National Critical Capabilities Defense Act of 2020

II 116TH CONGRESS 2D SESSION S. 5049 To require reviews of United States investment in foreign countries that may threaten national critical capabilities and to improve the use of authorities under the Defense Production Act of 1950, and for other purposes. IN THE SENATE OF THE UNITED STATES DECEMBER 17, 2020 Mr. CASEY introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To require reviews of United States investment in foreign countries that may threaten national critical capabilities and to improve the use of authorities under the Defense Production Act of 1950, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘National Critical Capa- 4 bilities Defense Act of 2020’’. 5 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 5049 IS SEC. 2. NATIONAL CRITICAL CAPABILITIES REVIEWS. 1 The Defense Production Act of 1950 (50 U.S.C. 2 4501 et seq.) is amended by adding at the end the fol- 3 lowing: 4 ‘‘TITLE VIII—NATIONAL CRIT- 5 ICAL CAPABILITIES REVIEWS 6 ‘‘SEC. 801. DEFINITIONS. 7 ‘‘In this title: 8 ‘‘(1) APPROPRIATE CONGRESSIONAL COMMIT- 9 TEES.—The term ‘appropriate congressional com- 10 mittees’ means— 11 ‘‘(A) the Committee on Armed Services, 12 the Committee on Banking, Housing, and 13 Urban Affairs, the Committee on Commerce, 14 Science, and Transportation, the Committee on 15 Finance, the Committee on Health, Education, 16 Labor, and Pensions, and the Committee on 17 Homeland Security and Governmental Affairs 18 of the Senate; and 19 ‘‘(B) the Committee on Armed Services, 20 the Committee on Education and Labor, the 21 Committee on Financial Services, the Com- 22 mittee on Homeland Security, the Committee 23 on Transportation and Infrastructure, and the 24 Committee on Ways and Means of the House of 25 Representatives. 26 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 5049 IS ‘‘(2) COMMISSION.—The term ‘Commission’ 1 means the commission established under section 2 803. 3 ‘‘(3) COMMITTEE.—The term ‘Committee’ 4 means the Committee on National Critical Capabili- 5 ties established under section 802. 6 ‘‘(4) CONTROL.—The term ‘control’ means the 7 power, direct or indirect, whether exercised or not 8 exercised, to determine, direct, or decide important 9 matters affecting an entity, subject to regulations 10 prescribed by the Committee. 11 ‘‘(5) COUNTRY OF CONCERN.—The term ‘coun- 12 try of concern’ has the meaning given that term in 13 regulations prescribed by the Committee. 14 ‘‘(6) COVERED TRANSACTION.— 15 ‘‘(A) IN GENERAL.—Except as otherwise 16 provided, the term ‘covered transaction’ means 17 any of the following forms of outbound invest- 18 ment, proposed or pending on or after the date 19 of the enactment of this title: 20 ‘‘(i) Any merger, acquisition, or take- 21 over of a foreign person by or with a 22 United States business that could result in 23 a threat to one or more national critical 24 capabilities, including such a merger, ac- 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 5049 IS quisition, or takeover carried out through a 1 joint venture. 2 ‘‘(ii) Any other investment, subject to 3 regulations prescribed under subparagraph 4 (B), by a United States business in a for- 5 eign person that— 6 ‘‘(I) owns, operates, manufac- 7 tures, supplies, or services national 8 critical capabilities; or 9 ‘‘(II) produces, designs, tests, 10 manufactures, fabricates, or develops 11 one or more national critical capabili- 12 ties. 13 ‘‘(iii) Any change in the rights that a 14 United States business has with respect to 15 a foreign person in which the United 16 States business has an investment, if that 17 change could result in— 18 ‘‘(I) a threat to one or more na- 19 tional critical capabilities; or 20 ‘‘(II) an investment described in 21 clause (ii). 22 ‘‘(iv) Any other transaction, transfer, 23 agreement, or arrangement, the structure 24 of which is designed or intended to evade 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 5049 IS or circumvent the application of this title, 1 subject to regulations prescribed by the 2 Committee. 3 ‘‘(B) OTHER INVESTMENTS.— 4 ‘‘(i) OTHER INVESTMENT DEFINED.— 5 For purposes of subparagraph (A)(ii), the 6 term ‘other investment’ means an invest- 7 ment, direct or indirect, by a United States 8 business in a foreign person described in 9 that subparagraph that is not an invest- 10 ment described in subparagraph (A)(i) and 11 that— 12 ‘‘(I) affords the foreign person— 13 ‘‘(aa) the ability to shift to a 14 foreign country any material non- 15 public technical information re- 16 lated to national critical capabili- 17 ties in the possession of the 18 United States business; 19 ‘‘(bb) membership or ob- 20 server rights on the board of di- 21 rectors or equivalent governing 22 body of the United States busi- 23 ness or the right to nominate an 24 individual to a position on the 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 5049 IS board of directors or equivalent 1 governing body; or 2 ‘‘(cc) any involvement, other 3 than through voting of shares, in 4 substantive decision making of 5 the United States business re- 6 garding— 7 ‘‘(AA) the use, develop- 8 ment, acquisition, safe- 9 keeping, or release of sen- 10 sitive personal data of 11 United States citizens main- 12 tained or collected by the 13 United States business; 14 ‘‘(BB) a shift to a for- 15 eign country of production, 16 development acquisition, or 17 release of national critical 18 capabilities; 19 ‘‘(CC) a shift to a for- 20 eign county of the manage- 21 ment, operation, manufac- 22 ture, or supply of national 23 critical capabilities; or 24 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 5049 IS ‘‘(DD) the transfer of 1 knowledge from the United 2 States business by any 3 means, including the train- 4 ing of an employee under an 5 agreement, either written or 6 verbal, under which the em- 7 ployee is expected to acquire 8 such knowledge and later 9 the such knowledge with an 10 entity in a foreign country; 11 ‘‘(II) results in a shift in produc- 12 tion from the United States to a for- 13 eign country; or 14 ‘‘(III) results in the establish- 15 ment of a new entity in a foreign 16 country. 17 ‘‘(ii) MATERIAL NONPUBLIC TECH- 18 NICAL INFORMATION DEFINED.— 19 ‘‘(I) IN GENERAL.—For purposes 20 of clause (i)(I), and subject to regula- 21 tions prescribed by the Committee, 22 the term ‘material nonpublic technical 23 information’ means information 24 that— 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 5049 IS ‘‘(aa) relates to the knowl- 1 edge, know-how, or under- 2 standing, not available in the 3 public domain, of the design, lo- 4 cation, or operation of national 5 critical capabilities; or 6 ‘‘(bb) is not available in the 7 public domain, and is necessary 8 to design, fabricate, develop, test, 9 produce, or manufacture national 10 critical capabilities, including 11 processes, techniques, or meth- 12 ods. 13 ‘‘(II) EXEMPTION FOR FINAN- 14 CIAL INFORMATION.—Notwith- 15 standing subclause (I), for purposes of 16 this subparagraph, the term ‘material 17 nonpublic technical information’ does 18 not include financial information re- 19 garding the performance of a foreign 20 person. 21 ‘‘(iii) REGULATIONS.— 22 ‘‘(I) IN GENERAL.—The Com- 23 mittee shall prescribe regulations pro- 24 viding guidance on the types of trans- 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 5049 IS actions that the Committee considers 1 to be ‘other investment’ for purposes 2 of subparagraph (A)(ii). 3 ‘‘(II) UNITED STATES BUSI- 4 NESSES THAT OWN, OPERATE, MANU- 5 FACTURE, SUPPLY, OR SERVICE NA- 6 TIONAL CRITICAL CAPABILITIES.—The 7 regulations prescribed by the Com- 8 mittee with respect to an investment 9 described in subparagraph (A)(ii)(I) 10 shall— 11 ‘‘(aa) specify the national 12 critical capabilities subject to 13 that subparagraph based on cri- 14 teria intended to limit application 15 of that subparagraph to the sub- 16 set of national critical capabilities 17 that is likely to be of importance 18 to the national security of the 19 United States; and 20 ‘‘(bb) enumerate specific 21 types and examples of such capa- 22 bilities. 23 ‘‘(7) FOREIGN PERSON.—The term ‘foreign per- 24 son’ means— 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 5049 IS ‘‘(A) an individual who is not a United 1 States citizen or an alien lawfully admitted for 2 permanent residence to the United States; or 3 ‘‘(B) an entity that is not organized under 4 the laws of the United States or of any jurisdic- 5 tion within the United States, including such an 6 entity— 7 ‘‘(i) owned or controlled by a United 8 States business; or 9 ‘‘(ii) owned or controlled by the gov- 10 ernment of a foreign country. 11 ‘‘(8) NATIONAL CRITICAL CAPABILITIES.—The 12 term ‘national critical capabilities’, subject to regula- 13 tions prescribed by the Committee— 14 ‘‘(A) means systems and assets, whether 15 physical or virtual, so vital to the United States 16 that the inability to develop such systems and 17 assets or the incapacity or destruction of such 18 systems or assets would have a debilitating im- 19 pact on national security; and 20 ‘‘(B) includes the following: 21 ‘‘(i) The production, in sufficient 22 quantities, of any of the following articles: 23 ‘‘(I) Medical supplies, medicines, 24 and personal protective equipment. 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 5049 IS ‘‘(II) Articles critical to the 1 maintenance of the national electrical 2 grid. 3 ‘‘(III) Articles critical to infra- 4 structure construction after a natural 5 or manmade disaster. 6 ‘‘(IV) Any other articles the 7 Committee considers appropriate, in- 8 cluding articles recommended by the 9 Commission under section 806(c). 10 ‘‘(ii) The supply chains for the pro- 11 duction of such articles. 12 ‘‘(iii) The supply chain for the De- 13 partment of Defense. 14 ‘‘(iv) Any other supply chain the Com- 15 mittee considers appropriate, including 16 supply chains recommended by the Com- 17 mission under section 806(c). 18 ‘‘(v) Services critical to the production 19 of articles described in clause (i) or a sup- 20 ply chain described in clause (ii), (iii), or 21 (iv). 22 ‘‘(vi) Medical services. 23 ‘‘(vii) Services critical to the mainte- 24 nance of the national electrical grid. 25 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 5049 IS ‘‘(viii) Services critical to infrastruc- 1 ture construction after a natural or man- 2 made disaster. 3 ‘‘(9) NATIONAL SECURITY.—The term ‘national 4 security’— 5 ‘‘(A) has the meaning given that term in 6 section 721; and 7 ‘‘(B) includes agricultural security, health 8 security, homeland security, infrastructure secu- 9 rity, and natural resources security. 10 ‘‘(10) PARTY.—The term ‘party’, with respect 11 to a transaction, has the meaning given that term in 12 regulations prescribed by the Committee. 13 ‘‘(11) UNITED STATES.—The term ‘United 14 States’ means the several States, the District of Co- 15 lumbia, and any territory or possession of the 16 United States. 17 ‘‘(12) UNITED STATES BUSINESS.—The term 18 ‘United States business’ means a person engaged in 19 interstate commerce in the United States. 20 ‘‘SEC. 802. COMMITTEE ON NATIONAL CRITICAL CAPABILI- 21 TIES. 22 ‘‘(a) IN GENERAL.—There is established a com- 23 mittee, to be known as the ‘Committee on National Crit- 24 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 5049 IS ical Capabilities’, which shall carry out this title and such 1 other assignments as the President may designate. 2 ‘‘(b) MEMBERSHIP.— 3 ‘‘(1) IN GENERAL.—The Committee shall be 4 comprised of the head, or a designee of the head, of 5 each of the following: 6 ‘‘(A) The Office of Science and Technology 7 Policy. 8 ‘‘(B) The Department of the Treasury. 9 ‘‘(C) The Department of Homeland Secu- 10 rity. 11 ‘‘(D) The Department of Commerce. 12 ‘‘(E) The Department of Defense. 13 ‘‘(F) The Department of State. 14 ‘‘(G) The Department of Justice. 15 ‘‘(H) The Department of Energy. 16 ‘‘(I) The Department of Health and 17 Human Services. 18 ‘‘(J) The Department of Agriculture. 19 ‘‘(K) The Department of Labor. 20 ‘‘(L) The Federal Emergency Management 21 Agency. 22 ‘‘(M) The National Institute of Standards 23 and Technology. 24 VerDate Sep 11 2014 02:14 Jan 10, 2021 Jkt 019200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S5049.IS S5049 pbinns on DSKJLVW7X2PROD with BILLS 14 •S 5049 IS ‘‘(N) The Centers for Disease Control and 1 Prevention. 2 ‘‘(O) The National Institute of Allergy and 3 Infectious Diseases. 4 ‘‘(P) Any other Federal agency the Presi- 5 dent determines appropriate, generally or on a 6 case-by-case basis. 7 ‘‘(2) EX OFFICIO MEMBER.—In addition the 8 members of the Committee specified in paragraph 9 (1), the Director of National Intelligence shall be a 10 nonvoting, ex officio member of the Committee. 11 ‘‘(c) CO-CHAIRS.—The Secretary of Homeland Secu- 12 rity and the Secretary of Commerce shall serve as the co- 13 chairs of the Committee. 14 ‘‘(d) DESIGNATION OF OFFICIALS TO CARRY OUT 15 DUTIES RELATED TO COMMITTEE.—The head of each 16 agency represented on the Committee shall designate an 17 official, at or equivalent to the level of Assistant Secretary 18 in the Department of the Treasury, who is appointed by 19 the President, by and with the advi [Text truncated for display. 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