[House Report 109-523]
[From the U.S. Government Publishing Office]



                                                                       
109th Congress                                            Rept. 109-523
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
     NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED 
                        TRANSPARENCY ACT OF 2006

                                _______
                                

                 June 22, 2006.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 5337]

      [Including cost estimate of the Congressional Budget Office]

      The Committee on Financial Services, to whom was referred 
the bill (H.R. 5337) to ensure national security while 
promoting foreign investment and the creation and maintenance 
of jobs, to reform the process by which such investments are 
examined for any effect they may have on national security, to 
establish the Committee on Foreign Investment in the United 
States, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     9
Background and Need for Legislation..............................    10
Hearings.........................................................    13
Committee Consideration..........................................    14
Committee Votes..................................................    14
Committee Oversight Findings.....................................    15
Performance Goals and Objectives.................................    15
New Budget Authority, Entitlement Authority, and Tax Expenditures    15
Committee Cost Estimate..........................................    15
Congressional Budget Office Estimate.............................    15
Federal Mandates Statement.......................................    17
Advisory Committee Statement.....................................    18
Constitutional Authority Statement...............................    18
Applicability to Legislative Branch..............................    18
Section-by-Section Analysis of the Legislation...................    18
Changes in Existing Law Made by the Bill, as Reported............    20

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SEC. 1. SHORT TITLE.

  This Act may be cited as the ``National Security Foreign Investment 
Reform and Strengthened Transparency Act of 2006''.

SEC. 2. UNITED STATES SECURITY IMPROVEMENT AMENDMENTS; CLARIFICATION OF 
                    REVIEW AND INVESTIGATION PROCESS.

  Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 
2170) is amended by striking subsections (a) and (b) and inserting the 
following new subsections:
  ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Committee.--The term `Committee' means the Committee on 
        Foreign Investment in the United States.
          ``(2) Control.--The term `control' has the meaning given to 
        such term in regulations which the Committee shall prescribe.
          ``(3) Covered transaction.--The term `covered transaction' 
        means any merger, acquisition, or takeover by or with any 
        foreign person which could result in foreign control of any 
        person engaged in interstate commerce in the United States.
          ``(4) Foreign government-controlled transaction.--The term 
        `foreign government-controlled transaction' means any covered 
        transaction that could result in the control of any person 
        engaged in interstate commerce in the United States by a 
        foreign government or an entity controlled by or acting on 
        behalf of a foreign government.
          ``(5) Clarification.--The term `national security' shall be 
        construed so as to include those issues relating to `homeland 
        security', including its application to critical infrastructure 
        (as defined in the Homeland Security Act of 2002).
  ``(b) National Security Reviews and Investigations.--
          ``(1) National security reviews.--
                  ``(A) In general.--Upon receiving written 
                notification under subparagraph (C) of any covered 
                transaction, or on a motion made under subparagraph (D) 
                with respect to any covered transaction, the President, 
                acting through the Committee, shall review the covered 
                transaction to determine whether the transaction 
                threatens to impair the national security of the United 
                States and whether such threat can be mitigated.
                  ``(B) Control by foreign government.--If the 
                Committee determines that the covered transaction is a 
                foreign government-controlled transaction, the 
                Committee shall conduct an investigation of the 
                transaction under paragraph (2).
                  ``(C) Written notice.--
                          ``(i) In general.--Any party to any covered 
                        transaction may initiate a review of the 
                        transaction under this paragraph by submitting 
                        a written notice of the transaction to the 
                        Chairperson of the Committee.
                          ``(ii) Withdrawal of notice.--No covered 
                        transaction for which a notice was submitted 
                        under clause (i) may be withdrawn from review 
                        unless--
                                  ``(I) a written request for such 
                                withdrawal is submitted by any party to 
                                the transaction; and
                                  ``(II) the request is approved in 
                                writing by the Chairperson, in 
                                consultation with the Vice Chairperson, 
                                of the Committee.
                  ``(D) Unilateral initiation of review.--The 
                President, the Committee, or any member of the 
                Committee may move to initiate a review under 
                subparagraph (A) of--
                          ``(i) any covered transaction;
                          ``(ii) any covered transaction that has 
                        previously been reviewed or investigated under 
                        this section, if any party to the transaction 
                        submitted false or misleading material 
                        information to the Committee in connection with 
                        the review or investigation or omitted material 
                        information, including material documents, from 
                        information submitted to the Committee; or
                          ``(iii) any covered transaction that has 
                        previously been reviewed or investigated under 
                        this section, if any party to the transaction 
                        or the entity resulting from consummation of 
                        the transaction intentionally materially 
                        breaches a mitigation agreement or condition 
                        described in subsection (l)(1)(A), and--
                                  ``(I) such breach is certified by the 
                                lead department or agency monitoring 
                                and enforcing such agreement or 
                                condition as an intentional material 
                                breach; and
                                  ``(II) such department or agency 
                                certifies that there is no other remedy 
                                or enforcement tool available to 
                                address such breach.
                  ``(E) Timing.--Any review under this paragraph shall 
                be completed before the end of the 30-day period 
                beginning on the date of the receipt of written notice 
                under subparagraph (C) by the Chairperson of the 
                Committee, or the date of the initiation of the review 
                in accordance with a motion under subparagraph (D).
          ``(2) National security investigations.--
                  ``(A) In general.--In each case in which--
                          ``(i) a review of a covered transaction under 
                        paragraph (1) results in a determination that--
                                  ``(I) the transaction threatens to 
                                impair the national security of the 
                                United States and that threat has not 
                                been mitigated during or prior to the 
                                review of a covered transaction under 
                                paragraph (1); or
                                  ``(II) the transaction is a foreign 
                                government-controlled transaction; or
                          ``(ii) the Director of National Intelligence 
                        identifies particularly complex national 
                        security or intelligence issues that could 
                        threaten to impair the national security of the 
                        United States and Committee members were not 
                        able to develop and agree upon measures to 
                        mitigate satisfactorily those threats during 
                        the initial review period under paragraph (1),
                the President, acting through the Committee, shall 
                immediately conduct an investigation of the effects of 
                the transaction on the national security of the United 
                States and take any necessary actions in connection 
                with the transaction to protect the national security 
                of the United States.
                  ``(B) Timing.--
                          ``(i) In general.--Any investigation under 
                        subparagraph (A) shall be completed before the 
                        end of the 45-day period beginning on the date 
                        of the investigation commenced.
                          ``(ii) Extensions of time.--The period 
                        established under subparagraph (B) for any 
                        investigation of a covered transaction may be 
                        extended with respect to any particular 
                        investigation by the President or by a rollcall 
                        vote of at least 2/3 of the members of the 
                        Committee involved in the investigation by the 
                        amount of time specified by the President or 
                        the Committee at the time of the extension, not 
                        to exceed 45 days, as necessary to collect and 
                        fully evaluate information relating to--
                                  ``(I) the covered transaction or 
                                parties to the transaction; and
                                  ``(II) any effect of the transaction 
                                that could threaten to impair the 
                                national security of the United States.
          ``(3) Approval of chairperson and vice chairperson 
        required.--
                  ``(A) In general.--A review or investigation under 
                this subsection of a covered transaction shall not be 
                treated as final or complete until the findings and the 
                report resulting from such review or investigation are 
                approved and signed by both the Secretary of the 
                Treasury and the Secretary of Homeland Security (and 
                such authority of each such Secretary may not be 
                delegated to any person other than the Deputy Secretary 
                of the Treasury or the Deputy Secretary of Homeland 
                Security, respectively).
                  ``(B) Additional actions required in certain cases.--
                In the case of an investigation under paragraph (2) of 
                any foreign government-controlled transaction, an 
                investigation shall not be treated as final or complete 
                until the findings and report resulting from such 
                investigation--
                          ``(i) are approved by a majority of the 
                        members of the Committee in a roll call vote; 
                        and
                          ``(ii) in the case of any roll call vote 
                        pursuant to clause (i) in which there is at 
                        least 1 vote by a Committee member against 
                        approving a foreign government-controlled 
                        transaction, are signed by the President (in 
                        addition to the Chairperson and the Vice 
                        Chairperson of the Committee under subparagraph 
                        (A)).
          ``(4) Analysis by director of national intelligence.--
                  ``(A) In general.--The Director of National 
                Intelligence shall expeditiously carry out a thorough 
                analysis of any threat to the national security of the 
                United States of any covered transaction, including 
                making requests for information to the Director of the 
                Office of Foreign Assets Control within the Department 
                of the Treasury and the Director of the Financial 
                Crimes Enforcement Network. The Director of National 
                Intelligence also shall seek and incorporate the views 
                of all appropriate intelligence agencies, including in 
                particular the Defense Intelligence Agency.
                  ``(B) 30-day minimum.--The Director of National 
                Intelligence shall be provided no less than 30 days to 
                complete the analysis required under subparagraph (A), 
                except in any instance described in paragraph 
                (2)(A)(ii).
                  ``(C) Independent role of director.--The Director of 
                National Intelligence shall not be a member of the 
                Committee and shall serve no policy role with the 
                Committee other than to provide analysis under 
                subparagraph (A) in connection with a covered 
                transaction.
          ``(5) Resubmittals of notice and requests for additional 
        review or investigation.--
                  ``(A) In general.--No provision of this subsection 
                shall be construed as prohibiting any party to a 
                covered transaction from--
                          ``(i) submitting additional information 
                        concerning the transaction, including any 
                        proposed restructuring of the transaction or 
                        any modifications to any agreements in 
                        connection with the transaction, while any 
                        review or investigation of the transaction is 
                        on-going; or
                          ``(ii) requesting a review or investigation 
                        of the transaction after any previous review or 
                        investigation of the same or a similar 
                        transaction has become final if information 
                        material to the prior review or investigation 
                        and not previously submitted to the Committee 
                        becomes known or if any material change in 
                        circumstances to the covered transaction has 
                        occurred since the review or investigation.
                  ``(B) Approval of request.--In the case of a request 
                referred to in subparagraph (A)(ii), the Committee 
                shall determine by consensus whether to grant a 
                request.
          ``(6) Regulations.--Regulations prescribed under this section 
        shall include standard procedures for--
                  ``(A) submitting any notice of a proposed or pending 
                covered transaction to the Committee;
                  ``(B) submitting a request to withdraw a proposed or 
                pending covered transaction from review; and
                  ``(C) resubmitting a notice of proposed or pending 
                covered transaction that was previously withdrawn from 
                review.''.

SEC. 3. STATUTORY ESTABLISHMENT OF THE COMMITTEE ON FOREIGN INVESTMENT 
                    IN THE UNITED STATES.

  (a) In General.--Section 721 of the Defense Production Act of 1950 
(50 U.S.C. App. 2170) is amended by striking subsection (k) and 
inserting the following new subsection:
  ``(k) Committee on Foreign Investment in the United States.--
          ``(1) Establishment.--The Committee on Foreign Investment in 
        the United States established pursuant to Executive Order No. 
        11858 shall be a multi-agency committee to carry out this 
        section and such other assignments as the President may 
        designate.
          ``(2) Membership.--The Committee shall be comprised of the 
        following members or the designee of any such member:
                  ``(A) The Secretary of the Treasury.
                  ``(B) The Secretary of Homeland Security.
                  ``(C) The Secretary of Commerce.
                  ``(D) The Secretary of Defense.
                  ``(E) The Secretary of State.
                  ``(F) The Attorney General.
                  ``(G) The Chairman of the Council of Economic 
                Advisors.
                  ``(H) The United States Trade Representative.
                  ``(I) The Director of the Office of Management and 
                Budget.
                  ``(J) The Director of the National Economic Council.
                  ``(K) The Director of the Office of Science and 
                Technology Policy.
                  ``(L) The President's Assistant for National Security 
                Affairs.
                  ``(M) Any other designee of the President from the 
                Executive Office of the President.
          ``(3) Chairperson; vice chairperson.--The Secretary of the 
        Treasury shall be the Chairperson of the Committee. The 
        Secretary of Homeland Security shall be the Vice Chairperson of 
        the Committee.
          ``(4) Other members.--Subject to subsection (b)(4)(B), the 
        Chairperson of the Committee shall involve the heads of such 
        other Federal departments, agencies, and independent 
        establishments in any review or investigation under subsection 
        (b) as the Chairperson, after consulting with the Vice 
        Chairperson, determines to be appropriate on the basis of the 
        facts and circumstances of the transaction under investigation 
        (or the designee of any such department or agency head).
          ``(5) Meetings.--The Committee shall meet upon the direction 
        of the President or upon the call of the Chairperson of the 
        Committee without regard to section 552b of title 5, United 
        States Code (if otherwise applicable).
          ``(6) Collection of evidence.--Subject to subsection (c), the 
        Committee may, for the purpose of carrying out this section--
                  ``(A) sit and act at such times and places, take such 
                testimony, receive such evidence, administer such 
                oaths; and
                  ``(B) require the attendance and testimony of such 
                witnesses and the production of such books, records, 
                correspondence, memoranda, papers, and documents as the 
                Chairperson of the Committee may determine advisable.
          ``(7) Authorization of appropriations.--There are authorized 
        to be appropriated to the Secretary of the Treasury for each of 
        fiscal years 2007, 2008, 2009, and 2010, expressly and solely 
        for the operations of the Committee that are conducted by the 
        Secretary, the sum of $10,000,000.''.
  (b) Technical and Conforming Amendment.--The first sentence of 
section 721(c) of the Defense Production Act of 1950 (50 U.S.C. App. 
2170(c)) is amended--
          (1) by striking ``material filed with'' and inserting 
        ``material, including proprietary business information, filed 
        with, or testimony presented to,''; and
          (2) by striking ``or documentary material'' the 2nd place 
        such term appears and inserting ``, documentary material, or 
        testimony''.

SEC. 4. ADDITIONAL FACTORS REQUIRED TO BE CONSIDERED.

  Section 721(f) of the Defense Production Act of 1950 (50 U.S.C. App. 
2170(f)) is amended--
          (1) in the matter preceding paragraph (1)--
                  (A) by striking ``may'' and inserting ``shall''; and
                  (B) by striking ``among other factors'';
          (2) by striking ``and'' at the end of paragraph (4);
          (3) by striking the period at the end of paragraph (5) and 
        inserting a semicolon; and
          (4) by adding at the end the following new paragraphs:
          ``(6) whether the covered transaction has a security-related 
        impact on critical infrastructure in the United States;
          ``(7) whether the covered transaction is a foreign 
        government-controlled transaction; and
          ``(8) such other factors as the President or the President's 
        designee may determine to be appropriate, generally or in 
        connection with a specific review or investigation.''.

SEC. 5. NONWAIVER OF SOVEREIGN IMMUNITY.

  Section 721(d) of the Defense Production Act of 1950 (50 U.S.C. App. 
2170(d)) is amended by adding at the end the following new sentence: 
``The United States shall not be held liable for any losses or other 
expenses incurred by any party to a covered transaction as a result of 
actions taken under this section after a covered transaction has been 
consummated if the party did not submit a written notice of the 
transaction to the Chairperson of the Committee under subsection 
(b)(1)(C) or did not wait until the completion of any review or 
investigation under subsection (b), or the end of the 15-day period 
referred to in this subsection, before consummating the transaction.''.

SEC. 6. MITIGATION, TRACKING, AND POST-CONSUMMATION MONITORING AND 
                    ENFORCEMENT.

  Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 
2170) is amended by inserting after subsection (k) (as amended by 
section 3 of this Act) the following new subsection:
  ``(l) Mitigation, Tracking, and Postconsummation Monitoring and 
Enforcement.--
          ``(1) Mitigation.--
                  ``(A) In general.--The Committee may negotiate, enter 
                into or impose, and enforce any agreement or condition 
                with any party to a covered transaction in order to 
                mitigate any threat to the national security of the 
                United States.
                  ``(B) Risk-based analysis required.--Any agreement 
                entered into or condition imposed under subparagraph 
                (A) shall be based on a risk-based analysis of the 
                threat to national security of the covered transaction.
          ``(2) Tracking authority for withdrawn notices.--
                  ``(A) In general.--If any written notice of a covered 
                transaction that was submitted to the Committee under 
                this section is withdrawn before any review or 
                investigation by the Committee under subsection (b) is 
                completed, the Committee shall establish, as 
                appropriate--
                          ``(i) interim protections to address specific 
                        concerns with such transaction that have been 
                        raised in connection with any such review or 
                        investigation pending any resubmission of any 
                        written notice under this section with respect 
                        to such transaction and further action by the 
                        President under this section;
                          ``(ii) specific timeframes for resubmitting 
                        any such written notice; and
                          ``(iii) a process for tracking any actions 
                        that may be taken by any party to the 
                        transaction, in connection with the 
                        transaction, before the notice referred to in 
                        clause (ii) is resubmitted.
                  ``(B) Designation of agency.--The Committee may 
                designate an appropriate Federal department or agency, 
                other than any entity of the intelligence community (as 
                defined in the National Security Act of 1947), as the 
                lead agency to carry out the requirements of 
                subparagraph (A) with respect to any covered 
                transaction that is subject to such subparagraph.
          ``(3) Negotiation, modification, monitoring, and 
        enforcement.--
                  ``(A) Designation of agency.--The Committee shall 
                designate a Federal department or agency as the lead 
                agency to negotiate, modify, monitor, and enforce any 
                agreement entered into or condition imposed under 
                paragraph (1) with respect to a covered transaction 
                based on the expertise with and knowledge of the issues 
                related to such transaction on the part of the 
                designated department or agency.
                  ``(B) Reporting by designated agency.--
                          ``(i) Implementation reports.--The Federal 
                        department or agency designated by the 
                        Committee as a lead agency under subparagraph 
                        (A) in connection with any agreement entered 
                        into or condition imposed under paragraph (1) 
                        with respect to a covered transaction shall--
                                  ``(I) provide periodic reports to the 
                                Chairperson and Vice Chairperson of the 
                                Committee on the implementation of such 
                                agreement or condition; and
                                  ``(II) require, as appropriate, any 
                                party to the covered transaction to 
                                report to the head of such department 
                                or agency (or the designee of such 
                                department or agency head) on the 
                                implementation or any material change 
                                in circumstances.
                          ``(ii) Modification reports.--The Federal 
                        department or agency designated by the 
                        Committee as a lead agency under subparagraph 
                        (A) in connection with any agreement entered 
                        into or condition imposed with respect to a 
                        covered transaction shall--
                                  ``(I) provide periodic reports to the 
                                Chairperson and Vice Chairperson of the 
                                Committee on any modification to any 
                                such agreement or condition imposed 
                                with respect to the transaction; and
                                  ``(II) ensure that any significant 
                                modification to any such agreement or 
                                condition is reported to the Director 
                                of National Intelligence and to any 
                                other Federal department or agency that 
                                may have a material interest in such 
                                modification.''.

SEC. 7. INCREASED OVERSIGHT BY THE CONGRESS.

  (a) Report on Actions.--Section 721(g) of the Defense Production Act 
of 1950 (50 U.S.C. App. 2170) is amended to read as follows:
  ``(g) Reports to the Congress.--
          ``(1) Reports on completed committee investigations.--
                  ``(A) In general.--Not later than 5 days after the 
                completion of a Committee investigation of a covered 
                transaction under subsection (b)(2), or, if the 
                President indicates an intent to take any action 
                authorized under subsection (d) with respect to the 
                transaction, after the end of 15-day period referred to 
                in subsection (d), the Chairperson or Vice Chairperson 
                of the Committee shall submit a written report on the 
                findings or actions of the Committee with respect to 
                such investigation, the determination of whether or not 
                to take action under subsection (d), an explanation of 
                the findings under subsection (e), and the factors 
                considered under subsection (f), with respect to such 
                transaction, to--
                          ``(i) the Majority Leader and the Minority 
                        Leader of the Senate;
                          ``(ii) the Speaker and the Minority Leader of 
                        the House of Representatives; and
                          ``(iii) the chairman and ranking member of 
                        each committee of the House of Representatives 
                        and the Senate with jurisdiction over any 
                        aspect of the covered transaction and its 
                        possible effects on national security.
                  ``(B) Notice and briefing requirement.--If a written 
                request for a briefing on a covered transaction is 
                submitted to the Committee by any Senator or Member of 
                Congress who receives a report on the transaction under 
                subparagraph (A), the Chairperson or Vice Chairperson 
                (or such other person as the Chairperson or Vice 
                Chairperson may designate) shall provide 1 classified 
                briefing to each House of the Congress from which any 
                such briefing request originates in a secure facility 
                of appropriate size and location that shall be open 
                only to the Majority Leader and the Minority Leader of 
                the Senate, the Speaker and the Minority Leader of the 
                House of Representatives, (as the case may be) the 
                chairman and ranking member of each committee of the 
                House of Representatives or the Senate (as the case may 
                be) with jurisdiction over any aspect of the covered 
                transaction and its possible effects on national 
                security, and appropriate staff members who have 
                security clearance.
          ``(2) Application of other provision.--
                  ``(A) In general.--The disclosure of information 
                under this subsection shall be consistent with the 
                requirements of subsection (c). Members of Congress and 
                staff of either House or any committee of the Congress 
                shall be subject to the same limitations on disclosure 
                of information as are applicable under such subsection.
                  ``(B) Proprietary information.--Proprietary 
                information which can be associated with a particular 
                party to a covered transaction shall be furnished in 
                accordance with subparagraph (A) only to a committee of 
                the Congress and only when the committee provides 
                assurances of confidentiality, unless such party 
                otherwise consents in writing to such disclosure.''.
  (b) Semi-Annual Report.--Section 721 of the Defense Production Act of 
1950 (50 U.S.C. App. 2170) is amended by inserting after subsection (l) 
(as added by section 6 of this Act) the following new subsection:
  ``(m) Semi-Annual Report to the Congress.--
          ``(1) In general.--The Chairperson of the Committee shall 
        transmit a report to the Congress before January 31 and July 31 
        of each year on all the reviews and investigations of covered 
        transactions conducted under subsection (b) during the 6-month 
        period covered by the report.
          ``(2) Contents of report relating to covered transactions.--
        The report under paragraph (1) shall contain the following 
        information with respect to each covered transaction:
                  ``(A) A list of all notices filed and all reviews or 
                investigations conducted during the period with basic 
                information on each party to the transaction, the 
                nature of the business activities or products of all 
                pertinent persons, along with information about the 
                status of the review or investigation, information on 
                any withdrawal from the process, any rollcall votes by 
                the Committee under this section, any extension of time 
                for any investigation, and any presidential decision or 
                action under this section.
                  ``(B) Specific, cumulative, and, as appropriate, 
                trend information on the numbers of filings, 
                investigations, withdrawals, and presidential decisions 
                or actions under this section.
                  ``(C) Cumulative and, as appropriate, trend 
                information on the business sectors involved in the 
                filings which have been made, and the countries from 
                which the investments have originated.
                  ``(D) Information on whether companies that withdrew 
                notices to the Committee in accordance with subsection 
                (b)(1)(C)(ii) have later re-filed such notices, or, 
                alternatively, abandoned the transaction.
                  ``(E) The types of security arrangements and 
                conditions the Committee has used to mitigate national 
                security concerns about a transaction.
                  ``(F) A detailed discussion of all perceived adverse 
                effects of covered transactions on the national 
                security or critical infrastructure of the United 
                States that the Committee will take into account in its 
                deliberations during the period before delivery of the 
                next such report, to the extent possible.
          ``(3) Contents of report relating to critical technologies.--
                  ``(A) In general.--In order to assist the Congress in 
                its oversight responsibilities with respect to this 
                section, the President and such agencies as the 
                President shall designate shall include in the semi-
                annual report submitted under paragraph (1) the 
                following:
                          ``(i) An evaluation of whether there is 
                        credible evidence of a coordinated strategy by 
                        1 or more countries or companies to acquire 
                        United States companies involved in research, 
                        development, or production of critical 
                        technologies for which the United States is a 
                        leading producer.
                          ``(ii) An evaluation of whether there are 
                        industrial espionage activities directed or 
                        directly assisted by foreign governments 
                        against private United States companies aimed 
                        at obtaining commercial secrets related to 
                        critical technologies.
                  ``(B) Critical technologies defined.--For purposes of 
                this paragraph, the term `critical technologies' means 
                technologies identified under title VI of the National 
                Science and Technology Policy, Organization, and 
                Priorities Act of 1976 or other critical technology, 
                critical components, or critical technology items 
                essential to national defense or national security 
                identified pursuant to this section.
                  ``(C) Release of unclassified study.--That portion of 
                the semi-annual report under paragraph (1) that is 
                required by this paragraph may be classified. An 
                unclassified version of that portion of the report 
                shall be made available to the public.''.
  (c) Investigation by Inspector General.--
          (1) In general.--The Inspector General of the Department of 
        the Treasury shall conduct an independent investigation to 
        determine all of the facts and circumstances concerning each 
        failure of the Department of the Treasury to make any report to 
        the Congress that was required under section 721(k) of the 
        Defense Production Act of 1950 (as in effect before the date of 
        the enactment of this Act).
          (2) Report to the congress.--Before the end of the 270-day 
        period beginning on the date of the enactment of this Act, the 
        Inspector General of the Department of the Treasury shall 
        submit a report to the Congress on the investigation under 
        paragraph (1) containing the findings and conclusions of the 
        Inspector General.
  (d) Study and Report.--
          (1) Study required.--Before the end of the 120-day period 
        beginning on the date of the enactment of this Act, the 
        Secretary of the Treasury, in consultation with the Secretary 
        of State and the Secretary of Commerce, shall conduct a study 
        on investments in the United States, especially investments in 
        critical infrastructure and industries affecting national 
        security, by--
                  (A) foreign governments, entities controlled by or 
                acting on behalf of a foreign government, or persons of 
                foreign countries which comply with any boycott of 
                Israel; or
                  (B) foreign governments, entities controlled by or 
                acting on behalf of a foreign government, or persons of 
                foreign countries which do not ban organizations 
                designated by the Secretary of State as foreign 
                terrorist organizations.
          (2) Report.--Before the end of the 30-day period beginning 
        upon completion of the study under paragraph (1) or in the next 
        semi-annual report under section 721(m) of the Defense 
        Production Act of 1950 (as added by subsection (b)), the 
        Secretary of the Treasury shall submit a report to the 
        Congress, for transmittal to all appropriate committees of the 
        Senate and the House of Representatives, containing the 
        findings and conclusions of the Secretary with respect to the 
        study, together with an analysis of the effects of such 
        investment on the national security of the United States and on 
        any efforts to address those effects.

SEC. 8. CERTIFICATION OF NOTICES AND ASSURANCES.

  Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 
2170) is amended by inserting after subsection (m) (as added by section 
7(b) of this Act) the following new subsection:
  ``(n) Certification of Notices and Assurances.--Each notice required 
to be submitted, by a party to a covered transaction, to the President 
or the President's designee under this section and regulations 
prescribed under such section, and any information submitted by any 
such party in connection with any action for which a report is required 
pursuant to paragraph (3)(B)(ii) of subsection (l) with respect to the 
implementation of any mitigation agreement or condition described in 
paragraph (1)(A) of such subsection, or any material change in 
circumstances, shall be accompanied by a written statement by the chief 
executive officer or the designee of the person required to submit such 
notice or information certifying that, to the best of the person's 
knowledge and belief--
          ``(1) the notice or information submitted fully complies with 
        the requirements of this section or such regulation, agreement, 
        or condition; and
          ``(2) the notice or information is accurate and complete in 
        all material respects.''.

SEC. 9. REGULATIONS.

  Section 721(h) of the Defense Production Act of 1950 (50 U.S.C. App. 
2170(h)) is amended to read as follows:
  ``(h) Regulations.--The President shall direct the issuance of 
regulations to carry out this section. Such regulations shall, to the 
extent possible, minimize paperwork burdens and shall to the extent 
possible coordinate reporting requirements under this section with 
reporting requirements under any other provision of Federal law.''.

SEC. 10. EFFECT ON OTHER LAW.

  Section 721(i) of the Defense Production Act of 1950 (50 U.S.C. App. 
2170(i)) is amended to read as follows:
  ``(i) Effect on Other Law.--No provision of this section shall be 
construed as altering or affecting any other authority, process, 
regulation, investigation, enforcement measure, or review provided by 
or established under any other provision of Federal law, including the 
International Emergency Economic Powers Act, or any other authority of 
the President or the Congress under the Constitution of the United 
States.''.

                          Purpose and Summary

    H.R. 5337, the ``National Security Foreign Improvement 
Reform and Strengthening Transparency Act of 2006'' (``National 
Security FIRST'') strengthens national security by improving 
the process by which foreign direct investment in the United 
States is scrutinized to determine if it threatens to impair 
national security in any way. The bill, introduced May 10, 
2006, makes a number of reforms to Section 721 of the Defense 
Production Act of 1950 (DPA)--the so-called Exon-Florio 
amendment to the DPA--improving an existing review process that 
has existed in some form since 1975. It reforms the Exon-Florio 
process, which became law in 1988, by correcting perceived 
problems with the process of examining such investment while 
not creating new hurdles for investment into the United States 
that in turn could trigger retaliatory investment barriers to 
U.S. investment overseas. The legislation improves 
accountability for the process within the Administration and 
codifies the existence of the Committee on Foreign Investment 
in the United States (CFIUS), adding the Secretary of Homeland 
Security as vice chairman of the cross-agency review panel. It 
establishes clear and transparent processes for examining 
proposed investment, designing and monitoring arrangements to 
mitigate any threat to national security short of refusing the 
transaction, and reporting to Congress regularly and clearly on 
CFIUS actions so that Congress can perform its necessary 
oversight. The bill addresses apparent voids in the current 
examination process--for example, establishing monitoring and 
interim security measures if a transaction is withdrawn from 
the examination process, even temporarily--and ensures that 
transactions may only be considered approved after the chairman 
and vice chairman of CFIUS sign off. Additionally, addressing 
what many in Congress view as a potential misreading of 
Congressional intent in the so-called ``Byrd amendment'' to 
Exon-Florio, the bill closes a loophole by mandating that all 
investments that are controlled by foreign governments undergo 
both a review and a national security investigation. The bill 
changes current practice, ensuring that a list of factors that 
currently ``may'' be considered while examining a proposal, in 
the future ``shall'' be considered, and adds security threats 
to critical infrastructure as a factor to be considered. 
Finally, the bill adds a formal analysis of every proposed 
transaction, to be performed by the Director of National 
Intelligence, but makes clear that the director has no policy 
role in the examination process, and makes appropriate 
provision for protection of classified and proprietary business 
information about a deal.

                  Background and Need for Legislation

    The events following public disclosure early in 2006 of the 
proposal by a Dubai-based ports operator to buy the global port 
operations business of a British ports operator raised a series 
of concerns about the process by which the United States 
government scrutinizes foreign direct investment in the U.S. 
and raised calls for reform of that process.
    Formed under a 1975 executive order to monitor U.S. policy 
on foreign direct investments, the Committee on Foreign 
Investment in the United States is an interagency committee 
chaired by the Department of the Treasury. Other participating 
agencies are the Department of Commerce; Department of State; 
Department of Homeland Security; Department of Defense; 
Department of Justice; National Security Council; Council of 
Economic Advisors; Office of Management & Budget; Office of 
Science and Technology Policy; U.S. Trade Representative; 
National Economic Council; and Council of Economic Advisors. In 
1988, as part of the Omnibus Trade Act, Congress expanded the 
role of CFIUS by passing the Exon-Florio amendment to the 
Defense Production Act of 1950. Under Exon-Florio, the 
President is authorized to suspend or prohibit foreign 
acquisitions of U.S. companies if the foreign controlling 
interest might threaten national security. The President 
delegated the Exon-Florio investigative authority to CFIUS.
    Exon-Florio established a four-step process for examining a 
foreign acquisition: (1) voluntary notice by the companies; (2) 
a 30-day review to identify any national security concerns; (3) 
an optional 45-day investigation to determine whether 
identified concerns require more extensive mitigation efforts 
or a recommendation to the President for possible action; and 
(4) a Presidential decision to permit, suspend, or prohibit an 
acquisition in those instances where potential national 
security concerns are identified.
    During the standard review period, the CFIUS responds to 
the requesting company within 30 days--after each CFIUS 
component agency has reviewed the proposed transaction. As 
companies often withdraw and restructure deals, however, this 
``30-day review'' often takes much longer. If concerns are 
raised, the CFIUS can begin a 45-day investigation. By law, 
CFIUS is limited in what information it can provide to the 
public and to Congress because its statute requires 
confidentiality. It should be noted that the 30-day review 
period is equal to the antitrust review period under Hart-
Scott-Rodino.
    In general, most CFIUS referrals are routine: either the 
company agrees to minor mitigation procedures ranging from 
minor changes in the sales agreement to divestiture of a 
division, or else the company withdraws from the process. A 
withdrawal is most often made when it becomes clear that any 
mitigation that would prevent a recommendation to the President 
would render the remainder of the deal unattractive to the 
buyer or seller. Occasionally, a company will withdraw from the 
process during the ``review'' period, restructure the deal and 
re-submit its proposal. More than 1500 CFIUS reviews have been 
conducted since 1988, with the annual rate rising dramatically 
following 9/11. In 2005, the CFIUS handled about 65 proposed 
deals.
    Of necessity, the reviews and investigations, which contain 
classified evaluations of national security vulnerabilities as 
well as extensive proprietary business information, are 
conducted in secret. Given this lack of transparency, there 
have been concerns over the years about CFIUS's accountability 
to Congress and to the public, particularly with regard to 
fundamental questions of whether CFIUS policies are consistent 
with the statute that governs its operations and whether CFIUS 
policies are applied consistently and according to the statute 
in each transaction that comes before CFIUS.
    The Committee has relied on expert testimony from public 
and private officials to assess concerns about CFIUS policies 
and procedures. Some of those concerns were examined in a 
report by the Government Accountability Office (GAO) released 
in September, 2005. The GAO report expressed concern about an 
overly narrow working definition of national security, the lack 
of clear and consistent procedures for monitoring transactions 
that have been withdrawn from CFIUS, and the lack of adequate 
reporting to Congress on CFIUS activities. The GAO also 
suggested that CFIUS has been too reluctant to initiate formal 
45-day investigations.
    This concern was evident in the aftermath of the ports-
operations transaction when critics charged that CFIUS 
improperly ignored the second part of the so-called ``Byrd 
Amendment'' test requiring a 45-day investigation if a buyer 
were controlled by a foreign government and if national 
security concerns were implicated.
    Another criticism in the aftermath of the ports transaction 
was that there has not been consistent or adequate senior-level 
accountability for CFIUS decision making, reflected in this 
case in the fact that senior officials in the Administration, 
including those directly charged with CFIUS responsibilities, 
were unaware of the Dubai transaction until it was reported in 
the media.
    H.R. 5337, the National Security FIRST Act of 2006, seeks 
to address legitimate concerns about CFIUS procedures and 
policies. It creates a ``regular order'' process by which no 
proposed transaction could appear to disappear temporarily or 
permanently from the security-review process and establishing a 
clear process by which any potential minor security issues 
could be addressed along with a clear and permanent process of 
post-transaction monitoring. The bill seeks to increase 
Administration accountability, make it far easier for Congress 
to perform its necessary oversight of the CFIUS process, better 
protect classified and proprietary business information 
involved in the examination process--all without creating any 
unnecessary new barriers to normal investment in the United 
States. The bill envisions a process in which a threat analysis 
would be conducted by the Director of National Intelligence 
(DNI)--who would not be a member of CFIUSand who would play no 
policy role--and decisions made in such a way that no individual CFIUS 
member's concerns might be masked or ignored. Additionally, the CFIUS 
chairman and vice-chairman (or their deputies) are both required to 
sign all CFIUS decisions, ensuring that while the review or 
investigation process remains objective, there is a clear and direct 
senior level responsibility for CFIUS decisions. The Committee 
specifically requires that the DNI make requests for information from 
the Office of Foreign Assets control and the Financial Crimes 
Enforcement Network, to determine any terrorism, sanction or financial 
crime nexus with funding sources or principals in a transaction, and 
requires the DNI to affirmatively check with all national intelligence 
sources, particularly the Defense Intelligence Agency, and incorporate 
any pertinent information from them in his report to CFIUS.
    In making the changes, the legislation also strengthens the 
President's capacity to refuse, suspend, modify or reverse any 
transaction if a written notice of such transaction is not 
filed with CFIUS or if there is an intentional material 
omission or falsehood in any filing with the CFIUS or an 
intentional material breach in any post-transaction mitigation 
agreement, and establishes a formal requirement that all 
filings with CFIUS must be complete and accurate to the best of 
the filing party's ability. Thus, the Committee establishes a 
clear signal that all violations of such notice certification 
should be considered in the context of Title 18, Section 1001, 
and all intentional breaches or misstatements could also lead 
to severe modification or unwinding of any transaction at any 
time.
    H.R. 5337 makes clear that national security encompasses 
threats to critical U.S. infrastructure, including energy-
related infrastructure. The Committee expects that acquisitions 
of U.S. energy companies or assets by foreign governments or 
companies controlled by foreign governments will be reviewed 
closely for their national security impact. If such 
acquisitions raise legitimate concerns about threats to U.S. 
national security, appropriate protections as set forth in the 
statute should be instituted including potentially the 
prohibition of the transaction.
    The Committee expects, however, that such determinations 
will be objective, based upon criteria that are reasonably 
related to protecting the security of the United States while 
encouraging and respecting the need for free flows of 
investment globally and the international agreements that 
govern those flows. The Committee notes that these CFIUS 
procedures stand in stark contrast to actions taken by some 
foreign governments, where expropriations of assets, often in 
the energy sector, have occurred arbitrarily, without 
justification, and without recompense for U.S. investors. The 
Committee rejects in the strongest possible terms any 
suggestion that CFIUS reforms contained in H.R. 5337 represent 
a mistreatment of foreign capital and that there is equivalence 
between CFIUS reform efforts and the actions of foreign 
governments that violate international agreements on the 
treatment of foreign capital. The Committee will continue in 
its longstanding efforts to seek to ensure that U.S. investors 
are treated fairly in foreign markets and that foreign 
governments honor their commitments in international 
agreements.
    The Committee expects that CFIUS will consider all aspects 
of a covered transaction to determine if the investment 
threatens to impair national security. The participation by 
foreign governments in the boycott of vital allies of the 
United States, such as Israel, or the failure of foreign 
governments to ban groups the Department of State designates as 
foreign terrorist organizations, may have an impact on U.S. 
national security, and such factors should be considered when 
companies that are owned or controlled by such a government 
seek to acquire or invest in a U.S. company, particularly one 
involved in critical defense production infrastructure. The 
Committee believes that affirmative requests by the Director of 
National Intelligence for information from the Treasury 
Department's Office of Foreign Assets Control, as required by 
this Act for every covered transaction, will make clear in the 
future such connections in any investment proposals. However, 
the committee is concerned about a general lack of knowledge 
about the investments in the United States by state-owned or 
state-controlled companies that are from governments that 
participate in the boycott of Israel or that decline to ban 
terrorist organizations. The Committee therefore requires in 
this Act that CFIUS report within six months on all such 
investments, with such report also to include any 
recommendations from CFIUS members on how the government should 
consider and treat any future proposed investment in the United 
States by such governments or persons.

                                Hearings

    The Subcommittee on Domestic and International Monetary 
Policy, Trade and Technology held a hearing on March 1, 2006, 
entitled ``Foreign Investment, Jobs and National Security: The 
CFIUS Process.'' The following witnesses testified: The 
Honorable Robert M. Kimmitt, Deputy Secretary, U.S. Department 
of Treasury; The Honorable Michael P. Jackson, Deputy 
Secretary, U.S. Department of Homeland Security; The Honorable 
Eric S. Edelman, Under Secretary of Defense for Policy, U.S. 
Department of Defense; The Honorable C. David Welch, Assistant 
Secretary, Bureau of Near Eastern Affairs, U.S. Department of 
State; Mr. James K. Glassman, Resident Fellow, American 
Enterprise Institute; Mr. Todd M. Malan, President and CEO, 
Organization for International Investment; Mr. David M. 
Marchick, Partner, Covington and Burling; Mr. William A. 
Reinsch, President, National Foreign Trade Council; and Mr. 
Clark Ervin, Director, Homeland Security Institute, The Aspen 
Institute.
    The Subcommittee held a second hearing on April 27, 2006, 
entitled ``CFIUS and the Role of Foreign Direct Investment in 
the United States.'' The following witnesses testified: The 
Honorable Donald L. Evans, Chief Executive Officer, The 
Financial Services Forum; Mr. Paul L. Vikner, President and 
CEO, Mack Trucks Inc.; Mr. Jeffrey M. Anderson, Executive 
Director, Virginia Economic Development Partnership; and Mr. 
Daniel K. Tarullo, Professor of Law, Georgetown University Law 
Center.
    Finally, the Subcommittee held a legislative hearing on 
H.R. 5337 on May 17, 2006. The following witnesses testified: 
The Honorable Clay Lowery, Assistant Secretary for 
International Affairs, U.S. Department of the Treasury; The 
Honorable Stewart A. Baker, Assistant Secretary for Policy, 
Planning and International Affairs, U.S. Department of Homeland 
Security; The Honorable Alice Fisher, Assistant Attorney 
General, Criminal Division, U.S. Department of Justice; The 
Honorable Peter C.W. Flory, Assistant Secretary for 
International Security Policy, U.S. Department of Defense; Mr. 
Douglas Holz-Eakin, Director of the Maurice R. Greenberg Center 
for Geoeconomic Studies, Council on Foreign Relations; Mr. 
David M. Marchick, Partner, Covington and Burling; and Mr. John 
H. Veroneau, Partner, DLA Piper Rudnick Gray Cary.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 14, 2006, and ordered H.R. 5337, as amended, favorably 
reported to the House by a record vote of 64 yeas and 0 nays.

                            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 Mr. Oxley to order the bill, as amended, reported to 
the House with a favorable recommendation was agreed to by a 
record vote of 64 yeas and 0 nays (Record vote no. FC-19). The 
names of Members voting for and against follow:

                                              RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................        X   ........  .........  Mr. Frank (MA)...        X   ........  .........
Mr. Leach......................        X   ........  .........  Mr. Kanjorski....        X   ........  .........
Mr. Baker......................        X   ........  .........  Ms. Waters.......        X   ........  .........
Ms. Pryce (OH).................  ........  ........  .........  Mr. Sanders......        X   ........  .........
Mr. Bachus.....................  ........  ........  .........  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......  ........  ........  .........
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.........        X   ........  .........
Mr. Hensarling.................        X   ........  .........  Mr. Matheson.....        X   ........  .........
Mr. Garrett (NJ)...............        X   ........  .........  Mr. Lynch........  ........  ........  .........
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......  ........  ........  .........
Mr. Pearce.....................        X   ........  .........  Ms. Bean.........  ........  ........  .........
Mr. Neugebauer.................        X   ........  .........  Ms. Wasserman            X   ........  .........
                                                                 Schultz.
Mr. Price (GA).................        X   ........  .........  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.

During the consideration of the bill, the following amendments 
were considered:
    An amendment in the nature of a substitute by Ms. Pryce, 
No. 1, making technical and substantive changes, was AGREED TO 
by a voice vote.
    An amendment by Mr. Capuano, No. 1a, regarding 
consideration of foreign countries' law as an additional 
factor, was WITHDRAWN.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held hearings and made 
findings that are reflected in 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 establishes the 
following performance related goals and objectives for this 
legislation:
    The Committee on Foreign Investment in the United States 
shall immediately adopt the procedures set forth in this Act, 
and begin filing such notices and reports to Congress and doing 
such post-transaction monitoring as called for in this Act, in 
a timely fashion. The Committee intends that the procedures set 
forth in this Act apply to all covered transactions henceforth, 
except that those covered transactions under review or 
investigation by the CFIUS on the day before the date of 
enactment shall be considered using the practices and 
procedures in place the day before enactment. Such transactions 
as are under review or investigation on the day before 
enactment of this Act shall, however, be subject to all post-
transaction monitoring and other procedures as set forth in 
this Act, and all other portions of this Act shall apply to 
such transactions except the procedures for initial review or 
investigation.

   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 adopts as its 
own the estimate of new budget authority, entitlement 
authority, tax expenditures or revenues contained in the cost 
estimate prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                     June 16, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5337, the National 
Security Foreign Investment Reform and Strengthened 
Transparency Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 5337--National Security Foreign Investment Reform and Strengthened 
        Transparency Act of 2006

    Summary: H.R. 5337 would amend the Defense Production Act 
of 1950 to establish in law the Committee on Foreign Investment 
in the United States (CFIUS). The committee would consist of at 
least 12 members (including six cabinet secretaries). In 
addition, the legislation would authorize the appropriation of 
$10 million annually over the 2007-2010 period for the 
Secretary of the Treasury to pay for activities of the 
committee that are conducted by the Department of the Treasury.
    Assuming appropriation of the authorized amounts, CBO 
estimates that implementing H.R. 5337 would cost $40 million 
over the 2007-2011 period. In addition, CBO expects that 
complying with the bill's provisions would increase the 
administrative expenses of some federal agencies, but because 
of the confidential nature of the CFIUS review process, the 
number of agencies involved, and the confidential information 
needed to prepare an estimate for some provisions of the 
legislation, CBO cannot determine a precise estimate of the 
likely total costs of this bill. Enacting the bill would not 
affect direct spending or revenues.
    H.R. 5337 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5337 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization level1...............................................       10       10       10       10        0
Estiamted outlays..................................................        9       10       10       10        1
----------------------------------------------------------------------------------------------------------------
1In addition, CBO expects that complying with the bill's provisions would increase the administrative expenses
  of some federal agencies, but because of the confidential nature of the CFIUS review process, the number of
  agencies involved, and the confidential information needed to prepare an estimate for some provisions of the
  legislation, CBO cannot determine a precise estimate of the likely total costs of this bill.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
5337 will be enacted by the end of fiscal year 2006. We assume 
that the necessary amounts will be appropriated for each year 
and that outlays will occur at historical rates for similar 
programs.
    H.R. 5337 would establish in law the CFIUS. Under the bill, 
the committee would consist of at least 12 permanent members 
including the Secretaries of the Departments of Treasury, 
State, Defense, Commerce, and Homeland Security; as well as the 
Attorney General, Director of the Office of Management and 
Budget, the United States Trade Representative, the Chairman of 
the Council of Economic Advisors, the Director of the National 
Economic Council, the Director of the Office of Science and 
Technology Policy; and the President's Assistant for National 
Security Affairs. The committee would coordinate reviews of 
foreign investment in the United States that involves national 
security or critical infrastructure in the United States. The 
legislation would formalize and expand this review and 
investigation process.
    The legislation also would authorize the appropriation of 
$10 million annually over the 2007-2010 period for the 
operations of the committee. Assuming the appropriation of the 
authorized amounts, CBO estimates that the provision would cost 
$40 million over the 2007-2011 period.
    In addition, CBO expects that complying with the bill's 
provisions would increase the administrative expenses of 
federal agencies that are represented on the committee, but 
because of the confidential nature of the CFIUS review process, 
the number of agencies involved, and the confidential 
information needed to prepare an estimate for some provisions 
of the legislation, CBO cannot determine a precise estimate of 
the likely total costs of this bill. Additional costs over the 
2007-2011 period, however, would generally come from agencies' 
salary and expense budgets which are subject to annual 
appropriation. Such costs would probably total at least a few 
million dollars per year.
    Intergovernmental and private-sector impact: H.R. 5337 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Previous CBO estimate: On May 3, 2006, CBO transmitted a 
cost estimate for the Foreign Investment and National Security 
Act of 2006, as ordered reported by the Senate Committee on 
Banking, Housing, and Urban Affairs on March 30, 2006. The two 
pieces of legislation are both concerned with CFIUS but have 
some different provisions. H.R. 5337 would authorize the 
appropriation of $10 million annually over the 2007-2010 period 
while the legislation approved by the Senate committee would 
not authorize a specific amount to be appropriated.
    Estimate prepared by: Federal costs: Matthew Pickford; 
impact on state, local, and tribal governments: Sarah Puro; 
impact on the private sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

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

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  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

    Section 1.--This section establishes the short title of the 
bill as the ``National Security Foreign Investment Reform and 
Strengthening Transparency Act of 2006.''
    Section 2.--This section amends Section 721 of the Defense 
Production Act of 1950 to reform and clarify the way 
acquisitions of United States companies by foreign companies 
are analyzed for their effect on national security.
          Subsection (a) defines a number of terms used often 
        in the bill: Committee, control, covered transaction, 
        foreign government-controlled transaction. It also 
        clarifies that for the purposes of Section 721, 
        ``national security'' will be construed to include 
        ``homeland security'' including its application to 
        critical infrastructure.
          Subsection (b) establishes the method by which 
        covered transactions are reviewed and investigated by 
        the Committee on Foreign Investment in the United 
        States to determine if they threaten to impair United 
        States national security; establishes that any 
        transaction involving a foreign government-controlled 
        company must undergo an ``investigation'' by CFIUS; 
        establishes the process for notifying CFIUS of a 
        proposed transaction and a procedure for treating 
        transactions that are withdrawn from the CFIUS process 
        and later re-submits notice; establishes a procedure 
        for the President to unilaterally initiate a review of 
        a transaction in the case of submission of false or 
        misleading information to CFIUS or intentional material 
        breach of mitigation agreements; makes clear that 
        national security reviews of transactions take no 
        longer than 30 days and, if necessary, investigations 
        that follow reviews take no longer than 45 days unless 
        2/3 of the members of CFIUS vote to extend, and then by 
        no longer than 45 days; describes reasons for a 
        transaction to undergo an investigation; establishes 
        that no review or investigation is complete until the 
        chairman and vice chairman of CFIUS sign the resulting 
        reports; requires that any investigation must be 
        approved by a majority of CFIUS members in a rollcall 
        vote; specifies that in the case of a dissenting vote 
        by any CFIUS member, the decision on a foreign 
        government-controlled transaction must be made by the 
        President; and specifies that the Director of National 
        Intelligence must conduct an analysis of each 
        transaction.

    Section 3.--This section formally establishes the Committee 
on Foreign Investment in the United States; establishes its 
membership; specifies that the Secretary of the Treasury shall 
be the chairman and the Secretary of Homeland Security the vice 
chair; allows the temporary addition of non-member Executive 
Branch agencies; establishes guidelines for meeting and 
gathering information; and authorizes the appropriation of $10 
million annually for the operation of the Committee.
    Section 4.--This section establishes that the list of 
factors in Section 721 that currently ``may'' be considered 
when reviewing or investigating any transaction, instead 
``must'' all be considered, and adds as new factors whether a 
transaction is a foreign government-controlled transaction and 
whether a transaction has a security-related impact on critical 
infrastructure in the United States.
    Section. 5--This section makes clear that while submitting 
notice to CFIUS remains voluntary, if the United States must 
take action to dissolve, suspend or modify a transaction, the 
U.S. is not liable for any losses or other expenses by any 
party to a completed transaction if a notice of such 
transaction was not filed with the CFIUS prior to completion of 
the transaction.
    Section 6.--This section establishes that the CFIUS may 
enter into agreements with parties to a transaction to mitigate 
any threats to national security; establishes that the CFIUS 
shall name an appropriate lead Federal agency to monitor 
compliance with such agreements, negotiate any changes in such 
agreements and report back to the CFIUS on compliance and 
modifications; and establishes a method of tracking 
transactions that are withdrawn from the review or 
investigation process as well as a process for setting interim 
protections on such transactions to address specific national 
security concerns.
    Section 7.--This section establishes a broad new system for 
reporting information on CFIUS activities to Congress so that 
it may conduct appropriate oversight of the CFIUS. This 
includes reports to Congress within 5 days after the final 
action in an investigation; a mechanism for Congress to request 
a detailed, classified briefing on a transaction; and 
affirmative protections for proprietary business information. 
The CFIUS is required to file semi-annual reports with Congress 
that contain information on transactions handled by the CFIUS, 
cumulative and trend analysis of transactions by business 
sector and country of origin, information on security and 
mitigation agreements, folds into the semi-annual reporting the 
contents of the previously required quadrennial reporting on 
foreign industrial espionage in the U.S. and on foreign 
attempts to control a particular U.S. business or industrial 
sector, and requires a report on investments in the U.S. by 
countries that do not ban foreign terrorist organizations and 
by countries that support the boycott of Israel. The 
quadrennial report is repealed as redundant.
    Section 8.--This section makes clear that parties to a 
transaction must certify that the information they file with 
CFIUS is complete and correct.
    Section 9.--This section directs the President to cause 
regulations to be issued to carry out the requirements of 
Section 721, and specifies that to the extent possible they 
minimize paperwork burden and coordinate new reporting 
requirements with existing ones.
    Section 10.--This section clarifies that no portion of the 
bill should be construed as affecting or altering other 
existing law or regulation.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

           SECTION 721 OF THE DEFENSE PRODUCTION ACT OF 1950


    AUTHORITY TO REVIEW CERTAIN MERGERS, ACQUISITIONS, AND TAKEOVERS

  Sec. 721. [(a) Investigations.--The President or the 
President's designee may make an investigation to determine the 
effects on national security of mergers, acquisitions, and 
takeovers proposed or pending on or after the date of enactment 
of this section by or with foreign persons which could result 
in foreign control of persons engaged in interstate commerce in 
the United States. If it is determined that an investigation 
should be undertaken, it shall commence no later than 30 days 
after receipt by the President or the President's designee of 
written notification of the proposed or pending merger, 
acquisition, or takeover as prescribed by regulations 
promulgated pursuant to this section. Such investigation shall 
be completed no later than 45 days after such determination.
  [(b) Mandatory Investigations.--The President or the 
President's designee shall make an investigation, as described 
in subsection (a), in any instance in which an entity 
controlled by or acting on behalf of a foreign government seeks 
to engage in any merger, acquisition, or takeover which could 
result in control of a person engaged in interstate commerce in 
the United States that could affect the national security of 
the United States. Such investigation shall--
          [(1) commence not later than 30 days after receipt by 
        the President or the President's designee of written 
        notification of the proposed or pending merger, 
        acquisition, or takeover, as prescribed by regulations 
        promulgated pursuant to this section; and
          [(2) shall be completed not later than 45 days after 
        its commencement.]
  (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Committee.--The term ``Committee'' means the 
        Committee on Foreign Investment in the United States.
          (2) Control.--The term ``control'' has the meaning 
        given to such term in regulations which the Committee 
        shall prescribe.
          (3) Covered transaction.--The term ``covered 
        transaction'' means any merger, acquisition, or 
        takeover by or with any foreign person which could 
        result in foreign control of any person engaged in 
        interstate commerce in the United States.
          (4) Foreign government-controlled transaction.--The 
        term ``foreign government-controlled transaction'' 
        means any covered transaction that could result in the 
        control of any person engaged in interstate commerce in 
        the United States by a foreign government or an entity 
        controlled by or acting on behalf of a foreign 
        government.
          (5) Clarification.--The term ``national security'' 
        shall be construed so as to include those issues 
        relating to ``homeland security'', including its 
        application to critical infrastructure (as defined in 
        the Homeland Security Act of 2002).
  (b) National Security Reviews and Investigations.--
          (1) National security reviews.--
                  (A) In general.--Upon receiving written 
                notification under subparagraph (C) of any 
                covered transaction, or on a motion made under 
                subparagraph (D) with respect to any covered 
                transaction, the President, acting through the 
                Committee, shall review the covered transaction 
                to determine whether the transaction threatens 
                to impair the national security of the United 
                States and whether such threat can be 
                mitigated.
                  (B) Control by foreign government.--If the 
                Committee determines that the covered 
                transaction is a foreign government-controlled 
                transaction, the Committee shall conduct an 
                investigation of the transaction under 
                paragraph (2).
                  (C) Written notice.--
                          (i) In general.--Any party to any 
                        covered transaction may initiate a 
                        review of the transaction under this 
                        paragraph by submitting a written 
                        notice of the transaction to the 
                        Chairperson of the Committee.
                          (ii) Withdrawal of notice.--No 
                        covered transaction for which a notice 
                        was submitted under clause (i) may be 
                        withdrawn from review unless--
                                  (I) a written request for 
                                such withdrawal is submitted by 
                                any party to the transaction; 
                                and
                                  (II) the request is approved 
                                in writing by the Chairperson, 
                                in consultation with the Vice 
                                Chairperson, of the Committee.
                  (D) Unilateral initiation of review.--The 
                President, the Committee, or any member of the 
                Committee may move to initiate a review under 
                subparagraph (A) of--
                          (i) any covered transaction;
                          (ii) any covered transaction that has 
                        previously been reviewed or 
                        investigated under this section, if any 
                        party to the transaction submitted 
                        false or misleading material 
                        information to the Committee in 
                        connection with the review or 
                        investigation or omitted material 
                        information, including material 
                        documents, from information submitted 
                        to the Committee; or
                          (iii) any covered transaction that 
                        has previously been reviewed or 
                        investigated under this section, if any 
                        party to the transaction or the entity 
                        resulting from consummation of the 
                        transaction intentionally materially 
                        breaches a mitigation agreement or 
                        condition described in subsection 
                        (l)(1)(A), and--
                                  (I) such breach is certified 
                                by the lead department or 
                                agency monitoring and enforcing 
                                such agreement or condition as 
                                an intentional material breach; 
                                and
                                  (II) such department or 
                                agency certifies that there is 
                                no other remedy or enforcement 
                                tool available to address such 
                                breach.
                  (E) Timing.--Any review under this paragraph 
                shall be completed before the end of the 30-day 
                period beginning on the date of the receipt of 
                written notice under subparagraph (C) by the 
                Chairperson of the Committee, or the date of 
                the initiation of the review in accordance with 
                a motion under subparagraph (D).
          (2) National security investigations.--
                  (A) In general.--In each case in which--
                          (i) a review of a covered transaction 
                        under paragraph (1) results in a 
                        determination that--
                                  (I) the transaction threatens 
                                to impair the national security 
                                of the United States and that 
                                threat has not been mitigated 
                                during or prior to the review 
                                of a covered transaction under 
                                paragraph (1); or
                                  (II) the transaction is a 
                                foreign government-controlled 
                                transaction; or
                          (ii) the Director of National 
                        Intelligence identifies particularly 
                        complex national security or 
                        intelligence issues that could threaten 
                        to impair the national security of the 
                        United States and Committee members 
                        were not able to develop and agree upon 
                        measures to mitigate satisfactorily 
                        those threats during the initial review 
                        period under paragraph (1),
                the President, acting through the Committee, 
                shall immediately conduct an investigation of 
                the effects of the transaction on the national 
                security of the United States and take any 
                necessary actions in connection with the 
                transaction to protect the national security of 
                the United States.
                  (B) Timing.--
                          (i) In general.--Any investigation 
                        under subparagraph (A) shall be 
                        completed before the end of the 45-day 
                        period beginning on the date of the 
                        investigation commenced.
                          (ii) Extensions of time.--The period 
                        established under subparagraph (B) for 
                        any investigation of a covered 
                        transaction may be extended with 
                        respect to any particular investigation 
                        by the President or by a rollcall vote 
                        of at least 2/3 of the members of the 
                        Committee involved in the investigation 
                        by the amount of time specified by the 
                        President or the Committee at the time 
                        of the extension, not to exceed 45 
                        days, as necessary to collect and fully 
                        evaluate information relating to--
                                  (I) the covered transaction 
                                or parties to the transaction; 
                                and
                                  (II) any effect of the 
                                transaction that could threaten 
                                to impair the national security 
                                of the United States.
          (3) Approval of chairperson and vice chairperson 
        required.--
                  (A) In general.--A review or investigation 
                under this subsection of a covered transaction 
                shall not be treated as final or complete until 
                the findings and the report resulting from such 
                review or investigation are approved and signed 
                by both the Secretary of the Treasury and the 
                Secretary of Homeland Security (and such 
                authority of each such Secretary may not be 
                delegated to any person other than the Deputy 
                Secretary of the Treasury or the Deputy 
                Secretary of Homeland Security, respectively).
                  (B) Additional actions required in certain 
                cases.--In the case of an investigation under 
                paragraph (2) of any foreign government-
                controlled transaction, an investigation shall 
                not be treated as final or complete until the 
                findings and report resulting from such 
                investigation--
                          (i) are approved by a majority of the 
                        members of the Committee in a rollcall 
                        vote; and
                          (ii) in the case of any rollcall vote 
                        pursuant to clause (i) in which there 
                        is at least 1 vote by a Committee 
                        member against approving a foreign 
                        government-controlled transaction, are 
                        signed by the President (in addition to 
                        the Chairperson and the Vice 
                        Chairperson of the Committee under 
                        subparagraph (A)).
          (4) Analysis by director of national intelligence.--
                  (A) In general.--The Director of National 
                Intelligence shall expeditiously carry out a 
                thorough analysis of any threat to the national 
                security of the United States of any covered 
                transaction, including making requests for 
                information to the Director of the Office of 
                Foreign Assets Control within the Department of 
                the Treasury and the Director of the Financial 
                Crimes Enforcement Network. The Director of 
                National Intelligence also shall seek and 
                incorporate the views of all appropriate 
                intelligence agencies, including in particular 
                the Defense Intelligence Agency.
                  (B) 30-day minimum.--The Director of National 
                Intelligence shall be provided no less than 30 
                days to complete the analysis required under 
                subparagraph (A), except in any instance 
                described in paragraph (2)(A)(ii).
                  (C) Independent role of director.--The 
                Director of National Intelligence shall not be 
                a member of the Committee and shall serve no 
                policy role with the Committee other than to 
                provide analysis under subparagraph (A) in 
                connection with a covered transaction.
          (5) Resubmittals of notice and requests for 
        additional review or investigation.--
                  (A) In general.--No provision of this 
                subsection shall be construed as prohibiting 
                any party to a covered transaction from--
                          (i) submitting additional information 
                        concerning the transaction, including 
                        any proposed restructuring of the 
                        transaction or any modifications to any 
                        agreements in connection with the 
                        transaction, while any review or 
                        investigation of the transaction is on-
                        going; or
                          (ii) requesting a review or 
                        investigation of the transaction after 
                        any previous review or investigation of 
                        the same or a similar transaction has 
                        become final if information material to 
                        the prior review or investigation and 
                        not previously submitted to the 
                        Committee becomes known or if any 
                        material change in circumstances to the 
                        covered transaction has occurred since 
                        the review or investigation.
                  (B) Approval of request.--In the case of a 
                request referred to in subparagraph (A)(ii), 
                the Committee shall determine by consensus 
                whether to grant a request.
          (6) Regulations.--Regulations prescribed under this 
        section shall include standard procedures for--
                  (A) submitting any notice of a proposed or 
                pending covered transaction to the Committee;
                  (B) submitting a request to withdraw a 
                proposed or pending covered transaction from 
                review; and
                  (C) resubmitting a notice of proposed or 
                pending covered transaction that was previously 
                withdrawn from review.
  (c) Confidentiality of Information.--Any information or 
documentary [material filed with] material, including 
proprietary business information, filed with, or testimony 
presented to, the President or the President's designee 
pursuant to this section shall be exempt from disclosure under 
section 552 of title 5, United States Code, and no such 
information [or documentary material], documentary material, or 
testimony may be made public, except as may be relevant to any 
administrative or judicial action or proceeding. Nothing in 
this subsection shall be construed to prevent disclosure to 
either House of Congress or to any duly authorized committee or 
subcommittee of the Congress.
  (d) Action by the President.--Subject to subsection (d), the 
President may take such action for such time as the President 
considers appropriate to suspend or prohibit any acquisition, 
merger, or takeover, of a person engaged in interstate commerce 
in the United States proposed or pending on or after the date 
of enactment of this section by or with foreign persons so that 
such control will not threaten to impair the national security. 
The President shall announce the decision to take action 
pursuant to this subsection not later than 15 days after the 
investigation described in subsection (a) is completed. The 
President may direct the Attorney General to seek appropriate 
relief, including divestment relief, in the district courts of 
the United States in order to implement and enforce this 
section. The United States shall not be held liable for any 
losses or other expenses incurred by any party to a covered 
transaction as a result of actions taken under this section 
after a covered transaction has been consummated if the party 
did not submit a written notice of the transaction to the 
Chairperson of the Committee under subsection (b)(1)(C) or did 
not wait until the completion of any review or investigation 
under subsection (b), or the end of the 15-day period referred 
to in this subsection, before consummating the transaction.

           *       *       *       *       *       *       *

  (f) Factors To Be Considered.--For purposes of this section, 
the President or the President's designee [may] shall, taking 
into account the requirements of national security, consider 
[among other factors]--
          (1) * * *

           *       *       *       *       *       *       *

          (4) the potential effects of the proposed or pending 
        transaction on sales of military goods, equipment, or 
        technology to any country--
                  (A) * * *
                  (B) listed under section 309(c) of the 
                Nuclear Non-Proliferation Act of 1978 on the 
                ``Nuclear Non-Proliferation-Special Country 
                List'' (15 C.F.R. Part 778, Supplement No. 4) 
                or any successor list; [and]
          (5) the potential effects of the proposed or pending 
        transaction on United States international 
        technological leadership in areas affecting United 
        States national security[.];
          (6) whether the covered transaction has a security-
        related impact on critical infrastructure in the United 
        States;
          (7) whether the covered transaction is a foreign 
        government-controlled transaction; and
          (8) such other factors as the President or the 
        President's designee may determine to be appropriate, 
        generally or in connection with a specific review or 
        investigation.
  [(g) Report to the Congress.--The President shall immediately 
transmit to the Secretary of the Senate and the Clerk of the 
House of Representatives a written report of the President's 
determination of whether or not to take action under subsection 
(d), including a detailed explanation of the findings made 
under subsection (e) and the factors considered under 
subsection (f). Such report shall be consistent with the 
requirements of subsection (c) of this Act.
  [(h) Regulations.--The President direct the issuance of 
regulations to carry out this section. Such regulations shall, 
to the extent possible, minimize paperwork burdens and shall to 
the extent possible coordinate reporting requirements under 
this section with reporting requirements under any other 
provision of Federal law.
  [(i) Effect on Other Law.--Nothing in this section shall be 
construed to alter or affect any existing power, process, 
regulation, investigation, enforcement measure, or review 
provided by any other provision of law.]
  (g) Reports to the Congress.--
          (1) Reports on completed committee investigations.--
                  (A) In general.--Not later than 5 days after 
                the completion of a Committee investigation of 
                a covered transaction under subsection (b)(2), 
                or, if the President indicates an intent to 
                take any action authorized under subsection (d) 
                with respect to the transaction, after the end 
                of 15-day period referred to in subsection (d), 
                the Chairperson or Vice Chairperson of the 
                Committee shall submit a written report on the 
                findings or actions of the Committee with 
                respect to such investigation, the 
                determination of whether or not to take action 
                under subsection (d), an explanation of the 
                findings under subsection (e), and the factors 
                considered under subsection (f), with respect 
                to such transaction, to--
                          (i) the Majority Leader and the 
                        Minority Leader of the Senate;
                          (ii) the Speaker and the Minority 
                        Leader of the House of Representatives; 
                        and
                          (iii) the chairman and ranking member 
                        of each committee of the House of 
                        Representatives and the Senate with 
                        jurisdiction over any aspect of the 
                        covered transaction and its possible 
                        effects on national security.
                  (B) Notice and briefing requirement.--If a 
                written request for a briefing on a covered 
                transaction is submitted to the Committee by 
                any Senator or Member of Congress who receives 
                a report on the transaction under subparagraph 
                (A), the Chairperson or Vice Chairperson (or 
                such other person as the Chairperson or Vice 
                Chairperson may designate) shall provide 1 
                classified briefing to each House of the 
                Congress from which any such briefing request 
                originates in a secure facility of appropriate 
                size and location that shall be open only to 
                the Majority Leader and the Minority Leader of 
                the Senate, the Speaker and the Minority Leader 
                of the House of Representatives, (as the case 
                may be) the chairman and ranking member of each 
                committee of the House of Representatives or 
                the Senate (as the case may be) with 
                jurisdiction over any aspect of the covered 
                transaction and its possible effects on 
                national security, and appropriate staff 
                members who have security clearance.
          (2) Application of other provision.--
                  (A) In general.--The disclosure of 
                information under this subsection shall be 
                consistent with the requirements of subsection 
                (c). Members of Congress and staff of either 
                House or any committee of the Congress shall be 
                subject to the same limitations on disclosure 
                of information as are applicable under such 
                subsection.
                  (B) Proprietary information.--Proprietary 
                information which can be associated with a 
                particular party to a covered transaction shall 
                be furnished in accordance with subparagraph 
                (A) only to a committee of the Congress and 
                only when the committee provides assurances of 
                confidentiality, unless such party otherwise 
                consents in writing to such disclosure.
  (h) Regulations.--The President shall direct the issuance of 
regulations to carry out this section. Such regulations shall, 
to the extent possible, minimize paperwork burdens and shall to 
the extent possible coordinate reporting requirements under 
this section with reporting requirements under any other 
provision of Federal law.
  (i) Effect on Other Law.--No provision of this section shall 
be construed as altering or affecting any other authority, 
process, regulation, investigation, enforcement measure, or 
review provided by or established under any other provision of 
Federal law, including the International Emergency Economic 
Powers Act, or any other authority of the President or the 
Congress under the Constitution of the United States.

           *       *       *       *       *       *       *

  [(k) Quadrennial Report.--
          [(1) In general.--In order to assist the Congress in 
        its oversight responsibilities with respect to this 
        section, the President and such agencies as the 
        President shall designate shall complete and furnish to 
        the Congress, not later than 1 year after the date of 
        enactment of this section and upon the expiration of 
        every 4 years thereafter, a report which--
                  [(A) evaluates whether there is credible 
                evidence of a coordinated strategy by 1 or more 
                countries or companies to acquire United States 
                companies involved in research, development, or 
                production of critical technologies for which 
                the United States is a leading producer; and
                  [(B) evaluates whether there are industrial 
                espionage activities directed or directly 
                assisted by foreign governments against private 
                United States companies aimed at obtaining 
                commercial secrets related to critical 
                technologies.
          [(2) Definition.--For the purposes of this 
        subsection, the term ``critical technologies'' means 
        technologies identified under title VI of the National 
        Science and Technology Policy, Organization, and 
        Priorities Act of 1976 or other critical technology, 
        critical components, or critical technology items 
        essential to national defense identified pursuant to 
        this section.
          [(3) Release of unclassified study.--The report 
        required by this subsection may be classified. An 
        unclassified version of the report shall be made 
        available to the public.]
  (k) Committee on Foreign Investment in the United States.--
          (1) Establishment.--The Committee on Foreign 
        Investment in the United States established pursuant to 
        Executive Order No. 11858 shall be a multi-agency 
        committee to carry out this section and such other 
        assignments as the President may designate.
          (2) Membership.--The Committee shall be comprised of 
        the following members or the designee of any such 
        member:
                  (A) The Secretary of the Treasury.
                  (B) The Secretary of Homeland Security.
                  (C) The Secretary of Commerce.
                  (D) The Secretary of Defense.
                  (E) The Secretary of State.
                  (F) The Attorney General.
                  (G) The Chairman of the Council of Economic 
                Advisors.
                  (H) The United States Trade Representative.
                  (I) The Director of the Office of Management 
                and Budget.
                  (J) The Director of the National Economic 
                Council.
                  (K) The Director of the Office of Science and 
                Technology Policy.
                  (L) The President's Assistant for National 
                Security Affairs.
                  (M) Any other designee of the President from 
                the Executive Office of the President.
          (3) Chairperson; vice chairperson.--The Secretary of 
        the Treasury shall be the Chairperson of the Committee. 
        The Secretary of Homeland Security shall be the Vice 
        Chairperson of the Committee.
          (4) Other members.--Subject to subsection (b)(4)(B), 
        the Chairperson of the Committee shall involve the 
        heads of such other Federal departments, agencies, and 
        independent establishments in any review or 
        investigation under subsection (b) as the Chairperson, 
        after consulting with the Vice Chairperson, determines 
        to be appropriate on the basis of the facts and 
        circumstances of the transaction under investigation 
        (or the designee of any such department or agency 
        head).
          (5) Meetings.--The Committee shall meet upon the 
        direction of the President or upon the call of the 
        Chairperson of the Committee without regard to section 
        552b of title 5, United States Code (if otherwise 
        applicable).
          (6) Collection of evidence.--Subject to subsection 
        (c), the Committee may, for the purpose of carrying out 
        this section--
                  (A) sit and act at such times and places, 
                take such testimony, receive such evidence, 
                administer such oaths; and
                  (B) require the attendance and testimony of 
                such witnesses and the production of such 
                books, records, correspondence, memoranda, 
                papers, and documents as the Chairperson of the 
                Committee may determine advisable.
          (7) Authorization of appropriations.--There are 
        authorized to be appropriated to the Secretary of the 
        Treasury for each of fiscal years 2007, 2008, 2009, and 
        2010, expressly and solely for the operations of the 
        Committee that are conducted by the Secretary, the sum 
        of $10,000,000.
  (l) Mitigation, Tracking, and Postconsummation Monitoring and 
Enforcement.--
          (1) Mitigation.--
                  (A) In general.--The Committee may negotiate, 
                enter into or impose, and enforce any agreement 
                or condition with any party to a covered 
                transaction in order to mitigate any threat to 
                the national security of the United States.
                  (B) Risk-based analysis required.--Any 
                agreement entered into or condition imposed 
                under subparagraph (A) shall be based on a 
                risk-based analysis of the threat to national 
                security of the covered transaction.
          (2) Tracking authority for withdrawn notices.--
                  (A) In general.--If any written notice of a 
                covered transaction that was submitted to the 
                Committee under this section is withdrawn 
                before any review or investigation by the 
                Committee under subsection (b) is completed, 
                the Committee shall establish, as appropriate--
                          (i) interim protections to address 
                        specific concerns with such transaction 
                        that have been raised in connection 
                        with any such review or investigation 
                        pending any resubmission of any written 
                        notice under this section with respect 
                        to such transaction and further action 
                        by the President under this section;
                          (ii) specific timeframes for 
                        resubmitting any such written notice; 
                        and
                          (iii) a process for tracking any 
                        actions that may be taken by any party 
                        to the transaction, in connection with 
                        the transaction, before the notice 
                        referred to in clause (ii) is 
                        resubmitted.
                  (B) Designation of agency.--The Committee may 
                designate an appropriate Federal department or 
                agency, other than any entity of the 
                intelligence community (as defined in the 
                National Security Act of 1947), as the lead 
                agency to carry out the requirements of 
                subparagraph (A) with respect to any covered 
                transaction that is subject to such 
                subparagraph.
          (3) Negotiation, modification, monitoring, and 
        enforcement.--
                  (A) Designation of agency.--The Committee 
                shall designate a Federal department or agency 
                as the lead agency to negotiate, modify, 
                monitor, and enforce any agreement entered into 
                or condition imposed under paragraph (1) with 
                respect to a covered transaction based on the 
                expertise with and knowledge of the issues 
                related to such transaction on the part of the 
                designated department or agency.
                  (B) Reporting by designated agency.--
                          (i) Implementation reports.--The 
                        Federal department or agency designated 
                        by the Committee as a lead agency under 
                        subparagraph (A) in connection with any 
                        agreement entered into or condition 
                        imposed under paragraph (1) with 
                        respect to a covered transaction 
                        shall--
                                  (I) provide periodic reports 
                                to the Chairperson and Vice 
                                Chairperson of the Committee on 
                                the implementation of such 
                                agreement or condition; and
                                  (II) require, as appropriate, 
                                any party to the covered 
                                transaction to report to the 
                                head of such department or 
                                agency (or the designee of such 
                                department or agency head) on 
                                the implementation or any 
                                material change in 
                                circumstances.
                          (ii) Modification reports.--The 
                        Federal department or agency designated 
                        by the Committee as a lead agency under 
                        subparagraph (A) in connection with any 
                        agreement entered into or condition 
                        imposed with respect to a covered 
                        transaction shall--
                                  (I) provide periodic reports 
                                to the Chairperson and Vice 
                                Chairperson of the Committee on 
                                any modification to any such 
                                agreement or condition imposed 
                                with respect to the 
                                transaction; and
                                  (II) ensure that any 
                                significant modification to any 
                                such agreement or condition is 
                                reported to the Director of 
                                National Intelligence and to 
                                any other Federal department or 
                                agency that may have a material 
                                interest in such modification.
  (m) Semi-Annual Report to the Congress.--
          (1) In general.--The Chairperson of the Committee 
        shall transmit a report to the Congress before January 
        31 and July 31 of each year on all the reviews and 
        investigations of covered transactions conducted under 
        subsection (b) during the 6-month period covered by the 
        report.
          (2) Contents of report relating to covered 
        transactions.--The report under paragraph (1) shall 
        contain the following information with respect to each 
        covered transaction:
                  (A) A list of all notices filed and all 
                reviews or investigations conducted during the 
                period with basic information on each party to 
                the transaction, the nature of the business 
                activities or products of all pertinent 
                persons, along with information about the 
                status of the review or investigation, 
                information on any withdrawal from the process, 
                any rollcall votes by the Committee under this 
                section, any extension of time for any 
                investigation, and any presidential decision or 
                action under this section.
                  (B) Specific, cumulative, and, as 
                appropriate, trend information on the numbers 
                of filings, investigations, withdrawals, and 
                presidential decisions or actions under this 
                section.
                  (C) Cumulative and, as appropriate, trend 
                information on the business sectors involved in 
                the filings which have been made, and the 
                countries from which the investments have 
                originated.
                  (D) Information on whether companies that 
                withdrew notices to the Committee in accordance 
                with subsection (b)(1)(C)(ii) have later re-
                filed such notices, or, alternatively, 
                abandoned the transaction.
                  (E) The types of security arrangements and 
                conditions the Committee has used to mitigate 
                national security concerns about a transaction.
                  (F) A detailed discussion of all perceived 
                adverse effects of covered transactions on the 
                national security or critical infrastructure of 
                the United States that the Committee will take 
                into account in its deliberations during the 
                period before delivery of the next such report, 
                to the extent possible.
          (3) Contents of report relating to critical 
        technologies.--
                  (A) In general.--In order to assist the 
                Congress in its oversight responsibilities with 
                respect to this section, the President and such 
                agencies as the President shall designate shall 
                include in the semi-annual report submitted 
                under paragraph (1) the following:
                          (i) An evaluation of whether there is 
                        credible evidence of a coordinated 
                        strategy by 1 or more countries or 
                        companies to acquire United States 
                        companies involved in research, 
                        development, or production of critical 
                        technologies for which the United 
                        States is a leading producer.
                          (ii) An evaluation of whether there 
                        are industrial espionage activities 
                        directed or directly assisted by 
                        foreign governments against private 
                        United States companies aimed at 
                        obtaining commercial secrets related to 
                        critical technologies.
                  (B) Critical technologies defined.--For 
                purposes of this paragraph, the term ``critical 
                technologies'' means technologies identified 
                under title VI of the National Science and 
                Technology Policy, Organization, and Priorities 
                Act of 1976 or other critical technology, 
                critical components, or critical technology 
                items essential to national defense or national 
                security identified pursuant to this section.
                  (C) Release of unclassified study.--That 
                portion of the semi-annual report under 
                paragraph (1) that is required by this 
                paragraph may be classified. An unclassified 
                version of that portion of the report shall be 
                made available to the public.
  (n) Certification of Notices and Assurances.--Each notice 
required to be submitted, by a party to a covered transaction, 
to the President or the President's designee under this section 
and regulations prescribed under such section, and any 
information submitted by any such party in connection with any 
action for which a report is required pursuant to paragraph 
(3)(B)(ii) of subsection (l) with respect to the implementation 
of any mitigation agreement or condition described in paragraph 
(1)(A) of such subsection, or any material change in 
circumstances, shall be accompanied by a written statement by 
the chief executive officer or the designee of the person 
required to submit such notice or information certifying that, 
to the best of the person's knowledge and belief--
          (1) the notice or information submitted fully 
        complies with the requirements of this section or such 
        regulation, agreement, or condition; and
          (2) the notice or information is accurate and 
        complete in all material respects.

                                  
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