ORE Act

I 116TH CONGRESS 2D SESSION H. R. 7812 To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment is made in property used to extract critical minerals and metals from the United States, to modify the prohibition on the acquisition of certain sensitive materials from non- allied foreign nations, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 29, 2020 Mr. JOYCE of Pennsylvania introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment is made in property used to extract critical minerals and metals from the United States, to modify the prohibition on the acquisition of certain sensitive materials from non- allied foreign nations, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7812 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Onshoring Rare 2 Earths Act of 2020’’ or the ‘‘ORE Act’’. 3 SEC. 2. PERMANENT FULL EXPENSING FOR PROPERTY 4 USED TO EXTRACT CRITICAL MINERALS AND 5 METALS WITHIN THE UNITED STATES. 6 (a) IN GENERAL.—Section 168(k) of the Internal 7 Revenue Code of 1986 is amended by adding at the end 8 the following: 9 ‘‘(11) SPECIAL RULE FOR PROPERTY USED IN 10 THE EXTRACTION OF CRITICAL MINERALS AND MET- 11 ALS WITHIN THE UNITED STATES.— 12 ‘‘(A) IN GENERAL.—In the case of any 13 qualified property which is directly involved in 14 extracting critical minerals and metals from de- 15 posits in the United States— 16 ‘‘(i) paragraph (2)(A)(iii) shall not 17 apply, and 18 ‘‘(ii) the applicable percentage shall be 19 100 percent. 20 ‘‘(B) CRITICAL MINERALS AND METALS.— 21 For purposes of this paragraph, the term ‘crit- 22 ical minerals and metals’ means cerium, cobalt, 23 dysprosium, erbium, europium, gadolinium, 24 graphite, holmium, lanthanum, lithium, lute- 25 tium, manganese, neodymium, praseodymium, 26 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7812 IH promethium, samarium, scandium, terbium, 1 thulium, ytterbium, and yttrium.’’. 2 (b) EFFECTIVE DATE.—The amendment made by 3 this section shall apply to property placed in service after 4 December 31, 2019. 5 SEC. 3. PERMANENT FULL EXPENSING FOR NONRESIDEN- 6 TIAL REAL PROPERTY USED IN THE EXTRAC- 7 TION OF CRITICAL MINERALS AND METALS 8 WITHIN THE UNITED STATES. 9 (a) IN GENERAL.—Section 168 of the Internal Rev- 10 enue Code of 1986 is amended by adding at the end the 11 following new subsection: 12 ‘‘(n) SPECIAL ALLOWANCE FOR NONRESIDENTIAL 13 REAL PROPERTY USED IN THE EXTRACTION OF CRITICAL 14 MINERALS AND METALS WITHIN THE UNITED STATES.— 15 ‘‘(1) NEW STRUCTURES.—In the case of any 16 qualified real property— 17 ‘‘(A)(i) if such property is placed in service 18 on or after the date of enactment of this sub- 19 section, the depreciation deduction provided by 20 section 167(a) for the taxable year in which 21 such property is placed in service shall include 22 an allowance equal to 100 percent of the ad- 23 justed basis of such property, or 24 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7812 IH ‘‘(ii) if such property was placed in service 1 before the date of enactment of this subsection, 2 the depreciation deduction provided by section 3 167(a) for the first taxable year beginning after 4 such date shall include an allowance equal to 5 100 percent of the adjusted basis of such prop- 6 erty, and 7 ‘‘(B) the adjusted basis of such property 8 shall be reduced by the amount of such deduc- 9 tion before computing the amount otherwise al- 10 lowable as a depreciation deduction under this 11 chapter for such taxable year and any subse- 12 quent taxable year. 13 ‘‘(2) QUALIFIED REAL PROPERTY.—For pur- 14 poses of this subsection, the term ‘qualified real 15 property’ means any nonresidential real property 16 which is directly involved in extracting critical min- 17 erals and metals (as defined in subsection 18 (k)(11)(B)) from deposits in the United States.’’. 19 (b) EFFECTIVE DATE.—The amendment made by 20 this section shall apply to taxable years beginning after 21 December 31, 2019. 22 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7812 IH SEC. 4. DEDUCTION FOR PURCHASE OF CRITICAL MIN- 1 ERALS AND METALS EXTRACTED WITHIN THE 2 UNITED STATES. 3 (a) IN GENERAL.—Part VI of subchapter B of chap- 4 ter 1 of the Internal Revenue Code of 1986 is amended 5 by inserting after section 176 the following new section: 6 ‘‘SEC. 177. DEDUCTION FOR PURCHASE OF CRITICAL MIN- 7 ERALS AND METALS EXTRACTED WITHIN THE 8 UNITED STATES. 9 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 10 allowed as a deduction for the taxable year an amount 11 equal to 200 percent of the cost paid or incurred by the 12 taxpayer for the purchase or acquisition of critical min- 13 erals and metals (as defined in section 168(k)(11)(B)) 14 which have been extracted from deposits in the United 15 States. 16 ‘‘(b) APPLICATION WITH OTHER DEDUCTIONS.—No 17 deduction shall be allowed under any other provision of 18 this chapter with respect to any expenditure with respect 19 to which a deduction is allowed or allowable under this 20 section to the taxpayer.’’. 21 (b) CONFORMING AMENDMENT.—The table of sec- 22 tions for part VI of subchapter B of chapter 1 of the Inter- 23 nal Revenue Code of 1986 is amended by inserting after 24 the item relating to section 176 the following new item: 25 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 7812 IH ‘‘Sec. 177. Deduction for purchase of critical minerals and metals extracted within the United States.’’. (c) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to amounts paid or incurred after 2 December 31, 2019. 3 SEC. 5. MODIFICATION OF PROHIBITION ON ACQUISITION 4 OF CERTAIN SENSITIVE MATERIALS. 5 (a) EXTENSION OF PROHIBITION TO MINED, RE- 6 FINED, AND SEPARATED MATERIALS.—Subsection (a)(1) 7 of section 2533c of title 10, United States Code, is amend- 8 ed by striking ‘‘melted or produced’’ and inserting ‘‘mined, 9 refined, separated, melted, or produced’’. 10 (b) COMMERCIALLY AVAILABLE OFF-THE-SHELF 11 ITEM EXCEPTION.—Subsection (c)(3)(A)(i) of such sec- 12 tion is amended by striking ‘‘50 percent or more tung- 13 sten’’ and inserting ‘‘50 percent or more covered mate- 14 rial’’. 15 SEC. 6. GRANT PROGRAM FOR DEVELOPMENT OF CRITICAL 16 MINERALS AND METALS. 17 (a) ESTABLISHMENT.—The Secretary of Defense, in 18 consultation with the Secretary of the Interior, shall estab- 19 lish a grant program to finance pilot projects for the devel- 20 opment of critical minerals and metals in the United 21 States. 22 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 7812 IH (b) LIMITATION ON GRANT AWARDS.—A grant 1 awarded under subsection (a) may not exceed 2 $10,000,000. 3 (c) ECONOMIC VIABILITY.—In awarding grants 4 under subsection (a), the Secretary of Defense shall give 5 priority to projects the Secretary determines are likely to 6 be economically viable over the long term. 7 (d) SECONDARY RECOVERY.—In awarding grants 8 under subsection (a) during a fiscal year, the Secretary 9 of Defense shall seek to award not less than 30 percent 10 of the total amount of grants awarded during that fiscal 11 year for projects relating to secondary recovery of critical 12 minerals and metals. 13 (e) AUTHORIZATION OF APPROPRIATIONS.—There 14 are authorized to be appropriated to the Secretary of De- 15 fense $50,000,000 for each of fiscal years 2021 through 16 2024 to carry out the grant program established under 17 subsection (a). 18 (f) DEFINITIONS.—In this section: 19 (1) CRITICAL MINERALS AND METALS.—The 20 term ‘‘critical minerals and metals’’ means cerium, 21 cobalt, dysprosium, erbium, europium, gadolinium, 22 graphite, holmium, lanthanum, lithium, lutetium, 23 manganese, neodymium, praseodymium, pro- 24 VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 7812 IH methium, samarium, scandium, terbium, thulium, 1 ytterbium, and yttrium. 2 (2) SECONDARY RECOVERY.—The term ‘‘sec- 3 ondary recovery’’ means the recovery of minerals 4 and metals from discarded end-use products or from 5 waste products produced during the metal refining 6 and manufacturing process, including from mine 7 waste piles, acid mine drainage sludge, or byprod- 8 ucts produced through legacy mining and metallurgy 9 activities. 10 Æ VerDate Sep 11 2014 22:38 Aug 15, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H7812.IH H7812 pamtmann on DSKBC07HB2PROD with BILLS