Following up on Squire Patton Boggs’s continuing coverage of the critical minerals industry, we examine some recent reforms in the federal permitting process which aim to ease supply-side constraints by expediting the development and exploitation of critical minerals. Rapidly mounting geopolitical tensions, East/West decoupling, and longstanding supply chain stresses underlie a new reality—global logistics now operates less like a fine tuned watch and more like a game of Calvinball, where delays, ever-changing rules, and black-swan shocks are the norm. But this disruption only goes so far—some things remain largely unchanged. One certainty in this uncertain time is that the demand for critical minerals will continue to increase in the coming years as countries push a green transition to meet Paris Accord targets. Countries and companies remain laser-focused on the need to obtain reliable sources of critical minerals needed to fuel this transition.
Although the demand for critical minerals is robust and largely insulated from the current political climate, critical minerals supply faces significant hurdles including both short- and long-term capacity strains given political instability in key regions, an uncertain trade outlook, and—most of all—skyrocketing demand. The International Energy Agency reports that demand for critical minerals related to electric vehicles and battery storage will soar by orders of magnitude in the coming years, to say nothing of critical minerals’ increasing use as the United States and European Union attempt to develop independent chip/high-tech manufacturing bases and redundant critical mineral supply chains.
Meeting this demand will require significantly more production, but it is very difficult for the industry to move quickly in response; large-scale mining projects are heavily regulated and the permitting process can take an extended period of time with success far from assured. The recent cancellation of a planned lithium mine in Serbia underscores that even the most well-planned and financed efforts can come to naught; it is hardly the only project to be withdrawn, and analysts have long been warning that the industry is under-investing in new projects, raising concerns over the long-term supply of critical minerals.
To boost the domestic supply of critical mineral and reduce administrative burdens, the Energy Act of 2020, Pub. L. 116-260, charged the Secretary of the Interior/Geological Survey with promulgating a list of “critical minerals” which then become eligible for certain permit streamlining provisions under existing statutory provisions. On November 9, 2021, the Department issued a draft list of fifty (50) critical minerals, including lithium, cobalt, and nickel. On February 24, 2022, the Secretary made that list final, the first such designation under the Energy Act (although it was not the first critical mineral designation).
The new list of critical minerals includes 50 minerals, ranging from antimony, used in batteries and certain flame-retardant formulations, to ytterbium, used in memory devices and lasers. The new list also includes lithium, cobalt, and nickel—the first such designation for nickel—which should provide some comfort to those who hope to buy an electric vehicle anytime soon; these are critical inputs for the manufacture of the high-capacity batteries required by electric vehicles, and with nearly every state and nation across the globe looking to electrify their vehicle fleets, these minerals will continue to be in increasing demand for the foreseeable future. Lithium—so called “white gold”—is particularly in demand as a necessary input for EV batteries.
Now that there has been a designation of critical minerals under the Energy At, how does that designation work to expedite permitting for those looking to exploit domestic supplies of critical minerals? Working in tandem with the recent infrastructure bill, the Energy Act aims to streamline the permitting process for critical-mineral extraction projects.
Amending the Materials and Minerals Policy, Research and Development Act of 1980, the recent infrastructure bill, Section 40206, provides that the Secretaries of the Interior and Agriculture shall, to the “maximum extent practicable,” “complete the Federal permitting and review processes with maximum efficiency and effectiveness, while supporting vital economic growth.” The bill directs those agencies to establish concrete performance goals for the permitting process while concurrently “engaging in early and active consultation with State, local, and Tribal governments.” The agencies have yet to establish written guidelines to accomplish this goal, but once that process is complete, critical mineral projects should be able to avail themselves of the expedited review—provided the agencies commit sufficient manpower to meet what is ultimately an aspirational standard. An executive order could put some teeth to what otherwise has the potential to be a paper victory for mining.
Moreover, the Section 40206 amendment only addresses two departments concerning the use of federal lands; the permitting process will involve many more agencies, most frequently the US Army Corps of Engineers and EPA. Enter FAST-41. The infrastructure bill also provided for the codification of an Obama-era reform, the 2015 Fixing America’s Surface Transportation Act (FAST-41), which had been set to sunset on December 4, 2022. The FAST Act established the Federal Permitting Improvement Council, an interagency council designed to coordinate agency review and permitting of large-scale “covered projects” which include those “involving construction of infrastructure for renewable or conventional energy production, electricity transmission, surface transportation, aviation, ports and waterways, water resource projects, broadband, pipelines, manufacturing, carbon capture, or any other sector as determined by a majority vote of the Council.” To date, the Council has voted to add mining.
The FAST-41 process and the procedures called for in Section 40206 are complementary. FAST-41 provides for procedural reforms and better coordination among agencies while Section 40206 requires (two) agencies to establish concrete guidelines and goals for critical minerals permitting. Indeed, it has hard to imagine Section 40206 succeeding without the FAST-41 framework—the agencies’ goals would be hard to achieve without the structural support from the Council.
We have yet to see the full benefit of a critical mineral mining project with the benefit of the Section 40206 guidelines or the FAST track, let alone both. At present, no mining projects are reported on the Council’s website. While Section 40206 and FAST-41 are complementary, they are somewhat incomplete when placed together—Section 40206 has a very narrow scope—only encompassing two agencies—and FAST-41 is procedural only. An executive order could harmonize the operation of the two sections to provide greater clarity and support for critical minerals, but even as it stands, these are important reforms which—properly navigated—should encourage domestic development of critical minerals—from “white gold” lithium on.