[Congressional Record Volume 168, Number 157 (Wednesday, September 28, 2022)]
[Senate]
[Pages S5322-S5324]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 5842. Mr. BLUNT submitted an amendment intended to be proposed to
amendment SA 5499 submitted by Mr. Reed (for himself and Mr. Inhofe)
and intended to be proposed to the bill H.R. 7900, to authorize
appropriations for fiscal year 2023 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:
At the end of subtitle A of title IX, add the following:
SEC. 906. ESTABLISHMENT OF OFFICE OF STRATEGIC CAPITAL.
(a) In General.--Chapter 4 of title 10, United States Code,
is amended by adding at the end the following new section:
``Sec. 148. Office of Strategic Capital
``(a) Establishment.--There is in the Office of the
Secretary of Defense an office to be known as the Office of
Strategic Capital (in this section referred to as the
`Office').
``(b) Director.--The Office shall be headed by a Director
(in this section referred to as the `Director'), who shall be
appointed by the Secretary of Defense from among employees of
the Department of Defense in Senior Executive Service
positions (as defined in section 3132 of title 5).
``(c) Duties.--The Office shall--
``(1) identify, accelerate, and sustain the establishment,
research, development, construction, procurement, leasing,
consolidation, alteration, improvement, or repair of tangible
and intangible assets vital to national security;
``(2) protect vital tangible and intangible assets from
theft, acquisition, and transfer by the People's Republic of
China, the Russian Federation, and other countries that are
adversaries of the United States; and
``(3) provide capital assistance to eligible entities
engaged in eligible investments.
``(d) Applications.--
``(1) In general.--An eligible entity seeking capital
assistance for an eligible investment shall submit to the
Director an application at such time, in such manner, and
containing such information as the Director may require.
``(2) Preliminary rating opinion letter.--
``(A) In general.--Except as provided by subparagraph (B),
an application submitted under paragraph (1) seeking capital
assistance for an eligible investment shall include a
preliminary rating opinion letter from at least one rating
agency indicating that the senior obligations of the
investment have the potential to achieve an investment-grade
rating.
``(B) Exceptions.--The Director may waive the requirement
under subparagraph (A) with respect to an investment if it is
not possible to obtain a preliminary rating opinion letter
with respect to the investment.
``(e) Selection of Investments.--The Director shall
establish criteria for selecting among eligible investments
for which applications are submitted under subsection (d).
Such criteria shall include--
``(1) the extent to which an investment is significant to
the national security of the United States;
``(2) the creditworthiness of an investment; and
``(3) the likelihood that capital assistance provided for
an investment would enable the investment to proceed sooner
than the investment would otherwise be able to proceed.
``(f) Capital Assistance.--
``(1) Loans and loan guarantees.--
``(A) In general.--The Office may provide loans or loan
guarantees to finance or refinance the costs of an eligible
investment selected pursuant to subsection (e).
``(B) Investment-grade rating required.--
``(i) In general.--Except as provided by clause (ii), a
loan or loan guarantee may be provided under subparagraph (A)
only with respect to an investment that receives an
investment-grade rating from a rating agency.
``(ii) Exception.--The Director may waive the requirement
under clause (i) with respect to an investment if--
``(I) it is not possible to obtain a preliminary rating
opinion letter with respect to the investment; and
``(II) the investment is determined by the Secretary of
Defense to be vital to the national security of the United
States.
``(C) Security.--A loan provided under subparagraph (A) is
required--
``(i) to be payable, in whole or in part, from tolls, user
fees, or other dedicated revenue sources; and
``(ii) to include a rate covenant, coverage requirement, or
similar security feature supporting investment obligations.
``(D) Administration of loans.--
``(i) Interest rate.--
``(I) In general.--Except as provided by subclause (II),
the interest rate on a loan provided under subparagraph (A)
shall be not less than the yield on marketable United States
Treasury securities of a similar maturity to the maturity of
the loan on the date of execution of the loan agreement.
``(II) Exception.--The Director may waive the requirement
under subclause (I) with respect to an investment if the
investment is determined by the Secretary of Defense to be
vital to the national security of the United States.
``(ii) Final maturity date.--The final maturity date of a
loan provided under subparagraph (A) shall be not later than
35 years after the date of substantial completion of the
investment for which the loan was provided.
``(iii) Prepayment.--A loan provided under subparagraph (A)
may be paid earlier than is provided for under the loan
agreement without a penalty.
``(iv) Capital reserve subsidy amount.--The Director of the
Office of Management and Budget and the rating agencies shall
determine the appropriate capital reserve subsidy amount for
each loan provided under subparagraph (A).
``(v) Nonsubordination.--A loan provided under subparagraph
(A) shall not be subordinated to the claims of any holder of
investment obligations in the event of bankruptcy,
insolvency, or liquidation of the obligor.
``(vi) Sale of loans.--After substantial completion of an
investment for which a loan is provided under subparagraph
(A) and after notifying the obligor, the Director may sell to
another entity or reoffer into the capital markets a loan for
the investment if the Director determines that the sale or
reoffering can be made on favorable terms.
[[Page S5323]]
``(vii) Loan guarantees.--If the Director determines that
the holder of a loan guaranteed by the Office defaults on the
loan, the Director shall pay the holder as specified in the
loan guarantee agreement.
``(viii) Terms and conditions.--Loans and loan guarantees
provided under subparagraph (A) shall be subject to such
other terms and conditions and contain such other covenants,
representations, warranties, and requirements (including
requirements for audits) as the Director determines
appropriate.
``(ix) Applicability of federal credit reform act of
1990.--Loans and loan guarantees provided under subparagraph
(A) shall be subject to the requirements of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
``(2) Equity investments.--
``(A) In general.--The Director may, as a minority
investor, support an eligible investment selected pursuant to
subsection (e) with funds or use other mechanisms for the
purpose of purchasing, and may make and fund commitments to
purchase, invest in, make pledges in respect of, or otherwise
acquire, equity or quasi-equity securities or shares or
financial interests of the eligible entity receiving support
for the eligible investment, including as a limited partner
or other investor in investment funds, upon such terms and
conditions as the Director may determine.
``(B) Sales and liquidation of position.--The Office shall
seek to sell and liquidate any support for an investment
provided under subparagraph (A) as soon as commercially
feasible, commensurate with other similar investors in the
investment and taking into consideration the national
security interests of the United States.
``(3) Insurance and reinsurance.--The Director may issue
insurance or reinsurance, upon such terms and conditions as
the Director may determine, to an eligible entity for an
eligible investment selected pursuant to subsection (e)
assuring protection of the investments of the entity in whole
or in part against any or all political risks such as
currency inconvertibility and transfer restrictions,
expropriation, war, terrorism, civil disturbance, breach of
contract, or nonhonoring of financial obligations.
``(4) Technical assistance.--The Director shall provide
technical assistance with respect to developing and financing
investments to eligible entities seeking capital assistance
for eligible investments and eligible entities receiving
capital assistance under this subsection.
``(5) Terms and conditions.--
``(A) Fees.--The Director may charge fees for the provision
of capital assistance under this subsection to cover the
costs to the Office of providing such assistance.
``(B) Amount of capital assistance.--The Director shall
provide to an eligible investment selected pursuant to
subsection (e) the minimum amount of assistance necessary to
carry out the investment.
``(C) Use of united states dollar.--All financial
transactions conducted under this subsection shall be
conducted in United States dollars, unless the Director
approves of the use of another currency.
``(g) Corporate Funds.--
``(1) Corporate capital account.--There is established in
the Treasury of the United States a fund to be known as the
`Office of Strategic Capital Capital Account' (in this
subsection referred to as the `Capital Account') to carry out
the purposes of the Office.
``(2) Funding.--The Capital Account shall consist of--
``(A) fees charged and collected pursuant to paragraph (3);
``(B) any amounts received pursuant to paragraph (6);
``(C) investments and returns on such investments pursuant
to paragraph (7);
``(D) amounts appropriated pursuant to the authorization of
appropriations under paragraph (8);
``(E) payments received in connection with settlements of
all insurance and reinsurance claims of the Office; and
``(F) all other collections transferred to or earned by the
Office, excluding the cost, as defined in section 502 of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a), of loans
and loan guaranties.
``(3) Fee authority.--Fees may be charged and collected for
providing capital assistance in amounts to be determined by
the Director. The Director shall establish the amount of such
fees at an amount sufficient to cover all or a portion of the
costs to the Office of providing capital assistance.
``(4) Use of funds.--
``(A) In general.--Subject to appropriations Acts, the
Director is authorized to pay, from amounts in the Capital
Account--
``(i) the cost, as defined in section 502 of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661a), of loans and loan
guarantees and other capital assistance; and
``(ii) administrative expenses of the Office.
``(B) Income and revenue.--In order to carry out the
purposes of the Office, all collections transferred to or
earned by the Office (excluding the cost, as defined in
section 502 of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a), of loans and loan guaranties) shall be
deposited into the Capital Account and shall be available to
carry out its purpose, including--
``(i) payment of all insurance and reinsurance claims of
the Office;
``(ii) repayments to the Treasury of amounts borrowed under
paragraph (5); and
``(iii) dividend payments to the Treasury under paragraph
(6).
``(5) Full faith and credit.--
``(A) In general.--All capital assistance provided by the
Office shall constitute obligations of the United States, and
the full faith and credit of the United States is hereby
pledged for the full payment and performance of such
obligations.
``(B) Authority to borrow.--The Director is authorized to
borrow from the Treasury such sums as may be necessary to
fulfill such obligations of the United States and any such
borrowing shall be at a rate determined by the Secretary of
the Treasury, taking into consideration the current average
market yields on outstanding marketable obligations of the
United States of comparable maturities, for a period jointly
determined by the Director and the Secretary of Defense, and
subject to such terms and conditions as the Secretary may
require.
``(6) Dividends.--The Director, in consultation with the
Director of the Office of Management and Budget, shall
annually assess a dividend payment to the Treasury if the
Office's insurance portfolio is more than 100 percent
reserved.
``(7) Investment authority.--
``(A) In general.--The Director may request the Secretary
of the Treasury to invest such portion of the Capital Account
as is not, in the Director's judgment, required to meet the
current needs of the Capital Account.
``(B) Form of investments.--Investments described in
subparagraph (A) shall be made by the Secretary of the
Treasury in public debt obligations, with maturities suitable
to the needs of the Capital Account, as determined by the
Director, and bearing interest at rates determined by the
Secretary, taking into consideration current market yields on
outstanding marketable obligations of the United States of
comparable maturities.
``(8) Authorization of appropriations.--
``(A) In general.--There are authorized to be appropriated
to the Capital Account--
``(i) for fiscal year 2023, $20,000,000;
``(ii) for fiscal year 2024, $30,000,000;
``(iii) for fiscal year 2025, $40,000,000; and
``(iv) for fiscal year 2026 and each fiscal year
thereafter, $50,000,000.
``(B) Availability of amounts.--Amounts appropriated
pursuant to the authorization of appropriations under
subparagraph (A) shall remain available until expended.
``(9) Collections subject to appropriations acts.--Interest
earnings made pursuant to paragraph (6), earnings collected
related to equity investments, and other amounts (excluding
fees related to insurance or reinsurance) collected, may not
be collected for any fiscal year except to the extent
provided in advance in appropriations Acts.
``(h) Regulations.--The Secretary of Defense shall
prescribe such regulations as are necessary to carry out this
section.
``(i) Annual Report.--Not later than December 31 of each
year, the Secretary of Defense shall submit to the
congressional defense committees an annual report describing
the activities of the Office in the preceding fiscal year and
the goals of the Office for the next fiscal year.
``(j) Definitions.--In this section:
``(1) Capital assistance.--The term `capital assistance'
means loans, loan guarantees, equity investments, insurance
and reinsurance, or technical assistance provided under
subsection (f).
``(2) Eligible entity.--The term `eligible entity' means--
``(A) an individual;
``(B) a corporation;
``(C) a partnership, including a public-private
partnership;
``(D) a joint venture;
``(E) a trust;
``(F) a State, including a political subdivision or any
other instrumentality of a State;
``(G) a Tribal government or consortium of Tribal
governments;
``(H) any other governmental entity or public agency in the
United States, including a special purpose district or public
authority, including a port authority; or
``(I) a multi-State or multi-jurisdictional group of public
entities.
``(3) Eligible investment.--The term `eligible investment'
means an investment that facilitates the efforts of the
Office--
``(A) to identify, accelerate, and sustain the
establishment, research, development, construction,
procurement, leasing, consolidation, alteration, improvement,
or repair of tangible and intangible assets vital to national
security; or
``(B) to protect vital tangible and intangible assets from
theft, acquisition, and transfer by the People's Republic of
China, the Russian Federation, and other countries that are
adversaries of the United States.
``(4) Investment-grade rating.--The term `investment-grade
rating' means a rating of BBB minus, Baa3, bbb minus, BBB
(low), or higher assigned by a rating agency to investment
obligations.
``(5) Obligor.--The term `obligor' means a party that is
primarily liable for payment of the principal of or interest
on a loan.
``(6) Rating agency.--The term `rating agency' means a
credit rating agency registered with the Securities and
Exchange Commission as a nationally recognized statistical
rating organization (as that term is defined in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
[[Page S5324]]
``(7) Subsidy amount.--The term `subsidy amount' means the
amount of budget authority sufficient to cover the estimated
long-term cost to the Federal Government of a loan--
``(A) calculated on a net present value basis; and
``(B) excluding administrative costs and any incidental
effects on governmental receipts or outlays in accordance
with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et
seq.).''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 4 of such title is amended by adding at
the end the following new item:
``148. Office of Strategic Capital.''.
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