{
  "id": 8889714,
  "title": "‘This pushes the boundaries’: White House helped Pentagon explain the legality of its stock deals",
  "url": "https://urgent.news/2026/09/21/this-pushes-the-boundaries-white-house-helped-pentagon-explain-the",
  "topic": "world",
  "section": "World",
  "published": "2026-09-21T09:01:57.000Z",
  "source": {
    "name": "Semafor",
    "slug": "semafor",
    "url": "https://www.semafor.com/article/09/21/2026/this-pushes-the-boundaries-white-house-helped-pentagon-explain-the-legality-of-its-stock-deals"
  },
  "original_language": "en",
  "account": "One month prior to the Pentagon announcing its inaugural equity stake in a company, its top legal counsel sought the White House's assistance in clarifying whether the transaction would contravene the law. Unbeknownst to many, the White House budget office subsequently furnished a previously unseen legal memorandum, verified by Semafor, which sheds light on how the Trump administration rationalized one of its most contentious deployments of public funds into the private sphere. The op-ed elaborates on a substantial agreement with MP Materials, valued in the multibillions, which remains exempt from the statute prohibiting executive branch spending without Congressional approval. This exemption is predicated on the necessity of averting an imminent threat to human life and government property, according to Mark Paoletta, General Counsel of the Office of Management and Budget, who made this argument in June 2025. Paoletta further posited that the Pentagon's actions would be guided by provisions under the Defense Production Act, appropriations from 2017, and Article II of the Constitution, which classify the deal as part of a \"long-standing tradition of presidential responsibilities prior to appropriation,\" extending back to 1792. Although the Pentagon proceeded to execute further deals involving equity in enterprises, including a more recent partnership with North American Blue Energy Partners, former Pentagon officials expressed skepticism regarding Paoletta's rationale. At present, the Department of Defense's investments find themselves ensnared in a legal limbo that legislators across the political spectrum perceive as untenable. The Senate Armed Services Committee is advocating for Congress to adopt its proposed legislation, already under consideration, which would empower the Pentagon's Office of Strategic Capital with explicit legal authorization for its equity stakes. This spokesperson from the committee's Chair, Roger Wicker, a Republican from Mississippi, conveyed to Semafor that Wicker believes an appropriately delineated authority for equity investments is crucial for sustaining the free market for critical minerals. However, he also emphasized the necessity for the department to standardize the process surrounding equity-based dealings and enhance its transparency with Congress to ensure such practices remain viable in the long haul. A former Pentagon official opined that the prohibition on taxpayer expenditures without Congressional approval, known as the Antideficiency Act, constituted \"one of the barriers we anticipated would be insurmountable\" for the MP Materials deal. Another former official from the Office of Strategic Capital (OSC) expressed astonishment that the present team had uncovered the justification for such actions under the Defense Production Act. The official further commented that \"laws can be elastic, but elasticity has its limits.\" \"I believe this pushes the boundaries,\" the official added. The OSC's involvement in the MP Materials deal was confined to a $150 million loan under its charter, while the Pentagon's Acquisitions and Sustainment Unit executed the $400 million equity investment utilizing authorities granted by the Defense Production Act. Both agreements were sanctioned by law, according to a Pentagon spokesperson, who added that the latter arrangement has already generated over $465 million. However, these statements contradict a report from a US official earlier in the month announcing the Venezuelan oil deal, which posited that the Trump administration leveraged legal authority \"granted to the OSC when it was created.\" This official also indicated that the OSC has employed similar arguments in other investments. Press releases and Securities and Exchange Commission filings for additional deals appear to obscure the boundaries of these actions. The Senate Armed Services committee has solicited briefings from the OSC regarding the Pentagon's legal authority to engage in equity investments, according to individuals familiar with these discussions. The Pentagon spokesperson subsequently offered a comprehensive response to questions arising from the briefing on the MP Materials deal. The White House declined to comment on the discrepancies in the explanations provided for the OSC's role in the Pentagon's equity deals.",
  "summary": "A legal opinion reviewed by Semafor shows how the Trump administration created the rationale for government stakes in more than a half-dozen companies.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 11,
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    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}