[Senate Report 117-272]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 671
117th Congress      }                           {         Report
                                 SENATE
 2d Session         }                           {         117-272
_______________________________________________________________________



               DOMAINS CRITICAL TO HOMELAND SECURITY ACT

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPANY

                                S. 2525

             TO AMEND THE HOMELAND SECURITY ACT OF 2002 TO
              REQUIRE RESEARCH AND DEVELOPMENT TO IDENTIFY
               AND EVALUATE THE EXTENT TO WHICH CRITICAL
              DOMAIN RISKS WITHIN THE UNITED STATES SUPPLY
              CHAIN POSE A SUBSTANTIAL THREAT TO HOMELAND
                    SECURITY, AND FOR OTHER PURPOSES

		[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               December 19, 2022.--Ordered to be printed
               
               		       __________
               		       
               		       
               	    U.S. GOVERNMENT PUBLISHING OFFICE	       
               
39-010			    WASHINGTON : 2023  



               
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
ALEX PADILLA, California             MITT ROMNEY, Utah
JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                     JOSH HAWLEY, Missouri

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
         Christopher J. Mulkins, Director of Homeland Security
           Naveed Jazayeri, Senior Professional Staff Member
                Pamela Thiessen, Minority Staff Director
            Sam J. Mulopulos, Minority Deputy Staff Director
       Clyde E. Hicks Jr., Minority Director of Homeland Security
                     Laura W. Kilbride, Chief Clerk

                                                      Calendar No. 671
117th Congress      }                           {         Report
                                 SENATE
 2d Session         }                           {         117-272

======================================================================


 
               DOMAINS CRITICAL TO HOMELAND SECURITY ACT

                                _______
                                

               December 19, 2022.--Ordered to be printed

                                _______
                                

 Mr. Peters, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 2525]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2525) to amend the 
Homeland Security Act of 2002 to require research and 
development to identify and evaluate the extent to which 
critical domain risks within the United States supply chain 
pose a substantial threat to homeland security, and for other 
purposes, having considered the same, reports favorably thereon 
without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis of the Bill, as Reported.............4
  V. Evaluation of Regulatory Impact..................................4
 VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law Made by the Bill, as Reported............5

                         I. Purpose and Summary

    S. 2525, the Domains Critical to Homeland Security Act, 
authorizes the Department of Homeland Security (DHS) to study 
sectors that are critical to the economic and homeland security 
of the United States. The bill also includes a requirement for 
DHS to conduct a risk analysis of critical domains to examine 
if there are present or future homeland security threats in the 
event that a critical domain is disrupted. Critical domains are 
defined in the bill as ``the critical infrastructure and other 
associated industries, technologies, and intellectual property, 
or any combination thereof, that are essential to the economic 
security of the United States.'' The bill requires the DHS 
Secretary to publish a report on the supply chain resiliency of 
critical domains beginning one year after enactment, including 
findings, evidence, analysis, and recommendations. The report 
would be updated annually through 2026. The bill also requires 
the DHS Secretary to submit the report to appropriate 
congressional committees 90 days after publication, in addition 
to a description of the actions taken or those intended to be 
taken by DHS and other federal agencies in response to the 
annual report. Finally, the bill authorizes $1,000,000 for each 
fiscal year starting FY 2022 through FY 2026 in order to 
implement the provisions of this Act.

              II. Background and Need for the Legislation

    In 2020, the DHS Office of Strategy, Policy, and Plans 
published a report on domains critical to the ongoing operation 
and growth of the U.S. economy. The 2020 Economic Security 
Assessment provided a high-level overview of the 
vulnerabilities in supply chains for materials used in critical 
industries ranging from pharmaceuticals to microelectronics.\1\ 
This legislation defines critical domains for economic security 
as the critical infrastructure and other associated industries, 
technologies, and intellectual property, or any combination 
thereof, that are essential to our economic security.
---------------------------------------------------------------------------
    \1\Department of Homeland Security, Office of Strategy, Policy, and 
Plans, 2020 Economic Security Assessment (Jan. 11, 2021).
---------------------------------------------------------------------------
    Over the last few years, global disruptions related to 
extreme weather and the COVID-19 pandemic have strained access 
to, and supplies of, medical and electronic materials that 
originate in other parts of the world.\2\ A report from the 
United States Government focused on building resilient supply 
chains found that the country has favored the prioritization of 
efficiency and cost at the expense of security, sustainability, 
and resilience, leading to current supply chain risks. The 
report asserted that current practices have ``undermined the 
prosperity and health of American workers and the ability to 
manage natural resources domestically and globally.''\3\ The 
pharmaceutical industry, for instance, operates on a ``just in 
time'' delivery model, meaning only a limited amount of 
inventory is procured and stored at a given time.\4\ A 2019 
HSGAC Minority Staff report on the prescription drug industry 
found that 80% of the active pharmaceutical ingredients in 
drugs sold in the U.S. come foreign countries, primarily China 
and India.\5\ The more complex the supply chain, the greater 
the opportunity for error, making it difficult for 
manufacturers to obtain active pharmaceutical ingredients 
during a shortage.\6\
---------------------------------------------------------------------------
    \2\The White House, 100-Day Reviews Under Executive Order 14017: 
Building Resilient Supply Chains, Revitalizing American Manufacturing, 
and Fostering Broad-Based Growth at 6 (June 2021).
    \3\Id. at 7.
    \4\Minority Staff, Senate Committee on Homeland Security and 
Governmental Affairs, A Price Too High: Cost, Supply, and Security 
Threats to Affordable Prescription Drugs at 32 (2019).
    \5\Id.
    \6\Id.
---------------------------------------------------------------------------
    Beyond the individual level, the breakdown of supply chains 
also threatens the security and stability of the entire 
country. Our cars, trucks, kitchen appliances, mobile devices, 
satellites, and defensive weapons are powered by 
semiconductors.\7\ Virtually all semiconductor chips are built 
in overseas plants that are ``susceptible to unplanned 
disruption, either from natural disasters or geopolitical 
events, creating a significant strategic liability for 
America.''\8\ As Chairman Peters has noted, the recent 
shortages of semiconductor chips and lifesaving medical 
supplies demonstrate the inherent dangers of overreliance on 
offshore sources.\9\ Our dependence on foreign suppliers 
extends to adversaries including China and Russia.\10\
---------------------------------------------------------------------------
    \7\Senate Committee on Commerce, Science, and Transportation, 
Testimony for the Record of Dr. Dario Gil, IBM Research, Hearing on 
Implementing Supply Chain Resiliency (July 15, 2021); Department of 
Defense, Securing Defense-Critical Supply Chains at 32 (Feb. 2022).
    \8\Senate Subcommittee on Surface, Transportation, Maritime, 
Freight, and Ports, Statement for the Record of Robert J. Rathert, KLA, 
Field Hearing on Made in America: The Future of Automotive Innovation 
and Semiconductor Chips, 117th Cong. (Mar. 28, 2022).
    \9\Senators Gary Peters and Rob Portman: Peters & Portman Provision 
to Direct DHS to Research Supply Chain Vulnerabilities That Threaten 
National Security Signed into Law as Part of Annual Defense Bill (Dec. 
28, 2021); Also see The White House, 100-Day Reviews Under Executive 
Order 14017: Building Resilient Supply Chains, Revitalizing American 
Manufacturing, and Fostering Broad-Based Growth at 153 (June 2021).
    \10\Department of Homeland Security, 2020 Economic Security 
Assessment at 11 (2020); Congressional Research Service, Renewed Great 
Power Competition: Implications for Defense--Issues for Congress at 24 
(Mar. 10, 2022).
---------------------------------------------------------------------------
    To address the fragility of supply chains in the U.S., this 
bill creates a reporting requirement for DHS to identify and 
analyze potential threats to critical domains that are 
essential to our economic and homeland security. The bill 
requires DHS to publish an annual report on supply chain 
resiliency in these critical domains, which will identify and 
prioritize the supply chains most critical to our security to 
mitigate potential risks.

                        III. Legislative History

    Senators Portman (R-OH) and Peters (D-MI) introduced S. 
2525, the Domains Critical to Homeland Security Act, on July 
28, 2021. The bill was referred to the Senate Committee on 
Homeland Security and Governmental Affairs.
    The Committee considered S. 2525 at a business meeting on 
August 4, 2021. During the business meeting, Senator Scott 
offered an amendment that would strike language to authorize $1 
million annually in fiscal years 2022 through 2026 to carry out 
the bill. The amendment would also require the Homeland 
Security secretary to use existing funds made available to the 
secretary to implement the bill and prohibit the authorization 
of additional funds to implement the bill. The amendment was 
not adopted by roll call vote with Senators Johnson, Lankford, 
Scott and Hawley voting in the affirmative, and Senators 
Peters, Carper, Hassan, Sinema, Rosen, Padilla, Ossoff, Portman 
and Romney voting in the negative. Senator Paul voted yes by 
proxy vote.
    The Committee ordered the bill reported favorably by voice 
vote with Senator Scott recorded ``No.'' Senators present for 
the vote on the bill were: Peters, Carper, Hassan, Sinema, 
Rosen, Padilla, Ossoff, Portman, Johnson, Lankford, Romney, 
Scott, and Hawley.

        IV. Section-by-Section Analysis of the Bill, as Reported


Section 1. Short title

    This section designates the name of the bill as the 
``Domains Critical to Homeland Security Act.''

Section 2. Critical domain research and development

    This section specifies the subsection of the Homeland 
Security Act of 2002 which the bill amends, and provides the 
language to be inserted in the Homeland Security Act.
    The language to be added to the Homeland Security Act 
authorizes the Secretary of Homeland Security to conduct 
research and development to identify and evaluate critical 
domains for homeland security. It further provides specifics on 
how this research is to be executed, published, and submitted 
to Congress, as well as definitions for ``economic security,'' 
and ``United States critical domains for economic security.''

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 25, 2021.
Hon. Gary C. Peters,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2525, the Domains 
Critical to Homeland Security Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lindsay 
Wylie.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    S. 2525 would authorize the Department of Homeland Security 
(DHS) to identify and analyze potential threats to 
infrastructure, industries, technologies, and intellectual 
property critical to the economic security of the United 
States. The agency would be required to report its findings and 
recommendations to the Congress annually through 2026.
    The bill would authorize the appropriation of $1 million 
each year from 2022 through 2026 to carry out the new 
requirements. Using historical patterns of spending for similar 
programs and assuming appropriation of the authorized amounts, 
CBO estimates that implementing S. 2525 would cost $3 million 
over the 2022-2026 period and $2 million after 2026.
    On June 15, 2021, CBO transmitted a cost estimate for H.R. 
3264, the Domains Critical to Homeland Security Act, as ordered 
reported by the House Committee on Homeland Security on June 1, 
2021. That bill is similar to S. 2525, as described above, and 
CBO's estimates for the bills are the same.
    The CBO staff contact for this estimate is Lindsay Wylie. 
The estimate was reviewed by Leo Lex, Deputy Director of Budget 
Analysis.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows: (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

                     HOMELAND SECURITY ACT OF 2002

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Homeland 
Security Act of 2002''.
    (b) Table of Contents.--The table of contents for this Act 
is as follows:
Sec. 1. Short title; table of contents.
     * * * * * * *

 TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
      UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

                  Subtitle H--Miscellaneous Provisions

     * * * * * * *
Sec. 890B. Homeland security critical domain research and development.
     * * * * * * *

TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

           *       *       *       *       *       *       *


Subtitle H--Miscellaneous Provisions

           *       *       *       *       *       *       *


SEC. 890B. HOMELAND SECURITY CRITICAL DOMAIN RESEARCH AND DEVELOPMENT.

    (a) In General.--
          (1) Research and development.--The Secretary is 
        authorized to conduct research and development to--
                  (A) identify United States critical domains 
                for economic security and homeland security; 
                and
                  (B) evaluate the extent to which disruption, 
                corruption, exploitation, or dysfunction of any 
                such domain poses a substantial threat to 
                homeland security.
          (2) Requirements.--
                  (A) Risk analysis of critical domains.--The 
                research under paragraph (1) shall include a 
                risk analysis of each identified United States 
                critical domain for economic security to 
                determine the degree to which there exists a 
                present or future threat to homeland security 
                in the event of disruption, corruption, 
                exploitation, or dysfunction to such domain. 
                Such research shall consider, to the extent 
                possible, the following:
                          (i) The vulnerability and resilience 
                        of relevant supply chains.
                          (ii) Foreign production, processing, 
                        and manufacturing methods.
                          (iii) Influence of malign economic 
                        actors.
                          (iv) Asset ownership.
                          (v) Relationships within the supply 
                        chains of such domains.
                          (vi) The degree to which the 
                        conditions referred to in clauses (i) 
                        through (v) would place such a domain 
                        at risk of disruption, corruption, 
                        exploitation, or dysfunction.
                  (B) Additional research into high-risk 
                critical domains.--Based on identification and 
                risk analysis of United States critical domains 
                for economic security pursuant to paragraph (1) 
                and subparagraph (A) of this paragraph, 
                respectively, the Secretary may conduct 
                additional research into those critical 
                domains, or specific elements thereof, with 
                respect to which there exists the highest 
                degree of a present or future threat to 
                homeland security in the event of disruption, 
                corruption, exploitation, or dysfunction to 
                such a domain. For each such high-risk domain, 
                or element thereof, such research shall--
                          (i) describe the underlying 
                        infrastructure and processes;
                          (ii) analyze present and projected 
                        performance of industries that comprise 
                        or support such domain;
                          (iii) examine the extent to which the 
                        supply chain of a product or service 
                        necessary to such domain is 
                        concentrated, either through a small 
                        number of sources, or if multiple 
                        sources are concentrated in one 
                        geographic area;
                          (iv) examine the extent to which the 
                        demand for supplies of goods and 
                        services of such industries can be 
                        fulfilled by present and projected 
                        performance of other industries, 
                        identify strategies, plans, and 
                        potential barriers to expand the 
                        supplier industrial base, and identify 
                        the barriers to the participation of 
                        such other industries;
                          (v) consider each such domain's 
                        performance capacities in stable 
                        economic environments, adversarial 
                        supply conditions, and under crisis 
                        economic constraints;
                          (vi) identify and define needs and 
                        requirements to establish supply 
                        resiliency within each such domain; and
                          (vii) consider the effects of sector 
                        consolidation, including foreign 
                        consolidation, either through mergers 
                        or acquisitions, or due to recent 
                        geographic realignment, on such 
                        industries' performances.
          (3) Consultation.--In conducting the research under 
        paragraphs (1) and (2)(B), the Secretary shall consult 
        with appropriate Federal agencies, including the Bureau 
        of Industry and Security at the Department of Commerce, 
        State agencies, and private sector stakeholders.
          (4) Publication.--Beginning 1 year after the date of 
        the enactment of this section, the Secretary shall 
        publish a report containing information relating to the 
        research under paragraphs (1) and (2)(B), including 
        findings, evidence, analysis, and recommendations. Such 
        report shall be updated annually through 2026.
    (b) Submission to Congress.--Not later than 90 days after 
the publication of each report required under subsection 
(a)(4), the Secretary shall transmit to the Committee on 
Homeland Security of the House of Representatives and the 
Committee on Homeland Security and Governmental Affairs of the 
Senate each such report, together with a description of actions 
the Secretary, in consultation with appropriate Federal 
agencies, will undertake or has undertaken in response to each 
such report.
    (c) Definitions.--In this section:
          (1) Economic security.--The term economic security' 
        means the condition of having secure and resilient 
        domestic production capacity, combined with reliable 
        access to the global resources necessary to maintain an 
        acceptable standard of living and to protect core 
        national values.
          (2) United states critical domains for economic 
        security.--The term `United States critical domains for 
        economic security' means the critical infrastructure 
        and other associated industries, technologies, and 
        intellectual property, or any combination thereof, that 
        are essential to the economic security of the United 
        States.
    (d) Authorization of Appropriations.--There is authorized 
to be appropriated $1,000,000 for each of fiscal years 2022 
through 2026 to carry out this section.

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