[Congressional Record Volume 169, Number 123 (Tuesday, July 18, 2023)]
[Senate]
[Pages S3093-S3095]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 931. Mr. CORNYN (for himself, Mr. Casey, Mr. Sullivan, Ms.
Stabenow, Mr. Cramer, Mr. Fetterman, and Mr. Ricketts) 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 COVERED SECTORS.
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 COVERED SECTORS
``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
related to a covered sector that involves--
``(i) an acquisition by such United States person 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 held by such United
States person in the short- or long-term debt obligations of
a covered foreign entity that includes governance rights that
are characteristic of an equity investment, management, or
other important rights, as defined in regulations prescribed
in accordance with section 806;
``(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 covered
sectors;
``(iv) the establishment by such United States person 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 covered 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; or
``(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 covered sectors.
``(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, as defined in
regulations prescribed in accordance with section 806;
``(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 or administrative 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 in the ordinary
[[Page S3094]]
course of business on one or more exchanges in a country of
concern;
``(iii) any entity in which any entity described in
subclause (i) or (ii) 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) Covered sectors.--Subject to regulations prescribed
in accordance with section 806, the term `covered sectors'
includes sectors within the following areas, as specified in
such regulations:
``(A) Advanced semiconductors and microelectronics.
``(B) Artificial intelligence.
``(C) Quantum information science and technology.
``(D) Hypersonics.
``(E) Satellite-based communications.
``(F) Networked laser scanning systems with dual-use
applications.
``(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) 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--
``(A) if such covered activity is not a secured
transaction, 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; and
``(B) if such covered activity is a secured transaction,
submit to the Secretary of the Treasury a complete written
notification of the activity not later than 14 days after the
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.
``(B) Incomplete notifications.--If a notification
submitted under paragraph (1) is incomplete, the Secretary
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.
``(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 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 provided 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 direction
and authorization of the President or the Secretary, 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.
``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 covered sectors in the United States,
including the potential of existing authorities to address
any related national security concerns;
``(B) investments needed to enhance covered 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 unclassified form, but may include a
classified annex.
``(c) Testimony Required.--Not later than one year after
the date of enactment of this title, and annually thereafter,
the Secretary of the Treasury and the Secretary of Commerce
shall each provide to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives testimony with
respect to the national security threats relating to
investments by the United States persons in countries of
concern and broader international capital flows.
``SEC. 805. PENALTIES AND ENFORCEMENT.
``(a) Penalties With Respect to Unlawful Acts.--Subject to
regulations prescribed in accordance with section 806, it
shall be unlawful--
``(1) 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
``(2) to make a material misstatement or to omit a material
fact in any information submitted to the Secretary under this
title.
``(b) Enforcement.--The President may direct the Attorney
General to seek appropriate 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 covered 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.
[[Page S3095]]
``SEC. 807. MULTILATERAL ENGAGEMENT AND COORDINATION.
``(a) In General.--The President shall delegate the
authorities and functions under this section to the Secretary
of State.
``(b) Authorities.--The Secretary of State, in coordination
with the Secretary of the Treasury, the Secretary of
Commerce, the United States Trade Representative, and the
Director of National Intelligence, shall--
``(1) conduct bilateral and multilateral engagement with
the governments of countries that are allies and partners of
the United States to ensure 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.
``(c) Strategy for Development of Outbound Investment
Screening Mechanisms.--The Secretary of State, in
coordination with the Secretary of the Treasury and 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.
``(d) Report.--Not later than 90 days after the development
of the strategy required by subsection (b), and annually
thereafter for a period of 5 years, the Secretary of State
shall submit to the appropriate congressional committees a
report that includes the strategy, the status of implementing
the strategy, and a description of any impediments to the
establishment of mechanisms comparable to this title by
allies and partners,
``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, not more than 25 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.''.
______