[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Proposed Rules]
[Pages 51389-51397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26109]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Part 700

[Docket No. 970827205-7205-01]
RIN 0694-AA02


Defense Priorities and Allocations System

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Notice of proposed rulemaking and request for comments.

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SUMMARY: The Department of Commerce proposes to revise the Defense 
Priorities and Allocations System (DPAS) regulation by updating, 
modifying or clarifying a number of its provisions. The DPAS implements 
the priorities and allocations authority of Title I of the Defense 
Production Act of 1950, as amended, and the priorities authority of 
Section 18 of the Selective Service Act of 1948 and related 
authorities, as these authorities pertain to industrial resources.

[[Page 51390]]

    Provisions to be modified include the time period within which a 
supplier must accept or reject a rated order, the order of precedence 
to be given to conflicting rated orders which have equal priority 
status, and the combining of defense rated requirements with commercial 
(unrated) requirements.
    The Department also proposes to remove all controlled materials 
provisions and references from the DPAS because the controlled 
materials program (essentially an emergency preparedness measure) is 
obsolete and has been deactivated.
    These revisions, including a number of other changes to update and 
clarify the text, are intended to improve the administration of the 
DPAS and make it more effective and efficient in the post-Cold War era.
    The Department will consider public comment on these proposed 
revisions and on any other provision that may be hindering effective 
and efficient DPAS administration or implementation.

DATES: Comments must be received no later than October 31, 1997.

ADDRESSES: Address written comments (six copies) to Richard V. Meyers, 
DPAS Program Manager, Office of Strategic Industries and Economic 
Security, Room 3876, U.S. Department of Commerce, Washington, D.C. 
20230. The public record of this proposed rule will be available at the 
Bureau of Export Administration Freedom of Information Records 
Inspection Facility, Room 4525, U.S. Department of Commerce, 14th 
Street and Pennsylvania Avenue, N.W., Washington, D.C. 20230.

FOR FURTHER INFORMATION CONTACT: Richard V. Meyers, DPAS Program 
Manager, Office of Strategic Industries and Economic Security, Room 
3876, U.S. Department of Commerce, 14th Street and Pennsylvania Avenue, 
N.W., Washington, D.C. 20230; telephone (202) 482-3634, FAX (202) 482-
5650, and E-Mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The current Defense Priorities and Allocations System (DPAS) 
regulation (15 CFR part 700; formerly 15 CFR part 350) was published by 
the Department of Commerce as a final rule on July 30, 1984 (49 FR 
30412), superseding the regulations of the Defense Materials System and 
Defense Priorities System. The DPAS regulation implements the 
priorities and allocations authority of Title I of the Defense 
Production Act of 1950, as amended (50 U.S.C. app. 2061, et seq.), and 
the priorities authority of Section 18 of the Selective Service Act of 
1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and 2539, and 50 U.S.C. 82, 
as these authorities pertain to industrial resources.
    The Department has received a number of oral and written comments 
suggesting the need to modify or clarify several provisions of the DPAS 
which relate to: (1) The time period within which a supplier must 
accept or reject a rated order [section 700.13(d)(1)]; (2) the order of 
precedence to be given by contractors and suppliers to conflicting 
rated orders of equal priority status (section 700.14); and (3) the 
combining by a contractor of defense rated requirements with commercial 
(unrated) requirements on one purchase order to a supplier [section 
700.17(d)]. Accordingly, for the reasons discussed in the PROPOSED 
REVISIONS section below, the Department proposes to revise these DPAS 
rules.
    The Department also proposes to remove the controlled materials 
provisions from the DPAS (sections 700.30-700.31) and delete all other 
references to the program from throughout the regulation for the 
following reasons.
    During World War II and the Korean War, the production and 
distribution of certain critical materials called ``controlled 
materials''--steel, copper, and aluminum--were managed under Controlled 
Materials Plans. From 1953 to 1988, these materials, with nickel alloys 
added in 1958, continued to be subject to government allocations 
regulations.
    A 1987 Department of Commerce study of the controlled materials 
program found that the program had little relevance to current defense 
requirements for the controlled materials or to the current ability of 
industry to supply the controlled materials to meet these requirements. 
The study recommended that the controlled materials procedures be 
deactivated. An interagency committee, comprised of Commerce and three 
of the DPAS Delegate Agencies (Federal Emergency Management Agency and 
the Departments of Defense and Energy), concurred with this 
recommendation. Action was subsequently taken by these agencies to 
deactivate the program, including action by Commerce to discontinue the 
information collection burden imposed upon controlled materials 
producers, distributors, and users to supply information about 
controlled materials requirements and shipments. This information was 
used to support administration of the controlled materials program.
    Finally, the Department proposes to make various jurisdictional, 
technical, administrative, and miscellaneous revisions to a number of 
DPAS provisions to address changes to delegated authority, to 
incorporate the delegation of additional authority, to update and 
clarify the text, and to improve generally the administration, 
effectiveness, and efficiency of the DPAS in support of our nation's 
post-Cold War defense requirements and its ability to respond fully to 
a national security or major disaster emergency situation.

Proposed Revisions

    Proposed revisions to the DPAS regulation are described in the 
following section-by-section analysis.

1. Customer Notification of Acceptance or Rejection of Rated Orders

    Section 700.13(d) (Customer notification requirements) of the 
current DPAS requires a supplier to accept or reject a rated order in 
writing within ten (10) working days after receipt of a DO rated order 
and within five (5) working days after receipt of a DX rated order. 
Subcontractors and suppliers have complained that it is very difficult 
to comply with this requirement due to production scheduling 
complexities and other administrative factors.
    The proposed rule would revise subparagraph (1) of section 
700.13(d) by extending the time within which a person must accept or 
reject a rated order by five (5) working days. Accordingly, a person 
must accept or reject a rated order within fifteen (15) working days 
after receipt of a DO rated order, and within ten (10) working days 
after receipt of a DX rated order. The Department believes that this 
change will not significantly impact upon the timely delivery of items 
against these orders.
    The revised subparagraph would also specifically reference 
electronic data interchange of the acceptance or rejection of rated 
orders. Electronic placement of rated orders is acceptable provided 
that the transmission complies in substance with section 700.12 
(Elements of a rated order). This section would also be revised to 
reference the electronic placement of rated orders.

2. Precedence of Rated Orders of Equal Priority Status

    A number of companies have requested clarification of the 
preference to be given to rated orders which have equal priority status 
(DX or DO) when production scheduling conflicts or other problems arise 
following acceptance of the rated orders.
    The proposed rule would revise paragraph (c) of section 700.14 
(Preferential scheduling) of the current

[[Page 51391]]

DPAS to provide that if a person finds that production, delivery, or 
performance against any accepted rated orders conflicts with 
production, delivery, or performance against any other accepted rated 
orders of equal priority status, preference shall be given to the 
conflicting rated orders in the sequence in which they were received 
(not to the required delivery dates). However, if the conflicting rated 
orders were received on the same day, the person shall give preference 
to those orders which have the earliest delivery dates. If under these 
rules, the production, delivery, or performance conflicts cannot be 
resolved, or if the customer objects to the rescheduling of the 
customer's rated order, the proposed rule provides that special 
priorities assistance should be requested promptly under sections 
700.50-700.54 of the DPAS.
    Some of the confusion over preferential scheduling appears to have 
been caused by including paragraph (c) in section 700.14 (Preferential 
scheduling) of the current DPAS. This paragraph covers acceptance or 
rejection of rated orders of equal priority status received on the same 
day. The proposed rule would incorporate this paragraph into section 
700.13 (Acceptance and rejection of rated orders).

3. Combining Defense Rated Requirements With Commercial (Unrated) 
Requirements

    Paragraph (d) of section 700.17 (Use of rated orders) of the 
current DPAS permits a contractor to combine rated and unrated order 
quantities on a purchase order to a supplier provided that the rated 
quantities are clearly and separately identified. These quantities must 
also be contained in a separate rated order which conforms to the 
requirements of section 700.12 (Elements of a rated order). A special 
statement and the physical attachment of the separate rated order to 
the combined order are also required. A number of companies have 
complained that the requirement for a separate rated order is expensive 
to implement, an administrative burden, and incompatible with their 
automated procurement systems.
    The proposed rule would eliminate the requirement for a separate 
rated order but would retain the requirement for clear and separate 
identification of rated order quantities. It also would require a 
special statement on the combined purchase order to notify the supplier 
that the order contains rated quantities certified for national defense 
use and that the provisions of the DPAS apply only to the rated 
quantities. This change should contribute to contractor efficiency and 
cost savings while minimizing the possibility of supplier confusion. 
The growing commercialization of defense procurement and the 
development of dual-use products and technology further underscores the 
need for this change.

4. National Security Emergency Preparedness and Removal of the 
Controlled Materials Provisions

    The proposed rule would remove from the DPAS all provisions and 
references pertaining to the controlled materials, including the 
controlled materials information in section 700.4 of Subpart B 
(Overview), the definitions relating to controlled materials in section 
700.8, the special rules for controlled materials in Subpart F 
(sections 700.30-700.31), and the authorized programs for controlled 
materials (C8 and H2-H4) listed in Schedule 1 to Part 700. Also removed 
would be Schedule II to Part 700, which lists the controlled materials, 
Schedule III to Part 700, which defines the controlled materials, and 
Schedules IV and V to Part 700, which establish the set-aside base and 
percentages for copper and nickel alloys producers.
    The heading of Subpart F would be renamed ``National Security 
Emergency Preparedness and Critical Items.'', and the heading of 
section 700.30 would be retitled ``Priorities and Allocations in a 
National Security Emergency.'' The text of section 700.30 would be 
revised to provide a statement as to how the DPAS may be expanded in a 
national security emergency to ensure rapid industrial response and the 
timely availability of critical industrial items and facilities to meet 
the urgent defense or major disaster emergency requirements of approved 
programs.
    Included is a discussion of emergency official actions, the 
allocation of critical and scarce items and facilities to meet 
emergency requirements, and the delegation of authority under the DPAS 
to the Regional Emergency Coordinators in the ten Standard Federal 
Region Council cities in the event that communications with Commerce 
headquarters in Washington, D.C. is severed as a result of the 
emergency.
    Section 700.4 in Subpart B (Overview) would also be revised to 
summarize the revised Subpart F, with the section heading retitled 
``Priorities and Allocations in a National Security Emergency.''
    In Subpart G, section 700.40 (General provisions) would be removed 
and section 700.41 (Metalworking machines) would be moved into Subpart 
F and redesignated as section 700.31. Subpart G would be ``Reserved'' 
for future use.
    The removal of the controlled materials provisions would 
necessitate amendment of DPAS Delegation 1 to the Secretary of Defense 
(Appendix I to Part 700) and the Memorandum of Understanding on 
Priorities and Allocations Support Between the U.S. Department of 
Commerce and the Canadian Public Works and Government Services Canada 
(formerly Department of Supply and Services) (Appendix IV to Part 700) 
to delete references to the controlled materials program within these 
documents.

5. New Approved Programs

    The proposed rule would revise Schedule 1 to the current DPAS to 
retitle it ``Approved Programs and Delegate Agencies'', to include two 
new programs, ``Special Projects'' and ``Food Resources (combat 
rations)'', and to change the ``N1'' Federal Emergency Management 
Agency program name to ``Emergency Preparedness Activities''.
    The ``Special Projects'' program would be assigned to the 
Department of Commerce as Delegate Agency and identified by the Program 
Identification Symbol ``H8''. It would provide the Department with 
greater administrative flexibility in authorizing the use of priority 
ratings, as needed on a case-by-case basis by non-Delegate Agencies to 
support defense related procurement, where use of a current approved 
program identification would not be appropriate. Such priority rating 
authority would be granted only after establishing the appropriate 
national defense or civil emergency preparedness nexus for the project 
in consultation with the Department of Defense (DOD), Department of 
Energy, or Federal Emergency Management Agency, as provided under 
section 202 of E.O. 12919.
    The ``Food Resources (combat rations)'' program would be assigned 
to DOD as Delegate Agency and identified by the Program Identification 
Symbol ``C1''. This would enable DOD to place rated orders under the 
DPAS for food resources to meet troop support requirements for combat 
rations under the authority delegated to DOD by Commerce in DPAS 
Delegation 1 (see Appendix I to Part 700). This program was established 
by agreement between the Departments of Commerce and Agriculture, dated 
January 28, 1991, and approved by FEMA on February 1, 1991 (see 
Attachment A to DPAS Delegation 1). It is consistent with the 
Memorandum of Understanding between the Departments of Agriculture and 
Commerce Concerning Priorities

[[Page 51392]]

and Allocations Jurisdiction and Responsibilities for Foods Which Have 
Industrial Uses and the Domestic Distribution of Farm Equipment (see 
Appendix II to Part 700).
    The ``N1'' program name change would reflect the expansion of 
Defense Production Act (Title I) priorities and allocations authority 
to cover emergency preparedness activities as provided under Title VI 
of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 
as amended (Stafford Act) (42 U.S.C. 5195, et seq.).

6. Other Revisions

    Because of recent amendments to the Defense Production Act, the 
Stafford Act, and the issuance and subsequent amendment of Executive 
Order 12919 (revision of Executive Order 10480), technical revisions to 
several sections of the DPAS, including section 700.18(b)(1) 
(Jurisdictional limitations), are required. The proposed rule sets 
forth these changes.
    Also, on January 8, 1991, priorities authority with respect to 
industrial resources was delegated to the Department of Commerce under 
the Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 
and 2539, and 50 U.S.C. 82 by Executive Order 12742 (56 FR 1079). The 
proposed rule would incorporate a reference to these authorities where 
appropriate, throughout the regulation.
    Finally, the proposed rule would make various other technical, 
administrative, and miscellaneous changes to the current DPAS rules. 
Among these revisions are improvements to the clarity of the text in 
section 700.2(b) (Introduction) and subparagraph (2) of section 
700.13(d) (Customer notification requirements), and increasing the 
minimum rated order amount from $5000 to $100,000 in paragraph (f) of 
section 700.17 (Use of rated orders) to conform with the current 
simplified Federal Acquisition Regulation small order acquisition 
threshold. Revision of section 700.21 (Application for priority rating 
authority) in Subpart E (Industrial Priorities for Energy Programs), 
section 700.72 (Compulsory process), section 700.80 (Adjustments or 
exceptions), section 700.81 (Appeals), and section 700.93 
(Communications), is necessary to reflect office name, address, 
telephone number, and Departmental organization changes.

7. Appendices to Part 700

    All DPAS Appendices (Appendix I--DPAS Delegations of Authority to 
the Departments of Defense and Energy, the General Services 
Administration, and the Federal Emergency Management Agency; Appendix 
II--Interagency Memoranda of Understanding with the Departments of 
Agriculture, Energy, and the Interior; Appendix III--Form ITA-999--
Request for Special Priorities Assistance; and Appendix IV--Memorandum 
of Understanding on Priorities and Allocations Support Between the U.S. 
Department of Commerce and the Canadian Department of Supply and 
Services) require updating and revision to address various substantive 
and technical changes, including changes in statutory and delegated 
authority and removal of obsolete provisions. Of special note is an 
expanded restriction in each of the DPAS Delegations of Authority on 
the use of rated orders by the Delegate Agencies to support procurement 
of any items which are commonly available in commercial markets for 
general consumption, do not require major modification when purchased 
for approved program use, and are readily available in sufficient 
quantity so as to cause no delay in meeting approved program 
requirements.
    A new Appendix V (DPAS Emergency Documents) will be added, 
containing, for information purposes only, DPAS Emergency Delegation 1. 
This document will delegate authority to the Regional Emergency 
Coodinators in the ten Federal Regional Council cities to administer 
the DPAS if a catastrophic national security emergency situation severs 
communications with Department of Commerce headquarters in Washington, 
D.C.
    Because the documents in these Appendices are of limited public 
interest, they will not be published in draft for public comment. They 
will, however, be reviewed by all involved departments and agencies and 
copies of the executed originals will be published with the Notice of 
Final Rulemaking.

Public Comment Requested

    Public comment on the sufficiency and reasonableness of these 
proposed revisions is solicited. In addition, comments are solicited 
concerning any other DPAS provision. The Department's objective is to 
ensure that the DPAS is effective, efficient, easy to understand and 
use, and properly designed not only to ensure the timely delivery of 
industrial resources in support of current national defense programs 
with minimal disruption to normal commercial activities, but also to 
support future emergency requirements.
    Section 709 of the Defense Production Act exempts the promulgation 
of rules and regulations from the rulemaking procedures of the 
Administrative Procedure Act (5 U.S.C. 551-559). However, the Defense 
Production Act does require Federal Register publication of these 
proposed revisions and opportunity for public comment, consistent with 
the requirements 5 U.S.C. 553(b). Therefore, all persons who desire to 
comment are encouraged to do so at the earliest possible time to 
receive the fullest consideration of their views. Only those comments 
received on or before October 31, 1997 will be considered.
    In the interest of accuracy and completeness, the Department 
requires written comments (six copies) which should be sent to the 
address indicated in the address section above. Oral comments should be 
directed to Richard V. Meyers, DPAS Program Manager [tel.: (202) 482-
3634], and must be followed by written memorandum to Mr. Meyers. All 
such written comments and memoranda will be placed in the public 
rulemaking docket and will be available for public review and copying. 
However, communications from agencies of the U.S. Government or foreign 
governments will not be made available for public inspection. Written 
comments accompanied by a request that part or all of the material 
contained be treated confidentially will not be considered in 
developing the final rule. Such comments and materials will be returned 
to the submitter.
    The public rulemaking docket concerning this regulation will be 
maintained in the Bureau of Export Administration Freedom of 
Information Records Inspection Facility, at the address indicated in 
the address section above. Records in this facility may be inspected 
and copied in accordance with regulations published in 15 CFR part 4. 
Information pertaining to the inspection and copying of records may be 
obtained from Ms. Margaret Cornejo, Freedom of Information Officer, at 
the Records Inspection Facility, or by calling (202) 482-5653.

Rulemaking Requirements

    The Department has made certain determinations with respect to the 
following rulemaking requirements:

1. Classification Under E.O. 12866

    This proposed revision of the current DPAS regulation (15 CFR part 
700) has been determined to be ``not significant'' for the purpose of 
Executive Order 12866.

2. Regulatory Flexibility Act

    The Assistant General Counsel for Legislation and Regulation 
certified to the Chief Counsel for Advocacy, Small

[[Page 51393]]

Business Administration, that this proposed rule to revise the DPAS, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities. These revisions would merely update, modify, 
or clarify a number of provisions to make the current DPAS more 
effective and efficient in the post Cold War era. Many of the proposed 
changes are being made in response to comments and recommendations 
received from the business community, thus ensuring that the updated 
DPAS will conform to current business practices and enable all business 
entities subject to its requirements to increase the efficiency of 
their operations and realize certain cost savings. In addition, some 
DPAS provisions must be revised to conform the regulation to recent 
statutory and organizational changes while other provisions must be 
deleted because they are obsolete.
    Because of the self-administered nature of the DPAS, there is no 
way to accurately estimate the number of business entities throughout 
the U.S. industrial base to whom the DPAS is applicable. However, it 
has been roughly estimated that there are at least 18,000 business 
entities during any one year that on at least one or more occasions 
must respond to its requirements. It is also estimated that given the 
nature of defense production, relatively few of these entities are 
small entities.
    The DPAS regulation has been in effect since 1984 and is the 
successor to priorities and allocations regulations that were first 
promulgated in the mid-1950s. Thus, most business entities engaged in 
defense production under the DPAS, including small entities, can and do 
respond to applicable DPAS requirements in the ordinary course of their 
business with very little, if any, economic impact. The DPAS revisions, 
in and of themselves, would impose no economic impact on any business 
entity, including small entities, and if adopted, will further reduce 
whatever minimal economic impact is associated with DPAS compliance.

3. Paperwork Reduction Act

    The information collection requirements imposed by the DPAS 
regulation have been submitted to the Office of Management and Budget 
(OMB) for review under the provisions of Section 3507 of the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3501, et seq.) (OMB Control Number 
0694-0053). Notwithstanding any other provision of law, no person is 
required to respond to nor shall a person be subject to a penalty for 
failure to comply with these information collection requirements unless 
the information collection displays a currently valid OMB Control 
Number.
    The collection of information requirements in the DPAS apply to all 
persons who receive priority rated orders under the DPAS. These 
requirements are necessary to support proper administration of the DPAS 
and ensure its effectiveness and efficiency. The total annual public 
burden per respondent for this collection of information is estimated 
at 14,476.5 hours. This estimate includes (a) 11,667 total extra record 
keeping hours to create a record of the receipt of a priority rated 
order (700,000 priority rated orders annually  x  1 minute per order); 
(b) 972 total hours to provide notice of acceptance of a priority rated 
order (699,650 priority rated orders accepted annually  x  5 seconds 
per order); (c) 87.5 total hours to provide notice of rejection of a 
priority rated order (350 total priority rated orders rejected annually 
 x  15 minutes per order); and (d) 1,750 total hours to provide notice 
of delayed delivery against a priority rated order (7000 total priority 
rated orders annually against which delivery will be delayed  x  15 
minutes per order).
    Comments are requested concerning: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
agency functions, which includes proper administration of the DPAS and 
ensuring its effectiveness and efficiency; (b) the accuracy of the 
public burden estimate; (c) ways to enhance the quality, utility, and 
clarity of the information collected; and (d) ways to further minimize 
the public information collection burden, including the use of 
automated collection techniques or other forms of information 
technology. Written comments should be sent within 30 days of 
publication of this Notice in the Federal Register to Ms. Victoria 
Baecher-Wassmer, OMB Desk Officer, Room 10202, New Executive Office 
Building, Office of Management and Budget, Washington, D.C. 20230; and 
to Mr. Stephen Baker, BXA Information Collection Officer, Room 6877, 
U.S. Department of Commerce, Washington, D.C. 20230.

4. Executive Order 12612

    This proposed rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 12612.

List of Subjects in 15 CFR Part 700

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

    For the reasons stated in the preamble, part 700 of Subchapter A, 
National Security Industrial Base Regulations (15 CFR part 700), is 
proposed to be amended as follows:
    1. The authority citation for 15 CFR part 700 is revised to read as 
follows:

    Authority: Titles I and VII of the Defense Production Act of 
1950, as amended (50 U.S.C. app. 2061, et seq.), Title VI of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5195, et seq.), and Executive Order 12919 of June 3, 1994 (59 
FR 29525), as amended; Section 18 of the Selective Service Act of 
1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and 2539, 50 U.S.C. 82, 
and Executive Order 12742 of January 8, 1991 (56 FR 1079), as 
amended; and Executive Order 12656 of November 18, 1988 (53 FR 226), 
as amended.

PART 700--[AMENDED]

    2. Section 700.1 is amended:
    a. By revising the phrase ``materials and facilities'' to read 
``materials, services, and facilities'', and revising the phrase 
``materials and equipment'' to read ``materials, equipment, and 
services'', in paragraph (a);
    b. By revising paragraph (b);
    c. By redesignating paragraph (c) as paragraph (e); and
    d. By adding new paragraphs (c) and (d); as follows:


Sec. 700.1  Purpose of this regulation.1

* * * * *
    (b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app. 
468) (Selective Service Act) authorizes the President to place an order 
with a supplier for any articles or materials required for the 
exclusive use of the U.S. armed forces whenever the President 
determines that in the interest of national security, prompt delivery 
of the articles and materials is required. The supplier must give 
precedence to the order so as to deliver the articles or materials in a 
required time period. 10 U.S.C. 2538 and 2539, and 50 U.S.C. 82, 
provide similar authority specifically for Department of Defense 
procurement, but only in time of war or when war is imminent.
    (c) Section 602(b) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms 
``national defense'' and ``defense'' as used in the Defense Production 
Act includes ``emergency preparedness activities'' conducted pursuant 
to Title VI of the Stafford Act. The definition of ``national defense'' 
in Section 702(13) of the

[[Page 51394]]

Defense Production Act provides that this term includes ``emergency 
preparedness activities'' conducted pursuant to Title VI of the 
Stafford Act.
    (d) The Defense Priorities and Allocations System (DPAS) regulation 
implements the priorities and allocations authority of the Defense 
Production Act and as this authority pertains to Title VI of the 
Stafford Act, and the priorities authority of the Selective Service Act 
and related statutes, all with respect to industrial resources. The 
DPAS ensures the timely availability of industrial resources for 
approved programs and provides a regulatory framework to support rapid 
industrial response to a national security or major disaster emergency.
* * * * *
    3. Section 700.2 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 700.2  Introduction.

    (a) Certain national defense and energy programs (including 
emergency preparedness activities) are approved for priorities and 
allocations support. For example, military aircraft production, 
ammunition, and certain programs which maximize domestic energy 
supplies are ``approved programs.'' A complete list of currently 
approved programs is provided at Schedule 1 to this regulation.
    (b) The Department of Commerce administers the DPAS to ensure the 
timely delivery of industrial items to meet approved program 
requirements.
* * * * *


Sec. 700.3  [Amended]

    4. Section 700.3(a) is amended by revising the term ``authorized 
program'' to read ``approved program''.
    5. Section 700.4 is amended:
    a. By revising the section heading;
    b. By revising paragraphs (a) and (b); and
    c. By removing paragraphs (c), (d), and (e); as follows:


Sec. 700.4  Priorities and allocations in a national security 
emergency.

    (a) In the event of a national security emergency, special rules 
may be established as needed to supplement this regulation, thus 
ensuring rapid industrial response and the timely availability of 
critical industrial items and facilities to meet the urgent defense or 
major disaster emergency requirements of approved programs.
    (b) The special rules established in response to the emergency may 
include provisions for the taking of certain emergency official actions 
and the allocation of critical and scarce materials and facilities.
    6. Section 700.7(a) is amended by adding the phrase ``and the 
Selective Service Act and related statutes'' following the phrase ``the 
Defense Production Act''.
    7. Section 700.8 is amended:
    a. By removing the following definitions: ``Authorized program'', 
``Controlled materials'', ``Controlled materials suppliers'', 
``Distributors of controlled materials'', ``Further conversion'', 
``Lead time'', ``Minimum mill quantity'', and ``Person'';
    b. By amending the definition of ``Delegate Agency'', revising the 
term ``authorized programs'' to read ``approved programs'';
    c. By amending the definition of ``Official action'', adding a 
comma followed by the phrase ``the Selective Service Act and related 
statutes,'' following the phrase ``the Defense Production Act,'';
    d. By amending the definition of ``Rated order'', revising the term 
``authorized program'' to read ``approved program''; and
    e. By revising the introductory sentence after the section heading, 
and adding new definitions in alphabetical order; as follows:


Sec. 700.8  Definitions.

    In addition to the definitions provided in Section 702 of the 
Defense Production Act, the following definitions pertain to all 
sections of the regulation:
    Approved program. A program determined as necessary or appropriate 
for priorities and allocations support to promote the national defense 
by the Secretary of Defense, the Secretary of Energy, or the Director, 
Federal Emergency Management Agency, under the authority of the Defense 
Production Act, the Stafford Act, and Executive Order 12919, or the 
Selective Service Act and related statutes and Executive Order 12742.
* * * * *
    Person. Any individual, corporation, partnership, association, or 
any other organized group of persons, or legal successor or 
representative thereof; or any State or local government or agency 
thereof; and for purposes of administration of this regulation, 
includes the United States Government and any foreign government or 
agency thereof, delegated authority under this regulation.
* * * * *
    Selective Service Act and related statutes. Section 18 of the 
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538 and 
2539, and 50 U.S.C. 82.
* * * * *
    Stafford Act. Title VI (Emergency Preparedness) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act, as amended (42 
U.S.C. 5195, et seq.).
    8. Section 700.10 is amended:
    a. By revising paragraph (a); and
    b. By revising the phrase ``Office of Industrial Resource 
Administration'' to read ``Office of Strategic Industries and Economic 
Security'', and revising the phrase ``authorized programs'' to read 
``approved programs'', in paragraph (b); as follows:


Sec. 700.10  Delegation of authority.

    (a) The priorities and allocations authorities given to the 
President in Title I of the Defense Production Act with respect to 
industrial resources, have been delegated to the Secretary of Commerce 
under Executive Order 12919 of June 3, 1994 (59 FR 29525), as amended. 
The priorities authorities given to the President in the Selective 
Service Act and related statutes with respect to industrial resources, 
have also been given delegated to the Secretary of Commerce under 
Executive Order 12742 of January 8, 1991 (56 FR 1079), as amended.
* * * * *


Sec. 700.11  [Amended]

    9. Section 700.11(b) is amended by revising the term ``authorized 
programs'' to read ``approved programs''.
    10. Section 700.12 is amended by revising paragraph (c) to read as 
follows:


Sec. 700.12  Elements of a rated order.

* * * * *
    (c) The written signature on a manually placed order, or the 
digital signature or name on an electronically placed order, of an 
individual authorized to sign rated orders for the person placing the 
order. The signature or use of the name certifies that the rated order 
is authorized under this regulation and that the requirements of this 
regulation are being followed; and
* * * * *
    11. Section 700.13 is amended:
    a. By adding a new paragraph (b)(4);
    b. By removing paragraphs (c)(5), (c)(6), and (c)(7);
    c. By redesignating paragraph (c)(8) as paragraph (c)(5) and 
amending redesignated paragraph (c)(5) by adding the phrase ``or the 
Selective Service Act and related statutes'' following the phrase ``the 
Defense Production Act'';
    d. By revising paragraph (d); and
    e. By adding an OMB control number; as follows:

[[Page 51395]]

Sec. 700.13  Acceptance and rejection of rated orders.

* * * * *
    (b) Mandatory rejection. * * *
    (4) If a person is unable to fill all the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders which can be 
filled, and reject the other orders. For example, a person must accept 
order A requiring delivery on December 15 before accepting order B 
requiring delivery on December 31. However, the person must offer to 
accept the rejected orders based on the earliest delivery dates 
otherwise possible.
* * * * *
    (d) Customer notification requirements. (1) A person must accept or 
reject a rated order in writing or electronically within fifteen (15) 
working days after receipt of a DO rated order and within ten (10) 
working days after receipt of a DX rated order. If the order is 
rejected, the person must give reasons in writing (not electronically) 
for the rejection.
    (2) If a person has accepted a rated order and subsequently finds 
that shipment or performance will be delayed, the person must notify 
the customer immediately, give the reasons for the delay, and advise of 
a new shipment or performance date. If notification is given verbally, 
written or electronic confirmation must be provided within five (5) 
working days.
    [The information collection requirements in paragraphs (d)(1) and 
(d)(2) are approved by the Office of Management and Budget under 
control number 0694-0053.]
    12. Section 700.14 is amended by revising paragraph (c) to read as 
follows:


Sec. 700.14  Preferential scheduling.

* * * * *
    (c) Conflicting rated orders. (1) If a person finds that 
production, delivery, or performance against any accepted rated orders 
conflicts with production, delivery, or performance against other 
accepted rated orders of equal priority status, the person shall give 
preference to the conflicting orders in the sequence in which they were 
received (not to the required delivery dates). If the conflicting rated 
orders were received on the same day, the person shall give preference 
to those orders which have the earliest delivery dates.
    (2) If a person is unable to resolve rated order production, 
delivery, or performance conflicts under these rules, the person should 
promptly seek special priorities assistance as provided in Secs. 700.50 
through 700.54. If the person's customer objects to the rescheduling of 
a rated order, the customer should promptly seek special priorities 
assistance as provided in Secs. 700.50 through 700.54. For any rated 
order against which delivery or performance will be delayed, the person 
must notify the customer as provided in Sec. 700.13(d)(2).
* * * * *
    13. Section 700.17 is amended:
    a. By removing the parenthetical phrase ``(except as provided in 
Sec. 700.31(d)--Controlled materials program identification symbols)'' 
in paragraph (b)(2);
    b. By removing the parenthetical phrase ``(not applicable to 
controlled materials producers)'' in paragraph (b)(3);
    c. By removing the phrase found at the end of the paragraph, 
``except as provided in Sec. 700.31(d) (Controlled materials program 
identification symbols)'', in paragraph (c).
    d. By revising paragraph (d)(1);
    e. By redesignating paragraph (d)(2) as (d)(3);
    f. By adding a new paragraph (d)(2); and
    g. By revising paragraph (f); as follows:


Sec. 700.17  Use of rated orders.

* * * * *
    (d) Combining rated and unrated orders. (1) A person may combine 
rated and unrated order quantities on one purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by 
Sec. 700.12, are included on the order with the statement required in 
Sec. 700.12(d) modified to read in substance:

    This purchase order contains rated order quantities certified 
for national defense use, and you are required to follow all the 
provisions of the Defense Priorities and Allocations System 
regulation (15 CFR part 700) only as it pertains to the rated 
quantities.

    (2) A supplier must accept or reject the rated portion of the 
purchase order as provided in Sec. 700.13 and give preferential 
treatment only to the rated quantities as required by this regulation. 
This regulation may not be used to give preferential treatment to the 
unrated portion of the order.
* * * * *
    (f) A person is not required to place a priority rating on an order 
for less than $100,000 provided that delivery can be obtained in a 
timely fashion without the use of the priority rating.
    14. Section 700.18 is amended:
    a. By adding a new paragraph (a)(2)(v);
    b. By revising paragraph (b)(1); and
    c. By removing the first item listed, ``communication services'', 
and the parenthetical phrase, ``(as defined in Schedule III)'' which 
follows the item, ``Copper raw materials'', in paragraph (b)(3); as 
follows:


Sec. 700.18  Limitations on placing rated orders.

    (a) * * *
    (2) * * *
    (v) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons.
    (b) Jurisdictional limitations. (1) The priorities and allocations 
authority for certain items has been delegated under Executive Orders 
12919 and 12742, other executive order, or Interagency Memoranda of 
Understanding to other agencies. Unless otherwise agreed to by the 
concerned agencies, the provisions of this regulation are not 
applicable to these items which include:
    (i) Food resources, food resource facilities, and the domestic 
distribution of farm equipment and commercial fertilizer (Department of 
Agriculture--see Attachment A to DPAS Delegation 1 in Appendix I to 
Part 700 concerning combat rations);
    (ii) All forms of energy, including radioisotopes, stable isotopes, 
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of Energy 
(Department of Energy);
    (iii) Health resources (Department of Health and Human Services);
    (iv) All forms of civil transportation (Department of 
Transportation);
    (v) Water resources (Department of Defense/U.S. Army Corps of 
Engineers);
    (vi) Communications services (National Communications System under 
Executive Order 12472 of April 3, 1984); and
    (vii) Mineral resources and mineral processing facilities 
(Department of the Interior/U.S. Geological Survey--see Memorandum of 
Understanding Between Interior and Commerce in DPAS Appendix II to Part 
700).
* * * * *
    15. Section 700.21 is amended:
    a. By revising paragraph (a);
    b. By revising the phrase ``materials or equipment'' to read 
``materials, equipment, or services'' in paragraphs (b)(2), (c) 
introductory text, (c)(1) introductory text, and (d); and
    c. By revising the term ``authorized programs'' to read ``approved 
programs'' in paragraph (f); as follows:

[[Page 51396]]

Sec. 700.21  Application for priority rating authority.

    (a) For projects believed to maximize domestic energy supplies, a 
person may request priority rating authority for scarce, critical, and 
essential supplies of materials, equipment, and services (related to 
the production of materials or equipment, or the installation, repair, 
or maintenance of equipment) by submitting DOE Form PR 437 to the 
Department of Energy. Blank applications and further information may be 
obtained from the U.S. Department of Energy, Office of Clearance and 
Support, Field/Headquarters Support Division, Forrestal Building, 1000 
Independence Avenue, S.W., Washington, D.C. 20585; Attn.: PR-132.
* * * * *
    16. Subpart F is amended:
    a. By revising the Subpart heading;
    b. By revising Sec. 700.30; and
    c. By removing Sec. 700.31; as follows:

Subpart F--National Security Emergency Preparedness and Critical 
Items


Sec. 700.30  Priorities and allocations in a national security 
emergency.

    (a) In the event of a national security emergency, special rules 
may be established as needed to supplement this regulation, thus 
ensuring rapid industrial response and the timely availability of 
critical industrial items and facilities to meet the urgent defense or 
major disaster emergency requirements of approved programs.
    (1) National security emergency. A ``national security emergency'' 
is defined in section 101(a) of E.O. 12656 (November 18, 1988), as 
amended, as any occurrence, including a natural disaster or an 
accidental or man-caused major disaster event such as military attack, 
technological emergency, or other emergency, that seriously degrades or 
seriously threatens the national or economic security of the United 
States.
    (2) Emergency official actions. (i) As needed, this regulation may 
be supplemented to include additional definitions to cover civilian 
emergency preparedness industrial items, support for essential civilian 
programs, and provisions for the taking of certain emergency official 
actions under sections 700.60 through 700.63.
    (ii) Emergency official actions may include:
    (A) Controlling inventories of critical and scarce defense and/or 
emergency preparedness items;
    (B) Restricting the purchase, use, or distribution of critical and 
scarce defense and/or emergency preparedness items, or the use of 
production or distribution facilities, for non-essential purposes; and
    (C) Converting the production or distribution of non-essential 
items to the production or distribution of critical and scarce defense 
and/or emergency preparedness items.
    (3) Allocation of critical and scarce items and facilities. (i) As 
needed, this regulation may be supplemented to establish special rules 
for the allocation of scarce and critical items and facilities to 
ensure the timely availability of these items and facilities for 
approved programs, and to provide for an equitable and orderly 
distribution of requirements for such items among all suppliers of the 
items. These rules may provide for the allocation of individual items 
or they may be broad enough to direct general industrial activity as 
required in support of emergency requirements.
    (ii) Allocation rules (i.e., controlled materials programs) were 
established in response to previous periods of national security 
emergency such as World War II and the Korean Conflict. The basic 
elements of the controlled materials programs were the set-aside (the 
amount of an item for which a producer or supplier must reserve order 
book space in anticipation of the receipt of rated orders), the 
production directive (requires a producer to supply a specific 
quantity, size, shape, and type of an item within a specific time 
period), and the allotment (the maximum quantity of an item authorized 
for use in a specific program or application). These elements can be 
used to assure the availability of any scarce and critical item for 
approved programs. Currently, a set-aside applies only to metalworking 
machines (see Sec. 700.31).
    (4) In the event that certain critical items become scarce, and 
approved program requirements for these items cannot be met without 
creating a significant dislocation in the civilian market place so as 
to create appreciable hardship, Commerce may establish special rules 
under section 101(b) of the Defense Production Act to control the 
general distribution of such items in the civilian market.
    (b) Regional Emergency Coordinators. (1) If due to a catastrophic 
national security emergency event, communications with Commerce 
headquarters in Washington, D.C. are severed, DPAS Emergency Delegation 
1 will provide authority to the Regional Emergency Coordinators (REC) 
located in the Standard Federal Region Council cities (Boston, New 
York, Philadelphia, Atlanta, Dallas, Kansas City, Chicago, Denver, San 
Francisco, and Seattle) to represent the Secretary of Commerce, and as 
necessary, act for the Secretary to carry out the emergency industrial 
production and distribution control functions of Commerce as set forth 
in this regulation, in any supplement thereto, or other applicable 
authority. See DPAS Emergency Delegation 1 (Appendix V to Part 700) for 
further information about the authority and duties of the RECs, and the 
effective date of the Delegation.
    (2) If DPAS Delegation 1 is implemented due to a catastrophic 
national security emergency event, requests for special priorities 
assistance under sections 700.50-55 of this regulation should be filed 
with the nearest Regional Emergency Coordinator located in one of the 
Standard Federal Region Council cities as provided in DPAS Delegation 1 
(Appendix V to Part 700).
    17. Subpart G is amended:
    a. By removing Sec. 700.40;
    b. By redesignating Sec. 700.41 as Sec. 700.31 in Subpart F; and
    c. By removing the subpart heading and reserving Subpart G for 
future use; as follows:

Subpart G--[Reserved]

    18. Section 700.50(c) is amended by revising the term ``ITA-999'' 
to read ``BXA-999'' each of the three times it appears in the 
paragraph; by revising the term ``(OMB #0625-0015)'' to read ``(OMB 
#0694-0057)''; and by removing the comma followed by the phrase ``any 
Commerce District Office''.
    19. Section 700.54 is amended by revising the section heading and 
the second sentence of the introductory text, as follows:


Sec. 700.54  Instances where assistance may not be provided.

* * * * *
    Examples where assistance may not be provided include situations 
when a person is attempting to:
* * * * *


Sec. 700.55  [Amended]

    20. Section 700.55 is amended:
    a. By revising the term ``authorized programs'' to read ``approved 
programs'' in paragraph (a);
    b. By revising the term ``Canadian Department of Supply and 
Services'' to read ``Canadian Public Works and Government Services 
Canada'' in paragraphs (b)(2), (b)(3), (b)(4), (b)(5), and (b)(6); and
    c. By revising the term ``ITA-999'' to read ``BXA-999'' in 
paragraph (b)(6).

[[Page 51397]]

Secs. 700.70, 700.71, 700.72, 700.23, 700.75, 700.80, 700.91  [Amended]

    21. The phrase ``the Selective Service Act and related statutes,'' 
is added following the phrase ``the Defense Production Act,'' wherever 
it appears in the following places:

Sec.
700.70(a)
700.71(a)
700.71(c)(1)
700.71(c)(2)
700.71(c)(3)
700.72(a)
700.73(a)
700.73(b)
700.75
700.80(a)(2)
700.91(d)

    22. Section 700.72(b) is amended by revising the term ``Assistant 
General Counsel for International Trade'' to read ``Chief Counsel for 
Export Administration''.
    23. Section 700.74 is amended:
    a. By revising paragraph (a);
    b. By removing paragraph (b);
    c. By redesignating paragraph (c) as paragraph (b), and paragraph 
(d) as paragraph (c); as follows:


Sec. 700.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of Title I or Sections 705 
or 707 of the Defense Production Act, the priorities provisions of the 
Selective Service Act and related statutes, this regulation, or an 
official action, is a crime and upon conviction, a person may be 
punished by fine or imprisonment, or both. The maximum penalty provided 
by the Defense Production Act is a $10,000 fine, or one year in prison, 
or both. The maximum penalty provided by the Selective Service Act and 
related statutes is a $50,000 fine, or three years in prison, or both.
* * * * *
    24. The term ``Office of Industrial Resource Administration'' is 
revised to read ``Office of Strategic Industries and Economic 
Security'' in the following places:


Secs. 700.80, 700.81, 700.93  [Amended]

Sec.
700.80(a)
700.80(c)
700.80(d)
700.81(a)
700.81(b)
700.93

    25. The phrase ``Assistant Secretary for Trade Administration'' is 
revised to read ``Assistant Secretary for Export Administration'' in 
the following places:

Sec.
700.80(d)
700.81(a)
700.81(b)
700.81(d)
700.81(e)
700.81(f)
700.81(g)
700.81(h)

    26. Section 700.81(b) is amended by revising the term 
``International Trade Administration'' to read ``Bureau of Export 
Administration''.
    27. Section 700.91(a) is amended by revising the term ``(OMB #0625-
0107)'' to read ``(OMB #0694-0053)''.
    28. Section 700.93 is amended by revising the phrase ``telephone: 
(202) 377-4506'' to read ``telephone: (202) 482-3634, or FAX: (202) 
482-5650''.

Schedule 1 to Part 700--[Amended]

    29. Schedule 1 to Part 700 is amended:
    a. By revising the column heading ``Authorized Program'' to read: 
``Approved Program''; and by revising the title of the Schedule and the 
first paragraph of the two paragraph explanation of the Schedule;
    b. By removing the following program identification symbols and 
associated authorized program names from the Schedule: ``C8--Controlled 
materials for Defense Industrial Supply Center (DISC)'', ``H2--
Controlled materials producers'', ``H3--Further converters (controlled 
materials)'', and ``H4--Distributors of controlled materials'';
    c. By removing the term ``Federal Aviation Administration'' from 
the list of Associated Agencies of the Department of Defense contained 
in footnote 1;
    d. By adding the following program identification symbols and 
associated approved program names to the Schedule: ``C1--Food resources 
(combat rations)'' under the ``Defense Programs'' heading; and ``H8--
Special projects'', under the ``Other Defense, Energy and Related 
Programs'' heading;
    e. By revising the ``Other Energy Programs'' heading to read: 
``Domestic Energy Programs''; and revising the ``F3'' program name 
``Construction and Maintenance'' to read: ``Construction, repair, and 
maintenance''; and
    f. By revising the ``N1'' program name ``Approved civil defense 
programs'' to read ``Emergency Preparedness Activities''; as follows:

Defense Priorities and Allocations System

Schedule 1 to Part 700--Approved Programs and Delegate Agencies

    The programs listed in this schedule have been approved for 
priorities and allocations support under this regulation. They have 
equal preferential status.
* * * * *

Schedule II to Part 700--[Amended]

    30. Schedule II to part 700 (Controlled Materials), Schedule III to 
part 700 (Technical Definitions of Controlled Materials Products), 
Schedule IV to part 700 (Copper Controlled Materials Producers' Set-
aside Base and Percentages), and Schedule V to part 700 (Nickel Alloys 
Controlled Materials Producers' Set-aside Base and Percentages) are 
removed.

    Issued: September 29, 1997.
William V. Skidmore,
Assistant Secretary (Acting) for Export Administration.
[FR Doc. 97-26109 Filed 9-30-97; 8:45 am]
BILLING CODE 3510-DT-P