|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Friday, February 9, 2001||202-224-0894|
Sen. Phil Gramm, chairman of the Committee on Banking, Housing and Urban Affairs, made the following statement today at a full committee hearing on the use of the Defense Production Act of 1950 to address the California energy crisis. The Banking Committee has jurisdiction over the Defense Production Act, which is due for reauthorization this year.
Former President Clinton, on Jan. 19, authorized the U.S. Energy Secretary to use the Defense Production Act of 1950 to compel a continuing supply of natural gas to Pacific Gas & Electric, a utility company that provides gas and electricity to parts of California. On Jan. 23, Energy Secretary Spencer Abraham continued the order until Feb. 6, when it expired.
"I wanted to hold this hearing today because this committee, the Banking Committee, is really the economics committee of the Senate. We have jurisdiction over the Defense Production Act, which has massive implications for the economic health of the nation. We have an opportunity today, in light of the use of the Defense Production Act in the California energy crisis, to look at this Act as we begin the process of rewriting the Defense Production Act, which is scheduled to expire this year.
"We are rewriting it in an era when Ivan is not at the gate, when the world is very different that it was in 1950 when Harry Truman signed this bill into law and Ivan was very much at the gate and we were beginning a life and death struggle with the Soviet Union.
"The Defense Production Act is a most powerful and potentially dangerous American law, in my opinion. It is a law that, whether used correctly or incorrectly, was meant to embody, through legislation, the President's powers under Article II, Section 2, of the Constitution, where the President is named commander in chief.
"In this extraordinary use of the Defense Production Act, President Clinton delegated authority to the Energy Secretary, and the Energy Secretary, under the name of the Defense Production Act, forced suppliers to sell to parties that they would not have supplied in the absence of the use of the police power of the federal government.
"They issued an order that required a sale to be made under conditions where the sellers would never have agreed to sell in the absence of the use of the police power of the federal government. It was an order that required a sale at a price the seller never would have accepted under any ordinary circumstance and with no guarantee that the product – in this case, natural gas – would be paid for. I am not aware that the natural gas has yet in fact been paid for.
"I think there's a real question, which we will discuss, as to whether or not Section 101(a) and Section 101(c) of the Defense Production Act, which were cited by the president and the Secretary of Energy, actually and appropriately apply to the circumstances in California.
"This is a very important issue. The Defense Production Act was a bill adopted during the Truman Administration that gave the President tremendous economic powers. It is clear, looking at the context of that debate and subsequent use of those powers, that it was the intent of Congress that these powers be used for emergencies or other circumstances that had clear national security implications.
"In fact, looking at the whole history of the Defense Production Act since its inception in 1950, it has been used principally for defense purposes. There have been two major exceptions, however. One was when Richard Nixon used the Defense Production Act to impose wage and price controls, and then Congress repealed that provision of the law.
"The second variance from the norm is the use of the Defense Production Act in the last few weeks to mandate the sale of natural gas under conditions that violated the will of those in the position to make the sale. That's what we're here to look at today.
"I am not trying to exhume the remains of the Clinton Administration. What I'm trying to do is understand exactly how the powerful instrument of the Defense Production Act was used or potentially misused.
"As we look to rewrite the Defense Production Act, it is my intention that we have an extensive rewrite. I don't intend to ever see this Act extended again without a rewriting. I think the world has simply changed too much to allow that to happen.
"What we want to do in this hearing is take a long, hard, dispassionate look at this decision and how it was implemented, what the implications were, how it was used or misused and what that says to us about rewriting this law. That is the purpose of our hearing."