[Congressional Record (Bound Edition), Volume 152 (2006), Part 3]
[Extensions of Remarks]
[Page 3275]
[From the U.S. Government Publishing Office, www.gpo.gov]




   INTRODUCTION OF H.R. XXXX, COMMITTEE ON FOREIGN INVESTMENT IN THE 
                        UNITED STATES REFORM ACT

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                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                        Thursday, March 9, 2006

  Mrs. MALONEY. Mr. Speaker, this bill reforms the process by which the 
government reviews foreign acquisitions of companies doing business in 
the United States for national security concerns. These reforms are 
badly needed. Even prior to the Dubai ports debacle, the nonpartisan 
Government Accounting Office had identified several serious problems 
with the process by which the interagency Committee on Foreign 
Investment in the United States reviews foreign acquisitions. The need 
for reform was dramatically illustrated by the failure of CFIUS process 
in the Dubai ports deal. Not one of the twelve agencies involved 
managed to identify the Dubai ports deal as one which ``could affect 
the national security'' of the United States--even though it involved 
acquisition of port management at 20 ports on the East Coast and Gulf 
by the government of Dubai.
  As a threshold matter, the bill creates the CFIUS by statute and 
specifies the membership. It adds the Director of National Intelligence 
to the present group, so that the concerns of the intelligence 
community are represented.
  The bill requires a 45-day investigation of national security 
concerns by CFIUS, and a , recommendation to the President, in all 
cases of acquisition by foreign governments. This was Congress' clear 
intent in enacting the Byrd Amendment. But as the GAO reported, and as 
we have seen in the Dubai ports case, the Administration has found 
several ways to evade doing an investigation through strained 
interpretations of the statutory language.
  The bill also requires that sign off at the Deputy Secretary level or 
above for any transaction that is not subject to a 45-day investigation 
but which is subject to a mitigation agreement to resolve national 
security concerns raised. These agreements need to be reviewed at the 
highest levels.
  The bill also requires CFIUS to consider and specifically respond to 
a list of factors that might affect national security. The present 
statute allows but does not require such consideration. Most important, 
the bill adds to the list of factors that must be considered whether 
the transaction affects critical infrastructure. According to the GAO 
report, the Departments of Justice, Homeland Security and Defense all 
believe that a deal's effect on critical infrastructure should be 
considered in the CFIUS process but Treasury has prevented such 
consideration.
  The bill requires an annual report to Congress on transactions 
completed and a quarterly report on pending transactions. Although the 
present law expressly permits Congress access to all information in the 
CFIUS process, Treasury has refused and continues to refuse Congress 
access to key information. These reports will provide, among other 
things, information on the nature of the transaction, the national 
security concerns raised by any agency; how those concerns were 
mitigated; and whether such acquisition was completed or not, as well 
as any Presidential decisions made under the statute.
  Perhaps the most dangerous transactions are those that escape the 
CFIUS process altogether through withdrawal, as the GAO reported. To 
correct the problem created by companies that withdraw before 
completion of the CFIUS process but proceed with the transaction, the 
bill requires that CFIUS impose restrictions on the company after 
withdrawal to address any national security concerns raised, set 
specific time frames for the company to refile, and track actions taken 
by the company during the withdrawal period.

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