```

[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]

THE IMPACT OF FOREIGN OWNERSHIP AND FOREIGN INVESTMENT ON THE SECURITY 
                OF OUR NATION'S CRITICAL INFRASTRUCTURE

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON TRANSPORTATION
                      SECURITY AND INFRASTRUCTURE
                               PROTECTION

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 16, 2007

                               __________

                           Serial No. 110-36

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                               __________

                  U.S. GOVERNMENT PRINTING OFFICE
48-911                    WASHINGTON : 2009
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                     COMMITTEE ON HOMELAND SECURITY

               BENNIE G. THOMPSON, Mississippi, Chairman

LORETTA SANCHEZ, California,         PETER T. KING, New York
EDWARD J. MARKEY, Massachusetts      LAMAR SMITH, Texas
NORMAN D. DICKS, Washington          CHRISTOPHER SHAYS, Connecticut
JANE HARMAN, California              MARK E. SOUDER, Indiana
PETER A. DeFAZIO, Oregon             TOM DAVIS, Virginia
NITA M. LOWEY, New York              DANIEL E. LUNGREN, California
ELEANOR HOLMES NORTON, District of   MIKE ROGERS, Alabama
Columbia                             BOBBY JINDAL, Louisiana
ZOE LOFGREN, California              DAVID G. REICHERT, Washington
SHEILA JACKSON LEE, Texas            MICHAEL T. McCAUL, Texas
DONNA M. CHRISTENSEN, U.S. Virgin    CHARLES W. DENT, Pennsylvania
Islands                              GINNY BROWN-WAITE, Florida
BOB ETHERIDGE, North Carolina        MARSHA BLACKBURN, Tennessee
JAMES R. LANGEVIN, Rhode Island      GUS M. BILIRAKIS, Florida
HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado
VACANCY

       Jessica Herrera-Flanigan, Staff Director & General Counsel
                     Rosaline Cohen, Chief Counsel
                     Michael Twinchek, Chief Clerk
                Robert O'Connor, Minority Staff Director

                                 ______

 SUBCOMMITTEE ON TRANSPORTATION SECURITY AND INFRASTRUCTURE PROTECTION

                 SHEILA JACKSON LEE, Texas, Chairwoman

EDWARD J. MARKEY, Massachusetts      DANIEL E. LUNGREN, California
PETER A. DeFAZIO, Oregon             GINNY BROWN-WAITE, Florida
ELEANOR HOLMES NORTON, District of   MARSHA BLACKBURN, Tennessee
Columbia                             GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York           PETER T. KING, New York (Ex 
ED PERLMUTTER, Colorado              Officio)
BENNIE G. THOMPSON, Mississippi (Ex 
Officio)

                      Mathew Washington, Director
                          Erin Daste, Counsel
                   Natalie Nixon, Deputy Chief Clerk
                     Coley O'Brien, Senior Counsel

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Sheila Jackson Lee, a Representative in Congress 
  From the State of Texas, and Chairwoman, Subcommittee on 
  Transportation Security and Infrastructure Protection..........     1
The Honorable Daniel E. Lungren, a Representative in Congress 
  From the State of California, Ranking Member, Subcommittee on 
  Transportation Security and Infrastructure Protection..........     2
The Honorable Yvette D. Clarke, a Representative in Congress From 
  the State of New York..........................................    26

                               Witnesses

Mr. Richard T. Garcia, Global Security Advisor, Corporate Affairs 
  Security, Shell International:
  Oral Statement.................................................     6
  Prepared Statement.............................................     7
Mr Michael Pfister, Senior Vice President and Chief Information 
  Officer, Halliburton Company:
  Oral Statement.................................................    10
  Prepared Statement.............................................    12
Mr. David Marchick, Covington and Burling LLP:
  Oral Statement.................................................    14
  Prepared Statement.............................................    16

 
THE IMPACT OF FOREIGN OWNERSHIP AND FOREIGN INVESTMENT ON THE SECURITY 
                OF OUR NATION'S CRITICAL INFRASTRUCTURE

                              ----------                              

                        Wednesday, May 16, 2007

             U.S. House of Representatives,
                    Committee on Homeland Security,
Subcommittee on Transportation Security and Infrastructure 
                                                Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:50 p.m., in 
Room 1539, Longworth House Office Building, Hon. Sheila Jackson 
Lee [chairwoman of the subcommittee] presiding.
    Present: Representatives Jackson Lee, DeFazio, Clarke, and 
Lungren.
    Ms. Jackson Lee. Good afternoon. Let me first of all thank 
all of the witnesses for their patience. There is quite a bit 
of activity on the floor of the House, and Members must be 
engaged in that activity. Our ranking member is en route.
    Let me acknowledge the presence of Mr. DeFazio of Oregon. I 
thank him, and members are coming, but with the importance of 
this hearing and the presence of the witnesses, we will begin.
    Let me first of all ask the subcommittee to come to order.
    The subcommittee is meeting today to receive testimony on 
the impact of foreign ownership and foreign investment on our 
Nation's critical infrastructure.
    Under the rules of the House of Representatives and the 
rules of the committee, visitors and guests are not permitted 
to make undue noise or to applaud or in any way show their 
pleasure or displeasure as to the actions of the Members of the 
House. The Chair will continue to abide by those rules as we 
proceed in this hearing so that all of the witnesses may be 
heard, as well as the members of the committee.
    Let me begin with my opening statement, I yield myself 5 
minutes.
    I would like to take this opportunity, as I said earlier, 
to thank all of you for joining with us this afternoon so that 
we can continue to address the questions of security and the 
security of our Nation. In this hearing, we will continue our 
exploration of foreign ownership and investment and how it 
intersects with national security.
    As we all know, early this year, this subcommittee took a 
thorough look into how the Federal Government monitors and 
evaluates foreign ownership of our critical infrastructure. 
Today, the subcommittee is taking a different approach to this 
issue.
    I think it is important to note that the challenge of the 
Department of Homeland Security and the challenge, of this 
committee is to be proactive. It is important that we imagine 
the possible and the impossible; and what that means is that 
every hearing that may in some areas be viewed as impossible 
are the actions that would generate from the testimony or the 
suggestion of the title to be impossible. We who have the 
responsibility of securing America can never consider that the 
possible or the impossible is too small or too narrow for us to 
review.
    Today, we are exploring the vulnerabilities of critical 
infrastructure owned by U.S. companies that have a significant 
number of foreign investors and how it may compromise homeland 
security preparedness, as well as the question of investment 
and access and control. I think we all understand that when a 
foreign entity establishes a lasting financial interest in a 
country, it is able to exert influence on that country.
    According to 2005 CEA data, foreign investors own over 9 
trillion in stock in U.S. assets. These assets are composed of 
four basic types and the largest portion is foreign direct 
investment. This type of investment goes directly into 
companies and infrastructures. The other three types of foreign 
investment are corporate stocks, private bonds and the U.S. 
Treasury bonds and bills. Each of these types comprises about 2 
trillion of the total investment stocks. It is also important 
to note that these investments have accumulated over decades, 
even centuries.
    Like most Americans, I wholeheartedly support capitalism 
and free trade, of course, with various requirements that would 
help all Americans. Yet, as events have shown, we need to 
pursue a vigorous oversight agenda, especially in the area of 
foreign investment and critical infrastructure. Dubai Ports 
taught us that we need to not just focus on one area of 
infrastructure, but we need to focus on all areas. And we need 
to be open minded because we know the capitalistic system is 
enormously creative. There are any number of subsets of what 
can be sold and what can be invested in.
    As the chairwoman of this subcommittee which bears the term 
``infrastructure protection'' in its title, I intend to do just 
that, evaluate how infrastructure is being protected to ensure 
it is here and available when America needs it most in a time 
of crisis.
    As we all know, terrorists do not signal or call ahead 
before they attack. We saw this in Madrid and London, amongst 
other horrible incidents. Terrorists are creative, especially 
in the ways in which they will attack us.
    It is not inconceivable that a terrorist might try to 
attack us not with brute force, but simply by pressing a 
computer button or by crippling a key asset or some other 
nonstated, but possibly unimaginable-type act.
    Another example, foreign investment deals with energy. 
Current European wind companies have been keen on investing in 
the U.S. market. In fact, several of the largest turbine 
producers are now selling to U.S. developers for projects, and 
opening offices and manufacturing plants in the U.S.
    Now, I know many will say that it is just wind turbines. 
What is the big deal? Well, being from Houston, I can tell you 
that energy is an important issue, and the security of energy 
is important. We must make sure that these companies take the 
necessary steps to protect new infrastructure as it becomes 
more prevalent.
    Today, we will address these basic questions. What are the 
U.S. companies doing to control access to sensitive information 
that if compromised, could possibly cripple our economy? What 
steps are taken to protect information when U.S. corporations 
operate outside the U.S.? For example, Halliburton recently set 
up operations in Dubai. This committee is eager to know how 
sensitive material or information that is housed in those 
offices in a foreign land are to be protected.
    I and other members of this subcommittee certainly are, 
hopefully, perceived as being responsible and serious and 
seriously committed to protecting the critical infrastructure 
and understanding how the private sector is protecting our 
vital assets.
    The chairman of the full committee and the ranking member 
of the full committee have had one voice on the question of 
ensuring the security of this Nation. As I work with my ranking 
member, we hope that as we work through many issues, that voice 
will be one voice on the questions of securing the Nation.
    Again, today, we want to explore what steps the private 
sector has taken to protect its infrastructure, and I look 
forward to witnesses' testimony learning how these different 
entities protect themselves from threats and what role Congress 
can play to fortify and protect the United States' assets.
    Let me close by simply saying that, in addition to the 
witnesses who are here, we know that many States have found in 
the public sector a source of revenue by utilizing public 
entities for investment of foreign operators, investors, and 
sometimes owners. In the course of our work, we will be looking 
at those issues as well, because frankly, the ability to lose 
control during a time of crisis or tragedy has to be the 
concern of this committee.
    So, in the course of this hearing, I will put some of these 
thoughts into the comments and questions that I will make. We 
must stand ready and we must be prepared.
    The Chair now recognizes the ranking member of the 
subcommittee, the gentleman from California, for an opening 
statement.
    Mr. Lungren. Thank you very much, Madam Chairwoman. And I 
noted you talked about the possible and the impossible. It may 
be impossible for us to hold this hearing because of all of the 
comings and goings that we are having on the floor of the House 
today, and if we could just get the germaneness rule figured 
out between now and the end of the day, we might be able to get 
back to regular work.
    I thank you for holding this hearing, and I welcome the 
opportunity to discuss foreign ownership and foreign 
investment, its impact on the critical infrastructure of the 
country.
    This Homeland Security Committee is all too familiar with 
the concerns and fears that foreign ownership of U.S. critical 
infrastructure assets create in our citizens. The 2006 purchase 
of the operating rights at six U.S. ports, including the Ports 
of New York, New Jersey, and Baltimore by the Dubai Ports World 
Company, owned by the UAE, created a firestorm of public and 
congressional opposition. I may be one of the few Members of 
Congress who was not so worried at the time. Perhaps because I 
was born and raised in a large port city, the city of Long 
Beach, California, and for 10 years represented both Long Beach 
and L.A. ports, it had dawned on me at an early age that ports 
had foreign ships, foreign workers, and foreign investment; and 
without that foreign investment in our ports of the United 
States, we would not be in as good shape as we were otherwise.
    I was one of those who thought that it is good that people 
think it is good to be investing in the United States. I would 
rather have them think this is the place to invest than 
somewhere else. But nonetheless, the Dubai Ports World 
controversy focused attention on the governmental process 
established to review such sales and determine whether review 
protects our economic and national security.
    Of course, I am referring to the CFIUS, or Committee on 
Financial Investment in the United States.
    Amid growing concerns over foreign acquisition of American 
businesses in 1988--that was my last year in Congress during my 
first tour of duty here--Congress passed the Exon-Florio 
provision, which gives the President the authority to block 
proposed foreign acquisitions that threaten our national 
security. Foreign acquisitions of U.S. Government assets do 
pose a challenge to our government. It does create a delicate 
balancing act in the worldwide economy. How do we attract vital 
foreign investment to the U.S. without sacrificing or 
diminishing our national security?
    I do believe we have the proper procedures in place to 
protect our critical infrastructure and assets by requiring 
foreign acquisition to be closely reviewed and scrutinized by 
CFIUS.
    For over 30 years, this process has worked effectively, 
guarding our capital markets, our high-valued infrastructure 
assets, and most importantly, our national security. On only 
one occasion of which I am aware, in 1990, the President 
intervened and ordered a divestiture by a Chinese aerospace 
company of a U.S. aircraft parts manufacturer.
    Last year's debate on the Dubai purchase raised a number of 
problems with the CFIUS review process. It demonstrates the 
changes needed to be made in light of 9/11 and our Nation's 
growing concern for security.
    I believe important improvements were included in the 
legislation we passed last year, H.R. 5337, and again in 
February of this year, H.R. 556, at that time by a vote of 423 
to zero.
    One of the important things it does is, it elevates the 
Secretaries of Homeland Security and Commerce to Vice Chairs of 
CFIUS, which will ensure a broader definition of national 
security threats in the CFIUS review. This legislation also 
limits delegating these important CFIUS decisions below the 
under secretary level.
    I would just say with respect to American businesses that 
operate overseas or bring some of their corporate structure 
overseas, it is important for us to see how they protect assets 
that we don't want to be revealed to others. But this is not 
something new; this is what we did throughout the entire Cold 
War. And then, in some cases, the most important technology we 
were working with were computers, but it also had to do with 
things as mundane as that which we used for offshore drilling, 
that which we used for exploration of oil around the world. We 
believed that some of those things ought to be limited at that 
time because of it.
    But we have to remember how fast the world works. I can 
remember back in the 1980s, when we had something called a 
global positioning satellite as a DOD project, and they were 
coming around telling us that we ought to vote for it because 
it would allow us to be able to determine where our military 
people were, within 100 feet of where they were. For Mother's 
Day, I just bought my wife a GPS. That shows how fast that 
which we want to protect from suspicious eyes of others become 
commonplace.
    So that is the challenge we have, and I would be very 
interested to find out how we deal with that from the 
standpoint of our witnesses.
    And I thank the gentlelady for yielding me this time.
    Ms. Jackson Lee. I thank the gentleman for his remarks.
    Other members of the subcommittee will be reminded, under 
the committee rules, opening statements may be submitted for 
the record.
    Ms. Jackson Lee. At this time I would like to welcome our 
panel of witnesses.
    Our first witness will be Mr. Richard T. Garcia, Global 
Security Advisor, Corporate Affairs Security, Shell 
International.
    Mr. Garcia began his position on August 1, 2005, after 
retiring from the Federal Bureau of Investigation with 25 years 
of service as the Assistant Director for the Los Angeles field 
office.
    Welcome, Mr. Garcia.
    As the Global Security Advisor, Mr. Garcia coordinates with 
other intelligence and law enforcement agencies, both domestic 
and foreign, in an effort to obtain strategic intelligence 
regarding potential criminal terrorist attacks against Shell 
assets globally.
    Mr. Garcia also manages security advisors in North America 
and in Latin America, as well as the intelligence and 
assessment team with offices in Washington, D.C., and London.
    Our second witness is Mr. Michael Pfister, Senior Vice 
President and Chief Information Officer at Halliburton. Mr. 
Pfister was named Senior Vice President and Chief Information 
Officer for Halliburton in January 2007. Previously, Mr. 
Pfister was President and Chief Operating Officer in a 
privately held health care firm in New Braunfels, Texas.
    The final witness of this panel is David Marchick, Partner 
at Covington & Burling. Mr. Marchick's practice focuses on 
complex international trade, investment, transportation and 
legislative matters. Mr. Marchick is also a leading expert on 
the Exon-Florio amendment and has an active practice advising 
U.S. and foreign companies on security approvals from the 
Committee on Foreign Investment in the United States.
    He is a coauthor of the book, National Security in Foreign 
Direct Investments. He has testified in Congress on numerous 
occasions on implementation of the legislation and played an 
active role in congressional consideration of the legislation 
that would amend the legislation in question.
    Without objection, the witnesses' full statements will be 
inserted in the record.
    I now ask each witness to summarize his statement for 5 
minutes, beginning with Mr. Garcia from Shell, if you would.

   STATEMENT OF RICHARD T. GARCIA, GLOBAL SECURITY ADVISOR, 
        CORPORATE AFFAIRS SECURITY, SHELL INTERNATIONAL

    Mr. Garcia. Madam Chair, members of the subcommittee, I am 
pleased to appear before you today to testify on the impacts of 
foreign ownership investment and the security of our Nation's 
infrastructure.
    Shell is active in more than 130 countries with 109,000 
employees worldwide. Security plays a vital role in every one 
of our operations. When we operate politically in stable, 
geologically challenging regions, leading-edge security is 
critical to our success. Shell has a century-old history in the 
United States; one-third of Shell's assets and shareholders are 
here in the United States.
    Shell Oil Company, through its U.S. affiliates, owns more 
than 10,000 miles of pipeline, 59 product terminals, nearly 
1,000 storage tanks, as well as chemical facilities and oil 
refineries. Shell U.S. operates oil and gas rigs onshore and 
offshore around the country. We have 22,000 people working in 
Shell offices from New York to Los Angeles, from the Arctic 
Circle to the Gulf of Mexico. We invest heavily in the 
personnel training systems and tools we need to protect our 
people and our assets.
    Since September 11th of 2001, Shell has invested in 
facility protection, training, access monitoring, and 
communications. Since 9/11, we have brought people into our 
corporate affairs security office from the Federal Government, 
law enforcement, military, and the Coast Guard. Shell U.S. 
maintains strong ties with these and other agencies that allow 
us to share information.
    We also receive briefings from DHS and the State 
Department's Overseas Security Advisory Council on security 
issues important to Shell in the energy industry.
    Our security team participates in various information-
sharing programs from the U.S. Government such as the FBI's 
Texas coastal regional alert system, the intelligence of 
terrorism network, which work with our information-sharing 
programs in Houston and Los Angeles.
    We also participate in the FBI's information-sharing 
program, which is currently where I am a member of the national 
board.
    Shell Oil Company, which operates in the United States, is 
a subsidiary of the Royal Dutch/Shell Group, a group global 
company incorporated in the United Kingdom and headquartered in 
the Netherlands.
    I am here today because you would like Shell's perspective 
on how foreign ownership or foreign investment impacts critical 
infrastructure. Let me say, as far as Shell is concerned, it 
does not affect us. I am aware of no instance where our foreign 
ownership or foreign investment has had any negative impact on 
keeping Shell's infrastructure and keeping it safe. I believe 
our energy infrastructure is secure as it would be as if Royal 
Dutch/Shell were based here in the United States.
    A diplomatic relationship between the United States and the 
Netherlands is one of the strongest unbroken relationships in 
the world. The Netherlands was the first country to recognize 
the American flag in November 1776, only 4 months after we 
declared independence.
    Shell has always had strong security measures in place 
protecting our people and infrastructure. Within months of 9/
11, the oil and gas industry developed security protocols and 
procedures for all segments of the industry, including 
pipelines and terminals. Shell participates fully with the 
Homeland Security Information Network, which allows DHS to get 
information quickly and easily to those responsible for the 
security of critical infrastructure.
    Shell also participates fully in Homeport. Homeport has the 
same function, but is focused on the maritime aspect of the 
critical infrastructure, facilities with docks and wharves. It 
is a Web-based portal for industry to access necessary 
information or for the Coast Guard to push data quickly should 
a threat materialize.
    As you may be aware, the Federal Government has also 
developed a credentialing program which will document 
transportation workers who have access to sensitive areas and 
equipment.
    In addition, Shell maintains a global network and helps 
with the relationship between the government and agencies 
around the world to protect our people and assets because a 
threat to our infrastructure is as likely to come from the 
outside as it is to come from inside. Shell's network helps us 
protect our U.S. infrastructure.
    Finally, Shell's security measures here are strengthened by 
the challenges being encountered around the world. Shell's 
experience in keeping our people and our assets secure in 
politically unstable regions and difficult climates sharpens 
our expertise in keeping our people and our assets safe here in 
the U.S. What we learn around the world, we apply here.
    Shell is proudest of the safety and reliability of our U.S. 
infrastructure, and it remains dedicated and committed to our 
security.
    Thank you for allowing me to be here to answer the 
questions that you.
    [The statement of Mr. Garcia follows:]

                Prepared Statement of Richard T. Garcia

    Chairwoman Jackson-Lee, Ranking Member Lungren and Members of the 
Subcommittee: My name is Richard Garcia and I am an employee of Shell 
Oil Company and serve as the Global Security Advisor for Shell 
International. In that capacity, I coordinate with law enforcement 
agencies in the United States and abroad to prevent attacks--both 
criminal and terrorist--against Shell's personnel or assets. I manage 
Shell's security advisors in North and Latin America. I also direct 
Shell's Information and Assessment Team, which has offices in 
Washington, D.C. and London. Prior to joining Shell, I was with the FBI 
for 25 years. I headed both the Houston and Los Angeles FBI field 
offices.
    I am pleased to appear before you today to testify on the impact of 
foreign ownership and foreign investment on the security of U.S. 
infrastructure.
    Shell is committed to protecting our assets and our people around 
the world. Shell companies produce oil, gas, chemicals, lubricants and 
alternative energies like wind and hydrogen around the globe. Security 
plays a vital role in every one of our operations. When we operate in 
politically unstable or geologically challenging regions, security is 
mission critical to our success.
    Shell has a century-old history in the United States. One third of 
Shell's assets, and shareholders are here in the United States. Shell 
Oil Company, through its U.S. affiliates, (Shell US) owns and operates 
5,000 miles of pipeline and has partial ownership of 10,500 miles of 
pipeline. We wholly or partially own 59 products terminals and 960 
storage tanks with more than 67.8 million barrels of capacity.
    Shell US owns and operates five refineries in the United States 
with a combined capacity of 753,000 barrels per day. Six plants produce 
15 billion pounds of chemicals annually for industrial use. Seven 
blending and packaging facilities around the country prepare our 
automotive consumer products like engine oils and lubricants. Shell US 
operates oil and gas rigs onshore and offshore around the country. We 
have 22,000 employees working at Shell sites and Shell offices from New 
York to Los Angeles and from the Arctic Circle to the Gulf of Mexico.
    Shell US invests heavily in the training, employees, systems and 
tools we need to protect our people and our assets. Since September 11, 
2001, we have invested in facility protection, training and 
communications all the way from wellheads and offshore platforms to 
tankers, ports, pipelines, refineries and storage tanks.
    All of these steps were carried out in close partnerships with law 
enforcement and security officials. Shell US maintains strong 
relationships with federal, state and local law enforcement agencies in 
the United States. Shell hires skilled security professionals who have 
the experience, training and professional relationships to protect 
Shell's people and infrastructure.
    --------------------------------------------------------
    Note: The companies in which 
Royal Dutch Shell plc directly and 
indirectly owns investments are separate 
entities. In this Statement, the 
expressions ``Shell'', ``Group'' and ``Shell 
Group'' are sometimes used for 
convenience where references are made to 
Group companies in general. Likewise, the 
words ``we'', ``us'' and ``our'' are 
also used to refer to Group 
companies in general or those who 
work for them. These expressions are 
also used where there is no purpose 
in identifying specific companies.
    Since 9-ll, Shell Oil Company has recruited professionals 
into our Corporate Affairs Security office from the State Department, 
the police and military and the Coast Guard. Shell US maintains strong 
ties with these and other agencies that allow us to share information 
back and forth. Shell Oil Company's security team also receives 
briefings from Department of Homeland Security (DHS) and the State 
Department's Overseas Security Advisory Council on security issues 
important to Shell and the energy industry.
    The U.S. security team participates in various information-sharing 
programs from the U.S. Government such as the FBI's Texas Coastal 
Regional Alert System and the Intelligence and Terrorism Alert Network, 
which are information-sharing programs in Houston and Los Angeles. In 
my previous employment with the FBI, I was responsible for the 
expansion and enhancement of these two programs. The U.S. Security team 
also participates with the FBI's InfraGard information sharing program 
where I am currently on the National Board of Directors for InfraGard.
    Shell Oil Company, which operates in the United States, is a 
subsidiary the Royal Dutch Shell Group, a global energy company 
incorporated in the United Kingdom and headquartered in The 
Netherlands.
    I am here today because you would like Shell's perspective on 
whether foreign ownership or foreign investment impacts the security of 
critical infrastructure. Let me say simply: It does not. I am aware of 
no instance where our foreign ownership or foreign investment has had 
any negative impact on keeping Shell's infrastructure and people safe 
in the United States. I believe our energy infrastructure is as secure 
as it would be if Royal Dutch Shell plc were headquartered here in the 
United States.
    The Dutch-American friendship goes back more than 200 years. The 
Netherlands was the first country to recognize the American flag in 
November 1776--four months after our nation declared independence. The 
diplomatic relationship between the United States and The Netherlands 
is one of the longest, unbroken diplomatic relationships in the world.
    Before 9-11, She had strong security measures in place to protect 
our people and infrastructure. But the world of corporate security 
changed forever on 9/11, as we had to more seriously address the 
possibility of intentional acts to harm our facilities and employees 
instead of just accidental events. Since 9-11, the oil and gas industry 
has forged a partnership with government at all levels to protect 
hundreds of facilities across the country from the potential of 
terrorist attacks. Shell is a full participant in that partnership.
    Within months of the attack, the oil and gas industry developed 
security measures for all segments of the oil and gas network--
including pipelines, refineries, terminals, and others. The American 
Petroleum Institute and the National Petrochemical and Refiners 
Association produced an industry-wide method for managers to identify 
security vulnerabilities in their operations. The Security 
Vulnerability Assessment methodology is a sophisticated, risk-based 
tool used to identify the security hazards, threats and vulnerabilities 
of a facility, and to evaluate the best measures to provide secure 
facility operations. In other words, it provides the framework for a 
complete security analysis of the facility and its operations. The SVA 
covers both physical and cyber security, process safety, facility and 
process design and operations, emergency response, management and law 
enforcement.
    In 2004, the oil and natural gas industry expanded the SVA 
methodology to include pipeline, truck, rail and liquefied natural gas 
(LNG) operations. DHS has recognized the SVA methodology and even uses 
it to train its own employees and Shell US has provided personnel to 
DHS to assist in this training. Shell US has participated fully in the 
use and expansion of the SVA methodology.
    The oil and gas industry and federal security personnel also 
completed the ``Security Guidelines for the Petroleum Industry,'' to 
help employers protect facilities and respond to changes in the threat 
level. This guidance is now in routine use as a roadmap for companies 
in deciding how best to protect all sectors of the industry against the 
threat of attack. These are the working methods and countermeasures the 
oil sector uses to protect all segments of the industry.
    The guidelines are important because they allow companies to manage 
security risks and provide a reference to federal security laws and 
regulations that have an impact on petroleum operations. The Secretary 
of Energy and later the Undersecretary for the Department of Homeland 
Security have endorsed the industry guidelines. These security 
protocols are constantly being updated. A third edition was published 
in April 2005. Shell continues to use these guidelines.
    As you may be aware, a new program currently being developed by the 
US Government will aid in securing certain Shell US facilities even 
further by the implementation of the Transportation Worker 
Identification Credential (TWIC). With the TWIC program, appropriate 
government background checks can be conducted to aid in identifying the 
insider threat to Shell US facilities by properly clearing the workers 
who have access to sensitive areas and equipment.
    Shell US participates in the Homeland Security Information Network. 
HSIN is a web-based portal that allows DHS to pass security related 
information to the Critical Infrastructure Community. It is managed by 
DHS. All members must be vetted by the Oil and Gas Sector Committee of 
the DHS to be admitted. HSIN allows DHS to push data to the sector 
quickly and easily.
    Shell also participates fully in Homeport. Homeport has the same 
function but is focused on the maritime aspect of the critical 
infrastructure, facilities with docks and wharves. It is a web-based 
portal for industry to access necessary information or for the Coast 
Guard to push data should a threat materialize.
    Membership in HSIN is focused at the corporate level for Shell 
whereas Homeport is geared to the facility owner and operator.
    In addition to Shell US' extensive security work within the oil and 
gas industry and with law enforcement agencies, Shell has built a 
global network that allows us to leverage our relationships with 
governments and law enforcement agencies around the world to protect 
Shell employees and assets. We exchange information, forge 
partnerships, design systems and implement procedures in partnership 
with governments and companies in other countries just as we do here. 
Because a threat to our U.S. infrastructure is as likely to come from 
outside the United States, as it is to come from the inside, Shell's 
network helps us protect our U.S. infrastructure.
    Finally, Shell's security measures in the United States are 
strengthened by the challenges we encounter around in the world. 
Shell's experience in keeping our people and our assets secure in 
politically unstable region, geologically-challenging areas and 
difficult climates sharpens our expertise in keeping our people and 
infrastructure safe here in the United States. What we learn around the 
world we apply here, just as what we learn here we apply around the 
world. I believe Shell's global presence strengthens the security of 
our U.S. assets.
    Shell is committed to providing a reliable supply of fuels and 
products to keep the economy growing. We are proud of the reliability 
of our oil and gas infrastructure and remain committed to its security. 
Thank you.

    Ms. Jackson Lee. We are going to try to have you begin your 
testimony and then recess after your testimony.
    Mr. Marchick, if you will be patient, we would appreciate 
it; and Mr. Ranking Member, I would like to ask unanimous 
consent that we could continue this hearing without a quorum so 
we can at least get through.
    Mr. Lungren. Thanks.

 STATEMENT OF MICHAEL PFISTER, SENIOR VICE PRESIDENT AND CHIEF 
                INFORMATION OFFICER, HALLIBURTON

    Mr. Pfister. Thank you, Chairwoman Jackson Lee and Ranking 
Member Lungren, members of the Committee on Homeland Security.
    I am Michael Pfister, Senior Vice President and Chief 
Information Officer of Halliburton Company. I am here today to 
witness on behalf of Halliburton Company, founded by Earl P. 
Halliburton in 1919 and incorporated in the State of Delaware.
    Halliburton received correspondence by committee Chairman 
Bennie Thompson, offering us an opportunity to testify before 
this committee. That correspondence indicated that the topic of 
the hearing would be the impact of foreign ownership and 
foreign investment on the security of our Nation's critical 
infrastructure.
    Halliburton is not foreign owned, and we do not possess 
critical infrastructure as we understand it. However, we would 
like to be of whatever help we can to this committee, and we 
might be of assistance relative to your introduction if we 
describe how we protect our technology and our information from 
being obtained and used by those who might wish to do our 
country harm.
    Halliburton and the energy industry for some time have been 
responding to the reality of the global business environment 
for which key employees travel around the world and need to 
have access to very sensitive information in order to do their 
jobs correctly. It also a given in today's world that threats 
to the security of vital information comes from almost every 
location around the globe. Hackers do not need to be near 
important computer resources.
    The IT security landscape for Halliburton assumes that all 
of our important IT assets, regardless of which data center 
they are located in, are under constant attack by hackers from 
every location around the globe. In fact, in our world, we 
intercept 16,000 viruses every day, and we respond to about 
12,000 attacks per day upon our network perimeter. So we have 
no choice but to take this information--information security 
extremely seriously.
    The IT industry has established security standards 
practiced by the Federal Government and by corporations like us 
that protect the perimeters of our networks, that protect the 
transmission of our information through public carriers, and it 
protects the centers that host the servers that run our 
applications and store our important raw data.
    Like the rest of the energy sector, Halliburton's IT 
security relies on what we call defense in depth. It is 
multiple layers of defense that are placed throughout the IT 
system, and the idea behind this defense in depth is the idea 
that any attacker would have to break through multiple 
defensive countermeasures in order to successfully hack into 
the system.
    Modeled much after the security systems that have evolved 
over the years, Halliburton operates industry standard 
firewalls, antivirus and intruder prevention systems to 
separate our internal network and all of the information on it 
from the Internet. We perform perimeter audits to ensure that 
our firewalls are doing their jobs. We regularly monitor for 
suspicious activity, and we isolate that activity before it can 
do any harm.
    We utilize third-party security experts to test our 
security systems' effectiveness, and we encrypt our digital 
communications before we transport them through public 
communication networks.
    In addition to all of the technical security we deploy to 
protect our information assets, there are other steps taken by 
Halliburton to physically secure its confidential data and its 
facilities. Our facilities have physical barriers such as 
fencing, locked doors, locked traffic gates. We employ security 
guards to prevent unauthorized access and entry to both 
tangible and intangible property. We restrict access to our 
facilities to persons having proper credentials, such as 
electronic badges, and badge access records are automatically 
retained and maintained and reviewed from time to time. 
Visitors to our Halliburton facilities are required to sign in 
and are escorted as they make their way through our facilities.
    We store our trade secret information, such as drawings and 
specifications that make us competitive, in a digital vault 
that is referred to as the matrix database. And the control 
access to this important trade secret information, the matrix 
database, recognizes the degree of authorization that has been 
granted to a user, and it appropriately limits the user's 
access to authorize data in the system.
    In addition, there are federally mandated export controls 
that impact our security assets as well. Halliburton has 
complex procedures in place to manage the export of our 
company's technical data. These movements are screened either 
through our company's system or by a member of the law 
department's trade compliance group. And in doing so, we 
believe that we may be helping to protect our country's 
critical infrastructure while keeping assets out of the hands 
of individuals who should not have them.
    There is also a need in our business to control to the best 
of our ability, the activities of employees that are entering 
and leaving our company.
    We have thousands of patents and many skills that we use to 
remain one of the finest energy service companies in the world. 
In our industry, there is a fairly constant turnover rate of 
talented and educated individuals, and for that reason, we have 
developed the following methods to protect Halliburton's 
intellectual property: new employee packages, provided by our 
H.R. department, include an intellectual property assignment 
and a confidentiality agreement that requires the employee to 
assign to Halliburton any IT that was developed during his 
employment and that relates to company business, and to 
maintain the secrecy and the confidentiality of any information 
to which they might have been exposed.
    Ms. Jackson Lee. Your time has expired.
    Would you be kind enough to summarize or respond to our 
questions?
    Mr. Pfister. I want to close by saying that our success 
depends upon a well-trained workforce. We provide a bunch of 
training options to teach people how to take good care of our 
proprietary information. Some of them are online; others are 
instructor-led.
    I want to thank you for allowing me to appear here today, 
and I hope that we have provided some information that will be 
of help to the committee. We take very seriously our 
responsibility for protecting data and trade secrets and 
intellectual property.
    I will be happy to answer any questions after we get done, 
and if I don't possess the information, we will get it for you 
for the record.
    [The statement of Mr. Pfister follows:]

                 Prepared Statement of Michael Pfister

    Chairwoman Jackson-Lee, members of the Committee on Homeland 
Security, I am Mike Pfister, Senior Vice President and Chief 
Information Officer of Halliburton Company. I am here today as a 
witness on behalf of Halliburton Company, founded by Earl P. 
Halliburton in 1919 and incorporated in Delaware. Halliburton received 
correspondence on May 9th from Committee Chairman, Congressman Bennie 
Thompson, offering us an opportunity to testify before this committee. 
That correspondence indicated that the topic of the hearing would be 
``The Impact of Foreign Ownership and Foreign Investment on the 
Security of Our Nation's Critical Infrastructure.'' Halliburton is not 
foreign owned and does not possess critical infrastructure. However, we 
would like to be of whatever help we can to this committee and I 
believe that we might be able to be of assistance if we describe how we 
protect our technology and information from being obtained and used by 
those who might wish to do our country harm. With that in mind, I would 
like to take a few minutes of your time to address Halliburton's 
Information Technology and the safeguards we employ to protect our 
assets.
    Halliburton, and the energy industry--along with the Information 
Technology (IT) industries--have, for some time, been responding to the 
reality of a global business environment in which key employees travel 
around the world and need to have access to very sensitive information 
in order to do their job correctly. It is also a given in today's world 
that threats to the security of vital business information come from 
almost every location around the globe. Hackers do not need to be near 
important computing resources. They take the path of least resistance 
and use the power of the Internet to locate information, regardless of 
where in the world it might be. The frequency and approaches that they 
use are independent of where key information stores reside, or where 
key employees office. For that reason, international business companies 
that have key corporate leaders, such as our CEO, Mr. Dave Lesar, who 
spend significant time outside the borders of the United States do not 
materially increase the risk that through IT methods, important 
information might be compromised. The IT security landscape for 
Halliburton assumes that ``all important IT assets'', regardless of 
which data center they are located in, are under constant attack by 
hackers from every location. That assumption is already in place, and 
preventive security measures are geared to that reality, regardless of 
where key employees are at any moment.
    Our customers do control most of the critical energy infrastructure 
and we have worked with those customers and IT security vendors to 
develop robust products and approaches to protect the information 
stored in our databases and other data repositories. The IT industry 
has established security standards, practiced by the federal government 
and by corporations, that protect the perimeters of our networks, the 
transmission of our information through public carriers, and the 
centers that host the servers that run our applications and store our 
raw data.
    Like the rest of the energy sector, Halliburton's IT Security 
relies on ``Defense in Depth''--multiple layers of defense are placed 
throughout an IT system and address personnel, technology, and 
operations for the duration of the system's lifecycle. The idea behind 
the Defense in Depth approach is that any attacker should have to break 
through multiple defensive countermeasures, in order to successfully 
hack into the system. This increases the likelihood of being able to 
identify and prevent an attack from occurring.
    Halliburton operates industry--standard firewalls, antivirus, and 
intrusion prevention systems to separate our internal network from the 
Internet. Halliburton performs perimeter audits to ensure the firewalls 
are doing their jobs. We regularly monitor for suspicious activity and 
isolate that activity before it can do any harm. We utilize third party 
security experts to test our security system's effectiveness. We 
encrypt digital communications before transporting them through public 
communications networks.
    It is worth noting at this point that the energy sector 
participates in the National Infrastructure Protection Plan. There is a 
sector-focused project called LOGIIC (Linking the Oil and Gas Industry 
to Improve Cyber Security). However, its focus has been on Supervisory 
Control and Data Acquisition (SCADA) and other ``control systems'' that 
control production and distribution of hydrocarbons. Halliburton does 
not operate these systems. We also share industry best practices each 
quarter through the American Petroleum Institute's Information 
Technology Security Forum.
    In additional to all the technical security we deploy to protect 
our information assets, there are other steps taken by Halliburton to 
physically secure its confidential data and its facilities.
         Halliburton facilities have physical barriers 
        (fencing, locked doors, and locked traffic gates) and security 
        guards to prevent unauthorized entry and access to both 
        tangible and intangible property.
         Halliburton restricts access to facilities to persons 
        having proper credentials, such as electronic badges. Badge 
        access records are automatically made and maintained.
         Visitors to Halliburton facilities are required to 
        sign-in and then are escorted throughout the facility.
         Halliburton marks certain documents as 
        ``confidential'' or uses other appropriate headers / legends 
        when such documents contain confidential information of the 
        company.
         Warning labels appear on computer log-in screens to 
        inform users that the system contains business confidential 
        information and is for company use.
         Halliburton stores trade secret information (drawings, 
        specifications, etc.) in an electronic vault that is referred 
        to as the Matrix database. To control access to the trade 
        secret information, the Matrix database recognizes the degree 
        of authorization that has been granted to a user and 
        appropriately limits the user's access to authorized data in 
        the system.
    Our internal controls over our own vital assets are engendered 
largely to keep us competitive with others in the energy service field 
and of the most benefit to our clients. However, there are federally 
mandated export controls that impact our security practices as well. 
Halliburton has procedures in place to screen the export of our 
Company's technical data. These movements are screened either through 
the Company's SAP system or manually by a member of the Law 
Department's Trade Compliance Group. In so doing, we believe we may be 
helping to protect critical infrastructure while keeping assets out of 
the hands of individuals that should not have them.
    So, I hope this brief technical disclosure helps this committee to 
appreciate the significant investment that we have made to protect 
information about our business from those with bad intentions.
    There is also a need in our business to control, to the best of our 
ability, the activities of employees that are entering and leaving the 
company. We have thousands of patents and many skills that we use to 
remain one of the finest energy service companies in the world.
    In our industry, there is a fairly constant turn over rate of very 
talented and educated individuals. For that reason, we have developed 
the following methods to protect Halliburton's intellectual property.
    New employee packages provided by Halliburton's Human Resources 
(HR) department include an intellectual property assignment and 
confidentiality agreement that requires the employee to assign to 
Halliburton intellectual property developed during his/her employment 
that relates to company business; and to maintain the secrecy of 
proprietary confidential information he/she develops or to which he/she 
is exposed.
    When an employee who had access to Halliburton's valuable 
proprietary information leaves the company, Halliburton's Law 
Department works closely with the HR Department and the business units, 
seeking to prevent the employee from taking that information for his or 
her own benefit or that of another, e.g., a competitor. When 
appropriate, access to our computer systems is disabled immediately. At 
other times during exit interviews, key employees are reminded of their 
continuing obligations under any applicable intellectual property and 
confidentiality agreements, and are requested to return any Halliburton 
proprietary information in their possession. When circumstances 
warrant, the company will send a letter to the departing employee, and 
possibly his new employer, formally reminding the ex-employee of his 
obligations to the company. If Halliburton suspects that the departing 
employee intends to or will be in a position to use Halliburton 
information in violation of those obligations, the company will 
consider taking legal action against the ex-employee and other 
responsible parties. There is a Dispute Resolution Agreement in place 
between the company and its employees that normally will require such 
disputes with ex-employees to be submitted to binding arbitration.
    In addition, when Halliburton engages a third party to provide 
goods or services and Halliburton is required to disclose confidential 
information to the third party, the third party is contractually 
obligated to maintain the confidentiality of such information. 
Typically, when a third party is engaged in Halliburton technology 
development, all rights to the developed technology are assigned to 
Halliburton, and again, the third party is required to maintain the 
confidentiality of Halliburton's proprietary information. In some 
cases, the developed technology could be jointly owned by Halliburton 
and a co-developer, but in those cases as well, the parties will be 
obligated to maintain the confidentiality of proprietary information 
shared by one with the other.
    The company provides a number of courses in its ``I-Learn'' catalog 
that relate to protecting Halliburton's valuable proprietary 
information, and to the proper handling of confidential information of 
third parties that is lawfully in the company's possession. Some of 
these courses are fully electronic, or on-line; others are instructor-
led. The ``I-Learn'' system has been developed by Halliburton to allow 
its employees to easily learn about many topics often while sitting in 
the comfort of their own offices.
    I again thank you for allowing me to appear here today and 
hopefully I have provided information that will be of help to this 
committee. I would be happy to answer any questions you might have and 
if I do not posses the information you want with me today, I will be 
happy to provide it for your record.

    Ms. Jackson Lee. Thank you very much.
    The committee stands in recess.
    [Recess.]
    Ms. Jackson Lee. Thank you.
    Mr. Marchick, would you please begin your testimony?

      STATEMENT OF DAVID MARCHICK, COVINGTON & BURLING LLP

    Mr. Marchick. Thank you, Madam Chairman, and it is a 
pleasure to be here. I know from personal meetings with you how 
much you have focused on this issue, how deeply you have 
investigated this issue, and I appreciate the leadership you 
have shown on this. I would like to make four points, Madam 
Chair.
    The first is that we want more foreign investment, not 
less. Foreign investment is part of the lifeblood of the U.S. 
economy. Employees, foreign companies employ about 5 million 
Americans, paying higher wage jobs than American-owned 
companies. It is critical to our technology and manufacturing 
base. Foreign-owned companies own about 5 percent of all U.S. 
assets, but they employ about 20 percent of all manufacturing 
jobs, so it is critical to our manufacturing base. And as long 
as we spend more than we save, we need the money to come from 
somewhere, and it is better for foreign entities to invest in 
fixed assets than in liquid assets because you simply can't 
dump fixed assets like you can liquid assets. So we want them 
to invest. It is good for our economy. It is good for R&D.
    Second is the issue of critical infrastructure. This 
committee, the Homeland Security Department and its 
predecessors, going back for almost 15 years, have really 
struggled with the concept of what critical infrastructure is. 
During the Clinton administration, the Clinton administration 
put out a study that the critical infrastructure covers about 
eight sectors. In 2001, Congress passed the PATRIOT Act and 
defined critical infrastructure as systems and assets that are 
so vital to the U.S. national and economic security that their 
destruction would have a debilitating impact on U.S. national 
security.
    Since that time, there have been four different reports 
that have come out from the executive branch with four 
different definitions of critical infrastructure and four 
different lists of sectors.
    Now why is this important? It is important because 
investors and security managers, like Mr. Garcia, take guidance 
from the government on what is critical infrastructure and what 
is not; and foreign investors take guidance on that as well. 
And so, unless there is clear guidance from the government as 
to what critical infrastructure is, it will make it more 
difficult and there will be more insufficiency for investors in 
deciding whether to invest with the United States. Because if a 
transaction--if a foreign investment implicates or covers 
critical infrastructure, then there is a greater likelihood 
that it has to go through the CFIUS review process. And if 
companies don't know whether they have to go through that 
process, it creates uncertainty, and uncertainty chills 
investment.
    So the third issue is that the CFIUS process since Dubai 
Ports has changed significantly. Transactions are now regularly 
going to very, very high levels in the government, sometimes 
all the way up to the Secretary, sometimes all the way up to 
the President, there is additional scrutiny. There has been an 
increase in the number of mitigation agreements or conditions 
imposed by the government.
    The Homeland Security Department has taken a very active 
role in this. Last year they negotiated--they required 
companies to commit to 15 mitigation agreements, which is three 
times the number of agreements required the previous year and 
equal to all of the mitigation agreements in the previous 3 
years.
    So, as a result of the increased oversight from this 
committee and others, there has been additional scrutiny of 
foreign investments in the United States.
    Frankly, in my view, not all of that is good, because 
overregulating investment has a chilling impact; and I know, 
from my practice, that there are investors who have decided not 
to pursue investments because of the CFIUS process. So the 
balance, the pendulum shifted dramatically after the Dubai 
Ports controversy, and hopefully that pendulum will swing back 
towards the middle.
    The final issue is legislation. Mr. Frank and Mr. Bachus 
and the Financial Services Committee put together a very good 
bill with Mrs. Maloney and Ms. Pryce. This committee and 
Chairman Thompson and Mr. King played a very important role in 
shaping that legislation; they were original cosponsors.
    You and Mr. Lungren played a very important role as well. 
It gives the Homeland Security Department additional authority. 
That legislation, I think, is very good legislation. It passed 
unanimously in the House.
    Today, in the Senate, Senator Dodd and Senator Shelby 
marked up similar legislation based on the House bill with a 
few changes. Hopefully, that will go through the Senate quickly 
and come back to the House with a conference, and hopefully, we 
can get a good bill.
    That legislation further increases the scrutiny that 
transactions will have to go through under the CFIUS process. 
It requires additional scrutiny of government-owned 
acquisitions. It requires additional reporting to Congress; 
Congress will have a much greater oversight role. And it 
requires additional factors to be considered in every 
transaction, factors that now are much more relevant after 
September 11th including investment in critical infrastructure.
    So the hearing that you are pursuing today is a very 
important hearing. Congressional oversight is very important, 
and the most important thing is that, through hearings like 
this, there is additional confidence in the integrity of the 
CFIUS process, so we don't have another Dubai Ports, which is 
not good for our country and not good for our relationships 
with other countries.
    [The statement of Mr. Marchick follows:]

                Prepared Statement of David Marchick \1\

    Chairman Jackson-Lee and Ranking Member Lungren
    Thank you for the opportunity to testify before your committee 
today on the important subject of foreign ownership of critical 
infrastructure.
---------------------------------------------------------------------------
    \1\ David Marchick is a partner at Covington & Burling LLP, a 
Washington-based law firm. He has an active CFIUS practice and is co-
authored the book ``U.S. National Security and Foreign Direct 
Investment (Peterson Institute, May 2006). Mr. Marchick represents U.S. 
and foreign investors before the Committee on Foreign Investment in the 
United States and the Congress. The views in this testimony are Mr. 
Marchick's views and not those of Covington & Burling LLP or the firms 
clients.
---------------------------------------------------------------------------
    I plan to discuss three issues in my testimony:
        First, the concept of ``critical infrastructure'' and the 
        implications of foreign ownership thereof;
        Second, recent developments in the Committee on Foreign 
        Investment in the United States;
        Third, CFIUS-reform legislation moving through the Congress.

Foreign Ownership of Critical Infrastructure
    A significant amount of work has been undertaken in this Committee, 
in the Department of Homeland Security and its predecessor agencies, 
and in the private sector with respect to defining and protecting 
critical infrastructure. This work dates back to the mid-1980s and 
continues to evolve today.
    There have been many iterations of the government's definition of 
``critical infrastructure'' over the years. In 1996, for example, 
President Clinton issued Executive Order 13010, which stated that 
``certain national infrastructures are so vital that their incapacity 
or destruction would have a debilitating impact on the defense or 
economic security of the United States.'' EO 13010 listed eight sectors 
as critical infrastructure, including telecommunications, electrical 
power systems, gas and oil storage and transportation, banking and 
finance, and transportation.
    Building on this initial concept, the USA PATRIOT Act, and later 
the Homeland Security Act, defined ``critical infrastructure'' as:
        ``[S]ystems and assets, whether physical or virtual, so vital 
        to the United States that the incapacity or destruction of such 
        systems and assets would have a debilitating impact on 
        security, national economic security, national public health or 
        safety, or any combination of those matters.'' \2\
---------------------------------------------------------------------------
    \2\ Section 1016(e) of the USA PATRIOT Act, codified at 42 U.S.C. 
Sec. 5195c.
---------------------------------------------------------------------------
    This definition, by setting a high threshold, implies that a 
relatively narrow list of assets would be deemed to ``have a 
debilitating effect.'' Core communications assets or the electrical 
grid certainly would meet this definition. But in the National Strategy 
for the Physical Protection of Critical Infrastructure and Key Assets, 
the White House identified twelve very broad sectors as critical 
infrastructure, including agriculture and food, water, and public 
health.\3\ In the book that I co-authored with Monty Graham of the 
Peterson Institute, Mr. Graham estimated that these twelve sectors 
cover some 25% of U.S. employment.\4\ Taking this effort one step 
further, the Department of Homeland Security created a ``national 
assets database,'' which contains tens of thousands of entries compiled 
from various sources, including state and local officials. The 
Information Assurance and Infrastructure Protection Division of DHS 
reported that it had identified 1,700 ``critical assets'' in 2004. And 
since 2001, there have been four different executive orders or reports, 
each of which included different sectors as critical infrastructure.\5\
---------------------------------------------------------------------------
    \3\ See National Strategy for the Physical Protection of Critical 
Infrastructure and Key Assets, (February 2003), available at 
www.whitehouse.gov (last visited May 20, 2006).
    \4\ U.S. National Security and Foreign Direct Investment, by Edward 
M. Graham and David M. Marchick, Peterson Institute, May 2006, p. 149.
    \5\ See, E.O. 13228; the National Strategy for Homeland Security, 
July 2002; the National Strategy for Physical Infrastructure 
Protection, February 2003; and Homeland Security Presidential Directive 
7, December 2003.
---------------------------------------------------------------------------
    The definition of critical infrastructure matters because the 
private sector makes key decisions--investment and resource allocation 
decisions--based on guidance from the federal government. Yet the 
evolving and increasingly broad definition of critical infrastructure, 
coupled with little guidance from the government on the national 
security issues associated with investment and management of such 
infrastructure, has created ambiguity and uncertainty for U.S. 
companies looking to increase their value by attracting foreign 
partners as well as for direct foreign investors.
    To be sure, we know from CFIUS practice, from statements by 
Homeland Security officials, and from H.R. 556 and the Dodd/Shelby 
bill, that protection of critical infrastructure is a top priority. 
And, for investment in certain sectors--including the defense 
industrial base, telecommunications carriers, and certain energy 
assets, including nuclear--there is a clear nexus to national security, 
there are established paradigms for assessing and, where necessary, 
mitigating national security risks posed by foreign investors. Foreign 
investors might reasonably expect to incur some national security-
related mitigation costs associated with their investment in these 
sectors, and they should have some sense of what those costs will be 
(especially for investments in the defense industrial base where there 
are fairly standard terms for mitigation).
    But these cases represent only a small percentage of investment in 
critical infrastructure, as that term has been broadly defined. It is 
far less clear that foreign ownership of other assets deemed to be 
``critical infrastructure'' has any measurable impact on U.S. national 
and homeland security. Let me offer three examples of how the absence 
of guidance in this area is both troubling from a policy perspective 
and potentially costly in the marketplace.
    First, there are certain areas of ``critical infrastructure,'' 
broadly defined, that in the ordinary course simply should not raise 
national security concerns.
    For example, there has been great controversy in certain states 
regarding the privatization of toll roads. While that debate is 
understandable, it would be far more difficult to see how foreign 
ownership of a toll road would raise national security issues. The same 
logic applies to most investments in agriculture and food. Ben and 
Jerry's is owned by a Dutch company, and Haagen-Dazs is owned by 
Diageo, a British company. I can think of many great ways to describe 
Cherry Garcia, but central to national security isn't one of them.
    Second, regulations that preserve and protect the national interest 
already govern a number of sectors identified as ``critical 
infrastructure.'' For example, there already exist myriad federal, 
state and local regulations to protect the food supply, to ensure the 
integrity of the banking system, and to facilitate high-quality public 
health services. This also is now true of investment in the chemical 
sector. Ambiguity as to whether investment in such sectors might also 
require a national security review because they technically are 
``critical infrastructure'' unnecessarily complicates the investment 
and resource allocation calculus of both sellers and buyers.
    Third, there is a real risk of ``critical infrastructure'' mission 
creep, particularly with respect to information technology products and 
services. Increasingly, in practice, the government is defining 
critical infrastructure to include not only the specifically identified 
sectors, but also any product or service sold into that sector. This 
produces a slippery analytic slope. An IT product that serves the exact 
same function for Ben & Jerry's as it does for AT&T may, because its 
customer is AT&T, be deemed part of critical infrastructure. This, in 
turn, creates unequal costs for foreign investors. For example, take 
two products that serve the same function on the IT networks of Ben & 
Jerry's and AT&T. Both products have source code that is written by 
engineers in Eastern Europe. Both products are incorporated into 
hardware assembled in China, with the hardware comprised of component 
parts made in a number of other countries all over the world. Both 
products are sold by publicly traded U.S. companies, and both companies 
use direct sales as well as distributors to reach their customers. One 
company is then bought by a foreign, publicly-traded company with no 
government ownership. Should that investment require a national 
security review simply because, among the many diverse customers of the 
product, some are located in ``critical infrastructure'' sectors?
    To be sure, the answer to that question may be ``yes'' in some 
instances. Moreover, Exon-Florio and the CFIUS process can adequately 
identify and mitigate risks in those cases. However, even sophisticated 
counsel frequently have difficulty identifying which instances these 
concerns may arise, or the potential costs associated with those 
issues. And this uncertainty is itself very costly, both for U.S. 
sellers who have an interest in creating the largest possible market 
for bidding and certainty with respect to closing, and for foreign 
investors who, in formulating their bid, must assess additional costs 
associated with their investment and how potential regulatory 
uncertainty both in timing and result might affect their competitive 
position vis-a-vis other bidders.
    More can be done to provide clear guidance to foreign investors, 
U.S. companies and their investment advisors. While the definitions and 
classes of assets I described earlier may work for the physical 
protection of critical infrastructure, they do not work for foreign 
investment considerations. The Administration and Congress should work 
together to determine how best to protect critical infrastructure, 
regardless of who owns a particular company or asset. Security policies 
and guidance could be developed on a sector-by-sector basis. A baseline 
level of security requirements should be established. Then, if there 
are particular national security issues associated with foreign 
ownership in a particular asset, U.S. interests will be further 
preserved by CFIUS, which is well equipped to mitigate the risk or 
block the investment.

Recent Developments in CFIUS
    Simultaneous with progress on CFIUS reform legislation in the 
Congress, CFIUS has undertaken a number of changes in response to 
concerns on the hill. These include:
         Committing additional resources to staffing CFIUS 
        cases. Treasury has added a new CFIUS Deputy Assistant 
        Secretary and DHS has added case officers and lawyers to focus 
        on reviews and enforcement;
         Involving more senior level officials within CFIUS;
         Enhancing communications with Congress;
         Expanding coordination among intelligence agencies;
         Expanding the use of mitigation agreements and 
        introducing new, tougher terms in such agreements; and,
         Enhancing enforcement of mitigation agreements, 
        including through on-site audits and consultations with parties 
        to such agreements.
    In many respects, CFIUS has taken a much more cautious attitude 
toward their work post-DPW. This caution has had a ripple effect on the 
private sector, leading to more filings. In 2006, there were 113 
filings (up 73 percent over 2005), 7 second-stage investigations (up 
250 percent) and 5 withdrawals (up 150 percent) during the second-stage 
investigation period. A number of other transactions were withdrawn 
during the initial 30-day period. The dramatic increase in the number 
of second-stage investigations and withdrawals suggests that foreign 
investors are having a more difficult time closing transactions in a 
timely fashion. The stakes are high--the value of just one-third of the 
transactions that were submitted to CFIUS exceeded $95.5 billion in 
2006.
    CFIUS has also increased the number of ``mitigation'' or ``national 
security'' agreements negotiated as a condition for approval. From 
2003-2005, the Department of Homeland Security (DHS) was a party to 
just 13 mitigation agreements, compared with 15 such agreements in 2006 
alone. Foreign investors--particularly in the IT sector and other 
sectors considered ``critical infrastructure''--now face a greater 
likelihood of being compelled to enter into a mitigation agreement in 
order to secure CFIUS approval.
    The trend in filings has continued this year--there have been 54 to 
date, putting CFIUS on track for almost 150 filings this year, a 130 
percent increase over 2005. Transactions that raise real national 
security issues should be filed and reviewed by CFIUS. But uncertainty 
about what cases should be filed will cause more transactions to be 
submitted for review than necessary. In turn, this forces CFIUS and the 
intelligence agencies to conduct a full analysis of inconsequential 
transactions, taking their focus off the transactions that really 
matter to national security. I suspect that over time this dramatic 
increase in filings post-DPW will level off to more normal levels, and 
that some caution in the agencies at this time is to be expected. The 
pendulum has swung too far post-DPW. For U.S. national security and 
economic interests, I hope the pendulum will soon swing back toward the 
middle.

Legislative Efforts to Amend Exon-Florio
    In the wake of the Dubai Ports World controversy just over a year 
ago, more than 20 bills were introduced in the House and Senate that 
would have restricted or blocked foreign investment in one way or 
another. Certain of these bills would have simply prohibited foreign 
investment in critical infrastructure; others would have prohibited 
foreign government ownership of certain assets in the United States. 
Several bills would have amended Exon-Florio, the statute that gives 
the President the power to block certain transactions that threaten 
U.S. national security. One bill amending Exon-Florio passed the House, 
and another passed the Senate, but the 109th Congress ran out of time 
before the bills could be reconciled.
    On February 28, the House passed unanimously H.R. 556, the National 
Security Foreign Investment Reform and Strengthened Transparency Act of 
2007, which was pulled together by Chairman Frank, Ranking Member 
Bachus, Congresswoman Maloney and Congresswoman Pryce, among others, 
and co-sponsored by Chairman Thompson and Ranking Member King of this 
committee. Today, in the Senate, Chairman Dodd and Ranking Member 
Shelby are marking up a bill based in large part upon H.R. 556.
    Credit goes to you, Madame Chairman and Mr. Lundgren, and to 
Chairman Thompson and Mr. King, for helping to shape a bipartisan, 
balanced bill that enhances protection of national security while not 
impeding foreign investment in the United States. This Committee had an 
important role in shaping that legislation.
    H.R. 556 would address many of the perceived shortcomings with the 
CFIUS process without chilling foreign investment. It would:
         Enhance Congressional oversight and reporting to 
        Congress without politicizing transactions;
         Require higher-level involvement in CFIUS decisions;
         Expand the factors that CFIUS must consider to reflect 
        post-September 11 imperatives, including protection of critical 
        infrastructure;
         Heighten scrutiny for government-owned transactions 
        without impeding investments that don't raise real national 
        security issues; and,
         Allow for transactions to be reopened based on 
        material intentional breaches of mitigation agreements where no 
        other adequate remedy exists. This provision--the so-called 
        ``evergreen'' provision--is tough medicine and a provision 
        which foreign investors and key elements of the U.S. business 
        community oppose.
    Chairman Dodd and Senator Shelby are marking up a bill in the 
Senate Banking Committee that is substantially similar on H.R. 556, 
making some modifications that in my view are very good changes. Among 
other things, the Dodd/Shelby bill:
         Adopts the concept of rotating lead agencies and vests 
        enhanced authority in those agencies to negotiate, monitor and 
        enforce mitigation agreements. For example, DOD would take the 
        lead on defense acquisitions; Homeland Security would lead on 
        investments in ports, airports and transportation companies; 
        Justice would take the lead where law enforcement issues were 
        paramount; and Commerce would take the lead on transactions 
        with significant export control issues;
         Eliminates some of the unnecessary bureaucratic 
        provisions of H.R. 556, such as requiring two-thirds votes in 
        CFIUS for certain decisions. Unlike Congressional committees, 
        agencies don't typically vote; and,
         Imposes the same confidentiality requirements on 
        Congress that exist within CFIUS.
    I was pleased that the Senate decided to use the House bill as the 
baseline. If the Dodd/Shelby bill passes the Senate without significant 
changes, I am confident and hopeful that the House and the Senate could 
work together, in a bipartisan fashion, to send sensible CFIUS reform 
legislation to the President for signature.
    The key, however, is that legislation advance U.S. national 
security interests without impeding foreign direct investment that we 
want and need. No bill would be better than a bad bill, but I am 
hopeful that the House and Senate can put together a good bill for the 
benefit of our economy and national security.

Conclusion
    The United States very much needs additional investment in critical 
infrastructure from both domestic and foreign sources. The more 
investment, the more durable and resilient our telecommunications, 
energy and other critical infrastructure will be.
    According to the Treasury Department:
         Foreign companies in the U.S. employed more than 5 
        million U.S. workers in 2005, providing 4.5% of all private 
        sector employment in the United States.
         Manufacturing jobs accounted for 33% of the jobs 
        created by foreign companies in the U.S. (2004 data).  The 
        manufacturing sector accounts for just 12% of overall U.S. 
        private sector employment.  Thus, FDI is disproportionately 
        bolstering this important sector.
         An additional 4.6 million U.S. jobs indirectly depend 
        on foreign investment in the U.S. (2005 data). Foreign 
        companies in the U.S. buy 80% of their inputs from U.S. 
        companies. This additional business indirectly supports almost 
        as many U.S. jobs as FDI creates directly.
         Compensation at foreign companies in the U.S. is on 
        average 30% higher than the U.S. national average.  Foreign-
        owned firms paid U.S. workers an average of $63,428 in 2004.
    Further, in 2000, foreign firms directly employed 5.7 million 
people in the U.S. (5.1% of the private sector workforce) and 
indirectly supported 6.5 million more jobs.  In 2005, those figures had 
fallen to 5.1 million (4.7% of the private sector workforce) and 4.6 
million, respectively.  Foreign firms? R&D spending as a share of total 
R&D spending in the U.S. has also slightly declined since 2000.
    We need more foreign investment, not less.
    In some cases--a very narrow set of circumstances--foreign 
investment does raise real national security issues. In those cases, 
the CFIUS process works, and works well. Through hearings like this, 
Madam Chairman, I am hopeful that the Congress will have additional 
confidence in the integrity of the CFIUS process. And with good 
legislation, the business uncertainty that has come in the wake of 
Dubai Ports will be reduced or eliminated, facilitating enhanced 
investments, new jobs and more economic activity in the United States.
    Thank you for the opportunity to testify before your committee.

    Ms. Jackson Lee. I thank the gentleman. We allowed you to 
pontificate a little bit longer, and we thank you for your 
expressions.
    Let me thank the witnesses for their testimony--I thank 
them for statements that open the door. And we are here to do 
some fact-finding. We are not here to prejudge or presuppose, 
and there are members on the committee who, I know, would have 
differing opinions.
    And let me indicate that we are going to move quickly. I 
understand there are certain flight obligations, and I 
understand also that we are in between and betwixt activities 
on the floor.
    But let me then pose a question in the context, as quickly 
as I can, to indicate that we have a no--if you will, an 
environment that we are in now, Mr. Garcia, Mr. Pfister, Mr. 
Marchick, that is stable and steady; and your testimony 
suggests somewhat that all is well.
    And I started out by indicating that we don't deal with the 
wellness of security; we deal with the fractures and the 
possibility of fractures. And I think we have made it very 
clear that we are not interested in violating or at least 
undermining the free flow of the economy.
    Frankly, another viable hearing would be the question of 
China's dominance, and I know that Financial Services has 
probably engaged in that in terms of the sizable investment 
that they have here in the United States, particularly in the 
financial institutions. That is not this committee's 
jurisdiction per se unless we discuss issues involving critical 
infrastructure. But these are very large questions that have to 
be asked and answered, so I hope the witnesses will answer my 
questions in the context that this is not an indictment of the 
witnesses as much as it is a fact-finding effort.
    And I will start first with Mr. Garcia.
    I have had the pleasure of working with Mr. Garcia in 
working with the management and leadership of the FBI. So I 
imagine you have a fuller understanding, and I would like you 
to--and I hope Shell will give you that latitude--to broaden 
your answers and how it relates really to, your background in 
the FBI.
    Just to lay the groundwork, we know that you stated in your 
testimony that one-third of Shell's assets and shareholders are 
in the U.S., thereby implying that two-thirds of your assets 
and shareholders are foreign. In addition to being a foreign-
owned company, Shell is global, which operates in more than 130 
companies and employs 108,000 people. And I would assume some 
of them are foreign nationals worldwide.
    Would you please elaborate on the specific additional 
security measures you take, both in terms of physical security 
over critical infrastructure and data security over 
information, because Shell is both foreign owned and a global 
company.
    And may I ask this question right here before so that we 
can separate some of the issues that you will be answering as 
it relates to Shell?
    But the foreign ownership and foreign investment issue 
sometimes relates to countries whose relationships with the 
United States are not as long-standing as those that we have 
with the Netherlands. Would you agree to that?
    Mr. Garcia. That is correct.
    Ms. Jackson Lee. Therefore, when you raise these questions, 
when our committee raises these questions, we are not just 
necessarily thinking that Shell has to be before us as a 
witness, but we have to address it as it relates to investments 
that may come from countries who have a short-term friendship 
with us versus a long-term.
    And if I can yield to you now for a response to my question 
on the security measures.
    Mr. Garcia. Thank you.
    When I retired from the FBI and took employment with Shell 
security, Shell security at that time was addressing all of the 
issues since 9/11, addressing all of the regulatory issues and 
regulatory information that was coming from Congress and other 
governments to the U.S. for protection of infrastructure.
    When I came on board, the position that I took, it was 
brand new; it had not been there before. And the purpose of 
that, my position in coming in there, was to look at the United 
States infrastructure, look at how Shell is operating in order 
to do what you are asking about: protection of the 
infrastructure, protection of the critical assets that are here 
and then how we interact with the rest of our partners around 
the world, the two-thirds, as you mentioned there.
    We have very strict procedures on how we deal with 
information, how we deal with information-sharing between 
agencies in the U.S. Government, information we share with our 
expats or foreign nationals that work with Shell.
    All of our facilities are controlled. All of our 
facilities, as far as the people that are there, we know who 
they are, we have background on them. We have no--we know 
exactly the access that they have, and one facility in the U.S. 
cannot be accessed by another person, even by a U.S. person 
unless they have authorization, escorted if they do not have 
authorization to be there on their own, or for what type of 
reason they are going to be there.
    The information we receive from these different things, we 
look at it, we vet it, and we keep it within the close realm of 
the security group.
    And also maintained in its information in a classified type 
of PKI encrypted system to where--and we only have access--that 
is not just open to the Shell Group in the U.S. or even 
overseas. We try to maintain these proper controls and limit 
what the information is so that, therefore, it does not get 
into the wrong hands. Only authorized personnel have access to 
this information, and that is only a handful of people and, 
some places, dependent on what exactly the information is.
    Ms. Jackson Lee. Is everyone carded and everyone vetted 
around your critical infrastructure in places other than the 
United States and in the United States?
    Mr. Garcia. That is correct. In those facilities they have 
credentialing that goes into facilities there. I, myself, 
cannot go to another foreign country, go into a facility and 
just walk in; they cannot do it in our facility.
    Ms. Jackson Lee. You might recall when Russia froze its gas 
exports into Europe, the critical impact that occurred. Would 
you imagine the possibility, the way you are structured now, 
that happening by an individual act of an employee? Because we 
have established that, at this point, our relationship with the 
Netherlands is certainly a, collaborative, cooperative 
relationship. But would you envision--or would you have the 
ability if that was an individual act of an employee or set of 
employees?
    Mr. Garcia. The possibility to have it happen here in the 
United States is slim. To have one employee just turn off a 
particular major gas line takes more than just an individual 
doing that. There are checks and balances that are established 
that I am aware of, from the process at the refineries; and the 
gas plants have some type of deviation from that. There is a 
work blot-out; those who work are advised as--security, as 
well--to make a determination as to what is going on here.
    Nothing is 100 percent. You always have that lone wolf. You 
always have that individual who can do something on their own 
because you cannot be in the minds of everybody. But the 
procedures and the checks and balances that they have in each 
facility and how they do things help to try to mitigate that.
    Ms. Jackson Lee. Thank you.
    Mr. Pfister, let me raise the question of access and 
control. And thank you very much for focusing most of your 
testimony on technology. But let us go back to the question of 
Dubai and the relocation or joint location, if you will, of 
corporate headquarters.
    As I understand, it is being reinterpreted to being 
jointly--two joint locations, Houston and Dubai. But in the 
course of your leadership, being in Dubai would suggest that 
there would be lead space. There would also be the appropriate 
resources for the joint corporate office to function.
    What procedures do you have in place that would give us 
comfort that any actions in Dubai by anyone who would be in 
that particular area would not have access to critical 
infrastructure that could impact America?
    Mr. Pfister. Thank you for giving me the chance to clear 
that up because there was a lot of misperception around that.
    We didn't plan on moving the company to Dubai. We are a 
proud American company, incorporated here since--
    Ms. Jackson Lee. I am glad to allow you to restate that 
again.
    Mr. Pfister. The reality--the way the IT security 
environment works is that, for decades, key employees have been 
moving all over the world and where they move and where they 
office and where they sit doesn't necessarily mean that the 
information that they need to have access to sits in that same 
location. In fact, it is much more likely for you to have your 
key information, your critical information, to be stored in 
data centers that have been physically secured in locations. 
You are comfortable around the environmentals, you are 
comfortable around access, you are comfortable about the 
security that you can put around that. And, in fact, that is 
the case in our computing environment. We take very good care 
of all of our digital crown jewels, and we put them in places 
where we have the fullest confidence that they will be well 
protected and access will be controlled.
    Ms. Jackson Lee. Would some of those be housed in the 
offices in Dubai?
    Mr. Pfister. Very few. Our particular security model is to 
put as little technology as possible in those locations.
    Generally we will put in, obviously, end-user devices such 
as PCs and laptops, and then we will put in local networks to 
allow them to talk to each other; but very seldom in other 
locations, other than our major data centers, which for us 
today, in an HP-managed facility in Toronto, in a Halliburton-
managed facility in Houston. Very seldom do we push anything 
more complex than that.
    Ms. Jackson Lee. I will raise some more questions with you 
later.
    Mr. Marchick, your testimony focused on the value of 
investment, and I don't think we have a disagreement in that. 
But I did note that you gave short shrift to the concept of the 
purchase, or the proliferation of the purchase of roads, toll 
roads, et cetera, noticing that this had been a phenomenon in 
Europe for a long time. However, the framework of this hearing 
is we must think of what could happen.
    Do you still want to give short shrift to the idea of loss 
of access and control or the interest that should be 
established as to have certain markers, certain criteria, 
certain oversight in terms of making sure that during a time of 
crisis, man-made disaster or natural disaster, that the people 
of the United States have access to these facilities or to 
these roads?
    Mr. Marchick. Madam Chairwoman, the first thing I want to 
do is learn the critical lesson in Washington: Never disagree 
with the Chairwoman.
    Ms. Jackson Lee. We welcome your opinion.
    Mr. Marchick. My view is that the government has a 
responsibility to ensure that security is in place whether it 
is a U.S. or a foreign investor, a U.S. or a foreign owner. And 
with a toll road, that starts with the regulatory structure 
that is in place or the structure that is in place for that 
asset.
    So, for example, if there are concerns about access to a 
road in a time of emergency, there should be provisions in 
place so that either the owner follows instructions of the 
government in times of emergency or the government gets out of 
the way and the State, local, Federal Government can take over 
the entrance and exits to a toll road at a time of emergency; 
but that the government should only intervene if there is a 
marginal increase in the risk as associated with a foreign 
investment.
    And with a toll road, I frankly think it is hard to see how 
a foreign investor could have a negative impact on a road. I 
think there is a very legitimate policy debate, which I want to 
stay out of, about whether roads should be privatized or not. 
But whether it is owned by a Canadian company or a U.S. 
company, or an Australian company or a U.S. company, I am not 
sure makes that big of a difference. If it does, the government 
should intervene and put security measures in place.
    Ms. Jackson Lee. Let me yield to the distinguished 
gentleman from California for 5 minutes.
    Mr. Lungren. Mr. Garcia, when were you with the FBI in 
L.A.?
    Mr. Garcia. June of 2001 was when I first arrived there as 
a special agent in charge, and I lived in Long Beach. Not to 
mention that--
    Mr. Lungren. You obviously have good judgment. I appreciate 
that.
    Ms. Jackson Lee. I won't take from your time, Mr. Lungren, 
but he is now back in Houston, and he started in Houston.
    Mr. Lungren. I know. I understand.
    Mr. Garcia. I am a Texan.
    Mr. Lungren. I understand that. You miss the humidity and 
the sweat. I understand that.
    In your testimony, you note that Shell participates in the 
Homeland Security Information Network and Homeport. Is there 
any difference that you can ascertain between the cooperation 
and the relationship you have with the Department of Homeland 
Security here as opposed to if you were not a subsidiary of a 
foreign-owned corporation?
    Mr. Garcia. If I understand your question: If we were a 
foreign corporation strictly, not have U.S. ties, as Shell has 
here in the United States, would there be any difference on how 
DHS works with you? I would imagine that DHS is limited on what 
they can share with anybody, depending on their nationality, 
depending on the information that they have and that they are 
actually trying to put out.
    Mr. Lungren. But as a wholly owned subsidiary of a 
corporation, do you have any--
    Mr. Garcia. We have no restrictions whatsoever on how they 
deal with us because of the fact that we are U.S. persons, too.
    Mr. Lungren. Mr. Pfister, could you clear up for me, I 
don't understand this idea of dual corporate structure Dubai, 
Houston. What is--what do you have in Houston and what do you 
have in Dubai in terms of corporate headquarters?
    Mr. Pfister. Well, Houston is our principal place of 
business. It is where we have the majority of our corporate 
officers; it is where we conduct the majority of the strategy 
settings and the design making of our company. So it is our 
corporate headquarters.
    Mr. Lungren. What is Dubai?
    Mr. Pfister. Dubai is going to be the location of our 
chairman and chief executive officer. It is our opinion that it 
is in the best interest of the country for Halliburton to be as 
strong in the energy business, and in order for us to do that, 
we have to be as strong in the Eastern Hemisphere. You have 
probably seen some of the statistics that are there; 60 percent 
of the oil reserves are in the Eastern Hemisphere, so he is 
moving over to Dubai.
    We will probably consolidate some of the other managers 
that are in that general region, and that will be his base.
    Mr. Lungren. So you have got more business over there than 
you have here?
    Mr. Pfister. No, that is not the case now. We conduct well 
into the majority of our business in North America today, but 
we need more valuable portfolios because that is where most of 
the reserves are.
    Mr. Lungren. And reserves you can go after, I presume.
    Mr. Pfister. Yes.
    Mr. Lungren. Last time I checked, you can't go offshore, 
Florida, California, offshore in the eastern part of the United 
States. You can't go in ANWR. Am I right in those things?
    Mr. Pfister. It is better probably to ask our Shell 
representative, because we don't get involved in this debate, 
but I think it is accurate.
    Mr. Lungren. I can't understand why you would move to where 
the business is. That is just bothersome.
    No. I mean, you know, we have made it almost impossible for 
us to go after new resources in the United States in our 
environs, and I always remember the people who used to drive to 
the protests against offshore drilling in California. Very few 
of them came there via skateboard or walking. I guess it was 
magically produced for them.
    That is just a little thing I have. I mean, I grew up in 
Long Beach, as you know, and Long Beach, we have manmade oil 
islands. We have 2 billion proven reserves. We actually do 
slant drilling there. We had the first, the beginnings of 
injection wells for the purpose of boosting the city back up, 
and then we got into the whole idea of using it for secondary 
and tertiary recovery.
    We are looking at the Signal Hill reserve, which I think is 
the fourth oldest continuous operating reserve in the country, 
and we actually have potential for opening up wells there 
because we put more money into it. It is kind of interesting. A 
lot of people get in their car and figure that comes there.
    Anyway, Mr. Marchick, you were talking about the CFIUS 
process and the ambiguity in which infrastructure will have an 
impact on national security, complicating foreign investment. 
We in the Congress responded to a concern that was expressed 
that we needed to bring CFIUS up to date. One of the concerns I 
had as we did that was, we should--would we be bringing too 
many transactions within that ambit? Would that cause us to 
spend too much time and attention and have our intelligence 
communities focusing across the board on what would end up 
being nonimportant issues, and therefore, not being able to 
give the appropriate analysis to those which truly had a 
national security interest within what we know have to be some 
sort of reasonable time limits; otherwise, you are not going to 
have the investment because we make it impossible.
    How do you suggest we balance that? You talk about 
ambiguity, which means you think we ought to have more 
particularity. What kind of particularity would you talk about?
    Mr. Marchick. The first thing to do is define what critical 
infrastructure is for the purposes of foreign investments.
    As I mentioned, during the Clinton administration there 
were eight sectors defined as critical infrastructures. Now 
there are 12, but there have been four different reports in the 
last 4 years that define it differently and give different 
sectors. That is all for the purpose of physical protection of 
critical infrastructure.
    Take a stadium, for example. You want to protect that from 
being blown up or from some tragic circumstance, but who owns a 
stadium, you know, doesn't have any impact on security. So I 
think the most important thing to do----
    Mr. Lungren. You obviously haven't been involved in the 
debate on building a stadium in DC.
    Mr. Marchick. Building or not building is a key issue, but 
who owns it doesn't raise any security issues.
    The key issue is for the government to provide guidance on 
what they mean by critical infrastructure for the purposes of 
foreign investment. They define agriculture as critical 
infrastructure. Who owns a farm, whether it is owned by a 
Canadian or an American, I can't see the difference from a 
security perspective.
    So in the Senate bill that passed the Senate today, the 
Senate Banking Committee, there is a requirement for the CFIUS 
agencies to provide guidance to the investment communities on 
the type of transactions they are seeing. That would be very 
helpful. Because right now there is a lot of ambiguity, and you 
are forcing a lot of transactions into the CFIUS process that 
don't need to be there. And you are requiring the intelligence 
community, the Homeland Security Department and others to spend 
a lot of time on those when they should be focused on the 
transactions that really matter.
    Ms. Jackson Lee. Thank you.
    The gentleman's time has expired.
    It is my pleasure to yield to the distinguished gentlelady 
from New York, Brooklyn, New York for her 5 minutes.
    Ms. Clarke. Thank you, Madam Chair.
    It has been somewhat of a hectic day today, but I thought 
it was very important to be at this subcommittee hearing. I 
just want to share a couple of thoughts and raise a couple of 
questions.
    Since the very beginning, foreign investment has played a 
vital role in the development of the United States; as the 
world becomes increasingly global and the businesses around the 
world find new ways to integrate, maintaining a strong level of 
foreign investment will be as important as ever.
    There is also a great deal that foreign companies can't do 
to keep America secure. By working with the government and 
reducing their vulnerabilities, companies can both improve the 
economy and help maintain security. This, however, is dependent 
on a strong, cooperative relationship with the government and 
on maintaining sensitive information and systems in a safe way.
    We must also keep in mind that not all investors have the 
best interest of the U.S. at heart. Therefore, the government 
must continue to play a role in determining which investments 
could cause harm to come to Americans.
    I wanted to direct my question to you, Mr. Pfister. How 
exactly would you define critical infrastructure? That has been 
a lot of the challenge. You know, I come from New York State 
where, of course, the big issue around Dubai Ports became a 
national issue and national concern. And I think defining 
critical infrastructure and what it means in this global 
environment that we are in, is really important.
    Because I notice that you comment in your testimony that 
Halliburton does not possess any critical infrastructure or 
assets, I want to know whether you would consider various 
energy facilities--you operate critical infrastructure; or what 
about operations which involve supplying or building facilities 
for our military overseas?
    Can you just sort of give me a sense?
    Mr. Pfister. Yes, ma'am. I would be happy to do that. Let 
me kind of start off--all right. Is it better now? This must be 
the microphone. I would be happy to answer those questions.
    Let me explain kind of what our assets are that we do own. 
We own people, obviously, with intellectual property between 
their ears. We have got manufacturing plants all over the world 
that build equipment, heavy equipment and tools that are mobile 
enough to then drop-ship into different parts of the world, so 
the big trucks and the skids and the boats that go out and 
provide services in the more permanent critical infrastructure 
that Homeland Security has appeared to focus more attention on 
in the past.
    We have technology centers where we do--we have 
laboratories where we do research and development of our 
products. And then again, we have the equipment, the actual 
equipment.
    So when we made the statement up at the--in my opening 
statement that we were really not the owners or the operators 
of critical infrastructure, we were using the more classical 
definition that Homeland Security has had of refineries, 
pipelines, LNG terminals, et cetera. We don't operate or own 
any of those.
    What we operate and own are tools that fit in trucks that 
we drive around or we float to different locations to actually 
help us.
    And the complexity around them is that our primary 
technology is in better understanding rock properties and fluid 
properties, deep underground, and figuring out how to make 
hydrocarbons flow faster out of that and get to the surface. So 
our equipment is very specific, very niche-oriented to that.
    So I don't know if that answers your question or not.
    Ms. Clarke. It does to a certain degree. But being an avid 
watcher of the television program 24, I will submit to you that 
the tools that you utilize getting into the wrong hands or 
being exposed to the wrong environment could pose a threat. 
Just FYI
    Let me follow up with this question: If Halliburton's 
operations were run by an entity that wished to do harm to 
America or shift U.S. policy, do you feel they would have a 
means through your operations to accomplish this?
    Mr. Pfister. Can you clear up the question just a little 
bit? If Halliburton's operations were bought by someone else 
and then controlled?
    Ms. Clarke. By that entity.
    Mr. Pfister. Well, it wouldn't be too different than some 
of our competitors today. Schlumberger is not an American 
corporation and yet we allow them to operate in the United 
States and in other places around the world.
    I guess you are asking me for my advice on whether foreign 
ownership of the sort of business that we operate today would 
create any incremental concerns.
    Ms. Clarke. Vulnerabilities.
    Mr. Pfister. I have a hard time seeing that being a large 
increase in risk.
    Ms. Clarke. OK.
    Mr. Marchick. I would just note, it was the microphone of 
the foreign company that didn't work.
    Ms. Clarke. That is a good one.
    Mr. Marchick, in your testimony, you express several 
definitions for critical infrastructure. Which do you feel is 
most appropriate, or do you have a separate definition you feel 
would better fit?
    Mr. Marchick. I think the definition in the PATRIOT Act is 
a very good definition because it focuses on those systems and 
assets whose destruction would have a debilitating impact on 
the United States.
    We know that, for example, in some sectors there is an 
incremental risk in foreign investment. For example, in the 
telecom sector because the Department of Justice wants to have 
access to wiretaps that we want--they have a legitimate 
interest in ensuring that they can conduct those wiretaps 
without foreign persons knowing about them or without foreign 
governments knowing about them, so you want to have American 
citizens handling those wiretap processes.
    Similarly, you want American citizens handling classified 
information in defense companies.
    But I think there is a very narrowly defined set of sectors 
where there really is an incremental risk for foreign 
investments, and in most of those sectors, if not all of them, 
there are ways to mitigate that risk through, for example, 
requiring that American citizens operate in key functions at a 
port facility or in a telecommunications control center or in 
the defense sector by making sure that all of the people that 
have access to sensitive assets have background checks and 
security screens, and there are access controls and badging and 
escorts.
    So I think that we shouldn't seek to ban foreign 
investment. We should seek to mitigate the marginal increase in 
risk associated with foreign ownership in those very narrow 
sets of sectors where foreign ownership matters.
    Ms. Clarke. Just to follow up, Madam Chair.
    Mr. Marchick, in your experience, do you feel that CFIUS 
takes into account the country in which the potential foreign 
owners are based? Does it treat various countries differently, 
and are you aware of any situations where CFIUS denied a filing 
purely on the nationality of the company?
    Mr. Marchick. CFIUS looks at a variety of factors in their 
national security analysis. They start with looking at the 
threat and whether there--if the buyer had harmful intent and 
the capability, would they do something to harm the interest of 
the United States.
    They would then look at the vulnerability. What are the 
assets that the company is buying and how could a person or 
entity that has the intent to harm the United States take 
action to harm the United States?
    The country where the buyer comes from is a factor. British 
companies are treated differently than companies from other 
countries. Privately owned companies are treated differently 
than government-owned companies. And the ownership does have a 
significant impact on the national security risk analysis that 
the CFIUS agencies undertake.
    I am not aware of any specific ban outside of existing law 
on companies from certain countries investing in the United 
States, but I do know that certain countries that make 
investments in the United States have higher scrutiny than 
others.
    Ms. Clarke. Thank you very much, Madam Chair.
    I yield back the rest of my time.
    Ms. Jackson Lee. I thank you.
    I am aware of your schedule. We will be back before that 
time. And we will recess for the last time. When we come back, 
we will conclude the hearing.
    [Recess.]
    Ms. Jackson Lee. The subcommittee hearing is called to 
order. Thank you so very much for your patience. I know it will 
add to your happenings here on the Hill.
    Let me first, in the absence of my ranking member--I know 
that he has been called to another hearing which I am called 
to, so we will finish at this time. Just--in his absence, as 
well, I will make sure that he knows that he has a few friends 
in Texas who believe in the energy industry and the value and 
importance that it has for the United States.
    With that in mind, Mr. Garcia, let me just quickly get a 
quick question to you. Plain and simple, how are these lessons 
applied to assets that are or affect critical infrastructure in 
the United States?
    The lessons that we are talking about, of course, are the 
fact that you are a global company. If you could, just restate 
for us how the lessons of being global can impact on the 
securing of assets here in the United States which happen to be 
under the control of foreign investors.
    Mr. Garcia. Since 9/11, the United States has really 
tightened its security measures on all aspects of life here. 
Everybody is more conscious of what is going on--law 
enforcement as well as companies, if they can take stringent 
measures to try to protect against another attack since 9/11.
    For attacks that take place overseas, we are in countries 
where security measures are not as strict as in the United 
States. The insurgents in Iraq and places in other locations, 
we see what they do. We learn from what they are trying to do 
and how to do it, and see what we can do to ensure that that 
does not happen here in the United States.
    We take those lessons learned by looking at and studying 
what they do to ensure that we are covering our procedures, 
that we have to plug that gap. We always try to look at the 
``what ifs,'' as you suggested earlier. We do not just take 
things for granted. Anything can possibly happen, so we always 
look at the impossible and say, ``Do we have a coverage for 
that or not?'' Using the overseas incidents that take place, we 
look at that as well.
    Ms. Jackson Lee. Mr. Marchick, let me just, as we excuse 
you and thank you for your testimony, raise this last question 
with you.
    I, frankly, believe that we need legislation that is geared 
toward the question of actual security of the infrastructure, 
of the critical infrastructure; and certainly CFIUS has a lot 
of elements in it. I will certainly be looking very closely at 
the markup that the Senate has done today.
    Give us, if you will again, your parameters or where you 
believe there should be government intervention, and we hope 
that you will not be inhibited by your clients. We are asking 
for your wisdom and so--frankly, I think you started out by 
saying, where there was a crisis or where there shows to be 
some inconsistency or problems, there might be a need for 
government intervention. Would you expand on that, please?
    Mr. Marchick. Thank you very much.
    Let me just state for the record that these are my 
opinions. My clients have opinions all over the map, and 
hopefully, I will not get fired by any of them after what I say 
today.
    It seems to me that the Federal Government, working with 
industry, should develop security guidelines, security 
mechanisms, security standards on a sector-by-sector basis, 
addressing the risk that is inherent in that sector.
    The Department of Homeland Security is doing that now in 
the chemical sector, coming up with chemical security 
guidelines and chemical security regulations, working with 
industry. That is a very healthy exercise.
    On top of that, if there are marginal increases in risk to 
our national security associated with foreign investment, those 
should be addressed through CFIUS; and CFIUS, I think, is well-
equipped to address those particular concerns, but it is that 
marginal increase, that delta in security risk that is the only 
thing that CFIUS should focus on.
    The general vulnerabilities that exist in our energy 
sector, for example, or our chemical sector should be addressed 
across the board regardless of who owns the asset. And then on 
top of that, if there are particular issues associated with a 
particular foreign owner who raises issues, those should be 
addressed through CFIUS. And I think that this committee and 
the CFIUS committee and the Homeland Security Department can 
work together to accomplish those twin goals.
    Ms. Jackson Lee. So, if you will, as to an established 
conflict that may generate between the United States and 
another sovereign nation that might interfere with critical 
assets or with that country's investment in the United States, 
you are suggesting that that should be looked at isolated or it 
should be looked at separately?
    Mr. Marchick. I think it should be looked at with great 
rigor to see if there are risks that a foreign owner would do 
anything that would harm the security of the United States. And 
we should never allow that to happen, but we should start by 
ensuring that we have strong security measures in place across 
the board; then--going back to the security philosophy that Mr. 
Pfister and Mr. Garcia articulated--have a layered approach, 
have additional security conditions to address particular 
concerns that are associated with a foreign investment.
    So you start with a basic building block of security for 
our critical infrastructure, and if there are additional risks 
associated with foreign investors, CFIUS should impose 
conditions on that transaction to make sure that those security 
issues are addressed.
    Ms. Jackson Lee. So you add to CFIUS or you may look also 
at a more narrow focus on homeland security?
    Mr. Marchick. Exactly.
    Ms. Jackson Lee. Let me thank you, Mr. Marchick. I 
understand you have a flight.
    Let me conclude with Mr. Pfister.
    Let us try to probe again, just as we close this hearing, 
to have a better understanding, because Dubai has created a 
great deal of interest, and the presence of your CEO and other 
personnel have created a great deal of interest. That, in 
essence, Mr. Pfister, is an investment of sorts.
    I assume that you are leasing property or buying a 
building. You are possibly having access and control. So our 
inquiry is equally, certainly for the safety of the personnel 
and for the safety of whatever resources you utilize.
    Can you again frame for us how you provide the protection 
of any critical infrastructure that might be necessary to 
ensure your work in Dubai or in Doha or wherever you might 
happen to be?
    Mr. Pfister. Yes, ma'am, I would be happy to.
    To be quite frank with you, Dubai is one of the easier 
places to secure and protect infrastructure, particularly of 
the information technology. They are one of the more advanced 
countries around the world in terms of providing capabilities 
and digital technologies, once you have figured out how to 
provide acceptable security in places like Africa and other 
places--in Russia, Falkland Islands, and other places that the 
energy industry operates.
    Ms. Jackson Lee. So how do you proceed in those difficult 
areas?
    Mr. Pfister. So it is using the standards.
    One of the phenomena around information technology security 
is that security improvements are cumulative. The financial 
industry creates new ways of protecting financial data, and it 
immediately becomes available in commercial products that then 
other industries are able to deploy. The health care industry 
creates new technology approaches and commercial products that 
we then embed in other industries. So, you know, this is not a 
brand-new phenomenon.
    With the advent of the Internet and when companies started 
hooking their computer networks up to, you know, the globe, 
that risk was introduced at that point in time; and so the 
commercial IT security industry and companies participating in 
groups like the API and others have been designing firewall 
systems, prevention systems, approaches to secure computers and 
assets that are almost mainstream at this point in time.
    So Mr. Lesar's move to Dubai really does not materially 
increase at all the risk that any of our key technologies or 
our key intellectual property is going to be exposed to, any 
more than it was in the last decade as we have had people 
traveling all over the world, many times much more and to more 
desolate places than Dubai.
    Ms. Jackson Lee. Do you have enhanced security measures of 
personnel? Do you have reinforced buildings? Do you do anything 
differently?
    Mr. Pfister. Well, we do the same types of security, from 
the physical security aspects, that you heard about from our 
Shell associate: guards; you know, big cement blocks as you 
enter the building so that car bombs and things like that would 
not get into the core of the building; the same card key 
access; the same logging; those types of things. So it is 
really not any different than the way we protect any other 
location that has computers that might have access to critical 
information.
    Ms. Jackson Lee. Let me say that I think the test may be 
the word ``rigor'' in that we should be rigorous when we are 
looking at foreign ownership and foreign investors as it 
relates to our security.
    My last question to you, Mr. Garcia, is that--again, using 
your expertise--we do know that oil companies--many of them are 
in and invest in continents--South America, the continent of 
Africa. We know in particular that there has been some well-
known publicized seizing of assets in the delta of Nigeria. 
That obviously has a life of its own, but I want to pose a 
question which is similar to the Russian incident that occurred 
that impacted Europe.
    If the resources were stymied such that there would be the 
foreign investment by a foreign company but they would be 
impacting the United States, what kind of intervention are you 
all looking toward to prevent that kind of major impact? Even 
though resources go all over the world, what are you looking 
toward to prevent that kind of major impact on energy resources 
coming to the United States?
    Mr. Garcia. Congresswoman, the actual dynamics of the oil 
flow's being cut off in various countries outside the United 
States would probably be answered best by somebody in the 
company that deals with that.
    As far as the security issues there in Nigeria, I monitor 
that with the Shell security group to see what measures can be 
done and to see what assistance can be provided to them either 
through the host country or through other types of training and 
activities that can be done with the various U.S. embassy 
personnel who are there, to help alleviate some of those 
problems and some of those issues so that we do not get to this 
position where it is not safe to do any business at all in that 
particular country.
    As far as the impact, I would imagine the impact of cutting 
off any kind of reserves coming to the United States can be 
detrimental to the United States economy depending on how much 
is cut. As far as how and specifically what the impact would 
be, some other witness will probably have to answer that on the 
economics part.
    Ms. Jackson Lee. Do you think, in the whole idea of 
security and critical infrastructure around the world, that the 
Federal Government, beyond the existing legislation, can be 
more helpful?
    Mr. Garcia. Well, the Federal Government right now is 
working a lot with the Coast Guard on the international port 
security program where they actually go to the various ports 
around the world that service ships that come to the United 
States--our tankers and other things that do come here. They 
are doing a big push in working with the various countries that 
these vehicles or vessels come from in order to try to ensure 
that the security measures that are taken on in those host 
ports overseas are helpful for what is coming to the United 
States.
    Some of the exceptions that are done are that the Coast 
Guard will do inspections and boardings offshore well within 
the safety region away from the United States so as to ensure 
that the vessel itself is not something that is going to be 
detrimental or dangerous to the United States when it comes to 
our ports.
    So the United States and the Federal Government are doing a 
lot of things overseas to help in that aspect, and we, as an 
industry, are trying to assist them on identifying weaknesses 
and vulnerabilities that they should be looking at and are 
trying to ensure that they search and look at those areas to 
try to prevent some sort of an act.
    Ms. Jackson Lee. Let me conclude and thank you very much 
for the response.
    Just in summary, this has been a challenging time to have a 
hearing, but I thank you for giving us at least the beginnings 
of our discussion on this issue. As I indicated, I think there 
is more to explore. This hearing was to begin the discussion, 
as we have started under the full committee with Chairman 
Thompson.
    How do you protect foreign infrastructure that may be in 
the hands of a foreign owner that impacts the United States, 
our national security or a foreign investor? There are a lot of 
nuances that will take several panels and very long hours, but 
I will end as I started.
    Our challenge is to imagine the possible and the 
impossible, and it is also to accept the premise of our 
economy, which is an economy that welcomes investors, but at 
the same time, as for the persons who we have the 
responsibility of protecting, we have to ask the hard 
questions.
    So I believe that we have been given, even from your 
testimony, a range of issues to think about and a range of 
issues to look at--expanded legislation--in light of the long 
list of critical infrastructure that we have, to be able to at 
least give guidance to public entities, which are separate from 
Mr. Garcia and Mr. Pfister.
    And also to our corporate entities, which already probably 
have a major leg forward, because statistics show that you have 
about 85 percent of our critical infrastructure, both 
domestically and then those that are owned by foreign investors 
that are in the private sector; and you certainly have concern 
about your own property and the needs and protection of your 
own employees.
    We know you are forward-thinking, and I think it is crucial 
that we take up the responsibility for those issues that may 
not be as far ahead as the private sector is, and I count that 
as the raging new, if you will, basis of securing funding for 
public entities, and that is the selling of the very roads upon 
which we travel. That is a major issue, and I think that we 
should certainly look at that.
    You have given us a great deal of insight. We thank you for 
your appearance here before our committee, and I believe that I 
will follow up with my concluding remarks so that we can 
finish.
    As I have indicated, I thank the witnesses for their very 
valuable testimony, and the members of the subcommittee may 
have additional questions for the witnesses, and we will ask 
you to respond expeditiously in writing to those questions, and 
we will look forward to the answers in the response.
    Ms. Jackson Lee. I am going to put into the record, with 
the existing quorum, an article by a Times reporter in 
Philadelphia, ``Foreign Companies Buying American Roads and 
Bridges''--it happens to be a positive article--and an article 
from the Dallas Morning News, ``Foreign Companies Buying U.S. 
Roads and Bridges.'' Those are some of the other aspects of the 
work that we have before us in this committee.
    So let me thank all of the witnesses. With that, the 
hearing is adjourned.
    [Whereupon, at 5 p.m., the subcommittee was adjourned, 
subject to the call of the Chair.]

                                 
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