Bloomberg News

Obama Signs Defense Spending Law, With Interpretations

January 12, 2012

(Corrects funding description of missile defense in sixth paragraph of story published Dec. 31)

Dec. 31 (Bloomberg) -- President Barack Obama, signing into law a $662 billion defense spending plan today, attached his own legal interpretation to several sections that the White House had contested with Congress, including a provision that requires suspected members of al-Qaeda be kept in military custody.

“The fact that I support this bill as a whole does not mean I agree with everything in it,” Obama said in a signing statement appended to the measure. “In particular, I have signed this bill despite having serious reservations with certain provisions that regulate the detention, interrogation and prosecution of suspected terrorists.”

The National Defense Authorization Act for Fiscal Year 2012 seeks to curb cost overruns of Lockheed Martin Corp.’s F-35 fighter jet for the fiscal year that began Oct. 1. Lawmakers frustrated by delays and cost overruns ordered the Pentagon to make Lockheed Martin absorb costs if it exceeds a negotiated target in a forthcoming sixth F-35 production contract.

The Defense Department is currently negotiating the fifth contract for the F-35. At $382 billion, it’s the Pentagon’s largest weapons program.

The defense authorization law calls for spending $27 billion less than Obama sought, and $43 billion less than fiscal 2011. It also tightens sanctions on Iran by denying access to the U.S. financial system to any foreign bank that conducts business with the Central Bank of Iran.

It provides a spending ceiling of $390 million for the multinational missile-defense program known as the Medium Extended Air Defense System, though three-fourths of that funding would be restricted until the defense secretary submits a detailed plan “either for implementing a smaller restructured program, or for paying contract termination costs.” Funding for U.S. military operations overseas was set at at about $115 billion.

‘Ill-Conceived’

The president criticized as “ill-conceived” the requirement that suspected terrorists identified as members of al-Qaeda be held in military detention. He said he retains “full and unencumbered ability to waive any military custody requirement.”

“I reject any approach that would mandate military custody where law enforcement provides the best method of incapacitating a terrorist threat,” he said.

The administration worked to modify the original language on detentions, saying Congress was inhibiting intelligence- gathering and investigations.

Presidential signing statements, which date to James Monroe in 1822, are comments by the president on how the administration intends to implement a law. Obama has issued 18 such statements, according to the American Presidency Project at the University of California in Santa Barbara.

Executive Authority

Regarding a section on the executive branch’s authority to detain suspected terrorists, including U.S. citizens captured on the battlefield, Obama said he wanted “to clarify that my administration will not authorize the indefinite military detention without trial of American citizens.”

He argued that the 2001 Authorization for Use of Military Force act, as well as rulings by the Supreme Court, have already conferred authority to the executive branch to make temporary detentions.

“This section breaks no new ground and is unnecessary,” he said.

The law’s new sanctions targeting Iran’s central bank would complicate the international purchases of Iran’s crude oil, which could disrupt oil markets and lead to a spike in price.

About 15.5 million barrels of oil a day, or a sixth of global consumption, pass through the Strait of Hormuz between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department. Crude oil for February delivery dropped 85 cents, or 0.9 percent, to $98.83 a barrel this week on the New York Mercantile Exchange on Jan. 30. Futures are up 8.2 percent this year.

Waiving Sanctions

As with the provision on detainees, the White House worked with Congress on the Iran section to make sure it has flexibility to implement the sanctions, according to an administration official, who requested anonymity. The law includes language that allows the president to waive the sanctions if he determines they would threaten national security.

The official said that the law preserves the administration’s ability to pursue its dual-track approach to Iran, with both the specter of increased sanctions and the option of more positive engagement with the U.S.

A second administration official, also speaking on the condition of anonymity, said that that White House was working to ensure that oil prices remained stable, without specifying what steps they were taking. The official said the administration did not anticipate a price spike in response to the law, which gives the president flexibility and, in the case of oil purchases, 180 days, to impose the sanctions.

The U.S. Senate approved the final bill Dec. 15 by a vote of 86-13 and the House approved it a day earlier, 283-136. The bill is H.R. 1540.

--With assistance from Roxana Tiron in Washington and Mark Shenk in New York. Editors: Joe Sobczyk, Leslie Hoffecker, Laurence Arnold.

To contact the reporters on this story: Hans Nichols in Honolulu at hnichols2@bloomberg.net; Roger Runningen in Washington at rrunningen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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