15 U.S.C. § 4652: Semiconductor incentives

The Secretary shall establish in the Department of Commerce a program that, in accordance with the requirements of this section and subject to the availability of appropriations for such purposes, provides Federal financial assistance to covered entities to incentivize investment in facilities and equipment in the United States for the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment. A covered entity shall submit to the Secretary an application that describes the project for which the covered entity is seeking financial assistance under this section. the covered entity has a documented interest in constructing, expanding, or modernizing a facility described in paragraph (1) 1 1 So in original. Probably should be followed by a semicolon. been offered a covered incentive; training and education benefits paid by the covered entity; and programs to expand employment opportunity for economically disadvantaged individuals; and 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; an executable plan to sustain the facility described in clause (i) without additional Federal financial assistance under this subsection for facility support; the type of semiconductor technology, equipment, materials, or research and development the covered entity will produce at the facility described in clause (i); and the customers, or categories of customers, to which the covered entity plans to sell the semiconductor technology, equipment, materials, or research and development described in item (aa); and documented, to the extent practicable, workforce needs and developed a strategy to meet such workforce needs consistent with the commitments described in subclauses (II) and (III); with respect to the project described in clause (i), the covered entity has an executable plan to identify and mitigate relevant semiconductor supply chain security risks, such as risks associated with access, availability, confidentiality, integrity, and a lack of geographic diversification in the covered entity’s supply chain; and with respect to any project for the production, assembly, or packaging of semiconductors, the covered entity has implemented policies and procedures to combat cloning, counterfeiting, and relabeling of semiconductors, as applicable. confirms that the covered entity has satisfied the eligibility criteria under subparagraph (B); determines that the project to which the application relates is in the economic and national security interests of the United States; and has notified the appropriate committees of Congress not later than 15 days before making any commitment to provide a grant to any covered entity that exceeds $10,000,000; the covered entity has previously received financial assistance made under this subsection; the governmental entity offering the applicable covered incentive has benefitted from financial assistance previously provided under this subsection; the covered entity has demonstrated that they are 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; and when practicable, a consortium that is considered a covered entity includes a small business concern, as defined under section 632 of this title , notwithstanding section 121.103 of title 13, Code of Federal Regulations; the Secretary shall consider the type of semiconductor technology produced by the covered entity and whether that semiconductor technology advances the economic and national security interests of the United States; the Secretary may not approve an application, unless the covered entity provides a plan that does not use Federal financial assistance to assist efforts to physically relocate existing facility infrastructure to another jurisdiction within the United States, unless the project is in the interest of the United States; and the Secretary may not approve an application if the Secretary determines that the covered entity is a foreign entity of concern. manufacture semiconductors necessary to address gaps and vulnerabilities in the domestic supply chain across a diverse range of technology and process nodes; and provide a secure supply of semiconductors necessary for the national security, manufacturing, critical infrastructure, and technology leadership of the United States and other essential elements of the economy of the United States; and ensure that the assistance is awarded to covered entities for both advanced and mature technology nodes to meet the priorities described in clause (i). The Secretary may request records and information from the applicant to review the status of a covered entity. The applicant shall provide the records and information requested by the Secretary. The Secretary shall determine the appropriate amount and funding type for each financial assistance award made to a covered entity under this subsection. significantly increase the proportion of reliable domestic supply of semiconductors relevant for national security and economic competitiveness that can be met through domestic production; and meet the needs of national security. finance the construction, expansion, or modernization of a facility or equipment to be used for the purposes described in paragraph (1), as documented in the application submitted by the covered entity under paragraph (2)(B), as determined necessary by the Secretary for purposes relating to the national security and economic competitiveness of the United States; support workforce development for a facility described in subparagraph (A); support site development and modernization for a facility described in subparagraph (A); and pay reasonable costs related to the operating expenses for a facility described in subparagraph (A), including specialized workforce, essential materials, and complex equipment maintenance, as determined by the Secretary. determine target dates by which a project shall commence and complete; and set these dates by the time of award. If the project does not commence and complete by the set target dates in (A), the Secretary shall progressively recover up to the full amount of an award provided to a covered entity under this subsection. with a foreign entity of concern; and that relates to a technology or product that raises national security concerns, as determined by the Secretary and communicated to the covered entity before engaging in such joint research or technology licensing. making a formal determination that circumstances beyond the ability of the covered entity to foresee or control are responsible for delays; and submitting congressional notification. of the clawback provisions attending each such award; and of any waivers provided, not later than 15 days after the date on which such a waiver was provided. a semiconductor technology that is of the 28 nanometer generation or older for logic; with respect to memory technology, analog technology, packaging technology, and any other relevant technology, any legacy generation of semiconductor technology relative to the generation described in item (aa), as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and any additional semiconductor technology identified by the Secretary in a public notice issued under clause (ii); and does not include a semiconductor that is critical to national security, as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence. Not later than 2 years after August 9, 2022 , and not less frequently than once every 2 years thereafter for the 8-year period after the last award under this section is made, the Secretary, after public notice and an opportunity for comment and if applicable and necessary, shall issue a public notice identifying any additional semiconductor technology included in the meaning of the term “legacy semiconductor” under clause (i). The functions of the Secretary under this paragraph shall not be subject to sections 551, 553 through 559, and 701 through 706 of title 5. In carrying out clause (ii), the Secretary shall consult with the Director of National Intelligence and the Secretary of Defense. state-of-the-art semiconductor technologies in the United States and internationally, including in foreign countries of concern; and consistency with export controls relating to semiconductors. has the meaning given the term by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and includes front-end semiconductor fabrication. On or before the date on which the Secretary awards Federal financial assistance to a covered entity under this section, the covered entity shall enter into an agreement with the Secretary specifying that, during the 10-year period beginning on the date of the award, subject to clause (ii), the covered entity may not engage in any significant transaction, as defined in the agreement, involving the material expansion of semiconductor manufacturing capacity in the People’s Republic of China or any other foreign country of concern. existing facilities or equipment of a covered entity for manufacturing legacy semiconductors; or produces legacy semiconductors; and predominately serves the market of a foreign country of concern. For the purpose of applying the requirements in an agreement required under clause (i), a covered entity shall include the covered entity receiving financial assistance under this section, as well as any member of the covered entity’s affiliated group under section 1504(a) of title 26 , without regard to section 1504(b)(3) of title 26 . During the applicable term of the agreement of a covered entity required under subparagraph (C)(i), the covered entity shall notify the Secretary of any planned significant transactions of the covered entity involving the material expansion of semiconductor manufacturing capacity in the People’s Republic of China or any other foreign country of concern. determine whether the significant transaction described in the notification would be a violation of the agreement of the covered entity required under subparagraph (C)(i); and notify the covered entity of the Secretary’s decision under subclause (I). immediately request from the covered entity tangible proof that the planned significant transaction has ceased or been abandoned; and provide the covered entity 45 days to produce and provide to the Secretary the tangible proof described in subclause (I). Subject to clause (iv), if a covered entity fails to remedy a violation as set forth under clause (ii), the Secretary shall recover the full amount of the Federal financial assistance provided to the covered entity under this section. may negotiate, enter into, and enforce any agreement or condition for the mitigation; and, waive the recovery requirement under clause (iii). The Secretary may request from a covered entity records and other necessary information to review the compliance of the covered entity with the agreement required under subparagraph (C)(i). In order to be eligible for Federal financial assistance under this section, a covered entity shall agree to provide records and other necessary information requested by the Secretary under clause (i). shall be exempt from disclosure under section 552(b)(3) of title 5 ; and shall not be made public. Information relevant to any administrative or judicial action or proceeding. Information that a covered entity has consented to be disclosed to third parties. Information necessary to fulfill the requirement of the congressional notification under subparagraph (H). a notification of the violation; a brief description of how the Secretary determined the covered entity to be in violation; and a summary of any actions or planned actions by the Secretary in response to the violation. The Secretary may issue regulations implementing this paragraph. 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, the Secretary of Energy, and the Director of National Intelligence. a determination of the number of instances in which financial assistance awards were provided under that subsection during the period covered by the review; the program is being carried out, including how recipients of financial assistance awards are being selected under the program; other Federal programs are leveraged for manufacturing, research, and training to complement the financial assistance awards awarded under the program; and demand-side incentives, including incentives related to the information and communications technology supply chain; and additional incentives, at national and global scales, to accelerate utilization of leading-edge semiconductor nodes to address shortages in mature semiconductor nodes; and facilities described in subsection (a)(1) that were constructed, expanded, or modernized as a result of awards made under the program; research and development carried out with awards made under the program; workforce training programs carried out with awards made under the program, including efforts to hire individuals from disadvantaged populations; and the impact of projects on the United States share of global microelectronics production; how projects are supporting the semiconductor needs of critical infrastructure industries in the United States, including those industries designated by the Cybersecurity and Infrastructure Security Agency as essential infrastructure industries; and majority owned and controlled by minority individuals; majority owned and controlled by women; or majority owned and controlled by both women and minority individuals; the number and amount of contracts and subcontracts awarded by each covered entity using funds made available under subsection (a) disaggregated by recipients of each such contract or subcontracts that are majority owned and controlled by minority individuals and majority owned and controlled by women; and aggregated workforce data, including data by race or ethnicity, sex, and job categories. 2 2 So in original. The period probably should be “; and”. submit to the appropriate committees of Congress the results of each review conducted under paragraph (1). strengthens the security and resilience of the semiconductor supply chain, including by mitigating gaps and vulnerabilities; provides a supply of secure semiconductors relevant for national security; strengthens the leadership of the United States in semiconductor technology; grows the economy of the United States and supports job creation in the United States; bolsters the semiconductor and skilled technical workforces in the United States; promotes the inclusion of economically disadvantaged individuals and small businesses; and improves the resiliency of the semiconductor supply chains of critical manufacturing industries. The Secretary shall establish within the program established under subsection (a) an additional program that provides Federal financial assistance to covered entities to incentivize investment in facilities and equipment in the United States for the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes. submit an application under subsection (a)(2)(A); meet the eligibility requirements under subsection (a)(2)(B); provide equipment or materials for the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes in the United States; or fabricate, assemble using packaging, or test semiconductors at mature technology nodes in the United States; commit to using any Federal financial assistance received under this section to increase the production of semiconductors at mature technology nodes; and be subject to the considerations described in subsection (a)(2)(C). In granting Federal financial assistance to covered entities under this subsection, the Secretary may use the procedures established under subsection (a). In addition to the considerations described in subsection (a)(2)(C), in granting Federal financial assistance under this subsection, the Secretary may consider whether a covered entity produces or supplies equipment or materials used in the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes that are necessary to support a critical manufacturing industry. In awarding Federal financial assistance to covered entities under this subsection, the Secretary shall give priority to covered entities that support the resiliency of semiconductor supply chains for critical manufacturing industries in the United States. There are authorized to be appropriated to the Secretary to carry out this subsection $2,000,000,000, which shall remain available until expended. Section 3212 of title 42 shall apply to a construction project that receives financial assistance from the Secretary under this section. Subject to the requirements of subsection (a) and this subsection, the Secretary may make or guarantee loans to covered entities as financial assistance under this section. has a reasonable prospect of repaying the principal and interest on the loan; and has met such other criteria as may be established and published by the Secretary; and the amount of the loan (when combined with amounts available to the loan recipient from other sources) will be sufficient to carry out the project. the strength of the contractual terms of the project the covered entity plans to perform (if commercially reasonably available); the forecast of noncontractual cash flows supported by market projections from reputable sources, as determined by the Secretary; cash sweeps and other structure enhancements; at the time of loan close; and throughout the loan term after the project is completed; the financial strength of the investors and strategic partners of the covered entity, if applicable; other financial metrics and analyses that the private lending community and nationally recognized credit rating agencies rely on, as determined appropriate by the Secretary; and such other criteria the Secretary may determine relevant. shall have an interest rate that does not exceed a level that the Secretary determines appropriate, taking into account, as of the date on which the loan is made, the cost of funds to the Department of the Treasury for obligations of comparable maturity; and shall have a term of not more than 25 years. A loan or guarantee provided under this subsection may include any other terms and conditions that the Secretary determines to be appropriate. the lender is responsible; and adequate provision is made for servicing the loan on reasonable terms and protecting the financial interest of the United States. New loans may not be obligated and new loan guarantees may not be committed to under this subsection, unless appropriations of budget authority to cover the costs of such loans and loan guarantees are made in advance in accordance with section 661c(b) of title 2 . The loan agreement for a loan guaranteed under this subsection shall provide that no provision of the loan agreement may be amended of 3 waived without the consent of the Secretary. 3 So in original. Probably should be “or”. the activity described in the application for that project has commenced not later than December 31, 2024 ; the Federal financial assistance provided is in the form of a loan or loan guarantee; or the Federal financial assistance provided, excluding any loan or loan guarantee, comprises not more than 10 percent of the total estimated cost of the project. Nothing in this subsection may be construed as altering whether an activity described in subparagraph (A), (B), or (C) of paragraph (1) is considered to be a major Federal action under NEPA, or an undertaking under division A of subtitle III of title 54, for a reason other than that the activity is eligible for Federal financial assistance provided under this section. whether the eligibility requirements for covered entities receiving financial assistance under the program are met; whether eligible entities use the financial assistance received under the program in accordance with the requirements of this section; whether the covered entities receiving financial assistance under this program have carried out the commitments made to worker and community investment under subsection (a)(2)(B)(ii)(II) by the target date for completion set by the Secretary under subsection (a)(5)(A); whether the required agreement entered into by covered entities and the Secretary under subsection (a)(6)(C)(i), including the notification process, has been carried out to provide covered entities sufficient guidance about a violation of the required agreement; whether the Secretary has provided timely Congressional notification about violations of the required agreement under subsection (a)(6)(C)(i), including the required information on how the Secretary reached a determination of whether a covered entity was in violation under subsection (a)(6)(E); and whether the Secretary has sufficiently reviewed any covered entity engaging in a listed exception under subsection (a)(6)(C)(ii). No funds made available under this section may be used to construct, modify, or improve a facility outside of the United States. Not later than 180 days after the date of enactment of this Act [ Aug. 9, 2022 ], the Secretary of Commerce shall establish activities in the Department of Commerce, within the program established under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4652 ), to carry out this section using funds appropriated under this Act [div. A of Pub. L. 117–167 , see Tables for classification]. The Secretary of Commerce shall assign personnel to lead and support the activities carried out under this section, including coordination with other workforce development activities of the Department of Commerce or of Federal agencies, as defined in section 551 of title 5 , United States Code, as appropriate. assess the eligibility of a covered entity, as defined in section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4651 ), for financial assistance for a project with respect to the requirements under subclauses (II) and (III) of section 9902(a)(2)(B)(ii) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4652(a)(2)(B)(ii)(II) and (III)); ensure that each covered entity, as defined in section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4651 ), that is awarded financial assistance under section 9902 of that Act ( 15 U.S.C. 4652 ) is carrying out the commitments of the covered entity to economically disadvantaged individuals as described in the application of the covered entity under that section by the target dates for completion established by the Secretary of Commerce under subsection(a)(5)(A) of that section; and increase participation of and outreach to economically disadvantaged individuals, minority-owned businesses, veteran-owned businesses, and women-owned businesses, as defined by the Secretary of Commerce, respectively, in the geographic area of a project under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4652 ) and serve as a resource for those individuals, businesses, and covered entities. The activities under this section shall be staffed at the appropriate levels to carry out the functions and responsibilities under this section until 95 percent of the amounts of funds made available for the program established under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4652 ) have been expended. Beginning on the date that is 1 year after the date on which the Secretary of Commerce establishes the activities described in subsection (c), the Secretary of Commerce shall submit to the appropriate committees of Congress, as defined in section 9901(1) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 15 U.S.C. 4651 ), and make publicly available on the website of the Department of Commerce an annual report regarding the actions taken by the Department of Commerce under this section.”