Information and Communications Technology and Services National Security Review Act

The Export Control Reform Act of 2018 (50 U.S.C. 4801 et seq.) is amended by adding at the end the following:

In this part:

The term agency has the meaning given that term in section 551 of title 5, United States Code.

The term Commerce Control List means the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations.

The term covered transaction means a transaction that—

(A) is conducted by any person subject to the jurisdiction of the United States or involves property subject to the jurisdiction of the United States;

(B) involves—

(i) ICTS (as the term is defined by Executive Order 13873) that is designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to a jurisdiction or direction of a jurisdiction of concern; or

(ii) an item on the Commerce Control List; and

(C) is—

(i) an ICTS transaction (as described in section 791.1 of title 15, Code of Federal Regulations (or any successor regulation)); or

(ii) a transaction relating to the export, reexport, or in-country transfer for an item described in subparagraph (B)(ii).

The term critical infrastructure means 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 national security, national economic security, national public health or safety, or any combination of those matters.

The term entity means any firm, partnership, trust, joint venture, corporation, or other association or organization.

The term entity of concern means an entity owned or controlled by—

(A) an entity listed on the Entity List set forth in Supplement No. 4 to part 744 of the Export Administration Regulation; or

(B) a person subject to the jurisdiction of a country that is under a comprehensive United States arms embargo, as listed in Country Group D:5 in Supplement No. 1 to part 740 of the Export Administration Regulations.

The terms information and communications technology and services and ICTS have the meaning given the term information and communications technology or services in Executive Order 13873 (50 U.S.C. 1701 note; relating to securing the information and communications technology and services supply chain).

The term jurisdiction of concern means any of the following:

(A) The People’s Republic of China.

(B) The Russian Federation.

(C) The Islamic Republic of Iran.

(D) The Democratic People’s Republic of Korea.

The term relevant committees of Congress means—

(A) the Committee on Banking, Housing, and Urban Affairs of the Senate; and

(B) the Committee on Foreign Affairs of the House of Representatives.

The term undue risk means any of the following:

(A) The undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of ICTS in the United States.

(B) The undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States.

(C) The undue risk of an entity of concern acquiring an item on the Commerce Control List.

There is established within the Bureau of Industry and Security of the Department of Commerce an Office of Information and Communications Technology and Services (in this section referred to as the Office).

The head of the Office shall be an Executive Director, who shall—

(1) be appointed by the Secretary; and

(2) report to the Assistant Secretary appointed under section 1782(a)(2).

The Office shall—

(1) identify and prevent through mitigation or prohibition the undue risk posed by certain transactions; and

(2) educate industry and other partners on relevant risks and communicate decisions.

The Executive Director may appoint, without regard to the provisions of sections 3309 through 3318 of title 5, United States Code, candidates directly to positions in the competitive service (as defined in section 2102 of that title).

An individual serving as the Executive Director before the date of the enactment of this part may serve as the Executive Director on and after that date without the need for appointment under subsection (b).

The Executive Director shall report to the Under Secretary for Industry and Security until such time as an Assistant Secretary is appointed, by and with the advice and consent of the Senate, under section 1782(a)(2).

The Secretary, acting through the Office of Information and Communications Technology and Services, shall review covered transactions according to the following procedures:

The Secretary may review any covered transaction that the Secretary suspects poses an undue risk.

In reviewing a covered transaction described in paragraph (1) the Secretary may do the following:

(A) Require any person subject to the jurisdiction of the United States to furnish under oath, in the form of a report or otherwise, at any time as may be required by the Secretary, complete information relative to any such transaction.

(B) Require that any such report take a particular form as directed in a request, regulation, or other guidance provided by the Secretary, which may be required before, during, or after any such transaction.

(C) Through any agency, conduct investigations, hold hearings, administer oaths, examine witnesses, receive evidence, take depositions, and require by subpoena the attendance and testimony of witnesses and the production of any book, contract, letter, paper, and other hard copy or document relating to any matter under investigation, regardless of whether any such report has been required or filed.

If the Secretary finds under subsection (a) that a covered transaction poses an undue risk, the Secretary shall mitigate the undue risk as described in paragraph (2) or prohibit the transaction.

The Secretary may choose to mitigate any undue risk posed by a covered transaction reviewed under subsection (a). To mitigate the undue risk, the Secretary may do any of the following with regard to any party to the covered transaction:

(A) Negotiate, enter into or impose, and enforce any agreement or condition.

(B) Require adherence to certain cybersecurity standards and other mitigation requirements determined to be necessary by the Secretary.

(C) Require the exclusion (in whole or in part) of certain components, including physical parts or hardware, software, digital services, and digital components, of any ICTS or any sub-component of ICTS from any such transaction.

(D) Anything else the Secretary determines to be appropriate or necessary to mitigate the undue risk.

If the Secretary determines that the undue risk posed by a covered transaction cannot be effectively mitigated for any reason, the Secretary—

(A) may prohibit the covered transaction; and

(B) if the Secretary prohibits the transaction, shall—

(i) notify any party subject to the review of the covered transaction of the prohibition; and

(ii) publish the prohibition in the Federal Register.

The Secretary may determine that, for certain classes of covered transactions, a review conducted under section 1785B may not effectively address undue risks and may promulgate, in accordance with section 553 of title 5, United States Code, regulations that do the following:

(1) Identify particular covered transactions, entities of concern, or jurisdictions of concern that warrant particular scrutiny for undue risk.

(2) Establish mitigation measures to address undue risk, to include prohibitions related to entities of concern or jurisdictions of concern or for classes of covered transactions.

(3) Establish criteria by which particular covered transactions or particular classes of participants in the covered transaction supply chain may be recognized as categorically included in or as categorically excluded from mitigation measures or prohibitions.

(4) Establish particular classes of covered transactions or parties to covered transactions that must abide by certain prohibitions or mitigation measures.

(5) Establish procedures to authorize or license transactions otherwise prohibited pursuant to a regulation promulgated under this section.

(6) Any other rule the Secretary determines to be appropriate.

The promulgation of any regulation under subsection (a) does not preclude the Secretary from initiating a review of any covered transaction, including a covered transaction that belongs to an identified category under this section.

Not later than 180 days after the date of the enactment of this part, and annually thereafter, the Director of National Intelligence shall submit to the Secretary—

(1) a risk assessment related to the threats posed by entities of concern or jurisdictions of concern to the United States by the supply chain of covered transactions that—

(A) includes specific criteria to evaluate any risk to the national security of the United States; and

(B) identifies any entities of concern, jurisdictions of concern, participants in such supply chain, and covered transactions or classes of covered transactions posing the highest risks to the national security of the United States; and

(2) a risk assessment of the threats posed by the supply chains of covered transactions to the national security of the United States.

Not later than 90 days after the date on which the risk assessments required by subsection (a) are submitted to the Secretary, the Director of National Intelligence shall submit the risk assessments to the relevant committees of Congress in unclassified format.

The risk assessments submitted under paragraph (1)—

(A) may include a classified annex; and

(B) shall include in the classified annex only the identification of specific participants in the supply chain of covered transactions that pose risk to the national security of the United States.

Any regulation the Secretary promulgated under Executive Order 13873 (50 U.S.C. 1701 note; relating to securing the information and communications technology and services supply chain) and Executive Order 14034 (50 U.S.C. 1701 note; relating to protecting Americans’ sensitive data from foreign adversaries) before the date of the enactment of this part shall continue in effect on and after such date of enactment. In carrying out the requirements of this part, the Secretary may amend regulations or promulgate new regulations and procedures as the Secretary considers appropriate.

The Secretary may issue guidance and establish procedures to carry out this part.

Not later than 180 days after the date of the enactment of this part, the Secretary shall establish an ICTS technical advisory committee to report to the Executive Director of the Office of Information and Communications Technology and Services.

The ICTS advisory committee established under paragraph (1) shall include the following:

(A) Industry academic experts on covered transaction supply chains.

(B) Representatives of private sector companies, industry associations, and academia.

(C) A designated Federal officer to administer the advisory committee and report to the Executive Director.

Any information or document not otherwise publicly or commercially available that has been submitted to the Secretary under this part shall not be released publicly excepted to the extent required by Federal law.

The Secretary may conduct an investigation of any violation of an authorization, order, mitigation measure, regulation, or prohibition issued under this part.

In conducting an investigation described in paragraph (1), the Assistant Secretary of Commerce for Export Enforcement, or designated officers or employees of the Secretary may, to the extent necessary or appropriate to enforce this part, exercise such authority as is conferred upon them by any other Federal law, subject to policies and procedures approved by the Attorney General.

An officer or employee authorized to conduct investigations under subsection (a) by the Secretary may do any of the following:

(1) Inspect, search, detain, seize, or impose a temporary denial order with respect to any item, in any form, or conveyance on which it is believed that there are items that have been, are being, or are about to be imported into the United States in violation of this part or any other applicable Federal law.

(2) Require, inspect, and obtain any book, record, and any other information from any person subject to the provisions of this part or other applicable Federal law.

(3) Administer an oath or affirmation and, by subpoena, require any person to appear and testify or to appear and produce books, records, and other writings.

(4) Obtain a court order and issue legal process to the extent authorized under chapters 119, 121, and 206 of title 18, United States Code, or any other applicable Federal law.

In the case of contumacy by, or refusal to obey a subpoena issued to, any person under subsection (b)(3), a district court of the United States, after notice to such person and a hearing, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce books, records, and other writings, regardless of format, that are the subject of the subpoena. Any failure to obey such order of the court may be punished by such court as a contempt thereof.

The Attorney General may bring an action in an appropriate district court of the United States for appropriate relief, including declaratory and injunctive, or divestment relief, against any person who violates this part or any regulation, order, direction, mitigation measure, prohibition, or other authorization or directive issued under this part.

A claim or petition challenging this part or any action, finding, or determination under this part may be filed only in the United States Court of Appeals for the District of Columbia Circuit.

The United States Court of Appeals for the District of Columbia Circuit shall have exclusive jurisdiction over claims or petitions arising under this part against the United States, any agency, or any component or official of an agency, subject to review by the Supreme Court of the United States under section 1254 of title 28, United States Code.

The following information may be included in the administrative record and shall be submitted to the court only ex parte and in camera:

(1) Sensitive security information, as defined in section 1520.5 of title 49, Code of Federal Regulations.

(2) Records or information compiled for law enforcement purposes, as described in section 552(b)(7) of title 5, United States Code.

(3) Classified information, meaning any information or material that has been determined by the United States Government pursuant to an Executive order, statute, or regulation, to require protection against unauthorized disclosure for reasons of national security and any restricted data, as defined in section 11 of the Atomic Energy Act of 1954 (42 U.S.C. 2014).

(4) Information subject to privilege or protections under any other provision of law, including subchapter II of chapter 53 of title 31, United States Code.

Any information that is part of the administrative record filed ex parte and in camera under subsection (c), or cited by the court in any decision, shall be treated by the court consistent with the provisions of this section. In no event shall such information be released to the claimant or petitioner or as part of the public record.

After the expiration of the time to seek further review, or the conclusion of further proceedings, the court shall return the administrative record, including any and all copies, to the United States.

A determination by the court under this section shall be the exclusive judicial remedy for any claim or petition for review challenging this part or any action, finding, or determination under this part against the United States, any agency, or any component or official of any such agency.

Nothing in this section shall be construed as limiting, superseding, or preventing the invocation of, any privileges or defenses that are otherwise available at law or in equity to protect against the disclosure of information.

A challenge to any determination under this part may only be brought not later than 180 days after the date of such a determination.

It shall be unlawful for a person to violate, attempt to violate, conspire to violate, or cause a violation of any regulation, order, direction, prohibition, or other authorization or directive issued under this part.

A person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids and abets in the commission of a violation of subsection (a) shall be fined not more than $1,000,000 for each violation, imprisoned for not more than 20 years, or both.

The Secretary may impose the following civil penalties on a person for each violation by that person of a rule promulgated under this section:

(A) A monetary penalty that is the greater of—

(i) $250,000; or

(ii) an amount that is twice the value of the action that is the basis of the violation with respect to which the penalty is imposed.

(B) Revocation of any mitigation measure or authorization issued under this part to the person.

(C) A prohibition or other restriction on the ability of the person to engage in any covered transaction or class of such transactions.

Any civil penalty imposed under paragraph (1) may be imposed only pursuant to a rule promulgated under this section.

The Secretary may, by rule, provide standards for establishing levels of civil penalty under paragraph (1) based upon factors, including—

(A) the seriousness of the violation;

(B) the culpability of the violator, including any pattern of reckless behavior; and

(C) any mitigating factors, such as the record of cooperation of the violator with the Federal Government in disclosing the violation.

If the Secretary has reason to believe that there has occurred a violation of subsection (a) and determines that a civil monetary penalty under subsection (c)(1)(A) is warranted, the Secretary shall issue a pre-penalty notice informing the alleged violator of the intent of the Secretary to impose a monetary penalty. The Secretary shall consider any voluntary disclosures of a violation before issuing such notice.

A pre-penalty notice issued under subparagraph (A) shall be in writing and issued either electronically or by mail to the alleged violator.

A pre-penalty notice may be issued under subparagraph (A) whether or not an agency other than the Department of Commerce has taken any action with respect to the matter.

An alleged violator may respond to a pre-penalty notice issued under paragraph (1)(A) in writing to the Secretary.

An alleged violator shall respond to a pre-penalty notice issued under paragraph (1)(A), except as provided by clause (ii), on or before the 30th day after the date of the issuance of the notice. Failure to submit a response during the time required by the previous sentence shall be deemed to be a waiver of the right to respond.

If the deadline under clause (i) for a response to a pre-penalty notice falls on a Federal holiday or weekend, that deadline shall be extended to the following business day. Any other extensions of the deadline shall be granted, at the discretion of the Secretary, only upon specific request to the Secretary.

A response under subparagraph (A) to a pre-penalty notice need not be in any particular form, but it is required to be typewritten and signed by the alleged violator or a representative thereof, contain information sufficient to indicate that it is in response to the pre-penalty notice, and include the identification number listed on the pre-penalty notice. A digital signature is acceptable.

Any response under subparagraph (A) to a pre-penalty notice is required—

(i) to set forth in detail why the alleged violator either believes that a violation of subsection (a) did not occur or why a civil monetary penalty under subsection (c)(1)(A) is otherwise unwarranted under the circumstances; and

(ii) to include all documentary or other evidence available to the alleged violator that supports the arguments set forth in the response.

A representative of the alleged violator may act on behalf of the alleged violator, but any oral communication with the Secretary prior to a written submission regarding the specific allegations contained in the pre-penalty notice is required to be preceded by a written letter of representation, unless the pre-penalty notice was served upon the alleged violator in care of the representative.

Settlement discussions may be initiated by the Secretary, the alleged violator, or the alleged violator's authorized representative.

If, after considering any written response to a pre-penalty notice under subsection (d)(2) and any relevant facts, including voluntary disclosure of a violation of subsection (a), the Secretary determines that there was a violation by the alleged violator named in the pre-penalty notice and that a civil monetary penalty under subsection (c)(1)(A) is appropriate, the Secretary may issue a penalty notice to the violator containing a determination of the violation and the imposition of the monetary penalty.

The issuance of the penalty notice shall constitute final agency action for purposes of review under section 704 of title 5, United States Code.

The violator may seek judicial review of that final agency action under section 1785G.

Nothing in this part shall be construed to alter or affect any other authority, process, regulation, investigation, enforcement measure, or review provided by or established under any other provision of Federal law.

The requirements of chapter 35 of title 44, United States Code (commonly referred to as the Paperwork Reduction Act), shall not apply to any action by the Secretary to implement this part.

Nothing in this part shall prevent or preclude the President or the Committee on Foreign Investment in the United States from exercising any authority under section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565 et seq.) as would be available in the absence of this part.

Nothing in this part may be construed as altering any of the authority of the Office of Information and Communications Technology and Services under Executive Order 13873 (50 U.S.C. 1701 note; relating to securing the information and communications technology and services supply chain) and Executive Order 14034 (50 U.S.C. 1701 note; relating to protecting Americans’ sensitive data from foreign adversaries).

Section 1742(13)(A) of the Export Control Reform Act of 2018 (50 U.S.C. 4801(13)(1)) is amended, in the matter preceding clause (i), by striking part I and inserting parts I and IV.

Section 1765(a) of the Export Control Reform Act of 2018 (50 U.S.C. 4824(a)) is amended—

(A) in the matter preceding paragraph (1), by inserting and part IV after this part;

(B) in paragraph (8), by striking; and and inserting a semicolon;

(C) in paragraph (9), by striking the period and inserting; and; and

(D) by adding at the end the following:

(10) a summary of how authorities under part IV are being used to ensure that entities of concern (as defined in section 1785) cannot undercut United States export controls by acquiring sensitive technology within the United States.

Section 1782(a) of the Export Control Reform Act of 2018 (50 U.S.C. 4852(a)) is amended—

(A) by striking Senate, two and inserting the following: “Senate—

(1) two

(B) by striking the period at the end and inserting; and; and

(C) by adding at the end the following:

(2) one Assistant Secretary of Commerce to assist the Under Secretary in carrying out part IV.