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S. 1869: Secure Federal LEASEs Act


The text of the bill below is as of Jun 13, 2019 (Introduced).


II

116th CONGRESS

1st Session

S. 1869

IN THE SENATE OF THE UNITED STATES

June 13, 2019

(for himself and Mr. Portman) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs

A BILL

To require the disclosure of ownership of high-security space leased to accommodate a Federal agency, and for other purposes.

1.

Short title; findings

(a)

Short title

This Act may be cited as the Secure Federal Leases from Espionage And Suspicious Entanglements Act or the Secure Federal LEASEs Act.

(b)

Findings

Congress finds that—

(1)

the Government Accountability Office has reported that the Federal Government often leases high-security space from private sector landlords;

(2)

the General Services Administration collects highest-level and immediate ownership information through the System of Award Management, but it is not currently required to collect beneficial ownership information and lacks an adequate system for doing so;

(3)

the General Services Administration and Federal agencies with leasing authority may not know if foreign owners have a stake in the buildings leased by the agencies, either through foreign-incorporated legal entities or through ownership in United States-incorporated legal entities, even when the leased space is used for classified operations or to store sensitive data; and

(4)

according to a report of the Government Accountability Office, dated January 2017, that examined the risks of foreign ownership of Government-leased real estate, leasing space in foreign-owned buildings could present security risks such as espionage and unauthorized cyber and physical access.

2.

Definitions

In this Act:

(1)

Beneficial owner

(A)

In general

Except as provided in subparagraph (B), the term beneficial owner means, with respect to a covered entity, each natural person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise—

(i)

exercises control over the covered entity; or

(ii)

has a substantial interest in or receives substantial economic benefits from the assets of the covered entity.

(B)

Exceptions

The term beneficial owner does not include, with respect to a covered entity—

(i)

a minor child;

(ii)

a person acting as a nominee, intermediary, custodian, or agent on behalf of another person;

(iii)

a person acting solely as an employee of the covered entity and whose control over or economic benefits from the covered entity derives solely from the employment status of the person;

(iv)

a person whose only interest in the covered entity is through a right of inheritance, unless the person also meets the requirements of subparagraph (A); or

(v)

a creditor of the covered entity, unless the creditor also meets the requirements of subparagraph (A).

(C)

Anti-abuse rule

The exceptions under subparagraph (B) shall not apply if used for the purpose of evading, circumventing, or abusing the requirements of this Act.

(2)

Closely held

The term closely held means a fund that has less than 100 natural persons as direct or indirect investors.

(3)

Control

The term control means, with respect to a covered entity—

(A)

having the authority or ability to determine how a covered entity is utilized; or

(B)

having some decision-making power for the use of a covered entity.

(4)

Covered entity

The term covered entity means a person, copartnership, corporation, or other public or private entity.

(5)

Executive agency

The term Executive agency has the meaning given the term in section 105 of title 5, United States Code.

(6)

Federal agency

The term Federal agency means any Executive agency or any establishment in the legislative or judicial branch of the Government.

(7)

Federal lessee

The term Federal lessee means the Administrator of General Services, the Architect of the Capitol, or the head of any Federal agency, other than the Department of Defense, that has independent statutory leasing authority.

(8)

Foreign entity

The term foreign entity means an entity that is headquartered or incorporated in a country that is not the United States.

(9)

Foreign person

The term foreign person means an individual who is not a United States person.

(10)

Federal tenant

The term Federal tenant means a Federal agency that is occupying or will occupy a high-security leased space for which a lease agreement has been secured on behalf of the Federal agency.

(11)

High-security leased space

The term high-security leased space means a space leased by a Federal lessee that—

(A)

will be occupied by Federal employees for nonmilitary activities; and

(B)

has a facility security level of III, IV, or V, as determined by the Federal tenant in consultation with the Interagency Security Committee, the Department of Homeland Security, and the General Services Administration.

(12)

Highest-level owner

The term highest-level owner means the entity that owns or controls an immediate owner of the offeror of a lease, or that owns or controls 1 or more entities that control an immediate owner of the offeror.

(13)

Immediate owner

The term immediate owner means an entity, other than the offeror of a lease, that has direct control of the offeror, including ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees.

(14)

Substantial economic benefits

The term substantial economic benefits means, with respect to a natural person described in paragraph (1)(A)(ii), having an entitlement to the funds or assets of a covered entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the covered entity.

(15)

United States person

The term United States person means an individual who—

(A)

is a citizen of the United States; or

(B)

is an alien lawfully admitted for permanent residence in the United States.

(16)

Widely held

The term widely held means a fund that has not less than 100 natural persons as direct or indirect investors.

3.

Disclosure of ownership of high-security space leased for Federal agencies

(a)

Required disclosures

Before entering into a lease agreement with a covered entity or approving a novation agreement with a covered entity involving a change of ownership under a lease that will be used for high-security leased space, a Federal lessee shall require the covered entity to identify and disclose whether the immediate or highest-level owner of the leased space, including an entity involved in the financing thereof, is a foreign person or a foreign entity, including the country associated with the ownership entity.

(b)

Notification

If a disclosure is made under subsection (a), the Federal lessee shall notify the Federal tenant of the building or other improvement that will be used for high-security space in writing, and consult with the Federal tenant, regarding security concerns and necessary mitigation measures, if any, prior to award of the lease or approval of the novation agreement.

(c)

Timing

(1)

In general

A Federal lessee shall require a covered entity to provide the information described in subsection (a) to a covered entity when first submitting a proposal in response to a solicitation for offers issued by the Federal lessee.

(2)

Updates

A Federal lessee shall require a covered entity to update a submission of the information described in subsection (a) annually, beginning on the date that is 1 year after the date on which the Federal tenant began occupancy, with information including—

(A)

the list of immediate or highest-level owners of the covered entity during the preceding 1-year period of Federal occupancy; or

(B)

the information required to be provided relating to each such immediate or highest-level owner.

4.

Immediate, highest-level, and beneficial owners

(a)

Proposal

The General Services Administration shall develop a Government-wide proposal for identifying all immediate, highest-level, or beneficial owners of high-security leased spaces before entering into a lease agreement with a covered entity for the accommodation of a Federal tenant in a high-security leased space.

(b)

Requirements

(1)

Contents

The proposal described in subsection (a) shall include a process for collecting and utilizing the following information on each immediate, highest-level, or beneficial owner of a high-security leased space:

(A)

Name.

(B)

Current residential or business street address.

(C)

An identifying number or document that verifies identity as a United States person or foreign person.

(2)

Disclosures and notifications

The proposal described in subsection (a) shall—

(A)

require the disclosure of any immediate, highest-level, or beneficial owner that is a foreign person;

(B)

require that, if the Federal lessee is assigning the building or other improvement that will be used for high-security space to a Federal tenant, the Federal tenant shall be notified of the disclosure described in subparagraph (A); and

(C)

exclude collecting ownership information on widely held pooled-investment vehicles, mutual funds, trusts, or other pooled-investment vehicles; and

(D)

include ownership information on closely held pooled-investment vehicles, mutual funds, trusts, or other pooled-investment vehicles.

(c)

Report and implementation

The General Services Administration shall—

(1)

not later than 1 year after the date of enactment of this Act, submit the proposal described in subsection (a) to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and Reform of the House of Representatives; and

(2)

not later than 6 years after the date of enactment of this Act, implement the proposal described in subsection (a).

5.

Other security agreements for leased space

A lease agreement between a Federal lessee and a covered entity for the accommodation of a Federal agency in a building or other improvement that will be used for high-security space shall include language that provides that—

(1)

the covered entity and any member of the property management company who may be responsible for oversight or maintenance of the high-security space shall not—

(A)

maintain access to the high-security space; or

(B)

have access to the high-security space without prior approval from the Federal tenant;

(2)

access to the high-security space or any property or information located within that space will only be granted by the Federal tenant if the Federal tenant determines that the access is clearly consistent with the mission and responsibilities of the Federal tenant; and

(3)

the Federal lessee shall have written procedures in place, signed by the Federal lessee and the covered entity, governing access to the high-security space in case of emergencies that may damage the leased property.