The Defense Production Act of 1950: History, October 6, 2023 Authorities, and Considerations for Congress Alexandra G. Neenan The Defense Production Act (DPA) of 1950 (P.L. 81-774, 50 U.S.C. §§4501 et seq.), as Analyst in U.S. Defense amended, confers upon the President a broad set of authorities to influence domestic industry in Infrastructure Policy 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 Luke A. Nicastro materials and goods needed for the national defense.

Analyst in U.S. Defense Infrastructure Policy Though initially passed in response to the Korean War, the DPA is historically based on the War Powers Acts of World War II. Gradually, Congress has expanded the term national defensedefense, as defined in the DPA. Based on this definition, the scope of DPA authorities now extends beyond shaping U.S. military preparedness and capabilities, as the authorities may also be used to enhance and support domestic preparedness, response, and recovery from natural hazards, terrorist attacks, and other national emergencies. Current DPA authorities include: • emergencies.

• Title I: Priorities and Allocations, which allows the President to require persons (including businesses and corporations) to prioritize and accept contracts for materials and services as necessary to promote the national defense.
• • Title III: Expansion of Productive Capacity and Supply, which allows the President to incentivize the domestic industrial base to expand the production and supply of critical materials and goods. Authorized incentives include loans, loan guarantees, direct purchases and purchase commitments, and the authority to procure and install equipment in private industrial facilities.
• • Title VII: General Provisions, which includes key definitions for the DPA and several distinct authorities, including the authority to establish voluntary agreements with private industry; the authority to block proposed or pending foreign corporate mergers, acquisitions, or takeovers that threaten national security; and the authority to employ persons of outstanding experience and ability and to establish a volunteer pool of industry executives who could be called to government service in the interest of the national defense.

The authorities of the DPA are generally afforded to the President in the 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 Generally speaking, these authorities are statutorily afforded to the President, who may in turn delegate them to other executive branch officials. While DPA authorities are most frequently used by, and commonly associated with, the Department of Defense (DOD), they can be —and have been —used by numerous other executiveother government departments and agencies.

Since 1950, the DPA has been reauthorized over 50 times, though significant authorities were terminated from the original law in 1953.and modified dozens of times. As most DPA authorities periodically terminate, much of the legislation must be regularly reauthorized Congress last reauthorized the DPA in Section 1791 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (P.L. 115-232). This extended the termination of the act by six six years, from September 30, 2019, to September 30, 2025, 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.

Congress may consider enhancing its oversight of executive branch activities related to the DPA in a number of ways. To enhance oversight, Congress could expand executive branch reporting requirements, track and enforce rulemaking requirements, review the activities of the Defense Production Act Committee, and broaden the committee oversight jurisdiction of the DPA in Congress. Congress may also consider amending the DPA, either by creating new authorities or repealing existing ones. In addition, Congress may consider amending the definitions of the DPA to expand or restrict the DPA'DPA’s scope, amending the statute to supersede the President'’s delegation of DPA authorities made in E.O. 13603, or consider adjusting future appropriations to the DPA Fund in order to manage the scope of Title III projects initiated by the President. Congressional Research Service link to page 5 link to page 6 link to page 6 link to page 6 link to page 7 link to page 7 link to page 8 link to page 9 link to page 9 link to page 11 link to page 12 link to page 13 link to page 13 link to page 14 link to page 15 link to page 16 link to page 17 link to page 18 link to page 18 link to page 18 link to page 19 link to page 19 link to page 20 link to page 21 link to page 22 link to page 23 link to page 24 link to page 24 link to page 24 link to page 24 link to page 24 link to page 25 link to page 25 link to page 26 link to page 26 link to page 26 link to page 27 link to page 16 link to page 28 The Defense Production Act of 1950 Contents Introduction ..................................................................................................................................... 1 History of the DPA .......................................................................................................................... 2 Origin ........................................................................................................................................ 2 Committee Jurisdiction ............................................................................................................. 2 History of DPA Reauthorizations .............................................................................................. 3 Major Authorities of the DPA .......................................................................................................... 3 General Scope of the DPA......................................................................................................... 4 Authorities under Title I of the DPA ......................................................................................... 5 Priorities and Allocations Authority .................................................................................... 5 Delegations of Title I Authorities ........................................................................................ 7 Examples of Use of Title I Authorities................................................................................ 8 Authorities Under Title III of the DPA ...................................................................................... 9 Loan Guarantees and Direct Loans ..................................................................................... 9 Purchase, Purchase Commitments, and Installation of Equipment ................................... 10 Delegation of Section 301, 302, and 303 Authorities in E.O. 13603 ................................. 11 Defense Production Act Fund ........................................................................................... 12 Examples of Use of Title III Authorities ........................................................................... 13 Authorities Under Title VII of the DPA .................................................................................. 14 Special Preference for Small Businesses .......................................................................... 14 Definitions of Key Terms in the DPA ............................................................................... 14 Industrial Base Assessments ............................................................................................. 15 Voluntary Agreements ....................................................................................................... 15 Nucleus Executive Reserve ............................................................................................... 16 Committee on Foreign Investment in the United States ................................................... 17 Termination of the Act ...................................................................................................... 18 Defense Production Act Committee .................................................................................. 19 Impact of Offsets Report ................................................................................................... 20 Considerations for Congress.......................................................................................................... 20 Enhancing Oversight ............................................................................................................... 20 Expanding Reporting or Notification Requirements ........................................................ 20 Enforcing and Revising Rulemaking Requirements ......................................................... 20 Broadening Committee Oversight Jurisdiction ................................................................. 21 Amending the Defense Production Act of 1950 ...................................................................... 21 Declaration of Policy ........................................................................................................ 22 Definitions ........................................................................................................................ 22 Amending the Delegations of Authority in E.O. 13603 .................................................... 22 Appropriations to the DPA Fund ....................................................................................... 23 Tables Table 1. Appropriations to the DPA Fund, FY2013-FY2023 ........................................................ 12 Table A-1. Additional Resources by Defense Production Act Subject .......................................... 24 Congressional Research Service link to page 29 link to page 29 link to page 31 link to page 33 link to page 28 link to page 34 The Defense Production Act of 1950 Table A-2. Key Provisions of the Defense Production Act, Related Portions of Executive Order 13603, and Associated Regulations ................................................................................. 25 Table A-3. Delegation of Priorities and Allocations Authorities to Cabinet Secretaries ............... 27 Table A-4. Chronology of Laws Reauthorizing the Defense Production Act of 1950 .................... 1 Appendixes Appendix. Supplementary Tables .................................................................................................. 24 Contacts Author Information .......................................................................................................................... 2 Congressional Research Service link to page 29 The Defense Production Act of 1950 Introduction President.

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.1 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”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 2018 (Sec. 791 of P.L. 115-232). The majority of DPA authorities will expire on September 30, 2025, 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. For example, though significant authorities for the Committee on Foreign Investment in the United States (CFIUS) are included in the DPA, CFIUS is generally considered separate and distinct from the DPA and this report defers to other CRS reports for in-depth discussion on that issue.³3 This report also identifies relevant delegations of the President'’s DPA authorities made in Executive Order (E.O.) 13603, National Defense Resources Preparedness.⁴ 4 Finally, this report provides a brief overview of issues Congress may 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.

As appendices to this report, several supplementary tables provide: additional resources related to various DPA subjects; a tabled analysis of key provisions of the DPA and related portions of E.O. 13603 and in regulations; the delegationdelegation of Title I priorities and allocations authority to Cabinet Secretaries in E.O. 13603; and a chronology of laws reauthorizing DPA authorities since first enactment. There is also an appendix discussing how DPA authorities changed as a result of the last major reauthorization of the law that included reforms (P.L. 113-172, To reauthorize the Defense Production Act, to improve the Defense Production Act Committee, and for other purposes).⁵

5 1 50 U.S.C. §§4501 et seq. The DPA has been reclassified and renumbered from the former Appendix to Title 50 of the U.S. Code, where it was numerated at 50 U.S.C. Appx. §§2061 et seq. 2 50 U.S.C. §4502(a)(1); Section 2(a)(1) of the DPA. 3 See CRS Report RL33388, The Committee on Foreign Investment in the United States (CFIUS), by James K. Jackson (for further inquiries, congressional offices may contact Cathleen D. Cimino-Isaacs); and CRS In Focus IF10952, CFIUS Reform Under FIRRMA, by James K. Jackson and Cathleen D. Cimino-Isaacs. 4 Executive Order 13603, “National Defense Resource Preparedness,” 77 Federal Register 16651, March 22, 2012. 5 These changes are discussed at length in this report, and are summarized in Table A-2 of the Appendix. Congressional Research Service 1 The Defense Production Act of 1950 History of the DPA Origin The DPA was modelledHistory of the DPA

Origin

The DPA was inspired by the First and Second War Powers Acts of 1941 and 1942, which gave the executive branch broad authority to regulate industry during World War II.⁶6 Much of this authority lapsed at the end of that war, butafter 1945, and the beginning of the Cold War with the Soviet Union in the late 1940s and the North Korean invasion of South Korea in June of 1950 caused(and particularly the June 1950 outbreak of the Korean War) led the Truman Administration to reconsider the need for stronger executive authority in the interest of national defense.⁷

The original DPA,identify a need for greater executive powers to control defense production and manage the nation’s economy.7 As initially enacted on September 8, 1950, the DPA granted broad authority to the President to control nationalaspects of industrial and economic policy.⁸8 Containing seven separate titles, the DPA legislation allowed the President, among other powers, to to, inter alia, demand that manufacturers give priority to defense production, to requisition materials and property, to expand government and private defense production capacity, ration consumer goods, fix wage and price ceilings, force settlement of some labor disputes, control consumer credit and regulate real estate construction credit and loans, provide certain antitrust protections to industry, and 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), those which related to requisitioning, rationing, wage and price fixing, labor disputes, and credit controls and regulation, Of the DPA’s seven initial titles, four—Title II (Authority to requisition), Title IV (Price and wage stabilization), Title V (Settlement of labor disputes), and Title VI (Control of consumer and real estate credit)—terminated in 1953 when Congress allowed them to lapse.⁹

9 Committee Jurisdiction

Though commonly associated with industrial production for the DODnational defense, the DPA currently lies within the jurisdiction of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. This is a legacy of the DPA’s initial scope—because of the broad economic 6 First War Powers Act, 1941 (H.R. 6233, P.L. 77-354, 55 Stat. 838), and Second War Powers Act, 1942 (S. 2208, P.L. 77-507, 56 Stat. 176). The first of these statutes conferred considerable emergency power on the President to reorganize the executive branch, to enter into contracts and make payments on them, and to regulate “trade with the enemy.” The second act expanded the powers of the Interstate Commerce Commission to improve the efficiency of transportation of war materials; expanded an existing authority for military departments to acquire private property by condemnation, purchase, donation, or other transfer; permitted the Secretaries of War and the Navy to place orders and contracts and the President to give such contracts priority over all deliveries for private accounts or for export; and gave the President the authority to require acceptance of and performance under these contracts and to allocate materials and facilities for their fulfillment. The act also empowered the President to obtain information, records, and reports sufficient to enforce the provisions of the act and clarified existing law on the amount of compensation required if property was requisitioned for defense purposes. The act also included provisions relating to free postage for members of the military services, naturalization of persons serving in the armed forces, acceptance of conditional gifts to further the war program, metal content of coinage, inspection and audit of war contractors, and the gathering and assessment of war information by the Department of Commerce. 7 In a message sent to Congress at the outbreak of war in Korea in mid-1950, President Truman stated that the United States and the United Nations were responding to a military invasion of the Republic of Korea by forces from north of the 38th parallel, that the nation urgently needed additional military manpower, supplies, and equipment, and that the nation’s military and economic preparedness were inseparable. He urged Congress to pass legislation that would guarantee the prompt supply of adequate quantities of needed military and civilian goods, including measures to help compensate for manufacturing demand growth caused by military expansion. For more history of the DPA, see U.S. Congress, House Banking and the Currency, Defense Production Act of 1950, report to accompany H.R. 9176, 81st Cong., 2nd sess., July 28, 1950, H.Rept. 81-2759 (Washington: GPO, 1950), p. 1. 8 P.L. 81-774, 64 Stat. 798. 9 P.L. 83-95, 67 Stat. 129. P.L. 83-95 permitted the termination of Titles II and VI as of June 30, 1953, and Titles IV and V to terminate as of April 30, 1953. Congressional Research Service 2 link to page 33 The Defense Production Act of 1950 powers the legislation conferred upon the President, the bill thatand 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).10 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 1992,¹⁰11 in effect, the Joint Committee has not existed since 1977, when salaries and expenses for the committee were last funded.¹¹

12 History of DPA Reauthorizations

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 1950. Aside from its initial enactment, the most consequential modification of the DPA occurred in 1953, when P.L. 85-95 reauthorized Titles I, III, and VII while allowing Titles II, IV, V, and VI of the DPA to expire in 1953.¹² The Defense Production Act, liketo expire.13 Like the War Power Acts that preceded it, the DPA 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 53 times, recurring opportunities for amendment. As of 2023, Congress has reauthorized the DPA 53 times (including many short-term "“stop-gap"” extensions). From time to time, the DPA has expired without Congress passing a law reauthorizing and extending its termination date. 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 115^th115th Congress, in Section 1791 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (P.L. 115-232). This extended the termination of the act by six  years, from September 30, 2019, to September 30, 2025, when nearly all DPA authorities will terminate. See Table A-4 in the Appendix for a full chronology of reauthorizations.

Major Authorities of the DPA

This section provides summaries of the major authorities granted to the President in the three remaining active titles of the DPA.¹³14 Each summary describes how the DPA authorities are delegated to Cabinet officials or other offices of the U.S. government in the issued Executive 10 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. 11 Section 153 of the Defense Production Act Amendments of 1992 (P.L. 102-558, 106 Stat. 4219). 12 Although in 1977 Congress extended the 1950 Act through September 30, 1979 (P.L. 95-37), no appropriation for salaries and expenses of the Joint Committee was made for FY1978. The last appropriation for salaries and expenses for the Joint Committee was made in P.L. 94-440. 13 Act of June 30, 1953, Defense Production Act Amendments of 1953 (S. 1080, P.L. 83-95). 14 Titles I, III, and VII. The former Titles of the DPA (II, IV, V, and VI) terminated in 1953, but were officially repealed in the Reauthorization of 2009. Congressional Research Service 3 link to page 29 link to page 28 The Defense Production Act of 1950 delegated to Cabinet officials or other offices of the U.S. government in the issued Executive Order (E.O.) 13603, National Defense Resource Preparedness.¹⁴15 It is not intended to comprehensively evaluate all authorities in the DPA. The information provided below is reviewed inin 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.

General Scope of the DPA

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."¹⁵ ”16 [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.¹⁶17 National defense is currently defined in the statute as

programs for military and energy production or construction, military or 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 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 Assistance Act [42 U.S.C. §§5195 et seq.] and critical infrastructure protection and restoration.18 Thus, the allowable use of DPA authorities extends beyond shaping U.S. military preparedness and capabilities, including purposes such as domestic preparedness, response, and recovery from hazards, terrorist attacks, and other national emergencies.19 This represents a substantial expansion of the term’s initial definition—as originally enacted, 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.”20 Another important definition affecting the scope of the DPA is that of the domestic industrial base, which is currently defined in the statute as “domestic sources which are providing, or which would be reasonably expected to provide, materials or services to meet national defense requirements during peacetime, national emergency, or war.”21 Domestic sources, in turn, are defined as businesses that perform contracted activities at, and source contracted components and 15 Executive Order 13603, “National Defense Resource Preparedness,” 77 Federal Register 16651, March 22, 2012. E.O. 13603 replaced the previous E.O. 12919 on National Defense Industrial Resource Preparedness, which had been issued by President William J. Clinton on June 3, 1994. See Executive Order 12919, “National Defense Industrial Resources Preparedness,” 59 Federal Register 29525, June 7, 1994. 16 50 U.S.C. §4502(a)(4); Section 2(a)(4) of the DPA (emphasis added). 17 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. §4511(a)); Title III authorities can be used when “essential for the national defense” (50 U.S.C. §§4531(a), 4532(a), 4533(a)); and Title VII voluntary agreement authority requires that the use helps “provide for the national defense” (50 U.S.C. §4558(c)(1)). 18 50 U.S.C. §4552(14); Section 702(14) of the DPA. Title VI of the Stafford Act defines “emergency preparedness activities” as any activities or 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.” 42 U.S.C. §5195(a)(3) 19 The most recent amendment to this definition occurred in 2009, when “restoration.¹⁷

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... "¹⁹ Over the many reauthorizations and amendments to the DPA, Congress has gradually expanded the scope of the definition of national defense, as recently as 2009.²⁰ At that time, Congress included critical infrastructure assistance to any foreign nation” and added “homeland security” were added. 123 Stat. 2017, Section 8 of P.L. 111-67. 20 See Section 702(d) of P.L. 81-774. 21 50 U.S.C. §4552(6). Congressional Research Service 4 The Defense Production Act of 1950 assemblies from, locations inside the United States or Canada.22 This definition is important because the provision of assistance to private industry under DPA Title III authorities is restricted to the domestic industrial base, meaning that only businesses in the United States and Canada that meet the current definition are eligible to receive such assistance. The DPA statute also includes congressional “Findings” and a “Statement of Policy.”23 This section of the law provides additional guidance homeland security to the definition.²¹

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.²² 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. For example, the “Findings” section contains guidance on the promotion of renewable energy sources: 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 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 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.²³

it24 Similarly, the “Statement of Policy” includes the following language on the locations of defense production sites: 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 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.²⁴

25 Authorities under Title I of the DPA

Priorities and Allocations Authority

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 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 such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.²⁵

26 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.²⁶27 Under the language of the DPA, a person (including corporations, as defined in statute)²⁷ is required to accept prioritized contracts/orders,²⁸ though regulations implementing Title I authorities provide practical exemptions to this 22 50 U.S.C. §4552 (8). 23 50 U.S.C. §4502; 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). 24 50 U.S.C. §4502(a)(6); Section 2(a)(6) of the DPA. 25 50 U.S.C. §4502(b)(6); Section 2(b)(6) of the DPA. 26 50 U.S.C. §4511(a); Section 101(a) of the DPA. 27 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. §3816). Congressional Research Service 5 The Defense Production Act of 1950 mandate.28mandate. 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.²⁹29 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.³⁰30 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.³¹

31 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.³²32 No allocation action has been taken by the President since the end of the Cold War.³³

33 There are several notable restrictions to the priorities and allocation authority. For example, it cannot be used for contracts of employment.³⁴Additionally34Additionally, 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.³⁵

35 Title I also contains several provisions related to domestic energy. Section 101(c) specifically authorizes the President to allocate and prioritize contracts relating to materials, equipment, and services to maximize domestic energy supplies in certain circumstances.³⁶36 However, Section 101(c) also restricts this use unless the President makes certain findings.³⁷37 Further, Section 105 of 28 50 U.S.C. §4552(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.” Contracts and “rated orders” have the same meaning in the regulations for Title I authorities. See, for example, the definition for “rated order” provided by 15 C.F.R. §700.8. 29 See, for example, the regulations establishing standards and procedures for the use of the Secretaries of Agriculture, Commerce, Energy, Health and Human Services, and Transportation delegated authorities under Title I of the DPA (7 C.F.R. §786.13, 15 C.F.R. §700.13, 10 C.F.R. §217.33, 45 C.F.R. §101.33, 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].” Additionally, President Biden issued Presidential Determination No. 2022-11 in March 2022, determining that renewable domestic energy production is essential to national defense. 30 50 U.S.C. §4557; 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). 31 See, for example, 15 C.F.R. §700.3(d). 32 See further explanation of allocation authority in 15 C.F.R. §700.30. 33 Department of Homeland Security, The Defense Production Act Committee Report to Congress, Calendar Year 2017 Report to Congress, June 18, 2019, p. 11. 34 This restriction is written as a parenthetical in Section 101(a)(1), but is a considerable constraint on Title I priorities authority. 35 50 U.S.C. §4514; 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. 36 50 U.S.C. §4511(c); Section 101(c) of the DPA. 37 50 U.S.C. §4511(c)(2); Section 101(c)(2) of the DPA stipulates that the Title I authority related to domestic energy (continued...) Congressional Research Service 6 link to page 31 The Defense Production Act of 1950 Further, Section 105 of the DPA restricts the authorities from being used to ration the end-use of gasoline without the approval of Congress.³⁸38 Section 106 of Title I, as amended, also designates energy as a strategic and critical material.³⁹39 This designation enables other authorities in the DPA, especially Title III authorities discussed below, to be used for policy purposes related to energy.

Delegations of Title I Authorities

In statute, Title I priorities and allocation authority can only be used to " E.O. 13603 of March 16, 2012 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. In practice, the priorities authority held by one Cabinet Secretary is frequently allowed to be used by other federal agencies, thereby allowing one agency to use another agency’s authorities (e.g., DHS was allowed to use the Department of Agriculture’s priorities authority related to food resources).40 Table A-3 in the Appendix summarizes this delegation of priorities and allocation authority. In addition, E.O. 13909 of March 18, 2020 delegated Title I authority to the Secretary of Health and Human Services “with respect to all health and medical resources needed to respond to the spread of COVID-19 within the United States.”41 In statute, Title I priorities and allocation authority can only be used to “promote national defense."” In E.O. 13603, the President further constrains thatconstrained this 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 either the Secretary of Defense, the Secretary of Homeland Security, or the Secretary of Energy, depending on the issue involved. 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. The Secretary of Defense makes determinations related to military production and construction, military assistance to foreign nations, military use of civil transportation, stockpiles managed by DOD, space, and directly related activities; the Secretary of Energy makes determinations related to energy production and construction, distribution and use, and directly related activities; and the “may not be used to require priority performance of contracts or orders, or to control the distribution of any supplies of materials, services, and facilities in the marketplace, unless the President finds that— (A) such materials, services, and facilities are scarce, critical, and essential— (i) to maintain or expand exploration, production, refining, transportation; (ii) to conserve energy supplies; or (iii) to construct or maintain energy facilities; and (B) maintenance or expansion of exploration, production, refining, transportation, or conservation of energy supplies or the construction and maintenance of energy facilities cannot reasonably be accomplished without exercising the authority specified in paragraph (1) of this subsection.” 38 50 U.S.C. §4515; Section 105 of the DPA. 39 50 U.S.C. §4516; Section 106 of the DPA. 40 Department of Homeland Security, The Defense Production Act Committee: Report to Congress, Calendar Year 2017 Report, June 18, 2019, p. 11. 41 E.O. 13909, March 18, 2020, available online at https://www.federalregister.gov/documents/2020/03/23/2020-06161/prioritizing-and-allocating-health-and-medical-resources-to-respond-to-the-spread-of-covid-19. Congressional Research Service 7 The Defense Production Act of 1950 Secretary of Homeland Security makes determinations related to all other national defense programs, including civil defense and continuity of government.42 to energy production and construction, distribution and use, and directly related activities; and the Secretary of Homeland Security makes determinations related to all other national defense programs, including civil defense and continuity of government.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. In practice, the priorities authority held by one Cabinet Secretary is frequently allowed to be used by other federal agencies, thereby allowing one agency to use another agency's authorities (e.g., DHS was allowed to use the Department of Agriculture's priorities authority related to food resources).⁴¹ Table A-3 in the Appendix summarizes this delegation of priorities and allocation authority.

Each of the six federal agencies to which the President delegated priorities and allocations authority through E.O. 13603 are required by law to issue and annually review regulations that "“establish standards and procedures by which the priorities and allocations authority under this section is used to promote the national defense, under both emergency and nonemergency conditions."⁴²”43 Five of the six delegated the authority—the Departments of Agriculture, Commerce, Energy, Health and Human Services, and Transportation—have issued those regulations. DOD has not issued its regulation as it relates to using the priorities and allocation authority for water resources, as of November 20, 2018. However, DOD has indicated that its regulation is in preliminary draft.⁴³44 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. As encouraged by statute, the DPAS regulation was used as a model to create a "“consistent and unified Federal priorities and allocations system."⁴⁴”45 This system is referred to as the "“Federal Priorities and Allocations System"” (FPAS).⁴⁵46 Each of the regulations that make up the FPAS establish two levels of priority for issued orders notated as "DO"“DO” and "“DX."” In the DPAS regulations, a "DO"“DO” rating is lower than a "DX"“DX” rating. A "DO"“DO” rating order for a product means that it must be prioritized over all other nonrated orders. However, if a product that has a "DO"“DO” rated order is needed for a different "DX"“DX” rated order, the "DX"“DX” rated order takes precedence. As a matter of practice, few select programs may receive a "DX" rating.⁴⁶

“DX” rating.47 Examples of Use of Title I Authorities

The authority to prioritize contracts is routinely employed by DOD. 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.⁴⁷ 48 DOD has reported that it includes a priority rating as a standard clause in virtually all eligible contracts and orders for items under DOC'’s resource jurisdiction.⁴⁸49 Some past examples of DOD'DOD’s use of Title I priorities authority include supporting the Integrated Ballistic Missile Defense System, the B-2 Bomber, the VC-25A Presidential Aircraft (i.e., Air Force One), and Mine Resistant Ambush Protected (MRAP) Vehicles.⁴⁹ 50 While the priorities authority is used farwas historically used less frequently by other departments and agencies outside of DOD, it has been used for a variety of purposes, including pandemic response, 42 See Section 202 of E.O. 13603. 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. 43 50 U.S.C. §4511(d)(1), Sec. 101(d)(1) of the DPA. 44 Email response from Department of Defense, Legislative Affairs, November 8, 2018. 45 50 U.S.C. §4511(d)(2), Sec. 101(d)(2) of the DPA. 46 For additional information on FPAS, see FEMA’s website about it at https://www.fema.gov/federal-priorities-and-allocations-system. 47 For a discussion of the different priority ratings, see 15 C.F.R. §700.11. 48 Ibid. DOD has been re-delegated authority by DOC to use their regulations and authorities for Title I priorities authority. 49 Department of Homeland Security, The Defense Production Act Committee: Report to Congress, Calendar Year 2015 Report, June 16, 2016, p. 5. 50 For a list of Department of Defense programs that were approved for DX-rating as of March 2016, see https://www.bis.doc.gov/index.php/forms-documents/pdfs/1257-dx-rated-program-list/file. Congressional Research Service 8 The Defense Production Act of 1950 terrorism prevention, and natural disaster preparedness. Much of this recent usage occurred in the context of the COVID-19 pandemic: according to a 2021 Government Accountability Office report, between March 2020 and September 2021, Title I authorities were used on at least 73 occasions for pandemic response purposes.51 Other non-COVID related uses outside the traditional remit of DOD have included the prioritization of contracts in support of hurricane mitigation activities in Louisiana (2013); disaster relief efforts in Puerto Rico (2017); and natural gas procurement for state utilities facing blackouts (2001).52 The allocation authority supports, 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.⁵⁰ The Federal Emergency Management Agency used the authority extensively during the 2017 disaster season, including prioritizing contracts for manufactured housing units, food and bottled water, and the restoration of electrical transmission and distribution systems in Puerto Rico.⁵¹ Further, U.S. allies have used the authority to assist with defense-related procurement issues.⁵² 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 2001.⁵³

Unlike the prioritization authority, the allocation authority has not been used since the Cold War. 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"“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.⁵⁴

53 Authorities Under Title III of the DPA

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.⁵⁵54 The President is also directed to may also 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.⁵⁶

55 Loan Guarantees and Direct Loans

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.⁵⁷56 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.⁵⁸57 A direct loan is 51 “COVID-19: Agencies Are Taking Steps to Improve Future Use of Defense Production Act Authorities”, Government Accountability Office, December 2021. Available online at https://www.gao.gov/assets/gao-22-105380.pdf. For more information on the use of DPA authorities to respond to COVID-19, see CRS Insight IN11619, New COVID-19 Defense Production Act (DPA) Actions: Implementation Considerations and CRS Insight IN11593, New Presidential Directives on the Defense Production Act (DPA) and the COVID-19 Pandemic. 52 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. Department of Homeland Security, The Defense Production Act Committee: Report to Congress, Calendar Year 2017 Report, June 18, 2018, p. 10. 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). 53 For more on the CRAF program, see U.S. Department of Transportation’s website on the program at http://www.dot.gov/ost/oiser/craf.htm. 54 50 U.S.C. §4517; Section 107(a) of the DPA. Many of these terms are defined further in 50 U.S.C. §4552. 55 50 U.S.C. §4517; Section 107(b)(1) of the DPA. 56 50 U.S.C. §4531(a)(1). The beginning of 50 U.S.C. §4532(a) includes the same basic text as §4531(a)(1). 57 Ibid. Congressional Research Service 9 The Defense Production Act of 1950 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 nonfederal lender to a nonfederal borrower, either by pledging to pay back all or part of the loan in cases when the borrower is unable to do so. 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 these loan authorities 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.⁵⁹58 Except during periods of national emergency declared by Congress or the President,⁶⁰59 the DPA statute also requires the President to determine that loan guarantees or direct loans meet a number of conditions before issuance. 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.⁶¹60 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.⁶²61 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.⁶³

62 Purchase, Purchase Commitments, and Installation of Equipment

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.⁶⁴63 These authorities include, but are not limited to

• • purchasing or making purchase commitments of industrial resources or critical technology items;⁶⁵
• 64 • making subsidy payments for domestically produced materials;⁶⁶ and
• 65 and • installing and purchasing equipment for government and privately owned industrial facilities to expand their productive capacity.⁶⁷

66 In general, Section 303 authorities can be used by the President to provide incentives for domestic private industry to produce and supply critical goods that are necessary for the national defense. The scope of Section 303 authorities allows for these incentives to be structured in a number of ways, including direct purchases or subsidies of such goods. Therefore, whereas Title I authorities help ensure that the government has priority access to goods that are already being produced by 58 See 50 U.S.C. §4531(a)(3) and 50 U.S.C. §4532(c). 59 See 50 U.S.C. §4531(a)(2) and 50 U.S.C. §4532(b)(2). 60 50 U.S.C. §4531(a)(2)(C) and 50 U.S.C. §4532(b)(2)(C). 61 See, for example, 50 U.S.C. §§4531(a)(2)(D), (E), (F) and (G) and 50 U.S.C. §§4532(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. 62 See 50 U.S.C. §4531(a)(2)(D), Section 301(a)(2)(D) of the DPA. 63 50 U.S.C. §4533, Section 303 of the DPA. 64 50 U.S.C. §4533(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. §4552, Section 702 of the DPA. 65 50 U.S.C. §4533(c), Section 303(c) of the DPA. 66 50 U.S.C. §4533(e), Section 303(e) of the DPA. Congressional Research Service 10 The Defense Production Act of 1950 domestic industries, Section 303 authorities help create a sufficient supply of these essential goods in the interest of national defense.

Prior to using Section 303 authorities, the law requires the President, on a nondelegable basis, 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.⁶⁸67 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.⁶⁹68 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.⁷⁰69 Generally, very few Title III projects exceed the $50 million threshold. The President is authorized to waive the determination and notification provisions in periods of national emergency or in situations that the President, on a nondelegable basis, determines the industrial base shortfall would severely impair national defense.⁷¹

.) Delegation of Section 301, 302, and 303 Authorities in E.O. 13603

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.⁷² 71 These agencies are specifically identified in E.O. 13603.⁷³72 This delegation includes the ability to 67 The President previously delegated authority to make this determination to the “head of each agency engage[d] in procurement for national defense” in Section 305(b) of E.O. 13603. However, changes to the DPA in P.L. 113-72 made subsequent to the issuance of the E.O. 13603 have overridden these delegations because the President is no longer allowed to delegate this determination and notification responsibility. 68 50 U.S.C. §4533(a)(5)(B) and (C), Section 303(a)(5)(B) and (C) of the DPA. 69 50 U.S.C. §4533(a)(6), Section 303(a)(6) of the DPA. 70 50 U.S.C. §4533(a)(7), Section 303(a)(7) of the DPA. 71 See Sections 301, 302, 303, 304, and 305 of E.O. 13603. 72 Section 801(h) of E.O. 13603 states “the heads of the Departments of State, Justice, the Interior, and Homeland Security, the Office of the Director of National Intelligence, the Central Intelligence Agency, the National Aeronautics and Space Administration, the General Services Administration, and all other agencies with authority delegated under section 201 of this order.” Under Section 201 of the executive order, the additional agencies are the Departments of Agriculture, Commerce, Defense, Energy, Health and Human Services, and Transportation. Congressional Research Service 11 link to page 16 link to page 17 link to page 15 The Defense Production Act of 1950 This delegation includes the ability to make all determinations not explicitly cited in the statute as being nondelegable.⁷⁴73 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.⁷⁵

74 In addition, E.O. 13911 of March 27, 2020 delegated Title III authorities to the Secretary of Health and Human Services and the Secretary of Homeland Security to “to respond to the spread of COVID-19.”75 Defense Production Act Fund Defense Production Act Fund

Title III of the DPA establishes a Treasury account, the Defense Production Act Fund, which is available to carry out all of the provisions and purposes of Title III. 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.⁷⁶76 The monies in the DPA Fund are available until expended. 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.⁷⁷

77 Table 1 provides the appropriations to the DPA Fund between FY2010 and FY2020FY2013 and FY2023. 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.⁷⁸ All; however, most recent discretionary appropriations directlyhave come from defense appropriations acts.78 Recent appropriations to the DPA Fund made through other legislative vehicles have included $500 million enacted through the Inflation Reduction Act of 2022 (P.L. 117-169), $600 million enacted through the Additional Ukraine Supplemental Appropriations Act, 2022 (P.L. 117-128), and $1 billion enacted through the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 (P.L. 116-136). Table 1. Appropriations to the DPA Fund, FY2013-FY2023 Amounts in millions Fiscal Year Law Amount 2013 P.L. 113-6 $223.5 2014 P.L. 113-76 $60.1a 2015 P.L. 113-235 $51.6 2016 P.L. 114-113 $76.7 2017 P.L. 115-31 $64.1 2018 P.L. 115-141 $67.4 73 Section 305 of E.O. 13603. 74 In statute, see 50 U.S.C. §4533(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. 75 Sec. 2 of E.O. 13911. 76 50 U.S.C. §4534; Section 304 of the DPA. 77 50 U.S.C. §4534(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, April 2015, p. Glossary-22. 78 See footnote 72 for an explanation and full list of the delegated agencies with Title III authorities. Congressional Research Service 12 link to page 17 link to page 17 The Defense Production Act of 1950 Fiscal Year Law Amount 2019 P.L. 115-245 $53.6 2020 P.L. 116-93 and P.L. 116-136 $1,064.4b 2021 P.L. 116-260 $174.6 2022 P.L. 117-103, P.L. 117-128, and P.L. 117-169. $1,488.3c 2023 P.L. 117-328 $372.9 Source: CRS analysis of appropriations acts. Notes: Amounts not adjusted for inflation. a. In FYs 2014, 2015, and 2016, Congress also authorized the Department of Energy to transfer up to $45 mil ionFund have come from DOD appropriations acts. As noted in Table 1, however, in FY2014-2016, the Department of Energy was authorized, and subsequently made, transfers of $45 million to the DPA Fund each year from another appropriation.⁷⁹ 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.⁸⁰ Between 2000 and 2018, the average total project size for Title III projects was $25.13 million. Of that total, an average of $14.02 million was provided by the DPA Fund, while an average of $0.95 million came from other government funding, and an average of $10.21 million was provided by private sector partners as a cost-share.⁸¹

The President is required to designate a "Fund manager"mil ion b. $1 bil ion of the FY2020 total was appropriated by the CARES Act (P.L. 116-136) to “to prevent, prepare for, and respond to coronavirus, domestically or internationally.” c. Of the $1.488.3 bil ion appropriated in FY2022, $600 mil ion was appropriated by the Additional Ukraine Supplemental Appropriations Act, 2022 (P.L. 117-128) “to respond to the situation in Ukraine and for related expenses” and $500 mil ion was appropriated by the Inflation Reduction Act of 2022 (P.L. 117-169). The President is required to designate a “Fund manager” to carry out general accounting functions for the fund.⁸²79 The Secretary of Defense has been designated to be the Fund Manager in E.O. 13603.⁸³80 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.

Examples of Use of Title III Authorities Successive presidential administrations have made extensive use of Title III authorities to expand productive capacity for capabilities deemed essential for national defense. Examples of Title III actions taken in 2023 include: • A $90 million agreement with Albemarle Corporation “to support the expansion of domestic mining and production of lithium” (September 2023);81 • A $20.6 million agreement with Talon Nickel, LLC “to increase the domestic production of nickel” (September 2023);82 79 50 U.S.C. §4534(f); Section 304(f) of the DPA. 80 Section 309 of E.O. 13603. 81 According to DOD, this action utilized funds appropriated by the Inflation Reduction Act of 2022. DOD, “DoD Enters Agreement to Expand Domestic Lithium Mining for U.S. Battery Supply Chains,” DOD News, September 12, 2023, at https://www.defense.gov/News/Releases/Release/Article/3522657/dod-enters-agreement-to-expand-domestic-lithium-mining-for-us-battery-supply-ch/. 82 According to DOD, this action utilized funds appropriated by the Additional Ukraine Supplemental Appropriations Act of 2022. DOD, “Department of Defense Enters an Agreement to Strengthen the U.S. Supply Chain for Nickel Production,” DOD News, September 12, 2023, at https://www.defense.gov/News/Releases/Release/Article/3522652/department-of-defense-enters-an-agreement-to-strengthen-the-us-supply-chain-for/. Congressional Research Service 13 The Defense Production Act of 1950 • A $37.5 million agreement with Graphite One (Alaska) “to secure a reliable, sustainable supply of graphite materials within the U.S. to be used in the production of large-capacity batteries” (July 2023);83 • A $45.5 million agreement with Arconic Corporation “to increase production of High Purity Aluminum (HPA) for use in missile and munition production” (June 2023);84 and • A $ 15 million agreement with Jervois Mining USA “to conduct feasibility studies to expand cobalt extraction in Idaho.”85 Examples of Use of Title III Authorities

Authorities Under Title VII of the DPA

Authorities Under Title VII of the DPA Title VII of the DPA contains various provisions that 1) clarify how DPA authorities shouldcan and canshould be used, as well asand 2) provide additional presidential authorities. Some significant provisions of Title VII are summarized below.

Special Preference for Small Businesses

Two provisions in the DPA direct the President to accord special preference to small businesses when issuing contracts under DPA authorities. Section 701 reiterates⁸⁹reiterates86 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.”87 Labor."⁹⁰

Definitions of Key Terms in the DPA

The DPA statute historically has included a section of definitions.⁹¹88 Though national defense is perhaps the most important term, there are additional definitions provided both in current law and in E.O. 13603.⁹²89 Over time, the list of definitions provided in both the law and implementing 83 According to DOD, this action utilized funds appropriated by the Inflation Reduction Act of 2022. DOD, “DOD Enters Agreement to Expand Capabilities for Domestic Graphite Mining and Processing for Large-Capacity Batteries,” DOD News, July 17, 2023, at https://www.defense.gov/News/Releases/Release/Article/3459556/dod-enters-agreement-to-expand-capabilities-for-domestic-graphite-mining-and-pr/. 84 According to DOD, this action utilized funds appropriated by the Additional Ukraine Supplemental Appropriations Act of 2022. DOD, “DoD Enters Agreement to Expand Domestic Manufacturing to Strengthen U.S. Missiles and Munitions Supply Chains,” DOD News, June 16, 2023, at https://www.defense.gov/News/Releases/Release/Article/3431173/dod-enters-agreement-to-expand-domestic-manufacturing-to-strengthen-us-missiles/. 85 According to DOD, this action utilized funds appropriated by the Additional Ukraine Supplemental Appropriations Act of 2022. DOD, “DOD Enters Agreement to Expand Domestic Manufacturing and Strengthen U.S. Cobalt Supply Chains,” DOD News, June 15, 2023, at https://www.defense.gov/News/Releases/Release/Article/3429442/dod-enters-agreement-to-expand-domestic-manufacturing-and-strengthen-us-cobalt/. 86 50 U.S.C. §4551; Section 701 of the DPA. 87 50 U.S.C. §4518; Section 108(a) of the DPA. 88 The original law provided five definitions, including a definition of “national defense.” See Section 702 of P.L. 81-774. 89 In total, there are 17 terms defined in law in 50 U.S.C. §4552, and 13 additional definitions in Section 801 of E.O. 13603. Congressional Research Service 14 The Defense Production Act of 1950 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 security⁹³90 to place it within the context of national defense.⁹⁴

91 Industrial Base Assessments

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]."⁹⁵”92 This authority is delegated to the Secretary of Commerce in E.O. 13603.⁹⁶93 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."⁹⁷”94 These assessments are often conducted in coordination with other federal agencies and the private sector to "“monitor trends, benchmark industry performance, and raise awareness of diminishing manufacturing capabilities."⁹⁸”95 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."⁹⁹”96 This regulation has been issued by DOC.¹⁰⁰

97 Voluntary Agreements

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."¹⁰¹”98 The President must determine that a "“condition exists which may pose a direct threat to the national defense or its preparedness programs"¹⁰²”99 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.¹⁰³100 Parties entering into such 90 50 U.S.C. §4552(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.” 91 123 Stat 2017-2018. Congress amended, in addition to the definition of national defense, the existing definitions of critical component, critical technology, domestic industrial base, industrial resources, and services. Congress struck the definitions for critical industry for national security, essential weapon system, and small business concern owned and controlled by socially and economically disadvantaged individuals. Congress added the definitions guaranteeing agency and homeland security. 92 50 U.S.C. §4555(a); Section 705(a) of the DPA. 93 Generally, see Section 104(d) of E.O. 13603. 94 For examples of some publicly available industrial base assessments, see the agency’s website at http://www.bis.doc.gov/index.php/other-areas/office-of-technology-evaluation-ote/industrial-base-assessments. 95 Ibid. 96 50 U.S.C. §4555(a); Section 705(a) of the DPA. 97 See 15 C.F.R. Part 702. 98 50 U.S.C. §4558(c)(1); Section 708(c)(1) of the DPA. 99 Ibid. The consultation process is described in 50 U.S.C. §§4558(d) and (e); Section 708(d) and (e) of the DPA. 100 50 U.S.C. §4558(f); Section 708(f) of the DPA. Congressional Research Service 15 The Defense Production Act of 1950 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.¹⁰⁴101 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.¹⁰⁵102 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 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. 13603.¹⁰⁶103 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,¹⁰⁷104 who 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.”105out."¹⁰⁸ 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.¹⁰⁹106 FEMA is now a part of DHS, and those regulations remain in effect.

The Maritime Administration (MARAD) 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"“VISA”) and the Voluntary Tanker Agreement. 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.¹¹⁰

107 Nucleus Executive Reserve

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).¹¹¹108 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 101 50 U.S.C. §4558, 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 (§4558(j)) or for breach of contract (§2158(o)). These exemptions do not grant them blanket immunity from these laws. 102 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, p. 45, at http://www.dhs.gov/xlibrary/assets/niac/niac_framework_dealing_with_disasters.pdf. 103 Section 401 of E.O. 13603. 104 Section 401 of E.O. 13603. 105 50 U.S.C. §4558(e); Section 708(e) of the DPA. 106 FEMA’s regulations can be found at 44 C.F.R. Part 332. They were issued at Federal Emergency Management Agency, “Voluntary Agreements: Standards and Procedures,” 46 Federal Register 2349, January 9, 1981. 107 For more, see approval of the VISA program in the Federal Register at Maritime Administration, “Voluntary Intermodal Sealift Agreement,” 79 Federal Register 64462, October 29, 2014. See also MARAD’s website at https://www.marad.dot.gov/ships-and-shipping/strategic-sealift/voluntary-intermodal-sealift-agreement-visa/. 108 50 U.S.C. §4560(e); Section 710(e) of the DPA. Congressional Research Service 16 The Defense Production Act of 1950 the NDER has been used as a means of improving the war mobilization and productivity of industries.109 The head of any governmental department or agency may establish a unit of the NDER and train its members.110 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.”111 Committee on Foreign Investment in the United States112 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.¹¹²

Authorization of Appropriations, as amended by P.L. 113-72

Table 1 shows that the annual average appropriation to the DPA Fund between FY2010 and FY2019 was $109.1 million,¹¹⁷ 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 DOD 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 States¹¹⁸

The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee that serves the President in overseeing the national security implications of foreign investment in the economy. It reviews foreign investment transactions to determine if (1) they threaten to impair U.S. national security; (2) the foreign investor is controlled by a foreign government; or (3) the transaction could affect homeland security or would result in control of any critical infrastructure that could impair the national security. The President has the authority to block proposed or pending foreign investment transactions that threaten to impair the national security.

CFIUS initially was created and operated through a series of Executive Orders.¹¹⁹113 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.¹²⁰114 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.

109 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. 110 Section 501(c) in E.O. 13603. 111 Section 501(e) in E.O. 13603. 112 This section was written by James K. Jackson, Specialist in International Trade and Finance, and Cathleen Cimino-Isaacs, Analyst in International Trade and Finance. For more information on CFIUS, see CRS Report RL33388, The Committee on Foreign Investment in the United States (CFIUS), by James K. Jackson (for further inquiries, congressional offices may contact Cathleen D. Cimino-Isaacs), and CRS In Focus IF10952, CFIUS Reform Under FIRRMA, by James K. Jackson and Cathleen D. Cimino-Isaacs. 113 The various CFIUS authorities are not delegated by the President in E.O. 13603 with the majority of other DPA authorities. Rather, CFIUS authorities are delegated by the President in E.O. 11858, Foreign Investment in the United States, as amended, which was originally issued in 1975 but has been amended since then (notably by E.O. 13456, Further Amendment of Executive Order 11858 Concerning Foreign Investment in the United States). See Executive Order 13456, “Foreign Investment in the United States,” 73 Federal Register 4677, January 25, 2008. 114 50 U.S.C. §4565; Section 721 of the DPA. Congressional Research Service 17 The Defense Production Act of 1950 On August 13, 2018, President Trump signed into law new rules governing national security reviews of foreign investment, known as the Foreign Investment Risk Review Modernization Act (FIRRMA, Title XVII, P.L. 115-235).¹²¹).115 FIRRMA amends several aspects of the CFIUS review process under Section 721 of the DPA.¹²²116 Notably, it expands the scope of transactions that fall under CFIUS'’ jurisdiction. It maintains core components of the current CFIUS process for evaluating proposed or pending investments in U.S. firms, but increases the allowable time for reviews and investigations. 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 45-day national security review; (2) a 45-day maximum national security investigation (with an option for a 15-day extension for "“extraordinary circumstances"”); 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"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 national security. FIRRMA shifts the filing requirement for foreign investors from voluntary to mandatory in certain cases, and provides a two-track method for reviewing certain investment transactions. Other changes mandated by FIRRMA would provide more resources for CFIUS, add new reporting requirements, and reform export controls.

Termination of the Act

Title VII of the DPA also includes a "sunset"“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.¹²³117 As explained in Section 717 of the DPA, the sections that are exempt from termination are

• are • 50 U.S.C. §4514, 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. §4557, Section 707 of the DPA that grants persons limited immunity from liability for complying with DPA-authorized regulations;
• • 50 U.S.C. §4558, Section 708 of the DPA that provides for the establishment of voluntary agreements; and
• • 50 U.S.C. §4565, Section 721 of the DPA, the so-called Exon-Florio Amendment, that gives the President and CFIUS review authority over certain corporate acquisition activities.

P.L. 115-232 extended the termination date of Section 717 from September 30, 2019, to September 30, 2025. 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, 2025, would still be executed until completion even 115 For more detail on FIRRMA, see CRS In Focus IF10952, CFIUS Reform Under FIRRMA, by James K. Jackson and Cathleen D. Cimino-Isaacs. 116 For the U.S. Treasury’s summary and FAQs of the changes, see https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius. 117 123 Stat. 2006; 50 U.S.C. §4564. Congressional Research Service 18 link to page 33 The Defense Production Act of 1950 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.¹²⁴118 For a chronology of all laws reauthorizing the DPA since inception, see Table A-4.

Defense Production Act Committee

The Defense Production Act Committee (DPAC) is an interagency body originally established by the 2009 reauthorization of the DPA.¹²⁵119 Originally, the DPAC was created to advise the President on the effective use of the full scope of authorities of the DPA. 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. 13603.¹²⁶120 As stipulated in law, the Chairperson of the DPAC is to be the "“head of the agency to which the President has delegated primary responsibility for government-wide coordination of the authorities in this Act."¹²⁷”121 As currently established in E.O. 13603 delegations, the Secretary of Homeland Security is the chair-designate, but the language of the law could allow the President to appoint another Secretary with revision to the E.O.¹²⁸122 The Chairperson of the DPAC is also required to appoint one full-time employee of the federal government to coordinate all the activities of the DPAC. Congress has exempted the DPAC from the requirements of the Federal Advisory Committee Act.¹²⁹

123 The DPAC has annual reporting requirements relating to the Title I priority and allocation authority, and is also required to include updated copies of Title I-related rules in its report. The annual report also contains, 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.¹³⁰124 The DPAC report is provided to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.

118 50 U.S.C. §4555(a); Section 705(a) of the DPA. Thus, under current law, Section 705 authority would expire on September 30, 2027. 119 P.L. 111-67, 123 Stat. 2019-2020. The DPAC is now authorized in Section 722 of the DPA, 50 U.S.C. §4567. 120 Section 701 of E.O. 13603. The DPAC is composed of 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 Administrator of the National Aeronautics and Space Administration; the Administrator of General Services; the Chair of the Council of Economic Advisers; and the Directors of the Central Intelligence Agency and of National Intelligence. In addition, the Director of the Office of Management and Budget and the Director of the Office of Science and Technology Policy serve in an advisory role. 121 See Section 722(b)(2) of the DPA; 50 U.S.C. §4567(b)(2). 122 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 is the 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. 123 Section 722(e) of the DPA; 50 U.S.C. §4567(e). For more on the Federal Advisory Committee Act, see CRS Report R44253, Federal Advisory Committees: An Introduction and Overview, by Meghan M. Stuessy. 124 See Section 722(d) of the DPA; 50 U.S.C. §4567(d). Congressional Research Service 19 link to page 14 The Defense Production Act of 1950 Impact of Offsets Report Impact of Offsets Report

Offsets are industrial compensation practices that foreign governments or companies require of U.S. firms as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services as defined by the Arms Export Control Act (22 U.S.C. §2751, et seq.) and the International Traffic in Arms Regulations (22 C.F.R. §§120-130). In the defense trade, such industrial compensation can include mandatory co-production, licensed production, subcontractor production, technology transfer, and foreign investment.

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"“offsets” in the government or commercial sales of defense materials.¹³¹

Considerations for Congress

Enhance Oversight

Expand125 Considerations for Congress Enhancing Oversight Expanding Reporting or Notification Requirements

Congress may consider whether 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 consider whether to require 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.¹³²126 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 made by the President. 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.

Enforce and Revise Enforcing and Revising Rulemaking Requirements

Congress may consider reviewing the agencies'’ compliance with existing rulemaking requirements. 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 be in need of an update given changes to the authority and government reorganizations since that date.¹³³ One of 127 One of 125 Offsets are defined in Section 801(k) of E.O. 13603. Offsets can be direct, where offsetting sales of goods and services are related to the military export sale being contracted, or indirect, where they are not. These reports are prepared by the Department of Commerce Bureau of Industry and Security (BIS) and are posted on at BIS’s website at http://www.bis.doc.gov/index.php/other-areas/strategic-industries-and-economic-security-sies/offsets-in-defense-trade. 126 For example, such a notification requirement is placed on Title III projects based on total project cost. See the section “Purchase, Purchase Commitments, and Installation of Equipment” of this report for more. 127 50 U.S.C. §4558(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. The national defense context and potential need for (continued...) Congressional Research Service 20 The Defense Production Act of 1950 the agencies responsible for issuing a rulemaking on the use of Title I authorities has yet to do so. Congress may also consider potentially expanding regulatory requirements 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 could 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.

Broaden Broadening Committee Oversight Jurisdiction

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 Agency and National Intelligence.

In order to 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.¹³⁴128 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 consider the joint referral of proposed DPA-related legislation to the appropriate oversight committees.

Amending the Defense Production Act of 1950

While the act in its current form may remain in force until September 30, 2025, 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. 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 voluntary agreement authorities has evolved since 1981, which could also potentially prompt the need to revise the regulation. 128 P.L. 102-558, 106 Stat. 4219. This committee was intended to review the programs established by the DPA and advise the standing committees in their legislation on the subject. Congressional Research Service 21 The Defense Production Act of 1950 specific concerns relating to production and security of emerging technologies necessary for the national defense.

Declaration of Policy

The "“Declaration of Policy"” in the DPA describes the general intentions of Congress in granting the authorities conferred on the President. Congress may 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'President’s authorities covered in the titles of the DPA without also amending the DPA'’s other provisions.

Definitions

Definitions Congress may amend the definitions of key terms found in the DPA to shape the scope and use of the authorities, especially the definitiondefinitions of national defense. and domestic sources. As an example, Congress could amend the definition of national defense to remove space from the definition of national defense, thus weakening the President'’s ability to support space-related projects through the use of DPA authorities.¹³⁵129 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.

If Congress wanted to expand the number of entities eligible for DPA Title III activities, it could consider amending the definition of domestic sources to include, for instance, business concerns located in allied or friendly nations other than Canada.130 Alternatively, if Congress believed too many entities were eligible for Title III assistance, it could amend this definition to restrict eligibility. Amending the Delegations of Authority in E.O. 13603 Amending the Delegations of Authority in E.O. 13603

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 rather than 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.¹³⁶131 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.

129 For the definition of national defense, see 50 U.S.C. §4552(14); Section 702(14) of the DPA. 130 As of this writing, a provision that would amend this definition to include businesses based in Australia and the United Kingdom is included as part of the Senate-passed bill for an FY2024 NDAA (S. 2226; Section 1080). 131 For an example of this clause, see 50 U.S.C. §4558(c)(3); Section 708(c)(3) of the DPA. Congressional Research Service 22 link to page 16 The Defense Production Act of 1950 Appropriations to the DPA Fund Appropriations to the DPA Fund

Congress could adjust future appropriations to the DPA Fund in order to manage the scope of Title III projects initiated by the President (seesee Table 1 for appropriations to the DPA Fund since FY2010FY2013). 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 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.¹³⁷132 Likewise, Congress may direct the use of such funds more specifically, such as has been done in relation to past Title III projects.¹³⁸133 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.¹³⁹

Appendix. Supplementary Tables