Order Code RL34082
Exon-Florio Foreign Investment Provision:
Comparison of H.R. 556 and S. 1610
Updated July 13, 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. 556 and S. 1610
Summary
During the First Session of the 110th Congress, several Members of Congress
have introduced measures in the House and the Senate to address various concerns
with foreign investment, especially the proposed purchase of the British-owned P&O
Ports by Dubai Ports World in early 2006. Congresswoman Maloney introduced
H.R. 556, the National Security Foreign Investment Reform and Strengthened
Transparency Act of 2007, on January 18, 2007. The measure was approved by the
House Financial Services Committee on February 13, 2007 with amendments, and
was approved with amendments by the full House on February 28, 2007 by a vote of
423 to 0. On June 13, 2007, Senator Dodd introduced S. 1610, the Foreign
Investment and National Security Act of 2007. On June 29, 2007, the Senate adopted
S. 1610 in lieu of H.R. 556 by unanimous consent. On July 11, 2007, the House
accepted the Senate’s version of H.R. 556 by a vote of 370-45 and sent the measure
to the President.
Both the House bill and the Senate bill attempt to address six perceived
problems with the current statutes that many Members identified during the 109th
Congress: 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 11th world; and 6) that deadlines 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 reviews and
investigations.
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. 556 and S. 1610 and a side-by-side comparison
of 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The “Byrd Amendment” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exon-Florio Provision After September 11, 2001 . . . . . . . . . . . . . . . . . . . . . 6
Overview of H.R. 556 and S. 1610 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Side-by-Side Comparison of H.R. 556 and S. 1610 . . . . . . . . . . . . . . . . . . . . . . 11
CFIUS National Security Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Composition of CFIUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Presidential Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Factors Used in Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Mitigation and Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Congressional Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Exon-Florio Foreign Investment Provision:
Comparison of H.R. 556 and S. 1610
Overview
During the 109th Congress, numerous 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 Ports1 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
developing and implementing 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
109th Congress ended before a Conference Committee was convened on H.R. 5337
or S. 3549 and both measures lapsed. So far in the 110th Congress, Congresswoman
Maloney has introduced H.R. 556 (H.Rept. 110-24), the National Security Foreign
Investment Reform and Strengthened Transparency Act of 2007, which was adopted
by the full House on February 28, 2007. On June 13, 2007, Senator Dodd introduced
S. 1610 (S.Rept. 110-80), the Foreign Investment and National Security Act of 2007.
On June 29, 2007, the Senate substituted S. 1610 for H.R. 556 and adopted the
revised measure by unanimous consent.
H.R. 556 and S. 1610 represent efforts to correct perceived problems with the
current process that arose during consideration of the Dubai Ports World transaction.
In particular, many Members generally expressed concerns about six areas. First,
some 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
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 RL33614, Exon-Florio Foreign Investment
Provision: Comparison of H.R. 5337 and S. 3549
, by James K. Jackson; and CRS Report
RL33388, The Committee on Foreign Investment in the United States (CFIUS), by James
K. Jackson.

CRS-2
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, some Members
argued that the current statutes do not provide Congress with enough information
about the operations and actions of 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 11th view of national security.
Last, some Members expressed their concerns that the time constraints placed on
CFIUS to complete reviews and investigations of investment transactions does not
provide adequate time in some instances for the Committee to complete its reviews
and investigations.
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
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.

CRS-3
The Exon-Florio Provision
The Exon-Florio provision (Section 2170 of the 1988 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 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.
Regulations developed by the Treasury Department in November 1991
implemented the Exon-Florio provision.9 These regulations created a system of
voluntary notification by the parties to an investment transaction and they allow for
notices of acquisitions by agencies that are members of CFIUS. Despite the
voluntary nature of the notification, firms largely comply with these provisions
because the regulations stipulate that foreign acquisitions that are governed by the
Exon-Florio review process, but that do not notify the Committee, remain subject
indefinitely to divestment or other appropriate actions by the President. This process
has become one in a number of regulatory steps that firms consider as they undertake
a merger, acquisition, or takeover.
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 Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons. 31
C.F.R. Part 800.

CRS-4
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 commerce
in the United States that could affect the national security of the United States.10
This amendment came under particularly intense scrutiny by the 109th 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
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.
CFIUS representatives also argued that their decision not to launch a full 45-day
investigation of the DP World was the result of an extensive informal review of the
transaction prior to the case being officially filed with CFIUS and as a result of a
formal 30-day review. During these two reviews, 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
10 P.L. 102-484, October 23, 1992.

CRS-5
requirement, because CFIUS had concluded during the 30-day review that the
transaction “could not affect the national security.”11
As a result of the attention by both the public and Congress, DP World officials
indicated that they would sell off the U.S. port operations to an American owner.12
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.13
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:
(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-
11 Briefing on the Dubai Ports World Deal before the Senate Armed Services Committee,
February 23, 2006.
12 Weisman, Jonathan, and Bradley Graham, “Dubai Firm to Sell U.S. Port Operations,” The
Washington Post
, March 10, 2006. p. A1.
13 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.

CRS-6
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. In addition, Congress did not adopt a specific definition of
national security when it approved the Exon-Florio provision. Instead, during a
review or investigation of a foreign investment, each member of CFIUS is expected
to apply that definition of national security that is consistent with the legislative
mandate of the CFIUS member. As a result, the CFIUS process relies on each
member applying their own particular definition of national security and making any
concerns that arise from such a review known to the other members of CFIUS.
Foreign investors are also constrained by legislation that bars foreign direct
investment in such industries as maritime operations, aircraft, banking, resources and
power.14 Generally, these sectors were closed to foreign investors, primarily for
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 11th 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).15 In this act,
Congress provided for special support for “critical industries,” which it defined as:
14 CRS Report RL33103, Foreign Investment in the United States: Major Federal
Restrictions,
by Michael V. Seitzinger.
15 P.L. 107-56, title X, Sec. 1014, October 26, 2001; 42 U.S.C. Sec. 5195c(e).

CRS-7
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,
or any combination of those matters.16
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,
energy, financial services, water, transportation sectors,17 and the “cyber and physical
infrastructure services critical to maintaining the national defense, continuity of
government, economic prosperity, and quality of life in the United States.”18 The
following year, Congress adopted the language in the USA PATRIOT Act on critical
infrastructure into The Homeland Security Act of 2002.19
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
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.
Activity within Congress and the intense public and congressional reaction that
arose from the proposed Dubai Ports World acquisition spurred the Bush
Administration in late 2006 to make an important administrative change in the way
CFIUS reviews foreign investment transactions. CFIUS and President Bush
approved the acquisition of Lucent Technologies, Inc. by the French-based Alcatel
SA, which was completed on December 1, 2006. Before the transaction was
approved by CFIUS, however, Alcatel-Lucent was required to agree to a national
security arrangement, known as a Special Security Arrangement, or SSA, that
restricts Alcatel's access to sensitive work done by Lucent's research arm, Bell Labs,
and the communications infrastructure in the United States.
16 Ibid.
17 42 U.S.C. Sec. 5195c(b)(2).
18 42 U.S.C. Sec. 5195c(b)(3).
19 6 U.S.C. Sec. 101(4).

CRS-8
The most controversial feature of this arrangement is that it allows CFIUS to
reopen a review of the deal and to overturn its approval at any time if CFIUS believes
the companies “materially fail to comply” with the terms of the arrangement. This
marks a significant change in the CFIUS process. Prior to this transaction, CFIUS
reviews and investigations had been portrayed, and had been considered, to be final.
As a result, firms were willing to subject themselves voluntarily to a CFIUS review,
because they believed that once an investment transaction was scrutinized and
approved by the members of CFIUS the firms could be assured that the investment
transaction would be exempt from any future reviews or actions. This administrative
change, however, means that a CFIUS determination may no longer be a final
decision and it adds a new level of uncertainty to foreign investors seeking to acquire
U.S. firms. A broad range of U.S. and international business groups are objecting to
this change in the Administration's policy.20
Overview of H.R. 556 and S. 1610
H.R. 556 was approved by the House Financial Services Committee on February
13, 2007, with amendments. The amendment offered by Committee Chairman Frank
and Representative Price included six changes to the bill as it was introduced on
January 18, 2007. These changes responded to concerns that were expressed by the
Bush Administration that some of the procedures that would have been established
under H.R. 556 would have created new levels of bureaucracy and administrative
bottlenecks that potentially could have delayed and discouraged foreign investment.
The changes would 1) allow a Deputy Secretary or an Under Secretary of an agency
to approve an investment transaction on behalf of the respective agency instead of
requiring the Secretary to approve the transaction; 2) require the Deputy Secretary of
an agency to certify investment transactions by companies that are owned by a
foreign government; 3) give the Director of National Intelligence “adequate time” to
consider national security implications instead of requiring a minimum of 30 days to
examine security implications; 4) clarify that agencies act on behalf of CFIUS in
administering agreements to mitigate security concerns that are raised about a foreign
investor during a CFIUS review; 5) strike a provision that would have allowed
CFIUS to reopen approvals; and would have required the Attorney General to report
to Congress.21
On February 28, 2007, H.R. 556 was approved with amendments by the full
House. The three amendments that were adopted clarified the language of the
measure in some cases and added a number of new sections. In particular, the
measure added a new factor that requires CFIUS and the President to consider the
impact of an investment transaction on U.S. efforts to curtail human smuggling in
approving a transaction. Another change would require CFIUS to notify Senators
and Members of Congress if the Committee determines that the areas represented by
20 Kirchgaessner, Stephanie, US Threat to Reopen Terms of Lucent and Alcatel Deal
Mergers, Financial Times, December 1, 2006. P. 19; Pelofsky, Jeremy, Businesses Object
to US move on foreign Investment, Reuters News, December 5, 2006.
21 House Financial Services Committee Clears Amended CFIUS Reform Bill by Voice
Vote, International Trade Daily, February 14, 2007.

CRS-9
the Senator or Member would be “significantly” affected by an investment
transaction.
On June 13, 2007, Senator Dodd introduced S. 1610, which was referred to the
Senate Committee on Banking, Housing, and Urban affairs. On June 29, 2007, the
full Senate considered S. 1610 and adopted the measure by unanimous consent as a
substitute for H.R. 556. On July 11, 2007, the House accepted the Senate’s version
of H.R. 556 by a vote of 370-45 and sent the measure to the President.
Both H.R. 556 and S. 1610 attempt to address congressional concerns by
establishing CFIUS by statutory authority, thereby giving Congress a direct role in
determining the make-up and operations of the Committee. The measures would
have the Secretary of the Treasury continue to serve as the Chairman of CFIUS,
despite the misgivings of some Members. The House measure would have the
Secretary of Homeland Security and the Secretary of Defense serve as Vice
Chairmen. In other respects, the House bill retains the basic structure of the
Committee as it presently exists, except that it would add the Secretary of Energy as
a permanent member of CFIUS. The Senate measure would reduce the official
number of members of CFIUS, but grant the President the authority to appoint
temporary members on a case-by-case basis.
According to the two measures, the Committee would operate 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. The President
would retain his authority as the only officer with the authority to suspend or prohibit
certain types of foreign investments. The measures would also place additional
requirements on firms that resubmitted a filing after previously withdrawing a filing
before a full review is completed.
In H.R. 556, no review or investigation would be considered to be complete
until it had been approved by a majority of the members of CFIUS and 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. Both measures would require CFIUS to investigate all 'covered” foreign
investment transactions to determine whether a transaction threatens to impair the
national security, or the foreign entity is controlled by a foreign government. A
covered foreign investment transaction is defined as any merger, acquisition, or
takeover which results in “foreign control of any person engaged in interstate
commerce in the United States.” S. 1610 would also require an investigation if the
transaction would result in control of any “critical infrastructure that could impair the
national security.”
Both measures place increased requirements on CFIUS to review investment
transactions in which the foreign person is owned or controlled by a foreign
government. Both measures provide for exceptions from the requirement to
investigate transactions in which the foreign party is controlled by a foreign
government. The measures would allow CFIUS to exclude a transaction from an
investigation if the Secretary of the Treasury and certain other specified officials
determine that the transaction will not impair the national security. It is somewhat
unclear, however, how this change will mesh with the current process. The measures

CRS-10
seem to strengthen the role of CFIUS in determining which transactions it will
investigate. The measures also do not amend or alter 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
does not have credible evidence that an investment will impair the national security
that it is not required to undertake a full 45-day investigation.
The extent to which CFIUS increases its investigations of transactions that
involve a foreign government may cause foreign investors to regard this as an
important policy change by the United States toward foreign investment. As
previously stated, the current system presumes that foreign investment transactions
are acceptable and that they provide a positive contribution to the economy. As a
result, the burden is on the members of CFIUS to prove that a particular transaction
is a threat to national security. The measures, however, might be 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 will view this as a
significant change in the traditional U.S. approach to foreign investment.
Both bills would increase the role of congressional oversight by requiring
greater reporting by CFIUS on its actions either during or after it completes reviews
and investigations and by increasing reporting requirements on CFIUS. H.R. 556
would require the Secretary of the Treasury, the Secretary of Homeland Security, and
the Secretary of Commerce 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 be
required to approve the transaction and the President and the chair and vice chairs of
CFIUS would be 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.
H.R. 556 would also require the President to approve of any review or investigation
in which a foreign entity is from a country that has been determined to support acts
of international terrorism.
Both measures would require CFIUS to provide Congress with a greater amount
of detailed information about its operations. H.R. 556 would require CFIUS to notify
specified Members at the conclusion of any investment investigation and to report
annually to Congress. Both measures would provide 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. H.R. 556 and S. 1610
provide for a process to track the agreements and to report the progress of such

CRS-11
agreements and any changes to the agreements to the members of CFIUS and to the
President.
The measures also would amend the current statute regarding the meaning of
national security and would place additional requirements on CFIUS regarding
national security reviews. The bills would explicitly require the Director of National
Intelligence to conduct reviews of any investment that posed a threat to the national
security. The bills also provide for additional factors the President and CFIUS would
be required to use in assessing foreign investments. In particular, the bills would add
implications for the nation's critical infrastructure as a factor for reviewing or
investigating an investment transaction.
Side-by-Side Comparison of H.R. 556 and S. 1610
The following section provides a more detailed comparison of the two bills as
they passed their respective bodies and the current provisions.
CFIUS National Security 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 those 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.
A subsequent amendment, the Byrd Amendment, requires CFIUS 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. 556 and S. 1610 would establish the Committee on Foreign Investment in
the United States as a matter of statute and would amend the current procedures for
a CFIUS review and investigation. The measures would strike out the first two
sections of the current statute that deal with investigations and replace them with
provisions that would provide for the same 30-day review and 45-day investigation
stages that exist under the current provision, but would alter the provision in a

CRS-12
number of ways. First, the measures would explicitly indicate that the investigation
would be conducted by the Committee on Foreign Investment in the United States,
which is referred to only as the President's designee in the current statute. Next, the
measures would amend and broaden the language in the current statute regarding
national security by indicating that national security for this provision would be
construed “so as to include those issues relating to 'homeland security,' including its
application to critical infrastructure,” and “critical technologies,” in the case of S.
1610.
The measures would provide for “National Security Reviews and
Investigations,” which are not a part of the current CFIUS process, although the
Director of National Intelligence often is asked to participate in CFIUS reviews and
investigations. In an important departure from the current procedure, CFIUS would
be required (“shall”) to review any merger, acquisition, or takeover to determine the
effects of the transaction on the national security of the United States. In addition,
CFIUS would be required (shall) to conduct an investigation of a transaction if the
Committee determines that the transaction would result in foreign control of any
person engaged in interstate commerce in the United States. Currently, CFIUS has
broad discretion to determine which cases it reviews and investigates, since its
directive states that it “may” review or investigate a transaction. Once a review has
been initiated, a firm cannot withdraw its notice unless it provides a written request
for such a withdrawal and the request is approved in writing by the Chairperson, in
consultation with the Vice Chairpersons of the Committee. The term “control” for
this section is defined in the Code of Federal Regulation (31CFR800.204) as the
power to affect the principal assets of the entity, the power to dissolve the entity, to
close and/or relocate the production or research and development facilities, to
terminate contracts, or to amend the Articles of Incorporation.
In addition to any entity that is a party to a merger, acquisition, or takeover
being able to initiate a review, the measures would provide that the President, the
Committee, or any member of the Committee (H.R. 556) could request that CFIUS
review a transaction. This authority could not be delegated by any member of CFIUS
to any person other than to an appropriate Deputy Secretary, Under Secretary, or the
equivalent, in the case of H.R. 556. These individuals would be able to review a
transaction that previously had been reviewed and approved under certain
circumstances: 1) a transaction in which it was later discovered that false or
misleading material information had been submitted to CFIUS; 2) or material
information, including documents, had been omitted from information submitted to
CFIUS; 3) or if a party to a transaction had intentionally failed to adhere to any
mitigating agreements or conditions upon which the original approval had been
granted and no other remedy or enforcement tool was available to address such a
breach of the mitigating agreement.
The measures also would require the President, acting through CFIUS, to
conduct a National Security investigation of the effects of a transaction on the
national security of the United States and to take any “necessary” actions in
connection with the transaction to protect the national security of the United States
under certain conditions. These conditions would be: (1) as a result of a review of
the transaction, CFIUS determined that the transactions threatened to impair the
national security of the United States and that the threat had not been mitigated

CRS-13
during or prior to a review of the transaction, or the foreign person was controlled by
a foreign government. H.R. 556 would also require an investigation if: during a roll
call vote of the members of CFIUS at least one member voted against approving the
transaction; the Director of National Intelligence had identified “particularly complex
national security or intelligence issues” that threaten to impair the national security
of the United States and CFIUS members had not been able to develop and agree on
measures to mitigate the threat during a review. S. 1610 would require an
investigation if the transaction would result in the control of “any critical
infrastructure” that would impair the national security. The investigation would be
required to be completed within 45 days, but the House measure would provide for
an extension of the deadline of up to an additional 45 days if the extension had been
requested by the President or by a roll call vote of two-thirds of the CFIUS members.
Both measures provide an important exception to the requirement that CFIUS
conduct an investigation of any transaction if it determines during a review that a
party to a transaction is owned or controlled by a foreign government. Instead, the
measures would not require such an investigation, even if CFIUS had determined
during a review that the party to a transaction was controlled by a foreign government
if: it also determined that the transaction “will not affect” the national security of the
United States. The House measure also waived the requirement for an investigation
if no agreement or condition was required, relative to the transaction, to mitigate any
threat to the national security.
The House measure would require the approval of a majority of the members
of CFIUS and the approval of, and a signed determination by, the Secretary of the
Treasury, the Secretary of Homeland Security, and the Secretary of Commerce on any
review or investigation in order for the CFIUS process to be considered final or
complete. In those cases in which the foreign entity was determined to be controlled
by a foreign government and at least one member of CFIUS did not vote in favor of
approval, the CFIUS investigation process would not be considered to be complete
until the President and the Chairperson, and the Vice Chairperson of the Committee
signed the Committee report to indicate their approval.
H.R. 556 would also require action by the President in certain cases.
Specifically, the measure would require the President to approve and to sign his
approval of an investment transaction in which the party to a transaction is an entity
or a country that has been determined by the Secretary of State under the Export
Administration Act or other provisions of law repeatedly to have provided support
for acts of terrorism. S. 1610, would require the Secretary of the Treasury to publish
in the Federal Register guidance on the types of transactions that the Committee had
reviewed and that had national security considerations. The Senate measure would
also require the Committee to notify specified Members of Congress at the
completion of a review or investigation of any foreign investment transaction.
Both bills would grant the Director of National Intelligence “adequate time” to
carry out a thorough analysis of “any threat to the national security of the United
States” of any merger, acquisition, or takeover. This analysis specifically would
include a request for information be made from the Department of the Treasury's
Director of the Office of Foreign Assets Control and the Director of the Financial
Crimes Enforcement Network. In addition, the Director of National Intelligence

CRS-14
would be required to seek and to incorporate the views of “all affected or
appropriate” intelligence agencies. The Director of National Intelligence, however,
would maintain a role that is independent from CFIUS by not serving as an official
member of CFIUS and would not serve in a policy role other than to provide analysis
in connection with an investment transaction. Firms would not be prohibited under
this measure from submitting additional information or modifying any agreement in
connection with a transaction while the transaction was being reviewed or
investigated.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Section 721 of the Defense Production
Same.
Act of 1950 (50 U.S.C. App. 2170) is
amended by striking subsections (a) and
(b) and inserting the following new
subsections:
National security reviews and
National security reviews and
investigations.
investigations.
The President, acting through the CFIUS,
Same.
would be required to review a “covered”
transaction (any merger, acquisition, or
takeover by or with any foreign person
which could result in foreign control of
any person engaged in interstate
commerce in the United States) to
determine the effects of the transaction
on the national security of the United
States.
No comparable provision.
Also specifically requires the President to
consider the factors specified elsewhere
in this measure in the review and
investigation, as “appropriate.”
Control by a foreign government.
Control by a foreign government.
CFIUS is required to conduct an
Same.
investigation if the Committee determines
that the investment transaction is a
foreign government-controlled
transaction.
Written notice.
Written notice.
Any party to any covered transaction may
Same.
initiate a review of the transaction by
submitting a written notice of the
transaction to the Chairperson of the

CRS-15
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Committee.
Withdrawal of notice.
Withdrawal of notice.
Written request must be 1) submitted by
Withdrawal notice must be submitted to
any party to the transaction; and 2) the
the Committee and approved by the
request is approved in writing by the
Committee.
Chairperson, in consultation with the
Vice Chairpersons, of the Committee.
Continuing discussions.
Continuing discussions.
Approval of a withdrawal request is not
Same.
to be construed as precluding continuing
informal discussions with the Committee
or any Committee member regarding
possible resubmission.
Unilateral initiation of review.
Unilateral initiation of review.
The President, the Committee, or any
The President or the Committee may
member of the Committee may move to
initiate a review of:
initiate a review of:
(i) any covered transaction;
Same.
(ii) any covered transaction that has
Same.
previously been reviewed or investigated
under this section, if any party to the
transaction submitted false or misleading
material information to the Committee in
connection with the review or
investigation or omitted material
information, including material
documents, from information submitted
to the Committee; or `(iii) any covered
transaction that has previously been
reviewed or investigated under this
section, if any party to the transaction or
the entity resulting from consummation
of the transaction intentionally materially
breaches a mitigation agreement or
condition described in subsection
(l)(1)(A), and:
1) such breach is certified by the lead
1) such breach is certified to the
department or agency monitoring and
Committee by the lead department or
enforcing such agreement or condition as
agency monitoring and enforcing such
an intentional material breach; and
agreement or condition as an intentional
material breach; and

CRS-16
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
2) such department or agency certifies
2) the Committee determines that there
that there is no other remedy or
are no other remedies or enforcement
enforcement tool available to address
tools available to address such breach.
such breach.
Timing.
Timing.
Any review under this paragraph shall be
Same.
completed before the end of the 30-day
period beginning on the date of the
receipt of written notice under
subparagraph (C) by the Chairperson of
the Committee, or the date of the
initiation of the review in accordance
with a motion under subparagraph (D).
Limit on delegation of authority.
Limit on delegation of authority.
Authority of the Committee or any
Authority can be delegated only to the
member of the Committee to initiate a
Deputy Secretary or an appropriate Under
review may be delegated only to the
Secretary of the department or agency
Deputy Secretary or an appropriate Under
represented on the Committee.
Secretary of the department or agency
represented on the committee or by such
member (or by a person holding an
equivalent position to a Deputy Secretary
or Under Secretary).
National security investigation.
National security investigation.
In each case in which a review of a
Same.
covered transaction results in a
determination that:
1) the transaction threatens to impair the
Same.
national security of the United States and
that threat has not been mitigated during
or prior to the review or
2) the transaction is a foreign
Same.
government-controlled transaction;
No comparable provision.
3) the transaction would result in control
of any critical infrastructure that could
impair the national security, and that such
impairment has not been mitigated by
assurances provided or renewed during
the review period, the lead agency
recommends, and the Committee concurs,
that an investigation be undertaken.
A roll call vote results in at least 1 vote
No comparable provision.
by a Committee member against

CRS-17
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
approving the transaction; or
No comparable provision.
The Director of National Intelligence
identifies particularly complex
intelligence concerns that could threaten
to impair the national security of the
United States and Committee members
were not able to develop and agree upon
measures to mitigate satisfactorily those
threats during the initial review period,
the President would be required to
conduct an investigation of the effects of
the transaction on the national security of
the United States and take any necessary
actions in connection with the transaction
to protect the national security of the
United States.
Timing.
Timing.
Any investigation must be completed
Same.
before the end of the 45-day period
beginning on the date of the investigation
commenced.
Extension of Time.
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 the
Committee by the amount of time
specified by the President or the
Committee at the time of the extension,
not to exceed 45 days, in order to collect
and fully evaluate information relating to
the covered transaction or parties to the
transaction; and any effect of the
transaction that could threaten to impair
the national security of the United States.
Exception.
Exception.
An investigation of a foreign
An investigation of a foreign
government-controlled transaction is not
government- controlled transaction or a
required if the Secretary of the Treasury,
transaction involving critical
the Secretary of Homeland Security, and
infrastructure is not required if the
the Secretary of Commerce determine
Secretary of the Treasury and the head of
that the transaction will not affect the
the lead agency jointly determine that the
national security of the United States and
transaction will not impair the national
no agreement or condition is required to
security of the United States.

CRS-18
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
mitigate any threat to the national
security (and such authority of each such
Secretary may not be delegated to any
person other than the Deputy Secretary of
the Treasury, of Homeland Security, or of
Commerce, respectively).
No comparable provision.
Non-delegation of authority. Authority
would be delegated only to the Deputy
Secretary of the Treasury or the deputy
head (or the equivalent thereof) of the
lead agency, respectively.
Approval of Chairperson and Vice
No comparable provision.
Chairpersons.
A review or investigation can not be
treated as final or complete until the
results of the review or investigation are
approved by a majority of the members of
the Committee in a roll call vote and
signed by the Secretary of the Treasury,
the Secretary of Homeland Security, and
the Secretary of Commerce.
No comparable provision.
Guidance on certain transactions with
national security implications.

The Chairperson shall publish in the
Federal Register guidance on the types of
transactions that the Committee has
reviewed and that have presented national
security considerations, including
transactions that may constitute covered
transactions that would result in control
of critical infrastructure relating to
United States national security by a
foreign government or an entity
controlled by or acting on behalf of a
foreign government.
Additional action required in certain
No comparable provision.
cases.
In the case of any roll call vote in
connection with an investigation of any
foreign government-controlled
transaction in which there is at least 1
vote by a Committee member against

CRS-19
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
approving the transaction, the
investigation shall not be treated as final
or complete until the findings and report
resulting from the investigation are
signed by the President (in addition to the
Chairperson and the Vice Chairpersons
of the Committee).
Presidential action required in certain
No comparable provision.
cases.
The President would be required to
approve and sign the results of a review
or investigation in any case in which any
party to the transaction is:
1) a person of a country the government
of which the Secretary of State has
determined is a government that has
repeatedly provided support for acts of
international terrorism;
2) a government or person controlled,
directly or indirectly, by any such
government.
No comparable provision.
Certifications to Congress.
Upon completion of a review the
chairperson and the head of the lead
agency would be required to transmit a
certified notice to specified members of
Congress.
No comparable provision.
Certified report after investigation.
As soon as is practicable after completion
of an investigation the chairperson and
the head of the lead agency would be
required to transmit to specified members
of Congress a certified written report on
the results of the investigation, unless the
matter under investigation has been sent
to the President for decision.
No comparable provision.
Certification procedures.
Each certified notice and report would be
required to include 1) a description of the
actions taken by the Committee with
respect to the transaction; and 2)
identification of the determinative

CRS-20
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
factors.
No comparable provision.
Content of certification.
Each certified notice and report would be
required to be signed by the chairperson
and the head of the lead agency, and shall
state that, in the determination of the
Committee, there are no unresolved
national security concerns with the
transaction that is the subject of the
notice or report.
No comparable provision.
Members of Congress.
Each certified notice and report would be
required to be transmitted to: 1) the
Majority Leader and the Minority Leader
of the Senate; 2) the chair and ranking
member of the Committee on Banking,
Housing, and Urban Affairs of the Senate
and of any committee of the Senate
having oversight over the lead agency; 3)
the Speaker and the Minority Leader of
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
lead agency.
No comparable provision.
Transmittal to other Members of
Congress.

The Majority Leader or the Minority
Leader in the Senate, and the Speaker or
the Minority Leader, in the House of
Representatives, may provide the
certified notices and reports regarding a
transaction involving critical
infrastructure: 1) in the case of the
Senate, to members of the Senate from
the State in which such critical
infrastructure is located; and 2) in the
case of the House of Representatives, to a
member from a Congressional District in
which the critical infrastructure is
located.

CRS-21
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
No comparable provision.
Signatures, limit on delegation.
Each certified notice and report must be
signed by the chairperson and the head of
the lead agency, which may only be
delegated to an employee of the
Department of the Treasury (in the case
of the Secretary of the Treasury) or to an
employee of the lead agency (in the case
of the lead agency) who was appointed
by the President, by and with the advice
and consent of the Senate, or only to a
Deputy Secretary of the Treasury (in the
case of the Secretary of the Treasury) or a
person serving in the Deputy position or
the equivalent thereof at the lead agency
(in the case of the lead agency).
Analysis by director of national
Analysis by director of national
intelligence.
intelligence.
The Director of National Intelligence
The Director of National Intelligence
would be required to expeditiously carry
would be required to expeditiously carry
out a thorough analysis of any threat to
out a thorough analysis of any threat to
the national security of the United States
the national security of the United States
of any covered transaction, including
posed by any covered transaction. The
making requests for information to the
Director of National Intelligence would
Director of the Office of Foreign Assets
be required to seek and incorporate the
Control within the Department of the
views of all affected or appropriate
Treasury and the Director of the
intelligence agencies with respect to the
Financial Crimes Enforcement Network.
transaction.
The Director of National Intelligence also
would be required to seek and
incorporate the views of all affected or
appropriate intelligence agencies.
Timing.
Timing.
The Director of National Intelligence
The analysis required under
would be required to provide adequate
subparagraph (A) must be provided by
time to complete the analysis required
the Director of National Intelligence to
under subparagraph (A).
the Committee not later than 20 days
after the date on which notice of the
transaction is accepted by the Committee
under paragraph (1)(C), but the Director
may begin the analysis at any time prior
to receipt of the notice.

CRS-22
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Interaction with intelligence
No comparable provision.
community.
The Director of National Intelligence
would be required to ensure that the
intelligence community remains engaged
in the collection, analysis, and
dissemination to the Committee of any
additional relevant information that may
become available during the course of
any investigation.
Independent role of the director.
Independent role of the director.
The Director of National Intelligence
The Director of National Intelligence
shall not be a member of the Committee
shall be an ex officio member of the
and shall serve no policy role with the
Committee, and shall be provided with all
Committee other than to provide analysis
notices received by the Committee
in connection with a covered transaction.
regarding covered transactions, but shall
serve no policy role on the Committee,
other than to provide analysis in
connection with a covered transaction.
Submission of additional information.
Submission of additional information.
No provision of this subsection can be
Same.
construed as prohibiting any party to a
covered transaction from submitting
additional information concerning the
transaction, including any proposed
restructuring of the transaction or any
modifications to any agreements in
connection with the transaction, while
any review or investigation of the
transaction is on-going.
No comparable provision.
Notice of results.
The Committee would be required to
notify the parties to a covered transaction
of the results of a review or investigation,
promptly upon completion of all action.
Regulations.
Regulations.
Regulations prescribed under this section
shall include standard procedures for:
A) submitting any notice of a proposed or
Same.
pending covered transaction to the

CRS-23
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Committee;
Same.
B) submitting a request to withdraw a
proposed or pending covered transaction
from review; and
Same.
C) resubmitting a notice of proposed or
pending covered transaction that was
previously withdrawn from review.
No comparable provision.
D) providing notice of the results of a
review or investigation to the parties to
the covered transaction, upon completion
of all action under this section.
Composition of CFIUS
The Committee on Foreign Investment in the United States (CFIUS) was created
by Executive Order of President Ford in 197522 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”23 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.”24
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
22 Executive Order 11858 (b), May 7, 1975, 40 F.R. 20263.
23 The term “representative” was dropped by Executive Order 12661, December 27, 1988,
54 F.R. 780.
24 Executive Order 11858 (b), May 7, 1975, 40 F.R. 20263.

CRS-24
National Security Affairs; and the Assistant to the President for Economic Policy.25
Both H.R. 556 and S. 1610 would establish the members of CFIUS as a matter
of statute, compared with the present situation in which CFIUS is a creation of
various presidential orders. Under the House measure, CFIUS would include the
same twelve members that currently constitute the Committee, and it would add the
Secretary of Energy to CFIUS. S. 1610, would include the same cabinet members
as currently included as members of CFIUS, but it would not include the other six
members of the Administration. In addition, the Senate measure would add the
Secretary of Labor and the Director of National Intelligence as ex officio members.
In both measures, the Secretary of the Treasury would continue to serve as the
Chairperson of the Committee, but the House measures create a new Vice
Chairperson position that would be held by the Secretary of Homeland Security and
the Secretary of Commerce. The Senate measure also would require that a particular
member of CFIUS be designated as the lead agency in cases in which a mitigation
agreement had been negotiated or in those cases in which CFIUS had determined to
monitor the conditions agreed to as part of a mitigation agreement to ensure that the
conditions were being met. The House measure would empower the Committee to
“take such testimony, receive such evidence, administer such oaths,” in order to carry
out a review or investigation. The House measure also would empower the
Committee to require the attendance and testimony of “such witnesses and
production of such books, records, correspondence memoranda, papers, and
documents” as the Chairperson of the Committee determined to be “advisable.”
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Statutory establishment of the
Statutory establishment of the
Committee on Foreign Investment in
Committee on Foreign Investment in
the United States.
the United States.
Section 721 of the Defense Production
Same.
Act of 1950 (50 U.S.C. App. 2170) is
amended
25 Executive Order 11858 of May 7, 1975, 40 F.R. 20263 established the Committee with
six members: the Secretaries of State, the Treasury, Defense, and 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.

CRS-25
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Establishment.
Establishment.
The Committee on Foreign Investment in
Same.
the United States established pursuant to
Executive Order No. 11858 shall be a
multi-agency committee to carry out this
section and such other assignments as the
President may designate.
Membership.
Membership.
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 Secretary of Energy.
Same.
The Chairman of the Council of
The Secretary of Labor (ex officio).
Economic Advisors.
The Director of National Intelligence (ex
The United States Trade Representative.
officio).
The Director of the Office of
The heads of any other executive
Management and Budget.
department, agency, or office, as the
The Director of the National Economic
President determines appropriate,
Council.
generally or on a case-by-case basis.
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.
Chairperson.
The Secretary of the Treasury shall be the
Same.
Chairperson of the Committee.
The Secretary of Homeland Security and
No comparable provision.
the Secretary of Commerce shall be the
Vice Chairpersons of the Committee.
No comparable provision.
Designation of lead agency.
The Secretary of the Treasury would be
required to designate another member or
members, as appropriate, of the
Committee to be the lead agency or
agencies on behalf of the Committee:
A) for each transaction, and for
negotiating any mitigation agreements or

CRS-26
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
other conditions necessary to protect
national security; and
B) for all matters related to the
monitoring of the completed transaction,
to ensure compliance with such
agreements or conditions.
Other members.
Other members.
The Chairperson of the Committee would
The chairperson would be required to
be required to involve the heads of such
consult with the heads of such other
other Federal departments, agencies, and
Federal departments, agencies, and
independent establishments in any review
independent establishments in any review
or investigation under subsection (b) as
or investigation under subsection (a), as
the Chairperson, after consulting with the
the chairperson determines to be
Vice Chairpersons, determines to be
appropriate, on the basis of the facts and
appropriate on the basis of the facts and
circumstances of the transaction under
circumstances of the transaction under
review or investigation (or the designee
investigation (or the designee of any such
of any such department or agency head).
department or agency head).
Meetings.
Meetings.
The Committee shall meet upon the
Same.
direction of the President or upon the call
of the Chairperson of the Committee
without regard to section 552b of title 5,
United States Code (if otherwise
applicable).
Collection of evidence.
No comparable provision.
The Committee may, for the purpose of
carrying out this section:
A) sit and act at such times and places,
take such testimony, receive such
evidence, administer such oaths; and
B) require the attendance and testimony
of such witnesses and the production of
such books, records, correspondence,
memoranda, papers, and documents as
the Chairperson of the Committee may
determine advisable.
Authorization of appropriations.
No comparable provision.
There are authorized to be appropriated

CRS-27
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
to the Secretary of the Treasury for each
of fiscal years 2008, 2009, 2010, and
2011 expressly and solely for the
operations of the Committee that are
conducted by the Secretary, the sum of
$10,000,000.
Presidential Actions
H.R. 556 would leave unaltered the current Exon-Florio provision, which 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 Senate measure similarly empowers the
President to take such action as the President considers appropriate concerning “any
covered transaction by or with a foreign person or government” that threatens to
impair the national security of the United States. Both measures follow the current
procedure, which requires the President to announce his decision within 15 days after
CFIUS completes its investigation of a proposed transaction. Both measures would
also follow current statute, which grants the President 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.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
No comparable provision.
Action by the President.
The President may take such action for
such time as the President considers
appropriate to suspend or prohibit any
covered transaction by or with a foreign
person or government that threatens to
impair the national security of the United
States.
No comparable provision.
Announcement by the President.
The President must announce the
decision on whether or not to take action
not later than 15 days after the date on
which an investigation is completed.

CRS-28
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
No comparable provision.
Enforcement.
The President may direct the Attorney
General of the United States to seek
appropriate relief, including divestment
relief, in the district courts of the United
States, in order to implement and enforce
this subsection.
No comparable provision.
Findings of the President.
The President may exercise the authority
conferred by paragraph (1), only if the
President finds that:
A) there is credible evidence that leads
the President to believe that the foreign
interest exercising control might take
action that threatens to impair the
national security; and
B) provisions of law, other than this
section and the International Emergency
Economic Powers Act, do not, in the
judgment of the President, provide
adequate and appropriate authority for
the President to protect the national
security in the matter before the
President.
No comparable provision.
Factors to be considered.
For purposes of determining whether to
take action, the President shall consider,
among other factors each of the factors
described in this measure.
Findings
Both measures would leave unchanged the current Exon-Florio provision, which
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. S. 1610 also indicates that the findings
of the President are not subject to any judicial review.

CRS-29
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
No comparable provision.
Actions and findings nonreviewable.
The actions of the President under this
subsection and the findings of the
President are not 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 investment. 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 as identified by the Secretary of States
under the Export Administration Act that supports terrorism or under the Nuclear
Non-Proliferation Act that 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.
Both H.R. 556 and S. 1610 would amend the current factors the President and
the Committee use to evaluate mergers, acquisitions, or takeovers. In particular, the
measures would change the status of the factors to be considered from being
discretionary (may) to being required (shall) in evaluating a transaction. The Senate
measure would add transactions identified under the fourth factor by the Secretary
of Defense as “posing a regional military threat” to the interests of the United States.
Also, H.R. 556 would add four more factors to the five that currently exist. These
new factors are:

CRS-30
(1) whether the transaction has a security-related impact on critical infrastructure
in the United States;
(2) the potential effects of the transaction on the efforts of the United States to
curtail human smuggling and to curtail drug smuggling.
(3) whether the entity involved is being controlled by a foreign government;
(4) and such other factors as the President or his designee “may determine to be
appropriate, generally or in connection with a specific review or transaction.”
S. 1610 would add seven new factors to the five that currently exist. These new
factors are:
(1) whether the transaction has a security-related impact on critical infrastructure
in the United States:
(2) the potential effects on United States critical infrastructure, including major
energy assets;
(3) the potential effects on United States critical technologies;
(4) whether the transaction is a foreign government-controlled transaction;
(5) in those cases involving a government-controlled transaction, a review of (A)
the adherence of the foreign country to nonproliferation control regimes, (B) the
foreign country's record on cooperating in counter0terrorism efforts, (C) the
potential for transshipment or diversion of technologies with military
applications,;
(6) the long-term projection of the United States requirements for sources of
energy and other critical resources and materials; and
(7) such other factors as the President or the Committee determine to be
appropriate.
Both bills would make the United States immune from any liability for any
losses or expenses incurred by the parties to an investment transaction as a result of
actions taken by CFIUS if the entities did not submit a written notification to CFIUS
or if the transaction was completed prior to the completion of a CFIUS review or
investigation.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Additional factors required to be
Additional factors required to be
considered.
considered.
Section 721(f) of the Defense Production
Section 721(f) of the Defense Production

CRS-31
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Act of 1950 (50 U.S.C. App. 2170(f)) is
Act of 1950 (50 U.S.C. App. 2170(f)) is
amended by making the factors
amended by adding
mandatory and by adding the following
factors to be considered:
No comparable provision.
B) identified by the Secretary of Defense
as posing a potential regional military
threat to the interests of the United
States;
6) whether the covered transaction has a
Same.
security-related impact on critical
infrastructure in the United States;
7) the potential effects of the covered
7) the potential effects on United States
transaction on the efforts of the United
critical infrastructure, including major
States to curtail human smuggling and to
energy assets;
curtail drug smuggling with regard to any
8) the potential effects on United States
country which is not described in
critical technologies;
paragraphs (1) and (2) of section 1003(a)
9) whether the covered transaction is a
of the Controlled Substances Import and
foreign government-controlled
Export Act;
transaction, as determined under
8) whether the covered transaction is a
subsection (b)(1)(B);
foreign government-controlled
10) with respect to transactions requiring
transaction; and
an investigation under subsection
9) such other factors as the President or
(b)(1)(B) only, a review of the current
the President's designee may determine to
assessment of:
be appropriate, generally or in connection
A) the adherence of the subject country
with a specific review or investigation.
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;
B) the relationship of such country with
the United States, specifically on its
record on cooperating in
counter-terrorism 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
C) the potential for transshipment or
diversion of technologies with military
applications, including an analysis of
national export control laws and

CRS-32
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
regulations;
11) the long-term projection of United
States requirements for sources of energy
and other critical resources and material;
and
12) such other factors as the President or
the Committee may determine to be
appropriate, generally or in connection
with a specific review or investigation.
Confidentiality
The Exon-Florio provision 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.”26 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 to any transaction that
was subject to a 45-day investigation.27 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.
Both H.R. 556 and S. 1610 would provide for the release of proprietary
information “which can be associated with a particular party” to committees only
with assurances that the information would remain confidential. Members of
Congress and their staff members would be accountable under current provisions of
law governing the release of certain types of information.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Confidentiality provisions.
Confidentiality provisions.
26 50 U.S.C. Appendix Sec. 2170(c)
27 50 U.S.C. Appendix Sec. 2170(g).

CRS-33
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
The disclosure of information under this
Same.
subsection shall be consistent with the
requirements of subsection (c). Members
of Congress and staff of either House or
any committee of the Congress shall be
subject to the same limitations on
disclosure of information as are
applicable under such subsection.
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, members of CFIUS negotiate conditions with firms at times either to
mitigate or to remove matters that raise national security concerns among the
members of CFIUS. Such agreements often are informal arrangements that have an
uncertain 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.
H.R. 556 and S. 1610 would address one concern about CFIUS's actions by
granting CFIUS, or any agency designated by the Chairperson and Vice Chairperson
of CFIUS according the House measure, and a designated lead agency according to
the Senate measure, the authority to negotiate, impose, or enforce any agreement or
condition with the parties to a transaction in order to mitigate any threat to the
national security of the United States. Such agreements would be based on a “risk-
based analysis” of the threat posed by the transaction. Also, if a notification of a
transaction is withdrawn before any review or investigation by CFIUS can be
completed, both measures grant the Committee the authority to take a number of
actions. In particular, the Committee would be able to develop (1) interim
protections to address specific concerns about the transaction pending a re-
submission of a notice by the parties; (2) specific time frames for re-submitting the
notice; and (3) a process for tracking any actions taken by any party to the
transaction.
According to H.R. 556, CFIUS would designate one or more appropriate federal
departments or agencies to negotiate, modify, monitor, and enforce agreements in
order to mitigate any threat to national security. In the Senate version, CFIUS would
designate a lead agency to negotiate, modify, monitor, and enforce agreements in
order to mitigate any threat to national security. H.R. 556 would require the agencies
or departments designated as the lead in negotiating mitigating agreements to report
on a half-yearly basis to CFIUS and the parties to an agreement would be required
to report on the implementation of any material change in circumstances. Both
measures would require the federal entity or entities involved in any mitigating
agreement to report to CFIUS on any modification to any agreement or condition that

CRS-34
had been imposed and to ensure that “any significant” modification is reported to the
Director of National Intelligence and to any other federal department or agency that
“may have a material interest in such modification.” S. 1610 would also require such
reports to be filed with the Attorney General.
In addition, H.R. 556 and S. 1610 would require CFIUS to develop a method for
evaluating the compliance of firms that had entered into a mitigation agreement or
condition that was imposed as a requirement for approval of the investment
transaction. Such measures, however, would be required to be developed in such a
way that they would allow CFIUS to determine that compliance is taking place
without also: 1) “unnecessarily diverting” CFIUS resources from assessing any new
covered transaction for which a written notice had been filed; and 2) placing
“unnecessary” burdens on a party to a investment transaction.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Mitigation and tracking.
Mitigation and tracking.
Mitigation.
Mitigation.
The Committee or any agency designated
The Committee or a lead agency may
by the Chairperson and Vice
negotiate, enter into or impose, and
Chairpersons may negotiate, enter into or
enforce any agreement or condition with
impose, and enforce any agreement or
any party to the covered transaction in
condition with any party to a covered
order to mitigate any threat to the
transaction in order to mitigate any threat
national security of the United States that
to the national security of the United
arises as a result of the covered
States that arises as a result of the
transaction.
transaction.
Risk-based analysis.
Risk-based analysis.
Any agreement entered into or condition
Same.
imposed under subparagraph (A) shall be
based on a risk-based analysis, conducted
by the Committee, of the threat to
national security of the covered
transaction.
Tracking authority.
Tracking authority.
If any written notice of a covered
Same.
transaction that was submitted to the
Committee is withdrawn before any
review or investigation by the Committee
is completed, the Committee would be
required to establish, as appropriate-
1) interim protections to address specific
concerns with such transaction that have
been raised in connection with any such

CRS-35
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
review or investigation pending any
resubmission of any written notice under
this section with respect to such
transaction and further action by the
President under this section;
2) specific time frames for resubmitting
any such written notice; and
3) a process for tracking any actions that
may be taken by any party to the
transaction, in connection with the
transaction, before the notice referred to
in clause (2) is resubmitted.
Designation of agency.
Designation of agency.
The Committee may designate 1 or more
The lead agency, other than any entity of
appropriate Federal departments or
the intelligence community shall ensure
agencies, other than any entity of the
that the requirements of subparagraph (A)
intelligence community as a lead agency
with respect to any covered transaction
to carry out the requirements with respect
that is subject to such subparagraph are
to any covered transaction that is subject
met.
to subparagraph (A).
Negotiation, modification, monitoring,
Negotiation, modification, monitoring,
and enforcement.
and enforcement.
The Committee shall designate 1 or more
Federal departments or agencies as the
The lead agency shall negotiate, modify,
lead agency to negotiate, modify,
monitor, and enforce, on behalf of the
monitor, and enforce, on behalf of the
Committee, any agreement entered into
Committee, any agreement entered into
or condition imposed under paragraph (1)
or condition imposed under paragraph (1)
with respect to a covered transaction,
with respect to a covered transaction
based on the expertise with and
based on the expertise with and
knowledge of the issues related to such
knowledge of the issues related to such
transaction on the part of the designated
transaction on the part of the designated
department or agency. Nothing in this
department or agency.
paragraph shall prohibit other
departments or agencies in assisting the
lead agency in carrying out the purposes
of this paragraph.
Reporting by designated agency.
Reporting by designated agency.
Implementation reports.
No comparable provision.
Each Federal department or agency
designated by the Committee as a lead
agency in connection with any agreement
entered into or condition imposed with
respect to a covered transaction shall:

CRS-36
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
1) report, as appropriate but not less than
once in each 6-month period, to the
Chairperson and Vice Chairpersons of
the Committee on the implementation of
such agreement or condition; and
2) require, as appropriate, any party to the
covered transaction to report to the head
of such department or agency (or the
designee of such department or agency
head) on the implementation or any
material change in circumstances.
Modification reports.
Modification reports.
Any Federal department or agency
The lead agency in connection with any
designated by the Committee as a lead
agreement entered into or condition
agency in connection with any agreement
imposed with respect to a covered
entered into or condition imposed with
transaction shall
respect to a covered transaction shall:
1) provide periodic reports to the
1) provide periodic reports to the
Chairperson and Vice Chairpersons of
Committee on any material modification
the Committee on any modification to
to any such agreement or condition
any such agreement or condition imposed
imposed with respect to the transaction;
with respect to the transaction; and
and
2) ensure that any significant
modification to any such agreement or
2) ensure that any material modification
condition is reported to the Director of
to any such agreement or condition is
National Intelligence and to any other
reported to the Director of National
Federal department or agency that may
Intelligence, the Attorney General of the
have a material interest in such
United States, and any other Federal
modification.
department or agency that may have a
material interest in such modification.
Compliance.
Compliance.
The Committee shall develop and agree
Same.
upon methods for evaluating compliance
with any agreement entered into or
condition imposed with respect to a
covered transaction that will allow the
Committee to adequately assure
compliance without-
1) unnecessarily diverting Committee
Same.
resources from assessing any new
covered transaction for which a written
notice has been filed pursuant to
subsection (b)(1)(C), and if necessary
reaching a mitigation agreement with or
imposing a condition on a party to such
covered transaction or any covered

CRS-37
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
transaction for which a review has been
reopened for any reason; or
Same.
2) placing unnecessary burdens on a party
to a covered transaction.
Congressional Oversight
In hearings that were held during the 109th Congress after the Dubai Ports World
transaction became public, various Members expressed concern that they were
provided so little information under the current statutes that their ability to fulfill
their oversight responsibilities was 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 also is 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 be 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.
Both H.R. 556 and S. 1610 would increase oversight by the Congress. H.R. 556
would require that not later than five days after CFIUS completed an investigation,
or 15 days after the end of an investigation if the President had determined to take
actions under the Exon-Florio provision, the Committee would provide a written
report to leaders in both Houses of Congress and to the Chairman and Ranking
Member of committees in both houses with jurisdiction over any aspect of the
transaction and its possible effects on national security, specifically, at a minimum,
the Committee on Foreign Affairs, the Committee on Financial Services, and the
Committee on Energy and Commerce in the House. Both measures would require

CRS-38
CFIUS to brief certain congressional leaders if they requested such a briefing.
Members of Congress and their staff would be subject to disclosure limitations and
proprietary information would be shared with congressional committees only under
conditions that would assure the confidentiality of the information.
H.R. 556 and S. 1610 would require CFIUS to report annually to Congress on
any reviews or investigations that it had conducted during the prior year. Each report
would include a list of all reviews and investigations that had been conducted,
information on the nature of the business activities of the parties involved in an
investment transaction, information about the status of the review or investigation,
and information on any withdrawal from the process, any roll call votes by the
Committee, any extension of time for any investigation, and any presidential decision
or action taken under the Exon-Florio provision. In addition, CFIUS would be
required to report on trend information on the number of filings, investigations,
withdrawals, and presidential decisions or actions that were taken. The report also
would include cumulative information on the business sectors involved in filings and
the countries from which the investments originated; information on the status of the
investments of companies that withdrew notices and the types of security
arrangements and conditions CFIUS used to mitigate national security concerns; the
methods the Committee used to determine that firms were complying with mitigation
agreements or conditions; and a detailed discussion of all perceived adverse effects
of investment transactions on the national security or critical infrastructure of the
United States.
Relative to critical technologies, both H.R. 556 and S. 1610 would require
CFIUS to include in its annual report an evaluation of any 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
in which the United States is a leading producer. The report also would include an
evaluation of possible industrial espionage activities directed or directly assisted by
foreign governments against private U.S. companies aimed at obtaining commercial
secrets related to critical technologies. For the purposes of this section, the House
measure would define critical technologies as technology defined in the National
Science and Technology Policy Organization and Priorities Act of 197628, or “other
critical technology, critical components, or critical technology items essential to
national defense or national security.”
In addition, both measures would require the Secretary of the Treasury, in
consultation with the Secretary of State and the Secretary of Commerce to conduct
a study on investment in the United States, particularly in critical infrastructure and
industries affecting national security by: 1) foreign governments, entities controlled
by or acting on behalf of a foreign government, or persons of foreign countries which
28 P.L. 94-282 (May 11, 1976) which states that the priority needs of the Nation relative to
investment in science and technology are: (1) promoting conservation and efficient
utilization of natural and human resources; (2) protecting the oceans and coastal zones; (3)
strengthening the economy and promoting full employment; (4) assuring adequate supplies
of food, materials, and energy; (5) improving the quality of health care; and (6) improving
the nation's housing, transportation, and communication systems.

CRS-39
comply with any boycott of Israel; 2) foreign governments, entities controlled by or
acting on behalf of a foreign government, or persons of foreign countries which do
not ban organizations designated by the Secretary of State as foreign terrorist
organizations.
Both measures also would require the Inspector General of the Department of
the Treasury to investigate any failure of CFIUS to comply with requirements for
reporting that were imposed prior to the passage of this measure and to report the
findings of this report to the Congress. In particular, the report would be required to
be sent to the chairman and ranking member of each committee of the House and the
Senate with jurisdiction over any aspect of the report, including the Committee on
International Relations, the Committee on Financial Services, and the Committee on
Energy and Commerce of the House.
H.R. 556 and S. 1610 also would require the chief executive officer of any party
to a merger, acquisition, or takeover to certify in writing that the information
contained in the written notification to CFIUS fully complied with the requirements
of the Exon-Florio provision and that the information was accurate and complete.
This written notification would also include any mitigation agreement or condition
that was part of a CFIUS approval.
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Increased oversight by the Congress.
Increased oversight by the Congress.
Reports on completed investigations.
No comparable provision.
Not later than 5 days after the completion
No comparable provision.
of a Committee investigation or, if the
President indicates an intent to take any
action with respect to the transaction,
after the end of 15-day period referred to
in subsection (d), the Chairperson or a
Vice Chairperson of the Committee
would be required to submit a written
report on the findings or actions of the
Committee with respect to such
investigation, the determination of
whether or not to take action under
subsection (d), an explanation of the
findings under subsection (e), and the
factors considered under subsection (f),
with respect to such transaction, to:
1) the Majority Leader and the Minority
Leader of the Senate; 2) the Speaker and
the Minority Leader of the House of
Representatives; 3) the chairman and
ranking member of each committee of the

CRS-40
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
House of Representatives and the Senate
with jurisdiction over any aspect of the
covered transaction and its possible
effects on national security, including, at
a minimum, the Committee on Foreign
Affairs, the Committee on Financial
Services, and the Committee on Energy
and Commerce of the House of
Representatives; and 4) Senators
representing States and Members of
Congress representing congressional
districts that would be significantly
affected by the covered transaction.
Notice and briefing requirement.
Notice and briefing requirement.
If a written request for a briefing on a
The Committee shall, upon request from
covered transaction, or on compliance
any Member of Congress specified in
with a mitigation agreement or condition
subsection (b)(3)(C)(iii), promptly
imposed with respect to such transaction,
provide briefings on a covered
is submitted to the Committee by any
transaction for which all action has
Senator or Member of Congress who
concluded under this section, or on
receives a report on the transaction, the
compliance with a mitigation agreement
Chairperson or a Vice Chairperson (or
or condition imposed with respect to such
such other person as the Chairperson or a
transaction, on a classified basis, if
Vice Chairperson may designate) shall
deemed necessary by the sensitivity of
provide 1 classified briefing to each
the information. Briefings under this
House of the Congress from which any
paragraph may be provided to the
such briefing request originates in a
congressional staff of such a Member of
secure facility of appropriate size and
Congress having appropriate security
location that shall be open only to the
clearance.
Majority Leader and the Minority Leader
of the Senate, the Speaker and the
Minority Leader of the House of
Representatives, (as the case may be) the
chairman and ranking member of each
committee of the House of
Representatives or the Senate (as the case
may be) with jurisdiction over any aspect
of the covered transaction and its possible
effects on national security, including, at
a minimum, the Committee on Foreign
Affairs, the Committee on Financial
Services, and the Committee on Energy
and Commerce of the House of
Representatives, and appropriate staff
members who have security clearance.
Annual report.
Annual report.

CRS-41
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
The Chairperson of the Committee would
The chairperson would be required to
be required to transmit a report to the
transmit a report to the chairman and
chairman and ranking member of each
ranking member of the committee of
committee of the House of
jurisdiction in the Senate and the House
Representatives and the Senate with
of Representatives, before July 31 of each
jurisdiction over any aspect of the report,
year on all of the reviews and
including, at a minimum, the Committee
investigations of covered transactions
on Foreign Affairs, the Committee on
completed under subsection (b) during
Financial Services, and the Committee on
the 12-month period covered by the
Energy and Commerce of the House of
report.
Representatives, before July 31 of each
year on all the reviews and investigations
of covered transactions completed under
subsection (b) during the 12-month
period covered by the report.
Contents of report.
Contents of report.
1) A list of all notices filed and all
1) A list of all notices filed and all
reviews or investigations completed
reviews or investigations completed
during the period with basic information
during the period, with basic information
on each party to the transaction, the
on each party to the transaction, the
nature of the business activities or
nature of the business activities or
products of all pertinent persons, along
products of all pertinent persons, along
with information about the status of the
with information about any withdrawal
review or investigation, information on
from the process, and any decision or
any withdrawal from the process, any roll
action by the President under this section.
call votes by the Committee under this
section, any extension of time for any
investigation, and any presidential
decision or action under this section.
2) Specific, cumulative, and, as
Same.
appropriate, trend information on the
numbers of filings, investigations,
withdrawals, and presidential decisions
or actions under this section.
3) Cumulative and, as appropriate, trend
Same.
information on the business sectors
involved in the filings which have been
made, and the countries from which the
investments have originated.
4) Information on whether companies
Same.
that withdrew notices to the Committee
in accordance with subsection
(b)(1)(C)(ii) have later re-filed such

CRS-42
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
notices, or, alternatively, abandoned the
transaction.
5) The types of security arrangements and
Same.
conditions the Committee has used to
mitigate national security concerns about
a transaction, including a discussion of
the methods the Committee and any lead
departments or agencies designated under
subsection (l) are using to determine
compliance with such arrangements or
conditions.
6) A detailed discussion of all perceived
Same.
adverse effects of covered transactions on
the national security or critical
infrastructure of the United States that
the Committee will take into account in
its deliberations during the period before
delivery of the next such report, to the
extent possible.
Contents of report relating to critical
Contents of report relating to critical
technologies.
technologies.
In order to assist the Congress in its
Same.
oversight responsibilities with respect to
this section, the President and such
agencies as the President shall designate
shall include in the annual report
submitted under paragraph (1) the
following:
1) An evaluation of whether there is
Same.
credible evidence of a coordinated
strategy by 1 or more countries or
companies to acquire United States
companies involved in research,
development, or production of critical
technologies for which the United States
is a leading producer.
2) An evaluation of whether there are
Same.
industrial espionage activities directed or
directly assisted by foreign governments
against private United States companies
aimed at obtaining commercial secrets
related to critical technologies.
Critical technologies.
No comparable provision.

CRS-43
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
Critical technologies means technologies
identified under title VI of the National
Science and Technology Policy,
Organization, and Priorities Act of 1976
or other critical technology, critical
components, or critical technology items
essential to national defense or national
security identified pursuant to this
section.
Release of unclassified study.
Release of unclassified study.
That portion of the annual report under
That portion of the annual report under
paragraph (1) that is required by this
paragraph (1) that is required by this
paragraph may be classified. An
paragraph may be classified. An
unclassified version of that portion of the
unclassified version of the report, as
report shall be made available to the
appropriate, consistent with safeguarding
public.'.
national security and privacy, shall be
made available to the public.
Study and report.
Study and report.
Before the end of the 120-day period
Same.
beginning on the date of the enactment of
this Act and annually thereafter, the
Secretary of the Treasury, in consultation
with the Secretary of State and the
Secretary of Commerce, shall conduct a
study on investments in the United States,
especially investments in critical
infrastructure and industries affecting
national security, by-
A) foreign governments, entities
Same.
controlled by or acting on behalf of a
foreign government, or persons of foreign
countries which comply with any boycott
of Israel; or
B) foreign governments, entities
Same.
controlled by or acting on behalf of a
foreign government, or persons of foreign
countries which do not ban organizations
designated by the Secretary of State as
foreign terrorist organizations.
Report.
Report.
The Secretary of the Treasury shall
Same.
submit a report to the Congress, for

CRS-44
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
transmittal to all appropriate committees
of the Senate and the House of
Representatives, containing the findings
and conclusions of the Secretary with
respect to the study described in
paragraph (1), together with an analysis
of the effects of such investment on the
national security of the United States and
on any efforts to address those effects.
Investigation by Inspector General.
Investigation by Inspector General.
The Inspector General of the Department
Same.
of the Treasury shall 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).
Report to the Congress.
Report to the Congress.
Before the end of the 270-day period
Same.
beginning on the date of the enactment of
this Act, the Inspector General of the
Department of the Treasury shall submit
a report to the chairman and ranking
member of each committee of the House
of Representatives and the Senate with
jurisdiction over any aspect of the report,
including, at a minimum, the Committee
on Foreign Affairs, the Committee on
Financial Services, and the Committee on
Energy and Commerce of the House of
Representatives, on the investigation
under paragraph (1) containing the
findings and conclusions of the Inspector
General.
Certification of notices.
Certification of notices.
Certification of Notices and
Certification of Notices and
Assurances.
Assurances.
Each notice required to be submitted, by
Same.

CRS-45
H.R. 556
S. 1610
National Security Foreign Investment
Foreign Investment and National
Reform and Strengthened
Security Act of 2007
Transparency Act of 2007
a party to a covered transaction, to the
President or the President's designee
under this section and regulations
prescribed under such section, and any
information submitted by any such party
in connection with any action for which a
report is required pursuant to paragraph
(3)(B)(ii) of subsection (l) with respect to
the implementation of any mitigation
agreement or condition described in
paragraph (1)(A) of such subsection, or
any material change in circumstances,
shall be accompanied by a written
statement by the chief executive officer
or the designee of the person required to
submit such notice or information
certifying that, to the best of the person's
knowledge and belief —
'(1) the notice or information submitted
fully complies with the requirements of
this section or such regulation,
agreement, or condition; and
'(2) the notice or information is accurate
and complete in all material respects.’.

CRS-46
Conclusions
The proposed DP World acquisition of P&O, while arguably of little economic
impact on the U.S. economy, could affect public policy on foreign investment that
relates to issues of corporate ownership, foreign investment, and national security in
the U.S. economy. The transaction revealed significant differences between
Congress and the Administration over the operations of CFIUS and over the
objectives the Committee should be pursuing. In addition, the transaction
demonstrated that neither Congress nor the Administration has been able so far to
define clearly the national security implications of foreign direct investment or the
national security implications of foreign investment activity in the economy. These
issues likely reflects differing assessments of the economic impact of foreign
investment on the U.S. economy and differing political and philosophical convictions
among Members and between the Congress and the Administration.
The incident also focused attention on the informal process firms use to have
their investment transactions reviewed by CFIUS prior to a formal review.
According to anecdotal evidence, some firms apparently believe that the CFIUS
process is not market neutral, but that it adds to market uncertainty that can
negatively affect a firm’s stock price and lead to economic behavior by some firms
that is not optimal for the economy as a whole. Such behavior might involve firms
expending a considerable amount of resources to avoid a CFIUS investigation, or
deciding to terminate a transaction that would improve the optimal performance of
the economy in order to avoid a CFIUS investigation. While such anecdotal evidence
may not serve as the basis for developing public policy, it does raise a number of
concerns about the possible impact of the CFIUS process on the market and the
potential costs of redefining the concept of national security relative to foreign
investment.
The recent focus by Congress on the Committee has also shown that the DP
World transaction, in combination with other recent unpopular foreign investment
transactions, has exacerbated dissatisfaction among some Members of Congress over
the operations of CFIUS. In particular, some Members are displeased with the way
the Committee uses its discretionary authority under the Exon-Florio provision to
investigate certain foreign investment transactions. As a result, some Members of
Congress are proposing changes to the CFIUS process through legislation that is
progressing through the 1st Session of the 110th Congress. The changes could
mandate more frequent contact between the Committee, which generally operates
without much public or congressional attention, and the Congress and enhance
Congress’s oversight role over the Committee.
The DP World transaction also revealed that the September 11, 2001 terrorist
attacks may have fundamentally altered the viewpoint of some Members of Congress
regarding the role of foreign investment in the economy and over the impact of such
investment on the national security framework. Some argue that this changed
perspective requires a reassessment of the role of foreign investment in the economy
and of the implications of corporate ownership of activities that fall under the rubric
of critical infrastructure. As a result, some Members of Congress are looking to
amend the CFIUS process to enhance Congress’s oversight role while reducing

CRS-47
somewhat the discretion of CFIUS to review and investigate foreign investment
transactions in order to have CFIUS investigate a larger number of foreign
investment cases. In addition, the DP World transaction has focused attention on
long-unresolved issues concerning the role of foreign investment in the nation’s
overall security framework and the methods that are being used to assess the impact
of foreign investment on the nation’s defense industrial base, homeland security, and
national economic infrastructure.
Changes to the CFIUS process being proposed in the House and Senate bills
would alter the current CFIUS process, but it remains to be seen how the changes
would affect the outcome of the CFIUS process. In the final analysis, the President
retains sole authority to apply the Exon-Florio provisions and he has complete
discretion to accept or reject a CFIUS recommendation to block a proposed foreign
investment transaction. As a result, CFIUS reflects the President’s priorities and
policies relative to foreign investment. To date, Presidents have been highly
reluctant to use the authority of the Exon-Florio provision to block investment
transactions, which has happened just once since the measure was adopted. In part,
this reluctance may stem from the narrow range of policy options that are provided
for in the provision, which seems at odds with the often highly complex nature of
foreign investment transactions. As a result, CFIUS has slowly developed an
informal process that essentially expands the policy options available to the President
by allowing CFIUS members to review proposed investment transactions ahead of
any formal review and, most importantly, to negotiate informal agreements that
mitigate aspects of the investment that otherwise would spur CFIUS members to
oppose the transaction. By formalizing this process through proposed legislation,
Congress likely would expand the range of policy options available to the President
and possibly broaden the scope of measures foreign firms may be asked to comply
with in order to gain approval. Depending on how foreign firms view these changes,
they may regard them as signaling a less tolerant attitude in the United States toward
foreign investment and the changes potentially could add support to the renewed
willingness of some foreign governments to impose additional restrictions on foreign
investors.
Most economists agree that there is little economic evidence to conclude that
foreign ownership, whether by a private entity or by an entity that is owned or
controlled by a foreign government, has a measurable impact on the U.S. economy
as a whole. Others may argue on non-economic grounds that such firms pose a risk
to national security or to homeland security. Similar issues concerning corporate
ownership were raised during the late 1980s and early 1990s when foreign
investment in the U.S. economy increased rapidly. There are little new data,
however, to alter the conclusion reached at that time that there is no definitive way
to assess the economic impact of foreign ownership or of foreign investment on the
economy. Although some observers have expressed concerns about foreign investors
who are owned or controlled by foreign governments acquiring U.S. firms, there is
little confirmed evidence that such a distinction in corporate ownership has any
measurable effect on the economy as whole.
For most economists, the distinction between domestic- and foreign-owned
firms, whether the foreign firms are privately owned or controlled by a foreign
government, is sufficiently small that they would argue that it does not warrant

CRS-48
placing restrictions on the inflow of foreign investment. Nevertheless, foreign direct
investment does entail various economic costs and benefits. On the benefit side, such
investments bring added capital into the economy and potentially could add to
productivity growth and innovation. Such investment also represents one
repercussion of the U.S. trade deficit. The deficit transfers dollar-denominated assets
to foreign investors, who then decide how to hold those assets by choosing among
various investment vehicles, including direct investment. Foreign investment also
removes a stream of monetary benefits from the economy in the form of repatriated
capital and profits that reduces the total amount of capital in the economy. Such
costs and benefits likely occur whether the foreign owner is a private entity or a
foreign government.