[Senate Report 108-156]
[From the U.S. Government Publishing Office]
Calendar No. 294
108th Congress Report
SENATE
1st Session 108-156
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DEFENSE PRODUCTION REAUTHORIZATION ACT OF 2003
_______
September 30 (legislative day, September 29), 2003.--Ordered to be
printed
_______
Mr. Shelby, from the Committee on Banking, Housing, and Urban Affairs,
submitted the following
R E P O R T
[To accompany S. 1680]
The Committee on Banking, Housing, and Urban Affairs,
having had under consideration an original bill to reauthorize
the Defense Production Act of 1950, and for other purposes,
having considered the same, reports favorably thereon and
recommends that the bill do pass.
I. PURPOSE
The Defense Production Reauthorization Act of 2003
reauthorizes the Defense Production Act of 1950 for five years,
until September 30, 2008, and amends the Defense Production Act
of 1950 by incorporating into its text increased emphasis on
the threat to U.S. national and economic security from
terrorism. In addition, the bill makes explicit authority to
use the Defense Production Act to protect critical
infrastructure. Finally, the reauthorizing legislation
clarifies the authority of the Executive Branch to collect
information required to provide assessments of the nation's
industrial base for national defense.
II. BACKGROUND AND DESCRIPTION OF BILL
The Defense Production Act of 1950 authorizes the President
to prioritize and allocate contracts with private industry for
the purpose of promoting the national defense. In addition to
the Act's authorities for prioritizing and allocating federal
contracts, it also provides the Government the legal authority
to guarantee financing for the recapitalization of private
industry consistent with national security requirements. Over
the years, the Act's authorities have been expanded to include
crises resulting from natural disasters and from man-caused
events not necessarily related to or categorized as an armed
attack on the United States. Most notably, in 1994, the Robert
T. Stafford Disaster Relief and Emergency Assistance Act
(hereafter, The Stafford Act) was formally incorporated into
the Defense Production Act of 1950, thereby ensuring that the
underlying legal authorities would be available for crises
other than direct military threats to the United States.
Since the terrorist attacks on U.S. embassies in East
Africa in 1998, the October 2000attack on the USS Cole in the
port of Aden, and the September 11, 2001, attacks on the World Trade
Center and the Pentagon, there has been increased emphasis in U.S.
national security planning on the threat of continued terrorist
attacks. Because terrorists seek out vulnerabilities in their intended
victims when planning to strike, there has been increasing focus on the
vulnerability of this nation's telecommunications systems, financial
and banking networks, transportation systems, power grids, food and
water supplies, and other elements of what is referred to as the
nation's critical infrastructure.
During a June 5, 2003, public hearing held by the Committee
on Banking, Housing, and Urban Affairs, witnesses from the
Administration testified that, in the view of the departments
they represented, the Defense Production Act's authorities do
apply to critical infrastructure protection and restoration. In
response to a question as to whether the authorities of the
Defense Production Act can be used to protect critical
infrastructures, R. David Paulison, Director, Emergency
Preparedness Division, U.S. Department of Homeland Security,
stated: ``That is our understanding. It can be either civil or
military. The Department of Defense uses it for military, and I
think the other agencies here would use it for civil
emergencies or disasters within the United States.''
The Committee agreed with the view expressed by Mr.
Paulison and other Administration witnesses and believed it
important to make this authority explicit in the statute. In
reaching this judgment, the Committee consulted the 1997
recommendations of the President's Commission on Critical
Infrastructure Protection as well as the analysis contained in
the President's Report to Congress on Modernization of the
Authorities of the Defense Production Act, also from 1997. The
former, in its comprehensive look at statutory and
organizational changes it deemed important for the future
protection of the nation's critical infrastructure recommended
the following:
Congress could consider amending the DPA [Defense
Production Act] Declaration of Policy to include a
finding of how critical infrastructures are essential
to national security.
The latter report, mandated by Congress, stated that, since
the 1994 inclusion of the Stafford Act:
Consequently, DPA authorities are available for meeting
requirements in a civil disaster--such as a
catastrophic earthquake or a terrorist attack [Emphasis
added]
The Report to Congress stated that ``further amendments are
required to have the declaration ofpolicy conform with evolving
national defense policies.'' Combined with the conclusion of the
Commission on Critical Infrastructure Protection, the Committee was
convinced that amendments to the Defense Production Act were warranted.
For this reason, the accompanying legislation amends the Findings and
Declaration of Policy consistent with Committee concerns regarding
critical infrastructure protection.
During consideration of the bill, the Committee accepted by
voice vote an amendment by Senator Bennett of Utah to change
the definition of ``national defense'' in the Defense
Production Act to include the phrase ``critical infrastructure
protection and restoration.'' The Committee accepted the
Senator's argument that this change was needed to ensure the
Defense Production Act authorities are available for use in
preparing for and responding to attacks on the nation's
critical infrastructure. In addition, a definition of
``critical infrastructure'' is added to the Act's text.
Under the terms of the Defense Production Act (Section
303(a)(6)(C)/50 USC 2093(a)(6)(C)), there is a maximum of $50
million that can be allocated for individual programs. The
Department of Defense has an ongoing program to recapitalize
the nation's industrial base for radiation-hardened
electronics. The fiscal year 2003 National Defense
Authorization Act provided the department authority to allocate
up to $106,000,000. In its budget request for fiscal year 2004,
the Department of Defense requested additional budget
authority, up to an aggregate total of $200,000,000, to
complete the program. The Committee agrees that the additional
funding is warranted and the accompanying legislation provides
the requested budget authority.
While the Committee agrees that additional funding is
needed to recapitalize the nation's industrial base for base
for radiation-hardened electronics, it is concerned regarding
the Department of Defense's assessment of the state of the
industrial base for these components. The department briefed
Committee staff that two companies exist with the requisite
capabilities. The Committee believes there may be more
companies that possess the requisite capabilities, based upon a
review of the Defense Department's recent history of awarding
contracts for radiation-hardened electronic components. For
this reason, the bill includes a requirement that the
department report within six months of passage of the Defense
Production Act of 2003 on its findings regarding that
industrial base.
The Department of Defense also requested that Section 707
of the Defense Production Act, which indemnifies contractors
against damages or penalties resulting from lawsuits filed as a
result of the contractors' compliance with U.S. Government
directives issued under Defense Production Act authorities, be
made permanent. The Department justifies this request on the
basis of its experiences when Civil Reserve Air Fleet carriers
were exposed to potential liability from commercial customers
after they were mobilized in support of Operations Desert
Shield and Desert Storm despite the expiration of appropriate
legal authorities. The Committee agrees that Section 707 should
be made permanent.The Department of Commerce requested that a
provision be added to the bill clarifying its authority to conduct
investigations for the purpose of obtaining information necessary to
conduct assessments on the capabilities of the United States industrial
base to support national defense. Under Section 705 of the Defense
Production Act, the department is provided authority to obtain
information relative to the state of the defense industrial base.
Additionally, Executive Order 12656 requires the Secretary of Commerce
``to perform industry analyses to assess capabilities of the commercial
industrial base to support the national defense . . .'' The department
believes that the clarification it requested will remove any ambiguity
regarding its authority to conduct industry studies as required. The
Committee agrees that the requested amendment to Section 705 is
warranted.
III. HEARINGS
The Committee on Banking, Housing, Urban Affairs held a
public hearing on reauthorization of the Defense Production Act
on June 5, 2003. The following witnesses testified: Mr. Ronald
Sega, Director, Office of Defense Research and Engineering,
Department of Defense; Ms. Suzanne Patrick, Deputy Under
Secretary of Defense for Industrial Policy, Department of
Defense; Mr. Karan Bhatia, Deputy Under Secretary of Commerce
for Industry and Security, Department of Commerce; Mr. R. David
Paulison, Director, Preparedness, Emergency and Response
Directorate, Department of Homeland Security; and Ms. Denise
Swink, Acting Director for Energy Assurance, Department of
Energy.
IV. COMMITTEE CONSIDERATION
The Committee on Banking, Housing, and Urban Affairs met in
open session on September 23, 2003, and ordered the bill
reported, as amended.
V. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Section 11(b) of rule XXVI of the Standing Rules of the
Senate, and Section 403 of the Congressional Budget Impoundment
and Control Act, require that each committee report on a bill
contain a statement estimating the cost of the proposed
legislation. The Congressional Budget Office has provided the
following cost estimate and estimate of costs of private-sector
mandates.
VI. REGULATORY IMPACT STATEMENT
Because the legislation reauthorizes existing statutes,
while providing no new authorities, the Committee has
determined that a report on the regulatory impact of the
legislation is not warranted. Further, because the existing
statutes expire on September 30, 2003, the Committee believes
that the requirement for their uninterrupted reauthorization
supercedes the benefit of any analysis that would otherwise be
performed pursuant to rule XXVI(b), were such analysis deemed
warranted.