Defense Production Act of 1950
The Defense Production Act of 1950 is a United States federal law enacted on September 8, 1950, in response to the start of the Korean War. It was part of a broad civil defense and war mobilization effort in the context of the Cold War. Its implementing regulations, the Defense Priorities and Allocation System, are located at 15 CFR §§700 to 700.93. Since 1950, the act has been reauthorized over 50 times. It has been periodically amended and remains in force.
Amendments
The Defense Production Act has undergone several amendments since it was first passed in 1950. These amendments have entailed alterations to its definition of "national defense." Four of the major amendments are described below:- In 1970, the existing definition of "national defense" was amended to include space activity, and the body of the legislation was edited to incorporate cost-accounting standards.
- In 1980, the DPA was reauthorized to designate energy as a material good, making the resources and means for its generation obtainable with an invocation of the act.
- In 1992, the DPA was amended to provide opportunities for small businesses to participate as contractors and subcontractors in initiatives directed by the act, allowing businesses of all sizes to be considered for accelerated production needs.
- In 2003, an amendment to the DPA established "critical infrastructure protection and restoration" as a national security concern, and identified resources deemed necessary for creating radiation-hardened electronics a specific new category the DPA could be applied to.
Related proposed legislation, never enacted, would have amended the Defense Production Act during national emergencies. Upon implementation by Congress, Defense Resources Act amendments to the DPA authorized the president to execute mobilization measures including price controls.
Provisions
The Defense Production Act currently contains three major sections. Title I authorizes the president to identify specific goods as "critical and strategic" and to require private businesses to accept and prioritize contracts for these materials. Title III authorizes the president to establish mechanisms to allocate materials, services and facilities to promote national defense. Title VII authorizes the president to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.The original act included four other sections that expired and were repealed under current law. These allowed the president to seize private property under Title II; fix wages and prices and implement rationing of goods under Title IV; use force to settle labor disputes under Title V; and control real estate credit under Title VI. Although the president can no longer fix wages and prices of goods, the president can still order to prevent hoarding and selling of designated items "in excess of prevailing market prices" under Title I in section 102 of the act.
The president's designation of products under the jurisdiction of the DPA is the authority of the act most often used by the Department of Defense since the 1970s. Most of the other functions of the act are administered by the Office of Strategic Industries and Economic Security in the Bureau of Industry and Security in the Department of Commerce.
The Defense Priorities and Allocations System institutes a rating system for contracts and purchase orders. The highest priority is DX, which must be approved by the secretary of defense. The next level down is DO, and below that are unrated contracts.
Under section 721 of the act, an inter-agency committee known as the Committee on Foreign Investment in the United States is authorized to investigate and review transactions involving foreign investment and/or real estate transactions by foreign persons and/or entities in the United States. Civil penalties may result in up to $250,000 per violation or the value of the transaction, whichever is greater, on any persons and/or entities that willfully violated CFIUS regulations, and any mitigation orders, conditions, or agreements imposed by CFIUS. The CFIUS serves as an administrative body to refer and advise the president should the transaction need to be rejected or limited. The law only grants the president the authorization and decision to reject or limit the transaction within a 15-day presidential review period.
Use
Korean War
The Defense Production Act was first used during the Korean War to establish a large defense mobilization infrastructure and bureaucracy. Under the authority of the act, President Harry S. Truman eventually established the Office of Defense Mobilization, instituted wage and price controls, strictly regulated production in heavy industries such as steel and mining, prioritized and allocated industrial materials in short supply, and ordered the dispersal of wartime manufacturing plants across the nation.Cold War
The Defense Production Act played a vital role in the establishment of the domestic aluminum and titanium industries in the 1950s. Using the act, Department of Defense provided capital and interest-free loans, and directed mining and manufacturing resources as well as skilled laborers to these two processing industries. The DPA was also used in the 1950s to ensure that government-funded industries were geographically dispersed across the United States to prevent the industrial base from being destroyed by a single nuclear attack. During the late 1960s and early 1970s, the DPA increasingly was used to diversify the US energy mix by funding the trans-Alaskan pipeline, the US synthetic fuels corporation, and research into liquefied natural gas.Technological innovation
Beginning in the 1980s, the Department of Defense began using the contracting and spending provisions of the Defense Production Act to provide seed money to develop new technologies. The DOD has since used the act to help develop a number of new technologies and materials, including silicon carbide ceramics, indium phosphide and gallium arsenide semiconductors, microwave power tubes, radiation-hardened microelectronics, superconducting wire, metal composites and the mining and processing of rare earth minerals.FEMA national security resource preparedness
In June 1994, President Bill Clinton invoked the Defense Production Act to implement national security resource preparedness during disasters under the advisement of the Federal Emergency Management Agency director. The order allows FEMA work with other federal departments to order producers and distributors to prioritize resources in preparation of and in times of disasters.21st century
California energy crisis
In January 2001, President Bill Clinton invoked the Defense Production Act to force gas suppliers to continue to supply Pacific Gas and Electric Company, the largest California energy provider at the time, with gas regardless of loss as a result of suppliers shutting off gas supplies due to the PG&E's non-payment during the 2000–01 California electricity crisis. The order was later rescinded under the George W. Bush administration, but it resulted in the expansion of blackouts in California for several months and PG&E's bankruptcy.Cyber espionage
In 2011, President Barack Obama invoked the Defense Production Act to force telecommunications companies, under criminal penalties, to provide detailed information to the Commerce Department's Bureau of Industry and Security on the use of foreign-manufactured hardware and software in the companies' networks, as part of efforts to combat Chinese cyberespionage.Materials critical to national defense
On June 13, 2017, President Donald Trump invoked the Defense Production Act to classify two sets of products as "critical to national defense". The first referenced "items affecting aerospace structures and fibers, radiation-hardened microelectronics, radiation test and qualification facilities, and satellite components and assemblies". The second referenced "items affecting adenovirus vaccine production capability; high strength, inherently fire and ballistic resistant, co-polymer aramid fibers industrial capability; secure hybrid composite shipping container industrial capability; and three-dimensional ultra-high density microelectronics for information protection industrial capability".COVID-19 pandemic
On March 18, 2020, in response to the COVID-19 outbreak in the United States, President Donald Trump invoked the Defense Production Act through an executive order that defined ventilators and personal protective equipment as "essential to the national defense." Trump named Director of Trade and Manufacturing Policy Peter Navarro as the policy coordinator for using the DPA in response to the COVID-19 crisis, and designated Health and Human Services Secretary Alex Azar the authority to determine quantities of essential supplies.Trump received criticism for not taking advantage of the DPA's capabilities sooner. Fifty-seven Democratic representatives in the House of Representatives sent a letter to Trump during the week prior, urging him to make use of the DPA for public health purposes, and Democratic speaker of the House Nancy Pelosi warned that "we must put more testing, more protective equipment, and more ventilators into the hands of our front-line workers immediately." On March 23, 2020, Trump issued an executive order classifying "health and medical resources necessary to respond to the spread of COVID-19" as subject to the authority granted by the DPA to prohibit hoarding and price gouging.
Automotive manufacturers such as General Motors and Ford Motor Co. were identified as private companies capable of focusing on ventilator production in response to the DPA. At the beginning of April 2020, Trump expanded his use of the DPA to require a total of six private companies, now including General Electric and Medtronic, to secure supplies to manufacture ventilators.
On April 28, 2020, Trump invoked the DPA with regards to the food supply chain, giving the United States Department of Agriculture as well as Agriculture Secretary Sonny Perdue the authority to require meat and poultry plants to maintain production. This order was also met with criticism over coronavirus safety concerns for workers at such plants.
On December 8, 2020, Trump claimed that he would invoke the DPA to produce vaccine doses, but he did not do so before the end of his term.
In January 2021, President Joe Biden invoked the DPA on his second day in office to increase production of supplies related to the pandemic, such as protective equipment. On March 2, Biden invoked the DPA again to supply equipment to Merck facilities needed to safely manufacture Johnson & Johnson vaccines.