Title: ORE Act
Policy area: Taxation

Summary:
Onshoring Rare Earths Act of 2020 or the ORE Act
This bill allows permanent expensing of property used in the extraction of certain critical minerals and metals within the United States and of nonresidential real property used in extracting 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.
The bill requires the Department of Defense (DOD) 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, DOD must give priority to projects determined to be economically viable over the long term and must allot 30% of grants funds to the secondary recovery of critical minerals and metals.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3694 Introduced in Senate (IS)]

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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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Onshoring Rare Earths Act of 2020'' 
or the ``ORE Act''.

SEC. 2. 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 in the extraction of 
        critical minerals and metals within the united states.--
                    ``(A) In general.--In the case of any qualified 
                property which is directly involved in extracting 
                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, 
                ytterbium, and yttrium.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2019.

SEC. 3. PERMANENT FULL EXPENSING FOR NONRESIDENTIAL REAL PROPERTY USED 
              IN THE EXTRACTION 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 in 
the Extraction 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 directly involved in 
        extracting 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, 2019.

SEC. 4. 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, 2019.

SEC. 5. MODIFICATION OF PROHIBITION ON ACQUISITION OF CERTAIN SENSITIVE 
              MATERIALS.

    (a) Extension of Prohibition to Mined, Refined, and Separated 
Materials.--Subsection (a)(1) of section 2533c of title 10, United 
States Code, is amended by striking ``melted or produced'' and 
inserting ``mined, refined, separated, melted, or produced''.
    (b) Commercially Available Off-the-Shelf Item Exception.--
Subsection (c)(3)(A)(i) of such section is amended by striking ``50 
percent or more tungsten'' and inserting ``50 percent or more covered 
material''.

SEC. 6. GRANT PROGRAM FOR DEVELOPMENT OF CRITICAL MINERALS AND METALS.

    (a) Establishment.--The Secretary of Defense, in consultation with 
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 Defense 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 Defense 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 Defense $50,000,000 for each of fiscal 
years 2021 through 2024 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, 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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