Power & Pipes

FERC, CFTC, and State Energy Law Developments

US President Joseph Biden issued a directive to the secretary of defense on March 31, invoking the Defense Production Act (DPA) to spur the domestic production of critical minerals needed to produce large-capacity batteries for the automotive, emobility, and stationary electricity storage sectors.

The president’s executive action is in direct response to the Biden-Harris administration’s longstanding concern that the existing supply chain and domestic capabilities to produce large-capacity batteries are insufficient to meet current and projected production and consumer domestic demand for the growing electric vehicle (EV) market. The administration’s action also aims to relieve the United States’ reliance on foreign oil while aiding a swift transition to a clean energy future.

The DPA provides the president authority to shape national defense preparedness programs and take appropriate steps to maintain and enhance the domestic industrial base. While the DPA was originally enacted in 1950, it is now used to enhance and support domestic preparedness for response and recovery from natural hazards, terrorist attacks, and other national emergencies.

Under the DPA, the president may require companies to prioritize and accept contracts for materials and services as necessary to promote the national defense, incentivize the domestic industrial base to expand production and supply of critical materials and goods, and establish voluntary agreements with private industry. The president may delegate these authorities to department and agency heads.

President Biden’s action reaffirms the administration’s commitment to the growing EV sector and may have far-reaching effects on the domestic EV sector.

Currently, the United States depends, in large part, on foreign sources to supply the necessary minerals and materials to build EV batteries. These minerals generally include lithium, nickel, graphite, cobalt, and manganese. Purchasing and importing these materials is costly and presents a barrier to the growth of the EV industry in the United States. President Biden’s use of the DPA will encourage EV sector growth through funding for feasibility studies, co-product and by-product production at current mining operations, and productivity/safety modernizations.

The administration’s commitment to domestic mining and battery production capabilities is in addition to the significant funding opportunities made available in the November 2021 enactment of the Bipartisan Infrastructure Law.

Through that law, the Department of Energy (DOE) is making nearly $2.9 billion in grant opportunities available to private sector applicants to pursue battery materials processing, manufacturing, and second-use application initiatives. Interested applicants are currently awaiting DOE’s issuance of funding opportunity announcements for those programs, which DOE estimates will be released in late April or early May. This is, of course, in addition to the $7.5 billion in funding that the infrastructure law made available in grant opportunities to develop a national network of publicly available EV chargers.