Preventing Adversaries from Developing Critical Capabilities Act
This bill requires the President to (1) identify categories of technologies and products in certain advanced technology sectors that may pose a particularly acute threat to national security if developed or acquired by North Korea, China, Russia, or Iran; and (2) prohibit U.S. persons from engaging in transactions related to identified categories with those countries.
The Department of State should conduct bilateral and multilateral engagement with partners and allies to coordinate protocols and procedures to facilitate the prevention of such transactions.
Additionally, the President is authorized to exercise all emergency economic powers to implement this bill, including imposing sanctions on foreign persons.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6349 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 6349
To prohibit or require notification with respect to certain activities
of United States persons involving countries of concern, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 9, 2023
Mr. McCaul (for himself and Mr. Meeks) introduced the following bill;
which was referred to the Committee on Foreign Affairs
_______________________________________________________________________
A BILL
To prohibit or require notification with respect to certain activities
of United States persons involving countries of concern, 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 ``Preventing Adversaries from
Developing Critical Capabilities Act''.
SEC. 2. EXERCISE OF AUTHORITIES UNDER THE INTERNATIONAL EMERGENCY
ECONOMIC POWERS ACT.
(a) In General.--The President may exercise all authorities
provided under the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.) necessary to carry out the provisions of this Act,
including authorities to impose penalties under section 206 of such
Act.
(b) Delegation.--The President may delegate the authorities
described in subsection (a) to the head of any Federal agency the
President determines appropriate in order to carry out the provisions
of this Act.
SEC. 3. PROHIBITION ON COVERED ACTIVITIES IN COVERED SECTORS THAT POSE
PARTICULARLY ACUTE THREATS TO UNITED STATES NATIONAL
SECURITY.
(a) Identification of Categories of Technologies and Products.--
(1) In general.--Not later than one year after the date of
the enactment of this Act, and annually thereafter as described
in paragraph (2), the President--
(A) shall identify categories of technologies and
products in covered sectors that may pose a
particularly acute threat to the national security of
the United States if developed or acquired by a country
of concern; and
(B) publish a list of the categories of
technologies and products identified under paragraph
(1) in the Federal Register.
(2) Updates.--The President shall annually review and
update the list of the categories of technologies and products
identified under paragraph (1)(A) and update the Federal
Register under paragraph (1)(B) as appropriate.
(b) Prohibition on Covered Activities.--The President shall, on or
after the date on which the initial list of categories of technologies
and products is published in the Federal Register pursuant to
subsection (a)(1)(B), prescribe, subject to public notice and comment,
regulations to prohibit a United States person from engaging, directly
or indirectly, in a covered activity involving a category of
technologies and products on such list of categories of technologies
and products in a covered sector. Such regulations should--
(1) require that a United States person take all reasonable
steps to prohibit and prevent any transaction by a foreign
entity under the control of the United States person that would
be a prohibited transaction if engaged in by a United States
person; and
(2) exclude any transaction consisting of the acquisition
of an equity or other interest in an entity located outside a
country of concern, where the President has determined that the
government of the country in which that entity is established
or has its principal place of business has in place a program
for the restriction of certain activities involving countries
of concern that is comparable to the provisions provided for in
this Act.
(c) Sense of Congress.--It is the sense of Congress that the
covered sectors include certain categories of technologies and products
that would pose a particularly acute threat to the national security of
the United States if developed or acquired by a country of concern, and
that the President should identify certain technologies and products in
the covered sectors as categories of technologies and products in
covered sectors for purposes of subsection (a)(1).
SEC. 4. MANDATORY NOTIFICATION OF COVERED ACTIVITIES IN COVERED SECTORS
THAT MAY POSE THREATS TO UNITED STATES NATIONAL SECURITY.
(a) Identification of Categories of Technologies and Products.--Not
later than one year after the date of the enactment of this Act, the
President shall--
(1) identify categories of technologies and products in
covered sectors that may pose a threat to the national security
of the United States if developed or acquired by a country of
concern;
(2) publish a list of the categories of technologies and
products identified under paragraph (1) in the Federal
Register; and
(3) annually thereafter, review the categories of
technologies and products identified under paragraph (1) and
publish an updated list of the categories of technologies and
products in the Federal Register under paragraph (2) if the
list identified in paragraph (2) has changed.
(b) Mandatory Notification.--
(1) In general.--Beginning on the date that is 90 days
after the date on which the initial list of categories of
technologies and products is published in the Federal Register
pursuant to subsection (a)(2), a United States person engaging
in a covered activity involving a category identified in
subsection (a)(1), or controlling a foreign entity engaging in
an activity that would be a covered activity if engaged in by a
United States person, shall submit to the President a complete
written notification of the activity not later than 14 days
after the completion date of the activity.
(2) Circulation of notification.--
(A) In general.--The President shall, upon receipt
of a notification under paragraph (1), promptly inspect
the notification for completeness.
(B) Incomplete notification.--If a notification
submitted under paragraph (1) is incomplete, the
President shall promptly inform the United States
person that submits the notification that the
notification is not complete and provide an explanation
for relevant material respect in which the notification
is not complete.
(3) Identification of non-notified activity.--The President
shall establish a process to identify a covered activity
involving a category identified under subsection (a)(1) for
which--
(A) a notification is not submitted to the
President under paragraph (1); and
(B) information is reasonably available.
(c) Confidentiality of Information.--
(1) In general.--Except as provided in paragraph (2), any
information or documentary material filed with the President
pursuant to this section shall be exempt from disclosure under
section 552(b)(3) of title 5, United States Code, and no such
information or documentary material may be made public by any
government agency or Member of Congress.
(2) Exceptions.--Subject to appropriate confidentiality and
classification requirements, the exemption from disclosure
provided by paragraph (1) shall not prevent the disclosure of
the following:
(A) Information relevant to any administrative or
judicial action or proceeding.
(B) Information provided to Congress or any of the
appropriate congressional committees.
(C) Information important to national security
analysis or actions of the President to any domestic
government entity, or to any foreign governmental
entity of an ally or partner of the United States,
under the direction and authorization of the President,
only to the extent necessary for national security
purposes.
(D) Information that the parties have consented to
be disclosed to third parties.
SEC. 5. REPORTING REQUIREMENTS.
(a) In General.--Not later than one year after the date on which
the regulations prescribed under section 6 take effect, and not less
frequently than annually thereafter, the President shall submit to the
appropriate congressional committees a report that--
(1) lists all notifications submitted under section 4(b)
during the year preceding submission of the report,
disaggregated by--
(A) sector;
(B) covered activity;
(C) covered foreign entity; and
(D) country of concern;
(2) an assessment of whether to amend the regulations,
including whether to amend the definition of ``covered
sectors'' to enhance national security;
(3) provides additional context and information regarding
trends in the sectors, the types of covered activity, and the
countries involved in those notifications, including--
(A) the location of the relevant covered foreign
entities; and
(B) the country in which the United States person
or foreign entity controlled by such United States
person involved in the relevant covered activity is
located; and
(4) assesses the overall impact of those notifications,
including recommendations for--
(A) expanding existing Federal programs to support
the production or supply of covered sectors in the
United States, including the potential of existing
authorities to address any related national security
concerns; and
(B) the continuation, expansion, or modification of
the implementation and administration of this Act.
(b) Form.--Each report required by this section shall be submitted
in unclassified form, but may include a classified annex.
(c) Prohibition on Disclosure.--Information contained in each
report required by this section may be withheld from disclosure only to
the extent otherwise permitted by statute, except that all information
included pursuant to subsection (a)(1) shall be withheld from public
disclosure.
SEC. 6. REQUIREMENT FOR REGULATIONS.
(a) In General.--Not later than 180 days after the date on which
the initial list of categories of technologies and products have been
published in the Federal Register pursuant to sections 3(a)(1)(B) and
4(a)(2), the President shall prescribe and finalize proposed
regulations to carry out this Act.
(b) Elements.--Regulations prescribed to carry out this Act shall
specify--
(1) the types of activities that will be considered to be
covered activities;
(2) the technologies and products in covered sectors with
respect to which covered activities are prohibited under
section 3(b) or require a notification under section 4(b); and
(3) a process by which parties can ask questions and get
timely guidance as to whether a covered activity is prohibited
under section 3(b) or requires a notification under section
4(b).
(c) Requirements for Certain Regulations.--The President shall
prescribe regulations further defining the terms used in this Act,
including the terms ``covered activity'', ``covered foreign entity'',
and ``party'', to maximize the effectiveness of carrying out this Act
in accordance with subchapter II of chapter 5 and chapter 7 of title 5
(commonly known as the ``Administrative Procedure Act'').
(d) Public Notice and Comment.--Regulations issued pursuant to
subsection (a) shall be subject to public notice and comment.
(e) Low-Burden Regulations.--In prescribing regulations under this
section, the President shall, to the extent practicable, structure the
regulations--
(1) to minimize the cost and complexity of compliance for
affected parties;
(2) to ensure the benefits of the regulations outweigh
their costs;
(3) to adopt the least burdensome alternative that achieves
regulatory objectives;
(4) to prioritize transparency and stakeholder involvement
in the process of prescribing the regulations; and
(5) to regularly review and streamline existing regulations
promulgated pursuant to this Act to reduce redundancy and
complexity.
(f) Penalties With Respect to Unlawful Acts.--Regulations issued
under this section shall, consistent with the authority provided by
section 2(a), provide for the imposition of civil penalties for
violations of this section, that involve--
(1) engaging in a covered activity prohibited under section
3(b) pursuant to the regulations issued under this section;
(2) failing to submit a timely notification under section
4(b) with respect to a covered activity or to submit other
information as required by the designated agency; or
(3) submitting a material misstatement or omitting a
material fact in any information submitted in a notification
under section 4(b).
(g) Enforcement.--Consistent with the authority provided by section
2(a), the President may direct the Attorney General to seek appropriate
relief in the district courts of the United States, in order to
implement and enforce this Act.
(h) Congressional Notification.--The President shall submit to the
appropriate congressional committees all regulations prescribed to
carry out this Act not later than 30 days before such regulations are
to take effect.
SEC. 7. MULTILATERAL ENGAGEMENT AND COORDINATION.
(a) In General.--The President shall delegate the authorities and
functions under this section to the Secretary of State.
(b) Authorities.--The Secretary of State, in coordination with the
heads or other relevant Federal agencies, should--
(1) conduct bilateral and multilateral engagement with the
governments of countries that are allies and partners of the
United States to promote and increase coordination of protocols
and procedures to facilitate the effective implementation of
and appropriate compliance with the prohibitions and
notifications pursuant to this Act;
(2) upon adoption of protocols and procedures described in
paragraph (1), work with those governments to establish
mechanisms for sharing information, including trends, with
respect to such activities; and
(3) work with and encourage the governments of countries
that are allies and partners of the United States to develop
similar mechanisms of their own.
(c) Strategy for Multilateral Engagement and Coordination.--Not
later than 180 days after the date of the enactment of this Act, the
Secretary of State, in coordination with the heads of other relevant
Federal agencies, should--
(1) develop a strategy to work with the governments of
countries that are allies and partners of the United States to
develop mechanisms that are comparable to the prohibitions and
notifications pursuant to this Act; and
(2) assess opportunities to provide technical assistance to
those countries with respect to the development of those
mechanisms.
(d) Report.--Not later than one year after the date of the
enactment of this Act, and annually thereafter for 4 years, the
Secretary of State shall submit to the appropriate congressional
committees a report that includes--
(1) a discussion of any strategy developed pursuant to
subsection (c)(1), including key tools and objectives for the
development of comparable mechanisms by the governments of
allies and partners of the United States;
(2) a list of partner and allied countries to target for
cooperation in developing their own screening programs;
(3) the status of the strategy's implementation and
outcomes; and
(4) a description of impediments to the establishment of
comparable mechanisms by governments of allies and partners of
the United States.
SEC. 8. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There is authorized to be appropriated
$25,000,000, to be derived from amounts otherwise authorized to be
appropriated to the President, for each of the first two fiscal years
beginning on or after the date of the enactment of this Act, to carry
out this Act, including to provide outreach to industry and persons
affected by this Act.
(b) Hiring Authority.--
(1) President.--The President may appoint, without regard
to the provisions of sections 3309 through 3318 of title 5,
United States Code, not more than 15 candidates directly to
positions in the competitive service (as defined in section
2102 of that title).
(2) Agency.--The head of the Federal department or agency
designated under section 2(b) to hold primary responsibility
for administering this Act may appoint, without regard to the
provisions of sections 3309 through 3318 of title 5, United
States Code, not fewer than 25 candidates directly to positions
in the competitive service (as defined in section 2102 of that
title) of such department or agency.
(3) Primary responsibility.--The primary responsibility of
individuals in positions authorized to be hired under this
subsection shall be to administer this Act.
SEC. 9. RULE OF CONSTRUCTION.
Nothing in this Act may be construed to--
(1) restrain or deter United States activities abroad if
such activities do not pose a risk to the national security of
the United States; or
(2) alter or negate the authority of the President under
any authority, process, regulation, investigation, enforcement
measure, or review provided by or established under any other
provision of Federal law, or any other authority of the
President or the Congress under the Constitution of the United
States.
SEC. 10. NATIONAL INTEREST WAIVER.
(a) In General.--Subject to subsection (b), the President is
authorized to exempt from any applicable prohibition or notification
requirement any activity determined by the President, in consultation
with the heads of relevant Federal agencies, as appropriate, to be in
the national interest of the United States.
(b) Congressional Notification.--The President shall--
(1) notify the appropriate congressional committees not
later than 48 hours after issuing a waiver under subsection
(a); and
(2) include in such notification an identification of the
national interest justifying the use of the waiver.
SEC. 11. DEFINITIONS.
In this Act:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Affairs, the Committee
on Financial Services, the Committee on Ways and Means,
the Committee on Appropriations, and the Permanent
Select Committee on Intelligence of the House of
Representatives; and
(B) the Committee on Foreign Relations, the
Committee on Banking, Housing, and Urban Affairs, the
Committee on Finance, the Committee on Appropriations,
and the Select Committee on Intelligence of the Senate.
(2) Country of concern.--The term ``country of concern''--
(A) means--
(i) the Democratic People's Republic of
North Korea;
(ii) the People's Republic of China,
including the Hong Kong Special Administrative
Region and the Macau Special Administrative
Region;
(iii) the Russian Federation; and
(iv) the Islamic Republic of Iran; and
(B) includes any other country the President
determines necessary to ensure a country specified in
clause (i), (ii), (iii), or (iv) of subparagraph (A) is
unable to circumvent the provisions of this Act and the
regulations issued pursuant to this Act.
(3) Covered activity.--
(A) In general.--Subject to such regulations as may
be prescribed in accordance with section 7, and except
as provided in subparagraph (B), the term ``covered
activity'' means any activity engaged in by a United
States person that involves--
(i) an acquisition by such United States
person of an equity interest or contingent
equity interest, or monetary capital
contribution, in a covered foreign entity,
directly or indirectly, by contractual
commitment or otherwise, with the goal of
generating income or gain;
(ii) an arrangement for an interest held by
such United States person in the short- or
long-term debt obligations of a covered foreign
entity that includes governance rights that are
characteristic of an equity investment,
management, or other important rights;
(iii) the establishment of a wholly owned
subsidiary in a country of concern, such as a
greenfield investment, for the purpose of
production, design, testing, manufacturing,
fabrication, or development related to one or
more covered sectors;
(iv) the establishment by such United
States person of a joint venture in a country
of concern or with a covered foreign entity for
the purpose of production, design, testing,
manufacturing, fabrication, or research, or
other contractual or other commitments
involving a covered foreign entity to jointly
research and develop new innovation, including
through the transfer of capital or intellectual
property or other business proprietary
information; or
(v) the acquisition by a United States
person with a covered foreign entity of--
(I) operational cooperation, such
as through supply or support
arrangements;
(II) the right to board
representation (as an observer, even if
limited, or as a member) or an
executive role (as may be defined
through regulation) in a covered
foreign entity;
(III) the ability to direct or
influence such operational decisions as
may be defined through such
regulations;
(IV) formal governance
representation in any operating
affiliate, such as a portfolio company,
of a covered foreign entity; or
(V) a new relationship to share or
provide business services, such as
financial services, marketing services,
maintenance, or assembly functions; or
(vi) knowingly directing transactions by
foreign persons that would constitute covered
activity if engaged in by a United States
person.
(B) Exceptions.--The term ``covered activity'' does
not include--
(i) any transaction the value of which the
President determines is de minimis, as defined
in regulations prescribed in accordance with
section 6;
(ii) any category of transactions that the
President determines is in the national
interest of the United States, as may be
defined in regulations prescribed in accordance
with section 6;
(iii) an investment in--
(I) a publicly traded security (as
such term is defined in section
3(a)(10) of the Securities Exchange Act
of 1934); or
(II) an index fund, mutual fund,
exchange-traded fund, or a similar
instrument (including associated
derivatives) offered by an investment
company (as such term is defined in
section 3(a)(1) of the Investment
Company Act of 1940), or by a private
investment fund;
(III) a venture capital fund,
private equity fund, fund of funds, or
other pooled investment funds, as the
limited partner, in each case in which
the limited partner's contribution is
solely capital in a limited partnership
structure and--
(aa) the limited partner
cannot make managerial
decisions, is not responsible
for any debts beyond its
investment, and does not have
the ability (formally or
informally) to influence or
participate in the fund's or a
covered foreign entity's
decision making or operations;
and
(bb) the investment is
below a de minimis threshold to
be determined by the President;
(iv) the acquisition of the equity or other
interest owned or held by a covered foreign
entity in an entity or assets located outside
of a country of concern in which the United
States person is acquiring all interests in the
entity or assets held by covered foreign
entity;
(v) an intracompany transfer of funds from
a United States parent company to a subsidiary
located in a country of concern;
(vi) a transaction made pursuant to a
binding, uncalled capital commitment entered
into before the date on which the regulations
prescribed in accordance with section 6 take
effect; or
(vii) any ordinary or administrative
business transaction as may be defined in such
regulations.
(4) Covered foreign entity.--Subject to regulations
prescribed in accordance with section 6, the term ``covered
foreign entity'' means the following:
(A) Any entity that is incorporated in, has a
principal place of business in, or is organized under
the laws of a country of concern.
(B) Any entity the equity securities of which are
traded in the ordinary course of business on one or
more exchanges in a country of concern.
(C) Any agency or instrumentality of the government
of a country of concern.
(D) Any other entity that is not a United States
person and that meets such criteria as may be specified
by the President in such regulations prescribed in
accordance with section 6.
(5) Covered sectors.--Subject to regulations prescribed in
accordance with section 6, the term ``covered sectors''
includes sectors within the following areas:
(A) Semiconductors and microelectronics.
(B) Artificial intelligence.
(C) Quantum information science and technology.
(D) Hypersonics.
(E) High-performance computing and supercomputing.
(6) Party.--The term ``party'', with respect to an
activity, has the meaning given that term in regulations
prescribed in accordance with section 7.
(7) United states person.--The term ``United States
person'' means--
(A) an individual who is a United States citizen or
an alien lawfully admitted for permanent residence to
the United States; or
(B) an entity organized under the laws of the
United States or of any jurisdiction within the United
States, including any foreign branch of such an entity.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Foreign Affairs.
Committee Consideration and Mark-up Session Held
Ordered to be Reported by Voice Vote.
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