Lithium Powered: Biden-Harris Administration Issues Update on Support and Challenges Facing Made in America Supply Chain for Critical Minerals

On February 22, 2022, the Biden-Harris Administration issued a Fact Sheet summarizing efforts by the federal government and the private sector over the past year to promote the development of a domestic supply chain for critical minerals, including announcing major investments into domestic production of critical minerals.  The Fact Sheet was issued in conjunction with a virtual summit hosted by President Biden on February 22 that included California Governor Gavin Newsom, Energy Secretary Jennifer Granholm and several business and community leaders discussing opportunities and challenges with developing a domestic critical mineral supply chain.

The Fact Sheet comes mere days before the one-year anniversary of Executive Order 14017, America’s Supply Chains, (Feb. 24, 2021) (E.O. 14017) in which the Administration stated its policy to “strengthen the resilience of America supply chains,” and set forth actions for various agencies to take to ensure that goal was met for critical products and materials.  The Fact Sheet also highlighted actions taken by the administration to implement provisions of the Infrastructure Investment and Jobs Act that are intended to support a domestic critical mineral industry.

E.O. 14017 ordered a review of vulnerabilities to domestic supply chains for critical mineral and other materials within 100 days, which culminated in the June 2021 White House report entitled Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth.  That report found an over-reliance on foreign sources, particularly with adversarial nations, for critical minerals, which, in turn, posed economic and national security threats to the United States.  For critical minerals, the report recommended that the U.S. government, private industry, and other stakeholders develop sustainability standards for critical mineral intensive industries; expand sustainable domestic production and processing capacity including through recycling; utilize the Defense Production Act and other authorities to provide financial assistance to increase domestic industrial capacity; and increase domestic stockpiles of critical minerals.

The Fact Sheet also identifies three key actions being taken to secure the critical minerals supply chain while also upholding the Administration’s labor, environmental, and equity priorities:

1. Announcing the establishment of an Interagency Working Group to develop recommendations for updating the Mining Law of 1872 and the regulatory and permitting requirements that apply to mines on federal lands.  On February 22, 2022, the Interagency Working Group released a list of 11 principles to guide its process of developing recommendations, including establishing financial assurance requirements and other standards for the domestic and international mining industry; updating hardrock mining royalties; and providing permitting certainty.  The President has called upon the Interagency Working Group to deliver its recommendations to Congress by November.
2. Updating and prioritizing the Federal list of critical minerals to “focus” the work of Federal agencies to prioritize production and processing of minerals to produce products like batteries, semiconductors, and permanent magnets.  To this end, the U.S. Geological Survey released an updated final list on February 22, 2022, identifying 50 minerals as critical, including the addition of nickel and zinc and the removal of helium and potash from the previous list issued in 2018; and
3. Issuing a Memorandum of Agreement among the Departments of Energy, Defense, and State to coordinate stockpiling activities for critical minerals to support the transition to clean energy and national security needs.

The Fact Sheet also summarizes several public and private efforts that have recently been taken to expand the domestic industry and to mitigate the risks from over-reliance on potentially adversarial nations for critical minerals and materials.

For example, the Fact Sheet highlighted that a California company has committed to invest $700 million to create 350 new jobs in the domestic magnet supply chain by 2024, following its receipt of a $35 million grant from the Department of Defense, in an effort to decrease reliance on China, which currently controls 87% of the global magnet supply chain.  The Fact Sheet also highlighted a February 14, 2022, announcement by the Department of Energy concerning use of $140 million in funds from the Bipartisan Infrastructure Law for the development and operation of a demonstration facility to recover rare earth metals and critical minerals from coal ash and other mine waste.  The new infrastructure law also provides $3 billion in funding to invest in refining battery materials, including lithium, cobalt, nickel, and graphite; the application period for this program is expected to open in the third quarter of 2022.

The Fact Sheet not only demonstrates the attention the Biden Administration is giving to supply chain issues but also highlights several risks and opportunities that could impact the development of domestic critical mineral supplies and processing capacity and adjacent industries that depend on these materials.  Indeed, the Ukraine-Russia conflict may complicate the Administration’s efforts given Russia’s role as a significant metals producer.  Whether a secure, reliable domestic supply chain for critical minerals can be developed will help determine the Biden Administration’s success in transitioning the economy generally and the transportation sector specifically away from fossil fuels and toward net zero emissions.  Crowell & Moring LLP will continue to track these developments as they have broad implications for national security and the economy and a range of industrial sectors.