Presidential authorization for the national defense

50 U.S.C. § 4531

• Title: 50 — War and National Defense
• Chapter: SUBCHAPTER II—EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY

Text

(a) Expediting production and deliveries or services
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.
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;
(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.
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 661a of title 2; 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 title 31.
(b) Fiscal agents of the United States
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.
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.
No 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.
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
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.
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
If the making of any guarantee or obligation of the Federal Government under this subchapter 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.
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.
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.

History

(Sept. 8, 1950, ch. 932, title III, §301, as added Pub. L. 111–67, §7, Sept. 30, 2009, 123 Stat. 2010.)

Editorial Notes

Termination of Section
For termination of section, see section 4564(a) of this title.

Editorial Notes

Codification
Section was formerly classified to section 2091 of the former Appendix to this title prior to editorial reclassification and renumbering as this section.

Prior Provisions
A prior section 301 of act Sept. 8, 1950, ch. 932, title III, 64 Stat. 800; June 30, 1953, ch. 171, §4, 67 Stat. 129; Pub. L. 91–379, title I, §104, Aug. 15, 1970, 84 Stat. 799; Pub. L. 96–294, title I, §104(a), (b), June 30, 1980, 94 Stat. 618; Pub. L. 98–265, §§3(a), 4(a), Apr. 17, 1984, 98 Stat. 149, 150; Pub. L. 102–558, title I, §§121(a), 141, Oct. 28, 1992, 106 Stat. 4203, 4217; Pub. L. 107–47, §4(1)–(3), (5), Oct. 5, 2001, 115 Stat. 260, related to loan guarantees, prior to the general amendment of title III of this Act by Pub. L. 111–67.

Statutory Notes and Related Subsidiaries

Legislative Waiver of Loan Limitations
Pub. L. 116–136, div. B, title III, Mar. 27, 2020, 134 Stat. 520, provided in part: "That for the two-year period beginning with the date of enactment of this Act [Mar. 27, 2020], the requirements described in Section [sic] 301(a)(3)(A) and 302(c)(1) of Public Law 81–774 [50 U.S.C. 4531(a)(3)(A), 4532(c)(1)], shall be waived".

Limitation on Cancellation of Designation of Secretary of the Air Force as Department of Defense Executive Agent
Pub. L. 115–232, div. A, title XVII, §1792, Aug. 13, 2018, 132 Stat. 2238, which provided the Secretary of Defense could not implement the decision, issued on July 1, 2017, to cancel the designation, under Department of Defense Directive 4400.01E, entitled "Defense Production Act Programs" and dated October 12, 2001, of the Secretary of the Air Force as the Department of Defense Executive Agent for the program carried out under title III of the Defense Production Act of 1950 (50 U.S.C. 4531 et seq.) until the date of the enactment of a joint resolution or an Act approving the implementation of such decision, was repealed by Pub. L. 119–60, div. A, title VIII, §862, Dec. 18, 2025, 139 Stat. 989.
Pub. L. 115–91, div. A, title II, §226, Dec. 12, 2017, 131 Stat. 1335, as amended by Pub. L. 117–263, div. A, title II, §214, Dec. 23, 2022, 136 Stat. 2471, which provided the Secretary of Defense could not implement the decision, issued on July 1, 2017, to cancel the designation, under Department of Defense Directive 4400.1E, entitled "Defense Production Act Programs" and dated October 12, 2001, of the currently assigned Department of Defense Executive Agent for the program carried out under title III of the Defense Production Act of 1950 (50 U.S.C. 4531 et seq.) until the Secretary had completed required review and assessment and carried out required briefing, was repealed by Pub. L. 119–60, div. A, title VIII, §862, Dec. 18, 2025, 139 Stat. 989.

Executive Documents

Delegation of Functions
Authority of President under this section with respect to addressing the national energy emergency declared under Ex. Ord. No. 14156, Jan. 20, 2025, 90 F.R. 8433, set out as a note under section 1621 of this title, delegated to the Chief Executive Officer of the United States International Development Finance Corporation, see section 6(d) of Ex. Ord. No. 14241, Mar. 20, 2025, 90 F.R. 13673, set out as a note under section 1601 of Title 30, Mineral Lands and Mining.
Authority of President under this section with respect to responding to the spread of COVID–19 within the United States delegated to Secretary of Health and Human Services and the Secretary of Homeland Security, see section 2 of Ex. Ord. No. 13911, Mar. 27, 2020, 85 F.R. 18403, set out as a note under section 4511 of this title.
Functions of President under this chapter relating to production, conservation, use, control, distribution, and allocation of energy, delegated to Secretary of Energy, see section 4 of Ex. Ord. No. 11790, eff. June 25, 1974, 39 F.R. 23185, set out as a note under section 761 of Title 15, Commerce and Trade.
For delegation of authority of President under subsec. (a)(2) of this section, see section 305(a) of Ex. Ord. No. 13603, Mar. 16, 2012, 77 F.R. 16654, set out as a note under section 4553 of this title.

Executive Waiver of Loan Limitations
Requirements of subsecs. (a)(2) and (d)(1)(A) of this section waived during the national emergency declared by Proc. No. 9994, Mar. 13, 2020, 85 F.R. 15337, set out as a note under section 1621 of this title, see section 2(c) of Ex. Ord. No. 13911, Mar. 27, 2020, 85 F.R. 18404, set out as a note under section 4511 of this title.