[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1407 Introduced in House (IH)]

<DOC>






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 
   Committee on Armed Services, and in addition to the Committees on 
  Financial Services, Foreign Affairs, and Energy and Commerce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration 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 Representatives 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 ``METALS Act''.

SEC. 2. SENSE OF CONGRESS ON DOMESTIC PRODUCTION OF RARE EARTH 
              ELEMENTS.

    (a) Findings.--Congress finds the following:
            (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 enacted 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 systems. 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 percent 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.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) in the interest of national security the United States 
        must develop a domestic industrial base for the production of 
        strategic and critical materials;
            (2) considering the host of defense-related applications 
        that would be rendered ineffective if United States access to 
        foreign strategic and critical materials was restricted, the 
        United States must ensure 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 specifically 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 opportunities;
            (5) the United States must support the domestic production 
        of strategic and critical materials by creating a fund which 
        uses a small percentage, 1 percent, of the internal 
        programmatic administration 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 programmatic administration 
        costs and should not decrease 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 reduce 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 international sources, 
        often owing to unfair trade and labor practices in foreign 
        countries, the fund should reimburse weapons systems programs 
        for cost increases as a result of procuring strategic and 
        critical materials from domestic sources.

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 strategic and 
        critical materials in accordance with subsection (c) for the 
        purposes of--
                    (A) constructing, upgrading, and operating 
                facilities inside the United States for the smelting, 
                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 production of strategic 
                and critical materials; and
            (2) reimbursing original equipment manufacturers in 
        accordance with subsection (d).
    (c) Loans to Domestic Producers.--
            (1) In general.--Amounts from the Fund may be used to make 
        loans to domestic producers of strategic and critical materials 
        for the purposes described in subparagraphs (A) and (B) of 
        subsection (b)(1).
            (2) Eligibility.--A domestic producer of strategic and 
        critical materials shall not be eligible to receive a loan from 
        the Fund if such producer--
                    (A) is carrying out an activity described in 
                subsection (f);
                    (B) has a history of financial insolvency or 
                bankruptcy; or
                    (C) is controlled by or acting on behalf of the 
                People's Republic of China or the Russian Federation.
            (3) Loan terms.--
                    (A) Interest.--Interest shall not accrue on any 
                loan made under paragraph (1).
                    (B) Repayment.--
                            (i) Repayment required.--Not later than 5 
                        years after receiving a loan under paragraph 
                        (1), the recipient of the loan shall repay the 
                        full amount of the loan--
                                    (I) to the Fund; or
                                    (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 recipient--
                                    (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 foreign entity.--
                            (i) Prohibition on transfer.--A recipient 
                        of a loan from the Fund shall not transfer to a 
                        foreign government or an entity controlled by 
                        or acting on behalf of a foreign government, 
                        any interest in--
                                    (I) any facilities constructed, 
                                upgraded, or operated by the recipient; 
                                or
                                    (II) any new technologies developed 
                                by the recipient for the more efficient 
                                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 prohibited 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 
        purchasing 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 percent of the amounts 
                deposited in the Fund for a fiscal year shall be 
                available for reimbursing original equipment 
                manufacturers under paragraph (1) in such fiscal year.
                    (B) Limitation on reimbursement of excessive 
                costs.--Excessive costs, as determined 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 paragraph (2), for 
        each of fiscal years 2018 through 2023, one tenth of one 
        percent of the amounts appropriated 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 quantities of items 
        procured under the programs.
            (2) Exception.--
                    (A) Certification.--The requirement under paragraph 
                (1) shall not apply to a covered program if the prime 
                contractor for such program certifies to the senior 
                acquisition executive concerned that no strategic or 
                critical materials from the People's Republic of China 
                or 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 documents 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 paragraph shall be 
                subject to a civil fine of not more than 1 percent of 
                the value of the contract concerned.
    (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 strategic 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:
            (1) Covered programs.--The term ``covered programs'' means 
        all major defense acquisition programs (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 Federal 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;
                    (L) steel--
                            (i) with a maximum alloy content exceeding 
                        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: aluminum, 
                        chromium, cobalt, columbium, molybdenum, 
                        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 established under section 
                187 of title 10, United States Code.
    (h) Sunset.--The Fund shall terminate on September 30, 2023, and 
any amounts remaining in the Fund 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 consultation 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 operations 
        of incorporating thorium-liquid-fueled nuclear reactors or 
        uranium reactors into a range of naval vessels (including major 
        surface combatants and conventionally fueled ships), including 
        identification of any such benefits with respect to--
                    (A) fuel cycle, from mining of fuel to disposal of 
                fuel waste;
                    (B) security of the fuel supply;
                    (C) power needs for advanced weapons and sensors;
                    (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 operations;
                    (I) power for advanced sensors and weapons, 
                including electromagnetic guns and lasers;
                    (J) survivability due to increased performance 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
                    (D) the ability for the domestic supply chain to 
                meet the requirements of the Department of Defense for 
                thorium.
    (d) Submission to Congress.--Not later than December 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 Defined.--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 perchlorate 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
                    (B) is used to launch a national security payload 
                into space.
            (2) The term does not include ammonium perchlorate 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 enactment 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 ammonium 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 Investment in the United 
States shall not approve any foreign government-controlled transaction 
relating to a domestic 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--
            (1) does not violate the prohibition under subsection (a); 
        and
            (2) will not compromise the national security of the United 
        States.
    (c) Definitions.--In this section:
            (1) The term ``Committee on Foreign Investment in the 
        United States'' means the committee established under section 
        721(k) of the Defense Production 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 processed, regardless of whether such 
        facility is operational.
            (3) The term ``foreign government-controlled transaction'' 
        has the meaning given the term in section 721(a) of the Defense 
        Production Act of 1950 (50 U.S.C. 4565(a)).
                                 <all>