foreign adversary fraud office; appropriation

Plain English Breakdown

The bill summary does not provide specific details on how the funds will be used beyond providing resources for the office.

Foreign Adversary Fraud Office; Funding

This bill establishes a Foreign Adversary Fraud Office within the Attorney General's office and funds it with $500,000 from the state budget to handle fraud involving technology produced by foreign adversaries.

What This Bill Does

• Creates the Foreign Adversary Fraud Office in the Attorney General’s office to pursue legal claims against entities violating consumer fraud laws related to technology produced by a foreign adversary.
• Defines 'foreign adversary' as any country determined to be a foreign adversary pursuant to federal regulations, including China and Russia.
• Establishes the Foreign Adversary Fraud Fund with $500,000 from the state budget for the office's work.
• Sets up the Rip and Replace Fund for replacing technology made by foreign adversaries in critical infrastructure after transferring excess funds from the Fraud Fund.

Who It Names or Affects

• The Attorney General's Office
• Entities suspected of fraud involving technology produced by countries considered enemies of the U.S.
• Arizona residents and businesses using critical infrastructure

Terms To Know

Foreign Adversary

A country determined to be a foreign adversary pursuant to federal regulations.

Critical Infrastructure

Systems and assets owned or operated by the state, political subdivisions of the state, or publicly regulated utilities that are vital for Arizona's security, economy, public health, and safety.

Limits and Unknowns

• The bill does not specify how the funds will be used beyond providing resources to the office.
• It is unclear what happens if there isn't enough money in the Fraud Fund at the end of a fiscal year.
• The Rip and Replace Fund only starts after transferring excess funds from the Fraud Fund.

Official Summary Text

SB1308 - 572R - Senate Fact Sheet

Assigned to
PS
& ATT���������������������������������������������������������������������������������������������������������� FOR
COMMITTEE

ARIZONA STATE SENATE

Fifty-Seventh
Legislature, Second Regular Session

FACT SHEET FOR
S.B. 1308

foreign adversary
fraud office; appropriation

Purpose

����������� Establishes the
Foreign Adversary Fraud Office (Office), and related funds, to pursue legal
claims against entities that violate consumer fraud laws to sell technology
produced by a foreign adversary and to replace critical infrastructure
technology produced by a foreign adversary. Appropriates $500,000 from the state
General Fund (state GF) in FY 2027 to the Foreign Adversary Fraud Fund (Fraud
Fund).

Background

����������� The
federal Committee on Foreign Investment in the United States (CFIUS) is charged
with conducting investigations of the effects of a covered transaction on the
national security of the United States if the transaction would result in
control of any critical infrastructure of or within the United States by or on
behalf of any foreign person. If CFIUS determines that the transaction could
impair national security, and that such impairment to national security has not
been mitigated, CFIUS must take any necessary actions in connection with the
transaction to protect the national security of the United States. Covered
transactions include but are not limited to, investments by a foreign person in
any unaffiliated U.S. business that owns, operates, manufactures, supplies or
services critical infrastructure (
50
U.S.C. � 4565
).

����������� The Department of
Public Safety (DPS) operates the Statewide Critical Infrastructure Information
System and makes critical infrastructure information available to all state,
local, federal and tribal law enforcement agencies, certain state agencies and
other organizations, as necessary to safeguard personnel and property in
Arizona. The Critical Infrastructure Information Program is implemented based
on the state-wide assessment of threat and vulnerability by the Arizona Counter
Terrorism Information Center under DPS (A.R.S. ��
41-1802

and
41-1803
).

����������� Critical
infrastructure
is systems and assets, whether physical or virtual, that are
so vital to Arizona and the United States that the incapacity or destruction of
those systems and assets would have a debilitating impact on security, economic
security, public health or safety (
A.R.S.

� 41-1801
).

����������� S.B. 1308
appropriates $500,000 from the state GF in FY 2027 to the Fraud Fund.

Provisions

1.

Establishes the Office in the Attorney General's (AG) Office.

2.

Requires the Office to bring legal claims against entities in Arizona
that are suspected of violating consumer fraud laws in the marketing,
distribution or sale of technology produced by a
foreign adversary
.

3.

Defines
a
foreign adversary
as any country determined to be a foreign adversary
by the U.S. Secretary of Commerce, which currently includes the People's
Republic of China, Republic of Cuba, the Islamic Republic of Iran, the
Democratic People's Republic of Korea, Russian Federation and Venezuelan
politician Nicolas Maduro.

4.

Requires
the AG to appoint a Director of the Office.

5.

Allows,
at the discretion of the AG, the Office to pursue any investigation, litigation
strategy or legal activity to defend the state against foreign adversaries.

6.

Establishes
the Fraud Fund consisting of legislative appropriations.

7.

Stipulates
that up to $10,000,000 of monies in the Fraud Fund are continuously
appropriated and exempt from lapsing.

8.

Transfers
all Fraud Fund monies exceeding $10,000,00 at the end of the fiscal year to the
Foreign Adversary Technology Rip and Replace Fund (Rip and Replace Fund).

9.

Requires
the AG's Office to administer the Fraud Fund.

10.

Instructs the AG to use
Fraud Fund monies to provide resources for the Fraud Office, to staff the Office
and for litigation costs associated with bringing legal claims.

11.

Establishes the Rip and
Replace Fund consisting of legislative appropriations and transferred Fraud
Fund monies.

12.

Stipulates that Rip and
Replace Fund monies must be used to replace any technology that is produced by
a foreign adversary from any critical infrastructure.

13.

Requires the Arizona
Department of Homeland Security to:

a)

administer the Rip and Replace Fund; and

b)

create a list of all critical infrastructure to audit based on the
security risk posed by the presence of any technology that is produced by a
foreign adversary.

14.

Repeals the Office and the
Fraud Fund on January 1, 2031, and the Rip and Replace Fund on January 1, 2032.

15.

Appropriates $500,000 from
the state GF in FY 2027 to the Fraud Fund.

16.

Exempts the appropriation
from lapsing.

17.

Defines
critical
infrastructure
as infrastructure that is owned or operated by the state, a
political subdivision of the state or a publicly regulated utility and that is:

a)

a gas and oil production, storage or delivery system, a water supply
refinement, storage or delivery system or an electrical power delivery system;

b)

telecommunications network;

c)

a transportation system and service;

d)

a personal data storage system, including cybersecurity; or

e)

an
emergency service.

18.

Becomes
effective on the general effective date.

Prepared by Senate Research

January
26, 2026

KJA/hk

Current Bill Text

SB1308 - 572R - S Ver

Senate Engrossed

foreign adversary
fraud office; appropriation

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SENATE BILL 1308

AN
ACT

Amending title 41, chapter 1, article 5, Arizona
Revised Statutes, by adding section 41-191.14; repealing section 41-191.14,
Arizona Revised Statutes; amending title 41, chapter 41, article 2, Arizona
Revised Statutes, by adding section 41-4274; repealing section 41-4274, Arizona
Revised Statutes; APPROPRIATING monies; relating to the attorney general.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be
it enacted by the Legislature of the State of Arizona:

Section
1. Title
41, chapter 1, article 5, Arizona Revised Statutes, is amended by adding
section 41-191.14, to read:

START_STATUTE
41-191.14.

Foreign adversary fraud office; fund; definition

A. The foreign adversary fraud office
is established in the attorney general's office. The office shall
bring legal claims against entities in this state that are suspected of
violating consumer fraud laws in the marketing, distribution or sale of any
technology that is produced by a foreign adversary.

B. the attorney general shall appoint
The director of the office.

C. At the discretion of the attorney
general, the office may pursue any INVESTIGATIOn, litigation strategy or legal
activity to defend this state against foreign adversaries.

D. The
Foreign ADVERSARY fraud fund is established consisting of legislative
appropriations. Monies in the fund are CONTINUOUSLY appropriated and
are exempt from the provisions of section 35-190 relating to the lapsing
of appropriations, except that all monies in the fund exceeding $10,000,000 at
the end of the fiscal year are transferred to the foreign adversary technology
rip and replace fund established by section 41-4274. The Attorney
General's office shall administer the fund. the attorney general shall
use monies in the fund to provide resources for THE FOREIGN ADVERSARY FRAUD
OFFICE, to staff the foreign adversary fraud office and for litigation costs
associated with bringing legal claims pursuant to this section.

e. For the purposes of this section,
"Foreign Adversary" means a country that is
determined to be a foreign adversary pursuant to 15 code of federal regulations
section 791.4.

END_STATUTE

Sec. 2.
Delayed repeal

Section 41-191.14, Arizona
Revised Statutes, as added by this act, is repealed from and after December 31,
2030.

Sec. 3. Title 41, chapter 41, article 2,
Arizona Revised Statutes, is amended by adding section 41-4274, to read:

START_STATUTE
41-4274.

Foreign adversary technology rip and replace fund; critical
infrastructure; audit; definitions

A. The Foreign ADVERSARY technology
rip and replace fund is established consisting of legislative appropriations
and monies deposited pursuant to section 41-191.14. Monies in the
fund are CONTINUOUSLY appropriated and are exempt from the provisions of
section 35-190 relating to the lapsing of appropriations. The
department shall administer the fund. monies in the fund shall be
used to replace any TECHNOLOGY that is produced by a foreign adversary from any
critical infrastructure.

B. The department shall create a list
of all critical infrastructure to audit based on the security risk posed by the
presence of any technology that is PRODUCED by a foreign ADVERSARY.

C. For
the purposes of this section
:

1. "CRITICAL
INFRASTRUCTURE"
means Infrastructure that is owned
or operated by this state, a political subdivision of this state or a publicly
regulated utility and that is any of the following:

(
a
) a GAS AND
OIL PRODUCTION, STORAGE OR DELIVERY SYSTEM.

(
b
) a WATER
SUPPLY REFINEMENT, STORAGE OR DELIVERY SYSTEM.

(
c
) an
ELECTRICAL POWER DELIVERY SYSTEM.

(
d
) a
TELECOMMUNICATIONS NETWORK.

(
e
) a
TRANSPORTATION SYSTEM AND SERVICE.

(
f
) a PERSONAL
DATA STORAGE SYSTEM, INCLUDING CYBERSECURITY.

(
g
) an
Emergency service.

2. "FOREIGN ADVERSARY"
MEANS A COUNTRY that is DETERMINED TO BE A FOREIGN ADVERSARY PURSUANT TO 15
CODE OF FEDERAL REGULATIONS SECTION 791.4.
END_STATUTE

Sec. 4.
Delayed repeal

Section 41-4274, Arizona Revised
Statutes, as added by this act, is repealed from and after December 31, 2031.

Sec. 5.
Appropriation;
foreign adversary fraud fund; exemption

A. The sum of $500,000 is
appropriated from the state general fund in fiscal year 2026-2027 to the
foreign adversary fraud fund established by section 41-191.14, Arizona
Revised Statutes, as added by this act.

B. The appropriation made
in subsection A of this section is exempt from the provisions of section
35-190, Arizona Revised Statutes, relating to lapsing of appropriations.