Food & Agriculture Quarterly June 2020 - Page 7

FOOD & AGRICULTURE QUARTERLY | JUNE 2020 continue operations consistent with the guidance issued by the CDC and OSHA. President Trump further delegated his authority under the DPA to the Secretary of Agriculture to “determine the proper nationwide priorities and allocation of all the materials, services, and facilities necessary to ensure the continued supply of meat and poultry[.]” President Trump’s authority under the Act is quite broad. The Defense Production Act of 1950 (the “DPA”), 50 U.S.C. 4501 et seq., was enacted during the Korean War era and 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[.]” Specifically, the President is authorized to (1) require that orders from the government take priority over performance under any other contracts or orders, and (2) “allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.” Further, the President is authorized to take measures to prevent hoarding and price-gouging of scarce materials. The President is also authorized to offer direct loans or loan guarantees to private businesses (subject to proper appropriations) to “maintain…and expand the productive capacities of domestic sources for critical components… materials and industrial resources[.]” The President’s powers to issue such loan guarantees are expanded during a period of national emergency. Likewise, the President is authorized to make purchases and purchase commitments and to install equipment in governmental and private industrial facilities to “create, maintain, protect, expand, or restore domestic industrial base capabilities[.]” that the agreement or plan was created and implemented in good faith. Nonetheless, such agreements and plans are subject to ongoing monitoring by the Attorney General and the Chair of the FTC. The President’s powers under the DPA are not unlimited, however. The DPA includes a “sunset” provision which provides that the vast majority of the President’s DPA powers outlined in Titles I, III, and VII of the Act will terminate on Sept. 30, 2025 unless Congress reinstates them. While President Trump’s use of the DPA is somewhat novel, the Defense Department has routinely used the DPA since its enactment in 1950 in order to prioritize the fulfillment of necessary contracts, including for Air Force One and other armored military vehicles. Further, the Pentagon uses the DPA to place approximately 300,000 orders per year for military-related equipment. Accordingly, as the COVID-19 crisis continues to develop, Americans can expect continued and increased usage of the DPA to address national shortfalls and industrial crises. Arlene Boruchowitz is an associate and focuses her practice on complex commercial litigation. She can be reached at 614.227.2032 or [email protected] Perhaps most notably, under the DPA the President or his delegate can approve voluntary agreements or plans of action among representatives of industry, including the agricultural industry, if such agreements and plans are designed to help provide for the national defense (which is defined to include emergency preparedness activities). Participants in such agreements and plans of action are provided with a statutory defense to any criminal or civil antitrust suits arising from the agreement or plan, provided PAGE 7