Can U.S. make EV batteries without China? Not yet.

China may have a 'lock on key parts' needed for
EV production. (Kumpan Electric photo, Unsplash)

When it comes to building electric cars, the industry may have to choose between tax incentives for buyers or minerals and parts from China, reports Jeff St. John of Canary Media. "Last week, the Biden administration released long-awaited proposed guidance for how it plans to enforce one of the most complex and controversial aspects of the electric vehicle incentives created by the Inflation Reduction Act: the requirement that the country's fast-growing EV and battery industries avoid using materials supplied by China, a geopolitical rival that has so far dominated clean energy manufacturing."

The requirement leaves companies that have "spent more than $100 billion establishing U.S.-based EV and battery factories. . . confronting the reality that, under the proposed rules, virtually none of the EVs they are currently manufacturing will still be eligible for the law's $7,500 federal tax credit as of 2025," St. John writes. "Under the proposed guidance from the Treasury Department, electric vehicles containing any battery component ​'manufactured or assembled by a foreign entity of concern' will no longer be eligible for the tax credit starting next year. In 2025, electric vehicles that ​'contain any critical minerals that were extracted, processed, or recycled' by a foreign entity of concern will no longer be eligible for the credit."

The ability of the U.S. to source all the critical minerals for lithium-ion EV batteries without doing business with China seems unlikely. "China has built a commanding lead in every step of the global EV supply chain, from the refining of minerals to the production of cathode and anode materials and the manufacture of battery cells and EVs," St. John reports. "Today, it's very difficult to find a lithium-ion EV battery that doesn't contain some portion of minerals or components processed or made in China or by a Chinese-based company."

Meanwhile, U.S. companies and partners from Europe and Asia are trying to catch up to China by "building domestic EV and battery manufacturing capacity," St. John explains. "They remain largely reliant on mineral and materials supply chains controlled by Chinese firms." 

Hardrock mining companies pay 'a pittance' for minerals mined from public lands. Some say taxpayers need more.

A copper mine shaft 1,100 feet below the surface near
Superior, Ariz. (Photo by Tamir Kalifa, The New York Times)

Since 1872, mining companies have taken stores of gold and other metals from public lands without paying royalty fees to the federal government. The Biden administration says lawmakers need to "fix the Gold Rush-era General Mining Law so it can better manage the mineral resources buried under millions of acres of public land," reports Lisa Friedman of The New York Times. "A top priority: require companies to pay something in exchange for what they take. Unlike companies that extract oil, gas and coal from federal lands, hardrock miners pay no royalties to the federal government."

Initial plans suggest a 4 to 8 percent fee of the net value of mined materials, which "could translate into as much as $97 million annually and drew sharp opposition from mining operators," Friedman writes. Tommy Beaudreau, the deputy secretary of the Interior Department, told Friedman: "The biggest takeaway from our report is that our 150-year-old-law, the 1872 mining law, needs to be reformed and brought into the 21st century."

Beaudreau heads up a "working group of officials across federal agencies who reviewed policies and regulations for hardrock mining," Friedman explains. "The group found the law did not do enough to steer mineral exploration away from sensitive resources or to promote 'early and meaningful' engagement with tribes or other affected communities. . . . And the law should require mining companies that take resources from public lands to pay something for that privilege. . . .The report stated, [the law] 'fails to provide the American taxpayer with any direct financial compensation for the value of hardrock minerals extracted from most publicly owned lands.'"

While mining operations pay state royalties and taxes, operators on federal land "only pay the U.S. government one-time claim processing fees totaling $60. Many companies also pay an annual $165 maintenance fee per site, according to the report," Friedman writes. Mining companies oppose the change. Rich Nolan, chief executive of the National Mining Association, told Friedman that the changes would "throw additional obstacles in the way of responsible domestic projects and would-be investment, forcing the U.S. to double-down on our already outsized import reliance from countries with questionable labor, safety and environmental practices."

Environmental groups praised the proposed change. Chris Wood, the president of Trout Unlimited, a conservation group, told Friedman, “It’s the only commodity produced off of our public lands where there is no tax or royalty." Friedman reports, "Wood added that money raised from federal royalties could help to clean up an estimated half a million abandoned mines scattered across the American West."

W.Va. Supreme Court says landowners can keep drillers from using their land to frack on other properties

David Wentz looks at an EQT gas well site on his property. (ProPublica photo by Raymond Thompson Jr.)

Last Wednesday, the West Virginia Supreme Court ruled unanimously that oil and gas companies are trespassing if they enter private land to use it for something the owners have not agreed to.

"Companies must obtain permission from surface owners in order to use their land to reach reserves under other properties, Justice John Hutchison wrote for the court," report Kate Mishkin and Ken Ward Jr. of the Charleston Gazette-Mail and ProPublica's Local Reporting Network.

The problem that led to the lawsuit began more than seven years ago. EQT Corp. owned the mineral rights on Beth Crowder and David Wentz's farm, and was allowed to use a 20-acre well pad on their property to drill for natural gas under their property. But EQT also owned drilling rights to about 3,000 acres nearby, and wanted to use the Wentz well pad to drill horizontal hydraulic fracturing wells to reach those tracts. Crowder and Wentz told EQT it could not do that, but EQT ignored them and drilled nine wells, causing considerable noise and traffic on the farm, Mishkin and Ward report.

The ruling "represents a rare victory for residents in a state where economics and politics are increasingly controlled by the natural gas business after decades of domination by the coal industry. Making it more gratifying for Crowder and Wentz, the court that ruled in their favor has been under the microscope because of connections to the gas industry," Mishkin and Ward report.

Industry officials say fracking limits environmental harm by drilling multiple wells from one pad, but that practice has increased the nuisance for nearby residents, many of whom didn't own their surface tracts when the mineral rights under them were sold. The sellers could not have anticipated the advent of fracking, which critics say is sometimes more of a nuisance than traditional drilling. "Though bills have been introduced year after year that are designed to mitigate the impacts on residents, West Virginia lawmakers have repeatedly refused to act," Mishkin and Ward report.

Proposed Alaskan gold mine, which could be world's largest, clears regulatory hurdles; some local tribes oppose it

Donlin Creek Project as mapped by the developer, Nova Gold

A proposal for a huge, open-pit gold mine in western Alaska cleared a major regulatory hurdle Monday, but still faces opposition from Alaska Natives. After six years of environmental review, the Donlin Gold Project, which will be one of the biggest gold mines in the world, received permits from the U.S. Army Corps of Engineers and the Bureau of Land Management.

Corps approval was needed because the project because it would affect thousands of acres of wetlands. BLM approval was needed because the plans include a 315-mile gas pipeline that crosses over BLM-managed federal land, Krysti Shallenberger reports for the Fairbanks Daily News-Miner.

The mine would bring jobs to the impoverished rural area, which mainly consists of Native Alaskan tribes who live a subsistence lifestyle "heavily subsidized by government checks," Suzanne Downing reports for Must Read Alaska. "During operations, some 434 jobs would be filled in the first year, increasing to 1,000 jobs annually for the life of the mine, which is estimated to be 27 years. Total payroll would be $98 million per year. Mine closure and reclamation would require fewer workers."

But many Yukon-Kuskokwim Delta Native Alaskans oppose the project. "Nearly a dozen have passed anti-mine resolutions in the past two years. The tribes fear the mine would damage their subsistence lifestyle. And they fear a mine accident could contaminate the Kuskokwim River, a vital food source," Shallenberger reports.

The mine is far from a done deal. It will require more than 100 other permits, and a ballot initiative in November could kill the project. The measure would designate all Alaskan water bodies as salmon habitat unless proven otherwise, and would require tougher standards for developers to prove that an area isn't a habitat. Opponents say it's so strict it would stymie development, Downing reports.

Interior official met repeatedly with coal-industry lobbyists before canceling study on health effects of strip mining

A top official in the Department of the Interior met repeatedly with coal-industry lobbyists shortly before canceling a study on the public health effects of surface mining, Jimmy Tobias reports for the Pacific Standard.

Katharine MacGregor

Katharine MacGregor, the principal deputy assistant secretary for land and minerals management, oversees the Office of Surface Mining Reclamation and Enforcement. OSM hired the National Academies of Science, Engineering and Medicine to do the study, but Interior abruptly suspended it last August, as researchers were about to hold their final public meetings on it. The meetings were held, and researchers said they expected to continue after a budget review that Interior had cited as the reason for the suspension, but then Ken Ward Jr. of the Charleston Gazette-Mail revealed that the study was the only one suspended. Later, the contract was canceled and the research committee disbanded.

Tobias writes: "Emails obtained through a FOIA request show that Katharine MacGregor had a hand in ensuring the health study's cancellation. Indeed, she appears to have been keenly interested in the matter." She wrote the OSM director Aug. 17: "I thought you told me on the phone that this was postponed?" The next day, OSM suspended the work.

“This is the very essence of what we mean when we describe Appalachia as a sacrifice zone,” said Bob Kincaid, president of Coal River Mountain Watch, a group fighting mountaintop-removal mining. Bo Webb, coordinator of the Appalachian Community Health Emergency campaign, which helped prompt West Virginia officials to ask for the study, said in the same press release, "It’s clear now that canceling this study was a gift to the coal industry.."

Tobias reports that "in the months leading up to the cancellation," MacGregor's calendar "shows that she had no fewer than six meetings with the most powerful mining players in the country. In both April and May of 2017, she met with the National Mining Association. In March and June, meanwhile, she met with Arch Coal, a long-time practitioner of mountaintop removal mining in Appalachia."

The evidence is circumstantial, but Tobias sees a broader trend in MacGregor's calendars: At the same time she held a mere handful of meetings—fewer than 10, according to my tally—with conservation organizations like The Wilderness Society and Sportsmen for the Boundary Waters." The calendar sshow that she "appears to have a habit of meeting repeatedly with industries and organizations that later receive favorable treatment from agencies she helps oversee," Tobias writes. An Interior spokesperson told him MacGregor is "happy to make time to meet with whomever requests a meeting," including conservation groups. "We have always welcomed input from all citizens and will continue to listen to ideas and concerns from anyone interested in sharing them."

West Virginia bill to allow oil or gas drilling with consent from 75 percent of owners heads to skeptical Gov. Justice

After a tumultuous week, the "co-tenancy" oil and gas drilling bill passed the West Virginia Senate and is headed to Gov. Jim Justice's desk.

"The bill, considered the oil and gas industry’s biggest priority of the session, would allow natural gas and oil companies to drill on land with the consent of at least 75 percent of the owners. It includes an amendment, introduced in the House, to give 50 percent of unknown owners’ interest on the minerals to a Public Employees Insurance Agency stability fund," Kate Mishkin reports for the Charleston Gazette-Mail. That is related to issues that resulted in a statewide teachers' strike.

It's unclear if Justice, who has many coal interests, will sign the bill. Last week he encouraged state Senators to kill the bill and pass a more controversial joint-development bill, which would allow drillers with old leases to drill wells across some individual property lines without signing a new lease. Justice also proposed a special session to vote on natural gas issues and resolve the teachers' strike. He later "moved back" on that proposal, Mishkin reports.

Virginia House panel tables bill apparently aimed at stopping lawsuits over natural-gas royalties

The Virginia General Assembly subcommittee last week tabled a bill that would empty gas royalties "escrow accounts holding at least $30 million that are now the subject of a series of federal class-action lawsuits," Michael Owens reports for the Bristol Herald Courier. "The bill attempts to fine-tune a 20-year-old law initially crafted by former industry lawyers in an attempt to spur Southwest Virginia’s energy sector without getting bogged down in drawn-out legal battles over gas ownership."

The bill, "which legal experts say could have stopped the lawsuits in their tracks, included suggestions by EQT Production, one of two main defendant companies targeted by the lawsuits," Owens writes. It is sponsored by by Rep. Terry Kilgore, R-Gate City. "The company donated $3,000 to Kilgore’s uncontested 2013 election campaign, according to political finance watchdog Virginia Public Access Project. Of that money, $1,000 landed in his campaign’s coffers two days after his election victory Nov. 5."

Landowners have always had a difficult time getting access to the royalties, Owens writes. "Under current law, they can touch the royalties only if they split it with the coal owners, win a costly court battle, or win an out-of-court arbitration. Virginia legislators imposed the hurdles rather than decide whether the gas royalties belong to the person holding the deed for the coal or the person with the deed for the gas estate. And so energy companies look to the escrow accounts each time they drill a coal seam where the deeds to the coal and to the gas are linked to multiple owners. Kilgore’s proposal declared the owners of the gas title to be the rightful recipients of the royalties as long as coal owners did not step in with a claim. The goal was to begin emptying the nearly 1,000 existing escrow accounts of all royalties by mid-2015." (Read more)

Amish selling land rights to oil and natural gas companies, then relocating with cash and tax break

In the oil and gas boom, many landowners have been cashing on selling drilling rights, and the Amish are no exception, even if that is disruptive, Ernest Scheyder reports for Reuters. Some Amish "are sitting on prime drilling land in eastern Ohio, but many say the rapid development is encroaching on their pastoral way of life. Already this year, several oil trucks have been involved in fatal collisions with Amish horse-drawn buggies in the region's narrow and winding roads. So, many Amish are cashing out to escape the noise as their bucolic landscape of lush green hills becomes dotted with oil storage tanks." (Scheyder photo: A Flatiron executive talks with Amish members in Deersville, Ohio)

Residents like Eli Byler are being paid large sums to sell their rights, allowing them to hit the road, Scheyder writes. Flatiron Energy Partners "is paying Byler $221,195 cash, an amount that will be tax-free thanks to an arcane part of the U.S. tax code, if Byler follows through on plans to relocate his family to Pennsylvania." One of the benefits is Section 1031 of code, which says "landowners can use cash they receive for selling their oil and natural gas minerals to buy another piece of property, tax free." The section counts mineral rights as property. Since the beginning of 2013, the number of companies buying Ohio royalty interests has risen from two to 10.

"Byler's deal is part of a larger wave of companies like Flatiron paying cash up front for oil and natural gas royalty interests, deals these companies hope will provide their clients - typically family trusts and other wealth funds - guaranteed income for decades in the form of royalty checks," Scheyder writes. "At least 35 other Amish families plan to sell their royalty rights and make an exodus from the Buckeye State to parts of Pennsylvania or New York state with little or no energy development, said Byler, who plans to sell the full 53.3 acres he owns on the surface, including his homestead, in a separate deal." (Read more)