H.R. 2246 — Foreign Investment Guardrails to Help Thwart (FIGHT) China Act

This section authorizes the President—delegated to the Secretary of the Treasury—to designate covered foreign persons and to exercise all powers under the International Emergency Economic Powers Act (IEEPA; 50 U.S.C. 1701 et seq.) to block and prohibit all transactions in their property and interests in property that are in the United States, come within the United States, or are in the possession or control of a U.S. person. It applies IEEPA civil and criminal penalties (50 U.S.C. 1705(b), (c)); provides exceptions for U.S. intelligence, law enforcement, and official government activities; requires the Secretary of the Treasury, in consultation with the Secretary of State, to consider credible information from foreign governments, nongovernmental organizations, or congressional committees in making designations; and authorizes IEEPA administrative powers (50 U.S.C. 1702, 1704). Additionally, not later than 365 days after enactment and annually thereafter for 7 years, the Secretary must report to specified congressional committees on whether foreign persons on the Non-SDN Chinese Military-Industrial Complex Companies List qualify as covered foreign persons, in unclassified form with a possible classified annex.

This section defines terms for purposes of this title, including "(1) appropriate congressional committees," meaning specified House and Senate committees on financial services, banking, and foreign affairs; "(2) country of concern," meaning the People's Republic of China, including the Hong Kong and Macau Special Administrative Regions; "(3) covered foreign person," meaning a foreign person incorporated, principally based, or controlled in a country of concern (or owned 50% or more by such entities) that knowingly engages in significant operations in that country's defense/materiel or surveillance technology sectors; "(4) foreign person," meaning any person, country, state, or government not a United States person; "(5) Non-SDN Chinese Military-Industrial Complex Companies List," meaning the Treasury Department's Office of Foreign Assets Control list under Executive Orders 13959 and 14032; and "(6) United States person," meaning U.S. citizens, permanent residents, U.S.-organized entities, or persons in the United States.

This section adds Title VIII to the Defense Production Act of 1950 (50 U.S.C. 4501 et seq.) to authorize prohibitions and notifications on U.S. person investments relating to covered national security transactions. Specifically, section 801 authorizes the Secretary (in regulations issued under the Administrative Procedure Act) to prohibit U.S. persons from knowingly engaging in such a transaction in a prohibited technology, prohibits evasion, and allows the President to waive prohibitions in the national interest subject to notification to congressional committees within 5 business days. The regulations must include (1) a process for confidential non-binding feedback on whether a transaction qualifies; (2) self-disclosure procedures with opportunity to cure; (3) low-burden compliance minimizing duplication and costs; and (4) civil penalties up to $250,000 or twice the transaction value, plus authority for compelled divestment and judicial enforcement, with burden of proof on the Secretary. Section 802 requires U.S. persons engaging in a covered national security transaction in a prohibited technology (unless prohibited under section 801) or notifiable technology to submit written notification to the Secretary within 30 days after completion, with implementing regulations due within 450 days of enactment.

This section requires the Secretary of Defense to submit to the appropriate congressional committees, not later than 365 days after enactment and biennially thereafter for six years, a report assessing whether certain People's Republic of China (PRC) persons qualify for inclusion on the Non-SDN Chinese Military-Industrial Complex Companies List (Non-SDN CMIC List)—specifically, PRC persons on the Department of Commerce's Military End-User List, the section 1260H list of PRC military companies, or the Entity List. (1) To prepare the reports, the President must establish an interagency process for sharing relevant information among the administering agencies and may use a risk-based prioritization framework; (2) subsequent reports may summarize prior findings without additional review and must include overviews of listing criteria for the Non-SDN CMIC List and the three assessed lists. This section further directs the President to promulgate rules prohibiting any U.S. person from knowingly holding securities of Non-SDN CMIC List entities after 365 days post-enactment, with an authorization for divestment transactions during that period. The President may waive the prohibition on a case-by-case basis for national security or foreign policy reasons, following advance written notice and a briefing within 30 days to the appropriate congressional committees. This section defines key terms, including "appropriate congressional committees" (specified House and Senate committees), "country of concern" (PRC, including Hong Kong and Macau), "Non-SDN CMIC List" (OFAC's list under Executive Orders 13959 and 14032), and "PRC person" (entities incorporated in or owned 50% or more by a country of concern, certain Chinese Communist Party members, or government entities of a country of concern).