¢ A Memorandum of Understanding between DOE and DOC spells out the respective
jurisdictions and responsibilities of these two departments for products and equipment
associated with the production of petroleum and gas.

3.4.2. Use of DPA Section 101 Authorities to Reduce Interruption of Energy Resources

Use of the priority authority was considered by DOE to support restoration of electric service
following Hurricane Ike. Through DOE discussions with the suppliers of needed components,
however, the timely procurement of needed materials was achieved without resorting to priority-
rated orders. It is rarely necessary to consider use of the priority authority to address emergency
supply needs to restore electric power, because it is common industry practice for affected
utilities to “borrow” needed components from unaffected utilities, when such components are
available. There was no need to invoke the priority authority during 2008 to support timely
restoration of energy infrastructure operations.

DOE includes priority ratings in its maintenance and operations contracts for national
laboratories and other facilities that support DOD nuclear programs. These contracts support
efforts to protect and restore operations at these facilities, in the event of a disruption caused by
an act of terrorism, natural catastrophe, or other similar national emergency.

3.4.3. Use of other DPA Authorities to Reduce Potential Interruptions in Domestic Energy
Operations

DOE is currently partnering with DOD in a DPA Title III project to establish large-volume, high-
quality, domestic production capacity for a second-generation high temperature superconductor
(HTS) coated conductor. The conductor, based on yttrium barium copper oxide (YBCO)
material, is a higher-performance, lower-cost substitute for first-generation HTS wire. While the
driving force behind this project is potential applications in defense systems, resulting
improvements in material quality and a lower material cost will stimulate use of the YBCO
coated conductor in electric power applications, such as transformers, transmission cables,
motors, fault current limiters, and generators. The project is establishing two domestic sources
of YBCO coated conductor and is projected to accelerate use of this second-generation HTS
material in military and electric utility applications by five to seven years.

The YBCO project is just one element of DOE’s efforts to partner with industry to develop cost-
effective transmission solutions, including advanced composite conductors, high temperature
superconductors, and wide area measurement systems. High temperature superconductors have
the potential to play an important role in the future of our nation’s electricity grid.

In addition to the YBCO project, DOE is exploring other potential applications for DPA Title III
authorities to improve the reliability and efficiency of domestic energy operations and to
improve capabilities of the domestic industrial base to support rapid restoration of energy
infrastructure capabilities that have been disrupted by natural or man-caused emergencies.

DOE is also exploring possible uses for voluntary agreements to support energy sector
emergency preparedness and response activities. Voluntary agreements could allow energy

16


ISER conducted emergency energy operations in response to a range of major disasters during
2008, including the flooding in the Midwest, the wildfires in California, and several hurricanes.
For example, during the three-week period from late August to mid September, when three
successive hurricanes — Gustav, Hanna, and Ike — made landfall in the United States, ISER
provided ESF #12 support in five FEMA Regions at the request of Federal Coordinating Officers
in these regions. By the end of Hurricane Ike, DOE had deployed fifty-nine responders in
FEMA Regions II, III, 1V, V and VI, where they successfully supported FEMA’s mission to help
disaster victims and facilitate power restoration. The relationships that the DOE Regional
Coordinators had established in the affected regions, in combination with the work that ISER had
done to establish relationships in the energy sectors, contributed to the energy sector’s disaster
preparedness in these regions and helped ensure timely restoration of energy infrastructure
operations that had been disrupted by the hurricanes.

2.5. Department of Transportation

E.O. 12919 assigns the Department of Transportation the lead role for implementing the Defense
Production Act in the transportation sector. This allows DOT to work with all elements of the
government, including DHS, to provide appropriate implementation of the DPA while balancing
the ongoing transportation needs of the nation. In addition to DOT, several elements of the
Department of Homeland Security interact with transportation entities. Under the NIPP, DHS,
via the Transportation Security Administration, is the government coordinator for the
transportation sector. TSA has been designated as the lead for the transportation sector for
security issues (and collaborates with DOD on security issues) and transportation is one of the
critical infrastructures coordinated by the DHS Infrastructure Protection Division. F EMA
provides transportation logistics associated with a Presidential-declared disaster. The two
Departments work together closely, with ongoing technical programs and quarterly coordination
meetings at the policy and Secretarial levels.

10


© Geostationary Operational Environmental Satellite, R-Series program, National Oceanic
and Atmospheric Administration, DOC (to support timely launch of satellites that will be
used to detect and track severe weather and provide vital weather forecasts and warnings
necessary for emergency planners to protect American lives and property).

FEMA also authorized Federal Coordinating Officers to place priority ratings on FEMA or other
DHS contracts or orders for emergency preparedness and response activities, including
restoration of CIKR operations (as needed), involving the following disasters:

e Midwest floods

e Hurricane Gustav

e Hurricane Ike.
3.8 Conclusion
DPA authorities, particularly the Section 101 authorities, have been used for critical
infrastructure protection and restoration. Examples of such use were provided in this chapter.
Federal departments with authority for priorities and allocations have been updating their
procedures to use this authority for preparedness and CIKR-related activities, Beyond the actual
uses of priority ratings to support CIKR operations, an increasing level of attention is being

given to DPA authorities as tools for a full spectrum of emergency preparedness, response, and
Tecovery activities, including critical infrastructure protection and response.

20


1. Introduction

1.1. Purpose and Scope

This report was prepared pursuant to Subsection 1002(b) of the Implementing Recommendations
of the 9/11 Commission Act of 2007 (Public Law 1 10-53). Subsection 1002(b) directs the
Secretary of Homeland Security to submit an annual report to Congress on actions taken by the
Federal Government to ensure, in accordance with Subsections (a) and (c) of Section 101 of the
Defense Production Act of 1950 (DPA) (50 U.S.C. App. 2071), the preparedness of industry to
reduce interruption of critical infrastructure and key resource (CIKR)! operations during an act
of terrorism, natural catastrophe, or other similar national emergency.” This report focuses on
planning to protect and restore CIKR and implementation of the DPA Section 101 authority for
these purposes.

This report was prepared by the Department of Homeland Security (DHS), in cooperation with
the Departments of Agriculture (USDA), Commerce (DOC), Defense (DOD), Energy (DOE),
and Transportation (DOT). This report is being submitted to the Senate Committees on Banking,
Housing, and Urban Affairs and Homeland Security and Governmental Affairs, and the House
Committees on Financial Services and Homeland Security.

Development of this report involved: (1) conducting interagency meetings to provide direction
and coordination for the drafting of each department’s input; (2) drafting of input by personnel
engaged in DPA programs and CIKR protection and restoration activities; (3) integrating inputs
into a report; and (4) reviewing and approving the consolidated report by departments whose
actions are described in this report.

1.2. Background
1.2.1. Protection of Critical Infrastructure and Key Resources (CIKR)

Protection of the Nation’s critical infrastructure and key resources is one of the core missions of
the Department of Homeland Security. Through the efforts of its Office of Infrastructure
Protection (DHS/IP), DHS is in the forefront of ensuring industry preparedness to reduce
interruption of CIKR operations. DHS works with industry on a daily basis to reduce both the
likelihood and consequences of interruptions to CIKR operations due to terrorism, natural
catastrophes, or other national emergencies.

' As defined in the Homeland Security Act of 2002, key resources are “publicly or privately controlled resources
essential to the minimal operations of the economy and government.”

* Subsection 1002(b) reads as follows: “(b) Report on Industry Preparedness.--Not later than 6 months after the last
day of fiscal year 2007 and each subsequent fiscal year, the Secretary of Homeland Security, in cooperation with the
Secretary of Commerce, the Secretary of Transportation, the Secretary of Defense, and the Secretary of Energy,
shall submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on Homeland Security
and Governmental Affairs of the Senate and the Committee on Financial Services and the Committee on Homeland
Security of the House of Representatives a report that details the actions taken by the Federal Government to ensure,
in accordance with Subsections (a) and (c) of Section 101 of the Defense Production Act of 1950 (50 U.S.C. App.
2071), the preparedness of industry to reduce interruption of critical infrastructure and key resource operations
during an act of terrorism, natural catastrophe, or other similar national emergency.”

1


infrastructure businesses to develop and implement coordinated plans for emergency actions to
mitigate disruptions caused by catastrophic events.

3.4.4. Summary

DOE has not encountered emergency conditions requiring use of DPA Sections 101(a) and
101(c) authorities to reduce interruptions in energy supplies caused by natural or man-caused
disasters since the DPA definition of “national defense” was expanded in 2003 to include
“critical infrastructure protection and restoration.” Nevertheless, in cooperation with DHS,
DOC, and DOD, DOE has been planning and exercising possible use of these authorities to
address emergency conditions impacting energy infrastructure operations. DOE has considered
the use of these authorities in response to a number of emergency preparedness and disaster
response cases since 2003 but has determined, in each case, that priorities or allocations action
was not needed to protect or restore the impacted energy supplies. The fact that these authorities
were not used in 2008 for protection and restoration of energy resources does not lessen their
potential importance for addressing energy supply problems caused by catastrophic disasters or
other threats to national defense and homeland security.

3.5. Department of Homeland Security

In December 2005, DHS/FEMA requested that DOC update DPAS Delegation 4 to cover the
spectrum of DHS programs eligible for DPAS support. In March 2006, the revised delegation
was issued by DOC/BIS. It authorizes and provides a procedure for handling requests from
owners and operators of critical infrastructure to place priority rated contracts and orders for
industrial resources in support of critical infrastructure protection and restoration activities.
Delegation 4 also provides procedures for use of priority ratings in support of: (1) approved DHS
programs; (2) state, local and tribal government programs that involve disaster preparedness,
mitigation, response, and recovery activities; and (3) programs of other Federal department and
agencies that involve essential civilian needs determined by DHS to be necessary or appropriate
to promote the national defense. The previous DPAS Delegation 4 had been issued to FEMA in
1998 and did not account for the broadened DPA definition of “national defense” to include
“critical infrastructure protection and restoration.”

In June 2006, the FEMA Administrator, acting under authority delegated by the Secretary of
Homeland Security, determined that eight categories of homeland security programs, including
critical infrastructure protection and restoration, are approved for DPAS support. These eight
approved program categories are:

¢ Federal emergency preparedness, mitigation, response, and recovery

* State, local, tribal government emergency preparedness, mitigation, response, and
recovery

e Intelligence and warning systems

¢ Border and transportation security

17


¢ 46 CFR Part 345—Restrictions Upon the Transfer or Change in Use or in Terms
Governing Utilization of Port Facilities. This regulation requires prior approval of the
National Shipping Authority (NSA) - MARAD’s emergency operations mode — to
transfer or change utilization of port facilities, “to meet the requirements of the national
security”

e 46 CFR Part 346—Federal Port Controllers. This regulation prescribes the standard form
of agreement between the NSA and port authorities for the appointment and functions of
Federal Port Controllers during national defense emergencies

© 46 CFR Part 347—Operating Contract. This regulation prescribes the standard form of
contract to be entered into between the NSA and marine terminal operators during civil
defense emergencies or national emergencies declared by the President.

DOT is developing procedures to address the recommendations in the Government
Accountability Office (GAO) report titled “Defense Production Act: Agencies Lack Policies and
Guidance for Use of Key Authorities,” GAO-08-854. Although DOT has internal protocols for
its prioritization and allocation authorities, the GAO Report recommended, and DOT agreed, that
the Department should develop and implement a priorities and allocation system. DOT
anticipates finalizing its procedures in the coming year.

3.7. Use of Priorities and Allocations for Protection and Restoration of CIKR Operations

DPAS Delegation 4 authorizes DHS to place priority rated contracts and orders in support of
DHS and State, local, and tribal government programs determined eligible by DHS for DPAS
support. The Secretary of Homeland Security re-delegated his authority to the DHS/FEMA
Administrator. Both DHS/FEMA and DOC are involved in DPAS actions involving use of
priority ratings by other Federal agencies or owners and operators of critical infrastructure for
civilian programs involving emergency preparedness or critical infrastructure operations.
DHS/FEMA determines that the program is “necessary and appropriate to promote the national
defense” and requests that DOC authorize use of a DPAS priority rating to support the civilian
program, as appropriate.

There were several cases involving use of the DPAS in support of emergency preparedness and
CIKR operations (not involving the Defense Industrial Base) during 2008, including:

¢ National Response Coordination Center, FEMA (to ensure timely upgrade of equipment)

¢ Restoration of the Federal Court House in Cedar Rapids, Iowa (to repair damage caused
by the Midwest floods)

¢ Greater New Orleans Hurricane and Storm Damage Risk Reduction System, USACE (to
support timely completion of this $14.6-billion program by June 2011, as mandated by
Congress)

¢ FEMA National Radio System (to ensure timely upgrade of emergency radio equipment)

19)


3.3.3. Special Priorities Assistance

Although the DPAS is largely self-executing, the contractor or DOD may ask DOC for SPA to
resolve any problem that may occur. SPA is a process used to:

¢ Expedite delivery at any level of the supply chain to meet a specific need or to accelerate
delivery under a rated order due to a change in military urgency;

¢ Resolve delivery conflicts among various rated orders; and

e Authorize an industrial priority rating for foreign nation defense contracts within the
United States when such authorization would further U.S. national defense interests.

Any entity within the acquisition or production supply chain of a rated order may request SPA.
If SPA requests cannot be resolved within DOD, the Deputy Under Secretary of Defense for
Industrial Policy is authorized to endorse the request for SPA and forward it to DOC for action.
The table below lists examples of SPA requests submitted to DOC during calendar year 2008.

TABLE 3-1. Examples of DPAS Special Priorities Assistance Cases in 2008

DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM/

SPECIAL PRIORITIES ASSISTANCE CASES — 2008

Date(s) Item Assistance for Summary
02/07, Machine repairs for armor U.S. Steel Mill Provided rating authority to expedite repair and
08/08 production resume production
07/08 Counter Radio Controlled Joint IED Defeat | Prepared justification and obtained SECDEF
Improvised Explosive Organization approval to extend DX authority
Device
06/07, | Mine Resistant Ambush Joint MRAP Engaged multiple industries to resolve capacity
09/07 Protected Vehicle & Route | program, Army constraints.
Clearance Vehicle(s) programs, & UK
program
09/08 New Orleans Levees U.S. Army Corps | Prepared priority rating justification and secured
of Engineers DHS sponsorship and DOC approval
10/08 Intelligence, Surveillance, ISR Task Force Engaged multiple industries to resolve capacity
Reconnaissance Systems constraints,
(ISR)

Source: ODUSD (IP)

The SPA request involving New Orleans levees is particularly noteworthy in the context of this
report. It involved the $14.6-billion New Orleans Hurricane and Storm Damage Risk Reduction
System (HSDRRS) program. USACE submitted a SPA request for the HSDRRS program to
enable completion by 2011. Civil works projects of this magnitude typically require eight to ten
years to complete. The SPA request was needed, because DPA priorities and allocations
authority may not be used in support of a civilian program, unless DHS determines that the
program is necessary or appropriate to support the national defense, which is defined to include
emergency preparedness activities conducted pursuant to title VI of the Stafford Act and critical
infrastructure protection and restoration. In response to the SPA request, DHS provided the

14


2. Planning for CIKR Protection and Restoration

This chapter highlights a number of key elements of emergency preparedness planning efforts,
both Government-wide and within several Federal departments, to address CIKR protection and
restoration.

2.1. Emergency Preparedness Planning

DHS is responsible for coordinating most interagency emergency preparedness planning efforts
and CIKR protection programs, including the National Preparedness Guidelines, the National
Response Framework (NRF), and the NIPP. All of these planning documents address reducing
interruptions of CIKR operations under emergency conditions.

The National Planning Scenarios are among the key elements of the National Preparedness
Guidelines’. The scenarios form the basis for coordinated Federal planning, training, exercises,
and grant investments needed to prepare for emergencies of all types. HSPD-8 Annex I commits
the Federal Government to complete families of interagency and agency-specific contingency
plans for these 15 National Planning Scenarios. The strategic plans and concept plans for these
scenarios are currently being developed. Each of the plans will mention DPA authorities in the
base plan and addresses these authorities, including the Section 101 authorities, in more detail in
the “Administration and Resources” section.

The NRF” provides a guide to all-hazards incident response. The Critical Infrastructure and
Key Resource Support Annex to the Framework highlights the importance of the DPA in
providing specific authority to expedite deliveries and strengthen production capabilities for
CIKR protection and restoration activities.

Homeland Security Presidential Directive (HSPD) 7 is implemented through the NIPP!'. The
NIPP describes the risk management framework used by DHS and other Federal agencies to
identify, assess, and prioritize risks to CIKR. It also describes the sector partnership model that
enables these government agencies to work effectively with the private sector to manage CIKR
risks. The NIPP partnership framework allows DHS to provide national leadership and cross-
sector oversight, while the Federal Sector-Specific Agencies manage specific CIKR protection
activities in their sectors. Using this framework, DHS, the SSAs, and other government and
private sector partners are implementing consistent processes to:

¢ Improve CIKR preparedness and protective measures;
¢ Develop and reinforce plans through training and exercises;

¢ Use DPA authorities in support of CIKR protection and restoration activities; and

° See http://www.dhs.gov/xprepresp/publications/gc_1189788256647.shtm.
° See http://www. fema.gov/emergency/nrf/mainindex.htm.
" See http://www.dhs. gov/xprevprot/programs/editorial_0827.shtm.

6


The 18 CIKR sectors and the SSAs are listed in Table 1-1.

TABLE 1-1. Sector-Specific Agencies for CIKR

Department of Agriculture Agriculture and Food

Department of Health and Human Services?

Department of Defense Defense Industrial Base
Department of Energy’ Energy
Department of Health and Human Services Health Care and Public Health
Department of the Interior National Monuments and Icons
Department of the Treasury Banking and Finance
Environmental Protection Agency Drinking Water and Water Treatment Systems
Department of Homeland Security
Office of Infrastructure Protection Chemical

Commercial Facilities

Critical Manufacturing

Dams

Emergency Services

Nuclear Reactors, Materials, and Waste
Office of Cyber Security and Telecommunications | Information Technology

Telecommunications
Transportation Security Administration Postal and Shipping
Transportation Security Administration/U.S, Coast | Transportation Systems®
Guard’
Immigration and Customs Enforcement/Federal Government Facilities

Protective Service

1.2.2. Defense Production Act

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.
DPA provisions are focused primarily on DOD acquisition needs and support for military
conflicts overseas. Except for several significant changes to the DPA definition of “national
defense,” which now includes “emergency preparedness activities” conducted pursuant to title
V1 of the Stafford Act and “critical infrastructure protection and restoration,” virtually no other
changes have been made to DPA Declaration of Policy or authorities to address homeland
security missions, including protection of CIKR operations.

Subsection 1002(b) of the Implementing Recommendations of the 9/11 Commission Act of 2007
specifically refers to the authorities in DPA Subsections 101(a) and 101(c). These Subsections

“ The Department of Agriculture is responsible for agriculture and food (meat, poultry, and egg products).

* The Department of Health and Human Services is responsible for food other than meat, poultry, and egg products.
° The Energy Sector includes the production, refining, storage, and distribution of oil, gas, and electric power, except
for commercial nuclear power facilities.

’ The U.S, Coast Guard is the SSA for the maritime transportation mode.

* As stated in HSPD-7, the Department of. Transportation and the Department of Homeland Security collaborate on
all matters relating to transportation security and transportation infrastructure protection.

3


Policies for CIKR protection and preparedness are established through a number of statutes,
executive orders, Presidential directives, and national strategies. Chief among these are: the
Homeland Security Act of 2002; Homeland Security Presidential Directive (HSPD) 7 (“Critical
Infrastructure Identification, Prioritization, and Protection”); the National Strategy for Homeland
Security of 2007; the National Strategy for the Physical Protection of Critical Infrastructure and
Key Assets; the National Strategy for Securing Cyberspace; and the Defense Production Act.

HSPD-7 charges the Secretary of Homeland Security with the responsibility for coordinating the
national effort to enhance CIKR protection. The directive also designates Sector-Specific
Agencies (SSAs) with responsibility for coordinating planning, preparedness, and protection
activities within each of 17 identified CIKR sectors, and gives the Secretary the authority to
designate additional sectors.’ This approach provides the structure needed to address the unique
characteristics and operating models of each of the sectors.

As called for in HSPD-7, DHS developed an overarching framework, outlined in the National
Infrastructure Protection Plan (NIPP) and the associated Sector-Specific Plans (SSPs), to lead
and coordinate the risk-based approach and sector partnership model used by government and
private sector partners to identify, assess, and prioritize the implementation of risk-reduction and
protective measures.

* The Secretary exercised this authority in March 2008 to add “Critical Manufacturing” as the 18th CIKR sector.

2


determination and DOC authorized use of the DPAS in support of the HSDRRS program on
November 5, 2008.

3.3.4. The National Critical Infrastructure Protection Program

DOD does not normally employ priorities and allocations authorities in support of its Critical
Infrastructure Protection Program. However, if a defense contractor is faced with production
constraints when attempting to improve physical security or to rebuild after an incident, the DOD
can authorize that contractor to establish priority ratings for the relevant contracts and improve
delivery.

3.4. Department of Energy
3.4.1. DOE Authorities and Procedures Under DPA Subsections 101(a) and 101(c)

DOE derives its authorities and procedures with respect to DPA Subsections 101(a) and 101(c)
from several documents:

* E.O. 12919 has several provisions regarding use of priorities and allocations authority
with respect to energy resources:

© Section 201 delegates the President’s priorities and allocations authority with respect
to “all forms of energy” to the Secretary of Energy;

© Section 202 states that Section 101 authority may only be used “with respect to
energy production and construction, distribution and use, and directly related
activities” to support programs that have been determined by the Secretary of Energy
to be necessary or appropriate to promote the national defense: and

© Section 203 of E.O. 12919 delegates the President’s authority under Subsection
101(c), which involves maximizing domestic energy supplies, to the Secretary of
Commerce but provides that DOC re-delegates to DOE the authority to make the
findings described in subsection 101(c)(2)(A) that the materials (including
equipment), services and facilities are critical and essential. The Secretary of
Commerce makes the finding described in 101(c)(2)(A) that the materials (including
equipment), services, or facilities are scarce, and the finding described in subsection
101(c)(2)(B) that it is necessary to use the authority provided by subsection 101(c)(1).

¢ 10 CFR Part 221 sets forth the procedures to be used by DOE and DOD, pursuant to the
DPA, whenever the priority supply of crude oil and petroleum products is necessary or
appropriate to meet national defense needs.

¢ 10 CFR Part 216 describes and establishes the procedures to be used by DOE to make the
findings required by DPA Section 101(c)(2)(A). This regulation was updated in 2008.


In general, proposed uses of DPA Section 101 authority for protection and restoration of most
types of critical infrastructure must first be determined by DHS to be “necessary or appropriate
to promote the national defense,” although DOD or DOE could approve defense or energy-
related uses, as appropriate.

1.2.3. Defense Priorities and Allocations System

DPA authority to issue priority ratings to support the timely delivery of industrial resources is
implemented through the DPAS regulation (15 CFR Part 700). This regulation is administered
by DOC, in consultation with the heads of the departments and agencies specified in Subsection
201(a) of E.O. 12919, and is used, as authorized by DOC, by other Federal departments and
agencies and industry to support programs necessary or appropriate to promote the national
defense, including critical infrastructure protection and restoration. The key elements of the
DPAS regulation are mandatory acceptance of rated orders, preferential scheduling of rated
orders to meet delivery requirements, and extension of priority ratings to lower level suppliers
and subcontractors.

DOC has delegated specific priority rating authority with respect to industrial resources to DOD,
DOE, the General Services Administration (GSA), and DHS. DOD implements its priority
rating authority as a standard clause in most of its contracts and orders for industrial resources.
Use of the priority rating authority by the other three agencies is limited. DOE and GSA use
their authority, primarily, in support of DOD-approved programs. DHS uses its authority
primarily in support of emergency preparedness and critical infrastructure protection and
restoration activities.

Except in cases when a special agreement has been made between DOC and the department with
applicable DPA priorities and allocations authority, the DPAS cannot be used to prioritize food,
energy, health, water, and civil transportation resources. These resources are under the
jurisdictions of USDA, DOE, the Department of Health and Human Services, DOD, and DOT,
respectively, in accordance with E.O. 12919.

1.3. Report Organization

The rest of this report is organized into two chapters. Chapter 2 provides a brief description of
several major emergency preparedness planning efforts, both Government-wide and within
several Federal departments, to address critical infrastructure protection and restoration. Chapter
3 summarizes Federal actions to implement the DPA priorities and allocations authority in
support of CIKR operations.


Appendix A. Acronyms

APAS
ASD (HD&ASA)

CAL

CIKR
CIPAC
CISP

DFOs

DHS
DHS/FEMA

DHS/IP
DIB
DOC
DOC/BIS
DOD
DOE
DOT
DPA
DPAS
E.O.

ESF
GAO
GCC
GSA
HSDRRS
HSPD
HTS
ISER
ISR
MARAD
NIPP
NRF
NSA

OE

PAIR
scc
SPA

Agriculture Priorities and Allocation System

Office of the Assistant Secretary of Defense for Homeland Defense and
Americas’ Security Affairs

Critical Asset List

Critical Infrastructure and Key Resources

Critical Infrastructure Partnership Advisory Council

Critical Infrastructure Security Program

Defense Food Orders

Department of Homeland Security

Department of Homeland Security/Federal Emergency Management
Agency

Department of Homeland Security/Office of Infrastructure Protection
Defense Industrial Base

Department of Commerce

Department of Commerce/Bureau of Industry and Security
Department of Defense

Department of Energy

Department of Transportation

Defense Production Act of 1950

Defense Priorities and Allocations System

Executive Order

Emergency Support Function

Government Accountability Office

Government Coordinating Council

General Services Administration

New Orleans Hurricane and Storm Damage Risk Reduction System
Homeland Security Presidential Directive

High Temperature Superconductor

Infrastructure Security and Energy Restoration Division
Intelligence, Surveillance, Reconnaissance Systems

Maritime Administration

National Infrastructure Protection Plan

National Response Framework

National Shipping Authority

Office of Electricity Delivery and Energy Reliability

Priority Allocation of Industrial Resources

Sector Coordinating Council

Special Priorities Assistance


7A Homeland
y Security



the ASD (HD & ASA) annually. The USD (AT&L) prepares the DIB CAL by identifying
critical defense industrial base facilities that warrant increased attention from all hazards. The
most recent DIB CAL, published in March 2009, prioritizes almost 400 domestic and foreign
facilities, Facilities selected are critical prime, sub-tier and sole-source suppliers, and those that
directly support current and projected operational warfighting requirements. The Defense
Contract Management Agency, as the sector lead agency for the DIB, identifies and prioritizes
DIB assets and executes day-to-day sector management activities.

Under the security partnership framework established in the NIPP, three principal coordinating
bodies within the DIB sector have been established. The DIB Government Coordinating Council
(GCC) provides effective coordination of sector security strategies and activities, policy, and
communications across government and coordinates with the other national sectors as required.
The DIB Sector Coordinating Council (SCC), the private sector counterpart to the GCC, is an
independent, self-governed body organized by the owners and operators of the DIB. It provides
a recurring forum to enable private sector owners and operators to coordinate among themselves
on sector initiatives, including response and recovery and information sharing. The Critical
Infrastructure Partnership Advisory Council (CIPAC) was established as the framework to
enable private sector owners and operators to engage DOD, DHS, and other Federal departments
and agencies on homeland security issues. The CIPAC is a Federal Advisory Committee Act
exempt body, pursuant to section 871 of the Homeland Security Act.

DOD has developed the DIB Sector Assurance Plan and DIB SSP. The DIB Sector Assurance
Plan outlines an approach that focuses on steps to identify a list of critical assets that, if damaged
or destroyed, will result in unacceptable consequences. It also sets forth the process used to
prioritize those critical assets based on a risk assessment process; perform vulnerability
assessments on high-priority critical assets; and encourage industry actions to remediate or
mitigate adverse effects found during these assessments. The DIB SSP outlines DOD's approach
to executing its sector-specific responsibilities, follows guidance established by DHS, and
complements other DOD critical infrastructure policy.

USACE has established the Critical Infrastructure Security Program (CISP) to address the
security needs under potential terrorist threat scenarios of all the USACE infrastructures,
including administration buildings and laboratory facilities. To date, USACE has not employed
the priorities and allocations authority in support of CISP. However, USACE is currently using
this authority in support of the New Orleans Hurricane and Storm Damage Risk Reduction
System (HSDRRS) program. (See section 3.3.3 of this report.)

2.4. Department of Energy

The Department of Energy is the lead federal agency for energy resources. In coordination with
DHS, DOE is tasked with the responsibility of protecting U.S. energy infrastructure, establishing
policies and procedures regarding preparedness for and prevention of interruptions in U.S.
energy supplies caused by natural and man-caused disasters, and promoting effective response
and recovery actions to mitigate disruptions and shortfalls of energy supplies caused by such
disasters.


¢ Strengthen capabilities to develop and share threat, protective measure, and other relevant
information and analyses.

2.2, Department of Homeland Security

DHS/IP provides leadership and coordination for the national effort to reduce the risk to the
Nation’s CIKR posed by acts of terrorism and to strengthen national preparedness, timely
response, and rapid recovery in the event of an attack, natural disaster, or other emergency.
DHS/IP utilizes various authorities to implement its mission and to foster private sector
preparedness. The Defense Production Act offers important authorities in support of the
protection and preparedness missions. DHS/IP has taken aggressive measures to understand and
incorporate DPA provisions in CIKR planning efforts, as well as in its training and exercises.

DHS/IP, in collaboration with private sector and government security partners, has taken
preparatory actions to support use of DPA authorities to reduce interruptions in CIKR operations.
These actions include:

¢ Working with FEMA to develop and institute procedures to enable use of the DPA
authorities, when needed and appropriate, to reduce interruptions of CIKR operations;

¢ Incorporating the DPA as a key authority described in the NIPP, the Sector Specific Plans
(SSPs), and the CIKR Support Annex to the NRF;

¢ Developing a process to coordinate and address requests for assistance from private
sector CIKR owners and operators that recognizes the use of the DPA as a potential tool
to address incident-related disruptions; and

* Conducting workshops, technical assistance sessions, and briefings with the Partnership
for Critical Infrastructure Security, Sector Coordinating Councils, and other private sector
partners to raise awareness of the process for requesting assistance and the applicability
of the DPA.

2.3. Department of Defense

HSPD-7 assigns two broad responsibilities to DOD associated with limiting and managing risks
to CIKR operations. DOD is designated as the Sector-Specific Agency for the Defense

Industrial Base (DIB), and the United States Army Corps of Engineers (USACE) plays a
significant role in the Water and Dams sectors under the Sector-Specific Agency lead of the
Environmental Protection Agency and Department of Homeland Security, respectively. USACE
is also the lead for Emergency Support Function (ESF) #3 (Public Works and Engineering) under
the NRF.

The Office of the Assistant Secretary of Defense for Homeland Defense and Americas’ Security
Affairs (ASD (HD&ASA)) serves as the principal civilian advisor to the Secretary of Defense for
the identification, prioritization, and protection of DOD's defense critical infrastructure. In
support of the ASD (HD & ASA), the Undersecretary of Defense for Acquisition, Technology,
and Logistics (USD (AT&L)) submits the DIB Critical Asset List (CAL) (classified SECRET) to

7


authorize the President to: (1) require acceptance and preferential performance of contracts or
orders (other than contracts of employment) that he deems necessary or appropriate to promote
the national defense or to maximize domestic energy supplies; and (2) 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 or to maximize domestic energy
supplies.

The Presidents priorities and allocations authorities under DPA subsection 101(a) are delegated
to the following department heads in subsection 201(a) of E.O. 12919 (National Defense
Industrial Resources Preparedness):

¢ The Secretary of Agriculture with respect to food resources, food resource facilities, and
the domestic distribution of farm equipment and commercial fertilizer;

* The Secretary of Energy with respect to all forms of energy;

¢ The Secretary of Health and Human Services with respect to health resources;
¢ The Secretary of Transportation with respect to all forms of civil transportation;
¢ The Secretary of Defense with respect to water resources; and

© The Secretary of Commerce for all other materials, services, and facilities, including
construction materials.

The Federal Acquisition Regulation (FAR) was amended on April 22, 2008, (73 FR 21785) to
reflect the President's delegation of the Defense Production Act's priorities and allocations
authorities in Executive Order 12919, and to reflect the current provisions of the Defense
Priorities and Allocations System (DPAS) regulations of the Department of Commerce outlined
in 15 CFR Part 700. FAR Subpart 2.101 revised the definition of "national defense" to include a
reference to the DPAS definition, which includes critical infrastructure protection and
restoration.

Section 202 of E.O. 12919 provides that section 201(a) authority may be used only to support
programs that have been determined in writing as necessary or appropriate to promote the
national defense by:

¢ DOD with respect to military production and construction, military assistance to foreign
nations, stockpiling, outer space, and directly related activities;

¢ DOE with respect to energy production and construction, distribution and use, and
directly related activities; and

¢ DHS with respect to essential civilian needs supporting national defense, including civil
defense and continuity of government and directly related activities,


¢ Domestic counter-terrorism, including law enforcement

¢ Chemical, biological, radiological, and nuclear countermeasures
© Critical infrastructure protection and restoration

e Miscellaneous.

DHS is in the process of establishing policies and procedures to implement its priorities and
allocations authorities fully. This process has included:

e Analyzing DOD’s use of the DPAS for lessons learned;
¢ Publishing a FEMA DPAS Directive and FEMA DPAS Manual;
¢ Developing a Web-based DPAS training course (in development);

¢ Developing processes and procedures to ensure coordination with DHS/IP to conduct
analysis and validate CIKR-related requests;

¢ Developing a DHS DPA/DPAS website (in development); and

¢ Preparing a new regulation on the use of DPA priorities and allocations authorities on
essential civilian needs (in coordination).

3.6. Department of Transportation

DOT is delegated DPA Section 101 authority with respect to all forms of civil transportation.
Civil transportation is not covered by the DPAS, but the DPAS has been used in the past to
expedite the delivery of industrial resources for protection and restoration of transportation
facilities. DOT has DPA protocols for civil transportation that can be issued quickly in times of
crisis. In addition, the Department ensures that senior leadership and necessary decision-makers
are briefed on the applicability of the DPA and the DPAS. The Federal Aviation Administration
Crisis Management Handbook contains guidance regarding DPAS requests. DOT planning and
procedures to address civil transportation preparedness and response for emergency conditions
are addressed in ESF #1 (Transportation) of the NRF, which also addresses use of DPA
authorities under emergency conditions.

The U.S. Maritime Administration (MARAD) has four long-established regulations derived from
the DPA and relevant executive orders:

¢ 46 CFR Part 340—Priority Use and Allocation of Shipping Services. This regulation is
designed to ensure that DOD will have access, as necessary, to shipping services and port
facilities in crisis or war


Table of Contents

1. Introduction
1.1. Purpose and Scope
1.2. Background
1.2.1. Protection of Critical Infrastructure and Key
Resources (CIKR)
1.2.2. Defense Production Act
1.2.3. Defense Priorities and Allocations System
1.3. Report Organization

2. Planning for CIKR Protection and Restoration
2.1, Emergency Preparedness Planning
2.2. Department of Homeland Security
2.3. Department of Defense
2.4. Department of Energy
2.5. Department of Transportation

3. Priorities and Allocations
3.1. Department of Agriculture
3.2. Department of Commerce
3.3. Department of Defense
3.3.1. The Defense Priorities and Allocations System
3.3.2. Priority Allocation of Industrial Resource
3.3.3. Special Priorities Assistance
3.3.4. The National Critical Infrastructure Protection
Program
3.4. Department of Energy
3.4.1. DOE Authorities and Procedures Under DPA
Subsections 101(a) and 101(c)
3.4.2. Use of DPA Section 101 Authorities to
Reduce Interruption of Energy Resources
3.4.3. Use of other DPA Authorities to Reduce
Potential Interruptions in Domestic Energy
Operations
3.4.4.. Summary
3.5. Department of Homeland Security
3.6. Department of Transportation
3.7. Use of Priorities and Allocations for Protection and
Restoration of CIKR
3.8. Conclusion

Appendix A. Acronyms

iii

17
17
18
19

20


3. Priorities and Allocations

Federal departments, both individually and collectively, have taken a number of actions to
implement DPA Section 101 authorities in support of CIKR protection and restoration in recent
years. Representatives of the Federal departments with delegated DPA authorities and
responsibilities meet periodically to review DPA delegations and guidance with regard to CIKR
protection and restoration. DPA authorities, including the priorities and allocations authority,
have been incorporated into Federal emergency preparedness plans.

Currently, DOC administers the only priorities and allocations system that is being used actively
to support approved national defense programs, including critical infrastructure protection and
restoration. USDA, DOE, and DOT have priorities and allocations systems, if needed. USDA is
revising its system. This chapter describes recent and ongoing actions in all of these areas.

3.1. Department of Agriculture

USDA is delegated DPA Section 101 authority with respect to food resources, food resource
facilities, and the domestic distribution of farm equipment and commercial fertilizer. These
resources are outside the jurisdiction of the DPAS regulation. The DPA, the Stafford Act, E.O.
12656 (Assignment of Emergency Preparedness Responsibilities), and E.O. 12919 authorize the
Secretary of Agriculture to establish plans to provide for the continuation of agricultural
production, food processing, storage, and distribution through the wholesale level and to place
priorities on contracts for continuation of agricultural production during times of national
emergency. USDA previously had established six Defense Food Orders (DFOs) for publication
in the Code of Emergency Federal Regulations. However, these DFOs are outdated and no
longer fulfill emergency response and recovery requirements. To address this issue and to
Support national defense programs, including domestic emergency preparedness and CIKR
protection and restoration and to fulfill the requirements of E.O. 12919, USDA is in the process
of developing plans and regulations to establish and implement an Agriculture Priorities and
Allocation System (APAS) pursuant to its DPA Section 101 authority. The APAS will support
continuation of agricultural production by ensuring that agricultural producers, processors,
distributors, and wholesalers receive preferential scheduling for items and processes necessary to
maintain their agricultural operations during times of a declared national emergency.

Under an APAS, USDA would issue priority orders to private sector processors, distributors, and
wholesalers as a means to redirect agricultural commodities to areas of hardship. By assigning
priority-rated orders, the Secretary of Agriculture would direct a supplier to fill orders in the
priority in which they are rated. Rated orders would take precedence over nonrated orders
normally supplied by an individual or business. The purpose of this system would be to assist
the free market in meeting USDA’s needs in response to an emergency. The Secretary of
Agriculture has assigned USDA’s Farm Service Agency responsibility for preparing and
implementing priorities and allocation requirements and for handling food claims received
pursuant to DPA provisions.

Regulations for establishing and implementing the APAS are proceeding, and an interim rule is
expected to be available for publication in the Federal Register in Calendar Year 2009. In 2008,

at


3.3. Department of Defense
3.3.1. The Defense Priorities and Allocations System

The DPAS provides DOD with powerful authorities to help protect our nation. DOC has
delegated to DOD authority under the DPAS to:

e Apply priority ratings to contracts and orders supporting approved national defense
programs; and

¢ Request that DOC provide Special Priorities Assistance (SPA) to resolve problems
involving rated contracts and orders and authorize use of priority ratings by foreign firms.

Except for end items that are commonly available in commercial markets in sufficient supply and
for items to be used primarily for administrative purposes, all DOD contracts for industrial
resources (including construction contracts and Foreign Military Sales contracts) are rated orders
under the DPAS. DOD uses two levels of rating priority, identified by the rating symbols "DO"
or "DX." Ifa contractor cannot meet all required delivery dates because of schedule conflicts,
DO-rated orders automatically must be given preference over unrated orders and DX-rated
orders automatically must be given preference over DO-rated orders and unrated orders. Such
preferential treatment is necessary even if it requires the diversion of items being processed for
delivery against lower rated or unrated orders. Only the Secretary and Deputy Secretary of
Defense can authorize DOD programs to use a DX rating.

3.3.2. Priority Allocation of Industrial Resource

On occasion, military operations may require increased or accelerated delivery of weapons,
supplies, and systems. These emergent requirements may create competing demands within
DOD for limited industrial resources. The Department’s Priority Allocation of Industrial
Resources (PAIR) Task Force is charged to ensure that industrial resources are allocated among
DOD programs in a comprehensive and integrated manner, in accordance with operational
priorities. The PAIR Task Force’s mission is to:

¢ Determine the industrial resources required to accomplish emergent plans;
¢ Identify any conflicting DOD demands on these resources; and

¢ Devise approaches to resolve these conflicts based on warfighting requirements
established by the Joint Chiefs of Staff.

The Task Force typically utilizes the DPAS to implement production resource allocation
(delivery) decisions as needed to resolve competing requirements among defense-related critical
infrastructure for limited resources. The Deputy Under Secretary of Defense for Industrial
Policy usually issues a request for SPA to the Department of Commerce to allocate materials or
expedite deliveries of defense items, in accordance with PAIR decisions.

13


Executive Summary

This is the second annual report to Congress on actions taken by the Federal Government, using
the priorities and allocations authority provided in Section 101 of the Defense Production Act of
1950 (DPA), to ensure the preparedness of industry to reduce interruption of critical
infrastructure and key resource (CIKR) operations under emergency conditions. This report was
prepared in accordance with Subsection 1002(b) of the Implementing Recommendations of the
9/11 Commission Act of 2007 (Public Law 110-53). The Department of Homeland Security
(DHS) developed this report in cooperation with the Departments of Agriculture (USDA),
Commerce (DOC), Defense (DOD), Energy (DOE), and Transportation (DOT).

Section 101 authorizes the President to require acceptance and priority performance of contracts
or orders and to allocate materials, services, and facilities to promote the national defense or to
maximize domestic energy supplies. Executive Order (E.O.) 12919 delegates the President’s
priorities and allocations authorities to USDA, DOC, DOD, DOE, Health and Human Services,
and DOT with respect to resources within each of these departments’ jurisdictions. It provides
that the priorities and allocations authorities may only be used for programs that have been
determined to be “necessary or appropriate to promote the national defense” by DOD (for
military and space programs), DOE (for energy resources), or DHS (for essential civilian needs).

E.O. 12919 also directs DOC to administer the Defense Priorities and Allocations System
(DPAS), which provides guidance and procedures for the acceptance and preferential
performance of contracts or orders for resources within DOC’s jurisdiction, pursuant to E.O.
12919’s delegation to DOC. The DPAS is used by other Federal departments and agencies,
foreign governments, and industry, when authorized by DOC, to ensure timely delivery of
industrial resources needed to support approved programs.

The DPA’s definition of “national defense” was amended in 2003 to include the term “critical
infrastructure protection and restoration.” Since that time, the Executive Branch has taken a
number of actions involving section 101 authorities that include: delegations of DPA authorities
and development of DPA guidance documents; plans to use DPA authorities; and applications of
DPA authorities. During 2008, additional actions were taken by several Federal Departments to
update DPA delegations of authority and guidance and to apply the DPA priorities authority in
support of critical infrastructure protection and restoration activities. The priorities authority was
used to support: (1) timely equipment upgrades in the Federal Emergency Management
Agency’s (FEMA’s) National Response Coordination Center; (2) restoration of the Federal
Court House in Cedar Rapids, Iowa (following extensive flooding in the Midwest); (3)
improvements to the Greater New Orleans Hurricane and Storm Damage Risk Reduction
System; (4) equipment upgrades for the FEMA National Radio System; and (5) responses to
disastrous flooding in the Midwest and Hurricanes Gustav and Ike.


SSAs

SSPs
USACE

USD (AT&L)
YBCO

Sector-Specific Agencies

Sector-Specific Plans

United States Army Corps of Engineers

Undersecretary of Defense for Acquisition, Technology, and Logistics
Yttrium Barium Copper Oxide


MAY 1 5 2009

Foreword

I am pleased to present the following report, “Use of the Defense Production Act to Reduce
Interruptions in Critical Infrastructure and Key Resource Operations During Emergencies.” This
report is required by Subsection 1002(b) of the Implementing Recommendations of the 9/11
Commission Act of 2007 [Public Law 110-53]. The report is an interagency effort led by the
Federal Emergency Management Agency in the Department of Homeland Security that includes
the Departments of Agriculture, Commerce, Defense, Energy, and Transportation.

Pursuant to congressional requirements, this report is being provided to the following Members
of Congress:

The Honorable Christopher J. Dodd
Chairman, Senate Banking, Housing, and Urban Affairs Committee

The Honorable Richard C. Shelby
Ranking Member, Senate Banking, Housing, and Urban Affairs Committee

The Honorable Barney Frank
Chairman, House Financial Services Committee

The Honorable Spencer Bachus
Ranking Member, House Financial Services Committee

The Honorable Joseph I. Lieberman
Chairman, Senate Homeland Security and Governmental Affairs Committee

The Honorable Susan M. Collins
Ranking Member, Senate Homeland Security and Governmental Affairs Committee

The Honorable Bennie G. Thompson
Chairman, House Homeland Security Committee

The Honorable Peter T. King
Ranking Member, House Homeland Security Committee

Inquiries relating to this report may be directed to the Department of Homeland Security’s Office
of Legislative Affairs at (202) 447-5890.

Assistant Secretary
Office of Legislative Affairs


Within DOE, the Office of Electricity Delivery and Energy Reliability (DOE-OE) is responsible
for safeguarding critical infrastructure and key resources in the energy sector. This office leads
the effort to ensure a secure and reliable flow of energy to America’s homes, businesses,
industries, and critical infrastructures (e.g., telecommunications, transportation, water supply,
banking and finance, manufacturing, education and public health systems). DOE-OE’s role
includes preparing for and responding to energy emergencies resulting from natural or man-made
disasters. DOE-OE works closely with DHS and in partnership with industry and state and local
governments to identify energy infrastructure vulnerabilities and to develop and implement
strategies to reduce these vulnerabilities and to enable rapid restoration of capabilities disrupted
by disasters. During the previous Administration, DOE’s energy assurance activities were
conducted in direct support of the President’s National Strategy for Homeland Security and the
President’s National Energy Policy.

DOE-OE has lead responsibilities for ESF #12 of the National Response Framework when
activated by DHS for incidents requiring a coordinated Federal Response. The purpose of ESF
#12 is to facilitate the restoration of damaged energy systems and components ESF #12 is an
integral part of the larger DOE responsibility of maintaining continuous and reliable energy
supplies for the United States through preventive measures and restoration and recovery actions.
DOE-OE provides expertise, coordination with energy producer and distributors, and situation
reports. It monitors the energy infrastructure and shares information with federal, state, local,
and industry officials, as well as the public. In coordination with DHS (including FEMA and the
Coast Guard) and state, local, and tribal governments, DOE-OE plans and supports
implementation of actions to restore energy resources during response and recovery operations.
DOE-OE also works very closely with the Minerals Management Service, United States
Department of the Interior, the Environmental Protection Agency, and the Department of
Transportation to ensure that energy fuels are available to first responders and the public.

Within DOE-OE, the Infrastructure Security and Energy Restoration Division (ISER) leads the
Federal Government's effort to ensure a robust, secure, and reliable energy infrastructure. This
division supports Homeland Security Presidential Directives 7 and 8, which require DOE to
identify and prioritize critical energy assets and assist state and local governments with
disruption preparation and response. ISER works with DHS, the Federal Energy Regulatory
Commission, and other national, regional, state, and local government and commercial
organizations to:

¢ Support the national critical infrastructure protection program;
¢ Analyze infrastructure vulnerabilities and recommend preventive measures;

¢ Help other agencies prepare for and respond to energy emergencies and minimize the
consequences of an emergency;

* Develop, implement, and maintain a national energy cyber security program; and

¢ Conduct emergency energy operations during a declared emergency or National Special
Security Event in accordance with the National Response Framework.


USDA and DOC also concluded an arrangement that authorized FEMA to place priority ratings,
in accordance with the DPAS, on orders for meals ready to eat and similar items to support
FEMA’s emergency preparedness activities during the 2008 hurricane season. FEMA requested
such assistance in order to replenish its diminished stocks to support hurricane relief operations.
Also, USDA has a memorandum of understanding in place with DOC separating duties and
assignments for priorities and allocations in areas in which authorities may overlap. USDA also
cooperates with the DOE to develop an understanding for governing biofuels commodities
during times of a declared emergency.

3.2. Department of Commerce

DOC is delegated authority, through E.O. 12919, to implement the DPA priorities and
allocations provisions for industrial resources.'* DOC’s Bureau of Industry and Security
(DOC/BIS) administers this authority through the DPAS regulation. The purpose of the DPAS is
to ensure the timely availability of industrial resources to meet current national defense and
emergency preparedness program requirements and to provide an operating system to support
rapid industrial response in a national emergency. All companies in the United States must
comply with the provisions of the DPAS regulation.

DOC/BIS has delegated authority to DOD, DOE, DHS, and the GSA, to place, in accordance
with the DPAS regulation and under the authority of the Defense Production Act and E.O.
12919, priority ratings on contracts or orders for industrial resources to support programs
determined by DOD, DOE, or DHS as “necessary or appropriate to promote the national
defense.” DOC/BIS may also authorize other government agencies, foreign governments,
owners and operators of critical infrastructure, or companies to place priority ratings on contracts
or orders for industrial resources on a case-by-case basis. Such requests must first be determined
as “necessary or appropriate to promote the national defense” by DOD, DOE, or DHS.

DOC/BIS has also authorized other Federal agencies, on a case-by-case basis, to place priority
ratings on orders to expedite the delivery of industrial resources needed to enhance the protection
of government facilities, a critical infrastructure sector. In addition, DOC’s DPAS delegation to
DOD provides that DOD may authorize persons to place rated orders for delivery of production
or construction equipment required to support DOD approved programs and projects, when the
equipment is necessary for the timely performance or completion of rated contracts or orders
when timely delivery of the equipment cannot be obtained otherwise. DOD has authorized
companies in the defense industrial base, a critical infrastructure sector, to place priority ratings
on orders to expedite the delivery of industrial resources, including to support recovery from
industrial accidents that have adversely impacted production capabilities.

In 2008, DOC/BIS took action through the DPAS, in cooperation with DHS/FEMA, to support
the protection, restoration, and recovery efforts of owner/operators of critical infrastructure.
Examples are provided in section 3.7 of this report.

" For the purposes of DPAS, “industrial resources” includes all materials, services, and facilities, including
construction materials, the authority for which has not been delegated to other agencies under Executive Order
12919 (e.g., food resources, food resource facilities, and the domestic distribution of farm equipment and
commercial fertilizer; all forms of energy; health resources; all forms of civil transportation; and water resources).

12