[House Report 118-536]
[From the U.S. Government Publishing Office]


118th Congress }                                               {   Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                               {  118-536

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



 
                   INTERNET APPLICATION INTEGRITY AND
                             DISCLOSURE ACT

                                _______
                                

  June 4, 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

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 784]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 784) to require any person that maintains an 
internet website or that sells or distributes a mobile 
application that is owned, wholly or partially, by the Chinese 
Communist Party or by a non-state-owned entity located in the 
People's Republic of China, to disclose that fact to any 
individual who downloads or otherwise uses such website or 
application, having considered the same, reports favorably 
thereon with amendments and recommends that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
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
Minority Views...................................................    10

    The amendments are as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Internet Application Integrity and 
Disclosure Act'' or the ``Internet Application I.D. Act''.

SEC. 2. CHINESE OWNERSHIP DISCLOSURE REQUIREMENTS.

  (a) Disclosure.--Any person that owns, provides, or controls an 
internet website or that sells or distributes a mobile application that 
is owned, wholly or partially, by the Chinese Communist Party or by a 
non-state-owned entity domiciled in the People's Republic of China 
shall clearly and conspicuously disclose to any individual who 
downloads or otherwise uses such website or application in the United 
States that such website or application is owned, wholly or partially, 
by the Chinese Communist Party or by a non-state-owned entity domiciled 
in the People's Republic of China.
  (b) False Information.--It shall be unlawful for any person to 
knowingly disclose false information under this section.

SEC. 3. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

  (a) Unfair or Deceptive Acts or Practices.--A violation of this Act 
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)).
  (b) Powers of Commission.--
          (1) In general.--The Federal Trade Commission shall enforce 
        this Act 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 Act.
          (2) Privileges and immunities.--Any person who violates this 
        Act shall be subject to the penalties, and entitled to the 
        privileges and immunities, provided in the Federal Trade 
        Commission Act (15 U.S.C. 41 et seq.).
          (3) Authority preserved.--Nothing in this Act may be 
        construed to limit the authority of the Federal Trade 
        Commission under any other provision of law.

SEC. 4. INDIVIDUAL DEFINED.

  In this Act, the term ``individual'' means a natural person residing 
in the United States.

SEC. 5. EFFECTIVE DATE.

  This Act shall take effect on the date that is 180 days after the 
date of the enactment of this Act.
    Amend the title so as to read:
    A bill to require any person that owns, provides, or 
controls an internet website or that sells or distributes a 
mobile application that is owned, wholly or partially, by the 
Chinese Communist Party or by a non-state-owned entity 
domiciled in the People's Republic of China to disclose that 
fact to any individual who downloads or otherwise uses such 
website or application in the United States.

                          PURPOSE AND SUMMARY

    H.R. 784, the ``Internet Application Integrity and 
Disclosure Act'' or the ``Internet Application I.D. Act'' was 
introduced by Representatives Fulcher and Pappas on February 2, 
2023, and referred to the Committee on Energy and Commerce. 
H.R. 784 requires any person or entity that owns, provides, or 
controls an internet website or sells or distributes a mobile 
application that is wholly or partially owned by the Chinese 
Communist Party (CCP) or a non-state-owned entity domiciled in 
the People's Republic of China to disclose, in a clear and 
conspicuous manner, that fact to any individual who downloads 
or uses such website or application. The legislation would make 
it unlawful for any person knowingly to provide false 
information required under the disclosure and would provide 
enforcement authority for the Federal Trade Commission (FTC).
    H.R. 784 will increase transparency and provide consumers 
with information about the ownership of the websites and mobile 
applications they use. The disclosure requirement is intended 
to inform users about the potential risks associated with using 
websites or applications owned by the CCP or non-state-owned 
entities domiciled in the People's Republic of China.

                  BACKGROUND AND NEED FOR LEGISLATION

    The CCP and the Chinese government have a track record of 
using websites and applications to collect data on U.S. 
businesses, governments, and individual Americans. American's 
unwittingly download applications onto their work and personal 
devices--not knowing the ties those websites and applications 
have with the CCP and the ability for the CCP to collect and 
retain information as a result of such relationship. H.R. 784 
provides Americans with greater transparency to help them to 
understand which websites and applications they use are tied to 
the CCP and to make better decisions about their use of such 
websites and applications.

                            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); and
           Samm Sacks, Cyber Policy Fellow, 
        International Security Program, New America.
    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. 784, 
without amendment, 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. 784, as amended, 
favorably reported to the House by a record vote of 28 yeas and 
22 nays.

                            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:


                 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. 784 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:




    H.R. 784 would require entities that own, provide, or 
control websites or mobile applications that are owned by the 
Chinese Communist Party or located in China to disclose that 
information to U.S. users. The bill would direct the Federal 
Trade Commission (FTC) to enforce that requirement.
    Using information from the FTC, CBO estimates that 
implementing H.R. 784 would cost $4 million over the 2024-2029 
period; any spending would be subject to the availability of 
appropriated funds. CBO expects that one employee, at an 
average annual cost of $225,000, would be needed in 2024 to 
issue guidance to clarify both the content of the disclosures 
and which entities would need to make the disclosures. CBO 
estimates that the FTC would need three employees after 2024 to 
enforce potential violations.
    H.R. 784 also would authorize the FTC to collect civil 
monetary penalties from businesses found in violation of the 
bill, along with pursuing other remedies. Civil monetary 
penalties are generally remitted to the Treasury and recorded 
in the budget as revenues. However, the extent to which those 
businesses would violate the new rules after they go into 
effect 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 would pursue 
civil penalties rather than other remedies is also uncertain, 
as is the amount of time it would take to resolve a case. As a 
result, CBO estimates that any additional revenues collected 
under the bill would be insignificant over the 2024-2034 
period.
    The bill would impose a private-sector mandate as defined 
by the Unfunded Mandates Reform Act (UMRA) by requiring 
entities that own, provide, or control websites or mobile 
applications owned wholly or partially by a Chinese entity to 
disclose that fact to consumers.
    Because those mobile applications and website owners could 
use an established disclosure procedure to comply with the 
bill's requirements, CBO estimates that the cost of the mandate 
would be small and would not exceed the threshold established 
in UMRA ($200 million in 2024, adjusted annually for 
inflation).
    The bill 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 require 
any person or entity who owns, provides, or controls an 
internet website or sells or distributes a mobile application 
that is wholly or partially owned by the Chinese Communist 
Party or a non-state-owned entity domiciled in the People's 
Republic of China to disclose, in a clear and conspicuous 
manner, that fact to any individual who downloads or uses such 
application.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 784 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. 784:
           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); 
                and
                   Samm Sacks, Cyber Policy Fellow, 
                International Security Program, New America.
           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. 784 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 as the 
``Internet Application Integrity and Disclosure Act'' or the 
``Internet Application I.D. Act''.

Section 2. Chinese ownership disclosure requirements

    Section 2 requires any person who owns, provides, or 
controls an internet website or sells or distributes a mobile 
application that is owned, wholly, or partially by the CCP or 
by a non-state-owned entity domiciled in China, to disclose 
such fact to anyone who would download or use such website or 
mobile application. This section also makes it unlawful to 
disclose knowingly false information under this section.

Section. 3. Enforcement by Federal Trade Commission

    Section 3 provides that a violation of the Act shall be 
treated as a violation of the Federal Trade Commission's rule 
defining an unfair or deceptive act or practice and will be 
subject to any associated penalties.

Section. 4. Individual defined

    This section defines the term ``individual'' as ``a natural 
person residing in the United States.''

Section. 5. Effective date

    This section provides that the legislation becomes 
effective 180 days after the date of enactment of the Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                             MINORITY VIEWS

    H.R. 784, the ``Internet Application Integrity and 
Disclosure Act,'' as amended would require that any person that 
owns, provides, or controls an internet website or that sells 
or distributes a mobile application that is owned, wholly or 
partially, by the Chinese Communist Party (CCP) or by a non-
state-owned entity domiciled in the People's Republic of China 
to clearly and conspicuously disclose that such website or 
application is owned by the CCP or a non-state-owned entity 
domiciled in the People's Republic of China.
    The breadth of the language and scope of those required to 
make and receive disclosures could lead to a deluge of 
notifications that are ignored by most recipients and confusing 
and useless to those who do try to understand them. An 
extensive body of privacy policy research has found that 
consumers typically don't read online notices, do not 
understand the content of these notices, and may misunderstand 
the purpose of such notices.\1\ The notice required by this 
legislation are particularly problematic because they will not 
provide consumers any information about the significance of a 
company being owned by the CCP or a non-state-owned entity 
domiciled in the People's Republic of China. The legislation 
also includes vague terms that could complicate compliance and 
make it more difficult for the Federal Trade Commission to 
enforce.
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    \1\World Economic Forum, Redesigning Data Privacy: Reimagining 
Notice & Consent for Human-Technology Interaction (July 2020) (https://
www3.weforum.org/docs/WEF_Redesigning_ Data_Privacy_Report_2020.pdf).

                                         Frank Pallone, Jr.
                                                    Ranking Member.