Trump’s DPA Play: Turning Energy Infrastructure Into a National Defense Priority
Over the past few months, the Trump administration has been laying the foundation to expand the use of the Defense Production Act (DPA) for energy infrastructure and supply chains. This started back in March when the Trump administration issued an Executive Order extending to the Department of Energy (DOE) the authority to directly engage in contract allocation for energy needs under DPA Title I.
A month later, on April 20th, the Trump administration released a series of Presidential Memoranda establishing presidential determinations for grid infrastructure, equipment, and supply chain capacity; large-scale energy and energy related infrastructure; natural gas infrastructure; coal supply chains and baseload power generation capacity; and domestic petroleum production, refining, and logistics capacity and delegating DPA Section 303 authorities to DOE. These actions are reminiscent of the series of presidential determinations that the Biden administration issued in June 2022 for energy materials and technologies, which also included transformers and electric power grid components.
So what does this all mean and why does it matter?
DPA Doing the Heavy Lifting
The DPA grants the President a unique set of authorities designed to direct, expand, and expedite the domestic industrial base for materials, technologies, and energy crucial to national defense when the private sector cannot be expected to meet the nation’s needs on its own. For example, DPA authority was used during the COVID-19 pandemic to expand production of medical supplies and vaccines.
DPA has a few titles that give different powers when invoked, with Title I and Title III being the most frequently used. Title I gives the President power to require private companies and contractors to prioritize certain contracts and orders over others for national defense purposes, including for materials, equipment, and services needed to “maximize domestic energy supply”. Using Title I, the government can, for example, require that manufacturers prioritize orders for the federal government or domestic customers over foreign exports.
Title III gives the President powers to expand domestic production and supply of goods, materials, and critical technologies needed for national defense and allows the President to use an array of financial mechanisms to do so. To use Title III authorities, the President must first issue a presidential determination ascertaining that the requirements to use the authority have been met and then delegate the authority to an agency to implement. Hence, the series of presidential determinations issued last week.
Breaking the Bottlenecks
Notably, both the Trump and Biden administrations have issued presidential determinations to address vulnerabilities in grid component supply chains. The Trump administration’s determination states that the United States’ deteriorating grid infrastructure, constrained by long lead times and shortages of grid components, is detrimental to national defense; industry cannot alleviate these supply chain bottlenecks without government intervention; and the authorities provided in DPA Section 303 are “the most cost-effective, expedient, and practical alternative methods for meeting this need”. DPA Section 303 authorities invoked by Trump include “purchases, purchase commitments, financial support for the development of production capabilities, or other action” necessary to alleviate supply chain vulnerabilities.
Through these DPA determinations, the Trump administration is explicitly tying the U.S. energy system to national security and making energy supply chains a national priority. In the context of grid supply chains, this is absolutely crucial given domestic shortages of components like transformers and breakers and an overreliance on imported goods in a time of geopolitical competition and fracturing relations.
Grid equipment, however, was not the only focus of Trump’s actions. Three of the other determinations support expanding fossil fuel infrastructure for natural gas, coal, and petroleum production. The last determination, focused on “large-scale energy and energy-related infrastructure”, appears to be a catch-all for any other energy projects that the administration wants to support. The memorandum invokes Trump’s prior Executive Order 14156, which declared a “National Energy Emergency” due to the U.S.’ “current inadequate and intermittent energy supply.” This suggests that intermittent renewables like wind and solar will likely be excluded from eligibility.
Such a large number of determinations raises questions about which ones will take priority. Can the U.S. government simultaneously support the expansion of natural gas, coal, petroleum, grid supply chains, and other large-scale energy infrastructure all at the same time? Trump’s DPA determinations explicitly direct the Secretary of Energy to implement them, adding a level of urgency and accountability. Yet, executing on all of these determinations will require significant coordination, staffing, and funding that has not yet materialized.
Show Me the Money
As we have written before on grid supply chains, federal policies like DPA can help correct for market failures, derisk the construction of new manufacturing facilities, and unlock faster grid modernization, but issuing a presidential determination is only the first step. Without a clear funding mechanism to implement the directives, we can only speculate where the money will come from.
Three possible sources currently exist. First, funding could come from whatever remains of the $1 billion that was appropriated in the One Big Beautiful Bill Act (OBBBA) to carry out DPA activities. Some amount of these funds may have already been committed to the DoD and MP Materials deal, and it is unclear how much remains unallocated or what the administration plans to do with the remainder.
The other alternative options could be FY27 appropriations or an FY27 reconciliation bill. The Department of Defense (DoD) is requesting an eye-watering $30.4 billion in DPA funding for FY27, nearly 100 times the amount appropriated by Congress for FY26. $30 billion of the requested amount is in mandatory funding, which would have to be appropriated through a budget reconciliation bill that the Trump administration is pushing for. Historically, the Pentagon has served as the manager of DPA funds, allocating funding to other agencies as necessary and directed by the White House, so while DoD is the agency requesting this funding, some amount could potentially be transferred later to DOE.
Complementing these funding sources is the $375 million in appropriations from FY26 to DOE to “enhance the domestic supply chain for the manufacture of distribution and power transformers, components, and materials, and electric grid components.” Typically only funds that Congress explicitly appropriates for DPA can be used to implement DPA authorities, but DOE could use the $375 million for supporting activities to help plan for DPA implementation (e.g. analysis and stakeholder engagement), especially since the goals of the appropriated money overlap with the goals of the DPA determination.
Now what?
These determinations are just the beginning. Now, it will be up to the administration and Congress to either find existing funding or appropriate new funding. DOE will then need to create and follow through on an implementation plan. We at FAS will be keeping an eye on whether these developments actually materialize over the coming year.
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