On October 3, 2022, the Department of Energy (DOE) issued a request for information (RFI) from the public seeking input on ways the DOE can leverage its authority under the Defense Production Act (DPA) to stimulate domestic manufacturing of clean energy technologies.
The DPA grants the President authority to shape national defense preparedness programs. National defense, as defined in Section 702 of the DPA, includes programs for energy production or construction, critical infrastructure assistance to homeland security, stockpiling, and any directly related activity. The President may delegate authority to the Secretary of Energy related to the production, conservation, use, control, distribution, and allocation of energy supplies under DPA Title I and Title III.
Under Title I, the President is permitted to allocate or prioritize contracts relating to materials, equipment, and services to maximize domestic energy supplies. 50 U.S.C. § 4511(c). Usage must be accompanied by a presidential finding that such materials, services, and facilities are scarce, critical, and essential to three specific objectives. Id. at § 4511(c)(2)(a). The President’s use of the DPA to impose wage and price controls without prior authorization through a joint resolution of Congress. 50 U.S.C. § 4514. Energy is designated as a strategic and critical material, which enables DPA authorities under Title III to be used for energy related purposes. 50 U.S.C. § 4516.
Under the DPA declaration of policy, Congress has found that it is in the interest of national defense preparedness that governmental assurance exists for a certain capacity level to produce and provide renewable energy sources. 50 U.S.C. § 4502(a)(6). The Congressional finding specifies that “to the maximum extent possible” domestic energy supplies should be enhanced through “reliance on renewable energy sources . . . more efficient energy storage and distribution technologies, and energy conservation measures.” Id.
Historic Use of the DPA for DOE objectives
The DPA is a key element of federal law for ensuring U.S. energy security. The Act, as amended in 1980, expressly indicates a direct link between national defense and adequate energy supplies. For instance, the DOE made use of DPA Title I in response to the 2000-2001 California electricity crisis. At that time the DOE utilized Title I prioritization authorities to ensure that emergency supplies of natural gas continued to flow to California utilities. In his prepared statement in the Congressional Review of the DPA in relation to the California Energy Crisis, DOE Acting General Counsel Eric J. Fygi testified that under the DPA presidential authority, “[i]n determining what the national defense requires, it is clear the President may consider the potential impact of shortages of energy supplies.” Fygi also noted that DPA presidential authority requires “priority performance of contracts or orders for goods to maximize domestic energy supplies if he makes certain findings, including that the good is scarce and critical and essential to maximizing domestic energy supplies.” In January 2001, President Clinton delegated authority under the DPA to the DOE. Pursuant to that authority, the DOE ordered out-of-state natural gas suppliers to sell natural gas to Pacific Gas & Electric to ensure continuity of gas service to California residents and businesses. (statement of Eric J, Fygi, Acting Gen. Couns., Dept. of Energy). The DOE’s use of authority under Title I helped California and surrounding states avoid threatened electrical blackouts.
Title IIII of the DPA establishes the Defense Production Act Fund (“DPA Fund”), which is available to carry out Title III’s provisions and purposes. In 2014-2016, Congress authorized the Department of Energy to make transfers of $45 million to the DPA Fund from the Energy Efficiency and Renewable Energy account. In the DOE’s 2014 budget request, the DOE stated that $45 million would be used to support the construction of commercial-scale biofuels production facilities under a joint DOD-Navy, DOE, and USDA memorandum of agreement. A total of $135 million was transferred between FY2014-2016.
Today, the DOE is considering the exercise of its DPA authority to increase manufacturing output and deployment rate of key clean energy technologies. To justify its use of the DPA, the DOE explains in the RFI:
The national defense imperative to strengthen the U.S. clean energy manufacturing base has become more urgent. Russia’s war on Ukraine and the impacts of the COVID-19 pandemic disrupted global supply chains and underscored the dangers of our overreliance on foreign sources for grid components and fossil fuels from adversarial nations. In the electricity sector, supply chain challenges such as wait times for upwards of two years for grid transformers have coincided with an increase in climate-fueled disasters, such as hurricanes and wildfires, that threaten grid reliability. Building the domestic energy industrial base necessary to maintain and strengthen grid reliability and resilience is critical to the U.S. economy and our national defense.
Responses to DOE’s RFI must be submitted by 5 p.m. (EST) on November 30, 2022.