[Federal Register Volume 79, Number 157 (Thursday, August 14, 2014)]
[Rules and Regulations]
[Pages 47560-47573]
[FR Doc No: 2014-19168]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 700

[Docket No.<PHONE_NUMBER>-4308-03]
RIN 0694-AE81

Revisions to Defense Priorities and Allocations System
Regulations

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Final rule.

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SUMMARY: This rule clarifies existing standards and procedures by which
the Bureau of Industry and Security (BIS) may require that certain
contracts or orders that promote the national defense be given priority
over other contracts or orders. It also sets new standards and
procedures for such prioritization with respect to contracts or orders
for emergency preparedness activities. Finally, this rule sets new
standards and procedures by which BIS may allocate materials, services
and facilities to promote the national defense. This rule implements
provisions in the Defense Production Act Reauthorization of 2009
(September 30, 2009) (herein the Reauthorization Act) regarding
publication of regulations providing standards and procedures for
prioritization of contracts and orders and for allocation of materials,
services, and facilities to promote the national defense under
emergency and non-emergency conditions.

DATES: Effective Date: September 15, 2014.

FOR FURTHER INFORMATION CONTACT: Liam McMenamin, Defense Programs
Division, Office of Strategic Industries and Economic Security at (202)
482-2233<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Background

    This rule updates and expands the Defense Priorities and
Allocations System (DPAS) regulations (15 CFR part 700). BIS relies
upon and uses the DPAS regulations to implement priority and allocation
actions involving industrial resources. The DPAS has two principal
components--priorities and allocations. Under the priorities component,
contracts needed to support programs that have been approved for
priorities support are required to be given priority over other
contracts to facilitate expedited delivery in promotion of the U.S.
national defense. Such contracts may be between the government and
private parties or between private parties. Under the allocations
component, materials, services, and facilities may be allocated to
promote the national defense. For both components, the term ``national
defense'' means programs for military and energy production or
construction, homeland security, stockpiling, space, emergency
preparedness, and critical infrastructure protection and restoration.
The term also includes foreign military and critical infrastructure
assistance.

    The Reauthorization Act (123 Stat. 2006) (Pub. L. 111-67) required
agencies with priorities and allocations

authorities to issue rules establishing standards and procedures by
which those authorities will be used to promote the national defense,
under both emergency and non-emergency conditions. Pursuant to the
Reauthorization Act, BIS issued two proposed rules to amend its DPAS
regulations. The first such proposed rule was published on June 7, 2010
(75 FR 32122) (herein the first proposed rule). BIS received one
comment in response to that rule. Based on that comment and on its
internal deliberations, BIS concluded that sufficient changes would be
needed from its proposal to require a second proposed rule.
Accordingly, BIS published a second proposed rule on January 31, 2014
(79 FR 5332) (herein the second proposed rule). The principal
differences between the first proposed rule and the second proposed
rule are summarized in the latter at 79 FR 5332 and not repeated here.
BIS received no comments on the second proposed rule. Therefore, BIS is
publishing the text that it proposed in the second proposed rule,
without substantive change, as this final rule.
    The Reauthorization Act requires each Federal agency that is
delegated priorities and allocations authority consistent with section
101 of the Defense Production Act (50 U.S.C. app. 2071, et seq.) to
issue final rules establishing standards and procedures by which that
authority is used to promote the national defense, during both
emergency and non-emergency conditions. In the Reauthorization Act,
Congress further directed that, to the extent practicable, the Federal
agencies with priorities and allocations authority should work together
to develop a consistent and unified Federal priorities and allocations
system. In order to meet this mandate, BIS worked in conjunction with
the Departments of Agriculture (USDA), Defense (DoD), Energy (DOE),
Health and Human Services (HHS), Homeland Security (DHS), and
Transportation (DOT) to develop common provisions based on the DPAS
that can be used by each Department in its own regulation. The
regulations promulgated, or to be promulgated, by each Department with
delegated DPA Title I authority comprise the Federal priorities and
allocations system.

Summary of Changes to the DPAS Made by This Rule

    The following lists provide highlights of the changes to the DPAS
implemented by this rule. A more detailed explanation of the changes
and reasons therefor appears in the preamble to the second proposed
rule. Because this final rule adopts the changes to the DPAS that were
in the second proposed rule for the reasons set forth in the preamble
to that rule without substantive change, BIS is not repeating them in
full here. Interested persons may read them at 79 FR 5332, 5332-5341,
January 31, 2014.

Highlights of Changes Related to Priorities

     The scope of reasons for which rated orders may be issued
has been expanded to include homeland security, emergency preparedness,
and critical infrastructure protection and restoration activities.
     The definitions section has been expanded to include
definitions of terms related to allocations and terms related to
emergency preparedness activities.
     Most rated orders will continue to require acceptance or
rejection within 10 or 15 days depending on the type of rating;
however, rated orders for emergency preparedness requirements may
require acceptance or rejection within a shorter timeframe but no less
than six hours for emergencies that have occurred, or 12 hours if
needed to prepare for an imminent hazard.
     Procedures for persons to obtain priority ratings for
items supporting homeland security, emergency preparedness, critical
infrastructure protection and restoration, and information about how
persons in the United States may seek such assistance have been added.
     Procedures for persons in Canada to obtain priority
ratings for items in the United States and information about how
persons in the United States may seek assistance in obtaining defense
items in Canada have been updated and moved into a separate section.
     Procedures for persons in foreign nations other than
Canada to obtain priority ratings for items in the United States and
information about how persons in the United States may seek assistance
in obtaining defense items from Australia, Finland, Italy, the
Netherlands, Sweden and the United Kingdom have been updated and moved
into a separate section. This section has been expanded to provide
procedures for international organizations to obtain priority ratings.
     The table in Schedule I to part 700 has been updated to
list all programs currently approved for priorities support and the
delegate agency for each program.

Highlights of Changes Related to Allocations

     The rule provides that allocations will be used only when
there is insufficient supply of a material, service, or facility to
satisfy national defense requirements through the use of the priorities
authority, or when the use of the priorities authority would cause a
severe and prolonged disruption in the supply of materials, services,
or facilities available to support normal U.S. economic activities, and
precludes use of allocations to ration materials or services at the
retail level.
     No allocation action may be used to control the general
distribution of a material in the civilian market unless the Department
of Commerce makes, and the President approves, a finding that the
requirements of the national defense for such material cannot otherwise
be met without creating a significant dislocation of the normal
distribution of such material in the civilian market to such a degree
as to create appreciable hardship.
     The rule specifies the minimum information that must be
included in an allocation order and provides for issuing the order
directly to affected persons or through publication of a constructive
notice in the Federal Register. All allocation orders must explain the
relationship between the allocation order and any previously or
subsequently issued rated or unrated orders and the start and end dates
of the order.
     Allocation orders must be accepted and complied with. A
person who is subject to an allocation order who believes that
compliance is not possible must notify the Office of Strategic
Industries and Economic Security. An allocation must be complied with
to the extent possible until the Department of Commerce notifies the
person that the order has been changed or cancelled.

Regulatory Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distribute impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' under Executive Order 12866. Accordingly, the rule has been
reviewed

by the Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with a collection of information, subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid OMB control number. This regulation contains two collections
previously approved by OMB. OMB control number 0694-0053 authorizes the
requirement that recipients of rated orders notify the party placing
the order whether or not they will fulfill the rated order. BIS
believes that this rule will not materially change the burden imposed
by this collection. OMB control number 0694-0057 authorizes the
collection of information that parties must send to BIS when seeking
special priorities assistance or priority rating authority. BIS
believes that this rule will not materially change the burden imposed
by this collection. Send comments regarding this burden estimate or any
other aspect of these collections of information, including suggestions
for reducing the burden, to Jasmeet K. Seehra, Office of Management and
Budget, by email at<EMAIL_ADDRESS>or by fax to<PHONE_NUMBER> and
to Liam McMenamin<EMAIL_ADDRESS>    3. This rule does not contain policies with Federalism implications
as that term is defined under E.O. 13132.
    4. The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to the notice and comment
rulemaking requirements under the Administrative Procedure Act (5
U.S.C. 553) or any other statute. Under section 605(b) of the RFA,
however, if the head of an agency certifies that a rule will not have a
significant impact on a substantial number of small entities, the
statute does not require the agency to prepare a regulatory flexibility
analysis. Pursuant to section 605(b), the Chief Counsel for Regulation,
Department of Commerce, certified to the Chief Counsel for Advocacy,
Small Business Administration that this rule will not have a
significant impact on a substantial number of small entities for the
reasons explained below. No other law requires such an analysis.
Consequently, no regulatory flexibility analysis is required and none
has been prepared. The factual support for this certification is
provided below.

Number of Small Entities

    Small entities include small businesses, small organizations and
small governmental jurisdictions. For purposes of assessing the impacts
of this rule on small entities, a small business, as described in the
Small Business Administration's Table of Small Business Size Standards
Matched to North American Industry Classification System Codes
(Effective January 22, 2014), has a maximum annual revenue of $35.5
million and a maximum of 1,500 employees (for some business categories,
these numbers are lower). A small governmental jurisdiction is a
government of a city, town, school district or special district with a
population of less than 50,000. A small organization is any not-for-
profit enterprise which is independently owned and operated and is not
dominant in its field.
    This rule sets criteria under which BIS (or agencies to which BIS
delegates authority) will authorize prioritization of certain orders or
contracts as well as criteria under which BIS would issue orders
allocating resources or production facilities. This rule would affect
organizations that enter into contracts to supply materials, services
and facilities that are necessary for the national defense (broadly
defined to include ``Programs for military and energy production or
construction, military or critical infrastructure assistance to any
foreign nation, homeland security, stockpiling, space, and any directly
related activity''). BIS's experience in administering its priorities
authority indicates that for-profit businesses are the organizations
that provide such materials, services and facilities. If it becomes
necessary to exercise allocations authority, the same types of
materials, services and facilities and the same types of providers are
the ones likely to be affected. Therefore, BIS believes that two of the
categories of small entities identified by the RFA, small organizations
and small government jurisdictions, are unlikely to experience any
economic impact as a result of this rule. However, BIS has no basis on
which to estimate the number of small businesses that are likely to be
affected by this rule.

Impact

    BIS believes that any impact that this rule might have on small
businesses would be minor. The rule has two principal components:
Prioritization and allocation. Prioritization is the process that is,
by far, more likely to be used. Under prioritization, BIS designates
certain orders, which may be placed by Government or by private
entities, and assigned under one of two possible priority levels. Once
so designated, such orders are referred to as ``rated orders.'' The
recipient of a rated order must give it priority over an unrated order.
The recipient of a rated order with the higher priority rating must
give that order priority over any rated orders with the lower priority
rating and over unrated orders. A recipient of a rated order may place
one or more orders at the same priority level with suppliers and
subcontractors for supplies and services necessary to fulfill the
recipient's rated order and the suppliers and subcontractors must treat
the request from the rated order recipient as a rated order with the
same priority level as the original rated order. The rule does not
require recipients to fulfill rated orders if the price or terms of
sale are not consistent with the price or terms of sale of similar non-
rated orders. The rule provides a defense from liability for damages or
penalties for actions or inactions made in compliance with the rule.
    BIS expects that this rule will not result in any increase in the
use of rated orders. The changes to the provisions of 15 CFR part 700
that apply to rated orders are primarily simplifications and
clarifications. The standards under which a rated order would be issued
are not changed by this rule.
    Although rated orders could require a firm to fill one order prior
to filling another, they would not require a reduction in the total
volume of orders nor would they require the recipient to reduce prices
or provide rated orders with more favorable terms than a similar non-
rated order. Under these circumstances, the economic effects on the
rated order recipient of substituting one order for another are likely
to be offsetting, resulting in no net loss.
    Allocations could be used to control the general distribution of
materials or services in the civilian market. Specific allocation
actions that BIS might take are set-asides, directives and allotments.
A set-aside is an official action that requires a person to reserve
resource capacity in anticipation of receipt of rated orders. A
directive is an official action that requires a person to take or
refrain from taking certain actions in accordance with its provisions.
A directive can require a person to stop or reduce production of an
item, prohibit the use of selected items, or divert supply of one type
of product to another, or to supply a specific quantity, size, shape,
and type of an item within a specific time period. An allotment is

an official action that specifies the maximum quantity of a material,
service or facility authorized for use in a specific program or
application.
    According to available records, BIS has not taken any actions under
its existing allocations authority in decades and any future
allocations actions would be used only in extraordinary circumstances.
As required by section 101(b) of the Defense Production Act of 1950, as
amended, (50 U.S.C. app. 2071), hereinafter ``DPA,'' and by Section
201(e) of Executive Order 13603 of March 16, 2012, BIS may implement
allocations to control the general distribution of a material in the
civilian market only if the Department of Commerce made, and the
President approved, a finding (1) that the material [or service] is a
scarce and critical material [or service] essential to the national
defense, and (2) that the requirements of the national defense for such
material [or service] cannot otherwise be met without creating a
significant dislocation of the normal distribution of such material [or
service] in the civilian market to such a degree as to create
appreciable hardship. The term ``national defense'' is defined to mean
``programs for military and energy production or construction, military
or critical infrastructure assistance to any foreign nation, homeland
security, stockpiling, space, and any related activity. Such term
includes emergency preparedness activities conducted pursuant to title
VI of the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5195 et seq.) and critical infrastructure protection and
restoration.''
    Even a narrower use of allocations authority under this rule will
be subject to the policy that this rule will set forth in 15 CFR
700.30, providing that allocations will be used only when there is
insufficient supply of a material, service, or facility to satisfy
national defense requirements through use of priorities authority or
when the use of priorities authority would cause a severe and prolonged
disruption in the supply of materials, services or facilities available
to support normal U.S. economic activity.
    Any allocation actions taken by BIS would also have to comply with
Section 701(e) of the DPA (50 U.S.C. app. 2151(e)), which provides that
``small business concerns shall be accorded, to the extent practicable,
a fair share of the such material, in proportion to the share received
by such business concerns under normal conditions, giving such special
consideration as may be possible to emerging business concerns.''

Conclusion

    Although BIS cannot determine precisely the number of small
entities that would be affected by this rule, BIS believes that the
overall impact on such entities would not be significant. With respect
to priorities authority, this rule is not likely to increase the number
of priority rated contracts compared to the number being issued
currently. Therefore the priorities authorities' provisions of this
rule are unlikely to have any economic impact. BIS's lack of recent
experience with allocations makes gauging the impact of an allocation,
should one occur, difficult. However, because (1) all allocation
actions require planning that includes evaluation of the impact on the
civilian market, (2) allocations to control the general distribution of
a material in the civilian market may be imposed only after a
determination by the President, and (3) BIS has taken no allocation
actions in decades, one can expect allocations will be a rare
occurrence going forward. BIS believes that the expected unchanged
level of contract prioritizations, planning and review requirements and
requirements of section 701 of the DPA, which are directed at
protecting the interests of small businesses, provide reasonable
assurance that any impact on small business will not be significant.
For the reasons set forth above, the Chief Counsel for Regulations at
the Department of Commerce certified that this action would not have a
significant impact on a substantial number of small entities.

List of Subjects in 15 CFR Part 700

    Administrative practice and procedure, Business and industry,
Government contracts, National defense, Reporting and recordkeeping
requirements, Strategic and critical materials.

    For the reasons stated in the preamble, 15 CFR part 700 is amended
as follows:

PART 700--[AMENDED]

0
1. The authority citation for part 700 is revised to read as follows:

    Authority: 50 U.S.C. App. 2061, et seq.; 42 U.S.C. 5195, et
seq.; 50 U.S.C. App 468; 10 U.S.C. 2538; 50 U.S.C. 82; E.O. 12656,
53 FR 226, 3 CFR, 1988, Comp. 585; E.O. 12742, 56 FR 1079, 3 CFR,
1991 Comp. 309; E.O. 13603, 77 FR 16651, 3 CFR, 2012 Comp., p. 225.

0
2. Section 700.1 is revised to read as follows:

Sec.  700.1  Purpose of this part.

    This part implements the Defense Priorities and Allocations System
(DPAS) that is administered by the Department of Commerce, Bureau of
Industry and Security. The DPAS implements the priorities and
allocations authority of the Defense Production Act, including use of
that authority to support emergency preparedness activities pursuant to
Title VI of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5195 et seq.), and the priorities authority
of the Selective Service Act and related statutes, all with respect to
industrial resources. The DPAS establishes procedures for the
placement, acceptance, and performance of priority rated contracts and
orders and for the allocation of materials, services, and facilities.
The guidance and procedures in this part are generally consistent with
the guidance and procedures provided in other regulations issued under
Executive Order 13603 authority.

0
3. Section 700.2 is revised to read as follows:

Sec.  700.2  Introduction.

    (a) Certain national defense and energy programs (including
military, emergency preparedness, homeland security, and critical
infrastructure protection and restoration activities) are approved for
priorities and allocations support. A complete list of currently
approved programs is provided at Schedule I to this part.
    (b) The Department of Commerce administers the DPAS and may
exercise priorities and allocations authority to ensure the timely
delivery of industrial items to meet approved program requirements.
    (c) The Department of Commerce has delegated authority to place
priority ratings on contracts or orders necessary or appropriate to
promote the national defense to certain government agencies that issue
such contracts or orders. Such delegations include authority to
authorize recipients of rated orders to place ratings on contracts or
orders to contractors, subcontractors, and suppliers. Schedule I to
this part includes a list of agencies to which the Department of
Commerce has delegated authority.

0
4. In Sec.  700.3, paragraphs (a), (b), and (e) are revised to read as
follows:

Sec.  700.3  Priority ratings and rated orders.

    (a) Rated orders are identified by a priority rating and a program
identification symbol. Rated orders take precedence over all unrated
orders as necessary to meet required delivery dates. Among rated
orders, DX rated orders take precedence over DO rated orders. Program
identification symbols

indicate which approved program is attributed to the rated order.
    (b) Persons receiving rated orders must give them preferential
treatment as required by this part.
* * * * *
    (e) Persons may place a priority rating on orders only when they
are in receipt of a rated order, have been explicitly authorized to do
so by the Department of Commerce or a Delegate Agency, or are otherwise
permitted to do so by this part.

Sec. Sec.  700.4, 700.5, 700.6, and 700.7  [Removed and Reserved]

0
5. Sections 700.4, 700.5, 700.6, and 700.7 are removed and reserved.
0
6. Section 700.8 is revised to read as follows:

Sec.  700.8  Definitions.

    The definitions in this section apply throughout this part:
    Allocation. The control of the distribution of materials, services
or facilities for a purpose deemed necessary or appropriate to promote
the national defense.
    Allocation order. An official action to control the distribution of
materials, services, or facilities for a purpose deemed necessary or
appropriate to promote the national defense.
    Allotment. An official action that specifies the maximum quantity
of a material, service, or facility authorized for a specific use to
promote the national defense.
    Approved program. A program determined as necessary or appropriate
for priorities and allocations support to promote the national defense
by the Secretary of Defense, the Secretary of Energy, or the Secretary
of Homeland Security, under the authority of the Defense Production Act
and Executive Order 13603, or the Selective Service Act and Executive
Order 12742.
    Construction. The erection, addition, extension, or alteration of
any building, structure, or project, using materials or products which
are to be an integral and permanent part of the building, structure, or
project. Construction does not include maintenance and repair.
    Critical infrastructure. Any systems and assets, whether physical
or cyber-based, so vital to the United States that the degradation or
destruction of such systems and assets would have a debilitating impact
on national security, including, but not limited to, national economic
security and national public health or safety.
    Defense Production Act. The Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.).
    Delegate Agency. A government agency authorized by delegation from
the Department of Commerce to place priority ratings on contracts or
orders needed to support approved programs.
    Directive. An official action which requires a person to take or
refrain from taking certain actions in accordance with its provisions.
    Emergency preparedness. All activities and measures designed or
undertaken to prepare for or minimize the effects of a hazard upon the
civilian population, to deal with the immediate emergency conditions
which would be created by the hazard, and to effectuate emergency
repairs to, or the emergency restoration of, vital utilities and
facilities destroyed or damaged by the hazard. Emergency preparedness
includes the following:
    (1) Measures to be undertaken in preparation for anticipated
hazards (including the establishment of appropriate organizations,
operational plans, and supporting agreements, the recruitment and
training of personnel, the conduct of research, the procurement and
stockpiling of necessary materials and supplies, the provision of
suitable warning systems, the construction or preparation of shelters,
shelter areas, and control centers, and, when appropriate, the
nonmilitary evacuation of the civilian population);
    (2) Measures to be undertaken during a hazard (including the
enforcement of passive defense regulations prescribed by duly
established military or civil authorities, the evacuation of personnel
to shelter areas, the control of traffic and panic, and the control and
use of lighting and civil communications); and
    (3) Measures to be undertaken following a hazard (including
activities for firefighting, rescue, emergency medical, health and
sanitation services, monitoring for specific dangers of special
weapons, unexploded bomb reconnaissance, essential debris clearance,
emergency welfare measures, and immediately essential emergency repair
or restoration of damaged vital facilities).
    Hazard. An emergency or disaster resulting from:
    (1) A natural disaster, or
    (2) An accidental or man-caused event.
    Homeland security. Includes efforts:
    (1) To prevent terrorist attacks within the United States;
    (2) To reduce the vulnerability of the United States to terrorism;
    (3) To minimize damage from a terrorist attack in the United
States; and
    (4) To recover from a terrorist attack in the United States.
    Industrial resources. All materials, services, and facilities,
including construction materials, the authority for which has not been
delegated to other agencies under Executive Order 13603. This term also
includes the term ``item'' as defined and used in this part.
    Item. Any raw, in process, or manufactured material, article,
commodity, supply, equipment, component, accessory, part, assembly, or
product of any kind, technical information, process, or service.
    Maintenance and repair and/or operating supplies (MRO). (1)
Maintenance is the upkeep necessary to continue any plant, facility, or
equipment in working condition.
    (2) Repair is the restoration of any plant, facility, or equipment
to working condition when it has been rendered unsafe or unfit for
service by wear and tear, damage, or failure of parts.
    (3) Operating supplies are any items carried as operating supplies
according to a person's established accounting practice. Operating
supplies may include hand tools and expendable tools, jigs, dies,
fixtures used on production equipment, lubricants, cleaners, chemicals
and other expendable items.
    (4) MRO does not include items produced or obtained for sale to
other persons or for installation upon or attachment to the property of
another person, or items required for the production of such items;
items needed for the replacement of any plant, facility, or equipment;
or items for the improvement of any plant, facility, or equipment by
replacing items which are still in working condition with items of a
new or different kind, quality, or design.
    National defense. Programs for military and energy production or
construction, military or critical infrastructure assistance to any
foreign nation, homeland security, stockpiling, space, and any directly
related activity. Such term includes emergency preparedness activities
conducted pursuant to Title VI of The Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5195 et seq.) and
critical infrastructure protection and restoration.
    Official action. An action taken by the Department of Commerce
under the authority of the Defense Production Act, the Selective
Service Act and related statutes, and this part. Such actions include
the issuance of rating authorizations, directives, letters of
understanding, demands for information, inspection authorizations,
administrative subpoenas and allocation orders.

    Person. Any individual, corporation, partnership, association, or
any other organized group of persons, or legal successor or
representative thereof; or any authorized State or local government or
agency thereof; and for purposes of administration of this part,
includes the United States Government and any authorized foreign
government or international organization or agency thereof, delegated
authority as provided in this part.
    Priorities authority. The authority of the Department of Commerce,
pursuant to Section 101 of the Defense Production Act, to require
priority performance of contracts and orders for industrial resource
items for use in approved programs.
    Priority rating. An identifying code assigned by a Delegate Agency
or authorized person placed on all rated orders and consisting of the
rating symbol and the program identification symbol.
    Production equipment. Any item of capital equipment used in
producing materials or furnishing services that has a unit acquisition
cost of $2,500 or more, an anticipated service life in excess of one
year, and the potential for maintaining its integrity as a capital
item.
    Program identification symbols. Abbreviations used to indicate
which approved program is supported by a rated order.
    Rated order. A prime contract, a subcontract, or a purchase order
in support of an approved program issued in accordance with the
provisions of this part.
    Selective Service Act. Section 18 of the Selective Service Act of
1948 (50 U.S.C. app. 468).
    Set-aside. An official action that requires a person to reserve
materials, services, or facilities capacity in anticipation of the
receipt of rated orders.
    Stafford Act. Title VI (Emergency Preparedness) of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, as amended (42
U.S.C. 5195, et seq.).
    Working day. Any day that the recipient of an order is open for
business.

0
7. Section 700.10 is revised to read as follows:

Sec.  700.10  Authority.

    (a) Delegations to the Department of Commerce. The priorities and
allocations authorities of the President under Title I of the Defense
Production Act with respect to industrial resources have been delegated
to the Secretary of Commerce under Executive Order 13603 of March 16,
2012 (3 CFR, 2012 Comp., p. 225). The priorities authorities of the
President under the Selective Service Act and related statutes with
respect to industrial resources have also been delegated to the
Secretary of Commerce under Executive Order 12742 of January 8, 1991 (3
CFR, 1991 Comp. 309).
    (b) Delegations by the Department of Commerce. The Department of
Commerce has authorized the Delegate Agencies to assign priority
ratings to orders for industrial resources needed for use in approved
programs.
    (c) Jurisdiction limitations. (1) The priorities and allocations
authority for certain items have been delegated under Executive Order
13603, other executive orders, or Interagency Memoranda of
Understanding between other agencies. Unless otherwise agreed to by the
concerned agencies, the provisions of this part are not applicable to
those other items which include:
    (i) Food resources, food resource facilities, livestock resources,
veterinary resources, plant health resources, and the domestic
distribution of farm equipment and commercial fertilizer (delegated to
the Department of Agriculture);
    (ii) All forms of energy (delegated to the Department of Energy);
    (iii) Health resources (delegated to the Department of Health and
Human Services);
    (iv) All forms of civil transportation (delegated to the Department
of Transportation); and
    (v) Water resources (delegated to the Department of Defense/U.S.
Army Corps of Engineers).
    (2) The priorities and allocations authority set forth in this part
may not be applied to communications services subject to Executive
Order 13618 of July 6, 2012--Assignment of National Security and
Emergency Preparedness Communications Functions (3 CFR, 2012 Comp., p.
273).

0
8. Section 700.11 is amended by revising the second sentence of
paragraph (b) to read as follows:

Sec.  700.11  Priority ratings.

* * * * *
    (b) Program identification symbols. * * * The list of approved
programs and their identification symbols is found in Schedule I to
this part. * * *
* * * * *

0
9. Section 700.12 is revised to read as follows:

Sec.  700.12  Elements of a rated order.

    (a) Elements required for all rated orders. (1) The appropriate
priority rating and program identification symbol (e.g., DO-A1, DX-A4,
DO-N1).
    (2) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. When a
``requirements contract,'' ``basic ordering agreement,'' ``prime vendor
contract,'' or similar procurement document bearing a priority rating
contains no specific delivery date or dates, but provides for the
furnishing of items from time-to-time or within a stated period against
specific purchase orders, such as ``calls,'' ``requisitions,'' and
``delivery orders,'' the purchase orders supporting such contracts or
agreements must specify a required delivery date or dates and are to be
considered as rated as of the date of their receipt by the supplier and
not as of the date of the original procurement document.
    (3) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of an
individual authorized to sign rated orders for the person placing the
order. The signature, manual or digital, certifies that the rated order
is authorized under this part and that the requirements of this part
are being followed.
    (4) A statement that reads in substance: ``This is a rated order
certified for national defense use and you are required to follow all
the provisions of the Defense Priorities and Allocations System
regulations (15 CFR part 700).''
    (b) Additional element required for certain emergency preparedness
rated orders. If a rated order is placed for the purpose of emergency
preparedness requirements and expedited action is necessary or
appropriate to meet these requirements, the following statement must be
included in the order: ``This rated order is placed for the purpose of
emergency preparedness. It must be accepted or rejected within [Insert
a time limit no less than the minimum applicable time limit specified
in Sec.  700.13(d)(2)].''

0
10. Section 700.13 is amended by revising paragraph (d) to read as
follows:

Sec.  700.13  Acceptance and rejection of rated orders.

* * * * *
    (d) Customer notification requirements. (1) Except as provided in
paragraph (d)(2) of this section, a person must accept or reject a
rated order in writing (hard copy), or in electronic format, within
fifteen (15) working days after receipt of a DO rated order and within
ten (10) working days after receipt of a DX rated order. If the order
is rejected, the person must give reasons

in writing or electronically for the rejection.
    (2) If a rated order is placed for the purpose of emergency
preparedness requirements and expedited action is necessary or
appropriate to meet these requirements and the order includes the
statement set forth in Sec.  700.12(b), a person must accept or reject
the rated order and transmit the acceptance or rejection in writing or
in an electronic format within the time specified in the rated order.
The minimum times for acceptance or rejection that such orders may
specify are six (6) hours after receipt of the order if the order is
issued by an authorized person in response to a hazard that has
occurred, or twelve (12) hours after receipt if the order is issued by
an authorized person to prepare for an imminent hazard.
    (3) If a person has accepted a rated order and subsequently finds
that shipment or performance will be delayed, the person must notify
the customer immediately, give the reasons for the delay, and advise of
a new shipment or performance date. If notification is given verbally,
written (hard copy) or electronic confirmation must be provided within
one working day of the verbal notice.

0
11. Section 700.14 is amended by adding a sentence at the end of the
examples paragraph in paragraph (b) and by revising paragraph (c)(2) to
read as follows:

Sec.  700.14  Preferential scheduling.

* * * * *
    (b) * * *
    Examples: * * * However, if business operations cannot be altered
to meet both the June 3 and July 15 delivery dates, then the DX rated
order must be given priority over the DO rated order.
    (c) * * *
    (2) If a person is unable to resolve rated order delivery or
performance conflicts under this section, the person should promptly
seek special priorities assistance as provided in subpart H of this
part. If the person's customer objects to the rescheduling of delivery
or performance of a rated order, the customer should promptly seek
special priorities assistance as provided in subpart H of this part.
For any rated order against which delivery or performance will be
delayed, the person must notify the customer as provided in Sec.
700.13(d)(3).
* * * * *

0
12. Section 700.15 is amended by revising the second sentence of
paragraph (a), the example following paragraph (a), the second sentence
of paragraph (b), and by adding paragraph (c) to read as follows:

Sec.  700.15  Extension of priority ratings.

    (a) * * * The person must use the priority rating indicated on the
customer's rated order, except as otherwise provided in this part or as
directed by the Department of Commerce.
    Example: If a person is in receipt of a DO-A3 rated order for a
navigation system and needs to purchase semiconductors for its
manufacture, that person must use a DO-A3 rated order to obtain the
needed semiconductors.
    (b) * * * Therefore, the inclusion of the rating will continue from
contractor to subcontractor to supplier throughout the entire supply
chain.
    (c) A person must use rated orders with suppliers to obtain items
needed to fill an emergency preparedness rated order. That person must
require acceptance or rejection, and transmission of that acceptance or
rejection by the supplier within the time limit stated in the rated
order that is being filled.

0
13. Section 700.16 is amended by revising paragraphs (d), (e), and (f)
to read as follows:

Sec.  700.16  Changes or cancellations of priority ratings and rated
orders.

* * * * *
    (d) The following amendments do not constitute a new rated order: a
change in shipping destination; a reduction in the total amount of the
order; an increase in the total amount of the order which has
negligible impact upon deliveries; a minor variation in size or design
(prior to the start of production); or a change which is agreed upon
between the supplier and the customer. (e) A person must cancel any
rated orders that the person (or a predecessor in interest) has placed
with suppliers or cancel the priority ratings on those orders if the
person no longer needs the items in those orders to fill a rated order.
    (f) A person adding a rating to an unrated order, or changing or
cancelling a priority rating must promptly notify all suppliers to whom
the order was sent of the addition, change or cancellation.

0
14. Section 700.17 is amended by revising paragraphs (d)(1)(ii) and (f)
to read as follows:

Sec.  700.17  Use of rated orders.

* * * * *
    (d) * * *
    (1) * * *
    (ii) The elements of a rated order, as required by Sec.  700.12,
are included on the order with the statement required in Sec.
700.12(a)(4) modified to read in substance: ``This purchase order
contains rated order quantities certified for national defense use, and
you are required to follow all the provisions of the Defense Priorities
and Allocations System regulations (15 CFR part 700) as it pertains to
the rated quantities.''
* * * * *
    (f) A person is not required to place a priority rating on an order
for less than $75,000, or one half of the Simplified Acquisition
Threshold (as established in the Federal Acquisition Regulation (FAR))
(see FAR section 2.101), whichever amount is greater, provided that
delivery can be obtained in a timely fashion without the use of the
priority rating.

0
15. Section 700.18 is revised to read as follows:

Sec.  700.18  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a rated order
pursuant to this part unless the person is in receipt of a rated order,
has been explicitly authorized to do so by the Department of Commerce
or a Delegate Agency or is otherwise permitted to do so by this part.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item than needed, except to obtain a
minimum procurable quantity;
    (iii) Items in advance of the receipt of a rated order, except as
specifically authorized by the Department of Commerce (see Sec.
700.41(c) for information on obtaining authorization for a priority
rating in advance of a rated order); or
    (iv) Any of the following items unless specific priority rating
authority has been obtained from a Delegate Agency or the Department of
Commerce:
    (A) Items for plant improvement, expansion or construction, unless
they will be physically incorporated into a construction project
covered by a rated order; or
    (B) Production or construction equipment or items to be used for
the manufacture of production equipment (for information on requesting
priority rating authority, see Sec.  700.41).
    (v) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons, unless such development or production has been authorized by
the President or the Secretary of Defense.
    (3) Separate rated orders may not be placed solely for obtaining
minimum procurable quantities on each order if the minimum procurable
quantity

would be sufficient to cover more than one rated order.
    (b) Specific item limitations. Notwithstanding any authorization or
requirement to place a rated order stated elsewhere in this part, no
person may place a rated order to obtain the following items unless
such order is authorized by an official action of the Department of
Commerce.
    (1) Copper raw materials.
    (2) Crushed stone.
    (3) Gravel.
    (4) Sand.
    (5) Scrap.
    (6) Slag.
    (7) Steam heat, central.
    (8) Waste paper.

0
16. Section 700.21 is revised to read as follows:

Sec.  700.21  Application for priority rating authority.

    (a) For projects believed to maximize domestic energy supplies, a
person may request priority rating authority for scarce, critical, and
essential supplies of materials, equipment, and services (related to
the production of materials or equipment, or the installation, repair,
or maintenance of equipment) by submitting a request to the Department
of Energy. Further information may be obtained from the Department of
Energy, Office of Electricity Delivery and Energy Reliability, 1000
Independence Avenue SW., Washington, DC 20585.
    (b) If the Department of Energy notifies the Department of Commerce
that the project maximizes domestic energy supplies and that the
materials, equipment, or services are critical and essential, the
Department of Commerce will determine whether the items in question are
scarce, and, if they are scarce, whether there is a need to use the
priorities authority.
    (1) Scarcity implies an unusual difficulty in obtaining the
materials, equipment, or services in a time frame consistent with the
timely completion of the energy project. In determining scarcity, the
Department of Commerce may consider factors such as the following:
    (i) Value and volume of material or equipment shipments;
    (ii) Consumption of material and equipment;
    (iii) Volume and market trends of imports and exports;
    (iv) Domestic and foreign sources of supply;
    (v) Normal levels of inventories;
    (vi) Rates of capacity utilization;
    (vii) Volume of new orders; and
    (viii) Lead times for new orders.
    (2) In finding whether there is a need to use the priorities
authority, the Department of Commerce may consider alternative supply
solutions and other measures.
    (c) After the Department of Commerce has conducted its analysis, it
will advise the Department of Energy whether the two findings have been
satisfied. If the findings are satisfied, the Department of Commerce
will authorize the Department of Energy to grant the use of a priority
rating to the applicant.
    (d) Schedule I to this part includes a list of approved programs to
support the maximization of domestic energy supplies. A Department of
Energy regulation setting forth the procedures and criteria used by the
Department of Energy in making its determination and findings is
published in 10 CFR part 216.

0
17. The heading of subpart F is revised to read as follows:

Subpart F--Allocation Actions

0
18. Section 700.30 is revised to read as follows:

Sec.  700.30  Policy.

    (a) Allocation orders will:
    (1) Be used only when there is insufficient supply of a material,
service, or facility to satisfy national defense requirements through
the use of the priorities authority or when the use of the priorities
authority would cause a severe and prolonged disruption in the supply
of materials, services, or facilities available to support normal U.S.
economic activities; and
    (2) Not be used to ration materials or services at the retail
level.
    (b) Allocation orders, when used, will be distributed equitably
among the suppliers of the materials, services, or facilities being
allocated and not require any person to relinquish a disproportionate
share of the civilian market.

0
19. Section 700.31 is revised to read as follows:

Sec.  700.31  General procedures.

    Before the Department of Commerce uses its allocations authority to
address a supply problem within its resource jurisdiction, it will
develop a plan that includes:
    (a) A copy of the written determination made in accordance with
section 202 of Executive Order 13603, that the program or programs that
would be supported by the allocation action are necessary or
appropriate to promote the national defense;
    (b) A detailed description of the situation to include any unusual
events or circumstances that have created the requirement for an
allocation action;
    (c) A statement of the specific objective(s) of the allocation
action;
    (d) A list of the materials, services, or facilities to be
allocated;
    (e) A list or description of the sources of the materials,
services, or facilities that will be subject to the allocation action;
    (f) A detailed description of the provisions that will be included
in the allocations orders, including the type(s) of allocations orders,
the percentages or quantity of capacity or output to be allocated for
each purpose, the relationship with previously or subsequently received
priority rated and unrated contracts and orders, and the duration of
the allocation action (e.g., anticipated start and end dates);
    (g) An evaluation of the impact of the proposed allocation action
on the civilian market; and
    (h) Proposed actions, if any, to mitigate disruptions to civilian
market operations.

0
20. In subpart F, add Sec. Sec.  700.32, 700.33, 700.34, 700.35, and
700.36 to read as follows:

Sec.  700.32  Controlling the general distribution of a material in the
civilian market.

    No allocation action by the Department of Commerce may be used to
control the general distribution of a material in the civilian market
unless the conditions of paragraphs (a), (b), and (c) of this section
are met.
    (a) The Secretary has made a written finding that:
    (1) Such material is a scarce and critical material essential to
the national defense, and
    (2) The requirements of the national defense for such material
cannot otherwise be met without creating a significant dislocation of
the normal distribution of such material in the civilian market to such
a degree as to create appreciable hardship.
    (b) The Secretary has submitted the finding for the President's
approval through the Assistant to the President and National Security
Advisor and the Assistant to the President for Homeland Security and
Counterterrorism.
    (c) The President has approved the finding.
    (d) In this section, the term, ``Secretary'' means the Secretary of
Commerce or his or her designee.

Sec.  700.33  Types of allocations orders.

    There are three types of allocations orders available for
communicating allocation actions.
    (a) Set-aside. A set-aside is an official action that requires a
person to reserve materials, services, or facilities capacity

in anticipation of the receipt of rated orders.
    (b) Directive. A directive is an official action that requires a
person to take or refrain from taking certain actions in accordance
with its provisions. For example, a directive can require a person to:
stop or reduce production of an item; prohibit the use of selected
materials, services, or facilities; or divert the use of materials,
services, or facilities from one purpose to another. (c) Allotment. An
allotment is an official action that specifies the maximum quantity of
a material, service, or facility authorized for a specific use to
promote the national defense.

Sec.  700.34  Elements of an allocation order.

    Allocation orders may be issued directly to the affected persons or
by constructive notice to the parties through publication in the
Federal Register. This section describes the elements that each order
must include.
    (a) Elements to be included in all allocation orders. (1) A
detailed description of the required allocation action(s), including
its relationship to previously or subsequently received DX rated
orders, DO rated orders and unrated orders.
    (2) Specific start and end calendar dates for each required
allocation action.
    (b) Elements to be included in orders issued directly to affected
persons. (1) A statement that reads in substance: ``This is an
allocation order certified for national defense use. [Insert the name
of the person receiving the order] is required to comply with this
order, in accordance with the provisions of the Defense Priorities and
Allocations System regulations (15 CFR part 700).''
    (2) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of an
authorized official or employee of the Department of Commerce.
    (c) Elements to be included in an allocation order that gives
constructive notice through publication in the Federal Register. (1) A
statement that reads in substance: ``This is an allocation order
certified for national defense use. [Insert the name(s) of the
person(s) to whom the order applies or a description of the class of
persons to whom the order applies] is (are) required to comply with
this order, in accordance with the provisions of the Defense Priorities
and Allocations System regulations (15 CFR part 700).''
    (2) The order must be signed by an authorized official or employee
of the Department of Commerce.

Sec.  700.35  Mandatory acceptance of an allocation order.

    (a) Except as otherwise specified in this section, a person shall
accept and comply with every allocation order received.
    (b) A person shall not discriminate against an allocation order in
any manner such as by charging higher prices for materials, services,
or facilities covered by the order or by imposing terms and conditions
for contracts and orders involving allocated materials, services, or
facilities that differ from the person's terms and conditions for
contracts and orders for the materials, services, or facilities prior
to receiving the allocation order.
    (c) If a person is unable to comply fully with the required
action(s) specified in an allocation order, the person must notify the
Office of Strategic Industries and Economic Security immediately,
explain the extent to which compliance is possible, and give the
reasons why full compliance is not possible. If notification is given
verbally, written or electronic confirmation must be provided within
one working day. Such notification does not release the person from
complying with the order to the fullest extent possible, until the
person is notified by the Department of Commerce that the order has
been changed or cancelled.

Sec.  700.36  Changes or cancellations of allocation orders.

    An allocation order may be changed or cancelled by an official
action from the Department of Commerce. Notice of such changes or
cancellations may be provided directly to persons to whom the order
being cancelled or modified applies or constructive notice may be
provided by publication in the Federal Register.

0
21. Section 700.50 is amended by revising the first sentence of
paragraph (a) and revising paragraph (b) to read as follows:

Sec.  700.50  General provisions.

    (a) Once a priority rating has been authorized pursuant to this
part, further action by the Department of Commerce generally is not
needed. * * *
    (b) Special priorities assistance can be provided for any reason
consistent with this part, such as assisting in obtaining timely
deliveries of items needed to satisfy rated orders or authorizing the
use of priority ratings on orders to obtain items not otherwise ratable
under this part. If the Department of Commerce is unable to resolve the
problem or to authorize the use of a priority rating and believes
additional assistance is warranted, the Department of Commerce may
forward the request to another agency, identified in Sec.  700.10(c),
as appropriate, for action.
* * * * *

Sec.  700.51  [Amended]

0
22. Section 700.51 is amended by:
0
a. Removing the word ``regulation'' and adding in its place the word
``part'' in paragraph (a), introductory text;
0
b. Adding the phrase ``the Department of'' immediately preceding the
word ``Commerce'' in the first sentence of paragraph (c)(1);
0
c. Adding the phrase ``the Department of'' immediately preceding the
word ``Commerce'' in paragraph (c)(3), introductory text;
0
d. Adding the word ``and'' at the end of paragraph (c)(3)(iv);
0
e. Removing paragraph (c)(3)(v); and
0
f. Redesignating paragraph (c)(3)(vi) as paragraph (c)(3)(v).

Sec.  700.53  [Amended]

0
23. Section 700.53 is amended by adding the words ``the Department of''
between the word ``or'' and the word ``Commerce'' in the introductory
text.

Sec.  700.54  [Amended]

0
24. Section 700.54 is amended by adding the words ``the Department of''
between the word ``and'' and the word ``Commerce'' in the introductory
text.

0
25. Section 700.55 is revised to read as follows:

Sec.  700.55  Homeland security, emergency preparedness, and critical
infrastructure protection and restoration assistance programs within
the United States.

    Any person requesting priority rating authority or requiring
assistance in obtaining rated items supporting homeland security,
emergency preparedness, and critical infrastructure protection and
restoration related activities should submit a request for such
assistance or priority rating authority to the Office of Policy and
Program Analysis, Federal Emergency Management Agency, Department of
Homeland Security, 500 C Street SW., Washington, DC 20472; telephone:
(202) 646-3520; Fax:<PHONE_NUMBER>; Email<EMAIL_ADDRESS>Web
site: http://www.fema.gov/defense-production-act-program-division.

0
26. In subpart H, Sec. Sec.  700.56, 700.57, and 700.58 are added to
read as follows:

Sec.  700.56  Military assistance programs with Canada.

    (a) To promote military assistance to Canada, this section provides
for authorizing priority ratings to persons in Canada to obtain items
in the United

States in support of approved programs. Although priority ratings have
no legal authority outside of the United States, this section also
provides information on how persons in the United States may obtain
informal assistance in Canada in support of approved programs.
    (b) The joint United States-Canadian military arrangements for the
defense of North America and the integrated nature of the United States
and Canadian defense industries require close coordination and the
establishment of a means to provide mutual assistance to the defense
industries located in both countries.
    (c) The Department of Commerce coordinates with the Canadian Public
Works and Government Services Canada on all matters of mutual concern
relating to the administration of this part.
    (d) Any person in the United States ordering defense items in
Canada in support of an approved program should inform the Canadian
supplier that the items being ordered are to be used to fill a rated
order. The Canadian supplier should be informed that if production
materials are needed from the United States by the supplier or the
supplier's vendor to fill the order, the supplier or vendor should
contact the Canadian Public Works and Government Services Canada for
authority to place rated orders in the United States: Public Works and
Government Services Canada, Acquisitions Branch, Business Management
Directorate, Phase 3, Place du Portage, Level 0A1, 11 Laurier Street,
Gatineau, Quebec, K1A 0S5, Canada; Telephone:<PHONE_NUMBER>; Fax:
(819) 956-7827, or electronically at
<EMAIL_ADDRESS>    (e) Any person in Canada producing defense items for the Canadian
government may also obtain priority rating authority for items to be
purchased in the United States by applying to the Canadian Public Works
and Government Services Canada, Acquisitions Branch, Business
Management Directorate, in accordance with its procedures.
    (f) Persons in Canada needing special priorities assistance in
obtaining defense items in the United States may apply to the Canadian
Public Works and Government Services Canada, Acquisitions Branch,
Business Management Directorate, for such assistance. Public Works and
Government Services Canada will forward appropriate requests to the
Department of Commerce.
    (g) Any person in the United States requiring assistance in
obtaining items in Canada must submit a request through the Delegate
Agency to the Office of Strategic Industries and Economic Security,
U.S. Department of Commerce on Form BIS-999. The Department of Commerce
will forward appropriate requests to the Canadian Public Works and
Government Services Canada.

Sec.  700.57  Military assistance programs with other nations and
international organizations.

    (a) Scope. To promote military assistance to foreign nations and
international organizations (for example, the North Atlantic Treaty
Organization or the United Nations), this section provides for
authorizing priority ratings to persons in foreign nations or
international organizations to obtain items in the United States in
support of approved programs. Although priority ratings have no legal
authority outside of the United States, this section also provides
information on how persons in the United States may obtain informal
assistance in Australia, Finland, Italy, The Netherlands, Sweden, and
the United Kingdom in support of approved programs.
    (b) Foreign nations and international organizations. (1) Any person
in a foreign nation other than Canada, or any person in an
international organization, requiring assistance in obtaining items in
the United States or priority rating authority for items to be
purchased in the United States, should submit a request for such
assistance or priority rating authority to: the Department of Defense
DPAS Lead in the Office of the Deputy Assistant Secretary of Defense
for Manufacturing and Industrial Base Policy, 3330 Defense Pentagon,
Room 3B854, Washington, DC 20301; Telephone:<PHONE_NUMBER>; Fax: (703)
695-4885; Email<EMAIL_ADDRESS>Web site: http://www.acq.osd.mil/mibp.
    (i) If the end product is being acquired by a U.S. Government
agency, the request should be submitted to the Department of Defense
DPAS Lead through the U.S. contract administration representative.
    (ii) If the end product is being acquired by a foreign nation or
international organization, the request must be sponsored prior to its
submission to the Department of Defense DPAS Lead by the government of
the foreign nation or the international organization that will use the
end product.
    (2) If the Department of Defense endorses the request, it will be
forwarded to the Department of Commerce for appropriate action.
    (c) Requesting assistance in Australia, Finland, Italy, The
Netherlands, Sweden, and the United Kingdom. (1) The Department of
Defense has entered into bilateral security of supply arrangements with
Australia, Finland, Italy, The Netherlands, Sweden, and the United
Kingdom that allow the Department of Defense to request the priority
delivery for Department of Defense contracts, subcontracts, and orders
from companies in these countries.
    (2) Any person in the United States requiring assistance in
obtaining the priority delivery of a contract, subcontract, or order in
Australia, Finland, Italy, The Netherlands, Sweden, or the United
Kingdom to support an approved program should contact the Department of
Defense DPAS Lead in the Office of the Deputy Assistant Secretary of
Defense for Manufacturing and Industrial Base Policy for assistance.
Persons in Australia, Finland, Italy, The Netherlands, Sweden, and the
United Kingdom should request assistance in accordance with paragraph
(b)(1) of this section.

Sec.  700.58  Critical infrastructure assistance programs to foreign
nations and international organizations.

    (a) Scope. To promote critical infrastructure assistance to foreign
nations, this section provides for authorizing priority ratings to
persons in foreign nations or international organizations (for example
the North Atlantic Treaty Organization or the United Nations) to obtain
items in the United States in support of approved programs.
    (b) Foreign nations or international organizations. Any person in a
foreign nation or representing an international organization requiring
assistance in obtaining items to be purchased in the United States for
support of critical infrastructure protection and restoration should
submit a request for such assistance or priority rating authority to
the Office of Policy and Program Analysis, Federal Emergency Management
Agency, Department of Homeland Security, 500 C Street SW., Washington,
DC 20472; telephone:<PHONE_NUMBER>; Fax:<PHONE_NUMBER>; Email<EMAIL_ADDRESS>Web site: http://www.fema.gov/defense-production-act-program-division.

0
27. Section 700.60 is revised to read as follows:

Sec.  700.60  General provisions.

    (a) The Department of Commerce may, from time-to-time, take
specific

official actions to implement or enforce the provisions of this part.
    (b) Some of these official actions (rating authorizations and
letters of understanding) are discussed in this subpart. Official
actions that pertain to compliance (administrative subpoenas, demands
for information, and inspection authorizations) are discussed in Sec.
700.71(c). Directives are discussed in Sec.  700.62.

0
28. Section 700.61 is amended by revising the heading and paragraph (a)
introductory text to read as follows:

Sec.  700.61  Rating authorizations.

    (a) A rating authorization is an official action granting specific
priority rating authority that:
* * * * *

Sec.  700.62  [Amended]

0
29. Section 700.62 is amended by removing ``Directive'' wherever it
appears and by adding in its place ``directive''.

Sec.  700.63  [Amended]

0
30. Section 700.63 is amended by:
0
a. Revising the section heading to read ``Letters of understanding'';
0
b. Removing ``Letter of Understanding'' wherever it appears and adding
in its place ``letter of understanding'';
0
c. Adding the words ``the Department of'' immediately preceding the
word ``Commerce'' in paragraph (a); and
0
d. Removing ``Letters of Understanding'' and adding in its place
``letters of understanding'' in paragraph (b).

Sec.  700.70  [Amended]

0
31. Section 700.70 is amended by:
0
a. Removing paragraph (b);
0
b. Redesignating paragraph (c) as paragraph (b); and
0
c. Removing the word ``regulation'' wherever it appears and adding in
its place the word ``part''.

0
32. Section 700.71 is revised to read as follows:

Sec.  700.71  Audits and investigations.

    (a) Audits and investigations are official actions involving the
examination of books, records, documents, other writings and
information to ensure that the provisions of the Defense Production
Act, the Selective Service Act and related statutes, and this part have
been properly followed. An audit or investigation may also include
interviews and a systems evaluation to detect problems or failures in
the implementation of this part.
    (b) When undertaking an audit, investigation, or other inquiry, the
Department of Commerce shall:
    (1) Define the scope and purpose in the official action given to
the person under investigation, and
    (2) Have ascertained that the information sought or other adequate
and authoritative data are not available from any Federal or other
responsible agency.
    (c) In administering this part, the Department of Commerce may
issue the following documents, which constitute official actions:
    (1) Administrative subpoenas. An administrative subpoena requires a
person to appear as a witness before an official designated by the
Department of Commerce to testify under oath on matters of which that
person has knowledge relating to the enforcement or the administration
of the Defense Production Act, the Selective Service Act and related
statutes, or this part. An administrative subpoena may also require the
production of books, papers, records, documents and physical objects or
property.
    (2) Demand for information. A demand for information requires a
person to furnish to a duly authorized representative of the Department
of Commerce any information necessary or appropriate to the enforcement
or the administration of the Defense Production Act, the Selective
Service Act, or this part.
    (3) Inspection authorizations. An inspection authorization requires
a person to permit a duly authorized representative of the Department
of Commerce to interview the person's employees or agents, to inspect
books, records, documents, other writings and information in the
person's possession or control at the place where that person usually
keeps them, and to inspect a person's property when such interviews and
inspections are necessary or appropriate to the enforcement or the
administration of the Defense Production Act, the Selective Service
Act, or this part.
    (d) The production of books, records, documents, other writings and
information will not be required at any place other than where they are
usually kept if, prior to the return date specified in the
administrative subpoena or demand for information, a duly authorized
official of the Department of Commerce is furnished with copies of such
material that are certified under oath to be true copies. As an
alternative, a person may enter into a stipulation with a duly
authorized official of the Department of Commerce as to the content of
the material.
    (e) An administrative subpoena, demand for information, or
inspection authorization shall include the name, title or official
position of the person to be served, the evidence sought to be adduced,
and its general relevance to the scope and purpose of the audit,
investigation, or other inquiry. If employees or agents are to be
interviewed; if books, records, documents, other writings, or
information are to be produced; or if property is to be inspected; the
administrative subpoena, demand for information, or inspection
authorization will describe them with particularity.
    (f) Service of documents shall be made in the following manner:
    (1) Service of a demand for information or inspection authorization
shall be made personally, or by certified mail--return receipt
requested at the person's last known address. Service of an
administrative subpoena shall be made personally. Personal service may
also be made by leaving a copy of the document with someone at least 18
years of age at the person's last known dwelling or place of business.
    (2) Service upon other than an individual may be made by serving a
partner, corporate officer, or a managing or general agent authorized
by appointment or by law to accept service of process. If an agent is
served, a copy of the document shall be mailed to the person named in
the document.
    (3) Any individual 18 years of age or older may serve an
administrative subpoena, demand for information, or inspection
authorization. When personal service is made, the individual making the
service shall prepare an affidavit as to the manner in which service
was made and the identity of the person served, and return the
affidavit, and in the case of subpoenas, the original document, to the
issuing officer. In case of failure to make service, the reasons for
the failure shall be stated on the original document.

0
33. Section 700.72 is amended by revising the first sentence of
paragraph (a) to read as follows:

Sec.  700.72  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative
of the Department of Commerce to have access to any premises or source
of information necessary to the administration or enforcement of the
Defense Production Act or this part, the Department of Commerce may
seek compulsory process. * * *
* * * * *

0
34. Section 700.73 is revised to read as follows:

Sec.  700.73  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, the Department of Commerce may inform the person
in writing where compliance with the requirements of the Defense
Production Act, the Selective Service Act and related statutes, or this
part were not met.
    (b) In cases where the Department of Commerce determines that
failure to comply with the provisions of the Defense Production Act,
the Selective Service Act and related statutes, or this part was
inadvertent, the person may be informed in writing of the particulars
involved and the corrective action to be taken. Failure to take
corrective action may then be construed as a willful violation of the
Defense Production Act, this part, or an official action.

0
35. Section 700.74 is revised to read as follows:

Sec.  700.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of Title I or Sections 705
or 707 of the Defense Production Act, the priorities provisions of the
Selective Service Act and related statutes or this part is a crime and
upon conviction, a person may be punished by fine or imprisonment, or
both. The maximum penalty provided by the Defense Production Act is a
$10,000 fine, or one year in prison, or both. The maximum penalty
provided by the Selective Service Act is a $50,000 fine, or three years
in prison, or both.
    (b) The government may also seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the Defense Production Act, this
part, or an official action.
    (c) In order to secure the effective enforcement of the Defense
Production Act, this part, and official actions, the following are
prohibited (see section 704 of the Defense Production Act; see also,
for example, sections 2 and 371 of Title 18 United States Code):
    (1) No person may solicit, influence or permit another person to
perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this part, or an official action.
    (2) No person may conspire or act in concert with any other person
to perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this part, or an official action.
    (3) No person shall deliver any item if the person knows or has
reason to believe that the item will be accepted, redelivered, held, or
used in violation of the Defense Production Act, this part, or an
official action. In such instances, the person must immediately notify
the Department of Commerce that, in accordance with this section,
delivery has not been made.

0
36. Section 700.80 is amended by revising paragraphs (a)(1) and (2),
(b), and (c) to read as follows:

Sec.  700.80  Adjustments or exceptions.

    (a) * * *
    (1) A provision of this part or an official action results in an
undue or exceptional hardship on that person not suffered generally by
others in similar situations and circumstances; or
    (2) The consequence of following a provision of this part or an
official action is contrary to the intent of the Defense Production
Act, the Selective Service Act and related statutes, or this part.
    (b) Each request for adjustment or exception must be in writing and
contain a complete statement of all the facts and circumstances related
to the provision of this part or official action from which adjustment
is sought and a full and precise statement of the reasons why relief
should be provided.
    (c) The submission of a request for adjustment or exception shall
not relieve any person from the obligation of complying with the
provisions of this part or official action in question while the
request is being considered unless such interim relief is granted in
writing by the Office of Strategic Industries and Economic Security.
The Office of Strategic Industries and Economic Security shall respond
to requests for adjustment of or exceptions to compliance with the
provisions of this part or an official action within 25 (twenty-five)
days, not including Saturdays, Sundays or Government holidays, of the
date of receipt.
* * * * *

0
37. Section 700.81 is amended by revising paragraphs (a), (b), and (g),
to read as follows:

Sec.  700.81  Appeals.

    (a) Any person who has had a request for adjustment or exception
denied by the Office of Strategic Industries and Economic Security
under Sec.  700.80, may appeal to the Assistant Secretary for Export
Administration, Department of Commerce, who shall review and reconsider
the denial. Such appeals should be submitted to the Office of the
Assistant Secretary for Export Administration, Bureau of Industry and
Security, Department of Commerce, Room 3886, Washington, DC 20230, Ref:
DPAS Appeals.
    (b) Appeals of denied requests for exceptions from or adjustments
to compliance with the provisions of this part or an official action
must be received by the Assistant Secretary for Export Administration
no later than 45 days after receipt of a written notice of denial from
the Office of Strategic Industries and Economic Security. After this
45-day period, an appeal may be accepted at the discretion of the
Assistant Secretary for Export Administration.
* * * * *
    (g) The submission of an appeal under this section shall not
relieve any person from the obligation of complying with the provisions
of this part or official action in question while the appeal is being
considered, unless such relief is granted in writing by the Assistant
Secretary for Export Administration.
* * * * *

Sec.  700.90  [Amended]

0
38. Section 700.90 is amended by removing the word ``regulation'' and
adding in its place the word ``part''.

Sec.  700.91  [Amended]

0
39. Section 700.91 is amended by:
0
a. Removing the word ``regulation'' wherever it appears and adding in
its place the word ``part'';
0
b. Adding the phrase ``the Department of'' immediately preceding the
word ``Commerce'' wherever it appears; and
0
c. Removing ``705(e)'' and adding in its place ``705(d)'' wherever it
appears.

Sec.  700.92  [Amended]

0
40. Section 700.92 is amended by:
0
a. Removing the word ``regulation'' wherever it appears in the heading
and in paragraphs (a), (b) and (c) and adding in its place the word
``part'';
0
b. Adding the phrase ``the Department of'' immediately preceding the
word ``Commerce'' wherever it appears; and
0
c. Removing the phrase ``the regulations'' and adding in its place
``any provision of this part'' in the first sentence of paragraph (d).

0
41. Section 700.93 is revised to read as follows:

Sec.  700.93  Communications.

    General communications concerning this part, including how to
obtain copies of this part and explanatory information, requests for
guidance or clarification, may be addressed to the Office of Strategic
Industries and Economic Security, Room 3876, Department of Commerce,
Washington, DC 20230, Ref: DPAS; telephone<PHONE_NUMBER>, email
<EMAIL_ADDRESS>Request for priorities assistance under

Sec.  700.50, adjustments or exceptions under Sec.  700.80, or appeals
under Sec.  700.81, must be submitted in the manner specified in those
sections.

0
42. Schedule I to part 700 is revised to read as follows:

Schedule I to Part 700--Approved Programs and Delegate Agencies

    The programs listed in this schedule have been approved for
priorities support under this part by the Department of Defense,\1\ the
Department of Energy or the Department of Homeland Security, in
accordance with section 202 of Executive Order 13603. They have equal
preferential status. The Department of Commerce has authorized the
delegate agencies listed in the third column to use this part in
support of those programs assigned to them, as indicated below.\2\
---------------------------------------------------------------------------

    \1\ Department of Defense includes: The Office of the Secretary
of Defense, the Military Departments, the Joint Staff, the Combatant
Commands, the Defense Agencies, the Defense Field Activities, all
other organizational entities in the Department of Defense, and, for
purposes of this part, the Central Intelligence Agency and the
National Aeronautics and Space Administration as associated
agencies.
    \2\ The Department of Commerce is also listed as an agency in
the third column for programs where its authorization is necessary
to place rated orders.

------------------------------------------------------------------------
Program identification
        symbol              Approved program           Agency(ies)
------------------------------------------------------------------------
                            Defense Programs
------------------------------------------------------------------------
A1....................  Aircraft...............  Department of Defense.
A2....................  Missiles...............  Department of Defense.
A3....................  Ships..................  Department of Defense.
A4....................  Tank--Automotive.......  Department of Defense.
A5....................  Weapons................  Department of Defense.
A6....................  Ammunition.............  Department of Defense.
A7....................  Electronic and           Department of Defense.
                         communications
                         equipment.
B1....................  Military building        Department of Defense.
                         supplies.
B8....................  Production equipment     Department of Defense.
                         (for defense
                         contractor's account).
B9....................  Production equipment     Department of Defense.
                         (Government owned).
C1....................  Food resources (combat   Department of Defense.
                         rations).
C2....................  Department of Defense    Department of Defense.
                         construction.
C3....................  Maintenance, repair,     Department of Defense.
                         and operating supplies
                         (MRO) for Department
                         of Defense facilities.
C9....................  Miscellaneous..........  Department of Defense.
------------------------------------------------------------------------
                      Military Assistance to Canada
------------------------------------------------------------------------
D1....................  Canadian military        Department of Commerce.
                         programs.
D2....................  Canadian production and  Department of Commerce.
                         construction.
D3....................  Canadian atomic energy   Department of Commerce.
                         program.
------------------------------------------------------------------------
              Military Assistance to Other Foreign Nations
------------------------------------------------------------------------
G1....................  Certain munitions items  Department of Commerce.
                         purchased by foreign
                         governments through
                         domestic commercial
                         channels for export.
G2....................  Certain direct defense   Department of Commerce.
                         needs of foreign
                         governments other than
                         Canada.
G3....................  Foreign nations (other   Department of Commerce.
                         than Canada)
                         production and
                         construction.
------------------------------------------------------------------------
          Critical Infrastructure Assistance to Foreign Nations
------------------------------------------------------------------------
G4....................  Foreign critical         Department of Commerce.
                         infrastructure
                         programs.
------------------------------------------------------------------------
                              Co-Production
------------------------------------------------------------------------
J1....................  F-16 Co-Production       Departments of Commerce
                         Program.                 and Defense.
------------------------------------------------------------------------
                         Atomic Energy Programs
------------------------------------------------------------------------
E1....................  Construction...........  Department of Energy.
E2....................  Operations--including    Department of Energy.
                         maintenance, repair,
                         and operating supplies
                         (MRO).
E3....................  Privately owned          Department of Energy.
                         facilities.
------------------------------------------------------------------------
                        Domestic Energy Programs
------------------------------------------------------------------------
F1....................  Exploration,             Department of Energy.
                         production, refining,
                         and transportation.
F2....................  Conservation...........  Department of Energy.
F3....................  Construction, repair,    Department of Energy.
                         and maintenance.
------------------------------------------------------------------------
               Other Defense, Energy, and Related Programs
------------------------------------------------------------------------
H1....................  Certain combined orders  Department of Commerce.
                         (see section
                         700.17(c)).
H5....................  Private domestic         Department of Commerce.
                         production.
H6....................  Private domestic         Department of Commerce.
                         construction.
H7....................  Maintenance, repair,     Department of Commerce.
                         and operating supplies
                         (MRO).

H8....................  Designated Programs....  Department of Commerce.
K1....................  Federal supply items...  General Services
                                                  Administration.
------------------------------------------------------------------------
                       Homeland Security Programs
------------------------------------------------------------------------
N1....................  Federal emergency        Department of Homeland
                         preparedness,            Security.
                         mitigation, response,
                         and recovery.
N2....................  State, local, tribal     Department of Homeland
                         government emergency     Security.
                         preparedness,
                         mitigation, response,
                         and recovery.
N3....................  Intelligence and         Department of Homeland
                         warning systems.         Security.
N4....................  Border and               Department of Homeland
                         transportation           Security.
                         security.
N5....................  Domestic counter-        Department of Homeland
                         terrorism, including     Security.
                         law enforcement.
N6....................  Chemical, biological,    Department of Homeland
                         radiological, and        Security.
                         nuclear
                         countermeasures.
N7....................  Critical infrastructure  Department of Homeland
                         protection and           Security.
                         restoration.
N8....................  Miscellaneous..........  Department of Homeland
                                                  Security.
------------------------------------------------------------------------

    Dated: August 8, 2014.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2014-19168 Filed 8-13-14; 8:45 am]
BILLING CODE 3510-JT-P


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[Federal Register Volume 87, Number 5 (Friday, January 7, 2022)]
[Notices]
[Page 998]
[FR Doc No: 2022-00058]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93891; File No. SR-NASDAQ-2021-054]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Designation of a Longer Period for Commission Action on
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change To Modify Listing Rule IM-5101-2 To Permit an Acquisition
Company To Contribute a Portion of Its Deposit Account to Another
Entity in a Spin-Off or Similar Corporate Transaction

January 3, 2022.
    On June 24, 2021, The Nasdaq Stock Market LLC (``Exchange'') filed
with the Securities and Exchange Commission (``Commission''), pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'')
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to modify
Listing Rule IM-5101-2 to permit an acquisition company to contribute a
portion of the amount held in its deposit account to a deposit account
of a new acquisition company in a spin-off or similar corporate
transaction. The proposed rule change was published for comment in the
Federal Register on July 13, 2021.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 92344 (July 7,
2021), 86 FR 36841. Comments received on the proposal are available
on the Commission's website at: https://www.sec.gov/comments/sr-nasdaq-2021-054/srnasdaq2021054.htm.
---------------------------------------------------------------------------

    On August 25, 2021, pursuant to Section 19(b)(2) of the Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On September 30, 2021, the Commission instituted proceedings
under Section 19(b)(2)(B) of the Act \6\ to determine whether to
approve or disapprove the proposed rule change.\7\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 92751, 86 FR 48780
(Aug. 31, 2021).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ See Securities Exchange Act Release No. 93219, 86 FR 55664
(Oct. 6, 2021).
---------------------------------------------------------------------------

    Section 19(b)(2) of the Act \8\ provides that, after initiating
proceedings, the Commission shall issue an order approving or
disapproving the proposed rule change not later than 180 days after the
date of publication of notice of filing of the proposed rule change.
The Commission may extend the period for issuing an order approving or
disapproving the proposed rule change, however, by not more than 60
days if the Commission determines that a longer period is appropriate
and publishes the reasons for such determination. The proposed rule
change was published for comment in the Federal Register on July 13,
2021.\9\ The 180th day after publication of the proposed rule change is
January 9, 2022. The Commission is extending the time period for
approving or disapproving the proposed rule change for an additional 60
days.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).
    \9\ See supra note 3.
---------------------------------------------------------------------------

    The Commission finds that it is appropriate to designate a longer
period within which to issue an order approving or disapproving the
proposed rule change so that it has sufficient time to consider the
proposed rule change and comments received. Accordingly, the
Commission, pursuant to Section 19(b)(2) of the Act,\10\ designates
March 10, 2022, as the date by which the Commission shall either
approve or disapprove the proposed rule change (File Number SR-NASDAQ-
2021-054).
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00058 Filed 1-6-22; 8:45 am]
BILLING CODE 8011-01-P