32122 Federal Register / Vol. 75, No. 108 / Monday, June 7, 2010 / Proposed Rules 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40103, 40113, 

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– 

1963 Comp., p. 389. 

§ 71.1 [Amended] 

2. The incorporation by reference in 

14 CFR 71.1 of FAA Order 7400.9T, 

Airspace Designations and Reporting 

Points, signed August 27, 2009, and 

effective September 15, 2009, is 

amended as follows: 

Paragraph 2006 United States Area 

Navigation Routes. 

* * * * * 

Q–8 ANC to GAL [Revised] 

GAL VOR/DME 

(Lat. 64°44′17′′ N., long. 156°46′38′′ W.) 

ANC VOR/DME 

(Lat. 61°09′03′′ N., long. 150°12′24′′ W.) 

* * * * * 

Paragraph 6011 United States Area 

Navigation Routes. 

* * * * * 

T–227 SYA to SCC [Modified] 

SYA VORTAC 

(Lat. 52°43′06′′ N., long. 174°03′44′′ E.) 

JANNT WP 

(Lat. 52°04′18′′ N., long. 178°15′37′′ W.) 

BAERE WP 

(Lat. 52°12′12′′ N., long. 176°08′09′′ W.) 

ALEUT FIX 

(Lat. 54°14′17′′ N., long. 166°32′52′′ W.) 

MORDI FIX 

(Lat. 54°52′50′′ N., long. 165°03′15′′ W.) 

GENFU FIX 

(Lat. 55°23′19′′ N., long. 163°06′22′′ W.) 

BINAL FIX 

(Lat. 55°46′00′′ N., long. 161°59′56′′ W.) 

PDN NDB/DME 

(Lat. 56°57′15′′ N., long. 158°38′51′′ W.) 

BATTY FIX 

(Lat. 59°03′57′′ N., long. 155°04′42′′ W.) 

AMOTT FIX 

(Lat. 60°53′56′′ N., long. 151°21′46′′ W.) 

ANC VOR/DME 

(Lat. 61°09′03′′ N., long. 150°12′24′′ W.) 

FAI VORTAC 

(Lat. 64°48′00′′ N., long. 148°00′43′′ W.) 

SCC VOR/DME 

(Lat. 70°11′57′′ N., long. 148°24′58′′ W.) 

* * * * * 

T–266 CGL to ANN [Modified] 

CGL NDB 

(Lat. 58°21′33′′ N., long. 134°41′58′′ W.) 

FPN NDB 

(Lat. 56°47′32′′ N., long. 132°49′16′′ W.) 

ANN VOR/DME 

(Lat. 55°03′37′′ N., long. 131°34′42′′ W.) 

* * * * * 

T–267 OME to OTZ [New] 

OME VOR/DME 

(Lat. 64°29′06′′ N., long. 165°15′11′′ W.) 

BALIN FIX 

(Lat. 64°33′55′′ N., long. 161°34′32′′ W.) 

OTZ VOR/DME 

(Lat. 66°53′09′′ N., long. 162°32′24′′ W.) 

* * * * * 

T–271 CDB to AMOTT [New] 

CDB VORTAC 

(Lat. 55°16′03′′ N., long. 162°46′27′′ W.) 

BINAL FIX 

(Lat. 55°46′00′′ N., long. 161°59′56′′ W.) 

AKN VORTAC 

(Lat. 58°43′29′′ N., long. 156°45′08′′ W.) 

AMOTT FIX 

(Lat. 60°53′56′′ N., long. 151°21′46′′ W.) 

* * * * * 

T–273 FAI to ROCES [Modified] 

FAI VORTAC 

(Lat. 64°48′00′′ N., long. 148°00′43′′ W.) 

AYKID FIX 

(Lat. 65°50′58′′ N., long. 147°16′34′′ W.) 

TUVVO FIX 

(Lat. 67°37′20′′ N., long. 146°04′49′′ W.) 

ROCES WP 

(Lat. 70°08′34′′ N., long. 144°08′16′′ W.) 

Issued in Washington, DC, May 28, 2010. 

Edith V. Parish, 

Manager, Airspace and Rules Group. 

[FR Doc. 2010–13596 Filed 6–4–10; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

15 CFR Part 700 

[Docket No. 0912311453–0016–01] 

RIN 0694–AE81 

Revisions to Defense Priorities and 

Allocations System Regulations 

AGENCY: Bureau of Industry and 

Security, Department of Commerce. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

reorganize and clarify existing standards 

and procedures by which the Bureau of 

Industry and Security (BIS) may require 

that certain contracts or orders that 

promote the national defense be given 

priority over other contracts or orders. 

This rule also sets new standards and 

procedures by which BIS may allocate 

materials, services and facilities to 

promote the national defense. BIS is 

publishing this rule to comply with a 

requirement of the Defense Production 

Act Reauthorization of 2009 to 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. 

DATES: Comments must be received by 

July 7, 2010. 

ADDRESSES: You may submit comments, 

identified by RIN 0694–AE81, by any of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• By e-mail directly to 

bis@publiccomments.bis.doc.gov. 

Include RIN 0694–AE81 in the subject 

line. 

• By mail or delivery to Regulatory 

Policy Division, Bureau of Industry and 

Security, U.S. Department of Commerce, 

Room 2705, 14th Street and 

Pennsylvania Avenue, NW., 

Washington, DC 20230. 

FOR FURTHER INFORMATION CONTACT: John 

Isbell, Director (Acting), Defense 

Programs Division, Office of Strategic 

Industries and Economic Security, 

Bureau of Industry and Security; (202) 

482–8229, jisbell@bis.doc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

This rule updates and expands 15 

CFR part 700, the Bureau of Industry 

and Security’s (BIS) Defense Priorities 

and Allocations System (DPAS) 

regulations. The DPAS regulations 

implement BIS’ administration of 

priorities and allocations actions 

involving industrial resources. BIS 

administers the DPAS pursuant to 

authority under Title I of the Defense 

Production Act (50 U.S.C. app. 2071 et 

seq.) (DPA) as delegated by Executive 

Order 12919 (June 3, 1994). The DPAS 

has two principal components: 

Priorities and allocations. Under the 

priorities component, certain contracts 

between the government and private 

parties or between private parties for the 

production or delivery of industrial 

resources are required to be given 

priority over other contracts to facilitate 

expedited 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 can 

include critical infrastructure protection 

and restoration, emergency 

preparedness, and recovery from natural 

disasters. BIS has extensive experience 

using its prioritizations authorities. 

However, BIS has not used its 

allocations authorities in more than fifty 

years. 

On September 30, 2009, the Defense 

Production Act Reauthorization of 2009 

(Pub. L. 111–67, 123 Stat. 2006, 

September 30, 2009) (DPAR) was 

enacted. That act requires that within 

270 days of its enactment (that is, by 

June 20, 2010), all agencies to which the 

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President has delegated priorities and 

allocations authority under Title I of the 

DPA must publish final rules 

establishing standards and procedures 

by which that authority will be used to 

promote the national defense in both 

emergency and nonemergency 

situations. That act also required all 

such agencies to consult ‘‘as appropriate 

and to the extent practicable to develop 

a consistent and unified Federal 

priorities and allocations system.’’ (123 

Stat. 2006, at 2009). This rule is one of 

several rules to be published to 

implement the provisions of the DPAR. 

The final rules of the agencies with 

DPAR authorities, which are the 

Departments of Commerce, Energy, 

Transportation, Health and Human 

Services, Defense, and Agriculture, will 

comprise the Federal Priorities and 

Allocations System. 

BIS is publishing this proposed rule 

as the initial rulemaking stage in 

compliance with the provision of the 

DPAR noted above. BIS believes that its 

existing rules regarding priorities satisfy 

the DPAR’s requirement that agencies 

have standards and procedures in place 

to implement the DPA’s authorities. 

However, in the interest of promoting a 

unified priorities and allocations 

system, and to update many of the 

existing DPAS procedures, BIS is setting 

forth in this proposed rule changes that 

will clarify and reorganize the DPAS to 

make it consistent with the regulations 

issued by other agencies, and to make it 

easier to understand. Additionally, 

although allocations provisions were 

previously contained in the DPAS, this 

proposed rule expands those provisions 

to clearly set forth the procedures to be 

followed for allocations actions. The 

specific changes proposed by this rule 

are more fully described below. 

Analysis of the Proposed Priorities and 

Allocations System 

Subpart A 

Proposed Subpart A would be titled 

‘‘Purpose, Overview and Definitions’’ 

and would reflect all three concepts. 

Proposed § 700.1 would state the 

purpose of the DPAS in general terms 

and would largely restate information 

that appears at 15 CFR 700.1 in the 

existing regulations. However, extensive 

language about the source of BIS’s legal 

authority would not be incorporated 

into the proposed § 700.1 on the 

grounds that such language is not 

regulatory in nature. BIS believes that 

the language regarding the DPAS’ 

purpose would be clearer if it is not 

submerged in extensive discussions of 

legal authority, particularly where those 

discussions have no legal effect. 

Proposed § 700.2 would provide an 

overview of the DPAS program. This 

section would incorporate much of the 

discussion that currently appears in 

Subpart B of the existing regulations, 

but would describe briefly all aspects of 

the DPAS, eliminating the need for the 

more extensive descriptions found in 

§§ 700.3 through 700.7 of the existing 

regulations. 

The ‘‘Definitions’’ section, which 

appears in § 700.8 in Subpart C of the 

current regulations, would appear in 

proposed § 700.3 in Subpart A with the 

following modifications. Proposed 

§ 700.3 would state that the definitions 

therein apply to all of part 700 unless 

otherwise specified in a particular 

definition. The reference to the 

definitions found in the DPA and in the 

Robert T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 

5195 et seq.) that appear in the current 

regulations would be removed and all 

relevant definitions would appear in 

full in § 700.3, thereby eliminating the 

need to consult statutes for definitions. 

Although references to these statutes are 

being removed, the definitions 

contained in proposed § 700.3 would be 

consistent with those set forth in the 

statutes. 

New definitions would be added for 

the following terms: Allocation, 

allocation authority, allocation order, 

allotment, critical infrastructure, 

prioritization directive, allocation 

directive, emergency preparedness, 

national defense, priorities authority, 

priority rating, priority performance, 

program identification symbols, 

resource agency, and short supply item. 

These new definitions are needed to 

promote clarity of meaning, to remove 

the need to consult authorizing statutes 

for definitions, to implement the new 

provisions regarding allocations, and to 

develop a consistent and unified 

Federal priorities and allocations 

system. 

The definition of the term ‘‘MRO’’ 

would be revised to replace the term 

‘‘Maintenance, and repair and operating 

supplies’’ with the term ‘‘Maintenance, 

repair and/or operating supplies.’’ For 

years, BIS has interpreted the term MRO 

to apply to maintenance, to repair, to 

operating supplies, to any combination 

of two of the three, or to all three. BIS 

is proposing to revise the language 

because it believes that the proposed 

language more clearly expresses the 

meaning that BIS has applied for years. 

In other respects, the definition is 

unchanged. 

The definition of the term Person 

would be expanded to include 

international organizations in order to 

clarify the scope of the entities subject 

to or eligible to be a recipient of 

authority (delegated or direct) as 

provided in this part. BIS proposes to 

modify the definition to clarify that 

international organizations are among 

the entities eligible to request priority 

ratings to obtain items in the United 

States in support of approved programs. 

This proposed change would codify 

existing agency practice. 

The definition of the term ‘‘Production 

equipment’’ would be changed to 

emphasize that the characteristics of the 

equipment that give it a useful life of 

more than one year (as distinct from the 

actual amount of time that it actually 

will be used) is a relevant factor in 

determining whether a piece of 

equipment is production equipment. 

The wording of the other factors in the 

definition, unit acquisition cost in 

excess of $2,500 and use in producing 

materials or furnishing services, remains 

unchanged. 

Finally, the definition of the term Setaside, which appears as a parenthetical 

in § 700.30 of the existing regulations, 

would be revised to more clearly state 

what is required of a person who is 

issued a set-aside. The current 

definition uses outdated language that 

makes the meaning of the term unclear. 

Subpart B 

Proposed Subpart B would be based 

largely on language that appears in 

Subparts D, I and L of the existing 

regulations and would be titled 

‘‘Industrial Priorities and Allocations,’’ 

reflecting the fact that the subpart will 

address certain matters that are common 

to both priorities and to allocations as 

opposed to the current title of subpart 

D ‘‘Industrial Priorities,’’ which reflects 

a narrower scope. 

Proposed § 700.10, ‘‘Authority,’’ 

would incorporate language that 

appears in the existing regulations at 

§ 700.10 of existing Subpart D, however 

the existing language would be revised 

to describe more fully the President’s 

delegations to the Department of 

Commerce and to other agencies that 

have roles in the Federal priorities and 

allocation system. It would also 

describe, in general terms, the items 

subject to each agency’s jurisdiction and 

note that the Department of Commerce 

has delegated certain authorities to 

other agencies. BIS is proposing this 

change to facilitate public 

understanding of the role that each 

delegate agency plays in the overall 

priorities and allocations system. 

Proposed § 700.11, ‘‘Priority ratings,’’ 

which is based on language that appears 

in existing § 700.11, would be revised 

and shortened to eliminate language 

newly included in the proposed 

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definitions section of Subpart A 

regarding ‘‘program identification 

symbols.’’ This revision is necessary for 

clarity and to prevent redundancy with 

the definitions in Subpart A. 

Proposed § 700.12, ‘‘Prioritization 

directives and allocation orders,’’ would 

incorporate language from existing 

§ 700.62(b) and (c) and would provide a 

discussion of the use of prioritization 

directives and allocation orders. The 

definition for ‘‘directive’’ in § 700.62(a) 

would be replaced by definitions of 

‘‘allocation directive’’ and ‘‘prioritization 

directive’’ in proposed § 700.3 along 

with the other definitions of terms used 

in this proposed rule. Paragraphs (b) 

and (c) of the existing regulations at 

§ 700.62 would become paragraphs (a) 

and (b) respectively in proposed 

§ 700.12. Proposed paragraph (c) is a 

new paragraph that provides that 

allocation orders take precedence over 

prioritization directives, DX rated 

orders, DO rated orders, and unrated 

orders, unless a contrary instruction 

appears in the allocation order. 

Language in proposed § 700.13, 

‘‘Examples of emergency preparedness,’’ 

provides examples of what constitutes 

‘‘emergency preparedness activities’’ and 

explains how those considerations 

impact decisions with regard to priority 

ratings and allocation orders. The 

material in this section is new. 

Language in proposed § 700.14, 

‘‘Changes or cancellations of priority 

ratings, rated orders and allocation 

orders,’’ is largely identical to language 

that appears in existing § 700.16 

‘‘Changes or cancellations of priority 

ratings and rated orders.’’ However, the 

scope would be expanded to include 

language describing the action necessary 

to change an allocation order. 

Proposed § 700.15, ‘‘Adjustments or 

exceptions,’’ incorporates language that 

appears in existing § 700.80 

‘‘Adjustment or exceptions’’ found in 

Subpart K. Proposed § 700.15 would 

reflect the time period in which the 

Office of Strategic Industries and 

Economic Security should respond to 

requests for adjustments to or 

exceptions. For such requests related to 

a priority rated order, response should 

occur within 20 business days. For 

requests for adjustments to or 

exceptions from an allocation order, 

response should occur within 2 (two) 

business days. BIS believes that a 

deadline for responses to requests for 

exceptions or adjustments is appropriate 

to provide predictability in the priorities 

and allocations processes. In addition, 

because allocations, if used, would 

address national emergencies, BIS 

believes that a shorter deadline to 

respond in those instances is 

appropriate. 

Proposed § 700.16, which 

incorporates language from § 700.81 of 

the existing regulations, sets forth the 

procedures for appealing to the 

Assistant Secretary for Export 

Administration for review of a decision 

regarding a request for an exception 

from or adjustment to a priority rated 

order or allocation order. Most of the 

language in proposed § 700.16 is taken 

from language that appears in § 700.81 

of the existing regulations. However, 

§ 700.81 provides no express procedure 

for appeals from a decision regarding a 

request for an exception from or 

adjustment to allocation orders. This 

rule would adopt the appeals 

procedures currently prescribed for 

requests for exceptions from, or 

adjustments to, priority rated orders to 

appeals from allocation orders with one 

exception. Appeals from allocation 

orders would have to be received in the 

Office of the Assistant Secretary for 

Export Administration within 5 (five) 

business days of the receipt of the 

decision by the party appealing that 

decision. The Assistant Secretary for 

Export Administration would have 

discretion to accept appeals after the 5 

day deadline. For priority rated orders, 

the deadline would continue to be 45 

calendar days. The proposed rule also 

would continue to give the Assistant 

Secretary discretion to accept appeals 

after that 45 day deadline, but would 

remove the phrase ‘‘for good cause 

shown from the sentence authorizing 

such acceptances because the phrase 

adds nothing of substance to the 

sentence. Because BIS will issue 

allocation orders only during a national 

emergency, the urgent nature of the 

circumstance and its possible impact on 

industry make a five business day 

deadline for filing an appeal necessary. 

Language in proposed § 700.17 

‘‘Protection against claims’’ is identical 

to the language that appears in existing 

§ 700.90 of Subpart L. BIS is proposing 

to move the language to § 700.17 in 

Subpart B to emphasize the point that 

the protections in this section would 

apply equally to persons complying 

with official actions related to priorities 

and to allocations. 

Subpart C 

Proposed Subpart C would address 

matters related to priorities and would 

be based largely on language currently 

in Subpart D and Subpart F. The 

proposed subpart would be titled 

‘‘Complying with Priority Ratings and 

Orders’’ to reflect the subpart’s narrower 

scope as compared to proposed Subpart 

B. However, as noted above, the 

language in § 700.10, ‘‘Delegation of 

Authority,’’ and § 700.16, ‘‘Changes or 

cancellations of priority ratings and 

rated orders,’’ of the existing regulations 

would be modified, retitled, and moved 

to proposed Subpart B. BIS is proposing 

these changes because it believes that 

discussing matters related to priorities 

in the order set forth in this proposed 

rule is more logical and easier to follow 

than the order in which such matters are 

discussed in the existing rule. 

Proposed § 700.21, ‘‘Rated Orders,’’ 

would reflect language that appears in 

existing § 700.3 but would be revised 

and shortened to prevent redundancy 

with language provided in the proposed 

definitions section of Subpart A. The 

new title also distinguishes this section 

from proposed § 700.11. 

Proposed § 700.22, ‘‘Elements of a 

rated order,’’ includes language that 

appears in existing § 700.12 but would 

include the phrase ‘‘program 

identification symbol’’ in proposed 

paragraph (a) to clarify what constitutes 

an official priority rating in accordance 

with Schedule 1. In addition, a new 

element setting forth language that 

should be included in those rated orders 

for emergency preparedness 

requirements for which expedited 

action is necessary and appropriate to 

meet such requirements, would be 

added. The language would identify the 

rated order as one for an emergency 

preparedness requirement and would 

specify that the order must be accepted 

or rejected within a specified number of 

workings days. When issuing the rated 

order, the rating agency would insert a 

number of working days ranging from 

one through fourteen as appropriate to 

the transaction. This section also would 

be reworded to clarify the text. 

Proposed § 700.23, ‘‘Use of rated 

orders,’’ incorporates the text from 

existing § 700.17. This proposed section 

would describe when and how a person 

would use a rated order. BIS would also 

incorporate language that appears in 

§ 700.17 of the existing regulations into 

proposed § 700.23 to improve the 

organization of the proposed rule. 

Language in proposed § 700.24, 

‘‘Limitations on placing rated orders,’’ 

draws from the language that appears in 

existing § 700.18 but is modified to 

recognize that in some instances, other 

agencies’ regulations would authorize 

the placement of rated orders. Existing 

§ 700.18 prohibits placing rated orders 

that are not authorized by ‘‘this 

regulation.’’ BIS would recognize other 

agencies’ authority by modifying the 

language in paragraph (a) of proposed 

§ 700.24 to state that rated orders issued 

pursuant to this part (i.e., 15 CFR part 

700) may not be used except as 

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authorized by this part. BIS is making 

this change because it does not intend 

to regulate conduct that is subject to the 

regulations of other agencies and not 

subject to regulations that are 

administered by BIS. 

In proposed § 700.25, ‘‘Acceptance 

and rejection of rated orders,’’ the 

proposed rule would move the language 

that appears in § 700.13 of the existing 

regulations, and modify it to specify the 

timeframes within which persons must 

accept or reject rated orders for 

emergency preparedness-related 

approved programs. This section was 

also revised by removing reference to 

the OMB control number because such 

reference is not needed in the regulatory 

text. 

The proposed rule would add 

language to proposed § 700.25 to 

distinguish the time frame within which 

persons must respond to priority rated 

orders for certain emergency 

preparedness requirement orders from 

other rated orders. The recipient would 

be required to accept or reject rated 

orders that contain the deadline specific 

language set forth in proposed 

§ 700.22(b) within the time specified in 

the order. That time could be in the 

range of one through fourteen working 

days. The issuing agency would select 

the number of days according to the 

urgency of the situation for which the 

order is issued at the time of the order’s 

issuance. 

The timeframe for acceptance or 

rejection of rated orders for all other 

approved programs remains fifteen days 

for DO programs and ten days for DX 

programs. BIS is proposing the shorter 

time limits in which the recipient must 

respond to a rated order issued in 

connection with an emergency 

preparedness program because such 

programs would involve disaster 

assistance, emergency response or 

similar activities. BIS believes that the 

exigent circumstances inherent in 

emergency preparedness related 

programs justify requiring a response 

time commensurate with the exigencies 

of the situation. In addition, a note 

would be added to alert the public that 

in some instances, for example certain 

emergency preparedness situations, a 

shorter time limit may be specified. The 

proposed note also alerts the public that 

priorities regulations issued by other 

Delegate Agencies may have shorter 

time limits than the time limits 

provided by BIS, and the recipient of a 

rated order must follow the regulations 

of the Delegate Agency issuing the rated 

order. 

The language in proposed § 700.26 

‘‘Preferential scheduling,’’ proposed 

§ 700.27 ‘‘Extension of priority ratings,’’ 

and proposed § 700.28 ‘‘Metalworking 

machines,’’ incorporates the language 

that appears in the existing regulations 

at §§ 700.14, 700.15 and 700.31 

respectively. BIS is proposing to move 

the language of these sections to Subpart 

C because it believes placing the 

language governing priorities in a single 

subpart would make the regulations 

easier to understand and would clarify 

the organization of these regulations. 

The proposed sections retain much of 

the original language from those 

sections, but also have been amended to 

provide examples in some instances, 

and to make the processes described in 

each section clearer. 

Subpart D 

Proposed Subpart D, ‘‘Industrial 

Priorities for Energy Programs,’’ 

describes the use of priority rating 

authority to support energy programs 

approved by the Department of Energy. 

Proposed § 700.30, ‘‘Use of priority 

ratings for energy programs’’ and 

§ 700.31, ‘‘Application for priority rating 

authority,’’ would use text that appears 

in the existing regulations at §§ 700.20 

and 700.21, respectively. The phrase 

‘‘for energy programs’’ would be added 

to the header of proposed § 700.30 to 

describe accurately the scope of the text 

of that section. Proposed § 700.31 would 

not contain language that appears in 

paragraphs (a) and (d) of § 700.21 the 

exiting regulations. Paragraph 700.21(a) 

of the existing regulations describes a 

procedure and process used by the 

Department of Energy that is more 

appropriately addressed in that agency’s 

regulations, and therefore this proposed 

rule would not include that discussion 

from regulations. Paragraph 700.21(d) of 

the existing regulations describes an 

internal BIS procedure that is not 

regulatory in nature and thus would not 

be included in the regulations. Apart 

from those changes, the text of proposed 

Subpart D is the same as the text of 

existing §§ 700.20 and 700.21. 

Subpart E 

Proposed Subpart E ‘‘Special Priorities 

Assistance’’ describes instances in 

which BIS would provide assistance in 

resolving matters related to priority 

rated contracts and orders. The text is 

taken from existing Subpart H with 

principle changes discussed below. 

Proposed § 700.40 ‘‘General 

provisions’’ is based on existing 

§ 700.50, but has been modified to make 

it clearer and more succinct. 

Discussions unrelated to the special 

priorities assistance that BIS can 

provide would be eliminated as would 

a recitation of the OMB Paperwork 

Reduction Act control number for the 

form used to request assistance from BIS 

because they are unnecessary and 

detract from the main point of the 

section, which is to illustrate when and 

how BIS can provide special priorities 

assistance. Although special priorities 

assistance may be requested for any 

reason, three examples would be 

provided. These examples are based on 

BIS’s experience and illustrate 

circumstances where BIS has been able 

to provide assistance in the past. 

In proposed § 700.41 ‘‘Request for 

priority rating authority’’ is largely the 

same text that appears in § 700.51 of the 

existing regulations, except that the 

statement in existing § 700.51(c)(3)(v), 

which states that BIS will consider the 

political sensitivity of the project in 

reviewing requests for rating authority 

in advance of a prime contract would 

not be included, because BIS would not 

consider that factor in deciding whether 

to grant rating authority. 

Proposed § 700.42 and § 700.43 reflect 

the same text that appears in existing 

§ 700.53 and § 700.55 respectively, with 

one exception. In proposed § 700.42 the 

word ‘‘develop’’ would replace the word 

‘‘effect’’ that is currently in § 700.53 to 

make that language clearer. 

In some instances, BIS can provide 

priorities assistance to persons located 

in foreign nations or to international 

organizations (e.g., NATO, United 

Nations agencies, etc.) seeking 

assistance in obtaining military and 

critical infrastructure items in the 

United States or priority rating authority 

for military and critical infrastructure 

items to be purchased in the United 

States. In addition, BIS can sometimes 

provide informal assistance to persons 

in the United States who are seeking 

assistance in obtaining items from 

foreign countries. In this proposed rule, 

BIS would expand the language 

describing this assistance pursuant to 

the changes specific to the new 

availability of critical infrastructure 

items to non-U.S. persons set forth in 

the DPAR, and for the purpose of 

clarification. 

This proposed rule would add a new 

section that specifically describes 

military assistance with respect to 

Canada (proposed § 700.44, ‘‘Military 

assistance programs with Canada’’), and 

would create another section describing 

such assistance with respect to other 

nations and international organizations 

(proposed § 700.45, ‘‘Military assistance 

programs with other nations and 

international organizations’’). Currently, 

information about military assistance 

with respect to all eligible foreign 

nations appears in § 700.55 of the 

existing regulations, and that section 

does not mention international 

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organizations. BIS is proposing to create 

a new section that speaks to military 

assistance with respect to Canada 

because the Canadian Government has 

been authorized to place priority ratings 

in the United States to support 

approved defense programs without the 

endorsement of the U.S. Department of 

Defense (DOD). Persons in other foreign 

countries may place priority ratings in 

the United States if their requests for 

military assistance are sponsored by 

their government and have DOD 

approval and endorsement. BIS believes 

that this difference justifies creation of 

separate sections to address these 

procedures. In addition, because BIS has 

provided assistance to international 

organizations in the past, adding a 

reference to international organizations 

in proposed § 700.45 merely codifies 

existing agency practice and does not 

represent a change in policy. 

In addition, this rule proposes to add 

new § 700.45 that would add Finland to 

the list of nations that have bilateral 

security of supply arrangements with 

the U.S. Department of Defense, 

reflecting an agreement signed by the 

United States and Finland in October 

2009. Proposed § 700.45 would also 

make it clear that persons in countries 

that do not have bilateral security of 

supply arrangements with the U.S. 

Department of Defense (DOD) may still 

seek assistance in obtaining defense 

items in the United States or priority 

rating authority for defense items to be 

purchased in the United States. 

Proposed § 700.46, ‘‘Critical 

infrastructure assistance programs with 

other nations and international 

organizations,’’ is also a new section that 

would describe how persons in foreign 

nations or international organizations 

may place priority ratings in the United 

States if their requests for critical 

infrastructure assistance are sponsored 

by their government or organization and 

have received the approval and 

endorsement of the U.S. Department of 

Homeland Security. The Department of 

Commerce is adding this section 

pursuant to the requirements of the 

DPAR, which include critical 

infrastructure protection and restoration 

assistance to foreign nations and 

international organizations. 

Subpart F 

Proposed Subpart F ‘‘Official Actions’’ 

is taken largely from existing Subpart I 

of the same name. Proposed §§ 700.50, 

700.51 and 700.52 employ the text of 

existing §§ 700.60, 600.61 and 700.63, 

respectively, without substantive 

change. The substance of existing 

§ 700.62 ‘‘Directives’’ has been amended 

to clarify that these directives are 

‘‘prioritization directives’’ and has been 

incorporated into the definitions in 

proposed § 700.3. These changes are 

being made to improve the clarity and 

flow of the regulations. 

Subpart G 

Proposed Subpart G ‘‘Allocations in a 

National Emergency’’ contains mostly 

new material and would replace 

language in existing Subpart F. 

Proposed Subpart G would provide the 

public with detailed information on the 

procedures governing allocations 

actions. Allocations actions will likely 

be used in response to a national 

emergency. 

Proposed § 700.61 describes 

allocations and when and how 

allocation orders would be used. 

Specifically, allocation orders would be 

used only if priorities authority would 

not provide a sufficient supply of 

material, services or facilities for 

national defense requirements, or when 

use of priorities authority would cause 

a severe and prolonged disruption in the 

supply of resources available to support 

normal U.S. economic activities. 

Allocation orders would not be used to 

ration materials or services at the retail 

level. Allocation orders would be 

distributed equitably among the 

suppliers of the resource(s) being 

allocated and would not require any 

person to relinquish a disproportionate 

share of the civilian market. BIS is 

proposing the standards set forth in 

proposed § 700.60 because it believes 

that they provide reasonable assurance 

that allocation orders will be used only 

in situations were the circumstances 

justify such orders. 

Proposed § 700.62 would provide 

that, in the event of a conflict between 

a priority order or prioritization 

directive and allocation order or 

allocation directive, the latter would 

take precedence. BIS is proposing this 

order of precedence because it believes 

that given the extreme and rare 

circumstances under which allocation 

orders would be issued as compared to 

the serious, but more frequently 

encountered circumstances under 

which priority orders are issued, it can 

reasonably predict that the justification 

for the allocation order will overcome 

any justification for any priority order 

that conflicts with the allocation order. 

Proposed § 700.63 describes the three 

types of allocation orders that BIS might 

issue, which are a set-aside, an 

allocation directive, and an allotment. A 

set-aside is an official action that would 

require a person to reserve resource 

capacity in anticipation of receipt of 

rated orders. An allocation directive is 

an official action that would require a 

person to take or refrain from taking 

certain actions in accordance with its 

provisions (an allocation directive can 

require a person to stop or reduce 

production of an item, prohibit the use 

of selected items, divert supply of one 

type of product to another, or to supply 

a specific quantity, size, shape, and type 

of an item within a specific time 

period). An allotment is an official 

action that would specify the maximum 

quantity of an item authorized for use in 

a specific program or application. The 

text in proposed § 700.63 is largely new. 

BIS is proposing these three types of 

allocation orders because it believes 

that, collectively they describe the types 

of actions that might be taken in any 

situation in which allocation is justified. 

Proposed § 700.64 ‘‘Elements of an 

allocation order,’’ is a new section that 

sets forth the minimum elements of an 

allocation order. Those elements are: 

(a) A detailed description of the 

required allocation action(s); 

(b) Specific start and end calendar 

dates for each required allocation 

action; 

(c) The written signature on a 

manually placed order, or the digital 

signature or name on an electronically 

placed order, of the head of the 

Resource Agency placing the order. The 

signature or use of the name certifies 

that the order is authorized under the 

DPAS regulations and that the 

requirements of those regulation are 

being followed; and 

(d) A statement that reads in 

substance: ‘‘This is an allocation order 

certified for national defense use. [Insert 

the legal name of the person receiving 

the order] is required to comply with 

this order, in accordance with the 

provisions of 15 CFR 700.’’ 

BIS is proposing these elements 

because it believes that they provide a 

proper balance between the need for 

standards to permit the public to 

recognize and understand an allocation 

order if one is issued, and the 

expectation that any actual allocation 

orders will have to be tailored to meet 

unforeseeable circumstances. The 

language of proposed § 700.64 would 

not preclude BIS from including 

additional information in an allocation 

order if circumstances warrant doing so. 

Proposed § 700.65 ‘‘Mandatory 

acceptance of allocation orders’’ would 

require that an allocation order must be 

accepted if a person is capable of 

fulfilling the order. This section also 

states that a person may not 

discriminate against an allocation order 

in any manner, such as by charging 

higher prices or imposing terms and 

conditions different than what the 

person imposed on contracts or orders 

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for the same resource(s) that were 

received prior to receiving the allocation 

order. This section also instructs the 

public on the procedures to follow to 

reject an allocation order, and refers the 

public to proposed § 700.15 for 

information on how to seek adjustment 

of or exception to an allocation order. 

BIS is proposing § 700.65 to make it 

clear to the public that the limited 

circumstances and emergency situations 

that trigger issuance of an allocation 

order require immediate response from 

the public in order to address the 

situation in an expedient fashion. 

Proposed § 700.66 ‘‘Changes or 

cancellations of allocation orders’’ 

would provide notice that the 

Department of Commerce may modify 

or cancel an allocation order. BIS is 

proposing this language because it 

believes that the uncertain nature of the 

events attributed to allocation orders, 

and the need for flexibility in dealing 

with a national emergency, require that 

BIS be able to modify or cancel orders 

to address changing circumstances as 

they arise. 

Subpart H 

Proposed Subpart H, ‘‘Compliance,’’ is 

taken largely from the language that 

appears in Subpart J of the existing 

regulations with little change. The 

language in existing §§ 700.70, 700. 71, 

700.72, 700.73, 700.74 and 700.75 of 

Subpart J would appear in §§ 700.70, 

700.72, 700.73, 700.74, 700.75, and 

700.76, respectively, in Subpart H. The 

term ‘‘official actions’’ would be 

removed from the text of this subpart. 

This term would be removed because its 

inclusion in the text suggested that 

official actions were something other 

than the activities set forth in part 700. 

Additionally, throughout Subpart H, 

references to ‘‘related statutes’’ would be 

removed from the phrase the ‘‘Defense 

Production Act, the Selective Service 

Act and related statutes’’ because the 

Defense Production Act and the 

Selective Service Act are the legal basis 

for BIS’s administrative and 

enforcement activities set forth in the 

Defense Priorities and Allocations 

System regulations (15 CFR part 700). 

The removal of the reference to 

unnamed ‘‘related statutes’’ does not 

impact BIS’s authority or public 

understanding of the compliance 

requirement that Subpart H is intended 

to address. The language currently in 

§ 700.70(b) stating that persons who 

place rated orders should be familiar 

with and must comply with this 

regulation does not appear in proposed 

§ 700.70 because BIS believes that it is 

unnecessary either for public 

understanding of the rule or as a basis 

for enforcement. 

Proposed § 700.71 reflects language 

that appears in § 700.91 ‘‘Records and 

reports’’ in Subpart L of the existing 

regulations. BIS believes that placing all 

compliance related previsions in a 

single subpart improves the 

organization of the DPAS. Additionally, 

the language in proposed § 700.72 

would be modified to clarify that 

personal service of a demand for 

information or inspection authorization 

may be made by leaving a copy of the 

document with a person who is at least 

eighteen years of age. The language that 

appears in § 700.71 of the existing 

regulations provides that the person 

must be of ‘‘suitable age and discretion.’’ 

The Department of Commerce is 

proposing this change in conformity 

with the proposed rules of other 

agencies delegated authority under the 

DPA and in conformity with the 

language in existing § 700.71(f)(3), 

which requires that a person receiving 

service of a demand for information or 

inspection authorization must be at least 

eighteen years of age. 

Subpart I 

Proposed Subpart I ‘‘Miscellaneous 

Provisions’’ is taken largely from 

Subpart L of the existing regulations. 

The language in existing §§ 700.92 and 

700.93 would become §§ 700.80 and 

700.81, respectively. Language in 

proposed § 700.80(c) would mirror the 

language that appears in § 700.92(c) of 

the existing regulations but would 

include a reference to the Defense 

Priorities and Allocations System 

because the Defense Priorities and 

Allocations System superseded both the 

Materials System and the Defense 

Priorities System, in 1984. Language in 

proposed § 700.80(d) would reflect the 

language that appears in § 700.92(d) of 

the existing regulations but would 

reflect current terminology. 

Substantively, existing § 700.92(d) 

provides that repeals of rules, orders, 

schedules and delegations of authority 

will not affect any penalty or liability 

incurred while such rules, orders, 

schedules and delegations of authority 

were in force. As previously noted, the 

language in § 700.90 ‘‘Protection against 

claims’’ of the existing regulations 

would be moved to proposed § 700.17 in 

proposed Subpart B, and the language in 

§ 700.91 ‘‘Records and Reports’’ of the 

existing regulations would be moved to 

proposed § 700.71 in proposed Subpart 

H to make the DPAS regulations more 

organized and easier to read. BIS is 

proposing the language in proposed 

§ 700.80(c) and (d) to state more 

precisely meaning that BIS has 

attributed to those two paragraphs for 

years. 

Rulemaking Requirements 

1. This rule has been determined to be 

significant for purposes of Executive 

Order 12866. 

2. Notwithstanding any other 

provision of law, no person is required 

to respond to nor be subject to a penalty 

for failure to comply with a collection 

of information, subject to the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) (PRA), unless that collection of 

information displays a currently valid 

Office of Management and Budget 

(OMB) Control Number. This regulation 

contains two collections previously 

approved by OMB. OMB control 

number 0694–0053 authorizes the 

requirement that recipient of rated 

orders notify the party placing the order 

whether or not they will fulfill the rated 

order. BIS believes that this rule will not 

materially change the burden imposed 

by this collection. OMB control number 

0694–0057 authorizes the collection of 

information that parties must send to 

BIS when seeking special priorities 

assistance or priority rating authority. 

BIS believes that this rule will not 

materially change the burden imposed 

by this collection. Send comments 

regarding this burden estimate or any 

other aspect of these collections of 

information, including suggestions for 

reducing the burden, to Jasmeet K. 

Seehra, Office of Management and 

Budget, by e-mail at 

jseehra@omb.eop.gov or by fax to (202) 

395–7285 and to John Isbell, 

jisbell@bis.doc.gov. 

3. This rule does not contain policies 

with Federalism implications as that 

term is defined in Executive Order 

13132. 

4. The Regulatory Flexibility Act 

(RFA), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA), 5 U.S.C. 

601 et seq., generally requires an agency 

to prepare a regulatory flexibility 

analysis of any rule subject to the notice 

and comment rulemaking requirements 

under the Administrative Procedure Act 

(5 U.S.C. 553) or any other statute, 

unless the agency certifies that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Under section 605(b) of the 

RFA, however, if the head of an agency 

certifies that a rule will not have a 

significant impact on a substantial 

number of small entities, the statute 

does not require the agency to prepare 

a regulatory flexibility analysis. 

Pursuant to section 605(b), the Acting 

Chief Counsel of Regulations, 

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Department of Commerce, certified to 

the Chief Counsel for Advocacy, Small 

Business Administration that this 

proposed rule, if promulgated, will not 

have a significant impact on a 

substantial number of small entities for 

the reasons explained below. 

Consequently, BIS has not prepared a 

regulatory flexibility analysis. 

Number of Small Entities 

Small entities include small 

businesses, small organizations and 

small governmental jurisdictions. For 

purposes of assessing the impacts of this 

proposed rule on small entities, a small 

business, as described in the Small 

Business Administration’s Table of 

Small Business Size Standards Matched 

to North American Industry 

Classification System Codes (August 

2008 Edition), has a maximum annual 

revenue of $ 33.5 million and a 

maximum of 1,500 employees (for some 

business categories, these number are 

lower). A small governmental 

jurisdiction is a government of a city, 

town, school district or special district 

with a population of less than 50,000. A 

small organization is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

This rule sets criteria under which 

BIS (or agencies to which BIS delegates 

authority) will authorize prioritization 

of certain orders or contracts as well as 

criteria under which BIS would issue 

orders allocating resources or 

production facilities. Because the rule 

affects commercial transactions, BIS 

believes that small organizations and 

small governmental jurisdictions are 

unlikely to be affected by this rule. 

However, BIS has no basis on which to 

estimate the number of small businesses 

that are likely to be affected by this rule. 

Impact 

BIS believes that any impact that this 

rule might have on small businesses 

would be minor. The rule has two 

principle components: prioritization 

and allocation. Prioritization is the 

process that is, by far, more likely to be 

used. Under prioritization, BIS 

designates certain orders, which may be 

placed by Government or by private 

entities, and assigned under one of two 

possible priority levels. Once so 

designated, such orders are referred to 

as ‘‘rated orders.’’ The recipient of a 

rated order must give it priority over an 

unrated order. The recipient of a rated 

order with the higher priority rating 

must give that order priority over any 

rated orders with the lower priority 

rating and over unrated orders. A 

recipient of a rated order may place two 

or more orders at the same priority level 

with suppliers and subcontractors for 

supplies and services necessary to fulfill 

the recipient’s rated order and the 

suppliers and subcontractors must treat 

the request from the rated order 

recipient as a rated order with the same 

priority level as the original rated order. 

The rule does not require recipients to 

fulfill rated orders if the price or terms 

of sale are not consistent with the price 

or terms of sale of similar non-rated 

orders. The rule provides a defense from 

any liability for damages or penalties for 

actions or inactions made in compliance 

with the rule. 

BIS expects that this rule will not 

result in any increase in the use of rated 

orders. The changes to the provisions of 

15 CFR part 700 that apply to rated 

orders are primarily simplifications and 

clarifications. The standards under 

which a rated order would be issued are 

not changed by this rule. 

Although rated orders could require a 

firm to fill one order prior to filling 

another, they would not require a 

reduction in the total volume of orders 

nor would they require the recipient to 

reduce prices or provide rated orders 

with more favorable terms than a similar 

non-rated order. Under these 

circumstances, the economic effects on 

the rated order recipient of substituting 

one order for another are likely to be 

mutually offsetting, resulting in no net 

loss. 

Allocations could be used to control 

the general distribution of materials or 

services in the civilian market. Specific 

allocation actions that BIS might take 

are as follows: 

Set-aside: An official action that 

requires a person to reserve resource 

capacity in anticipation of receipt of 

rated orders. 

Allocation directive: An official action 

that requires a person to take or refrain 

from taking certain actions in 

accordance with its provisions. An 

allocation directive can require a person 

to stop or reduce production of an item, 

prohibit the use of selected items, or 

divert supply of one type of product to 

another, or to supply a specific quantity, 

size, shape, and type of an item within 

a specific time period. 

Allotment: An official action that 

specifies the maximum quantity of an 

item authorized for use in a specific 

program or application. 

BIS has not taken any actions under 

its existing allocations authority since 

the early 1950s (during the Korean 

conflict) and any future allocations 

actions would be used only in 

extraordinary circumstances. As 

required by section 101(b) of the 

Defense Production Act of 1950, as 

amended, (50 U.S.C. app. § 2071), 

hereinafter ‘‘DPA,’’ and by Section 

201(d) of Executive Order 12919 of June 

3, 1994, as amended, BIS may 

implement allocations only if the 

Secretary of Commerce made, and the 

President approved, a finding ‘‘(1) that 

the material [or service] is a scarce and 

critical material [or service] essential to 

the national defense, and (2) that the 

requirements of the national defense for 

such material [or service] cannot 

otherwise be met without creating a 

significant dislocation of the normal 

distribution of such material [or service] 

in the civilian market to such a degree 

as to create appreciable hardship.’’ The 

term ‘‘national defense’’ is defined to 

mean ‘‘programs for military and energy 

production or construction, military or 

critical infrastructure assistance to any 

foreign nation, homeland security, 

stockpiling, space, and any related 

activity. Such term includes emergency 

preparedness activities conducted 

pursuant to title IV of the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5195 et seq.) 

and critical infrastructure protection 

and restoration.’’ 

Any allocation actions taken by BIS 

would also have to comply with Section 

701(e) of the DPA (50 U.S.C. app. 

2151(e)), which provides that ‘‘small 

business concerns shall be accorded, to 

the extent practicable, a fair share of the 

such material [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.’’ 

Conclusion 

Although BIS cannot determine 

precisely the number of small entities 

that would be affected by this rule, BIS 

believes that the overall impact on such 

entities would not be significant. With 

respect to priorities authority, this rule 

is not likely to increase the number of 

priority rated contracts compared to the 

number being issued currently. In 

addition, in most instances, rated 

contracts would be in addition to other 

(unrated) contracts and not reduce the 

total amount of business of the firm that 

receives a rated contract. 

BIS’s lack of experience with 

allocations makes gauging the impact of 

an allocation, should one occur, 

difficult. Because allocations can be 

imposed only after a determination by 

the President, and the fact that BIS has 

taken no allocations actions in more 

than fifty years, one can expect 

allocations will be a rare occurrence. 

However, BIS believes that the 

requirement for a Presidential 

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determination and the provisions of 

section 701 of the DPA provide 

reasonable assurance that any impact on 

small business will not be significant. 

Therefore, for the reasons set forth 

above, the Chief Counsel for Regulations 

at the Department of Commerce certified 

that this action would not have a 

significant impact on a substantial 

number of small entities. 

List of Subjects in 15 CFR Part 700 

Administrative practice and 

procedure, Business and industry, 

Government contracts, National defense, 

Reporting and recordkeeping 

requirements, Strategic and critical 

materials. 

For the reasons stated in the 

preamble, 15 CFR part 700, is proposed 

to be revised as follows: 

PART 700—[AMENDED] 

1. The authority citations paragraph 

for part 700 is revised to read as follows: 

Authority: 50 U.S.C. App. 2061, et seq.; 42 

U.S.C. 5195, et seq.; 50 U.S.C. App 468; 10 

U.S.C. 2538; 50 U.S.C. 82; E.O. 12919, 59 FR 

29525, 3 CFR, 1991 Comp. 901; E.O. 13286, 

68 FR 10619, 3 CFR, 2003 Comp. 166; E.O. 

12742, 56 FR 1079, 3 CFR, 1991 Comp. 309; 

E.O. 12656, 53 FR 226, 3 CFR, 1988, Comp. 

585. 

2. Subpart A is revised to read as 

follows: 

Subpart A—Purpose, Overview and 

Definitions. 

Sec. 

700.1 Purpose. 

700.2 Overview. 

700.3 Definitions. 

Subpart A—Purpose, Overview and 

Definitions. 

§ 700.1 Purpose. 

This part implements the Defense 

Priorities and Allocations System 

(DPAS) that is administered by the U.S. 

Department of Commerce, Bureau of 

Industry and Security. The DPAS 

implements the priorities and 

allocations authority of the Defense 

Production Act specific to industrial 

resources, including use of that 

authority to implement emergency 

preparedness activities pursuant to Title 

VI of the Stafford Act (Title VI 

(Emergency Preparedness) of the Robert 

T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 

5195 et seq.), and the priorities 

authority of the Selective Service Act, 

all with respect to industrial resources. 

The DPAS ensures the timely 

availability of industrial resources for 

approved programs and provides an 

operating system to support rapid 

industrial response to a national 

emergency. 

§ 700.2 Overview. 

(a) Certain national defense and 

energy programs (including emergency 

preparedness activities) are approved 

for priorities and allocations support. 

For example, military aircraft 

production, ammunition, and certain 

programs which maximize domestic 

energy supplies are ‘‘approved 

programs.’’ A complete list of currently 

approved programs is provided at 

Schedule I to this part. 

(b) The Department of Commerce 

administers the DPAS and may exercise 

priorities or allocation authority to 

ensure the timely delivery of industrial 

items to meet approved program 

requirements. 

(c) The Department of Commerce has 

delegated authority to place priority 

ratings on contracts or orders necessary 

or appropriate to promote the national 

defense to certain government agencies 

that issue such contracts or orders. Such 

delegations include authority to 

authorize recipients of rated orders to 

place ratings on contracts or orders to 

suppliers and subcontractors. Schedule 

I includes a list of agencies to which the 

Department of Commerce has delegated 

authority. 

§ 700.3 Definitions. 

The definitions in this section apply 

to the entirety of this part unless 

otherwise stated in a specific definition. 

Allocation. The control of the 

distribution of materials, services or 

facilities for a purpose deemed 

necessary or appropriate to promote the 

national defense. 

Allocation Authority. The authority to 

allocate materials, facilities and services 

for use in approved programs. 

Allocation Directive. An official 

action that requires a person to take or 

refrain from taking certain actions in 

accordance with its provisions. An 

allocation directive can require a person 

to stop or reduce production of an item, 

prohibit the use of selected items, divert 

the supply of one type of product to 

another, or to supply a specific quantity, 

size, shape, and type of an item within 

a specific time period. 

Allocation Order. An official action to 

control the distribution of materials, 

services or facilities for a purpose 

deemed necessary or appropriate to 

promote the national defense. 

Allotment. An official action that 

specifies the maximum quantity of an 

item for specified use to promote the 

national defense. 

Approved Program. A program 

determined by the Secretary of Defense, 

the Secretary of Energy or the Secretary 

of Homeland Security as necessary or 

appropriate for priorities and allocations 

support to promote the national defense. 

Construction. The erection, addition, 

extension, or alteration of any building, 

structure, or project, using materials or 

products which are to be an integral and 

permanent part of the building, 

structure, or project. Construction does 

not include maintenance and repair. 

Critical Infrastructure. Any systems 

and assets, whether physical or cyberbased, 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. 

Delegate Agency. A government 

agency authorized by delegation from 

the Department of Commerce to place 

priority ratings on contracts or orders 

for industrial resources needed to 

support approved programs. 

Defense Production Act. The Defense 

Production Act of 1950, as amended (50 

U.S.C. App. 2061, et seq.), is the statute 

authorizing the President to require the 

priority performance of contracts and 

orders necessary or appropriate to 

promote the national defense over other 

contracts or orders and to require the 

allocation of materials, services, and 

facilities as necessary or appropriate to 

promote the national defense. 

Emergency Preparedness. All 

activities and measures designed or 

undertaken to prepare for or minimize 

the effects of a hazard upon the civilian 

population, to deal with the immediate 

emergency conditions which would be 

created by the hazard, and to effectuate 

emergency repairs to, or the emergency 

restoration of, vital utilities and 

facilities destroyed or damaged by the 

hazard. 

Industrial Resources. All materials, 

services, and facilities, including 

construction materials that are needed 

to establish or maintain an efficient and 

modern defense industrial capacity, the 

authority for which has not been 

delegated to other agencies under 

Executive Order 12919. This term also 

includes the term ‘‘item’’ as defined and 

used in this part. 

Item. Any raw, in process, or 

manufactured material, article, 

commodity, supply, equipment, 

component, accessory, part, assembly, 

or product of any kind, technical 

information, process, or service. 

MRO. Maintenance, repair and/or 

operating supplies as those three terms 

are defined in this section. However, 

MRO does not include items produced 

or obtained for sale to other persons or 

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for installation upon or attachment to 

the property of another person, or items 

required for the production of such 

items; items needed for the replacement 

of any plant, facility, or equipment; or 

items for the improvement of any plant, 

facility, or equipment by replacing items 

which are still in working condition 

with items of a new or different kind, 

quality, or design. The elements of MRO 

are defined as follows: 

(1) Maintenance is the upkeep 

necessary to continue any plant, facility, 

or equipment in working condition, 

(2) Operating supplies are any items 

carried as operating supplies according 

to a person’s established accounting 

practice. Operating supplies may 

include hand tools and expendable 

tools, jigs, dies, fixtures used on 

production equipment, lubricants, 

cleaners, chemicals and other 

expendable items, and 

(3) 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. 

National Defense. Programs for 

military and energy production or 

construction, military or critical 

infrastructure assistance to a foreign 

nation, homeland security, stockpiling, 

space, and any directly related activity. 

Such term includes emergency 

preparedness activities conducted 

pursuant to Title VI of The Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5195 et seq.) 

and critical infrastructure protection 

and restoration. 

Official action. An action taken by the 

Department of Commerce under the 

authority of the Defense Production Act, 

the Selective Service Act, and this part. 

Subparts B, F and H describe the official 

actions that may be taken by the 

Department of Commerce. Official 

actions include the issuance of setasides, rating authorizations, allocation 

or prioritization directives, letters of 

understanding, demands for 

information, inspection authorizations, 

and administrative subpoenas. 

Person. Any individual, corporation, 

partnership, association, or any other 

organized group of persons, or legal 

successor or representative thereof; or 

any authorized State or local 

government or agency thereof; and for 

purposes of administration of this part, 

including the United States Government 

and any authorized foreign government 

or agency thereof, or international 

organization delegated authority as 

provided in this part. 

Priorities Authority. The authority of 

the Department of Commerce, pursuant 

to Section 101 of the Defense 

Production Act, to require priority 

performance of contracts and orders for 

industrial resource items for use in 

approved programs. 

Priority Rating. An identifying code 

assigned by a delegate agency or 

authorized person placed on all rated 

orders and consisting of the rating 

symbol and the program identification 

symbol. The Department of Commerce 

uses the priority rating DO and DX; with 

DX having priority over DO. 

Prioritization Directive. An official 

action which requires a person to take 

or refrain from taking certain actions in 

accordance with its provisions. A 

prioritization directive may require a 

person to satisfy a rated requirement 

within a specific time period. 

Production Equipment. Any item of 

capital equipment used in producing 

materials or furnishing services that has 

a unit acquisition cost of $2,500 or more 

and the potential for maintaining its 

integrity as a capital item in excess of 

one year. 

Program Identification Symbols. 

Abbreviations used to indicate which 

approved program is supported by a 

rated order. The list of approved 

programs and their identification 

symbols is found in Schedule I of this 

part. For example, A1 identifies defense 

aircraft programs and A7 signifies 

defense electronic programs. Program 

identification symbols, in themselves, 

do not connote any priority. 

Rated Order. A prime contract, a 

subcontract, or a purchase order in 

support of an approved program issued 

in accordance with the provisions of 

this part. 

Resource Agency. Any U.S. 

Government agency delegated priorities 

and allocations authority in Section 201 

of Executive Order 12919. 

Selective Service Act. Section 18 of 

the Selective Service Act of 1948 (50 

U.S.C. app. 468), authorizes the 

President to place an order with a 

supplier for any articles or materials 

required for the exclusive use of the 

U.S. armed forces whenever the 

President determines that in the interest 

of national security, prompt delivery of 

the articles and materials is required. 

The supplier must give precedence to 

the order so as to deliver the articles or 

materials in a required time period. 

Set-Aside. An official action that 

requires a person to reserve resource 

capacity in anticipation of the receipt of 

rated orders. 

Short Supply Item. An item that is in 

short supply due to a sudden and 

substantial increase in demand or 

decrease in supply. 

Stafford Act. Title VI (Emergency 

Preparedness) of the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5195 et seq.). 

3. Subpart B is revised to read as 

follows: 

Subpart B—Industrial Priorities and 

Allocations 

Sec. 

700.10 Authority. 

700.11 Priority ratings. 

700.12 Prioritization directives and 

allocation orders. 

700.13 Examples of emergency 

preparedness. 

700.14 Changes to or cancellations of 

priority ratings, rated orders and 

allocation orders. 

700.15 Adjustments or exceptions. 

700.16 Appeals. 

700.17 Protection against claims. 

Subpart B—Industrial Priorities and 

Allocations 

§ 700.10 Authority. 

(a) Delegations to the Department of 

Commerce. The priorities and 

allocations authorities of the President 

under Title I of the Defense Production 

Act with respect to industrial resources 

have been delegated to the Secretary of 

Commerce under Executive Order 12919 

of June 3, 1994 (59 FR 29525, 3 CFR, 

1991 Comp., p. 901). The priorities 

authorities of the President under the 

Selective Service Act with respect to 

industrial resources have also been 

delegated to the Secretary of Commerce 

under Executive Order 12742 of January 

8, 1991 (56 FR 1079, 3 CFR 1991 Comp., 

p. 309). 

(b) Delegations by the Department of 

Commerce. In turn, the Department of 

Commerce has authorized the Delegate 

Agencies to assign priority ratings to 

orders for industrial resources needed 

for use in approved programs. 

(c) Jurisdiction limitations. (1) The 

priorities and allocations authority for 

certain items have been delegated under 

Executive Order 12919, other executive 

orders, or Interagency Memoranda of 

Understanding between other agencies. 

Unless otherwise agreed to by the 

concerned agencies, the provisions of 

this part are not applicable to those 

other items which include: 

(i) Food resources, food resource 

facilities, and the domestic distribution 

of farm equipment and commercial 

fertilizer (delegated to the Department of 

Agriculture); 

(ii) All forms of energy (delegated to 

the Department of Energy); 

(iii) Health resources (delegated to the 

Department of Health and Human 

Services); 

(iv) All forms of civil transportation 

(delegated to the Department of 

Transportation); and 

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(v) Water resources (delegated to the 

Department of Defense/U.S. Army Corps 

of Engineers). 

(2) The priorities and allocations 

authority set forth in this part may not 

be applied to communications services 

(delegated to the National 

Communications System under 

Executive Order 12472 of April 3, 1984, 

49 FR 13471, 3 CFR, 1985 Comp., p. 

193). 

§ 700.11 Priority ratings. 

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

levels of priority authorized by this 

subpart, 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 § 700.12(c) 

of this part.) 

(3) In addition, a prioritization 

directive issued by the Department of 

Commerce takes precedence over any 

DX rated order, DO rated order or any 

unrated order, as stipulated in the 

prioritization directive. (For a full 

discussion of prioritization directives, 

see § 700.12 of this part.) 

(b) Program identification symbols. 

The list of approved programs and their 

identification symbols are listed in 

Schedule I. For example, A1 identifies 

defense aircraft programs and A7 

signifies defense electronic programs. 

§ 700.12 Prioritization directives and 

allocation orders. 

(a) A person must comply with each 

prioritization directive issued. However, 

a person may not use or extend a 

prioritization directive to obtain any 

items from a supplier, unless expressly 

authorized to do so in the prioritization 

directive. 

(b) Prioritization directives take 

precedence over all DX rated orders, DO 

rated orders and unrated orders 

previously or subsequently received, 

unless a contrary instruction appears in 

the prioritization directive. 

(c) Allocation orders take precedence 

over prioritization directives, DX rated 

orders, DO rated orders and unrated 

orders previously or subsequently 

received, unless a contrary instruction 

appears in the allocation order. 

§ 700.13 Examples of emergency 

preparedness. 

There are instances where emergency 

preparedness is a basis for issuance of 

a priority rating or allocation order. 

Emergency preparedness is defined in 

§ 700.3 of this part, and largely depends 

on the nature of the hazards 

encountered. Examples of hazards that 

relate to emergency preparedness 

include the following: 

(a) Measures to be undertaken for 

anticipated hazards (including the 

establishment of appropriate 

organizations, 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); 

(b) Measures to be undertaken during 

a hazard (including the evacuation of 

personnel to shelter areas and the 

control and use of lighting and civil 

communications); and 

(c) Measures to be undertaken 

following a hazard (including activities 

for fire fighting, rescue, emergency 

medical, health and sanitation services, 

monitoring for specific dangers of 

special weapons, unexploded bomb 

reconnaissance, essential debris 

clearance, and immediately essential 

emergency repair or restoration of 

damaged vital facilities). 

§ 700.14 Changes to or cancellations of 

priority ratings, rated orders and allocation 

orders. 

(a) The priority rating on a rated order 

may be changed or cancelled by: 

(1) An official action of, or an 

allocation order from, the Department of 

Commerce; 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 if 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 § 700.24 

of this part. 

(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 

to fill a rated order, any rated orders 

placed with suppliers for the items, or 

the priority rating on those orders, must 

be cancelled. 

(f) When a priority rating is added to 

an unrated order, or when a priority 

rating is changed or cancelled, all 

suppliers must be promptly notified in 

writing by the person adding, changing 

or canceling the priority rating. 

(g) An allocation order may be 

changed by an official action of the 

Department of Commerce. 

§ 700.15 Adjustments or exceptions. 

(a) A person may submit a request to 

the Office of Strategic Industries and 

Economic Security, U.S. Department of 

Commerce, 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 consequence of following a 

provision of this part or an official 

action is contrary to the intent of the 

Defense Production Act, the Selective 

Service Act, 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 

for which adjustment or from which an 

exception is sought and a full and 

precise statement of the reasons why 

relief should be provided. Requests for 

adjustment or exception pursuant this 

section should be sent to: Office of 

Strategic Industries and Economic 

Security, Bureau of Industry and 

Security, U.S. Department of Commerce, 

Room 3876, 14th Street and 

Pennsylvania Avenue, NW., 

Washington, DC 20230, Ref: DPAS 

Adjustments; Fax: (202) 482–5650. 

(c) The submission of a request for 

adjustment or exception shall not 

relieve any person from the obligation of 

complying with the provision of this 

part or official action in question while 

the request is being considered unless 

such interim relief is granted in writing 

by the Office of Strategic Industries and 

Economic Security. 

(1) The Office of Strategic Industries 

and Economic Security shall respond to 

request for adjustment of or exceptions 

to priority orders within 20 (twenty) 

business days of the date of receipt. 

(2) The Office of Strategic Industries 

and Economic Security shall respond to 

request for adjustment of allocation 

orders or exceptions to within 2 (two) 

business days of receipt. 

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(d) A decision of the Office of 

Strategic Industries and Economic 

Security under this section may be 

appealed to the Assistant Secretary for 

Export Administration, U.S. Department 

of Commerce in accordance with 

§ 700.16 of this part. 

§ 700.16 Appeals. 

(a) Any person who has had a request 

for adjustment or exception denied by 

the Office of Strategic Industries and 

Economic Security under § 700.15 of 

this part, may appeal to the Assistant 

Secretary for Export Administration, 

U.S. Department of Commerce, who 

shall review and reconsider the denial. 

Such appeals should be submitted to the 

Office of the Assistant Secretary for 

Export Administration, Bureau of 

Industry and Security, U.S. Department 

of Commerce, Room 3886, Washington, 

DC 20230, Ref: DPAS Appeals. 

(b) Appeals of denied requests of 

exceptions from or adjustments to 

priority orders must be received by the 

Assistant Secretary for Export 

Administration no later than 45 days 

after receipt of a written notice of denial 

from the Office of Strategic Industries 

and Economic Security. After this 45- 

day period, an appeal may be accepted 

at the discretion of the Assistant 

Secretary for Export Administration. 

(c) Appeals of denied requests of 

exception from or adjustment to 

allocation orders must be received by 

the Assistant Secretary for Export 

Administration no later than 5 business 

days after receipt of a written notice of 

denial from the Office of Strategic 

Industries and Economic Security. After 

this 5 day period, an appeal may be 

accepted at the discretion of the 

Assistant Secretary for Export 

Administration. 

(d) 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. 

(e) In addition to the written materials 

submitted in support of an appeal, an 

appellant may request, in writing, an 

opportunity for an informal hearing. 

This request may be granted or denied 

at the discretion of the Assistant 

Secretary for Export Administration. 

(f) When a hearing is granted, the 

Assistant Secretary for Export 

Administration may designate an 

employee of the Department of 

Commerce 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. 

(g) When determining an appeal, the 

Assistant Secretary for Export 

Administration may consider all 

information submitted during the 

appeal as well as any recommendations, 

reports, or other relevant information 

and documents available to the 

Department of Commerce, or consult 

with any other persons or groups. 

(h) The submission of an appeal 

under this section shall not relieve any 

person from the obligation of complying 

with the provision of this part or official 

action in question while the appeal is 

being considered, unless such relief is 

granted in writing by the Assistant 

Secretary for Export Administration. 

(i) The decision of the Assistant 

Secretary for Export Administration 

shall be made within a reasonable time 

after receipt of the appeal and shall be 

the final administrative action. It shall 

be issued to the appellant in writing 

with a statement of the reasons for the 

decision. 

§ 700.17 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. 

4. Subpart C is revised to read as 

follows: 

Subpart C—Complying With Priority 

Ratings and Orders. 

Sec. 

700.21 Rated orders. 

700.22 Elements of a rated order. 

700.23 Use of rated orders. 

700.24 Limitations on placing rated orders. 

700.25 Acceptance and rejection of rated 

orders. 

700.26 Preferential scheduling. 

700.27 Extension of priority ratings. 

700.28 Metalworking machines. 

Subpart C—Complying With Priority 

Ratings and Orders. 

§ 700.21 Rated orders. 

(a) Rated orders are identified by a 

priority rating and a program 

identification symbol. Rated orders take 

precedence over all unrated orders as 

necessary to meet required delivery 

dates. Among rated orders, DX rated 

orders take precedence over DO rated 

orders. Program identification symbols 

indicate which approved program is 

attributed to the rated order. 

(b) Persons receiving rated orders 

must give them preferential treatment as 

required by this part. 

(c) All rated orders must be 

scheduled, to the extent possible, in a 

manner to ensure delivery by the 

required delivery date. 

(d) Persons who receive rated orders 

must in turn place rated orders with 

their suppliers for the items they need 

to fill the orders. This provision ensures 

that suppliers will give priority 

treatment to rated orders throughout the 

procurement chain. 

(e) Persons may place a priority rating 

on orders only when they are in receipt 

of a rated order, have been explicitly 

authorized to do so by the Department 

of Commerce or a Delegate Agency, or 

are otherwise permitted to do so by this 

part. 

§ 700.22 Elements of a rated order. 

(a) Elements required for all rated 

orders. Each rated order must include: 

(1) The appropriate priority rating and 

program identification symbol (e.g., 

DO–A1, DX–A4, DO–H1); 

(2) A required delivery date or dates. 

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

possible’’ do not constitute a delivery 

date. When a ‘‘requirements contract,’’ 

‘‘basic ordering agreement,’’ ‘‘prime 

vendor contract,’’ or similar 

procurement document bearing a 

priority rating contains no specific 

delivery date or dates, but provides for 

the furnishing of items from time-totime or within a stated period against 

specific purchase orders, such as ‘‘calls,’’ 

‘‘requisitions,’’ and ‘‘delivery orders,’’ the 

purchase orders supporting such 

contracts or agreements must specify a 

required delivery date or dates and are 

to be considered as rated as of the date 

of their receipt by the supplier and not 

as of the date of the original 

procurement document; 

(3) The written signature on a 

manually placed order, or the digital 

signature or name on an electronically 

placed order, of an individual 

authorized to sign rated orders for the 

person placing the order. The signature, 

manual or digital, certifies that the rated 

order is authorized under this part and 

that the requirements of this part are 

being followed; and 

(4) A statement that reads in 

substance: 

This is a rated order certified for national 

defense use and you are required to follow 

all the provisions of the Defense Priorities 

and Allocations System regulation in the 

execution of this rated order (15 CFR part 

700). 

(b) If the rated order is placed in 

support of emergency preparedness 

requirements and expedited action is 

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necessary and appropriate to meet these 

requirements, the following sentences 

should be added following the 

statement set forth in paragraph (a)(4) of 

this section: ‘‘This rated order is placed 

for the purpose of emergency 

preparedness. It must be accepted or 

rejected within (the rating agency will 

insert a time frame in the range of one 

through fourteen working days) working 

days in accordance with Section 

700.25(d)(3) of the Defense Priorities 

and Allocations System regulation (15 

CFR part 700).’’ 

§ 700.23 Use of rated orders. 

(a) Use of rated orders. A person may 

use rated orders to obtain: 

(1) Items which will be physically 

incorporated into other items to fill 

rated orders, including that portion of 

such items normally consumed, or 

converted into scrap or by-products, in 

the course of processing; 

(2) Containers or other packaging 

materials required to make delivery of 

the finished items against rated orders; 

(3) Services, other than contracts of 

employment, needed to fill rated orders; 

and 

(4) MRO needed to produce the 

finished items to fill rated orders. 

However, for MRO, the priority rating 

used must contain the program 

identification symbol H7 in addition to 

the rating symbol contained on the 

customer’s rated order. For example, a 

person in receipt of a DO–A3 rated 

order who needs MRO would place a 

DO–H7 rated order with the person’s 

supplier. 

(b) Use of rated orders to replace 

inventoried items. 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 symbol 

may not be used even if the inventory 

was used to fill a DX rated order. 

(3) If the priority ratings on rated 

orders from one customer or several 

customers contain different program 

identification symbols, the rated orders 

may be combined. In this case, the 

program identification symbol H1 must 

be used (i.e., DO–H1). 

(c) Combining rated orders. A person 

may combine DX and DO rated orders 

from one customer or several customers 

if the items covered by each level of 

priority are identified separately and 

clearly. If different program 

identification symbols are indicated on 

those rated orders of equal priority, the 

person must use the program 

identification symbol H1 (i.e., DO–H1 or 

DX–H1). 

(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 § 700.22 of this part, are 

included on the order with the 

statement required in § 700.22(d) of this 

part modified to read in substance: 

‘‘This purchase order contains rated 

order quantities certified for national 

defense use, and you are required to 

follow all the provisions of the Defense 

Priorities and Allocations System 

regulation (15 CFR part 700) as it 

pertains to the rated quantities.’’ 

(2) A supplier must accept or reject 

the rated portion of the purchase order 

as provided in § 700.21 of this part and 

give preferential treatment only to the 

rated quantities as required by this part. 

This part may not be used to give 

preferential treatment to 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 § 700.15 of this part. 

(e) Rated orders and minimum 

commercially procurable quantities. 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) Federal Acquisition Regulation. A 

person is not required to place a priority 

rating on an order for less than $50,000, 

or one-half Simplified Acquisition 

Threshold (as established in the Federal 

Acquisition Regulation (FAR) (48 CFR 

chapter 1), see FAR 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. 

§ 700.24 Limitations on placing rated 

orders. 

(a) General limitations. (1) A person 

may not place a rated order pursuant to 

this part unless entitled to do so under 

the provisions of this part. 

(2) Rated orders may not be used to 

obtain: 

(i) Delivery on a date earlier than 

needed; 

(ii) A greater quantity of the item than 

needed, except to obtain a minimum 

procurable quantity. Separate rated 

orders may not be placed solely for 

obtaining minimum procurable 

quantities on each order if the minimum 

procurable quantity would be sufficient 

for all of the rated orders if combined. 

(iii) Items in advance of the receipt of 

a rated order, except as specifically 

authorized by the Department of 

Commerce (see § 700.41(c) for 

information on obtaining authorization 

for a priority rating in advance of a rated 

order); or 

(iv) Any of the following items unless 

specific priority rating authority has 

been obtained from a Delegate Agency 

or the Department of Commerce: 

(A) Items for plant improvement, 

expansion or construction, unless they 

will be physically incorporated into a 

construction project covered by a rated 

order; and 

(B) Production or construction 

equipment or items to be used for the 

manufacture of production equipment 

(for information on requesting priority 

rating authority, see § 700.41 of this 

part). 

(v) Any items related to the 

development of chemical or biological 

warfare capabilities or the production of 

chemical or biological weapons, unless 

such development or production has 

been authorized by the President or the 

Secretary of Defense. 

(b) Limitations on Use of Ratings. 

Rated orders may not be placed on the 

following items under the jurisdiction of 

the Department of Commerce; however, 

these items must be supplied if request 

is pursuant to an allocation directive 

described under Subpart G. These 

excluded items are: 

(1) Copper raw materials. 

(2) Crushed stone. 

(3) Gravel. 

(4) Sand. 

(5) Scrap. 

(6) Slag. 

(7) Steam heat, central. 

(8) Waste paper. 

§ 700.25 Acceptance and rejection of rated 

orders. 

(a) Mandatory acceptance. (1) Except 

as otherwise specified in this section, a 

person capable of fulfilling a rated order 

shall accept every rated order received 

and must fill such orders in due 

consideration of any other rated order, 

and regardless of unrated orders that 

have been accepted. 

(2) A person shall not discriminate 

against rated orders in any manner such 

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as by charging higher prices or by 

imposing different terms and conditions 

than are imposed for comparable 

unrated orders. 

(b) Mandatory rejection. Unless 

otherwise directed by the Department of 

Commerce: 

(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 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 the Department of 

Commerce, 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 performed; 

(3) If the order is for an item 

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, the supplier is 

obligated to accept rated orders up to 

that quantity or portion of production, 

whichever is greater, sold within the 

past two years; 

(4) If the person placing the rated 

order, other than the U.S. Government, 

makes the item or performs the service 

being ordered; 

(5) If acceptance of a rated order or 

performance against a rated order would 

violate any other regulation, official 

action, or order of the Department of 

Commerce issued under the authority of 

the Defense Production Act or the 

Selective Service Act (see § 700.76 of 

this part). 

(d) Customer notification 

requirements. (1) A person must accept 

or reject a rated order for all approved 

programs and, except as provided in 

paragraph (d)(2) of this section, must 

transmit the acceptance or rejection in 

writing (hard copy), or in electronic 

format, within fifteen (15) working days 

after receipt of a DO rated order and 

within ten (10) working days after 

receipt of a DX rated order. 

(2) For rated orders involving 

emergency preparedness requirements 

and containing the language specified in 

§ 700.22(b) of this part, notification of 

acceptance or rejection must be 

transmitted in writing or electronically 

within the time specified in the rated 

order. 

Note to Paragraph (d)(2): There may be 

certain instances, including, for example, the 

emergency preparedness requirements listed 

in § 700.13 of this part, where a shorter time 

period for acceptance or rejection of the rated 

order may apply. The time period for 

acceptance and rejection of rated orders is 

dictated by the regulations of the Delegate 

Agency issuing the rating. The contract or the 

contracting official should identify which 

agency has issued the rated order and 

provide reference to the regulations that 

apply to that rated order. 

(3) If the rated order is rejected, the 

person must provide reasons in writing 

(hard copy) or electronically for the 

rejection. 

(4) 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 five (5) 

working days of the verbal notice. 

§ 700.26 Preferential scheduling. 

(a) Scheduling requirement, 

modification of non-rated order delivery 

dates. A person must schedule 

operations, including the acquisition of 

all needed production items, in a timely 

manner to satisfy the delivery 

requirements of each rated order. 

Modifying production or delivery 

schedules for other orders is necessary 

only when required delivery dates for 

rated orders cannot otherwise be met. 

(b) Precedence of orders. DO and DX 

rated orders must be given production 

precedence over unrated orders, if 

necessary to meet required delivery 

dates, even if this requires the diversion 

of items being processed or ready for 

delivery against unrated orders. 

Similarly, DX rated orders must be 

given precedence 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 business 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 3 and 

July 15 delivery dates, then the DX rated 

order must be given priority over the DO 

rated order. 

(c) Conflicting rated orders. (1) If a 

person finds that delivery or 

performance against any accepted rated 

orders conflicts with the delivery or 

performance against other accepted 

rated orders of equal priority status, the 

person shall give precedence to the 

conflicting orders in the sequence in 

which they are to be delivered or 

performed (not to the receipt dates). If 

the conflicting rated orders are 

scheduled to be delivered or performed 

on the same day, the person shall give 

precedence to those orders which 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 Subpart E of 

this part. If a customer placing a rated 

order objects to the rescheduling of 

delivery or performance of a rated order, 

the customer should promptly seek 

special priorities assistance as provided 

in Subpart E of this part. For any rated 

order against which delivery or 

performance will be delayed, the person 

must notify the customer as provided in 

§ 700.24(d)(3) of this part. 

(d) Use of inventoried items to fill 

rated orders. 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 

the rated order as provided in 

§ 700.23(b) of this part. 

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§ 700.27 Extension of priority ratings. 

(a) A person must use rated orders 

with suppliers to obtain items needed to 

fill a rated order. The person must use 

the priority rating indicated on the 

customer’s rated order, except as 

otherwise provided in this part or as 

directed by the Department of 

Commerce. For example, if a person is 

in receipt of a DO–A3 rated order for a 

navigation system and needs to 

purchase semiconductors for its 

manufacture, that person must use a 

DO–A3 rated order to obtain the needed 

semiconductors. 

(b) The priority rating must be 

included on each successive order 

placed to obtain items needed to fill a 

customer’s rated order. Therefore, the 

inclusion of the rated order will 

continue from contractor to 

subcontractor to supplier throughout the 

entire procurement chain. 

§ 700.28 Metalworking machines. 

(a) ‘‘Metalworking machines’’ include 

power driven, manual or automatic, 

metal cutting and metal forming 

machines and complete machines not 

supported in the hands of an operator 

when in use. Basic machines with a list 

price of $2,500 or less are not covered 

by this section. 

(b) Metalworking machines covered 

by this section include: 

(1) Bending and forming machines. 

(2) Boring machines. 

(3) Broaching machines. 

(4) Drilling and tapping machines. 

(5) Electrical discharge, ultrasonic and 

chemical erosion machines. 

(6) Forging machinery and hammers. 

(7) Gear cutting and finishing 

machines. 

(8) Grinding machines. 

(9) Hydraulic and pneumatic presses, 

power driven. 

(10) Machining centers and way-type 

machines. 

(11) Manual presses. 

(12) Mechanical presses, power 

driven. 

(13) Milling machines. 

(14) Miscellaneous machine tools. 

(15) Miscellaneous secondary metal 

forming and cutting machines. 

(16) Planers and shapers. 

(17) Polishing, lapping, boring, and 

finishing machines. 

(18) Punching and shearing machines. 

(19) Riveting machines. 

(20) Saws and filing machines. 

(21) Turning machines, lathes, 

including automatic. 

(22) Wire and metal ribbon forming 

machines. 

(c) A metalworking machine producer 

is not required to accept DO or DX rated 

orders calling for delivery in any month 

of a total quantity of any size of machine 

in excess of 60 percent of scheduled 

production of that size of machine for 

that month, or any DO or DX rated 

orders received less than three months 

prior to the beginning of the month for 

which delivery is requested. However, 

DX and DO rated orders must be 

accepted without regard to a set-aside or 

the lead time, if delivery can be made 

by the required date. 

5. Subpart D is revised to read as 

follows: 

Subpart D—Industrial Priorities for Energy 

Programs 

Sec. 

700.30 Use of priority ratings for energy 

programs. 

700.31 Application for priority rating 

authority. 

Subpart D—Industrial Priorities for 

Energy Programs 

§ 700.30 Use of priority ratings for energy 

programs. 

(a) Section 101(c) of the Defense 

Production Act authorizes the use of 

priority ratings for projects which 

maximize domestic energy supplies. 

(b) Projects which maximize domestic 

energy supplies include those which 

maintain or further domestic energy 

exploration, production, refining, and 

transportation; maintain or further the 

conservation of energy; or are involved 

in the construction or maintenance of 

energy facilities. 

§ 700.31 Application for priority rating 

authority. 

(a) For projects believed to maximize 

domestic energy supplies, a person may 

request priority rating authority for 

scarce, critical, and essential supplies of 

materials, equipment, and services 

(related to the production of materials or 

equipment, or the installation, repair, or 

maintenance of equipment) by 

submitting a request to the Department 

of Energy. Further information may be 

obtained from the U.S. Department of 

Energy, Office of Electricity Delivery 

and Energy Reliability, 1000 

Independence Avenue, SW., 

Washington, DC 20585. 

(b) If the Department of Energy 

notifies the Department of Commerce 

that the project maximizes domestic 

energy supplies and that the materials, 

equipment, or services are critical and 

essential, the Department of Commerce 

must make two findings; whether the 

items in question are scarce, and 

whether there is a need to use the 

priorities authority. 

(1) Scarcity implies an unusual 

difficulty in obtaining the materials, 

equipment, or services in a timeframe 

consistent with the timely completion of 

the energy project. Among the factors to 

be used in making the scarcity finding 

will be the following: 

(i) Value and volume of material or 

equipment shipments; 

(ii) Consumption of material and 

equipment; 

(iii) Volume and market trends of 

imports and exports; 

(iv) Domestic and foreign sources of 

supply; 

(v) Normal levels of inventories; 

(vi) Rates of capacity utilization; 

(vii) Volume of new orders; and 

(viii) Lead times for new orders. 

(2) In finding whether there is a need 

to use the priorities authority, the 

Department of Commerce will consider 

alternative supply solutions and other 

measures. 

(c) After the Department of Commerce 

has conducted its analysis, it will advise 

the Department of Energy whether the 

two findings have been satisfied. If the 

findings are satisfied, the Department of 

Commerce will authorize the 

Department of Energy to grant the use of 

a priority rating to the applicant. 

(d) Schedule I includes a list of 

approved programs to support the 

maximization of domestic energy 

supplies. A Department of Energy 

regulation setting forth the procedures 

and criteria used by the Department of 

Energy in making its determination and 

findings is published in 10 CFR part 

216. 

6. Subpart E is revised to read as 

follows: 

Subpart E—Special Priorities Assistance 

Sec. 

700.40 General provisions. 

700.41 Requests for priority rating 

authority. 

700.42 Criteria for assistance. 

700.43 Instances where assistance will not 

be provided. 

700.44 Military Assistance programs with 

Canada. 

700.45 Military Assistance programs with 

other nations and international 

organizations. 

700.46 Critical Infrastructure Assistance 

programs with other nations and 

international organizations. 

Subpart E—Special Priorities 

Assistance 

§ 700.40 General provisions. 

(a) To resolve problems or conflicts 

that may arise in the execution of 

priorities and allocations authorities, 

the Department of Commerce may 

exercise its authority to provide special 

priorities assistance to resolve such 

problems or conflicts. The Department 

of Commerce can provide special 

priorities assistance for any reason in 

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support of this part, such as assisting in 

obtaining timely deliveries of items 

needed to satisfy rated orders or 

authorizing the use of priority ratings on 

orders to obtain items not automatically 

ratable under this part. 

(1) Examples of Special Priorities 

Assistance Requests. Special priorities 

assistance requests may be made for a 

variety of reasons including: 

(i) A person may request special 

priorities assistance to obtain priority 

rating authority for an item from a U.S. 

supplier in support of an approved 

program to ensure timely delivery ahead 

of unrated orders; 

(ii) A person may request special 

priorities assistance to obtain priority 

rating authority for an item to ensure 

timely delivery when there are one or 

more rated orders for the same item; or 

(iii) A person may request special 

priorities assistance when a U.S. 

supplier is unable to ensure the timely 

delivery of a rated order due to the 

production schedules of other rated 

orders. 

(2) Assistance for persons executing 

priority ratings or orders. Persons 

executing priority ratings or orders may 

apply directly to the Department of 

Commerce for special priorities 

assistance. 

(b) In the event a problem arises in the 

fulfillment of a rated order or other 

action authorized by a Delegate Agency, 

a person should immediately contact 

the appropriate contract administration 

officer for guidance or assistance. In 

turn, the contract administration officer 

should request assistance from that 

Delegate Agency to resolve the problem. 

If the Delegate Agency is unable to 

resolve the problem, then the Delegate 

Agency may instruct the contract 

administration officer to request special 

priorities assistance from the 

Department of Commerce. 

(c) The Department of Commerce 

makes the following types of special 

priorities assistance available: Priority 

rating authority; ensuring that rated 

orders receive preferential treatment by 

suppliers; resolution of production or 

delivery conflicts between various rated 

orders; assistance in placing rated 

orders with suppliers; verification of the 

urgency of rated orders; and 

determination of the validity of rated 

orders. 

(d) A request for special priorities 

assistance or priority rating authority 

must be submitted on Form BIS–999 to 

the local contract administration 

representative. Form BIS–999 may be 

obtained from the Delegate Agency 

representative or from the Department 

of Commerce. A sample Form BIS–999 

is attached at Appendix I. 

§ 700.41 Requests for priority rating 

authority. 

(a) Reason for request. If a rated order 

is likely to be delayed because a person 

is unable to obtain items not normally 

rated under this part, the person may 

request the authority to use a priority 

rating in ordering the needed items. 

Examples of items for which priority 

ratings can be authorized include: 

(1) Production or construction 

equipment; 

(2) Computers when not used as 

production items; and 

(3) Expansion, rebuilding or replacing 

plant facilities. 

(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 appropriate 

Delegate Agency. The Delegate Agency 

may establish particular forms to be 

used for these requests (e.g., Department 

of Defense Form DD 691.). 

(2) When the use of a priority rating 

is authorized for the procurement of 

production or construction equipment, a 

rated order may be used either to 

purchase or to lease such equipment. 

However, in the latter case, the 

equipment may be leased only from a 

person engaged in the business of 

leasing such equipment or from a 

person willing to lease rather than sell. 

(c) Rating authority in advance of a 

rated prime contract. (1) In certain cases 

and upon specific request, the 

Department of Commerce, in order to 

promote the national defense, may 

authorize a person to place a priority 

rating on an order to a supplier in 

advance of the issuance of a rated prime 

contract. In these instances, the person 

requesting advance rating authority 

must obtain sponsorship of the request 

from the appropriate Delegate Agency. 

The person shall also assume any 

business risk associated with the 

placing of rated orders if these orders 

have to be cancelled in the event the 

rated prime contract is not issued. 

(2) The person must state the 

following in the request: 

It is understood that the authorization of a 

priority rating in advance of our receiving a 

rated prime contract from a Delegate Agency 

and our use of that priority rating with our 

suppliers in no way commits the Delegate 

Agency, the Department of Commerce or any 

other government agency to enter into a 

contract or order or to expend funds. Further, 

we understand that the Federal Government 

shall not be liable for any cancellation 

charges, termination costs, or other damages 

that may accrue if a rated prime contract is 

not eventually placed and, as a result, we 

must subsequently cancel orders placed with 

the use of the priority rating authorized as a 

result of this request. 

(3) In reviewing requests for rating 

authority in advance of a rated prime 

contract, the Department of Commerce 

will consider, among other things, the 

following criteria: 

(i) The probability that the prime 

contract will be awarded; 

(ii) The impact of the resulting rated 

orders on suppliers and on other 

authorized programs; 

(iii) Whether the contractor is the sole 

source; 

(iv) Whether the item being produced 

has a long lead time; and 

(v) The time period for which the 

rating is being requested. 

(4) The Department of Commerce 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 has been cancelled. 

§ 700.42 Criteria for assistance. 

Requests for special priorities 

assistance should be timely, i.e., the 

request must be submitted promptly and 

with enough time for the Delegate 

Agency or the Department of Commerce 

to develop 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. 

§ 700.43 Instances where assistance will 

not be provided. 

Special priorities assistance is 

provided at the discretion of the 

Department of Commerce 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. 

§ 700.44 Military Assistance programs with 

Canada. 

To promote military assistance to 

Canada, this section provides for 

authorizing priority ratings to persons in 

Canada to obtain items in the United 

States in support of approved programs. 

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Although priority ratings have no legal 

authority outside of the United States, 

this section also provides information 

on how persons in the United States 

may obtain informal assistance in 

Canada in support of approved 

programs. 

(a) The joint United States-Canadian 

military arrangements for the defense of 

North America and the integrated nature 

of United States and Canadian their 

defense industries require close 

coordination and the establishment of a 

means to provide mutual assistance to 

the defense industries located in both 

countries. 

(b) The Department of Commerce 

coordinates with the Canadian Public 

Works and Government Services Canada 

on all matters of mutual concern 

relating to the administration of this 

part. 

(c) Any person in the United States 

ordering defense items in Canada in 

support of an approved program should 

inform the Canadian supplier that the 

items being ordered are to be used to fill 

a rated order. The Canadian supplier 

should be informed that if production 

materials are needed from the United 

States by the supplier or the supplier’s 

vendor to fill the order, the supplier or 

vendor should contact the Canadian 

Public Works and Government Services 

Canada, for authority to place rated 

orders in the United States: Public 

Works and Government Services 

Canada, Acquisitions Branch, Business 

Management Directorate, Phase 3, Place 

du Portage, Level 0A1, 11 Laurier Street, 

Gatineau, Quebec, K1A 0S5, Canada; 

Telephone: (819) 956–6825; Fax: (819) 

956–7827, or electronically at 

DGAPrioritesdedefense.ACQBDefence

Priorities@tpsgc-pwgsc.gc.ca. 

(d) Any person in Canada producing 

defense items for the Canadian 

government may also obtain priority 

rating authority for items to be 

purchased in the United States by 

applying to the Canadian Public Works 

and Government Services Canada, 

Acquisitions Branch, Business 

Management Directorate, in accordance 

with its procedures. 

(e) Persons in Canada needing special 

priorities assistance in obtaining 

defense items in the United States may 

apply to the Canadian Public Works and 

Government Services Canada, 

Acquisitions Branch, Business 

Management Directorate, for such 

assistance. Public Works and 

Government Services Canada will 

forward appropriate requests to the 

Department of Commerce. 

(f) Any person in the United States 

requiring assistance in obtaining items 

in Canada must submit a request 

through the Delegate Agency to the 

Department of Commerce on Form BIS– 

999. The Department of Commerce will 

forward appropriate requests to the 

Canadian Public Works and 

Government Services Canada. 

§ 700.45 Military Assistance programs with 

other nations and international 

organizations. 

(a) Scope. To promote military 

assistance to foreign nations and 

international organizations, this section 

provides for authorizing priority ratings 

to persons in foreign nations or 

international organizations to obtain 

items in the United States in support of 

approved programs. Although priority 

ratings have no legal authority outside 

of the United States, this section also 

provides information on how persons in 

the United States may obtain informal 

assistance in Finland, Italy, The 

Netherlands, Sweden, and the United 

Kingdom in support of approved 

programs. 

(b) Foreign nations and international 

organizations. (1) Any person in a 

foreign nation other than Canada, 

Finland, Italy, The Netherlands, 

Sweden, or the United Kingdom, or any 

person in an international organization, 

requiring assistance in obtaining 

defense items in the United States or 

priority rating authority for defense 

items to be purchased in the United 

States, should submit a request for such 

assistance or rating authority to: The 

Department of Defense DPAS Lead in 

the Office of the Director, Industrial 

Policy, 3330 Defense Pentagon, 

Washington, DC 20301; Telephone: 

(703) 697–0051; Fax: (703) 695–4885. 

(i) If the end product is being acquired 

by a U.S. Government agency, the 

request should be submitted to the 

DPAS Lead through the U.S. contract 

administration representative. 

(ii) If the end product is being 

acquired by a foreign nation or 

international organization, the request 

must be sponsored prior to its 

submission to DPAS Lead by the 

government of the foreign nation or the 

international organization that will use 

the end product. 

(2) If the Department of Defense 

endorses the request, it will be 

forwarded to the Department of 

Commerce for appropriate action. 

(c) Requesting assistance in Finland, 

Italy, The Netherlands, Sweden, and the 

United Kingdom. 

(1) The U.S. Department of Defense 

has entered into bilateral security of 

supply arrangements with Finland, 

Italy, The Netherlands, Sweden, and the 

United Kingdom that allow the U.S. 

Department of Defense to request the 

priority delivery for U.S. Department of 

Defense contracts, subcontracts, and 

orders from companies in these 

countries. 

(2) Any person in the United States 

requiring assistance in obtaining the 

priority delivery of a contract, 

subcontract, or order in Finland, Italy, 

The Netherlands, Sweden, or the United 

Kingdom to support an approved 

program should contact the Department 

of Defense DPAS Lead in the Office of 

the Director, Industrial Policy for 

assistance. Persons in Finland, Italy, 

The Netherlands, Sweden, and the 

United Kingdom should request 

assistance in accordance with paragraph 

(b)(1) of this section. 

§ 700.46 Critical Infrastructure Assistance 

programs with other nations and 

international organizations. 

(a) Scope. To promote critical 

infrastructure assistance to foreign 

nations, this section provides for 

authorizing priority ratings to persons in 

foreign nations or international 

organizations to obtain items in the 

United States in support of approved 

programs. 

(b) Foreign nations and international 

organizations. (1) Any person in a 

foreign nation or international 

organization requiring assistance in 

obtaining critical infrastructure items in 

the United States or priority rating 

authority for critical infrastructure items 

to be purchased in the United States 

should submit a request for such 

assistance or rating authority to the 

Office of Policy and Program Analysis 

(OPPA), Federal Emergency 

Management Agency, U.S. Department 

of Homeland Security, 500 C Street, 

SW., Washington, DC 20472; telephone: 

(202) 646–3520; Fax: (202) 646–4060. 

(2) The government of the foreign 

nation or the international organization 

that will use the end product must 

sponsor all critical infrastructure 

assistance requests prior to submission 

to the OPPA. 

7. Subpart F is revised to read as 

follows: 

Subpart F—Official Actions 

Sec. 

700.50 General provisions. 

700.51 Rating authorizations. 

700.52 Letters of understanding. 

Subpart F—Official Actions 

§ 700.50 General provisions. 

(a) The Department of Commerce 

may, from time-to-time, take specific 

official actions to implement or enforce 

the provisions of this part. 

(b) Several of these official actions 

(rating authorizations, and letters of 

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understanding) are discussed in this 

subpart. Official actions that pertain to 

compliance (administrative subpoenas, 

demands for information, and 

inspection authorizations) are discussed 

in § 700.72(c) of this part. Prioritization 

directives and allocation directives are 

discussed in §§ 700.12 and 700.62, 

respectively, of this part. 

§ 700.51 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 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 § 700.41 of this part. 

§ 700.52 Letters of understanding. 

(a) A Letter of understanding is an 

official action which may be issued to 

resolve special priorities assistance 

cases and reflects an agreement reached 

by all parties (the Department of 

Commerce, the Delegate Agency, 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, or to take other official action. 

Rather, letters of understanding are used 

to confirm production or shipping 

schedules which do not impact other 

rated orders. 

8. Subpart G is revised to read as 

follows: 

Subpart G—Allocations in a National 

Emergency 

Sec. 

700.61 Allocation orders—when and how 

used. 

700.62 Precedence of allocation orders over 

rated orders or prioritization directives. 

700.63 Allocation orders. 

700.64 Elements of an allocation order. 

700.65 Mandatory acceptance of allocation 

orders. 

700.66 Changes or cancellations of 

allocation orders. 

Subpart G—Allocations in a National 

Emergency 

§ 700.61 Allocation orders—when and how 

used. 

(a) Allocation orders will be used only 

if: 

(1) Use of priorities (subpart C of this 

part) does not provide sufficient supply 

of a material, service or facility to satisfy 

national defense requirements; or 

(2) Use of such priorities would cause 

a severe and prolonged disruption in the 

supply of resources available to support 

normal U.S. economic activities. 

(b) Allocation orders will not be used 

to ration materials or services at the 

retail level. 

(c) Allocation orders, when imposed, 

will be distributed equitably among the 

suppliers of the resource(s) being 

allocated and not require any person to 

relinquish a disproportionate share of 

the civilian market. 

§ 700.62 Precedence of allocation orders 

over rated orders or prioritization 

directives. 

If a conflict should occur between an 

allocation order and an unrelated rated 

order or prioritization directive, the 

allocation order shall take precedence. 

§ 700.63 Allocation orders. 

The three types of allocation orders 

that may be used to communicate 

allocation actions are: 

(a) Set-asides; 

(b) Allocation directives; and 

(c) Allotments. 

§ 700.64 Elements of an allocation order. 

All allocation orders will include: 

(a) A detailed description of the 

required allocation action(s); 

(b) Specific start and end calendar 

dates for each required allocation 

action; 

(c) The written signature on a 

manually placed order, or the digital 

signature or name on an electronically 

placed order, of the head of the 

Resource Agency placing the order. The 

signature or use of the name certifies 

that the order is authorized under this 

part and that the requirements of this 

part are being followed; and 

(d) A statement that reads in 

substance: ‘‘This is an allocation order 

certified for national defense use. [Insert 

the legal name of the person receiving 

the order] is required to comply with 

this order, in accordance with the 

provisions of 15 CFR 700.’’ 

§ 700.65 Mandatory acceptance of 

allocation orders. 

(a) A person shall accept every 

allocation order received that the person 

is capable of fulfilling, and must comply 

with such orders regardless of any rated 

order, from any delegate agency, that the 

person may be in receipt of or other 

commitments involving the resource(s) 

covered by the allocation order. 

(b) A person shall not discriminate 

against an allocation order in any 

manner such as by charging higher 

prices for resources covered by the order 

or by imposing terms and conditions for 

contracts and orders involving allocated 

resource(s) that differ from the person’s 

terms and conditions for contracts and 

orders for the resource(s) prior to 

receiving the allocation order. 

(c) If a person is unable to comply 

fully with the required action(s) 

specified in an allocation order, the 

person must notify the Department of 

Commerce immediately at the address, 

telephone or fax number in § 700.81 of 

this part, explain the extent to which 

compliance is possible, and give the 

reasons why full compliance is not 

possible. If notification is given 

verbally, written or electronic 

confirmation must be provided within 

five (5) working days in accordance 

with the instructions in § 700.81 of this 

part. Such notification does not release 

the person from complying with the 

order to the fullest extent possible, until 

the person is notified by the Department 

of Commerce that the order has been 

changed or cancelled. Alternatively, a 

person may request an adjustment of or 

exception from an allocation order in 

accordance with the provisions set forth 

in § 700.15 of this part. 

§ 700.66 Changes or cancellations of 

allocation orders. 

An allocation order may be changed 

or canceled by an official action from 

the Department of Commerce. 

9. Subpart H is revised to read as 

follows: 

Subpart H—Compliance 

Sec. 

700.70 General provisions. 

700.71 Records and reports. 

700.72 Audits and investigations. 

700.73 Compulsory process. 

700.74 Notification of failure to comply. 

700.75 Violations, penalties, and remedies. 

700.76 Compliance conflicts. 

Subpart H—Compliance 

§ 700.70 General provisions. 

(a) Compliance actions may be taken 

for any reason necessary or appropriate 

to the enforcement or the administration 

of the Defense Production Act, the 

Selective Service Act, or this part. Such 

actions include audits, investigations, or 

other inquiries. 

(b) Willful violation of any of the 

provisions of Title I or section 705 of the 

Defense Production Act, or this part, is 

a criminal act, punishable as provided 

in the Defense Production Act and as set 

forth in § 700.75 of this part. 

§ 700.71 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 

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specify any particular method or system 

to be used. 

(c) Records required to be maintained 

by this section must be made available 

for examination on demand by duly 

authorized representatives of the 

Department of Commerce as provided in 

§ 700.72 of this part. 

(d) In addition, persons must develop, 

maintain, and submit any other records 

and reports to the Department of 

Commerce that may be required for the 

administration of the Defense 

Production Act, the Selective Service 

Act, and this part. 

(e) Section 705(d) of the Defense 

Production Act provides that 

information obtained under this section 

which the President 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 President determines that the 

withholding of this information is 

contrary to the interest of the national 

defense. Information required to be 

submitted to the Department of 

Commerce in connection with the 

enforcement or administration of the 

Act, this part, or an official action, is 

deemed to be confidential under section 

705(d) of the Act and shall not be 

published or disclosed except as 

required by law. 

§ 700.72 Audits and investigations. 

(a) Audits and investigations are 

official actions involving the 

examination of books, records, 

documents, other writings and 

information to ensure that the 

provisions of the Defense Production 

Act, the Selective Service Act, and this 

part have been properly followed. An 

audit or investigation may also include 

interviews and a systems evaluation to 

detect problems or failures in the 

implementation of this part. 

(b) When undertaking an audit, 

investigation, or other inquiry, the 

Department of Commerce shall: 

(1) Promptly define the scope and 

purpose in the official action given to 

the person under investigation, and 

(2) Ascertain that the information 

sought or other adequate and 

authoritative data are not available from 

any Federal or other responsible agency. 

(c) In administering this part, the 

Department of Commerce may issue the 

following documents which constitute 

official actions: 

(1) Administrative Subpoenas. An 

Administrative Subpoena requires a 

person to appear as a witness before an 

official designated by the Department of 

Commerce to testify under oath on 

matters of which that person has 

knowledge relating to the enforcement 

or the administration of the Defense 

Production Act, the Selective Service 

Act, or this part. An Administrative 

Subpoena may also require the 

production of books, papers, records, 

documents and physical objects or 

property. 

(2) Demand for Information. A 

Demand for Information requires a 

person to furnish to a duly authorized 

representative of the Department of 

Commerce any information necessary or 

appropriate to the enforcement or the 

administration of the Defense 

Production Act, the Selective Service 

Act, or this part. 

(3) Inspection Authorizations. An 

Inspection Authorization requires a 

person to permit a duly authorized 

representative of the Department of 

Commerce to interview the person’s 

employees or agents, to inspect books, 

records, documents, other writings and 

information in the person’s possession 

or control at the place where that person 

usually keeps them, and to inspect a 

person’s property when such interviews 

and inspections are necessary or 

appropriate to the enforcement or the 

administration of the Defense 

Production Act, the Selective Service 

Act, or this part. 

(d) The production of books, records, 

documents, other writings and 

information will not be required at any 

place other than where they are usually 

kept if, prior to the return date specified 

in the Administrative Subpoena or 

Demand for Information, a duly 

authorized official of the Department of 

Commerce is furnished with copies of 

such material that are certified under 

oath to be true copies. As an alternative, 

a person may enter into a stipulation 

with a duly authorized official of the 

Department of Commerce as to the 

content of the material. 

(e) An Administrative Subpoena, 

Demand for Information, or Inspection 

Authorization, shall include the name, 

title or official position of the person to 

be served, the evidence sought to be 

adduced, and its general relevance to 

the scope and purpose of the audit, 

investigation, or other inquiry. If 

employees or agents are to be 

interviewed; if books, records, 

documents, other writings, or 

information are to be produced; or if 

property is to be inspected; the 

Administrative Subpoena, Demand for 

Information, or Inspection 

Authorization will describe them with 

particularity. 

(f) Service of documents shall be 

made in the following manner: 

(1) Service of a Demand for 

Information or Inspection Authorization 

shall be made personally, or by Certified 

Mail—Return Receipt Requested at the 

person’s last known address. Service of 

an Administrative Subpoena shall be 

made personally. Personal service may 

also be made by leaving a copy of the 

document with someone at least 18 

years of age at the person’s last known 

dwelling or place of business. 

(2) Service upon other than an 

individual may be made by serving a 

partner, corporate officer, or a managing 

or general agent authorized by 

appointment or by law to accept service 

of process. If an agent is served, a copy 

of the document shall be mailed to the 

person named in the document. 

(3) Any individual 18 years of age or 

older may serve an Administrative 

Subpoena, Demand for Information, or 

Inspection Authorization. When 

personal service is made, the individual 

making the service shall prepare an 

affidavit as to the manner in which 

service was made and the identity of the 

person served, and return the affidavit, 

and in the case of subpoenas, the 

original document, to the issuing officer. 

In case of failure to make service, the 

reasons for the failure shall be stated on 

the original document. 

§ 700.73 Compulsory process. 

(a) If a person refuses to permit a duly 

authorized representative of the 

Department of Commerce to have access 

to any premises or source of information 

necessary to the administration or the 

enforcement of the Defense Production 

Act, the Selective Service Act, or this 

part, the Department of Commerce 

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 Director of the Office of 

Strategic Industries and Economic 

Security, U.S. Department of Commerce, 

in consultation with the Chief Counsel 

for Industry and Security, U.S. 

Department of Commerce, 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. 

§ 700.74 Notification of failure to comply. 

(a) At the conclusion of an audit, 

investigation, or other inquiry, or at any 

other time, the Department of 

Commerce may inform the person in 

writing where compliance with the 

requirements of the Defense Production 

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32140 Federal Register / Vol. 75, No. 108 / Monday, June 7, 2010 / Proposed Rules 

Act, the Selective Service Act, or this 

part were not met. 

(b) In cases where the Department of 

Commerce determines that failure to 

comply with the provisions of the 

Defense Production Act, the Selective 

Service Act, or this part was 

inadvertent, the person may be 

informed in writing of the particulars 

involved and the corrective action to be 

taken. Failure to take corrective action 

may then be construed as a willful 

violation of the Defense Production Act, 

this part, or an official action. 

§ 700.75 Violations, penalties, and 

remedies. 

(a) Willful violation of the provisions 

of the Defense Production Act, the 

priorities provisions of the Selective 

Service Act, or this part is a crime and 

upon conviction, a person may be 

punished by fine or imprisonment, or 

both. The maximum penalty provided 

by the Defense Production Act is a 

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

both. The maximum penalty provided 

by the Selective Service Act is a $50,000 

fine, or three years in prison, or both. 

(b) The government may also seek an 

injunction from a court of appropriate 

jurisdiction to prohibit the continuance 

of any violation of, or to enforce 

compliance with, the Defense 

Production Act, this part, or an official 

action. 

(c) In order to secure the effective 

enforcement of the Defense Production 

Act, this part, and official actions, the 

following are prohibited (see section 

704 of the Defense Production Act; see 

also, for example, sections 2 and 371 of 

Title 18, United States Code): 

(1) No person may solicit, influence or 

permit another person to perform any 

act prohibited by, or to omit any act 

required by, the Defense Production 

Act, this part, or an official action. 

(2) No person may conspire or act in 

concert with any other person to 

perform any act prohibited by, or to 

omit any act required by, the Defense 

Production Act, this part, or an official 

action. 

(3) No person shall deliver any item 

if the person knows or has reason to 

believe that the item will be accepted, 

redelivered, held, or used in violation of 

the Defense Production Act, this part, or 

an official action. In such instances, the 

person must immediately notify the 

Department of Commerce that, in 

accordance with this provision, delivery 

has not been made. 

§ 700.76 Compliance conflicts. 

If compliance with any provision of 

the Defense Production Act, the 

Selective Service Act, or this part would 

prevent a person from filling a rated 

order or from complying with another 

provision of the Defense Production 

Act, this part, or an official action, the 

person must immediately notify the 

Department of Commerce or the 

appropriate Delegate Agency for 

resolution of the conflict. 

10. Subpart I is revised to read as 

follows: 

Subpart I—Miscellaneous Provisions 

Sec. 

700.80 Applicability of this part and official 

actions. 

700.81 Communications. 

Subpart I—Miscellaneous Provisions 

§ 700.80 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 and its schedules shall 

not be construed to affect any 

administrative actions taken by the 

Department of Commerce, or any 

outstanding contracts or orders placed 

pursuant to any of the regulations, 

orders, schedules or delegations of 

authority under the Defense Materials 

System, Defense Priorities System or the 

Defense Priorities and Allocations 

System previously issued by the 

Department of Commerce. Such actions, 

contracts, or orders shall continue in 

full force and effect under this part 

unless modified or terminated by proper 

authority. 

(d) Any repeal of any provision of this 

part or any order, schedule or delegation 

of authority issued pursuant to this part 

shall not release or extinguish any 

penalty or liability incurred under that 

provision, order, schedule or delegation 

of authority. That provision, order, 

schedule or delegation of authority shall 

be treated as still remaining in force for 

the purpose of sustaining any action for 

the enforcement of such penalty or 

liability. 

§ 700.81 Communications. 

All communications concerning this 

part, including requests for copies of the 

regulation and explanatory information, 

requests for guidance or clarification, 

and requests for adjustment or 

exception shall be addressed to the 

Office of Strategic Industries and 

Economic Security, Room 3876, U.S. 

Department of Commerce, Washington, 

DC 20230, Ref: DPAS; telephone: (202) 

482–3634, fax: (202) 482–5650. 

Communications may also be submitted 

electronically at DPAS@bis.doc.gov, 

with reference to the topic of the 

communication in the subject line. 

Subpart J—[Removed] 

11. Subpart J is removed. 

Subpart K—[Removed] 

12. Subpart K is removed. 

Subpart L—[Removed] 

13. Subpart L is removed. 

Dated: May 28, 2010. 

Kevin J. Wolf, 

Assistant Secretary for Export 

Administration. 

[FR Doc. 2010–13395 Filed 6–4–10; 8:45 am] 

BILLING CODE 3510–JT–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

21 CFR Parts 1301, 1309 

[Docket No. DEA–304P] 

RIN 1117–AB27 

Voluntary Surrender of Certificate of 

Registration 

AGENCY: Drug Enforcement 

Administration (DEA), Justice. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Drug Enforcement 

Administration (DEA) proposes to 

amend its regulations and to revise 

applicable implementing forms to 

clarify the registration status of a 

registrant who voluntarily surrenders a 

Certificate of Registration for cause. The 

effect of these proposed changes would 

make it clear that a voluntary surrender 

of a registration for cause by a registrant 

has the legal effect of immediately 

terminating the registrant’s registration 

without any further action by DEA. 

DATES: Written comments must be 

postmarked and electronic comments 

must be submitted on or before August 

6, 2010. Commenters should be aware 

that the electronic Federal Docket 

Management System will not accept 

comments after Midnight Eastern Time 

on the last day of the comment period. 

ADDRESSES: To ensure proper handling 

of comments, please reference ‘‘Docket 

No. DEA–304’’ on all written and 

electronic correspondence. Written 

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