To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction for the mining, reclaiming, or recycling of critical minerals and metals from the United States, and to support the development of domestic supply chains for rare earth elements and other critical materials essential to United States technology, manufacturing, energy, healthcare and advanced medical devices, broadband infrastructure, transportation, and national defense.
Bill: H.R.2688 | Sponsor: Rep. Gooden, Lance (R-TX)
Policy area: Taxation

Summary:
This bill allows permanent expensing of property used in the mining, reclaiming, or recycling of certain critical minerals and metals within the United States and of nonresidential real property used in mining such minerals and metals. Expensing is the treatment of expenditures as operating costs deductible in full in the current taxable year.
The bill allows a new tax deduction for 200% of the cost of purchasing or acquiring such critical minerals and metals extracted from deposits in the United States and a 22% rate of percentage depletion for such critical minerals and metals.
The bill requires the Department of the Interior to establish a pilot project grant program for the development of critical minerals and metals in the United States. A grant awarded under such program may not exceed $10 million. In awarding grants, Interior must give priority to projects determined to be economically viable over the long term and must allot not less than 30% of grants funds to the secondary recovery of critical minerals and metals.

To amend the Internal Revenue Code of 1986 to permanently allow a tax 
deduction for the mining, reclaiming, or recycling of critical minerals 
 and metals from the United States, and to support the development of 
   domestic supply chains for rare earth elements and other critical 
materials essential to United States technology, manufacturing, energy, 
  healthcare and advanced medical devices, broadband infrastructure, 
                 transportation, and national defense.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PERMANENT FULL EXPENSING FOR PROPERTY USED TO EXTRACT 
              CRITICAL MINERALS AND METALS WITHIN THE UNITED STATES.

    (a) In General.--Section 168(k) of the Internal Revenue Code of 
1986 is amended by adding at the end the following:
            ``(11) Special rule for property used for mining of 
        critical minerals and metals within the united states.--
                    ``(A) In general.--In the case of any qualified 
                property which is substantially involved in the mining, 
                reclaiming, or recycling of critical minerals and 
                metals from deposits in the United States--
                            ``(i) paragraph (2)(A)(iii) shall not 
                        apply, and
                            ``(ii) the applicable percentage shall be 
                        100 percent.
                    ``(B) Critical minerals and metals.--For purposes 
                of this paragraph, the term `critical minerals and 
                metals' means cerium, cobalt, dysprosium, erbium, 
                europium, gadolinium, graphite, holmium, lanthanum, 
                lithium, lutetium, manganese, neodymium, praseodymium, 
                promethium, samarium, scandium, terbium, thulium, 
                vanadium, ytterbium, and yttrium.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2020.

SEC. 2. PERMANENT FULL EXPENSING FOR NONRESIDENTIAL REAL PROPERTY USED 
              FOR MINING OF CRITICAL MINERALS AND METALS WITHIN THE 
              UNITED STATES.

    (a) In General.--Section 168 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(n) Special Allowance for Nonresidential Real Property Used for 
Mining of Critical Minerals and Metals Within the United States.--
            ``(1) New structures.--In the case of any qualified real 
        property--
                    ``(A)(i) if such property is placed in service on 
                or after the date of enactment of this subsection, the 
                depreciation deduction provided by section 167(a) for 
                the taxable year in which such property is placed in 
                service shall include an allowance equal to 100 percent 
                of the adjusted basis of such property, or
                    ``(ii) if such property was placed in service 
                before the date of enactment of this subsection, the 
                depreciation deduction provided by section 167(a) for 
                the first taxable year beginning after such date shall 
                include an allowance equal to 100 percent of the 
                adjusted basis of such property, and
                    ``(B) the adjusted basis of such property shall be 
                reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified real property.--For purposes of this 
        subsection, the term `qualified real property' means any 
        nonresidential real property which is substantially involved in 
        the mining, reclaiming, or recycling of critical minerals and 
        metals (as defined in subsection (k)(11)(B)) from deposits in 
        the United States.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2020.

SEC. 3. DEDUCTION FOR PURCHASE OF CRITICAL MINERALS AND METALS 
              EXTRACTED WITHIN THE UNITED STATES.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 176 
the following new section:

``SEC. 177. DEDUCTION FOR PURCHASE OF CRITICAL MINERALS AND METALS 
              EXTRACTED WITHIN THE UNITED STATES.

    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction for the taxable year an amount equal to 200 percent of the 
cost paid or incurred by the taxpayer for the purchase or acquisition 
of critical minerals and metals (as defined in section 168(k)(11)(B)) 
which have been extracted from deposits in the United States.
    ``(b) Application With Other Deductions.--No deduction shall be 
allowed under any other provision of this chapter with respect to any 
expenditure with respect to which a deduction is allowed or allowable 
under this section to the taxpayer.''.
    (b) Conforming Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 176 the 
following new item:

``Sec. 177. Deduction for purchase of critical minerals and metals 
                            extracted within the United States.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2020.

SEC. 4. INCREASE IN RATE OF PERCENTAGE DEPLETION FOR CRITICAL MINERALS 
              AND METALS FROM DEPOSITS IN THE UNITED STATES.

    (a) In General.--Section 613(b)(1) of the Internal Revenue Code of 
1986 is amended by striking ``and'' at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and inserting ``; 
and'', and by adding at the end the following new subparagraph:
                    ``(C) critical minerals and metals (as defined in 
                section 168(k)(11)(B)) from deposits in the United 
                States.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.

SEC. 5. GRANT PROGRAM FOR DEVELOPMENT OF CRITICAL MINERALS AND METALS.

    (a) Establishment.--The Secretary of the Interior shall establish a 
grant program to finance pilot projects for the development of critical 
minerals and metals in the United States.
    (b) Limitation on Grant Awards.--A grant awarded under subsection 
(a) may not exceed $10,000,000.
    (c) Economic Viability.--In awarding grants under subsection (a), 
the Secretary of the Interior shall give priority to projects the 
Secretary determines are likely to be economically viable over the long 
term.
    (d) Secondary Recovery.--In awarding grants under subsection (a) 
during a fiscal year, the Secretary of the Interior shall seek to award 
not less than 30 percent of the total amount of grants awarded during 
that fiscal year for projects relating to secondary recovery of 
critical minerals and metals.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of the Interior $50,000,000 for each of 
fiscal years 2022 through 2025 to carry out the grant program 
established under subsection (a).
    (f) Definitions.--In this section:
            (1) Critical minerals and metals.--The term ``critical 
        minerals and metals'' means cerium, cobalt, dysprosium, erbium, 
        europium, gadolinium, graphite, holmium, lanthanum, lithium, 
        lutetium, manganese, neodymium, praseodymium, promethium, 
        samarium, scandium, terbium, thulium, vanadium, ytterbium, and 
        yttrium.
            (2) Secondary recovery.--The term ``secondary recovery'' 
        means the recovery of minerals and metals from discarded end-
        use products or from waste products produced during the metal 
        refining and manufacturing process, including from mine waste 
        piles, acid mine drainage sludge, or byproducts produced 
        through legacy mining and metallurgy activities.
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