Clarifications and Updates to Defense Priorities and Allocations System Regulation

DEPARTMENT OF COMMERCE <SUBAGY>Bureau of Industry and Security</SUBAGY> <CFR>15 CFR Part 700</CFR> <DEPDOC>[Docket No. 240108-0002]</DEPDOC> <RIN>RIN 0694-AJ15</RIN> <SUBJECT>Clarifications and Updates to Defense Priorities and Allocations System Regulation</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Bureau of Industry and Security, Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This proposed rule would amend the Bureau of Industry and Security's (BIS) Defense Priorities and Allocations System (DPAS) regulation by providing administrative changes to well-established standards and procedures. This proposed rule would: clarify existing standards and procedures by which BIS may provide Special Priorities Assistance (SPA); revise Schedule I to provide transparency and differentiation between other departments' priorities jurisdiction and the Department of Commerce's jurisdiction; and provide technical edits to reflect certain non-substantive updates since the DPAS regulation was last amended in 2014, including providing updated contact information, legal citations, and definitions. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments on this proposed rule must be received by BIS by no later than March 8, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments on this proposed rule may be submitted to the Federal rulemaking portal ( <E T="03">www.regulations.gov</E> ). The <E T="03">regulations.gov</E> ID for this rule is: BIS-2024-0002. Please refer to RIN 0694-AJ15 in all comments. Anyone submitting business confidential information should clearly identify any business confidential portion of a comment at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential version of the submission. For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” Any submissions with file names that do not begin with either a “BC” or a “P” will be assumed to be public and will be made publicly available through <E T="03">https://www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Katie Reid at (202) 482-3634, <E T="03">DPAS@bis.doc.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> This proposed rule would update the priorities and allocations provisions set forth in the Defense Priorities and Allocations System (DPAS) regulation (15 CFR part 700) and implemented by the Department of Commerce (DOC), Bureau of Industry and Security (BIS) consistent with its authorities under Title I of the Defense Production Act of 1950, as amended (50 U.S.C. 4501 <E T="03">et seq.</E> ) (DPA), as delegated by Executive Order 13603 (March 16, 2012). The DPAS has two principal components, priorities and allocations. Under the priorities component, certain contracts between the government and private parties or between private parties for the production or delivery of industrial resources are required to be given priority over other contracts to facilitate expedited delivery in promotion of the U.S. national defense. Under the allocations component, materials, services, and facilities may be allocated to promote the national defense. For both components, the term “national defense” means programs for military and energy production or construction, homeland security, stockpiling, space, emergency preparedness, critical infrastructure protection and restoration, and any directly related activity. The term also includes military and critical infrastructure assistance to any foreign nation. <HD SOURCE="HD1">Section-by-Section Analysis of the Clarifications and Updates That This Proposed Rule Would Make to the Existing DPAS Regulation</HD> The following discussion explains the changes that this proposed rule would make to the existing DPAS regulation. <HD SOURCE="HD2">Subpart A—Purpose</HD> <E T="03">Section 700.1—Purpose of this part.</E> This section would add the legal citation for the DPA and update the legal citation for the Robert T. Stafford Disaster Relief Emergency Assistance Act. This rule would also make minor changes to the language to be consistent with the DPA and Executive Order (E.O.) 13603. <HD SOURCE="HD2">Subpart B—Overview</HD> <E T="03">Section 700.2—Introduction.</E> This section would change reference to “industrial items” to “industrial resources” in paragraph (b) in order to use the term “industrial resources” defined in § 700.8. Paragraph (c) would be revised to highlight that the DOC is also listed as an agency in Schedule I and the reason why. BIS believes that the additional information would provide a more complete description of Schedule I. <E T="03">Section 700.3—Priority ratings and rated orders.</E> This section would add in paragraph (a) references to the rating symbol to conform with the current definition of priority rating in section 700.8 as well as a description of a rating symbol. BIS would make these changes so that paragraph (a) will give a more complete description of a priority rating. It also revises paragraph (d) of this section by changing “items” to “industrial resources” in order to use the term “industrial resources” defined in section 700.8. <HD SOURCE="HD2">Subpart C—Definitions</HD> <E T="03">Section 700.8—Definitions.</E> This section would update the legal citation for the DPA found in the definition of “Defense Production Act.” It would update the legal citation for the Stafford Act found in the definitions of “national defense” and “Stafford Act,” and it would update the legal citation for the Selective Service Act found in the definition of “Selective Service Act.” Both the definition of “approved program” and “priorities authority” are proposed for updates in order to be consistent with the language of the DPA and E.O. 13603. It would also update the definition of “priority rating” to provide clarity that the DOC may assign the priority rating, which is consistent with 15 CFR part 700. It would remove the definition of “item” and update the definition of “industrial resources” to clarify and be consistent with the use of both terms in 15 CFR part 700. This section would include the definitions of “facilities,” “materials,” and “services” to provide clarity and be consistent with the DPA. It would also provide a definition for “determination department” and “resources department” to provide clarity and be consistent with sections 201 and 202 of E.O. 13603 and other priorities and allocations regulations. It would also make non-substantiative changes by adding a comma after “administrative subpoenas” in the definition of official action and a comma after “chemicals” in the definition of “maintenance and repair and/or operating supplies (MRO).” <HD SOURCE="HD2">Subpart D—Industrial Priorities</HD> <E T="03">Section 700.10—Authority.</E> This section would revise the last sentence of paragraph (c)(1), to provide clarity on what the provisions of 15 CFR part 700 are not applicable to by removing “those other items which include”. This change is to be consistent with the use of “item” in 15 CFR part 700. <E T="03">Section 700.11—Priority ratings.</E> This section would make a non-substantive change in paragraph (a)(1) by moving the period inside the quotation. It would also capitalize the word “schedule” in paragraph (b) as this word references Schedule I, a specific part of 15 CFR part 700, which is capitalized throughout 15 CFR part 700. It would also clarify the explanation of what “A7” signifies to be consistent with Schedule I. This section would update paragraph (c) by replacing reference to the “C2” program identification symbol with “A7” in order to refer to the program identification symbol later referenced as an example of a priority rating in this paragraph. <E T="03">Section 700.12—Elements of a rated order.</E> This section would replace the example that refers to a “DX-A4” priority rating, which is not currently in use, with a reference to a “DX-A2” priority rating, which is more commonly used, in paragraph (a)(1). It would also revise paragraph (a)(4) by changing the word “regulations” to “regulation” to be consistent with the use of the word when referencing 15 CFR part 700. <E T="03">Section 700.13—Acceptance and rejection of rated orders.</E> This section would replace the brackets with parentheses in paragraph (c)(5) to be consistent with other sections of 15 CFR part 700. It would add “(1)” in between “one” and “working day” in paragraph (d)(3) to be consistent with other parts of this section. <E T="03">Section 700.14—Preferential scheduling.</E> This section would revise the “Examples” by changing “June 2” to “June 3” so that the fact pattern makes sense. <E T="03">Section 700.15—Extension of priority ratings.</E> This section would revise paragraphs (a), (b), and (c) by changing “items” to “industrial resources” to clarify the type of resource covered by the extension of priority ratings provision. It would also revise paragraph (a) by adding a pinpoint citation to section 700.17 to add clarity as to which section of 15 CFR part 700 is being referenced. This section would insert language in paragraphs (a) and (b) to clarify that all four required elements of a rated order outlined in section 700.12 must be included on each successive order placed to fulfill a rated order. 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