[Federal Register Volume 89, Number 28 (Friday, February 9, 2024)]
[Rules and Regulations]
[Pages 9020-9036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01947]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 101

RIN 0908-AA00


Health Resources Priorities and Allocations System (HRPAS)

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

ACTION: Final rule.

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SUMMARY: The Department of Health and Human Services (HHS) is issuing a 
final rule establishing standards and

[[Page 9021]]

procedures by which it may require acceptance and priority performance 
of certain contracts or orders to promote the national defense over 
other contracts or orders with respect to health resources. This final 
rule also sets new standards and procedures by which HHS may allocate 
materials, services, and facilities to promote the national defense. 
This rule finalizes the regulations as proposed in the Notice of 
Proposed Rule Making (NPRM) of August 16, 2023, with minor technical 
edits based on comments received.

DATES: This rule is effective March 11, 2024.

FOR FURTHER INFORMATION CONTACT: L. Paige Ezernack, telephone at (202) 
260-0365 or via email at [email protected].

SUPPLEMENTARY INFORMATION: This final rule implements HHS' 
administration of priorities and allocations actions with respect to 
health resources and establishes the Health Resources Priorities and 
Allocations System (HRPAS). The HRPAS covers health resources pursuant 
to the authority under section 101(a) of the Defense Production Act 
(DPA) of 1950 as delegated to the Secretary of HHS (Secretary) by 
Executive Order (E.O.) 13603. On September 26, 2022, the Secretary 
delegated to the Assistant Secretary for Preparedness and Response (the 
ASPR) within the Administration for Strategic Preparedness and Response 
(ASPR), the authority under section 201 of E.O. 13603 to exercise 
priorities authority under section 101 of the DPA. This delegation 
authorized the ASPR, on behalf of the Secretary, to approve DO--[-[M1-
M9] priority rating requests for health resources that promote the 
national defense. This delegation excludes the authority to approve all 
priorities provisions for health resources that require DX--[-[M1-M9] 
priority ratings. The Secretary retains all other authorities delegated 
by the President in E.O. 13603.
    The HRPAS has two principal components: priorities and allocations. 
Under the priorities' component, the Secretary is authorized to place 
priority ratings on contracts or orders for health resources to support 
programs which have been determined by the Department of Defense, 
Department of Energy, or Department of Homeland Security as necessary 
or appropriate to promote the national defense in accordance with 
section 202 of E.O. 13603. Through the HRPAS rule, HHS may also respond 
to requests to place priority ratings on contracts or orders (requiring 
priority performance of contracts or orders) for health resources, as 
specified in the DPA, if the necessity arises. Under the priorities' 
component, certain contracts or orders between the government and 
private parties or between private parties for the production or 
delivery of health resources are required to be prioritized over other 
contracts or orders to facilitate expedited production or delivery in 
promotion of the U.S. national defense. The Secretary retains the 
authority for allocations. Under the allocations' component, materials, 
services, and facilities may be allocated to promote the national 
defense. Such requests must be determined as necessary or appropriate 
to promote the national defense in accordance with section 202 of E.O. 
13603. For both components, the term ``national defense'' is defined in 
section 801(j) of E.O. 13603 as ``programs for military and energy 
production or construction, military or critical infrastructure 
assistance to any foreign nation, homeland security, stockpiling, 
space, and any directly related activity.'' The term also includes 
emergency preparedness activities conducted pursuant to title VI of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(Stafford Act) and critical infrastructure protection and restoration. 
See E.O. 13603, section 801(j). Other authorities delegated to the 
Secretary in E.O. 13603, but not covered by this regulation may be re-
delegated by the Secretary.

I. Background

    HHS published an interim final rule in the Federal Register at 80 
FR 42408 on July 17, 2015, to comply with the Part II--Priorities and 
Allocations, Sec 201(b) of E.O. 13603, dated March 16, 2012, and 
section 101(d) of the DPA, 50 U.S.C. 4511(d), and received no public 
comments. Based on the signficant amount of time between the 
publication of the interim final rule in 2015, HHS published, on August 
16, 2023, a NPRM in the Federal Register at 88 FR 55613 to allow for 
comments based on HHS utilizing DPA authorities and the HRPAS to 
respond to COVID-19 Public Health Emergency (PHE) from 2020 to 2023 and 
the infant formula shortage in 2022.

II. Discussion and Analysis

    HRPAS is a program established in accordance with the DPA and E.O. 
13603 that supports national defense needs (for health resources), 
including emergency preparedness initiatives, by addressing essential 
civilian needs through the placing of priority ratings on contracts and 
orders for items and services or allocating resources, as necessary. 
Although a specific Presidential disaster declaration is not required, 
the ability to prioritize or allocate items or services requires a 
determination be made in accordance with section 202 of E.O. 13603, 
(except as provided in section 201(e) for use of the allocations 
authority) that the program or programs are necessary or appropriate to 
promote national defense, including emergency preparedness. The HRPAS 
outlines several conditions that must be met in order for HHS to 
undertake an allocation order, which include a finding, when necessary, 
under section 101(b) of the DPA that such a material is a scarce and 
critical material essential to the national defense and that the 
requirements of the national defense for such material cannot otherwise 
be met without creating a significant dislocation of the normal 
distribution of such material in the civilian market to such a degree 
as to create appreciable hardship. The President must approve the 
finding, in accordance with section 201(e) of E.O. 13603, before the 
Secretary may use the allocation authority. Under section 702(14) of 
the DPA (50 U.S.C. 4552(14)), the term ``national defense'' includes 
emergency preparedness activities conducted pursuant to the Stafford 
Act, and critical infrastructure protection and restoration. Authority 
for priorities and allocations is specified in the DPA and further 
defined in E.O. 13603, ``National Defense Resources Preparedness,'' 
dated March 16, 2012. E.O. 13603 replaced E.O. 12919 and further 
defined jurisdictional areas and national defense preparedness roles 
and responsibilities for specific agencies. E.O. 13603 did not change 
the intent of the DPA as it applies to HHS' functions in national 
defense, including emergency preparedness.

Jurisdiction

    E.O. 13603 authorizes jurisdictional areas for each agency 
delegated title I authority under the DPA that is involved in national 
defense, including emergency preparedness. HHS has jurisdiction for 
items that fall under the category of health resources which is defined 
in E.O. 13603 as ``drugs, biological products, medical devices, 
materials, facilities, health supplies, services and equipment required 
to diagnose, mitigate, or prevent the impairment of, improve, treat, 
cure, or restore the physical or mental health conditions of the 
population.'' HHS cannot use its DPA authority for items or services 
not in its jurisdiction. Those entities in need of items or services 
that do not fall under the jurisdiction of HHS

[[Page 9022]]

should request priorities assistance from the applicable resource 
department. HHS will direct the requesters to the appropriate resource 
agency if the request comes to HHS. HHS intends to work with other 
resource agencies to address instances where HHS does not have 
jurisdiction--or where jurisdiction may be overlapping or ambiguous--
for items necessary to complete the order. HHS intends to work with the 
other resource agencies to request prioritization of contracts or 
orders for other items or services necessary for use in support of 
programs approved for use by HHS (see next section).

HRPAS Approved Programs

    On November 2, 2023, the Department of Homeland Security approved 
four programs to be eligible for priorities and allocations support in 
accordance with Section 202 of Executive Order 13603. These programs 
are listed in Appendix 1.

III. DPA Priorities and Allocations System Authority

    The Defense Production Act Reauthorization (DPAR) of 2009 required 
that HHS, and all other agencies that previously have been delegated 
priorities and allocations authority under E.O. 13603, publish 
regulations providing standards and procedures for prioritization of 
contracts and orders and for allocation of materials, services, and 
facilities to promote the national defense under both emergency and 
nonemergency conditions. HHS' regulation, along with regulations 
promulgated by other agencies, are part of the Federal Priorities and 
Allocations System (FPAS).
    On October 1, 2018, Congress amended the DPA through the John S. 
McCain National Defense Authorization Act (Pub. L. 115-232) which 
extended non-permanent provisions through September 30, 2025. Section 
101(d) of the DPA, as amended, directs all agencies to which the 
President has delegated priorities and allocations authority under E.O. 
13603 to publish final rules establishing standards and procedures by 
which that authority will be used to promote the national defense in 
both emergency and non-emergency situations. The DPAR also required all 
such agencies to consult with the heads of other Federal agencies as 
appropriate and to the extent practicable to develop a consistent and 
unified FPAS. This rulemaking is one of several rules published to 
implement section 101 of the DPA. The rules of the agencies with such 
authorities, which are the Departments of Commerce, Energy, 
Transportation, Health and Human Services, Homeland Security, Defense, 
and Agriculture, comprise the FPAS. HHS is publishing this NPRM rule in 
compliance with section 101(d) of the DPA. HHS' HRPAS provisions are 
consistent with the FPAS regulations issued by other agencies to the 
extent practicable.
    The HRPAS, as part of the FPAS, has two principal components: 
priorities and allocations. Under the priorities component, contracts 
and orders between the government and private parties or between 
private parties for the production or delivery of health resources are 
required to be given priority over other contracts to facilitate 
expedited production and delivery in promotion of the U.S. national 
defense. Under the allocations component, materials, services, and 
facilities may be allocated to promote the national defense. For both 
components, the term ``national defense'' is defined broadly and 
includes emergency preparedness activities conducted pursuant to title 
VI of the Stafford Act and critical infrastructure protection and 
restoration priorities authorities. Priorities, allocations, and other 
authorities delegated to the Secretary in E.O. 13603, but not covered 
by this regulation may be re-delegated by the Secretary. The Secretary 
delegated the authority for DO priority ratings to the ASPR. The 
Secretary retains the authority for DX priority ratings and for 
allocations.

IV. Summary of Significant Changes From the 2015 Interim Final Rule to 
the 2023 NPRM

    a. HHS' interim final rule had a 60-day comment period that ended 
on September 15, 2015. HHS received no comments on the interim Final 
Rule. HHS has made minor revisions to its interim final rule based on 
the use of these authorities to response to the COVID-19 PHE, the 
infant formula shortage, and deliberations with interagency partners. 
These changes were reflected in the NPRM (88 FR 55613: 08/16/2023).
    (1) Section 101.1, Purpose, was revised to add livestock resources, 
veterinary resources, and plant health resources.
    (2) Section 101.20, Definitions, was revised to include a new 
definition of priority rating and program identification symbol and add 
a definition of ``working day.''
    (3) Section 101.30, Delegation of Authority, was revised to include 
the delegation of DO priority rating authority of the DPA, and section 
201 of E.O. 13603, from the Secretary of HHS to the Assistant Secretary 
for Preparedness and Response (the ASPR).
    (4) Section 101.63, Letters and Memoranda of Understanding was 
revised to delete references to Memoranda.
    b. Analysis of Other Technical Edits: Several editorial changes 
were made to the rule and are summarized below.

(1) Placement of Rated Orders

    (a) Section 101.33. The acceptance and rejection times for rated 
orders are revised. The preamble section of the interim final rule was 
inconsistent with the provisions in Sec. Sec.  101.32 and 101.33 with 
respect to the time limits for acceptance and rejection of rated 
orders. Most rated orders will continue to require acceptance or 
rejection within 10 or 15 working days depending on the type of rating. 
Rated orders placed in support of emergency preparedness requirements 
may require acceptance or rejection within a shorter timeframe that is 
specified in the rated order. The minimum times for acceptance or 
rejection that such orders may specify are six business (6) hours for 
emergencies that have occurred, or 12 business hours if needed to 
prepare for an imminent hazard. Also, ``time limit in'' has been 
changed to ``minimum times,'' which is the correct terminology.
    (b) Section 101.33(d)(2). Customer notification requirements 
require persons who have accepted a rated order to give notice if 
performance will be delayed. The time limit to provide written 
confirmation of a verbal notice is five (working) days; the time limit 
is revised to one (1) working day to provide written confirmation of a 
verbal notice. HHS believes that the nature of rated orders supporting 
national defense requirements justifies expeditious communications and 
that once a verbal notice of delayed performance has been given, 
putting that notice into writing should not take more than one working 
day.

(2) Allocation Actions

    Sections 101.51 and 101.51(a) are revised to conform with language 
in the other FPAS regulations and comply with the requirement in 
section 101(d)(2) of the DPA for the regulations to be consistent and 
unified.
    Section 101.53 is revised 101.53 to change ``is requiring'' to ``as 
established.'' The rationale for this change is that ``is requiring'' 
implies that the allocations process is a constant obligation.

[[Page 9023]]

(3) Elements of an Allocation Order

    (a). Section 101.54(c) is revised to include a new element to be 
included in an allocation order that gives constructive notice through 
publication in the Federal Register.

(4) Official Actions

    (a) Section 101.63. ``Memorandums of Understanding'' (MOUs) are 
universally known in the Federal Government as an agreement between 
agencies/parties, sometimes completed under the Economy Act, and the 
use of MOUs in implementing priorities authorities could cause 
confusion. Therefore, the terms ``Memorandum of Understanding'' or 
``Memoranda of Understanding'' in Sec.  101.63 and other sections in 
the interim rule are deleted.
(b) Section 101.1 Purpose
    Section 101.1 revises the sentence regarding guidance and 
procedures for use of DPA authorities to include livestock, veterinary 
resources, plant health resources, and all forms of energy. In 
addition, HHS deleted reference to 32 CFR part 555, referring to 
priorities and allocations for water resources.
(c) Section 101.3 Program Eligibility
    Section 101.3 is revised to delete ``deployment and sustainment of 
military forces,'' to track with section 702(14) of the DPA.
(d) Section 101.20 Definitions
    (1) Revise definition of ``National defense'' to delete ``health'' 
and add ``energy'' to track definition of ``national defense'' in 
section 702(14) of the DPA.
    (2) Delete sentence stating, ``Natural resources such as oil and 
gas,'' from the definition of ``Materials.''
    (3) Revise the definition of ``person.''
    (4) Revise the definition of ``priority rating.''
    (5) Add a definition for ``Working day.''
e. Section 101.30 Delegations of Authority
    Revised to change ``priority rating activities'' to ``priorities 
authorities'' to track E.O. 13603.
f. Section 101.31 Priority Ratings
    (1) Paragraph (a)(1), Levels of priority is revised to change 
``Federal'' to ``Health Resources'' because agency regulations 
establish priority levels.
g. Section 101.32 Elements of a Rated Order
    (2) Paragraph (d)(2)(i). The preamble discussion of Sec.  101.33 is 
revised to correct the 2-day time frame for acceptance or rejection of 
rated orders for emergency preparedness to be consistent with 
Sec. Sec.  101.32 and 101.33.
h. Section 101.33 Acceptance and Rejection of Rated Orders
    Paragraph (e). The discussion of Sec.  101.33 of the preamble of 
the interim final rule is inconsistent with the 2-working daytime frame 
for acceptance or rejection of rated orders in Sec.  101.33. The 
preamble is revised to correct this inconsistency.
i. Section 101.37 Use of Rated Orders
    (1) Paragraph (a)(4) ``Facilities needed to produce rated orders, 
and'' is deleted because ``facilities'' are considered an industrial 
resource and not eligible for priorities and allocations under the HHS-
administered HRPAS regulation.
j. Section 101.38 Limitations on Placing Rated Orders
    (1) Paragraph (b)(1). Revising paragraph (b)(1) to insert 
``livestock resources, veterinary resources, and plant health 
resources,'' to track E.O. 13603.
    (2) Paragraph (b)(2). Revising paragraph (b)(2) to add ``All forms 
of energy'' in lieu of ``Energy supplies,'' to track E.O. 13603.
    (3) Paragraph (b)(5). (3) Paragraph (b)(5). Adding a paragraph 
clarifying Department of Commerce's resource jurisdiction over 
``industrial resources.''
    (4) Paragraph (b)(6). Changing former paragraph (b)(5) (now 
paragraph (b)(6)) to clarify that HRPAS priorities and allocations 
authority may not be applied to communication services as the 
``resource judication.''
k. Section 101.40 General Provisions
    Paragraph (a). Revised the introductory sentence of paragraph (a). 
The rationale for this change is once a rating is authorized, in most 
instances, no further action is required by HHS.
l. Section 101.60 General Provisions
    Paragraph (b). Revising paragraph (b) to replace ``Memoranda'' of 
Understanding with ``Letters.''
m. Section 101.62 Directives
    Paragraph (d). Deleting paragraph (d) relating to an Allocation 
Directive, as it was deleted in the Department of Commerce's final 
rule.
n. Section 101.63 Letters and Memoranda of Understanding
    Revising Sec.  101.63 to delete ``and Memoranda'' in paragraphs (a) 
and (b).
o. Section 101.74 Violations, Penalties, and Remedies
    Paragraph (a). Deleted language specific to the Selective Service 
Act and related statutes because HHS has not been delegated authority 
under the Selective Service Act, and the sentence, as well as the 
reference to the Selective Service Act earlier in this paragraph, have 
been deleted.
p. Appendix 1 includes four approved programs that are eligible for 
priorities and allocations support in accordance with Section 202 of 
Executive Order 13603. These programs are listed in Appendix 1.

V. Summary of Public Comments to the HRPAS NPRM

    Based on the signficant amount of time since the publication of the 
interim final rule in 2015, HHS published, on August 16, 2023, a NPRM 
in the Federal Register (88 FR 55613) to allow for comments based on 
HHS utilizing DPA and HRPAS authorities in response to COVID-19 and the 
infant formula shortage in 2022. The comment period for the NPRM closed 
on September 15, 2023. During the 30-day comment period, HHS received 
two comments on the HRPAS NPRM. One comment, from a private citizen, 
was generally supportive of the regulation and primarily requested 
clarification and identified minor technical errors that have been 
addressed in this final rule. The second comment was from a coalition 
advocating on behalf of their stakeholders. This second comment was not 
specific to the HRPAS or DPA authorities and no edits were required to 
the HRPAS final rule.
    HHS considered all comments received on the NPRM and, based on the 
comments received, HHS has made minor technical changes from the NPRM 
(88 FR 55613) to include the following revisions in this final rule:
     In IV of the Preamble, Sec.  101.54(e) is revised to 
reference Sec.  101.54(c)
     In IV of the Preamble, ``State, local, or Tribal 
governments'' is revised to reference ``State, Local, Tribal, or 
Territorial governments.''
     In IV of the Preamble, ``commodities of products'' is 
revised to read ``commodities or products'' and Sec.  101.20 was 
revised, consistent with this change.
     Section 101.32(a)(4) is revised to reference Sec.  
101.32(a)(4)(a) and (b).
     Section 101.33(c) is revised to reference Sec.  
101.32(a)(4)(b).
     Section 101.37(d)(1)(ii) is revised to reference Sec.  
101.32(a)(4).

[[Page 9024]]

     Section 101.43 is revised to delete reference to ``the 
Department of Commerce for industrial resources.''

VI. Regulatory Analysis

A. Review Under E.O. 12866, E.O. 13563, and E.O. 14094

    (1) Executive Orders 12866 (``Regulatory Planning and Review''), 
13563 (``Improving Regulation and Regulatory Review''), and 14094 
(``Modernizing Regulatory Review) direct agencies to assess the costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Under E.O. 12866, 
``significant'' regulatory actions are subject to review by OMB. E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
E.O. 14094 amends section 3(f) of Executive Order 12866 (Regulatory 
Planning and Review). This final rule has been drafted and reviewed in 
accordance with these Executive Orders. This rule has been designated a 
``significant regulatory action'' by the Office of Management and 
Budget's (OMB) Office of Information and Regulatory Affairs, under 
section 3(f) of E.O. 12866.
    (2) This final rule adopts the interim final rule (IFR) that 
established standards and procedures by which HHS may require certain 
contracts or orders that promote the national defense be given priority 
over other contracts or orders and setting new standards and procedures 
by which HHS may allocate materials, services, and facilities to 
promote the national defense under emergency and non-emergency 
conditions pursuant to section 101 of the DPA of 1950, as amended. 
Accordingly, relative to a post-IFR baseline, this final rule has 
limited economic impact.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. HHS reviewed 
this final rule under the provisions of the Regulatory Flexibility Act 
and has determined that this rulemaking, if promulgated, will not have 
a significant impact on a substantial number of small entities.
(1) Number of Small Entities
    (a) Small entities include small businesses, small organizations, 
and small governmental jurisdictions. For purposes of assessing the 
impacts of this final rule on small entities, a small business, as 
described in the Small Business Administration's Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes (January 2022 Edition), has a maximum 
annual revenue of $33.5 million and a maximum of 1,500 employees (for 
some business categories, these numbers are lower). A small 
governmental jurisdiction is a government of a city, town, school 
district or special district with a population of less than 50,000. A 
small organization is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    (b) This rulemaking sets criteria under which HHS (or agencies to 
which HHS delegates HHS' DPA authority to issue rated orders) will 
authorize prioritization of certain contracts or orders for health 
resources as well as criteria under which HHS will issue orders 
allocating materials, services, and facilities. Because the rulemaking 
affects specific commercial transactions, HHS believes that small non-
profit organizations and small governmental jurisdictions are unlikely 
to be directly affected by this rulemaking.
    (c) Prior to the COVID-19 PHE, HHS had minimally exercised its 
prioritization authority for contracts and orders and had not exercised 
its allocation authorities. To date, HHS has exercised title I 
priorities authorities approximately 70 times in responding to the 
COVID-19 PHE to prioritize contracts thus ensuring rapid industrial 
mobilization for critical health resources (e.g., N95 facemasks, 
vaccines, therapeutics, and diagnostics) to meet urgent emergency 
preparedness and response requirements. In response to the initial wave 
of the COVID-19 pandemic, HHS leveraged its allocations authority, in 
conjunction with a DX rated order, to re-distribute N-95 facemasks that 
were seized by the U.S. Customs and Border Protection. Several health 
resource materials have been identified as essential in responding to 
the COVID-19 pandemic and these items, such as personal protective 
equipment (PPE), ventilators, medical countermeasures, and ancillary 
supplies are in high demand. Therefore, a priority rating was necessary 
to provide the quantities of these health resources within a specified 
timeframe to respond to the COVID-19 pandemic. Additionally, in 
response to the infant formula shortage, HHS issued three priority 
rated orders to help ensure timely delivery of key ingredients to 
infant formula manufacturers.
(2) Impact
    (a) The final rule has two principal components: prioritization and 
allocation. Under prioritization, HHS, or its Delegate Agency, 
designates certain orders as one of two possible priority levels. Once 
so designated, such orders are referred to as ``rated orders.'' The 
recipient of a rated order must give it priority over an unrated order 
or an order with a lower priority rating as necessary to meet the 
delivery requirement of the rated order. A recipient of a rated order 
must place orders at the same priority level with suppliers and 
subcontractors for supplies and services necessary to fulfill the 
recipient's rated order. The suppliers and subcontractors must treat 
the request from the rated order recipient as a rated order with the 
same priority level as the original rated order. The rulemaking does 
not require recipients to fulfill rated orders if the price or terms of 
sale are not consistent with the price or terms of sale of similar non-
rated orders. The rulemaking provides protection against claims for 
actions taken in, or inactions required for, compliance with the 
rulemaking.
    (b) Although rated orders could require a firm to fill one order 
prior to filling another, they will not necessarily require a reduction 
in the total volume of orders. The regulations also do not require the 
recipient of a rated order to reduce prices or provide rated orders 
with more favorable terms than a similar non-rated order. Under these 
circumstances, the economic effects on the rated order recipient of 
substituting one order for another are likely to be mutually 
offsetting, resulting in no net economic impact.
    (c) Allocations could be used to control the general distribution 
of materials or services in the civilian market. Specific allocation 
actions that HHS might take are as follows:
    1. Set-aside: an official action that requires a person to reserve 
materials, services, or facilities capacity in anticipation of receipt 
of rated orders.
    2. Directive: an official action that requires a person to take or 
refrain from taking certain actions in accordance with its provisions. 
A directive can require a person to stop or reduce production of an 
item; prohibit the use of selected materials, services, or

[[Page 9025]]

facilities; or divert the use of materials, services, or facilities 
from one purpose to another.
    3. Allotment: an official action that specifies the maximum 
quantity of a material, service, or facility authorized for a specific 
use to promote the national defense.
    (d) In response to the COVID-19 PHE, HHS leveraged its allocations 
authority, in conjunction with a DX rated order to re-distribute N-95 
facemasks that were seized by the U.S. Customs and Border Protection. 
As required by section 101(a)(2) of the DPA and by section 201(a)(3) of 
E.O. 13603, HHS may implement allocations only if the materials, 
services, and facilities are deemed necessary or appropriate to promote 
the national defense. ``National defense'' covers programs for military 
and energy production or construction, military or critical 
infrastructure assistance to any foreign nation, homeland security, 
stockpiling, space, and any related activity. Such terms include 
emergency preparedness activities conducted pursuant to title VI of the 
Stafford Act and critical infrastructure protection and restoration.
    (e) Any allocation actions taken by HHS must assure that small 
business concerns shall be accorded, to the extent practicable, a fair 
share of the materials or services covered by the allocation action, in 
proportion to the share received by small business concerns under 
normal conditions, giving such special consideration as may be possible 
to emerging business concerns. 50 U.S.C. 4551(e).
Conclusion
    (f) Although HHS cannot precisely determine the number of small 
entities that will be affected by this rulemaking, HHS believes that 
the overall impact on such entities will not be significant. In most 
instances, rated contracts or orders will be fulfilled in addition to 
other (unrated) contracts or orders and, in some instances might 
actually increase the total amount of business of the firm that 
receives a rated contract or order.
    (g) Because allocations can be imposed only after a finding 
required under section 101(b) of the DPA, and approved by the President 
in accordance with section 201(e) of E.O. 13603, that such material is 
a scarce and critical material essential to the national defense and 
that the requirements of the national defense for such material cannot 
otherwise be met without creating a significant dislocation of the 
normal distribution of such material in the civilian market to such a 
degree as to create appreciable hardship, and because HHS has only used 
its allocations authority one time in response to the initial wave of 
COVID-19, one can expect allocations will be ordered only in rare and 
unique circumstances. Any allocation actions would also have to comply 
with section 701(e) of DPA (50 U.S.C. 4551(e)), which provides that 
small business concerns be accorded, to the extent practicable, a fair 
share of the material, including services, in proportion to the share 
received by such business concerns under normal conditions, giving such 
special consideration as may be possible to emerging business concerns.
    Therefore, HHS believes that the requirement for a finding under 
section 101(b) of the DPA, and approved by the President in accordance 
with section 201(e) of E.O. 13603, that such a material is a scarce and 
critical material essential to the national defense and that the 
requirements of the national defense for such material cannot otherwise 
be met without creating a significant dislocation of the normal 
distribution of such material in the civilian market to such a degree 
as to create appreciable hardship and the provisions of section 701 of 
the DPA indicate that any impact on small business will not be 
significant.
    (h) For the reasons set forth above, the Secretary of HHS certifies 
that this final rule will not have a significant economic impact on a 
substantial number of small entities.

C. Review Under the Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing 
for public comment a summary of the collection of information and a 
brief description of the need for and proposed use of the information.
    A Federal agency may not conduct or sponsor a collection of 
information unless it is approved by OMB under the PRA, and it displays 
a currently valid OMB control number. The public is also not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. In addition, notwithstanding any 
other provisions of law, no person will be subject to penalty for 
failing to comply with a collection of information if the collection of 
information does not display a currently valid OMB control number (44 
U.S.C. 3512).
    In accordance with the PRA, the Department has submitted one new 
Information Collection Request (ICR) to OMB in concert with the 
publishing of this final rule.

D. Review Under E.O. 13132

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

E. Review Under Unfunded Mandates Reform Act

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

F. Approval of the Office of the Secretary

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

List of Subjects in 45 CFR Part 101

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


0
For the reasons stated in the preamble, HHS is revising part 101 of 
title 45 of the Code of Federal Regulations as follows:

[[Page 9026]]

PART 101--HEALTH RESOURCES PRIORITIES AND ALLOCATIONS SYSTEM 
(HRPAS)

Sec.
Subpart A--General
101.1 Purpose.
101.2 Priorities and allocations authority.
101.3 Program eligibility.
Subpart B--Definitions
101.20 Definitions.
Subpart C--Placement of Rated Orders
101.30 Delegations of authority.
101.31 Priority ratings.
101.32 Elements of a rated order.
101.33 Acceptance and rejection of rated orders.
101.34 Preferential scheduling.
101.35 Extension of priority ratings.
101.36 Changes or cancellations of priority ratings and rated 
orders.
101.37 Use of rated orders.
101.38 Limitations on placing rated orders.
Subpart D--Special Priorities Assistance
101.40 General provisions.
101.41 Requests for priority rating authority.
101.42 Examples of assistance.
101.43 Criteria for assistance.
101.44 Instances where assistance may not be provided.
Subpart E--Allocation Actions
101.50 Policy.
101.51 General procedures.
101.52 Controlling the general distribution of a material in the 
civilian market.
101.53 Types of allocation orders.
101.54 Elements of an allocation order.
101.55 Mandatory acceptance of an allocation order.
101.56 Changes or cancellations of an allocation order.
Subpart F--Official Actions
101.60 General provisions.
101.61 Rating Authorizations.
101.62 Directives.
101.63 Letters of Understanding.
Subpart G--Compliance
101.70 General provisions.
101.71 Audits and investigations.
101.72 Compulsory process.
101.73 Notification of failure to comply.
101.74 Violations, penalties, and remedies.
101.75 Compliance conflicts.
Subpart H--Adjustments, Exceptions, and Appeals
101.80 Adjustments or exceptions.
101.81 Appeals.
Subpart I--Miscellaneous Provisions
101.90 Protection against claims.
101.91 Records and reports.
101.92 Applicability of this part and official actions.
101.93 Communications.
Appendix 1 to Part 101

    Authority: Defense Production Act of 1950, as amended (50 U.S.C. 
4501, et seq.), and Executive Order 13603 (77 FR 16651, 3 CFR, March 
16, 2012).

Subpart A--General


Sec.  101.1  Purpose.

    This part provides guidance and procedures for use of Defense 
Production Act (DPA) of 1950 section 101 priorities and allocations 
authority with respect to health resources necessary or appropriate to 
promote the national defense. The guidance and procedures in this part 
are consistent with the guidance and procedures provided in other 
regulations that form the Federal Priorities and Allocations System 
(FPAS). Guidance and procedures for use of the DPA priorities and 
allocations authority with respect to other types of resources are 
provided for: food resources, food resource facilities, livestock 
resources, veterinary resources, plant health resources, and the 
domestic distribution of farm equipment and commercial fertilizer in 7 
CFR part 789; all forms of energy in 10 CFR part 217; all forms of 
civil transportation in 49 CFR part 33; and all other materials, 
services, and facilities, including construction materials in 15 CFR 
part 700.


Sec.  101.2  Priorities and allocations authority.

    (a) Section 201 of Executive Order (E.O.) 13603, delegates the 
President's priorities and allocations authority under section 101 of 
the DPA. Section 101 of the DPA provides the President with authority 
to require acceptance and priority performance of contracts and orders 
(other than contracts of employment) to promote the national defense 
over performance of any other contracts or orders, and to allocate 
materials, services, and facilities as deemed necessary or appropriate 
to promote the national defense to a number of agencies. Section 201 of 
E.O. 13603 delegates the President's authority to specific agencies as 
follows:
    (1) The Secretary of Agriculture with respect to food resources, 
food resource facilities, livestock resources, veterinary resources, 
plant health resources, and the domestic distribution of farm equipment 
and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to 
health resources;
    (4) The Secretary of Transportation with respect to all forms of 
civil transportation;
    (5) The Secretary of Defense with respect to water resources; and
    (6) The Secretary of Commerce for all other materials, services, 
and facilities, including construction materials.
    (b) Section 202 of E.O. 13603 states that the authority delegated 
in section 201, except as provided in section 201(e) of E.O. 13603, may 
be used only to support programs that have been determined in writing 
as necessary or appropriate to promote the national defense:
    (1) By the Secretary of Defense with respect to military production 
and construction, military assistance to foreign nations, military use 
of civil transportation, stockpiles managed by the Department of 
Defense, space, and directly related activities.
    (2) By the Secretary of Energy with respect to energy production 
and construction, distribution, and use, and directly related 
activities; and
    (3) By the Secretary of Homeland Security with respect to all other 
national defense programs, including civil defense and continuity of 
Government.
    (c) Section 201(e) of E.O. 13603 provides that each department that 
is delegated allocations authority under section 201(a) of E.O. 13603 
may use this authority with respect to control of the general 
distribution of any material (including applicable services) in the 
civilian market only after:
    (1) Making the finding required under section 101(b) of the DPA; 
and
    (2) The finding has been approved by the President.


Sec.  101.3  Program eligibility.

    Certain programs to promote the national defense are approved for 
priorities and allocations support. These include programs for military 
and energy production or construction, military or critical 
infrastructure assistance to any foreign nation, homeland security, 
stockpiling, space, and any directly related activity. Other eligible 
programs include emergency preparedness activities conducted pursuant 
to title VI of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.), and critical infrastructure 
protection and restoration.

Subpart B--Definitions


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

[[Page 9027]]

appropriate to promote the national defense.
    Allotment means an official action that specifies the maximum 
quantity or use of a material, service, or facility authorized for a 
specific use to promote the national defense.
    Approved program means a program determined by the Secretary of 
Defense, the Secretary of Energy, or the Secretary of Homeland Security 
to be necessary or appropriate to promote the national defense, under 
the authority of the Defense Production Act and in accordance with 
section 202 of E.O. 13603.
    Construction means the erection, addition, extension, or alteration 
of any building, structure, or project, using materials or products 
which are to be an integral and permanent part of the building, 
structure, or project. Construction does not include maintenance and 
repair.
    Critical infrastructure means any systems and assets, whether 
physical or cyber-based, so vital to the United States that the 
degradation or destruction of such systems and assets would have a 
debilitating impact on national security, including, but not limited 
to, national economic security and national public health or safety.
    Defense Production Act or DPA means the Defense Production Act of 
1950, as amended (50 U.S.C. 4501 et seq.).
    Delegate agency means a Federal Government agency authorized by 
delegation from the Department of Health and Human Services (HHS) to 
place priority ratings on contracts or orders needed to support 
approved programs.
    Directive means an official action that requires a person to take 
or refrain from taking certain actions in accordance with its 
provisions.
    Emergency preparedness means all those activities and measures 
designed or undertaken to prepare for or minimize the effects of a 
hazard upon the civilian population, to deal with the immediate 
emergency conditions which would be created by the hazard, and to 
effectuate emergency repairs to, or the emergency restoration of, vital 
utilities and facilities destroyed or damaged by the hazard. 
``Emergency Preparedness'' includes the following:
    (1) Measures to be undertaken in preparation for anticipated 
hazards (including the establishment of appropriate organizations, 
operational plans, and supporting agreements, the recruitment and 
training of personnel, the conduct of research, the procurement and 
stockpiling of necessary materials and supplies, the provision of 
suitable warning systems, the construction or preparation of shelters, 
shelter areas, and control centers, and, when appropriate, the 
nonmilitary evacuation of the civilian population).
    (2) Measures to be undertaken during a hazard (including the 
enforcement of passive defense regulations prescribed by duly 
established military or civil authorities, the evacuation of personnel 
to shelter areas, the control of traffic and panic, and the control and 
use of lighting and civil communications).
    (3) Measures to be undertaken following a hazard (including 
activities for firefighting; rescue; emergency medical, health and 
sanitation services; monitoring for specific dangers of special 
weapons; unexploded bomb reconnaissance; essential debris clearance; 
emergency welfare measures; and immediately essential emergency repair 
or restoration of damaged vital facilities).
    Facilities includes all types of buildings, structures, or other 
improvements to real property (but excluding farms, churches or other 
places of worship, and private dwelling houses), and services relating 
to the use of any such building, structure, or other improvement.
    Farm equipment means equipment, machinery, and repair parts 
manufactured for use on farms in connection with the production or 
preparation for market use of food resources.
    Fertilizer means any product or combination of products that 
contain one or more of the elements nitrogen, phosphorous, and 
potassium for use as a plant nutrient.
    Food resources means all commodities and products, (simple, mixed, 
or compound), or complements to such commodities or products, that are 
capable of being ingested by other human beings or animals, 
irrespective of other uses to which such commodities or products may be 
put, at all stages of processing from the raw commodity to the products 
thereof in vendible form for human or animal consumption. ``Food 
resources'' also means potable water packaged in commercially 
marketable containers, all starches, sugars, vegetable and animal or 
marine fats and oils, seed, cotton, hemp, and flax fiber, but does not 
mean any such material after it loses its identity as an agricultural 
commodity or agriculture product.
    Food resource facilities means plants, machinery, vehicles 
(including on farm), and other facilities required for the production, 
processing, distribution, and storage (including cold storage) of food 
resources, and for the domestic distribution of farm equipment and 
fertilizer (excluding transportation thereof).
    Hazard means an emergency or disaster resulting from:
    (1) A natural disaster; or
    (2) An accidental or man-caused event.
    Health resources means drugs, biological products, medical devices, 
materials, facilities, health supplies, services and equipment required 
to diagnose, mitigate, or prevent the impairment of, improve, treat, 
cure, or restore the physical or mental health conditions of the 
population.
    Homeland Security includes efforts--
    (1) To prevent terrorist attacks within the United States;
    (2) To reduce the vulnerability of the United States to terrorism;
    (3) To minimize damage from a terrorist attack in the United 
States; and
    (4) To recover from a terrorist attack in the United States.
    Industrial resource means all materials, services, and facilities, 
including construction materials, the authority for which has not been 
delegated to other agencies under E.O. 13603. The term ``Industrial 
resource'' does not include food resources, food resource facilities, 
livestock resources, veterinary resources, and the domestic 
distribution of farm equipment and commercial fertilizer; all forms of 
energy; health resources; all forms of civil transportation; and water 
resources.
    Item means any raw, in process, or manufactured material, article, 
commodity, supply, equipment, component, accessory, part, assembly, or 
product of any kind, technical information, process, or service.
    Maintenance and Repair and/or Operating Supplies (MRO) includes the 
following--
    (1) ``Maintenance'' is the upkeep necessary to continue any plant, 
facility, or equipment in working condition;
    (2) ``Repair'' is the restoration of any plant, facility, or 
equipment to working condition when it has been rendered unsafe or 
unfit for service by wear and tear, damage, or failure of parts;
    (3) ``Operating Supplies'' are any resources carried as operating 
supplies according to a person's established accounting practice. 
``Operating Supplies'' may include hand tools and expendable tools, 
jigs, dies, fixtures used on production equipment, lubricants, 
cleaners, chemicals, and other expendable items; and
    (4) MRO does not include items produced or obtained for sale to 
other persons or for installation upon or attachment to the property of 
another

[[Page 9028]]

person, or items required for the production of such items; items 
needed for the replacement of any plant, facility, or equipment; or 
items for the improvement of any plant, facility, or equipment by 
replacing items which are still in working condition with items of a 
new or different kind, quality, or design.
    Materials includes--
    (1) Any raw materials (including minerals, metals, and advanced 
processed materials), commodities, articles, components (including 
critical components), products, and items of supply; and
    (2) Any technical information or services ancillary to the use of 
any such materials, commodities, articles, components, products, or 
items.
    National defense means programs for military and energy production 
or construction, military or critical infrastructure assistance to any 
foreign nation, homeland security, stockpiling, space, and any directly 
related activity. Such term includes emergency preparedness activities 
conducted pursuant to title VI of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5121, et seq.) and 
critical infrastructure protection and restoration.
    Official action means an action taken by HHS under the authority of 
the DPA, E.O. 13603, and this part or another regulation under the 
FPAS. Such actions include the issuance of Rating Authorizations, 
Directives, Set Asides, Allotments, Letters of Understanding, and 
Demands for Information, Inspection Authorizations, and Administrative 
Subpoenas.
    Person includes any individual, corporation, partnership, 
association, or any other organized group of persons, or legal 
successor or representative thereof; or any State or local government 
or agency thereof; and for purposes of administration of this part, 
includes the Federal Government and any authorized foreign government 
or international organization or agency thereof, delegated authority as 
provided in this part.
    Priority rating is an identifying code assigned by HHS, a Delegate 
Agency or authorized person placed on all rated orders for health 
resources and consisting of the rating symbol and program 
identification symbol.
    Program Identification Symbols is an abbreviation used to indicate 
which approved program is supported by a rated order.
    Rated order means a prime contract, a subcontract, or a purchase 
order in support of an approved program issued in accordance with the 
provisions of this part.
    Resource department means any agency delegated priorities and 
allocations authority as specified in Sec.  101.2.
    Secretary means the Secretary of HHS.
    Services includes any effort that is needed for or incidental to--
    (1) The development, production, processing, distribution, 
delivery, or use of a health resource.
    (2) The construction of facilities.
    (3) Other national defense programs and activities.
    Set-aside means an official action that requires a person to 
reserve materials, services, or facilities capacity in anticipation of 
the receipt of rated orders.
    Stafford Act means title VI (Emergency Preparedness) of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act, as amended 
(42 U.S.C. 5121 et seq.).
    Water resources means all usable water, from all sources, within 
the jurisdiction of the United States, that can be managed, controlled, 
and allocated to meet emergency requirements, except ``water 
resources'' do not include usable water that qualifies as ``food 
resources''.
    Working day means any day that the recipient of an order is open 
for business.

Subpart C--Placement of Rated Orders


Sec.  101.30  Delegations of authority.

    (a) The priorities and allocations authorities of the President 
under section 101 of the DPA with respect to health resources have been 
delegated to the Secretary under E.O. 13603. The Secretary may re-
delegate the Secretary's priorities authorities under the DPA to 
authorize a Delegate Agency to assign priority ratings to orders for 
health resources needed for use in approved programs.
    (b) Pursuant to 87 FR 58363 published in the Federal Register on 
September 26, 2022, the Secretary delegated to the Assistant Secretary 
for Preparedness and Response (the ASPR) within the Administration for 
Strategic Preparedness and Response (ASPR), the authority under section 
201 of E.O. 13603 to exercise priorities authority under section 101 of 
the DPA. This delegation authorized the ASPR, on behalf of the 
Secretary, to approve DO--[-[M1-M9] priority rating requests for health 
resources that promote the national defense, though this delegation 
excludes the authority to approve all priorities provisions for health 
resources that require DX--[-[M1-M9] priority ratings.


Sec.  101.31  Priority ratings.

    (a) Levels of priority. (1) There are two levels of priority 
established by the HRPAS, identified by the rating symbols ``DO'' and 
``DX''.
    (2) All DO rated orders have equal priority with each other and 
take precedence over unrated orders. All DX rated orders have equal 
priority with each other and take precedence over DO rated orders and 
unrated orders. (For resolution of conflicts among rated orders of 
equal priority, see Sec.  101.34(c).
    (3) In addition, a Directive regarding priority treatment for a 
given item issued by HHS for that item takes precedence over any DX 
rated order, DO rated order, or unrated order, as stipulated in the 
Directive. (For a full discussion of Directives, see Sec.  101.62.)
    (b) Priority ratings. A priority rating is an identifying code 
assigned by a Delegate Agency or authorized person placed on all rated 
orders for health resources. It consists of the rating symbol and the 
program identification symbol.


Sec.  101.32  Elements of a rated order.

    (a) Each rated order must include:
    (1) The appropriate priority rating (e.g., DO-[M1-M9 or DX--[-[M1-
M9];
    (2) A required delivery date or dates. The words ``immediately'' or 
``as soon as possible'' do not constitute a delivery date. A 
``requirements contract,'' ``basic ordering agreement,'' ``prime vendor 
contract,'' or similar procurement document bearing a priority rating 
may contain no specific delivery date or dates and may provide for the 
furnishing of items or service from 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;
    (3) The written signature on a manually placed order, or the 
digital signature or name on an electronically placed order, of an 
individual authorized to sign rated orders for the person placing the 
order. The signature or use of the name certifies that the rated order 
is authorized under this part and that the requirements of this part 
are being followed; and
    (4) A statement that reads in substance:
    (b) This is a rated order certified for national defense use, and 
you are required to follow all the provisions of the Health Resources 
Priorities and Allocations System regulation at 45 CFR part 101.

[[Page 9029]]

    (c) Additional element required for certain emergency preparedness 
rated orders. If the rated order is placed in support of emergency 
preparedness requirements and expedited action is necessary and 
appropriate to meet these requirements, the following statement must be 
included in the order: ``This rated order is placed for the purpose of 
emergency preparedness. It must be accepted or rejected within [Insert 
a time limit no less than the minimum applicable time limit specified 
in Sec.  101. 33(e)].''


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 health resources:
    (1) A person shall not accept a rated order for delivery on a 
specific date if unable to fill the order by that date. However, the 
person must inform the customer of the earliest date on which delivery 
can be made and offer to accept the order on the basis of that date. 
Scheduling conflicts with previously accepted lower rated or unrated 
orders are not sufficient reason for rejection under this section.
    (2) A person shall not accept a DO rated order for delivery on a 
date which would interfere with delivery of any previously accepted DO 
or DX rated orders. However, the person must offer to accept the order 
based on the earliest delivery date otherwise possible.
    (3) A person shall not accept a DX rated order for delivery on a 
date which would interfere with delivery of any previously accepted DX 
rated orders but must offer to accept the order based on the earliest 
delivery date otherwise possible.
    (4) If a person is unable to fill all of the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders which can be 
filled, and reject the other orders. For example, a person must accept 
order A requiring delivery on December 15 before accepting order B 
requiring delivery on December 31. However, the person must offer to 
accept the rejected orders based on the earliest delivery dates 
otherwise possible.
    (c) Optional rejection. Unless otherwise directed by HHS for a 
rated order involving health resources, rated orders may be rejected in 
any of the following cases as long as a supplier does not discriminate 
among customers:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
capable of being performed;
    (3) If the order is for an item or service produced, acquired, or 
provided only for the supplier's own use for which no orders have been 
filled for two years prior to the date of receipt of the rated order. 
If, however, a supplier has sold some of these items or provided 
similar services, the supplier is obligated to accept rated orders up 
to that quantity or portion of production or service, whichever is 
greater, sold or provided within the past two years;
    (4) If the person placing the rated order, other than the U.S. 
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated 
order would violate any other regulation, official action, or order of 
the HHS issued under the authority of the DPA or another relevant 
statute.
    (d) Customer notification requirements. (1) Except as provided in 
paragraph (e) of this section, a person must accept or reject a rated 
order in writing or electronically within fifteen (15) working days 
after receipt of a 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 (hard copy) or electronic confirmation must be provided within 
one (1) working day of the verbal notice.
    (e) Exception for emergency response conditions. If the rated order 
is placed for the purpose of emergency preparedness, and expedited 
action is necessary or appropriate to meet these requirements and the 
order includes the statement as set forth in Sec.  101.32(a)(4)(b), a 
person must accept or reject a rated order and transmit the acceptance 
or rejection in writing or in an electronic format within the time 
frame specified in the rated order (usually within two working days 
after receipt of the order). The minimum times for acceptance or 
rejection that such orders may specify are six (6) hours after receipt 
if the order is issued by an authorized person in response to a hazard 
that has occurred; or twelve (12) hours after receipt if the order is 
issued by an authorized person to prepare for an imminent hazard.


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. However, if business 
operations cannot be altered to meet both the June 2 and July 15 
delivery dates, then the DX rated order must be given priority over the 
DO rated order.)
    (c)(1) If a person finds that delivery or performance against any 
accepted rated orders conflicts with the delivery or performance 
against other accepted rated orders of equal priority status, the 
person shall give precedence to the conflicting orders in the sequence 
in which they are to be delivered or performed (not to the receipt 
dates). If the conflicting orders are scheduled to be delivered or 
performed on the same day, the person shall give precedence to those 
orders that have the earliest receipt dates.
    (2) If a person is unable to resolve rated order delivery or 
performance conflicts under this section, the person should promptly 
seek special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44. If the person's customer objects to the rescheduling of 
delivery

[[Page 9030]]

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 HHS.
    (b) The priority rating must be included on each successive order 
placed to obtain items or services needed to fill a customer's rated 
order. This continues from contractor to subcontractor to supplier 
throughout the entire procurement chain.


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 person who placed the rated order 
(including a Delegate Agency).
    (b) If an unrated order is amended to make it a rated order, or a 
DO rating is changed to a DX rating, the supplier must give the 
appropriate preferential treatment to the order as of the date the 
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a 
supplier's original production or delivery schedule shall constitute a 
new rated order as of the date of its receipt. The supplier must accept 
or reject the amended order according to the provisions of 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 
(prior to the start of production); or a change which is agreed upon 
between the supplier and the customer.
    (e) If a person no longer needs items or services to fill a rated 
order, any rated orders placed with suppliers for the items or 
services, or the priority rating on those orders, must be canceled.
    (f) When a priority rating is added to an unrated order, or is 
changed or canceled, all suppliers must be promptly notified in 
writing.


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;
    (4) MRO needed to produce the finished items to fill rated orders.
    (b) A person may use a rated order to replace inventoried items 
(including finished items) if such items were used to fill rated 
orders, as follows:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (2) A DO rating symbol and the program identification symbol 
indicated on the customer's rated order must be used on the order. A DX 
rating may not be used even if the inventory was used to fill a DX 
rated order.
    (3) If the priority ratings on rated orders from one customer or 
several customers contain different program identification symbols, the 
rated orders may be combined.
    (c) A person may combine DX and DO rated orders from one customer 
or several customers if the items or services covered by each level of 
priority are identified separately and clearly.
    (d) Combining rated and unrated orders.
    (1) A person may combine rated and unrated order quantities on one 
purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec.  
101.32, are included on the order with the statement required in Sec.  
101.32(a)(4) modified to read in substance: ``This purchase order 
contains rated order quantities certified for national defense use, and 
you are required to follow all applicable provisions of the Health 
Resources Priorities and Allocations System regulations at 45 CFR part 
101 only as it pertains to the rated quantities''.
    (2) A supplier must accept or reject the rated portion of the 
purchase order as provided in 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 pursuant to this part unless the person in receipt of the 
rated order has been explicitly authorized to do so by HHS or a 
Delegate Agency or is otherwise permitted to do so by this part.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item or services than needed, except 
to obtain a minimum procurable quantity. Separate rated orders may not 
be placed solely for the purpose of obtaining minimum procurable 
quantities on each order;
    (iii) Items or services in advance of the receipt of a rated order, 
except as specifically authorized by HHS (see 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

[[Page 9031]]

construction project covered by a rated order; or
    (B) Production or construction equipment or items to be used for 
the manufacture of production equipment. [For information on requesting 
priority rating authority, see Sec.  101.41.]
    (C) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons unless such development or production has been authorized by 
the President or the Secretary of Defense. This provision does not 
however prohibit the use of the priority and allocations authority to 
acquire or produce qualified countermeasures that are necessary to 
treat, identify, or prevent harm from any biological or chemical agent 
that may pose a public health threat affecting national security.
    (b) Jurisdictional limitations. Unless authorized by the resource 
agency with jurisdiction, the provisions of this part are not 
applicable to the following resources:
    (1) Food resources, food resource facilities, livestock resources, 
veterinary resources, plant health resources, and the domestic 
distribution of farm equipment and commercial fertilizer (Resource 
agency with jurisdiction--Department of Agriculture);
    (2) All forms of energy (Resource agency with jurisdiction--
Department of Energy);
    (3) All forms of civil transportation (Resource agency with 
jurisdiction--Department of Transportation);
    (4) Water resources (Resource agency with jurisdiction--Department 
of Defense/U.S. Army Corps of Engineers);
    (5) All materials, services, and facilities, including construction 
materials (industrial resources) for which the authority has not been 
delegated to other agencies under E.O. 13603 (Resource agency with 
jurisdiction--Department of Commerce);
    (6) The priorities and allocations authority of this part may not 
be applied to communications services (Resource agency with 
jurisdiction--National Communications System under E.O. 13618 of July 
6, 2012).

Subpart D--Special Priorities Assistance


Sec.  101.40  General provisions.

    (a) Once a priority rating has been authorized pursuant to this 
part, further action by HHS is generally not needed. However, from 
time-to-time, production or delivery problems will arise in connection 
with rated orders for health resources as covered under this part. In 
this event, a person should immediately contact ASPR for guidance, as 
specified in Sec.  101.93. ASPR serves as the lead policy office for 
emergency preparedness and response operations on behalf of HHS and 
manages the Department's delegated DPA authorities. If ASPR is unable 
to resolve the problem or to authorize the use of a priority rating and 
believes additional assistance is warranted, ASPR may forward the 
request to another agency with resource jurisdiction, such as the 
Department of Commerce, as appropriate, for action. Special priorities 
assistance is provided to alleviate problems that do arise.
    (b) Special priorities assistance is available for any reason 
consistent with this part. Generally, special priorities assistance is 
provided to expedite deliveries, resolve delivery conflicts, place 
rated orders, locate suppliers, or to verify information supplied by 
customers and vendors. Special priorities assistance may also be used 
to request rating authority for items that are not normally eligible 
for priority treatment.


Sec.  101.41  Requests for priority rating authority.

    (a) Rating authority for items or services not normally rated. If a 
rated order is likely to be delayed because a person is unable to 
obtain items or services not normally rated under this part, the person 
may request the authority to use a priority rating in ordering the 
needed items or services.
    (b) Rating authority for production or construction equipment. (1) 
A request for priority rating authority for production or construction 
equipment must be submitted to the U.S. Department of Commerce on Form 
BIS-999.
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment, a rated order may 
be used either to purchase or to lease such equipment. However, in the 
latter case, the equipment may be leased only from a person engaged in 
the business of leasing such equipment or from a person willing to 
lease rather than sell.
    (c) Rating authority in advance of a rated prime contract. (1) In 
certain cases, and upon specific request HHS may authorize a person to 
place a priority rating on an order to a supplier in advance of the 
issuance of a rated prime contract. In these instances, the person 
requesting advance-rating authority must obtain sponsorship of the 
request from HHS or the appropriate Delegate Agency. The person shall 
also assume any business risk associated with the placing of rated 
orders in the event the rated prime contract is not issued.
    (2) The person must state the following in the request: It is 
understood that the authorization of a priority rating in advance of 
our receiving a rated prime contract from the Department of Health and 
Human Services (HHS) and our use of that priority rating with our 
suppliers in no way commits HHS or any other government agency to enter 
into a contract or order or to expend funds. Further, we understand 
that the Federal Government shall not be liable for any cancellation 
charges, termination costs, or other damages that may accrue if a rated 
prime contract is not eventually placed and, as a result, we must 
subsequently cancel orders placed with the use of the priority rating 
authorized as a result of this request.
    (3) In reviewing requests for rating authority in advance of a 
rated prime contract, HHS will consider, among other things, the 
following criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time;
    (v) The time period for which the rating is being requested;
    (4) HHS may require periodic reports on the use of the rating 
authority granted under paragraph (c) of this section.
    (5) If a rated prime contract is not issued, the person shall 
promptly notify all suppliers who have received rated orders pursuant 
to the advanced rating authority that the priority rating on those 
orders is cancelled.


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

[[Page 9032]]

    (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 Delegate Agency to affect a meaningful resolution to the 
problem, and must establish that:
    (a) There is an urgent need for the item; and
    (b) The applicant has made a reasonable effort to resolve the 
problem.


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


Sec.  101.51  General procedures.

    Before the Department of Health and Human Services uses its 
allocations authority to address a supply problem within its resource 
jurisdiction, it will develop a plan that includes:
    (a) A copy of the written determination made in accordance with 
section 202 of Executive Order 13603, that the program or programs that 
would be supported by the allocation action are necessary or 
appropriate to promote the national defense.
    (b) A detailed description of the situation to include any unusual 
events or circumstances that have created the requirement for an 
allocation action;
    (c) A statement of the specific objective(s) of the allocation 
action;
    (d) A list of the materials, services, or facilities to be 
allocated;
    (e) A list of the sources of the materials, services, or facilities 
that will be subject to the allocation action;
    (f) A detailed description of the provisions that will be included 
in the allocation orders, including the type(s) of allocation orders, 
the percentages or quantity of capacity or output to be allocated for 
each purpose, and the duration of the allocation action (i.e., 
anticipated start and end dates);
    (g) An evaluation of the impact of the proposed allocation action 
on the civilian market; and
    (h) Proposed actions, if any, to mitigate disruptions to civilian 
market operations.


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

    No allocation action taken by HHS may be used to control the 
general distribution of a material in the civilian market, unless the 
Secretary has:
    (a) Made a written finding that:
    (1) Such material is a scarce and critical material essential to 
the national defense, and
    (2) The requirements of the national defense for such material 
cannot otherwise be met without creating a significant dislocation of 
the normal distribution of such material in the civilian market to such 
a degree as to create appreciable hardship;
    (b) Submitted the finding for the President's approval through the 
Assistant to the President and National Security Advisor and the 
Assistant to the President for Homeland Security and Counterterrorism; 
and
    (c) The President has approved the finding.


Sec.  101.53  Types of allocation orders.

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


Sec.  101.54  Elements of an allocation order.

    Allocation orders may be issued directly to the affected persons or 
by constructive notice through publication in the Federal Register. 
This section describes the elements that each order must include.
    (a) Each allocation order must include:
    (1) A detailed description of the required allocation action(s), 
including its relationship to any received DX rated orders, DO rated 
orders, and unrated orders;
    (2) Specific start and end calendar dates for each required 
allocation action;
    (3) The written signature on a manually placed order or the digital 
signature on an electronically placed order of the Secretary of HHS.
    (b)(1) Elements to be included in orders issued directly to 
affected persons:
    (2) A statement that reads in substance: ``This is an allocation 
order certified for national defense use. [Insert the name of the 
person receiving the order] is required to comply with this order, in 
accordance with the provisions of the Health Resources Priorities and 
Allocations System regulation (45 CFR part 101);
    (c)(1) Elements to be included in an allocation order that gives 
constructive notice through publication in the Federal Register:
    (2) A statement that reads in substance: ``This is an allocation 
order certified for national defense use. [Insert the name(s) of the 
person(s) to whom the order applies or a description of the class of 
persons to whom the order applies] is (are) required to comply with 
this order, in accordance with the provisions of the Health Resources 
Priorities and Allocations System regulation (45 CFR part 101).


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.

[[Page 9033]]

    (b) A person shall not discriminate against an allocation order in 
any manner such as by charging higher prices for materials, services, 
or facilities covered by the order or by imposing terms and conditions 
for contracts and orders involving allocated materials, services, or 
facilities that differ from the person's terms and conditions for 
contracts and orders for the materials, services, or facilities prior 
to receiving the allocation order.
    (c) If a person is unable to comply fully with the required 
action(s) specified in an allocation order, the person must notify the 
ASPR, as specified in 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, then written or 
electronic confirmation must be provided within one (1) working day. 
Such notification does not release the person from complying with the 
order to the fullest extent possible, until the person is notified by 
HHS that the order has been changed or cancelled.


Sec.  101.56  Changes or cancellations of an allocation order.

    An allocation order may be changed or canceled by an official 
action of HHS. Notice of such changes or cancellations may be provided 
directly to persons to whom the order being cancelled or modified 
applies or constructive notice may be provided by publication in the 
Federal Register.

Subpart F--Official Actions


Sec.  101.60  General provisions.

    (a) HHS may take specific official actions to implement the 
provisions of this part.
    (b) These official actions include, but are not limited to, Rating 
Authorizations, Directives, and Letters of Understanding (See 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 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.


Sec.  101.63  Letters of Understanding.

    (a) A Letter of Understanding is an official action that may be 
issued in resolving special priorities assistance cases to reflect an 
agreement reached by all parties including HHS, the Department of 
Commerce (if applicable), a Delegate Agency (if applicable), the 
supplier, and the customer.
    (b) A Letter of Understanding is not used to alter scheduling 
between rated orders, to authorize the use of priority ratings, to 
impose restrictions under this part. Rather, Letters of Understanding 
are used to confirm production or shipping schedules that do not 
require modifications to other rated orders.

Subpart G--Compliance


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 DPA and other applicable statutes, this part, or an official 
action of HHS is a criminal act, punishable as provided in the DPA and 
other applicable statutes, and as set forth in 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 DPA and other applicable statutes, this part, and 
official actions have been properly followed. An audit or investigation 
may also include interviews and a systems evaluation to detect problems 
or failures in the implementation of this part.
    (b) When undertaking an audit or investigation, HHS shall:
    (1) Define the scope and purpose in the official action given to 
the person under investigation; and
    (2) Have ascertained that the information sought, or other adequate 
and authoritative data are not available from any Federal or other 
responsible agency.
    (c) In administering this part, HHS may issue the following 
documents that constitute official actions:
    (1) Administrative Subpoenas. An Administrative Subpoena requires a 
person to appear as a witness before an official designated by HHS to 
testify under oath on matters of which that person has knowledge 
relating to the enforcement or the administration of the DPA and other 
applicable statutes, this part, or official actions. An Administrative 
Subpoena may also require the production of books, papers, records, 
documents and physical objects or property.
    (2) Demands for Information. A Demand for Information requires a 
person to furnish to a duly authorized representative of HHS any 
information necessary or appropriate to the enforcement or the 
administration of the DPA and other applicable statutes, this part, or 
official actions.
    (3) Inspection Authorizations. An Inspection Authorization requires 
a person to permit a duly authorized representative of HHS to interview 
the person's employees or agents, to inspect books, records, documents, 
other writings, and information, including electronically-stored 
information, in the person's possession or control at the place where 
that person usually keeps them or otherwise, and to inspect a person's 
property when such interviews and inspections are necessary or 
appropriate to the enforcement or the administration of the DPA and 
related statutes, this part, or official actions.
    (d) The production of books, records, documents, other writings, 
and information will not be required at any place other than where they 
are usually kept, if, prior to the return date specified in the 
Administrative Subpoena or Demand for Information, a duly authorized 
official of HHS is furnished with copies of such material that are 
certified under oath to be true copies. As an alternative, a duly 
authorized representative of HHS may enter into a stipulation with a 
person as to the content of the material.
    (e) An Administrative Subpoena, Demand for Information, or 
Inspection Authorization shall include the name, title, or official 
position of the person to be served, the evidence sought to be adduced, 
and its general relevance to the scope and purpose of the audit, 
investigation, or other inquiry. If employees or agents are to be 
interviewed; if books, records,

[[Page 9034]]

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


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' 
position regarding that person's non-compliance with the requirements 
of the DPA and other applicable statutes, this part, or an official 
action.
    (b) In cases where HHS determines that failure to comply with the 
provisions of the DPA and other applicable statutes, this part, or an 
official action was inadvertent, the person may be informed in writing 
of the particulars involved and the corrective action to be taken. 
Failure to take corrective action may then be construed as a willful 
violation of the DPA and other applicable statutes, this part, or an 
official action.


Sec.  101.74  Violations, penalties, and remedies.

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


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 HHS, 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 HHS for an adjustment or 
exception on the ground that:
    (1) A provision of this part or an official action results in an 
undue or exceptional hardship on that person not suffered generally by 
others in similar situations and circumstances; or
    (2) The consequences of following a provision of this part or an 
official action are contrary to the intent of the DPA and other 
applicable statutes, or this part.
    (b) Each request for adjustment or exception must be in writing and 
contain a complete statement of all the facts and circumstances related 
to the provision of this part or official action from which adjustment 
is sought and a full and precise statement of the reasons why relief 
should be provided.
    (c) The submission of a request for adjustment or exception shall 
not relieve any person from the obligation of complying with the 
provision of this part or official action in question while the request 
is being considered unless such interim relief is granted in writing by 
the Secretary or the Secretary's designated representative.
    (d) A decision of the Secretary or the Secretary's designated 
representative under this section may be appealed to the Secretary. 
(For information on the appeal procedure, see 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 
Sec.  101.80, may appeal to the Secretary who, through the Secretary's 
designated representative, shall review and reconsider the denial.
    (b)(1) Except as provided in paragraph (b)(2) of this section, an 
appeal must be received by the Secretary no later than 45 business days 
after receipt of a written notice of denial. After this 45-business day 
period, an appeal may be accepted at the discretion of the Secretary.
    (2) For requests for adjustment or exception involving rated orders 
placed for the purpose of emergency

[[Page 9035]]

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

Subpart I--Miscellaneous Provisions


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 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.
    (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 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 Administration for Strategic Preparedness and 
Response, U.S. Department of Health and Human Services, Washington, DC 
20201. Ref: HRPAS, or email [email protected].

Appendix 1 to Part 101

------------------------------------------------------------------------
   Program identification
           symbol               Approved program           Agency
------------------------------------------------------------------------
M1..........................  Emergency Support     Department of Health
                               Function 8 Public     and Human Services.
                               Health and Medical
                               Services.
M2..........................  Strategic National    Department of Health
                               Stockpile.            and Human Services.
M3..........................  Biodefense and        Department of Health
                               Related Medical       and Human Services.
                               Countermeasures.
M4..........................  ASPR Critical         Department of Health
                               Infrastructure        and Human Services.
                               Protection Program.
------------------------------------------------------------------------



[[Page 9036]]

    Dated: January 26, 2024.
Xavier Becerra,
Secretary, U.S. Department of Health, and Human Services.
[FR Doc. 2024-01947 Filed 2-8-24; 8:45 am]
BILLING CODE 4150-37-P