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II
116TH CONGRESS
2D SESSION
S. 3694
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 SENATE OF THE UNITED STATES
MAY 12, 2020
Mr. CRUZ introduced the following bill; which was read twice and referred to
the Committee on Finance
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
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Onshoring Rare
4
Earths Act of 2020’’ or the ‘‘ORE Act’’.
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•S 3694 IS
SEC. 2. PERMANENT FULL EXPENSING FOR PROPERTY
1
USED TO EXTRACT CRITICAL MINERALS AND
2
METALS WITHIN THE UNITED STATES.
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(a) IN GENERAL.—Section 168(k) of the Internal
4
Revenue Code of 1986 is amended by adding at the end
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the following:
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‘‘(11) SPECIAL RULE FOR PROPERTY USED IN
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THE EXTRACTION OF CRITICAL MINERALS AND MET-
8
ALS WITHIN THE UNITED STATES.—
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‘‘(A) IN
GENERAL.—In the case of any
10
qualified property which is directly involved in
11
extracting critical minerals and metals from de-
12
posits in the United States—
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‘‘(i) paragraph (2)(A)(iii) shall not
14
apply, and
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‘‘(ii) the applicable percentage shall be
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100 percent.
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‘‘(B) CRITICAL MINERALS AND METALS.—
18
For purposes of this paragraph, the term ‘crit-
19
ical minerals and metals’ means cerium, cobalt,
20
dysprosium, erbium, europium, gadolinium,
21
graphite, holmium, lanthanum, lithium, lute-
22
tium, manganese, neodymium, praseodymium,
23
promethium, samarium, scandium, terbium,
24
thulium, ytterbium, and yttrium.’’.
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•S 3694 IS
(b) EFFECTIVE DATE.—The amendment made by
1
this section shall apply to property placed in service after
2
December 31, 2019.
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SEC. 3. PERMANENT FULL EXPENSING FOR NONRESIDEN-
4
TIAL REAL PROPERTY USED IN THE EXTRAC-
5
TION OF CRITICAL MINERALS AND METALS
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WITHIN THE UNITED STATES.
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(a) IN GENERAL.—Section 168 of the Internal Rev-
8
enue Code of 1986 is amended by adding at the end the
9
following new subsection:
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‘‘(n) SPECIAL ALLOWANCE FOR NONRESIDENTIAL
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REAL PROPERTY USED IN THE EXTRACTION OF CRITICAL
12
MINERALS AND METALS WITHIN THE UNITED STATES.—
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‘‘(1) NEW STRUCTURES.—In the case of any
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qualified real property—
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‘‘(A)(i) if such property is placed in service
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on or after the date of enactment of this sub-
17
section, the depreciation deduction provided by
18
section 167(a) for the taxable year in which
19
such property is placed in service shall include
20
an allowance equal to 100 percent of the ad-
21
justed basis of such property, or
22
‘‘(ii) if such property was placed in service
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before the date of enactment of this subsection,
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the depreciation deduction provided by section
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•S 3694 IS
167(a) for the first taxable year beginning after
1
such date shall include an allowance equal to
2
100 percent of the adjusted basis of such prop-
3
erty, and
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‘‘(B) the adjusted basis of such property
5
shall be reduced by the amount of such deduc-
6
tion before computing the amount otherwise al-
7
lowable as a depreciation deduction under this
8
chapter for such taxable year and any subse-
9
quent taxable year.
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‘‘(2) QUALIFIED
REAL
PROPERTY.—For pur-
11
poses of this subsection, the term ‘qualified real
12
property’ means any nonresidential real property
13
which is directly involved in extracting critical min-
14
erals
and
metals
(as
defined
in
subsection
15
(k)(11)(B)) from deposits in the United States.’’.
16
(b) EFFECTIVE DATE.—The amendment made by
17
this section shall apply to taxable years beginning after
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December 31, 2019.
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SEC. 4. DEDUCTION FOR PURCHASE OF CRITICAL MIN-
20
ERALS AND METALS EXTRACTED WITHIN THE
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UNITED STATES.
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(a) IN GENERAL.—Part VI of subchapter B of chap-
23
ter 1 of the Internal Revenue Code of 1986 is amended
24
by inserting after section 176 the following new section:
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•S 3694 IS
‘‘SEC. 177. DEDUCTION FOR PURCHASE OF CRITICAL MIN-
1
ERALS AND METALS EXTRACTED WITHIN THE
2
UNITED STATES.
3
‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be
4
allowed as a deduction for the taxable year an amount
5
equal to 200 percent of the cost paid or incurred by the
6
taxpayer for the purchase or acquisition of critical min-
7
erals and metals (as defined in section 168(k)(11)(B))
8
which have been extracted from deposits in the United
9
States.
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‘‘(b) APPLICATION WITH OTHER DEDUCTIONS.—No
11
deduction shall be allowed under any other provision of
12
this chapter with respect to any expenditure with respect
13
to which a deduction is allowed or allowable under this
14
section to the taxpayer.’’.
15
(b) CONFORMING AMENDMENT.—The table of sec-
16
tions for part VI of subchapter B of chapter 1 of the Inter-
17
nal Revenue Code of 1986 is amended by inserting after
18
the item relating to section 176 the following new item:
19
‘‘Sec. 177. Deduction for purchase of critical minerals and metals extracted
within the United States.’’.
(c) EFFECTIVE DATE.—The amendments made by
20
this section shall apply to amounts paid or incurred after
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December 31, 2019.
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•S 3694 IS
SEC. 5. MODIFICATION OF PROHIBITION ON ACQUISITION
1
OF CERTAIN SENSITIVE MATERIALS.
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(a) EXTENSION OF PROHIBITION TO MINED, RE-
3
FINED, AND SEPARATED MATERIALS.—Subsection (a)(1)
4
of section 2533c of title 10, United States Code, is amend-
5
ed by striking ‘‘melted or produced’’ and inserting ‘‘mined,
6
refined, separated, melted, or produced’’.
7
(b) COMMERCIALLY
AVAILABLE
OFF-THE-SHELF
8
ITEM EXCEPTION.—Subsection (c)(3)(A)(i) of such sec-
9
tion is amended by striking ‘‘50 percent or more tung-
10
sten’’ and inserting ‘‘50 percent or more covered mate-
11
rial’’.
12
SEC. 6. GRANT PROGRAM FOR DEVELOPMENT OF CRITICAL
13
MINERALS AND METALS.
14
(a) ESTABLISHMENT.—The Secretary of Defense, in
15
consultation with the Secretary of the Interior, shall estab-
16
lish a grant program to finance pilot projects for the devel-
17
opment of critical minerals and metals in the United
18
States.
19
(b) LIMITATION
ON
GRANT
AWARDS.—A grant
20
awarded
under
subsection
(a)
may
not
exceed
21
$10,000,000.
22
(c) ECONOMIC
VIABILITY.—In awarding grants
23
under subsection (a), the Secretary of Defense shall give
24
priority to projects the Secretary determines are likely to
25
be economically viable over the long term.
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•S 3694 IS
(d) SECONDARY RECOVERY.—In awarding grants
1
under subsection (a) during a fiscal year, the Secretary
2
of Defense shall seek to award not less than 30 percent
3
of the total amount of grants awarded during that fiscal
4
year for projects relating to secondary recovery of critical
5
minerals and metals.
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(e) AUTHORIZATION
OF APPROPRIATIONS.—There
7
are authorized to be appropriated to the Secretary of De-
8
fense $50,000,000 for each of fiscal years 2021 through
9
2024 to carry out the grant program established under
10
subsection (a).
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(f) DEFINITIONS.—In this section:
12
(1) CRITICAL
MINERALS
AND
METALS.—The
13
term ‘‘critical minerals and metals’’ means cerium,
14
cobalt, dysprosium, erbium, europium, gadolinium,
15
graphite, holmium, lanthanum, lithium, lutetium,
16
manganese,
neodymium,
praseodymium,
pro-
17
methium, samarium, scandium, terbium, thulium,
18
ytterbium, and yttrium.
19
(2) SECONDARY
RECOVERY.—The term ‘‘sec-
20
ondary recovery’’ means the recovery of minerals
21
and metals from discarded end-use products or from
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waste products produced during the metal refining
23
and manufacturing process, including from mine
24
waste piles, acid mine drainage sludge, or byprod-
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•S 3694 IS
ucts produced through legacy mining and metallurgy
1
activities.
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Æ
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