[Congressional Record Volume 169, Number 120 (Thursday, July 13, 2023)]
[Senate]
[Pages S2741-S2743]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 650. Mr. CORNYN (for himself and Mr. Casey) submitted an amendment
intended to be proposed by him to the bill S. 2226, to authorize
appropriations for fiscal year 2024 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 G of title X, add the following:
SEC. 1083. PROTECTION OF NATIONAL CRITICAL CAPABILITIES.
The Defense Production Act of 1950 (50 U.S.C. 4501 et seq.)
is amended by adding at the end the following:
``TITLE VIII--PROTECTION OF NATIONAL CRITICAL CAPABILITIES
``SEC. 801. DEFINITIONS.
``In this title:
``(1) Appropriate congressional committees.--The term
`appropriate congressional committees' means--
``(A) the Committee on Armed Services, the Committee on
Finance, the Committee on Banking, Housing, and Urban
Affairs, the Select Committee on Intelligence, and the
Committee on Foreign Relations of the Senate; and
``(B) the Committee on Armed Services, the Committee on
Ways and Means, the Committee on Financial Services, the
Permanent Select Committee on Intelligence, and the Committee
on Foreign Affairs of the House of Representatives.
``(2) Country of concern.--The term `country of concern'
means, subject to such regulations as may be prescribed in
accordance with section 806, a country specified in section
4872(d)(2) of title 10, United States Code.
``(3) Covered activity.--
``(A) In general.--Subject to such regulations as may be
prescribed in accordance with section 806, and except as
provided in subparagraph (B), the term `covered activity'
means any activity engaged in by a United States person in a
national critical capabilities sector that involves--
``(i) an acquisition of an equity interest or contingent
equity interest, or monetary capital contribution, in a
covered foreign entity, directly or indirectly, by
contractual commitment or otherwise, with the goal of
generating income or gain;
``(ii) an arrangement for an interest in the short- or
long-term debt obligations of a covered foreign entity that
includes government rights that are characteristic of an
equity investment, management, or other important rights;
``(iii) the establishment of a wholly owned subsidiary in a
country of concern, such as a greenfield investment, for the
purpose of production, design, testing, manufacturing,
fabrication, or development related to one or more national
critical capabilities sectors;
``(iv) the establishment of a joint venture in a country of
concern or with a covered foreign entity for the purpose of
production, design, testing, manufacturing, fabrication, or
research involving one or more national critical capabilities
sectors, or other contractual or other commitments involving
a covered foreign entity to jointly research and develop new
innovation, including through the transfer of capital or
intellectual property or other business proprietary
information;
``(v) the acquisition by a United States person with a
covered foreign entity of--
``(I) operational cooperation, such as through supply or
support arrangements;
``(II) the right to board representation (as an observer,
even if limited, or as a member) or an executive role (as may
be defined through regulation) in a covered foreign entity;
``(III) the ability to direct or influence such operational
decisions as may be defined through such regulations;
``(IV) formal governance representation in any operating
affiliate, like a portfolio company, of a covered foreign
entity; or
``(V) a new relationship to share or provide business
services, such as but not limited to financial services,
marketing services, maintenance, or assembly functions,
related to a national critical capabilities sector; or
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``(vi) except as provided in subparagraph (B), any other
transaction involving a country of concern or with a covered
foreign entity defined in regulations prescribed in
accordance with section 806.
``(B) Exceptions.--The term `covered activity' does not
include--
``(i) any transaction the value of which the Secretary of
the Treasury determines is de minimis;
``(ii) any category of transactions that the Secretary
determines is in the national interest of the United States,
as may be defined in regulations prescribed in accordance
with section 806; or
``(iii) any ordinary business transaction as may be defined
in such regulations.
``(4) Covered foreign entity.--
``(A) In general.--Subject to regulations prescribed in
accordance with section 806, and except as provided in
subparagraph (B), the term `covered foreign entity' means--
``(i) any entity that is incorporated in, has a principal
place of business in, or is organized under the laws of a
country of concern;
``(ii) any entity the equity securities of which are
primarily traded on one or more exchanges in a country of
concern;
``(iii) any entity in which any covered foreign entity
holds, individually or in the aggregate, directly or
indirectly, an ownership interest of greater than 50 percent;
or
``(iv) any other entity that is not a United States person
and that meets such criteria as may be specified by the
Secretary of the Treasury in such regulations.
``(B) Exception.--The term `covered foreign entity' does
not include any entity described in subparagraph (A) that can
demonstrate that a majority of the equity interest in the
entity is ultimately owned by--
``(i) nationals of the United States; or
``(ii) nationals of such countries (other than countries of
concern) as are identified for purposes of this subparagraph
pursuant to regulations prescribed in accordance with section
806.
``(5) National critical capabilities sector.--Subject to
regulations prescribed in accordance with section 806, the
term `national critical capabilities sector' includes sectors
within the following areas, as specified in such regulations:
``(A) Semiconductor manufacturing and advanced packaging.
``(B) Microelectronics.
``(C) Large-capacity batteries with dual-use applications.
``(D) Artificial intelligence.
``(E) Quantum information science and technology.
``(F) Hypersonics.
``(G) Satellite-based communications.
``(H) Networked laser scanning systems with dual-use
applications.
``(I) Any other technology that if produced in the United
States would be--
``(i) included on the Commerce Control List maintained by
the Bureau of Industry and Security and set forth in
Supplement No. 1 to part 774 of the Export Administration
Regulations; and
``(ii) subject to the requirement for a license under the
Export Administration Regulations for the export, reexport,
or in-country transfer (as those terms are defined in section
1742 of the Export Control Reform Act of 2018 (50 U.S.C.
4801)) of the technology to or in a country of concern.
``(6) Party.--The term `party', with respect to an
activity, has the meaning given that term in regulations
prescribed in accordance with section 806.
``(7) United states.--The term `United States' means the
several States, the District of Columbia, and any territory
or possession of the United States.
``(8) United states person.--The term `United States
person' means--
``(A) an individual who is a citizen or national of the
United States or an alien lawfully admitted for permanent
residence in the United States; and
``(B) any corporation, partnership, or other entity
organized under the laws of the United States or the laws of
any jurisdiction within the United States.
``SEC. 802. ADMINISTRATION OF UNITED STATES INVESTMENT
NOTIFICATION.
``(a) In General.--The President shall delegate the
authorities and functions under this title to the Secretary
of the Treasury.
``(b) Designation of Lead Agency.--The Secretary shall
designate, as appropriate, the head of a Federal agency or
agencies to be the lead agency or agencies for each
notification required under section 803.
``(c) Coordination.--In carrying out the duties of the
Secretary under this title, the Secretary shall--
``(1) coordinate with the Secretary of Commerce; and
``(2) consult with the United States Trade Representative,
the Secretary of Defense, the Secretary of State, and the
Director of National Intelligence.
``SEC. 803. MANDATORY NOTIFICATION OF COVERED ACTIVITIES.
``(a) Mandatory Notification.--
``(1) In general.--Subject to regulations prescribed in
accordance with section 806, beginning on the date that is 90
days after such regulations take effect, a United States
person that plans to engage in a covered activity shall
submit to the Secretary of the Treasury a complete written
notification of the activity not later than 14 days before
the anticipated completion date of the activity.
``(2) Circulation of notification.--
``(A) In general.--The Secretary shall, upon receipt of a
notification under paragraph (1), promptly inspect the
notification for completeness, and, if complete, immediately
circulate the notification to the agency designated as the
lead agency for the notification under section 802(b).
``(B) Incomplete notifications.--If a notification
submitted under paragraph (1) is incomplete, the Secretary or
the head of the lead agency shall promptly inform the United
States person that submits the notification that the
notification is not complete and provide an explanation of
relevant material respects in which the notification is not
complete.
``(C) Referral to attorney general.--If the Secretary has
reason to believe that a covered activity that is the subject
of a notification submitted under paragraph (1) may be
prohibited under this title or regulations prescribed in
accordance with section 806, the President shall refer the
notification to the Attorney General for such action as the
Attorney General may determine to be proper.
``(3) Identification of non-notified activity.--The
Secretary shall establish a process to identify covered
activity for which--
``(A) a notification is not submitted to the Secretary
under paragraph (1); and
``(B) information is reasonably available.
``(b) Confidentiality of Information.--
``(1) In general.--Except as provided in paragraph (2), any
information or documentary material and any information or
materials derived from such information or documentary
materials filed with the Secretary of the Treasury pursuant
to this section shall be exempt from disclosure under section
552 of title 5, United States Code, and no such information
or documentary material may be made public by any government
agency or Member of Congress.
``(2) Exceptions.--The exemption from disclosure provided
by paragraph (1) shall not prevent the disclosure of the
following:
``(A) Information relevant to any administrative or
judicial action or proceeding.
``(B) Information to Congress or any of the appropriate
congressional committees.
``(C) Information important to the national security
analysis or actions of the President to any domestic
governmental entity, or to any foreign governmental entity of
an ally or partner of the United States, under the exclusive
direction and authorization of the President, only to the
extent necessary for national security purposes, and subject
to appropriate confidentiality and classification
requirements.
``(D) Information that the parties have consented to be
disclosed to third parties.
``(c) Recordkeeping.--In taking action under this section
with respect to a covered activity, the Secretary of the
Treasury may require any person--
``(1) to keep a full record of, and to furnish under oath,
in the form of reports or otherwise, complete information
relative to the covered activity before, during, or after the
completion of the covered activity, or as may be otherwise
necessary to enforce the provisions of this title; and
``(2) to produce any books of account, records, contracts,
letters, memoranda, or other papers relative to the covered
activity in the custody or control of the person.
``SEC. 804. REPORTING REQUIREMENTS.
``(a) In General.--Not later than 360 days after the date
on which the regulations prescribed under section 806 take
effect, and not less frequently than annually thereafter, the
Secretary of the Treasury shall submit to the appropriate
congressional committees a report that--
``(1) lists all notifications submitted under section
803(a) during the year preceding submission of the report and
includes, with respect to each such notification--
``(A) basic information on each party to the covered
activity with respect to which the notification was
submitted; and
``(B) the nature of the covered activity that was the
subject to the notification, including the elements of the
covered activity that necessitated a notification;
``(2) includes a summary of those notifications,
disaggregated by sector, by covered activity, and by country
of concern;
``(3) provides additional context and information regarding
trends in the sectors, the types of covered activities, and
the countries involved in those notifications;
``(4) includes a description of the national security risks
associated with--
``(A) the covered activities with respect to which those
notifications were submitted; or
``(B) categories of such activities; and
``(5) assesses the overall impact of those notifications,
including recommendations for--
``(A) expanding existing Federal programs to support the
production or supply of national critical capabilities
sectors in the United States, including the potential of
existing authorities to address any related national security
concerns;
``(B) investments needed to enhance national critical
capabilities sectors and reduce dependence on countries of
concern regarding those sectors; and
``(C) the continuation, expansion, or modification of the
implementation and administration of this title, including
recommendations with respect to whether the definition of
`country of concern' under section 801(2) should be amended
to add or remove countries.
``(b) Form of Report.--Each report required by this section
shall be submitted in
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unclassified form, but may include a classified annex.
``SEC. 805. PENALTIES AND ENFORCEMENT.
``(a) Penalties.--
``(1) Unlawful acts.--Subject to regulations prescribed in
accordance with section 806, it shall be unlawful--
``(A) to fail to submit a notification under subsection (a)
of section 803 with respect to a covered activity or to
submit other information as required by the Secretary of the
Treasury; or
``(B) to make a material misstatement or to omit a material
fact in any information submitted to the Secretary under this
title.
``(2) Civil penalties.--A civil penalty may be imposed on
any person who commits an unlawful act described in paragraph
(1) in an amount not to exceed the greater of--
``(A) $250,000; or
``(B) an amount that is twice the amount of the covered
activity that is the basis of the violation with respect to
which the penalty is imposed.
``(b) Enforcement.--The President may direct the Attorney
General to seek appropriate relief, including divestment
relief, in the district courts of the United States, in order
to implement and enforce this title.
``SEC. 806. REQUIREMENT FOR REGULATIONS.
``(a) In General.--Not later than 360 days after the date
of the enactment of this title, the Secretary of the Treasury
shall finalize regulations to carry out this title.
``(b) Elements.--Regulations prescribed to carry out this
title shall include specific examples of the types of--
``(1) activities that will be considered to be covered
activities; and
``(2) the specific sectors and subsectors that may be
considered to be national critical capabilities sectors.
``(c) Requirements for Certain Regulations.--The Secretary
of the Treasury shall prescribe regulations further defining
the terms used in this title, including `covered activity',
`covered foreign entity', and `party', in accordance with
subchapter II of chapter 5 and chapter 7 of title 5 (commonly
known as the `Administrative Procedure Act').
``(d) Public Participation in Rulemaking.--The provisions
of section 709 shall apply to any regulations issued under
this title.
``(e) Low-burden Regulations.--In prescribing regulations
under this section, the Secretary of the Treasury shall
structure the regulations--
``(1) to minimize the cost and complexity of compliance for
affected parties;.
``(2) to ensure the benefits of the regulations outweigh
their costs;
``(3) to adopt the least burdensome alternative that
achieves regulatory objectives;
``(4) to prioritize transparency and stakeholder
involvement in the process of prescribing the regulations;
and
``(5) to regularly review and streamline existing
regulations to reduce redundancy and complexity.
``SEC. 807. MULTILATERAL ENGAGEMENT AND COORDINATION.
``(a) In General.--The President, in coordination with the
United States Trade Representative, the Secretary of
Commerce, the Secretary of State, the Secretary of the
Treasury, and the Director of National Intelligence, shall--
``(1) in coordination and consultation with relevant
Federal agencies, conduct bilateral and multilateral
engagement with the governments of countries that are allies
and partners of the United States to secure coordination of
protocols and procedures with respect to covered activities
with countries of concern and covered foreign entities; and
``(2) upon adoption of protocols and procedures described
in paragraph (1), work with those governments to establish
mechanisms for sharing information, including trends, with
respect to such activities.
``(b) Strategy for Development of Outbound Investment
Screening Mechanisms.--The Secretary of the Treasury, in
consultation with the Attorney General, shall--
``(1) develop a strategy to work with countries that are
allies and partners of the United States to develop
mechanisms comparable to this title for the notification of
covered activities; and
``(2) provide technical assistance to those countries with
respect to the development of those mechanisms.
``SEC. 808. AUTHORIZATION OF APPROPRIATIONS.
``(a) In General.--There are authorized to be appropriated
such sums as may be necessary to carry out this title,
including to provide outreach to industry and persons
affected by this title.
``(b) Hiring Authority.--The head of any agency designated
as a lead agency under section 802(b) may appoint, without
regard to the provisions of sections 3309 through 3318 of
title 5, United States Code, candidates directly to positions
in the competitive service (as defined in section 2102 of
that title) in that agency. The primary responsibility of
individuals in positions authorized under the preceding
sentence shall be to administer this title.
``SEC. 809. RULE OF CONSTRUCTION WITH RESPECT TO FREE AND
FAIR COMMERCE.
``Nothing in this title may be construed to restrain or
deter foreign investment in the United States, United States
investment abroad, or trade in goods or services, if such
investment and trade do not pose a risk to the national
security of the United States.''.
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