Mandatory, If You Choose

When does "mandatory" mean optional? Perhaps when the Bush administration is interpreting the 1988 Exon-Florio amendment to the Defense Production Act that Congress adopted to enable the president to block any foreign acquisition of a U.S. company that might threaten national security. The amendment mandates that any foreign investment that could impinge on national security be subject to a 45-day review. Here are excerpts from the Feb. 23 Senate Armed Services Committee hearing on the bid by Dubai Ports World of the United Arab Emirates to manage some U.S. ports.

Sen. Hillary Rodham Clinton (D-N.Y.): We know from press reports . . . that the process used to review this transaction appears to be cursory at best. A number of provisions were not required of the company and it appears similarly that the mandatory requirement for an additional 45-day review when the entity involved is government owned was ignored. . . . The full 45-day investigation of an investment by a foreign government is mandatory if it, quote, "affects national security." Yet the CFIUS [Committee on Foreign Investment in the United States] board voted unanimously, according to our information, not to conduct an investigation that by my reading of the statute is required.

Deputy Treasury Secretary Robert Kimmitt: Any agency that identifies a potential threat to national security has an obligation to raise those concerns within the review process. If any member of CFIUS raises a national security concern, then the case goes to an extended 45-day investigation period . . .

Sen. John Warner (R-Va.): There was a reference made to this investigation of 45 days, and that was an important point. The word " mandatory " was used. As I read the statute, it's more or less discretionary. But that discretion is exercised, Secretary Kimmitt, if any of the CFIUS members decide that it should be done. Perhaps you should clarify that procedure and the reason it was not done in this case.

Kimmitt: Senator, we have a difference of opinion on the interpretation of your amendment. It is now a 14-year difference of opinion, because this amendment has been interpreted by successive administrations since 1992 as being discretionary . . .

Sen. Carl Levin (D-Mich.): I don't see how you can interpret the statute two ways. It's not a discretionary statute. The statute says that the president or the president's designee shall make an investigation. In other words, shall is not discretionary. The shall -- the word shall -- I think you'd agree, Mr. Kimmitt, is a mandatory word. Would you agree with that so far?

Kimmitt: I would agree with that, Senator, so far.

Levin: Okay. Good. Well, now we're going to get to the rest of the sentence. "Where the takeover could affect" -- could affect -- "the national security of the United States." Are you saying that there's not one department that looked at this that thought that the takeover of these facilities could affect the national security?

Kimmitt: I accept what you said with regard to "shall," but as to the "could," which isn't "shall," we have basically taken a position, as have previous Democratic and Republican administrations, that that is only triggered if concerns about potential harm to the national security have not been resolved.

Levin: Ambiguity has been found in a statute which is unambiguous. . . .

Kimmitt: Respectfully, if I could respond briefly. We didn't ignore the law. We might interpret it differently, but the fundamental fact here -- concerns were raised; they were resolved. . . .

Warner: I must say as a lawyer myself, reading this on the face, my colleagues raise a legitimate question.