[Congressional Record (Bound Edition), Volume 155 (2009), Part 16]
[Senate]
[Pages 21789-21796]
[From the U.S. Government Publishing Office, www.gpo.gov]




             DEFENSE PRODUCTION ACT REAUTHORIZATION OF 2009

  Mr. CASEY. Mr. President, I ask unanimous consent the Senate proceed 
to the immediate consideration of S. 1677, introduced earlier today.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1677) to reauthorize the Defense Production Act 
     of 1950, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. DODD. Mr. President, I rise at a moment when our Nation is 
enduring its worst economic crisis since the Great Depression. This 
crisis began in the financial sector, but it has impacted every sector 
of our economy. And perhaps one of the hardest-hit has been our 
manufacturing sector, which was already reeling even before this 
crisis.
  Over the last decade, we have lost an average of 40,000 manufacturing 
jobs per month. In Connecticut, we lost nearly 16,000 manufacturing 
jobs in the last year alone more than 8 percent of our manufacturing 
sector, gone.
  These figures represent the loss of American livelihoods, the 
economic security of thousands of families.
  And they represent a clear and present threat to our national 
security.
  We rely on key domestic industries to supply critical goods and 
services in a timely fashion when our nation faces an emergency. In 
wartime and in the aftermath of natural disasters, factories in my 
state of Connecticut and around the country are relied upon for 
everything from raw metal to military vehicles and power generators. 
These products are essential to supporting our war efforts, maintaining 
critical infrastructure, and protecting our homeland.
  Connecticut, although it is 29th in total population, ranks 6th in 
total employment in the military and aerospace sector. Tens of 
thousands of residents of my State work in this industry.
  When this industrial base is threatened, our military and emergency 
preparedness suffer.
  Six decades ago, President Harry Truman sought to bolster this 
critical bulwark of security by signing the Defense Production Act, or 
DPA, into law. The DPA allows the government to tap industrial 
resources to meet domestic energy supply, address emergency 
preparedness, protect infrastructure, and help civilian agencies and 
the military respond to crisis situations.
  In the 1950s, the DPA served to address our new national security 
realities in the wake of the Cold War. In the ensuing decades, 
beginning with the Korean War, the DPA kept production lines humming, 
military supply lines fully stocked, and our country prepared in case 
of emergency.
  Congress has reauthorized this Act every few years, but has only 
sporadically sought to update its provisions to meet changing 
conditions. And thus, according to independent analyses, Federal 
agencies' understanding and use of the tools provided by this act have 
become inconsistent.
  Thus, we have proposed bipartisan legislation to make critical 
reforms to our national defense industrial policy. The Dodd-Shelby bill 
reflects the contributions of DPA practitioners from a variety of 
agencies, particularly the Departments of Defense and Homeland 
Security. And I would like to express my appreciation for the work of 
two civil servants who worked especially hard to help us develop this 
legislation: Larry Hall, DPA Director at FEMA, and Mark Buffler, DPA 
title III Program Manager at DOD.
  The bill responds to the analysis of two landmark studies completed 
last year, as required by my amendments to the 9/11 Commission 
Recommendations Act and the fiscal year 2008 National Defense 
Authorization Act, which directed DHS and the GAO to report to Congress 
on how the DPA is being used.
  In its report, DHS conceded that several agencies authorized to use 
DPA

[[Page 21790]]

tools don't take advantage of them. And the GAO report echoed those 
findings, recommending greater coordination and pro-active use of key 
DPA authorities.
  For instance, under title I of the DPA, the President is empowered to 
require companies to set aside their commercial business obligations 
and fulfill government contracts first in order to meet national 
defense needs. However, although a wide range of Departments and 
agencies are directed to use this authority, only Defense, Homeland 
Security, and Energy are doing so. The Pentagon has used it to require 
companies to set aside other work until production of mine-resistant 
ambush protected vehicles was complete. FEMA, in coordination with 
Commerce, has used it to expedite the delivery of power generators and 
transfer switches needed to restore railroad operations in New Orleans 
after Katrina. But other agencies that could, and should, be taking 
advantage of title I, aren't.
  Moreover, the GAO found that, unlike DOD, FEMA doesn't even prepare 
title I contingency plans, which means that it takes longer for DPA 
provisions to be implemented even after they are enacted.
  Therefore, our bill, at the GAO's recommendation, requires that every 
authorized agency establish a priorities and allocation system similar 
to that in place at the Pentagon and to coordinate with other agencies 
in its implementation.
  It also sets up a new interagency body that will elevate DPA policy 
discussions to Cabinet-level posts, so that administrations going 
forward will be able to reassess the law's provisions and applications, 
and never lose sight of the importance of coordinating with critical 
segments of our industry to meet national defense needs. The President 
will designate a chairperson to lead this committee, which will be 
composed of Cabinet officials and agency heads authorized to use DPA 
tools, as well as the chairman of the Council of Economic Advisers. And 
the President will also appoint a Deputy Assistant Secretary to 
coordinate high-level dialogue among relevant government agencies.
  This elevated discussion will prove particularly essential in the 
implementation of title III of the DPA, which allows the President to 
provide financial incentives including direct capital purchases, loans, 
and loan guarantees--for U.S. firms to expand domestic production of 
critical industries. These authorities are critically important--and 
underused.
  Title III is used when the U.S. is overly reliant on foreign sources 
for a critical product, or when there is otherwise insufficient 
domestic supply of the product. Unlike other Federal assistance, title 
III is managed by industry experts. And it is designed to assist 
companies capable of meeting specific requirements: that the firms 
can't meet government needs on their own, and that the assistance will 
lead to commercial viability in the long term.
  Today, we have strong evidence that defense companies all along the 
supply chain--particularly in the third and fourth subcontractor tier--
are being denied access to credit. Machine tool and parts manufacturers 
in defense and dual-use industries are having a hard time getting 
capital--not because demand is down, but because bank lending is down. 
Government loan and loan guarantee authorities in title III would 
help--but, the government isn't using those tools.
  Therefore, our bill modernizes those powers and brings them into 
compliance with the 1990 Federal Credit Reform Act. Accordingly, under 
our bill, such loans and loan guarantees are allowed only to the extent 
that an appropriations act provides budget authority in advance.
  As frozen credit markets continue to hurt our industrial base, it is 
critical that we revitalize our factories. According to the Department 
of Commerce, manufacturing now makes up 13 percent of the U.S. economy 
a quarter of what it was three decades ago. And foreign-made products 
have risen from a tenth to a third of what we consume over that same 
time. We are at risk of becoming overly dependent on foreign sources of 
critical goods, materials, and technology and losing our manufacturing 
facilities and workforce.
  A non-partisan think tank, the Lexington Institute, recently wrote:

       If the erosion of U.S. manufacturing persists, America will 
     become more dependent on offshore sources of goods and the 
     nation's trade balance will weaken. That will undercut the 
     role of the dollar as a reserve currency and diminish U.S. 
     influence around the world. The economy will be less capable 
     of supporting major military campaigns and less resilient in 
     the face of market reverses. Most profoundly, America will 
     become poorer relative to other nations, a trend that the 
     National Intelligence Council says is already under way in 
     its most recent assessment of global trends.

  This bill isn't a silver bullet to address all of these problems. But 
it's an important first step towards making more effective one of our 
best tools to strengthen our manufacturing base. Our bill also makes 
these efforts more transparent, requiring notification to Congress and 
a 30-day waiting period for larger projects. As we look to expand DPA 
use, we are also working to make it more accountable to taxpayers.
  As the GAO reported:

       Since the DPA was last reauthorized in 2003, there has been 
     little use of its authorities for areas other than defense. 
     Lessons learned from catastrophic events have emphasized the 
     importance of ensuring that needed capabilities and contracts 
     for key items are in place in advance of a disaster.

  Congress didn't intend for such inertia. And now, more than ever, we 
need dynamic government action to reinvigorate our manufacturing base. 
It is time for the executive branch to take heed of the warning signs, 
repair the vulnerabilities in our industries, and restore our 
manufacturing capacities in the name of our national and economic 
security.
  Mr. DODD. Mr. President, before concluding our discussion about the 
2009 Defense Production Act Reauthorization, I would like to pay 
tribute to two of my colleagues who have worked diligently on this 
legislation. First, my friend and ranking member of the Banking 
Committee, Senator Shelby. Nobody understands the complexities of 
national security policy and its nexus with economic affairs better 
than the senior Senator from Alabama. Given the importance of 
reauthorizing and updating the law prior to its expiration on September 
30, I appreciated his good counsel and sincere effort to expedite 
approval of this important legislation today. I would also like to 
thank Senator Brown for his work, particularly as chairman of the 
Economic Policy Subcommittee. The Senator from Ohio has proven to be 
both an expert on U.S. manufacturing and a skillful surveyor of how the 
current credit crisis is affecting America's national defense 
industrial base.
  Mr. BROWN. Mr. President, I appreciate the kind words of the Senator 
from Connecticut. At a hearing of the Economic Policy Subcommittee on 
May 13, witnesses discussed the challenges tight credit markets pose 
for small and medium-sized manufacturers, as well as the economic, 
strategic, and security implications of a weakened manufacturing 
sector.
  Among our witnesses were the president of the United Steelworkers, 
and a managing director of the Carlyle Group. It is not every day 
Congress sees representatives from these two institutions, but when it 
comes to the importance of manufacturing to this nation, the United 
Steelworkers and the Carlyle Group are on the same page.
  The reason is simple. Manufacturing accounts for $1.6 trillion of 
U.S. GDP--12 percent--and accounts for nearly three-fourths of the 
Nation's industrial research and development. Manufacturing jobs also 
pay 20 percent more on average than service jobs. Each manufacturing 
job supports four to five other jobs throughout the U.S. economy.
  In short, manufacturing matters a great deal to our Nation's 
strength.
  One important finding that emerged during this hearing is that 
reauthorization and expansion of the Defense Production Act of 1950 may 
provide the U.S. Government with valuable tools for maintaining 
critical supply lines, which would be particularly useful at a time 
when U.S. manufacturers are experiencing declining access to credit.

[[Page 21791]]


  Mr. DODD. Mr. President, I could not agree more. And I appreciated 
the leadership that Senator Brown demonstrated in highlighting these 
important facts during his hearing. In fact, I expressed a similar 
sentiment in a letter to Homeland Security Secretary Janet Napolitano 
in February, which I will ask to be made part of the Record.
  With this legislation in place, not only do we expect the current and 
future administrations to apply these newly updated authorities when 
appropriate, but I hope that they will take care to use them in a 
creative and appropriate manner in response to ongoing problems that 
threaten the long-term health of our industrial base--namely the credit 
crisis' impact on U.S. manufacturing.
  My colleague from Ohio has played a key role in raising awareness of 
these important matters and ensuring that the current administration 
work with Congress to address our concerns. In particular, I 
appreciated his ongoing contact with the administration regarding his 
subcommittee's findings.
  Mr. BROWN. Mr. President, the key to America's long-term security and 
prosperity is a healthy and viable domestic manufacturing base. I am 
hopeful that the administration will use the tools set in place by this 
legislation to achieve these ends. It is for this reason that Senator 
Dodd, Senator Merkley, Senator Warner and I sent a letter--which I will 
ask to be printed in the Record--to the Office of Management and Budget 
urging the administration to provide their recommendations on changes 
to the Defense Production Act.
  Mr. President, I ask unanimous consent to have the two letters which 
were referred to be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                 February 4, 2009.
     Hon. Janet Napolitano,
     Secretary, U.S. Department of Homeland Security, Washington, 
         DC.
       Dear Secretary Napolitano: I am writing to inquire about 
     government efforts underway to address a potentially serious 
     consequence of the global economic and financial crisis. 
     Because manufacturers' access to credit is becoming 
     increasingly limited, I am concerned about the ability of key 
     sectors of our industrial base to meet emergency response and 
     defense needs of the federal government.
       I understand that the Federal Emergency Management Agency 
     is leading an interagency process to review and reform 
     current authorities afforded by the Defense Production Act 
     (50 U.S.C. App. 2061, et seq.) and Executive Order 12919. I 
     hope such an effort will help address our nation's industrial 
     readiness to maintain our critical infrastructure and 
     emergency preparedness.
       I would like to know the current status of this initiative, 
     which should be completed with all due care and speed. With 
     the Bureau of Economic Analysis reporting a 27.8 percent 
     decline in investment in equipment and software for the last 
     quarter, some analysts are indicating that federal assistance 
     to banks may not be thawing credit markets adequately to 
     maintain U.S. manufacturing capabilities. According to the 
     Federal Reserve Board, manufacturing output fell 2.3 percent 
     in December to a level almost 10 percent below that of 12 
     months earlier. For the fourth quarter of last year, 
     manufacturing output contracted at an annual rate of more 
     than 16 percent. In December, the factory operating rate 
     moved down 1.7 percentage points, to 70.2 percent, a level 
     9.5 percentage points below its 1972 to 2007 average. The 
     production of durable goods declined 2.6 percent in December. 
     Output fell in virtually every major category of durable 
     goods except for aerospace equipment and miscellaneous 
     transportation equipment.
       As the Banking Committee begins to consider legislation to 
     re-authorize the Defense Production Act (DPA), I would 
     appreciate your insights into how the authorities of the DPA 
     may be used to reverse these trends and help maintain viable 
     production capabilities for items essential for our national 
     defense as defined by Section 702 of the DPA. Of special 
     interest is how Title I of this Act may be better used to 
     ensure adequate government access to critical goods during 
     emergencies and, under Title III how provisions--including 
     possible direct loan guarantees--might be used by key 
     industries needing access to credit. I believe your 
     Department's April 25, 2008, report ``Use of the Defense 
     Production Act to Reduce Interruptions in Critical 
     Infrastructure and Key Resource Operations During 
     Emergencies'' will prove useful in revisiting key DPA 
     authorities.
       Please report to me on your progress in reviewing these 
     authorities at your earliest convenience. I would appreciate 
     interim reports or proposals being made available to Senate 
     Banking Committee staff prior to the Administration's final 
     submission of DPA legislation. Thank you for your attention 
     to this important matter.
           Sincerely,
                                              Christopher J. Dodd,
     Chairman.
                                  ____

                                                     June 1, 2009.
     Mr. Peter Orszag,
     Director, Office of Management and Budget, Washington, DC.
       Dear Director Orszag: We are writing to request your prompt 
     recommendations to Congress on key legislative proposals 
     currently under your office's review. This letter comes as a 
     follow-up to a hearing of the Subcommittee on Economic Policy 
     held May 13 entitled, ``Manufacturing and the Credit 
     Crisis.''
       Witnesses discussed the challenges tight credit markets 
     pose for small and medium-sized manufacturers, as well as the 
     economic, strategic, and security implications of a weakened 
     manufacturing sector. Absent some mechanism for providing or 
     spurring access to credit, witnesses testified, key 
     government functions--ranging from defense to critical 
     infrastructure operations--could be impaired.
       One important finding that emerged during this hearing is 
     that reauthorization and expansion of the Defense Production 
     Act of 1950 (50 U.S.C. App. 2061 et seq) may provide the 
     United States government valuable tools for maintaining 
     critical supply lines, particularly at a time when U.S. 
     manufacturers are experiencing declining access to credit.
       Over the past five decades, the DPA has been amended beyond 
     its original focus on military requirements, to expand 
     industrial resources to meet energy supply, emergency 
     preparedness, and critical infrastructure protection needs, 
     thereby allowing civilian agencies to rapidly respond to 
     crises such as natural disasters and terrorist attacks. 
     Titles I, III, and VII of the Act remain in effect, which 
     include authorities to require preferential performance on 
     government contracts, to fund expanded production 
     capabilities for critical security needs, and to collect 
     information on the domestic industrial base.
       At the May 13 hearing, witnesses recommended the following:
       Revitalizing the Interagency Task Force that administers 
     the DPA, with a chairman designated by the President.
       Increasing the level of funding available for DPA at the 
     Department of Homeland Security, Department of Energy, and 
     Department of Defense.
       Resuming the loan guarantee authorities under Title III of 
     the DPA, in accordance with OMB guidance.
       It is our understanding that OMB is reviewing interagency 
     proposals. A thorough review of the DPA, and consideration of 
     reforms, will require additional hearings. Given the urgency 
     of manufacturers' challenges, the impending expiration of DPA 
     authorities on September 30, and the impending Fiscal Year 
     2010 appropriations process, we urge you to promptly review 
     the DPA and forward your recommendations to Congress.
       Thank you for your attention to this matter.
           Sincerely,
     Sherrod Brown,
       Chairman, Economic Policy Subcommittee.
     Christopher J. Dodd,
       Chairman, Banking, House, & Urban Affairs.
     Jeff Merkley,
       U.S. Senator.
     Mark Warner,
       U.S. Senator.

  Mr. CASEY. Mr. President, I ask unanimous consent that the bill be 
read three times and passed, the motion to reconsider be laid upon the 
table, with no intervening action or debate, and any statements related 
to the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 1677) was ordered to be engrossed for a third reading, 
was read the third time, and passed, as follows:

                                S. 1677

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Defense 
     Production Act Reauthorization of 2009''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Reauthorization of Defense Production Act of 1950.
Sec. 3. Declaration of policy.
Sec. 4. Priority in contracts and orders.
Sec. 5. Designation of energy as a strategic and critical material.
Sec. 6. Strengthening domestic capability.
Sec. 7. Expansion of productive capacity and supply.
Sec. 8. Definitions.
Sec. 9. Voluntary agreements and plans of action for national defense.

[[Page 21792]]

Sec. 10. Employment of personnel; appointment policies; nucleus 
              executive reserve; use of confidential information by 
              employees; printing and distribution of reports.
Sec. 11. Defense Production Act Committee.
Sec. 12. Annual report on impact of offsets.

     SEC. 2. REAUTHORIZATION OF DEFENSE PRODUCTION ACT OF 1950.

       (a) Termination of Act.--
       (1) Termination.--Section 717 of the Defense Production Act 
     of 1950 (50 U.S.C. App. 2166) is amended--
       (A) by striking subsections (a) and (b) and inserting the 
     following:
       ``(a) Title I (except section 104), title III, and title 
     VII (except sections 707, 708, and 721) shall terminate on 
     September 30, 2014, except that all authority extended under 
     title III on or after the date of enactment of the Defense 
     Production Act Reauthorization of 2009 shall be effective for 
     any fiscal year only to such extent or in such amounts as are 
     provided in advance in appropriations Acts.
       ``(b) Notwithstanding subsection (a), any agency created 
     under a provision of law that is terminated under subsection 
     (a) may continue in existence, for purposes of liquidation, 
     for a period not to exceed 6 months, beginning on the date of 
     termination of the provision authorizing the creation of such 
     agency under subsection (a).''; and
       (B) in subsection (c), by striking the second undesignated 
     paragraph.
       (2) Repeals.--Titles II, IV, V, and VI of the Defense 
     Production Act of 1950 (50 U.S.C. App. 2151 et seq., 2101 et 
     seq., 2121 et seq., and 2131 et seq.) are repealed.
       (b) Authorization of Appropriations.--Section 711 of the 
     Defense Production Act of 1950 (50 U.S.C. App. 2161) is 
     amended--
       (1) in subsection (a)--
       (A) in the first sentence, by striking ``(including'' and 
     all that follows through ``) by'' and inserting ``by''; and
       (B) by striking ``(a) Authorization.--Except as provided in 
     subsection (b), there'' and inserting ``There''; and
       (2) by striking subsection (b).

     SEC. 3. DECLARATION OF POLICY.

       (a) Findings.--Section 2 of the Defense Production Act of 
     1950 (50 U.S.C. App. 2062) is amended to read as follows:

     ``SEC. 2. DECLARATION OF POLICY.

       ``(a) Findings.--Congress finds that--
       ``(1) 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) to ensure the vitality of the domestic industrial 
     base, actions are needed--
       ``(A) to promote industrial resources preparedness in the 
     event of domestic or foreign threats to the security of the 
     United States;
       ``(B) to support continuing improvements in industrial 
     efficiency and responsiveness;
       ``(C) to provide for the protection and restoration of 
     domestic critical infrastructure operations under emergency 
     conditions; and
       ``(D) to respond to actions taken outside of the United 
     States that could result in reduced supplies of strategic and 
     critical materials, including energy, necessary for national 
     defense and the general economic well-being of the United 
     States;
       ``(3) in order to provide for the national security, the 
     national defense preparedness effort of the United States 
     Government requires--
       ``(A) preparedness programs to respond to both domestic 
     emergencies and international threats to national defense;
       ``(B) measures to improve the domestic industrial base for 
     national defense;
       ``(C) the development of domestic productive capacity to 
     meet--
       ``(i) essential national defense needs that can result from 
     emergency conditions; and
       ``(ii) unique technological requirements; and
       ``(D) the diversion of certain materials and facilities 
     from ordinary use to national defense purposes, when national 
     defense needs cannot otherwise be satisfied in a timely 
     fashion;
       ``(4) to meet the requirements referred to in this 
     subsection, this Act provides the President with an array of 
     authorities to shape national defense preparedness programs 
     and to take appropriate steps to maintain and enhance the 
     domestic industrial base;
       ``(5) in order to ensure national defense preparedness, it 
     is necessary and appropriate to assure the availability of 
     domestic energy supplies for national defense needs;
       ``(6) 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 renewable energy sources (including solar, geothermal, 
     wind, and biomass sources), more efficient energy storage and 
     distribution technologies, and energy conservation measures;
       ``(7) much of the industrial capacity that is relied upon 
     by the United States Government for military production and 
     other national defense purposes is deeply and directly 
     influenced by--
       ``(A) the overall competitiveness of the industrial economy 
     of the United States; and
       ``(B) the ability of industries in the United States, in 
     general, to produce internationally competitive products and 
     operate profitably while maintaining adequate research and 
     development to preserve competitiveness with respect to 
     military and civilian production; and
       ``(8) the inability of industries in the United States, 
     especially smaller subcontractors and suppliers, to provide 
     vital parts and components and other materials would impair 
     the ability to sustain the Armed Forces of the United States 
     in combat for longer than a short period.
       ``(b) Statement of Policy.--It is the policy of the United 
     States that--
       ``(1) to ensure the adequacy of productive capacity and 
     supply, Federal departments and agencies that are responsible 
     for national defense acquisition should continuously assess 
     the capability of the domestic industrial base to satisfy 
     production requirements under both peacetime and emergency 
     conditions, specifically evaluating the availability of 
     adequate production sources, including subcontractors and 
     suppliers, materials, skilled labor, and professional and 
     technical personnel;
       ``(2) every effort should be made to foster cooperation 
     between the defense and commercial sectors for research and 
     development and for acquisition of materials, components, and 
     equipment;
       ``(3) plans and programs to carry out the purposes of this 
     Act should be undertaken with due consideration for promoting 
     efficiency and competition;
       ``(4) in providing United States Government financial 
     assistance under this Act to correct a domestic industrial 
     base shortfall, the President should give consideration to 
     the creation or maintenance of production sources that will 
     remain economically viable after such assistance has ended;
       ``(5) authorities under this Act should be used to reduce 
     the vulnerability of the United States to terrorist attacks, 
     and to minimize the damage and assist in the recovery from 
     terrorist attacks that occur in the United States;
       ``(6) 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 vulnerable to attack by an enemy of 
     the United States;
       ``(7) to ensure that essential national defense 
     requirements are met, consideration should be given to 
     stockpiling strategic materials, to the extent that such 
     stockpiling is economical and feasible; and
       ``(8) in the construction of any industrial facility owned 
     by the United States Government, in the rendition of any 
     financial assistance by the United States Government for the 
     construction, expansion, or improvement of any industrial 
     facility, and in the production of goods and services, under 
     this Act or any other provision of law, each department and 
     agency of the United States Government should apply, under 
     the coordination of the Federal Emergency Management Agency, 
     when practicable and consistent with existing law and the 
     desirability for maintaining a sound economy, the principle 
     of geographic dispersal of such facilities in the interest of 
     national defense.''.

     SEC. 4. PRIORITY IN CONTRACTS AND ORDERS.

       Section 101 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2071) is amended by adding at the end the 
     following:
       ``(d) The head of each Federal agency to which the 
     President delegates authority under this section shall--
       ``(1) not later than 270 days after the date of enactment 
     of the Defense Production Act Reauthorization of 2009, issue 
     final rules, in accordance with section 553 of title 5, 
     United States Code, 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; and
       ``(2) as appropriate and to the extent practicable, consult 
     with the heads of other Federal agencies to develop a 
     consistent and unified Federal priorities and allocations 
     system.''.

     SEC. 5. DESIGNATION OF ENERGY AS A STRATEGIC AND CRITICAL 
                   MATERIAL.

       Section 106 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2076) is amended--
       (1) by striking ``such designation'' and all that follows 
     through ``(1)'' and inserting ``such designation'';
       (2) by striking ``; or'' and inserting a period; and
       (3) by striking paragraph (2).

     SEC. 6. STRENGTHENING DOMESTIC CAPABILITY.

       Section 107 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2077) is amended--
       (1) in subsection (a)--
       (A) by inserting ``restore,'' after ``modernize,''; and
       (B) by inserting ``materials,'' after ``items,''; and
       (2) in subsection (b)--
       (A) by striking paragraph (1);
       (B) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively; and
       (C) in paragraph (1), as so redesignated, by striking ``or 
     critical technology items'' and

[[Page 21793]]

     inserting ``, critical technology items, essential materials, 
     and industrial resources''.

     SEC. 7. EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY.

       Title III of the Defense Production Act of 1950 (50 U.S.C. 
     App. 2091 et seq.) is amended to read as follows:

        ``TITLE III--EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY

     ``SEC. 301. PRESIDENTIAL AUTHORIZATION FOR THE NATIONAL 
                   DEFENSE.

       ``(a) Expediting Production and Deliveries or Services.--
       ``(1) Authorized activities.--To reduce current or 
     projected shortfalls of industrial resources, critical 
     technology items, or essential materials needed for national 
     defense purposes, subject to such regulations as the 
     President may prescribe, the President may authorize a 
     guaranteeing agency to provide guarantees of loans by private 
     institutions for the purpose of financing any contractor, 
     subcontractor, provider of critical infrastructure, or other 
     person in support of production capabilities or supplies that 
     are deemed by the guaranteeing agency to be necessary to 
     create, maintain, expedite, expand, protect, or restore 
     production and deliveries or services essential to the 
     national defense.
       ``(2) Presidential determinations required.--Except during 
     a period of national emergency declared by Congress or the 
     President, a loan guarantee may be entered into under this 
     section only if the President determines that--
       ``(A) the loan guarantee is for an activity that supports 
     the production or supply of an industrial resource, critical 
     technology item, or material that is essential for national 
     defense purposes;
       ``(B) without a loan guarantee, credit is not available to 
     the loan applicant under reasonable terms or conditions 
     sufficient to finance the activity;
       ``(C) the loan guarantee is the most cost effective, 
     expedient, and practical alternative for meeting the needs of 
     the Federal Government;
       ``(D) the prospective earning power of the loan applicant 
     and the character and value of the security pledged provide a 
     reasonable assurance of repayment of the loan to be 
     guaranteed;
       ``(E) the loan to be guaranteed bears interest at a rate 
     determined by the Secretary of the Treasury to be reasonable, 
     taking into account the then-current average yield on 
     outstanding obligations of the United States with remaining 
     periods of maturity comparable to the maturity of the loan;
       ``(F) the loan agreement for the loan to be guaranteed 
     provides that no provision of the loan agreement may be 
     amended or waived without the consent of the fiscal agent of 
     the United States for the guarantee; and
       ``(G) the loan applicant has provided or will provide--
       ``(i) an assurance of repayment, as determined by the 
     President; and
       ``(ii) security--

       ``(I) in the form of a performance bond, insurance, 
     collateral, or other means acceptable to the fiscal agent of 
     the United States; and
       ``(II) in an amount equal to not less than 20 percent of 
     the amount of the loan.

       ``(3) Limitations on loans.--Loans under this section may 
     be--
       ``(A) made or guaranteed under the authority of this 
     section only to the extent that an appropriations Act--
       ``(i) provides, in advance, budget authority for the cost 
     of such guarantees, as defined in section 502 of the Federal 
     Credit Reform Act of 1990 (2 U.S.C. 661a); and
       ``(ii) establishes a limitation on the total loan principal 
     that may be guaranteed; and
       ``(B) made without regard to the limitations of existing 
     law, other than section 1341 of title 31, United States Code.
       ``(b) Fiscal Agents of the United States.--
       ``(1) In general.--Any Federal agency or any Federal 
     reserve bank, when designated by the President, is hereby 
     authorized to act, on behalf of any guaranteeing agency, as 
     fiscal agent of the United States in the making of such 
     contracts of guarantee and in otherwise carrying out the 
     purposes of this section.
       ``(2) Funds.--All such funds as may be necessary to enable 
     any fiscal agent described in paragraph (1) to carry out any 
     guarantee made by it on behalf of any guaranteeing agency 
     shall be supplied and disbursed by or under authority from 
     such guaranteeing agency.
       ``(3) Limit on liability.--No fiscal agent described in 
     paragraph (1) shall have any responsibility or 
     accountability, except as agent in taking any action pursuant 
     to or under authority of this section.
       ``(4) Reimbursements.--Each fiscal agent described in 
     paragraph (1) shall be reimbursed by each guaranteeing agency 
     for all expenses and losses incurred by such fiscal agent in 
     acting as agent on behalf of such guaranteeing agency, 
     including, notwithstanding any other provision of law, 
     attorneys' fees and expenses of litigation.
       ``(c) Oversight.--
       ``(1) In general.--All actions and operations of fiscal 
     agents under authority of or pursuant to this section shall 
     be subject to the supervision of the President, and to such 
     regulations as the President may prescribe.
       ``(2) Other authority.--The President is authorized to 
     prescribe--
       ``(A) either specifically or by maximum limits or 
     otherwise, rates of interest, guarantee and commitment fees, 
     and other charges which may be made in connection with loans, 
     discounts, advances, or commitments guaranteed by the 
     guaranteeing agencies through fiscal agents under this 
     section; and
       ``(B) regulations governing the forms and procedures (which 
     shall be uniform to the extent practicable) to be utilized in 
     connection with such guarantees.
       ``(d) Aggregate Guarantee Amounts.--
       ``(1) Industrial resource and critical technology 
     shortfalls.--
       ``(A) In general.--If the making of any guarantee or 
     obligation of the Federal Government under this title 
     relating to a domestic industrial base shortfall would cause 
     the aggregate outstanding amount of all guarantees for such 
     shortfall to exceed $50,000,000, any such guarantee may be 
     made only--
       ``(i) if the President has notified the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives in writing of the proposed guarantee; and
       ``(ii) after the 30-day period following the date on which 
     notice under clause (i) is provided.
       ``(B) Waivers authorized.--The requirements of subparagraph 
     (A) may be waived--
       ``(i) during a period of national emergency declared by 
     Congress or the President; or
       ``(ii) upon a determination by the President, on a 
     nondelegable basis, that a specific guarantee is necessary to 
     avert an industrial resource or critical technology item 
     shortfall that would severely impair national defense 
     capability.
       ``(2) Other limitations.--The authority conferred by this 
     section shall not be used primarily to prevent the financial 
     insolvency or bankruptcy of any person, unless--
       ``(A) the President certifies that the insolvency or 
     bankruptcy would have a direct and substantially adverse 
     effect upon national defense production; and
       ``(B) a copy of the certification under subparagraph (A), 
     together with a detailed justification thereof, is 
     transmitted to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives not later than 10 days prior 
     to the exercise of that authority for such use.

     ``SEC. 302. LOANS TO PRIVATE BUSINESS ENTERPRISES.

       ``(a) Loan Authority.--To reduce current or projected 
     shortfalls of industrial resources, critical technology 
     items, or materials essential for the national defense, the 
     President may make provision for loans to private business 
     enterprises (including nonprofit research corporations and 
     providers of critical infrastructure) for the creation, 
     maintenance, expansion, protection, or restoration of 
     capacity, the development of technological processes, or the 
     production of essential materials, including the exploration, 
     development, and mining of strategic and critical metals and 
     minerals.
       ``(b) Conditions of Loans.--Loans may be made under this 
     section on such terms and conditions as the President deems 
     necessary, except that--
       ``(1) financial assistance may be extended only to the 
     extent that it is not otherwise available from private 
     sources on reasonable terms; and
       ``(2) during periods of national emergency declared by the 
     Congress or the President, no such loan may be made unless 
     the President determines that--
       ``(A) the loan is for an activity that supports the 
     production or supply of an industrial resource, critical 
     technology item, or material that is essential to the 
     national defense;
       ``(B) without the loan, United States industry cannot 
     reasonably be expected to provide the needed capacity, 
     technological processes, or materials in a timely manner;
       ``(C) the loan is the most cost-effective, expedient, and 
     practical alternative method for meeting the need;
       ``(D) the prospective earning power of the loan applicant 
     and the character and value of the security pledged provide a 
     reasonable assurance of repayment of the loan in accordance 
     with the terms of the loan, as determined by the President; 
     and
       ``(E) the loan bears interest at a rate determined by the 
     Secretary of the Treasury to be reasonable, taking into 
     account the then-current average yield on outstanding 
     obligations of the United States with remaining periods of 
     maturity comparable to the maturity of the loan.
       ``(c) Limitations on Loans.--Loans under this section may 
     be--
       ``(1) made or guaranteed under the authority of this 
     section only to the extent that an appropriations Act--
       ``(A) provides, in advance, budget authority for the cost 
     of such guarantees, as defined in section 502 of the Federal 
     Credit Reform Act of 1990 (2 U.S.C. 661a); and
       ``(B) establishes a limitation on the total loan principal 
     that may be guaranteed; and
       ``(2) made without regard to the limitations of existing 
     law, other than section 1341 of title 31, United States Code.

[[Page 21794]]

       ``(d) Aggregate Loan Amounts.--
       ``(1) In general.--If the making of any loan under this 
     section to correct a shortfall would cause the aggregate 
     outstanding amount of all obligations of the Federal 
     Government under this title relating to such shortfall to 
     exceed $50,000,000, such loan may be made only--
       ``(A) if the President has notified the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives, in writing, of the proposed loan; and
       ``(B) after the 30-day period following the date on which 
     notice under subparagraph (A) is provided.
       ``(2) Waivers authorized.--The requirements of paragraph 
     (1) may be waived--
       ``(A) during a period of national emergency declared by the 
     Congress or the President; and
       ``(B) upon a determination by the President, on a 
     nondelegable basis, that a specific loan is necessary to 
     avert an industrial resource or critical technology shortfall 
     that would severely impair national defense capability.

     ``SEC. 303. OTHER PRESIDENTIAL ACTION AUTHORIZED.

       ``(a) In General.--
       ``(1) In general.--To create, maintain, protect, expand, or 
     restore domestic industrial base capabilities essential for 
     the national defense, the President may make provision--
       ``(A) for purchases of or commitments to purchase an 
     industrial resource or a critical technology item, for 
     Government use or resale;
       ``(B) for the encouragement of exploration, development, 
     and mining of critical and strategic materials, and other 
     materials;
       ``(C) for the development of production capabilities; and
       ``(D) for the increased use of emerging technologies in 
     security program applications and the rapid transition of 
     emerging technologies--
       ``(i) from Government-sponsored research and development to 
     commercial applications; and
       ``(ii) from commercial research and development to national 
     defense applications.
       ``(2) Treatment of certain agricultural commodities.--A 
     purchase for resale under this subsection shall not include 
     that part of the supply of an agricultural commodity which is 
     domestically produced, except to the extent that such 
     domestically produced supply may be purchased for resale for 
     industrial use or stockpiling.
       ``(3) Terms of sales.--No commodity purchased under this 
     subsection shall be sold at less than--
       ``(A) the established ceiling price for such commodity, 
     except that minerals, metals, and materials shall not be sold 
     at less than the established ceiling price, or the current 
     domestic market price, whichever is lower; or
       ``(B) if no ceiling price has been established, the higher 
     of--
       ``(i) the current domestic market price for such commodity; 
     or
       ``(ii) the minimum sale price established for agricultural 
     commodities owned or controlled by the Commodity Credit 
     Corporation, as provided in section 407 of the Agricultural 
     Act of 1949 (7 U.S.C. 1427).
       ``(4) Delivery dates.--No purchase or commitment to 
     purchase any imported agricultural commodity shall specify a 
     delivery date which is more than 1 year after the date of 
     termination of this section.
       ``(5) Presidential determinations.--Except as provided in 
     paragraph (7), the President may not execute a contract under 
     this subsection unless the President determines that--
       ``(A) the industrial resource, material, or critical 
     technology item is essential to the national defense; and
       ``(B) without Presidential action under this section, 
     United States industry cannot reasonably be expected to 
     provide the capability for the needed industrial resource, 
     material, or critical technology item in a timely manner.
       ``(6) Notification to congress of shortfall.--
       ``(A) In general.--Except as provided in paragraph (7), the 
     President shall provide written notice to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives of a domestic industrial base shortfall prior 
     to taking action under this subsection to remedy the 
     shortfall. The notice shall include the determinations made 
     by the President under paragraph (5).
       ``(B) Aggregate amounts.--If the taking of any action under 
     this subsection to correct a domestic industrial base 
     shortfall would cause the aggregate outstanding amount of all 
     such actions for such shortfall to exceed $50,000,000, the 
     action or actions may be taken only after the 30-day period 
     following the date on which the Committee on Banking, 
     Housing, and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives have been 
     notified in writing of the proposed action.
       ``(7) Waivers authorized.--The requirements of paragraphs 
     (1) through (6) may be waived--
       ``(A) during a period of national emergency declared by the 
     Congress or the President; or
       ``(B) upon a determination by the President, on a 
     nondelegable basis, that action is necessary to avert an 
     industrial resource or critical technology item shortfall 
     that would severely impair national defense capability.
       ``(b) Exemption for Certain Limitations.--Subject to the 
     limitations in subsection (a), purchases and commitments to 
     purchase and sales under subsection (a) may be made without 
     regard to the limitations of existing law (other than section 
     1341 of title 31, United States Code), for such quantities, 
     and on such terms and conditions, including advance payments, 
     and for such periods, but not extending beyond a date that is 
     not more than 10 years from the date on which such purchase, 
     purchase commitment, or sale was initially made, as the 
     President deems necessary, except that purchases or 
     commitments to purchase involving higher than established 
     ceiling prices (or if no such established ceiling prices 
     exist, currently prevailing market prices) or anticipated 
     loss on resale shall not be made, unless it is determined 
     that supply of the materials could not be effectively 
     increased at lower prices or on terms more favorable to the 
     Government, or that such purchases are necessary to assure 
     the availability to the United States of overseas supplies.
       ``(c) Presidential Findings.--
       ``(1) In general.--The President may take the actions 
     described in paragraph (2), if the President finds that--
       ``(A) under generally fair and equitable ceiling prices, 
     for any raw or nonprocessed material, there will result a 
     decrease in supplies from high-cost sources of such material, 
     and that the continuation of such supplies is necessary to 
     carry out the objectives of this title; or
       ``(B) an increase in cost of transportation is temporary in 
     character and threatens to impair maximum production or 
     supply in any area at stable prices of any materials.
       ``(2) Subsidy payments authorized.--Upon a finding under 
     paragraph (1), the President may make provision for subsidy 
     payments on any such domestically produced material, other 
     than an agricultural commodity, in such amounts and in such 
     manner (including purchases of such material and its resale 
     at a loss), and on such terms and conditions, as the 
     President determines to be necessary to ensure that supplies 
     from such high-cost sources are continued, or that maximum 
     production or supply in such area at stable prices of such 
     materials is maintained, as the case may be.
       ``(d) Incidental Authority.--The procurement power granted 
     to the President by this section shall include the power to 
     transport and store and have processed and refined any 
     materials procured under this section.
       ``(e) Installation of Equipment in Industrial Facilities.--
       ``(1) Installation authorized.--If the President determines 
     that such action will aid the national defense, the President 
     is authorized--
       ``(A) to procure and install additional equipment, 
     facilities, processes or improvements to plants, factories, 
     and other industrial facilities owned by the Federal 
     Government;
       ``(B) to procure and install equipment owned by the Federal 
     Government in plants, factories, and other industrial 
     facilities owned by private persons;
       ``(C) to provide for the modification or expansion of 
     privately owned facilities, including the modification or 
     improvement of production processes, when taking actions 
     under section 301, 302, or this section; and
       ``(D) to sell or otherwise transfer equipment owned by the 
     Federal Government and installed under this subsection to the 
     owners of such plants, factories, or other industrial 
     facilities.
       ``(2) Indemnification.--The owner of any plant, factory, or 
     other industrial facility that receives equipment owned by 
     the Federal Government under this section shall agree--
       ``(A) to waive any claim against the United States under 
     section 107 or 113 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9607 and 9613); and
       ``(B) to indemnify the United States against any claim 
     described in paragraph (1) made by a third party that arises 
     out of the presence or use of equipment owned by the Federal 
     Government.
       ``(f) Excess Metals, Minerals, and Materials.--
       ``(1) In general.--Notwithstanding any other provision of 
     law to the contrary, metals, minerals, and materials acquired 
     pursuant to this section which, in the judgment of the 
     President, are excess to the needs of programs under this 
     Act, shall be transferred to the National Defense Stockpile 
     established by the Strategic and Critical Materials Stock 
     Piling Act (50 U.S.C. 98 et seq.), when the President deems 
     such action to be in the public interest.
       ``(2) Transfers at no charge.--Transfers made pursuant to 
     this subsection shall be made without charge against or 
     reimbursement from funds appropriated for the purposes of the 
     Strategic and Critical Materials Stock Piling Act (50 U.S.C. 
     98 et seq.), except that costs incident to such transfer, 
     other than acquisition costs, shall be paid or reimbursed 
     from such funds.

[[Page 21795]]

       ``(g) Substitutes.--When, in the judgement of the 
     President, it will aid the national defense, the President 
     may make provision for the development of substitutes for 
     strategic and critical materials, critical components, 
     critical technology items, and other industrial resources.

     ``SEC. 304. DEFENSE PRODUCTION ACT FUND.

       ``(a) Establishment of Fund.--There is established in the 
     Treasury of the United States a separate fund to be known as 
     the `Defense Production Act Fund' (in this section referred 
     to as the `Fund').
       ``(b) Moneys in Fund.--There shall be credited to the 
     Fund--
       ``(1) all moneys appropriated for the Fund, as authorized 
     by section 711; and
       ``(2) all moneys received by the Fund on transactions 
     entered into pursuant to section 303.
       ``(c) Use of Fund.--The Fund shall be available to carry 
     out the provisions and purposes of this title, subject to the 
     limitations set forth in this Act and in appropriations Acts.
       ``(d) Duration of Fund.--Moneys in the Fund shall remain 
     available until expended.
       ``(e) Fund Balance.--The Fund balance at the close of each 
     fiscal year shall not exceed $750,000,000, excluding any 
     moneys appropriated to the Fund during that fiscal year or 
     obligated funds. If, at the close of any fiscal year, the 
     Fund balance exceeds $750,000,000, the amount in excess of 
     $750,000,000 shall be paid into the general fund of the 
     Treasury.
       ``(f) Fund Manager.--The President shall designate a Fund 
     manager. The duties of the Fund manager shall include--
       ``(1) determining the liability of the Fund in accordance 
     with subsection (g);
       ``(2) ensuring the visibility and accountability of 
     transactions engaged in through the Fund; and
       ``(3) reporting to the Congress each year regarding 
     activities of the Fund during the previous fiscal year.
       ``(g) Liabilities Against Fund.--When any agreement entered 
     into pursuant to this title after December 31, 1991, imposes 
     any contingent liability upon the United States, such 
     liability shall be considered an obligation against the 
     Fund.''.

     SEC. 8. DEFINITIONS.

       Section 702 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2152) is amended--
       (1) in paragraph (1), by striking ``military equipment 
     identified by the Secretary of Defense'' and inserting 
     ``equipment identified by the President'';
       (2) by striking paragraphs (2), (4), (9), and (18);
       (3) by redesignating paragraph (3) as paragraph (2);
       (4) by inserting after paragraph (2), as so redesignated, 
     the following:
       ``(3) Critical technology.--The term `critical technology' 
     includes any technology designated by the President to be 
     essential to the national defense.'';
       (5) by redesignating paragraphs (5) through (8) as 
     paragraphs (4) through (7), respectively;
       (6) in paragraph (6), as so redesignated--
       (A) in the paragraph heading, by striking ``defense'';
       (B) by striking ``domestic defense'' and inserting 
     ``domestic''; and
       (C) by striking ``graduated mobilization,'';
       (7) by redesignating paragraphs (10) and (11) as paragraphs 
     (8) and (9), respectively;
       (8) by inserting after paragraph (9), as so redesignated, 
     the following:
       ``(10) Guaranteeing agency.--The term `guaranteeing agency' 
     means a department or agency of the United States engaged in 
     procurement for the national defense.
       ``(11) Homeland security.--The term `homeland security' 
     includes 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.'';
       (9) in paragraph (12), by striking ``capacity'' and 
     inserting ``base'';
       (10) in paragraph (14), by striking ``military assistance 
     to any foreign nation'' and inserting ``military or critical 
     infrastructure assistance to any foreign nation, homeland 
     security''; and
       (11) in paragraph (16)--
       (A) in subparagraph (A), by striking ``or'' at the end;
       (B) in subparagraph (B), by striking the period and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(C) the movement of individuals and property by all modes 
     of civil transportation; or
       ``(D) other national defense programs and activities.''.

     SEC. 9. VOLUNTARY AGREEMENTS AND PLANS OF ACTION FOR NATIONAL 
                   DEFENSE.

       Section 708 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2158) is amended--
       (1) in subsection (c)--
       (A) in paragraph (1), by striking ``defense of the United 
     States'' and all that follows through the period and 
     inserting ``national defense.''; and
       (B) by adding at the end the following:
       ``(3) Upon a determination by the President, on a 
     nondelegable basis, that a specific voluntary agreement or 
     plan of action is necessary to meet national defense 
     requirements resulting from an event that degrades or 
     destroys critical infrastructure--
       ``(A) an individual that has been delegated authority under 
     paragraph (1) with respect to such agreement or plan shall 
     not be required to consult with the Attorney General or the 
     Federal Trade Commission under paragraph (2)(B); and
       ``(B) the President shall publish a rule in accordance with 
     subsection (e)(2)(B) and publish notice in accordance with 
     subsection (e)(3)(B) with respect to such agreement or plan 
     as soon as is practicable under the circumstances.'';
       (2) in subsection (f)(2)--
       (A) by striking ``two years'' each place that term appears 
     and inserting ``5 years''; and
       (B) by striking ``two-year'' and inserting ``5-year''; and
       (3) by striking subsection (n) and inserting the following:
       ``(n) Exemption From Advisory Committee Act Provisions.--
     Notwithstanding any other provision of law, the Federal 
     Advisory Committee Act (5 U.S.C. App.) and any other 
     provision of Federal law relating to advisory committees 
     shall not apply to--
       ``(1) the consultations referred to in subsection (c)(1); 
     or
       ``(2) any activity conducted under a voluntary agreement or 
     plan of action approved pursuant to this section that 
     complies with the requirements of this section.''.

     SEC. 10. EMPLOYMENT OF PERSONNEL; APPOINTMENT POLICIES; 
                   NUCLEUS EXECUTIVE RESERVE; USE OF CONFIDENTIAL 
                   INFORMATION BY EMPLOYEES; PRINTING AND 
                   DISTRIBUTION OF REPORTS.

       Section 710 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2160) is amended--
       (1) in subsection (b)--
       (A) in paragraph (2), by striking clause (iii);
       (B) by striking paragraph (4);
       (C) by redesignating paragraphs (5) through (8) as 
     paragraphs (4) through (7), respectively; and
       (D) in paragraph (6), as so redesignated, by striking ``At 
     least'' and all that follows through ``survey'' and inserting 
     ``The Director of the Office of Personnel Management shall 
     carry out a biennial survey of'';
       (2) in subsection (c), by striking the third sentence;
       (3) in subsection (d), by striking ``needed;'' and all that 
     follows through the period and inserting ``needed.''; and
       (4) in subsection (e)--
       (A) in the first sentence, by striking ``emergency'' and 
     inserting ``national defense emergency, as determined by the 
     President''; and
       (B) by striking the third sentence.

     SEC. 11. DEFENSE PRODUCTION ACT COMMITTEE.

       Section 722 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2171) is amended to read as follows:

     ``SEC. 722. DEFENSE PRODUCTION ACT COMMITTEE.

       ``(a) Committee Established.--There is established the 
     Defense Production Act Committee (in this section referred to 
     as the `Committee'), which shall advise the President on the 
     effective use of the authority under this Act by the 
     departments, agencies, and independent establishments of the 
     Federal Government to which the President has delegated 
     authority under this Act.
       ``(b) Membership.--
       ``(1) In general.--The members of the Committee shall be--
       ``(A) the head of each Federal agency to which the 
     President has delegated authority under this Act; and
       ``(B) the Chairperson of the Council of Economic Advisors.
       ``(2) Chairperson.--The President shall designate 1 member 
     of the Committee as the Chairperson of the Committee.
       ``(c) Executive Director.--
       ``(1) In general.--The President shall appoint an Executive 
     Director of the Defense Production Act Committee (in this 
     section referred to as the `Executive Director'), who shall--
       ``(A) be responsible to the Chairperson of the Committee; 
     and
       ``(B) carry out such activities relating to the Committee 
     as the Chairperson may determine.
       ``(2) Appointment.--The appointment by the President shall 
     not be subject to the advice and consent of the Senate.
       ``(3) Compensation.--For pay periods beginning on or after 
     the date on which each Chairperson is appointed, funds for 
     the pay of the Executive Director shall be paid from 
     appropriations to the salaries and expenses account of the 
     department or agency of the Chairperson of the Committee. The 
     Executive Director shall be compensated at a rate of pay 
     equivalent to that of a Deputy Assistant Secretary (or a 
     comparable position) of the Federal agency of the Chairperson 
     of the Committee.
       ``(d) Report.--Not later than the end of the first quarter 
     of each calendar year, the Committee shall submit to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives a report signed by each member of the 
     Committee that contains--

[[Page 21796]]

       ``(1) a review of the authority under this Act of each 
     department, agency, or independent establishment of the 
     Federal Government to which the President has delegated 
     authority under this Act;
       ``(2) recommendations for the effective use of the 
     authority described in paragraph (1) in a manner consistent 
     with the statement of policy under section 2(b);
       ``(3) recommendations for legislation, regulations, 
     executive orders, or other action by the Federal Government 
     necessary to improve the use of the authority described in 
     paragraph (1); and
       ``(4) recommendations for improving information sharing 
     between departments, agencies, and independent establishments 
     of the Federal Government relating to all aspects of the 
     authority described in paragraph (1).
       ``(e) Federal Advisory Committee Act.--The provisions of 
     the Federal Advisory Committee Act (5 U.S.C. App.) shall not 
     apply to the Committee.''.

     SEC. 12. ANNUAL REPORT ON IMPACT OF OFFSETS.

       (a) Annual Report.--Title VII of the Defense Production Act 
     of 1950 (50 U.S.C. App. 2151 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 723. ANNUAL REPORT ON IMPACT OF OFFSETS.

       ``(a) Report Required.--
       ``(1) In general.--The President shall submit to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives, a detailed annual report on the impact of 
     offsets on the defense preparedness, industrial 
     competitiveness, employment, and trade of the United States.
       ``(2) Duties of the secretary of commerce.--The Secretary 
     of Commerce (hereafter in this subsection referred to as the 
     `Secretary') shall--
       ``(A) prepare the report required by paragraph (1);
       ``(B) consult with the Secretary of Defense, the Secretary 
     of the Treasury, the Secretary of State, and the United 
     States Trade Representative in connection with the 
     preparation of such report; and
       ``(C) function as the President's Executive Agent for 
     carrying out this section.
       ``(b) Interagency Studies and Related Data.--
       ``(1) Purpose of report.--Each report required under 
     subsection (a) shall identify the cumulative effects of 
     offset agreements on--
       ``(A) the full range of domestic defense productive 
     capability (with special attention paid to the firms serving 
     as lower-tier subcontractors or suppliers); and
       ``(B) the domestic defense technology base as a consequence 
     of the technology transfers associated with such offset 
     agreements.
       ``(2) Use of data.--Data developed or compiled by any 
     agency while conducting any interagency study or other 
     independent study or analysis shall be made available to the 
     Secretary to facilitate the execution of the Secretary's 
     responsibilities with respect to trade offset and 
     countertrade policy development.
       ``(c) Notice of Offset Agreements.--
       ``(1) In general.--If a United States firm enters into a 
     contract for the sale of a weapon system or defense-related 
     item to a foreign country or foreign firm and such contract 
     is subject to an offset agreement exceeding $5,000,000 in 
     value, such firm shall furnish to the official designated in 
     the regulations promulgated pursuant to paragraph (2) 
     information concerning such sale.
       ``(2) Regulations.--The information to be furnished under 
     paragraph (1) shall be prescribed in regulations promulgated 
     by the Secretary. Such regulations shall provide protection 
     from public disclosure for such information, unless public 
     disclosure is subsequently specifically authorized by the 
     firm furnishing the information.
       ``(d) Contents of Report.--
       ``(1) In general.--Each report under subsection (a) shall 
     include--
       ``(A) a net assessment of the elements of the industrial 
     base and technology base covered by the report;
       ``(B) recommendations for appropriate remedial action under 
     the authority of this Act, or other law or regulations;
       ``(C) a summary of the findings and recommendations of any 
     interagency studies conducted during the reporting period 
     under subsection (b);
       ``(D) a summary of offset arrangements concluded during the 
     reporting period for which information has been furnished 
     pursuant to subsection (c); and
       ``(E) a summary and analysis of any bilateral and 
     multilateral negotiations relating to the use of offsets 
     completed during the reporting period.
       ``(2) Alternative findings or recommendations.--Each report 
     required under this section shall include any alternative 
     findings or recommendations offered by any departmental 
     Secretary, agency head, or the United States Trade 
     Representative to the Secretary.
       ``(e) Utilization of Annual Report in Negotiations.--The 
     findings and recommendations of the reports required by 
     subsection (a), and any interagency reports and analyses 
     shall be considered by representatives of the United States 
     during bilateral and multilateral negotiations to minimize 
     the adverse effects of offsets.''.
       (b) Technical and Conforming Amendments.--
       (1) Defense production act amendments of 1992.--Section 
     123(c)(1)(C) of the Defense Production Act Amendments of 1992 
     (50 U.S.C. App. 2099 note) is amended by striking ``section 
     309(a) of the Defense Production Act of 1950 (50 U.S.C. App. 
     2099(a))'' and inserting ``section 723(a) of the Defense 
     Production Act of 1950''.
       (2) American homeownership and economic opportunity act of 
     2000.--Section 1102(2) of the American Homeownership and 
     Economic Opportunity Act of 2000 (31 U.S.C. 1113 note) is 
     amended by striking ``309 of the Defense Production Act of 
     1950 (50 U.S.C. App. 2099)'' and inserting ``723 of the 
     Defense Production Act of 1950''.
       (3) Defense production act amendments of 2003.--Section 
     7(a) of the Defense Production Act Amendments of 2003 (50 
     U.S.C. App. 2099 note) is amended by striking ``section 
     309(a) of the Defense Production Act of 1950 (50 U.S.C. App. 
     2099(a))'' and inserting ``section 723(a) of the Defense 
     Production Act of 1950''.

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