Title: National Critical Capabilities Defense Act of 2021
Policy area: Foreign Trade and International Finance

Summary:
National Critical Capabilities Defense Act of 2021
This bill establishes the Committee on National Critical Capabilities to review certain transactions by U.S. businesses, including those transactions that could result in an unacceptable risk to national critical capabilities. Further, the bill authorizes the President to suspend or prohibit transactions that pose an unacceptable risk to national critical capabilities.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1854 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 1854

  To require reviews of United States investment in foreign countries 
    that may threaten national critical capabilities, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 2021

Mr. Casey (for himself, Mr. Cornyn, Ms. Stabenow, Mr. Kaine, Mr. Rubio, 
and Mr. Tillis) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To require reviews of United States investment in foreign countries 
    that may threaten national critical capabilities, 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. SHORT TITLE.

    This Act may be cited as the ``National Critical Capabilities 
Defense Act of 2021''.

SEC. 2. NATIONAL CRITICAL CAPABILITIES REVIEWS.

    (a) In General.--The Trade Act of 1974 (19 U.S.C. 2101 et seq.) is 
amended by adding at the end the following:

           ``TITLE X--NATIONAL CRITICAL CAPABILITIES REVIEWS

``SEC. 1001. DEFINITIONS.

    ``In this title:
            ``(1) Appropriate congressional committees.--The term 
        `appropriate congressional committees' means--
                    ``(A) the Committee on Finance, the Committee on 
                Armed Services, the Committee on Banking, Housing, and 
                Urban Affairs, the Committee on Commerce, Science, and 
                Transportation, 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 Ways and Means, the 
                Committee on Armed Services, the Committee on Education 
                and Labor, the Committee on Financial Services, the 
                Committee on Homeland Security, and the Committee on 
                Transportation and Infrastructure of the House of 
                Representatives.
            ``(2) Committee.--The term `Committee' means the Committee 
        on National Critical Capabilities established under section 
        1002.
            ``(3) Control.--The term `control' means the power, direct 
        or indirect, whether exercised or not exercised, to determine, 
        direct, or decide important matters affecting an entity, 
        subject to regulations prescribed by the Committee.
            ``(4) Country of concern.--The term `country of concern'--
                    ``(A) has the meaning given the term `foreign 
                adversary' in section 8(c)(2) of the Secure and Trusted 
                Communications Networks Act of 2019 (47 U.S.C. 
                1607(c)(2)); and
                    ``(B) may include a nonmarket economy country (as 
                defined in section 771(18) of the Tariff Act of 1930 
                (19 U.S.C. 1677(18))) identified by the Committee for 
                purposes of this paragraph by regulation.
            ``(5) Covered transaction.--
                    ``(A) In general.--Except as otherwise provided, 
                the term `covered transaction' means any of the 
                following transactions, proposed or pending on or after 
                the date of the enactment of this title:
                            ``(i) Any transaction by a United States 
                        business that--
                                    ``(I) shifts or relocates to a 
                                country of concern, or transfers to an 
                                entity of concern, the design, 
                                development, production, manufacture, 
                                fabrication, supply, servicing, 
                                testing, management, operation, 
                                investment, ownership, or any other 
                                essential elements involving one or 
                                more national critical capabilities 
                                identified under subparagraph (B)(ii); 
                                or
                                    ``(II) could result in an 
                                unacceptable risk to a national 
                                critical capability.
                            ``(ii) 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) Regulations.--
                            ``(i) In general.--The Committee shall 
                        prescribe regulations further defining the term 
                        `covered transaction' in accordance with 
                        subchapter II of chapter 5, and chapter 7, of 
                        title 5, United States Code (commonly known as 
                        the `Administrative Procedure Act').
                            ``(ii) Identification of national critical 
                        capabilities.--For purposes of subparagraph 
                        (A)(I), the regulations prescribed by the 
                        Committee under clause (i) shall--
                                    ``(I) identify 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 
                                pose an unacceptable risk to the 
                                national security and crisis 
                                preparedness of the United States; and
                                    ``(II) enumerate, quantify, 
                                prioritize, and set forth sufficient 
                                allowances of, specific types and 
                                examples of such capabilities.
            ``(6) Crisis preparedness.--The term `crisis preparedness' 
        means preparedness for--
                    ``(A) a public health emergency declared under 
                section 319 of the Public Health Service Act (42 U.S.C. 
                247d); or
                    ``(B) a major disaster declared under section 401 
                of the Robert T. Stafford Disaster Relief and Emergency 
                Assistance Act (42 U.S.C. 5170).
            ``(7) Critical infrastructure.--The term `critical 
        infrastructure' means systems and assets, whether physical or 
        virtual, so vital to the United States that the incapacity or 
        destruction of such systems and assets would have a 
        debilitating impact on national security, national economic 
        security, national public health or safety, or any combination 
        of those matters.
            ``(8) Entity of concern.--The term `entity of concern' 
        means an entity--
                    ``(A) the ultimate parent entity of which is 
                domiciled in a country of concern; or
                    ``(B) that is directly or indirectly controlled by, 
                owned by, or subject to the influence of a foreign 
                person that has a substantial nexus with a country of 
                concern.
            ``(9) Foreign entity.--
                    ``(A) In general.--Except as provided by 
                subparagraph (B), the term `foreign entity' means any 
                branch, partnership, group or sub-group, association, 
                estate, trust, corporation or division of a 
                corporation, or organization organized under the laws 
                of a foreign country if--
                            ``(i) its principal place of business is 
                        outside the United States; or
                            ``(ii) its equity securities are primarily 
                        traded on one or more foreign exchanges.
                    ``(B) Exception.--The term `foreign entity' does 
                not include any entity described in subparagraph (A) 
                that can demonstrate that a majority of the equity 
                interest in such entity is ultimately owned by 
                nationals of the United States.
            ``(10) Foreign person.--The term `foreign person' means--
                    ``(A) any foreign national, foreign government, or 
                foreign entity;
                    ``(B) any entity over which control is exercised or 
                exercisable by a foreign national, foreign government, 
                or foreign entity; or
                    ``(C) any entity over which control is exercised or 
                exercisable by a person described in subparagraph (A) 
                or (B).
            ``(11) National critical capabilities.--The term `national 
        critical capabilities', subject to regulations prescribed by 
        the Committee--
                    ``(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 
                or crisis preparedness; 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 essential to the 
                                operation, manufacture, supply, 
                                service, or maintenance of critical 
                                infrastructure.
                                    ``(III) Articles critical to 
                                infrastructure construction after a 
                                natural or manmade disaster.
                                    ``(IV) Articles that are components 
                                of systems critical to the operation of 
                                weapons systems, intelligence 
                                collection systems, or items critical 
                                to the conduct of military or 
                                intelligence operations.
                                    ``(V) Any other articles identified 
                                in regulations prescribed under section 
                                1007.
                            ``(ii) Supply chains for the production of 
                        articles described in clause (i).
                            ``(iii) Essential supply chains for the 
                        Department of Defense.
                            ``(iv) Any other supply chains identified 
                        in regulations prescribed under section 1007.
                            ``(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 critical infrastructure.
                            ``(viii) Services critical to 
                        infrastructure construction after a natural or 
                        manmade disaster.
                            ``(ix) Any other services identified in 
                        regulations prescribed under section 1007.
            ``(12) National security.--The term `national security' 
        includes--
                    ``(A) national security, as defined in section 
                721(a) of the Defense Production Act of 1950 (50 U.S.C. 
                4565(a));
                    ``(B) national defense, as defined in section 702 
                of that Act (50 U.S.C. 4552); and
                    ``(C) agricultural security and natural resources 
                security.
            ``(13) Party.--The term `party', with respect to a 
        transaction, has the meaning given that term in regulations 
        prescribed by the Committee.
            ``(14) United states.--The term `United States' means the 
        several States, the District of Columbia, and any territory or 
        possession of the United States.
            ``(15) United states business.--The term `United States 
        business' means a person engaged in interstate commerce in the 
        United States.

``SEC. 1002. COMMITTEE ON NATIONAL CRITICAL CAPABILITIES.

    ``(a) In General.--There is established a committee, to be known as 
the `Committee on National Critical Capabilities', which shall carry 
out this title and such other assignments as the President may 
designate.
    ``(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 the United States Trade 
                Representative.
                    ``(B) The Department of Commerce.
                    ``(C) The Office of Science and Technology Policy.
                    ``(D) The Department of the Treasury.
                    ``(E) The Department of Homeland Security.
                    ``(F) The Department of Defense.
                    ``(G) The Department of State.
                    ``(H) The Department of Justice.
                    ``(I) The Department of Energy.
                    ``(J) The Department of Health and Human Services.
                    ``(K) The Department of Agriculture.
                    ``(L) The Department of Labor.
                    ``(M) Any other Federal agency the President 
                determines appropriate, generally or on a case-by-case 
                basis.
            ``(2) Ex officio members.--
                    ``(A) In general.--In addition to the members of 
                the Committee specified in paragraph (1), the following 
                shall, except as provided in subparagraph (B), be 
                nonvoting, ex officio members of the Committee:
                            ``(i) The Director of National 
                        Intelligence.
                            ``(ii) The Administrator of the Federal 
                        Emergency Management Agency.
                            ``(iii) The Director of the National 
                        Institute of Standards and Technology.
                            ``(iv) The Director of the Centers for 
                        Disease Control and Prevention.
                            ``(v) The Director of the National 
                        Institute of Allergy and Infectious Diseases.
                            ``(vi) The Chairperson of the Federal 
                        Communications Commission.
                            ``(vii) The Chairperson of the Securities 
                        and Exchange Commission.
                            ``(viii) The Chairperson of the Commodity 
                        Futures Trading Commission.
                            ``(ix) The Administrator of the Federal 
                        Aviation Administration.
                    ``(B) Designation as voting members.--The 
                chairperson of the Committee may designate any of the 
                officials specified in clauses (ii) through (ix) of 
                subparagraph (A) as voting members of the Committee.
    ``(c) Chairperson.--
            ``(1) In general.--The United States Trade Representative 
        shall serve as the chairperson of the Committee.
            ``(2) Consultations with secretaries of defense and 
        commerce.--In carrying out the duties of the chairperson of the 
        Committee, the United States Trade Representative shall consult 
        with the Secretary of Defense and the Secretary of Commerce.
    ``(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.

``SEC. 1003. 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 may--
                    ``(A) review the transaction to determine if the 
                transaction is likely to result in an unacceptable risk 
                to one or more national critical capabilities, 
                including by considering factors specified in section 
                1005; and
                    ``(B) if the Committee determines under 
                subparagraph (A) that the transaction poses a risk 
                described in that subparagraph, make recommendations--
                            ``(i) to the President for appropriate 
                        action that may be taken under this title or 
                        under other existing authorities to address or 
                        mitigate that risk; and
                            ``(ii) to Congress for the establishment or 
                        expansion of Federal programs to support the 
                        production or supply of articles and services 
                        described in section 1001(a)(11)(B) in the 
                        United States.
            ``(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 one of the appropriate congressional committees jointly 
        request the Committee to review the transaction.
    ``(c) Treatment of Business Confidential Information.--A United 
States business shall submit each notification required by subsection 
(a) to the Committee--
            ``(1) in a form that includes business confidential 
        information; and
            ``(2) in a form that omits business confidential 
        information and is appropriate for disclosure to the public.

``SEC. 1004. 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 address or mitigate any unacceptable risk posed by a covered 
transaction to one or more national critical capabilities, including 
suspending or prohibiting the covered transaction.
    ``(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 date on which the review of the transaction under section 1003 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) to suspend or prohibit a covered 
transaction only if the President finds that--
            ``(1) there is credible evidence that leads the President 
        to believe that the transaction poses an unacceptable risk 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 
1005, as appropriate.

``SEC. 1005. FACTORS TO BE CONSIDERED.

    ``The Committee, in reviewing and making a determination with 
respect to a covered transaction under section 1003, and the President, 
in determining whether to take action under section 1004 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 or predatory trade 
        practices in each country in which a foreign person that is a 
        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; 10 
        U.S.C. 2509 note)) of each foreign person that is a party to 
        the transaction; and
            ``(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.

``SEC. 1006. SUPPLY CHAIN SENSITIVITIES.

    ``The Committee shall determine the sensitivities and risks for 
sourcing of articles described in section 1001(a)(11)(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 countries 
        that are allies of the United States.
            ``(2) The sourcing of greater concern shall be articles the 
        supply chains for which are housed in part within countries of 
        concern or from an entity of concern but for which substitute 
        production is available from elsewhere at required scale.
            ``(3) The sourcing of greatest concern shall be articles 
        the supply chains for which are housed wholly or in part in 
        countries of concern or from an entity of concern and for which 
        substitute production is unavailable elsewhere at required 
        scale.

``SEC. 1007. IDENTIFICATION OF ADDITIONAL NATIONAL CRITICAL 
              CAPABILITIES.

    ``(a) In General.--The Committee should prescribe regulations to 
identify additional articles, supply chains, and services to recommend 
for inclusion in the definition of `national critical capabilities' 
under section 1001(a)(11).
    ``(b) Review of Industries.--
            ``(1) In general.--In identifying under subsection (a) 
        additional articles, supply chains, and services to recommend 
        for inclusion in the definition of `national critical 
        capabilities' under section 1001(a)(11), the Committee should 
        conduct a review of industries identified by Federal Emergency 
        Management Agency as carrying out emergency support functions, 
        including the following industries:
                    ``(A) Energy.
                    ``(B) Medical.
                    ``(C) Communications, including electronic and 
                communications components.
                    ``(D) Defense.
                    ``(E) Transportation.
                    ``(F) Aerospace, including space launch.
                    ``(G) Robotics.
                    ``(H) Artificial intelligence.
                    ``(I) Semiconductors.
                    ``(J) Shipbuilding.
                    ``(K) Water, including water purification.
            ``(2) Quantification.--In conducting a review of industries 
        under paragraph (1), the Committee should specify the quantity 
        of articles, supply chains, and services, and specific types 
        and examples of transactions, from each industry sufficient to 
        maintain national critical capabilities.

``SEC. 1008. 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 2021, and annually thereafter, the Committee shall submit to 
        the appropriate congressional committees a report--
                    ``(A) on the determination under section 1006 with 
                respect to sensitivities and risks for sourcing of 
                articles described in section 1001(a)(11)(B)(i);
                    ``(B) assessing whether identification of 
                additional national critical capabilities under section 
                1007 is necessary; and
                    ``(C) describing, for the year preceding submission 
                of the report--
                            ``(i) the notifications received under 
                        subsection (a) of section 1003 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
                    ``(D) 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 Defense Production Act of 1950 Authorities.--Not later 
than 180 days after the date of the enactment of the National Critical 
Capabilities Defense Act of 2021, the Committee shall submit to 
Congress a report that includes recommendations relating to use the 
authorities under title III of the Defense Production Act of 1950 (50 
U.S.C. 4531 et seq.) to make investments to enhance national critical 
capabilities and reduce dependency on materials and services imported 
from foreign countries.

``SEC. 1009. REQUIREMENT FOR REGULATIONS.

    ``(a) In General.--The Committee shall prescribe regulations to 
carry out this title.
    ``(b) Elements.--Regulations prescribed to carry out this title 
shall--
            ``(1) provide for the imposition of civil penalties for any 
        violation of this title, including any mitigation agreement 
        entered into, conditions imposed, or order issued pursuant to 
        this title; and
            ``(2) include specific examples of the types of--
                    ``(A) the transactions that will be considered to 
                be covered transactions; and
                    ``(B) the articles, supply chains, and services 
                that will be considered to be national critical 
                capabilities.
    ``(c) Coordination.--In prescribing regulations to carry out this 
title, the Committee shall coordinate with the United States Trade 
Representative, the Under Secretary of Commerce for Industry and 
Security, and the Committee on Foreign Investment in the United States 
to avoid duplication of effort.

``SEC. 1010. 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 2021, 
the Federal Acquisition Regulation shall be revised to require each 
person that is a prospective contractor for an executive agency to 
disclose the supply chains the person would use to carry out the 
contract and the extent to which the person would depend on articles 
and services imported from foreign countries, including the percentage 
of such materials and services imported from countries of concern.
    ``(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 2021.
    ``(d) Definitions.--In this section:
            ``(1) Executive agency.--The term `executive agency' has 
        the meaning given that term in section 133 of title 41, United 
        States Code.
            ``(2) Federal acquisition regulation.--The term `Federal 
        Acquisition Regulation' means the regulation issued pursuant to 
        section 1303(a)(1) of title 41, United States Code.

``SEC. 1011. MULTILATERAL ENGAGEMENT AND COORDINATION.

    ``The United States Trade Representative--
            ``(1) should, in coordination and consultation with 
        relevant Federal agencies, conduct multilateral engagement with 
        the governments of countries that are allies of the United 
        States to secure coordination of protocols and procedures with 
        respect to covered transactions with countries of concern; and
            ``(2) upon adoption of protocols and procedures described 
        in paragraph (1), shall work with those governments to 
        establish information sharing regimes.

``SEC. 1012. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated such sums as may be 
necessary to carry out this title, including to provide outreach to 
industry and persons affected by this title.

``SEC. 1013. RULE OF CONSTRUCTION WITH RESPECT TO FREE AND FAIR 
              COMMERCE.

    ``Nothing in this title may be construed as prohibiting or limiting 
the free and fair flow of commerce outside of the United States that 
does not pose an unacceptable risk to a national critical 
capability.''.
    (b) Clerical Amendment.--The table of contents for the Trade Act of 
1974 is amended by adding at the end the following:

           ``TITLE X--NATIONAL CRITICAL CAPABILITIES REVIEWS

``Sec. 1001. Definitions.
``Sec. 1002. Committee on National Critical Capabilities.
``Sec. 1003. Review of covered transactions.
``Sec. 1004. Action by the President.
``Sec. 1005. Factors to be considered.
``Sec. 1006. Supply chain sensitivities.
``Sec. 1007. Identification of additional national critical 
                            capabilities.
``Sec. 1008. Reporting requirements.
``Sec. 1009. Requirement for regulations.
``Sec. 1010. Requirements related to government procurement.
``Sec. 1011. Multilateral engagement and coordination.
``Sec. 1012. Authorization of appropriations.
``Sec. 1013. Rule of construction with respect to free and fair 
                            commerce.''.
                                 <all>