I 

109TH CONGRESS 

2D SESSION H. R. 4929 

To amend section 721 of the Defense Production Act of 1950 to enhance 

the effectiveness of the investigations of certain mergers, acquisitions, 

and takeovers for national security implications, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 9, 2006 

Mr. SABO introduced the following bill; which was referred to the Committee 

on Financial Services, and in addition to the Committees on Energy and 

Commerce, International Relations, and Select Intelligence (Permanent 

Select), for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend section 721 of the Defense Production Act of 

1950 to enhance the effectiveness of the investigations 

of certain mergers, acquisitions, and takeovers for national security implications, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Foreign Investment 

5 National Security Review Act of 2006’’. 


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1 SEC. 2. INVESTIGATION OF CERTAIN TRANSACTIONS FOR 

2 NATIONAL SECURITY IMPLICATIONS. 

3 (a) IN GENERAL.—Section 721 of the Defense Pro4 duction Act of 1950 (50 U.S.C. App. 2170) is amended 

5 to read as follows: 

6 ‘‘SEC. 721. INVESTIGATION OF CERTAIN TRANSACTIONS 

7 FOR NATIONAL SECURITY IMPLICATIONS. 

8 ‘‘(a) INVESTIGATIONS.— 

9 ‘‘(1) IN GENERAL.—Upon receiving written no10 tification, as prescribed by regulations under this 

11 section, of any merger, acquisition, or takeover pro12 posed or pending on or after the date of the enact13 ment of this section by or with any foreign person 

14 which could result in foreign control of any person 

15 engaged in interstate commerce in the United 

16 States, the President, acting through the President’s 

17 designee and the Committee on Foreign Investment 

18 in the United States shall conduct an investigation 

19 to determine the effects, if any, of the proposed or 

20 pending merger, acquisition, or takeover on the na21 tional security of the United States. 

22 ‘‘(2) TIMING.—Any investigation required 

23 under paragraph (1) shall be completed before the 

24 end of the 75-day period beginning on the date of 

25 the receipt by the President or the President’s desVerDate Aug 31 2005 04:37 Mar 10, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4929.IH H4929

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1 ignee of written notification of the proposed or pend2 ing merger, acquisition, or takeover. 

3 ‘‘(b) CONFIDENTIALITY OF INFORMATION.— 

4 ‘‘(1) IN GENERAL.—Any information or docu5 mentary material filed with the President or the 

6 President’s designee pursuant to this section shall be 

7 exempt from disclosure under section 552 of title 5, 

8 United States Code, and no such information or doc9 umentary material may be made public, except as 

10 may be relevant to any administrative or judicial ac11 tion or proceeding. 

12 ‘‘(2) AVAILABILITY TO THE CONGRESS.—No 

13 provision of paragraph (1) shall be construed as pre14 venting the disclosure of any information or docu15 mentary material to either House of Congress or to 

16 any duly authorized committee or subcommittee of 

17 the Congress. 

18 ‘‘(c) COMMITTEE ON FOREIGN INVESTMENT IN THE

19 UNITED STATES.— 

20 ‘‘(1) ESTABLISHMENT.—The Committee on 

21 Foreign Investment in the United States established 

22 pursuant to Executive Order No. 11858 (hereafter 

23 in this section referred to as the ‘Committee’) shall 

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1 tion and such other assignments as the President 

2 may designate. 

3 ‘‘(2) MEMBERSHIP.—The Committee shall be 

4 comprised of the following members: 

5 ‘‘(A) The Secretary of the Treasury. 

6 ‘‘(B) The Secretary of State. 

7 ‘‘(C) The Secretary of Defense. 

8 ‘‘(D) The Secretary of Homeland Security. 

9 ‘‘(E) The Attorney General. 

10 ‘‘(F) The Secretary of Commerce. 

11 ‘‘(G) The Director of the Office of Man12 agement and Budget. 

13 ‘‘(H) The United States Trade Represent14 ative. 

15 ‘‘(I) The Chairman of the Council of Eco16 nomic Advisors. 

17 ‘‘(J) The Director of the Office of Science 

18 and Technology Policy. 

19 ‘‘(3) CHAIRPERSON.—The Secretary of the 

20 Treasury shall be the Chairperson of the Committee. 

21 ‘‘(4) OTHER MEMBERS.—The Chairperson of 

22 the Committee shall involve the heads of such other 

23 Federal agencies, the Assistant to the President for 

24 National Security Affairs, and the Assistant to the 

25 President for Domestic Policy in any investigation 


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1 under subsection (a) as the Chairperson determines 

2 to be appropriate on the basis of the facts and cir3 cumstances of the transaction under investigation. 

4 ‘‘(5) ROLE OF THE DIRECTOR OF NATIONAL IN5 TELLIGENCE.—The Director of National Intelligence 

6 shall provide appropriate intelligence analysis and 

7 intelligence briefings to the Committee. 

8 ‘‘(d) ACTION BY THE PRESIDENT.— 

9 ‘‘(1) IN GENERAL.—No proposed or pending ac10 quisition, merger, or takeover, of a person engaged 

11 in interstate commerce in the United States by or 

12 with foreign persons may occur unless the President, 

13 on the basis of an investigation and report by the 

14 Committee, finds that such acquisition, merger or 

15 takeover, will not threaten to impair the national se16 curity of the United States, as defined by regula17 tions prescribed pursuant to this section, and ap18 proves the transaction. 

19 ‘‘(2) ENFORCEMENT.—The President shall di20 rect the Attorney General to seek appropriate relief, 

21 including divestment relief, in the district courts of 

22 the United States in order to implement and en23 force— 


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1 ‘‘(A) any finding, action, or determination 

2 under this section of disapproval of an acquisi3 tion, merger, or takeover; or 

4 ‘‘(B) any conditions imposed on any ap5 proval of any acquisition, merger, or takeover. 

6 ‘‘(3) FINALITY OF DETERMINATIONS.—All ac7 tions and determinations under this section shall be 

8 final and not subject to judicial review. 

9 ‘‘(e) FINDINGS BY THE PRESIDENT.— 

10 ‘‘(1) IN GENERAL.—A finding under this sec11 tion of impairment or threatened impairment to na12 tional security shall be based on credible evidence 

13 that leads the President to believe that— 

14 ‘‘(A) the foreign interest exercising control 

15 might take action that threatens to impair the 

16 national security; and 

17 ‘‘(B) other provisions of law do not provide 

18 adequate and appropriate authority for the 

19 President to protect the national security. 

20 ‘‘(2) FACTORS TO BE CONSIDERED.—Any inves21 tigation under this section shall take into account 

22 the following factors: 

23 ‘‘(A) Domestic production needed for pro24 jected national defense requirements. 


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1 ‘‘(B) The capability and capacity of domes2 tic industries to meet national defense require3 ments, including the availability of human re4 sources, products, technology, materials, and 

5 other supplies and services. 

6 ‘‘(C) The control of domestic industries 

7 and commercial activity by foreign citizens as it 

8 affect the capability and capacity of the United 

9 States to meet the requirements of national se10 curity. 

11 ‘‘(D) The potential effects of the proposed 

12 or pending transaction on sales of military 

13 goods, equipment, or technology to any coun14 try— 

15 ‘‘(i) identified by the Secretary of 

16 State— 

17 ‘‘(I) under section 6(j) of the Ex18 port Administration Act of 1979, as a 

19 country that supports terrorism; 

20 ‘‘(II) under section 6(l) of the 

21 Export Administration Act of 1979, 

22 as a country of concern regarding 

23 missile proliferation; or 

24 ‘‘(III) under section 6(m) of the 

25 Export Administration Act of 1979, 


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1 as a country of concern regarding the 

2 proliferation of chemical and biologi3 cal weapons; or 

4 ‘‘(ii) listed under section 309(c) of the 

5 Nuclear Non-Proliferation Act of 1978 on 

6 the ‘Nuclear Non-Proliferation-Special 

7 Country List’ (15 C.F.R. Part 778, Sup8 plement No. 4) or any successor list. 

9 ‘‘(E) The potential effects on the proposed 

10 or pending transaction on United States inter11 national technological leadership in areas affect12 ing United States national security. 

13 ‘‘(f) REPORT TO THE CONGRESS.—Upon making any 

14 determination to approve or disapprove any merger, acqui15 sition, or takeover by or with any foreign person which 

16 could result in foreign control of any person engaged in 

17 interstate commerce in the United States, the President 

18 shall immediately transmit to the Secretary of the Senate 

19 and the Clerk of the House of Representatives a written 

20 report of the President’s determination under this section 

21 to approve or disapprove such merger, acquisition, or take22 over, including a detailed explanation of the finding made 

23 and factors considered. 

24 ‘‘(g) CONGRESSIONAL ACTION.— 


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1 ‘‘(1) IN GENERAL.—If the determination of the 

2 President contained in the report transmitted to the 

3 Congress under subsection (f) is that the President 

4 will approve any merger, acquisition, or takeover 

5 under subsection (d) and not later than 30 days 

6 after the date on which Congress receives the report, 

7 a joint resolution described in paragraph (2) is en8 acted into law, then the President shall take such 

9 action under subsection (d) as is necessary to pro10 hibit the merger, acquisition, or takeover, including, 

11 if such acquisition has been completed, directing the 

12 Attorney General to seek divestment or other appro13 priate relief in the district courts of the United 

14 States. 

15 ‘‘(2) JOINT RESOLUTION DESCRIBED.—For 

16 purposes of paragraph (1), the term ‘joint resolu17 tion’ means a joint resolution of the Congress, the 

18 sole matter after the resolving clause of which is as 

19 follows: ‘That the Congress disapproves the deter20 mination of approval of the President contained in 

21 the report submitted to Congress pursuant to section 

22 721(f) of the Defense Production Act of 1950 on 

23 lllll.’, with the blank space being filled with 

24 the appropriate date. 


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1 ‘‘(3) COMPUTATION OF REVIEW PERIOD.—In 

2 computing the 30-day period referred to in para3 graph (1), there shall be excluded any day described 

4 in section 154(b) of the Trade Act of 1974. 

5 ‘‘(h) REGULATIONS.—The President shall direct the 

6 issuance of regulations to carry out this section. Such reg7 ulations shall, to the extent possible, minimize paperwork 

8 burdens and shall to the extent possible coordinate report9 ing requirements under this section with reporting re10 quirements under any other provision of Federal law. 

11 ‘‘(i) EFFECT ON OTHER LAW.—No provision of this 

12 section shall be construed as altering or affecting any ex13 isting authority, power, process, regulation, investigation, 

14 enforcement measure, or review provided by any other pro15 vision of law. 

16 ‘‘(j) TECHNOLOGY RISK ASSESSMENTS.—In any case 

17 in which an assessment of the risk of diversion of defense 

18 critical technology is performed by the Committee or any 

19 other designee of the President, a copy of such assessment 

20 shall be provided to any other designee of the President 

21 responsible for reviewing or investigating a merger, acqui22 sition, or takeover under this section. 

23 ‘‘(k) BIENNIAL REPORT ON CRITICAL TECH24 NOLOGIES.— 


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1 ‘‘(1) IN GENERAL.—In order to assist the Con2 gress in its oversight responsibilities with respect to 

3 this section, the President and such agencies as the 

4 President shall designate shall complete and furnish 

5 to the Congress, not later than May 1, 2007, and 

6 upon the expiration of every 2 years thereafter, a re7 port, both in classified and unclassified form, 

8 which— 

9 ‘‘(A) evaluates whether there is credible 

10 evidence of a coordinated strategy by 1 or more 

11 countries or companies to acquire United States 

12 companies involved in research, development, or 

13 production of critical technologies for which the 

14 United States is a leading producer; and 

15 ‘‘(B) evaluates whether there are industrial 

16 espionage activities directed or directly assisted 

17 by foreign governments against private United 

18 States companies aimed at obtaining commer19 cial secrets related to critical technology. 

20 ‘‘(2) DEFINITION.—For the purposes of this 

21 subsection, the term ‘critical technologies’ means 

22 technologies identified under title VI of the National 

23 Science and Technology Policy, Organization, and 

24 Priorities Act of 1976 or other critical technology, 

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1 sential to national defense or security identified pur2 suant to this section. 

3 ‘‘(l) BIENNIAL REPORT ON CRITICAL INFRASTRUC4 TURE.—In order to assist the Congress in its oversight 

5 responsibilities, the President and such agencies as the 

6 President shall designate shall complete and furnish to the 

7 Congress, not later than 90 days after the date of enact8 ment of this subsection and upon the expiration of every 

9 2 years thereafter, a report, both in classified and unclas10 sified form, which— 

11 ‘‘(1) lists all critical infrastructure, as defined 

12 under subtitle B of title II of Public Law 107–296, 

13 that is owned, controlled or dominated by an alien, 

14 a foreign corporation, or a foreign government; 

15 ‘‘(2) evaluates whether there is credible evi16 dence of a coordinated strategy by 1 or more coun17 tries or companies to acquire United States critical 

18 infrastructure; and 

19 ‘‘(3) evaluates whether there are industrial espi20 onage activities directed or directly assisted by for21 eign governments against private United States com22 panies controlling critical infrastructure.’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 subsection (a) shall apply to the review and investigation 

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1 comes subject to section 721 of the Defense Production 

2 Act of 1950 (50 U.S.C. App. 2170) (as in effect imme3 diately before the date of the enactment of this Act or 

4 on or after such date) that has not become final before 

5 the date of the enactment of this Act. 

Æ 


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