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The Obama administration issued a new executive order last Friday entitled “National Defense Resources Preparedness.” The Executive Order cited the powers granted to the president by the Defense Production Act of 1950, as amended, and the president’s constitutional authority as commander-in-chief as the basis for asserting more breathtaking presidential powers over key sectors of the U.S. economy, not only during wars and national emergencies, but also during peacetime.
The new executive order gives the president and his executive branch agency heads far more power than was contemplated by Congress in the Defense Production Act (“Act”).
At least, the definition of “national defense” in both the Act and executive order are the same:
programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity. Such term includes emergency preparedness activities conducted pursuant to title VI of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5195 et seq., and critical infrastructure protection and restoration.
The difference lies in how much discretion the president has to intervene in and control major portions of the economy if he or his delegated agency heads believe it is appropriate to do so to promote the national defense.
The Act authorizes the president to prioritize contract performance and to “allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.” The executive order follows this statutory grant as far as it goes, but then goes much further, particularly with respect to the energy industry.
Part II of Obama’s executive order (“Priorities and Allocations”) delegates to a broad array of executive agency heads the president’s authority over contract prioritization and allocation of materials, services and facilities across all major segments of the private sector economy, including agriculture, “all forms of energy,” “health resources,” “all forms of civil transportation,” “water resources,” and a catch-all for “all other materials, services, and facilities, including construction materials.”
The executive order delegates to the agency heads, with policy and oversight responsibilities affecting all these different industries, the authority to “issue regulations to prioritize and allocate resources and establish standards and procedures by which the authority shall be used to promote the national defense, under both emergency and non-emergency conditions.” Their authority is be exercised to support programs deemed by the secretary of defense, secretary of energy or secretary of homeland security to be necessary or appropriate to promote the national defense.
The Defense Production Act does not purport to affect so many industries. For example, nowhere are “health resources” even mentioned, much less defined, in the Act, as it is in the executive order.
The executive order is particularly over-reaching concerning the energy industry sector. When setting forth the president’s powers with respect to “the allocation of, or the priority performance under contracts or orders…relating to, materials, equipment, and services in order to maximize domestic energy supplies,” the Defense Production Act places strict conditions on the exercise of such powers.
Specifically, the Act states that the statutory authority to exercise such presidential powers:
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.
The Obama administration’s executive order skips right over the special statutory limitations on its executive authority to intervene in the energy industry sector. Instead, the Obama administration gives itself the direct authority to centrally manage the entire energy industry, encompassing fossil fuels and all forms of alternative energy, whenever and however it deems “necessary” or “appropriate” to promote the national defense.
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