```

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5598 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 5598

     To prohibit and require notifications with respect to certain 
investments by United States persons in the People's Republic of China, 
                        and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

            December 18 (legislative day, December 16), 2024

 Mr. Cornyn (for himself, Mr. Casey, and Mr. Sullivan) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
     To prohibit and require notifications with respect to certain 
investments by United States persons in the People's Republic of China, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PROHIBITION AND NOTIFICATION ON INVESTMENTS RELATING TO 
              COVERED NATIONAL SECURITY TRANSACTIONS.

    The Defense Production Act of 1950 (50 U.S.C. 4501 et seq.) is 
amended by adding at the end the following:

 ``TITLE VIII--PROHIBITION AND NOTIFICATION ON INVESTMENTS RELATING TO 
                 COVERED NATIONAL SECURITY TRANSACTIONS

``SEC. 801. PROHIBITION ON INVESTMENTS.

    ``(a) In General.--The Secretary may prohibit, in accordance with 
regulations issued under subsection (e), a United States person from 
knowingly engaging in a covered national security transaction in a 
prohibited technology.
    ``(b) Evasion.--Any transaction by a United States person or within 
the United States that evades or avoids, has the purpose of evading or 
avoiding, causes a violation of, or attempts to violate the prohibition 
set forth in subsection (a) is prohibited.
    ``(c) Waiver.--Subject to subsection (d), the Secretary is 
authorized to exempt from the prohibition set forth in subsection (a) 
any activity determined by the President, in consultation with the 
Secretary, the Secretary of Commerce and, as appropriate, the heads of 
other relevant Federal departments and agencies, to be in the national 
interest of the United States.
    ``(d) Congressional Notification.--The Secretary shall--
            ``(1) notify the appropriate congressional committees not 
        later than 5 business days after issuing a waiver under 
        subsection (c); and
            ``(2) include in such notification an identification of the 
        national interest justifying the use of the waiver.
    ``(e) Regulations.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of Commerce and, as appropriate, the heads of other 
        relevant Federal departments and agencies, may issue 
        regulations to carry out this section in accordance with 
        subchapter II of chapter 5 and chapter 7 of title 5, United 
        States Code (commonly known as `Administrative Procedure Act').
            ``(2) Non-binding feedback.--
                    ``(A) In general.--The regulations issued under 
                paragraph (1) shall include a process under which a 
                person can request non-binding feedback on a 
                confidential basis as to whether a transaction would 
                constitute a covered national security transaction in a 
                prohibited technology.
                    ``(B) Authority to limit frivolous feedback 
                requests.--In establishing the process required by 
                subparagraph (A), the Secretary may prescribe 
                limitations on requests for feedback identified as 
                frivolous for purposes of this subsection.
            ``(3) Notice and opportunity to cure.--
                    ``(A) In general.--The regulations issued under 
                paragraph (1) shall account for whether a United States 
                person has self-identified a violation of the 
                prohibition set forth in subsection (a) in determining 
                the legal consequences of that violation.
                    ``(B) Self-disclosure letters.--The regulations 
                issued under paragraph (1) shall dictate the form and 
                content of a letter of self-disclosure, which shall 
                include relevant facts about the violation, why the 
                United States person believes its activity to have 
                violated the prohibition set forth in subsection (a), 
                and a proposal for mitigation of the harm of such 
                action.
            ``(4) Public notice and comment.--The regulations issued 
        under paragraph (1) shall be subject to public notice and 
        comment.
            ``(5) Low-burden regulations.--In issuing regulations under 
        paragraph (1), the Secretary shall balance the priority of 
        protecting the national security interest of the United States 
        while, to the extent practicable--
                    ``(A) minimizing the cost and complexity of 
                compliance for affected parties, including the 
                duplication of reporting requirements under current 
                regulations;
                    ``(B) adopting the least burdensome alternative 
                that achieves regulatory objectives; and
                    ``(C) prioritizing transparency and stakeholder 
                involvement in the process of issuing the rules.
            ``(6) Penalties.--
                    ``(A) In general.--The regulations issued under 
                paragraph (1) shall provide for the imposition of civil 
                penalties described in subparagraph (B) for violations 
                of the prohibition set forth in subsection (a).
                    ``(B) Penalties described.--
                            ``(i) Unlawful acts.--It shall be unlawful 
                        for a person to violate, attempt to violate, 
                        conspire to violate, or cause a violation of 
                        any license, order, regulation, notification 
                        requirement, or prohibition issued under this 
                        section.
                            ``(ii) Civil penalty.--The Secretary may 
                        impose a civil penalty on any person who 
                        commits an unlawful act described in clause (i) 
                        in an amount not to exceed the greater of--
                                    ``(I) $250,000; or
                                    ``(II) an amount that is twice the 
                                amount of the transaction that is the 
                                basis of the violation with respect to 
                                which the penalty is imposed.
                            ``(iii) Divestment.--The Secretary may 
                        compel the divestment of a covered national 
                        security transaction in a prohibited technology 
                        determined to be in violation of this title.
                            ``(iv) Relief.--The President may direct 
                        the Attorney General of the United States to 
                        seek appropriate relief, including divestment 
                        relief, in the district courts of the United 
                        States, in order to implement and enforce this 
                        title.
            ``(7) Burden of proof.--In accordance with section 556(d) 
        of title 5, United States Code, in an enforcement action for a 
        violation of the prohibition set forth in subsection (a), the 
        burden of proof shall be upon the Secretary.

``SEC. 802. NOTIFICATION ON INVESTMENTS.

    ``(a) Mandatory Notification.--Not later than 450 days after the 
date of the enactment of this title, the Secretary shall issue 
regulations prescribed in accordance with subsection (b), to require a 
United States person that engages in a covered national security 
transaction in a prohibited technology (unless the Secretary has 
exercised the authority provided by section 801(a) to prohibit 
knowingly engaging in such covered national security transaction) or a 
notifiable technology to submit to the Secretary a written notification 
of the transaction not later than 30 days after the completion date of 
the transaction.
    ``(b) Regulations.--
            ``(1) In general.--Not later than 450 days after the date 
        of the enactment of this title, the Secretary, in consultation 
        with the Secretary of Commerce and, as appropriate, the heads 
        of other relevant Federal departments and agencies, shall issue 
        regulations to carry out this section in accordance with 
        subchapter II of chapter 5 and chapter 7 of title 5, United 
        States Code (commonly known as `Administrative Procedure Act').
            ``(2) Public notice and comment.--The regulations issued 
        under paragraph (1) shall be subject to public notice and 
        comment.
            ``(3) Low-burden regulations.--In issuing regulations under 
        paragraph (1), the Secretary shall balance the priority of 
        protecting the national security interest of the United States 
        while, to the extent practicable--
                    ``(A) minimizing the cost and complexity of 
                compliance for affected parties, including the 
                duplication of reporting requirements under current 
                regulation;
                    ``(B) adopting the least burdensome alternative 
                that achieves regulatory objectives; and
                    ``(C) prioritizing transparency and stakeholder 
                involvement in the process of issuing the rules.
            ``(4) Penalties.--
                    ``(A) In general.--The regulations issued under 
                paragraph (1) shall provide for the imposition of civil 
                penalties described in subparagraph (B) for violations 
                of the notification requirement set forth in subsection 
                (a).
                    ``(B) Penalties described.--
                            ``(i) Unlawful acts.--It shall be unlawful 
                        for a person to violate, attempt to violate, 
                        conspire to violate, or cause a violation of 
                        any license, order, regulation, notification 
                        requirement, or prohibition issued under this 
                        section.
                            ``(ii) Civil penalty.--A civil penalty may 
                        be imposed on any person who commits an 
                        unlawful act described in clause (i) in an 
                        amount not to exceed the greater of--
                                    ``(I) $250,000; or
                                    ``(II) an amount that is twice the 
                                amount of the transaction that is the 
                                basis of the violation with respect to 
                                which the penalty is imposed.
            ``(5) Burden of proof.--In accordance with section 556(d) 
        of title 5, United States Code, in an enforcement action for a 
        violation of the prohibition set forth in subsection (a), the 
        burden of proof shall be upon the Secretary.
            ``(6) Completeness of notification.--
                    ``(A) In general.--The Secretary shall, upon 
                receipt of a notification under subsection (a), and in 
                consultation with the Secretary of Commerce, promptly 
                inspect the notification for completeness.
                    ``(B) Incomplete notifications.--If a notification 
                submitted under subsection (a) 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.
            ``(7) Identification of non-notified activity.--The 
        Secretary, in coordination with the Secretary of Commerce, 
        shall establish a process to identify covered national security 
        transactions in a prohibited technology or a notifiable 
        technology for which--
                    ``(A) a notification is not submitted to the 
                Secretary under subsection (a); and
                    ``(B) information is reasonably available.
    ``(c) Confidentiality of Information.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        information or documentary material filed with the Secretary 
        pursuant to this section shall be exempt from disclosure under 
        section 552(b)(3) 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 Secretary 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 
                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.
                    ``(E) Information where the disclosure of such 
                information is determined by the Secretary to be in the 
                national security interest.
    ``(d) Inapplicability.--If the Secretary prohibits a covered 
national security transaction in a prohibited technology under section 
801, the requirements of this section shall not apply with respect to 
the covered national security transaction.

``SEC. 803. REPORT.

    ``(a) In General.--Not later than one year after the date on which 
the regulations issued under section 801(e) take effect, and not less 
frequently than annually thereafter for 7 years, the Secretary, in 
consultation with the Secretary of Commerce, shall submit to the 
appropriate congressional committees a report that--
            ``(1) lists all enforcement actions taken subject to the 
        regulations during the year preceding submission of the report, 
        which includes, with respect to each such action, a description 
        of--
                    ``(A) the prohibited technology or notifiable 
                technology;
                    ``(B) the covered national security transaction; 
                and
                    ``(C) the covered foreign person;
            ``(2) provides an assessment of whether Congress should 
        amend the definition of the term `prohibited technology' by--
                    ``(A) identifying additional technologies, not 
                currently listed as a prohibited technology, that the 
                Secretary, in consultation with the Secretary of 
                Commerce and, as applicable, the Secretary of Defense, 
                the Secretary of State, the Secretary of Energy, the 
                Director of National Intelligence, and the heads of any 
                other relevant Federal agencies, determines may pose an 
                acute threat to the national security of the United 
                States if developed or acquired by a country of 
                concern;
                    ``(B) explaining why each technology identified in 
                subparagraph (A) may pose an acute threat to the 
                national security of the United States if developed or 
                acquired by a country of concern; and
                    ``(C) recommending the repeal of technologies from 
                the category of prohibited technology to the extent 
                that the technologies no longer pose an acute threat to 
                the national security of the United States if developed 
                or acquired by a country of concern;
            ``(3) lists all notifications submitted under section 802 
        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 national security transaction with respect to 
                which the notification was submitted; and
                    ``(B) the nature of the covered national security 
                transaction that was the subject to the notification, 
                including the elements of the covered national security 
                transaction that necessitated a notification;
            ``(4) includes a summary of those notifications, 
        disaggregated by prohibited technology, notifiable technology, 
        by covered national security transaction, and by country of 
        concern;
            ``(5) provides additional context and information regarding 
        trends in the prohibited technology, notifiable technology, the 
        types of covered national security transaction, and the 
        countries involved in those notifications; and
            ``(6) assesses the overall impact of those notifications, 
        including recommendations for--
                    ``(A) expanding existing Federal programs to 
                support the production or supply of prohibited 
                technologies or notifiable technologies in the United 
                States, including the potential of existing authorities 
                to address any related national security concerns;
                    ``(B) investments needed to enhance prohibited 
                technologies or notifiable technologies and reduce 
                dependence on countries of concern regarding those 
                technologies; and
                    ``(C) the continuation, expansion, or modification 
                of the implementation and administration of this title, 
                including recommendations with respect to whether the 
                definition of the term `country of concern' under 
                section 807(2) should be amended to add or remove 
                countries.
    ``(b) Consideration of Certain Information.--In preparing the 
report pursuant to subsection (a), the Secretary--
            ``(1) shall consider information provided jointly by the 
        chairperson and ranking member of any of the appropriate 
        congressional committees;
            ``(2) may consider credible information obtained by other 
        countries and nongovernmental organizations that monitor the 
        military, surveillance, intelligence, or technology 
        capabilities of a country of concern; and
            ``(3) may consider any other information that the Secretary 
        deems relevant.
    ``(c) Form of Report.--Each report required by this section shall 
be submitted in unclassified form, but may include a classified annex.
    ``(d) Testimony Required.--Not later than one year after the date 
of the enactment of this title, and annually thereafter for five years, 
the Secretary 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.
    ``(e) Requests by Appropriate Congressional Committees.--
            ``(1) In general.--After receiving a request that meets the 
        requirements of paragraph (2) with respect to whether a 
        technology should be included in the amendments as described in 
        subsection (a)(2), the Secretary shall, in preparing the report 
        pursuant to subsection (a)--
                    ``(A) determine if that technology may pose an 
                acute threat to the national security of the United 
                States if developed or acquired by a country of 
                concern; and
                    ``(B) include in the report pursuant to subsection 
                (a) an explanation with respect to that determination 
                that includes--
                            ``(i) a statement of whether or not the 
                        technology, as determined by the Secretary, may 
                        pose an acute threat to the national security 
                        of the United States if developed or acquired 
                        by a country of concern; and
                            ``(ii) if the Secretary determines that--
                                    ``(I) the technology may pose an 
                                acute threat to the national security 
                                of the United States if developed or 
                                acquired by a country of concern, an 
                                explanation for such determination and 
                                a recommendation whether that 
                                technology should be named a prohibited 
                                technology or a notifiable technology; 
                                and
                                    ``(II) the technology would not 
                                pose an acute threat to the national 
                                security of the United States if 
                                developed or acquired by a country of 
                                concern, an explanation for such 
                                determination.
            ``(2) Requirements.--A request under paragraph (1) with 
        respect to whether a technology may pose an acute threat to the 
        national security of the United States if developed or acquired 
        by a country of concern shall be submitted to the Secretary in 
        writing jointly by the chairperson and ranking member of one or 
        more of the appropriate congressional committees.

``SEC. 804. MULTILATERAL ENGAGEMENT AND COORDINATION.

    ``(a) Authorities.--The Secretary, in coordination with the 
Secretary of State, the Secretary of Commerce, and the heads of other 
relevant Federal agencies, should--
            ``(1) conduct bilateral and multilateral engagement with 
        the governments of countries that are allies and partners of 
        the United States to promote and increase coordination of 
        protocols and procedures to facilitate the effective 
        implementation of and appropriate compliance with the 
        prohibitions pursuant to this title;
            ``(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; and
            ``(3) work with and encourage the governments of countries 
        that are allies and partners of the United States to develop 
        similar mechanisms of their own, for the exclusive purpose of 
        preventing the development or acquisition of prohibited 
        technologies by a country of concern.
    ``(b) Strategy for Multilateral Engagement and Coordination.--Not 
later than 180 days after the date of the enactment of this title, the 
Secretary, in consultation with the Secretary of State, the Secretary 
of Commerce, and the heads of other relevant Federal agencies, should--
            ``(1) develop a strategy to work with the governments of 
        countries that are allies and partners of the United States to 
        develop mechanisms that are comparable to the prohibitions 
        pursuant to this title, for the exclusive purpose of preventing 
        the development and acquisition of prohibited technologies by a 
        country of concern; and
            ``(2) assess opportunities to provide technical assistance 
        to those countries with respect to the development of those 
        mechanisms.
    ``(c) Report.--Not later than one year after the date of the 
enactment of this title, and annually thereafter for four years, the 
Secretary shall submit to the appropriate congressional committees a 
report that includes--
            ``(1) a discussion of any strategy developed pursuant to 
        subsection (b)(1), including key tools and objectives for the 
        development of comparable mechanisms by the governments of 
        allies and partners of the United States;
            ``(2) a list of partner and allied countries to target for 
        cooperation in developing their own prohibitions;
            ``(3) the status of the strategy's implementation and 
        outcomes; and
            ``(4) a description of impediments to the establishment of 
        comparable mechanisms by governments of allies and partners of 
        the United States.
    ``(d) Appropriate Congressional Committees Defined.--In this 
section, the term `appropriate congressional committees' means--
            ``(1) the Committee on Foreign Relations and the Committee 
        on Banking, Housing, and Urban Affairs of the Senate; and
            ``(2) the Committee on Foreign Affairs and the Committee on 
        Financial Services of the House of Representatives.

``SEC. 805. PUBLIC DATABASE OF COVERED FOREIGN PERSONS.

    ``(a) In General.--The Secretary, in consultation with the 
Secretary of Commerce, may establish a publicly accessible, non-
exhaustive database that identifies covered foreign persons in a 
prohibited technology pursuant to this title.
    ``(b) Confidentiality of Evidence.--The Secretary shall establish a 
mechanism for the public, including Congress, stakeholders, investors, 
and nongovernmental organizations, to submit evidence on a confidential 
basis regarding whether a foreign person is a covered foreign person in 
a prohibited technology and should be included in the database 
described in subsection (a), if any.
    ``(c) Exemption From Disclosure.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        information or documentary material filed with the Secretary 
        pursuant to this section shall be exempt from disclosure under 
        section 552(b)(3) of title 5, United States Code, and no such 
        information or documentary material may be made public (other 
        than the identity of a covered foreign person in accordance 
        with subsection (b)).
            ``(2) Exceptions.--Paragraph (1) shall not prohibit the 
        disclosure of the following:
                    ``(A) Information relevant to any administrative or 
                judicial action or proceeding.
                    ``(B) Information to Congress or any duly 
                authorized committee or subcommittee of Congress.
                    ``(C) Information important to the national 
                security analysis or actions of the Secretary to any 
                domestic governmental entity, or to any foreign 
                governmental entity of a United States ally or partner, 
                under the exclusive direction and authorization of 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.
    ``(d) Rule of Construction.--The database described in subsection 
(a), if any, shall not be considered to be an exhaustive or 
comprehensive list of covered foreign persons for the purposes of this 
title.

``SEC. 806. RULE OF CONSTRUCTION.

    ``Nothing in this title may be construed to negate the authority of 
the President under any authority, process, regulation, investigation, 
enforcement measure, or review provided by or established under any 
other provision of Federal law, or any other authority of the President 
or the Congress under the Constitution of the United States.

``SEC. 807. DEFINITIONS.

    ``In this title:
            ``(1) Appropriate congressional committees.--Except as 
        provided by section 804(d), the term `appropriate congressional 
        committees' means--
                    ``(A) the Committee on Financial Services, the 
                Committee on Foreign Affairs, the Committee on Energy 
                and Commerce, and the Committee on Appropriations of 
                the House of Representatives; and
                    ``(B) the Committee on Banking, Housing, and Urban 
                Affairs and the Committee on Appropriations of the 
                Senate.
            ``(2) Country of concern.--The term `country of concern'--
                    ``(A) means the People's Republic of China; and
                    ``(B) includes the Hong Kong Special Administrative 
                Region and the Macau Special Administrative Region.
            ``(3) Covered foreign person.--Subject to regulations 
        prescribed in accordance with this title, the term `covered 
        foreign person' means a foreign person that--
                    ``(A) is incorporated in, has a principal place of 
                business in, or is organized under the laws of a 
                country of concern;
                    ``(B) is a member of the Central Committee of the 
                Chinese Communist Party;
                    ``(C) is subject to the direction or control of a 
                country of concern, an entity described in subparagraph 
                (A) or (B), or the state or the government of a country 
                of concern (including any political subdivision, 
                agency, or instrumentality thereof); or
                    ``(D) is owned in the aggregate, directly or 
                indirectly, 50 percent or more by a country of concern, 
                an entity described in subparagraph (A) or (B), or the 
                state or the government of a country of concern 
                (including any political subdivision, agency, or 
                instrumentality thereof).
            ``(4) Covered national security transaction.--
                    ``(A) In general.--Subject to such regulations as 
                may be issued in accordance with this title, the term 
                `covered national security transaction' means any 
                activity engaged in by a United States person that 
                involves--
                            ``(i) the acquisition of an equity interest 
                        or contingent equity interest in a covered 
                        foreign person;
                            ``(ii) the provision of a loan or similar 
                        debt financing arrangement to a covered foreign 
                        person, where such debt financing--
                                    ``(I) is convertible to an equity 
                                interest; or
                                    ``(II) affords or will afford the 
                                United States person the right to make 
                                management decisions with respect to or 
                                on behalf of a covered foreign person 
                                or the right to appoint members of the 
                                board of directors (or equivalent) of 
                                the covered foreign person;
                            ``(iii) the entrance by such United States 
                        person into a joint venture with a covered 
                        foreign person;
                            ``(iv) the conversion of a contingent 
                        equity interest (or interest equivalent to a 
                        contingent equity interest) or conversion of 
                        debt to an equity interest in a covered foreign 
                        person;
                            ``(v) the acquisition, leasing, or other 
                        development of operations, land, property, or 
                        other assets in a country of concern that will 
                        result in, or that the United States person 
                        intends to result in--
                                    ``(I) the establishment of a 
                                covered foreign person; or
                                    ``(II) the engagement of a person 
                                of a country of concern in a prohibited 
                                technology where it was not previously 
                                engaged in such prohibited technology;
                            ``(vi) knowingly directing transactions by 
                        foreign persons that the United States person 
                        has knowledge at the time of the transaction 
                        would constitute an activity described in 
                        clause (i), (ii), (iii), (iv), or (v), if 
                        engaged in by a United States person; or
                            ``(vii) the acquisition of a limited 
                        partner or equivalent interest in a venture 
                        capital fund, private equity fund, fund of 
                        funds, or other pooled investment fund that the 
                        United States person has knowledge at the time 
                        of the acquisition, intends to engage in an 
                        activity described in clause (i), (ii), (iii), 
                        (iv), (v), or (vi).
                    ``(B) Exceptions.--Subject to notice and comment 
                regulations prescribed in consultation with Congress 
                and in accordance with this title, the term `covered 
                national security transaction' does not include--
                            ``(i) any transaction the value of which 
                        the Secretary determines is de minimis;
                            ``(ii) any category of transactions that 
                        the Secretary determines is in the national 
                        interest of the United States;
                            ``(iii) an investment--
                                    ``(I) in a security (as defined in 
                                section 3(a) of the Securities Exchange 
                                Act of 1934(15 U.S.C. 78c(a))) that is 
                                traded on an exchange or the over-the-
                                counter market in any jurisdiction;
                                    ``(II) in a security issued by an 
                                investment company (as defined in 
                                section 3 of the Investment Company Act 
                                of 1940(15 U.S.C. 80a-3)) that is 
                                registered with the Securities and 
                                Exchange Commission;
                                    ``(III) made as a limited partner 
                                or equivalent in a venture capital 
                                fund, private equity fund, fund of 
                                funds, or other pooled investment fund 
                                (other than as described in subclause 
                                (II)) where--
                                            ``(aa) the limited partner 
                                        or equivalent's committed 
                                        capital is not more than 
                                        $2,000,000, aggregated across 
                                        any investment and co-
                                        investment vehicles of the 
                                        fund; or
                                            ``(bb) the limited partner 
                                        or equivalent has secured a 
                                        binding contractual assurance 
                                        that its capital in the fund 
                                        will not be used to engage in a 
                                        transaction that would be a 
                                        covered national security 
                                        transaction if engaged in by a 
                                        United States person; or
                                    ``(IV) in a derivative of a 
                                security described under subclause (I), 
                                (II), or (III);
                            ``(iv) any ancillary transaction undertaken 
                        by a financial institution (as defined in 
                        section 5312 of title 31, United States Code);
                            ``(v) the acquisition by a United States 
                        person of the equity or other interest owned or 
                        held by a covered foreign person in an entity 
                        or assets located outside of a country of 
                        concern in which the United States person is 
                        acquiring the totality of the interest in the 
                        entity held by the covered foreign person;
                            ``(vi) an intracompany transfer of funds, 
                        as defined in regulations prescribed in 
                        accordance with this title, from a United 
                        States parent company to a subsidiary located 
                        in a country of concern or a transaction that, 
                        but for this clause, would be a covered 
                        national security transaction between a United 
                        States person and its controlled foreign person 
                        that supports operations that are not covered 
                        national security transactions or that 
                        maintains covered national security 
                        transactions that the controlled foreign person 
                        was engaged in prior to January 2, 2025;
                            ``(vii) a transaction secondary to a 
                        covered national security transaction, 
                        including--
                                    ``(I) contractual arrangements or 
                                the procurement of material inputs for 
                                any covered national security 
                                transaction (such as raw materials);
                                    ``(II) bank lending;
                                    ``(III) the processing, clearing, 
                                or sending of payments by a bank;
                                    ``(IV) underwriting services;
                                    ``(V) debt rating services;
                                    ``(VI) prime brokerage;
                                    ``(VII) global custody;
                                    ``(VIII) equity research or 
                                analysis; or
                                    ``(IX) other similar services;
                            ``(viii) any ordinary or administrative 
                        business transaction as may be defined in such 
                        regulations; or
                            ``(ix) any transaction completed before the 
                        date of the enactment of this title.
                    ``(C) Ancillary transaction defined.--In this 
                paragraph, the term `ancillary transaction' means--
                            ``(i) the processing, settling, clearing, 
                        or sending of payments and cash transactions;
                            ``(ii) underwriting services;
                            ``(iii) credit rating services; and
                            ``(iv) other services ordinarily incident 
                        to and part of the provision of financial 
                        services, such as opening deposit accounts, 
                        direct custody services, foreign exchange 
                        services, remittances services, and safe 
                        deposit services.
            ``(5) Foreign person.--The term `foreign person' means a 
        person that is not a United States person.
            ``(6) Notifiable technology.--
                    ``(A) In general.--The term `notifiable technology' 
                means a technology with respect to which a covered 
                foreign person--
                            ``(i) designs any advanced integrated 
                        circuit that is not covered under paragraph 
                        (8)(A)(iii);
                            ``(ii) fabricates any integrated circuit 
                        that is not covered under paragraph (8)(A)(iv);
                            ``(iii) packages any integrated circuit 
                        that is not covered under paragraph (8)(A)(v); 
                        or
                            ``(iv) develops any artificial intelligence 
                        system that is not covered under clause (vii), 
                        (viii), (ix), or (xvi) of paragraph (8)(A), and 
                        that is--
                                    ``(I) designed to be used for--
                                            ``(aa) any military end use 
                                        (such as for weapons targeting, 
                                        target identification, combat 
                                        simulation, military vehicle or 
                                        weapons control, military 
                                        decision-making, weapons design 
                                        (including chemical, 
                                        biological, radiological, or 
                                        nuclear weapons), or combat 
                                        system logistics and 
                                        maintenance); or
                                            ``(bb) any government 
                                        intelligence or mass-
                                        surveillance end use (such as 
                                        through incorporation of 
                                        features such as mining text, 
                                        audio, or video, image 
                                        recognition, location tracking, 
                                        or surreptitious listening 
                                        devices);
                                    ``(II) intended by the covered 
                                foreign person or joint venture to be 
                                used for--
                                            ``(aa) cybersecurity 
                                        applications;
                                            ``(bb) digital forensics 
                                        tools;
                                            ``(cc) penetration testing 
                                        tools; or
                                            ``(dd) control of robotic 
                                        systems; or
                                    ``(III) trained using a quantity of 
                                computing power greater than 10\23\ 
                                computational operations (such as 
                                integer or floating-point operations).
                    ``(B) Updates.--The Secretary, in consultation with 
                Congress, may prescribe regulations in accordance with 
                this title to refine the technical parameters of 
                technologies described in subparagraph (A) as 
                reasonably needed for national security purposes or to 
                add or remove categories to or from the list in 
                subparagraph (A).
            ``(7) Party.--The term `party', with respect to a covered 
        national security transaction, has the meaning given that term 
        in regulations prescribed in accordance with this title.
            ``(8) Prohibited technology.--
                    ``(A) In general.--The term `prohibited technology' 
                means a technology with respect to which a covered 
                foreign person--
                            ``(i) develops or produces any design 
                        automation software for the design of 
                        integrated circuits or advanced packaging;
                            ``(ii) develops or produces any--
                                    ``(I) electronic design automation 
                                software for the design of integrated 
                                circuits or advanced packaging;
                                    ``(II) front-end semiconductor 
                                fabrication equipment designed for the 
                                volume fabrication of integrated 
                                circuits, including equipment used in 
                                the production stages from a blank 
                                wafer or substrate to a completed wafer 
                                or substrate; or
                                    ``(III) equipment for performing 
                                volume advanced packaging;
                            ``(iii) designs any integrated circuit 
                        designs that meet or exceed the specifications 
                        set in Export Control Classification Number 
                        (ECCN) 3A090 in Supplement No. 1 to the Export 
                        Administration Regulations, or integrated 
                        circuits designed for operation at or below 4.5 
                        Kelvin;
                            ``(iv) fabricates integrated circuits that 
                        are--
                                    ``(I) logic integrated circuits 
                                using a non-planar transistor 
                                architecture or with a technology node 
                                of 16/14 nanometers or less, including 
                                fully depleted silicon-on-insulator 
                                (FDSOI) integrated circuits;
                                    ``(II) NOT-AND (NAND) memory 
                                integrated circuits with 128 layers or 
                                more;
                                    ``(III) dynamic random-access 
                                memory (DRAM) integrated circuits using 
                                a technology node of 18 nanometer half-
                                pitch or less;
                                    ``(IV) integrated circuits 
                                manufactured from a gallium-based 
                                compound semiconductor;
                                    ``(V) integrated circuits using 
                                graphene transistors or carbon 
                                nanotubes; or
                                    ``(VI) integrated circuits designed 
                                for operation at or below 4.5 Kelvin;
                            ``(v) packages any integrated circuit using 
                        advanced packaging techniques;
                            ``(vi) develops, designs, or produces any 
                        commodity, material, software, or technology 
                        designed exclusively for use in or with extreme 
                        ultraviolet lithography fabrication equipment;
                            ``(vii) develops, designs, or produces any 
                        artificial intelligence models trained with at 
                        least 10\25\ floating point operations;
                            ``(viii) develops, designs, or produces any 
                        artificial intelligence models that rely upon 
                        or utilize advanced integrated circuits that 
                        meet or exceed the specifications set in Export 
                        Control Classification Number (ECCN) 3A090 in 
                        Supplement No. 1 to the Export Administration 
                        Regulations;
                            ``(ix) develops, designs, or produces any 
                        artificial intelligence models designed for use 
                        by the Government of the People's Republic of 
                        China, its special administrative regions, or 
                        its agencies and instrumentalities;
                            ``(x) develops a quantum computer or 
                        produces any critical components required to 
                        produce a quantum computer such as a dilution 
                        refrigerator or two-stage pulse tube 
                        cryocooler;
                            ``(xi) develops or produces any quantum 
                        sensing platform designed for, or which the 
                        relevant covered foreign person intends to be 
                        used for, any military, government 
                        intelligence, or mass-surveillance end use;
                            ``(xii) develops or produces quantum 
                        networks or quantum communication systems 
                        designed for or intended to be used for--
                                    ``(I) networking to scale up the 
                                capabilities of quantum computers, such 
                                as for the purposes of breaking or 
                                compromising encryption;
                                    ``(II) secure communications, such 
                                as quantum key distribution; or
                                    ``(III) any other application that 
                                has any military, government 
                                intelligence, or mass-surveillance end 
                                use;
                            ``(xiii) develops, designs, or produces 
                        materials, components, avionics, flight 
                        control, propulsion, Global Positioning System 
                        (GPS), data relay, and target detection systems 
                        designed for use in hypersonic systems or 
                        capable of sustainable operations above 1,000 
                        degrees Celsius;
                            ``(xiv) develops, installs, sells, or 
                        produces any supercomputer enabled by advanced 
                        integrated circuits that can provide 
                        theoretical compute capacity of 100 or more 
                        double-precision (64-bit) petaflops or 200 or 
                        more single-precision (32-bit) petaflops of 
                        processing power within a 41,600 cubic foot or 
                        smaller envelope;
                            ``(xv) develops, designs, or produces any 
                        other technologies in the advanced 
                        semiconductors and microelectronics sector, the 
                        artificial intelligence sector, the high-
                        performance computing and supercomputing 
                        sector, the hypersonic missiles sector, or the 
                        quantum information science and technology 
                        sector that are--
                                    ``(I) defense articles or defense 
                                services included on the United States 
                                Munitions List set forth in the 
                                International Traffic in Arms 
                                Regulations under subchapter M of 
                                chapter I of title 22, Code of Federal 
                                Regulations;
                                    ``(II) specially designed and 
                                prepared nuclear equipment, parts or 
                                components, materials, software, or 
                                technologies covered by part 810 of 
                                title 10, Code of Federal Regulations 
                                (relating to assistance to foreign 
                                atomic energy activities);
                                    ``(III) nuclear facilities, 
                                equipment, or materials covered by part 
                                110 of title 10, Code of Federal 
                                Regulations (relating to export and 
                                import of nuclear equipment and 
                                material); or
                                    ``(IV) emerging or foundational 
                                technologies controlled pursuant to 
                                section 1758 of the Export Control 
                                Reform Act of 2018 (50 U.S.C. 4817); or
                            ``(xvi) develops any artificial 
                        intelligence system that is designed to be 
                        exclusively used for, or which the relevant 
                        covered foreign person intends to be used for, 
                        any--
                                    ``(I) military end use (such as for 
                                weapons targeting, target 
                                identification, combat simulation, 
                                military vehicle or weapon control, 
                                military decision-making, weapons 
                                design (including chemical, biological, 
                                radiological, or nuclear weapons), or 
                                combat system logistics and 
                                maintenance); or
                                    ``(II) government intelligence or 
                                mass-surveillance end (such as through 
                                incorporation of features such as 
                                mining text, audio, or video, image 
                                recognition, location tracking, or 
                                surreptitious listening devices).
                    ``(B) Updates.--The Secretary, in consultation with 
                Congress, may prescribe regulations in accordance with 
                this title to make updates to the technical parameters 
                of technologies described in subparagraph (A) as 
                reasonably needed for national security purposes.
            ``(9) Secretary.--Except as otherwise provided, the term 
        `Secretary' means the Secretary of the Treasury.
            ``(10) United states person.--The term `United States 
        person' means--
                    ``(A) any United States citizen or an alien 
                lawfully admitted for permanent residence to the United 
                States;
                    ``(B) an entity organized under the laws of the 
                United States or of any jurisdiction within the United 
                States (including any foreign branch of such an 
                entity); or
                    ``(C) any person in the United States.''.
                                 <all>
```