Drawing a Line

Despite its vast mineral resources, the United States is increasingly dependent on foreign sources of minerals of importance to the nation’s well-being (including its security and its manufacturing competitiveness). Although there is no “official” government list of such “strategic and critical minerals,” they are generally considered to encompass those that are crucial for national defense and security, infrastructure or economic security and are at risk of supply disruption. Examples include copper, uranium, magnesium, tantalum, tungsten and vanadium and the “rare earths,” a group of 17 elements with properties that make them especially useful in high-tech consumer products such as cell phones, computer hard drives, electric and hybrid vehicles and flat-screen monitors and televisions.

According to the U.S. Geological Survey (USGS), in the early 1990s, the United States was dependent upon foreign sources for 45 nonfuel mineral materials, eight of which were 100 percent import-dependent, and another 19 at least 50 percent import-dependent. By 2014, the number of nonfuel minerals that were import-dependent had risen to 65, 19 of which were 100 percent import-dependent and another 24 at least 50 percent import-dependent. Today, less than half of the mineral needs of domestic manufacturing is met by domestically-mined minerals; most of the deficit is filled by China, which is responsible for more than 90 percent of global rare earth element production and has a greater than 50 percent market share of more than 10 different mineral materials. This increasing dependence on the import of minerals is in large part a consequence of declining investment in domestic mineral exploration; where the United States’ share of worldwide spending on mineral exploration was 19 percent in the early 1990s, as of 2014 it had declined to just 7 percent.

Permitting Problems
One reason often cited by industry for the decline in investment in domestic mineral resource development is the United States’ outdated and inefficient system for permitting mines and associated operations. Industry sees the current permitting process as plagued by uncertainties and delays arising from duplication and lack of coordination among federal and state agencies, and the absence of firm timelines for completing environmental assessments. In addition, lawsuits, sometimes frivolous, brought by citizens groups often further delay permitting. These circumstances have resulted in one of the longest mine permitting processes of any country, seven to 10 years. By comparison, Canada, a country that shares the United States’ core principles of responsible resource development, has a variety of best practices in place to promote efficient permitting, with a goal of completing the permitting process in two years or less.
According to industry and some government sources, the lengthy U.S. permitting process discourages investment because it compromises the commercial viability of domestic mining projects by increasing their cost and reducing their net-present value. A recent report sponsored by the National Mining Association found that, on average, a proposed mine in the United States will lose one-third of its value as it waits for the numerous permits and other government approvals. The extended permitting process was identified by the minerals industry advisory firm Behre Dolbear in its 2014 Ranking of Countries for Mining Investment as the single most significant risk to mining projects in the United States, a conclusion echoed by the National Academy of Sciences and the Departments of Energy and Defense.

Global Growth
At the same time that investment in U.S. domestic mineral mining has declined, global population growth and the industrialization of many developing nations has increased worldwide demand for the minerals necessary for modern telecommunications, military, healthcare and conventional and renewable energy technologies. This, in turn, has created growing concern in the U.S. about continued access to strategic and critical minerals. A recent survey of manufacturing executives found that more than 90 percent worry about mineral supply disruptions outside of their control.
Legislation has been introduced in both the House of Representatives and the Senate to attempt to address these concerns. On October 22, 2015, the House passed – for the fourth time this decade – the National Strategic and Critical Minerals Production Act (H.R. 1937). H.R. 1937, sponsored by Republican Congressman Mark Amodei of Nevada, passed with bipartisan support that included eight Democrats. A related bill, the American Mineral Security Act of 2015 (S. 883), which was introduced in March 2015 by Republican Senator Murkowski of Alaska, has been folded into a broader energy package, the Energy Policy Modernization Act of 2015 (S. 2012). S. 2012 was reported out of the Senate Energy and Natural Resources Committee in July and awaits a vote by the full Senate.
Although the two bills differ somewhat in their particulars, at their heart, each would require that federal government agencies implement measures to improve the efficiency and timeliness of the permitting process for strategic and critical mineral mines. Both bills would require increased federal agency coordination in environmental impact reviews and review of permit applications. In addition, both would designate all domestic mining projects that produce strategic and critical minerals as “infrastructure projects” under Executive Order 13604, thereby giving such projects access to a streamlined permit process. While the pending Senate bill would require the Bureau of Land Management and the Forest Service to establish and adhere to permitting timelines and schedules, the already-passed House bill would require the permitting agency to enter into an agreement with the project proponent that sets hard-and-fast time limits for each part of the federal permitting process, with an overall limit of no more than 30 months for the entire process unless all parties agree otherwise.
The House bill would define as “strategic and critical minerals” those that are “necessary” for national defense and national security requirements; the nation’s energy infrastructure, including pipelines, refining capacity, electrical power generation and transmission, and renewable energy production; domestic manufacturing, agriculture, housing, telecommunications, healthcare a and transportation infrastructure; or the nation’s economic security and balance of trade. This definition would be interpreted by the lead agency with responsibility for issuing a mineral exploration or mine permit when reviewing the permit application. By contrast, the Senate bill would require the Director of USGS, in consultation with relevant federal agencies and entities and with public input, to develop a methodology for establishing and periodically updating an official list of elements that qualify as “critical minerals” based on whether they are important in various applications (such as energy and consumer technology, defense, health care and agriculture) and subject to potential supply restrictions.
The House bill would allow strategic and critical mineral mining projects to satisfy National Environmental Policy Act (NEPA) requirements if the lead agency with responsibility for issuing a mineral exploration or mine permit determines that any state and/or federal agency acting pursuant to its authorities has addressed or will address the essential components of NEPA review. As such, no separate environmental impact statement or environmental assessment would need to be prepared. In addition, the House bill requires that court challenges to permits be filed within 60 days of the action being challenged, and prohibits the payment of attorney’s fees, expenses and other costs by the government. The pending Senate bill does not expressly address NEPA review or the timing of lawsuits.
Environmental groups have criticized the House bill for weakening environmental review of proposed mining projects, limiting the ability of affected communities to use the court system to hold the government accountable for the environmental impacts of mining, and for defining “strategic and critical minerals” so broadly that it would extend the streamlined permitting procedures to virtually any hardrock mine, and not just those projects of legitimate national security interest. As for the White House, the Obama Administration has threatened to veto H.R. 1937 should it be passed by both houses of Congress, on the stated ground that the bill focuses not on ensuring a supply of minerals needed for national security, but on skirting necessary environmental protections that are the core of existing permitting processes.
The timing of a full Senate vote on S. 2012 is uncertain, but if passed by the Republican-controlled Senate, significant reconciliation with the House bill would be needed before arriving at a final bill for the president’s signature. Although it seems unlikely the president would sign a bill substantially similar to H.R. 1937, it remains to be seen whether a reconciled bill, if closer to the Senate version, would be more palatable to the White House.
Michael S. Giannotto is a senior partner in Goodwin Procter’s Business Litigation and Environmental Groups in Washington, D.C.  Matthew Brewer is an attorney in Goodwin Procter’s Washington, D.C. office specializing in environmental and energy issues.

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