50 U.S.C. § 4581 — Prohibition on investments
submitted 76 years ago by Pub. L. 119-60 to r/title-50-WAR-AND-NATIONAL-DEFENSE · 623 words · no verdicts yet
This section addresses prohibition on investments. It sets the rules and duties stated in the section.
(a) The Secretary may, under regulations issued under subsection (e), prohibit a United States person*, including controlled foreign entities, from knowingly entering into a covered national security transaction* involving prohibited technology. (b) A person may not evade or avoid that prohibition, intend to evade or avoid it, cause a violation, or try to violate it. (c)(1) Subject to subsection (d), the Secretary may exempt an activity that the President, consulting with the Secretary or delegating to the Secretary, determines is in the United States’ national interest. The Secretary must coordinate with Commerce, State, and, as appropriate, other relevant agencies. (2) The regulations do not apply to authorized United States intelligence activities. (d) The Secretary must notify the appropriate congressional committees* within five business days after issuing an exemption and identify the national interest supporting it, subject to confidentiality and classification rules. (e)(1) The Secretary, consulting with Commerce, State, and appropriate agencies, may issue or update regulations after public notice and comment under title 5. The regulations are not subject to section 4559 and must, as needed, amend, end, replace, revoke, or simplify the Outbound Investment Rule in 31 C.F.R. part 850 and allow a reasonable compliance period. (2)(A) The regulations must let a person confidentially request nonbinding feedback, or anonymized public guidance, on whether a transaction is covered prohibited-technology activity. (B) The Secretary may limit requests considered frivolous. (3)(A) The regulations must consider whether a United States person identified and disclosed its own violation when deciding the violation’s legal consequences. (B) They must set the form and contents of a self-disclosure letter, including relevant facts, why the person believes it violated the prohibition, and a proposal to reduce the harm. (4) The Secretary should protect national security while, as practicable, minimizing compliance cost and complexity and duplicate reporting, choosing the least burdensome effective option, and emphasizing transparency and stakeholder participation. (5) In an enforcement action, the Secretary bears the burden of proof under section 556(d) of title 5.
The Secretary may prohibit, in accordance with regulations issued under subsection (e), a United States person*, including its controlled foreign entities, from knowingly engaging in a covered national security transaction* in any prohibited technology.
Any action that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate the prohibition set forth in subsection (a) is prohibited.
Subject to subsection (d), the Secretary is authorized to exempt from the prohibition set forth in subsection (a) any activity determined by the President, in consultation with the Secretary, or delegated to the Secretary, in coordination with the Secretary of Commerce, the Secretary of State, and, as appropriate, the heads of other relevant Federal departments and agencies, to be in the national interest of the United States.
Regulations issued under subsection (e) shall not apply to any authorized intelligence activities of the United States.
The Secretary shall—
notify the appropriate congressional committees* not later than five business days after issuing an exemption under subsection (c); and
include in such notification an identification of the national interest justifying the use of the exemption, subject to appropriate confidentiality and classification requirements.
The Secretary, in consultation with the Secretary of Commerce, the Secretary of State and, as appropriate, the heads of other relevant Federal departments and agencies, may issue or update existing regulations to carry out this section subject to public notice and comment in accordance with subchapter II of chapter 5 and chapter 7 of title 5, and not subject to the requirements of section 4559 of this title. The regulations issued pursuant to this paragraph shall, as necessary, amend, terminate, supersede, revoke, or streamline existing requirements in part 850 of title 31, Code of Federal Regulations (the Outbound Investment Rule) and shall provide a reasonable timeframe for compliance.
The regulations issued under paragraph (1) shall include a process under which a person can request to receive non-binding feedback on a confidential basis, or as anonymized guidance to the public, as to whether a transaction would constitute a covered national security transaction in a prohibited technology.
In establishing the process required by subparagraph (A), the Secretary may prescribe limitations on requests for feedback identified as frivolous for purposes of this subsection.
The regulations issued under paragraph (1) shall account for whether a United States person has self-identified and self-disclosed a violation of the prohibition set forth in subsection (a) in determining the legal consequences of that violation.
The regulations issued under paragraph (1) shall dictate the form and content of a letter of self-disclosure, which shall include relevant facts about the violation, why the United States person believes its activity to have violated the prohibition set forth in subsection (a), and a proposal for mitigation of the harm of such action.
In issuing regulations under paragraph (1), the Secretary should balance the priority of protecting the national security interest of the United States while, to the extent practicable—
minimizing the cost and complexity of compliance for affected parties, including the duplication of reporting requirements under current regulations;
adopting the least burdensome alternative that achieves regulatory objectives; and
prioritizing transparency and stakeholder involvement in the process of issuing the rules.
In accordance with section 556(d) of title 5, in an enforcement action for a violation of the prohibition set forth in subsection (a), the burden of proof shall be upon the Secretary.
Source credit: (Sept. 8, 1950, ch. 932, title VIII, § 801, as added Pub. L. 119–60, div. H, title LXXXV, § 8521, Dec. 18, 2025, 139 Stat. 1924.)
- 1950Enacted · Pub. L. 119-60 · 139 Stat. 1924
A history note hasn’t been published yet. The record shows enactment by Pub. L. 119-60 on 1950-09-08.
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