National Critical Capabilities Defense Act of 2023

I 118TH CONGRESS 1ST SESSION H. R. 3136 To require notification and review of United States investment in foreign countries that may threaten the national security of the United States, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 9, 2023 Ms. DELAURO (for herself, Mr. PASCRELL, and Mr. FITZPATRICK) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To require notification and review of United States invest- ment in foreign countries that may threaten the national security of the United States, 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 2023’’. 5 SEC. 2. PROTECTION OF NATIONAL CRITICAL CAPABILI- 6 TIES. 7 The Trade Act of 1974 (19 U.S.C. 2101 et seq.) is 8 amended by adding at the end the following: 9 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3136 IH ‘‘TITLE X—PROTECTION OF NA- 1 TIONAL CRITICAL CAPABILI- 2 TIES 3 ‘‘SEC. 1001. DEFINITIONS. 4 ‘‘In this title: 5 ‘‘(1) APPROPRIATE CONGRESSIONAL COMMIT- 6 TEES.—The term ‘appropriate congressional com- 7 mittees’ means— 8 ‘‘(A) the Committee on Finance, the Com- 9 mittee on Banking, Housing, and Urban Af- 10 fairs, the Select Committee on Intelligence, and 11 the Committee on Foreign Relations of the Sen- 12 ate; and 13 ‘‘(B) the Committee on Ways and Means, 14 the Committee on Financial Services, the Per- 15 manent Select Committee on Intelligence, and 16 the Committee on Foreign Affairs of the House 17 of Representatives. 18 ‘‘(2) COUNTRY OF CONCERN.—The term ‘coun- 19 try of concern’ means, subject to such regulations as 20 may be prescribed in accordance with section 1008, 21 any country the government of which is engaged in 22 a long-term pattern or serious instances of conduct 23 significantly adverse to the national security of the 24 United States or the security and safety of United 25 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3136 IH States persons, such as the People’s Republic of 1 China, the Russian Federation, Iran, North Korea, 2 Cuba, and the regime of Nicola`s Maduro in Ven- 3 ezuela. 4 ‘‘(3) COVERED ACTIVITY.— 5 ‘‘(A) IN GENERAL.—Subject to such regu- 6 lations as may be prescribed in accordance with 7 section 1008, and except as provided in sub- 8 paragraph (B), the term ‘covered activity’ 9 means any activity engaged in by a United 10 States person in a national critical capabilities 11 sector that involves— 12 ‘‘(i) an acquisition of an equity inter- 13 est or contingent equity interest, or mone- 14 tary capital contribution, in a covered for- 15 eign entity, directly or indirectly, by con- 16 tractual commitment or otherwise, with the 17 goal of generating income or gain; 18 ‘‘(ii) an arrangement for an interest 19 in the short- or long-term debt obligations 20 of a covered foreign entity that includes 21 government rights that are characteristic 22 of an equity investment, management, or 23 other important rights; 24 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3136 IH ‘‘(iii) the establishment of a wholly 1 owned subsidiary in a country of concern, 2 such as a greenfield investment, for the 3 purpose of production, design, testing, 4 manufacturing, fabrication, development, 5 or research related to one or more national 6 critical capabilities sectors; 7 ‘‘(iv) the establishment of a joint ven- 8 ture in a country of concern or with a cov- 9 ered foreign entity for the purpose of pro- 10 duction, design, testing, manufacturing, 11 fabrication, development, or research in- 12 volving one or more national critical capa- 13 bilities sectors, or other contractual or 14 other commitments involving a covered for- 15 eign entity to jointly research and develop 16 new innovation, including through the 17 transfer of capital or intellectual property 18 or other business proprietary information; 19 ‘‘(v) the acquisition by a United 20 States person with a covered foreign entity 21 of— 22 ‘‘(I) operational cooperation, such 23 as through supply or support arrange- 24 ments; 25 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3136 IH ‘‘(II) the right to board represen- 1 tation (as an observer, even if limited, 2 or as a member) or an executive role 3 (as may be defined through regula- 4 tion) in a covered foreign entity; 5 ‘‘(III) the ability to direct or in- 6 fluence such operational decisions as 7 may be defined through such regula- 8 tions; 9 ‘‘(IV) formal governance rep- 10 resentation in any operating affiliate, 11 like a portfolio company, of a covered 12 foreign entity; or 13 ‘‘(V) a new relationship to share 14 or provide business services, such as 15 but not limited to financial services, 16 marketing services, maintenance, or 17 assembly functions, related to a na- 18 tional critical capabilities sector; 19 ‘‘(vi) any activity by a recipient or 20 beneficiary of financial assistance, includ- 21 ing grants, tax incentives, or other types of 22 funding, with respect to a covered foreign 23 entity or a country of concern; 24 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3136 IH ‘‘(vii) any activity with respect to a 1 covered foreign entity or a country of con- 2 cern by an entity that benefits from annual 3 procurement of more than an amount to be 4 determined in regulations prescribed in ac- 5 cordance with section 1008 in goods or 6 services by a United States national secu- 7 rity agency; or 8 ‘‘(viii) except as provided in subpara- 9 graph (B), any other transaction involving 10 a country of concern or with a covered for- 11 eign entity defined in regulations pre- 12 scribed in accordance with section 1008. 13 ‘‘(B) EXCEPTIONS.—The term ‘covered ac- 14 tivity’ does not include— 15 ‘‘(i) any transaction the value of 16 which the Committee determines is de 17 minimis; 18 ‘‘(ii) any category of transactions that 19 the Committee determines is in the na- 20 tional interest of the United States, as 21 may be defined in regulations prescribed in 22 accordance with section 1008; or 23 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3136 IH ‘‘(iii) any ordinary business trans- 1 action as may be defined in such regula- 2 tions. 3 ‘‘(4) COVERED FOREIGN ENTITY.— 4 ‘‘(A) IN GENERAL.—Subject to regulations 5 prescribed in accordance with section 1008, and 6 except as provided in subparagraph (B), the 7 term ‘covered foreign entity’ means— 8 ‘‘(i) any entity that is incorporated in, 9 has a principal place of business in, or is 10 organized under the laws of a country of 11 concern; 12 ‘‘(ii) any entity the equity securities of 13 which are primarily traded on one or more 14 exchanges in a country of concern; 15 ‘‘(iii) any entity in which any covered 16 foreign entity holds, individually or in the 17 aggregate, directly or indirectly, an owner- 18 ship interest of greater than 50 percent; or 19 ‘‘(iv) any other entity that is not a 20 United States person and that meets such 21 criteria as may be specified by the Com- 22 mittee in such regulations. 23 ‘‘(B) EXCEPTION.—The term ‘covered for- 24 eign entity’ does not include any entity de- 25 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3136 IH scribed in subparagraph (A) that can dem- 1 onstrate that a majority of the equity interest 2 in the entity is ultimately owned by— 3 ‘‘(i) nationals of the United States; or 4 ‘‘(ii) nationals of such countries (other 5 than countries of concern) as are identified 6 for purposes of this subparagraph pursu- 7 ant to regulations prescribed in accordance 8 with section 1008. 9 ‘‘(5) NATIONAL CRITICAL CAPABILITIES SEC- 10 TOR.—Subject to regulations prescribed in accord- 11 ance with section 1008, the term ‘national critical 12 capabilities sector’ includes sectors within the fol- 13 lowing areas, as specified in such regulations: 14 ‘‘(A) Semiconductor manufacturing and 15 advanced packaging. 16 ‘‘(B) Large-capacity batteries. 17 ‘‘(C) Critical minerals and materials. 18 ‘‘(D) Artificial intelligence. 19 ‘‘(E) Quantum information science and 20 technology. 21 ‘‘(F) Active pharmaceutical ingredients. 22 ‘‘(G) Automobile manufacturing. 23 ‘‘(H) Any other sector as may be— 24 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3136 IH ‘‘(i) determined by the President to be 1 a national critical capabilities sector based 2 on the significance of the sector to the na- 3 tional security of the United States; and 4 ‘‘(ii) included in such definition by the 5 President through such regulations. 6 ‘‘(6) PARTY.—The term ‘party’, with respect to 7 an activity, has the meaning given that term in reg- 8 ulations prescribed in accordance with section 1008. 9 ‘‘(7) UNITED STATES.—The term ‘United 10 States’ means the several States, the District of Co- 11 lumbia, and any territory or possession of the 12 United States. 13 ‘‘(8) UNITED STATES PERSON.—The term 14 ‘United States person’ means— 15 ‘‘(A) an individual who is a citizen or na- 16 tional of the United States or an alien lawfully 17 admitted for permanent residence in the United 18 States; and 19 ‘‘(B) any corporation, partnership, or other 20 entity organized under the laws of the United 21 States or the laws of any jurisdiction within the 22 United States. 23 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3136 IH ‘‘SEC. 1002. ADMINISTRATION OF UNITED STATES INVEST- 1 MENT NOTIFICATION, REVIEW, AND PROHIBI- 2 TION AUTHORITY. 3 ‘‘(a) ESTABLISHMENT OF COMMITTEE ON NATIONAL 4 CRITICAL CAPABILITIES.— 5 ‘‘(1) IN GENERAL.—The President shall estab- 6 lish an interagency committee to administer this 7 title, to be known as the ‘Committee on National 8 Critical Capabilities’ (in this title referred to as the 9 ‘Committee’). 10 ‘‘(2) DELEGATION.—The President may dele- 11 gate the requirement under paragraph (1), and all 12 or any portion of the authorities and functions under 13 this title, to the head of an Executive department 14 (as defined in section 101 of title 5, United States 15 Code). 16 ‘‘(b) MEMBERSHIP.—The following agencies shall be 17 represented on the Committee: 18 ‘‘(1) The Office of the United States Trade 19 Representative. 20 ‘‘(2) The Department of Commerce. 21 ‘‘(3) The Department of State. 22 ‘‘(4) The Department of the Treasury. 23 ‘‘(5) The Department of Homeland Security. 24 ‘‘(6) The Department of Defense. 25 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3136 IH ‘‘(7) The Office of Science and Technology Pol- 1 icy. 2 ‘‘(8) The Department of Justice. 3 ‘‘(9) The Department of Energy. 4 ‘‘(10) The Department of Health and Human 5 Services. 6 ‘‘(11) The Department of Agriculture. 7 ‘‘(12) The Department of Labor. 8 ‘‘(13) The Office of the Director of National In- 9 telligence. 10 ‘‘(14) Any other Federal agency the President 11 determines appropriate, generally, or on a case-by- 12 case basis. 13 ‘‘(c) DESIGNATION AS VOTING MEMBERS.—The 14 heads of the agencies specified in subsection (b) shall be 15 voting members of the Committee. 16 ‘‘(d) CHAIRPERSON.—The head of the Executive de- 17 partment to which the President delegates authority under 18 subsection (a) shall serve as the chairperson of the Com- 19 mittee. 20 ‘‘(e) CONSULTATIONS.—In carrying out the duties of 21 the chairperson of the Committee, the chairperson shall 22 consult with the United States Trade Representative, the 23 Secretary of Defense, the Secretary of Commerce, the Sec- 24 retary of State, and the Secretary of the Treasury. 25 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3136 IH ‘‘SEC. 1003. MANDATORY NOTIFICATION OF COVERED AC- 1 TIVITIES; REVIEW AND ACTIONS TO MITI- 2 GATE RISK. 3 ‘‘(a) MANDATORY NOTIFICATION.— 4 ‘‘(1) IN GENERAL.—Subject to regulations pre- 5 scribed in accordance with section 1008, beginning 6 on the date that is 90 days after such regulations 7 take effect, a United States person that plans to en- 8 gage in a covered activity shall submit to the Com- 9 mittee a complete written notification of the activity 10 not later than 90 days before the anticipated initi- 11 ation date of the activity. 12 ‘‘(2) CIRCULATION OF NOTIFICATION.— 13 ‘‘(A) IN GENERAL.—The Committee shall, 14 upon receipt of a notification under paragraph 15 (1), promptly inspect the notification for com- 16 pleteness, and, if complete, immediately cir- 17 culate the notification to each agency specified 18 in section 1002(b). 19 ‘‘(B) INCOMPLETE NOTIFICATIONS.—If a 20 notification submitted under paragraph (1) is 21 incomplete, the Committee shall , unilaterally or 22 at request of any member of the Committee, 23 promptly inform the United States person that 24 submits the notification that the notification is 25 not complete and provide an explanation of rel- 26 VerDate Sep 11 2014 00:55 May 20, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3136.IH H3136 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 3136 IH evant material respects in which the notification 1 is not complete. 2 ‘‘(C) REFERRAL TO ATTORNEY GEN- 3 ERAL.—If the Committee has reason to believe 4 that a covered activity that is the subject of a 5 notification submitted under paragraph (1) may 6 be prohibited under this title or regulations pre- 7 scribed in accordance with section 1008, the 8 President may refer the notification to the At- 9 torney General for such action as the Attorney 10 General may determine to be proper. 11 ‘‘(b) REVIEW.— 12 ‘‘(1) IN GENERAL.—Subject to regulations pre- 13 scribed in accordance with section 1008, the Com- 14 mittee may, beginning on the d [Text truncated for display. 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