Amicus Curiae Brief — Diamond Alternative Energy, LLC, et al., Petitioners v. Environmental Protection Agency, et al.

No. 24-7

In the

Supreme Court of the United States

DIAMOND ALTERNATIVE ENERGY, LLC, et al.,

Petitioners,

v.

ENVIRONMENTAL PROTECTION AGENCY, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of A ppeals for the

District of Columbia Circuit Case Numbers

22-1081, 22-1083, 22-1084, 22-1085

BRIEF OF AMICI CURIAE

CALIFORNIA BUSINESS ROUNDTABLE

AND CALIFORNIA MANUFACTURERS &

TECHNOLOGY ASSOCIATION

IN SUPPORT OF PETITIONERS

Dale A. Stern (Bar No. 131108)

Counsel of Record

Downey Brand LLP

621 Capitol Mall, 18th Floor

Sacramento, CA 95814

(916) 444-1000

dstern@downeybrand.com

Attorney for Amici Curiae

331823

A

(800) 274-3321 • (800) 359-6859

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . iii

INTEREST OF AMICI CURIAE . . . . . . . . . . . . . . . . . . 1

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . 3

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

I.

PETITIONERS SATISFIED ARTICLE

III STA NDING REQUIREMENTS

INCLUDING REDRESSABILITY . . . . . . . . . . 6

A. Article III Standing is Established

as Evidenced by the Wide Breadth

of Economic Participants Adversely

Affected by EPA’s Waiver . . . . . . . . . . . . . . . 6

B. Upholding the D.C. Circuit’s Limited

View of Redressability Will Close the

Courthouse Door to a Variety of Future

Injured Parties that are Negatively

Impacted by Major Agency Actions . . . . . . 9

II. THE VAST ECONOMIC AND POLITICAL

I M PAC T OF EPA’ S A BI LI T Y T O

GR A NT A WA I V ER R A ISES THE

MAJOR QUESTIONS DOCTRINE . . . . . . . . . 13

ii

Table of Contents

Page

A. The Major Questions Doctrine . . . . . . . . . . 13

B. Cobalt’s Role in a Transformed Vehicle

Economy Based on Lithium-Ion

Battery Technology . . . . . . . . . . . . . . . . . . . 15

C. The Economic Consequences of Other

Industries’ Competing Demand for

Available Cobalt Supplies . . . . . . . . . . . . . . 16

D. T he Econom ic Consequences of

Expected Cobalt Supply Shortages . . . . . . 16

E. T h e E c o n o m i c a n d P o l i t i c a l

Consequences of Reliance On, and

Expansion of, Existing Cobalt Supplies . . 19

F.

T he Econom ic a nd Pol it ic a l

Consequences Undermining Protection

of Marine Resources, Human Rights,

Energy Independence, and National

Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

G. The Economic Consequences of Mineral

Shortages are Not Limited to Cobalt . . . . 24

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

iii

TABLE OF CITED AUTHORITIES

Page

CASES

Bennett v. Spear,

520 U.S. 154 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Corner Post, Inc. v. Board of Governors

of the Fed. Rsrv. Sys.,

603 U.S. ___ (2024) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Department of Commerce v. New York,

588 U.S. 752 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Energy Future Coalition v. EPA,

793 F.3d 141 (D.C. Cir. 2015) . . . . . . . . . . . . . . . . . 8, 12

FDA v. Brown & Williamson Tobacco Corp.,

529 U.S. 120 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . 9, 13

Utility Air Regul. Grp. v. EPA,

573 U.S. 302 (2014) . . . . . . . . . . . . . . . . . . . . . . . . . 13-14

West Virginia v. EPA,

142 S. Ct. 2587 (2022) . . . . . . . . . . . . . . . . . . . . . . . 3, 14

Statutes, Rules and Other Authorities

42 U.S.C. § 7543(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Rule 37.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Rule 37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

iv

Cited Authorities

Page

“A Closer Look At California’s Cobalt Economy,”

California Center for Jobs & the Economy

(January 2019), https://www.cobalt-economy.

centerforjobs.org/ . . . . 15, 16, 17, 18, 19, 20, 21, 22, 23

California Department of Food and Agriculture,

2022-2023 California Agricultural Statistics

Review, https://www.cdfa.ca.gov/Statistics/

PDFs/2022-2023_california_agricultural_

statistics_review.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

How A mericans View National, Local and

Personal Energy Choices, Pew Research

Cent er, ht tp s: // w w w.p ew re se a rch.org /

science/2024 /06/27/ how-americans-viewnational-local-and-personal-energy-choices/ . . . . . . 10

How Government Programs Help Fuel Tesla Profit,

Wall Street Journal (July 25, 2024), https://

www.wsj.com/business/autos/how-governmentprograms-help-fuel-tesla-profit-c9887cdf . . . . . . . . 10

IMPLAN® model, 2022 Data for California,

IMPLAN Group LLC, IMPLAN System (data

and software), 16905 Northcross Dr., Suite 120,

Huntersville, NC 28078, www.IMPLAN.com . . . . . . 7

“ Nickel shor t age spel ls t rouble for EVs

– report,” E&E News (October 13, 2021),

https: // w w w.eenews.net /a r ticles/nickelshortage-spells-trouble-for-evs-report/ . . . . . . . . . . 24

v

Cited Authorities

Page

Taking the High Road, Strategies for a Fair

EV Future, UAW Research Department,

https://region1d.uaw.org /system /files/evwhite-paper-revised-january-2020-final.pdf . . . . . . 11

The net-zero transition: What it would cost,

what it cou ld br i ng, McK i nsey Globa l

Institut e (Janua r y 2 0 2 2), https: // w w w.

mckinsey.com /capabilities/sustainability/

o u r - i n s i g ht s / t h e - n e t - z e r o - t r a n s i t i o n what-it-would-cost-what-it-could-bring . . . . . . . . . . 14

“ T he Role of Cr it ica l M i nera ls i n Clea n

Energy Transitions,” International Energy

Agency (March 2022) (“IEA Study 2022”),

https://iea.blob.core.w indows.net /assets/

f fd 2a 8 3b - 8 c 3 0 - 4e9d- 9 8 0a-2b 6 d9a 8 6fdc /

TheRoleofCriticalMineralsinCleanEnergy

Transitions.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

U.S. Environmental Protection Agency’s (EPA)

action entitled California State Motor Vehicle

Pollution Control Standards; Advanced Clean

Car Program; Reconsideration of a Previous

Withdrawal of a Waiver of Preemption; Notice

of Decision, 87 Fed. Reg. 14,332 (Mar. 14, 2022) . . . 2

1

INTEREST OF AMICI CURIAE1

The California Business Roundtable (“CBRT”) is a

nonpartisan organization comprised of senior executive

leadership of major employers throughout the state of

California, with a combined workforce of over 750,000

employees. For more than 40 years, CBRT has identified

the issues critical to a healthy business climate and

provided the leadership needed to strengthen California’s

economy and create jobs. Among other things, CBRT

concerns itself with policies and conditions that undermine

economic efficiency and structural stability, diminish the

total economic surplus created by California’s economy

for the collective benefit of all its participants, and place

California at a competitive disadvantage in the U.S. and

global economies. Of particular importance to CBRT

are the (often overlooked) economic implications and

consequences of various public policies and laws.

1. Under Rule 37.6, CBRT and CMTA affirm that no counsel

for a party authored this brief in whole or in part, and that no person

other than amici or their counsel contributed money intended to fund

preparing or submitting this brief. Petitioners Valero Renewable

Fuels Company, LLC and Diamond Alternative Energy, LLC are

subsidiaries of Valero Energy Corporation. Another subsidiary,

Valero Services, Inc., is a member of CBRT and pays annual

membership dues to the organization. Neither Valero Services, Inc.

nor Valero Energy Corporation, nor any counsel for those companies,

authored this amicus brief in whole or in part or made a monetary

contribution intended to fund the preparation or submission of this

brief, and they did not participate in CBRT’s decision to submit

this amicus brief. CBRT and CMTA provided notice of this brief

pursuant to Rule 37.2 to all counsel of record and did not receive

any objections as to this filing.

2

The California Manufacturers & Technolog y

Association (“CMTA”) is a non-profit statewide trade

association representing the manufactur ing and

technology sectors in California. CMTA works to improve

and enhance a strong business climate for California’s

30,000 manufacturing, processing and technology-based

companies. Since 1918, CMTA has worked with the

state government to develop balanced laws, effective

regulations and sound public policies to stimulate

economic growth and create new jobs while safeguarding

the state’s environmental resources. CMTA represents

400 businesses from the entire manufacturing community

– an economic sector that generates more than $300 billion

every year and employs more than 1.3 million Californians.

Among their responsibilities, CBRT and CMTA file

amicus briefs in cases of importance to their members,

such as the pending action.

Amici submit this brief to assist the Court in its

review of Petitioners’ Petition for Writ of Certiorari

and the U.S. Environmental Protection Agency’s (EPA)

action entitled California State Motor Vehicle Pollution

Control Standards; Advanced Clean Car Program;

Reconsideration of a Previous Withdrawal of a Waiver

of Preemption; Notice of Decision, 87 Fed. Reg. 14,332

(Mar. 14, 2022), with reference to the “major questions

doctrine” that mandates “Congress to speak clearly if it

wishes to assign to an agency decisions of ‘vast economic

and political significance.’” In short, and as discussed

below, EPA’s assertion of authority under Section 209(b)

of the Clean Air Act to allow the deliberate and directed

restructuring of major sectors of the California economy

(itself, the world’s fifth largest economy) has economic

3

and associated political implications that are deep, multilayered, comprehensive, and unprecedented.

Amici submit this brief not as an argument about

the appropriate public policy to address air quality or

climate change, but simply to assist the Court in its review

by explaining why Petitioners’ injuries are redressable

(thereby establishing Article III standing) and why

the “major questions doctrine” must be applied here to

examine the scope of EPA’s statutory authority. Indeed,

“None of this is to say that the policy the agency

seeks to pursue is unwise or should not be

pursued. It is only to say that the agency seeks

to resolve for itself the sort of question normally

reserved for Congress. As a result, we look for

clear evidence that the people’s representatives

in Congress have actually afforded the agency

the power it claims.”

West Virginia v. EPA, 142 S. Ct. 2587, 2622 (2022)

(Gorsuch, J., concurring).

SUMMARY OF ARGUMENT

Section 209(a) of the Clean Air Act generally preempts

States from setting their own emission standards for new

motor vehicles. 42 U.S.C. § 7543(a). But under Section

209(b) of that Act, EPA may grant California a waiver

from federal preemption to enforce its own vehicleemission standards. In 2022, EPA granted California

a waiver to set its own standards for greenhouse-gas

emissions and to adopt a zero-emission-vehicle mandate.

4

Petitioners (also referred to herein as the “Fuel

Producers”) are entities and associations of entities that

produce or sell liquid fuels and the raw materials used

to make them. They immediately sued EPA in 2022,

challenging EPA’s waiver as contrary to the text of Section

209(b). EPA’s waiver controlled for the next four years,

through the 2025 model year.

In denying the Fuel Producers underlying action

before the D.C. Circuit, the court rejected Fuel Producers’

challenge without reaching the merits, concluding that

Fuel Producers’ injuries were not redressable, and

therefore they did not have standing to challenge the

regulation under Article III.

Specifically, the D.C. Circuit held that Fuel Producers

had not presented evidence affirmatively demonstrating

that vacating the EPA waiver (even in 2022, shortly

after it was granted) was “substantially likely” to cause

automakers to produce fewer electric vehicles or alter

their prices so that fewer would be sold before the end

of the 2025 model year. Therefore, according to the

D.C. Circuit, Fuel Producers failed to show that their

financial injuries would be redressed if the EPA waiver

was vacated. Most significantly, the D.C. Circuit faulted

Fuel Producers for not submitting evidence in the form

of affidavits from the regulated automakers showing

precisely how vacating the regulation in 2022 would have

affected the automakers’ production or prices. That is, it

appears the only form of evidence the D.C. Circuit would

have found sufficient to demonstrate redressability would

be affidavits from automakers themselves promising to

produce and sell more liquid fuel vehicles in California if

EPA’s waiver was vacated.

5

Fuel Producers argue (and Amici agree) that it is a

matter of common sense that if the EPA waiver were set

aside and California was unable to require automakers

to produce electric vehicles instead of liquid fuel vehicles,

at least one more liquid fuel vehicle would be sold over

the four-year period. Indeed, Fuel Producers argue that

their standing is “self-evident” because California’s EPA

waiver is expressly intended and designed to reduce the

demand for and consumption of their liquid fuel products.

By disregarding this common sense logic and other

precedent, and seemingly requiring affidavits from the

directly-regulated parties [automakers], Fuel Producers

and Amici contend that the D.C. Circuit’s decision will

erect an often-insurmountable barrier to any third party

seeking to challenge an administrative regulation in the

federal courts of appeal. In sum, and as a result of the D.C.

Circuit’s decision, under various scenarios regulations

with sweeping financial impacts across multiple nonregulated parties would be effectively insulated from

challenge.

Separately, Amici assert that EPA’s underlying action

raises the major question doctrine and the EPA’s assertion

of authority under Section 209(b) of the Clean Air Act to

allow the deliberate and directed restructuring of major

sectors of the California economy (itself, the world’s fifth

largest economy) has economic and associated political

implications that are deep, multi-layered, comprehensive,

and unprecedented. EPA’s action cannot be removed from

these real world questions and implications.

6

ARGUMENT

I.

PETITION ER S SATISFIED A RTICLE III

STANDING REQUIREMENTS INCLUDING

REDRESSABILITY

A.

Article III Standing is Established as Evidenced

by the Wide Breadth of Economic Participants

Adversely Affected by EPA’s Waiver.

One need look no further than this case to understand

that major agency decisions affect numerous layers of

economic participants outside those directly regulated by

the agency decision. The Fuel Producers in this case are

representative of such industries including, but not limited

to, corn and soybean farmers, developers of biorefining

capabilities, manufacturers of biomass derived liquid

fuels, refining and petrochemical companies, energy

marketers, and convenience and fuel retailing stores.

In addition, although they may not be (as the D.C.

Circuit stated) “directly regulated,” there are entire

industries impacted by EPA’s waiver. For example, there

is an industry entirely focused on the collection of used

cooking oils for delivery to rendering and processing

plants for the generation of biodiesel fuels. These activities

also benefit restaurants by giving restaurants value for

this waste rather than having to pay to dispose of used

cooking oils as they did in the past. In California, this is

particularly relevant given that restaurants are currently

facing cost pressures from the state’s $20 an hour wage

(both the fast food chains directly affected and others

7

since they compete with each other). 2 Similarly, cattle

and calves were California’s fourth largest agricultural

commodity in 2022, 3 but this industry has always been at

a cost disadvantage due to the need to import feed from

other states and related shipping and transportation costs.

Ethanol production in California has provided an option

that reduces the feed cost. Corn is imported to produce

ethanol for fuels. The remainder rather than treated as

a waste has been sold as cattle feed. However, without

ethanol, feed costs and meat prices would continue to

increase.

Other indirect industries involved in the production

(refineries), transportation, and sale of liquid fuels

in California, but which are directly impacted by

EPA’s waiver, include, but are not limited to gasoline

stores, trucking and other transportation businesses,

warehousing and storage locations, automotive repair

and maintenance, and transportation support businesses.4

2. For additional information on current employment numbers

and impacts to soaring costs in the restaurant industry, please see

the Center for Jobs and the Economy’s recent Jobs Report, available

here: https://centerforjobs.org/ca/job-reports/full-june-2024-jobsreport.

3. See California Department of Food and Agriculture, 20222023 California Agricultural Statistics Review, available here:

https://www.cdfa.ca.gov/Statistics/PDFs/2022-2023_california_

agricultural_statistics_review.pdf.

4. See generally Industry Contribution analysis using

IMPLAN® model, 2022 Data for California, IMPLAN Group LLC,

IMPLAN System (data and software), 16905 Northcross Dr., Suite

120, Huntersville, NC 28078, www.IMPLAN.com.

8

In light of the foregoing, and as Fuel Producers argue

(and Amici agree), it is a matter of common sense that if

the EPA waiver were set aside and California was unable

to require automakers to produce electric vehicles instead

of liquid fuel vehicles, at least one more liquid fuel vehicle

would be sold over the four-year period. Standing is “selfevident” because California’s EPA waiver is expressly

intended and designed to reduce the demand for and

consumption of their liquid fuel products.

In addition, and as further cited and highlighted by

Fuel Producers:

- Redressability is ordinarily established when a

plaintiff [here, Fuel Producers] can show that a favorable

decision [vacating EPA’s waiver] would remove a

regulatory barrier to a third-party’s [automakers] conduct

that would benefit the plaintiff. Energy Future Coalition

v. EPA, 793 F.3d 141, 144 (D.C. Cir. 2015) (Kavanaugh, J.);

- Redressability also ex ists when a plainti ff

[Fuel Producers] alleges an injury produced by the

“determinative or coercive effect” of a challenged

regulation upon the action of a third party [automakers].

Bennett v. Spear, 520 U.S. 154, 169 (1997).

- Even without a determinative or coercive effect,

redressability can also be established by the “predictable

effect” of a regulation on the decisions of a third party

[automakers]. Department of Commerce v. New York,

588 U.S. 752, 768 (2019). For example, it is predictable

that government regulation of one business “may cause

downstream or upstream economic injuries to others in

9

the chain.” FDA v. Alliance for Hippocratic Medicine,

602 U.S. __ (2024) (slip op., at 12).

By disregarding the above-referenced industries and

this precedent, and seemingly requiring affidavits from

the directly-regulated parties [here, automakers], the

D.C. Circuit’s decision will erect an often-insurmountable

barrier to any third party seeking to challenge an

administrative regulation in the federal courts of appeal.

This Court should grant the Fuel Producers’ Petition

for Writ of Certiorari.

B. Upholding the D.C. Circuit’s Limited View of

Redressability Will Close the Courthouse Door

to a Variety of Future Injured Parties that are

Negatively Impacted by Major Agency Actions.

As detailed above, the Fuel Producers already

satisfied Article III standing requirements, including in

relation to redressability. Even apart from this however,

allowing the D.C. Circuit’s decision to stand with respect

to the redressability prong will chill and prevent future

injured parties from challenging major agency actions.

This is evident by examining other sectors of the U.S.

economy in which the same scenario is likely to play out,

including where parties that are directly regulated by a

major agency action may have different incentives from

an injured plaintiff.

For example, both State of California and federal

regulations impose a de facto tax on consumers buying

liquid fuel vehicles. All automobile manufacturers do not

10

need to have actually made an electric vehicle (EV) to

comply with the rules. They can still produce the more

profitable internal combustion engine (ICE) and cover the

regulatory requirements instead by purchasing credits

from others such as Tesla that produces electric vehicles

in amounts greater than the required minimums. These

costs, then, add to the costs of producing those internal

combustion engine vehicles, in essence acting as a tax.

By way of example, even as its sales fell in the second

quarter, Tesla made more than half its profit from the

sale of those credits. 5

Consumers would also benefit by having more of the

types of vehicles available that they want to buy. Data

from California New Car Dealers Association (California

Auto Outlook Covering 2nd Quarter 2024 and prior issues)

indicate that sales of fully electric vehicles (battery

electric vehicles or BEVs) in California have essentially

peaked over the past 7 quarters at a market share of about

21% of all light duty vehicle sales in spite of declining BEV

prices. This static market share is largely consistent with a

recent national poll from Pew Research Center that found

only 29% of U.S. adults were very or somewhat likely to

seriously consider buying an electric vehicle, down from

a high of 42% in 2022.6

5. How Government Programs Help Fuel Tesla Profit, Wall

Street Journal (July 25, 2024), available here: https://www.wsj.com/

business/autos/how-government-programs-help-fuel-tesla-profitc9887cdf.

6. How Americans View National, Local and Personal Energy

Choices, Pew Research Center, available here: https://w w w.

pewresearch.org/science/2024/06/27/how-americans-view-nationallocal-and-personal-energy-choices/.

11

Finally, current auto workers would also benefit.

According to a 2020 United Auto Workers white paper:7

Electrification presents an opportunity to

create innovative products, but the nature of

EV production could also threaten employment

levels in the automotive industry. This is due to

the much lower mechanical complexity of EV

powertrains. A UBS-commissioned teardown of

a Chevy Bolt found that the EV powertrain had

over 80% fewer moving parts than a comparable

ICE powertrain and improved technology and

design will allow for greater EV powertrain

integration, leading to even fewer parts.

This simplicity could reduce the amount of

labor, and thus jobs, associated with vehicle

production. Even if OEMs choose to produce

EV powertrains in-house, which remains an

open question, there could still be a reduction

in employment at automakers. Ford has

acknowledged this, telling its investors that

the product simplification that comes from

EVs can lead to a 50% reduction in capital

investment and a 30% reduction in labor hours

per unit compared to ICE production. Similarly,

Volkswagen CEO Herbert Diess has said that

“The reality is that building an electric car

involves some 30% less effort than one powered

7. Taking the High Road, Strategies for a Fair EV Future,

UAW Research Department, available here: https://region1d.uaw.

org/system/files/ev-white-paper-revised-january-2020-final.pdf.

12

by an [internal combustion engine]. That means

we will need to make job cuts.”

The impact could be even worse if the mechanical

simplicity of the components leads OEMs

to outsource the work to low-road suppliers

that compete primarily on cost-reductions.

This would reduce the quality of jobs in the

value chain and the positive impact that auto

employment has on the rest of the economy.

If a plaintiff can show that a favorable decision

“would remove a regulatory hurdle” to third-party

conduct that would benefit the plaintiff, that is ordinarily

“enough to demonstrate redressability.” Energy Future

Coalition, 793 F.3d at 141; see Corner Post, Inc. v. Board

of Governors of the Fed. Rsrv. Sys., 603 U.S. ___ (2024)

(Kavanaugh, J., concurring) (slip op., at 8) (“[E]ntire

classes of administrative litigation . . . have traditionally

been brought by unregulated parties.”).

In summary, a potential plaintiff who is not directly

regulated may be injured by the determinative or coercive

effect of a challenged regulation upon the action of a

regulated third party; and/or the predictable effect of a

regulation on the decisions of a regulated third party may

cause downstream or upstream economic injuries to other,

not directly regulated, participants in the chain. This is

sufficient to satisfy Article III standing.

This Court should grant the Fuel Producers’ Petition

for Writ of Certiorari.

13

II. THE VA ST ECONOMIC A N D POLITICA L

IMPACT OF EPA’S ABILITY TO GRANT A

WAIVER RAISES THE MAJOR QUESTIONS

DOCTRINE.

In addition to erring on A rticle III standing

requirements, the D.C. Circuit failed to address EPA’s

underlying action on the merits. As detailed below, EPA’s

action necessarily implicates the major question doctrine.

A.

The Major Questions Doctrine.

The challenged action of EPA – granting California

a waiver of federal preemption under Section 209(b) of

the Clean Air Act for California’s 2012 greenhouse-gas

emission standards and its zero-emission-vehicle sales

mandate – has effectively mandated, as one of the means

of addressing global climate change, that there be a rapid

and comprehensive transformation of the vehicles driven

by Californians from those vehicles which are powered

by the internal combustion engine to electric vehicles

primarily powered by lithium-ion batteries.

The economic and political implications of such a

deliberate and directed restructuring of major sectors

of the California economy, and the economic risks that

are created thereby, are unprecedented in the state’s

history. Construing Section 209(b) to authorize California

to regulate in this manner raises issues of vast economic

and political significance. Under the “major questions

doctrine,” courts “expect Congress to speak clearly if it

wishes to assign to an agency decisions of ‘vast economic

and political significance.’” Utility Air Regul. Grp. v.

EPA, 573 U.S. 302, 324 (2014) (quoting FDA v. Brown &

14

Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)); see

West Virginia, 142 S. Ct. at 2605.

The obvious effects of EPA’s decision on California’s

automobile market, petroleum industry, agricultural

sectors, and electric grid, are themselves of “vast

economic and political significance.” But even those effects

only scratch the surface. As an illustrative example of

the deep and multi-layered nature of the economic and

political impacts, Amici here discuss the critical role of a

single chemical element – cobalt – in a restructured vehicle

economy based on lithium-ion batteries.

Furthermore, as the largest economy of any of the

United States and fifth largest economy in the world, the

impacts on the California economy alone are sufficiently

vast to invoke the major question doctrine. The subsequent

adoption of California’s standards and policies by other

states and the District of Columbia only reinforces that

conclusion.

Nor are these observations surprising. Globally:

“The economic transformation required to

achieve net-zero emissions by 2050 will be

massive in scale and complex in execution.

The transition would bring substantial shifts

in demand, capital allocation, costs, and jobs,

which will be challenging to a wide range of

stakeholders, not least because they will be

distributed unevenly.”8

8. The net-zero transition: What it would cost, what it could

bring, McKinsey Global Institute (January 2022), p. 50, available at:

https://www.mckinsey.com/capabilities/sustainability/our-insights/

the-net-zero-transition-what-it-would-cost-what-it-could-bring.

15

“Reaching net-zero emissions w ill thus require a

transformation of the global economy.” 9

B. Cobalt’s Role in a Transformed Vehicle

Economy Based on Lithium-Ion Battery

Technology

While a range of vehicle technologies are viable

t o reduce g reen house - g a s em i s sions , EPA ha s

effectively allowed California to select electric vehicles

powered primarily by lithium-ion batteries to be the

state’s predominant technology, and to rapidly force

manufacturers to produce such electric vehicles in place

of traditionally-powered vehicles.

Cobalt is the raw material most critical to the lithiumion battery technology that is presently commercially

available in electric vehicles, and which will be for the

foreseeable future.10 While battery technologies that are

less dependent on cobalt will likely develop over time,

they will not be sufficiently prevalent in electric vehicles

to meet California’s aggressive timelines.11 That makes

the existing lithium-ion battery technology – and its cobalt

dependence – the de facto technology on which electric

vehicle sales in California will be based.12

9. Id., p. 11.

10. “A Closer Look At California’s Cobalt Economy,” California

Center for Jobs & the Economy (January 2019), https://www.cobalteconomy.centerforjobs.org/, pp. 3, 9, 16, 20, 52. The California Center

for Jobs & the Economy (centerforjobs.org) provides an objective

and definitive source of information pertaining to job creation and

economic trends in the United States.

11. Id., pp. 4, 5, 8, 16, 20, 91.

12. Id., pp. 8, 29, 88.

16

California’s reliance on this specific vehicle technology

that depends on a single energy source has widespread

consequences for the broader California (and by extension,

national) economy, and significant, associated social and

political consequences.13

C.

The Economic Consequences of O ther

Industries’ Competing Demand for Available

Cobalt Supplies

Cobalt is widely used across numerous sectors of the

California economy. Therefore, as electric vehicles and

electricity storage batteries ramp up their demand, they

will be competing against other, also expanding, uses of

cobalt, including:

• Traditional chemical applications such as

animal feed additives, catalysts, paint drying

agents, pigments, polyester, recording

media, tires, and vitamin B12.14

• Emerging and rapidly expanding use

of rechargeable and non-rechargeable

batteries in smartphones, tablets, laptops,

tools, equipment such as forklifts, household

13. Automakers have continued to support development of

alternative chemistry batteries. The current predominant alternative

currently being used is lithium-iron-phosphate (LFP), which is both

cobalt and nickel free. These only have about half the energy density

of cobalt/nickel batteries and consequently are used only in vehicles

with a shorter range. Batteries using cobalt, however, are still the

dominant choice in vehicles offering the range consumers are looking

for, and demand is expected to continue to grow.

14. Id., pp. 3, 11, 83, 91.

17

equipment, other consumer products, and

medical applications.15

• Met a l lu r g ic a l appl ic at ion s suc h a s

superalloys for aerospace parts, defense,

power generation, and prosthetics; highspeed steel for cutting tools and maraging

steels; carbide and diamond tools; and

magnets including those used in electric

vehicles, alternative energy generation, and

a wide range of other product applications.16

Indeed, by 2025, cobalt use for non-battery applications

alone is projected to grow to a level that that exhausts the

total amount of cobalt mined in 2017.17 And by 2025, the

demand for cobalt for battery applications other than

electric vehicles and electricity storage batteries is, by

itself, estimated to be 5-30% higher than total mining

production in 2017.18

D.

The Economic Consequences of Expected

Cobalt Supply Shortages

Cobalt shortages are expected by 2025.19 A substantial

expansion of mining will be required to meet most of the

15. Id., pp. 3, 11, 83, 91.

16. Id., pp. 3, 11, 83, 91.

17. Id., pp. 53, 83.

18. Id., pp. 53, 83-84.

19. Id., pp. 6, 10, 12, 69-70, 86-87, 91.

18

massive increase in demand for cobalt. 20 Even if presentlyplanned mining expansion proceeds without delay

and without encountering unanticipated barriers, this

increased and accelerated demand for cobalt for electric

vehicles will likely result in supply and price pressures on

other, non-vehicle manufacturing, sectors of the California

economy, with the most significant impacts likely to be

in those industries where cobalt is also an especially

critical element – consumer electronics, metallurgical,

and medical applications. 21 In the manufacturing sector

alone (i.e., excluding related wholesale, retail, and service

businesses), the non-vehicle industries most likely to be

negatively affected employed over 560,000 Californians

as of 2017. 22

If there are significant cobalt supply shortages they

will likely result in production delays of those products and

applications where cobalt is a critical component, and such

production delays have the greatest potential to result in

significant price increases to consumers and other end

users. 23 Even without a significant supply shortage, any

cobalt price increase will increase product prices and

result in higher costs for consumers, businesses, and

public services such as transportation, facilities, and

healthcare. 24

20. Id., pp. 5, 11, 84.

21. Id., pp. 84-85.

22. Id., pp. 84-85.

23. Id., p. 85.

24. Id., p. 85.

19

Of course, the effect on individual California

companies will vary depending on the extent to which

they rely on cobalt-dependent components. For consumers,

the most significant impact would likely be the prices for

consumer electronics. 25

It is estimated that a 1% increase in the prices for

consumer electronics would cost California consumers

around $400 million annually. 26 While some consumer

electronics companies would absorb higher costs in the

short run, longer term cobalt supply issues would be more

likely to translate into higher consumers prices. 27

E. The Economic and Political Consequences

of Reliance On, and Expansion of, Existing

Cobalt Supplies

Cobalt is the battery-critical material that is most

likely to be in short supply. 28 As of 2019, mining in the

Democratic Republic of the Congo (DRC) supplied more

than half of the world’s cobalt, and it is expected to supply

three-quarters by 2025. 29 Because, as discussed above,

projections through 2025 indicate that all or more of the

world’s current mining output will be required to meet the

cobalt demands of non-vehicle applications, the additional

cobalt necessary to supply electric vehicles will have to

25. Id., p. 86.

26. Id., p. 86.

27. Id., p. 86.

28. Id., pp. 10, 52.

29. Id., pp. 5, 11, 58-60, 86, 91.

20

depend on expanded mining, almost all of which will also

be located in the DRC. 30 However, decades of civil unrest

and war in the DRC, which shows no sign of abating, have

led to frequent disruption of mining operations and global

minerals supplies. 31 While China-based companies have

moved to invest and assert increasing control over DRC

mines, that circumstance introduces a different risk of

harm to the California (and by extension) U.S. economy if

China’s national policies lead to monopolistic practices. 32

Further, the unavoidable reliance on DRC-based

mines as the critical supplier of cobalt necessarily entails

acceptance of, if not tacit support for, the prevailing

mining conditions in the DRC. A substantial component

of the DRC’s cobalt production comes from subsistence,

artisanal mining in unsafe working conditions utilizing

child labor, which are also associated with other worker

and human rights abuses.33 While foreign governments and

companies may make efforts to get future cobalt from the

DRC under “ethical” and child-labor-free conditions, the

effectiveness of these efforts will depend on the unlikely

emergence of administrative and political conditions in

the DRC, including control of corruption, that have not

existed for several decades. 34 Corruption, in particular,

has drained the DRC of mineral revenues necessary for

basic mine maintenance, leading to the physical collapse

30. Id., pp. 5, 60, 64, 69, 91-92.

31. Id., pp. 13, 75-76, 86-87, 92.

32. Id., pp. 64, 70-73, 87.

33. Id., pp. 3, 5, 13, 66-67, 92.

34. Id., pp. 6, 11, 67, 76-77, 92.

21

of mines. 35 And with two-thirds of the DRC population

living in extreme poverty (with income of less than $1.50

a day), and with most other income options having been

destroyed by decades of civil unrest and war, the economic

incentives to retain the DRC’s cobalt supply industry in

its present form will only increase. 36

Further compounding the risks of cobalt reliance, is

the fact that cobalt is mined as a co-product of copper and

nickel. 37 Therefore, an additional, significant barrier to

the expansion of cobalt mining capacity is the influence of

global price and supply conditions for nickel and copper.

Even large increases in cobalt prices will likely have little

effect on the total amount produced by mines.38 Illustrating

this phenomenon, production of cobalt declined in 2017 due

to a slump in Chinese demand for copper and nickel, even

as the prices for cobalt rose dramatically. 39

F.

The Economic and Political Consequences

Undermining Protection of Marine Resources,

Human Rights, Energy Independence, and

National Security

While ample, alternative cobalt resources exist to

meet the needs of electric vehicles, they are located in deep

35. Id., pp. 6, 13, 86.

36. Id., pp. 6, 11, 65, 67, 85, 92.

37. Id., pp. 58, 63.

38. Id., pp. 11, 63-64, 91.

39. Id., pp. 11, 63, 64, 91.

22

seabed deposits.40 Even if those marine resources could

be tapped on an economical basis (which they presently

cannot be), any such efforts on or near the California coast

would most certainly generate, and have to overcome,

considerable environmental opposition.41

Ironically, the electric vehicle policies that California

set in motion have now caused other nations to consider

exploiting marine cobalt deposits in the same sorts of

marine environments that California has historically

sought to protect.42

California, like other states, has long been willing

to passively consume products that have been produced

elsewhere under conditions – humanita r ian and

environmental – that California would not allow to occur

within its jurisdiction. But cobalt supply for electric

vehicles will present a dramatically different scenario

where it is actually California’s own policies that drive

the occurrence of these objectionable practices around

the globe.

California’s mandated sales targets for electric

vehicles will not only require expanded mining, but also

the expansion of the capacity to refine the materials

and produce battery cells. Such facilities will need to be

quickly sited, permitted, and constructed – on expedited

timelines that California does not allow for even its most

40. Id., pp. 12, 61-63, 93.

41. Id., pp. 12, 93.

42. Id., pp. 12, 63, 93.

23

urgent economic problems, such as housing.43 Battery cell

production has become highly concentrated in East Asia

countries as a result of aggressive industrial policies to

develop that capacity, including government subsidies.44

Thus, while China and the other East Asian nations

are expanding their materials refining and battery cell

capacity, California has yet to even consider changes

to its California Environmental Quality Act (CEQA),

permitting, and other regulations to shorten delays.45

The cost efficiencies that have been created in East

Asia’s battery supply clusters likely means that this

concentration of the battery cell industry in East Asia will

endure, if not expand.46 The net result of this unprecedented

commitment to, and impending reliance on, a single and

increasingly-foreign energy source is to reverse the

U.S.’s steady progress towards energy independence and

greater national security.47 By comparison, when U.S.

dependence on OPEC oil production peaked in 1977 it

accounted for only one-third of U.S. consumption, and it

had dropped to only 17% by 2017.48

43. Id., p. 93.

44. Id., pp. 4, 8, 18, 20-23, 92.

45. Id., p. 92.

46. Id., pp. 8, 21, 23-25.

47. Id., pp. 25, 92.

48. Id., pp. 6, 86.

24

G. The Economic Consequences of Mineral

Shortages are Not Limited to Cobalt

Finally, it should be noted that while this amicus brief

has focused on cobalt as a key battery-critical mineral,

similar production constraints and impacts also exist

for other minerals. A study by the International Energy

Agency (IEA) anticipates that by 2026 for copper and

2028 for lithium (as well as cobalt) demand will exceed

production from both current mining operations and those

now under construction. “The Role of Critical Minerals

in Clean Energy Transitions,” International Energy

Agency (March 2022) (“IEA Study 2022”), p. 119.49 Other

assessments expect nickel demand (Class 1 nickel) to also

exceed supply as soon as 2026. “Nickel shortage spells

trouble for EVs – report,” E&E News (October 13, 2021).50

The IEA study further noted:

Our analysis suggests that it has taken on

average over 16 years to move mining projects

from discovery to first production. These long

lead times raise questions about the ability of

suppliers to ramp up output if demand were to

pick up rapidly. If companies wait for deficits

to emerge before committing to new projects,

this could lead to a prolonged period of market

tightness and price volatility.

49. https: //iea .blob.core.w indows.net /assets /ffd 2a 8 3b 8c 30 - 4e9d-98 0a-2b6d9a 8 6fdc / TheRoleofCr iticalMineralsin

CleanEnergyTransitions.pdf.

50. https://www.eenews.net/articles/nickel-shortage-spellstrouble-for-evs-report/.

25

CONCLUSION

For the foregoing reasons, this Court should grant

Petitioners’ Petition for Writ of Certiorari.

Respectfully submitted,

LL

d

N

Dale . Stern (Bar o. 131108)

Counsel of Record

Downey Bran

P

621 Capitol Mall, 18th Floor

Sacramento, CA 95814

(916) 444-1000

dstern@downeybrand.com

A

August 7, 2024

Attorney for Amici Curiae