Bill Summary
The "Critical Minerals and Manufacturing Support Act" proposes amendments to the Internal Revenue Code of 1986, specifically modifying the advanced manufacturing credit to enhance support for the production of battery components. Key features of the legislation include:
1. **Increased Credit Rate**: The credit rate for the production of electrode active materials is increased from 10% to 25%, incentivizing domestic production.
2. **Production Cost Inclusion**: The definition of production costs is expanded to include not only raw materials but also expenses related to material extraction from both geological sources and waste products.
3. **Sourcing Requirements**: The act establishes stringent sourcing requirements for critical minerals and battery components. A significant percentage of these materials must be sourced from within the U.S. or from countries with which the U.S. has free trade agreements, with gradually increasing thresholds set for future years.
4. **Exclusions for Foreign Entities**: Credits will not be available for components containing critical minerals or materials produced by foreign entities of concern, ensuring national security and promoting local manufacturing.
5. **Definition Updates**: The act updates definitions related to electrode active materials and introduces new categories of materials qualifying for credits, reflecting advancements in battery technology.
6. **Effective Date**: The amendments will apply to components produced and sold after December 31, 2025.
Overall, this legislation aims to bolster domestic manufacturing of battery components, support the development of critical minerals sourcing, and enhance the competitiveness of the U.S. in the global battery supply chain.
Possible Impacts
Here are three examples of how the "Critical Minerals and Manufacturing Support Act" could affect people:
1. **Job Creation in Domestic Manufacturing**: By increasing the advanced manufacturing credit for battery components, particularly electrode active materials, this legislation incentivizes domestic production. As a result, companies may invest in new manufacturing facilities or expand existing ones in the United States. This could lead to job creation in manufacturing, engineering, and related fields, benefiting workers and local economies.
2. **Increased Cost of Battery Components**: The legislation includes specific sourcing requirements, mandating that a significant percentage of the critical minerals used in battery components must be sourced from the U.S. or countries with which the U.S. has free trade agreements. This could potentially raise production costs for manufacturers who may need to adjust their supply chains to comply with the new rules. Consequently, consumers may face higher prices for electric vehicles and other battery-operated products.
3. **Environmental and Sustainability Impacts**: The emphasis on recycling and sourcing critical minerals locally could lead to more environmentally sustainable practices in the battery production industry. By encouraging the recycling of minerals and reducing dependency on foreign entities, the legislation may contribute to improved environmental standards and practices, which can positively affect communities by reducing pollution and promoting the responsible use of resources. This could also enhance public awareness about the importance of sustainable manufacturing practices.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3200 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 3200
To amend the Internal Revenue Code of 1986 to modify the advanced
manufacturing credit with respect to the production of battery
components.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 5, 2025
Mr. Ruiz (for himself and Mr. Evans of Colorado) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify the advanced
manufacturing credit with respect to the production of battery
components.
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 ``Critical Minerals and Manufacturing
Support Act''.
SEC. 2. MODIFICATION OF ADVANCED MANUFACTURING PRODUCTION CREDIT
RELATING TO BATTERY PRODUCTION.
(a) Increase in Credit Amount for Electrode Active Materials.--
Section 45X(b)(1)(J) of the Internal Revenue Code of 1986 is amended by
striking ``10 percent'' and inserting ``25 percent''.
(b) Special Rules Relating to Production of Electrode Active
Materials.--Section 45X(b) of such Code is amended by adding at the end
the following new paragraph:
``(5) Special rules relating to electrode active
materials.--
``(A) Production costs.--The production of
electrode active materials shall include the cost of
raw materials, including material extraction from
geological sources or waste products.''.
(c) Sourcing Requirements With Respect to Qualifying Battery
Components and Applicable Critical Minerals.--Section 45X of such Code
is amended by adding at the end the following new subsection:
``(e) Critical Mineral and Battery Component Sourcing
Requirements.--
``(1) Applicable critical minerals.--
``(A) In general.--No credit shall be allowed under
this section with respect to a qualifying battery
component unless the percentage of the value of the
applicable critical minerals contained therein that
were--
``(i) extracted or processed--
``(I) in the United States, or
``(II) in any country with which
the United States has a free trade
agreement in effect, or
``(ii) recycled, and reintegrated into the
supply chain, in North America,
is at least equal to the applicable percentage (as
certified by the taxpayer in such form or manner as
prescribed by the Secretary).
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage shall be--
``(i) in the case of any qualifying battery
component sold to an unrelated person during
calendar year 2026, 70 percent, and
``(ii) in the case of any qualifying
battery component sold to an unrelated person
after December 31, 2026, 80 percent.
``(2) Qualifying battery components.--
``(A) In general.--No credit shall be allowed under
this section with respect to a qualifying battery
component unless the percentage of the value of the
constituent elements, materials, and subcomponents
contained therein that were produced, manufactured, or
assembled in North America is at least equal to the
applicable percentage (as certified by the taxpayer, in
such form or manner as prescribed by the Secretary).
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage shall be--
``(i) in the case of qualifying battery
components sold to an unrelated person during
calendar year 2026, 70 percent,
``(ii) in the case of qualifying battery
components sold to an unrelated person during
calendar year 2027, 80 percent,
``(iii) in the case of qualifying battery
components sold to an unrelated person during
calendar year 2028, 90 percent, and
``(iv) in the case of qualifying battery
components sold to an unrelated person after
December 31, 2028, 100 percent.
``(3) Regulations.--The Secretary shall, to the extent
practicable, prescribe regulations similar to regulations
prescribed under section 30D(e) to carry out the purposes of
this subsection.''.
(d) Excluded Entities.--Section 45X(c)(1) of such Code is amended
by adding at the end the following new subparagraph:
``(C) Excluded entities.--The term `eligible
component' shall not include any qualifying battery
component with respect to which--
``(i) any of the applicable critical
minerals contained therein were extracted,
processed, or recycled by a foreign entity of
concern (as defined in section 40207(a)(5) of
the Infrastructure Investment and Jobs Act (42
U.S.C. 18741(a)(5))), and
``(ii) any of the constituent elements,
materials, or subcomponents contained therein
were produced, manufactured, or assembled by a
foreign entity of concern (as so defined).
The term `foreign entity of concern' shall include any
entity that is directly or indirectly owned by a
foreign entity of concern described in subparagraph (C)
of section 40207(a)(5) of such Act.''.
(e) Modification of Electrode Active Material Definition.--
(1) In general.--Section 45X(c)(5)(B)(i) of such Code is
amended--
(A) by inserting ``electrode active precursor
materials used in the production of cathode and anode
materials,'' after ``anode materials,'',
(B) by inserting ``binders,'' after ``anode
foils,'', and
(C) by inserting ``solid state electrolytes,''
after ``including''.
(2) Electrode active precursor materials.--Section
45X(c)(5)(B)(i) of such Code is amended--
(A) by striking ``material.--The term'' and
inserting the following: ``material.--
``(I) In general.--The term'', and
(B) by adding at the end the following new
subclause:
``(II) Electrode active precursor
material.--The term `electrode active
precursor material' means any of the
following materials which are of a
sufficient grade to meet the purity
specifications to supply the electrode
active materials market: Cobalt
sulfate, manganese sulfate, iron
sulfate, lithium hydroxide,
metallurgical silicon, phosphoric acid,
iron phosphate, nickel manganese cobalt
oxide, graphene, sulfur, synthetic or
natural graphite pitch, or lithium
carbonate.''.
(f) Certain Silicon Treated as Applicable Critical Material.--
Section 45X(c)(6) of such Code is amended by redesignating
subparagraphs (T) through (Z) as subparagraphs (U) through (AA),
respectively, and by inserting after subparagraph (S) the following new
subparagraph:
``(T) Silicon.--Silicon which is silicon or silicon
composite used as an electrode active material in
battery anodes.''.
(g) Effective Date.--The amendments made by this section shall
apply to components produced and sold after December 31, 2025.
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