Biden Uses Defense Production Act to Boost Domestic Mining in Support of Large-Capacity Battery Production

This presidential designation opens up federal funding to support domestic mining and processing of the minerals used in these batteries, such as lithium, nickel, cobalt, graphite, and manganese, which are currently sourced from abroad. Large-capacity batteries are used in electric vehicles and for energy storage. The order is notable because President Biden is using his authority under the Defense Production Act (DPA) to support the transition to clean energy.

Last year, President Biden set targets for the United States to halve 2005 baseline greenhouse gas emissions by 2030 and become a net-zero emission economy by 2050. The Biden Administration’s long-term plan to achieve those targets recognized the importance of battery technology to the growth of both zero-emission vehicles and energy storage.

In his order invoking the DPA, President Biden reiterated that large-capacity batteries are “requirements of the clean energy economy.” Noting the US’s current dependence on “unreliable foreign sources” for the materials used to make batteries, the order invokes DPA Section 303, which authorizes the president to undertake certain activities to “create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national defense.”

The order identifies three specific activities to receive support:

• Feasibility studies for mining, beneficiation, and processing;
• By-product and co-product production at existing facilities; and
• Mining, beneficiation, and processing modernization.

The immediate impact to domestic businesses engaged in mining or processing materials used in batteries is not yet clear. However, the order is explicit that it does not waive or supersede compliance with permitting requirements or environmental health and safety laws.

Projects authorized under DPA Section 303 are eligible to receive funding from the Defense Production Act Fund, although the order does not specify any source or amount of funds to be used.

ArentFox Schiff will continue to monitor for further uses of the Defense Production Act that advance the transition to clean energy.