Last week the White House issued two additional Executive Orders (“EOs”) related to EO 13909, the subject of our March 20, 2020 blog post: Presidential Executive Order Calls on HHS to Issue Priority Contracts and Allocate Scarce Medical Resources.

EO 13910, Preventing Hoarding of Health and Medical Resources to Respond to the Spread of COVID-19 (dated March 23, 2020), delegates to the Secretary of Health and Human Services (“HHS”) (in consultation with the Administrator of FEMA) authority under Section 102 of the Defense Production Act (“DPA”) to prevent hoarding and price gouging of health and medical resources, such as personal protective equipment (“PPE”) and sanitizing and disinfecting products, that are needed to respond to the spread of COVID-19 in the United States. Pursuant to the EO, the Secretary has authority to:

prescribe conditions with respect to the accumulation of such resources, and to designate any material as a scare material, or as a material the supply of which would be threatened by persons accumulating the material either in excess of reasonable demands of business, personal, or home consumption, or for resale at prices in excess of prevailing market prices.

EO 13910. The EO further delegates to the Secretary of HHS the authority to prescribe regulations and issue orders, conduct investigations, apply to an appropriate court for injunctive relief to stop or prevent a person from engaging in prohibited acts, and appoint or employ individuals to carry out these requirements. See 50 U.S.C. §§ 4554, 4555, 4556, and 4560.

EO 13911, Delegating Additional Authority Under the DPA with Respect to Health and Medical Resources to Respond to the Spread of COVID-19 (dated March 27, 2020), was also issued pursuant to the DPA and delegated substantial additional authority to the Secretaries of HHS and Homeland Security (“DHS”) beyond the delegations in EO 13909 and EO 13910. The purpose of the EO is to expand domestic production of health and medical resources, including PPE and ventilators, to ensure the United States’ healthcare systems have the ability to surge capacity and capability to respond to the COVID-19 outbreak.

To effect this purpose, EO 13911 provides that:

  • Authority is delegated to the Secretaries of HHS and DHS under Title III of the DPA to provide incentives to industry to produce health and medical resources, such as guaranteeing private loans, making loans to private businesses, and providing for purchases and commitments to purchase. Because the President declared a National Emergency regarding the COVID-19 outbreak, certain requirements of the DPA, such as Presidential determinations and limitations on loans, are waived.
  • Authority is delegated to the Secretaries of HHS and DHS under section 708(c) and (d) of the DPA to provide for the making of voluntary agreements and plans of action by the private sector for the purpose of enabling greater cooperation among private businesses in expanding production and distribution of health and medical resources.
  • Authority conferred by Section 107 of the DPA is delegated to the Secretaries of HHS and DHS to provide incentives to develop and expand productive capabilities of domestic resources for critical components and materials, including restricting contract solicitations to reliable and/or domestic sources, stockpiling critical components, and developing substitutes for critical components and critical technology items.
  • The same authorities previously delegated to the Secretary of HHS under EOs 13909 and 13910 (e. DPA Sections 101 regarding priority in contracts and allocations, and 102 regarding hoarding of designated scarce materials) are delegated to the Secretary of DHS. The Secretary of DHS must consult with the heads of other executive departments and agencies, as appropriate, to determine the proper nationwide priorities and allocation of health and medical resources.
  • The Secretaries of HHS and DHS shall adopt and revise appropriate rules and regulations as may be necessary to implement the EO.

As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules in this area. Our blog does not reflect an unequivocal statement of the law, but instead represents our best understanding of where things currently stand. Further, this blog does not address the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay, and other issues.

For more legal insights visit our Coronavirus (COVID-19) page.

*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*