Exon-Florio Foreign Investment Provision: Comparison of H.R. 5337 and S. 3549

Exon-Florio Foreign Investment Provision:
Comparison of H.R. 5337 and S. 3549
Updated January 24, 2007
James K. Jackson
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division

Exon-Florio Foreign Investment Provision: Comparison
of H.R. 5337 and S. 3549
Summary
During the Second Session of the 109^th Congress, Members of Congress
introduced over two dozen measures to address various concerns with foreign
investment that arose from the proposed purchase of the British-owned P&O Ports
by Dubai Ports World in early 2006. Of the measures that were introduced, H.R.
5337 and S. 3549 from the House and Senate, respectively, garnered significant
support and passed their respective bodies on July 26, 2006. The 109^th Congress
ended before a Conference Committee could be convened on H.R. 5337 or S. 3549
and both measures lapsed. The measures likely will be taken up by the 110^th
Congress.
The two measures represent efforts by Members of Congress to address six
perceived problems: 1) that the principal members of the interagency Committee on
Foreign Investment in the United States (CFIUS) at times seem not to be well
informed of the outcomes of reviews and investigations regarding proposed or
pending investment transactions; 2) that CFIUS has interpreted incorrectly the
requirements under current statutes for investigations of transactions that involve
firms that are owned or controlled by a foreign government; 3) that reporting
requirements under current statutes do not provide Congress with enough information
about the operations and actions of CFIUS for Members to fulfill their oversight
responsibilities; 4) that CFIUS exercises too much discretion in its ability to choose
which transactions it investigates; 5) that the definition of national security used by
CFIUS is no longer adequate in a post-September 11^th world; and 6) that time
constraints placed on CFIUS to complete reviews and investigations of investment
transactions do not provide adequate time in some instances for the Committee to
complete its activities.
This report provides background information on the Committee on Foreign
Investment in the United States and on the Exon-Florio provision. In addition, the
report provides an overview of H.R. 5337 and S. 3549 and a comparison of
provisions in the two measures. This report will be updated as warranted by events.

Contents
Overview ........................................................1
The Committee on Foreign Investment in the United States (CFIUS).....2
The Exon-Florio Provision......................................2
The “Byrd Amendment”........................................3
Exon-Florio Provision After September 11, 2001.....................6
Overview of H.R. 5337 and S. 3549...................................7
Side-by-Side Comparison of H.R. 5337 and S. 3549.....................10
CFIUS Investigations..........................................10
Composition of CFIUS........................................17
Presidential Actions...........................................19
Findings ....................................................19
Factors Used in Findings.......................................20
Confidentiality ...............................................21
Mitigation and Tracking........................................22
Congressional Oversight.......................................24

Exon-Florio Foreign Investment Provision:
Comparison of H.R. 5337 and S. 3549
Overview
During the Second Session of the 109^th Congress, Members of Congress
introduced over two dozen measures to address various concerns with foreign¹
investment that arose from the proposed purchase of the British-owned P&O Ports
by Dubai Ports World² in early 2006.³ In particular, the transaction spurred some
Members to question the effectiveness of the relatively obscure interagency group,
the Committee on Foreign Investment in the United States (CFIUS). The group has
been charged with spearheading the Administration’s policy on foreign investment
and with conducting national security reviews under the Exon-Florio provision of the
Defense Production Act (50 U.S.C. Sec. 2170). Of the measures that were
introduced, H.R. 5337 and S. 3549 from the House and Senate, respectively,
garnered significant support and passed their respective bodies on July 26, 2006. The

109^th Congress ended before a Conference Committee could be convened on H.R.^th

5337 or S. 3549 and both measures lapsed. The 110 Congress likely will consider
similar measures.
The two measures are different in a number of ways, but they represent efforts
by Members to correct perceived problems with the current process that arose during
consideration of the Dubai Ports World transaction. In particular, Members generally
expressed concerns about six areas. First, Members were concerned that the
principal members of CFIUS at times seem not to be well informed of the outcomes
of reviews and investigations made by CFIUS regarding proposed or pending
investment transactions, because the duty for reviewing such transactions has been
delegated in most agencies to lower-level personnel. Second, some Members argued
that CFIUS was interpreting incorrectly the requirements under current statutes for
investigations of transactions that involve firms that are owned or controlled by a
foreign government. Third, many Members argued that the current statutes do not
provide Congress with enough information about the operations and actions of

¹ Peninsular and Oriental Steam Company is a leading ports operator and transport company
with operations in ports, ferries, and property development. It operates container terminals
and logistics operations in over 100 ports and has a presence in 18 countries.
² Dubai Ports World was created in November 2005 by integrating Dubai Ports Authority
and Dubai Ports International. It is one of the largest commercial port operators in the world
with operations in the Middle East, India, Europe, Asia, Latin America, the Carribean, and
North America.
³ For additional information, see CRS Report RL33312, The Exon-Florio National Security
Test for Foreign Investment, by James K. Jackson; and CRS Report RL33388, The
Committee on Foreign Investment in the United States (CFIUS), by James K. Jackson.

CFIUS for them to fulfill their oversight responsibilities. Fourth, some Members
argued that CFIUS exercises too much discretion in its ability to choose which
transactions it investigates and that it needs to be held more accountable to Congress
for its decisions regarding reviews and investigations of investment transactions.
Fifth, some Members questioned the definition of national security used by the
Committee as being too narrowly interpreted and out of sync with the post September
11^th view of national security. Last, some Members were concerned that the time
constraints placed on CFIUS to complete reviews and investigations of investment
transactions do not provide adequate time in some instances for the Committee to
complete its activities.
The Committee on Foreign Investment in the United States
(CFIUS)
The Committee on Foreign Investment in the United States (CFIUS) is an
interagency committee that serves the President in overseeing the national security
implications of foreign investment in the economy. CFIUS was established by an
Executive Order of President Ford in 1975 with broad responsibilities and few
specific powers.⁴ The Committee is housed in the Department of the Treasury and
has generally operated in relative obscurity. Initially, CFIUS was established with
six members, but the membership has been expanded over time to twelve through
various Executive Orders. The twelve members include the Secretaries of State, the
Treasury, Defense, Homeland Security, and Commerce; the United States Trade
Representative; the Chairman of the Council of Economic Advisers; the Attorney
General; the Director of the Office of Management and Budget; the Director of the
Office of Science and Technology Policy; the Assistant to the President for National
Security Affairs; and the Assistant to the President for Economic Policy.⁵
The Exon-Florio Provision
The Exon-Florio provision (Section 2170 of the Defense Production Act) grants
the President broad discretionary authority to take what action he considers to be
“appropriate” to suspend or prohibit proposed or pending foreign acquisitions,
mergers, or takeovers of persons engaged in interstate commerce in the United States
which “threaten to impair the national security.” The statute indicates that the

⁴ Executive Order 11858 (b), May 7, 1975, 40 F.R. 20263.
⁵ Executive Order 11858 of May 7, 1975, 40 F.R. 20263 established the Committee with six
members: the Secretaries of State, the Treasury, Defense, Commerce, and the Assistant to
the President for Economic Affairs, and the Executive Director of the Council on
International Economic Policy. Executive Order 12188, January 2, 1980, 45 F.R. 969,
added the United States Trade Representative and substituted the Chairman of the Council
of Economic Advisors for the Executive Director of the Council on International Economic
Policy. Executive Order 12661, December 27, 1988, 54 F.R. 779, added the Attorney
General and the Director of the Office of Management and Budget. Executive Order 12860,
September 3, 1993, 58 F.R. 47201, added the Director of the Office of Science and
Technology Policy, the Assistant to the President for National Security Affairs, and the
Assistant to the President for Economic Policy. Executive Order 13286, Section 57,
February 28, 2003, added the Secretary of Homeland Security.

President “may” make an investigation to determine the effects on national security
of such investments. Most importantly, however, Congress directed that the President
can exercise this discretionary authority “only if” he determines that two conditions
exist: 1) other U.S. laws are inadequate or inappropriate to protect the national
security; and 2) that he must have “credible evidence” that the foreign investment
will impair the national security. For the purposes of this legislation, Congress
purposely did not define national security, but intended to have the term interpreted
broadly without limitation to a particular industry.⁶
In 1988, Congress approved the Exon-Florio provision as part of the Omnibus
Trade Act.⁷ Through Executive Order 12661, President Reagan implemented
provisions of the Omnibus Trade Act, and he delegated his authority to administer
the Exon-Florio provision to CFIUS,⁸ particularly to conduct reviews of foreign
investment, to undertake investigations, and to make recommendations, although the
statute itself does not specifically mention CFIUS. As a result of President Reagan’s
action, CFIUS was transformed from a purely administrative body with limited
authority to review and analyze data on foreign investment to one with a broad
mandate and significant authority to advise the President on foreign investment
transactions and to recommend that some transactions be suspended or prohibited.
The Committee has 30 days to decide whether to investigate a case and an additional
45 days to make its recommendation. Once the recommendation is made, the
President has 15 days to act.
The “Byrd Amendment”
In 1992, Congress amended the Exon-Florio statute through section 837(a) of
the National Defense Authorization Act for Fiscal Year 1993. Known as the “Byrd
Amendment” after the amendment’s sponsor, the provision requires CFIUS to
investigate proposed mergers, acquisitions, or takeovers in cases where:
(1) the acquirer is controlled by or acting on behalf of a foreign government;
and
(2) the acquisition results in control of a person engaged in interstate commerce⁹
in the United States that could affect the national security of the United States.
This amendment came under particularly intense scrutiny by the 109^th Congress
as a result of the DP World transaction. Many Members of Congress and others
believed that this amendment required CFIUS to undertake a full 45-day
investigation of the transaction, because DP World was “controlled by or acting on
behalf of a foreign government.” The DP World acquisition, however, exposed a
sharp rift between what some Members apparently believed the amendment directed
CFIUS to do and how the members of CFIUS were interpreting the amendment. In
particular, some Members of Congress apparently interpreted the amendment to

⁶ Congressional Record, Daily Edition, vol. 134, April 20, 1988. p. H2118.
⁷ P.L. 100-418, title V, Subtitle A, Part II, or 50 U.S.C. app 2170.
⁸ Executive Order 12661 of December 27, 1988, 54 F.R. 779.
⁹ P.L. 102-484, October 23, 1992.

require CFIUS to conduct a mandatory 45-day investigation without exception if the
foreign firm involved in a transaction is owned or controlled by a foreign
government.
Representatives of CFIUS, however, argued that there were two factors that
controlled their decision not to conduct a 45-day investigation of the transaction.
First, they argued that the requirements of the Exon-Florio provision itself precluded
them from engaging in a 45-day investigation, because their initial review did not
find “credible evidence” that the transaction would impair national security, a basic
threshold for CFIUS to meet in order to invoke the Exon-Florio provision. Secondly,
representatives indicated that they interpret the amendment to mean that a 45-day
investigation is discretionary and not mandatory, again because of the requirement
that a transaction must be found to cause an impairment to national security before
the Exon-Florio provision can be invoked.
As a result of the attention by both the public and Congress, DP World officials
announced that they would sell off the U.S. port operations to an American owner.¹⁰
On December 11, 2006, DP World officials announced that a unit of AIG Global
Investment Group, a New York-based asset management company with $683 billion
in assets, but no experience in port operations, would acquire the U.S. port operations
for an undisclosed amount.¹¹
In the case of the DP World acquisition, CFIUS representatives argued that they
had concluded as a result of an extensive review of the proposed acquisition both
prior to the case being formally filed with CFIUS and as a result of a 30-day review
that the DP World case did not warrant a full 45-day investigation. During these two
reviews, one informal and one formal, CFIUS members believed that all concerns
that had been expressed by members of CFIUS had been adequately resolved so that
by the time of the review no member of CFIUS had any unresolved concerns about
the impact of the transaction on national security. They conceded that the case met
the first criterion under the Byrd amendment, because DP World was controlled by
a foreign government, but that it did not meet the second part of the requirement,
because CFIUS had concluded during the 30-day review that the transaction “could
not affect the national security.”¹²
Through the Exon-Florio provision, Congress directed that the President or his
designee may consider a short list of factors in deciding whether to block a foreign
acquisition, merger, or takeover. Again, the President has broad discretion under the
current statute to decide the basis on which he determines whether a transaction
might impair the national security. This list includes the following factors:

¹⁰ Weisman, Jonathan, and Bradley Graham, “Dubai Firm to Sell U.S. Port Operations,” The
Washington Post, March 10, 2006. p. A1.
¹¹ King, Neil Jr., and Greg Hitt, Dubai Ports World Sells U.S. Assets — AIG Buys
Operations that Ignited Controversy As Democrats Plan Changes. The Wall Street Journal,
December 12, 2006. P. A1.
¹² Briefing on the Dubai Ports World Deal before the Senate Armed Services Committee,
February 23, 2006.

(1) domestic production needed for projected national defense requirements;
(2) the capability and capacity of domestic industries to meet national defense
requirements, including the availability of human resources, products, technology,
materials, and other supplies and services;
(3) the control of domestic industries and commercial activity by foreign citizens as
it affects the capability and capacity of the U.S. to meet the requirements of national
security;
(4) the potential effects of the transactions on the sales of military goods, equipment,
or technology to a country that supports terrorism or proliferates missile technology
or chemical and biological weapons; and
(5) the potential effects of the transaction on U.S. technological leadership in areas
affecting U.S. national security.
Part of Congress’s motivation in adopting the Exon-Florio provision apparently
arose from concerns that foreign takeovers of U.S. firms could not be stopped unless
the President declared a national emergency or regulators invoked federal antitrust,
environmental, or securities laws. Through the Exon-Florio provision, Congress
attempted to strengthen the President’s hand in conducting foreign investment policy,
while providing a cursory role for itself as a means of emphasizing that, as much as
possible, the commercial nature of investment transactions should be free from
political considerations. Congress also attempted to balance public concerns about
the economic impact of certain types of foreign investment with the nation’s long-
standing international commitment to maintain an open and receptive environment
for foreign investment
Furthermore, Congress did not intend to have the Exon-Florio provision alter
the generally open foreign investment climate of the country or to have it inhibit
foreign direct investments in industries that could not be considered to be of national
security interest. The basic approach of the provision, therefore, was to presume that
foreign investment generally has a ‘positive effect on the economy and that it should
be encouraged and restricted only in those cases in which a specific transaction had
met a burden of proof that the proposed investor “might take action that threatens to
impair the national security.”
At the time the Exon-Florio provision was adopted, some analysts believed the
provision could potentially widen the scope of industries that fell under the national
security rubric. CFIUS, however, is not free to establish an independent approach to
reviewing foreign investment transactions, but operates under the authority of the
President and reflects his attitudes and policies. As a result, the discretion CFIUS
uses to review and to investigate foreign investment cases reflects policy guidance
from the President. Foreign investors are also constrained by legislation that bars
foreign direct investment in such industries as maritime, aircraft, banking, resources
and power.¹³ Generally, these sectors were closed to foreign investors, primarily for

¹³ CRS Report RL33103, Foreign Investment in the United States: Major Federal
Restrictions, by Michael V. Seitzinger.

national defense purposes, prior to passage of the Exon-Florio provision to prevent
these areas from being subject to foreign control.
Exon-Florio Provision After September 11, 2001
Arguably, the events of September 11, 2001, have reshaped Congressional
attitudes toward the Exon-Florio provision and the manner in which it should be
used. During discussion about the Exon-Florio provision prior to its passage in 1988,
the Reagan Administration opposed a definition of national security that included
“essential commerce and national security,” because the administration argued that
the definition was too broad. Ultimately, the Reagan Administration succeeded in
getting the term “essential commerce” dropped from the provision. After the
September 11^th terrorist attacks, however, Congress passed and President Bush signed
the USA PATRIOT Act of 2001 (Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism).¹⁴ In this act,
Congress provided for special support for “critical industries,” which it defined as:
systems 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,¹⁵
or any combination of those matters.
This broad definition is enhanced to some degree by other provisions of the act,
which specifically identify certain sectors of the economy, therefore, as likely
candidates for consideration as critical infrastructure, including telecommunications,¹⁶
energy, financial services, water, transportation sectors, and the “cyber and physical
infrastructure services critical to maintaining the national defense, continuity of¹⁷
government, economic prosperity, and quality of life in the United States.” The
following year, Congress adopted the language in the Patriot Act on critical¹⁸
infrastructure into The Homeland Security Act of 2002.
By adopting the terms “critical infrastructure” and “homeland security,”
following the events of September 11, 2001, Congress demonstrated that the attacks
fundamentally altered the way many Members of Congress and many in the public
view the concept of national security. As a result, many in Congress and in the
public have come to believe that economic activities are a separately identifiable
component of national security. In addition, many in Congress and elsewhere
apparently perceive greater risks to the economy arising from foreign investments in
which the foreign investor is owned or controlled by foreign governments as a result
of the terrorist attacks. The Dubai Ports World case, in particular, demonstrated that
there was a difference between the post-September 11 expectations held by many in
Congress about the role of foreign investment in the economy and of economic

¹⁴ P.L. 107-56, title X, Sec. 1014, October 26, 2001; 42 U.S.C. Sec. 5195c(e).
¹⁵ Ibid.
¹⁶ 42 U.S.C. Sec. 5195c(b)(2).
¹⁷ 42 U.S.C. Sec. 5195c(b)(3).
¹⁸ 6 U.S.C. Sec. 101(4).

infrastructure issues as a component of national security and the operations of
CFIUS. For some Members of Congress, CFIUS seemed to be out of touch with the
post-September 11, 2001 view of national security, because it remains founded in the
late 1980s orientation of the Exon-Florio provision, which views national security
primarily in terms of national defense and downplays or even excludes a broader
notion of economic national security.
Overview of H.R. 5337 and S. 3549
H.R. 5337¹⁹ and S. 3549²⁰ share a number of common objectives and some
common approaches. Both measures attempted to address congressional concerns
by establishing CFIUS as a matter of statute, thereby giving Congress a direct role
in determining the make-up and operations of the Committee. Under the House bill,
the Secretary of Homeland Security and the Secretary of Defense would have served
as Vice Chairmen, while the Senate bill would have had the Secretary of Defense
serve in that capacity. The House bill would have retained the basic structure of the
Committee as it presently exists, while the Senate bill would have included the
Director of National Intelligence as a member of CFIUS and excluded, except on a
case-by-case basis, the current members of CFIUS that are from the White House —
the Director of the Office of Management and Budget, the Chairman of the Council
of Economic Advisors, the United States Trade Representative, the Director of the
National Economic Council, the Director of the Office of Science and Technology,
and the President’s Assistant for National Security Affairs.
Under both measures, the Committee would have operated under the same time
frame that currently exists with 30 days allotted for a review, 45 days for an
investigation and 15 days for the President to make his determination. In both bills,
the President would have retained his authority as the only officer with the authority
to suspend or prohibit certain types of foreign investments. The Senate bill would
have allowed CFIUS to extend a review by 30 days under certain circumstances.
Both measures would have placed additional requirements on firms that resubmitted
a filing after previously withdrawing a filing before a full review had been
completed.

¹⁹ H.R. 5337 was introduced by Representative Blunt on May 10, 2006. Hearings were held
on March 1, 2006, April 27, 2006, and on May 17, 2006, by the Subcommittee on Domestic
and International Monetary Policy, Trade and Technology of the House Financial Services
Committee. The measure was approved unanimously with an amendment by the House
Financial Services Committee on June 14, 2006. See also H.Rept. 109-523, and the
Congressional Record, July 26, 2006, p. H5863-H5873.
²⁰ S. 3549 was introduced by Senator Shelby on June 21, 2006. Hearings were held on
October 6, 2005, by the Senate Committee on Banking, housing, and Urban Affairs on
CFIUS, on October 20, 2005, on the Exon-Florio Amendment, and on March 2, 2006, on the
Dubai Ports World acquisition of P&O. The Committee met on March 30, 2006, and
adopted the measure with amendment. See also S.Rept. 109-264, and the Congressional
Record, July 26, 2006, p. S8317-S8321.

In the House bill, no review or investigation would have been considered to be
complete until it had been signed by the Secretary of the Treasury and the Secretary
of Homeland Security to insure that principal members of CFIUS were aware of all
reviews and investigations completed by CFIUS. The House bill would have
required that CFIUS review all foreign investment transactions to determine whether
a transaction threatens to impair the national security.
Both measures would have placed increased requirements on CFIUS to review
investment transactions in which the foreign person is owned or controlled by a
foreign government. It is unclear, however, to what extent the House and Senate bills
would have altered the current process. While both bills would have explicitly
required CFIUS to review all investment transactions in which the foreign person is
owned or controlled by a foreign government, neither measure amended or altered
the current statute in the area that has been the source of recent differences between
CFIUS and Congress. In particular, the current statute states that the President, and
through him CFIUS, can use the Exon-Florio process “only if” he finds that there is
“credible evidence” that a foreign investment will impair national security. As a
result, CFIUS has determined, as was the case in the Dubai Ports transaction, that if
the Committee did not have credible evidence that an investment will impair the
national security that it is not required to undertake a full 45-day investigation. It is
possible that CFIUS could continue to operate in this manner, regardless of the
passage of either of the measures.
In addition, if CFIUS did act to investigate all foreign investment transactions
in which the foreign person is owned or controlled by a foreign government, foreign
investors likely would regard it as a sharply changed attitude by the United States
toward foreign investment. As previously stated, the current system presumes that
foreign investment transactions are accepted, and it places a burden on the members
of CFIUS to prove that a particular transaction is a threat to national security. The
House and Senate bills, however, might have been interpreted to presume that
investment transactions in which the foreign person is owned or controlled by a
foreign government are a threat to the nation’s security simply because of the
relationship to the foreign government and, therefore, might require the firms to
prove that they are not a threat. Although the number of investment transactions a
year in which the foreign investor is associated with a foreign government is small
compared with the total number of foreign investment transactions, foreign investors
and foreign governments likely would have viewed this as a significant change in the
traditional U.S. approach to foreign investment.
Both bills attempted to increase the role of congressional oversight by requiring
greater reporting by CFIUS on its actions either during or after it completed reviews
and investigations and by increasing reporting requirements on CFIUS. The House
bill, for instance, would have required the Secretary of the Treasury and the Secretary
of Homeland Security to sign and approve any review or investigation. In those cases
in which the foreign person involved in an investment transaction is owned or
controlled by a foreign government, a majority of the members of CFIUS would have
been required to approve of the transaction and the President and the chair and vice
chairs of CFIUS would have been required to sign off on investments in which at
least one member of CFIUS did not agree with the decision of the majority to
approve the transaction.

The House and Senate measures would have required CFIUS to provide
Congress with a greater amount of detailed information about its operations, albeit
at different stages in the process. The Senate bill would have required CFIUS to
notify specified Members of Congress at the conclusion of a review of any
investment transaction in which there is any ownership or control by a foreign
government. Both bills would have required CFIUS to notify specified Members at
the conclusion of any investment investigation. The Senate bill would also have
required CFIUS to notify the governors of states in which the investment transaction
involved any critical infrastructure. The House bill would have required CFIUS to
report semi-annually to Congress, while the Senate version would have required
CFIUS to provide detailed reports annually. In both cases, CFIUS would have been
required to provide more information than the current statute requires.
The House and Senate measures also would have provided for greater reporting
on and increased authority for CFIUS to negotiate provisions with the foreign firms
involved in investment transactions to mitigate the impact of the transaction. Under
current statutes, CFIUS has no authority to negotiate such agreements with firms and
it is not clear that it has any authority to enforce such agreements. The House bill,
in particular, would have provided for a process to track the agreements and to report
the progress of such agreements and any changes to the agreements to the members
of CFIUS and to the President.
Both bills also would have amended the current statute regarding the meaning
of national security and would have placed additional requirements on CFIUS
regarding national security reviews. The Senate bill also would have required CFIUS
to review any transaction in which the investment resulted in a foreign person gaining
control of any critical infrastructure in the United States. The House bill would have
explicitly required the Director of National Intelligence to conduct reviews of any
investment that posed a threat to the national security. The Senate bill also would
have required the Director of National Intelligence to have the intelligence
community collect and analyze information related to any proposed or pending
investment transactions and to insure that the intelligence community remained
engaged throughout the review and investigation of any investment transaction. In
addition, the Senate bill would have required CFIUS to develop and implement a
system of assessing individual countries as part of their review of potential investors
in U.S. assets according to three criteria: a country’s adherence to nonproliferation
control regimes; a country’s record on cooperation with the United States in
counterterrorism efforts; and a country’s potential for transshipment or diversion of
technologies with military applications. Historically, the United States has never
applied a similar policy test to potential foreign investors.
Both bills also would have provided additional factors the President and CFIUS
could have used in assessing foreign investments. The House bill would have made
such factors a mandatory part of the review process, while the Senate bill would have
continued with the current statute, which makes the use of the factors a matter of the
President’s discretion. The House bill would have added implications for the
nation’s critical infrastructure as a matter for reviewing or investigating an
investment transaction. The Senate would also have added critical infrastructure as
a matter for review as well as investments that could affect major energy assets,

critical technologies, long-term impact on U.S. energy supplies, and the assessment
of countries according to the three criteria indicated in the previous paragraph.
Side-by-Side Comparison of H.R. 5337 and S. 3549
The following section provides a more detailed comparison of the two bills and
the current provisions.
CFIUS Investigations
According to the Exon-Florio provision and subsequent regulations issued by
the Treasury Department, CFIUS has 30 days after it receives the initial formal
notification by the parties to a merger, acquisition, or a takeover, to decide whether
to investigate a case as a result of its determination that the investment “threatens to
impair the national security of the United States.” If during this 30-day period all the
members of CFIUS conclude that the investment does not threaten to impair the
national security or if the concerns of any member are resolved, the review is
terminated. If, however, at least one member of the Committee determines that the
investment does threaten to impair the national security and if these concerns are not
resolved, CFIUS can proceed to a 45-day investigation. At the conclusion of the
investigation or the 45-day review period, whichever comes first, the Committee can
decide to offer no recommendation or it can recommend that the President suspend
or prohibit the investment. The President is under no obligation to follow the
recommendation of the Committee to suspend or prohibit an investment.
According to a subsequent amendment, the Byrd Amendment, CFIUS is
required to conduct a 45-day investigation of a transaction in any instance in which
the foreign entity is controlled by or acting on behalf of a foreign government which
could result in the foreign entity gaining control of the U.S. entity and that could
affect the national security of the United States. Such an investigation is required to
begin no later than 30 days after CFIUS receives written notice of the proposed or
pending merger, acquisition, or takeover and be completed in no more than 45 days.
H.R. 5337S. 3549
Reform of National Security ReviewsForeign Investment and National
of Foreign Direct Investments ActSecurity Act of 2006
Subsections (a) and (b) of the Exon-FlorioSubsections (a) and (b) would not be
provision (50 U.S.C. Sec. 2170) providingremoved, but would be amended by the
authority for reviews and investigationsfollowing sections.

and for mandatory investigations in those
cases where the foreign entity is owned or
controlled by foreign governments, known
as the “Byrd Amendment,” would be
removed and replaced by the following
section.

H.R. 5337S. 3549
Reform of National Security ReviewsForeign Investment and National
of Foreign Direct Investments ActSecurity Act of 2006
National security reviews.Mandatory notification related to
transactions affecting national security.
The President, acting through CFIUS,The chairperson and vice chairperson of
would be required to review anyCFIUS, within 90 days of the enactment of
transaction to determine whether thethis measure, would be required to issue
transaction threatens to impair the nationalrules, including the imposition of
security of the United States and whetherappropriate penalties for failure to comply,
that threat could be mitigated.that require each person controlled by or
acting on behalf of a foreign government to
If CFIUS determined that the investmentnotify the chairperson of CFIUS in writing
transaction is a foreign government-of any proposed transaction involving
controlled transaction, CFIUS would becritical infrastructure relating to United
required to conduct an investigation of theStates national security.
transaction.
Upon receiving a notification of a proposed
or pending transaction under this section,
the chairperson of CFIUS would be
required to assign the appropriate member
of CFIUS to lead the review and
investigation.
No comparable section.Reviews involving foreign persons and
governments.
CFIUS would be required to review any
transaction proposed or pending by, with,
or on behalf of a foreign person or foreign
government which could result in foreign
control of a person engaged in interstate
commerce in the United States.
The purpose of the review would be to
determine the effect on national security of
the transaction, and to determine whether
an investigation of the transaction is
required under subsection (b) of the Exon-
Florio provision.
Notice of investment.No comparable section.
Any party to any investment transaction
may initiate a review of the transaction
under this paragraph by submitting a
written notice of the transaction to the
Chairperson of CFIUS.
No transaction for which a notice was
submitted may be withdrawn from review
unless:

1) a written request for such withdrawal is

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submitted by any party to the transaction;
and
2) the request is approved in writing by the
Chairperson, in consultation with the Vice
Chairperson, of the Committee.
Timing of a review.Timing of a review.
A review of a proposed or pendingSame.
investment transaction would be required
to be completed not later than 30 days after
the date CFIUS received the written
notification.
No comparable provision.Extensions.
Upon written request by the Secretary,
Deputy Secretary, or Under Secretary, or
the equivalent thereof, of one or more of
the agencies that make up CFIUS for
additional time to review a case, the 30-day
period shall be extended by not longer than
an additional 30 days, if the Secretary,
Deputy Secretary, or Under Secretary,
or the equivalent thereof, concludes that
there is credible evidence to believe that if
permitted to proceed with the transaction,
the foreign acquiring entity may take
action that threatens to impair the national
security.
Initiation of a review.No comparable provision.
The President, the Committee, or any
member of the Committee may move to
initiate a review of an investment
transaction under the following conditions:

1) any investment transaction;

2) of any transaction that had previously
been reviewed or investigated if any party
to the transaction submitted false or
misleading material information to CFIUS
in connection with the review or
investigation or omitted material
information, including material documents,
from information submitted to the
Committee; or
3) any transaction that had previously been
reviewed or investigated if any party to the

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transaction or the entity resulting from
consummation of the transaction
intentionally materially breached a
mitigation agreement or condition, and 1)
the breach is certified by the lead
department or agency monitoring and
enforcing such agreement or condition as
an intentional material breach; and 2) the
department or agency certifies that there is
no other remedy or enforcement tool
available to address such breach.
National security investigations.Investigations.
The President, acting through CFIUS,CFIUS would be required to undertake an
would be required to conduct aninvestigation to determine the effects on
investigation of the effects of a transactionnational security of any transaction which
on the national security of the Unitedwould:
States and take any necessary actions in
connection with the transaction to protect1) result in control of any person engaged
the national security of the United States inin interstate commerce in the United States
those cases in which a review results in aby a foreign government, or a person acting
determination that:by, with, or on behalf of a foreign
government; or
1) the transaction threatens to impair the
national security of the United States and2) result in control of any critical
that threat has not been mitigated during orinfrastructure of or within the United
prior to the review; or States by, with, or on behalf of any foreign
person, if CFIUS determines that any
2) the transaction is a foreign government-possible impairment to national security
controlled transaction; orhas not been mitigated by assurances
provided or renewed with the approval of

3) the Director of National IntelligenceCFIUS.

identifies particularly complex national
security or intelligence issues that couldIf the review by CFIUS produces
threaten to impair the national security ofsufficient information to indicate the
the United States and were not resolvedpossibility of an impairment to national
during the initial review period.security, after consideration of the factors
listed and the issues that could result in an
impairment to national security are not
resolved through negotiation of assurances
between one or more members of CFIUS
and the entities involved in the transaction.
Timing of an investigation.Timing of an investigation.
An investigation would be required to beSame.
completed within 45 days.
Resubmittal of notices.Resubmittal of filings.
Parties to a transactions would not beIf an investigation of a transaction is

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prohibited from:interrupted due to the filing being
withdrawn by the applicant, then any
1) submitting additional informationresubmission would require a 45-day
concerning the transaction, including anyinvestigation. The investigation would be
proposed restructuring of the transaction orrequired to include a review of the
any modifications to any agreements inrationale for the withdrawal and
connection with the transaction, while anyresubmission of the proposed transaction to
review or investigation of the transaction isCFIUS.
ongoing; or
2) requesting a review or investigation of
the transaction after any previous review or
investigation of the same or a similar
transaction has become final if information
material to the prior review or investigation
and not previously submitted to the
Committee becomes known or if any
material change in circumstances to the
covered transaction has occurred since the
review or investigation.
CFIUS would grant requests for
resubmittal by a consensus of the members
of CFIUS.
Extensions of investigations.No comparable provision.
The period for any investigation may be
extended by the President or by a roll call
vote of at least 2/3 of the members of
CFIUS involved in the investigation by no
more than 45 days in order to collect and
fully evaluate information relating to: 1)
the transaction or the parties to the
transaction; and 2) any effect of the
transaction that could threaten to impair
the national security of the United States.
Required approvals.No comparable provision.
A review or investigation would not be
treated as final or complete until the
findings and the report resulting from the
review or investigation are approved and
signed by both the Secretary of the
Treasury and the Secretary of Homeland
Security. The authority of the Secretary
may not be delegated to any person other
than the Deputy Secretary of the Treasury
or the Deputy Secretary of Homeland
Security, respectively.

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In the case of an investigation of any
foreign government-controlled transaction,
an investigation would not be treated as
final or complete until the findings and
report resulting from the investigation:
1) are approved by a majority of the
members of the Committee in a roll call
vote; and
2) in the case of any roll call vote in which
there is at least 1 vote by a Committee
member against approving a foreign
government-controlled transaction, are
signed by the President, in addition to the
Chairperson and the Vice Chairperson of
CFIUS.
No comparable provision.Required completion of investigations.
An investigation of a transaction would be
required to be completed, even if the
notification or filing of the transaction is
withdrawn or rescinded. CFIUS would be
required to monitor a withdrawn or
rescinded transaction, except that a
completed investigation or continued
monitoring would not be required for
transactions that were terminated by
agreement of the parties to the transaction.
Analysis by the Director of NationalIntelligence reviews.
Intelligence.
The Director of National IntelligenceThe Director of National Intelligence
would be required expeditiously to carrywould be required:
out a thorough analysis of any threat to the
national security of the United States of1) to direct the intelligence community, to
any transaction, including an inquiry forcollect and analyze information related to
information to the Director of the Office ofany proposed or pending transaction, and
Foreign Assets Control within theto prepare a report of its findings, which
Department of the Treasury and thethe Director shall make available to
Director of the Financial Crimesmembers of CFIUS not later than 15 days
Enforcement Network.after the date of the commencement by
CFIUS of a 30-day review of any
This analysis would be required to betransaction, and before the commencement
completed in no less than 30 days and beof any investigation; and
completed no less than 7 days before the
end of the initial review period.2) to ensure that the intelligence
community remains engaged in the

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collection, analysis, and dissemination to
CFIUS of any additional relevant
information that may become available
during the course of any investigation of a
transaction.
Independent role of the Director ofNo comparable provision.
National Intelligence.
The Director of National Intelligence
would not be a member of CFIUS and
would serve no policy role with the
Committee other than to provide analysis.
No comparable provision.Assessments of foreign countries.
Within 120 days of enactment, the
chairperson and vice chairperson of
CFIUS, in consultation with the Secretary
of State, the Secretary of Commerce, the
Secretary of Energy, the Chairman of the
Nuclear Regulatory Commission, and the
Director of National Intelligence, would be
required to develop and implement a
system for assessing individual countries,
including:
1) an assessment of each country’s
adherence to nonproliferation control
regimes, including treaties and multilateral
supply guidelines, which shall draw on, but
not be limited to, the annual report on
Adherence to and Compliance with Arms
Control, Nonproliferation and
Disarmament Agreements and
Commitments required by section 403 of
the Arms Control and Disarmament Act;
2) an assessment of the relationship of each
country with the United States, specifically
on its record on cooperating in
counterterrorism efforts, which shall draw
on, but not be limited to, the report of the
President to Congress under section 7120
of the Intelligence Reform and Terrorism
Prevention Act of 2004; and
3) an assessment of the potential for
transshipment or diversion of technologies
with military applications, including an
analysis of national export control laws and

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regulations.
Composition of CFIUS
The Committee on Foreign Investment in the United States (CFIUS) was created²¹
by Executive Order of President Ford in 1975 to serve the President in overseeing
the national security implications of foreign investment in the economy. President
Ford’s 1975 Executive Order established the basic structure of CFIUS, and directed
that the “representative”²² of the Secretary of the Treasury be the chairman of the
Committee. The Executive Order also stipulated that the Committee would have “the
primary continuing responsibility within the Executive Branch for monitoring the
impact of foreign investment in the United States, both direct and portfolio, and for
coordinating the implementation of United States policy on such investment.”²³
Presently, the Committee consists of twelve members, including the Secretaries of
State, the Treasury, Defense, Homeland Security, and Commerce; the United States
Trade Representative; the Chairman of the Council of Economic Advisers; the
Attorney General; the Director of the Office of Management and Budget; the Director
of the Office of Science and Technology Policy; the Assistant to the President for
National Security Affairs; and the Assistant to the President for Economic Policy.²⁴
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Establishes CFIUS as a matter ofSame.

statute.
²¹ Executive Order 11858 (b), May 7, 1975, 40 F.R. 20263.
²² The term “representative” was dropped by Executive Order 12661, December 27, 1988,

54 F.R. 780.

²³ Executive Order 11858 (b), May 7, 1975, 40 F.R. 20263.
²⁴ Executive Order 11858 of May 7, 1975, 40 F.R. 20263 established the Committee with
six members: the Secretaries of State, the Treasury, Defense, Commerce, and the Assistant
to the President for Economic Affairs, and the Executive Director of the Council on
International Economic Policy. Executive Order 12188, January 2, 1980, 45 F.R. 969,
added the United States Trade Representative and substituted the Chairman of the Council
of Economic Advisors for the Executive Director of the Council on International Economic
Policy. Executive Order 12661, December 27, 1988, 54 F.R. 779, added the Attorney
General and the Director of the Office of Management and Budget. Executive Order 12860,
September 3, 1993, 58 F.R. 47201, added the Director of the Office of Science and
Technology Policy, the Assistant to the President for National Security Affairs, and the
Assistant to the President for Economic Policy. Executive Order 13286, Section 57,
February 28, 2003 added the Secretary of Homeland Security.

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Chairman. Chairman.
Secretary of the Treasury.Same.
Vi ce-Chairman. Vi ce-Chairman.
Secretary of Homeland Security and theSecretary of Defense.
Secretary of Commerce.
Membership. Mem bershi p.
The Secretary of the Treasury.Same.
The Secretary of Homeland Security.Same.
The Secretary of Commerce.Same.
The Secretary of Defense.Same.
The Secretary of State.Same.
The Attorney General.Same.
The Director of the Office of ManagementSame.
and Budget.
The Chairman of the Council of EconomicThe Director of National Intelligence.
Advisors.
The United States Trade Representative.The heads of other executive departments
or agencies as the President determinesThe Director of the National Economic
appropriate, on a case-by-case basis.Council.
The Director of the Office of Science and
Technology Policy.
The President’s Assistant for National
Security Affairs.
Any other designee of the President from
the Executive Office of the President.
Chairperson of CFIUS can involve the
heads of other Federal departments,
agencies, and independent establishments
in any review or investigation.
Meetings.No comparable provision.
The Committee would meet upon the
direction of the President or on the call of
the Chairperson of the Committee
Collection of Evidence.No comparable provision.
The Committee would be able to take
testimony, receive evidence, administer
oaths; and require the testimony of
witnesses and the production of books,
records, correspondence, memoranda,
papers, and documents as the Chairperson
of the Committee requests.

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Authorization of Appropriations.No comparable provision.
$10,000,000 appropriated to the Secretary
of the Treasury for each of fiscal years
2007, 2008, 2009, and 2010, expressly and
solely for the operations of the Committee.
Presidential Actions
The Exon-Florio provision grants the President the authority to “take such
action for such time as the President considers appropriate to suspend or prohibit”
any acquisition, merger, or takeover by a foreign entity of “persons engaged in
interstate commerce in the United States” that threaten to impair the national security.
The President is required to announce his decision within 15 days after CFIUS
completes its investigation of a proposed transaction. The President was also granted
the authority to direct the Attorney General to seek appropriate relief, including
divestment relief, in the district courts of the United States in order to implement and
enforce this decision by the President.
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Unchanged.This section is different from the current
provision because it indicates that the
President can exercise his authority in
those cases in which a transaction which
would result in control of any critical
infrastructure or person engaged in
interstate commerce...
Findings
The Exon-Florio provision grants the President the authority to block proposed
or pending foreign acquisitions of “persons engaged in interstate commerce in the
United States” that threaten to impair the national security. Congress directed,
however, that before the President can invoke this authority he must believe that the
case meets two tests, or findings. First, he must believe that other U.S. laws are
inadequate or inappropriate to protect the national security. Secondly, he must have
“credible evidence” that the foreign investment will impair the national security.

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Unchanged.Same, except for the addition of the
following: The actions of the President and
the findings of the President would not be
subject to judicial review.
Factors Used in Findings
As it is currently written, the Exon-Florio provision includes a list of five factors
the President may consider in deciding to block a foreign acquisition. These factors
are also considered by the individual members of CFIUS as part of their own review
process to determine if a particular transaction threatens to impair the national
security. This list includes the following elements:
(1) domestic production needed for projected national defense requirements;
(2) the capability and capacity of domestic industries to meet national defense
requirements, including the availability of human resources, products, technology,
materials, and other supplies and services;
(3) the control of domestic industries and commercial activity by foreign
citizens as it affects the capability and capacity of the U.S. to meet the requirements
of national security;
(4) the potential effects of the transactions on the sales of military goods,
equipment, or technology to a country that supports terrorism or proliferates missile
technology or chemical and biological weapons; and
(5) the potential effects of the transaction on U.S. technological leadership in
areas affecting U.S. national security.
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CFIUS would be required (shall instead ofNo comparable provision.
may) to use the factors in evaluating
foreign investment transactions
The five factors listed above andSame.

(6) whether the covered transaction has a(6) potential effects on United States
security-related impact on criticalcritical infrastructure, including major
infrastructure in the United States;energy assets;
(7) whether the transaction is a foreign(7) potential effects on United States
government-controlled transaction; andcritical technologies;
(8) such other factors as the President or(8) the long term projection of United
the President’s designee may determine toStates requirements for sources of energy
be appropriate, generally or in connectionand other critical resources and materials;
with a specific review or investigation.and
(9) the ranking developed under subsection
(c)(7) of the country in which the foreign
persons acquiring United States entities are
based.
Confidentiality
The Exon-Florio provision also codified confidentiality requirements that are
similar to those that appeared in Executive Order 11858 by stating that any
information or documentary material filed under the provision may not be made
public “except as may be relevant to any administrative or judicial action or
proceeding.”²⁵ The provision does state, however, that this confidentiality provision
“shall not be construed to prevent disclosure to either House of Congress or to any
duly authorized committee or subcommittee of the Congress.” The Exon-Florio
provision requires the President to provide a written report to the Secretary of the
Senate and the Clerk of the House detailing his decision and his actions relevant to²⁶
any transaction that was subject to a 45-day investigation. As presently written,
there is no requirement for CFIUS or the President to notify or otherwise inform
Congress of cases it reviews or of the outcome of any investigation.

²⁵ 50 U.S.C. Appendix Sec. 2170(c)
²⁶ 50 U.S.C. Appendix Sec. 2170(g).

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Reports that are required to be released toAny information or documentary material
Congress that contain proprietaryfiled with CFIUS would be exempt from
information which can be associated withdisclosure under section 552 of title 5,
a particular party to an investmentUnited States Code, and no information or
transaction can be furnished to committeedocumentary material could be made
of the Congress only when the committeepublic, except as it is relevant to an
provides assurances of confidentiality,administrative or judicial action or
unless the party consents in writing toproceeding.
disclosing the information.
CFIUS would be required to notify the
Governor of any State regarding a
transaction involving critical infrastructure
in that State for the purpose of discussing
any security concerns that might arise or
might arise from that transaction.
Information or documentary material made
available to a Governor may not be made
public, including under any law of a State
pertaining to freedom of information or
otherwise.
Nothing in this subsection would prevent
disclosure to either House of Congress or
to any duly authorized committee or
subcommittee of Congress.
Mitigation and Tracking
Since the implementation of the Exon-Florio provision, CFIUS has developed
several practices that likely were not envisioned when the statute was drafted. For
instance, CFIUS negotiates conditions with firms at times either to mitigate or to
remove maters that raise national security concerns among the members of CFIUS.
Such agreements often are informal arrangements. There arrangements appear to
have no basis in statute and have not been tested in court. These arrangements have
been negotiated during the formal 30-day review period, or even during an informal
process prior to the formal filing of a notice of an investment transaction.
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The Committee may negotiate, enter intoAny assurances given to one or more
or impose, and enforce any agreement oragencies of the United States in connection
condition with any party to an investmentwith the review or investigation of, or any
transaction in order to mitigate any threatPresidential decision concerning, any
to the national security of the Unitedtransaction would be deemed to be a

States.continuing covenant of the persons on
whose behalf such review is sought (and of
Any agreement entered into or conditionall persons controlling such person), the
imposed would be required to be based onobservance of which shall be a condition of
a risk-based analysis of the threat tothe determination of CFIUS, the President,
national security of the transaction.or both, on whether to take any action with
respect to the transaction.
If any written notice of an investment
transaction is withdrawn before the reviewAny assurances would be embodied in an
or investigation is completed, theagreement executed by the foreign person
Committee could establish:or foreign government on whose behalf a
1) interim protections to address specificreview of a transaction is sought under this
concerns that have been raised insection and the chairperson or vice
connection with any such review orchairperson of CFIUS, on behalf of the
investigation pending any resubmission;United States.
2) specific time frames for resubmitting
any written notice; andCompliance with any assurances will be
3) a process for tracking any actions thatmonitored, and may be investigated, in the
may be taken by any party to thesame manner as a violation of a civil
transaction, in connection with thestatute, by the agency designated by the
transaction, before the notice ischairperson of CFIUS, in consultation with
resubmitted.the vice chairperson and the Attorney
General of the United States.
The Committee may designate an
appropriate Federal department or agency
as the lead agency to negotiate, modify,
monitor, and enforce any agreement related
to an investment transaction based on the
expertise with and knowledge of the issues
related to the transaction.
The Federal department or agencyNo comparable provision.
designated by the Committee as a lead
agency would be required to:
1) provide periodic reports to the
chairperson and vice chairperson of the
Committee on the implementation of any
agreement or condition; and
2) require, as appropriate, any party to the
transaction to report to the head of the
department or agency on the
implementation or any material change in
circumstances.
The Federal department or agencyNo comparable provision.

designated by the Committee as a lead
agency shall:
1) provide periodic reports to the
chairperson and vice chairperson of the
Committee on any modification to any
agreement or condition imposed with
respect to the transaction; and
2) ensure that any significant modification
to any agreement or condition is reported

to the Director of National Intelligence and
to any other Federal department or agency
that may have a material interest in the
modification.
Each notice required to be submitted to theNo comparable provision.
President or the President’s designee and
each report required by this act with
respect to the implementation of any
mitigation agreement or condition or any
material change in circumstances would be
required to be accompanied by a written
statement by the chief executive officer or
the designee of the person required to
submit such notice or report certifying that,
to the best of the person’s knowledge and
belief:
1) that the notice or report submitted fully
complies with the requirements of the
appropriate section or such regulation,
agreement, or condition; and
2) that the information is accurate and
complete.
Congressional Oversight
In hearings that were held after the Dubai Ports World transaction, various
Members expressed concern that they were provided so little information under the
current statute that their ability to fulfill their oversight responsibilities was being
hampered. In addition, some Members apparently believed that the current
requirements do not provide Members with enough information to address public
concerns that occasionally arise concerning particular investment transactions, such
as the Dubai Ports World transaction. Currently, the President is required to report
to Congress on his determination to take action on a proposed investment transaction
after CFIUS has completed a 30-day review and a 45-day investigation of the
transaction. The President’s report is required to contain a detailed explanation of
the findings and of the factors the President used to make his determination.
The President is also required to provide an assessment of the risk of diversion
of defense critical technology posed by an investment transaction if such an
assessment is performed and that the assessment by provided to any other individual
responsible for reviewing or investigating investment transactions under the Exon-
Florio provision. In addition, the President is required to provide Congress with a
quadrennial report which evaluates two issues: 1) whether there is credible evidence
of a coordinated strategy by one or more countries or companies to acquire U.S.
companies involved in research, development, or production of critical technologies
for which the United States is a leading producer; and 2) whether there are industrial
espionage activities directed or directly assisted by foreign governments against
private U.S. companies aimed at obtaining commercial secrets related to critical
technologies.

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No comparable provision.Notice of investment reviews.
Not later than 10 days after the receipt of a
proposed or pending transaction CFIUS
would be required to transmit written
notice to specified members of Congress
including the identities of all parties
involved and any foreign government
ownership or control of any party.
Upon completion of a review CFIUS and
the head of the lead agency would transmit
a certified notice to the members of
Congress.
No comparable provision.Notice of investment investigations.
CFIUS would be required to notify
specified members of Congress when it
commences an investigation of investment
transactions.
Report on investigations.Report on investigations.
Not later than 5 days after completing anAs soon as practicable after completing an
investigation, or 15 days if the Presidentinvestigation CFIUS and the head of the
intends to take any action, CFIUS wouldlead agency would be required to transmit
be required to submit a written report onto specified members of Congress a
the findings or actions of an investigation,certified written report on the results of the
the determination of whether or not to takeinvestigation, unless the matter under
action to block or suspend the transaction,investigation has been sent to the President
an explanation of the findings, and thefor decision.
factors considered with respect to the
transaction.Each certified notice and report would be
required to include:
1) whether or not an investigation had been
completed;
2) a description of the actions taken by
CFIUS with respect to the transaction; and

3) identification of the factors considered.

Each certified notice would be required to
be signed by the chairperson and vice
chairperson of CFIUS and the head of the
lead agency, and contain an attestation that
the transaction does not impair the national
security.
The report would be sent to:The notices and reports would be sent
to:

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1) the Majority Leader and the Minority1) the Majority Leader and the Minority
Leader of the Senate;Leader of the Senate;
2) the Speaker and the Minority Leader of2) the chair and ranking member of the
the House of Representatives; andCommittee on Banking, Housing, and
3) the chairman and ranking member ofUrban Affairs of the Senate and of any
each committee of the House ofcommittee of the Senate having oversight
Representatives and the Senate withover the agency assigned to lead a review
jurisdiction over any aspect of theor investigation;
transaction and its possible effects on3) the Speaker and the Minority Leader of
national security.the House of Representatives; and
4) the chair and ranking member of the
Committee on Financial Services of the
House of Representatives and of any
committee of the House of Representatives
having oversight over the agency assigned
to lead a review or investigation.
No comparable provision.Notice to Governors of transactions
involving critical infrastructure.
The Majority Leader or the Minority
Leader in the Senate and the Speaker or the
Minority Leader of the House of
Representatives may provide the notices
and reports involving critical infrastructure
to members of the Senate from the State in
which the critical infrastructure is located;
and to a member from a Congressional
District in which the critical infrastructure
is located.
Semi-Annual Report to the Congress.No comparable provision.
CFIUS would be required to transmit a
report to the Congress before January 31
and July 31 of each year on all the reviews
and investigations of transactions
conducted during the six-month period
covered by the report.
The semi-annual report would contain:No comparable provision.
1) A list of all notices filed and all reviews
or investigations conducted during the
period with basic information on each
party to the transaction, the nature of the
business activities or products of all
pertinent persons, along with information
about the status of the review or
investigation, information on any
withdrawal from the process, any roll call
votes by CFIUS, any extension of time for

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any investigation, and any presidential
decision or action.
2) Specific, cumulative, and, as
appropriate, trend information on the
numbers of filings, investigations,
withdrawals, and presidential decisions or
actions under the section.
3) Cumulative and, as appropriate, trend
information on the business sectors
involved in the filings and the countries
from which the investments originated.
4) Information on whether companies that
withdrew notices to the Committee later
re-filed the notices, or, alternatively,
abandoned the transaction.
5) The types of security arrangements and
conditions the Committee used to mitigate
national security concerns about a
transaction.
6) A detailed discussion of all perceived
adverse effects of transactions on the
national security or critical infrastructure
of the United States that the Committee
would take into account in its deliberations
during the period before delivery of the
next semi-annual report, to the extent
possible.
Semi-annual report on criticalAnnual Reports on defense production
technologies.and critical infrastructure.
The President would be required to submitThe Secretary of the Treasury would be
to Congress as part of CFIUS’s semi-required to submit to the Committee on
annual report a section on criticalBanking, Housing, and Urban Affairs of
technologies that would include thethe Senate and the Committee on Financial
following:Services of the House of Representatives,
on or before March 15 of each year, a
1) An evaluation of whether there iswritten report on the policy of the United
credible evidence of a coordinated strategyStates with respect to the preservation of
by one or more countries or companies tothe Nation’s defense production and
acquire U.S. companies involved incritical infrastructure.
research, development, or production of
critical technologies for which the UnitedThe Secretary would be required to appear
States is a leading producer.before both committees to provide
testimony on the reports.

2) An evaluation of whether there are

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industrial espionage activities directed orEach report would be required to contain:
directly assisted by foreign governments
against private United States companies1) an analysis of each transaction involving
aimed at obtaining commercial secretsa foreign person or foreign government
related to critical technologies.affecting national security that has
occurred during the preceding year to
which the report relates, including the
nature of the acquisitions and the effect or
potential impact of the acquisitions on the
United States defense industrial base and
critical infrastructure;
2) a similar updated analysis for any
transaction that occurred during the four
years immediately preceding the current
year, including a separate section
discussing the impact of transactions
involving foreign governments or persons
acting on behalf of or in concert with
foreign governments;
3) a detailed discussion of all perceived
risks to national security or United States
critical infrastructure that CFIUS will take
into account in its deliberations during the
year in which the report is delivered to the
committees;

4) a table showing on a cumulative basis,

by sector, product, and country of foreign
ownership, the number of acquisitions
reviewed, investigated, or both, by CFIUS,
to provide a census of production
potentially relevant to the Nation’s defense
industrial base owned or controlled by
foreign persons or foreign governments;
5) an evaluation of whether there is
credible evidence of a coordinated strategy
by one or more countries or companies to
acquire critical infrastructure of or within
the United States or United States
companies involved in research,
development, or production of critical
technologies for which the United States is
a leading producer;
6) an evaluation of whether there are
industrial espionage activities directed or
directly assisted by foreign governments

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against private United States companies
aimed at obtaining commercial secrets
related to critical technologies or critical
infrastructure; and
7) such other matters as are necessary to
give a complete disclosure and analysis of
the work of CFIUS during the year to
which the report relates.
Confidentiality of information.Classified reports.
Information provided by participants andIn those cases where parts of a report
considered as proprietary informationcontain classified information, an
would be classified and not released to theunclassified version of the evaluations
public. Members of Congress and staff ofwould be required to be made available to
either House or any committee of thethe public.
Congress would be subject to these same
limitations.The chairperson of CFIUS, in consultation
with the vice chairperson of CFIUS, may
Proprietary information which can bewithhold proprietary information from
associated with a particular party to apublic release.
transaction would be furnished only to a
committee of the Congress and only whenThe above restrictions, however, would not
the committee provides assurances ofprohibit CFIUS from providing the
confidentiality, unless the party consentsinformation to relevant committees of
in writing to disclosure.Congress.
In those cases where parts of the report are
classified, an unclassified version of that
portion of the report would be required to
be made available to the public.
Requests for Briefings.Annual appearances before Congress.
If a written request for a briefing on aThe chairperson and vice chairperson of
transaction is submitted to CFIUS by anyCFIUS, and the heads of such additional
Senator or Member of Congress, CFIUSCFIUS member agencies specified in a
would be required to provide a classifiedwritten request by the Chairman of the
briefing to each House of the Congress inCommittee on Banking, Housing, and
a secure facility open only to the MajorityUrban Affairs of the Senate would be
Leader and the Minority Leader of therequired to appear annually before the
Senate, the Speaker and the MinorityCommittee on Banking, Housing, and
Leader of the House of Representatives,Urban Affairs and the Committee on
the chairman and ranking member of eachFinancial Services of the House of
committee of the House of RepresentativesRepresentatives to provide testimony on
or the Senate (as the case may be) withthe activities of CFIUS.

jurisdiction over any aspect of the covered
transaction and its possible effects on
national security, and appropriate staff
members who have security clearance.

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Investigation by Inspector General.No comparable provision.
The Inspector General of the Department
of the Treasury would be required to
conduct an independent investigation to
determine all of the facts and
circumstances concerning each failure of
the Department of the Treasury to make
any report to the Congress that was
required under section 721(k) of the
Defense Production Act of 1950 (as in
effect before the date of the enactment of
this act).
Before the end of the 270-day period
beginning on the date of the enactment of
this act, the Inspector General of the
Department of the Treasury would be
required to submit a report to the Congress
on the investigation under paragraph (1)
containing the findings and conclusions of
the Inspector General.