June 16, 2022


The United States Innovation and Competition Act (USICA) and America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (America COMPETES) Act Conferees continue to negotiate differences between the House and Senate versions of their respective bills. In May, lawmakers outlined the conference schedule for May and June, with plans to report the final version out of conference by June 20 – though that timeline will not be met, as the conference has already missed its deadline of May 25 for Professional Staff and Counsel to “close out” all legislative items. Officials close to the conference process have indicated that the bill may not be ready until late August. There are still key differences between the House-passed America COMPETES Act and the Senate-passed USICA including how to prioritize research funding. USICA would allocate most of its funding to the National Science Foundation (NSF) while the America COMPETES Act would allocate its funding to the Department of Energy. Other key differences include provisions providing pathways for immigration, provisions on climate spending, and provisions on trade and tariffs. Here are five key questions about the process moving forward.

1 – What is the likelihood of passage for a broad agreement?  The conference committee has been moving relatively slowly given the predicted timeline. The longer the conference process takes, the louder the calls will grow to separate out the more popular and business-friendly provisions into a stand-alone bill. This week, Congressional leaders, led by Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) have been moving to narrow the scope of the package, in an effort to produce a final product before the August recess. This step is largely driven by the concern that the longer negotiations drag out, the increased likelihood that nothing will get done this Congress. House Majority Leader Steny Hoyer (D-MD) said that he sees the bill moving before August, as Democrats continue resolving differences. Pelosi and Schumer will meet this weekend in hopes of resolving key differences. Lastly, the longer the conference drags on, the less likely Republicans are to compromise and provide President Biden and Congressional Democrats a legislative victory.

2 – If a bill passes, will it look more like the Senate or House version?  After the Senate took the procedural steps to move the conference process forward, more than 100 conferees were named including 80 conferees from the House. Many of the House members will push for their priorities, however, it is important to be mindful that 18 Republican Senators crossed the aisle to support this package, and Sen. Bernie Sanders (I-VT) is unlikely to support the final package. This means Senate Democrats must secure at least 11 GOP votes to pass the final version. There are some stark differences that must be resolved before a final product can be voted on. Both bills include similar statements of purpose for the program and focus on technology development, job creation, and expanding U.S. innovation capacity, with the House bill emphasizing inclusive innovation. But there are differences in technology hub priorities, funding for research, and some eligibility and oversight requirements.

3 – If no agreement occurs, will CHIPS Act move separately? One of the most sought-after provisions in this process is the CHIPS Act, which aims to increase American competitiveness by subsidizing new investment in domestic semiconductor manufacturing capacity. The CHIPS Act does this by providing $52 billion in federal funding to support investment in semiconductor manufacturing capacity. The main funding mechanism is tax credits for companies who meet certain criteria, or direct spending on R&D by some government agencies. Given the shortage of semiconductor chips over the past few years impacting consumer sales on everything from cars to phones to washing machines, and concerns over China’s technological ambitions, there is bipartisan and bicameral resolve to increase the supply of American-made semiconductors. If the CHIPS Act language is stripped out and moves on its own, roughly $50 billion would be allocated for the Commerce Department to carry out the semiconductor incentive program. This has become a key priority for many, including the Biden administration, with Commerce Secretary Raimondo being an especially vocal proponent for the semiconductor incentives. However, if CHIPS were to move separately, many members fear they would lose leverage for their other priorities in the broader package. Therefore, it may be highly unlikely that decoupling the package becomes a viable option.

4 – What happens to the riders? Following the House passage of the China Competition bill, Senate Minority Leader Mitch McConnell (R-KY) released a statement that addressed his concerns about riders, or extraneous policy provisions. In his statement, McConnell stated that “From Green New Deal follies to Big Labor handouts to marijuana banking, the House Democrats’ competing bill drags these efforts leftward and backward. The Senate must now restore a product that reflects what passed this chamber with bipartisan support.” McConnell’s objections highlight the leverage Senate Republicans currently have, knowing that whatever comes out of conference will need their support again. With Senate Democrats constrained by the need to keep at least 11 GOP votes, assuming no more defections, controversial riders that do not have full support within the Senate Democratic caucus are unlikely to gain momentum.

5 – What China components are still in play?  Two of the more significant China-related provisions are the outbound investments screening language and the modifications to the Holding Foreign Companies Accountable Act (HFCAA). An updated outbound investment language was recently proposed by Sens. Bob Casey (D-PA) and John Cornyn (R-TX), and Reps. Rosa DeLauro (D-CT), Bill Pascrell (D-NJ), Michael McCaul (R-TX), Brian Fitzpatrick (R-PA), and Victoria Spartz (R-IN) as a mechanism that would follow a similar model at the Committee on Foreign Investment in the U.S. (CFIUS), focused on regulating outbound investments in ‘critical capabilities’ made by U.S. individuals or entities to foreign entities in specific countries of concern, like China. The White House has also stated its support for an outbound investment screening mechanism, so it would be unsurprising to see this priority return if the conference process does lead nowhere. The HFCAA modifications, offered by Sen. John Kennedy (R-LA) and Reps. Brad Sherman (D-CA), Andy Barr (R-KY) and Spartz, would shorten the potential delisting timeline from three to two years for U.S. listed Chinese companies in violation of U.S. audit regulations.