[House Report 118-530]
[From the U.S. Government Publishing Office]


118th Congress }                                             { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                             { 118-530

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



 
                  CHINESE-OWNED APPLICATIONS USING THE 
                 INFORMATION OF OUR NATION ACT OF 2023

                                _______
                                

  May 31, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mrs. Rodgers of Washington, from the Committee on Energy and   
                   Commerce, submitted the following 

                              R E P O R T

                        [To accompany H.R. 750]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 750) to require any person that sells or 
distributes a mobile application that the Federal Government 
has prohibited for Government-owned devices to disclose that 
fact to any individual who downloads, updates, or otherwise 
uses such application, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Committee Action.................................................     3
Committee Votes..................................................     4
Oversight Findings and Recommendations...........................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Statement of General Performance Goals and Objectives............     7
Duplication of Federal Programs..................................     7
Related Committee and Subcommittee Hearings......................     7
Committee Cost Estimate..........................................     8
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     8
Advisory Committee Statement.....................................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     9

    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 ``Chinese-owned Applications Using The 
Information of Our Nation Act of 2023'' or the ``CAUTION Act of 2023''.

SEC. 2. DISCLOSURE REQUIREMENTS.

  (a) In General.--Any person that sells or distributes a covered 
application that the Federal Government has prohibited the use of for 
information technology and required to be removed from such information 
technology under the No TikTok on Government Devices Act (Public Law 
117-328), before any individual downloads or updates the covered 
application, shall disclose, in a clear and conspicuous manner, that 
the use of the covered application is prohibited on Government-owned 
devices under law.
  (b) False Information.--It shall be unlawful for any person to 
knowingly provide false information with respect to the disclosure 
required under this section.
  (c) Enforcement.--
          (1) Unfair and deceptive acts or practices.--A violation of 
        this section shall be treated as a violation of a rule defining 
        an unfair or deceptive act or practice prescribed under section 
        18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
        57a(a)(1)(B)).
          (2) Powers of the federal trade commission.--
                  (A) In general.--The Federal Trade Commission shall 
                enforce this section in the same manner, by the same 
                means, and with the same jurisdiction, powers, and 
                duties as though all applicable terms and provisions of 
                the Federal Trade Commission Act (15 U.S.C. 41 et seq.) 
                were incorporated into and made a part of this section.
                  (B) Privileges and immunities.--Any person that 
                violates this section shall be subject to the 
                penalties, provided in the Federal Trade Commission Act 
                (15 U.S.C. 41 et seq.).
          (3) Authority preserved.--Nothing in this section shall be 
        construed to limit the authority of the Federal Trade 
        Commission under any other provision of law.
  (d) Effective Date.--This section shall take effect 180 days after 
the date of the enactment of this Act.
  (e) Definitions.--In this section:
          (1) Covered application.--The term ``covered application'' 
        has the meaning given that term in section 102 of division R of 
        the Consolidated Appropriations Act, 2023 (Public Law 117-328).
          (2) Individual.--The term ``individual'' means a natural 
        person residing in the United States.
          (3) Information technology.--The term ``information 
        technology'' has the meaning given that term in section 102 of 
        division R of the Consolidated Appropriations Act, 2023 (Public 
        Law 117-328).

                          PURPOSE AND SUMMARY

    H.R. 750, the ``Chinese-owned applications Using The 
Information of Our Nation Act of 2023'' or the ``CAUTION Act'' 
was introduced on February 2, 2023, by Representatives Cammack 
and Soto. H.R. 750 requires any person who sells or distributes 
a covered application that the Federal Government has (1) 
prohibited the use of for information technology and (2) 
required to be removed from such information technology to 
disclose that fact before any individual downloads or updates 
the covered application.

                  BACKGROUND AND NEED FOR LEGISLATION

    Enacted into law on December 29, 2022, the Consolidated 
Appropriations Act, 2023 (Public Law 117-328) includes 
provisions to improve the security of government-owned devices. 
Specifically, the No TikTok on Government Devices Act (Public 
Law 117-328) requires the Director of the Office of Management 
and Budget, in consultation with the Administrator of General 
Services, the Director of the Cybersecurity and Infrastructure 
Security Agency, the Director of National Intelligence, and the 
Secretary of Defense, and consistent with the information 
security requirements under subchapter II of chapter 35 of 
title 44, United States Code, to develop standards and 
guidelines for executive agencies requiring the removal of any 
covered application from information technology.
    H.R. 750 requires any person who sells or distributes a 
covered application that the Federal Government has prohibited 
for Government-owned devices under Public Law 117-328 to 
disclose that fact in a clear and conspicuous manner to any 
individual who downloads or updates the application. In 
addition to the United States Federal Government, other 
governments around the world have prohibited the use of the 
application on government devices over concerns with how the 
application is tied to the Chinese Communist Party (CCP), their 
lax data security practices, and the ability of the CCP to 
obtain user information to prioritize and censor content in 
accordance with their totalitarian agenda. The bill will give 
Americans much deserved transparency into the Federal 
Governments concerns with downloading and using TikTok.

                            COMMITTEE ACTION

    On February 1, 2023, the Subcommittee on Innovation, Data, 
and Commerce held a hearing on the fight for global leadership 
in the age of emerging technology. The title of the hearing was 
``Economic Danger Zone: How America Competes To Win The Future 
Versus China.'' The Subcommittee received testimony from the 
following witnesses:
           Brandon Pugh, Policy Director and Resident 
        Senior Fellow, R Street Institute;
           Jeff Farrah, Executive Director, Autonomous 
        Vehicle Industry Association (AVIA);
           Samm Sacks, Cyber Policy Fellow, 
        International Security Program, New America; and
           Marc Jarsulic, Senior Fellow and Chief 
        Economist, Center for American Progress.
    On March 1, 2023, the Subcommittee on Innovation, Data, and 
Commerce held a hearing on the current digital ecosystem and 
the importance of enacting a comprehensive preemptive federal 
data privacy and security law. The title of the hearing was 
``Promoting U.S. Innovation And Individual Liberty Through A 
National Standard For Data Privacy.'' The Subcommittee received 
testimony from the following witnesses:
           Alexandra Reeve Givens, President and CEO, 
        Center for Democracy & Technology;
           Graham Mudd, Founder and Chief Product 
        Officer, Anonym; and
           Jessica Rich, Of Counsel and Senior Policy 
        Advisor for Consumer Protection, Kelley Drye & Warren, 
        LLP.
    On February 7, 2023, the Subcommittee on Innovation, Data, 
and Commerce met in open markup session and forwarded H.R. 750, 
as amended, to the full Committee by a voice vote.
    On March 9, 2023, the full Committee on Energy and Commerce 
met in open markup session and ordered H.R. 750, as amended, 
favorably to the House by a recorded vote of 47 yeas and 1 nay.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII requires the Committee to list the 
record votes on the motion to report legislation and amendments 
thereto. The following reflects the record votes taken during 
the Committee consideration:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  

                 OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee held hearings and made findings that 
are reflected in this report.

      NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX  
                           EXPENDITURES 

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 750 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    H.R. 750 would require entities that sell or distribute the 
application TikTok, or any successor application or service 
distributed by ByteDance Limited, to disclose to consumers that 
current law prohibits its use on government-owned devices. The 
bill would direct the Federal Trade Commission (FTC) to enforce 
that requirement.
    Based on information from the FTC, CBO expects the 
commission would need one employee in 2023 and 2024, at an 
average annual cost of $225,000, to issue guidance to clarify 
the content of the disclosures and which entities would need to 
make the disclosures. In each year after 2024, CBO estimates 
that the agency would need three employees to enforce potential 
violations. On that basis and accounting for anticipated 
inflation, CBO estimates that implementing H.R. 750 would cost 
$3 million over the 2023-2028 period; any spending would be 
subject to the availability of appropriated funds.
    The bill would authorize the FTC to collect civil monetary 
penalties, which are recorded as revenues, from businesses 
found in violation of the act, along with pursuing other 
remedies. The extent to which businesses would violate the new 
rules is uncertain. Furthermore, if a business does violate the 
new rules and the FTC chooses to proceed with an enforcement 
action, the extent to which the agency pursues civil penalties 
instead of other remedies is also uncertain, as is the length 
of time it would take to resolve a case. On that basis, CBO 
estimates that any additional revenues collected over the next 
decade would not be significant.
    By requiring entities that sell or distribute TikTok, or 
any successor application or service developed by ByteDance 
Limited, to disclose to consumers that such applications are 
prohibited on government-owned devices, the bill would impose a 
private-sector mandate as defined by the Unfunded Mandates 
Reform Act (UMRA). Because the mandated entities could use an 
established disclosure process to comply with the bill's 
requirements, the cost of the mandate would be small and would 
not exceed the threshold established in UMRA ($198 million in 
2023, adjusted annually for inflation).
    H.R. 750 contains no intergovernmental mandates as defined 
in UMRA.
    The CBO staff contacts for this estimate are David Hughes 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Director 
of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                       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.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to 
increase the public's awareness that the Federal Government has 
prohibited the use of TikTok on Government-owned devices.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 750 is known to be duplicative of another Federal program, 
including any program that was included in a report to Congress 
pursuant to section 21 of Public Law 111-139 or the most recent 
Catalog of Federal Domestic Assistance.

              RELATED COMMITTEE AND SUBCOMMITTEE HEARINGS

    Pursuant to clause 3(c)(6) of rule XIII, the following 
related hearings were used to develop or consider H.R. 750:
           On February 1, 2023, the Subcommittee on 
        Innovation, Data, and Commerce held a hearing on the 
        fight for global leadership in the age of emerging 
        technology. The title of the hearing was ``Economic 
        Danger Zone: How America Competes To Win The Future 
        Versus China.'' The Subcommittee received testimony 
        from the following witnesses:
                   Brandon Pugh, Policy Director 
                and Resident Senior Fellow, R Street Institute;
                   Jeff Farrah, Executive Director, 
                Autonomous Vehicle Industry Association (AVIA);
                   Samm Sacks, Cyber Policy Fellow, 
                International Security Program, New America; 
                and
                   Marc Jarsulic, Senior Fellow and 
                Chief Economist, Center for American Progress.
           On March 1, 2023, the Subcommittee on 
        Innovation, Data, and Commerce held a hearing on the 
        current digital ecosystem and the importance of 
        enacting a comprehensive preemptive federal data 
        privacy and security law. The title of the hearing was 
        ``Promoting U.S. Innovation And Individual Liberty 
        Through A National Standard For Data Privacy.'' The 
        Subcommittee received testimony from the following 
        witnesses:
                   Alexandra Reeve Givens, 
                President and CEO, Center for Democracy & 
                Technology;
                   Graham Mudd, Founder and Chief 
                Product Officer, Anonym; and
                   Jessica Rich, Of Counsel and 
                Senior Policy Advisor for Consumer Protection, 
                Kelley Drye & Warren, LLP.

                        COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, 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.

       EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 750 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                      ADVISORY COMMITTEE STATEMENT

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

                  APPLICABILITY TO LEGISLATIVE BRANCH

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

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 provides that the Act may be cited title as the 
``Chinese-owned Applications Using The Information of Our 
Nation Act of 2023'' or the ``CAUTION Act.''

Section 2. Disclosure requirements

    Section 2 requires that any person who sells or distributes 
a covered application that the Federal Government has 
prohibited the use of for information technology and required 
to be removed from such information technology under the No 
TikTok on Government Devices Act (Public Law 117-328), to 
disclose that fact in a clear and conspicuous manner to any 
individual before they download or update the application. This 
section notes that it would be unlawful for any person 
knowingly to provide false information with respect to the 
disclosure required under this section.
    Section 2 also provides the Federal Trade Commission with 
enforcement authorities and establishes that a violation of the 
section shall be treated as a violation of a rule defining an 
unfair or deceptive act or practice.
    Section 2 establishes the effective date is designated as 
180 days after the date of the enactment of this Act.
    Finally, the section defines terms used in the Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                                  [all]