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





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

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



 
 REFORM OF NATIONAL SECURITY REVIEWS OF FOREIGN DIRECT INVESTMENTS ACT

                                _______
                                

                 July 17, 2006.--Ordered to be printed

                                _______
                                

    Mr. Barton of Texas, from the Committee on Energy and Commerce, 
                        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 Energy and Commerce, 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..............................................     8
Background and Need for Legislation..............................     9
Hearings.........................................................    10
Committee Consideration..........................................    10
Committee Votes..................................................    10
Committee Oversight Findings.....................................    12
Statement of General Performance Goals and Objectives............    12
New Budget Authority, Entitlement Authority, and Tax Expenditures    12
Committee Cost Estimate..........................................    12
Congressional Budget Office Estimate.............................    12
Federal Mandates Statement.......................................    14
Advisory Committee Statement.....................................    14
Constitutional Authority Statement...............................    14
Applicability to Legislative Branch..............................    14
Section-by-Section Analysis of the Legislation...................    15
Changes in Existing Law Made by the Bill, as Reported............    17

                               Amendment

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

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Reform of National Security Reviews of 
Foreign Direct Investments Act''.

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.
  ``(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 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 were not resolved 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 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 the Chairperson of the Committee 
                after approval by a majority vote of the Committee.
                  ``(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 an 
                affirmative inquiry 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.
                  ``(B) 30-day minimum.--The analysis required under 
                subparagraph (A) shall take no less than 30 days and be 
                completed no less than 7 days before the end of the 
                initial review period under paragraph (1), 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 Secretary of Energy.
                  ``(H) The Chairman of the Council of Economic 
                Advisors.
                  ``(I) The United States Trade Representative.
                  ``(J) The Director of the Office of Management and 
                Budget.
                  ``(K) The Director of the National Economic Council.
                  ``(L) The Director of the Office of Science and 
                Technology Policy.
                  ``(M) The President's Assistant for National Security 
                Affairs.
          ``(3) Chairperson.--The Secretary of Commerce shall be the 
        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 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 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 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 of the Committee 
                shall submit a written report on the findings or 
                actions of the Committee with respect to such 
                investigation, the determination of whether or not to 
                take action under subsection (d), an explanation of the 
                findings under subsection (e), and the factors 
                considered under subsection (f), with respect to such 
                transaction, to--
                          ``(i) the Majority Leader and the Minority 
                        Leader of the Senate;
                          ``(ii) the Speaker and the Minority Leader of 
                        the House of Representatives; and
                          ``(iii) the chairman and ranking member of 
                        each committee of the House of Representatives 
                        and the Senate with jurisdiction over any 
                        aspect of the covered transaction and its 
                        possible effects on national security, 
                        including the Committee on International 
                        Relations, the Committee on Financial Services, 
                        and the Committee on Energy and Commerce of the 
                        House of Representatives.
                  ``(B) Notice and briefing requirement.--If a written 
                request for a briefing on a covered transaction is 
                submitted to the Committee by any Senator or Member of 
                Congress who receives a report on the transaction under 
                subparagraph (A), the Chairperson (or such other person 
                as the Chairperson may designate) shall provide 1 
                classified briefing to each House of the Congress from 
                which any such briefing request originates in a secure 
                facility of appropriate size and location that shall be 
                open only to the Majority Leader and the Minority 
                Leader of the Senate, the Speaker and the Minority 
                Leader of the House of Representatives, (as the case 
                may be) the chairman and ranking member of each 
                committee of the House of Representatives or the Senate 
                (as the case may be) with jurisdiction over any aspect 
                of the covered transaction and its possible effects on 
                national security, including the Committee on 
                International Relations, the Committee on Financial 
                Services, and the Committee on Energy and Commerce of 
                the House of Representatives, and appropriate staff 
                members who have security clearance.
          ``(2) Application of other provision.--
                  ``(A) In general.--The disclosure of information 
                under this subsection shall be consistent with the 
                requirements of subsection (c). Members of Congress and 
                staff of either House or any committee of the Congress 
                shall be subject to the same limitations on disclosure 
                of information as are applicable under such subsection.
                  ``(B) Proprietary information.--Proprietary 
                information which can be associated with a particular 
                party to a covered transaction shall be furnished in 
                accordance with subparagraph (A) only to a committee of 
                the Congress and only when the committee provides 
                assurances of confidentiality, unless such party 
                otherwise consents in writing to such disclosure.''.
  (b) Semi-Annual Report.--Section 721 of the Defense Production Act of 
1950 (50 U.S.C. App. 2170) is amended by inserting after subsection (l) 
(as added by section 6 of this Act) the following new subsection:
  ``(m) Semi-Annual Report to the Congress.--
          ``(1) In general.--The Chairperson of the Committee shall 
        transmit a report to the chairman and ranking member of each 
        committee of the House of Representatives and the Senate with 
        jurisdiction over any aspect of the report, including the 
        Committee on International Relations, the Committee on 
        Financial Services, and the Committee on Energy and Commerce of 
        the House of Representatives, before January 31 and July 31 of 
        each year on all the reviews and investigations of covered 
        transactions conducted under subsection (b) during the 6-month 
        period covered by the report.
          ``(2) Contents of report relating to covered transactions.--
        The report under paragraph (1) shall contain the following 
        information with respect to each covered transaction:
                  ``(A) A list of all notices filed and all reviews or 
                investigations conducted during the period with basic 
                information on each party to the transaction, the 
                nature of the business activities or products of all 
                pertinent persons, along with information about the 
                status of the review or investigation, information on 
                any withdrawal from the process, any rollcall votes by 
                the Committee under this section, any extension of time 
                for any investigation, and any presidential decision or 
                action under this section.
                  ``(B) Specific, cumulative, and, as appropriate, 
                trend information on the numbers of filings, 
                investigations, withdrawals, and presidential decisions 
                or actions under this section.
                  ``(C) Cumulative and, as appropriate, trend 
                information on the business sectors involved in the 
                filings which have been made, and the countries from 
                which the investments have originated.
                  ``(D) Information on whether companies that withdrew 
                notices to the Committee in accordance with subsection 
                (b)(1)(C)(ii) have later re-filed such notices, or, 
                alternatively, abandoned the transaction.
                  ``(E) The types of security arrangements and 
                conditions the Committee has used to mitigate national 
                security concerns about a transaction.
                  ``(F) A detailed discussion of all perceived adverse 
                effects of covered transactions on the national 
                security or critical infrastructure of the United 
                States that the Committee will take into account in its 
                deliberations during the period before delivery of the 
                next such report, to the extent possible.
          ``(3) Contents of report relating to critical technologies.--
                  ``(A) In general.--In order to assist the Congress in 
                its oversight responsibilities with respect to this 
                section, the President and such agencies as the 
                President shall designate shall include in the semi-
                annual report submitted under paragraph (1) the 
                following:
                          ``(i) An evaluation of whether there is 
                        credible evidence of a coordinated strategy by 
                        1 or more countries or companies to acquire 
                        United States companies involved in research, 
                        development, or production of critical 
                        technologies for which the United States is a 
                        leading producer.
                          ``(ii) An evaluation of whether there are 
                        industrial espionage activities directed or 
                        directly assisted by foreign governments 
                        against private United States companies aimed 
                        at obtaining commercial secrets related to 
                        critical technologies.
                  ``(B) Critical technologies defined.--For purposes of 
                this paragraph, the term `critical technologies' means 
                technologies identified under title VI of the National 
                Science and Technology Policy, Organization, and 
                Priorities Act of 1976 or other critical technology, 
                critical components, or critical technology items 
                essential to national defense or national security 
                identified pursuant to this section.
                  ``(C) Release of unclassified study.--That portion of 
                the semi-annual report under paragraph (1) that is 
                required by this paragraph may be classified. An 
                unclassified version of that portion of the report 
                shall be made available to the public.''.
  (c) Investigation by Inspector General.--
          (1) In general.--The Inspector General of the Department of 
        the Treasury shall conduct an independent investigation to 
        determine all of the facts and circumstances concerning each 
        failure of the Department of the Treasury to make any report to 
        the Congress that was required under section 721(k) of the 
        Defense Production Act of 1950 (as in effect before the date of 
        the enactment of this Act).
          (2) Report to the congress.--Before the end of the 270-day 
        period beginning on the date of the enactment of this Act, the 
        Inspector General of the Department of the Treasury shall 
        submit a report to the chairman and ranking member of each 
        committee of the House of Representatives and the Senate with 
        jurisdiction over any aspect of the report, including the 
        Committee on International Relations, the Committee on 
        Financial Services, and the Committee on Energy and Commerce of 
        the House of Representatives, on the investigation under 
        paragraph (1) containing the findings and conclusions of the 
        Inspector General.

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 to the President or the President's designee under this 
section and regulations prescribed under such section, and each report 
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 report certifying that, to the best of the 
person's knowledge and belief--
          ``(1) the notice or report submitted fully complies with the 
        requirements of this section or such regulation, agreement, or 
        condition; and
          ``(2) the information so contained 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

    The purpose of H.R. 5337 is to strengthen the process for 
reviewing foreign investment transactions in U.S. companies, 
clarify the role of the Committee on Foreign Investment in the 
United States (CFIUS) and its membership, and improve 
transparency in the process. H.R. 5337 establishes CFIUS and 
its membership as a standing inter-agency Committee chaired by 
the Secretary of Commerce and sets forth requirements for 
reviews and investigations and the timing thereof. H.R. 5337 
provides criteria and requirements for reviews and automatic 
investigations of foreign government controlled transactions as 
well as covered transactions. Additionally, H.R. 5337 sets 
forth reporting requirements for CFIUS on its activities to 
Congressional leadership and the Congressional Committees of 
jurisdiction.

                  Background and Need for Legislation

    The Committee on Foreign Investment in the United States is 
an inter-agency committee originally formed by an executive 
order in 1975. It was established to monitor and evaluate the 
impact of foreign investment in the United States. In 1988, 
Congress amended Section 721 of the Defense Production Act of 
1950 in the Omnibus Trade and Competitiveness Act of 1988 
(Section 721 is also known as the ``Exon-Florio'' provision). 
This Amendment was developed and marked up in the Committee on 
Energy and Commerce. The amended statute provides authority to 
the President to suspend or prohibit any foreign acquisition, 
merger or takeover of a U.S. corporation that is determined to 
threaten the national security of the United States. In 1988, 
the President delegated his responsibilities to CFIUS by 
executive order.
    The Exon-Florio provision provides the President authority 
to block a transaction only if he finds (1) there is credible 
evidence that the foreign entity exercising control might take 
action that threatens national security, and (2) the provisions 
of law do not provide adequate and appropriate authority to 
protect national security. Exon-Florio requires a foreign 
entity to provide notice to CFIUS upon a planned acquisition, 
merger, or takeover of a U.S. corporation. Such notification is 
confidential but does not preclude disclosure to Congress. 
CFIUS then reviews the proposed transaction. In cases where 
more extensive review is required, an ``investigation'' is 
conducted that must not exceed 45 days in length and must 
commence within 30 days of initial receipt of notification.
    Exon-Florio does not define national security, but does set 
forth factors to be considered in the review process as they 
affect national security. Generally, the factors involve the 
ability of the U.S. to meet national defense and security 
requirements as well as protect national security. Treasury 
Department Officials have indicated each CFIUS member is 
expected to apply that definition of national security that is 
consistent with the representative agency's specific 
legislative mandate during an Exon-Florio review or 
investigation.
    In 1993, Congress again amended the Exon-Florio provision 
in the National Defense Authorization Act of 1993 (Byrd 
Amendment). The Byrd Amendment requires CFIUS review 
transactions where an acquirer is owned or controlled by a 
foreign government and the transaction could affect national 
security. The Speaker appointed Energy and Commerce Committee 
Members as conferees on the Senate bill.
    CFIUS by tradition is chaired by the Secretary of Treasury 
and its membership includes the Secretaries of State, Defense, 
and Commerce, the Attorney General, the Director of the Office 
of Management and Budget, the U.S. Trade Representative, the 
Chairman of the Council of Economic Advisers, the Director of 
the Office of Science and Technology Policy, the Assistant to 
the President for National Security Affairs and the Assistant 
to the President for Economic Policy. Additionally, the 
Secretary of Homeland Security was added in 2003.
    Early in 2006, the proposed Dubai Ports World transaction 
to acquire certain U.S. port facility operations was met with 
concern when the transaction was not subject of an 
investigation by CFIUS. As the company was tied to the 
government, many observers believed the law under the ``Byrd'' 
amendment required an investigation. Adding to the problem, 
there was no unanimity on what the existing statute required 
and concern that the law did not provide adequate disclosure to 
Congress. Given these concerns, the Committee recognizes the 
need for legislation to clarify and update CFIUS and the 
process of review as well as transparency for Congressional 
oversight.

                                Hearings

    The Subcommittee on Commerce, Trade, and Consumer 
Protection held a hearing on H.R. 5337 on July 11, 2006. The 
Subcommittee received testimony from: John Castellani, 
President, Business Roundtable; Calman J. Cohen, President, 
Emergency Committee on American Trade; Douglass Holtz-Eakin, 
Director, Maurice R. Greenberg Center for Geoeconomic Studies, 
Council on Foreign Relations; and The Honorable Patrick Mulloy, 
Commissioner, United States-China Economic and Security Review 
Commission.

                        Committee Consideration

    On Wednesday, July 12, 2006, the Full Committee met in open 
markup session and ordered H.R. 5337 favorably reported to the 
House, amended, by a voice vote, a quorum being present.

                            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. The 
following is the recorded votes taken on amendments offered to 
the measure, including the names of those Members voting for 
and against. A motion by Mr. Barton to order H.R. 5337 reported 
to the House, amended, was agreed to by voice vote.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 5337 is to strengthen the process for 
review of foreign investment in the United States. The 
Committee on Foreign Investment in the United States shall 
adopt such regulations set forth in the Act and commence filing 
reports and notices to the Congressional Committees of 
jurisdiction as required.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
5337, the Reform of National Security Reviews of Foreign Direct 
Investments Act, would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                        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:
                                                     July 14, 2006.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5337, the Reform 
of National Security Reviews of Foreign Direct Investments Act.
    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--Reform of National Security Reviews of Foreign Direct 
        Investments Act

    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 13 
members (including seven 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 the Treasury 
Department $40 million over the 2007-2011 period. In addition, 
CBO expects that complying with the bill's provisions would 
increase the administrative expenses of other federal agencies 
involved with CFIUS by at least a few million dollars per year. 
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 Level\1\...................................         10         10         10         10          0
Estimated Outlays........................................          9         10         10         10         1
----------------------------------------------------------------------------------------------------------------
\1\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.

    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 authorized amounts will be appropriated for each year 
and that outlays will occur at historical rates for similar 
activities.
    H.R. 5337 would establish in law the CFIUS to coordinate 
the government's review of proposed foreign investments in the 
United States that might affect national security. Currently, 
the committee consists of 12 members (including six cabinet 
secretaries). Under an executive order, the committee now has 
30 days to evaluate the national security implications of 
foreign investment in the United States. Under the bill, the 
committee would consist of 13 members; the Secretaries of the 
Departments of the Treasury, State, Defense, Commerce, Energy, 
and Homeland Security; the Attorney General; the Director of 
the Office of Management and Budget; the Chairman of the 
Council of Economic Advisers; the United States Trade 
Representative; 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 legislation would formalize and expand the review and 
investigation process.
    The bill 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 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 June 16, 2006, CBO transmitted a 
cost estimate for H.R. 5337, as ordered reported by the House 
Committee on Financial Services on June 14, 2006. On May 3, 
2006, CBO transmitted a cost estimate for S. 3549, 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. Those bills also dealt with CFIUS 
but have some different provisions, including those involving 
the composition and leadership of the committee. Both versions 
of H.R. 5337 would authorize the appropriation of $10 million 
annually over the 2007-2010 period while S. 3549 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: Fatimot Ladipo.
    Estimate approved by: Robert A. Sunshine, 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 for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  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. Short title

    Section 1 establishes the short title of the bill as the 
``National Security Foreign Investment Reform and Strengthening 
Transparency Act of 2006.''

Section 2. United States security improvement amendments; Clarification 
        of review and investigation process

    Section 2 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) provides definitions for certain terms used 
in the bill: Committee, control, covered transaction, and 
foreign government-controlled transaction.
    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.
    An investigation must be conducted for: (1) any covered 
transaction that is reviewed and determined threatens to impair 
the national security of the U.S. and the threat has not been 
mitigated during or prior to the review; (2) a transaction 
involving a foreign government-controlled company; and (3) a 
transaction for which the Director of National Intelligence 
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. 
Section 2 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 two-thirds 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 obtains a majority vote of the 
Committee; requires that any investigation must be approved by 
a majority of CFIUS members in a roll call 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. Statutory establishment of the Committee on Foreign 
        Investment in the United States

    Section 3 formally establishes the Committee on Foreign 
Investment in the United States. In addition, this section (1) 
establishes the membership; (2) specifies that the Secretary of 
the Commerce shall be the chairman; (3) allows the temporary 
addition of non-member Executive Branch agencies; (4) 
establishes guidelines for meeting and gathering information; 
and (5) authorizes the appropriation of $10 million annually 
for the operation of the Committee.

Section 4. Additional factors required to be considered

    Section 4 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. Nonwaiver of sovereign immunity

    Section 5 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. Mitigation, tracking, and post-consummation monitoring and 
        enforcement

    Section 6 establishes that the CFIUS may enter into 
agreements with parties to a transaction to mitigate any 
threats to national security. In addition, this section 
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. Section 6 also 
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. Increased oversight by the Congress

    Section 7 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 (1) 
reports to Congress within 5 days after the final action in an 
investigation; (2) a mechanism for Congress to request a 
detailed, classified briefing on a transaction; and (3) 
affirmative protections for proprietary business information. 
The CFIUS is required to file semi-annual reports with 
Congressional Committees of jurisdiction (including the Energy 
and Commerce Committee, Financial Services Committee, and the 
Committee on International Relations) 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. Certification of notices and assurances

    Section 8 makes clear that parties to a transaction must 
certify that the information they file with CFIUS is complete 
and correct.

Section 9. Regulations

    Section 9 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. Effect of other law

    Section 10 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, acquisitons, 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.
  (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 
                                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 were not resolved 
                        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 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 the Chairperson of the Committee after 
                approval by a majority vote of the Committee.
                  (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 an affirmative inquiry 
                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.
                  (B) 30-day minimum.--The analysis required 
                under subparagraph (A) shall take no less than 
                30 days and be completed no less than 7 days 
                before the end of the initial review period 
                under paragraph (1), 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 of the Committee shall submit a 
                written report on the findings or actions of 
                the Committee with respect to such 
                investigation, the determination of whether or 
                not to take action under subsection (d), an 
                explanation of the findings under subsection 
                (e), and the factors considered under 
                subsection (f), with respect to such 
                transaction, to--
                          (i) the Majority Leader and the 
                        Minority Leader of the Senate;
                          (ii) the Speaker and the Minority 
                        Leader of the House of Representatives; 
                        and
                          (iii) the chairman and ranking member 
                        of each committee of the House of 
                        Representatives and the Senate with 
                        jurisdiction over any aspect of the 
                        covered transaction and its possible 
                        effects on national security, including 
                        the Committee on International 
                        Relations, the Committee on Financial 
                        Services, and the Committee on Energy 
                        and Commerce of the House of 
                        Representatives.
                  (B) Notice and briefing requirement.--If a 
                written request for a briefing on a covered 
                transaction is submitted to the Committee by 
                any Senator or Member of Congress who receives 
                a report on the transaction under subparagraph 
                (A), the Chairperson (or such other person as 
                the Chairperson may designate) shall provide 1 
                classified briefing to each House of the 
                Congress from which any such briefing request 
                originates in a secure facility of appropriate 
                size and location that shall be open only to 
                the Majority Leader and the Minority Leader of 
                the Senate, the Speaker and the Minority Leader 
                of the House of Representatives, (as the case 
                may be) the chairman and ranking member of each 
                committee of the House of Representatives or 
                the Senate (as the case may be) with 
                jurisdiction over any aspect of the covered 
                transaction and its possible effects on 
                national security, including the Committee on 
                International Relations, the Committee on 
                Financial Services, and the Committee on Energy 
                and Commerce of the House of Representatives, 
                and appropriate staff members who have security 
                clearance.
          (2) Application of other provision.--
                  (A) In general.--The disclosure of 
                information under this subsection shall be 
                consistent with the requirements of subsection 
                (c). Members of Congress and staff of either 
                House or any committee of the Congress shall be 
                subject to the same limitations on disclosure 
                of information as are applicable under such 
                subsection.
                  (B) Proprietary information.--Proprietary 
                information which can be associated with a 
                particular party to a covered transaction shall 
                be furnished in accordance with subparagraph 
                (A) only to a committee of the Congress and 
                only when the committee provides assurances of 
                confidentiality, unless such party otherwise 
                consents in writing to such disclosure.
  (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 Secretary of Energy.
                  (H) The Chairman of the Council of Economic 
                Advisors.
                  (I) The United States Trade Representative.
                  (J) The Director of the Office of Management 
                and Budget.
                  (K) The Director of the National Economic 
                Council.
                  (L) The Director of the Office of Science and 
                Technology Policy.
                  (M) The President's Assistant for National 
                Security Affairs.
          (3) Chairperson.--The Secretary of Commerce shall be 
        the 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 
        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 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 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 chairman and ranking 
        member of each committee of the House of 
        Representatives and the Senate with jurisdiction over 
        any aspect of the report, including the Committee on 
        International Relations, the Committee on Financial 
        Services, and the Committee on Energy and Commerce of 
        the House of Representatives, before January 31 and 
        July 31 of each year on all the reviews and 
        investigations of covered transactions conducted under 
        subsection (b) during the 6-month period covered by the 
        report.
          (2) Contents of report relating to covered 
        transactions.--The report under paragraph (1) shall 
        contain the following information with respect to each 
        covered transaction:
                  (A) A list of all notices filed and all 
                reviews or investigations conducted during the 
                period with basic information on each party to 
                the transaction, the nature of the business 
                activities or products of all pertinent 
                persons, along with information about the 
                status of the review or investigation, 
                information on any withdrawal from the process, 
                any rollcall votes by the Committee under this 
                section, any extension of time for any 
                investigation, and any presidential decision or 
                action under this section.
                  (B) Specific, cumulative, and, as 
                appropriate, trend information on the numbers 
                of filings, investigations, withdrawals, and 
                presidential decisions or actions under this 
                section.
                  (C) Cumulative and, as appropriate, trend 
                information on the business sectors involved in 
                the filings which have been made, and the 
                countries from which the investments have 
                originated.
                  (D) Information on whether companies that 
                withdrew notices to the Committee in accordance 
                with subsection (b)(1)(C)(ii) have later re-
                filed such notices, or, alternatively, 
                abandoned the transaction.
                  (E) The types of security arrangements and 
                conditions the Committee has used to mitigate 
                national security concerns about a transaction.
                  (F) A detailed discussion of all perceived 
                adverse effects of covered transactions on the 
                national security or critical infrastructure of 
                the United States that the Committee will take 
                into account in its deliberations during the 
                period before delivery of the next such report, 
                to the extent possible.
          (3) Contents of report relating to critical 
        technologies.--
                  (A) In general.--In order to assist the 
                Congress in its oversight responsibilities with 
                respect to this section, the President and such 
                agencies as the President shall designate shall 
                include in the semi-annual report submitted 
                under paragraph (1) the following:
                          (i) An evaluation of whether there is 
                        credible evidence of a coordinated 
                        strategy by 1 or more countries or 
                        companies to acquire United States 
                        companies involved in research, 
                        development, or production of critical 
                        technologies for which the United 
                        States is a leading producer.
                          (ii) An evaluation of whether there 
                        are industrial espionage activities 
                        directed or directly assisted by 
                        foreign governments against private 
                        United States companies aimed at 
                        obtaining commercial secrets related to 
                        critical technologies.
                  (B) Critical technologies defined.--For 
                purposes of this paragraph, the term ``critical 
                technologies'' means technologies identified 
                under title VI of the National Science and 
                Technology Policy, Organization, and Priorities 
                Act of 1976 or other critical technology, 
                critical components, or critical technology 
                items essential to national defense or national 
                security identified pursuant to this section.
                  (C) Release of unclassified study.--That 
                portion of the semi-annual report under 
                paragraph (1) that is required by this 
                paragraph may be classified. An unclassified 
                version of that portion of the report shall be 
                made available to the public.
  (n) Certification of Notices and Assurances.--Each notice 
required to be submitted to the President or the President's 
designee under this section and regulations prescribed under 
such section, and each report 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 report certifying that, to 
the best of the person's knowledge and belief--
          (1) the notice or report submitted fully complies 
        with the requirements of this section or such 
        regulation, agreement, or condition; and
          (2) the information so contained is accurate and 
        complete in all material respects.

                                  
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