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66–924PDF 2011

FEDERAL PERSPECTIVE ON A 

NATIONAL CRITICAL MATERIALS STRATEGY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS AND 

OVERSIGHT 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

TUESDAY, JUNE 14, 2011 

Serial No. 112–24 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. RALPH M. HALL, Texas, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

DANA ROHRABACHER, California 

ROSCOE G. BARTLETT, Maryland 

FRANK D. LUCAS, Oklahoma 

JUDY BIGGERT, Illinois 

W. TODD AKIN, Missouri 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

SANDY ADAMS, Florida 

BENJAMIN QUAYLE, Arizona 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

E. SCOTT RIGELL, Virginia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

ANDY HARRIS, Maryland 

RANDY HULTGREN, Illinois 

CHIP CRAVAACK, Minnesota 

LARRY BUCSHON, Indiana 

DAN BENISHEK, Michigan 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 

JERRY F. COSTELLO, Illinois 

LYNN C. WOOLSEY, California 

ZOE LOFGREN, California 

DAVID WU, Oregon 

BRAD MILLER, North Carolina 

DANIEL LIPINSKI, Illinois 

GABRIELLE GIFFORDS, Arizona 

DONNA F. EDWARDS, Maryland 

MARCIA L. FUDGE, Ohio 

BEN R. LUJA ́ N, New Mexico 

PAUL D. TONKO, New York 

JERRY MCNERNEY, California 

JOHN P. SARBANES, Maryland 

TERRI A. SEWELL, Alabama 

FREDERICA S. WILSON, Florida 

HANSEN CLARKE, Michigan 

SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT

HON. PAUL C. BROUN, Georgia, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

SANDY ADAMS, Florida 

RANDY HULTGREN, Illinois 

LARRY BUCSHON, Indiana 

DAN BENISHEK, Michigan 

VACANCY 

RALPH M. HALL, Texas 

DONNA F. EDWARDS, Maryland 

ZOE LOFGREN, California 

BRAD MILLER, North Carolina 

JERRY MCNERNEY, California 
(III) 

C O N T E N T S 

Wednesday, June 14, 2011 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Randy Hultgren, Acting Chairman, Subcommittee on Investigations and Oversight, Committee on Science, Space, 

and Technology, U.S. House of Representatives ............................................... 19 

Written Statement ............................................................................................ 20 

Statement by Representative Donna F. Edwards, Ranking Minority Member, 

Subcommittee on Investigations and Oversight, Committee on Science, 

Space, and Technology, U.S. House of Representatives .................................... 21 

Written Statement ............................................................................................ 22 

Statement by Representative Brad Miller, Subcommittee on Investigations 

and Oversight, Committee on Science, Space, and Technology, U.S. House 

of Representatives ................................................................................................ 23 

Witnesses: 

Dr. John P. Holdren, Director, Office of Science & Technology Policy (OSTP), 

Executive Office of The President of the United States 

Oral Statement ................................................................................................. 24 

Written Statement ............................................................................................ 25 

Mr. David Sandalow, Assistant Secretary for Policy and International Affairs, 

U.S. Department of Energy (DOE) 

Oral Statement ................................................................................................. 28 

Written Statement ............................................................................................ 29 

Mr. Jeff L. Doebrich, Program Coordinator (Acting), Mineral Resources Program, U.S. Geological Survey (USGS) 

Oral Statement ................................................................................................. 31 

Written Statement ............................................................................................ 32 

Appendix I: Answers to Post-Hearing Questions 

Dr. John P. Holdren, Director, Office of Science & Technology Policy (OSTP) .. 50 

Mr. David Sandalow, Assistant Secretary for Policy and International Affairs, 

U.S. Department of Energy (DOE) ..................................................................... 53 

Mr. Jeff L. Doebrich, Program Coordinator (Acting), Mineral Resources Program, U.S. Geological Survey (USGS) ................................................................ 72 

Appendix II: Additional Material for the Record 

Letter submitted Dr. John P. Holdren, Director, Office of Science & Technology Policy (OSTP), in response to Representative Dan Benishek ............... 80 

(1) 

FEDERAL PERSPECTIVE ON A 

NATIONAL CRITICAL MATERIALS STRATEGY 

HEARING DATE (INCLUDING DAY OF WEEK) 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:39 p.m., in Room 

2318 of the Rayburn House Office Building, Hon. Randy Hultgren 

presiding. 
2 
3 

1 ‘‘Energy Critical Elements: Securing Materials for Emerging Technologies,’’ a report by the 

American Physical Society and the Materials Research Society, February 2011, available at: 

http://www.aps.org/policy/reports/popa-reports/loader.cfm?csModule=security/ 

getfile&PageID=236337 (hereinafter APS/MRS Report) 2 Ibid. 

HEARING CHARTER

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

SUBCOMMITTEE ON INVESTIGATIONS & OVERSIGHT 

U.S. HOUSE OF REPRESENTATIVES 

‘‘The Federal Perspective on a National 

Critical Materials Strategy’’ 

TUESDAY, JUNE 14, 2011

2:00 P.M.—4:00 P.M. 2318 RAYBURN HOUSE OFFICE BUILDING

Purpose 

On June 14, 2011, the Subcommittee on Investigations and Oversight has invited 

officials from the Administration to discuss the federal perspective on a national 

critical materials strategy. This includes rare earth elements as well as other critical materials. 

Background 

A recent report by the American Physical Society (APS) and Materials Research 

Society (MRS) defines energy critical elements (ECE) as: ‘‘a class of chemical elements that currently appear critical to one or more new, energy-related technologies. A shortage of these elements would significantly inhibit large-scale deployment, which could otherwise be capable of transforming the way we produce, transmit, store, or conserve energy.’’ 1

Located primarily around the center of the Periodic table (Appendix 2), there are 

several reasons why these elements may be considered critical beyond the role they 

play in electronics and advanced technologies such as electric cars, wind turbines 

and photovoltaic cells. The joint APS and MRS study explains elements may be critical because they might be ‘‘intrinsically rare in Earth’s crust, poorly concentrated 

by natural processes, or currently unavailable in the United States.’’ 2 While many 

energy critical elements also play important roles in national defense, this hearing 

is primarily focused on the commercial and energy applications of these materials. 

Within the definition of energy critical elements are a group of seventeen chemical 

elements that are commonly found together, and referred to as the rare earth elements. On the Periodic table, fifteen of these elements are located in the Lanthanide 

series (see below), which make up a row of elements with atomic numbers in ascending order from 57 to 71. The other two are Yttrium (atomic number 39) and Scandium (atomic number 21). A list of the rare earth elements below, and their common 

end uses, is available in Appendix 3. 
4 

3 Jack Lifton, ‘‘In Xanadu Did Goldman Sachs Decree A Rare Earths Surplus For All To See,’’ 

Technology Metals Research, May 6, 2011, available at: http://www.techmetalsresearch.com/ 

2011/05/in-xanadu-did-goldman-sachs-decree-a-rare-earths-surplus-for-all-to-see/ 4 Ibid. 

5Tiffany Hsu, ‘‘High-tech’s Ace in the Hole,’’ Los Angeles Times, February 20, 2011, available 

at: http://articles.latimes.com/2011/feb/20/business/la-fi-rare-earth-20110220/3 (hereinafter Hsu 

Article) 6Paul Krugman, ‘‘Rare and Foolish,’’ New York Times, October 17, 2010, available at: http:// 

www.nytimes.com/2010/10/18/opinion/18krugman.html 7Ming Hwa Ting, ‘‘China’s Rare Earth Motives,’’ The Diplomat, June 5, 2011, available at: 

http://the-diplomat.com/new-leaders-forum/2011/06/05/chinas-rare-earth-motives/ (hereinafter 

Ting Article) 8 Bill Kovacs, ‘‘Rare Earth Elements and our Clean Energy Future,’’ ChamberPost, April 19, 

2011, available at: http://www.chamberpost.com/2011/04/rare-earth-elements-and-our-clean-energy-future/ 9Ting Article, supra, note 7 

Rare earths share similar—yet unique—chemical and physical properties that 

make them critical components of advanced technologies such as high powered 

magnets, petroleum refining catalysts, batteries, and lasers among others. Like 

other critical elements, rare earths are important components of everyday items 

such as cell phones, blackberries, hybrid cars, etc. 

Rare earths are further classified into two categories—light and heavy. The lighter elements—basically the first half of the Lanthanide series—are more abundant 

and have a larger market. The heavier elements—the second half of the Lanthanide 

series—are scarcer, but equally, if not more critical, even with a smaller market 

share. 

Despite the terminology, rare earths are actually abundant in the Earth’s crust. 

They are however, expensive and difficult to mine, as the process of separating and 

isolating each individual rare earth element is highly complex and cumbersome— 

both financially as well as logistically. When initially extracted from the ground as 

an ore, rare earths are mixed together. The mixed rare earths have to be chemically 

extracted from the ore concentrates, and further chemically separated from any 

other metals that exist in the ore. The remaining mix of rare earths then undergoes 

an additional process to isolate each individual rare earth in a ‘‘separation plant.’’ 3

These are expensive facilities to build, and can ‘‘easily involve hundreds of repetitive 

steps taking up to a month to finish a single batch of material, and although 

batches can be run almost continuously the size of the plant must reflect the optimum large batch size for producing enough volume to make a profit, by selling the 

resulting commercially pure separated chemical compounds.’’ 4

International Production 

China 

From the 1960s to the 1980s, the United States was the dominant producer in 

the world of rare earths. But the intensive nature of rare earths mining ultimately 

led to the demise of this industry. The process of mining and separating rare earth 

elements presents environmental challenges. It creates ‘‘hundreds of gallons of salty 

wastewater per minute, consuming huge amounts of electricity, requiring toxic materials for the refining process and occasionally unearthing dirt that is radioactive.’’ 5 Combined with China’s lower environmental standards, labor costs, and 

government backing of an industry of interest to that nation, the U.S. couldn’t remain competitive, and ultimately ceded authority of this industry to the Chinese. 

The result is that today, China produces about 97% of the world’s rare earth oxides—demonstrating the success of a vision eloquently encapsulated in the following 

1992 quote by Deng Xiaoping, the architect of China’s economic transformation, 

‘‘There is oil in the Middle East; there is rare earth in China.’’ 6

But as China’s interest in the industry has expanded, so too has its control. Since 

2006, ‘‘the Chinese Commerce Ministry has been reducing export quotas, as well as 

limiting and cutting the number of firms that are allowed to export rare earths in 

their raw form. In 2006, 47 Chinese companies had permits to export rare earths, 

but by 2010, only 22 companies were allowed to do so.’’ 7

Understandably, with a reduction in permits has come a reduction in exports. According to the U.S. Chamber of Commerce, ‘‘Last year, China slashed exports by 

72%, and then by another 35% for the first half of 2011.’’ 8

Moreover, as of 2007, China has established export taxes on rare earths. ‘‘Originally set at between 15 percent to 25 percent, depending on the oxide or concentrate 

being exported, the rates on many more rare earth products are expected to be 

raised by 25 percent in 2011.’’ 9
5 

10Tony Zhu, ‘‘China Tightens Control of Rare Earth Industry,’’ Business China, May 20, 2011, 

available at: http://en.21cbh.com/HTML/2011–5–20/wNMjMyXzIxMDIwNA.html 11 Hsu Article, supra, note 5 12 Derek Scissors, ‘‘Rare Earths: The U.S. Government Should not Manage Supply,’’ Heritage 

Foundation Web Memo No. 3201, March 21, 2011, available at: http://thf— 

media.s3.amazonaws.com/2011/pdf/wm3201.pdf 13 Keith Bradsher, ‘‘Amid Tension, China Blocks Crucial Exports to Japan,’’ New York Times, 

September 22, 2010, available at: http://www.nytimes.com/2010/09/24/business/global/ 

24rare.html 14Keith Bradsher, ‘‘China Restarts Rare Earth Shipments to Japan,’’ New York Times, November 19, 2010, available at: http://www.nytimes.com/2010/11/20/business/global/20rare.html 

China claims these measures are necessary to protect its environment from rogue 

mining operators, and to sustain its rare earths industry. To that end, China issued 

guidelines earlier this year that lifts rare earth elements to the level of national 

strategic reserves. Additionally, existing mines are forbidden from expanding capacity, China is setting up a strategic stockpile system for rare earth metals, and it 

aims to concentrate 80 percent of the country’s heavy rare earth mining assets in 

the hands of its three largest companies over the next couple of years. 10

China’s actions have created tense relations with American technology and renewable energy industries, leading the U.S. Trade Representative’s office to say that ‘‘if 

China continues to rebuff requests to ease export limits on rare earths, it may take 

the dispute to the World Trade Organization.’’ 11 And, an analyst at the Heritage 

Foundation had the following to say: 

‘‘Beijing already faces a losing case at the World Trade Organization (WTO) for 

its rare earth export quotas. A Chinese embargo would take at least a few months 

to have an effect and would trigger WTO sanctioned retaliation that would match 

or exceed the dollar value of rare earth exports. Trade disruptions from that point 

would harm the PRC far more than the U.S., given the much greater volume of 

Chinese shipments to America and the jobs associated with them.’’ 12

Japan 

China’s willingness to take advantage of its near monopoly on rare earth elements 

isn’t restricted to export quotas and taxes, nor are its policies directed solely to the 

United States. While China is the world’s largest producer of rare earth elements, 

Japan conducts a great deal of the world’s rare earth processing, and is therefore 

vulnerable to Chinese export restrictions. Last year, China suspended exports of 

rare earths to Japan in retaliation for Japan’s detention of a Chinese fishing boat 

captain accused of deliberately ramming two Japanese patrol boats in disputed waters. 13 While Japan kept custody of the fisherman during its investigation, the Chinese government kept raising diplomatic stakes in demanding his freedom, leading 

to an increasingly tense stand-off between the two nations. Japan eventually relented, and let the Chinese captain go, claiming that the negative impact on the 

Japan-China relationship wasn’t worth the cost. China, meanwhile, denied any embargo on rare earth shipments to Japan—even though it took almost two months 

before shipment of the minerals resumed. 14

Australia 

Prior to the Japanese incident, in 2009, China sought to expand its influence in 

other countries. Flush with the cash flow of a bustling economy, the Chinese made 

multiple unsuccessful bids to purchase significant shares of several companies in 

Australia’s resource industry: 

• A $400 million bid for a controlling stake in a rare earths miner fell through; 

• For national security reasons, Australia’s Defense Department intervened in a 

proposed joint venture between an Australian subsidiary of a Chinese company 

and an Australian outback mining venture; 

• In a separate deal, again for national security reasons, Australian Treasurer 

Wayne Swan rejected Minmetals’ (a Chinese state-owned firm) $2.6 billion offer 

for OZ Minerals; 

• A $19.5 billion discussion between Chinese-owned metals firm Chinalco and Rio 

Tinto broke down after Rio backed away from the deal; and 

• China Nonferrous Metal Mining (Group) Company ended negotiations to purchase Lynas Corporation because Australia’s Foreign Investment Review Board 
6 

15 Rob Taylor, ‘‘China Drops Lynas Bid; Further Strains Australia-China Relations,’’ Mineweb, 

September 24, 2009, available at: http://mineweb.com/mineweb/view/mineweb/en/ 

page72068?oid=89761&sn=Detail 16Marc Humphries, Rare Earth Elements: The Global Supply Chain, CRS, September 30, 

2010, available at http://www.crs.gov/Products/R/PDF/R41347.pdf (hereinafter Humphries/CRS 

Report) 17Keith Bradsher, ‘‘Challenging China in Rare Earth Mining,’’ New York Times, April 21, 

2010, available at: http://www.nytimes.com/2010/04/22/business/energy-environment/22rare.html 18 Ibid. 

required the Chinese company’s ownership stake to be below 50% while maintaining a minority of board seats on Lynas. 15

The Lynas negotiation attracted a great deal of attention given the leverage the 

Chinese would have had in a company that owns significant deposits of undeveloped 

rare earths. Had China been successful in this endeavor, it would have further tilted the playing field in its favor, despite the 97 percent control it already enjoys in 

the production of rare earth oxides. 

Domestic Production 

The combination of China’s aggressive actions—strong-arming Japan, aggressive 

purchase bids in Australia, reducing the number of rare earth export permits and 

quotas, and increasing taxes on these exports—has prompted numerous countries to 

call for a more diversified rare earths market and greater domestic exploration and 

production. As China’s economy and industry grows, its own need for these rare 

earth materials is increasing. Because of this, it is possible that China could cease 

rare earth exports, or become a rare earth importer at some point in the future. 

These circumstances have led to a renewed interest in domestic production of rare 

earth elements. Although ‘‘[r]are earth element reserves and resources are found in 

Colorado, Idaho, Montana, Missouri, Utah, and Wyoming . . . [t]here is no rare earth 

mine production in the United States.’’ 16 The company best positioned to reconstitute domestic production is Molycorp Minerals, LLC. Based in Colorado, the company owns a mine in Mountain Pass, California, a site that once allowed Molycorp 

to hold the title of largest producer of rare earths in the world. But the mine shut 

down in 2002, as a result of low priced Chinese imports, strict environment regulations in the U.S., and liabilities associated with environmental contamination. 17

Nevertheless, proving its value, China has attempted to buy the mine three times 

after it shut down in 2002. 18

In his testimony before this Subcommittee last year, Mark Smith, Molycorp’s 

Chief Executive Officer, outlined the company’s approach toward restarting the 

mine, and establishing itself as a competitive business. According to Mr. Smith: 

Many industry observers question how a U.S. producer of rare earths can ever 

compete with the Chinese, when the possibility always lingers that the Chinese 

could flood the market and dramatically depress rare earth prices, a practice they 

have demonstrated previously. We have spent the better part of the past eight 

years developing the answer to this question. We changed the orientation of our 

thinking and discovered that by focusing principally on energy and resource efficiency, we could make major improvements in our cost competitiveness while at 

the same time advance our environmental stewardship. 

We will incorporate a wide variety of manufacturing processes that are new to the 

rare earth industry, which will increase resource efficiency, improve environmental performance, and reduce carbon emissions. Specifically: 

• Our overall processing improvements will almost cut in half the amount of 

raw ore needed to produce the same amount of rare earth oxides that we have 

produced historically. This effectively doubles the life of the ore body and further minimizes the mine’s footprint; 

• Our extraction improvements will increase the processing facility’s rare earth 

recovery rates to 95% (up from 60–65%) and decrease the amount of reagents 

needed by over 30%; 

• Our reagent recycling, through proprietary technology that Molycorp has developed, could lead to even greater decreases in reagent use; 

• Our new water recycling and treatment processes reduce the mine’s fresh water 

usage from 850 gallons per minute (gpm) to 30 gpm—a 96% reduction; 

• Finally, the construction of a Combined Heat and Power (CHP) plant—fueled 

by natural gas—will eliminate usage of fuel oil and propane. This will significantly reduce the facility’s carbon emissions, reduce electricity costs by 50%, 

and improve electricity reliability. 
7 

19Mark A. Smith, CEO, Molycorp Minerals, LLC, Testimony, House Science and Technology 

Subcommittee on Investigations and Oversight, March 16, 2010 (hereinafter Smith Testimony) 20 ‘‘Update 1—Rare Earth Producer Molycorp Wins OK for Mine,’’ Reuters, December 13, 2010, 

available at: http://af.reuters.com/article/metalsNews/idAFN1321376420101213 21 Hsu Article, supra, note 5 22Tess Stynes, ‘‘Molycorp, Hitachi Metals Reach Rare Earth Deal,’’ Wall Street Journal, December 21, 2010, available at: http://online.wsj.com/article/ 

SB10001424052748703581204576033382079826492.html 23 Ibid. 24 Critical Materials Strategy, U.S. Department of Energy, December 15, 2010, available at: 

http://www.energy.gov/news/documents/criticalmaterialsstrategy.pdf (hereinafter DOE Report) 

These process improvements fundamentally reverse the conventional wisdom that 

superior environmental stewardship increases production costs. At the same time, 

we significantly distinguish ourselves from the Chinese rare earth industry that 

has been plagued by a history of significant environmental degradation, one that 

it is just beginning to recognize and rectify. 19

From a financial perspective, Molycorp’s efforts are receiving favorable marks 

thus far. By the end of last year. 20 Molycorp claimed it had secured all the permits it needed to begin mining ore this year. Molycorp is spending over $500 million on 

its 2,200-acre facility, and by 2014, plans to dig about 40,000 tons of dirt a year, 

compared to its current 3,000 tons. 21

Moreover, as part of its ‘mine-to-magnets’ strategy, Molycorp and Hitachi Metals 

Ltd. agreed to ‘‘form a joint venture to produce rare-earth alloys and magnets, moving Molycorp a step closer to establishing a rare-earth manufacturing chain in the 

U.S.’’ 22 This deal would expand Molycorp’s business beyond just mining. Hitachi 

owns a host of patents on neodymium iron boron (NdFeB) permanent magnets, 

which advances Molycorp’s ‘mine-to-magnets’ strategy. These powerful magnets 

have played an essential role in miniaturizing consumer electronics (cell phones), 

and are key components of lightweight, high-power motors and generators (wind 

turbines, hybrid and electric vehicles.) 

From Japan’s perspective, where Hitachi is based, this venture would provide the 

country with some place other than China for a supply of rare earths. Separately, 

Molycorp also struck a deal with Sumitomo Corporation, another Japanese company, which ‘‘agreed to buy $100 million, or more than 3%, of Molycorp’s shares and 

provide $30 million in financing as part of a seven-year rare-earth supply agreement.’’ 23

Interagency Working Group 

Since March 2010, OSTP, in coordination with the National Economic Council and 

the National Security Council, has been hosting an interagency working group on 

critical and strategic mineral supply chains, which includes the topic of supply constraints on rare earth elements. The group is initially focusing on four areas: 

• Defining, screening and prioritizing critical materials; 

• Prioritizing federal research and development; 

• Review of domestic and global policies that affect the supply of critical and strategic minerals (e.g., permitting, export restrictions, recycling, stockpiling, etc.) 

and consideration of methods to mitigate risks through industrial or diplomatic 

processes; and 

• Transparency of resource supply and demand information. 

Participants in this group include: Department of Energy, Department of Defense, 

U.S. Geological Survey, Department of Commerce, Environmental Protection Agency, Department of Justice, Department of State, and the U.S. Trade Representative. 

At this time, there are no plans to develop a collaborative report or document to 

reflect the dialogue and/or exchange of ideas between the participating agencies. 

Last December, DOE officials published the ‘‘Critical Materials Strategy’’ report, 

and indicated that they plan to release an update at the end of this year. The 2010 

report examined the role of rare earths and other materials in the clean energy 

economy. In the report, DOE describes plans to: 

i. develop its first integrated research agenda addressing critical materials; 

ii. strengthen its capacity for information-gathering on this topic; and 

iii. work closely with international partners, including Japan and Europe, to reduce vulnerability to supply disruptions and address critical material needs. 24

With respect to its critical materials strategy, the DOE report identifies three 

points: 
8 

25 Ibid. 26DOE Announces Second RFI on Rare Earth Metals, March 22, 2011, available at: http:// 

www.energy.gov/news/10193.htm 27 Hsu Article, supra, note 5 28 APS/MRS Report, supra, note 1 29 Hal Quinn, President and CEO, National Mining Association, Testimony, House Natural 

Resources Subcommittee on Energy and Mineral Resources, May 24, , available 2011 at: http:// 

naturalresources.house.gov/UploadedFiles/QuinnTestimony05.24.11.pdf 30 30 USC 1601(a) (6) 

• First, diversified global supply chains are essential; 

• Second, substitutes must be developed; 

• Third, recycling, reuse and more efficient use could significantly lower world demand for newly extracted materials. 25

The follow-up report ‘‘will include additional analysis of rapidly-changing market 

conditions. It will analyze the use of critical materials in other technologies, such 

as fluid cracking catalysts in petroleum refineries. Finally, the updated strategy will 

identify specific steps forward for substitution, recycling and more efficient use of 

materials identified as critical.’’ 26 There is a need for data on recycling efforts by 

industry, as well as understanding the potential for substitute materials. Stories 

such as Toyota’s plans to switch from rare earths to a special induction motor in 

its Prius, 27 and GE’s success in developing a new alloy to replace Rhenium, a critical material in its turbine engines, are encouraging. 28

It would also be beneficial to Congress and private industry if the Administration 

would address the issue of mining permits. Highlighting the seriousness of this subject, during testimony before a House Natural Resources Subcommittee on Energy 

and Mineral Resources hearing on May 24, Mr. Hal Quinn, President and CEO of 

the National Mining Association, made the following observation: 

‘‘Regulatory costs can slowly drown an enterprise. But the uncertainties and 

delays in obtaining permits to commence operations can crush the mining enterprise before it even gets in the dirt. Permit delays pose the highest hurdle for domestic mining with necessary government authorizations now taking close to ten 

years to secure. If commodity cycles are historically 20 years in duration, the tenyears it takes to obtain permits leaves U.S. mining still in the starting blocks with 

the race half way over.’’ 29

Funding Streams 

Funding for rare earths and critical materials R&D is spread throughout several 

DOE programs, making it difficult to isolate specific budget numbers. The following 

is a list of programs and sub-programs from which funds may be used relative to 

rare earths and critical materials projects: Office of Energy Efficiency and Renewable Energy; Advanced Research Projects Agency-Energy; Industrial Technologies 

Program; Next Generation Materials Program; Next Generation Manufacturing 

Processes; Manufacturing Energy Systems Program; Energy Efficiency Partnership; 

and Industrial Technical Assistance Program. 

Additionally, the USGS Mineral Resources Program supports funding for the collection, analysis, and dissemination of minerals information in the U.S. and around 

the world. 

For examples of rare earths and critical material budget details, please see Appendix 4, which includes selected information from DOE’s 2010 ‘‘Critical Materials 

Strategy’’ Report. 

Statutory History 

Thirty years ago, the National Materials and Minerals Policy, Research and Development Act was enacted because: 

. . . [T]he United States lacks a coherent national materials policy and a coordinated program to assure the availability of materials critical for national economic well-being, national defense, and industrial production, including interstate commerce and foreign trade . . . 30

The Congress declared it the President’s responsibility to coordinate a plan of research and other actions that would ‘‘.promote an adequate and stable supply of materials necessary to maintain national security, economic well-being and industrial 

production with appropriate attention to a long-term balance between resource production, energy use, a healthy environment, natural resources conservation, and so-
9 

31 30 USC 1602 32 30 USC 1603 33 30 USC Chapter 30 34 Ex. Ord. 12881, ‘‘Establishment of the National Science and Technology Council,’’ November 

23, 1993; 58 Fed. Reg. 62491. Dr. Gibbons tied the reorganization both to President Clinton’s 

decision to reduce staff within the White House and to the National Performance Review conducted by Vice President Gore. Bill Loveless, ‘‘Gibbons to Propose Formation of Science and Tech 

Council,’’ Federal Technology Report, September 2, 1993; p. 1 35 30 USC 1604(b) (2) and (3) 

cial needs.’’ 31 Our current situation with rare earth minerals indicates that successive Administrations failed to carry out this policy. 

The 1980 Act directed development of a plan that would, among other outcomes, 

produce continuing assessments of demand for minerals and materials in the economy; conduct a ‘‘vigorous’’ research and development effort; collect, analyze and disseminate information; and cooperate with the private sector and other nations. 32

Four years later, dissatisfied with the inaction to the 1980 law, Congress decided 

in the National Critical Materials Act of 1984 to establish a National Critical Materials Council in the Executive Office of the President to serve as the focal point for 

critical materials policy. The Council was tasked to assist the President in carrying 

out the requirements of the 1980 Act. 33 In 1993, through Executive Order 12881, 34

the National Critical Materials Council was terminated, and its responsibilities 

transferred to the National Science and Technology Council, located within the Office of Science and Technology Policy. 

In 1995 and 1996, the NSTC published reports on the Federal Research and Development Program in Materials Science and Technology. No equivalent report has 

been produced since, however, nor has OSTP produced the ‘‘long-range assessments 

of materials needs related to scientific and technological concerns’’ or ‘‘scientific and 

technical changes over the next five years’’ whose annual preparation the statute 

requires. 35

Somewhere along the way, there appears to have been a failure in communication 

between the two branches of government given that multiple Administrations have 

disregarded responsibilities assigned by Congress in the 1980 Act. 

During its hearing on rare earths last March, this Subcommittee revisited policy 

issues it thought had been settled decades ago to determine how to avoid finding 

ourselves in similar straits in the future. The full Committee on Science and Technology even held a mark-up in September on H.R. 6160, the Rare Earths and Critical Materials Revitalization Act of 2010, introduced by Rep. Kathleen Dahlkemper 

a day before the mark-up. Among its provisions, Rep. Dahlkemper’s bill repealed the 

National Critical Materials Act of 1984, and amended parts of the National Materials and Minerals Policy, Research and Development Act of 1980. On September 

29, the House approved the bill by a vote of 325–98. 

This year, a number of Members have introduced legislation regarding rare earths 

and critical materials, with at least two of them repealing the 1984 Act. (See Appendix 1.) 

Issues 

R&D Portfolio 

The federal government funds a number of research and development programs 

related to rare earths and critical materials. Recent reports recommend establishing 

research and development efforts focused on geological deposit modeling, mineral extraction and processing, material characterization and substitution, manufacturing, 

recycling, and life-cycle analysis. The private sector has a strong incentive to conduct this research as well; however, its focus is primarily on applied research rather 

than basic or fundamental research. In times of fiscal austerity, some have suggested prioritizing research and development activities in such a manner that precludes duplication, and prevents the crowding-out of private sector work. In other 

words, the federal government should not only identify what research needs to be 

conducted to enhance the critical element supply chain, but also what research is 

actually appropriate for government support versus private sector investment. 

Information 

Another recommendation for the U.S. government involves improving information 

related to discovered and potential resources, production, use, trade, disposal, and 

recycling. Currently, USGS provides the majority of data on element and mineral 

supplies; however, the agency has very little information on current and future demands. DOE projects the potential demand for energy critical elements, but not for 

all applications. In order to gather, analyze, and disseminate information on both 
10 

supply and demand, reports have recommended that a ‘‘Principal Statistical Agency’’ 

should be tasked with regularly surveying emerging technologies and the supply 

chain throughout the Periodic table, with an aim of identifying critical applications, 

as well as potential shortfalls. 

Loan Guarantees 

A number of federal incentives were proposed to address shortfalls in domestic 

rare earth element production, most notably loan guarantees. Because access to capital was limited after the financial downturn, potential rare earth producers applied 

for DOE loan guarantees, and several legislative proposals sought to expand similar 

programs for rare earth elements. Despite the limited access to capital, concerns 

have been raised about the necessity of such incentives, given the high demand for 

rare earth elements. 

Stockpiling 

Recent proposals direct the federal government to stockpile certain rare earth elements and critical materials, especially those vital to national security and defense. 

The Defense National Stockpile maintains and manages strategic and critical materials, but proposals have suggested similar non-defense stockpiling efforts in addition to this effort. Conversely, other proposals have suggested that stockpiling is not 

necessary for non-defense related purposes other than helium. 

Permitting 

Arguments have been made for a streamlined permitting process for miners of 

rare earths and critical materials, as it can take as long as ten years to obtain the 

necessary approval. Any effort to revitalize a domestic rare earth industry that can 

compete with China is contingent upon minimizing administrative burdens. Ensuring that the permitting process is expedited in a manner that respects public health 

and safety, and the environment, is key to the industry’s long term viability. 

Witnesses: 

• Dr. John P. Holdren, Director, Office of Science & Technology Policy (OSTP), Executive Office of The President of the United States 

Dr. Holdren has been invited to talk about the interagency working group on critical and strategic mineral supply chains, which is comprised of OSTP, National 

Economic Council and the National Security Council. Dr. Holdren will describe 

the group and its objectives, especially with respect to any research and development plans relative to rare earths and critical materials. 

• Mr. David Sandalow, Assistant Secretary for Policy and International Affairs, 

U.S. Department of Energy (DOE) 

Mr. Sandalow will discuss DOE’s participation in the above-mentioned interagency working group, and address DOE’s activities relative to rare earths and 

critical materials, especially with respect to any research and development plans. 

• Mr. Jeff L. Doebrich, Program Coordinator (Acting), Mineral Resources Program, 

U.S. Geological Survey (USGS), U.S. Department of the Interior 

Mr. Doebrich will explain USGS’ participation in the interagency working group, 

and provide an overview of USGS’ research activities relative to rare earths and 

critical materials. 

APPENDIX 1 

HOUSE BILLS 

• Rep. Leonard Boswell—H.R.618, Rare Earths and Critical Materials Revitalization Act of 2011, introduced February 10, 2011: 

Establishes in the DOE a research, development, and commercial application program. 

Directs the Secretary of Energy to: 

1. support new or significantly improved processes and technologies (as compared 

to those currently in use in the rare earth materials industry), 

2. encourage multidisciplinary collaborations and opportunities for students at institutions of higher education, and 

3. submit an implementation plan to Congress. 
11 

Amends the Energy Policy Act of 2005 to authorize the Secretary to make loan guarantee commitments for the commercial application of new or significantly improved 

technologies for specified projects. 

Amends the National Materials and Minerals Policy, Research and Development Act 

of 1980 to: 

1. instruct the Director of the Office of Science and Technology Policy to coordinate federal materials research and development through the National Science 

and Technology Council (instead of, as currently required, the Federal Coordinating Council for Science, Engineering, and Technology, which is now 

defunct); 

2. modify the duties of the Secretary of Commerce regarding critical needs assessment; and 

3. repeal specified reporting and other duties of the Secretaries of Defense and 

of the Interior. 

Repeals the National Critical Materials Act of 1984. 

• Rep. Brad Miller—H.R.952, Energy Critical Elements Renewal Act of 2011, introduced March 8, 2011: 

Establishes in the Department of Energy (DOE) a research, development, and commercial application program. 

Directs the Secretary of Energy to: 

1. support new or significantly improved processes and technologies (as compared 

to those currently in use in the energy critical elements industry); 

2. encourage multidisciplinary collaborations and opportunities for students at institutions of higher education; 

3. collaborate with the relevant agencies of foreign countries with interests relating to energy critical elements; 

4. establish a Research and Development Information Center to catalogue, disseminate, and archive information on energy critical elements; and 

5. submit an implementation plan to Congress. 

Directs the President, acting through the Office of Science and Technology Policy, 

to coordinate the actions of federal agencies to: 

1. promote an adequate and stable supply of energy critical elements; 

2. identify energy critical elements and establish early warning systems for supply problems; 

3. establish a mechanism for the coordination and evaluation of federal programs 

with energy critical element needs; and 

4. encourage private enterprise in the development of an economically sound and 

stable domestic energy critical elements supply chain. 

Amends the Energy Policy Act of 2005 to authorize the Secretary to make loan guarantee commitments for the commercial application of new or significantly improved 

technologies for specified rare earth materials projects. 

Amends the National Materials and Minerals Policy, Research and Development Act 

of 1980 to: 

1. instruct the Director of the Office of Science and Technology Policy to coordinate federal materials research and development through the National Science 

and Technology Council (instead of, as currently required, the Federal Coordinating Council for Science, Engineering, and Technology, which is now 

defunct); 

2. modify the duties of the Secretary of Commerce regarding critical needs assessment; and 

3. repeal specified duties of the Secretaries of Defense and of the Interior. 

Repeals the National Critical Materials Act of 1984. 

• Rep. Henry C. ‘‘Hank’’ Johnson, Jr—H.R.1314, RARE Act of 2011, introduced 

April 1, 2011: 

Directs the Secretary of the Interior, through the Director of the USGS, to submit 

a comprehensive report on global rare earth element resources and the potential future global supply of such resources. 
12 

Requires the report to include recommendations on areas of need for future geologic 

research related to rare earth elements and other minerals that are critical based 

on the impact of a potential supply restriction and the likelihood of one. 

• Rep. Mike Coffman—H.R.1388, Rare Earths Supply Chain Technology and Resources Transformation Act of 2011, introduced April 6, 2011: 

Establishes in the Department of the Interior a task force which shall report to the 

President through the Secretary of the Interior. The task force will be composed of 

Secretaries or their designees from the following agencies: Interior, Energy, Agriculture, Defense, Commerce, State, OMB, the Chairman (or designee) of the Council 

on Environmental Quality, and other members the Secretary of Interior considers 

appropriate. 

The Task Force will review and report on ways for federal agencies to expedite the 

permitting process and reduce barriers to investment and development of the domestic rare earth industry. The Task Force shall then submit this report to the 

President, the Senate Committee on Energy and Natural Resources, the House 

Committee on Energy and Commerce, and the House Committee on Natural Resources. 

Using funds from the sale of excess materials in the National Defense Stockpile, the 

President, acting through the Secretary of Defense, shall establish a neodymium 

iron boron magnet alloy and dysprosium iron alloy inventory to be managed by the 

Administrator of the Defense Logistics Agency Strategic Materials. The Secretary of 

Defense shall encourage domestic neodymium iron boron magnet manufacturing capability by seeking to enter into a long-term supply contract with such producer of 

such magnets and ensure that a sintered neodymium iron boron magnet producer 

who is awarded any such long-term contract establishes manufacturing capability 

for only military-use magnets for sale to the National Defense Stockpile. 

• Rep. Doug Lamborn—H.R.2011, National Strategic and Critical Minerals Policy 

Act of 2011, introduced May 26, 2011: 

Directs the Secretary of the Interior to coordinate a government wide assessment 

of the Nation’s mineral resources and availability to meet current and future strategic and critical mineral needs. 

Requires the Secretary of the Interior to evaluate factors impacting domestic mineral development, including workforce, access, permitting and duplicative regulatory 

requirements as well as identify areas for improvement. 

Directs the Interior Department to assemble the report within six months. 

Requires an annual progress report, beginning one year after the date of enactment 

of the Act for the following two years, outlining the progress made in reaching the 

policy goals described in the bill. 

• Rep. Randy Hultgren—H.R. 2090, to improve assessments of and research 

about energy critical elements, and for other purposes, introduced June 2, 2011: 

Instructs the Secretary of the Interior and Secretary of Energy (acting through the 

Energy Information Administration) to improve assessments of energy critical elements that covers discovered and potential resources, production, use, trade, disposal and recycling. This entity will be designated a ‘‘principal statistical agency’’ 

and will make this information available to the public. 

Directs the Secretary of Energy in coordination with the Secretary of Interior to establish a research program to advance basic research and enable expanded availability of energy critical elements. Requires the National Science and Technology 

Council to submit a report to the Science committee on the status of these endeavors. 

SENATE BILLS 

• Sen. Mark Udall—S.383, Critical Minerals and Materials Promotion Act of 2011, 

introduced February 17, 2011: 

Directs the Secretary of the Interior, acting through the USGS, to establish a research and development program to: 

1. provide data and scientific analyses for research on, and assessments of the potential for, undiscovered and discovered resources of critical minerals and materials in the United States and other countries; 
13 

2. analyze and assess current and future critical minerals and materials supply 

chains; and (3) cooperate with international partners to ensure that the research and assessment programs provide analyses of the global supply chain 

of critical minerals and materials. 

Directs the Secretary of Energy to conduct a research, development, and demonstration program to strengthen the domestic critical minerals and materials supply 

chain for clean energy technologies, and to ensure the long-term, secure, and sustainable supply of critical minerals and materials sufficient to strengthen the national security and meet the clean energy production needs of the United States. 

Directs the Secretary of Energy to promote the development of the critical minerals 

and materials industry workforce in the United States by supporting: 

1. critical minerals and materials education by providing undergraduate and 

graduate scholarships and fellowships at institutions of higher education, including technical and community colleges; 

2. partnerships between industry and institutions of higher education, including 

technical and community colleges, to provide onsite job training; and 

3. development of courses and curricula on critical minerals and materials. 

Expresses the policy of the United States to promote an adequate and stable supply 

of critical minerals and materials necessary to maintain national security, economic 

well-being, and industrial production with appropriate attention to a long-term balance between resource production, energy use, a healthy environment, natural resources conservation, and social needs. Directs the President take specified steps to 

implement such policy. 

• Sen. Kay Hagan—S.421, Powering America’s Lithium Production Act of 2011, introduced February 28, 2011: 

Amends the Energy Independence and Security Act of 2007 to require the Secretary 

of Energy (DOE) to provide grants to eligible entities for research, development, 

demonstration, and commercial application of domestic industrial processes that are 

designed to enhance domestic lithium production for use in advanced battery technologies. 

Defines an ‘‘eligible entity’’ as: 

1. a private partnership or other entity that is organized in accordance with federal law and engaged in lithium production for use in advanced battery technologies; 

2. a public entity, such as a state, tribal, or local governmental entity; or 

1. a consortium of such entities. 

Requires such eligible entities to use such grants to develop or enhance: 

1. domestic industrial processes that increase lithium production, processing, or 

recycling for use in advanced lithium batteries; or 

1. industrial process associated with new formulations of lithium feedstock for 

use in such batteries. 

• Sen. Lisa Murkowski—S.1113, Critical Minerals Policy Act, introduced May 26, 

2011: 

The bill provides clear programmatic direction to help keep the U.S. competitive and 

will ensure that the federal government’s mineral policies—some of which have not 

been updated since the 1980s—are brought into the 21st century. 

The legislation starts by directing USGS to establish a list of minerals critical to 

the U.S. economy and, pursuant to those designations, outlines a comprehensive set 

of policies that will bolster critical mineral production, expand manufacturing, and 

promote recycling and alternatives—all while maintaining strong environmental 

protections. 

To avoid the duplication of authorities related to critical minerals, two previous Acts 

of Congress are repealed, in whole or in part: the National Critical Minerals Act of 

1984 and the National Materials and Minerals Policy, Research, and Development 

Act of 1980. 

A savings clause to clarify that nothing in this Act displaces the authorizations included under ‘‘Geological Survey’’ of the first section of the Organic Act of March 

3, 1879. 
14 

Authorizes a total of $106 million for the various activities, programs, authorizations, and requirements of the Act. 
15 

36 APS/MRS Report, supra, note 1 

APPENDIX 2 36
16 

37 Humphries/CRS Report, supra, note 16 

APPENDIX 3 37
17 

APPENDIX 4 

Rare Earth Elements and Critical Material Funding 

Department of Energy 

The following information is from Chapter 4 of DOE’s 2010 ‘‘Critical Materials 

Strategy’’ report: 

Several U.S. Department of Energy (DOE) data and information programs, research and development (R&D) programs and financial instruments address rare 

earths and other key materials. Current programs focus on the component and 

end-use technology stages of the supply chain and address both the economic and 

the innovation dimensions of the clean energy sector. 

DOE also supports R&D addressing specific materials and alternatives across the 

supply chain. In Fiscal Year (FY) 2010, the Office of Science, the Office of Energy 

Efficiency and Renewable Energy (EERE) and the Advanced Research Projects 

Agency-Energy (ARPA–E) together provided approximately $15 million for research on rare earth materials and possible substitutes for magnets. An additional $35 million was spent by ARPA–E on next generation battery technologies 

that don’t require rare earths. 

At the basic science end of the pipeline, the Materials Sciences and Engineering 

(MSE) Division of the Office of Basic Energy Sciences supports broad-based, fundamental materials research. MSE seeks to illuminate the atomic basis of materials properties and behavior and improve materials performance at acceptable 

costs through innovative design, synthesis and processing. This research was 

funded at a level of about $5 million/year in FY 2010. 

Most of the supported work has been performed at Ames Laboratory. A key component of the Ames Laboratory program is the Materials Preparation Center 

(MPC). The MPC was established in 1981 to provide high purity metals (including the rare earths, uranium, thorium, vanadium, chromium); and intermetallics, 

refractory, inorganic compounds and specialty alloys; none of which are available 

commercially in the required purity or form/shape needed by the requestor on a 

cost recovery basis. 

Moving along the pipeline to applied research via feasibility research, technology 

development and demonstration, ARPA–E supports two initial projects totaling 

$6.6 million specifically targeted to developing substitutes for rare earth magnets. 

The goal of this $4.4 million project is to develop materials to allow the United 

States to fabricate the next generation of permanent magnets (PMs) with magnetic 

energy density (maximum energy product) up to two times higher than the current 

value of the strongest commercially available neodymium-iron-boron (Nd-Fe-B) 

magnets. If successful, this project will lead to cheaper, more energy-efficient, 

more power-dense magnets for deployment in a wide range of clean energy technologies. 

In another ARPA–E project, General Electric Global Research (GE) is developing 

next-generation permanent magnets with a lower content of critical rare earth materials. For the $2.2 million project, GE is developing bulk nanostructured magnetic materials with a dramatic increase in performance relative to state-of-theart magnets. These new magnets will increase the efficiency and power density 

of electric machines while decreasing dependence on rare earth minerals. 

Addressing the challenge of rare-earth and critical-materials-containing batteries, 

particularly in the emerging hybrid and electric vehicle transportation sectors, the 

Batteries for Electric Energy Storage in Transportation (BEEST) program invested $35 million in first-of-kind demonstration of new batteries and storage 

chemistries, structures and technologies. 

The Office of Energy Efficiency and Renewable Energy (EERE) is supporting an 

applied magnet research project valued at $2 million (FY 2010) at Ames Laboratory. This project is focused on fabricating high-performance, cost-effective PMs 

that can be used for traction motors with an internal PM rotor design. 

In addition to the magnet material research, EERE’s Vehicle Technologies Program supports two projects valued at a total of $1.4 million (FY2010) at Oak 

Ridge National Laboratory investigating alternative motor designs that do not use 

rare earth PMs. 
18 

38DOE Report, supra, note 24 

In addition, in 2009, the Vehicle Technologies Program awarded $9.5 million to 

Toxco, to expand an existing battery recycling facility in Ohio and become the first 

U.S. facility to recycle lithium-ion vehicle batteries. 

For wind power applications, reducing magnet size by developing higher flux density magnets is more important than consistent properties at elevated temperatures. EERE’s Wind and Water Technologies Program is supporting QM Power, 

Inc., with to develop a higher flux density PM generator. There are also much 

larger investments within EERE in battery, PV and lighting R&D that have key 

materials use implications. 

The Loan Guarantee Program (LGP) was established under Title XVII of the Energy Policy Act (EPAct) of 2005. The LGP is authorized to provide loan guarantees to support domestic manufacturing of component technologies that use critical materials if those technologies meet the statutory tests. Projects supported by 

the program have the potential to affect market demand for key materials. 

The Advanced Technology Vehicles Manufacturing (ATVM) Loan Program provides loans to automobile and automobile part manufacturers to re-equip, expand 

or establish manufacturing facilities in the United States to produce advanced 

technology vehicles or qualified components, and for the associated engineering 

integration costs. Vehicles with efficiency standards that will contribute to a clean 

energy economy are included in the definition of advanced technology vehicles. 

The ATVM lacks authority to directly support extraction and production of key 

materials. However, the ATVM issued loans to companies for projects that may 

affect the market demand of nickel metal hydride (NiMH) or Lithium ion batteries and NdFeB permanent magnet motors. These companies include Ford 

Motor Company ($5.9 billion), Nissan North America ($1.6 billion), Tesla Motors 

($465 million) and Fisker Automotive ($529 million). 38

Since this report was published, there have been two notable additions according 

to DOE congressional affairs staff: 

• ARPA–E issued a $30 million funding announcement for projects on rare earth 

alternatives in green technologies being funded out of the FY 2011 appropriations; and 

• A $20 million request to create a critical materials innovation hub in the FY 

2012 appropriations request. 

US Geological Survey 

According to USGS congressional liaison office, USGS’ FY 2012 request of $44.2 million for its Mineral Resources Program represents ‘‘about an 18 percent reduction 

from the FY 2010 enacted level of $53.8 million. As a result, [USGS] will eliminate 

collection, analysis, and dissemination of minerals information for about 180 other 

countries; domestic minerals information activities will continue. This is the information that goes into the Mineral Commodity Summaries and Volume III–Area Report: International, of the Minerals Yearbook. In addition, [USGS] will eliminate 

mineral resources research and field studies in Alaska and will eliminate about 50 

scientific and technical positions [out of a total of about 350] across the United 

States.’’ 
19 

Mr. HULTGREN. The Subcommittee on Investigations and Oversight will come to order. Good afternoon. Welcome to today’s hearing titled ‘‘The Federal Perspective on a National Critical Materials 

Strategy.’’ Chairman Broun is unable to attend due to a family 

emergency, so I am sitting in for him today. You will find in front 

of you packets containing our witness panel’s written testimony, biographies, and Truth-in-Testimony disclosure. 

I recognize myself for five minutes for an opening statement. 

The subject of today’s hearing is one which this Subcommittee is 

very familiar with. A little over a year ago, under the then-Democratic majority, the Investigations and Oversight Subcommittee 

held a hearing on rare earth minerals. Rare earths, as most of you 

know, possess unique physical and chemical properties that make 

them particularly suitable for use in advanced technologies such as 

high-powered magnets, petroleum refining catalysts, batteries, and 

lasers, among others. They are also important components in everyday items that everyone in this room probably has right now, 

such as cell phones and Blackberrys. 

This Committee did some very good work last year as we heard 

from industry folks, academics, and scientists. Today, we follow up 

on that work and take the next step in this process by hearing 

from government officials. 

I am pleased to welcome our distinguished guests. While they 

represent different agencies within the Administration, they are 

here today because of their collaboration on an interagency working 

group on critical and strategic materials supply chains. 

Critical materials include rare earth elements which are more 

widely recognized today than they were when this Committee last 

addressed this topic. That the issue is still of interest to Congress 

is evident by the number and variety of bills introduced in both the 

House and the Senate. I myself recently introduced H.R. 2090, the 

Energy Critical Elements Advancement Act, and Mr. Miller from 

the Democratic side has a bill also. 

In 1980, the National Materials and Minerals Policy, Research 

and Development Act was enacted because the United States 

lacked a coherent national materials policy and a coordinated program to assure the availability of materials critical for our national 

economic well being, national defense, and industrial production, 

including interstate commerce and foreign trade. Thirty-one years 

later, this Committee is presented with similar issues and, to quote 

Yogi Berra, ‘‘it’s deja vu all over again.’’ 

Our witnesses today will provide us with some insight into the 

Administration’s perspective on critical materials. Dr. Holdren will 

discuss the activities of the interagency working group that was 

created last year. Mr. Sandalow and Mr. Doebrich will discuss their 

respective agencies’ involvement in the group, as well as provide us 

with an overview of their agencies’ responsibilities relative to the 

topic of this hearing. 

Taking it a step further, I look forward to some honest conversations about appropriate roles that should and shouldn’t be played 

by the Federal Government. While I appreciate the need for federal 

research, I believe we should distinguish between basic and applied 

research, recognizing that the government may have a role to play 
20 

in the former, but that it should not duplicate nor preempt work 

that is rightfully done by industries. 

For about 2 decades, the price of rare earths and critical materials were low, perhaps artificially so, because of Chinese policies. 

As a result of these policies and our own stringent rules regarding 

environmental standards, U.S. suppliers were unable to compete. 

Now that the Chinese have restricted exports, prices have gone up 

because non-Chinese suppliers have all but vanished. These policies have led to various international trade protests that remain 

unresolved. 

Conversely, there are those who say that we shouldn’t fret over 

these conditions because the financial markets will ultimately correct the situation. The expansion of Lynas Corporation in Australia 

and the growth of Molycorp in the United States provide hope that 

alternatives to Chinese rare earths will be available shortly. In the 

interim, though, we still need a plan, one that should assess issues 

such as stockpiling, permitting, researching and development, 

workforce development, recycling, information gathering, and manufacturing and production incentives. I look forward to exploring 

these options and hearing from our government witnesses today. 

The Chair now recognizes Ms. Edwards for an opening statement. 

[The prepared statement of Representative Hultgren follows:] 

PREPARED STATEMENT ACTING CHAIRMAN RANDY HULTGREN

The subject of today’s hearing is one which this Subcommittee is very familiar 

with. A little over a year ago, under the then-Democratic Majority, the Investigations and Oversight Subcommittee held a hearing on rare earth minerals. Rare 

earths, as most of you know, possess unique physical and chemical properties that 

make them particularly suitable for use in advanced technologies, such as high powered magnets, petroleum refining catalysts, batteries, and lasers, among others. 

They are also important components in everyday items that everyone in this room 

probably has right now, such as cell phones and blackberries. 

This Committee did some very good work last year, as we heard from industry 

folks, academics, and scientists. Today, we follow up on that work, and take the 

next step in this process by hearing from government officials. 

I am pleased to welcome our distinguished guests. While they represent different 

agencies within the Administration, they are here today because of their collaboration on an interagency working group on critical and strategic materials supply 

chains. Critical materials include rare earth elements, which are more widely recognized today than they were when this Committee last addressed the topic. 

That the issue is still of interest to Congress is evidenced by the number and variety of bills introduced in both the House and Senate. I myself recently introduced 

H.R. 2090, the Energy Critical Elements Advancement Act, and Mr. Miller from the 

Democratic side has a bill too. 

In 1980, the National Materials and Minerals Policy, Research and Development 

Act was enacted because the United States lacked a ‘‘coherent national materials 

policy and a coordinated program to assure the availability of materials critical for 

national economic well-being, national defense, and industrial production, including 

interstate commerce and foreign trade.’’ Thirty-one years later, this Committee is 

presented with similar issues, and to quote Yogi Berra, ‘‘it’s de ́ja ́-vu all over again.’’ 

Our witnesses today will provide us with some insight into the Administration’s 

perspective on critical materials. Dr. Holdren will discuss the activities of the interagency working group that was created last year, and Mr. Sandalow and Mr. 

Doebrich will discuss their respective agencies’ involvement in the group, as well as 

provide us with an overview of their agencies’ responsibilities relative to the topic 

of this hearing. 

Taking it a step further, I look forward to some honest conversations about appropriate roles that should—and shouldn’t—be played by the federal government. 

While I appreciate the need for federal research, I believe we should distinguish between basic and applied research, recognizing that the government may have a role 
21 

to play in the former, but that it should not duplicate, nor preempt work that rightfully should be done by industries. 

For about two decades, the price of rare earths and critical materials were low, 

perhaps artificially so, because of Chinese policies. As a result of these policies, and 

our own stringent rules regarding environmental standards, U.S. suppliers were unable to compete. Now that the Chinese have restricted exports, prices have gone up 

because non-Chinese suppliers have all but vanished. These policies have led to various international trade protests that remain unresolved. 

Conversely, there are those who say that we shouldn’t fret over these conditions 

because the financial markets will ultimately correct the situation. The expansion 

of Lynas Corporation in Australia, and the growth of Molycorp in the United States, 

provides hope that alternatives to Chinese rare earths will be available shortly. 

In the interim though, we still need a plan, one that should assess issues such 

as: stockpiling, permitting, research and development, workforce development, recycling, information gathering, and manufacturing and production incentives. I look 

forward to exploring these options, and hearing from our government witnesses 

today. 

I now turn to the Ranking Member from Maryland. 

Ms. EDWARDS. Thank you, Mr. Chairman. And thank you in advance to our witnesses today. I want to thank the Chairman for 

taking up this important issue. And I also want to acknowledge the 

work of the former Chairman of the Subcommittee, Mr. Miller, who 

held the first hearing on this matter for the Committee and who 

also worked with his then-vice chair, Kathy Dahlkemper from 

Pennsylvania, to craft legislation designed to help address the 

shortage of rare earth elements. 

Rare earths are just one class of materials that are crucial to our 

economy and our national security. This Committee has a 30-yearlong history of trying to establish an ongoing institutionalized focus 

on potential shortages of such materials, but at different times, 

both Republican and Democratic administrations have let this matter slip off the table. That said, I congratulate the Obama Administration for grasping the challenge of critical materials and organizing to develop a coherent set of policies. I am very pleased to 

see Dr. Holdren here today to talk about those efforts. 

The public focus on shortages is largely on rare earth elements, 

but tomorrow, the challenge may indeed be scarce isotopes or metals or minerals. I think we need to recognize that government 

should have an ongoing capacity to work to identify potential shortages and adopt policies designed to avoid or diminish the disruptions that come with shortages. Some argue that rare earth element—that the rare earth element story will end up validating the 

power of markets to address demand. It is true that there are aggressive efforts underway in Malaysia, the United States, and 

other places to develop rare earth extraction capacity. However, 

even if those efforts prove fruitful, the reality is that China’s aggressive use of access to their rare earth reserves will have succeeded in moving manufacturing facilities and jobs to China. Once 

there, those facilities are highly unlikely to move away. 

Further, there is nothing to keep China from reversing its rare 

earth policies if they face competitors. At the moment, China has 

cut export quotas to create incentives for farms to move there and 

to capture exorbitant profits from those reserves they do export. 

There is nothing to stop the Chinese Government from reversing 

course in the future and flooding markets with rare earths to drive 

their competition out of business. And when faced with a state-con-
22 

trolled economy the size of China’s, we cannot assume that markets alone can solve our problems. 

I want to warn that those who blame our loss of mining and rare 

earths on environmental regulations that they are overlooking the 

reality that the key lever the Chinese use to win a virtual global 

monopoly in mining in the first place was cutthroat pricing. That 

said, rare earth mining and processing has proven to be a very 

dirty business in the past with pollution, including radioactive 

waste, a trademark of this industry. I expected our work to develop 

a domestic industry that will not ignore the real dangers inherent 

in earth mining and process and that we will see Molycorp and others set a global standard for environmental compliance and safety. 

I look forward to the testimony today and hope that this marks 

the beginning of an ongoing dialogue about how to protect our jobs, 

our economy, and our national security for unfair trade practices 

and resource scarcities. 

I would like to yield my remaining time to my distinguished colleague, Mr. Miller of North Carolina. 

[The prepared statement of Ms. Edwards follows:] 

PREPARED STATEMENT OF RANKING MEMBER DONNA F. EDWARDS

I want to thank the Chairman for taking up this important issue. I also want to 

acknowledge the work of the former Chairman of this Subcommittee, Mr. Miller, 

who held the first hearing on this matter for the Committee, and who worked with 

his then-Vice Chair, Kathy Dahlkamper, to craft legislation designed to help address 

the shortage of rare earth elements. 

Rare earths are just one class of materials that are crucial to our economy and 

our national security. This Committee has a thirty year-long history of trying to establish an ongoing institutionalized focus on potential shortages of such materials, 

but at different times Republican and Democratic administrations have let this matter slip off the table. 

That said, the Obama Administration is to be congratulated for grasping the challenge of critical materials and organizing to develop a coherent set of policies. I am 

very pleased to see Dr. Holdren here to talk about those efforts. 

The public focus on shortages is largely on rare earth elements, but tomorrow the 

challenge may be scarce isotopes or metals or minerals. I think we need to recognize 

that the government should have an on-going capacity to work to identify potential 

shortages and adopt policies designed to avoid or diminish the disruptions that come 

with shortages. 

Some argue that the rare earth element story will end up validating the power 

of markets to address demand. It is true that there are aggressive efforts underway 

in Malaysia, the United States and other places to develop rare earth extraction capacity. 

However, even if those efforts prove fruitful, the reality is that China’s aggressive 

use of access to their rare earths reserves will have succeeded in moving manufacturing facilities and jobs to China. Once there, those facilities are unlikely to move 

away. Further, there is nothing to keep China from reversing its rare earth policies 

if they face competitors. 

At the moment, China has cut export quotas to create incentives for firms to move 

there and to capture exorbitant profits from those reserves they do export. There 

is nothing to stop the Chinese government from reversing course in the future and 

flooding markets with rare earths to drive their competition out of business. 

When faced with a state-controlled economy the size of China’s, we cannot assume 

that markets alone can solve our problems. I want to warn that those who blame 

our loss of mining in rare earths on environmental regulations that they are overlooking the reality that the key lever the Chinese used to win a virtual global monopoly in mining in the first place was cut-throat pricing. 

That said, rare earth mining and processing has proven to be a very dirty business in the past, with pollution-including radioactive wastes-a trademark of this industry. I expect that our work to develop a domestic industry will not ignore the 

real dangers inherent in rare earth mining and process and that we will see 
23 

Molycorp, and others, set a global standard for environmental compliance and safety. 

I look forward to the testimony today and hope that this marks the beginning of 

an ongoing dialogue about how to protect our jobs, our economy and our national 

security from unfair trade policies and resource scarcities. 

I would like to yield my remaining time to my distinguished colleague, Mr. Miller 

of North Carolina. 

Mr. MILLER. Thank you, Ms. Edwards. 

Ensuring reliable and stable supply of energy-critical elements is 

obviously vital to our national security and our economic interest, 

and this has been an issue of interest to me for some time. As both 

Ms. Edwards and Mr. Hultgren have said, I chaired a Committee 

hearing—a Subcommittee hearing on this a year ago. As a result 

of that hearing, this Subcommittee did develop legislation. Our 

Democratic staff did great work. Ms. Dahlkemper, who was the 

vice chair of the Committee introduced the legislation, and I have 

introduced that—very similar legislation again that is based upon 

the work of the Subcommittee last year. 

But that really was not the first legislation of this kind. We are 

not new to this issue. We recognize the importance of critical materials in the ’80s and past National Materials and Minerals Policy, 

Research and Development Act. I say ‘‘we’’—I mean Congress, but 

obviously I was not here then. But Executive Branch efforts really 

have been nonexistent for almost two decades now. It is time that 

we do start focusing on the issue. We cannot allow ourselves to lose 

the competitive advantage that we have had in the past or have 

those materials—access to those materials used to leverage other 

economic advantages. And I look forward to working with the Office of Science and Technology Policy, the Department of Energy, 

and I am glad that they are paying attention to this issue as well. 

Thank you very much. 

Mr. HULTGREN. Thank you, Ms. Edwards and Mr. Miller. If there 

are members who wish to submit additional opening statements, 

your statements will be added to the record at this point. 

At this time, I would like to introduce our panel of witnesses: 

first, Dr. John Holdren, Director of the Office of Science and Technology Policy; next, Mr. David Sandalow is the Assistant Secretary 

for Policy and International Affairs at the U.S. Department of Energy; and Mr. Jeff Doebrich is the Acting Program Coordinator for 

the Mineral Resources Program at the U.S. Geological Survey. 

Thank you all for being here. 

As our witnesses should know, spoken testimony is limited to 

five minutes each, after which the members of the Committee will 

have five minutes each to ask questions. Your written testimony 

will be included in the record of the hearing. 

It is the practice of the Subcommittee on Investigations and 

Oversight to receive testimony under oath. Do any of you have any 

objection to taking an oath? Let the record reflect that all witnesses 

were willing to take an oath. 

You may also be represented by counsel. Do any of you have 

counsel here with you today? Let the record reflect that none of the 

witnesses have counsel. 

If all of you would now please stand and raise your right hand. 

Do you solemnly swear or affirm to tell the whole truth and 

nothing but the truth, so help you, God? 
24 

Let the record reflect that all the witnesses participating have 

taken the oath. Thank you very much. You may be seated. 

I now recognize our first witness, Dr. Holdren. Thank you. 

STATEMENT OF DR. JOHN P. HOLDREN, DIRECTOR, OFFICE OF 

SCIENCE & TECHNOLOGY POLICY, EXECUTIVE OFFICE 

OF THE PRESIDENT OF THE UNITED STATES 

Dr. HOLDREN. Well, Chairman Hultgren, Ranking Member Edwards, members of the Subcommittee, I want to start by thanking 

you for the opportunity to testify today on administration policies 

and interagency efforts for addressing the issues that surround the 

production and use of critical materials. 

There is, as you have already mentioned, a number of you, a long 

history of concerns about the availability of critical materials, 

which we call that because their supply is highly concentrated in 

either one country or in a few corporate entities, and because they 

are used in the production of goods that are important economically 

or for national security. 

The Executive Office of the President in this Administration has 

been focused on this issue for well over a year—since March 2010, 

in fact. The Office of Science and Technology Policy in close coordination with the National Economic Council, the U.S. Trade Representative, and the National Security Council has been convening—as you mentioned, Mr. Chairman—an interagency working 

group to develop the necessary understanding of the critical materials situation and to focus Administration thinking and resources 

on risk mitigation. 

Four points have emerged from that process as key to understanding the overall situation. The first one is that concentrated 

production does not necessarily mean the reserves are equally concentrated. China currently accounts for about 95 percent of world 

production of the rare earth elements but is host to only a third 

to a half of the known reserves. In situations of that kind, market 

forces will work over the long term to mitigate risks as other suppliers come into the market to take advantage of higher prices and 

new demand. 

Second point is that market size does not necessarily predict disruptive potential. For example, the U.S. market for raw oxide 

forms of rare earths is small. It is only about $170 million a year 

or about 1/1000 of a percent of U.S. GDP. But these rare earths 

serve as vital ingredients in many advanced technologies in the 

commercial and defense domains, including the emerging clean energy sector, which are worth much more. 

Third, the risks of supply disruptions depend on what form of the 

material is deemed critical: raw minerals, metals, alloys, components, or finished goods. For any given material, a detailed analysis of the entire supply chain is necessary in order to identify 

where the vulnerabilities are and to identify effective mitigation 

measures. 

Fourth, in the short term, the Administration can use trade relations and diplomacy to foster the diversification of supply of critical 

materials, as well as taking steps to facilitate domestic production. 

In the long term, the greatest opportunities to reduce the risks as-
25 

sociated with critical materials are through investments in research and innovation. 

In the rest of my time, I want to elaborate on some agency and 

interagency activities that are currently underway and contemplated to address those issues. First of all, it is important to 

identify proactively and continuously which materials are critical 

based on an agreed-upon set of criteria. A number of departments, 

agencies, and outside entities, including the National Academy of 

Sciences, have been and are conducting such analyses and developing frameworks that will ultimately allow us to anticipate material shortfalls before they actually happen in the market. 

Second, given the growing interdependence among countries supplying and using these resources, a shared and accurate understanding of global raw material flows, location of resources, and 

material demand is essential. The OSTP convened interagency 

process is investigating the best ways to accomplish that. 

Third, USTR is closely examining China’s policies, restricting exports of raw materials including rare earths, and continues to press 

China to remove those restrictions both through bilateral dialogues 

and through international venues. 

Fourth, and for the longer term, the Administration proposes to 

initiate additional research activity on critical materials issues. 

The President’s fiscal year 2012 budget includes $20 million for a 

DOE innovation hub in that domain, and I suspect that Assistant 

Secretary Sandalow will describe that hub and other relevant DOE 

R&D activities in more detail. 

In closing, let me emphasize that the Obama Administration is 

taking the topic of critical materials and their supply chains very 

seriously indeed. Federal agency efforts are being coordinated 

through the White House-led interagency process as I mentioned. 

We remain in close communication with the scientific, technical, 

and business communities, and certainly we look forward to working with this Subcommittee, with the full Committee, and with 

other Members of Congress to improve our national capabilities in 

this domain. 

I will be happy to try to answer any questions you have. Thank 

you. 

[The prepared statement of Dr. Holdren follows:] 

PREPARED STATEMENT OF DR. JOHN P. HOLDREN, DIRECTOR, OFFICE OF SCIENCE AND

TECHNOLOGY POLICY, EXECUTIVE OFFICE OF THE PRESIDENT OF THE UNITED STATES

Chairman Broun, Ranking Member Edwards, and members of the Subcommittee, 

thank you for the opportunity to testify today on the Administration policies and 

interagency efforts for addressing the many complex issues associated with the production and use of critical materials. 

While recent events may have precipitated this hearing, there is a long history 

of concerns over the availability of critical materials. Many materials are referred 

to as ‘‘critical’’ because supply is highly concentrated in either one country or by a 

few corporate interests, and because they are used in the production of goods that 

are important economically or for national security. Today, there is particular concern about materials like platinum, tellurium, and rare earth elements because they 

are essential to the manufacture of products in key high-growth sectors, including 

clean energy, consumer electronics, and defense, among others. 

The Executive Office of the President (EOP) has been focused on this issue for 

some time. Since March 2010, the Office of Science and Technology Policy (OSTP), 

in close coordination with the National Economic Council (NEC), the Office of the 

U.S. Trade Representative (USTR), and the National Security Council (NSC), has 
26 

been convening an interagency working group to develop the necessary understanding of the critical-materials situation and to focus Administration thinking and 

resources on risk mitigation. First, I would like to go through some key themes that 

have emerged as part of this interagency process-themes that will provide the necessary backdrop for our discussion today. Then I will turn my attention to administration action areas already under way. 

Production is only indicative of short-term market risk 

Concentrated production does not necessarily imply concentrated reserves. China 

currently accounts for about 95 percent of world production of the rare earth elements (REE), but is host to only a third to half of known reserves. The high concentration of current production creates short-term risks and vulnerabilities, such 

as high commodity prices and supply disruptions, but in the longer term normal 

market forces will work to mitigate these risks, as other suppliers come into the 

market to take advantage of the higher prices and new demand. 

Access to critical materials is vital for emerging industries, 

like clean energy 

The U.S. market for the raw oxide form of REE is small-only about 12 percent of global trade, or $170 million per year. But these REE serve as vital ingredients 

in many advanced technologies in both the commercial domain (including electric 

vehicles, lighting, computers, wind turbines, ceramics, and medical imaging) and the 

defense domain (including avionics, radar, precision-guided munitions, and lasers). 

Supply shortages of critical materials are of concern because they can stall production of high-growth industries such as the emerging clean energy sector. 

In assessing risks of supply disruptions, the entire supply chain 

must be considered 

The risks of supply disruptions depend on what form of the material is deemed 

critical-raw minerals, metals, alloys, components, or finished goods. For example, 

most electronic components and finished goods containing rare earths are manufactured abroad, so there is probably little cause for concern in the domestic electronics 

industry if only the raw metals and oxides are being restricted, so long as the U.S. 

companies can continue to buy the REE-containing components and goods from 

other countries. In another example, the United States has the largest reserves of 

tellurium, a materials used in high-efficiency solar technologies, and there is a high 

level of producer diversity of this material. However, global production of tellurium 

has not increased with growing global demand, potentially limiting the market development of promising new photovoltaic technologies. For any given material, a detailed analysis of the entire supply chain is necessary to identify potential 

vulnerabilities and effective mitigation measures. In some cases, domestic manufacturing is as important as domestic mining. 

Long-term planning and innovation provide the best opportunity to 

mitigate supply risks 

Concentration of the production of critical materials can cause painful price spikes 

and supply disruptions. In the short term, the Administration can use trade relations and diplomacy to foster the diversification of critical material supply, as well 

as take steps to facilitate domestic production. In the long term, the greatest opportunities to reduce the risks associated with critical materials are through investments in R&D and innovation. The OSTP-convened interagency process is addressing these core themes in both the short and long-term. Presently this interagency 

effort is organized around the following sets of activities: 

• identifying critical materials based on common and agreed criteria; 

• promoting more detailed and transparent collection of information on global resource supply and demand to facilitate the proper functioning of markets; 

• establishing federal research and development priorities and establishing R&D 

roadmaps; and 

• reviewing-in coordination with our colleagues in the NEC, USTR, NSC and Federal agencies-domestic and global policies that affect the supply of critical materials (permitting, export restrictions, recycling, stockpiling, etc.) and pursuing 

remedies for roadblocks. 

In what follows, I elaborate on the agency and interagency activities currently underway and contemplated in each of these domains. 
27 

Identifying critical materials based on agreed criteria 

Identifying which materials are critical based on an agreed set of criteria should 

be done proactively and continuously. The National Academy of Sciences and the 

American Physical Society/ Materials Research Society recently published reports 

that include methodologies for defining critical minerals. In its 2010 Critical Materials Strategy, the Department of Energy (DOE) developed a methodology for assessing energy-critical materials. Concurrently, the Department of Defense (DOD) is 

conducting a congressionally mandated assessment of demand for individual rare 

earth elements from defense applications with an interim report due in July 2011. 

In support of this effort, the USGS recently completed a DOD-funded inventory of 

known domestic rare-earth reserves and resources. These analyses and frameworks 

provide the foundation for developing a robust and on-going analytical capability, 

one that allows the Federal government to anticipate material shortfalls in multiple 

civilian and defense related sectors long before they happen in the market. Our 

newly established interagency working group formed a sub-group co-chaired by the 

Departments of Energy and Defense to perform this task. 

Depth and transparency of information 

The growing interdependence between countries supplying and using raw materials underlines the importance of ensuring that global markets are open and wellfunctioning, on the basis of known material flows, clear price signals, and fair and 

transparent regulations. A shared and accurate understanding of global raw materials flows, location of resources, and material demand is essential to ensure the 

smooth functioning of materials markets. Data availability for many critical raw 

materials is limited due to relatively small market sizes and a limited number of 

producers. In addition, assessing the supply and demand outlook is complicated because many critical raw materials are mined or coproduced with other materials. 

More accurate and timely market information will help industry and governments 

make better strategic decisions. The OSTP-convened interagency process can support the collection, dissemination, and quality assurance of global information that 

builds on existing government data-collection processes. For example, enhanced cooperation among national geological services could substantially improve collective 

knowledge on the availability of raw materials and facilitate the identification of resource location. 

Federal R&D needs and priorities 

The Department of Energy is initiating new R&D activity on these issues. The 

President’s FY 2012 Budget includes a proposal for a DOE Energy Innovation Hub 

($20 million) on critical materials to help reduce U.S. reliance on materials such as 

rare earth elements (REE). The Hub activity will focus on finding ways to reduce 

the content of such critical materials in existing components; identifying new chemical compositions, material designs, and approaches that are not reliant on critical 

materials; and pursuing technologies that decrease the cost of separating critical 

elements from recycle streams and ores. Furthermore, DOE’s Advanced Research 

Projects Agency-Energy (ARPA–E) issued a solicitation in FY 2011 to fund earlystage technology alternatives that reduce or eliminate dependence on rare earths by 

developing substitutes in two key areas: electric vehicle motors and wind generators. 

Up to $30 million will be made available for this program area. 

Addressing global trade policies 

In October 2010, USTR initiated an investigation into allegations concerning China’s export restraints on REE, tungsten, and antimony, pursuant to a petition 

brought by the United Steelworkers under Section 301 of the Trade Act of 1974, as 

amended. Although no formal action was taken by USTR under Section 301 on the 

REE allegations, USTR is closely examining China’s policies restricting exports of 

raw materials, including REE, and continues to press China to remove its export 

restraints on REE and other raw materials. Moreover, the United States is actively 

working through international organizations such as the World Trade Organization 

(WTO), the G–20, the Organization for Economic Cooperation and Development 

(OECD), and through bilateral dialogues to increase transparency about problematic 

export restraint policies in China and other countries, and to reduce barriers to 

global trade and investment in raw materials. 

In closing, let me emphasize again that the Executive Office of the President and 

the Federal agencies are taking the topics of critical materials and critical mineral 

supply chains very seriously. The Federal agency efforts are coordinated through the 

EOP-led interagency process. Despite that process being in its infancy, we have de-
28 

veloped a shared understanding of the problems and issues of critical materials with 

our interagency partners, have formulated a game plan for addressing both short 

and long-term concerns with critical materials and are executing on that plan. We 

remain in close communication with the scientific, technical, and business communities; and we look forward to continuing to work with this committee and other 

members of Congress to help ensure growth in our national capabilities in this domain. 

Thank you. 

Mr. HULTGREN. Thank you, Dr. Holdren. Thank you for being 

here. 

I now recognize our next witness, Mr. Sandalow. Thank you. 

STATEMENT OF MR. DAVID SANDALOW, 

ASSISTANT SECRETARY FOR POLICY AND INTERNATIONAL 

AFFAIRS, U.S. DEPARTMENT OF ENERGY 

Mr. SANDALOW. Thank you, Mr. Chairman, Ranking Member Edwards, and members of the Subcommittee. I join Director Holdren 

in thanking you for holding a hearing on this important topic 

today. 

Earlier this year, I visited the Mountain Pass Mine in Southern 

California. I was impressed by the facility and its potential to provide a domestic source of rare earth metals. According to the facility’s owners, the mine will produce at an annual rate of about 

19,000 tons of rare earth by the end of 2012 and 40,000 rare 

earth—tons of rare earth by the end of 2014 and doing that using 

modern technologies at a globally competitive cost. Now, that is an 

important step in the right direction. 

The issue of critical materials is important and needs priority attention in the months and years ahead. At the Department of Energy, we share the goal of establishing a stable, sustainable, and 

domestic supply of critical minerals, and we look forward to working with the Congress on this issue as we move forward. 

Members of the Committee, the world is on a cusp of a clean energy revolution. Here in the United States, we are making historic 

investments in clean energy. The American Recovery Act was the 

largest one-time investment in clean energy in our Nation’s history. 

At DOE, we are investing $35 billion in Recovery Act funds in electric vehicles, batteries, and advanced energy storage, a smarter and 

more reliable electric grid, wind and solar technologies, among 

many other areas. 

Now, other countries are also seizing this opportunity. For example, the Chinese Government is launching a program to deploy 

electric cars in over 25 major cities while building huge wind 

farms, ultra-supercritical advanced coal plants, ultra high voltage 

long-distance transmission lines and more. India has launched an 

ambitious national solar mission, and in Europe, strong public policies are driving sustained investments in clean energy. 

In recognition of the importance of certain materials in the transition to clean energy, DOE is working to address the use of critical 

materials in clean energy components in products and processes. 

As a first step, last year we released a critical materials strategy, 

the first of its kind ever released by the Department of Energy. The 

report found that four clean energy technologies—wind turbines, 

electric vehicles, photovoltaic cells, and fluorescent lighting—use 

materials at risk of supply disruptions in the next five years. In the 
29 

report, five rare earth elements—dysprosium, neodymium, terbium, 

europium, and yttrium, as well as indium—were assessed as the 

most critical in the short term. For this purpose, criticality was a 

measure that combined the importance of the clean energy economy and the risk of supply disruption. 

Our critical materials strategy highlighted three pillars to address the challenges associated with these materials in the clean 

energy economy. First, substitutes must be developed. Second, recycling, reuse, and more efficient use can significantly lower global 

demand for newly-extracted materials. And finally, diversified global supply chains are essential. That means encouraging other nations to expedite alternative supplies and exploring other potential 

sources of materials, in addition to facilitating environmentally 

sound extraction and processing right here in the United States because domestic production is the most secure. With all three of 

these approaches, we must consider all stages of the supply chain 

from sound material extraction to purification and processing to 

manufacture of chemicals and components and ultimately to end 

uses. 

This year, DOE is updating our analysis. We have in recent 

months sent out to the public a request for information and, in the 

process, received back over 500 pages of information from over 30 

respondents with a variety of information on multiple topics. One 

lesson we have learned through this experience is that supply constraints aren’t static. As a society, we have dealt with these types 

of issues before, mainly through smart policy and R&D investments 

that reinforced efficient market mechanisms. We can and will do 

so again. 

We must be smart and serious as we plan for a growing global 

demand for products that contain critical minerals. With focused 

attention, working together we can meet these challenges. Thank 

you. 

[The prepared statement of Mr. Sandalow follows:] 

PREPARED STATEMENT OF DAVID SANDALOW, ASSISTANT SECRETARY OF ENERGY FOR

POLICY AND INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF ENERGY

Chairman Broun, Ranking Member Edwards, and Members of the Subcommittee, 

thank you for the opportunity to testify today about the Federal perspective on a 

national critical materials strategy and the Department of Energy’s ongoing work 

on this topic. 

Earlier this year I visited the Mountain Pass Mine in southern California. I was 

impressed by the facility and its potential to provide a domestic source of rare earth 

metals. According to the owners, the mine will produce at an annual rate of about 

19,000 tons of rare earths by end of 2012 and 40,000 tons by early 2014, using modern technologies at a globally competitive cost. That’s an important step in the right 

direction. 

The issue of critical minerals is important and needs priority attention in the 

months and years ahead. The Department shares the goal of establishing a stable, 

sustainable and domestic supply of critical minerals, and we look forward to discussions with the Congress on ways to address this issue as we move forward. 

GLOBAL CLEAN ENERGY ECONOMY 

historic investments in clean energy. The American Recovery and Reinvestment 

Act was the largest one-time investment in clean energy in our nation’s history— 

more than $90 billion. At the Department of Energy (DOE), we’re investing $35 billion in Recovery funds in electric vehicles; batteries and advanced energy storage; 

a smarter and more reliable electric grid; and wind and solar technologies, among 

many other areas. We aim to double our renewable energy generation and manufacturing capacities by 2012. We are working to deploy hundreds of thousands of elec-
30 

tric vehicles and charging infrastructure to power them, weatherize at least half a 

million homes, and help modernize our grid. 

Other countries are also seizing this opportunity, and the market for clean energy 

technologies is growing rapidly all over the world. For example, the Chinese government is launching programs to deploy electric cars in over 25 major cities. They are 

connecting urban centers with high-speed rail and building huge wind farms, 

ultrasupercritical advanced coal plants and ultra-high≥voltage long-distance transmission lines. India has launched an ambitious National Solar Mission, with the 

goal of reaching 20 gigawatts of installed solar capacity by 2020. 

In Europe, strong public policies are driving sustained investments in clean en- ergy. Denmark earns more than $4 billion each year in the wind turbine industry. 

Germany and Spain are the world’s top installers of solar photovoltaic panels, accounting for nearly three-quarters of a global market worth $37 billion in 2009. 

Around the world, investments in clean energy technologies are growing, helping 

create jobs, promote economic growth and fight climate pillar of global economic 

growth. 

DOE STRATEGY 

In recognition of the importance of certain materials in the transition to clean energy, DOE has begun to address the use of critical materials in clean energy components, products and processes. As a first step, DOE released its Critical Materials 

Strategy last December. The report found that four clean energy technologies-wind 

turbines, electric vehicles, photovoltaic cells and fluorescent lighting-use materials 

at risk of supply disruptions in the next five years. In the report, five rare earth 

elements (dysprosium, neodymium, terbium, europium and yttrium), as well as indium, were assessed as most critical in the short term. For this purpose, ‘‘criticality’’ 

was a measure that combined importance to the clean energy economy and the risk 

of supply disruption. 

The Critical Materials Strategy highlighted three pillars to address the challenges 

associated with critical materials in the clean energy economy. First, substitutes 

must be developed. Research and entrepreneurial activity leading to material and 

technology substitutes improves flexibility to meet the material demands of the 

clean energy economy. Second, recycling, reuse and more efficient use can significantly lower global demand for newly extracted materials. Research into recycling 

processes coupled with well-designed policies will help make recycling economically 

viable over time. Finally, diversified global supply chains are essential. To manage 

supply risk, multiple sources of material are required. This means encouraging 

other nations to expedite alternative supplies and exploring other potential sources 

of material (such as existing mine here in the United States. With all three of these 

approaches, we must consider all stages of the supply chain: from environmentallysound material extraction to purification and processing, the manufacture of chemicals and components, and ultimately end uses. 

Since the Critical Materials Strategy was released last year, DOE’s work in this 

area has ramped up considerably. Earlier in 2011, ARPA–E issued a $30 million 

Funding Opportunity Announcement (FOA) on Rare Earth Alternatives for magnets 

in wind turbines and motors. EERE’s Vehicle Technology and Wind Programs have 

also issued relevant FOAs this year. In addition, the President’s FY 2012 budget 

supports a Critical Materials Hub. These activities build on DOE’s longstanding expertise on these topics. For example, the Office of Basic Energy Sciences (BES) has 

funded research at Ames Laboratory on the production of high quality rare earth 

magnets, magnetic technologies, synthesis technologies and superconductors for a 

number of years. The Office of Energy Efficiency and Renewable Energy (EERE) has 

funded several projects at Ames Laboratory and Oak Ridge National Laboratory addressing alternate magnet and motor designs. 

This year, DOE will update its analysis in light of rapidly-changing market conditions. DOE is analyzing the use of critical materials in petroleum refineries and 

other applications not addressed in last year’s report. In addition, DOE may identify 

specific strategies for materials identified as critical, including strategies with respect to substitution, recycling and more efficient use. In support of this year’s analysis, DOE issued a Request for Information that focused on critical material content 

of certain technologies, supply chains, research, education The RFI closed last 

month. We received nearly 500 pages of responses from 30 organizations, including 

manufacturers, miners, universities, and national laboratories. Many organizations 

shared proprietary data on material usage that will help us develop a clearer picture of current and future market conditions. 

Within this larger context, we do intend to address domestic production of critical 

materials in our 2011 report. Production within the United States is important for 

at least three reasons. First, domestic production is the most secure. Second, the 
31 

United States’ considerable reserves of some critical materials could add significantly to total global production and to greater diversity in the global supply of 

these materials. Third, U.S. technology and best practices developed during mine 

operations can help promote safe and responsible mining in other countries, further 

contributing to supply diversity and the sustainable development of resources. With 

regard to mining in the United States, it is important to point out that permits are 

not the only requirements that can extend the time required to open a mine. The 

required accumulation of hundreds of millions of dollars of capital for mine development can also lead to delay. 

Managing supply chain risks is by no means simple. At DOE, we focus on the research and development angle. From our perspective, we must think broadly about 

addressing the supply chain in our research and development (R&D) investments, 

from extraction of materials through product manufacture and eventual recycling. 

It is also important to think about multiple technology options, rather than picking 

winners and losers. We work with other Federal agencies to address other issues, 

such as trade, labor and workforce, and environmental impacts. 

The White House Office of Science and Technology Policy has been convening an 

interagency effort on critical materials and their supply chains. In fact, this group 

met last week to discuss a number of important developments on these topics. 

CONCLUSION 

One lesson we have learned through experience is that supply constraints aren’t 

static. As a society, we have dealt with these types of issues before, mainly through 

smart policy and R&D investments that reinforced efficient market mechanisms. We 

can and will do so again. Strategies for addressing shortages of strategic resources 

are available, if we act wisely. Not every one of these strategies will work every 

time. But taken together, they offer a set of approaches we should consider, as appropriate, whenever potential shortages of natural resources loom on the horizon. 

So in conclusion, there’s no reason to panic, but every reason to be smart and serious as we plan for growing global demand for products that contain critical minerals. The United States intends to be a world leader in clean energy technologies. 

Toward that end, we are shaping the policies and approaches to help prevent disruptions in supply of the materials needed for those technologies. This will involve 

careful and collaborative policy development. We will rely on the creative genius and 

entrepreneurial ingenuity of the business community to meet an emerging market 

demand in a competitive fashion. With focused attention, working together we can 

meet these challenges. 

Mr. HULTGREN. Thank you, Mr. Sandalow. 

I now recognize our final witness, Mr. Doebrich. 

STATEMENT OF MR. JEFF L. DOEBRICH, 

ACTING PROGRAM COORDINATOR, MINERAL RESOURCES 

PROGRAM, U.S. GEOLOGICAL SURVEY, U.S. DEPARTMENT OF 

THE INTERIOR 

Mr. DOEBRICH. Good afternoon and thank you for the opportunity 

to appear before you today to discuss the role of the USGS in informing decisions regarding a national critical minerals strategy. 

The USGS is responsible for conducting research and collecting 

data on a wide variety of non-fuel and mineral resources. We conduct research to understand the geologic processes that concentrated known mineral resources at specific localities in the 

earth’s crust, and to estimate quantities, qualities, and areas of 

mineral resources. We collect, analyze, and disseminate data and 

information on current production and consumption for about 100 

mineral commodities both domestically and internationally. 

We also conduct research on the interactions of mineral resources 

with the environment, both natural and as a result of resource extraction to better predict the degree of impact the resource development may have on human and ecosystem health. This full spectrum of mineral resource science allows for comprehensive understanding of the complete lifecycle of mineral resources and mate-
32 

rials: resource formation, discovery, production, consumption, use, 

recycling, and reuse, and allows for an understanding of environmental issues of concern throughout the lifecycle. 

Global demand for critical mineral commodities is on the rise 

with increasing applications in consumer products, computers, 

automobiles, aircraft, and other advanced technology products. The 

USGS has recently completed an inventory of known domestic rare 

earth reserves and resources. This study reviews current U.S. consumption and imports of rare earths, current knowledge of domestic resources, and possibilities for future domestic production. The 

report also includes an overview of known global rare earth resources and discusses the reliability of alternative foreign sources. 

Though rare earth elements are currently of most concern to 

many—including the Department of Defense which funded this inventory—it should be noted that in 2010 the United States was 100 

percent dependent on foreign suppliers for 18 mineral commodities 

and more than 50 percent dependent on foreign sources for 43 mineral commodities. The import partners include Brazil, Canada, 

China, France, Germany, Japan, Mexico, Russia, Venezuela, and 

many others. 

The USGS is a member of the OSTP convened interagency process on critical and strategic mineral supply chains. USGS information on domestic and global mineral production and consumption 

and expertise in understanding this information are being provided 

to the interagency group to help inform decision-making and to 

support the ongoing activities that relate to a national critical mineral strategy. 

In particular, the USGS is taking a lead role with other interagency members in the recently-established sub-working group to 

identify high-priority critical minerals and to establish a methodology and criteria necessary to make those determinations. This 

work will enable the Federal Government to anticipate material 

shortfalls before they happen in the market and will be a core competent in establishing a national critical minerals strategy. 

The USGS stands ready to fulfill its role as the federal provider 

of unbiased research on known mineral resources, assessment of 

undiscovered mineral resources, and information on domestic and 

global production and consumption of mineral resources for use in 

global critical mineral supply chain analysis. 

Thank you for the opportunity to explain the role of the USGS 

on this very important topic, and I will be happy to answer any 

questions. 

[The prepared statement of Mr. Doebrich follows:] 

PREPARED STATEMENT OF MR. JEFF L. DOEBRICH, PROGRAM COORDINATOR (ACTING), 

MINERAL RESOURCES PROGRAM, U.S. GEOLOGICAL SURVEY, U.S. DEPARTMENT OF

THE INTERIOR

Good afternoon, Mr. Chairman and Members of the Subcommittee. Thank you for 

the opportunity to appear before you today to discuss the role of the USGS in informing decisions regarding a national critical minerals strategy. 

The USGS is responsible for conducting research and collecting data on a wide 

variety of nonfuel mineral resources. Research is conducted to understand the geologic processes that concentrated known mineral resources at specific localities in 

the Earth’s crust and to estimate (or assess) quantities, qualities, and areas of undiscovered mineral resources, or potential future supply. USGS scientists also conduct research on the interactions of mineral resources with the environment, both 
33 

natural and as a result of resource extraction, to better predict the degree of impact 

that resource development may have on human and ecosystem health. USGS mineral commodity specialists collect, analyze, and disseminate data and information 

that document current production and consumption for about 100 mineral commodities, both domestically and internationally for 180 countries. This full spectrum of 

mineral resource science allows for a comprehensive understanding of the complete 

life cycle of mineral resources and materials—resource formation, discovery, production, consumption, use, recycling, and reuse—and allows for an understanding of environmental issues of concern throughout the life cycle. 

Global demand for critical mineral commodities is on the rise with increasing applications in consumer products, computers, automobiles, aircraft, and other advanced technology products. Much of this demand growth is driven by new technologies that increase energy efficiency and decrease reliance on fossil fuels. To 

begin the process of understanding potential sources of critical mineral commodities, 

the USGS has recently completed an inventory of known domestic rare-earth reserves and resources (Long and others, 2010). This study restates basic geologic 

facts about rare earths relevant to assessing domestic security of supply and reviews 

current U.S. consumption and imports of rare earths, current knowledge of domestic 

resources, and possibilities for future domestic production. The report also includes 

an overview of known global rare-earth resources and discusses the reliability of alternative foreign sources of rare earths. 

Though rare earth elements are currently of most concern to many, including the 

Department of Defense, which funded the inventory, it should be noted that in 2010 

the United States was 100 percent dependent on foreign suppliers for 18 mineral 

commodities and more than 50 percent dependent on foreign sources for 43 mineral 

commodities. Import partners include Brazil, Canada, China, France, Germany, 

Japan, Mexico, Russia, and Venezuela. In 2008, a National Research Council committee, funded largely by the USGS, developed a ?criticality matrix? that combines 

supply risk with importance of use as a first step toward determining which mineral 

commodities are essential to the Nation’s economic and national security (National 

Research Council, 2008). 

The USGS is currently preparing for a national assessment of undiscovered resources which will include an assessment of rare-earth and other critical mineral 

resources. The recent inventory of known rare-earth resources will be followed by 

other critical mineral inventories and used as a foundation for the assessment of 

domestic undiscovered critical mineral resources. The preparation for the assessment involves research and data collection on mineral deposit types that represent 

the primary sources of minerals to be assessed, research on techniques to assess for 

resources that are concealed below the earth’s surface, and research on techniques 

to characterize environmental aspects of mineral resources, prior to, during, and 

subsequent to resource development. 

The USGS continuously collects, analyzes, and disseminates data and information 

on domestic and global rare-earth and other critical mineral reserves and resources, 

production, consumption, and use. This information is published annually in the 

USGS Mineral Commodity Summaries (USGS, 2011) and includes a description of 

current events, trends, and issues related to supply and demand. 

The USGS is a member of the OSTP-convened interagency process on critical and 

strategic mineral supply chains. USGS domestic and global mineral production and 

consumption information and expertise in understanding this information are being 

provided to the interagency group to help inform decision-making and support the 

on-going activities that relate to a national critical minerals strategy. In particular, 

the USGS is taking a lead role, with other interagency members, in the recently 

established sub-working group to identify high-priority critical materials and establish the methodology and criteria necessary to make those determinations. This 

work will enable the Federal government to anticipate material shortfalls before 

they happen in the market and will be a core component in establishing a national 

critical minerals strategy. 

The USGS stands ready to fulfill its role as the federal provider of unbiased research on known mineral resources, assessment of undiscovered mineral resources, 

and information on domestic and global production and consumption of mineral resources for use in global critical-mineral supply chain analysis. 

Thank you, Mr. Chairman, for the opportunity to explain the role of the USGS 

on this very important topic. I will be happy to answer any questions you or the 

other Members may have. 

Mr. HULTGREN. I thank the panel for their testimony. 

Reminding members of the Committee that Committee rules 

limit questioning to five minutes. The Chair will at this point open 
34 

the round of questions. The Chair recognizes himself for five minutes. 

First question, Dr. Holdren, I wonder if you could help me with 

this, just some understanding on the interagency working group. 

The interagency working group has met over the—for the last year 

now. I wonder will it produce any deliverables? And then I also 

wonder if you can comment on any proposed legislation that may 

complement or duplicate the efforts of the working group? 

Dr. HOLDREN. Sure. I would actually argue that the working 

group has already produced some deliverables. It will certainly 

produce more. But its meetings have been working sessions where 

the agencies is under the direction of the Executive Office of the 

President are actually doing things and committing to do additional 

things. Examples include the studies that have already been mentioned by my fellow witnesses, the reports that have come out of 

the DOE and the USGS, World Trade Organization, litigation from 

the USTR, the new R&D programs out of DOE, proactive engagement with industry by the Department of Commerce and the Office 

of the Trade Representative, over a dozen high-level, bilateral 

meetings between the Department of State and foreign counterparts on these issues. And so we have already been actually generating products, doing things, taking action. 

Your question about the legislation, as you know, there are a 

number of bills, Mr. Chairman, including one of yours. We have not 

taken a formal position as an Administration on the specific characteristics of these different bills, but there is a lot in them. And 

again, I would point to yours in particular that we are clearly very 

much in agreement with. Your bill calls particularly for three focuses. One is on better information, one is on recycling, and one is 

on research. We agree with all of that. And we are already pursuing all of those avenues. 

I would say the additional approaches which we regard as important and clearly warranted are diversification through discussion 

and encouragement not only with companies in this country but 

companies located among our friends and allies. And also, really I 

would add, negotiation, which includes discussions with China in 

both bilateral and multilateral forums to try to make clear to 

China that it is actually not in China’s interest to restrict trade in 

these materials. 

Mr. HULTGREN. Changing course a little bit, Dr. Holdren, but 

again asking you a couple questions here if I may. Just specifically, 

according to press reports, the DOD sees that no rare—there really 

is no rare earth crisis right now. I wondered if you concur with the 

DOD’s observation? And then following up on that, what is your assessment of the rare earth and critical materials situation in the 

United States relative to nondefense applications? And should the 

United States be engaged in stockpiling critical materials for nondefense applications? 

Dr. HOLDREN. Just jotting notes so I can remember all three 

parts of your question. First of all, the DOD assessment, we are actually still awaiting a formal and comprehensive assessment from 

the Department of Defense, which is due out next month. Earlier 

statements I think were perhaps incomplete, but I think the basis 

for them was probably that the quantities required by the Depart-
35 

ment of Defense are relatively small compared to the quantities required in the commercial sector. And I think the Department’s assumption is probably that given those small quantities and given 

the very small fraction they represent of the cost of the systems to 

which they are important, the Department is assuming it would 

continue to be able to get what it needs, even if at higher cost, 

without significant impact on the overall cost of the weapons systems and the programs. But again, I don’t want to preempt the appearance of their actual comprehensive study on this, which is due 

next month. 

Your second question was on the overall situation with respect 

to these materials in the commercial sector. And certainly they are 

very important. The value added by the use of these materials, 

even though, as I said, the price of the materials themselves is a 

relatively modest share of our GDP, the value added is much larger. And their importance to emerging sectors, particularly the clean 

energy sector that Assistant Secretary Sandalow was talking about 

is very great. So we really have to be focused on our capacity to 

maintain access to these materials over time. 

When the National Academy conducted its study that came out 

just three years ago on minerals, critical materials, and the U.S. 

economy, they developed actually a methodology for defining and 

quantifying how critical is critical, and they looked actually at 11 

minerals and mineral families. And among those, the rare earths 

were the most critical, exceeded only by platinum and rhodium if 

you look at the methodology and you look at the results, criticality 

in terms of importance and in terms of the risk associated with our 

supply of those materials. That is pretty strong stuff that among 

all the minerals we import—and again, my colleague from the 

USGS talked about the fact that we are 100 percent dependent for 

our supply of 18 minerals and over 50 percent dependent for our 

supply of 43—out of all of those dependents as rare earths are 

right there at the top in terms of criticality. 

One can talk about some very specific ones. Europium, which has 

no substitute in red phosphors that are used in our LCD screens 

and color cathode ray tubes. That stuff is now going for around 

$2,000 a kilogram. And again, there is no substitute. Erbium, there 

is no substitute for erbium and its special properties for use in 

fiber optic cables. It is going for about $1,000 a kilogram. 

Other materials, cerium has unique attributes that are used in 

lens and glass polishing, for example, mirror polishing for telescopes. It is much cheaper than the others but it has such unique 

attributes that one has to consider it critical. A whole set of them— 

of the rare earths, neodymium and several others, samarium, gadolinium, and more are essential in permanent magnets, in memory 

sticks, in DVDs. So when you ask what is the situation in the 

United States, very important stuff, a lot of it is critical. We have 

got to be paying attention. 

Your last question was about stockpiles. I think stockpiles have 

a very checkered history. The government investing in stockpiles 

can be a pipeline by which taxpayer money bids up the price and 

gets the private industry out of the business of having their own 

stockpiles. I certainly would have serious reservations about the 

government investing in stockpiles. The private sector does have 
36 

some incentive for stockpiling. It does do some, and that is one of 

the reasons that our short-term situation is perhaps not as serious 

as the percentage dependences would indicate. 

Mr. HULTGREN. Thank you. I now recognize Ms. Edwards. 

Ms. EDWARDS. Thank you, Mr. Chairman, and thank you to the 

witnesses. 

Dr. Holdren, over the last 30 years we have seen the government’s commitment to addressing critical materials, both in the Executive Branch and the Congress wax and wane as different specific crises have emerged and receded, and I think one of the key 

things that we need in place is a structure that is going to remain 

in place even after you and I have left our current positions to ensure our government is better able to anticipate and supply—anticipate supply problems with critical materials in the future. And 

so I wonder if you have any specific recommendations on how to 

accomplish that, and I wonder if you could tell me whether you 

think Administration policy—either this Administration or past Administration—actually contribute to the lack of industry development? And I would note the closing of the AIMS Information Center in the early part of the last decade and the—you know, the 

shift at the same time of the industry almost to—well, pretty much 

to zero. And so I wonder if you could comment on that, Dr. 

Holdren, and then I will turn to you, Mr. Sandalow. 

Dr. HOLDREN. I have to admit, Ranking Member Edwards, that 

I am not an authority on the history of this industry. It is my impression that the decline of the industry in the United States and 

basically the transfer of the production—so much of the production 

of these materials to China was, as you mentioned in your opening 

statement, largely a matter of economics. The Chinese simply underbid everybody else. They did it in part, I think, by neglecting 

environmental impacts of the mining of these materials, which are 

often severe. They are now coming around to recognizing that and 

starting to try to rectify it. I am very much encouraged myself looking forward by Molycorp’s announcements about new technology 

that they have developed that will enable production in the United 

States to be both more efficient and much cleaner than production 

was in the last round. I think this has substantial potential for restoring our own productive capacity. But I don’t think it was particularly U.S. policies that caused the decline in this country. 

Again, I think it was the Chinese underbidding everybody else. 

Ms. EDWARDS. Well, let me just turn to Mr. Sandalow because 

in your statement you mention, one, your visit to Mountain Pass 

and the importance of what you were seeing there, but at the same 

time, Molycorp has had a bit of a difficulty in securing a loan guarantee, for example, from the Department. And so that is about Administration policy because how do you begin to stand up an industry that then can thrive on its own and have the capacity to 

produce in a competitive market when we are not—I mean we can’t 

provide, obviously, the level of support that China can provide because you can do that when you have just got a government that 

says we are just going to spend here and we are not going to spend 

anywhere else, and where we also have a regulatory structure in 

place that I think is actually really important to protecting the 

public health and the public interest. 
37 

So, you know, Mr. Sandalow, can you just tell me, have you given 

any thoughts to what steps need to be taken to protect our domestic capacity to mine and sell critical materials in the face of the 

price pressure from the likes of a China? 

Mr. SANDALOW. Thank you for the question, Ranking Member 

Edwards. And there is no question we need a wide range of policy 

tools in order to be able to develop this industry going forward. The 

Department of Energy’s loan guarantee authority today does not 

extend to mining operations, and so there are limits in the ability 

of the Department in this respect. 

But what we identified in our strategy was a three-pronged approach, and that includes areas that are particularly in the competence of the U.S. Department of Energy. For us, research and development is particularly central. The Department of Energy is the 

Nation’s leading funder of the physical sciences, and so research 

and development in substitutes is particularly important, research 

and development into more efficient use and reuse is particularly 

important, and then developing a globalized supply chain, including domestic supply is important as well. 

Ms. EDWARDS. Let me ask Dr. Holdren because you also mentioned, obviously, our need to develop a more robust manufacturing 

capacity. We could talk about that across all kinds of lines. But it 

does seem to me that our manufacturing capacity—21st Century 

manufacturing capacity is actually tied to our ability to produce the 

domestic supplies that we need without being held to whatever 

quotas might be imposed from those who, in fact, are investing in 

mining of critical materials. 

Dr. HOLDREN. I can only agree with that, Ranking Member Edwards, and I think the whole domain of advanced manufacturing 

is immensely important. The President’s Council of Advisors on 

Science and Technology recently completed a study in that vein. 

The President has been out there talking about what we need to 

do to lift our game in advanced manufacturing and restore some 

real strength to the manufacturing sector in this country. And I 

agree with you that attending to these matters of critical minerals 

is going to be an important part of that strategy. 

Mr. HULTGREN. Thank you. I now recognize Dr. Bucshon for five 

minutes. 

Mr. BUCSHON. Thank you, Mr. Chairman. 

This, again, seems to be another area where our country is dependent on foreign nations for sources of minerals, oil, whatever 

you want to call it, and it is quite distressing actually. And I think 

that this is a great hearing to have because we do need a strategy 

to reverse that, just as we do with our dependence on foreign oil. 

The basic question I have is pretty simple. What are the one or 

two things that we need to do in our country to decrease our dependence on China for these type of minerals going forward? It is 

pretty simple. I can start with Dr. Holdren and then everyone can 

comment. 

Dr. HOLDREN. Well, Congressman Bucshon, I would just say 

again that recycling and diversification are two of the most important things we can do early, and diversification includes both the 

development of sources domestically and the development of 

sources in friends and allies—Australia, Canada—countries on 
38 

which we can really rely not to cut us off. Recycling also has very 

substantial potential and we need to emphasize it. But over the 

longer run, research to develop substitutes is going to be crucial. 

Mr. SANDALOW. I would—Congressman, thank you for your question and I would echo the thoughtful comments of Director Holdren 

and just say as well this is an area that government and business 

can work together and work together well and that a partnership 

between government and business institutions can only make a difference for our country. I think it is a place where government can 

do the initial research, some of the R&D, can help to create the 

knowledge base, and then working together. We are all headed in 

the same direction I think. This is one where we can really come 

together to help solve the problem. 

Mr. DOEBRICH. Yes, Congressman, particularly with regards to 

supply risk that we are facing with regards to rare earths, diversifying supply, understanding where our potential future supply may 

be able to come from, and that is a role USGS can help with in 

terms of assessments for undiscovered rare earth resources both 

domestically and internationally. 

Mr. BUCSHON. I guess the last time we lost our domestic production was based on economic factors primarily. That is what I am 

hearing. What prevents economic factors, competitive factors to just 

keep our companies out of business again in the future, for example, as some people are saying in their testimony, China just floods 

the market? 

Dr. HOLDREN. Well, I would say first of all that the strength of 

America, American companies, American manufacturing has always been innovation. And we have to, as the President has said, 

out-innovate our competition. And I think it is going to be innovation that enables us to compete. We have already heard about some 

of the innovations that Molycorp itself has pursued and achieved. 

And I think that what one finds is over the long run the strategy 

of flooding the market with cheap stuff could drive out your competitors doesn’t work very well. I think China would pay a very 

high price for doing that, but we can’t, as some other comments 

have suggested, rely on good sense from that quarter, and therefore, we have to make—take the steps and make the investments 

we need to make sure that on our own we can do what is necessary 

and together with our friends and allies to diversify those sources. 

Mr. BUCSHON. Mr. Sandalow, any comments on that? 

Mr. SANDALOW. I think that is very well said. 

Mr. BUCSHON. I yield back. Thank you. 

Mr. HULTGREN. Thank you, Doctor. 

I now recognize Mr. Miller for five minutes. 

Mr. MILLER. Thank you, Mr. Chairman. 

Dr. Holdren or Mr. Sandalow, in the past the rare earths research was carried on at the Rare Earth Information Center at the 

Ames laboratory and DOE is now proposing an energy innovation 

hub on critical materials. What are the advantages of using a hub 

or a center to carry out the research? 

Mr. SANDALOW. Thank you for the question, Congressman. This 

is a model that DOE is using now and brings together some of the 

best minds in a single place to focus on a challenge of especial national importance. And that is a goal with something like a hub. 
39 

And with concentrated funding, with funding that will sustain 

itself over a number of years, bringing together the best minds and 

creating synergies between different disciplines, we think we can 

make progress. And this is just a perfect area for doing something 

exactly like that. 

I would say the Ames National Lab, which you point to, has been 

a historic leader in this area. It has been a leader for, you know, 

since World War II with extraordinary expertise, and so we want 

to build on that at the Department of Energy with substantially 

augmenting what they have already done with substantial new capabilities. 

Mr. MILLER. Okay. Is it more or less cost effective to do the research in a hub or a center? 

Mr. SANDALOW. Yes, it is more cost effective and more productive, more productive to bring different disciplines together in one 

place creating synergies and complementarities. 

Mr. MILLER. Okay. Again, to any of the panelists, do you think 

we have the researchers now in the United States who have the 

skills and the knowledge to carry out the critical materials research that we need done, either in the private sector or in government? 

Mr. SANDALOW. In my view, Congressman, we do not. We need 

concentrated effort in this country to build up the intellectual capital, not just the industrial base in this country—you know, in this 

area. That means, you know, training chemists with, you know, experts in lanthanide chemistry and a broad range of other disciplines who can make sure that we are innovating in a way that 

will transform this industry and make a difference for the future. 

Dr. HOLDREN. If I may just add to this, I think candor does require that we confess that there is some real financial challenges 

in this whole domain. You have raised the question—really the 

question of our science and technology education and training in 

this country. And we know we have to lift our game in that domain. We have to train more scientists and more engineers. And 

we train those at every level from our community colleges to our 

great research universities, and we have some real funding challenges in that domain. 

As you know, the President proposed shortly after he came into 

office that we should be aiming to double the investments in our 

basic science, our most important basic science agencies, the NSF, 

the DOE, Office of Science and the NIST laboratories. And that 

money radiates out into the research universities. And it is going 

to be a real challenge to do that in the current budget environment. 

The President has been clear he wants to do it, but obviously we 

are going to need the help of the Congress to pull that off. 

Even—and I will say this because my colleague from the USGS 

might not want to—the budget of the USGS is an important issue 

here. The capacity of the USGS to deliver the analysis and the information that we need to identify the most critical areas, to identify the shortfalls potentially before they materialize, it requires 

that you maintain those capabilities with the USGS and the current USGS budget makes it a great stretch to do that. 

Mr. MILLER. Okay. Dr. Holdren, you said that R&D reduces the 

risk associated with critical material shortages. I think I know 
40 

what you mean by that and how that works, but could you elaborate on that some? 

Dr. HOLDREN. Sure. One of the things that R&D, particularly in 

material science, leads to is substitutes. You know, we used to 

think we were going to rely on copper for all our communication 

circuits. Now, we rely very heavily on fiber optic cables. That is as 

a result of research that enabled us to do that. Research will unquestionably lead to better ways—in many cases less expensive 

ways—to achieve some of the tasks for which we now depend on 

materials that we have to import. 

Mr. MILLER. Okay. I yield back my time. 

Mr. HULTGREN. Thank you. I now recognize Dr. Benishek for five 

minutes. 

Mr. BENISHEK. Well, thank you, Mr. Chairman. I thank the gentlemen for coming. It is a pleasure listening to your testimony. 

Dr. Holdren, I have a question for you concerning your previous 

answer. How are you going to convince China it is not in their interest to control the market on these materials? Because I don’t see 

how we can do that nicely. 

Dr. HOLDREN. I am not sure we can do it nicely, but there are 

a couple dimensions. First of all, they might believe it is in their 

interest to control the market, but if we out-innovate them, they 

won’t be able to. If their only strategy is to try to drive out the 

competition by flooding the market with very inexpensive material, 

they are going to lose their shirts. 

Mr. BENISHEK. Well, they have done that and they are making 

money. 

Dr. HOLDREN. They have done it from time to time in the past, 

but I think going forward, if we apply our comparative advantage 

in innovation, it is going to be harder for them to do it going forward. 

Mr. BENISHEK. How is that? They control the market now so how 

are you going to do that? 

Dr. HOLDREN. Well, 20 years ago they didn’t control the market; 

we did. And again, they captured it by underbidding everybody for 

the time. But their capacity to do that indefinitely is limited because——— 

Mr. BENISHEK. How is that? 

Dr. HOLDREN. —we will out-innovate them. 

Mr. BENISHEK. How is that? How do we out-innovate them? We 

don’t have the material. 

Dr. HOLDREN. We do have the material. The United States has 

very substantial reserves of this material. 

Mr. BENISHEK. Okay. How do we get that material to market 

here in this country faster? 

Dr. HOLDREN. I think we have been talking about how we do 

that here. We encourage U.S. corporations to make the investments. We help them——— 

Mr. BENISHEK. My information here is that it takes——— 

Dr. HOLDREN. —in research and development and partner——— 

Mr. BENISHEK. —7 to ten years to get a permit for some of these 

mines. 

Dr. HOLDREN. The question of permitting is one that I would 

defer to colleagues——— 
41 

Mr. BENISHEK. But that is the central issue here, though. 

Dr. HOLDREN. —about permits, but let me simply say about that 

I am not sure where the 7 to ten years comes from. I suspect that 

part of that is hesitation and delay over whether one can compete 

economically and not actually the inability——— 

Mr. BENISHEK. No, this is an inability to get a permit. People are 

willing to do it; they just can’t get a permit. 

Dr. HOLDREN. Well, no, I hear you, Congressman. I have not 

looked at these analyses of how it takes ten years. I think if it is 

taking ten years, that is problematic and we should fix it. 

Mr. BENISHEK. All right. Thank you. Mr. Doebrich, what could 

the Administration do as far as you are concerned about, you know, 

making it easier for us to develop these resources here at home 

other than talking the Chinese out of controlling the market? 

Mr. DOEBRICH. Well, from a scientific standpoint, just providing 

better information, understanding what our resources are, where 

they are, how much there is. I think also beyond the United States, 

there are known and potentially future supplies as well outside of 

China. And I think that is an important point to make as well with 

those who are perhaps a little bit friendlier trading partners. 

Mr. BENISHEK. Well, I think part of the problem myself—and I 

didn’t hear any of you address this—was the fact that, you know, 

the uncertainty in the permitting process, the uncertainty in the 

regulations that they are going to change from one year to the next 

as far as, you know, the requirements for the EPA and all that sort 

of thing, do you think that has had any effect on the ability to raise 

money and market these big projects? 

Mr. DOEBRICH. Again, from a scientific standpoint, I can’t comment on that. 

Mr. BENISHEK. Dr. Holdren, do have any—Dr. Holdren, do you 

have any comment on that? 

Dr. HOLDREN. Well, I did see a statement the other day that Senator Bingaman offered in which he made the argument that profitability and not permitting had been the real obstacle and it is profitability that we have to work on. But I am prepared to agree with 

you that we need to simplify the permitting as well. And I would 

note that this Administration, this President has issued an Executive Order on simplifying regulatory regimes. And a lot of progress 

has been made on that and more will be made because we understand that unpredictability and regulation is an obstacle to investment in business and we want to improve that situation. We are 

taking steps to do it. 

Mr. BENISHEK. If you could provide this Committee with some 

examples of that streamlining process? 

Dr. HOLDREN. Oh, absolutely. I will submit that for the record. 

Mr. BENISHEK. Thank you. 

Dr. HOLDREN. Happy to do that. 

Mr. BENISHEK. With that, I yield back. 

Mr. HULTGREN. Thank you, Dr. Benishek. I now recognize Mr. 

McNerney for five minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. Doebrich, I would like to get an idea of how much of environmental damage was done at Mountain Pass Mine before it was 
42 

closed. Is that a significant amount of damage or is it not that significant? 

Mr. DOEBRICH. Sir, I don’t have specifics on that but I can perhaps look into that and provide some information for the record. 

Mr. MCNERNEY. Mr. Sandalow, do you have an idea on that? 

Mr. SANDALOW. Congressman, I don’t know the detailed history. 

I did tour the site and I did see the environmental management 

techniques that they are applying right now, which certainly, from 

a tour, looked very impressive. 

Mr. MCNERNEY. So you have confidence in Molycorp’s claims? 

You think they are reliable? You think they will be as good as their 

word on that? 

Mr. SANDALOW. Well, I hope so, Congressman. 

Mr. MCNERNEY. So do—we all do. What I am wondering is can 

economic drivers alone, you know, the high cost of water, the high 

cost of power, can those considerations alone force—not force but 

encourage American mining and reprocessing operations to clean 

up and do a good job or are we going to need some other guidelines 

to help make sure that that happens? 

Mr. DOEBRICH. Again, from the Department of the Interior’s 

standpoint, I mean that would be a question perhaps to the BLM 

and I would have to defer to them on that. 

Dr. HOLDREN. I guess I would add a comment on that. I wouldn’t 

say that market forces alone will lead to all the kinds of environmental controls that one would want, but we do have in place a 

very substantial number of laws passed by the Congress that affect 

air and water quality and the protection of land. And my assumption is we will continue to enforce those laws. And that those together with economic incentives to become more efficient and cleaner will push us in the right direction. 

Mr. MCNERNEY. And that Molycorp should be able to compete 

economically with the China producers within a few years, is that 

their estimate? Is that your estimate? 

Dr. HOLDREN. They are saying they can. And I would bet on it. 

Mr. SANDALOW. And yeah, I heard that personally as well. And 

to just broaden the point, there is no market that American 

innovators cannot compete in and win, and this is one of them. 

Mr. MCNERNEY. Good. Thank you. 

Now, what I want to know is do you feel, Mr. Sandalow, that the 

real risk with the current imbalance—trade imbalance—on this 

issue is that China will force industries and jobs to China that 

won’t return? Is that the real underlying risk that we are looking 

at here? 

Mr. SANDALOW. That is a concern to be sure, Congressman. I 

think there are other concerns as well. All of these concerns could 

be addressed if we are smart and serious about the way that we 

do this, with R&D on substitutes and efficiency and on globalizing 

supply chains. 

Mr. MCNERNEY. Well, I mean I hear that—I hear you saying if 

we do recycling, which means people using their cell phone batteries when they die and that kind of stuff will produce a significant quantity of these materials, and also innovation—I mean, 

what are the potentials there for the recycling part of this? 
43 

Dr. HOLDREN. I will take recycling on. The potential for recycling 

depends on a number of factors. It depends on the value of the material, it depends on how expensive the processing is for getting 

that material out of the products it is in, it depends on the logistics 

of how concentrated the sources of product are that you are going 

to process to get the stuff out, and I would say the answer is that 

recycling looks good for some of these materials and less good for 

others. Recycling is also not going to be adequate in situations 

where a market is very rapidly expanding, because the stuff that 

you are recycling from is not as large in quantity as what you need 

for the expanding sector. 

And so, for example, if you look at permanent magnets for the 

wind turbine market where wind turbines are growing very rapidly, recycling is not going to do that for us. I think we have to be 

realistic and we have to discriminate between different circumstances, some where recycling will help a lot, others where it 

won’t, and we have to rely on other kinds of measures, including 

diversification. 

Mr. MCNERNEY. Is there a sort of a unified or coordinated program to put research money in areas where substitution would be 

a good alternative, Mr. Sandalow? 

Mr. SANDALOW. Yeah, this is something that we are investing 

money in at the Department of Energy in our Energy Efficiency Renewable Energy Program in particular, and it is something we are 

looking at. We are talking to colleagues around the government 

about it as well. 

Mr. MCNERNEY. So you are trying to avoid duplication or——— 

Mr. SANDALOW. Absolutely, Congressman. 

Mr. MCNERNEY. Thank you. I yield back. 

Mr. HULTGREN. I recognize Ms. Adams for five minutes. 

Mrs. ADAMS. Thank you, Mr. Chair. 

Dr. Holdren, I listened to the back and forth with you and Mr. 

Benishek, and I have a question. If you haven’t researched all the 

factors, how can you make that assertion that China would not 

flood the market? 

Dr. HOLDREN. I don’t have a clear crystal ball congresswoman 

and so I can’t assert that China would not. I can only assert that 

there would be some disadvantages to China in doing that. I would 

also point out that we are engaged with China in the World Trade 

Organization, that China has a considerable economic interest in 

maintaining good trade relations with the United States and other 

countries, and so there is some leverage there. Nonetheless——— 

Mrs. ADAMS. You know they do have a lot of our debt. 

Dr. HOLDREN. They do and that also means it is not particularly 

in their interest to try to devastate our economy because they 

would drop the value of the U.S. securities that they hold. But I 

am not claiming I have a clear crystal ball. I am simply claiming 

here——— 

Mrs. ADAMS. So it is possible. 

Dr. HOLDREN. It is possible but there are a number of things we 

can do, certainly, to reduce the risk from that very substantially. 

Mrs. ADAMS. In your written testimony you say that USTR is 

closely examining China’s policies restricting exports of raw materials, include RE and continues to press China and remove its ex-
44 

port restraints on RE and other raw materials. Can you elaborate 

on the state of the conversations between USTR and PRC? Are we 

making any headway? 

Dr. HOLDREN. It is my impression that we are making some 

headway there but I can’t really elaborate. I think it would be appropriate to defer to the USTR on that point for an up-to-date assessment of the state of their interactions. 

Mrs. ADAMS. Okay. There is a greater issue, a bigger issue than 

rare earths. We have been talking about critical materials and rare 

earth today but the Committee has identified similar failures in 

other fields. Recent unforeseen shortages in Helium-3—you know, 

the ones that used for radiation detectors—suggest this is an issue 

greater than just rare earths. What is the Administration doing to 

characterize and forecast supplies and demands of other materials 

such as rare isotopes and strategic minerals that may be impacted 

by policies decisions outside of the market? 

Dr. HOLDREN. Well, certainly our focus in the Administration 

and the focus of outside entities such as the National Academy that 

have looked at these issues is not restricted to rare earths. I commented a while ago that rare earths are judged to be among the 

most critical but they are not the only critical elements and we are 

looking at the others. The DOD is looking at the others; the DOE 

is looking at the others; the USTR is looking at the others; the Department of Commerce. We are certainly not confining our attention to rare earths. 

Mrs. ADAMS. Like plutonium-238? 

Dr. HOLDREN. Well, plutonium-238 is, of course, indispensible for 

radioisotopic thermal power generators as we use on our Mars missions and other such technologies. Helium-3 is essential. And yes, 

we are looking at that. The DOE looks at that closely. 

Mr. SANDALOW. Just to add, Congressman, in our critical materials strategy last year we looked not just at rare earths but also 

at indium, gallium, tellurium, lithium, and cobalt. And then in the 

request for information that we just submitted to the public, we 

asked about other materials that might be important, of interest. 

So it is very much an area beyond just rare earths that we are 

looking at. 

Mrs. ADAMS. Thank you. I yield back. 

Mr. HULTGREN. Thank you very much. I know a couple of the 

witnesses—panel members need to leave at 4 o’clock, so we want 

to be conscious of your time. I see that we still—it is a few minutes 

before 4 o’clock, about 20 minutes until, so my hope is to go 

through another round of questions. Our Committee rules say that 

we are limited to five minutes each, but if we can be shorter than 

that, that would be nice to be able to try and get through all of 

us. So if that is all right with you all, we will start going through 

another round of questions and wrap up at 4 o’clock so one of you 

can catch a plane and others have other things that you need to 

get to. 

Dr. Holdren, one of the provisions of the bill I introduced instructs the Secretary of the Interior and the Secretary of Energy 

to specify a principal statistical agency. I wonder what your 

thoughts are on the efficacy and effectiveness of specifying a principal statistical agency? 
45 

Dr. HOLDREN. Well, I guess my response would be I believe we 

have had a principal statistical agency in the USGS and the— 

where the rubber meets the road would be what additional responsibilities the USGS would have under such a provision and whether they would have the budget to carry out those responsibilities. 

Mr. HULTGREN. I think the challenge is can they identify what 

the demand is without that. Any thoughts on that or not? 

Dr. HOLDREN. I agree with you. 

Mr. HULTGREN. Okay. Do any of the other two witnesses have 

thoughts on that? 

Mr. DOEBRICH. As Dr. Holdren said, this would apply to one part 

of the Mineral Resources Program that provides minerals information, and we would like to better understand what such a designation would truly mean, the ramifications of it. And we would be 

happy to answer that more fully for the record. 

Mr. HULTGREN. Okay. We can get you that and that would be 

great if you could submit a response to that. That would be very 

helpful. 

Quickly, just with another minute or two here, I know one of the 

challenges is, again, making sure that we have got people who are 

capable to be doing this work and certainly we are talking about 

the resources but also the intellectual resources are so challenging 

here. Specifically, we need students who have a better grasp of the 

industrial sciences versus a specific education in rare earths. I 

wondered if any of you have heard concerns about this and what 

the government, if it were to spend funds targeting and strengthening industrial science programs, how would it ensure retention 

of this talent in the United States after subsidizing their education? 

Mr. SANDALOW. Well, I will just start and then turn to Dr. 

Holdren, I just want to thank you for emphasizing this point, 

Chairman. It is vitally important. It is vitally important that we 

have the intellectual capital in this country to invest in this area. 

I often hear that the expertise follows the research money, and so 

when the research money is available, then the expertise will be 

developed. And so it just underscores the importance of maintaining federal support for basic R&D in this area, and in particular, 

in the areas you point to in industrial sciences. Industrial manufacturing processes and efficiency are absolutely critical for U.S. competitiveness in the decades ahead. So it is vital that we maintain 

federal funding support in that area. 

Dr. HOLDREN. I would add I think it is also important as the formulation your question suggests that we look at ways to make it 

easier for foreign talent that gets educated in this country, particularly getting advanced degrees in science and engineering, that 

makes it easier for them to stay here. Right now, I think we make 

it too hard for them to stay here. Some, obviously, are going to 

want to go back to their countries. That is not an entirely bad 

thing because science and engineering in some respects is not a 

zero sum game, but we certainly shouldn’t be making it hard for 

foreign nationals who are educated here and want to stay to do so. 

Mr. HULTGREN. To give everyone else a chance, questions as well, 

I now recognize Ms. Edwards. 
46 

Ms. EDWARDS. Thank you, Mr. Chairman. I just have a couple of 

quick questions. 

Dr. Holdren, I just want to point to you. I was looking at the 

fourth quarter 2010 reports from Molycorp as another suggestion 

about why China might be rethinking things. In this—in the report, the CEO of Molycorp noted that senior government leaders in 

China consistently stress China’s intent to continue to restrict rare 

earth exports and the possibility of China becoming a net rare 

earth importing nation by 2015. CEO Smith also said, ‘‘These dynamics are why we believe rare earth pricing will remain robust 

for the foreseeable future.’’ It is also why Molycorp recently committed to expanding its production capacity from 19,050 metric 

tons per year in 2012 to 40,000 metric tons per year, which is expected to be achieved by 2013. And he says that that will position 

Molycorp to capture new markets and customers and benefit from 

continued strong pricing, hence, a competitor for China, but I think 

it is important and highlights the reason that the United States 

needs to step up its game, our government needs to step up its 

game in order to be able to stand up industries that can compete. 

And I would also note that Molycorp secured all of its critical 

government permits that enabled it to proceed with construction of 

a new rare earth oxide manufacturing facility in Mountain Pass. 

They broke ground ahead of schedule. They are constructing their 

new manufacturing facility and they recommenced mining operations for the first time since 2002. And that is with environmental 

regulations in place that are actually going to protect the American 

consumer and those who live in and around Mountain Pass from 

the dangers that have befallen the Chinese and the reason that the 

Chinese, in fact, are having to make these changes and different 

decisions about what they do with respect to their mining. 

And I wonder for USGS, Mr. Doebrich, if you could comment 

whether from an environmental perspective what sort of concerns 

we need to be aware of regarding potential environmental contamination as a result of these mining operations and how that impacts 

what we need to consider in the United States in terms of our own 

industry with respect to competition with China? 

Mr. DOEBRICH. Thank you, Congresswoman. 

With regard to rare earths in particular, many of these rare 

earth minerals contain radioactive components, and so radiation is 

an environmental issue of concern when developing rare earth resources. So this is an area of research that we are actually getting 

more involved with to understand what the impact—the natural 

impact of the known resource in the ground even before resource 

development, developing baseline information to understand what 

the natural baseline geochemical signature is of these resources to 

help us better understand what the impact of resource development 

would be for different types of these rare earth deposits. So that 

is an area of research that we are involved with right now. 

Ms. EDWARDS. In any case, the goal would not be to throw out 

environmental regulations. That is not what is going to stand up 

our industry. Thank you, and I will yield back. 

Dr. HOLDREN. I strongly agree. 

Mr. HULTGREN. I now recognize Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 
47 

The subject of Helium-3 came up, which is also a subject that 

was—that this Subcommittee dealt with in the last couple of years. 

The problem with Helium-3 was we didn’t know how much of it we 

had. That was the biggest problem. We didn’t have an assessment 

of what the demand was and what the supply was, and the reason 

was that Helium-3 was produced by the decay of tritium, which 

was used in nuclear weapons and how much tritium there was and, 

therefore, how much Helium-3 there was was all classified, so nobody knew how much there was. And we spent billions of dollars 

developing a technology that depended on a lot of Helium-3 and 

then found out there wasn’t that much Helium-3. 

The Administration actually appears to have done a pretty good 

job of dealing with that problem once you realize you had a problem, kind of assessing what the supply was and figuring out what 

the demand was and making decisions about priorities. But that 

appears not to have been unique to Helium-3. There are other 

problems of identifying supply and demand. Dr. Holdren, I think 

you addressed that at least somewhat in your testimony of identifying the supply and demand. 

And there is still a problem—both in the government and the private sector—of that information not being available, whether it is 

treated as a trade secret or confidential for business reasons or 

whatever else. How much of a problem is that, and how are we 

going to get at that problem to identify what the demand is and 

what the supply is? 

Dr. HOLDREN. Well, first of all, Congressman Miller, the first 

item on my list consistent with your question of what we need to 

do is information. We need to do better with information, and there 

I think again the USGS has been a mainstay of our ability to get 

that information and my judgment should continue to be. 

My understanding is that companies are becoming more forthcoming with the kinds of information we need to make these assessments. I think we are doing better at public-private partnerships in this domain and in some other domains as well. Of course, 

the problem with classified information that you referred to in the 

case of tritium is, as always in the case of those kinds of materials, 

going to be something of an obstacle. But it is not true that nobody 

knew how much tritium we had. It is just that nobody knew in the 

public domain how much we had, and there was probably a lack 

for a time of connecting the dots as they say among the different 

people who had the requisite information. 

But I do believe we are doing better going forward. We have an 

approach to open government and transparency in this Administration that is yielding, I think, real benefits in terms not only of the 

kinds of data and databases that the government is making available but also in terms of an increasing tendency toward transparency in business. 

Mr. MILLER. Okay. Anyone else? 

Mr. SANDALOW. Thank you. If I might add, this is a topic that 

I hear about from businesses when I talk about this issue with 

them. And they say that government really has an important role 

to play in collecting the information. And we were encouraged at 

the U.S. Department of Energy to inquire about this in the last request for information that we put out. And we did so and, among 
48 

other things, we said that we would keep information proprietary 

and collected it on that basis if businesses wanted us to do that. 

So we have collected proprietary information, looking at ways in 

which we might be able to share it while protecting the confidential 

nature of it by aggregation or other types of tools. But I hear about 

this all the time from the industry as an important area. 

I would note, too, that on our Energy Information Administration 

(EIA), which is our statistical agency, have plans to scale up its 

work in this area but as the result of the latest round of budget 

pressures and cuts is unable to pursue its additional work in this 

area, which I think is unfortunate. But this is an area that, no 

question, that we hear about all the time in the Energy Department. 

Mr. MILLER. Okay. Just for purposes of clarifying something, 

which was reasonably clear already, but when you say ‘‘flooding the 

market,’’ you really mean that the Chinese are selling rare earths 

below cost to drive out competitors is what—it is called the antitrust law’s predatory pricing so that other suppliers will not compete because they have a dominant position in the market and they 

have got a government behind them funding it all. Is that generally 

what you mean when you say ‘‘flooding the market?’’ 

Dr. HOLDREN. Well, Congressman, I didn’t use the term ‘‘flooding 

the market.’’ Your colleagues used it. But I think what they have 

in mind is not what the Chinese are doing now. The Chinese are, 

I believe, not losing money under current pricing. But the concern 

is that as we start to develop more effective competition with the 

Chinese at current prices, the concern is they could undercut 

those——— 

Mr. MILLER. Right. 

Dr. HOLDREN. —as happened some decades ago in the international oil market where we developed some expensive alternatives to conventional oil and the—and OPEC cut its prices to undercut those technologies. That history causes people to worry 

about that possibility. And as I have said before, it is a possibility. 

I don’t have a crystal ball clear enough to rule it out, but I think 

our strategy needs to be prepared for a wide variety of possible scenarios. And the way you get prepared for that, again, is better information, it is diversification, it is recycling, it is research. 

Mr. MILLER. Thank you. 

Mr. HULTGREN. I want to thank the witnesses for their valuable 

testimony and for the members for their questions. The members 

of the Subcommittee may have additional questions for the witnesses and we will ask you to respond to those in writing if that 

is all right. The record will remain open for two weeks for additional comments from members. The witnesses are excused and the 

hearing is now adjourned. 

[Whereupon, at 3:54 p.m., the subcommittee was adjourned.] 
(49) 

Appendix I: 

ANSWERS TO POST-HEARING QUESTIONS
50 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. John P. Holdren, Director, Office of Science & Technology Policy 

(OSTP): 

Questions submitted by Chairman Paul C. Broun 

Q1. What are the Administration’s short, medium and long-term plans to ensure 

adequate supplies of rare earths and critical materials for U.S. industries? 

A1. In the short term, the Administration is using trade relations and diplomacy 

to foster the diversification of critical material supply, as well as taking steps to facilitate domestic production. In the long term, the greatest opportunities to reduce 

the risks associated with supply shortfalls of critical materials are through investments in R&D and innovation. The OSTP-convened interagency process is addressing these core themes in both the short and long term. Presently this interagency 

effort is organized around the following sets of activities: 

• identifying critical materials based on common and agreed criteria; 

• promoting more detailed and transparent collection of information on global resource supply and demand to facilitate the proper functioning of markets; 

• establishing federal R&D priorities and roadmaps; and 

• reviewing-in coordination with our colleagues in the National Economic Council, 

the Office of the U.S. Trade Representative, the National Security Council, and 

Federal departments and agencies-domestic and global policies that affect the 

supply of critical materials (permitting, export restrictions, recycling, stockpiling, etc.) and pursuing remedies for roadblocks. 

Q2. What role is OSTP playing to promote public/private collaboration in the development of recycling technologies—including technical standards, guides and best 

practices—to strengthen recycling for key materials and to facilitate innovative 

materials use throughout economic value chains? 

A2. The potential for recycling depends on a number of factors. It depends on the 

value of the material, the ease of disassembly or separation, and how concentrated 

the material is within a product. Recycling may be a viable option for some materials but not for others. Recycling will not be adequate in situations where a market 

is rapidly expanding, because the supply of recovered material will not be sufficient 

to meet expanding demand. 

The President’s FY 2012 Budget includes a proposal for a Department of Energy 

(DOE) Energy Innovation Hub on critical materials to help reduce U.S. reliance on 

critical materials including rare earth elements (REE). Hub activities on recycling 

would include R&D on efficient separation technologies that could be economically 

applied to both mined ores and recycled product streams, as well as other strategies 

that could significantly lower world demand for newly extracted critical materials. 

Q3. Has the development of technical standards and standard reference materials 

been integrated into the Administration’s Critical Materials Strategy? Will the 

National Institute of Standards and Technology (NIST) be tasked to lend its 

technical expertise—particularly in the development of standard reference materials that help in the identification and classification of rare and other materials, and that could facilitate their re-use from electronic scrap, cell phones, 

magnets and magnet applications, and batteries? 

A3. While NIST has not specifically been tasked with integrating its activities and 

expertise into the Administration’s Critical Materials Strategy, NIST’s longstanding 

technical expertise in reference materials and technical standards could play an important role in any Federal efforts to develop standards and reference materials related to critical materials. Of NIST’s 1300 Standard Reference Materials (SRMs), 

several metal alloys and geological materials have measurement information on rare 

earths. A series of calibration standards is available for calibrating the determination of rare-earth elements using a wide variety of chemical analysis methods. 

Q4. Our current situation with raw materials is not unique to the United States. To 

what extent is the U.S. government coordinating strategies with other nations 

in an effort to address this issue by learning for each other’s actions? What nations are more active in these discussions? What are some of the ideas and strategies that have been discussed in these collaborative efforts? 

A4. I believe the United States government must be prepared for a wide range of 

scenarios in this area in the years ahead. The United States is interested in working 
51 

1Mozur, Paul and Liu, Fanny, ‘‘Taiwan, China Discuss possible Rare-Earths Deal,’’ The Wall 

Street Journal, May 18, 2011 

with like-minded trading partners to determine the best way forward to ensure reliable supplies of critical materials from all sources. We have been working bilaterally 

and multilaterally (at the G20, the Asia-Pacific Economic Cooperation (APEC) 

Forum, the World Trade Organization (WTO), and other fora) to seek progress on 

the issue. We have also hosted direct conversations with: Japan, South Korea, Germany, Australia, Canada, China, the European Union, European Commission, and 

the European Parliament among others. These conversations have covered collaboration in: research and development, promoting an open and transparent global 

market including sharing of supply and demand information, and the responsible 

development of future supply chains. 

Q5. Recent articles have described a potential relationship between China and Taiwan, where Taiwan would benefit from a special rare earths arrangement. Can 

you comment on the significance of such an agreement and its potential impact 

on the U.S. and other countries? 1

A5. At this point, without specific knowledge of the details of a potential arrangement, any comments on how Taiwan could benefit or how other countries would be 

impacted would be speculative at best. 

Q6. In an ideal world, what provisions would you want to see in a rare earths/critical materials bill? 

A6. I would welcome provisions that strengthen our capabilities to: (1) educate and 

train scientists and engineers in this country; (2) identify critical materials and establish an appropriate early warning mechanism; (3) perform a more detailed and 

transparent collection of information on global resource supply and demand; (4) support federal research and development priorities in the areas of substitute materials 

and technologies, more atom-efficient use of materials, environmentally superior 

mineral extraction and processing, and recycling; (5) pursue an adequate and diversified supply of critical materials; (6) identify downstream supply chain 

vulnerabilities (e.g. metals, alloys, components, or finished goods) and propose effective mitigation measures; and (7) review domestic and global policies that affect the 

supply of critical materials and pursue remedies for roadblocks. Such provisions 

could strengthen efforts the Administration is already pursuing in these areas. 

Q7. Congress visited the issue of strategic minerals in 1980 with the National Materials and Minerals Policy, Research and Development Act, and again in 1984, 

with the National Critical Materials Act. The 1980 Act included certain reporting requirements by the National Science and Technology Council, which is 

housed in the Office of Science and Technology Policy. Are you familiar with 

those reporting requirements? Understanding that this occurred before your 

time, do you have any insight as to why those requirements are not being met? 

How can we ensure that we are vigilant in our monitoring of critical materials? 

Do you believe annual updates are necessary? 

A7. I am familiar with those reporting requirements but do not know the history 

of why those had lapsed in previous Administrations. This Administration, in contrast, has taken the National Materials and Minerals Policy, Research and Development Act, and the National Critical Materials Act seriously. It began coordination 

on this topic early in the first year of the Administration. 

While there are no current plans for the Executive Office of the President to release 

documents on the topic, there will be a continuous stream of reports from our colleagues in the Federal agencies (e.g. DOD, DOE, USGS) that reflect the collective 

thinking and analysis of our interagency process. The set of issues on critical materials is fluid and dynamic. The market and geopolitical landscape change rapidly 

and so too must the U.S. government response. 

Q8. Do you have any suggestions to modify or amend the National Materials and 

Minerals Policy, Research and Development Act of 1980, to ensure the Act is effective? Are there any additional authorities or restrictions that Congress should 

consider to ensure compliance with the Act? 

A8. These Acts are comprehensive but could benefit from an update to reflect nuances in the present market landscape. One such area that may deserve additional 

emphasis is in full supply-chain considerations. The risks of supply disruptions depend on what form of the material is deemed critical-raw minerals, metals, alloys, 

components, or finished goods. Another area that deserves additional emphasis is 
52 

training of the next-generation workforce in materials through STEM-based education programs. 
53 

Responses by David Sandalow, Assistant Secretary of Energy for Policy and International Affairs, U.S. Department of Energy 

Questions submitted by Chairman Paul C. Broun 
54 
55 
56 
57 
58 
59 
60 
61 
62 
63 
64 
65 
66 
67 
68 
69 
70 
71 
72 

Responses by Mr. Jeff L. Doebrich, Program Coordinator (Acting), Mineral Resources 

Program, U.S. Geological Survey (USGS): 

Questions submitted by Chairman Paul C. Broun 

Q1. In this year’s (2011) USGS Mineral Commodities Summary: Rare Earths, China 

is listed as having around 48% of the world’s rare earth elements, which is a 

significant up tick from last year’s (2010) report which listed China’s number 

at around 37%. 

a. What is the reason for China’s elevated numbers this year? 

A1 a. The USGS estimate of China’s Rare Earth reserves in Mineral Commodity 

Summaries 2011 (MCS 2011) was changed from the previous year’s estimate based 

upon improved understanding of Chinese reserve and resource definitions and the 

comparison of those definitions to USGS reserve and resource definitions. The concepts are explained for all countries in Appendix C (Part B) on page 196 of MCS 

2011 (http://minerals.usgs.gov/minerals/pubs/mcs/2011/mcs2011.pdf); the correspondence of the Chinese and USGS terms are discussed in USGS Open File Report 

2011–1042 (http://pubs.usgs.gov/of/2011/1042/). 

b. How does USGS determine the presence of rare earths, i.e., what methods and 

technologies does it employ? 

A1 b. The USGS employs a variety of geologic investigations and analytical techniques to characterize a region or site for the existence of rare-earth-bearing mineral resources. Reconnaissance geologic mapping and use of satellite remote sensing 

are used to identify specific rock types known to contain rare-earth minerals. These 

rocks are then investigated further through more detailed mapping, higher-resolution satellite or airborne remote sensing, sampling for geochemical analysis, and 

geophysical surveys to determine the presence of rare-earth mineral concentrations 

in the rock. Once surface evidence of concentrations is documented through these 

techniques, a drilling program is initiated to begin to explore the subsurface and 

to outline identified resources. In the United States, it is at this point that private 

industry enters the process to define identified resources and reserves through drilling and feasibility studies of developing an ore reserve. In some countries governments will conduct the initial phases of drilling to define an attractive resource to 

interest private investment. The USGS does not explore for nor drill mineral resources but conducts research on a deposit to understand the parameters of its formation that can then be used to predict where other deposits may be found. This 

research may rely on samples from drilling that was done by private industry or 

be confined to surface or remote examinations as described above. 

The USGS National Minerals Information Center (NMIC) collects, analyzes, and 

publishes identified resource and reserve information that is released by private industry and national governments. National reserves information for rare earths 

found in the Mineral Commodity Summaries report, including those for the United 

States, is derived from a variety of sources. Lacking national assessment information by governments, sources such as academic articles, company reports, presentations by company representatives, and trade journal articles, or a combination of 

these, serve as the basis for national reserves information reported in the mineral 

commodity sections of this publication. The USGS collects information about the 

quantity and quality of mineral resources but does not directly measure reserves. 

Reassessment of reserves is a continuing process, and the intensity of this process 

differs for mineral commodities, countries, and time period. Some countries have 

specific definitions for reserves data, and reserves for each country are assessed separately, based on reported data and definitions. In the Mineral Commodity Summaries report, an attempt is made to make reserves consistent among countries for 

a mineral commodity and its byproducts. 

c. Does USGS have the best tools and employees to accomplish its mission competently? 

A1 c. The USGS Mineral Resources Program, including its National Minerals Information Center, has the tools and employees needed to accomplish its core mission 

competently but lacks capacity to expand its functions to accommodate increased activity called for in some of the pending critical minerals legislation. The Mineral Resources Program has been proposed for budget cuts every year but one [2010] since 

FY 2001; for FY 2012, the Administration’s budget request proposed a reduction of 

$9.6 million (18%) from the FY 2010 funding level of $53.8 million, which will require the elimination of 49 scientific and technical positions and the elimination of 
73 

1Order Providing for the Confidentiality of Statistical Information http://www.gpo.gov/fdsys/ 

pkg/FR–1997–06–27/pdf/97–16934.pdf 2 Confidential Information Protection and Statistical Efficiency Act of 2002 P.L. 107–347, title 

V http://www.gpo.gov/fdsys/pkg/PLAW–107publ347/pdf/PLAW–107publ347.pdf 3 Confidential Information Protection and Statistical Efficiency Act of 2002 P.L. 107–347, title 

V http://www.gpo.gov/fdsys/pkg/PLAW–107publ347/pdf/PLAW–107publ347.pdf; ys/pkg/FR–2007– 

06–15/pdf/E7–11542.pdf 

important research, assessment, and mineral information program activities both 

within the United States and internationally. Furthermore, the past and current 

proposed reductions to MRP funding make it more difficult to recruit and retain 

high-caliber scientists. 

d. Given the jump in China’s numbers, should we have expected to see a jump 

in resources for other areas such as in Africa and Australia? 

A1 d. No. Given the answer to the first question, there is no reason to think that 

new information about and improved understanding of the classification system 

used by the Chinese to report their mineral reserves would cause a change in reserve estimates for Africa or Australia. 

Q2. The recommendation to develop a ‘‘Principal Statistical Agency’’ (PSA) has 

sparked a debate over whether that should be housed in DOE and modeled after 

the Energy Information Agency (EIA), or housed at USGS and modeled after the 

Mineral Resources Program (MRP). One difference between DOE and USGS is 

the designation of the EIA as a PSA. USGS has stated in the past that it has 

concerns about such a designation as it may threaten the ,goodwill? it currently 

enjoys with industry contacts because a PSA designation would require companies to report to USGS, potentially hurting the existing relationship. 

a. Can you comment on the roles and potential overlaps of EIA and MRP and 

how a PSA designation for both offices would impact your efforts? 

A1 a. The EIA and the National Minerals Information Center (NMIC) of the MRP 

are both organizational units that collect, analyze, and disseminate statistical data 

and information, provide industry analysis, and conduct supply and demand forecasting. The EIA is responsible for reporting on four nonrenewable energy commodities (oil, gas, coal, uranium) and five renewable sources of energy (biofuel, solar, 

wind, hydroelectric, geothermal). The NMIC is responsible for reporting on more 

than 80 nonrenewable nonfuel mineral commodities. There is no overlap in the responsibilities of the EIA and the NMIC. 

In a 1997 Order Providing for the Confidentiality of Statistical Information, OMB 

established ‘‘a uniform policy for the principal statistical agencies’’ but appears to 

have used the term principal statistical agency informally. The Order lists twelve 

agencies under the heading ‘‘Designated Statistical Agencies or Units’’. These agencies were determined by OMB to be subject to the 1997 Order and thus obliged to 

implement certain policies on confidentiality of information (Federal Register, v. 62, 

No. 124, p. 35044–35050) 1. The Energy End Use and Integrated Statistics Division 

of the EIA is included as one of the twelve agencies or units listed in the 1997 

Order. The USGS is not one of the twelve agencies listed in the 1997 Order, nor 

is any unit within the USGS. 

The Confidentiality Information Protection and Statistical Efficiency Act of 2002 

(CIPSEA) defines a statistical agency or unit as ‘‘an agency or organizational unit 

of the executive branch whose activities are predominantly the collection, compilation, processing, or analysis of information for statistical purposes.’’ 2 OMB, which 

coordinates the implementation of CIPSEA, recognized 14 statistical organizational 

units as statistical agencies or units for the purposes of CIPSEA in its 2007 guidance on implementing the Act 3. The EIA is designated as a statistical agency or 

unit under CIPSEA. Neither the USGS as a whole, nor any part of the USGS, is 

designated as a statistical agency or unit under CIPSEA. 

The designation of an agency or unit as a statistical agency or unit for the purposes 

of CIPSEA subjects the agency to different confidentiality standards. CIPSEA statistical agencies or units must implement higher standards to protect data confidentiality than other statistical units. This involves increased physical and IT security 

measures, confidentiality training for all personnel, additional record keeping, informing respondents about the confidentiality protection and use of information, ensuring that information is used only for statistical purposes, ensuring that identifiable information is not disseminated, and supervising and controlling agents who 

have access to confidential information. 
74 

CIPSEA does not convey specific authority to an agency—including the authority to 

require companies to report to the USGS, contrary to our previous understanding. 

Rather, each agency’s authority is defined in the statutes governing that agency. For 

example, some CIPSEA statistical agencies have mandatory data collection authority. In addition, there are differences in how the agencies are funded. 

If a unit within USGS, such as the NMIC, were to be designated as a statistical 

unit under the provisions of CIPSEA, that unit would have to implement additional 

IT and administrative security measures, increase personnel training, and meet additional reporting requirements to comply with the higher confidentiality standards. 

The confidentiality of data collected by the NMIC is currently governed by subsection (f) of the National Materials and Minerals Policy, Research, and Development Act of 1980 (30 U.S.C. 1604(f)). 

b. What are the cost and implications of such a designation for USGS? 

A1 b. The USGS has not conducted an analysis of cost required to implement the 

higher confidentiality standards of statistical agency designation under CIPSEA. 

The USGS believes that such a designation would have little impact on the quantity 

and quality of data currently collected through a long-standing trust-based voluntary system and does not anticipate that such a designation would improve our 

ability to serve clients. 

Q3. Has your agency commented on any House or Senate rare earths/critical materials bills? If yes, please provide those comments. 

A3. The USGS provided testimony to the House Natural Resources Committee, 

Subcommittee on Energy and Minerals on H.R. 1314 on June 3, 2011 and to the 

Senate Energy and Natural Resources Committee on S. 383 and S. 1113 on June 

9, 2011. 

These testimonies can be found at the following links: 

• H.R. 1314: http://naturalresources.house.gov/UploadedFiles/ 

DoebrichTestimony06.03.11.pdf 

• S. 383: http://energy.senate.gov/public/—files/BurkeTestimonyS383.pdf 

• S. 1113: http://energy.senate.gov/public/—files/BurkeTestimonyS1113.pdf 

A4. In an ideal world, what provisions would you want to see in a rare earths/critical materials bill? 

Legislative authorizations that apply to mineral resource work of the USGS are 

quite old, dating back to the 1980s and earlier. Much has transpired since then and 

it would be helpful to update authorizations to reflect the current scope of work performed by the USGS Mineral Resources Program (MRP). There are two very important areas of MRP work that lack specific up-to-date authority. These are the work 

of the National Mineral Information Center (NMIC) and the environmental science 

conducted by the MRP. 

The NMIC is a function that was transferred to the MRP in 1996 from the U.S. 

Bureau of Mines (USBM) at the time of its closure. This transfer authority was provided in appropriations language only. The transfer authority should specify data 

analysis of the domestic and international supply of and demand for minerals and 

materials essential to the U.S. economy and national security. 

Specific authorization language that recognizes the importance of the mineral environmental science conducted by the MRP would be helpful. This work is key to understanding the parameters for environmentally responsible development of mineral 

resources. The MRP conducts research on the interactions of mineral resources with 

the environment, both natural and as a result of resource extraction, to better predict the degree of impact that resource development may have on human and ecosystem health. Environmental issues related to mineral resources have required research to help mitigate impact. 

Any bill related to critical minerals should clarify the roles of specific federal agencies involved in nonfuel mineral resource data collection, information dissemination, 

and research on identified and undiscovered resources. These roles and responsibilities should be consistent with the expertise that resides in such agencies. The bill 

should also ensure that there is no overlap or redundancy in effort expended on accomplishing the objectives of the bill. 

The USGS would welcome adequate and sustainable support for unbiased and objective nonfuel mineral research, assessment, and information gathering and analysis 

that it conducts. These activities are federal responsibilities that are essential for 
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informing decisions and policy related to mineral supply sustainability and land 

management of resources. 

(77) 

Appendix II 

ADDITIONAL MATERIAL FOR THE RECORD
78 

ADDITIONAL MATERIAL FOR THE RECORD

Letter submitted Dr. John P. Holdren, Director, 

Office of Science & Technology Policy (OSTP), 

in response to Representative Dan Benishek question found on page 41 
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