[House Report 109-414]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-414

======================================================================

 
   REQUESTING THE PRESIDENT AND DIRECTING THE SECRETARY OF HOMELAND 
 SECURITY TO PROVIDE TO THE HOUSE OF REPRESENTATIVES CERTAIN DOCUMENTS 
IN THEIR POSSESSION RELATING TO THE DUBAI PORTS WORLD ACQUISITION OF 6 
                 UNITED STATES COMMERCIAL PORTS LEASES

                                _______
                                

   April 7, 2006.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                       [To accompany H. Res. 718]

  The Committee on Financial Services, to whom was referred the 
resolution (H. Res. 718) requesting the President and directing 
the Secretary of Homeland Security to provide to the House of 
Representatives certain documents in their possession relating 
to the Dubai Ports World acquisition of 6 United States 
commercial ports leases, having considered the same, report 
thereon with amendments and without recommendation.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Dissenting Views.................................................     7
  The amendments (stated in terms of the page and line numbers 
of the introduced bill) are as follows:

  Page 1, line 2, strike ``is directed'' and insert ``and the 
Secretary of the Treasury are directed''.
  Page 2, line 4, strike ``6''.
  Page 2, line 9, after ``discussions'' insert ``, including 
discussions''.
  Page 2, line 10, after ``World'' insert a comma.
  Page 2, line 12, strike ``and''.
  Page 2, line 20, strike the period and insert ``; and''.
  Page 2, after line 20, insert the following:

          (4) all documents in their possession, including 
        notes from meetings, memos, telephone and electronic 
        mail records, logs and calendars, and records of 
        internal discussions, relating to the Committee on 
        Foreign Investments in the United States review process 
        for such acquisition.

  Amend the title so as to read:

      Resolution requesting the President and directing the 
Secretary of Homeland Security and the Secretary of the 
Treasury to provide to the House of Representatives certain 
documents in their possession relating to the Dubai Ports World 
acquisition of United States commercial ports leases.

                          PURPOSE AND SUMMARY

    House Resolution 718, ``requesting the President and 
directing the Secretary of Homeland Security to provide to the 
House of Representatives certain documents in their possession 
relating to the Dubai Ports World acquisition of 6 United 
States commercial ports leases,'' was introduced March 9, 2006, 
by Mr. Kucinich for himself and Reps. Larson and Brady of 
Pennsylvania. It seeks to have the President and the Secretary 
of Homeland Security provide, within 14 days of adoption, a 
variety of documents relating to aspects of the proposed 
purchase by Dubai Ports World (DP World) of the U.S. ports 
operations of the Peninsular & Oriental Steam Navigation Co. 
(P&O). Additionally, it seeks information related to a December 
16, 2005, memo from the Coast Guard outlining concerns it 
thought should be addressed as a review of the deal by the 
Committee on Foreign Investment in the United States (CFIUS) 
got underway. A portion of that memo has been made public. 
Finally, the legislation seeks a similar variety of documents 
from the President and Secretary covering ``internal 
discussions'' from October 1, 2005, to March 2, 2006, between 
the White House and the Carlyle Group related to the review of 
the proposed Dubai-P&O deal.
    While the transaction in question now is complete, DP World 
has made an arrangement to leave the U.S. operations in the 
control of P&O until they are sold off. Even so, scrutiny of 
the CFIUS, both as related to this deal and to the underlying 
process in general, was intense. This legislation was 
introduced at the peak of the intensity of public interest in 
the transaction. However, although the deal itself is moot and 
thus the document request moot, the parliamentary nature of the 
legislation impelled consideration.

                  BACKGROUND AND NEED FOR LEGISLATION

    H. Res. 718 is a resolution of inquiry, which pursuant to 
clause 7 of rule XIII of the Rules of the House of 
Representatives, directs the Committee to act on the resolution 
within 14 legislative days or a privileged motion to discharge 
the Committee is in order.
    Under the Rules and precedents of the House, a resolution 
of inquiry is one of the methods used by the House to obtain 
information from the executive branch. According to volume 7, 
chapter 24, section 8 of Deschler's Procedure, it is a ``simple 
resolution making a direct request or demand of the President 
or the head of an executive department to furnish the House of 
Representatives with specific factual information in the 
possession of the executive branch.''
    On February 13, 2006, shareholders from P&O approved a 
$6.85 billion acquisition proposal from DP World, a port 
terminal operations company owned by the government of the 
United Arab Emirates (UAE). The acquisition, for which 
negotiations began in October and on which a deal was struck 
and reported in the financial press in November, was completed 
in March, but not before a public outcry in the United States 
caused close scrutiny of the deal, a vote in Congress to 
repudiate it, and an agreement from DP World to sell off the 
U.S. operations as soon as practical.
    A 30-day review by the inter-agency CFIUS--charged with 
determining if any such acquisition might cause a threat to 
national security--began in mid-December. CFIUS is said to have 
reached a multi-point agreement to mitigate certain security 
concerns that appear to have been raised about the proposed 
deal by CFIUS components. A 45-day investigation period that is 
indicated in CFIUS authorizing legislation for any acquisition 
by a state-owned company that triggers security concerns was 
not conducted, because, the administration has said, the 
security issues raised were successfully addressed.
    While the transaction is complex, covering port operations 
around the world, it is pertinent that P&O operates at some 20 
U.S. ports in the Gulf of Mexico and East Coast, including the 
major ports of New York, Baltimore, Miami and New Orleans. 
While critics of DP World have called for a closer examination 
of the implications of this transaction, it should be noted 
that the majority of large U.S. ports are operated by foreign-
owned companies. Foreign-owned companies represent the four 
largest operators of ports in the world; Hong Kong's Hutchinson 
Ports is the market leader, followed by Denmark's APM 
Terminals.
    Given all of the facts of this situation, the Committee is 
forwarding this report to the House without recommendation.

                                HEARINGS

    The Committee held no hearings on H. Res. 718.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
April 5, 2006, and ordered H. Res 718, as amended, reported to 
the House without recommendation.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mrs. Biggert to report the resolution, as amended, to 
the House without recommendation was agreed to a record vote of 
35 yeas and 32 nays (Record vote no. FC-18). The names of 
Members voting for and against follow:

                                              RECORD VOTE NO. FC-18
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................        X   ........  .........  Mr. Frank (MA)...  ........        X   .........
Mr. Leach......................  ........  ........  .........  Mr. Kanjorski....  ........        X   .........
Mr. Baker......................        X   ........  .........  Ms. Waters.......  ........        X   .........
Ms. Pryce (OH).................        X   ........  .........  Mr. Sanders......  ........        X   .........
Mr. Bachus.....................        X   ........  .........  Mrs. Maloney.....  ........        X   .........
Mr. Castle.....................        X   ........  .........  Mr. Gutierrez....  ........        X   .........
Mr. Royce......................        X   ........  .........  Ms. Velazquez....  ........        X   .........
Mr. Lucas......................        X   ........  .........  Mr. Watt.........  ........        X   .........
Mr. Ney........................        X   ........  .........  Mr. Ackerman.....  ........        X   .........
Mrs. Kelly.....................        X   ........  .........  Ms. Hooley.......  ........        X   .........
Mr. Paul.......................        X   ........  .........  Ms. Carson.......  ........        X   .........
Mr. Gillmor....................        X   ........  .........  Mr. Sherman......  ........        X   .........
Mr. Ryun (KS)..................        X   ........  .........  Mr. Meeks (NY)...  ........        X   .........
Mr. LaTourette.................        X   ........  .........  Ms. Lee..........  ........        X   .........
Mr. Manzullo...................        X   ........  .........  Mr. Moore (KS)...  ........        X   .........
Mr. Jones (NC).................        X   ........  .........  Mr. Capuano......  ........        X   .........
Mrs. Biggert...................        X   ........  .........  Mr. Ford.........  ........        X   .........
Mr. Shays......................        X   ........  .........  Mr. Hinojosa.....  ........        X   .........
Mr. Fossella...................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Gary G. Miller (CA)........        X   ........  .........  Mr. Clay.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Israel.......  ........        X   .........
Mr. Kennedy (MN)...............        X   ........  .........  Mrs. McCarthy....  ........        X   .........
Mr. Feeney.....................        X   ........  .........  Mr. Baca.........  ........  ........  .........
Mr. Hensarling.................        X   ........  .........  Mr. Matheson.....  ........        X   .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Lynch........  ........        X   .........
Ms. Brown-Waite (FL)...........        X   ........  .........  Mr. Miller (NC)..  ........        X   .........
Mr. Barrett (SC)...............        X   ........  .........  Mr. Scott (GA)...  ........        X   .........
Ms. Harris.....................        X   ........  .........  Mr. Davis (AL)...  ........        X   .........
Mr. Renzi......................        X   ........  .........  Mr. Al Green (TX)        X   ........
Mr. Gerlach....................        X   ........  .........  Mr. Cleaver......        X   ........
Mr. Pearce.....................        X   ........  .........  Ms. Bean.........  ........        X   .........
Mr. Neugebauer.................        X   ........  .........  Ms. Wasserman            X   ........
                                                                 Schultz.
Mr. Price (GA).................  ........  ........  .........  Ms. Moore (WI)...  ........        X   .........
Mr. Fitzpatrick (PA)...........        X   ........  .........
Mr. Davis (KY).................        X   ........  .........
Mr. McHenry....................        X   ........  .........
Mr. Campbell...................        X   ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.

    The following other amendments were also considered by the 
Committee:
          Amendments offered by Mrs. Maloney, No. 1, adding the 
        Secretary of the Treasury, were AGREED TO by a voice 
        vote.
          An amendment offered by Mr. Price (GA), No. 2, adding 
        the Secretary of the Treasury, was OFFERED AND A POINT 
        OF ORDER WAS SUSTAINED against its consideration.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings and 
recommendations of the Committee, based on oversight activities 
under clause 2(b)(1) of rule X of the Rules of the House of 
Representatives, are incorporated into the descriptive portions 
of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee's performance related 
goals and objectives are reflected in the descriptive portions 
of this report.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
legislation would result in no new budget authority, 
entitlement authority, or tax expenditures or revenues.

                       FEDERAL MANDATES STATEMENT

    H. Res. 718 contains no unfunded mandates.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

    As amended by the Committee, the resolution requests the 
President and directs the Secretary of Homeland Security and 
the Secretary of Treasury to provide to the House of 
Representatives, not later than 14 days after adoption of the 
resolution--
          (1) all documents in their possession, including 
        notes from meetings, memos, telephone and electronic 
        mail records, logs and calendars, and records of 
        internal discussions relating to the December 13, 2005, 
        document by the Coast Guard Intelligence Coordination 
        Center relating to the Dubai Ports World acquisition of 
        United States commercial ports leases;
          (2) all documents in their possession, including 
        notes from meetings, memos, telephone and electronic 
        mail records, logs and calendars, and records of 
        internal discussions, including discussions between the 
        White House and Dubai Ports World relating to the 
        Committee on Foreign Investment in the United States 
        review process for such acquisition;
          (3) all documents in their possession, including 
        notes from meetings, memos, telephone and electronic 
        mail records, logs and calendars, and records of 
        internal discussions between the White House and the 
        Carlyle Group during the period beginning October 1, 
        2005, and ending March 2, 2006, relating to the 
        Committee on Foreign Investment in the United States 
        review process for such acquisition; and
          (4) all documents in their possession, including 
        notes from meetings, memos, telephones and electronic 
        mail records, logs and calendars, records of internal 
        discussions, relating to the Committee on Foreign 
        Investment in the United States review process for such 
        acquisition.

                            DISSENTING VIEWS

    H. Res. 718, sponsored by Mr. Kucinich (OH) and amended by 
Mrs. Maloney (NY), is an important effort to obtain information 
about what went wrong with the Bush Administration's handling 
of the Dubai Ports World transaction, which was reviewed by the 
interagency Committee on Foreign Investment in the United 
States (CFIUS). The resolution directs the Secretaries of 
Homeland Security and Treasury to provide to the House critical 
information and records on the Dubai Ports World transaction. 
Because foreign investment plays such a constructive role in 
our economy, it is important for us to look at the facts 
surrounding this transaction, so that we can take whatever 
steps are necessary to reduce the likelihood of a repetition. 
This request for information regarding the Dubai issue is 
important because we need to separate out the mishandling of 
this transaction from any problems surrounding the basic 
structure of the CFIUS process. To the extent that there is a 
flawed structure for dealing with these sorts of transactions, 
we may need to legislate. But to the extent that the structure 
was not deeply flawed, but the execution of the transaction 
was, then major changes may be unwarranted.
    Although the Dubai Ports World case has been resolved with 
the company's agreement to divest its U.S. port assets, the 
case continues to play a central role in various CFIUS 
legislative reform initiatives currently underway in the House 
and Senate. There is some legitimate concern in the financial 
community that the reaction to the Bush Administration's 
mistakes in its handling of this transaction might lead to 
excessive restrictions in the area of foreign investment--which 
is why those who support a continued role for an open and 
constructive foreign investment policy should also support this 
resolution. The Democrats on the Financial Services Committee 
who unanimously voted to send the Kucinich resolution to the 
floor for action are sensitive to the need to preserve elements 
of the CFIUS process that adequately address national security 
concerns without restricting legitimate foreign investment. We 
believe that receiving the information requested by this 
resolution would help us in achieving that balance and we 
regret the partisan response of our Republican colleagues, 
which is keeping from us information which would help us 
legislate.

                                                      Barney Frank.

                                  
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