I 

113TH CONGRESS 

2D SESSION H. R. 5581 

To amend the Defense Production Act of 1950 to provide for a net benefit 

review of certain covered transactions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 18, 2014 

Ms. DELAURO introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Defense Production Act of 1950 to provide 

for a net benefit review of certain covered transactions, 

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 and Economic Security Act of 2014’’. 

6 SEC. 2. REVIEW OF GREENFIELD INVESTMENTS. 

7 Section 721(a)(3) of the Defense Production Act of 

8 1950 (50 U.S.C. App. 2170(a)(3)) is amended— 

9 (1) by striking ‘‘means any merger’’ and insert10 ing the following: ‘‘means— 


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1 ‘‘(A) any merger’’; 

2 (2) by striking the period and inserting ‘‘; 

3 and’’; and 

4 (3) by adding at the end the following: 

5 ‘‘(B) any construction of a new facility in 

6 the United States by any foreign person.’’. 

7 SEC. 3. NET BENEFIT REVIEW. 

8 (a) IN GENERAL.—Section 721 of the Defense Pro9 duction Act of 1950 (50 U.S.C. App. 2170) is amended— 

10 (1) in subsection (b)— 

11 (A) in the heading for such subsection, by 

12 inserting ‘‘AND NET BENEFIT’’ after ‘‘NA13 TIONAL SECURITY’’; 

14 (B) in paragraph (1)— 

15 (i) in the heading for such paragraph, 

16 by inserting ‘‘AND NET BENEFIT’’ after 

17 ‘‘NATIONAL SECURITY’’; 

18 (ii) in subparagraph (A), by striking 

19 clauses (i) and (ii) and inserting the fol20 lowing: 

21 ‘‘(i) shall— 

22 ‘‘(I) review the covered trans23 action to determine the effects of the 

24 transaction on the national security of 

25 the United States; and 


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1 ‘‘(II) consider the factors speci2 fied in subsection (f) for such pur3 pose, as appropriate; and 

4 ‘‘(ii) shall review the covered trans5 action to determine whether such trans6 action is of net benefit to the United 

7 States, as provided under subsection (o).’’; 

8 and 

9 (iii) by adding at the end the fol10 lowing: 

11 ‘‘(G) MANDATORY NET BENEFIT REVIEW

12 FOR CERTAIN COVERED TRANSACTIONS.—The 

13 President and the Committee shall initiate a 

14 net benefit review of a covered transaction 

15 under subparagraph (A)(ii) if such transaction 

16 meets the requirements of paragraphs (1) and 

17 (2) of section 7A(a) of the Clayton Act (15 

18 U.S.C. 18a(a)).’’; and 

19 (C) in paragraph (3)(A), by inserting ‘‘na20 tional security’’ before ‘‘review’’ each place it 

21 appears in the heading and text of such sub22 paragraph; and 

23 (2) by adding at the end the following: 

24 ‘‘(o) PERFORMANCE OF NET BENEFIT DETERMINA25 TION.— 


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1 ‘‘(1) FACTORS TO BE CONSIDERED.—For pur2 poses of carrying out the net benefit determination 

3 under subsection (b)(1)(A)(ii), the President, acting 

4 through the Committee, shall consider— 

5 ‘‘(A) the effect on the level of economic ac6 tivity in the United States on— 

7 ‘‘(i) the level and quality of employ8 ment; 

9 ‘‘(ii) resource processing; 

10 ‘‘(iii) the utilization of parts and serv11 ices produced in the United States; 

12 ‘‘(iv) the utilization of products, parts, 

13 and services imported into the United 

14 States; and 

15 ‘‘(v) exports from the United States; 

16 ‘‘(B) the effect of the proposed or pending 

17 transaction on productivity, industrial effi18 ciency, technological development, technology 

19 transfers, and product innovation in the United 

20 States; 

21 ‘‘(C) the effect of the proposed or pending 

22 transaction on competition within any industry 

23 in the United States or between the United 

24 States and other countries; 


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1 ‘‘(D) the compatibility of the proposed or 

2 pending transaction with national industrial, 

3 economic, and cultural policies; 

4 ‘‘(E) the effect on the public health, safety, 

5 and well-being of United States consumers; 

6 ‘‘(F) in the case of a covered transaction 

7 that is a foreign government-influenced trans8 action— 

9 ‘‘(i) the governance and commercial 

10 orientation of the foreign person engaging 

11 in such transaction; 

12 ‘‘(ii) how and the extent to which the 

13 foreign person engaging in such trans14 action is owned or controlled by a foreign 

15 government or its conduct and operations 

16 are influenced by a foreign government, in17 cluding considering the stated government 

18 policies of the country of origin of the for19 eign person regarding government support 

20 or policies relating to the economic sector 

21 involved in such transaction; 

22 ‘‘(iii) whether the foreign person en23 gaging in such transaction— 

24 ‘‘(I) adheres to United States 

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1 cluding commitments to transparency 

2 and disclosure, independent members 

3 of the board of directors, independent 

4 audit committees, and equitable treat5 ment of shareholders); 

6 ‘‘(II) adheres to United States 

7 laws and practices; and 

8 ‘‘(III) is a foreign person of a 

9 country whose government has ade10 quately engaged with the Securities 

11 and Exchange Commission and the 

12 Public Company Accounting Oversight 

13 Board in order to promote and ensure 

14 adequate transparency; and 

15 ‘‘(iv) whether the foreign person en16 gaging in such transaction will likely oper17 ate on a commercial basis if such trans18 action is completed, including with regard 

19 to— 

20 ‘‘(I) where to export; 

21 ‘‘(II) where to process; 

22 ‘‘(III) the participation of United 

23 States citizens in its operations in the 

24 United States and elsewhere; 


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1 ‘‘(IV) the impact of the invest2 ment on productivity and industrial 

3 efficiency in the United States; 

4 ‘‘(V) support of on-going innova5 tion, research, and development in the 

6 United States; 

7 ‘‘(VI) sourcing patterns; and 

8 ‘‘(VII) the appropriate level of 

9 capital expenditures to maintain the 

10 United States business in a globally 

11 competitive position; and 

12 ‘‘(G) such other factors as the Committee 

13 determines appropriate. 

14 ‘‘(2) DETERMINING NET BENEFIT.—In making 

15 a net benefit determination under subsection 

16 (b)(1)(A)(ii)— 

17 ‘‘(A) judgments will be made both in meas18 uring the effects of a proposed or pending 

19 transaction in relation to the relevant individual 

20 factors under paragraph (1) and in measuring 

21 the aggregate net effect after offsetting the 

22 negative effects, if any, against the positive 

23 ones; and 

24 ‘‘(B) a proposed or pending transaction 

25 will be determined to be of net benefit to the 


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1 United States when the aggregate net effect is 

2 positive, regardless of its extent over the short3 and long-term. 

4 ‘‘(3) RIGHT TO APPEAL; FINAL DETERMINA5 TION.— 

6 ‘‘(A) APPEAL OF DETERMINATION.—If the 

7 Committee makes a determination that the cov8 ered transaction will not be of net benefit to the 

9 United States, the parties to the covered trans10 action may, within the 30-day period following 

11 such determination, submit additional informa12 tion to the Committee to demonstrate that the 

13 transaction will be of net benefit to the United 

14 States. 

15 ‘‘(B) FINAL DETERMINATION.—The Com16 mittee shall— 

17 ‘‘(i) make a final determination of 

18 whether the covered transaction will be of 

19 net benefit to the United States before the 

20 end of the 30-day period beginning on the 

21 date that additional information is sub22 mitted pursuant to subparagraph (A); and 

23 ‘‘(ii) if such determination is that the 

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1 efit to the United States, refer such deter2 mination to the President. 

3 ‘‘(4) CERTIFICATIONS TO CONGRESS.—Notwith4 standing subsection (b)(3), upon a final determina5 tion by the Committee under this subsection, the 

6 chairperson and the head of the lead agency shall 

7 make certifications to the Congress on the net ben8 efit determination that are as close as practicable to 

9 the certifications required under subsection (b)(3) 

10 for the national security review. 

11 ‘‘(5) ACTION BY PRESIDENT AFTER NET BEN12 EFIT REVIEW.— 

13 ‘‘(A) IN GENERAL.—If the Committee re14 fers a determination to the President pursuant 

15 to paragraph (3)(ii), the President shall, within 

16 the 15-day period beginning on the date of such 

17 referral, review such determination and an18 nounce whether the President determines the 

19 covered transaction is of net benefit to the 

20 United States. 

21 ‘‘(B) FACTORS TO BE CONSIDERED.—For 

22 purposes of making a determination under sub23 paragraph (A), the President shall consider, 

24 among other factors each of the factors de25 scribed in paragraph (1), as appropriate. 


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1 ‘‘(C) PROHIBITION OF CERTAIN TRANS2 ACTIONS.—If the President, pursuant to sub3 paragraph (A), determines that a covered trans4 action is not of net benefit to the United States, 

5 such covered transaction is prohibited. 

6 ‘‘(D) ENFORCEMENT.—The President 

7 shall direct the Attorney General of the United 

8 States to seek appropriate relief, including di9 vestment relief, in the district courts of the 

10 United States, in order to implement and en11 force this paragraph. 

12 ‘‘(E) DETERMINATIONS NONREVIEW13 ABLE.—A determination of the President under 

14 this paragraph shall not be subject to judicial 

15 review. 

16 ‘‘(6) COMMITTEE MEMBERSHIP FOR PURPOSES

17 OF A NET BENEFIT DETERMINATION.—For purposes 

18 of carrying out the net benefit determination under 

19 subsection (b)(1)(A)(ii) and this subsection, the 

20 Committee shall be composed of the following mem21 bers or the designee of any such member: 

22 ‘‘(A) The Attorney General of the United 

23 States. 

24 ‘‘(B) The Secretary of Commerce. 

25 ‘‘(C) The Secretary of Labor. 


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1 ‘‘(D) The Secretary of the Treasury. 

2 ‘‘(E) The United States Trade Representa3 tive. 

4 ‘‘(F) If the President determines that the 

5 covered transaction may affect the agricultural 

6 sector, including food safety, the Secretary of 

7 Agriculture. 

8 ‘‘(G) If the President determines that the 

9 covered transaction may affect the public 

10 health, including food safety, the Secretary of 

11 Health and Human Services. 

12 ‘‘(7) FOREIGN GOVERNMENT-INFLUENCED

13 TRANSACTION DEFINED.—For purposes of this sub14 section, the term ‘foreign government-influenced 

15 transaction’ means any covered transaction where 

16 the foreign person engaging in such transaction is 

17 owned, controlled, or influenced, directly or indi18 rectly, by a foreign government.’’. 

19 (b) RULEMAKING.—Not later than the end of the 

20 180-day period beginning on the date of the enactment 

21 of this Act, the President shall issue regulations to carry 

22 out section 721(o) of the Defense Production Act of 1950, 

23 as added by subsection (a). 

Æ 


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