Authority for equity investments by Office of Strategic Capital

Section 149 of title 10, United States Code, is amended— (1) by redesignating subsection (h) as subsection (i); (2) by inserting after subsection (g) the following new subsection (h): (h) Authority for equity investments (1) Establishment of account (A) In general There is established in the Treasury of the United States a Department of Defense Equity Investment Account (in this subsection referred to as the Equity Investment Account), to be used to make equity investments under this subsection. (B) Amounts in account The Equity Investment Account shall consist of amounts appropriated pursuant to the authorization of appropriations specifically designated for equity investments under this subsection. (2) Authority for equity investments The Director may use amounts in the Equity Investment Account to make equity investments in entities for the purpose of carrying out this subsection. (3) Eligible uses The Director may exercise the authority under paragraph (2) only with respect to— (A) critical minerals, materials, and chemicals; and (B) batteries. (4) Limitations (A) Limitation on per amount investment The amount of an equity investment in an entity under paragraph (2) may not exceed the amount that is equal to 40 percent of the total amount of all equity investments made to the entity at the time of the equity investment by the Director under paragraph (2). (B) Limitation on aggregate amount of investments The Director may not make equity investments under paragraph (2) in an entity that exceed $500,000,000 in the aggregate. (C) Prohibition on majority ownership by Department The Department of Defense may not hold more than 50 percent of the ownership interest in an entity in which the Director makes an equity investment under paragraph (2). (D) Prohibition on voting representation The Director shall not take or maintain board seats, directors, or any other form of voting representation in any entity in which the Director makes an equity investment under paragraph (2). (5) Certification The Director may make an equity investment in an entity under paragraph (2) only if the Director certifies to the congressional defense committees that— (A) without the investment— (i) sufficient commercial credit is not available to the entity under reasonable terms or conditions to finance the activity the entity plans to carry out using the investment; or (ii) the entity would be unable to expand operations to support the defense industrial base in the time frame necessary to address a shortfall in such operations; (B) the investment is the most cost effective, expedient, and practical alternative available to meet the needs of the Federal Government; and (C) the investment is in the national security interests of the United States. (6) Guidelines and criteria (A) In general The Director, in coordination with the National Security Capital Forum, shall develop guidelines and criteria for the use of the authority to make equity investments under paragraph (2). (B) Considerations The guidelines and criteria required by subparagraph (A) shall require, when determining whether to make an equity investment in an entity under paragraph (2), consideration of whether— (i) the equity investment in the entity would be more likely than not to substantially reduce or overcome the effect of an identified market failure; (ii) the operations of the entity would be terminated or substantially delayed without the equity investment; (iii) the investment supports a use described in paragraph (3); (iv) the investment would be aligned with incentives provided by commercial partners; (v) the investment would have a significant benefit for, or contribute to long-term commercial sustainability of, the defense industrial base; (vi) the investment would not unduly harm or hinder competition within the defense industrial base; (vii) the investment would further the economic security policy of the United States; and (viii) the investment would comply with all applicable laws related to ethics and conflicts of interest. (7) Limit on currency denomination An equity investment under paragraph (2) may be denominated in a foreign currency only if the National Security Capital Forum determines the policy goal of the investment cannot be achieved using United States dollars. (8) Disposition of equity investment (A) In general The Director may dispose of any equity investment made under paragraph (2) only after taking into consideration the national security interests of the United States. (B) Reinvestment Any proceeds from the disposition of an equity investment made under paragraph (2)— (i) may not be used for any purpose; and (ii) shall be deposited into the Treasury of the United States. (9) Sunset The authorities under this subsection shall terminate on December 31, 2037.; and (3) in subsection (i), as redesignated by paragraph (1)— (A) by redesignating paragraph (5) as paragraph (6); and (B) by inserting after paragraph (4) the following new paragraph (5): (5) The term equity investment means any direct or indirect purchase, acquisition, or commitment of funds by the Department of Defense in exchange for an ownership interest, convertible interest, warrant, revenue-sharing instrument, or other similar financial instrument in a non-Federal entity..