[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Proposed Rules]
[Pages 51389-51397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26109]
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DEPARTMENT OF COMMERCE
Bureau of Export Administration
15 CFR Part 700
[Docket No. 970827205-7205-01]
RIN 0694-AA02
Defense Priorities and Allocations System
AGENCY: Bureau of Export Administration, Commerce.
ACTION: Notice of proposed rulemaking and request for comments.
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SUMMARY: The Department of Commerce proposes to revise the Defense
Priorities and Allocations System (DPAS) regulation by updating,
modifying or clarifying a number of its provisions. The DPAS implements
the priorities and allocations authority of Title I of the Defense
Production Act of 1950, as amended, and the priorities authority of
Section 18 of the Selective Service Act of 1948 and related
authorities, as these authorities pertain to industrial resources.
[[Page 51390]]
Provisions to be modified include the time period within which a
supplier must accept or reject a rated order, the order of precedence
to be given to conflicting rated orders which have equal priority
status, and the combining of defense rated requirements with commercial
(unrated) requirements.
The Department also proposes to remove all controlled materials
provisions and references from the DPAS because the controlled
materials program (essentially an emergency preparedness measure) is
obsolete and has been deactivated.
These revisions, including a number of other changes to update and
clarify the text, are intended to improve the administration of the
DPAS and make it more effective and efficient in the post-Cold War era.
The Department will consider public comment on these proposed
revisions and on any other provision that may be hindering effective
and efficient DPAS administration or implementation.
DATES: Comments must be received no later than October 31, 1997.
ADDRESSES: Address written comments (six copies) to Richard V. Meyers,
DPAS Program Manager, Office of Strategic Industries and Economic
Security, Room 3876, U.S. Department of Commerce, Washington, D.C.
20230. The public record of this proposed rule will be available at the
Bureau of Export Administration Freedom of Information Records
Inspection Facility, Room 4525, U.S. Department of Commerce, 14th
Street and Pennsylvania Avenue, N.W., Washington, D.C. 20230.
FOR FURTHER INFORMATION CONTACT: Richard V. Meyers, DPAS Program
Manager, Office of Strategic Industries and Economic Security, Room
3876, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue,
N.W., Washington, D.C. 20230; telephone (202) 482-3634, FAX (202) 482-
5650, and E-Mail rmeyers@bxa.doc.gov.
SUPPLEMENTARY INFORMATION:
Background
The current Defense Priorities and Allocations System (DPAS)
regulation (15 CFR part 700; formerly 15 CFR part 350) was published by
the Department of Commerce as a final rule on July 30, 1984 (49 FR
30412), superseding the regulations of the Defense Materials System and
Defense Priorities System. The DPAS regulation implements the
priorities and allocations authority of Title I of the Defense
Production Act of 1950, as amended (50 U.S.C. app. 2061, et seq.), and
the priorities authority of Section 18 of the Selective Service Act of
1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and 2539, and 50 U.S.C. 82,
as these authorities pertain to industrial resources.
The Department has received a number of oral and written comments
suggesting the need to modify or clarify several provisions of the DPAS
which relate to: (1) The time period within which a supplier must
accept or reject a rated order [section 700.13(d)(1)]; (2) the order of
precedence to be given by contractors and suppliers to conflicting
rated orders of equal priority status (section 700.14); and (3) the
combining by a contractor of defense rated requirements with commercial
(unrated) requirements on one purchase order to a supplier [section
700.17(d)]. Accordingly, for the reasons discussed in the PROPOSED
REVISIONS section below, the Department proposes to revise these DPAS
rules.
The Department also proposes to remove the controlled materials
provisions from the DPAS (sections 700.30-700.31) and delete all other
references to the program from throughout the regulation for the
following reasons.
During World War II and the Korean War, the production and
distribution of certain critical materials called ``controlled
materials''--steel, copper, and aluminum--were managed under Controlled
Materials Plans. From 1953 to 1988, these materials, with nickel alloys
added in 1958, continued to be subject to government allocations
regulations.
A 1987 Department of Commerce study of the controlled materials
program found that the program had little relevance to current defense
requirements for the controlled materials or to the current ability of
industry to supply the controlled materials to meet these requirements.
The study recommended that the controlled materials procedures be
deactivated. An interagency committee, comprised of Commerce and three
of the DPAS Delegate Agencies (Federal Emergency Management Agency and
the Departments of Defense and Energy), concurred with this
recommendation. Action was subsequently taken by these agencies to
deactivate the program, including action by Commerce to discontinue the
information collection burden imposed upon controlled materials
producers, distributors, and users to supply information about
controlled materials requirements and shipments. This information was
used to support administration of the controlled materials program.
Finally, the Department proposes to make various jurisdictional,
technical, administrative, and miscellaneous revisions to a number of
DPAS provisions to address changes to delegated authority, to
incorporate the delegation of additional authority, to update and
clarify the text, and to improve generally the administration,
effectiveness, and efficiency of the DPAS in support of our nation's
post-Cold War defense requirements and its ability to respond fully to
a national security or major disaster emergency situation.
Proposed Revisions
Proposed revisions to the DPAS regulation are described in the
following section-by-section analysis.
1. Customer Notification of Acceptance or Rejection of Rated Orders
Section 700.13(d) (Customer notification requirements) of the
current DPAS requires a supplier to accept or reject a rated order in
writing within ten (10) working days after receipt of a DO rated order
and within five (5) working days after receipt of a DX rated order.
Subcontractors and suppliers have complained that it is very difficult
to comply with this requirement due to production scheduling
complexities and other administrative factors.
The proposed rule would revise subparagraph (1) of section
700.13(d) by extending the time within which a person must accept or
reject a rated order by five (5) working days. Accordingly, a person
must accept or reject a rated order within fifteen (15) working days
after receipt of a DO rated order, and within ten (10) working days
after receipt of a DX rated order. The Department believes that this
change will not significantly impact upon the timely delivery of items
against these orders.
The revised subparagraph would also specifically reference
electronic data interchange of the acceptance or rejection of rated
orders. Electronic placement of rated orders is acceptable provided
that the transmission complies in substance with section 700.12
(Elements of a rated order). This section would also be revised to
reference the electronic placement of rated orders.
2. Precedence of Rated Orders of Equal Priority Status
A number of companies have requested clarification of the
preference to be given to rated orders which have equal priority status
(DX or DO) when production scheduling conflicts or other problems arise
following acceptance of the rated orders.
The proposed rule would revise paragraph (c) of section 700.14
(Preferential scheduling) of the current
[[Page 51391]]
DPAS to provide that if a person finds that production, delivery, or
performance against any accepted rated orders conflicts with
production, delivery, or performance against any other accepted rated
orders of equal priority status, preference shall be given to the
conflicting rated orders in the sequence in which they were received
(not to the required delivery dates). However, if the conflicting rated
orders were received on the same day, the person shall give preference
to those orders which have the earliest delivery dates. If under these
rules, the production, delivery, or performance conflicts cannot be
resolved, or if the customer objects to the rescheduling of the
customer's rated order, the proposed rule provides that special
priorities assistance should be requested promptly under sections
700.50-700.54 of the DPAS.
Some of the confusion over preferential scheduling appears to have
been caused by including paragraph (c) in section 700.14 (Preferential
scheduling) of the current DPAS. This paragraph covers acceptance or
rejection of rated orders of equal priority status received on the same
day. The proposed rule would incorporate this paragraph into section
700.13 (Acceptance and rejection of rated orders).
3. Combining Defense Rated Requirements With Commercial (Unrated)
Requirements
Paragraph (d) of section 700.17 (Use of rated orders) of the
current DPAS permits a contractor to combine rated and unrated order
quantities on a purchase order to a supplier provided that the rated
quantities are clearly and separately identified. These quantities must
also be contained in a separate rated order which conforms to the
requirements of section 700.12 (Elements of a rated order). A special
statement and the physical attachment of the separate rated order to
the combined order are also required. A number of companies have
complained that the requirement for a separate rated order is expensive
to implement, an administrative burden, and incompatible with their
automated procurement systems.
The proposed rule would eliminate the requirement for a separate
rated order but would retain the requirement for clear and separate
identification of rated order quantities. It also would require a
special statement on the combined purchase order to notify the supplier
that the order contains rated quantities certified for national defense
use and that the provisions of the DPAS apply only to the rated
quantities. This change should contribute to contractor efficiency and
cost savings while minimizing the possibility of supplier confusion.
The growing commercialization of defense procurement and the
development of dual-use products and technology further underscores the
need for this change.
4. National Security Emergency Preparedness and Removal of the
Controlled Materials Provisions
The proposed rule would remove from the DPAS all provisions and
references pertaining to the controlled materials, including the
controlled materials information in section 700.4 of Subpart B
(Overview), the definitions relating to controlled materials in section
700.8, the special rules for controlled materials in Subpart F
(sections 700.30-700.31), and the authorized programs for controlled
materials (C8 and H2-H4) listed in Schedule 1 to Part 700. Also removed
would be Schedule II to Part 700, which lists the controlled materials,
Schedule III to Part 700, which defines the controlled materials, and
Schedules IV and V to Part 700, which establish the set-aside base and
percentages for copper and nickel alloys producers.
The heading of Subpart F would be renamed ``National Security
Emergency Preparedness and Critical Items.'', and the heading of
section 700.30 would be retitled ``Priorities and Allocations in a
National Security Emergency.'' The text of section 700.30 would be
revised to provide a statement as to how the DPAS may be expanded in a
national security emergency to ensure rapid industrial response and the
timely availability of critical industrial items and facilities to meet
the urgent defense or major disaster emergency requirements of approved
programs.
Included is a discussion of emergency official actions, the
allocation of critical and scarce items and facilities to meet
emergency requirements, and the delegation of authority under the DPAS
to the Regional Emergency Coordinators in the ten Standard Federal
Region Council cities in the event that communications with Commerce
headquarters in Washington, D.C. is severed as a result of the
emergency.
Section 700.4 in Subpart B (Overview) would also be revised to
summarize the revised Subpart F, with the section heading retitled
``Priorities and Allocations in a National Security Emergency.''
In Subpart G, section 700.40 (General provisions) would be removed
and section 700.41 (Metalworking machines) would be moved into Subpart
F and redesignated as section 700.31. Subpart G would be ``Reserved''
for future use.
The removal of the controlled materials provisions would
necessitate amendment of DPAS Delegation 1 to the Secretary of Defense
(Appendix I to Part 700) and the Memorandum of Understanding on
Priorities and Allocations Support Between the U.S. Department of
Commerce and the Canadian Public Works and Government Services Canada
(formerly Department of Supply and Services) (Appendix IV to Part 700)
to delete references to the controlled materials program within these
documents.
5. New Approved Programs
The proposed rule would revise Schedule 1 to the current DPAS to
retitle it ``Approved Programs and Delegate Agencies'', to include two
new programs, ``Special Projects'' and ``Food Resources (combat
rations)'', and to change the ``N1'' Federal Emergency Management
Agency program name to ``Emergency Preparedness Activities''.
The ``Special Projects'' program would be assigned to the
Department of Commerce as Delegate Agency and identified by the Program
Identification Symbol ``H8''. It would provide the Department with
greater administrative flexibility in authorizing the use of priority
ratings, as needed on a case-by-case basis by non-Delegate Agencies to
support defense related procurement, where use of a current approved
program identification would not be appropriate. Such priority rating
authority would be granted only after establishing the appropriate
national defense or civil emergency preparedness nexus for the project
in consultation with the Department of Defense (DOD), Department of
Energy, or Federal Emergency Management Agency, as provided under
section 202 of E.O. 12919.
The ``Food Resources (combat rations)'' program would be assigned
to DOD as Delegate Agency and identified by the Program Identification
Symbol ``C1''. This would enable DOD to place rated orders under the
DPAS for food resources to meet troop support requirements for combat
rations under the authority delegated to DOD by Commerce in DPAS
Delegation 1 (see Appendix I to Part 700). This program was established
by agreement between the Departments of Commerce and Agriculture, dated
January 28, 1991, and approved by FEMA on February 1, 1991 (see
Attachment A to DPAS Delegation 1). It is consistent with the
Memorandum of Understanding between the Departments of Agriculture and
Commerce Concerning Priorities
[[Page 51392]]
and Allocations Jurisdiction and Responsibilities for Foods Which Have
Industrial Uses and the Domestic Distribution of Farm Equipment (see
Appendix II to Part 700).
The ``N1'' program name change would reflect the expansion of
Defense Production Act (Title I) priorities and allocations authority
to cover emergency preparedness activities as provided under Title VI
of the Robert T. Stafford Disaster Relief and Emergency Assistance Act,
as amended (Stafford Act) (42 U.S.C. 5195, et seq.).
6. Other Revisions
Because of recent amendments to the Defense Production Act, the
Stafford Act, and the issuance and subsequent amendment of Executive
Order 12919 (revision of Executive Order 10480), technical revisions to
several sections of the DPAS, including section 700.18(b)(1)
(Jurisdictional limitations), are required. The proposed rule sets
forth these changes.
Also, on January 8, 1991, priorities authority with respect to
industrial resources was delegated to the Department of Commerce under
the Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538
and 2539, and 50 U.S.C. 82 by Executive Order 12742 (56 FR 1079). The
proposed rule would incorporate a reference to these authorities where
appropriate, throughout the regulation.
Finally, the proposed rule would make various other technical,
administrative, and miscellaneous changes to the current DPAS rules.
Among these revisions are improvements to the clarity of the text in
section 700.2(b) (Introduction) and subparagraph (2) of section
700.13(d) (Customer notification requirements), and increasing the
minimum rated order amount from $5000 to $100,000 in paragraph (f) of
section 700.17 (Use of rated orders) to conform with the current
simplified Federal Acquisition Regulation small order acquisition
threshold. Revision of section 700.21 (Application for priority rating
authority) in Subpart E (Industrial Priorities for Energy Programs),
section 700.72 (Compulsory process), section 700.80 (Adjustments or
exceptions), section 700.81 (Appeals), and section 700.93
(Communications), is necessary to reflect office name, address,
telephone number, and Departmental organization changes.
7. Appendices to Part 700
All DPAS Appendices (Appendix I--DPAS Delegations of Authority to
the Departments of Defense and Energy, the General Services
Administration, and the Federal Emergency Management Agency; Appendix
II--Interagency Memoranda of Understanding with the Departments of
Agriculture, Energy, and the Interior; Appendix III--Form ITA-999--
Request for Special Priorities Assistance; and Appendix IV--Memorandum
of Understanding on Priorities and Allocations Support Between the U.S.
Department of Commerce and the Canadian Department of Supply and
Services) require updating and revision to address various substantive
and technical changes, including changes in statutory and delegated
authority and removal of obsolete provisions. Of special note is an
expanded restriction in each of the DPAS Delegations of Authority on
the use of rated orders by the Delegate Agencies to support procurement
of any items which are commonly available in commercial markets for
general consumption, do not require major modification when purchased
for approved program use, and are readily available in sufficient
quantity so as to cause no delay in meeting approved program
requirements.
A new Appendix V (DPAS Emergency Documents) will be added,
containing, for information purposes only, DPAS Emergency Delegation 1.
This document will delegate authority to the Regional Emergency
Coodinators in the ten Federal Regional Council cities to administer
the DPAS if a catastrophic national security emergency situation severs
communications with Department of Commerce headquarters in Washington,
D.C.
Because the documents in these Appendices are of limited public
interest, they will not be published in draft for public comment. They
will, however, be reviewed by all involved departments and agencies and
copies of the executed originals will be published with the Notice of
Final Rulemaking.
Public Comment Requested
Public comment on the sufficiency and reasonableness of these
proposed revisions is solicited. In addition, comments are solicited
concerning any other DPAS provision. The Department's objective is to
ensure that the DPAS is effective, efficient, easy to understand and
use, and properly designed not only to ensure the timely delivery of
industrial resources in support of current national defense programs
with minimal disruption to normal commercial activities, but also to
support future emergency requirements.
Section 709 of the Defense Production Act exempts the promulgation
of rules and regulations from the rulemaking procedures of the
Administrative Procedure Act (5 U.S.C. 551-559). However, the Defense
Production Act does require Federal Register publication of these
proposed revisions and opportunity for public comment, consistent with
the requirements 5 U.S.C. 553(b). Therefore, all persons who desire to
comment are encouraged to do so at the earliest possible time to
receive the fullest consideration of their views. Only those comments
received on or before October 31, 1997 will be considered.
In the interest of accuracy and completeness, the Department
requires written comments (six copies) which should be sent to the
address indicated in the address section above. Oral comments should be
directed to Richard V. Meyers, DPAS Program Manager [tel.: (202) 482-
3634], and must be followed by written memorandum to Mr. Meyers. All
such written comments and memoranda will be placed in the public
rulemaking docket and will be available for public review and copying.
However, communications from agencies of the U.S. Government or foreign
governments will not be made available for public inspection. Written
comments accompanied by a request that part or all of the material
contained be treated confidentially will not be considered in
developing the final rule. Such comments and materials will be returned
to the submitter.
The public rulemaking docket concerning this regulation will be
maintained in the Bureau of Export Administration Freedom of
Information Records Inspection Facility, at the address indicated in
the address section above. Records in this facility may be inspected
and copied in accordance with regulations published in 15 CFR part 4.
Information pertaining to the inspection and copying of records may be
obtained from Ms. Margaret Cornejo, Freedom of Information Officer, at
the Records Inspection Facility, or by calling (202) 482-5653.
Rulemaking Requirements
The Department has made certain determinations with respect to the
following rulemaking requirements:
1. Classification Under E.O. 12866
This proposed revision of the current DPAS regulation (15 CFR part
700) has been determined to be ``not significant'' for the purpose of
Executive Order 12866.
2. Regulatory Flexibility Act
The Assistant General Counsel for Legislation and Regulation
certified to the Chief Counsel for Advocacy, Small
[[Page 51393]]
Business Administration, that this proposed rule to revise the DPAS, if
adopted, will not have a significant economic impact on a substantial
number of small entities. These revisions would merely update, modify,
or clarify a number of provisions to make the current DPAS more
effective and efficient in the post Cold War era. Many of the proposed
changes are being made in response to comments and recommendations
received from the business community, thus ensuring that the updated
DPAS will conform to current business practices and enable all business
entities subject to its requirements to increase the efficiency of
their operations and realize certain cost savings. In addition, some
DPAS provisions must be revised to conform the regulation to recent
statutory and organizational changes while other provisions must be
deleted because they are obsolete.
Because of the self-administered nature of the DPAS, there is no
way to accurately estimate the number of business entities throughout
the U.S. industrial base to whom the DPAS is applicable. However, it
has been roughly estimated that there are at least 18,000 business
entities during any one year that on at least one or more occasions
must respond to its requirements. It is also estimated that given the
nature of defense production, relatively few of these entities are
small entities.
The DPAS regulation has been in effect since 1984 and is the
successor to priorities and allocations regulations that were first
promulgated in the mid-1950s. Thus, most business entities engaged in
defense production under the DPAS, including small entities, can and do
respond to applicable DPAS requirements in the ordinary course of their
business with very little, if any, economic impact. The DPAS revisions,
in and of themselves, would impose no economic impact on any business
entity, including small entities, and if adopted, will further reduce
whatever minimal economic impact is associated with DPAS compliance.
3. Paperwork Reduction Act
The information collection requirements imposed by the DPAS
regulation have been submitted to the Office of Management and Budget
(OMB) for review under the provisions of Section 3507 of the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501, et seq.) (OMB Control Number
0694-0053). Notwithstanding any other provision of law, no person is
required to respond to nor shall a person be subject to a penalty for
failure to comply with these information collection requirements unless
the information collection displays a currently valid OMB Control
Number.
The collection of information requirements in the DPAS apply to all
persons who receive priority rated orders under the DPAS. These
requirements are necessary to support proper administration of the DPAS
and ensure its effectiveness and efficiency. The total annual public
burden per respondent for this collection of information is estimated
at 14,476.5 hours. This estimate includes (a) 11,667 total extra record
keeping hours to create a record of the receipt of a priority rated
order (700,000 priority rated orders annually x 1 minute per order);
(b) 972 total hours to provide notice of acceptance of a priority rated
order (699,650 priority rated orders accepted annually x 5 seconds
per order); (c) 87.5 total hours to provide notice of rejection of a
priority rated order (350 total priority rated orders rejected annually
x 15 minutes per order); and (d) 1,750 total hours to provide notice
of delayed delivery against a priority rated order (7000 total priority
rated orders annually against which delivery will be delayed x 15
minutes per order).
Comments are requested concerning: (a) Whether the proposed
collection of information is necessary for the proper performance of
agency functions, which includes proper administration of the DPAS and
ensuring its effectiveness and efficiency; (b) the accuracy of the
public burden estimate; (c) ways to enhance the quality, utility, and
clarity of the information collected; and (d) ways to further minimize
the public information collection burden, including the use of
automated collection techniques or other forms of information
technology. Written comments should be sent within 30 days of
publication of this Notice in the Federal Register to Ms. Victoria
Baecher-Wassmer, OMB Desk Officer, Room 10202, New Executive Office
Building, Office of Management and Budget, Washington, D.C. 20230; and
to Mr. Stephen Baker, BXA Information Collection Officer, Room 6877,
U.S. Department of Commerce, Washington, D.C. 20230.
4. Executive Order 12612
This proposed rule does not contain policies with Federalism
implications sufficient to warrant preparation of a Federalism
assessment under E.O. 12612.
List of Subjects in 15 CFR Part 700
Administrative practice and procedure, Business and industry,
Government contracts, National defense, Reporting and recordkeeping
requirements, Strategic and critical materials.
For the reasons stated in the preamble, part 700 of Subchapter A,
National Security Industrial Base Regulations (15 CFR part 700), is
proposed to be amended as follows:
1. The authority citation for 15 CFR part 700 is revised to read as
follows:
Authority: Titles I and VII of the Defense Production Act of
1950, as amended (50 U.S.C. app. 2061, et seq.), Title VI of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5195, et seq.), and Executive Order 12919 of June 3, 1994 (59
FR 29525), as amended; Section 18 of the Selective Service Act of
1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and 2539, 50 U.S.C. 82,
and Executive Order 12742 of January 8, 1991 (56 FR 1079), as
amended; and Executive Order 12656 of November 18, 1988 (53 FR 226),
as amended.
PART 700--[AMENDED]
2. Section 700.1 is amended:
a. By revising the phrase ``materials and facilities'' to read
``materials, services, and facilities'', and revising the phrase
``materials and equipment'' to read ``materials, equipment, and
services'', in paragraph (a);
b. By revising paragraph (b);
c. By redesignating paragraph (c) as paragraph (e); and
d. By adding new paragraphs (c) and (d); as follows:
Sec. 700.1 Purpose of this regulation.1
* * * * *
(b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app.
468) (Selective Service Act) authorizes the President to place an order
with a supplier for any articles or materials required for the
exclusive use of the U.S. armed forces whenever the President
determines that in the interest of national security, prompt delivery
of the articles and materials is required. The supplier must give
precedence to the order so as to deliver the articles or materials in a
required time period. 10 U.S.C. 2538 and 2539, and 50 U.S.C. 82,
provide similar authority specifically for Department of Defense
procurement, but only in time of war or when war is imminent.
(c) Section 602(b) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms
``national defense'' and ``defense'' as used in the Defense Production
Act includes ``emergency preparedness activities'' conducted pursuant
to Title VI of the Stafford Act. The definition of ``national defense''
in Section 702(13) of the
[[Page 51394]]
Defense Production Act provides that this term includes ``emergency
preparedness activities'' conducted pursuant to Title VI of the
Stafford Act.
(d) The Defense Priorities and Allocations System (DPAS) regulation
implements the priorities and allocations authority of the Defense
Production Act and as this authority pertains to Title VI of the
Stafford Act, and the priorities authority of the Selective Service Act
and related statutes, all with respect to industrial resources. The
DPAS ensures the timely availability of industrial resources for
approved programs and provides a regulatory framework to support rapid
industrial response to a national security or major disaster emergency.
* * * * *
3. Section 700.2 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 700.2 Introduction.
(a) Certain national defense and energy programs (including
emergency preparedness activities) are approved for priorities and
allocations support. For example, military aircraft production,
ammunition, and certain programs which maximize domestic energy
supplies are ``approved programs.'' A complete list of currently
approved programs is provided at Schedule 1 to this regulation.
(b) The Department of Commerce administers the DPAS to ensure the
timely delivery of industrial items to meet approved program
requirements.
* * * * *
Sec. 700.3 [Amended]
4. Section 700.3(a) is amended by revising the term ``authorized
program'' to read ``approved program''.
5. Section 700.4 is amended:
a. By revising the section heading;
b. By revising paragraphs (a) and (b); and
c. By removing paragraphs (c), (d), and (e); as follows:
Sec. 700.4 Priorities and allocations in a national security
emergency.
(a) In the event of a national security emergency, special rules
may be established as needed to supplement this regulation, thus
ensuring rapid industrial response and the timely availability of
critical industrial items and facilities to meet the urgent defense or
major disaster emergency requirements of approved programs.
(b) The special rules established in response to the emergency may
include provisions for the taking of certain emergency official actions
and the allocation of critical and scarce materials and facilities.
6. Section 700.7(a) is amended by adding the phrase ``and the
Selective Service Act and related statutes'' following the phrase ``the
Defense Production Act''.
7. Section 700.8 is amended:
a. By removing the following definitions: ``Authorized program'',
``Controlled materials'', ``Controlled materials suppliers'',
``Distributors of controlled materials'', ``Further conversion'',
``Lead time'', ``Minimum mill quantity'', and ``Person'';
b. By amending the definition of ``Delegate Agency'', revising the
term ``authorized programs'' to read ``approved programs'';
c. By amending the definition of ``Official action'', adding a
comma followed by the phrase ``the Selective Service Act and related
statutes,'' following the phrase ``the Defense Production Act,'';
d. By amending the definition of ``Rated order'', revising the term
``authorized program'' to read ``approved program''; and
e. By revising the introductory sentence after the section heading,
and adding new definitions in alphabetical order; as follows:
Sec. 700.8 Definitions.
In addition to the definitions provided in Section 702 of the
Defense Production Act, the following definitions pertain to all
sections of the regulation:
Approved program. A program determined as necessary or appropriate
for priorities and allocations support to promote the national defense
by the Secretary of Defense, the Secretary of Energy, or the Director,
Federal Emergency Management Agency, under the authority of the Defense
Production Act, the Stafford Act, and Executive Order 12919, or the
Selective Service Act and related statutes and Executive Order 12742.
* * * * *
Person. Any 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; and for purposes of administration of this regulation,
includes the United States Government and any foreign government or
agency thereof, delegated authority under this regulation.
* * * * *
Selective Service Act and related statutes. Section 18 of the
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and
2539, and 50 U.S.C. 82.
* * * * *
Stafford Act. Title VI (Emergency Preparedness) of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, as amended (42
U.S.C. 5195, et seq.).
8. Section 700.10 is amended:
a. By revising paragraph (a); and
b. By revising the phrase ``Office of Industrial Resource
Administration'' to read ``Office of Strategic Industries and Economic
Security'', and revising the phrase ``authorized programs'' to read
``approved programs'', in paragraph (b); as follows:
Sec. 700.10 Delegation of authority.
(a) The priorities and allocations authorities given to the
President in Title I of the Defense Production Act with respect to
industrial resources, have been delegated to the Secretary of Commerce
under Executive Order 12919 of June 3, 1994 (59 FR 29525), as amended.
The priorities authorities given to the President in the Selective
Service Act and related statutes with respect to industrial resources,
have also been given delegated to the Secretary of Commerce under
Executive Order 12742 of January 8, 1991 (56 FR 1079), as amended.
* * * * *
Sec. 700.11 [Amended]
9. Section 700.11(b) is amended by revising the term ``authorized
programs'' to read ``approved programs''.
10. Section 700.12 is amended by revising paragraph (c) to read as
follows:
Sec. 700.12 Elements of a rated order.
* * * * *
(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 regulation and that the requirements of this
regulation are being followed; and
* * * * *
11. Section 700.13 is amended:
a. By adding a new paragraph (b)(4);
b. By removing paragraphs (c)(5), (c)(6), and (c)(7);
c. By redesignating paragraph (c)(8) as paragraph (c)(5) and
amending redesignated paragraph (c)(5) by adding the phrase ``or the
Selective Service Act and related statutes'' following the phrase ``the
Defense Production Act'';
d. By revising paragraph (d); and
e. By adding an OMB control number; as follows:
[[Page 51395]]
Sec. 700.13 Acceptance and rejection of rated orders.
* * * * *
(b) Mandatory rejection. * * *
(4) If a person is unable to fill all 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.
* * * * *
(d) Customer notification requirements. (1) A person must accept or
reject a rated order in writing or electronically within fifteen (15)
working days after receipt of a DO rated order and within ten (10)
working days after receipt of a DX rated order. If the order is
rejected, the person must give reasons in writing (not 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)
working days.
[The information collection requirements in paragraphs (d)(1) and
(d)(2) are approved by the Office of Management and Budget under
control number 0694-0053.]
12. Section 700.14 is amended by revising paragraph (c) to read as
follows:
Sec. 700.14 Preferential scheduling.
* * * * *
(c) Conflicting rated orders. (1) If a person finds that
production, delivery, or performance against any accepted rated orders
conflicts with production, delivery, or performance against other
accepted rated orders of equal priority status, the person shall give
preference to the conflicting orders in the sequence in which they were
received (not to the required delivery dates). If the conflicting rated
orders were received on the same day, the person shall give preference
to those orders which have the earliest delivery dates.
(2) If a person is unable to resolve rated order production,
delivery, or performance conflicts under these rules, the person should
promptly seek special priorities assistance as provided in Secs. 700.50
through 700.54. If the person's customer objects to the rescheduling of
a rated order, the customer should promptly seek special priorities
assistance as provided in Secs. 700.50 through 700.54. For any rated
order against which delivery or performance will be delayed, the person
must notify the customer as provided in Sec. 700.13(d)(2).
* * * * *
13. Section 700.17 is amended:
a. By removing the parenthetical phrase ``(except as provided in
Sec. 700.31(d)--Controlled materials program identification symbols)''
in paragraph (b)(2);
b. By removing the parenthetical phrase ``(not applicable to
controlled materials producers)'' in paragraph (b)(3);
c. By removing the phrase found at the end of the paragraph,
``except as provided in Sec. 700.31(d) (Controlled materials program
identification symbols)'', in paragraph (c).
d. By revising paragraph (d)(1);
e. By redesignating paragraph (d)(2) as (d)(3);
f. By adding a new paragraph (d)(2); and
g. By revising paragraph (f); as follows:
Sec. 700.17 Use of rated orders.
* * * * *
(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. 700.12, are included on the order with the statement required in
Sec. 700.12(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 Defense Priorities and Allocations System
regulation (15 CFR part 700) 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. 700.13 and give preferential
treatment only to the rated quantities as required by this regulation.
This regulation may not be used to give preferential treatment to the
unrated portion of the order.
* * * * *
(f) A person is not required to place a priority rating on an order
for less than $100,000 provided that delivery can be obtained in a
timely fashion without the use of the priority rating.
14. Section 700.18 is amended:
a. By adding a new paragraph (a)(2)(v);
b. By revising paragraph (b)(1); and
c. By removing the first item listed, ``communication services'',
and the parenthetical phrase, ``(as defined in Schedule III)'' which
follows the item, ``Copper raw materials'', in paragraph (b)(3); as
follows:
Sec. 700.18 Limitations on placing rated orders.
(a) * * *
(2) * * *
(v) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons.
(b) Jurisdictional limitations. (1) The priorities and allocations
authority for certain items has been delegated under Executive Orders
12919 and 12742, other executive order, or Interagency Memoranda of
Understanding to other agencies. Unless otherwise agreed to by the
concerned agencies, the provisions of this regulation are not
applicable to these items which include:
(i) Food resources, food resource facilities, and the domestic
distribution of farm equipment and commercial fertilizer (Department of
Agriculture--see Attachment A to DPAS Delegation 1 in Appendix I to
Part 700 concerning combat rations);
(ii) 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
(Department of Energy);
(iii) Health resources (Department of Health and Human Services);
(iv) All forms of civil transportation (Department of
Transportation);
(v) Water resources (Department of Defense/U.S. Army Corps of
Engineers);
(vi) Communications services (National Communications System under
Executive Order 12472 of April 3, 1984); and
(vii) Mineral resources and mineral processing facilities
(Department of the Interior/U.S. Geological Survey--see Memorandum of
Understanding Between Interior and Commerce in DPAS Appendix II to Part
700).
* * * * *
15. Section 700.21 is amended:
a. By revising paragraph (a);
b. By revising the phrase ``materials or equipment'' to read
``materials, equipment, or services'' in paragraphs (b)(2), (c)
introductory text, (c)(1) introductory text, and (d); and
c. By revising the term ``authorized programs'' to read ``approved
programs'' in paragraph (f); as follows:
[[Page 51396]]
Sec. 700.21 Application for priority rating authority.
(a) For projects believed to maximize domestic energy supplies, a
person may request priority rating authority for scarce, critical, and
essential supplies of materials, equipment, and services (related to
the production of materials or equipment, or the installation, repair,
or maintenance of equipment) by submitting DOE Form PR 437 to the
Department of Energy. Blank applications and further information may be
obtained from the U.S. Department of Energy, Office of Clearance and
Support, Field/Headquarters Support Division, Forrestal Building, 1000
Independence Avenue, S.W., Washington, D.C. 20585; Attn.: PR-132.
* * * * *
16. Subpart F is amended:
a. By revising the Subpart heading;
b. By revising Sec. 700.30; and
c. By removing Sec. 700.31; as follows:
Subpart F--National Security Emergency Preparedness and Critical
Items
Sec. 700.30 Priorities and allocations in a national security
emergency.
(a) In the event of a national security emergency, special rules
may be established as needed to supplement this regulation, thus
ensuring rapid industrial response and the timely availability of
critical industrial items and facilities to meet the urgent defense or
major disaster emergency requirements of approved programs.
(1) National security emergency. A ``national security emergency''
is defined in section 101(a) of E.O. 12656 (November 18, 1988), as
amended, as any occurrence, including a natural disaster or an
accidental or man-caused major disaster event such as military attack,
technological emergency, or other emergency, that seriously degrades or
seriously threatens the national or economic security of the United
States.
(2) Emergency official actions. (i) As needed, this regulation may
be supplemented to include additional definitions to cover civilian
emergency preparedness industrial items, support for essential civilian
programs, and provisions for the taking of certain emergency official
actions under sections 700.60 through 700.63.
(ii) Emergency official actions may include:
(A) Controlling inventories of critical and scarce defense and/or
emergency preparedness items;
(B) Restricting the purchase, use, or distribution of critical and
scarce defense and/or emergency preparedness items, or the use of
production or distribution facilities, for non-essential purposes; and
(C) Converting the production or distribution of non-essential
items to the production or distribution of critical and scarce defense
and/or emergency preparedness items.
(3) Allocation of critical and scarce items and facilities. (i) As
needed, this regulation may be supplemented to establish special rules
for the allocation of scarce and critical items and facilities to
ensure the timely availability of these items and facilities for
approved programs, and to provide for an equitable and orderly
distribution of requirements for such items among all suppliers of the
items. These rules may provide for the allocation of individual items
or they may be broad enough to direct general industrial activity as
required in support of emergency requirements.
(ii) Allocation rules (i.e., controlled materials programs) were
established in response to previous periods of national security
emergency such as World War II and the Korean Conflict. The basic
elements of the controlled materials programs were the set-aside (the
amount of an item for which a producer or supplier must reserve order
book space in anticipation of the receipt of rated orders), the
production directive (requires a producer to supply a specific
quantity, size, shape, and type of an item within a specific time
period), and the allotment (the maximum quantity of an item authorized
for use in a specific program or application). These elements can be
used to assure the availability of any scarce and critical item for
approved programs. Currently, a set-aside applies only to metalworking
machines (see Sec. 700.31).
(4) In the event that certain critical items become scarce, and
approved program requirements for these items cannot be met without
creating a significant dislocation in the civilian market place so as
to create appreciable hardship, Commerce may establish special rules
under section 101(b) of the Defense Production Act to control the
general distribution of such items in the civilian market.
(b) Regional Emergency Coordinators. (1) If due to a catastrophic
national security emergency event, communications with Commerce
headquarters in Washington, D.C. are severed, DPAS Emergency Delegation
1 will provide authority to the Regional Emergency Coordinators (REC)
located in the Standard Federal Region Council cities (Boston, New
York, Philadelphia, Atlanta, Dallas, Kansas City, Chicago, Denver, San
Francisco, and Seattle) to represent the Secretary of Commerce, and as
necessary, act for the Secretary to carry out the emergency industrial
production and distribution control functions of Commerce as set forth
in this regulation, in any supplement thereto, or other applicable
authority. See DPAS Emergency Delegation 1 (Appendix V to Part 700) for
further information about the authority and duties of the RECs, and the
effective date of the Delegation.
(2) If DPAS Delegation 1 is implemented due to a catastrophic
national security emergency event, requests for special priorities
assistance under sections 700.50-55 of this regulation should be filed
with the nearest Regional Emergency Coordinator located in one of the
Standard Federal Region Council cities as provided in DPAS Delegation 1
(Appendix V to Part 700).
17. Subpart G is amended:
a. By removing Sec. 700.40;
b. By redesignating Sec. 700.41 as Sec. 700.31 in Subpart F; and
c. By removing the subpart heading and reserving Subpart G for
future use; as follows:
Subpart G--[Reserved]
18. Section 700.50(c) is amended by revising the term ``ITA-999''
to read ``BXA-999'' each of the three times it appears in the
paragraph; by revising the term ``(OMB #0625-0015)'' to read ``(OMB
#0694-0057)''; and by removing the comma followed by the phrase ``any
Commerce District Office''.
19. Section 700.54 is amended by revising the section heading and
the second sentence of the introductory text, as follows:
Sec. 700.54 Instances where assistance may not be provided.
* * * * *
Examples where assistance may not be provided include situations
when a person is attempting to:
* * * * *
Sec. 700.55 [Amended]
20. Section 700.55 is amended:
a. By revising the term ``authorized programs'' to read ``approved
programs'' in paragraph (a);
b. By revising the term ``Canadian Department of Supply and
Services'' to read ``Canadian Public Works and Government Services
Canada'' in paragraphs (b)(2), (b)(3), (b)(4), (b)(5), and (b)(6); and
c. By revising the term ``ITA-999'' to read ``BXA-999'' in
paragraph (b)(6).
[[Page 51397]]
Secs. 700.70, 700.71, 700.72, 700.23, 700.75, 700.80, 700.91 [Amended]
21. The phrase ``the Selective Service Act and related statutes,''
is added following the phrase ``the Defense Production Act,'' wherever
it appears in the following places:
Sec.
700.70(a)
700.71(a)
700.71(c)(1)
700.71(c)(2)
700.71(c)(3)
700.72(a)
700.73(a)
700.73(b)
700.75
700.80(a)(2)
700.91(d)
22. Section 700.72(b) is amended by revising the term ``Assistant
General Counsel for International Trade'' to read ``Chief Counsel for
Export Administration''.
23. Section 700.74 is amended:
a. By revising paragraph (a);
b. By removing paragraph (b);
c. By redesignating paragraph (c) as paragraph (b), and paragraph
(d) as paragraph (c); as follows:
Sec. 700.74 Violations, penalties, and remedies.
(a) Willful violation of the provisions of Title I or Sections 705
or 707 of the Defense Production Act, the priorities provisions of the
Selective Service Act and related statutes, this regulation, or an
official action, is a crime and upon conviction, a person may be
punished by fine or imprisonment, or both. The maximum penalty provided
by the Defense Production Act is a $10,000 fine, or one year in prison,
or both. The maximum penalty provided by the Selective Service Act and
related statutes is a $50,000 fine, or three years in prison, or both.
* * * * *
24. The term ``Office of Industrial Resource Administration'' is
revised to read ``Office of Strategic Industries and Economic
Security'' in the following places:
Secs. 700.80, 700.81, 700.93 [Amended]
Sec.
700.80(a)
700.80(c)
700.80(d)
700.81(a)
700.81(b)
700.93
25. The phrase ``Assistant Secretary for Trade Administration'' is
revised to read ``Assistant Secretary for Export Administration'' in
the following places:
Sec.
700.80(d)
700.81(a)
700.81(b)
700.81(d)
700.81(e)
700.81(f)
700.81(g)
700.81(h)
26. Section 700.81(b) is amended by revising the term
``International Trade Administration'' to read ``Bureau of Export
Administration''.
27. Section 700.91(a) is amended by revising the term ``(OMB #0625-
0107)'' to read ``(OMB #0694-0053)''.
28. Section 700.93 is amended by revising the phrase ``telephone:
(202) 377-4506'' to read ``telephone: (202) 482-3634, or FAX: (202)
482-5650''.
Schedule 1 to Part 700--[Amended]
29. Schedule 1 to Part 700 is amended:
a. By revising the column heading ``Authorized Program'' to read:
``Approved Program''; and by revising the title of the Schedule and the
first paragraph of the two paragraph explanation of the Schedule;
b. By removing the following program identification symbols and
associated authorized program names from the Schedule: ``C8--Controlled
materials for Defense Industrial Supply Center (DISC)'', ``H2--
Controlled materials producers'', ``H3--Further converters (controlled
materials)'', and ``H4--Distributors of controlled materials'';
c. By removing the term ``Federal Aviation Administration'' from
the list of Associated Agencies of the Department of Defense contained
in footnote 1;
d. By adding the following program identification symbols and
associated approved program names to the Schedule: ``C1--Food resources
(combat rations)'' under the ``Defense Programs'' heading; and ``H8--
Special projects'', under the ``Other Defense, Energy and Related
Programs'' heading;
e. By revising the ``Other Energy Programs'' heading to read:
``Domestic Energy Programs''; and revising the ``F3'' program name
``Construction and Maintenance'' to read: ``Construction, repair, and
maintenance''; and
f. By revising the ``N1'' program name ``Approved civil defense
programs'' to read ``Emergency Preparedness Activities''; as follows:
Defense Priorities and Allocations System
Schedule 1 to Part 700--Approved Programs and Delegate Agencies
The programs listed in this schedule have been approved for
priorities and allocations support under this regulation. They have
equal preferential status.
* * * * *
Schedule II to Part 700--[Amended]
30. Schedule II to part 700 (Controlled Materials), Schedule III to
part 700 (Technical Definitions of Controlled Materials Products),
Schedule IV to part 700 (Copper Controlled Materials Producers' Set-
aside Base and Percentages), and Schedule V to part 700 (Nickel Alloys
Controlled Materials Producers' Set-aside Base and Percentages) are
removed.
Issued: September 29, 1997.
William V. Skidmore,
Assistant Secretary (Acting) for Export Administration.
[FR Doc. 97-26109 Filed 9-30-97; 8:45 am]
BILLING CODE 3510-DT-P
