Establishes the Missouri Defense and Energy Independence Act

SECOND REGULAR SESSION
HOUSE BILL NO. 3027
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE KNIGHT .
6648H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
T o repeal section 144.054, RSMo, and to enact in lieu thereof two new sections relating to
incentives for producing certain critical materials and pharmaceuticals.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 144.054, RSMo, is repealed and two new sections enacted in lieu
2 thereof, to be known as sections 144.054 and 620.1641, to read as follows:
144.054. 1. As used in this section, the following terms mean:
2 (1) "Critical materials", metal or metal complexes that serve an essential
3 function in key energy , defense, and consumer prod uct technologies and have a high risk
4 of supply chain disruption;
5 (2) "Critical pharmaceuticals", pharmaceutical active ingr edients, key starting
6 materials, or essential finished pharmaceuticals identified as critical to national security
7 or public health and having a high risk of supply chain disruption;
8 (3) "Nuclear security enterprise", the same meaning as defined in 50 U.S.C. Section
9 2501, inclusive of buildings, structures, and infrastructure constructed for use as a defense
10 nuclear facility as defined in 50 U.S.C. Section 2501;
11 [ (2) ] (4) "Processing", any mode of treatment, act, or series of acts performed upon
12 materials to transform or reduce them to a dif ferent state or thing, including treatment
13 necessary to maintain or preserve such processing by the producer at the production facility;
14 [ (3) ] (5) "Producing" includes, but is not limited to, the production of, including the
15 production and transmission of, telecommunication services;
16 [ (4) ] (6) "Product" includes, but is not limited to, telecommunications services ,
17 critical materials, and critical pharmaceuticals ;
EXPLANA TION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
intended to be omitted from the law . Matter in bold-face type in the above bill is proposed language.
18 [ (5) ] (7) "Recovered materials", those materials which have been diverted or removed
19 from the solid waste stream for sale, use, reuse, or recycling, whether or not they require
20 subsequent separation and processing.
21 2. In addition to all other exemptions granted under this chapter , there is hereby
22 specifically exempted from the provisions of this chapter and the local sales tax law as
23 defined in section 32.085 and from the computation of the tax levied, assessed, or payable
24 under this chapter and the local sales tax law as defined in section 32.085, electrical ener gy
25 and gas, whether natural, artificial, or propane, water , coal, and ener gy sources, chemicals,
26 machinery , equipment, and materials used or consumed in the manufacturing, processing,
27 compounding, mining, or producing of any product, or used or consumed in the processing of
28 recovered materials, or used in research and development related to manufacturing,
29 processing, compounding, mining, or producing any product. The construction and
30 application of this subsection as expressed by the Missouri supreme court in DST Systems,
31 Inc. v . Dir ector of Revenue, 43 S.W .3d 799 (Mo. banc 2001); Southwestern Bell T el. Co. v .
32 Dir ector of Revenue, 78 S.W .3d 763 (Mo. banc 2002); and Southwestern Bell T el. Co. v .
33 Dir ector of Revenue, 182 S.W .3d 226 (Mo. banc 2005), is hereby af firmed.
34 3. In addition to all other exemptions granted under this chapter , there is hereby
35 specifically exempted from the provisions of this chapter and the local sales tax law as
36 defined in section 32.085, and from the computation of the tax levied, assessed, or payable
37 under this chapter and the local sales tax law as defined in section 32.085, all utilities,
38 machinery , and equipment used or consumed directly in television or radio broadcasting and
39 all sales and purchases of tangible personal property , utilities, services, or any other
40 transaction that would otherwise be subject to the state or local sales or use tax when such
41 sales are made to or purchases are made by a contractor for use in fulfillment of any
42 obligation under a defense contract with the United States government, and all sales and
43 leases of tangible personal property by any county , city , incorporated town, or village,
44 provided such sale or lease is authorized under chapter 100, and such transaction is certified
45 for sales tax exemption by the department of economic development, and tangible personal
46 property used for railroad infrastructure brought into this state for processing, fabrication, or
47 other modification for use outside the state in the regular course of business.
48 4. In addition to all other exemptions granted under this chapter , there is hereby
49 specifically exempted from the provisions of this chapter and the local sales tax law as
50 defined in section 32.085, and from the computation of the tax levied, assessed, or payable
51 under this chapter and the local sales tax law as defined in section 32.085, all sales and
52 purchases of tangible personal property , utilities, services, or any other transaction that would
53 otherwise be subject to the state or local sales or use tax when such sales are made to or
HB 3027 2
54 purchases are made by a private partner for use in completing a project under sections
55 227.600 to 227.669.
56 5. In addition to all other exemptions granted under this chapter , there is hereby
57 specifically exempted from the provisions of this chapter and the local sales tax law as
58 defined in section 32.085, and from the computation of the tax levied, assessed, or payable
59 under this chapter and the local sales tax law as defined in section 32.085, all materials,
60 manufactured goods, machinery and parts, electrical ener gy and gas, whether natural,
61 artificial or propane, water , coal and other ener gy sources, chemicals, soaps, deter gents,
62 cleaning and sanitizing agents, and other ingredients and materials inserted by commercial or
63 industrial laundries to treat, clean, and sanitize textiles in facilities which process at least five
64 hundred pounds of textiles per hour and at least sixty thousand pounds per week.
65 6. In addition to all other exemptions granted pursuant to this chapter , there is hereby
66 exempted from the provisions of and the computation of the tax levied, assessed, or payable
67 pursuant to this chapter and the local sales tax law as defined in section 32.085, all sales and
68 purchases of tangible personal property , building materials, equipment, fixtures,
6 9 manufactured goods, machinery , and parts for the purposes of constructing all or any
70 portion of a nuclear security enterprise located in any city with more than four hundred
71 thousand inhabitants and located in more than one county . This subsection shall expire on
72 August 28, 2034.
620.1641. 1. This section shall be known and may be cited as the "Missouri
2 Defense and Energy Independence Act".
3 2. As used in this section, the following terms mean:
4 (1) "Critical materials", metal or metal complexes that serve an essential
5 function in key energy , defense, and consumer prod uct technologies and have a high risk
6 of supply chain disruption;
7 (2) "Critical pharmaceuticals", pharmaceutical active ingr edients, key starting
8 materials, or essential finished pharmaceuticals identified as critical to national security
9 or public health and having a high risk of supply chain disruption;
10 (3) "Department", the Missouri department of economic development;
11 (4) "Missouri development finance board" or "MDFB", the Missouri
1 2 development finance board established under section 100.265;
13 (5) "Notice of intent", a form developed by the department and available online,
14 completed by the qualified company , and submitted to the department stating the
15 qualified company's intent to req uest tax cre dits under this section as pr ovided in
16 subsection 5 of this section;
17 (6) "Proj ect facility", the building or buildings used by a qualified company at
18 which critical materials or critical pharmaceuticals will be pro duced or process ed;
HB 3027 3
19 (7) "Qualified company", a firm, partnership, joint venture , association, private
20 or public corporation rega rdless of whether organized for pr ofit, or headquarters of
21 such entity r egistere d to do business in Missouri, that is a nontraditional defense
22 contractor , as such term is defined in 10 U.S.C. Section 3014, as amended, and that
23 incurs qualified pr oject costs;
24 (8) "Qualified pr oject costs", costs incurr ed by a qualified company for the
25 construction, expansion, or conversion of facilities and acquisition of equipment for the
26 pr oduction of critical materials or critical pharmaceuticals including, but not limited to:
27 (a) Site pr eparation;
28 (b) Building construction or reno vation;
29 (c) Machinery and equipment acquisition and installation, including any
30 specialized manufacturing equipment;
31 (d) Utility infrastructur e; and
32 (e) Envir onmental compliance systems;
33 (9) "State tax liability", any liability incurr ed by a taxpayer pursuant to the
34 pr ovisions of chapter 143 or chapter 148, exclusive of the pr ovisions relat ing to the
35 withholding of tax as pro vided for in sections 143.191 to 143.265 and relat ed pr ovisions;
36 (10) "T ax cr edit", a cr edit against the tax otherwise due under chapter 143 or
37 chapter 148, excluding withholding tax imposed under sections 143.191 to 143.265.
38 3. (1) For all tax years beginning on or after January 1, 2027, the department
39 may award a qualified company tax cred its for qualified pro ject costs incurr ed by the
40 qualified company on or after January 1, 2027, pr ovided that no tax cr edit shall be
41 authorized for any qualified company that incurs less than five million dollars in
42 qualified pr oject costs. The amount of the tax cr edit shall be equal to:
43 (a) For qualified companies that incur qualified pr oject costs of at least five
44 million dollars but less than fifteen million dollars, twenty per cent of such qualified
45 pr oject costs; and
46 (b) For qualified companies that incur qualified project costs of at least fifteen
47 million dollars, twenty-five percen t of qualified pr oject costs.
48 (2) T ax credi ts authorized by this section shall not be ref undable, but may be
49 carried forward for ten subsequent tax years or until the full amount of the tax credit
50 has been red eemed, whichever occurs first.
51 (3) T ax cr edits authorized by this section may be transferr ed, sold, or otherwise
52 assigned by filing a notarized endorsement ther eof with the department that names the
53 transfer ee, the amount of tax cr edit transferr ed, and the value receiv ed for the cre dit, as
54 well as any other information reas onably r equested by the department. For a qualified
55 company with flow-throu gh tax tr eatment to its members, partners, or shar eholders, the
HB 3027 4
56 tax cred it shall be allowed to members, partners, or shareho lders in prop ortion to their
57 shar e of ownership on the last day of the qualified company's tax period.
58 4. The cumulative amount of tax credi ts that may be authorized pursuant to this
59 section shall not exceed forty million dollars in any fiscal year . If the amount of tax
60 cr edits applied for in a fiscal year exceeds forty million dollars, tax cred its shall be
61 allowed based on the order in which they ar e claimed.
62 5. A qualified company seeking tax cr edits authorized by this section shall
63 submit a notice of intent to the department. Upon appr oval of a notice of intent to
64 r eceive tax cr edits under this section, the department and the qualified company shall
65 enter into a written agr eement, which shall specify , at a minimum:
66 (1) The types and amounts of critical materials that will be pr oduced or
67 pr ocessed at the pr oject facility , along with any supporting information fr om the federal
68 Department of the Interior , Department of Energy , or Department of Defense indicating
69 a shortage or thr eat to supply of such critical materials;
70 (2) The types and amounts of critical pharmaceuticals that will be pr oduced or
71 pr ocessed at the pr oject facility , along with any supporting information fr om the federal
72 Food and Drug Administration, Department of Defense, Department of V eterans
73 Affairs, or Department of Health and Human Services indicating a shortage or thr eat to
74 supply of such critical pharmaceuticals;
75 (3) The estimated amount of capital investment to be made and the estimated
76 number of new jobs to be creat ed at the pr oject facility;
77 (4) Clawback pr ovisions, as may be r equir ed by the department;
78 (5) Financial guarantee pr ovisions as may be requi red by the department; and
79 (6) Any other pr ovisions the department may requ ire.
80 6. (1) Ther e is her eby cr eated in the state treasury the "Grants for
81 Independence fr om For eign Influence Fund", which shall consist of at least ten
82 million dollars appr opriated by the general assembly and any gifts, contributions,
83 grants, or bequests rec eived fr om federal, private, or other sources . The state tre asurer
84 shall be custodian of the fund. In accordance with sections 30.170 and 30.180, the state
85 tr easur er may appr ove disbursements. The fund shall be a dedicated fund and, upon
86 appr opriation, moneys in the fund shall be used solely as pr ovided in subsection 7 of this
87 section.
88 (2) Notwithstanding the pro visions of section 33.080 to the contrary , any moneys
89 r emaining in the fund at the end of the biennium shall not r evert to the credit of the
90 general reven ue fund.
HB 3027 5
91 (3) The state tre asurer shall invest moneys in the fund in the same manner as
92 other funds ar e invested. Any interes t and moneys earned on such investments shall be
93 cr edited to the fund.
94 7. (1) The department shall develop and implement grants for independence
95 fr om for eign influence as pr ovided in this subsection.
96 (2) The department shall establish pr ocedur es for the solicitation, evaluation,
97 and appr oval of grant applications r eceived fr om a qualified company . A qualified
98 company may submit a grant application for the award of moneys for qualified pr oject
99 costs incurr ed by the qualified company as pr ovided in this subsection.
100 (3) The department shall evaluate each application and appr ove or r eject such
101 application. Subject to appr opriations, upon appr oval of an application, the MDFB
102 shall serve as the third-party administrator of the grant funds, and shall disburse the
103 grant award fr om the grants for independence fr om fore ign influence fund in an
104 amount not to exceed five hundre d thousand dollars per grant application.
105 (4) Moneys granted to a qualified company under this section shall be used solely
106 for qualified project costs incurr ed before the completion of the project facility .
107 8. The department shall promul gate all necessary rules and r egulations for the
108 administration of this section including, but not limited to, rules rela ting to the
109 verification of a qualified company's qualified project costs. Any rule or portion of a
110 rule, as that term is defined in section 536.010, that is crea ted under the authority
111 delegated in this section shall become effective only if it complies with and is subject to
112 all of the pr ovisions of chapter 536 and, if applicable, section 536.028. This section and
113 chapter 536 are nonseverable and if any of the powers vested with the general assembly
114 pursuant to chapter 536 to revi ew , to delay the effective date, or to disappr ove and annul
115 a rule are subsequently held unconstitutional, then the grant of rulemaking authority
116 and any rule prop osed or adopted after August 28, 2026, shall be invalid and void.
117 9. Pursuant to section 23.253 of the Missouri sunset act:
118 (1) The pr ogram authorized pursuant to this section shall automatically sunset
119 on December 31, 2036, unless reau thorized by an act of the general assembly;
120 (2) This section shall terminate on September first of the calendar year
121 immediately following the calendar year in which the prog ram authorized pursuant to
122 this section is sunset; and
123 (3) The pr ovisions of this subsection shall not be construed to impair or impede
124 the state's fulfillment of any obligations, including the authorization, issuance, or
HB 3027 6
125 r edemption of tax cr edits, incurr ed pursuant to this section prior to the date the
126 pr ogram authorized pursuant to this section is sunset.
✔
HB 3027 7