Federal

RESTRICT Act

Source: Congress.gov · 12,005 words in original text

What This Bill Does

This bill gives the Secretary of Commerce power to review and block deals involving foreign countries that pose national security risks. Specifically, it targets transactions (purchases, transfers, use) involving technology and communication products when foreign adversaries like China, Russia, Iran, North Korea, Cuba, or Venezuela have a controlling interest in them. (Sec. 1, 3, 4) ##

Who It Affects

- The Secretary of Commerce and federal agencies that advise on national security - Any person or business in the U.S. involved in technology transactions - Tech companies with more than 1 million U.S. users or 1 million units sold in the U.S. - Foreign governments and companies owned by foreign adversaries - The President, who makes final decisions on certain transactions ##

Key Provisions

- The Secretary of Commerce can identify, block, or restrict technology transactions that pose "undue or unacceptable risk" to national security, including risks to elections, critical infrastructure, or democratic institutions. (Sec. 3) - The Secretary must review transactions within 180 days of starting the review to decide if they should be prohibited or changed to reduce risk. (Sec. 3(b)(1)) - The Secretary can refer certain holdings (ownership stakes) in major U.S. tech companies to the President if they pose national security risks. The President can then force the sale of those holdings or take other action to reduce the risk. (Sec. 4) - The bill designates six foreign governments as "foreign adversaries": China (including Hong Kong and Macao), Cuba, Iran, North Korea, Russia, and Venezuela under Nicolás Maduro. The Secretary can add or remove countries from this list. (Sec. 2(8), 6) - Congress can disapprove the Secretary's decision to designate or remove a country as a foreign adversary through an expedited vote process. (Sec. 7) - The Secretary can require companies to provide information, documents, and testimony about transactions under review. The Secretary can also issue subpoenas and conduct investigations. (Sec. 9) - Violations can result in civil penalties up to $250,000 or twice the transaction value, whichever is larger. Criminal violations can result in fines up to $1 million and up to 20 years in prison. (Sec. 11) - Technology areas the Secretary must prioritize reviewing include: critical infrastructure technology, telecommunications, cloud computing, data storage, artificial intelligence, quantum computing, drones, surveillance devices, internet applications used by more than 1 million Americans, and e-commerce technology. (Sec. 5) ##

What Changes

If this becomes law, the Secretary of Commerce gains new authority to block or force changes to technology transactions and ownership stakes involving foreign adversaries. Companies that want to sell or operate technology products in the U.S. may face government review if a foreign adversary has significant ownership or control. Technology companies with large U.S. user bases become subject to national security screening. The President gains power to force the sale of tech company stakes held by foreign adversaries. Violating the new rules carries serious criminal and civil penalties. ##

Important Definitions

- **Covered transaction**: Any deal involving technology and communications products when a foreign adversary or an entity they control has any interest in it. Also includes deals intentionally structured to avoid this law. (Sec. 2(4)) - **Foreign adversary**: A foreign government determined by the Secretary to have engaged in serious conduct harmful to U.S. national security or the safety of Americans. The bill names six specific countries but the Secretary can add more. (Sec. 2(8)) - **ICTS covered holding entity**: Any company that owns, controls, or manages technology products or services and has at least 1 million U.S. users or has sold more than 1 million units to Americans. (Sec. 2(10)) - **Information and communications technology**: Hardware, software, or products mainly used for processing, storing, sending, or displaying information electronically. (Sec. 2(11)) - **Holding**: An ownership stake, including stocks, partnerships, limited liability company interests, or anything convertible into ownership. (Sec. 2(9)) - **Mitigation measure**: An agreement or order between a company and the federal government to reduce risks from a transaction or holding. (Sec. 2(12)) - **Controlling holding**: Ownership stake with the power to determine or direct important decisions affecting a company. (Sec. 2(2)) ##

Effective Date

Not specified in bill text

II 118TH CONGRESS 1ST SESSION S. 686 To authorize the Secretary of Commerce to review and prohibit certain trans- actions between persons in the United States and foreign adversaries, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 7, 2023 Mr. WARNER (for himself, Mr. THUNE, Ms. BALDWIN, Mrs. FISCHER, Mr. MANCHIN, Mr. MORAN, Mr. BENNET, Mr. SULLIVAN, Mrs. GILLIBRAND, Ms. COLLINS, Mr. HEINRICH, Mr. ROMNEY, and Mrs. CAPITO) intro- duced the following bill; which was read twice and referred to the Com- mittee on Commerce, Science, and Transportation A BILL To authorize the Secretary of Commerce to review and pro- hibit certain transactions between persons in the United States and foreign adversaries, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Restricting the Emer- 4 gence of Security Threats that Risk Information and Com- 5 munications Technology Act’’ or the ‘‘RESTRICT Act’’. 6 SEC. 2. DEFINITIONS. 7 In this Act: 8 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 686 IS (1) CLASSIFIED NATIONAL SECURITY INFORMA- 1 TION.—The term ‘‘classified national security infor- 2 mation’’ means information that has been deter- 3 mined pursuant to Executive Order 13526 (50 4 U.S.C. 3161 note; relating to classified national se- 5 curity information) or any predecessor or successor 6 order, to require protection against unauthorized 7 disclosure, and is marked to indicate such classified 8 status if in documentary form. 9 (2) CONTROLLING HOLDING.—The term ‘‘con- 10 trolling holding’’ means a holding with the power, 11 whether direct or indirect and whether exercised or 12 not exercised, to determine, direct, or decide impor- 13 tant matters affecting an entity. 14 (3) COVERED HOLDING.—The term ‘‘covered 15 holding’’— 16 (A) means, regardless of how or when such 17 holding was or will be obtained or otherwise 18 come to have been held, a controlling holding 19 held, directly or indirectly, in an ICTS covered 20 holding entity by— 21 (i) a foreign adversary; 22 (ii) an entity subject to the jurisdic- 23 tion of, or organized under the laws of, a 24 foreign adversary; or 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 686 IS (iii) an entity owned, directed, or con- 1 trolled by an entity described in subpara- 2 graphs (i) or (ii); and 3 (B) includes any other holding, the struc- 4 ture of which is designed or intended to evade 5 or circumvent the application of this Act, sub- 6 ject to regulations prescribed by the Secretary. 7 (4) COVERED TRANSACTION.— 8 (A) IN GENERAL.—The term ‘‘covered 9 transaction’’ means a transaction in which an 10 entity described in subparagraph (B) has any 11 interest (including through an interest in a con- 12 tract for the provision of the technology or serv- 13 ice), or any class of such transactions. 14 (B) COVERED ENTITIES.—The entities de- 15 scribed in this subparagraph are: 16 (i) a foreign adversary; 17 (ii) an entity subject to the jurisdic- 18 tion of, or organized under the laws of, a 19 foreign adversary; and 20 (iii) an entity owned, directed, or con- 21 trolled by a person described in subpara- 22 graph (A) or (B). 23 (C) NON-EVASION.—The term ‘‘covered 24 transaction’’ includes any other transaction, the 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 686 IS structure of which is designed or intended to 1 evade or circumvent the application of this Act, 2 subject to regulations prescribed by the Sec- 3 retary. 4 (D) TIMING.—The term ‘‘covered trans- 5 action’’ includes a current, past, or potential fu- 6 ture transaction. 7 (5) CRITICAL INFRASTRUCTURE.—The term 8 ‘‘critical infrastructure’’ has the meaning given the 9 term in section 1016(e) of the USA PATRIOT Act 10 (42 U.S.C. 5195c(e)). 11 (6) ENTITY.—The term ‘‘entity’’ means any of 12 the following, whether established in the United 13 States or outside of the United States: 14 (A) A firm. 15 (B) A government, government agency, 16 government department, or government com- 17 mission. 18 (C) A labor union. 19 (D) A fraternal or social organization. 20 (E) A partnership. 21 (F) A trust. 22 (G) A joint venture. 23 (H) A corporation. 24 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 686 IS (I) A group, subgroup, or other association 1 or organization whether or not organized for 2 profit. 3 (7) EXECUTIVE DEPARTMENT AND AGENCY.— 4 The term ‘‘executive department and agency’’ has 5 the meaning given the term ‘‘Executive agency’’ in 6 section 105 of title 5, United States Code. 7 (8) FOREIGN ADVERSARY.—The term ‘‘foreign 8 adversary’’— 9 (A) means any foreign government or re- 10 gime, determined by the Secretary, pursuant to 11 sections 3 and 5, to have engaged in a long- 12 term pattern or serious instances of conduct 13 significantly adverse to the national security of 14 the United States or the security and safety of 15 United States persons; and 16 (B) includes, unless removed by the Sec- 17 retary pursuant to section 6— 18 (i) the People’s Republic of China, in- 19 cluding the Hong Kong Special Adminis- 20 trative Region and Macao Special Adminis- 21 trative Region; 22 (ii) the Republic of Cuba; 23 (iii) the Islamic Republic of Iran; 24 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 686 IS (iv) the Democratic People’s Republic 1 of Korea; 2 (v) the Russian Federation; and 3 (vi) the Bolivarian Republic of Ven- 4 ezuela under the regime of Nicola´s Maduro 5 Moros. 6 (9) HOLDING.—The term ‘‘holding’’— 7 (A) means— 8 (i) an equity interest; 9 (ii) a stock; 10 (iii) a security; 11 (iv) a share; 12 (v) a partnership interest; 13 (vi) an interest in a limited liability 14 company; 15 (vii) a membership interest; or 16 (viii) any participation, right, or other 17 equivalent, however designated and of any 18 character; and 19 (B) includes, without limitation, any secu- 20 rity convertible into an ownership interest and 21 right, warrant, or option to acquire ownership 22 interests. 23 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 686 IS (10) ICTS COVERED HOLDING ENTITY.—The 1 term ‘‘ICTS covered holding entity’’ means any enti- 2 ty that— 3 (A) owns, controls, or manages information 4 and communications technology products or 5 services; and 6 (B)(i) has not less than 1,000,000 United 7 States-based annual active users at any point 8 during the year period preceding the date on 9 which the covered holding is referred to the 10 President; or 11 (ii) for which more than 1,000,000 units 12 have been sold to persons in the United States 13 before the date on which the covered holding is 14 referred to the President. 15 (11) INFORMATION AND COMMUNICATIONS 16 TECHNOLOGY PRODUCTS OR SERVICES.—The term 17 ‘‘information and communications technology prod- 18 ucts or services’’ means any hardware, software, or 19 other product or service primarily intended to fulfill 20 or enable the function of information or data proc- 21 essing, storage, retrieval, or communication by elec- 22 tronic means, including transmission, storage, and 23 display. 24 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 686 IS (12) MITIGATION MEASURE.—The term ‘‘miti- 1 gation measure’’ means a measure agreed to in an 2 agreement between any relevant party and the Fed- 3 eral Government, or ordered by the Federal Govern- 4 ment and of which any relevant party has been noti- 5 fied, in any matter addressed under this Act to ad- 6 dress any risk arising from a covered transaction or 7 associated with a covered holding. 8 (13) PERSON.—The term ‘‘person’’ means a 9 natural person, including a citizen or national of the 10 United States or of any foreign country. 11 (14) RELEVANT EXECUTIVE DEPARTMENT AND 12 AGENCY HEADS.—The term ‘‘relevant executive de- 13 partment and agency heads’’ means— 14 (A) the Secretary of Treasury; 15 (B) the Secretary of State; 16 (C) the Secretary of Defense; 17 (D) the Attorney General; 18 (E) the Secretary of Homeland Security; 19 (F) the United States Trade Representa- 20 tive; 21 (G) the Director of National Intelligence; 22 (H) the Administrator of General Services; 23 (I) the Chairman of the Federal Commu- 24 nications Commission; and 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 686 IS (J) the heads of other executive depart- 1 ments and agencies, as appropriate. 2 (15) RELEVANT COMMITTEES OF CONGRESS.— 3 The term ‘‘relevant committees of Congress’’ 4 means— 5 (A) the Committee on Commerce, Science, 6 and Transportation, the Committee on the Ju- 7 diciary, the Committee on Homeland Security 8 and Governmental Affairs, the Committee on 9 Foreign Relations, the Committee on Banking, 10 Housing, and Urban Affairs, the Committee on 11 Armed Services, the Committee on Rules and 12 Administration, and the Select Committee on 13 Intelligence of the Senate; and 14 (B) the Committee on Energy and Com- 15 merce, the Committee on the Judiciary, the 16 Committee on Homeland Security, the Com- 17 mittee on Oversight and Accountability, the 18 Committee on Foreign Affairs, the Committee 19 on Armed Services, the Committee on House 20 Administration, and the Permanent Select 21 Committee on Intelligence of the House of Rep- 22 resentatives. 23 (16) SECRETARY.—The term ‘‘Secretary’’ 24 means the Secretary of Commerce. 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 686 IS (17) TRANSACTION.—The term ‘‘transaction’’ 1 means any acquisition, importation, transfer, instal- 2 lation, dealing in, or use of any information and 3 communications technology product or service, in- 4 cluding ongoing activities such as managed services, 5 data transmission, software updates, repairs, or the 6 provision of data hosting services, or a class of such 7 transactions. 8 SEC. 3. ADDRESSING INFORMATION AND COMMUNICATION 9 TECHNOLOGY PRODUCTS AND SERVICES 10 THAT POSE UNDUE OR UNACCEPTABLE RISK. 11 (a) IN GENERAL.—The Secretary, in consultation 12 with the relevant executive department and agency heads, 13 is authorized to and shall take action to identify, deter, 14 disrupt, prevent, prohibit, investigate, or otherwise miti- 15 gate, including by negotiating, entering into, or imposing, 16 and enforcing any mitigation measure to address any risk 17 arising from any covered transaction by any person, or 18 with respect to any property, subject to the jurisdiction 19 of the United States that the Secretary determines— 20 (1) poses an undue or unacceptable risk of— 21 (A) sabotage or subversion of the design, 22 integrity, manufacturing, production, distribu- 23 tion, installation, operation, or maintenance of 24 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 686 IS information and communications technology 1 products and services in the United States; 2 (B) catastrophic effects on the security or 3 resilience of the critical infrastructure or digital 4 economy of the United States; 5 (C) interfering in, or altering the result or 6 reported result of a Federal election, as deter- 7 mined in coordination with the Attorney Gen- 8 eral, the Director of National Intelligence, the 9 Secretary of Treasury, and the Federal Election 10 Commission; or 11 (D) coercive or criminal activities by a for- 12 eign adversary that are designed to undermine 13 democratic processes and institutions or steer 14 policy and regulatory decisions in favor of the 15 strategic objectives of a foreign adversary to the 16 detriment of the national security of the United 17 States, as determined in coordination with the 18 Attorney General, the Director of National In- 19 telligence, the Secretary of Treasury, and the 20 Federal Election Commission; or 21 (2) otherwise poses an undue or unacceptable 22 risk to the national security of the United States or 23 the safety of United States persons. 24 (b) PROCEDURE.— 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •S 686 IS (1) IN GENERAL.—Not later than 180 days 1 after the date of enactment of this Act, the Sec- 2 retary, in consultation with the relevant executive 3 department and agency heads, shall review any 4 transaction described in subsection (a) to— 5 (A) determine, not later than 180 days 6 after the date on which the Secretary initiates 7 such review, if such transaction poses an undue 8 or unacceptable risk under subsection (a)(2) 9 and qualifies as a covered transaction; and 10 (B) with respect to a transaction found to 11 pose an undue or unacceptable risk and qualify 12 as a covered transaction, determine whether— 13 (i) the covered transaction should be 14 prohibited; or 15 (ii) any other action should be taken 16 to mitigate the effects of the covered trans- 17 action. 18 (2) PUBLISHED EXPLANATIONS.—If prac- 19 ticable, and consistent with the national security and 20 law enforcement interests of the United States, in 21 coordination and in cooperation with the Director of 22 National Intelligence, the Secretary shall publish in- 23 formation in a declassified form to explain how a 24 covered transaction that the Secretary denied or oth- 25 VerDate Sep 11 2014 03:49 Mar 21, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S686.IS S686 pbinns on DSKJLVW7X2PROD with $$_JOB 13 •S 686 IS erwise mitigated under paragraph (1) meets the cri- 1 teria established under subsection (a) or section 2 4(a). 3 (3) CERTAIN ADMINISTRATIVE PROCEDURE RE- 4 QUIREMENTS INAPPLICABLE.—Section 553 of title 5 5, United State Code, shall not apply to any regula- 6 tion promulgated pursuant to paragraph (1). 7 SEC. 4. ADDRESSING INFORMATION AND COMMUNICA- 8 TIONS TECHNOLOGY PRODUCTS AND SERV [Text truncated for display. Full text available on Congress.gov.]

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