I 

109TH CONGRESS 

2D SESSION H. R. 4881 

To promote the national defense by establishing requirements for the ownership, management, and operation of critical infrastructure in the United 

States, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 7, 2006 

Mr. HUNTER (for himself, Mr. SAXTON, Mr. SKELTON, Mr. DAVIS of Kentucky, Mrs. JO ANN DAVIS of Virginia, Mr. JONES of North Carolina, 

Mr. LOBIONDO, Mr. MILLER of Florida, Mr. SMITH of New Jersey, Mr. 

POE, Mr. BACHUS, Mr. HEFLEY, Mr. NEY, Mr. TURNER, and Mr. DUNCAN) introduced the following bill; which was referred to the Committee 

on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, 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 promote the national defense by establishing requirements 

for the ownership, management, and operation of critical 

infrastructure in the United States, 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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘National Defense Crit3 ical Infrastructure Protection Act of 2006’’. 

4 SEC. 2. CITIZENSHIP AND OTHER REQUIREMENTS FOR 

5 OWNERSHIP, MANAGEMENT, AND OPERATION 

6 OF UNITED STATES CRITICAL INFRASTRUC7 TURE. 

8 (a) LIMITATION ON CORPORATE OWNERSHIP AND

9 MANAGEMENT AND OPERATION.—A corporation may not 

10 own, or be authorized (by contract or otherwise) to man11 age or operate, any system or asset that is included on 

12 the national defense critical infrastructure list unless the 

13 corporation meets the critical infrastructure national secu14 rity management requirements. 

15 (b) CRITICAL INFRASTRUCTURE NATIONAL SECU16 RITY MANAGEMENT REQUIREMENTS.—A corporation 

17 meets the critical infrastructure national security manage18 ment requirements for purposes of subsection (a) only if 

19 each of the following applies to the corporation: 

20 (1) The corporation is organized under the laws 

21 of the United States. 

22 (2) The corporation has a board of directors the 

23 majority of whom are citizens of the United States. 

24 (3) The corporation has a chief executive officer 

25 and chairman of the board of directors who are citi26 zens of the United States. 


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1 (4) A majority of the voting shares of the cor2 poration, and a majority of nonvoting shares of the 

3 corporation, are owned by citizens of the United 

4 States. 

5 (5) More than 50 percent of the members of 

6 the board of directors of the corporation have been 

7 approved by the Secretary of Defense, in consulta8 tion with the Secretary of Homeland Security, for 

9 membership on the board. 

10 (6) Not less than 20 percent of the members of 

11 the board of directors are independent directors. 

12 (7) All of the independent directors have been 

13 approved by the Secretary of Defense, in consulta14 tion with the Secretary of Homeland Security, for 

15 membership on the board. 

16 (8) The board of directors has a government se17 curity committee, all of whose members are ap18 proved by the Secretary of Defense, in consultation 

19 with the Secretary of Homeland Security, for mem20 bership on the committee. 

21 (9) The board of directors has a compensation 

22 committee that— 

23 (A) is comprised of citizens of the United 

24 States; and 


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1 (B) includes the independent directors ap2 proved under paragraph (7). 

3 (10) The corporation has agreed to allow, and 

4 has instituted procedures to authorize, the Secretary 

5 of Defense, in consultation with the Secretary of 

6 Homeland Security, to annually inspect the proce7 dures of the corporation for handling classified infor8 mation and, based on such an annual inspection, the 

9 procedures of the corporation for handling classified 

10 information have been approved by the Secretary of 

11 Defense. 

12 In the case of a corporation that as of the effective date 

13 of subsection (a) owns, or is authorized by contract (or 

14 otherwise) to manage or operate, a system or asset that 

15 is included on the national defense critical infrastructure 

16 list, the provisions of paragraph (4) of this subsection take 

17 effect with respect to that corporation as of the date that 

18 is five years after the date of the enactment of this Act. 

19 (c) NOTIFICATION REQUIREMENTS.—Any corpora20 tion that has met the requirements of subsection (b) and 

21 that owns, or manages or operates, a system or asset on 

22 the national defense critical infrastructure list shall 

23 promptly submit notice to the Secretary in the event any 

24 of the following occurs: 


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1 (1) Acquisition of ownership or beneficial own2 ership, direct or indirect, of five percent or more of 

3 the corporation’s voting securities by a foreign per4 son. 

5 (2) Acquisition of ownership or beneficial own6 ership, direct or indirect, of 25 percent or more of 

7 any class of the corporation’s nonvoting securities by 

8 a foreign person. 

9 (3) Authority or ability of a foreign person to 

10 have power, direct or indirect, to control the election, 

11 appointment, or tenure of directors, officers, or exec12 utive personnel of the corporation and the power to 

13 control other decisions or activities of the corpora14 tion. 

15 (4) Total revenues or net income in excess of 

16 five percent from a single foreign person or in excess 

17 of 30 percent from foreign persons in the aggregate 

18 in any fiscal year of the corporation. 

19 (5) Ten percent or more of any class of the cor20 poration’s voting securities held in ‘‘nominee 

21 shares’’, ‘‘street names’’, or in some other method 

22 that does not disclose the beneficial owner of equi23 table title. 

24 (6) Interlocking directors with foreign persons 

25 and any officer or management official of the appliVerDate Aug 31 2005 21:47 Mar 08, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4881.IH H4881

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1 cant company who is also employed by a foreign per2 son. 

3 (7) Any other factor that indicates or dem4 onstrates a capability on the part of foreign persons 

5 to control or influence the operations or manage6 ment of the corporation. 

7 (8) Acquisition by the corporation of ownership 

8 of 10 percent or more of any foreign interest. 

9 (d) NATIONAL DEFENSE CRITICAL INFRASTRUC10 TURE LIST.— 

11 (1) IN GENERAL.—For purposes of this section, 

12 the Secretary of Defense, in consultation with the 

13 Secretary of Homeland Security, shall prepare and 

14 maintain a list, to be known as the ‘‘national defense 

15 critical infrastructure list’’, of critical infrastructure 

16 in the United States. The list shall include both mili17 tary installations and non-military installations. 

18 (2) SUBMISSION TO CONGRESSIONAL COMMIT19 TEES.—Whenever the national defense critical infra20 structure list is revised, the Secretary of Defense 

21 shall, not later than 15 days after the date of the 

22 revision, submit notice of the revision in writing to 

23 the following: 

24 (A) The Committee on Armed Services of 

25 the Senate. 


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1 (B) The Committee on Armed Services of 

2 the House of Representatives. 

3 (3) CRITICAL INFRASTRUCTURE DEFINED.—In 

4 this section, the term ‘‘critical infrastructure’’ means 

5 any system or asset, whether physical or virtual, 

6 that is so vital to the United States that the inca7 pacity or destruction of such system or asset would 

8 have a debilitating effect on national security, on na9 tional economic security, on national public health or 

10 safety, or on any combination of those matters. 

11 (e) CITIZEN OF THE UNITED STATES DEFINED.— 

12 In this section: 

13 (1) CITIZEN OF THE UNITED STATES.—The 

14 term ‘‘citizen of the United States’’ includes— 

15 (A) a person that is a citizen of the United 

16 States under section 2 of the Shipping Act, 

17 1916 (46 U.S.C. App. 802); and 

18 (B) a United States citizen trust. 

19 (2) UNITED STATES CITIZEN TRUST.— 

20 (A) Subject to subparagraph (C), the term 

21 ‘‘United States citizen trust’’ means a trust 

22 that is qualified under this paragraph. 

23 (B) A trust is qualified under this para24 graph with respect to critical infrastructure 

25 only if— 


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1 (i) each of the trustees is a citizen of 

2 the United States; and 

3 (ii) the trust submits to the Secretary 

4 of Defense an affidavit of each trustee 

5 stating that the trustee is not aware of any 

6 reason involving a beneficiary of the trust 

7 that is not a citizen of the United States, 

8 or involving any other person that is not a 

9 citizen of the United States, as a result of 

10 which the beneficiary or other person 

11 would hold more than 25 percent of the 

12 aggregate power to influence or limit the 

13 exercise of the authority of the trustee with 

14 respect to matters involving any ownership 

15 or operation of the critical infrastructure 

16 that may adversely affect the interests of 

17 the United States. 

18 (C) If any person that is not a citizen of 

19 the United States has authority to direct or 

20 participate in directing a trustee for a trust in 

21 matters involving any ownership or operation of 

22 the critical infrastructure that may adversely 

23 affect the interests of the United States or in 

24 removing a trustee for a trust without cause, ei25 ther directly or indirectly through the control of 


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1 another person, the trust is not qualified under 

2 this paragraph unless the trust instrument pro3 vides that persons who are not citizens of the 

4 United States may not hold more than 25 per5 cent of the aggregate authority to so direct or 

6 remove a trustee. 

7 (D) This paragraph shall not be considered 

8 to prohibit a person who is not a citizen of the 

9 United States from holding more than 25 per10 cent of the beneficial interest in a trust. 

11 (f) EFFECTIVE DATES.— 

12 (1) IN GENERAL.—Subsection (a) shall take ef13 fect on the date on which the national defense crit14 ical infrastructure list is submitted to Congress pur15 suant to paragraph (2) and shall apply to any cor16 poration covered by that subsection as of that date 

17 or thereafter. 

18 (2) NATIONAL DEFENSE CRITICAL INFRA19 STRUCTURE LIST.—The national defense critical in20 frastructure list required by subsection (c) shall be 

21 established, and the initial list under that subsection 

22 shall be submitted in writing to the Congress, not 

23 later than three months after the date of the enact24 ment of this Act. 


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1 (g) SPECIAL RULE FOR CERTAIN PORT TERMI2 NALS.— 

3 (1) SPECIAL RULE.—The port terminals speci4 fied in paragraph (2) are deemed to be on the na5 tional defense critical infrastructure list, and the 

6 provisions of subsection (a) apply with respect to 

7 those terminals effective as of February 28, 2006. 

8 (2) SPECIFIED PORT TERMINALS.—The port 

9 terminals specified in this paragraph are the fol10 lowing: 

11 (A) The terminals that as of February 28, 

12 2006, were operated by the United Kingdom 

13 company, Peninsular and Oriental Steam Navi14 gation Company (P & O), at the following 

15 United States ports: 

16 (i) Baltimore, Maryland. 

17 (ii) Philadelphia, Pennsylvania. 

18 (iii) Miami, Florida. 

19 (iv) New Orleans, Louisiana. 

20 (v) Houston, Texas. 

21 (vi) Newark and Elizabeth, New Jer22 sey. 

23 (B) Any terminal at a port in the United 

24 States other than a port listed in subparagraph 

25 (A) that as of February 28, 2006, was operated 


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1 in part, or with the contribution of, the com2 pany named in subparagraph (A). 

3 SEC. 3. ENHANCED AUTHORITY TO REVIEW CERTAIN FOR4 EIGN MERGERS, ACQUISITIONS, AND TAKE5 OVERS. 

6 (a) CONFIDENTIALITY OF INFORMATION.—Sub7 section (c) of section 721 of the Defense Production Act 

8 of 1950 (50 U.S.C. App. 2170(c)) is amended— 

9 (1) by inserting ‘‘during the process of inves10 tigation’’ after ‘‘prevent disclosure’’; and 

11 (2) by inserting ‘‘of any information considered 

12 during the process of investigation’’ before the pe13 riod at the end. 

14 (b) FINDINGS OF THE PRESIDENT.—Subsection (e) 

15 of such section (50 U.S.C. App. 2170(e)) is amended— 

16 (1) in the matter preceding paragraph (1)— 

17 (A) by striking ‘‘may’’ and inserting 

18 ‘‘shall’’; 

19 (B) by striking ‘‘subsection (c)’’ and in20 serting ‘‘subsection (d)’’; and 

21 (C) by striking ‘‘only’’; and 

22 (2) by striking paragraph (1) and inserting the 

23 following: 

24 ‘‘(1) there is either— 


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1 ‘‘(A) credible evidence that leads the Presi2 dent to believe that the foreign interest exer3 cising control might take action that threatens 

4 to impair the national security; or 

5 ‘‘(B) a reasonable expectation that the for6 eign interest exercising control would use such 

7 control— 

8 ‘‘(i) to adversely affect the ability of 

9 domestic industries to meet existing pro10 duction requirements for defense or home11 land security; 

12 ‘‘(ii) to acquire advanced technology 

13 illicitly; or 

14 ‘‘(iii) to increase its ability to affect 

15 United States critical infrastructure; and’’. 

16 (c) FACTORS TO BE CONSIDERED.—Subsection (f) of 

17 such section (50 U.S.C. App. 2170(f)) is amended— 

18 (1) in the matter preceding paragraph (1)— 

19 (A) by striking ‘‘may’’ and inserting 

20 ‘‘shall’’; and 

21 (B) by striking ‘‘factors—’’ and inserting 

22 ‘‘factors the following:’’; 

23 (2) by capitalizing the first letter of the first 

24 word of paragraphs (1), (2), (3), (4), and (5); 


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1 (3) at the end of paragraphs (1), (2), and (3), 

2 by striking the comma and inserting a period; 

3 (4) at the end of paragraph (4), by striking ‘‘; 

4 and’’ and inserting a period; 

5 (5) by redesignating paragraph (5) as para6 graph (8); and 

7 (6) by inserting after paragraph (4) the fol8 lowing new paragraphs: 

9 ‘‘(5) Domestic production needed to meet the 

10 needs of homeland security. 

11 ‘‘(6) The potential effects of the proposed or 

12 pending transaction on control of critical infrastruc13 ture, such as energy, telecommunications, transpor14 tation, or information. 

15 ‘‘(7) The potential effects of the proposed or 

16 pending transaction on secure United States access 

17 to strategic natural resources, including energy sup18 plies and critical minerals.’’. 

19 (d) NOTIFICATION TO GOVERNMENT.— 

20 (1) REQUIRED NOTICE OF PROPOSED OR PEND21 ING TRANSACTIONS.—Such section is further amend22 ed— 

23 (A) by redesignating subsections (g), (h), 

24 (i), (j), and (k) as subsections (h), (i), (j), (k), 

25 and (l), respectively; and 


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1 (B) by inserting after subsection (f) the 

2 following new subsection: 

3 ‘‘(g) NOTIFICATION TO GOVERNMENT.— 

4 ‘‘(1) REQUIRED NOTICE.—The President shall 

5 provide for the regulations issued pursuant to this 

6 section to require that, in any case in which there 

7 is a proposed or pending merger, acquisition, or 

8 takeover that is or may be subject to an investiga9 tion under subsection (a), the President or the 

10 President’s designee shall be provided written notifi11 cation of the proposed or pending merger, acquisi12 tion, or takeover, as referred to in the second sen13 tence of subsection (a), and that such written notifi14 cation shall be provided in sufficient time for the re15 view process under this section to be completed be16 fore the proposed or pending merger, acquisition, or 

17 takeover is finalized. 

18 ‘‘(2) PUBLICATION IN FEDERAL REGISTER.— 

19 Any notification pursuant to paragraph (1) shall be 

20 published in the Federal Register within five days of 

21 such notification.’’. 

22 (2) INTERIM RULES.—The President or the 

23 President’s designee may prescribe interim rules 

24 necessary to carry out the responsibilities under sub25 section (g) of section 721 of the Defense Production 


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1 Act of 1950 as added by paragraph (1)(B). Any oth2 erwise applicable notice-and-comment requirement of 

3 section 553 of title 5, United States Code, shall not 

4 apply to such interim rules. Interim rules prescribed 

5 under the authority of this subsection that are not 

6 earlier superceded by final rules shall expire as spec7 ified in such interim rules, but not later than the 

8 end of the one-year period beginning on the the date 

9 of the enactment of this Act. 

10 (e) ANNUAL REPORT.—Subsection (l) of such sec11 tion, as redesignated by subsection (d)(1), is amended— 

12 (1) in the subsection heading, by striking 

13 ‘‘QUADRENNIAL REPORT.—’’ and inserting ‘‘AN14 NUAL REPORT.—’’; and 

15 (2) in paragraph (1), by striking ‘‘not later 

16 than 1 year’’ and all that follows through ‘‘every 4 

17 years thereafter’’ and inserting ‘‘not later than No18 vember 1 each year’’. 

19 (f) TECHNICAL AMENDMENTS.—Such section is fur20 ther amended— 

21 (1) in subsections (a) and (d), by striking ‘‘the 

22 date of enactment of this section’’ and inserting 

23 ‘‘August 23, 1988’’; 

24 (2) in subsection (d), by striking ‘‘subsection 

25 (d)’’ and inserting ‘‘subsection (e)’’; and 


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1 (3) in the last sentence of subsection (h), as re2 designated by subsection (d)(1), by striking ‘‘of this 

3 Act’’. 

4 (g) EFFECTIVE DATES.— 

5 (1) APPLICABILITY TO NEW INVESTIGATIONS.— 

6 The amendments made by this section shall apply 

7 with respect to any investigation under section 721 

8 of the Defense Production Act of 1950 (50 U.S.C. 

9 App. 2170) that is commenced after the date of the 

10 enactment of this Act. 

11 (2) TIME LIMIT FOR REQUIRED NEW REGULA12 TIONS.—Regulations required by subsection (g) of 

13 such section, as added by the amendment made by 

14 subsection (d)(1)(B), shall be prescribed not later 

15 than the end of the one-year period beginning on the 

16 date of the enactment of this Act. 

17 SEC. 4. MANDATORY INSPECTION OF CARGO. 

18 (a) MANDATORY INSPECTIONS.—No cargo trans19 ported by a commercial motor vehicle may enter the 

20 United States from Canada or Mexico, and no cargo trans21 ported by vessel may be unloaded in the United States, 

22 unless an appropriate officer or employee of the Direc23 torate of Border and Transportation Security or other ap24 propriate officer or employee of the United States has inVerDate Aug 31 2005 21:47 Mar 08, 2006 Jkt 049200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H4881.IH H4881

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1 spected the cargo to ensure that it complies with the laws 

2 of the United States. 

3 (b) DEFINITIONS.—In this section: 

4 (1) CARGO.—The term ‘‘cargo’’ means prop5 erty, or mail, or both. 

6 (2) COMMERCIAL MOTOR VEHICLE.—The term 

7 ‘‘commercial motor vehicle’’ means a commercial 

8 motor vehicle as defined in section 31101(1) of title 

9 49, United States Code, that is used principally to 

10 transport cargo. 

11 (3) UNITED STATES; VESSEL.—The terms 

12 ‘‘United States’’ and ‘‘vessel’’ have the meanings 

13 given those terms in section 401 of the Tariff Act 

14 of 1930 (19 U.S.C. 1401). 

15 (c) EFFECTIVE DATE.—This section shall take effect 

16 6 months after the date of the enactment of this Act. 

Æ 


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