the
following:
``(1) In general.--Any information''; and
(2) by adding at the end the following:
``(2) Exception.--Paragraph (1) shall not prohibit the
disclosure of information or documentary material that the
party filing such information or material consented to be
disclosed to third parties.''.
SEC. 307. ACTION BY THE PRESIDENT.
(a) In General.--Section 721(d)(2) of the Defense
Production Act of 1950 (50 U.S.C. 4565(d)(2)) is amended by
striking ``not later than 15 days'' and all that follows and
inserting the following: ``with respect to a covered
transaction not later than 15 days after the earlier of--
``(A) the date on which the investigation of the
transaction under subsection (b) is completed; or
``(B) the date on which the Committee otherwise refers the
transaction to the President under subsection (l)(4).''.
(b) Civil Penalties.--Section 721(h)(3)(A) of the Defense
Production Act of 1950 (50 U.S.C. 4565(h)(3)(A)) is amended
by striking ``including any mitigation'' and all that follows
through ``subsection (l)'' and inserting ``including any
mitigation agreement entered into, conditions imposed, or
order issued pursuant to this section''.
SEC. 308. FACTORS TO BE CONSIDERED.
Section 721(f) of the Defense Production Act of 1950 (50
U.S.C. 4565(f)) is amended--
(1) in paragraph (3), by striking the comma at the end and
inserting the following: ``, including the availability of
human resources, products, technology, materials, and other
supplies and services;'';
(2) in paragraph (4), by striking ``proposed or pending'';
(3) by striking paragraph (5);
(4) by redesignating paragraphs (6), (7), (8), (9), (10),
and (11) as paragraphs (5), (6), (7), (8), (9), and (16),
respectively;
(5) in paragraph (9), as so redesignated, by striking
``and'' at the end;
(6) by inserting after paragraph (9), as so redesignated,
the following:
``(10) the degree to which the covered transaction is
likely to threaten the ability of the United States
Government to acquire or maintain the equipment and systems
that are necessary for defense, intelligence, or other
national security functions;
[[Page H5678]]
``(11) the potential national security-related effects of
the cumulative control of any one type of critical
infrastructure, energy asset, material, or critical
technology by a foreign person;
``(12) whether any foreign person that would acquire
control of a United States business as a result of the
covered transaction has a history of--
``(A) complying with United States laws and regulations and
prior adherence, if applicable, to any agreement or
condition, as described under (l)(1)(A); and
``(B) adhering to contracts or other agreements with
entities of the United States Government;
``(13) the extent to which the covered transaction is
likely to release, either directly or indirectly, sensitive
personal data of United States citizens to a foreign person
that may exploit that information in a manner that threatens
national security;
``(14) whether the covered transaction is likely to
exacerbate cybersecurity vulnerabilities or is likely to
result in a foreign government gaining a significant new
capability to engage in malicious cyber-enabled activities
against the United States, including such activities designed
to affect the outcome of any election for Federal office;
``(15) whether the covered transaction is likely to expose
any information regarding sensitive national security matters
or sensitive procedures or operations of a Federal law
enforcement agency with national security responsibilities to
a foreign person not authorized to receive that information;
and''; and
(7) by adding at the end the following flush-left text:
``For purposes of this subsection, the phrase `the
availability of human resources' shall be construed to
consider potential losses of such availability resulting from
reductions in the employment of United States persons whose
knowledge or skills are critical to national security,
including the continued production in the United States of
items that are likely to be acquired by the Department of
Defense or other Federal departments or agencies for the
advancement of the national security of the United States.''.
SEC. 309. MITIGATION AND OTHER ACTIONS BY THE COMMITTEE TO
ADDRESS NATIONAL SECURITY RISKS.
Section 721(l) of the Defense Production Act of 1950 (50
U.S.C. 4565(l)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) in the heading, by striking ``In general'' and
inserting ``Agreements and conditions'';
(ii) by striking ``The Committee'' and inserting the
following:
``(i) In general.--The Committee'';
(iii) by adding at the end the following:
``(ii) Abandonment of transactions.--If a party to a
covered transaction has voluntarily chosen to abandon the
transaction, the Committee or lead agency, as the case may
be, may negotiate, enter into or impose, and enforce any
agreement or condition with any party to the covered
transaction for purposes of effectuating such abandonment and
mitigating any threat to the national security of the United
States that arises as a result of the covered transaction.
``(iii) Agreements and conditions relating to completed
transactions.--The Committee or lead agency, as the case may
be, may negotiate, enter into or impose, and enforce any
agreement or condition with any party to a completed covered
transaction in order to mitigate any interim threat to the
national security of the United States that may arise as a
result of the covered transaction until such time that the
Committee has completed action pursuant to subsection (b) or
the President has taken action pursuant to subsection (d)
with respect to the transaction.'';
(B) by amending subparagraph (B) to read as follows:
``(B) Treatment of outdated agreements or conditions.--The
chairperson and the head of any applicable lead agency shall
periodically review the appropriateness of an agreement or
condition described under subparagraph (A) and terminate,
phase out, or otherwise amend any agreement or condition if a
threat no longer requires mitigation through the agreement or
condition.''; and
(C) by adding at the end the following:
``(C) Limitations.--An agreement may not be entered into or
condition imposed under subparagraph (A) with respect to a
covered transaction unless the Committee determines that the
agreement or condition resolves the national security
concerns posed by the transaction, taking into consideration
whether the agreement or condition is reasonably calculated
to--
``(i) be effective;
``(ii) allow for compliance with the terms of the agreement
or condition in an appropriately verifiable way; and
``(iii) enable effective monitoring of compliance with and
enforcement of the terms of the agreement or condition.
``(D) Jurisdiction.--The provisions of section 706(b) shall
apply to any mitigation agreement entered into or condition
imposed under subparagraph (A).''; and
(2) by adding at the end the following:
``(4) Referral to president.--The Committee may, at any
time during the review or investigation of a covered
transaction under subsection (b), complete the action of the
Committee with respect to the transaction and refer the
transaction to the President for action pursuant to
subsection (d).
``(5) Risk-based analysis required.--
``(A) In general.--Any determination of the Committee to
refer a covered transaction to the President under paragraph
(4), to suspend a covered transaction under paragraph (6), or
to negotiate, enter into, impose, or enforce any agreement or
condition under paragraph (1)(A) with respect to a covered
transaction, shall be based on a risk-based analysis,
conducted by the Committee, of the effects on the national
security of the United States of the covered transaction,
which shall include--
``(i) an assessment of the threat, vulnerabilities, and
consequences to national security resulting from the
transaction, as these terms are defined or clarified in
guidance and regulations issued by the Committee; and
``(ii) an identification of each relevant factor described
in subsection (f) that the transaction may substantially
implicate.
``(B) Compliance plans.--
``(i) In general.--In the case of a covered transaction
with respect to which an agreement or condition is entered
into under paragraph (1)(A), the Committee or lead agency, as
the case may be, shall formulate, adhere to, and keep updated
a plan for monitoring compliance with the agreement or
condition.
``(ii) Elements.--Each plan required by clause (i) with
respect to an agreement or condition entered into under
paragraph (1)(A) shall include an explanation of--
``(I) which member of the Committee will have primary
responsibility for monitoring compliance with the agreement
or condition;
``(II) how compliance with the agreement or condition will
be monitored;
``(III) how frequently compliance reviews will be
conducted;
``(IV) whether an independent entity will be utilized under
subparagraph (D) to conduct compliance reviews; and
``(V) what actions will be taken if the parties fail to
cooperate regarding monitoring compliance with the agreement
or condition.
``(C) Effect of lack of compliance.--If, at any time after
a mitigation agreement or condition is entered into or
imposed under paragraph (1)(A), the Committee or lead agency,
as the case may be, determines that a party or parties to the
agreement or condition are not in compliance with the terms
of the agreement or condition, the Committee or lead agency
may, in addition to the authority of the Committee to impose
penalties pursuant to subsection (h)(3)(A) and to
unilaterally initiate a review of any covered transaction
under subsection (b)(1)(D)(iii)(I)--
``(i) negotiate a plan of action for the party or parties
to remediate the lack of compliance, with failure to abide by
the plan or otherwise remediate the lack of compliance
serving as the basis for the Committee to find a material
breach of the agreement or condition;
``(ii) require that the party or parties submit any covered
transaction initiated after the date of the determination of
noncompliance and before the date that is 5 years after the
date of the determination to the Committee for review under
subsection (b); or
``(iii) seek injunctive relief.
``(D) Use of independent entities to monitor compliance.--
If the parties to an agreement or condition entered into
under paragraph (1)(A) enter into a contract with an
independent entity from outside the United States Government
for the purpose of monitoring compliance with the agreement
or condition, the Committee shall take such action as is
necessary to prevent any significant conflict of interest
from arising with respect to the entity and the parties to
the transaction.
``(E) Successors and assigns.--Any agreement or condition
entered or imposed under paragraph (1)(A) shall be considered
binding on all successors and assigns, unless and until the
agreement or condition terminates on its own terms or is
otherwise terminated by the Committee in the Committee's sole
discretion.
``(F) Additional compliance measures.--Subject to
subparagraphs (A) through (D), the Committee shall develop
and agree upon methods for evaluating compliance with any
agreement entered into or condition imposed with respect to a
covered transaction that will allow the Committee to
adequately ensure compliance without unnecessarily diverting
Committee resources from assessing any new covered
transaction for which a written notice under clause (i) of
subsection (b)(1)(C) has been filed or for which a
declaration has been submitted under clause (v) of subsection
(b)(1)(C), and if necessary, reaching a mitigation agreement
with or imposing a condition on a party to such covered
transaction or any covered transaction for which a review has
been reopened for any reason.
``(6) Suspension of transactions.--The Committee, acting
through the chairperson, may suspend a proposed or pending
covered transaction that may pose a risk to the national
security of the United States for such time as the covered
transaction is under review or investigation under subsection
(b).''.
SEC. 310. CERTIFICATION OF NOTICES AND INFORMATION.
Section 721(n) of the Defense Production Act of 1950 (50
U.S.C. 4565(n)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and by moving such
subparagraphs, as so redesignated, 2 ems to the right;
(2) by striking ``Each notice'' and inserting the
following:
``(1) In general.--Each notice''; and
[[Page H5679]]
(3) by adding at the end the following:
``(2) Effect of failure to submit.--The Committee may not
complete a review under this section of a covered transaction
and may recommend to the President that the President suspend
or prohibit the transaction or require divestment under
subsection (d) if the Committee determines that a party to
the transaction has--
``(A) failed to submit a statement required by paragraph
(1); or
``(B) included false or misleading information in a notice
or information described in paragraph (1) or omitted material
information from such notice or information.
``(3) Applicability of law on fraud and false statements.--
The Committee shall prescribe regulations expressly providing
for the application of section 1001 of title 18, United
States Code, to all information provided to the Committee
under this section by any party to a covered transaction.''.
SEC. 311. ADDITIONAL REGULATIONS.
Section 721(h)(3) of the Defense Production Act of 1950 (50
U.S.C. 4565(h)(3)) is amended--
(1) in subparagraph (B)(ii), by striking ``and'' at the
end;
(2) in subparagraph (C), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following:
``(D) provide that in connection with any national security
review or investigation of a covered transaction conducted by
the Committee, the Committee should--
``(i) consider the factors described in paragraphs (2) and
(3) of subsection (f); and
``(ii) as appropriate, require parties to provide the
information necessary to consider such factors.''.
TITLE IV--MODIFICATION OF ANNUAL REPORT
SEC. 401. MODIFICATION OF ANNUAL REPORT.
Section 721(m) of the Defense Production Act of 1950 (50
U.S.C. 4565(m)) is amended--
(1) in paragraph (2), by amending subparagraph (A) to read
as follows:
``(A) A list of all notices filed and all reviews or
investigations of covered transactions completed during the
period, with--
``(i) a description of the outcome of each review or
investigation, including whether an agreement was entered
into or condition was imposed under subsection (l)(3)(A) with
respect to the transaction being reviewed or investigated,
and whether the President took any action under this section
with respect to that transaction;
``(ii) the nature of the business activities or products of
the United States business with which the transaction was
entered into or intended to be entered into;
``(iii) information about any withdrawal from the process;
and
``(iv) the mean and median number of days required to
complete reviews and investigations during the period.'';
(2) in paragraph (3)--
(A) by striking ``critical technologies'' and all that
follows through ``In order to assist'' and inserting
``critical technologies.--In order to assist'';
(B) by striking subparagraph (B); and
(C) by redesignating clauses (i) and (ii) as subparagraphs
(A) and (B), respectively, and by moving such subparagraphs,
as so redesignated, 2 ems to the left; and
(3) by adding at the end the following:
``(4) Additional contents of report.--Each annual report
required under paragraph (1) shall contain the following
additional information:
``(A) Statistics on compliance reviews conducted and
actions taken by the Committee under subsection (l)(6),
including subparagraph (D) of that subsection (l)(6), during
that period and a description of any actions taken by the
Committee to impose penalties or initiate a unilateral review
pursuant to subsection (b)(1)(D)(iii)(I).
``(B) Cumulative and trend information on the number of
declarations filed under subsection (b)(1)(C)(v), the actions
taken by the Committee in response to declarations, the
business sectors involved in the declarations which have been
made, the countries involved in such declarations, and the
mean and median number of days required to respond to such
declarations, as described in subsection (b)(1)(C)(v)(IV),
during that period.
``(C) The number of new hires made since the preceding
report through the authorities described under subsection
(q), along with summary statistics, position titles, and
associated pay grades for such hires and a summary of such
hires' responsibilities in administering this section.
``(5) Classification; availability of report.--
``(A) Classification.--All appropriate portions of the
annual report required by paragraph (1) may be classified.
``(B) Public availability of unclassified version.--An
unclassified version of the report required by paragraph (1),
as appropriate and consistent with safeguarding national
security and privacy, shall be made available to the public.
Information regarding trade secrets or business confidential
information may be included in the classified version and may
not be made available to the public in the unclassified
version.
``(C) Exceptions to freedom of information act.--The
exceptions to subsection (a) of section 552 of title 5,
United States Code, provided for under subsection (b) of that
section shall apply with respect to the report required by
paragraph (1).''.
SEC. 402. REPORT ON TRANSACTIONS WITH CENSORSHIP
IMPLICATIONS.
Not later than one year from the date of enactment of this
Act, the Committee on Foreign Investment in the United States
shall issue a report to the Congress, appropriate portions of
which may be classified, on investments by foreign persons
into the entertainment and information sectors of the United
States, which shall include analysis of the extent to which
such investments have resulted in or could result in direct
or indirect censorship, including self-censorship, within the
United States.
SEC. 403. NOTICE TO CONGRESS BY THE COMMITTEE.
Section 721 of the Defense Production Act of 1950 (50
U.S.C. 4565), as amended by section 503, is further amended
by adding at the end the following:
``(v) Notice to Congress by the Committee.--If the
Committee recommends that the President suspend or prohibit a
covered transaction because such transaction threatens to
impair the national security of the United States, the
Committee shall, in the classified version of the annual
report described under subsection (m), notify Congress of
each such recommendation and, upon request, provide a
classified briefing on the recommendation.''.
TITLE V--RESOURCES, SPECIAL HIRING AUTHORITY, AND OUTREACH
SEC. 501. CENTRALIZATION OF CERTAIN COMMITTEE FUNCTIONS.
Section 721 of the Defense Production Act of 1950 (50
U.S.C. 4565) is amended by adding at the end the following:
``(o) Centralization of Certain Committee Functions.--
``(1) In general.--The chairperson, in consultation with
the Committee, may centralize certain functions of the
Committee within the Department of the Treasury for the
purpose of enhancing interagency coordination and
collaboration in carrying out the functions of the Committee
under this section.
``(2) Rule of construction.--Nothing in this subsection
shall be construed as limiting the authority of any
department or agency represented on the Committee to
represent its own interests before the Committee.''.
SEC. 502. CFIUS RESOURCE NEEDS.
(a) Unified Budget Request.--Section 721 of the Defense
Production Act of 1950 (50 U.S.C. 4565), as amended by
section 501, is further amended by adding at the end the
following:
``(p) Unified Budget Request; Annual Spending Plan.--
``(1) Unified budget request.--
``(A) In general.--The President may include, in the budget
of the Department of the Treasury for a fiscal year (as
submitted to Congress with the budget of the President under
section 1105(a) of title 31, United States Code), a unified
request for funding of all operations under this section
conducted by all of the departments and agencies represented
on the Committee.
``(B) Form of budget request.--A unified request under
subparagraph (A) shall be detailed and include the amounts
and staffing levels requested for each department or agency
represented on the Committee to carry out the functions of
that department or agency under this section.
``(2) Annual spending plan.--Not later than 90 days
following the date of enactment of this subsection, and
annually thereafter, the chairperson of the Committee shall
transmit to the Committees on Appropriations and Financial
Services of the House of Representatives and the Committees
on Appropriations and Banking, Housing, and Urban Affairs of
the Senate a detailed spending plan to expeditiously meet the
requirements of subsections (b), (l), and (m), including
estimated expenditures and staffing levels required by
operations of the Committee for not less than the following
fiscal year at each of the Committee's member agencies.
``(3) Waiver.--The chairperson may waive the reporting
requirement under paragraph (2) with respect to a fiscal year
for which a unified budget request described under paragraph
(1) has been submitted.''.
(b) Special Hiring Authority.--Section 721 of the Defense
Production Act of 1950 (50 U.S.C. 4565), as amended by
subsection (a), is further amended by adding at the end the
following:
``(q) Special Hiring Authority.--The heads of the
departments and agencies represented on the Committee may
appoint, without regard to the provisions of sections 3309
through 3318 of title 5, United States Code, candidates
directly to positions in the competitive service (as defined
in section 2102 of that title) in their respective
departments and agencies to administer this section.''.
(c) Testimony Required.--Section 721 of the Defense
Production Act of 1950 (50 U.S.C. 4565), as amended by
subsection (d), is further amended by adding at the end the
following:
``(r) Testimony.--
``(1) In general.--After submitting the unified budget
request described under subsection (p)(1), or the spending
plan described under subsection (p)(2), as the case may be,
but not later than March 31 of each year, the chairperson, or
the chairperson's designee, shall appear before the Committee
on Financial Services of the House of Representatives and
present testimony on--
``(A) anticipated resources necessary for operations of the
Committee in the following fiscal year at each of the
Committee's member agencies;
[[Page H5680]]
``(B) the adequacy of appropriations for the Committee in
the current and the previous fiscal year to--
``(i) ensure that thorough reviews and investigations are
completed as expeditiously as possible;
``(ii) monitor and enforce mitigation agreements; and
``(iii) identify covered transactions for which a notice
under clause (i) of subsection (b)(1)(C) or a declaration
under clause (v) of subsection (b)(1)(C) was not submitted to
the Committee;
``(C) management efforts to strengthen the ability of the
Committee to meet the requirements of this section; and
``(D) activities of the Committee undertaken in order to--
``(i) educate the business community, with a particular
focus on the technology sector and other sectors of
importance to national security, on the goals and operations
of the Committee;
``(ii) disseminate to the governments of United States
allies best practices of the Committee that--
``(I) strengthen national security reviews of relevant
investment transactions; and
``(II) expedite such reviews when appropriate; and
``(iii) promote openness to foreign investment, consistent
with national security considerations.
``(2) Sunset.--This subsection shall have no force or
effect on the date that is 7 years following the date of
enactment of the Foreign Investment Risk Review Modernization
Act of 2018.''.
SEC. 503. FUNDING.
Section 721 of the Defense Production Act of 1950 (50
U.S.C. 4565), as amended by section 603, is further amended
by adding at the end the following:
``(u) Funding.--
``(1) Establishment of fund.--There is established in the
Treasury of the United States a fund, to be known as the
`Committee on Foreign Investment in the United States Fund'
(in this subsection referred to as the `Fund'), to be
administered by the chairperson.
``(2) Authorization of appropriations for the committee.--
There are authorized to be appropriated to the Fund for each
of fiscal years 2019 through 2023 $20,000,000 to perform the
functions of the Committee.
``(3) Filing fees.--
``(A) In general.--The Committee may assess and collect a
fee in an amount determined by the Committee in regulations,
without regard to section 9701 of title 31, United States
Code, and subject to subparagraph (B), with respect to each
covered transaction for which a written notice is submitted
to the Committee under subsection (b)(1)(C)(i) or a
declaration is submitted to the Committee under subsection
(b)(1)(C)(v).
``(B) Determination of amount of fee.--
``(i) In general.--The amount of the fee to be assessed
under subparagraph (A) with respect to a covered
transaction--
``(I) may not exceed an amount equal to the lesser of--
``(aa) 1 percent of the value of the transaction; or
``(bb) $300,000, as such amount is adjusted annually for
inflation pursuant to regulations prescribed by the
Committee; and
``(II) shall be determined by the Committee after taking
into consideration--
``(aa) the effect of the fee on small business concerns (as
defined in section 3 of the Small Business Act (15 U.S.C.
632));
``(bb) the expenses of the Committee associated with
conducting activities under this section;
``(cc) the effect of the fee on foreign investment;
``(dd) the unified budget request or annual spending plan,
as appropriate, described in section 502 of the Foreign
Investment Risk Review Modernization Act of 2018; and
``(ee) such other matters as the Committee considers
appropriate.
``(ii) Updates.--The Committee shall periodically
reconsider and adjust the amount of the fee to be assessed
under subparagraph (A) with respect to a covered transaction
to ensure that the amount of the fee remains appropriate.
``(C) Deposit and availability of fees.--Notwithstanding
section 3302 of title 31, United States Code, fees collected
under subparagraph (A) shall--
``(i) be deposited into the Fund for use in carrying out
activities under this section;
``(ii) to the extent and in the amounts provided in advance
in appropriations Acts, be available to the chairperson;
``(iii) remain available until expended; and
``(iv) be in addition to any appropriations made available
to the members of the Committee.
``(4) Transfer of funds.--To the extent provided in advance
in appropriations Acts, the chairperson may transfer any
amounts in the Fund to any other department or agency
represented on the Committee for the purpose of addressing
emerging needs in carrying out activities under this section.
Amounts so transferred shall be in addition to any other
amounts available to that department or agency for that
purpose.''.
TITLE VI--MISCELLANEOUS FIRRMA PROVISIONS
SEC. 601. CONFORMING AMENDMENT.
Section 721(d)(4)(A) of the Defense Production Act of 1950
(50 U.S.C. 4565(d)(4)(A)) is amended by striking ``the
foreign interest exercising control'' and inserting ``a
foreign person that would acquire an interest in a United
States business or its assets as a result of the covered
transaction''.
SEC. 602. REGULATORY CERTAINTY FOR UNITED STATES BUSINESSES.
Section 721 of the Defense Production Act of 1950 (50
U.S.C. 4565), as amended by section 502, is further amended
by adding at the end the following:
``(s) Regulatory Certainty for United States Businesses.--
``(1) In general.--With respect to mitigating a national
security risk that results from a foreign person's investment
in, or joint venture with, a United States business, a member
agency of the Committee may not prescribe or implement
regulations to require divestment by, or of, the United
States business, unless--
``(A) the regulations are prescribed under this section or
pursuant to authorities of the President under the
International Emergency Economic Powers Act; or
``(B) the President reports to Congress in writing that the
regulations--
``(i) are, wherever applicable, consistent with regulations
prescribed under this section, including any such regulations
pertaining to--
``(I) foreign control or influence over a United States
business;
``(II) the identification of emerging, foundational, or
other critical technologies; and
``(III) confidentiality requirements with respect to
information and documentary material regarding United States
businesses; and
``(ii) in the case of regulations prescribed or finalized
following the effective date of this subsection, were
prescribed in consultation with the chairperson of the
Committee and with the head of any member agency determined
by the President to be affected by the regulations.
``(2) Exception for procurement authority.--Paragraph (1)
shall not apply to an action by a member agency if the head
of the member agency determines that such action is necessary
for procurement purposes of the agency or for matters related
to the management of the agency's supply chain.''.
SEC. 603. COOPERATION WITH UNITED STATES ALLIES AND PARTNERS.
Section 721 of the Defense Production Act of 1950 (50
U.S.C. 4565), as amended by section 602, is further amended
by adding at the end the following:
``(t) Cooperation With United States Allies and Partners.--
``(1) In general.--The chairperson, in consultation with
other members of the Committee, is authorized to lead a
formal process for the regular exchange of information with
governments of countries that are allies or partners of the
United States, in the discretion of the chairperson, to
protect the national security of the United States and those
countries.
``(2) Requirements.--The process described under paragraph
(1) shall, in the discretion of the chairperson--
``(A) be designed to facilitate the harmonization of action
with respect to trends in investment and technology that
could pose risks to the national security of the United
States and countries that are allies or partners of the
United States;
``(B) provide for the sharing of information with respect
to specific technologies and entities acquiring such
technologies as appropriate to ensure national security; and
``(C) include consultations and meetings with
representatives of the governments of such countries on a
recurring basis.''.
TITLE VII--COMMON SENSE CREDIT UNION CAPITAL RELIEF
SEC. 701. DELAY IN EFFECTIVE DATE.
Notwithstanding any effective date set forth in the rule
issued by the National Credit Union Administration titled
``Risk-Based Capital'' (published at 80 Fed. Reg. 66626
(October 29, 2015)), such final rule shall take effect on
January 1, 2021.
TITLE VIII--EXPORT CONTROL REFORM
SEC. 801. SHORT TITLE.
This title may be cited as the ``Export Control Reform Act
of 2018''.
SEC. 802. DEFINITIONS.
In this title:
(1) Controlled.--The term ``controlled'' refers to an item
subject to the jurisdiction of the United States under
subtitle A.
(2) Dual-use.--The term ``dual-use'', with respect to an
item, means the item has civilian applications and military,
terrorism, weapons of mass destruction, or law-enforcement-
related applications.
(3) Export.--The term ``export'', with respect to an item
subject to controls under subtitle A, includes--
(A) the shipment or transmission of the item out of the
United States, including the sending or taking of the item
out of the United States, in any manner; and
(B) the release or transfer of technology or source code
relating to the item to a foreign person in the United
States.
(4) Export administration regulations.--The term ``Export
Administration Regulations'' means--
(A) the Export Administration Regulations as promulgated,
maintained, and amended under the authority of the
International Emergency Economic Powers Act and codified, as
of the date of the enactment of this Act, in subchapter C of
chapter VII of title 15, Code of Federal Regulations; or
(B) regulations that are promulgated, maintained, and
amended under the authority of subtitle A on or after the
date of the enactment of this Act.
[[Page H5681]]
(5) Foreign person.--The term ``foreign person'' means--
(A) any natural person who is not a lawful permanent
resident of the United States, citizen of the United States,
or any other protected individual (as such term is defined in
section 274B(a)(3) of the Immigration and Nationality Act (8
U.S.C. 1324b(a)(3));
(B) any corporation, business association, partnership,
trust, society or any other entity or group that is not
incorporated in the United States or organized to do business
in the United States, as well as international organizations,
foreign governments and any agency or subdivision of a
foreign government (e.g., diplomatic mission).
(6) Item.--The term ``item'' means a commodity, software,
or technology.
(7) Person.--The term ``person'' means--
(A) a natural person;
(B) a corporation, business association, partnership,
society, trust, financial institution, insurer, underwriter,
guarantor, and any other business organization, any other
nongovernmental entity, organization, or group, or any
government or agency thereof; and
(C) any successor to any entity described in subparagraph
(B).
(8) Reexport.--The term ``reexport'', with respect to an
item subject to controls under subtitle A, includes--
(A) the shipment or transmission of the item from a foreign
country to another foreign country, including the sending or
taking of the item from the foreign country to the other
foreign country, in any manner; and
(B) the release or transfer of technology or source code
relating to the item to a foreign person outside the United
States.
(9) Secretary.--Except as otherwise provided, the term
``Secretary'' means the Secretary of Commerce.
(10) Technology.--The term ``technology'' includes
foundational information and information and know-how
necessary for the development (at all stages prior to serial
production), production, use, operation, installation,
maintenance, repair, overhaul or refurbishing of an item.
(11) Transfer.--The term ``transfer'', with respect to an
item subject to controls under title I, means a change in the
end-use or end user of the item within the same foreign
country.
(12) United states.--The term ``United States'' means the
several States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana
Islands, American Samoa, Guam, the United States Virgin
Islands, and any other territory or possession of the United
States.
(13) United states person.--The term ``United States
person'' means--
(A) for purposes of subtitles A and C--
(i) any individual who is a citizen or national of the
United States or who is an individual described in
subparagraph (B) of section 274B(a)(3) of the Immigration and
Nationality Act (8 U.S.C. 1324b(a)(3));
(ii) a corporation or other legal entity which is organized
under the laws of the United States, any State or territory
thereof, or the District of Columbia; and
(iii) any person in the United States; and
(B) for purposes of subtitle B, any United States resident
or national (other than an individual resident outside the
United States and employed by other than a United States
person), any domestic concern (including any permanent
domestic establishment of any foreign concern) and any
foreign subsidiary or affiliate (including any permanent
foreign establishment) of any domestic concern which is
controlled in fact by such domestic concern, as determined
under regulations by the Secretary.
(14) Weapons of mass destruction.--The term ``weapons of
mass destruction'' means nuclear, radiological, chemical, and
biological weapons and delivery systems for such weapons.
Subtitle A--Authority and Administration of Controls
SEC. 811. SHORT TITLE.
This subtitle may be cited as the ``Export Controls Act of
2018''.
SEC. 812. STATEMENT OF POLICY.
The following is the policy of the United States:
(1) To use export controls only after full consideration of
the impact on the economy of the United States and only to
the extent necessary--
(A) to restrict the exports of items which would make a
significant contribution to the military potential of any
other country or combination of countries which would prove
detrimental to the national security of the United States;
and
(B) to restrict the export of items if necessary to further
significantly the foreign policy of the United States or to
fulfill its declared international obligations.
(2) The national security and foreign policy of the United
States require that the export, reexport, and transfer of
items, and specific activities of United States persons,
wherever located, be controlled for the following purposes:
(A) To control the release of items for use in--
(i) the proliferation of weapons of mass destruction or of
conventional weapons;
(ii) the acquisition of destabilizing numbers or types of
conventional weapons;
(iii) acts of terrorism;
(iv) military programs that could pose a threat to the
security of the United States or its allies; or
(v) activities undertaken specifically to cause significant
interference with or disruption of critical infrastructure.
(B) To preserve the qualitative military superiority of the
United States.
(C) To strengthen the United States industrial base.
(D) To carry out the foreign policy of the United States,
including the protection of human rights and the promotion of
democracy.
(E) To carry out obligations and commitments under
international agreements and arrangements, including
multilateral export control regimes.
(F) To facilitate military interoperability between the
United States and its North Atlantic Treaty Organization
(NATO) and other close allies.
(G) To ensure national security controls are tailored to
focus on those core technologies and other items that are
capable of being used to pose a serious national security
threat to the United States.
(3) The national security of the United States requires
that the United States maintain its leadership in the
science, technology, engineering, and manufacturing sectors,
including foundational technology that is essential to
innovation. Such leadership requires that United States
persons are competitive in global markets. The impact of the
implementation of this subtitle on such leadership and
competitiveness must be evaluated on an ongoing basis and
applied in imposing controls under sections 813 and 814 to
avoid negatively affecting such leadership.
(4) The national security and foreign policy of the United
States require that the United States participate in
multilateral organizations and agreements regarding export
controls on items that are consistent with the policy of the
United States, and take all the necessary steps to secure the
adoption and consistent enforcement, by the governments of
such countries, of export controls on items that are
consistent with such policy.
(5) Export controls should be coordinated with the
multilateral export control regimes. Export controls that are
multilateral are most effective, and should be tailored to
focus on those core technologies and other items that are
capable of being used to pose a serious national security
threat to the United States and its allies.
(6) Export controls applied unilaterally to items widely
available from foreign sources generally are less effective
in preventing end-users from acquiring those items.
Application of unilateral export controls should be limited
for purposes of protecting specific United States national
security and foreign policy interests.
(7) The effective administration of export controls
requires a clear understanding both inside and outside the
United States Government of which items are controlled and an
efficient process should be created to update the controls,
such as by adding or removing such items.
(8) The export control system must ensure that it is
transparent, predictable, and timely, has the flexibility to
be adapted to address new threats in the future, and allows
seamless access to and sharing of export control information
among all relevant United States national security and
foreign policy agencies.
(9) Implementation and enforcement of United States export
controls require robust capabilities in monitoring,
intelligence, and investigation, appropriate penalties for
violations, and the ability to swiftly interdict unapproved
transfers.
(10) Export controls complement and are a critical element
of the national security policies underlying the laws and
regulations governing foreign direct investment in the United
States, including controlling the transfer of critical
technologies to certain foreign persons. Thus, the President,
in coordination with the Secretary, the Secretary of Defense,
the Secretary of State, the Secretary of Energy, and the
heads of other Federal agencies, as appropriate, should have
a regular and robust process to identify the emerging and
other types of critical technologies of concern and regulate
their release to foreign persons as warranted regardless of
the nature of the underlying transaction. Such identification
efforts should draw upon the resources and expertise of all
relevant parts of the United States Government, industry, and
academia. These efforts should be in addition to traditional
efforts to modernize and update the lists of controlled items
under the multilateral export control regimes.
(11) The authority under this subtitle may be exercised
only in furtherance of all of the objectives set forth in
paragraphs (1) through (10).
SEC. 813. AUTHORITY OF THE PRESIDENT.
(a) Authority.--In order to carry out the policy set forth
in paragraphs (1) through (10) of section 812, the President
shall control--
(1) the export, reexport, and transfer of items subject to
the jurisdiction of the United States, whether by United
States persons or by foreign persons; and
(2) the activities of United States persons, wherever
located, relating to specific--
(A) nuclear explosive devices;
(B) missiles;
(C) chemical or biological weapons;
(D) whole plants for chemical weapons precursors;
(E) foreign maritime nuclear projects; and
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(F) foreign military intelligence services.
(b) Requirements.--In exercising authority under this
subtitle to carry out the policy set forth in paragraphs (1)
through (10) of section 812, the President shall--
(1) regulate the export, reexport, and transfer of items
described in subsection (a)(1) of United States persons or
foreign persons;
(2) regulate the activities described in subsection (a)(2)
of United States persons, wherever located;
(3) secure the cooperation of other governments and
multilateral organizations to impose control systems that are
consistent, to the extent possible, with the controls imposed
under subsection (a);
(4) maintain the leadership of the United States in
science, engineering, technology research and development,
manufacturing, and foundational technology that is essential
to innovation;
(5) protect United States technological advances by
prohibiting unauthorized technology transfers to foreign
persons in the United States or outside the United States,
particularly with respect to countries that may pose a
significant threat to the national security of the United
States;
(6) strengthen the United States industrial base, both with
respect to current and future defense requirements; and
(7) enforce the controls through means such as regulations,
requirements for compliance, lists of controlled items, lists
of foreign persons who threaten the national security or
foreign policy of the United States, and guidance in a form
that facilitates compliance by United States persons and
foreign persons, in particular academic institutions,
scientific and research establishments, and small- and
medium-sized businesses.
(c) Application of Controls.--The President shall impose
controls over the export, reexport, or transfer of items for
purposes of the objectives described in subsections (b)(1) or
(b)(2) without regard to the nature of the underlying
transaction or any circumstances pertaining to the activity,
including whether such export, reexport, or transfer occurs
pursuant to a purchase order or other contract requirement,
voluntary decision, inter-company arrangement, marketing
effort, or during a joint venture, joint development
agreement, or similar collaborative agreement.
SEC. 814. ADDITIONAL AUTHORITIES.
(a) In General.--In carrying out this subtitle on behalf of
the President, the Secretary, in consultation with the
Secretary of State, the Secretary of Defense, the Secretary
of Energy, and the heads of other Federal agencies as
appropriate, shall--
(1) establish and maintain a list of items that are
controlled under this subtitle;
(2) establish and maintain a list of foreign persons and
end-uses that are determined to be a threat to the national
security and foreign policy of the United States pursuant to
the policy set forth in section 812(2)(A);
(3) prohibit unauthorized exports, reexports, and transfers
of controlled items, including to foreign persons in the
United States or outside the United States;
(4) restrict exports, reexports, and transfers of any
controlled items to any foreign person or end-use listed
under paragraph (2);
(5) require licenses or other authorizations, as
appropriate, for exports, reexports, and transfers of
controlled items, including imposing conditions or
restrictions on United States persons and foreign persons
with respect to such licenses or other authorizations;
(6) establish a process for an assessment to determine
whether a foreign item is comparable in quality to an item
controlled under this subtitle, and is available in
sufficient quantities to render the United States export
control of that item or the denial of a license ineffective,
including a mechanism to address that disparity;
(7) require measures for compliance with the export
controls established under this subtitle;
(8) require and obtain such information from United States
persons and foreign persons as is necessary to carry out this
subtitle;
(9) require, to the extent feasible, identification of
items subject to controls under this subtitle in order to
facilitate the enforcement of such controls;
(10) inspect, search, detain, or seize, or impose temporary
denial orders with respect to items, in any form, that are
subject to controls under this subtitle, or conveyances on
which it is believed that there are items that have been, are
being, or are about to be exported, reexported, or
transferred in violation of this subtitle;
(11) monitor shipments, or other means of transfer;
(12) keep the public fully apprised of changes in policy,
regulations, and procedures established under this subtitle;
(13) appoint technical advisory committees in accordance
with the Federal Advisory Committee Act;
(14) create, as warranted, exceptions to licensing
requirements in order to further the objectives of this
subtitle;
(15) establish and maintain processes to inform persons,
either individually by specific notice or through amendment
to any regulation or order issued under this subtitle, that a
license from the Bureau of Industry and Security of the
Department of Commerce is required to export; and
(16) undertake any other action as is necessary to carry
out this subtitle that is not otherwise prohibited by law.
(b) Relationship to IEEPA.--The authority under this
subtitle may not be used to regulate or prohibit under this
subtitle the export, reexport, or transfer of any item that
may not be regulated or prohibited under section 203(b) of
the International Emergency Economic Powers Act (50 U.S.C.
1702(b)), except to the extent the President has made a
determination necessary to impose controls under subparagraph
(A), (B), or (C) of paragraph (2) of such section.
(c) Countries Supporting International Terrorism.--
(1) Commerce license requirement.--
(A) In general.--A license shall be required for the
export, reexport, or transfer of items, the control of which
is implemented pursuant to subsection (a) by the Secretary,
to a country if the Secretary of State has made the following
determinations:
(i) The government of such country has repeatedly provided
support for acts of international terrorism.
(ii) The export, reexport, or transfer of such items could
make a significant contribution to the military potential of
such country, including its military logistics capability, or
could enhance the ability of such country to support acts of
international terrorism.
(B) Determination under other provisions of law.--A
determination of the Secretary of State under section 620A of
the Foreign Assistance Act of 1961 (22 U.S.C. 2371), section
40 of the Arms Export Control Act (22 U.S.C. 2780), or any
other provision of law that the government of a country
described in subparagraph (A) has repeatedly provided support
for acts of international terrorism shall be deemed to be a
determination with respect to such government for purposes of
clause (i) of subparagraph (A).
(2) Notification to congress.--
(A) In general.--The Secretary of State and the Secretary
shall notify the Committee on Foreign Affairs of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs and the Committee on Foreign Relations of the
Senate at least 30 days before any license is issued as
required by paragraph (1).
(B) Contents.--The Secretary of State shall include in the
notification required under subparagraph (A)--
(i) a detailed description of the items to be offered,
including a brief description of the capabilities of any item
for which a license to export, reexport, or transfer the
items is sought;
(ii) the reasons why the foreign country, person, or entity
to which the export, reexport, or transfer is proposed to be
made has requested the items under the export, reexport, or
transfer, and a description of the manner in which such
country, person, or entity intends to use such items;
(iii) the reasons why the proposed export, reexport, or
transfer is in the national interest of the United States;
(iv) an analysis of the impact of the proposed export,
reexport, or transfer on the military capabilities of the
foreign country, person, or entity to which such transfer
would be made;
(v) an analysis of the manner in which the proposed export,
reexport, or transfer would affect the relative military
strengths of countries in the region to which the items that
are the subject of such export, reexport, or transfer would
be delivered and whether other countries in the region have
comparable kinds and amounts of items; and
(vi) an analysis of the impact of the proposed export,
reexport, or transfer on the relations of the United States
with the countries in the region to which the items that are
the subject of such export, reexport, or transfer would be
delivered.
(3) Publication in federal register.--Each determination of
the Secretary of State under paragraph (1)(A)(i) shall be
published in the Federal Register, except that the Secretary
of State may exclude confidential information and trade
secrets contained in such determination.
(4) Rescission of determination.--A determination of the
Secretary of State under paragraph (1)(A)(i) may not be
rescinded unless the President submits to the Speaker of the
House of Representatives, the chairman of the Committee on
Foreign Affairs, and the chairman of the Committee on
Banking, Housing, and Urban Affairs and the chairman of the
Committee on Foreign Relations of the Senate--
(A) before the proposed rescission would take effect, a
report certifying that--
(i) there has been a fundamental change in the leadership
and policies of the government of the country concerned;
(ii) that government is not supporting acts of
international terrorism; and
(iii) that government has provided assurances that it will
not support acts of international terrorism in the future; or
(B) at least 90 days before the proposed rescission would
take effect, a report justifying the rescission and
certifying that--
(i) the government concerned has not provided any support
for acts international terrorism during the preceding 24-
month period; and
(ii) the government concerned has provided assurances that
it will not support acts of international terrorism in the
future.
(5) Disapproval of rescission.--No rescission under
paragraph (4)(B) of a determination under paragraph (1)(A)
with respect to the government of a country may be made if
Congress, within 90 days after receipt of a report under
paragraph (4)(B), enacts a joint
[[Page H5683]]
resolution described in subsection (f)(2) of section 40 of
the Arms Export Control Act with respect to a rescission
under subsection (f)(1) of such section with respect to the
government of such country.
(6) Notification and briefing.--Not later than--
(A) ten days after initiating a review of the activities of
the government of the country concerned within the 24-month
period referred to in paragraph (4)(B)(i), the Secretary of
State shall notify the Committee on Foreign Affairs of the
House of Representatives and the Committee on Foreign
Relations of the Senate of such initiation; and
(B) 20 days after the notification described in paragraph
(1), the Secretary of State shall brief the congressional
committees described in paragraph (1) on the status of such
review.
(7) Waiver.--The President may waive the requirement under
paragraph (1) that a license shall be required for the
export, reexport, or transfer of items, the control of which
is implemented pursuant to subsection (a) by the Secretary,
to a country if the President--
(A) determines that to do so is essential to the national
security interests of the United States; and
(B) consults with the Committee on Foreign Affairs of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs and the Committee on Foreign
Relations of the Senate not less than 15 days prior to the
waiver taking effect.
(d) Enhanced Controls.--
(1) In general.--In furtherance of section 813(a), the
President shall, except to the extent authorized by a statute
or regulation administered by a Federal department or agency
other than the Department of Commerce, require a United
States person, wherever located, to apply for and receive a
license from the Department of Commerce for--
(A) the export, reexport, or transfer of items described in
paragraph (2), including items that are not subject to
control under this subtitle; and
(B) other activities that may support the design,
development, production, use, operation, installation,
maintenance, repair, overhaul, or refurbishing of, or for the
performance of services relating to, any such items.
(2) Items described.--The items described in this paragraph
include--
(A) nuclear explosive devices;
(B) missiles;
(C) chemical or biological weapons;
(D) whole plants for chemical weapons precursors; and
(E) foreign maritime nuclear projects that would pose a
risk to the national security or foreign policy of the United
States.
(e) Additional Prohibitions.--The Secretary may inform
United States persons, either individually by specific notice
or through amendment to any regulation or order issued under
this subtitle, that a license from the Bureau of Industry and
Security of the Department of Commerce is required to engage
in any activity if the activity involves the types of
movement, service, or support described in subsection (d).
The absence of any such notification does not excuse the
United States person from compliance with the license
requirements of subsection (d), or any regulation or order
issued under this subtitle.
(f) License Review Standards.--The Secretary shall deny an
application to engage in any activity described in subsection
(d) if the activity would make a material contribution to any
of the items described in subsection (d)(2).
SEC. 815. ADMINISTRATION OF EXPORT CONTROLS.
(a) In General.--The President shall rely on, including
through delegations, as appropriate, to the Secretary, the
Secretary of Defense, the Secretary of State, the Secretary
of Energy, the Director of National Intelligence, and the
heads of other Federal agencies as appropriate, to exercise
the authority to carry out the purposes set forth in
subsection (b).
(b) Purposes.--
(1) In general.--The purposes of this section include to--
(A) advise the President with respect to--
(i) identifying specific threats to the national security
and foreign policy that the authority of this subtitle may be
used to address; and
(ii) exercising the authority under this subtitle to
implement policies, regulations, procedures, and actions that
are necessary to effectively counteract those threats;
(B) review and approve--
(i) criteria for including items on, and removing such an
item from, a list of controlled items established under this
subtitle;
(ii) an interagency procedure for compiling and amending
any list described in clause (i);
(iii) criteria for including a person on a list of persons
to whom exports, reexports, and transfers of items are
prohibited or restricted under this subtitle;
(iv) standards for compliance by persons subject to
controls under this subtitle; and
(v) policies and procedures for the end-use monitoring of
exports, reexports, and transfers of items controlled under
this subtitle;
(C) obtain independent evaluations, including from
Inspectors General of the relevant departments or agencies,
on a periodic basis on the effectiveness of the
implementation of this subtitle in carrying out the policy
set forth in section 812; and
(D) benefit from the inherent equities, experience, and
capabilities of the Federal officials described in subsection
(a), including--
(i) the views of the Department of Defense with respect to
the national security implications of a particular control or
decision;
(ii) the views of the Department of State with respect to
foreign policy implications of a particular control or
decision, including views relating to national security;
(iii) the views of the Department of Energy with respect to
the implications for nuclear proliferation of a particular
control or decision;
(iv) the views of the Department of Commerce with respect
to the administration of an efficient, coherent, reliable,
enforceable, and predictable export control system, including
views relating to national security, and the resolution of
competing views or policy objectives described in section
812; and
(v) the views of other Federal agencies, including the
Department of Homeland Security and the Department of
Justice, with respect to enforceability of a particular
control or decision.
(2) Transmittal and implementation of evaluations.--The
results of the independent evaluations conducted pursuant to
paragraph (1)(C) shall be transmitted to the President and
the Congress, in classified form if necessary. Subject to the
delegation of authority by the President, the Federal
officials described in subsection (a) shall determine,
direct, and ensure that improvements recommended in the
evaluations are implemented.
(c) Sense of Congress.--It is the sense of Congress that
the administration of export controls under this subtitle
should be consistent with the procedures relating to export
license applications described in Executive Order 12981
(1995).
SEC. 816. LICENSING.
(a) In General.--The President shall, as set forth in
section 815(a), establish a procedure for the Department of
Commerce to license or otherwise authorize the export,
reexport, and transfer of items controlled under this
subtitle in order to carry out the policy set forth in
section 812 and the requirements set forth in section 813(b).
The procedure shall ensure that--
(1) license applications and other requests for
authorization are considered and decisions made with the
participation of appropriate Federal agencies, as
appropriate; and
(2) licensing decisions are made in an expeditious manner,
with transparency to applicants on the status of license and
other authorization processing and the reason for denying any
license or request for authorization.
(b) Sense of Congress.--It is the sense of Congress that
the President should make best efforts to ensure that an
accurate, consistent, and timely evaluation and processing of
licenses or other requests for authorization to export,
reexport, or transfer items controlled under this subtitle is
generally accomplished within 30 days from the date of such
license request.
(c) Fees.--No fee may be charged in connection with the
submission, processing, or consideration of any application
for a license or other authorization or other request made in
connection with any regulation in effect under the authority
of this subtitle.
(d) Additional Procedural Requirements.--
(1) In general.--The procedure required under subsection
(a) shall provide for the assessment of the impact of a
proposed export of an item on the United States defense
industrial base and the denial of an application for a
license or a request for an authorization of any export that
would have a significant negative impact on such defense
industrial base, as described in paragraph (3).
(2) Information from applicant.--The procedure required
under subsection (a) shall also require an applicant for a
license to provide the information necessary to make the
assessment provided under paragraph (1), including whether
the purpose or effect of the export is to allow for the
significant production of items relevant for the defense
industrial base outside the United States.
(3) Significantly negative impact defined.--A significant
negative impact on the United States defense industrial base
is the following:
(A) A reduction in the availability of an item produced in
the United States that is likely to be acquired by the
Department of Defense or other Federal department or agency
for the advancement of the national security of the United
States, or for the production of an item in the United States
for the Department of Defense or other agency for the
advancement of the national security of the United States.
(B) A reduction in the production in the United States of
an item that is the result of research and development
carried out, or funded by, the Department of Defense or other
Federal department or agency to advance the national security
of the United States, or a federally funded research and
development center.
(C) A reduction in the employment of United States persons
whose knowledge and skills are necessary for the continued
production in the United States of an item that is likely to
be acquired by the Department of Defense or other Federal
department or agency for the advancement of the national
security of the United States.
[[Page H5684]]
SEC. 817. COMPLIANCE ASSISTANCE.
(a) System for Seeking Assistance.--The President may
authorize the Secretary to establish a system to provide
United States persons with assistance in complying with this
subtitle, which may include a mechanism for providing
information, in classified form as appropriate, who are
potential customers, suppliers, or business partners with
respect to items controlled under this subtitle, in order to
further ensure the prevention of the export, reexport, or
transfer of items that may pose a threat to the national
security or foreign policy of the United States.
(b) Security Clearances.--In order to carry out subsection
(a), the President may issue appropriate security clearances
to persons described in that subsection who are responsible
for complying with this subtitle.
(c) Assistance for Certain Businesses.--
(1) In general.--Not later than 120 days after the date of
the enactment of this Act, the President shall develop and
submit to Congress a plan to assist small- and medium-sized
United States in export licensing and other processes under
this subtitle.
(2) Contents.--The plan shall include, among other things,
arrangements for the Department of Commerce to provide
counseling to businesses described in paragraph (1) on filing
applications and identifying items controlled under this
subtitle, as well as proposals for seminars and conferences
to educate such businesses on export controls, licensing
procedures, and related obligations.
SEC. 818. REQUIREMENTS TO IDENTIFY AND CONTROL EMERGING,
FOUNDATIONAL, AND OTHER CRITICAL TECHNOLOGIES
IN EXPORT CONTROL REGULATIONS.
(a) Identification of Technologies.--
(1) In general.--The President shall establish and, in
coordination with the Secretary, the Secretary of Defense,
the Secretary of Energy, the Secretary of State, and the
heads of other Federal agencies as appropriate, lead a
regular, ongoing interagency process to identify emerging and
foundational technologies that--
(A) are essential to the national security of the United
States; and
(B) are not critical technologies described in
subparagraphs (A) through (D) of section 721(a)(7) of the
Defense Production Act of 1950 (50 U.S.C. 4565(a)(7)).
(2) Interagency process.--The interagency process required
under paragraph (1) shall--
(A) be informed by multiple sources of information,
including--
(i) publicly available information;
(ii) classified information, including relevant information
provided by the Director of National Intelligence;
(iii) information relating to reviews and investigations of
transactions by the Committee on Foreign Investment in the
United States under section 721 of the Defense Production Act
of 1950 (50 U.S.C. 4565); and
(iv) information provided by the advisory committees
established by the Secretary to advise the Under Secretary of
Commerce for Industry and Security on controls under the
Export Administration Regulations, including the Emerging
Technology and Research Advisory Committee.
(B) take into account--
(i) the development of emerging and foundational
technologies in other countries;
(ii) the effect export controls imposed pursuant to this
section may have on the development of the technologies in
the United States; and
(iii) the effectiveness of export controls imposed pursuant
to this section on limiting the proliferation of emerging and
foundational technologies to foreign countries;
(C) provide for the nomination of an emerging or
foundational technology to be identified under subsection (a)
by the Secretary, the Secretary of Defense, the Secretary of
State, the Secretary of Energy, or the heads of other Federal
agencies as appropriate;
(D) ensure that, not later than 60 days after the
nomination of an emerging or foundational technology under
subparagraph (C), the Secretary makes a determination, in
coordination with the Secretary of Defense, the Secretary of
State, the Secretary of Energy, and the heads of other
Federal agencies as appropriate, regarding whether additional
or modified controls on the technology under this section are
warranted, including through informing a person that a
license is required to export the technology, or that more
time and input from the sources described in this paragraph
is needed before a final determination is made to issue a
rule to impose controls over such technology; and
(E) include a notice and comment period.
(b) Commerce Controls.--
(1) In general.--The Secretary shall, except to the extent
inconsistent with the authorities described in subsection
(a)(1)(B), establish appropriate controls on the export,
reexport, or transfer of technology identified pursuant to
subsection (a) and subject to the Export Administration
Regulations, including by publishing additional regulations.
(2) Levels of control.--
(A) In general.--The Secretary may, in coordination with
the Secretary of Defense, the Secretary of Energy, the
Secretary of State, and the heads of other Federal agencies
as appropriate, specify the level of control to apply under
paragraph (1) with respect to the export of technology
described in that paragraph, including a requirement for a
license or other authorization, to export, reexport, or
transfer of that technology.
(B) Considerations.--In determining under subparagraph (A)
the level of control that is appropriate for technology
described in paragraph (1), the Secretary shall take into
account--
(i) lists of countries to which exports from the United
States are restricted; and
(ii) the potential end uses and end users of the
technology.
(C) Minimum requirements.--The Secretary shall, at a
minimum and except as required by paragraph (4), require a
license to export, reexport, or transfer technology described
in paragraph (1) to or in a country subject to an embargo,
including an arms embargo, imposed by the United States.
(3) Review of license applications.--
(A) Procedures.--The procedures set forth in Executive
Order 12981 (50 U.S.C. 4603 note; relating to the
administration of export controls) or any successor order,
shall apply to the review of an application for a license for
the export, reexport, or transfer of technology described in
paragraph (1).
(B) Consideration of information relating to national
security.--In reviewing an application for a license or other
authorization for the export, reexport, or transfer of
technology described in paragraph (1), the Secretary shall
take into account information provided by the Director of
National Intelligence regarding any threat to the national
security of the United States posed by the proposed export,
reexport, or transfer. The Director of National Intelligence
shall provide such information on the request of the
Secretary.
(C) Disclosure relating to collaborative arrangements.--In
the case of an application for a license or other
authorization for the export, reexport, or transfer of
technology described in paragraph (1) submitted by or on
behalf of a joint venture, joint development agreement, or
similar collaborative arrangement, the Secretary may require
the applicant to identify, in addition to any foreign person
participating in the arrangement, any foreign person with
significant ownership interest in a foreign person
participating in the arrangement.
(4) Exceptions.--
(A) Mandatory exception.--The Secretary may not control
under this subsection the export of any technology described
in paragraph (1) if the regulation of that technology is
prohibited under any other provision of law.
(B) Regulatory exemptions.--In prescribing regulations
under paragraph (1), the Secretary may include appropriate
regulatory exemptions to the requirements of that paragraph
for the export, reexport, or transfer of technology described
in paragraph (1).
(c) Multilateral Controls.--
(1) In general.--The Secretary of State, in coordination
with the Secretary, the Secretary of Defense, the Secretary
of Energy, and heads of other Federal agencies as
appropriate, shall propose to the relevant multilateral
export control regimes in the following year that a
technology identified through the interagency process
required under subsection (a) be added to the list of
technology controlled by such regimes.
(2) Review of continued unilateral export controls.--The
Secretary, with respect to those items on the Commerce
Control List maintained under part 774 of title 15, Code of
Federal Regulations, and in coordination with the Secretary
of Defense, the Secretary of Energy, and the Secretary of
State, and the Secretary of State, with respect to those
items on the United States Munitions List and in coordination
with the Secretary of Defense and the heads of other Federal
agencies as appropriate, shall determine whether national
security concerns warrant continued unilateral export
controls over a technology proposed for multilateral control
under paragraph (1) if the relevant multilateral export
control regime does not agree to list such technology on its
control list within three years of a proposal by the United
States.
(d) Report.--Not later than 180 days after the date of the
enactment of this Act, and not less frequently than every 180
days thereafter, the Secretary, in coordination with the
Secretary of Defense, the Secretary of State, the Secretary
of Energy, and the heads of other Federal agencies as
appropriate, shall submit to the Committee on Foreign
Investment in the United States on a semiannual basis a
report on updates of any key actions taken pursuant to this
section.
(e) Rule of Construction.--Nothing in this section shall be
construed to alter or limit--
(1) the authority of the President and the Secretary of
State to designate those items that are considered to be
defense articles or defense services for purposes of the Arms
Export Control Act (22 U.S.C. 2751 et seq.) or to otherwise
regulate such items; or
(2) the authority of the President under the Atomic Energy
Act of 1954 (42 U.S.C. 2011 et seq.), the Nuclear Non-
Proliferation Act of 1978 (22 U.S.C. 3201 et seq.), the
Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.),
this title, or any other provision of law relating to the
control of exports.
(f) Sense of Congress.--It is the sense of the Congress
that the President should request in the annual budget of the
President submitted under section 1105(a) of title 31, United
States Code, sufficient resources to
[[Page H5685]]
enable the relevant departments and agencies to effectively
implement this section.
SEC. 819. REVIEW RELATING TO COUNTRIES SUBJECT TO
COMPREHENSIVE UNITED STATES ARMS EMBARGO.
(a) In General.--The Secretary, the Secretary of Defense,
the Secretary of Energy, the Secretary of State, and the
heads of other Federal agencies as appropriate, shall conduct
a review of--
(1) section 744.21 of title 15, Code of Federal
Regulations, including to assess whether the current and
anticipated risks of direct or indirect diversion, such as
from policies and practices that effectively obscure
distinctions between civil and military end-users and end-
uses, require that the scope of control under such section
should be expanded to apply to exports, reexports, or
transfers for military end uses and military end users in
countries that are subject to a comprehensive United States
arms embargo and countries that are subject to a United
Nations arms embargo;
(2) entries on the Commerce Control List maintained under
part 774 of title 15, Code of Federal Regulations, that do
not impose license requirements for exports, reexports, or
transfers of items to countries subject to a comprehensive
United States arms embargo;
(3) whether there should be a presumption of denial for an
application for a license to export, reexport, or transfer an
item on the Commerce Control List subject to national
security controls or regional stability controls under part
742 of the Export Administration Regulations if that item is
reasonably likely to contribute, directly or indirectly, to
the military or intelligence capabilities of any country with
respect to which the United States has in place an arms
embargo, sanctions, or comparable restrictions, including to
or within any country listed in Country Group D:5 in
Supplement No. 1 to part 740 of the Export Administration
Regulations;
(4) whether there should be a presumption of denial for an
application for a license to export, reexport, or transfer an
emerging or foundational technology identified in section
818(a) to or within a country identified in section 744.21 of
title 15, Code of Federal Regulations or Country Group E in
Supplement No. 1 to part 740 of the Export Administration
Regulations; and
(5) without limiting the effect of paragraphs (3) and (4),
whether there should be a presumption of approval for an
application for a license to export, reexport, or transfer an
item on the Commerce Control List if that item is for a civil
end use.
(b) Implementation of Results of Review.--Not later than
270 days after the date of the enactment of this Act, the
Secretary shall implement the results of the review conducted
under subsection (a).
SEC. 820. PENALTIES.
(a) Unlawful Acts.--
(1) In general.--It shall be unlawful for a person to
violate, attempt to violate, conspire to violate, or cause a
violation of this subtitle or of any regulation, order,
license, or other authorization issued under this subtitle,
including any of the unlawful acts described in paragraph
(2).
(2) Specific unlawful acts.--The unlawful acts described in
this paragraph are the following:
(A) No person may engage in any conduct prohibited by or
contrary to, or refrain from engaging in any conduct required
by this subtitle, the Export Administration Regulations, or
any order, license or authorization issued thereunder.
(B) No person may cause or aid, abet, counsel, command,
induce, procure, permit, or approve the doing of any act
prohibited, or the omission of any act required by this
subtitle, the Export Administration Regulations, or any
order, license or authorization issued thereunder.
(C) No person may solicit or attempt a violation of this
subtitle, the Export Administration Regulations, or any
order, license or authorization issued thereunder.
(D) No person may conspire or act in concert with one or
more other persons in any manner or for any purpose to bring
about or to do any act that constitutes a violation of this
subtitle, the Export Administration Regulations, or any
order, license or authorization issued thereunder.
(E) No person may order, buy, remove, conceal, store, use,
sell, loan, dispose of, transfer, transport, finance,
forward, or otherwise service, in whole or in part, or
conduct negotiations to facilitate such activities for, any
item exported or to be exported from the United States, or
that is otherwise subject to the Export Administration
Regulations, with knowledge that a violation of this
subtitle, the Export Administration Regulations, or any
order, license or authorization issued thereunder, has
occurred, is about to occur, or is intended to occur in
connection with the item unless valid authorization is
obtained therefor.
(F) No person may make any false or misleading
representation, statement, or certification, or falsify or
conceal any material fact, either directly to the Department
of Commerce, or an official of any other United States
agency, including the Department of Homeland Security and the
Department of Justice, or indirectly through any other
person--
(i) in the course of an investigation or other action
subject to the Export Administration Regulations;
(ii) in connection with the preparation, submission,
issuance, use, or maintenance of any export control document
or any report filed or required to be filed pursuant to the
Export Administration Regulations; or
(iii) for the purpose of or in connection with effecting
any export, reexport, or transfer of an item subject to the
Export Administration Regulations or a service or other
activity of a United States person described in section 814.
(G) No person may engage in any transaction or take any
other action with intent to evade the provisions of this
subtitle, the Export Administration Regulations, or any
order, license, or authorization issued thereunder.
(H) No person may fail or refuse to comply with any
reporting or recordkeeping requirements of the Export
Administration Regulations or of any order, license, or
authorization issued thereunder.
(I) Except as specifically authorized in the Export
Administration Regulations or in writing by the Department of
Commerce, no person may alter any license, authorization,
export control document, or order issued under the Export
Administration Regulations.
(J) No person may take any action that is prohibited by a
denial order issued by the Department of Commerce to prevent
imminent violations of this subtitle, the Export
Administration Regulations, or any order, license or
authorization issued thereunder.
(3) Additional requirements.--For purposes of subparagraph
(G), any representation, statement, or certification made by
any person shall be deemed to be continuing in effect. Each
person who has made a representation, statement, or
certification to the Department of Commerce relating to any
order, license, or other authorization issued under this
subtitle shall notify the Department of Commerce, in writing,
of any change of any material fact or intention from that
previously represented, stated, or certified, immediately
upon receipt of any information that would lead a reasonably
prudent person to know that a change of material fact or
intention had occurred or may occur in the future.
(b) Criminal Penalty.--A person who willfully commits,
willfully attempts to commit, or willfully conspires to
commit, or aids and abets in the commission of, an unlawful
act described in subsection (a)--
(1) shall be fined not more than $1,000,000; and
(2) in the case of the individual, shall be imprisoned for
not more than 20 years, or both.
(c) Civil Penalties.--
(1) Authority.--The President may impose the following
civil penalties on a person for each violation by that person
of this subtitle or any regulation, order, or license issued
under this subtitle, for each violation:
(A) A fine of not more than $300,000 or an amount that is
twice the value of the transaction that is the basis of the
violation with respect to which the penalty is imposed,
whichever is greater.
(B) Revocation of a license issued under this subtitle to
the person.
(C) A prohibition on the person's ability to export,
reexport, or transfer any items, whether or not subject to
controls under this subtitle.
(2) Procedures.--Any civil penalty under this subsection
may be imposed only after notice and opportunity for an
agency hearing on the record in accordance with sections 554
through 557 of title 5, United States Code.
(3) Standards for levels of civil penalty.--The Secretary
may by regulation provide standards for establishing levels
of civil penalty under this subsection based upon factors
such as the seriousness of the violation, the culpability of
the violator, and such mitigating factors as the violator's
record of cooperation with the Government in disclosing the
violation.
(d) Criminal Forfeiture of Property Interest and
Proceeds.--
(1) Forfeiture.--Any person who is convicted under
subsection (b) of a violation of a control imposed under
section 813 (or any regulation, order, or license issued with
respect to such control) shall, in addition to any other
penalty, forfeit to the United States--
(A) any of that person's interest in, security of, claim
against, or property or contractual rights of any kind in the
tangible items that were the subject of the violation;
(B) any of that person's interest in, security of, claim
against, or property or contractual rights of any kind in
tangible property that was used in the violation; and
(C) any of that person's property constituting, or derived
from, any proceeds obtained directly or indirectly as a
result of the violation.
(2) Procedures.--The procedures in any forfeiture under
this subsection, and the duties and authority of the courts
of the United States and the Attorney General with respect to
any forfeiture action under this subsection or with respect
to any property that may be subject to forfeiture under this
subsection, shall be governed by the provisions of section
1963 of title 18, United States Code.
(e) Prior Convictions.--
(1) License bar.--
(A) In general.--The Secretary may--
(i) deny the eligibility of any person convicted of a
criminal violation described in subparagraph (B) to export,
reexport, or transfer outside the United States any item,
whether or not subject to controls under this subtitle, for a
period of up to 10 years beginning on the date of the
conviction; and
[[Page H5686]]
(ii) revoke any license or other authorization to export,
reexport, or transfer items that was issued under this
subtitle and in which such person has an interest at the time
of the conviction.
(B) Violations.--The violations referred to in subparagraph
(A) are any criminal violations of, or criminal attempt or
conspiracy to violate--
(i) this subtitle (or any regulation, license, or order
issued under this subtitle);
(ii) any regulation, license, or order issued under the
International Emergency Economic Powers Act;
(iii) section 371, 554, 793, 794, or 798 of title 18,
United States Code;
(iv) section 1001 of title 18, United States Code;
(v) section 4(b) of the Internal Security Act of 1950 (50
U.S.C. 783(b)); or
(vi) section 38 of the Arms Export Control Act (22 U.S.C.
2778).
(2) Application to other parties.--The Secretary may
exercise the authority under paragraph (1) with respect to
any person related, through affiliation, ownership, control,
position of responsibility, or other connection in the
conduct of trade or business, to any person convicted of any
violation of law set forth in paragraph (1), upon a showing
of such relationship with the convicted party, and subject to
the procedures set forth in subsection (c)(2).
(f) Other Authorities.--Nothing in subsection (c), (d), or
(e) limits--
(1) the availability of other administrative or judicial
remedies with respect to violations of this subtitle, or any
regulation, order, license or other authorization issued
under this subtitle;
(2) the authority to compromise and settle administrative
proceedings brought with respect to violations of this
subtitle, or any regulation, order, license, or other
authorization issued under this subtitle; or
(3) the authority to compromise, remit or mitigate seizures
and forfeitures pursuant to section 1(b) of title VI of the
Act of June 15, 1917 (22 U.S.C. 401(b)).
SEC. 821. ENFORCEMENT.
(a) Authorities.--In order to enforce this subtitle, the
Secretary, on behalf of the President shall exercise, in
addition to relevant enforcement authorities of other Federal
agencies, the authority to--
(1) issue orders and guidelines;
(2) require, inspect, and obtain books, records, and any
other information from any person subject to the provisions
of this subtitle;
(3) administer oaths or affirmations and by subpoena
require any person to appear and testify or to appear and
produce books, records, and other writings, or both;
(4) conduct investigations (including undercover) in the
United States and in other countries using all applicable
laws of the United States, including intercepting any wire,
oral, and electronic communications, conducting electronic
surveillance, using pen registers and trap and trace devices,
and carrying out acquisitions, to the extent authorized under
chapters 119, 121, and 206 of title 18, United States Code;
(5) inspect, search, detain, seize, or issue temporary
denial orders with respect to items, in any form, that are
subject to controls under this subtitle, or conveyances on
which it is believed that there are items that have been, are
being, or are about to be exported, reexported, or
transferred in violation of this subtitle, or any
regulations, order, license, or other authorization issued
thereunder;
(6) carry firearms;
(7) conduct prelicense inspections and post-shipment
verifications; and
(8) execute warrants and make arrests.
(b) Enforcement of Subpoenas.--In the case of contumacy by,
or refusal to obey a subpoena issued to, any person under
subsection (a)(3), a district court of the United States,
after notice to such person and a hearing, shall have
jurisdiction to issue an order requiring such person to
appear and give testimony or to appear and produce books,
records, and other writings, regardless of format, that are
the subject of the subpoena. Any failure to obey such order
of the court may be punished by such court as a contempt
thereof.
(c) Best Practice Guidelines.--
(1) In general.--The Secretary, in consultation with the
heads of other appropriate Federal agencies, should publish
and update ``best practices'' guidelines to assist persons in
developing and implementing, on a voluntary basis, effective
export control programs in compliance with the regulations
issued under this subtitle.
(2) Export compliance program.--The implementation by a
person of an effective export compliance program and a high
quality overall export compliance effort by a person should
ordinarily be given weight as mitigating factors in a civil
penalty action against the person under this subtitle.
(d) Reference to Enforcement.--For purposes of this
section, a reference to the enforcement of, or a violation
of, this subtitle includes a reference to the enforcement or
a violation of any regulation, order, license or other
authorization issued pursuant to this subtitle.
(e) Immunity.--A person shall not be excused from complying
with any requirements under this section because of the
person's privilege against self-incrimination, but the
immunity provisions of section 6002 of title 18, United
States Code, shall apply with respect to any individual who
specifically claims such privilege.
(f) Confidentiality of Information.--
(1) Exemptions from disclosure.--
(A) In general.--Information obtained under this subtitle
may be withheld from disclosure only to the extent permitted
by statute, except that information described in subparagraph
(B) shall be withheld from public disclosure and shall not be
subject to disclosure under section 552(b)(3) of title 5,
United States Code, unless the release of such information is
determined by the Secretary to be in the national interest.
(B) Information described.--Information described in this
subparagraph is information submitted or obtained in
connection with an application for a license or other
authorization to export, reexport, or transfer items, engage
in other activities, a recordkeeping or reporting
requirement, enforcement activity, or other operations under
this subtitle, including--
(i) the license application, license, or other
authorization itself;
(ii) classification or advisory opinion requests, and the
response thereto;
(iii) license determinations, and information pertaining
thereto;
(iv) information or evidence obtained in the course of any
investigation; and
(v) information obtained or furnished in connection with
any international agreement, treaty, or other obligation.
(2) Information to the congress and GAO.--
(A) In general.--Nothing in this section shall be construed
as authorizing the withholding of information from the
Congress or from the Government Accountability Office.
(B) Availability to the congress.--
(i) In general.--Any information obtained at any time under
any provision of the Export Administration Act of 1979 (as in
effect on the day before the date of the enactment of this
Act and as continued in effect pursuant to the International
Emergency Economic Powers Act), under the Export
Administration Regulations, or under this subtitle, including
any report or license application required under any such
provision, shall be made available to a committee or
subcommittee of Congress of appropriate jurisdiction, upon
the request of the chairman or ranking minority member of
such committee or subcommittee.
(ii) Prohibition on further disclosure.--No such committee
or subcommittee, or member thereof, may disclose any
information made available under clause (i), that is
submitted on a confidential basis unless the full committee
determines that the withholding of that information is
contrary to the national interest.
(C) Availability to GAO.--
(i) In general.--Information described in clause (i) of
subparagraph (B) shall be subject to the limitations
contained in section 716 of title 31, United States Code.
(ii) Prohibition on further disclosure.--An officer or
employee of the Government Accountability Office may not
disclose, except to the Congress in accordance with this
paragraph, any such information that is submitted on a
confidential basis or from which any individual can be
identified.
(3) Information sharing.--
(A) In general.--Any Federal official described in section
815(a) who obtains information that is relevant to the
enforcement of this subtitle, including information
pertaining to any investigation, shall furnish such
information to each appropriate department, agency, or office
with enforcement responsibilities under this section to the
extent consistent with the protection of intelligence,
counterintelligence, and law enforcement sources, methods,
and activities.
(B) Exceptions.--The provisions of this paragraph shall not
apply to information subject to the restrictions set forth in
section 9 of title 13, United States Code, and return
information, as defined in subsection (b) of section 6103 of
the Internal Revenue Code of 1986 (26 U.S.C. 6103(b)), may be
disclosed only as authorized by that section.
(C) Exchange of information.--The President shall ensure
that the heads of departments, agencies, and offices with
enforcement authorities under this subtitle, consistent with
protection of law enforcement and its sources and methods--
(i) exchange any licensing and enforcement information with
one another that is necessary to facilitate enforcement
efforts under this section; and
(ii) consult on a regular basis with one another and with
the head of other departments, agencies, and offices that
obtain information subject to this paragraph, in order to
facilitate the exchange of such information.
(D) Information sharing with federal agencies.--Licensing
or enforcement information obtained under this subtitle may
be shared with departments, agencies, and offices that do not
have enforcement authorities under this subtitle on a case-
by-case basis.
(g) Reporting Requirements.--In the administration of this
section, reporting requirements shall be designed to reduce
the cost of reporting, recordkeeping, and documentation to
the extent consistent with effective enforcement and
compilation of useful trade statistics. Reporting,
recordkeeping, and documentation requirements shall be
periodically reviewed and revised in the light of
developments in the field of information technology.
(h) Civil Forfeiture.--
(1) In general.--Any tangible items seized under subsection
(a) by designated officers or
[[Page H5687]]
employees shall be subject to forfeiture to the United States
in accordance with applicable law, except that property
seized shall be returned if the property owner is not found
guilty of a civil or criminal violation under section 819.
(2) Procedures.--Any seizure or forfeiture under this
subsection shall be carried out in accordance with the
procedures set forth in section 981 of title 18, United
States Code.
(i) Rule of Construction.--Nothing in this Act shall be
construed to limit or otherwise affect the enforcement
authorities of the Department of Homeland Security which may
also complement those set forth herein.
SEC. 822. ADMINISTRATIVE PROCEDURE.
(a) In General.--The functions exercised under this
subtitle shall not be subject to sections 551, 553 through
559, and 701 through 706 of title 5, United States Code.
(b) Administrative Law Judges.--The Secretary is authorized
to appoint an administrative law judge, and may designate
administrative law judges from other Federal agencies who are
provided pursuant to a legally authorized interagency
agreement with the Department of Commerce, and consistent
with the provisions of section 3105 of title 5, United States
Code.
(c) Amendments to Regulations.--The President shall notify
in advance the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Foreign Affairs of
the House of Representatives of any proposed amendments to
the Export Administration Regulations with an explanation of
the intent and rationale of such amendments.
SEC. 823. REVIEW OF INTERAGENCY DISPUTE RESOLUTION PROCESS.
(a) In General.--The President shall review and evaluate
the interagency export license referral, review, and
escalation processes for dual-use items and munitions under
the licensing jurisdiction of the Department of Commerce or
any other Federal agency, as appropriate, to determine
whether current practices and procedures are consistent with
established national security and foreign policy objectives.
(b) Report.--Not later than 180 days after the date of the
enactment of this Act, the President shall submit to the
appropriate congressional committees a report that contains
the results of the review carried out under subsection (a).
(c) Operating Committee for Export Policy.--In any case in
which the Operating Committee for Export Policy established
by Executive Order 12981 (December 5, 1991; relating to
Administration of Export Controls) is meeting to conduct an
interagency dispute resolution relating to applications for
export licenses under the Export Administration Regulations,
matters relating to jet engine hot section technology,
commercial communication satellites, and emerging or
foundational technology shall be decided by majority vote.
(d) Appropriate Congressional Committees Defined.--In this
section, the term ``appropriate congressional committees''
means--
(1) the Committee on Armed Services and the Committee on
Foreign Affairs of the House of Representatives; and
(2) the Committee on Armed Services and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
SEC. 824. COORDINATION WITH OTHER AGENCIES ON COMMODITY
CLASSIFICATION AND REMOVAL OF EXPORT CONTROLS.
(a) In General.--Notwithstanding any other provision of
law, the Secretary shall coordinate with the Secretary of
Defense, the Secretary of State, and the Secretary of Energy
before taking any of the actions described in subsection (b).
(b) Actions Described.--The actions described in this
subsection are the following:
(1) Amending the Commerce Control List set forth in
Supplement No. 1 to part 774 of the Export Administration
Regulations to remove an item from the list.
(2) Providing a commodity classification determination
under section 748.3 of the Export Administration Regulations,
including with respect to--
(A) ``600 series'' items;
(B) commercial communication satellites (ECCN 9x515);
(C) emerging and foundational technologies identified under
section 818(a);
(D) ``specially designed'' items under part 774 of title
15, Code of Federal Regulations; or
(E) any other items that the Secretary, in coordination
with the Secretary of Defense, the Secretary of State, and
the Secretary of Energy, identifies and mutually determines
is materially significant enough to warrant interagency
consultation before the Secretary determines to add the item
to the Commerce Control List and provide the item with a
Export Control Classification Number (ECCN).
(3) Amending the Commerce Control List to remove any
control imposed pursuant to subsection (b) of section 818 on
the export, reexport, or transfer of an emerging or
foundational technology identified under subsection (a) of
that section.
(4) Amending the Export Administration Regulations to
expand the scope or application of a license exception
authorized by section 740 of the Export Administration
Regulations.
SEC. 825. ANNUAL REPORT TO CONGRESS.
(a) In General.--The President shall submit to Congress, by
December 31 of each year, a report on the implementation of
this subtitle during the preceding fiscal year. The report
shall include a review of--
(1) the effect of controls imposed under this subtitle on
exports, reexports, and transfers of items in addressing
threats to the national security or foreign policy of the
United States, including a description of licensing
processing times;
(2) the impact of such controls on the scientific and
technological leadership of the United States;
(3) the consistency with such controls of export controls
imposed by other countries;
(4) efforts to provide exporters with compliance
assistance, including specific actions to assist small- and
medium-sized businesses;
(5) a summary of regulatory changes from the prior fiscal
year;
(6) a summary of export enforcement actions, including of
actions taken to implement end-use monitoring of dual-use,
military, and other items subject to the Export
Administration Regulations;
(7) a summary of approved license applications to
proscribed persons;
(8) efforts undertaken within the previous year to comply
with the requirements of section 819, including any critical
technologies identified under such section and how or whether
such critical technologies were controlled for export; and
(9) a summary of industrial base assessments conducted
during the previous year by the Department of Commerce,
including with respect to counterfeit electronics,
foundational technologies, and other research and analysis of
critical technologies and industrial capabilities of key
defense-related sectors.
(b) Form.--The report required under subsection (a) shall
be submitted in unclassified form, but may contain a
classified annex.
SEC. 826. REPEAL.
(a) In General.--The Export Administration Act of 1979 (50
U.S.C. App. 2401 et seq.) (as continued in effect pursuant to
the International Emergency Economic Powers Act) is repealed.
(b) Implementation.--The President shall implement the
amendment made by subsection (a) by exercising the
authorities of the President under the International
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).
SEC. 827. EFFECT ON OTHER ACTS.
(a) In General.--Except as otherwise provided in this
subtitle, nothing contained in this subtitle shall be
construed to modify, repeal, supersede, or otherwise affect
the provisions of any other laws authorizing control over
exports, reexports, or transfers of any item, or activities
of United States persons subject to the Export Administration
Regulations.
(b) Coordination of Controls.--
(1) In general.--The authority granted to the President
under this subtitle shall be exercised in such manner so as
to achieve effective coordination with all export control and
sanctions authorities exercised by Federal departments and
agencies delegated with authority under this subtitle,
particularly the Department of State, the Department of the
Treasury, and the Department of Energy.
(2) Sense of congress.--It is the sense of Congress that in
order to achieve effective coordination described in
paragraph (1), such Federal departments and agencies--
(A) should continuously work to create enforceable
regulations with respect to the export, reexport, and
transfer by United States and foreign persons of commodities,
software, technology, and services to various end uses and
end users for foreign policy and national security reasons;
(B) should regularly work to reduce complexity in the
system, including complexity caused merely by the existence
of structural, definitional, and other non-policy based
differences between and among different export control and
sanctions systems; and
(C) should coordinate controls on items exported,
reexported, or transferred in connection with a foreign
military sale under chapter 2 of the Arms Export Control Act
or a commercial sale under section 38 of the Arms Export
Control Act to reduce as much unnecessary administrative
burden as possible that is a result of differences between
the exercise of those two authorities.
(c) Nonproliferation Controls.--Nothing in this subtitle
shall be construed to supersede the procedures published by
the President pursuant to section 309(c) of the Nuclear Non-
Proliferation Act of 1978.
SEC. 828. TRANSITION PROVISIONS.
(a) In General.--All delegations, rules, regulations,
orders, determinations, licenses, or other forms of
administrative action that have been made, issued, conducted,
or allowed to become effective under the Export
Administration Act of 1979 (as in effect on the day before
the date of the enactment of this Act and as continued in
effect pursuant to the International Emergency Economic
Powers Act), or the Export Administration Regulations, and
are in effect as of the date of the enactment of this Act,
shall continue in effect according to their terms until
modified, superseded, set aside, or revoked under the
authority of this subtitle.
(b) Administrative and Judicial Proceedings.--This subtitle
shall not affect any administrative or judicial proceedings
commenced, or any applications for licenses made, under the
Export Administration Act of 1979 (as in effect on the day
before the
[[Page H5688]]
date of the enactment of this Act and as continued in effect
pursuant to the International Emergency Economic Powers Act),
or the Export Administration Regulations.
(c) Certain Determinations and References.--
(1) State sponsors of terrorism.--Any determination that
was made under section 6(j) of the Export Administration Act
of 1979 (as in effect on the day before the date of the
enactment of this Act and as continued in effect pursuant to
the International Emergency Economic Powers Act) shall
continue in effect as if the determination had been made
under section 814(c) of this Act.
(2) Reference.--Any reference in any other provision of law
to a country the government of which the Secretary of State
has determined, for purposes of section 6(j) of the Export
Administration Act of 1979 (as in effect on the day before
the date of the enactment of this Act and as continued in
effect pursuant to the International Emergency Economic
Powers Act), is a government that has repeatedly provided
support for acts of international terrorism shall be deemed
to refer to a country the government of which the Secretary
of State has determined, for purposes of section 814(c), is a
government that has repeatedly provided support for acts of
international terrorism.
Subtitle B--Anti-Boycott Act of 2018
SEC. 831. SHORT TITLE.
This subtitle may be cited as the ``Anti-Boycott Act of
2018''.
SEC. 832. STATEMENT OF POLICY.
Congress declares it is the policy of the United States--
(1) to oppose restrictive trade practices or boycotts
fostered or imposed by any foreign country against other
countries friendly to the United States or against any United
States person;
(2) to encourage and, in specified cases, require United
States persons engaged in the export of goods or technology
or other information to refuse to take actions, including
furnishing information or entering into or implementing
agreements, which have the effect of furthering or supporting
the restrictive trade practices or boycotts fostered or
imposed by any foreign country against a country friendly to
the United States or any United States person; and
(3) to foster international cooperation and the development
of international rules and institutions to assure reasonable
access to world supplies.
SEC. 833. FOREIGN BOYCOTTS.
(a) Prohibitions and Exceptions.--
(1) Prohibitions.--For the purpose of implementing the
policies set forth in section 832, the President shall issue
regulations prohibiting any United States person, with
respect to that person's activities in the interstate or
foreign commerce of the United States, from taking or
knowingly agreeing to take any of the following actions with
intent to comply with, further, or support any boycott
fostered or imposed by any foreign country, against a country
which is friendly to the United States and which is not
itself the object of any form of boycott pursuant to United
States law or regulation:
(A) Refusing, or requiring any other person to refuse, to
do business with or in the boycotted country, with any
business concern organized under the laws of the boycotted
country, with any national or resident of the boycotted
country, or with any other person, pursuant to an agreement
with, a requirement of, or a request from or on behalf of the
boycotting country. The mere absence of a business
relationship with or in the boycotted country with any
business concern organized under the laws of the boycotted
country, with any national or resident of the boycotted
country, or with any other person, does not indicate the
existence of the intent required to establish a violation of
regulations issued to carry out this subparagraph.
(B) Refusing, or requiring any other person to refuse, to
employ or otherwise discriminating against any United States
person on the basis of race, religion, sex, or national
origin of that person or of any owner, officer, director, or
employee of such person.
(C) Furnishing information with respect to the race,
religion, sex, or national origin of any United States person
or of any owner, officer, director, or employee of such
person.
(D) Furnishing information about whether any person has,
has had, or proposes to have any business relationship
(including a relationship by way of sale, purchase, legal or
commercial representation, shipping or other transport,
insurance, investment, or supply) with or in the boycotted
country, with any business concern organized under the laws
of the boycotted country, with any national or resident of
the boycotted country, or with any other person which is
known or believed to be restricted from having any business
relationship with or in the boycotting country. Nothing in
this subparagraph shall prohibit the furnishing of normal
business information in a commercial context as defined by
the Secretary.
(E) Furnishing information about whether any person is a
member of, has made contributions to, or is otherwise
associated with or involved in the activities of any
charitable or fraternal organization which supports the
boycotted country.
(F) Paying, honoring, confirming, or otherwise implementing
a letter of credit which contains any condition or
requirement compliance with which is prohibited by
regulations issued pursuant to this paragraph, and no United
States person shall, as a result of the application of this
paragraph, be obligated to pay or otherwise honor or
implement such letter of credit.
(2) Exceptions.--Regulations issued pursuant to paragraph
(1) shall provide exceptions for--
(A) complying or agreeing to comply with requirements--
(i) prohibiting the import of goods or services from the
boycotted country or goods produced or services provided by
any business concern organized under the laws of the
boycotted country or by nationals or residents of the
boycotted country; or
(ii) prohibiting the shipment of goods to the boycotting
country on a carrier of the boycotted country, or by a route
other than that prescribed by the boycotting country or the
recipient of the shipment;
(B) complying or agreeing to comply with import and
shipping document requirements with respect to the country of
origin, the name of the carrier and route of shipment, the
name of the supplier of the shipment or the name of the
provider of other services, except that no information
knowingly furnished or conveyed in response to such
requirements may be stated in negative, blacklisting, or
similar exclusionary terms, other than with respect to
carriers or route of shipment as may be permitted by such
regulations in order to comply with precautionary
requirements protecting against war risks and confiscation;
(C) complying or agreeing to comply in the normal course of
business with the unilateral and specific selection by a
boycotting country, or national or resident thereof, of
carriers, insurers, suppliers of services to be performed
within the boycotting country or specific goods which, in the
normal course of business, are identifiable by source when
imported into the boycotting country;
(D) complying or agreeing to comply with export
requirements of the boycotting country relating to shipments
or transshipments of exports to the boycotted country, to any
business concern of or organized under the laws of the
boycotted country, or to any national or resident of the
boycotted country;
(E) compliance by an individual or agreement by an
individual to comply with the immigration or passport
requirements of any country with respect to such individual
or any member of such individual's family or with requests
for information regarding requirements of employment of such
individual within the boycotting country; and
(F) compliance by a United States person resident in a
foreign country or agreement by such person to comply with
the laws of that country with respect to his activities
exclusively therein, and such regulations may contain
exceptions for such resident complying with the laws or
regulations of that foreign country governing imports into
such country of trademarked, trade named, or similarly
specifically identifiable products, or components of products
for his own use, including the performance of contractual
services within that country, as may be defined by such
regulations.
(3) Special rules.--Regulations issued pursuant to
paragraphs (2)(C) and (2)(F) shall not provide exceptions
from paragraphs (1)(B) and (1)(C).
(4) Rule of construction.--Nothing in this subsection may
be construed to supersede or limit the operation of the
antitrust or civil rights laws of the United States.
(5) Application.--This section shall apply to any
transaction or activity undertaken, by or through a United
States person or any other person, with intent to evade the
provisions of this section as implemented by the regulations
issued pursuant to this subsection, and such regulations
shall expressly provide that the exceptions set forth in
paragraph (2) shall not permit activities or agreements
(expressed or implied by a course of conduct, including a
pattern of responses) otherwise prohibited, which are not
within the intent of such exceptions.
(b) Foreign Policy Controls.--
(1) In general.--In addition to the regulations issued
pursuant to subsection (a), regulations issued under subtitle
A to carry out the policies set forth in section 812(1)(D)
shall implement the policies set forth in this section.
(2) Requirements.--Such regulations shall require that any
United States person receiving a request for the furnishing
of information, the entering into or implementing of
agreements, or the taking of any other action referred to in
subsection (a) shall report that fact to the Secretary,
together with such other information concerning such request
as the Secretary may require for such action as the Secretary
considers appropriate for carrying out the policies of that
section. Such person shall also report to the Secretary
whether such person intends to comply and whether such person
has complied with such request. Any report filed pursuant to
this paragraph shall be made available promptly for public
inspection and copying, except that information regarding the
quantity, description, and value of any goods or technology
to which such report relates may be kept confidential if the
Secretary determines that disclosure thereof would place the
United States person involved at a competitive disadvantage.
The Secretary shall periodically transmit summaries of the
information contained in such reports to the Secretary of
State for such action as the Secretary of State, in
consultation with the Secretary, considers appropriate for
carrying out the policies set forth in section 832.
(c) Preemption.--The provisions of this section and the
regulations issued pursuant
[[Page H5689]]
thereto shall preempt any law, rule, or regulation of any of
the several States or the District of Columbia, or any of the
territories or possessions of the United States, or of any
governmental subdivision thereof, which law, rule, or
regulation pertains to participation in, compliance with,
implementation of, or the furnishing of information regarding
restrictive trade practices or boycotts fostered or imposed
by foreign countries against other countries friendly to the
United States.
SEC. 834. ENFORCEMENT.
(a) Criminal Penalty.--A person who willfully commits,
willfully attempts to commit, or willfully conspires to
commit, or aids or abets in the commission of, an unlawful
act section 833--
(1) shall, upon conviction, be fined not more than
$1,000,000; or
(2) if a natural person, may be imprisoned for not more
than 20 years, or both.
(b) Civil Penalties.--The President may impose the
following civil penalties on a person who violates section
833 or any regulation issued under this subtitle:
(1) A fine of not more than $300,000 or an amount that is
twice the value of the transaction that is the basis of the
violation with respect to which the penalty is imposed,
whichever is greater.
(2) Revocation of a license issued under title I to the
person.
(3) A prohibition on the person's ability to export,
reexport, or transfer any items controlled under subtitle A.
(c) Procedures.--Any civil penalty or administrative
sanction (including any suspension or revocation of authority
to export) under this section may be imposed only after
notice and opportunity for an agency hearing on the record in
accordance with sections 554 through 557 of title 5, United
States Code, and shall be subject to judicial review in
accordance with chapter 7 of such title.
(d) Standards for Levels of Civil Penalty.--The President
may by regulation provide standards for establishing levels
of civil penalty under this section based upon factors such
as the seriousness of the violation, the culpability of the
violator, and the violator's record of cooperation with the
Government in disclosing the violation.
Subtitle C--Sanctions Regarding Missile Proliferation and Chemical and
Biological Weapons Proliferation
SEC. 841. MISSILE PROLIFERATION CONTROL VIOLATIONS.
(a) Violations by United States Persons.--
(1) Sanctions.--
(A) Sanctionable activity.--The President shall impose the
applicable sanctions described in subparagraph (B) if the
President determines that a United States person knowingly--
(i) exports, reexports, or transfers of any item on the
MTCR Annex, in violation of the provisions of section 38 (22
U.S.C. 2778) or chapter 7 of the Arms Export Control Act,
subtitle A, or any regulations or orders issued under any
such provisions; or
(ii) conspires to or attempts to engage in such export,
reexport, or transfer.
(B) Sanctions.--The sanctions that apply to a United States
person under subparagraph (A) are the following:
(i) If the item on the MTCR Annex involved in the export,
reexport, or transfer is missile equipment or technology
within category II of the MTCR Annex, then the President
shall deny to such United States person, for a period of 2
years, licenses for the transfer of missile equipment or
technology controlled under subtitle A.
(ii) If the item on the MTCR Annex involved in the export,
reexport, or transfer is missile equipment or technology
within category I of the MTCR Annex, then the President shall
deny to such United States person, for a period of not less
than 2 years, all licenses for items the transfer of which is
controlled under subtitle A.
(2) Discretionary sanctions.--In the case of any
determination referred to in paragraph (1), the President may
pursue any other appropriate penalties under section 820.
(3) Waiver.--The President may waive the imposition of
sanctions under paragraph (1) on a person with respect to a
product or service if the President certifies to the Congress
that--
(A) the product or service is essential to the national
security of the United States; and
(B) such person is a sole source supplier of the product or
service, the product or service is not available from any
alternative reliable supplier, and the need for the product
or service cannot be met in a timely manner by improved
manufacturing processes or technological developments.
(b) Transfers of Missile Equipment or Technology by Foreign
Persons.--
(1) Sanctions.--
(A) Sanctionable activity.--Subject to paragraphs (3)
through (7), the President shall impose the applicable
sanctions under subparagraph (B) on a foreign person if the
President--
(i) determines that a foreign person knowingly--
(I) exports, reexports, or transfers any MTCR equipment or
technology that contributes to the design, development, or
production of missiles in a country that is not an MTCR
adherent and would be, if it were United States-origin
equipment or technology, subject to the jurisdiction of the
United States under subtitle A;
(II) conspires to or attempts to engage in such export,
reexport, or transfer; or
(III) facilitates such export, reexport, or transfer by any
other person; or
(ii) has made a determination with respect to the foreign
person under section 73(a) of the Arms Export Control Act.
(B) Sanctions.--The sanctions that apply to a foreign
person under subparagraph (A) are the following:
(i) If the item involved in the export, reexport, or
transfer is within category II of the MTCR Annex, then the
President shall deny, for a period of 2 years, licenses for
the transfer to such foreign person of missile equipment or
technology the transfer of which is controlled under subtitle
A.
(ii) If the item involved in the export, reexport, or
transfer is within category I of the MTCR Annex, then the
President shall deny, for a period of not less than 2 years,
licenses for the transfer to such foreign person of items the
transfer of which is controlled under subtitle A.
(2) Inapplicability with respect to MTCR adherents.--
Paragraph (1) does not apply with respect to--
(A) any export, reexport, or transfer that is authorized by
the laws of an MTCR adherent, if such authorization is not
obtained by misrepresentation or fraud; or
(B) any export, reexport, or transfer of an item to an end
user in a country that is an MTCR adherent.
(3) Effect of enforcement actions by MTCR adherents.--
Sanctions set forth in paragraph (1) may not be imposed under
this subsection on a person with respect to acts described in
such paragraph or, if such sanctions are in effect against a
person on account of such acts, such sanctions shall be
terminated, if an MTCR adherent is taking judicial or other
enforcement action against that person with respect to such
acts, or that person has been found by the government of an
MTCR adherent to be innocent of wrongdoing with respect to
such acts.
(4) Waiver and report to congress.--
(A) Waiver authority.--The President may waive the
application of paragraph (1) to a foreign person if the
President determines that such waiver is essential to the
national security of the United States.
(B) Notification and report to congress.--In the event that
the President decides to apply the waiver described in
subparagraph (A), the President shall so notify the
appropriate congressional committees not less than 20 working
days before issuing the waiver. Such notification shall
include a report fully articulating the rationale and
circumstances which led the President to apply the waiver.
(5) Additional waiver.--The President may waive the
imposition of sanctions under paragraph (1) on a person with
respect to a product or service if the President certifies to
the appropriate congressional committees that--
(A) the product or service is essential to the national
security of the United States; and
(B) such person is a sole source supplier of the product or
service, the product or service is not available from any
alternative reliable supplier, and the need for the product
or service cannot be met in a timely manner by improved
manufacturing processes or technological developments.
(6) Exceptions.--The President shall not apply the sanction
under this subsection prohibiting the importation of the
products of a foreign person--
(A) in the case of procurement of defense articles or
defense services--
(i) under existing contracts or subcontracts, including the
exercise of options for production quantities to satisfy
requirements essential to the national security of the United
States;
(ii) if the President determines that the person to which
the sanctions would be applied is a sole source supplier of
the defense articles or defense services, that the defense
articles or defense services are essential to the national
security of the United States, and that alternative sources
are not readily or reasonably available; or
(iii) if the President determines that such articles or
services are essential to the national security of the United
States under defense coproduction agreements or NATO Programs
of Cooperation;
(B) to products or services provided under contracts
entered into before the date on which the President publishes
his intention to impose the sanctions; or
(C) to--
(i) spare parts;
(ii) component parts, but not finished products, essential
to United States products or production;
(iii) routine services and maintenance of products, to the
extent that alternative sources are not readily or reasonably
available; or
(iv) information and technology essential to United States
products or production.
(c) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Affairs of the House of
Representatives; and
(B) the Committee on Foreign Relations and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
(2) Defense articles; defense services.--The terms
``defense articles'' and ``defense services'' mean those
items on the United States Munitions List as defined in
section
[[Page H5690]]
47(7) of the Arms Export Control Act (22 U.S.C. 2794 note).
(3) Missile.--The term ``missile'' means a category I
system as defined in the MTCR Annex.
(4) Missile technology control regime; mtcr.--The term
``Missile Technology Control Regime'' or ``MTCR'' means the
policy statement, between the United States, the United
Kingdom, the Federal Republic of Germany, France, Italy,
Canada, and Japan, announced on April 16, 1987, to restrict
sensitive missile-relevant transfers based on the MTCR Annex,
and any amendments thereto.
(5) MTCR adherent.--The term ``MTCR adherent'' means a
country that participates in the MTCR or that, pursuant to an
international understanding to which the United States is a
party, controls MTCR equipment or technology in accordance
with the criteria and standards set forth in the MTCR.
(6) MTCR annex.--The term ``MTCR Annex'' means the
Guidelines and Equipment and Technology Annex of the MTCR,
and any amendments thereto.
(7) Missile equipment or technology; mtcr equipment or
technology.--The terms ``missile equipment or technology''
and ``MTCR equipment or technology'' mean those items listed
in category I or category II of the MTCR Annex.
SEC. 842. CHEMICAL AND BIOLOGICAL WEAPONS PROLIFERATION
SANCTIONS.
(a) Imposition of Sanctions.--
(1) Determination by the president.--Except as provided in
subsection (b)(2), the President shall impose the sanction
described in subsection (c) if the President determines that
a foreign person has knowingly and materially contributed--
(A) through the export from the United States of any item
that is subject to the jurisdiction of the United States
under this subtitle; or
(B) through the export from any other country of any item
that would be, if they were United States goods or
technology, subject to the jurisdiction of the United States
under this subtitle,
to the efforts by any foreign country, project, or entity
described in paragraph (2) to use, develop, produce,
stockpile, or otherwise acquire chemical or biological
weapons.
(2) Countries, projects, or entities receiving
assistance.--Paragraph (1) applies in the case of--
(A) any foreign country that the President determines has,
at any time after January 1, 1980--
(i) used chemical or biological weapons in violation of
international law;
(ii) used lethal chemical or biological weapons against its
own nationals; or
(iii) made substantial preparations to engage in the
activities described in clause (i) or (ii);
(B) any foreign country whose government is determined for
purposes of section 914(c) to be a government that has
repeatedly provided support for acts of international
terrorism; or
(C) any other foreign country, project, or entity
designated by the President for purposes of this section.
(3) Persons against which sanctions are to be imposed.--A
sanction shall be imposed pursuant to paragraph (1) on--
(A) the foreign person with respect to which the President
makes the determination described in that paragraph;
(B) any successor entity to that foreign person; and
(C) any foreign person that is a parent, subsidiary, or
affiliate of that foreign person if that parent, subsidiary,
or affiliate knowingly assisted in the activities which were
the basis of that determination.
(b) Consultations With and Actions by Foreign Government of
Jurisdiction.--
(1) Consultations.--If the President makes the
determinations described in subsection (a)(1) with respect to
a foreign person, the Congress urges the President to
initiate consultations immediately with the government with
primary jurisdiction over that foreign person with respect to
the imposition of a sanction pursuant to this section.
(2) Actions by government of jurisdiction.--In order to
pursue such consultations with that government, the President
may delay imposition of a sanction pursuant to this section
for a period of up to 90 days. Following such consultations,
the President shall impose the sanction unless the President
determines and certifies to the appropriate congressional
committees that the Government has taken specific and
effective actions, including appropriate penalties, to
terminate the involvement of the foreign person in the
activities described in subsection (a)(1). The President may
delay imposition of the sanction for an additional period of
up to 90 days if the President determines and certifies to
the Congress that the government is in the process of taking
the actions described in the preceding sentence.
(3) Report to congress.--The President shall report to the
appropriate congressional committees, not later than 90 days
after making a determination under subsection (a)(1), on the
status of consultations with the appropriate government under
this subsection, and the basis for any determination under
paragraph (2) of this subsection that such government has
taken specific corrective actions.
(c) Sanction.--
(1) Description of sanction.--The sanction to be imposed
pursuant to subsection (a)(1) is, except as provided that the
United States Government shall not procure, or enter into any
contract for the procurement of, any goods or services from
any person described in subsection (a)(3).
(2) Exceptions.--The President shall not be required to
apply or maintain a sanction under this section--
(A) in the case of procurement of defense articles or
defense services--
(i) under existing contracts or subcontracts, including the
exercise of options for production quantities to satisfy
United States operational military requirements;
(ii) if the President determines that the person or other
entity to which the sanctions would otherwise be applied is a
sole source supplier of the defense articles or defense
services, that the defense articles or defense services are
essential, and that alternative sources are not readily or
reasonably available; or
(iii) if the President determines that such articles or
services are essential to the national security under defense
coproduction agreements;
(B) to products or services provided under contracts
entered into before the date on which the President publishes
his intention to impose sanctions;
(C) to--
(i) spare parts;
(ii) component parts, but not finished products, essential
to United States products or production; or
(iii) routine servicing and maintenance of products, to the
extent that alternative sources are not readily or reasonably
available;
(D) to information and technology essential to United
States products or production; or
(E) to medical or other humanitarian items.
(d) Termination of Sanctions.--A sanction imposed pursuant
to this section shall apply for a period of at least 12
months following the imposition of one sanction and shall
cease to apply thereafter only if the President determines
and certifies to the appropriate congressional committees
that reliable information indicates that the foreign person
with respect to which the determination was made under
subsection (a)(1) has ceased to aid or abet any foreign
government, project, or entity in its efforts to acquire
chemical or biological weapons capability as described in
that subsection.
(e) Waiver.--
(1) Criterion for waiver.--The President may waive the
application of any sanction imposed on any person pursuant to
this section if the President determines and certifies to the
appropriate congressional committees that such waiver is
important to the national security interests of the United
States.
(2) Notification of and report to congress.--If the
President decides to exercise the waiver authority provided
in paragraph (1), the President shall so notify the
appropriate congressional committees not less than 20 days
before the waiver takes effect. Such notification shall
include a report fully articulating the rationale and
circumstances which led the President to exercise the waiver
authority.
(f) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Affairs of the House of
Representatives; and
(B) the Committee on Foreign Relations and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
(2) Defense articles; defense services.--The terms
``defense articles'' and ``defense services'' mean those
items on the United States Munitions List or are otherwise
controlled under the Arms Export Control Act.
Subtitle D--Administrative Authorities
SEC. 851. UNDER SECRETARY OF COMMERCE FOR INDUSTRY AND
SECURITY.
(a) In General.--The President shall appoint, by and with
the advice and consent of the Senate, an Under Secretary of
Commerce for Industry and Security who shall carry out all
the functions of the Secretary under this title and such
other provisions of law that relate to the implementation of
the dual-use export system.
(b) Assistant Secretaries of Commerce.--The President shall
appoint, by and with the advice and consent of the Senate,
two Assistant Secretaries of Commerce to assist the Under
Secretary in carrying out the functions described in
paragraph (1).
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
California (Mr. Royce) and the gentleman from California (Mr. Sherman)
each will control 20 minutes.
The Chair recognizes the gentleman from California (Mr. Royce).
General Leave
Mr. ROYCE of California. Mr. Speaker, I ask unanimous consent that
all Members may have 5 legislative days to revise and extend their
remarks and to include any extraneous material in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. ROYCE of California. Mr. Speaker, I yield 10 minutes to the
gentleman from Texas (Mr Hensarling), chairman of the Financial
Services Committee,
[[Page H5691]]
and I ask unanimous consent that he be allowed to control that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. ROYCE of California. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, over the past decade, we have seen rapid technological
advances. We have seen an increase in foreign investment in the United
States, but we have seen it especially from countries like China and
Russia that pose national security concerns to us.
Of great alarm, our regulatory system has not kept pace. Mr.
Pittenger's bill before us today seeks to change that.
The Foreign Investment Risk Review Modernization Act of 2018
represents a broad bipartisan agreement to reform our regulatory
systems to protect both our national security and to protect our
economic prosperity. Specifically, this bill strengthens national
security reviews of certain commercial transactions conducted by CFIUS,
as well as reforms and modernizations in order to bring up to date
outdated U.S. export control systems.
{time} 1345
That regime is reformed here.
I want to thank the chairman of the Financial Services Committee, Mr.
Hensarling, for his leadership on this issue.
The Committees on Armed Services, on Intelligence, Energy and
Commerce, Budget, and Oversight and Government Reform also played
important roles in shaping this legislation. This has been a truly
collaborative process.
Mr. Speaker, this body has not addressed exports of dual-use items--
products and services that have both commercial and military
application--since the Export Administration Act of 1979.
Since that lapse, nearly 25 years ago, successive administrations
have relied on emergency authorities that have not kept pace with
technological advances.
Today, we are acting to fix that problematic lapse because the United
States' position as the world's largest exporter of goods and services
is at risk. We will lose many good-paying jobs if we don't better
secure advanced technology and if we don't better secure intellectual
property.
That is why, this spring, the Foreign Affairs Committee passed the
Export Control Reform Act of 2018. We passed this legislation. And
under this approach, reflected in title VIII of the bill before us,
modernized U.S. export control laws and regulations will continue to
have broad authority governing the transfer of dual-use items and
technology to foreign persons, whether that transfer takes place abroad
or if that transfer takes place here in the United States.
Let me just highlight a few critical features of the export control
provisions of the legislation.
This title of the bill requires that export controls be calibrated
and continually updated to ensure lasting U.S. leadership in these
fields: science, technology, engineering, manufacturing, and other
sectors critical to the industrial base.
It ensures that sensitive manufacturing know-how, which may include
such items as written or oral communications, blueprints, engineering
designs, specifications, are subject to appropriate export controls
regardless of the nature of the underlying transaction.
And lastly, it establishes a new authority for the U.S. export
control agencies and the Department of Defense to identify and
appropriately control emerging and foundational technologies that may
be critical to U.S. national security.
This includes artificial intelligence, robotics, augmented and
virtual reality, new biotechnologies, new financial technologies, and
advanced materials.
Ten years ago, Mr. Sherman and I held a series of hearings to examine
China's increasingly aggressive policies in the wake of the EAA'S
expiration. I appreciate his passion for these issues and his
understanding of the need to balance our economic and national security
interests.
We do need a nimble, adaptable system that protects but doesn't
unduly burden our world-class industries.
Modernized U.S. export controls and CFIUS reforms are both critical
to the challenges posed by China and by Russia and by others.
This bill will help keep America safe, help keep us strong.
Mr. Speaker, I reserve the balance of my time.
House of Representatives, Committee on Oversight and
Government Reform
Washington, DC, June 26, 2018.
Hon. Edward R. Royce,
Chairman, Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: I write concerning H.R. 5841, the
Foreign Investment Risk Review Modernization Act of 2018.
This bill contains provisions within the jurisdiction of the
Committee on Oversight and Government Reform. As a result of
your having consulted with me concerning the provisions of
the bill that fall within our Rule X jurisdiction, I agree to
forgo consideration of the bill, so the bill may proceed
expeditiously to the House floor.
The Committee takes this action with our mutual
understanding that by foregoing consideration of H.R. 5841 we
do not waive any jurisdiction over the subject matter
contained in this or similar legislation, and we will be
appropriately consulted and involved as the bill or similar
legislation moves forward so we may address any remaining
issues within our Rule X jurisdiction. Further, I request
your support for the appointment of conferees from the
Committee on Oversight and Government Reform during any
House-Senate conference on this or related legislation.
Finally, I would appreciate a response confirming this
understanding and ask that a copy of our exchange of letters
on this matter be included in the bill report filed by the
Committee on Armed Services, as well as in the Congressional
Record during floor consideration thereof.
Sincerely,
Trey Gowdy.
____
House of Representatives,
Committee on Foreign Affairs,
Washington, DC, June 26, 2018.
Hon. Trey Gowdy,
Chairman, Committee on Oversight and Government Reform,
Washington, DC.
Dear Chairman Gowdy: Thank you for consulting with the
Foreign Affairs Committee and agreeing to be discharged from
further consideration of H.R. 5841, the Foreign Investment
Risk Review Modernization Act of 2018, so that the bill may
proceed expeditiously to the House floor.
I agree that your forgoing further action on this measure
does not in any way diminish or alter the jurisdiction of
your committee, or prejudice its jurisdictional prerogatives
on this resolution or similar legislation in the future. I
would support your effort to seek appointment of an
appropriate number of conferees from your committee to any
House-Senate conference on this legislation.
I will seek to place our letters on this bill into the
Congressional Record during floor consideration of the bill.
I appreciate your cooperation regarding this legislation and
look forward to continuing to work together as this measure
moves through the legislative process.
Sincerely,
Edward R. Royce,
Chairman.
____
House of Representatives, Permanent Select Committee on
Intelligence,
Washington, DC, June 26, 2018.
Hon. Ed Royce,
Chairman, Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: On May 16, 2018, H.R. 5841, the
``Foreign Investment Risk Review and Modernization Act of
2018'' was additionally referred to the Permanent Select
Committee on Intelligence.
In order to expedite the House's consideration of the
measure, the Permanent Select Committee on Intelligence will
forgo consideration of the measure. This courtesy is
conditioned on our mutual understanding and agreement that it
will in no way diminish or alter the jurisdiction of the
Permanent Select Committee on Intelligence with respect to
any future jurisdictional claim over the subject matter
contained in the legislation or any similar measure, nor will
this waiver inhibit the Permanent Select Committee on
Intelligence's to address issues of concern going forward. I
appreciate your support to the appointment of Members from
the Permanent Select Committee on Intelligence to any House-
Senate conference on this legislation.
I would appreciate you including our exchange of letters in
the Congressional Record during floor consideration of H.R.
5841. Thank you for the cooperative spirit in which you have
worked regarding this and other matters between our
respective committees.
Sincerely,
Devin Nunes,
Chairman.
[[Page H5692]]
____
House of Representatives,
Committee on Foreign Affairs,
Washington, DC, June 26, 2018.
Hon. Devin Nunes,
Chairman, Permanent Select Committee on Intelligence,
Washington, DC.
Dear Chairman Nunes: Thank you for consulting with the
Foreign Affairs Committee and agreeing to be discharged from
further consideration of H.R. 5841, the Foreign Investment
Risk Review Modernization Act of 2018, so that the bill may
proceed expeditiously to the House floor.
I agree that your forgoing further action on this measure
does not in any way diminish or alter the jurisdiction of
your committee, or prejudice its jurisdictional prerogatives
on this resolution or similar legislation in the future. I
would support your effort to seek appointment of an
appropriate number of conferees from your committee to any
House-Senate conference on this legislation.
I will seek to place our letters on this bill into the
Congressional Record during floor consideration of the bill.
I appreciate your cooperation regarding this legislation and
look forward to continuing to work together as this measure
moves through the legislative process.
Sincerely,
Edward R. Royce,
Chairman.
____
House of Representatives, Committee on Energy and
Commerce,
Washington, DC, June 26, 2018.
Hon. Edward R. Royce,
Chairman, Committee on Foreign Affairs,
Washington, DC.
Dear Chairman Royce: I write in regard to H.R. 5841,
Foreign Investment Risk Review Modernization Act of 2018,
which was referred in addition to the Committee on Energy and
Commerce. I wanted to notify you that the Committee will
forgo action on the bill so that it may proceed expeditiously
to the House floor for consideration.
The Committee on Energy and Commerce takes this action with
our mutual understanding that by foregoing consideration of
H.R. 5841, the Committee does not waive any jurisdiction over
the subject matter contained in this or similar legislation
and will be appropriately consulted and involved as this or
similar legislation moves forward to address any remaining
issues within the Committee's jurisdiction. The Committee
also reserves the right to seek appointment of conferees to
any House-Senate conference involving this or similar
legislation and asks that you support any such request.
I would appreciate your response confirming this
understanding with respect to H.R. 5841 and ask that a copy
of our exchange of letters on this matter be included in the
Congressional Record during its consideration on the House
floor.
Sincerely,
Greg Walden,
Chairman.
____
House of Representatives,
Committee on Foreign Affairs,
Washington, DC, June 26, 2018.
Hon. Greg Walden,
Chairman, Committee on Energy and Commerce,
Washington, DC.
Dear Chairman Walden: Thank you for consulting with the
Foreign Affairs Committee and agreeing to be discharged from
further consideration of H.R. 5841, the Foreign Investment
Risk Review Modernization Act of 2018, so that the bill may
proceed expeditiously to the House floor.
I agree that your forgoing further action on this measure
does not in any way diminish or alter the jurisdiction of
your committee, or prejudice its jurisdictional prerogatives
on this resolution or similar legislation in the future. I
would support your effort to seek appointment of an
appropriate number of conferees from your committee to any
House-Senate conference on this legislation.
I will seek to place our letters on this bill into the
Congressional Record during floor consideration of the bill.
I appreciate your cooperation regarding this legislation and
look forward to continuing to work together as this measure
moves through the legislative process.
Sincerely,
Edward R. Royce,
Chairman.
Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 5861 and I want to
associate myself with the remarks of Chairman Royce of the Foreign
Affairs Committee.
This bill deals with two very related issues. One is investment in
the United States when that could indeed undermine our national
security. So this bill would reform the CFIUS process, the process by
which we review taking control of a business enterprise in the United
States that may have strategic implications. That part of the bill is
the product of the Financial Services Committee.
The second part of the bill reauthorizes and reforms our long-lapsed
export control statute.
I would like to commend Representatives Heck, Pittenger, and Barr for
their work on the first part of this bill, and commend Chairman Royce
and Ranking Member Engel for their leadership on the reform and
recodification of the Export Control Reform Act.
This is a bill that deals with our national security as it may relate
to business; first focusing on investments, then focusing on the sale
of products abroad.
I have served on the two committees of jurisdiction for over 20
years, and have been working on this issue for all of that time.
First, as to the investment or CFIUS portion of the bill, I serve as
ranking member of the Asia and the Pacific Subcommittee and know
firsthand that Chinese companies are not always driven just by their
own company profits. But instead, they are looking at a bigger picture,
working with Beijing to advance China's global interests. And all too
often, these interests undermine American national security.
Foreign investment in the United States often benefits us. We should
encourage and welcome foreign investments that create jobs for American
workers. But when a firm absorbs innovative American technology and an
innovative American company and then transfers the know-how and the
jobs, often to China, we may have a problem.
I am pleased to indicate that the CFIUS portion of this bill has
three of my amendments, which are designed to recognize that national
security is not just a matter of missiles and warships, but also
maintaining our strategic technological edge.
The first of my amendments requires that CFIUS focus on the national
security risks of offshoring American jobs. Because when you hollow out
the American workforce, when you create a circumstance where Americans
no longer have those technical skills, then you undermine our ability
to provide for our own national defense.
The second deals with the risk of censorship that arises when foreign
companies acquire our companies engaged in entertainment and
information, and requires CFIUS to report to Congress on this issue of
controlling our entertainment and information industries.
We learned in the 2016 election that hostile foreign countries
attempt to influence the American public, so we should study the
potential for foreign ownership of media in the United States to
influence our political discourse and ultimately our elections and
government power.
I would point out that if you control broadcasting, if you control
movie screens, if you control mechanisms of distribution, you control
what movies and TV shows will be made, and we should not put any
hostile foreign power in a position to dictate that we never make
another movie about Tibet.
We never want to put ourselves in a position where China controls
what we see on our screens, in our entertainment, in our newspapers.
I would point out that China already has control over films being
distributed in China. They unjustly limit that through a protectionist
quota system and use that to try to force American studios to make
movies that are consistent with the objectives of the Chinese
Government.
My third amendment focuses on the Made in China 2025 program by
acknowledging that supposedly independent Chinese companies are, in
fact, required to work with their own government.
Simply put, if you are based in Shanghai, you are going to listen to
Beijing, and when the CFIUS process provides heightened scrutiny for
government-controlled investment, that should apply to any company in a
managed economy that is, in effect, under government supervision and
control.
Mr. Speaker, I now move on to the export control portion of this
bill, the portion that limits what technology we can sell abroad.
This act has not been amended since 1990. It expired in 2001. It has
been held together through a series of temporary executive orders.
This bill provides for export controls that support U.S. foreign
policy goals such as complementing economic sanctions, combating
terrorism, and prohibiting the export of items that will be used in
human rights violations.
[[Page H5693]]
I offered, and I am pleased that the committee accepted, one of my
amendments that would require the Department of Commerce to look at the
significantly negative impacts of controlled exports on our defense
industrial base.
When we allow the tools, the dies, the materials for manufacturing to
be exported, we, therefore, lose the workforce, lose the capacity, and
lose the ability to provide for our own defense.
Mr. Speaker, I urge the support of this important legislation which
modernizes CFIUS and our export control laws.
Mr. Speaker, seeing no other speakers on our side from the Foreign
Affairs Committee, I would urge my colleagues to vote for this bill.
Mr. Speaker, I yield the balance of my time to the gentlewoman from
California (Ms. Maxine Waters), the ranking member of the Financial
Services Committee, and I ask unanimous consent that she be allowed to
control that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance
of my time.
Mr. HENSARLING. Mr. Speaker, I yield myself 4 minutes.
Mr. Speaker, I rise in strong support of H.R. 5841, the Foreign
Investment Risk Review Modernization Act, which the Financial Services
Committee approved last month by a unanimous vote of 53-0.
I want to thank both Republican and Democrat Members for their
effort, but I especially want to thank the bill's sponsor, the
gentleman from North Carolina (Mr. Pittenger), who has worked
tirelessly to develop this legislation and bring it to the House floor.
Mr. Speaker, we would not be here but for his expertise and leadership.
I also want to thank Chairman Royce for the cooperation of the
Foreign Affairs Committee working with us on this very important piece
of legislation.
Finally, I want to thank the gentleman from Kentucky (Mr. Barr), who
chairs our Monetary Policy and Trade Subcommittee, as well as his
ranking member, Ms. Moore of Wisconsin.
I also happen to see the gentleman from Washington, Mr. Heck, and I
want to thank him for his contributions as well.
The subcommittee held no fewer than four hearings prior to marking up
this legislation, and the thoughtfulness that they brought to the issue
is something we should all emulate.
The bill is a comprehensive reform of the Committee on Foreign
Investment in the United States, or CFIUS, as it is known; the first
update of its kind in over a decade.
CFIUS is authorized to review foreign investment transactions that
may threaten our national security. And although these authorities have
been wielded carefully, Congress must remain vigilant when delegating
additional powers that may have far-reaching effects.
The reason, Mr. Speaker, is simple. According to a Department of
Commerce study from 2016, 12 million American workers have jobs
resulting from foreign investment; 3\1/2\ million in the manufacturing
sector alone.
On top of that, the vast majority of foreign investments' value added
comes from deals with U.S. allies. We need to protect our national
security while also ensuring that America stays open for business.
This is exactly what the House version of FIRRMA does. It closes real
gaps in CFIUS' jurisdiction that could otherwise be exploited by bad
actors, but it doesn't give the government a foothold to go after deals
or entire sectors on a whim.
We target those transactions in countries, including China and
Russia, that truly present a national security risk, but without
strangling the investment and innovation that makes our country strong
to begin with.
We also focus on particular assets that are sensitive, assets like
sensitive personal data of U.S. citizens or technical information on
critical technologies and critical infrastructure rather than walling
off entire categories of U.S. companies and industries.
{time} 1400
It is also important to know what that bill doesn't do, Mr. Speaker.
We don't change due process under CFIUS, and we don't weaken
confidentiality requirements that CFIUS is subject to. H.R. 5841 keeps
CFIUS accountable.
Finally, this legislation recognizes that CFIUS and export controls
are complementary. As two sides of the same coin, reforms to both
clearly belong in the same bill.
We are pleased to see this legislation include such reforms to the
export control regime, again, reforms that passed the Foreign Affairs
Committee by voice vote in April. They make the House version of FIRRMA
even stronger.
Again, Mr. Speaker, I wish to thank Members on both sides of the
aisle, especially Mr. Pittenger, but all Members on both sides of the
aisle who contributed so thoughtfully to this legislation, including
the cooperation of the ranking member.
I urge all of my colleagues to support it, and I reserve the balance
of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, I rise in support of H.R. 5841, the Foreign Investment
Risk Review Modernization Act of 2018. This bill represents a
bipartisan effort to bring much-needed reform to the Committee on
Foreign Investment in the United States, or CFIUS, which serves an
important function in the national security area.
I would like to thank Chairman Hensarling, Chairman Barr, Ranking
Member Moore, Congressman Pittenger, Congresswoman Maloney, and also
Congressman Heck, who is here today, in particular.
Congressman Heck has, for the good part of a year, been working very
hard to ensure that any legislation addresses key jurisdictional gaps
in the current scope of CFIUS authority, and this bill does just that.
I thank him for his leadership.
It is Congress' responsibility to ensure that CFIUS appropriately
balances the benefits of our traditionally open investment climate with
the need to protect our national security. And make no mistake, the
national security threats we face today in this area are both serious
and evolving. The world has become a much more complicated place since
Congress last reviewed and reformed the CFIUS process a decade ago. The
bill brings CFIUS into the 21st century.
H.R. 5841 would expand the jurisdiction of CFIUS with regard to
certain types of transactions that have previously avoided scrutiny,
and it reforms the national security reviews performed by CFIUS to
address growing concerns that foreign entities may be using
acquisitions of and partnerships with U.S. businesses to chip away at
American technological leadership.
The primary concern here is that China's aggressive industrial policy
and their efforts to invest in early stage, cutting-edge U.S.
technologies with potential military applications, including artificial
intelligence and robotics, in part to advance China's military
modernization, will diminish America's technological advantage.
During the course of our deliberations on this legislation, despite
some honest intellectual disagreements as to how best to counter this
threat, at the end of the day, we understood that we have a
responsibility to address these problems in the most effective and
efficient way possible, in ways that do not undermine other important
functions of government, many of which also contribute to our national
security.
Importantly, this legislation also recognizes that, as the volume of
cases and the complexity of transactions continue to increase,
expanding the scope of CFIUS without additional resources would not
only undermine CFIUS' mission, but it would also deplete other
important government services and functions, both domestically and
internationally.
So I am very glad that this legislation authorizes $20 million
annually for the next 5 years to fund CFIUS' operation, as well as
provide the authority for Treasury to impose a filing fee on the
companies that file with CFIUS based on the value of the transaction,
taking into account a number of other factors, including the effect of
any given fee on small-business concerns.
[[Page H5694]]
The bill does not address everyone's concerns yet, including concerns
by some entertainment industry stakeholders, which I share. As we move
forward, I will continue to support ongoing refinements to the
legislation.
H.R. 5841 deserves strong support in the House, and I urge my
colleagues to vote ``yes.''
I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I am pleased to yield 3 minutes the
gentleman from North Carolina (Mr. Pittenger), the vice chairman of the
Terrorism and Illicit Finance Subcommittee and the author of the FIRRMA
bill before us.
Mr. PITTENGER. Mr. Speaker, I would like to thank the chairman for
his leadership on this very important legislation, H.R. 5841, FIRRMA.
I would also like to thank Chairman Royce, Congressman Barr, and
Congressman Heck for the significant leadership role that they played
with this bill, as well as my chief of staff, Clark Fonda, and
Assistant Secretary of Treasury Heath Tarbert. They have put in
countless hours, working through details and language on this bill.
Mr. Speaker, I have worked on CFIUS-related issues for nearly 3
years. Prior to FIRRMA, I spent my efforts identifying problematic
transactions and engaging in a public media campaign to raise awareness
and stoke government action. Three years later, I am so happy to the
say that we have had a robust impact on this issue.
For example, we helped prevent the Chicago Stock Exchange from
falling into the hands of opaque Chinese ownership. We protected our
defense supply chain by helping stop Lattice Semiconductor from being
purchased by a Chinese state-owned investment fund. We helped prevent
the Chinese from exploiting important personal data during an attempt
to purchase MoneyGram.
Our successful initiatives have garnered the attention of Senator
Cornyn. We began a yearlong process to draft the original version of
FIRRMA.
Over the past year, my staff and I have seen dozens of versions of
FIRRMA, both introduced versions and redline edits, from various
offices and stakeholders. For months, we have fought for the strongest
CFIUS reform bill possible.
Today, we reach a milestone where floor action is imminent, which is
a huge step forward for the cause of CFIUS reform. The version we are
considering today, of which I am the sponsor, includes a number of
reforms to strengthen the current system and prevent the flow of
military-applicable technologies to the Chinese Government, in
particular.
The bill creates a process by which countries of special concern,
which would include China, would have increased oversight when
attempting to purchase critical technology companies in the United
States.
The bill also helps create an interagency process through export
controls to review overseas joint ventures, a process that is absent
under our current system.
While I am pleased that we have gotten to this point in the
legislative process, both the House and Senate versions are departures
from the original FIRRMA concept. However, both would improve
significantly the CFIUS and export control processes, as well as have a
strong impact on governing Chinese and other adversarial investments.
Regardless of what actions are taken next to reconcile the
differences with the language of the Senate version, passed as part of
their NDAA, there are certain principles that should be addressed in
the final version.
History will record whether we have done our job to prevent the
transfer of proprietary intellectual property and critical technologies
to adversarial governments.
The SPEAKER pro tempore (Mr. Poe of Texas). The time of the gentleman
has expired.
Mr. HENSARLING. Mr. Speaker, I yield an additional 15 seconds to the
gentleman from North Carolina.
Mr. PITTENGER. Mr. Speaker, to this end, I am encouraged by the
progress we have made on this issue, and I am grateful for the
opportunity to help move forward important legislation to reform CFIUS
and export controls.
Ms. MAXINE WATERS of California. Mr. Speaker, it is my pleasure to
yield 2 minutes to the gentleman from Washington (Mr. Heck), a member
of the Financial Services Committee who has fought tirelessly on CFIUS
reform and has been engaged in this process from the beginning, for the
purposes of a colloquy.
Mr. HECK. Mr. Speaker, I thank the ranking member. I do indeed rise
to engage in a colloquy with the gentleman from Kentucky.
The bill we are considering today, unlike the Senate CFIUS bill, does
not have specific language dealing with board seats. That
notwithstanding, Chairman Barr and I share an understanding that the
language of the bill that covers ``involvement, other than through
voting shares, in the substantive decision-making of the United States
business'' gives CFIUS jurisdiction over investments which would confer
membership or observer rights or the right to nominate someone from the
board of directors or equivalent governing body of a business.
I ask my friend to confirm that understanding.
Mr. BARR. Will the gentleman yield?
Mr. HECK. I yield to the gentleman from Kentucky.
Mr. BARR. Mr. Speaker, I thank the gentleman for yielding, and I
especially thank the gentleman for his cooperative, constructive, and
bipartisan approach to the legislation, and improving the legislation.
We are in agreement on this point, that such involvement could cover
activity, including membership on the board of directors and observer
rights. In addition, the gentleman makes note of board nominations. As
we have seen under current law, CFIUS looks at nominations and the
risks that may arise from them. The Broadcom deal was a case in point.
However, the language in this bill makes this jurisdiction clearer.
The gentleman is right to focus on risks that a board member may pose
who is acting on behalf of a foreign investor who nominates the member.
The whole point of such nominations could be to involve the foreign
investor in substantive decision-making in a way that results in
national security risks.
H.R. 5841 could cover such a scenario. I thank the gentleman for
yielding.
Mr. HECK. Mr. Speaker, I thank the gentleman for this exchange.
Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
The SPEAKER pro tempore. The gentleman from Texas has 2\3/4\ minutes
remaining.
Mr. HENSARLING. Mr. Speaker, I yield the balance of my time to the
gentleman from Kentucky (Mr. Barr), the chairman of the Monetary Policy
and Trade Subcommittee, and the subcommittee chairman who helped craft
the bill and helped shepherd it to the markup process.
Mr. BARR. Mr. Speaker, I rise today in support of the Foreign
Investment Risk Review Modernization Act.
I want to thank the House authors of this bill, particularly the
gentleman from North Carolina (Mr. Pittenger), for his outstanding
leadership on this effort; and my friend, the gentleman from Washington
(Mr. Heck); also the Senate authors, Senator Cornyn and Senator
Feinstein; and House Chairman Hensarling, Chairman Royce, Chairman
Nunes, Chairman Thornberry, and Chairman Walden; as well as House
leadership for their efforts in bringing this nonpartisan legislation
to the floor.
Just by that list, you understand how complex this issue is because
it involves not only a multiagency effort of this government, it
requires the concerted and cooperative efforts of many committees in
this House and in Congress generally because of the shared
jurisdiction.
In 2016, new foreign direct investment added $894 billion in value to
the U.S. economy. Today, 6.8 million American workers are employed by
international companies, including 20 percent of U.S. manufacturing
workers.
In my own district in Kentucky, Toyota Motor Manufacturing, Kentucky,
Inc. supports 8,500 jobs as a result of benign foreign direct
investment, a great example of this. These are typically higher paying
jobs. So it is critical that we preserve in the United States an open
investment climate, to the extent possible, consistent with national
security objectives.
But a comprehensive update to both the export control regime and the
Committee on Foreign Investment in the
[[Page H5695]]
United States, or CFIUS as is it commonly called, is needed due to the
massive surge in malign investments by the Chinese and other bad actors
in U.S. assets.
This legislation closes loopholes in CFIUS' jurisdiction and
modernizes our process for identifying critical technologies without
duplicating agency efforts like earlier drafts of this legislation
called for, all the while ensuring these transactions are thoroughly
vetted in a timely manner so that America continues to attract much-
needed foreign investment that does not implicate national security.
This legislation also authorizes CFIUS to review sensitive,
noncontrolling investments in critical technology or infrastructure
made by persons affiliated with countries of special concern or
threatening actors.
These changes improve upon previous versions of the bill that failed
to focus CFIUS' limited resources on the most serious threats and bad
actors, including China.
Importantly, this legislation grants CFIUS the authority to review
the acquisition of real estate near U.S. military installations and
other important national security assets. The legislation uses a new
and strengthened interagency export control process to review joint
ventures and outbound activities. I want to thank Chairman Royce for
his leadership on that point.
These reforms strike the right balance between bolstering national
security and ensuring strong economic growth. I encourage my colleagues
to support the legislation.
{time} 1415
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3 minutes to
the gentleman from Washington (Mr. Heck).
Mr. HECK. Mr. Speaker, I thank the ranking member for yielding.
Mr. Speaker, I rise in support of this legislation which is urgently
needed. Our adversaries and competitors are indeed actively exploiting
gaps in our existing CFIUS process, which I would argue has not been
materially modernized in 30 years, and there are gaps.
Right now, purchases of land near our most sensitive national
security installations which are purchased to facilitate espionage go
unreviewed unless there happens to be an existing business on that
site.
Investments that could give our strategic competitors influence and
insights into our critical technology or the critical infrastructure
our country relies on go unreviewed because they fall just short of
control of a company.
Rights changes that can confer control of a company even without new
equity being contributed are not clearly within CFIUS jurisdiction.
There is a gap between CFIUS' existing authority over joint ventures
involving a whole U.S. business and the export control system's
authority over individual pieces of technology and know-how.
Good news. We close these gaps in this bill.
I appreciate deeply the willingness of Chairmen Hensarling and Barr
to work to ensure this legislation effectively addresses investments
that could expose details of critical technology or critical
infrastructure to our strategic competitors and to incorporate other
improvements suggested by our national security committees.
Frankly, however, as is no secret, I think there are some other
changes that I would like to have had made. For example, the Senate and
the original House bill contained delegation authority to help manage
an increased workload and more senior officials to oversee the CFIUS
process.
I also continue to believe that the blacklist used in the House bill
will ultimately be too easy for our adversaries to evade. Compared to
the approach taken by the Senate bill and the original House
legislation, the blacklist is also kind of a missed opportunity, I
think, to encourage our allies and partners to establish their own
CFIUS-like mechanisms compatible with ours because the truth is, we are
no safer if we block our competitors from buying a capability here but
they buy it from one of our allies or partners. That all said, this is
a very important step forward.
Mr. Speaker, I am glad to stand before you today and urge your
support on what I believe is a critical issue of national security. I
am equally glad to express my deep appreciation to the ranking member
and to the chairmen, both Mr. Hensarling and Mr. Barr, and to my
friend, Robert Pittenger.
Last statement of the obvious warning, none of us is any better than
the quality of our staff. I want to acknowledge that I have been very
ably assisted on this matter for the better part of a year by Erik
Ashida of my staff. He has been with me 6 years.
The SPEAKER pro tempore. The time of the gentleman has expired.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield such time as he
may consume to the gentleman from Washington (Mr. Heck).
Mr. HECK. Mr. Speaker, he is leaving staff because he has been
admitted to the extremely prestigious SAIS program, School of Advanced
International Studies at Johns Hopkins University. I know each of us
has experiences who have been here any length of time, when you have
had a young person be with you for many, many years, it creates a sense
of loss when they finally decide to take that next step. I am only able
to do this because I know that as ably as he has served the people of
the 10th Congressional District in our State from which he is from, I
know with equal confidence that he will continue to serve America upon
completion of his graduate program. He has been the point person in my
office working with Members' offices, and I am deeply appreciative to
him for all of his service.
Mr. Speaker, I urge the Members of this House to endorse and to
support this very important national security measure.
Mr. ROYCE of California. Mr. Speaker, I yield 3 minutes to the
gentleman from Texas, and I ask unanimous consent that he may control
that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. HENSARLING. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Ohio (Mr. Davidson), who is a hardworking member of the Financial
Services Committee and a member of the Monetary Policy and Trade
Subcommittee that dealt with this FIRRMA legislation.
Mr. DAVIDSON. Mr. Speaker, I want to thank my colleagues for working
together on this bipartisan legislation, H.R. 4311, the Foreign
Investment Risk Review Modernization Act. It addresses the intersection
of national security, intellectual property, and property rights.
We have a responsibility to protect the people of the United States
of America from threats abroad, and we also have a responsibility to
protect the system that has truly made the United States the world's
land of opportunity. We have had free flow of goods, services, capital,
ideas, and, indeed, people because we have a high functioning rule of
law here in America.
How can the entrepreneur living the American Dream truly thrive in
the spirit of enterprise when competing against a foreign state? But
that is the very state that he is up against a lot of times in trade as
an entrepreneur seeks to grow a corporation backed by a foreign
government.
This legislation addresses many of these types of concerns--countries
acting as companies that pose threats to our national security--and
this legislation has been done in a bipartisan, constructive manner,
and I appreciate the input and efforts from Members of both sides of
the aisle as well as those in the administration and the private sector
who have helped make this meaningful legislation what it is today.
Mr. HENSARLING. Mr. Speaker, I yield 30 seconds to the gentleman from
Kentucky (Mr. Barr), who is the chairman of our Monetary Policy and
Trade Subcommittee.
Mr. BARR. Mr. Speaker, this effort has been a success because we are
balancing the imperatives of national security with maintaining an
important open investment climate in the United States. Why that
balance is so important is because preserving benign foreign direct
investment and capital so that research and development in the United
States can flourish is important not only to preserve our competitive
edge in the global economy, it is important for national security.
Our economic strength contributes to our national security. We are
striking
[[Page H5696]]
the right balance with this new FIRRMA legislation.
Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, again, I think this is a very important piece of
legislation that has come before the body. I also want to acknowledge
that, yes, it is very challenging for this body to engage in bipartisan
legislation. But we have clearly achieved it today. I think we have
achieved it because we know that as Americans we must rally around when
it comes to issues of national security.
So, again, I want to thank the ranking member. I want to thank the
gentleman from Washington and all other Members on the other side of
the aisle for coming together. And as the gentleman from Washington
said, perhaps not getting exactly the bill that they wanted--I assure
the gentleman from Washington I didn't get exactly the bill I wanted--
but we have a very strong bill that I think balances our critical need
to safeguard our technology and at the same time recognizes how
important foreign direct investment is in growing our economy and being
able to afford the type of defense structures that we need so that our
national security is never second to none.
Again, Mr. Speaker, we could not have done this first without the
leadership, the expertise, and the drive of the gentleman from North
Carolina. I believe that some form of this bill will soon end up on the
President's desk and we will all thank the gentleman from North
Carolina for his leadership in getting America to this point.
Mr. Speaker, I urge all Members to vote for this legislation, and I
yield back the balance of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself the
balance of my time.
Mr. Speaker, I think that all of our speakers have been eloquent in
the way that they have described the work that was done on the bill. I
am very pleased and proud that on this issue of national security that
we were able to come together. I think that what we have done is
certainly in the best interests of our country.
As the chairman said, some did not get everything that they would
like to have in the bill, but we were able to work through the various
concerns, I think, in a very honest and open way.
Mr. Speaker, I urge all of my colleagues to vote ``aye'' on this
bill, and I yield back the balance of my time.
Mr. ROYCE of California. Mr. Speaker, I yield myself the balance of
my time.
Mr. Speaker, in closing, I would like to thank several of my
colleagues, the ranking member of the Foreign Affairs Committee, Mr.
Engel, as well as, of course, Chairman Hensarling, Ranking Member
Waters, and Mr. Pittenger.
I want to thank them for incorporating as title VIII the text that I
authored as H.R. 5040, this is the Export Control Reform Act of 2018.
This is the measure we put out of the Foreign Affairs Committee.
This title modernizes and reforms outdated export controls designed
to impose trade controls on the old Soviet bloc. It was long past due
that we update these controls to reflect the realities of modern
international commerce and the national security threats of the century
we are in right now.
I would urge my colleagues to join us in modernizing both the CFIUS
and export controls process which we do now in this combined bill. A
``yes'' vote will ensure continued U.S. leadership in high technology
industries essential to the health of our economy and essential to our
national security.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from California (Mr. Royce) that the House suspend the rules
and pass the bill, H.R. 5841, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. HENSARLING. 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, further
proceedings on this motion will be postponed.
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