[House Report 107-173]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-173
======================================================================
DEFENSE PRODUCTION ACT AMENDMENTS OF 2001
_______
July 30, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 2510]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 2510) to extend the expiration date of the Defense
Production Act of 1950, and for other purposes, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Committee Consideration.......................................... 2
Committee Votes.................................................. 2
Committee Oversight Findings..................................... 4
Performance Goals and Objectives................................. 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Committee Cost Estimate.......................................... 4
Congressional Budget Office Estimate............................. 4
Federal Mandates Statement....................................... 6
Advisory Committee Statement..................................... 6
Constitutional Authority Statement............................... 6
Applicability to Legislative Branch.............................. 6
Section-by-Section Analysis of the Legislation................... 6
Changes in Existing Law Made by the Bill, as Reported............ 7
Purpose and Summary
H.R. 2510, the ``Defense Production Act Amendments of
2001'' extends the effective termination date for expiring
sections of the Defense Production Act of 1950 (DPA) by three
years, from September 30, 2001, to September 30, 2004. The
legislation provides for the continued authorization of
appropriations to carry out title III functions, and makes a
number of technical corrections to allow for proper sectional
cross references, consistent term usage throughout the Act, and
corrects references to the House Committee on Financial
Services.
Background and Need for Legislation
The Defense Production Act was enacted in 1950 to mobilize
U.S. productive capacity after the outbreak of the Korean War.
The Act authorizes the utilization of economic tools to provide
prompt, adequate and uninterrupted supplies of industrial
resources to satisfy both national security needs and needs
arising from civil emergencies. Dramatically scaled back from
its original form, the DPA is periodically amended to extend
the expiration date of its critical authorities and modernize
those authorities to respond to changing preparedness needs.
Unless the Act is reauthorized, the President may find
himself without these important authorities in a time of need.
For instance, the DPA expired on September 30, 1990 during
Operation: Desert Shield. In order to give the President needed
authority during this time of crisis, Congress passed an
emergency extension of the Act on October 20, 1990, which was
followed by a longer, 3-year extension.
The Federal Emergency Management Administration (FEMA), on
behalf of the Administration, sent a request for proposed
legislation to the House Committee on Financial Services on
June 29, 2001. The legislation was introduced by request on
July 17, 2001.
Hearings
The Subcommittee on Domestic Monetary Policy, Technology,
and Economic Growth held a hearing on the reauthorization of
the Defense Production Act of 1950 on June 13, 2001. The
subcommittee received testimony from the Departments' of
Defense, Commerce, Energy, and the Federal Emergency Management
Administration.
Committee Consideration
On July 25, 2001, the Committee met in open session and
ordered H.R. 2510 reported to the House, without amendment,
with a favorable recommendation by a voice vote, a quorum being
present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Oxley to report the bill to the House with a
favorable recommendation was agreed to by a voice vote. The
following amendments were considered:
An amendment by Mr. Sherman, no. 1, changing the length of
the reauthorization from 3 years to 2 years, was not agreed to
by a record vote of 17 yeas and 34 nays (Record vote no. 5).
The names of Members voting for and against follow:
YEAS NAYS
Mr. Paul Mr. Oxley
Mr. Frank Mrs. Roukema
Ms. Waters Mr. Bereuter
Mr. Sanders Mr. King
Mr. Gutierrez Mr. Royce
Mr. Watt of North Carolina Mr. Lucas of Oklahoma
Ms. Carson of Indiana Mr. Ney
Mr. Sherman Mrs. Kelly
Mr. Meeks of New York Mr. Gillmor
Ms. Lee Mr. Cox
Mr. Inslee Mr. Weldon of Florida
Ms. Schakowsky Mr. Ryun of Kansas
Mr. Moore Mr. Riley
Mr. Gonzalez Mr. Ose
Mrs. Jones of Ohio Mrs. Biggert
Mr. Capuano Mr. Green of Wisconsin
Mr. Hinojosa Mr. Toomey
Mr. Gary G. Miller of California
Mr. Cantor
Mr. Grucci
Ms. Hart
Mrs. Capito
Mr. Rogers of Michigan
Mr. Tiberi
Mr. LaFalce
Mrs. Maloney of New York
Mr. Ackerman
Mr. Maloney of Connecticut
Mr. Mascara
Mr. Lucas of Kentucky
Mr. Shows
Mr. Crowley
Mr. Israel
Mr. Ross
An amendment by Mr. Sherman, no. 2 (as modified by
unanimous consent), authorizing the President to establish
price controls for retail electricity in Western States, was
not agreed to by a record vote of 25 yeas and 28 nays (Record
vote no. 6). The names of Members voting for and against
follow:
YEAS NAYS
Mr. LaFalce Mr. Oxley
Mr. Frank Mrs. Roukema
Ms. Waters Mr. Bereuter
Mr. Sanders Mr. Castle
Mrs. Maloney of New York Mr. King
Mr. Gutierrez Mr. Lucas of Oklahoma
Mr. Watt of North Carolina Mr. Ney
Ms. Hooley of Oregon Mrs. Kelly
Ms. Carson of Indiana Mr. Paul
Mr. Sherman Mr. Gillmor
Mr. Meeks of New York Mr. Cox
Ms. Lee Mr. Weldon of Florida
Mr. Mascara Mr. Ryun of Kansas
Mr. Inslee Mr. Riley
Ms. Schakowsky Mr. Ose
Mr. Moore Mrs. Biggert
Mr. Gonzalez Mr. Green of Wisconsin
Mrs. Jones of Ohio Mr. Toomey
Mr. Capuano Mr. Gary G. Miller of California
Mr. Ford Mr. Cantor
Mr. Hinojosa Mr. Grucci
Mr. Shows Ms. Hart
Mr. Crowley Mrs. Capito
Mr. Israel Mr. Rogers of Michigan
Mr. Ross Mr. Tiberi
Mr. Bentsen
Mr. Maloney of Connecticut
Mr. Lucas of Kentucky
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a hearing and made
findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The legislation will extend and improve the President's
emergency powers under the Defense Production Act of 1950.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that this
legislation would result in no new budget authority,
entitlement authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 27, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared to enclosed cost estimate for H.R. 2510, the Defense
Production Act Amendments of 2001.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Sam
Papenfuss (for federal costs) and R. Williams Thomas (for the
private-sector impact).
Sincerely,
Steven M. Liberman
(For Dan L. Crippen, Director).
Enclosure.
H.R. 2510--Defense Production Act Amendments of 2001
H.R. 2510 would extend the authorities of the Defense
Production Act of 1950 (DPA) for an additional three years
through September 30, 2004, and would authorize all necessary
appropriations for that period. The DPA provides the President
the authority to require preferential performance on contracts
and orders to meet approved national defense requirements; and
to allocate materials, services and facilities as necessary to
promote the national defense in a major national emergency
(Title I); authorizes loan guarantees, direct loans, and
purchase guarantees for those goods necessary for national
defense (Title III); and allows the President to void
international mergers that would adversely affect national
security (Title VII). These authorities are set to expire on
September 30, 2001. CBO estimates that implementing H.R. 2510
would cost about $85 million over the 2002-2006 period,
assuming appropriation of the necessary amounts. Because the
bill would not affect direct spending or receipts, pay-as-you-
go procedures would not apply.
The bill would authorize the appropriation of such sums as
necessary for direct loans and loan guarantees under Title III
to correct for shortfalls in domestic industrial capacity. In
recent years, the Department of Defense (DoD) has used the
authority for purchase guarantees--that is, the authority to
commit to buying a specific quantity of a defense good if a
manufacturer cannot sell it elsewhere. Appropriations for
purchase guarantees have averaged about $20 million a year over
the 1986-2001 period, ranging from $29 million in 1986 to $100
million in 1994 to $3 million in 2001. No money was
appropriated for this purpose in 1992, 1993, or over the 1996-
1999 period. The Administration has requested an appropriation
of $50 million for 2002. Because of the sharp variations in
annual funding, specific yearly amounts for the indefinite
authorization are difficult to project.
Based on information from DoD and the historical average
over the past 16 years, CBO estimates that extending the
authorization would require about $90 million in appropriations
for the three-year period covered by the bill. Based on
historical spending patterns, CBO estimates outlays from that
funding would total less than $75 million over the 2002-2006
period. In addition, the administrative support to carry out
the DPA would require appropriated funds of about $4 million a
year, split between DoD, the Federal Emergency Management
Agency, and the Department of Commerce.
To date, no funds have been appropriated for other
provisions of the DPA. As a result, CBO has no basis for
estimating any additional costs that could be triggered by
extending its authorization for three more years.
Section 4 of the Unfunded Mandates Reform Act excludes from
the application of that act any legislative provisions that are
necessary for the national security. CBO has determined that
the provisions of the DPA would fall under that exclusion.
The CBO staff contact for federal costs in Sam Papenfuss.
The CBO staff contact for the private-sector impact is R.
William Thomas. This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States); Article 1, section 8,
clause 3 (relating to the power to regulate interstate
commerce); Article 1, section 8, clause 5 (relating to the
power to coin money and regulate the value thereof); and
Article I, section 8, clause 18 (relating to making all laws
necessary and proper for carrying into execution powers vested
by the Constitution in the government of the United States).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section establishes the short title of the bill, the
``Defense Production Act Amendments of 2001.''
Section 2. Extension of the Defense Production Act of 1950
This section amends section 717(a) of the DPA to extend the
termination date for expiring sections of the Act by three
years from September 30, 2001, to September 30, 2004.
Section 3. Authorization of appropriations
This section amends section 711(b) of the DPA to authorize
appropriations for fiscal years 2002 through 2004 to carry out
title III of the Act. Current law authorizes appropriations for
fiscal years 1996 through 2001 to carry out title III.
Section 4. Technical amendments
This section makes several technical amendments to the DPA.
It amends the Act to correct incorrect cross-references in
sections 301(a) and 304(b), makes the language of sections
301(3) and 303(a) consistent with the other sections of the
Act, and updates a reference to the Committee on Financial
Services.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
DEFENSE PRODUCTION ACT OF 1950
* * * * * * *
TITLE III--EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY
Sec. 301. (a)(1) In order to expedite production and
deliveries or services under Government contracts, the
President may authorize, subject to such regulations as he may
prescribe, the Department of Defense, the Department of Energy,
the Department of Commerce, and such other agencies of the
United States engaged in procurement for the national defense
as he may designate (herein-after referred to as ``guaranteeing
agencies'') without regard to provisions of law relating to the
making, performance, amendment, or modification of contracts,
to guarantee in whole or in part any public or private
financing institution (including any Federal Reserve bank), by
commitment to purchase, agreement to share losses, or
otherwise, against loss of principal or interest on any loan,
discount or advance, or on any commitment in connection
therewith, which may be made by such financing institution for
the purpose of financing any contractor, subcontractor, or
other person in connection with the performance of any contract
or other operation deemed by the guaranteeing agency to be
necessary to expedite or expand production and deliveries or
services under Government contracts for the procurement of
industrial resources or critical technology items essential to
the national defense, or for the purpose of financing any
contractor, subcontractor, or other person in connection with
or in contemplation of the termination, in the interest of the
United States, of any contract made for the national defense;
but no small-business concern (as defined in section [714(a)(1)
of this Act] 702(16)) shall be held ineligible for the issuance
of such a guaranty by reason of alternative sources of supply.
* * * * * * *
(e)(1)(A) Except as provided in subparagraph (D), a guarantee
may be made under this section only if the [industrial resource
shortfall] industrial resource or critical technology item
shortfall which such guarantee is intended to correct has been
identified in the Budget of the United States, or amendments
thereto, submitted to the Congress, accompanied by a statement
from the President demonstrating that the budget submission is
in accordance with the provisions of subsection (a)(3) of this
section.
(B) Any such guarantee may be made only after 60 days have
elapsed after such [industrial resource shortfall] industrial
resource or critical technology item shortfall has been
identified pursuant to subparagraph (A).
(C) If the making of any guarantee or guarantees to correct
an [industrial resource shortfall] industrial resource or
critical technology item shortfall would cause the aggregate
outstanding amount of all guarantees for such [industrial
resource shortfall] industrial resource or critical technology
item shortfall to exceed $50,000,000, any such guarantee or
guarantees may be made only if specifically authorized by law.
(D) The requirements of subparagraphs (A),
(B), and (C) may be waived--
(i) * * *
(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) The authority conferred by this section shall not be used
primarily to prevent the financial insolvency or bankruptcy of
any person, unless
(A) * * *
(B) a copy of such certification, together with a
detailed justification thereof, is transmitted to the
Congress and to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the [Committee on
Banking, Finance and Urban Affairs of the House of
Representatives] Committee on Financial Services of the
House of Representatives at least ten days prior to the
exercise of that authority for such use.
* * * * * * *
Sec. 303. (a) Presidential Provisions.--
(1) * * *
* * * * * * *
(7) Waiver.--The requirements of paragraphs (1)
through (6) may be waived--
(A) * * *
(B) 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.
* * * * * * *
SEC. 304. DEFENSE PRODUCTION ACT FUND.
(a) * * *
(b) Moneys in Fund.--There shall be credited to the Fund--
(1) all moneys appropriated for the Fund, as
authorized by section [711(c)] 711(b); and
* * * * * * *
Sec. 309. (a) Annual Report on Impact of Offsets.--
(1) Report required.--Not later than 18 months after
the date of the enactment of the Defense Production Act
Amendments of 1984, and annually thereafter, the
President shall submit to the [Committee on Banking,
Finance and Urban Affairs of the House of
Representatives] Committee on Financial Services of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate, a detailed
report on the impact of offsets on the defense
preparedness, industrial competitiveness, employment,
and trade of the United States.
* * * * * * *
TITLE VII--GENERAL PROVISIONS
Sec. 711. (a) * * *
(b) Title III Authorization.--There are authorized to be
appropriated for each of fiscal years [1996 through 2001] 2002
through 2004, such sums as may be necessary to carry out title
III.
* * * * * * *
Sec. 717. (a) Title I (except section 104), title III, and
title VII (except sections 708 and 721), and all authority
conferred thereunder, shall terminate at the close of September
30, [2001] 2004: Provided, That all authority hereby or
hereafter extended under title III of this Act shall be
effective for any fiscal year only to such extent or in such
amounts as are provided in advance in appropriation Acts.
Section 714 of this Act, and all authority conferred
thereunder, shall terminate at the close of July 31, 1953.
Section 104, title II, and title VI of this Act, and all
authority conferred thereunder shall terminate at the close of
June 30, 1953. Title IV and V of this Act, and all authority
conferred thereunder, shall terminate at the close of April 30,
1953.
* * * * * * *