National Critical Capabilities Defense Act of 2020

To require reviews of United States investment in foreign countries that may threaten national critical capabilities and to improve the use of authorities under the Defense Production Act of 1950, and for other purposes. 1. Short title This Act may be cited as the National Critical Capabilities Defense Act of 2020 2. National critical capabilities reviews The Defense Production Act of 1950 ( 50 U.S.C. 4501 VIII National critical capabilities reviews 801. Definitions In this title: (1) Appropriate congressional committees The term appropriate congressional committees (A) the Committee on Armed Services, the Committee on Banking, Housing, and Urban Affairs, the Committee on Commerce, Science, and Transportation, the Committee on Finance, the Committee on Health, Education, Labor, and Pensions, and the Committee on Homeland Security and Governmental Affairs of the Senate; and (B) the Committee on Armed Services, the Committee on Education and Labor, the Committee on Financial Services, the Committee on Homeland Security, the Committee on Transportation and Infrastructure, and the Committee on Ways and Means of the House of Representatives. (2) Commission The term Commission (3) Committee The term Committee (4) Control The term control (5) Country of concern The term country of concern (6) Covered transaction (A) In general Except as otherwise provided, the term covered transaction (i) Any merger, acquisition, or takeover of a foreign person by or with a United States business that could result in a threat to one or more national critical capabilities, including such a merger, acquisition, or takeover carried out through a joint venture. (ii) Any other investment, subject to regulations prescribed under subparagraph (B), by a United States business in a foreign person that— (I) owns, operates, manufactures, supplies, or services national critical capabilities; or (II) produces, designs, tests, manufactures, fabricates, or develops one or more national critical capabilities. (iii) Any change in the rights that a United States business has with respect to a foreign person in which the United States business has an investment, if that change could result in— (I) a threat to one or more national critical capabilities; or (II) an investment described in clause (ii). (iv) Any other transaction, transfer, agreement, or arrangement, the structure of which is designed or intended to evade or circumvent the application of this title, subject to regulations prescribed by the Committee. (B) Other investments (i) Other investment defined For purposes of subparagraph (A)(ii), the term other investment (I) affords the foreign person— (aa) the ability to shift to a foreign country any material nonpublic technical information related to national critical capabilities in the possession of the United States business; (bb) membership or observer rights on the board of directors or equivalent governing body of the United States business or the right to nominate an individual to a position on the board of directors or equivalent governing body; or (cc) any involvement, other than through voting of shares, in substantive decision making of the United States business regarding— (AA) the use, development, acquisition, safekeeping, or release of sensitive personal data of United States citizens maintained or collected by the United States business; (BB) a shift to a foreign country of production, development acquisition, or release of national critical capabilities; (CC) a shift to a foreign county of the management, operation, manufacture, or supply of national critical capabilities; or (DD) the transfer of knowledge from the United States business by any means, including the training of an employee under an agreement, either written or verbal, under which the employee is expected to acquire such knowledge and later the such knowledge with an entity in a foreign country; (II) results in a shift in production from the United States to a foreign country; or (III) results in the establishment of a new entity in a foreign country. (ii) Material nonpublic technical information defined (I) In general For purposes of clause (i)(I), and subject to regulations prescribed by the Committee, the term material nonpublic technical information (aa) relates to the knowledge, know-how, or understanding, not available in the public domain, of the design, location, or operation of national critical capabilities; or (bb) is not available in the public domain, and is necessary to design, fabricate, develop, test, produce, or manufacture national critical capabilities, including processes, techniques, or methods. (II) Exemption for financial information Notwithstanding subclause (I), for purposes of this subparagraph, the term material nonpublic technical information (iii) Regulations (I) In general The Committee shall prescribe regulations providing guidance on the types of transactions that the Committee considers to be other investment (II) United States businesses that own, operate, manufacture, supply, or service national critical capabilities The regulations prescribed by the Committee with respect to an investment described in subparagraph (A)(ii)(I) shall— (aa) specify the national critical capabilities subject to that subparagraph based on criteria intended to limit application of that subparagraph to the subset of national critical capabilities that is likely to be of importance to the national security of the United States; and (bb) enumerate specific types and examples of such capabilities. (7) Foreign person The term foreign person (A) an individual who is not a United States citizen or an alien lawfully admitted for permanent residence to the United States; or (B) an entity that is not organized under the laws of the United States or of any jurisdiction within the United States, including such an entity— (i) owned or controlled by a United States business; or (ii) owned or controlled by the government of a foreign country. (8) National critical capabilities The term national critical capabilities (A) means systems and assets, whether physical or virtual, so vital to the United States that the inability to develop such systems and assets or the incapacity or destruction of such systems or assets would have a debilitating impact on national security; and (B) includes the following: (i) The production, in sufficient quantities, of any of the following articles: (I) Medical supplies, medicines, and personal protective equipment. (II) Articles critical to the maintenance of the national electrical grid. (III) Articles critical to infrastructure construction after a natural or manmade disaster. (IV) Any other articles the Committee considers appropriate, including articles recommended by the Commission under section 806(c). (ii) The supply chains for the production of such articles. (iii) The supply chain for the Department of Defense. (iv) Any other supply chain the Committee considers appropriate, including supply chains recommended by the Commission under section 806(c). (v) Services critical to the production of articles described in clause (i) or a supply chain described in clause (ii), (iii), or (iv). (vi) Medical services. (vii) Services critical to the maintenance of the national electrical grid. (viii) Services critical to infrastructure construction after a natural or manmade disaster. (9) National security The term national security (A) has the meaning given that term in section 721; and (B) includes agricultural security, health security, homeland security, infrastructure security, and natural resources security. (10) Party The term party (11) United states The term United States (12) United states business The term United States business 802. Committee on National Critical Capabilities (a) In general There is established a committee, to be known as the Committee on National Critical Capabilities (b) Membership (1) In general The Committee shall be comprised of the head, or a designee of the head, of each of the following: (A) The Office of Science and Technology Policy. (B) The Department of the Treasury. (C) The Department of Homeland Security. (D) The Department of Commerce. (E) The Department of Defense. (F) The Department of State. (G) The Department of Justice. (H) The Department of Energy. (I) The Department of Health and Human Services. (J) The Department of Agriculture. (K) The Department of Labor. (L) The Federal Emergency Management Agency. (M) The National Institute of Standards and Technology. (N) The Centers for Disease Control and Prevention. (O) The National Institute of Allergy and Infectious Diseases. (P) Any other Federal agency the President determines appropriate, generally or on a case-by-case basis. (2) Ex officio member In addition the members of the Committee specified in paragraph (1), the Director of National Intelligence shall be a nonvoting, ex officio member of the Committee. (c) Co-Chairs The Secretary of Homeland Security and the Secretary of Commerce shall serve as the co-chairs of the Committee. (d) Designation of officials To carry out duties related to Committee The head of each agency represented on the Committee shall designate an official, at or equivalent to the level of Assistant Secretary in the Department of the Treasury, who is appointed by the President, by and with the advice and consent of the Senate, to carry out such duties related to the Committee as the head of the agency may assign. 803. Review of covered transactions (a) Mandatory notification A United States business that engages in a covered transaction shall submit a written notification of the transaction to the Committee. (b) Review (1) In general Not later than 60 days after receiving written notification under subsection (a) of a covered transaction, the Committee shall— (A) review the transaction to determine if the transaction is likely to result in a threat to one or more national critical capabilities, considering factors specified in section 805(a); and (B) if the Committee determines under subparagraph (A) that the transaction poses a threat described in that subparagraph, recommend to the President that appropriate action be taken to address or mitigate that threat, such as— (i) procurement by the Federal Government of articles and services described in section 801(a)(8)(B) produced or supplied in the United States; (ii) use of authorities under title I or III to increase the production and supply of such articles and services in the United States; (iii) the use or establishment of Federal programs to support the production or supply of such articles and services in the United States; (iv) the initiation of an investigation under section 232 of the Trade Expansion Act of 1962 ( 19 U.S.C. 1862 (v) such other actions as the Committee considers appropriate. (2) Unilateral initiation of review The Committee may initiate a review under paragraph (1) of a covered transaction for which written notification is not submitted under subsection (a). (3) Initiation of review by request from congress The Committee shall initiate a review under paragraph (1) of a covered transaction if the chairperson and the ranking member of any of the appropriate congressional committees request the Committee to review the transaction. (c) Authority To suspend transactions (1) In general Except as provided in paragraph (3), the Committee may suspend or prohibit, in accordance with paragraph (4), a proposed or pending covered transaction described in paragraph (2) for such time as the covered transaction is under review under this section. (2) Transactions described A covered transaction is described in this paragraph if the Committee determines that the transaction poses a threat to one or more national critical capabilities. (3) Exception The Committee may not suspend or prohibit a covered transaction under paragraph (1) if the transaction is related to an article or service the supply chain for which is housed wholly within the United States or countries that are allies of the United States. (4) Procedures The Committee may suspend or prohibit a proposed or pending covered transaction under paragraph (1) if— (A) the motion to suspend or prohibit the transaction is be raised by not less than 1/3 (B) not less than 3/5 804. Action by the President (a) In general Subject to subsection (d), the President may take such action for such time as the President considers appropriate to suspend or prohibit any covered transaction that poses a threat to one or more national critical capabilities. (b) Announcement by the president The President shall announce the decision on whether or not to take action pursuant to subsection (a) with respect to a covered transaction not later than 15 days after the earlier of the date on which the review of the transaction under section 803 is completed. (c) Enforcement 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 section. (d) Findings of the president The President may exercise the authority conferred by subsection (a) with respect to a covered transaction only if the President finds that— (1) there is credible evidence that leads the President to believe that the transaction poses a threat to one or more national critical capabilities; and (2) provisions of law (other than this section) do not, in the judgment of the President, provide adequate and appropriate authority for the President to protect such capabilities. (e) Factors To be considered For purposes of determining whether to take action under subsection (a), the President shall consider, among other factors each of the factors described in section 805(a), as appropriate. 805. Factors to be considered (a) In general The Committee, in reviewing and making a determination with respect to a covered transaction under section 803, and the President, in determining whether to take action under section 804 with respect to a covered transaction, shall consider any factors relating to national critical capabilities that the Committee or the President considers relevant, including— (1) the long-term strategic economic, national security, and crisis preparedness interests of the United States; (2) the history of distortive trade practices in each country in which a foreign party to the transaction is domiciled; (3) control and beneficial ownership (as determined in accordance with section 847 of the National Defense Authorization Act for Fiscal Year 2020 ( Public Law 116–92 (4) impact on the domestic industry and resulting resiliency, including the domestic skills base, taking into consideration any pattern of foreign investment in the domestic industry. (b) Supply chain sensitivities The Committee shall determine the sensitivities and national security risks for sourcing of articles described in section 801(a)(8)(B)(i), in accordance with the following: (1) The sourcing of least concern shall be articles the supply chains for which are housed in whole within North America. (2) The sourcing of lesser concern shall be articles the supply chains for which are housed in whole within countries that are allies of the United States. (3) The sourcing of greater concern shall be articles the supply chains for which are housed in part within countries of concern. (4) The sourcing of greatest concern shall be articles the supply chains for which are housed or substantially dependent on resources from countries of concern. 806. Congressional commission (a) Establishment of Commission There is established a congressional commission, which shall— (1) review the activities of the Committee annually; and (2) make recommendations with respect to industries to be reviewed. (b) Membership The Commission shall be comprised of the following: (1) Three Members of the Senate from the majority party, appointed by the majority leader of the Senate. (2) Three Members of the Senate from the minority party, appointed by the minority leader of the Senate. (3) Three Members of the House of Representatives from the majority party, appointed by the Speaker of the House. (4) Three Members of the House of Representatives from the minority party, appointed by the minority leader of the House. (5) Three individuals representing workers and labor organizations, appointed by the chairperson of the policy advisory committee on labor established under section 135(c)(1) of the Trade Act of 1974 ( 19 U.S.C. 2155(c)(1) (6) Three individuals with expertise in domestic manufacturing and supply chains, appointed by the chairperson of the committee referred to in paragraph (5). (c) Review of industries (1) In general The Commission shall— (A) conduct a review of— (i) the industries specified in paragraph (2); and (ii) all industries identified by Federal Emergency Management Agency as carrying out emergency support functions; and (B) not later than 2 years after the date of the enactment of the National Critical Capabilities Defense Act of 2020 national critical capabilities (2) Industries specified The industries specified in this subsection are the following: (A) Energy. (B) Medical. (C) Communications, including electronic and communications components. (D) Defense. (E) Transportation. (F) Aerospace. (G) Robotics. (H) Artificial intelligence. (I) Semiconductors. (J) Shipbuilding. (K) Water, including water purification. (d) Application of Federal Advisory Committee Act The provisions of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply with respect to the Commission. 807. Inclusion of additional articles, supply chains, and services in definition of national critical capabilities (a) Proposal by Committee Not later than 60 days after receiving the recommendations of the Commission under section 806(c)(1)(B), the Committee shall submit to Congress a list of additional articles, supply chains, and services the Committee proposes for inclusion in the definition of national critical capabilities (b) Effectiveness of proposal The proposal of the Committee under subsection (a) with respect to additional articles, supply chains, and services to include in the definition of national critical capabilities 808. Reporting requirements (a) Annual report to Congress (1) In general Not later than 90 days after the date of the enactment of the National Critical Capabilities Defense Act of 2020 (A) on the determination under section 805(b) with respect to sensitivities and national security risks for sourcing of articles described in section 801(a)(8)(B)(i); (B) describing, for the year preceding submission of the report— (i) the notifications received under subsection (a) of section 803 and reviews conducted pursuant to such notifications; (ii) reviews initiated under paragraph (2) or (3) of subsection (b) of that section; (iii) actions recommended by the Committee under subsection (b)(1)(B) of that section as a result of such reviews; and (iv) reviews during which the Committee determined no action was required; and (C) assessing the overall impact of such reviews on national critical capabilities. (2) Form of report The report required by paragraph (1) shall be submitted in unclassified form but may include a classified annex. (b) Use of title III authorities Not later than 180 days after the date of the enactment of the National Critical Capabilities Defense Act of 2020 809. Requirements related to government procurement (a) In general Not later than 90 days after the date of the enactment of the National Critical Capabilities Defense Act of 2020 (1) the supply chains the person would use to carry out the contract and the extent to which the person would depend on materials and services imported from foreign countries, including the percentage of such materials and services imported from countries of concern; and (2) a good faith estimate of the effect of the contract on employment by the person in the United States. (b) Materiality The head of an executive agency shall consider the failure of a person to make the disclosures required by subsection (a) to be material determinants in awarding a contract to that person. (c) Applicability The revisions to the Federal Acquisition Regulation required under subsection (a) shall apply with respect to contracts for which solicitations are issued on or after the date that is 90 days after the date of the enactment of the National Critical Capabilities Defense Act of 2020 (d) Definitions In this section: (1) Executive agency The term executive agency (2) Federal Acquisition Regulation The term Federal Acquisition Regulation . 3. Use of authorities under title VII of the Defense Production Act of 1950 for production and distribution of a SARS–CoV–2 vaccine Not later than 90 days after the date of the enactment of this Act, the President shall, pursuant to section 708(c) of the Defense Production Act of 1950 ( 50 U.S.C. 4558(c) 4. Executive Director of Defense Production Act Committee Section 722(c) of the Defense Production Act of 1950 ( 50 U.S.C. 4567(c) (c) Executive Director (1) In general The President shall appoint an Executive Director of the Committee (in this subsection referred to as the Executive Director (A) be responsible to the Chairperson of the Committee; and (B) carry out such activities relating to the Committee as the Chairperson may assign. (2) Compensation For pay periods beginning on or after the date on which each Chairperson is appointed, funds for the pay of the Executive Director shall be paid from amounts appropriated for the salaries and expenses account of the agency of the Chairperson of the Committee. The Executive Director shall be compensated at a rate of pay equivalent to that of a Deputy Assistant Secretary (or a comparable position) of the agency of the Chairperson. . 5. Reporting by entities receiving financial assistance relating to COVID–19 response efforts (a) In general Not later than one year after the date of the enactment of this Act, and 5 years after such date of enactment, any entity that receives more than $50,000,000 in direct or indirect financial assistance from the Federal Government related to the response to the coronavirus disease 2019 (commonly referred to as COVID–19 50 U.S.C. 4531 (1) (A) the value of property, plant, and equipment investments of the entity in the United States; (B) the number of individuals employed by the entity in the United States; and (C) the production and capacity production capacity of the entity in the United States; and (2) (A) the value of property, plant, and equipment investments of the entity in foreign countries; (B) the number of individuals employed by the entity in foreign countries; and (C) the production and capacity production capacity of the entity in foreign countries. (b) Penalties and Federal assistance clawback (1) In general An entity described in subsection (a) shall pay a penalty to the United States in an amount the Secretary of the Treasury determines is equivalent to the amount, if any, by which investments of the entity described in subsection (a)(2)(A) exceed the amount of investments of the entity described in subsection (a)(1)(A). (2) Limitation The amount of a penalty imposed under paragraph (1) on an entity may not exceed 5 times the amount of direct or indirect financial assistance described in subsection (a) received by the entity from the Federal Government. (c) Appropriate congressional committees defined In this section, the term appropriate congressional committees (1) the Committee on Homeland Security and Governmental Affairs, the Committee on Finance, the Committee on Banking, Housing, and Urban Affairs, and the Committee on Appropriations, and the Committee on Health, Education, Labor, and Pensions of the Senate; and (2) the Committee on Homeland Security, the Committee on Ways and Means, the Committee on Financial Services, the Committee on Appropriations, and the Committee on Education and Labor of the House of Representatives.

Summary: National Critical Capabilities Defense Act of 2020 This bill establishes the Committee on National Critical Capabilities to review specified forms of outbound investment, including any merger, acquisition, or takeover of a foreign person by or with a U.S. business that could result in a threat to national critical capabilities. Further, the bill establishes a congressional commission to review the activities of the committee, and it authorizes the President to suspend or prohibit transactions that pose a threat to national critical capabilities.