First, you have to start at the beginning. We are talking about D1.1:2015.
Second, Table 6.1 starts undercut with 'Statically' loaded members.
Followed by material less than 1" thick. For this material, undercut can be 1/32" or less for the entire run of a weld regardless of length. The 'exception' clause must be carefully considered. IF the undercut IS over 1/32" it can be up to 1/16" for any 2" accumulation in a 12" run.
Your 3/64" does not exist as a code measurement other than it is OVER 1/32" so it falls into the exception clause and can be up to 1/16" for up to 2" in length or accumulation of length to 2". It is 1/32" for the whole run OR up to 1/16" for any accumulated sum to 2" in 12".
NO, it is NOT passable if it is over 2" in length, UNLESS, your material is equal to or greater than 1" thick. Then your undercut would be acceptable regardless of length. But, with 1" material it is rejectable if it exceeds 1/16" depth for any length.
Have a Great Day, Brent