II 116th CONGRESS 2d Session S. 4130 IN THE SENATE OF THE UNITED STATES July 1, 2020 Mr. Cotton (for himself, Mr. Schumer , Mr. Reed , Mr. Risch , Ms. Collins , Mr. King , Mr. Hawley , Mr. Jones , Mrs. Gillibrand , Mr. Rubio , and Ms. Hassan ) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To require the Secretary of Commerce to award grants to States for the construction of microelectronics manufacturing and advanced research and development facilities, to authorize the Secretary of Defense and the Director of National Intelligence to fund the construction of microelectronics manufacturing facilities for national security needs, and to authorize additional amounts for microelectronics research and development, and for other purposes.

1. Short title This Act may be cited as the American Foundries Act of 2020 . 2. Grants for construction of microelectronics manufacturing and research and development facilities, and workforce development (a) Grants for States with demonstrated interest in constructing microelectronics manufacturing and advanced research and development facilities (1) In general Not later than 180 days after the date of the enactment of this Act, the Secretary of Commerce, in consultation with the Secretary of Defense, shall commence carrying out a program on the award of grants to States described in paragraph (2) to assist in financing the construction, expansion, or modernization (including acquisition of equipment and intellectual property) of microelectronics fabrication, assembly, test, advanced packaging, or advanced research and development facilities. (2) States described A State described in this paragraph is a State that demonstrates to the Secretary of Commerce the following: (A) Documented interest from a microelectronics company, that has a demonstrated ability to build and operate microelectronics fabrication, assembly, test, advanced packaging, or advanced research and development facilities, in constructing, expanding, or modernizing a commercial microelectronics fabrication, assembly, test, advanced packaging, or advanced research and develop facility, or documented interest from a public-private consortium that has a demonstrated ability to build and operate an advanced research and development facility in the State. (B) Documented interest from a private entity to provide funding to support the construction, expansion, or modernization of the facility that is the subject of the interest documented under subparagraph (A). (C) Commitments from such microelectronics company or consortia to worker and community investment, including— (i) training and education benefits paid for by the company; and (ii) programs to expand employment opportunity for economically disadvantaged individuals. (D) Commitments from regional educational and training entities and institutions of higher education to develop curriculum or engage in workforce training, including programming for training and job placement of economically disadvantaged individuals. (E) Guaranteed State-level economic incentives for the construction, expansion, or modernization of the facility described in subparagraph (B), such as site development, tax incentives, job-training programs and State-level funding for microelectronics research and development. (3) Limitation on grant amount A State may not be awarded more than $3,000,000,000 under paragraph (1). (4) Use of funds (A) In general A State receiving a grant under paragraph (1) may only use the amount of the grant to finance— (i) the construction, expansion, or modernization of a state-of-the-art microelectronics fabrication, assembly, test, advanced packaging, or advanced research and development facility with respect to which the State demonstrated to the Secretary documented interest under paragraph (2), or for similar uses in state of practice and legacy facilities as deemed necessary by the Secretary for national security and economic competitiveness; (ii) to support workforce development for such facility; or (iii) to support site development for such facility. (B) Return of funds A State awarded a grant under paragraph (1) shall return any unused funds to the Treasury of the United States on an agreed-upon timeframe determined by the Secretary prior to issuing the funds. (C) Recovery of certain funds If a microelectronics entity receiving grant funds under this subsection engages in increased levels of joint research and development, technology licensing or transfer, or investment involving sensitive technologies with entities under the foreign ownership, control, or influence (FOCI) of the Government of the People’s Republic of China or other foreign adversary during the period of the grant, as determined by the Secretary as part of a periodic review of whether a microelectronics entity participating in the program specified in this subsection is under foreign ownership, control, or influence, the Secretary shall recover the amounts provided by the Secretary under this subsection. (5) Prohibition If pursuant to the periodic review of foreign ownership, control, or influence specified in paragraph (4)(C), the Secretary determines that a microelectronics entity is under the foreign ownership, control, or influence of the Government of the People’s Republic of China or other foreign adversary during the period of the grant, such entity shall be prohibited from participating in the program specified in this subsection. (6) Nonrelocation between States (A) Prohibition A State may not use any amount of a grant awarded under this subsection to induce the relocation or the movement of existing jobs from one State to another State in competition for those jobs. (B) Remedies In the event that the Secretary determines an amount of a grant awarded to a State under this subsection was used in violation of subparagraph (A), the Secretary may pursue appropriate enforcement actions, including— (i) suspension of disbursements of the grant awarded; and (ii) termination of the grant awarded, which may include the establishment of a debt requiring the recipient of the grant to reimburse the amount of the grant. (7) Implementation The Secretary shall carry out this section acting through the Director of the National Institute of Standards and Technology. (8) Reports and notices (A) Secretary of Commerce (i) Report on implementation plan Not later than 90 days after the date of the enactment of this Act, the Secretary shall submit to Congress a report on the plans of the Secretary to carry out the program required by paragraph (1). (ii) Notice of pending award (I) In general Not later than 30 days before awarding a grant to a State under this subsection, the Secretary shall submit to Congress a notice of the intended award. (II) Contents Each notice submitted under subclause (I) shall include a description of the State to which the Secretary intends to award a grant under this subsection, the project or projects for which the amount of the grant is intended to be used, specifics on the planned use of the amounts of the grant for that project, and the rationale of the Secretary for awarding the grant. (B) Comptroller General of the United States (i) Biennial report Not later than 1 year after the date on which the Secretary of Commerce submits the report under subparagraph (A)(i) and not less frequently than once every 2 years thereafter, the Comptroller General of the United States shall submit to Congress a report on the activities carried out under this subsection during the previous year. (ii) Contents Each report submitted under clause (i) shall include, at a minimum, assessments of the following: (I) How the program is being carried out and how recipients of grants are being selected under the program. (II) How other Federal programs are leveraged for manufacturing, research, and training to complement the grants awarded to States under this subsection. (III) Outcomes of projects supported by grants under this subsection, including the construction, expansion, or modernization of a microelectronics fabrication, assembly, test, advanced packaging, or advanced research and development facilities, research and development, workforce training, employment, wages, and hiring of economically disadvantaged populations. (9) Authorization of appropriations There is authorized to be appropriated to carry out this subsection $15,000,000,000 for fiscal year 2021, with such amount to remain available for such purpose until September 30, 2031. (b) Creation, expansion, or modernization of microelectronics manufacturing facilities and capabilities for national security needs (1) Incentives authorized The Secretary of Defense and the Director of National Intelligence, in consultation with the Secretary of Commerce, may jointly enter into arrangements with private sector entities or consortia thereof to provide incentives for the creation, expansion, or modernization of one or more commercially competitive and sustainable microelectronics manufacturing or advanced research and development facilities capable of producing measurably secure and specialized microelectronics for use by the Department of Defense, the intelligence community, critical infrastructure sectors of the United States economy, and other national security applications. (2) Commercial manufacturing A facility constructed, expanded, or modernized with an incentive provided under paragraph (1) may— (A) be principally oriented toward commercial manufacturing; or (B) devote surplus manufacturing capacity to the production of commercial microelectronics. (3) Risk mitigation requirements A facility constructed, expanded, or modernized with an incentive provided under paragraph (1), or the components thereof, shall— (A) have the potential to perform fabrication, assembly, package, test, or advanced research and development functions for classified and export-controlled microelectronics; (B) include management processes to identify and mitigate supply chain security risks; and (C) be able to produce microelectronics consistent with applicable trusted supply chain and operational security standards established under section 224 of the National Defense Authorization Act for Fiscal Year 2020 ( Public Law 116–92 ). (4) National security requirements In the provision of incentives under paragraph (1), the Secretary of Defense and the Director of National Intelligence shall jointly give preference to private sector entities and consortia that— (A) have participated in previous programs and projects of the Department of Defense or the Office of the Director of National Intelligence, including— (i) the Trusted Integrated Circuit program of the Intelligence Advanced Research Projects Activity; (ii) trusted and assured microelectronics projects, as administered by the Department of Defense; or (iii) the Electronics Resurgence Initiative (ERI) program of the Defense Advanced Research Projects Agency; (B) have demonstrated an ongoing commitment to performing contracts for the Department of Defense and the intelligence community; (C) are approved by the Defense Counterintelligence and Security Agency or the Office of the Director of National Intelligence as presenting an acceptable security risk, taking into account supply chain assurance vulnerabilities, counterintelligence risks, and any risks presented by companies whose owners are located outside the United States; and (D) are evaluated periodically for foreign ownership, control, or influence, consistent with the determinations in paragraphs (4)(C) and (5) of subsection (a). (5) Use of incentives Incentives may be provided under paragraph (1) for the construction, expansion, or modernization of a facility that was constructed, expanded, or modernized with funds from a grant awarded under subsection (a). (6) Nontraditional defense contractors and commercial entities The arrangements entered into under paragraph (1) shall be in the form the Secretary of Defense and the Director of National Intelligence determine to be appropriate to encourage industry participation of nontraditional defense contractors or commercial entities and may include a contract, a grant, a cooperative agreement, a commercial agreement, the use of other transaction authority under section 2371 of title 10, United States Code, or another such arrangement. (7) Reports (A) Report by Secretary of Defense and Director of National Intelligence Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense and the Director of National Intelligence shall jointly submit to Congress a report on the plans of the Secretary and the Director to provide incentives under paragraph (1). (B) Biennial reports by Comptroller General of the United States Not later than 1 year after the date on which the Secretary submits the report required by subparagraph (A) and not less frequently than once every 2 years thereafter, the Comptroller General of the United States shall submit to Congress a report on the activities carried out under this subsection. (8) Authorization of appropriations There is authorized to be appropriated to carry out this subsection $5,000,000,000 for fiscal year 2021, with such amount to remain available for such purpose until September 30, 2031. (c) Additional amounts for ensuring the future of United States leadership in microelectronics (1) Authorization of appropriations There is authorized to be appropriated $2,000,000,000 for fiscal year 2021, with such amount to remain available until September 30, 2031, to expand the Electronics Resurgence Initiative of the Defense Advanced Research Projects Agency to develop advanced disruptive microelectronics technology, including research and development to enable production at a volume required to sustain a robust domestic microelectronics industry and mitigate parts obsolescence. (2) Authorization of appropriations There is authorized to be appropriated to carry out microelectronics research at the National Science Foundation $1,500,000,000 for fiscal year 2021, with such amount to remain available for such purpose until September 30, 2031. (3) Authorization of appropriations There is authorized to be appropriated to carry out microelectronics research at the Department of Energy $1,250,000,000 for fiscal year 2021, with such amount to remain available for such purpose until September 30, 2031. (4) Authorization of appropriations There is authorized to be appropriated to carry out microelectronics research at the National Institute of Standards and Technology $250,000,000 for fiscal year 2021, with such amount to remain available for such purpose until September 30, 2031. (5) Supplement, not supplant The amounts authorized to be appropriated under paragraphs (1) through (4) shall supplement and not supplant amounts already appropriated to carry out the purposes described in such paragraphs. (6) Domestic production requirements The heads of executive agencies receiving funding under this section shall develop policies to require domestic production, to the extent possible, for any intellectual property resulting from microelectronics research and development conducted as a result of these funds and domestic control requirements to protect any such intellectual property from foreign adversaries. (7) Sense of congress Congress supports and encourages efforts by the heads of executive agencies receiving funding under this subsection to co-invest in industry-led microelectronics investment consortiums to increase private capital investment in the domestic microelectronics industry. (d) National microelectronics research and development plan (1) In general The President shall establish a standing subcommittee of the President’s Office of Science and Technology’s National Science and Technology Council for interagency efforts relating to microelectronics policy. (2) National microelectronics research plan (A) In general The subcommittee established under paragraph (1) shall develop a national microelectronics research and development plan to guide and coordinate funding for breakthroughs in next-generation microelectronics research and technology, strengthen the domestic microelectronics workforce, and encourage collaboration between government, industry, and academia. (B) Updates Not less frequently than once each year, the subcommittee established under paragraph (1) shall update the plan developed under subparagraph (A) of this paragraph. (e) Industry advisory committee The President shall establish a standing subcommittee of the President’s Council of Advisors on Science and Technology to advise the United States Government on matters relating to microelectronics policy. (f) Multilateral export control plan Not later than 180 days after the date of the enactment of this Act, the Secretary of State, the Secretary of the Treasury, and the Secretary of Commerce, in consultation with the Director of National Intelligence, the Secretary of Homeland Security, the Secretary of Defense, and the Secretary of Energy, shall jointly develop and submit to Congress a plan to coordinate with foreign government partners on establishing common microelectronics export control and foreign direct investment screening measures to align with national and multilateral security priorities. (g) Prohibition Relating to foreign adversaries None of the funds appropriated pursuant to an authorization in this section may be provided to an entity— (1) under the foreign ownership, control, or influence of the Government of the People’s Republic of China or the Chinese Communist Party, or other foreign adversary; or (2) determined to have beneficial ownership from foreign individuals subject to the jurisdiction, direction, or influence of foreign adversaries. (h) Requirements for sourcing from domestic microelectronics design and foundry services (1) Requirements required Not later than 1 year after the date of the enactment of this Act, the Secretary of Defense shall establish requirements, and a timeline for enforcement of such requirements, to the extent possible, for domestic sourcing for microelectronics design and foundry services by programs, contractors, subcontractors, and other recipients of funding from the Department of Defense. (2) Processes for waivers The requirements established under paragraph (1) shall include processes to permit waivers for specific contracts or transactions for domestic sourcing requirements based on cost, availability, severity of technical and mission requirements, emergency requirements and operational needs, other legal or international treaty obligations, or other factors. (3) Updates Not less frequently than once each year, the Secretary shall— (A) update the requirements and timelines established under paragraph (1) and the processes under paragraph (2); and (B) submit to Congress a report on the updates made under subparagraph (A). (i) Definitions In this section: (1) Beneficial owner; beneficial ownership The terms beneficial owner and beneficial ownership have the meanings given such terms in section 847 of the National Defense Authorization Act for Fiscal Year 2020 ( Public Law 116–92 ). (2) Entity; company The terms entity and company mean any corporation, company, limited liability company, limited partnership, business trust, business association, or other similar entity. (3) Foreign ownership, control, or influence The term foreign ownership, control, or influence has the meaning given such term in section 847 of the National Defense Authorization Act for Fiscal Year 2020 ( Public Law 116–92 ). (4) Intelligence community In this section, the term intelligence community has the meaning given such term in section 3 of the National Security Act of 1947 ( 50 U.S.C. 3003 ).