II 

111TH CONGRESS 

2D SESSION S. 3630 

To improve the commercialization potential of National Science Foundation 

grants, enhance the metrics used to assess such potential, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 22, 2010 

Ms. KLOBUCHAR (for herself and Mr. LEMIEUX) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To improve the commercialization potential of National 

Science Foundation grants, enhance the metrics used 

to assess such potential, and for other purposes. 

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 ‘‘American Innovation 

5 Act of 2010’’. 

6 SEC. 2. GRANTEE REPORTS ON COMMERCIALIZATION 

7 STRATEGY AND RESULTS. 

8 (a) IN GENERAL.—Any institution of higher edu9 cation (as such term is defined in section 101(a) of the 


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1 Higher Education Act of 1965 (20 U.S.C. 1001(a))) that 

2 receives 1 or more grants of financial assistance from the 

3 National Science Foundation for research shall submit a 

4 report to the Foundation at the end of the first year of 

5 the grants, and at the end of each subsequent year in 

6 which funds are received pursuant to such grants, describ7 ing— 

8 (1) the institution’s strategy for commer9 cializing the results of research supported by such 

10 grants; 

11 (2) the implementation of the strategy with re12 spect to research supported by the grants; and 

13 (3) the results of its efforts to realize the com14 mercial potential of the research supported by those 

15 grants. 

16 (b) WEB SITE.—The Foundation shall post reports 

17 received under this section on a Web site accessible to and 

18 searchable by the public. 

19 (c) TRADE SECRET INFORMATION.—An institution of 

20 higher education that submits reports to the Foundation 

21 under this section shall not reveal confidential, trade se22 cret, or proprietary information in such reports. 


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1 SEC. 3. NSF GRANTS IN SUPPORT OF SPONSORED POST2 DOCTORAL FELLOWSHIP PROGRAMS. 

3 The Director of the National Science Foundation 

4 may utilize funds appropriated to carry out grants to insti5 tutions of higher education (as such term is defined in 

6 section 101(a) of the Higher Education Act of 1965 (20 

7 U.S.C. 1001(a))) to provide financial support for post8 graduate research in fields with potential commercial ap9 plications to match, in whole or in part, any private sector 

10 grant of financial assistance to any post-doctoral program 

11 in such a field of study. 

12 SEC. 4. STEM INDUSTRY INTERNSHIP PROGRAMS. 

13 (a) IN GENERAL.—The Director may award grants, 

14 on a competitive, merit-reviewed basis, to institutions of 

15 higher education, or consortia thereof, to establish or ex16 pand partnerships with local or regional private sector en17 tities, for the purpose of providing undergraduate students 

18 with integrated internship experiences that connect private 

19 sector internship experiences with the students’ STEM 

20 coursework. The partnerships may also include industry 

21 or professional associations. 

22 (b) INTERNSHIP PROGRAM.—The grants awarded 

23 under section (a) may include internship programs in the 

24 manufacturing sector. 

25 (c) USE OF GRANT FUNDS.—Grants under this sec26 tion may be used— 


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1 (1) to develop and implement hands-on learning 

2 opportunities; 

3 (2) to develop curricula and instructional mate4 rials related to industry, including the manufac5 turing sector; 

6 (3) to perform outreach to secondary schools; 

7 (4) to develop mentorship programs for stu8 dents with partner organizations; and 

9 (5) to conduct activities to support awareness of 

10 career opportunities and skill requirements. 

11 (d) PRIORITY.—In awarding grants under this sec12 tion, the Director shall give priority to institutions of high13 er education or consortia thereof that demonstrate signifi14 cant outreach to and coordination with local or regional 

15 private sector entities and Regional Centers for the Trans16 fer of Manufacturing Technology established by section 

17 25(a) of the National Institute of Standards and Tech18 nology Act (15 U.S.C. 278k(a)) in developing academic 

19 courses designed to provide students with the skills or cer20 tifications necessary for employment in local or regional 

21 companies. 

22 (e) OUTREACH TO RURAL COMMUNITIES.—The 

23 Foundation shall conduct outreach to institutions of high24 er education and private sector entities in rural areas to 


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1 encourage those entities to participate in partnerships 

2 under this section. 

3 (f) COST-SHARE.—The Director shall require a 50 

4 percent non-Federal cost-share from partnerships estab5 lished or expanded under this section. 

6 (g) RESTRICTION.—No Federal funds provided under 

7 this section may be used— 

8 (1) for the purpose of providing stipends or 

9 compensation to students for private sector intern10 ships unless private sector entities match 75 percent 

11 of such funding; or 

12 (2) as payment or reimbursement to private 

13 sector entities, except for institutions of higher edu14 cation. 

15 (h) REPORT.—Not less than 3 years after the date 

16 of enactment of this Act, the Director shall submit a re17 port to Congress on the number and total value of awards 

18 made under this section, the number of students affected 

19 by those awards, any evidence of the effect of those awards 

20 on workforce preparation and jobs placement for partici21 pating students, and an economic and ethnic breakdown 

22 of the participating students. 


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1 SEC. 5. STUDY TO DEVELOP IMPROVED IMPACT-ON-SOCI2 ETY METRICS. 

3 (a) IN GENERAL.—Within 180 days after the date 

4 of enactment of this Act, the President of the National 

5 Academy of Sciences shall initiate a study to evaluate, de6 velop, or improve metrics for measuring the potential im7 pact-on-society, including— 

8 (1) the potential for commercial applications of 

9 research studies funded in whole or in part by 

10 grants of financial assistance from the National 

11 Science Foundation or other Federal agencies; 

12 (2) the manner in which research conducted at, 

13 and individuals graduating from, an institution of 

14 higher education contribute to the development of 

15 new intellectual property and the success of commer16 cial activities; 

17 (3) the quality of relevant scientific and inter18 national publications; and 

19 (4) the ability of such institutions to attract ex20 ternal research funding. 

21 (b) REPORT.—Within 1 year after initiating the 

22 study required by subsection (a), the Director shall submit 

23 a report to the Senate Committee on Commerce, Science, 

24 and Transportation and the House of Representatives 

25 Committee on Science and Technology setting forth the 

26 Director’s findings, conclusions, and recommendations. 


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1 SEC. 6. SIMPLIFICATION OF TAX CREDIT FOR CONTRIBU2 TIONS TO UNIVERSITIES FOR RESEARCH AND 

3 DEVELOPMENT PURPOSES. 

4 (a) IN GENERAL.—Subparagraph (A) of section 

5 41(e)(7) of the Internal Revenue Code of 1986 (defining 

6 basic research) is amended by striking ‘‘not having a spe7 cific commercial objective’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to taxable years beginning after 

10 the date of enactment of this Act. 

11 SEC. 7. FEDERAL LOAN GUARANTEES FOR BUSINESSES 

12 COMMERCIALIZING NSF GRANT-FUNDED RE13 SEARCH IDEAS. 

14 (a) ESTABLISHMENT.—The Secretary of Commerce 

15 shall establish a program to provide loan guarantees for 

16 obligations to small- or medium-sized businesses to assist 

17 them in making commercial use of products, processes, or 

18 ideas generated by research grants funded by the National 

19 Science Foundation. 

20 (b) ELIGIBLE PROJECTS.—A loan guarantee may be 

21 made under the program only for a project that enables 

22 a small- or medium-sized business in the United States— 

23 (1) to use an innovative product, process, or 

24 idea that was developed by research funded in whole 

25 or in part by a grant from the National Science 

26 Foundation; and 


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1 (2) to develop, implement, market, or otherwise 

2 make use of that product, process, or idea for com3 mercial purposes. 

4 (c) ELIGIBLE BORROWER.—A loan guarantee may be 

5 made under the program only for a borrower who is a 

6 small- or medium-sized business, as determined by the 

7 Secretary under the criteria established pursuant to sub8 section (m). 

9 (d) LIMITATION ON AMOUNT.—A loan guarantee 

10 shall not exceed an amount equal to 80 percent of the obli11 gation, as estimated at the time at which the loan guar12 antee is issued. 

13 (e) LIMITATIONS ON LOAN GUARANTEE.—No loan 

14 guarantee shall be made unless the Secretary determines 

15 that— 

16 (1) there is a reasonable prospect of repayment 

17 of the principal and interest on the obligation by the 

18 borrower; 

19 (2) the amount of the obligation (when com20 bined with amounts available to the borrower from 

21 other sources) is sufficient to carry out the project; 

22 (3) the obligation is not subordinate to other fi23 nancing; 

24 (4) the obligation bears interest at a rate that 

25 does not exceed a level that the Secretary determines 


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1 appropriate, taking into account the prevailing rate 

2 of interest in the private sector for similar loans and 

3 risks; and 

4 (5) the term of an obligation requires full re5 payment over a period not to exceed the lesser of— 

6 (A) 30 years; or 

7 (B) 90 percent of the projected useful life, 

8 as determined by the Secretary, of the asset to 

9 be financed by the obligation. 

10 (f) PENALTY FOR RELOCATION OUTSIDE OF UNITED

11 STATES.—The loan agreement shall contain a provison 

12 that requires that, if the recipient of the loan relocates 

13 more than 25 percent of the business activities for which 

14 the loan was received outside the United States during the 

15 term of the loan, the recipient is required to repay the 

16 remainder of such loan— 

17 (1) with interest at a penalty rate determined 

18 by the Secretary before the issuance of the loan and 

19 in consultation with the lender to deter the recipient 

20 of the loan from relocating such activities outside 

21 the United States; and 

22 (2) for a duration determined by the Secretary 

23 in consultation with the lender. 

24 (g) DEFAULTS.— 

25 (1) PAYMENT BY SECRETARY.— 


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1 (A) IN GENERAL.—If a borrower defaults 

2 (as defined in regulations promulgated by the 

3 Secretary and specified in the loan guarantee) 

4 on the obligation, the holder of the loan guar5 antee shall have the right to demand payment 

6 of the unpaid amount from the Secretary. 

7 (B) PAYMENT REQUIRED.—Within such 

8 period as may be specified in the loan guar9 antee or related agreements, the Secretary shall 

10 pay to the holder of the loan guarantee the un11 paid interest on and unpaid principal of the ob12 ligation as to which the borrower has defaulted, 

13 unless the Secretary finds that there was no de14 fault by the borrower in the payment of interest 

15 or principal or that the default has been rem16 edied. 

17 (C) FORBEARANCE.—Nothing in this sub18 section precludes any forbearance by the holder 

19 of the obligation for the benefit of the borrower 

20 which may be agreed upon by the parties to the 

21 obligation and approved by the Secretary. 

22 (2) SUBROGATION.— 

23 (A) IN GENERAL.—If the Secretary makes 

24 a payment under paragraph (1), the Secretary 

25 shall be subrogated to the rights, as specified in 


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1 the loan guarantee, of the recipient of the pay2 ment or related agreements including, if appro3 priate, the authority (notwithstanding any other 

4 provision of law)— 

5 (i) to complete, maintain, operate, 

6 lease, or otherwise dispose of any property 

7 acquired pursuant to such loan guarantee 

8 or related agreement; or 

9 (ii) to permit the borrower, pursuant 

10 to an agreement with the Secretary, to 

11 continue to pursue the purposes of the 

12 project if the Secretary determines that 

13 such an agreement is in the public interest. 

14 (B) SUPERIORITY OF RIGHTS.—The rights 

15 of the Secretary, with respect to any property 

16 acquired pursuant to a loan guarantee or re17 lated agreements, shall be superior to the rights 

18 of any other person with respect to the prop19 erty. 

20 (3) NOTIFICATION.—If the borrower defaults 

21 on an obligation, the Secretary shall notify the At22 torney General of the default. 

23 (h) TERMS AND CONDITIONS.—A loan guarantee 

24 under this section shall include such detailed terms and 

25 conditions as the Secretary determines appropriate— 


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1 (1) to protect the interests of the United States 

2 in the case of default; and 

3 (2) to have available all the patents and tech4 nology necessary for any person selected, including 

5 the Secretary, to complete and operate the project. 

6 (i) CONSULTATION.—In establishing the terms and 

7 conditions of a loan guarantee under this section, the Sec8 retary shall consult with the Secretary of the Treasury. 

9 (j) FEES.— 

10 (1) IN GENERAL.—The Secretary shall charge 

11 and collect fees for loan guarantees in amounts the 

12 Secretary determines are sufficient to cover applica13 ble administrative expenses. 

14 (2) AVAILABILITY.—Fees collected under this 

15 subsection shall— 

16 (A) be deposited by the Secretary into the 

17 Treasury of the United States; and 

18 (B) remain available until expended, sub19 ject to such other conditions as are contained in 

20 annual appropriations Acts. 

21 (3) LIMITATION.—In charging and collecting 

22 fees under paragraph (1), the Secretary shall take 

23 into consideration the amount of the obligation. 

24 (k) RECORDS.— 


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1 (1) IN GENERAL.—With respect to a loan guar2 antee under this section, the borrower, the lender, 

3 and any other appropriate party shall keep such 

4 records and other pertinent documents as the Sec5 retary shall prescribe by regulation, including such 

6 records as the Secretary may require to facilitate an 

7 effective audit. 

8 (2) ACCESS.—The Secretary and the Comp9 troller General of the United States, or their duly 

10 authorized representatives, shall have access to 

11 records and other pertinent documents for the pur12 pose of conducting an audit. 

13 (l) FULL FAITH AND CREDIT.—The full faith and 

14 credit of the United States is pledged to the payment of 

15 all loan guarantees issued under this section with respect 

16 to principal and interest. 

17 (m) REGULATIONS.—The Secretary shall issue final 

18 regulations before making any loan guarantees under the 

19 program. The regulations shall include— 

20 (1) criteria that the Secretary shall use to de21 termine eligibility for loan guarantees under this sec22 tion, including— 

23 (A) whether a borrower is a small- or me24 dium-sized business; and 


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1 (B) whether a borrower demonstrates that 

2 a market exists for the product or that the 

3 process will prove commercially successful; 

4 (2) criteria that the Secretary shall use to de5 termine the amount of any fees charged under sub6 section (j), including criteria related to the amount 

7 of the obligation; 

8 (3) policies and procedures for selecting and 

9 monitoring lenders and loan performance; and 

10 (4) any other policies, procedures, or informa11 tion necessary to implement this section. 

12 (n) AUDIT.— 

13 (1) ANNUAL INDEPENDENT AUDITS.—The Sec14 retary shall enter into an arrangement with an inde15 pendent auditor for annual evaluations of the pro16 gram under this section. 

17 (2) COMPTROLLER GENERAL REVIEW.—The 

18 Comptroller General of the United States shall con19 duct a biennial review of the Secretary’s execution of 

20 the program under this section. 

21 (3) REPORT.—The results of the independent 

22 audit under paragraph (1) and the Comptroller Gen23 eral’s review under paragraph (2) shall be provided 

24 directly to the Committee on Science and Tech25 nology of the House of Representatives and the 


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1 Committee on Commerce, Science, and Transpor2 tation of the Senate. 

3 (o) REPORT TO CONGRESS.—Concurrent with the 

4 submission to Congress of the President’s annual budget 

5 request in each year after the date of enactment of this 

6 Act, the Secretary shall transmit to the Committee on 

7 Science and Technology of the House of Representatives 

8 and the Committee on Commerce, Science, and Transpor9 tation of the Senate a report containing a summary of 

10 all activities carried out under this section. 

11 (p) COORDINATION AND NONDUPLICATION.—To the 

12 maximum extent practicable, the Secretary shall ensure 

13 that the activities carried out under this section are co14 ordinated with, and do not duplicate the efforts of, other 

15 loan guarantee programs within the Federal Government. 

16 (q) MINIMIZING RISK.—The Secretary shall promul17 gate regulations and policies to carry out this section in 

18 accordance with Office of Management and Budget Cir19 cular No. A–129, entitled ‘‘Policies for Federal Credit 

20 Programs and Non-Tax Receivables’’, as in effect on the 

21 date of enactment of this Act. 

22 (r) DEFINITIONS.—In this section: 

23 (1) COST.—The term ‘‘cost’’ has the meaning 

24 given such term under section 502 of the Federal 

25 Credit Reform Act of 1990 (2 U.S.C. 661a). 


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1 (2) LOAN GUARANTEE.—The term ‘‘loan guar2 antee’’ has the meaning given such term in section 

3 502 of the Federal Credit Reform Act of 1990 (2 

4 U.S.C. 661a). The term includes a loan guarantee 

5 commitment (as defined in section 502 of such Act 

6 (2 U.S.C. 661a)). 

7 (3) OBLIGATION.—The term ‘‘obligation’’ 

8 means the loan or other debt obligation that is guar9 anteed under this section. 

10 (4) PROGRAM.—The term ‘‘program’’ means 

11 the loan guarantee program established in sub12 section (a). 

13 (s) AUTHORIZATION OF APPROPRIATIONS.— 

14 (1) COST OF LOAN GUARANTEES.—There are 

15 authorized to be appropriated such sums as are nec16 essary for each of fiscal years 2011 through 2015 to 

17 provide the cost of loan guarantees under this sec18 tion. 

19 (2) PRINCIPAL AND INTEREST.—There are au20 thorized to be appropriated such sums as are nec21 essary to carry out subsection (g). 

Æ 


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