[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

[[Page S2742]]

       ``(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

[[Page S2743]]

     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.''.
                                 ______