[Congressional Record Volume 170, Number 144 (Tuesday, September 17, 2024)]
[Senate]
[Pages S6107-S6109]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 3284. Mr. CORNYN (for himself, Mr. Casey, and Mr. Sullivan) 
submitted an amendment intended to be proposed by him to the bill S. 
4638, to authorize appropriations for fiscal year 2025 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 appropriate place, insert the following:

     SEC. ___. OUTBOUND INVESTMENT TRANSPARENCY.

       (a) In General.--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 Banking, Housing, and Urban Affairs 
     and the Committee on Commerce, Science, and Transportation of 
     the Senate; and
       ``(B) the Committee on Financial Services and the Committee 
     on Energy and Commerce 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 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 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;
       ``(iii) any ordinary or administrative business transaction 
     as may be defined in such regulations;
       ``(iv) an investment by a United States person in--

       ``(I) any publicly traded security (as that term is defined 
     in section 3(a)(10) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78c(a)(10)), denominated in any currency, that 
     trades on a securities exchange or through the method of 
     trading that is commonly referred to as `over-the-counter,' 
     in any jurisdiction; or
       ``(II) a security issued by--

       ``(aa) any investment company (as that term is defined in 
     section 3(a)(1) of the Investment Company Act of 1940, as 
     amended, at 15 U.S.C. 80a-3(a)(1)) that is registered with 
     the Securities and Exchange Commission, such as index funds, 
     mutual funds, or exchange traded funds;

[[Page S6108]]

       ``(bb) any company that has elected to be a business 
     development company pursuant to section 54 of the Investment 
     Company Act of 1940 (15 U.S.C. 80a-53); or
       ``(cc) any derivative of item (aa) or (bb);
       ``(v) any ancillary transaction undertaken by a financial 
     institution (as that term is defined in defined in section 
     5312 of title 31, United States Code); or
       ``(vi) the creation, contribution to, or provision of 
     software distributed under open source licenses that permit 
     downstream users to use, reproduce, distribute, copy, create 
     derivative works of, and make modifications to the software.
       ``(C) Ancillary transaction defined.--In this paragraph, 
     the term `ancillary transaction' means the processing, 
     settling, clearing or sending of payments and cash 
     transactions, underwriting services, credit rating services, 
     and other services ordinarily incident to and part of the 
     provision of financial services, such as opening bank 
     accounts, direct custody services, foreign exchange services, 
     remittances services, and safe deposit services.
       ``(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 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 
     activities 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 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--

[[Page S6109]]

       ``(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.

     ``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.--
       ``(1) In general.--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.
       ``(2) Appropriate congressional committees defined.--In 
     this subsection, the term `appropriate congressional 
     committees' means--
       ``(A) the Committee on Foreign Relations, the Committee on 
     Finance, the Committee on Banking, Housing, and Urban 
     Affairs, the Committee on Commerce, Science, and 
     Transportation, and the Select Committee on Intelligence of 
     the Senate; and
       ``(B) the Committee on Foreign Affairs, the Committee on 
     Ways and Means, the Committee on Financial Services, the 
     Committee on Energy and Commerce, and the Permanent Select 
     Committee on Intelligence of the House of Representatives.

     ``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.''.
       (b) Sunset.--This section and the amendments made by this 
     section shall terminate on the date that is 5 years after the 
     date of the enactment of this Act.

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