117 HR 7460 IH: Obtaining National and Secure Homeland Operations for Rare Earth Manufacturing Act
U.S. House of Representatives
2022-04-07
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I
117th CONGRESS
2d Session
H. R. 7460
IN THE HOUSE OF REPRESENTATIVES
April 7, 2022
Mr. Tony Gonzales of Texas (for himself and Mr. Gimenez) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Education and Labor, Foreign Affairs, and Financial 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 require the Secretary of Energy to establish a program to incentivize investment in facilities that carry out the metallurgy of rare earth elements and the production of finished rare earth products, and for other purposes.
1.

Short title
This Act may be cited as the “Obtaining National and Secure Homeland Operations for Rare Earth Manufacturing Act” or the “ONSHORE Manufacturing Act”.
2.

Definitions
In this Act:
(1)

Appropriate committees of Congress
The term appropriate committees of Congress means—
(A)
the Select Committee on Intelligence, the Committee on Energy and Natural Resources, the Committee on Commerce, Science, and Transportation, the Committee on Foreign Relations, the Committee on Armed Services, the Committee on Appropriations, the Committee on Banking, Housing, and Urban Affairs, the Committee on Homeland Security and Governmental Affairs, and the Committee on Finance of the Senate; and
(B)
the Permanent Select Committee on Intelligence, the Committee on Energy and Commerce, the Committee on Foreign Affairs, the Committee on Armed Services, the Committee on Science, Space, and Technology, the Committee on Appropriations, the Committee on Financial Services, the Committee on Homeland Security, and the Committee on Ways and Means of the House of Representatives.
(2)

Concentrated rare earth element
The term concentrated rare earth element means a rare earth element that has been extracted or separated from raw materials and concentrated.
(3)

Covered entity
The term covered entity means a private entity, a consortium of private entities, or a consortium of public and private entities with a demonstrated ability to substantially finance, construct, expand, or technologically upgrade a covered facility.
(4)

Covered facility
The term covered facility means a facility located in a State that carries out the metallurgy of rare earth elements for the production of finished rare earth products.
(5)

Covered incentive
The term covered incentive means—
(A)
an incentive offered by a Federal, State, local, or Tribal governmental entity to a covered entity for the purposes of—
(i)
constructing within the jurisdiction of the governmental entity a covered facility; or
(ii)
expanding or technologically upgrading an existing facility within that jurisdiction to be a covered facility; and
(B)
a workforce-related incentive (including a grant agreement relating to workforce training or vocational education), any concession with respect to real property, funding for research and development with respect to rare earth elements and finished rare earth products, and any other incentive determined appropriate by the Secretary, in consultation with the Secretary of State.
(6)

Finished rare earth product
The term finished rare earth product means—
(A)
a product composed of—
(i)
metal powders, such as rare earth oxides and rare earth salts, including chlorides and nitrates;
(ii)
metals containing rare earth elements;
(iii)
alloys; or
(iv)
magnets; and
(B)
any other value-added product that is composed fully or partially of rare earth elements.
(7)

Foreign entity
(A)

In general
The term foreign entity means—
(i)
a government of a foreign country and a foreign political party;
(ii)
a natural person who is not—
(I)
a lawful permanent resident of the United States;
(II)
a citizen or national of the United States; or
(III)
any other protected individual (as defined in section 274B(a)(3) of the Immigration and Nationality Act (8 U.S.C. 1324b(a)(3))); and
(iii)
a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country.
(B)

Inclusions
The term foreign entity includes—
(i)
any person owned by, controlled by, or subject to the jurisdiction or direction of an entity described in subparagraph (A);
(ii)
any person, wherever located, who acts as an agent, representative, or employee of an entity described in subparagraph (A);
(iii)
any person who acts in any other capacity at the order, request, or under the influence, direction, or control, of—
(I)
an entity described in subparagraph (A); or
(II)
a person the activities of which are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in majority part by an entity described in subparagraph (A);
(iv)
any person who directly or indirectly through any contract, arrangement, understanding, relationship, or otherwise, owns 25 percent or more of the equity interests of an entity described in subparagraph (A);
(v)
any person with significant responsibility to control, manage, or direct an entity described in subparagraph (A);
(vi)
any person, wherever located, who is a citizen or resident of a country controlled by an entity described in subparagraph (A); and
(vii)
any corporation, partnership, association, or other organization organized under the laws of a country controlled by an entity described in subparagraph (A).
(8)

Foreign entity of concern
The term foreign entity of concern means any foreign entity that is—
(A)
designated as a foreign terrorist organization by the Secretary of State under section 219 of the Immigration and Nationality Act (8 U.S.C. 1189);
(B)
included on the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury;
(C)
owned by, controlled by, or subject to the jurisdiction, direction, or otherwise under the undue influence of a government of a covered nation (as defined in section 2533c(d) of title 10, United States Code);
(D)
alleged by the Attorney General to have been involved in activities for which a conviction was obtained under—
(i)
chapter 37 of title 18, United States Code (commonly known as the “Espionage Act”);
(ii)
section 951 or 1030 of title 18, United States Code;
(iii)
chapter 90 of title 18, United States Code (commonly known as the “Economic Espionage Act of 1996”);
(iv)
the Arms Export Control Act (22 U.S.C. 2751 et seq.);
(v)
section 224, 225, 226, 227, or 236 of the Atomic Energy Act of 1954 (42 U.S.C. 2274–2278; 2284);
(vi)
the Export Control Reform Act of 2018 (50 U.S.C. 4801 et seq.); or
(vii)
the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.); or
(E)
determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, to be engaged in unauthorized conduct that is detrimental to the national security or foreign policy of the United States under this Act.
(9)

Governmental entity
The term governmental entity means—
(A)
a State; and
(B)
a local government of a State.
(10)

Intelligence community
The term intelligence community has the meaning given the term in section 3 of the National Security Act of 1947 (50 U.S.C. 3003).
(11)

Metallurgy
The term metallurgy means the process of producing finished rare earth products from concentrated rare earth elements.
(12)

Person
The term person includes an individual, partnership, association, corporation, organization, or any other combination of individuals.
(13)

Rare earth element
The term rare earth element means a natural element associated with—
(A)
the metallic element scandium, with atomic number 21;
(B)
the metallic element yttrium, with atomic number 39; or
(C)
any of the series of 15 metallic elements between lanthanum, with atomic number 57, and lutetium, with atomic number 71, on the periodic table.
(14)

Secretary
The term Secretary means the Secretary of Energy.
(15)

State
The term State means—
(A)
each of the several States of the United States;
(B)
the District of Columbia;
(C)
the Commonwealth of Puerto Rico;
(D)
Guam;
(E)
American Samoa;
(F)
the Commonwealth of the Northern Mariana Islands;
(G)
the Federated States of Micronesia;
(H)
the Republic of the Marshall Islands;
(I)
the Republic of Palau; and
(J)
the United States Virgin Islands.
3.

Rare earth metallurgy financing
(a)

Financial assistance program
(1)

In general
The Secretary shall establish in the Department of Energy a program to provide Federal financial assistance to covered entities to incentivize investment in covered facilities, subject to the availability of appropriations for that purpose.
(2)

Procedure
(A)

In general
A covered entity seeking financial assistance under this subsection shall submit to the Secretary an application that describes the project for which the covered entity is seeking financial assistance.
(B)

Eligibility
In order for a covered entity to qualify for financial assistance under this subsection, the covered entity shall demonstrate to the Secretary, in the application submitted by the covered entity under subparagraph (A), that—
(i)
the covered entity has a documented interest in—
(I)
constructing a covered facility; or
(II)
expanding or technologically upgrading a facility owned by the covered entity to be a covered facility; and
(ii)
with respect to the project for which the covered entity is seeking financial assistance, the covered entity has—
(I)
been offered a covered incentive;
(II)
made commitments to worker and community investment, including through—
- (aa)
training and education benefits paid by the covered entity; and
- (bb)
programs to expand employment opportunity for economically disadvantaged individuals;
(III)
secured commitments from regional educational and training entities and institutions of higher education to provide workforce training, including programming for training and job placement of economically disadvantaged individuals; and
(IV)
an executable plan to sustain a covered facility without additional Federal financial assistance under this subsection for facility support.
(C)

Application review
(i)

In general
The Secretary may not approve an application submitted by a covered entity under subparagraph (A)—
(I)
unless the Secretary—
- (aa)
confirms that the covered entity has satisfied the eligibility criteria under subparagraph (B);
- (bb)
determines that the project for which the covered entity is seeking financial assistance is in the interest of the United States; and
- (cc)
has notified the appropriate committees of Congress not later than 15 days before making any commitment to provide an award of financial assistance to any covered entity in an amount that exceeds $10,000,000; or
(II)
if the Secretary determines, in consultation with the Director of National Intelligence, that the covered entity is a foreign entity of concern.
(ii)

Consideration
In reviewing an application submitted by a covered entity under subparagraph (A), the Secretary may consider whether—
(I)
the covered entity has previously received financial assistance under this subsection;
(II)
the governmental entity offering the applicable covered incentive has benefitted from financial assistance previously provided under this subsection;
(III)
the covered entity has demonstrated that the covered entity is responsive to the national security needs or requirements established by the intelligence community (or an agency thereof), the National Nuclear Security Administration, or the Department of Defense;
(IV)
if practicable, a consortium that is considered a covered entity includes a small business concern (as defined under section 3 of the Small Business Act (15 U.S.C. 632)), notwithstanding section 121.103 of title 13, Code of Federal Regulations (or successor regulations); and
(V)
the covered entity intends to produce finished products for use by the Department of Defense, the defense industry of the United States, or critical energy infrastructure.
(iii)

Prioritization
To the maximum extent practicable, the Secretary shall prioritize awarding financial assistance under this subsection to a covered entity that—
(I)
utilizes raw material feedstock sourced from 1 or more offtake agreements with entities that are not foreign entities of concern;
(II)
utilizes raw material feedstock sourced from 2 or more—
- (aa)
entities;
- (bb)
offtake agreements; or
- (cc)
geographic locations;
(III)
utilizes concentrated rare earth elements sourced from 2 or more—
- (aa)
entities;
- (bb)
offtake agreements; or
- (cc)
geographic locations; and
(IV)
intends to produce finished products for use by the Department of Defense, the defense industry of the United States, or critical energy infrastructure.
(D)

Records
(i)

In general
The Secretary may request records and information from a covered entity that submitted an application under subparagraph (A) to review the status of a covered entity.
(ii)

Requirement
The covered entity shall provide the records and information requested by the Secretary under clause (i).
(3)

Amount
(A)

In general
The Secretary shall determine the appropriate amount and funding type for each financial assistance award provided to a covered entity under this subsection.
(B)

Larger investment
The total Federal investment in any individual project receiving a financial assistance award under this subsection shall not exceed $500,000,000, unless the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, recommends to the President, and the President certifies and reports to the appropriate committees of Congress, that a larger investment is necessary—
(i)
to significantly increase the proportion of reliable domestic supply of finished rare earth products relevant for national security and economic competitiveness that can be met through domestic production; and
(ii)
to meet the needs of national security.
(4)

Use of funds
A covered entity that receives a financial assistance award under this subsection may only use the financial assistance award amounts—
(A)
to finance the construction of a covered facility (including equipment) or the expansion or technological upgrade of a facility (including equipment) of the covered entity to be a covered facility, as documented in the application submitted by the covered entity under paragraph (2)(A), as determined necessary by the Secretary for purposes relating to the national security and economic competitiveness of the United States;
(B)
to support workforce development for a covered facility;
(C)
to support site development and technological upgrade for a covered facility; and
(D)
to pay reasonable costs relating to the operating expenses for a covered facility, including specialized workforce, essential materials, and complex equipment maintenance.
(5)

Clawback
(A)

Major awards
(i)

In general
For all financial assistance awards of more than $10,000,000 provided to covered entities under this subsection, the Secretary shall, at the time of making the award, determine the target dates by which a covered entity shall commence and complete the applicable project.
(ii)

Progressive recovery for delays
If the covered entity receiving a financial assistance award of more than $10,000,000 under this subsection does not complete the applicable project by the applicable target date determined under clause (i), the Secretary shall progressively recover up to the full amount of the award.
(iii)

Waiver
In the case of projects that do not meet the applicable target date determined under clause (i), the Secretary may waive the requirement to recover the financial award provided for the project under clause (ii) after making a formal determination that circumstances beyond the ability of the covered entity to foresee or control are responsible for the delay.
(iv)

Congressional notification
(I)

In general
Not later than 15 days after making a determination to recover an award under clause (ii), the Secretary shall notify the appropriate committees of Congress of the intent of the Secretary to recover the award.
(II)

Waivers
Not later than 15 days after the date on which the Secretary provides a waiver under clause (iii), the Secretary shall notify the appropriate committees of Congress of the waiver.
(B)

Joint research, technology licensing, and intellectual property reporting
(i)

In general
Before entering into an agreement with a foreign entity to conduct joint research or technology licensing, or to share intellectual property, a covered entity that has received a financial assistance award under this subsection—
(I)
shall notify the Secretary of the intent to enter into such an agreement; and
(II)
may only enter into such an agreement if the Secretary determines the foreign entity is not a foreign entity of concern.
(ii)

Determination
On receiving a notification under clause (i), the Secretary, in consultation with the Director of National Intelligence, the Director of the National Counterintelligence and Security Center, and the Director of the Federal Bureau of Investigation, shall make a determination of whether the applicable foreign entity is a foreign entity of concern.
(iii)

Technology clawback
The Secretary shall recover the full amount of a financial assistance award provided to a covered entity under this subsection if, during the applicable term of the award, the covered entity knowingly engages in any joint research, technology licensing, or intellectual property sharing effort with a foreign entity of concern that relates to a technology or product that raises national security concerns, as determined by the Secretary, in consultation with the Director of National Intelligence, the Director of the National Counterintelligence and Security Center, and the Director of the Federal Bureau of Investigation, on the condition that the determination of the Secretary shall have been communicated to the covered entity before the covered entity engaged in the joint research, technology licensing, or intellectual property sharing.
(6)

Condition of receipt
A covered entity to which the Secretary awards Federal financial assistance under this subsection shall enter into an agreement that specifies that, during the 5-year period immediately following the award of the Federal financial assistance, the covered entity will not make shareholder distributions in excess of profits.
(b)

Coordination required
In carrying out the program established under subsection (a), the Secretary shall coordinate with the Secretary of State, the Secretary of Defense, the Secretary of Homeland Security, and the Director of National Intelligence.
(c)

GAO reviews
The Comptroller General of the United States shall—
(1)
not later than 2 years after the date of disbursement of the first financial award under the program established under subsection (a), and biennially thereafter for 10 years, conduct a review of the program, which shall include, at a minimum—
(A)
a determination of the number of financial assistance awards provided under the program during the period covered by the review;
(B)
an evaluation of how—
(i)
the program is being carried out, including how recipients of financial assistance awards are being selected under the program; and
(ii)
other Federal programs are leveraged for manufacturing, research, and training to complement the financial assistance awards provided under the program; and
(C)
a description of the outcomes of projects supported by financial assistance awards provided under the program, including a description of—
(i)
covered facilities that were constructed or facilities that were expanded or technologically upgraded to be covered facilities as a result of financial assistance awards provided under the program;
(ii)
workforce training programs carried out with financial assistance awards provided under the program, including efforts to hire individuals from disadvantaged populations; and
(iii)
the impact of projects receiving financial assistance awards under the program on the United States share of global finished rare earth product production; and
(2)
submit to the appropriate committees of Congress the results of each review conducted under paragraph (1).
(d)

Authorization of appropriations
There are authorized to be appropriated to carry out this section—
(1)
$1,500,000,000 for fiscal year 2023; and
(2)
$200,000,000 for each of fiscal years 2024 through 2027.
4.

Funding for development of secure rare earth supply chains
(a)

Multilateral Rare Earth Security Fund
(1)

Establishment of fund
The Secretary of the Treasury may establish a trust fund, to be known as the “Multilateral Rare Earth Security Fund” (in this section referred to as the “Fund”), consisting of such amounts as are appropriated to the Fund or credited to the Fund under paragraph (3).
(2)

Reporting requirement
If the Fund is not established by not later than 180 days after the date of the enactment of this Act, on that date, and annually thereafter until the Fund is established, the Secretary of the Treasury, in coordination with the Secretary of State, shall provide, in writing, to the appropriate committees of Congress a rationale for not establishing the Fund.
(3)

Investment of amounts
(A)

Investment of amounts
If the Fund is established, the Secretary of the Treasury may invest such portion of the Fund as is not required to meet current withdrawals in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.
(B)

Interest and proceeds
The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to and form a part of the Fund.
(4)

Use of fund
(A)

In general
Subject to subparagraph (B), amounts in the Fund shall be available, as provided in advance in an appropriations Act, to the Secretary of State—
(i)
to provide funding through the common funding mechanism described in subsection (b)(1) to support the development and adoption of secure rare earth supply chains; and
(ii)
to otherwise carry out this section.
(B)

Availability contingent on international arrangement or agreement
(i)

In general
Amounts in the Fund shall be available to the Secretary of State, as provided in advance in an appropriations Act, on and after the date on which the Secretary of State enters into an arrangement or agreement with the governments of countries that are partners of the United States, as determined by the Secretary of State, to participate in the common funding mechanism under subsection (b)(1).
(ii)

Consultation
Before entering into an arrangement or agreement as described in clause (i), the Secretary of State, in consultation with the Secretary of Commerce, shall ensure that any government that will participate in the arrangement or agreement maintains export control licensing policies with respect to exports of finished rare earth products substantively equivalent to the United States with respect to restrictions on such exports to the People's Republic of China.
(b)

Common funding mechanism for development of secure rare earth supply chains
(1)

In general
The Secretary of State, in consultation with the Secretary of Commerce, the Secretary of Defense, the Secretary of Homeland Security, the Secretary of the Treasury, the Secretary of Energy, and the Director of National Intelligence, may establish a common funding mechanism, in coordination with the governments of countries that are partners of the United States, that uses amounts from the Fund to support the development and adoption of secure rare earth supply chains, including for—
(A)
research and development collaborations among countries participating in the mechanism; and
(B)
supplementing bids by foreign entities that are not foreign entities of concern to secure offtake agreements with entities that mine rare earth elements.
(2)

Contributions from participating countries
In establishing and sustaining a common funding mechanism described in paragraph (1), the Secretary of State shall seek to leverage amounts from the Fund to secure contributions to the mechanism from the governments of countries participating in the mechanism, including with respect to cost sharing and other cooperative measures leading to the development and adoption of secure rare earth supply chains.
(3)

Commitments
In creating and sustaining a common funding mechanism described in paragraph (1), the Secretary of State shall promote efforts among countries participating in the mechanism—
(A)
to establish transparency requirements for any subsidies or other financial benefits (including revenue foregone) provided to rare earth firms located in or outside such countries;
(B)
to establish processes similar to the process of the Committee on Foreign Investment in the United States under section 721 of the Defense Production Act of 1950 (50 U.S.C. 4565) for intervening to preempt foreign entities of concern from investing in, purchasing, or assuming control of entities, intellectual property, and equipment that are created by or benefit from investments by the mechanism;
(C)
to establish consistent policies with respect to countries that—
(i)
are not participating in the mechanism; and
(ii)
do not meet transparency requirements established under subparagraph (A);
(D)
to promote harmonized treatment of finished rare earth products and verification processes for raw materials or products being exported to a country considered a national security risk by the government of a country participating in the mechanism;
(E)
to establish consistent policies among the governments of countries participating in the mechanism and common policies among countries that are not participating to address nonmarket economy countries as the behavior of such countries pertains to rare earth elements;
(F)
to align policies with respect to supply chain integrity and security, including with respect to protection and enforcement of intellectual property rights; and
(G)
to promote harmonized foreign direct investment screening measures and export control policies with respect to rare earth elements to align with national, multilateral, and plurilateral security priorities.
(c)

Annual report to Congress
Not later than 1 year after the date on which the Fund is established, and annually thereafter for each fiscal year during which amounts in the Fund are available under subsection (a)(4), the Secretary of State shall submit to the appropriate committees of Congress a report on the status of the implementation of this section that includes a description of—
(1)
any commitments made by the governments of countries that have entered into an arrangement or agreement with the United States to provide funding for the common funding mechanism described in subsection (b)(1) and the specific amount so committed and other cooperative measures being taken by such countries as part of the mechanism;
(2)
the criteria established for expenditure of funds through the mechanism;
(3)
how, and to whom, amounts have been expended from the Fund and a description of progress made in utilizing the Fund to support the objectives described in subsection (b)(1);
(4)
amounts remaining in the Fund;
(5)
the progress of the Secretary of State toward entering into an arrangement or agreement with the governments of countries that are partners of the United States to participate in the common funding mechanism and the commitments described in subsection (b)(2); and
(6)
any additional authorities needed to enhance the effectiveness of the Fund in achieving the security goals of the United States.
(d)

Notifications To Be provided by the Fund
(1)

In general
Not later than 15 days prior to the Fund making a financial commitment associated with the provision of expenditures under subsection (a)(4)(A) in an amount in excess of $1,000,000, the Secretary of State shall submit to the appropriate committees of Congress a report in writing that includes the information described in paragraph (2).
(2)

Information required
The information described in this paragraph is—
(A)
the amount of each expenditure described in paragraph (1);
(B)
an identification of the recipient or beneficiary of each such expenditure; and
(C)
a description of the project or activity to be carried out and the purpose to be achieved by each such expenditure.
(3)

Arrangements or agreements
The Secretary of State shall notify the appropriate committees of Congress not later than 30 days after entering into a new bilateral or multilateral arrangement or agreement described in subsection (a)(4)(B).
5.

Workforce development initiative
As soon as practicable after the date of enactment of this Act, the Secretary shall establish an initiative under which the Secretary shall work with the Secretary of Labor, the Director of the National Science Foundation, the Critical Minerals Subcommittee of the National Science and Technology Council, the private sector, institutions of higher education, and workforce training entities to incentivize and expand participation in graduate and undergraduate programs, and to develop workforce training programs and apprenticeships, relating to advanced rare earth element mining, separation, processing, metallurgy, and advanced equipment maintenance capabilities.
6.

Prohibition relating to foreign entities of concern
None of the funds authorized to be appropriated to carry out this Act may be provided to a foreign entity of concern.
7.

Defense Production Act of 1950 efforts
(a)

In general
Not later than 180 days after the date of enactment of this Act, the President shall submit to Congress a report on a plan of action for any use of authorities available in title III of the Defense Production Act of 1950 (50 U.S.C. 4531 et seq.) to establish or enhance a domestic production capability for finished rare earth products and related technologies, subject to—
(1)
the availability of appropriations for that purpose; and
(2)
a determination made under the plan pursuant to that title that—
(A)
finished rare earth products and related technologies are essential to the national defense; and
(B)
domestic industrial capabilities are insufficient to meet those needs.
(b)

Coordination
The President shall develop the plan of action required by subsection (a) in consultation with any relevant head of a Federal agency, an advisory committee established under section 708(d) of the Defense Production Act of 1950 (50 U.S.C. 4558(d)), and appropriate stakeholders in the private sector.