How to Use the Defense Production Act
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- Steps in the Process for a PWS or POTW Unable to Secure Critical Resources Necessary for Water Treatment
Under Title I of the DPA, as amended, the President is authorized to require the preferential acceptance and performance of contracts or orders (other than contracts of employment) supporting certain approved national defense and energy programs, and to allocate materials, services, and facilities in such a manner as to promote the national defense.
The Defense Priorities and Allocations System (DPAS) is used to prioritize national defense-related contracts/orders throughout the U.S. supply chain in order to support military, energy, homeland security, emergency preparedness, and critical infrastructure requirements.
The Department of Commerce (DOC) is delegated authority, through Executive Order 13603, that implements these priorities and allocations provisions for industrial resources. The Bureau of Industry and Security administers this authority through the DPAS regulation (15 CFR Part 700).
The key provisions of the DPAS regulation are mandatory acceptance of contracts or orders placed in support of a national defense program (rated orders), preferential scheduling, extension of priority ratings throughout the supply chain, and protection against claims. The purpose of a rated order is to ensure on-time delivery of items and services, in accordance with the delivery requirements specified in the order.
U.S. companies are required by law to accept rated orders and provide preferential scheduling, if necessary, to meet required delivery date(s). Companies who receive rated orders must in turn place rated orders with their suppliers for the items they need to fill these orders. Companies may not discriminate against rated orders, such as by charging higher prices or imposing different terms and conditions than for comparable unrated orders. The DPAS regulation provides protection against claims for companies complying with the DPAS or an official DPAS action.
The DPAS regulation also outlines several limitations on placing rated orders. DPAS rated orders cannot be placed unless entitled to do so under the DPAS regulation. The DPAS cannot be used to prioritize food, energy, health, water, and civil transportation resources, or communication services subject to E.O. 13618. A rated order may not be used to obtain delivery on a date earlier than needed; a greater quantity of the item than needed (with exception); or items in advance of the receipt of a rated order (with exception). A rated order has no legal authority outside of the United States. In addition, the DPAS may not be used 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 to provide an unwarranted share of scarce items, or overcome a supplier’s regularly established terms of sale or conditions of doing business.
Steps in the Process for a PWS or POTW Unable to Secure Critical Resources Necessary for Water Treatment
If a PWS or POTW needs assistance in obtaining timely deliveries of items that are not normally rated, a request for priority rating authority can be made to Department of Commerce (DOC) Bureau of Industry and Security (BIS). In order to make this request, the following steps should be taken by the PWS or POTW:
- Access and complete the Request for Special Priorities Assistance Form (BIS-999) (https://www.bis.doc.gov/index.php/documents/sies/498-bis-999-formerly-bxa-999-request-for-special-priorities-assistance/file).
- Pay specific attention to Block 7 of the BIS-999 form in which you must describe the consequence or impact of not being able to procure the chemical or consumable. You must establish that there is an urgent need for the item and that you have made a reasonable effort to resolve the problem.
- Submit the BIS-999 form to EPA Headquarters at WSD-Outreach@epa.gov.
- EPA will review and coordinate with the PWS or POTW on any questions before forwarding the form to the Federal Emergency Management Agency (FEMA) for review and a program determination that the order is in support of the national defense.
- FEMA then examines the BIS-999 and request to determine if it applies to the definition of national defense. The five categories of national defense related to FEMA, as defined by the DPA, are:
- Homeland security
- Emergency preparedness activities conducted pursuant to title VI of The Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 U.S.C. 5195 et seq.]
- Critical infrastructure protection or restoration
- Civil defense
- Continuity Programs.
- If FEMA issues a program determination, the request will be forwarded by FEMA to DOC for action.
- DOC will review the request and take official action. DOC will provide notification to the PWS or POTW if a rating authorization is granted. If the request is found to not apply to the definition of national defense, it will be returned to the requestor and EPA.
- If a rating authorization is granted to the PWS or POTW, the system may place a rated order in accordance with the rating authorization provided by DOC and the provisions of the DPAS regulation.
- Any person who places or receives a rated order should be thoroughly familiar with, and must comply with, the provisions of the DPAS regulation. Willful violation of any of the provisions of Title I or section 705 or 707 of the DPA, the DPAS regulation, or an official action of the DOC is a criminal act, punishable as provided in the DPA and as set in § 700.74 of the DPAS regulation. DPAS program resources and training materials are available on the DOC/BIS DPAS website.EXIT
Note that it may take one month to process the form and another fifteen days for the vendor to accept the order. PWSs and POTWs are advised to be proactive and plan ahead if you foresee a shortage of a critical treatment chemical or consumable and have no other alternative sources. If you have questions regarding this process, you may contact EPA at WSD-Outreach@epa.gov.
Can a rating authorization (under the DPA) from the DOC be used to address high prices or surcharges being charged by a producer or supplier?
For a rating authorization under the DPA, DPAS may not be used to reduce surcharges, obtain delivery prior to the time required to fill a rated order, gain competitive advantage, disrupt an industry apportionment program to provide an unwarranted share of scarce items, or overcome a supplier’s regularly established terms of sale or conditions of doing business. Additionally, the DPA says that companies may not discriminate against rated orders, such as by charging higher prices or imposing different terms and conditions than for comparable unrated orders.
Can a certification of need under the Safe Drinking Water Act (SDWA) Section 1441 or a rating authorization under the DPA be used to order a manufacturer to produce a product it is not currently producing?
For SDWA Section 1441, the statute states that an order “shall apply to such manufacturers, producers, processors, distributors, and repackagers of such chemical or substance as the [DOC Undersecretary for Business and Industrial Security] deems necessary and appropriate.” The DOC therefore has authority to determine who must fulfill the order. The only exemption in the statute is for “any manufacturer, producer, or processor of such chemical or substance who manufactures, produces, or processes (as the case may be) such chemical or substance solely for its own use.” Additionally, “Persons subject to an order…shall be given a reasonable opportunity to consult with the [DOC Undersecretary for Business and Industrial Security] with respect to the implementation of the order.”
For the DPA, a rated order in this context cannot compel an entity to supply a commodity under conditions of force majeure or to resume production of a commodity that it has ceased to produce for market or other reasons. For more information, please visit the DOC website.
Who should I contact if I have questions about this process?
You may send an email to WSD-Outreach@epa.gov.