Us Congress 2023-2024 Regular Session

Us Congress Senate Bill SB2678 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	II
2	2	118THCONGRESS
3	3	1
4	4	STSESSION S. 2678
5	5	To provide for an investment screening mechanism relating to covered sectors.
6	6	IN THE SENATE OF THE UNITED STATES
7	7	JULY27, 2023
8	8	Mr. C
9	9	ORNYN(for himself and Mr. CASEY) introduced the following bill; which
10	10	was read twice and referred to the Committee on Banking, Housing, and
11	11	Urban Affairs
12	12	A BILL
13	13	To provide for an investment screening mechanism relating
14	14	to covered sectors.
15	15	Be it enacted by the Senate and House of Representa-1
16	16	tives of the United States of America in Congress assembled, 2
17	17	SECTION 1. SHORT TITLE. 3
18	18	This Act may be cited as the ‘‘Outbound Investment 4
19	19	Transparency Act of 2023’’. 5
20	20	SEC. 2. PROTECTION OF COVERED SECTORS. 6
21	21	The Defense Production Act of 1950 (50 U.S.C. 7
22	22	4501 et seq.) is amended by adding at the end the fol-8
23	23	lowing: 9
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27	27	‘‘TITLE VIII—PROTECTION OF 1
28	28	COVERED SECTORS 2
29	29	‘‘SEC. 801. DEFINITIONS. 3
30	30	‘‘In this title: 4
31	31	‘‘(1) A
32	32	PPROPRIATE CONGRESSIONAL COMMIT -5
33	33	TEES.—The term ‘appropriate congressional com-6
34	34	mittees’ means— 7
35	35	‘‘(A) the Committee on Armed Services, 8
36	36	the Committee on Finance, the Committee on 9
37	37	Banking, Housing, and Urban Affairs, the Se-10
38	38	lect Committee on Intelligence, and the Com-11
39	39	mittee on Foreign Relations of the Senate; and 12
40	40	‘‘(B) the Committee on Armed Services, 13
41	41	the Committee on Ways and Means, the Com-14
42	42	mittee on Financial Services, the Permanent 15
43	43	Select Committee on Intelligence, and the Com-16
44	44	mittee on Foreign Affairs of the House of Rep-17
45	45	resentatives. 18
46	46	‘‘(2) C
47	47	OUNTRY OF CONCERN .—The term ‘coun-19
48	48	try of concern’ means, subject to such regulations as 20
49	49	may be prescribed in accordance with section 806, a 21
50	50	country specified in section 4872(d)(2) of title 10, 22
51	51	United States Code. 23
52	52	‘‘(3) C
53	53	OVERED ACTIVITY.— 24
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57	57	‘‘(A) IN GENERAL.—Subject to such regu-1
58	58	lations as may be prescribed in accordance with 2
59	59	section 806, and except as provided in subpara-3
60	60	graph (B), the term ‘covered activity’ means 4
61	61	any activity engaged in by a United States per-5
62	62	son in a related to a covered sector that in-6
63	63	volves— 7
64	64	‘‘(i) an acquisition by such United 8
65	65	States person of an equity interest or con-9
66	66	tingent equity interest, or monetary capital 10
67	67	contribution, in a covered foreign entity, 11
68	68	directly or indirectly, by contractual com-12
69	69	mitment or otherwise, with the goal of gen-13
70	70	erating income or gain; 14
71	71	‘‘(ii) an arrangement for an interest 15
72	72	held by such United States person in the 16
73	73	short- or long-term debt obligations of a 17
74	74	covered foreign entity that includes govern-18
75	75	ance rights that are characteristic of an 19
76	76	equity investment, management, or other 20
77	77	important rights, as defined in regulations 21
78	78	prescribed in accordance with section 806; 22
79	79	‘‘(iii) the establishment of a wholly 23
80	80	owned subsidiary in a country of concern, 24
81	81	such as a greenfield investment, for the 25
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84	84	•S 2678 IS
85	85	purpose of production, design, testing, 1
86	86	manufacturing, fabrication, or development 2
87	87	related to one or more covered sectors; 3
88	88	‘‘(iv) the establishment by such 4
89	89	United States person of a joint venture in 5
90	90	a country of concern or with a covered for-6
91	91	eign entity for the purpose of production, 7
92	92	design, testing, manufacturing, fabrication, 8
93	93	or research involving one or more covered 9
94	94	sectors, or other contractual or other com-10
95	95	mitments involving a covered foreign entity 11
96	96	to jointly research and develop new innova-12
97	97	tion, including through the transfer of cap-13
98	98	ital or intellectual property or other busi-14
99	99	ness proprietary information; or 15
100	100	‘‘(v) the acquisition by a United 16
101	101	States person with a covered foreign entity 17
102	102	of— 18
103	103	‘‘(I) operational cooperation, such 19
104	104	as through supply or support arrange-20
105	105	ments; 21
106	106	‘‘(II) the right to board represen-22
107	107	tation (as an observer, even if limited, 23
108	108	or as a member) or an executive role 24
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112	112	(as may be defined through regula-1
113	113	tion) in a covered foreign entity; 2
114	114	‘‘(III) the ability to direct or in-3
115	115	fluence such operational decisions as 4
116	116	may be defined through such regula-5
117	117	tions; 6
118	118	‘‘(IV) formal governance rep-7
119	119	resentation in any operating affiliate, 8
120	120	like a portfolio company, of a covered 9
121	121	foreign entity; or 10
122	122	‘‘(V) a new relationship to share 11
123	123	or provide business services, such as 12
124	124	but not limited to financial services, 13
125	125	marketing services, maintenance, or 14
126	126	assembly functions, related to a cov-15
127	127	ered sectors. 16
128	128	‘‘(B) E
129	129	XCEPTIONS.—The term ‘covered ac-17
130	130	tivity’ does not include— 18
131	131	‘‘(i) any transaction the value of 19
132	132	which the Secretary of the Treasury deter-20
133	133	mines is de minimis, as defined in regula-21
134	134	tions prescribed in accordance with section 22
135	135	806; 23
136	136	‘‘(ii) any category of transactions that 24
137	137	the Secretary determines is in the national 25
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141	141	interest of the United States, as may be 1
142	142	defined in regulations prescribed in accord-2
143	143	ance with section 806; or 3
144	144	‘‘(iii) any ordinary or administrative 4
145	145	business transaction as may be defined in 5
146	146	such regulations. 6
147	147	‘‘(4) C
148	148	OVERED FOREIGN ENTITY .— 7
149	149	‘‘(A) I
150	150	N GENERAL.—Subject to regulations 8
151	151	prescribed in accordance with section 806, and 9
152	152	except as provided in subparagraph (B), the 10
153	153	term ‘covered foreign entity’ means— 11
154	154	‘‘(i) any entity that is incorporated in, 12
155	155	has a principal place of business in, or is 13
156	156	organized under the laws of a country of 14
157	157	concern; 15
158	158	‘‘(ii) any entity the equity securities of 16
159	159	which are primarily traded in the ordinary 17
160	160	course of business on one or more ex-18
161	161	changes in a country of concern; 19
162	162	‘‘(iii) any entity in which any entity 20
163	163	described in subclause (i) or (ii) holds, in-21
164	164	dividually or in the aggregate, directly or 22
165	165	indirectly, an ownership interest of greater 23
166	166	than 50 percent; or 24
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170	170	‘‘(iv) any other entity that is not a 1
171	171	United States person and that meets such 2
172	172	criteria as may be specified by the Sec-3
173	173	retary of the Treasury in such regulations. 4
174	174	‘‘(B) E
175	175	XCEPTION.—The term ‘covered for-5
176	176	eign entity’ does not include any entity de-6
177	177	scribed in subparagraph (A) that can dem-7
178	178	onstrate that a majority of the equity interest 8
179	179	in the entity is ultimately owned by— 9
180	180	‘‘(i) nationals of the United States; or 10
181	181	‘‘(ii) nationals of such countries (other 11
182	182	than countries of concern) as are identified 12
183	183	for purposes of this subparagraph pursu-13
184	184	ant to regulations prescribed in accordance 14
185	185	with section 806. 15
186	186	‘‘(5) C
187	187	OVERED SECTORS .—Subject to regula-16
188	188	tions prescribed in accordance with section 806, the 17
189	189	term ‘covered sectors’ includes sectors within the fol-18
190	190	lowing areas, as specified in such regulations: 19
191	191	‘‘(A) Advanced semiconductors and micro-20
192	192	electronics. 21
193	193	‘‘(B) Artificial intelligence. 22
194	194	‘‘(C) Quantum information science and 23
195	195	technology. 24
196	196	‘‘(D) Hypersonics. 25
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200	200	‘‘(E) Satellite-based communications. 1
201	201	‘‘(F) Networked laser scanning systems 2
202	202	with dual-use applications. 3
203	203	‘‘(6) P
204	204	ARTY.—The term ‘party’, with respect to 4
205	205	an activity, has the meaning given that term in reg-5
206	206	ulations prescribed in accordance with section 806. 6
207	207	‘‘(7) U
208	208	NITED STATES.—The term ‘United 7
209	209	States’ means the several States, the District of Co-8
210	210	lumbia, and any territory or possession of the 9
211	211	United States. 10
212	212	‘‘(8) U
213	213	NITED STATES PERSON .—The term 11
214	214	‘United States person’ means— 12
215	215	‘‘(A) an individual who is a citizen or na-13
216	216	tional of the United States or an alien lawfully 14
217	217	admitted for permanent residence in the United 15
218	218	States; and 16
219	219	‘‘(B) any corporation, partnership, or other 17
220	220	entity organized under the laws of the United 18
221	221	States or the laws of any jurisdiction within the 19
222	222	United States. 20
223	223	‘‘SEC. 802. ADMINISTRATION OF UNITED STATES INVEST-21
224	224	MENT NOTIFICATION. 22
225	225	‘‘(a) I
226	226	NGENERAL.—The President shall delegate the 23
227	227	authorities and functions under this title to the Secretary 24
228	228	of the Treasury. 25
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232	232	‘‘(b) COORDINATION.—In carrying out the duties of 1
233	233	the Secretary under this title, the Secretary shall— 2
234	234	‘‘(1) coordinate with the Secretary of Com-3
235	235	merce; and 4
236	236	‘‘(2) consult with the United States Trade Rep-5
237	237	resentative, the Secretary of Defense, the Secretary 6
238	238	of State, and the Director of National Intelligence. 7
239	239	‘‘SEC. 803. MANDATORY NOTIFICATION OF COVERED AC-8
240	240	TIVITIES. 9
241	241	‘‘(a) M
242	242	ANDATORYNOTIFICATION.— 10
243	243	‘‘(1) I
244	244	N GENERAL.—Subject to regulations pre-11
245	245	scribed in accordance with section 806, beginning on 12
246	246	the date that is 90 days after such regulations take 13
247	247	effect, a United States person that plans to engage 14
248	248	in a covered activity shall— 15
249	249	‘‘(A) if such covered activity is not a se-16
250	250	cured transaction, submit to the Secretary of 17
251	251	the Treasury a complete written notification of 18
252	252	the activity not later than 14 days before the 19
253	253	anticipated completion date of the activity; and 20
254	254	‘‘(B) if such covered activity is a secured 21
255	255	transaction, submit to the Secretary of the 22
256	256	Treasury a complete written notification of the 23
257	257	activity not later than 14 days after the comple-24
258	258	tion date of the activity. 25
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262	262	‘‘(2) CIRCULATION OF NOTIFICATION .— 1
263	263	‘‘(A) I
264	264	N GENERAL.—The Secretary shall, 2
265	265	upon receipt of a notification under paragraph 3
266	266	(1), promptly inspect the notification for com-4
267	267	pleteness. 5
268	268	‘‘(B) I
269	269	NCOMPLETE NOTIFICATIONS .—If a 6
270	270	notification submitted under paragraph (1) is 7
271	271	incomplete, the Secretary shall promptly inform 8
272	272	the United States person that submits the noti-9
273	273	fication that the notification is not complete 10
274	274	and provide an explanation of relevant material 11
275	275	respects in which the notification is not com-12
276	276	plete. 13
277	277	‘‘(3) I
278	278	DENTIFICATION OF NON -NOTIFIED ACTIV-14
279	279	ITY.—The Secretary shall establish a process to 15
280	280	identify covered activity for which— 16
281	281	‘‘(A) a notification is not submitted to the 17
282	282	Secretary under paragraph (1); and 18
283	283	‘‘(B) information is reasonably available. 19
284	284	‘‘(b) C
285	285	ONFIDENTIALITY OFINFORMATION.— 20
286	286	‘‘(1) I
287	287	N GENERAL.—Except as provided in para-21
288	288	graph (2), any information or documentary material 22
289	289	filed with the Secretary of the Treasury pursuant to 23
290	290	this section shall be exempt from disclosure under 24
291	291	section 552 of title 5, United States Code, and no 25
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295	295	such information or documentary material may be 1
296	296	made public by any government agency or Member 2
297	297	of Congress. 3
298	298	‘‘(2) E
299	299	XCEPTIONS.—The exemption from disclo-4
300	300	sure provided by paragraph (1) shall not prevent the 5
301	301	disclosure of the following: 6
302	302	‘‘(A) Information relevant to any adminis-7
303	303	trative or judicial action or proceeding. 8
304	304	‘‘(B) Information provided to Congress or 9
305	305	any of the appropriate congressional commit-10
306	306	tees. 11
307	307	‘‘(C) Information important to the national 12
308	308	security analysis or actions of the President to 13
309	309	any domestic governmental entity, or to any 14
310	310	foreign governmental entity of an ally or part-15
311	311	ner of the United States, under the direction 16
312	312	and authorization of the President or the Sec-17
313	313	retary, only to the extent necessary for national 18
314	314	security purposes, and subject to appropriate 19
315	315	confidentiality and classification requirements. 20
316	316	‘‘(D) Information that the parties have 21
317	317	consented to be disclosed to third parties. 22
318	318	‘‘SEC. 804. REPORTING REQUIREMENTS. 23
319	319	‘‘(a) I
320	320	NGENERAL.—Not later than 360 days after 24
321	321	the date on which the regulations prescribed under section 25
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325	325	806 take effect, and not less frequently than annually 1
326	326	thereafter, the Secretary of the Treasury shall submit to 2
327	327	the appropriate congressional committees a report that— 3
328	328	‘‘(1) lists all notifications submitted under sec-4
329	329	tion 803(a) during the year preceding submission of 5
330	330	the report and includes, with respect to each such 6
331	331	notification— 7
332	332	‘‘(A) basic information on each party to 8
333	333	the covered activity with respect to which the 9
334	334	notification was submitted; and 10
335	335	‘‘(B) the nature of the covered activity that 11
336	336	was the subject to the notification, including 12
337	337	the elements of the covered activity that neces-13
338	338	sitated a notification; 14
339	339	‘‘(2) includes a summary of those notifications, 15
340	340	disaggregated by sector, by covered activity, and by 16
341	341	country of concern; 17
342	342	‘‘(3) provides additional context and informa-18
343	343	tion regarding trends in the sectors, the types of 19
344	344	covered activities, and the countries involved in those 20
345	345	notifications; 21
346	346	‘‘(4) includes a description of the national secu-22
347	347	rity risks associated with— 23
348	348	‘‘(A) the covered activities with respect to 24
349	349	which those notifications were submitted; or 25
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353	353	‘‘(B) categories of such activities; and 1
354	354	‘‘(5) assesses the overall impact of those notifi-2
355	355	cations, including recommendations for— 3
356	356	‘‘(A) expanding existing Federal programs 4
357	357	to support the production or supply of covered 5
358	358	sectors in the United States, including the po-6
359	359	tential of existing authorities to address any re-7
360	360	lated national security concerns; 8
361	361	‘‘(B) investments needed to enhance cov-9
362	362	ered sectors and reduce dependence on coun-10
363	363	tries of concern regarding those sectors; and 11
364	364	‘‘(C) the continuation, expansion, or modi-12
365	365	fication of the implementation and administra-13
366	366	tion of this title, including recommendations 14
367	367	with respect to whether the definition of ‘coun-15
368	368	try of concern’ under section 801(2) should be 16
369	369	amended to add or remove countries. 17
370	370	‘‘(b) F
371	371	ORM OFREPORT.—Each report required by 18
372	372	this section shall be submitted in unclassified form, but 19
373	373	may include a classified annex. 20
374	374	‘‘(c) T
375	375	ESTIMONYREQUIRED.—Not later than one 21
376	376	year after the date of enactment of this title, and annually 22
377	377	thereafter, the Secretary of the Treasury and the Sec-23
378	378	retary of Commerce shall each provide to the Committee 24
379	379	on Banking, Housing, and Urban Affairs of the Senate 25
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383	383	and the Committee on Financial Services of the House of 1
384	384	Representatives testimony with respect to the national se-2
385	385	curity threats relating to investments by the United States 3
386	386	persons in countries of concern and broader international 4
387	387	capital flows. 5
388	388	‘‘SEC. 805. PENALTIES AND ENFORCEMENT. 6
389	389	‘‘(a) P
390	390	ENALTIESWITHRESPECT TO UNLAWFUL 7
391	391	A
392	392	CTS.—Subject to regulations prescribed in accordance 8
393	393	with section 806, it shall be unlawful— 9
394	394	‘‘(1) to fail to submit a notification under sub-10
395	395	section (a) of section 803 with respect to a covered 11
396	396	activity or to submit other information as required 12
397	397	by the Secretary of the Treasury; or 13
398	398	‘‘(2) to make a material misstatement or to 14
399	399	omit a material fact in any information submitted to 15
400	400	the Secretary under this title. 16
401	401	‘‘(b) E
402	402	NFORCEMENT.—The President may direct the 17
403	403	Attorney General to seek appropriate relief in the district 18
404	404	courts of the United States, in order to implement and 19
405	405	enforce this title. 20
406	406	‘‘SEC. 806. REQUIREMENT FOR REGULATIONS. 21
407	407	‘‘(a) I
408	408	NGENERAL.—Not later than 360 days after 22
409	409	the date of the enactment of this title, the Secretary of 23
410	410	the Treasury shall finalize regulations to carry out this 24
411	411	title. 25
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415	415	‘‘(b) ELEMENTS.—Regulations prescribed to carry 1
416	416	out this title shall include specific examples of the types 2
417	417	of— 3
418	418	‘‘(1) activities that will be considered to be cov-4
419	419	ered activities; and 5
420	420	‘‘(2) the specific sectors and subsectors that 6
421	421	may be considered to be covered sectors. 7
422	422	‘‘(c) R
423	423	EQUIREMENTS FOR CERTAINREGULATIONS.— 8
424	424	The Secretary of the Treasury shall prescribe regulations 9
425	425	further defining the terms used in this title, including ‘cov-10
426	426	ered activity’, ‘covered foreign entity’, and ‘party’, in ac-11
427	427	cordance with subchapter II of chapter 5 and chapter 7 12
428	428	of title 5 (commonly known as the ‘Administrative Proce-13
429	429	dure Act’). 14
430	430	‘‘(d) P
431	431	UBLICPARTICIPATION INRULEMAKING.—The 15
432	432	provisions of section 709 shall apply to any regulations 16
433	433	issued under this title. 17
434	434	‘‘(e) L
435	435	OW-BURDENREGULATIONS.—In prescribing 18
436	436	regulations under this section, the Secretary of the Treas-19
437	437	ury shall structure the regulations— 20
438	438	‘‘(1) to minimize the cost and complexity of 21
439	439	compliance for affected parties; 22
440	440	‘‘(2) to ensure the benefits of the regulations 23
441	441	outweigh their costs; 24
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445	445	‘‘(3) to adopt the least burdensome alternative 1
446	446	that achieves regulatory objectives; 2
447	447	‘‘(4) to prioritize transparency and stakeholder 3
448	448	involvement in the process of prescribing the regula-4
449	449	tions; and 5
450	450	‘‘(5) to regularly review and streamline existing 6
451	451	regulations to reduce redundancy and complexity. 7
452	452	‘‘SEC. 807. MULTILATERAL ENGAGEMENT AND COORDINA-8
453	453	TION. 9
454	454	‘‘(a) I
455	455	NGENERAL.—The President shall delegate the 10
456	456	authorities and functions under this section to the Sec-11
457	457	retary of State. 12
458	458	‘‘(b) A
459	459	UTHORITIES.—The Secretary of State, in co-13
460	460	ordination with the Secretary of the Treasury, the Sec-14
461	461	retary of Commerce, the United States Trade Representa-15
462	462	tive, and the Director of National Intelligence, shall— 16
463	463	‘‘(1) conduct bilateral and multilateral engage-17
464	464	ment with the governments of countries that are al-18
465	465	lies and partners of the United States to ensure co-19
466	466	ordination of protocols and procedures with respect 20
467	467	to covered activities with countries of concern and 21
468	468	covered foreign entities; and 22
469	469	‘‘(2) upon adoption of protocols and procedures 23
470	470	described in paragraph (1), work with those govern-24
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474	474	ments to establish mechanisms for sharing informa-1
475	475	tion, including trends, with respect to such activities. 2
476	476	‘‘(c) S
477	477	TRATEGY FORDEVELOPMENT OF OUTBOUND 3
478	478	I
479	479	NVESTMENTSCREENINGMECHANISMS.—The Secretary 4
480	480	of State, in coordination with the Secretary of the Treas-5
481	481	ury and in consultation with the Attorney General, shall— 6
482	482	‘‘(1) develop a strategy to work with countries 7
483	483	that are allies and partners of the United States to 8
484	484	develop mechanisms comparable to this title for the 9
485	485	notification of covered activities; and 10
486	486	‘‘(2) provide technical assistance to those coun-11
487	487	tries with respect to the development of those mech-12
488	488	anisms. 13
489	489	‘‘(d) R
490	490	EPORT.—Not later than 90 days after the de-14
491	491	velopment of the strategy required by subsection (b), and 15
492	492	annually thereafter for a period of 5 years, the Secretary 16
493	493	of State shall submit to the appropriate congressional 17
494	494	committees a report that includes the strategy, the status 18
495	495	of implementing the strategy, and a description of any im-19
496	496	pediments to the establishment of mechanisms comparable 20
497	497	to this title by allies and partners. 21
498	498	‘‘SEC. 808. AUTHORIZATION OF APPROPRIATIONS. 22
499	499	‘‘(a) I
500	500	NGENERAL.—There are authorized to be ap-23
501	501	propriated such sums as may be necessary to carry out 24
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503	503	kjohnson on DSK79L0C42PROD with BILLS 18
504	504	•S 2678 IS
505	505	this title, including to provide outreach to industry and 1
506	506	persons affected by this title. 2
507	507	‘‘(b) H
508	508	IRINGAUTHORITY.—The head of any agency 3
509	509	designated as a lead agency under section 802(b) may ap-4
510	510	point, without regard to the provisions of sections 3309 5
511	511	through 3318 of title 5, United States Code, not more 6
512	512	than 25 candidates directly to positions in the competitive 7
513	513	service (as defined in section 2102 of that title) in that 8
514	514	agency. The primary responsibility of individuals in posi-9
515	515	tions authorized under the preceding sentence shall be to 10
516	516	administer this title. 11
517	517	‘‘SEC. 809. RULE OF CONSTRUCTION WITH RESPECT TO 12
518	518	FREE AND FAIR COMMERCE. 13
519	519	‘‘Nothing in this title may be construed to restrain 14
520	520	or deter foreign investment in the United States, United 15
521	521	States investment abroad, or trade in goods or services, 16
522	522	if such investment and trade do not pose a risk to the 17
523	523	national security of the United States.’’. 18
524	524	Æ
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