109th CONGRESS
2d Session
H. R. 4929
To amend section 721 of the Defense Production Act of 1950 to enhance
the effectiveness of the investigations of certain mergers, acquisitions,
and takeovers for national security implications, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
March 9, 2006
Mr. SABO introduced the following bill; which was referred to the Committee
on Financial Services, and in addition to the Committees on Energy and Commerce,
International Relations, and Select Intelligence (Permanent Select), for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend section 721 of the Defense Production Act of 1950 to enhance
the effectiveness of the investigations of certain mergers, acquisitions,
and takeovers for national security implications, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Foreign Investment National Security Review
Act of 2006'.
SEC. 2. INVESTIGATION OF CERTAIN TRANSACTIONS FOR NATIONAL SECURITY IMPLICATIONS.
(a) In General- Section 721 of the Defense Production Act of 1950 (50 U.S.C.
App. 2170) is amended to read as follows:
`SEC. 721. INVESTIGATION OF CERTAIN TRANSACTIONS FOR NATIONAL SECURITY
IMPLICATIONS.
`(1) IN GENERAL- Upon receiving written notification, as prescribed by
regulations under this section, of any merger, acquisition, or takeover
proposed or pending on or after the date of the enactment of this section
by or with any foreign person which could result in foreign control of
any person engaged in interstate commerce in the United States, the President,
acting through the President's designee and the Committee on Foreign Investment
in the United States shall conduct an investigation to determine the effects,
if any, of the proposed or pending merger, acquisition, or takeover on
the national security of the United States.
`(2) TIMING- Any investigation required under paragraph (1) shall be completed
before the end of the 75-day period beginning on the date of the receipt
by the President or the President's designee of written notification of
the proposed or pending merger, acquisition, or takeover.
`(b) Confidentiality of Information-
`(1) IN GENERAL- Any information or documentary material filed with 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 may be made public, except
as may be relevant to any administrative or judicial action or proceeding.
`(2) AVAILABILITY TO THE CONGRESS- No provision of paragraph (1) shall
be construed as preventing the disclosure of any information or documentary
material to either House of Congress or to any duly authorized committee
or subcommittee of the Congress.
`(c) 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 (hereafter in
this section referred to as the `Committee') 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:
`(A) The Secretary of the Treasury.
`(B) The Secretary of State.
`(C) The Secretary of Defense.
`(D) The Secretary of Homeland Security.
`(E) The Attorney General.
`(F) The Secretary of Commerce.
`(G) The Director of the Office of Management and Budget.
`(H) The United States Trade Representative.
`(I) The Chairman of the Council of Economic Advisors.
`(J) The Director of the Office of Science and Technology Policy.
`(3) CHAIRPERSON- The Secretary of the Treasury shall be the Chairperson
of the Committee.
`(4) OTHER MEMBERS- The Chairperson of the Committee shall involve the
heads of such other Federal agencies, the Assistant to the President for
National Security Affairs, and the Assistant to the President for Domestic
Policy in any investigation under subsection (a) as the Chairperson determines
to be appropriate on the basis of the facts and circumstances of the transaction
under investigation.
`(5) ROLE OF THE DIRECTOR OF NATIONAL INTELLIGENCE- The Director of National
Intelligence shall provide appropriate intelligence analysis and intelligence
briefings to the Committee.
`(d) Action by the President-
`(1) IN GENERAL- No proposed or pending acquisition, merger, or takeover,
of a person engaged in interstate commerce in the United States by or
with foreign persons may occur unless the President, on the basis of an
investigation and report by the Committee, finds that such acquisition,
merger or takeover, will not threaten to impair the national security
of the United States, as defined by regulations prescribed pursuant to
this section, and approves the transaction.
`(2) ENFORCEMENT- The President shall 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--
`(A) any finding, action, or determination under this section of disapproval
of an acquisition, merger, or takeover; or
`(B) any conditions imposed on any approval of any acquisition, merger,
or takeover.
`(3) FINALITY OF DETERMINATIONS- All actions and determinations under
this section shall be final and not subject to judicial review.
`(e) Findings by the President-
`(1) IN GENERAL- A finding under this section of impairment or threatened
impairment to national security shall be based on credible evidence that
leads the President to believe that--
`(A) the foreign interest exercising control might take action that
threatens to impair the national security; and
`(B) other provisions of law do not provide adequate and appropriate
authority for the President to protect the national security.
`(2) FACTORS TO BE CONSIDERED- Any investigation under this section shall
take into account the following factors:
`(A) Domestic production needed for projected national defense requirements.
`(B) The capability and capacity of domestic industries to meet national
defense requirements, including the availability of human resources,
products, technology, materials, and other supplies and services.
`(C) The control of domestic industries and commercial activity by foreign
citizens as it affect the capability and capacity of the United States
to meet the requirements of national security.
`(D) The potential effects of the proposed or pending transaction on
sales of military goods, equipment, or technology to any country--
`(i) identified by the Secretary of State--
`(I) under section 6(j) of the Export Administration Act of 1979,
as a country that supports terrorism;
`(II) under section 6(l) of the Export Administration Act of 1979,
as a country of concern regarding missile proliferation; or
`(III) under section 6(m) of the Export Administration Act of 1979,
as a country of concern regarding the proliferation of chemical
and biological weapons; or
`(ii) 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.
`(E) The potential effects on the proposed or pending transaction on
United States international technological leadership in areas affecting
United States national security.
`(f) Report to the Congress- Upon making any determination to approve or
disapprove 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, 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 under this section to
approve or disapprove such merger, acquisition, or takeover, including a
detailed explanation of the finding made and factors considered.
`(g) Congressional Action-
`(1) IN GENERAL- If the determination of the President contained in the
report transmitted to the Congress under subsection (f) is that the President
will approve any merger, acquisition, or takeover under subsection (d)
and not later than 30 days after the date on which Congress receives the
report, a joint resolution described in paragraph (2) is enacted into
law, then the President shall take such action under subsection (d) as
is necessary to prohibit the merger, acquisition, or takeover, including,
if such acquisition has been completed, directing the Attorney General
to seek divestment or other appropriate relief in the district courts
of the United States.
`(2) JOINT RESOLUTION DESCRIBED- For purposes of paragraph (1), the term
`joint resolution' means a joint resolution of the Congress, the sole
matter after the resolving clause of which is as follows: `That the Congress
disapproves the determination of approval of the President contained in
the report submitted to Congress pursuant to section 721(f) of the Defense
Production Act of 1950 on XXXXX.', with the blank space being filled
with the appropriate date.
`(3) COMPUTATION OF REVIEW PERIOD- In computing the 30-day period referred
to in paragraph (1), there shall be excluded any day described in section
154(b) of the Trade Act of 1974.
`(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 existing authority, power, process, regulation,
investigation, enforcement measure, or review provided by any other provision
of law.
`(j) Technology Risk Assessments- In any case in which an assessment of
the risk of diversion of defense critical technology is performed by the
Committee or any other designee of the President, a copy of such assessment
shall be provided to any other designee of the President responsible for
reviewing or investigating a merger, acquisition, or takeover under this
section.
`(k) Biennial Report on Critical Technologies-
`(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 May 1, 2007, and upon the expiration of every 2 years thereafter,
a report, both in classified and unclassified form, 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
technology.
`(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 or security identified pursuant to
this section.
`(l) Biennial Report on Critical Infrastructure- In order to assist the
Congress in its oversight responsibilities, the President and such agencies
as the President shall designate shall complete and furnish to the Congress,
not later than 90 days after the date of enactment of this subsection and
upon the expiration of every 2 years thereafter, a report, both in classified
and unclassified form, which--
`(1) lists all critical infrastructure, as defined under subtitle B of
title II of Public Law 107-296, that is owned, controlled or dominated
by an alien, a foreign corporation, or a foreign government;
`(2) evaluates whether there is credible evidence of a coordinated strategy
by 1 or more countries or companies to acquire United States critical
infrastructure; and
`(3) evaluates whether there are industrial espionage activities directed
or directly assisted by foreign governments against private United States
companies controlling critical infrastructure.'.
(b) Effective Date- The amendments made by subsection (a) shall apply to
the review and investigation of any acquisition, merger, or takeover which
is or becomes subject to section 721 of the Defense Production Act of 1950
(50 U.S.C. App. 2170) (as in effect immediately before the date of the enactment
of this Act or on or after such date) that has not become final before the
date of the enactment of this Act.
