Source: https://www.everycrsreport.com/files/20141023_R43767_1fef04a762152d96f9c04b40597f31065077ceff.html
Timestamp: 2020-04-03 03:10:42
Document Index: 582589004

Matched Legal Cases: ['§2061', '§5195', '§2074', '§2157', '§2158', '§2170', '§2062', '§2071', 'art 217', 'art 700', 'art 33', '§2091', '§2093', '§2152', '§2158', '§2160', '§2170', '§2171', '§2061', '§2152', '§2061', '§2166', '§2061', '§2062', '§2062', '§2071', '§2091', '§2158', '§2152', '§2152', '§2062', '§2062', '§2062', '§2071', '§700', '§468', '§2152', '§700', '§217', '§33', '§2157', '§2074', '§2071', '§2076', '§700', '§2071', 'art 217', 'art 33', 'art 700', '§2077', '§2152', '§2077', '§2091', '§2092', '§2091', '§2091', '§2092', '§2091', '§2092', '§2091', '§2092', '§2091', '§2092', '§2091', '§2093', '§2093', '§2152', '§2093', '§2093', '§2093', '§2093', '§842', '§2093', '§2093', '§2093', '§2094', '§2094', '§2094', '§2093', '§2093', '§2093', '§2093', '§2151', '§2078', '§2152', '§2152', '§2155', '§2158', '§2158', '§2158', '§2158', '§2158', '§2158', '§2158', '§2160', '§2161', '§2170', '§2166', '§2155', '§2171', '§2171', '§2171', '§2158', 'art 332', '§2171', '§2152', '§2158']

October 23, 2014 (R43767)
Major Authorities of the DPA post-2014 Reauthorization (P.L. 113-172)
How Title I Authorities Changed in P.L. 113-172
How Title III Authorities Changed in P.L. 113-172
Defense Production Act Committee, as amended by P.L. 113-72
Track and Enforce Rulemaking Requirements
Review Activities of the Defense Production Act Committee
The Defense Production Act (DPA) of 1950 (P.L. 81-774, 50 U.S.C. Appx §2061 et seq.), as amended, confers upon the President a broad set of authorities to influence domestic industry in the interest of national defense. The authorities can be used across the federal government to shape the domestic industrial base so that, when called upon, it is capable of providing essential materials and goods needed for the national defense.
The current authorities of the DPA include, but are not limited to:
The authorities of the DPA are generally afforded to the President in statute. The President, in turn, has delegated these authorities to department and agency heads in Executive Order 13603, National Defense Resource Preparedness, issued in 2012. While the authorities are most frequently used by, and commonly associated with, the Department of Defense, they can be, and have been, used by numerous other executive departments and agencies.
Since 1950, the DPA has been reauthorized over 50 times, though significant authorities were terminated from the original law in 1953. Congress last reauthorized the DPA in 2014 (P.L. 113-172). This reauthorization amended some of the current DPA authorities and extended the termination of the act by five years, until September 30, 2019, when nearly all DPA authorities will terminate. A few authorities of the DPA, such as the Exon-Florio Amendment (which established government review of the acquisition of U.S. companies by foreigners) and anti-trust protections for certain voluntary industry agreements, have been made permanent by Congress. The DPA lies within the legislative jurisdiction of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs.
The Defense Production Act of 1950, as amended (DPA),1 provides the President a broad set of authorities to ensure that domestic industry can meet national defense requirements. In the DPA, Congress has found that "the security of the United States is dependent on the ability of the domestic industrial base to supply materials and services for the national defense and to prepare for and respond to military conflicts, natural or man-caused disasters, or acts of terrorism within the United States."2 Through the DPA, the President can, among other activities, prioritize government contracts for goods and services over competing customers, and offer incentives within the domestic market to enhance the production and supply of critical materials and technologies when necessary for national defense. Since 1950, the DPA has been reauthorized over 50 times by Congress, most recently in 2014. The majority of DPA authorities will expire on September 30, 2019, unless reauthorized.
This report examines some of the extensive history of the DPA, focusing primarily on its creation and most recent legislative reauthorization. This report also discusses the foremost active authorities of the DPA. Nevertheless, this report is not intended to evaluate all authorities of the DPA comprehensively. In discussing the major authorities of the DPA, this report explains how those authorities may have changed as a result of the most recent reauthorization of the law (P.L. 113-172, To reauthorize the Defense Production Act, to improve the Defense Production Act Committee, and for other purposes).3 This report also identifies relevant delegations of the President's DPA authorities made in Executive Order (E.O.) 13603, National Defense Resources Preparedness.4 Finally, this report provides a brief overview of issues Congress may wish to consider in its oversight of executive branch use of DPA authorities, as well as the implementation of changes made in the most recent reauthorization. The report also discusses congressional considerations for expanding, restricting, or otherwise modifying the authorities provided by the DPA through new legislation.
A number of factors encouraged President Truman to propose such legislation. Both the armed services and the defense industry supporting the nation's effort during World War II had demobilized during the late 1940s after the cessation of hostilities. With the return of peace, the Administration cut back military expenditures significantly. President Truman accentuated these cuts by placing heavy reliance on atomic weapons to provide for the nation's defense.7 The perceived power of the atomic arsenal justified, in the eyes of the Administration, substantial cuts in expensive, manpower-intensive conventional military capabilities. This enabled the President to propose and Congress to pass much-reduced defense appropriations.
In addition, the nation had recently experienced substantial economic and industrial turmoil. Demand for housing and consumer products, unleashed by the expiration of wartime economic controls, precipitated a series of postwar labor strikes. These reached their height in 1946 in a nationwide shutdown of passenger and freight rail service, leading President Truman to threaten to seize control of the railways and draft striking rail workers into the Armed Forces, placing them under military discipline. Though the presidential threats were never carried out, the strike served to illustrate the economic context in which the nation approached the Korean War.8
The original DPA, enacted on September 8, 1950, granted broad authority to the President to control national economic policy.9 Containing seven separate titles, the DPA allowed the President, among other powers, to demand that manufacturers give priority to defense production, to requisition materials and property, to expand government and private defense production capacity, to ration consumer goods, to fix wage and price ceilings, to force settlement of some labor disputes, to control consumer credit and regulate real estate construction credit and loans, to provide certain antitrust protections to industry, and to establish a voluntary reserve of private sector executives who would be available for emergency federal employment.
Four of the seven titles (Titles II, IV, V, and VI), which were those related to requisitioning, rationing, wage and price fixing, labor disputes, and credit controls and regulation, terminated in 1953 when Congress allowed them to lapse.10
Though commonly associated with industrial production for the Department of Defense (DOD), the DPA currently lies within the jurisdiction of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. Prior to 1975, House rules did not permit simultaneous referral of bills to two or more committees. Precedents in both chambers did not allow divided or joint referrals, regardless of bill content. Instead, bills were assigned to committees based on the preponderance of their subject matter. Because much of the President's proposal dealt with economic policy, what became the Defense Production Act was assigned in 1950 to the House and Senate Committees on Banking and Currency (their successors are the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs). Although the parts of the act dealing with the requisitioning of materials, wages and prices, labor, and credit are no longer in force, these committees have retained jurisdiction.
In addition to the standing committees of jurisdiction, the original statute created a Joint Committee on Defense Production. This committee was composed of selected members from the standing Committees on Banking and Currency of the Senate and House. This committee was intended to review the programs established by the DPA and advise the standing committees whenever they drafted legislation on the subject. Although the provision in the DPA establishing the Joint Committee on Defense Production was officially repealed in 1992,11 in effect, the Joint Committee has not existed since 1977, when salaries and expenses for the committee were last funded.12
The DPA has been amended and reauthorized numerous times since its original enactment. Most notably, with the passage and enactment of P.L. 85-95, Congress reauthorized Titles I, III, and VII while allowing Titles II, IV, V, and VI of the DPA to expire in 1953.13 The Defense Production Act, like the War Power Acts that preceded it, included a sunset provision that has required periodic reauthorization and offered the opportunity for amendment. Congress passed the DPA in 1950 and has thus far reauthorized it 52 times, including many short-term "stop-gap" extensions.14 From time to time, the DPA has expired without Congress passing a law reauthorizing and extending the termination date of the DPA. However, in such circumstances, Congress has often ultimately passed a law retroactively setting the effective date for the law to the previous expiration date. Most notably, for example, the DPA expired on October 20, 1990, and was not reauthorized until August 17, 1991. However, upon passage of P.L. 102-99, the effective date of the law was set to October 20, 1990.
The DPA was most recently reauthorized by the 113th Congress. Representative John Campbell introduced H.R. 4809, "a bill to reauthorize the Defense Production Act, to improve the Defense Production Act Committee, and for other purposes," on June 9, 2014. After having been marked up and reported out of the Committee on Financial Services, the bill was considered under suspension of the rules in the House and passed by recorded vote on July 29, 2014.15 The Senate passed H.R. 4809 without amendment by unanimous consent on September 17, 2014, and the President signed the bill into law as P.L. 113-172 on September 26, 2014. In addition to revising DPA authorities as discussed throughout the remainder of the report, P.L. 113-172 extended the sunset of the majority of DPA authorities from September 30, 2014, to September 30, 2019, at which time they will be terminated, unless Congress acts otherwise.
This section provides summaries of the major authorities granted to the President in the three remaining active titles of the DPA.16 Each summary describes how the DPA authorities are delegated to Cabinet officials or other offices of the U.S. government in the issued Executive Order (E.O.) 13603, National Defense Resource Preparedness.17 The section highlights substantive changes made to these authorities in P.L. 113-172. It is not intended to comprehensively evaluate all authorities in the DPA. The information provided below is reviewed in Table A-2 for select provisions of the DPA. Table A-1 also provides a list of additional materials, information, and resources on various topics of the DPA that may be of use to Congress.
The DPA provides the President an "array of authorities to shape national defense preparedness programs and to take appropriate steps to maintain and enhance the domestic industrial base."18 [Italics added.] DPA authorities are tied to the definition of national defense, as the use of any major DPA authority must be interpreted to promote, support, or otherwise be deemed needed or essential for the national defense.19 National defense is currently defined in the statute as
programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity. Such term includes emergency preparedness activities conducted pursuant to title VI of The Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 U.S.C. §5195 et seq.] and critical infrastructure protection and restoration.20
means all those activities and measures designed or undertaken to prepare for or minimize the effects of a hazard upon the civilian population, to deal with the immediate emergency conditions which would be created by the hazard, and to effectuate emergency repairs to, or the emergency restoration of, vital utilities and facilities destroyed or damaged by the hazard.21
In its original 1950 form, the DPA defined national defense as "the operations and activities of the armed forces, the Atomic Energy Commission, or any other department or agency directly or indirectly and substantially concerned with the national defense... "22 Over the many reauthorizations and amendments to the DPA, Congress has gradually expanded the scope of the definition of national defense, as recently as 2009.23 At that time, Congress included critical infrastructure assistance to any foreign nation and added homeland security to the definition.24
The DPA statute also includes both a full Congressional "Findings" and "Statement of Policy," as set forth in the "Declaration of Policy" section of the DPA.25 This section of the law gives additional guidance—though not explicit legal requirements—to the executive branch on why and how the DPA authorities should be used in order to provide for the national security. For example, in the "Findings" section, with regards to national defense and energy security, Congress has stated that
to further assure the adequate maintenance of the domestic industrial base, to the maximum extent possible, domestic energy supplies should be augmented through reliance on renewable energy sources (including solar, geothermal, wind, and biomass sources), more efficient energy storage and distribution technologies, and energy conservation measures.26
As another example, as guidance to the executive branch on how the defense industrial base should be encouraged to develop, in the "Statement of Policy," Congress has stated that
it is the policy of the United States that... in order to ensure productive capacity in the event of an attack on the United States, the United States Government should encourage the geographic dispersal of industrial facilities in the United States to discourage the concentration of such productive facilities within limited geographic areas that are vulnerable to attack by an enemy of the United States.27
Section 101(a) of Title I of the DPA states:
The President is authorized (1) to require that performance under contracts or orders (other than contracts of employment) which he deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order, and, for the purpose of assuring such priority, to require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance, and (2) to allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.28
The priority performance authority allows the federal government to ensure the timely availability of critical materials, equipment, and services produced in the private market in the interest of national defense, and to receive those materials, equipment, and services through contracts before any other competing interest.29 Under the language of the DPA, a person (including corporations, as defined in statute)30 is required to accept prioritized contracts/orders,31 though regulations implementing Title I authorities provide practical exemptions to this mandate. The limited allowances for when a person is required to or may optionally reject a prioritized order can be superseded by the direction of the implementing federal department.32 In executing a contract under the DPA, a contractor is not liable for actions taken to comply with governing rules, regulations, and orders (e.g., prioritization requirements), including any rules, regulations, or orders later declared legally invalid.33 The government can also prioritize the performance of contracts between two private parties, such as a contract between a prime contractor and a subcontractor, if needed to fulfill a priority contract and promote the national defense.34
Title I also allows the President to allocate or control the general distribution of materials, services, and facilities. Allocation authority relates historically to the controlled materials programs of World War II, when the distribution of critical materials and resources had to be managed to maximize the production of goods needed in the war effort.35 This authority is rarely used to support executive branch programs today.
There are several notable restrictions to the priorities and allocation authority. For example, it cannot be used for contracts of employment.36Additionally, unless authorized by a joint resolution of Congress, the authority cannot be used for wage or price controls. Private persons are also not required to assist in the production or development of chemical or biological weapons unless directly authorized by the President or a Cabinet secretary.37
Title I also contains several provisions related to domestic energy. Section 101(c) specifically authorizes the President to allocate and prioritize contracts for materials, equipment, and services to maximize domestic energy supplies in certain circumstances.38 However, Section 105 of the DPA restricts the authorities from being used to ration the end-use of gasoline without the approval of Congress. Section 106 of Title I, as amended, also designates energy as a strategic and critical material.39 This designation enables other authorities in the DPA, especially Title III authorities discussed below, to be used for policy decisions related to energy.
In statute, Title I priorities and allocation authority can only be used to "promote national defense." In E.O. 13603, the President further constrains that authority so that it "may be used only to support programs that have been determined in writing as necessary or appropriate to promote the national defense" by the either the Secretary of Defense, the Secretary of Homeland Security, or the Secretary of Energy, depending on the issue involved.40 Once a program is determined to promote the national defense, other Secretaries who have been delegated the priorities and allocation authority can use their authority for those pre-designated program purposes.
E.O. 13603 provides for the delegation of the President's priorities and allocation authority to six different Cabinet Secretaries based upon their areas of expertise in different resource and material sectors. These resource areas are further defined in Section 801 of E.O. 13603. Table A-3 in the Appendix summarizes this delegation of priorities and allocation authority.
The authority to prioritize contracts is routinely employed by the DOD. In a typical year, DOD will assign a DPA priority to more than 300,000 contracts, representing more than 20% of the nearly 1.5 million contracts reported by the department and its subordinate military departments, agencies, and offices for FY2012.41 These prioritized contracts are typically issued under the Department of Commerce's (DOC's) delegated authority with respect to materials, services, and facilities, including construction materials, and under its Defense Priorities and Allocations System (DPAS) regulations guiding the use of this authority.42 Some notable examples of DOD's use of Title I priorities authority include supporting the development of the Integrated Ballistic Missile Defense System and Mine Resistant Ambush Protected (MRAP) Vehicles.43 While the priorities authority is used far less frequently by other departments and agencies, it has been used for both the prevention of terrorism and natural disaster preparedness. For example, the Federal Bureau of Investigation has prioritized contracts in support of the Terrorist Screening Center program and the U.S. Army Corps of Engineers prioritized contracts in support of the Greater New Orleans Hurricane and Storm Damage Risk Reduction System program.44 The Federal Emergency Management Agency prioritized the services of linguistic translators in the response to Hurricane Sandy.45 The State Department has used the authority, with the assistance of DOD and DOC, to improve the security of overseas installations.46 The specific Title I prioritization and allocation authorities related to domestic energy (Section 101(c) of the DPA) was used by the Department of Energy to ensure that emergency supplies of natural gas continued to flow to California utilities, helping to avoid threatened electrical blackouts in early 2001.47
Unlike the prioritization authority, the allocation authority has rarely been used by the government. The authority does support the Civil Reserve Air Fleet (CRAF) program, which was created initially in 1951, and is now managed by the U.S. Department of Transportation. Under the CRAF program, civilian aircraft are "allocated" for the potential use, if required, by the DOD so that it may augment its airlift capability with civilian aircraft during a national defense related crisis. In return for their participation in the CRAF program, civilian carriers are given preference in carrying commercial peacetime cargo and passenger traffic for the DOD.48
The statutory language providing Section 101(a) priorities and allocation authority has existed, unaltered, since the original enactment of the DPA.49 However, in 2009, Congress added a rulemaking requirement to the statute.50 At that time, Congress mandated that all Cabinet Secretaries delegated priorities and allocation authority establish standards and procedures for its use by the end of June 2010.51 The statute further encouraged these rules to be consistent and unified in nature, which was in keeping with of a recommendation made by the Government Accountability Office (GAO).52
In P.L. 113-127, Congress amended this regulatory mandate by now requiring delegated agencies with Title I authority to issue and annually review their final rules.53 However, of the six departments to which the President delegated Title I authority, only three (Commerce, Energy, and Transportation) had issued final rules as of October 15, 2014. The Departments of Agriculture, Defense, and Health and Human Services have not yet completed final rules.54 Historically, the Department of Commerce's rule establishing the Defense Priorities and Allocations System (DPAS) has been the most frequently used by the executive branch, and has apparently served as the template for the DPA Title I rules of other federal agencies.55
Title III authorities are intended to help ensure that the nation has an adequate supply of, or the ability to produce, essential materials and goods necessary for the national defense. Using Title III authorities, the President may provide appropriate financial incentives to develop, maintain, modernize, restore, and expand the production capacity of domestic sources for critical components, critical technology items, materials, and industrial resources essential for the execution of the national security strategy of the United States.56 The President is also directed to use Title III authorities to ensure that critical components, critical technology items, essential materials, and industrial resources are available from reliable sources when needed to meet defense requirements during peacetime, graduated mobilization, and national emergency.57 In P.L. 113-172, Congress did not amend Sections 301 or 302 of the DPA, relating to loans and loan guarantees. Congress did amend the authorities of Section 303 of Title III by reintroducing restrictions on the use of the authority into the statute that had been removed in a prior reauthorization of the law in 2009.
Sections 301 and 302 of Title III of the DPA authorize the President to issue loan guarantees and direct loans to reduce current or projected shortfalls of industrial resources, critical technology items, or essential materials needed for national defense purposes.58 Loan guarantees and direct loans can be issued to private businesses to help them create, maintain, expedite, expand, protect, or restore production and deliveries or services essential to the national defense.59 A direct loan is a loan from the federal government to another government or private sector borrower that requires repayment, with or without interest. A loan guarantee allows the federal government to guarantee a loan made by a non-federal lender to a non-federal borrower, either by pledging to pay back all or part of the loan in cases when the borrower is unable to do so.60 These authorities, for instance, could be used to provide a loan, or to guarantee a loan, to a defense contractor that is responsible for the provision of critical services essential to the national defense when credit is otherwise unavailable in the private market.
There are a number of restrictions placed on the executive branch before it may be used in the interest of national defense. First, the budget authority for guarantees and direct loans must be specifically included in appropriations passed by Congress and enacted by the President before such loan mechanisms can be issued.61 Except during periods of national emergency declared by Congress or the President,62 the DPA statute also requires the President to determine that loan guarantees or direct loans meet a number of conditions before issuance. Perhaps most importantly, one of the conditions in using the loan authority is that the loan or loan guarantee is the most cost-effective, expedient, and practical alternative method for meeting the need.63 There are also a number of determination requirements for loan guarantees and direct loans that may help ensure that the loan is repaid by the recipient.64 For example, the President is required to determine that there is "reasonable assurance" that a recipient of a loan or loan guarantee will be able to repay the loan.65 These loan and loan guarantee authorities were not amended in P.L. 113-172.
Section 303 of Title III grants the President an array of authorities to create, maintain, protect, expand, or restore domestic industrial base capabilities essential to the national defense.66 These authorities include, but are not limited to:
purchasing or making purchase commitments of industrial resources or critical technology items;67
making subsidy payments for domestically produced materials;68 and
installing and purchasing equipment for government and privately owned industrial facilities to expand their productive capacity.69
Prior to using Section 303 authorities, the law requires the President to determine that there is a "domestic industrial base shortfall" for a particular industrial resource, material, or critical technology item that threatens the national defense.70 This determination includes finding that the industry of the United States cannot reasonably be expected to provide the capability for the good in a timely manner, and that purchases, purchase commitments, or other actions are the most cost effective, expedient, and practical alternative method for meeting the need.71 For projects that cumulatively cost more than $50 million to address an industrial base shortfall, the projects must first be authorized by an act of Congress. Additionally, the President is required to notify the committees of jurisdiction, and give the committees 30 days to comment, when the actions to remedy the shortfall are expected to exceed $50 million.72 Generally, very few Title III projects exceed the $50 million threshold.73 The President is authorized to waive the determination and notification provisions in periods of national emergency or in situations that the President, on a non-delegable basis, determines the industrial base shortfall would severely impair national defense.74
In E.O. 13603, the "head of each agency engaged in procurement for national defense" is delegated the majority of the authorities of Sections 301, 302, and 303 of Title III of the DPA.75 These agencies are specifically identified in E.O. 13603.76 This delegation includes the ability to make all determinations not explicitly cited in the statute as being nondelegable.77 However, this delegation does not include the authority to encourage the exploration, development, and mining of strategic and critical materials and other materials. This authority is provided to the President in the statute, and is delegated only to the Secretaries of Defense and the Interior.78
Title III of the DPA establishes a Treasury account, the Defense Production Act Fund, that is available to carry out all of the provisions and purposes of Title III. The monies in the DPA Fund are available until expended. The DPA Fund is also used to collect all proceeds from DPA activities under Title III, such as the resale of DPA-procured commodities or products.79 However, the unobligated balance in the DPA Fund at the end of any fiscal year cannot exceed $750 million, excluding monies appropriated for that fiscal year.80 Table 1 provides the appropriations to the DPA Fund between FY2010 and FY2014. It is possible for appropriations to the DPA Fund to be made in any of the bills providing funding to the numerous agencies delegated Title III authorities.81 All recent appropriations directly to the DPA Fund have come from DOD appropriations acts. As noted in Table 1, however, in FY2014, the Department of Energy was authorized to transfer up to $45 million to the DPA Fund from another appropriation.82 In addition, Title III projects that are paid for through the DPA Fund have been funded through transfers of budget authority from DOD and other federal agencies.83
a. P.L. 113-76, 128 Stat. 165, also authorizes the Department of Energy to transfer up to $45 million to the DPA Fund from the FY2014 appropriation for the Energy Efficiency and Renewable Energy.
The President is required to designate a "Fund manager" to carry out general accounting functions for the fund.84 The Secretary of Defense has been designated to be the Fund Manager in E.O. 13603.85 As the Fund Manager, the Secretary of Defense (or official to whom the authority is further delegated in DOD) is responsible for the financial accounting of the fund, but does not necessarily have decision-making authority over the use of the fund.
According to the Defense Production Act Committee, the federal government has not used the loan authorities provided in Section 301 or Section 302 of Title III in more than 30 years. Rather, current projects are initiated under Section 303 of Title III of the DPA.86 During calendar year 2012, the Department of Defense reported that 34 Title III projects were underway that generally had a key objective of "accelerat[ing] the transition of technologies from research and development to affordable production and insertion into defense and other government systems."87 Examples of these types of projects include an "Advanced Drop-In Biofuel Production Project" to accelerate the commercialization of drop-in biofuels for military and commercial use, and a project for "Radiation-Hardened Cryogenic Readout Integrated Circuits" needed to support high altitude and space-based imaging and missile systems.88 Like many other Title III projects, these are meant to establish a domestic capacity to produce advanced technologies deemed essential for national defense by the President.
P.L. 113-172 revised the Title III, Section 303 authority of the DPA, but did not amend the loan and loan guarantee authorities.
First, the President is now required, on a non-delegable basis, to provide written explanatory materials on how actions taken under Section 303 would meet the presidential determinations required by law (that the actions are essential to the national defense and that sufficient commercial production and supply of the good would otherwise not be available).89 Prior to P.L. 113-172, the President had been implicitly allowed to delegate these determinations to other officials in the executive branch. In past recent practice, the Under Secretary of Defense for Acquisition, Technology, and Logistics had been responsible for making these determinations and for submitting signed explanatory materials to the committees of jurisdiction.90
Second, P.L. 113-172 also reinstituted two provisions, with minor revisions, that were removed from the law in a reauthorization of the DPA in 2009.91 In addition to the other conditions in Section 303(a)(5) of the DPA that must be determined to be met before using Section 303 authorities, the President is once again required to determine that the actions taken are "the most cost effective, expedient, and practical alternative method for meeting the need."92
Further, as amended by P.L. 113-172, if the cumulative cost of actions taken under Section 303 to address an industrial base shortfall will exceed $50 million, those actions must be authorized in advance by an act of Congress. This requirement was removed from law in the 2009 reauthorization, and replaced with a requirement for general notification to the committees of jurisdiction that a given project was estimated to cost more than $50 million.93 Therefore, the President is once again required to both notify the committees of jurisdiction and obtain authorization in an act of Congress before taking actions that will cost more than $50 million to address a manufacturing capacity or supply shortfall. This reinstituted requirement for Congressional authorization of projects over $50 million does not apply retroactively to existing Title III projects (i.e., ones that have already been determined to meet requirements of the previous law). In other words, if actions to address a shortfall for any existing project do not exceed $50 million currently, but ultimately do so in the future, that project would not require separate authorization from Congress. As noted above, the President also retains the ability to waive these requirements in periods of national emergency or if the actions are necessary to avert a shortfall that would severely impair national defense capability.94
Title VII of the DPA contains an assortment of provisions that clarify how DPA authorities should and can be used, as well as additional presidential authorities. Significant provisions of Title VII, and how some have changed under P.L. 113-172, are summarized below.
There are two provisions in the DPA directing the President to accord special preference to small businesses when issuing contracts under DPA authorities. Section 701 reiterates95 and expands upon a requirement in Section 108 of Title I directing the President to "accord a strong preference for small business concerns which are subcontractors or suppliers, and, to the maximum extent practicable, to such small business concerns located in areas of high unemployment or areas that have demonstrated a continuing pattern of economic decline, as identified by the Secretary of Labor."96 This special preference for small business was not amended in P.L. 113-172.
The DPA statute historically has included a section of definitions.97 Though national defense is perhaps the most important term, there are additional definitions provided both in current law and in E.O. 13603.98 Over time, the list of definitions provided in both the law and implementing executive orders has been added to and edited, most recently in 2009, when Congress added a definition for homeland security99 to place it within the context of national defense.100
To appropriately use numerous authorities of the DPA, especially Title III authorities, the President may require a detailed understanding of current domestic industrial capabilities and therefore need to obtain extensive information from private industries. Under Section 705 of the DPA, the President may "by regulation, subpoena, or otherwise obtain such information from ... any person as may be necessary or appropriate, in his discretion, to the enforcement or the administration of this Act [the DPA]."101 This authority is delegated to the Secretary of Commerce in E.O. 13603.102 Though this authority has many potential implications and uses, it is most commonly associated with what the DOC's Bureau of Industry and Security calls "industrial base assessments."103 These assessments are often conducted in coordination with the Departments of Defense and Homeland Security, as well as the private sector, to "monitor trends, benchmark industry performance, and raise awareness of diminishing manufacturing capabilities."104 The statute requires the President to issue regulations to insure that the authority is used only after "the scope and purpose of the investigation, inspection, or inquiry to be made have been defined by competent authority, and it is assured that no adequate and authoritative data are available from any Federal or other responsible agency."105 However, no such regulation has been issued by the executive branch as of October 15, 2014. This industrial base assessment authority was not amended in P.L. 113-172.
Normally, voluntary agreements or plans of action between competing private industry interests could be subject to legal sanction under anti-trust statutes or contract law. Title VII of the DPA authorizes the President to "consult with representatives of industry, business, financing, agriculture, labor, and other interests in order to provide for the making by such persons, with the approval of the President, of voluntary agreements and plans of action to help provide for the national defense."106 The President must determine that a "condition exists which may pose a direct threat to the national defense or its preparedness programs"107 prior to engaging in the consultation process. Following the consultation process, the President or Presidential delegate may approve and implement the agreement or plan of action.108 Parties entering into such voluntary agreements are afforded a special legal defense if their actions within that agreement would otherwise violate antitrust or contract laws.109 Historically, the National Infrastructure Advisory Council noted that the voluntary agreement authority has been used to "enable companies to cooperate in weapons manufacture, solving production problems and standardizing designs, specifications and processes," among other examples.110 It could also be used, for example, to develop a plan of action with private industry for the repair and reconstruction of major critical infrastructure systems following a domestic disaster. The voluntary agreement authority was not amended in P.L. 113-172.
The authority to establish a voluntary agreement has been delegated to the head of any federal department or agency otherwise delegated authority under any other part of E.O. 13603.111 Thus, the authority could be potentially used by a large group of federal departments and agencies. Use of these voluntary agreements is tracked by the Secretary of Homeland Security,112 which is tasked under E.O. 13603 with issuing regulations that are required by law on the "standards and procedures by which voluntary agreements and plans of action may be developed and carried out."113 The Federal Emergency Management Agency (FEMA), which at the time was an independent agency and tasked with these responsibilities under the DPA, issued regulations in 1981 to fulfill this requirement.114 FEMA is now a part of DHS, and those regulations remain in effect.
The Maritime Administration of the U.S. Department of Transportation manages the only currently established voluntary agreements in the federal government, the Voluntary Intermodal Sealift Agreement (commonly referred to as "VISA") and the Voluntary Tanker Agreement.115 These programs are maintained in partnership with the U.S. Transportation Command of DOD, and have been established to ensure that the maritime industry can respond to the rapid mobilization, deployment, and transportation requirements of DOD. Voluntary participants from the maritime industry are solicited to join the agreements annually.
Title VII of the DPA authorizes the President to establish a volunteer body of industry executives, the "Nucleus Executive Reserve," or more frequently called the National Defense Executive Reserve (NDER).116 The NDER would be a pool of individuals with recognized expertise from various segments of the private sector and from government (except full-time federal employees). These individuals would be brought together for training in executive positions within the federal government in the event of an emergency that requires their employment. The historic concept of the NDER has been used as a means of improving the war mobilization and productivity of industries.117
The head of any governmental department or agency may establish a unit of the NDER and train its members.118 No NDER unit is currently active, though the statute and E.O. 13603 still provide for this possibility. Units may be activated only when the Secretary of Homeland Security declares in writing that "an emergency affecting the national defense exists and that the activation of the unit is necessary to carry out the emergency program functions of the agency."119 The NDER authority was not amended in P.L. 113-172.
Appropriations for the purpose of the DPA are authorized by Section 711 of Title VII.120 Prior to the P.L. 113-172, "such sums as necessary" were authorized to be appropriated. This has been replaced by a specific authorization for an appropriation of $133 million per fiscal year, starting in FY2015, to carry out the provisions and purposes of the Defense Production Act.121
Table 1 shows that the annual average appropriation to the DPA Fund between FY2010 and FY2014 was $127.7 million,122 with a high of $223.5 million in FY2013 and a low of $34.3 million in FY2011. Monies in the DPA Fund are available until expended, so annual appropriations may carry over from year to year if not expended. Recently, the only regular annual appropriation for the purposes of the DPA has been made in the Department of Defense appropriations bill, though appropriations could be made in other bills directly to the DPA Fund (or transferred from other appropriations).
Committee on Foreign Investment in the United States123
CFIUS initially was created and operated through a series of Executive Orders.124 In 1988, Congress passed the "Exon-Florio" amendment to the DPA, granting the President authority to review certain corporate mergers, acquisitions, and takeovers, and to investigate the potential impact on national security of such actions.125 This amendment codified the CFIUS review process due in large part to concerns over acquisitions of U.S. defense-related firms by Japanese investors. In 2007, amid growing concerns over the proposed foreign purchase of commercial operations of six U.S. ports, Congress passed the Foreign Investment and National Security Act of 2007 (P.L. 110-49) to create CFIUS in statute. The CFIUS review process is a voluntary system of notification by investors. Firms largely comply with the provision, because foreign acquisitions that do not notify CFIUS remain subject indefinitely to divestment or other actions by the President. Upon receiving written notification of a proposed acquisition, merger, or takeover of a U.S. firm by a foreign investor, the CFIUS process can proceed potentially through three steps: (1) a 30-day maximum national security review; (2) a 45-day maximum national security investigation; and (3) a 15-day maximum Presidential determination. The President can exercise his authority to suspend or prohibit a foreign investment, subject to a CFIUS review, if he finds that (1) credible evidence exists that the foreign investor might take action that threatens to impair the national security; and (2) no other laws provide adequate and appropriate authority for the President to protect the national security.
Title VII of the DPA also includes a "sunset" clause for the majority of the DPA authorities. All DPA authorities in Titles I, III, and VII have a termination date, with the exception of four sections.126 As explained in Section 717 of the DPA, the sections that are exempt from termination are:
50 U.S.C. Appx. §2074, Section 104 of the DPA that prohibits both the imposition of wage or price controls without prior congressional authorization and the mandatory compliance of any private person to assist in the production of chemical or biological warfare capabilities;
50 U.S.C. Appx. §2157, Section 707 of the DPA that grants persons limited immunity from liability for complying with DPA-authorized regulations;
50 U.S.C. Appx. §2158, Section 708 of the DPA that provides for the establishment of voluntary agreements; and
50 U.S.C. Appx. §2170, Section 721 of the DPA, the so-called Exon-Florio Amendment, that gives the President and CFIUS review authority over certain corporate acquisition activities.
In addition, Section 717(c) provides that any termination of sections of the DPA "shall not affect the disbursement of funds under, or the carrying out of, any contract, guarantee, commitment or other obligation entered into pursuant to this Act" prior to its termination. This means, for instance, that prioritized contracts or Section 303 projects created with DPA authorities prior to September 30, 2019, would still be executed until completion even if the DPA is not reauthorized. Similarly, the statute specifies that the authority to investigate, subpoena, and otherwise collect information necessary to administer the provisions of the act, as provided by Section 705 of the DPA, will not expire until two years after the termination of the DPA.127 P.L. 113-172 extended the termination date of Section 717 from September 30, 2014, to September 30, 2019. For a chronology of all laws reauthorizing the DPA since inception, see Table A-4.
The Defense Production Act Committee (DPAC) is an interagency body originally established by the 2009 reauthorization of the DPA.128 Originally, the DPAC was created to advise the President on the effective use of the full scope of authorities of the DPA. P.L. 113-172 redirected the purpose of the DPAC to exclusively coordinate and plan for the use of Title I priorities and allocations authority by the executive branch.129 This change in law will likely result in the disbanding of several "industrial capability assessment study groups" that were created under old DPAC authority. In general, through the first five years of its existence, the DPAC and these "study groups" were focused on identifying industries in possible need of support through Title III authorities. Now, the law requires DPAC to be centrally focused on the priorities and allocations authorities of Title I of the DPA.
The statute assigns membership in the DPAC to the head of each federal agency delegated DPA authorities, as well as the Chairperson of the Council of Economic Advisors. A full list of the members of the DPAC is included in E.O. 13603.130 Prior to P.L. 113-172, the DPA also required the President to designate one of the members as Chairperson of the DPAC, and President Obama appointed the Secretaries of Homeland Security and Defense to serve as the Chairperson on an annually rotating basis.131 Now, under current law, the Chairperson will be the "head of the agency to which the President has delegated primary responsibility for government-wide coordination of the authorities in this Act." As currently established in E.O. 13603 delegations, the Secretary of Homeland Security appears to be the most likely chair-designate, but the language of the law could allow the President to appoint another Secretary.132 Following P.L. 113-172, the Chairperson of the DPAC is also now required to appoint one full-time employee of the federal government to coordinate all the activities of the DPAC. Under previous law, this person was subject to appointment by the President.133
P.L. 113-172 has also revised the annual reporting requirements of the DPAC to emphasize Title I priority and allocation authority and to require the report to include updated copies of Title I-related rules. Previously, the DPAC report was intended to review the current use of DPA authorities, and provide recommendations for improving DPA implementation in the government or for amending DPA statute, among other requirements. Under current law and the new focus of the DPAC, the annual report will now contain, among other items, a "description of the contingency planning... for events that might require the use of the priorities and allocations authorities" and "recommendations for legislative actions, as appropriate, to support the effective use" of the Title I authorities.134
The DPAC report is provided to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services. The first annual DPAC report, for the calendar year 2010, was submitted in August of 2011. The reports for calendar years 2011 and 2012 were combined and submitted to Congress on March 31, 2013. As of October 15, 2014, a DPAC report for the calendar year 2013 was not available to CRS and to CRS's knowledge it has not been submitted. Congress has exempted the DPAC from the requirements of the Federal Advisory Committee Act.135 A new DPAC report, fulfilling the revised requirements of P.L. 113-172, is required to be submitted by March 31, 2015, and every year thereafter.
The Secretary of Commerce is required by law to prepare and to transmit to the appropriate congressional committees an annual report on the impact of offsets on defense preparedness, industrial competitiveness, employment, and trade. Specifically, the report discusses "offsets" in the government or commercial sales of defense materials.136
Congress may wish to add more extensive notification and reporting requirements on the use of all or specific authorities in the DPA. These reporting or notification requirements could be added to the existing law, or could be included in conference or committee reports accompanying germane legislation, such as appropriations bills or the National Defense Authorization Act. Additional reporting or notification requirements could involve formal notification of Congress prior to or after the use of certain authorities under specific circumstances. For example, Congress may wish for the President to notify Congress (or the oversight committees) when the priorities and allocations authority is used on a contract valued above a threshold dollar amount.137 Congress might also consider expanding the existing reporting requirements of the DPAC, to include semi-annual updates on the recent use of authorities or explanations about controversial determinations. Thus far, the DPAC has failed to regularly submit an annual report on time to the committees of jurisdiction, which may be impeding congressional oversight. Existing requirements could also be expanded from notifying/reporting to the committees of jurisdiction to the Congress as a whole, or to include other interested committees, such as the House and Senate Armed Services Committees.
In P.L. 113-172, Congress reemphasized the requirement that agencies with delegated priorities and allocations authority under Title I of the DPA issue and annually review final rules creating standards and procedures for the use of the authority. Three of the agencies responsible for these rules had not issued them as of October 15, 2014.138 Another rulemaking, relating to industrial base assessments conducted by the Department of Commerce, has also not been completed.139 A rulemaking requirement exists for the voluntary agreement authority in Title VII that has been completed by DHS, but it has not been updated since 1981 and may need to do so given changes to the authority and government reorganizations since that date.140 Congress may wish to review the agencies' compliance with existing rulemaking requirements, and potentially expand them for other authorities included in the DPA. For example, Congress may consider whether the President should promulgate rules establishing standards and procedures for the use of all or certain Title III authorities. In addition to formalizing the executive branch's policies and procedures for using DPA authorities, these regulations also serve an important function by offering an opportunity for private citizens and industry to comment on and understand the impact of DPA authorities on their personal interests.
Since its enactment, the House Committee on Financial Services, the Senate Committee on Banking, Housing, and Urban Affairs, and their predecessors have exercised legislative oversight of the Defense Production Act. The statutory authorities granted in the various titles have been vested in the President, who has delegated some of these authorities to various agency officials through E.O. 13603. As an example of the scope of delegations, the membership of the Defense Production Act Committee (DPAC), created in 2009 and amended in 2014, includes the Secretaries of Agriculture, Commerce, Defense, Energy, Labor, Health and Human Services, Homeland Security, the Interior, Transportation, the Treasury, and State; the Attorney General; the Administrators of the National Aeronautics and Space Administration and of General Services, the Chair of the Council of Economic Advisers; and the Directors of the Central Intelligence and National Intelligence.
In order to complement existing oversight, given the number of agencies that currently use or could potentially use the array of DPA authorities to support national defense missions, Congress may consider reestablishing a select committee with a purpose similar to the former Joint Committee on Defense Production, described in this report's Introduction.141 As an alternative to the creation of a new committee, Congress may consider formally broadening DPA oversight responsibilities to include all relevant standing committees when developing its committee oversight plan.
Should DPA oversight be broadened, Congress might consider ways to enhance inter-committee communication and coordination of its related activities. This coordination could include periodic meetings to prepare for oversight hearings or ensuring that DPA-related communications from agencies are shared appropriately. Finally, because the DPA was enacted at a time when the organization and rules of both chambers were markedly different to current practice, Congress may wish to consider the joint referral of proposed DPA-related legislation to the appropriate oversight committees.
In 2009, Congress created the DPAC to advise the President on the use of the full scope of DPA authorities. In P.L. 113-172, Congress focused the DPAC on the priorities and allocations authority enumerated in Title I, and revised the designation of the committee's chair.142 Given the expansive membership of the committee, its requirement to regularly report to Congress, and the new emphasis of its mandate and organization incorporated into the 2014 reauthorization, the relevant congressional oversight committees may wish to enhance their review of DPAC activities. For example, Congress may review the DPAC by scheduling oversight hearings, requesting periodic briefings, or requiring periodic reports on certain aspects of DPAC actions. Future required reports from the DPAC may also include recommendations for "legislation actions, as appropriate, to support the effective use of the priorities and allocations authorities"143 that could contribute to effective congressional oversight.
While the act in its current form may remain in force through the end of the 115th Congress, the legislature could amend the DPA at any time to extend, expand, restrict, or otherwise clarify the powers it grants to the President. For example, Congress could eliminate certain authorities altogether, such as the Section 710(e) authority underpinning the National Defense Executive Reserve. Likewise, Congress could expand the DPA to include new authorities to address novel threats to the national defense. For example, Congress may consider creating new authorities to address specific concerns relating to production and security of cyber-related infrastructure and assets necessary for the national defense.144
The "Declaration of Policy" in the DPA describes the general intentions of Congress in granting the authorities conferred on the President. Congress may wish to amend this section of the statute in order to expand, restrict, or clarify the overall purpose of the authorities. For instance, given the wide variety of circumstances in which DPA authorities have been employed, Congress could include an expanded discussion of the specific conditions in which it would find DPA authorities appropriate for use by the President. Though this section serves as a guide for the overall use of DPA authorities, changes to the Declaration of Policy may not fully endow or deny the President's authorities covered in the titles of the DPA without also amending the DPA's other provisions.
Congress may wish to amend the definitions of key terms found in the DPA to shape the scope and use of the authorities, especially the definition of national defense. As an example, Congress could amend the definition of national defense to remove space from the definition, thus weakening the President's ability to support space-related projects through the use of DPA authorities.145 On the other hand, for example, Congress could amend the definition of national defense to specifically include counter-narcotics, cybersecurity, or organized crime. Doing so would more explicitly enable the use of DPA authorities to address these homeland security and national defense concerns.
Congress may consider limiting the use of certain DPA authorities to specific agencies. To do so, Congress could amend the President's delegation of DPA authorities, superseding those made in E.O. 13603, by amending the statute to assign specific authorities to individual Cabinet Secretaries as opposed to the President. Further, Congress could expand the use of the legislative clause "on a nondelegable basis" to ensure that the authority is not delegated beyond the person identified in the statute.146 In considering these options, Congress may determine that the use of some authorities by certain agencies is appropriate and necessary for the national defense, but not for others.
In P.L. 113-172, Congress authorized an annual appropriation of $133 million a year for the purposes of the DPA. Congress could adjust future appropriations to the DPA Fund in order to manage the scope of Title III projects initiated by the President (see Table 1 for appropriations to the DPA Fund since FY2010). The use of the DPA Fund, however, is specific to Title III. Therefore, adjusting appropriations to the DPA Fund is unlikely to have an effect on the President's ability to exercise authorities under the other titles of the DPA, unless Congress drafts legislation changing the nature of the Fund itself or authorizing its use beyond a specific title. Congress may also wish to reintroduce a separate provision in Section 711 of the DPA authorizing only certain appropriation amounts over a given time period for Title III or other DPA authorities.147 Likewise, Congress may wish to direct the use of such funds more specifically, such as has been done recently in relation to advanced drop-in biofuels.148 Congress may also consider including specific restrictions or reporting requirements related to the DPA in the appropriations made to other accounts that could be used to pay for Title I activities, such as the Disaster Relief Fund managed by FEMA.149
FEMA website on the DPA at http://www.fema.gov/defense-production-act-program-division.
Annual reports on the industrial capabilities from the Department of Defense, to include how DPA has been used to support those capabilities, at http://www.acq.osd.mil/mibp/releases.html
U.S. Government Accountability Office, Defense Production Act: Agencies Lack Policies and Guidance for Use of Key Authorities, GAO-08-854, June 2008, at http://www.gao.gov/products/GAO-08-854.
The National Infrastructure Advisory Council, Framework for Dealing with Disasters and Related Interdependencies: Final Report and Recommendations, Appendix G: The Defense Production Act, Washington, DC, July 14, 2009, pp. 40-49, at http://www.dhs.gov/xlibrary/assets/niac/niac_framework_dealing_with_disasters.pdf.
Department of Commerce "Defense Priorities and Allocations System" website at http://www.bis.doc.gov/dpas/default.htm.
Department of Defense, Priorities and Allocations Manual, 4400.1-M, Washington, DC, February 21, 2002, at http://www.acq.osd.mil/mibp/docs/44001m.pdf.
Website with listing and description of Title III projects at http://www.dpatitle3.com/dpa_db/.
A 2012 brochure produced by the Department of Defense on Title III projects at http://dpatitle3.com/Title_III%202012%20Brochure.pdf.
Department of the Treasury CFIUS website at http://www.treasury.gov/resource-center/international/Pages/Committee-on-Foreign-Investment-in-US.aspx.
Declaration of Policy; Section 2 of the DPA, 50 U.S.C. Appx. §2062
Priorities and Allocations; Title I of the DPA, 50 U.S.C. Appx. §2071
10 C.F.R. Part 217, 15 C.F.R. Part 700 and 49 C.F.R. Part 33. More regulations have been proposed, and others are required.b
Loan Guarantees; Section 301 and 302 of Title III of the DPA, 50 U.S.C. Appx. §§2091 and 2092
Purchases, Purchase Commitments, and Installation of Equipment; Section 303 of Title III of the DPA, 50 U.S.C. Appx. §2093
"Lithium Ion Space Battery Production Initiative," which involved remodeling a facility and the purchase and installation of equipment to create "a viable domestic source of spacecraft-quality rechargeable Lithium Ion (Li Ion) cells and the critical materials required to produce these cells."d
Definitions; Section 702 of the DPA, 50 U.S.C. Appx. §2152
Voluntary Agreements; Section 708 of the DPA, 50 U.S.C. Appx. §2158
Voluntary Intermodal Sealift Agreement (VISA) managed by the Maritime Administration in the U.S. Department of Transportation.e
National Defense Executive Reserve (NDER); Section 710 of the DPA, 50 U.S.C. Appx. §2160
Committee on Foreign Investment in the United States (CFIUS); Section 721 of the DPA, 50 U.S.C. Appx. §2170
Defense Production Act Committee (DPAC); Section 722 of the DPA, 50 U.S.C. Appx. §2171
Source: CRS analysis of E.O. 13603, 50 U.S.C. Appx. §2061 et seq., and information from available resources.
b. The Department of Agriculture has a proposed rulemaking that has not been finalized, see Department of Agriculture, "Agriculture Priorities and Allocations System," 76 Federal Register 29084, May 19, 2011. The Administration has reported that new rules are being prepared by the Department of Agriculture and the Department of Health and Human Services, but did not mention the development of a rule by the Department of Defense. See Department of Homeland Security, The Defense Production Act Committee: Report to Congress, March 31, 2013, p. 4.
c. For more examples, see Department of Homeland Security, The Defense Production Act Committee: Report to Congress, Washington, DC, August 2011, p. 8; or the Under Secretary of Defense for Acquisition, Technology, and Logistics, Annual Industrial Capabilities Report to Congress, August 2013, p. 55, at http://www.acq.osd.mil/mibp/docs/releases/FINAL%202013%20Annual%20Report%20to%20Congress%20(updated).
d. See specifically http://www.dpatitle3.com/dpa_db/project.php?id=67 for information on this project. For a current list of DPA Title III projects, see http://www.dpatitle3.com/dpa_db/. For more examples, see Under Secretary of Defense for Acquisition, Technology, and Logistics, Annual Industrial Capabilities Report to Congress, August 2013, Appendix C, at http://www.acq.osd.mil/mibp/docs/releases/FINAL%202013%20Annual%20Report%20to%20Congress%20(updated).
e. For more, see approval of the VISA program in the Federal Register at Maritime Administration, "Voluntary Intermodal Sealift Agreement," 75 Federal Register 14245, March 24, 2010. See also http://www.marad.dot.gov/ships_shipping_landing_page/national_security/vol_intermodal_sealift_agreement/vol_intermodal_sealift_agreement.htm.
g. The Defense Production Act Committee's purpose and focus was revised by P.L. 113-172. Prior to this change, the DPAC statute was support by a Presidential Memorandum Designating the Chairperson of the Committee; an official Charter of the DPAC; and a Memorandum of Understanding between DHS and DOD on their shared responsibilities to support the DPAC. These documents are assumed to be outdated by P.L. 113-172.
Materials, services, and facilities are all defined in statute; see 50 U.S.C. Appx. §§2152(13), (16), and (8), respectively.
Source: CRS analysis of E.O. 13603 and 50 U.S.C. Appx. §§2061 et seq.
Notes: This table does not include all laws that amended the DPA, only those that altered the termination date of the act, currently codified at 50 U.S.C Appx. §2166, Section 717 of the DPA.
a. Not all provisions of the DPA may have expired on each given date, as the law has frequently offered an evolving set of exceptions to the termination of DPA authorities. For example, currently the majority of DPA authorities will terminate on September 30, 2019, with the exception of four sections.
50 U.S.C. Appx. §§2061 et seq.
50 U.S.C. Appx. §2062(a)(1); Section 2(a)(1) of the DPA.
Examples of the many studies of the impact of atomic weaponry on U.S. strategic thought during the initial years of the Cold War may be found in Edmund Beard, Developing the ICBM: A Study in Bureaucratic Politics (New York: Columbia University Press, 1976), pp. 34-35; Bernard Brodie, Strategy in the Missile Age (Princeton: Princeton University Press, 1959), pp. 107-144; Harland B. Moulton, "American Strategic Power: Two Decades of Nuclear Strategy and Weapon Systems, 1945-1965" (Ph. D. dissertation, University of Minnesota, 1969), pp. 1-14. A more recent general examination of the development of military strategy during the Truman Administration forms the basis of Patrick W. Steele, "Strategic Air Warfare and Nuclear Strategy: The Formulation of Military Policy in the Truman Administration, 1945-1950" (Ph. D. dissertation, Marquette University, 2010).
See, for example, Robert W. Ruth, "Truman Denies He Gave Ike Order to Take Over in 1946 Railroad Strike," The Baltimore Sun, September 19, 1952, p. 1.
See Table A-4 in the Appendix for a full chronology of reauthorizations.
Roll Call No. 464.
50 U.S.C. Appx. §2062(a)(4); Section 2(a)(4) of the DPA (emphasis added).
There are various references to national defense throughout the DPA. Some examples: Title I, Section 101 priorities and allocations authority requires the President to deem action as "necessary or appropriate to promote the national defense" (50 U.S.C. Appx. §2071(a)); Title III authorities can be used when "essential for the national defense" (50 U.S.C. Appx. §§2091(a), 2092(a), 2093(a)); and Title VII voluntary agreement authority requires that the use helps "provide for the national defense" (50 U.S.C. Appx. §2158(c)(1)).
50 U.S.C. Appx. §2152(14); Section 702(14) of the DPA.
123 Stat. 2017, Section 8 of P.L. 111-67. Both "critical infrastructure" and "homeland security" are defined in Section 702 of the DPA, 50 U.S.C. Appx. §2152.
50 U.S.C. Appx. §2062; Section 2 of the DPA. This section comprises congressional findings, Section 2(a), and a statement of policy of the United States, Section 2(b).
50 U.S.C. Appx. §2062(a)(6); Section 2(a)(6) of the DPA.
50 U.S.C. Appx. §2062(b)(6); Section 2(b)(6) of the DPA.
50 U.S.C. Appx. §2071(a); Section 101(a) of the DPA.
As noted in regulations for Title I authorities, especially 15 C.F.R. §700.1(b), this priority authority is broader than similar priority authorities provided in other statutes including Section 18 of the Selective Service Act of 1948 (50 U.S.C. Appx. §468).
50 U.S.C. Appx. §2152(15), Section 702(15) of the DPA, defines person as "individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative thereof, or any State or local government or agency thereof."
See, for example, the regulations establishing standards and procedures for the use of the Secretaries' of Commerce, Energy, and Transportation delegated authorities under Title I of the DPA (15 C.F.R. §700.13, 10 C.F.R. §217.33, and 49 C.F.R. §33.33, respectively). These regulations explain the circumstances under which a person may reject a prioritized contract, though these conditions are limited by the clause "Unless otherwise directed by the [implementing department]."
50 U.S.C. Appx. §2157; Section 707 of the DPA. Immunity under this provision is limited, and does not confer blanket tort immunity to a contractor for liability to injured third parties. Also, carrying out a contract according to its terms does not necessarily entitle a contractor to be indemnified by the government when the resulting product injures third parties, absent an indemnification clause in the contract. Hercules v. United States, 516 U.S. 417 (1996).
This restriction is written as a parenthetical in Section 101(a)(1), but is an important constraint on Title I priorities authority.
50 U.S.C. Appx. §2074; Section 104 of the DPA. It should be noted that development and production of chemical weapons and biological weapons are prohibited by the Chemical Weapons Convention (CWC) and the Biological Weapons Convention (BWC), respectively. The United States is a state party to both of these international treaties and is legally bound by their obligations and prohibitions.
50 U.S.C. Appx. §2071(c); Section 101(c) of the DPA.
50 U.S.C. Appx. §2076; Section 106 of the DPA.
See Section 202 of E.O. 13603. Determinations are made
(a) by the Secretary of Defense with respect to military production and construction, military assistance to foreign nations, military use of civil transportation, stockpiles managed by the Department of Defense, space, and directly related activities; (b) by the Secretary of Energy with respect to energy production and construction, distribution and use, and directly related activities; and (c) by the Secretary of Homeland Security with respect to all other national defense programs, including civil defense and continuity of Government.
In practice, some determination authority has been further re-delegated within the executive branch. An example of a written determination, issued by the Department of Homeland Security through FEMA, can be found at http://www.fema.gov/pdf/about/programs/dpa/signed-program-determinations-100506.pdf.
Department of Homeland Security, The Defense Production Act Committee: Report to Congress, August 2011, p. 7. Total contract data for FY2012 compiled from USASpending.gov on May 17, 2013.
There are two levels of priority rating provided in DPAS regulations. The "DO" rating is lower than a "DX" rating. For a discussion of the different priority ratings, see 15 C.F.R. §700.11. DOD, as a matter of practice, includes a DO rating on most commercial contracts. Only select programs may receive a "DX" rating. For a current list of "DX" rated programs, see http://www.bis.doc.gov/dpas/pdfdocs/list_of_dx_approved_programs.pdf.
Department of Homeland Security, The Defense Production Act Committee: Report to Congress, August 2011, p. 8.
U.S. Congress, House Committee on Financial Services, Subcommittee on Monetary Policy and Trade, Reauthorizing the Defense Production Act, 113th Cong., 1st sess., May 8, 2013, H. Hrg. 113-18 (Washington: GPO, 2013), p. 13.
Under Secretary of Defense for Acquisition, Technology, and Logistics, Annual Industrial Capabilities Report to Congress, August 2012, p. 45, http://www.acq.osd.mil/mibp/docs/annual_ind_cap_rpt_to_congress-2012.pdf.
For discussion on how DPA was used in this situation, see U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, California Energy Crisis and Use of the Defense Production Act, 107th Cong., 1st sess., February 9, 2001, S. Hrg. 107-215 (Washington: GPO, 2001).
See Section 101 of P.L. 81-774.
Section 4 of P.L. 111-67, 123 Stat. 2009.
Approximately 270 days from the date of enactment of P.L. 111-67.
See 50 U.S.C. Appx. §2071(d); Section 101(d) of the DPA and U.S. Government Accountability Office, Defense Production Act: Agencies Lack Policies and Guidance for Use of Key Authorities, GAO-08-854, June 2008, at http://www.gao.gov/products/GAO-08-854.
Section 3 of P.L. 113-172.
The Department of Agriculture has a proposed rulemaking that has not been finalized, see Department of Agriculture, "Agriculture Priorities and Allocations System," 76 Federal Register 29084, May 19, 2011. The Department of Energy issued a final rule codified in 10 C.F.R. Part 217, see Department of Energy, "Energy Priorities and Allocations System Regulations," 75 Federal Register 41405, July 16, 2010. The Department of Transportation issued a final rule codified in 49 C.F.R. Part 33, see Department of Transportation, "Prioritization and Allocation Authority Exercised by the Secretary of Transportation Under the Defense Production Act," 77 Federal Register 59793, October 1, 2012. The Administration has reported that new rules are being prepared by the Department of Agriculture and the Department of Health and Human Services, but did not mention the development of a rule by the Department of Defense. See Department of Homeland Security, The Defense Production Act Committee: Report to Congress, March 31, 2013, p. 4.
See 15 C.F.R. Part 700 for the Defense Priorities and Allocations System (DPAS). The DPAS was most recently updated in August of 2014, see Department of Commerce, "Revisions to Defense Priorities and Allocations System Regulations," 79 Federal Register 47560, August 14, 2014. For the original rulemaking of the Defense Priorities and Allocations System, see Department of Commerce, "Defense Priorities and Allocations System," 49 Federal Register 30412, July 30, 1984. Prior to the DPAS, DOC maintained a "Defense Materials System" and a "Defense Priorities System" that were superseded by the DPAS.
50 U.S.C. Appx. §2077; Section 107(a) of the DPA. Many of these terms are defined further in 50 U.S.C. Appx. §2152.
50 U.S.C. Appx. §2077; Section 107(b)(1) of the DPA.
50 U.S.C. Appx. §2091(a)(1). The beginning of 50 U.S.C. Appx. §2092(a) includes the same basic text as §2091(a)(1).
For more on direct loans and loan guarantees, see CRS Report R42632, Budgetary Treatment of Federal Credit (Direct Loans and Loan Guarantees): Concepts, History, and Issues for Congress, by [author name scrubbed].
See 50 U.S.C. Appx. §2091(a)(3) and 50 U.S.C. Appx. §2092(c).
See 50 U.S.C. Appx. §2091(a)(2) and 50 U.S.C. Appx. §2092(b)(2).
50 U.S.C. Appx. §2091(a)(2)(C) and 50 U.S.C. Appx. §2092(b)(2)(C).
See, for example, 50 U.S.C. Appx. §§2091(a)(2)(D), (E), (F) and (G) and 50 U.S.C. Appx. §§2092(b)(2)(D) and (E); which are Sections 301(a)(2)(D), (E), and (F) and Sections 302(b)(2)(D) and (E) of the DPA, respectively.
See 50 U.S.C. Appx. §§2091(a)(2)(D), Section 301(a)(2)(D) of the DPA.
50 U.S.C. Appx. §2093, Section 303 of the DPA.
50 U.S.C. Appx. §2093(a), Section 303(a)(1)(A) of the DPA. The terms "critical technology item" and "industry resource" are further defined in 50 U.S.C. Appx. §2152, Section 702 of the DPA.
50 U.S.C. Appx. §2093(c), Section 303(c) of the DPA.
50 U.S.C. Appx. §2093(e), Section 303(e) of the DPA.
The President delegated authority to make these determinations to the "head of each agency engage[d] in procurement for national defense" in Section 305(b) of E.O. 13603. Section 303(a)(5) of the DPA states that an "industrial base shortfall" exists when domestic industry "cannot be reasonably expected to provide the capability for the need."
50 U.S.C. Appx. §2093(a)(5)(B) and (C), Section 303(a)(5)(B) and (C) of the DPA.
50 U.S.C. Appx. §2093(a)(6), Section 303(a)(6) of the DPA.
An example of a past authorization made by Congress for Title III actions exceeding $50 million, to correct a shortfall for high-purity beryllium metal, can be found in §842 of P.L. 111-84, the National Defense Authorization Act for Fiscal Year 2010, 123 Stat. 2418.
50 U.S.C. Appx. §2093(a)(7), Section 303(a)(7) of the DPA.
Section 305 of E.O. 13603. The only determination not delegable is 50 U.S.C. Appx. §2093(a)(7)(B), Section 303(a)(7)(B) of the DPA. This determination allows the President, on a non-delegable basis, to waive requirements in Section 303(a)(1)-(6) on the use of those authorities.
In statute, see 50 U.S.C. Appx. §2093(a)(1)(B); Section 303(a)(1)(B) of the DPA. The authority is delegated in Section 306 of E.O. 13603. The Secretary of Interior is delegated this authority in consultation with the Secretary of Defense, as the National Defense Stockpile Manager.
50 U.S.C. Appx. §2094; Section 304 of the DPA.
50 U.S.C. Appx. §2094(e); Section 304(e) of the DPA. The obligation of funds is defined in the DOD Financial Management Regulation as an "amount representing orders placed, contracts awarded, services received, and similar transactions during an accounting period that will require payment during the same, or a future, period." Office of the Comptroller, Department of Defense, Financial Management Regulation, DOD 7000.14-R, Washington, DC, December 2008, p. Glossary-21.
See footnote 76 for an explanation and full list of the delegated agencies with Title III authorities.
In its FY2014 budget request, DOE stated the $45 million would be used to support the construction of commercial-scale biofuels production facilities that can produce drop-in, hydrocarbon biofuels under a joint DOD-Navy, DOE, and USDA memorandum of agreement. For more information on the memorandum of understanding, see CRS Report R42859, DOD Alternative Fuels: Policy, Initiatives and Legislative Activity, by [author name scrubbed].
For example, a Title III project on "Gallium Nitride Radar and Electronic Warfare Monolithic Microwave Integrated Circuit Producibility" has been funded in part with budget authority transferred from the Navy. See, Under Secretary of Defense for Acquisition, Technology, and Logistics, Annual Industrial Capabilities Report to Congress, August 2013, p. C-7, at http://www.acq.osd.mil/mibp/docs/releases/FINAL%202013%20Annual%20Report%20to%20Congress%20(updated).
50 U.S.C. Appx. §2094(f); Section 304(f) of the DPA.
Department of Homeland Security, The Defense Production Act Committee: Report to Congress, August 2011, p. 10. For a current list of all DPA Title III projects, see http://www.dpatitle3.com/dpa_db/.
Under Secretary of Defense for Acquisition, Technology, and Logistics, Annual Industrial Capabilities Report to Congress, August 2013, p. 55, at http://www.acq.osd.mil/mibp/docs/releases/FINAL%202013%20Annual%20Report%20to%20Congress%20(updated).pdf.
Ibid, respectively pp. C-2 and C-15.
Section 4(a) of the P.L. 113-172, this requirement amended Section 303(a)(5) of the DPA [50 U.S.C. Appx. §2093(a)(5)(C)].
The Under Secretary of Defense for Acquisition, Technology, and Logistics was delegated this responsibility by the Secretary of Defense in DOD Directive 4400.01E, Defense Production Act Programs, September 14, 2007, at http://www.dtic.mil/whs/directives/corres/pdf/440001p.pdf.
These provisions were deleted from law by Section 7 of P.L. 111-67, 123 Stat. 2014.
See current 50 U.S.C. Appx. §2093(a)(5)(C), Section 303(a)(5)(C) of the DPA.
These provisions were deleted from law by Section 7 of P.L. 111-67, 123 Stat. 2014.This limitation previously existed in law at Section 303(a)(6)(C) of the DPA, the former 50 U.S.C. Appx. §2093(a)(6)(C) [2006 edition].
See 50 U.S.C. Appx. §2093(a)(7), Section 303(a)(7) of the DPA.
50 U.S.C. Appx. §2151; Section 701 of the DPA.
50 U.S.C. Appx. §2078; Section 108(a) of the DPA.
In total, there are 17 terms defined in law in 50 U.S.C. Appx. §2152, and 13 additional definitions in Section 801 of E.O. 13603.
50 U.S.C. Appx. §2152(11). Homeland security means efforts "(A) to prevent terrorist attacks within the United States; (B) to reduce the vulnerability of the United States to terrorism; (C) to minimize damage from a terrorist attack in the United States; and (D) to recover from a terrorist attack in the United States."
50 U.S.C. Appx. §2155(a); Section 705(a) of the DPA.
50 U.S.C. Appx. §2158(c)(1); Section 708(c)(1) of the DPA.
Ibid. The consultation process is described in 50 U.S.C. Appx. §§2158(d) and (e); Section 708(d) and (e) of the DPA.
50 U.S.C. Appx. §2158(f); Section 708(f) of the DPA.
50 U.S.C. Appx. §2158, Section 708 of the DPA provides a legal defense to parties of voluntary agreements or plans of action that can be used in civil suits or criminal actions brought against them under anti-trust laws (§2158(j)) or for breach of contract (§2158(o)). These exemptions do not grant them blanket immunity from these laws.
Section 708(e) of the DPA, 50 U.S.C. Appx. §2158(e).
Department of Homeland Security, The Defense Production Act Committee: Report to Congress, August 2011, p. 10.
50 U.S.C. Appx. §2160(e); Section 710(e) of the DPA.
President Dwight D. Eisenhower created the NDER in 1956 by issuing E.O.10660 under the authorities granted in Title VII. It has served as a vehicle for training highly qualified private industry executives in war production mobilization should the nation be faced with the need to place the nation's industrial base on a war footing. This program was inspired by the experiences of the War Industries Board of World War I and the War Production Board of World War II, when corporate executives were brought into government service, often with little or no compensation, to organize the nation's industries for war production. For background on the origins and operation of the War Industries Board, see Paul A. C. Koistinen, "The 'Industrial-Military Complex' in Historical Perspective: World War I," The Business History Review, Vol. 41, No. 4 (Winter, 1967), pp. 378-403; and Robert D. Cuff, "A 'Dollar-a-Year Man' in Government: George N. Peek and the War Industries Board," The Business History Review, vol. 41, no. 4 (Winter, 1967), pp. 404-420.
50 U.S.C. Appx §2161
50 U.S.C. Appx §2170; Section 721 of the DPA.
123 Stat. 2006; 50 U.S.C. Appx. §2166.
50 U.S.C. Appx. §2155(a); Section 705(a) of the DPA. Thus, under current law, Section 705 authority would expire on September 30, 2021.
P.L. 111-67, 123 Stat. 2019-2020. The DPAC is now authorized in Section 722 of the DPA, 50 U.S.C. Appx. §2171.
Section 2 of P.L. 113-172.
Presidential Documents, "Designating the Chairperson of the Defense Production Act," 75 Federal Register 32087, June 7, 2010. This relationship between the Secretaries of Homeland Security and Defense is supported by a memorandum of agreement, available at http://www.acq.osd.mil/mibp/resources.html. The Secretary of Homeland Security served as the first Chairperson, from April 1, 2010, to March 31, 2011; the Secretary of Defense then served from April 1, 2011 to March 31, 2012, and so forth.
See Section 104(b)(2) of E.O. 13603, which includes as one of the responsibilities of the Secretary of Homeland Security to "provide for the central coordination of the plans and programs incident to authorities and functions delegated under this order ... " Given this language, the Secretary of Homeland Security appears to be the most likely Chairperson, though a change to E.O. 13603 (or a different interpretation of E.O. 13603 by the Administration) could allow for another Chairperson to be designated.
Given the focus of the old DPAC on Title III, the President had appointed Deputy Assistant Secretary of Defense for Manufacturing and Industrial Base Policy.
See Section 722(d) of the DPA; 50 U.S.C. Appx. §2171(d).
Section 722(e) of the DPA; 50 U.S.C. Appx. §2171(e). For more on the Federal Advisory Committee Act, see CRS Report R40520, Federal Advisory Committees: An Overview, by [author name scrubbed].
P.L. 113-72, the 2014 reauthorization of the DPA, imposed such a cap on Title III project size. See the section "How Title III Authorities Changed in " of this report for more.
The Administration has reported that new rules are being prepared by the Department of Agriculture and the Department of Health and Human Services, but did not mention the development of a rule by the Department of Defense. See Department of Homeland Security, The Defense Production Act Committee: Report to Congress, March 31, 2013, p. 4. The Department of Agriculture has a proposed rulemaking that has not been finalized, see Department of Agriculture, "Agriculture Priorities and Allocations System," 76 Federal Register 29084, May 19, 2011
50 U.S.C. Appx. §2158(e); Section 708(e) of the DPA. This rule is established in 44 C.F.R. Part 332. The voluntary agreement authority was revised most recently in P.L. 111-67. Additionally, the national defense context and potential need for voluntary agreement authorities has evolved since 1981, which would also potentially prompt the need to revise the regulation.
For more, see the "Defense Production Act Committee, as amended by " section of this report.
50 U.S.C. Appx. §2171(d)(3); Section 722(d)(3) of the DPA, as amended by P.L. 113-172.
The Homeland Security Studies and Analysis Institute has suggested that DPA authorities, especially Section 303 authorities, might be helpful in addressing cybersecurity threats, though the legality of such action remains unknown. See Homeland Security Studies and Analysis Institute, An Analysis of the Primary Authorities Supporting and Governing the Efforts of the Department of Homeland Security to Secure the Cyberspace of the United States, Arlington, VA, May 24, 2011, p. 28, at http://www.homelandsecurity.org/docs/reports/MHF-and-EG-Analysis-of-authorities-supporting-efforts-of-DHS-to-secure-cyberspace-2011.pdf. The possibility of DPA authorities being used in the realm of cybersecurity and defense was also raised in a Senate hearing on the DPA, see U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Oversight of the Defense Production Act: Issues and Opportunities for Reauthorization, Examining How the Federal Agencies Responsible for the Implementation of the Defense Production Act (DPA) Are Being Used to Support National Defense, 113th Cong., 1st sess., July 16, 2013, S.Hrg. 113-66 (Washington: GPO, 2013), pp. 11-13.
For the definition of national defense, see 50 U.S.C. Appx. §2152(14); Section 702(14) of the DPA.
For an example of this clause, see 50 U.S.C. Appx. §2158(c)(3); Section 708(c)(3) of the DPA.
Section 315, P.L. 112-239, National Defense Authorization Act for Fiscal Year 2013. For more on this topic, see CRS Report R42859, DOD Alternative Fuels: Policy, Initiatives and Legislative Activity.