II 

118TH CONGRESS 

1ST SESSION S. 2678 

To provide for an investment screening mechanism relating to covered sectors. 

IN THE SENATE OF THE UNITED STATES 

JULY 27, 2023 

Mr. CORNYN (for himself and Mr. CASEY) introduced the following bill; which 

was read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

A BILL 

To provide for an investment screening mechanism relating 

to covered sectors. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Outbound Investment 

5 Transparency Act of 2023’’. 

6 SEC. 2. PROTECTION OF COVERED SECTORS. 

7 The Defense Production Act of 1950 (50 U.S.C. 

8 4501 et seq.) is amended by adding at the end the fol9 lowing: 


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1 ‘‘TITLE VIII—PROTECTION OF 

2 COVERED SECTORS 

3 ‘‘SEC. 801. DEFINITIONS. 

4 ‘‘In this title: 

5 ‘‘(1) APPROPRIATE CONGRESSIONAL COMMIT6 TEES.—The term ‘appropriate congressional com7 mittees’ means— 

8 ‘‘(A) the Committee on Armed Services, 

9 the Committee on Finance, the Committee on 

10 Banking, Housing, and Urban Affairs, the Se11 lect Committee on Intelligence, and the Com12 mittee on Foreign Relations of the Senate; and 

13 ‘‘(B) the Committee on Armed Services, 

14 the Committee on Ways and Means, the Com15 mittee on Financial Services, the Permanent 

16 Select Committee on Intelligence, and the Com17 mittee on Foreign Affairs of the House of Rep18 resentatives. 

19 ‘‘(2) COUNTRY OF CONCERN.—The term ‘coun20 try of concern’ means, subject to such regulations as 

21 may be prescribed in accordance with section 806, a 

22 country specified in section 4872(d)(2) of title 10, 

23 United States Code. 

24 ‘‘(3) COVERED ACTIVITY.— 


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1 ‘‘(A) IN GENERAL.—Subject to such regu2 lations as may be prescribed in accordance with 

3 section 806, and except as provided in subpara4 graph (B), the term ‘covered activity’ means 

5 any activity engaged in by a United States per6 son in a related to a covered sector that in7 volves— 

8 ‘‘(i) an acquisition by such United 

9 States person of an equity interest or con10 tingent equity interest, or monetary capital 

11 contribution, in a covered foreign entity, 

12 directly or indirectly, by contractual com13 mitment or otherwise, with the goal of gen14 erating income or gain; 

15 ‘‘(ii) an arrangement for an interest 

16 held by such United States person in the 

17 short- or long-term debt obligations of a 

18 covered foreign entity that includes govern19 ance rights that are characteristic of an 

20 equity investment, management, or other 

21 important rights, as defined in regulations 

22 prescribed in accordance with section 806; 

23 ‘‘(iii) the establishment of a wholly 

24 owned subsidiary in a country of concern, 

25 such as a greenfield investment, for the 


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1 purpose of production, design, testing, 

2 manufacturing, fabrication, or development 

3 related to one or more covered sectors; 

4 ‘‘(iv) the establishment by such 

5 United States person of a joint venture in 

6 a country of concern or with a covered for7 eign entity for the purpose of production, 

8 design, testing, manufacturing, fabrication, 

9 or research involving one or more covered 

10 sectors, or other contractual or other com11 mitments involving a covered foreign entity 

12 to jointly research and develop new innova13 tion, including through the transfer of cap14 ital or intellectual property or other busi15 ness proprietary information; or 

16 ‘‘(v) the acquisition by a United 

17 States person with a covered foreign entity 

18 of— 

19 ‘‘(I) operational cooperation, such 

20 as through supply or support arrange21 ments; 

22 ‘‘(II) the right to board represen23 tation (as an observer, even if limited, 

24 or as a member) or an executive role 


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1 (as may be defined through regula2 tion) in a covered foreign entity; 

3 ‘‘(III) the ability to direct or in4 fluence such operational decisions as 

5 may be defined through such regula6 tions; 

7 ‘‘(IV) formal governance rep8 resentation in any operating affiliate, 

9 like a portfolio company, of a covered 

10 foreign entity; or 

11 ‘‘(V) a new relationship to share 

12 or provide business services, such as 

13 but not limited to financial services, 

14 marketing services, maintenance, or 

15 assembly functions, related to a cov16 ered sectors. 

17 ‘‘(B) EXCEPTIONS.—The term ‘covered ac18 tivity’ does not include— 

19 ‘‘(i) any transaction the value of 

20 which the Secretary of the Treasury deter21 mines is de minimis, as defined in regula22 tions prescribed in accordance with section 

23 806; 

24 ‘‘(ii) any category of transactions that 

25 the Secretary determines is in the national 


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1 interest of the United States, as may be 

2 defined in regulations prescribed in accord3 ance with section 806; or 

4 ‘‘(iii) any ordinary or administrative 

5 business transaction as may be defined in 

6 such regulations. 

7 ‘‘(4) COVERED FOREIGN ENTITY.— 

8 ‘‘(A) IN GENERAL.—Subject to regulations 

9 prescribed in accordance with section 806, and 

10 except as provided in subparagraph (B), the 

11 term ‘covered foreign entity’ means— 

12 ‘‘(i) any entity that is incorporated in, 

13 has a principal place of business in, or is 

14 organized under the laws of a country of 

15 concern; 

16 ‘‘(ii) any entity the equity securities of 

17 which are primarily traded in the ordinary 

18 course of business on one or more ex19 changes in a country of concern; 

20 ‘‘(iii) any entity in which any entity 

21 described in subclause (i) or (ii) holds, in22 dividually or in the aggregate, directly or 

23 indirectly, an ownership interest of greater 

24 than 50 percent; or 


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1 ‘‘(iv) any other entity that is not a 

2 United States person and that meets such 

3 criteria as may be specified by the Sec4 retary of the Treasury in such regulations. 

5 ‘‘(B) EXCEPTION.—The term ‘covered for6 eign entity’ does not include any entity de7 scribed in subparagraph (A) that can dem8 onstrate that a majority of the equity interest 

9 in the entity is ultimately owned by— 

10 ‘‘(i) nationals of the United States; or 

11 ‘‘(ii) nationals of such countries (other 

12 than countries of concern) as are identified 

13 for purposes of this subparagraph pursu14 ant to regulations prescribed in accordance 

15 with section 806. 

16 ‘‘(5) COVERED SECTORS.—Subject to regula17 tions prescribed in accordance with section 806, the 

18 term ‘covered sectors’ includes sectors within the fol19 lowing areas, as specified in such regulations: 

20 ‘‘(A) Advanced semiconductors and micro21 electronics. 

22 ‘‘(B) Artificial intelligence. 

23 ‘‘(C) Quantum information science and 

24 technology. 

25 ‘‘(D) Hypersonics. 


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1 ‘‘(E) Satellite-based communications. 

2 ‘‘(F) Networked laser scanning systems 

3 with dual-use applications. 

4 ‘‘(6) PARTY.—The term ‘party’, with respect to 

5 an activity, has the meaning given that term in reg6 ulations prescribed in accordance with section 806. 

7 ‘‘(7) UNITED STATES.—The term ‘United 

8 States’ means the several States, the District of Co9 lumbia, and any territory or possession of the 

10 United States. 

11 ‘‘(8) UNITED STATES PERSON.—The term 

12 ‘United States person’ means— 

13 ‘‘(A) an individual who is a citizen or na14 tional of the United States or an alien lawfully 

15 admitted for permanent residence in the United 

16 States; and 

17 ‘‘(B) any corporation, partnership, or other 

18 entity organized under the laws of the United 

19 States or the laws of any jurisdiction within the 

20 United States. 

21 ‘‘SEC. 802. ADMINISTRATION OF UNITED STATES INVEST22 MENT NOTIFICATION. 

23 ‘‘(a) IN GENERAL.—The President shall delegate the 

24 authorities and functions under this title to the Secretary 

25 of the Treasury. 


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1 ‘‘(b) COORDINATION.—In carrying out the duties of 

2 the Secretary under this title, the Secretary shall— 

3 ‘‘(1) coordinate with the Secretary of Com4 merce; and 

5 ‘‘(2) consult with the United States Trade Rep6 resentative, the Secretary of Defense, the Secretary 

7 of State, and the Director of National Intelligence. 

8 ‘‘SEC. 803. MANDATORY NOTIFICATION OF COVERED AC9 TIVITIES. 

10 ‘‘(a) MANDATORY NOTIFICATION.— 

11 ‘‘(1) IN GENERAL.—Subject to regulations pre12 scribed in accordance with section 806, beginning on 

13 the date that is 90 days after such regulations take 

14 effect, a United States person that plans to engage 

15 in a covered activity shall— 

16 ‘‘(A) if such covered activity is not a se17 cured transaction, submit to the Secretary of 

18 the Treasury a complete written notification of 

19 the activity not later than 14 days before the 

20 anticipated completion date of the activity; and 

21 ‘‘(B) if such covered activity is a secured 

22 transaction, submit to the Secretary of the 

23 Treasury a complete written notification of the 

24 activity not later than 14 days after the comple25 tion date of the activity. 


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1 ‘‘(2) CIRCULATION OF NOTIFICATION.— 

2 ‘‘(A) IN GENERAL.—The Secretary shall, 

3 upon receipt of a notification under paragraph 

4 (1), promptly inspect the notification for com5 pleteness. 

6 ‘‘(B) INCOMPLETE NOTIFICATIONS.—If a 

7 notification submitted under paragraph (1) is 

8 incomplete, the Secretary shall promptly inform 

9 the United States person that submits the noti10 fication that the notification is not complete 

11 and provide an explanation of relevant material 

12 respects in which the notification is not com13 plete. 

14 ‘‘(3) IDENTIFICATION OF NON-NOTIFIED ACTIV15 ITY.—The Secretary shall establish a process to 

16 identify covered activity for which— 

17 ‘‘(A) a notification is not submitted to the 

18 Secretary under paragraph (1); and 

19 ‘‘(B) information is reasonably available. 

20 ‘‘(b) CONFIDENTIALITY OF INFORMATION.— 

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), any information or documentary material 

23 filed with the Secretary of the Treasury pursuant to 

24 this section shall be exempt from disclosure under 

25 section 552 of title 5, United States Code, and no 


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1 such information or documentary material may be 

2 made public by any government agency or Member 

3 of Congress. 

4 ‘‘(2) EXCEPTIONS.—The exemption from disclo5 sure provided by paragraph (1) shall not prevent the 

6 disclosure of the following: 

7 ‘‘(A) Information relevant to any adminis8 trative or judicial action or proceeding. 

9 ‘‘(B) Information provided to Congress or 

10 any of the appropriate congressional commit11 tees. 

12 ‘‘(C) Information important to the national 

13 security analysis or actions of the President to 

14 any domestic governmental entity, or to any 

15 foreign governmental entity of an ally or part16 ner of the United States, under the direction 

17 and authorization of the President or the Sec18 retary, only to the extent necessary for national 

19 security purposes, and subject to appropriate 

20 confidentiality and classification requirements. 

21 ‘‘(D) Information that the parties have 

22 consented to be disclosed to third parties. 

23 ‘‘SEC. 804. REPORTING REQUIREMENTS. 

24 ‘‘(a) IN GENERAL.—Not later than 360 days after 

25 the date on which the regulations prescribed under section 


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1 806 take effect, and not less frequently than annually 

2 thereafter, the Secretary of the Treasury shall submit to 

3 the appropriate congressional committees a report that— 

4 ‘‘(1) lists all notifications submitted under sec5 tion 803(a) during the year preceding submission of 

6 the report and includes, with respect to each such 

7 notification— 

8 ‘‘(A) basic information on each party to 

9 the covered activity with respect to which the 

10 notification was submitted; and 

11 ‘‘(B) the nature of the covered activity that 

12 was the subject to the notification, including 

13 the elements of the covered activity that neces14 sitated a notification; 

15 ‘‘(2) includes a summary of those notifications, 

16 disaggregated by sector, by covered activity, and by 

17 country of concern; 

18 ‘‘(3) provides additional context and informa19 tion regarding trends in the sectors, the types of 

20 covered activities, and the countries involved in those 

21 notifications; 

22 ‘‘(4) includes a description of the national secu23 rity risks associated with— 

24 ‘‘(A) the covered activities with respect to 

25 which those notifications were submitted; or 


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1 ‘‘(B) categories of such activities; and 

2 ‘‘(5) assesses the overall impact of those notifi3 cations, including recommendations for— 

4 ‘‘(A) expanding existing Federal programs 

5 to support the production or supply of covered 

6 sectors in the United States, including the po7 tential of existing authorities to address any re8 lated national security concerns; 

9 ‘‘(B) investments needed to enhance cov10 ered sectors and reduce dependence on coun11 tries of concern regarding those sectors; and 

12 ‘‘(C) the continuation, expansion, or modi13 fication of the implementation and administra14 tion of this title, including recommendations 

15 with respect to whether the definition of ‘coun16 try of concern’ under section 801(2) should be 

17 amended to add or remove countries. 

18 ‘‘(b) FORM OF REPORT.—Each report required by 

19 this section shall be submitted in unclassified form, but 

20 may include a classified annex. 

21 ‘‘(c) TESTIMONY REQUIRED.—Not later than one 

22 year after the date of enactment of this title, and annually 

23 thereafter, the Secretary of the Treasury and the Sec24 retary of Commerce shall each provide to the Committee 

25 on Banking, Housing, and Urban Affairs of the Senate 


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1 and the Committee on Financial Services of the House of 

2 Representatives testimony with respect to the national se3 curity threats relating to investments by the United States 

4 persons in countries of concern and broader international 

5 capital flows. 

6 ‘‘SEC. 805. PENALTIES AND ENFORCEMENT. 

7 ‘‘(a) PENALTIES WITH RESPECT TO UNLAWFUL

8 ACTS.—Subject to regulations prescribed in accordance 

9 with section 806, it shall be unlawful— 

10 ‘‘(1) to fail to submit a notification under sub11 section (a) of section 803 with respect to a covered 

12 activity or to submit other information as required 

13 by the Secretary of the Treasury; or 

14 ‘‘(2) to make a material misstatement or to 

15 omit a material fact in any information submitted to 

16 the Secretary under this title. 

17 ‘‘(b) ENFORCEMENT.—The President may direct the 

18 Attorney General to seek appropriate relief in the district 

19 courts of the United States, in order to implement and 

20 enforce this title. 

21 ‘‘SEC. 806. REQUIREMENT FOR REGULATIONS. 

22 ‘‘(a) IN GENERAL.—Not later than 360 days after 

23 the date of the enactment of this title, the Secretary of 

24 the Treasury shall finalize regulations to carry out this 

25 title. 


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1 ‘‘(b) ELEMENTS.—Regulations prescribed to carry 

2 out this title shall include specific examples of the types 

3 of— 

4 ‘‘(1) activities that will be considered to be cov5 ered activities; and 

6 ‘‘(2) the specific sectors and subsectors that 

7 may be considered to be covered sectors. 

8 ‘‘(c) REQUIREMENTS FOR CERTAIN REGULATIONS.— 

9 The Secretary of the Treasury shall prescribe regulations 

10 further defining the terms used in this title, including ‘cov11 ered activity’, ‘covered foreign entity’, and ‘party’, in ac12 cordance with subchapter II of chapter 5 and chapter 7 

13 of title 5 (commonly known as the ‘Administrative Proce14 dure Act’). 

15 ‘‘(d) PUBLIC PARTICIPATION IN RULEMAKING.—The 

16 provisions of section 709 shall apply to any regulations 

17 issued under this title. 

18 ‘‘(e) LOW-BURDEN REGULATIONS.—In prescribing 

19 regulations under this section, the Secretary of the Treas20 ury shall structure the regulations— 

21 ‘‘(1) to minimize the cost and complexity of 

22 compliance for affected parties; 

23 ‘‘(2) to ensure the benefits of the regulations 

24 outweigh their costs; 


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1 ‘‘(3) to adopt the least burdensome alternative 

2 that achieves regulatory objectives; 

3 ‘‘(4) to prioritize transparency and stakeholder 

4 involvement in the process of prescribing the regula5 tions; and 

6 ‘‘(5) to regularly review and streamline existing 

7 regulations to reduce redundancy and complexity. 

8 ‘‘SEC. 807. MULTILATERAL ENGAGEMENT AND COORDINA9 TION. 

10 ‘‘(a) IN GENERAL.—The President shall delegate the 

11 authorities and functions under this section to the Sec12 retary of State. 

13 ‘‘(b) AUTHORITIES.—The Secretary of State, in co14 ordination with the Secretary of the Treasury, the Sec15 retary of Commerce, the United States Trade Representa16 tive, and the Director of National Intelligence, shall— 

17 ‘‘(1) conduct bilateral and multilateral engage18 ment with the governments of countries that are al19 lies and partners of the United States to ensure co20 ordination of protocols and procedures with respect 

21 to covered activities with countries of concern and 

22 covered foreign entities; and 

23 ‘‘(2) upon adoption of protocols and procedures 

24 described in paragraph (1), work with those governVerDate Sep 11 2014 03:00 Aug 17, 2023 Jkt 039200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S2678.IS S2678

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1 ments to establish mechanisms for sharing informa2 tion, including trends, with respect to such activities. 

3 ‘‘(c) STRATEGY FOR DEVELOPMENT OF OUTBOUND

4 INVESTMENT SCREENING MECHANISMS.—The Secretary 

5 of State, in coordination with the Secretary of the Treas6 ury and in consultation with the Attorney General, shall— 

7 ‘‘(1) develop a strategy to work with countries 

8 that are allies and partners of the United States to 

9 develop mechanisms comparable to this title for the 

10 notification of covered activities; and 

11 ‘‘(2) provide technical assistance to those coun12 tries with respect to the development of those mech13 anisms. 

14 ‘‘(d) REPORT.—Not later than 90 days after the de15 velopment of the strategy required by subsection (b), and 

16 annually thereafter for a period of 5 years, the Secretary 

17 of State shall submit to the appropriate congressional 

18 committees a report that includes the strategy, the status 

19 of implementing the strategy, and a description of any im20 pediments to the establishment of mechanisms comparable 

21 to this title by allies and partners. 

22 ‘‘SEC. 808. AUTHORIZATION OF APPROPRIATIONS. 

23 ‘‘(a) IN GENERAL.—There are authorized to be ap24 propriated such sums as may be necessary to carry out 


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1 this title, including to provide outreach to industry and 

2 persons affected by this title. 

3 ‘‘(b) HIRING AUTHORITY.—The head of any agency 

4 designated as a lead agency under section 802(b) may ap5 point, without regard to the provisions of sections 3309 

6 through 3318 of title 5, United States Code, not more 

7 than 25 candidates directly to positions in the competitive 

8 service (as defined in section 2102 of that title) in that 

9 agency. The primary responsibility of individuals in posi10 tions authorized under the preceding sentence shall be to 

11 administer this title. 

12 ‘‘SEC. 809. RULE OF CONSTRUCTION WITH RESPECT TO 

13 FREE AND FAIR COMMERCE. 

14 ‘‘Nothing in this title may be construed to restrain 

15 or deter foreign investment in the United States, United 

16 States investment abroad, or trade in goods or services, 

17 if such investment and trade do not pose a risk to the 

18 national security of the United States.’’. 

Æ 


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