President Trump Declares National Emergency, Considers Import Restrictions to Address Reliance on Critical Minerals from "Foreign Adversaries"

On September 30, 2020, President Trump issued an Executive Order (the "2020 Order") declaring a national emergency, pursuant to the National Emergencies Act (NEA, 50 U.S.C. § 1601 et seq.), with respect to the United States' "undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries[.]" The 2020 Order directs the US Department of the Interior (the "DOI") to develop, by November 29, 2020, recommendations for potential executive actions to respond to the alleged national emergency, which may include "the imposition of tariffs or quotas, [or] other import restrictions against China and other non-market foreign adversaries[.]"  

The 2020 Order specifically targets the 35 types of "critical minerals" identified by the DOI in 2018, pursuant to President Trump's 2017 Executive Order (the "2017 Order") mandating the development of a federal strategy to ensure "secure and reliable supplies" of minerals that are "essential to the economic and national security of the United States[.]" However, whereas that strategy emphasized removing regulatory impediments to domestic minerals production and expanding trade with allied countries, the 2020 Order contemplates a different approach, centered on import restrictions, which could significantly disrupt existing supply chains and business operations. We provide an overview of the 2020 Order and its implications below. 

Background

On December 20, 2017, President Trump issued the 2017 Order entitled A Federal Strategy To Ensure Secure and Reliable Supplies of Critical Minerals.¹ Based on findings that "[t]he United States is heavily reliant on imports of certain mineral commodities that are vital to the Nation's security and economic prosperity," and that this alleged dependency "creates a strategic vulnerability," the 2017 Order directed the DOI to develop a list of "critical minerals," defined as:

(i) a non-fuel mineral or mineral material essential to the economic and national security of the United States, (ii) the supply chain of which is vulnerable to disruption, and (iii) that serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security.

Additionally, the 2017 Order directed the US Department of Commerce (the "DOC") to issue a report providing "a strategy to reduce the Nation's reliance" on the critical minerals identified by the DOI.   

Following an interagency review and public comment process, the DOI published the required list of "critical minerals" on May 18, 2018.²  The DOI identified 35 "critical minerals," as follows: 

On June 4, 2019, the DOC published its report entitled A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals.³ The report provided several recommendations for addressing the alleged vulnerabilities described in the 2017 Order, which included: (1) streamlining permitting and review processes related to developing mining claims or leases and enhancing access to domestic critical mineral resources in the United States; (2) improving understanding of domestic critical mineral resources (e.g., through topographical, geological, geophysical and bathymetrical mapping of the United States); (3) supporting educational initiatives to develop the US critical minerals workforce; and (4) increasing trade and cooperation with allied countries, such as Canada and Mexico, to reduce the likelihood of disruption to critical mineral supply chains.

The DOC report did not recommend the imposition of tariffs, quotas or other import restrictions, but it alluded to potential investigations under Section 232 of the Trade Expansion Act by suggesting that the government "[c]onsider whether the circumstances of U.S. reliance on imports of high risk materials merit investigations to determine the effect on U.S. national security[.]" Section 232 authorizes the President to "adjust imports" of any article, based upon a finding by the DOC that imports of the article threaten to impair US national security.⁴

September 30, 2020, Executive Order on "Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries"

Declaration of National Emergency

President Trump's 2020 Order goes beyond the previous 2017 Order by declaring a national emergency pursuant to the NEA with respect to "our Nation's undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries," which allegedly constitutes "an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States."⁵  The declaration of such an emergency under the NEA is a prerequisite for the President to exercise his emergency powers under the International Emergency Economic Powers Act (IEEPA, 19 U.S.C. § 1701-1707), which authorizes the president to regulate international commerce with the United States in response to a national emergency.⁶ Among other authorities, subsection 203(a)(1)(B) of IEEPA authorizes the President to "investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States[.]"⁷

Investigation under IEEPA and Recommendations for Action

Citing to subsection 203(a)(1)(B) of IEEPA, the 2020 Order directs the Secretary of the Interior, in consultation with other government agencies, to "investigate our Nation's undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries," and to submit a report to the President by November 29, 2020, summarizing the conclusions of the investigation. In addition, the report must "recommend executive action, which may include the imposition of tariffs or quotas, [or] other import restrictions against China and other non-market foreign adversaries whose economic practices threaten to undermine the health, growth, and resiliency of the United States, or other appropriate action, consistent with applicable law."  

The 2020 Order does not elaborate on these directives (e.g., by defining "foreign adversaries" or describing what other "appropriate actions" might be considered). The 2020 Order also does not specify whether the proposed import restrictions would be imposed pursuant to the President's purported authority under IEEPA or, alternatively, under trade statutes such as Section 232 that generally require an agency investigation and public comment process prior to any final decision.

Other Directives

The 2020 Order contains several additional directives to be carried out by federal agencies, none of which are likely to have an immediate impact on trade. For example:

• By October 30, 2020, each agency head must identify "all legal authorities and appropriations that the agency can use" to meet the 2020 Order's stated objectives of expanding and protecting the domestic supply chain for minerals and establishing secure critical minerals supply chains. By November 29, 2020, each agency must submit a report to the President detailing its strategy for using the identified legal authorities and appropriations.
• By November 15, 2020, the Secretary of State and the US Trade Representative must submit a report to the President identifying existing and planned policy options to "reduce the vulnerability of the United States to the disruption of critical mineral supply chains through cooperation and coordination with partners and allies," among other objectives.
• By October 30, 2020, the Secretary of Energy must develop and publish guidance "clarifying the extent to which projects that support domestic supply chains for minerals" are eligible for loan guarantees pursuant to Title XVII of the Energy Policy Act of 2005, as amended (42 U.S.C. 16511 et seq.), and for funding awards and loans pursuant to the Advanced Technology Vehicles Manufacturing incentive program established by section 136 of the Energy Independence and Security Act of 2007.

Outlook

The President's declaration of a national emergency and request for a plan to impose import restrictions under IEEPA is an important development for companies involved in the exploration, mining, processing and trade of critical minerals. The 2020 Order provides only a brief, 60-day window for the DOI to complete its investigation and recommend specific trade actions to the President, and any presidential actions based thereon could commence quickly. Interested parties in the United States and abroad may therefore wish to assess promptly the risks arising from this investigation on their supply chains and trade flows, and potential mitigation strategies.  

IEEPA does not expressly require Executive Branch agencies to solicit public comments on investigations and actions taken pursuant to the statute. However, given the magnitude and complexity of the issues under investigation, and the wide range of US stakeholders that might be adversely affected, the DOI may provide an opportunity for interested parties to provide input through a notice and comment process, as it did when developing the initial list of critical minerals. Moreover, the use of IEEPA to impose import tariffs as contemplated by the 2020 Order would be unprecedented, and some observers (including Members of Congress) have stated that the law does not grant the President the authority to impose import tariffs or quotas. Interested parties may therefore wish to prepare factual and legal arguments to protect their commercial interests.

The 2020 Order can be viewed here.

_{1 Executive Order No. 13817, 82 Fed. Reg. 60835 (December 17, 2017) is here.   
2 Final List of Critical Minerals 2018, 83 Fed. Reg. 23295 (May 18, 2018) is here. 
3 The DOC report is here. 
4 19 U.S.C. § 1862.
5 According to the Order, this threat arises in part from "[o]ur dependence on one country, the People's Republic of China (China), for multiple critical minerals." 
6 The President may only take action under IEEPA where two criteria are met (19 U.S.C. § 1701):
(1) The action must be intended to deal with an "unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States"; and  (2) Prior to taking (or concurrent with any action taken) under IEEPA, the President must declare a national emergency pursuant to the National Emergencies Act (NEA, 50 U.S.C. § 1601 et seq.) with respect to such threat. The NEA further provides that the proclamation declaring the national emergency "shall immediately be transmitted to the Congress and published in the Federal Register" (50 U.S.C. §1621(a)). The NEA also provides that the President must specify, either in the declaration of a national emergency, or by one or more contemporaneous or subsequent Executive orders published in the Federal Register and transmitted to the Congress, the provisions of law (e.g., IEEPA) under which the President proposes to act (50 U.S.C. § 1631(a)).
7 19 U.S.C. § 1702(a)(1)(B).}  

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