I believe the answer is that the bill _targets_ foreign sites, but requires _domestic_ sites to obscure those targets. That's the sanction mechanism. Failure to comply creates liability.
This forces DNS nameservers into censorship administration.
It breaks DNS as users seek name service not engaged in censorship. That means fewer DNS servers, outside US territory, which means less cross-checking (ie, easier fraudulent imitation), less reliability and slower name service. It also means breaking security measures based on back-checking IP addresses with domain names.
EDIT: Those are the _technical_ problems. The civil liberties problem is the effective excommunication of bad actors, by some particular definition. People doing X are prevented from communicating with others. Well, here X is blatant and cynical copyright infringement. But what of X as incitement, or unpopular opinion? Even if the US were immune to such impulses, doing this for copyright gives China precedent for their censorship "in the interest of stability" and "to avoid irresponsible inaccuracy".
This bill also puts US companies at a serious disadvantage internationally. Imagine a Canadian Paypal. They wouldn't have restriction like this (yet, it will surely follow as the US puts a lot of pressure on Canada in these subjects). This would make the Canadian site a lot more attractive to both American and international customers. Paypal would suffer greatly.
A sorta reverse effect similar to this happened to Google in China. By standing up to the Chinese government Google had a disadvantage compared to the Chinese search engines and has be greatly affected by this over there.
The definition of foreign sites is also problematic. At this time the US government thinks it can seize any domain for which the top level domain administrator is in the US. Thus any site with a .ca, .is, .uk etc could be blocked by a weird definition of foreign. What I find funny is the use of the pirate bay as poster child of evil site. It's a .org domain it could be seize today. Wikileaks also a .org could have been seize by ICE (http://www.ice.gov/). ICE having that power is weird since they have gone after American sites.
Essentially the government can now block both American and soon Foreign sites if this bill goes into action. American Internet users are the ones who will suffer most by this. This affects Americans much more than international people.
Also, kn0thing should ask the guy next time if a Job in the entertainment business is worth more than one in other fields because this is what I feel they are saying.
This forces DNS nameservers into censorship administration.
It breaks DNS as users seek name service not engaged in censorship. That means fewer DNS servers, outside US territory, which means less cross-checking (ie, easier fraudulent imitation), less reliability and slower name service. It also means breaking security measures based on back-checking IP addresses with domain names.
EDIT: Those are the _technical_ problems. The civil liberties problem is the effective excommunication of bad actors, by some particular definition. People doing X are prevented from communicating with others. Well, here X is blatant and cynical copyright infringement. But what of X as incitement, or unpopular opinion? Even if the US were immune to such impulses, doing this for copyright gives China precedent for their censorship "in the interest of stability" and "to avoid irresponsible inaccuracy".