The provision -- attached to the Defense Authorization bill -- would be a critical blow to the president's stated goal of trying some Guantanamo detainees in civilian courts. Attorney General Eric Holder sent a letter to Congress late last year calling the provision "an extreme and risky encroachment on the authority of the executive branch to determine when and where to prosecute terrorist suspects."
A final decision on whether to issue a so-called signing statement, which was first reported by ProPublica, and its scope, has yet to be made by the president and his senior staff.
Signing statements are legal documents that a president issues to outline how he thinks a law should be implemented. The statements can be largely ceremonial, explaining the president's view of the effects of the bill, or they can go as far as challenging the constitutionality of the provision and stating that the president will refuse to enforce it.
A White House official said Monday that even if the president decides to issue the signing statement, he will not seek to bypass the Guantanamo restrictions. The statement instead would reflect Obama's intention to seek a reversal of the provision through Congress.
Obama's use of signing statements so far in his administration has been in line with other presidents from Reagan to Clinton, who each issued about a dozen constitutional challenges a year. It was the George W. Bush administration that used the statements much more frequently when it thought legislation might negatively impact presidential power.
Obama issued a memo in March 2009 to the heads of all executive branch departments and agencies, saying he would continue to use the signing statements but would do so more sparingly than the Bush administration.
"I will issue signing statements to address constitutional concerns only when it is appropriate to do so as a means of discharging my constitutional responsibilities," he wrote.
Signing statements "serve a legitimate function in our system, at least when based on well-founded constitutional objections. In appropriately limited circumstances, they represent an exercise of the president's constitutional obligations to take care that the laws be faithfully executed, and they promote a healthy dialogue between the executive branch and the Congress," Obama wrote.
Professor Christopher Kelley, who studies the issue at Miami University of Ohio, said, "Signing statements' legality is murky in that that they have never been challenged as a device in the Supreme Court.
"The president issues a signing statement because he has to accept all or none of the bill he is given. The president basically says with a signing statement, 'I will sign this into law but there are constitutional problems.' Then it's up to Congress to figure out what it wants to do."
Congress can choose to work with the president to pass remedial legislation or can apply pressure to the president if he chooses to bypass the restrictions.
Lawyers representing some of the detainees being held in Guantanamo had hoped Obama might veto the entire spending bill in order to block the provisions. They are concerned that the language will also make it much more difficult to release detainees that have been cleared for release to foreign countries.
"It would be preferable if this whole bill were vetoed," says Shane Kadidal of the Center for Constitutional Rights.
But Kadidal says it comes down to practicality. "In this situation you have this huge spending bill with this tiny thing attached to it that is problematic.
"Bottom line: I think its pointless for Congress to be intruding in this way and I do think it's unconstitutional for Congress to tell the president that he can't release a detainee, especially someone ordered released by the courts."
Lawyer David Remes, who represents 15 Yemeni detainees, is critical of the president for not doing more to block the legislation.
"President Obama should have taken a much stronger stand on these provisions, not necessarily threatening to veto the entire package but providing the Democrats in Congress with more leadership on the issue."
The spending bill is expected to reach the president by Monday.