Advanced Technologies: Strengthened Federal Approach Needed to Help Identify and Mitigate Supply Risks for Critical Raw Materials
Published: 2016-09-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Certain metals, minerals, and other “critical” raw materials play an important role in the production of advanced technologies across a range of industrial sectors and defense applications. Recently, concentration of the supply of some critical materials under foreign control has renewed questions about the U.S. government's and industry's ability to address potential supply disruptions.
GAO was asked to examine U.S. efforts to identify and strategically plan for critical materials supply issues. Among other objectives, this report (1) describes federal agencies' activities related to the supply of critical materials and (2) evaluates the federal government's approach to addressing critical materials supply issues. GAO reviewed relevant laws, agency documents, and academic studies; interviewed federal officials; and conducted a two-stage web-based survey of a nongeneralizable sample of critical materials experts selected to cover a range of subject matter areas.
section_title: What GAO Found
paragraphs: Federal agencies are primarily focused on two areas of activity related to critical materials supply—assessing risk and supporting research. For example, the Department of Energy (DOE) has conducted two criticality assessments on materials important to clean energy applications and manages the Critical Materials Institute—a 5-year, $120 million investment aimed at mitigating risks by diversifying supply, providing alternatives to existing materials, and improving recycling and reuse. In addition, agencies conduct a range of other critical materials related activities, including stockpiling or producing materials, and reviewing and approving resource extraction projects, among other efforts.
The federal approach to addressing critical materials supply has areas of strength but is not consistent with selected key practices for interagency collaboration and faces other limitations, as shown below.
According to its charter, the Subcommittee on Critical and Strategic Mineral Supply Chains (Subcommittee)—co-chaired by the Office of Science and Technology Policy (OSTP), DOE, and the Department of the Interior—is to facilitate a strong, coordinated effort across its member agencies on critical materials activities. However, the Subcommittee's efforts have not been consistent with selected key practices for interagency collaboration, including agreeing on roles and responsibilities; establishing mutually reinforcing or joint strategies; and developing mechanisms to monitor, evaluate, and report on results. For example, some member agencies do not have a clear role in the Subcommittee's efforts and have had limited or no involvement in its work. By taking steps to actively engage all member agencies in its efforts and clearly define roles and responsibilities, the Subcommittee would have more reasonable assurance that it can effectively marshal the potential contributions of all member agencies to help identify and mitigate critical materials supply risks.
Other limitations to the federal approach to addressing critical materials supply include limited engagement with industry and a limited focus on domestic production. For example, the Department of Commerce (Commerce) is required by law to identify and assess cases of materials needs. However, Commerce does not solicit information from stakeholders across a range of industrial sectors. As a result, Commerce may not have comprehensive, current information across a range of industrial sectors to help it identify and assess materials needs.
section_title: What GAO Recommends
paragraphs: GAO is making six recommendations, including that OSTP take steps to improve interagency collaboration by, for example, defining Subcommittee member roles and responsibilities and that Commerce engage with stakeholders to continually identify and assess critical materials needs across industrial sectors. Commerce agreed. OSTP agreed with one and neither agreed nor disagreed with the other four recommendations but discussed how roles and responsibilities are defined, among other things. GAO continues to believe these steps are needed, as discussed in the report.

section_title: Letter
paragraphs: Many advanced technologies rely on certain metals, minerals, or other  “critical” raw materials for their production. In some cases, specific  materials are important to advanced technologies because of their unique  chemical and physical properties. For example, the rare earth materials  neodymium and dysprosium are used in the manufacture of permanent  magnets, which are used in automotive motors, wind turbines, and a  variety of other applications because of their unique properties, such as  magnetism at high temperatures. For some critical materials, a majority  of the global supply is produced by a few suppliers, in a single country, or  comes from a region that is vulnerable to geopolitical unrest. For  example, as we previously reported, China produces most of the world’s  supply of rare earth materials, which are used in cell phones, computer  hard drives, precision-guided munitions, and a variety of other  commercial and military applications. In 2010, China tightened its export  restrictions on rare earth materials and a rapid price increase followed.  According to a 2013 Congressional Research Service report, from April  2010 to July 2011, the prices of dysprosium and neodymium rose from  $250 per kilogram to $2,840 per kilogram and from $42 per kilogram to  $334 per kilogram, respectively. This price volatility highlighted U.S.  dependence on China for these materials and the potential supply risks  for U.S. defense and economic interests. Moreover, limitations on the  availability of critical materials to U.S. companies at acceptable prices  have the potential to affect the development of emerging advanced  technologies and the industrial sectors that produce them.
A stable supply of critical materials has long been recognized as an  important U.S. issue. In 1980, Congress passed the National Materials  and Minerals Policy, Research and Development Act (1980 Act), citing  the lack of a coherent national materials policy and a need for a  coordinated program to ensure the availability of materials critical for  national economic well-being, defense, and industrial production. In  recent years, the concentration of the supply of some critical materials  under foreign control has renewed questions about the U.S. government’s  and industry’s ability to address potential critical materials supply  disruptions. In 2010, the National Science and Technology Council’s  (NSTC) Committee on Environment, Natural Resources, and  Sustainability chartered the Subcommittee on Critical and Strategic  Mineral Supply Chains (Subcommittee) to provide advice and assistance  on policies, plans, and procedures for mitigating mineral risks. In  addition, a number of bills have been introduced in the 113th and 114th  Congresses that seek to address critical material supply issues through a  variety of proposals, such as streamlining mine permitting in the United  States, increasing critical materials data collection, and conducting  research on material substitution and recycling.
You asked us to examine the status and comparative strength of U.S.  efforts to identify and strategically plan to address critical materials supply  issues. This report (1) describes federal agencies’ activities related to the  supply of critical materials; (2) describes the approaches of selected  countries and regions to address critical materials supply issues; and (3)  evaluates the federal government’s approach, such as coordination of  activities, to addressing critical materials supply issues.
For our first and third objectives, we reviewed critical materials-related  laws, such as the 1980 Act and a law related to the Department of  Defense’s stockpiling of materials, regulations, industry reports, and  academic studies. To describe federal agencies’ activities related to the  supply of critical materials, we contacted the 20 federal departments and  agencies (referred to collectively as agencies) and Executive Office of the  President organizations that are designated as members of the  Subcommittee. These agencies and organizations are the Departments of  Agriculture (USDA), Commerce (Commerce), Defense (DOD), Education  (Education), Energy (DOE), Homeland Security (DHS), the Interior  (Interior), Justice (Justice), Labor (Labor), State (State), and the Treasury  (Treasury) as well as the Environmental Protection Agency (EPA),  National Aeronautics and Space Administration (NASA), National Science  Foundation (NSF), Council on Environmental Quality (CEQ), National  Economic Council (NEC), National Security Council (NSC), Office of  Management and Budget (OMB), Office of Science and Technology  Policy (OSTP), and Office of the U.S. Trade Representative (USTR). We  interviewed and obtained reports and analyses from officials from those  agencies as appropriate. We also interviewed officials from a federal  agency that was not designated as a member of the Subcommittee—the  Department of Health and Human Services’ (HHS) National Institutes of  Health (NIH)—about its role in activities related to the supply of critical  materials, as it relies on rare gases, for example, for research and  medical applications.
To describe the approaches of selected countries and regions to address  critical materials supply issues, we interviewed officials across  government, academia, and industry from the European Union (EU),  Japan, and Canada. We selected the EU, Japan, and Canada based on  the efforts they have under way to address critical materials supply risks  and our ability to collect information about those efforts.
To evaluate the federal government’s approach to addressing critical  materials supply issues, we developed and disseminated a two-stage,  web-based survey to a nongeneralizable sample of 46 critical materials  experts. We selected these experts to ensure coverage of a variety of  types of organizations, including industry, industry associations,  academia, and government. We also selected these experts with  expertise across a range of critical materials-related subject matter areas,  including materials science, industrial ecology, mining and raw materials,  markets and trade policy, supply chain management, and workforce  issues. We conducted the survey in two rounds. The first round of the  survey asked the experts to respond to five open-ended questions about  the primary strengths and weaknesses of the U.S. federal government’s  policies and activities related to critical materials and challenges and  options for improving these efforts. We conducted the first round of the  survey in September and October 2015 and received responses from 33  of the 46 experts. We analyzed the responses provided by the experts in  the first round and developed closed-ended questions for the second  round of the survey, in which we asked each expert to rate the ideas and  other information that came from the first round of the survey. We  conducted the second round in February and March 2016 and received  responses from 36 of the 46 experts. In addition, we interviewed officials  in OSTP and other agencies that are members of the Subcommittee to  obtain additional information on the federal approach, including efforts to  coordinate federal activities across agencies. To evaluate the federal  approach, including coordination, we compared federal efforts against the  national policy outlined in the 1980 Act and selected key practices for  interagency collaboration. We selected the key practices based on which  of the practices were most relevant to the operations of the  Subcommittee. Additional information on our methodology and the  experts who participated in our survey is found in appendix I.
We conducted this performance audit from March 2015 to September  2016 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: This section provides an overview of material criticality and federal  agencies’ critical materials roles.
subsections: section_title: Material Criticality
paragraphs: There is no single federal government-wide definition or list of what  constitutes a critical material and different assessments have  demonstrated that there are a wide variety of materials that are critical to  U.S. economic and national security interests. In a 2008 study on critical  minerals, the National Academies of Sciences, Engineering, and  Medicine’s Committee on Critical Mineral Impacts on the U.S. Economy  developed a matrix to assess the criticality of a given mineral (see fig. 1).  The horizontal axis represents the availability and reliability of the mineral  supply (supply risk), and the vertical axis represents the importance of the  mineral (impact of supply restriction). The degree of criticality increases  from the lower-left to the upper-right corner of the figure, such that  mineral A is considered more critical than mineral B.
A determination that a mineral or other type of material is critical is  generally based on some measure of the material’s importance,  combined with a measure of the supply risk for the material. Supply risks  include potential physical interruptions in the supply chain, market  imbalances, and government interventions. For example, see the  following:
Physical disruptions in the supply chain may include war or natural  disasters.
Market imbalances may include oligopoly market power or inability to  adjust supply quickly in response to changes in demand.
Government interventions may include export bans or restrictions on  mining for environmental considerations.
Vulnerability to potential supply disruption varies depending on the  importance of the material in question and other factors, such as the  extent to which acceptable substitute materials are available and the  extent to which supply of a critical material can be adjusted quickly in  response to changes in demand. For materials that are extracted as  coproducts or by-products of other mining operations, increased demand  may not cause mining companies to produce more of them without  additional sustained demand for their primary products. For example,  according to a journal article, ruthenium is obtained almost entirely as a  by-product of platinum production. In late 2006, demand for ruthenium  expanded rapidly, in part, because of its increased use in hard disk  drives. However, the supply of ruthenium did not respond to this  increased demand, and the price of ruthenium rose rapidly to $870 per  troy ounce by mid-February 2007, a ninefold increase from the previous  year and a 29-fold increase from a low point in 2003.
The materials supply chain in figure 2 shows the steps by which materials  are extracted from mines, processed, transformed into semifinished  components, and incorporated into end-use applications. The supply  chain also shows the potential for recycling and reusing materials from  finished applications, although materials can be reclaimed at any stage of  the supply chain.
section_title: Federal Agencies’ Critical Materials Roles
paragraphs: There are a variety of ways in which federal agencies’ activities intersect  with critical materials supply issues. For example, the federal government  relies on advanced technologies in which critical materials may be used  to support DOD’s national defense mission. DOD is responsible for  determining which materials are strategic and critical for national defense  and acquiring those materials. In addition, DOE, in support of its mission  of ensuring the United States’ security and prosperity by addressing its  energy, environmental, and nuclear challenges through transformative  science and technology solutions, is focused on the supply of critical  materials given the importance of such materials to certain energy and  nuclear security technologies. The federal government may also affect  the development of critical materials resources through its land  management and regulatory activities. For example, the Department of  the Interior’s Bureau of Land Management (BLM) manages approximately  950 million acres of the nation’s land, including subsurface acres, and has  a role in reviewing and approving resource extraction projects on this  land.
The 1980 Act establishes a national policy of promoting 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 among resource production, energy use, a healthy  environment, natural resources conservation, and social needs. The 1980  Act generally does not ascribe desired outcomes and responsibility for  critical materials activities to individual agencies. However, the act does  require the Secretary of Commerce, in consultation with other agencies,  to continually identify and assess material needs cases to ensure an  adequate and stable supply of materials to meet national security,  economic well-being, and industrial production needs. The act also  charges the President, through the Executive Office of the President, with  coordinating federal departments and agencies to undertake a variety of  activities to implement this policy, including establishing early warning systems for materials supply problems; promoting a vigorous, comprehensive, and coordinated program of  materials research and development; encouraging federal agencies to facilitate availability and development  of domestic resources to meet critical materials needs; providing for improved collection, analysis, and dissemination of  scientific, technical, and economic materials information and data  from federal, state, and local governments and other sources as  appropriate; and assessing federal policies that adversely or positively affect all stages  of the materials cycle, from exploration to final product recycling and  disposal.
The Subcommittee was organized as an interagency working group to  help understand the issues that surround the production and use of  critical materials, and to focus the government’s resources on mitigation  of critical materials supply risks. The Subcommittee, initially chartered in  2010, was rechartered in April 2016. According to its charter, the  Subcommittee is to facilitate a strong, coordinated effort across federal  agencies to identify and address important policy implications arising from  critical and strategic mineral supply issues. The charter identifies the  following federal agencies and Executive Office of the President  organizations as members of the Subcommittee.
Federal agencies  Department of Agriculture  Department of Commerce  Department of Defense  Department of Education  Department of Energy (co-chair)  Department of Homeland Security  Department of the Interior (co-chair)  Department of Justice  Department of Labor  Department of State  Department of the Treasury  Environmental Protection Agency  National Aeronautics and Space Administration  National Science Foundation  Executive Office of the President organizations  Council on Environmental Quality  National Economic Council  National Security Council  Office of Management and Budget  Office of Science and Technology Policy (co-chair)  Office of the U.S. Trade Representative  Although the Subcommittee was not chartered to implement the 1980 Act,  many of the functions identified in its charter are similar to policies  outlined in the act. Examples of functions identified by the Subcommittee  charter that are similar to policies in the act include  implementing and, as necessary, updating the methodology  developed cooperatively by Subcommittee member agencies for  dynamically assessing mineral criticality and for signaling emerging  critical or strategic minerals;  reviewing and analyzing domestic and global policies that affect the  supply of critical and strategic minerals, assessing their implications  on U.S. manufacturing, and evaluating potential strategies for risk  mitigation, as needed;  identifying cross-agency opportunities in research and development  and in education and training for addressing critical and strategic  minerals across the life cycle spectrum, including extraction,  processing, and recycling; and  considering and offering recommendations for enhanced U.S.  minerals data collection and economic analysis.
The Subcommittee meets several times per year at varying intervals,  according to OSTP officials. Subcommittee meeting agendas are  developed by the co-chairs with input from member agencies. According  to OSTP and DOE officials, agency participation on the Subcommittee is  voluntary.
section_title: Federal Agencies Primarily Focus on Risk Assessment and Research but Also Conduct a Range of Other Activities Related to Critical Materials Supply
paragraphs: Federal agencies are primarily focused on two areas of activity related to  critical materials supply—assessing risk and supporting research—in  addition to conducting a range of other activities. Agencies’ other critical  materials activities include stockpiling or producing materials and  reviewing and approving resource extraction projects, among other  efforts.
subsections: section_title: Federal Activities Related to Critical Materials Supply Are Primarily Focused on Assessing Risk and Supporting Research
paragraphs: Agencies’ critical materials supply activities focus on two primary areas— assessing risk and supporting research.
subsections: section_title: Assessing Risk
paragraphs: Federal agencies engage in a variety of activities to identify and assess  risks related to critical materials supply. These activities include collecting  and disseminating information on material supply and demand,  conducting targeted analyses of specific sectors, and conducting broader  assessments to determine which materials are critical for the U.S.  economy or security. Commerce, DOD, DOE, DHS, Interior, and NASA  conduct activities to identify and assess critical materials supply risk, as  shown in figure 3.
The following federal agencies conduct activities to identify and assess  critical materials supply risk:  Interior. Interior’s U.S. Geological Survey’s (USGS) National Minerals  Information Center develops and provides statistics and information  on the worldwide production, consumption, and flow of minerals and  materials essential to the United States economy and national  security. The center, established in 1996 under USGS upon the  dissolution of the U.S. Bureau of Mines, produces a number of  reports, including the annual Minerals Yearbook and the Mineral  Commodity Summaries. The Minerals Yearbook is an annual  publication that provides statistical data on approximately 90  commodities. It also includes data from over 175 countries on mineral  production and trade, among other things. The Mineral Commodity  Summaries is based on the data reported in the yearbook and  includes data over a 5-year period. The annual summary includes  similar historical data as reported in the Minerals Yearbook, as well as  production estimates from the current reporting year. Interior’s BLM  also collects information related to mineral resources. Although BLM  generally relies on data provided by USGS, it periodically issues  mineral potential reports to assess the mineral resource occurrence  and development potential on land related to particular mining  applications or projects. For example, in 2012 BLM issued an  assessment of the mineral potential of public lands located within a  proposed solar energy zone in New Mexico. As part of the  assessment, BLM evaluated whether certain minerals produced in  New Mexico and that are classified as strategic and critical minerals  for national defense purposes, including bismuth, copper, fluorspar,  manganese, tungsten, vanadium, and zinc, were found within the  proposed solar energy zone.
DOE. As part of its efforts to advance a clean energy economy, DOE  conducted two criticality assessments on materials important to clean  energy applications, such as wind turbines, electric vehicles,  photovoltaic cells, and fluorescent lighting. DOE’s first assessment,  published in a 2010 Critical Materials Strategy, evaluated 14 materials  and identified 10, including 7 rare earth materials, as critical or near  critical over the short or medium terms. DOE’s second assessment,  published in a 2011 Critical Materials Strategy, assessed 16 materials  and identified 10 of them as critical or near critical over the short or  medium terms. As part of its 2015 Quadrennial Technology Review,  DOE also published a critical materials technology assessment that  reported on major trends driving future material criticality for selected  clean energy applications. Additionally, DOE manages the Isotope  Development and Production for Research and Applications program  (Isotope Program) through which it produces and distributes  radioactive and stable isotopes that are in short supply but are critical  for either federal government or U.S. commercial use. As part of the  Isotope Program, DOE has a process to identify high-priority isotopes  by monitoring long-term changes in demand within the isotope  community that could affect isotope availability.
DOD. Three DOD organizations have related responsibilities for  managing risks from DOD’s use of “critical” and “strategic and critical”  materials: the Defense Logistics Agency-Strategic Materials (DLA- Strategic Materials), the Office of the Deputy Assistant Secretary of  Defense for Manufacturing and Industrial Base Policy, and the  Strategic Materials Protection Board. DOD periodically issues two  reports analyzing critical materials for defense needs according to  statutory definitions of “critical” and “strategic and critical” materials.  The Annual Industrial Capabilities Report to Congress provides  analyses of sectors of the defense industrial base, such as aircraft  and ground vehicles. The biennial Strategic and Critical Materials  Report on Stockpile Requirements summarizes DLA-Strategic  Materials’ analyses of materials for the National Defense Stockpile.  According to DLA-Strategic Materials officials and an official with  DOE’s Oak Ridge National Laboratory, DLA-Strategic Materials also  collaborated with DOE’s Oak Ridge National Laboratory and a private  company to develop the Strategic Material Analysis and Reporting  Topography software tool, which is a computer-based supply chain  mapping tool that can visually represent the supply chain for any  number of materials.
Commerce. The department’s Bureau of Industry and Security is  responsible for analyzing the capabilities of the U.S. industrial base to  support national defense. The bureau conducted a strategic materials  survey to evaluate the supply chains associated with several materials  considered important to defense programs and systems. The resulting  data set and report are intended to assist DOD in developing planning  and acquisition strategies designed to ensure the availability of  materials critical to defense missions. In addition to its work  supporting DOD, Commerce’s International Trade Administration  (ITA) convened two roundtables of industry and government  participants to gather information on critical materials issues that may  affect U.S. manufacturers and the competitiveness of U.S. industry.  ITA’s Office of Materials Industries hosted the first roundtable in 2009  to discuss issues related to access to rare earth materials that could  affect important end uses, such as clean energy technologies. ITA  convened the second roundtable in 2012, in cooperation with the  Subcommittee, to identify the materials, technologies, and supply  chains that should be prioritized to develop an interagency  assessment of critical minerals.
DHS. Under the Critical Foreign Dependency Initiative, DHS identifies  critical foreign infrastructure that, if disrupted, could significantly affect  U.S. public health, economic vitality, industrial capability, or security.  The initiative is a collaborative effort co-led by DHS and State, with  other relevant agencies. According to a DHS official, such  infrastructure can include mines or other production facilities that are  foreign sources of critical materials, as determined by an interagency  process. This assessment process involves both public and private  sector partners responsible for critical infrastructure and key  resources. Also, the DHS Science and Technology Directorate funded  academic research examining the extent to which critical chemicals in  the U.S. supply chain are being produced in foreign countries.
NASA. Agency officials stated that NASA is analyzing its supply  chains for materials that it deems essential to its mission. According to  a 2012 presentation on its approach to critical materials management,  NASA’s research and evaluation efforts target applied challenges in  support of spaceflight, planetary and earth exploration, and  aeronautics/aviation. NASA officials stated that many of the materials  that the agency relies on are commonly used by both NASA and DOD  and can include elements such as tungsten, chromium, and nickel  that are used in making alloys. In the view of one NASA official we  spoke with, these actions are aligned with the 2010 National Space  Policy, which called for agencies to engage with industrial partners to  improve processes and effectively manage supply chains, among  other things.
In addition to these six agencies’ efforts, the Subcommittee has also  coordinated an interagency effort to develop a methodology to identify  potentially critical materials for the U.S. economy or security, which it has  described as an early warning screening. OSTP, DOE, and Interior’s  USGS, through their participation as co-chairs of the Subcommittee, have  led the effort to develop the early warning screening, with other  Subcommittee members providing key input. In March 2016, the  Subcommittee published a criticality assessment in which it reported on  its progress in developing a screening methodology for critical minerals  and the results of the initial application of this methodology. The  methodology described in the Subcommittee’s report is the first step in a  two-stage process to identify which minerals pose a risk of becoming  critical. The Subcommittee screened 78 mineral resources using its  methodology and identified 17 minerals as potentially critical. According  to the March 2016 report, the next steps for the second stage of the  process include (1) developing a prioritized list of a subset of the 17  potentially critical minerals for in-depth investigation, (2) developing  individual project plans for those minerals for further study, and (3)  carrying out the targeted studies in the next annual cycle.
section_title: Supporting Research
paragraphs: Federal agencies support research that encompasses a range of  approaches to address critical materials supply issues, including projects  to (1) discover or develop substitutes that can duplicate the unique  properties of critical materials, (2) develop new approaches or  technologies that minimize the use of critical materials, and (3) develop  new approaches or technologies to increase the efficiency of domestic  production of critical materials or enable the recycling of specific  materials. Figure 4 shows federal activities related to critical materials  research.
The following federal agencies support research related to critical  materials supply:
DOE. The Critical Materials Institute (CMI), based at DOE’s Ames  Laboratory in Iowa, is a 5-year, $120 million public-private  partnership, with partners from other national laboratories,  universities, and industry. CMI began operations in June 2013, and its  mission is to help ensure supply chains of materials critical to clean  energy technologies (see sidebar).
CMI’s research efforts focus on diversifying the supply of materials,  developing substitute materials, and improving the efficiency of  material use and reducing waste, among other efforts. DOE officials  told us that CMI collaborates informally with other DOE offices with  efforts related to critical materials research. For example, CMI  collaborated with DOE’s Advanced Research Projects Agency- Energy, which awarded $40.8 million to 14 projects in the Rare Earth  Alternatives in Critical Technologies program to support early stage  development of rare earth-free magnetic materials, novel motor  designs that reduce or eliminate the need for rare earth materials, and  High Temperature Superconductor wires for large-scale wind  generators with no rare earth magnets. Another example DOE  officials cited was collaboration with the DOE Office of Fossil Energy’s  National Energy Technology Laboratory to fund research on the  recovery of rare earth elements from coal and coal by-products.
According to the Department of Energy, as of  May 1, 2016, Critical Materials Institute (CMI)  research projects have resulted in 42 invention  disclosures, 17 patent applications and 1  licensed technology. One example is the  development of a membrane solvent extraction  system that aids in the recycling, recovery, and  extraction of rare earth materials. The system  was developed by researchers at Oak Ridge  and Idaho National Laboratories and has been  licensed to a U.S. company. According to CMI  researchers, the recycling of critical materials  from electronic waste has been limited by  processing technologies that are inefficient,  costly, and environmentally hazardous. The  researchers report that this new simplified  process, shown in the figure above, eliminates  many of these limitations. The technology uses  a combination of hollow fiber membranes,  organic solvents, and neutral extractants to  selectively recover rare earth elements such as  neodymium, dysprosium, and praseodymium.  In laboratory testing, the membrane extraction  system demonstrated the potential to recover  more than 90 percent of neodymium,  dysprosium, and praseodymium in a highly  pure form from scrap neodymium-based  magnets. The licensing company has indicated  that it intends to apply the technology to  recover rare earth elements from old  electronics and from its mining claims in the  United States.
DOD. DOD funds critical materials research both through component  agencies that support the entire department and through the Army,  Navy, and Air Force research organizations. DOD’s research  approach to mitigating the risk associated with the supply of critical  materials used in weapon components has varied, but according to  officials, critical materials have been studied as part of meeting  mission requirements to increase performance and capabilities and to  reduce costs of DOD technologies. For example, the Army Research  Laboratory collaborated with academic and industrial partners to  explore how to resolve the technical barriers to achieving a reliable  domestic supply chain for certain rare earth materials.
NSF. In fiscal year 2013, NSF started an initiative to encourage and  foster research in sustainable chemistry, engineering, and materials to  address the interrelated challenges of sustainable supply,  engineering, production, and use of chemicals and materials.  Examples of research topics in this area include replacing rare,  expensive, or toxic materials with earth-abundant, inexpensive, and  benign materials; discovering new techniques to facilitate recycling  and producing valuable materials; and developing and characterizing  low cost, sustainable, and scalable-manufactured materials with  improved properties. NSF also supports the Center for Resource  Recovery and Recycling, which addresses challenges related to  materials recovery and recycling. Researchers from the center  developed a method of extracting rare earth elements from drive units  and motors of discarded electric and hybrid vehicles. The goal of that  work is to recycle rare earth materials that would otherwise be lost  and create an alternative source of these materials.
Interior. The department’s USGS supports research on nonfuel  mineral resources. According to a senior USGS official, a priority area  in this research is identifying and characterizing critical mineral  resources through activities such as mineral resource assessments,  mineral deposit models, and remote sensing exploration techniques.  According to the official, the focus of these activities is on domestic  mineral resources.
section_title: Agencies Conduct a Range of Other Activities Related to Critical Materials Supply
paragraphs: In addition to activities in the primary areas described above, federal  agencies conduct a wide range of other activities related to the supply of  critical materials.
Addressing trade issues. USTR plays a key role in the federal  government’s efforts to address trade issues. While USTR does not  have a specific program or focus area related to critical materials, the  agency has worked, in collaboration with other federal agencies and  international partners, to address trade issues affecting materials that  are critical for a range of industries. For example, USTR led the  federal government’s World Trade Organization (WTO) dispute  against China’s export restrictions on rare earth materials, tungsten,  and molybdenum, resulting in a finding that the export restrictions  were inconsistent with China’s WTO obligations, and continues to  monitor China’s actions to ensure compliance with the WTO  decision. According to USTR officials, the agency also engages in  activities to create more transparency about export restraints, such as  maintaining ongoing trade dialogues on raw materials and working  with other countries within the Organisation for Economic Co- operation and Development to create an inventory of trade restrictions  related to raw materials and energy. In addition to USTR’s efforts,  the Subcommittee has also played a role in addressing trade issues.  For example, in 2013 the Subcommittee requested changes to the  Harmonized Tariff Schedule of the United States that according to  OSTP officials, provided more granular data on U.S. imports of rare  earth materials, among other changes. Similarly, in 2014 the  Subcommittee submitted a request for additional changes to the  Harmonized Tariff Schedule to provide more granular data on U.S.  imports of permanent magnets, among other changes.
Coordinating internationally. Federal agencies have coordinated  with international partners on critical materials issues through different  forums. For example, the EU-US-Japan Trilateral Conference on  Critical Materials—which is jointly organized by the European  Commission; DOE; and the Japanese Ministry of Economy, Trade,  and Industry (METI)—has taken place for 5 consecutive years to  exchange information on recent developments in critical materials  research and development. According to a DOE official, the first few  conferences began with high-level policy discussions, but they have  become focused more on researcher-to-researcher exchanges about  technology efforts. Another example is the Transatlantic Economic  Council, which, in 2011, agreed to launch a cooperative platform on  raw materials focusing on five areas: (1) trade cooperation; (2) raw  materials data, flows, and information sharing; (3) resource efficiency  and recycling; (4) research and development on raw material  substitution and reduction; and (5) waste shipment. According to a  State Department official, individual federal agencies have led U.S.  efforts in each focus area based on their individual missions. For  example, USTR led efforts in trade cooperation; USGS led efforts in  raw materials data; and DOE led efforts in research and development  and recycling, with EPA’s assistance on recycling. Other examples of  international coordination that were described to us by federal agency  officials include annual reviews of strategic stockpile issues between  the United States, Japan, and the Republic of Korea, and U.S.  participation in the G7 Alliance on Resource Efficiency.
Reviewing and approving mining projects. BLM and the U.S.
Forest Service oversee the extraction of minerals on federal land.  BLM and Forest Service officials said that their agencies do not  consider mineral criticality in their administration of mining projects.  When a mining operator submits a plan for a new mine on federal  land, either BLM or the Forest Service analyzes the potential impact  of the proposed mine on the environment, human health, and cultural  resources by conducting an analysis under the National  Environmental Policy Act. The National Environmental Policy Act  requires federal agencies to evaluate the likely environmental effects  of a proposed project using an environmental assessment or, if the  project is likely to significantly affect the environment, a more detailed  environmental impact statement. From fiscal years 2010 through  2014, BLM and the Forest Service approved 68 hardrock mine plans,  2 of which were for materials that have been identified as critical by  DOD—magnesium and manganese.
Stockpiling or producing materials. DLA-Strategic Materials is  responsible for storing select materials in the National Defense  Stockpile to mitigate potential shortages based on certain national  emergency planning assumptions. Based on the biennial analyses  described previously, DLA-Strategic Materials makes  recommendations to acquire specific forms and amounts of materials  and then maintains these materials in the stockpile. Additionally, in  2005, DOD invested in a public-private partnership with the leading  U.S. beryllium producer to build a new $90.4 million primary beryllium  facility in Ohio to ensure current and future availability of high-quality  domestic beryllium to meet critical defense needs. The federal  government has also been extensively involved in the production,  storage, and use of helium since the early part of the 20th century.  BLM is responsible for managing the federal helium program,  including an underground reservoir for the storage of federally and  privately owned helium. The reserve provides a supply of federal  helium to such agencies as DOD, DOE, and NASA that rely on the  rare gas for research and medical and national defense  applications. Further, under DOE’s Isotope Program, DOE produces  and distributes radioactive and stable isotopes in short supply for  commercial or federal needs. According to DOE officials, the federal  government is uniquely suited to produce certain isotopes as  production may require recycled or reused national security-related  source materials, big accelerators, and research facilities that are only  available within the federal government, or it is not profitable for  industry to provide the small amounts of isotopes needed for research  applications.
Promoting technical education and workforce development.
DOE’s CMI offers a variety of educational opportunities through  several partners, including the Colorado School of Mines, Iowa State  University, and the University of Tennessee, Knoxville. For example,  in November 2015, CMI announced the development of a three-credit  on-line course, offered through Iowa State University for the 2016  spring semester, focused on rare earth materials. According to CMI’s  announcement, the course covers a wide range of topics related to  rare earth materials, including extraction, separation, preparation and  purification; properties related to these materials; and other topics.  Additionally, students at the University of Tennessee, Knoxville, have  been evaluating conceptual processes for recovery of rare earths from  unconventional resources. CMI also provides science and engineering  outreach to elementary and high school students through its  partnership with the Colorado School of Mines. As described above,  NSF supports critical materials research. According to NSF’s research  proposal and award policies and procedures guidance, one of the  strategic objectives in support of NSF’s mission is to foster integration  of research and education through the programs, projects, and  activities it supports at NSF awardee organizations. NSF supports  development of a strong science, technology, engineering, and  mathematics (STEM) workforce by investing in building the knowledge  that informs improvements in STEM teaching and learning. NSF  expects research proposals to discuss the broader impacts of  proposed activities, such as improved STEM education and educator  development, and development of a diverse, globally competitive  STEM workforce.
Recycling and sustainable materials management. Through its  Sustainable Materials Management program, EPA engages with  public and private stakeholders to advance the productive and  sustainable use of materials across their life cycles. According to EPA  officials, the agency is in a unique position to lead in the effort of  getting industry involved in addressing critical materials consumption.  In 2009, EPA published a report outlining measures it could take to  promote efforts to manage materials and products on a life cycle basis  with a goal of sustainable materials use. Additionally, EPA co- chaired an interagency task force on electronics stewardship, which  produced a 2011 National Strategy for Electronics Stewardship that  included goals and recommendations, among other things, to improve  the ability to recover and market valuable materials from used  electronics, especially precious metals and rare earth materials.
Supporting commercialization of new technologies. The National  Institute of Standards and Technology provides support for industrial  adoption of rare earth materials substitutes by providing material  measurement science and developing data and models. For example,  the institute provides standard reference materials that measure the  intensity of magnetism that can be induced by magnetic fields, which  is of interest to the permanent magnet industry—a major user of rare  earth materials. Additionally, the Materials Genome Initiative—under  the National Science and Technology Council’s Subcommittee on the  Materials Genome Initiative—is a multiagency initiative designed to  discover, develop, and manufacture the next generation of materials  to meet national needs.
section_title: The EU and Japan Collaborate with Stakeholders across a Wide Range of Industrial Sectors, and Canada Focuses on Resource Production
paragraphs: The EU, Japan, and Canada have different approaches to address critical  materials supply issues. According to the EU policy documents that we  reviewed, the EU has a collaborative, economy-wide approach that  incorporates sustainability. According to the government officials that we  interviewed, Japan’s approach focuses on securing access to foreign  sources and conducting materials science research to bolster industrial  competitiveness. According to government reports that we reviewed,  Canada encourages resource production by providing tax incentives and  improving the efficiency of regulatory reviews.
subsections: section_title: The EU Has a Collaborative, Economy- Wide Approach That Incorporates Sustainability
paragraphs: The EU has developed a collaborative, economy-wide approach to  addressing the supply of critical materials that incorporates a focus on  developing a more sustainable and resource-efficient economy. The EU’s  Raw Materials Initiative, which was outlined by the European Commission  in its 2008 communication to the European Parliament and Council, has  three pillars: (1) ensure access to raw materials from international  markets under the same conditions as other industrial competitors, (2) set  the right framework conditions within the EU in order to foster a  sustainable supply of raw materials from European sources, and (3) boost  overall resource efficiency and promote recycling to reduce the EU’s  consumption of primary raw materials and decrease the relative import  dependence. The Raw Materials Initiative is implemented, in part,  through the European Innovation Partnership on Raw Materials  (Partnership)—a stakeholder platform that brings together EU countries,  companies, researchers, and nongovernmental organizations to promote  innovation in the raw materials sector. According to EU officials, the  Partnership has defined 95 actions to be carried out both within the EU  and internationally, in order to secure the EU supply of raw materials via  innovation. In 2014, an independent expert group studied the Partnership  model and found that it has been a useful vehicle in bringing partners  together with a view to align priorities, leverage investments, and form  future partnerships. The group’s report stated that European innovation  partnerships have generally been good in ensuring extensive participation  of all relevant stakeholders, and they have also created effective  channels for the interested actors to become engaged in the partnerships,  including through invitations for commitments. Figure 5 shows key  information about the Partnership.
According to EU officials, the majority of the Partnership’s priorities have  been reflected in Horizon 2020, the EU research and development  funding program for 2014 to 2020. Horizon 2020 has several broad  pillars, one of which is climate action, environment, resource efficiency,  and raw materials. According to a European industry association we  interviewed, an example of efforts in this area involves trying to find ways  to provide more supply for raw materials from the EU. Association officials  told us that mining ventures tend to raise significant social opposition,  which can diminish potential for getting projects under way. According to  the officials, this aspect of the Horizon 2020 program tries to take a social  approach to mining by using advanced technology to help address social  opposition. This focus on public awareness is also an action area outlined  in the Partnership’s 2013 Strategic Implementation Plan. The action area  is mostly industry led but is also supported by concerned stakeholders— communities, institutions, and regulatory bodies—at all levels. It aims to  first increase public awareness of the benefits and potential costs of raw  materials supply and then gain public acceptance and trust by improved  communication and transparency, notably during the permitting process  and the production cycle (i.e., exploration, mine operation, and after  mining).
The Partnership states that it will play an important role in meeting the  objectives of Resource Efficient Europe—an initiative under the Europe  2020 strategy that supports the shift toward a resource-efficient, low- carbon economy to achieve sustainable growth—by ensuring the  sustainable supply of raw materials to the European economy. This  illustrates the connection within EU policy between the criticality of certain  raw materials and the goal of shifting towards a more resource-efficient  economy and sustainable development. This connection is also evident in  the second and third pillars of the Raw Materials Initiative, listed above,  which focus on sustainability and recycling. As stated in the European  Commission’s 2008 communication on the raw materials initiative, the EU  views boosting overall resource efficiency as a key part of a path toward a  secure supply of raw materials.
The Raw Materials Initiative also called for the EU to identify a common  list of critical raw materials for the EU’s economy. To develop this list of  critical raw materials, the EU set up the Ad-Hoc Working Group on  Defining Critical Raw Materials, which comprises experts across  government, industry, and academia, as described in the Working  Group’s 2010 report. The European Commission, with the Ad-Hoc  Working Group, published its first criticality analysis for raw materials in  2010. In that analysis, 14 critical raw materials were identified from a  candidate list of 41 nonenergy, nonagricultural materials. In 2013, the  commission and the working group, in cooperation with a group of  researchers, updated this work and analyzed 54 nonenergy,  nonagricultural materials, identifying 20 of them as critical raw materials.  EU officials we interviewed stated that they believe that the list of critical  materials is useful for prioritizing and identifying relevant research, raising  awareness, fostering trade negotiations, and communicating with  stakeholders, such as trade and industry groups. According to the  officials, the list is also used to incentivize the European production of  critical raw materials and facilitate the launching of new mining and  recycling activities.
In addition to the Ad-Hoc Working Group on Defining Critical Raw  Materials, which conducts official criticality analyses, there are a number  of stakeholder organizations in the EU and in EU member states that  support collaboration between industry, government and academia.  Examples include the European Institute of Innovation and Technology  Knowledge and Innovation Community on Raw Materials and a future  Expert Network on Critical Raw Materials, which will be launched under  Horizon 2020 by the European Commission.
section_title: Japan Focuses on Securing Access to Foreign Sources and Conducting Materials Science Research to Bolster Industrial Competitiveness
paragraphs: According to a report on the raw materials strategies of industrialized  countries, Japan’s heavy dependence on metal and mineral imports has  led it to focus on securing access to foreign sources of materials and  exploring substitute materials through materials science research as a  way to ensure its continued industrial competitiveness. According to  government officials we interviewed, Japan’s METI sets policy for raw  material supplies. Officials told us that METI has established a five pillar  strategy for the supply of rare metals: (1) promoting initiatives to secure  resources overseas, (2) promoting recycling and development of smelting  technology, (3) developing resource-saving and substitute materials, (4)  stockpiling rare metals, and (5) developing marine resources.
According to government officials we interviewed, the Japanese  government, through the Japan Oil, Gas and Metals National Corporation  (JOGMEC), secures access to critical materials by providing direct  funding to exploration and development projects around the world.  JOGMEC’s efforts fit into METI’s policy framework under four of the five  pillars—it is not involved in developing resource-saving and substitute  materials. JOGMEC officials said that a primary aspect of JOGMEC’s  critical materials supply efforts is to provide financial and other types of  assistance, such as liability protection, to Japanese companies for  overseas mineral exploration or development projects. For example,  JOGMEC officials said that they can engage in joint venture exploration  projects with foreign companies. If the exploration proves fruitful,  JOGMEC officials said that they can transfer JOGMEC’s contractual  interest in a project to a Japanese company. The officials said that this  type of assistance can help to insulate Japanese companies from the  impact of price shocks in individual materials markets. JOGMEC is also  involved in a seabed exploration project seeking to help verify the  feasibility of collecting rare earth materials from the ocean floor.
In addition, government officials told us that JOGMEC also engages with  experts from across Japan’s domestic industries, including recycling,  automobile manufacturing, and telecommunications, to develop a material  flow analysis that can pinpoint bottlenecks in the supply chain. JOGMEC  started doing this kind of analysis more than a decade ago, more to  identify bottlenecks in the supply chain than to provide material supply  forecasts, officials told us. The officials told us that currently JOGMEC  conducts material flow analyses for 42 materials. Officials also said that  JOGMEC’s critical materials efforts reflect a strong relationship between  the government and the private sector in Japan. According to JOGMEC  officials, investors tend to be more focused on new technologies, whereas  the important role for the government is to take a medium-to-long-term  view of the trends.
According to government officials, Japan has also been a leader in  materials science research, and in 2007 the Japanese government began  funding the Element Strategy, which was aimed at overcoming the  limitation of natural resources by finding alternative materials for new and  existing goods and processes. Under the Element Strategy, the Japanese  government initiated a research collaboration between industry and  academia wherein researchers worked to identify the unknown physical  properties of all the elements in the periodic table in order to use each  element to the fullest extent possible. In 2012, the Japanese government  began a successor research and development program, which has been  funded for 10 years. Figure 6 shows key information about Japan’s  Element Strategy.
section_title: Canada Implements a Variety of Activities to Encourage Resource Production
paragraphs: Canada’s focus on raw materials is to attract investment in its mining  sector through tax incentives, research, and increased efficiency of  regulatory reviews. Officials from Natural Resources Canada, the  government ministry responsible for natural resources, energy, minerals  and metals, forests, earth sciences, mapping, and remote sensing, stated  that critical raw materials are important in the context of leveraging  opportunities for economic development through the production and  export of mineral products. According to a Canadian report to the United  Nations (UN) Commission on Sustainable Development, Canada’s mining  sector plays an important part in the overall economic development of  Canada. According to that report, provincial governments are largely  responsible for the exploration, development, and extraction of mineral  resources and the construction, management, reclamation, and closeout  of mine sites in their jurisdiction. The report also states that the Canadian  federal government’s responsibilities mainly pertain to international  affairs, trade, and investment, including development assistance; fiscal  and monetary policy; science and technology; and regulation of all  activities related to mineral development in the territory of Nunavut.  According to officials from Natural Resources Canada, the Canadian  federal, provincial, and territorial governments share responsibilities for  the protection of the environment, and proposed mine developments.  Projects usually require separate federal and provincial environmental  impact assessments and regulatory approvals.
Canada has taken a number of actions at both the federal and provincial  levels to encourage investment in the mining sector, according to officials  from Natural Resources Canada. According to officials we interviewed  and reports we reviewed, tax incentives are a way the Canadian  government encourages investment in the mining sector. According to  officials from Natural Resources Canada, junior mining companies have  no regular source of income and often have difficulty raising capital to  finance their exploration and development activities. According to officials  from Natural Resources Canada, Canada’s flow-through share (FTS)  mechanism allows principal business corporations, particularly junior  mining companies, to obtain equity financing for mineral exploration and  development in Canada, whereby a mineral exploration or mining  company can transfer or flow-through the tax deductions arising from its  eligible exploration expenses to the FTS investors, giving them the  benefit. In addition, investors can receive an additional 15 percent Mineral  Exploration Tax Credit (METC) for qualifying surface or above-surface  exploration expenditures. According to information from the Natural  Resources Canada website, for the individual investors, the advantages  of investing in an FTS can be that they (1) receive a 100 percent tax  deduction for the amount of money they invested in the shares, plus the  15 percent METC in the case of an eligible expense, and (2) may see the  value of their investment appreciate in the event of successful  exploration. According to the report to the UN Commission on  Sustainable Development, a number of provinces also have a tax credit  that harmonizes with the federal package, which makes individual  investors’ net costs of FTS investment less than half of their initial  amounts.
Another example of Canada’s investment in the mining sector is through  its research investments. According to officials from Natural Resources  Canada, Canada invested C$100 million (U.S. $78 million) over 7 years  (2013 through 2020) in the Geo-mapping for Energy and Minerals  program to develop new energy and minerals resources and promote  responsible land development. Officials told us that Canada also  dedicated C$23 million (U.S. $18 million) over 5 years (starting in 2015- 2016), to stimulate the technological innovation needed to separate and  develop rare earth elements and chromite.
In addition to providing financial incentives for investing in the mining  industry, the Canadian government has also focused on improving the  efficiency of regulatory reviews of mining and other major projects. In  2007, the Canadian government launched the Major Projects  Management Office (MPMO) Initiative to improve the effectiveness and  efficiency of the federal regulatory review process, while ensuring careful  consideration of environmental protection, consultation obligations, and  industry competitiveness. According to a 2012 report from Natural  Resources Canada on its evaluation of the MPMO Initiative, there are  eight participating departments and agencies that have agreed to  implement the initiative both individually and in collaboration: the  Aboriginal Affairs and Northern Development Canada, the Canadian  Environmental Assessment Agency, Fisheries and Oceans Canada,  Environment Canada, Transport Canada, the Canadian Nuclear Safety  Commission, the National Energy Board, and Natural Resources Canada.  The report states that through the initiative, the MPMO was established to  conduct a range of activities that according to Natural Resources Canada  officials, were intended to improve the accountability, transparency,  timeliness, and predictability of the federal regulatory review process for  major resource projects. The report further states that the mandate of the  MPMO is to provide (1) major project management and coordination and  (2) policy leadership, including problem-solving of short- to medium-term  issues. In the area of project management and coordination, the MPMO’s  role includes coordinating the development of project agreements that  include target timelines, ongoing project and performance monitoring,  tracking and reporting, and administering the MPMO Tracker—a publicly  accessible web-based monitoring system for major resource projects that  can be updated in real time.
The 2012 evaluation of the MPMO Initiative by the Canadian government  covered a number of issues, including the achievement of expected  outcomes and demonstration of the efficiency and economy of the  permitting process for mining projects. According to the report on the  evaluation, the Canadian government found that the integration and  federal coordination of environmental assessments and regulatory  reviews increased under the initiative. In addition, as noted in the report,  the evaluation also found that transparency and accountability of the  federal regulatory process within the Canadian government increased  significantly through the initiative. According to the evaluation, the  Canadian government timelines were viewed by internal and external  stakeholders to be improving because of increased capacity and  improved integration and coordination, but efforts to quantitatively  demonstrate to what extent these improvements had translated into  increased overall predictability of the Canadian government’s permitting  process were limited. According to officials from Natural Resources  Canada, Canada’s 2015 Economic Action Plan proposed providing  C$135 million (U.S. $105 million) over 5 years, (starting in 2015-16) to  continue to improve the efficiency and effectiveness of project approvals  through the MPMO Initiative. Figure 7 shows key information about  Canada’s MPMO.
section_title: Federal Approach to Addressing Critical Materials Supply Has Strengths but Is Not Consistent with Selected Collaboration Key Practices and Has Other Limitations
paragraphs: The federal government’s approach to addressing critical materials supply  issues has areas of strength, according to experts we surveyed, but is not  consistent with selected key practices for enhancing and sustaining  interagency collaboration and has other limitations. For example, federal  government efforts to assess risks and conduct critical materials research  have been identified by experts as strengths. However, the federal  government’s approach to addressing critical materials supply issues has  not been consistent with selected key practices for interagency  collaboration, such as ensuring that agencies’ roles and responsibilities  are clearly defined. In addition, the federal critical materials approach  faces other limitations, including data limitations and a focus on only a  subset of critical materials, a limited focus on domestic production of  critical materials, and limited engagement with industry.
subsections: section_title: Surveyed Experts Identified Areas of Strength in the Federal Approach to Addressing Critical Materials Supply Issues
paragraphs: Experts that we surveyed identified areas of strength in the federal  government’s approach to addressing critical materials supply issues.  The most commonly cited strengths were in federal efforts to identify and  assess risks in certain industrial sectors and to conduct research related  to critical materials. Among the strengths cited by experts in identifying  and assessing risks was USGS’s collection of data to support assessing  critical materials supply risks. In particular, experts responding to the first  round of our survey identified efforts by USGS to compile and provide  data on mineral deposits and supply and demand for minerals as  strengths. One expert lauded USGS data and knowledge about the  distribution of critical materials throughout the United States and the rest  of the world. Another strength cited by an expert in the area of identifying  and assessing risks included DLA-Strategic Materials’ critical materials  assessments. In the area of conducting research related to critical  materials, experts cited DOE’s CMI as a strength in the federal approach  to developing methods that address the supply of critical materials,  primarily rare earth materials. For example, one expert stated that the  formation of CMI was a very positive step to address specific material  shortages (rare earth materials, especially) from a scientific perspective,  and to develop methods for using less material in specific applications,  develop substitutes, and improve recycling of such materials. We found  that the research funded by DOE’s CMI has largely focused on projects  related to rare earth materials. Specifically, according to DOE officials, 30  out of 34 of CMI’s funded projects as of April 2016 have been related to  rare earth materials.
In addition, experts in the second-round survey rated as adequate certain  available data collected by the federal government in its effort to identify  and assess risks with regard to the supply of critical materials. For  example, when asked in the second-round survey to rate the adequacy of  different types of critical materials data available, a majority of experts  who responded described available data on (1) actual U.S. domestic  production of materials and (2) resource potential and inventory for  sources or deposits of materials located within the United States as  somewhat or very adequate, as shown in table 1.
section_title: The Federal Approach to Addressing Critical Materials Supply Issues Is Not Consistent with Selected Key Practices for Interagency Collaboration
paragraphs: The federal government’s approach to addressing critical materials supply  issues is not consistent with selected key practices that we have  previously identified that can help enhance and sustain interagency  collaboration. Collaboration can be broadly defined as any joint activity  that is intended to produce more public value than could be produced  when the organizations act alone. As described above, a number of  federal agencies conduct activities related to critical materials supply  across the primary areas of effort—assessing risk and supporting  research—as well as a range of other activities. In our April 2015 guide to  evaluating and managing fragmentation, overlap, and duplication, we  define fragmentation as those circumstances in which more than one  federal agency, or organization within an agency, is involved in the same  broad area of national need, and opportunities exist to improve service  delivery. This definition applies concerning federal agencies’ critical  materials activities, with more than one agency involved in the same  broad area of national need. However, as shown by the agencies’ critical  materials activities described above, agencies’ activities sometimes differ  in meaningful ways or leverage the efforts of other agencies. In this  context, we have reported that collaboration is an option that can reduce  or better manage fragmentation of federal programs.
As an interagency working group and according to its charter, the  Subcommittee is to facilitate a strong, coordinated effort across its  member agencies on critical minerals activities. However, we identified  aspects of the Subcommittee’s efforts, which represent the federal  approach, that are not consistent with key practices for enhancing and  sustaining interagency collaboration. These practices include agreeing on  roles and responsibilities; establishing mutually reinforcing or joint  strategies; and developing mechanisms to monitor, evaluate, and report  on results.
subsections: section_title: Some Agencies Have a Subcommittee Role, but Other Agencies’ Participation Has Been Limited and Roles and Responsibilities Have Not Been Clearly Defined
paragraphs: One practice we identified that can help enhance and sustain interagency  collaboration is agreeing on roles and responsibilities, including  leadership. We reported that collaborating agencies should work  together to define and agree on their respective roles and responsibilities,  including how the collaborative effort will be led. In doing so, agencies  can clarify who will do what, organize their joint and individual efforts, and  facilitate decision making. Consistent with this practice, OSTP, DOE, and  USGS have taken key roles as co-chairs of the Subcommittee.
However, there are a number of Subcommittee member agencies, such  as Education, Labor, EPA, DHS, and USDA, that are designated as  members in the Subcommittee charter but do not have clear roles within  the Subcommittee’s efforts and have had limited or no involvement in the  Subcommittee’s work on critical materials. For example:
EPA officials stated that EPA is in a unique position to lead in certain  government-wide efforts, such as electronic waste recycling, that  could be important for facilitating the recycling and reuse of critical  materials. However, one EPA official stated that EPA viewed its role  on the Subcommittee as limited. Specifically, EPA has had some  involvement as a member of the Subcommittee but has not been  coordinating with the Subcommittee on federal efforts to facilitate the  recycling and reuse of critical materials. EPA officials stated that the  Subcommittee’s activities were being driven primarily by other  agencies, and EPA officials did not view the Subcommittee’s activities  as being focused on sustainable materials management—an area  where EPA has expertise.
Education and Labor lead federal efforts on education and workforce  issues. A 2013 National Academies of Sciences, Engineering, and  Medicine report on workforce trends in the U.S. energy and mining  industries highlighted the role that Education and Labor could play in  helping to address education and workforce issues related to those  industries, which include industries related to the supply of critical  materials. Among the report’s recommendations was for Education  to collaborate with Labor, state departments of education, and  national industry organizations to convene workshops with industry,  government, and educational leaders. However, although Education  and Labor are designated as members in the Subcommittee charter,  neither has shown that it ever participated in Subcommittee meetings.  Officials from Labor stated that they were unaware of the  Subcommittee and their agency’s designation as a member on the  Subcommittee until we contacted them during the course of this  review. Officials from Education stated that they were unable to  identify anyone who participated on the Subcommittee and that there  were no records of anyone from Education having participated.
USDA’s Forest Service reviews and approves mine plans for  operations that have included the mining of critical materials on the  lands it manages. Although USDA is designated a member of the  Subcommittee in its charter, according to agency officials, USDA did  not have representation on the Subcommittee until August 2015 when  a mining operator applying for a permit informed Forest Service  officials about the Subcommittee. Forest Service officials told us that  because they now know about their role on the Subcommittee, they  plan to attend meetings regularly and be more involved in activities.
DHS analyzes U.S. dependence on foreign infrastructure, including  foreign sources of critical materials. The agency is designated as a  Subcommittee member in the charter; however, DHS officials stated  that, until we contacted them during the course of our review, no one  had been tasked to represent the agency on the Subcommittee. A  DHS official told us that he is now on OSTP’s list of agency contacts  for the Subcommittee. DHS analyses of foreign infrastructure could  help to inform the analysis that the Subcommittee has developed for  the early warning screening system, as well as DOD’s analyses for its  stockpiling assessments.
Some experts we surveyed also noted the lack of clarity in agencies’ roles  and responsibilities with regard to federal coordination efforts in  addressing the supply of critical materials. Sixteen out of 36 experts  responding to our survey indicated that the roles and responsibilities of  government agencies with respect to critical materials were not very  clearly defined or not defined at all. For example, one expert stated that  too many agencies have their own agendas and therefore the federal  effort is not coordinated. Relatedly, another expert noted that Commerce  does not have a clearly defined role to support critical materials important  to the economy.
Our work has shown that although collaborative mechanisms differ in  complexity and scope, they all benefit from certain key features, including  the clarity of roles and responsibilities and ensuring that the relevant  participants are included in the collaborative effort. Specifically, key  practices call for participating agencies to consider clarifying their roles  and responsibilities and whether all relevant participants have been  included. We have reported that clarity about roles and responsibilities  can be codified through laws, policies, memorandums of understanding,  or other requirements. By agreeing on and clearly defining roles and  responsibilities of their members, collaborating agencies clarify which  agency will do what, organize their joint and individual efforts, and  facilitate decision making. Furthermore, experts we contacted for our  2012 report on key considerations for implementing interagency  collaborative mechanisms said, among other things, that it is helpful when  the participants in a collaborative mechanism have full knowledge of the  relevant resources in their agency and the ability to commit these  resources and make decisions on behalf of the agency.
We noted earlier that the EU has created a mechanism to bring together  relevant stakeholders in the area of critical materials to align priorities,  leverage investments, and form future partnerships. According to OSTP  officials, the Subcommittee’s efforts are generally based on the level of  involvement and resources of member agencies, with certain agencies  taking the lead for certain activities. However, OSTP, as part of the  Subcommittee’s leadership, did not point to efforts made to engage  member agencies in more active participation in the Subcommittee. By  taking steps to actively engage all member agencies in its efforts and  clearly define roles and responsibilities, the Subcommittee will have more  reasonable assurance that it can effectively marshal the potential  contributions of all member agencies to take full advantage of their  expertise and resources to help identify and mitigate critical materials  supply risks. Moreover, the 1980 Act outlines a range of policies to  promote an adequate and stable supply of materials, including assessing  the availability of technically trained personnel, as well as supporting  research related to recovery and recycling of materials, among others.  In addition to enhancing interagency collaboration on critical materials  activities, actively engaging all member agencies may also present an  opportunity for the Subcommittee to more fully incorporate the policies of  the 1980 Act into the federal approach for addressing critical materials  supply issues.
section_title: Federal Efforts Are Not Guided by Joint Strategies to Achieve a Common Outcome
paragraphs: Another key practice we identified that can enhance and sustain  interagency collaboration is establishing mutually reinforcing or joint  strategies designed to help align activities, core processes, and resources  to achieve a common outcome. However, federal critical materials  efforts are not guided by joint strategies to achieve a common outcome.  The Subcommittee’s charter outlines general areas of effort for its work  but does not specify the outcome or outcomes that the Subcommittee  plans to achieve. The Subcommittee’s member agencies have not  worked together to develop joint strategies to guide their activities. OSTP  officials indicated that member agencies are responsible for determining  which activities to undertake based on the agencies’ resources and  mission. The Subcommittee does not direct member agency activities,  and there has been no discussion within the Subcommittee of creating a  joint strategy. Experts also identified issues with the extent to which the  federal approach to addressing critical materials supply issues supports  achieving desired outcomes in response to our survey. For example, 28  out of 36 experts responding to our survey indicated that the federal  government’s objectives with respect to critical materials were not clearly  defined or not defined at all, and 20 out of 36 indicated that the extent to  which federal agencies’ activities are mutually reinforcing with regard to  critical materials was small or nonexistent.
We have previously reported that to achieve a common outcome,  collaborating agencies need to establish strategies that work in concert  with those of their partners or are joint in nature. Developing joint  strategies can help align partner agencies’ activities, core processes, and  resources to accomplish a common outcome. Developing joint strategies  to articulate common outcomes and identify member agencies’ efforts  could help the Subcommittee better coordinate agencies’ critical materials  activities to ensure that they are mutually reinforcing.
section_title: The Subcommittee Does Not Have a Mechanism to Monitor, Evaluate, and Report Its Efforts
paragraphs: An additional key practice we identified that can enhance and sustain  interagency collaboration is developing mechanisms to monitor, evaluate,  and report results. Federal agencies engaged in collaborative efforts  need to create the means to monitor and evaluate their efforts to enable  them to identify areas for improvement. However, the Subcommittee does  not have a mechanism to monitor and evaluate progress across all areas  of its activities. OSTP officials did not think that monitoring the progress of  activities was the Subcommittee’s responsibility because individual  activities are funded by member agencies, and therefore those agencies  would be responsible for tracking progress. However, without a  mechanism to monitor and evaluate its efforts, the Subcommittee may be  missing an opportunity to fulfill a policy of the 1980 Act, which calls for  establishing a mechanism to evaluate federal materials programs.
Also, key practices call for reporting on the activities of agencies engaged  in collaborative efforts to help key decision makers within the agencies,  as well as clients and stakeholders, obtain feedback for improving both  policy and operational effectiveness. OSTP officials stated that they  provide reports as necessary on specific Subcommittee activities, in line  with the reporting practices for other NSTC subcommittees. For example,  as noted earlier, in March 2016, the Subcommittee published a report on  its progress in developing a screening methodology for critical minerals  and the results of the initial application of this methodology. However,  since it was established in 2010, the Subcommittee has not reported  periodically on the progress of all of its efforts to address critical materials  supply issues. According to OSTP officials, the Subcommittee leaves  regular reporting on the progress of activities to the member agencies as  part of their standard agency oversight measures. However, there is no  member agency that is responsible for reporting on all of the  Subcommittee’s efforts. Periodic reporting on the progress of the  Subcommittee’s activities could help key decisionmakers within the  member agencies and Congress, as well as other stakeholders, to obtain  feedback for improving both policy and operational effectiveness.
section_title: Federal Approach to Addressing Critical Materials Supply Issues Faces Other Limitations
paragraphs: We identified other limitations in the federal approach to addressing  critical materials supply issues through our expert survey, review of the  Subcommittee’s criticality assessment, and analysis of other information  we collected. These include limitations in the federal government’s  engagement with industry to identify U.S. critical material needs, with data  to identify and assess risks and the Subcommittee’s focus on only a  subset of critical materials, and in the Subcommittee’s focus on domestic  production of critical materials.
subsections: section_title: Federal Engagement with Industry to Identify Materials Needs across the U.S. Economy Has Been Limited
paragraphs: The federal government’s engagement with industry on an economy-wide  basis to identify critical materials supply issues has been limited,  according to our analysis and responses from the experts we surveyed.  Although DOE and DOD have engaged with industry stakeholders in the  clean energy and defense sectors through their efforts to address critical  materials supply issues, we found that there has been limited federal  government engagement with industry stakeholders outside of energy  and defense. For example, officials that we interviewed from the  semiconductor industry told us that they have concerns about the  availability of certain gases that are critical to the semiconductor  manufacturing process. However, company officials stated that they had  not spoken with anyone within the federal government about their  concerns; one trade association official stated that the organization did  not know where in the federal government it should go to raise these  concerns and that it was not aware of mechanisms to communicate  information about supply disruptions to the government. Additionally, in  response to our survey, a majority of experts, 25 out of 36, indicated that  the level of attention that the federal government has paid to the criticality  of materials important to industrial sectors outside of energy and defense  was very or somewhat inadequate. In comparison, slightly more than  half of the experts we surveyed, 19 out of 36, indicated that the level of  attention paid to materials important to sectors related to energy and  defense was very or somewhat adequate.
Commerce is responsible for soliciting information from a range of  industry sectors to help identify and assess cases of materials needs. The  1980 Act requires Commerce, in consultation with other agencies, to  continually identify and assess cases of materials needs, as necessary, to  ensure an adequate and stable supply of materials to meet national  security, economic well-being, and industrial production needs. In the  early 1980s after the legislation was enacted, Commerce conducted two  such assessments on critical materials related to the aerospace and steel  industries. Both assessments were conducted by Commerce’s Minerals  and Materials Task Force, which was chaired by the Director of ITA’s  Office of Strategic Resources. However, Commerce officials could not  identify any recent assessments on critical materials by the department.  Commerce’s Office of Technology Evaluation within the Bureau of  Industry and Security conducts industrial base surveys and assessments,  but according to Commerce, those assessments are focused exclusively  on the U.S. defense industrial base. Within Commerce, nondefense  assessment functions reside in ITA.
ITA held two industry roundtables related to critical materials, one in 2009  focused on rare earth materials and another in 2012 that was intended to  help inform the Subcommittee’s assessment of critical minerals.  According to ITA officials, roundtables are convened periodically, often  when there is something new or important affecting industry, such as the  concerns about the decreased global supply of rare earth materials.  According to the officials, ITA’s role on the Subcommittee is to provide  support by sharing and exchanging information from an industry and  trade perspective. The officials indicated that ITA has no specific plans to  conduct additional roundtables to identify industry concerns related to  critical materials supply. ITA officials also stated that it was not within the  purview of ITA’s industry-specific offices—Office of Energy and  Environment Industries, Office of Health and Information Technology, and  Office of Transportation Machinery—to meet with industry to engage on  issues related to critical materials supply. ITA officials stated that they  were not aware of Commerce’s responsibilities under the 1980 Act prior  to our review.
Proactive engagement with a range of industry stakeholders to identify  critical materials needs was a feature we identified in other countries’ or  regions’ approaches to address critical materials supply issues. For  example, the Japanese government’s approach features close  collaboration between government and industry through engagement with  industrial stakeholders to develop materials flow analyses that can  identify critical materials and pinpoint bottlenecks in supply chains.  Because Commerce is not engaging with industry stakeholders across a  range of industrial sectors to identify materials of concern, it may not have  the comprehensive, current information it needs to fulfill its responsibilities  under the 1980 Act to continually identify and assess cases of materials  needs.
section_title: Experts Surveyed Found Some Data to Be Very or Somewhat Inadequate, and the Subcommittee Focuses on a Subset of Critical Materials
paragraphs: The federal approach to addressing critical materials supply issues is  limited by the inadequacy of certain data and a focus on a subset of  critical materials. While experts we surveyed were generally positive  about data on domestic production, resource potential and inventory, and  imports and exports associated with the supply of critical materials, as  described earlier, a majority of them found available data to identify and  assess risks associated with the supply of critical materials to be very or  somewhat inadequate. As shown in table 2, a majority of experts who  responded to the survey thought that the availability of data was  inadequate in a number of areas, including data to identify and assess  risks on (1) actual foreign production; (2) the resource potential of critical  materials in other parts of the world, including in and below the oceans;  and (3) the quantity of material recycled.
In addition, the Subcommittee’s March 2016 criticality assessment  reporting on the development and initial application of a screening  methodology represents an important step toward developing an early  warning system. However, the report focuses on a subset of potential  critical minerals, which it defined as nonfuel resources—elements or  compounds—that are obtained by mining or refined from mined products,  and in some cases includes such substances at various stages of  processing. According to the Subcommittee’s report, the subset of  minerals assessed in this initial screening was determined by the  availability of suitable and consistent data. The report noted that, in  addition to limitations of scope, a significant weakness common among all  known criticality assessments is that they are not updated regularly, likely  because of the complexity of the models employed, lack of necessary  data, or lack of resources needed to perform such updates. Relatedly, the  Subcommittee’s 2010 charter established that one of the functions of the  Subcommittee would be to develop and periodically update methods for  assessing the criteria for material designations as critical or strategic in  the short, medium, and long terms, including an early warning mechanism  for emerging critical or strategic materials. However, the Subcommittee’s  2016 charter narrowed this function to implement and, as necessary,  update the methodology developed cooperatively by its member agencies  for dynamically assessing mineral criticality and for signaling emerging  critical or strategic minerals—notably replacing the word material with  mineral.
The Subcommittee’s focus on minerals excludes other materials that are  important to industry and federal scientific research, such as rare gases  like neon and argon. For instance, we learned from industry officials we  interviewed that beginning in 2014 during the conflict between the  Ukrainian government and Russian-backed separatist groups, there was  a decrease in the global supply of neon gas that led to a 20-fold price  increase. Neon is generally produced as a by-product of steelmaking, and  most of the global supply of neon comes from Ukraine and Russia.  Neon is used for many industrial and research applications, including in  the medical field and in the semiconductor industry to design computer  chips. For instance, an NIH official stated that the agency found out  about the decreased global supply of neon through one of its grantees  that needed the gas for medical research. According to the NIH official,  the decreased supply of neon gas has resulted in researchers rationing  the gas, which restricts research activities. The official stated that in one  case the agency provided supplemental funds to assist a researcher in  conducting experiments using alternative laser systems that did not  depend on neon gas, but the experiments were unsuccessful using those  lasers. According to the NIH official, federal intervention to ensure the  availability of neon and other rare gases would improve the agency’s  ability to advance its mission.
The Subcommittee’s criticality assessment report notes that the  development of the screening methodology and the regular publication of  its results address aspects of the 1980 Act. As noted above, the 1980 Act  calls for the creation of early warning systems for materials supply  problems, and defines “materials” as substances, including but not limited  to minerals, needed to supply the industrial, military, and essential civilian  needs of the United States. The Subcommittee’s report indicated that  additional minerals could be included in the early warning screening in the  future as additional data become available. However, the Subcommittee  has not developed a plan or strategy to prioritize additional materials  needed by industry and federal research and to determine how to obtain  data that would allow them to be included in the early warning screening  in the future.
One potential mechanism for obtaining data on additional materials is the  North American Industry Classification System, which is the standard  used by federal statistical agencies—several of which are part of  Subcommittee member agencies (e.g., Labor’s Bureau of Labor Statistics  and DOE’s Energy Information Administration)—in classifying business  establishments to collect, analyze, and publish statistical data related to  the North American economy. The system is reviewed through an  international process every 5 years and uses a production-oriented  conceptual framework to group establishments into industries based on  the activity in which they are primarily engaged. Establishments using  similar raw material inputs, similar capital equipment, and similar labor  are classified in the same industry, so that establishments that do similar  things in similar ways are classified together. The current 2012 industry  classifications in use under this system were issued in 2011. The U.S  Economic Classification Policy Committee is reviewing comments on its  recommendations for the 2017 revisions to the system, after which it will  begin the process of soliciting proposed revisions for implementation in  2022. During the revision process, the Economic Classification Policy  Committee solicits and evaluates requests for revisions to the North  American Industry Classification System. A Labor official said that if there  is a need to classify segments of industries at a more granular level, it  would be important to communicate these needs for the next revision  cycle. For example, there is one North American Industry Classification  System code that covers all industrial gases. If the Subcommittee found  that there was the need for additional information on a specific industrial  gas, such as neon, it could use the upcoming revision process to request  a change to incorporate additional granularity into the system to  differentiate between different industrial gases. This would be similar to  the changes the Subcommittee worked with the United States  International Trade Commission to incorporate in the Harmonized Tariff  Schedule to provide more visibility into the imports of specific rare earth  materials and permanent magnets.
Since the publication of the Subcommittee’s criticality report, the  Subcommittee narrowed its charter to focus on minerals. In narrowing the  charter, the Subcommittee is missing the opportunity to fulfill in its early  warning screening methodology one of the policies of the 1980 Act, which  applies to all critical materials. By taking the steps necessary to broaden  future applications of the early warning screening methodology to include  potentially critical materials beyond minerals, such as a plan or strategy  for prioritizing the materials, the Subcommittee could better work with  member agencies to address existing data limitations and broaden the  scope of the early warning system to better achieve the policy outlined in  the 1980 Act.
section_title: Federal Approach to Addressing Critical Materials Supply Issues Has a Limited Focus on Domestic Production
paragraphs: Experts we surveyed noted the importance of domestic production in  addressing the supply of critical materials but also indicated that the  federal government’s approach to date has included a limited focus on  domestic production. The 1980 Act calls for the coordination of federal  agencies to facilitate the availability and development of domestic  resources to meet critical materials needs, and the assessment of federal  policies that affect all stages of the materials cycle, including mining. A  majority of experts who responded to the survey, 24 out of 36, indicated  that the federal government should play a major role in encouraging the  domestic production of critical materials, and 19 out of 36 indicated that  federal efforts to encourage domestic production of critical materials to  address supply issues are somewhat or very inadequate. As shown in  table 3, experts we surveyed identified several factors with the potential to  limit domestic production of critical materials.
As described above, one aspect of domestic production of critical  materials is the review and approval by federal agencies of mining  projects on federal land. As shown in table 3, most experts we surveyed  indicated that the length of the permitting process for new mines has the  potential to limit the domestic production of critical materials. In January  2016, we reported on the permitting process involving BLM and the  Forest Service and found, among other things, that agency officials felt  that there was limited or ineffective interagency coordination and  collaboration during the mine plan review process. We reported that  officials in nine BLM and two Forest Service locations said that  coordination and collaboration had been limited in both quantity and  quality and had resulted in adding from 2 months to 3 years to the review  process. As part of the review process, BLM and the Forest Service need  to coordinate and collaborate with other federal agencies, state agencies,  and Native American tribes on issues such as assessing impacts to water  quality, wildlife, and cultural resources. However, BLM and Forest  Service officials said it can be difficult to do. For example, Forest Service  officials said that a federal agency delayed the review process for one  mine plan because the agency did not provide the necessary data in a  timely fashion. As a result, Forest Service officials had to redo some  analyses needed for the mine plan’s environmental impact statement,  which added time to the review process. To help address this key  challenge, some officials said that they have developed memorandums of  agreement with state agencies, are holding regular meetings with these  state agencies, and the mine operators, and are communicating and  consulting with tribes.
As noted above, other countries’ or regions’ approaches to addressing  critical materials supply issues have incorporated taking steps to facilitate  domestic production of materials. For example, Canada’s MPMO Initiative  was established to improve the accountability, transparency, timeliness,  and predictability of Canada’s federal regulatory review process for major  resource projects, and internal and external stakeholders believe that  federal project review timelines have improved because of better  coordination. The Canadian government has also taken steps to provide  tax incentives for domestic production. Similarly, as described above,  fostering communication with stakeholders related to new mining projects  has been a facet of the EU approach to facilitating domestic production of  critical materials. Although its charter calls for the Subcommittee to review  and analyze global and domestic policies that affect the supply of critical  and strategic minerals, the Subcommittee has addressed these issues  only to a limited degree. As noted above, the Subcommittee has done  some work to look at trade issues to critical materials through its work  with USTR and other member agencies to address China’s export  restrictions through dispute settlement at the WTO. However, the  Subcommittee has not focused on increasing the supply of critical  materials through facilitating domestic production. Until recently, the  Forest Service was not an active participant on the Subcommittee, and  according to BLM officials we interviewed, BLM has not participated on  the Subcommittee. There are a number of global and domestic policies  related to the supply of critical materials that the Subcommittee could  review and analyze, including examining the approaches taken by other  countries or regions to facilitate domestic production by, for example,  improving coordination and streamlining the mine-permitting process. By  examining the approaches taken by other countries or regions to facilitate  domestic production of critical materials, the Subcommittee could  determine if there are any lessons learned that could be applied to the  United States.
section_title: Conclusions
paragraphs: The availability of certain materials is essential for national security,  economic well-being, and industrial production. Recognizing this need,  Congress passed the 1980 Act to promote an adequate and stable supply  of needed materials. Although this legislation has been in place for over  30 years, a number of the key federal activities we examined that are  focused on addressing critical materials supply risk did not begin until  after 2010, when China tightened its export restrictions on rare earth  materials.
U.S. government agencies are now carrying out some of the policies  outlined in the 1980 Act, and experts have identified strengths in  agencies’ efforts to assess critical materials supply risks and mitigate  those risks through research activities. Although the Subcommittee is to  facilitate a strong, coordinated effort across its member agencies on  critical minerals activities, its efforts to coordinate agencies’ activities are  not consistent with selected key practices for enhancing and sustaining  interagency collaboration. The Subcommittee has not taken steps to  actively engage all member agencies in its efforts and has not clearly  defined the roles and responsibilities of member agencies. By ensuring  that all relevant member agencies are engaged in its efforts and have  agreed on and clearly defined roles and responsibilities, the  Subcommittee will have more reasonable assurance that it can effectively  marshal the potential contributions of all member agencies to take full  advantage of their expertise and resources in addressing critical materials  supply issues. The Subcommittee also has not developed joint strategies  to articulate common outcomes and identify contributing agencies’ efforts,  or developed a mechanism to monitor, evaluate, and periodically report  on the progress of these efforts. Developing joint strategies to articulate  common outcomes and identify member agencies’ efforts could help the  Subcommittee better coordinate agencies’ critical materials activities to  ensure that they are mutually reinforcing. In addition, developing a  mechanism to monitor, evaluate, and periodically report on the progress  of member agencies’ efforts could help the Subcommittee fulfill a policy of  the 1980 Act, which calls for the establishment of a mechanism for the  evaluation of federal materials programs.
The U.S. government is also missing other key opportunities to address  critical materials supply risks because of its limited engagement with  industry to continually identify and assess materials needs, a focus on a  subset of critical materials, and a limited focus on developing domestic  production capabilities. The Subcommittee has taken an important step  toward developing an early warning system for critical minerals as called  for by its charter, but it excludes nonmineral materials that may be  important to industry and federal research. Currently, the Subcommittee  does not have a documented plan or strategy to prioritize potentially  critical materials beyond minerals and determine how to obtain data on  such materials that would allow them to be included in the early warning  screening in the future. By taking the steps necessary to broaden its  future applications of the early warning screening methodology to include  potentially critical materials beyond minerals, including a plan or strategy  for prioritizing such materials, the Subcommittee could better work with  member agencies to address existing data limitations and broaden the  scope of the early warning system to better achieve the policy outlined in  the 1980 Act.
The Subcommittee is also not taking steps to identify opportunities to  facilitate domestic production as a way to mitigate critical materials supply  risks. As provided for by the Subcommittee’s charter, examining how  other countries or regions, such as Canada and the EU, are improving  coordination and streamlining the mine-permitting process could help the  Subcommittee determine if there are any lessons learned that could be  applied to the United States. Finally, Commerce has not engaged with  industry stakeholders to solicit information across a range of industrial  sectors. While Commerce has coordinated with industry at certain times  or on specific issues, these coordination efforts have been ad hoc and  have generally focused on the defense industrial base. As a result,  Commerce may not have the comprehensive, current information it needs  to fulfill its responsibilities under the 1980 Act to continually identify and  assess cases of materials needs.
section_title: Recommendations for Executive Action
paragraphs: To enhance the ability of the Executive Office of the President to  coordinate federal agencies to carry out the national materials policy  outlined in the 1980 Act, we recommend that the Director of the Office of  Science and Technology Policy, working with the National Science and  Technology Council’s Subcommittee on Critical and Strategic Mineral  Supply Chains and agency leadership, as appropriate, take the following  five actions:
To strengthen the federal approach to addressing critical materials  supply issues through enhanced interagency collaboration, the  Subcommittee should agree on and clearly define the roles and responsibilities of  member agencies and take steps to actively engage all relevant  federal agencies in the Subcommittee’s efforts; develop joint strategies that articulate common outcomes and  identify contributing agencies’ efforts; and develop a mechanism to monitor, evaluate, and periodically report  on the progress of member agencies’ efforts.
To broaden future applications of the early warning screening  methodology, the Subcommittee should take the steps necessary to  include potentially critical materials beyond minerals, such as  developing a plan or strategy for prioritizing additional materials for  which actions are needed to address data limitations.
To enhance the federal government’s ability to facilitate domestic  production of critical materials, the Subcommittee should examine  approaches other countries or regions are taking to see if there are  any lessons learned that can be applied to the United States.
To fulfill the role assigned to it under the 1980 Act, the Secretary of  Commerce should engage with industry stakeholders and continually  identify and assess critical materials needs across a broad range of  industrial sectors.
section_title: Agency Comments, Third-Party Views, and Our Evaluation
paragraphs: We provided a draft of this report to USDA, Commerce, DOD, Education,  DOE, HHS, DHS, Interior, Justice, Labor, State, Treasury, EPA, NASA,  NSF, CEQ, NEC, NSC, OMB, OSTP, and USTR for review and comment.  We received the following comments:
OSTP provided written comments, which are reproduced in appendix  III. Of the five recommendations directed to it, OSTP neither agreed  nor disagreed with four of the recommendations, but expressed some  concerns with three of the recommendations as described below, and  concurred with the fifth recommendation.
Commerce provided written comments, which are reproduced in  appendix IV. Specifically, in its comments Commerce stated it agreed  with the recommendations and that it will consult with other agencies  in order to develop an action plan with details on implementation.
USDA provided written comments, which are reproduced in appendix  V. USDA stated that it generally agreed with the draft report, stating  that it supported the Subcommittee and that it agreed that there are  limitations, including limited engagement with industry and limited  focus on domestic production. USDA did not comment on the  recommendations.
In an email from an audit analyst in its Office of the Chief Financial  Officer, DOE provided general comments, which we discuss below.
Commerce, DOD, DOE, Interior, NASA, and USTR provided technical  comments, which we incorporated as appropriate.
Officials from Education, HHS, DHS, Justice, Labor, State, Treasury,  EPA, NSF, and NSC stated via email that they had no comments on  the report.
An NEC official stated that NEC had no comments on the report.
CEQ and OMB did not provide comments.
Additionally, we provided a draft of this report to Natural Resources  Canada, the European Commission Directorate-General for Internal  Market, Industry, Entrepreneurship and Small and Medium-sized  Enterprises, METI, and Japan’s Ministry of Education, Culture, Sports,  Science and Technology for their views and comments on the  completeness and accuracy of GAO’s information on their programs  and practices. Officials from the EU and Canada provided technical  comments via email, which we incorporated as appropriate. Officials  from Japan stated in emails that they had no comments on the report.
In its written comments, OSTP neither agreed nor disagreed with our first  three recommendations that the Subcommittee should (1) agree on and  clearly define the roles and responsibilities of member agencies and take  steps to actively engage all relevant federal agencies in the  Subcommittee’s efforts; (2) develop joint strategies that articulate  common outcomes and identify contributing agencies’ efforts; and (3)  develop a mechanism to monitor, evaluate, and periodically report on the  progress of member agencies’ efforts. In its comments, OSTP stated that  the roles and responsibilities of member agencies are defined by their  existing missions and that further specification of roles and  responsibilities within the context of the Subcommittee is either  redundant, if aligned with agency missions, or may raise confusion if not.  However, as we state in the report, there are a number of Subcommittee  member agencies that do not have clear roles within the Subcommittee’s  efforts and have had limited or no involvement in the Subcommittee’s  work on critical materials. By clearly defining roles and responsibilities  within the context of the Subcommittee, member agencies could organize  their joint and individual efforts, and facilitate decision making. Moreover,  more actively engaging all member agencies by clearly defining roles and  responsibilities and identifying contributing activities could help the  Subcommittee more fully incorporate the range of policies of the 1980 Act  into the federal approach for addressing critical materials supply issues.  OSTP further stated that agencies have in place mechanisms to monitor,  evaluate, and report on the progress of their efforts in support of their  missions, and the Subcommittee reports directly to its parent committee  and in other ways (public documents) on its collective actions. However,  as we state in the report, the Subcommittee has not reported periodically  on the progress of all of its efforts to address critical materials supply  issues, and there is no member agency that is responsible for reporting  on all of the Subcommittee’s efforts. We continue to believe that OSTP  should fully implement our three recommendations to enhance  interagency collaboration on critical materials supply issues.
OSTP neither agreed nor disagreed with our fourth recommendation that  the Subcommittee should take the steps necessary to include potentially  critical materials beyond minerals, such as developing a plan or strategy  for prioritizing additional materials. In its comments, OSTP stated that  plans to address additional materials are under discussion as the  Subcommittee evaluates feedback on the published assessment  methodology and that other approaches may be considered to add  potentially critical materials that cannot be screened using the  methodology because of data limitations or other factors. DOE, which co- chairs the Subcommittee along with OSTP and Interior, stated in its  general comments that the report would more accurately present the  issue of the federal focus on only a subset of materials by including a  more comprehensive discussion of the data availability issues that limit  the Subcommittee’s early warning screening methodology. We  acknowledge that existing data limitations present a challenge for the  Subcommittee. As we state in the report, our recommendation that the  Subcommittee take steps such as developing a plan or strategy for  prioritizing additional materials to be included in the early warning  screening methodology is intended to help the Subcommittee better work  with member agencies to address existing data limitations. In its general  comments, DOE also suggested that we clarify that the plan or strategy  for prioritizing additional materials should focus on those that require  augmented data collection activities. As we state in our report, addressing  data limitations is a key factor in the Subcommittee’s ability to apply its  early warning screening methodology to additional materials. Therefore,  we clarified in the recommendation the role of data limitations. Without  taking steps to include potentially critical materials beyond minerals, such  as developing a plan for prioritizing additional materials, the  Subcommittee may miss opportunities to obtain the data it needs, such as  by proposing a revision to the North American Industry Classification  System. We continue to believe that the Subcommittee should implement  our recommendation by taking such steps.
In written comments, OSTP stated it concurred with our fifth  recommendation that the Subcommittee should examine approaches  other countries or regions are taking to see if there are any lessons  learned that can be applied to the United States. OSTP stated that it  looks forward to exploring the experiences and approaches of other  countries and regions.
In its general comments, DOE expressed concerns that our evaluation of  the federal government’s approach to addressing critical materials supply  issues is based largely on a nongeneralizable sample of critical materials  experts and that it is not clear in the report that we considered how the  composition of survey respondents could present significant bias in the  results. DOE stated that a majority of the survey respondents fall under  the ‘Industry/Association’ category and that representatives from industry  could be expected to say that there is more the government can do to  support domestic industries. As we state in the report, our survey results  are not generalizable and only represent the views of those who  responded. However, both the total number of experts from industry  sampled (24) and the number of experts from industry that responded in  the second round of the survey (19) represent about half of the experts  we included in the survey. The remaining represent government experts  (6 sampled and 5 who responded in the second round of the survey) and  academic/nonprofit experts (16 sampled and 12 who responded in the  second round of the survey). DOE’s statement assumes that all of the  industry respondents think government should do more—which may or  may not be true. There could also be bias if the respondents’ views  differed from the views of nonrespondents. However, we do not know  whether this is the case, and this type of bias can occur in any survey.  Our findings are supported not only by our survey results, but also  through our review of relevant documents and interviews with officials  from government and industry in the United States and in other countries  and regions. Therefore, we did not make any changes to the report as a  result of DOE’s comment.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Director of the Office of Science and  Technology Policy, the Secretary of Commerce, and other interested  parties. In addition, the report will be available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-3841 or neumannj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report (1) describes federal agencies’ activities related to the supply  of critical materials; (2) describes the approaches of selected countries  and regions to address critical materials supply issues; and (3) evaluates  the federal government’s approach, such as coordination of activities, to  addressing critical materials supply issues.
For our first and third objectives, we reviewed laws, regulations, and  guidance related to the supply of critical materials, such as the National  Materials and Minerals Policy, Research and Development Act of 1980  (1980 Act) and a law related to the Department of Defense’s stockpiling of  materials. We also collected and reviewed prior GAO reports on issues  related to the federal effort to address the supply of critical materials, as  well as congressional hearings, industry reports, and academic studies on  the U.S. supply of critical materials. We also reviewed the charters of the  Subcommittee on Critical and Strategic Mineral Supply Chains  (Subcommittee), which is under the National Science and Technology  Council’s Committee on Environment, Natural Resources, and  Sustainability.
To describe federal agencies’ activities related to the supply of critical  materials, we contacted the 20 federal agencies and Executive Office of  the President organizations that are designated as members of the  Subcommittee. These agencies and organizations are the Departments of  Agriculture, Commerce, Defense, Education, Energy, Homeland Security,  the Interior, Justice, Labor, State, and the Treasury, as well as the  Environmental Protection Agency, National Aeronautics and Space  Administration, National Science Foundation, Council on Environmental  Quality, National Economic Council, National Security Council, Office of  Management and Budget, Office of Science and Technology Policy, and  Office of the U.S. Trade Representative (OSTP). We interviewed and  obtained reports and analyses from officials from those agencies as  appropriate. We also interviewed officials from a federal agency that was  not designated as a member of the Subcommittee—the Department of  Health and Human Services’ National Institutes of Health—about its role  in activities related to the supply of critical materials, as it relies on rare  gases, for example, for research and medical applications.
To describe the approaches of selected countries and regions to address  critical materials supply issues, we interviewed officials across  government, academia, and industry from the European Union (EU),  Japan, and Canada and obtained relevant documentation from officials.  We also met onsite with EU officials in Brussels, Belgium, and Japanese  officials in Tokyo. While in the EU, we also met with German officials in  Berlin and Bonn, to understand the impact of multinational planning on  national laws and policies related to critical materials. We selected these  countries and regions based on the efforts they have under way to  address critical materials supply risks and our ability to collect information  about those efforts.
To evaluate the federal government’s approach to addressing critical  materials supply issues, we developed and disseminated a two-stage,  web-based survey to a nongeneralizable sample of 46 critical materials  experts. The sample was selected with the goal of obtaining a balance of  perspectives across the industrial, academic, and government sectors on  the critical materials supply chain. We also identified subject matter areas  relevant to the critical materials supply chain. Based on background  research and interviews with experts, we identified the following relevant  subject matter areas:
Materials science—basic or applied research or experience related to  materials that could be used in the production of advanced  technologies, including methods for recycling materials.
Industrial ecology—research or experience related to the flow of  energy and materials through an industrial system, including, but not  limited to, resource constraints and life cycle analysis.
Mining and raw materials—research or experience related to  extraction or processing of minerals or materials, including exploration  and permitting for such activities.
Markets and trade policy—research or experience related to  commodity markets, supply and demand for materials, or trade  policies that affect the flow of materials.
Supply chain management—research or experience related to the  management of an industry or government supply chain or the  collection, dissemination, or analysis of information on material supply  chains and the risk associated with them.
Workforce issues—research or experience related to the adequacy of  technically trained personnel in the fields of mining or material  science.
To identify experts from the industrial, academic, and government sectors  who are knowledgeable about matters involving the critical materials  supply chain, the team used resources that included professional and  government publications; participant lists of knowledge-sharing events,  such as workshops, symposia, and conferences; recent congressional  testimonies related to critical materials issues; members of a federal  advisory committee; and outreach to research and academic programs,  trade associations, companies, and other industry groups. In addition, the  team identified a number of potential experts based on interviews with  federal agencies and other knowledgeable stakeholders conducted as  part of the audit work for the engagement. We identified and reached out  to more than 100 experts based on their expertise across the range of  subject matter areas and sectors. Out of those experts we contacted, 49  expressed an interest in participating in the survey. In total, 47 experts (of  49 considered) were selected for participation in the survey. After the first  round of the survey was sent out to all participants, one participant  declined to participate and was removed from the list of participants  resulting 46 experts. The makeup of the 46 experts consisted of 6 in  government, 16 in academia and nonprofit organizations, and 24 in  industry and trade group associations. Table 4 shows the breakdown of  experts’ expertise across sectors.
The first round of the survey was conducted from September 22, 2015, to  October 30, 2015, and asked the experts to respond to five open-ended  questions about the primary strengths and weaknesses of the U.S.  federal government’s policies and activities related to critical materials  and options for improving these efforts. Out of the 46 experts sampled for  the survey, 33 responded to the survey, resulting in a response rate of 72  percent. The 33 who responded were experts who successfully submitted  their conflict-of-interest forms and completed the electronic survey. After  the experts completed the open-ended questions, we analyzed the  responses to identify key issues raised by the experts. Based on those  key issues raised by the experts, we identified topic categories related to  the supply of critical materials. We then developed closed-ended  questions for the second round of the survey in which we asked each  expert to rate the ideas and other information that came from the first  round of the survey. Two of the 33 respondents from the first round of the  survey did not participate in the second round of the survey.
The second round of the survey was conducted from February 3, 2016, to  March 4, 2016, and contained 30 questions. The first 29 questions were  closed-ended questions, with many containing follow-up questions to  further explore experts’ responses. The last question was open-ended to  capture experts’ views on issues that had not been previously covered in  the survey. Out of the 46 experts sampled for the second round of the  survey, 36 responded, resulting in a response rate of 78 percent. We  conducted follow-up phone calls around mid-February 2016 to  participants who had not completed the survey, had not turned in their  conflict-of-interest forms, or both. The 36 who responded to the survey  were those experts who successfully submitted their conflict-of-interest  forms and completed the electronic survey. Five of the 36 respondents  who participated in the second round of the survey had not participated in  the first round of the survey.
Because we selected a nongeneralizable sample of experts, their views  are not generalizable to other experts in these subject matter areas, but  their views can provide illustrative examples of critical materials supply  issues. The quality of survey data can be affected by nonsampling error.  Nonsampling error includes variations in how respondents interpret  questions, respondents’ willingness to offer accurate responses, and data  collection and processing errors. In developing the web survey, we  pretested draft versions of the instrument in December 2015 with 5  experts who later participated in the second round of the survey. On the  basis of the pretests, we made revisions to the survey. We included steps  in developing the survey and collecting, editing, and analyzing survey  data, to minimize such nonsampling error. Furthermore, using a web- based survey also helped remove errors in our data collection effort.  Allowing experts to enter their responses directly into an electronic  instrument automatically created a record for each expert in a data file  and eliminated the errors associated with a manual data entry process.
To determine the extent of collaboration among agencies that are  members of the Subcommittee, we collected documents and interviewed  officials in OSTP and other agencies that are Subcommittee members to  obtain additional information on the federal approach, including efforts to  coordinate federal activities. To evaluate the federal approach, including  coordination, we compared federal efforts against the national policy  outlined in the 1980 Act and key practices for interagency collaboration.  We reviewed the eight key practices for interagency collaboration based  on which of the practices were most relevant to the operations of the  Subcommittee. The key practices for interagency collaboration are among  the options for reducing or better managing fragmentation to improve the  efficiency of federal programs and more effectively achieve their  objectives. We identified all but one of the key practices (reinforce  individual accountability for collaborative efforts through performance  management systems) as relevant to the Subcommittee’s functions.
We conducted this performance audit from March 2015 to September  2016 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Results of Selected U.S. Critical Materials Assessments
paragraphs: Table 5 provides information on the results of selected criticality  assessments that have been conducted on a variety of materials that are  important to U.S. economic and national security interests.
section_title: Appendix III: Comments from the Office of Science and Technology Policy
section_title: Appendix IV: Comments from the Department of Commerce
section_title: Appendix V: Comments from the Department of Agriculture
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Chris Murray (Assistant Director),  Darnita Akers, Martin Campbell, Antoinette Capaccio, Mackenzie Doss,  Lorraine Ettaro, Cheryl Harris, Holly Hobbs, Jill Lacey, Dan C. Royer,  Tind Shepper Ryen, Jerome Sandau, Alexandra Stone, Vasiliki  Theodoropoulos, and Reed Van Beveren made key contributions to this  report.