In a letter to Senator Rand Paul (R-KY), Attorney General Eric Holder said that the President could theoretically order lethal strikes within American borders under "extraordinary circumstance." In February, Paul had written to proposed CIA director John Brennan, asking whether the Obama Administration could order drone strikes or other targeted killings of Americans on American soil without trial. As Obama has said before, Holder was clear that "the US government has not carried out drone strikes in the United States and has no intention of doing so... The question you have posed is therefore entirely hypothetical, unlikely to occur, and one we hope no President will ever have to confront."
Holder refused, however, to rule out situations in which the President could order a strike. "It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the President to authorize the military to use lethal force within the territory of the United States. For example, the President could conceivably have no choice" but to authorize strikes in the case of a second Pearl Harbor or 9/11 attack, in which case Holder would "examine the particular fact and circumstances before advising the President on the scope of his authority."
"It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate."
The Obama Administration has been vague on its drone warfare program: White House Press Secretary Jay Carney would only mention the program after a memo leaked in February, and previous secretary Robert Gibbs said he was instructed not to acknowledge its existence. Obama himself has said that drone strikes are unlikely to be necessary within the US because the chances of capturing targets here is much greater, but he's largely remained silent. Holder's letter is similarly circumspect, but it explicitly justifies "extraordinary" cases in which targeted killing could be carried out.