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]
[H.R. 6329 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 6329
To require reviews of United States investment in foreign countries
that may threaten national critical capabilities, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 20, 2021
Ms. DeLauro (for herself, Mr. Pascrell, Mrs. Spartz, and Mr.
Fitzpatrick) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
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>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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