COVID-19: Defense Production Act (DPA) Developments and Issues for Congress

INSIGHTi COVID-19: Defense Production Act (DPA) Developments and Issues for Congress May 13, 2020 The The White House is employing the Defense Production Act of 1950 (DPA) in response (DPA) is being employed by the Trump Administration in response to the Coronavirus Disease 2019 (COVID-19) pandemic to facilitate the production and availability of essential goods, supplies, and services. This Insight considers recent DPA actions with regard to the COVID-19 pandemic and discusses and associated policy considerations for Congress. It is a companion to CRS Insights IN11337, IN11280, and IN11231IN11337, IN11280, and IN11231. See CRS Report R43767R43767 for a more in-depth discussion of DPA history and authorities. New DPA Actions in Response to COVID-19 Since April 15, seveneight DPA actions have been made public:      According to Federal Procurement Data System (FPDS) COVID-19 records, the Federal Emergency Management Agency (FEMA) , FEMA issued four DPA priority-rated orders to the 3M company for N95 respirators on April 16, April 21, and April 28. The orders were made pursuant to, per an April 2 White House memorandum. FEMA announced the White House memorandum. The Federal Emergency Management Agency (FEMA) announced the DPA priority-rated orders for N95 respirators from producer 3M on April 14. On . On April 20, the Department of Defense (DOD) announced it had set aside $750 million of $1 billion in new DPA Title III appropriations for health resources, with $250 million reserved for defense industrial base supply chains investments. investments. On April 21, DOD announced a $133 million Title III investment in N95 respirator production, per a previous April 11 announcement. . The Department of Justice (DOJ) charged a New York resident on April 24, and two individualstwo individuals on April 28, with violating DPA anti-hoarding/price -gouging provisions. On April 28, President Trump issued Executive Order (E.O..) 13917 directing the Department of Agriculture (USDA) to exercise DPA authorities to address meat processingmeat and poultry plant closures, and any other food supply chain issues, due to the pandemic. Congressional Research Service https://crsreports.congress.gov IN11387 CRS INSIGHT Prepared for Members and Committees of Congress Congressional Research Service  On April 29, DOD announced $75 million in DPA Title III investments to increase nasal swab production, which followedper the President’s 's April 19 DPA invocation to produce the swabs.  . On May 5, pursuant to E.O. 13917, the USDA publicized letters to state governors and meat processing plants, directing plants to continue or resume operations utilizing COVID-19 meat and poultry COVID-19 meat processing guidelines developed on April 28 by the Centers for Disease Control and Prevention (CDC) and the Department of Labor’'s Occupational Safety and Health Administration (OSHA).

On May 14, the President issued a new E.O. delegating DPA Title III authority to the International Development Finance Corporation (DFC) in response to the pandemic.

These actions were made publicly available, but may not be exhaustive. There are no statutory reporting requirements under the DPA. for DPA actions. DPA Issues for Congress The Administration has employed the DPA selectively, focusing on individual companies (e.g., GM, 3M) or industry sub-sectors (e.g., meat processing). There have been sporadic DPA efforts, and an opaque process, in response to complaints from Congress and some governors regarding ongoing shortages of personal protective equipment, , testing supplies, and other such resources. The Administration’s 's announced actions have primarily framed the DPA as a coercive instrument (the President called the DPA a “ a "tremendous hammer”") with relatively narrow application. Recent DPA actions present a number of issues that may be of interest to Congress:     Control over the statutory DPA Title III account, the DPA Fund, is a potential issue. Currently, Title III appropriations are made to the DPA Purchases (DPAP) account, which serves the DPA Fund’s 's statutory role—a fund for Title III activities that does not expire (a “ "no-year”" fund), capped at $750 million annually. According to Sec. 304 of the statute, and Sec. 309 of E.O. 13603, DOD manages, DOD is the manager of the DPA Fund, which is available to support Title III activities across government. However, according to some congressional offices, certain DOD officials interpret appropriations to DPAPDPAP appropriations—including the $1 billion appropriated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act—as available at DOD’'s sole discretion. The DPA Fund has functioned in the past as an exclusive DOD account, beingBeing the fund manager and possessing the only standing Title III program in government, the DPA Fund has functioned as an exclusive DOD account despite being technically available to other agencies. As a result, notwithstanding its statutory and administratively-defined role, DOD may require further guidance to perform its custodial obligations to make DPAP funds available to the government as a whole in emergency situations. The Administration has exercised DPA’s 's anti-hoarding/price gouging provisions to make arrests and seize goods for redistribution. However, the DPA does not define an “excess "excess of prevailing market price”" or include operational standards on when and how these provisions may be used. FEMA announced the existence of DPA rated orders on April 14, but did not include details. While orders matching FEMA’'s description were identified in the FPDS, there were discrepancies in the dates, and there. There is no statutory requirement for DPA actions to be reported in FPDS or elsewhere. The USDA’'s May 5 letters reference DPA authorities to reopen and ensure production in meat processing facilities and, which could be interpreted to supersede more stringent state directives. However, USDA statements do not specify the operative DPA authorities used to enforcein its policy. The agency also did not state whether CDC/OSHA guidance is 2 Congressional Research Service  3 intended to “preempt”"preempt" state guidance, and what DPA authorities support that interpretation. For a legal analysis of E.O. 13917, see CRS Legal Sidebar LSB10456. Policy Considerations LSB10456.

The E.O. delegating Title III authorities to DFC was issued as part of the Administration's broader policy to expand national stockpiles. However, as an international development agency created in 2019, DFC's capacity for making domestic DPA investments is unknown.

Policy Considerations

Given these issues, Congress may wish to consider the followingseveral policy options:  Congress may use itsconduct oversight powers or pursue legislation to obtain clarity over differing interpretations of DPA authorities, such as the use of the DPA fund by DOD vs. other federal agencies; congressional authorization for promulgating DPA regulations; the need for increased DPA reporting and transparency; and parameters for antihoardinganti-hoarding/price gouging actions.  Congress may consider creating a centralized office for DPA implementation, reporting, and coordination. The Office of Defense Mobilization, created alongside the DPA in 1950, established executive administrative infrastructure to plan and execute DPA authorities. One currentcurrent proposal provides for an “"executive officer”" to fulfill this function in a limited, temporary fashion. Congress may amend the DPA to expand congressional oversight and involvement in DPA actions, and curtail or constrain presidential discretion in employing DPA authorities outside congressional intent.  Author Information Michael H. Cecire Analyst in Intergovernmental Relations and Economic Development Policy Heidi M. Peters Analyst in U.S. Defense Acquisition Policy Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material. IN11387 · VERSION 1 · NEW outside congressional intent.