New COVID-19 Defense Production Act (DPA) Actions: Implementation Considerations

New COVID-19 Defense Production Act (DPA) Actions: Implementation Considerations

INSIGHTi

New COVID-19 Defense Production Act
(DPA) Actions: Implementation
Considerations
March 1, 2021
The Biden Administration has taken several executive branch actions under the Defense Production Act of
1950 (DPA) to address the Coronavirus Disease 2019 (COVID-19) pandemic. Those actions suggest a
revised DPA approach and raise potential implementation issues. This Insight considers those issues and
policy considerations for Congress. It is intended as a companion to CRS Insight IN11593. See CRS
Report R43767 for a discussion of DPA history and authorities.
Recent DPA Actions
The Biden Administration has issued two executive orders—E.O.s 13987 and 14001—that directly
reference the DPA, and other E.O.s with additional potential relevance. On February 5, 2021, White
House COVID-19 Supply Chain Coordinator Timothy W. Manning elaborated on three specific DPA
actions the Administration was pursuing:
1. Issuing DPA Title I priority-rated orders to support the Pfizer-BioNTech COVID-19
vaccine production and supply chain (Moderna is reportedly already receiving support
under Operation Warp Speed);
2. Expanding manufacturing capacity to facilitate production of 61 million rapid point-of-
care COVID-19 tests by six suppliers, likely under Title III expansion of productive
capacity authorities; and
3. Constructing new domestic PPE manufacturing capacity (likely also under Title III),
particularly for nitrile gloves, to reduce long-term U.S. dependence on foreign suppliers.
These planned investments are broadly consistent with the Biden Administration’s published COVID-19
strategy, and previous CRS analyses of DPA production for COVID-19 countermeasures. The February 5
briefing indicated additional DPA actions in support of the COVID-19 vaccine, PPE, and testing capacity
are forthcoming.
Congressional Research Service
https://crsreports.congress.gov
IN11619
CRS INSIGHT
Prepared for Members and
Committees of Congress

Congressional Research Service
2
Policy and Legal Considerations
The pace and scope of the Biden Administration’s recent announcements to broaden the use of DPA for
pandemic response raise several policy and legal implementation issues.
DPA Funding and Appropriations
During the February 5 briefing, Manning noted that the Biden Administration’s DPA efforts required
congressional appropriations. On February 8, the House Financial Services Committee released a draft aid
proposal, which included $10 billion in funding to carry out DPA actions. These funds would be
appropriated to the Department of Health and Human Services, reserved for COVID-19 health resources,
and available to support actions under all DPA authorities. By contrast, previous appropriations had been
directed to the DPA Fund, a statutory account available to any agency undertaking Title III projects.
Expenditures of DPA Fund appropriations, and discretion over their use, has been a source of dispute
between the Department of Defense (DOD) and congressional leadership, with DOD appearing to have
asserted priority over Fund allocations as the account custodian under E.O. 13603.
The Financial Services proposal bypasses the DPA Fund. However, providing funding outside of the DPA
Fund appropriations line could be interpreted as sidestepping DOD’s claims of discretion over DPA Fund
monies. Conversely, specific appropriations for Title I and VII activities could be inadvertently taken as a
precedent that those DPA actions are expected to draw from designated funds. Generally, non-Title III
actions are funded through appropriations to the agency making use of them, and not from DPA-
designated funding.
Increasing Domestic Capacity
The Biden Administration’s new DPA actions also appear to emphasize reshoring elements of the public
health supply chain, and reducing U.S. dependence on foreign imports of certain health and medical
supplies. Although global supply chains allow for some economic efficiencies, this system has arguably
contributed to domestic health and medical supply shortages during the pandemic and limited the
potential for surge production. Given current global supply chain dependencies, ongoing import of certain
supplies may be necessary to meet demand.
The DPA is not structured to assist with importing supplies, as its authorities do not appear to reach
articles produced abroad. Although it has not been litigated, the Supreme Court has held there is a
presumption against extraterritorial application—i.e., when a statute lacks an express indication that
Congress intended it to apply outside of the United States, it does not so apply. The DPA’s stated statutory
purpose is to address national security by “ensur[ing] the vitality of the domestic industrial base,” and
does not indicate that its authorities are intended to extend outside of the United States. At least one U.S.
agency’s DPA regulations expressly states that “priority ratings have no legal authority outside of the
United States.” In other words, even if the President believes that certain critical or scarce resources can
be best obtained from abroad, DPA authorities likely cannot be used to procure them.
DPA and Legal Immunity
In some cases, employing DPA authorities may give rise to litigation, particularly if novel uses are
involved. Although a company fulfilling an order given priority under Title I may be forced to break an
existing contract with a third party, Title VII (50 U.S.C. §4557) denies damages or other relief to the third
party plaintiff if the defending company can prove its actions “result[ed] directly or indirectly from
compliance with” a DPA order. For example, Title I priority-rated orders in Pfizer-BioNTech’s COVID-19

Congressional Research Service
3
vaccine supply chain may preempt other preexisting contracts, but Pfizer and its suppliers would be
legally immune under Title VII.
While it is well settled that this affirmative defense applies to contract disputes, its application to other
forms of disputes is not. A company’s ability to claim immunity under Title VII in tort (personal injury or
harm) cases may be clarified within litigation resulting from the COVID-19 pandemic. For example, in a
lawsuit alleging gross negligence against Tyson Foods, Inc. concerning a meat processing facility, Tyson
asserted a defense based on E.O. 13917, in which former President Trump directed the Secretary of
Agriculture to take action to ensure meat processors continue operations. The federal district court
rejected Tyson’s argument, although did not address whether Title VII could apply to tort claims. The
decision is currently on appeal.
Novel uses of DPA authorities, like E.O. 13917, may make litigation more likely. At the same time, a
more comprehensive and sustained use of DPA authorities need not necessarily involve novel applications
of the DPA statute.

Author Information

Michael H. Cecire
Heidi M. Peters
Analyst in Intergovernmental Relations and Economic
Analyst in U.S. Defense Acquisition Policy
Development Policy

Nina M. Hart

Legislative Attorney

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
IN11619 · VERSION 1 · NEW