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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2006 Introduced in Senate (IS)]

113th CONGRESS
  2d Session
                                S. 2006

  To provide for the establishment of a National Rare Earth Refinery 
                  Cooperative, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 6, 2014

Mr. Blunt (for himself and Mr. Manchin) introduced the following bill; 
   which was read twice and referred to the Committee on Energy and 
                           Natural Resources

_______________________________________________________________________

                                 A BILL

 
  To provide for the establishment of a National Rare Earth Refinery 
                  Cooperative, 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 ``National Rare Earth Cooperative Act 
of 2014''.

SEC. 2. FINDINGS; STATEMENT OF POLICY.

    (a) Findings.--Congress makes the following findings:
            (1) Heavy rare earth elements are critical for the national 
        defense of the United States, advanced energy technologies, and 
        other desirable commercial and industrial applications.
            (2) The Government Accountability Office has confirmed that 
        the monopoly control of the People's Republic of China over the 
        rare earth value chain has resulted in vulnerabilities in the 
        procurement of multiple United States weapons systems.
            (3) China has leveraged its monopoly control over the rare 
        earth value chain to force United States, European, Japanese, 
        and Korean corporations to transfer manufacturing facilities, 
        technology, and jobs to China in exchange for secure supply 
        contracts.
            (4) China's increasingly aggressive mercantile behavior has 
        resulted in involuntary transfers of technology, manufacturing, 
        and jobs resulting in onerous trade imbalances with the United 
        States and trading partners of the United States.
            (5) Direct links exist between heavy rare earth mineralogy 
        and thorium.
            (6) Thorium is a mildly radioactive element commonly 
        associated with the lanthanide elements in the most heavy rare 
        earth deposits that are located in the United States and 
        elsewhere.
            (7) Regulations regarding thorium represent a barrier to 
        the development of a heavy rare earth industry that is based in 
        the United States.
            (8) Balancing the strategic national interest objectives of 
        the United States against economic and environmental risks are 
        best met through the creation of a rare earth cooperative.
            (9) A rare earth cooperative could--
                    (A) greatly increase rare earth production;
                    (B) ensure environmental safety; and
                    (C) lower the cost of the production and financial 
                risks faced by rare earth producers in the United 
                States.
            (10) Historically, agricultural and electric cooperatives 
        have stood as one of the greatest success stories of the United 
        States.
    (b) Statement of Policy.--It is the policy of the United States to 
advance domestic refining of heavy rare earth materials and the safe 
storage of thorium in anticipation of the potential future industrial 
uses of thorium, including energy, as--
            (1) thorium has a mineralogical association with valuable 
        heavy rare earth elements;
            (2) there is a great need to develop domestic refining 
        capacity to process domestic heavy rare earth deposits; and
            (3) the economy of the United States would benefit from the 
        rapid development and control of intellectual property relating 
        to the commercial development of technology utilizing thorium.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Actinide.--The term ``actinide'' means a natural 
        element associated with any of the 15 rare earth minerals with 
        atomic number 43 and atomic numbers 81 through 93 on the 
        periodic table.
            (2) Consumer member.--
                    (A) In general.--The term ``consumer member'' means 
                a member of the Cooperative that is--
                            (i) an entity that is part of, or has a 
                        role in, the value chain for rare earth 
                        materials or rare earth products, including 
                        from the refined oxide stage to the stage in 
                        which the rare earth elements are finished in 
                        any physical or chemical form (including 
                        oxides, metals, alloys, catalysts, or 
                        components); or
                            (ii) a consumer of rare earth products.
                    (B) Inclusions.--The term ``consumer member'' 
                includes--
                            (i) a producer of or other entity that is 
                        part of the value chain for rare earth 
                        materials, including original equipment 
                        manufacturer producers, whose place of business 
                        is located in or outside the United States;
                            (ii) a defense contractor or contractors in 
                        the United States; and
                            (iii) any government agency in the United 
                        States or outside the United States that 
                        invests in the Cooperative.
            (3) Cooperative.--The term ``Cooperative'' means the 
        Thorium-Bearing Rare Earth Refinery Cooperative established by 
        section 4(a)(1).
            (4) Cooperative board.--The term ``Cooperative Board'' 
        means the Board of Directors of the Cooperative established 
        under section 4(b)(2).
            (5) Corporation.--The term ``Corporation'' means the 
        Thorium Storage, Energy, and Industrial Products Corporation 
        established under section 5(a)(1).
            (6) Corporation board.--The term ``Corporation Board'' 
        means the Board of Directors of the Corporation established 
        under section 5(b)(1).
            (7) Executive committee.--The term ``Executive Committee'' 
        means the executive committee established under section 
        5(b)(2).
            (8) Initial board of directors.--The term ``Initial Board 
        of Directors'' means the initial Board of Directors for the 
        Cooperative established under section 4(b)(1)(A).
            (9) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given that 
        term in section 101(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1001(a)).
            (10) National laboratory.--The term ``national laboratory'' 
        has the meaning given that term in section 2 of the Energy 
        Policy Act of 2005 (42 U.S.C. 15801).
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Defense.
            (12) Supplier member.--The term ``supplier member'' means a 
        rare earth producer that enters into a contract to supply the 
        Cooperative with rare earth ores.
            (13) Tolling.--The term ``tolling'' means a fee-for-
        services contract between the Cooperative and a primary rare 
        earth producer under which--
                    (A) the producer retains ownership and control of 
                the finished product; and
                    (B) pays to the Cooperative a fee for services 
                rendered by the Cooperative.
            (14) Unprocessed and unrefined ore.--The term ``unprocessed 
        and refined ore'' includes any ores or residual ores resulting 
        from the mining, extraction, beneficiation, and processing of 
        other natural resources.

SEC. 4. THORIUM-BEARING RARE EARTH REFINERY COOPERATIVE.

    (a) Establishment.--
            (1) In general.--There is established a Cooperative, to be 
        known as the ``Thorium-Bearing Rare Earth Refinery 
        Cooperative'', to provide for the domestic processing of 
        thorium-bearing rare earth concentrates as residual unprocessed 
        and unrefined ores.
            (2) Federal charter; ownership.--The Cooperative shall 
        operate under a Federal charter.
            (3) Membership.--
                    (A) Composition.--The Cooperative shall be 
                comprised of--
                            (i) supplier members; and
                            (ii) consumer members.
                    (B) Supplier members.--
                            (i) In general.--As a condition of entering 
                        into a contract to supply the Cooperative with 
                        rare earth ores, supplier members shall provide 
                        rare earth concentrates to the Cooperative at 
                        market price.
                            (ii) Capital contributions.--Any supplier 
                        member that makes significant capital 
                        contributions to the Cooperative, as determined 
                        by the Cooperative Board, may become a consumer 
                        member for purposes of the distribution of 
                        profits of the Cooperative under subparagraph 
                        (D).
                    (C) Consumer member.--A consumer member--
                            (i) shall make capital contributions to the 
                        Cooperative in exchange for entering into 
                        negotiated supply agreements; and
                            (ii) in accordance with the agreements 
                        entered into under clause (i), may acquire 
                        finished rare earth products from the 
                        Cooperative at market price.
                    (D) Distribution of profits.--Any profits of the 
                Cooperative shall be distributed between supplier 
                members and consumer members in accordance with a 
                formula established by the Cooperative Board.
    (b) Management.--
            (1) Initial board of directors.--
                    (A) In general.--As soon as practicable after the 
                date of the enactment of this Act, the Secretary shall 
                appoint the Initial Board of Directors for the 
                Cooperative, comprised of 5 members, of whom--
                            (i) 1 member shall represent the Defense 
                        Logistics Agency Strategic Materials program of 
                        the Department of Defense;
                            (ii) 1 member shall represent the Assistant 
                        Secretary of Defense for Research and 
                        Engineering;
                            (iii) 1 member shall represent United 
                        States advocacy groups for rare earth producers 
                        and original equipment manufacturing interests;
                            (iv) 1 member shall represent the United 
                        States Geological Survey; and
                            (v) 1 member who shall--
                                    (I) not be affiliated with a 
                                Federal agency; and
                                    (II) be recommended for appointment 
                                by a majority vote of the other members 
                                of the Initial Board of Directors 
                                appointed under clauses (i) through 
                                (iv).
                    (B) Duties.--The Initial Board of Directors shall--
                            (i) establish a charter, bylaws, and rules 
                        of governance for the Cooperative;
                            (ii) make formative business decisions on 
                        behalf of the Cooperative; and
                            (iii) assist in the formation of, and the 
                        provision of tasks and assignments to, the 
                        Corporation.
                    (C) Standing member.--The member appointed under 
                subparagraph (A)(v) shall remain on the Cooperative 
                Board and Corporation Board, until such time as--
                            (i) the member voluntarily resigns; or
                            (ii) a majority of the members of the 
                        Cooperative Board and a majority of the members 
                        of the Corporation Board vote to remove the 
                        member from the Cooperative Board and the 
                        Corporation Board.
                    (D) Termination.--The Initial Board of Directors 
                shall terminate on the date on which the initial 
                members of the Cooperative Board are appointed under 
                paragraph (2).
            (2) Board of directors.--
                    (A) In general.--The Board of Directors of the 
                Cooperative shall be comprised of 9 members, to be 
                selected in accordance with the bylaws of the 
                Cooperative established under paragraph (1)(B)(i), of 
                whom--
                            (i) 5 members shall be consumer members;
                            (ii) 2 members shall be supplier members;
                            (iii) 1 member shall represent an advocacy 
                        group for defense contractors, other rare earth 
                        consumers, and suppliers who are not 
                        represented by the Board or through direct 
                        ownership in the Cooperative; and
                            (iv) 1 member shall be the member of the 
                        Initial Board of Directors appointed under 
                        paragraph (1)(A)(v).
                    (B) Powers.--The Cooperative Board may--
                            (i) prescribe the manner in which business 
                        shall be conducted by the Cooperative;
                            (ii) determine pay-out ratio formulas for 
                        consumer members and supplier members, based 
                        on--
                                    (I) the capital stock ratios of 
                                consumer members; and
                                    (II) the value of supply member 
                                contracts, as determined based on the 
                                volume, term, and distributions of rare 
                                earth concentrates relative to 
                                processing costs; and
                            (iii) evaluate technologies and processes 
                        for the efficient extraction and refining of 
                        rare earth materials from various thorium-
                        bearing ores.
                    (C) Refinery and office locations.--The Cooperative 
                Board shall establish the refinery and offices for the 
                Cooperative at any locations determined to be 
                appropriate by the Cooperative Board.
    (c) Powers; Duties.--
            (1) Investment partnerships.--The Cooperative shall seek to 
        enter into domestic and international investment partnerships 
        for the development of the refinery.
            (2) Agreements; direct sales.--The Cooperative may--
                    (A) enter into equity, financial, and supply-based 
                agreements or arrangements with value-added 
                intermediaries, equipment manufacturers, consumers of 
                rare earth products, and Federal, State, or local 
                agencies to provide economic incentives, leases, or 
                public financing; and
                    (B) engage in direct market sales of rare earth 
                products.
            (3) Supply contracts and tolling services.--
                    (A) In general.--The Cooperative may--
                            (i) directly purchase rare earth materials 
                        obtained from any byproduct producers of rare 
                        earths;
                            (ii) transport those materials in 
                        accordance with part 40 of title 10, Code of 
                        Federal Regulations (or any corresponding 
                        similar regulation or ruling);
                            (iii) offer supplier members short-term or 
                        direct purchase contracts; and
                            (iv) allow primary rare earth producers to 
                        be tolling customers of the Cooperative.
                    (B) Requirements.--A tolling customer under 
                subparagraph (A)(iii) shall--
                            (i) retain control of the rare earth 
                        products during the processing, refining, or 
                        value adding of the rare earth products by the 
                        Cooperative; and
                            (ii) take possession of the rare earth 
                        products after--
                                    (I) tolling services are rendered 
                                by the Cooperative; and
                                    (II) the Cooperative has received 
                                payment in full for the tolling 
                                services rendered.
                    (C) Fee.--The Cooperative may charge tolling 
                customers under subparagraph (A)(iii) a tolling fee not 
                to exceed the sum of--
                            (i) the amount equal to 110 percent of the 
                        total cost for tolling services rendered by the 
                        Cooperative on behalf of the tolling customer; 
                        and
                            (ii) the amount equal to 5 percent of the 
                        market value of the finished product provided 
                        to the tolling customer by the Cooperative.
                    (D) Applicable law.--Any contract among consumer 
                members, supplier members, tolling customers, and 
                direct purchase suppliers entered into under 
                subparagraph (A)(iii) shall be protected as provided in 
                subsection 552(b)(4) of title 5, United States Code.
                    (E) Limitations.--A direct purchase consumer under 
                subparagraph (A)(ii) or a tolling customer under 
                subparagraph (A)(iii)--
                            (i) shall not be considered to be a 
                        supplier member or otherwise be considered a 
                        member of the Cooperative for purposes of this 
                        Act; and
                            (ii) shall not participate in Cooperative 
                        profits or have voting rights with respect to 
                        the Cooperative.
    (d) Audits.--
            (1) In general.--The Cooperative shall retain an 
        independent auditor to evaluate the extent to which Federal 
        funds, if any, made available to the Cooperative for research 
        and development activities have been expended in a manner that 
        is consistent with the purposes of this Act and the charter, 
        bylaws, and rules of the Cooperative.
            (2) Reports.--The auditor retained under paragraph (1) 
        shall submit to the Secretary of Defense, the Cooperative, and 
        the Comptroller General of the United States an annual report 
        containing the findings and determinations of the auditor.
            (3) Review by comptroller general.--The Comptroller General 
        of the United States shall--
                    (A) review each annual report submitted to the 
                Comptroller General by the auditor under paragraph (2); 
                and
                    (B) submit to the Committee on Armed Services of 
                the Senate and the Committee on Armed Services of the 
                House of Representatives a report containing the 
                comments of the Comptroller General on the accuracy and 
                completeness of the report and any other matters 
                relating to the report that the Comptroller General 
                considers appropriate.
    (e) Reimbursement of Federal Government.--Not later than 7 years of 
the date of the enactment of this Act, the Cooperative shall reimburse 
the Federal Government for administrative costs associated with the 
establishment of its charter.

SEC. 5. THORIUM STORAGE, ENERGY, AND INDUSTRIAL PRODUCTS CORPORATION.

    (a) Establishment.--
            (1) In general.--As soon as practicable after the date of 
        the enactment of this Act, the Cooperative Board, in 
        consultation with the Secretary of Defense, shall establish the 
        Thorium Storage, Energy, and Industrial Products Corporation to 
        develop uses and markets for thorium, including energy.
            (2) Federal charter.--The Corporation shall operate under a 
        Federal charter.
    (b) Management.--
            (1) Board of directors.--
                    (A) In general.--The Board of Directors of the 
                Corporation shall be composed of 5 members.
                    (B) Initial members.--The initial members of the 
                Corporation Board shall consist of the following 
                members, to be appointed by the Secretary of Defense:
                            (i) 1 member, who shall represent the 
                        Assistant Secretary of Defense for Research and 
                        Engineering.
                            (ii) 1 member, who shall represent the 
                        Advanced Energy Program of the Defense Advanced 
                        Research Project Agency.
                            (iii) 1 member, who shall represent United 
                        States advocacy groups for commercial 
                        development of thorium in nuclear energy 
                        systems.
                            (iv) 1 member, who shall represent a 
                        national laboratory.
                            (v) 1 member, who is the member of the 
                        Initial Board of Directors appointed under 
                        section 4(b)(1)(A)(v).
                    (C) Subsequent members.--Subject to subparagraphs 
                (A) and (D), subsequent members of the Corporation 
                Board and Executive Committee shall be appointed in 
                accordance with the bylaws of the Corporation 
                established under paragraph (2)(B)(i).
                    (D) Standing members.--The initial members 
                appointed under clauses (iv) and (v) of subparagraph 
                (B) shall remain on the Corporation Board and the 
                Executive Committee, until such time as--
                            (i) the members voluntarily resign;
                            (ii) in the case of a member appointed 
                        under subparagraph (B)(iv), a majority of the 
                        members of the Corporation Board vote to remove 
                        the member from the Corporation Board; or
                            (iii) in the case of a member appointed 
                        under subparagraph (B)(v), a majority of the 
                        members of the Corporation Board and a majority 
                        of the members of the Cooperative Board vote to 
                        remove the member from the Corporation Board 
                        and the Cooperative Board.
            (2) Executive committee.--
                    (A) In general.--The Executive Committee for the 
                Corporation shall be composed of the initial members of 
                the Corporation Board appointed under clauses (iv) and 
                (v) of paragraph (1)(B).
                    (B) Duties.--The Executive Committee shall--
                            (i) establish the charter, rules of 
                        governance, bylaws, and corporate structure for 
                        the Corporation; and
                            (ii) make formative business decisions with 
                        respect to the Corporation.
    (c) Powers.--
            (1) Establishment of subsequent entities.--
                    (A) In general.--The Corporation may establish 1 or 
                more entities, to be known as an ``Industrial Products 
                Corporation'', for the certification, licensing, 
                insuring, and commercial development of all non-energy 
                uses for thorium (including thorium isotopes and 
                thorium daughter elements), including--
                            (i) alloys;
                            (ii) catalysts;
                            (iii) medical isotopes; and
                            (iv) other products.
                    (B) Authority of entities.--The entities described 
                in subparagraph (A) may--
                            (i) develop standards, procedures, and 
                        protocols for the approval of commercial and 
                        industrial applications for thorium;
                            (ii) carry out directly the production and 
                        sale of thorium-related non-energy products; 
                        and
                            (iii) sell or license any production or 
                        sales rights to third parties.
                    (C) Sale or distribution of industrial products 
                corporation; creation of businesses and partnerships.--
                To develop and commercialize non-energy uses for 
                thorium, the Corporation Board may--
                            (i) create, sell, or distribute the equity 
                        of an entity described in subparagraph (A); and
                            (ii) establish partnerships with Federal 
                        agencies, foreign governments, and private 
                        entities relating to businesses and activities 
                        of the entity.
            (2) Sale or distribution of corporation equity; creation of 
        partnerships.--To develop and commercialize thorium energy, the 
        Corporation may sell or distribute equity and establish 
        partnerships with the United States and foreign governments and 
        private entities--
                    (A) to create capital;
                    (B) to develop intellectual property;
                    (C) to acquire technology;
                    (D) to establish business partnerships and raw 
                material supply chains;
                    (E) to commercially develop thorium energy systems;
                    (F) to commercially develop systems for the 
                reduction of spent fuel;
                    (G) to develop hardened energy systems for the 
                United States military; and
                    (H) to develop process heat technologies systems 
                for coal-to-liquid fuel separation, desalinization, 
                chemical synthesis, and other applications.
    (d) Duties.--
            (1) Ownership of thorium and related actinides.--The 
        Corporation shall--
                    (A) on a preprocessing basis, assume liability for 
                and ownership of all thorium and mineralogically 
                associated or related actinides and decay products 
                contained within the monazite and other rare earth 
                mineralizations in the possession of the Cooperative;
                    (B) after the Cooperative has separated the thorium 
                from the rare earth concentrates, take physical 
                possession and safely store all thorium-containing 
                actinide byproducts, with the costs of the storage to 
                be paid by the Corporation from fees charged or revenue 
                from sales of other valuable actinides;
                    (C) develop new markets and uses for thorium;
                    (D) develop energy systems from thorium; and
                    (E) develop, manage, and control national and 
                international energy leasing and distribution platforms 
                related to thorium energy systems.
            (2) Safe, long-term storage; development of uses and 
        markets.--The Corporation shall--
                    (A) in consultation with the Administrator of the 
                Environmental Protection Agency and the Secretary of 
                Energy, be responsible for the safe, long-term storage 
                for all thorium and thorium decay products generated 
                through the Cooperative, consistent with part 192 of 
                title 40, Code of Federal Regulations (as in effect on 
                the date of the enactment of this Act), while taking 
                into account the low relative risks relating to 
                thorium; and
                    (B) develop uses and markets for thorium, including 
                energy, including by coordinating and structuring 
                domestic and international investment partnerships for 
                the development of commercial and industrial uses for 
                thorium.
    (e) Audits.--
            (1) In general.--The Corporation shall retain an 
        independent auditor to evaluate the extent to which Federal 
        funds, if any, made available to the Corporation for research 
        and development activities have been expended in a manner that 
        is consistent with the purposes of this Act and the charter, 
        bylaws, and rules of the Corporation.
            (2) Reports.--The auditor retained under paragraph (1) 
        shall submit to the Secretary of Defense, the Corporation, and 
        the Comptroller General of the United States an annual report 
        containing the findings and determinations of the auditor.
            (3) Review by comptroller general.--The Comptroller General 
        of the United States shall--
                    (A) review each annual report submitted to the 
                Comptroller General by the auditor under paragraph (2); 
                and
                    (B) submit to the Committee on Armed Services of 
                the Senate and the Committee on Armed Services of the 
                House of Representatives a report containing the 
                comments of the Comptroller General on the accuracy and 
                completeness of the report and any other matters 
                relating to the report that the Comptroller General 
                considers appropriate.
    (f) Reimbursement of Federal Government.--Not later than 7 years of 
the date of the enactment of this Act, the Corporation shall reimburse 
the Federal Government for administrative costs associated with the 
establishment of its charter.

SEC. 6. DUTIES OF SECRETARY OF DEFENSE.

    (a) Advancement of Rare Earth Initiatives.--The Secretary shall 
coordinate with other Federal agencies to advance and protect--
            (1) domestic rare earth mining;
            (2) the refining of rare earth elements;
            (3) basic rare earth metals production; and
            (4) the development and commercialization of thorium, 
        including--
                    (A) energy technologies and products; and
                    (B) products containing thorium.
    (b) Annual Reports.--Not later than one year after the date of the 
enactment of this Act, and annually thereafter, the Secretary shall 
submit to Congress a report that, for the period covered by the 
report--
            (1) contains a description of the progress in the 
        development of--
                    (A) a domestic rare earth refining capacity; and
                    (B) commercial uses and energy-related uses for 
                thorium; and
            (2) takes into account each report submitted to the 
        Secretary by the Cooperative and the Corporation.
    (c) Federal Agencies; National Laboratories.--Each Federal agency 
(including the Nuclear Regulatory Commission and the Defense Advanced 
Research Projects Agency), each national laboratory, and each facility 
funded by the Federal Government shall provide assistance to the 
Cooperative and the Corporation under this Act.
    (d) Institutions of Higher Education.--Each institution of higher 
education is encouraged--
            (1) to develop training and national expertise in the field 
        of thorium development; and
            (2) to promote--
                    (A) the marketing of thorium;
                    (B) the advancement of the strategic uses of 
                thorium; and
                    (C) salt chemistry science and radio chemists.

SEC. 7. AUTHORIZATION OF DEPARTMENT OF DEFENSE TO ESTABLISH EQUITY 
              STAKE IN COOPERATIVE.

    The Secretary may acquire and maintain a 10 percent equity stake in 
the Cooperative in accordance with the provisions of the Strategic and 
Critical Materials Stock Piling Act (50 U.S.C. 98 et seq.) for the 
purpose of accessing strategic rare earth materials and eliminating the 
need to acquire such materials under that Act.
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