RESTRICT ACT: Are Americans Being Railroaded with ‘Tik Tok’ Legislation?

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The RESTRICT Act is being sold to Americans as an anti-Chinese espionage measure, but Scott Lincicome, Clark Packard, Jennifer Huddleston, and Will Duffield of the CATO Institute explain how it contains much more that could erode the rights of Americans. They write:

What’s Actually in the RESTRICT Act?

The “Restricting the Emergence of Security Threats that Risk Information and Communications Technology” (RESTRICT Act) can be broken down into five main parts:

• ICT “transactions” authority. The bill authorizes and instructs the Department of Commerce to “identify, deter, disrupt, prevent, prohibit, investigate, or otherwise mitigate” any risk arising from a covered transaction between U.S. individuals/​firms and “covered entities” from “adversary countries” that “poses an undue or unacceptable risk to the national security of the United States or the safety of United States persons.” The bill broadly defines “transactions” to include “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology product or service, including ongoing activities such as managed services, data transmission, software updates, repairs, or the provision of data hosting services, or a class of such transactions.” These include risks of election interference, activities that “undermine democratic processes and institutions or steer policy” and anything that “otherwise poses an undue or unacceptable risk to national security.” Because almost any communications technology can be misused to meddle in foreign domestic affairs, any disfavored platform can be seen to present these risks. It also broadly defines a “covered entity” to include not merely state actors but essentially any group subject to the jurisdiction of a “foreign adversary” country or owned, directed or controlled by a person subject to that jurisdiction. The department may, but is not required to, publish an explanation for its determinations.

• “Holdings” authority. The bill also requires the secretary of commerce to identify covered “holdings” (defined as “any interest, stock, security, share, partnership interest, LLC interest, or any participation, right, or other equivalent, however designated and of any character”) that pose a risk to national security. Covered holdings are defined broadly to include any holding in which a group subject to the jurisdiction of a “foreign adversary” has direct or indirect “power… to determine, direct, or decide important matters affecting an entity.” Commerce must also refer such risks to the president who is then given 30 days to take “such action as the president considers appropriate to compel divestment of, or otherwise mitigate the risk associated with” such a holding.

• “Adversary countries” authority. The bill defines “adversary countries” to include China, Cuba, Iran, North Korea, Russia, and Venezuela, but also authorizes the Commerce Department to designate new “adversary countries” that have a “long‐​term pattern” or “serious instances of conduct significantly adverse to the national security of the United States or the security and safety of United States persons.” Commerce must notify Congress before making (or removing) this designation, and Congress can reject the agency’s decision by passing a joint (both chambers) resolution of disapproval.

• Investigation and enforcement authority. In carrying out its authorities, Commerce may “require any party to a transaction or holding under review or investigation… to furnish under oath, in the form of reports or otherwise, at any time as may be required by [Commerce], complete information relative to any act, transaction, or holding” covered by the law. Commerce or another agency may also “conduct investigations of violations of any authorization, order, mitigation measure, regulation, or prohibition issued” under the law. During these investigations, federal officials may search or seize covered imports; search or obtain books and records of “any person” implicated by the law; and/​or require those persons to appear and testify before the agency. Violations of the law (e.g., engaging in prohibited transactions or refusing to cooperate with an investigation) may be subject to both civil and criminal penalties, which include fines up to $1 million, imprisonment up to 20 years, and forfeiture of assets.

• Limited judicial review. The law expressly limits judicial review of agency and presidential determinations and actions under the Administrative Procedure Act and most other provisions of U.S. law. In particular, courts may disturb only actions taken by Commerce or the president that the plaintiff has demonstrated are “unconstitutional or in patent violation of a clear and mandatory statutory command.” During this litigation, the government may file sensitive, privileged, or classified information that will not be given to the party suing the government.