WASHINGTON (AP) - The House agreed Wednesday to give the government broader powers to review foreign investments in U.S. power plants, ports and other facilities that could be vulnerable to terror attacks. The legislation, passed 423-0, would give legal muscle to a once- obscure federal office that gained attention a year ago with the uproar over plans by a Dubai-owned company to manage six of the nation's largest ports.
The deal fell through after lawmakers from both parties said the Committee on Foreign Investment in the United States, or CFIUS, ignored serious national security concerns in signing off on the transaction.
The legislation, which now moves to the Senate, expands the definition of transactions that require CFIUS review to include those involving homeland security and critical infrastructures, and takes steps to ensure that high-level officials will be involved in decisions by the multi-agency group.
The secretaries of the departments of Homeland Security and Commerce are added as vice-chairs of the group, which includes the heads of 13 departments and agencies. It requires the director of national intelligence to analyze any threat to national security posed by a deal.
"This bill contains very tough provisions to protect national security, including the ability for CFIUS to reopen reviews when companies don't comply with mitigation agreements designed to reduce security risks," said Rep. Carolyn Maloney, D-N.Y., a sponsor of the bill.
The legislation also ensures that Congress will be notified when investigations are completed. Lawmaker complaints that they were left out of the process were a major factor in the anger engendered by the proposed Dubai Ports World deal.
It would require a 45-day investigation, after the initial 30-day review, of any deal involving companies controlled by foreign governments.
Last year, with Congress under GOP control, both the House and Senate approved legislation to revamp the CFIUS process, but the two chambers were unable to compromise on a common bill.
The Bush administration, in a statement, said it supported the House bill but expressed some reservations.
It said language that appears to give the director of national intelligence the ability to force a second-stage 45-day investigation was "inconsistent with the independent advisory role" of that office. It also cautioned that extending the 45-day investigations "may discourage foreign investment by generating uncertainty and delay."
Striking a balance between security concerns and the promotion of investment was a key issue in crafting the bill. "We must be careful not to send the wrong message to the world's investors that America is closed for business," said Rep. Adam Putnam, R-Fla.
Todd Malan, president of the Organization for International Investment, an association representing U.S. subsidiaries of foreign companies, said he was pleased with the result.
"From a business standpoint it doesn't screw anything up," he said. "It maintains CFIUS's role as a screening process, not as a barrier to foreign investment."
President Ford established CFIUS in 1975 by executive order in response to congressional concerns about increased OPEC investments in the United States. It has focused on deals that involve U.S. companies with defense contracts, such as the takeover last year by French-owned Alcatel of fellow telecommunications equipment giant Lucent Technologies Inc.
The House legislation would ensure that CFIUS also monitors transactions with homeland security ramifications, such as those involving power plants, water works or toll roads. Maloney noted that CFIUS, after a personal call from her, last year did review a later- abandoned plan for the Venezuelan government to buy a major voting machine manufacturer.
"It applies a post-9/11 mind-set to a pre-9/11 infrastructure," Putnam said.
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The bill is H.R. 556
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