National Defense Critical Infrastructure Protection Act of 2006 - Prohibits a corporation from owning, or being authorized to manage or operate, any system or asset that is included on the national defense critical infrastructure list (list) unless the corporation meets specified critical infrastructure national security management requirements, including: (1) being organized under the laws of the United States; (2) having a board of directors the majority of whom are U.S. citizens; (3) having a chief executive officer and board chairman who are U.S. citizens; (4) having a majority of voting shares and nonvoting shares being owned by U.S. citizens; and (5) having more than 50 percent of the board members approved by the Secretary of Defense (Secretary), in consultation with the Secretary of Homeland Security. Requires any such corporation to promptly notify the Secretary of certain corporation acquisition, ownership or other control obtained by a foreign person.
Requires the Secretary to: (1) maintain such list; and (2) notify the congressional defense committees of any list revisions.
Amends the Defense Production Act of 1950 to provide for the confidentiality of information obtained during an investigation of corporate mergers, acquisitions, and takeovers (transactions) that may affect U.S. national security. Allows the President to suspend or prohibit a transaction if there is credible evidence that a foreign interest exercising control might take action that threatens to impair the national security or affect the ability of domestic industries to meet existing production requirements for defense or homeland security. Provides additional national security factors to be considered by the President when reviewing a proposed transaction, including defense production and potential effects on the control of critical infrastructure and access to strategic natural resources. Requires the President to be notified of a proposed transaction that may affect U.S. national security.
Prohibits any cargo transported by commercial motor vehicle from Canada or Mexico, and any cargo transported by vessel, from entering, or being unloaded in, the United States unless the appropriate officer or employee has inspected the cargo to ensure compliance with all U.S. laws.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4881 Introduced in House (IH)]
109th CONGRESS
2d Session
H. R. 4881
To promote the national defense by establishing requirements for the
ownership, management, and operation of critical infrastructure in the
United States, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 7, 2006
Mr. Hunter (for himself, Mr. Saxton, Mr. Skelton, Mr. Davis of
Kentucky, Mrs. Jo Ann Davis of Virginia, Mr. Jones of North Carolina,
Mr. LoBiondo, Mr. Miller of Florida, Mr. Smith of New Jersey, Mr. Poe,
Mr. Bachus, Mr. Hefley, Mr. Ney, Mr. Turner, and Mr. Duncan) introduced
the following bill; which was referred to the Committee on Financial
Services, and in addition to the Committees on Armed Services, Energy
and Commerce, International Relations, and Homeland Security, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To promote the national defense by establishing requirements for the
ownership, management, and operation of critical infrastructure in the
United States, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``National Defense Critical
Infrastructure Protection Act of 2006''.
SEC. 2. CITIZENSHIP AND OTHER REQUIREMENTS FOR OWNERSHIP, MANAGEMENT,
AND OPERATION OF UNITED STATES CRITICAL INFRASTRUCTURE.
(a) Limitation on Corporate Ownership and Management and
Operation.--A corporation may not own, or be authorized (by contract or
otherwise) to manage or operate, any system or asset that is included
on the national defense critical infrastructure list unless the
corporation meets the critical infrastructure national security
management requirements.
(b) Critical Infrastructure National Security Management
Requirements.--A corporation meets the critical infrastructure national
security management requirements for purposes of subsection (a) only if
each of the following applies to the corporation:
(1) The corporation is organized under the laws of the
United States.
(2) The corporation has a board of directors the majority
of whom are citizens of the United States.
(3) The corporation has a chief executive officer and
chairman of the board of directors who are citizens of the
United States.
(4) A majority of the voting shares of the corporation, and
a majority of nonvoting shares of the corporation, are owned by
citizens of the United States.
(5) More than 50 percent of the members of the board of
directors of the corporation have been approved by the
Secretary of Defense, in consultation with the Secretary of
Homeland Security, for membership on the board.
(6) Not less than 20 percent of the members of the board of
directors are independent directors.
(7) All of the independent directors have been approved by
the Secretary of Defense, in consultation with the Secretary of
Homeland Security, for membership on the board.
(8) The board of directors has a government security
committee, all of whose members are approved by the Secretary
of Defense, in consultation with the Secretary of Homeland
Security, for membership on the committee.
(9) The board of directors has a compensation committee
that--
(A) is comprised of citizens of the United States;
and
(B) includes the independent directors approved
under paragraph (7).
(10) The corporation has agreed to allow, and has
instituted procedures to authorize, the Secretary of Defense,
in consultation with the Secretary of Homeland Security, to
annually inspect the procedures of the corporation for handling
classified information and, based on such an annual inspection,
the procedures of the corporation for handling classified
information have been approved by the Secretary of Defense.
In the case of a corporation that as of the effective date of
subsection (a) owns, or is authorized by contract (or otherwise) to
manage or operate, a system or asset that is included on the national
defense critical infrastructure list, the provisions of paragraph (4)
of this subsection take effect with respect to that corporation as of
the date that is five years after the date of the enactment of this
Act.
(c) Notification Requirements.--Any corporation that has met the
requirements of subsection (b) and that owns, or manages or operates, a
system or asset on the national defense critical infrastructure list
shall promptly submit notice to the Secretary in the event any of the
following occurs:
(1) Acquisition of ownership or beneficial ownership,
direct or indirect, of five percent or more of the
corporation's voting securities by a foreign person.
(2) Acquisition of ownership or beneficial ownership,
direct or indirect, of 25 percent or more of any class of the
corporation's nonvoting securities by a foreign person.
(3) Authority or ability of a foreign person to have power,
direct or indirect, to control the election, appointment, or
tenure of directors, officers, or executive personnel of the
corporation and the power to control other decisions or
activities of the corporation.
(4) Total revenues or net income in excess of five percent
from a single foreign person or in excess of 30 percent from
foreign persons in the aggregate in any fiscal year of the
corporation.
(5) Ten percent or more of any class of the corporation's
voting securities held in ``nominee shares'', ``street names'',
or in some other method that does not disclose the beneficial
owner of equitable title.
(6) Interlocking directors with foreign persons and any
officer or management official of the applicant company who is
also employed by a foreign person.
(7) Any other factor that indicates or demonstrates a
capability on the part of foreign persons to control or
influence the operations or management of the corporation.
(8) Acquisition by the corporation of ownership of 10
percent or more of any foreign interest.
(d) National Defense Critical Infrastructure List.--
(1) In general.--For purposes of this section, the
Secretary of Defense, in consultation with the Secretary of
Homeland Security, shall prepare and maintain a list, to be
known as the ``national defense critical infrastructure list'',
of critical infrastructure in the United States. The list shall
include both military installations and non-military
installations.
(2) Submission to congressional committees.--Whenever the
national defense critical infrastructure list is revised, the
Secretary of Defense shall, not later than 15 days after the
date of the revision, submit notice of the revision in writing
to the following:
(A) The Committee on Armed Services of the Senate.
(B) The Committee on Armed Services of the House of
Representatives.
(3) Critical infrastructure defined.--In this section, the
term ``critical infrastructure'' means any system or asset,
whether physical or virtual, that is so vital to the United
States that the incapacity or destruction of such system or
asset would have a debilitating effect on national security, on
national economic security, on national public health or
safety, or on any combination of those matters.
(e) Citizen of the United States Defined.--In this section:
(1) Citizen of the united states.--The term ``citizen of
the United States'' includes--
(A) a person that is a citizen of the United States
under section 2 of the Shipping Act, 1916 (46 U.S.C.
App. 802); and
(B) a United States citizen trust.
(2) United states citizen trust.--
(A) Subject to subparagraph (C), the term ``United
States citizen trust'' means a trust that is qualified
under this paragraph.
(B) A trust is qualified under this paragraph with
respect to critical infrastructure only if--
(i) each of the trustees is a citizen of
the United States; and
(ii) the trust submits to the Secretary of
Defense an affidavit of each trustee stating
that the trustee is not aware of any reason
involving a beneficiary of the trust that is
not a citizen of the United States, or
involving any other person that is not a
citizen of the United States, as a result of
which the beneficiary or other person would
hold more than 25 percent of the aggregate
power to influence or limit the exercise of the
authority of the trustee with respect to
matters involving any ownership or operation of
the critical infrastructure that may adversely
affect the interests of the United States.
(C) If any person that is not a citizen of the
United States has authority to direct or participate in
directing a trustee for a trust in matters involving
any ownership or operation of the critical
infrastructure that may adversely affect the interests
of the United States or in removing a trustee for a
trust without cause, either directly or indirectly
through the control of another person, the trust is not
qualified under this paragraph unless the trust
instrument provides that persons who are not citizens
of the United States may not hold more than 25 percent
of the aggregate authority to so direct or remove a
trustee.
(D) This paragraph shall not be considered to
prohibit a person who is not a citizen of the United
States from holding more than 25 percent of the
beneficial interest in a trust.
(f) Effective Dates.--
(1) In general.--Subsection (a) shall take effect on the
date on which the national defense critical infrastructure list
is submitted to Congress pursuant to paragraph (2) and shall
apply to any corporation covered by that subsection as of that
date or thereafter.
(2) National defense critical infrastructure list.--The
national defense critical infrastructure list required by
subsection (c) shall be established, and the initial list under
that subsection shall be submitted in writing to the Congress,
not later than three months after the date of the enactment of
this Act.
(g) Special Rule for Certain Port Terminals.--
(1) Special rule.--The port terminals specified in
paragraph (2) are deemed to be on the national defense critical
infrastructure list, and the provisions of subsection (a) apply
with respect to those terminals effective as of February 28,
2006.
(2) Specified port terminals.--The port terminals specified
in this paragraph are the following:
(A) The terminals that as of February 28, 2006,
were operated by the United Kingdom company, Peninsular
and Oriental Steam Navigation Company (P & O), at the
following United States ports:
(i) Baltimore, Maryland.
(ii) Philadelphia, Pennsylvania.
(iii) Miami, Florida.
(iv) New Orleans, Louisiana.
(v) Houston, Texas.
(vi) Newark and Elizabeth, New Jersey.
(B) Any terminal at a port in the United States
other than a port listed in subparagraph (A) that as of
February 28, 2006, was operated in part, or with the
contribution of, the company named in subparagraph (A).
SEC. 3. ENHANCED AUTHORITY TO REVIEW CERTAIN FOREIGN MERGERS,
ACQUISITIONS, AND TAKEOVERS.
(a) Confidentiality of Information.--Subsection (c) of section 721
of the Defense Production Act of 1950 (50 U.S.C. App. 2170(c)) is
amended--
(1) by inserting ``during the process of investigation''
after ``prevent disclosure''; and
(2) by inserting ``of any information considered during the
process of investigation'' before the period at the end.
(b) Findings of the President.--Subsection (e) of such section (50
U.S.C. App. 2170(e)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``may'' and inserting ``shall'';
(B) by striking ``subsection (c)'' and inserting
``subsection (d)''; and
(C) by striking ``only''; and
(2) by striking paragraph (1) and inserting the following:
``(1) there is either--
``(A) credible evidence that leads the President to
believe that the foreign interest exercising control
might take action that threatens to impair the national
security; or
``(B) a reasonable expectation that the foreign
interest exercising control would use such control--
``(i) to adversely affect the ability of
domestic industries to meet existing production
requirements for defense or homeland security;
``(ii) to acquire advanced technology
illicitly; or
``(iii) to increase its ability to affect
United States critical infrastructure; and''.
(c) Factors to Be Considered.--Subsection (f) of such section (50
U.S.C. App. 2170(f)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``may'' and inserting ``shall'';
and
(B) by striking ``factors--'' and inserting
``factors the following:'';
(2) by capitalizing the first letter of the first word of
paragraphs (1), (2), (3), (4), and (5);
(3) at the end of paragraphs (1), (2), and (3), by striking
the comma and inserting a period;
(4) at the end of paragraph (4), by striking ``; and'' and
inserting a period;
(5) by redesignating paragraph (5) as paragraph (8); and
(6) by inserting after paragraph (4) the following new
paragraphs:
``(5) Domestic production needed to meet the needs of
homeland security.
``(6) The potential effects of the proposed or pending
transaction on control of critical infrastructure, such as
energy, telecommunications, transportation, or information.
``(7) The potential effects of the proposed or pending
transaction on secure United States access to strategic natural
resources, including energy supplies and critical minerals.''.
(d) Notification to Government.--
(1) Required notice of proposed or pending transactions.--
Such section is further amended--
(A) by redesignating subsections (g), (h), (i),
(j), and (k) as subsections (h), (i), (j), (k), and
(l), respectively; and
(B) by inserting after subsection (f) the following
new subsection:
``(g) Notification to Government.--
``(1) Required notice.--The President shall provide for the
regulations issued pursuant to this section to require that, in
any case in which there is a proposed or pending merger,
acquisition, or takeover that is or may be subject to an
investigation under subsection (a), the President or the
President's designee shall be provided written notification of
the proposed or pending merger, acquisition, or takeover, as
referred to in the second sentence of subsection (a), and that
such written notification shall be provided in sufficient time
for the review process under this section to be completed
before the proposed or pending merger, acquisition, or takeover
is finalized.
``(2) Publication in federal register.--Any notification
pursuant to paragraph (1) shall be published in the Federal
Register within five days of such notification.''.
(2) Interim rules.--The President or the President's
designee may prescribe interim rules necessary to carry out the
responsibilities under subsection (g) of section 721 of the
Defense Production Act of 1950 as added by paragraph (1)(B).
Any otherwise applicable notice-and-comment requirement of
section 553 of title 5, United States Code, shall not apply to
such interim rules. Interim rules prescribed under the
authority of this subsection that are not earlier superceded by
final rules shall expire as specified in such interim rules,
but not later than the end of the one-year period beginning on
the the date of the enactment of this Act.
(e) Annual Report.--Subsection (l) of such section, as redesignated
by subsection (d)(1), is amended--
(1) in the subsection heading, by striking ``Quadrennial
Report.--'' and inserting ``Annual Report.--''; and
(2) in paragraph (1), by striking ``not later than 1 year''
and all that follows through ``every 4 years thereafter'' and
inserting ``not later than November 1 each year''.
(f) Technical Amendments.--Such section is further amended--
(1) in subsections (a) and (d), by striking ``the date of
enactment of this section'' and inserting ``August 23, 1988'';
(2) in subsection (d), by striking ``subsection (d)'' and
inserting ``subsection (e)''; and
(3) in the last sentence of subsection (h), as redesignated
by subsection (d)(1), by striking ``of this Act''.
(g) Effective Dates.--
(1) Applicability to new investigations.--The amendments
made by this section shall apply with respect to any
investigation under section 721 of the Defense Production Act
of 1950 (50 U.S.C. App. 2170) that is commenced after the date
of the enactment of this Act.
(2) Time limit for required new regulations.--Regulations
required by subsection (g) of such section, as added by the
amendment made by subsection (d)(1)(B), shall be prescribed not
later than the end of the one-year period beginning on the date
of the enactment of this Act.
SEC. 4. MANDATORY INSPECTION OF CARGO.
(a) Mandatory Inspections.--No cargo transported by a commercial
motor vehicle may enter the United States from Canada or Mexico, and no
cargo transported by vessel may be unloaded in the United States,
unless an appropriate officer or employee of the Directorate of Border
and Transportation Security or other appropriate officer or employee of
the United States has inspected the cargo to ensure that it complies
with the laws of the United States.
(b) Definitions.--In this section:
(1) Cargo.--The term ``cargo'' means property, or mail, or
both.
(2) Commercial motor vehicle.--The term ``commercial motor
vehicle'' means a commercial motor vehicle as defined in
section 31101(1) of title 49, United States Code, that is used
principally to transport cargo.
(3) United states; vessel.--The terms ``United States'' and
``vessel'' have the meanings given those terms in section 401
of the Tariff Act of 1930 (19 U.S.C. 1401).
(c) Effective Date.--This section shall take effect 6 months after
the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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Referred to the Committee on Financial Services, and in addition to the Committees on Armed Services, Energy and Commerce, International Relations, and Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Economic Security, Infrastructure Protection, and Cybersecurity.
Referred to the Subcommittee on Commerce, Trade and Consumer Protection, for a period to be subsequently determined by the Chairman.
Referred to the Subcommittee on Terrorism, Unconventional Threats and Capabilities.
Referred to the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology.