[Congressional Record Volume 167, Number 91 (Tuesday, May 25, 2021)]
[Senate]
[Pages S3434-S3436]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 1984. Mr. RUBIO submitted an amendment intended to be proposed to 
amendment SA 1502 proposed by Mr. Schumer to the bill S. 1260, to 
establish a new Directorate for Technology and Innovation in the 
National Science Foundation, to establish a regional technology hub 
program, to require a strategy and report on economic security, 
science, research, innovation, manufacturing, and job creation, to 
establish a critical supply chain resiliency program, and for other 
purposes; which was ordered to lie on the table; as follows:

        At the appropriate place in title II of division E, insert 
     the following:

     SEC. 52__. SHAREHOLDER NATIONAL SECURITY AWARENESS.

       (a) Short Title.--This section may be cited as the 
     ``Shareholder National Security Awareness Act of 2021''.
       (b) Findings.--Congress finds the following:
       (1) The national security of the United States is a 
     necessary condition for the advancement of the national 
     public interest, the general welfare, and the volume of 
     credit available for trade, industry, and transportation, 
     which form the bases for the necessity of the regulation of 
     transactions in securities, as described in section 2 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78b).
       (2) Transactions in securities may adversely affect the 
     national security of the United States in a manner that is 
     analogous to the circumstances described in paragraphs (3) 
     and (4) of section 2 of the Securities Exchange Act of 1934 
     (15 U.S.C. 78b), which state that the unreasonable expansion 
     and contraction of the volume of credit is caused by the 
     susceptibility of the prices of securities to manipulation 
     and control, excessive speculation, and sudden and 
     unreasonable fluctuations.
       (3) In the case of the national security of the United 
     States, the susceptibility of the prices of securities to 
     manipulation and control, excessive speculation, and sudden 
     and unreasonable fluctuations may create business financing 
     conditions that prevent, erode, or cause the abandonment of 
     long-term investment that is necessary for the formation, 
     development, and maintenance of capital assets that perform 
     functions that are essential to the national security of the 
     United States by--
       (A) undervaluing those capital assets relative to their 
     necessity to the United States; and
       (B) overvaluing transactions that would reduce, downsize, 
     outsource, or offshore the operation of those capital assets.
       (4) In the report to Congress required under section 2504 
     of title 10, United States Code, with respect to fiscal year 
     2020, the Department of Defense stated that ``a U.S. business 
     climate that has favored short-term shareholder earnings . . 
     . [has] severely damaged America's ability to arm itself 
     today and in the future''.
       (5) The susceptibility of the prices of securities to 
     manipulation and control, excessive speculation, and sudden 
     and unreasonable fluctuations establishes, with respect to 
     capital assets that are essential to the national

[[Page S3435]]

     security of the United States, a justification for providing 
     shareholders with greater information regarding the possible 
     adverse effects of certain transactions on the national 
     security of the United States in order to improve the 
     stability, quality, and informational efficiency of the 
     market for those capital assets.
       (c) Definitions.--In this section:
       (1) Cause.--The term ``cause'' means to directly or 
     indirectly cause.
       (2) Commission.--The term ``Commission'' means the 
     Securities and Exchange Commission.
       (3) Committee.--The term ``Committee'' means the Committee 
     for the Assessment of National Security in Corporate 
     Governance established under subsection (g).
       (4) Covered provision.--The term ``covered provision'' 
     means subparagraph (F) of section 13(d)(1) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78m(d)(1)), as added by 
     subsection (d)(1) of this section.
       (5) Issuer.--The term ``issuer'' means an issuer with a 
     class of securities registered pursuant to section 12 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78l).
       (6) National security asset.--The term ``national security 
     asset''--
       (A) means an asset, the material reduction in the 
     operation, the impairment, or the loss of which would harm 
     the national security of the United States; and
       (B) includes--
       (i) any critical component, critical infrastructure, 
     critical technology, critical technology item, and industrial 
     resources, as those terms are defined in section 702 of the 
     Defense Production Act of 1950 (50 U.S.C. 4552);
       (ii) critical infrastructure and critical technologies, as 
     those terms are defined in paragraphs (5) and (6) of section 
     721(a) of the Defense Production Act of 1950 (50 U.S.C. 
     4565(a)), respectively;
       (iii) any intellectual property, or asset developed using 
     intellectual property, that is developed through any program 
     that has received funding, or that is authorized, under this 
     Act; and
       (iv) any facility or equipment developed through the 
     program established under section 9902 of the William M. 
     (Mac) Thornberry National Defense Authorization Act for 
     Fiscal Year 2021 (Public Law 116-283).
       (7) Shareholder proposal.--The term ``shareholder 
     proposal'' means a proposal by a shareholder that the 
     applicable issuer is required to include in the proxy 
     statement of the issuer under section 240.14a-8 of title 17, 
     Code of Federal Regulations, as in effect on the date of 
     enactment of this Act.
       (8) Within the united states.--The term ``within the United 
     States'' means within the United States or any territory or 
     possession of the United States.
       (d) Disclosure of Share Ownership With Respect to Plans or 
     Proposals Affecting National Security Assets.--
       (1) In general.--Section 13(d) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78m(d)) is amended--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``Any person who'' and inserting ``Subject to paragraph (7), 
     any person who'';
       (ii) in subparagraph (D), by striking ``and'' at the end;
       (iii) in subparagraph (E), by striking the period at the 
     end and inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(F) whether such person has any plan or proposal that 
     would be reasonably expected to, if implemented, cause a 
     material reduction to the operation by the issuer of a 
     national security asset, as all such applicable terms are 
     defined in subsection (c) of the Shareholder National 
     Security Awareness Act of 2021, within the United States or 
     any territory or possession of the United States.'';
       (B) in paragraph (6)(D), by inserting ``, except that this 
     subparagraph shall not apply with respect to an acquisition 
     or proposed acquisition to which paragraph (1)(F) applies'' 
     after ``purposes of this subsection''; and
       (C) by adding at the end the following:
       ``(7) With respect to a person that has a plan or proposal 
     described in paragraph (1)(F), this subsection shall be 
     applied by substituting `2.5 per centum' for `5 per centum' 
     each place that term appears.''.
       (2) Rulemaking.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall amend section 
     240.13d-101 of title 17, Code of Federal Regulations, or any 
     successor regulation, to ensure that such section is 
     consistent with the covered provision.
       (e) Rulemakings Regarding Review of the Effect of Proxy 
     Solicitations and Proposals on National Security Assets.--Not 
     later than 2 years after the date of enactment of this Act, 
     the Commission shall--
       (1) amend section 240.14a-2(b)(1)(vi) of title 17, Code of 
     Federal Regulations, or any successor regulation, to provide 
     that a person that is required to file a statement described 
     in the covered provision is included as a person described in 
     such section 240.14a-2(b)(1)(vi); and
       (2) issue rules that permit an issuer to exclude from any 
     proxy statement supplied by the issuer any shareholder 
     proposal that would be reasonably expected to, if 
     implemented, cause a material reduction to the operation by 
     the issuer of a national security asset.
       (f) Referral to Committee.--With respect to any material 
     reviewed, or determination required to be made, by the 
     Commission under a rule issued or amended under subsection 
     (d)(2) or (e), the Commission may refer the matter to the 
     Committee, which shall review the matter in a manner that is 
     consistent with the requirements of subsection (g).
       (g) Committee for the Assessment of National Security in 
     Corporate Governance.--
       (1) Establishment.--There is established the Committee for 
     the Assessment of National Security in Corporate Governance, 
     the primary objective of which shall be to assist the 
     Commission in the review by the Commission of matters 
     relating to national security, including the covered 
     provision and matters relating to any rule issued or amended 
     under subsection (d)(2) or (e).
       (2) Composition.--The Committee shall be composed of the 
     following members:
       (A) The Secretary of Defense.
       (B) The Attorney General.
       (C) The Secretary of Homeland Security.
       (D) The Secretary of Commerce.
       (E) The United States Trade Representative.
       (F) The Secretary of State.
       (3) Chair.--
       (A) In general.--The Attorney General shall serve as Chair 
     of the Committee.
       (B) Duties of the chair.--The Chair shall--
       (i) except as otherwise provided by this section, or the 
     amendments made by this section, have the exclusive authority 
     to act, or to authorize other members of the Committee to 
     act, on behalf of the Committee, including communicating with 
     the Commission and with persons subject to the reviews 
     authorized under paragraph (4); and
       (ii) in acting on behalf of the Committee--

       (I) keep the Committee fully informed of the activities of 
     the Chair; and
       (II) consult with the Committee before taking any material 
     actions under paragraph (4).

       (4) Duties.--
       (A) Review of share ownership disclosure and shareholder 
     proposals.--Not later than 45 days after the date on which 
     the Commission refers a matter to the Committee under 
     subsection (f), the Committee shall--
       (i) conduct a review to determine, based on a written, 
     risk-based analysis, whether the plan or proposal that is the 
     subject of the referred matter would be reasonably expected 
     to, if implemented, cause a material reduction to the 
     operation by the applicable issuer of a national security 
     asset within the United States; and
       (ii) communicate to the Commission any determination made 
     by the Committee under clause (i).
       (B) Communication.--The Committee may--
       (i) communicate directly with any person that is the 
     subject of a review under this paragraph; and
       (ii) submit to any person described in clause (i) any 
     questions or requests for information to establish facts 
     necessary to conduct a review described in that clause.
       (C) Totality of the circumstances.--In making any 
     determination under this paragraph regarding whether a plan 
     or proposal would reasonably be expected to, if implemented, 
     cause a material reduction to the operation by the issuer of 
     a national security asset, the Committee may consider any of 
     the following:
       (i) The totality of the circumstances with respect to the 
     plan or proposal, including--

       (I) consideration of whether, in taking a separate action, 
     the person to which the determination applies is--

       (aa) planning or proposing a material increase with respect 
     to the operation of the applicable national security asset or 
     any other national security asset; or
       (bb) creating or developing any new asset relating to the 
     national security of the United States that would offset the 
     material reduction with respect to the operation of the 
     national security asset; and

       (II) whether that material reduction is caused by--

       (aa) any sale of, or other disposition of (whether in a 
     single transaction or a series of transactions) assets or 
     capital stock;
       (bb) any merger, consolidation, joint venture, partnership, 
     spin-off, reverse spin-off, dissolution, restructuring, 
     recapitalization, liquidation, or any other business 
     combination or strategic transaction; or
       (cc) any other transaction or event the Committee 
     determines appropriate.
       (ii) The totality of the circumstances with respect to the 
     operation of the national security asset, including--

       (I) the amount of time in operation of the applicable 
     asset;
       (II) the number, amount, or quality of inputs, whether from 
     labor, energy, or other sources, contributing to the 
     operation of the applicable asset;
       (III) the number, amount, or quality of outputs, whether in 
     the form of labor, components, or end-use products, that 
     result from the operation of the applicable asset; and
       (IV) any other measurement with respect to the operation 
     that the Committee determines appropriate.

       (D) Presumption of material reduction.--With respect to any 
     review conducted by the Committee under this paragraph, there 
     shall be a presumption, which may be rebutted through any 
     information received by the Committee through communication 
     permitted under subparagraph (B), that the

[[Page S3436]]

     plan or proposal that is the subject of the review would be 
     reasonably expected to, if implemented, cause a material 
     reduction to the operation by the applicable issuer of a 
     national security asset if that plan or proposal would, if 
     implemented, cause--
       (i) in a fiscal year, distributions , including capital 
     distributions, with respect to the common stock of the issuer 
     to exceed the net income of the issuer with respect to any of 
     the 3 most recently completed fiscal years of the issuer;
       (ii) the sale of any material line of business of the 
     issuer with respect to which the issuer has, or had in any of 
     the 3 most recently completed fiscal years of the issuer, a 
     contract with the Federal Government; or
       (iii) a reduction in expenditures on research and 
     development by the issuer in an amount that is more than 50 
     percent, as compared with the amount of those expenditures in 
     any of the 3 most recently completed fiscal years of the 
     issuer.
       (5) Consensus.--
       (A) In general.--The Committee shall attempt to reach 
     consensus with respect to determinations made under paragraph 
     (4).
       (B) Inability to reach consensus.--If the Committee is 
     unable to reach consensus, as described in subparagraph (A)--
       (i) the Chair shall present the issue to the Committee, 
     which shall make a determination by majority vote; and
       (ii) if the vote of the Committee under clause (i) is a 
     tie, the Chair shall make the final decision regarding the 
     applicable determination.
       (C) Publicly available version of determination.--The 
     Committee shall publish publicly a version of any 
     determination made under paragraph (4) that provides the 
     reasoning for the determination, which may have removed 
     classified or other sensitive information from the 
     determination or any analysis from the determination.
       (D) Implementation.--
       (i) Department of justice.--The Attorney General shall 
     provide such funding and administrative support for the 
     Committee as the Committee may require.
       (ii) Other departments and agencies.--The heads of 
     executive departments and agencies shall provide, as 
     appropriate and to the extent permitted by law, such 
     resources, information, and assistance as required to 
     implement the reviews required by paragraph (4) within their 
     respective agencies, including the assignment of staff to 
     perform the duties described in this subsection.
       (6) Inapplicability of federal advisory committee act.--The 
     Federal Advisory Committee Act (5 U.S.C. App.) shall not 
     apply with respect to the Committee or the activities of the 
     Committee.
                                 ______