A lawmaker is proposing legislation and raising the threat of legal action to stop the Pentagon from continuing to fund a troubled tri-nation missile defense program.

Rep. Bill Shuster (R-Pa.) wants to block the Pentagon from using funds appropriated by Congress, in the fiscal year 2013 defense appropriations act signed into law March 26, on the Medium Extended Air and Missile Defense System (MEADS). He is among the lawmakers calling for the United States to immediately stop investing in the developmental system, which has suffered cost and schedule setbacks, and which U.S. officials have no plans to actually deploy. The United States has continued work on a MEADS “Proof of Concept” effort, under pressure from its German and Italian partners on the system, and the FY ’13 funding would support that effort.

MEADS is developed by MEADS International, which includes Lockheed Martin [LMT] in the United States and MBDA in Italy and MBDA’s LFK in Germany.

Shuster unveiled legislation Thursday that would direct the Pentagon to not spend $380.9 million included for MEADS in the new defense appropriations bill. The congressman further told Defense Secretary Chuck Hagel Thursday during a House Armed Services Committee (HASC) hearing that the Pentagon could face a lawsuit if it proceeds with funding MEADS in FY ‘13.

Hagel acknowledged that during his Senate confirmation process earlier this year he pledged to uphold a prohibition, in the fiscal year 2013 defense authorization bill, against funding and continuing MEADS. Still, he told Shuster Thursday, “what’s changed is the appropriations bill that was passed a few weeks ago.”

“They put the money back in the budget to fulfill that last year of commitment” to the MEADS Proof of Concept, Hagel said. “According to our (Department of Defense) Office of General Counsel–and I asked for legal advice on this–they have told me that we’re obligated to finish that contract as a result of that appropriations directive with the money.”

Shuster argued to Hagel that the defense authorization bill clearly prohibits the Pentagon from spending money on MEADS in FY ’13, and that is the law the Pentagon should heed.

“I think you need to go back, I think you need to talk to your lawyers, because I think there’s probably grounds here to sue the Department of Defense, so now we’re going to get into litigation,” Shuster said. “And I think you have a responsibility to the American people, first and foremost, (to) get another crew of attorneys in there to make sure they understand the law.”

Shuster told Defense Daily after the hearing that he would not take the legal action himself, but that “there are people out there that are talking about” a lawsuit. Those people are not lawmakers, he said, but “folks around town here” in Washington, D.C. He declined to share any more details.

Hagel said he was not defending MEADS, and insisted he was following the direction of lawyers after examining the matter in “some detail.”

He added that if the United States didn’t fulfill its commitment to the current phase of work on MEADS, it could face litigation and penalty costs that may exceed the cost of staying in the program.

Hagel said missile experts in the Pentagon told him “there are a lot of things that we can use” from MEADS in other programs. Shuster replied that the United State has already gleaned missile interceptor technology from the MEADS effort, and a MEADS radar it wants for other uses is under a stop-work order.

“The American people, the taxpayers, are paying for something that’s never going to be deployed,” the congressman argued. “We’ve harvested…the main technology that we wanted on this system.”

Shuster maintains the Pentagon is breaking the law in proceeding with MEADS because it is following the FY ’13 defense appropriations bill instead of the authorization legislation from the same year regarding MEADS.

Lawmakers on authorization committees like the HASC often lament the power that appropriators play in setting policy for federal agencies, arguing that appropriators should only write checks and agencies should act in accordance with authorization bills. Nonetheless, the defense appropriations bill hold great sway over Pentagon actions.

Pentagon officials “ are violating the law,” Shuster told Defense Daily, referring to the defense authorization law and MEADS. “It’s clear in the legislation that they’re not allowed to do this. And it’s the authorizing committees that make law, not the appropriators in the Senate. That’s where the money was put in. (Appropriators) cut checks, they don’t make the law. And (Pentagon officials are) violating the law and it’s a serious problem.”

Asked what the Pentagon will do following Shuster’s comments, Pentagon Comptroller Robert Hale told reporters: “We need to get our lawyers involved.”

He said the Department of Defense’s Office of General Counsel rendered a “decision” that the Pentagon has to continue with MEADS in FY ’13, and its lawyers were in agreement.

“Unless Congress changes the law, we’ll move forward with the funds,” Hale said.

Shuster’s office said his new bill would “stop the wasteful mismanagement of funds and unlawful continued development funding” of MEADs and also address “the poor timing of decreasing the missile defense budget when the international stability remains uncertain.”

The text of legislation, specifically, directs the defense secretary to reprogram the $380.9 million in FY ‘13 MEADS funding to “other missile defense programs and projects that are not part of” MEADS. It calls for a report within 15 days of the reprogramming on the action.

Shuster’s office further said the legislation is intended to prohibit President Barack Obama’s “administration from once again sidestepping the intention of the law.”

“It is irresponsible for (Pentagon officials) to be spending almost $400 million on a system that’s never going to be procured, when we have systems now,” Shuster told Defense Daily. “We should be spending that money to update our Patriots, because we’ve got the North Koreans rattling their (sabers). It’s outrageous.”

Reps. Mike Turner (R-Ohio), Niki Tsongas (D-Mass.), and Rep. Mike Coffman (R-Ohio) are original co-sponsors of Shuster’s bill.

HASC Chairman Howard “Buck” McKeon (R-Calif.) declined to comment to reporters on the legislation and Shuster’s MEADS concerns.

“I’ll let (Shuster) carry that,” McKeon said after the hearing.