Sec. 1703. Definitions
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Section 721(a) of the Defense Production Act of 1950 ( 50 U.S.C. 4565(a) ) is amended to read as follows: In this section: The term access means the ability and opportunity to obtain information, subject to regulations prescribed by the Committee. The terms Committee and chairperson mean the Committee on Foreign Investment in the United States and the chairperson thereof, respectively. The term control means the power to determine, direct, or decide important matters affecting an entity, subject to regulations prescribed by the Committee.
The term country of special concern means a country that poses a significant threat to the national security interests of the United States. This paragraph shall not be construed to require the Committee to maintain a list of countries of special concern. Except as otherwise provided, the term covered transaction means— any transaction described in subparagraph (B)(i); and any transaction described in clauses
(ii)through
(v)of subparagraph
(B)that is proposed, pending, or completed on or after the effective date specified in section 1732(b)(1)(A) of the Foreign Investment Risk Review Modernization Act of 2018 . A transaction described in this subparagraph is any of the following: Any merger, acquisition, or takeover that is proposed or pending after August 23, 1988, by or with any foreign person that could result in foreign control of any United States business. Subject to subparagraph (C), the purchase or lease by a foreign person of, or a concession offered to a foreign person with respect to, private or public real estate that— is located in the United States; is, is located at, or will function as part of, a land, air, or maritime port; or is in close proximity to a United States military installation or another facility or property of the United States Government that is sensitive for reasons relating to national security; could reasonably provide the foreign person the ability to collect information on activities being conducted at such an installation, facility, or property; or could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance; and meets such other criteria as the Committee prescribes by regulation, as long as such criteria do not expand the categories of real estate to which this clause applies beyond the categories described in subclause (II). Any other investment (other than a passive investment) by a foreign person in any United States critical technology company or United States critical infrastructure company that is unaffiliated with the foreign person, subject to regulations prescribed under subparagraph (C). Any change in the rights that a foreign person has with respect to a United States business in which the foreign person has an investment, if that change could result in— foreign control of the United States business; or an investment described in clause (iii). Any other transaction, transfer, agreement, or arrangement the structure of which is designed or intended to evade or circumvent the application of this section, subject to regulations prescribed by the Committee. A real estate purchase or lease described in subparagraph (B)(ii) does not include a lease or purchase of— a single housing unit , as defined by the Census Bureau; or real estate in urbanized areas , as defined by the Census Bureau in the most recent census, except as otherwise prescribed by the Committee in regulations in consultation with the Secretary of Defense. The Committee shall prescribe regulations further defining covered transactions described in subparagraph (B)(iii) by reference to the technology, sector, subsector, transaction type, or other characteristics of such transactions. The Committee shall, by regulation, define circumstances and procedures under which a transaction otherwise described in clause
(ii)or
(iii)of subparagraph
(B)is excluded from the definition of covered transaction if each foreign person that is a party to the transaction, and each foreign person with ownership or control over a party to the transaction, is from (as determined by the Committee pursuant to regulations prescribed by the Committee), a country or part of a country identified by the Committee for purposes of this clause based on factors established by the Committee, such as— whether, in the sole judgment of the Committee, the process of the country for reviewing the national security effects of foreign investment and associated international cooperation effectively safeguards national security interests the country shares with the United States; whether the country is a member country of the North Atlantic Treaty Organization or is designated as a major non-NATO ally pursuant to section 517 of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2321k ); whether the country adheres to nonproliferation control regimes, including treaties and multilateral supply guidelines, which shall be informed by sources such as 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 ( 22 U.S.C. 2593a ); whether excluding transactions by foreign persons from the country advances the national security objectives of the United States; and any other factors that the Committee determines to be appropriate. The Committee shall reconsider on a regular basis the identification of countries and parts of countries under subclause (I). For purposes of subparagraph (B)(iii), the term other investment does not include an investment involving an air carrier, as defined in section 40102(a)(2) of title 49, United States Code, that holds a certificate issued under section 41102 of that title. The Committee shall prescribe regulations to clarify that the term covered transaction includes any transaction described in subparagraph
(B)that arises pursuant to a bankruptcy proceeding or other form of default on debt. For purposes of subparagraph (B)(iii), the term passive investment means an investment, direct or indirect, by a foreign person in a United States critical infrastructure company or United States critical technology company that meets the following criteria: The investment is not described in subparagraph (B)(i). The investment does not afford the foreign person— access to any material nonpublic technical information in the possession of the United States critical infrastructure company or United States critical technology company; membership or observer rights on the board of directors or equivalent governing body of the United States critical infrastructure company or United States critical technology company or the right to nominate an individual to a position on the board of directors or equivalent governing body; or any involvement, other than through voting of shares, in substantive decisionmaking relating to the management, governance, or operation of the United States critical infrastructure company or United States critical technology company. The foreign person does not have a material parallel strategic partnership or other material financial relationship, as described in regulations prescribed by the Committee, with the United States critical infrastructure company or United States critical technology company. Such other criteria as the Committee may prescribe by regulation, which shall be consistent with the criteria specified in subclauses (I), (II), and (III). For purposes of clause (i)(II)(aa), the term material nonpublic technical information has the meaning given that term in regulations prescribed by the Committee, except that the term does not include financial information regarding the performance of a United States critical infrastructure company or United States critical technology company. A determination of whether an investment is a passive investment under clause
(i)shall be made without regard to how low the level of ownership interest a foreign person would hold or acquire in a United States critical infrastructure company or United States critical technology company would be as a result of the investment. The Committee may prescribe regulations specifying that any investment (other than an investment described in item (bb)) greater than a certain level or amount shall not be considered a passive investment under clause (i). An investment described in this item is an investment— by a foreign person in a United States critical infrastructure company or United States critical technology company through an investment fund; that does not result in the foreign person’s control of the United States critical technology or United States critical infrastructure company; and that otherwise meets the requirements of clauses
(i)and (iv), as applicable. Notwithstanding clause (i)(II)(bb) and subject to regulations prescribed by the Committee, an indirect investment by a foreign person in a United States critical infrastructure company or United States critical technology company through an investment fund that affords the foreign person (or a designee of the foreign person) membership as a limited partner on an advisory board or a committee of the fund shall be considered a passive investment if— the fund is managed exclusively by a general partner, a managing member, or an equivalent; the general partner, managing member, or equivalent is not a foreign person; the advisory board or committee does not have the ability to approve, disapprove, or otherwise control— investment decisions of the fund; or decisions made by the general partner, managing member, or equivalent related to entities in which the fund is invested; the foreign person does not otherwise have the ability to control the fund, including the authority— to approve, disapprove, or otherwise control investment decisions of the fund; to approve, disapprove, or otherwise control decisions made by the general partner, managing member, or equivalent related to entities in which the fund is invested; or to unilaterally dismiss, prevent the dismissal of, select, or determine the compensation of the general partner, managing member, or equivalent; and the investment otherwise meets the requirements of this subparagraph. For the purposes of items
(cc)and
(dd)of subclause
(I)and except as provided in item (bb), a waiver of a potential conflict of interest, a waiver of an allocation limitation, or a similar activity, applicable to a transaction pursuant to the terms of an agreement governing an investment fund shall not be considered to constitute control of investment decisions of the fund or decisions relating to entities in which the fund is invested. The Committee may prescribe regulations providing for exceptions to item
(aa)for extraordinary circumstances. The Committee shall prescribe regulations providing guidance on the types of transactions that the Committee considers to be passive investment. For purposes of this paragraph, the term United States critical infrastructure company means a United States business that is, owns, operates, or primarily provides services to, an entity or entities that operate within a critical infrastructure sector or subsector, as defined by regulations prescribed by the Committee. For purposes of this paragraph, the term United States critical technology company means a United States business that produces, designs, tests, manufactures, or develops one or more critical technologies, or a subset of such technologies, as defined by regulations prescribed by the Committee. The term critical infrastructure means, subject to regulations prescribed by the Committee, systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems or assets would have a debilitating impact on national security. The term critical materials means physical materials essential to national security, subject to regulations prescribed by the Committee. The term critical technologies means technology, components, or technology items that are essential or could be essential to national security, identified for purposes of this section pursuant to regulations prescribed by the Committee. The term critical technologies includes the following: Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations. Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled— pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or for reasons relating to regional stability or surreptitious listening. Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, Code of Federal Regulations (relating to assistance to foreign atomic energy activities). Nuclear facilities, equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to export and import of nuclear equipment and material). Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such Code, or part 73 of title 42 of such Code. Emerging and foundational technologies identified pursuant to section 1725(a) of the Foreign Investment Risk Review Modernization Act of 2018 . The term foreign government-controlled transaction means any covered transaction that could result in the control of any United States business by a foreign government or an entity controlled by or acting on behalf of a foreign government. The term foreign person means— any foreign national, foreign government, or foreign entity; or any entity over which control is exercised or exercisable by a foreign national, foreign government, or foreign entity. For purposes of subparagraph
(A)and except as provided in clause (ii), the term foreign entity means any branch, partnership, group or subgroup, association, estate, trust, corporation or division of a corporation, or organization organized under the laws of a foreign country if— the principal place of business of the entity is outside the United States; or the equity securities of the entity are primarily traded on one or more foreign exchanges. For purposes of subparagraph (A), the term foreign entity does not include an entity that demonstrates to the Committee that a majority of the equity interest in the entity is ultimately owned by United States nationals. The term intelligence community has the meaning given that term in section 3(4) of the National Security Act of 1947 ( 50 U.S.C. 3003(4) ). The term investment means the acquisition of equity interest, including contingent equity interest, as further defined in regulations prescribed by the Committee. The term lead agency means the agency or agencies designated as the lead agency or agencies pursuant to subsection (k)(5). The term national security shall be construed so as to include those issues relating to homeland security , including its application to critical infrastructure. The term party has the meaning given that term in regulations prescribed by the Committee. The term United States means the several States, the District of Columbia, and any territory or possession of the United States. The term United States business means a person engaged in interstate commerce in the United States. .
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