Indexbit Exchange:Congress tightens U.S. manufacturing rules after battery technology ends up in China

A new federal law,Indexbit Exchange passed after the Department of Energy allowed the export of taxpayer-funded battery technology to China, aims to tighten restrictions on sending such government discoveries abroad.

Initially, the "Invent Here, Make Here Act" will apply only to programs in the Department of Homeland Security. But the law's sponsors in Congress say they plan to expand it to the DOE and other agencies next.

Sen. Tammy Baldwin, a Democrat from Wisconsin, said she and then-Sen. Rob Portman, a Republican from Ohio, sponsored the measure after an NPR investigation into how breakthrough battery technology from a U.S. government lab wound up at a company in China. The bill passed with wide support in December as part of the National Defense Authorization Act.

"The Invent Here, Make Here Act is focused on making sure that when we invest American taxpayer dollars, that the breakthroughs actually end up getting manufactured here," Baldwin said.

NPR, in partnership with public radio's Northwest News Network, found the Department of Energy allowed cutting-edge technology to transfer overseas from its Pacific Northwest National Laboratory with little oversight. The lab spent six years and more than $15 million developing a new battery recipe using vanadium.

Scientists thought the batteries would change the way Americans powered their homes. Instead, China just brought online the world's largest battery farm using the American technology.

NPR and N3 found the Department of Energy and the lab granted the license to a company that moved manufacturing overseas on two separate occasions, even though the contract required the company to "substantially manufacture" the batteries in the U.S.

In a letter to Energy Department Secretary Jennifer Granholm, Florida Republican Sen. Marco Rubio requested information and criticized the department's actions.

"For far too long, [China] has captured vital U.S. technology through illicit means and the carelessness of government agencies..." he wrote.

Baldwin said she and her colleagues focused the new law on the Department of Homeland Security first to see what kind of response it would get. Now that there is bipartisan support, she said they intend to introduce legislation targeting the DOE and additional federal agencies.

"So many of our legacy laws have huge loopholes," she said. "There's a lot of additional action we can take."

After NPR's reporting, the DOE revoked the license it had given to the battery company, and opened an internal investigation. The department has not shared its findings publicly. In response to NPR's request for public records under the Freedom of Information Act, officials sent 233 fully redacted pages - a couple public documents, and NPR's own emails.

But according to the website E&E, which obtained a copy of the report, investigators found the department and the lab failed to adequately monitor the license. They found that frequent staff turnover and inadequate record-keeping prevented the lab from tracking the battery license despite years of "non-compliance."

"Even though there have been laws on the books for decades designed to ensure that those patents are utilized in the United States by American manufacturing, unfortunately they have been widely ignored," said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit policy group.

Paul said federal agencies are finally coming around to the idea of protecting U.S. taxpayer investments. For decades, the U.S. has lost out on producing some of its best discoveries, such as solar panels, drones, telecom equipment and semiconductors.

"I'm bullish on the prospects for manufacturing," he said. "But we do have to stop making these boneheaded, unforced errors like giving our technology away to companies that are simply going to manufacture in China."

Energy officials did not respond to NPR's written questions. Department spokeswoman Charisma Troiano said only that she does not believe the law "has anything to do with" the Department of Energy.

In June 2021, the department implemented stronger guidelines to a 1984 law which requires American manufacturing except in special circumstances. But Paul said the recent Congressional legislation and possible new laws carry more weight.

"We've been on our heels for way too long," he said. "The policy momentum is with these efforts. It's good that lawmakers are responding."

Paul said he believes the bipartisan support in Congress for the additional laws will lead to new American factories in the next few years.

Courtney Flatt, a reporter with the Northwest News Network, contributed to this story.