Digging into the Clean Energy Minerals Reform Act

A Policy Assessment of Impacts on Critical Minerals Production

Digging into the Clean Energy Minerals Reform Act

The Clean Energy Minerals Reform Act of 2023 is an ambitious bill that seeks to bolster mining regulatory safeguards, in light of expected increases in mineral demand driven by the clean energy transition. This policy assessment summarizes the bill’s key provisions and identifies their likely effects on future domestic clean energy minerals production. Weighing these effects and their potential to either coordinate or conflict with broader ambitions is essential for policymakers to consider for this bill and all mining-related initiatives given bipartisan attention to U.S. supply chain security, advanced technology, and energy transition goals.

Overall, some provisions of S. 1742 would exert positive impacts while others would negatively affect clean energy minerals production. However, this assessment also calls out where rule exemptions specifically for critical minerals can be made to mitigate those negative effects. Critical minerals cannot continue to be treated as just another subset of the entire hardrock mining sector if the U.S. is to make progress towards energy transition or supply chain security goals. At the same time, policymakers should recognize that making these types of distinctions can also maximize the political viability of any reform-oriented provisions by removing their potential to conflict with these other ambitions.

Ban Mine Claim Patenting

Section 101

Effect on clean energy minerals: minor positive (improved social license)

The text of the General Mining Law of 1872 (GML) allows for the practice of patenting a mining claim, thereby transferring public land to private ownership at low cost. Congress has approved and extended a de-facto ban on mine claim patenting in annual appropriations bills since 1994, highlighting Congress’s bipartisan recognition that the GML provision is a clear vestige of the law’s 19th century context. Section 101 would ban this practice outright, representing a positive update to the GML and reflecting modern values towards public land. Permanently banning mine claim patenting furthermore eliminates the need for Congress to repeatedly uphold temporary bans year-to-year, establishing both market and regulatory certainty.

Royalties, Fees, and Abandoned Mine Land Reclamation Funding

Sections 102, 201, 401, 402

Effect on clean energy minerals: negative, unless critical minerals exempted.

Abandoned mine land reclamation remains an enduring national priority. The federal government must uphold its long-term responsibility to support cleanup efforts and dedicate sufficient funding to advance visible progress on this large-scale national problem. S. 1742 would assist such efforts by establishing a Hardrock Minerals Reclamation Fund, introducing land use fees, production-based abandoned mine land fees, and production-based royalties, and increasing existing claim filing and maintenance fees. Revenue for all of these sources would go to the reclamation fund with the exception of the portions of claim fees allotted to agency budgets.

The funding sources created by this bill would benefit American communities by supporting cleanup efforts that help address lingering environmental and public health risks. Parity in the application of production-based royalties to hardrock mining on public lands that parallels long standing royalty schemes for oil, gas, and saleable mineral production is also long overdue. Finally, adjustments to modify claim filing and maintenance fees in response to inflation are also appropriate and common-sense. However, in light of urgent domestic supply chain priorities, the nation would benefit further from additional stipulations that would protect critical minerals projects from unintended, adverse economic effects:

  • Policymakers should exempt critical minerals operations from any production-based fees. The bill grants the Secretary of the Interior the authority to adjust rates for mines that would otherwise close due to the added financial burden. However, proactive outright exemptions for critical mineral operations are essential to avoid even temporary mine closures in the future, which may persist while mine operators submit appeals and agencies deliberate over rate adjustments. Furthermore, production-based fees on critical minerals operations would act counterproductively to and erode the benefits from other national policies intended to support the critical minerals sector through project grants, loan guarantees, and similar mechanisms. These exemptions would still leave critical minerals operations subject to claim maintenance fees, claim filing fees, and land use fees that support reclamation funding. Considering that critical minerals operations only produce a small minority of hardrock mining revenue to begin with, exempting critical mineral operations from production-based fees would not meaningfully detract from national abandoned mine cleanup efforts.

  • Policymakers might consider whether revenue generated from the various proposed fees could benefit other worthwhile causes apart from the Hardrock Minerals Reclamation Fund. For example, revenue could support public sector investments and benefits for communities neighboring active mines, or could support permitting agencies. An example is Minnesota’s Permanent School Fund, which provides funding to public schools in the state. The fund is supported by contributions from mining on Minnesota state trust lands, which accounted for roughly 80% of the fund’s $1.37 billion balance as of 2018.

  • Policymakers should consider if alternative mechanisms to gross revenue royalties would achieve similar effects with fewer potentially adverse impacts on mine operations. Net revenue royalties, for example, would generate less total funding, but would account for capital expenditures and operating costs, which are significant for mining ventures and an enduring hurdle to development. This could be a more efficient approach than beginning with gross revenue royalties then adjusting rates once appealed by operators.

Exploration Permitting

Section 302

Effect on clean energy minerals: highly negative.

Section 302 would require operators to secure a permit in order to conduct exploration activities. Currently, the existing criteria for whether or not operations require a permit is based on the level of surface disturbance instead of nominal categories of operations like exploration or mining. For example, operations that cause low levels of surface disturbance such as exploration activities only require operators to submit a notice to agencies whereas operations that create major disturbances such as full scale mining require a permit that agencies must approve.

Policymakers must reconsider this proposed change. Basing permit requirement criteria on the type of activity instead of the level of impact—minimal for many exploration activities—is arbitrary and subjects many operations that are currently processed efficiently and overseen diligently to an unnecessary administrative burden. Agencies already possess expertise in overseeing notice submissions and the existing regulatory criteria ensures that activities with more significant impacts undergo the extra vetting required by permit reviews. Action by Congress requiring agencies to review and approve exploration permits would not enhance environmental protection, and would merely add to already-strained agency workloads. In particular, agency decisions on permit applications could risk constituting a major federal action requiring a National Environmental Policy Act (NEPA) review similar to those required when operators apply for full scale mine permits. Cumulatively, this added administrative burden would be considerable with no meaningful benefit to outcomes.

If lawmakers are concerned that the current notice system does not sufficiently enable regulators to mitigate adverse impacts from exploration activities, then an alternative to transitioning to a permit system would be to simply revise existing regulations to require the equivalent information for notice submissions as is stipulated in Section 302 for the proposed exploration permits. Such a revision would expand requirements that close any perceived gaps and bolster agency safeguards. Furthermore, given that the information outlined in Section 302 largely reiterates what is already required for notice submissions (i.e., descriptions of operations and reclamation plans, and the provision of financial guarantees), this alternative could be implemented more feasibly and precisely than unnecessarily adding to agency responsibilities by requiring decisions on permits.

Likewise, if lawmakers are concerned about adequate public engagement, Section 302 calls for public notice of the proposed exploration permit decisions and opportunities for public comment. So, requiring equivalent public notification procedures for notice submissions within the current system would be a more elegant means of ensuring robust public engagement.

Reclamation Standards

Sections 2 and 306

Effect on clean energy minerals: negative.

Milestone environmental protection laws such as the Federal Land Policy Management Act (FLPMA) impose a mandate on agencies to prevent ‘unnecessary and undue degradation’ to the environment when administering various functions like reviewing a mine permit. Current regulations define ‘unnecessary and undue degradation’ as impacts beyond those ‘reasonably incident’ to mining activities. This definition then leaves room for the various types of allowable operations to proceed while regulatory oversight mitigates their impacts to acceptable levels. Section 306, however, applies a new, superseding definition of ‘undue degradation’ that would mean ‘substantial irreparable harm.’ The issue with this new definition is that it could be interpreted to encompass any sort of impact caused by a mining operation even including commonplace, regulated activities performed in line with existing standards. This new definition could serve as grounds that would compel agencies to deny any related activity outright.

As written, this provision may cause serious disruption and confusion to agency administration and expose responsible mining operations to bad faith litigation. Policymakers should note that from roughly 1999 to 2001, the Bureau of Land Management implemented a similar change of definition. In response to a barrage of lawsuits and appeals expressing similar concerns, the Department of the Interior reviewed the rulemakings and eventually reverted the decision, citing legal conflicts with the FLPMA and too broad of criteria that could lead to arbitrary denials.

Mineral Estate Withdrawals

Section 307

Effect on clean energy minerals: negative, unless modifications incorporated to protect critical minerals areas.

Section 307 amends the FLPMA by adding language that requires a review of environmentally sensitive areas of federal land within 3 years of the bill’s passage and grants the Secretary of the Interior the authority to withdraw those areas from operation under the GML, effectively banning mining in those areas.

Mineral estate withdrawals are a useful tool with which Congress and administrations can preempt mine development in environmentally sensitive areas or conserve locations that hold particularly fond public sentiment. That said, the broad criteria and the deadline for inclusion outlined in Section 307 could result in a large docket of unnecessary, rushed mineral estate withdrawals. Such an outcome risks harming local and regional economies, impeding national critical minerals strategy, and subjecting agencies to the significant burden that the requisite changes to land use plans would later entail. Congress and agencies can still make withdrawals without Section 307. It would be more responsible to identify worthwhile areas through the typical land use planning processes and calls from the public rather than rushing them under a review deadline.

Otherwise, the recent historical record suggests a real danger that the withdrawals triggered by Section 307 could favor areas subject to short-term political pressures rather than solely focusing on environmental sensitivity and long-term land-use planning. A timely example is the 2023 Minnesota Boundary Waters withdrawal enacted by the Department of the Interior on the one-year anniversary of its cancellation of the Twin Metals Minnesota project lease. The lease renewal alone was subject to years of back and forth legal stances that predictably changed along party lines from one administration to another. The withdrawal rendered the project’s feasibility unlikely, effectively superseding the permit process and hampering the environmental review’s ability to determine the actual potential of the project to adversely impact the nearby areas targeted by the withdrawal.

Congress and administrations should execute mineral estate withdrawals deliberately and preemptively. Yet, federal policymakers commonly restrict proposed domestic mining projects in these reactive ways. Instead, agencies should allow mine development to either proceed or not based on the standards-based criteria vetted in the environmental review and permitting process. Such criteria are important for all mining. In particular though, critical minerals strategy requires long term consideration that cannot afford setbacks from short term pressures. At the very least, the federal land reviews and mineral estate withdrawals outlined in Section 307 should explicitly study and exempt areas with known potential for critical mineral development.

Lastly, Section 307 further amends the FLPMA by striking language that previously restricted agency withdrawals to procedures covered by the FLPMA. Policymakers should seriously consider the unintended implications of this provision and whether or not it would significantly expand the ability to implement agency withdrawals beyond the authority, criteria, and Congressional oversight outlined by the FLPMA. These checks and balances are the type of stringent criteria that should not be eroded and, if anything, Congress should consider expanding.

Tribal Consultation

Section 310

Effect on clean energy minerals: minor positive (improved social license).

Section 310 requires agencies to implement Tribal consultation procedures outlined in “Uniform Standards for Tribal Consultation” (87 Fed. Reg. 74479 (December 5, 2022)). These standards ensure Tribes are notified of mining-related activity and that their input is documented. None of the required practices supersede regulatory or permitting procedures. This provision carries high potential value and significance for Tribal communities and represents a common-sense procedural improvement that better upholds Tribal rights and sovereignty.

At the same time, policymakers should consider whether the definition of ‘mineral activity’ in this context is too broad and potentially administratively burdensome. The lack of clarification may obligate agencies to engage in consultation procedures for relatively commonplace actions like simply filing a mining claim. The definition could be constrained to actions that require a permit or are based on levels of impact analogous to casual use, notice level, or plan level operations, for example.

Uranium Development on Federal Land

Section 505

Effect on clean energy minerals: positive

Section 505 calls for a broad review of the regulatory practices regarding uranium mining to assess how well they “allow for the production of uranium while ensuring protection of public health and safety and the environment.” This review considers whether uranium should be a leasable or a locatable mineral, the adequacy of existing financial assurances, and whether any land withdrawals are eminently appropriate specifically for uranium. Because uranium plays an essential role in national energy security and efforts to reduce air pollution, it is critically important for the federal government to balance domestic uranium production with protection of public health, safety, and the environment. This review would produce useful insights to better inform future federal government decision-making, and represents a positive development.