Agriculture Priorities and Allocations System, 29084-29106 [2011-12153]

Agencies

• DEPARTMENT OF AGRICULTURE
• Farm Service Agency

[Federal Register Volume 76, Number 97 (Thursday, May 19, 2011)]
[Proposed Rules]
[Pages 29084-29106]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12153]



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Vol. 76

Thursday,

No. 97

May 19, 2011

Part III





Department of Agriculture





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Farm Service Agency



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7 CFR Part 789



Agriculture Priorities and Allocations System; Proposed Rule

Federal Register / Vol. 76 , No. 97 / Thursday, May 19, 2011 / 
Proposed Rules

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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 789

RIN 0560-AH68


Agriculture Priorities and Allocations System

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: The Farm Service Agency (FSA) is establishing the regulation 
for the Agriculture Priorities and Allocations System (APAS). Food is a 
critical commodity essential to the national defense (including civil 
emergency preparedness and response). To avoid civilian hardship during 
national defense emergencies it may be necessary to regulate the 
production, processing, storage, and wholesale distribution of food. 
Through the APAS rule, the U.S. Department of Agriculture (USDA) will 
respond to requests to place priority ratings on contracts, or orders 
of agriculture commodities up through the wholesale levels for 
agriculture production and equipment, allocate resources, and handle 
food claims as specified in the Defense Production Act (DPA) of 1950, 
as amended, if the necessity arises. FSA needs to implement this rule 
to direct the agriculture commodities and resources to areas of 
hardship or potential hardship due to national emergencies. For 
example, APAS is designed to use the DPA authority to help ensure that 
food is available when and where it is needed most, such as after a 
hurricane or earthquake. In most cases, there is likely to be no 
economic impact in filling priority orders because it would generally 
just be changing the timing in which orders are completed.

DATES: We will consider comments that we receive by July 18, 2011.

ADDRESSES: We invite you to submit comments on this proposed rule and 
the information collection. In your comment, include the Regulation 
Identifier Number (RIN) and volume, date, and page number of this issue 
of the Federal Register. You may submit comments by any of the 
following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Mail: USDA FSA, 1400 Independence Ave., SW., Mail Stop 
0543, Washington, DC 20250-0543.
     Hand Delivery or Courier: Deliver comments to the above 
address.
    Comments may be inspected at the mail address listed above between 
8 a.m. and 4:30 p.m., Monday through Friday, except holidays. A copy of 
this proposed rule is available through the FSA home page at https://www.fsa.usda.gov/.

FOR FURTHER INFORMATION CONTACT: Josh Bornstein, telephone (202) 690-
4770. Persons with disabilities who require alternative means for 
communication (Braille, large print, audiotape, etc.) should contact 
the USDA Target Center at (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Executive Summary

    APAS is a USDA program that supports not only national defense 
needs (such as for combat rations), but also emergency preparedness 
initiatives by addressing essential civilian needs (food and food 
resources) through the placing of priorities on contracts for items and 
services or allocate resources, as necessary. Although a specific 
disaster designation is not required, the ability to prioritize or 
allocate items or services can be triggered by a determination by the 
President or designated entities that this action is necessary and 
essential to promote national defense including the imminent need for 
emergency preparedness. Under DPA (50 U.S.C. App. 2061 to 2170, 2171, 
and 2172), the term ``national defense'' includes emergency 
preparedness, response, and critical infrastructure and key resources 
protection. Authority for priorities and allocations of contracts is 
specified in DPA and further defined in Executive Order 12919, 
``National Defense Industrial Resources Preparedness,'' dated June 3, 
1994.

History of DPA

    DPA was enacted into law as a means to combat military and civilian 
hardships as a result of the Korean War and other Cold War events. 
Until recently, only the Department of Commerce (DOC) implemented 
regulations to use the authority under DPA. The Department of Defense 
and DOC have used DPA authority to timely procure military and 
construction items. Items not under Department of Defense and DOC 
jurisdiction were procured using DPA priority ratings only after 
entering into a memorandum of understanding (MOU) with the Department 
that had jurisdiction over those items. For example, USDA has had MOUs 
with DOC for items under USDA jurisdiction; as a result, enabling DOC 
to establish priority ratings for food and food resources. Recent 
events such as acts of terrorism, hurricane disasters, and severe 
floods and droughts have increased the need for DPA priority ratings, 
requiring USDA to implement the APAS regulations to relieve DOC from 
the implementation responsibility for food and food resources and to 
directly assist other Departments in achieving national defense 
including emergency preparedness initiatives.

Jurisdiction

    Title I of DPA and Executive Order 12919 authorize jurisdictional 
areas for each Department that is involved in national defense 
including emergency preparedness. USDA has jurisdiction for items that 
fall under the categories of:
    (1) Food;
    (2) Food resource facilities; and
    (3) Distribution of farm equipment and commercial fertilizer.
    USDA cannot use its DPA authority for items or services not in its 
jurisdiction. Those persons \1\ in need of items or services that do 
not fall under the jurisdiction of USDA will request priorities or 
allocations assistance from the applicable Department. USDA will direct 
the requesters to the appropriate Department if the request comes into 
USDA.
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    \1\ The word ``person'' as used in this rule refers to the 
requester of the priority rating. A person is an individual, 
corporation, partnership, association, or any other organized group 
of persons, or legal successor or representative thereof, or any 
State or local government or agency thereof, or any Federal agency.
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APAS Process

    If a Federal, State, or local government agency or private industry 
has placed, or wishes to place, a contract for items or services that 
are necessary or appropriate for the promotion of national defense, the 
agencies or private industry can request authorization from USDA to 
place a priority rating on the contract for the items or services. This 
process will allow the contractor (department or person requesting the 
priority rating) with the means to meet the requirements of maintaining 
or restoring national defense operations. To request priority 
authorization, the contractor must submit form AD-2102 (Request for 
Special Priorities Assistance) and include a written justification for 
the need to use APAS to establish the priority rating. USDA would only 
use APAS when the items or services required cannot be obtained in a 
timely manner through normal market channels.

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Priorities

    In the priorities component of APAS, certain contracts between the 
government and private parties, or contracts between private parties, 
would be given priority over other contracts to ensure timely delivery 
of items or services needed to support the national defense. Contracts 
for these items may already be in place, but may need to be amended 
(quantity and delivery dates), or new contracts may be required for 
immediate action as a means to support national defense requirements. 
Through APAS, USDA will work with the contracted vendor \2\ to 
establish the new required priority.
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    \2\ The word ``vendor'' as used in this rule refers to the 
vendor, manufacturer, or supplier of the items or services. The 
person requesting an APAS priority rating has or will place a 
contract with the vendor for which the priority rating is requested.
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Allocations

    The second part of APAS is the allocations component. Allocation 
authority will only be used when there is an insufficient supply of an 
item or service to satisfy national defense supply requirements through 
the use of priorities authority or when the use of the priorities 
authority would cause a severe and prolonged disruption in the retail 
market place. Allocation orders would be distributed equitably among 
the suppliers of the resource(s) being allocated and would not require 
any person to relinquish a disproportionate share of the civilian 
market. Under no circumstances would allocations be used to ration 
materials or services at the retail level. No department of the Federal 
government has used its allocation authority in more than 50 years.

APAS Programs Approved for Use by USDA

    USDA has three approved programs for priorities and allocations 
support under section 202(c) of Executive Order 12919. Items or 
services that USDA may establish a priority rating for must fall under 
either of the following programs:
    (1) Food and food resources (civilian): Programs involving food and 
food resources processing and storage in support of emergency 
preparedness activities conducted pursuant to Title VI of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, 42 
U.S.C. 5195-5197h).
    (2) Agriculture and food critical infrastructure protection and 
restoration (civilian): Programs to protect or restore the agriculture 
and food system from terrorist attacks, major disasters, and other 
emergencies.
    (3) Military food rations: Programs to provide the Department of 
Defense with food resources for combat rations.
    For all other requests for items under USDA's jurisdiction that are 
not covered by these three programs, USDA will request concurrence from 
the Secretary of Homeland Security before placing a priority rating on 
the items.

Acceptance and Rejection of a Rated Order

    A contract on which a priority rating has been placed is called a 
``rated order.'' Rated orders require a supplier to fill the order 
before all other unrated orders. DPA provides liability protection to 
suppliers if they breach other unrated contracts in order to fill rated 
orders.
    A vendor must accept a rated order and follow provisions contained 
in the priority rated contract if the vendor normally supplies the 
materials or services covered by the order. A vendor must not 
discriminate against rated orders in any manner such as charging higher 
prices or by imposing different terms and conditions than for 
comparable unrated orders. A person who was in receipt of a rated order 
and did not comply with the provisions of the contract is subject to 
penalties and fines.
    If a vendor is unable to accept the rated order, they must 
immediately notify USDA and the requester (if a USDA agency is not the 
requester). A vendor must not accept a rated order for delivery on a 
specific date if they are unable to fill it by that date or if they are 
unable to fill it because they are in receipt of other rated orders. 
However, the vendor still must offer to accept the order on the 
earliest delivery date otherwise possible.

Appeals

    Appeal rights are available to vendors seeking an adjustment to or 
exception from a rated order due to exceptional hardships or if such 
vendor believes that the order is contrary to the intent of DPA or 
other applicable statutes.

Responsibilities

    APAS responsibilities have been delegated to FSA from the Secretary 
of Agriculture (the Secretary). The Emergency Preparedness Division 
(EPD) implements APAS for FSA. FSA's Deputy Administrator for 
Management is responsible for the initial determination of placing a 
priority rating on a contract. The FSA Administrator is responsible for 
resolving conflicts and hearing appeals on requests for an adjustment 
or exception.

Scope

    APAS covers only those Government and public agencies that have 
national defense, or emergency preparedness, response, and recovery 
responsibilities. This environment strictly limits the participants 
eligible to request assistance through APAS. Also, the vendors that 
supply agriculture related items (food, food resources) and in the 
quantity that is expected to be requested is inherently limited in 
scope. Only a select few are able to produce or deliver the large 
quantities of items that will require priority rating requests through 
APAS. For example, for preparations in advance of Hurricane Ike hitting 
the Texas Coast in 2008, one Federal agency considered requesting 1 
million meals-ready-to-eat. In this example, it is clear that there 
would be limited companies that would be able to quickly supply 1 
million meals-ready-to-eat. This is a representative example of the 
type of needs for which a priority rating would be requested through 
APAS. As a result, this program has a very limited customer base of 
large manufacturers and suppliers as well as those Government and 
public agencies (for example, the Red Cross), having national defense, 
or emergency preparedness, response, and recovery responsibilities.
    Government organizations will request priority ratings through APAS 
to ensure that they are able to obtain critical resources during or in 
anticipation of an emergency to lessen the effects of the hazard on 
civilian populations.
    As an example of how DOC has needed to use DPAS, during the 
aftermath of Hurricane Katrina, after the request was endorsed by the 
Federal Emergency Management Agency (FEMA), DOC authorized a railroad 
to place a priority rated order with Company X for equipment to repair 
the damages to the railroad system supporting commodity movements in 
and around the New Orleans area. This rated order allowed the vendor 
responsible for repairing the railroad infrastructure around the New 
Orleans area to complete repairs in the fastest time possible. This 
allowed the response organizations to quickly receive items in bulk 
quantities needed to support the mass care and housing of those 
displaced by the hurricane and its aftermath. When the railroad placed 
the rated order for equipment, Company X was required to fill the 
railroad's order first, before any other orders, unless Company X had a 
legal basis for rejecting the rated order. In addition, all customers 
currently under contract

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obligations from Company X would not have breach-of-contract cause of 
action against Company X if their orders could not be filled by the 
original agreed-to time due to unplanned delays due to filling the 
rated order.

DPA Priorities and Allocations Authority

    Section 101 of the DPA of 1950 (50 U.S.C. App. 2071) establishes 
the broad authority for the President to require the acceptance and 
priority performance of contracts or 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. This is commonly referred to as ``priorities and allocations'' 
authority. Through Executive Order 12919 the President delegated the 
DPA section 101 priorities and allocations authority to the following 
agency heads:
     The Secretary of Agriculture with respect to food 
resources, food resource facilities, and the domestic distribution of 
farm equipment and commercial fertilizer.
     The Secretary of Energy with respect to all forms of 
energy.
     The Secretary of Health and Human Services with respect to 
health resources.
     The Secretary of Transportation with respect to all forms 
of civil transportation.
     The Secretary of Defense with respect to water resources.
     The Secretary of Commerce for all other materials, 
services, and facilities, including construction materials.
    Since the initial enactment, Congress has continued to reauthorize 
DPA. Most recently, on September 30, 2009, Congress enacted the Defense 
Production Act Reauthorization (DPAR) of 2009 (Pub. L. 111-67). A 
significant difference in this reauthorization was the requirement for 
Departments other than DOC to initiate rulemaking to implement their 
responsibilities under DPA. Specifically, section 101(d) of DPA (50 
U.S.C. App. 2071(d)), as added by DPAR, directs the head of each 
Federal agency to issue final rules that establish standards and 
procedures to use the authority of section 101 to promote the national 
defense under both emergency and nonemergency conditions and, as 
appropriate and to the extent necessary, consult with the heads of 
other Federal agencies to develop a consistent and unified Federal 
Priorities and Allocations System (FPAS).
    FEMA in the Department of Homeland Security (DHS) is responsible 
for coordinating priorities and allocations rulemaking efforts among 
the six Federal agencies that have been delegated DPA section 101 
authority (referred to as ``resource agencies'') to ensure consistency 
and uniformity of rule language and provisions across resource agency 
jurisdictions. Each of the six resource agencies is either revising 
existing priorities and allocations regulations to meet this statutory 
requirement or is in the process of developing and publishing its 
initial regulation. Together, the priorities and allocations system 
regulations of each resource agency will constitute FPAS.
    USDA is working with FEMA and the other Departments to have common 
rules for the implementation of APAS and the other Departments' 
regulations; that common rule language is the basis for this rule. DOC 
published proposed revisions to the DPAS regulations on June 7, 2010 
(75 FR 32122-32140); Energy published the proposed rule for EPAS on 
July 16, 2010 (75 FR 41405-41421); and Transportation published the 
proposed rule for TPAS on February 15, 2011 (76 FR 8675-8699).
    Within USDA, authority to administer APAS has been delegated to the 
FSA Administrator. FSA will manage APAS for all USDA.
    This rule establishes APAS, one-part of the FPAS, to implement 
USDA's administration of its delegated authority under DPA section 101 
and other related statutes such as the priorities provisions of the 
Military Selective Service Act \3\ (50 U.S.C. App. 468) (see Executive 
Order 12742, ``National Security Industrial Responsiveness,'' dated 
Jan. 8, 1991). As explained in further detail below, APAS is consistent 
with the existing Defense Priorities and Allocations System (DPAS) (15 
CFR part 700) implemented by DOC to provide continuity with long-
established priorities system procedures and to make use of a proven 
foundation for a consistent and unified FPAS.\4\
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    \3\ References to the Military Selective Service Act apply to 
those required deliveries to the Government exclusively for the use 
of the armed forces or for the use of the Atomic Energy Commission.
    \4\ DPAS regulations provided the starting point for development 
of the common rule language discussed above.
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    In other words, the APAS regulations are intended to be consistent 
with the DOC regulations through which DPAS has operated for 
approximately 25 years. The only intended differences are those that 
are unique to USDA's requirements. Specific changes were made as needed 
due to the focus on food and food resources versus construction 
materials and other related items or services and to specifically 
include emergency preparedness. For both of those, one specific change 
is in the timing allowed to accept or reject priority orders; a shorter 
time frame is required when dealing with food and food resources for 
civilian hardships due to emergencies. Therefore, instead of having 15 
days, the APAS regulation allows for 6 to 12 hours.

APAS Description

    APAS provides guidance and procedures for use of DPA priorities and 
allocations authority with respect to the resource areas delegated by 
the President to USDA as specified in Executive Order 12919: Food 
resources, food resource facilities, and the domestic distribution of 
farm equipment and commercial fertilizer. As specified in Executive 
Order 12919, section 202, priorities and allocations may be used only 
to support programs that have been determined in writing ``as necessary 
or appropriate to promote the national defense'' by:
    (a) The Secretary of Defense with respect to military production 
and construction, military assistance to foreign nations, stockpiling, 
outer space, and directly related activities;
    (b) The Secretary of Energy with respect to energy production and 
construction, distribution and use, and directly related activities; or
    (c) The Secretary of Homeland Security, with respect to essential 
civilian needs supporting national defense, including civil defense and 
continuity of government and directly related activities.
    Under DPA, the term ``national defense'' specifically includes 
emergency preparedness activities conducted pursuant to Title VI of the 
Stafford Act.\5\ The Stafford Act, in section 602(b) of Title VI, also 
cross-references DPA by stating that ``[t]he terms `national defense' 
and `defense,' as used in [DPA], include emergency preparedness 
activities conducted pursuant to this title.'' (See 42 U.S.C. 
5195a(b).) Emergency preparedness activities include a broad range of 
measures to be taken in preparation for, during, and in response to 
natural

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disasters or accidental or man-caused events (that is, hazards).\6\ For 
APAS, emergency preparedness is expected to be used most for:
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    \5\ The term ``national defense'' is defined in section 702(14) 
of DPA 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. Such term includes emergency preparedness 
activities conducted pursuant to title VI of the [Stafford Act] and 
critical infrastructure protection and restoration.'' See 50 U.S.C. 
App. 2152(14).
    \6\ The term ``emergency preparedness'' is defined in section 
602(a) of the Stafford Act as ``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.'' 
(See 42 U.S.C. 5195a(a).) Section 602(a) also provides a non-
exhaustive list of specific measures that constitute emergency 
preparedness.
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    (1) Preparedness, including actions taken before an event occurs to 
lessen the severity of hardships to civilians,
    (2) Response, including actions taken immediately after the event 
happens, but before any recovery actions are taken, to relieve the 
effects on civilians; and
    (3) Recovery, including actions taken to restore critical 
infrastructure and key resources as close as can be to normal 
operations to approve priority ratings in cases of imminent hazard; 
response includes both the anticipation of the event and the immediate 
response to it.
    USDA expects the requests for priority ratings will predominately 
be from Federal government agencies, and the few State and local 
governments with a responsibility in emergency preparedness. When the 
request is from a private entity, it is expected to be for the purpose 
of fulfilling a government contract.
    As mentioned above, according to Executive Order 12919 the 
priorities and allocations authority of DPA may only be used by the 
Secretary of Agriculture to support programs that have been determined 
in writing as necessary or appropriate to promote the national defense. 
Therefore, to be ready to use the priorities and allocations authority 
for food and food resources, USDA has already coordinated with the 
Secretary of Homeland Security and the Secretary of Defense to approve 
programs that will cover everything for which we expect to need to 
provide priorities and allocations in the near future.
    USDA has two programs that have been approved by the Secretary of 
Homeland Security for priorities and allocations support pursuant to 
section 202(c) of Executive Order 12919:
    (1) Food and food resources (civilian): Programs involving food and 
food resources processing and storage in support of emergency 
preparedness activities conducted pursuant to Title VI of the Stafford 
Act. Such programs involve 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 
that would be created by the hazard, and to make emergency repairs to, 
or the emergency restoration of, vital utilities and food resource 
facilities destroyed or damaged by the hazard.
    (2) Agricultural and food critical infrastructure protection and 
restoration: Programs to protect or restore the agriculture and food 
system from terrorist attacks, major disasters, and other emergencies. 
In Homeland Security Presidential Directive HSPD-9, ``Defense of United 
States Agriculture and Food, ``dated January 30, 2004, such programs 
involve activities and measures to:
     Identify and prioritize critical infrastructure and key 
resources in the agriculture and food system for establishing 
protection requirements;
     Develop awareness and early warning capabilities to 
recognize threats;
     Mitigate vulnerabilities at critical production and 
processing nodes;
     Enhance screening procedures for domestic and imported 
products; and
     Enhance response and recovery procedures.
    These programs support the national defense by providing for 
essential civilian needs to ensure a viable food and agriculture sector 
during an emergency preparedness event or a military conflict. Both 
programs involve emergency preparedness activities and the maintenance 
and restoration of the critical infrastructure and key resources.
    USDA has one program, Food Resources (combat rations), that has 
been approved by the Secretary of Defense for priorities and 
allocations support under section 202(a) of Executive Order 12919. As 
mentioned above, prior to implementation of DPAR, USDA delegated 
implementation authority of the agricultural portion of DPA to DOC. DOC 
in turn delegated authority to the Department of Defense to administer 
a ``priorities'' program for combat rations to meet troop requirements. 
The combat rations program was established by an agreement between DOC 
and USDA, dated January 28, 1991, and approved by FEMA on February 1, 
1991. USDA's current intention is to continue the policy established 
under DOC granting authority to the Department of Defense to administer 
the combat rations program.
    The approved programs are listed in Schedule I of the APAS 
regulation (see Schedule I for a complete list of approved programs).
    Before USDA can exercise its priorities or allocations authority 
for any requirements not covered under the approved programs, as 
specified in section 202 of Executive Order 12919, the Secretaries of 
Defense, Energy, or Homeland Security, as appropriate, would have to 
concur, in writing, with USDA that use of priorities or allocations 
authority by USDA would be necessary or appropriate to promote the 
national defense.
    Commodities covered under the APAS regulation include those items 
required for production of agriculture commodities (including 
fertilizer, agriculture seed and livestock feed), raw and processed 
agriculture products for wholesale distribution, and agriculture 
production equipment.

Priorities and Allocations

    APAS has two principal components: Priorities and allocations.

Priorities

    In the ``priorities'' component of APAS, certain contracts between 
the government and private parties, or contracts between private 
parties, would be required to be given priority over other respective 
contracts to ensure timely delivery of an item needed for an ``approved 
program.'' ``Approved program'' is defined in 7 CFR 789.8 to mean ``a 
program determined by the Secretary of Defense, the Secretary of 
Energy, or the Secretary of Homeland Security to be necessary or 
appropriate to promote the national defense, in accordance with section 
202 of Executive Order 12919.'' As stated above, certain USDA programs 
have been approved by the Secretary of Homeland Security and by the 
Secretary of Defense as necessary or appropriate to promote the 
national defense. Other programs could be approved in the future.

Priority Rating Authority

    During a disaster event that impacts or threatens the national 
defense, Government and private agencies that have a role in emergency 
preparedness may require additional items or materials and delivery of 
these items in a short time span to meet the demands of emergency 
preparedness, response, and recovery efforts. Contracts for these items 
may already be in place, but may need to be altered (quantity and 
delivery dates) to meet national defense including emergency 
preparedness requirements. If no contract is in place to supply 
specific items at a specific time, a new contract may be required to 
obtain these items to meet emergency preparedness requirements. 
Specific

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contracts for emergency preparedness items may require prioritization 
(ranked above non-essential contracts) to allow for timely delivery of 
specific materials to meet the requirements of national defense.
    If a Government or private agency has placed, or wishes to place, a 
contract for an item that is necessary or appropriate for the promotion 
of national defense (including emergency preparedness activities under 
the Stafford Act or the protection or restoration of the agriculture 
and food system), the agency or private entity can request from USDA 
authorization to place a priority rating on the contract for the items 
to provide the contractor with the means to meet the requirements of 
maintaining or restoring national defense operations.
    A contract on which a priority rating has been placed is called a 
``rated order.'' Rated orders require a vendor or supplier to fill the 
order before all other unrated orders. Procedures for the placement of 
rated orders and the effect of rated orders on unrated orders are 
specified in Sec. Sec.  789.10 through 789.18 as described below.
    In addition, APAS priority authority provided by USDA provides the 
vendor or supplier with legal protection from other customers without 
rated orders with respect to timeliness of filling their other unrated 
orders as specified Sec.  789.70, ``Protection Against Claims.''

Example

    If a Federal agency with emergency preparedness authorities placed 
an order with Company X for shelf stable meals in anticipation of or 
response to a hurricane, and Company X told the Federal agency that 
there were 19 other orders to be filled before the Federal agency's 
order, the Federal agency could request from USDA authority to place a 
priority rating on its order with Company X. USDA would then determine 
if the acquisition of shelf stable meals was necessary or appropriate 
to support emergency preparedness activities or promote the national 
defense. (Note: If USDA determines that the item would support a 
program that has not yet been approved by the Secretaries of Defense, 
Energy, or Homeland Security, as appropriate, in accordance with 
section 202 of Executive Order 12919, USDA could not authorize the 
contractor to place a priority rating on its contract unless USDA were 
to receive from the appropriate Secretary (Defense, Energy, or Homeland 
Security) a written determination that the particular program is 
necessary or appropriate to promote the national defense.) If so, USDA 
then would authorize the Federal agency to place a priority rating on 
the order for the item(s). Company X would be required to meet the 
delivery requirements of the Federal agency's rated order, and modify 
production or delivery schedules of any of the other 19 unrated orders 
only when required delivery dates for the rated order cannot otherwise 
be met, unless Company X had a basis for rejecting the rated order as 
specified in Sec.  789.13. Customers 1 through 19 on the list would not 
have a cause of action against Company X for not filling their orders 
by the original agreed-to time, as specified in Sec.  789.70 if the 
rated order was the reason why they could not fulfill other orders by 
the agreed-upon time.

Use of Priority Ratings

    If you (as a vendor) receive a rated order, you must give it 
preferential treatment as required by subpart C, Sec. Sec.  789.10 
through 789.18 (the sections of the regulations are discussed below). 
Generally, this means that you must accept and fill rated orders for 
items that you normally supply and consistent with regularly 
established terms of sale (see Sec.  789.13(a)). Failure to comply with 
the provisions of the rated order may result in legal actions and fines 
against the recipient of the rated order. However, certain grounds for 
mandatory rejection or optional rejection of the rated order may apply 
(see Sec.  789.13(b) and (c)). Rated orders must be accepted or 
rejected within specified time frames (see Sec. Sec.  789.13(d) and 
789.13(e)).
    All rated orders must be scheduled in a manner and to the extent 
possible to ensure timely delivery by the required delivery date 
contained in each order (see Sec.  789.14(a)).
    The existence of previously accepted unrated orders or contracts or 
lower rated orders is not sufficient reason for rejecting a rated 
order. In fact, you (as a supplier or vendor) are required to displace 
or defer lower rated or unrated orders if they conflict with your 
performance against a higher rated order (see Sec.  789.14(b)). When 
you receive multiple rated orders for specific goods or services and 
the orders have the same rating level, you must first place and fill 
those orders that you received first (see Sec.  789.14(c)).
    To ensure that contracts and orders for authorized programs are 
completed in a timely fashion, you (as a supplier or vendor) must 
place, as necessary, a priority rating on all the contracts and orders 
you issue with suppliers for items needed to fill rated orders you have 
received (see Sec.  789.15). This requirement ensures that priority 
treatment will be afforded your orders by your suppliers and from 
vendor to vendor throughout the supply chain. Other requirements apply 
to changes or cancellations of priority ratings and rated orders (see 
Sec.  789.16) and use of rated orders for certain items (see Sec.  
789.17).
    Finally, you may place a priority rating on your contracts or 
orders only if you are in receipt of a rated order or if you have been 
otherwise explicitly authorized to do so by USDA or a delegate agency 
(see Sec.  789.18 for other limitations on placing rated orders).

Example

    If a Federal agency with responsibilities in mass care and feeding 
during an emergency has a need for bread, and its current inventory is 
not sufficient to handle the short term needs of the dependents, nor 
would its existing contracts with vendors be sufficient to resupply its 
inventory in the timeframe that is required. The Federal agency 
requests from USDA authorization to place a priority rating on an order 
for the bread. USDA authorizes the Federal agency to place a priority 
rating on the order for the bread, and the agency places a priority 
rating on an order issued to Company Z, the manufacturer and supplier 
of the bread. Upon receipt of the rated order from the agency, Company 
Z must schedule operations to satisfy the delivery requirements of the 
rated order. Company Z must use the rated order received from the 
Federal agency to place prioritt ratings on contracts with other 
vendors that supply Company Z with items used to process the bread 
(ingredients, packaging materials), as necessary.
    Although packaging materials would fall under the jurisdiction of 
DOC, USDA is working with DOC to establish a delegation of authority 
from DOC to USDA to assign priority ratings to orders for industrial 
resources falling within the priorities authority of DOC that are 
needed for use in USDA programs (see Sec.  789.10). This would allow 
for a rated order placed using authorization from USDA to cross 
multiple jurisdictions and remain valid.

Allocations

    An ``allocation'' is defined in Sec.  789.8 as ``the control of the 
distribution of materials, services, or facilities for a purpose deemed 
necessary or appropriate to promote the national defense.'' As 
specified in the allocations component of the APAS regulation (see 
subpart E, Sec. Sec.  789.30 through 789.37), USDA has the authority to 
allocate specified items to promote the national defense.

[[Page 29089]]

    Allocation authority would be used only when there is insufficient 
supply of a material, service, or facility to satisfy national defense 
supply requirements through the use of 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 (see Sec.  
789.30(a)). Under no circumstances would allocations be used to ration 
materials or services at the retail level (see Sec.  789.30(a)). 
Allocation orders would be distributed equitably among the suppliers of 
the resource(s) being allocated and would not require any person to 
relinquish a disproportionate share of the civilian market (see Sec.  
789.30(b)).
    Additionally, as specified in DPA Sec.  101(b) and section 201(d) 
of Executive Order 12919, USDA may not use an allocation to control the 
general distribution of a material in the civilian market unless:
     The Secretary has made a written finding that such 
material is a scarce and critical material essential to the national 
defense and the requirements of the national defense for such material 
cannot otherwise be met without a significant dislocation of the normal 
distribution of such material in the civilian market to such a degree 
as to create appreciable hardship;
     The Secretary has submitted the finding for the 
President's approval through the Assistant to the President for 
National Security Affairs; and
     The President has approved the finding (see Sec.  789.33).
    DOC has extensive experience using its priorities authority (under 
their DPAS regulation), but has not used its allocation authority in 
more than 50 years. Much like DPAS, APAS is expected to primarily be 
used for prioritizing contracts and to a much lesser extent for making 
allocations. However, USDA is proposing to include allocations in the 
regulation to have the option ready, if needed. The proposed allocation 
standards and procedures provide strong assurance that allocations 
would only be used in situations where the circumstances justify such 
orders.
    For example, dairy operations are brought to a standstill due to a 
detected presence of Foot and Mouth disease. The output of milk 
produced in the United States is curtailed by 80 percent as a result of 
reduced herd numbers in response to the outbreak. Prices for processed 
and unprocessed milk would skyrocket. USDA determines that allocating 
milk commodities to processors or wholesalers is necessary to promote 
the national defense, namely, as an emergency response action under 
Title VI of the Stafford Act (which is an approved program by the 
Secretary of Homeland Security under section 202(c) of Executive Order 
12919). Because allocating this commodity would involve controlling its 
general distribution in the market, USDA then makes the required 
finding as specified in DPA section 101(b) for allocating this food 
commodity and forwards that finding to the President through the 
National Security Advisor. After Presidential concurrence with the 
determination, per Executive Order 12919, USDA may allocate this 
commodity on a pre-determined basis to processors or wholesalers. The 
purpose of this allocation would be to control the distribution of milk 
to ensure civilian hardships are minimized. USDA would allocate 
existing and new milk sources to redistribute milk products in a way 
that ensures previously established priorities for this food product 
(for example, school food programs and nutritional programs for mothers 
and infant children to continue to provide some level of resources for 
those already enrolled in such programs) are met and would continue 
implementing allocation policies until USDA determines that this food 
source shortfall no longer meets the requirements for allocation 
programs.

Section by Section Discussion of Rule

    As stated throughout this document, the APAS regulation was 
developed in consultation with the other relevant Federal departments 
and agencies. The majority of the regulation is based on the 
regulations DOC has used for DPAS for many years. Specific differences 
from DPAS are noted below in the relevant sections.
    The purpose of the APAS regulation, as specified in Sec.  789.1, 
``Purpose,'' states that the regulation provides guidance and 
procedures for use of the DPA priorities and allocations authorities 
delegated by the President to the Secretary of Agriculture as specified 
in Executive Order 12919 with respect to food resources, food resource 
facilities, and the domestic distribution of farm equipment and 
commercial fertilizer.
    Section 789.2, ``Priorities and Allocations Authority,'' summarizes 
the delegations of priorities and allocations authority in Part II of 
Executive Order 12919. In addition to listing the delegations of 
authority to the six resource agencies (described above), Sec.  789.2 
clarifies that the delegated priorities and allocations authority may 
be used only to support programs that have been determined in writing 
as necessary or appropriate to promote the national defense by the 
Secretary of Defense, Energy, or Homeland Security in their respective 
areas of jurisdiction.
    Section 789.3, ``Program Eligibility,'' lists the categories of 
programs eligible for priorities and allocations support, in accordance 
with the definition of ``national defense'' in DPA section 702. 
Programs approved and eligible for priorities and allocation support by 
USDA are contained in Schedule I. Other agencies with priorities and 
allocations authority list their programs eligible for priorities and 
allocation support in their respective regulations.
    Section 789.8, ``Definitions,'' defines terms used in the 
regulation. Most of the definitions are drawn from other sources, which 
are noted below, and used in each agency's priorities and allocations 
regulations for consistency across the agencies, while certain 
definitions are distinct to APAS, as follows:
     DPA section 702 (50 U.S.C. App. 2152)--``critical 
infrastructure;'' ``facilities;'' ``homeland security;'' ``materials;'' 
``national defense;'' and ``services.'' The term ``person'' is drawn 
from DPA section 702, but is expanded to also include any Federal 
agency.
     Section 902 of Executive Order 12919--``civil 
transportation;'' ``energy;'' ``farm equipment;'' ``fertilizer;'' 
``food resources;'' ``food resource facilities;'' ``health resources;'' 
and ``water resources.''
     The current DPAS regulation (15 CFR part 700)--
``allotment'' (with technical modifications); ``approved program'' 
(with technical modifications); ``construction;'' ``delegate agency'' 
(with technical modifications); ``directive;'' ``industrial 
resources;'' ``item;'' ``maintenance and repair and operating supplies 
or MRO;'' ``official action'' (with technical modifications); ``rated 
order'' (with technical modifications); and ``set-aside'' (with 
technical modifications). The technical modifications to the 
definitions were those required to make them applicable for 
agriculture.
     Section 602 of the Stafford Act (42 U.S.C. 5195a)--
``emergency preparedness'' and ``hazard.''
    The ``allocation'' and ``allocation order'' definitions are based 
on language in DPA section 101 that describes the allocation authority 
of the President. ``Defense Production Act'' means the Defense 
Production Act of 1950, as amended (50 U.S.C. App. 2061 to 2170, 2171, 
and 2172). ``Resource agency'' means one of the six Federal departments 
that has been delegated DPA priorities and allocations authority under 
section 201 of Executive Order

[[Page 29090]]

12919. ``Secretary'' means the Secretary of Agriculture. ``Stafford 
Act'' means Title VI of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, as amended (42 U.S.C. 5195-5197h). The 
``feed'' and ``seed'' definitions are consistent with other USDA 
regulations.
    The ``civil transportation'' definition was only changed for plain 
language and as required for the Code of Federal Regulations 
references; there is no intended change from the meaning given in 
Section 902 of Executive Order 12919. The word ``shall,'' which is not 
considered plain language was removed; specifically ``shall not 
include'' was changed to ``does not include'' and ``shall include'' was 
changed to ``includes.'' In addition, the word ``herein'' was replaced 
with the phrase ``in this part'' to use the correct reference for text 
in the Code of Federal Regulations.
    Section 789.10, ``Delegations of Authority,'' describes the 
delegation of priorities and allocations authority from the President 
to the Secretary for all forms of food resources. USDA anticipates 
receiving a delegation of authority from DOC to assign priority ratings 
for materials, services, and facilities falling within the priorities 
authority of the DOC that are needed for use in approved programs for 
USDA; this means the extension of APAS priority ratings. USDA expects 
to include a reference to any such delegation from DOC in this section 
in the final rule in reserved paragraph (a). Within USDA, the authority 
to administer APAS has been delegated to the FSA Administrator. The FSA 
Administrator will coordinate APAS implementation and administration 
through the Director, USDA Office of Homeland Security and Emergency 
Coordination.
    The provisions Sec. Sec.  789.11 through 789.18 (subpart C) are in 
general continued from DPAS provisions to provide continuity with long-
established priorities system procedures and to make use of a proven 
foundation for a consistent and uniform FP AS as described in this 
section.
    Section 789.11, ``Priority Ratings,'' describes the: ``DO'' and 
``DX'' rating symbols; program identification symbols; levels of 
priority ratings; priority ratings consist of a rating symbol and a 
program identification symbol; and directives that take precedence over 
priority ratings. Priority levels designate differences between orders 
based on national defense including emergency preparedness 
requirements. ``DX'' rated orders take precedence over ``DO'' rated 
orders and directives take precedence over ``DX'' and ``DO'' rated 
orders. All rated orders will include a program identification symbol 
to indicate which approved program is being supported by the rated 
order. DX and DO symbols were created to differentiate between levels 
of requirements for items. If one person has a higher requirement for 
an item compared to another person in need of the same item, but both 
with emergency preparedness and response functions, USDA will place a 
DX rating symbol on the contract for the higher requirement item(s) and 
a DO rating symbol on all others, as applicable.
    Section 789.12, ``Elements of a Rated Order,'' describes the four 
elements that must be included in a contract or order to make it a 
``rated order.'' The four elements are: (1) A priority rating; (2) 
specific delivery date(s) for materials or services covered in the 
rated order; (3) the signature of an individual authorized to sign 
rated orders (the signature on the request to rate the order certifies 
that the rated order is authorized); and 4) a statement that describes 
what is required of the rated order recipient, in accordance with 
procedures provided in the rule. Section 789.12 includes a new 
provision (not in the current DPAS regulation), that requires an 
additional statement to be included in a rated order involving 
emergency preparedness and requiring quicker action by the recipient to 
accept or reject the order. In the current DPAS regulation, the 
recipient of a rated order must accept or reject the rated order within 
15 working days for a ``DO''-rated order or 10 working days for a 
``DX''-rated order. Agency-specific deadlines are incorporated into the 
regulations issued by each agency (see section 789.13(d)). While these 
deadlines are appropriate for orders under ``normal'' circumstances, 
they are too long for emergency conditions, when quick procurement 
actions may be needed to help save lives and to help protect or restore 
property (See Sec.  789.13(e)).
    Section 789.13, ``Acceptance and Rejection of Rated Orders,'' 
specifies mandatory and optional conditions for acceptance or rejection 
of rated orders. In general, a person must accept a rated order if the 
person normally supplies the materials or services covered by the 
order. A person must reject an order if unable to fill the order by the 
specified delivery date(s) or if the order would interfere with 
delivery under another rated order with a comparable or higher priority 
rating. A person has the option of rejecting a rated order if any one 
of a number of other conditions exists. As noted above, the recipient 
of a rated order must either accept or reject the order by specified 
deadlines. These deadlines are significantly shorter for orders that 
are identified in the orders as being placed for the purpose of 
emergency preparedness. Section 789.13 includes two new provisions that 
are not in the current DPAS regulation: (1) The shorter deadlines for 
orders supporting emergency preparedness activities; and (2) a 
provision that requires a person to reject an order if prohibited by 
Federal law from meeting the terms of the order. Due to the nature of 
short time response requirements after an emergency event, vendors have 
6 to 12 hours to accept or reject a rated order. In the cases where 
persons (including Federal Departments) are not responding to an actual 
emergency, but are restocking inventories depleted from previous 
emergency response activities, vendors have up to 15 working days to 
accept or reject a rated order. As proposed, the recipient of a rated 
order must accept or reject the rated order within 15 working days for 
a ``DO''-rated order or within either 6 hours, 12 hours, or 15 working 
days for a ``DX''-rated order; USDA will specify the required timeframe 
on the rating authorization.
    Section 789.14, ``Preferential Scheduling,'' specifies: (1) When a 
recipient of a rated order must modify production or delivery schedules 
to satisfy the delivery requirements of a rated order; (2) the order of 
precedence for rated, unrated, and conflicting orders; and (3) the use 
of inventoried production items when needed to fill a rated order. A 
person must modify production or delivery schedules of other contracts 
to fulfill the requirements of the rated order if required delivery 
dates cannot be met under normal operating conditions. For conflicts 
over rated orders that have the same delivery dates, the person must 
give precedence to those orders that have the earliest receipt dates. 
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.
    Section 789.15, ``Extension of Priority Ratings,'' states that the 
recipient of a rated order must use the same rating symbols on rated 
orders as necessary with suppliers to obtain items or services needed 
to fill a rated order. For example, if you have a DX-P1 rated order for 
a food source (milk) and need to purchase packaging materials (milk 
cartons) from the packaging supplier, you must use a DX-P1 rated order 
to obtain the needed packaging materials

[[Page 29091]]

(milk cartons) required to fulfill the obligations of the rated 
contract.
    Section 789.16, ``Changes or Cancellations of Priority Ratings and 
Rated Orders,'' describes procedures that apply when a priority rating 
or the provisions of a rated order are changed or canceled. An official 
action of USDA or a written notification from the person who requested 
authorization for a rated order and placed it are the two ways changes 
or cancellations can be made to rated orders. When a priority rating is 
added to an unrated order, or is changed or canceled, all suppliers 
must be promptly notified in writing. If changes are made that make an 
unrated order 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 supplier is notified. If an amendment to a 
rated order significantly alters a supplier's original production or 
delivery schedule then it constitutes a new rated order as of the date 
of its receipt. The supplier must accept or reject the amended order as 
specified in Sec.  789.13. Certain amendments do not constitute a new 
rated order, such as: a change in shipping destination; a reduction in 
the total amount of the order; an increase in the total amount of the 
order that has a negligible impact upon deliveries; a minor variation 
in size or design; or a change that is agreed upon between the supplier 
and the customer. If the items or services are no longer needed to fill 
a rated order, the rated orders must be canceled.
    Section 789.17, ``Use of Rated Orders,'' requires that the 
recipient of a rated order: (1) Must use rated orders as necessary to 
obtain items and services needed to fulfill the order; (2) may use a 
rated order to replace inventoried items that were used to fulfill the 
order; (3) may combine orders with different priority ratings; and (4) 
may forgo use of a priority rating for orders below certain dollar 
thresholds.
    Section 789.18, ``Limitations on Placing Rated Orders,'' describes 
general and jurisdictional limitations on the use of rated orders. 
Rated orders may only be placed by persons with the proper authority 
for items and services that are needed to support approved programs and 
that are eligible for priority treatment. In general, the use of rated 
orders under each resource agency's rule is limited to resources within 
that agency's jurisdiction, as delegated under section 201 of Executive 
Order 12919. USDA anticipates receiving a delegation from DOC to 
authorize USDA certain authority to use DPAS for materials, services, 
and facilities falling within the priorities and allocations 
jurisdiction of DOC.

Special Priorities Assistance

    The provisions in Sec. Sec.  789.20 through 789.24 (subpart D) are 
in general continued from DPAS provisions to provide continuity with 
long-established priorities system procedures and to make use of a 
proven foundation for a consistent and uniform FPAS as described in 
this section.
    Section 789.20, ``General Provisions,'' also describes procedures 
to request assistance in resolving problems with an existing rated 
order or in dealing with procurement issues involving a program that is 
eligible for support using the priorities authority.
    Section 789.21, ``Requests for Priority Rating Authority,'' 
describes procedures to request rating authority under special 
circumstances, such as for: (1) Items and services not normally rated 
under the regulation and (2) use of rated orders for supplies needed to 
fulfill a rated prime contract that is anticipated but not yet 
received. If there are production or delivery problems, a person should 
immediately contact the FSA Administrator for special priorities 
assistance (see Sec. Sec.  789.20 through 789.24 and 789.73). If FSA is 
unable to resolve the problem, USDA may forward the request to another 
resource agency, as appropriate, for action. 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. To request special 
priorities assistance or priority rating authority, submit Form AD-2102 
to FSA. Form AD-2102 and instruction are available from https://forms.sc.egov.usda.gov/eForms/welcomeAction.do?Home or by contacting 
the FSA Administrator.
    Section 789.22, ``Examples of Assistance,'' lists various uses for 
special priorities assistance, specifically:
     Difficulty in obtaining delivery against a rated order by 
the required delivery date;
     Cannot locate a supplier for an item or service needed to 
fill a rated order;
     Ensuring that rated orders receive preferential treatment 
by suppliers;
     Resolving production or delivery conflicts between various 
rated orders;
     Assisting in placing rated orders with suppliers;
     Verifying the urgency of rated orders; and
     Determining the validity of rated orders.
    Section 789.23, ``Criteria for Assistance,'' states that a request 
for special priorities assistance must establish that there is an 
urgent procurement need and that the applicant has made a reasonable 
effort to resolve the problem for which assistance is needed.
    Section 789.24, ``Instances Where Assistance May Not be Provided,'' 
states that special priorities assistance is provided at the discretion 
of USDA or a delegate agency and lists examples of when assistance may 
not be provided. Assistance must not be provided in situations in which 
a person is attempting to:
     Secure a price advantage;
     Obtain delivery prior to the time required to fill a rated 
order;
     Gain competitive advantage;
     Disrupt an industry apportionment program in a manner 
designed to provide a person with an unwarranted share of scarce items; 
or
     Overcome a supplier's regularly established terms of sale 
or conditions of doing business.

Allocation Actions

    Section, 789.30, ``Policy,'' states the policy of the Federal 
Government regarding use of the allocations authority, based on 
statutory language in DPA section 101 and its legislative history. USDA 
is only authorized to use the allocations authority 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. The 
allocations authority may not be used to ration materials or services 
at the retail level. 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.
    Legislative history indicates that Congress was concerned that 
national defense requirements, during times of emergency, could consume 
much of the output of key industrial sectors and selected producers 
within some sectors. The allocations authority was viewed as a means to 
ensure an equitable distribution of national defense demand among 
potential suppliers to avoid disproportionate impacts on each 
supplier's share of the civilian market.

[[Page 29092]]

Congress prohibits the use of the allocation authority to ration at the 
retail level.
    If it is determined that meeting defense needs could only be 
satisfied by a significant dislocation of consumer goods for household 
or personal use, use of the allocation authority first requires the DPA 
section 101(b) findings by the President. DPA section 101(b) states 
that the priorities and allocations authority will not be used to 
control the general distribution of any material in the civilian market 
unless the President finds (1) that such material is a scarce and 
critical material essential to the national defense, and (2) 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.
    Section 789.31, ``General Procedures,'' states that USDA will 
develop a plan when planning to execute the allocations authority to 
address a supply problem within the USDA resource jurisdiction. The 
information that USDA will include in the plan is specified in Sec.  
789.31.
    Section 789.32, ``Precedence over Priority Rated Order,'' states 
that all allocation orders take precedence over unrelated rated orders 
or prioritization directives (see Sec.  789.42 for a description of 
directives).
    Section 789.33, ``Controlling the General Distribution of a 
Material in the Civilian Market,'' provides procedures for the findings 
required by DPA section 101(b) and section 201(d) of Executive Order 
12919. DPA section 101(b) requires Presidential findings. (See 
description of findings above in Sec.  789.30.) Section 201(d) directs 
heads of resource agencies to make the findings required under DPA 
section 101(b) and to submit the findings for the President's approval 
through the Assistant to the President for National Security Affairs.
    Section 789.34, ``Types of Allocation Orders,'' identifies the 
three types of allocations orders: (1) Set-asides; (2) directives; and 
(3) allotments.
    Section 789.35, ``Elements of an Allocation Order,'' describes the 
elements of an allocation order. These elements are: (1) A detailed 
description of the required allocation action(s); (2) specific start 
and end calendar dates for each required allocation action; (3) the 
signature of the Secretary of Agriculture, certifying that the order is 
authorized under the APAS regulation and that the requirements are 
being followed; (4) a statement that the order is certified for 
national defense use and that recipients are required to comply with 
the order; and (5) a copy of 7 CFR part 789.
    Section 789.36, ``Mandatory Acceptance of an Allocation Order,'' 
states that persons must: (1) Accept and comply with allocation orders; 
and (2) not discriminate against an allocation order in any manner 
(such as by charging higher prices). Persons are required to notify 
USDA immediately if unable to comply with an allocation order.
    Section 789.37, ``Changes or Cancellations of an Allocation 
Order,'' states that USDA may change or cancel the order by an official 
action.

Official Actions

    The provisions in Sec. Sec.  789.40 through 789.43 (subpart F) are 
in general continued from DPAS provisions to provide continuity with 
long-established priorities system procedures and to make use of a 
proven foundation for