Commander in Chief or Command Economy? Presidential Power to Address Supply Chain Issues

by Sean Meyer, Publications Editor, University of Cincinnati Law Review Vol. 91

I. Introduction

Over the past decade, American presidents have increasingly used a law drafted to address the challenges of 1950s wartime to try to solve disruptions in the global supply chain. The Defense Production Act of 1950 (“DPA”) authorizes the President to take an active role in the domestic economy for national defense purposes, ordering companies to manufacture certain goods, forcing private parties to accept and perform contracts, and inspecting private entities’ records.¹ As Congress’ definition of “national security” has broadened over decades, the President’s power under the DPA has grown commensurately.²

However, the President should not have a direct role in setting domestic manufacturing priorities during peacetime. Congress, not the President, is better equipped for that role, with access to expertise and systems of accountability. Congress should amend the DPA to limit the power granted to presidents during peacetime. Confining the President’s broad emergency powers to wartime would preserve private citizens’ freedom of contract.

This article discusses the President’s power to influence the domestic economy under the DPA. Part II describes the background of the DPA, passed in wartime and regularly reauthorized by Congress thereafter. Part III argues that the President’s expansive power under the DPA is justified by military necessity in wartime but not in peacetime. Part IV concludes by recommending a stronger role for Congress to balance the DPA’s risks for presidential overreach.

II. Background

The Korean War began on June 25, 1950, when the North Korean People’s Army crossed into South Korea.³ Before the end of June, the United States had joined the war to support South Korea.⁴ In July, Congressman Floyd Spence introduced House Resolution 9176, the DPA bill, to “establish a system of priorities and allocations for materials and facilities . . . and . . . facilitate the production of goods and services necessary for the national security, and for other purposes.”⁵ Congress intended the President to “use the powers conferred by [the DPA] to promote the national defense.”⁶ In essence, the bill temporarily broadened presidential power over domestic production of goods and services to strengthen the United States’ wartime effectiveness.

Congress debated the DPA’s expansive presidential power.⁷ The bill initially authorized the President to unilaterally impose wage and price controls.⁸ Members of Congress hoped to use the bill to curb inflation, stop price gouging, and maintain electricity production.⁹ Debates framed the bill’s strategies to address these concerns as temporary necessities to stabilize the country during the foreseeably prolonged military conflict.¹⁰

Congressman Clare Hoffman doubted that the bill was needed to encourage Americans to contribute to the war effort.¹¹ Hoffman also doubted that the bill would increase the country’s war production efficiency.¹² Much of the debate concerned whether the bill’s price control provisions granted the president a proper amount of discretion over the national economy.¹³ Nonetheless, the House of Representatives and Senate passed the bill, and President Harry Truman signed the DPA into law on September 8, 1950.¹⁴

The DPA’s sunset provision set the bill to expire in 1953, the year the Korean War ended.¹⁵ However, Congress has regularly reauthorized and amended the DPA since passage.¹⁶ For instance, Congress approved the Exon-Florio amendment to the DPA in 1988 to empower the President, in collaboration with the Committee on Foreign Investment in the United States (“CFIUS”), to block foreign/domestic mergers and acquisitions for national security reasons.¹⁷ Congress amended the DPA again in 2018 to expand CFIUS’ power to review these transactions and make recommendations.¹⁸ The DPA and corresponding powers are currently set to expire on September 30, 2025, but history indicates that Congress will almost certainly reauthorize the DPA before then.¹⁹

The DPA is codified in the United States Code at Title 50, Chapter 55.²⁰ The Code divides the DPA into priorities and allocations, expansion of productive capacity and supply, and general provisions.²¹ The President is authorized to require that contracts deemed necessary for national defense take priority over others.²² The President can force a private party to accept and perform a contract.²³ The President can take “appropriate actions” to ensure resources are available for defense purposes, including restricting the pool of government contract bidders to certain sources.²⁴ With money from the Defense Production Act Fund, the President can buy industrial or technological resources and incentivize the collection of “strategic materials.”²⁵ The President can inspect a private entity’s books, records, writings, premises, and property to enforce the DPA.²⁶ A president who believes someone has violated or will violate the DPA can enjoin the action or enforce compliance by filing suit in a federal district court.²⁷

The DPA promotes small businesses, giving small businesses priority placement as contractors and their representatives priority involvement in relevant committees.²⁸ The DPA also establishes the Defense Production Act Committee (“Committee”), which plans for the President’s priorities under the DPA.²⁹ The Committee delivers an annual report to the Senate Committee on Banking, Housing, and Urban Affairs.³⁰ The DPA expressly exempts the Committee from the Federal Advisory Committee Act, which establishes open meeting and public participation rules for other federal advisory committees.³¹

Though Congress designed the DPA to address the Korean War’s challenges, Congress has expanded the DPA’s scope since the war ended. The DPA grants the President power to override routine economic activity for “national defense” purposes.³² By expanding the murky definition of “national defense” beyond military conflict, Congress has expanded the President’s power over private economic activity.³³

Presidents have increasingly delegated this power to federal department heads. In 2001, President Bill Clinton declared a national emergency in response to an energy shortage in California.³⁴ This declaration authorized the Secretary of Energy under the DPA to order natural gas suppliers to continue selling gas to Pacific Gas and Electric Company for five days, avoiding electricity cut-offs.³⁵ In 2012, President Barack Obama signed an executive order delegating DPA powers to six different leaders of federal department and agencies.³⁶ The Department of Defense uses the DPA’s power to require priority performance of its contracts for armored vehicles and the president’s plane.³⁷

Presidents’ use of DPA powers escalated during the COVID-19 pandemic. In 2020, President Donald Trump banned exports of personal protective equipment under the DPA.³⁸ President Trump ordered General Motors to produce ventilators and 3M to produce respirator masks for federal government use.³⁹ Later, President Trump ordered his administration to increase domestic production of healthcare items.⁴⁰ In 2021, President Joe Biden invoked the DPA to order his administration to find and address supply chain issues for pandemic response products.⁴¹ To speed vaccine production, President Biden ordered his administration to secure equipment and components needed to create COVID-19 vaccine doses.⁴² Then, President Biden ordered manufacturers to produce rapid at-home COVID-19 tests that the administration delivered to civilian homes in 2022.⁴³

III. Discussion

Congress’ gradual broadening of the definition of “national defense” exceeds the purposes of the DPA by granting the President broad power over peacetime economic activity. In wartime, a president and administration need discretion to act quickly and decisively in the face of imminent military threats. Accordingly, presidential power over domestic economic activity can be temporarily justified to build adequate supplies of strategically necessary materials in wartime. However, since the Korean War’s end, presidents increasingly use the DPA’s power to address domestic supply chain inconveniences in peacetime.⁴⁴ Current use of the DPA gives the executive branch excessive and unjustified authority over private actors during peacetime. To preserve economic freedom, Congress should impose limits on the peacetime powers the DPA grants the President.

In 2020, domestic meatpacking plants temporarily shut down as the COVID-19 virus spread among workers.⁴⁵ President Trump signed an executive order under the DPA’s power to officially designate “meat and poultry in the food supply chain” as “critical and strategic materials.”⁴⁶ The order forcefully reopened the plants.⁴⁷ The order was possible because the DPA authorizes the President to control materials distribution in the civilian market for “national defense” purposes.⁴⁸ In comparison, materials previously deemed “critical and strategic” include crude oil, natural gas, and electricity.⁴⁹ Chicken fingers and pork chops can hardly be deemed strategic resources that must be produced continuously in peacetime as a matter of national defense. Meat was not even the sole protein product available during the meatpacking plant shutdown.⁵⁰

Recently, in response to an infant formula shortage caused by a voluntary recall, President Biden invoked the DPA to order domestic suppliers to direct resources to infant formula manufacturers before all other recipients.⁵¹ The order was admirable in intention but precarious in practice. The infant formula shortage occurred when the Food and Drug Administration (“FDA”) ordered the shutdown of Michigan’s Abbot Nutrition manufacturing plant—which produced one-fourth of the country’s formula—when four infants became sick after ingesting formula from the plant.⁵² Congressional testimony showed that the FDA took months to connect the infant-sickening bacteria to the plant.⁵³ A whistleblower stated that the FDA overlooked bacterial problems with the plant in a 2019 inspection, not learning of them until February 2022.⁵⁴ President Biden’s order to domestic suppliers would have been unnecessary if the FDA had monitored the plant competently and expeditiously. President Biden’s order substituted government error with government overreach. The order could cause a shortage of other nutritional products if the order’s forced diversion of resources to infant formula manufacturers deprives other manufacturers. The United States’ supply chains typically function comparatively well, and top-down meddling in the peacetime production of domestic goods is counterproductive.⁵⁵ The formula shortage was a federal regulatory agency problem, not a national security problem.

In 2022, President Biden invoked the DPA to order accelerated domestic production of solar panel parts and large-capacity batteries.⁵⁶ Green energy production should be a priority for the government, but presidential fiat is not the proper avenue for such policymaking. These executive orders based on the DPA’s authority stretch the concepts of “national defense” and “critical and strategic materials” past the military context and beyond plausibility.

Presidents should be empowered to take swift action during wartime to address short-term, high-stakes changes in circumstances. That power is not justified in peacetime. Accordingly, Congress should limit the DPA’s application during peacetime to protect civilians’ freedom to contract without executive branch intervention. Some legal scholars support a direct role for the President in federal regulation.⁵⁷ Supreme Court Justice Elena Kagan argued that the “new presidentialization [of regulation] . . . renders the bureaucratic sphere more transparent and responsive to the public.”⁵⁸ However, presidentializing the regulation of manufacturing poses more problems than solutions. The President is almost never a subject matter expert on the area of the economy being regulated, which creates a substantial risk of decision making errors.⁵⁹ Judicial review of executive orders is weak when it exists, leaving DPA-based executive actions ripe opportunities for anti-democratic abuses of power.⁶⁰ Congress is the proper body to address supply chain woes, not the President.

IV. Conclusion

The federal government should resist the temptation to impose solutions that solve supply chain problems in the short term but cause larger problems in the long term. The President’s expansive power over the economy under the DPA is one such problematic solution to supply chain issues. The President, as a single person, cannot possibly harbor the knowledge and expertise required to unilaterally stabilize a national industry. During peacetime, Congress should be the governmental body empowered to address national supply chain issues. Keeping the roles of the federal branches distinct and defined will increase the likelihood that the branches work effectively together to weather the next crisis to arrive.

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Cover Photo by Shunya Koide on Unsplash

1. Michael H. Cecire & Heidi M. Peters, Cong. Rsch. Serv., R43767, The Defense Production Act of 1950: History, Authorities, and Considerations for Congress 5-6 (2020).[↩]
2. Erik Gordon, What you Need to Know About the Defense Production Act – the 1950s Law Biden Invoked to Try to End the Baby Formula Shortage, The Conversation (May 19, 2022, 1:36 PM), https://theconversation.com/what-you-need-to-know-about-the-defense-production-act-the-1950s-law-biden-invoked-to-try-to-end-the-baby-formula-shortage-183085.[↩]
3. Alan R. Millett, Korean War, Britannica (June 18, 2021), https://www.britannica.com/event/Korean-War.[↩]
4. James I. Matray, The Korean War 101: Causes, Course, and Conclusion of the Conflict, 17:3 Education About ASIA 23, 25 (2012), https://www.asianstudies.org/wp-content/uploads/the-korean-war-101-causes-course-and-conclusion-of-the-conflict.pdf.[↩]
5. H.R. 9176, 81st Cong. (1950).[↩]
6. Id.[↩]
7. 91 Cong. Rec. 11611-12. Congressman Usher Burdick expressed concern that “wartime controls will increase until there will be nothing left of our democratic freedoms.” Congressman Clare Hoffman sharply added that the bill risked substituting “the form of government under which our Nation has grown great” for “socialism or a dictatorship.”[↩]
8. H.R. 9176. The wage controls were eventually suspended by executive order on February 6, 1953. Exec. Order No. 10,434, 3 C.F.R. 929 (1949-1953).[↩]
9. 91 Cong. Rec. 11601-02, 11612.[↩]
10. Id. at 11612.[↩]
11. Id. at 11613-14.[↩]
12. Id.[↩]
13. Id. at 11610-11.[↩]
14. Cecire & Peters, supra note 1, at 2.[↩]
15. Id. at 3.[↩]
16. Id.[↩]
17. James K. Jackson, Cong. Rsch. Serv., RL3388, The Committee on Foreign Investment in the United States (CFIUS) 7-8 (2020).[↩]
18. Id. at 1-2; David Vance Lucas, Implications of the use of the Defense Production Act in the U.S. Supply Chain, JD Supra (May 24, 2022), https://www.jdsupra.com/legalnews/implications-of-the-use-of-the-defense-8367994.[↩]
19. Cecire & Peters, supra note 1, at 19.[↩]
20. 50 U.S.C. § 4501.[↩]
21. Id. at § Ch. 55, Subchs. I, II, III, Refs & Annos.[↩]
22. Id. at § 4511(a).[↩]
23. Id.[↩]
24. Id. at § 4517(b)(1), (2).[↩]
25. 50 U.S.C. § 4533(a)(1)(A), (B); Id. at § 4534.[↩]
26. Id. at§ 4555(a). Those who willfully fail to comply with an inspection face a $10,000 fine and/or a year in prison if convicted. Id. at § 4555(c).[↩]
27. Id. at § 4556(a), (b).[↩]
28. Id. at § 4551(a), (b).[↩]
29. Id. at § 4567(a).[↩]
30. 50 U.S.C. § 4567(d).[↩]
31. Id. at § 4567(e).[↩]
32. The Federal Advisory Committee Act, U.S. Gen. Servs. Admin. (May 6, 2022), https://www.gsa.gov/policy-regulations/policy/federal-advisory-committee-management/legislation-and-regulations/the-federal-advisory-committee-act.[↩]
33. In fact, neither Congress nor the executive branch has conclusively defined “national security.” As of 2020, the term “national security” perplexingly includes “those issues relating to ‘homeland security,’ including its application to critical infrastructure,” and “critical technologies.” Jackson, supra note 17, at 13.[↩]
34. Frank R. Lindh, Keeping California’s Pilot Lights Burning: A Rare Exercise of Presidential Powers, 16 Nat. Res. & Env’t 320, 320 (2001).[↩]
35. Id.) The incoming George W. Bush administration extended the order for two additional weeks.((Id.[↩]
36. Anshu Siripurapu, What Is the Defense Production Act?, Council on Foreign Rels. (Dec. 22, 2021, 3:40 PM), https://www.cfr.org/in-brief/what-defense-production-act. President Obama delegated direct power under the DPA to the Secretaries of (1) Agriculture; (2) Energy; (3) Health and Human Services; (4) Transportation; (5) Defense; and (6) Commerce. Exec. Order No. 13,603, 77 Fed. Reg. 16,651 (Mar. 16, 2012). See Jim Powell, Obama’s Plan to Seize Control of Our Economy and Our Lives, Forbes (Apr. 29, 2012, 8:39 PM), https://www.forbes.com/sites/jimpowell/2012/04/29/obamas-plan-to-seize-control-of-our-economy-and-our-lives/?sh=1fce54c72ee9 (critiquing the order’s delegation of power).[↩]
37. Siripurapu, supra note 37.[↩]
38. Christina Wilkie, Trump Bans Export of Coronavirus Protection Gear, Says He’s ‘Not Happy with 3M,’ CNBC (Apr. 3, 2020, 6:45 PM), https://www.cnbc.com/2020/04/03/coronavirus-trump-to-ban-export-of-protective-gear-after-slamming-3m.html.[↩]
39. Siripurapu, supra note 37.[↩]
40. Exec. Order No. 13,944, 85 Fed. Reg. 49,929 (Aug. 6, 2020).[↩]
41. Exec. Order No. 14,017, 86 Fed. Reg. 11,849 (Feb. 24, 2021).[↩]
42. Heidi M. Peters & Erica A. Lee, Cong. Rsch. Serv., IN11593, New Presidential Directives on the Defense Production Act (DPA) and the COVID-19 Pandemic 1-3 (2021).[↩]
43. Shayan Karbassi, Understanding Biden’s Invocation of the Defense Production Act, Lawfare (Mar. 4, 2021, 8:01 AM), https://www.lawfareblog.com/understanding-bidens-invocation-defense-production-act; Alexander Tin, Biden Administration has Shipped More than 90% of Free At-Home COVID Test Orders, CBS News (Feb. 23, 2022, 8:16 AM), https://www.cbsnews.com/news/covid-tests-free-orders-shipped.[↩]
44. Aidan Lawson & June Rhee, Usage of the Defense Production Act throughout history and to combat COVID-19, Yale Sch. Mgmt. (June 3, 2020), https://som.yale.edu/blog/usage-of-the-defense-production-act-throughout-history-and-to-combat-covid-19.[↩]
45. Dan Charles, Meat Processing Plants Suspend Operations After Workers Fall Ill, NPR (Apr. 7, 2020, 1:41 PM), https://www.npr.org/sections/coronavirus-live-updates/2020/04/07/828873225/meat-processing-plants-suspend-operations-after-workers-fall-ill.[↩]
46. Exec. Order No. 13,917, 85 Fed. Reg. 26,313 (Apr. 28, 2020); 50 U.S.C. § 4511(b).[↩]
47. Union Opposes Reopening U.S. Meat Plants as More Workers Die, Reuters (May 8, 2020, 5:59 PM), https://www.reuters.com/article/us-health-coronavirus-usa-meat/union-opposes-reopening-u-s-meat-plants-as-more-workers-die-idUSKBN22K2WP.[↩]
48. 50 U.S.C. § 4511(b).[↩]
49. Id. at § 4516.[↩]
50. Dee-Ann Durbin, Where’s the Beef? Production Shutdown Leads to Shortages, The Associated Press (May 5, 2020), https://apnews.com/article/1ace47a100d73ce690990d73e597db22.[↩]
51. Spencer Kimball, Biden Invokes Defense Production Act to Boost Baby Formula Manufacturing to Ease Shortage, CNBC (May 18, 2022, 6:04 PM), https://www.cnbc.com/2022/05/18/biden-invokes-defense-production-act-to-address-infant-formula-shortage.html.[↩]
52. Christina Jewett, F.D.A. Chief Details ‘Shocking’ Conditions at Baby Formula Plant, The New York Times (May 25, 2022), https://www.nytimes.com/2022/05/25/health/fda-baby-formula-shortage.html.[↩]
53. Id.[↩]
54. Id.[↩]
55. Mercedes Delgado & Karen Mills, The Supply Chain Economy and the Future of Good Jobs in America, Harv. Bus. Rev. (Mar. 9, 2018), https://hbr.org/2018/03/the-supply-chain-economy-and-the-future-of-good-jobs-in-america (“The intensity of Science, Technology, Engineering and Math (STEM) jobs, a proxy for innovation potential, is almost five times higher in the supply chain economy than in the B2C [business-to-consumer] economy. Patenting is also highly concentrated in supply chain industries.”).[↩]
56. Pres Determ. No. 2022-11, 87 Fed. Reg. 19,775 (Mar. 31, 2022); Pres. Determ. No. 2022-15, 87 Fed. Reg. 35,071 (June 6, 2022).[↩]
57. See, e.g., James E. Baker, From Shortages to Stockpiles: How the Defense Production Act Can Be Used to Save Lives, Make America the Global Arsenal of Public Health, and Address the Security Challenges Ahead, 11 J. Nat’l Sec. L. & Pol’y 157, 178-79 (2020).[↩]
58. Elena Kagan, Presidential Administration, 114 Harv. L. Rev. 2245, 2252 (2001).[↩]
59. This is especially true in the modern context. Professor Elaine Kamarck argues that as “presidents, over the last half-century, [are] talking and traveling more every year,” they have less time to hone expertise in government affairs. How Presidents Can Avoid Big Failures, Knowledge at Wharton (Oct. 27, 2016), https://knowledge.wharton.upenn.edu/article/161012b-kwr-kamarckbook.[↩]
60. Lisa Manheim & Kathryn A. Watts, Reviewing Presidential Orders, 86 U. Chi. L. Rev. 1743, 1747-48 (2019).[↩]