SB 1553

                                     SECOND REGULAR SESSION
                           [TRULY AGREED TO AND FINALLY PASSED]
                                       SENATE SUBSTITUTE FOR
               SENATE BILL NO. 1553
                                     103RD GENERAL ASSEMBLY
                                               2026
 6232S.02T
                                                  AN ACT
 To 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:
1Section A.  Section 144.054, RSMo, is repealed and two new
2  sections enacted in lieu thereof, to be known as sections
3  144.054 and 620.1641, to read as follows:
1144.054.  1. As used in this section, the following
2  terms mean:
3(1) "Critical materials", metal or metal complexes
4  included on the list of critical materials as published by
5  the United States Department of the Interior that serve an
6  essential function in key energy, defense, and consumer
7  product technologies and have a high risk of supply chain
8  disruption;
9(2)      "Critical pharmaceuticals", pharmaceutical active
10  ingredients, key starting materials, or essential finished
11  pharmaceuticals identified as critical to national security
12  or public health and having a high risk of supply chain
13  disruption as included on the list published by the United
14  States Food and Drug Administration;
15(3) "Nuclear security enterprise", the same meaning as
16  defined in 50 U.S.C. Section 2501, inclusive of buildings,
 EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
 and is intended to be omitted in the law.
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17 structures, and infrastructure constructed for use as a
18 defense nuclear facility as defined in 50 U.S.C. Section
19 2501;
20[(2)] (4)   "Processing", any mode of treatment, act, or
21 series of acts performed upon materials to transform or
22 reduce them to a different state or thing, including
23 treatment necessary to maintain or preserve such processing
24 by the producer at the production facility;
25[(3)] (5)   "Producing", includes, but is not limited
26 to, the production of, including the production and
27 transmission of, telecommunication services;
28[(4)] (6)   "Product", includes, but is not limited to,
29 telecommunications services, critical materials, and
30 critical pharmaceuticals;
31[(5)] (7)   "Recovered materials", those materials which
32 have been diverted or removed from the solid waste stream
33 for sale, use, reuse, or recycling, whether or not they
34 require subsequent separation and processing.
352. In addition to all other exemptions granted under
36 this chapter, there is hereby specifically exempted from the
37 provisions of this chapter and the local sales tax law as
38 defined in section 32.085 and from the computation of the
39 tax levied, assessed, or payable under this chapter and the
40 local sales tax law as defined in section 32.085, electrical
41 energy and gas, whether natural, artificial, or propane,
42 water, coal, and energy sources, chemicals, machinery,
43 equipment, and materials used or consumed in the
44 manufacturing, processing, compounding, mining, or producing
45 of any product, or used or consumed in the processing of
46 recovered materials, or used in research and development
47 related to manufacturing, processing, compounding, mining,
48 or producing any product.    The construction and application
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49 of this subsection as expressed by the Missouri supreme
50 court in DST Systems, Inc. v. Director of Revenue, 43 S.W.3d
51 799 (Mo. banc 2001); Southwestern Bell Tel. Co. v. Director
52 of Revenue, 78 S.W.3d 763 (Mo. banc 2002); and Southwestern
53 Bell Tel. Co. v. Director of Revenue, 182 S.W.3d 226 (Mo.
54 banc 2005), is hereby affirmed.
553. In addition to all other exemptions granted under
56 this chapter, there is hereby specifically exempted from the
57 provisions of this chapter and the local sales tax law as
58 defined in section 32.085, and from the computation of the
59 tax levied, assessed, or payable under this chapter and the
60 local sales tax law as defined in section 32.085, all
61 utilities, machinery, and equipment used or consumed
62 directly in television or radio broadcasting and all sales
63 and purchases of tangible personal property, utilities,
64 services, or any other transaction that would otherwise be
65 subject to the state or local sales or use tax when such
66 sales are made to or purchases are made by a contractor for
67 use in fulfillment of any obligation under a defense
68 contract with the United States government, and all sales
69 and leases of tangible personal property by any county,
70 city, incorporated town, or village, provided such sale or
71 lease is authorized under chapter 100, and such transaction
72 is certified for sales tax exemption by the department of
73 economic development, and tangible personal property used
74 for railroad infrastructure brought into this state for
75 processing, fabrication, or other modification for use
76 outside the state in the regular course of business.
774. In addition to all other exemptions granted under
78 this chapter, there is hereby specifically exempted from the
79 provisions of this chapter and the local sales tax law as
80 defined in section 32.085, and from the computation of the
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81  tax levied, assessed, or payable under this chapter and the
82  local sales tax law as defined in section 32.085, all sales
83  and purchases of tangible personal property, utilities,
84  services, or any other transaction that would otherwise be
85  subject to the state or local sales or use tax when such
86  sales are made to or purchases are made by a private partner
87  for use in completing a project under sections 227.600 to
88  227.669.
895. In addition to all other exemptions granted under
90  this chapter, there is hereby specifically exempted from the
91  provisions of this chapter and the local sales tax law as
92  defined in section 32.085, and from the computation of the
93  tax levied, assessed, or payable under this chapter and the
94  local sales tax law as defined in section 32.085, all
95  materials, manufactured goods, machinery and parts,
96  electrical energy and gas, whether natural, artificial or
97  propane, water, coal and other energy sources, chemicals,
98  soaps, detergents, cleaning and sanitizing agents, and other
99  ingredients and materials inserted by commercial or
100 industrial laundries to treat, clean, and sanitize textiles
101 in facilities which process at least five hundred pounds of
102 textiles per hour and at least sixty thousand pounds per
103 week.
1046. In addition to all other exemptions granted
105 pursuant to this chapter, there is hereby exempted from the
106 provisions of and the computation of the tax levied,
107 assessed, or payable pursuant to this chapter and the local
108 sales tax law as defined in section 32.085, all sales and
109 purchases of tangible personal property, building materials,
110 equipment, fixtures, manufactured goods, machinery, and
111 parts for the purposes of constructing all or any portion of
112 a nuclear security enterprise located in any city with more
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113 than four hundred thousand inhabitants and located in more
114 than one county.  This subsection shall expire on August 28,
115 2034.
1620.1641.     1.    This section shall be known and may be
2  cited as the "Missouri Defense and Energy Independence Act".
32.     As used in this section, the following terms mean:
4(1)     "Critical materials", metal or metal complexes
5  included on the list of critical materials as published by
6  the United States Department of the Interior that serve an
7  essential function in key energy, defense, and consumer
8  product technologies and have a high risk of supply chain
9  disruption;
10(2)     "Critical pharmaceuticals", pharmaceutical active
11  ingredients, key starting materials, or essential finished
12  pharmaceuticals identified as critical to national security
13  or public health and having a high risk of supply chain
14  disruption as included on the list published by the United
15  States Food and Drug Administration;
16(3)     "Department", the Missouri department of economic
17  development;
18(4)     "Missouri development finance board" or "MDFB",
19  the Missouri development finance board established under
20  section 100.265;
21(5)     "Notice of intent", a form developed by the
22  department and available online, completed by the qualified
23  company, and submitted to the department stating the
24  qualified company's intent to request tax credits under this
25  section as provided in subsection 5 of this section;
26(6)     "Project facility", the building or buildings used
27  by a qualified company at which critical materials or
28  critical pharmaceuticals will be produced or processed;
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29(7)     "Qualified company", a firm, partnership, joint
30 venture, association, private or public corporation
31 regardless of whether organized for profit, or headquarters
32 of such entity registered to do business in Missouri, that
33 is a nontraditional defense contractor, as such term is
34 defined in 10 U.S.C. Section 3014, as amended, and that
35 incurs qualified project costs.      "Qualified company" shall
36 not include any company headquartered in a country
37 identified by the United States Director of National
38 Intelligence as a country that poses a risk to the national
39 security of the United States in at least one of the three
40 most recent annual threat assessments of the U.S.
41 intelligence community issued pursuant to Section 108B,
42 federal National Security Act of 1947 (50 U.S.C. Section
43 3043b);
44(8)     "Qualified project costs":
45(a)     Costs incurred by a qualified company for the
46 construction, expansion, or conversion of facilities and
47 acquisition of equipment for the production of critical
48 materials or critical pharmaceuticals, including, but not
49 limited to:
50a.     Site preparation;
51b.     Building construction or renovation;
52c.     Machinery and equipment acquisition and
53 installation, including any specialized manufacturing
54 equipment;
55d.     Utility infrastructure; and
56e.     Environmental compliance systems;
57(b)     "Qualified project costs" shall not include any
58 costs incurred by a qualified company utilizing a contractor
59 unless:
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60a.     Such contractor is selected through an open bidding
61 process and is headquartered in Missouri and for whom at
62 least eighty-five percent of the workforce used for any work
63 performed by the contractor for a qualified company reside
64 within Missouri; and
65b.     Such contractor maintains an existing United States
66 Department of Labor registered apprenticeship program;
67(9)     "State tax liability", any liability incurred by a
68 taxpayer pursuant to the provisions of chapter 143 or
69 chapter 148, exclusive of the provisions relating to the
70 withholding of tax as provided for in sections 143.191 to
71 143.265 and related provisions;
72(10)     "Tax credit", a credit against the tax otherwise
73 due under chapter 143 or chapter 148, excluding withholding
74 tax imposed under sections 143.191 to 143.265.
753.     (1) For all tax years beginning on or after
76 January 1, 2027, the department may award a qualified
77 company tax credits for qualified project costs incurred by
78 the qualified company on or after January 1, 2027, provided
79 that no tax credit shall be authorized for any qualified
80 company that incurs less than five million dollars in
81 qualified project costs.      The amount of the tax credit shall
82 be equal to:
83(a)     For qualified companies that incur qualified
84 project costs of at least five million dollars, but less
85 that fifteen million dollars, twenty percent of such
86 qualified project costs; and
87(b)     For qualified companies that incur qualified
88 project costs of at least fifteen million dollars, twenty-
89 five percent of qualified project costs.
90(2)     Tax credits authorized by this section shall not
91 be refundable, but may be carried forward for ten subsequent
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92  tax years or until the full amount of the tax credit has
93  been redeemed, whichever occurs first.
94(3)     Tax credits authorized by this section may be
95  transferred, sold, or otherwise assigned by filing a
96  notarized endorsement thereof with the department that names
97  the transferee, the amount of tax credit transferred, and
98  the value received for the credit, as well as any other
99  information reasonably requested by the department.      For a
100 qualified company with flow-through tax treatment to its
101 members, partners, or shareholders, the tax credit shall be
102 allowed to members, partners, or shareholders in proportion
103 to their share of ownership on the last day of the qualified
104 company's tax period.
1054.     The cumulative amount of tax credits that may be
106 authorized pursuant to this section shall not exceed forty
107 million dollars in any fiscal year.      If the amount of tax
108 credits applied for in a fiscal year exceeds forty million
109 dollars, tax credits shall be allowed based on the order in
110 which they are claimed.
1115.     A qualified company seeking tax credits authorized
112 by this section shall submit a notice of intent to the
113 department.      Upon approval of a notice of intent to receive
114 tax credits under this section, the department and the
115 qualified company shall enter into a written agreement,
116 which shall specify, at a minimum:
117(1)     The types and amounts of critical materials that
118 will be produced or processed at the project facility, along
119 with any supporting information from the federal Department
120 of the Interior, Department of Energy, or Department of
121 Defense indicating a shortage or threat to supply of such
122 critical materials;
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123(2)    The types and amounts of critical pharmaceuticals
124 that will be produced or processed at the project facility,
125 along with any supporting information from the federal Food
126 and Drug Administration, Department of Defense, Department
127 of Veterans Affairs, or Department of Health and Human
128 Services indicating a shortage or threat to supply of such
129 critical pharmaceuticals;
130(3)    The estimated amount of capital investment to be
131 made and the estimated number of new jobs to be created at
132 the project facility;
133(4)    Clawback provisions, as may be required by the
134 department;
135(5)    Financial guarantee provisions as may be required
136 by the department; and
137(6)    Any other provisions the department may require.
1386.     (1) There is hereby created in the state treasury
139 the "Grants for Independence from Foreign Influence Fund",
140 which shall consist of at least ten million dollars
141 appropriated by the general assembly and any gifts,
142 contributions, grants, or bequests received from federal,
143 private, or other sources.     The state treasurer shall be
144 custodian of the fund.     In accordance with sections 30.170
145 and 30.180, the state treasurer may approve disbursements.
146 The fund shall be a dedicated fund and, upon appropriation,
147 moneys in the fund shall be used solely as provided in
148 subsection 7 of this section.
149(2)    Notwithstanding the provisions of section 33.080
150 to the contrary, any moneys remaining in the fund at the end
151 of the biennium shall not revert to the credit of the
152 general revenue fund.
153(3)    The state treasurer shall invest moneys in the
154 fund in the same manner as other funds are invested.     Any
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155 interest and moneys earned on such investments shall be
156 credited to the fund.
1577.     (1) The department shall develop and implement
158 grants for independence from foreign influence as provided
159 in this subsection.
160(2)     The department shall establish procedures for the
161 solicitation, evaluation, and approval of grant applications
162 received from a qualified company.      A qualified company may
163 submit a grant application for the award of moneys for
164 qualified project costs incurred by the qualified company as
165 provided in this subsection.
166(3)     The department shall evaluate each application and
167 approve or reject such application.      Subject to
168 appropriations, upon approval of an application, the MDFB
169 shall serve as the third-party administrator of the grant
170 funds, and shall disburse the grant award from the grants
171 for independence from foreign influence fund in an amount
172 not to exceed five hundred thousand dollars per grant
173 application.
174(4)     Moneys granted to a qualified company under this
175 section shall be used solely for qualified project costs
176 incurred before the completion of the project facility.
1778.     The department shall promulgate all necessary rules
178 and regulations for the administration of this section
179 including, but not limited to, rules relating to the
180 verification of a qualified company's qualified project
181 costs.     Any rule or portion of a rule, as that term is
182 defined in section 536.010, that is created under the
183 authority delegated in this section shall become effective
184 only if it complies with and is subject to all of the
185 provisions of chapter 536 and, if applicable, section
186 536.028.      This section and chapter 536 are nonseverable and
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187 if any of the powers vested with the general assembly
188 pursuant to chapter 536 to review, to delay the effective
189 date, or to disapprove and annul a rule are subsequently
190 held unconstitutional, then the grant of rulemaking
191 authority and any rule proposed or adopted after August 28,
192 2026, shall be invalid and void.
1939.    Pursuant to section 23.253 of the Missouri sunset
194 act:
195(1)    The program authorized pursuant to this section
196 shall automatically sunset on December 31, 2036, unless
197 reauthorized by an act of the general assembly;
198(2)    This section shall terminate on September first of
199 the calendar year immediately following the calendar year in
200 which the program authorized pursuant to this section is
201 sunset; and
202(3)    The provisions of this subsection shall not be
203 construed to impair or impede the state's fulfillment of any
204 obligations, including the authorization, issuance, or
205 redemption of tax credits, incurred pursuant to this section
206 prior to the date the program authorized pursuant to this
207 section is sunset.
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