[House Report 115-714]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-714
======================================================================
RESOLUTION DIRECTING THE SECRETARY OF HOMELAND SECURITY TO TRANSMIT
CERTAIN DOCUMENTS TO THE HOUSE OF REPRESENTATIVES RELATING TO
DEPARTMENT OF HOMELAND SECURITY POLICIES AND ACTIVITIES RELATING TO
HOMELAND SECURITY INFORMATION PRODUCED AND DISSEMINATED REGARDING
CYBERSECURITY THREATS POSED BY THE ZTE CORPORATION, HEADQUARTERED IN
SHENZHEN, CHINA
_______
June 8, 2018.--Referred to the House Calendar and ordered to be printed
_______
Mr. McCaul, from the Committee on Homeland Security, submitted the
following
ADVERSE REPORT
together with
DISSENTING VIEWS
[To accompany H. Res. 898]
The Committee on Homeland Security, to whom was referred
the resolution (H. Res. 898) directing the Secretary of
Homeland Security to transmit certain documents to the House of
Representatives relating to Department of Homeland Security
policies and activities relating to homeland security
information produced and disseminated regarding cybersecurity
threats posed by the ZTE Corporation, headquartered in
Shenzhen, China, having considered the same, report unfavorably
thereon without amendment and recommend that the resolution not
be agreed to.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 3
New Budget Authority, Entitlement Authority, and Tax Expenditures 3
Congressional Budget Office Estimate............................. 4
Statement of General Performance Goals and Objectives............ 4
Duplicative Federal Programs..................................... 4
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits....................................................... 4
Federal Mandates Statement....................................... 4
Preemption Clarification......................................... 4
Disclosure of Directed Rule Makings.............................. 5
Advisory Committee Statement..................................... 5
Applicability to Legislative Branch.............................. 5
Section-by-Section Analysis of the Legislation................... 5
Changes in Existing Law Made by the Bill, as Reported............ 5
Dissenting Views................................................. 6
PURPOSE AND SUMMARY
On May 16, 2018, Representative Bennie G. Thompson of
Mississippi introduced H. Res. 898, a non-binding resolution of
inquiry requesting the Secretary of Homeland Security transmit
to the House of Representatives, homeland security information
in the possession of the Secretary that refers or relates to
the following:
1. Any documentation related to the use of any ZTE
Corporation's products by the Department of Homeland Security.
2. Any documentation related to cybersecurity threats or
vulnerabilities resulting from the use of ZTE Corporation's
products by the Department of Homeland Security or the
Department's contractors.
3. Any documentation related to the cybersecurity threats
or vulnerabilities resulting from the use of ZTE Corporation's
products by State and local governments and first responders.
4. Any documentation related to any alerts or warnings
issued by the Department of Homeland Security related to the
use of ZTE Corporation's cybersecurity products.
5. Any documentation related to cybersecurity threats or
vulnerabilities posed by the use of ZTE Corporation products by
the Federal Government.
6. Any documentation related to cybersecurity threats or
vulnerabilities from state actors, including Iran, or terrorist
organizations resulting from ZTE Corporation's activities.
BACKGROUND AND NEED FOR LEGISLATION
A resolution of inquiry is a House resolution directing the
President or the head of an executive department to provide to
the House specific information in the possession of the
Administration.
Clause 7 of House Rule XIII provides that, if properly
drafted, a resolution of inquiry is provided special
parliamentary status allowing the Committee to which the
measure was referred to be discharged if the Committee has not
reported the measure back to the House within 14 legislative
days after is introduction.
The Committee notes that the consideration of this
resolution of inquiry is to have the Committee comply with Rule
XIII, it does not affect the Committee's obligation or
commitment to investigate and require documentation from the
Administration on issues within the Committee's jurisdictional
authorities.
This Committee has several ongoing, bipartisan oversight
projects related to Department of Homeland Security supply
chain risk management, threats posed by Chinese
telecommunications, and other related counterintelligence
threats.
HEARINGS
No hearings were held on H. Res. 898 in the 115th Congress.
COMMITTEE CONSIDERATION
The Committee met on June 6, 2018, to consider H. Res. 898,
and ordered the measure to be reported to the House with an
unfavorable recommendation, without amendment, by a recorded
vote of 16 yeas and 11 nays (Roll Call Vote No. 37).
COMMITTEE VOTES
Clause 3(b) of Rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report legislation and amendments
thereto.
The Committee on Homeland Security considered H. Res. 898
on June 6, 2018, and took the following vote:
On ordering the resolution to be reported to the House of Representatives with an unfavorable recommendation.
Not Agreed to: 16 yeas and 11 nays.
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Representative Yea Nay Representative Yea Nay
----------------------------------------------------------------------------------------------------------------
Mr. McCaul, Chair.... X Mr. Thompson of Mississippi, Ranking X
Member.
Mr. Smith of Texas........................... Ms. Jackson Lee......................
Mr. King of New York......................... X Mr. Langevin......................... X
Mr. Rogers of Alabama........................ X Mr. Richmond......................... X
Mr. Barletta................................. X Mr. Keating.......................... X
Mr. Perry.................................... X Mr. Payne............................ X
Mr. Katko.................................... X Mr. Vela............................. X
Mr. Hurd..................................... X Mrs. Watson Coleman.................. X
Ms. McSally.................................. X Miss Rice of New York................ X
Mr. Ratcliffe................................ Mr. Correa........................... X
Mr. Donovan.................................. X Mrs. Demings......................... X
Mr. Gallagher................................ X Ms. Barragan......................... X
Mr. Higgins of Louisiana..................... X
Mr. Garrett.................................. X
Mr. Fitzpatrick.............................. X
Mr. Estes.................................... X
Mr. Bacon.................................... X
Mrs. Lesko................................... X
-------------
Vote Total: 16 11
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COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of Rule XIII of the Rules of the
House of Representatives, the Committee has held oversight
hearings and made findings that are reflected in this report.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of Rule XIII of the Rules
of the House of Representatives, the Committee finds that H.
Res. 898, would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of Rule XIII of the Rules of the
House of Representatives, a cost estimate provided by the
Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974 was not made available to the
Committee in time for the filing of this report. The Committee
estimates that this non-binding resolution would not result in
any significant costs.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of Rule XIII of the Rules of the
House of Representatives, H. Res. 898 requests that Secretary
of the Department of Homeland Security transmit documents
related to the use of any ZTE Corporation's products by the
Department of Homeland Security; cybersecurity threats or
vulnerabilities resulting from the use of ZTE Corporation's
products by the Department of Homeland Security or the
Department's contractors; cybersecurity threats or
vulnerabilities resulting from the use of ZTE Corporation's
products by State and local governments and first responders;
any alerts or warnings issued by the Department of Homeland
Security related to the use of ZTE Corporation's cybersecurity
products; cybersecurity threats or vulnerabilities posed by the
use of ZTE Corporation products by the Federal Government; and
cybersecurity threats or vulnerabilities from state actors,
including Iran, or terrorist organizations resulting from ZTE
Corporation's activities. And to provide these documents to the
U.S. House of Representatives.
DUPLICATIVE FEDERAL PROGRAMS
Pursuant to clause 3(c) of Rule XIII, the Committee finds
that H. Res. 898 does not contain any provision that
establishes or reauthorizes a program known to be duplicative
of another Federal program.
CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF
BENEFITS
In compliance with Rule XXI of the Rules of the House of
Representatives, this resolution, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of the Rule
XXI.
FEDERAL MANDATES STATEMENT
An estimate of Federal mandates prepared by the Director of
the Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act was not made available to the
Committee in time for the filing of this report. The Committee
believes that no Federal mandates are included in this
resolution.
PREEMPTION CLARIFICATION
In compliance with section 423 of the Congressional Budget
Act of 1974, requiring the report of any Committee on a bill or
joint resolution to include a statement on the extent to which
the bill or joint resolution is intended to preempt State,
local, or Tribal law, the Committee finds that H. Res. 898 does
not preempt any State, local, or Tribal law.
DISCLOSURE OF DIRECTED RULE MAKINGS
The Committee estimates that H. Res. 898 would require no
directed rule makings.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
H.Res. 898, if passed, would require the Secretary of
Homeland Security to provide documents to the House of
Representatives within 14 days of passage.
The documents requested relate to the ZTE Corporation and
its relationship to the Department of Homeland Security
including: the use of any ZTE Corporation's products by the
Department of Homeland Security; cybersecurity threats or
vulnerabilities resulting from the use of ZTE Corporation's
products by the Department of Homeland Security or the
Department's contractors; cybersecurity threats or
vulnerabilities resulting from the use of ZTE Corporation's
products by State and local governments and first responders;
any alerts or warnings issued by the Department of Homeland
Security related to the use of ZTE Corporation's cybersecurity
products; cybersecurity threats or vulnerabilities posed by the
use of ZTE Corporation products by the Federal Government; and
cybersecurity threats or vulnerabilities from state actors,
including Iran, or terrorist organizations resulting from ZTE
Corporation's activities. And to provide these documents to the
U.S. House of Representatives.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H. Res. 898 makes no changes to existing law.
DISSENTING VIEWS
On Wednesday, June 6, 2018, the Committee on Homeland
Security rejected H. Res. 898, a Resolution of Inquiry
directing the Secretary of Homeland Security to transmit
certain documents to the House of Representatives regarding
Department of Homeland Security (DHS) policies and activities
relating to homeland security information produced and
disseminated regarding cybersecurity threats posed by the ZTE
Corporation, a telecommunications company headquartered in
Shenzhen, China.
ZTE has a long track record of rejecting international
business norms, operating in secrecy, and doing the bidding of
the Chinese government. In 2012, ZTE and another Chinese
telecommunications equipment manufacturer, Huawei, were the
subject of a high-profile investigation by the House Permanent
Select Committee on Intelligence, which ultimately concluded
that ``the risks associated with Huawei's and ZTE's provision
of equipment to U.S. critical infrastructure could undermine
core U.S. national-security interests.''\1\ The report included
sweeping recommendations for the U.S. Intelligence Community
(IC) to ``remain vigilant and focused on this threat . . .
[and] actively seek to keep cleared private sector actors as
informed of the threat as possible.''\2\ It also directed the
Committee on Foreign Investment in the United States to block
acquisitions involving ZTE, and urged private entities to
``consider the long-security risks'' of doing business with
ZTE.\3\
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\1\U.S. House of Representatives Permanent Select Committee on
Intelligence, Investigative Report on the U.S. National Security Issues
Posed by Chinese Telecommunications Companies Huawei and ZTE, 112th
Con. (Oct. 8, 2012), available at https://intelligence.house.gov/sites/
intelligence.house.gov/files/dicynets/huawei-
zte%20investigative%20report%20(final).pdf.
\2\Id.
\3\Id.
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In 2016, the Commerce Department imposed stiff penalties on
ZTE for violating U.S. sanctions by making hundreds of
shipments of microprocessors, routers, servers and other
telecommunications equipment that was made with U.S. parts to
Iran, Sudan, North Korea, Syria, and Cuba. In 2017, the
Commerce Department entered into a settlement with ZTE where
the company agreed to pay fines and punish employees involved
in breaching U.S. sanctions or have its export privileges
denied for seven years. In April, when the Commerce Department
learned that the settlement had been breached, it was forced to
bar U.S. companies from exporting to Chinese telecom equipment
maker ZTE for seven years. In May, the Department of Defense
(DOD) announced that it was banning U.S. military bases from
selling Huawei and ZTE phones on the grounds that the devices
``may pose an unacceptable risk'' of spying on soldiers or
revealing troop whereabouts,\4\ and the Federal Communications
Commission proposed rules barring small, rural carriers from
buying Chinese-made telecommunications equipment.\5\
---------------------------------------------------------------------------
\4\``Pentagon Orders Stores on Military Bases to Remove Huawei, ZTE
Phone,'' The Wall Street Journal (May 2, 2018), available at https://
www.wsj.com/articles/pentagon-asking-military-bases-to-remove-huawei-
zte-phones-1525262076?mod=djemalertNEWS&ns=prod/accounts-wsj&ns=prod/
accounts-wsj&ns=prod/accounts-wsj&ns=prod/accounts-wsj&ns=prod/
accounts-wsj&ns=prod/accounts-wsj.
\5\Federal Communications Commission Notice of Proposed Rulemaking,
Protecting Against National Security Threats to the Communications
Supply Chain Through FCC Programs, FCC 18-42 (Apr. 18, 2018).
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Then, inexplicably, on May 13, 2018, President Trump
tweeted, without warning or explanation, that he had spoken
with President Xi of China and that he was directing the
Commerce Department to work to save ZTE and Chinese jobs.\6\ It
is unclear whether the President familiarized himself with the
IC's significant concerns about ZTE or whether there was any
engagement with the IC or DHS prior to tweeting this new policy
on ZTE. What we do know is that two days before the
announcement, the Chinese government agreed to help finance the
development of a Trump-branded resort property in Indonesia,
offering roughly $500 million toward construction of the
project. We also know that a day after the President tweeted
about easing sanctions on ZTE, the company hired Bryan Lanza, a
former Trump Campaign staffer to lobby on its behalf.
---------------------------------------------------------------------------
\6\Twitter, Donald J. Trump, @realDonaldTrump (May 13, 2018 at
11:01 AM).
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I introduced this Resolution of Inquiry in response to
urgent warnings from national security experts, including the
Director of National Intelligence and top officials at the
Federal Bureau of Investigation, the Central Intelligence
Agency, and the National Security Agency, among others, that
the use of ZTE products could create an access point for the
Chinese government to conduct espionage.\7\ Consideration of H.
Res. 898 provided Members of the Committee on Homeland Security
with the opportunity to send a strong statement of concern
about the direction the Trump Administration is going on this
national security matter.
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\7\Testimony of Daniel R. Coats, Director of National Intelligence,
Michael Pompeo, CIA Director, Adm. Michael Rogers, NSA Director, and
Chris Wray, FBI Director, before the U.S. Senate Select Committee on
Intelligence hearing entitled Worldwide Threats (Feb. 13, 2018).
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The Resolution of Inquiry would have forced DHS to provide
Congress with information to get a better understanding of the
implications, particularly the cybersecurity implications, of
easing sanctions against ZTE. Given that the Pentagon was in
the process of barring the sale of ZTE devices on military
bases, it seems reasonable that DHS would have conducted its
own investigations and arrived at its own national security
conclusions. Unfortunately, the Majority chose to stay silent
on this urgent national security issue and unanimously voted to
report the measure unfavorably to the House of Representatives.
With this vote, the Majority essentially decided to look away
as the Trump Administration pursued efforts to relax its
punishment of ZTE, discounting the significant national
security concerns voiced by DOD, the IC, security experts and
U.S. allies. The day after the markup, Secretary of Commerce
Wilbur Ross announced that the seven-year ban on ZTE buying
American parts would be relaxed, as the company had agreed to
pay a $1 billion fine and adopt a new compliance regime.
Congress has a responsibility to be a check on the
Administration. By voting down H. Res. 898, the Majority chose
to sit on the sidelines and let the Trump Administration ease
sanctions on a company that DOD, the IC, security experts and
U.S. allies believe to be a threat to our national security. As
such, I dissent against the Committee's decision to stand in
the way of oversight of this urgent national security matter.
Bennie G. Thompson,
Ranking Member.
[all]