I 
115TH CONGRESS 
1ST SESSION H. R. 1407 
To establish a strategic materials investment fund, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 7, 2017 
Mr. HUNTER introduced the following bill; which was referred to the Com-
mittee on Armed Services, and in addition to the Committees on Finan-
cial Services, Foreign Affairs, and Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To establish a strategic materials investment fund, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Materials Essential 
To American Leadership and Security Act’’ or the ‘‘MET-
ALS Act’’. 
SEC. 2. SENSE OF CONGRESS ON DOMESTIC PRODUCTION 
OF RARE EARTH ELEMENTS. 
(a) FINDINGS.—Congress finds the following: 
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(1) In the wake of increased tension between 
the People’s Republic of China and the nation of 
Japan in 2010, the People’s Republic of China en-
acted a de facto embargo of all rare earth elements 
which placed the Department of Defense at risk of 
losing access to materials used in the manufacture 
of key components of numerous major weapons sys-
tems. The potential for the People’s Republic of 
China to suspend exports of rare earth elements to 
the United States still exists today. 
(2) In 2015, a major United States corporation, 
the only major domestic producer of certain rare 
earth products, filed for bankruptcy after compiling 
$1.4 billion in debt. Assets from the company were 
sold to operators in the People’s Republic of China 
to pay off creditors while the domestic mine and 
processing plant were shuttered and disassembled. 
(3) The People’s Republic of China currently 
dominates the supply chain for the production of 
rare earth elements controlling more than 90 per-
cent of the world’s production. 
(4) Rare earth elements are used in a host of 
advanced defense applications and technologies 
which would largely be rendered ineffective without 
these materials. 
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(b) SENSE OF CONGRESS.—It is the sense of Con-
gress that— 
(1) in the interest of national security the 
United States must develop a domestic industrial 
base for the production of strategic and critical ma-
terials; 
(2) considering the host of defense-related ap-
plications that would be rendered ineffective if 
United States access to foreign strategic and critical 
materials was restricted, the United States must en-
sure a safe and secure supply chain for strategic and 
critical materials for defense purposes; 
(3) given the current supply chain for strategic 
and critical materials the United States, and specifi-
cally the Department of Defense, is at considerable 
risk for a supply interruption; 
(4) if it is to divest itself from a dependence on 
foreign-produced strategic and critical materials, the 
United States must be willing to accept some risk in 
the form of aiding domestic investment opportuni-
ties; 
(5) the United States must support the domes-
tic production of strategic and critical materials by 
creating a fund which uses a small percentage, 1 
percent, of the internal programmatic administration 
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costs of major aircraft and missile weapons systems 
to promote investment in domestic production of 
strategic and critical materials; 
(6) the fund should only leverage those funds 
used by the Department of Defense for internal pro-
grammatic administration costs and should not de-
crease quantities to be procured by the Department 
of Defense; 
(7) the fund should be managed by the Defense 
Logistics Agency Strategic Materials; 
(8) the purpose of the fund should be to provide 
5-year, interest-free loans to domestic producers of 
strategic and critical materials in an attempt to re-
duce American dependence on foreign sources of 
these materials and the loans should be paid back to 
the fund at the termination of the loan period; and 
(9) in those cases where domestic materials are 
more expensive than materials available from inter-
national sources, often owing to unfair trade and 
labor practices in foreign countries, the fund should 
reimburse weapons systems programs for cost in-
creases as a result of procuring strategic and critical 
materials from domestic sources. 
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SEC. 3. STRATEGIC MATERIALS INVESTMENT FUND. 
(a) ESTABLISHMENT.—There is established in the 
Treasury of the United States a separate fund to be 
known as the ‘‘Strategic Materials Investment Fund’’ (in 
this section referred to as the ‘‘Fund’’). The Fund shall 
consist of amounts deposited to it under subsection (e). 
(b) FUND OPERATIONS.—The Secretary of Defense, 
acting through the Administrator of the Defense Logistics 
Agency Strategic Materials, may make expenditures from 
the Fund to develop the domestic strategic and critical 
materials industrial base, including by— 
(1) making loans to domestic producers of stra-
tegic and critical materials in accordance with sub-
section (c) for the purposes of— 
(A) constructing, upgrading, and operating 
facilities inside the United States for the smelt-
ing, sintering, leaching, processing, separation, 
beneficiation, or production of strategic and 
critical materials; and 
(B) developing new technologies for the 
more efficient smelting, sintering, leaching, 
processing, separation, beneficiation, or produc-
tion of strategic and critical materials; and 
(2) reimbursing original equipment manufactur-
ers in accordance with subsection (d). 
(c) LOANS TO DOMESTIC PRODUCERS.— 
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(II) if the Fund has terminated 
under subsection (h), to the Treasury 
of the United States 
(ii) PENALTY.—If a recipient does not 
repay the full amount of the loan in the 
time period described in clause (i), the re-
cipient— 
(I) shall not be eligible to receive 
additional disbursements from the 
Fund; and 
(II) shall be liable to the United 
States for the full amount of the loan 
plus a penalty in an amount equal to 
50 percent of the amount of the loan. 
(C) PROHIBITION ON TRANSFER TO FOR-
EIGN ENTITY.— 
(i) PROHIBITION
ON
TRANSFER.—A 
recipient of a loan from the Fund shall not 
transfer to a foreign government or an en-
tity controlled by or acting on behalf of a 
foreign government, any interest in— 
(I) any facilities constructed, up-
graded, or operated by the recipient; 
or 
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(II) any new technologies devel-
oped by the recipient for the more ef-
ficient smelting, sintering, leaching, 
processing, separation, benefaction, or 
production of strategic and critical 
materials. 
(ii) PENALTY.—If the recipient of a 
loan from the Fund makes a transfer pro-
hibited under clause (i), the recipient shall 
be liable to the United States for the full 
amount of the loan plus a penalty in an 
amount equal to 500 percent of the 
amount of the loan. 
(d) REIMBURSEMENT
OF
ORIGINAL
EQUIPMENT 
MANUFACTURERS.— 
(1) IN GENERAL.—Subject to paragraph (2), 
amounts from the Fund may be used to reimburse 
original equipment manufacturers for the increased 
costs that result from such manufacturers pur-
chasing strategic and critical materials produced in 
the United States from producers that have received 
disbursements from the Fund. 
(2) LIMITATIONS.— 
(A) LIMITATION ON AMOUNTS AVAILABLE 
FOR REIMBURSEMENT.—Not more than 50 per-
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cent of the amounts deposited in the Fund for 
a fiscal year shall be available for reimbursing 
original equipment manufacturers under para-
graph (1) in such fiscal year. 
(B) LIMITATION ON REIMBURSEMENT OF 
EXCESSIVE COSTS.—Excessive costs, as deter-
mined by the senior acquisition executive for 
the program concerned, shall not be reimbursed 
under paragraph (1). 
(e) DEPOSITS TO FUND.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), for each of fiscal years 2018 through 
2023, one tenth of one percent of the amounts ap-
propriated for covered programs shall be deposited 
to the Fund. Such deposits shall be taken from 
amounts allocated for the internal administration of 
the covered programs and shall not reduce the quan-
tities of items procured under the programs. 
(2) EXCEPTION.— 
(A) 
CERTIFICATION.—The 
requirement 
under paragraph (1) shall not apply to a cov-
ered program if the prime contractor for such 
program certifies to the senior acquisition exec-
utive concerned that no strategic or critical ma-
terials from the People’s Republic of China or 
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the Russian Federation are included in the final 
item delivered to the Government or in any 
component thereof. 
(B) SUPPORTING DOCUMENTS.—Not later 
than 30 days after a prime contractor makes a 
certification under subparagraph (A), the senior 
acquisition executive concerned may require the 
prime contractor to provide supporting docu-
ments verifying that the final item delivered to 
the Government meets the requirements of such 
subparagraph. 
(C) CIVIL PENALTY.—A prime contractor 
who makes a false certification under this para-
graph shall be subject to a civil fine of not more 
than 1 percent of the value of the contract con-
cerned. 
(f) PROHIBITED USES OF FUNDS.—No amount may 
be expended from the Fund— 
(1) to develop technologies that would decrease 
the capacity of the domestic industrial base for stra-
tegic and critical materials; or 
(2) to redesign technologies to reduce the use of 
strategic and critical materials in such technologies. 
(g) DEFINITIONS.—In this section: 
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(1) COVERED PROGRAMS.—The term ‘‘covered 
programs’’ means all major defense acquisition pro-
grams (as that term is defined in section 2430 of 
title 10, United States Code) for the development or 
procurement of aircraft or missiles. 
(2) ORIGINAL EQUIPMENT MANUFACTURER.— 
The term ‘‘original equipment manufacturer’’ means 
a contractor or subcontractor in the supply chain 
that integrates strategic and critical materials into a 
component used in a product that is sold to the Fed-
eral Government. 
(3) STRATEGIC
AND
CRITICAL
MATERIALS.— 
The term ‘‘strategic and critical materials’’ means— 
(A) the lanthanide elements, yttrium, and 
scandium; 
(B) titanium and titanium alloys; 
(C) magnesium; 
(D) antimony; 
(E) tungsten; 
(F) uranium; 
(G) tantalum; 
(H) fluorspar; 
(I) lithium; 
(J) strontium; 
(K) vanadium; 
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(L) steel— 
(i) with a maximum alloy content ex-
ceeding one or more of the following limits: 
(I) manganese, 1.65 percent; 
(II) silicon, 0.60 percent; or 
(III) copper, 0.60 percent; or 
(ii) containing more than 0.25 percent 
of any of the following elements: alu-
minum, chromium, cobalt, columbium, mo-
lybdenum, nickel, titanium, tungsten, or 
vanadium; 
(M) zirconium and zirconium base alloys; 
(N) metal alloys consisting of nickel, iron- 
nickel, and cobalt base alloys containing a total 
of other alloying metals (except iron) in excess 
of 10 percent; 
(O) thorium; and 
(P) any other materials determined to be 
materials critical to national security by the 
Strategic Materials Protection Board estab-
lished under section 187 of title 10, United 
States Code. 
(h) SUNSET.—The Fund shall terminate on Sep-
tember 30, 2023, and any amounts remaining in the Fund 
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on such date shall be deposited in the Treasury of the 
United States. 
SEC. 4. NUCLEAR REACTORS ASSESSMENT. 
(a) FINDING.—Congress finds that section 1012 of 
the National Defense Authorization Act for 2008 (Public 
Law 110–181; 122 Stat. 303) required that the United 
States construct all major combatant vessels of the strike 
forces of the Navy with integrated nuclear power systems. 
(b) ASSESSMENT.—The Secretary of Defense, in con-
sultation with the Secretary of Energy, shall assess the 
ability of thorium-fueled nuclear reactors to meet the 
power generation needs of the Navy. 
(c) ELEMENTS.—The assessment under subsection 
(b) shall include— 
(1) an identification of the benefits to naval op-
erations of incorporating thorium-liquid-fueled nu-
clear reactors or uranium reactors into a range of 
naval vessels (including major surface combatants 
and conventionally fueled ships), including identifica-
tion of any such benefits with respect to— 
(A) fuel cycle, from mining of fuel to dis-
posal of fuel waste; 
(B) security of the fuel supply; 
(C) power needs for advanced weapons and 
sensors; 
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(D) safety and operations, waste handling 
and disposal, and proliferation issues compared 
to uranium reactors; 
(E) refueling and logistics; 
(F) ship upgrades and retrofitting; 
(G) manning levels; 
(H) global range at flank speed, greater 
forward presence, and extended combat oper-
ations; 
(I) power for advanced sensors and weap-
ons, including electromagnetic guns and lasers; 
(J) survivability due to increased perform-
ance and reduced signatures; 
(K) high-power density propulsion; 
(L) operational tempo; 
(M) operational effectiveness; and 
(N) estimated cost effectiveness; and 
(2) an analysis of the domestic supply chain of 
thorium, including a description of— 
(A) domestic reserves; 
(B) operational mines; 
(C) separation and refinement capabilities; 
and 
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(D) the ability for the domestic supply 
chain to meet the requirements of the Depart-
ment of Defense for thorium. 
(d) SUBMISSION TO CONGRESS.—Not later than De-
cember 31, 2020, the Secretary of Defense shall submit 
to the congressional defense committees a report on the 
results of the assessment under subsection (b). 
(e) CONGRESSIONAL DEFENSE COMMITTEES DE-
FINED.—In this Act, the term ‘‘congressional defense 
committees’’ has the meaning given that term in section 
101(a)(16) of title 10, United States Code. 
SEC. 5. LIMITATION ON AMMONIUM PERCHLORATE FROM 
FOREIGN SOURCES. 
(a) LIMITATION.—Beginning not later than 180 days 
after the date of the enactment of this Act, the Secretary 
of Defense shall ensure that any covered ammonium per-
chlorate is obtained from sources inside the United States. 
(b) COVERED AMMONIUM PERCHLORATE.— 
(1) Except as provided in paragraph (2), the 
term ‘‘covered ammonium perchlorate’’ means any 
ammonium perchlorate (or any sodium perchlorate 
used as a precursor to ammonium perchlorate) 
that— 
(A) is incorporated into any item procured 
by the Department of Defense; or 
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(B) is used to launch a national security 
payload into space. 
(2) The term does not include ammonium per-
chlorate obtained from sources outside the United 
States for use in an air-to-air missile program and 
qualified for such use as of the date of the enact-
ment of this Act. 
(c) WAIVER.—The Secretary of Defense may waive 
the limitation in subsection (a) if the Secretary makes a 
determination in writing that obtaining covered ammo-
nium perchlorate from sources outside the United States 
is in the national security interests of the United States. 
SEC. 6. PROHIBITION ON SALE OF DOMESTIC RARE EARTH 
MINES. 
(a) PROHIBITION.—The Committee on Foreign In-
vestment in the United States shall not approve any for-
eign government-controlled transaction relating to a do-
mestic rare earth facility if a party to such transaction 
is controlled by or acting on behalf of— 
(1) the People’s Republic of China; or 
(2) the Russian Federation. 
(b) CERTIFICATION.—Before approving a foreign 
government-controlled transaction relating to a domestic 
rare earth facility, the Committee shall submit to Congress 
a written certification that the transaction— 
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(1) does not violate the prohibition under sub-
section (a); and 
(2) will not compromise the national security of 
the United States. 
(c) DEFINITIONS.—In this section: 
(1) The term ‘‘Committee on Foreign Invest-
ment in the United States’’ means the committee es-
tablished under section 721(k) of the Defense Pro-
duction Act of 1950 (50 U.S.C. 4565(k)). 
(2) The term ‘‘domestic rare earth facility’’ 
means any facility inside the United States at which 
rare earth elements are mined, produced, or proc-
essed, regardless of whether such facility is oper-
ational. 
(3) The term ‘‘foreign government-controlled 
transaction’’ has the meaning given the term in sec-
tion 721(a) of the Defense Production Act of 1950 
(50 U.S.C. 4565(a)). 
Æ 
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