Defense Production Act of 1950, as amended

THE DEFENSE PRODUCTION ACT
OF 1950, AS AMENDED
[50 U.S.C. App. § 2061 et seq.]
Current through P.L. 111-67, enacted September 30, 2009

October 2009

THE DEFENSE PRODUCTION ACT OF 1950,
AS AMENDED
[50 U.S.C. App. § 2061 et seq.]

TABLE OF CONTENTS
Declaration of Policy

………...……….

1

Title I- Priorities and Allocations

………...……….

1

Title II- Authority to Requisition and Condemn –
(Repealed)

………...……….

8

Title III- Expansion of Productive Capacity and Supply ………...……….

8

Title IV- Price and Wage Stabilization – (Repealed)

………...……….

17

Title V- Settlement of Labor Disputes – (Repealed)

………...……….

18

Title VI- Control of Consumer and Real Estate Credit – ………...……….
(Repealed)

18

Title VII- General Provisions

18

………...……….

Sec. 1. SHORT TITLE [50 U.S.C. App. § 2061]
This Act [50 U.S.C. App. § 2061-2171], divided into titles, may be cited as the “Defense
Production Act of 1950”.
Sec. 2. DECLARATION OF POLICY [50 U.S.C. App. § 2062]
(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

1

(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 [50 U.S.C. App. §
2061-2171] 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 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

(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 [50 U.S.C. App. § 20612171] should be undertaken with due consideration for promoting efficiency and competition;
(4) in providing United States Government financial assistance under this Act [50
U.S.C. App. § 2061-2171] 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 [50 U.S.C. App. § 2061-2171] 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 [50 U.S.C. App. § 2061-2171] 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.
TITLE I – PRIORITIES AND ALLOCATIONS
Sec. 101. PRIORITY IN CONTRACTS AND ORDERS [50 U.S.C. App. § 2071]
(a) Allocation of Materials, Services, and Facilities
The President is authorized (1) to require that performance under contracts or orders (other
than contracts of employment) which he deems necessary or appropriate to promote the
national defense shall take priority over performance under any other contract or order, and,
for the purpose of assuring such priority, to require acceptance and performance of such
contracts or orders in preference to other contracts or orders by any person he finds to be
capable of their performance, and (2) to allocate materials, services, and facilities in such

3

manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to
promote the national defense.
(b) Critical and Strategic Materials
The powers granted in this section shall not be used to control the general distribution of any
material in the civilian market unless the President finds (1) that such material is a scarce and
critical material essential to the national defense, and (2) that the requirements of the national
defense for such material cannot otherwise be met without creating a significant dislocation of
the normal distribution of such material in the civilian market to such a degree as to create
appreciable hardship.
(c) Domestic Energy; Materials, Equipment, and Services
(1) Notwithstanding any other provision of this Act [50 U.S.C. App. § 2061-2171], the
President may, by rule or order, require the allocation of, or the priority performance under
contracts or orders (other than contracts of employment) relating to, materials, equipment, and
services in order to maximize domestic energy supplies if he makes the findings required by
paragraph (3) of this subsection.
(2) The authority granted by this subsection may not be used to require priority
performance of contracts or orders, or to control the distribution of any supplies of materials,
services, and facilities in the marketplace, unless the President finds that—
(A) such materials, services, and facilities are scarce, critical, and essential—
(i) to maintain or expand exploration, production, refining, transportation;
(ii) to conserve energy supplies; or
(iii) to construct or maintain energy facilities; and
(B) maintenance or expansion of exploration, production, refining, transportation,
or conservation of energy supplies or the construction and maintenance of energy facilities
cannot reasonably be accomplished without exercising the authority specified in paragraph (1)
of this subsection.
(3) During any period when the authority conferred by this subsection is being
exercised, the President shall take such action as may be appropriate to assure that such
authority is being exercised in a manner which assures the coordinated administration of such
authority with any priorities or allocations established under subsection (a) of this section and
in effect during the same period.
(d) The head of each Federal agency to which the President delegates authority under this
section shall—

4

(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. 102. HOARDING OF DESIGNATED SCARCE MATERIALS [50 U.S.C. App. §
2072]
In order to prevent hoarding, no person shall accumulate (1) in excess of the reasonable
demands of business, personal, or home consumption, or (2) for the purpose of resale at prices
in excess of prevailing market prices, materials which have been designated by the President
as scarce materials or materials the supply of which would be threatened by such
accumulation. The President shall order published in the Federal Register, and in such other
manner as he may deem appropriate, every designation of materials the accumulation of
which is unlawful and any withdrawal of such designation. In making such designations the
President may prescribe such conditions with respect to the accumulation of materials in
excess of the reasonable demands of business, personal, or home consumption as he deems
necessary to carry out the objectives of this Act [50 U.S.C. App. § 2061-2171]. This section
shall not be construed to limit the authority contained in sections 101 and 704 of this Act [50
U.S.C. App. § 2061-2171] [50 U.S.C. App. § 2071 and 2154].
Sec. 103. PENALTIES [50 U.S.C. App. § 2073]
Any person who willfully performs any act prohibited, or willfully fails to perform any act
required, by the provisions of this title or any rule, regulation, or order thereunder, shall, upon
conviction, be fined not more than $10,000 or imprisoned for not more than one year, or both.
Sec. 104. LIMITATION ON ACTIONS WITHOUT CONGRESSIONAL
AUTHORIZATION [50 U.S.C. App. § 2074]
(a) Wage or Price Controls
No provision of this Act [50 U.S.C. App. § 2061-2171] shall be interpreted as providing for
the imposition of wage or price controls without the prior authorization of such action by a
joint resolution of Congress.
(b) Chemical or Biological Weapons
No provision of title I of this Act [50 U.S.C. App. § 2061-2171] shall be exercised or
interpreted to require action or compliance by any private person to assist in any way in the
production of or other involvement in chemical or biological warfare capabilities, unless
authorized by the President (or the President’s designee who is serving in a position at level I

5

of the Executive Schedule in accordance with section 5312 of title 5, United States Code)
without further redelegation.
Sec. 105. PRESIDENTIAL POWER TO RATION GASOLINE AMONG CLASSES OF
END-USERS UNAFFECTED [50 U.S.C. App. § 2075]
Nothing in this Act [50 U.S.C. App. § 2061-2171] shall be construed to authorize the
President to institute, without the approval of the Congress, a program for the rationing of
gasoline among classes of end-users.
Sec. 106. DESIGNATION OF ENERGY AS A STRATEGIC AND CRITICAL
MATERIAL [50 U.S.C. App. § 2076]
For purposes of this Act [50 U.S.C. App. § 2061-2171], “energy” shall be designated as a
“strategic and critical material” after the date of the enactment of this section [June 30, 1980]:
Provided, that no provision of this Act [50 U.S.C. App. § 2061-2171] shall, by virtue of such
designation grant any new direct or indirect authority to the President for the mandatory
allocation or pricing of any fuel or feedstock (including, but not limited to, crude oil, residual
fuel oil, any refined petroleum product, natural gas, or coal) or electricity or any other form of
energy.
Sec. 107. STRENGTHENING DOMESTIC CAPABILITY [50 U.S.C. App. § 2077]
(a) In General
Utilizing the authority of title III of this Act [50 U.S.C. App. § 2061-2171] [50 U.S.C. App. §
2091-2099a] or any other provision of law, the President may provide appropriate incentives
to develop, maintain, modernize, restore, and expand the productive capacities of domestic
sources for critical components, critical technology items, materials, and industrial resources
essential for the execution of the national security strategy of the United States.
(b) Critical Components and Critical Technology Items
(1) Maintenance of reliable sources of supply
The President shall take appropriate actions to assure that critical components, critical
technology items, essential materials, and industrial resources are available from reliable
sources when needed to meet defense requirements during peacetime, graduated mobilization,
and national emergency.
(2) Appropriate action
For purposes of this subsection, appropriate action may include—
(A) restricting contract solicitations to reliable sources;

6

(B) restricting contract solicitations to domestic sources pursuant to—
(i) section 2304(b)(1)(B) or section 2304(c)(3) of title 10, United States Code;
(ii) section 303(b)(1)(B) or section 303(c)(3) of the Federal Property and
Administrative Services Act of 1949 [41 U.S.C. App. § 253(b)(1)(B) or 253(c)(3)]; or
(iii) other statutory authority;
(C) stockpiling critical components; and
(D) developing substitutes for a critical component or a critical technology item.
Sec. 108. MODERNIZATION OF SMALL BUSINESS SUPPLIERS [50 U.S.C. App. §
2078]
(a) In General
In providing any assistance under this Act [50 U.S.C. App. § 2061-2171], the President shall
accord a strong preference for small business concerns which are subcontractors or suppliers,
and, to the maximum extent practicable, to such small business concerns located in areas of
high unemployment or areas that have demonstrated a continuing pattern of economic decline,
as identified by the Secretary of Labor.
(b) Modernization of Equipment
(1) In general
Funds authorized under title III [50 U.S.C. App. § 2091-2099a] may be used to guarantee the
purchase or lease of advance manufacturing equipment, and any related services with respect
to any such equipment for purposes of this Act [50 U.S.C. App. § 2061-2171].
(2) Small business suppliers
In considering proposals for title III [50 U.S.C. App. § 2091-2099a] projects under paragraph
(1), the President shall provide a strong preference for proposals submitted by a small
business supplier or subcontractor whose proposal—
(A) has the support of the department or agency which will provide the guarantee;
(B) reflects that the small business concern has made arrangements to obtain
qualified outside assistance to support the effective utilization of the advanced manufacturing
equipment being proposed for installation; and
(C) meets the requirements of section 301, 302, or 303 [50 U.S.C. App. § 2091,
2092, or 2093].

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TITLE II – AUTHORITY TO REQUISITION AND CONDEMN [50 U.S.C. App. §
2081]
[This title expired June 30, 1953, and was repealed by P.L. 111-67, September 30, 2009.]
TITLE III – EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY
Sec. 301. PRESIDENTIAL AUTHORIZATION FOR THE NATIONAL DEFENSE.
[50 U.S.C. App. § 2091]
(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;

8

(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 19 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 such 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.

9

(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.

10

(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 [50 U.S.C. App. § 2092]
(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;

11

(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.
(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.

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Sec. 303. OTHER PRESIDENTIAL ACTION AUTHORIZED [50 U.S.C. App. § 2093]
(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].

13

(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) Waiver 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

14

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—
(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;

15

(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 [50 U.S.C. App. § 2061-2171],
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.
(g) Substitutes
When, in the judgment 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 [50 U.S.C. App. § 2094]
(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’).

16

(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 [50 U.S.C. App. § 2061-2171] 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.
TITLE IV - PRICE AND WAGE STABILIZATION [50 U.S.C. App. § 2101-2112]
[This title expired April 30, 1953, and was repealed by P.L. 111-67, September 30, 2009.]

17

TITLE V - SETTLEMENT OF LABOR DISPUTES [50 U.S.C. App. § 2121-2123]
[This title expired April 30, 1953, and was repealed by P.L. 111-67, September 30, 2009.]
TITLE VI - CONTROL OF CONSUMER AND REAL ESTATE CREDIT [50 U.S.C.
App. § 2132-2137]
[The authorities of Sec. 2131 of this title were repealed June 30, 1952. The authorities of Sec.
2132 to 2137 of this title expired June 30, 1953, and were repealed by P.L. 111-67, September
30, 2009.]
TITLE VII - GENERAL PROVISIONS
Sec. 701. SMALL BUSINESS [50 U.S.C. § App. § 2151]
(a) Participation
Small business concerns shall be given the maximum practicable opportunity to participate as
contractors, and subcontractors at various tiers, in all programs to maintain and strengthen the
Nation’s industrial base and technology base undertaken pursuant to this Act [50 U.S.C. App.
§ 2061-2171].
(b) Administration of Act
In administering the programs, implementing regulations, policies, and procedures under this
Act [50 U.S.C. App. § 2061-2171], requests, applications, or appeals from small business
concerns shall, to the maximum extent practicable, be expeditiously handled.
(c) Advisory Committee Participation
Representatives of small business concerns shall be afforded the maximum opportunity to
participate in such advisory committees as may be established pursuant to this Act [50 U.S.C.
App. § 2061-2171].
(d) Information
Information about this Act [50 U.S.C. App. § 2061-2171] and activities undertaken in
accordance with this Act [50 U.S.C. App. § 2061-2171] shall be made available to small
business concerns.
(e) Allocations under Section 101
Whenever the President makes a determination to exercise any authority to allocate any
material pursuant to section 101 [50 U.S.C. App. § 2071], small business concerns shall be
accorded, to the extent practicable, a fair share of such material, in proportion to the share
received by such business concerns under normal conditions, giving such special
consideration as may be possible to emerging small business concerns.

18

Sec. 702. DEFINITIONS [50 U.S.C. App. § 2152]
For purposes of this Act [50 U.S.C. App. § 2061-2171], the following definitions shall apply:
(1) Critical component
The term “critical component” includes such components, subsystems, systems, and related
special tooling and test equipment essential to the production, repair, maintenance, or
operation of weapon systems or other items of equipment identified by the President as being
essential to the execution of the national security strategy of the United States. Components
identified as critical by a National Security Assessment conducted pursuant to section 113(i)
of title 10, United States Code, or by a Presidential determination as a result of a petition filed
under section 232 of the Trade Expansion Act of 1962 [19 U.S.C. App. § 1862] shall be
designated as critical components for purposes of this Act [50 U.S.C. App. § 2061-2171],
unless the President determines that the designation is unwarranted.
(2) Critical infrastructure
The term “critical infrastructure” means any systems and assets, whether physical or cyberbased, so vital to the United States that the degradation or destruction of such systems and
assets would have a debilitating impact on national security, including, but not limited to,
national economic security and national public health or safety.
(3) Critical technology
The term “critical technology” includes any designated by the President to be essential to the
national defense.
(4) Critical technology item
The term “critical technology item” means materials directly employing, derived from, or
utilizing a critical technology.
(5) Defense contractor
The term “defense contractor” means any person who enters into a contract with the United
States –
(A) to furnish materials, industrial resources, or a critical technology for the
national defense; or
(B) to perform services for the national defense.
(6) Domestic industrial base

19

The term “domestic industrial base” means domestic sources which are providing, or which
would be reasonably expected to provide, materials or services to meet national defense
requirements during peacetime, national emergency, or war.
(7) Domestic source
The term “domestic source” means a business concern –
(A) that performs in the United States or Canada substantially all of the research
and development, engineering, manufacturing, and production activities required of such
business concern under a contract with the United States relating to a critical component or a
critical technology item; and
(B) that procures from business concerns described in subparagraph (A)
substantially all of any components and assemblies required under a contract with the United
States relating to a critical component or critical technology item.
(8) Facilities
The term “facilities” includes all types of buildings, structures, or other improvements to real
property (but excluding farms, churches or other places of worship, and private dwelling
houses), and services relating to the use of any such building, structure, or other improvement.
(9) Foreign source
The term ''foreign source'' means a business entity other than a ''domestic source''.
(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.
(12) Industrial resources

20

The term “industrial resources” means materials, services, processes, or manufacturing
equipment (including the processes, technologies, and ancillary services for the use of such
equipment) needed to establish or maintain an efficient and modern national defense
industrial base.
(13) Materials
The term “materials” includes –
(A) any raw materials (including minerals, metals, and advanced processed
materials), commodities, articles, components (including critical components), products, and
items of supply; and
(B) any technical information or services ancillary to the use of any such materials,
commodities, articles, components, products, or items.
(14) National defense
The term “national defense” means programs for military and energy production or
construction, military or critical infrastructure assistance to any foreign nation, homeland
security, stockpiling, space, and any directly related activity. Such term includes emergency
preparedness activities conducted pursuant to title VI of The Robert T. Stafford Disaster
Relief and Emergency Assistance Act [42 U.S.C. § 5195 et seq.] and critical infrastructure
protection and restoration.
(15) Person
The term “person” includes an individual, corporation, partnership, association, or any other
organized group of persons, or legal successor or representative thereof, or any State or local
government or agency thereof.
(16) Services
The term “services” includes any effort that is needed for or incidental to –
(A) the development, production, processing, distribution, delivery, or use of an
industrial resource or a critical technology item;
(B) the construction of facilities;
(C) the movement of individuals and property by all modes of civil transportation;
or
(D) other national defense programs and activities.
(17) Small business concern

21

The term “small business concern” means a business concern that meets the requirements of
section 3(a) of the Small Business Act [15 U.S.C. § 632(a)] and the regulations promulgated
pursuant to that section, and includes such business concerns owned and controlled by
socially and economically disadvantaged individuals or by women.
(18) Small business concern owned and controlled by socially and economically
disadvantaged individuals
The term “small business concern owned and controlled by socially and economically
disadvantaged individuals” has the same meaning as in section 8(d)(3)(C) of the Small
Business Act [15 U.S.C. § 637(d)(3)(C)].
Sec. 703. CIVILIAN PERSONNEL [50 U.S.C. App. § 2153]
Any officer or agency head may—
(1) appoint civilian personnel without regard to section 5331(b) of title 5, United
States Code, and without regard to the provisions of title 5, United States Code, governing
appointments in the competitive service; and
(2) fix the rate of basic pay for such personnel without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to
classification and General Schedule pay rates, except that no individual so appointed may
receive pay in excess of the annual rate of basic pay payable for GS-18 of the General
Schedule, as the President deems appropriate to carry out this Act [50 U.S.C. App. § 20612171].
Sec. 704. REGULATIONS AND ORDERS [50 U.S.C. App. § 2154]
(a) In General
Subject to section 709 [50 U.S.C. App. § 2159] and subsection (b), the President may
prescribe such regulations and issue such orders as the President may determine to be
appropriate to carry out this Act [50 U.S.C. App. § 2061-2171].
(b) Procurement Regulations
Any procurement regulation, procedure, or form issued pursuant to subsection (a) shall be
issued pursuant to section 25 of the Office of Federal Procurement Policy Act [41 U.S.C.
App. § 421], and shall conform to any government-wide procurement policy or regulation
issued pursuant to section 6 or 25 of that Act [41 U.S.C. App. § 405 or 421].
Sec. 705. INVESTIGATIONS; RECORDS; REPORTS; SUBPOENAS; RIGHT TO
COUNSEL [50 U.S.C. App. § 2155]

22

(a) The President shall be entitled, while this Act [50 U.S.C. App. § 2061-2171] is in
effect and for a period of two years thereafter, by regulation, subpoena, or otherwise, to obtain
such information from, require such reports and the keeping of such records by, make such
inspection of the books, records, and other writings, premises or property of, and take the
sworn testimony of, and administer oaths and affirmations to, any person as may be necessary
or appropriate, in his discretion, to the enforcement or the administration of this Act [50
U.S.C. App. § 2061-2171] [said sections] and the regulations or orders issued thereunder.
The authority of the President under this section includes the authority to obtain information
in order to perform industry studies assessing the capabilities of the United States industrial
base to support the national defense. The President shall issue regulations insuring that the
authority of this subsection will be utilized only after the scope and purpose of the
investigation, inspection, or inquiry to be made have been defined by competent authority,
and it is assured that no adequate and authoritative data are available from any Federal or
other responsible agency. In case of contumacy by, or refusal to obey a subpoena served
upon, any person referred to in this subsection, the district court of the United States for any
district in which such person is found or resides or transacts business, upon application by the
President, shall have jurisdiction to issue an order requiring such person to appear and give
testimony or to appear and produce documents, or both; and any failure to obey such order of
the court may be punished by such court as a contempt thereof.
(b) The production of a person’s books, records, or other documentary evidence shall not
be required at any place other than the place where such person usually keeps them, if, prior
to the return date specified in the regulations, subpoena, or other document issued with
respect thereto, such person furnishes the President with a true copy of such books, records, or
other documentary evidence (certified by such person under oath to be a true and correct
copy) or enters into a stipulation with the President as to the information contained in such
books, records, or other documentary evidence. Witnesses shall be paid the same fees and
mileage that are paid witnesses in the courts of the United States.
(c) Any person who willfully performs any act prohibited or willfully fails to perform any
act required by the above provisions of this section, or any rule, regulation, or order
thereunder, shall upon conviction be fined not more than $10,000 or imprisoned for not more
than one year or both.
(d) Information obtained under this section which the President deems confidential or with
reference to which a request for confidential treatment is made by the person furnishing such
information shall not be published or disclosed unless the President determines that the
withholding thereof is contrary to the interest of the national defense, and any person willfully
violating this provision shall, upon conviction, be fined not more than $10,000, or imprisoned
for not more than one year, or both.
(e) Any person subpoenaed under this section shall have the right to make a record of his
testimony and to be represented by counsel.
Sec. 706. JURISDICTION OF COURTS; INJUNCTIONS; VENUE; PROCESS;
EFFECT OF TERMINATION OF PROVISIONS [50 U.S.C. App. § 2156]

23

(a) Whenever in the judgment of the President any person has engaged or is about to
engage in any acts or practices which constitute or will constitute a violation of any provision
of this Act [50 U.S.C. App. § 2061-2171], he may make application to the appropriate court
for an order enjoining such acts or practices, or for an order enforcing compliance with such
provision, and upon a showing by the President that such person has engaged or is about to
engage in any such acts or practices a permanent or temporary injunction, restraining order, or
other order, with or without such injunction or restraining order, shall be granted without
bond.
(b) The district courts of the United States and the United States courts of any Territory or
other place subject to the jurisdiction of the United States shall have jurisdiction of violations
of this Act [50 U.S.C. App. § 2061-2171] or any rule, regulation, order, or subpoena
thereunder, and of all civil actions under this Act [50 U.S.C. App. § 2061-2171] [said
sections] to enforce any liability or duty created by, or to enjoin any violation of, this Act [50
U.S.C. App. § 2061-2171] [said sections] or any rule, regulation, order, or subpoena
thereunder. Any criminal proceeding on account of any such violation may be brought in any
district in which any act, failure to act, or transaction constituting the violation occurred. Any
such civil action may be brought in any such district or in the district in which the defendant
resides or transacts business. Process in such cases, criminal or civil, may be served in any
district wherein the defendant resides or transacts business or wherever the defendant may be
found; the subpoena for witnesses who are required to attend a court in any district in such
case may run into any other district. The termination of the authority granted in any title or
section of this Act [50 U.S.C. App. § 2061-2171] [said sections], or of any rule, regulation, or
order issued thereunder, shall not operate to defeat any suit, action, or prosecution, whether
theretofore or thereafter commenced, with respect to any right, liability, or offense incurred or
committed prior to the termination date of such title or of such rule, regulation, or order. No
costs shall be assessed against the United States in any proceeding under this Act [50 U.S.C.
App. § 2061-2171] [said sections]. All litigation arising under this Act [50 U.S.C. App. §
2061-2171] [said sections] or the regulations promulgated thereunder shall be under the
supervision and control of the Attorney General.
Sec. 707. LIABILITY FOR COMPLIANCE WITH INVALID REGULATIONS;
DISCRIMINATION AGAINST ORDERS OR CONTRACTS AFFECTED BY
PRIORITIES OR ALLOCATIONS [50 U.S.C. App. § 2157]
No person shall be held liable for damages or penalties for any act or failure to act resulting
directly or indirectly from compliance with a rule, regulation, or order issued pursuant to this
Act [50 U.S.C. App. § 2061-2171] [50 U.S.C. App. § 2061-2071], notwithstanding that any
such rule, regulation, or order shall thereafter be declared by judicial or other competent
authority to be invalid. No person shall discriminate against orders or contracts to which
priority is assigned or for which materials or facilities are allocated under title I of this Act [50
U.S.C. App. § 2061-2171] [50 U.S.C. App. § 2071-2076] or under any rule, regulation, or
order issued thereunder, by charging higher prices or by imposing different terms and
conditions for such orders or contracts than for other generally comparable orders or
contracts, or in any other manner.

24

Sec. 708. VOLUNTARY AGREEMENTS AND PLANS OF ACTION FOR
NATIONAL DEFENSE [50 U.S.C. App. § 2158]
(a) Immunity from Civil and Criminal Liability or Defense to Action under Antitrust
Laws; Exceptions
Except as specifically provided in subsection (j) of this section, no provision of this Act [50
U.S.C. App. § 2061-2171] shall be deemed to convey to any person any immunity from civil
or criminal liability, or to create defenses to actions, under the antitrust laws.
(b) Definitions
For purposes of this Act [50 U.S.C. App. § 2061-2171]—
(1) Antitrust laws
The term “antitrust laws” has the meaning given to such term in subsection (a) of the first
section of the Clayton Act [15 U.S.C. § 12], except that such term includes section 5 of the
Federal Trade Commission Act [15 U.S.C. § 45] to the extent that such section 5 applies to
unfair methods of competition.
(2) Plan of action
The term “plan of action” means any of 1 or more documented methods adopted by
participants in an existing voluntary agreement to implement that agreement.
(c) Prerequisites for Agreements and Plans of Action; Delegation of Authority to
Presidential Designees
(1) Upon finding that conditions exist which may pose a direct threat to the national
defense or its preparedness programs, the President may consult with representatives of
industry, business, financing, agriculture, labor, and other interests in order to provide for the
making by such persons, with the approval of the President, of voluntary agreements and
plans of action to help provide for the national defense.
(2) The authority granted to the President in paragraph (1) and subsection (d) may be
delegated by him (A) to individuals who are appointed by and with the advice and consent of
the Senate, or are holding offices to which they have been appointed by and with the advice
and consent of the Senate, (B) upon the condition that such individuals consult with the
Attorney General and with the Federal Trade Commission not less than ten days before
consulting with any persons under paragraph (1), and (C) upon the condition that such
individuals obtain the prior approval of the Attorney General, after consultation by the
Attorney General with the Federal Trade Commission, to consult under paragraph (1).

25

(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 a 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.
(d) Advisory Committees; Establishment; Applicable Provisions; Membership;
Notice and Participation in Meetings; Verbatim Transcript; Availability to Public
(1) To achieve the objectives of subsection (c)(1) of this section, the President or any
individual designated pursuant to subsection (c)(2) may provide for the establishment of such
advisory committees as he determines are necessary. In addition to the requirements specified
in this section and except as provided in subsection (n), any such advisory committee shall be
subject to the provisions of the Federal Advisory Committee Act, whether or not such Act or
any of its provisions expire or terminate during the term of this Act [50 U.S.C. App. § 20612171] or of such committees, and in all cases such advisory committees shall be chaired by a
Federal employee (other than an individual employed pursuant to section 3109 of title 5,
United States Code) and shall include representatives of the public. The Attorney General
and the Federal Trade Commission shall have adequate advance notice of any meeting and
may have an official representative attend and participate in any such meeting.
(2) A full and complete verbatim transcript shall be kept of such advisory committee
meetings, and shall be taken and deposited, together with any agreement resulting therefrom,
with the Attorney General and the Federal Trade Commission. Such transcript and agreement
shall be made available for public inspection and copying, subject to the provisions of
paragraphs (1), (3), and (4) of section 552(b) of title 5, United States Code.
(e) Rules; Promulgation by Presidential Designees; Consultation by Attorney
General with Chairman of Federal Trade Commission; Approval of Attorney General;
Procedures; Incorporation of Standards and Procedures for Development of
Agreements and Plans of Action
(1) The individual or individuals referred to in subsection (c)(2) shall, after approval
of the Attorney General, after consultation by the Attorney General with the Chairman of the
Federal Trade Commission, promulgate rules, in accordance with section 553 of title 5,
United States Code, incorporating standards and procedures by which voluntary agreements
and plans of action may be developed and carried out.
(2) In addition to the requirements of section 553 of title 5, United States Code—

26

(A) general notice of the proposed rulemaking referred to in paragraph (1) shall be
published in the Federal Register, and such notice shall include—
(i) a statement of the time, place, and nature of the proposed rulemaking
proceedings;
(ii) reference to the legal authority under which the rule is being proposed; and
(iii) either the terms of substance of the proposed rule or a description of the
subjects and issues involved;
(B) the required publication of a rule shall be made not less than thirty days before
its effective date; and
(C) the individual or individuals referred to in paragraph (1) shall give interested
persons the right to petition for the issuance, amendment, or repeal of a rule.
(3) The rules promulgated pursuant to this subsection incorporating standards and
procedures by which voluntary agreements may be developed shall provide, among other
things, that—
(A) such agreements shall be developed at meetings which include—
(i) the Attorney General or his delegate,
(ii) the Chairman of the Federal Trade Commission or his delegate, and
(iii) an individual designated by the President in subsection (c)(2) or his
delegate, and which are chaired by the individual referred to in clause (iii);
(B) at least seven days prior to any such meeting, notice of the time, place, and
nature of the meeting shall be published in the Federal Register;
(C) interested persons may submit written data and views concerning the proposed
voluntary agreement, with or without opportunity for oral presentation;
(D) interested persons may attend any such meeting unless the individual
designated by the President in subsection (c)(2) finds that the matter or matters to be
discussed at such meeting falls within the purview of matters described in section 552b(c) of
title 5, United States Code;
(E) a full and verbatim transcript shall be made of any such meeting and shall be
transmitted by the chairman of the meeting to the Attorney General and to the Chairman of
the Federal Trade Commission;

27

(F) any voluntary agreement resulting from the meetings shall be transmitted by
the chairman of the meetings to the Attorney General, the Chairman of the Federal Trade
Commission, and the Congress; and
(G) any transcript referred to in subparagraph (E) and any voluntary agreement
referred to in subparagraph (F) shall be available for public inspection and copying, subject to
paragraphs (1), (3), and (4) of section 552(b) of title 5, United States Code.
(f) Commencement of Agreements and Plans of Action; Expiration Date; Extensions
(1) A voluntary agreement or plan of action may not become effective unless and
until—
(A) the individual referred to in subsection (c)(2) who is to administer the
agreement or plan approves it and certifies, in writing, that the agreement or plan is necessary
to carry out the purposes of subsection (c)(1) and submits a copy of such agreement or plan to
the Congress; and
(B) the Attorney General (after consultation with the Chairman of the Federal
Trade Commission) finds, in writing, that such purpose may not reasonably be achieved
through a voluntary agreement or plan of action having less anticompetitive effects or without
any voluntary agreement or plan of action and publishes such finding in the Federal Register.
(2) Each voluntary agreement or plan of action which becomes effective under
paragraph (1) shall expire 5 years after the date it becomes effective (and at 5-year intervals
thereafter, as the case may be), unless (immediately prior to such expiration date) the
individual referred to in subsection (c)(2) who administers the agreement or plan and the
Attorney General (after consultation with the Chairman of the Federal Trade Commission)
make the certification or finding, as the case may be, described in paragraph (1) with respect
to such voluntary agreement or plan of action and publish such certification or finding in the
Federal Register, in which case, the voluntary agreement or plan of action may be extended
for an additional period of 5 years.
(g) Monitoring of Agreements and Plans of Action by Attorney General and
Chairman of Federal Trade Commission
The Attorney General and the Chairman of the Federal Trade Commission shall monitor the
carrying out of any voluntary agreement or plan of action to assure—
(1) that the agreement or plan is carrying out the purposes of subsection (c)(1);
(2) that the agreement or plan is being carried out under rules promulgated pursuant to
subsection (e);
(3) that the participants are acting in accordance with the terms of the agreement or
plan; and

28

(4) the protection and fostering of competition and the prevention of anticompetitive
practices and effects.
(h) Required Provisions of Rules for Implementation of Agreements and Plans of
Action
The rules promulgated under subsection (e) with respect to the carrying out of voluntary
agreements and plans of action shall provide—
(1) for the maintenance, by participants in any voluntary agreement or plan of action,
of documents, minutes of meetings, transcripts, records, and other data related to the carrying
out of any voluntary agreement or plan of action;
(2) that participants in any voluntary agreement or plan of action agree, in writing, to
make available to the individual designated by the President in subsection (c)(2) to administer
the voluntary agreement or plan of action, the Attorney General and the Chairman of the
Federal Trade Commission for inspection and copying at reasonable times and upon
reasonable notice any item maintained pursuant to paragraph (1);
(3) that any item made available to the individual designated by the President in
subsection (c)(2) to administer the voluntary agreement or plan of action, the Attorney
General, or the Chairman of the Federal Trade Commission pursuant to paragraph (2) shall be
available from such individual, the Attorney General, or the Chairman of the Federal Trade
Commission, as the case may be, for public inspection and copying, subject to paragraph (1),
(3), or (4) of section 552(b) of title 5, United States Code.
(4) that the individual designated by the President in subsection (c)(2) to administer
the voluntary agreement or plan of action, the Attorney General, and the Chairman of the
Federal Trade Commission, or their delegates, may attend meetings to carry out any voluntary
agreement or plan of action;
(5) that a Federal employee (other than an individual employed pursuant to section
3109 of title 5 of the United States Code) shall attend meetings to carry out any voluntary
agreement or plan of action;
(6) that participants in any voluntary agreement or plan of action provide the
individual designated by the President in subsection (c)(2) to administer the voluntary
agreement or plan of action, the Attorney General, and the Chairman of the Federal Trade
Commission with adequate prior notice of the time, place, and nature of any meeting to be
held to carry out the voluntary agreement or plan of action;
(7) for the attendance by interested persons of any meeting held to carry out any
voluntary agreement or plan of action, unless the individual designated by the President in
subsection (c)(2) to administer the voluntary agreement or plan of action finds that the matter

29

or matters to be discussed at such meeting falls within the purview of matters described in
section 552b(c) of title 5, United States Code;
(8) that the individual designated by the President in subsection (c)(2) to administer
the voluntary agreement or plan of action has published in the Federal Register prior
notification of the time, place, and nature of any meeting held to carry out any voluntary
agreement or plan of action, unless he finds that the matter or matters to be discussed at such
meeting falls within the purview of matters described in section 552b(c) of title 5, United
States Code, in which case, notification of the time, place, and nature of such meeting shall be
published in the Federal Register within ten days of the date of such meeting;
(9) that—
(A) the Attorney General (after consultation with the Chairman of the Federal
Trade Commission and the individual designated by the President in subsection (c)(2) to
administer a voluntary agreement or plan of action), or
(B) the individual designated by the President in subsection (c)(2) to administer a
voluntary agreement or plan of action (after consultation with the Attorney General and the
Chairman of the Federal Trade Commission), may terminate or modify, in writing, the
voluntary agreement or plan of action at any time, and that effective, immediately upon such
termination or modification, any antitrust immunity conferred upon the participants in the
voluntary agreement or plan of action by subsection (j) shall not apply to any act or omission
occurring after the time of such termination or modification;
(10) that participants in any voluntary agreement or plan of action be reasonably
representative of the appropriate industry or segment of such industry; and
(11) that the individual designated by the President in subsection (c)(2) to administer
the voluntary agreement or plan of action shall provide prior written notification of the time,
place, and nature of any meeting to carry out a voluntary agreement or plan of action to the
Attorney General, the Chairman of the Federal Trade Commission and the Congress.
(i) Rules; Promulgation by Attorney General and Chairman of Federal Trade
Commission
The Attorney General and the Chairman of the Federal Trade Commission shall each
promulgate such rules as each deems necessary or appropriate to carry out his responsibility
under this section.
(j) Defenses
(1) In general
Subject to paragraph (4), there shall be available as a defense for any person to any civil or
criminal action brought under the antitrust laws (or any similar law of any State) with respect

30

to any action taken to develop or carry out any voluntary agreement or plan of action under
this section that—
(A) such action was taken—
(i) in the course of developing a voluntary agreement initiated by the President
or a plan of action adopted under any such agreement; or
(ii) to carry out a voluntary agreement initiated by the President and approved
in accordance with this section or a plan of action adopted under any such agreement, and
(B) such person—
(i) complied with the requirements of this section and any regulation
prescribed under this section; and
(ii) acted in accordance with the terms of the voluntary agreement or plan of
action.
(2) Scope of defense
Except in the case of actions taken to develop a voluntary agreement or plan of action, the
defense established in paragraph (1) shall be available only if and to the extent that the person
asserting the defense demonstrates that the action was specified in, or was within the scope of,
an approved voluntary agreement initiated by the President and approved in accordance with
this section or a plan of action adopted under any such agreement and approved in accordance
with this section. The defense established in paragraph (1) shall not be available unless the
President or the President’s designee has authorized and actively supervised the voluntary
agreement or plan of action.
(3) Burden of persuasion
Any person raising the defense established in paragraph (1) shall have the burden of proof to
establish the elements of the defense.
(4) Exception for actions taken to violate the antitrust laws
The defense established in paragraph (1) shall not be available if the person against whom the
defense is asserted shows that the action was taken for the purpose of violating the antitrust
laws.
(k) Surveys and Studies by Attorney General and Federal Trade Commission;
Content; Annual Report to Congress and President by Attorney General
The Attorney General and the Federal Trade Commission shall each make surveys for the
purpose of determining any factors which may tend to eliminate competition, create or

31

strengthen monopolies, injure small business, or otherwise promote undue concentration of
economic power in the course of the administration of this section. Such surveys shall
include studies of the voluntary agreements and plans of action authorized by this section.
The Attorney General shall (after consultation with the Federal Trade Commission) submit to
the Congress and the President at least once every year reports setting forth the results of such
studies of voluntary agreements and plans of action.
(l) Annual Report to Congress and President by Presidential Designees; Contents
The individual or individuals designated by the President in subsection (c)(2) shall submit
to the Congress and the President at least once every year reports describing each voluntary
agreement or plan of action in effect and its contribution to achievement of the purpose of
subsection (c)(1).
(m) Jurisdiction to Enjoin Statutory Exemption or Suspension and Order for
Production of Transcripts, etc.; Procedures
On complaint, the United States District Court for the District of Columbia shall have
jurisdiction to enjoin any exemption or suspension pursuant to subsections (d)(2), (e)(3)(D)
and (G), and (h)(3), (7), and (8), and to order the production of transcripts, agreements, items,
or other records maintained pursuant to this section by the Attorney General, the Federal
Trade Commission or any individual designated under subsection (c)(2), where the court
determines that such transcripts, agreements, items, or other records have been improperly
withheld from the complainant. In such a case the court shall determine the matter de novo,
and may examine the contents of such transcripts, agreements, items, or other records in
camera to determine whether such transcripts, agreements, items, or other records or any parts
thereof shall be withheld under any of the exemption or suspension provisions referred to in
this subsection, and the burden is on the Attorney General, the Federal Trade Commission, or
such designated individual, as the case may be, to sustain its action.
(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.
(o) Preemption of Contract Law in Emergencies
In any action in any Federal or State court for breach of contract, there shall be available as a
defense that the alleged breach of contract was caused predominantly by action taken during
an emergency to carry out a voluntary agreement or plan of action authorized and approved in

32

accordance with this section. Such defense shall not release the party asserting it from any
obligation under applicable law to mitigate damages to the greatest extent possible.
Sec. 708a. [50 U.S.C. App. § 2158a] Repealed. Pub. L. 102-99, Sec. 4, Aug. 17, 1991, 105
Stat. 487
Sec. 709. PUBLIC PARTICIPATION IN RULEMAKING [50 U.S.C. App. § 2159]
(a) Exemption from the Administrative Procedure Act
Any regulation issued under this Act [50 U.S.C. App. § 2061-2171] shall not be subject to
sections 551 through 559 of title 5, United States Code.
(b) Opportunity for Notice and Comment
(1) In general
Except as provided in subsection (c), any regulation issued under this Act [50 U.S.C. App. §
2061-2171] shall be published in the Federal Register and opportunity for public comment
shall be provided for not less than 30 days, consistent with the requirements of section 553(b)
of title 5, United States Code.
(2) Waiver for temporary provisions
The requirements of paragraph (1) may be waived, if—
(A) the officer authorized to issue the regulation finds that urgent and compelling
circumstances make compliance with such requirements impracticable;
(B) the regulation is issued on a temporary basis; and
(C) the publication of such temporary regulation is accompanied by the finding
made under subparagraph (A) (and a brief statement of the reasons for such finding) and an
opportunity for public comment is provided for not less than 30 days before any regulation
becomes final.
(3) Consideration of public comments
All comments received during the public comment period specified pursuant to paragraph (1)
or (2) shall be considered and the publication of the final regulation shall contain written
responses to such comments.
(c) Public Comment on Procurement Regulations
Any procurement policy, regulation, procedure, or form (including any amendment or
modification of any such policy, regulation, procedure, or form) issued under this Act [50

33

U.S.C. App. § 2061-2171] shall be subject to section 22 of the Office of Federal Procurement
Policy Act [41 U.S.C. App. § 418b].
Sec. 710. EMPLOYMENT OF PERSONNEL; APPOINTMENT POLICIES;
NUCLEUS EXECUTIVE RESERVE; USE OF CONFIDENTIAL INFORMATION BY
EMPLOYEES; PRINTING AND DISTRIBUTION OF REPORTS [50 U.S.C. App. §
2160]
(a) Repealed. June 28, 1955, ch. 189, Sec. 12(c)(1), 69 Stat. 180.
(b)(1) The President is further authorized, to the extent he deems it necessary and
appropriate in order to carry out the provisions of this Act [50 U.S.C. App. § 2061-2171] [50
U.S.C. App. § 2061-2710], and subject to such regulations as he may issue, to employ persons
of outstanding experience and ability without compensation;
(2) The President shall be guided in the exercise of the authority provided in this
subsection by the following policies:
(i) So far as possible, operations under the Act [said sections] shall be carried on
by full-time, salaried employees of the Government, and appointments under this authority
shall be to advisory or consultative positions only.
(ii) Appointments to positions other than advisory or consultative may be made
under this authority only when the requirements of the position are such that the incumbent
must personally possess outstanding experience and ability not obtainable on a full-time,
salaried basis.
(3) Appointees under this subsection shall, when policy matters are involved, be
limited to advising appropriate full-time salaried Government officials who are responsible
for making policy decisions.
(4) Appointments under this subsection shall be supported by written certification by
the head of the employing department or agency—
(i) that the appointment is necessary and appropriate in order to carry out the
provisions of the Act [50 U.S.C. App. § 2061-2171];
(ii) that the duties of the position to which the appointment is being made require
outstanding experience and ability;
(iii) that the appointee has the outstanding experience and ability required by the
position; and
(iv) that the department or agency head has been unable to obtain a person with the
qualifications necessary for the position on a full-time, salaried basis.

34

(5) Notice and financial disclosure requirements
(A) Public notice of appointment—
The head of any department or agency who appoints any individual under this subsection
shall publish a notice of such appointment in the Federal Register, including the name of the
appointee, the employing department or agency, the title of the appointee’s position, and the
name of the appointee’s private employer.
(B) Financial disclosure—
Any individual appointed under this subsection who is not required to file a financial
disclosure report pursuant to section 101 of the Ethics in Government Act of 1978 [5 U.S.C.
App. § 101], shall file a confidential financial disclosure report pursuant to section 107 of that
Act [5 U.S.C. App. § 107] with the appointing department or agency.
(6) The Director of the Office of Personnel Management shall carry out a biennial
survey of appointments made under this subsection biennially and shall report his or her
findings to the President and make such recommendations as he or she may deem proper.
(7) Persons appointed under the authority of this subsection may be allowed
reimbursement for travel, subsistence, and other necessary expenses incurred by them in
carrying out the functions for which they were appointed in the same manner as persons
employed intermittently in the Federal Government are allowed expenses under section 5703
of title 5, United States Code.
(c) The President is authorized, to the extent he deems it necessary and appropriate in
order to carry out the provisions of this Act [50 U.S.C. App. § 2061-2171] to employ experts
and consultants or organizations thereof, as authorized by section 55a of title 5 of the United
States Code. Individuals so employed may be compensated at rates not in excess of $50 per
diem and while away from their homes or regular places of business they may be allowed
transportation and not to exceed $15 per diem in lieu of subsistence and other expenses while
so employed.
(d) The President may utilize the services of Federal, State, and local agencies and may
utilize and establish such regional, local, or other agencies, and utilize such voluntary and
uncompensated services, as may from time to time be needed.
(e) The President is further authorized to provide for the establishment and training of a
nucleus executive reserve for employment in executive positions in Government during
periods of national defense emergency, as determined by the President. Members of this
executive reserve who are not full-time Government employees may be allowed
transportation and per diem in lieu of subsistence, in accordance with title 5 of the United
States Code (with respect to individuals serving without pay, while away from their homes or
regular places of business), for the purpose of participating in the executive reserve training
program.

35

(f) Whoever, being an officer or employee of the United States or any department or
agency thereof (including any Member of the Senate or House of Representatives), receives,
by virtue of his office or employment, confidential information, and (1) uses such information
in speculating directly or indirectly on any commodity exchange, or (2) discloses such
information for the purpose of aiding any other person so to speculate, shall be fined not more
than $10,000 or imprisoned not more than one year, or both. As used in this section, the term
“speculate” shall not include a legitimate hedging transaction, or a purchase or sale which is
accompanied by actual delivery of the commodity.
(g) The President, when he deems such action necessary, may make provision for the
printing and distribution of reports, in such number and in such manner as he deems
appropriate, concerning the actions taken to carry out the objectives of this Act [50 U.S.C.
App. § 2061-2171].
Sec. 711. AUTHORIZATION OF APPROPRIATIONS; AVAILABILITY OF FUNDS
[50 U.S.C. App. § 2161]
There are hereby authorized to be appropriated such sums as may be necessary and
appropriate for the carrying out of the provisions and purposes of this Act [50 U.S.C. App. §
2061-2171] by the President and such agencies as he may designate or create. Funds made
available pursuant to this paragraph for the purposes of this Act [50 U.S.C. App. § 20612171] [said sections] may be allocated or transferred for any of the purposes of this Act [50
U.S.C. App. § 2061-2171], with the approval of the Office of Management and Budget, to any
agency designated to assist in carrying out this Act [50 U.S.C. App. § 2061-2171] [said
sections]. Funds so allocated or transferred shall remain available for such period as may be
specified in the Acts making such funds available.
Sec. 712. JOINT COMMITTEE ON DEFENSE PRODUCTION [50 U.S.C. App. § 2162]
Repealed. Pub. L. 102-558, title I, Sec. 153, Oct. 28, 1992, 106 Stat. 4219
Sec. 713. TERRITORIAL APPLICATION OF ACT [50 U.S.C. App. § 2163]
The provisions of this Act [50 U.S.C. App. § 2061-2171] shall be applicable to the United
States, its Territories and possessions, and the District of Columbia.
Sec. 714. SMALL DEFENSE PLANTS ADMINISTRATION [50 U.S.C. App. § 2163a]
Repealed. Pub. L. 89-554, Sec. 8(a), Sept. 6, 1966, 80 Stat. 656
Sec. 715. SEPARABILITY OF PROVISIONS [50 U.S.C. App. § 2164]
If any provision of this Act [50 U.S.C. App. § 2061-2171] or the application of such provision
to any person or circumstances shall be held invalid, the remainder of the Act [said sections],
and the application of such provision to persons or circumstances other than those as to which
it is held invalid, shall not be affected thereby.

36

Sec. 716. PERSON DISQUALIFIED FROM EMPLOYMENT AND PENALTIES [50
U.S.C. App. § 2165] Repealed. Pub. L. 102-558, title I, Sec. 154, Oct. 28, 1992, 106 Stat.
4219
Sec. 717. TERMINATION OF ACT [50 U.S.C. App. § 2166]
(a) Title I [50 U.S.C. App. § 2071-2078] (except section 104), title III [50 U.S.C. App. §
2091-2099a], and title VII [50 U.S.C. App. § 2151-2171] (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).
(c) The termination of any section of this Act [50 U.S.C. App. § 2061-2171], or of any
agency or corporation utilized under this Act [50 U.S.C. App. § 2061-2171] [said section],
shall not affect the disbursement of funds under, or the carrying out of, any contract,
guarantee, commitment or other obligation entered into pursuant to this Act [50 U.S.C. App. §
2061-2171] [said sections] prior to the date of such termination, or the taking of any action
necessary to preserve or protect the interests of the United States in any amounts advanced or
paid out in carrying on operations under this Act [50 U.S.C. App. § 2061-2171] [said
sections], or the taking of any action (including the making of new guarantees) deemed by a
guaranteeing agency to be necessary to accomplish the orderly liquidation, adjustment or
settlement of any loans guaranteed under this Act [50 U.S.C. App. § 2061-2171] [said
sections], including actions deemed necessary to avoid undue hardship to borrowers in
reconverting to normal civilian production; and all of the authority granted to the President,
guaranteeing agencies, and fiscal agents, under section 301 of this Act [50 U.S.C. App. §
2061-2171] [50 U.S.C. App. § 2091] shall be applicable to actions taken pursuant to the
authority contained in this subsection.
(d) No action for the recovery of any cooperative payment made to a cooperative
association by a Market Administrator under an invalid provision of a milk marketing order
issued by the Secretary of Agriculture pursuant to the Agricultural Marketing Agreement Act
of 1937 [7 U.S.C. App. § 671 et seq.] shall be maintained unless such action is brought by
producers specifically named as party plaintiffs to recover their respective share of such
payments within ninety days after the date of enactment of the Defense Production Act
Amendments of 1952 [June 30, 1952] with respect to any cause of action heretofore accrued
and not otherwise barred, or within ninety days after accrual with respect to future payments,
and unless each claimant shall allege and prove (1) that he objected at the hearing to the
provisions of the order under which such payments were made and (2) that he either refused
to accept payments computed with such deduction or accepted them under protest to either the
Secretary or the Administrator. The district courts of the United States shall have exclusive

37

original jurisdiction of all such actions regardless of the amount involved. This subsection
shall not apply to funds held in escrow pursuant to court order. Notwithstanding any other
provision of this Act [50 U.S.C. App. § 2061-2171], no termination date shall be applicable to
this subsection.
Sec. 718. FEASIBILITY STUDY OF APPLICATION OF UNIFORM COST
ACCOUNTING STANDARDS TO DEFENSE PROCUREMENT CONTRACTS [50
U.S.C. App. § 2167] Repealed. Pub. L. 102-558, title I, Sec. 155, Oct. 28, 1992, 106 Stat.
4219
Sec. 719. FORMATION, FUNCTIONS, APPOINTMENT AND COMPENSATION OF
STAFF, ETC., OF COST ACCOUNTING STANDARDS BOARD [50 U.S.C. App. §
2168] Repealed. Pub. L. 100-679, Sec. 5(b), Nov. 17, 1988, 102 Stat. 4063
Sec. 720. NATIONAL COMMISSION ON SUPPLIES AND SHORTAGES [50 U.S.C.
App. § 2169] Repealed. Pub. L. 102-558, title I, Sec. 156, Oct. 28, 1992, 106 Stat. 4219
Sec. 721. AUTHORITY TO REVIEW CERTAIN MERGERS, ACQUISITIONS, AND
TAKEOVERS [50 U.S.C. App. § 2170]
(a) Definitions
For purposes of this section, the following definitions shall apply:
(1) Committee; chairperson—The terms “Committee” and “chairperson” mean the
Committee on Foreign Investment in the United States and the chairperson thereof,
respectively.
(2) Control—The term “control” has the meaning given to such term in regulations
which the Committee shall prescribe.
(3) Covered transaction—The term “covered transaction” means any merger,
acquisition, or takeover that is proposed or pending after August 23, 1988, by or with any
foreign person which could result in foreign control of any person engaged in interstate
commerce in the United States.
(4) Foreign government-controlled transaction—The term “foreign governmentcontrolled transaction” means any covered transaction that could result in the control of any
person engaged in interstate commerce in the United States by a foreign government or an
entity controlled by or acting on behalf of a foreign government.
(5) Clarification—The term “national security” shall be construed so as to include
those issues relating to “homeland security”, including its application to critical infrastructure.
(6) Critical infrastructure—The term “critical infrastructure” means, subject to rules
issued under this section, systems and assets, whether physical or virtual, so vital to the

38

United States that the incapacity or destruction of such systems or assets would have a
debilitating impact on national security.
(7) Critical technologies—The term “critical technologies” means critical technology,
critical components, or critical technology items essential to national defense, identified
pursuant to this section, subject to regulations issued at the direction of the President, in
accordance with subsection (h).
(8) Lead agency—The term “lead agency” means the agency, or agencies, designated
as the lead agency or agencies pursuant to subsection (k)(5) for the review of a transaction.
(b) National Security Reviews and Investigations
(1) National security reviews—
(A) In general—Upon receiving written notification under subparagraph (C) of
any covered transaction, or pursuant to a unilateral notification initiated under subparagraph
(D) with respect to any covered transaction, the President, acting through the Committee—
(i) shall review the covered transaction to determine the effects of the
transaction on the national security of the United States; and
(ii) shall consider the factors specified in subsection (f) for such purpose, as
appropriate.
(B) Control by foreign government—If the Committee determines that the covered
transaction is a foreign government-controlled transaction, the Committee shall conduct an
investigation of the transaction under paragraph (2).
(C) Written notice—
(i) In general—Any party or parties to any covered transaction may initiate a
review of the transaction under this paragraph by submitting a written notice of the
transaction to the Chairperson of the Committee.
(ii) Withdrawal of notice—No covered transaction for which a notice was
submitted under clause (i) may be withdrawn from review, unless a written request for such
withdrawal is submitted to the Committee by any party to the transaction and approved by the
Committee.
(iii) Continuing discussions—A request for withdrawal under clause (ii) shall
not be construed to preclude any party to the covered transaction from continuing informal
discussions with the Committee or any member thereof regarding possible resubmission for
review pursuant to this paragraph.

39

(D) Unilateral initiation of review—Subject to subparagraph (F), the President or
the Committee may initiate a review under subparagraph (A) of—
(i) any covered transaction;
(ii) any covered transaction that has previously been reviewed or investigated
under this section, if any party to the transaction submitted false or misleading material
information to the Committee in connection with the review or investigation or omitted
material information, including material documents, from information submitted to the
Committee; or
(iii) any covered transaction that has previously been reviewed or investigated
under this section, if—
(I) any party to the transaction or the entity resulting from consummation
of the transaction intentionally materially breaches a mitigation agreement or condition
described in subsection (l)(1)(A);
(II) such breach is certified to the Committee by the lead department or
agency monitoring and enforcing such agreement or condition as an intentional material
breach; and
(III) the Committee determines that there are no other remedies or
enforcement tools available to address such breach.
(E) Timing—Any review under this paragraph shall be completed before the end
of the 30-day period beginning on the date of the acceptance of written notice under
subparagraph (C) by the chairperson, or beginning on the date of the initiation of the review in
accordance with subparagraph (D), as applicable.
(F) Limit of delegation of certain authority—The authority of the Committee to
initiate a review under subparagraph (D) may not be delegated to any person, other than the
Deputy Secretary or an appropriate Under Secretary of the department or agency represented
on the Committee.
(2) National security investigations—
(A) In general—In each case described in subparagraph (B), the Committee shall
immediately conduct an investigation of the effects of a covered transaction on the national
security of the United States, and take any necessary actions in connection with the
transaction to protect the national security of the United States.
(B) Applicability—Subparagraph (A) shall apply in each case in which—
(i) a review of a covered transaction under paragraph (1) results in a
determination that—

40

(I) the transaction threatens to impair the national security of the United
States and that threat has not been mitigated during or prior to the review of a covered
transaction under paragraph (1);
(II) the transaction is a foreign government controlled transaction; or
(III) the transaction would result in control of any critical infrastructure of
or within the United States by or on behalf of any foreign person, if the Committee determines
that the transaction could impair national security, and that such impairment to national
security has not been mitigated by assurances provided or renewed with the approval of the
Committee, as described in subsection (l), during the review period under paragraph (1); or
(ii) the lead agency recommends, and the Committee concurs, that an
investigation be undertaken.
(C) Timing—Any investigation under subparagraph (A) shall be completed before
the end of the 45-day period beginning on the date on which the investigation commenced.
(D) Exception—
(i) In general—Notwithstanding subparagraph (B)(i), an investigation of a
foreign government-controlled transaction described in subclause (II) of subparagraph (B)(i)
or a transaction involving critical infrastructure described in subclause (III) of subparagraph
(B)(i) shall not be required under this paragraph, if the Secretary of the Treasury and the head
of the lead agency jointly determine, on the basis of the review of the transaction under
paragraph (1), that the transaction will not impair the national security of the United States.
(ii) Nondelegation—The authority of the Secretary or the head of an agency
referred to in clause (i) may not be delegated to any person, other than the Deputy Secretary
of the Treasury or the deputy head (or the equivalent thereof) of the lead agency, respectively.
(E) Guidance on Certain Transactions with National Security Implications —The
Chairperson shall, not later than 180 days after the effective date of the Foreign Investment
and National Security Act of 2007, publish in the Federal Register guidance on the types of
transactions that the Committee has reviewed and that have presented national security
considerations, including transactions that may constitute covered transactions that would
result in control of critical infrastructure relating to United States national security by a
foreign government or an entity controlled by or acting on behalf of a foreign government.
(3) Certifications to Congress—
(A) Certified notice at completion of review—Upon completion of a review under
subsection (b) that concludes action under this section, the chairperson and the head of the
lead agency shall transmit a certified notice to the members of Congress specified in
subparagraph (C)(iii).

41

(B) Certified report at completion of investigation—As soon as is practicable after
completion of an investigation under subsection (b) that concludes action under this section,
the chairperson and the head of the lead agency shall transmit to the members of Congress
specified in subparagraph (C)(iii) a certified written report (consistent with the requirements
of subsection (c)) on the results of the investigation, unless the matter under investigation has
been sent to the President for decision.
(C) Certification procedures—
(i) In general—Each certified notice and report required under subparagraphs
(A) and (B), respectively, shall be submitted to the members of Congress specified in clause
(iii), and shall include—
(I) a description of the actions taken by the Committee with respect to the
transaction; and
(II) identification of the determinative factors considered under subsection
(f).
(ii) Content of certification—Each certified notice and report required under
subparagraphs (A) and (B), respectively, shall be signed by the chairperson and the head of
the lead agency, and shall state that, in the determination of the Committee, there are no
unresolved national security concerns with the transaction that is the subject of the notice or
report.
(iii) Members of Congress—Each certified notice and report required under
subparagraphs (A) and (B), respectively, shall be transmitted—
(I) to the Majority Leader and the Minority Leader of the Senate;
(II) to the chair and ranking member of the Committee on Banking,
Housing, and Urban Affairs of the Senate and of any committee of the Senate having
oversight over the lead agency;
(III) to the Speaker and the Minority Leader of the House of
Representatives;
(IV) to the chair and ranking member of the Committee on Financial
Services of the House of Representatives and of any committee of the House of
Representatives having oversight over the lead agency; and
(V) with respect to covered transactions involving critical infrastructure, to
the members of the Senate from the State in which the principal place of business of the
acquired United States person is located, and the member from the Congressional District in
which such principal place of business is located.

42

(iv) Signatures; limit on delegation—
(I) In general—Each certified notice and report required under
subparagraphs (A) and (B), respectively, shall be signed by the chairperson and the head of
the lead agency, which signature requirement may only be delegated in accordance with
subclause (II).
(II) Limitation of delegation of certifications—The chairperson and the
head of the lead agency may delegate the signature requirement under subclause (I)—
(aa) only to an appropriate employee of the Department of the Treasury
(in the case of the Secretary of the Treasury) or to an appropriate employee of the lead agency
(in the case of the lead agency) who was appointed by the President, by and with the advice
and consent of the Senate, with respect to any notice provided under paragraph (1) following
the completion of a review under this section; or
(bb) only to a Deputy Secretary of the Treasury (in the case of the
Secretary of the Treasury) or a person serving in the Deputy position or the equivalent thereof
at the lead agency (in the case of the lead agency), with respect to any report provided under
subparagraph (B) following an investigation under this section.
(4) Analysis by Director of National Intelligence—
(A) In general—The Director of National Intelligence shall expeditiously carry out
a thorough analysis of any threat to the national security of the United States posed by any
covered transaction. The Director of National Intelligence shall also seek and incorporate the
views of all affected or appropriate intelligence agencies with respect to the transaction.
(B) Timing—The analysis required under subparagraph (A) shall be provided by
the Director of National Intelligence to the Committee not later than 20 days after the date on
which notice of the transaction is accepted by the Committee under paragraph (1)(C), but such
analysis may be supplemented or amended, as the Director considers necessary or
appropriate, or upon a request for additional information by the Committee. The Director
may begin the analysis at any time prior to acceptance of the notice, in accordance with
otherwise applicable law.
(C) Interaction with intelligence community—The Director of National
Intelligence shall ensure that the intelligence community remains engaged in the collection,
analysis, and dissemination to the Committee of any additional relevant information that may
become available during the course of any investigation conducted under subsection (b) with
respect to a transaction.
(D) Independent role of Director—The Director of National Intelligence shall be a
nonvoting, ex officio member of the Committee, and shall be provided with all notices
received by the Committee under paragraph (1)(C) regarding covered transactions, but shall

43

serve no policy role on the Committee, other than to provide analysis under subparagraphs
(A) and (C) in connection with a covered transaction.
(5) Submission of additional information—No provision of this subsection shall be
construed as prohibiting any party to a covered transaction from submitting additional
information concerning the transaction, including any proposed restructuring of the
transaction or any modifications to any agreements in connection with the transaction, while
any review or investigation of the transaction is ongoing.
(6) Notice of results to parties— The Committee shall notify the parties to a covered
transaction of the results of a review or investigation under this section, promptly upon
completion of all action under this section.
(7) Regulations—Regulations prescribed under this section shall include standard
procedures for—
(A) submitting any notice of a covered transaction to the Committee;
(B) submitting a request to withdraw a covered transaction from review;
(C) resubmitting a notice of a covered transaction that was previously withdrawn
from review; and
(D) providing notice of the results of a review or investigation to the parties to the
covered transaction, upon completion of all action under this section.
(c) Confidentiality of Information
Any information or documentary material filed with the President or the President’s designee
pursuant to this section shall be exempt from disclosure under section 552 of title 5, United
States Code, and no such information or documentary material may be made public, except as
may be relevant to any administrative or judicial action or proceeding. Nothing in this
subsection shall be construed to prevent disclosure to either House of Congress or to any duly
authorized committee or subcommittee of the Congress.
(d) Action by the President
(1) In general—Subject to paragraph (4), the President may take such action for such
time as the President considers appropriate to suspend or prohibit any covered transaction that
threatens to impair the national security of the United States.
(2) Announcement by the President—The President shall announce the decision on
whether or not to take action pursuant to paragraph (1) not later than 15 days after the date on
which an investigation described in subsection (b) is completed.

44

(3) Enforcement—The President may direct the Attorney General of the United States
to seek appropriate relief, including divestment relief, in the district courts of the United
States, in order to implement and enforce this subsection.
(4) Findings of the President—The President may exercise the authority conferred by
paragraph (1), only if the President finds that—
(A) there is credible evidence that leads the President to believe that the foreign
interest exercising control might take action that threatens to impair the national security; and
(B) provisions of law, other than this section and the International Emergency
Economic Powers Act, do not, in the judgment of the President, provide adequate and
appropriate authority for the President to protect the national security in the matter before the
President.
(5) Factors to be considered—For purposes of determining whether to take action
under paragraph (1), the President shall consider, among other factors each of the factors
described in subsection (f), as appropriate.
(e) Actions and Findings Nonreviewable
The actions of the President under paragraph (1) of subsection (d) and the findings of the
President under paragraph (4) of subsection (d) shall not be subject to judicial review.
(f) Factors to be Considered
For purposes of this section, the President or the President’s designee may, taking into
account the requirements of national security, consider—
(1) domestic production needed for projected national defense requirements,
(2) the capability and capacity of domestic industries to meet national defense
requirements, including the availability of human resources, products, technology, materials,
and other supplies and services,
(3) the control of domestic industries and commercial activity by foreign citizens as it
affects the capability and capacity of the United States to meet the requirements of national
security,
(4) the potential effects of the proposed or pending transaction on sales of military
goods, equipment, or technology to any country—
(A) identified by the Secretary of State—
(i) under section 6(j) of the Export Administration Act of 1979 [section 2405(j)
of this Appendix], as a country that supports terrorism;

45

(ii) under section 6(l) of the Export Administration Act of 1979 [section
2405(l) of this Appendix], as a country of concern regarding missile proliferation; or
(iii) under section 6(m) of the Export Administration Act of 1979 [section 2405(m) of this
Appendix], as a country of concern regarding the proliferation of chemical and biological
weapons;
(B) identified by the Secretary of Defense as posing a potential regional military
threat to the interests of the United States; or
(C) listed under section 309(c) of the Nuclear Non-Proliferation Act of 1978 [42
U.S.C. App. § 2139a(c)] on the “Nuclear Non-Proliferation-Special Country List” [15 C.F.R.
Part 778, Supplement No. 4] or any successor list;
(5) the potential effects of the proposed or pending transaction on United States
international technological leadership in areas affecting United States national security;
(6) the potential national security-related effects on United States critical
infrastructure, including major energy assets;
(7) the potential national security-related effects on United States critical technologies;
(8) whether the covered transaction is a foreign government-controlled transaction, as
determined under subsection (b)(1)(B);
(9) as appropriate, and particularly with respect to transactions requiring an
investigation under subsection (b)(1)(B), a review of the current assessment of—
(A) the adherence of the subject country to nonproliferation control regimes,
including treaties and multilateral supply guidelines, which shall draw on, but not be limited
to, the annual report on “Adherence to and Compliance with Arms Control, Nonproliferation
and Disarmament Agreements and Commitments” required by section 403 of the Arms
Control and Disarmament Act;
(B) the relationship of such country with the United States, specifically on its
record on cooperating in counterterrorism efforts, which shall draw on, but not be limited to,
the report of the President to Congress under section 7120 of the Intelligence Reform and
Terrorism Prevention Act of 2004; and
(C) the potential for transshipment or diversion of technologies with military
applications, including an analysis of national export control laws and regulations;
(10) the long-term projection of United States requirements for sources of energy and
other critical resources and material; and

46

(11) such other factors as the President or the Committee may determine to be
appropriate, generally or in connection with a specific review or investigation.
(g) Additional Information to Congress; Confidentiality
(1) Briefing requirement on request—The Committee shall, upon request from any
Member of Congress specified in subsection (b)(3)(C)(iii), promptly provide briefings on a
covered transaction for which all action has concluded under this section, or on compliance
with a mitigation agreement or condition imposed with respect to such transaction, on a
classified basis, if deemed necessary by the sensitivity of the information. Briefings under this
paragraph may be provided to the congressional staff of such a Member of Congress having
appropriate security clearance.
(2) Application of confidentiality provisions—
(A) In general—The disclosure of information under this subsection shall be
consistent with the requirements of subsection (c). Members of Congress and staff of either
House of Congress or any committee of Congress, shall be subject to the same limitations on
disclosure of information as are applicable under subsection (c).
(B) Proprietary information—Proprietary information which can be associated
with a particular party to a covered transaction shall be furnished in accordance with
subparagraph (A) only to a committee of Congress, and only when the committee provides
assurances of confidentiality, unless such party otherwise consents in writing to such
disclosure.
(h) Regulations
(1) In general—The President shall direct, subject to notice and comment, the issuance
of regulations to carry out this section.
(2) Effective date—Regulations issued under this section shall become effective not
later than 180 days after the effective date of the Foreign Investment and National Security
Act of 2007.
(3) Content—Regulations issued under this subsection shall—
(A) provide for the imposition of civil penalties for any violation of this section,
including any mitigation agreement entered into or conditions imposed pursuant to subsection
(l);
(B) to the extent possible—
(i) minimize paperwork burdens; and

47

(ii) coordinate reporting requirements under this section with reporting
requirements under any other provision of Federal law; and
(C) provide for an appropriate role for the Secretary of Labor with respect to
mitigation agreements.
(i) Effect on Other Law
No provision of this section shall be construed as altering or affecting any other authority,
process, regulation, investigation, enforcement measure, or review provided by or established
under any other provision of Federal law, including the International Emergency Economic
Powers Act, or any other authority of the President or the Congress under the Constitution of
the United States.
(j) Technology Risk Assessments
In any case in which an assessment of the risk of diversion of defense critical technology is
performed by a designee of the President, a copy of such assessment shall be provided to any
other designee of the President responsible for reviewing or investigating a merger,
acquisition, or takeover under this section.
(k) Committee on Foreign Investment in the United States
(1) Establishment—The Committee on Foreign Investment in the United States,
established pursuant to Executive Order No. 11858, shall be a multi agency committee to
carry out this section and such other assignments as the President may designate.
(2) Membership—The Committee shall be comprised of the following members or the
designee of any such member:
(A) The Secretary of the Treasury.
(B) The Secretary of Homeland Security.
(C) The Secretary of Commerce.
(D) The Secretary of Defense.
(E) The Secretary of State.
(F) The Attorney General of the United States.
(G) The Secretary of Energy.
(H) The Secretary of Labor (nonvoting, ex officio).

48

(I) The Director of National Intelligence (nonvoting, ex officio).
(J) The heads of any other executive department, agency, or office, as the
President determines appropriate, generally or on a case-by-case basis.
(3) Chairperson—The Secretary of the Treasury shall serve as the chairperson of the
Committee.
(4) Assistant Secretary for the Department of the Treasury—There shall be established
an additional position of Assistant Secretary of the Treasury, who shall be appointed by the
President, by and with the advice and consent of the Senate. The Assistant Secretary
appointed under this paragraph shall report directly to the Undersecretary of the Treasury for
International Affairs. The duties of the Assistant Secretary shall include duties related to the
Committee on Foreign Investment in the United States, as delegated by the Secretary of the
Treasury under this section.
(5) Designation of lead agency—The Secretary of the Treasury shall designate, as
appropriate, a member or members of the Committee to be the lead agency or agencies on
behalf of the Committee—
(A) for each covered transaction, and for negotiating any mitigation agreements or
other conditions necessary to protect national security; and
(B) for all matters related to the monitoring of the completed transaction, to ensure
compliance with such agreements or conditions and with this section.
(6) Other members—The chairperson shall consult with the heads of such other
Federal departments, agencies, and independent establishments in any review or investigation
under subsection (a), as the chairperson determines to be appropriate, on the basis of the facts
and circumstances of the covered transaction under review or investigation (or the designee of
any such department or agency head).
(7) Meetings—The Committee shall meet upon the direction of the President or upon
the call of the chairperson, without regard to section 552b of title 5, United States Code (if
otherwise applicable).
(l) Mitigation, Tracking, and Post Consummation Monitoring and Enforcement
(1) Mitigation—
(A) In general—The Committee or a lead agency may, on behalf of the
Committee, negotiate, enter into or impose, and enforce any agreement or condition with any
party to the covered transaction in order to mitigate any threat to the national security of the
United States that arises as a result of the covered transaction.

49

(B) Risk-based analysis required—Any agreement entered into or condition
imposed under subparagraph (A) shall be based on a risk-based analysis, conducted by the
Committee, of the threat to national security of the covered transaction.
(2) Tracking authority for withdrawn notices—
(A) In general—If any written notice of a covered transaction that was submitted
to the Committee under this section is withdrawn before any review or investigation by the
Committee under subsection (b) is completed, the Committee shall establish, as appropriate—
(i) interim protections to address specific concerns with such transaction that
have been raised in connection with any such review or investigation pending any
resubmission of any written notice under this section with respect to such transaction and
further action by the President under this section;
(ii) specific time frames for resubmitting any such written notice; and
(iii) a process for tracking any actions that may be taken by any party to the
transaction, in connection with the transaction, before the notice referred to in clause (ii) is
resubmitted.
(B) Designation of agency—The lead agency, other than any entity of the
intelligence community (as defined in the National Security Act of 1947), shall, on behalf of
the Committee, ensure that the requirements of subparagraph (A) with respect to any covered
transaction that is subject to such subparagraph are met.
(3) Negotiation, modification, monitoring, and enforcement—
(A) Designation of lead agency—The lead agency shall negotiate, modify,
monitor, and enforce, on behalf of the Committee, any agreement entered into or condition
imposed under paragraph (1) with respect to a covered transaction, based on the expertise
with and knowledge of the issues related to such transaction on the part of the designated
department or agency. Nothing in this paragraph shall prohibit other departments or agencies
in assisting the lead agency in carrying out the purposes of this paragraph.
(B) Reporting by designated agency—
(i) Modification reports—The lead agency in connection with any agreement
entered into or condition imposed with respect to a covered transaction shall—
(I) provide periodic reports to the Committee on any material modification
to any such agreement or condition imposed with respect to the transaction; and
(II) ensure that any material modification to any such agreement or
condition is reported to the Director of National Intelligence, the Attorney General of the

50

United States, and any other Federal department or agency that may have a material interest in
such modification.
(ii) Compliance—The Committee shall develop and agree upon methods for
evaluating compliance with any agreement entered into or condition imposed with respect to a
covered transaction that will allow the Committee to adequately assure compliance, without—
(I) unnecessarily diverting Committee resources from assessing any new
covered transaction for which a written notice has been filed pursuant to subsection (b)(1)(C),
and if necessary, reaching a mitigation agreement with or imposing a condition on a party to
such covered transaction or any covered transaction for which a review has been reopened for
any reason; or
(II) placing unnecessary burdens on a party to a covered transaction.
(m) Annual Report to Congress
(1) In general—The chairperson shall transmit a report to the chairman and ranking
member of the committee of jurisdiction in the Senate and the House of Representatives,
before July 31 of each year on all of the reviews and investigations of covered transactions
completed under subsection (b) during the 12-month period covered by the report.
(2) Contents of report relating to covered transactions—The annual report under
paragraph (1) shall contain the following information, with respect to each covered
transaction, for the reporting period:
(A) A list of all notices filed and all reviews or investigations completed during the
period, with basic information on each party to the transaction, the nature of the business
activities or products of all pertinent persons, along with information about any withdrawal
from the process, and any decision or action by the President under this section.
(B) Specific, cumulative, and, as appropriate, trend information on the numbers of
filings, investigations, withdrawals, and decisions or actions by the President under this
section.
(C) Cumulative and, as appropriate, trend information on the business sectors
involved in the filings which have been made, and the countries from which the investments
have originated.
(D) Information on whether companies that withdrew notices to the Committee in
accordance with subsection (b)(1)(C)(ii) have later refiled such notices, or, alternatively,
abandoned the transaction.
(E) The types of security arrangements and conditions the Committee has used to
mitigate national security concerns about a transaction, including a discussion of the methods

51

that the Committee and any lead agency are using to determine compliance with such
arrangements or conditions.
(F) A detailed discussion of all perceived adverse effects of covered transactions
on the national security or critical infrastructure of the United States that the Committee will
take into account in its deliberations during the period before delivery of the next report, to
the extent possible.
(3) Contents of report relating to critical technologies—
(A) In general—In order to assist Congress in its oversight responsibilities with
respect to this section, the President and such agencies as the President shall designate shall
include in the annual report submitted under paragraph (1)—
(i) an evaluation of whether there is credible evidence of a coordinated strategy
by 1 or more countries or companies to acquire United States companies involved in research,
development, or production of critical technologies for which the United States is a leading
producer; and
(ii) an evaluation of whether there are industrial espionage activities directed or
directly assisted by foreign governments against private United States companies aimed at
obtaining commercial secrets related to critical technologies.
(B) Release of unclassified study—All appropriate portions of the annual report
under paragraph (1) may be classified. An unclassified version of the report, as appropriate,
consistent with safeguarding national security and privacy, shall be made available to the
public.
(n) Certification of Notices and Assurances
Each notice, and any follow-up information, submitted under this section and regulations
prescribed under this section to the President or the Committee by a party to a covered
transaction, and any information submitted by any such party in connection with any action
for which a report is required pursuant to paragraph (3)(B) of subsection (l), with respect to
the implementation of any mitigation agreement or condition described in paragraph (1)(A) of
subsection (l), or any material change in circumstances, shall be accompanied by a written
statement by the chief executive officer or the designee of the person required to submit such
notice or information certifying that, to the best of the knowledge and belief of that person—
(1) the notice or information submitted fully complies with the requirements of this
section or such regulation, agreement, or condition; and
(2) the notice or information is accurate and complete in all material respects.

52

Sec. 721a. PROHIBITION ON PURCHASE OF UNITED STATES DEFENSE
CONTRACTORS BY ENTITIES CONTROLLED BY FOREIGN GOVERNMENTS
[50 U.S.C. App. § 2170a]
(a) In General
No entity controlled by a foreign government may merge with, acquire, or take over a
company engaged in interstate commerce in the United States that—
(1) is performing a Department of Defense contract, or a Department of Energy
contract under a national security program, that cannot be performed satisfactorily unless that
company is given access to information in a proscribed category of information; or
(2) during the previous fiscal year, was awarded—
(A) Department of Defense prime contracts in an aggregate amount in excess of
$500,000,000; or
(B) Department of Energy prime contracts under national security programs in an
aggregate amount in excess of $500,000,000.
(b) Inapplicability to Certain Cases
The limitation in subsection (a) shall not apply if a merger, acquisition, or takeover is not
suspended or prohibited pursuant to section 721 of the Defense Production Act of 1950 [50
U.S.C. App. § 2170].
(c) Definitions
In this section:
(1) The term “entity controlled by a foreign government” includes—
(A) any domestic or foreign organization or corporation that is effectively owned
or controlled by a foreign government; and
(B) any individual acting on behalf of a foreign government, as determined by the
President.
(2) The term “proscribed category of information” means a category of information
that—
(A) with respect to Department of Defense contracts—
(i) includes special access information;

53

(ii) is determined by the Secretary of Defense to include information the
disclosure of which to an entity controlled by a foreign government is not in the national
security interests of the United States; and
(iii) is defined in regulations prescribed by the Secretary of Defense for the
purposes of this section; and
(B) with respect to Department of Energy contracts—
(i) is determined by the Secretary of Energy to include information described
in subparagraph (A)(ii); and
(ii) is defined in regulations prescribed by the Secretary of Energy for the
purposes of this section.
Sec. 721b. REPORTS ON FOREIGN INDUSTRIAL ESPIONAGE [50 U.S.C. App. §
2170b]
(a) In General
(1) Submission and contents
In order to assist Congress in its oversight functions with respect to this Act [50 U.S.C. App.
§ 2061-2171] and to improve the awareness of United States industry of foreign industrial
espionage and the ability of such industry to protect against such espionage, the President
shall submit to Congress a report that describes, as of the time of the report, the following:
(A) The respective policy functions and operational roles of the agencies of the
executive branch of the Federal Government in identifying and countering threats to United
States industry of foreign industrial espionage, including the manner in which such functions
and roles are coordinated.
(B) The means by which the Federal Government communicates information on
such threats, and on methods to protect against such threats, to United States industry In
General and to United States companies known to be targets of foreign industrial espionage.
(C) The specific measures that are being or could be undertaken in order to
improve the activities referred to in subparagraphs (A) and (B), including proposals for any
modifications of law necessary to facilitate the undertaking of such activities.
(D) The threat to United States industry of foreign industrial espionage and any
trends in that threat, including—
(i) the number and identity of the foreign governments conducting foreign
industrial espionage;

54

(ii) the industrial sectors and types of information and technology targeted by
such espionage; and
(iii) the methods used to conduct such espionage.
(2) Date of Submission
The President shall submit the report required under this subsection not later than six months
after the date of the enactment of this Act [50 U.S.C. App. § 2061-2171] (Oct. 14, 1994).
(b) Annual Update
(1) Submittal to congressional intelligence committees
Not later each year than the date provided in section 507 of the National Security Act of 1947
[50 U.S.C. App. § 415b], the President shall submit to the congressional intelligence
committees a report updating the information referred to in subsection (a)(1)(D).
(2) Submittal to congressional leadership
Not later than April 14 each year, the President shall submit to the congressional leadership a
report updating the information referred to in subsection (a)(1)(D).
(3) Definitions
In this subsection:
(A) Congressional intelligence committees—The term “congressional intelligence
committees” has the meaning given that term in section 3 of the National Security Act of
1947 [50 U.S.C. App. § 401a].
(B) Congressional leadership—The term “congressional leadership” means the
Speaker and the minority leader of the House of Representatives and the majority leader and
the minority leader of the Senate.
(c) Form of Reports
To the maximum extent practicable, the reports referred to in subsections (a) and (b) shall be
submitted in an unclassified form, but may be accompanied by a classified appendix.
(d) Omitted
(e) Definition
For the purposes of this section, “foreign industrial espionage” means industrial espionage
conducted by a foreign government or by a foreign company with direct assistance of a

55

foreign government against a private United States company and aimed at obtaining
commercial secrets.
Sec. 722. DEFENSE PRODUCTION ACT COMMITTEE [50 U.S.C. App. § 2171]
(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 [50 U.S.C. App. § 2061-2171] by the departments, agencies, and independent
establishments of the Federal Government to which the President has delegated authority
under this Act [50 U.S.C. App. § 2061-2171].
(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 [50 U.S.C. App. § 2061-2171]; 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 Director shall be paid from appropriations
to the salaries and expenses account of the department or agency of the Chairperson of the
Committee. The 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.

56

(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—
(1) a review of the authority under this Act [50 U.S.C. App. § 2061-2171] of each
department, agency, or independent establishment of the Federal Government to which the
President has delegated authority under this Act [50 U.S.C. App. § 2061-2171];
(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. 723. ANNUAL REPORT ON IMPACT OF OFFSETS [50 U.S.C. App. § 2172]
(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.

57

(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 [50 U.S.C. App. § 2061-2171], 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

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(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.

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