Senate’s U.S. Tech Bill Takes Shape

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The combined legislation Senate committees have crafted to address the United States’ (U.S.) technology industry debuted in the Senate.

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One of the few things on which Republicans and Democrats can agree is that action is needed against the People’s Republic of China (PRC).

Cocktail Party

The Senate is moving closer to sending a massive package to the House that would provide more than $50 billion for semiconductor incentives and programs and authorize more than $100 billion for a range of research and development programs. The impetus for the legislation is to ensure the U.S. maintains its place as the dominant power around the globe, especially in areas where the PRC has been encroaching.

Meeting

The Senate Majority Leader has pulled together a number of bills into a lengthy package of provisions that would ask the Biden Administration with implementing many new programs and initiatives. Odds of Senate passage look good, and the House may follow suit.

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Senate Majority Leader Chuck Schumer (D-NY) filed the consolidated tech bill, named the “United States Innovation and Competition Act of 2021” as a substitute amendment to S.1260. This new bill brings together the “Endless Frontier Act” (S.1260), the “Strategic Competition Act Of 2021” (S.1169) the “Securing America’s Future Act” (i.e., a number of bills the Senate Homeland Security and Governmental Affairs Committee marked up and reported out), and the “Meeting The China Challenge Act Of 2021.”

The impetus for the bill is succinctly explained in the U.S.-China Economic and Security Review Commission’s recent annual report to Congress:

In China’s most recent industrial policy wave, set by the 2016 Innovation-Driven Development Strategy, which includes the Made in China 2025 plan, policymakers have promoted the development of China’s digital ecosystem and accompanying regulatory architecture. The CCP believes China faces a rare historic opportunity to establish control over a cluster of revolutionary, networked technologies, including high-speed internet, sensors, telecommunications, artificial intelligence, robotics, and smart city infrastructure. Doing so could allow Beijing to leapfrog the United States and other powerful competitors and lead in the next generation of global innovation.

The Congressional Research Service (CRS) created this infographic to explain the PRC’s focus for the Made in China 2025 plan:

CRS further stated:

• The plan prioritizes upgrading manufacturing through advances in technology innovation (smart manufacturing) and manufacturing-tied services. Specifically, China aims to:
  • By 2025. Boost manufacturing quality, innovation, and labor productivity; obtain an advanced level of technology integration; reduce energy and resource consumption; and develop globally competitive firms and industrial centers.
  • By 2035. Reach parity with global industry at intermediate levels, improve innovation, make major breakthroughs, lead innovation in specific industries, and set global standards.
  • By 2049. Lead global manufacturing and innovation with a competitive position in advanced technology and industrial systems. (This date coincides with the 100th anniversary of the founding of the People’s Republic of China.)

It is against the backdrop of PRC plans to leapfrog the U.S. in key technologies, this legislation has come together. Of course, there are a number of other U.S.-PRC issues the bill addresses, and many non-PRC specific technology provisions.

There appears to be broad support for this package. Earlier this week, the Senate voted 86-11 on a key procedural vote, suggesting widespread support for the package. If it clears the Senate, it will go to the House, which will likely add provisions of its own, necessitating a reconciling of the two bills.

Given the length of the package, this article will only tackle the first three parts of the bill, leaving the rest for tomorrow.

Title A of the package would appropriate $50.2 billion over five years for the “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund Act” included in the FY 2021 National Defense Authorization Act (P.L. 116-283), a measure designed to create incentives and provide assistance to revitalize the U.S. semiconductor industry. $39 billion would go to the Department of Commerce to provide financial incentives, and $11.2 billion would be provided to the White House’s National Science and Technology Council for advanced microelectronics research and development. The bill also establishes a Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Defense Fund per a provision in the CHIPS Act “to provide for research, development, test and evaluation, workforce development, and other requirements that are unique to the Department of Defense and the intelligence community.” This program would be given $400 million a year for five years. Likewise, this part of the bill also creates a Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America International Technology Security and Innovation Fund and appropriates $100 million a year for five years. There is also language revising the CHIPS Act as enacted in the FY 2021 NDAA.

This section of the bill would also appropriate $1.5 billion for the Public Wireless Supply Chain Innovation Fund, another program enacted in the FY 2021 NDAA. This funding level meets the April 2021 request of its sponsors. They claimed this fund and the Multilateral Telecommunications Security Fund “provide critical foundations for  robust, secure, and efficient fifth-generation (5G) networks, and will be integral to the ability of the U.S. and its allies to adopt Open Radio Access Network (Open RAN) equipment at a scale necessary to compete with the equipment vendors of our strategic rivals, including China.” He bill does not appear to explicitly fund the Multilateral Telecommunications Security Fund, however.

Title B is the “Endless Frontier Act” as the Senate Commerce, Science, and Transportation Committee altered it. This portion of the bill would still establish a number of grant and awards programs to disburse the more than $100 billion the bill authorizes for a range of programs to stimulate research, development, and application in a number of key tech fields.

The Office of Science and Technology Policy (OSTP) would convene an interagency working group through the National Science and Technology Council “to ensure that the activities of different Federal agencies enhance and complement, but, as appropriate, do not duplicate, efforts being carried out by another Federal agency” with respect to the activities authorized and directed by the bill carried out by the

• National Science Foundation (NSF) and the newly created Directorate for Technology and Innovation (DTI)
• Department of Commerce (Commerce)
• Department of Energy (Energy)

This interagency group must report in six months that assesses existing and current federal science and research efforts, identifies areas of overlap and potential areas of cooperation and funding, and solicits stakeholder views.

NSF and Energy would need annually review the initial list of key technologies with other key agencies and revise as necessary:

• Artificial intelligence, machine learning, autonomy, and related advances.
• High performance computing, semiconductors, and advanced computer hardware and software.
• Quantum information science and technology.
• Robotics, automation, and advanced manufacturing.
• Natural and anthropogenic disaster prevention or mitigation.
• Advanced communications technology and immersive technology.
• Biotechnology, medical technology, genomics, and synthetic biology.
• Data storage, data management, distributed ledger technologies, and cybersecurity, including biometrics.
• Advanced energy and industrial efficiency technologies, such as batteries and advanced nuclear technologies, including but not limited to for the purposes of electric generation (consistent with section 15 of the National Science Foundation Act of 1950 (42 U.S.C. 1874).
• Advanced materials science, including composites and 2D materials.

NSF and Energy must also “deliver a report to Congress detailing—

(1) the key technology focus areas and rationale for their selection;

(2) the role of the Foundation, the Department of Energy, and other Federal entities, as relevant, in advancing the key technology focus areas; and

(3) the impact, including to the academic research community, of any changes to the key technology focus areas.

The NSF and Energy must also coordinate with the Office of Management and Budget (OMB) to “submit as part of their annual budget requests to Congress, a detailed description of the activities to be funded under this division, including an explanation of how the requested funding is complementary and not redundant of programs, efforts, and infrastructure undertaken or supported by other relevant Federal agencies.”

The NSF must establish the DTI to achieve these goals:

• Strengthening the leadership of the United States in critical technologies, including as relevant to the critical national needs described in section 7018 of the America COMPETES Act (42 U.S.C. 1862o–5).
• Addressing and mitigating technology challenges integral to the geostrategic position of the United States through the activities authorized by this title.
• Enhancing the competitiveness of the United States by improving education in the key technology focus areas and attracting more students to such areas at all levels of education.
• Accelerating the translation and development of scientific advances in the key technology focus areas into processes and products in the United States.
• Utilizing the full potential of the United States workforce by avoiding undue geographic concentration of research and development and education funding across the United States, and encouraging broader participation in the key technology focus areas by populations underrepresented in STEM.
• Ensuring the programmatic work of the Directorate and Foundation incorporates a workforce perspective from labor organizations and workforce training organizations.

This title authorizes $81 billion for the NSF and the new DTI that Congress will need to actually appropriate, meaning these programs could possibly be funded at a lower level. Energy would also be authorized funds ($16.9 billion) to carry out the new responsibilities that the appropriations committees would have to separately appropriate.

The DTI is charged with executing a range of activities that will ideally foster technology research, development, and deployment in the U.S. The NSF Director will appoint an Assistant Director to head the DTI and also program directors for programs inside the DTI.

The NSF “shall establish a program in the [DTI] to make awards, through a competitive selection process, to eligible entities to establish university technology centers.” The purpose of this new program is to:

• conduct multi-disciplinary, collaborative basic and applied research, relevant to at least one of the key technology focus areas;
• leverage the expertise of multi-disciplinary and multi-sector partners, including partners from private industry;
• further the development, deployment, and commercialization of innovations, including inventions, in the key technology focus areas, including those derived from the activities of the university technology center; and
• support the development of scientific, innovation, entrepreneurial, and educational capacity within the region of the university technology center.

Universities, non-profits, and consortia consisting of universities, and other entities may apply for funding under this program to set up university technology centers.

The NSF must also “establish innovation institutes to further the research, development, and commercialization of innovation in the key technology focus areas,” and each such institute must be a partnership of two or more of the following: universities, non-profit entities, for profit entities, a federal entity, or others deemed vital to the success of the program by the NSF.

The NSF must “fund undergraduate scholarships (including at community colleges), graduate fellowships and traineeships, and postdoctoral awards in the key technology focus areas” subject to the detailed criteria in this title of the bill.

The NSF will also award funds “for research and technology development within the key technology focus areas” for which applicants will compete. Entities eligible to apply are “institutions of higher education, research institutions, non-profit entities, private sector entities, consortia, or other entities as defined by” the NSF.

The NSF will coordinate with the National Institute of Standards and Technology (NIST), Energy and other agencies to “establish a program in the DTI to make awards, on a competitive basis, to institutions of higher education, nonprofit organizations, or consortia…to establish and operate test beds, which may include fabrication facilities and cyberinfrastructure, to advance the development, operation, integration, deployment, and, as appropriate, demonstration of new, innovative technologies in the key technology focus areas, which may include hardware or software.” NSF and NIST will “make awards, on a competitive basis, to eligible entities to advance the development and commercialization of technologies, particularly those in the key technology focus areas.”

The NSF must also award funds to minority and underserved institutions “to support the mission of the [DTI] and to build institutional research capacity.”

Among other new duties, the NSF must also

• establish a 5-year pilot program for awarding grants to eligible partnerships, led by 1 or more emerging research institutions, to build research and education capacity at emerging research institutions to enable such institutions to contribute to programs run by the [DTI].
• provide grants on a merit-reviewed, competitive basis to institutions of higher education or nonprofit organizations (or a consortium thereof) for research and development to advance innovative approaches to support and sustain high-quality STEM teaching in rural schools.
• conduct multiple pilot programs within the Foundation to expand the number of institutions of higher education (including such institutions that are community colleges), and other eligible entities that the Director determines appropriate, that are able to successfully compete for Foundation grants.
• establish a Federal artificial intelligence scholarship-for-service program (referred to in this section as the Federal AI Scholarship-for-Service Program) to recruit and train artificial intelligence professionals to lead and support the application of artificial intelligence to the missions of Federal, State, local, and Tribal governments.

This title also consists of the following bills, many of which were added during the Senate Commerce, Science, and Transportation’s markup.

• Quantum Network Infrastructure and Workforce Development Act
• Supporting Early-Career Researchers Act
• Advancing Precision Agriculture Capabilities Act
• Critical Minerals Mining Research
• Bioeconomy Research and Development Act Of 2021

NSF must also “establish and maintain a research security and policy office within the Office of the Director” and its functions “shall be to coordinate all research security policy issues across the Foundation.” In a related direction, the NSF will “enter into an agreement with a qualified independent organization to establish a research security and integrity information sharing analysis organization (RSI-ISAO)” to help safeguard research across the NSF and for universities, non-profits, and small and medium sized businesses.

OSTP must “publish and widely distribute a uniform set of policy guidelines for Federal science agencies regarding foreign government talent recruitment programs” that aims to prevent the People’s Republic of China, the Democratic People’s Republic of Korea, the Russian Federation, or the Islamic Republic of Iran from accessing or participating in U.S. research funding or activities. The agency must also “shall develop a plan to—

(1) identify research areas that may include sensitive or controlled information, including in the key technology focus areas; and

(2) provide for background screening, as appropriate, for individuals working in such research areas who are employees of the Foundation or recipients of funding from the Foundation.”

NIST is directed to “disseminate and make publicly available resources to help research institutions and institutions of higher education identify, protect the institution involved from, detect, respond to, and recover to manage the cybersecurity risk of the institution involved related to conducting research.”

Commerce is tasked with establishing a program to encourage and develop U.S. talent to participate in international standards setting organizations.

Commerce would administer a grant program to regional technology hubs to encourage cooperation among a range of U.S. entities to

• to encourage new and constructive collaboration among local, State, and Federal government entities, academia, the private sector, economic development organizations, and labor organizations;
• to support eligible consortia in the creation of regional innovation strategies;
• to designate eligible consortia as regional technology hubs and facilitate activities by consortia designated as regional technology hubs in implementing their regional innovation strategies, in order—
  • to enable United States leadership in technology and innovation sectors critical to national and economic security;
  • to support regional economic development, including in small cities and rural areas, and diffuse innovation around the United States; and
  • to support domestic job creation and broad-based economic growth; and
• to ensure that the regional technology hubs address the intersection of emerging technologies and either local and regional challenges or national challenges; and
• to conduct ongoing research, evaluation, analysis, and dissemination of best practices for regional development and competitiveness in technology and innovation.

The bill would authorize appropriations for Commerce and NIST to get $1.2 billion to administer an existing program, the Manufacturing USA Program.

OSTP would need to “develop or revise a national strategy to improve the national competitiveness of the United States in science, research, and innovation to support the national security strategy” and submit it to Congress. Commerce would also be directed “to enter into an agreement with the National Academies of Sciences, Engineering, and Medicine to conduct a study—

• to identify the 10 most critical emerging science and technology challenges facing the United States; and
• to develop recommendations for legislative or administrative action to ensure United States leadership in matters relating to such challenges.”

Commerce would be tasked with establishing “a supply chain resiliency and crisis response program”

Other provisions would establish a new position and office in the Executive Office of the President. There would be a Chief Manufacturing Officer subject to Senate confirmation who would head the new Office of Manufacturing and Industrial Innovation Policy. This official would “report to the President, and such agencies within the Executive Office of the President and the Director of the National Economic Council, as may be appropriate, on issues regarding and impacting manufacturing and industrial innovation efforts of the Federal Government, or of the private sector, that require attention at the highest levels of the Federal Government.” Likewise, a new Federal Strategy and Coordinating Council on Manufacturing and Industrial Innovation would be created.

There is also language establishing a requirement for all goods sold online to have country of origin labeling information for consumers and violations of this requirement or misrepresentations would be subject to enforcement under Section 5 of the Federal Trade Commission (FTC) Act.

The National Telecommunications and Information Administration (NTIA) would be directed to make grants to establish or expand internet exchange facilities. NTIA “shall award grants to States and Indian Tribes to build infrastructure and acquire necessary equipment to establish or expand an open-access, carrier-neutral submarine cable landing station that serves a military facility.” NTIA “shall establish an applied research open network architecture testbed at the Institute for Telecommunication Sciences of the NTIA to develop and demonstrate net- work architectures and applications, equipment integration and interoperability at scale, including—

• Open Radio Access Network (commonly known as ‘‘Open-RAN’’) technology;
• Virtualized Radio Access Network (commonly known as ‘‘vRAN’’) technology; and
• cloud native technologies that replicate telecommunications hardware as software-based virtual network elements and functions.”

The fifth title of the Endless Frontier Act pertains to space matters that includes a National Aeronautics and Space Administration reauthorization. Notably, a provision requires the NASA Administrator “update and improve the cybersecurity of NASA space assets and supporting infrastructure.”

Division C of the United States Innovation and Competition Act of 2021 is the “Strategic Competition Act of 2021,” legislation marked up and reported by the Senate Foreign Relations Committee in April. Consequently, much of the bill seeks to refashion and redirect U.S. foreign policy to address the rise of the PRC. In the first finding of the bill, it is argued:

The PRC is leveraging its political, diplomatic, economic, military, technological, and ideological power to become a strategic, near-peer, global competitor of the United States. The policies increasingly pursued by the PRC in these domains are contrary to the interests and values of the United States, its partners, and much of the rest of the world.

This title of the bill has some technological aspects of U.S. foreign policy. For example, the Department of State (State) “is authorized to establish a program to facilitate the contracting by the Department of State for the professional services of qualified experts, on a reimbursable fee for service basis, to assist interested United States persons and business entities with supply chain management issues related to the PRC.” State is also “authorized to establish a program, to be known as the ‘‘Digital Connectivity and Cybersecurity Partnership’’ to help foreign countries—

• expand and increase secure Internet access and digital infrastructure in emerging markets;
• protect technological assets, including data;
• adopt policies and regulatory positions that foster and encourage open, interoperable, reliable, and secure internet, the free flow of data, multi-stakeholder models of internet governance, and pro-competitive and secure information and communications technology (ICT) policies and regulations;
• promote exports of United States ICT goods and services and increase United States company market share in target markets;
• promote the diversification of ICT goods and supply chain services to be less reliant on PRC imports; and
• build cybersecurity capacity, expand interoperability, and promote best practices for a national approach to cybersecurity.”

In the same vein, the United States International Development Finance Corporation shall submit to Congress “a strategy for support of private sector digital investment that—

• includes support for information- connectivity projects, including projects relating to telecommunications equipment, mobile payments, smart cities, and undersea cables;
• in providing such support, prioritizes private sector projects—
  • of strategic value to the United States;
  • of mutual strategic value to the United States and allies and partners of the United States; and
  • that will advance broader development priorities of the United States;
• helps to bridge the digital gap in less developed countries and among women and minority communities within those countries;
• facilitates coordination, where appropriate, with multilateral development banks and development finance institutions of other countries with respect to projects described in paragraph (1), including through the provision of co-financing and co-guarantees; and
• identifies the human and financial resources available to dedicate to such projects and assesses any constraints to implementing such projects.”

This title also has provisions to address PRC information warfare. There is language authorizing $100 million per year over five years for the United States Agency for Global Media “to support local media, build independent media, combat Chinese disinformation inside and outside of China, invest in technology to subvert censorship, and monitor and evaluate these programs.” State “shall support and train journalists on investigative techniques necessary to ensure public accountability related to the Belt and Road Initiative, the PRC’s surveillance and digital export of technology, and other influence operations abroad direct or directly supported by the Communist Party or the Chinese government.” $150 million is authorized for State’s Global Engagement Center to “expand its coordinating capacity through the exchange of liaison officers with Federal departments and agencies that manage aspects of identifying and countering foreign disinformation.”

There are provisions on U.S. foreign policy in the Indo-Pacific region to direct the strengthening of U.S. relationships to counter the PRC.

A new Technology Partnership Office would be established at State for “creating, overseeing, and carrying out technology partnerships with countries and relevant political and economic unions.”

The bill provides that “The President shall establish an interagency Working Group, which shall include representatives of the Department of State, the Department of Defense, the Office of the Director of National Intelligence, and such other agencies of the United States Government as the President considers appropriate, on means to counter PRC cyber aggression with respect to Africa.”

Moreover, there are provisions to address the PRC’s “Great Firewall:”

• The Secretary of State is authorized to establish a working group to develop a strategy to bolster internet resiliency and online access in Hong Kong. The Secretary shall establish a Hong Kong Internet Freedom Program in the Bureau of Democracy, Human Rights, and Labor at the Department of State. Additionally, the President of the Technology Fund is authorized to establish a Hong Kong Internet Freedom Program. These programs shall operate independently, but in strategic coordination with other entities in the working group. The Open Technology Fund shall remain independent from Department of State direction in its implementation of this, and any other Internet Freedom Programs.
• The Secretary of State, working through the Bureau of Democracy, Human Rights, and Labor, and the Open Technology Fund, separately and independently from the Secretary of State, are authorized to award grants and contracts to private organizations to support and develop programs in Hong Kong that promote or expand—
  • open, interoperable, reliable and secure internet; and
  • the online exercise of human rights and fundamental freedoms of individual citizens, activists, human rights defenders, independent journalists, civil society organizations, and marginalized populations in Hong Kong.

State must also create an intellectual property violators list that identifies—

• all centrally administered state-owned enterprises incorporated in the People’s Republic of China that have benefitted from—
  • a significant act or series of acts of intellectual property theft that subjected a United States economic sector or particular company incorporated in the United States to harm; or
  • an act or government policy of involuntary or coerced technology transfer of intellectual property ultimately owned by a company incorporated in the United States; and
• any corporate officer of, or principal shareholder with controlling interests in, an entity described in paragraph (1).

State must compile a separate list and update it annually that “identifies—

• subsidies provided by the PRC government to enterprises in the PRC; and
• discriminatory treatment favoring enterprises in the PRC over foreign market participants.

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