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Critical Minerals: Where National Security, Trade and Environmental Laws Will Meet

“National Security” an Increasingly Elastic Concept

By now it should be clear that the Trump Administration defines “national security” broadly. In the trade arena, the Administration has directly asserted a “national security” justification to impose tariffs on steel, aluminum and other imports, and the President has suggested that auto imports might also be subject to tariffs on national security grounds.

Acting variously under Section 232 of the Trade Expansion Act of 1962 and Sections 301 and 201 of the Trade Act of 1974, the President has imposed and proposed tariffs on a range of imports. In support of tariffs on washing machines and solar cells and modules, for example, the Administration explained that imports of those items were a “substantial cause of serious injury to domestic manufacturers.” While national security was not technically a basis for the action, the “safeguard” tariffs on washing machines and solar components were likely rooted in an animating philosophy within the Administration: that economic security is national security.

Against the backdrop of the Trump Administration’s ideology, a range of conventional and unconventional trade, economic and other measures have been and likely will continue to be taken on “national security” grounds, including domestically. These include measures to increase domestic production of “critical minerals” (among them rare earth elements)–essential to the production of consumer electronics, electric vehicles, defense articles, medical devices, and other manufactured goods.

Such actions can be seen on the horizon, if one connects the dots between national security authorities under trade laws, the Administration’s stated goals and actions favoring increased domestic mining of critical minerals, and environmental laws that contain national security/national defense exceptions and are viewed by the Administration and extractives industry interests as prohibitive to domestic production of critical minerals on commercially viable terms.

Federal Policy: Critical Minerals Supply Chain Risk is a National “Strategic Vulnerability”

On December 20, 2017, the President issued Executive Order 13817, entitled “A Federal Strategy To Ensure Secure and Reliable Supplies of Critical Minerals.” EO 13817’s overarching finding is that the United States “is heavily reliant on imports of certain mineral commodities that are vital to the Nation’s security and economic prosperity.” The dependency, the Order finds, constitutes a “strategic vulnerability for both [the U.S.] economy and military.”

The finding that U.S. dependence on foreign source critical minerals is national security vulnerability is legally significant, as it lays the foundation for Executive Branch action to alleviate (or attempt to) foreign dependence, including– if not principally– by bolstering domestic production of mineral commodities deemed essential to “national security” and “economic prosperity.” EO 13817 lays the groundwork for such action, declaring that “it shall be the policy of the Federal Government to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals, which constitutes a strategic vulnerability for the security and prosperity of the United States.”

Critical Minerals List and Commerce Department Blueprint

Pursuant to EO 13817, the Administration has already taken steps that link national security and domestic production of critical minerals. On May 18, 2018, the Department of the Interior, citing national security interests, published the Final List of Critical Minerals 2018 (the “Critical Minerals List“) comprised of 35 minerals (including the rare earth elements group).

Also pursuant to EO 13817, the Secretary of Commerce, in coordination with the Secretaries of Defense, Interior, Agriculture and Energy, and the U.S. Trade Representative, is required to submit to the President, by November 14, 2018, a report containing:

“(i) a strategy to reduce the Nation’s reliance on critical minerals;

(ii) an assessment of progress toward developing critical minerals recycling and reprocessing technologies, and technological alternatives to critical minerals;

(iii) options for accessing and developing critical minerals through investment and trade with our allies and partners;

(iv) a plan to improve the topographic, geologic, and geophysical mapping of the United States and make the resulting data and metadata electronically accessible, to the extent permitted by law and subject to appropriate limitations for purposes of privacy and security, to support private sector mineral exploration of critical minerals; and

(v) recommendations to streamline permitting and review processes related to developing leases; enhancing access to critical mineral resources; and increasing discovery, production, and domestic refining of critical minerals.”

The Commerce Department report will be used as a blueprint to achieve EO 13817’s stated goals of increasing “private sector domestic exploration, production . . . and reprocessing of critical minerals . . . reduc[ing] . . . dependence on imports, and preserv[ing] [the United States’] leadership in technological innovation . . . [to] improve [the country’s] national security and balance of trade, and enhance the technological superiority and readiness of . . . [the] Armed Forces, which are among the Nation’s most significant consumers of critical minerals.”

Connecting the Dots: Critical Minerals, National Security, and Trade and Environmental Laws

Given the ways in which the Administration has used “national security” to justify trade and non-trade actions (such as restricting immigration), the Commerce Department report is likely to serve as a springboard for further “national security” driven action favoring domestic critical minerals production.

EO 13817 on its face authorizes domestic action. And trade laws that apply to international trade and authorize the President to take aim at foreign imports and foreign trade practices on national security grounds can be used to make the case for increased domestic mining and reprocessing of minerals, including by seeking (or attempting to seek) exceptions from applicable environmental laws and regulations that include national security (or “national defense”) exceptions. National security justifications– stemming from EO 13817, the Critical Minerals List, the forthcoming Commerce Department report, and/or other Executive Branch actions–will likely also be used to advocate for amended or new legislation to remove administrative and cost burdens to domestic critical minerals mining and related activities. Indeed, some Congress members have already proposed or endorsed such measures.

Impacts Across Industries and Interests

Any further actions taken by the Administration to reduce dependency on foreign source critical minerals, particularly by bolstering domestic production, will be of interest to a range of industry and other interest groups. Directly, of course, mining interests within and outside of United States will naturally seek (and have sought) opportunities to engage in production, exploration, reprocessing and other activities on enhanced commercial and regulatory terms.

Technology, clean energy, electric vehicle, medical device, defense and other industry interests that rely on critical minerals to manufacture goods and conduct research and development will be affected through their supply chains (including by any restrictive measures that the Administration might take vis-a-vis critical minerals imports, some of which are on the Trump Administration’s list of tariffs targeting imports from China). Technology companies in particular might also be called upon to take a position on any curbs on the application of environmental compliance that the Administration (or Congress) might propose for the purpose of increasing domestic mining on more favorable terms.

U.S. states– both in favor of and opposed to– increased mining (on environmentally stringent or other terms) will likely enter any fray, should events warrant. Environmental advocates too, of course, will have a clear interest in tracking and responding to Executive Branch and legislative actions that might diminish environmental requirements applicable to critical minerals mining and related activities.

All affected interests and groups should monitor developments around critical minerals, which will be a point at which national security, trade laws, and environmental laws will meet.

Get in Touch

To learn more about the thinking behind this piece or to discuss MassPoint’s related Critical Resources, International Trade, or other services, contact the author, Hdeel Abdelhady, at habdelhady@masspointpllc.com.

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