Four US officials say the American suspected terrorist is in a country that prohibits US military action on its soil.
President Barack Obama's new policy says only the military, not the CIA, can kill American terror suspects overseas, creating a policy conundrum for the White House.
The officials spoke on condition of anonymity because they were not authorized to speak publicly.
The Justice Department is also required to show that killing an American citizen through military action is "legal and constitutional" because he is considered an enemy combatant.