“NO” on Swalwell’s Rare Earth Mineral Bill (H.R. 1022)

Today, the House is scheduled to vote on the Securing Energy Critical Elements and American Jobs Act of 2013 (H.R. 1022), which is on the suspension calendar.  Introduced by Rep. Eric Swalwell (D-CA)Heritage ActionScorecardRep. Eric Swalwell11%House Democrat AverageSee Full Scorecard11%, the bill — which did not go through the committee process — would “create a number of taxpayer-supported government programs to extract and recycle domestic rare earth minerals” to “address price volatility for rare earths.”  While Congress may be justified in gathering information through basic research on energy-critical elements, subsidizing mining, production, or refinement of rare earth elements is not justifiable and would have adverse effects on markets in the future.

The approach in H.R. 1022 is misguided.  The Heritage Foundation explains rather than creating a new government program and subsidizing “technologies the private sector won’t invest in without a handout, the government should open access to the 13 states where rare earths lie and establish an efficient regulatory pathway that provides companies the certainty needed to extract REEs.”  

Contrary to claims that a government-centric approach to rare earths is “critical” to provide for the common defense, the Department of Defense “sees no imminent security threat in this area — just some possible commercial shortages that hardly rise to the level of ‘critical.’” Additionally, America has “some 13 percent of world reserves” of rare earth elements according to the U.S. Geological Survey. Heritage adds, “If any national security need exists for rare earths, the Department of Defense should provide regular reports, classified or unclassified, concerning demand and supply of those rare earths needed by the military.”

In a testimony before the Energy and Environment Subcommittee of the Science, Space and Technology Committee in 2011, former Heritage Foundation analyst Dereck Scissors stated:

[A]ctive interference in a functioning market is self-defeating. Some proposals and actions concerning ECEs pick out seemingly important materials for what is unavoidably long-term action on the basis of short-term conditions. Supporting ECEs in light of current use risks warping research incentives and generating inferior technology. Supporting individual companies risks elevating the inefficient over superior present or future competitors. A combination of weak firms and inflexible technology kills any industry. Picking winners, including technological winners, in a rapidly developing market increases the odds of a losing industry in the future.

H.R. 1022 does precisely that.  Rather than create an expensive new government program, Congress should deregulate the market for rare earth elements and energy-critical elements:

When the market is working properly, as it is now, the most helpful government policy is to extend the size of the market through deregulation. An obvious way to inhibit Chinese or any other monopoly position in ECEs is for the U.S. to make more of its own resources available. To this end, modifications of federal restrictions on land use should be studied.

Heritage Action opposes H.R. 1022 and will include it as a vote on our legislative scorecard.  

Related:

Heritage Action Scorecard
Rare Earths Bill Should Open Markets, Not Create Government Programs
Access to Rare Earths Is Best Solution to Rare Earths Dilemma
Rare Earth Market Fine Without Government Interference
Rare Earths: The U.S. Government Should Not Manage Supply
The Rare Earths Distraction
Taking the Critical Out of “Critical Materials”
Congressional Testimony: Energy Critical Elements; The Market Is Working