[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Rules and Regulations]
[Pages 42408-42423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17047]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)

45 CFR Part 101

RIN 0991-AB94


Health Resources Priority and Allocations System (HRPAS)

AGENCY: Department of Health and Human Services, Office of the 
Secretary.

ACTION: Interim final rule.

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SUMMARY: This interim final rule establishes standards and procedures 
by which the U.S. Department of Health and Human Services (HHS) 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 HHS may allocate 
materials, services, and facilities to promote the national defense. 
This rule will implement HHS's administration of priorities and 
allocations actions, and establish the Health Resources Priorities and 
Allocation System (HRPAS). The HRPAS will cover health resources 
pursuant to the authority under Section 101(c) of the Defense 
Production Act as delegated to HHS by Executive Order 13603. Priorities 
authorities (and other authorities delegated to the Secretary in E.O. 
13603, but not covered by this regulation) may be re-delegated by the 
Secretary. The Secretary retains the authority for allocations.

DATES: Effective July 17, 2015. Comments must be received by September 
15, 2015.

ADDRESSES: You may submit comments, identified by RIN 0991-AB94 by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     By email directly to [email protected].
     By mail or delivery to Cassandra Freeman, Director, 
Division of Acquisition Policy, Office of the Assistant Secretary for 
Preparedness and Response, U.S. Department of Health and Human 
Services, 200 Independence Avenue SW., Room 630G, Washington, DC 20201.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements or any other 
provisions contained in this interim final rule may

[[Page 42409]]

be submitted to Cassandra Freeman, Director, Division of Acquisition 
Policy, Office of the Assistant Secretary for Preparedness and 
Response, U.S. Department of Health and Human Services, 200 
Independence Avenue SW., Room 630G, Washington, DC 20201.

FOR FURTHER INFORMATION CONTACT: The agency program contact is 
Cassandra R. Freeman, who can be contacted by phone at (202) 205-1855 
or via email at [email protected].

SUPPLEMENTARY INFORMATION: 

Background

    HHS is publishing this rule to comply with a requirement of the 
Defense Production Act Reauthorization of 2009 (Pub. L. 111-67) (the 
``DPAR''). The Defense Production Act Reauthorization of 2009 required 
that HHS, and all other agencies that previously have been delegated 
authority to issue rated orders under Executive Order 13603, publish 
regulations providing standards and procedures for prioritization of 
contracts and orders and for allocation of materials, services, and 
facilities to promote the national defense under both emergency and 
non-emergency conditions. HHS's regulation, along with regulations 
promulgated by other agencies, will become part of the Federal 
Priorities and Allocations System.
    The HRPAS is part of the Federal Priorities and Allocations System. 
The HRPAS 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 response, and 
recovery from natural and man-made disasters. Priorities authorities 
(and other authorities delegated to the Secretary in E.O. 13603, but 
not covered by this regulation) may be re-delegated by the Secretary. 
The Secretary retains the authority for allocations.
    On September 30, 2009, Congress amended the DPA through the Defense 
Production Act Reauthorization of 2009 (Pub. L. 111-67) (the ``DPAR''). 
The DPAR directed, all agencies to which the President has delegated 
priorities and allocations authority under E.O. 13603, 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. The DPAR 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. 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 (``FPAS''). 
HHS is publishing this interim final rule in compliance with the 
provision of the DPAR noted above. HHS's HRPAS provisions are 
consistent with the FPAS regulations being issued by other agencies. 
The specific proposals in this rule are more fully described below.

Analysis of the Priorities and Allocations System

General

    Section 101.1 states the purpose of the HRPAS in general terms, as 
providing guidance and procedures for use of the Defense Production Act 
(DPA) priorities and allocations authority with respect to health 
resources necessary or appropriate to promote the national defense.
    Section 101.2 provides guidance and procedures for the use of the 
DPA priorities and allocation authority with respect to health 
resources necessary or appropriate to promote the national defense.
    Section 101.3 provides an overview of the HRPAS program 
eligibility.
    This section describes briefly aspects of the HRPAS, including the 
certain programs for military and health resources under the DPA.

Definitions

    The ``Definitions'' section appears in Sec.  101.20 and provides 
definitions for the relevant regulatory terms.

Placement of Rated Orders

    Section 101.30, ``Delegation of Authority,'' describes fully the 
President's delegations to HHS. It also describes, in general terms, 
the items subject to HHS's jurisdiction. This provision facilitates 
public understanding of the role that each delegate agency plays in the 
overall priorities and allocations system.
    Section 101.31, ``Priority ratings,'' describes the two possible 
levels of priority and program identification symbols used when rating 
an order.
    Section 101.32, ``Elements of a rated order,'' describes in detail 
what each rated order must include, consisting of the appropriate 
priority rating, delivery date information, signatures and required 
language. HHS seeks comment specifically on the text of this provision.
    Section 101.33, ``Acceptance and rejection of rated orders,'' 
details when orders placed by HHS may or must be accepted or rejected, 
and what the procedures are for both, including customer notification 
requirements and certain exceptions for emergency preparedness 
conditions. Specifically, persons must accept or reject rated orders 
for emergency response-related approved programs within fifteen (15) 
working days (or ten (10) working days, depending on the circumstance). 
HHS requires the shorter time limit in for the recipient to respond to 
a rated order issued in connection with an emergency response because 
such orders would require a shorter time frame to ensure delivery in 
time to provide disaster assistance, emergency response or similar 
activities. HHS believes that the exigent circumstances inherent in 
such activities justify requiring a shorter response time.
    Section 101.34, ``Preferential scheduling,'' details procedures in 
cases where a person receives two or more conflicting rated orders. If 
a person is unable to resolve such a conflict, this section refers them 
to special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44.
    Section 101.35, ``Extension of priority ratings,'' requires a 
person to use rated orders with suppliers to obtain items or services 
needed to fill a rated order. This allows the priority rating to 
``extend'' from contractor to subcontractor to supplier throughout the 
entire procurement chain.
    Section 101.36, ``Changes or cancellations of priority ratings and 
rated orders,'' provides procedures for changing or cancelling a rated 
order, both by HHS or other persons who placed the order.
    Section 101.37, ``Use of rated orders,'' lists what items must be 
rated. It also introduces the use of certain program identification 
symbols used when rated orders may be combined, and details the 
procedures for combining two or more rated orders, as well as rated and 
unrated orders.
    Section 101.38, ``Limitations on placing rated orders,'' prohibits 
the use of rated orders in a list of specific circumstances. This 
section also

[[Page 42410]]

specifically excludes the use of rated orders for resources within the 
resource jurisdiction of agencies other than HHS with DPA priorities 
and allocations authority.

Special Priorities Assistance

    Section 101.40, ``General provisions'' illustrates when and how HHS 
can provide special priorities assistance, and provides specific HHS 
points of contact and the form to be used for requesting such 
assistance. Special priorities assistance may generally be requested 
for any reason.
    Section 101.41, ``Requests for priority rating authority,'' directs 
persons to the Department of Commerce to request rating authority for 
production or construction equipment. This section also identifies 
circumstances in which HHS may authorize a person to place a priority 
rating on an order to a supplier in advance of the issuance of a rated 
prime contract, and lists factors HHS will consider in deciding whether 
to grant this authority.
    Section 101.42, ``Examples of assistance,'' provides a number of 
examples of when special priorities assistance may be provided, 
although it may generally be provided for any reason.
    Section 101.43 lists the criteria for granting assistance, and 
Sec.  101.44 lists instances in which assistance may not be provided 
(i.e., to secure a price advantage).

Allocation Actions

    Sections 101.50 through 101.52 describe allocations and contain 
procedures for the use of allocation orders. Specifically, allocation 
orders will be used only if priorities authority will not provide a 
sufficient supply of material, services or facilities for national 
defense requirements, or when use of priorities authority will cause a 
severe and prolonged disruption in the supply of resources available to 
support normal U.S. economic activities. Allocation orders will not be 
used to ration materials or services at the retail level. Allocation 
orders will be distributed equitably among the suppliers of the 
resource(s) being allocated and will not require any person to 
relinquish a disproportionate share of the civilian market. The 
standards set forth in Sec. Sec.  101.50 through 101.52 provide 
reasonable assurance that allocation orders will be used only in 
situations where the circumstances justify such orders.
    Section 101.53 describes the three types of allocation orders that 
HHS might issue. The types of allocation orders are a set-aside, an 
allocation directive, and an allotment. A set-aside is an official 
action that will require a person to reserve resource capacity in 
anticipation of receipt of rated orders. An allocation directive is an 
official action that will 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 will specify the maximum quantity of an item 
authorized for use in a specific program or application. HHS is 
requiring 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.
    Section 101.54, ``Elements of an allocation order,'' sets forth the 
minimum elements of an allocation order. Those elements are:
     A detailed description of the required allocation 
action(s);
     Specific start and end calendar dates for each required 
allocation action;
     The written signature on a manually placed order, or the 
digital signature or name on an electronically placed order, of the 
Secretary of Health and Human Services or his/her designee, which 
certifies that the order is authorized under this regulation and that 
the order is consistent with requirements of the regulation;
     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 the Health Resources Priorities and 
Allocations System regulation (45 CFR 101.1), which is part of the 
Federal Priorities and Allocations System; and
     A current copy of the HRPAS.
    HHS rquires 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 Sec.  101.54 
precludes HHS from including additional information in an allocation 
order if circumstances warrant doing so.
    Section 101.55, ``Mandatory acceptance of allocation orders,'' 
requires that an allocation order must be accepted if a person is 
capable of fulfilling the order. If a person is unable to comply fully 
with the required actions specific in an allocation order, the person 
must notify HHS immediately, explain the extent to which compliance is 
possible, and give reasons why full compliance is not possible. 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 for the same resource(s) that were received prior 
to receiving the allocation order. Section 101.55 makes 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.
    Section 101.56, ``Changes or cancellations of an allocation order'' 
provides that an allocation order may be changed or cancelled by HHS.

Official Actions

    Section 101.60, ``General Provisions'', provides HHS and overview 
regarding implementation of this subpart.
    Section 101.61, ``Rating Authorizations,'' defines a rating 
authorization as an official action granting specific priority rating 
authority, and refers persons to Sec.  101.21 to request such priority 
rating authority.
    Section 101.62, ``Directives,'' defines a directive as an official 
action that requires a person to take or refrain from taking certain 
actions in accordance with its provisions. This section details 
directive compliance for the public.
    Section 101.63, ``Letters and Memoranda of Understanding,'' defines 
a letter or memorandum of understanding as an official action that may 
be issued in resolving special priorities assistance cases to reflect 
an agreement reached by all parties, and explains its use.

Compliance

    Section 101.70, ``General Provisions'' details the official actions 
which may be taken by HHS to enforce or administer the DPA and other 
applicable statutes.
    Section 101.71, ``Audits and investigations,'' details the 
procedures for official examinations of books, records, documents, and 
other writings and information to ensure that the provisions of the DPA 
and other applicable statutes, this regulation, and official actions 
have been properly followed. An audit or investigation may also include 
interviews and a systems evaluation to detect problems or failures in 
the implementation of this regulation.

[[Page 42411]]

    Section 101.72, ``Compulsory process,'' provides that if a person 
refuses to permit a duly authorized HHS representative to have access 
to necessary information, HHS may seek the institution of appropriate 
legal action, including ex parte application for an inspection warrant, 
in any forum of appropriate jurisdiction.
    Sections 101.73 and 101.74 both provide procedures for notification 
of failure to comply with the DPA, these regulations, or HHS official 
actions, and describe the resulting penalties and remedies.
    Section 101.75, ``Compliance Conflicts,'' requires that persons 
immediately contact HHS should compliance with the DPA, these 
regulations, or an official action prevent a person from filling a 
rated order or from complying with another provision of the DPA and 
other applicable statutes, this regulation, or an official action.

Adjustments, Exceptions, and Appeals

    Section 101.80, ``Adjustments, Exceptions, and Appeals,'' reflects 
the procedures necessary to request an adjustment or exception to the 
provisions of these regulations.
    Section 101.81, ``Appeals,'' provides the procedures, timing and 
contact information for appealing a decision made on a request for 
relief in the previous section.

Miscellaneous Provisions

    Section 101.90, ``Protection against claims,'' provides that 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 part of this regulation or an official action.
    Section 101.91, ``Records and reports,'' requires that persons are 
required to make and preserve for at least three years, accurate and 
complete records of any transaction covered by this regulation or an 
official action. Various requirements and procedures regarding such 
records are provided in this section. The confidentiality provisions of 
the DPA governing the submission of information pursuant to the DPA and 
these regulations are also set forth.
    Section 101.92, ``Applicability of this regulation and official 
actions,'' provides the jurisdictional applicability of this regulation 
and official actions.
    Section 101.93, ``Communications,'' provides a HHS point of contact 
for all communications regarding this regulation.

A. Review Under Executive Order 12866 and Executive Order 13563

    HHS has examined the impacts of the interim final rule under 
Executive Order 12866 and Executive Order 13563. Executive Orders 12866 
and 13563 direct agencies to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). This rule is not an 
economically significant regulatory action under Executive Order 12866.
    A summary of the cost benefit analysis is provided below.
    This rule sets criteria under which HHS (or agencies to which HHS 
delegates HHS's DPA authority to issue rated orders) will authorize 
prioritization of certain orders or contracts as well as criteria under 
which HHS will issue orders allocating resources or production 
facilities. To date, HHS has minimally exercised its prioritization 
authority for contracts during the response to H1N1 influenza in 2009 
to order ancillary supplies in support of the Centers for Disease 
Control and Prevention's (CDC) Immunization Program, and not exercised 
its existing allocations authority.
    Under prioritization, HHS or its Delegate Agency designates certain 
orders as one of two possible priority levels. Once so designated, such 
orders are referred to as ``rated orders.'' The recipient of a rated 
order must give it priority over an unrated order or an order with a 
lower priority rating. A recipient of a rated order may place 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 taken 
in or inactions required for, compliance with the rule.
    The impact of HRPAS on private companies receiving priority orders 
is expected to vary. However, in most cases, there is likely to be no 
economic impact in filling priority orders because it will generally 
just be changing the timing in which orders are completed.
    HRPAS is expected to have an overall positive impact on the U.S. 
public and industry by maintaining and restoring the production, 
processing, storage, and distribution of health resources during times 
of both emergency and nonemergency conditions to promote national 
defense and to prevent civilian hardship in the food marketplace. While 
HHS has not yet administered HRPAS under DPA authority, the continued 
use of DPAS by the Department of Defense proves the utility of a 
priorities and allocations system.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. HHS reviewed 
this interim final rule under the provisions of the Regulatory 
Flexibility Act and has determined that this rule, if promulgated, will 
not have a significant impact on a substantial number of small 
entities.

Number of Small Entities

    Small entities include small businesses, small organizations and 
small governmental jurisdictions. For purposes of assessing the impacts 
of this interim final rule on small entities, a small business, as 
described in the Small Business Administration's Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes (January 2012 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 HHS (or agencies to which HHS 
delegates HHS's DPA authority to issue rated orders) will authorize 
prioritization of certain orders or contracts as well as criteria under 
which HHS will issue orders allocating resources or production 
facilities. Because the rule affects commercial transactions, HHS 
believes that small organizations and small governmental jurisdictions 
are unlikely to be affected by this rule. To date, HHS has

[[Page 42412]]

minimally exercised its prioritization authority for contracts during 
the response to 2009 H1N1 influenza to order ancillary supplies in 
support of HHS/CDC's Immunization Program, and not exercised its 
existing allocations authority. As such, HHS has no basis on which to 
estimate the number of small businesses that may be affected by this 
rule.

Impact

    The interim final rule has two principle components: prioritization 
and allocation. Under prioritization, HHS, or its Delegate Agency, 
designates certain orders as one of two possible priority levels. Once 
so designated, such orders are referred to as ``rated orders.'' The 
recipient of a rated order must give it priority over an unrated order 
or an order with a lower priority rating. A recipient of a rated order 
may place 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 taken in or inactions required for, 
compliance with the rule.
    Although rated orders could require a firm to fill one order prior 
to filling another, they will not necessarily require a reduction in 
the total volume of orders. The regulations will also not require the 
recipient of a rated order to reduce prices or provide rated orders 
with more favorable terms than a similar non-rated order. Under these 
circumstances, the economic effects on the rated order recipient of 
substituting one order for another are likely to be mutually 
offsetting, resulting in no net economic impact.
    Allocations could be used to control the general distribution of 
materials or services in the civilian market. Specific allocation 
actions that HHS might take are as follows:
    Set-aside: an official action that requires a person to reserve 
resource capacity in anticipation of receipt of rated orders.
    Allocations 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.
    HHS has not yet taken any actions under its existing allocations 
authority, 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. Sec. 2071), 
hereinafter ``DPA,'' and by Section 201(a) (3) of Executive Order 
13603, HHS may implement allocations only if the Secretary of Health 
and Human Services makes, and the President approves, and determines 
that there is a scarcity of critical materials and services essential 
to the national defense, and that the requirements of the national 
defense cannot otherwise be met without a significant interruption of 
normal distribution of these essential materials or services in the 
civilian marketplace that would cause considerable hardship. ``National 
defense'' covers programs for military and health resources 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 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.
    Any allocation actions taken by HHS must assure that small business 
concerns shall be accorded, to the extent practicable; a fair share of 
the materials or services covered by the allocation action in 
proportion to the share received by small business concerns under 
normal conditions, giving such special consideration as may be possible 
to emerging business concerns, 50 U.S.C. App. Sec. 2151(e).

Conclusion

    Although HHS cannot determine precisely the number of small 
entities that will be affected by this rule, HHS believes that the 
overall impact on such entities will not be significant. In most 
instances, rated contracts will be fulfilled in addition to other 
(unrated) contracts and, in some instances might actually increase the 
total amount of business of the firm that receives a rated contract.
    Because allocations can be imposed only after an agency 
determination confirmed by the President, and because HHS has not yet 
used its allocations authority that has existed since passage of the 
Defense Production Act in 1950, one can expect allocations will be 
ordered only in particular circumstances. Any allocation actions would 
also have to comply with Section 701(e) of DPA (50 U.S.C. app. 
2151(e)), which provides that small business concerns be accorded, to 
the extent practicable, a fair share of the material, including 
services, in proportion to the share received by such business concerns 
under normal conditions, giving such special consideration as may be 
possible to emerging business concerns.
    Therefore, HHS believes that the requirement for a Presidential 
determination and the provisions of section 701 of the DPA indicate 
that any impact on small business will not be significant.
    Therefore, for the reasons set forth above, the Secretary of the 
Department of Health and Human Services certifies that this interim 
final rule will not have a significant economic impact on a substantial 
number of small entities.

C. Review Under the Paperwork Reduction Act

    This interim final rule contains a collection-of-information 
requirement for Request for Special Priorities Assistance, which is 
subject to review and approval by OMB under the Paperwork Reduction Act 
(PRA). This requirement has been submitted to OMB for approval. Data 
required will include: name, location, contact information, items for 
which the applicant is requesting assistance on, quantity, and delivery 
date. Public reporting burden for submission of a request for special 
priorities assistance or priority rating authority is estimated to 
average 30 minutes per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Public comment is sought regarding: whether this collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information shall have practical 
utility; the accuracy of the burden estimate; ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
ways to minimize the burden of the collection of information, including 
through the use of automated collection techniques or other forms of 
information technology. Send comments on these or any other aspects of 
the collection of information

[[Page 42413]]

to (see [email protected], Office of the Assistant Secretary 
for Preparedness and Response, U.S. Department of Health and Human 
Services, 200 Independence Avenue SW., Room 630G, Washington, DC 
20201).
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.
    Title: Request for Special Priorities Assistance for HRPAS.
    OMB Control Number: To be provided by OMB.
    Type of Request: New Collection.
    Abstract: HRPAS will efficiently place priority ratings on 
contracts or orders of health resources within its authority as 
specified in the Defense Production Act (DPA) of 1950, as amended, when 
necessary. Applicants (Government agencies or private individuals with 
a role in emergency preparedness, response, and recovery functions) 
will request authorization from HHS to place a rating on a contract for 
items to support national defense activities. Applicants must supply, 
at time of request, their name, location, contact information, items 
for which the applicant is requesting assistance on, quantity, and 
delivery date. Applicants can submit the request by mail or fax.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 30 minutes per response.
    Type of Respondents: Individuals, businesses, and Agencies with 
responsibilities for emergency preparedness and response.
    Estimated Number of Respondents: 100.
    Estimated Number of Responses per Respondents: 0.95.
    Estimated Total Number of Respondents: 95.
    Estimate Total Annual Burden Hours on Respondents: 50 hours.
    We are requesting comments on all aspects of this information 
collection to help us: (1) Evaluate whether the collection of 
information is necessary for the proper performance of the functions of 
HHS, including whether the information will have practical utility; (2) 
Evaluate the accuracy of HHS's estimate of burden including the 
validity of the methodology and assumptions used; (3) Enhance the 
quality, utility and clarity of the information to be collected; (4) 
Minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology. All comments received in 
response to this document, including names and addresses when provided, 
will be a matter of public record. Comments will be summarized and 
included in the submission for Office of Management and Budget 
approval.

D. Review Under Executive Order 13132

    HHS reviewed this rule pursuant to Executive Order 13132, 
``Federalism,'' 64 FR 43255 (August 4, 1999), which imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. HHS determined that the rule will not have a substantial 
direct effect on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of Government.

E. Review Under Unfunded Mandates Reform Act

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions on State, local, or Tribal governments or the 
private sector. Agencies generally must prepare a written statement, 
including a cost benefit analysis, for proposed and final rules with 
Federal mandates that may result in expenditures of $100 million or 
more in any one year for State, local, or Tribal governments, in the 
aggregate, or to the private sector. This rule contains no Federal 
mandates as defined by Title II of UMRA for State, local, or Tribal 
governments or for the private sector; therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

F. Approval of the Office of the Secretary

    The Secretary of Health and Human Services has approved publication 
of this interim final rule.

List of Subjects in 45 CFR Part 101

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

    For the reasons stated in the preamble, HHS adds part 101 to 
subchapter A of title 45 of the Code of Federal Regulations to read as 
follows:

PART 101--DESCRIBING AGENCY NEEDS

Subpart A--Health Resources Priorities and Allocations System

General

Sec.
101.1 Purpose.
101.2 Priorities and allocations authority.
101.3 Program eligibility.
Subpart B--Definitions
101.20 Definitions.
Subpart C--Placement of Rated Orders
101.30 Delegations of authority.
101.31 Priority ratings.
101.32 Elements of a rated order.
101.33 Acceptance and rejection of rated orders.
101.34 Preferential scheduling.
101.35 Extension of priority ratings.
101.36 Changes or cancellations of priority ratings and rated 
orders.
101.37 Use of rated orders.
101.38 Limitations on placing rated orders.
Subpart D--Special Priorities Assistance
101.40 General provisions.
101.41 Requests for priority rating authority.
101.42 Examples of assistance.
101.43 Criteria for assistance.
101.44 Instances where assistance may not be provided.
Subpart E--Allocation Actions
101.50 Policy.
101.51 General procedures.
101.52 Controlling the general distribution of a material in the 
civilian market.
101.53 Types of allocation orders.
101.54 Elements of an allocation order.
101.55 Mandatory acceptance of an allocation order.
101.56 Changes or cancellations of an allocation order.
Subpart F--Official Actions
101.60 General provisions.
101.61 Rating Authorizations.
101.62 Directives.
101.63 Letters and Memoranda of Understanding.
Subpart G--Compliance
101.70 General provisions.
101.71 Audits and investigations.
101.72 Compulsory process.
101.73 Notification of failure to comply.
101.74 Violations, penalties, and remedies.
101.75 Compliance conflicts.
Subpart H--Adjustments, Exceptions, and Appeals
101.80 Adjustments or exceptions.
101.81 Appeals.
Subpart I--Miscellaneous Provisions
101.90 Protection against claims.
101.91 Records and reports.
101.92 Applicability of this part and official actions.
101.93 Communications.

    Authority: 50 U.S.C. App. 2061-2171;

[[Page 42414]]

Subpart A--Health Resources Priorities and Allocations System

General


Sec.  101.1  Purpose.

    This section provides guidance and procedures for use of Defense 
Production Act (DPA) of 1950 Section 101(a) priorities and allocations 
authority with respect to all forms of health resources necessary or 
appropriate to promote the national defense. The guidance and 
procedures in this part are consistent with the guidance and procedures 
provided in other regulations that, as a whole, form the Federal 
Priorities and Allocations System. Guidance and procedures for use of 
the DPA priorities and allocations authority with respect to other 
types of resources are provided for: food resources, food resource 
facilities, and the domestic distribution of farm equipment and 
commercial fertilizer in7 CFR part 700; energy supplies in 10 CFR part 
217; all forms of civil transportation in 49 CFR part 33; water 
resources in 32 CFR part 555; and all other materials, services, and 
facilities, including construction materials in the Defense Priorities 
and Allocations System (DPAS) regulation (15 CFR part 700).


Sec.  101.2  Priorities and allocations authority.

    (a) Section 201 of E.O. 13603, delegates the President's authority 
under Section 101 of the DPA. DPA Section 101 provides the President 
with authority to require acceptance and priority performance of 
contracts and orders (other than contracts of employment) to promote 
the national defense over performance of any other contracts or orders, 
and to allocate materials, services, and facilities as deemed necessary 
or appropriate to promote the national defense to a number of agencies. 
Section 201 of E.O. 13603 delegates the President's authority to 
specific agencies as follows:
    (1) The Secretary of Agriculture with respect to food resources, 
food resource facilities, livestock resources, veterinary resources, 
plant health resources, and the domestic distribution of farm equipment 
and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to 
health resources;
    (4) The Secretary of Transportation with respect to all forms of 
civil transportation;
    (5) The Secretary of Defense with respect to water resources; and
    (6) The Secretary of Commerce for all other materials, services, 
and facilities, including construction materials.
    (b) Section 202(a) of E.O. 13603 states that the priorities and 
allocations authority delegated in Section 201 of that Executive Order 
may be used only to support programs that have been determined in 
writing as necessary or appropriate to promote the national defense:
    (1) By the Secretary of Defense with respect to military production 
and construction, military assistance to foreign nations, military use 
of civil transportation, stockpiles managed by the Department of 
Defense, space, and directly related activities;
    (2) By the Secretary of Energy with respect to energy production 
and construction, distribution and use, and directly related 
activities; and
    (3) By the Secretary of Homeland Security with respect to all other 
national defense programs, including civil defense and continuity of 
Government.
    (c) Section 201(e) of E.O. 13603 provides that each department that 
is delegated priorities and allocations authority under Section 201(a) 
of E.O. 13603 may use this authority with respect to control of the 
general distribution of any material (including applicable services) in 
the civilian market only after:
    (1) Making the finding required under Section 101(b) of the DPA; 
and
    (2) The finding has been approved by the President.
    (d) Priorities authorities (and other authorities delegated to the 
Secretary in E.O. 13603 but not covered by this regulation) have been 
re-delegated by the Secretary to the Assistant Secretary for 
Preparedness and Response (the ``ASPR''). The Secretary retains the 
authority for allocations.


Sec.  101.3  Program eligibility.

    Certain programs to promote the national defense are eligible for 
priorities and allocations support. These include programs for military 
and energy production or construction, military or critical 
infrastructure assistance to any foreign nation, deployment and 
sustainment of military forces, homeland security, stockpiling, space, 
and any directly related activity. Other eligible programs include 
emergency preparedness activities conducted pursuant to Title VI of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 
U.S.C. 5195 et seq.] and critical infrastructure protection and 
restoration.

Subpart B--Definitions


Sec.  101.20  Definitions.

    The following definitions pertain to all sections of this part:
    Allocation means the control of the distribution of materials, 
services, or facilities for a purpose deemed necessary or appropriate 
to promote the national defense.
    Allocation order means an official action to control the 
distribution of materials, services, or facilities for a purpose deemed 
necessary or appropriate to promote the national defense.
    Allotment means an official action that specifies the maximum 
quantity or use of a material, service, or facility authorized for a 
specific use to promote the national defense.
    Approved program means a program determined by the Secretary of 
Defense, the Secretary of Energy, or the Secretary of Homeland Security 
to be necessary or appropriate to promote the national defense, in 
accordance with Section 202 of E.O. 13603.
    Construction means the erection, addition, extension, or alteration 
of any building, structure, or project, using materials or products 
which are to be an integral and permanent part of the building, 
structure, or project. Construction does not include maintenance and 
repair.
    Critical infrastructure means any systems and assets, whether 
physical or cyber-based, so vital to the United States that the 
degradation or destruction of such systems and assets would have a 
debilitating impact on national security, including, but not limited 
to, national economic security and national public health or safety.
    Defense Production Act or DPA means the Defense Production Act of 
1950, as amended (50 U.S.C. App. 2061 et seq.).
    Delegate agency means a Federal government agency authorized by 
delegation from HHS to place priority ratings on contracts or orders 
needed to support approved programs.
    Directive means an official action that requires a person to take 
or refrain from taking certain actions in accordance with its 
provisions.
    Emergency preparedness means all those activities and measures 
designed or undertaken to prepare for or minimize the effects of a 
hazard upon the civilian population, to deal with the immediate 
emergency conditions which would be created by the hazard, and to 
effectuate emergency repairs to, or the emergency restoration of, vital 
utilities and facilities destroyed or damaged by the hazard. 
``Emergency Preparedness'' includes the following:
    (1) Measures to be undertaken in preparation for anticipated 
hazards (including the establishment of appropriate organizations, 
operational plans, and supporting agreements, the

[[Page 42415]]

recruitment and training of personnel, the conduct of research, the 
procurement and stockpiling of necessary materials and supplies, the 
provision of suitable warning systems, the construction or preparation 
of shelters, shelter areas, and control centers, and, when appropriate, 
the nonmilitary evacuation of the civilian population).
    (2) Measures to be undertaken during a hazard (including the 
enforcement of passive defense regulations prescribed by duly 
established military or civil authorities, the evacuation of personnel 
to shelter areas, the control of traffic and panic, and the control and 
use of lighting and civil communications).
    (3) Measures to be undertaken following a hazard (including 
activities for firefighting; rescue; emergency medical, health and 
sanitation services; monitoring for specific dangers of special 
weapons; unexploded bomb reconnaissance; essential debris clearance; 
emergency welfare measures; and immediately essential emergency repair 
or restoration of damaged vital facilities).
    Facilities includes all types of buildings, structures, or other 
improvements to real property (but excluding farms, churches or other 
places of worship, and private dwelling houses), and services relating 
to the use of any such building, structure, or other improvement.
    Farm equipment means equipment, machinery, and repair parts 
manufactured for use on farms in connection with the production or 
preparation for market use of Food resources.
    Fertilizer means any product or combination of products that 
contain one or more of the elements--nitrogen, phosphorus, and 
potassium--for use as a plant nutrient.
    Food resources means all commodities and products, (simple, mixed, 
or compound), or complements to such commodities or products, that are 
capable of being ingested by either human beings or animals, 
irrespective of other uses to which such commodities or products may be 
put, at all stages of processing from the raw commodity to the products 
thereof in vendible form for human or animal consumption. ``Food 
Resources'' also means potable water packaged in commercially 
marketable containers, all starches, sugars, vegetable and animal or 
marine fats and oils, seed, cotton, hemp, and flax fiber, but does not 
mean any such material after it loses its identity as an agricultural 
commodity or agricultural product.
    Food resource facilities means plants, machinery, vehicles 
(including on-farm), and other facilities required for the production, 
processing, distribution, and storage (including cold storage) of food 
resources, and for the domestic distribution of farm equipment and 
fertilizer (excluding transportation thereof).
    Hazard means an emergency or disaster resulting from:
    (1) A natural disaster; or
    (2) An accidental or human-caused event.
    Health resources means drugs, biological products, medical devices, 
materials, facilities, health supplies, services and equipment required 
to diagnose, mitigate or prevent the impairment of, improve, treat, 
cure, or restore the physical or mental health conditions of the 
population.
    Homeland Security includes efforts--
    (1) To prevent terrorist attacks within the United States;
    (2) To reduce the vulnerability of the United States to terrorism;
    (3) To minimize damage from a terrorist attack in the United 
States; and
    (4) To recover from a terrorist attack in the United States.
    Industrial Resource means all materials, services, and facilities, 
including construction materials, but not including: Food resources, 
food resource facilities, and the domestic distribution of farm 
equipment and commercial fertilizer; all forms of health resources; all 
forms of civil transportation; and water resources.
    Item means any raw, in process, or manufactured material, article, 
commodity, supply, equipment, component, accessory, part, assembly, or 
product of any kind, technical information, process, or service.
    Maintenance and Repair and Operating Supplies (MRO) includes the 
following--
    (1) ``Maintenance'' is the upkeep necessary to continue any plant, 
facility, or equipment in working condition.
    (2) ``Repair'' is the restoration of any plant, facility, or 
equipment to working condition when it has been rendered unsafe or 
unfit for service by wear and tear, damage, or failure of parts.
    (3) ``Operating Supplies'' are any resources carried as operating 
supplies according to a person's established accounting practice. 
``Operating Supplies'' may include hand tools and expendable tools, 
jigs, dies, fixtures used on production equipment, lubricants, 
cleaners, chemicals and other expendable items.
    (4) MRO does not include items produced or obtained for sale to 
other persons or for installation upon or attachment to the property of 
another person, or items required for the production of such items; 
items needed for the replacement of any plant, facility, or equipment; 
or items for the improvement of any plant, facility, or equipment by 
replacing items which are still in working condition with items of a 
new or different kind, quality, or design.
    Materials includes--
    (1) Any raw materials (including minerals, metals, and advanced 
processed materials), commodities, articles, components (including 
critical components), products, and items of supply;
    (2) Any technical information or services ancillary to the use of 
any such materials, commodities, articles, components, products, or 
items; and
    (3) Natural resources such as oil and gas.
    National defense means programs for military and health resources 
production or construction, military or critical infrastructure 
assistance to any foreign nation, homeland security, stockpiling, 
space, and any directly related activity. Such term includes emergency 
preparedness activities conducted pursuant to title VI of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195, 
et seq.) and critical infrastructure protection and restoration.
    Official action means an action taken by the Department of Health 
and Human Services or another resource agency under the authority of 
the Defense Production Act, E.O.13603, and this part or another 
regulation under the Federal Priorities and Allocations System. Such 
actions include the issuance of Rating Authorizations, Directives, Set 
Asides, Allotments, Letters of Understanding, Memoranda of 
Understanding, and Demands for Information, Inspection Authorizations, 
and Administrative Subpoenas.
    Person includes an 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.
    Rated order means a prime contract, a subcontract, or a purchase 
order in support of an approved program issued in accordance with the 
provisions of this part.
    Resource agency means any agency delegated priorities and 
allocations authority as specified in Sec.  101.2.
    Secretary means the Secretary of Health and Human Services.
    Services includes any effort that is needed for or incidental to--

[[Page 42416]]

    (1) The development, production, processing, distribution, 
delivery, or use of an industrial resource or a critical technology 
item;
    (2) The construction of facilities;
    (3) The movement of individuals and property by all modes of civil 
transportation; or
    (4) Other national defense programs and activities.
    Set-aside means an official action that requires a person to 
reserve materials, services, or facilities capacity in anticipation of 
the receipt of rated orders.
    Stafford Act means title VI (Emergency Preparedness) of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act, as amended 
(42 U.S.C. 5195-5197h).
    Water resources means all usable water, from all sources, within 
the jurisdiction of the United States, that can be managed, controlled, 
and allocated to meet emergency requirements, except ``water resources 
does not include usable water that qualifies as ``food resources''.

Subpart C--Placement of Rated Orders


Sec.  101.30  Delegations of authority.

    The priorities and allocations authorities of the President under 
Title I of the DPA with respect to all forms of health resources have 
been delegated to the Secretary under E.O. 13603. The Secretary may re-
delegate the Secretary's priority rating activities under the DPA 
though the allocations authority provided to the Secretary is not 
subject to delegation per Section 201(e) of E.O. 13603.


Sec.  101.31  Priority ratings.

    (a) Levels of priority. (1) There are two levels of priority 
established by Federal Priorities and Allocations System regulations, 
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 Sec.  101.34(c).)
    (3) In addition, a Directive regarding priority treatment for a 
given item issued by the Department of Health and Human Services for 
that item takes precedence over any DX-rated order, DO-rated order, or 
unrated order, as stipulated in the Directive. (For a full discussion 
of Directives, see Sec.  101. 62.
    (b) Program identification symbols. Program identification symbols, 
such as ``DO-HR'', or ``DX-HR'', indicate which approved program is 
being supported by a rated order. Programs may be approved under the 
procedures of E.O. 13603 Section 202 at any time. Program 
identification symbols do not connote any priority.
    (c) Priority ratings. A priority rating consists of the rating 
symbol--DO or DX--and the program identification symbol, such as DO-HR 
or DX-HR.


Sec.  101.32  Elements of a rated order.

    Each rated order must include:
    (a) The appropriate priority rating (e.g. DO-HR or DX-HR);
    (b) A required delivery date or dates. The words ``immediately'' or 
``as soon as possible'' do not constitute a delivery date. A 
``requirements contract'', ``basic ordering agreement'', ``prime vendor 
contract'', or similar procurement document bearing a priority rating 
may contain no specific delivery date or dates and may provide for the 
furnishing of items or service from time-to-time or within a stated 
period against specific purchase orders, such as ``calls'', 
``requisitions'', and ``delivery orders''. These purchase orders must 
specify a required delivery date or dates and are to be considered as 
rated as of the date of their receipt by the supplier and not as of the 
date of the original procurement document;
    (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 part and that the requirements of this part 
are being followed; and
    (d)(1) 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 Health 
Resources Priorities and Allocations System regulation at 45 CFR 
part 101.

    (2) If the rated order is placed in support of emergency 
preparedness requirements and expedited action is necessary and 
appropriate to meet these requirements, the following sentences should 
be added following the statement set forth in paragraph (d)(1) of this 
section:
    (i) This rated order is placed for the purpose of emergency 
preparedness. It must be accepted or rejected within two (2) days after 
receipt of the order if:
    (A) The order is issued in response to a hazard that has occurred; 
or
    (B) If the order is issued to prepare for an imminent hazard, as 
specified in HRPAS Sec.  101.33(e).
    (ii) [Reserved]


Sec.  101.33  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance. (1) Except as otherwise specified in this 
section, a person shall accept every rated order received and must fill 
such orders regardless of any other rated or unrated orders that have 
been accepted.
    (2) A person shall not discriminate against rated orders in any 
manner such as by charging higher prices or by imposing different terms 
and conditions than for comparable unrated orders.
    (b) Mandatory rejection. Unless otherwise directed by HHS for a 
rated order involving all forms of health resources:
    (1) A person shall not accept a rated order for delivery on a 
specific date if unable to fill the order by that date. However, the 
person must inform the customer of the earliest date on which delivery 
can be made and offer to accept the order on the basis of that date. 
Scheduling conflicts with previously accepted lower rated or unrated 
orders are not sufficient reason for rejection under this section.
    (2) A person shall not accept a DO-rated order for delivery on a 
date which would interfere with delivery of any previously accepted DO- 
or DX-rated orders. However, the person must offer to accept the order 
based on the earliest delivery date otherwise possible.
    (3) A person shall not accept a DX-rated order for delivery on a 
date which would interfere with delivery of any previously accepted DX-
rated orders, but must offer to accept the order based on the earliest 
delivery date otherwise possible.
    (4) If a person is unable to fill all of the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders which can be 
filled, and reject the other orders. For example, a person must accept 
order A requiring delivery on December 15 before accepting order B 
requiring delivery on December 31. However, the person must offer to 
accept the rejected orders based on the earliest delivery dates 
otherwise possible.
    (c) Optional rejection. Unless otherwise directed by HHS for a 
rated order involving all forms of health resources, rated orders may 
be rejected in any of the following cases as long as a supplier does 
not discriminate among customers:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
capable of being performed;

[[Page 42417]]

    (3) If the order is for an item or service produced, acquired, or 
provided only for the supplier's own use for which no orders have been 
filled for two years prior to the date of receipt of the rated order. 
If, however, a supplier has sold some of these items or provided 
similar services, the supplier is obligated to accept rated orders up 
to that quantity or portion of production or service, whichever is 
greater, sold or provided within the past two years;
    (4) If the person placing the rated order, other than the U.S. 
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated 
order would violate any other regulation, official action, or order of 
the HHS issued under the authority of the DPA or another relevant 
statute.
    (d) Customer notification requirements. (1) Except as provided in 
paragraph (e) of this section, a person must accept or reject a rated 
order in writing or electronically within fifteen (15) working days 
after receipt of a 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 or electronically for the rejection.
    (2) If a person has accepted a rated order and subsequently finds 
that shipment or performance will be delayed, the person must notify 
the customer immediately, give the reasons for the delay, and advise of 
a new shipment or performance date. If notification is given verbally, 
written or electronic confirmation must be provided within five (5) 
working days.
    (e) Exception for emergency response conditions. If the rated order 
is placed for the purpose of emergency preparedness, a person must 
accept or reject a rated order and transmit the acceptance or rejection 
in writing or in an electronic format within two (2) days after receipt 
of the order if:
    (1) The order is issued in response to a hazard that has occurred; 
or
    (2) The order is issued to prepare for an imminent hazard.


Sec.  101.34  Preferential scheduling.

    (a) A person must schedule operations, including the acquisition of 
all needed production items or services, in a timely manner to satisfy 
the delivery requirements of each rated order. Modifying production or 
delivery schedules is necessary only when required delivery dates for 
rated orders cannot otherwise be met.
    (b) DO-rated orders must be given production preference over 
unrated orders, if necessary to meet required delivery dates, even if 
this requires the diversion of items being processed or ready for 
delivery or services being performed against unrated orders. Similarly, 
DX-rated orders must be given preference over DO-rated orders and 
unrated orders. (Examples: If a person receives a DO-rated order with a 
delivery date of June 3 and if meeting that date would mean delaying 
production or delivery of an item for an unrated order, the unrated 
order must be delayed. If a DX-rated order is received calling for 
delivery on July 15 and a person has a DO-rated order requiring 
delivery on June 2 and operations can be scheduled to meet both 
deliveries, there is no need to alter production schedules to give any 
additional preference to the DX-rated order.)
    (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 orders are scheduled to 
be delivered or performed on the same day, the person shall give 
precedence to those orders that have the earliest receipt dates.
    (2) If a person is unable to resolve rated order delivery or 
performance conflicts under this section, the person should promptly 
seek special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44. If the person's customer objects to the rescheduling of 
delivery or performance of a rated order, the customer should promptly 
seek special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44. For any rated order against which delivery or 
performance will be delayed, the person must notify the customer as 
provided in Sec.  101.33(d)(2).
    (d) If a person is unable to purchase needed production items in 
time to fill a rated order by its required delivery date, the person 
must fill the rated order by using inventoried production items. A 
person who uses inventoried items to fill a rated order may replace 
those items with the use of a rated order as provided in Sec.  
101.37(b).


Sec.  101.35  Extension of priority ratings.

    (a) A person must use rated orders with suppliers to obtain items 
or services needed to fill a rated order. The person must use the 
priority rating indicated on the customer's rated order, except as 
otherwise provided in this part or as directed by the Department of 
Health and Human Services.
    (b) The priority rating must be included on each successive order 
placed to obtain items or services needed to fill a customer's rated 
order. This continues from contractor to subcontractor to supplier 
throughout the entire procurement chain.


Sec.  101.36  Changes or cancellations of priority ratings and rated 
orders.

    (a) The priority rating on a rated order may be changed or canceled 
by:
    (1) An official action of HHS; or
    (2) Written notification from the originating agency that placed 
the rated order.
    (b) If an unrated order is amended so as to make it a rated order, 
or a DO rating is changed to a DX rating, the supplier must give the 
appropriate preferential treatment to the order as of the date the 
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a 
supplier's original production or delivery schedule shall constitute a 
new rated order as of the date of its receipt. The supplier must accept 
or reject the amended order according to the provisions of Sec.  
101.33.
    (d) The following amendments do not constitute a new rated order: a 
change in shipping destination; a reduction in the total amount of the 
order; an increase in the total amount of the order which has 
negligible impact upon deliveries; a minor variation in size or design; 
or a change which is agreed upon between the supplier and the customer.
    (e) If a person no longer needs items or services to fill a rated 
order, any rated orders placed with suppliers for the items or 
services, or the priority rating on those orders, must be canceled.
    (f) When a priority rating is added to an unrated order, or is 
changed or canceled, all suppliers must be promptly notified in 
writing.


Sec.  101.37  Use of rated orders.

    (a) A person must use rated orders to obtain:
    (1) Items which will be physically incorporated into other items to 
fill rated orders, including that portion of such items normally 
consumed or converted into scrap or by-products in the course of 
processing;
    (2) Containers or other packaging materials required to make 
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill 
rated orders; and
    (4) MRO needed to produce the finished items to fill rated orders.

[[Page 42418]]

    (b) A person may use a rated order to replace inventoried items 
(including finished items) if such items were used to fill rated 
orders, as follows:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (2) A DO rating and the program identification symbol indicated on 
the customer's rated order must be used on the order. A DX rating may 
not be used even if the inventory was used to fill a DX-rated order.
    (3) If the priority ratings on rated orders from one customer or 
several customers contain different program identification symbols, the 
rated orders may be combined. In this case, the program identification 
symbol ``H1'' must be used (i.e., DO-H1).
    (c) A person may combine DX- and DO-rated orders from one customer 
or several customers if the items or services covered by each level of 
priority are identified separately and clearly. 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 Sec.  
101.32, are included on the order with the statement required in Sec.  
101.32(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 
applicable provisions of the Health Resources Priorities and 
Allocations System regulations at 45 CFR part 101, subpart A, 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.  101.33 and give preferential 
treatment only to the rated quantities as required by this part. This 
part may not be used to require preferential treatment for the unrated 
portion of the order.
    (3) Any supplier who believes that rated and unrated orders are 
being combined in a manner contrary to the intent of this part or in a 
fashion that causes undue or exceptional hardship may submit a request 
for adjustment or exception under Sec.  101.80.
    (e) A person may place a rated order for the minimum commercially 
procurable quantity even if the quantity needed to fill a rated order 
is less than that minimum. However, a person must combine rated orders 
as provided in paragraph (c) of this section, if possible, to obtain 
minimum procurable quantities.
    (f) A person is not required to place a priority rating on an order 
for less than one-half of the Simplified Acquisition Threshold (as 
established in the Federal Acquisition Regulation (FAR) (see 48 CFR 
2.101) or in other authorized acquisition regulatory or management 
systems) whichever amount is greater, provided that delivery can be 
obtained in a timely fashion without the use of the priority rating.


Sec.  101.38  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a DO- or DX-
rated order unless entitled to do so under this part.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item or services than needed, except 
to obtain a minimum procurable quantity. Separate rated orders may not 
be placed solely for the purpose of obtaining minimum procurable 
quantities on each order;
    (iii) Items or services in advance of the receipt of a rated order, 
except as specifically authorized by HHS (see Sec.  101.41(c) for 
information on obtaining authorization for a priority rating in advance 
of a rated order);
    (iv) Items that are not needed to fill a rated order, except as 
specifically authorized by HHS, or as otherwise permitted by this part; 
or
    (v) Any of the following items unless specific priority rating 
authority has been obtained from HHS, a Delegate Agency, or the 
Department of Commerce, as appropriate:
    (A) Items for plant improvement, expansion, or construction, unless 
they will be physically incorporated into a 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 Sec.  101.41.]
    (vi) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons, unless such development or production has been authorized by 
the President or the Secretary of Defense. This provision does not 
however prohibit the use of the priority and allocations authority to 
acquire or produce qualified countermeasures that are necessary to 
treat, identify, or prevent harm from any biological or chemical agent 
that may cause a public health emergency affecting national security.
    (b) Jurisdictional limitations. Unless authorized by the resource 
agency with jurisdiction, the provisions of this part are not 
applicable to the following resources:
    (1) Food resources, food resource facilities, and the domestic 
distribution of farm equipment and commercial fertilizer (Resource 
agency with jurisdiction--Department of Agriculture);
    (2) Energy supplies (Resource agency with jurisdiction--Department 
of Energy);
    (3) All forms of civil transportation (Resource agency with 
jurisdiction--Department of Transportation);
    (4) Water resources (Resource agency with jurisdiction--Department 
of Defense/U.S. Army Corps of Engineers); and
    (5) Communications services (Resource agency with jurisdiction-- 
National Communications System under E.O. 12472 of April 3, 1984).

Subpart D--Special Priorities Assistance


Sec.  101.40  General provisions.

    (a) The six regulations that comprise the Federal Priorities and 
Allocations System are designed to be largely self-executing. However, 
from time-to-time production or delivery problems will arise in 
connection with rated orders for health resources as covered under this 
part. In this event, a person should immediately contact the Secretary 
for guidance, as specified in Sec.  101.93. If the HHS is unable to 
resolve the problem or to authorize the use of a priority rating and 
believes additional assistance is warranted, HHS may forward the 
request to another agency with resource jurisdiction, or the Department 
of Commerce, as appropriate, for action. Special priorities assistance 
is provided to alleviate problems that do arise.
    (b) Special priorities assistance is available for any reason 
consistent with this part. Generally, special priorities assistance is 
provided to expedite deliveries, resolve delivery conflicts, place 
rated orders, locate suppliers, or to verify information supplied by 
customers and vendors. Special priorities assistance may also be used 
to request rating authority for items that are not normally eligible 
for priority treatment.
    (c) A request for special priorities assistance or priority rating 
authority must be submitted to the Secretary, as specified in Sec.  
101.93.

[[Page 42419]]

Sec.  101.41  Requests for priority rating authority.

    (a) If a rated order is likely to be delayed because a person is 
unable to obtain items or services not normally rated under this part, 
the person may request the authority to use a priority rating in 
ordering the needed items or services.
    (b) Rating authority for production or construction equipment. (1) 
A request for priority rating authority for production or construction 
equipment must be submitted to the U.S. Department of Commerce on Form 
BIS-999.
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment, a rated order may 
be used either to purchase or to lease such equipment. However, in the 
latter case, the equipment may be leased only from a person engaged in 
the business of leasing such equipment or from a person willing to 
lease rather than sell.
    (c) Rating authority in advance of a rated prime contract. (1) In 
certain cases and upon specific request, the Department of Health and 
Human Services, 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 Department of Health and Human Services or the 
appropriate Delegate Agency. The person shall also assume any business 
risk associated with the placing of rated orders in the event the rated 
prime contract is not issued.
    (2) The person must state the following in the request:

    It is understood that the authorization of a priority rating in 
advance of our receiving a rated prime contract from the Department 
of Health and Human Services and our use of that priority rating 
with our suppliers in no way commits the Department of Health and 
Human Services or any other government agency to enter into a 
contract or order or to expend funds. Further, we understand that 
the Federal Government shall not be liable for any cancellation 
charges, termination costs, or other damages that may accrue if a 
rated prime contract is not eventually placed and, as a result, we 
must subsequently cancel orders placed with the use of the priority 
rating authorized as a result of this request.

    (3) In reviewing requests for rating authority in advance of a 
rated prime contract, HHS will consider, among other things, the 
following criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time;
    (v) The time period for which the rating is being requested.
    (4) The HHS may require periodic reports on the use of the rating 
authority granted under paragraph (c) of this section.
    (5) If a rated prime contract is not issued, the person shall 
promptly notify all suppliers who have received rated orders pursuant 
to the advanced rating authority that the priority rating on those 
orders is cancelled.


Sec.  101.42  Examples of assistance.

    (a) While special priorities assistance may be provided for any 
reason in support of this part, it is usually provided in situations 
where:
    (1) A person is experiencing difficulty in obtaining delivery 
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item or service needed 
to fill a rated order.
    (b) Other examples of special priorities assistance include:
    (1) Ensuring that rated orders receive preferential treatment by 
suppliers;
    (2) Resolving production or delivery conflicts between various 
rated orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.


Sec.  101.43  Criteria for assistance.

    Requests for special priorities assistance should be timely, i.e., 
the request has been submitted promptly and enough time exists for HHS, 
or the agencies to which HHS has delegated its authority to issue rated 
orders (the ``Delegate Agency''), or the Department of Commerce for 
industrial resources to effect 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.


Sec.  101.44  Instances where assistance may not be provided.

    Special priorities assistance is provided at the discretion of HHS 
or the Delegate Agency when it is determined that such assistance is 
warranted to meet the objectives of this part. Examples where 
assistance may not be provided include situations when a person is 
attempting to:
    (a) Secure a price advantage;
    (b) Obtain delivery prior to the time required to fill a rated 
order;
    (c) Gain competitive advantage;
    (d) Disrupt an industry apportionment program in a manner designed 
to provide a person with an unwarranted share of scarce items; or
    (e) Overcome a supplier's regularly established terms of sale or 
conditions of doing business.

Subpart E--Allocation Actions


Sec.  101.50  Policy.

    (a) It is the policy of the Federal Government that the allocations 
authority under title I of the Defense Production Act may:
    (1) Only be used when there is insufficient supply of a material, 
service, or facility to satisfy national defense supply requirements 
through the use of the priorities authority or when the use of the 
priorities authority would cause a severe and prolonged disruption in 
the supply of materials, services, or facilities available to support 
normal U.S. economic activities; and
    (2) Not be used to ration materials or services at the retail 
level.
    (b) Allocation orders, when used, will be distributed equitably 
among the suppliers of the materials, services, or facilities being 
allocated and not require any person to relinquish a disproportionate 
share of the civilian market.


Sec.  101.51  General procedures.

    When HHS plans to execute its allocations authority to address a 
supply problem within its resource jurisdiction, the Department shall 
develop a plan that includes the following information:
    (a) A copy of the Secretary's finding for Presidential approval 
made, in accordance with Section 201(e) of E.O. 13603, that the 
material or materials at issue are scarce and critical materials 
essential to the national defense and that the requirements for 
national defense for such material(s) cannot otherwise be met without 
creating a significant dislocation of the normal distribution of such 
material(s) in to such a degree as to create appreciable hardship.
    (b) A detailed description of the situation to include any unusual 
events or circumstances that have created the requirement for an 
allocation action;
    (c) A statement of the specific objective(s) of the allocation 
action;
    (d) A list of the materials, services, or facilities to be 
allocated;
    (e) A list of the sources of the materials, services, or facilities 
that will be subject to the allocation action;

[[Page 42420]]

    (f) A detailed description of the provisions that will be included 
in the allocation orders, including the type(s) of allocation orders, 
the percentages or quantity of capacity or output to be allocated for 
each purpose, and the duration of the allocation action (i.e., 
anticipated start and end dates);
    (g) An evaluation of the impact of the proposed allocation action 
on the civilian market; and
    (h) Proposed actions, if any, to mitigate disruptions to civilian 
market operations.


Sec.  101.52  Controlling the general distribution of a material in the 
civilian market.

    (a) No allocation action taken by HHS may be used to control the 
general distribution of a material in the civilian market, unless the 
Secretary has:
    (1) Made a written finding that:
    (i) Such material is a scarce and critical material essential to 
the national defense, and
    (ii) The requirements of the national defense for such material 
cannot otherwise be met without creating a significant dislocation of 
the normal distribution of such material in the civilian market to such 
a degree as to create appreciable hardship;
    (2) Submitted the finding for the President's approval through the 
Assistant to the President for National Security Affairs; and
    (3) The President has approved the finding.
    (b) The requirements of this section may not delegated by the 
Secretary (See E.O. 13603, Section 201(e)).


Sec.  101.53  Types of allocation orders.

    There are three types of allocation orders available for 
communicating allocation actions. These are:
    (a) Set-aside. An official action that requires a person to reserve 
materials, services, or facilities capacity in anticipation of the 
receipt of rated orders;
    (b) Directive. An official action that requires a person to take or 
refrain from taking certain actions in accordance with its provisions. 
A directive can require a person to: Stop or reduce production of an 
item; prohibit the use of selected materials, services, or facilities; 
or divert the use of materials, services, or facilities from one 
purpose to another; and
    (c) Allotment. An official action that specifies the maximum 
quantity of a material, service, or facility authorized for a specific 
use.


Sec.  101.54  Elements of an allocation order.

    Each allocation order must 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 
Secretary of Health and Human Services. 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;
    (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 the Health Resources Priorities and Allocations System 
regulation (45 CFR part 101, subpart A), which is part of the 
Federal Priorities and Allocations System; and

    (e) A current copy of the Health Resources Priorities and 
Allocations System regulation (subpart A of this part).


Sec.  101.55  Mandatory acceptance of an allocation order.

    (a) Except as otherwise specified in this section (see paragraph 
(c) of this section), a person shall accept and comply with every 
allocation order received.
    (b) A person shall not discriminate against an allocation order in 
any manner such as by charging higher prices for materials, services, 
or facilities covered by the order or by imposing terms and conditions 
for contracts and orders involving allocated materials, services, or 
facilities that differ from the person's terms and conditions for 
contracts and orders for the materials, services, or facilities prior 
to receiving the allocation order.
    (c) If a person is unable to comply fully with the required 
action(s) specified in an allocation order, the person must notify the 
Secretary, as specified in Sec.  101.93, immediately, explain the 
extent to which compliance is possible, and give the reasons why full 
compliance is not possible. If notification is given verbally, written 
or electronic confirmation must be provided within five (5) working 
days. 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 Health and Human Services that the order has been 
changed or cancelled.


Sec.  101.56  Changes or cancellations of an allocation order.

    An allocation order may be changed or canceled by an official 
action of the Department of Health and Human Services.

Subpart F--Official Actions


Sec.  101.60  General provisions.

    (a) HHS may take specific official actions to implement the 
provisions of this subpart.
    (b) These official actions include, but are limited to, Rating 
Authorizations, Directives, and Memoranda of Understanding (See Sec.  
101.20.)


Sec.  101.61  Rating Authorizations.

    (a) A Rating Authorization is an official action granting specific 
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an 
item or service not normally ratable under this part; or
    (2) Authorizes a person to modify a priority rating on a specific 
order or series of contracts or orders.
    (b) To request priority rating authority, see Sec.  101.41.


Sec.  101.62  Directives.

    (a) A Directive is an official action that requires a person to 
take or refrain from taking certain actions in accordance with its 
provisions.
    (b) A person must comply with each Directive issued. However, a 
person may not use or extend a Directive to obtain any items from a 
supplier, unless expressly authorized to do so in the Directive.
    (c) A Priorities Directive takes precedence over all DX-rated 
orders, DO-rated orders, and unrated orders previously or subsequently 
received, unless a contrary instruction appears in the Directive.
    (d) An Allocations Directive takes precedence over all Priorities 
Directives, DX-rated orders, DO-rated orders, and unrated orders 
previously or subsequently received, unless a contrary instruction 
appears in the Directive.


Sec.  101.63  Letters and Memoranda of Understanding.

    (a) A Letter or Memorandum of Understanding is an official action 
that may be issued in resolving special priorities assistance cases to 
reflect an agreement reached by all parties including HHS, the 
Department of Commerce (if applicable), a Delegate Agency (if 
applicable), the supplier, and the customer).
    (b) A Letter or Memorandum of Understanding is not used to alter 
scheduling between rated orders, to authorize the use of priority 
ratings, to

[[Page 42421]]

impose restrictions under this part. Rather, Letters or Memoranda of 
Understanding are used to confirm production or shipping schedules that 
do not require modifications to other rated orders.

Subpart G--Compliance


Sec.  101.70  General provisions.

    (a) HHS may take specific official actions for any reason necessary 
or appropriate to the enforcement or the administration of the Defense 
Production Act and other applicable statutes, this part, or an official 
action. Such actions include Administrative Subpoenas, Demands for 
Information, and Inspection Authorizations.
    (b) Any person who places or receives a rated order or an 
allocation order must comply with the provisions of this part.
    (c) Willful violation of the provisions of title I or section 705 
of the Defense Production Act and other applicable statutes, this part, 
or an official action of the Department of Health and Human Services is 
a criminal act, punishable as provided in the Defense Production Act 
and other applicable statutes, and as set forth in Sec.  101.74.


Sec.  101.71  Audits and investigations.

    (a) Audits and investigations are official examinations of books, 
records, documents, other writings and information to ensure that the 
provisions of the Defense Production Act and other applicable statutes, 
this part, and official actions have been properly followed. An audit 
or investigation may also include interviews and a systems evaluation 
to detect problems or failures in the implementation of this part.
    (b) When undertaking an audit or investigation, HHS shall:
    (1) Define the scope and purpose in the official action given to 
the person under investigation; and
    (2) Have ascertained that the information sought or other adequate 
and authoritative data are not available from any Federal or other 
responsible agency.
    (c) In administering this part, HHS may issue the following 
documents that constitute official actions:
    (1) Administrative Subpoenas. An Administrative Subpoena requires a 
person to appear as a witness before an official designated by HHS to 
testify under oath on matters of which that person has knowledge 
relating to the enforcement or the administration of the Defense 
Production Act and other applicable statutes, this part, or official 
actions. An Administrative Subpoena may also require the production of 
books, papers, records, documents and physical objects or property.
    (2) Demands for Information. A Demand for Information requires a 
person to furnish to a duly authorized representative of HHS any 
information necessary or appropriate to the enforcement or the 
administration of the Defense Production Act and other applicable 
statutes, this part, or official actions.
    (3) Inspection Authorizations. An Inspection Authorization requires 
a person to permit a duly authorized representative of HHS to interview 
the person's employees or agents, to inspect books, records, documents, 
other writings, and information, including electronically-stored 
information, in the person's possession or control at the place where 
that person usually keeps them or otherwise, and to inspect a person's 
property when such interviews and inspections are necessary or 
appropriate to the enforcement or the administration of the Defense 
Production Act and related statutes, this part, or official actions.
    (d) The production of books, records, documents, other writings, 
and information will not be required at any place other than where they 
are usually kept, if, prior to the return date specified in the 
Administrative Subpoena or Demand for Information, a duly authorized 
official of HHS is furnished with copies of such material that are 
certified under oath to be true copies. As an alternative, a duly 
authorized representative of HHS may enter into a stipulation with a 
person as to the content of the material.
    (e) An Administrative Subpoena, Demand for Information, or 
Inspection Authorization, shall include the name, title, or official 
position of the person to be served, the evidence sought to be adduced, 
and its general relevance to the scope and purpose of the audit, 
investigation, or other inquiry. If employees or agents are to be 
interviewed; if books, records, documents, other writings, or 
information are to be produced; or if property is to be inspected; the 
Administrative Subpoena, Demand for Information, or Inspection 
Authorization will describe them with particularity.
    (f) Service of documents shall be made in the following manner:
    (1) Service of a Demand for Information or Inspection Authorization 
shall be made personally, or by Certified Mail-Return Receipt Requested 
at the person's last known address. Service of an Administrative 
Subpoena shall be made personally. Personal service may also be made by 
leaving a copy of the document with someone at least 18 years old at 
the person's last known dwelling or place of business.
    (2) Service upon other than an individual may be made by serving a 
partner, corporate officer, or a managing or general agent authorized 
by appointment or by law to accept service of process. If an agent is 
served, a copy of the document shall be mailed to the person named in 
the document.
    (3) Any individual 18 years of age or over may serve an 
Administrative Subpoena, Demand for Information, or Inspection 
Authorization. When personal service is made, the individual making the 
service shall prepare an affidavit as to the manner in which service 
was made and the identity of the person served, and return the 
affidavit, and in the case of subpoenas, the original document, to the 
issuing officer. In case of failure to make service, the reasons for 
the failure shall be stated on the original document.


Sec.  101.72  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative 
of the Department of Health and Human Services to have access to any 
premises or to the source of information necessary to the 
administration or the enforcement of the Defense Production Act and 
other applicable statutes, this part, or official actions, HHS, through 
its authorized representative may seek compulsory process. Compulsory 
process means the institution of appropriate legal action, including ex 
parte application for an inspection warrant or its equivalent, in any 
forum of appropriate jurisdiction.
    (b) Compulsory process may be sought in advance of an audit, 
investigation, or other inquiry, if, in the judgment of the Secretary 
there is reason to believe that a person will refuse to permit an 
audit, investigation, or other inquiry, or that other circumstances 
exist which make such process desirable or necessary.


Sec.  101.73  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry, 
or at any other time, HHS may inform the person in writing of HHS's 
position regarding that person's non-compliance with the requirements 
of the DPA and other applicable statutes, this part, or an official 
action.
    (b) In cases where HHS determines that failure to comply with the 
provisions of the DPA and other applicable statutes, this part, or an 
official action was inadvertent, the person may be informed in writing 
of the particulars involved and the

[[Page 42422]]

corrective action to be taken. Failure to take corrective action may 
then be construed as a willful violation of DPA and other applicable 
statutes, this part, or an official action.


Sec.  101.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of the DPA, the priorities 
provisions of the Selective Service Act and related statutes (when 
applicable), this part, or an official action, is a crime and upon 
conviction, a person may be punished by fine or imprisonment, or both. 
The maximum penalties provided by the DPA are a $10,000 fine, or one 
year in prison, or both. The maximum penalties provided by the 
Selective Service Act and related statutes are 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 DPA, this part, or an official 
action.
    (c) In order to secure the effective enforcement of the DPA and 
other applicable statutes, this part, and official actions, the 
following are prohibited:
    (1) No person may solicit, influence or permit another person to 
perform any act prohibited by, or to omit any act required by, the DPA 
and other applicable statutes, this part, or an official action.
    (2) No person may conspire or act in concert with any other person 
to perform any act prohibited by, or to omit any act required by, the 
DPA and other applicable statutes, this part, or an official action.
    (3) No person shall deliver any item if the person knows or has 
reason to believe that the item will be accepted, redelivered, held, or 
used in violation of the DPA and other applicable statutes, this part, 
or an official action. In such instances, the person must immediately 
notify HHS that, in accordance with this provision, delivery has not 
been made.


Sec.  101.75  Compliance conflicts.

    If compliance with any provision of the DPA and other applicable 
statutes, this part, or an official action would prevent a person from 
filling a rated order or from complying with another provision of the 
DPA and other applicable statutes, this part, or an official action, 
the person must immediately notify the Secretary, as specified in Sec.  
101.93, for resolution of the conflict.

Subpart H--Adjustments, Exceptions, and Appeals


Sec.  101.80  Adjustments or exceptions.

    (a) A person may submit a request to the Secretary for an 
adjustment or exception on the ground that:
    (1) A provision of this part or an official action results in an 
undue or exceptional hardship on that person not suffered generally by 
others in similar situations and circumstances; or
    (2) The consequences of following a provision of this part or an 
official action are contrary to the intent of the DPA and other 
applicable statutes, or this part.
    (b) Each request for adjustment or exception must be in writing and 
contain a complete statement of all the facts and circumstances related 
to the provision of this part or official action from which adjustment 
is sought and a full and precise statement of the reasons why relief 
should be provided.
    (c) The submission of a request for adjustment or exception shall 
not relieve any person from the obligation of complying with the 
provision of this part or official action in question while the request 
is being considered unless such interim relief is granted in writing by 
the Secretary or the Secretary's designated representative.
    (d) A decision of the Secretary or the Secretary's designated 
representative under this section may be appealed to the Secretary (For 
information on the appeal procedure, see Sec.  101.81.)


Sec.  101.81  Appeals.

    (a) Any person whose request for adjustment or exception was denied 
by the Secretary or the Secretary's designated representative under 
Section. 94a.80, may appeal to the Secretary who, through the 
Secretary's designated representative, shall review and reconsider the 
denial.
    (b)(1) Except as provided in paragraph (b)(2) of this section, an 
appeal must be received by the Secretary no later than 45 days after 
receipt of a written notice of denial. After this 45 day period, an 
appeal may be accepted at the discretion of the Secretary.
    (2) For requests for adjustment or exception involving rated orders 
placed for the purpose of emergency preparedness (see Sec.  101.33(e)), 
an appeal must be received by the Secretary, no later than 15 days 
after receipt of a written notice of denial. Contract performance under 
the order shall not be stayed pending resolution of the appeal.
    (c) Each appeal must be in writing and contain a complete statement 
of all the facts and circumstances related to the action appealed from 
and a full and precise statement of the reasons the decision should be 
modified or reversed.
    (d) In addition to the written materials submitted in support of an 
appeal, an appellant may request, in writing, an opportunity for an 
informal hearing. This request may be granted or denied at the 
discretion of the Secretary or the Secretary's designated 
representative.
    (e) When a hearing is granted, the Secretary may designate an HHS 
employee to act as the Secretary's representative and hearing officer 
to conduct the hearing and to prepare a report. The hearing officer 
shall determine all procedural questions and impose such time or other 
limitations deemed reasonable. In the event that the hearing officer 
decides that a printed transcript is necessary, all expenses shall be 
borne by the appellant.
    (f) When determining an appeal, the Secretary may consider all 
information submitted during the appeal as well as any recommendations, 
reports, or other relevant information and documents available to HHS 
or consult with any other persons or groups.
    (g) The submission of an appeal under this section shall not 
relieve any person from the obligation of complying with the provision 
of this part or official action in question while the appeal is being 
considered unless such relief is granted in writing by the Secretary.

 Subpart I--Miscellaneous Provisions


Sec.  101.90  Protection against claims.

    A person shall not be held liable for damages or penalties for any 
act or failure to act resulting directly or indirectly from compliance 
with any provision of this part, or an official action, notwithstanding 
that such provision or action shall subsequently be declared invalid by 
judicial or other competent authority.


Sec.  101.91  Records and reports.

    (a) Persons are required to make and preserve for at least three 
years, accurate and complete records of any transaction covered by this 
part or an official action.
    (b) Records must be maintained in sufficient detail to permit the 
determination, upon examination, of whether each transaction complies 
with the provisions of this part or any official action. However, this 
part does not specify any particular method or system to be used.
    (c) Records required to be maintained by this part must be made 
available for examination on demand by duly authorized representatives 
of HHS as provided in Sec.  101.71.

[[Page 42423]]

    (d) In addition, persons must develop, maintain, and submit any 
other records and reports to HHS that may be required for the 
administration of the DPA and other applicable statutes, and this part.
    (e) DPA Section 705(d), as implemented by E.O. 13603, provides that 
information obtained under this section which the Secretary deems 
confidential, or with reference to which a request for confidential 
treatment is made by the person furnishing such information, shall not 
be published or disclosed unless the Secretary determines that the 
withholding of this information is contrary to the interest of the 
national defense. Information required to be submitted to HHS in 
connection with the enforcement or administration of the DPA, this 
part, or an official action, is deemed to be confidential under DPA 
Section 705(d) and shall be handled in accordance with applicable 
Federal law.


Sec.  101.92  Applicability of this part and official actions.

    (a) This part and all official actions, unless specifically stated 
otherwise, apply to transactions in any state, territory, or possession 
of the United States and the District of Columbia.
    (b) This part and all official actions apply not only to deliveries 
to other persons but also include deliveries to affiliates and 
subsidiaries of a person and deliveries from one branch, division, or 
section of a single entity to another branch, division, or section 
under common ownership or control.
    (c) This part and its schedules shall not be construed to affect 
any administrative actions taken by HHS, or any outstanding contracts 
or orders placed pursuant to any of the regulations, orders, schedules 
or delegations of authority previously issued by HHS pursuant to 
authority granted to HHS, by the President under the DPA and E.O. 
13603. Such actions, contracts, or orders shall continue in full force 
and effect under this part unless modified or terminated by proper 
authority.


Sec.  101.93  Communications.

    All communications concerning this part, including requests for 
copies of the part and explanatory information, requests for guidance 
or clarification, and requests for adjustment or exception shall be 
addressed to the Secretary, U.S. Department of Health and Human 
Services, and Washington, DC.

    Dated: March 3, 2015.
Sylvia M. Burwell,
Secretary.

    Editorial note: This document was received by the Office of the 
Federal Register on July 8, 2015.

[FR Doc. 2015-17047 Filed 7-16-15; 8:45 am]
 BILLING CODE 4150-28-P