2. Has it been used since then?
Yes. The Department of Defense “routinely” uses the law to make sure military-related orders are given priority within the U.S. supply chain, according to the Congressional Research Service. The Federal Emergency Management Agency has used it after natural disasters to prioritize contracts for manufactured housing, food and bottled water, and other supplies. Two decades ago, President Bill Clinton was criticized for using the law to order suppliers to sell natural gas to California -- at prices some senators said were far below market -- to help energy utilities facing credit crunches. Trump himself has employed elements of the law to boost production of rare earth elements, small drones and sensors to detect submarines, among other products. His administration has also considered using it to help the coal and nuclear industries.
3. What can the government do under the law?
In addition to requiring that its orders be given priority, the government can create incentives for manufacturers, such as providing them with direct loans or loan guarantees; buy equipment for them; and waive antitrust restrictions that could discourage industry cooperation. The law allows the government to control the use of scarce resources, such as by requiring companies to reserve materials to fulfill federal orders. Hoarding and price gouging are barred for materials the president designates as scarce. Failing to comply with the law can lead to financial penalties or imprisonment.
4. Is the law being used to help fight the coronavirus?
Trump is using his power under the law to order General Motors Co. “to accept, perform and prioritize contracts or orders for the number of ventilators” deemed appropriate by the Department of Health and Human Services. That department had earlier taken smaller steps under the law, banning hoarding and price-gouging of N95 respirator masks, ventilators and personal protective equipment used by doctors and nurses.
5. Why had Trump been reluctant to use the law?
On March 18, he formally invoked the law with an executive order “prioritizing and allocating health and medical resources to respond to the spread of Covid-19.” But four days later, on March 22, Trump said action under the law wasn’t needed because “tremendous numbers of companies,” including 3M Co. and General Electric Co., had stepped forward voluntarily to make needed equipment. He also suggested that using the law means “nationalizing our business” as a socialist country like Venezuela might do. (In fact, the law doesn’t mean the government taking ownership of any companies, which is what nationalization implies.) The U.S. Chamber of Commerce supported Trump’s resistance to fully deploy his powers under the DPA.
6. Are companies really ramping up production on their own?
Yes, though shortfalls remain. 3M is using “surge capacity“ to ramp up production of N95 masks. Distilleries and breweries are making hand sanitizer. Still, experts say the law could be useful in coordinating production and distribution of complex goods, such as ventilators, which are assembled from hundreds of individual parts.
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