(Updated at 12:13 a.m., April 3, Eastern Time) On Thursday, April 2, 2020, President Trump issued two memoranda directing use of the Defense Production Act (“DPA”) to (i) facilitate the supply of materials for production of ventilators and (ii) acquire N-95 respirators. Making the determination necessary to trigger the president’s powers under DPA section 101, 50 U.S.C. § 4511, the presidential memoranda determined that the scarcity of critical health and medical resources essential to national defense requires intervention in the commercial market. First, with respect to ventilators, the presidential memorandum mandates that the Secretary of Health and Human Services (“HHS”), in consultation with the Secretary of Homeland Security ("DHS"), use any and all available authority under the DPA to facilitate the supply of materials to appropriate subsidiaries or affiliates of General Electric Company; Hill-Rom Holdings, Inc.; Medtronic Public Limited Company; ResMed Inc.; Royal Philips N.V.; and Vyaire Medical, Inc. Second, with respect to N-95 respirators, the presidential memorandum requires the Secretary of Homeland Security to use any and all authority under the DPA to acquire the number of N-95 respirators that are deemed necessary from any appropriate subsidiary or affiliate of 3M Company.
The Executive Order (“EO”) issued on March 18, invoking the DPA as necessary to respond to COVID-19, directed the Secretary of HHS, in consultation with other department heads, to use the authority conferred by DPA section 101 to determine nationwide priorities and allocation of “all health and medical resources,” including allocating the distribution of materials in the civilian market and requiring performance of contracts or orders for national defense over any other contracts or orders. The March 18 EO contained a finding that all health and medical resources required to respond to COVID-19 should be properly distributed according to need.
DPA section 101 provides express authority for the president to control distribution of materials in the civilian market and to prioritize national defense orders above all others upon a finding that (i) materials are scarce and essential to the national defense (including COVID-19 response) and (ii) national defense requirements for materials cannot be met without a significant dislocation of the normal civilian market distribution channels to a degree that creates appreciable hardship.
The April 2 orders provide the authority necessary for the Secretaries of HHS or DHS to organize, manage, allocate, and distribute necessary resources to promote maximum production of ventilators and to prioritize national defense acquisitions of N-95 respirators. The orders give the federal government control of the relevant supplies and markets to assure that resources are marshalled to achieve the most effective means of production and distribution.