[Federal Register Volume 76, Number 31 (Tuesday, February 15, 2011)]
[Proposed Rules]
[Pages 8675-8699]
[FR Doc No: 2011-3209]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 33

[Docket No. OST 2010-0298]
RIN 2105-AD83

Prioritization and Allocation Authority Exercised by the
Secretary of Transportation Under the Defense Production Act

AGENCY: Office of the Secretary of Transportation (OST), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Department of Transportation's Office of the Secretary
(OST) is initiating this proposed rulemaking to clarify the priorities
and allocation authorities exercised by the Secretary of Transportation
(Secretary) under title 1 of the Defense Production Act of 1950
(Defense Production Act), and to set forth the administrative
procedures by which the Secretary will exercise this authority. This
proposed rule complies with the requirement in the Defense Production
Act Reauthorization of 2009 (Pub. L. 111-67) to issue final rules
establishing standards and procedures by which the priorities and
allocations authority is used to promote the national defense, under
both emergency and nonemergency conditions, and is part of a multi-
agency effort that forms the Federal Priorities and Allocations System.

DATES: Comment Closing Date: Comments must be received by March 17,
2011.

ADDRESSES: You may submit comments (identified by the agency name and
DOT Docket ID Number OST-2010-0298) by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting
comments.
     Mail: Docket Management Facility: U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building Ground
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET,
Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    Instructions: You must include the agency name (Office of the
Secretary, DOT) and Docket number (OST-2010-0298) for this notice at
the beginning of your comments. You should submit two copies of your
comments if you submit them by mail or courier. Note that all comments
received will be posted without change to http://www.regulations.gov
including any personal information provided and will be available to
internet users. You may review DOT's complete Privacy Act Statement in
the Federal Register published on April 11, 2000 (65 FR 19477) or you
may visit http://DocketsInfo.dot.gov.
    Docket: For Internet access to the docket to read background
documents and comments received, go to http://www.regulations.gov.
Background documents and comments received may also be viewed at the
U.S. Department of Transportation, 1200 New Jersey Ave., SE., Docket
Operations, M-30, West Building Ground Floor, Room W12-140, Washington,
DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except
Federal holidays.

FOR FURTHER INFORMATION CONTACT: Donna L. O'Berry, Office of the
General Counsel, Department of Transportation, 1200 New Jersey Avenue,
SE., Room W96-317, Washington, DC 20590; telephone:<PHONE_NUMBER>; e-
mail<EMAIL_ADDRESS>or Lloyd E. Milburn, Office of
Intelligence, Security and Emergency Response, Department of
Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590;
telephone:<PHONE_NUMBER>; e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    The Defense Production Act of 1950 (Defense Production Act) (50
U.S.C. App. 2061 et seq.) was enacted during the Korean War to ensure
the availability of resources to meet national security needs. The
Defense Production Act provides a number of important authorities to
expedite and expand the supply of critical resources from the U.S.
industrial base to support the national defense. While Defense
Production Act provisions initially focused on Department of Defense
(DoD) acquisition needs, several significant changes to the Defense
Production Act definition of national defense have been added over time
to expand the definition from military, energy, and space activities,
to include emergency preparedness activities conducted pursuant to
title VI of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (Stafford Act) (42 U.S.C. 5121 et seq.) and the
protection and restoration of critical infrastructure.
    Section 101(a) of title I of the Defense Production Act (50 U.S.C.
App. 2071) authorizes the President:

    (1) To require that performance under contracts or orders (other
than contracts of employment) which he deems necessary or appropriate
to promote the national defense shall take priority over performance
under any other contract or order, and, for the purpose of assuring
such priority, to require acceptance and performance of such contracts
or orders in preference to other contracts or orders by any person he
finds to be capable of their performance, and (2) to allocate
materials, services, and facilities in such manner, upon such
conditions, and to such extent as he shall deem necessary or
appropriate to promote the national defense.
    Executive Order 12919, National Defense Industrial Resources
Preparedness (June 3, 1994), as amended, delegates the President's
authority under section 101 of the Defense Production Act to the heads
of several departments and agencies. The President has delegated this
authority to the Secretary of Transportation with respect to all forms
of civil transportation.\1\ While the Department of Transportation
(DOT) is seeking comments on all aspects of the rulemaking, we are
particularly interested in comments on the scope and applicability of
the definition of civil transportation.
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    \1\ Section 201 of Executive Order 12919 also delegates Defense
Production Act section 101 authority to:
    (1) The Secretary of Agriculture with respect to food resources,
food resource facilities, and the domestic distribution of farm
equipment and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to
health resources;
    (4) The Secretary of Defense with respect to water resources;
and
    (5) The Secretary of Commerce for all other materials, services,
and facilities, including construction materials.
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    Section 202 of Executive Order 12919 provides that this delegated
authority may only be used to support programs that have been
determined in writing as necessary or appropriate to promote the
national defense by the Secretary of Defense with respect to military
production and construction, military assistance to foreign nations,
stockpiling, outer space and directly related activities; the Secretary
of Energy with respect to energy production and construction,
distribution and use, and directly related activities; or the Secretary
of Homeland Security with respect to essential civilian needs
supporting national defense, including civil defense and continuity of
government and directly related activities.
    Executive Order 12656, Assignment of Emergency Preparedness
Responsibilities, as amended, assigns Federal departments and agencies
responsibilities for national security emergency preparedness. The
Secretary of Transportation is assigned lead responsibility for, among
other things,
    (1) Developing plans to promulgate and manage overall national
policies, programs, procedures, and systems to meet essential civil and
military transportation needs in national security emergencies; (2)
preparing to provide direction to all modes of civil transportation in
national security emergencies, including air, surface, water,
pipelines, and public storage and warehousing, to the extent such
responsibility is vested in the Secretary for: (a) Implementation of
priorities for all transportation resource requirements for service,
equipment, facilities, and systems; and (b) allocation of
transportation resource capacity; and (3) emergency management and
control of civil transportation resources and systems, including
privately owned automobiles, urban mass transit, intermodal
transportation systems, the National Railroad Passenger Corporation and
the St. Lawrence Seaway Development Corporation.

This proposed rule would set forth the policies and procedures by which
the Secretary would carry out certain authorities and responsibilities
assigned under Executive Order 12656.
    The Defense Production Act Reauthorization of 2009 (Pub. L. 111-67,
September 30, 2009) requires each Federal agency with delegated
authority under section 101 of the Defense Production Act to issue
final rules establishing standards and procedures by which the
priorities and allocations authority is used to promote the national
defense, under both emergency and non-emergency conditions. Congress
further directed that, to the extent practicable, the Federal agencies
should work together to develop a consistent and unified Federal
priorities and allocations system.
    In order to meet this mandate, DOT has worked in conjunction with
the Departments of Agriculture, Commerce, Defense, Energy, Health and
Human Services, and Homeland Security to develop common provisions that
can be used by each Department in its own regulation. Common provisions
among the Departments would provide consistency and uniformity for how
the Federal priorities and allocations are applied. However, each
Department would supplement in its own regulation, as necessary, the
common provisions in order to provide additional standards and
procedures unique to its resource area. The six regulations to be
promulgated by each Department with delegated Defense Production Act
title I authority would be commonly referred to as the Federal
Priorities and Allocations System (FPAS) of rules.
    DOT's proposed regulation to form part of the FPAS would be known
as the Transportation Priorities and Allocations System (TPAS).\2\
Although DOT has developed procedures for implementing this authority
through Departmental orders and other internal documents and protocols,
DOT now proposes to establish a regulatory framework through TPAS to
implement these authorities through this rulemaking. While TPAS adopts
the common standards established under the FPAS, it would also include
requirements that are specific to civil transportation. Transportation
services covered under TPAS would include the movement of persons and
property by all modes of civil transportation in commerce and related
public storage and warehousing, ports, services, equipment and
facilities.
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    \2\ The other parts that make up FPAS are:
    (1) Agricultural Priorities and Allocations System promulgated
by the Department of Agriculture;
    (2) Defense Priorities and Allocations System promulgated by the
Department of Commerce;
    (3) Energy Priorities and Allocations System promulgated by the
Department of Energy;
    (4) Health Resources Priorities and Allocations System
promulgated by the Department of Health and Human Service; and
    (5) Water Resources Priorities and Allocations System
promulgated by the Department of Defense.
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    DOT's Maritime Administration (MARAD) currently has regulations in
46 CFR that are based on Defense Production Act section 101 authority
and is currently reviewing these regulations to determine if any
modifications are necessary to bring them into conformance with TPAS.
    Generally speaking, the transportation sector is very robust and
even in emergencies DOT expects that the normal interactions between
civilian transportation providers and those using their services will
be maintained or that it will be possible to address any disruptions
that may occur without the need for DOT to employ its priorities and
allocations authority. Although DOT is developing a system to be used
in emergency and non-emergency situations, DOT anticipates that only an
extreme crisis would trigger the need to use DOT's authorities under
this proposed rule. DOT has conducted response activities to multiple
crises over the last decade and at no time

during the most severe situation was DOT required to use its delegated
Defense Production Act priority or allocation authority to marshal
adequate transportation resources to complete its mission. Instead,
there was sufficient transportation capacity available through normal
interactions or alternative arrangements between transportation service
providers and end users to meet the demand or the disruption was
addressed through other means.

II. Section-by-Section Analysis

Subpart A--General

    Section 33.1 Purpose of this part. This section explains that the
purpose of this rule would be to provide guidance and procedures for
use of the Defense Production Act priorities and allocations authority
with respect to civil transportation, in accordance with the delegation
of authority provided in section 201 of Executive Order 12919. This
section also lists other agency regulations that, along with this
regulation, would form the Federal Priorities and Allocations System.
    Section 33.2 Priorities and allocations authority. This section
would summarize the delegations of priorities and allocations authority
in section 201 of Executive Order 12919. This section would also
explain that these delegated authorities may only be used to support
programs that have been determined in writing as necessary or
appropriate to promote the national defense by the Secretaries of
Defense, Energy, or Homeland Security in their respective areas of
jurisdiction, as specified in section 202 of Executive Order 12919.
    Section 33.3 Program eligibility. This proposed section lists the
categories of programs eligible for priorities and allocations support,
in accordance with the definition of ``national defense'' in section
702 of the Defense Production Act (50 U.S.C. App. Sec.  2152).

Subpart B--Definitions

    Section 33.20 Definitions. This section would contain definitions
used in this part. Some definitions are drawn from other sources, as
follows:
     Section 702 of the Defense Production Act (50 U.S.C. App.
Sec.  2152)--``critical infrastructure,'' ``facilities,'' ``homeland
security,'' ``materials,'' ``national defense,'' ``person,'' and
``services.''
     Section 901 of Executive Order 12919--``civil
transportation,'' ``energy,'' ``farm equipment,'' ``fertilizer,''
``food resources,'' ``food resource facilities,'' ``health resources,''
and ``water resources.''
     The current Defense Priorities and Allocations System
(DPAS) regulation--``allotment'' (with technical modifications),
``approved program'' (with technical modifications), ``construction,''
``delegate agency,'' ``directive,'' ``item,'' ``maintenance and repair
and operating supplies'' or ``MRO,'' ``official action'' (with
technical modifications), ``rated order,'' and ``set-aside'' (with
technical modifications).
     Section 602 of the Stafford Act (42 U.S.C. 5195a)--
``emergency preparedness'' and ``hazard.''
     Section 18.3 of 49 Code of Federal Regulations--``local
government'' and ``state.''
    The definitions of ``allocation,'' ``allocation authority,'' and
``allocation order'' are based on language in section 101 of the
Defense Production Act that describes the allocation authority of the
President.
    ``Defense Production Act'' means the Defense Production Act of
1950, as amended (50 U.S.C. App. 2061 et seq.).
    ``Planning order'' defines an administrative tool used by DOT's
Maritime Administration.
    ``Resource agency'' refers to one of the six Federal departments
that has been delegated Defense Production Act priorities and
allocations authority under section 201 of Executive Order 12919.
    ``Secretary'' refers to the Secretary of Transportation.
    ``Stafford Act'' refers to title VI (Emergency Preparedness) of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5195-5197g).

Subpart C--Placement of Rated Orders

    Section 33.30 Delegation of authority. This section proposes to
describe the delegation of priorities and allocations authority from
the President to the Secretary of Transportation for all forms of civil
transportation.
    DOT anticipates receiving a delegation of authority from the
Department of Commerce to enable DOT to place priority ratings for
items and materials necessary for civil transportation resources that
fall under the Department of Commerce's jurisdiction. For example, such
``flow down'' items might include brakes, tires, and engine parts
necessary for motor coaches to operate under a priority order for the
provision of civil transportation. In instances where DOT is placing
such a ``flow down'' priority rating under authority delegated from the
Department of Commerce, the time period for acceptance and rejection of
the rated order set forth in TPAS applies, consistent with relevant
sections of the Department of Commerce's regulations. Transportation
service providers should work with their parts and component providers
to ensure they are aware that they may be asked to provide necessary
parts or components on an expedited basis.
    Section 33.31 Priority ratings. This section would explain the
following: ``DO'' and ``DX'' rating symbols; program identification
symbols; order of precedence for directives and ratings; and priority
ratings that consist of a rating symbol and a program identification
symbol.
    Generally speaking, most contracts or orders for transportation
services would be unrated. However, DOT may authorize priority rating
authority if necessary to support a program that has been determined as
necessary or appropriate to promote the national defense. A ``DO''
rating authorization may be authorized if the service or item is in
critical or urgent need. For example, in 1990, DOT's Federal Aviation
Administration was granted ``DO'' rating authority by DoD for specified
procurements to support Civil Reserve Air Fleet use in Operation Desert
Shield. In 2002, the Transportation Security Administration, which was
then part of DOT, was granted ``DO'' rating authorization for contracts
to support the acquisition of Explosive Detection Systems machines.
Finally, in 2005, DOT sponsored a priority rating request by a railroad
operator to support the emergency delivery of generators and transfer
switches to replace those destroyed by Hurricane Katrina. The
Department of Commerce granted the company ``DO'' rating authority. A
``DO'' rated contract or order takes precedence over unrated contracts
or orders.
    A ``DX'' rating would be reserved for those services or items that
are determined to support programs that are of the highest national
defense urgency based on the requesting entity's mission objectives. A
``DX'' rating would take precedence over a ``DO'' rating. The Secretary
of Transportation must approve all requests for a ``DX'' rating
pertaining to civil transportation resources.
    Program Identification Symbols (PIS) would be used to identify
approved programs, meaning a program that has been determined by the
Secretaries of DoD, DHS, or DOE, as appropriate, as necessary to
promote the national defense. DOT currently has no approved programs,
but anticipates working with Commerce, DHS, DoD or DOE, as appropriate,
in the near future to

develop approved programs. The proposed PIS for DOT-approved programs
would contain the letter ``T'' followed by a letter and a number; for
example, T-L1. All approved programs would have equal status. The PIS
would be combined with the appropriate priority rating authority,
either DX or DO, to form the priority rating, for example DO-T-L1 or
DX-T-L1. DOT is particularly interested in comments on its proposed PIS
letter and number combination.
    Section 33.32 Elements of a rated order. This section proposes to
describe the four elements that must be included in a contract or order
to make it a ``rated order,'' in accordance with the standards and
procedures provided in this part. The four elements are: (1) A priority
rating; (2) specific delivery date(s) for materials or services covered
in the rated order; (3) the signature of an individual authorized to
place the rated order; and (4) a statement describing what is required
of the rated order recipient, in accordance with procedures provided in
this part.
    This section also would include a provision for an additional
statement to be included in a rated order involving emergency
preparedness, which would require quicker action by the recipient to
accept or reject the order. The justification for the expedited
timeframes is explained below in the Sec.  33.33 discussion.
    Section 33.33 Acceptance and rejection of rated orders. This
section would describe mandatory and optional conditions for acceptance
or rejection of rated orders, as well as customer notification
timeframes pertaining to acceptance or rejection. In general, a person
would be required to accept a rated order if the person normally
supplies the materials or services covered by the rated order and must
do so regardless of any other orders on hand. Persons would be
prohibited from charging higher prices, imposing different terms, or
any other discriminatory practices for the rated order that are
different from a comparable unrated order.
    A person would be required to reject a rated order if unable to
fill the order by the specified delivery date(s) or if the order would
interfere with delivery under another rated order with a comparable or
higher priority rating. In addition, a person would be required to
reject a rated order if the person is prohibited by law from meeting
the terms of the order; for example, the provider of the services
contemplated in the order does not have current operating authority to
perform the service. A person would have the option of rejecting a
rated order if any one of a number of other conditions set forth in the
regulation exists.
    Under non-emergency conditions, the recipient of a rated order
would be required to accept or reject the rated order within fifteen
calendar days for a ``DO''-rated order or ten working days for a
``DX''-rated order. (See Sec.  33.33(d)) DOT is proposing calendar days
instead of working days in order to provide greater specificity for
deadlines. However, DOT is interested in comments on whether the use of
calendar days could lead to any unintended consequences for recipients
of a rated order.
    While the deadlines discussed above would be appropriate for non-
emergency circumstances, they are too long for emergency conditions
when quick procurement actions may be needed to help save lives,
protect property, or restore services. Transportation services are
unique in that they are often the first services needed to move people
out of harm's way and to move rescue and response personnel and
supplies into a disaster area; thus, transportation services often must
be marshaled on very short notice. DOT proposes in this rule that
orders placed for the purpose of emergency preparedness must be
accepted or rejected within 6 hours from receipt of the order if the
order is issued in response to a hazard that has occurred and within 12
hours from receipt of the order if the order is issued to prepare for
an imminent hazard.
    Prior to 2008, DOT was the lead Federal agency responsible for
providing and managing emergency transportation services, including
those necessary for mass evacuations.\3\ Our experiences while carrying
out this mission, which included managing the massive transportation
needs for the evacuation of persons and the movement of supplies,
equipment and teams in response to Hurricanes Katrina and Rita, confirm
that transportation providers can respond within these expedited
timeframes. Specifically, the contract that DOT had in place for
transportation services required the contractor to acknowledge an order
for service within one hour of receiving the order and to make
transportation equipment available at the shipment place of origin to
begin moving cargo and passengers within four hours from receipt of the
order for service.\4\
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    \3\ In 2007 DOT and DHS entered into a Memorandum of
Understanding transferring the responsibility for evacuations and
commodity and equipment movements to the Federal Emergency
Management Agency (FEMA). New authority given to FEMA in the Post-
Katrina Emergency Management Reform Act of 2006 necessitated
redefining DOT's role for providing emergency transportation
services and for designating the Federal lead for planning,
coordinating and conducting evacuations of the general population.
    \4\ DOT's contract with Landstar Express America, Inc. contained
the following requirements for Rapid Response Capability:
    Within one (1) hour of receiving the initial Order for Service
(OFS) from the Contracting Officer, the Contractor (Landstar) shall
acknowledge receipt of the OFS by electronic commerce or fax.
    Within four (4) hours of receipt of an OFS, the Contractor shall
make transportation equipment available at the shipment place of
origin to commence movement of cargo and passengers, using air and
surface modes of transportation. The Contractor shall meet all
pickup and transit deadlines.
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    In this proposed provision, DOT would only require acceptance or
rejection of a rated order within an expedited timeframe and not actual
fulfillment of the order within that timeframe. The expedited response
periods proposed in this regulation are necessary in order for DOT to
rapidly identify and obtain sufficient transportation resources to meet
emergency response needs.
    DOT is mindful, however, that some circumstances may necessitate
closer coordination between DOT and the potential recipient of a rated
order. For example, if a rated order is placed in preparation for an
imminent hazard, such as a hurricane that is projected to make landfall
in 13 hours, DOT obviously would not wish to learn at the end of the
12-hour window that the proposed supplier is unable to accept the rated
order. In these situations, DOT would work closely with industry to
identify and resolve any potential issues in order to meet the
transportation requirements.
    Not all regulations promulgated under FPAS contain such expedited
notification requirements because those resources normally are not
required immediately for emergency response as are transportation
resources. However, for any orders issued under TPAS that ``flow down''
from the prime contractor to a subcontracted supplier of a necessary
service, component, or part, the requirements of TPAS would apply to
all subcontractors in the procurement or distribution chain. Therefore,
transportation service providers should work with their suppliers to
ensure they are aware that they may be asked to provide necessary
services, parts, or components on an expedited basis.
    Section 33.34 Preferential scheduling. This section would describe:
(1) When a recipient of a rated order must modify production or
delivery schedules to satisfy the delivery requirements of a rated
order; (2) the order of precedence for rated, unrated, and conflicting
orders; and (3)

the use of inventoried production items when needed to fill a rated
order.
    Section 33.35 Extension of priority ratings. This section would
require that the recipient of a rated order must, in turn, use rated
orders with suppliers to obtain items or services needed to fill a
rated order. The requirement would apply to all contractors and
subcontractors throughout the procurement chain necessary to fill the
rated order.
    Section 33.36 Changes or cancellations of priority ratings and
rated orders. This section would describe the procedures for changing
or cancelling a priority rating or the provisions of a rated order. In
addition, this section would list types of modifications that do not
constitute a new rated order.
    Section 33.37 Use of rated orders. This section would describe the
process and procedures for when the recipient of a rated order: (1)
Must use rated orders to obtain items and services needed to fulfill
the rated order; (2) may use a rated order to replace inventoried items
that were used to fulfill the order; (3) may combine orders with
different priority ratings or with unrated orders; and (4) may forgo
use of rated orders for orders below certain thresholds.
    Section 33.38 Limitations on placing rated orders. This section
would describe specific circumstances when the use of rated orders
would be prohibited. This section also would prohibit the use of TPAS
to obtain rated orders for a resource under the resource jurisdiction
of other agencies with delegated Defense Production Act priorities and
allocations authority, unless specifically authorized by the resource
agency.

Subpart D--Special Priorities Assistance

    Section 33.40 General provisions. This section would explain the
circumstances and procedures under which DOT would provide assistance
in resolving problems related to priority rated contracts and orders.
This section also would list the DOT points of contact and the form to
be used to request assistance.
    Section 33.41 Requests for priority rating authority. This section
would establish the procedures to request rating authority under
special circumstances. DOT may grant priority ratings for items and
services not normally rated under the regulation in order to prevent a
delay of a rated order. This section also would specify that rating
authority for production or construction equipment must come from the
Department of Commerce. Finally, this section would explain when DOT
may authorize the use of a priority rating on an order to a supplier in
advance of the issuance of a rated prime contract, and the factors DOT
would consider in deciding whether to grant such a request.
    Section 33.42 Examples of assistance. This section would list
examples of when special priority assistance may be provided.
    Section 33.43 Criteria for assistance. This section would require
that a request for special priorities assistance be timely, that there
be an urgent procurement need for the item, and that the applicant has
made a reasonable effort to resolve the problem for which assistance is
needed.
    Sec.  33.44 Instances where assistance may not be provided. This
section would list examples of when special priority assistance may not
be provided.
    Section 33.45 Assistance programs with other nations. Reserved.

Subpart E--Allocation Actions

    Section 33.50 Policy. This section would explain the policy of the
Federal Government regarding use of the allocations authority, which is
based on the statutory language in section 101 of the Defense
Production Act and the legislative history of section 101.\5\
Specifically, allocation authority would only be used when priority
authority is unable to provide a sufficient supply of a material,
service, or facility to meet the national defense, or when the use of
priority authority would cause a severe and prolonged disruption in the
supply of materials, services, or facilities available to support
normal U.S. economic activities.
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    \5\ Legislative history indicates that Congress was concerned
that national defense requirements, during times of emergency, could
consume much of the output of key industrial sectors and selected
producers within some sectors. Allocations authority was viewed as a
means to ensure an equitable distribution of national defense demand
among potential suppliers to avoid disproportionate impacts on each
supplier's share of the civilian market.
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    Allocation authority would not be used to ration materials or
services at the retail level. In other words, allocation authority
would not be used to control how much of a product or service a person
may have for personal use. For example, DOT could use allocation
authority to require the nation's bus companies to dedicate 40% of
their bus fleet to a designated emergency, but DOT could not use
allocation authority to tell a bus company how to distribute its buses
to serve its commercial customers or to tell a bus company how many
tickets it could sell to persons in a given month.
    Allocation orders would be distributed equitably among similarly
situated suppliers of the resources being allocated and would not
require any person to relinquish a disproportionate share of the
civilian market. Allocation authority would not apply to resources
owned by the Federal Government, as those resources may be used by the
controlling Federal entity in accordance with other governing laws.
Nor, generally speaking, would allocation authority apply to resources
owned by States, local governments or Native American tribes, as that
could potentially undermine other Federal laws. For example, the
Stafford Act is designed ``to provide an orderly and continuing means
of assistance by the Federal Government to States and local governments
in carrying out their responsibilities to alleviate the suffering and
damage which results from * * * disasters. * * *'' Thus, it would be
counterproductive for the Federal Government to consider allocating for
its own use the very resources the State, local or tribal government
could be counting on as part of its response efforts.
    The Civil Reserve Air Fleet (CRAF) and the Voluntary Intermodal
Sealift Agreement (VISA) are two examples of DOT's use of its
allocation authority.\6\ Concerning CRAF, under the terms of a
Memorandum of Understanding, DOT develops plans and allocates aircraft
to the CRAF program based on DoD requirements. DOT advises DoD if it
intends to allocate fewer aircraft than requested by DoD, notifies DoD
if a particular level of CRAF activation will have a serious adverse
impact on the civil air carrier's ability to provide essential service,
and works with DoD to identify alternatives or determine ways to
minimize the impact. DOT publishes a periodic allocation of aircraft,
by registration or ``N'' number, of each airline participating in the
CRAF program.
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    \6\ CRAF was formed through a joint agreement between DoD and
the Department of Commerce. Executive Order 10999 placed
responsibility for administration of the CRAF program in the
Department of Commerce as a function of the Office of Emergency
Transportation. In 1967, the Office of Emergency Transportation
transferred in its entirety with its mission, functions and staff
into the new Department of Transportation. Responsibility for
carrying out the Secretary's role with respect to the CRAF program
now resides with the Office of Intelligence, Security and Emergency
Response.
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    The VISA program is a preparedness program designed to make
intermodal shipping services and systems available to DoD as required
to support the emergency deployment and sustainment of U.S. military
forces. This is done through cooperation among the

maritime industry, DOT and DoD pursuant to a voluntary agreement
entered into in accordance with Section 708 of the Defense Product Act
(50 U.S.C. App. Sec.  2158). During a Stage III activation, the
Secretary of DoD will request the Secretary of DOT to allocate sealift
capacity based on DoD requirements.
    Section 33.51 General procedures. The proposed procedures set out
in this section and in proposed section 33.52 are intended to provide a
reasonable assurance that allocation authority would only be used in
situations where such authority is justified. Section 33.51 would set
out the specific requirements and findings that DOT must meet before it
could use its allocation authority.
    One requirement would be for DOT to obtain a written determination
from either DoD, DHS or DOE, as appropriate, that the program DOT
intends to support through its allocation authority is necessary or
appropriate to support the national defense. As previously mentioned,
section 202 of Executive Order 12919 requires such a finding before DOT
can take an allocation action. Additionally, DOT would be required to
provide a detailed description of the situation creating the need for
allocation and the specific objectives to be obtained through the
allocation action; a list of the materials, services, or facilities to
be allocated, and of the sources that will be subject to the allocation
action; a detailed description of the requirements to be contained in
the allocation action, to include the percentage or quantity of
capacity to be allocated and the duration of the allocation action; and
an evaluation of the potential impact on the civilian market and
proposed actions to mitigate any disruption of the civilian market.
    Section 33.52 Controlling the general distribution of a material in
the civilian market. This section would provide procedures for making
the findings required by section 101(b) of the Defense Production Act
and section 201(d) of Executive Order 12919. Defense Production Act
section 101(b) states that the priorities and allocations authority
shall not be used to control the general distribution of any material
in the civilian market unless the President finds (1) that such
material is a scarce and critical material essential to the national
defense, and (2) 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. Section
201(d) of Executive Order 12919 directs each agency with delegated
authority under section 101 of the Defense Production Act to make the
finding required by section 101(b) and submit the finding for the
President's approval through the Assistant to the President for
National Security Affairs. By definition under the Defense Production
Act, services, including transportation services, are not considered a
``material'' as contemplated in section 101(b) of the Defense
Production Act or section 201(d) of Executive Order 12919.
    Section 33.53 Types of allocation orders. This section proposes to
describe the three types of allocations orders DOT might issue: a set-
aside; an allocation directive; or an allotment. A set-aside is an
official action that would require a person to reserve a resource
capacity in anticipation of receipt of rated orders. An allocation
directive is an official action that would require a person to take or
refrain from taking certain actions in accordance with its provisions.
For example, an allocation directive could require a person to stop or
reduce production of an item or service; prohibit the use of selected
materials, services or facilities; divert supply of one type of
material, service or facility to another; or to supply a specific
quantity, size, shape, and type of an item or service within a specific
time period. An allotment is an official action that would specify the
maximum quantity of a material, service, or facility authorized for use
in a specific program or application.
    Section 33.54 Elements of an allocation order. This section would
describe the minimum elements of an allocation order. These elements
would be: (1) A detailed description of the required allocation
action(s); (2) specific start and end calendar dates for each required
allocation action; (3) the written signature on a manually placed
order, or the digital signature or name on an electronically placed
order, of the Secretary of DOT, which would certify that the order is
authorized under this regulation and that the requirements of this part
are being followed; (4) a statement that the order is certified for
national defense use and that recipients are required to comply with
the order; and (5) a copy of the Transportation Priorities and
Allocations System regulation.
    Section 33.55 Mandatory acceptance of an allocation order. This
section would require a person to accept and comply with allocation
orders if the person is capable of complying. If a person is unable to
comply fully with the required actions specified in an allocation
order, the person would be required to notify DOT immediately, explain
the extent to which compliance is possible, and give reasons why full
compliance is not possible. Furthermore, notifying DOT of possible non-
compliance does not release the person from complying with the
allocation order to the extent possible.
    This section also would state that a person may not discriminate
against an allocation order in any manner, such as by charging higher
prices or imposing terms and conditions on allocation orders that are
different from what the person imposed on contracts or orders for the
same resource prior to receiving the allocation order.
    Section 33.56 Changes or cancellations of an allocation order. This
section would state that DOT may modify or cancel an allocation order.

Subpart F--Official Actions

    Section 33.60 General provisions. This section would set out the
specific official actions that DOT may take to implement the provisions
of this regulation. These official actions include Rating
Authorizations, Directives, Planning Orders, and Memoranda of
Understanding.
    Section 33.61 Rating authorizations. This section would define a
rating authorization as an official action granting priority rating
authority.
    Section 33.62 Directives. This section would define a directive as
an official action that requires a person to take or refrain from
taking certain actions in accordance with its provisions. A priority
directive would take precedence over rated orders, and allocation
directives take precedence over a priority directive.
    Section 33.63 Memoranda of Understanding. This section would
explain that a Memorandum of Understanding is an official action that
may be issued to reflect an agreement resolving a request for special
priorities assistance. A Memorandum of Understanding may not be used to
alter scheduling between rated orders, authorize the use of priority
ratings, impose restrictions under this regulation, or take other
official actions.

Subpart G--Compliance

    Section 33.70 General provisions. This section would clarify that
DOT has the authority to enforce or administer the Defense Production
Act, this regulation, or an official action. Additionally, this section
would state that willful violations of title I or section 705 of the
Defense Production Act, this regulation, or an official DOT action, are
criminal acts, punishable as provided in the Defense Production Act,
and as set forth in Sec.  33.74 below.

    Section 33.71 Audits and investigations. This section would provide
the procedures for conducting audits and investigations to ensure that
the provisions of the Defense Production Act and other applicable
statutes, this regulation, and official actions have been properly
followed. This provision is limited to activities conducted under DPA
authorities and would not limit the authority of DOT elements to
initiate and conduct audits, investigations, or other inquiries under
their specific statutes or authorities, nor would it affect the process
for such audits, investigations or inquiries.
    Section 33.72 Compulsory process. This section would explain the
procedures DOT may use to seek a compulsory process if a person refuses
to permit a duly authorized DOT representative to have access to any
premises or any necessary information. For purposes of this regulation,
compulsory process would mean the institution of appropriate legal
action, including ex parte application for an inspection warrant or its
equivalent in any forum of appropriate jurisdiction. Furthermore,
compulsory process under this regulation may be sought in advance of an
audit or investigation if DOT believes a person will refuse to comply
with the audit or investigation.
    Section 33.73 Notification of failure to comply. This section would
provide procedures for notification of failure to comply with the
Defense Production Act, other applicable statutes, this regulation, or
an official DOT action.
    Section 33.74 Violations, penalties, and remedies. This section
would set out the penalties and related actions the Government may take
for violations of the provisions of title I or sections 705 or 707 of
the Defense Production Act, the priorities provisions of the Selective
Service Act, when applicable, this regulation, or an official DOT
action.
    Section 33.75 Compliance conflicts. This section would require
persons to immediately notify DOT if compliance with any provision of
the Defense Production Act, other applicable statutes, this part, or an
official action would prevent a person from filling a rated order or
from complying with another provision of the Defense Production Act,
other applicable statutes, this regulation, or an official action.

Subpart H--Adjustments, Exceptions, and Appeals

    Section 33.80 Adjustments or exceptions. This section would
describe the procedures necessary to request an adjustment or exception
to a provision of this regulation or an official action on the grounds
that it would create an undue or exceptional hardship or compliance is
contrary to the intent of the Defense Production Act or this
regulation. Such requests must be submitted in writing and the
submission of a request for adjustment or exception does not relieve
the requester from compliance while the request is being considered by
DOT.
    Section 33.81 Appeals. This section would provide procedures and
timeframes for appealing a decision denying relief from a request for
an adjustment or exception under this regulation. This section would
provide for an expedited procedure for appeals involving a rated order
placed for the purpose of emergency preparedness.

Subpart I--Miscellaneous Provisions

    Section 33.90 Protection against claims. This section would provide
that a person shall not be held liable for damages or penalties for any
act or failure to act resulting directly or indirectly from compliance
with any provision of this regulation or an official action. This
``hold harmless'' provision applies even if any provision of this
regulation or action is subsequently declared to be invalid by judicial
or other competent authority.
    Section 33.91 Records and reports. This section would require
persons to create and preserve for at least three years accurate and
complete records of any transaction covered by this regulation or an
official action. This section also would detail the various
requirements pertaining to the required records and reports. In
addition, this section would describe the confidentiality provision of
the Defense Production Act pertaining to information submitted under
the Defense Production Act or this regulation.
    Section 33.92 Applicability of this part and official actions. This
section would establish the jurisdictional applicability of this
regulation.
    Section 33.93 Communications. This section would provide DOT
contact information for communications concerning this regulation.

III. Regulatory Analyses and Notices

A. Executive Order 12866--Regulatory Planning and Review

    This proposed rule is a ``significant regulatory action'' under
section 3(f) of Executive Order 12866, Regulatory Planning and Review.
While the requirements under title I of the Defense Production Act have
been in existence for years, these proposed regulations are new to the
transportation industry and could be considered to raise novel legal or
policy issues under section 3(f)(4) of Executive Order 12866. The
proposed rule is not economically significant, however, as it would not
have an annual economic impact of over $100 million.

B. Executive Order 13132--Federalism

    This proposed rule has been analyzed in accordance with the
principles and criteria contained in Executive Order 13132, Federalism.
This proposed rule would not have a substantial direct effect on, or
sufficient federalism implications for, the States, nor would it limit
the policymaking discretion of the States. Therefore, the consultation
requirements of Executive Order 13132 do not apply.

C. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments

    This proposed rule has been analyzed in accordance with the
principles and criteria contained in Executive Order 13175 Consultation
and Coordination with Indian Tribal Governments. Because this proposed
rule would not significantly or uniquely affect the communities of the
Indian tribal governments and would not impose substantial direct
compliance costs, the funding and consultation requirements of
Executive Order 13175 would not apply.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to review regulations to assess their impact on small entities
unless the agency determines that a rule is not expected to have
significant impact on a substantial number of small entities.
Potentially Affected Small Entities
    Small entities include small businesses, small organizations and
small governmental jurisdictions. For purposes of assessing the impacts
of this proposed 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 (August 2008 Edition), has a maximum annual revenue of $33.5
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 that is independently owned and operated and is not
dominant in its field.

    This proposed regulation would set criteria under which DOT would
authorize prioritization of certain orders or contracts, as well as
criteria under which DOT would issue orders allocating materials,
services, or facilities. Because the proposed rule would mainly be used
for larger commercial transportation operations, DOT believes that
small organizations and small governmental jurisdictions are unlikely
to be affected by this proposed rule. To date, DOT has not exercised
its existing priorities authority and has only exercised its existing
allocations authority for one aviation program and one sealift program,
both of which rely on voluntary engagement by industry. Therefore, DOT
has no basis on which to estimate the number of small businesses that
might be affected by promulgation of this proposed rule.
Potential Impacts
    Although DOT cannot determine precisely the number of small
entities that would be affected by this proposed rule, DOT believes
that the overall impact on such entities would not be significant. In
most instances, rated contracts would be fulfilled in addition to other
(unrated) contracts and could actually increase the total amount of
business for a firm that receives a rated contract. DOT expects that
allocations would be ordered only in extraordinary circumstances, other
than in the two well-established, voluntary programs discussed above.
Furthermore, DOT believes that the provisions of section 701(e) of the
Defense Production Act, which requires that small businesses be
considered in allocations, indicate that any impact on small business
would not be significant.
Conclusion
    Therefore, for the reasons set forth above, I certify that this
proposed rule, if implemented, would not have a significant economic
impact on a substantial number of small entities.

E. Paperwork Reduction Act

    This proposed rule contains an information collection requirement.
As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520), DOT has submitted the information requirement to the Office of
Management and Budget (OMB) for review. DOT estimates that the public
reporting burden for submission of Form OST F 1254 is an average of 30
minutes per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
    DOT is seeking public comment on any aspect of the information
collection, including: (1) Whether the proposed collection is necessary
for DOT's performance; (2) the accuracy of the estimate burdens; (3)
ways for DOT to enhance the quality, usefulness, and clarity of the
collected information; and (4) ways that the burden could be minimized
without reducing the quality of the collected information.
Organizations and individuals desiring to submit comments on the
collection of information should direct them to the Office of
Management and Budget, Attention: Desk Officer for the Office of the
Secretary of Transportation, Office of Information and Regulatory
Affairs, Washington, DC 20505. Comments should also be sent to the
Department of Transportation, Attn: Defense Production Act Activities
Coordinator, Office of Intelligence, Security, and Emergency Response,
1200 New Jersey Avenue, SE., Washington DC 20590.
    We will respond to any OMB or public comments on the information
collection requirement contained in this proposed rule. DOT may not
impose a penalty on persons for violating information collection
requirements that do not display a current OMB control number, if
required. DOT intends to obtain a current OMB control number for the
information collection requirements that would result from this
proposed rulemaking action. The OMB control number, when assigned, will
be announced by separate notice in the Federal Register.

List of Subjects in 49 CFR Part 33

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

Raymond LaHood,
Secretary of Transportation.

    In consideration of the foregoing, the Department proposes to add
Part 33 of Title 49, Code of Federal Regulations, to read as follows:

PART 33--TRANSPORTATION PRIORITIES AND ALLOCATION SYSTEM

Subpart A--General
Sec.
33.1 Purpose of this part.
33.2 Priorities and allocations authority.
33.3 Program eligibility.
Subpart B--Definitions
33.20 Definitions.
Subpart C--Placement of Rated Orders
33.30 Delegation of authority.
33.31 Priority ratings.
33.32 Elements of a rated order.
33.33 Acceptance and rejection of rated orders.
33.34 Preferential scheduling.
33.35 Extension of priority ratings.
33.36 Changes or cancellations of priority ratings and rated orders.
33.37 Use of rated orders.
33.38 Limitations on placing rated orders.
Subpart D--Special Priorities Assistance
33.40 General provisions.
33.41 Requests for priority rating authority.
33.42 Examples of assistance.
33.43 Criteria for assistance.
33.44 Instances where assistance may not be provided.
33.45 [Reserved]
Subpart E--Allocation Actions
33.50 Policy.
33.51 General procedures.
33.52 Controlling the general distribution of a material in the
civilian market.
33.53 Types of allocation orders.
33.54 Elements of an allocation order.
33.55 Mandatory acceptance of an allocation order.
33.56 Changes or cancellations of an allocation order.
Subpart F--Official Actions
33.60 General provisions.
33.61 Rating Authorizations.
33.62 Directives.
33.63 Memoranda of Understanding.
Subpart G--Compliance
33.70 General provisions.
33.71 Audits and investigations.
33.72 Compulsory process.
33.73 Notification of failure to comply.
33.74 Violations, penalties, and remedies.
33.75 Compliance conflicts.
Subpart H--Adjustments, Exceptions, and Appeals
33.80 Adjustments or exceptions.
33.81 Appeals.
Subpart I--Miscellaneous Provisions
33.90 Protection against claims.
33.91 Records and reports.
33.92 Applicability of this part and official actions.
33.93 Communications.
Appendix I to Part 33--Sample Form OST F 1254
Appendix II to Part 33--Schedule 1 Approved Programs

    Authority:  Defense Production Act of 1950, as amended, 50
U.S.C. App. 2061-2171; Executive Order 12919, as amended, (59 FR
29525, June 7, 1994).

Subpart A--General

Sec.  33.1  Purpose of this part.

    This part provides guidance and procedures for use of the Defense
Production Act priorities and allocations authority with respect to all
forms of civil transportation. The

guidance and procedures in this part are generally consistent with the
guidance and procedures provided in other regulations that, as a whole,
form the Federal Priorities and Allocations System. Guidance and
procedures for use of the Defense Production Act priorities and
allocations authority with respect to other types of resources are
provided for: food resources, food resource facilities, and the
domestic distribution of farm equipment and commercial fertilizer in
the Agricultural Priorities and Allocation Systems at 7 CFR part 700;
all forms of energy in the Energy Priorities and Allocations System
regulation at 10 CFR part 217; health resources in the Health Resources
Priorities and Allocations System at [CFR citation to be inserted in
the final rule]; water resources in the Water Resources Priorities and
Allocations System at [CFR citation to be inserted in the final rule];
and all other materials, services, and facilities, including
construction materials in the Defense Priorities and Allocations System
(DPAS) regulation at 15 CFR part 700.

Sec.  33.2  Priorities and allocations authority.

    (a) Section 201 of Executive Order 12919 (59 FR 29525) delegates
the President's authority under section 101 of the Defense Production
Act to require acceptance and priority performance of contracts and
orders (other than contracts of employment) to promote the national
defense over performance of any other contracts or orders, and to
allocate materials, services, and facilities as deemed necessary or
appropriate to promote the national defense to:
    (1) The Secretary of Agriculture with respect to food resources,
food resource facilities, and the domestic distribution of farm
equipment and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to
health resources;
    (4) The Secretary of Transportation with respect to all forms of
civil transportation;
    (5) The Secretary of Defense with respect to water resources; and
    (6) The Secretary of Commerce for all other materials, services,
and facilities, including construction materials.
    (b) Section 202 of Executive Order 12919 states that the priorities
and allocations authority delegated in section 201 of the order may be
used only to support programs that have been determined in writing as
necessary or appropriate to promote the national defense:
    (1) By the Secretary of Defense with respect to military production
and construction, military assistance to foreign nations, stockpiling,
outer space, and directly related activities;
    (2) By the Secretary of Energy with respect to energy production
and construction, distribution and use, and directly related
activities; and
    (3) By the Secretary of Homeland Security with respect to essential
civilian needs supporting national defense, including civil defense and
continuity of government and directly related activities.

Sec.  33.3  Program eligibility.

    Certain programs to promote the national defense are eligible for
priorities and allocations support. These 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. Other eligible
programs include 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.

Subpart B--Definitions

Sec.  33.20  Definitions.

    The following definitions pertain to all sections of this part:
    ``Allocation'' means the control of the distribution of materials,
services, or facilities for a purpose deemed necessary or appropriate
to promote the national defense.
    ``Allocation authority'' means the authority of the Department of
Transportation, pursuant to section 101 of the Defense Production Act,
to allocate materials, services, and facilities for use in approved
programs.
    ``Allocation order'' means 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 '' means 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'' means a program determined by the Secretary of
Defense, the Secretary of Energy, or the Secretary of Homeland Security
to be necessary or appropriate to promote the national defense, in
accordance with section 202 of Executive Order 12919.
    ``Civil transportation'' includes movement of persons and property
by all modes of transportation in interstate, intrastate, or foreign
commerce within the United States, its territories and possessions, and
the District of Columbia, and, without limitation, related public
storage and warehousing, ports, services, equipment and facilities,
such as transportation carrier shop and repair facilities. However,
``civil transportation'' shall not include transportation owned or
controlled by the Department of Defense, use of petroleum and gas
pipelines, and coal slurry pipelines used only to supply energy
production facilities directly. As applied herein, ``civil
transportation'' shall include direction, control, and coordination of
civil transportation capacity regardless of ownership.
    ``Construction'' means 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'' means 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'' means the Defense Production Act of
1950, as amended (50 U.S.C. App. 2061 et seq.).
    ``Delegate Agency'' means a government agency authorized by
delegation from the Department of Transportation to place priority
ratings on contracts or orders needed to support approved programs.
    ``Directive'' means an official action that requires a person to
take or refrain from taking certain actions in accordance with its
provisions.
    ``Emergency preparedness'' means all those 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. Such term
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).
    (3) Measures to be undertaken following a hazard (including
activities for fire fighting, 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).
    ``Energy'' means all forms of energy including petroleum, gas (both
natural and manufactured), electricity, solid fuels (including all
forms of coal, coke, coal chemicals, coal liquification, and coal
gasification), and atomic energy, and the production, conservation,
use, control, and distribution (including pipelines) of all of these
forms of energy.
    ``Facilities'' includes all types of buildings, structures, or
other improvements to real property (but excluding farms, churches or
other places of worship, and private dwelling houses), and services
relating to the use of any such building, structure, or other
improvement.
    ``Farm equipment'' means equipment, machinery, and repair parts
manufactured for use on farms in connection with the production or
preparation for market use of food resources.
    ``Fertilizer'' means any product or combination of products that
contain one or more of the elements--nitrogen, phosphorus, and
potassium--for use as a plant nutrient.
    ``Food resources'' means all commodities and products, simple,
mixed, or compound, or complements to such commodities or products,
that are capable of being ingested by either human beings or animals,
irrespective of other uses to which such commodities or products may be
put, at all stages of processing from the raw commodity to the products
thereof in vendible form for human or animal consumption. ``Food
resources'' also means all starches, sugars, vegetable and animal or
marine fats and oils, cotton, tobacco, wool, mohair, hemp, flax fiber,
and naval stores, but does not mean any such material after it loses
its identity as an agricultural commodity or agricultural product.
    ``Food resource facilities'' means plants, machinery, vehicles
(including on-farm), and other facilities required for the production,
processing, distribution, and storage (including cold storage) of food
resources, livestock and poultry feed and seed, and for the domestic
distribution of farm equipment and fertilizer (excluding transportation
thereof).
    ``Hazard'' means an emergency or disaster resulting from--
    (1) A natural disaster; or
    (2) An accidental or man-caused event.
    ``Health resources'' means materials, facilities, health supplies,
and equipment (including pharmaceutical, blood collecting and
dispensing supplies, biological, surgical textiles, and emergency
surgical instruments and supplies) required to prevent the impairment
of, improve, or restore the physical and mental health conditions of
the population.
    ``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.
    ``Item'' means 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.
    ``Local government'' means a county, municipality, city, town,
township, local public authority (including any public and Indian
housing agency under the United States Housing Act of 1937) school
district, special district, intrastate district, council of governments
(whether or not incorporated as a nonprofit corporation under state
law), any other regional or interstate government entity, or any agency
or instrumentality of a local government.
    ``Maintenance and repair and operating supplies'' or ``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 resources 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.
    ``Materials'' includes--
    (1) Any raw materials (including minerals, metals, and advanced
processed materials), commodities, articles, components (including
critical components), products, and items of supply; and
    (2) Any technical information or services ancillary to the use of
any such materials, commodities, articles, components, products, or
items.
    ``National defense'' means 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 and critical
infrastructure protection and restoration.
    ``Official action'' means an action taken by the Department of
Transportation or another resource agency under the authority of the
Defense Production Act, Executive Order 12919, and this part or another
regulation under the Federal Priorities and Allocations System. Such
actions include, but are not limited to, the issuance of Rating
Authorizations, Directives, Set Asides, Allotments, Planning Orders,
Memoranda of Understanding, Demands for Information, Inspection
Authorizations, and Administrative Subpoenas.
    ``Person'' includes an individual, corporation, partnership,
association, or any other organized group of persons, or legal
successor or representative thereof, or any State or local government
or agency thereof.
    ``Planning order'' means notification of tentative arrangements to
meet national

defense requirements issued in priority order or allocation order
format, for planning purposes only.
    ``Rated order'' means a prime contract, a subcontract, or a
purchase order in support of an approved program issued in accordance
with the provisions of this part.
    ``Resource agency'' means any agency delegated priorities and
allocations authority as specified in Sec.  33.2.
    ``Secretary'' means the Secretary of Transportation.
    ``Services'' includes any effort that is needed for or incidental
to--
    (1) The development, production, processing, distribution,
delivery, or use of an industrial resource or a critical technology
item;
    (2) The construction of facilities;
    (3) The movement of individuals and property by all modes of civil
transportation; or
    (4) Other national defense programs and activities.
    ``Set-aside'' means an official action that requires a person to
reserve materials, services, or facilities capacity in anticipation of
the receipt of rated orders.
    ``Stafford Act'' means title VI (Emergency Preparedness) of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act, as
amended (42 U.S.C. 5195-5197g).
    ``State'' means any of the several States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States, or any agency or instrumentality of a
State exclusive of local governments. The term does not include any
public and Indian housing agency under United States Housing Act of
1937.
    ``Water resources'' means all usable water, from all sources,
within the jurisdiction of the United States, which can be managed,
controlled, and allocated to meet emergency requirements.

Subpart C--Placement of Rated Orders

Sec.  33.30  Delegation of authority.

    The priorities and allocations authorities of the President under
title I of the Defense Production Act with respect to all forms of
civil transportation have been delegated to the Secretary of
Transportation under section 201(a)(4) of Executive Order 12919 of June
3, 1994 (59 FR 29525).

Sec.  33.31  Priority ratings.

    (a) Levels of priority.
    (1) There are two levels of priority established by set of
regulations that comprise the Federal Priorities and Allocations System
regulations, identified by the rating symbols ``DO'' and ``DX''.
    (2) All DO-rated orders have equal priority with each other and
take precedence over unrated orders. All DX-rated orders have equal
priority with each other and take precedence over DO-rated orders and
unrated orders. (For resolution of conflicts among rated orders of
equal priority, see Sec.  33.34(c).)
    (3) In addition, a Directive regarding priority treatment for a
given item issued by the resource agency with priorities jurisdiction
for that item takes precedence over any DX-rated order, DO-rated order,
or unrated order, as stipulated in the Directive. (For a full
discussion of Directives, see Sec.  33.62.)
    (b) Program identification symbols. Program identification symbols
indicate which approved program is being supported by a rated order.
DOT will use the letter ``T'' followed by a letter and a number for all
transportation-related approved programs. Programs may be approved
under the procedures of Executive Order 12919 at any time. Program
identification symbols, in themselves, do not connote any priority.
    (c) Priority ratings. A priority rating consists of the rating
symbol--DO and DX--and the program identification symbol, such as DO-T-
L1 or DX-T-L1 for a priority rating under TPAS.

Sec.  33.32  Elements of a rated order.

    Each rated order must include:
    (a) The appropriate priority rating (e.g. DO-T or DX-T);
    (b) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. A
``requirements contract,'' ``basic ordering agreement,'' ``prime vendor
contract,'' or similar procurement document bearing a priority rating
may contain no specific delivery date or dates and may provide for the
furnishing of items or service from time-to-time or within a stated
period against specific purchase orders, such as ``calls,''
``requisitions,'' and ``delivery orders''. These purchase orders 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;
    (c) 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 or use of the name certifies that the rated order
is authorized under this part and that the requirements of this part
are being followed; and
    (d)(1) 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 Transportation
Priorities and Allocations System regulation at 49 CFR part 33.
    (2) If the rated order is placed in support of emergency
preparedness requirements and expedited action is necessary and
appropriate to meet these requirements, the following sentences should
be added following the statement set forth in paragraph (d)(1) of this
section:
    This rated order is placed for the purpose of emergency
preparedness. It must be accepted or rejected within [INSERT NUMBER OF
HOURS REQUIRED IN Sec.  33.33] hours from receipt of the order, in
accordance with Sec.  33.33(e) of the Transportation Priorities and
Allocations System regulation at 49 CFR Part 33.

Sec.  33.33  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance.
    (1) Except as otherwise specified in this section, a person shall
accept every rated order received and must fill such orders regardless
of any other rated or unrated orders that have been accepted.
    (2) A person shall not discriminate against rated orders in any
manner such as by charging higher prices or by imposing different terms
and conditions than for comparable unrated orders.
    (b) Mandatory rejection. Unless otherwise directed by the
Department of Transportation for a rated order involving all forms of
civil transportation:
    (1) A person shall not accept a rated order for delivery on a
specific date if unable to fill the order by that date. However, the
person must inform the customer of the earliest date on which delivery
can be made and offer to accept the order on the basis of that date.
Scheduling conflicts with previously accepted lower rated or unrated
orders are not sufficient reason for rejection under this section.
    (2) A person shall not accept a DO-rated order for delivery on a
date which would interfere with delivery of any previously accepted DO-
or DX-rated orders. However, the person must offer to accept the order
based on the earliest delivery date otherwise possible.
    (3) A person shall not accept a DX-rated order for delivery on a
date which would interfere with delivery of any previously accepted DX-
rated orders, but must offer to accept the order based on the earliest
delivery date otherwise possible.

    (4) If a person is unable to fill all of the rated orders of equal
priority status received on the same day, the person must accept, based
upon the earliest delivery dates, only those orders which can be
filled, and reject the other orders. For example, a person must accept
order A requiring delivery on December 15 before accepting order B
requiring delivery on December 31. However, the person must offer to
accept the rejected orders based on the earliest delivery dates
otherwise possible.
    (5) A person shall not accept a rated order if the person is
prohibited by Federal law from meeting the terms of the order.
    (c) Optional rejection. Unless otherwise directed by the Department
of Transportation for a rated order involving all forms of civil
transportation, rated orders may be rejected in any of the following
cases as long as a supplier does not discriminate among customers:
    (1) If the person placing the order is unwilling or unable to meet
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not
capable of being performed;
    (3) If the order is for an item or service produced, acquired, or
provided only for the supplier's own use for which no orders have been
filled for two years prior to the date of receipt of the rated order.
If, however, a supplier has sold some of these items or provided
similar services, the supplier is obligated to accept rated orders up
to that quantity or portion of production or service, whichever is
greater, sold or provided within the past two years;
    (4) If the person placing the rated order, other than the U.S.
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated
order would violate any other regulation, official action, or order of
the Department of Transportation, issued under the authority of the
Defense Production Act or another relevant statute.
    (d) Customer notification requirements.
    (1) Except as provided in paragraph (e) of this section, a person
must accept or reject a rated order in writing or electronically within
fifteen (15) calendar days after receipt of a DO rated order and within
ten (10) calendar 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 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 or electronic confirmation must be provided within five (5)
calendar days.
    (e) Exception for emergency preparedness conditions. If a rated
order is placed for the purpose of emergency preparedness and includes
the additional statement set forth in Sec.  33.32(d)(2), a person must
accept or reject the rated order and transmit the acceptance or
rejection in writing or in an electronic format:
    (1) Within six (6) hours after receipt of the order if the order is
issued in response to a hazard that has occurred; or
    (2) Within the greater of twelve (12) hours from receipt of the
order or the time specified in the order, if the order is issued to
prepare for an imminent hazard.

Sec.  33.34  Preferential scheduling.

    (a) A person must schedule operations, including the acquisition of
all needed production items or services, in a timely manner to satisfy
the delivery requirements of each rated order. Modifying production or
delivery schedules is necessary only when required delivery dates for
rated orders cannot otherwise be met.
    (b) DO-rated orders must be given production or performance
preference over unrated orders, if necessary to meet required delivery
dates, even if this requires the diversion of items being processed or
ready for delivery or services being performed against unrated orders.
Similarly, DX-rated orders must be given preference over DO-rated
orders and unrated orders. (Examples: If a person receives a DO-rated
order with a delivery date of June 3 and if meeting that date would
mean delaying production or delivery of an item for an unrated order,
the unrated order must be delayed. If a DX-rated order is received
calling for delivery on July 15 and a person has a DO-rated order
requiring delivery on June 2 and operations can be scheduled to meet
both deliveries, there is no need to alter production schedules to give
any additional preference to the DX-rated order.)
    (c) Conflicting rated orders. (1) If a person finds that delivery
or performance against any accepted rated orders conflicts with the
delivery or performance against other accepted rated orders of equal
priority status, the person shall give precedence to the conflicting
orders in the sequence in which they are to be delivered or performed
(not to the receipt dates). If the conflicting orders are scheduled to
be delivered or performed on the same day, the person shall give
precedence to those orders that have the earliest receipt dates.
    (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 Sec. Sec.  33.40
through 33.44. 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 Sec. Sec.  33.40
through 33.44. For any rated order against which delivery or
performance will be delayed, the person must notify the customer as
provided in Sec.  33.33.
    (d) If a person is unable to purchase needed production items in
time to fill a rated order by its required delivery date, the person
must fill the rated order by using inventoried production items. A
person who uses inventoried items to fill a rated order may replace
those items with the use of a rated order as provided in Sec.
33.37(b).

Sec.  33.35  Extension of priority ratings.

    (a) A person must use rated orders with suppliers to obtain items
or services needed to fill a rated order. 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
Transportation. For example, if a person is in receipt of a DO-T-L1
rated order for a bus and needs to purchase brakes for its use, that
person must use a DO-T-L1 rated order to obtain the needed brakes.
    (b) The priority rating must be included on each successive order
placed to obtain items or services needed to fill a customer's rated
order. This continues from contractor to subcontractor to supplier
throughout the entire procurement chain.

Sec.  33.36  Changes or cancellations of priority ratings and rated
orders.

    (a) The priority rating on a rated order may be changed or canceled
by:
    (1) An official action of the Department of Transportation; or
    (2) Written notification from the person who placed the rated
order.
    (b) If an unrated order is amended so as to make it a rated order,
or a DO rating is changed to a DX rating, the supplier must give the
appropriate preferential treatment to the order as of the date the
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a
supplier's

original production or delivery schedule shall constitute a new rated
order as of the date of its receipt. The supplier must accept or reject
the amended order according to the provisions of Sec.  33.33.
    (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;
or a change which is agreed upon between the supplier and the customer.
    (e) If a person no longer needs items or services to fill a rated
order, any rated orders placed with suppliers for the items or
services, or the priority rating on those orders, must be canceled.
    (f) When a priority rating is added to an unrated order, or is
changed or canceled, all suppliers must be promptly notified in
writing.

Sec.  33.37  Use of rated orders.

    (a) A person must use rated orders to obtain:
    (1) Items which will be physically incorporated into other items to
fill rated orders, including that portion of such items normally
consumed or converted into scrap or by-products in the course of
processing;
    (2) Containers or other packaging materials required to make
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill
rated orders; and
    (4) MRO needed to produce the finished items to fill rated orders.
    (b) A person may use a rated order to replace inventoried items
(including finished items) if such items were used to fill rated
orders, as follows:
    (1) The order must be placed within 90 days of the date of use of
the inventory.
    (2) A DO rating and the program identification symbol indicated on
the customer's rated order must be used on the order. A DX rating may
not be used even if the inventory was used to fill a DX-rated order.
    (3) If the priority ratings on rated orders from one customer or
several customers contain different program identification symbols, the
rated orders may be combined. In this case, the program identification
symbol ``E1'' must be used (i.e., DO-T-E1).
    (c) A person may combine DX- and DO-rated orders from one customer
or several customers if the items or services covered by each level of
priority are identified separately and clearly. If different program
identification symbols are indicated on those rated orders of equal
priority, the person must use the program identification symbol ``E1''
(i.e., DO-T-E1 or DX-T-E1).
    (d) Combining rated and unrated orders.
    (1) A person may combine rated and unrated order quantities on one
purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec.
33.32, are included on the order with the statement required in Sec.
33.32(d) 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 Transportation Priorities and Allocations System regulations at
49 CFR part 33 only as it pertains to the rated quantities.
    (2) A supplier must accept or reject the rated portion of the
purchase order as provided in Sec.  33.33 and give preferential
treatment only to the rated quantities as required by this part. This
part may not be used to require preferential treatment for the unrated
portion of the order.
    (3) Any supplier who believes that rated and unrated orders are
being combined in a manner contrary to the intent of this part or in a
fashion that causes undue or exceptional hardship may submit a request
for adjustment or exception under section 33.80.
    (e) A person may place a rated order for the minimum commercially
procurable quantity even if the quantity needed to fill a rated order
is less than that minimum. However, a person must combine rated orders
as provided in paragraph (c), if possible, to obtain minimum procurable
quantities.
    (f) A person is not required to place a priority rating on an order
for less than $50,000, or one-half of the Simplified Acquisition
Threshold (as established in the Federal Acquisition Regulations (FAR)
(see FAR section 2.101) or in other authorized acquisition regulatory
or management systems), whichever amount is greater, provided that
delivery can be obtained in a timely fashion without the use of the
priority rating.

Sec.  33.38  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a DO- or DX-
rated order unless entitled to do so under this part.
    (2) Rated orders may not be used to obtain:
    (i) Delivery or performance on a date earlier than needed;
    (ii) A greater quantity of the item or services than needed, except
to obtain a minimum procurable quantity. Separate rated orders may not
be placed solely for the purpose of obtaining minimum procurable
quantities on each order;
    (iii) Items or services in advance of the receipt of a rated order,
except as specifically authorized by the Department of Transportation
(see Sec.  33.41(c) for information on obtaining authorization for a
priority rating in advance of a rated order);
    (iv) Items that are not needed to fill a rated order, except as
specifically authorized by the Department of Transportation, or as
otherwise permitted by this part;
    (v) Any of the following items unless specific priority rating
authority has been obtained from the Department of Transportation, a
Delegate Agency, or the Department of Commerce, as appropriate:
    (A) Items for plant improvement, expansion, or construction, unless
they will be physically incorporated into a construction project
covered by a rated order; and
    (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.  33.41); or
    (vi) 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.
    (b) Jurisdictional limitations. Unless authorized by the resource
agency with jurisdiction, the provisions of this part are not
applicable to the following resources:
    (1) Food resources, food resource facilities, and the domestic
distribution of farm equipment and commercial fertilizer (Resource
agency with jurisdiction--Department of Agriculture);
    (2) All forms of energy, including radioisotopes, stable isotopes,
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of Energy
(Resource agency with jurisdiction--Department of Energy);
    (3) Health resources (Resource agency with jurisdiction--Department
of Health and Human Services);
    (4) Water resources (Resource agency with jurisdiction--Department
of Defense/U.S. Army Corps of Engineers); and
    (5) Communications services (Resource agency with jurisdiction--
National Communications System under Executive Order 12472 of April 3,
1984).

Subpart D--Special Priorities Assistance

Sec.  33.40  General provisions.

    (a) TPAS is designed to be largely self-executing. However, from
time-to-time production or delivery problems will arise. In this event,
a person should immediately contact DOT's Defense Production Act
Activities Coordinator, Office of Intelligence, Security, and Emergency
Response, 1200 New Jersey Avenue, SE., Washington, DC 20590, for
guidance or assistance. If the problem(s) cannot otherwise be resolved,
special priorities assistance should be sought from the Department of
Transportation through the Director, Office of Intelligence, Security,
and Emergency Response, 1200 New Jersey Avenue, SE., Washington, DC
20590. If the Department of Transportation is unable to resolve the
problem or to authorize the use of a priority rating and believes
additional assistance is warranted, the Department of Transportation
may forward the request to another resource agency, as appropriate, for
action. Special priorities assistance is a service provided to
alleviate problems that do arise.
    (b) Special priorities assistance is available for any reason
consistent with this part. Generally, special priorities assistance is
provided to expedite deliveries, resolve delivery conflicts, place
rated orders, locate suppliers, or to verify information supplied by
customers and vendors. Special priorities assistance may also be used
to request rating authority for items that are not normally eligible
for priority treatment.
    (c) A request for special priorities assistance or priority rating
authority must be submitted on Form OST F 1254 (OMB control number to
be inserted in the final rule) to the Defense Production Act Activities
Coordinator, Office of Intelligence, Security, and Emergency Response,
1200 New Jersey Avenue, SE., Washington, DC 20590. Form OST F 1254 may
be obtained from the Department of Transportation or a Delegate Agency.
A sample Form OST F 1254 is attached at Appendix I.

Sec.  33.41  Requests for priority rating authority.

    (a) If a rated order is likely to be delayed because a person is
unable to obtain items or services not normally rated under this part,
the person may request the authority to use a priority rating in
ordering the needed items or services.
    (b) Rating authority for production or construction equipment.
    (1) A request for priority rating authority for production or
construction equipment must be submitted to the U.S. Department of
Commerce on FORM BIS-999.
    (2) When the use of a priority rating is authorized for the
procurement of production or construction equipment, a rated order may
be used either to purchase or to lease such equipment. However, in the
latter case, the equipment may be leased only from a person engaged in
the business of leasing such equipment or from a person willing to
lease rather than sell.
    (c) Rating authority in advance of a rated prime contract.
    (1) In certain cases and upon specific request, the Department of
Transportation, in order to promote the national defense, may authorize
a person to place a priority rating on an order to a supplier in
advance of the issuance of a rated prime contract. In these instances,
the person requesting advance rating authority must obtain sponsorship
of the request from the Department of Transportation or the appropriate
Delegate Agency. The person shall also assume any business risk
associated with the placing of rated orders if these orders have to be
cancelled in the event the rated prime contract is not issued.
    (2) The person must state the following in the request:
    It is understood that the authorization of a priority rating in
advance of our receiving a rated prime contract from the Department of
Transportation and our use of that priority rating with our suppliers
in no way commits the Department of Transportation or any other
government agency to enter into a contract or order or to expend funds.
Further, we understand that the Federal Government shall not be liable
for any cancellation charges, termination costs, or other damages that
may accrue if a rated prime contract is not eventually placed and, as a
result, we must subsequently cancel orders placed with the use of the
priority rating authorized as a result of this request.
    (3) In reviewing requests for rating authority in advance of a
rated prime contract, the Department of Transportation will consider,
among other things, the following criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time; and
    (v) The time period for which the rating is being requested.
    (4) The Department of Transportation may require periodic reports
on the use of the rating authority granted under paragraph (c) of this
section.
    (5) If a rated prime contract is not issued, the person shall
promptly notify all suppliers who have received rated orders pursuant
to the advanced rating authority that the priority rating on those
orders is cancelled.

Sec.  33.42  Examples of assistance.

    (a) While special priorities assistance may be provided for any
reason in support of this part, it is usually provided in situations
where:
    (1) A person is experiencing difficulty in obtaining delivery
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item or service needed
to fill a rated order.
    (b) Other examples of special priorities assistance include:
    (1) Ensuring that rated orders receive preferential treatment by
suppliers;
    (2) Resolving production or delivery conflicts between various
rated orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.

Sec.  33.43  Criteria for assistance.

    Requests for special priorities assistance should be timely, e.g.,
the request has been submitted promptly and enough time exists for the
Department of Transportation or the Delegate Agency to effect a
meaningful resolution to the problem, and must establish that:
    (a) There is an urgent need for the item; and
    (b) The applicant has made a reasonable effort to resolve the
problem.

Sec.  33.44  Instances where assistance may not be provided.

    Special priorities assistance is provided at the discretion of the
Department of Transportation or the Delegate Agencies, when it is
determined that such assistance is warranted to meet the objectives of
this part. Examples where assistance may not be provided include
situations when a person is attempting to:
    (a) Secure a price advantage;
    (b) Obtain delivery prior to the time required to fill a rated
order;
    (c) Gain competitive advantage;
    (d) Disrupt an industry apportionment program in a manner designed
to provide a person with an unwarranted share of scarce items; or

    (e) Overcome a supplier's regularly established terms of sale or
conditions of doing business.

Sec.  33.45  [Reserved]

Subpart E--Allocation Actions

Sec.  33.50  Policy.

    (a) It is the policy of the Federal Government that the allocations
authority under title I of the Defense Production Act may:
    (1) Only be used when there is insufficient supply of a material,
service, or facility to satisfy national defense supply 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.

Sec.  33.51  General procedures.

    When the Department of Transportation plans to execute its
allocations authority to address a supply problem within its resource
jurisdiction, the Department shall develop a plan that includes the
following information:
    (a) A copy of the written determination made in accordance with
section 202 of Executive Order 12919, 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 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 allocation orders, including the type(s) of allocation orders,
the percentages or quantity of capacity or output to be allocated for
each purpose, 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.

Sec.  33.52  Controlling the general distribution of a material in the
civilian market.

    No allocation action by the Department of Transportation may be
used to control the general distribution of a material in the civilian
market, unless the Secretary of the Department of Transportation has:
    (a) 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) Submitted the finding for the President's approval through the
Assistant to the President for National Security Affairs; and
    (c) The President has approved the finding.

Sec.  33.53  Types of allocation orders.

    There are three types of allocation orders available for
communicating allocation actions. These are:
    (a) Set-aside: An official action that requires a person to reserve
materials, services, or facilities capacity in anticipation of the
receipt of rated orders;
    (b) Directive: 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; and
    (c) Allotment: An official action that specifies the maximum
quantity of a material, service, or facility authorized for a specific
use.

Sec.  33.54  Elements of an allocation order.

    Each allocation order must include:
    (a) A detailed description of the required allocation action(s);
    (b) Specific start and end calendar dates for each required
allocation action;
    (c) The written signature on a manually placed order, or the
digital signature or name on an electronically placed order, of the
Secretary. The signature or use of the name certifies that the order is
authorized under this part and that the requirements of this part are
being followed;
    (d) A statement that reads in substance: ``This is an allocation
order certified for national defense use. [Insert the legal name of the
person receiving the order] is required to comply with this order, in
accordance with the provisions of the Transportation Priorities and
Allocations System regulation (49 CFR part 33)''; and
    (e) A current copy of the Transportation Priorities and Allocations
System regulation (49 CFR part 33) as of the date of the allocation
order.

Sec.  33.55  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
Department of Transportation 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 five (5) calendar days. 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 Transportation that the order has been changed or
cancelled.

Sec.  33.56  Changes or cancellations of an allocation order.

    An allocation order may be changed or canceled by an official
action of the Department of Transportation.

Subpart F--Official Actions

Sec.  33.60  General provisions.

    (a) The Department of Transportation may take specific official
actions to implement the provisions of this part.
    (b) These official actions include, but are not limited to, Rating
Authorizations, Directives, Planning Orders, and Memoranda of
Understanding.

Sec.  33.61  Rating authorizations.

    (a) A Rating Authorization is an official action granting specific
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an
item or service not normally ratable under this part; or
    (2) Authorizes a person to modify a priority rating on a specific
order or series of contracts or orders.
    (b) To request priority rating authority, see Sec.  33.41.

Sec.  33.62  Directives.

    (a) A Directive is an official action that requires a person to
take or refrain from taking certain actions in accordance with its
provisions.
    (b) A person must comply with each Directive issued. However, a
person may not use or extend a Directive to obtain any items from a
supplier, unless expressly authorized to do so in the Directive.
    (c) A Priorities Directive takes precedence over all DX-rated
orders, DO-rated orders, and unrated orders previously or subsequently
received, unless a contrary instruction appears in the Directive.
    (d) An Allocations Directive takes precedence over all Priorities
Directives, DX-rated orders, DO-rated orders, and unrated orders
previously or subsequently received, unless a contrary instruction
appears in the Directive.

Sec.  33.63  Memoranda of Understanding.

    (a) A Memorandum of Understanding is an official action that may be
issued in resolving special priorities assistance cases to reflect an
agreement reached by all parties (the Department of Transportation, the
Department of Commerce (if applicable), a Delegate Agency (if
applicable), the supplier, and the customer).
    (b) A Memorandum of Understanding is not used to alter scheduling
between rated orders, authorize the use of priority ratings, impose
restrictions under this part, or take other official actions. Rather,
Memoranda of Understanding are used to confirm production or shipping
schedules that do not require modifications to other rated orders.

Subpart G--Compliance

Sec.  33.70  General provisions.

    (a) The Department of Transportation may take specific official
actions for any reason necessary or appropriate to the enforcement or
the administration of the Defense Production Act and other applicable
statutes or this part. Such actions include Administrative Subpoenas,
Demands for Information, and Inspection Authorizations.
    (b) Any person who places or receives a rated order or an
allocation order must comply with the provisions of this part.
    (c) Willful violation of the provisions of title I or Section 705
of the Defense Production Act and other applicable statutes, this part,
or an official action of the Department of Transportation, is a
criminal act, punishable as provided in the Defense Production Act and
other applicable statutes, and as set forth in Sec.  33.74 of this
part.

Sec.  33.71  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
and other applicable statutes, this part, and official actions 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 Transportation 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 Transportation
may issue the following documents that 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 Transportation to testify under oath on matters of which
that person has knowledge relating to the enforcement or the
administration of the Defense Production Act and other applicable
statutes, this part, or official actions. An Administrative Subpoena
may also require the production of books, papers, records, documents
and physical objects or property.
    (2) Demands for Information. A Demand for Information requires a
person to furnish to a duly authorized representative of the Department
of Transportation any information necessary or appropriate to the
enforcement or the administration of the Defense Production Act and
other applicable statutes, this part, or official actions.
    (3) Inspection Authorizations. An Inspection Authorization requires
a person to permit a duly authorized representative of the Department
of Transportation to interview the person's employees or agents, to
inspect books, records, documents, other writings, and information,
including electronically-stored information, in the person's possession
or control at the place where that person usually keeps them or
otherwise, 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 and related statutes, this
part, or official actions.
    (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 Transportation 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 Transportation 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 issuing the document and 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 old 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 over 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.
    (g) This section is neither intended to limit the authority of the
Inspector General of the Department of Transportation to initiate and
conduct audits and investigations nor confer additional authority
beyond that provided by the Inspector General Act.

Sec.  33.72  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative
of the Department of Transportation to have access to any premises or
source of information necessary to the administration or the
enforcement of the Defense Production Act and other applicable
statutes, or this part, the Department of Transportation representative
may seek compulsory process. Compulsory process means the institution
of appropriate legal action, including ex parte application for an
inspection warrant or its equivalent, in any forum of appropriate
jurisdiction.
    (b) Compulsory process may be sought in advance of an audit,
investigation, or other inquiry, if, in the judgment of DOT there is
reason to believe that a person will refuse to permit an audit,
investigation, or other inquiry, or that other circumstances exist
which make such process desirable or necessary.

Sec.  33.73  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, the Department of Transportation may inform the
person in writing where compliance with the requirements of the Defense
Production Act and other applicable statutes, this part, or an official
action were not met.
    (b) In cases where the Department of Transportation determines that
failure to comply with the provisions of the Defense Production Act and
other applicable statutes, this part, or an official action 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 and other applicable statutes, this part, or an
official action.

Sec.  33.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of title 1 or section 705
or 707 of the Defense Production Act, the priorities provisions of the
Selective Service Act, this part, or an official action, is a crime and
upon conviction, a person may be punished by fine or imprisonment, or
both. The maximum penalty currently provided by the Defense Production
Act is a $10,000 fine, or one year in prison, or both. The maximum
penalty currently 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 and other applicable statutes, this part, and official
actions, the following are prohibited:
    (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 and other applicable statutes, 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 and other applicable statutes, this part, or an
official action.
    (3) No person shall deliver any item or perform any service 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
and other applicable statutes, this part, or an official action. In
such instances, the person must immediately notify the Department of
Transportation that, in accordance with this provision, delivery of the
item or performance of the service has not been made.

Sec.  33.75  Compliance conflicts.

    If compliance with any provision of the Defense Production Act and
other applicable statutes, this part, or an official action would
prevent a person from filling a rated order or from complying with
another provision of the Defense Production Act and other applicable
statutes, this part, or an official action, the person must immediately
notify the Department of Transportation for resolution of the conflict.

Subpart H--Adjustments, Exceptions, and Appeals

Sec.  33.80  Adjustments or exceptions.

    (a) A person may submit a request to the Defense Production Act
Activities Coordinator, Office of Intelligence Security, and Emergency
Response, 1200 New Jersey Avenue, SE., Washington, DC 20590, for an
adjustment or exception on the ground that:
    (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 consequences of following a provision of this part or an
official action are contrary to the intent of the Defense Production
Act and other applicable 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
or exception 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
provision 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 Intelligence, Security, and Emergency Response.
    (d) A decision of the Defense Production Act Activities Coordinator
under this section may be appealed to the Assistant Secretary for
Administration. (For information on the appeal procedure, see Sec.
33.81.)

Sec.  33.81  Appeals.

    (a) Any person who has had a request for adjustment or exception
denied by the Defense Production Act Activities Coordinator under Sec.
33.80, may appeal to the Department of Transportation's Assistant
Secretary for Administration, who shall review and reconsider the
denial.
    (b)(1) Except as provided in paragraph (b)(2) if this section, an
appeal must be received by the Assistant Secretary for Administration
no later than 45 days after receipt of a written notice of denial from
the Defense Production Act Activities Coordinator. After this 45-day
period, an appeal may be accepted at the discretion of the Assistant
Secretary for Administration for good cause shown.

    (2) For requests for adjustment or exception involving rated orders
placed for the purpose of emergency preparedness, an appeal must be
received by the Assistant Secretary for Administration, no later than
five (5) days after receipt of a written notice of denial from the
Defense Production Act Activities Coordinator. Contract performance
under the order shall not be stayed pending resolution of the appeal.
    (c) Each appeal must be in writing and contain a complete statement
of all the facts and circumstances related to the action appealed from,
all necessary documents, and a full and precise statement of the
reasons the decision should be modified or reversed.
    (d) In addition to the written materials submitted in support of an
appeal, an appellant may request, in writing, an opportunity for an
informal hearing. This request may be granted or denied at the
discretion of the Assistant Secretary for Administration.
    (e) When a hearing is granted, the Assistant Secretary for
Administration may designate an employee of the Office of the Senior
Procurement Executive to conduct the hearing and to prepare a report.
The hearing officer shall determine all procedural questions and impose
such time or other limitations deemed reasonable. In the event that the
hearing officer decides that a printed transcript is necessary, all
expenses shall be borne by the appellant.
    (f) When determining an appeal, the Assistant Secretary for
Administration may consider all information submitted during the appeal
as well as any recommendations, reports, or other relevant information
and documents available to the Department of Transportation, or consult
with any other persons or groups.
    (g) The submission of an appeal under this section shall not
relieve any person from the obligation of complying with the provision
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 Administration.
    (h) The decision of the Assistant Secretary for Administration
shall be made within five (5) working days after receipt of the appeal,
or within one (1) working day for appeals pertaining to emergency
preparedness and shall be the final administrative action. It shall be
issued to the appellant in writing with a statement of the reasons for
the decision.

Subpart I--Miscellaneous Provisions

Sec.  33.90  Protection against claims.

    A person shall not be held liable for damages or penalties for any
act or failure to act resulting directly or indirectly from compliance
with any provision of this part, or an official action, notwithstanding
that such provision or action shall subsequently be declared invalid by
judicial or other competent authority.

Sec.  33.91  Records and reports.

    (a) Persons are required to make and preserve for at least three
years, accurate and complete records of any transaction covered by this
part or an official action.
    (b) Records must be maintained in sufficient detail to permit the
determination, upon examination, of whether each transaction complies
with the provisions of this part or any official action. However, this
part does not specify any particular method or system to be used.
    (c) Records required to be maintained by this part must be made
available for examination on demand by duly authorized representatives
of the Department of Transportation as provided in Sec.  33.71.
    (d) In addition, persons must develop, maintain, and submit any
other records and reports to the Department of Transportation that may
be required for the administration of the Defense Production Act and
other applicable statutes, and this part.
    (e) Section 705(d) of the Defense Production Act, as implemented by
Executive Order 12919, provides that information obtained under this
section which the Secretary deems confidential, or with reference to
which a request for confidential treatment is made by the person
furnishing such information, shall not be published or disclosed unless