9020 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

44. On page 82162, 

a. Second column, first full paragraph, 

line 24, the figure ‘‘$778.20’’ is 

corrected to read ‘‘$777.39’’. 

b. Third column, first partial 

paragraph, line 2, the figure ‘‘$40,466’’ 

is corrected to read ‘‘$40,424’’. 

c. Third column, under ‘‘2. Estimated 

Effects of CY 2024 ASC 

Payment System Changes’’, first 

paragraph, line 10, the figure ‘‘0.8881’’ 

is corrected to read ‘‘0.889’’. 

45. On page 82168, second column, 

first partial paragraph, line 7, the phrase 

‘‘302 hours at a cost of $6,670’’ is 

corrected to read ‘‘2,849 hours at a cost 

of $68,218’’. 

46. On page 82171, third column, in 

footnote 858 the link https://

jamanetwork.com/journals/ 

jamanetworkopen/fullarticle/2800088 is 

corrected to read ‘‘https://

jamanetwork.com/journals/ 

jamanetworkopen/fullarticle/2800083’’. 

Elizabeth J. Gramling, 

Executive Secretary to the Department, 

Department of Health and Human Services. 

[FR Doc. 2024–02631 Filed 2–6–24; 4:15 pm] 

BILLING CODE 4120–01–C 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 101 

RIN 0908–AA00 

Health Resources Priorities and 

Allocations System (HRPAS) 

AGENCY: Office of the Secretary, 

Department of Health and Human 

Services. 

ACTION: Final rule. 

SUMMARY: The Department of Health and 

Human Services (HHS) is issuing a final 

rule establishing standards and 


ddrumheller on DSK120RN23PROD with RULES1ER09FE24.017</GPH>

(1) (2) (3) (4) (5) 

All Budget 

Neutral 

Changes 

(combined 

cols 2 and 

New Wage 3) with 

Number APC Index and Market 

of Recalibration Provider Basket All 

Hospitals (all changes) Ad_justments Update Changes 

URBAN TEACHING/DSH 

TEACHING& 

DSH 1,163 -0.1 -0.1 2.9 2.9 

NO 

TEACHING/DSH 1,181 0.4 0.4 3.9 3.8 

NO 

TEACHING/NO 

DSH 9 -2.4 -1.4 -0.7 1.3 

DSHNOT 

AVAILABLE2 448 4.0 1.5 8.9 8.9 

TYPE OF OWNERSHIP 

VOLUNTARY 1 991 0.0 0.2 3.3 3.2 

PROPRIETARY 1,077 1.1 0.5 4.8 4.6 

GOVERNMENT 443 -0.3 -0.1 2.7 2.8 

CMHCs 32 6.6 0.0 9.9 9.1 

Column (1) shows total hospitals and/or CMHCs. 

Column (2) includes all final CY 2024 OPPS policies and compares those to the CY 2023 OPPS. 

Column (3) shows the budget neutral impact of updating the wage index by applying the final FY 2024 hospital inpatient wage index. 

The final rural SCH adjustment would continue our current policy of 7 .1 percent so the budget neutrality factor is 1. The fmal budget 

neutrality adjustment for the cancer hospital adjustment is 1.0005 because the final CY 2024 target payment-to-cost ratio is less than the 

CY 2023 PCR target. 

Column ( 4) shows the impact of all budget neutrality adjustments and the addition of the final 3 .1 percent OPD fee schedule update 

factor (3.3 percent inpatient PPS (IPPS) hospital market basket percentage increase reduced by 0.2 percentage point for the productivity 

adjustment). 

Column (5) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate and adding 

estimated outlier payments. Note that previous years included the frontier adjustment in this column, but we have the frontier adjustment 

to Column 3 in this table. 

These 3,611 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs. 

* * Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and longterm care hospitals. 
Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 9021 

procedures by which it may require 

acceptance and priority performance of 

certain contracts or orders to promote 

the national defense over other contracts 

or orders with respect to health 

resources. This final rule also sets new 

standards and procedures by which 

HHS may allocate materials, services, 

and facilities to promote the national 

defense. This rule finalizes the 

regulations as proposed in the Notice of 

Proposed Rule Making (NPRM) of 

August 16, 2023, with minor technical 

edits based on comments received. 

DATES: This rule is effective March 11, 

2024. 

FOR FURTHER INFORMATION CONTACT: L. 

Paige Ezernack, telephone at (202) 260– 

0365 or via email at aspr.dpa@hhs.gov. 

SUPPLEMENTARY INFORMATION: This final 

rule implements HHS’ administration of 

priorities and allocations actions with 

respect to health resources and 

establishes the Health Resources 

Priorities and Allocations System 

(HRPAS). The HRPAS covers health 

resources pursuant to the authority 

under section 101(a) of the Defense 

Production Act (DPA) of 1950 as 

delegated to the Secretary of HHS 

(Secretary) by Executive Order (E.O.) 

13603. On September 26, 2022, the 

Secretary delegated to the Assistant 

Secretary for Preparedness and 

Response (the ASPR) within the 

Administration for Strategic 

Preparedness and Response (ASPR), the 

authority under section 201 of E.O. 

13603 to exercise priorities authority 

under section 101 of the DPA. This 

delegation authorized the ASPR, on 

behalf of the Secretary, to approve DO— 

[–[M1–M9] priority rating requests for 

health resources that promote the 

national defense. This delegation 

excludes the authority to approve all 

priorities provisions for health resources 

that require DX—[–[M1–M9] priority 

ratings. The Secretary retains all other 

authorities delegated by the President in 

E.O. 13603. 

The HRPAS has two principal 

components: priorities and allocations. 

Under the priorities’ component, the 

Secretary is authorized to place priority 

ratings on contracts or orders for health 

resources to support programs which 

have been determined by the 

Department of Defense, Department of 

Energy, or Department of Homeland 

Security as necessary or appropriate to 

promote the national defense in 

accordance with section 202 of E.O. 

13603. Through the HRPAS rule, HHS 

may also respond to requests to place 

priority ratings on contracts or orders 

(requiring priority performance of 

contracts or orders) for health resources, 

as specified in the DPA, if the necessity 

arises. Under the priorities’ component, 

certain contracts or orders between the 

government and private parties or 

between private parties for the 

production or delivery of health 

resources are required to be prioritized 

over other contracts or orders to 

facilitate expedited production or 

delivery in promotion of the U.S. 

national defense. The Secretary retains 

the authority for allocations. Under the 

allocations’ component, materials, 

services, and facilities may be allocated 

to promote the national defense. Such 

requests must be determined as 

necessary or appropriate to promote the 

national defense in accordance with 

section 202 of E.O. 13603. For both 

components, the term ‘‘national 

defense’’ is defined in section 801(j) of 

E.O. 13603 as ‘‘programs for military 

and energy production or construction, 

military or critical infrastructure 

assistance to any foreign nation, 

homeland security, stockpiling, space, 

and any directly related activity.’’ The 

term also includes emergency 

preparedness activities conducted 

pursuant to title VI of the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (Stafford Act) and 

critical infrastructure protection and 

restoration. See E.O. 13603, section 

801(j). Other authorities delegated to the 

Secretary in E.O. 13603, but not covered 

by this regulation may be re-delegated 

by the Secretary. 

I. Background 

HHS published an interim final rule 

in the Federal Register at 80 FR 42408 

on July 17, 2015, to comply with the 

Part II—Priorities and Allocations, Sec 

201(b) of E.O. 13603, dated March 16, 

2012, and section 101(d) of the DPA, 50 

U.S.C. 4511(d), and received no public 

comments. Based on the signficant 

amount of time between the publication 

of the interim final rule in 2015, HHS 

published, on August 16, 2023, a NPRM 

in the Federal Register at 88 FR 55613 

to allow for comments based on HHS 

utilizing DPA authorities and the 

HRPAS to respond to COVID–19 Public 

Health Emergency (PHE) from 2020 to 

2023 and the infant formula shortage in 

2022. 

II. Discussion and Analysis 

HRPAS is a program established in 

accordance with the DPA and E.O. 

13603 that supports national defense 

needs (for health resources), including 

emergency preparedness initiatives, by 

addressing essential civilian needs 

through the placing of priority ratings 

on contracts and orders for items and 

services or allocating resources, as 

necessary. Although a specific 

Presidential disaster declaration is not 

required, the ability to prioritize or 

allocate items or services requires a 

determination be made in accordance 

with section 202 of E.O. 13603, (except 

as provided in section 201(e) for use of 

the allocations authority) that the 

program or programs are necessary or 

appropriate to promote national 

defense, including emergency 

preparedness. The HRPAS outlines 

several conditions that must be met in 

order for HHS to undertake an 

allocation order, which include a 

finding, when necessary, under section 

101(b) of the DPA that such a material 

is a scarce and critical material essential 

to the national defense and that the 

requirements of the national defense for 

such material cannot otherwise be met 

without creating a significant 

dislocation of the normal distribution of 

such material in the civilian market to 

such a degree as to create appreciable 

hardship. The President must approve 

the finding, in accordance with section 

201(e) of E.O. 13603, before the 

Secretary may use the allocation 

authority. Under section 702(14) of the 

DPA (50 U.S.C. 4552(14)), the term 

‘‘national defense’’ includes emergency 

preparedness activities conducted 

pursuant to the Stafford Act, and critical 

infrastructure protection and 

restoration. Authority for priorities and 

allocations is specified in the DPA and 

further defined in E.O. 13603, ‘‘National 

Defense Resources Preparedness,’’ dated 

March 16, 2012. E.O. 13603 replaced 

E.O. 12919 and further defined 

jurisdictional areas and national defense 

preparedness roles and responsibilities 

for specific agencies. E.O. 13603 did not 

change the intent of the DPA as it 

applies to HHS’ functions in national 

defense, including emergency 

preparedness. 

Jurisdiction 

E.O. 13603 authorizes jurisdictional 

areas for each agency delegated title I 

authority under the DPA that is 

involved in national defense, including 

emergency preparedness. HHS has 

jurisdiction for items that fall under the 

category of health resources which is 

defined in E.O. 13603 as ‘‘drugs, 

biological products, medical devices, 

materials, facilities, health supplies, 

services and equipment required to 

diagnose, mitigate, or prevent the 

impairment of, improve, treat, cure, or 

restore the physical or mental health 

conditions of the population.’’ HHS 

cannot use its DPA authority for items 

or services not in its jurisdiction. Those 

entities in need of items or services that 

do not fall under the jurisdiction of HHS 


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9022 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

should request priorities assistance from 

the applicable resource department. 

HHS will direct the requesters to the 

appropriate resource agency if the 

request comes to HHS. HHS intends to 

work with other resource agencies to 

address instances where HHS does not 

have jurisdiction—or where jurisdiction 

may be overlapping or ambiguous—for 

items necessary to complete the order. 

HHS intends to work with the other 

resource agencies to request 

prioritization of contracts or orders for 

other items or services necessary for use 

in support of programs approved for use 

by HHS (see next section). 

HRPAS Approved Programs 

On November 2, 2023, the Department 

of Homeland Security approved four 

programs to be eligible for priorities and 

allocations support in accordance with 

Section 202 of Executive Order 13603. 

These programs are listed in Appendix 

1. 

III. DPA Priorities and Allocations 

System Authority 

The Defense Production Act 

Reauthorization (DPAR) of 2009 

required that HHS, and all other 

agencies that previously have been 

delegated priorities and allocations 

authority under E.O. 13603, publish 

regulations providing standards and 

procedures for prioritization of contracts 

and orders and for allocation of 

materials, services, and facilities to 

promote the national defense under 

both emergency and nonemergency 

conditions. HHS’ regulation, along with 

regulations promulgated by other 

agencies, are part of the Federal 

Priorities and Allocations System 

(FPAS). 

On October 1, 2018, Congress 

amended the DPA through the John S. 

McCain National Defense Authorization 

Act (Pub. L. 115–232) which extended 

non-permanent provisions through 

September 30, 2025. Section 101(d) of 

the DPA, as amended, directs all 

agencies to which the President has 

delegated priorities and allocations 

authority under E.O. 13603 to publish 

final rules establishing standards and 

procedures by which that authority will 

be used to promote the national defense 

in both emergency and non-emergency 

situations. The DPAR also required all 

such agencies to consult with the heads 

of other Federal agencies as appropriate 

and to the extent practicable to develop 

a consistent and unified FPAS. This 

rulemaking is one of several rules 

published to implement section 101 of 

the DPA. The rules of the agencies with 

such authorities, which are the 

Departments of Commerce, Energy, 

Transportation, Health and Human 

Services, Homeland Security, Defense, 

and Agriculture, comprise the FPAS. 

HHS is publishing this NPRM rule in 

compliance with section 101(d) of the 

DPA. HHS’ HRPAS provisions are 

consistent with the FPAS regulations 

issued by other agencies to the extent 

practicable. 

The HRPAS, as part of the FPAS, has 

two principal components: priorities 

and allocations. Under the priorities 

component, contracts and orders 

between the government and private 

parties or between private parties for the 

production or delivery of health 

resources are required to be given 

priority over other contracts to facilitate 

expedited production and delivery in 

promotion of the U.S. national defense. 

Under the allocations component, 

materials, services, and facilities may be 

allocated to promote the national 

defense. For both components, the term 

‘‘national defense’’ is defined broadly 

and includes emergency preparedness 

activities conducted pursuant to title VI 

of the Stafford Act and critical 

infrastructure protection and restoration 

priorities authorities. Priorities, 

allocations, and other authorities 

delegated to the Secretary in E.O. 13603, 

but not covered by this regulation may 

be re-delegated by the Secretary. The 

Secretary delegated the authority for DO 

priority ratings to the ASPR. The 

Secretary retains the authority for DX 

priority ratings and for allocations. 

IV. Summary of Significant Changes 

From the 2015 Interim Final Rule to the 

2023 NPRM 

a. HHS’ interim final rule had a 60- 

day comment period that ended on 

September 15, 2015. HHS received no 

comments on the interim Final Rule. 

HHS has made minor revisions to its 

interim final rule based on the use of 

these authorities to response to the 

COVID–19 PHE, the infant formula 

shortage, and deliberations with 

interagency partners. These changes 

were reflected in the NPRM (88 FR 

55613: 08/16/2023). 

(1) Section 101.1, Purpose, was 

revised to add livestock resources, 

veterinary resources, and plant health 

resources. 

(2) Section 101.20, Definitions, was 

revised to include a new definition of 

priority rating and program 

identification symbol and add a 

definition of ‘‘working day.’’ 

(3) Section 101.30, Delegation of 

Authority, was revised to include the 

delegation of DO priority rating 

authority of the DPA, and section 201 of 

E.O. 13603, from the Secretary of HHS 

to the Assistant Secretary for 

Preparedness and Response (the ASPR). 

(4) Section 101.63, Letters and 

Memoranda of Understanding was 

revised to delete references to 

Memoranda. 

b. Analysis of Other Technical Edits: 

Several editorial changes were made to 

the rule and are summarized below. 

(1) Placement of Rated Orders 

(a) Section 101.33. The acceptance 

and rejection times for rated orders are 

revised. The preamble section of the 

interim final rule was inconsistent with 

the provisions in §§ 101.32 and 101.33 

with respect to the time limits for 

acceptance and rejection of rated orders. 

Most rated orders will continue to 

require acceptance or rejection within 

10 or 15 working days depending on the 

type of rating. Rated orders placed in 

support of emergency preparedness 

requirements may require acceptance or 

rejection within a shorter timeframe that 

is specified in the rated order. The 

minimum times for acceptance or 

rejection that such orders may specify 

are six business (6) hours for 

emergencies that have occurred, or 12 

business hours if needed to prepare for 

an imminent hazard. Also, ‘‘time limit 

in’’ has been changed to ‘‘minimum 

times,’’ which is the correct 

terminology. 

(b) Section 101.33(d)(2). Customer 

notification requirements require 

persons who have accepted a rated 

order to give notice if performance will 

be delayed. The time limit to provide 

written confirmation of a verbal notice 

is five (working) days; the time limit is 

revised to one (1) working day to 

provide written confirmation of a verbal 

notice. HHS believes that the nature of 

rated orders supporting national defense 

requirements justifies expeditious 

communications and that once a verbal 

notice of delayed performance has been 

given, putting that notice into writing 

should not take more than one working 

day. 

(2) Allocation Actions 

Sections 101.51 and 101.51(a) are 

revised to conform with language in the 

other FPAS regulations and comply 

with the requirement in section 

101(d)(2) of the DPA for the regulations 

to be consistent and unified. 

Section 101.53 is revised 101.53 to 

change ‘‘is requiring’’ to ‘‘as 

established.’’ The rationale for this 

change is that ‘‘is requiring’’ implies 

that the allocations process is a constant 

obligation. 


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Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 9023 

(3) Elements of an Allocation Order 

(a). Section 101.54(c) is revised to 

include a new element to be included in 

an allocation order that gives 

constructive notice through publication 

in the Federal Register. 

(4) Official Actions 

(a) Section 101.63. ‘‘Memorandums of 

Understanding’’ (MOUs) are universally 

known in the Federal Government as an 

agreement between agencies/parties, 

sometimes completed under the 

Economy Act, and the use of MOUs in 

implementing priorities authorities 

could cause confusion. Therefore, the 

terms ‘‘Memorandum of 

Understanding’’ or ‘‘Memoranda of 

Understanding’’ in § 101.63 and other 

sections in the interim rule are deleted. 

(b) Section 101.1 Purpose 

Section 101.1 revises the sentence 

regarding guidance and procedures for 

use of DPA authorities to include 

livestock, veterinary resources, plant 

health resources, and all forms of 

energy. In addition, HHS deleted 

reference to 32 CFR part 555, referring 

to priorities and allocations for water 

resources. 

(c) Section 101.3 Program Eligibility 

Section 101.3 is revised to delete 

‘‘deployment and sustainment of 

military forces,’’ to track with section 

702(14) of the DPA. 

(d) Section 101.20 Definitions 

(1) Revise definition of ‘‘National 

defense’’ to delete ‘‘health’’ and add 

‘‘energy’’ to track definition of ‘‘national 

defense’’ in section 702(14) of the DPA. 

(2) Delete sentence stating, ‘‘Natural 

resources such as oil and gas,’’ from the 

definition of ‘‘Materials.’’ 

(3) Revise the definition of ‘‘person.’’ 

(4) Revise the definition of ‘‘priority 

rating.’’ 

(5) Add a definition for ‘‘Working 

day.’’ 

e. Section 101.30 Delegations of 

Authority 

Revised to change ‘‘priority rating 

activities’’ to ‘‘priorities authorities’’ to 

track E.O. 13603. 

f. Section 101.31 Priority Ratings 

(1) Paragraph (a)(1), Levels of priority 

is revised to change ‘‘Federal’’ to 

‘‘Health Resources’’ because agency 

regulations establish priority levels. 

g. Section 101.32 Elements of a Rated 

Order 

(2) Paragraph (d)(2)(i). The preamble 

discussion of § 101.33 is revised to 

correct the 2-day time frame for 

acceptance or rejection of rated orders 

for emergency preparedness to be 

consistent with §§ 101.32 and 101.33. 

h. Section 101.33 Acceptance and 

Rejection of Rated Orders 

Paragraph (e). The discussion of 

§ 101.33 of the preamble of the interim 

final rule is inconsistent with the 2- 

working daytime frame for acceptance 

or rejection of rated orders in § 101.33. 

The preamble is revised to correct this 

inconsistency. 

i. Section 101.37 Use of Rated Orders 

(1) Paragraph (a)(4) ‘‘Facilities needed 

to produce rated orders, and’’ is deleted 

because ‘‘facilities’’ are considered an 

industrial resource and not eligible for 

priorities and allocations under the 

HHS-administered HRPAS regulation. 

j. Section 101.38 Limitations on 

Placing Rated Orders 

(1) Paragraph (b)(1). Revising 

paragraph (b)(1) to insert ‘‘livestock 

resources, veterinary resources, and 

plant health resources,’’ to track E.O. 

13603. 

(2) Paragraph (b)(2). Revising 

paragraph (b)(2) to add ‘‘All forms of 

energy’’ in lieu of ‘‘Energy supplies,’’ to 

track E.O. 13603. 

(3) Paragraph (b)(5). (3) Paragraph 

(b)(5). Adding a paragraph clarifying 

Department of Commerce’s resource 

jurisdiction over ‘‘industrial resources.’’ 

(4) Paragraph (b)(6). Changing former 

paragraph (b)(5) (now paragraph (b)(6)) 

to clarify that HRPAS priorities and 

allocations authority may not be applied 

to communication services as the 

‘‘resource judication.’’ 

k. Section 101.40 General Provisions 

Paragraph (a). Revised the 

introductory sentence of paragraph (a). 

The rationale for this change is once a 

rating is authorized, in most instances, 

no further action is required by HHS. 

l. Section 101.60 General Provisions 

Paragraph (b). Revising paragraph (b) 

to replace ‘‘Memoranda’’ of 

Understanding with ‘‘Letters.’’ 

m. Section 101.62 Directives 

Paragraph (d). Deleting paragraph (d) 

relating to an Allocation Directive, as it 

was deleted in the Department of 

Commerce’s final rule. 

n. Section 101.63 Letters and 

Memoranda of Understanding 

Revising § 101.63 to delete ‘‘and 

Memoranda’’ in paragraphs (a) and (b). 

o. Section 101.74 Violations, Penalties, 

and Remedies 

Paragraph (a). Deleted language 

specific to the Selective Service Act and 

related statutes because HHS has not 

been delegated authority under the 

Selective Service Act, and the sentence, 

as well as the reference to the Selective 

Service Act earlier in this paragraph, 

have been deleted. 

p. Appendix 1 includes four approved 

programs that are eligible for priorities 

and allocations support in accordance 

with Section 202 of Executive Order 

13603. These programs are listed in 

Appendix 1. 

V. Summary of Public Comments to the 

HRPAS NPRM 

Based on the signficant amount of 

time since the publication of the interim 

final rule in 2015, HHS published, on 

August 16, 2023, a NPRM in the Federal 

Register (88 FR 55613) to allow for 

comments based on HHS utilizing DPA 

and HRPAS authorities in response to 

COVID–19 and the infant formula 

shortage in 2022. The comment period 

for the NPRM closed on September 15, 

2023. During the 30-day comment 

period, HHS received two comments on 

the HRPAS NPRM. One comment, from 

a private citizen, was generally 

supportive of the regulation and 

primarily requested clarification and 

identified minor technical errors that 

have been addressed in this final rule. 

The second comment was from a 

coalition advocating on behalf of their 

stakeholders. This second comment was 

not specific to the HRPAS or DPA 

authorities and no edits were required 

to the HRPAS final rule. 

HHS considered all comments 

received on the NPRM and, based on the 

comments received, HHS has made 

minor technical changes from the NPRM 

(88 FR 55613) to include the following 

revisions in this final rule: 

• In IV of the Preamble, § 101.54(e) is 

revised to reference § 101.54(c) 

• In IV of the Preamble, ‘‘State, local, 

or Tribal governments’’ is revised to 

reference ‘‘State, Local, Tribal, or 

Territorial governments.’’ 

• In IV of the Preamble, 

‘‘commodities of products’’ is revised to 

read ‘‘commodities or products’’ and 

§ 101.20 was revised, consistent with 

this change. 

• Section 101.32(a)(4) is revised to 

reference § 101.32(a)(4)(a) and (b). 

• Section 101.33(c) is revised to 

reference § 101.32(a)(4)(b). 

• Section 101.37(d)(1)(ii) is revised to 

reference § 101.32(a)(4). 


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9024 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

• Section 101.43 is revised to delete 

reference to ‘‘the Department of 

Commerce for industrial resources.’’ 

VI. Regulatory Analysis 

A. Review Under E.O. 12866, E.O. 

13563, and E.O. 14094 

(1) Executive Orders 12866 

(‘‘Regulatory Planning and Review’’), 

13563 (‘‘Improving Regulation and 

Regulatory Review’’), and 14094 

(‘‘Modernizing Regulatory Review) 

direct agencies to assess the costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Under E.O. 12866, ‘‘significant’’ 

regulatory actions are subject to review 

by OMB. E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. E.O. 14094 amends section 

3(f) of Executive Order 12866 

(Regulatory Planning and Review). This 

final rule has been drafted and reviewed 

in accordance with these Executive 

Orders. This rule has been designated a 

‘‘significant regulatory action’’ by the 

Office of Management and Budget’s 

(OMB) Office of Information and 

Regulatory Affairs, under section 3(f) of 

E.O. 12866. 

(2) This final rule adopts the interim 

final rule (IFR) that established 

standards and procedures by which 

HHS may require certain contracts or 

orders that promote the national defense 

be given priority over other contracts or 

orders and setting new standards and 

procedures by which HHS may allocate 

materials, services, and facilities to 

promote the national defense under 

emergency and non-emergency 

conditions pursuant to section 101 of 

the DPA of 1950, as amended. 

Accordingly, relative to a post-IFR 

baseline, this final rule has limited 

economic impact. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis for any rule that by law must 

be proposed for public comment, unless 

the agency certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities. HHS reviewed 

this final rule under the provisions of 

the Regulatory Flexibility Act and has 

determined that this rulemaking, if 

promulgated, will not have a significant 

impact on a substantial number of small 

entities. 

(1) Number of Small Entities 

(a) Small entities include small 

businesses, small organizations, and 

small governmental jurisdictions. For 

purposes of assessing the impacts of this 

final rule on small entities, a small 

business, as described in the Small 

Business Administration’s Table of 

Small Business Size Standards Matched 

to North American Industry 

Classification System Codes (January 

2022 Edition), has a maximum annual 

revenue of $33.5 million and a 

maximum of 1,500 employees (for some 

business categories, these numbers are 

lower). A small governmental 

jurisdiction is a government of a city, 

town, school district or special district 

with a population of less than 50,000. A 

small organization is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

(b) This rulemaking sets criteria under 

which HHS (or agencies to which HHS 

delegates HHS’ DPA authority to issue 

rated orders) will authorize 

prioritization of certain contracts or 

orders for health resources as well as 

criteria under which HHS will issue 

orders allocating materials, services, and 

facilities. Because the rulemaking affects 

specific commercial transactions, HHS 

believes that small non-profit 

organizations and small governmental 

jurisdictions are unlikely to be directly 

affected by this rulemaking. 

(c) Prior to the COVID–19 PHE, HHS 

had minimally exercised its 

prioritization authority for contracts and 

orders and had not exercised its 

allocation authorities. To date, HHS has 

exercised title I priorities authorities 

approximately 70 times in responding to 

the COVID–19 PHE to prioritize 

contracts thus ensuring rapid industrial 

mobilization for critical health resources 

(e.g., N95 facemasks, vaccines, 

therapeutics, and diagnostics) to meet 

urgent emergency preparedness and 

response requirements. In response to 

the initial wave of the COVID–19 

pandemic, HHS leveraged its allocations 

authority, in conjunction with a DX 

rated order, to re-distribute N–95 

facemasks that were seized by the U.S. 

Customs and Border Protection. Several 

health resource materials have been 

identified as essential in responding to 

the COVID–19 pandemic and these 

items, such as personal protective 

equipment (PPE), ventilators, medical 

countermeasures, and ancillary supplies 

are in high demand. Therefore, a 

priority rating was necessary to provide 

the quantities of these health resources 

within a specified timeframe to respond 

to the COVID–19 pandemic. 

Additionally, in response to the infant 

formula shortage, HHS issued three 

priority rated orders to help ensure 

timely delivery of key ingredients to 

infant formula manufacturers. 

(2) Impact 

(a) The final rule has two principal 

components: prioritization and 

allocation. Under prioritization, HHS, or 

its Delegate Agency, designates certain 

orders as one of two possible priority 

levels. Once so designated, such orders 

are referred to as ‘‘rated orders.’’ The 

recipient of a rated order must give it 

priority over an unrated order or an 

order with a lower priority rating as 

necessary to meet the delivery 

requirement of the rated order. A 

recipient of a rated order must place 

orders at the same priority level with 

suppliers and subcontractors for 

supplies and services necessary to fulfill 

the recipient’s rated order. The 

suppliers and subcontractors must treat 

the request from the rated order 

recipient as a rated order with the same 

priority level as the original rated order. 

The rulemaking does not require 

recipients to fulfill rated orders if the 

price or terms of sale are not consistent 

with the price or terms of sale of similar 

non-rated orders. The rulemaking 

provides protection against claims for 

actions taken in, or inactions required 

for, compliance with the rulemaking. 

(b) Although rated orders could 

require a firm to fill one order prior to 

filling another, they will not necessarily 

require a reduction in the total volume 

of orders. The regulations also do not 

require the recipient of a rated order to 

reduce prices or provide rated orders 

with more favorable terms than a similar 

non-rated order. Under these 

circumstances, the economic effects on 

the rated order recipient of substituting 

one order for another are likely to be 

mutually offsetting, resulting in no net 

economic impact. 

(c) Allocations could be used to 

control the general distribution of 

materials or services in the civilian 

market. Specific allocation actions that 

HHS might take are as follows: 

1. Set-aside: an official action that 

requires a person to reserve materials, 

services, or facilities capacity in 

anticipation of receipt of rated orders. 

2. Directive: an official action that 

requires a person to take or refrain from 

taking certain actions in accordance 

with its provisions. A directive can 

require a person to stop or reduce 

production of an item; prohibit the use 

of selected materials, services, or 


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facilities; or divert the use of materials, 

services, or facilities from one purpose 

to another. 

3. Allotment: an official action that 

specifies the maximum quantity of a 

material, service, or facility authorized 

for a specific use to promote the 

national defense. 

(d) In response to the COVID–19 PHE, 

HHS leveraged its allocations authority, 

in conjunction with a DX rated order to 

re-distribute N–95 facemasks that were 

seized by the U.S. Customs and Border 

Protection. As required by section 

101(a)(2) of the DPA and by section 

201(a)(3) of E.O. 13603, HHS may 

implement allocations only if the 

materials, services, and facilities are 

deemed necessary or appropriate to 

promote the national defense. ‘‘National 

defense’’ covers programs for military 

and energy production or construction, 

military or critical infrastructure 

assistance to any foreign nation, 

homeland security, stockpiling, space, 

and any related activity. Such terms 

include emergency preparedness 

activities conducted pursuant to title VI 

of the Stafford Act and critical 

infrastructure protection and 

restoration. 

(e) Any allocation actions taken by 

HHS must assure that small business 

concerns shall be accorded, to the extent 

practicable, a fair share of the materials 

or services covered by the allocation 

action, in proportion to the share 

received by small business concerns 

under normal conditions, giving such 

special consideration as may be possible 

to emerging business concerns. 50 

U.S.C. 4551(e). 

Conclusion 

(f) Although HHS cannot precisely 

determine the number of small entities 

that will be affected by this rulemaking, 

HHS believes that the overall impact on 

such entities will not be significant. In 

most instances, rated contracts or orders 

will be fulfilled in addition to other 

(unrated) contracts or orders and, in 

some instances might actually increase 

the total amount of business of the firm 

that receives a rated contract or order. 

(g) Because allocations can be 

imposed only after a finding required 

under section 101(b) of the DPA, and 

approved by the President in 

accordance with section 201(e) of E.O. 

13603, that such material is a scarce and 

critical material essential to the national 

defense and that the requirements of the 

national defense for such material 

cannot otherwise be met without 

creating a significant dislocation of the 

normal distribution of such material in 

the civilian market to such a degree as 

to create appreciable hardship, and 

because HHS has only used its 

allocations authority one time in 

response to the initial wave of COVID– 

19, one can expect allocations will be 

ordered only in rare and unique 

circumstances. Any allocation actions 

would also have to comply with section 

701(e) of DPA (50 U.S.C. 4551(e)), 

which provides that small business 

concerns be accorded, to the extent 

practicable, a fair share of the material, 

including services, in proportion to the 

share received by such business 

concerns under normal conditions, 

giving such special consideration as 

may be possible to emerging business 

concerns. 

Therefore, HHS believes that the 

requirement for a finding under section 

101(b) of the DPA, and approved by the 

President in accordance with section 

201(e) of E.O. 13603, that such a 

material is a scarce and critical material 

essential to the national defense and 

that the requirements of the national 

defense for such material cannot 

otherwise be met without creating a 

significant dislocation of the normal 

distribution of such material in the 

civilian market to such a degree as to 

create appreciable hardship and the 

provisions of section 701 of the DPA 

indicate that any impact on small 

business will not be significant. 

(h) For the reasons set forth above, the 

Secretary of HHS certifies that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

C. Review Under the Paperwork 

Reduction Act 

The purposes of the Paperwork 

Reduction Act of 1995 (PRA), 44 U.S.C. 

3501 et seq., include minimizing the 

paperwork burden on affected entities. 

The PRA requires certain actions before 

an agency can adopt or revise a 

collection of information, including 

publishing for public comment a 

summary of the collection of 

information and a brief description of 

the need for and proposed use of the 

information. 

A Federal agency may not conduct or 

sponsor a collection of information 

unless it is approved by OMB under the 

PRA, and it displays a currently valid 

OMB control number. The public is also 

not required to respond to a collection 

of information unless it displays a 

currently valid OMB control number. In 

addition, notwithstanding any other 

provisions of law, no person will be 

subject to penalty for failing to comply 

with a collection of information if the 

collection of information does not 

display a currently valid OMB control 

number (44 U.S.C. 3512). 

In accordance with the PRA, the 

Department has submitted one new 

Information Collection Request (ICR) to 

OMB in concert with the publishing of 

this final rule. 

D. Review Under E.O. 13132 

HHS reviewed this proposed rule 

pursuant to E.O. 13132, ‘‘Federalism,’’ 

64 FR 43255 (August 4, 1999), which 

imposes certain requirements on 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have federalism 

implications. HHS determined that the 

rulemaking will not have a substantial 

direct effect on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of Government. 

E. Review Under Unfunded Mandates 

Reform Act 

Title II of the Unfunded Mandate 

Reform Act of 1995 (UMRA, Pub. L. 

104–4) requires Federal agencies to 

assess the effects of their regulatory 

actions on State, Local, Tribal, or 

Territorial governments or the private 

sector. Agencies generally must prepare 

a written statement, including a cost 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures of $100 million or 

more in any one year for State, Local, 

Tribal, or Territorial governments, in the 

aggregate, or to the private sector. This 

rule contains no Federal mandates as 

defined by title II of UMRA for State, 

Local, Tribal, or Territorial governments 

or for the private sector; therefore, this 

rule is not subject to the requirements 

of sections 202 and 205 of Unfunded 

Mandate Reform Act. 

F. Approval of the Office of the 

Secretary 

The Secretary of Health and Human 

Services has approved publication of 

this final rule. 

List of Subjects in 45 CFR Part 101 

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, 

HHS is revising part 101 of title 45 of 

the Code of Federal Regulations as 

follows: 


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PART 101—HEALTH RESOURCES 

PRIORITIES AND ALLOCATIONS 

SYSTEM (HRPAS) 

Sec. 

Subpart A—General 

101.1 Purpose. 

101.2 Priorities and allocations authority. 

101.3 Program eligibility. 

Subpart B—Definitions 

101.20 Definitions. 

Subpart C—Placement of Rated Orders 

101.30 Delegations of authority. 

101.31 Priority ratings. 

101.32 Elements of a rated order. 

101.33 Acceptance and rejection of rated 

orders. 

101.34 Preferential scheduling. 

101.35 Extension of priority ratings. 

101.36 Changes or cancellations of priority 

ratings and rated orders. 

101.37 Use of rated orders. 

101.38 Limitations on placing rated orders. 

Subpart D—Special Priorities Assistance 

101.40 General provisions. 

101.41 Requests for priority rating 

authority. 

101.42 Examples of assistance. 

101.43 Criteria for assistance. 

101.44 Instances where assistance may not 

be provided. 

Subpart E—Allocation Actions 

101.50 Policy. 

101.51 General procedures. 

101.52 Controlling the general distribution 

of a material in the civilian market. 

101.53 Types of allocation orders. 

101.54 Elements of an allocation order. 

101.55 Mandatory acceptance of an 

allocation order. 

101.56 Changes or cancellations of an 

allocation order. 

Subpart F—Official Actions 

101.60 General provisions. 

101.61 Rating Authorizations. 

101.62 Directives. 

101.63 Letters of Understanding. 

Subpart G—Compliance 

101.70 General provisions. 

101.71 Audits and investigations. 

101.72 Compulsory process. 

101.73 Notification of failure to comply. 

101.74 Violations, penalties, and remedies. 

101.75 Compliance conflicts. 

Subpart H—Adjustments, Exceptions, and 

Appeals 

101.80 Adjustments or exceptions. 

101.81 Appeals. 

Subpart I—Miscellaneous Provisions 

101.90 Protection against claims. 

101.91 Records and reports. 

101.92 Applicability of this part and official 

actions. 

101.93 Communications. 

Appendix 1 to Part 101 

Authority: Defense Production Act of 1950, 

as amended (50 U.S.C. 4501, et seq.), and 

Executive Order 13603 (77 FR 16651, 3 CFR, 

March 16, 2012). 

Subpart A—General 

§ 101.1 Purpose. 

This part provides guidance and 

procedures for use of Defense 

Production Act (DPA) of 1950 section 

101 priorities and allocations authority 

with respect to health resources 

necessary or appropriate to promote the 

national defense. The guidance and 

procedures in this part are consistent 

with the guidance and procedures 

provided in other regulations that form 

the Federal Priorities and Allocations 

System (FPAS). Guidance and 

procedures for use of the DPA priorities 

and allocations authority with respect to 

other types of resources are provided 

for: food resources, food resource 

facilities, livestock resources, veterinary 

resources, plant health resources, and 

the domestic distribution of farm 

equipment and commercial fertilizer in 

7 CFR part 789; all forms of energy in 

10 CFR part 217; all forms of civil 

transportation in 49 CFR part 33; and all 

other materials, services, and facilities, 

including construction materials in 15 

CFR part 700. 

§ 101.2 Priorities and allocations authority. 

(a) Section 201 of Executive Order 

(E.O.) 13603, delegates the President’s 

priorities and allocations authority 

under section 101 of the DPA. Section 

101 of the DPA provides the President 

with authority to require acceptance and 

priority performance of contracts and 

orders (other than contracts of 

employment) to promote the national 

defense over performance of any other 

contracts or orders, and to allocate 

materials, services, and facilities as 

deemed necessary or appropriate to 

promote the national defense to a 

number of agencies. Section 201 of E.O. 

13603 delegates the President’s 

authority to specific agencies as follows: 

(1) The Secretary of Agriculture with 

respect to food resources, food resource 

facilities, livestock resources, veterinary 

resources, plant health resources, and 

the domestic distribution of farm 

equipment and commercial fertilizer; 

(2) The Secretary of Energy with 

respect to all forms of energy; 

(3) The Secretary of Health and 

Human Services with respect to health 

resources; 

(4) The Secretary of Transportation 

with respect to all forms of civil 

transportation; 

(5) The Secretary of Defense with 

respect to water resources; and 

(6) The Secretary of Commerce for all 

other materials, services, and facilities, 

including construction materials. 

(b) Section 202 of E.O. 13603 states 

that the authority delegated in section 

201, except as provided in section 

201(e) of E.O. 13603, may be used only 

to support programs that have been 

determined in writing as necessary or 

appropriate to promote the national 

defense: 

(1) By the Secretary of Defense with 

respect to military production and 

construction, military assistance to 

foreign nations, military use of civil 

transportation, stockpiles managed by 

the Department of Defense, space, and 

directly related activities. 

(2) By the Secretary of Energy with 

respect to energy production and 

construction, distribution, and use, and 

directly related activities; and 

(3) By the Secretary of Homeland 

Security with respect to all other 

national defense programs, including 

civil defense and continuity of 

Government. 

(c) Section 201(e) of E.O. 13603 

provides that each department that is 

delegated allocations authority under 

section 201(a) of E.O. 13603 may use 

this authority with respect to control of 

the general distribution of any material 

(including applicable services) in the 

civilian market only after: 

(1) Making the finding required under 

section 101(b) of the DPA; and 

(2) The finding has been approved by 

the President. 

§ 101.3 Program eligibility. 

Certain programs to promote the 

national defense are approved for 

priorities and allocations support. These 

include programs for military and 

energy production or construction, 

military or critical infrastructure 

assistance to any foreign nation, 

homeland security, stockpiling, space, 

and any directly related activity. Other 

eligible programs include emergency 

preparedness activities conducted 

pursuant to title VI of the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5121 et seq.), 

and critical infrastructure protection 

and restoration. 

Subpart B—Definitions 

§ 101.20 Definitions. 

The following definitions pertain to 

all sections of this part: 

Allocation means the control of the 

distribution of materials, services, or 

facilities for a purpose deemed 

necessary or appropriate to promote the 

national defense. 

Allocation order means an official 

action to control the distribution of 

materials, services, or facilities for a 

purpose deemed necessary or 


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appropriate to promote the national 

defense. 

Allotment means an official action 

that specifies the maximum quantity or 

use of a material, service, or facility 

authorized for a specific use to promote 

the national defense. 

Approved program means a program 

determined by the Secretary of Defense, 

the Secretary of Energy, or the Secretary 

of Homeland Security to be necessary or 

appropriate to promote the national 

defense, under the authority of the 

Defense Production Act and in 

accordance with section 202 of E.O. 

13603. 

Construction means the erection, 

addition, extension, or alteration of any 

building, structure, or project, using 

materials or products which are to be an 

integral and permanent part of the 

building, structure, or project. 

Construction does not include 

maintenance and repair. 

Critical infrastructure means any 

systems and assets, whether physical or 

cyber-based, so vital to the United States 

that the degradation or destruction of 

such systems and assets would have a 

debilitating impact on national security, 

including, but not limited to, national 

economic security and national public 

health or safety. 

Defense Production Act or DPA means 

the Defense Production Act of 1950, as 

amended (50 U.S.C. 4501 et seq.). 

Delegate agency means a Federal 

Government agency authorized by 

delegation from the Department of 

Health and Human Services (HHS) to 

place priority ratings on contracts or 

orders needed to support approved 

programs. 

Directive means an official action that 

requires a person to take or refrain from 

taking certain actions in accordance 

with its provisions. 

Emergency preparedness means all 

those activities and measures designed 

or undertaken to prepare for or 

minimize the effects of a hazard upon 

the civilian population, to deal with the 

immediate emergency conditions which 

would be created by the hazard, and to 

effectuate emergency repairs to, or the 

emergency restoration of, vital utilities 

and facilities destroyed or damaged by 

the hazard. ‘‘Emergency Preparedness’’ 

includes the following: 

(1) Measures to be undertaken in 

preparation for anticipated hazards 

(including the establishment of 

appropriate organizations, operational 

plans, and supporting agreements, the 

recruitment and training of personnel, 

the conduct of research, the 

procurement and stockpiling of 

necessary materials and supplies, the 

provision of suitable warning systems, 

the construction or preparation of 

shelters, shelter areas, and control 

centers, and, when appropriate, the 

nonmilitary evacuation of the civilian 

population). 

(2) Measures to be undertaken during 

a hazard (including the enforcement of 

passive defense regulations prescribed 

by duly established military or civil 

authorities, the evacuation of personnel 

to shelter areas, the control of traffic and 

panic, and the control and use of 

lighting and civil communications). 

(3) Measures to be undertaken 

following a hazard (including activities 

for firefighting; rescue; emergency 

medical, health and sanitation services; 

monitoring for specific dangers of 

special weapons; unexploded bomb 

reconnaissance; essential debris 

clearance; emergency welfare measures; 

and immediately essential emergency 

repair or restoration of damaged vital 

facilities). 

Facilities includes all types of 

buildings, structures, or other 

improvements to real property (but 

excluding farms, churches or other 

places of worship, and private dwelling 

houses), and services relating to the use 

of any such building, structure, or other 

improvement. 

Farm equipment means equipment, 

machinery, and repair parts 

manufactured for use on farms in 

connection with the production or 

preparation for market use of food 

resources. 

Fertilizer means any product or 

combination of products that contain 

one or more of the elements nitrogen, 

phosphorous, and potassium for use as 

a plant nutrient. 

Food resources means all 

commodities and products, (simple, 

mixed, or compound), or complements 

to such commodities or products, that 

are capable of being ingested by other 

human beings or animals, irrespective of 

other uses to which such commodities 

or products may be put, at all stages of 

processing from the raw commodity to 

the products thereof in vendible form 

for human or animal consumption. 

‘‘Food resources’’ also means potable 

water packaged in commercially 

marketable containers, all starches, 

sugars, vegetable and animal or marine 

fats and oils, seed, cotton, hemp, and 

flax fiber, but does not mean any such 

material after it loses its identity as an 

agricultural commodity or agriculture 

product. 

Food resource facilities means plants, 

machinery, vehicles (including on 

farm), and other facilities required for 

the production, processing, distribution, 

and storage (including cold storage) of 

food resources, and for the domestic 

distribution of farm equipment and 

fertilizer (excluding transportation 

thereof). 

Hazard means an emergency or 

disaster resulting from: 

(1) A natural disaster; or 

(2) An accidental or man-caused 

event. 

Health resources means drugs, 

biological products, medical devices, 

materials, facilities, health supplies, 

services and equipment required to 

diagnose, mitigate, or prevent the 

impairment of, improve, treat, cure, or 

restore the physical or mental health 

conditions of the population. 

Homeland Security includes efforts— 

(1) To prevent terrorist attacks within 

the United States; 

(2) To reduce the vulnerability of the 

United States to terrorism; 

(3) To minimize damage from a 

terrorist attack in the United States; and 

(4) To recover from a terrorist attack 

in the United States. 

Industrial resource means all 

materials, services, and facilities, 

including construction materials, the 

authority for which has not been 

delegated to other agencies under E.O. 

13603. The term ‘‘Industrial resource’’ 

does not include food resources, food 

resource facilities, livestock resources, 

veterinary resources, and the domestic 

distribution of farm equipment and 

commercial fertilizer; all forms of 

energy; health resources; all forms of 

civil transportation; and water 

resources. 

Item means any raw, in process, or 

manufactured material, article, 

commodity, supply, equipment, 

component, accessory, part, assembly, 

or product of any kind, technical 

information, process, or service. 

Maintenance and Repair and/or 

Operating Supplies (MRO) includes the 

following— 

(1) ‘‘Maintenance’’ is the upkeep 

necessary to continue any plant, facility, 

or equipment in working condition; 

(2) ‘‘Repair’’ is the restoration of any 

plant, facility, or equipment to working 

condition when it has been rendered 

unsafe or unfit for service by wear and 

tear, damage, or failure of parts; 

(3) ‘‘Operating Supplies’’ are any 

resources carried as operating supplies 

according to a person’s established 

accounting practice. ‘‘Operating 

Supplies’’ may include hand tools and 

expendable tools, jigs, dies, fixtures 

used on production equipment, 

lubricants, cleaners, chemicals, and 

other expendable items; and 

(4) MRO does not include items 

produced or obtained for sale to other 

persons or for installation upon or 

attachment to the property of another 


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person, or items required for the 

production of such items; items needed 

for the replacement of any plant, 

facility, or equipment; or items for the 

improvement of any plant, facility, or 

equipment by replacing items which are 

still in working condition with items of 

a new or different kind, quality, or 

design. 

Materials includes— 

(1) Any raw materials (including 

minerals, metals, and advanced 

processed materials), commodities, 

articles, components (including critical 

components), products, and items of 

supply; and 

(2) Any technical information or 

services ancillary to the use of any such 

materials, commodities, articles, 

components, products, or items. 

National defense means programs for 

military and energy production or 

construction, military or critical 

infrastructure assistance to any foreign 

nation, homeland security, stockpiling, 

space, and any directly related activity. 

Such term includes emergency 

preparedness activities conducted 

pursuant to title VI of the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5121, et seq.) 

and critical infrastructure protection 

and restoration. 

Official action means an action taken 

by HHS under the authority of the DPA, 

E.O. 13603, and this part or another 

regulation under the FPAS. Such 

actions include the issuance of Rating 

Authorizations, Directives, Set Asides, 

Allotments, Letters of Understanding, 

and Demands for Information, 

Inspection Authorizations, and 

Administrative Subpoenas. 

Person includes 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 part, includes the 

Federal Government and any authorized 

foreign government or international 

organization or agency thereof, 

delegated authority as provided in this 

part. 

Priority rating is an identifying code 

assigned by HHS, a Delegate Agency or 

authorized person placed on all rated 

orders for health resources and 

consisting of the rating symbol and 

program identification symbol. 

Program Identification Symbols is an 

abbreviation used to indicate which 

approved program is supported by a 

rated order. 

Rated order means a prime contract, 

a subcontract, or a purchase order in 

support of an approved program issued 

in accordance with the provisions of 

this part. 

Resource department means any 

agency delegated priorities and 

allocations authority as specified in 

§ 101.2. 

Secretary means the Secretary of HHS. 

Services includes any effort that is 

needed for or incidental to— 

(1) The development, production, 

processing, distribution, delivery, or use 

of a health resource. 

(2) The construction of facilities. 

(3) Other national defense programs 

and activities. 

Set-aside means an official action that 

requires a person to reserve materials, 

services, or facilities capacity in 

anticipation of the receipt of rated 

orders. 

Stafford Act means title VI 

(Emergency Preparedness) of the Robert 

T. Stafford Disaster Relief and 

Emergency Assistance Act, as amended 

(42 U.S.C. 5121 et seq.). 

Water resources means all usable 

water, from all sources, within the 

jurisdiction of the United States, that 

can be managed, controlled, and 

allocated to meet emergency 

requirements, except ‘‘water resources’’ 

do not include usable water that 

qualifies as ‘‘food resources’’. 

Working day means any day that the 

recipient of an order is open for 

business. 

Subpart C—Placement of Rated Orders 

§ 101.30 Delegations of authority. 

(a) The priorities and allocations 

authorities of the President under 

section 101 of the DPA with respect to 

health resources have been delegated to 

the Secretary under E.O. 13603. The 

Secretary may re-delegate the 

Secretary’s priorities authorities under 

the DPA to authorize a Delegate Agency 

to assign priority ratings to orders for 

health resources needed for use in 

approved programs. 

(b) Pursuant to 87 FR 58363 published 

in the Federal Register on September 

26, 2022, the Secretary delegated to the 

Assistant Secretary for Preparedness 

and Response (the ASPR) within the 

Administration for Strategic 

Preparedness and Response (ASPR), the 

authority under section 201 of E.O. 

13603 to exercise priorities authority 

under section 101 of the DPA. This 

delegation authorized the ASPR, on 

behalf of the Secretary, to approve DO— 

[–[M1–M9] priority rating requests for 

health resources that promote the 

national defense, though this delegation 

excludes the authority to approve all 

priorities provisions for health resources 

that require DX—[–[M1–M9] priority 

ratings. 

§ 101.31 Priority ratings. 

(a) Levels of priority. (1) There are two 

levels of priority established by the 

HRPAS, identified by the rating symbols 

‘‘DO’’ and ‘‘DX’’. 

(2) All DO rated orders have equal 

priority with each other and take 

precedence over unrated orders. All DX 

rated orders have equal priority with 

each other and take precedence over DO 

rated orders and unrated orders. (For 

resolution of conflicts among rated 

orders of equal priority, see § 101.34(c). 

(3) In addition, a Directive regarding 

priority treatment for a given item 

issued by HHS for that item takes 

precedence over any DX rated order, DO 

rated order, or unrated order, as 

stipulated in the Directive. (For a full 

discussion of Directives, see § 101.62.) 

(b) Priority ratings. A priority rating is 

an identifying code assigned by a 

Delegate Agency or authorized person 

placed on all rated orders for health 

resources. It consists of the rating 

symbol and the program identification 

symbol. 

§ 101.32 Elements of a rated order. 

(a) Each rated order must include: 

(1) The appropriate priority rating 

(e.g., DO–[M1–M9 or DX—[–[M1–M9]; 

(2) A required delivery date or dates. 

The words ‘‘immediately’’ or ‘‘as soon 

as possible’’ do not constitute a delivery 

date. A ‘‘requirements contract,’’ ‘‘basic 

ordering agreement,’’ ‘‘prime vendor 

contract,’’ or similar procurement 

document bearing a priority rating may 

contain no specific delivery date or 

dates and may provide for the 

furnishing of items or service from timeto-time or within a stated period against 

specific purchase orders, such as 

‘‘calls,’’ ‘‘requisitions,’’ and ‘‘delivery 

orders.’’ These purchase orders must 

specify a required delivery date or dates 

and are to be considered as rated as of 

the date of their receipt by the supplier 

and not as of the date of the original 

procurement document; 

(3) The written signature on a 

manually placed order, or the digital 

signature or name on an electronically 

placed order, of an individual 

authorized to sign rated orders for the 

person placing the order. The signature 

or use of the name certifies that the 

rated order is authorized under this part 

and that the requirements of this part 

are being followed; and 

(4) A statement that reads in 

substance: 

(b) This is a rated order certified for 

national defense use, and you are 

required to follow all the provisions of 

the Health Resources Priorities and 

Allocations System regulation at 45 CFR 

part 101. 


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(c) Additional element required for 

certain emergency preparedness rated 

orders. If the rated order is placed in 

support of emergency preparedness 

requirements and expedited action is 

necessary and appropriate to meet these 

requirements, the following statement 

must be included in the order: ‘‘This 

rated order is placed for the purpose of 

emergency preparedness. It must be 

accepted or rejected within [Insert a 

time limit no less than the minimum 

applicable time limit specified in § 101. 

33(e)].’’ 

§ 101.33 Acceptance and rejection of rated 

orders. 

(a) Mandatory acceptance. (1) Except 

as otherwise specified in this section, a 

person shall accept every rated order 

received and must fill such orders 

regardless of any other rated or unrated 

orders that have been accepted. 

(2) A person shall not discriminate 

against rated orders in any manner such 

as by charging higher prices or by 

imposing different terms and conditions 

than for comparable unrated orders. 

(b) Mandatory rejection. Unless 

otherwise directed by HHS for a rated 

order involving health resources: 

(1) A person shall not accept a rated 

order for delivery on a specific date if 

unable to fill the order by that date. 

However, the person must inform the 

customer of the earliest date on which 

delivery can be made and offer to accept 

the order on the basis of that date. 

Scheduling conflicts with previously 

accepted lower rated or unrated orders 

are not sufficient reason for rejection 

under this section. 

(2) A person shall not accept a DO 

rated order for delivery on a date which 

would interfere with delivery of any 

previously accepted DO or DX rated 

orders. However, the person must offer 

to accept the order based on the earliest 

delivery date otherwise possible. 

(3) A person shall not accept a DX 

rated order for delivery on a date which 

would interfere with delivery of any 

previously accepted DX rated orders but 

must offer to accept the order based on 

the earliest delivery date otherwise 

possible. 

(4) If a person is unable to fill all of 

the rated orders of equal priority status 

received on the same day, the person 

must accept, based upon the earliest 

delivery dates, only those orders which 

can be filled, and reject the other orders. 

For example, a person must accept order 

A requiring delivery on December 15 

before accepting order B requiring 

delivery on December 31. However, the 

person must offer to accept the rejected 

orders based on the earliest delivery 

dates otherwise possible. 

(c) Optional rejection. Unless 

otherwise directed by HHS for a rated 

order involving health resources, rated 

orders may be rejected in any of the 

following cases as long as a supplier 

does not discriminate among customers: 

(1) If the person placing the order is 

unwilling or unable to meet regularly 

established terms of sale or payment; 

(2) If the order is for an item not 

supplied or for a service not capable of 

being performed; 

(3) If the order is for an item or service 

produced, acquired, or provided only 

for the supplier’s own use for which no 

orders have been filled for two years 

prior to the date of receipt of the rated 

order. If, however, a supplier has sold 

some of these items or provided similar 

services, the supplier is obligated to 

accept rated orders up to that quantity 

or portion of production or service, 

whichever is greater, sold or provided 

within the past two years; 

(4) If the person placing the rated 

order, other than the U.S. Government, 

makes the item or performs the service 

being ordered; 

(5) If acceptance of a rated order or 

performance against a rated order would 

violate any other regulation, official 

action, or order of the HHS issued under 

the authority of the DPA or another 

relevant statute. 

(d) Customer notification 

requirements. (1) Except as provided in 

paragraph (e) of this section, a person 

must accept or reject a rated order in 

writing or electronically within fifteen 

(15) working days after receipt of a DOrated order and within ten (10) working 

days after receipt of a DX-rated order. If 

the order is rejected, the person must 

give reasons in writing or electronically 

for the rejection. 

(2) If a person has accepted a rated 

order and subsequently finds that 

shipment or performance will be 

delayed, the person must notify the 

customer immediately, give the reasons 

for the delay, and advise of a new 

shipment or performance date. If 

notification is given verbally, written 

(hard copy) or electronic confirmation 

must be provided within one (1) 

working day of the verbal notice. 

(e) Exception for emergency response 

conditions. If the rated order is placed 

for the purpose of emergency 

preparedness, and expedited action is 

necessary or appropriate to meet these 

requirements and the order includes the 

statement as set forth in 

§ 101.32(a)(4)(b), a person must accept 

or reject a rated order and transmit the 

acceptance or rejection in writing or in 

an electronic format within the time 

frame specified in the rated order 

(usually within two working days after 

receipt of the order). The minimum 

times for acceptance or rejection that 

such orders may specify are six (6) 

hours after receipt if the order is issued 

by an authorized person in response to 

a hazard that has occurred; or twelve 

(12) hours after receipt if the order is 

issued by an authorized person to 

prepare for an imminent hazard. 

§ 101.34 Preferential scheduling. 

(a) A person must schedule 

operations, including the acquisition of 

all needed production items or services, 

in a timely manner to satisfy the 

delivery requirements of each rated 

order. Modifying production or delivery 

schedules is necessary only when 

required delivery dates for rated orders 

cannot otherwise be met. 

(b) DO rated orders must be given 

production preference over unrated 

orders, if necessary, to meet required 

delivery dates, even if this requires the 

diversion of items being processed or 

ready for delivery or services being 

performed against unrated orders. 

Similarly, DX rated orders must be 

given preference over DO rated orders 

and unrated orders. (Examples: If a 

person receives a DO rated order with 

a delivery date of June 3 and if meeting 

that date would mean delaying 

production or delivery of an item for an 

unrated order, the unrated order must 

be delayed. If a DX rated order is 

received calling for delivery on July 15 

and a person has a DO rated order 

requiring delivery on June 2 and 

operations can be scheduled to meet 

both deliveries, there is no need to alter 

production schedules to give any 

additional preference to the DX rated 

order. However, if business operations 

cannot be altered to meet both the June 

2 and July 15 delivery dates, then the 

DX rated order must be given priority 

over the DO rated order.) 

(c)(1) If a person finds that delivery or 

performance against any accepted rated 

orders conflicts with the delivery or 

performance against other accepted 

rated orders of equal priority status, the 

person shall give precedence to the 

conflicting orders in the sequence in 

which they are to be delivered or 

performed (not to the receipt dates). If 

the conflicting orders are scheduled to 

be delivered or performed on the same 

day, the person shall give precedence to 

those orders that have the earliest 

receipt dates. 

(2) If a person is unable to resolve 

rated order delivery or performance 

conflicts under this section, the person 

should promptly seek special priorities 

assistance as provided in §§ 101.40 

through 101.44. If the person’s customer 

objects to the rescheduling of delivery 


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or performance of a rated order, the 

customer should promptly seek special 

priorities assistance as provided in 

§§ 101.40 through 101.44. For any rated 

order against which delivery or 

performance will be delayed, the person 

must notify the customer as provided in 

§ 101.33(d)(2). 

(d) If a person is unable to purchase 

needed production items in time to fill 

a rated order by its required delivery 

date, the person must fill the rated order 

by using inventoried production items. 

A person who uses inventoried items to 

fill a rated order may replace those 

items with the use of a rated order as 

provided in § 101.37(b). 

§ 101.35 Extension of priority ratings. 

(a) A person must use rated orders 

with suppliers to obtain items or 

services needed to fill a rated order. The 

person must use the priority rating 

indicated on the customer’s rated order, 

except as otherwise provided in this 

part or as directed by HHS. 

(b) The priority rating must be 

included on each successive order 

placed to obtain items or services 

needed to fill a customer’s rated order. 

This continues from contractor to 

subcontractor to supplier throughout the 

entire procurement chain. 

§ 101.36 Changes or cancellations of 

priority ratings and rated orders. 

(a) The priority rating on a rated order 

may be changed or canceled by: 

(1) An official action of HHS; or 

(2) Written notification from the 

person who placed the rated order 

(including a Delegate Agency). 

(b) If an unrated order is amended to 

make it a rated order, or a DO rating is 

changed to a DX rating, the supplier 

must give the appropriate preferential 

treatment to the order as of the date the 

change is received by the supplier. 

(c) An amendment to a rated order 

that significantly alters a supplier’s 

original production or delivery schedule 

shall constitute a new rated order as of 

the date of its receipt. The supplier must 

accept or reject the amended order 

according to the provisions of § 101.33. 

(d) The following amendments do not 

constitute a new rated order: a change 

in shipping destination; a reduction in 

the total amount of the order; an 

increase in the total amount of the order 

which has negligible impact upon 

deliveries; a minor variation in size or 

design (prior to the start of production); 

or a change which is agreed upon 

between the supplier and the customer. 

(e) If a person no longer needs items 

or services to fill a rated order, any rated 

orders placed with suppliers for the 

items or services, or the priority rating 

on those orders, must be canceled. 

(f) When a priority rating is added to 

an unrated order, or is changed or 

canceled, all suppliers must be 

promptly notified in writing. 

§ 101.37 Use of rated orders. 

(a) A person must use rated orders to 

obtain: 

(1) Items which will be physically 

incorporated into other items to fill 

rated orders, including that portion of 

such items normally consumed or 

converted into scrap or by-products in 

the course of processing; 

(2) Containers or other packaging 

materials required to make delivery of 

the finished items against rated orders; 

(3) Services, other than contracts of 

employment, needed to fill rated orders; 

(4) MRO needed to produce the 

finished items to fill rated orders. 

(b) A person may use a rated order to 

replace inventoried items (including 

finished items) if such items were used 

to fill rated orders, as follows: 

(1) The order must be placed within 

90 days of the date of use of the 

inventory. 

(2) A DO rating symbol and the 

program identification symbol indicated 

on the customer’s rated order must be 

used on the order. A DX rating may not 

be used even if the inventory was used 

to fill a DX rated order. 

(3) If the priority ratings on rated 

orders from one customer or several 

customers contain different program 

identification symbols, the rated orders 

may be combined. 

(c) A person may combine DX and DO 

rated orders from one customer or 

several customers if the items or 

services covered by each level of 

priority are identified separately and 

clearly. 

(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 § 101.32, are included on 

the order with the statement required in 

§ 101.32(a)(4) modified to read in 

substance: ‘‘This purchase order 

contains rated order quantities certified 

for national defense use, and you are 

required to follow all applicable 

provisions of the Health Resources 

Priorities and Allocations System 

regulations at 45 CFR part 101 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 § 101.33 and give 

preferential treatment only to the rated 

quantities as required by this part. This 

part may not be used to require 

preferential treatment for the unrated 

portion of the order. 

(3) Any supplier who believes that 

rated and unrated orders are being 

combined in a manner contrary to the 

intent of this part or in a fashion that 

causes undue or exceptional hardship 

may submit a request for adjustment or 

exception under § 101.80. 

(e) A person may place a rated order 

for the minimum commercially 

procurable quantity even if the quantity 

needed to fill a rated order is less than 

that minimum. However, a person must 

combine rated orders as provided in 

paragraph (c) of this section, if possible, 

to obtain minimum procurable 

quantities. 

(f) A person is not required to place 

a priority rating on an order for less than 

one-half of the Simplified Acquisition 

Threshold (as established in the Federal 

Acquisition Regulation (FAR) (see 48 

CFR 2.101) or in other authorized 

acquisition regulatory or management 

systems) whichever amount is greater, 

provided that delivery can be obtained 

in a timely fashion without the use of 

the priority rating. 

§ 101.38 Limitations on placing rated 

orders. 

(a) General limitations. (1) A person 

may not place a DO or DX rated order 

pursuant to this part unless the person 

in receipt of the rated order has been 

explicitly authorized to do so by HHS or 

a Delegate Agency or is otherwise 

permitted to do so by this part. 

(2) Rated orders may not be used to 

obtain: 

(i) Delivery on a date earlier than 

needed; 

(ii) A greater quantity of the item or 

services than needed, except to obtain a 

minimum procurable quantity. Separate 

rated orders may not be placed solely 

for the purpose of obtaining minimum 

procurable quantities on each order; 

(iii) Items or services in advance of 

the receipt of a rated order, except as 

specifically authorized by HHS (see 

§ 101.41(c) for information on obtaining 

authorization for a priority rating in 

advance of a rated order); 

(iv) Items that are not needed to fill 

a rated order, except as specifically 

authorized by HHS, or as otherwise 

permitted by this part; or 

(v) Any of the following items unless 

specific priority rating authority has 

been obtained from HHS, a Delegate 

Agency, or the Department of 

Commerce, as appropriate: 

(A) Items for plant improvement, 

expansion, or construction, unless they 

will be physically incorporated into a 


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construction project covered by a rated 

order; or 

(B) Production or construction 

equipment or items to be used for the 

manufacture of production equipment. 

[For information on requesting priority 

rating authority, see § 101.41.] 

(C) Any items related to the 

development of chemical or biological 

warfare capabilities or the production of 

chemical or biological weapons unless 

such development or production has 

been authorized by the President or the 

Secretary of Defense. This provision 

does not however prohibit the use of the 

priority and allocations authority to 

acquire or produce qualified 

countermeasures that are necessary to 

treat, identify, or prevent harm from any 

biological or chemical agent that may 

pose a public health threat affecting 

national security. 

(b) Jurisdictional limitations. Unless 

authorized by the resource agency with 

jurisdiction, the provisions of this part 

are not applicable to the following 

resources: 

(1) Food resources, food resource 

facilities, livestock resources, veterinary 

resources, plant health resources, and 

the domestic distribution of farm 

equipment and commercial fertilizer 

(Resource agency with jurisdiction— 

Department of Agriculture); 

(2) All forms of energy (Resource 

agency with jurisdiction—Department 

of Energy); 

(3) All forms of civil transportation 

(Resource agency with jurisdiction— 

Department of Transportation); 

(4) Water resources (Resource agency 

with jurisdiction—Department of 

Defense/U.S. Army Corps of Engineers); 

(5) All materials, services, and 

facilities, including construction 

materials (industrial resources) for 

which the authority has not been 

delegated to other agencies under E.O. 

13603 (Resource agency with 

jurisdiction—Department of Commerce); 

(6) The priorities and allocations 

authority of this part may not be applied 

to communications services (Resource 

agency with jurisdiction—National 

Communications System under E.O. 

13618 of July 6, 2012). 

Subpart D—Special Priorities 

Assistance 

§ 101.40 General provisions. 

(a) Once a priority rating has been 

authorized pursuant to this part, further 

action by HHS is generally not needed. 

However, from time-to-time, production 

or delivery problems will arise in 

connection with rated orders for health 

resources as covered under this part. In 

this event, a person should immediately 

contact ASPR for guidance, as specified 

in § 101.93. ASPR serves as the lead 

policy office for emergency 

preparedness and response operations 

on behalf of HHS and manages the 

Department’s delegated DPA authorities. 

If ASPR is unable to resolve the problem 

or to authorize the use of a priority 

rating and believes additional assistance 

is warranted, ASPR may forward the 

request to another agency with resource 

jurisdiction, such as the Department of 

Commerce, as appropriate, for action. 

Special priorities assistance is provided 

to alleviate problems that do arise. 

(b) Special priorities assistance is 

available for any reason consistent with 

this part. Generally, special priorities 

assistance is provided to expedite 

deliveries, resolve delivery conflicts, 

place rated orders, locate suppliers, or 

to verify information supplied by 

customers and vendors. Special 

priorities assistance may also be used to 

request rating authority for items that 

are not normally eligible for priority 

treatment. 

§ 101.41 Requests for priority rating 

authority. 

(a) Rating authority for items or 

services not normally rated. If a rated 

order is likely to be delayed because a 

person is unable to obtain items or 

services not normally rated under this 

part, the person may request the 

authority to use a priority rating in 

ordering the needed items or services. 

(b) Rating authority for production or 

construction equipment. (1) A request 

for priority rating authority for 

production or construction equipment 

must be submitted to the U.S. 

Department of Commerce on Form BIS– 

999. 

(2) When the use of a priority rating 

is authorized for the procurement of 

production or construction equipment, a 

rated order may be used either to 

purchase or to lease such equipment. 

However, in the latter case, the 

equipment may be leased only from a 

person engaged in the business of 

leasing such equipment or from a 

person willing to lease rather than sell. 

(c) Rating authority in advance of a 

rated prime contract. (1) In certain 

cases, and upon specific request HHS 

may authorize a person to place a 

priority rating on an order to a supplier 

in advance of the issuance of a rated 

prime contract. In these instances, the 

person requesting advance-rating 

authority must obtain sponsorship of 

the request from HHS or the appropriate 

Delegate Agency. The person shall also 

assume any business risk associated 

with the placing of rated orders in the 

event the rated prime contract is not 

issued. 

(2) The person must state the 

following in the request: It is 

understood that the authorization of a 

priority rating in advance of our 

receiving a rated prime contract from 

the Department of Health and Human 

Services (HHS) and our use of that 

priority rating with our suppliers in no 

way commits HHS or any other 

government agency to enter into a 

contract or order or to expend funds. 

Further, we understand that the Federal 

Government shall not be liable for any 

cancellation charges, termination costs, 

or other damages that may accrue if a 

rated prime contract is not eventually 

placed and, as a result, we must 

subsequently cancel orders placed with 

the use of the priority rating authorized 

as a result of this request. 

(3) In reviewing requests for rating 

authority in advance of a rated prime 

contract, HHS will consider, among 

other things, the following criteria: 

(i) The probability that the prime 

contract will be awarded; 

(ii) The impact of the resulting rated 

orders on suppliers and on other 

authorized programs; 

(iii) Whether the contractor is the sole 

source; 

(iv) Whether the item being produced 

has a long lead time; 

(v) The time period for which the 

rating is being requested; 

(4) HHS may require periodic reports 

on the use of the rating authority 

granted under paragraph (c) of this 

section. 

(5) If a rated prime contract is not 

issued, the person shall promptly notify 

all suppliers who have received rated 

orders pursuant to the advanced rating 

authority that the priority rating on 

those orders is cancelled. 

§ 101.42 Examples of assistance. 

(a) While special priorities assistance 

may be provided for any reason in 

support of this part, it is usually 

provided in situations where: 

(1) A person is experiencing difficulty 

in obtaining delivery against a rated 

order by the required delivery date; or 

(2) A person cannot locate a supplier 

for an item or service needed to fill a 

rated order. 

(b) Other examples of special 

priorities assistance include: 

(1) Ensuring that rated orders receive 

preferential treatment by suppliers; 

(2) Resolving production or delivery 

conflicts between various rated orders; 

(3) Assisting in placing rated orders 

with suppliers; 

(4) Verifying the urgency of rated 

orders; and 


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(5) Determining the validity of rated 

orders. 

§ 101.43 Criteria for assistance. 

Requests for special priorities 

assistance should be timely, i.e., the 

request has been submitted promptly 

and enough time exists for HHS, or the 

Delegate Agency to affect a meaningful 

resolution to the problem, and must 

establish that: 

(a) There is an urgent need for the 

item; and 

(b) The applicant has made a 

reasonable effort to resolve the problem. 

§ 101.44 Instances where assistance may 

not be provided. 

Special priorities assistance is 

provided at the discretion of HHS or the 

Delegate Agency when it is determined 

that such assistance is warranted to 

meet the objectives of this part. 

Examples where assistance may not be 

provided include situations when a 

person is attempting to: 

(a) Secure a price advantage; 

(b) Obtain delivery prior to the time 

required to fill a rated order; 

(c) Gain competitive advantage; 

(d) Disrupt an industry apportionment 

program in a manner designed to 

provide a person with an unwarranted 

share of scarce items; or 

(e) Overcome a supplier’s regularly 

established terms of sale or conditions 

of doing business. 

Subpart E—Allocation Actions 

§ 101.50 Policy. 

(a) Allocation orders will: 

(1) Only be used when there is 

insufficient supply of a material, 

service, or facility to satisfy national 

defense supply requirements through 

the use of the priorities authority or 

when the use of the priorities authority 

would cause a severe and prolonged 

disruption in the supply of materials, 

services, or facilities available to 

support normal U.S. economic 

activities; and 

(2) Not be used to ration materials or 

services at the retail level. 

(b) Allocation orders, when used, will 

be distributed equitably among the 

suppliers of the materials, services, or 

facilities being allocated and not require 

any person to relinquish a 

disproportionate share of the civilian 

market. 

§ 101.51 General procedures. 

Before the Department of Health and 

Human Services uses its allocations 

authority to address a supply problem 

within its resource jurisdiction, it will 

develop a plan that includes: 

(a) A copy of the written 

determination made in accordance with 

section 202 of Executive Order 13603, 

that the program or programs that would 

be supported by the allocation action 

are necessary or appropriate to promote 

the national defense. 

(b) A detailed description of the 

situation to include any unusual events 

or circumstances that have created the 

requirement for an allocation action; 

(c) A statement of the specific 

objective(s) of the allocation action; 

(d) A list of the materials, services, or 

facilities to be allocated; 

(e) A list of the sources of the 

materials, services, or facilities that will 

be subject to the allocation action; 

(f) A detailed description of the 

provisions that will be included in the 

allocation orders, including the type(s) 

of allocation orders, the percentages or 

quantity of capacity or output to be 

allocated for each purpose, and the 

duration of the allocation action (i.e., 

anticipated start and end dates); 

(g) An evaluation of the impact of the 

proposed allocation action on the 

civilian market; and 

(h) Proposed actions, if any, to 

mitigate disruptions to civilian market 

operations. 

§ 101.52 Controlling the general 

distribution of a material in the civilian 

market. 

No allocation action taken by HHS 

may be used to control the general 

distribution of a material in the civilian 

market, unless the Secretary has: 

(a) Made a written finding that: 

(1) Such material is a scarce and 

critical material essential to the national 

defense, and 

(2) The requirements of the national 

defense for such material cannot 

otherwise be met without creating a 

significant dislocation of the normal 

distribution of such material in the 

civilian market to such a degree as to 

create appreciable hardship; 

(b) Submitted the finding for the 

President’s approval through the 

Assistant to the President and National 

Security Advisor and the Assistant to 

the President for Homeland Security 

and Counterterrorism; and 

(c) The President has approved the 

finding. 

§ 101.53 Types of allocation orders. 

There are three types of allocation 

orders available for communicating 

allocation actions. 

(a) Set-aside. An official action that 

requires a person to reserve materials, 

services, or facilities capacity in 

anticipation of the receipt of rated 

orders. 

(b) Directive. An official action that 

requires a person to take or refrain from 

taking certain actions in accordance 

with its provisions. A directive can 

require a person to: Stop or reduce 

production of an item; prohibit the use 

of selected materials, services, or 

facilities; or divert the use of materials, 

services, or facilities from one purpose 

to another; and 

(c) Allotment. An official action that 

specifies the maximum quantity of a 

material, service, or facility authorized 

for a specific use to promote the 

national defense. 

§ 101.54 Elements of an allocation order. 

Allocation orders may be issued 

directly to the affected persons or by 

constructive notice through publication 

in the Federal Register. This section 

describes the elements that each order 

must include. 

(a) Each allocation order must 

include: 

(1) A detailed description of the 

required allocation action(s), including 

its relationship to any received DX rated 

orders, DO rated orders, and unrated 

orders; 

(2) Specific start and end calendar 

dates for each required allocation 

action; 

(3) The written signature on a 

manually placed order or the digital 

signature on an electronically placed 

order of the Secretary of HHS. 

(b)(1) Elements to be included in 

orders issued directly to affected 

persons: 

(2) A statement that reads in 

substance: ‘‘This is an allocation order 

certified for national defense use. [Insert 

the name of the person receiving the 

order] is required to comply with this 

order, in accordance with the provisions 

of the Health Resources Priorities and 

Allocations System regulation (45 CFR 

part 101); 

(c)(1) Elements to be included in an 

allocation order that gives constructive 

notice through publication in the 

Federal Register: 

(2) A statement that reads in 

substance: ‘‘This is an allocation order 

certified for national defense use. [Insert 

the name(s) of the person(s) to whom 

the order applies or a description of the 

class of persons to whom the order 

applies] is (are) required to comply with 

this order, in accordance with the 

provisions of the Health Resources 

Priorities and Allocations System 

regulation (45 CFR part 101). 

§ 101.55 Mandatory acceptance of an 

allocation order. 

(a) Except as otherwise specified in 

this section (see paragraph (c) of this 

section), a person shall accept and 

comply with every allocation order 

received. 


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(b) A person shall not discriminate 

against an allocation order in any 

manner such as by charging higher 

prices for materials, services, or 

facilities covered by the order or by 

imposing terms and conditions for 

contracts and orders involving allocated 

materials, services, or facilities that 

differ from the person’s terms and 

conditions for contracts and orders for 

the materials, services, or facilities prior 

to receiving the allocation order. 

(c) If a person is unable to comply 

fully with the required action(s) 

specified in an allocation order, the 

person must notify the ASPR, as 

specified in § 101.93, immediately, 

explain the extent to which compliance 

is possible, and give the reasons why 

full compliance is not possible. If 

notification is given verbally, then 

written or electronic confirmation must 

be provided within one (1) working day. 

Such notification does not release the 

person from complying with the order 

to the fullest extent possible, until the 

person is notified by HHS that the order 

has been changed or cancelled. 

§ 101.56 Changes or cancellations of an 

allocation order. 

An allocation order may be changed 

or canceled by an official action of HHS. 

Notice of such changes or cancellations 

may be provided directly to persons to 

whom the order being cancelled or 

modified applies or constructive notice 

may be provided by publication in the 

Federal Register. 

Subpart F—Official Actions 

§ 101.60 General provisions. 

(a) HHS may take specific official 

actions to implement the provisions of 

this part. 

(b) These official actions include, but 

are not limited to, Rating 

Authorizations, Directives, and Letters 

of Understanding (See § 101.20.) 

§ 101.61 Rating Authorizations. 

(a) A Rating Authorization is an 

official action granting specific priority 

rating authority that: 

(1) Permits a person to place a priority 

rating on an order for an item or service 

not normally ratable under this part; or 

(2) Authorizes a person to modify a 

priority rating on a specific order or 

series of contracts or orders. 

(b) To request priority rating 

authority, see § 101.41. 

§ 101.62 Directives. 

(a) A Directive is an official action 

that requires a person to take or refrain 

from taking certain actions in 

accordance with its provisions. 

(b) A person must comply with each 

Directive issued. However, a person 

may not use or extend a Directive to 

obtain any items from a supplier, unless 

expressly authorized to do so in the 

Directive. 

(c) A Directive takes precedence over 

all DX rated orders, DO rated orders, 

and unrated orders previously or 

subsequently received, unless a contrary 

instruction appears in the Directive. 

§ 101.63 Letters of Understanding. 

(a) A Letter of Understanding is an 

official action that may be issued in 

resolving special priorities assistance 

cases to reflect an agreement reached by 

all parties including HHS, the 

Department of Commerce (if applicable), 

a Delegate Agency (if applicable), the 

supplier, and the customer. 

(b) A Letter of Understanding is not 

used to alter scheduling between rated 

orders, to authorize the use of priority 

ratings, to impose restrictions under this 

part. Rather, Letters of Understanding 

are used to confirm production or 

shipping schedules that do not require 

modifications to other rated orders. 

Subpart G—Compliance 

§ 101.70 General provisions. 

(a) HHS may take specific official 

actions for any reason necessary or 

appropriate to the enforcement or the 

administration of the Defense 

Production Act and other applicable 

statutes, this part, or an official action. 

Such actions include Administrative 

Subpoenas, Demands for Information, 

and Inspection Authorizations. 

(b) Any person who places or receives 

a rated order or an allocation order must 

comply with the provisions of this part. 

(c) Willful violation of the provisions 

of title I or section 705 of the DPA and 

other applicable statutes, this part, or an 

official action of HHS is a criminal act, 

punishable as provided in the DPA and 

other applicable statutes, and as set 

forth in § 101.74. 

§ 101.71 Audits and investigations. 

(a) Audits and investigations are 

official examinations of books, records, 

documents, other writings, and 

information to ensure that the 

provisions of the DPA and other 

applicable statutes, this part, and 

official actions have been properly 

followed. An audit or investigation may 

also include interviews and a systems 

evaluation to detect problems or failures 

in the implementation of this part. 

(b) When undertaking an audit or 

investigation, HHS shall: 

(1) Define the scope and purpose in 

the official action given to the person 

under investigation; and 

(2) Have ascertained that the 

information sought, or other adequate 

and authoritative data are not available 

from any Federal or other responsible 

agency. 

(c) In administering this part, HHS 

may issue the following documents that 

constitute official actions: 

(1) Administrative Subpoenas. An 

Administrative Subpoena requires a 

person to appear as a witness before an 

official designated by HHS to testify 

under oath on matters of which that 

person has knowledge relating to the 

enforcement or the administration of the 

DPA and other applicable statutes, this 

part, or official actions. An 

Administrative Subpoena may also 

require the production of books, papers, 

records, documents and physical objects 

or property. 

(2) Demands for Information. A 

Demand for Information requires a 

person to furnish to a duly authorized 

representative of HHS any information 

necessary or appropriate to the 

enforcement or the administration of the 

DPA and other applicable statutes, this 

part, or official actions. 

(3) Inspection Authorizations. An 

Inspection Authorization requires a 

person to permit a duly authorized 

representative of HHS to interview the 

person’s employees or agents, to inspect 

books, records, documents, other 

writings, and information, including 

electronically-stored information, in the 

person’s possession or control at the 

place where that person usually keeps 

them or otherwise, and to inspect a 

person’s property when such interviews 

and inspections are necessary or 

appropriate to the enforcement or the 

administration of the DPA and related 

statutes, this part, or official actions. 

(d) The production of books, records, 

documents, other writings, and 

information will not be required at any 

place other than where they are usually 

kept, if, prior to the return date 

specified in the Administrative 

Subpoena or Demand for Information, a 

duly authorized official of HHS is 

furnished with copies of such material 

that are certified under oath to be true 

copies. As an alternative, a duly 

authorized representative of HHS may 

enter into a stipulation with a person as 

to the content of the material. 

(e) An Administrative Subpoena, 

Demand for Information, or Inspection 

Authorization shall include the name, 

title, or official position of the person to 

be served, the evidence sought to be 

adduced, and its general relevance to 

the scope and purpose of the audit, 

investigation, or other inquiry. If 

employees or agents are to be 

interviewed; if books, records, 


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9034 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

documents, other writings, or 

information are to be produced; or if 

property is to be inspected; the 

Administrative Subpoena, Demand for 

Information, or Inspection 

Authorization will describe them with 

particularity. 

(f) Service of documents shall be 

made in the following manner: 

(1) Service of a Demand for 

Information or Inspection Authorization 

shall be made personally, or by Certified 

Mail-Return Receipt Requested at the 

person’s last known address. Service of 

an Administrative Subpoena shall be 

made personally. Personal service may 

also be made by leaving a copy of the 

document with someone at least 18 

years old at the person’s last known 

dwelling or place of business. 

(2) Service upon other than an 

individual may be made by serving a 

partner, corporate officer, or a managing 

or general agent authorized by 

appointment or by law to accept service 

of process. If an agent is served, a copy 

of the document shall be mailed to the 

person named in the document. 

(3) Any individual 18 years of age or 

over may serve an Administrative 

Subpoena, Demand for Information, or 

Inspection Authorization. When 

personal service is made, the individual 

making the service shall prepare an 

affidavit as to the manner in which 

service was made and the identity of the 

person served, and return the affidavit, 

and in the case of subpoenas, the 

original document, to the issuing officer. 

In case of failure to make service, the 

reasons for the failure shall be stated on 

the original document. 

§ 101.72 Compulsory process. 

(a) If a person refuses to permit a duly 

authorized representative of HHS to 

have access to any premises or to the 

source of information necessary to the 

administration or the enforcement of the 

DPA and other applicable statutes, this 

part, or official actions, HHS, through its 

authorized representative may seek 

compulsory process. Compulsory 

process means the institution of 

appropriate legal action, including ex 

parte application for an inspection 

warrant or its equivalent, in any forum 

of appropriate jurisdiction. 

(b) Compulsory process may be 

sought in advance of an audit, 

investigation, or other inquiry, if, in the 

judgment of the Secretary there is 

reason to believe that a person will 

refuse to permit an audit, investigation, 

or other inquiry, or that other 

circumstances exist which make such 

process desirable or necessary. 

§ 101.73 Notification of failure to comply. 

(a) At the conclusion of an audit, 

investigation, or other inquiry, or at any 

other time, HHS may inform the person 

in writing of HHS’ position regarding 

that person’s non-compliance with the 

requirements of the DPA and other 

applicable statutes, this part, or an 

official action. 

(b) In cases where HHS determines 

that failure to comply with the 

provisions of the DPA and other 

applicable statutes, this part, or an 

official action was inadvertent, the 

person may be informed in writing of 

the particulars involved and the 

corrective action to be taken. Failure to 

take corrective action may then be 

construed as a willful violation of the 

DPA and other applicable statutes, this 

part, or an official action. 

§ 101.74 Violations, penalties, and 

remedies. 

(a) Willful violation of the provisions 

of the DPA, and related statutes (when 

applicable), this part, or an official 

action, is a crime and upon conviction, 

a person may be punished by fine or 

imprisonment, or both. The maximum 

penalties provided by the DPA are a 

$10,000 fine, or one year in prison, or 

both. 

(b) The Government may also seek an 

injunction from a court of appropriate 

jurisdiction to prohibit the continuance 

of any violation of, or to enforce 

compliance with, the DPA, this part, or 

an official action. 

(c) In order to secure the effective 

enforcement of the DPA and other 

applicable statutes, this part, and 

official actions, the following are 

prohibited: 

(1) No person may solicit, influence, 

or permit another person to perform any 

act prohibited by, or to omit any act 

required by, the DPA and other 

applicable statutes, this part, or an 

official action. 

(2) No person may conspire or act in 

concert with any other person to 

perform any act prohibited by, or to 

omit any act required by, the DPA and 

other applicable statutes, this part, or an 

official action. 

(3) No person shall deliver any item 

if the person knows or has reason to 

believe that the item will be accepted, 

redelivered, held, or used in violation of 

the DPA and other applicable statutes, 

this part, or an official action. In such 

instances, the person must immediately 

notify HHS that, in accordance with this 

provision, delivery has not been made. 

§ 101.75 Compliance conflicts. 

If compliance with any provision of 

the DPA and other applicable statutes, 

this part, or an official action would 

prevent a person from filling a rated 

order or from complying with another 

provision of the DPA and other 

applicable statutes, this part, or an 

official action, the person must 

immediately notify HHS, as specified in 

§ 101.93, for resolution of the conflict. 

Subpart H—Adjustments, Exceptions, 

and Appeals 

§ 101.80 Adjustments or exceptions. 

(a) A person may submit a request to 

HHS for an adjustment or exception on 

the ground that: 

(1) A provision of this part or an 

official action results in an undue or 

exceptional hardship on that person not 

suffered generally by others in similar 

situations and circumstances; or 

(2) The consequences of following a 

provision of this part or an official 

action are contrary to the intent of the 

DPA and other applicable statutes, or 

this part. 

(b) Each request for adjustment or 

exception must be in writing and 

contain a complete statement of all the 

facts and circumstances related to the 

provision of this part or official action 

from which adjustment is sought and a 

full and precise statement of the reasons 

why relief should be provided. 

(c) The submission of a request for 

adjustment or exception shall not 

relieve any person from the obligation of 

complying with the provision of this 

part or official action in question while 

the request is being considered unless 

such interim relief is granted in writing 

by the Secretary or the Secretary’s 

designated representative. 

(d) A decision of the Secretary or the 

Secretary’s designated representative 

under this section may be appealed to 

the Secretary. (For information on the 

appeal procedure, see § 101.81.) 

§ 101.81 Appeals. 

(a) Any person whose request for 

adjustment or exception was denied by 

the Secretary or the Secretary’s 

designated representative under 

§ 101.80, may appeal to the Secretary 

who, through the Secretary’s designated 

representative, shall review and 

reconsider the denial. 

(b)(1) Except as provided in paragraph 

(b)(2) of this section, an appeal must be 

received by the Secretary no later than 

45 business days after receipt of a 

written notice of denial. After this 45- 

business day period, an appeal may be 

accepted at the discretion of the 

Secretary. 

(2) For requests for adjustment or 

exception involving rated orders placed 

for the purpose of emergency 


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Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 9035 

preparedness (see § 101.33(e)), an 

appeal must be received by the 

Secretary, no later than 15 business days 

after receipt of a written notice of 

denial. Contract performance under the 

order shall not be stayed pending 

resolution of the appeal. 

(c) Each appeal must be in writing 

and contain a complete statement of all 

the facts and circumstances related to 

the action appealed from and a full and 

precise statement of the reasons the 

decision should be modified or 

reversed. 

(d) In addition to the written materials 

submitted in support of an appeal, an 

appellant may request, in writing, an 

opportunity for an informal hearing. 

This request may be granted or denied 

at the discretion of the Secretary or the 

Secretary’s designated representative. 

(e) When a hearing is granted, the 

Secretary may designate an HHS 

employee to act as the Secretary’s 

representative and hearing officer to 

conduct the hearing and to prepare a 

report. The hearing officer shall 

determine all procedural questions and 

impose such time or other limitations 

deemed reasonable. In the event that the 

hearing officer decides that a printed 

transcript is necessary, all expenses 

shall be borne by the appellant. 

(f) When determining an appeal, the 

Secretary may consider all information 

submitted during the appeal as well as 

any recommendations, reports, or other 

relevant information and documents 

available to HHS or consult with any 

other persons or groups. 

(g) The submission of an appeal under 

this section shall not relieve any person 

from the obligation of complying with 

the provision of this part or official 

action in question while the appeal is 

being considered unless such relief is 

granted in writing by the Secretary. 

Subpart I—Miscellaneous Provisions 

§ 101.90 Protection against claims. 

A person shall not be held liable for 

damages or penalties for any act or 

failure to act resulting directly or 

indirectly from compliance with any 

provision of this part, or an official 

action, notwithstanding that such 

provision or action shall subsequently 

be declared invalid by judicial or other 

competent authority. 

§ 101.91 Records and reports. 

(a) Persons are required to make and 

preserve for at least three years, accurate 

and complete records of any transaction 

covered by this part or an official action. 

(b) Records must be maintained in 

sufficient detail to permit the 

determination, upon examination, of 

whether each transaction complies with 

the provisions of this part or any official 

action. However, this part does not 

specify any method or system to be 

used. 

(c) Records required to be maintained 

by this part must be made available for 

examination on demand by duly 

authorized representatives of HHS as 

provided in § 101.71. 

(d) In addition, persons must develop, 

maintain, and submit any other records 

and reports to HHS that may be required 

for the administration of the DPA and 

other applicable statutes, and this part. 

(e) DPA section 705(d), as 

implemented by E.O. 13603, provides 

that information obtained under this 

section which the Secretary deems 

confidential, or with reference to which 

a request for confidential treatment is 

made by the person furnishing such 

information, shall not be published or 

disclosed unless the Secretary 

determines that the withholding of this 

information is contrary to the interest of 

the national defense. Information 

required to be submitted to HHS in 

connection with the enforcement or 

administration of the DPA, this part, or 

an official action, is deemed to be 

confidential under DPA section 705(d) 

and shall be handled in accordance with 

applicable Federal law. 

§ 101.92 Applicability of this part and 

official actions. 

(a) This part and all official actions, 

unless specifically stated otherwise, 

apply to transactions in any state, 

territory, or possession of the United 

States and the District of Columbia. 

(b) This part and all official actions 

apply not only to deliveries to other 

persons but also include deliveries to 

affiliates and subsidiaries of a person 

and deliveries from one branch, 

division, or section of a single entity to 

another branch, division, or section 

under common ownership or control. 

(c) This part shall not be construed to 

affect any administrative actions taken 

by HHS, or any outstanding contracts or 

orders placed pursuant to any of the 

regulations, orders, schedules, or 

delegations of authority previously 

issued by HHS pursuant to authority 

granted to HHS, by the President under 

the DPA and E.O. 13603. Such actions, 

contracts, or orders shall continue in 

full force and effect under this part 

unless modified or terminated by proper 

authority. 

§ 101.93 Communications. 

All communications concerning this 

part, including requests for copies of the 

part and explanatory information, 

requests for guidance or clarification, 

and requests for adjustment or 

exception shall be addressed to the 

Administration for Strategic 

Preparedness and Response, U.S. 

Department of Health and Human 

Services, Washington, DC 20201. Ref: 

HRPAS, or email aspr.dpa@hhs.gov. 

Appendix 1 to Part 101 

Program identification 

symbol Approved program Agency 

M1 ........................................ Emergency Support Function 8 Public Health and Medical Services.Department of Health and Human Services. 

M2 ........................................ Strategic National Stockpile ............................................ Department of Health and Human Services. 

M3 ........................................ Biodefense and Related Medical Countermeasures ...... Department of Health and Human Services. 

M4 ........................................ ASPR Critical Infrastructure Protection Program ............ Department of Health and Human Services. 


ddrumheller on DSK120RN23PROD with RULES1
9036 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

1 82 FR 58348. 

2 82 FR 27431. 

3OMB Memorandum M–24–07 (December 19, 

2023). 

Dated: January 26, 2024. 

Xavier Becerra, 

Secretary, U.S. Department of Health, and 

Human Services. 

[FR Doc. 2024–01947 Filed 2–8–24; 8:45 am] 

BILLING CODE 4150–37–P 

NATIONAL FOUNDATION ON THE 

ARTS AND THE HUMANITIES 

National Endowment for the Arts 

45 CFR Parts 1149 and 1158 

RIN 3135–AA33 

Civil Penalties Adjustment for 2024 

AGENCY: National Endowment for the 

Arts, National Foundation on the Arts 

and the Humanities. 

ACTION: Final rule. 

SUMMARY: The National Endowment for 

the Arts (NEA) is adjusting the 

maximum civil monetary penalties 

(CMPs) that may be imposed for 

violations of the Program Fraud Civil 

Remedies Act (PFCRA) and the NEA’s 

Restrictions on Lobbying to reflect the 

requirements of the Federal Civil 

Penalties Inflation Adjustment Act 

Improvements Act of 2015 (the 2015 

Act). The 2015 Act further amended the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990 (the Inflation 

Adjustment Act) to improve the 

effectiveness of civil monetary penalties 

and to maintain their deterrent effect. 

This final rule provides the 2024 annual 

inflation adjustments to the initial 

‘‘catch-up’’ adjustments made on June 

15, 2017, and reflects all other inflation 

adjustments made in the interim. 

DATES: This rule is effective February 9, 

2024. 

FOR FURTHER INFORMATION CONTACT: 

Daniel Fishman, Assistant General 

Counsel, National Endowment for the 

Arts, 400 7th St. SW, Washington, DC 

20506, Telephone: 202–682–5418. 

SUPPLEMENTARY INFORMATION: 

1. Background 

On December 12, 2017 the NEA 

issued a final rule entitled ‘‘Federal 

Civil Penalties Adjustments’’ 1 which 

finalized the NEA’s June 15, 2017 

interim final rule entitled 

‘‘Implementing the Federal Civil 

Penalties Adjustment Act Improvements 

Act’’,2 implementing the 2015 Act 

(section 701 of Pub. L. 114–74), which 

amended the Inflation Adjustment Act 

(28 U.S.C. 2461 note) requiring catch-up 

and annual adjustments to the NEA’s 

CMPs. The 2015 Act requires agencies 

make annual adjustments to its CMPs 

for inflation. 

A CMP is defined in the Inflation 

Adjustment Act as any penalty, fine, or 

other sanction that is (1) for a specific 

monetary amount as provided by 

Federal law, or has a maximum amount 

provided for by Federal law; (2) 

assessed or enforced by an agency 

pursuant to Federal law; and (3) 

assessed or enforced pursuant to an 

administrative proceeding or a civil 

action in the Federal courts. 

These annual inflation adjustments 

are based on the percentage change in 

the Consumer Price Index for all Urban 

Consumers (CPI–U) for the month of 

October preceding the date of the 

adjustment, relative to the October CPI– 

U in the year of the previous 

adjustment. The formula for the amount 

of a CMP inflation adjustment is 

prescribed by law, as explained in OMB 

Memorandum M–16–06 (February 24, 

2016), and therefore the amount of the 

adjustment is not subject to the exercise 

of discretion by the Chairman of the 

National Endowment for the Arts 

(Chairman). 

The Office of Management and Budget 

has issued guidance on implementing 

and calculating the 2024 adjustment 

under the 2015 Act.3 Per this guidance, 

the CPI–U adjustment multiplier for this 

annual adjustment is 1.03241. In its 

prior rules, the NEA identified two 

CMPs, which require adjustment: the 

penalty for false statements under the 

PFCRA and the penalty for violations of 

the NEA’s Restrictions on Lobbying. 

With this rule, the NEA is adjusting the 

amount of those CMPs accordingly. 

2. Dates of Applicability 

The inflation adjustments contained 

in this rule shall apply to any violations 

assessed after January 15, 2024. 

3. Adjustments 

Two CMPs in NEA regulations require 

adjustment in accordance with the 2015 

Act: (1) the penalty associated with the 

Program Fraud Civil Remedies Act (45 

CFR 1149.9) and (2) the penalty 

associated with Restrictions on 

Lobbying (45 CFR 1158.400; 45 CFR part 

1158, app. A). 

A. Adjustments to Penalties Under the 

NEA’s Program Fraud Civil Remedies 

Act Regulations 

The current maximum penalty under 

the PFCRA for false claims and 

statements is currently set at $13,507. 

The post-adjustment penalty or range is 

obtained by multiplying the preadjustment penalty or range by the 

percent change in the CPI–U over the 

relevant time period and rounding to 

the nearest dollar. Between October 

2022 and October 2023, the CPI–U 

increased by a multiplier of 103.241%. 

Therefore, the new post-adjustment 

maximum penalty under the PFCRA for 

false statements is $13,507 × 1.03241 = 

$13,944.76 which rounds to $13,945. 

Therefore, the maximum penalty under 

the PFCRA for false claims and 

statements will be $13,945. 

B. Adjustments to Penalties Under the 

NEA’s Restrictions on Lobbying 

Regulations 

The penalty for violations of the 

Restrictions on Lobbying is currently set 

at a range of a minimum of $23,714 and 

a maximum of $237,268. The postadjustment penalty or range is obtained 

by multiplying the pre-adjustment 

penalty or range by the percent change 

in the CPI–U over the relevant time 

period and rounding to the nearest 

dollar. Between October 2022 and 

October 2023, the CPI–U increased by a 

multiplier of 103.241%. Therefore, the 

new post-adjustment minimum penalty 

under the Restrictions on Lobbying is 

$23,714 × 1.03241 = $24,482.57074, 

which rounds to $24,483 and the 

maximum penalty under the 

Restrictions on Lobbying is $237,268 × 

1.03241 = $244,957.86, which rounds to 

$244,958. Therefore, the range of 

penalties under the law on the 

Restrictions on Lobbying shall be 

between $24,483 and $244,958. 

Administrative Procedure Act 

Section 553 of the Administrative 

Procedure Act requires agencies to 

provide an opportunity for notice and 

comment on rulemaking and also 

requires agencies to delay a rule’s 

effective date for 30 days following the 

date of publication in the Federal 

Register unless an agency finds good 

cause to forgo these requirements. 

However, section 4(b)(2) of the 2015 Act 

requires agencies to adjust civil 

monetary penalties notwithstanding 

section 553 of the Administrative 

Procedure Act (APA) and publish 

annual inflation adjustments in the 

Federal Register. ‘‘This means that the 

public procedure the APA generally 

requires . . . is not required for agencies 

to issue regulations implementing the 

annual adjustment.’’ OMB 

Memorandum M–18–03. 

Even if the 2015 Act did not except 

this final rule from section 553 of the 

APA, the NEA has good cause to 

dispense with notice and comment. 

Section 553(b)(B), authorizes agencies to 


ddrumheller on DSK120RN23PROD with RULES1