Pages 46213±46496 Vol. 60 9±6±95 No. 172 federal register September 6,1995 Wednesday this issue. Atlanta, GA,seeannouncementontheinsidecoverof For informationonbriefingsinWashington,DCand Briefings onHowToUsetheFederalRegister 1 II Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995
SUBSCRIPTIONS AND COPIES
PUBLIC Subscriptions: Paper or fiche 202–512–1800 FEDERAL REGISTER Published daily, Monday through Friday, Assistance with public subscriptions 512–1806 (not published on Saturdays, Sundays, or on official holidays), by Online: the Office of the Federal Register, National Archives and Records Telnet swais.access.gpo.gov, login as newuser 2 III Contents Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 Administration on Aging Consolidated Farm Service Agency See Aging Administration RULES Program regulations: Aging Administration Community facility loans and grants— NOTICES Timber-dependent communities, 46215–46216 Grants and cooperative agreements; availability, etc.: Indian tribal organizations; supportive and nutritional Corporation for National and Community Service services for older Indians, 46283–46287 NOTICES Agency information collection activities under OMB Agricultural Marketing Service review: RULES Proposed agency information collection activities; Milk marketing orders: comment request, 46264–46265 Eastern Colorado, 46214–46215 Agriculture Department Customs Service See Agricultural Marketing Service RULES See Consolidated Farm Service Agency North American Free Trade Agreement (NAFTA); See Rural Business and Cooperative Development Service implementation, 46334–46463 See Rural Housing and Community Development Service NOTICES See Rural Utilities Service Crystallinity of ceramic tile; tariff classification; comment request, 46329 Army Department North American Free Trade Agreement (NAFTA); NOTICES implementation: Meetings: Customs procedures and national treatment and market Armed Forces Epidemiological Board, 46265 access for goods; interpretation, application and Science Board, 46265 administration, 46464–46482 Arts and Humanities, National Foundation Defense Department See National Foundation on the Arts and the Humanities See Army Department PROPOSED RULES Blackstone River Valley National Heritage Corridor Acquisition regulations: Commission Use and charges clause class deviation, 46259–46260 NOTICES Meetings; Sunshine Act, 46331 Education Department RULES Coast Guard Grants and agreements administration: NOTICES Improving America’s Schools Act; implementation and National Environmental Policy Act: other technical amendments, 46492–46495 Categorical exclusions; agency procedures, 46327 Employment and Training Administration Commerce Department NOTICES NOTICES Agency information collection activities under OMB Meetings: review: National Skill Standards Board, 46308 Proposed agency information collection activities; comment request, 46261–46263 Energy Department See Federal Energy Regulatory Commission Committee for the Implementation of Textile Agreements NOTICES NOTICES Natural gas exportation and importation: Cotton, wool, and man-made textiles: Brymore Energy Inc., 46276 Turkey, 46263 Canada Imperial Oil Ltd., 46276 Commodity Futures Trading Commission Environmental Protection Agency NOTICES RULES Contract market proposals: Air quality implementation plans; approval and Chicago Mercantile Exchange— promulgation; various States: Mexico 30 stock index, 46263–46264 California, 46220–46222 South Dakota, 46222–46228 Comptroller of the Currency PROPOSED RULES PROPOSED RULES Air quality implementation plans; approval and Leasing: promulgation; various States: National banks; personal property lease financing California, 46252 transactions, 46246–46251 South Dakota, 46252 IV Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Contents NOTICES Federal Highway Administration Grants, State and local assistance: RULES Santa Barbara Air Pollution Control District, 46276– Motor carrier safety standards: 46277 Parts and accessories necessary for safe operation— Meetings: Automatic brake adjusters and brake adjustment Ozone Transport Commission, 46277–46278 indicators, 46236–46245 Pesticide registration, cancellation, etc.: Chemicals; reregistration eligibility decision documents; Federal Reserve System availability, 46278–46279 NOTICES VAPAM–B Foaming Fumigant containing metam-sodium, Meetings; Sunshine Act, 46331 46279–46280 Applications, hearings, determinations, etc.: Toxic and hazardous substances control: CNB Bancshares of Victoria, Inc., et al., 46281 Premanufacture exemption approvals, 46280–46281 Norwest Corp., 46281–46282 Equal Employment Opportunity Commission Food and Drug Administration RULES PROPOSED RULES Organization, functions, and authority delegations: Medical devices: Commission chairman, 46219–46220 Electrode lead wires; standard to prevent hazardous connections between patients and electrical power Executive Office of the President sources, 46251 See Trade Representative, Office of United States NOTICES Medical devices; premarket approval: Federal Aviation Administration Wesley-Jessen COE–405 Disinfection Tablet, 46288 RULES Airworthiness directives: Health and Human Services Department General Electric Co., 46216–46218 See Aging Administration Standard instrument approach procedures, 46218–46219 See Food and Drug Administration NOTICES See Health Care Financing Administration Airport noise compatibility program: See Inspector General Office, Health and Human Services Fort Worth Spinks Airport, TX, 46328–46329 Department Passenger facility charges; applications, etc.: Baltimore Washington International Airport, MD, 46327– Health Care Financing Administration 46328 See Inspector General Office, Health and Human Services Department Federal Communications Commission RULES PROPOSED RULES Medicare: Common carrier services: Payments to health maintenance organizations (HMOs) Satellite communications— and competitive medical plans (CMPs) and appeals; Space and earth station application and licensing technical amendments, 46228–46234 requirements; streamlining, 46252–46259 NOTICES NOTICES Medicare: Rulemaking proceedings; petitions filed, granted, denied, Fiscal intermediaries and carriers— etc., 46281 Data, standards, and methodology (1996 FY budgets), 46288–46296 Federal Energy Regulatory Commission NOTICES Housing and Urban Development Department Electric rate and corporate regulation filings: NOTICES Entergy Power Marketing Corp. et al., 46270–46271 Grant and cooperative agreement awards: Vantus Energy Corp. et al., 46271–46273 Community development block grant program— Environmental statements; availability, etc.: Small cities program, 46298–46300 Wisconsin Electric Power Co., 46273 Hydroelectric applications, 46273–46276 Indian Affairs Bureau Applications, hearings, determinations, etc.: NOTICES ANR Storage Co., 46265–46266 Tribal-State Compacts approval; Class III (casino) gambling: Blue Lake Gas Storage Co., 46266 Skokomish Indian Tribe, WA, 46490 Great Lakes Gas Transmission L.P., 46266–46267 Jupiter Energy Corp., 46267 Koch Gateway Pipeline Co., 46267 Inspector General Office, Health and Human Services NorAm Gas Transmission Co., 46267–46268 Department Northern Natural Gas Co., 46268 NOTICES Paiute Pipeline Co., 46268 Program exclusions; list, 46296–46297 Steuben Gas Storage Co., 46268 Trailblazer Pipeline Co., 46268–46269 Interior Department Williston Basin Interstate Pipeline Co., 46269 See Indian Affairs Bureau Wyoming Interstate Co. Ltd., 46269 See Land Management Bureau Young Gas Storage Co. Ltd., 46269 See National Park Service Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Contents V Interstate Commerce Commission Personnel Management Office NOTICES RULES Railroad operation, acquisition, construction, etc.: Prevailing rate systems, 46213–46214 Broe, Patrick D., et al., 46301 Presidential Advisory Committee on Gulf War Veterans' Justice Department Illnesses See Prisons Bureau NOTICES NOTICES Meeting, 46282–46283 Agency information collection activities under OMB review: Proposed agency information collection activities; Prisons Bureau comment request, 46301–46308 RULES Inmate control, custody, care, etc.: Labor Department Control unit programs, 46484–46485 See Employment and Training Administration Religious beliefs and practices, 46485–46487 See Pension and Welfare Benefits Administration NOTICES Prospective Payment Assessment Commission Meetings: NOTICES President’s Committee on the International Labor Meetings, 46321 Organization, 46308 Public Health Service Land Management Bureau See Food and Drug Administration NOTICES Organization, functions, and authority delegations: Wyoming State Office; relocation, 46300 Rural Business and Cooperative Development Service RULES National Aeronautics and Space Administration Program regulations: NOTICES Community facility loans and grants— Meetings: Timber-dependent communities, 46215–46216 Aeronautics Advisory Committee, 46314 Rural Housing and Community Development Service National Foundation on the Arts and the Humanities RULES NOTICES Program regulations: Meetings: Community facility loans and grants— President’s Committee on Arts and Humanities, 46314– Timber-dependent communities, 46215–46216 46315 Rural Utilities Service National Park Service RULES NOTICES Program regulations: National Register of Historic Places: Community facility loans and grants— Pending nominations, 46300 Timber-dependent communities, 46215–46216 National Science Foundation RULES Securities and Exchange Commission Antarctic animals and plants conservation: NOTICES Specially protected areas; designations, 46234–46235 Applications, hearings, determinations, etc.: American Adjustable Rate Term Trust Inc., 46321–46322 Nuclear Regulatory Commission IDS Life Insurance Co. et al., 46322–46324 NOTICES Societe Generale, 46324–46326 Environmental statements; availability, etc.: Florida Power Corp., 46320–46321 Small Business Administration Meetings; Sunshine Act, 46331 NOTICES Organization, functions, and authority delegations: Disaster loan areas: West Lake Landfill, MO; regulatory oversight deferral to Texas, 46326 EPA, 46321 Applications, hearings, determinations, etc.: Textile Agreements Implementation Committee Cimarron Corp., 46315 See Committee for the Implementation of Textile Citizens Awareness Network, Inc., 46315–46318 Agreements Kerr-McGee Corp., 46318 Vermont Yankee Nuclear Power Corp., 46318–46319 Trade Representative, Office of United States Office of United States Trade Representative NOTICES See Trade Representative, Office of United States Tariff-rate quota amount determinations: Raw cane sugar, 46330 Pension and Welfare Benefits Administration NOTICES Transportation Department Employee benefit plans; prohibited transaction exemptions: See Coast Guard John B. Toomey Rollover IRA et al., 46308–46311 See Federal Aviation Administration TSC International Ltd., 46312–46314 See Federal Highway Administration VI Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Contents NOTICES Part IV Aviation proceedings: Department of the Interior, Indian Affairs Bureau, 46490 Agreements filed; weekly receipts, 46327 Certificates of public convenience and necessity and Part V foreign air carrier permits; weekly applications, Department of Education, 46492–46495 46326–46327 Treasury Department See Comptroller of the Currency Reader Aids See Customs Service Additional information, including a list of public laws, telephone numbers, and finding aids, appears in the Reader Aids section at the end of this issue. Separate Parts In This Issue Part II Electronic Bulletin Board Treasury Department, Customs Service, 46334–46482 Free Electronic Bulletin Board service for Public Law numbers, Federal Register finding aids, and a list of Part III documents on public inspection is available on 202–275– Department of Justice, Prisons Bureau, 46484–46487 1538 or 275–0920. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Contents VII CFR PARTS AFFECTED IN THIS ISSUE A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue. 5 CFR 532...... 46213 7 CFR 1137...... 46214 1942...... 46215 12 CFR Proposed Rules: 23...... 46246 14 CFR 39...... 46216 97...... 46218 19 CFR 10...... 46334 12...... 46334 24...... 46334 123...... 46334 134...... 46334 162...... 46334 174...... 46334 177...... 46334 178...... 46334 181...... 46334 191...... 46334 21 CFR Proposed Rules: 895...... 46251 898...... 46251 28 CFR 541...... 46484 548...... 46484 29 CFR 1601...... 46219 34 CFR 74...... 46492 75...... 46492 76...... 46492 81...... 46492 40 CFR 52 (2 documents) ...... 46220, 46222 Proposed Rules: 52 (2 documents) ...... 46252 42 CFR 417...... 46228 45 CFR 670...... 46234 47 CFR Proposed Rules: 25...... 46252 48 CFR Proposed Rules: 52...... 46259 49 CFR 393...... 46236 46213 Rules and Regulations Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 This section of the FEDERAL REGISTER the Office of Personnel Management employees will become entitled to pay contains regulatory documents having general that the Los Angeles, San Diego, San retention when converted to the regular applicability and legal effect, most of which Francisco, and Seattle-Everett-Tacoma wage schedule. The remaining 17 are keyed to and codified in the Code of Printing and Lithographic wage employees will benefit upon conversion Federal Regulations, which is published under schedules be abolished and that the by receiving higher regular wage rates. 50 titles pursuant to 44 U.S.C. 1510. regular wage schedule for each area San Francisco, California: Federal The Code of Federal Regulations is sold by apply to printing employees. Federal employment in printing and the Superintendent of Documents. Prices of employment in printing and lithographic occupations in the San new books are listed in the first FEDERAL lithographic occupations in these wage Francisco wage area declined from 55 in REGISTER issue of each week. areas has declined in recent years. Only 1993 to a current total of 16 in 1995. a small number of employees are now The special printing and lithographic paid from these special wage schedules, wage schedule for the San Francisco OFFICE OF PERSONNEL and only a few of these employees wage area now applies to seven General MANAGEMENT actually benefit by being paid from the Services Administration employees, five special schedule rather than the regular Defense Printing Service employees, 5 CFR Part 532 wage schedule. Most of the covered two National Aeronautics and Space RIN 3206±AG53 employees are paid ‘‘floor rates’’ Administration employees, one established under the 5 CFR 532.279 Department of Agriculture employee, Prevailing Rate Systems; Abolishment provision that no maximum rate on a and one United States Coast Guard of Certain Special Wage Schedules for special printing schedule may be less employee. The last full-scale survey Printing Positions than the maximum rate for the involved the substantial work effort of corresponding grade on the regular wage contacting 71 printing establishments AGENCY: Office of Personnel Management. schedule for the wage area. In addition, spread over 8 counties in the San with the reduced number of employees, Francisco metropolitan area. Upon ACTION: Interim rule with request for it has been difficult to comply with the abolishment of the San Francisco comments. requirement that workers paid from the special printing schedule, two SUMMARY: The Office of Personnel special printing schedule participate in employees will become entitled to pay Management is issuing interim the special wage survey process. retention when converted to the regular regulations to abolish the Federal Wage Los Angeles, California: Federal wage schedule. The remaining 14 System special wage schedules for employment in printing and employees will benefit upon conversion printing positions in the Los Angeles, lithographic occupations in the Los by receiving higher regular wage rates. California; San Diego, California; San Angeles wage area declined from 49 in Seattle-Everett-Tacoma, Washington: Francisco, California; and Seattle- 1993 to a current total of 16 in 1995. Federal employment in printing and Everett-Tacoma, Washington, wage The special printing and lithographic lithographic occupations in the Seattle- areas. Printing and lithographic wage schedule for the Los Angeles wage Everett-Tacoma wage area declined from employees in these wage areas will now area now applies to 15 Defense Printing 45 in 1994 to a current total of 19 in be paid rates from the regular wage Service employees and 1 Department of 1995. The special printing and schedule for their respective wage area. Agriculture employee. The last full- lithographic wage schedule for the scale survey involved the substantial Seattle-Everett-Tacoma wage area now DATES: This interim rule becomes work effort of contacting 72 printing applies to 11 Defense Printing Service effective on September 6, 1995. establishments spread over Los Angeles employees and 8 General Services Comments must be received by October County. Upon abolishment of the Los Administration employees. The last full- 6, 1995. Employees paid rates from Angeles special printing schedule, three scale survey involved the substantial special wage schedules for printing employees will become entitled to pay work effort of contacting 100 printing positions in these areas will continue to retention when converted to the regular establishments spread over 4 counties. to paid rates from those schedules until wage schedule. The remaining 13 Upon abolishment of the Seattle-Everett- their conversion to the regular wage employees will benefit upon conversion Tacoma special schedule, all 19 schedules for their respective wage by receiving higher regular wage rates. employees will benefit when converted areas effective on the first day of the San Diego, California: Federal to the regular wage schedule by first full pay period beginning on or employment in printing and receiving higher regular wage rates. after September 6, 1995. lithographic occupations in the San Upon abolishment of these special ADDRESSES: Send or deliver comments Diego wage area declined from 46 in printing schedules, the printing and to Donald J. Winstead, Assistant 1993 to a current total of 23 in 1995. lithographic employees will be Director for Compensation Policy, The special printing and lithographic converted to the regular schedule for Human Resources Systems Service, wage schedule for the San Diego wage their wage area on a grade-for-grade Office of Personnel Management, Room area now applies to 23 Defense Printing basis. Their new rate of pay will be set 6H31, 1900 E Street NW., Washington, Service employees. The last full-scale at the applicable step of the regular DC 20415. survey involved the substantial work schedule that equates to the employees’ FOR FURTHER INFORMATION CONTACT: Paul effort of contracting 65 printing existing scheduled rate of pay. When Shields, (202) 606–2848. establishments spread over San Diego the existing rate falls between two steps, SUPPLEMENTARY INFORMATION: The County. Upon abolishment of the San the employee’s new rate will be set at Department of Defense recommended to Diego special printing schedule, six the rate of the higher of those two steps. 46214 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations This conversion does not constitute an DEPARTMENT OF AGRICULTURE Civil Justice Reform. This rule is not equivalent increase for within-grade intended to have a retroactive effect and increase purposes. In accordance with Agricultural Marketing Service will not preempt any state or local laws, the OPM Operating Manual, The Guide regulations, or policies, unless they 7 CFR Part 1137 to Processing Personnel Actions, this present an irreconcilable conflict with pay plan change will be processed as a [DA±95±21] this rule. ‘‘Pay Adjustment,’’ Nature of Action The Agricultural Marketing Code 894, authority code ZLM, citing Milk in the Eastern Colorado Marketing Agreement Act of 1937, as amended (7 Area; Suspension of Certain U.S.C. 601–674), provides that this Federal Register notice as Provisions of the Order administrative proceedings must be authority. Pay retention provisions will exhausted before parties may file suit in AGENCY: apply for employees not receiving Agricultural Marketing Service, court. Under section 608c(15)(A) of the increases upon conversion. USDA. Act, any handler subject to an order may The Federal Prevailing Rate Advisory ACTION: Suspension of rule. file with the Secretary a petition stating Committee has reviewed this SUMMARY: This document suspends that the order, any provision of the recommendation and by consensus has certain performance standards of the order, or any obligation imposed in recommended approval. Eastern Colorado Federal milk order. connection with the order is not in Pursuant to 5 U.S.C. 553(b)(3)(B), I Mid-America Dairymen, Inc., a accordance with the law and requesting a modification of an order or to be find that good cause exists for waiving cooperative association that supplies milk for the market’s fluid needs, exempted from the order. A handler is the general notice of proposed afforded the opportunity for a hearing rulemaking. Also, pursuant to section requested the suspension. The suspension will make it easier for on the petition. After a hearing, the 553(d)(3) of title 5, United States Code, Secretary would rule on the petition. handlers to qualify milk for pool status I find that good cause exists for making The Act provides that the district court and will prevent uneconomic milk this rule effective in less than 30 days. of the United States in any district in movements that otherwise would be The notice is being waived and the which the handler is an inhabitant, or required to maintain pool status for milk regulation is being made effective in less has its principal place of business, has of producers who have been historically than 30 days because preparations for jurisdiction in equity to review the associated with the market. the September 1995 wage surveys in Los Secretary’s ruling on the petition, Angeles, San Diego, San Francisco, and EFFECTIVE DATES: The suspension to provided a bill in equity is filed not Seattle-Everett-Tacoma must begin § 1137.7 is effective from September 1, later than 20 days after date of the entry immediately. 1995, through February 29, 1996. The of the ruling. suspensions to § 1137.12 are effective This order of suspension is issued Regulatory Flexibility Act from September 1, 1995, through August pursuant to the provisions of the 31, 1996. Agricultural Marketing Agreement Act, I certify that these regulations will not FOR FURTHER INFORMATION CONTACT: as amended, and of the order regulating have a significant economic impact on Clifford M. Carman, Marketing the handling of milk in the Eastern a substantial number of small entities Specialist, USDA/AMS/Dairy Division, Colorado marketing area. because they will affect only Federal Order Formulation Branch, Room 2968, Notice of proposed rulemaking was agencies and employees. South Building, P.O. Box 96456, published in the Federal Register on List of Subjects in 5 CFR Part 532 Washington, DC 20090–6456, (202) 720– July 28, 1995 (60 FR 38767), concerning 9368. a proposed suspension of certain Administrative practice and SUPPLEMENTARY INFORMATION: Prior provisions of the order. Interested procedure, Freedom of information, document in this proceeding: persons were afforded opportunity to Government employees, Reporting and Notice of Proposed Suspension: file written data, views and arguments recordkeeping requirements, Wages. Issued July 24, 1995; published July 28, thereon. One comment supporting the 1995 (60 FR 38767). suspension was filed and no opposing Office of Personnel Management. The Regulatory Flexibility Act (5 views were received. Lorraine A. Green, U.S.C. 601–612) requires the Agency to After consideration of all relevant Deputy Director. examine the impact of a proposed rule material, including the proposal in the on small entities. Pursuant to 5 U.S.C. notice, the comment received and other Accordingly, OPM is amending 5 CFR 605(b), the Administrator of the available information, it is hereby found part 532 as follows: Agricultural Marketing Service has and determined that the following certified that this proposed rule will not provisions of the order do not tend to PART 532ÐPREVAILING RATE have a significant economic impact on effectuate the declared policy of the Act: SYSTEMS a substantial number of small entities. 1. For the months of September 1, This rule lessens the regulatory impact 1995, through February 29, 1996: In the 1. The authority citation for part 532 of the order on certain milk handlers second sentence of § 1137.7(b), the continues to read as follows: and tends to ensure that dairy farmers words ‘‘plant which has qualified as a’’ Authority: 5 U.S.C. 5343, 5346; § 532.707 who have been historically associated and ‘‘of March through August’’; and also issued under 5 U.S.C. 552. with this market will continue to have 2. For the months of September 1, their milk priced under the order and 1995, through August 31, 1996: In the § 532.279 [Amended] thereby receive the benefits that accrue first sentence of § 1137.12(a)(1), the 2. In § 532.279, paragraphs (j) (5) from such pricing. words ‘‘from whom at least three through (8) are removed. The Department is issuing this rule in deliveries of milk are received during conformance with Executive Order the month at a distributing pool plant’’; [FR Doc. 95–21904 Filed 9–5–95; 8:45 am] 12866. and in the second sentence, the words BILLING CODE 6325±01±M This suspension of rule has been ‘‘30 percent in the months of March, reviewed under Executive Order 12778, April, May, June, July, and December Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46215 and 20 percent in other months of’’, and and contrary to the public interest in Dated: August 29, 1995. the word ‘‘distributing’’. that: Patricia Jensen, Statement of Consideration (a) The suspension is necessary to Acting Assistant Secretary, Marketing and reflect current marketing conditions and Regulatory Programs. This rule suspends certain portions of [FR Doc. 95–22005 Filed 9–5–95; 8:45 am] the pool plant and producer definitions to assure orderly marketing conditions BILLING CODE 3410±02±P of the Eastern Colorado order. The in the marketing area, in that such rule suspension will make it easier for is necessary to permit the continued pooling of the milk of dairy farmers who handlers to qualify milk for pooling Rural Housing and Community have historically supplied the market under the order. Development Service The suspension was requested by without the need for making costly and Mid-America Dairymen, Inc. (Mid-Am), inefficient movements of milk; Rural Business and Cooperative a cooperative association that has (b) This suspension does not require Development Service pooled milk of dairy farmers on the of persons affected substantial or Rural Utilities Service Eastern Colorado order for several years. extensive preparation prior to the Mid-Am requested the suspension to effective date; and Consolidated Farm Service Agency prevent the uneconomic and inefficient movement of milk for the sole purpose (c) Notice of proposed rulemaking 7 CFR Part 1942 of pooling the milk of producers who was given interested parties and they RIN 0572±AB11 have been historically associated with were afforded opportunity to file written data, views or arguments concerning the Eastern Colorado order. Community Facility Loans and this suspension. One comment For the months of September 1995 GrantsÐTimber-Dependent supporting and no comments opposing through February 1996, the restriction Communities on the months when automatic pool the suspension were received. plant status applies for supply plants Therefore, good cause exists for AGENCIES: Rural Housing and will be removed. For the months of making this order effective less than 30 Community Development Service, Rural September 1995 through August 1996, days from the date of publication in the Business and Cooperative Development the touch-base requirement will not Federal Register. Service, Rural Utilities Service, and apply and the diversion allowance for Consolidated Farm Service Agency, cooperatives will be raised. List of Subjects in 7 CFR Part 1137 USDA. These provisions have been ACTION: Final rule. suspended for several years to maintain Milk marketing orders. the pool status of producers who have For the reasons set forth in the SUMMARY: The regulations that are historically supplied the fluid needs of preamble, the following provisions in utilized by the Rural Utilities Service Eastern Colorado distributing plants. Title 7, Part 1137, are amended as (RUS) and the Rural Housing and The marketing conditions which follows: Community Development Service justified the prior suspensions continue (RHCDS) in administering Community to exist. PART 1137ÐMILK IN THE EASTERN Facility Loans and Grants are being Mid-Am asserts that they have made COLORADO MARKETING AREA amended. This action is necessary to a commitment to supply the fluid milk implement provisions of Public Law requirements of distributing plants if the 1. The authority citation for 7 CFR 103–427, provides for a temporary suspension request is granted. Without Part 1137 continues to read as follows: increase in the maximum population for the suspension action, to qualify certain eligibility for certain loans and grants as of its milk for pooling, it would be Authority: 7 U.S.C. 601–674. contained in the Consolidated Farm and necessary for the cooperative to ship § 1137.7 [Suspended in part] Rural Development Act (7 U.S.C. 1921 milk from distant farms to Denver-area et seq.) (CONACT) for certain timber- bottling plants. The distant milk would 2. In § 1137.7(b), the second sentence dependent communities in the Pacific displace milk produced on nearby farms is amended by suspending the words Northwest. The temporary expanded that would then have to be shipped ‘‘plant which has qualified as a’’ and ‘‘of eligibility applies to the following from the Denver area to manufacturing March through August’’ from September programs; (1) Water and Waste Disposal plants located in outlying areas. 1, 1995, through February 29, 1996. (WWD) loans and grants, (2) Community There are ample supplies of locally Facilities Loans (CF), and (3) Local § 1137.12 [Suspended in part] produced milk that can be delivered Technical Assistance and Planning directly from farms to distributing 3. In § 1137.12(a)(1), the first sentence Grants. plants to meet the market’s fluid needs is amended by suspending the words DATES: This final rule is effective on without requiring shipments from ‘‘from whom at least three deliveries of September 6, 1995. supply plants. milk are received during the month at This suspension is found to be FOR FURTHER INFORMATION CONTACT: Jerry a distributing pool plant’’ from W. Cooper, Loan Specialist, Water and necessary for the purpose of assuring September 1, 1995, through August 31, that producers’ milk will not have to be Waste Disposal Division, Rural Utilities 1996. moved in an uneconomic and inefficient Service, USDA, South Agriculture manner to ensure that producers whose 4. In § 1137.12(a)(1), the second Building, Room 6328, Washington, DC milk has long been associated with the sentence is amended by suspending the 20250, telephone: (202) 720–9589. Eastern Colorado marketing area will words ‘‘30 percent in the months of SUPPLEMENTARY INFORMATION: continue to benefit from pooling and March, April, May, June, July, and Classification pricing under the order. December and 20 percent in other It is hereby found and determined months of’’, and the word ‘‘distributing’’ This rule has been determined to be that thirty days’ notice of the effective from September 1, 1995, through August significant and was reviewed by OMB date hereof is impractical, unnecessary 31, 1996. under Executive Order 12866. 46216 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Intergovernmental Review the Pacific Northwest that are struggling Economy and a Sustainable These programs are listed in the to retool their economies in the face of Environment,’’ dated July 1, 1993; the Catalog of Federal Domestic Assistance necessary changes in timber-cutting population limits contained § 1942.17(b) under number 10.760, Water and Waste policies. Certain rural communities in are expanded to include communities Systems For Rural Communities and the Pacific Northwest are experiencing with not more than 25,000 inhabitants 10.766, Community Facilities Loans and significant economic difficulties as a until September 30, 1998, if: are subject to the provisions of result of their proximity to the range of (i) Part or all of the community lies Executive Order 12372 which requires the northern spotted owl will benefit within 100 miles of the boundary of a intergovernmental consultation with from the expanded loan and grant national forest covered by the Federal State and local officials. eligibility. document entitled, ‘‘Forest Plan for a The CONACT caps the eligibility of Sustainable Economy and a Sustainable Environmental Impact Statement cities or towns at 10,000 inhabitants for Environment,’’ dated July 1, 1993; and This action has been reviewed in RUS WWD loans and grants and 20,000 (ii) The community is located in a accordance with FmHA Instruction inhabitants for RHCDS CF loans. Public county in which at least 15 percent of 1940–G, ‘‘Environmental Program.’’ It Law 103–427 temporarily expands, until the total primary and secondary labor has been determined that the action September 30, 1998, the population to and proprietor income is derived from does not constitute a major Federal 25,000 inhabitants if the cities or towns forestry, wood products, or forest- action significantly affecting the quality meet certain criteria. The communities related industries such as recreation and of the human environment, and in must; (1) lie within 100 miles of the tourism. accordance with the National boundary of a national forest covered by * * * * * Environmental Policy Act of 1969, Pub. the Federal document entitled ‘‘Forest Dated: August 4, 1995. L. 91–190, an Environmental Impact Plan for a Sustainable Economy and a Michael V. Dunn, Statement is not required. Sustainable Environment,’’ dated July 1, Acting Under Secretary for Rural Economic 1993; and (2) be located in a county in Compliance With Executive Order and Community Development. which at least 15 percent of the total 12778 [FR Doc. 95–22006 Filed 9–5–95; 8:45 am] primary and secondary labor and BILLING CODE 3410±32±U The regulation has been reviewed in proprietor income is derived from light of Executive Order 12778 and forestry, wood products, or forest- meets the applicable standards provided related industries such as recreation and in sections 2(a) and 2(b)(2) of that Order. tourism. DEPARTMENT OF TRANSPORTATION Provisions within this part which are The Local Technical Assistance and Federal Aviation Administration inconsistent with State law are Planning Grant program is impacted by controlling. All administrative remedies this legislation. However, there are no 14 CFR Part 39 pursuant to 7 CFR Part 1900 Subpart B existing regulations for this program, must be exhausted prior to filing suit. and therefore, that program is not [Docket No. 95±ANE±51; Amendment 39± 9361; AD 95±18±14] Paperwork Reduction Act included in this amendment. In accordance with the Paperwork List of Subjects in 7 CFR Part 1942 Airworthiness Directives; General Reduction Act (44 U.S.C. 3507), the Community development, Electric Company CF6 Series Turbofan information collection requirements Community facilities, Grant programs— Engines included in this rule have been Housing and community development, AGENCY: approved through 7 CFR 1942–A. The Federal Aviation Rural areas, Waste treatment and Administration, DOT. assigned OMB control number is 0575– disposal—Domestic, Water supply— 0015. This rule does not revise or Domestic. ACTION: Final rule; request for comments. impose any new information collection Therefore, chapter XVIII, title 7, Code or recordkeeping requirements from of Federal Regulations is amended as SUMMARY: This amendment adopts a those approved by the Office of follows: new airworthiness directive (AD) that is Management and Budget. applicable to General Electric Company PART 1942ÐASSOCIATIONS Background (GE) CF6 series turbofan engines. This It is the policy of this Department that 1. The authority citation for part 1942 action requires a more detailed rules relating to public property, loans, continues to read as follows: fluorescent penetrant inspection process grants, benefits, or contracts shall be Authority: 7 U.S.C. 1989; 16 U.S.C. 1005; for GE CF6 series high pressure published for comment notwithstanding 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70. compressor rotor (HPCR) stage 3–9 the exemption in 5 U.S.C. 553 with spools. This amendment is prompted by respect to such rules. These Subpart AÐCommunity Facility Loans an uncontained failure of the HPCR stage 3–9 spool attributed to a material amendments, however, are not 2. Section 1942.17 is amended by published for proposed rulemaking defect located in the hub to web adding paragraph (b)(6) to read as transition area of the stage 6 disk. The because they are merely following the follows: specific directions of Public Law 103– actions specified in this AD are 427 and no discretion is left with the § 1942.17 Community facilities. intended to prevent an uncontained agency as to the population eligibility of * * * * * HPCR engine failure, which can result certain timber-dependent communities (b) * * * in damage to the aircraft. in the Pacific Northwest. Good cause is (6) Expanded eligibility for timber- DATES: Effective September 21, 1995. found that notice and public procedure dependent communities in Pacific The incorporation by reference of thereon are impractical, unnecessary Northwest. In the Pacific Northwest, certain publications listed in the and contrary to the public interest. defined as an area containing national regulations is approved by the Director Public Law 103–427 addresses the forest covered by the Federal document of the Federal Register as of September financial needs of rural communities in entitled, ‘‘Forest Plan for a Sustainable 21, 1995. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46217 Comments for inclusion in the Rules the All Operators’ Wire described The FAA has determined that this Docket must be received on or before previously. regulation is an emergency regulation November 6, 1995. Since a situation exists that requires that must be issued immediately to ADDRESSES: Submit comments in the immediate adoption of this correct an unsafe condition in aircraft, triplicate to the Federal Aviation regulation, it is found that notice and and is not a ‘‘significant regulatory Administration (FAA), New England opportunity for prior public comment action’’ under Executive Order 12866. It Region, Office of the Assistant Chief hereon are impracticable, and that good has been determined further that this Counsel, Attention: Rules Docket No. cause exists for making this amendment action involves an emergency regulation 95–ANE–51, 12 New England Executive effective in less than 30 days. under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, Park, Burlington, MA 01803–5299. Comments Invited The service information referenced in 1979). If it is determined that this this AD may be obtained from General Although this action is in the form of emergency regulation otherwise would Electric Aircraft Engines, CF6 a final rule that involves requirements be significant under DOT Regulatory Distribution Clerk, Room 132, 111 affecting flight safety and, thus, was not Policies and Procedures, a final Merchant Street, Cincinnati, OH 45246. preceded by notice and an opportunity regulatory evaluation will be prepared This information may be examined at for public comment, comments are and placed in the Rules Docket. A copy the FAA, New England Region, Office of invited on this rule. Interested persons of it, if filed, may be obtained from the the Assistant Chief Counsel, 12 New are invited to comment on this rule by Rules Docket at the location provided England Executive Park, Burlington, submitting such written data, views, or under the caption ADDRESSES. arguments as they may desire. MA; or at the Office of the Federal List of Subjects in 14 CFR Part 39 Register, 800 North Capitol Street, NW., Communications should identify the suite 700, Washington, DC. Rules Docket number and be submitted Air transportation, Aircraft, Aviation FOR FURTHER INFORMATION CONTACT: in triplicate to the address specified safety, Incorporation by reference, Richard Woldan, Aerospace Engineer, under the caption ADDRESSES. All Safety. Engine Certification Office, FAA, Engine communications received on or before Adoption of the Amendment and Propeller Directorate, 12 New the closing date for comments will be Accordingly, pursuant to the England Executive Park, Burlington, MA considered, and this rule may be authority delegated to me by the 01803–5299; telephone (617) 238–7136, amended in light of the comments Administrator, the Federal Aviation fax (617) 238–7199. received. Factual information that Administration amends part 39 of the SUPPLEMENTARY INFORMATION: The supports the commenter’s ideas and suggestions is extremely helpful in Federal Aviation Regulations (14 CFR Federal Aviation Administration (FAA) part 39) as follows: has received a report of an uncontained evaluating the effectiveness of the AD failure of a General Electric Company action and determining whether PART 39ÐAIRWORTHINESS (GE) CF6–50 high pressure compressor additional rulemaking action would be DIRECTIVES rotor (HPCR) stage 3–9 spool. The needed. failure resulted from a low cycle fatigue Comments are specifically invited on 1. The authority citation for part 39 crack originating from a material defect the overall regulatory, economic, continues to read as follows: located in the hub to web transition area environmental, and energy aspects of Authority: 49 USC 106(g), 40101, 40113, of the stage 6 disk. The FAA has the rule that might suggest a need to 44701. determined that a more detailed modify the rule. All comments § 39.13 [Amended] fluorescent penetrant inspection process submitted will be available, both before is required for these high pressure and after the closing date for comments, 2. Section 39.13 is amended by compressor rotor stage 3–9 spools. This in the Rules Docket for examination by adding the following new airworthiness condition, if not corrected, could result interested persons. A report that directive: in an uncontained HPCR engine failure, summarizes each FAA-public contact 95–18–14 General Electric Company: which can result in damage to the concerned with the substance of this AD Amendment 39–9361. Docket 95–ANE– aircraft. will be filed in the Rules Docket. 51. The FAA has reviewed and approved Commenters wishing the FAA to Applicability: General Electric Company the technical contents of GE All acknowledge receipt of their comments (GE) CF6 series engines. These engines are Operators’ Wire, Subject: FPI of Deep submitted in response to this notice installed on but not limited to Airbus Disk Spools, Best Practices, dated must submit a self-addressed, stamped Industries A300, A310, and A330 series; August 10, 1995, that describes a more postcard on which the following Boeing 747 and 767 series; and McDonnell Douglas DC10 and MD11 series aircraft. detailed fluorescent penetrant statement is made: ‘‘Comments to inspection process for HPCR stage 3–9 Docket Number 95–ANE–51.’’ The Note: This AD applies to each engine postcard will be date stamped and identified in the preceding applicability spools. provision, regardless of whether it has been Since an unsafe condition has been returned to the commenter. modified, altered, or repaired in the area identified that is likely to exist or The regulations adopted herein will subject to the requirements of this AD. For develop on other GE CF6 series engines not have substantial direct effects on the engines that have been modified, altered, or of the same type design, this AD is being States, on the relationship between the repaired so that the performance of the issued to prevent an uncontained HPCR national government and the States, or requirements of this AD is affected, the engine failure, which can result in on the distribution of power and owner/operator must use the authority damage to the aircraft. This AD requires responsibilities among the various provided in paragraph (b) to request approval that a more detailed fluorescent levels of government. Therefore, in from the FAA. This approval may address either no action, if the current configuration penetrant inspection of the HPCR stage accordance with Executive Order 12612, eliminates the unsafe condition, or different 3–9 spool be used whenever fluorescent it is determined that this final rule does actions necessary to address the unsafe penetrant inspection of these spools is not have sufficient federalism condition described in this AD. Such a accomplished. The actions are required implications to warrant the preparation request should include an assessment of the to be accomplished in accordance with of a Federalism Assessment. effect of the changed configuration on the 46218 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations unsafe condition addressed by this AD. In no 14 CFR Part 97 SUPPLEMENTARY INFORMATION: This case does the presence of any modification, amendment to part 97 of the Federal [Docket No. 28315; Amdt. No. 1682] alteration, or repair remove any engine from Aviation Regulations (14 CFR part 97) the applicability of this AD. Standard Instrument Approach establishes, amends, suspends, or Compliance: Required as indicated, unless Procedures; Miscellaneous revokes Standard Instrument Approach accomplished previously. Amendments Procedures (SIAPs). The complete regulatory description of each SIAP is To prevent an uncontained high pressure AGENCY: Federal Aviation contained in official FAA form compressor rotor (HPCR) engine failure, Administration (FAA), DOT. documents which are incorporated by which can result in damage to the aircraft, ACTION: Final rule. reference in this amendment under 5 accomplish the following: U.S.C. 552(a), 1 CFR part 51, and § 97.20 (a) After the effective date of this AD all SUMMARY: This amendment establishes, of the Federal Aviation Regulations fluorescent penetrant inspections of HPCR amends, suspends, or revokes Standard (FAR). The applicable FAA Forms are stage 3–9 spools must be accomplished in Instrument Approach Procedures identified as FAA Forms 8260–3, 8260– accordance with the process described in GE (SIAPs) for operations at certain 4, and 8260–5. Materials incorporated All Operators’ Wire, Subject: FPI of Deep airports. These regulatory actions are by reference are available for Disk Spools, Best Practices, dated August 10, needed because of the adoption of new examination or purchase as stated 1995. or revised criteria, or because of changes above. occurring in the National Airspace (b) An alternative method of compliance or The large number of SIAPs, their adjustment of the compliance time that System, such as the commissioning of complex nature, and the need for a provides an acceptable level of safety may be new navigational facilities, addition of special format make their verbatim used if approved by the Manager, Engine new obstacles, or changes in air traffic publication in the Federal Register Certification Office. The request should be requirements. These changes are expensive and impractical. Further, forwarded through an appropriate FAA designed to provide safe and efficient airmen do not use the regulatory text of Principal Maintenance Inspector, who may use of the navigable airspace and to the SIAPs, but refer to their graphic add comments and then send it to the promote safe flight operations under depiction on charts printed by Manager, Engine Certification Office. instrument flight rules at the affected publishers of aeronautical materials. airports. Thus, the advantages of incorporation Note: Information concerning the existence DATES: An effective date for each SIAP by reference are realized and of approved alternative methods of is specified in the amendatory publication of the complete description compliance with this airworthiness directive, provisions. of each SIAP contained in FAA form if any, may be obtained from the Engine Incorporation by reference-approved documents is unnecessary. The Certification Office. by the Director of the Federal Register provisions of this amendment state the (c) The actions required by this AD shall on December 31, 1980, and reapproved affected CFR (and FAR) sections, with be accomplished in accordance with the as of January 1, 1982. the types and effective dates of the following GE All Operators’ Wire: ADDRESSES: Availability of matters SIAPs. This amendment also identifies incorporated by reference in the the airport, its location, the procedure Document Pages Date amendment is as follows: identification and the amendment For Examination—1. FAA Rules number. Subject: FPI of Deep 1±3 Aug. 10, Docket, FAA Headquarters Building, The Rule Disk Spools, Best 1995. 800 Independence Avenue, SW., Practices. Washington, DC 20591; This amendment to part 97 is effective Total pages: 3. 2. The FAA Regional Office of the upon publication of each separate SIAP region in which the affected airport is as contained in the transmittal. Some SIAP amendments may have been This incorporation by reference was located; or previously issued by the FAA in a approved by the Director of the Federal 3. The Flight Inspection Area Office Register in accordance with 5 U.S.C. 552(a) which originated the SIAP. National Flight Data Center (FDC) and 1 CFR part 51. Copies may be obtained For Purchase—Individual SIAP Notice to Airmen (NOTAM) as an from General Electric Aircraft Engines, CF6 copies may be obtained from: emergency action of immediate flight Distribution Clerk, Room 132, 111 Merchant 1. FAA Public Inquiry Center (APA– safety relating directly to published Street, Cincinnati, OH 45246. Copies may be 200), FAA Headquarters Building, 800 aeronautical charts. The circumstances inspected at the FAA, New England Region, Independence Avenue, SW., which created the need for some SIAP Office of the Assistant Chief Counsel, 12 New Washington, DC 20591; or amendments may require making them England Executive Park, Burlington, MA; or 2. The FAA Regional Office of the effective in less than 30 days. For the at the Office of the Federal Register, 800 region in which the affected airport is remaining SIAPs, an effective date at North Capitol Street, NW., suite 700, located. least 30 days after publication is Washington, DC. By Subscription—Copies of all SIAPs, provided. mailed once every 2 weeks, are for sale Further, the SIAPs contained in this (d) This amendment becomes effective on by the Superintendent of Documents, amendment are based on the criteria September 21, 1995. U.S. Government Printing Office, contained in the U.S. Standard for Issued in Burlington, Massachusetts, on Washington, DC 20402. Terminal Instrument Approach August 29, 1995. FOR FURTHER INFORMATION CONTACT: Procedures (TERPS). In developing Paul J. Best, Flight Procedures these SIAPs, the TERPS criteria were Jay J. Pardee, Standards Branch (AFS–420), Technical applied to the conditions existing or Manager, Engine and Propeller Directorate, Programs Division, Flight Standards anticipated at the affected airports. Aircraft Certification Service. Service, Federal Aviation Because of the close and immediate [FR Doc. 95–21955 Filed 9–1–95; 3:38 pm] Administration, 800 Independence relationship between these SIAPs and Avenue, SW., Washington, DC 20591; safety in air commerce, I find that notice BILLING CODE 4910±13±U telephone (202) 267–8277. and public procedure before adopting Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46219 these SIAPs are impracticable and Memphis, TN, General Dewitt Spain, VOR delegations of authority to the Director contrary to the public interest and, RWY 16, Orig of the Office of Program Operations to where applicable, that good cause exists Millington, TN, Charles W. Baker, VOR/DME designate a State or local agency as a for making some SIAPs effective in less RWY 18, Orig Fair Employment Practices (FEP) agency Rutland, VT, Rutland State, GPS RWY 19, than 30 days. Orig and to determine whether a FEP The FAA has determined that this agency’s designation shall be regulation only involves an established ** * Effective October 12, 1995 withdrawn. Those authorities are now body of technical regulations for which Grand Canyon, AZ, Grand Canyon National vested in the full Commission. These frequent and routine amendments are Park, ILS/DME 1 RWY 3, Orig. changes are the result of a Motion necessary to keep them operationally CANCELLED adopted by the Commission on May 22, current. It, therefore—(1) is not a Columbus, GA, Columbus Metropolitan, LOC 1995. BC RWY 23, Amdt 13, CANCELLED ‘‘significant regulatory action’’ under EFFECTIVE DATE: September 6, 1995. Executive Order 12866; (2) is not a Columbus, GA, Columbus Metropolitan, ILS RWY 5, Amdt 24 FOR FURTHER INFORMATION CONTACT: ‘‘significant rule’’ under DOT Vincennes, IN, O’Neal, NDB or GPS–A, Amdt Thomas J. Schlageter, Assistant Legal Regulatory Policies and Procedures (44 5 Counsel, or John D. Norquist, General FR 11034; February 26, 1979); and (3) Bellaire, MI, Antrim County, GPS RWY 2, Attorney, at (202) 663–4669 (voice) or does not warrant preparation of a Orig (202) 663–7026 (TDD). This rule is also regulatory evaluation as the anticipated Roseau, MN, Roseau Muni, VOR or GPS–A, available in the following formats: large impact is so minimal. For the same Amdt 7A, CANCELLED Roseau, MN, Roseau Muni, VOR or GPS RWY print, braille, audio tape and electronic reason, the FAA certifies that this file on computer disk. Requests for this amendment will not have a significant 34, Orig rule in an alternative format should be economic impact on a substantial Roseau, MN, Roseau Muni, VOR or GPS RWY 16, Amdt 7 made to the Office of Equal Employment number of small entities under the Piqua, OH, Piqua, VOR/DME RNAV or GPS Opportunity at (202) 663–7081 (voice) criteria of the Regulatory Flexibility Act. RWY 26, Amdt 7 or (202) 663–7002 (TDD). Piqua, OH, Piqua, VOR RWY 26, Amdt 6 List of Subjects in 14 CFR Part 97 SUPPLEMENTARY INFORMATION: Piqua, OH, Piqua, VOR or GPS–A, Amdt 12 Section Air traffic control, Airports, Spokane, WA, Felts Field, GPS–A, Orig 706 of Title VII of the Civil Rights Act Navigation (Air). of 1964 recognizes a State or a political ** * Effective November 9, 1995 subdivision of a State that has a state or Issued in Washington, DC, on August 25, Anvik, AK, Anvik, NDB RWY 35, Orig 1995. local law prohibiting unlawful Noatak, AK, Noatak, NDB/DME RWY 36, Thomas C. Accardi, employment discrimination and a State Orig or local authority empowered to grant or Director, Flight Standards Service. Selawik, AK, Selawik, VOR RWY 3, Orig seek relief from such practice or to Selawik, AK, Selawik, VOR RWY 21, Orig Adoption of the Amendment Freeport, IL, Albertus, VOR or GPS RWY 24, institute criminal proceedings. The Accordingly, pursuant to the Amdt 6 Commission’s regulations allow such a authority delegated to me, part 97 of the Freeport, IL, Albertus, VOR/DME RNAV or State or local authority to apply for Federal Aviation Regulations (14 CFR GPS RWY 6, Amdt 5 formal designation as a ‘‘FEP Agency.’’ part 97) is amended by establishing, Ely, NV, Ely Airport/Yelland Field, GPS The Commission’s procedural amending, suspending, or revoking RWY 18, Orig regulations at 29 CFR 1601, Subpart G, Santa Fe, NM, Santa Fe County Muni, GPS sections 1601.70–.71 set forth the Standard Instrument Approach RWY 28, Orig Procedures, effective at 0901 u.t.c. on procedures for a FEP Agency to request Albany, NY, Albany County, ILS RWY 1, designation and for the Commission to the dates specified, as follows: Amdt 8 Port Clinton, OH, Carl R Keller Field, VOR/ determine if a designation should be PART 97ÐSTANDARD INSTRUMENT DME or GPS–A, Amdt 7 rescinded. APPROACH PROCEDURES Port Clinton, OH, Carl R Keller Field, NDB The current 1601.70 provides that any or GPS RWY 27, Amdt 11 State or local agency or authority 1. The authority citation for part 97 is Danville, VA, Danville Regional, VOR RWY seeking FEP agency designation should revised to read as follows: 24, Amdt 9, CANCELLED submit a written request to the Program Authority: 49 U.S.C. 106(g), 40103, 40113, ** * Effective Upon Publication Director, Office of Program Operations. 40120, 44701; and 14 CFR 11.49(b)(2). It also provides that the Program Baltimore, MD, Baltimore-Washington Intl, Director will provide to the State 2. Part 97 is amended to read as ILS RWY 28 Amdt 10 follows: attorney general and to any corporation [FR Doc. 95–22068 Filed 9–5–95; 8:45 am] counsel of an involved local government §§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33, BILLING CODE 4910±13±M an opportunity to comment upon and 97.35 [Amended] aspects of State or local law which By amending: § 97.23 VOR, VOR/DME might affect the qualifications of any VOR or TACAN, and VOR/DME, or EQUAL EMPLOYMENT OPPORTUNITY new agency. The Commission has TACAN; § 97.25 LOC, LOC/DME, LDA, COMMISSION determined that it needs to be more LDA/DME, SDF, SDF/DME; § 97.27 involved in the designation process. The NDB, NDB/DME; § 97.29 ILS, ILS/DME, 29 CFR Part 1601 Commission is therefore substituting the ISMLS, MLS, MLS/DME, MLS/RNAV; words ‘‘Chairman of the Commission’’ § 97.31 RADAR SIAPs; § 97.33 RNAV Procedural Regulations for ‘‘Program Director, Office of Program SIAPs; and § 97.35 COPTER SIAPs, AGENCY: Equal Employment Operations’’ in 1601.70. identified as follows: Opportunity Commission (EEOC). The current 1601.71 provides that the ** * Effective September 14, 1995 ACTION: Final rule. Program Director, Office of Program Willimantic, CT, Windham, VOR OR GPS–A, Operations, has the authority to Amdt 8 SUMMARY: EEOC is revising its determine whether State and local Willimantic, CT, Windham, LOC RWY 27, procedural regulations at 29 CFR agencies should be designated as FEP Amdt 2 sections 1601.70 and .71 to rescind the agencies. It also provides that when the 46220 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Program Director becomes aware of (a) substituting the word standards and plan requirements for events that lead him or her to believe ‘‘Commission’’ for the words ‘‘Program nonattainment areas. that a deferral agency no longer meets Director, Office of Program DATES: This final rule is effective on the requirements for deferral or Operations,’’; and November 6, 1995 unless adverse or designation, the Director should notify (b) substituting the words ‘‘the critical comments are received by the agency and request a response. Commission’’ for the words ‘‘he or she’’. October 6, 1995. If the effective date is Based on the response or after a hearing, 5. Paragraph (b) of section 1601.71 is delayed, a timely notice will be the Program Director is authorized to amended by substituting the word published in the Federal Register. render a final determination regarding ‘‘Commission’’ for the words ‘‘Program ADDRESSES: Copies of the rules and continuation of the agency as a FEP Director, Office of Program Operations,’’ EPA’s evaluation report of each rule are agency. The Commission has in both places where it is found in the available for public inspection at EPA’s determined that these decisions are first sentence. Region IX office during normal business better made by the full Commission. At 6. Paragraph (c) of section 1601.71 is hours. Copies of the submitted rules are its meeting on May 22, 1995, the amended by: available for inspection at the following Commission rescinded the delegation of (a) substituting the word ‘‘Chairman’’ locations: authority to the Director of the Office of for the words ‘‘Program Director, Office Rulemaking Section (A–5–3), Air and Program Operations to make of Program Operations,’’ in the first Toxics Division, U.S. Environmental determinations affecting the designation sentence; Protection Agency, Region IX, 75 of a State or local fair employment (b) substituting the words ‘‘the Hawthorne Street, San Francisco, CA practices agency as a FEP agency. As a Chairman’’ for the words ‘‘such 94105. result of this action, the Commission is Director’’ in the first sentence; Environmental Protection Agency, Air substituting ‘‘Commission’’ or (c) substituting the word ‘‘Chairman’’ Docket (6102), 401 ‘‘M’’ Street, SW., ‘‘Chairman of the Commission’’ for for the word ‘‘Director’’ in the second Washington, D.C. 20460. ‘‘Program Director, Office of Program sentence; and California Air Resources Board, Operations’’ in 1601.71 and making (d) substituting the word Stationary Source Division, Rule conforming grammatical adjustments. ‘‘Commission’’ for the word ‘‘Director’’ Evaluation Section, 2020 ‘‘L’’ Street, This rule is not a significant in the third sentence. Sacramento, CA 95814. regulatory action for the purposes of [FR Doc. 95–22025 Filed 9–5–95; 8:45 am] South Coast Air Quality Management Executive Order 12866. Under the BILLING CODE 6750±06±M District, 21865 E. Copley Drive, Regulatory Flexibility Act, this rule will Diamond Bar, CA 91765–4182. not have a significant economic effect FOR FURTHER INFORMATION CONTACT: Mae on a substantial number of small Wang, Rulemaking Section (A–5–3), Air entities. ENVIRONMENTAL PROTECTION AGENCY and Toxics Division, U.S. List of Subjects in 29 CFR Part 1601 Environmental Protection Agency, 40 CFR Part 52 Region IX, 75 Hawthorne Street, San Administrative practice and Francisco, CA 94105–3901, Telephone: procedure, Equal employment [CA 95±7±6789a; FRL±5280±1] (415) 744–1200. opportunity, Individuals with disabilities. Approval and Promulgation of SUPPLEMENTARY INFORMATION: Implementation Plans; California State Applicability For the Commission, Implementation Plan Revision; South Gilbert F. Casellas, Coast Air Quality Management District The rules being approved into the Chairman. California SIP include: SCAQMD Rule AGENCY: Environmental Protection 1146, Emissions of Oxides of Nitrogen For the reasons set forth in the Agency (EPA). preamble, EEOC is amending 29 CFR from Industrial, Institutional, and part 1601 as follows: ACTION: Direct final rule. Commercial Boilers, Steam Generators, and Process Heaters; and Rule 1146.1, PART 1601Ð[AMENDED] SUMMARY: EPA is taking direct final Emissions of Oxides of Nitrogen from action to approve revisions to the Small Industrial, Institutional, and 1. The authority citation for part 1601 California State Implementation Plan Commercial Boilers, Steam Generators, continues to read as follows: (SIP). The revisions concern rules from and Process Heaters. These rules were Authority: 42 U.S.C. 2000e to 2000e–17; 42 the South Coast Air Quality submitted by the California Air U.S.C. 12111 to 12117. Management District (SCAQMD) which Resources Board (CARB) to EPA on July control oxides of nitrogen (NOX) from 13, 1994. § 1601.70 [Amended] industrial, commercial, and institutional 2. Paragraph (b) of section 1601.70 is boilers, steam generators, and process Background amended by substituting the words heaters. This approval action will On November 15, 1990, the Clean Air ‘‘Chairman of the Commission’’ for the incorporate these rules into the Act Amendments of 1990 (CAA or the words ‘‘Program Director, Office of Federally approved SIP. The intended Act) were enacted. Pub. L. 101–549, 104 Program Operations’’ in the first effect of approving these rules is to Stat. 2399, codified at 42 U.S.C. 7401– sentence. regulate emissions of NOX in 7671q. The air quality planning 3. Paragraph (e) of section 1601.70 is accordance with the requirements of the requirements for the reduction of NOX amended by substituting the words Clean Air Act, as amended in 1990 emissions through reasonably available ‘‘Chairman or his or her designee’’ for (CAA or the Act). The EPA is finalizing control technology (RACT) are set out in the words ‘‘Program Director, Office of the approval of these revisions into the section 182(f) of the CAA. On November Program Operations,’’ in the first California SIP under provisions of the 25, 1992, EPA published a Notice of sentence. CAA regarding EPA action on SIP Proposed Rulemaking (NPRM) entitled 4. Paragraph (a) of section 1601.71 is submittals, SIPs for national primary ‘‘State Implementation Plans; Nitrogen amended by: and secondary ambient air quality Oxides Supplement to the General Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46221 Preamble; Clean Air Act Amendments SCAQMD’s efforts to achieve the Institutional, and Commercial Boilers, of 1990 Implementation of Title I; National Ambient Air Quality Standards Steam Generators, and Process Heaters, Proposed Rule,’’ (the NOX Supplement) for ozone and in response to the CAA contains the following significant which describes and provides requirements cited above. The following changes from the current SIP rule: preliminary guidance on the section contains EPA’s evaluation and 1. Expands applicability beyond requirements of section 182(f). 57 FR final action for these rules. steam generators with rated heat input capacity (RHIC) of 50 MBtu/hr or more. 55620. The NOX Supplement should be EPA Evaluation referred to for further information on the 2. Lowers emission limits. NOX requirements and is incorporated In determining the approvability of a 3. Adds definitions, control plan into this notice of direct final NOX rule, EPA must evaluate the rule requirements, recordkeeping, rulemaking by reference. for consistency with the requirements of compliance determination provisions, a Section 182(f) of the Clean Air Act the CAA and EPA regulations, as found compliance schedule, and an equipment requires States to apply the same in section 110 and part D of the CAA tuning procedure. requirements to major stationary sources and 40 CFR part 51 (Requirements for SCAQMD Rule 1146.1, Emissions of of NOX (‘‘major’’ as defined in section Preparation, Adoption and Submittal of Oxides of Nitrogen from Small 302 and section 182 (c), (d), and (e)) as Implementation Plans). The EPA Industrial, Institutional, and are applied to major stationary sources interpretation of these requirements, Commercial Boilers, Steam Generators, of volatile organic compound (VOC) which forms the basis for this action, and Process Heaters, is a new rule emissions, in moderate or above ozone appears in various EPA policy guidance which controls emissions from units nonattainment areas. The Los Angeles- documents.3 Among these provisions is between 2 and 5 million Btu per hour. South Coast Air Basin Area is classified the requirement that a NOX rule must, The major provisions of this rule as extreme; 1 therefore this area was at a minimum, provide for the include: emission limits, recordkeeping, subject to section 182(f), the RACT implementation of RACT for stationary compliance determination provisions, a requirements of section 182(b)(2), and sources of NOX emissions. compliance schedule, and an equipment the November 15, 1992 deadline, cited For the purposes of assisting state and tuning procedure. below. local agencies in developing NOX RACT For the source category of industrial, Section 182(b)(2) requires submittal of rules, EPA prepared the NOX commercial, and institutional boilers, RACT rules for major stationary sources Supplement to the General Preamble. In steam generators, and process heaters, the NOX Supplement, EPA provides of VOC (and NOX) emissions (not CARB has made a determination on the covered by either a pre-enactment or guidance on how RACT will be emission levels that constitute RACT, post-enactment control technologies determined for stationary sources of and CARB has published a guidance guideline (CTG) document) by NOX emissions. While most of the document concerning their guidance issued by EPA on what November 15, 1992. There were no NOX determination for this source category. CTGs issued before enactment and EPA constitutes RACT for stationary sources EPA believes that the emission limits in has been directed towards application has not issued a CTG document for any Rule 1146 and Rule 1146.1 are for VOC sources, much of the guidance NOX sources since enactment of the consistent with guidance and policy for is also applicable to RACT for stationary CAA. The RACT rules covering NOx making RACT determinations, and that sources of NOX (see section 4.5 of the sources and submitted as SIP revisions, these limits satisfy the RACT NOX Supplement). In addition, pursuant are expected to require final installation requirement. A more detailed to section 183(c), EPA is issuing of the actual NOx controls as discussion of the sources controlled,4 alternative control technique documents expeditiously as practicable, but no later the controls required, and the (ACTs), which identify alternative than May 31, 1995. justification for why these controls controls for all categories of stationary SCAQMD Rule 1146 and Rule 1146.1 represent RACT can be found in the sources of NOX. The ACT documents were adopted by SCAQMD on May 13, Technical Support Document (TSD) for will provide information on control 1994, and were submitted by CARB to each rule, available from the U.S. EPA technology for stationary sources that EPA on July 13, 1994. These submitted Region IX office. emit or have the potential to emit 25 rules were found to be complete on July EPA has evaluated the submitted rule tons per year or more of NOX. However, 22, 1994 pursuant to EPA’s and has determined that it is consistent the ACTs will not establish a completeness criteria that are set forth with the CAA, EPA regulations and EPA presumptive norm for what is in 40 CFR part 51, appendix V.2 policy. Therefore, SCAQMD Rule 1146 By considered RACT for stationary sources today’s notice, EPA is taking direct final and Rule 1146.1 are being approved of NOX. In general, the guidance under section 110(k)(3) of the CAA as action to approve these rules into the documents cited above, as well as other meeting the requirements of section Federally approved SIP. relevant and applicable guidance SCAQMD Rule 1146 and 1146.1 110(a), section 182(b)(2), section 182(f) documents, have been set forth to control emissions of NOX from and the NOX Supplement to the General ensure that submitted NOX RACT rules Preamble. industrial, commercial, and institutional meet Federal RACT requirements and Nothing in this action should be boilers, steam generators and process are fully enforceable and strengthen or construed as permitting or allowing or heaters. NOX emissions contribute to the maintain the SIP. production of ground level ozone and SCAQMD Rule 1146, Emissions of establishing a precedent for any future smog. The rules were adopted as part of Oxides of Nitrogen from Industrial, request for revision to any state implementation plan. Each request for 1 The Los Angeles-South Coast Air Basin Area 3 Among other things, the pre-amendment revision to the state implementation retained its designation of nonattainment and was guidance consists of those portions of the proposed plan shall be considered separately in classified by operation of law pursuant to sections post-1987 ozone and carbon monoxide policy that light of specific technical, economic and 107(d) and 181(a) upon the date of enactment of the concern RACT, 52 FR 45044 (November 24, 1987); environmental factors and in relation to CAA. See 55 FR 56694 (November 6, 1991). ‘‘Issues Relating to VOC Regulation Cutpoints, 2 EPA adopted the completeness criteria on Deficiencies, and Deviations, Clarification to February 16, 1990 (55 FR 5830) and, pursuant to Appendix D of November 24, 1987 Federal Register 4 Rule 1146 and Rule 1146.1 will apply to section 110(k)(1)(A) of the CAA, revised the criteria Notice’’ (Blue Book) (notice of availability was sources which are not covered in the SCAQMD on August 26, 1991 (56 FR 42216). published in the Federal Register on May 25, 1988). NOX RECLAIM program. 46222 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations relevant statutory and regulatory Small Businesses (c) * * * requirements. Under the Regulatory Flexibility Act, (198) * * * EPA is publishing this document 5 U.S.C. Section 600 et seq., EPA must (i) * * * without prior proposal because the prepare a regulatory flexibility analysis (H) South Coast Air Quality Agency views this as a noncontroversial assessing the impact of any proposed or Management District. amendment and anticipates no adverse final rule on small entities. 5 U.S.C. (1) Rule 1146 and Rule 1146.1, comments. However, in a separate sections 603 and 604. Alternatively, adopted May 13, 1994. document elsewhere in this Federal EPA may certify that the rule will not * * * * * Register, the EPA is proposing to have a significant economic impact on [FR Doc. 95–21877 Filed 9–5–95; 8:45 am] approve the SIP revision should adverse a substantial number of small entities. BILLING CODE 6560±50±W or critical comments be filed. This Small entities include small businesses, action will be effective November 6, small not-for-profit enterprises, and 1995, unless, by October 6, 1995, government entities with jurisdiction 40 CFR Part 52 adverse or critical comments are over populations of less than 50,000. [SD6±1±6947a and SD5±1±6191a; FRL± received. SIP approvals under section 110 and 5279±3] subchapter I, part D of the CAA do not If the EPA receives such comments, create any new requirements, but Clean Air Act Approval and this action will be withdrawn before the simply approve requirements that the Promulgation of State Implementation effective date by publishing a State is already imposing. Therefore, Plan for South Dakota; Revisions to subsequent notice that will withdraw because the Federal SIP-approval does the Air Pollution Control Program the final action. All public comments not impose any new requirements, I received will then be addressed in a certify that it does not have a significant AGENCY: Environmental Protection subsequent final rule based on this impact on affected small entities. Agency (EPA). action serving as a proposed rule. The Moreover, due to the nature of the ACTION: Direct final rule. EPA will not institute a second Federal-state relationship under the comment period on this action. Any CAA, preparation of a regulatory SUMMARY: EPA approves the State parties interested in commenting on this flexibility analysis would constitute implementation plan (SIP) revisions action should do so at this time. If no Federal inquiry into the economic submitted by the State of South Dakota such comments are received, the public reasonableness of state action. The CAA on November 12, 1993 and March 7, is advised that this action will be forbids EPA to base its actions 1995. EPA is replacing the existing rules effective November 6, 1995. concerning SIPs on such grounds. approved in the SIP with the following chapters of the Administrative Rules of Regulatory Process Union Electric Co. v. U.S. E.P.A. , 427 U.S. 246, 256–66 (S. Ct. 1976); 42 U.S.C. South Dakota (ARSD), as requested by Unfunded Mandates section 7410(a)(2). the State: 74:36:01–74:36:04, 74:36:06; The Office of Management and Budget 74:36:07, 74:36:10–74:36:13, and Under Sections 202, 203, and 205 of has exempted this regulatory action 74:36:15, as in effect on January 5, 1995. the Unfunded Mandates Reform Act of from review under Executive Order The State’s submittals included 1995 (‘‘Unfunded Mandates Act’’), 12866. revisions to the State’s definitions, signed into law on March 22, 1995, EPA minor source construction and federally must undertake various actions in List of Subjects in 40 CFR Part 52 enforceable state operating permit association with proposed or final rules Environmental protection, Air (FESOP) rules, source category emission that include a Federal mandate that may pollution control, Hydrocarbons, limitations, sulfur dioxide (SO2) rules, result in estimated costs of $100 million Incorporation by reference, new source performance standards or more to the private sector or to state, Intergovernmental relations, Nitrogen (NSPS), new source review (NSR) local, or tribal governments in the dioxide, Nitrogen oxides, Ozone, requirements for new and modified aggregate. Reporting and recordkeeping major sources impacting nonattainment Through submission of this state requirements, Volatile organic areas, and enhanced monitoring and implementation plan revision, the State compound. compliance certification requirements. and any affected local or tribal Dated: August 8, 1995. In addition, EPA is approving the governments have elected to adopt the Felicia Marcus, State’s construction and operating program provided for under part D of Regional Administrator. permit program under section 112(l) of the Clean Air Act (Act) for the purposes the Clean Air Act. These rules may bind Part 52, chapter I, title 40 of the Code state, local, and tribal governments to of creating federally enforceable permit of Federal Regulations is amended as conditions for sources of hazardous air perform certain actions and also require follows: the private sector to perform certain pollutants (HAPs). duties. The rules being approved by this PART 52Ð[AMENDED] DATES: This final rule is effective on action will impose no new requirements November 6, 1995 unless adverse because affected sources are already 1. The authority citation for part 52 comments are received by October 6, subject to these regulations under state continues to read as follows: 1995. If the effective date is delayed, law. Therefore, no additional costs to Authority: 42 U.S.C. 7401–7671q. timely notice will be published in the state, local, or tribal governments or to Federal Register. the private sector result from this action. Subpart FÐCalifornia ADDRESSES: Copies of the State’s EPA has also determined that this direct 2. Section 52.220 is amended by submittal and other information are final action does not include a mandate adding paragraph (c) (198)(i)(H)(1) to available for inspection during normal that may result in estimated costs of read as follows: business hours at the following $100 million or more to state, local, or locations: Air Programs Branch, tribal governments in the aggregate or to § 52.220 Identification of plan. Environmental Protection Agency, the private sector. * * * * * Region VIII, 999 18th Street, suite 500, Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46223 Denver, Colorado 80202–2405; South Emission Standards for Hazardous Air The SIP revisions were reviewed by Dakota Department of Environment and Pollutants, which the State has taken EPA to determine completeness shortly Natural Resources, Division of out of the SIP and has instead requested after their submittal, in accordance with Environmental Regulation, Joe Foss delegation of authority for these the completeness criteria referenced Building, Pierre, South Dakota 57501; standards; ARSD 74:36:09 Prevention of above. The submittals were found to be and The Air and Radiation Docket and Significant Deterioration (PSD), which complete, and letters dated January 12, Information Center, 401 M Street, SW, incorporates by reference the 1994 and June 28, 1995 were forwarded Washington, D.C. 20460. corresponding Federal rules at 40 CFR to the Governor indicating the Written comments should be 52.21 that EPA delegated authority to completeness of the submittals and the addressed to Vicki Stamper, 8ART–AP, the State to implement on July 6, 1994 next steps to be taken in the processing Environmental Protection Agency, (see September 15, 1994 Federal of the SIP submittals. Region VIII, 999 18th Street, suite 500, Register, 59 FR 47260); ARSD 74:36:14 2. Evaluation of State’s Submittals Denver, Colorado. Variances, which the State did not FOR FURTHER INFORMATION CONTACT: include in the SIP because such a The following summarizes the State’s Vicki Stamper, (303) 293–1765. provision could not be approved as part submittals and EPA’s review for of the SIP as it is inconsistent with approvability: SUPPLEMENTARY INFORMATION: section 110(i) of the amended Act; and a. ARSD 74:36:01 Definitions I. Background ARSD 74:36:16 Acid Rain Program, The State made numerous revisions to On November 12, 1993, the State of which will be acted on by EPA separate from this SIP approval. its definitions in ARSD 74:36:01 in South Dakota submitted revisions to its order to make the definitions consistent SIP. Specifically, the State requested This document evaluates the State’s submittal for conformity with the with other provisions in the State’s rules that the existing State rules approved in and with the corresponding Federal the SIP be replaced with the most recent corresponding Federal regulations and the requirements of the Act. regulations, including the State’s codification of the ARSD, Chapters recently adopted title V permitting 74:36:01–04 and 74:36:06–13 inclusive. II. This Action program in ARSD 74:36:05 and the acid In addition to recodification, the State A. Analysis of State Submissions rain program in ARSD 74:36:16. made numerous revisions to its air EPA has reviewed the definitions quality regulations, including 1. Procedural Background included in this chapter against the definitions, minor source construction The Act requires States to observe corresponding Federal definitions in 40 and operating permit rules, source CFR parts 51, 60, and 70 and for category emission limitations, NSPS, certain procedural requirements in developing implementation plans and conformity with the State’s regulations. national emission standards for EPA believes the revised definitions are hazardous air pollutants (NESHAPs), plan revisions for submission to EPA. Section 110(a)(2) of the Act provides consistent with the corresponding NSR requirements for new and modified Federal definitions, with the following sources impacting nonattainment areas, that each implementation plan submitted by a State must be adopted clarifications. and other minor revisions. As discussed in EPA’s January 12, In a July 13, 1994 letter, EPA noted after reasonable notice and public 1995 Federal Register notice of many deficiencies in the State’s hearing. Section 110(l) of the Act proposed interim approval of South November 12, 1993 submittal and similarly provides that each revision to Dakota’s title V program (see 60 FR requested that the State correct the an implementation plan submitted by a 2919), EPA believes clarification major deficiencies before EPA would State under the Act must be adopted by regarding two of the State’s definitions proceed with approval. The State made such State after reasonable notice and is necessary to ensure that the those corrections to its rules and public hearing. provisions are interpreted consistently submitted the rule corrections to EPA The EPA also must determine whether a submittal is complete and with the Federal regulations: on March 7, 1995. In that submittal, the (1) The definition of ‘‘federally State also addressed EPA’s July 7, 1994 therefore warrants further EPA review and action [see section 110(k)(1) and 57 enforceable’’ which appears at ARSD call for revision of the South Dakota SIP 74:36:01:01(28) reads as follows: to comply with the enhanced FR 13565, April 16, 1992]. The EPA’s monitoring and compliance certification completeness criteria for SIP submittals ‘‘Federally enforceable,’’ all limits and program requirements of sections 110, are set out at 40 CFR part 51, appendix conditions that are enforceable by the 113, and 114 of the Act. In addition, the V. The EPA attempts to make administrator of EPA pursuant to federal law. completeness determinations within 60 These limits and conditions include those State adopted other revisions to its requirements developed pursuant to this rules, including its acid rain rules and days of receiving a submission. article, those appearing in 40 CFR 60 and 61 updates to its incorporation by reference However, a submittal is deemed (July 1, 1993), requirements within the state of the Federal requirements for NSPS complete by operation of law under implementation plan and permit and HAPs. section 110(k)(a)(B) if a completeness requirements established pursuant to this The March 7 submittal requested that determination is not made by EPA article or 40 CFR 51 Subpart I (July 1, 1993). the previous regulations approved in the within six months after receipt of the The use of this term does not impede the SIP be replaced with ARSD Chapters submission. Department’s authority under state law to 74:36:01–74:36:04, 74:36:06; 74:36:07, The State of South Dakota held public enforce these limits and conditions. 74:36:10–74:36:13, and 74:36:15, as in hearings on February 18, 1993 and This definition is significant for effect on January 5, 1995. The following November 17, 1994 to entertain public determining whether a source is subject State regulations were not included in comment on the SIP revisions, at which to preconstruction and operating the State’s March 7 SIP submittal: ARSD the rule revisions were adopted by the permitting requirements as a major 74:36:05 Operating Permits for Part 70 State. These rule revisions were source or as a minor source, because it Sources, for which EPA granted interim formally submitted to EPA for approval is used in defining the ‘‘potential to approval on March 22, 1995 (see 60 FR in the SIP on November 12, 1993 and on emit’’ of a source. To be consistent with 15066–15069); ARSD 74:36:08 National March 7, 1995. EPA’s definition of ‘‘federally 46224 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations enforceable,’’ the second sentence of the c. ARSD 74:36:03 Air Quality Episodes on November 3, 1993, EPA announced above definition cannot and should not This chapter was revised to refer to in a guidance document entitled, be read to expand on the first sentence the Federal guidelines for emergency ‘‘Approaches to Creating Federally of the definition. For example, episode plans in 40 CFR 51.151–153 Enforceable Emissions Limits,’’ from requirements developed pursuant to and appendix L. The State’s regulation John S. Seitz, Director, OAQPS, that this ARSD Article 74:36 might be, but would is consistent with the relevant Federal mechanism could be extended to create not necessarily be, federally enforceable. requirements and is approvable. federally enforceable limits for Such Federal enforceability would emissions of HAPs if the program were depend on whether such requirements d. ARSD 74:36:04 Operating Permits approved pursuant to section 112(l) of had been included in a source’s for Minor Sources the Act. (See Section III. below for preconstruction or operating permit This chapter was revised extensively further details on EPA’s section 112(l) issued under an EPA-approved program, to combine the State’s existing minor approval of South Dakota’s FESOP whether such requirements had been source construction permit and FESOP program.) As detailed in the TSD, EPA has approved by EPA as part of the SIP, or requirements into one permitting system reviewed the State’s permitting program whether such requirements were and to ensure compliance with the for conformity with the FESOP criteria already considered Federal regulations Federal requirements for both outlined in the June 28, 1989 Federal (such as NSPS promulgated in 40 CFR construction permit programs and Register notice and believes the State’s part 60 which South Dakota has FESOP programs. This chapter only program adequately meets those incorporated by reference in ARSD applies to sources which are not requirements, although one clarification 74:36:07). EPA’s interpretation is that considered to be 40 CFR part 70 sources the requirements delineated in the regarding their rules needs to be made: (i.e., sources which are not required to South Dakota’s rules do not second sentence of the definition are obtain a title V operating permit). (Note only federally enforceable if they are specifically provide for submittal of that the State’s construction permitting each proposed and final permit to EPA enforceable by the administrator of EPA program for new and modified major pursuant to Federal law. on a timely basis. However, EPA has sources is the State’s PSD permitting established procedures in the annual (2) The second sentence of the program in ARSD 74:36:09.) State-EPA agreement requiring the State definition of ‘‘major source’’ in ARSD Specifically, a new source in South to submit to EPA proposed and final 74:36:01:08(1) reads as follows: Dakota must obtain an operating permit permits which would limit the potential Emissions from any oil exploration or prior to construction, and an existing to emit of a source so that it would not production well and its associated equipment source must obtain a permit in order to be considered major. EPA reiterates that and emissions from any pipeline compressor operate the source. Such operating requirement in this document. That is, or pump station may not be aggregated with permits will be valid for five years and for any operating permit issued by the emissions from other similar units, whether must be renewed. State to be considered federally or not such units are in a contiguous area or (1) Construction Permit Program. enforceable, the State must submit the under common control, to determine whether The minor source construction permit such units or stations are major sources. proposed and final permit to EPA in a element of the State’s permitting timely manner, as well as meet all of the To be consistent with the Federal program must meet the corresponding other requirements of its program and regulations, this sentence must be read Federal requirements in 40 CFR 51.160– the June 28, 1989 Federal Register. as only being applicable to a 164, in order to be approved by EPA. As Thus, EPA is approving South determination of whether a source is detailed in the Technical Support Dakota’s construction permit/FESOP major under section 112 of the Act. This Document (TSD) accompanying this program because it adequately meets the language cannot be applied when notice, EPA believes the State’s requirements of the June 28, 1989 determining whether a source is major construction permit requirements meet Federal Register and 40 CFR 51.160– under other sections of the Act. all of the corresponding Federal 164. Permits issued by the State that requirements in 40 CFR 51.160–164. conform to the State’s rules and With these interpretations, EPA (2) FESOP Program. corresponding Federal requirements believes the definitions in ARSD On June 28, 1989, EPA published will be considered federally enforceable. 74:36:01 are consistent with the criteria for approving and incorporating See the TSD accompanying this corresponding Federal regulations. EPA into the SIP regulatory programs for the document for further details. is approving all of the definitions in issuance of FESOPs (see 54 FR 27282). ARSD 74:36:01, with the exception of Permits issued pursuant to an operating e. ARSD 74:36:06 Regulated Air two definitions related to the State’s permit program approved into the SIP as Pollutants acid rain program which EPA will be meeting these criteria may be In this chapter, the State combined its acting on separately: ‘‘acid rain permit’’ considered federally enforceable. The Control of Particulate Emissions and ‘‘acid rain program’’ in ARSD EPA has encouraged States to develop regulation previously codified in ARSD 74:36:01:01(2) and (3). such FESOP programs in conjunction 74:26:06 and its Control of Sulfur b. ARSD 74:36:02 Ambient Air Quality with title V operating permit programs Compound Emissions regulation to enable sources to limit their potential previously codified in ARSD 74:26:07 This chapter was revised to refer to to emit to below the title V applicability into one chapter. The State made minor the Federal regulations for the National thresholds. (See the September 18, 1992 revisions to simplify its particulate Ambient Air Quality Standards guidance document entitled, matter emission regulations, which EPA (NAAQS), methods of sampling and ‘‘Limitation of Potential to Emit with believes are consistent with the Act and analysis, air quality monitoring Respect to Title V Applicability approvable. networks, and ambient air monitoring in Thresholds,’’ from John Calcagni, In addition, the State made revisions 40 CFR parts 50, 53, and 58. The State’s Director, Air Quality Management to its regulations controlling SO2 regulation is consistent with the Division, Office of Air Quality Planning emissions in this chapter, as a result of relevant Federal requirements and is and Standards (OAQPS), Office of Air EPA’s nationwide effort to have SO2 approvable. and Radiation, U.S. EPA.) In addition, enforceability deficiencies identified Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46225 and corrected in SIPs before title V authorities which cannot be delegated to This regulation also address EPA’s operating permit programs become the State, in which case ‘‘administrator’’ nationwide SIP call regarding the new effective. Because the title V operating means both EPA and the State. Since enhanced monitoring and compliance permits will initially incorporate this chapter incorporates by reference certification requirements of the underlying SIP requirements, it is the Federal NSPS in 40 CFR part 60, it amended Act. On October 22, 1993, EPA important that the underlying SIP is is consistent with Federal requirements announced in the Federal Register that enforceable so that the permits and approvable. SIP calls pursuant to section 110(k)(5) of themselves will be enforceable. Thus, g. ARSD 74:36:10 New Source Review the Act would be issued in order to on March 8, 1991, EPA provided a list implement the enhanced monitoring of enforceability deficiencies in South In this chapter, the State adopted requirements of section 114(a)(3) of the Dakota’s SO2 emission control rules. provisions for new and modified major Act and the periodic monitoring The Region used the ‘‘SO2 SIP stationary sources proposing to locate in requirements for operating permits Enforceability Checklist’’ when attainment/unclassified areas but which under sections 502(b)(2) and 504 of the reviewing South Dakota’s SO2 rules for cause or contribute to a violation of the Act (see 58 FR 54677). This SIP call is enforceability deficiencies. This NAAQS, in accordance with the required because existing SIPs are checklist was included as an attachment requirements in 40 CFR 51.165(b). The inadequate in that they may be to the November 28, 1990 memorandum State currently has no areas designated interpreted to limit the types of testing from Robert Bauman and Rich Biondi to nonattainment for the NAAQS, so the or monitoring data that may be used for the Air Branch Chiefs, and it focused on State is currently not required to adopt determining compliance and the following topics: nonattainment NSR provisions. EPA has establishing violations. (1) Clarity; reviewed the provisions in this chapter (2) Averaging times consistent with against the corresponding Federal On July 7, 1994, the EPA notified the protection of the SO2 NAAQS; requirements in 40 CFR 51.165 and Governor of South Dakota that a SIP (3) Clear compliance determinations; found it to be consistent and therefore revision was necessary to meet the (4) Continuous emission monitoring; approvable. aforementioned requirements of the Act. (5) Adequate reporting and EPA’s letter provided the States with recordkeeping requirements; h. ARSD 74:36:11 Stack Performance two options for regulatory language that, (6) Director’s discretion issues; and Testing if adopted by the State and submitted to (7) Stack height issues. EPA for approval in the SIP, would The State of South Dakota This chapter was revised to refer to the Federal test methods in 40 CFR part satisfy the requirements of this SIP call. subsequently adopted revisions to In Sections 74:36:13:06–07 of the ARSD, address the deficiencies outlined in 51, appendix M, and 40 CFR part 60 as the State has adopted provisions which EPA’s March 8, 1991 letter. Those the test methods required to be used by are essentially identical to the revisions include: clarifying the sources and to make other minor regulatory language provided in option applicability of this chapter to include revisions. EPA has reviewed the 2 of the attachment to EPA’s July 7, units required to be permitted under revisions to this chapter and has found 1994 letter, as follows: article 74:36; specifying a 3-hour rolling they are consistent with the averaging time, consistent with the SO corresponding Federal requirements and (a) In ARSD 74:36:13:06, the State has 2 approvable. NAAQS, for the SO2 emission added a provision stating that, when limitations of this chapter; and referring i. ARSD 74:36:12 Control of Visible submitting compliance certifications, an to test methods listed in chapter Emissions owner or operator of a source may use 74:36:11 and including appropriate monitoring as required under 40 CFR reference methods in that chapter. Minor revisions were made to this 70.6(a)(3) in addition to any specified Recordkeeping and reporting chapter, mainly to update the compliance methods. The practical requirements are addressed through the incorporation by reference of 40 CFR effect of this provision is that the SIP is operating permit rules in ARSD part 60, appendix A to reflect the July now more flexible and inclusive and 74:36:05:16. 1, 1993 version. EPA has reviewed the does not preclude the use of enhanced EPA believes the State has adequately revisions to this chapter and has found monitoring. they are consistent with the addressed the SO2 deficiencies corresponding Federal requirements. (b) In ARSD 74:36:13:07, the State has identified in EPA’s March 8, 1991 letter. added provisions stating that any Therefore, EPA is approving the State’s j. ARSD 74:36:13 Continuous Emission credible evidence may be used to SO2 regulations. Monitoring Systems determine if a violation has occurred at f. ARSD 74:36:07 New Source (1) Continuous Emission Monitoring a source. The rule provides that Performance Standards Requirements. information from monitoring methods In this chapter, the State has adopted This new chapter was added to approved in a federally enforceable new NSPS by incorporating by reference authorize the State to require major operating permit or in the SIP, as well the Federal NSPS for subparts Dc, QQ, sources to install continuous emission as from any other federally enforceable RR, VV, XX, AAA, JJJ, NNN, and SSS of monitors (CEMs) and to require that monitoring and testing methods 40 CFR part 60, as in effect on July 1, such CEMs meet the Federal (including those in 40 CFR Parts 51, 60, 1993. Also, the State updated the performance specifications in 40 CFR 61, and 75), may be used by the State incorporation by reference citations of part 60. EPA has reviewed these as credible evidence to determine its existing NSPS to reflect the July 1, requirements adopted in ARSD compliance. 1993 version of 40 CFR part 60. In 74:36:13:01–05 and has found these EPA believes the State has adequately addition, the State added a provision rules to be consistent with the satisfied the requirements of that SIP clarifying that the term ‘‘administrator,’’ corresponding Federal requirements and call letter and, therefore, is approving as used in the Federal regulations approvable. Sections 74:36:13:06–07 regarding incorporated into the State’s regulations, (2) Enhanced Monitoring and enhanced monitoring and compliance means the State except for those Compliance Certification. certifications. 46226 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations k. ARSD 74:36:15 Open Burning Potential to Emit of a Stationary Source programs approved under section 112(l) The State made revisions to this Under Section 112 and Title V of the without further rulemaking once the chapter by further detailing those items Clean Air Act,’’ in order for EPA to revisions to subpart E are promulgated. that could not be disposed of by open consider any construction permit terms As discussed in Section II.A.2.d. burning, and by providing ability for federally enforceable, such permit above and in the TSD, EPA believes conditions must be enforceable as a small municipalities to burn solid South Dakota’s combined construction practical matter. South Dakota’s wastes. Other minor revisions were also permit/FESOP program meets the permitting program will allow the State made. EPA has reviewed the revisions applicable Federal criteria for approval to issue permits that are enforceable as and believes they are consistent with of such programs in the SIP. In addition, a practical matter. Thus, any permits the requirements of the Act and South Dakota’s construction and issued in accordance with South approvable. operating permit program meets the Dakota’s construction permit program statutory criteria for approval under III. Approval of South Dakota’s and which are practically enforceable section 112(l)(5), as follows: Construction and Operating Permit would be considered federally Regarding the statutory criteria of Program Under Section 112(l) of the enforceable. section 112(l)(5), EPA believes South Act. EPA believes that the five approval criteria for approving FESOP programs Dakota’s permitting program contains In this action, EPA is also approving into the SIP, as specified in the June 28, adequate authority to assure compliance South Dakota’s combined construction/ 1989 Federal Register notice, are also with section 112 requirements since the FESOP permit program in ARSD appropriate for evaluating and third criterion of the June 28, 1989 74:36:04 under section 112(l) of the Act approving such programs under section notice is met, i.e., since the State’s for the purpose of creating federally 112(l). The requirements outlined in the program does not provide for waiving enforceable limits on the potential to June 28, 1989 notice need not be unique any section 112 requirement. Sources emit of HAPs listed pursuant to section to criteria pollutants since the reason that become minor through a permit 112(b) of the Act. Approval under that the notice does not address HAPs issued pursuant to these programs section 112(l) is necessary to allow the is simply that it was written prior to the would still be required to meet section State to create federally enforceable 1990 Amendments to section 112. 112 requirements applicable to non- limits on the potential to emit of HAPs, In addition to meeting the criteria in major sources. because SIP approval of this permitting 40 CFR 51.160–164 for construction Regarding the requirement for program only extends to the control of permits and the criteria in the June 28, adequate resources, the State has HAPs which are photochemically 1989 Federal Register notice for committed to provide for adequate reactive organic compounds or FESOPs, a permitting program that resources to implement and enforce the particulate matter. Federally enforceable addresses HAPs must meet the statutory program. EPA will monitor the State’s limits on photochemically reactive criteria for approval under section implementation of the program to assure organic compounds or particulate 112(l)(5). Section 112(l) allows EPA to that adequate resources continue to be matter may have the incidental effect of approve a program only if it: (1) available. limiting certain HAPs.1 As a legal Contains adequate authority to assure EPA also believes that South Dakota’s matter, no additional program approval compliance with any section 112 construction and operating permit by EPA is required in order for these standards or requirements; (2) provides program provides for an expeditious ‘‘criteria’’ pollutant limits to be for adequate resources; (3) provides for schedule for assuring compliance with recognized as federally enforceable. an expeditious schedule for assuring section 112 requirements. This program However, section 112 of the Act compliance with section 112 will be used to allow a source to provides the underlying authority for requirements; and (4) is otherwise likely establish a voluntary limit on potential controlling all HAP emissions. to satisfy the objectives of the Act. to emit so as to avoid being subject to As discussed above and in the TSD, EPA plans to codify the approval a Federal requirement applicable on a the criteria which are used in approving criteria for programs limiting potential particular date. Nothing in the State’s minor source construction permit to emit of HAPs through amendments to program would allow a source to avoid programs are located in 40 CFR 51.160– subpart E of 40 CFR part 63, the or delay compliance with the Federal 164. EPA believes the most significant regulations promulgated to implement requirement if it fails to obtain the criteria in 40 CFR part 51 for creating section 112(l) of the Act. (See 58 FR appropriate federally enforceable limit federally enforceable limits through 62262, November 26, 1993.) EPA by the relevant deadline. construction permits are those in 40 believes it has the authority under CFR 51.160–162. Further, as discussed section 112(l) to approve programs to Finally, EPA believes it is consistent in EPA’s January 25, 1995 memorandum limit the potential to emit of HAPs with the intent of the section 112 and from John S. Seitz, Director of the Office directly under section 112(l) prior to the Act for States to provide a of Air Quality Planning and Standards, this revision to subpart E of 40 CFR part mechanism through which sources may and Robert I. Van Heuvelen, Director of 63. Given the timing problems posed by avoid classification as a major source by the Office of Regulatory Enforcement, impending deadlines under section 112 obtaining a federally enforceable limit entitled ‘‘Options for Limiting the and title V, EPA believes it is reasonable on potential to emit. to read section 112(l) to allow for Accordingly, EPA finds that South 1 EPA issued guidance addressing the technical approval of programs to limit potential Dakota’s construction permit/FESOP aspects of how these criteria pollutant limits may to emit prior to promulgation of a rule program satisfies the applicable criteria be recognized for purposes of limiting a source’s potential to emit of HAPs to below section 112 specifically addressing this issue. EPA for establishing federally enforceable major source levels. Please refer to the January 25, is therefore approving South Dakota’s limitations on potential to emit both 1995 EPA policy from John Seitz and Robert Van combined construction permit/FESOP criteria and hazardous air pollutants. Heuvelen entitled ‘‘Options for Limiting the program now so that South Dakota may Thus, EPA is approving South Dakota’s Potential to Emit of a Stationary Source under Section 110 and Title V of the Clean Air Act,’’ begin to issue federally enforceable construction permit/FESOP program in available at the EPA office listed at the beginning synthetic minor permits as soon as ARSD 74:36:04 under section 112(l) of of this document. possible. EPA also plans to codify the Act. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46227 IV. Final Action on this action should do so at this time. requirements; such sources are already EPA is approving the revisions to the If no such comments are received, the subject to these regulations under State South Dakota SIP which were submitted public is advised that this action will be law. Accordingly, no additional costs to by the State on March 7, 1995 and on effective on November 6, 1995. State, local, or tribal governments, or to Nothing in this action should be November 12, 1993. Specifically, EPA is the private sector, result from this construed as permitting or allowing or replacing the existing State regulations action. EPA has also determined that establishing a precedent for any future approved in the SIP with the following this final action does not include a request for revision to any SIP. Each chapters of the ARSD, effective on mandate that may result in estimated request for revision to a SIP shall be January 5, 1995: 74:36:01–74:36:04, costs of $100 million or more to State, considered separately in light of specific 74:36:06; 74:36:07, 74:36:10–74:36:13, local, or tribal governments in the technical, economic, and environmental and 74:36:15. However, EPA is not aggregate or to the private sector. factors and in relation to relevant taking action at this time on two Under section 307(b)(1) of the Clean statutory and regulatory requirements. Air Act, petitions for judicial review of definitions in ARSD 74:36:01 related to Under the Regulatory Flexibility Act, the State’s acid rain program which EPA this action must be filed in the United 5 U.S.C. 600, et seq., EPA must prepare States Court of Appeals for the will be acting on separately: ‘‘acid rain a regulatory flexibility analysis permit’’ and ‘‘acid rain program’’ in appropriate circuit by November 6, assessing the impact of any proposed or 1995. Filing a petition for ARSD 74:36:01:01(2) and (3). final rule on small entities. 5 U.S.C. 603 In addition to approving South reconsideration by the Administrator of and 604. Alternatively, EPA may certify this final rule does not affect the finality Dakota’s construction permit/FESOP that the rule will not have a significant program in ARSD 74:36:04 as part of the of this rule for the purposes of judicial economic impact on a substantial review nor does it extend the time SIP, EPA is also approving this program number of small entities. Small entities under section 112(l) of the Act for the within which a petition for judicial include small businesses, small not-for- review must be filed, and shall not purposes of creating federally profit enterprises, and government enforceable permit conditions on HAPs. postpone the effectiveness of such rule entities with jurisdiction over or action. This action may not be Note that in order for EPA to consider populations of less than 50,000. operating permits issued under ARSD challenged later in proceedings to Approvals of SIP submittals under enforce its requirements (see section 74:36:04 to be federally enforceable, the section 110 and subchapter I, part D of State must submit the proposed and 307(b)(2)). the Clean Air Act do not create any new This action has been classified as a final permits to EPA in a timely manner, requirements, but simply approve as well as meet the other requirements Table 3 action for signature by the requirements that the State is already Regional Administrator under the of its program and the June 28, 1989 imposing. Therefore, because the Federal Register. procedures published in the Federal Federal SIP-approval does not impose Register on January 19, 1989 (54 FR This approval provides the State with any new requirements, I certify that it the authority for implementation and 2214–2225), as revised by a July 10, does not have a significant impact on 1995 memorandum from Mary Nichols, enforcement of the following subparts of small entities affected. Moreover, due to 40 CFR part 60: A, D, Da, Db, Dc, E, Ea, Assistant Administrator for Air and the nature of the Federal-state Radiation. The Office of Management F, I, K, Ka, Kb, O, Y, DD, GG, HH, LL, relationship under the Clean Air Act, and Budget (OMB) has exempted this QQ, RR, VV, XX, AAA, JJJ, NNN, OOO, preparation of a regulatory flexibility regulatory action from E.O. 12866 and SSS, effective July 1, 1993. analysis would constitute Federal review. However, the State’s NSPS authorities inquiry into the economic do not include those authorities which reasonableness of state action. The List of Subjects in 40 CFR Part 52 cannot be delegated to the states, as Clean Air Act forbids EPA to base its Environmental protection, Air defined in 40 CFR part 60. actions concerning SIPs on such pollution control, Incorporation by EPA is publishing this action without grounds. Union Electric Co. v. U.S. reference, Particulate matter, Reporting prior proposal because the Agency E.P.A., 427 U.S. 246, 256–66 (1976); 42 and recordkeeping requirements, views this as a noncontroversial U.S.C. 7410(a)(2). Volatile organic compounds. amendment and anticipates no adverse Under Sections 202, 203, and 205 of comments. However, in a separate the Unfunded Mandates Reform Act of Dated: August 10, 1995. document in this Federal Register 1995 (‘‘Unfunded Mandates Act’’), Jack W. McGraw, publication, EPA is proposing to signed into law on March 22, 1995, EPA Acting Regional Administrator. approve the SIP revision should adverse must undertake various actions in Chapter I, title 40 of the Code of or critical comments be filed. Under the association with proposed or final rules Federal Regulations is amended as procedures established in the May 10, that include a Federal mandate that may follows: 1994 Federal Register (59 FR 24054), result in estimated costs of $100 million this action will be effective November 6, or more to the private sector, or to State, PART 52Ð[AMENDED] 1995 unless, by October 6, 1995, adverse local, or tribal governments in the 1. The authority citation for part 52 or critical comments are received. aggregate. If such comments are received, this Through submission of this state continues to read as follows: action will be withdrawn before the implementation plan or plan revision, Authority: 42 U.S.C. 7401–7671q. effective date by publishing a the State and any affected local or tribal subsequent document that will governments have elected to adopt the Subpart QQÐSouth Dakota withdraw the final action. All public program provided for under Section 110 2. Section 52.2170 is amended by comments received will then be of the Clean Air Act. These rules may adding paragraph (c)(16) to read as addressed in a subsequent final rule bind State, local and tribal governments follows: based on this action serving as a to perform certain actions and also proposed rule. EPA will not institute a require the private sector to perform § 52.2170 Identification of plan. second comment period on this action. certain duties. The rules being approved * * * * * Any parties interested in commenting by this action will impose no new (c) * * * 46228 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (16) On November 12, 1993 and DEPARTMENT OF HEALTH AND they are received—generally beginning March 7, 1995, the designee of the HUMAN SERVICES approximately 3 weeks after publication Governor of South Dakota submitted of the document, in Room 309–G of the revisions to the plan, which included Health Care Financing Administration Department’s offices at 200 revised regulations for definitions, Independence Avenue, SW., 42 CFR Part 417 minor source construction and federally Washington, DC, Monday through enforceable state operating permit [OMC±014±FC] Friday, from 8:30 a.m. to 5 p.m. (phone: (FESOP) rules, source category emission (202) 690–7890). Medicare Program; Payments to HMOs Although we cannot respond to limitations, sulfur dioxide rule and CMPs and Appeals: Technical individual comments, if we revise this corrections, new source performance Amendments rule as a result of comments, we will standards (NSPS), new source review discuss all timely comments in the (NSR) requirements for new and AGENCY: Health Care Financing preamble to the revised rule. modified major sources impacting Administration (HCFA), HHS. FOR FURTHER INFORMATION CONTACT: nonattainment areas, and enhanced ACTION: Final rule with comment period. Tracy Jensen, (410) 786–1033. monitoring and compliance certification requirements. The State also requested SUMMARY: This rule clarifies and SUPPLEMENTARY INFORMATION: that the existing State regulations updates portions of the HCFA regulations that pertain to payment for A. Background approved in the South Dakota SIP be services furnished to Medicare enrollees The previous 4 technical regulations replaced with the following chapters of by health maintenance organizations of the special project have— the recently recodified Administrative (HMOs) and competitive medical plans • Removed obsolete content; • Rules of South Dakota (ARSD): (CMPs); appeals by Medicare enrollees Designated the remaining text 74:36:01–74:36:04, 74:36:06; 74:36:07, concerning payment for those services; under 17 subparts that identify the 74:36:10–74:36:13, and 74:36:15, as in and appeals by HMOs and CMPs with different program aspects so that it is effect on January 5, 1995. regard to their Medicare contracts. easier to refer to those aspects and to This rule completes the special find particular rules; • (i) Incorporation by reference. project aimed at the total technical Through nomenclature and revision of part 417. Part 417 contains definition changes, established certain the regulations applicable to all prepaid terms to be used throughout part 417, so (A) Revisions to the Administrative as to preclude confusion, make clear Rules of South Dakota, Air Pollution health care organizations, that is, HMOs, CMPs, and health care prepayment that responsibility for the prepaid health Control Program, Chapters 74:36:01 care programs has been delegated to (except 74:36:01:01(2) and (3)); plans (HCPPs). These are technical and editorial HCFA, and ensure use of the most 74:36:02–74:36:04, 74:36:06; 74:36:07, changes that do not affect the substance precise terms available; 74:36:10–74:36:13, and 74:36:15, • of the regulations. They are intended to Redesignated certain portions of effective April 22, 1993 and January 5, make it easier to find particular part 417 to free section numbers needed 1995. provisions, to eliminate needless so that new rules can be incorporated in repetition and remove obsolete content, logical order; and • Established a separate subpart C to 3. A new section 52.2184 is added to and to better ensure uniform set forth the many requirements for the read as follows: understanding of the rules. organization and operation of HMOs. DATES: Effective dates: These rules are Under previous rules, these were § 52.2184 Operating permits for minor effective as of October 1, 1995. compressed into a single section Comment date: We will consider sources. (§ 417.107). comments received by October 6, 1995. As a result of the redesignations, ADDRESSES: Mail written comments (1 Emission limitations and related §§ 417.107 through 417.119 were made original and 3 copies) to the following available for new rules that are required provisions established in South Dakota address: Health Care Financing minor source operating permits, which because of statutory amendments that Administration, Department of Health affect the furnishing of services by are issued in accordance with ARSD and Human Services, Attention: OMC– Federally qualified HMOs, or may be 74:36:04 and which are submitted to 014–FC, PO Box 26688, Baltimore, MD needed because of future changes in the EPA in a timely manner in both 21207. statute. Similarly, §§ 417.128 through proposed and final form, shall be If you prefer, you may deliver your 417.139 are available for additional enforceable by EPA. EPA reserves the written comments (1 original and 3 rules on the organization and operation right to deem permit conditions not copies) to one of the following of those HMOs. federally enforceable. Such a addresses: determination will be made according to Room 309–G, Hubert H. Humphrey B. Changes made by this rule appropriate procedures and will be Building, 200 Independence Avenue, This technical rule affects the based upon the permit, permit approval SW., Washington, DC 20201, or following subparts: procedures, or permit requirements Room C5–09–26, 7500 Security Subpart N—Medicare Payment to HMOs which do not conform with the Boulevard, Baltimore, MD 21244– and CMPs—General Rules operating permit program requirements 1850 Subpart O—Medicare Payment: Cost of EPA’s underlying regulations. Due to staffing and resource Basis; limitations, we cannot accept comments Subpart P—Medicare Payment: Risk [FR Doc. 95–21879 Filed 9–5–95; 8:45 am] by facsimile (FAX) transmission. In Basis; commenting, please refer to file code Subpart Q—Beneficiary Appeals; and, Subpart R—Contract Appeals. BILLING CODE 6560±50±P OMC–014–FC. Written comments received timely Changes to the first three subparts will be available for public inspection as reflect a general change of approach— Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46229 use of the term ‘‘payment’’ rather than Information and Regulatory Affairs, Subpart NÐMedicare Payment to ‘‘reimbursement’’. Changes in all five Office of Management and Budget, HMOs and CMPs: General Rules subparts, such as use of the active voice, Room 10235, Executive Office Building, are intended to improve clarity. They Washington, DC 30503. 1. Section 417.524 is revised to read also provide more headings, revise as follows: Regulatory Impact Statement confusing word order, and remove § 417.524 Payment to HMOs or CMPs: obsolete provisions (rules that applied Consistent with the Regulatory General. to contract periods that began before Flexibility Act (RFA) and section (a) Basic rule. The payments that 1986). 1102(b) of the Social Security Act, we HCFA makes to an HMO or CMP under In subpart Q, the revisions add a prepare a regulatory flexibility analysis this subpart and subparts O and P of paragraph explaining the statutory basis for each rule, unless the Secretary this part for furnishing covered for the beneficiary appeals rules and certifies that the particular rule will not Medicare services are in place of any expand the ‘‘Scope’’ paragraph to have a significant economic impact on payment that HCFA would otherwise reference a recently added provision a substantial number of small entities, make to a beneficiary or the HMO or that gives the beneficiary the right to or a significant impact on the operation CMP under sections 1814(b) and 1833(a) request immediate PRO review of a of a substantial number of small rural of the Act. determination that he or she no longer hospitals. (b) Basis of payment. (1) HCFA pays needs inpatient hospital care. the HMOs or CMPs on either a The RFA defines ‘‘small entity’’ as a Other Required Information reasonable cost basis or a risk basis small business, a nonprofit enterprise, depending on the type of contract the Waiver of Proposed Rulemaking and or a governmental jurisdiction (such as HMO or CMP has with HCFA. Delayed Effective Date a county, city, or township) with a (2) In certain cases a risk HMO or population of less than 50,000. We also The changes made by this rule are CMP also receives payments on a consider all providers and suppliers of technical and editorial in nature. Their reasonable cost basis for certain services to be small entities. For aim is to simplify, clarify, and update Medicare enrollees who retain nonrisk purposes of section 1102(b) of the Act, subparts N through R of part 417 status, as provided in § 417.444, after we define small rural hospital as a without substantive change. the HMO or CMP enters into a risk Accordingly, we find that notice and hospital that has fewer than 50 beds, contract. and is not located in a metropolitan opportunity for public comment are § 417.526 [Amended] unnecessary and that there is good statistical area. 2. In § 417.526, ‘‘reimbursement’’ is cause to waive proposed rulemaking We have not prepared a regulatory revised to read ‘‘payment’’ each time it procedures. flexibility analysis because we have appears. In addition, it is important, for the determined and we certify that these 3. Section 417.528 is amended to convenience of the public, that these rules (which make only technical and revise the section heading to revise, changes be effective as of October 1, editorial changes with no substantive paragraphs (a) through (c) and to add a 1995, so that they can be included in the effect) will not have a significant heading to paragraph (d) to read as 1995 edition of the Code of Federal economic impact on a substantial follows: Regulations on which the public relies. number of small entities or a significant Therefore, we find good cause to also impact on the operation of a substantial § 417.528 Payment when Medicare is not waive the usual 30-day delay in the number of small rural hospitals. primary payer. effective date In accordance with the provisions of (a) Limits on payments and charges. As previously indicated, however, we Executive Order 12866, this rule was (1) HCFA may not pay for services to the will consider timely comments from not reviewed by the Office of extent that Medicare is not the primary anyone who believes that, in making the Management and Budget. payer under section 1862(b) of the Act technical and editorial changes, we have and part 411 of this chapter. unintentionally altered the substance. List of Subjects in 42 CFR Part 417 (2) The circumstances under which an Paperwork Reduction Act HMO or CMP may charge, or authorize Administrative practice and a provider to charge, for covered Sections 417.558, 417.576, and procedure, Health maintenance Medicare services for which Medicare is 417.600 of the regulations amended by organizations (HMO), Medicare. not the primary payer are stated in this technical rule contain requirements 42 CFR part 417 is amended as set paragraphs (b) and (c) of this section. that are subject to review by the Office forth below. (b) Charge to other insurers or the of Management and Budget (OMB) enrollee. If a Medicare enrollee receives under the Paperwork Reduction Act of PART 417ÐHEALTH MAINTENANCE from an HMO or CMP covered services 1980 (44 U.S.C. 3501 et seq.). The ORGANIZATIONS, COMPETITIVE that are also covered under State or requirement for a certified cost report MEDICAL PLANS, AND HEALTH CARE Federal worker’s compensation, (§ 417.576(b)) has OMB approval under PREPAYMENT PLANS automobile medical, or any no-fault number 0938–0165, with an expiration insurance, or any liability insurance date of 9–30–95. The burden for this A. The authority citation for part 417 policy or plan, including a self-insured report is estimated at 200 hours for continues to read as follows: plan, the HMO or CMP may charge, or record keeping and 260 hours for Authority: secs. 1102 and 1871 of the authorize a provider that furnished the completing the report. The requirements Social Security Act (42 U.S.C. 1302 and service to charge— for justification of exception to cost 1395hh), Secs. 1301, 1306, and 1310 of the (1) The insurance carrier, employer, limits (§ 417.558(c)) and for grievance Public Health Service Act (42 U.S.C. 300e, or other entity that is liable to pay for and appeals procedures (§ 417.600(b)) 300e–5, and 300e–9); and 31 U.S.C. 9701. these services; or are being submitted for OMB approval. (2) The Medicare enrollee, to the If you comment on these requirements, B. Subpart N is amended as set forth extent that he or she has been paid by please send a copy directly to: Office of below. the carrier, employer, or other entity. 46230 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (c) Charge to group health plans e. Paragraph (g) is revised to read as described in subpart k of this part are (GHPs) or large group health plans follows: allowable. (LGHPs). An HMO or CMP may charge * * * * * a GHP or LGHP for covered services it § 417.532 General considerations. furnished to a Medicare enrollee and * * * * * § 417.544 [Amended] may charge the Medicare enrollee to the (g) Direct payment by HCFA. (1) If the 7. In § 417.544, in paragraph (a), the extent that he or she has been paid by HMO or CMP elects to have HCFA pay paragraph designations (1), (2), and (3) the GHP or LGHP for these covered for provider services, HCFA pays each are added, preceding the first, second, services if— provider on a reasonable cost basis or and third sentences and in paragraph (1) The Medicare enrollee is covered under the PPS system, whichever is (b), the paragraph designations (1) and under the plan; and appropriate for the particular provider (2) are added preceding the first and (2) Under section 1862(b) of the Act, under part 412 or part 413 of this second sentences. HCFA is precluded from paying for the chapter. covered services . (2) In computing the Medicare § 417.548 [Amended] (d) Responsibilities of HMO or CMP. payment to the HMO or CMP, HCFA 9. In § 417.548, the following changes *** deducts these payments and any other are made: C. Subpart O is amended as set forth payments made by the Medicare a. In paragraph (a), ‘‘reimbursable’’ is below. intermediary or carrier on behalf of the revised to read ‘‘payable’’. HMO or CMP (such as payment for b. In paragraph (b), in the second Subpart OÐMedicare Payment: Cost emergency or urgently needed services sentence, ‘‘For example, in’’ is removed Basis under § 417.558). and ‘‘(c) Example. In’’ is inserted in its place, and the parenthetical phrase is 1. Section 417.530 is revised to read § 417.533 [Amended] revised to read ‘‘(rather than the as follows: 4. In § 417.533, the following changes payment amounts determined under § 417.530 Basis and scope. are made: part 412 or part 413 of this chapter)’’. a. In the introductory text, the phrase 10. Section 417.550 is revised to read This subpart sets forth the principles as follows: that HCFA follows to determine the ‘‘is responsible for’’ is revised to read amount it pays for services furnished by ‘‘must’’. § 417.550 Special Medicare program a cost HMO or CMP to its Medicare b. In paragraphs (a), (b), and (c), requirements. enrollees. These principles are based on ‘‘Determining’’, ‘‘Making’’, and (a) Principle. HCFA pays the full sections 1861(v) and 1876 of the Act ‘‘Carrying’’ are revised to read reasonable cost incurred by an HMO or and are, for the most part, the same as ‘‘Determine’’, ‘‘Make’’, and ‘‘Carry’’, CMP for activities that are solely for those set forth— respectively. Medicare purposes and unique to (a) In part 412 of this chapter, for § 417.536 [Amended] Medicare contracts under section 1876 paying the costs of inpatient hospital of the Act. services which, for cost HMOs and 5. In § 417.536, the following changes (b) Application. HCFA pays the full CMPs, are considered ‘‘reasonable’’ only are made: reasonable cost of the following if they do not exceed the amounts a. The section heading is revised to activities: allowed under the prospective payment read ‘‘Cost payment principles.’’ (1) Reporting increases and decreases system; and b. In paragraph (a), first sentence, the in the number of Medicare enrollees. (b) In part 413 of this chapter, for the phrase ‘‘or reasonable cost (2) Obtaining independent costs of all other covered services. reimbursement’’ is removed. certification of the HMO’s or CMP’s cost c. In paragraphs (a), (f)(3), and (m), report to the extent that it is for § 417.531 [Amended] ‘‘reimbursement’’ is revised to read Medicare purposes. 2. In § 417.531, the following changes ‘‘payment’’. (3) Reporting special data that HCFA are made: d. In paragraph (m), the heading is requires solely for program planning a. In paragraph (a), ‘‘reimbursement’’ revised to read ‘‘Limitations on and evaluation. is revised to read ‘‘payment’’, and payment.’’; in the introductory text, (c) Prior approval requirement. The ‘‘participating in the Medicare program’’ ‘‘reimbursed’’ is revised to read ‘‘paid’’; costs specified in paragraph (b) of this is removed. and ‘‘subpart E of part 405, and’’ is section must be separately budgeted and b. In paragraph (b), introductory text, removed. approved by HCFA before the contract ‘‘the HMO or CMP may be reimbursed’’ period begins. § 417.538 [Amended] is revised to read ‘‘HCFA pays the HMO (d) Limit on full payment. Full or CMP’’. 6. In § 417.538, the following changes payment is limited to the costs specified are made: in paragraph (b) of this section. All § 417.532 [Amended] a. Paragraph (a) is revised to read as other administrative costs must be 3. In § 417.532, the following changes set forth below. apportioned in accordance with are made: b. The heading of paragraph (b) is § 417.552. a. Throughout § 417.532, revised to read ‘‘Included costs.’’ ‘‘reimbursement’’ is revised to read c. The heading of paragraph (d) is § 417.552 [Amended] ‘‘payment’’ and ‘‘reimburses’’ is revised revised to read ‘‘Limitation on 11. In § 417.552, the following to read ‘‘pays’’. payment.’’ and in the last sentence, changes are made: b. In paragraph (a)(3), ‘‘Except as ‘‘such costs’’ is revised to read ‘‘those a. In the introductory text of specified in paragraph (a)(4) of this costs’’. paragraph (a), ‘‘Except as provided in section,’’ is removed and ‘‘in judging’’ is § 417.556(c)’’ is removed and ‘‘the’’ is revised to read ‘‘In judging’’. § 417.538 Enrollment and marketing costs. revised to read ‘‘The’’. c. Paragraph (a)(4) is removed. (a) Principle. Costs incurred by an b. In paragraph (a)(1), ‘‘§§ 417.530 d. In paragraph (f), ‘‘will determine’’ HMO or CMP in performing the through 417.576; and’’ is revised to read is revised to read ‘‘determines’’. enrollment and marketing activities ‘‘this subpart; and’’. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46231 § 417.554 [Amended] (iii) Medical record costs. approved cost-finding method described 12. In § 417.554, the regulation (iv) Centralized purchasing costs. in § 413.24 of this chapter to determine citations at the end are revised to read (v) Accounting and data processing the actual cost of these covered services. ‘‘§ 405.480, part 412, and §§ 413.5 and costs. * * * * * 413.24 of this chapter.’’ (vi) Other administrative and general 13. Section 417.558 is revised to read costs that are not included in paragraph § 417.576 [Amended] as follows: (a) of this section. 18. In § 417.576, the following (2) The allocation or distribution changes are made: § 417.558 Emergency, urgently needed, process must be as follows: a. In the following paragraphs, and out-of-area services for which the HMO (i) If a separate entity or department ‘‘reimbursement’’ is revised to read or CMP accepts responsibility. of an HMO or CMP performs ‘‘payment’’: paragraphs (b)(2)(ii), (c)(1), (a) Source of payment. Either HCFA administrative functions the benefit of (c)(2)(ii), (d) heading, introductory text, or the HMO or CMP may pay a provider which can be quantitatively measured and (d)(1), and (e)(1). for emergency or urgently needed (such as centralized purchasing and b. In the following paragraphs, services or other covered out-of-area data processing), the total allowable ‘‘reimbursable’’ is revised to read services for which the HMO or CMP costs of this entity or department must ‘‘payable’’: paragraphs (c)(1) and (d)(2). accepts responsibility. be allocated or distributed to the c. In paragraph (b)(2), ‘‘§§ 417.532 (b) Limits on payment. If the HMO or components of the HMO or CMP in through 417.566’’ is revised to read CMP pays, the payment amount may not reasonable proportion to the benefits ‘‘this subpart’’. exceed the amount that is allowable received by these components. d. In paragraph (c)(1), ‘‘providing’’ is under part 412 or part 413 of this (ii) If a separate entity or department revised to read ‘‘furnishing’’. chapter. of an HMO or CMP performs e. In paragraph (c)(2)(ii), ‘‘an (c) Exception to limit on payment. administrative functions the benefit of insignificant amount’’ is revised to read Payment in excess of the limit imposed which cannot be quantitatively ‘‘an insignificant portion’’. by paragraph (b) of this section is measured (such as facility costs), the f. Paragraphs (b)(3) and (e)(3) are allowable only if the HMO or CMP total allowable costs of this entity or revised to read as set forth below: demonstrates to HCFA’s satisfaction that department must be allocated or it is justified on the basis of advantages distributed to the components of the § 417.576 Final settlement. gained by the HMO or CMP, as set forth HMO or CMP on the basis of a ratio of * * * * * in § 417.548. total incurred and distributed costs per (b) Certified cost report as basis for final settlement. * ** § 417.560 [Amended] component to the total incurred and distributed costs for all components. (3) Failure to report required financial 14. In § 417.560, the following information. If the HMO or CMP fails to changes are made: § 417.568 [Amended] submit the required cost report and a. In paragraph (a) introductory text, 17. In § 417.568, the following supporting documents within 180 days ‘‘will base’’ is revised to read ‘‘bases’’. changes are made: (or an extended period approved by b. In paragraph (d)(1), ‘‘(1) Except as a. In paragraph (a)(1), ‘‘payable by HCFA under paragraph (b)(1) of this provided in paragraph (d)(2) of this Medicare’’ is revised to read ‘‘payable section), HCFA may— section,’’ is removed, and ‘‘the Medicare by HCFA’’, and the comma after (i) Consider the failure to report as share’’ is revised to read ‘‘The Medicare ‘‘enrollees’’ is removed. evidence of likely overpayment; and share’’. b. In paragraph (a)(2), the phrase ‘‘the (ii) Initiate recovery of amounts c. Paragraph (d)(2) is removed. HMO or CMP must follow’’ is added previously paid, or reduce interim 15.–16. Section 417.564 is revised to immediately before ‘‘standardized payments, or both. read as follows: definitions * * *’’, and the last three * * * * * words ‘‘must be followed.’’ are removed. § 417.564 Apportionment and allocation of (e) Basis for retroactive adjustment. administrative and general costs. c. In paragraph (b)(2), ‘‘as described in *** this paragraph’’ is revised to read ‘‘as (3) Any withholding continues until (a) Costs not directly associated with provided in paragraph (b)(3) of this the earliest of the following occurs: providing medical care. Enrollment, section’’. (i) The overpayment is liquidated. marketing, and other administrative and d. In paragraph (b)(3), ‘‘based on this (ii) The HMO or CMP enters into an general costs that benefit the total basis’’ is revised to read ‘‘developed on agreement with HCFA to refund the enrollment of the HMO or CMP and are this basis’’ and ‘‘will be acceptable’’ is overpaid amount. not directly associated with furnishing revised to read ‘‘is acceptable’’. (iii) HCFA, on the basis of medical care must be apportioned on e. Paragraph (c) is revised to read as subsequently acquired information, the basis of a ratio of Medicare enrollees set forth below. determines that there was no to the total HMO or CMP enrollment. f. In paragraph (d), ‘‘the HMO or overpayment. (b) Costs significantly related to CMP’’, the last time it appears, is (iv) The decision of a hearing providing medical services. (1) The revised to read ‘‘it’’. specified in paragraph (d)(4) of this following administrative and general section is that there was no costs, which bear a significant § 417.568 Adequate financial records, statistical data, and cost finding. overpayment. relationship to the services furnished, D. Subpart P is amended as set forth are not apportioned to Medicare * * * * * below. directly; they must be allocated or (c) Provider services furnished directly distributed to the HMO or CMP by the HMO or CMP. If the HMO or CMP Subpart PÐMedicare Payment: Risk components and then apportioned to furnishes provider services directly, the Basis Medicare in accordance with §§ 417.552 provider is subject to the cost-finding through 417.560: and cost-reporting requirements set § 417.580 [Amended] (i) Facility costs. forth in parts 412 and 413 of this 1. In § 417.580, paragraph (a), (ii) Interest expense. chapter. The provider must use an ‘‘reimbursed’’ is revised to read ‘‘pays’’. 46232 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations § 417.582 [Amended] § 417.588 [Amended] 45 days before its contract period 2. In § 417.582 the heading is revised 6. In § 417.588, the following changes begins. and three definitions are added in are made. (2) An HMO or CMP that elects the alphabetical order, to read as follows: a. In paragraph (a), ‘‘resulting in an option of providing additional benefits AAPCC’’ is revised to read ‘‘to establish must include in its submittal— § 417.582 Definitions. an AAPCC’’. (i) A description of the additional AAPCC stands for adjusted average b. In paragraph (c)(2), ‘‘A further benefits it will provide to its Medicare per capita cost. adjustment is made by HCFA’’ is revised enrollees; and ACR stands for adjusted community to read ‘‘HCFA makes a further (ii) Supporting evidence to show that rate. adjustment’’. the selected benefits meet the requirements of paragraph (a)(2) of this * * * * * 7. Section 417.592 is revised to read section with respect to dollar value APCRP stands for average of per as follows: equivalence. capita rates of payment. § 417.592 Additional benefits requirement. 8. Section 417.594 is amended to * * * * * (a) General rules. (1) An HMO or CMP revise paragraphs (a), (b)(1) and (b)(2), § 417.584 [Amended] that has an APCRP (as determined (c), (d), and (e) to read as follows: under § 417.590) greater than its ACR 3. In § 417.584, the following changes § 417.594 Computation of adjusted (as determined under § 417.594) must community rate (ACR). are made. elect one of the options specified in (a) Basic rule. Each HMO or CMP a. The introductory text of the section paragraph (b) of this section. must compute its basic rate as follows: and paragraph (c) are revised to read as (2) The dollar value of the elected (1) Compute an initial rate in set forth below. option must, over the course of a accordance with paragraph (b) of this b. In paragraph (d), ‘‘§ 417.592(e)’’ is contract period, be at least equal to the revised to read ‘‘§ 417.592(b)(2)’’; ‘‘will section. difference between the APCRP and the (2) Adjust and reduce the initial rate reduce’’ is revised to read ‘‘reduces’’; proposed ACR. and the last sentence is removed. in accordance with paragraphs (c) and (b) Options—(1) Additional benefits. (d) of this section. § 417.584 Payment to HMOs and CMPs Provide its Medicare enrollees with (b) Computation of initial rates. (1) with risk contracts. additional benefits in accordance with The HMO or CMP must compute its paragraph (c) of this section. Except in the circumstances specified initial rate using either of the following (2) Payment reduction. Request HCFA in § 417.440(d) for inpatient hospital systems: to reduce its monthly payments. (i) A community rating system as care, and as provided in § 417.585 for (3) Combination of additional benefits hospice care, HCFA makes payment for defined in § 417.104(b); or and payment reduction. Provide fewer (ii) A system, approved by HCFA, covered services only to the HMO or than the additional benefits required CMP. under which the HMO or CMP develops under paragraph (b)(1) of this section an aggregate premium for all its * * * * * and request HCFA to reduce the enrollees and weights the aggregate by (c) Adjustments to payments. If the monthly payments by the remaining the size of the various enrolled groups actual number of Medicare enrollees difference between the APCRP and the that compose its enrollment. differs from the estimated number on ACR. (For purposes of this section, enrolled which the amount of advance monthly (4) Combination of additional benefits groups are defined as employee groups payment was based, HCFA adjusts and withholding in a stabilization fund. or other bodies of subscribers that enroll subsequent monthly payments to take Provide fewer than the additional in the HMO or CMP through payment of account of the difference. benefits required under paragraph (b)(1) premiums.) * * * * * of this section, and request HCFA to (2) Regardless of which method the withhold in a stabilization fund (as HMO or CMP uses— § 417.585 [Amended] provided in § 417.596) the remaining (i) The initial rate must be equal to the 4. In § 417.585, the following changes difference between the APCRP and the premium it would charge its non- are made: ACR. Medicare enrollees for the Medicare- a. The section heading is revised to (c) Special rules: Additional benefits covered services; read: ‘‘Special rules: Hospice care.’’ option. (1) The HMO or CMP must (ii) The HMO or CMP must compute b. In paragraph (a), ‘‘No payment is determine additional benefits separately the rates separately for enrollees entitled made effective the first day’’ is revised for enrollees entitled to both Part A and to Medicare Part A and Part B and for to read: ‘‘This no-payment rule is Part B benefits and those entitled only those entitled only to Part B; and effective from the first day’’. to Part B. (iii) The HMO or CMP must identify c. In paragraph (b), Introductory text, (2) The HMO or CMP may elect to and take into account anticipated ‘‘for only’’ is revised to read ‘‘but only provide additional benefits in any of the revenue from health insurance payers for’’. following forms— for those services for which Medicare is d. In paragraph (b)(2), ‘‘hospice care (i) A reduction in the HMO’s or CMP’s not the primary payer as provided in was elected’’ is revised to read ‘‘the premium or in other charges it imposes § 417.528. enrollee elected hospice care’’. in the form of deductibles or * * * * * e. In paragraph (c), the clause ‘‘are coinsurance. (c) Adjustment of initial rates—(1) made to the hospice participating in (ii) Health benefits in addition to the Purpose of adjustment. The purpose of Medicare elected by the enrollee’’ is required Part A and Part B covered adjustment is to reflect the utilization revised to read ‘‘is made to the services. characteristics of Medicare enrollees. Medicare-participating hospice elected (iii) A combination of reduced charges (2) Adjustment by the HMO or CMP. by the enrollee’’. and additional benefits. The HMO or CMP may adjust the rate (d) Notification to HCFA. (1) The for a particular service using more than § 417.586 [Removed] HMO or CMP must give HCFA notice of one of the following factors if they do 5. Section 417.586 is removed. its ACR and its weighted APCRP at least not duplicate each other: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46233 (i) Unit of service. If the HMO or CMP set forth in §§ 405.1819 through CMP under section 1876(c)(5)(A) of the purchases or identifies services on a 405.1833 of this chapter. Act and § 417.604(a) for complaints that unit of service basis and the unit of do not involve an organization service is defined the same for all § 417.596 [Amended] determination; enrollees, the HMO or CMP may make 9. In § 417.596, the following changes (3) The responsibility of the HMO or an adjustment in its initial rate to reflect are made: CMP— the number of units of services a. In paragraphs (a), (b), and (c)(1), (i) To develop and maintain furnished to its Medicare enrollees in ‘‘the average of its per capita rates of procedures; and comparison to those furnished to other payment’’ is revised to read ‘‘its (ii) To ensure that all Medicare enrollees. APCRP’’. enrollees have a complete written (ii) Complexity or intensity of services. b. In paragraphs (c)(1) and (c)(2), ‘‘will explanation of their grievance and The HMO or CMP may make an not’’ is revised to read ‘‘does not’’. appeal rights, of the steps to follow, and adjustment to reflect the differences in c. In paragraph (d), ‘‘for the purpose of the time limits for each step of the the complexity or intensity of services of establishing and maintaining’’ is procedures; and furnished to its Medicare enrollees if the revised to read ‘‘to establish and (4) The special rules that apply when calculation of its initial rate includes the maintain’’. a beneficiary requests immediate PRO elements of this adjustment. § 417.597 [Amended] review of a determination that he or she (3) Support documentation. All no longer needs inpatient hospital care. adjustments made by the HMO or CMP 10. In paragraph (a) of § 417.597, in must be accompanied by adequate the introductory text, ‘‘the average of its § 417.602 [Amended] supporting data. If an HMO or CMP per capita rates of payment’’ is revised 2. In § 417.602, the heading is revised does not have sufficient enrollment to read ‘‘its APCRP’’. to read ‘‘§ 417.602 Definitions.’’ and the experience to develop this data, it may, § 417.598 [Amended] definition of ‘‘enrollee’’ is removed. during its initial contract period, use 3. Section 417.604 is revised to read 11. In § 417.598, ‘‘will conduct’’ is as follows: documented statistics from a nationally revised to read ‘‘conducts’’. recognized statistical source. E. Subpart Q is amended as set forth § 417.604 General provisions. (4) Adjustment by HCFA. If the HMO below. or CMP does not have adequate data to (a) Responsibilities of the HMO or CMP. (1) The HMO or CMP must adjust the initial rate calculated under Subpart QÐBeneficiary Appeals paragraph (b) of this section to reflect establish and maintain— the utilization characteristics of its 1. Section 417.600 is revised to read (i) Appeals procedures that meet the Medicare enrollees, HCFA will, at the as follows: requirements of this subpart for issues that involve organization HMO’s or CMP’s request, adjust the § 417.600 Basis and scope. initial rate. HCFA adjusts the rate on the determinations; and basis of differences in the utilization (a) Statutory basis. (1) Section 1869 of (ii) Grievance procedures for dealing characteristics of— the Act provides the right to a hearing with issues that do not involve (i) Medicare and non-Medicare and to judicial review for any individual organization determinations. enrollees in other HMOs or CMPs; or dissatisfied with a determination (2) The HMO or CMP must ensure (ii) Medicare beneficiaries (in the regarding his or her Medicare benefits. that all enrollees receive written HMO’s or CMP’s area, or State, or the (2) Section 1876 of the Act provides information about the grievance and United States) who are eligible to enroll for Medicare payments to HMOs and appeals procedures that are available to in an HMO or CMP and other CMPs that contract with HCFA to enroll them. individuals in that same area, or State, Medicare beneficiaries and furnish (b) Limits on applicability of this or the United States. Medicare-covered health care services to subpart. (1) If an enrollee requests (d) Reduction of adjusted rates. The them. Section 1876(c)(5) provides that— immediate PRO review (as provided in HMO or CMP or HCFA further reduces (i) An HMO or CMP must establish § 417.605) of a determination of the adjusted rates by the actuarial value grievance and appeals procedures; and noncoverage of inpatient hospital care— of applicable Medicare deductibles and (ii) Medicare enrollees dissatisfied (i) The enrollee is not entitled to coinsurance. because they do not receive health care subsequent review of that issue under (e) HCFA review—(1) Submission of services to which they believe they are this subpart; and data. The HMO or CMP must submit its entitled, at no greater cost than they (ii) The PRO review decision is ACR and the methodology used to believe they are required to pay, have subject to the appeals procedures set compute it for HCFA review and the following appeal rights: forth in part 473 of this chapter. approval, and must include adequate (A) The right to an ALJ hearing if the (2) Any determination regarding supporting data. amount in controversy is $100 or more. services that were furnished by the (2) Appeals procedures. (i) If HCFA (B) The right to judicial review of the HMO or CMP, either directly or under determines that an HMO’s or CMP’s hearing decision if the amount in arrangement, for which the enrollee has ACR computation is not acceptable, the controversy is $1000 or more. no further liability for payment are not HMO or CMP may, within 30 days after (iii) The Medicare enrollee and the subject to appeal. receipt of notice of the determination, HMO or CMP are parties to the hearing (3) Services included in an optional file with HCFA a request for a hearing. and to the judicial review. supplemental plan under (ii) The request must state why the (b) Scope. This subpart sets forth— (§ 417.440(b)(2)) are subject only to a HMO or CMP believes the (1) The appeals procedures, as grievance procedure. determination is incorrect, and include required by section 1876(c)(5)(B) of the (4) Physicians and other individuals any supporting evidence the HMO or Act for Medicare enrollees who are who furnish services under arrangement CMP considers pertinent. dissatisfied with an ‘‘organization with an HMO or CMP have no right of (iii) A hearing officer designated by determination’’ as defined in § 417.606; appeal under this subpart. HCFA conducts the hearing in (2) The applicability of grievance (c) Applicability of other regulations. accordance with the hearing procedures procedures established by the HMO or Unless otherwise provided in this 46234 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations subpart, regulations at 20 CFR, part 404, § 417.656 Notice of reconsidered a. In paragraph (a), ‘‘will issue’’ is subparts J and R, (pertaining determination. revised to read ‘‘issues’’. respectively to conduct of hearings and (a) HCFA gives the parties written b. In paragraph (b), ‘‘will provide’’ is representation of parties under title II of notice of the reconsidered revised to read ‘‘provides’’. the Act) are applicable under this determination. § 417.692 [Amended] subpart. (b) The notice— (1) Contains findings with respect to 14. In § 417.692, the following § 417.628 [Removed] the HMO’s or CMP’s qualifications to changes are made: 4. Section 417.628 is removed. enter into a contract with HCFA under a. In paragraph (c)(1), ‘‘will be’’ is 5. In § 417.632, paragraphs (c) and (d) section 1876 of the Act; revised to read ‘‘is’’. are revised to read as follows: (2) States the specific reasons for the b. In paragraph (c)(2), ‘‘will specify’’ is revised to read ‘‘specifies’’. § 417.632 Request for hearing. reconsidered determination; and (3) Informs the party of its right to a * * * * * § 417.694 [Amended] hearing if it is dissatisfied with the (c) Parties to a hearing. (1) The parties 15. In § 417.694, ‘‘final and binding’’ determination. to a hearing must be the parties to the is revised to read ‘‘binding’’. reconsideration and any other person or § 417.666 [Amended] (Catalog of Federal Domestic Assistance entity whose rights with respect to the 5. In § 417.666, ‘‘will designate’’ is Program No. 93.773, Medicare—Hospital reconsideration may be affected by the revised to read ‘‘designates’’. Insurance; and Program No. 93.774, hearing, as determined by the ALJ. Medicare—Supplementary Medical (2) The HMO or CMP must be made § 417.668 [Amended] Insurance Program) a party to the hearing but does not have 6. In § 417.668, ‘‘will designate’’ is Dated: July 31, 1995. a right to request a hearing. revised to read ‘‘designates’’. Bruce C. Vladeck, (d) ALJ action when the amount in Administrator, Health Care Financing controversy is less than $100. (1) If the § 417.670 [Amended] Administration. request plainly shows that the amount 7. In § 417.670, the following changes [FR Doc. 95–21695 Filed 9–5–95; 8:45 am] in controversy is less than $100, the ALJ are made: BILLING CODE 4120±01±P dismisses the request. a. In paragraph (a), ‘‘will fix’’, ‘‘send’’, (2) If, after a hearing is initiated, the and ‘‘must also inform’’ are revised to ALJ finds that the amount in read ‘‘fixes’’, ‘‘sends’’, and ‘‘also NATIONAL SCIENCE FOUNDATION controversy is less than $100, he or she informs’’, respectively. discontinues the hearing and does not b. In paragraph (c), ‘‘any change in 45 CFR Part 670 rule on the substantive issues raised in time or place or of adjournment’’ is the appeal. revised to read ‘‘any change in time or Conservation of Antarctic Animals and Plants F. Subpart R is amended as set forth place of hearing, or of adjournment or postponement’’. below. AGENCY: National Science Foundation. § 417.676 [Amended] ACTION: Final rule with request for Subpart RÐMedicare Contract Appeals 8. In § 417.676, the following changes comments. are made: § 417.644 [Amended] SUMMARY: The National Science a. In paragraph (a), ‘‘will be open’’ is 1. In § 417.644, the following changes Foundation is amending its regulations revised to read ‘‘is open’’. are made: to designate additional Antarctic b. In paragraph (b), ‘‘will inquire’’ is Specially Protected Areas, to a. In paragraph (a), ‘‘will notify the revised to read ‘‘inquires’’, and ‘‘must HMO or CMP in writing’’ is revised to redesignate one site as a Specially receive’’ is revised to read ‘‘receives’’. Protected Area which was formerly read ‘‘gives the HMO or CMP written c. In paragraph (c), ‘‘The parties will notice’’. designated as a Site of Special Scientific be provided’’ is revised to read ‘‘The Interest, and to revise the designations b. In paragraph (c), ‘‘Notice of an hearing officer provides the parties’’. of Specially Protected Areas consistent initial determination specified in d. In paragraph (d), ‘‘will decide’’ is with Antarctic Treaty Consultative § 417.640 is mailed to the HMO or revised to read ‘‘decides’’. meeting recommendations. These CMP’’ is revised to read ‘‘HCFA mails § 417.678 [Amended] regulations, issued pursuant to section the notice to the HMO or CMP’’. 9. In § 417.678, ‘‘will rule’’ is revised 6(b)(3) of the Antarctic Conservation Act 2. Section 417.648 is revised to read to read ‘‘rules’’. of 1978 (16 U.S.C. 2405(b)(3)), are being as follows: revised to reflect recommendations § 417.680 [Amended] adopted by the Antarctic Treaty parties § 417.648 Reconsideration: Applicability. 10. In § 417.680, paragraph (b), ‘‘will at the 16th Antarctic Consultative (a) Reconsideration is the first step for be’’ is revised to read ‘‘are’’. Meeting. appealing an organization determination EFFECTIVE DATE: September 6, 1995. § 417.682 [Amended] specified in § 417.640 (a) or (b). ADDRESSES: Comments should be sent to (b) HCFA reconsiders either of the 11. In § 417.682, in paragraphs (a) and Joyce A. Jatko, Office of Polar Programs, specified determinations if the HMO or (c), ‘‘will be’’ is revised to read ‘‘is’’. Room 755, National Science CMP files a written request in § 417.686 [Amended] Foundation, 4201 Wilson Boulevard, accordance with § 417.650. Arlington, VA 22230. 12. In § 417.686, in paragraph (a), § 417.652 [Amended] ‘‘will be’’ is revised to read ‘‘is’’. FOR FURTHER INFORMATION CONTACT: 3. In § 417.652, ‘‘will provide’’ is Joyce A. Jatko at the address above or by revised to read ‘‘provides’’. § 417.690 [Amended] telephone at (703) 306–1030. 4. Section 417.656 is revised to read 13. In § 417.690, the following SUPPLEMENTARY INFORMATION: Since as follows: changes are made: these regulations were originally issued Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46235 in 1979, several Antarctic Treaty about 1,200 m by 500 m. Geothermal PART 670Ð[AMENDED] Consultative Meetings have been held in activity occurs along about 300–400 m accordance with Article IX of the of the ridge and is marked by 1. The authority citation for Part 670 Antarctic Treaty. The regulations have discontinuous areas of ice-free ground, continues to read as follows: been amended from time to time based surrounded by numerous ice hummocks Authority: 16 U.S.C. 2405, as amended. on recommendations adopted at these up to 1 m high and scattered hollow ice 2. Section 670.30 is revised to read as meetings. The amendments that are the towers up to several meters in diameter follows: subject of this rule implement and 4 m high. The warm ice-free areas recommendations XVI–4, XVI–8 and are mostly gently sloping with narrow § 670.30 Designation of specially XVI–9 of the 16th Antarctic Treaty terraces up to 1.5 m wide. The protected areas. Consultative Meeting (16th ATCM). geothermal ground within the Area The Act states that the Director shall Because the amendments merely supports a unique community of designate as a specially protected area, implement recommendations adopted at bryophytes, algae and microbiota, each area identified under the Agreed the 16th ATCM, public comments were including the only known occurrence in Measures as needing special protection. not obtained before making the the Antarctic of the moss Campylopus The following areas have been so amendment effective. pyriformis. identified and designated as Specially The recommendations which are the Specially Protected Area No. 23: Protected Areas: subject of this amendment are as Forlidas Pond, about 100 m in diameter, (a) SPA 1, Taylor Rookery, follows: is situated near the east end of the Dufek MacRobertson Land Recommendation XVI–4 re-designates Massif in a small unnamed dry valley (b) SPA 2, Rookery Islands, Holme Bay Site of Special Scientific Interest No. 30, about 1 km to the east of the northern (c) SPA 3, Ardrey Island and Odbert Avian Island, Marguerite Bay, Antarctic edge of the Forlidas Ridge and about 1 Island, Budd Coast Peninsula as Specially Protected Area km northwest of Davis Valley. The (d) SPA 4, Sabrina Island, Balleny No. 21 and provides that it be subject to unnamed dry valley is separated from Islands the management plan accompanying the Davis Valley by a northeast trending (e) SPA 5, Beaufort Island, Ross Sea description of the protected area. ridge several kilometers long. The (f) SPA 7, Cape Hallett, Victoria Land Recommendation XVI–8 provides that position of Forlidas Pond is 82°27′15′′ S, (g) SPA 8, Dion Islands, Marguerite Bay, Cryptogram Ridge, Mount Melbourne, 15°21′ W. The Area includes smaller Antarctic Peninsula Victoria Land, be designated as ponds that occur along the ice margin at (h) SPA 9, Green Island, Berthelot Specially Protected Area No. 22 and be the northern edge of Davis Valley, a Islands, Antarctic Peninsula subject to the management plan short distance east of Forlidas Pond. (i) SPA 13, Moe Island, South Orkney annexed thereto. The Area consists of two parts about 500 Islands Recommendation XVI–9 provides that meters apart and includes all that area (j) SPA 14, Lynch Island, South Orkney Forlidas Pond and Davis Valley Ponds within 500 m of the center of Forlidas Islands be designated as Specially Protected Pond and all that area within a 500 m (k) SPA 15, Southern Powell Island and Area No. 23 and be subject to the radius of several meltwater ponds at the adjacent islands, South Orkney management plan annex thereto. ice margin along the northern edge of Islands Specially Protected Area No. 21: Davis Valley. The Area contains some of (l) SPA 16, Coppermine Peninsula, ° ′ ° ′ Avian Island (67 46 S, 68 54 W) lies the most southerly freshwater ponds Robert Island 0.25 km south of the south-west tip of known in Antarctica containing plant (m) SPA 17, Litchfield Island, Arthur Adelaide Island in north-west life. Harbor, Palmer Archipelago Marguerite Bay, south-west Antarctic (n) SPA 18, North Coronation Island, Peninsula. The Area consists of Avian Determinations South Orkney Islands Island together with its littoral zone. It I have determined, under the criteria (o) SPA 19, Lagotellerie Island, is 1.45 km long by 0.8 km at its widest set forth in Executive Order 12866, that Marguerite Bay (total area about 49 ha), and rises to just this rule is not a significant regulatory (p) SPA 20, ‘New College Valley’, over 40 m altitude in the south. It is action requiring review by the Office of Caughley Beach, Cape Bird, Ross almost entirely ice-free in summer. Information and Regulatory Affairs. I Island There are several shallow melt pools, have also determined that this rule (q) SPA 21, Avian Island, North-west the largest being on the eastern raised involves a foreign affairs function of the Marguerite Bay (r) SPA 22, Cryptogram Ridge, Mount beach terrace. There are two small United States and is, therefore, exempt Melbourne, Victoria Land dilapidated refuge huts, one near the from the notice requirements of section (s) SPA 23, Forlidas Pond and Davis north-west and the other near the mid- 553 of the Administrative Procedure Act Valley Ponds east shores of the island. The Area is and from regulatory flexibility analysis unique in the Antarctic Peninsula requirements of the Regulatory Note: Maps specifying these areas in region for its abundance and diversity of Flexibility Act, 5 U.S.C. 601–612. greater detail may be obtained from the breeding seabirds. The Blue-eyed shag Finally, I have reviewed this rule in Director. colony is one of the largest known in the light of section 2 of Executive Order § 670.34 [Amended] Antarctic, and the Adelie penguin 12778 and certify for the National 3. Section 670.34 is amended by colony is the largest on the Antarctic Science Foundation that this rule meets removing paragraph (b)(30) and Peninsula. the applicable standards provided in redesignating paragraphs (b)(31)–(b)(36) Specially Protected Area No. 22: sections 2(a) and 2(b) of that order. as paragraphs (b)(30)–(b)(35). Mount Melbourne (74°21′ S, 164°42′ W lies between Wood Bay and Campbell List of Subjects in 45 CFR Part 670 Dated: August 18, 1995. Glacier, northern Victoria Land, on the Antarctica, Conservation. Lawrence Rudolph, western side of the Ross Sea. The Area Pursuant to the authority granted by General Counsel, National Science includes most of Cryptogram Ridge on 16 U.S.C. 2405(b)(3), NSF hereby Foundation. the southern rim of the main summit amends 45 CFR Part 670 as set forth [FR Doc. 95–21978 Filed 9–5–95; 8:45 am] crater (2,733 m altitude), and extends to below. BILLING CODE 7555±01±P 46236 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations DEPARTMENT OF TRANSPORTATION for brake adjustment indicators (BAIs) replacement of a manual brake adjuster on air-braked CMVs with external (MBA)? Please include the cost of the Federal Highway Administration adjustment mechanisms manufactured device, the time required to complete on or after October 20, 1994. the installation, and a representative 49 CFR Part 393 Because the FHWA also believed hourly salary of the mechanic [FHWA Docket No. MC±94±9] there were opportunities for performing the installation. Please also improvements to the operational safety include a ‘‘loss of use’’ cost figure if a RIN 2125±AD37 of CMVs manufactured prior to the CMV were to be taken out of revenue effective dates of the amendments to Parts and Accessories Necessary for service for retrofitting at some time FMVSS Nos. 105 and 121, the agency Safe Operation; Automatic Brake other than a time when a brake adjuster requested information regarding the Adjusters and Brake Adjustment would normally be due for replacement. potential impacts of requiring CMVs How often do tractors and trailers visit Indicators subject to the FMCSRs to be retrofitted a facility where retrofitting could take AGENCY: Federal Highway with ABAs, and of requiring air-braked place? Administration (FHWA), DOT. CMVs with external adjustment 8. Should the FHWA consider a ACTION: Final rule. mechanisms to be retrofitted with BAIs. retrofitting requirement for The FHWA requested comments on hydraulically-braked CMVs? Please SUMMARY: The FHWA is adopting a final eight questions specifically concerning address the cost questions asked in rule requiring the use of automatic brake the issue of retrofits: Question 7. adjusters (ABAs) on hydraulically- 1. Should air-braked CMVs Discussion of Comments braked commercial motor vehicles manufactured before the effective date (CMVs) and air-braked CMVs of NHTSA’s rule be required to be Twenty-seven commenters responded manufactured on or after October 20, retrofitted with ABAs? to the notice: The Heavy Duty Brake 1993, and October 20, 1994, 2. Should all air-braked CMVs with Manufacturers Council (HDBMC), an respectively. This rulemaking is external brake adjustment mechanisms association of 10 heavy duty brake intended to: Ensure that the operational be required to be retrofitted with brake component manufacturers; 3 standards for brakes in the Federal adjustment indicators? manufacturers of brake components Motor Carrier Safety Regulations 3. If certain CMVs are to be retrofitted, (Rockwell International, Haldex (FMCSRs) are consistent with the how much time should be allowed for Corporation, Midland-Grau Heavy Duty manufacturing standards in the Federal installation of the new equipment? Systems); a manufacturer of brake Motor Vehicle Safety Standards 4. Are there certain types or adjustment indicators (Tattle-Tale); a (FMVSSs), Nos. 105 and 121, which configurations of air-braked vehicles motor carrier using a brake adjustment now require the installation of that cannot be equipped with ABAs indicator of its own design (Sebring automatic brake adjusters and because of space limitations around the Container Corporation); a private motor adjustment indicators on certain CMVs axles and wheels? carrier (Wilbur-Ellis); a manufacturer of manufactured on or after these dates; 5. Should different periods be trucks and truck-tractors (Volvo GM and improve the safety of operation of specified for retrofitting single-unit Heavy Truck Corporation); a CMVs by reducing the incidence of trucks, tractors, converter dollies, and manufacturer of heavy construction brakes that are out of adjustment. trailers? equipment (Cedarapids Inc.); 6 national 6. The requirements proposed by this transportation and trade associations EFFECTIVE DATE: October 6, 1995. NPRM would exclude air-braked (Steamship Operators Intermodal FOR FURTHER INFORMATION CONTACT: Ms. vehicles that were not subject to FMVSS Committee (SOIC), American Trucking Deborah M. Freund, Office of Motor No. 121 on the date of manufacture. Associations (ATA), National Carrier Standards, (202) 366–2981, or (Vehicles not subject to the Automobile Dealers Association Mr. Charles Medalen, Office of the Chief requirements are listed under paragraph (NADA), National Private Truck Council Counsel, (202) 366–1354, Federal S3 of § 571.121, and include certain (NPTC), National School Transportation Highway Administration, Department of types of limited- or specialized-use Association (NSTA), Petroleum Transportation, 400 Seventh Street, vehicles such as wide trailers, vehicles Marketers Association of America SW., Washington, DC 20590. Office equipped with an axle with a gross axle (PMAA); 2 CMV leasing companies hours are from 7:45 a.m. to 4:15 p.m., weight rating of 13,154 kilograms (Riteway Leasing Company and XTRA e.t., Monday through Friday, except (29,000 pounds) or more, any truck or Corporation); a drivers’ organization Federal holidays. bus that has a speed attainable in 3.2 (the Owner Operator Independent SUPPLEMENTARY INFORMATION: kilometers (2 miles) of not more than 53 Drivers Association (OOIDA)); a public km/hr (33 mph), heavy hauler trailer transportation authority (Metro-Dade Background sets, and load divider dollies.) Should Transit Authority); an intermodal On August 3, 1994, the FHWA specific types of CMVs, or CMVs used transportation provider (Union Pacific published a notice of proposed in unique operations, (i.e., CMVs that Railroad Company); the Commercial rulemaking in the Federal Register (59 are not subject to the requirements of Vehicle Safety Alliance (CVSA), an FR 39518) to require the use of ABAs on FMVSS 121, but are subject to the association of Federal, State, and hydraulically-braked CMVs FMCSRs) be exempt from a requirement Provincial officials responsible for the manufactured on or after October 20, to be retrofitted with ABAs? Should administration and enforcement of 1993, and air-braked CMVs these specific types of air-braked CMVs motor carrier safety regulations in the manufactured on or after October 20, manufactured on or after October 20, United States, Canada, and Mexico; the 1994. These were the effective dates of 1994, be required to be equipped with European Union, which submitted its the National Highway Traffic Safety ABAs prior to being placed in operation comments via the European Administration’s (NHTSA) amendments in interstate commerce? Please provide Commission General Agreement on to its Federal Motor Vehicle Safety details. Tariffs and Trade (GATT) Enquiry Point; Standards (FMVSSs) Nos. 105 and 121. 7. What are the costs associated with 2 State highway safety enforcement The FHWA also proposed a requirement retrofitting an ABA compared to agencies (Maine State Police, State of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46237 Connecticut Department of Motor believe that ABAs can reduce instances vehicle. Commercial motor vehicle Vehicles); 2 highway safety of brakes out-of-adjustment, and CMVs operators have ample experience in organizations (Insurance Institute for being declared out-of-service, due to obtaining replacement parts for vehicle Highway Safety (IIHS) and Advocates this condition. subsystems. In fact, at least one ABA for Highway and Auto Safety (AHAS)); The ATA asserted that ABAs ‘‘are not manufacturer (Gunite) provides cross- and 1 private individual. mandatory for safety.’’ It argued that, reference lists to show appropriate should a regulation be imposed replacements for original equipment In-Use Requirement prohibiting the replacement of an ABA manufacturers’ devices. Almost without exception, with an MBA, the vehicle should not be In closing, the ATA recommended commenters who addressed the placed out of service because of the that the FHWA and the NHTSA work proposed requirement to adopt rules substitution unless the vehicle’s brakes together to focus the FMVSSs and the parallel to the NHTSA’s recent are found to be out of adjustment. FMCSRs on CMV maintenance amendments to FMVSSs Nos. 105 and The FHWA’s intent in issuing this difficulties. The ATA stated that such 121 responded favorably. These rulemaking is to require an ABA items as wear indicators, component commenters included the Maine State installed in accordance with the identification, and access for inspection Police, the State of Connecticut requirements of FMVSS Nos. 105 or 121 have been largely ignored in the Federal Department of Motor Vehicles; HDBMC; to be replaced in kind, so the vehicle standards, yet they play a major role in Wilbur-Ellis; IIHS, NPTC, AHAS, continues to perform as originally equipment operation and ease of OOIDA, NSTA, and Midland-Grau. manufactured. Motor carriers have inspection. The FHWA takes these Haldex and Rockwell International considerable experience selecting concerns into account to the greatest limited their comments to air-braked replacement parts; the replacements extent practicable, and will continue to vehicles. must be chosen to ensure that the do so as the agency works to develop The ATA noted that manufacturers systems in which they are installed performance-based regulations through have provided, and motor carriers continue to operate safely. its Zero-Base Regulatory Review voluntarily used, automatic brake Regarding the ATA’s concern about a Program. adjusters for a number of years, and CMV equipped with an MBA (where an The CVSA did not take a position on that, even in the absence of Federal ABA is required by the FMVSSs and the the proposed in-use requirements. It regulations, the marketplace is adopting FMCSRs) being placed out of service, noted that most inspectors are familiar this technology on its merits. Although the FHWA notes that, under the current with ABAs, although they may need it generally favored the proposed in-use provisions of the CVSA’s North some minimal ‘‘recognition’’ training for requirement, the ATA raised several American Uniform Out-of-Service new or different systems. The CVSA arguments concerning ABAs and brake Criteria, the presence of an MBA would was concerned that BAIs provide maintenance. It stated that out-of- not be a cause for placing a CMV out- consistent information to motor carrier adjustment brakes are a maintenance of-service unless the condition of the personnel throughout the BAI’s service problem that ‘‘can be compounded if the brake, or its state of adjustment, were life. The CVSA made the observation addition of such equipment causes such that it would be likely to cause an that some BAIs use paint on the fleets to determine that they will no accident or a breakdown. The FHWA pushrod to indicate adjustment status, longer need to look at their brakes as notes that the CVSA’s comments to this and that, when the paint wears, it may frequently and if the automatic adjusters docket did not address changing the give a false reading. are not serviced.’’ The ATA also quoted criteria with respect to the presence or The FHWA has consulted with the a NHTSA study, which noted that absence of ABAs. NHTSA regarding this matter. Some carefully-maintained manual brake Finally, while the ATA agreed with manufacturers use epoxy and baked-on adjusters (MBAs) can keep strokes the intent of the NPRM, it expressed coatings for marking/color-coding within tolerances comparable to ABAs. concern that the proposed language pushrods, but it is possible that some The ATA added that MBAs ‘‘can be set would specifically reference an FMVSS. may use paint. If a BAI is not to a closer adjustment’’ than ABAs The ATA stated that, by requiring maintained to provide an accurate because ABAs ‘‘must provide extra vehicle users to ensure that replacement reading of brake adjustment status, the stroke to prevent over-adjustment when parts meet the FMVSS, the FHWA motor carrier will be in violation of the brake drums are hot.’’ would, in effect, require consumers FMCSRs. The FHWA generally agrees with this [motor carriers, CMV operators] to Sebring Container Corporation portion of the ATA’s comment; ‘‘create the technical expertise of commented on their favorable however, the cited research performed manufacturers for themselves.’’ The experience with BAIs. Two commenters by the NHTSA (‘‘Automatic Brake ATA asserted that, if the FHWA wants noted that many buses are equipped Adjusters for Heavy Vehicle Air Brake CMV users to purchase parts which with ABAs: the NSTA indicated that its Systems,’’ February 1991, report DOT– meet the FMVSS, then the FHWA must members who responded to a small HS–807–724 (PB 91–215814)) and the work with the NHTSA to assure that survey all used ABAs, and Metro-Dade National Transportation Safety Board new parts are labeled with compliance Transit Authority buses all have ABAs. (‘‘Heavy Vehicle Airbrake information or a code, similar to the Union Pacific Railroad Company Performance,’’ April 29, 1992, report requirements for fuel tanks under favored the in-use rule. The European NTSB/SS–92/01 (PB 92–917003)) has § 393.67(f) of the FMCSRs. Commission expressed a concern that demonstrated that not all MBAs are well An in-use requirement for a CMV part the FMVSS requirement was more maintained. (Copies of both of these or accessory that references an FMVSS restrictive than European requirements. reports have been placed in the docket.) does not place any unique burden on Volvo and the ATA addressed the The preambles to the FHWA’s NPRM the CMV’s operator. For example, wording of the proposed rule. Volvo and the NHTSA’s rulemakings on ABAs § 393.11 provides an in-use standard for suggested the language be modified to clearly stated that ‘‘automatic’’ brake lighting devices and reflectors; it states define more clearly the class of vehicles adjusters do not in any way imply that that CMVs must meet the requirements subject to the requirement, specifically they are ‘‘maintenance-free’’ devices. of 49 CFR 571.108 (FMVSS 108) in CMVs with air brake systems that meet Nevertheless, the FHWA continues to effect at the time of manufacture of the the requirements of FMVSS No. 121 (49 46238 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations CFR 571.121, paragraph S5.1.8) at the drum brakes have internal adjustment especially if a reasonable phase-in time of manufacture. It pointed out that mechanisms, and retrofitting would, in program was put in place.’’ The AHAS FMVSS No. 121 exempts some vehicles, most cases, require replacement of the did not, however, provide any figures to such as those with gross axle weight entire brake assembly. In some cases, substantiate this statement. The AHAS ratings in excess of 13,154 kg (29,000 the hub and drum, or even the entire also stated that it was unsure of the lbs.), and that the language originally axle, would have to be replaced. The benefits of BAIs for hydraulic or air- proposed would have required ABAs on HDBMC noted that, since the 1983 over-hydraulic systems, and that it did all CMVs, irrespective of the FMVSS model year, all class 6, 7, and 8 not know how BAIs could be retrofitted. No. 121 requirements. This would hydraulic brake trucks 1 manufactured The Maine State Police (Maine) also necessitate retrofitting for which by major U.S. manufacturers have had stated that retrofits should be required, components may not exist. automatic adjustment features. without differentiating between air- The FHWA has revised the language Mandating a retrofit would therefore be braked and hydraulically-braked CMVs. of § 393.53(a) and § 393.53(b) to clarify superfluous except for a very few It recommended effective dates of their applicability to CMVs that are vehicles, and their retrofitting costs October 20, 1996, for tractors and subject to the requirements of FMVSS would be exorbitant. trucks, and October 20, 1997, for Nos. 105 and 121, respectively, at the Both Rockwell International and trailers, semitrailers, and converter time of their manufacture. Wilbur-Ellis noted that hydraulically- dollies. Maine also recommended that The ATA also offered alternative braked CMVs provide the driver an limited- or specialized-use vehicles also language for the proposed rule: ‘‘Each indication of brake adjustment through be subject to a retrofitting requirement, commercial motor vehicle manufactured the brake pedal travel. but it provided no additional with a hydraulic brake system on or The ATA’s comments reiterated many information or technical material to after October 20, 1993, and equipped of the points made by others. It noted support this viewpoint. with an automatic means of brake that adjustment systems for hydraulic The FHWA acknowledges the adjustment to comply with FMVSS 105, drum brakes are internal to the brakes, concerns expressed by the commenters shall remain equipped with an integral to their design, and cannot over retrofitting hydraulically-braked automatic brake adjustment system.’’ practically be retrofitted. Similarly for CMVs equipped with air CMVs. The engineering work required The NADA and the NPTC were to accomplish this retrofit would be brakes: ‘‘Each commercial motor vehicle opposed to a retrofit for hydraulically- manufactured with an air brake system complex and costly. The engineering braked CMVs. Haldex stated that retrofit complexity of designing and installing a on or after October 20, 1994, and is impractical for hydraulic brakes. The equipped with an automatic means of retrofitted system would potentially go NSTA was concerned with potential beyond the maintenance capabilities of brake adjustment to comply with retrofitting problems, including safety FMVSS 121, shall remain equipped all but the most sophisticated and voiding of the FMVSS certification organizations. Because the design of with an automatic brake adjustment applicable at the time of manufacture. It system.’’ hydraulic brakes is generally not also questioned whether retrofit kits amenable to this type of modification, The FHWA disagrees with the ATA’s would be available for older buses in suggested rewording because it could be an engineering retrofit, if done fleets, some of which are over 20 years improperly, could actually degrade the interpreted to permit devices that do not old, and whether they could be installed comply with the ABA requirements of performance of the brake system, or and made to operate properly. Midland- render it inoperative. Therefore, in view FMVSSs Nos. 105 and 121 at the time Grau Heavy Duty Systems noted that the when the CMV was manufactured to be of the possible adverse safety impacts, majority of hydraulically-braked CMVs the FHWA has decided not to require used as replacement parts. The agency’s already are equipped with ABAs. Union intent, in proposing an in-use rule, was retrofitting for hydraulically-braked Pacific Railroad Company CMVs. to require that replacement ABAs recommended against retrofits for continue to conform to the FMVSSs, hydraulically-braked CMVs because of Questions Concerning Retrofitting of much as replacement lighting devices the high costs involved. It noted that ABAs and BAIs on Air-Braked CMVs and reflectors must continue to conform hydraulically-braked vehicles have had to the requirements of FMVSS No. 108. The remaining questions posed by the self-adjusting brakes on most units for NPRM covered retrofitting ABAs and Retrofitting ABAs on Hydraulically- many years, and that relatively few BAIs on air-braked CMVs. While few Braked CMVs CMVs currently in service are not so commenters expressed strong opinions equipped. The CVSA commented that for or against retrofitting, nearly all The following commenters addressed hydraulic brake systems are not the questions concerning a potential voiced concerns. Commenters cited the disassembled to inspect their current limited production capacity of retrofitting requirement, but did not component parts during the course of address the proposed in-use ABA manufacturers, potential inspecting a CMV, and that a decision engineering modifications required for requirement: Riteway Leasing Company, regarding hydraulic brake systems SOIC, Tattle-Tale, NADA, PMAA, brake system component mountings would not affect inspection procedures. because of the limited space around Cedarapids, Michael J. Meyer, and Commenting in favor of a retrofit brake chambers on some vehicles, and XTRA Corporation. requirement for hydraulically-braked potential difficulty in locating the With two exceptions, those who CMVs, the AHAS stated that ABAs are vehicles and taking them out of revenue commented on this issue were strongly necessary for all CMVs. The AHAS was service to retrofit ABAs. Specific opposed to a retrofitting requirement for ‘‘convinced that the benefits gained by comments on each of the numbered these vehicles. Most cited potential retrofitting ABAs and BAIs to the entire questions asked in the NPRM follow, major engineering changes that would existing commercial fleet would far along with the FHWA’s response: be required for axles as well as brakes. outweigh any costs to industry, For example, HDBMC stated that 1. Should air-braked CMVs hydraulic disc brakes inherently 1 Class 6: 8,446–11,794 kg (19,501–26,000 lbs); manufactured before the effective date provide automatic adjustment. It added Class 7: 11,795–14,969 kg (26,001–33,000 lbs); and of NHTSA’s rule be required to be that automatically-adjusted hydraulic Class 8: over 14,969 kg (33,000 lbs). retrofitted with ABAs? Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46239 In Favor The NPTC stated ‘‘There is still some XTRA Corporation cited cost, possible The AHAS stated it would strongly concern surrounding the effectiveness of customer non-awareness of the support such an initiative as an ABAs * * *. (T)he technology still has applicability of a retrofitting appropriate complement to the room for improvement * * *.’’ While it requirement to leased trailers, and the FMVSSs. The AHAS strongly believes opposed retrofitting, the NPTC proposed difficulty of customers in ‘‘obtaining that the FHWA should not consider that vehicles that had already been adequate compliance with the technical mandating ABAs without also requiring retrofitted be required to maintain their aspects of retrofitting.’’ It added that a substantial number of its trailers are not (1) the use of BAIs, and (2) submissions ABAs. used in long-distance hauls, but are of certifications by interstate carriers of The OOIDA stated that it was drayed to and from intermodal ramps. It their preventive maintenance programs adamantly opposed to a retrofit also noted that many of its trailers are which ensure optimal maintenance and requirement. ‘‘Time and cost are not leased for storage and for use as offices, operation of ABAs. justified by the marginal safety benefit and should not be required to be Maine believed that retrofits should that would result.’’ It believed that retrofitted. be required. retrofitting would be cost-prohibitive Metro-Dade stated it would support ‘‘for a vast portion of the trucking Other Commenters’ Concerns industry, especially owner-operators,’’ an ABA retrofit proposal, noting that its The HDBMC believed that the FHWA urban bus fleet is equipped with ABAs. and that the FHWA should defer to the opinion and expertise of the NHTSA. should consider air-braked CMV ABA Sebring stated that it will install retrofits ‘‘when physically possible and ABAs as replacements for manual brake Haldex was concerned that retrofitted ABAs might not be able to keep air economically feasible.’’ While the adjusters, as needed. HDBMC declared that consideration of chambers operating within allowable retrofitting ‘‘is laudable,’’ it cautioned Opposed limits due to wear and lack of that many concerns would need to be maintenance of other brake components. Wilbur-Ellis opposed retrofitting addressed; for example, not all It stated that ‘‘Improvement in overall because the cost would not justify the automatic slack adjusters interchange operational safety of these retrofitted safety benefit, and ABAs must still be with manual slack adjusters. maintained and brake clearances vehicles may be less than expected Volvo echoed the HDBMC’s view, checked. It recommended aggressive unless other brake maintenance is stating that retrofits will, in some cases, roadside enforcement. performed at the time of the retrofit.’’ require more than a one-for-one The ATA opposed mandatory retrofit Haldex also stated that, although the replacement. Volvo noted that design for existing equipment, reasoning that company would benefit from a changes go ‘‘forward’’ to new products, motor carriers lack technical expertise requirement to retrofit all CMVs, it and that not all are backward- to assure replacement parts comply with could not enthusiastically support such compatible for use as service the FMVSSs; this is the responsibility of a proposal because of the potential high replacements with older equipment. the manufacturer. It stated that costs to the trucking industry and Midland-Grau stated that a complete hydraulic brakes and some air brakes because it believed that past analysis of all combinations of ABAs cannot be retrofitted, and that motor maintenance histories would lead to and foundation brake set-ups must be carriers are ‘‘unable to redesign uncertain future benefits from the made. It urged an evaluation of the risk equipment which was built not having devices. of incomplete or incorrect installation to comply * * *.’’ The ATA stated that The NSTA was concerned that against potential safety benefits, and most tractors manufactured since the retrofitting could affect safety and advised the FHWA to review past late 1980s have ABAs, but that ABAs potentially void the FMVSS certification experiences with retrofit requirements, have not been standard equipment on applicable at time of manufacture. It such as that for steering axle brakes. most trailers. It contended that the questioned whether retrofit kits would Midland-Grau also recommended that current rule requiring brakes to be kept be available for older buses (up to 20 the FHWA include requirements to use in adjustment is ‘‘actually more years old), and whether the ABAs could devices that meet the appropriate SAE comprehensive’’ than a retrofit be installed and made to operate Recommended Practices, and to perform requirement, because the mere presence properly. technical evaluations to prevent safety of ABAs does not guarantee that brakes The PMAA cited safety and economic degradation for incomplete or incorrect will be kept in adjustment. The ATA concerns, particularly for small retrofits. added that retrofits should not be businesses. The PMAA believed that The State of Connecticut Department required because many installations current regulations requiring brake of Motor Vehicles supported a retrofit lack the space to make the substitution; inspection and adjustment were proposal, provided confirmation of there may be design limitations within sufficient. compatibility could be made in the initial system; and current systems Union Pacific cited an extremely high advance. operate safely but may not do so after cost burden, and added that the time Rockwell believed that ABAs ‘‘do not retrofitting. It stated that consumer during which vehicles would be out of function in exactly the same manner reworking of vehicles could create legal revenue service would jeopardize the and that adjustment rate and clearance liability issues: an example would be a transportation system’s ability to move can affect brake certification,’’ although retrofit that could require removing the Nation’s freight on a timely basis. it stated that it did not have data to brackets from heat-treated axles, Mr. Michael J. Meyer, a mechanic validate its concern. Rockwell asserted potentially leading to a structural with 14 years of experience and 14 it would be prudent to recommend that failure. Finally, the ATA asserted that additional years as an owner-operator, replacement ABAs and BAIs be of the the record demand for ABAs for new believed a retrofitting requirement same type with which the brake was CMVs subject to FMVSS No. 121 has would lead drivers to ignore brakes, as originally equipped. Rockwell rationed aftermarket supply. well as to miss other potential contended that ‘‘new, small, unproven The NADA believed the requirements equipment problems, because they suppliers’’ may introduce devices would be unduly burdensome to the would take shortcuts in performing designed to conform to ‘‘somewhat motor carrier industry. under-vehicle inspections. ambiguous NHTSA requirements,’’ and 46240 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations that their lack of knowledge and require engineering modifications to the accuracy of retrofit marks/indicators, experience may result in the affected CMVs. safety issues from owners improperly introduction of ineffective and non- In view of the potential adverse safety disassembling or assembling a brake conforming devices. If retrofitting were impact of a retrofit rule, should it be chamber, and the production capability to be mandated, Rockwell asks the performed incorrectly, and the of established suppliers. FHWA to consider (1) production significant costs of such a rule, the The ATA believed that internal capabilities and parts availability, (2) FHWA will not require retrofitting system BAIs using air chamber expense and inconvenience to CMV ABAs on air-braked CMVs. assemblies incorporating marked owners, and (3) such technical and 2. Should all air-braked CMVs with pushrods are the most satisfactory performance issues as fit, possible external brake adjustment mechanisms arrangement. It feared that required mechanical incompatibility, and mixing be required to be retrofitted with brake retrofitting might involve replacing of different types of ABAs on a single adjustment indicators? brake chambers to achieve a proper match of size and brake stroke. It was vehicle. In Favor The CVSA questioned whether there also concerned that aftermarket BAIs would be a sufficient supply of ABAs The HDBMC stated it would support may be easily knocked out of position over a short retrofit period. It suggested BAI retrofit when it is physically by road debris, dirt, snow, and physical that ‘‘[o]ne alternative to consider is the possible and economically feasible. It contact with other vehicle parts. discontinuance of the manufacture of asked that the FHWA consider The NADA opposed BAI retrofitting non-ABAs and when replacing systems, specifying SAE standards designating for the same reasons it opposed ABA replace them with ABAs.’’ BAI markings and identification. It also retrofitting. suggested that replacement brake The AHAS believed that ABAs will Agency’s Response to These Comments chambers with SAE-marked BAIs be not correct chronic problems with out- It is certainly not the FHWA’s intent mandated. of-adjustment air brakes unless used to force CMV operators to attempt to Connecticut would strongly support with easily-seen adjustment indicators redesign brake systems or axles in order BAI retrofit for air brakes to ease pretrip and ‘‘vigorous educational campaigns to accommodate ABAs. If a motor inspections and reduce the time by Federal and State authorities.’’ It carrier is considering retrofitting ABAs, necessary for maintenance and roadside stated that the FHWA should not it should consult with appropriate inspections. consider mandating ABAs without also technical experts (such as the original- Riteway recommended that all requiring the use of BAIs. The AHAS equipment manufacturers of the vehicle tractors, trailers, trucks, and buses be expressed particular concern on and the brake system) to ensure that the equipped with ‘‘air brake stroke retrofitting CMVs with ‘‘boot-covered’’ CMV and its brakes will continue to indicators.’’ It noted that the company air brake pushrods, because it believed operate safely. has used indicators ‘‘for some time’’ and that BAIs were probably not feasible for has not had a BAI-equipped unit cited As for the AHAS’ recommendation for that design. The AHAS added that ‘‘this for out of adjustment brakes. certification of preventive-maintenance proprietary approach to air brake Lindy’s Enterprise Inc., manufacturer programs, it should be noted that chamber design can permanently of Tattle-Tale, a visual brake stroke § 396.3(a)(1) of the FMCSRs requires forswear the considerable additional indicator, enclosed product literature that: ‘‘Parts and accessories shall be in benefits of supplementing ABAs with and a partial list of customers. ‘‘Our safe operating condition at all times’’ BAIs on air brakes,’’ and recommended products have been on many over-the- (emphasis added). Preventive that the FHWA coordinate with the road tractors, trailers, and trucks with maintenance is a central element of a NHTSA. great success. We not only feel that our The OOIDA opposed any requirement CMV maintenance program, and FHWA product could save annual inspection for retrofitting of brake components. It compliance reviews include an costs but help achieve safety results as believed that, given the ‘‘typical useful assessment of motor carrier well.’’ life’’ of Class 7 or 8 motor vehicles, and maintenance records. Furthermore, Sebring developed a BAI for its own allowing for ‘‘any reasonable’’ amount CMVs are subject to roadside inspection fleet. It believes that its brake of time fully to implement a retrofit programs, using uniform CVSA maintenance and adjustment programs rule, a manufacturing standard would inspection procedures, and to the have improved. achieve virtually the same result. periodic inspection requirement of Wilbur-Ellis recommended BAI Haldex cited fleet turnover in its § 396.17. In addition, § 396.25 requires retrofit for s-cam brakes. opposition to BAI retrofit. It believed brake inspectors to be capable of The NPTC stated it would support a that a mandate for stroke indicators performing brake service or inspection BAI retrofit requirement, but that the could be made without one for ABAs, tasks through brake-related training, method used to indicate brake out-of- but that an ABA retrofit without experience, or a combination thereof adjustment status should not be including BAIs could create a false totaling at least one year. The FHWA specified. sense of security due to maintenance believes that an additional program to Metro-Dade supported a BAI retrofit concerns on older vehicles. ‘‘certify’’ motor carriers’ preventive requirement. Midland-Grau cautioned that a maintenance programs would achieve The CVSA stated that retrofit of BAIs complete brake system analysis would little. would be desirable as it would aid in be required, as for an ABA retrofit. The agency disagrees with CVSA’s recognizing brake adjustment problems. Union Pacific and XTRA Corporation comment that the manufacture of MBAs would oppose retrofit of BAIs for the Opposed should be halted. The FHWA does not same reasons that they would oppose have the regulatory authority to place Maine opposed BAI retrofitting ABA retrofit. such a requirement on manufacturers. because benefits would be very limited. Also, as other commenters have pointed Rockwell believed that the benefit of Agency’s Response to These Comments out, some CMVs were never designed to BAIs is marginal compared to ABAs. It As several of the brake manufacturers accept ABAs, even as an option. cited factors such as the expense of the pointed out, the original design of the Replacing MBAs with ABAs could devices, control of the placement brake system must be considered in Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46241 determining whether or not a retrofitted manufacturers currently have to accommodate ABAs on such vehicles item would function properly. The inadequate capacity to simultaneously vary from relatively small machining accuracy, precision, and, most notably, supply ‘‘record levels’’ of new CMVs operations to outright wheel the durability of most retrofitted BAIs is and a large retrofit demand. replacement.’’ questionable. While marked pushrods The AHAS recommended two The PMAA also expressed concerns on replacement air chamber assemblies alternative phased-in schedules. In the about space and necessary clearances might prove the most durable, it is not first, 10 percent of the entire existing for retrofitted ABAs to work effectively. reasonable to expect a motor carrier to commercial fleet would be retrofitted The PMAA believes that ‘‘[w]hile a replace an air chamber in proper beginning one year following the newly-designed vehicles could easily operating condition for that sole promulgation of the final rule, followed accommodate the variety of components purpose. by 25 percent in the second year, 60 on the market, older vehicles would not The FHWA has consulted with the percent in the third year, with 100 be able to follow suit. This is primarily NHTSA on the matter of BAIs on boot- percent compliance by the end of the due to the fact that the brake and covered pushrods. Very few CMVs use fourth year. The AHAS also suggested, structural system of the existing vehicle boot-covered pushrods. Those CMVs as an alternative choice for motor or trailer is already fixed in place during that are so equipped are generally used carriers, a two-year implementation the manufacturing process. Adding for operations where the brake chambers delay after a final rule was issued, adjusters to these vehicles and trailers could be contaminated with dust and followed by a requirement for 100 would require extensive alterations debris. They are exempt from the percent compliance in the third year. requiring cutting welded bracket FMVSS BAI requirement because they anchors from the brake system and do not have an exposed pushrod. This Agency Response to These Comments engineering a completely redesigned is not a loophole for manufacturers, but Since the agency has decided not to brake system.’’ The PMAA believed that a recognition that certain operating require retrofitting of any kind, a such redesign is beyond the technical environments require enclosed discussion of these comments is capabilities of operators like petroleum pushrods. unnecessary. marketers and truck/trailer service 3. If certain CMVs are to be retrofitted, 4. Are there certain types or facilities. It believed that a leading cause how much time should be allowed for configurations of air-braked vehicles of ABA failure is improper installation, installation of the new equipment? that cannot be equipped with ABAs and that, even when performed by because of space limitations around the Comments factory-trained personnel, many units axles and wheels? still fail. ‘‘It is reasonable to surmise that Commenters suggested phase-in Comments the more technically-difficult retrofit by periods ranging from one to seven years. untrained personnel would yield a Metro Dade suggested that only one year Rockwell, Haldex, the PMAA, and the higher rate of brake failure * * *.’’ would be necessary to retrofit a transit ATA stated that space limitations can The NADA and the NPTC also fleet. The NPTC suggested a minimum prevent installation of ABAs, and have believed that some CMVs cannot be two-year retrofit period for in fact done so. Rockwell added that an equipped with ABAs. XTRA hydraulically-braked CMVs and a improperly installed ABA may impair Corporation stated that it owned minimum of a five-year retrofit for air- brake performance by limiting brake approximately 1,000 older braked CMVs. The OOIDA and Union chamber stroke, and that use of long remanufactured trailers which cannot be Pacific recommended at least three stroke chambers may influence converted. years, while the ATA and the AHAS performance as well. Several commenters did not view a recommended four years. The SOIC and Haldex noted that, in the last five potential retrofitting requirement as a Haldex recommended at least five years. years, most U.S.-built CMVs offered problem. Sebring believed that all its XTRA Corporation stated that the ABAs at least as an option, but, because tractors and trailers could be easily responsibility to retrofit would fall upon of design differences, not all equipped. Union Pacific stated that it their customers because it has manufacturers’ ABAs fit each was not aware of any type of trucks, relinquished control to the lessee. It application. Haldex stated that some tractors, or trailers that cannot be noted that most leases run five to six vehicles built over 15 years ago, as well equipped due to space limitations. The years, so its commercial situation as some Japanese vehicles, use a HDBMC, Midland-Grau, Metro Dade, dictated against requiring retrofitting in ‘‘camshaft spline’’ with uncommon and the CVSA recommended that the a shorter period than seven years. dimensions which is not currently FHWA defer to the judgement of CMV Midland-Grau commented that retrofit available from any ABA manufacturer. manufacturers. time required would be a function of the (Haldex did not provide specifics on the While it opposed the notion of a specific products selected, and any design.) Haldex stated that it has had retrofitting requirement, the ATA vehicle modifications needed, such as difficulties retrofitting other Japanese suggested that the requirement only brake chamber pushrod length changes vehicles which were not originally apply to those CMVs which, when new, to fit a new ABA and clevis, interference designed to offer ABAs as an option. had ABAs offered as a substitute option rework, and brake chamber The ATA commented that slack for MBAs. The ATA stated that it modifications to fit stroke indicator adjusters, which it believes comprise at recognized that there may be problems components. least 95 percent of the adjustment identifying those vehicles. Other factors cited by commenters mechanisms used for air brakes, must fit that would affect a phase-in period into cramped quarters between brake, Agency’s Response to These Comments included the ability of manufacturers to axle, suspension, and frame The FHWA agrees with the meet the demands for new CMVs as components. ‘‘This problem is commenters’ concerns regarding the well as retrofitted ones, time lags in particularly difficult on tractors but also difficulty of making engineering distribution channels, scheduling of occurs with trailers, especially those of modifications (relocation of welded vehicles for retrofit, and costs to CMV a specialty nature.’’ The OOIDA brackets, replacement of atypical operators. In particular, Haldex and the repeated this concern, adding that ‘‘[t]he components, reconfiguration of ATA contended that ABA modifications that would be necessary components in tight quarters) to permit 46242 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations some CMVs originally equipped with they would lead to confusion, needless impractical because of installation MBAs to retrofit ABAs. With the enforcement activity, and penalties for difficulties. exception of Haldex, none of the mistakes of fact. The ATA stated that specialized commenters provided information on Sebring said that different periods vehicles which are exempt from FMVSS specific classes of CMVs that could be may be needed but did not elaborate on No. 121 requirements have been given readily identified as presenting unique that statement. this status by the NHTSA ‘‘based on the retrofit challenges. Midland-Grau believed that different facts that doing so will not compromise As discussed in the agency’s response periods should be specified according to public safety and that these vehicles to the comments to Question 1, it has potential installation problems, but it cannot be constructed in a manner never been the FHWA’s intent to did not elaborate. consistent with more ‘normal’ promulgate a rule which would force Metro-Dade stated that this issue was equipment.’’ The ATA added that these CMV operators to attempt to redesign not applicable to transit agencies. vehicles could not have been readily brake systems or axles in order to Union Pacific opposed the notion of built with ABAs, that retrofit should not accommodate an ABA. The FHWA will different retrofit periods for different be considered, and that these vehicles not prohibit retrofitting of ABAs. types of CMVs because it would require must still meet the FMCSR’s Nevertheless, motor carriers considering excessive management to enforce. requirements for inspection and safe retrofitting ABAs when MBAs are The CVSA asked that the FHWA operation. replaced should consult the appropriate consider a phase-in period and the need The NADA stated that its members technical experts to ensure that the for mechanic training. support ‘‘maximum possible brake system of the affected CMV will XTRA Corporation urged that no grandfathering’’ of non-FMVSS 121 continue to operate safely. retrofitting requirements be imposed on CMVs as part of their universal 5. Should different periods be intermodal containers, trailers, or opposition to a retrofit mandate. The NPTC stated that a member had specified for retrofitting single-unit chassis, or on remanufactured trailers, suggested that trucks and trailers over trucks, tractors, converter dollies, and or on mobile storage trailers. trailers? 8,165 kg (18,000 lbs) GVW, which have Agency’s Response to This Comment been equipped with ABAs, be required Comments As stated earlier in this notice, to maintain the ABAs or improve them, Maine recommended that trucks and but that any retrofitting requirement tractors be retrofitted by October 20, retrofitting requirements will not be imposed. exempt trucks under 8,165 kg (18,000 1996, and that trailers, semitrailers, and lb) GVW because the benefits of ABAs 6. Should specific types of CMVs, or converter dollies be retrofitted by on those vehicles are not clear. The CMVs used in unique operations, (i.e., October 20, 1997. NPTC did not elaborate on that CMVs that are not subject to the Rockwell suggested that the FHWA comment. requirements of FMVSS 121, but are might set priorities for vehicle types The AHAS believed that no vehicle or subject to the FMCSRs) be exempt from based on model years and benefit-risk load-carrying dolly should be exempted a requirement to be retrofitted with analysis. if it can sustain highway speeds. ABAs? Should these specific types of The HDBMC and Haldex advised that However, it allowed that low-speed air-braked CMVs manufactured on or any retrofitting requirement be phased- vehicles that usually operate for short after October 20, 1994, be required to be in by vehicle type and year of distances and under special permit can equipped with ABAs prior to being manufacture. Haldex believed that be considered as long as the FHWA placed in operation in interstate trailers should have priority over ‘‘will avoid the creation of a loophole commerce? tractors because they have longer useful for exploitation.’’ lives, but receive less maintenance Comments The OOIDA opposed retrofitting of during their lives. Haldex cautioned that any air-braked vehicles, and stated that combination vehicles are susceptible to Maine and Sebring believed that the FHWA ‘‘should defer to NHTSA’’ on jackknife accidents if the tractor brakes limited or specialized use vehicles not this issue. are in better working order than trailer subject to the FMVSS No. 121 Union Pacific stated that certain brakes. Haldex also noted that new requirements should be subject to a vehicles should be excluded. vehicles accumulate more miles, and requirement for retrofit of ABAs. Cedarapids opposed retrofitting older vehicles would be retired from Neither provided elaboration. The construction equipment, citing an service before a retrofit were to be CVSA recommended that CMVs economic impact without an increase in required. currently equipped with slack adjusters highway safety. It was concerned that While the NADA indicated that its be required to have ABAs unless there ABAs could exacerbate brake problems survey respondents were universally is a specific retrofitting problem for that because dirt and dust would cause high opposed to retrofits, it requested that the type of vehicle. Those situations should failure rates of ABAs while providing a time-frame for a potential requirement be handled as exceptions. false sense of security to construction consider limitations in labor, parts, and The HDBMC, Rockwell, Haldex, equipment operators. However, ‘‘[f]or shop facilities. Midland-Grau, and the ATA normal highway vehicles, we agree and The AHAS believed that its recommended against including CMVs applaud your efforts to increase recommended phase-in period not subject to the FMVSSs. Rockwell highway safety.’’ discussed earlier should apply believed it ‘‘might be awkward’’ to XTRA Corporation urged that no simultaneously to tractors, trailers, and require ABAs on vehicles ‘‘not subject retrofitting requirements be imposed on single-unit tankers that carry hazardous to other federal braking requirements.’’ intermodal containers, trailers, or materials. It suggested that additional Haldex argued that there was chassis, or on remanufactured trailers, lead time be provided for other CMVs insufficient justification for ABAs on or on mobile storage trailers. and non-air-braked CMVs. limited- and specialized-use vehicles, While opposing retrofitting, the noting that there is little industry Agency’s Response to This Comment OOIDA maintained that different experience with ABAs on these As noted above, this final rule does periods should not be specified because vehicles, and that retrofitting might be not require retrofitting of any kind. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46243 Some of the comments nonetheless furnished in individual responses from to be retrofitted ‘‘within the given deserve a brief response. HDBMC member companies. period’’ at a cost of $108 million. The FHWA agrees with the ATA’s and The SOIC estimated a range of labor The NADA estimated costs at from Cedarapids’ comments. The NHTSA is and materials costs for each intermodal $75/brake to $250/tandem and believed responsible for determining compliance chassis from $185 to $275, averaging there would be considerable CMV-to- with, or exemptions from, FMVSS No. around $220. It estimated a cost of $48 CMV variation. 121. The definition of off-road million for its members to retrofit, and The NPTC estimated costs at $200 to construction equipment is to be questioned the ‘‘indeterminate $750 for straight trucks and single axle narrowly construed and limited to reductions in traffic accidents’’ that trailers, and $900 to $1000 for tandem- equipment which, by its design, would result. The SOIC stated that it axle tractors. appearance, and function, is obviously anticipated no technical problems While the AHAS was ‘‘convinced that not intended for use on a public road. related to a retrofitting requirement, but the benefits gained by retrofitting ABAs The FHWA has provided regulatory that administrative difficulties of and BAIs to the entire existing guidance (58 FR 60734, November 17, locating, capturing, and transporting commercial fleet would far outweigh 1993) concerning the applicability of the chassis to repair facilities may be any costs to industry, especially if a FMCSRs to ‘‘off road’’ motorized significant and difficult to quantify. It reasonable phase-in program was put in construction equipment, i.e., motor suggested a program of conversion ‘‘in place,’’ it did not provide any figures to scrapers, backhoes, compactors, association with annual inspections substantiate this statement. The OOIDA stated that costs can vary excavators, tractors, trenchers, and required by the FMCSRs.’’ considerably, depending on application, bulldozers (Question 6 to § 390.5, Sebring estimated that in 1990 a local configuration of foundation brake Definitions), as follows: repair shop needed one hour per wheel mounting, make and type of ABA, and Such equipment is routinely found at to install four automatic slack adjusters where the work is performed. It construction sites and is operated by (ASAs). Labor charges were $25 per provided the following information, personnel requiring specialized skills. hour, and the ASAs cost approximately based on discussions with several Occasionally, such equipment is moved to or $55 each. The first retrofit of a BAI of midwest truck dealerships: ABAs, $35 from construction sites by ‘‘driving’’ the Sebring’s own design took 30 minutes, ‘‘vehicles’’ short distances on public to $75; hourly shop rates from $47 to and others took 10 minutes/wheel. $49.50; time to simply remove brake highways. Their appearance on the highway Rockwell estimated the cost of parts is only incidental to their primary function, adjusters and install ABAs, from 20 to they are not designed to operate in traffic, and labor to replace MBAs at $50 per 90 minutes. The OOIDA added that and their mechanical manipulation often wheel; to retrofit an ABA, $100 per retrofit may require replacement of requires a different set of knowledge and wheel. other system components to conform to skills. The types of construction equipment Wilbur-Ellis estimated costs at around ABA design and various mounting discussed above do not come within the $80 for an ASA, installation time of 0.75 configurations. The OOIDA asserted that definition of a ‘‘CMV’’ and hence the to one hour each, and a labor rate of $45 owner-operators are already operating operators and equipment are not subject to to $50 per hour. Downtime was the FMCSRs. on thin profit margins, and that any that estimated at one day per truck, and any loss of use of a CMV would be an As for the NPTC’s comment perhaps more. The total retrofitting cost unjustifiable burden. concerning an exemption for CMVs for three-axle delivery truck would be Haldex stated that ABAs retail for under 8,165 kg (18,000 lbs) GVWR, the approximately $700. Most of Wilbur- approximately 4 to 5 times the cost of general applicability of the FMCSRs to Ellis’ locations are in rural areas where an MBA; aftermarket prices range from CMVs over 4,536 kg (10,000 lbs) GVWR air brake repair facilities are not readily $50 to $75. It estimated installation time is required by statute (49 U.S.C. available. at around 15 minutes per wheel; 31132(1)). The ATA believed that ‘‘re- however, the potential need to change The FHWA cannot ‘‘defer to NHTSA’’ engineering’’ systems to accommodate air chamber pushrod length could on operational standards for CMVs, as ABAs on CMVs not originally designed double that time. ‘‘On the average, a OOIDA suggested, because that agency’s for them would be a major cost element vehicle would be out of [revenue] regulatory authority is limited to of retrofitting. The ATA stated that, ‘‘in service for no less than 90 minutes for manufacturing standards. However, the many instances, the vehicle would have an ABA retrofit.’’ Haldex also stated that FHWA and the NHTSA work closely to be either scrapped or sold somewhere data available to the company indicated together on regulations of common else in the world where it could be that major fleets generate an average of interest to both agencies. used, since the retrofit could not be approximately $100 to $150 per hour in 7. What are the costs associated with economically justified.’’ The ATA revenue, so each vehicle undergoing retrofitting an ABA compared to estimated the following costs for retrofit retrofit would also cost the motor carrier replacement of an MBA? Include: the of vehicles originally designed to $150 to $225 in revenue foregone. cost of the device, installation time, accommodate ASAs: One hour per Metro-Dade stated that the ‘‘Cost to mechanic’s hourly salary, and a ‘‘loss of brake, assuming no severe corrosion or retrofit would be insignificant if done in use’’ cost figure if a CMV were to be other interfering factor; labor, $25 per conjunction with a brake rebuild.’’ taken out of revenue service for hour (different in various parts of the The PMAA believed that costs might retrofitting at some time other than a country); $65 for an ABA, $12.50 for an include re-engineering of brake and time when a brake adjuster would MBA. If brake chambers needed to be structural systems to provide additional normally be due for replacement. How replaced to accomplish a BAI retrofit, space needed for installation. It believed often do tractors and trailers visit a they would cost an additional $55 each. that, in many cases, retrofitting may not facility where retrofitting could take The ATA believed that costs for parts be economically feasible because of the place? and labor alone would make retrofit complexity of the redesign. In other cost-prohibitive; it did not include costs cases, redesign would not be technically Comments of vehicle down-time in these figures. possible. It stated ‘‘In cases such as The HDBMC stated that detailed The ATA estimated that 3.8 million these, the cost of compliance would answers to this question would be trailers would require 12 million ABAs equal the cost of the vehicle and 46244 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations trailer.’’ The PMAA estimated the operating in interstate commerce. The brakes are also the primary equipment- following costs for CMVs that could be agency believes that the ATA’s estimate related cause for CMVs to be placed out retrofitted: $65 for ABAs; labor, $40 per of 3.8 million CMVs potentially subject of service during roadside inspections; hour; 6 hours for installation if there is to a retrofitting requirement may be for Fiscal Year 1992, 36.2 percent of no extensive corrosion; total: $670. For somewhat high because single-unit vehicles placed out-of-service were a complex brake system redesign, it trucks and buses with hydraulic brake cited for this deficiency. estimated costs up to $2300 per vehicle. systems would not have been included Aside from the clear safety benefits of The PMAA estimated costs for its in such a proposal. The ATA estimated maintaining proper brake adjustment, industry segment at $14,740,000. slightly more than three retrofitted ABAs can have a positive benefit on Midland-Grau stated that it was ABAs per vehicle (12 million ABAs/3.8 motor carrier productivity by preventing difficult to estimate a typical cost, and million CMVs=3.15 ABAs/CMV). This CMVs from being placed out of service, that an evaluation was needed. also might be a low estimate: Most reducing roadside service calls and the Union Pacific provided the following semitrailers would need 4 ABAs, and resulting delays to transportation cost estimates. Tandem tractors: one-axle semitrailers would need two operations. material, $400; labor, 2 hours at $60 per ABAs, but tractors would need up to 6. Virtually all commenters to the NPRM hour; total $520. Tandem trailers: However, using the ATA’s estimate of who responded to the in-use material, $300; 3 hours labor at $60 per 12 million ABAs, the cost for parts and requirement were in favor of it. The hour; total $480. labor would be $1.2 billion, rather than ATA noted that manufacturers have XTRA Corporation estimated direct the $108 million figure stated in its provided, and motor carriers voluntarily costs of approximately $300/unit for its docket comment. If we were to exclude have been using, ABAs for a number of entire fleet of trailers and chassis, tractors and air-braked single-unit years. Even in the absence of Federal including materials and an average of CMVs, some 2.7 million trailer retrofits regulations, the marketplace was 2.5 hours of labor. It noted that (two-thirds of the U.S. trailer and adopting the technology on its merits. additional costs that needed to be semitrailer fleet), requiring four ABAs Finally, the FHWA strives to maintain considered included loss of revenue, each, would cost an estimated $1.08 consistency between the manufacturing recordkeeping, and customers’ costs billion for parts and labor. standards for commercial motor resulting from temporary removal of Some commenters noted, and the vehicles contained in the NHTSA’s their trailers from service. Logistical FHWA agrees, that the logistical costs of Federal Motor Vehicle Safety Standards considerations would be XTRA locating a CMV for retrofitting and (FMVSSs), and the operations and Corporation’s time to locate the CMV removing it from revenue service could maintenance regulations contained in and to plan and schedule its retrofit, exceed the costs of labor and materials. the FMCSRs. and their customers’ cooperation in On the other hand, the cost of The FHWA has concluded that both accomplishing it. retrofitting ABAs probably would not motor carriers and the traveling public Agency’s Response to This Comment exceed the value of the CMV unless the may derive substantial operational and vehicle was at or past the end of its safety benefits from the use of automatic The ABAs were estimated to cost useful life. In general, however, the data brake adjusters and brake adjustment between $35 and $75; most commenters and cost estimates show that retrofitting indicators. estimated a range of $50 to $75. They ABAs would involve significant The final rule, therefore, amends the might take from 20 minutes to 1.5 hours expense to the motor carrier industry. FMCSRs by adding a new § 393.53, to install; 45 minutes to one hour was While ABAs have real advantages Automatic Brake Adjusters and Brake the most common range noted. over MBAs, the FHWA has determined Adjustment Indicators, to Subpart C, Mechanics’ hourly salaries were figured that the costs associated with a Brakes. at $25 to $60, with $40 to $45 most retrofitting requirement do not clearly The provisions of paragraphs (a), (b), commonly noted. exceed the benefits that could be At the low end of the range, a $50 and (c) require that automatic brake anticipated. This is especially true given adjusters and brake adjustment ABA that takes a mechanic earning $40 that the estimated $1 billion retrofit cost per hour 0.75 hour to install would cost indicators installed on newly would only apply to trailers, and manufactured CMVs to comply with the the motor carrier $80. At the high end, semitrailers, not to truck-tractors or air- a $75 ABA that takes a $45 per hour requirements of FMVSS Nos. 105 and braked single-unit trucks. Even with 121 be maintained by the motor carriers mechanic one hour to install would cost several years of lead time, the annual the motor carrier $120. For purposes of operating those CMVs. cost to the motor carrier industry would These provisions will apply to all estimating, the FHWA will use a be several hundred million dollars. CMVs operated in the United States, rounded average of $100 per ABA None of the commenters that favored a irrespective of the country where the installed, excluding the motor carrier’s retrofit requirement provided an CMV is based. Canadian and Mexican revenue loss for the time the CMV is not analysis or estimate of its expected vehicles manufactured on or after the in service. impact on CMV accidents. The FHWA, effective dates of the NHTSA rules will Estimates of the numbers of registered therefore, will not require retrofitting. CMVs from the FHWA’s 1993 edition of be required to conform to this Highway Statistics are as follows: Discussion of Final Rule regulation. Commercial and private trucks Proper brake adjustment is critical to Rulemaking Analyses and Notices (excluding truck tractors, and light and safe CMV operation. The NHTSA has farm trucks), 2.4 million; truck tractors, estimated that nearly 4,000 CMV Executive Order 12866 (Regulatory 1.3 million; private and commercial accidents per year are caused by out-of- Planning and Review) and DOT trailers and semitrailers, 3.9 million; adjustment brakes. The NTSB’s review Regulatory Policies and Procedures and private and commercial buses, of 97 serious heavy truck accidents The FHWA has determined that this 115,000. However, many of these 7.6 investigated from 1969 to 1981 cited action is not a significant regulatory million CMVs are not in interstate out-of-adjustment brakes as a causal or action within the meaning of Executive commerce. The FHWA estimated in contributing factor in 28 percent of Order 12866 or significant within the 1993 that there were 3.6 million CMVs those accidents. Out-of-adjustment meaning of Department of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46245 Transportation regulatory policies and Executive Order 12612 (Federalism List of Subjects in 49 CFR Part 393 procedures. This rule makes the Assessment) Freight transportation, Highway operational standards for brakes in the This action has been analyzed in safety, Highways and roads, Motor FMCSRs consistent with the accordance with the principles and carriers, Motor vehicle safety. manufacturing standards in the FMVSS criteria contained in Executive Order In consideration of the foregoing, the Nos. 105 and 121. It requires automatic 12612, and it has been determined that FHWA is amending title 49, Code of brake adjusters and brake adjustment this action does not have sufficient Federal Regulations, part 393, as indicators installed on newly federalism implications to warrant the follows: manufactured CMVs in accordance with preparation of a federalism assessment. those manufacturing standards to be To be eligible for Motor Carrier Safety PART 393Ð[AMENDED] maintained by the motor carriers Assistance Program funds, a State’s operating those vehicles. The FHWA regulations for interstate transportation 1. The authority citation for part 393 believes that promulgation of this final must be the same as the FMCSRs and is revised to read as follows: rule is necessary to assure that the safety Federal Hazardous Materials Authority: Section 1041(b) of Pub. L. 102– benefits of the NHTSA rule are fully Regulations. Regulations for intrastate 240, 105 Stat. 1914, 1993 (1991); 49 U.S.C. transportation may be at variance only 31136 and 31502; 49 CFR 1.48. realized. Based on the NHTSA’s so long as they fall within the research, the FHWA believes that 2. In subpart C, § 393.53 is added to parameters of the Tolerance Guidelines read as follows: operation and maintenance costs of the in 49 CFR part 350, Appendix C. automatic brake adjusters and The FHWA intends to provide § 393.53 Automatic brake adjusters and adjustment indicators required under training and informational materials to brake adjustment indicators. the new FMVSSs will be lower than the States to aid them in this process. (a) Automatic brake adjusters costs of the devices previously required. The FHWA works with the Commercial (hydraulic brake systems). Each It is anticipated that the economic Vehicle Safety Alliance on training and commercial motor vehicle manufactured impact of this rulemaking will be enforcement issues, and will continue to on or after October 20, 1993, and minimal; therefore, a full regulatory do so. equipped with a hydraulic brake evaluation is not required. Paperwork Reduction Act system, shall meet the automatic brake adjustment system requirements of Regulatory Flexibility Act This action does not contain a Federal Motor Vehicle Safety Standard collection of information requirement No. 105 (49 CFR 571.105, S5.1) In compliance with the Regulatory for purposes of the Paperwork applicable to the vehicle at the time it Flexibility Act (5 U.S.C. 601–612), the Reduction Act of 1980, 44 U.S.C. 3501 was manufactured. FHWA has evaluated the effects of this et seq. rule on small entities. This rule (b) Automatic brake adjusters (air modifies the operational standards for National Environmental Policy Act brake systems). Each commercial motor brakes in the FMCSRs to make them The agency has analyzed this action vehicle manufactured on or after consistent with the manufacturing for the purpose of the National October 20, 1994, and equipped with an standards in the FMVSS Nos. 105 and Environmental Policy Act of 1969 (42 air brake system shall meet the 121, which now require the installation U.S.C. 4321 et seq.) and has determined automatic brake adjustment system of automatic brake adjusters and that this action would not have any requirements of Federal Motor Vehicle Safety Standard No. 121 (49 CFR adjustment indicators on certain newly- effect on the quality of the environment. 571.121, S5.1.8) applicable to the manufactured CMVs. Under this final Executive Order 12372 vehicle at the time it was manufactured. rule, motor carriers are only required to (Intergovernmental Review) (c) Brake adjustment indicator (air maintain these devices. The final rule Catalog of Federal Domestic brake systems). On each commercial does not impose a retrofitting Assistance Program Number 20.217, motor vehicle manufactured on or after requirement for vehicles manufactured Motor Carrier Safety. The regulations October 20, 1994, and equipped with an prior to the effective date of the implementing Executive Order 12372 air brake system which contains an NHTSA’s rules. This is consistent with regarding intergovernmental external automatic adjustment other requirements linking the FMCSRs consultation on Federal programs and mechanism and an exposed pushrod, to the FMVSS Nos. 105 and 121. The activities apply to this program. the condition of service brake under- FHWA believes that operation and Regulation Identification Number adjustment shall be displayed by a brake maintenance costs of the vehicles adjustment indicator conforming to the equipped with automatic brake A regulation identification number requirements of Federal Motor Vehicle adjusters and adjustment indicators will (RIN) is assigned to each regulatory Safety Standard No. 121 (49 CFR be lower than costs of the manual action listed in the Unified Agenda of 571.121, S5.1.8) applicable to the devices previously required. Therefore, Federal Regulations. The Regulatory vehicle at the time it was manufactured. Information Service Center publishes the FHWA hereby certifies that this Issued on August 30, 1995. action would not have a significant the Unified Agenda in April and October of each year. The RIN in the Rodney E. Slater, economic impact on a substantial heading of this document can be used Federal Highway Administrator. number of small entities. to cross reference this action with the [FR Doc. 95–22077 Filed 9–5–95; 8:45 am] Unified Agenda. BILLING CODE 4910±22±P 46246 Proposed Rules Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 This section of the FEDERAL REGISTER property lease financing transactions by maintenance, or insurance in contains notices to the public of the proposed national banks. This proposal is another connection with the leased property. issuance of rules and regulations. The component of the OCC’s Regulation The full-payout requirement means that purpose of these notices is to give interested Review Program. The principal goal of the bank must expect to recover the full persons an opportunity to participate in the the Program is to review all of the OCC’s acquisition and financing costs of the rule making prior to the adoption of the final rules. rules with a view toward eliminating leasing transaction from sources that provisions that do not contribute include the estimated, unguaranteed significantly to maintaining the safety residual value of the leased property, DEPARTMENT OF THE TREASURY and soundness of national banks or to but that the bank may rely on estimated accomplishing the OCC’s other statutory residual value only to a limited extent. Office of the Comptroller of the responsibilities. Another important goal There is no aggregate limit on a national Currency is to clarify regulations so that they bank’s investment in Section more effectively convey the standards 24(Seventh) Leases. 12 CFR Part 23 the OCC seeks to apply. In 1987, Congress gave national banks [95±21] The OCC first adopted part 23 in mid- a second, explicit source of authority to 1991.1 The OCC’s experience to date engage in the personal property lease RIN 1557±AB45 suggests that a complete, substantive financing. The Competitive Equality rewrite of the regulation is not Banking Act (CEBA) 3 amended 12 Leasing warranted at this time, but that revisions U.S.C. 24 by adding a new paragraph AGENCY: Office of the Comptroller of the to improve its clarity would be useful. Tenth, which allows national banks to Currency, Treasury. Accordingly, the proposal revises the invest in tangible personal property, ACTION: Notice of proposed rulemaking. regulation by shortening and including vehicles, manufactured streamlining its text; reorganizing many homes, machinery, equipment, and SUMMARY: The Office of the Comptroller of its provisions and adding paragraph furniture, for lease financing of the Currency (OCC) is proposing to headings; and conforming its style to transactions on a net lease basis. revise its regulation governing the that of the OCC’s other rules. In Investment in personal property to be personal property lease financing addition, the OCC has identified several leased under the authority of 12 U.S.C. transactions of national banks. This areas, described in the Discussion 24(Tenth) (CEBA Leases) may not proposal is another component of the section below, where substantive exceed 10 percent of a national bank’s OCC’s Regulation Review Program to changes may be appropriate based upon assets. Although a national bank must update and streamline OCC regulations the comments received in response to expect to recover its full acquisition and and to reduce unnecessary regulatory this proposal. financing costs in a CEBA leasing costs and other burdens. The proposal transaction from the same sources as the revises the regulation to improve its Background regulation specifies for a Section clarity. In addition, the OCC has National banks may engage in leasing 24(Seventh) leasing transaction, CEBA identified several areas where activities pursuant to two independent Leases are not subject to a maximum substantive changes may be appropriate sources of authority. First, under 12 estimated residual value limit. based upon comments received in this U.S.C. 24(Seventh), national banks may Both Section 24(Seventh) Leases and rulemaking. engage in personal property lease CEBA Leases are governed by standards DATES: Comments must be received by financing transactions (Section set forth in part 23. The current version November 6, 1995. 24(Seventh) Leases) when the lease is of part 23 contains three subparts: ADDRESSES: Comments should be the functional equivalent of a loan.2 The subpart A applies to all lease financing directed to: Communications Division, OCC has interpreted the functional transactions; subpart B contains 250 E Street, SW., Washington, DC equivalency standard to mean that additional requirements applicable only 20219, Attention: Docket No. 95–21. Section 24(Seventh) Leases must be to CEBA Leases; and subpart C contains Comments will be available for public ‘‘net, full-payout leases.’’ Under the additional requirements applicable only inspection and photocopying at the current regulation, the net lease to Section 24(Seventh) Leases. The same location. requirement means that the lessor proposal retains the three-subpart structure, but revises and reorganizes FOR FURTHER INFORMATION CONTACT: national bank may not provide certain Morris Morgan, Credit and Management enumerated services such as repairs, the rule’s provisions to enhance clarity. A derivation table showing these Policy, Chief National Bank Examiner’s 1 changes appears at the conclusion of Office 202/874–5170; Jacqueline 56 FR 28314 (June 20, 1991). The final regulation replaced the OCC’s interpretive ruling on this preamble. Lussier, Senior Attorney, Legislative lease financing transactions, which had been The Discussion portion of the and Regulatory Activities 202/874– codified at 12 CFR 7.3400. Much of the substance preamble contains a section-by-section of this interpretive ruling was retained, however, in 5090, Aline J. Henderson, Senior description of the proposed revisions. Attorney, Bank Activities and Structure, the portions of part 23 that apply to Section 24(Seventh) Leases. Chief Counsel’s Office 202/874–5300. 2 See M & M Leasing Corp. v. Seattle First 3 Pub. L. 100–86, § 108, 101 Stat. 552, 579 (August SUPPLEMENTARY INFORMATION: National Bank, 563 F.2d 1377 (9th Cir. 1977), cert. 10, 1987). See also S. Rep. No. 100–19, 100th Cong., denied, 436 U.S. 956 (1978) (upholding national 1st Sess. 43 (1987) (CEBA expanded national banks’ Introduction banks’ authority under 12 U.S.C. 24(Seventh) to leasing authority in order to enable them to respond engage in personal property lease financing to customer demand for a broader range of lease The OCC is proposing to revise 12 transactions if the lease is the functional equivalent financing transactions and to compete with thrift CFR part 23, which governs personal of a loan). and other nonbank lessors). Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46247 Discussion The purpose of a residual value limit transaction must reasonably expect to is to ensure that a lessor bank relies recover its full investment in the leased Subpart A—General Provisions primarily on the creditworthiness of the property as well as its estimated Authority, Purpose, and Scope lessee to recover its entire investment in financing costs over the life of the lease (Proposed § 23.1) the leased property. When the OCC from three sources: rentals, estimated adopted the current residual value limit tax benefits, and the estimated residual Current Section 23.1(a) sets out the in 1979, it selected 25 percent as the value of the leased property. authority of national banks to engage in level that best protected national banks personal property lease financing As its placement in subpart A of part from the increased risk that results from transactions. The proposal does not 23 indicates, the recovery of investment excessive reliance on residual value. change the authority provision, but it provision applies both to CEBA Leases That amount was based in part on the and to Section 24(Seventh) Leases. The adds subsections describing the purpose OCC’s experience at that time in of part 23 and the scope of its respective maximum estimated residual value examining and supervising banks requirement that appears in the subparts. Current 23.1(b), which engaged in Section 24(Seventh) lease authorizes a national bank to recover its definition of the term ‘‘full-payout financing activities. See 44 FR 22388, lease,’’ however, applies only to Section acquisition and financing costs from 22390 (April 13, 1979) (adoption of rentals, tax benefits, and the residual 24(Seventh) Leases. Neither the current interpretive rule establishing estimated regulation nor the proposal limits the value of the leased property, is relocated residual value limit of 25 percent).5 to proposed § 23.3. extent to which a national bank may Since then, national banks have been rely on residual value to recover its Definitions (Proposed § 23.2) given authority to enter into CEBA acquisition and financing costs in a Leases, which are not subject to a CEBA Lease transaction. The current regulation does not maximum residual value limit (but are contain a definitions section. Proposed restricted in aggregate amount to 10 Net Lease Requirement (Proposed § 23.2 defines several terms, including percent of a national bank’s total § 23.4) ‘‘CEBA Lease,’’ ‘‘conforming lease,’’ consolidated assets). National banks do A new paragraph (a) is added to ‘‘off-lease property,’’ and ‘‘Section not appear to be engaged in CEBA 24(Seventh) Lease’’ for the purpose of proposed § 23.4. This paragraph leasing to the full extent of their contains an explicit statement of the making the operative provisions of the statutory authority, and liberalization of regulation shorter and easier to read. requirement that national banks may the residual value limit for Section engage in a lease financing transaction, Current § 23.2 contains both a 24(Seventh) Leases may therefore be definition of the term ‘‘net lease’’ and and in activities incidental to the unnecessary. transaction, only if the lease is a net operative provisions, including the so- The OCC is interested in commenters’ lease. The current rule does not contain called ‘‘distress clauses,’’ which allow a views on this question, and specifically a plain statement of this basic national bank to take reasonable action invites comment on whether the requirement. The statement is added for to protect its interest in leased property, residual value limit for Section purposes of clarity and completeness; it and a provision that allows a national 24(Seventh) Leases should be modified. bank to arrange for a third party to In addressing this question, commenters is not intended to change the provide operational services that the may wish to discuss the effect of requirement. bank is precluded from providing under Financial Accounting Standards Board The incidental activities clause in a net lease. The definition of ‘‘net lease’’ Statement of Financial Accounting proposed § 23.4(a) reflects the OCC’s is retained in proposed § 23.2(d) Standard 13, ‘‘Accounting for Leases,’’ long-standing interpretations without substantive change; the which, as a practical matter, may affect authorizing national banks to engage in operative provisions are moved to the extent to which a national bank activities incidental to leasing. As the proposed § 23.4. relies on residual value. Commenters placement of the incidental activities Proposed § 23.2(c) contains a who support a more flexible limit on reference within subpart A of part 23 definition of the term ‘‘full-payout residual value for Section 24(Seventh) indicates, the OCC takes the position lease.’’ The term is defined as a lease Leases are asked to identify any that a national bank may engage in financing transaction in which the increased risk that may accompany a incidental activities with respect both to unguaranteed portion of the estimated new limit and to discuss how the OCC Section 24(Seventh) Leases and CEBA residual value of the leased property 4 should address that risk. Leases. on which a bank relies for recovery of The activities incidental to leasing Recovery of Investment (Proposed that the OCC has authorized to date for its acquisition and financing costs is no § 23.3) greater than 25 percent of the cost of the national banks acting as lessors leased property to the lessor. This Proposed § 23.3 is the same as current include: 6 providing management, estimated residual value limit is the § 23.1(b), which requires that a national same as the limit that currently appears bank entering into a lease financing 6 The OCC has also authorized national banks to at § 23.11(a) of the current regulation. engage in incidental activities with respect to lease 5 In 1979, the regulations promulgated by the financing transactions to which the bank is not a Other, operative provisions of the Board of Governors of the Federal Reserve System party. These activities include acting as finder or current regulation that pertain to (FRB) that authorized a bank holding company or performing similar functions as agent or broker. See residual value are retained in subpart C its subsidiary to engage in lease financing activities 12 CFR 7.7200. They also include providing lease of part 23, as described below. limited the reliance placed on residual value to a consulting services such as financial advice; maximum of 20 percent of the cost of the property. providing management, brokerage, and finder In 1992, the FRB decided to conform its residual services; and performing lease servicing for third 4 The ‘‘estimated residual value’’ is the estimated value provisions to the OCC’s limit for Section parties. See, e.g., OCC Interpretive Letter No. 567 market value of leased property at the end of the 24(Seventh) Leases. The FRB based its decision, in (Oct. 29, 1991) reprinted in [1991–92 Transfer lease term; the ‘‘unguaranteed portion’’ of the part, on the fact that the OCC had not identified any Binder] Fed. Banking L. Rep. (CCH) ¶ 83,337; estimated residual value is the estimated residual significant increased risk from permitting reliance Letter from Wallace S. Nathan (Oct. 28, 1985) value at the end of the lease term less any portion on the slightly higher level of 25 percent. See 57 (unpublished); Letter from Peter Liebesman (June of the estimated residual value guaranteed by the FR 20958, 20959–60 (May 18, 1992) (final 15, 1981) (unpublished). lessee, the manufacturer, or a third party. See 12 regulation; discussion of bases for FRB action). The Copies of unpublished letters are available in the CFR 23.1(b), 23.11. FRB’s regulation appears at 12 CFR 225.25(b)(8). OCC’s public comment file for this rulemaking. 46248 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules marketing, and administrative services upon the lessee’s default on the lease Requirement for Separate Records through an operating subsidiary; agreement prior to expiration. (Proposed § 23.6) offering credit life insurance to lessees; Current § 23.3(b) requires that a and acquiring rights under maintenance national bank dispose of or re-lease off- Proposed § 23.6 retains the contracts associated with purchased lease property as soon as practicable, requirement in current § 23.4 that leases.7 The OCC does not propose to but not later than two years from the national banks maintain separate include a list of permissible activities date the lease expires. Proposed records for CEBA Leases and Section incidental to leasing in part 23. § 23.5(b) is substantively the same but 24(Seventh) Leases. Minor revisions Commenters are, however, invited to contains new language to clarify that the have been made to shorten and clarify address the desirability of retaining this two-year holding period runs either the text. case-by-case approach and to discuss from the date the lease expires or from incidental activities that may be the date of the lessee’s default, Applicability of Consumer Laws appropriate for OCC consideration. In depending on the reason that the (Current § 23.6; Removed in Proposal) national bank takes possession or particular, the OCC is seeking comment Current § 23.6 states that nothing in on whether it should, on a case-by-case control of the leased property. Both Section 24(Seventh) Leases and part 23 shall be construed to be in basis, permit national banks to lease real conflict with the duties, liabilities and estate when the real estate lease is CEBA Leases are subject to this holding standards imposed by the Consumer incidental to a personal property lease period limitation for off-lease assets. Leasing Act of 1976, 12 U.S.C. 1667 et financing transaction. This issue may Property that the bank retains in seq. (CLA). The OCC is proposing to arise, for example, when a bank wishes anticipation of re-leasing must be to lease personalty, such as machinery, revalued when it comes off-lease at the remove this section because other that is affixed to the land on which it lower of current fair market value or consumer protection laws and sits. book value. Upon the expiration of the regulations may also apply to personal two-year period, national banks are property lease financing, making the The substance of proposed § 23.4(b) is required to write-off any remaining book cross-reference potentially misleading. the same as that of current § 23.2(b), (c), value for off-lease assets. Of course, this change does not affect and (d), but the text has been revised so The OCC has considered whether it the applicability of the CLA or any other that it is shorter and simpler. For should extend the holding period for consumer credit laws to national banks’ example, the provisions specifying the off-lease property. For example, a longer conditions under which a national bank lease financing activities, and national holding period may be appropriate banks must know and comply with the may take appropriate action to protect where markets for particular types of full range of requirements that govern its interests have been amended so that property become depressed, and the they no longer require that a change in two-year period might be insufficient to these activities. condition be ‘‘unexpected’’ or that a allow national banks to proceed with Application of Lending Limits; bank’s increased exposure to risk be the orderly liquidation or re-lease of the Restrictions on Transactions With ‘‘significant.’’ As is the case in current property. The OCC, however, lacks Affiliates (Proposed § 23.7) § 23.2, proposed § 23.4(b) provides that empirical data on the experiences the actions a national bank may take to national banks have had in attempting The proposal continues to subject salvage or protect its investment under to liquidate or re-lease specific kinds of lease financing transactions to lending the distress clauses include the actions off-lease property within the current limits and transactions with affiliates described in the definition of net lease holding period and, accordingly, is not restrictions, but clarifies that the at § 23.2(d). now proposing any change. transactions with affiliates restrictions The OCC would consider modifying Investment in Personal Property apply only if the lessee is an affiliate of the holding period in the final revisions (Proposed § 23.5) the lessor bank. The proposal also of part 23 if commenters present retains the reservation of the OCC’s persuasive reasons, supported by Current § 23.3, which governs the authority to impose other limits or empirical evidence, for doing so. acquisition of property to be leased, the restrictions. These provisions currently disposition of the property at the Accordingly, the OCC requests comment on the following issues: (1) Should the appear at § 23.5; they are relocated in conclusion of the lease term or upon the the proposal to § 23.7. lessee’s default, and the use of short- holding period for off-lease assets be term leases, has been moved to extended and, if so, should it be Subpart B—CEBA Leases proposed § 23.5 with certain clarifying extended for all categories of assets or Provisions Applicable to CEBA Leases changes. For example, the text of the only for particular categories? (2) If the (Proposed §§ 23.8, 23.9, and 23.10) provision covering bridge or interim holding period were extended, what is a reasonable additional time period, in leases has been rewritten to state more Proposed §§ 23.8, 23.9, and 23.10 clearly the current rule that a bank’s use general or for particular categories of assets? (3) What evidence supports contain the requirements applicable to of a bridge or interim lease pending the CEBA Leases, including a statement of long-term disposition of off-lease extension of the holding period? (4) If the holding period were extended, how the general rule authorizing investment property does not extend the off-lease in CEBA Leases, the limits placed on holding period. Property is ‘‘off-lease’’ should the OCC ensure that banks do banks’ exercise of their CEBA leasing at the expiration of the lease term or not use the longer period to retain property for essentially speculative authority, and a transition rule for CEBA Leases entered into after CEBA’s 7 See Letter from H. Joe Selby, Nov. 24, 1976 purposes? The OCC invites specific (unpublished) (management, marketing, and comment on the experiences of national enactment but before the effective date administrative services through an operating banks in attempting to liquidate or re- of the OCC’s final implementing rule. subsidiary); Letter from Peter Liebesman, Jan. 14, lease specific kinds of off-lease personal The substance of these provisions is the 1985 (unpublished) (credit life insurance); Letter same as that of current §§ 23.7. 23.8, and from J.T. Watson, May 14, 1975 (unpublished) property that are relevant to the issue of (rights under maintenance contracts associated with extending the holding period 23.9. Minor changes have been made to purchased leases). requirement. shorten and clarify the text. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46249 Subpart C—Section 24(Seventh) Leases The OCC welcomes comments on any proposed to be amended as set forth aspect of the proposed regulation, below: General Rule (Proposed § 23.11) particularly on those issues specifically 1. Part 23 is revised to read as follows: Current § 23.10 states the general rule noted in this preamble. authorizing national banks to engage in PART 23ÐLEASING lease financing pursuant to 12 U.S.C DERIVATION TABLE Subpart AÐGeneral Provisions 24(Seventh). The substance of proposed [This table directs readers to the provision(s) Sec. § 23.11 is the same as this current rule. of the current regulation, if any, upon which the proposed revision is based.] 23.1 Authority, purpose, and scope. The reference to incidental activities in 23.2 Definitions. the current rule has been deleted as 23.3 Recovery of investment. redundant, however, given the Original Revised provision provision Comments 23.4 Net lease requirement. treatment of incidental activities in 23.5 Investment in personal property. proposed § 23.4. Other, minor revisions § 23.1 ...... § 23.1(a) ... Modified. 23.6 Requirement for separate records. have been made to shorten and clarify § 23.2(a), (b), (c) ...... Added. 23.7 Application of lending limits; the text. § 23.2(d) ...... § 23.2(a) ... Modified. restrictions on transactions with § 23.3 ...... § 23.1(b) ... Modified. affiliates. Estimated Residual Value (Proposed § 23.4(a) ...... Added. Subpart BÐCEBA Leases § 23.12) § 23.4(b) ...... § 23.2 (b), Modified. 23.8 General rule. Current § 23.11 prescribes not only (c), (d). § 23.5 ...... § 23.3 ...... Modified. 23.9 Lease term. the residual value limit that applies to 23.10 Transition rule. Section 24(Seventh) Leases but also § 23.6 ...... § 23.4 ...... Modified. § 23.7 ...... § 23.5 ...... Modified. Subpart CÐSection 24(Seventh) Leases certain other provisions that apply to a § 23.6 ...... Removed. 23.11 General rule. bank’s reliance on or estimate of § 23.8 ...... § 23.7 ...... Modified. 23.12 Estimated residual value. residual value. First, the amount of any § 23.9 ...... § 23.8 ...... Modified. 23.13 Transition rule. estimated residual value guaranteed by § 23.10 ...... § 23.9 ...... Modified. a manufacturer, the lessee, or a third § 23.11 ...... § 23.10 ...... Modified. Authority: 12 U.S.C. 1; 12 U.S.C. party that is not an affiliate of the bank § 23.12 ...... § 23.11 ...... Modified. 24(Seventh) and 24(Tenth); 12 U.S.C. 93a. § 23.13 ...... § 23.12 ...... Modified. may exceed 25 percent of the original Subpart AÐGeneral Provisions cost of the property if the bank has determined that the guarantor has the Regulatory Flexibility Act § 23.1 Authority, purpose, and scope. resources to meet the guarantee and the It is hereby certified that this (a) Authority. A national bank may bank can document its determination. proposal, if adopted as a final rule, will engage in personal property lease Second, the estimated residual value not have a significant economic impact financing transactions pursuant to 12 amounts must be reasonable given the on a substantial number of small U.S.C. 24(Seventh) and 12 U.S.C. type of property leased and the relevant entities. Accordingly, a regulatory 24(Tenth). circumstances, so that realization of the flexibility analysis is not required. This (b) Purpose. The purpose of this part lessor bank’s full investment and the proposal, if adopted as a final rule, will is to set forth standards for personal cost of financing the property primarily reduce the regulatory burden on property lease financing transactions depends on the creditworthiness of the national banks, regardless of size, by authorized for national banks. lessee and any guarantor of the residual simplifying and clarifying existing (c) Scope. A national bank that enters value, and not on the residual market regulatory requirements. into a lease under the authority of 12 value of the leased item. Finally, when U.S.C. 24(Seventh) must comply with a bank leases personal property to a Executive Order 12866 subparts A and C of this part. A national government entity, its estimates of The OCC has determined that this bank that enters into a lease under the residual value may be based on future proposal is not a significant regulatory authority of 12 U.S.C. 24(Tenth) must transactions that it reasonably action under Executive Order 12866. comply with subparts A and B of this anticipates will occur. part. The estimated residual value limit has Unfunded Mandates Reform Act of been incorporated into a definition of 1995 § 23.2 Definitions. (a) CEBA Lease means a personal the term ‘‘full-payout lease’’ that The OCC has determined that the appears in proposed § 23.2. The other property lease entered into under the requirements of this proposal will not authority of 12 U.S.C. 24(Tenth). provisions remain substantively result in expenditures by State, local, unchanged but have been moved to (b) Conforming lease means: and tribal governments, or by the (1) A CEBA Lease that conforms with proposed § 23.12 with minor revisions private sector, of more than $100 the requirements of subparts A and B of to shorten and clarify the text. million in any one year. Accordingly, a this part; or Transition Rule (Proposed § 23.13) budgetary impact statement is not (2) A Section 24(Seventh) Lease that required under section 202 of the Current § 23.12 provides that leases conforms with the requirements of Unfunded Mandates Reform Act of executed before June 12, 1979,8 are not subparts A and C of this part. 1995. (c) Full-payout lease means a lease subject to part 23 and prescribes rules financing transaction in which any for renewing those leases. Proposed List of Subjects in 12 CFR Part 23 unguaranteed portion of the estimated § 23.13 retains these provisions with National banks, Banking, Leasing, residual value relied upon by the bank minor revisions to shorten and clarify Lease financing transactions. to yield the return of its full investment the text. in the leased property, plus the Authority and Issuance estimated cost of financing the property 8 June 12, 1979, was the effective date of the For the reasons set out in the OCC’s final rule amending 12 CFR 7.3400 to reflect over the term of the lease, does not the Ninth Circuit’s decision in the M&M Leasing preamble, part 23 of title 12, chapter I, exceed 25 percent of the original cost of case. of the Code of Federal Regulations is the property to the lessor. 46250 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules (d) Net lease means a lease under (ii) As the assignee of a lessor’s distinguish the CEBA Leases from the which the bank will not, directly or interest in a lease, become the owner Section 24(Seventh) Leases. indirectly, provide or be obligated to and lessor of the leased property provide for: § 23.7 Application of lending limits; pursuant to its contractual rights, or take restrictions on transactions with affiliates. (1) Servicing, repair, or maintenance any reasonable and appropriate action of the leased property during the lease (including the actions specified in A national bank’s lease financing term; § 23.2(d)) to salvage or protect the value transactions are subject to the lending (2) Purchasing parts and accessories of the property or its interests arising limits prescribed by 12 U.S.C. 84 or, if for the leased property; however, under the lease. the lessee is an affiliate of the bank (as improvements and additions to the (2) Provisions to protect the bank’s defined by 12 U.S.C. 371c), to the leased property may be leased to the interests. A national bank may include restrictions on transactions with lessee upon the lessee’s request in any provisions in a lease, or make any affiliates prescribed by 12 U.S.C. 371c accordance with any applicable additional agreements, to protect its and 371c–1. The OCC may also requirements for maximum estimated financial position or investment in the determine that other limits or restrictions apply. residual value; event of a change in conditions that (3) Loan of replacement or substitute would increase its exposure to loss. Subpart BÐCEBA Leases property while the leased property is (3) Arranging for services by a third being serviced; party. A national bank may arrange for § 23.8 General rule. (4) Purchasing insurance for the any of the services enumerated in Pursuant to 12 U.S.C. 24(Tenth), a lessee, except where the lessee has § 23.2(d) to be provided to a lessee by national bank may invest in tangible failed in its contractual obligation to a third party at the expense of the personal property, including, without purchase or maintain the required lessee. limitation, vehicles, manufactured insurance; or homes, machinery, equipment, or (5) Renewal of any license or § 23.5 Investment in personal property. registration for the property unless furniture for lease financing (a) Requirement for written transactions, or may become the owner renewal by the bank is necessary to agreement. A national bank may acquire protect its interest as owner or financier and lessor of tangible personal property specific personal property to be leased by purchasing the property from another of the property. only after the bank has entered into (e) Off-lease property means personal lessor in connection with the bank’s either: purchase of the related lease, provided property that reverts to a national bank’s (1) A legally binding written possession or control upon the that: the lease is a conforming lease; and agreement that indemnifies the bank the aggregate book value of all tangible expiration of a lease or upon the default against loss in connection with its of the lessee. personal property held for lease under acquisition of the property; or the authority of 12 U.S.C. 24(Tenth) (f) Section 24(Seventh) Lease means a (2) A legally binding written personal property lease entered into does not exceed 10 percent of the bank’s commitment to enter into a conforming consolidated assets. under the authority of 12 U.S.C. lease. 24(Seventh). (b) Two-year holding period. At the § 23.9 Lease term. § 23.3 Recovery of investment. expiration of the lease (including any (a) Initial term. A CEBA Lease must A national bank that enters into a renewals or extensions with the same have an initial term of not less than 90 lease financing transaction must lessee), or in the event of a default on days. reasonably expect to realize the return a lease agreement prior to the expiration (b) Exception. The 90-day term of its full investment in the leased of the lease term, a national bank shall requirement prescribed by paragraph (a) property, plus the estimated cost of either liquidate the property or re-lease of this section does not apply to the financing the property over the term of it under a conforming lease as soon as acquisition of property subject to an the lease, from: practicable. In any event, liquidation or existing lease with a remaining maturity (1) Rentals; re-lease shall occur not later than two of less than 90 days, provided that, at (2) Estimated tax benefits; and years from the date of the expiration of its inception the lease was a conforming (3) The estimated residual value of the the lease or the date of the lessee’s lease. property at the expiration of the term of default. Property that the bank retains in § 23.10 Transition rule. the lease. anticipation of re-leasing must be revalued at the lower of current fair (a) General rule. CEBA Leases entered § 23.4 Net lease requirement. market value or book value before the into prior to July 22, 1991, may continue (a) General rule. A national bank may bank enters into any subsequent lease. to be administered in accordance with engage in a lease financing transaction (c) Bridge or interim leases. During the lease financing terms agreed to by and activities incidental to the the two-year holding period allowed by the bank/lessor and the lessee. For transaction only if the lease qualifies as paragraph (b) of this section, a bank may purposes of applying the lending limits a net lease. enter into a short-term bridge or interim and the restrictions on transactions with (b) Exceptions—(1) Change in lease pending the sale of off-lease affiliates described in § 23.7, however, a conditions. If, in good faith, a national property or the re-lease of the property bank that enters into a new extension of bank believes that there has been a under a long-term conforming lease. A credit to a customer, including a lease, change in conditions that threatens its short-term bridge or interim lease must shall include all outstanding leases financial position by increasing its be a net lease, but it need not comply regardless of the date on which they exposure to loss, then the bank may: with any other requirement of subpart B were made. (i) As the owner and lessor under a or C of this part. (b) Renewal of non-conforming leases. net lease, take reasonable and A national bank may renew a CEBA appropriate action (including the § 23.6 Requirement for separate records. Lease that was entered into prior to July actions specified in § 23.2(d)) to salvage If a national bank enters into both 22, 1991, and that is not a conforming or protect the value of the property or CEBA Leases and Section 24(Seventh) lease only if the following conditions its interests arising under the lease; Leases, the bank’s records must are satisfied: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46251 (1) The bank entered into the CEBA transactions or renewals that the bank unprotected electrode lead wires a Lease in good faith; reasonably anticipates will occur. banned device upon the effective date of (2) The expiring lease contains a the standard. FDA is taking this action § 23.13 Transition rule. binding agreement requiring that the in response to two requests for an bank renew the lease at the lessee’s (a) Exclusion. Subpart A and this extension of the comment period. option, and the bank cannot reasonably subpart shall not apply to any avoid its commitment to do so; and § 24(Seventh) Leases executed prior to DATES: Written comments by October (3) The bank determines in good faith June 12, 1979. For purposes of applying 20, 1995. the lending limits and the restrictions and demonstrates by appropriate ADDRESSES: Submit written comments on transactions with affiliates described documentation that renewal of the lease to the Dockets Management Branch in § 23.7, however, a bank that enters is necessary to avoid financial loss and (HFA–305), Food and Drug into a new extension of credit to a to recover its investment in and its cost Administration, rm. 1–23, 12420 of financing the property. customer, including a lease shall include all outstanding leases regardless Parklawn Dr., Rockville, MD 20857. Subpart CÐSection 24(Seventh) of the date on which they were made. FOR FURTHER INFORMATION CONTACT: Leases (b) Renewal of non-conforming leases. Marquita B. Steadman, Center for A national bank may renew a Section § 23.11 General rule. Devices and Radiological Health (HFZ– 24(Seventh) Lease that was entered into 84), Food and Drug Administration, Pursuant to 12 U.S.C. 24(Seventh), a prior to June 12, 1979, and that is not national bank may become the legal or 2094 Gaither Rd., Rockville, MD 20850, a conforming lease only if the following 301–594–4765, ext. 145. beneficial owner and lessor of, or conditions are satisfied: otherwise acquire, personal property; or (1) The bank entered into the Section SUPPLEMENTARY INFORMATION: In the may become the owner and lessor of 24(Seventh) Lease in good faith; Federal Register of June 21, 1995 (60 FR personal property by purchasing the (2) The expiring lease contains a 32406), FDA issued a proposed rule to property from another lessor in binding agreement requiring that the establish a performance standard for connection with the bank’s purchase of bank renew the lease at the lessee’s electrode lead wires, and to make the related lease, provided that: the option, and the bank cannot reasonably unprotected electrode lead wires a lease is a net, full-payout lease avoid its commitment to do so; and banned device upon the effective date of representing a noncancelable obligation (3) The bank determines in good faith the standard. of the lessee (notwithstanding the and demonstrates by appropriate FDA has received two requests from possible early termination of that lease); documentation that renewal of the lease trade associations for a 90-day extension and the lease is a conforming lease. is necessary to avoid financial loss and of the comment period. The reasons § 23.12 Estimated residual value. to recover its investment in and its cost of financing the property. given for the requests are that the (a) Recovery of investment and costs. proposed rule has raised potential A national bank’s estimates of the Dated: August 14, 1995. implications beyond those previously residual value of the property and the Eugene A. Ludwig, anticipated, and additional time is portion of the estimated residual value Comptroller of the Currency. needed for the consideration of these that the bank relies upon to satisfy the [FR Doc. 95–21983 Filed 9–5–95; 8:45 am] issues and the preparation of requirements of a full-payout lease, as BILLING CODE 4810±33±P meaningful comments. defined in § 23.2(c), must be reasonable in light of the nature of the leased The agency agrees in part with the property and all circumstances relevant requests, however, it believes that due DEPARTMENT OF HEALTH AND to the public health significance of this to the transaction. The bank’s HUMAN SERVICES realization of its full investment in the issue, an extension for the entire length leased property, plus the estimated cost Food and Drug Administration of time requested is not appropriate. of financing the property over the term The agency is extending the comment of the lease, must depend primarily on 21 CFR Parts 895 and 898 period for 45 days, to October 20, 1995. the creditworthiness of the lessee and [Docket No. 94N±0078] Interested persons may, on or before any guarantor of the residual value, and October 20, 1995, submit to the Dockets not on the residual value of the leased Medical Devices; Proposed Management Branch (address above) item. Performance Standards for Electrode written comments regarding this (b) Estimated residual value subject to Lead Wires and Proposed Banning of proposed rule. Two copies of any guarantee. The amount of any estimated Unprotected Electrode Lead Wires; comments are to be submitted, except residual value guaranteed by the Extension of Comment Period that individuals may submit one copy. manufacturer, the lessee, or a third party Comments are to be identified with the may exceed 25 percent of the original AGENCY: Food and Drug Administration, docket number found in brackets in the cost of the property if the bank HHS. heading of this document. Received determines and demonstrates by ACTION: Proposed rule; extension of comments may be seen in the office appropriate documentation that the comment period. guarantor has the resources to meet the above between 9 a.m. and 4 p.m., guarantee and the guarantor is not an SUMMARY: The Food and Drug Monday through Friday. affiliate of the bank, as defined by 12 Administration (FDA) is extending to Dated: August 30, 1995. U.S.C. 371c. October 20, 1995, the comment period Joseph A. Levitt, (c) Leases to government entities. on a proposed rule that published in the Deputy Director for Regulations Policy, Center Calculations of estimated residual value Federal Register of June 21, 1995 (60 FR for Devices and Radiological Health. on leases of personal property to 32406). The document proposed to Federal, State, or local government establish a performance standard for [FR Doc. 95–22104 Filed 8–31–95; 4:29 pm] entities may be based on future electrode lead wires, and to make BILLING CODE 4160±01±F 46252 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules ENVIRONMENTAL PROTECTION South Coast Air Quality Management direct final rule without prior proposal AGENCY District, 21865 E. Copley Drive, because the Agency views these Diamond Bar, CA 91765–4182. submittals as noncontroversial and 40 CFR Part 52 FOR FURTHER INFORMATION CONTACT: Mae anticipates no adverse comments. A [CA 95±7±6789b; FRL±5280±2] Wang, Rulemaking Section (A–5–3), Air detailed rationale for the approval is set and Toxics Division, U.S. forth in the direct final rule. If no Approval and Promulgation of State Environmental Protection Agency, adverse comments are received in Implementation Plans; California State Region IX, 75 Hawthorne Street, San response to this proposed rule, no Implementation Plan Revision; South Francisco, CA 94105–3901, Telephone: further activity is contemplated in Coast Air Quality Management District (415) 744–1200. relation to this rule. If the EPA receives SUPPLEMENTARY INFORMATION: This adverse comments, then the direct final AGENCY: Environmental Protection document concerns South Coast Air rule will be withdrawn and all public Agency (EPA). Quality Management District Rule 1146, comments received will be addressed in ACTION: Proposed rule. Emissions of Oxides of Nitrogen from a subsequent final rule based on this proposed rule. The EPA will not SUMMARY: EPA is proposing to approve Industrial, Institutional, and Commercial Boilers, Steam Generators, institute a second comment period on revisions to the California State this notice. Any parties interested in Implementation Plan (SIP) which and Process Heaters, and Rule 1146.1, Emissions of Oxides of Nitrogen from commenting on this notice should do so control oxides of nitrogen (NOx) from at this time. industrial, commercial, and institutional Small Industrial, Institutional, and DATES: boilers, steam generators, and process Commercial Boilers, Steam Generators, Comments on this proposed heaters. The intended effect of and Process Heaters. Both of these rules action must be received in writing by proposing approval of these rules is to were submitted to EPA on July 13, 1994 October 6, 1995. by the California Air Resources Board. ADDRESSES: regulate emissions of NOx in accordance Written comments should with the requirements of the Clean Air For further information, please see the be addressed to Vicki Stamper, 8ART– Act, as amended in 1990 (CAA or the information provided in the direct final AP, at the EPA Regional Office listed Act). In the Rules Section of this action which is located in the Rules below. Copies of the documents relevant Federal Register, the EPA is approving Section of this Federal Register. to this proposed rule are available for the state’s SIP revision as a direct final Authority: 42 U.S.C. 7401–7671q. public inspection during normal rule without prior proposal because the Dated: August 8, 1995. business hours at the following Agency views this as a noncontroversial Felicia Marcus, locations: Air Programs Branch, revision amendment and anticipates no Regional Administrator. Environmental Protection Agency, Region VIII, 999 18th Street, suite 500, adverse comments. A detailed rationale [FR Doc. 95–21878 Filed 9–5–95; 8:45 am] Denver, Colorado 80202–2466; and for this approval is set forth in the direct BILLING CODE 6560±50±W final rule. If no adverse comments are South Dakota Department of received in response to this proposed Environment and Natural Resources, rule, no further activity is contemplated 40 CFR Part 52 Division of Environmental Regulation, in relation to this rule. If EPA receives Joe Foss Building, Pierre, South Dakota adverse comments, the direct final rule [SD6±1±6947b and SD5±1±6191b; FRL± 57501. 5279±4] will be withdrawn and all public FOR FURTHER INFORMATION CONTACT: comments received will be addressed in Clean Air Act Approval and Vicki Stamper, 8ART–AP, a subsequent final rule based on this Promulgation of State Implementation Environmental Protection Agency, proposed rule. The EPA will not Plan for South Dakota; Revisions to Region VIII, 999 18th Street, suite 500, institute a second comment period on the Air Pollution Control Program Denver, Colorado 80202–2466, (303) this document. Any parties interested in 293–1765. commenting on this action should do so AGENCY: Environmental Protection SUPPLEMENTARY INFORMATION: See the at this time. Agency (EPA). information provided in the direct final DATES: Comments on this proposed rule ACTION: Notice of proposed rulemaking. rule of the same title which is located in the Rules Section of this Federal must be received in writing by October SUMMARY: In this document, the EPA is 6, 1995. proposing approval of revisions to the Register. ADDRESSES: Written comments on this South Dakota State Implementation Plan Dated: August 10, 1995. action should be addressed to: Daniel A. (SIP) submitted by the State of South Jack W. McGraw, Meer, Rulemaking Section (A–5–3), Air Dakota on November 12, 1993 and Acting Regional Administrator. and Toxics Division, U.S. March 7, 1995. The submittals included [FR Doc. 95–21880 Filed 9–5–95; 8:45 am] Environmental Protection Agency, regulatory revisions to the State’s BILLING CODE 6560±50±P±M Region IX, 75 Hawthorne Street, San definitions, minor source construction Francisco, CA 94105–3901. and federally enforceable state operating Copies of the rules and EPA’s permit (FESOP) rules, source category FEDERAL COMMUNICATIONS evaluation report of each rule are emission limitations, sulfur dioxide COMMISSION available for public inspection at EPA’s (SO2) rules, new source performance Region IX office during normal business standards (NSPS), new source review 47 CFR Part 25 hours. Copies of the submitted rules are (NSR) requirements for new and also available for inspection at the modified major sources impacting [IB Docket No. 95±117; FCC 95±285] following locations: nonattainment areas, and enhanced Satellite Application and Licensing California Air Resources Board, monitoring and compliance certification Procedures Stationary Source Division, Rule requirements. In the final rules section Evaluation Section, 2020 ‘‘L’’ Street, of this Federal Register, the EPA is AGENCY: Federal Communications Sacramento, CA 95812. acting on the State’s SIP submittals in a Commission. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46253 ACTION: Notice of proposed rulemaking. Bureau, Satellite Policy Branch, (202) on: (1) The necessity of the proposed 739–0729. collection of information for the proper SUMMARY: The Commission has SUPPLEMENTARY INFORMATION: This is a performance of the functions of the proposed rules and policies to summary of the Commission’s Notice of agency, including whether the streamline application and licensing Proposed Rulemaking in IB Docket No. information has practical utility; (2) the requirements for satellite space and 95–117; FCC 95–285, adopted July 13, accuracy of the agency’s estimates of the earth stations under the commission’s 1995 and released August 11, 1995. The burden of the proposed collection of rules regarding satellite complete text of this Notice of Proposed information; (3) enhancing the quality, communications. Among other things, Rulemaking is available for inspection utility, and clarity of the information to this document proposes to waive the and copying during normal business be collected; and (4) minimizing the construction permit requirement for hours in the FCC Reference Center burden of the collection of information satellite space stations and modify the (Room 239), 1919 M Street, NW., on parties responding. Comments must license term for temporary fixed earth Washington, DC and also may be be filed with the Office of Management stations and the implementation period purchased from the Commissions’s copy and Budget within sixty days of for Very Small Aperture Terminal contractor, International Transcription publication of this summary in the (‘‘VSAT’’) earth stations. The item also Service, (202) 857–3800, 2100 M Street, Federal Register. A copy of any proposes amendments concerning NW., Suite 140, Washington, DC 20037. comments filed with the Office of minor modifications for earth stations, The following collection of Management and Budget should also be inclined orbit operations of space information contained in the Notice has sent to the following address at the stations, and application and licensing been submitted to the Office of Commission: Federal Communications forms. Comments are requested on all Management and Budget for review Commission, Records Management aspects of the proposals. under Section 3507(d) of the Paperwork Division, Room 234, Paperwork DATES: Comments must be submitted on Reduction Act (44 U.S.C. 3507(d)). For Reduction Project, Washington, DC or before October 4, 1995; reply copies of the submissions contact 20554. For further information contract comments must be submitted on or Dorothy Conway at (202) 418–0217 or Judy Boley, (202) 418–0210. before October 25, 1995. access our fax on demand system at Title: In the Matter of Streamlining 202–418–0177 from the handset on your the Commission’s Rules and Regulations ADDRESSES: Federal Communications fax machine and using the document for Satellite Application and Licensing Commission, 1919 M Street, NW., retrieval number 6000000. Persons Procedures. Washington, DC 20554. wishing to comment on this collection Action: Proposed new and revised FOR FURTHER INFORMATION CONTACT: of information should direct their collection. Paula Ford, International Bureau, comments to Timothy Fain (202) 395– Affected Public/Respondents: Satellite Policy Branch, (202) 739–0733; 3561, Office of Management and Budget, Businesses or other for profit, including Frank Peace, International Bureau, Room 3235 NEOB, Washington, DC small businesses. Satellite Engineering Branch, (202) 739– 20503. Specifically, the Commission Frequency of Response: On occasion, 0513; Kathleen Campbell, International requests that parties provide comments annually. REPORTING REQUIREMENTS No. of re- Hours per re- Total annual re- Proposed sections spondents sponse porting hours Space Stations: 25.113, 25.114, 25.140, 25.210, 25.280, 25.300 ...... 125 9.5 1,187.5 Earth Stations: 25.115, 25.118, 25.134, 25.277, 25.300 ...... 500 2.5 1,250 Proposed FCC Form 312 (used by both space and earth stations) ...... 300 4 1,200 Information for Adjacent Satellite Interference Analysis Database ...... 50 24 * 1,200 * Represents the hours for the periodic reporting of information. We propose to collect the information whenever there is a new processing round. The 1,200 figure represents reporting hours for the year in which information is collected. Needs and Uses: In accordance with Summary of Notice of Proposed recommendations made during that the Communications Act, the Rulemaking roundtable discussion have been information collected will be used by In light of the evolving satellite incorporated in this Notice of Proposed the Commission in granting various technology, the Commission Rulemaking. authorizations and determining the commenced a review of its operations in The proposals amend or eliminate technical, legal, and financial order to eliminate outdated regulations existing requirements, and codify in qualifications of a satellite applicant or and unnecessary burdens that impede Part 25 of the Commission’s rules, licensee. the introduction of satellite services to various technical and procedural As required by Section 603 of the the public and the efficient processing policies and guidelines that have not yet Regulatory Flexibility Act, the of satellite applications and licenses. As been specifically codified. Among other things, the Notice proposes to waive the Commission has prepared an Initial a result of this review, the Commission created the International Bureau. Soon construction permit requirement for Regulatory Flexibility Analysis (IRFA) after its creation, the new International satellite space stations; increase the of the expected impact on small entities Bureau held a roundtable discussion in license term, from one year to ten years, of the proposals suggested in this February with representatives of for temporary fixed earth stations document. industry and members of the public to operating in the C-band; eliminate the solicit suggestions on ways to improve four year implementation period for satellite application and licensing VSATs allowing VSAT licensees to policies and procedures. Many of the construct their network over the course 46254 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules of their ten year license term; eliminate matter has been deleted from the PART 25ÐSATELLITE the annual reporting requirement for Sunshine Agenda; or (3) issues a public COMMUNICATIONS VSATs; simplify the earth and space notice stating that the matter has been 1. The authority citation for part 25 station application process by revising returned to the staff for further continues to read as follows: and consolidating FCC Forms 430, 493, consideration, whichever occurs first. 702, and 704; eliminate redundant 47 CFR 1.1202(f). During the Sunshine Authority: Sections 101–404, 76 Stat. 419– reporting requirements for earth and Agenda period, no presentations, ex 427; 47 U.S.C. 701–744, Sec. 4, 48 Stat. 1066, space stations; allow earth station as amended; 47 U.S.C. 154. Interprets or parte or otherwise, are permitted unless applies sec. 303, 48 Stat. 1082, as amended; operators to make minor technical specifically exempted. 47 CFR 1.1203. modifications to their stations without 47 U.S.C. 303. prior authorization from the Pursuant to applicable procedures set 2. Section 25.113 is amended by Commission; and allow satellites to forth in Sections 1.415 and 1.419 of the revising paragraphs (a) and (d) to read operate in inclined orbits without prior Commission’s Rules, 47 CFR 1.415 and as follows: authorization from the Commission. 1.419, interested parties may file Given the large outlay of capital and comments on or before October 4, 1995 § 25.113 Construction permits. long-term planning necessary to and reply comments on or before (a) Except as provided in paragraph establish satellite systems, it is October 25, 1995. To file formally in (b) of this section or in § 25.131, necessary to ensure that potential this proceeding, you must file an construction permits must be obtained applicants and service providers are not original and five copies of all comments, for all fixed or temporary fixed earth hampered by unnecessary and reply comments, and supporting stations governed by this part. Simultaneous application for a sometimes redundant regulations. The comments. If you want each construction permit and station license proposed amendments recognize the Commissioner to receive a personal may be made for all earth station need of the satellite industry to operate copy of your comments send additional in an environment defined by growth, facilities governed by this part. copies to Office of the Secretary, Federal innovation, efficiency, and competition. Communications Commission, * * * * * Comments are requested on all aspects (d) A launch authorization must be Washington, DC 20554. Comments and of these proposals. Specific proposals applied for and granted before a space and recommendations are requested for reply comments will be available for station may be launched and operated any additional streamlining rule public inspection during regular in orbit. Request for launch changes. business hours in the Federal authorization may be included in an Communications Commission, application for space station license. A Ordering Clauses Reference Center, Room 239, 1919 M launch authorizaiton and station license Accordingly, It is Ordered that Street, NW., Washington, DC 20554. For may also be requested at any time for a pursuant to the authority contained in further information concerning this space station constructed as an on- Sections 4(i) and 303 of the rulemaking contact Paula Ford at (202) ground spare satellite. However, an Communications Act of 1934, as 739–0733. application for authority to launch and amended, 47 U.S.C. §§ (4)(i) and 303, operate an on-ground spare domestic Initial Regulatory Flexibility Act NOTICE IS HEREBY GIVEN of our satellite will be considered to be a Statement intent to adopt the rule revisions set newly filed application for cut-off forth below and the proposed form set As required by Section 603 of the purposes, except where the space forth below. Regulatory Flexibility Act, the station to be launched is determined to It is Further Ordered that the be an emergency replacement for a Secretary shall send a copy of this Commission has prepared an Initial Regulatory Flexibility Analysis previously authorized space station that Notice of Proposed Rulemaking, has been lost as a result of a launch including the Initial Regulatory, (‘‘IRFA’’) of the expected impact on small entities of the proposals suggested failure or a catastrophic in-orbit failure. Flexibility Analysis, to the Chief 3. Section 25.114 is revised to read as in this document. The IRFA is set forth Counsel for Advocacy of the Small follows: Business Administration in accordance in Appendix A. Written public with paragraph 603(a) of the Regulatory comments are requested on the IRFA. § 25.114 Applications for space station Flexibility Act, Public Law No. 96–354, These comments must be filed in authorizations. 94 Stat. 1164, 5 U.S.C. § 601 et seq accordance with the same filing (a) A comprehensive proposal shall be (1981). deadlines as comments on the rest of the submitted for each proposed space Notice, but they must have a separate station in narrative form with attached Administrative Matters and distinct heading designating them exhibits as described in paragraph (c) of This is a non-restricted notice and as responses to the Initial Regulatory this section. If an applicant is proposing comment rulemaking proceeding. Ex Flexibility Analysis. more than one space station, parte presentations are permitted, information common to all space except during the Sunshine Agenda List of Subjects in 47 CFR Part 25 stations may be submitted in a period, provided they are disclosed as consolidated system proposal. provided in the Commission’s rules. See Satellites. (b) Each application for a new or generally 47 CFR 1.1202, 1.1203, and Federal Communications Commission. modified space station authorization 1.1206(a). The Sunshine Agenda period William F. Caton, must constitute a concrete proposal for is the period of time that commences Acting Secretary. Commission evaluation, although the with the release of public notice that a applicant may propose altrnatives that matter has been placed on the Sunshine Proposed Rules increase flexibility in accommodating Agenda and terminates when the the satellite in orbit. Each application Commission (1) releases the text of a Part 25 of Title 47 of the Code of must also contain the formal waiver decision or order in the matter; (2) Federal Regulations is proposed to be required by Section 304 of the issues a public notice stating that the amended as follows: Communications Act, 47 U.S.C. 304. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46255 The technical information for a active service arc(s), and right ascension in Washington, DC), shall provide the proposed satellite system need not be of the ascending node(s). information required by that decision. filed on any prescribed form but should (iii) For 1.6/2.4 GHz Mobile-Satellite (14) Qualifications of applicant. FCC be complete in all pertinent details. The Service space stations, the feeder link Form 312, Main Form. If FCC Form 312, format of the applications should frequencies requested for the satellite, Main Form, is already on file, indicate conform to the specifications of § 1.49 of together with the demonstration date, radio service and file number of this chapter. required by § 25.203 (j) and (k). most recent filing. (c) The following information shall be (7) Predicted space station antenna (15) A clear and detailed statement of contained in each application: gain contour(s) for each transmit and whether the space station is to be (1) Name, address, and telephone each receive antenna beam and nominal operated on a common carrier basis, or number of the applicant. orbital location requested. These whether noncommon carrier (2) Name, address, and telephone contour(s) should be plotted on an area transactions are proposed. If number of the person(s), including map at 2 dB intervals down to 10 dB noncommon carrier transactions are counsel, to whom inquiries or below the peak value of the parameter proposed, describe the nature of the correspondence should be directed. and at 5 dB intervals between 10 dB and transactions and specify the number of (3) Type of authorization requested 10 dB below the peak values, with the transponders to be offered on a (e.g., launch authority, station license, peak value and sense for polarization noncommon carrier basis. modification of authorization). clearly specified on each plotted (16) Dates by which construction will (4) General description of overall contour. be commenced and completed, launch system facilities, operations and (8) A description of the types of date, and estimated date of placement services. services to be provided, and the areas to into service. (5) Radio frequencies and polarization be served, including a description of the (17) Public interest considerations in plan (including beacon, telemetry, and transmission characteristics and support of grant. telecommand functions), center performance objectives for each type of (18) Applications for authorizations frequency and polarization of proposed service, details of the link for domestic fixed-satellite space transponders (both receiving and noise budget, typical or baseline earth stations shall also include the transmitting frequencies), emission station parameters, modulation information specified in § 25.140. designators and allocated bandwidth of parameters, an overall link performance (19) Applications for international emission, final amplifier output power analysis (including an analysis of the fixed-satellite authorizations shall also (identify any net losses between output effects of each contributing noise and provide all information necessary to of final amplifier and input of antenna interference source). comply with the policies and and specify the maximum EIRP for each (9) For satellites in geostationary- procedures set forth in Establishing of antenna beam), identification of which satellite orbit, accuracy with which the Satellite Systems Providing antenna beams are connected or orbital inclination, the antenna axis International Communications, 101 FCC switchable to each transponder and attitude, and longitudinal drift will be 2d 1046 (1985) (available at the TT&C function, receiving system noise maintained. Commission’s Library in Washington, temperature, the relationship between (10) Calculation of power flux density DC), as modified by Permissible satellite receive antenna gain pattern levels within each coverage area and of Services of U.S. license International and gain-to-temperature ratio and the energy dispersal, if any, needed for Communications Satellite Systems, saturation flux density for each antenna compliance with § 25.208. Order, FCC 92–95 released April 8, 1992 beam (may be indicated on antenna gain (11) Arrangement for tracking, (available through the Commission’s plot), the gain of each transponder telemetry, and control. Public Reference Room in Washington, channel (between output of receiving (12) Physical characteristics of the DC). antenna and input of transmitting space station including weight and (20) Applications for authorizations in antenna) including any adjustable gain dimensions of spacecraft, detailed mass the Radiodetermination Satellite Service step capabilities, and predicted receiver (on ground and in-orbit) and power shall also include the information and transmitter channel filter response (beginning and end of life) budgets, and specified in § 25.141. characteristics. estimated operational lifetime and (21) Applications for authorizations in (6)(i) For satellites in geostationary- reliability of the space station and the the Mobile Satellite Service in the 1545– satellite orbit, orbital location, or basis for that estimate. 1559/1646.5–1660.5 MHz frequency locations if alternatives are proposed, (13) Detailed information bands shall also provide all information requested for the satellite, the factors demonstrating the financial necessary to comply with the policies that support such an orbital assignment, qualifications of the applicant to and procedures set forth in Rules and the range of orbital locations from construct and launch the proposed Policies Pertaining to the Use of Radio which adequate service can be provided satellites. Applications for domestic Frequencies in a Land Mobile Satellite and the basis for determining that range fixed-satellite systems and mobile- Service, 2 FCC Rcd 485 (1987) (available of orbital locations, and a detailed satellite systems shall provide the at the Commission’s Library in explanation of all factors that would financial information required by Washington, DC). limit the orbital arc over which the § 25.140 (b) through (e), § 25.142(a)(4), (22) Applications to license multiple satellite could adequately serve its or § 25.143(b)(3), as appropriate. space station systems in the non-voice, expected users. Applications for international satellite non-geostationary mobile-satellite (ii) For satellites in non-geostationary- systems authorized pursuant to service under blanket operating satellite orbits, the number of space Establishing of Satellite Systems authority shall also provide all stations and applicable information Providing International information specified in § 25.142. relating to the number of orbital planes, Communications, 101 FCC 2d 1046 (23) Applications for authorizations in the inclination of the orbital plane(s), (1985), recon., 61 RR 2d 649 (1986), the 1.6/2.4 GHz Mobile-Satellite Service the orbital period, the apogee, the further recon., 1 FCC Rcd 439 (1986) shall also provide all information perigee, the argument(s) of perigee, (available at the Commission’s Library specified in § 25.143. 46256 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules (d) Applicants requesting authority to 7. A new § 25.118 is added to read as 9. The newly designated § 25.120 is construct and/or launch a system follows: amended by revising the last sentence of comprised of technically identical, non- paragraph (a) to read as follows: geostationary satellite orbit mobile- § 25.118 Modifications not requiring prior authorization. satellite service space stations may file § 25.120 Application for special temporary authorization. a single ‘‘blanket’’ application (a) Equipment in an authorized earth containing the information specified in station may be replaced without prior (a) * * * A copy of the request for paragraph (c) of this section for each authorization or notification if the special temporary authority also shall be representative space station. replacement equipment is electrically forwarded to the Commission’s 4. Section 25.115 is amended by identical to the replaced equipment. Columbia Operations Center in revising paragraphs (a), (b), and (c)(1), (b) A licensee providing service on a Columbia, Maryland. (c)(2) and (d) to read as follows: private carrier basis may change its * * * * * operations to common carrier status 10. The newly designated § 25.121 is § 25.115 Application for earth station without obtaining prior Commission amended by revising paragraph (a) to authorizations. authorization by notifying the read as follows: (a) Transmitting earth stations. Except Commission by letter within 30 days § 25.121 License term and renewals. as provided under § 25.113(b), after the completed change to common Commission authorization must be carrier status. (a) License term. Licenses for facilities obtained for authority to construct and/ (c) Earth station licensees may make governed by this part will be issued for or operate a transmitting earth station. facility changes without obtaining prior a period of 10 years. Applications shall be filed on FCC Form Commission authorization, by notifying * * * * * 312, Main Form and Schedule C, and the Commission by letter within 30 days 11. Section 25.130 is amended by include the information specified in after the modification is completed, if revising paragraph (a) to read as follows: § 25.130. frequency coordination procedures, as § 25.130 Filing requirements for (b) Receive-only earth stations. necessary, are complied with in Applications to license or register transmitting earth stations. accordance with § 25.251, and the (a) Application for a new or modified receive only earth stations shall be filed modification does not involve: on FCC Form 312, Main Form and transmitting earth station facility shall (1) An increase in EIRP or EIRP be submitted on FCC Form 312, Main Schedule C, and conform to the density; provisions of § 25.131. Form and Schedule C, accompanied by (2) An increase in transmitter power; (c) * * * any required exhibits. (1) An FCC Form 312, Main Form and (3) A change in coordinates for * * * * * Schedule B, for each large (5 meters or stations operating in C–Band; 12. Section 25.131 is amended by larger) hub station operating with the (4) A change in coordinates of 10 revising paragraphs (a), (d), and (j) to network, seconds or greater for stations operating read as follows: (2) An FCC Form 312, Main Form and in Kuband; Schedule B, for each representative type (5) A change or addition to antenna § 25.131 Filing requirements for receive- only earth stations. of small antenna (less than 5 meters). facilities. (a) Except as provided in paragraphs * * * * * 8. The newly designated § 25.119 is (b) and (j) of this section, applications (d) User transceivers in the non-voice, amended by revising the first sentences for a license for a receive-only earth non-geostationary mobile-satellite of paragraph (c) and (d) and the last station shall be submitted on FCC Form service need not be individually sentence of paragraph (f) to read as 312, Main Form and Schedule C, licensed. Service vendors may file follows: accompanied by any required exhibits. blanket applications for transceivers § 25.119 Assignment or transfer of control units using FCC Form 312, Main Form * * * * * of station authorization. (d) Applications for registration shall and Schedule C, and specifying the * * * * * number of units to be covered by the be filed on FCC Form 312, Main Form (c) Assignment of license. FCC Form blanket license. Each application for a and Schedule C, accompanied by the 312, Main Form and Schedule A, shall blanket license under this section shall coordination exhibit required by 25.203, be submitted to assign voluntarily (as include the information described in and any other required exhibits. Any by, for example, contract or other § 25.135. application that is deficient or 5. Section 25.117 is amended by agreement) or involuntarily (as by, for incomplete in any respect shall be revising the first sentence of paragraph example, death, bankruptcy, or legal immediately returned to the applicant (a) to read as follows: disability) the station authorization. without processing. *** * * * * * § 25.117 Modification of station license. (d) Transfer of control of corporation (j) Receive-only earth stations (a) Except as provided for in § 25.118 holding license. FCC Form 312, Main operating with (1) INTELSAT space (Modifications not requiring prior Form and Schedule A, shall be stations, (2) international space stations, authorization), no modification of a submitted in order to transfer or (3) U.S. domestic and non-U.S. space radio station governed by this part voluntarily or involuntarily (de jure or stations for reception of services from which affects the parameters or terms de facto) control of a corporation other countries, shall file an FCC Form and conditions of the station holding any licenses. * ** 312, Main Form and Schedule C, authorization shall be made except * * * * * requesting a license for such station. upon application to and grant of such (f) * * * Within 30 days of Receive-only earth stations used to application by the Commission. * ** consummation, the Commission shall be receive INTELNET I services from * * * * * notified by letter of the date of INTELSAT space stations need not file 6. Section 25.118 through 25.120 are consummation and the file numbers of for licenses. See Deregulation of redesignated as §§ 25.119 through the applications involved in the Receive-Only Satellite Earth Stations 25.121, respectively. transaction. Operating with the INTELSAT Global Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46257 Communications Satellite System, for each type of r.f. carrier, the link level of detail as specified in paragraph Declaratory Ruling, RM No. 4845, FCC noise budget, modulation parameters, (c)(2)(i) of this section. 86–214 (released May 19, 1986) and overall link performance analysis. (iii) The terms of any grant or other (available through the Commission’s (See, e.g., appendices B and C to external funding commitment intended Reference Center in Washington, D.C.). Licensing of Space Stations in the to be used to finance the proposed 13. Section 25.134 is amended by Domestic Fixed-Satellite Service, Docket construction, acquisition, or operation revising the first sentences of No. 81–704, FCC No. 83–184 (released of the requested facilities, including paragraphs (a) and (b) and adding August 16, 1983) (available through the such information as the identity of the paragraph (d) to read as follows: Commission’s Reference Center in grantor(s), the amount committed, Washington, D.C.)) letters of commitment, and detailed § 25.134 Licensing Provisions of Very (3) The applicant’s current financial Small Aperture Terminal (VSAT) Networks. terms of the transaction, including the ability to meet the: details of any contingencies; (a) All applications for digital VSAT (i) Estimated costs of proposed (iv) Any financing arrangements networks with maximum outbound construction and/or launch, and any contingent on further performance by downlink EIRP densities of +6.0 dBW/ other initial expenses for the space either party, such as marketing of 4 kHz per carrier and earth station station(s); and satellite capacity or raising additional antennas with maximum input power (ii) Estimated operating expenses for financing, will not satisfy the densities of ¥14 dBW/4 kHz and one year after launch of the proposed requirements of paragraph (b)(3) of this maximum hub EIRPs of 78.3 dBW will space station(s). section. be processed routinely. * ** (c) Each application for authority to (3)Whatever other information or (b) Each applicant for digital and/or construct and/or launch a space station details the Commission may require analog VSAT network authorization shall demonstrate the applicant’s with regard to a specific application or proposing to use transmitted satellite current financial ability to meet the applicant; carrier EIRP densities in excess of +6.0 costs specified in paragraph (b)(3) of dBW/4 kHz per carrier and +13.0 dBW/ this section by submitting the following (d) Any loan or other credit 4 kHz, respectively, and/or maximum financial information verified by arrangement providing for a chattel antenna input power densities of ¥14.0 affidavit: mortgage or secured interest in any dBW/4 kHz dBW and ¥8.0 dBW/4 kHz, (1) A balance sheet current for the proposed facility must include a respectively, shall conduct an latest fiscal year and documentation of provision for a minimum of ten (10) engineering analysis using the Sharp, any financial commitments reflected in days prior written notification to the Adjacent Satellite Interference Analysis the balance sheet (such as, for example, licensee or permittee, and to the (ASIA) program. * ** loan agreements and service contracts) Commission, before any such equipment may be repossessed under * * * * * together with an exihibit demonstrating that the applicant has current assets and any default provision of the agreement. (d) An application for VSAT (e) An applicant found to be qualified authorization shall be filed on FCC operating income sufficient to satisfy the requirements of paragraph (c) of this pursuant to paragraph (a) of this section Form 312. Main Form and Schedule B. may be initially assigned up to two A VSAT licensee applying to renew its section. If the applicant is owned by more than one corporate parent, it must orbital locations in each pair of license must include on FCC Form 405, frequency bands proposed. the number of constructed VSAT units submit evidence of a commitment to the proposed satellite program by Authorizations to construct ground in its network. spares are at the applicant’s risk that 14. Section 25.140 is revised to read management of the corporate parent launch authorization will not be granted as follows: upon whom it is relying for financial resources; by the Commission. § 25.140 Qualifications of domestic fixed- (2) If the submissions of paragraph (f) Each applicant found to be satellite space stations. (c)(1) of this section do not satisfy qualified pursuant to paragraph (a) of (a) Each applicant for a space station paragraph (b)(3) of this section, the this section may be assigned no more authorization in the domestic fixed- applicant shall submit additional than one additional orbital location satellite service must demonstrate, on information as listed in paragraphs beyond its current authorizations in the basis of the documentation (c)(2) (i) through (iv) to satisfy paragraph each frequency band in which it is contained in its application, that it is (b)(3) of this section. authorized to operate, provided that its legally, financially, technically, and (i) The terms of any fully negotiated in-orbit satellites are essentially filled otherwise qualified to proceed loan or other form of credit arrangement and that it has no more than two unused expeditiously with the construction, intended to be used to finance the orbital locations for previously launch and/or operation of each proposed construction, acquisition, or authorized but unlaunched satellites in proposed space station facility operation of the requested facilities that band. immediately upon grant of the requested including such information as the (g) In the event that one or more authorization. identity of the creditor (or creditors), the applications satisfying the requirements (b) Each applicant must provide the amount committed, letters of of this section are ready for grant, any following information: commitment, detailed terms of the orbital location occupied by a satellite (1) The information specified in transaction, including the details of any that is determined to be a part of a § 25.114. contingencies, and a statement that the system that is not essentially filled may (2) An interference analysis to applicant complies with paragraph (d) be cancelled and colocation of in-orbit demonstrate the compatibility of its of this section. satellites may be required. The proposed system 2 degrees from any (ii) The terms of any fully negotiated Commission may take this action if, in authorized space station. An applicant sale or placement of any equity or other so doing, it would allow the grant of should provide details of its proposed form of ownership interest, including pending applications that satisfy the r.f. carriers which it believes should be the sale, or long-term lease for the requirements of this section. If a taken into account in this analysis. At lifetime of the satellite, of proposed cancellation is made, the licensee will a minimum, the applicant must include, satellite transponder capacity in the be afforded a period of 30 days to notify 46258 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules the Commission which of its assigned 19. Section 25.210 is amended by 22. Section 25.251 is revised to read locations should be cancelled. revising paragraphs (j) introductory text as follows: 15. Section 25.141 is amended by and (j)(3), to read as follows: revising paragraph (c) to read as follows: § 25.251 Special requirements for § 25.210 Technical requirements for space coordination. § 25.141 Licensing provisions for the stations in the Fixed-Satellite Service. (a) The administrative aspects of the radiodetermination satellite service. * * * * * coordination process are set forth in * * * * * (j) All operators of space stations §§ 21.100(d) and 21.706 (c) and (d) of (c) User transceivers. Individual user shall, on June 30 of each year, file a this chapter in the case of coordination transceivers will not be licensed. report with the International Bureau and of terrestrial stations with earth stations, Service vendors may file blanket the Commission’s Columbia Operations and in § 25.203 in the case of applications for transceiver units using Center in Columbia, Maryland coordination of earth stations with FCC Form 312, Main Form and containing the following information. terrestrial stations. Schedule C, and specifying the number * * * * * (b) The technical aspects of of units to be covered by the blanket (3) A detailed description of the coordination are based on Appendix 28 license. Each application must utilization made of each transponder on of the International telecommunications demonstrate that transceiver operations each of the in-orbit satellites. That Union Radio Regulations and certain will not cause interference to other description should identify the total recommendations of the ITU users of the spectrum. capacity or the percentage of time each Radiocommunication Sector (‘‘ITU–R’’) * * * * * transponder is actually used for which may be obtained through the 16. Section 25.142 is amended by transmission, and the amount of unused International Telecommunication revising paragraph (c) introductory text system capacity in the transponder. Union, General Secretariat—Sales to read as follows: * * * * * Section, Places des Nations, CH–1211 20. Section 25.211 is amended by Geneva 20, Switzerland or by phone § 25.142 Licensing provisions for the non- 011–41–22–730–6141 or fax 011–41– voice, non-geostationary mobile-satellite adding paragraph (d), to read as follows: service. 22–730–5194. Applicants and operators § 25.211 Video Transmissions in the will find it helpful to be aware of the * * * * * Domestic Fixed-Satellite Service. latest revisions of these documents. (c) Reporting requirements. All * * * * * operators of non-voice, non- (d) In the 6 GHz band, an earth station §§ 25.252 through 25.256 [Removed and geostationary mobile-satellite service with an equivalent diameter of 9 meters reserved] systems shall, on June 30 of each year, or smaller may be routinely licensed for 23. Sections 25.252 through 25.256 file a report with the International transmission of full transponder are removed and reserved. Bureau and the Commission’s Columbia services if the maximum power into the 24. Section 25.272 is amended by Operations Center in Columbia, antenna does not exceed 450 watts (26.5 revising the first sentence of paragraph Maryland containing the following dBW). In the 14 GHz band, an earth (b) to read as follows: information: station with an equivalent diameter of 5 § 25.272 General inter-system * * * * * meters or smaller may be routinely coordination procedures. 17. Section 25.143 is amended by licensed for transmission of full revising paragraph (e)(1) introductory transponder services if the maximum * * * * * text to read as follows: power into the antenna does not exceed (b) Each space station licensee shall 500 watts (27 dBW). maintain on file with the Commission § 25.143 Licensing provisions for the 21. Section 25.212 is amended by and with its Columbia Operations 1.6/2.4 GHz Mobile-Satellite Service. adding paragraphs (c) and (d), to read as Center in Columbia, Maryland a current * * * * * follows: listing of the names, titles, addresses (e) * * * and telephone numbers of the points of (1) All operators of 1.6/2.4 GHz § 25.212 Narrowband transmissions in the contact for resolution of interference mobile-satellite systems shall, on June Fixed-Satellite Service. problems. * * * 30 of each year, file with the * * * * * * * * * * International Bureau and the (c) In the 14 GHz band, and earth 25. Section 25.274 is amended by Commission’s Columbia Operations station with an equivalent diameter of revising the first sentence of paragraph Center, Columbia, Maryland a report 1.2 meters or greater may be routinely (f) to read as follows: containing the following information: licensed for transmission of narrowband * * * * * analog services with bandwidths up to § 25.274 Procedures to be followed in the 18. Section 25.155 is amended by 200 kHz if the maximum power event of harmful interference. revising paragraph (b) to read as follows: densities into the antenna do not exceed * * * * * ¥8 dBW/4 kHz and the maximum (f) At any point, the system control § 25.155 Mutually exclusive applications. transmitted satellite carrier power center operator may contact the * * * * * densities do not exceed 13 dBW/4 kHz. Commission’s Columbia Operations (b) A space station application will be (d) In the 6 GHz band, an earth station Center in Columbia, Maryland to assist entitled to comparative consideration with an equivalent diameter of 4.5 in resolving the matter. * ** with one or more conflicting meters or greater may be routinely * * * * * applications only if: licensed for transmission of SCPC 26. Section 25.277 is amended by (1) The application is mutually services if the maximum power revising paragraph (c) introductory text exclusive with another application; and densities into the antenna do not exceed to read as follows: (2) The application is received by the +0.5 dBW/4 kHz for analog SCPC Commission in a condition acceptable carriers with bandwidths up to 200 kHz, § 25.277 Temporary fixed earth station for filing by the ‘‘cut-off’’ date specified and do not exceed ¥2.7 dBW/4 kHz for operations. in a public notice. digital SCPC carriers. * * * * * Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules 46259 (c) The licensee of an earth station considered in the formulation of the smaller of two percent of the property’s which is authorized to conduct final class deviation. acquisition cost multiplied by the ratio temporary fixed operations in bands ADDRESSES: Interested parties should of rental time to time available for use, shared co-equally with terrestrial fixed submit written comments to: Ms. or by the method described for real stations shall provide the following Angelena Moy, MPI, Room 3E144, property and associated fixtures. information to the Director of the Pentagon, Washington, DC 20301–3000. Use and Charges (APR 1984) (Deviation) Columbia Operations Center at P.O. Box FAX (703) 695–7596. (a) Deviations. 250, Columbia, Maryland 21045 (phone FOR FURTHER INFORMATION CONTACT: number 301–725–3474 and fax number As used in this clause— Ms. Angelena Moy, telephone (703) Acquisition cost means the acquisition cost 301–206–2896) and to the licensees of 695–1099. recorded in the contractor’s property control all terrestrial facilities lying within the SUPPLEMENTARY INFORMATION: system or, in the absense of such record, the coordination contour of the proposed value attributed by the Government to a temporary fixed earth station site before A. Background government property item for purposes of beginning transmissions: On September 16, 1994 (59 FR 47583) determining a reasonable rental charge. * * * * * the Director of Defense Procurement Government property means property 27. A new § 25.280 is added to read announced an initiative to rewrite FAR owned, licensed, or leased by the Government. as follows: Part 45, Government Property, to make Real property means land and rights in it easier to understand and to minimize § 25.280 Inclined orbit operations. land, ground improvements, utility the burdens imposed on contractors and distribution systems, and buildings and other Satellite operators may commence the Government. The Director of structures. It does not include foundations operation in incline orbit mode without Defense Procurement is providing a and other work necessary for installing obtaining prior Commission forum for an exchange of ideas and special tooling, special test equipment, or authorization provided that the information with government and equipment. Commission is notified by letter within industry personnel by holding public Rental period means the calendar period 30 days after commencement. The meetings, soliciting public comments, during which government property is made notification shall include: and publishing notices of public available for commercial purposes. (a) The date of commencement of meetings in the Federal Register. Rental time means the number of hours, to the nearest whole hour, rented property is included orbit operation; Interested parties were invited to (b) The initial inclination; actually used for commercial purposes. It provide written suggestions or includes time to set up the property for such (3) The rate of change in inclination comments in the notice of public purposes, perform required maintenance, and per year; and hearing dated September 16, 1994 (59 restore the property to its condition prior to (4) The expected end-of-life of the FR 47583). Twenty-two commentors rental. satellite accounting for inclined orbit provided approximately 500 comments, Time available for use means the number operation. including a recommendation that of hours, to the nearest whole hour, in the 28. Section 25.308 is redesignated as simplifying the procedures for rental period. § 25.281. computing rental charges for (b) General. (1) Rental requests must be 29. Subpart E is removed and government property would reduce submitted to the administrative Contracting reserved. Officer, identify the property desired, administrative burdens and provide cost propose a rental period, and calculate an [FR Doc. 95–22168 Filed 9–5–95; 8:45 am] savings. estimated rental charge. In order to expedite implementation BILLING CODE 6712±01±M (2) The Contractor shall not use of simplified government property government property for commercial rental procedures, DoD is proposing a purposes until a rental charge for real class deviation from current FAR property, or estimated rental charge for other DEPARTMENT OF DEFENSE methods of determining rental charges property, is agreed upon. Rented property for commercial use of government may be used only on a non-interference basis. 48 CFR Part 52 property. The proposed class deviation (3) Notwithstanding any other provision of was included in discussions during the this contract, the Contractor is responsible for Federal Acquisition Regulation; Use any loss, theft, or destruction of, or damage and Charges Clause Class Deviation public hearings that have been held on to, government property during its use for the rewrite of FAR Part 45. DoD commercial purposes. AGENCY: Department of Defense (DoD). proposes to deviate from the clause at (c) Estimated rental charge. The estimated ACTION: Notice of proposed class FAR 52.245–9 as follows: rental charge submitted with the Contractor’s deviation. rental request shall be computed by Part 52—Solicitation Provisions and substituting the Contractor’s best estimate of Contract Clauses SUMMARY: The Department of Defense the time the property might be used for (DoD) is proposing a class deviation 52.245–9 Use and Charges commercial purposes for rental time in the from the Federal Acquisition Regulation • formulae described in paragraph (d) of this Deviation authorizes DoD to use the clause. (FAR) that simplifies the method of following clause in lieu of the clause at (d) Final rental charge—(1) Real property determining rental charges for 52.245–9. This clause requires and associated fixtures—(i) The Contractor government property. The proposed contractors, for real property and shall obtain, at its expense, a property class deviation will allow defense associated fixtures, to obtain certified appraisal from an independent licensed or contractors to propose rental charges for property appraisals that compute a certified appraiser that computes a monthly, the commercial use of government monthly, daily, or hourly rental rate for daily, or hourly rental rate for comparable property and real property while comparable commercial property. commercial property no more than one year revisions to the FAR are being drafted. prior to the date the property is desired for Rental charges would be determined by commercial use and submit the appraisal to DATES: Comments on the proposed class multiplying the rental time by an the administrative Contracting Officer at least deviation should be submitted in appraisal rental rate expressed as a rate 30 days prior to that date. Except as provided writing at the address shown below on per hour. For other government in paragraph (d)(1)(iv) of this clause, the or before November 6, 1995 to be property, rental charges will be the administrative Contracting Officer shall use 46260 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Proposed Rules the appraisal rental rate to determine an time shall be expressed in increments not (3) At any time during the rental period, equitable rental charge. less than one hour; or, the Government may revoke commercial use (ii) Rental charges shall be determined by (ii) A rental charge based upon the authorization and require the Contractor, at multiplying the rental time by the appraisal appraisal method described in paragraph the Contractor’s expense, to return the rental rate expressed as a rate per hour. (d)(1) of this clause subject to the constraints property to the Government, restore the Monthly or daily rental rates shall be divided of that paragraph. property to its pre-rental condition, or both. by 720 or 24, respectively, to determine an (e) Rental payments. (1) Rent is due at the (f) The Government’s acceptance of any hourly rental rate. time and place specified by the Contracting rental payment under this clause, in whole (iii) The Contractor may request Officer. If a time is not specified, the rental or in part, shall not be construed as a waiver consideration of an alternate basis for is due 60 days following completion of the or relinquishment of any rights it may have computing the rental charge if it considers a rental period. The Contractor shall calculate against the Contractor stemming from the time based rental unreasonable or the rental due, and furnish records or other Contractor’s unauthorized use of government impractical. supporting data in sufficient detail to permit property or any other failure to perform this (iv) When the administrative Contracting the administrative Contracting Officer to contract according to its terms. Officer has reason to believe the appraisal verify the rental time. (End of clause) rental rate is not reasonable, he or she shall (2) Interest will be charged if payment is promptly notify the Contractor and provide not made by the specified payment date or, List of Subjects in 48 CFR Part 52 his or her rationale. The parties may agree on in the absence of a specified date, the sixty- an alternate means for computing a first day following completion of the rental Government procurement. reasonable rental charge. period. Interest will accrue at the Michele P. Peterson, (2) Other government property. The final ‘‘Renegotiation Board Interest Rate’’ Executive Editor, Defense Acquisition rental charge shall be the smaller of— (published in the Federal Register Regulations Council. (i) Two percent (2%) of the property’s semiannually on or about January 1st and acquisition cost multiplied by the ratio of July 1st) for the period in which the rent is [FR Doc. 95–22001 Filed 9–5–95; 8:45 am] rental time to time available for use where due. BILLING CODE 5000±04±M 46261 Notices Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 This section of the FEDERAL REGISTER OMB Approval Number: 0694–0003. Avg Hours Per Response: 8 hours. contains documents other than rules or Type of Request: Extension of a Needs and Uses: An application form proposed rules that are applicable to the currently approved collection. is needed from commercial fishermen public. Notices of hearings and investigations, Burden: 5 hours. who wish to obtain guaranteed committee meetings, agency decisions and Number of Respondents: 2. financing under the Fisheries Obligation rulings, delegations of authority, filing of petitions and applications and agency Avg Hours Per Response: 30 minutes Guarantee Program. The information is statements of organization and functions are (4 reports for each respondent). used to determine eligibility and examples of documents appearing in this Needs and Uses: This reporting monitor program participation. section. requirement allows exporters to export Affected Public: Individuals, parts to service U.S. equipment to Businesses or other for–profit proscribed countries provided that the organizations. DEPARTMENT OF COMMERCE equipment was previously exported Frequency: On occasion. from the U.S. under a validated license. Respondent’s Obligation: Required to Agency Forms Under Review by the Exporters are required to submit obtain or retain benefits. Office of Management and Budget quarterly reports providing basic OMB Desk Officer: Don Arbuckle, (OMB) information on shipments. BXA uses (202) 395–7340. Agency: National Oceanic and DOC has submitted to the Office of this information to make sure that there are no excessive shipments of spare Atmospheric Administration. Management and Budget (OMB) for Title: Marine Recreational Fishery clearance the following proposals for parts. Affected Public: Businesses or other Statistics Survey. collection of information under the Agency Form Number: None assigned. provisions of the Paperwork Reduction for–profit organizations. Frequency: Quarterly. OMB Approval Number: 0648–0052. Act ) 44 U.S.C. Chapter 35). Type of Request: Extension of a Respondent’s Obligation:Required to Agency: Bureau of Export currently approved collection. obtain or retain benefits. Administration (BXA). Burden: 23,118 hours. Title: U.S. Industry Reporting OMB Desk Officer: Don Arbuckle, Number of Respondents: 571,233. Requirements for Compliance with the (202) 395–7340. Avg Hours Per Response: Varies but Chemical Weapons Treaty. Agency: National Oceanic and averages between 1 and 7 minutes Agency Form Number(s): None Atmospheric Administration (NOAA). depending on the requirement. assigned. Title: National Ocean Service (NOS) Needs and Uses: This survey OMB Approval Number: None. Customer Needs Survey. conducts random telephone interviews Type of Request: New Collection. Agency Form Number: None assigned. of residents of coastal county Burden: 15,620 hours. OMB Approval Number: None households to obtain data on marine Number of Respondents: 3,000. Type of Request: New Collection. recreational fishing effort and it Avg Hours Per Response: Varies but Burden: 25 hours. conducts random field interviews of ranges between 2.5 and 9 hours Number of Respondents: 50. anglers returning from fishing trips. The depending on the requirement. Avg Hours Per Response: 30 minutes. data obtained are used to calculate Needs and Uses: The Chemical Needs and Uses: This survey is bimonthly estimates of marine Weapons Convention is a multilateral designed to ascertain customer needs for recreational fishing participation, effort arms control treaty that seeks to achieve National Ocean Service products and and catch by species. The effort and an international ban on chemical services. The information will be used catch estimates are used in the weapons. Under this treaty, each as a basis for modifying or development, implementation and participating country will be required to supplementing the organization’s monitoring of fishery management make initial and annual declarations on current product and service offerings. programs by the National Marine facilities producing, processing, Affected Public: Individuals, Fisheries Service, regional fishery consuming, importing or exporting Businesses or other for–profit management councils, interstate marine specified toxic chemicals and organizations, Not–for–profit fishery commissions and state fishery precursors. This collection will not go institutions, Federal Government, State, agencies. into effect until the treaty is ratified. Local or Tribal Government. Affected Public: Individuals, Affected Public: Businesses or other Frequency: One–time survey. Businesses or other–for–profit for–profit organizations, Federal Respondent’s Obligation: Voluntary. organizations. Government, State, Local or Tribal OMB Desk Officer: Don Arbuckle, Frequency: On occasion. Government. (202) 395–7340. Respondent’s Obligation: Voluntary. Frequency: Annually. Agency: National Oceanic and OMB Desk Officer: Don Arbuckle, Respondent’s Obligation: Mandatory. Atmospheric Administration (NOAA). (202) 395–7340. OMB Desk Officer: Don Arbuckle, Title: Application for Fisheries Agency: National Oceanic and (202) 395–7340. Obligation Guarantee. Atmospheric Administration (NOAA). Agency: Bureau of Export Agency Form Number: NOAA 88–1. Title: Fishermen’s Contingency Fund. Administration (BXA). OMB Approval Number: 0648–0012. Agency Form Number: NOAA 88–164, Title: Quarterly Report on Exports of Type of Request: Extension of a 88–166. Parts to Service Equipment Shipped currently approved collection. OMB Approval Number: 0648–0082. Against a Validated Export License. Burden: 10,400 hours. Type of Request: Extension of a Agency Form Number: None. Number of respondents: 1,300. currently approved collection. 46262 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Burden: 13,650 hours. Dated: August 25, 1995 Dated: August 31, 1995. Number of Respondents: 1,065. Gerald Tache, Gerald Tache, Avg Hours Per Response: Ranges Departmental Forms Clearance Officer, Office Departmental Forms Clearance Officer, Office between 5 minutes and approximately of Management and Organization. of Management and Organization. 13 hours depending on the requirement. [FR Doc. 95–22024 Filed 9–5–95; 8:45 am] [FR Doc. 95–22072 Filed 9–5–95; 8:45 am] Needs and Uses: Title IV of the Outer BILLING CODE 3510±CW±F BILLING CODE 3510±07±F Continental Shelf Lands Act Amendments established the Fishermen’s Contingency Fund to DEPARTMENT OF COMMERCE Agency Form Under Review by the compensate commercial fishermen for Office of Management and Budget property or economic loss caused by oil Agency Form Under Review by the DOC has submitted to the Office of and gas obstructions on the U.S. Outer Office of Management and Budget Management and Budget (OMB) for Continental Shelf. An application and a clearance the following proposal for report are needed from commercial DOC has submitted to the Office of collection of information under the fishermen to apply for compensation. Management and Budget (OMB) for provisions of the Paperwork Reduction The information is used in making a clearance the following proposal for Act (44 U.S.C. Chapter 35). decision on the claimants’s eligibility collection of information under the for compensation and to determine the provisions of the Paperwork Reduction Agency: Bureau of the Census. amount of payment. Act (44 U.S.C. Chapter 35). Title: Survey of State Government Affected Public: Individuals, Agency: Bureau of the Census. Pass–through Expenditures. Businesses or other for–profit Title: Field Representative Exit Form Number(s): CF–1. organizations. Questionnaire. Agency Approval Number: 0607– Form Number(s): BC–1294. Frequency: On occasion. 0505. Agency Approval Number: 0607– Respondent’s Obligation: Required to Type of Request: Reinstatement, with 0404. change, of a previously approved obtain benefits. Type of Request: Extension of a OMB Desk Officer: Don Arbuckle, collection for which approval has currently approved collection. expired. (202) 395–7340. Burden: 13 hours. Agency: National Oceanic and Burden: 795 hours. Number of Respondents: 160. Number of Respondents: 1,060. Atmospheric Administration (NOAA). Avg Hours Per Response: 5 minutes. Avg Hours Per Response: 45 minutes. Title: Fishing Vessel and Gear Damage Needs and Uses: In a continuous Compensation Fund. effort to devise policy and practice Needs and Uses: The Census Bureau Agency Form Number: 88–178. aimed at reducing turnover among field plans to reinstate this survey to again OMB Approval Number: 0648–0094. representatives (FR)s–our field collect data from all state governments Type of Request: Extension of a interviewing staff–the Census Bureau on how they allocate (pass–through) currently approved collection. needs to collect data on the reasons FRs Federal formula grant funds to Burden: 8.000 hours. leave the Bureau. The exit questionnaire recipients at the county level, and how Number of Respondents: 400. helps the Census Bureau identify pass–through allocations change from year to year. We plan to collect this data Avg Hours Per Response: 20 hours. specific reasons for the turnovers. annually from state governments over Needs and Uses: An application form Approximately every quarter, a sample the next three years. Data collected will is needed from commercial fishermen of one–half of all FRs voluntarily be used in estimating these pass– who wish to file a claim under Section resigning within the period will be through expenditures in future years in 10 of the Fishermen’s Protective Act. contacted by telephone to complete a the Consolidated Federal Funds Report The purpose of the fund is to questionnaire. Interviewers hired to which the Census Bureau provides compensate fishermen for fishing vessel conduct the census enumeration or annually to Congress. Current or fishing gear damage or loss caused by related tests are not included in the estimating procedures are based on data foreign or domestic vessels. sample. Based on the survey results the Census Bureau can develop both general last collected for fiscal year 1986 and Affected Public: Individuals, are outdated. Businesses or other for–profit and specific plans to reduce turnover. Affected Public: State, local or tribal organizations. Affected Public: Individuals or government. Frequency: On occasion. households. Frequency: Annually. Respondent’s Obligation: Required to Frequency: Quarterly. Respondent’s Obligation: Voluntary. obtain or retain benefits. Respondent’s Obligation: Voluntary. OMB Desk Officer: Don Arbuckle, OMB Desk Officer: Maria Gonzalez, OMB Desk Officer: Maria Gonzalez, (202) 395–7340. (202) 395–7313. (202) 395–7313. Copies of the above information Copies of the above information Copies of the above information collection proposals can be obtained by collection proposal can be obtained by collection proposal can be obtained by calling or writing Gerald Tache, DOC calling or writing Gerald Tache, DOC calling or writing Gerald Tache, DOC Forms Clearance Officer, (202) 482– Forms Clearance Officer, (202) 482– Forms Clearance Officer, (202) 482– 3271, Department of Commerce, Room 3271, Department of Commerce, Room 3271, Department of Commerce, Room 5327, 14th and Constitution Avenue, 5327, 14th and Constitution Avenue, 5327, 14th and Constitution Avenue, N.W., Washington, D.C. 20230. NW, Washington, DC 20230. NW, Washington, DC 20230. Written comments and Written comments and Written comments and recommendations for the proposed recommendations for the proposed recommendations for the proposed information collections should be sent information collection should be sent to information collection should be sent to to Don Arbuckle, OMB Desk Officer, Maria Gonzalez, OMB Desk Officer, Maria Gonzalez, OMB Desk Officer, Room 10202, New Executive Office Room 10202 New Executive Office Room 10202 New Executive Office Building, Washington, D.C. 20503. Building,Washington, DC 20503. Building, Washington, DC 20503. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46263 Dated: August 31, 1995. The 1995 limits for Categories 335, for the period January 1, 1995 through Gerald Tache, 338/339/638/639, 338–S/339–S/638–S/ December 31, 1995, as provided for under the Departmental Forms Clearance Officer, Office 639–S, 350 and 351/651 are being Uruguay Round Agreements Act and the of Management and Organization. adjusted, variously, for special shift and Uruguay Round Agreement on Textiles and Clothing: [FR Doc. 95–22071 Filed 9–5–95; 8:45 am] carryforward. Category Adjusted twelve-month BILLING CODE 3510±07±F In the letter published below, the limit a Chairman of CITA directs the Commissioner of Customs to amend the Limits not in group COMMITTEE FOR THE current limit for Categories 352/652 to 335 ...... 265,523 dozen. IMPLEMENTATION OF TEXTILE begin on March 28, 1995 and extend 338/339/638/639 .... 4,960,608 dozen of AGREEMENTS through December 31, 1995 at an which not more than increased level and to adjust the current 3,562,811 dozen Establishment and Amendment of limits for Categories 335, 338/339/638/ shall be in Cat- egories 338±S/339± Import Limits and Amendment of a 639, 338–S/339–S/638–S/639–S, 350 S/638±S/639±S b. Restraint Period for Certain Cotton and and 351/651. 350 ...... 524,320 dozen. Man-Made Fiber Textile Products A description of the textile and 351/651 ...... 770,144 dozen. Produced or Manufactured in the apparel categories in terms of HTS Republic of Turkey numbers is available in the a1 The limits have not been adjusted to ac- count for any imports exported after December CORRELATION: Textile and Apparel August 30, 1995. 31, 1994. Categories with the Harmonized Tariff b1 Category 338±S: only HTS numbers AGENCY: Committee for the Schedule of the United States (see 6103.22.0050, 6105.10.0010, 6105.10.0030, Implementation of Textile Agreements Federal Register notice 59 FR 65531, 6105.90.8010, 6109.10.0027, 6110.20.1025, (CITA). 6110.20.2040, 6110.20.2065, 6110.90.9068, published on December 20, 1994). Also 6112.11.0030 and 6114.20.0005; Category ACTION: Issuing a directive to the see 60 FR 17338, published on April 5, 339±S: only HTS numbers 6104.22.0060, Commissioner of Customs establishing 1995. 6104.29.2049, 6106.10.0010, 6106.10.0030, and amending limits and amending a The letter to the Commissioner of 6106.90.2510, 6106.90.3010, 6109.10.0070, restraint period. 6110.20.1030, 6110.20.2045, 6110.20.2075, Customs and the actions taken pursuant 6110.90.9070, 6112.11.0040, 6114.20.0010 to it are not designed to implement all EFFECTIVE DATE: September 7, 1995. and 6117.90.9020; Category 638±S: all HTS of the provisions of the Uruguay Round numbers except 6109.90.1007, 6109.90.1009, FOR FURTHER INFORMATION CONTACT: Agreements Act and the Uruguay Round 6109.90.1013 and 6109.90.1025; Category Naomi Freeman, International Trade Agreement on Textiles and Clothing, but 639±S: all HTS numbers except Specialist, Office of Textiles and 6109.90.1050, 6109.90.1060, 6109.90.1065 are designed to assist only in the and 6109.90.1070. Apparel, U.S. Department of Commerce, implementation of certain of their The Committee for the Implementation of (202) 482–4212. For information on the provisions. quota status of these limits, refer to the Textile Agreements has determined that Donald R. Foote, Quota Status Reports posted on the these actions fall within the foreign affairs bulletin boards of each Customs port or Acting Chairman, Committee for the exception of the rulemaking provisions of 5 Implementation of Textile Agreements. U.S.C. 553(a)(1). call (202) 927–6718. For information on Sincerely, embargoes and quota re-openings, call Committee for the Implementation of Textile Donald R. Foote, (202) 482–3715. Agreements Acting Chairman, Committee for the August 30, 1995. SUPPLEMENTARY INFORMATION: Implementation of Textile Agreements. Commissioner of Customs, Authority: Executive Order 11651 of March Department of the Treasury, Washington, DC [FR Doc. 95–22023 Filed 9–5–95; 8:45 am] 3, 1972, as amended; section 204 of the 20229. BILLING CODE 3510±DR±F Agricultural Act of 1956, as amended (7 Dear Commissioner: This directive U.S.C. 1854). amends, but does not cancel, the directive A notice published in the Federal issued to you on June 16, 1995, by the COMMODITY FUTURES TRADING Register on June 23, 1995 (60 FR 32656) Chairman, Committee for the Implementation COMMISSION of Textile Agreements. That directive announces a limit for cotton and man- concerns imports of cotton and man-made made fiber underwear in Categories 352/ Applications of the Chicago Mercantile fiber textile products in Categories 352/652, Exchange as a Contract Market in 652 for the period March 28, 1995 produced or manufactured in Turkey and through March 27, 1996. In an exchange exported during the twelve-month period Mexico 30 Stock Index Futures and of notes dated July 26, 1995 and August which began on March 28, 1995 and extends Option Contracts through March 27, 1996. 23, 1995, the Governments of the United AGENCY: Commodity Futures Trading This directive also amends, but does not States and the Republic of Turkey Commission. agreed, pursuant to Article 6 of the cancel, the directive issued to you on March 30, 1995 concerning imports of certain ACTION: Notice of availability of the Uruguay Round Agreements Act and the cotton, wool and man-made fiber textile terms and conditions of proposed Uruguay Round Agreement of Textiles products, produced or manufactured in commodity futures and futures option and Clothing (ATC), to establish a limit Turkey and exported during the twelve- contracts. for textile products in Categories 352/ month period which began on January 1, 652 for a three-year term—March 28, 1995 and extends through December 31, SUMMARY: The Chicago Mercantile 1995 through December 31, 1995; 1995. Exchange (CME or Exchange) has January 1, 1996 through December 31, Effective on September 7, 1995, you are applied for designation as a contract 1996; January 1, 1997 through December directed to amend the restraint period for market in Mexico 30 stock index futures Categories 352/652 to end on December 31, 31, 1997; and January 1, 1998 through 1995 at a level of 1,681,644 dozen 1 and to and option contracts. The Acting March 27, 1998. Also, the two adjust the limits for the following categories Director of the Division of Economic governments agreed to increase the 1995 Analysis (Division) of the Commission, base sublimit for Categories 338–S/339– 1 The limit has not been adjusted to account for acting pursuant to the authority S/638–S/639–S. any imports exported after March 27, 1995. delegated by Commission Regulation 46264 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 140.96, has determined that publication terms and conditions of the proposed Member recruitment and placement of the proposals for comment is in the contracts, or with respect to other for program management, planning, public interest, will assist the materials submitted by the Exchange in and required recordkeeping. Commission in considering the views of support of the applications, should send Type of Request: Revision of currently interested persons, and is consistent such comments to Jean A. Webb, approved collection. with the purposes of the Commodity Secretary, Commodity Futures Trading Respondent’s Obligation to Reply: Exchange Act. Commission, 2033 K Street, NW., Voluntary. DATES: Comments must be received on Washington, DC 20581, by the specified Frequency of Data Collection: On or before October 6, 1995. date. occasion. ADDRESSES: Interested persons should Issued in Washington, DC, on August 30, Estimated Number of Responses: 50,000 submit their views and comments to 1995. (annually). Average Burden Hours per Response: Jean A. Webb, Secretary, Commodity John Mielke, 0.05 Hours (3 minutes). Futures Trading Commission, 2033 K Acting Director. Street NW., Washington, DC 20581. Estimated Annual Reporting or [FR Doc. 95–21971 Filed 9–5–95; 8:45 am] Disclosure Burden: 2,500 hours. Reference should be made to the CME BILLING CODE 6351±01±P contract markets in Mexico 30 stock Regulatory Authority: 42 U.S.C. 12592 index futures and options. (Pub. L. 103–82). Dated: August 31, 1995. FOR FURTHER INFORMATION CONTACT: CORPORATION FOR NATIONAL AND Please contact Stephen Sherrod of the COMMUNITY SERVICE Bruce J. Cohen, Division of Economic Analysis, Director, AmeriCorps Recruitment. Commodity Futures Trading Information Collection Proposal [FR Doc. 95–22059 Filed 9–5–95; 8:45 am] Commission, 2033 K Street NW., BILLING CODE 6050±28±M Washington, DC 20581, telephone 202– AGENCY: Corporation for National and 254–7303. Community Service (CNS). SUPPLEMENTARY INFORMATION: According ACTION: Information Collection Request Information Collection Proposal to the CME, the Mexico 30 stock index submitted to the Federal Office of AGENCY: The Corporation for National is designed to be representative of the Management and Budget for Review. and Community Service (CNS). Mexican stock market, and is an SUMMARY: This notice provides adjusted capitalization-weighted index ACTION: Information Collection Request information about an information of 30 large and liquid Mexican stocks Submitted to the Office of Management collection proposal by the Corporation traded on the Bolsa Mexicana de and Budget (OMB) for Review. for National Service, AmeriCorps Valores. The capitalizations of Recruitment Office, currently under SUMMARY: This notice provides component stocks are adjusted to keep review by the Office of Management and information about an information their individual index weights equal to Budget (OMB). proposal by CNS, currently under or smaller than 25%. The computation review by OMB. of the index will be the responsibility of DATES: OMB and CNS will consider DATES: OMB and CNS will consider the Bridge company. The CME and the comments on the proposed collection of comments on the proposed collection of Chicago Board Options Exchange will information and recordkeeping information and record keeping maintain the index jointly. requirements received within 20 days Copies of the terms and conditions of from the date of publication. Copies of requirements received within 10 days the proposed contracts will be available the proposed forms and supporting from the date of publication. Copies of for inspection at the Office of the documents may be obtained by the proposed forms and supporting Secretariat, Commodity Futures Trading contacting the Corporation for National documents may be obtained by Commission, 2033 K street, NW., Service. contacting CNS. Washington, DC 20581. Copies of the ADDRESSES: Send comments to both: ADDRESSES: Send comments to both: terms and conditions can be obtained Bruce J. Cohen, Director, AmeriCorps Chuck Helfer, Study Director, CNS, through the Office of the Secretariat by Recruitment, 1201 New York Ave., 1201 New York Ave., NW., mail at the above address or by phone NW., Washington, DC 20525 Washington, DC 20525 at (202) 254–6314. and and Other materials submitted by the Debra Bond, Desk Officer for CNS, Debra Bond, Desk Officer, OMB, 3002 Exchange in support of the applications Office of Management and Budget, NEOB, Washington, DC 20503. for contract market designation may be 3002 New Executive Office Bldg., available upon request pursuant to the FOR FURTHER INFORMATION CONTACT: Washington, DC 20503. Freedom of Information Act (5 U.S.C. Chuck Helfer, (202) 606–5000, extension 552 (1987)) and the Commission’s FOR FURTHER INFORMATION CONTACT: 248. regulations thereunder (17 CFR Part 145 Bruce Cohen, (202) 606–5000. SUPPLEMENTARY INFORMATION: (1987)), except to the extent they are SUPPLEMENTARY INFORMATION: Office of the Corporation for National entitled to confidential treatment as set Office of CNS Issuing Proposal: and Community Service Issuing forth in 17 CFR 145.5 and 145.9. AmeriCorps Recruitment. Notice: Office of Evaluation. Requests for copies of such materials Title of Form: AmeriCorps Referral Titles of Forms: RSVP Project Director should be made to the FOI, Privacy and Form. Survey, RSVP Station Supervisor Sunshine Act Compliance Staff of the Need and Use: The AmeriCorps Referral Survey; RSVP Volunteer Survey. Office of the Secretariat at the form is used by the AmeriCorps Need and Use: The Domestic Volunteer Commission’s headquarters in Recruitment Office to meet Service Act (as amended) (Pub. L. 93– accordance with 17 CFR 145.7 and requirements mandated by federal law 13) requires the Corporation for 145.8. (National and Community Service Act National and Community Service to Any person interested in submitting of 1993). The information collected evaluate its programs every three written data, views, or arguments on the via the form assists with AmeriCorps years. This information is needed for Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46265 program management, program Army Science Board; Notice of Open DEPARTMENT OF ENERGY planning, and required record Meeting keeping. Federal Energy Regulatory Type of Request: Submission of a new In accordance with Section 10(a)(2) of Commission collection. the Federal Advisory Committee Act [Docket No. TM96±1±91±000] Respondents Obligation to Reply: (Pub. L. 92–463), announcement is Voluntary. made of the following Committee ANR Storage Company; Notice of Frequency of Data Collection: Annual. Meeting: Proposed Changes in FERC Gas Tariff Estimated Number of Responses: 1,900 Annual Charges Adjustment Clause Name of Committee: Army Science Board Responses. Provisions Average Burden Hours per Response: (ASB). 0.58 Hours. Date of Meeting: September 28, 1995. August 30, 1995. Estimated Annual Reporting or Time of Meeting: 0930–1230. Take notice that on August 25, 1995, Place: Ft. Detrick-Frederick, MD. Disclosure Burden: 1,100 Hours. ANR Storage Company (ANR Storage) Agenda: The Army Science Board (ASB) Regulatory Authority: 42 U.S.C. 5056(a). tendered for filing to become part of its Personnel and Medical Panel will meet for FERC Gas Tariff, Original Volume No. 2, Dated: August 30, 1995. initial discussions on the design and staffing Seventh Revised Sheet No. 1(a), with a Anne Ostberg, required to support the medical research, proposed effective date of October 1, Acting Director, Office of the Vice President. development, test and evaluation (RDT&E) 1995. [FR Doc. 95–22060 Filed 9–5–95; 8:45 am] programs of the proposed Army and Navy ANR Storage states that Seventh consolidated laboratory management BILLING CODE 6050±28±M Revised Sheet No. 1(a) reflects the new organization currently proposed to be called ACA rate to be charged per the Annual the Armed Forced Medical Research and Charge Adjustment clause provisions Development Agency (AFMRDA). This DEPARTMENT OF DEFENSE established by the Commission in Order meeting will be open to the public. Any No. 472, issued on May 29, 1987. The interested person may attend, appear before, Department of the Army new ACA rate to be charged by ANR or file statements with the committee at the Storage will be effective October 1, Armed Forces Epidemiological Board time and in the manner permitted by the committee. For further information, please 1995. AGENCY: Armed Forces Epidemiological call Michelle Diaz at (703) 695–0781. ANR Storage states that copies of the Board, DOD. filing were served upon the company’s Michelle P. Diaz, jurisdictional customers. ACTION: Notice of open meeting. Acting Administrative Officer, Army Science Any person desiring to be heard or to Board. 1. In accordance with Section 10(a)(2) protest said filing should file a motion of the Federal Advisory Committee Act [FR Doc. 95–21975 Filed 9–5–95; 8:45 am] to intervene or protest with the Federal (P.L. 92–462), announcement is made of BILLING CODE 3710±08±M Energy Regulatory Commission, 825 the following committee meeting: North Capitol Street, NE., Washington, DC 20426, in accordance with 18 CFR Name of Committee: Armed Forces Army Science Board; Notice of Open Epidemiological Board, DOD. 385.214 and 385.211 of the Date: October 12–13, 1995. Meeting Commission’s Rules and Regulations. Time: 0800–1630. All such motions or protests should be Place: U.S. Army Center for Health In accordance with Section 10(a)(2) of filed on or before September 7, 1995. Promotion and Preventive Medicine the Federal Advisory Committee Act Protests will be considered by the (Provisional), Edgewood Area, Aberdeen (Pub. L. 92–463), announcement is Commission in determining the Proving Ground, Maryland. made of the following Committee appropriate action to be taken, but will Proposed Agenda: 12–13 October 1995— Meeting: not serve to make protestants parties to Service preventive medicine reports and the proceeding. Any person wishing to issues in infectious disease, vaccines, and Name of Committee: Army Science Board behavioral risk factors. (ASB). become a party must file a motion to Date of Meeting: September 27, 1995. intervene. Copies of this filing are on 2. This meeting will be open to the file with the Commission and are public but limited by space Time of Meeting: 0800–1700. Place: Alexandria, VA. available for public inspection in the accommodations. Any interested person Agenda: The Army Science Board (ASB) Public Reference Room. may attend, appear before or file Independent Assessment Panel on ‘‘Lead- Lois D. Cashell, statements with the committee at the based Paint’’ will meet to review information Secretary. time and in the manner permitted by the provided during earlier briefings and site committee. Interested persons wishing [FR Doc. 95–21985 Filed 9–5–95; 8:45 am] visits regarding the Army Program for the BILLING CODE 6717±01±M to participate should advise the Acting management and abatement of lead-based Executive Secretary, AFEB, Skyline Six, paint. Any interested person may attend, 5109 Leesburg Pike, Room 667, Falls appear before, or file statements with the [Docket No. TM96±2±91±000] Church, Virginia 22041–3258. committee at the time and in the manner ANR Storage Company; Notice of FOR FURTHER INFORMATION CONTACT: permitted by the committee. For further Proposed Changes in FERC Gas Tariff Colonel Francis L. O’Donnell, USA, MC, information, please contact Michelle Diaz at Acting Executive Secretary, Armed (703) 695–0781. Annual Charges Adjustment Clause Provisions Forces Epidemiological Board, (703) Michelle P. Diaz, 681–8012/3. Acting Administrative Officer, Army Science August 30, 1995. Gregory D. Showalter, Board. Take notice that on August 25, 1995, Army Federal Register Liaison Officer. [FR Doc. 95–21977 Filed 9–5–95; 8:45 am] ANR Storage Company (ANR Storage) [FR Doc. 95–21979 Filed 9–5–95; 8:45 am] BILLING CODE 3710±08±M tendered for filing to become part of its BILLING CODE 3710±08±M FERC Gas Tariff, Original Volume No. 1, 46266 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Third Revised Sheet No. 5, with a to intervene or protest with the Federal and 385.211 of the Commission’s Rules proposed effective date of October 1, Energy Regulatory Commission, 825 and Regulations. All such motions or 1995. North Capitol Street, NE., Washington, protests should be filed on or before ANR Storage states that Third Revised DC 20426, in accordance with 18 CFR September 7, 1995. Protests will be Sheet No. 5 reflects the new ACA rate 385.214 and 385.211 of the considered by the Commission in to be charged per the Annual Charge Commission’s Rules and Regulations. determining the appropriate action to be Adjustment clause provisions All such motions or protests should be taken, but will not serve to make established by the Commission in Order filed on or before September 7, 1995. protestants parties to the proceeding. No. 472, issued on May 29, 1987. The Protests will be considered by the Any person wishing to become a party new ACA rate to be charged by ANR Commission in determining the must file a motion to intervene. Copies Storage will be effective October 1, appropriate action to be taken, but will of this filing are on file with the 1995. not serve to make protestants parties to commission and are available for public ANR Storage states that copies of the the proceeding. Any person wishing to inspection in the Public Reference filing were served upon the company’s become a party must file a motion to Room. jurisdictional customers. intervene. Copies of this filing are on Also in compliance with the Order on Any person desiring to be heard or to file with the Commission and are Remand, Great Lakes tendered for filing protest said filing should file a motion available for public inspection in the pro forma tariff sheets reflecting to intervene or protest with the Federal Public Reference Room. systemwide rolled-in rates on its system Energy Regulatory Commission, 825 Lois D. Cashell, for the period November 1, 1991 North Capitol Street, NE., Washington, Secretary. through September 30, 1995, during DC 20426, in accordance with 18 CFR [FR Doc. 95–21987 Filed 9–5–95; 8:45 am] which incremental rates were required 385.214 and 385.211 of the BILLING CODE 6717±01±M to be charged by the Commission’s Commission’s Rules and Regulations. Opinion Nos. 367 and 368, which the All such motions or protests should be Commission has now reversed. The filed on or before September 7, 1995. [Docket No. RP91±143±031 and RP95±422± following is a listing of the pro forma Protests will be considered by the 000] tariff sheets and the dates they are to Commission in determining the become effective: appropriate action to be taken, but will Great Lakes Gas Transmission Limited not serve to make protestants parties to Partnership; Notice of Compliance Second Revised Volume No. 1 Tariff Filing the proceeding. Any person wishing to Pro Forma Sheet No. 4—November 1, become a party must file a motion to August 30, 1995. 1994; November 1, 1993 intervene. Copies of this filing are on Take notice that on August 25, 1995, Pro Forma Sheet No. 4A—November 1, file with the Commission and are Great Lakes Gas Transmission Limited 1994 available for public inspection in the Partnership (Great Lakes), tendered for Pro Forma Sheet No. 5—November 1, Public Reference Room. filing proposed changes in its FERC Gas 1993 Lois D. Cashell, Tariff, to become effective October 1, First Revised Volume No. 1 Secretary. 1995, as more fully described in its [FR Doc. 95–21986 Filed 9–5–95; 8:45 am] Description of Prospective Tariff Sheets Pro Forma Sheet No. 4—April 1, 1993; BILLING CODE 6717±01±M contained in its filing. The tariff sheets November 1, 1991 submitted are as follows: Pro Forma Sheet No. 57(i)—April 1, 1993; November 1, 1991 [Docket No. TM96±1±112±000] Second Revised Volume No. 1 Original Volume No. 2 Second Revised Sheet No. 4 Blue Lake Gas Storage Co.; Notice of Pro Forma Sheet No. 53—November 1, Proposed Changes in FERC Gas Tariff First Revised Sheet No. 4A First Revised Sheet No. 5 1993; April 1, 1993; November 1, Annual Charges Adjustment Clause Second Revised Sheet No. 6 1991 Provisions Original Volume No. 2 Pro Forma Sheet No. 77—April 1, 1993; November 1, 1991 August 30, 1995. Seventeenth Revised Sheet No. 151 Take notice that on August 25, 1995, Fourteenth Revised Sheet No. 223 Pro Forma Sheet No. 78—April 1, 1993; Blue Lake Gas Storage Company (Blue Fourteenth Revised Sheet No. 245 November 1, 1991 Lake) tendered for filing to become part Eighth Revised Sheet No. 269 Pro Forma Sheet No. 151—November 1, of its FERC Gas Tariff, First Revised Fourteenth Revised Sheet No. 294 1993; April 1, 1993; November 1, Volume No. 1, Third Revised Sheet No. Ninth Revised Sheet No. 603 1991 5, with a proposed effective date of Sixth Revised Sheet No. 604 Pro Forma Sheet No. 223—November 1, October 1, 1995. Great Lakes states that the above tariff 1993; April 1, 1993; November 1, Blue Lake states that Third Revised sheets are filed to reinstate systemwide 1991 Sheet No. 5 reflects the new ACA rate rolled-in rates on its system, in Pro Forma Sheet No. 245—November 1, to be charged per the Annual Charge compliance with the Commission’s July 1993; April 1, 1993; November 1, Adjustment Clause provisions 26, 1995, Order on Remand, in which it 1991 established by the Commission in Order reversed its prior incremental rate Pro Forma Sheet No. 269—November 1, No. 472, issued on May 29, 1987. The decisions. 1993; April 1, 1993; November 1, new ACA rate to be charged by Blue Any person desiring to be heard or to 1991 Lake will be effective October 1, 1995. protest the above referenced tariff sheets Pro Forma Sheet No. 294—November 1, Blue Lake states that copies of the should file a motion to intervene or 1993; April 1, 1993; November 1, filing were served upon the company’s protest with the Federal Energy 1991 jurisdictional customer. Regulatory Commission, 825 North Pro Forma Sheet No. 603—November 1, Any person desiring to be heard or to Capitol Street, NE., Washington, DC 1993; April 1, 1993; November 1, protest said filing should file a motion 20426 in accordance with §§ 385.214 1991 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46267 Pro Forma Sheet No. 604—November 1, Volume No. 1, the following tariff Commission’s special permission to 1993; April 1, 1993; November 1, sheets, with a proposed effective date of withdraw the filing in Docket No. RP95– 1991 October 1, 1995: 295–000 which would have permitted Pro Forma Sheet No. 865—April 1, Ninth Revised Sheet No. 4A the recovery of Koch Gateway’s Account 1993; November 1, 1991 Ninth Revised Sheet No. 5A No. 191 costs through a direct bill Pro Forma Sheet No. 866—April 1, Ninth Revised Sheet No. 6A mechanism. 1993; November 1, 1991 Jupiter Energy states that the filed Koch Gateway states that the above Pro Forma Sheet No. 905—April 1, tariff reflect revision, pursuant to tariff sheets are being submitted in order 1993; November 1, 1991 Section 154.38(d)(6) of the to permit recovery of pre-July 31, 1991 Pro Forma Sheet No. 906—April 1, Commission’s Regulations, of Jupiter costs in its Account No. 191 through 1993; November 1, 1991 Energy’s Annual Charge Adjustment prospective surcharges on Pro Forma Sheet No. 1008—April 1, transportation service under Rate 1993; November 1, 1991 (‘‘ACA’’) surcharge. The new surcharge rate is 0.23¢ Mcf. Schedules FTS, FTS–SCO, NNS, NNS– Original Volume No. 3 Jupiter Energy states that copies of the SCO and ITS. Koch Gateway proposes filing have been served on the that ninety percent of the stranded Pro Forma Sheet No. 2—October 1, Account No. 191 costs be allocated to 1993; April 1, 1993; January 1, 1993; Company’s jurisdictional customers. Any person desiring to be heard or to firm service with the remaining ten October 1, 1992; January 1, 1992; percent being allocated to interruptible November 1, 1991 protest said filing should file a motion to intervene or protest with the Federal transportation service. Pro Forma Sheet No. 3—October 1, Koch Gateway also states that copies 1993; April 1, 1993; January 1, 1993; Energy Regulatory Commission, 825 North Capitol Street, NE., Washington, of its filing are being served upon Koch October 1, 1992; May 1, 1992; January Gateway customers, state commissions, 1, 1992; November 1, 1991 DC 20426, in accordance with Rules 211 and 214 of the Commission’s Rules of all intervenors in RP95–295–000 and In addition, Great Lakes included its Practice and Procedure. All such other interested parties. Refund and Surcharge Plan, and motions or protests should be filed on Any person desiring to be heard or to supporting schedules, in its filing. or before September 7, 1995. Protests protest said filing should file a motion Any person desiring to be heard or to will be considered by the Commission to intervene or protest with the Federal protest the above referenced pro forma in determining the appropriate action to Energy Regulatory Commission, 825 tariff sheets should file a motion to be taken, but will not serve to make North Capitol Street, NE., Washington, intervene or protest with the Federal protestants parties to the proceeding. DC 20426, in accordance with Sections Energy Regulatory Commission, 825 Any person wishing to become a party 385.214 and 385.211 of the North Capitol Street, NE., Washington, must file a motion to intervene. Copies Commission’s regulations. All such DC 20426, in accordance with of Jupiter Energy’s filing are on file with motions or protests should be filed on §§ 385.214 and 385.211 of the the Commission and are available for or before September 7, 1995. Protests Commission’s Rules and Regulations. public inspection. will be considered by the Commission All such motions or protests should be Lois D. Cashell, in determining appropriate action to be filed on or before September 29, 1995. taken, but will not serve to make Secretary. Protests will be considered by the protestants parties to the proceedings. Commission in determining the FR Doc. 95–21988 Filed 9–5–95; 8:45 am] Any person wishing to become a party appropriate action to be taken, but will BILLING CODE 6717±01±M must file a motion to intervene. Copies not serve to make protestants parties to of this filing are on file with the the proceeding. Any person wishing to [Docket No. RP95±421±000] Commission and are available for public become a party must file a motion to inspection. intervene. Copies of this filing are on Koch Gateway Pipeline Company; Lois D. Cashell, file with the Commission and are Notice of Proposed Changes in FERC Secretary. available for public inspection in the Gas Tariff [FR Doc. 95–21989 Filed 9–5–95; 8:45 am] Public Reference Room. August 30, 1995. BILLING CODE 6717±01±M Great Lakes states that copies of the Take notice that on August 24, 1995, filing were served upon all parties to Koch Gateway Pipeline Company (Koch these proceedings, each of Great Lakes [Docket No. CP95±714±000] Gateway), tendered for filing to become customers, and the Public Service part of its FERC Gas Tariff, Fifth Revised Commissions of the States of Michigan, NorAm Gas Transmission Company; Volume No. 1, the following tariff Minnesota and Wisconsin. Notice of Request Under Blanket sheets, to be effective October 1, 1995: Authorization Lois D. Cashell, Sixth Revised Sheet No. 20 Secretary. August 30, 1995. Sixth Revised Sheet No. 21 [FR Doc. 95–22050 Filed 9–5–95; 8:45 am] Sixth Revised Sheet No. 22 Take notice that on August 28, 1995, BILLING CODE 6717±01±M Sixth Revised Sheet No. 24 NorAm Gas Transmission Company Second Revised Sheet No. 3904 (Applicant), 525 Milam Street, P.O. Box First Revised Sheet No. 3905 21734, Shreveport, Louisiana 71151 [Docket No. TM96±1±65±000] Original Sheet No. 3906 filed in Docket No. CP95–714–000 for Jupiter Energy Corporation; Notice of Koch Gateway states that this filing is approval under §§ 157.205 and 157.212 Proposed Changes in FERC Gas Tariff submitted as a limited application of the Commission’s Regulations to pursuant to Section 4 of the Natural Gas construct and operate, delivery points August 30, 1995. Act, 15 U.S.C. 717c (1988), and the for Arkla, a division of NorAm Energy Take notice that on August 23, 1995, Rules and Regulations of the Federal Corp. (Arkla), all as more fully set forth Jupiter Energy Corporation (Jupiter Energy Regulatory Commission. in the request which is on file with the Energy) tendered for filing to become Koch Gateway states that on August 4, Commission and open to public part of its FERC Gas Tariff, Original 1995, it filed an application for the inspection. 46268 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Applicant proposes to construct and 825 North Capitol Street, NE., [Docket No. TM96±1±111±000] operate the following facilities for Washington, DC 20426, in accordance deliveries of natural gas to Arkla, to with Rule 211 of the Commission’s Steuben Gas Storage Company; Notice serve its new domestic and commercial Rules of Practice and Procedure (18 CFR of Proposed Changes in FERC Gas customers: (a) One 1-inch delivery tap 385.211). All such protests must be filed Tariff Annual Charges Adjustment and first cut regulatory on Applicant’s on or before September 7, 1995. Protests Clause Provisions Line T to serve Metropolitan Life will be considered by the Commission August 30, 1995. Insurance Company in Philips County, in determining the appropriate Take notice that on August 25, 1995, Arkansas; (b) one 1-inch delivery tap proceeding. Copies of this filing are on Steuben Gas Storage Company (Steuben) and first-cut regulator on Applicant’s file with the Commission and are tendered for filing as part of its FERC Line T to serve Ray Fuller Farms in available for public inspection. Gas Tariff, Original Volume No. 2, Third Monroe County, Arkansas. The Lois D. Cashell, Revised Sheet No. 1(A), with a proposed estimated annual volumes through these Secretary. effective date of October 1, 1995. facilities are 2,550 MMBtu annually and [FR Doc. 95–21991 Filed 9–5–95; 8:45 am] Steuben states that Third Revised 48 MMBtu on a peak day. The cost of BILLING CODE 6717±01±M Sheet No. 1(A) reflects the new ACA construction is $4,598.00, which will be rate to be charged per the Annual reimbursed by Arkla. Charge Adjustment clause provisions Any person or the Commission’s staff established by the Commission in Order [Docket No. TM96±1±41±000] may, within 45 days after issuance of No. 472, issued on May 29, 1987. The the instant notice by the Commission, Paiute Pipeline Company; Notice of new ACA rate to be charged by Steuben file pursuant to Rule 214 of the Change in Annual Charge Adjustment will be effective October 1, 1995. Commission’s Procedural Rules (18 CFR Steuben states that copies of the filing 385.214) a motion to intervene or notice August 30, 1995. were served upon the company’s of intervention and pursuant to Take notice that on August 24, 1995, Jurisdictional customers. § 157.205 of the Regulations under the Paiute Pipeline Company (Paiute) Any person desiring to be heard or to Natural Gas Act (18 CFR 157.205) a tendered for filing and acceptance the protest said filing should file a motion protest to the request. If no protest is following tariff sheet to be a part of its to intervene or protest with the Federal filed within the time allowed therefore, FERC Gas Tariff: Energy Regulatory Commission, 825 the proposed activity shall be deemed to North Capitol Street, NE., Washington, be authorized effective the day after the Second Revised Volume No. 1–A DC 20426, in accordance with 18 CFR time allowed for filing a protest. If a Second Revised Sheet No. 10 385.214 and 385.211 of the protest is filed and not withdrawn Paiute states that the purpose of said Commission’s Rules and Regulations. within 30 days after the time allowed filing is to revise its annual charge All such motions or protests should be for filing a protest, the instant request adjustment surcharge in order to recover filed on or before September 7, 1995. shall be treated as an application for the Commission’s annual charges for the Protests will be considered by the authorization pursuant to Section 7 of 1995 fiscal year. Commission in determining the the Natural Gas Act. appropriate action to be taken, but will Paiute has requested that the not serve to make protestants parties to Lois D. Cashell, Commission accept its tariff sheet to Secretary. the proceeding. Any person wishing to become effective on October 1, 1995. become a party must file a motion to [FR Doc. 95–21990 Filed 9–5–95; 8:45 am] Paiute states that copies of this filing BILLING CODE 6717±01±M intervene. Copies of this filing are on have been mailed to all jurisdictional file with the Commission and are customers and affected state regulatory available for public inspection in the [Docket No. RP95±185±006] commissions. Public Reference Room. Any person desiring to be heard or to Lois D. Cashell, Northern Natural Gas Company; Notice protest said filing should file a motion Secretary. of Petition To Place Tariff Sheets Into to intervene or a protest with the [FR Doc. 95–21993 Filed 9–5–95; 8:45 am] Effect Federal Energy Regulatory Commission, 825 North Capitol Street, NE., BILLING CODE 6717±01±M August 30, 1995. Washington, DC 20426, in accordance Take notice that on August 25, 1995, with Rules 211 and 214 of the [Docket No. CP95±699±000] Northern Natural Gas Company Commission’s Rules of Practice and (Northern) filed a motion to place the Procedure (18 CFR 385.211, 385.214). Trailblazer Pipeline Company; Notice following tariff sheet into effect on All such motions or protests should be of Request Under Blanket September 1, 1995: filed on or before September 7, 1995. Authorization Substitute Twenty-First Revised Sheet No. 53 Protests will be considered by the August 30, 1995. Northern states that the filing moves Commission in determining the Take notice that on August 21, 1995, into effect as of September 1, 1995, the appropriate action to be taken, but will Trailblazer Pipeline Company gathering rate previously accepted and not serve to make protestants parties to (Trailblazer), 701 East 22nd Street, suspended by the Commission’s March the proceedings. Any person wishing to Lombard, Illinois 60148, filed in Docket 30, 1995, suspension order. become a party must file a motion to No. CP95–699–000 a request pursuant to Northern further states that copies of intervene. Copies of this filing are on Sections 157.205 and 157.212 of the the motion have been mailed to each of file with the Commission and are Commission’s Regulations under the its customers and interested State available for inspection. Natural Gas Act (18 CFR 157.205, Commissions. Lois D. Cashell, 157.212) for authorization to construct Any person desiring to protest said Secretary. and operate a new natural gas delivery filing should file a protest with the [FR Doc. 95–21992 Filed 9–5–95; 8:45 am] point under Trailblazer’s blanket Federal Energy Regulatory Commission, BILLING CODE 6717±01±M certificate issued in Docket No. CP82– Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46269 497–000 pursuant to Section 7 of the Young requested that the new $0.0023 are on file with the Commission and are Natural Gas Act, all as more fully set cent per Mcf ACA charge be effective available for public inspection. forth in the request that is on file with October 1, 1995. Lois D. Cashell, Young states that copies of this filing the Commission and open to public Secretary. inspection. have been served on Young’s [FR Doc. 95–21995 Filed 9–5–95; 8:45 am] Trailblazer proposes to construct and jurisdictional customers and public operate a new delivery point located in bodies. BILLING CODE 6717±01±M Gage County, Nebraska for Farmland Any person desiring to be heard or to Industries, Inc. (Farmland). Trailblazer protest said filing should file a motion states that it would deliver, on an to intervene or a protest with the [Docket No. TM96±1±76±000] interruptible basis, up to 30,000 Mcf of Federal Energy Regulatory Commission, gas per day to Farmland for use as 825 North Capitol Street, NE., Wyoming Interstate Company, Ltd.; feedstock. Trailblazer estimates that the Washington, DC 20426, in accordance Notice of Filing new facilities, consisting of a 4-inch with Sections 385.211 and 385.214 of sidetap, a 6-inch meter and the Commission’s Rules of Practice and August 30, 1995. approximately 3,500 feet of 6-inch Procedure (18 CFR Sections 385.214 and Take notice that on August 25, 1995, pipeline, would cost $222,000. 385.211). All such petitions or protests Wyoming Interstate Company, Ltd. Trailblazer asserts that it has sufficient should be filed on or before September (WIC) submitted for filing to become capacity to provide the proposed 7, 1995. Protests will be considered by part of its FERC Gas Tariff, First Revised services without detriment or the Commission in determining the Volume No. 1, Third Revised Sheet No. disadvantage to its peak day and annual appropriate action to be taken, but will 5, and to become part of its FERC Gas delivery capacity. not serve to make protestants parties to Tariff, Second Revised Volume No. 2, Any person or the Commission’s staff the proceeding. Any person wishing to Third Revised Sheet No. 4 and Fourth may, within 45 days after issuance of become a party must file a motion to Revised Sheet No. 5 to become effective the instant notice by the Commission, intervene. Copies of this filing are on October 1, 1995. file pursuant to Rule 214 of the file with the Commission and are Commission’s Procedural Rules (18 CFR available for public inspection in the WIC states that the tariff sheets reflect 385.214) a motion to intervene or notice Public Reference Room. a decrease of $0.0001 per Mcf in the of intervention and pursuant to Section Lois D. Cashell, ACA adjustment charge, resulting in a 157.205 of the Regulations under the Secretary. new ACA rate of $0.0023 per Mcf based Natural Gas Act (18 CFR 157.205) a [FR Doc. 95–21997 Filed 9–5–95; 8:45 am] on WIC’s 1995 ACA billing. protest to the request. If no protest is BILLING CODE 6717±01±M WIC requested that the new $0.0023 filed within the time allowed therefor, cent per Mcf ACA charge be effective the proposed activity shall be deemed to October 1, 1995. be authorized effective the date after the [Docket No. RP92±236±005] WIC states that copies of this filing time allowed for filing a protest. If a Williston Basin Interstate Pipeline protest is filed and not withdrawn have been served on WIC’s Company; Notice of Compliance Filing within 30 days after the time allowed jurisdictional customers and public bodies. for filing a protest, the instant request August 30, 1995. shall be treated as an application for Take notice that on August 24, 1995, Any person desiring to be heard or to authorization pursuant to Section 7 of Williston Basin Interstate Pipeline protest said filing should file a motion the Natural Gas Act. Company (Williston Basin), tendered for to intervene or a protest with the Lois D. Cashell, filing, under protest, certain revised Federal Energy Regulatory Commission, Secretary. tariff sheets to First and Second Revised 825 North Capitol Street, NE., [FR Doc. 95–21994 Filed 9–5–95; 8:45 am] Volume Nos. 1 and Original Volume Washington, DC 20426, in accordance BILLING CODE 6717±01±M Nos. 1–A, 1–B and 2 of its FERC Gas with Sections 385.211 and 385.214 of Tariff. the Commission’s Rules of Practice and Williston Basin states that the revised Procedure (18 CFR 385.214 and [Docket No. TM96±1±119±000] tariff sheets were filed in compliance 385.211). All such petitions or protests with the Commission’s ‘‘Order should be filed on or before September Young Gas Storage Company, Ltd.; Affirming in part and Reversing in Part 7, 1995. Protests will be considered by Notice of Proposed Changes in FERC Initial Decision’’ issued July 25, 1995 in the Commission in determining the Gas Tariff Annual Charges Adjustment Docket Nos. RP9 2–236–000, et al. as appropriate action to be taken, but will Clause Provisions more fully described in the filing. not serve to make protestants parties to Any person desiring to protest said the proceeding. Any person wishing to August 30, 1995. filing should file a protest with the become a party must file a motion to Take notice that on August 25, 1995, Federal Energy Regulatory Commission, intervene. Copies of this filing are on Young Gas Storage Company, Ltd. 825 North Capitol Street, NE., file with the Commission and are (Young) submitted for filing to become Washington, DC 20426, in accordance available for public inspection in the part of its FERC Gas Tariff, Original with Rule 211 of the Commission’s Volume No. 1, First Revised Sheet No. Rules of Practice and Procedure (18 CFR Pubic Reference Room. 5, with a proposed effective date of 385.211). All such protests should be Lois D. Cashell, October 1, 1995. filed on or before September 7, 1995. Secretary. Young states that the tariff sheets Protest will be considered by the [FR Doc. 95–21996 Filed 9–5–95; 8:45 am] reflect a decrease of $0.0001 per Mcf in Commission in determining the BILLING CODE 6717±01±M the ACA adjustment charge, resulting in appropriate action to be taken, but will a new ACA rate of $0.0023 per Mcf not service to make protestants parties based on Young’s 1995 ACA billing. to the proceeding. Copies of the filing 46270 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices [Docket No. EG95±87±000, et al.] (SWEPCO), provided additional Comment date: September 11, 1995, information in this docket. in accordance with Standard Paragraph Entergy Power Marketing Corporation, SWEPCO served copies of the filing E at the end of this notice. et al.; Electric Rate and Corporate on all parties to the proceeding and the Regulation Filings Public Utility Commission of Texas. 7. American Electric Power Service Corporation August 28, 1995. Copies are also available for inspection at SWEPCO’s offices in Shreveport, [Docket No. ER95–1596–000] Take notice that the following filings Louisiana. have been made with the Commission: Take notice that on August 21, 1995, Comment date: September 11, 1995, the American Electric Power Service 1. Entergy Power Marketing in accordance with Standard Paragraph Corporation (AEPSC), tendered for Corporation E at the end of this notice. filing, as an Initial Rate Schedule, a [Docket No. EG95–87–000] 4. New England Power Company Power Sales Tariff. The Power Sales Tariff and the Take notice that on August 23, 1995, [Docket No. ER95–1360–000] associated service schedule provides for Entergy Power Marketing Corporation Take notice that on August 23, 1995, the sale of operating capacity and (EPMC), 900 S. Shackleford Road, Suite New England Power Company filed an energy that the AEP Companies are 210, Little Rock, Arkansas 72211, filed amendment clarifying its earlier willing to make available, from AEP with the Federal Energy Regulatory submission in this docket. System resources on a firm or non-firm Commission, an application for Comment date: September 11, 1995, basis. AEPSC requests an effective date determination of exempt wholesale in accordance with Standard Paragraph of September 1, 1995. generator (EWG) status pursuant to Part E at the end of this notice. A copy of the filing was served upon 365 of the Commission’s Regulations. 5. Southern California Edison Company the Eligible Entities listed in Appendix EPMC is a Delaware corporation that II to the filing and the state regulatory [Docket No. ER95–1489–000] will be engaged directly, or indirectly commissions of Indiana, Kentucky, through one or more affiliates as defined Take notice that on August 23, 1995, Michigan, Ohio, Tennessee, Virginia in Section 2(a)(11)(B) of PUHCA, and Southern California Edison Company and West Virginia. exclusively in the business of owning or (Edison), tendered for filing Comment date: September 11, 1995, operating, or both owning and supplements to its initial filing in the in accordance with Standard Paragraph operating, all or part of one or more above docket. The supplements amend E at the end of this notice. eligible facilities and selling electric the rate to be effective June 1, 1995 for energy at wholesale. the Edison-Riverside Washington Water 8. New England Power Company EPMC intends to own, control or hold Power Firm Transmission Service [Docket No. ER95–1597–000] Agreement between Edison and the City with the power to vote at least 5% of the Take notice that on August 21, 1995, voting securities of Entergy Power of Riverside, correct the losses stated for the Edison-IID Firm Transmission New England Power Company (NEP), Development Corporation (EPDC). The tendered for filing an Agreement with Commission previously has determined Service Agreement between Edison and Imperial Irrigation District, and correct Pepperell Power Associates Limited that EPDC is an EWG. EPDC owns (i) Partnership (Pepperell) regarding the 100% of Entergy Richmond Power a typographical error in the losses shown for the Edison-AEPCO Firm disconnection of the interconnection of Corporation (Entergy Richmond) and (ii) Pepperell’s 40 megawatt cogeneration interests in a number of foreign EWGs. Transmission Service Agreement between Edison and the Arizona facility with NEP’s transmission system. Entergy Richmond is an EWG and owns Comment date: September 11, 1995, and operates an eligible facility Electric Power Cooperative. Copies of this filing were served upon in accordance with Standard Paragraph consisting of a 250 MW electric E at the end of this notice. generating facility that is located in the Public Utilities Commission of the Richmond, Virginia. State of California and all interested 9. Kentucky Utilities Company parties. Comment date: September 11, 1995, Comment date: September 11, 1995, [Docket No. ER95–1599–000] in accordance with Standard Paragraph in accordance with Standard Paragraph Take notice that on August 21, 1995, E at the end of this notice. The E at the end of this notice. Kentucky Utilities Company tendered Commission will limit its consideration for filing an executed Service of comments to those that concern the 6. Illinova Power Marketing, Inc. Agreement for Power Services with CNG adequacy or accuracy of the application. [Docket No. ER95–1577–000] Power Services Corporation. 2. Rig Gas Inc. Take notice that on August 17, 1995, Comment date: September 11, 1995, Illinova Power Marketing, Inc. (IPMI) in accordance with Standard Paragraph [Docket No. ER95–480–002] tendered for filing a letter from the E at the end of this notice. Take notice that on August 24, 1995, Executive Committee of the Western 10. Houston Lighting & Power Company Rig Gas Inc. (Rig) filed certain Systems Power Pool (WSPP) approving information as required by the IPMI’s application for membership in [Docket No. ER95–1605–000] Commission’s March 16, 1995, letter the WSPP. IPMI requests it be permitted Take notice that on August 21, 1995, order in Docket No. ER95–480–000. to become a member of the WSPP. In Houston Lighting & Power Company Copies of Rig’s informational filing are order to receive the benefits of pool (HL&P) tendered for filing three on file with the Commission and are membership, IPMI requests waiver of executed transmission service available for public inspection. the Commission’s prior notice agreements (TSA) and LG&E Power 3. Southwestern Electric Power requirement to allow its WSPP Marketing, Inc. (LG&E) for Economy Company membership to become effective August Energy Transmission Service under 15, 1995, but in no event later than 60 HL&P’s FERC Electric Tariff, Original [Docket No. ER95–1301–000] days from this filing. Volume No. 1, for Transmission Service Take notice that on August 24, 1995, A copy of the filing was served on To, From and Over Certain HVDC Southwestern Electric Power Company WSPP. Interconnections. The three TSAs Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46271 provide for the transmission of economy North American Energy Conservation, Tampa Electric proposes that the energy supplied, respectively, by South Inc., for delivery of non-firm wholesale agreements be made effective as of Texas Electric Cooperative, Inc. (STEC), electrical power and associated energy August 23, 1995, and therefore requests Air Liquide and The Dow Chemical output utilizing the PSE&G bulk power waiver of the Commission’s notice Company (Dow), and scheduled to and transmission system. requirement. over the East HVDC Interconnection. Comment date: September 11, 1995, Tampa Electric states that a copy of HL&P has requested effective dates of in accordance with Standard Paragraph the filing has been served on OUC and August 15, 1995 for the TSA covering E at the end of this notice. the Florida Public Service Commission. energy supplied by STEC, August 16, 14. Central Illinois Public Service Comment date: September 11, 1995, 1995 for the TSA covering energy Company in accordance with Standard Paragraph supplied by Air Liquide, and August 18, E at the end of this notice. [Docket No. ER95–1611–000] 1995 for the TSA covering energy 17. Acme POSDEF Partners, L.P. supplied by Dow. Take notice that on August 23, 1995, Copies of the filing were served on Central Illinois Public Service Company [Docket No. QF85–311–003] LG&E and the Public Utility (CIPS) submitted a Service Agreement, On August 14, 1995, Acme POSDEF Commission of Texas. dated September 1, 1995, establishing Partners, L.P. (Applicant) submitted for Comment date: September 11, 1995, Stand Energy Corporation as a customer filing an amendment to its filing in this in accordance with Standard Paragraph under the terms of CIPS’ Coordination docket. E at the end of this notice. Sales Tariff CST–1 (CST–1 Tariff). The amendment provides additional CIPS requests an effective date of information pertaining to the ownership 11. Rochester Gas and Electric September 1, 1995, for the service of its cogeneration facility. No Corporation agreement and, accordingly, seeks determination has been made that the [Docket No. ER95–1606–000] waiver of the Commission’s notice submittal constitutes a complete filing. Take notice that on August 22, 1995, requirements. Copies of this filing were Comment date: September 15, 1995, Rochester Gas and Electric Corporation served upon Stand Energy Corporation in accordance with Standard Paragraph (RG&E), tendered for filing a Service and the Illinois Commerce Commission. E at the end of this notice. Comment date: September 11, 1995, Agreement for acceptance by the in accordance with Standard Paragraph Standard Paragraph Federal Energy Regulatory Commission E at the end of this notice. (Commission) between RG&E and GPU E. Any person desiring to be heard or Service Corporation. The terms and 15. Central Power and Light Company to protest said filing should file a motion to intervene or protest with the conditions of service under this [Docket No. ER95–1612–000] Agreement are made pursuant to RG&E’s Federal Energy Regulatory Commission, Take notice that on August 23, 1995, FERC Electric Rate Schedule, Original 825 North Capitol Street, N.E., Central Power and Light Company (CPL) Volume 1 (Power Sales Tariff) accepted Washington, D.C. 20426, in accordance filed a one-time rate decrease to the with Rules 211 and 214 of the by the Commission in Docket No. ER94– Public Utilities Board of the City of 1279. RG&E also has requested waiver of Commission’s Rules of Practice and Brownsville, Texas, Kimble Electric Procedure (18 CFR 385.211 and 18 CFR the 60-day notice provisions pursuant to Cooperative, Inc., Magic Valley Electric 18 CFR 35.11. 385.214). All such motions or protests Cooperative, Inc., Madina Electric should be filed on or before the A copy of this filing has been served Cooperative, Inc., Robstown Utilities of on the Public Service Commission of the comment date. Protests will be the City of Robstown, Texas, and South considered by the Commission in State of New York. Texas Electric Cooperative, Inc. Comment date: September 11, 1995, determining the appropriate action to be CPL requests an effective date of taken, but will not serve to make in accordance with Standard Paragraph August 24, 1995, for the tariff sheets protestants parties to the proceeding. E at the end of this notice. implementing the one-time rate Any person wishing to become a party decrease and, accordingly, CPL seeks 12. Union Electric Company must file a motion to intervene. Copies waiver of the Commission’s notice of this filing are on file with the [Docket No. ER95–1607–000] requirements. CPL served copies of the Commission and are available for public Take notice that on August 22, 1995, filing on each of the affected customers, inspection. Union Electric Company (UE), tendered Rio Grande Electric Cooperative, Inc. for filing a Transmission Service and the Public Utility Commission of Lois D. Cashell, Agreement dated August 23, 1995 Texas. Secretary. between LG&E Power Marketing Inc. Comment date: September 11, 1995, [FR Doc. 95–21984 Filed 9–5–95; 8:45 am] (LPMI) and UE. UE asserts that the in accordance with Standard Paragraph BILLING CODE 6717±01±P purpose of the Agreement is to set out E at the end of this notice. specific rates, terms, and conditions for [Docket No. ER95±1614±000, et al.] transactions from UE to LPMI. 16. Tampa Electric Company Comment date: September 11, 1995, [Docket No. ER95–1613–000] Vantus Energy Corporation, et al.; in accordance with Standard Paragraph Take notice that on August 23, 1995, Electric Rate and Corporate Regulation E at the end of this notice. Tampa Electric Company (Tampa Filings 13. Public Service Electric and Gas Electric) tendered for filing three August 30, 1995. Company agreements with the Orlando Utilities Commission (OUC): (1) A Transmission Take notice that the following filings [Docket No. ER95–1610–000] Facilities Purchase and Sale Agreement; have been made with the Commission: Take notice that on August 23, 1995, (2) an Agreement to Coordinate 1. Vantus Energy Corporation Public Service Electric and Gas Construction of Interconnecting Company (PSE&G), tendered for filing Facilities; and (3) an Operating [Docket No. ER95–1614–000] an initial rate schedule to provide fully Agreement With Respect to Take notice that on August 23, 1995, interruptible transmission service to Interconnection. Vantus Energy Corporation (Vantus), 46272 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices tendered for filing an application for executed copy of the signatory page to Services, Inc. (Heartland) dated August waivers and blanket approvals under the WSPP Agreement. 3, 1995, Enron Power Marketing, Inc. regulations of the Commission and for A copy of the filing was served to the (Enron) dated August 14, 1995 and an order accepting its Electric Rate WSPP Executive Committee Chairman InterCoast Power Marketing Company Schedule FERC No. 1. Vantus is a and General Counsel. (InterCoast) dated August 14, 1995, wholly-owned, indirect subsidiary of Comment date: September 14, 1995, entered into pursuant to Section 5.2 of Pacific Gas and Electric Company. in accordance with Standard Paragraph MidAmerican’s Firm Point-to-Point Vantus intends to engage in electric E at the end of this notice. Transmission Service Tariff which was capacity and energy transactions as a accepted for filing by the Commission in 5. Georgia Power Company marketer. In these transactions Vantus Docket No. ER95–188–000. intends to charge market rates as [Docket No. ER95–1618–000] MidAmerican requests an effective mutually agreed to by Vantus and the Take notice that on August 24, 1995, date of August 3, 1995 for the purchaser. All other terms of the Georgia Power Company (Georgia Agreement with Heartland, August 14, transaction would also be determined Power), submitted for filing revised 1995 for the Agreement with Enron, and by negotiation between the parties. All tariff sheets to Rate Schedules ‘‘C’’ and August 14, 1995 for the Agreement with sales and purchases will be arms-length ‘‘D’’ to its Partial Requirements Tariff. InterCoast, and accordingly seeks a transactions. The purpose of this filing is to amend waiver of the Commission’s notice Comment date: September 14, 1995, energy rates contained in the foregoing requirement. MidAmerican has served a in accordance with Standard Paragraph tariff to reflect the energy-related costs copy of the filing on Heartland, Enron, E at the end of this notice. incurred by Georgia Power to ensure InterCoast, the Iowa Utilities Board, the compliance with the Phase I sulfur Illinois Commerce Commission and the 2. Entergy Power Marketing South Dakota Public Utilities Corporation dioxide emissions limitations of the Clean Air Act Amendment of 1990. Commission. [Docket No. ER95–1615–000] Comment date: September 14, 1995, Comment date: September 14, 1995, Take notice that on August 23, 1995, in accordance with Standard Paragraph in accordance with Standard Paragraph Entergy Power Marketing Corporation E at the end of this notice. E at the end of this notice. filed Rate Schedule No. 1, which would 6. MidAmerican Energy Company 8. PacifiCorp permit it to make sales of capacity and [Docket No. ER95–1621–000] energy at market-based rates, as more [Docket No. ER95–1619–000] Take notice that on August 24, 1995, fully described in the filing. Take notice that on August 24, 1995, PacifiCorp, tendered for filing in Comment date: September 14, 1995, MidAmerican Energy Company accordance with 18 CFR Part 35 of the in accordance with Standard Paragraph (MidAmerican) filed with the Commission’s Rules and Regulations, E at the end of this notice. Commission three Service Agreements Transmission Service Agreements with with Heartland Energy Services, Inc. 3. Coastal Electric Services Company Energy Resource Marketing, Inc. (ERM) (Heartland) dated August 3, 1995, Enron and Coastal Electric Services Company [Docket No. ER95–1616–000] Power Marketing, Inc. (Enron) dated (Coastal) under, PacifiCorp’s FERC Take notice that on August 23, 1995, August 14, 1995, and InterCoast Power Electric Tariff, Original Volume No. 5, Coastal Electric Services Company Marketing Company (InterCoast) dated Service Schedule TS–5. (CESC), tendered for filing its request August 14, 1995, entered into pursuant Copies of this filing were supplied to that the Commission recognize CESC as to Section 4.0 of MidAmerican’s Non- ERM, Coastal, the Washington Utilities a member of the Western Systems Power Firm Point-to-Point Transmission and Transportation Commission and the Pool (WSPP), amend the WSPP Service Tariff which was accepted for Public Utility Commission of Oregon. Agreement to include CESC, and, filing by the Commission in Docket No. A copy of this filing may be obtained pursuant to 18 CFR 35.3 and 35.11, ER95–188–000. from PacifiCorp’s Regulatory waive notice requirements for good MidAmerican requests an effective Administration Department’s Bulletin cause shown. CESC requests an effective date of August 3, 1995, for the Board System through a personal date of one day after filing for the Agreement with Heartland, August 14, computer by calling (503) 464–6122 proposed amendment. 1995 for the Agreement with Enron, and (9600 baud, 8 bits, no parity, 1 stop bit). Copies of the filing were served upon August 14, 1995, for the Agreement with Comment date: September 14, 1995, the WSPP Executive Committee. InterCoast, and accordingly seeks a in accordance with Standard Paragraph Comment date: September 14, 1995, waiver of the Commission’s notice E at the end of this notice. in accordance with Standard Paragraph requirement. MidAmerican has served a E at the end of this notice. copy of the filing on Heartland, Enron, Standard Paragraph InterCoast, the Iowa Utilities Board, the 4. Koch Power Services, Inc. E. Any person desiring to be heard or Illinois Commerce Commission and the to protest said filing should file a [Docket No. ER95–1617–000] South Dakota Public Utilities motion to intervene or protest with the Take notice that on August 24, 1995, Commission. Federal Energy Regulatory Commission, Koch Power Services, Inc. (KPSI), Comment date: September 14, 1995, 825 North Capitol Street, NE., tendered for filing with the Federal in accordance with Standard Paragraph Washington, DC 20426, in accordance Energy Regulatory Commission, E at the end of this notice. with Rules 211 and 214 of the pursuant to 18 CFR 35.13, a letter 7. MidAmerican Energy Company Commission’s Rules of Practice and requesting FERC approval of KPSI’s Procedure (18 CFR 385.211 and 18 CFR membership within the Western [Docket No. ER95–1620–000] 385.214). All such motions or protests Systems Power Pool (WSPP), a copy of Take notice that on August 24, 1995, should be filed on or before the a letter dated August 17, 1995, MidAmerican Energy Company comment date. Protests will be indicating that the WSPP Executive (MidAmerican) filed with the considered by the Commission in Committee approved KPSI’s WSPP Commission three Umbrella Service determining the appropriate action to be membership application and an Agreements with Heartland Energy taken, but will not serve to make Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46273 protestants parties to the proceeding. 1a. Type of Application: New Major WPSC proposes to: (1) Operate in a Any person wishing to become a party License. peaking mode but increase the must file a motion to intervene. Copies b. Project No.: 2522–002. minimum flow from 29 cfs to 150 cfs of this filing are on file with the c. Date Filed: December 18, 1991. year long; (2) place all of the shoreline Commission and are available for public d. Applicant: Wisconsin Public on this reservoir, from the high water inspection. Service Corporation (WPSC). mark back 400 feet, in an old growth Lois D. Cashell, e. Name of Project: Johnson Falls classification as well as the five miles of Project. Secretary. river shoreline downstream from the f. Location: On the Peshtigo River project; (3) work with the fishery [FR Doc. 95–22051 Filed 9–5–95; 8:45 am] (river mile 60) in Marinette County, BILLING CODE 6717±01±P resource agencies to attempt to establish Wisconsin. or enhance a population of both brown g. Filed Pursuant to: Federal Power trout and brook trout (4) monitor the [Project No. 2431±008 Michigan and Act, 16 U.S.C. §§ 791(a)-825(r). recreational pressure demands every 5 h. Applicant Contact: Mr. Edward Wisconsin] years. Newman, Director of Environmental m. Purpose of Project: Project power Wisconsin Electric Power Company; Services, Power Supply and would be utilized by the applicant for Notice of Availability of Final Engineering, Wisconsin Public Service sale to its customers. Environmental Assessment Corp., P.O. Box 19002, Green Bay, n. This notice also consists of the Wisconsin 54307, (414) 433–1294. August 30, 1995. i. FERC Contact: James Haimes at following standard paragraphs: A4 and In accordance with the National (202) 219–2780. D10. Environmental Policy Act of 1969 and j. Deadline Date: See standard o. Available Locations of Application: the Federal Energy Regulatory paragraph D10. A copy of the application is available for Commission’s (Commission) k. Status of Environmental Analysis: inspection and reproduction at the regulations, 18 CFR Part 380 (Order No. This application is ready for Commission’s Public Reference and 486, 52 FR 47897), the Office of environmental analysis at this time—see Files Maintenance Branch, located at Hydropower Licensing has reviewed the attached paragraph D10. 941 North Capitol Street, N.E., Room application for major new license for the l. Description of Project: The 3104, Washington, D.C. 20426, or by existing Brule Hydroelectric Project constructed Johnson Falls Project is a calling (202) 208–1371. A copy is also located on the Brule River in Iron peaking project that consists of the available for inspection and County, Michigan and Florence County, following: (1) A reservoir with a surface reproduction at Wisconsin Public Wisconsin, near Crystal Falls, area of 130.5 acres with a maximum Service Corporation’s office at 700 Wisconsin, and has prepared a final depth of 40 feet, and a volume of 2500 North Adams Street, Green Bay, Environmental Assessment (EA) for the acre-feet at elevation 814.0 feet NGVD; Wisconsin 54307–9002, (414) 433–1294. existing project. In the EA, the (2) two earth embankments with a 2- 2a. Type of Application: New Major Commission’s staff has analyzed the foot-thick concrete core wall and a License. potential environmental effects of the combined length of 188 feet; (3) an b. Project No.: 2525–004. existing project and has concluded that unregulated spillway section consisting c. Date filed: December 18, 1991. approval of the project, with appropriate of a concrete gravity overflow dam with d. Applicant: Wisconsin Public enhancement measures, would not crest length of 9 feet and crest elevation Service Corporation (WPSC). constitute a major Federal action 814.45; (4) a concrete gated spillway e. Name of Project: Caldron Falls significantly affecting the quality of the section 117-feet-long with (a) Project. human environment. conventional ogee overflow segment at f. Location: On the Peshtigo River On June 29, 1994, a draft EA was elevation 802.40; and (b) six 12-foot- (river mile 70) in Marinette County, issued and distributed to all parties, and high by 14-foot-wide radial gates; (5) a Wisconsin. comments were requested on the draft nonoverflow concrete gravity dam with g. Filed pursuant to: Federal Power EA to be filed within 45 days. All a vertical upstream face and crest Act, 16 USC §§ 791(a)–825(r). comments have been considered in this elevation of 818.0 feet; (6) three 4-foot- h. Applicant Contact: Mr. Edward final EA. square sluice gates, located in the Newman, Director of Environmental Copies of the final EA are available for nonoverflow dam; (7) a 66.5-foot-wide Services, Power Supply and review in the Public Reference Branch, power intake with six gates; and (8) a Engineering, Wisconsin Public Service Room 3104 of the Commission’s offices powerhouse consisting of (a) a 34-foot- Corp., P.O. Box 19002, Green Bay, at 941 North Capitol Street, NE., wide by 66.5-foot-long by 42-foot-high Wisconsin 54307, (414) 433–1294. Washington, DC 20426. concrete, steel, and brick structure, (b) i. FERC Contact: James Haimes at Lois D. Cashell, two identical 3-phase 60-cycle, Allis- (202) 219–2780. Secretary. Chalmers vertical shaft generators rated j. Deadline Date: See standard [FR Doc. 95–22003 Filed 9–5–95; 8:45 am] at 1,760 kW, directly connected to (c) paragraph D10. BILLING CODE 6717±01±M two Allis-Chalmers vertical shaft 2,500- k. Status of Environmental Analysis: horsepower turbines operating at 150 This application is ready for rpm. environmental analysis at this time—see [Project Nos. 2522±002, et al.] The existing license requires the attached paragraph D10. Hydroelectric Applications [Wisconsin Wisconsin Public Service Corporation l. Description of Project: The Public Service Corporation, et al.]; (WPSC) to operating in a peaking mode constructed Caldron Falls Project is a Notice of Applications and provide a minimum release of 29 peaking project that consists of the cubic feet per second (cfs). The following: (1) A reservoir with a surface Take notice that the following applicant may elect to operate the area of 1,180 acres, a maximum depth hydroelectric applications have been Project in a run-of-river mode when of 40 feet and a volume of 11,570 acre- filed with the Commission and are daily flows are projected to be less than feet at elevation 982.0 feet NGVD; (2) available for public inspection: 200 cfs for an extended period of time. two earth embankments with a 2-foot- 46274 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices thick concrete core wall and a combined c. Date filed: December 19, 1991. minimum flow of 200 cfs; (2) establish length of 1,250 feet; (3) an unregulated d. Applicant: Wisconsin Public an old growth/no cut area from the river spillway section consisting of a concrete Service Corporation (WPSC). shoreline back to the top of the slope of gravity overflow dam 121 feet long; (4) e. Name of Project: Sandstone Rapids the land that is oriented to the river; and a concrete gated spillway section 110 Project. (3) monitor the recreational pressure feet long with (a) conventional ogee f. Location: On the Peshtigo River demands every 5 years. overflow segment, and (b) six 12-foot- (river mile 50) in Marinette County, m. Purpose of Project: Project power high by 14 foot-wide radial gates; (5) a Wisconsin. would be utilized by the applicant for nonoverflow concrete gravity dam with g. Filed pursuant to: Federal Power sale to its customers. crest at elevation 986 and vertical Act, 16 USC §§ 791(a)–825(r). n. This notice also consists of the upstream face; (6) two 4-foot-square h. Applicant Contact: Mr. Edward following standard paragraphs: A4 and sluice gates, located in the nonoverflow Newman, Director of Environmental D10. dam; (7) a 7-foot-wide gated concrete Services, Power Supply and o. Available Locations of Application: trash sluice, located adjacent to the Engineering, Wisconsin Public Service A copy of the application is available for power intake; (8) a 52-foot-wide power Corp., P.O. Box 19002, Green Bay, inspection and reproduction at the intake with four 10.3-foot-high by 10.5- Wisconsin 54307, (414) 433–1294. Commission’s Public Reference and i. FERC Contact: James Haimes at foot-wide gates; (9) one 10-foot diameter Files Maintenance Branch, located at (202) 219–2780. penstock 210 feet long; (10) one 10-foot 941 North Capitol Street, N.E., Room j. Deadline Date: See standard diameter penstock 220 feet long; and 3104, Washington, D.C. 20426, or by paragraph D10. (11) a powerhouse consisting of (a) a 29- k. Status of Environmental Analysis: calling (202) 208–1371. A copy is also foot-wide by 76-foot-long by 35-foot- This application is ready for available for inspection and high steel and brick structure, and (b) environmental analysis at this time—see reproduction at Wisconsin Public two identical 3 phase, 60 cycle Allis- attached paragraph D10. Service Corporation’s office at 700 Chalmers vertical umbrella type l. Description of Project: The North Adams Street, Green Bay, generators rated at 3,200 kW directly constructed Sandstone Rapids Project is Wisconsin 54307–9002, (414) 433–1294. connected to (c) two Allis-Chalmers a peaking project that consists of the 4a. Type of Application: Subsequent type FV 4,650 horsepower vertical following: (1) A reservoir with a surface Minor License. turbines operating at 225 rpm. area of 150 acres with a maximum depth b. Project No.: 2560–001. The existing license requires of 39 feet, and a volume of 1,400 acre- c. Date Filed: December 19, 1991. Wisconsin Public Service Corporation feet at elevation 724.1 feet NGVD; (2) d. Applicant: Wisconsin Public (WPSC) to operate in a peaking mode two earth embankments with a 2-foot- Service Corporation (WPSC). and provide a minimum release of 23 thick concrete core wall and a combined e. Name of Project: Potato Rapids cubic feet per second (cfs). The length of 420 feet and crest elevation of Project. applicant may also elect to operate the 729.50; (3) an unregulated spillway f. Location: On the Peshtigo River Project in a run-of-river mode when section consisting of a concrete gravity (river mile 15) in Marinette County, daily flows are projected to be less than overflow dam with a crest length of 26 Wisconsin. 200 cfs for an extended period of time. feet at elevation 724.1; (4) a concrete g. Filed Pursuant to: Federal Power WPSC currently proposes to: (1) gated spillway section with (a) Act, 16 USC §§ 791(a)–825(r). Continue operating in a peaking mode; conventional ogee overflow crest at h. Applicant Contact: Mr. Edward (2) increase the minimum release flow elevation 712.1; and (b) six 12-foot-high Newman, Director of Environmental from 23 cfs to 50 cfs from June through by 14-feet-wide radial gates; (5) an 85.5- Services, Power Supply and March; (3) increase the minimum foot-long nonoverflow dam concrete Engineering, Wisconsin Public Service release flow to 350 cfs from April gravity structure with a vertical Corp., P.O. Box 19002, Green Bay, through May; and (4) monitor the upstream face and crest elevation Wisconsin 54307, (414) 433–1294. recreational pressure demands every 5 729.50; (6) two 4-foot-square sluice i. FERC Contact: James Haimes at years. gates, located in the nonoverflow dam; (202) 219–2780. m. Purpose of Project: Project power (7) a power intake with four gates; and j. Deadline Date: See standard would be utilized by the applicant for (8) a powerhouse consisting of (a) 41- paragraph D10. sale to its customers. foot-wide by 85.6-foot-long by 42-foot- k. Status of Environmental Analysis: n. This notice also consists of the high concrete and brick structure; (b) This application is ready for following standard paragraphs: A4 and two identical 3-phase 60-cycle, Allis- environmental analysis at this time—see D10. Chalmers vertical shaft generators rated attached paragraph D10. o. Available Locations of Application: at 1,920 kW directly connected to (c) l. Description of Project: The A copy of the application is available for two Allis-Chalmers vertical shaft 2,500- constructed Potato Rapids Project is a inspection and reproduction at the horsepower turbines operating at 150 run-of-river project that consists of the Commission’s Public Reference and rpm. following: (1) A reservoir with a surface Files Maintenance Branch, located at The existing license requires the area of 350 acres with a maximum depth 941 North Capitol Street, N.E., Room Wisconsin Public Service Corporation of 20 feet, and a volume at elevation 3104, Washington, D.C. 20426, or by (WPSC) to operate in a peaking mode 621.5 feet of 3,100 acre-feet; (2) Three calling (202) 208–1371. A copy is also and provide a minimum release of 31 earth dikes with a combined length of available for inspection and cubic feet per second (cfs). The 4,134 feet and a crest elevation of 625 reproduction at Wisconsin Public applicant may elect to operate the feet; (3) a concrete gated spillway Service Corporation’s office at 700 Project in a run-of-river mode when section with (a) 225-foot-long North Adams Street, Green Bay, daily flows are projected to be less than conventional concrete gravity section, Wisconsin 54307–9002, (414) 433–1294. 200 cfs for an extended period of time. (b) three 15-foot-high by 26-foot-wide 3a. Type of Application: New Major WPSC currently proposes to: (1) radial gates, and (c) four 6.5-foot-high License. Operate in a peaking mode but increase and 20-foot-wide radial gates; (4) a 217- b. Project No.: 2546–001. the minimum flow from 31 cfs to a foot-long nonoverflow concrete gravity Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46275 dam with a vertical upstream face and k. Status of Environmental Analysis: h. Applicant Contact: Mr. Edward crest elevation of 623.7; (5) a 8-foot- This application is ready for Newman, Director of Environmental wide trash sluiceway, located adjacent environmental analysis at this time—see Services, Power Supply and to the powerhouse; (6) a 56-foot-wide attached paragraph D10. Engineering, Wisconsin Public Service power intake with three gates; and (7) a l. Description of Project: The Corp., P.O. Box 19002, Green Bay, powerhouse consisting of (a) a 34-foot- constructed Peshtigo Project is a run-of- Wisconsin 54307, (414) 433–1294. wide by 56-foot-long by 31-foot-high river project that consists of the i. FERC Contact: James Haimes at concrete powerhouse; (b) one 3-phase, following: (1) A reservoir with a surface (202) 219–2780. area of 460 acres with a maximum depth 60-cycle Allis-Chalmers umbrella type j. Deadline Date: See standard of 15 feet and a volume of 4,600 acre- generator rated at 500 kW, directly paragraph D10. connected to (c) one Leffel vertical shaft feet at elevation 603.0 feet NGVD; (2) a 780-horsepower turbine operating at concrete spillway which consists of (a) k. Status of Environmental Analysis: 128.5 rpm, and (d) two 3-phase, 60- an ungated section with 61 foot-long This application is ready for cycle General Electric umbrella type crest at elevation 603.0, and (b) a gated environmental analysis at this time—see generators rated at 440 kW, directly section with crest at elevation 591 that attached paragraph D10. connected to (e) two S Morgan Smith includes six 12-foot-high by 14-foot- l. Description of Project: The vertical shaft 676-horsepower turbines wide radial gates; (3) a 96-foot-long constructed High Falls Project is a operating at 128.5 rpm. nonoverflow concrete gravity dam with peaking project that consists of the The existing license requires the a vertical upstream face and crest at following: (1) A reservoir with a surface Wisconsin Public Service Corporation elevation 605.75; (4) a 96-foot-wide area of 1,670 acres with a maximum (WPSC) to operate in a run-of-river power intake with eight gates; and (5) a depth of 54 feet, and a volume of 15,810 mode maintaining a target reservoir powerhouse consisting of (a) 41-foot- acre-feet at elevation 897.0 feet NGVD; level of 621.25 (NGVDS) ± 0.25 feet. wide by 96.5-foot-long by 28-foot-high (2) two earth embankments with a 2- WPSC currently proposes to: (1) concrete powerhouse, (b) one 3-phase, foot-thick-concrete core wall and a Continue operating in a run of river 60-cycle General Electric vertical shaft combined length of 4,025 feet; (3) an mode with no changes to the flow; and generator rated at 224 Kw directly unregulated spillway section consisting (2) monitor recreational pressure connected to (c) a 410-horsepower of a concrete gravity overflow dam 128 demands every 5 years. turbine operating at 109 rpm, and (d) feet long with crest at elevation 897.0; m. Purpose of Project: Project power one 3-phase, 60-cycle General Electric (4) a concrete gated spillway section 105 would be utilized by the applicant for vertical shaft generator rated at 360 Kw, feet long with (a) a conventional ogee sale to its customers. directly connected to (e) a Francis type overflow segment, and (b) six 12-foot- n. This notice also consists of the Z, 560-horsepower turbine operating at high by 14-foot-wide radial gates; (5) a following standard paragraphs: A4 and 100 rpm. nonoverflow concrete gravity dam with D10. WPSC currently proposes: (1) to a vertical upstream face and crest at o. Available Locations of Application: operate in a run-of-river mode with no elevation 902.0; (6) two non-operating 4- A copy of the application is available for changes to the flow; and (2) monitor foot-square sluice gates, located in the inspection and reproduction at the recreational pressure demands every 5 nonoverflow dam; (7) a 125-foot-wide Commission’s Public Reference and years. power intake with eight gates; (8) five 8- Files Maintenance Branch, located at m. Purpose of Project: Project power foot-diameter, 60-foot-long steel 941 North Capitol Street, N.E., Room would be utilized by the applicant for penstocks; (9) two 3-foot-diameter, 60- 3104, Washington, D.C. 20426, or by sale to its customers. foot-long steel penstocks; and (10) a calling (202) 208–1371. A copy is also n. This notice also consists of the powerhouse consisting of (a) an 83-foot- available for inspection and following standard paragraphs: A4 and wide by 136-foot-long by 36-foot-high reproduction at Wisconsin Public D10. structural steel and brick structure, and Service Corporation’s office at 700 o. Available Locations of Application: (b) five identical 3-phase, 60-cycle Allis- North Adams Street, Green Bay, A copy of the application is available for Chalmers horizontal shaft generators Wisconsin 54307–9002, (414) 433–1294. inspection and reproduction at the rated at 1,400 Kw directly connected to 5a. Type of Application: Subsequent Commission’s Public Reference and (c) five Allis-Chalmers horizontal shaft Minor License. Files Maintenance Branch, located at 1,900 horsepower turbines operating at b. Project No.: 2581–002. 941 North Capitol Street, N.E., Room 360 rpm. c. Date filed: December 19, 1991. 3104, Washington, D.C. 20426, or by The existing license requires d. Applicant: Wisconsin Public calling (202) 208–1371. A copy is also Wisconsin Public Service Corporation Service Corporation (WPSC). available for inspection and (WPSC) to operate in a peaking mode e. Name of Project: Peshtigo Project. reproduction at Wisconsin Public f. Location: On the Peshtigo River and provide a minimum release of 25 Service Corporation’s office at 700 cubic feet per second (cfs). The (river mile 12) in Marinette County, North Adams Street, Green Bay, Wisconsin. applicant may elect to operate the Wisconsin 54307–9002, (414) 433–1294. Project in a run-of-river mode when g. Filed Pursuant to: Federal Power 6a. Type of Application: New Major Act, 16 USC §§ 791(a)–825(r). daily flows are projected to be less than License. 200 cfs for an extended period of time. h. Applicant Contact: Mr. Edward b. Project No.: 2595–005. Newman, Director of Environmental c. Date Filed: December 18, 1991. WPSC currently proposes to: (1) Services, Power Supply and d. Applicant: Wisconsin Public Continue operating in a peaking mode, Engineering, Wisconsin Public Service Service Corporation (WPSC) but with no defined or set minimum Corp., P.O. Box 19002, Green Bay, e. Name of Project: High Falls Project. release flow (instead, WPSC proposes to Wisconsin 54307, (414) 433–1294. f. Location: On the Peshtigo River operate the project in coordination with i. FERC Contact: James Haimes at (river mile 62) in Marinette County, upstream and downstream projects to (202) 219–2780. Wisconsin. maintain target reservoir water levels); j. Deadline Date: See standard g. Filed Pursuant to: Federal Power and (2) monitor the recreational paragraph D10. Act, 16 USC §§ 791(a)–825(r) pressure demands every 5 years. 46276 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices m. Purpose of Project: Project power the project number of the application to Issued in Washington, DC, August 16, would be utilized by the applicant for which the filing responds; (3) furnish 1995. sale to its customers. the name, address, and telephone Clifford P. Tomaszewski, n. This notice also consists of the number of the person submitting the Director, Office of Natural Gas, Office of Fuels following standard paragraphs: A4 and filing; and (4) otherwise comply with Programs, Office of Fossil Energy. D10. the requirements of 18 CFR 385.2001 [FR Doc. 95–22053 Filed 9–5–95; 8:45 am] o. Available Locations of Application: through 385.2005. All comments, BILLING CODE 6450±01±P A copy of the application is available for recommendations, terms and conditions inspection and reproduction at the or prescriptions must set forth their Commission’s Public Reference and evidentiary basis and otherwise comply [FE Docket No. 95±55±NG] Files Maintenance Branch, located at with the requirements of 18 CFR 4.34(b). 941 North Capitol Street, NE., Room Canada Imperial Oil Limited; Order Agencies may obtain copies of the Granting Blanket Authorization To 3104, Washington, DC 20426, or by application directly from the applicant. calling (202) 208–1371. A copy is also Import and Export Natural Gas From Any of these documents must be filed and to Canada available for inspection and by providing the original and the reproduction at Wisconsin Public number of copies required by the AGENCY: Office of Fossil Energy, DOE. Service Corporation’s office at 700 Commission’s regulations to: The ACTION: Notice of order. North Adams Street, Green Bay, Secretary, Federal Energy Regulatory Wisconsin 54307–9002, (414) 433–1294. Commission, 825 North Capitol Street, SUMMARY: The Office of Fossil Energy of Standard Paragraphs NE., Washington, DC. 20426. An the Department of Energy gives notice additional copy must be sent to that it has issued an order granting A4. Development Application— Director, Division of Project Review, Canada Imperial Oil Limited blanket Public notice of the filing of the initial Office of Hydropower Licensing, authorization to import and export a development application, which has Federal Energy Regulatory Commission, combined total of up to 146 Bcf of already been given, established the due Room 1027, at the above address. Each natural gas from and to Canada. This date for filing competing applications or filing must be accompanied by proof of authorization is for a period of two years notices of intent. Under the service on all persons listed on the beginning on the date of the initial Commission’s regulations, any service list prepared by the Commission import or export, whichever occurs first, competing development application in this proceeding, in accordance with after October 31, 1995. must be filed in response to and in 18 CFR 4.34(b), and 385.2010. This order is available for inspection compliance with public notice of the and copying in the Office of Fuels Dated: August 30, 1995, Washington, DC. initial development application. No Programs Docket Room, 3F–056, competing applications or notices of Lois D. Cashell, Forrestal Building, 1000 Independence intent may be filed in response to this Secretary. Avenue, S.W., Washington, D.C. 20585, notice. [FR Doc. 95–22049 Filed 9–5–95; 8:45 am] (202) 586–9478. The docket room is D10. Filing and Service of Responsive BILLING CODE 6717±01±P open between the hours of 8:00 a.m. and Documents—The application is ready 4:30 p.m., Monday through Friday, for environmental analysis at this time, except Federal holidays. and the Commission is requesting Office of Fossil Energy comments, reply comments, Issued in Washington, DC, on August 16, 1995. recommendations, terms and [FE Docket No. 95±56±NG] conditions, and prescriptions. Clifford P. Tomaszewski, The Commission directs, pursuant to Brymore Energy Inc.; Order Granting Director, Office of Natural Gas, Office of Fuels section 4.34(b) of the regulations (see Blanket Authorization To Import and Programs, Office of Fossil Energy. Order No. 533 issued May 8, 1991, 56 Export Natural Gas From and to [FR Doc. 95–22052 Filed 9–5–95; 8:45 am] FR 23108, May 20, 1991) that all Canada BILLING CODE 6450±01±P comments, recommendations, terms and conditions and prescriptions concerning AGENCY: Office of Fossil Energy, DOE. the application be filed with the ENVIRONMENTAL PROTECTION ACTION: Notice of order. Commission within 60 days from the AGENCY issuance date of this notice (October 13, SUMMARY: [FRL±5292±5] 1995 for all projects). All reply The Office of Fossil Energy of the Department of Energy gives notice comments must be filed with the Air Pollution Control; Proposed Action Commission within 105 days from the that it has issued an order granting Brymore Energy Inc. authorization to on Clean Air Act Grant to the Santa date of this notice (November 27, 1995 Barbara Air Pollution Control District for all projects). import and export up to a combined Anyone may obtain an extension of total of 200 Bcf of natural gas from and AGENCY: Environmental Protection time for these deadlines from the to Canada over a two-year term Agency (EPA). beginning the date of first import or Commission only upon a showing of ACTION: Proposed determination with export delivery after August 13, 1995. good cause or extraordinary request for comments and notice of circumstances in accordance with 18 This order is available for inspection opportunity for public hearing. CFR 385.2008. and copying in the Office of Fuels All filings must (1) bear in all capital Programs Docket Room, 3F–056, SUMMARY: The U.S. EPA has made a letters the title ‘‘COMMENTS’’, ‘‘REPLY Forrestal Building, 1000 Independence proposed determination that a reduction COMMENTS’’, Avenue, S.W., Washington, D.C. 20585, in expenditures of non-Federal funds for ‘‘RECOMMENDATIONS,’’ ‘‘TERMS (202) 586–9478. The docket room is the Santa Barbara Air Pollution Control AND CONDITIONS,’’ or open between the hours of 8:00 a.m. and District (SBAPCD) in Goleta, California ‘‘PRESCRIPTIONS;’’ (2) set forth in the 4:30 p.m., Monday through Friday, is a result of a non-selective reduction heading the name of the applicant and except Federal holidays. in expenditures. This determination, Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46277 when final, will permit the SBAPCD to documentation which shows that its [FRL±5292±8] keep the financial assistance awarded to actual FY–94 MOE was $3,450,870. This it for FY–94 by EPA under section amount represents a shortfall of Meeting of the Ozone Transport Commission for the Northeast United 105(c) of the Clean Air Act (CAA). $736,219 from the MOE of $4,187,089 States DATES: Comments and/or requests for a for the preceding fiscal year (FY–93). In public hearing must be received by EPA order for the SBAPCD to be eligible to AGENCY: Environmental Protection at the address stated below by October keep its FY–94 grant, EPA must make a Agency. 6, 1995. determination under section 105(c)(2). ACTION: Notice of meeting. ADDRESSES: All comments and/or In FY–94, the SBAPCD was an requests for a public hearing should be SUMMARY: The United States operating department within the County mailed to: Laurie Amaro, Air Grants Environmental Protection Agency is of Santa Barbara under the direction of Section (A–2–3), Air and Toxics announcing its Fall meeting of the Division, U.S. EPA Region IX, 75 the County Board of Supervisors. The Ozone Transport Commission to be held Hawthorne Street, San Francisco, Board of Supervisors, during the fiscal on September 28, 1995. California 94105–3901; FAX (415)744– years of 91/92, 92/93 and 93/94, issued This meeting is for the Ozone 1076. policies directing county-wide budget Transport Commission to deal with FOR FURTHER INFORMATION CONTACT: cuts. These budget cuts were necessary appropriate matters within the transport Laurie Amaro, Air Grants Section (A–2– as a result of declining economic region, as provided for under the Clean 3), Air and Toxics Division, U.S. EPA conditions which caused the business Air Act Amendments of 1990. This Region IX, 75 Hawthorne Street, San community to curtail operations, meeting is not subject to the provisions Francisco, California 94105–3901 at resulting in a decline of county of the Federal Advisory Committee Act, (415) 744–1247. revenues from sources such as permit Public Law 92–463, as amended. SUPPLEMENTARY INFORMATION: Under the fees and taxes. The SBAPCD submitted DATES: The meeting will be held on authority of Section 105 of the CAA, documentation to EPA which shows September 28, 1995 from 10:00 a.m. to EPA provides financial assistance to the that over the last three years county- 4:00 p.m. SBAPCD, whose jurisdiction includes wide budget cuts became severe enough PLACE: The meeting will be held at: The Santa Barbara County in California, to in 93/94 that SBAPCD instituted a Inn at Essex, 70 Essex Way, Essex aid in the operation of its air pollution number of cost cutting measures Junction, VT 05452. control programs. In FY–94, EPA including: eliminating a position, FOR FURTHER INFORMATION CONTACT: awarded the SBAPCD $459,086, which freezing all hiring, and instituting new EPA: Doug Gutro, State Relations represented approximately 10% of the programs to reduce costs such as permit Coordinator, Region I, U.S. SBAPCD’s budget. streamlining and computer-assisted Environmental Protection Agency, John Section 105(c)(1) of the CAA, 42 permit processing. F. Kennedy Federal Building, Boston, U.S.C. 7405(c)(1), provides that ‘‘[n]o MA 02203, (617) 565–3383. agency shall receive any grant under The SBAPCD’s MOE reductions THE STATE CONTACT: this section during any fiscal year when resulted from a loss of county revenues, Host Agency: Dick its expenditures of non-Federal funds including permit fees, due to Valentinetti, Vermont Department of for recurrent expenditures for air circumstances beyond its control. The Environmental Conservation, 103 South pollution control programs will be less budget cuts instituted by the Board of Main Street, Building 3 South, than its expenditures were for such Supervisors, affected all county agencies Waterbury, VT 05671–0402, (802) 241– programs during the preceding fiscal equally. EPA proposes to determine that 3840. year. In order for [EPA] to award grants the SBAPCD’s lower FY–94 MOE level FOR DOCUMENTS AND PRESS INQUIRIES under this section in a timely manner meets the section 105(c)(2) criteria as CONTACT: Stephanie A. Cooper, Ozone each fiscal year, [EPA] shall compare an resulting from a non-selective reduction Transport Commission, 444 North agency’s prospective expenditure level of expenditures. Pursuant to 40 CFR Capitol Street, N.W., Suite 604, to that of its second preceding year.’’ 35.210, this determination will allow Washington, DC 20001, (202) 508–3840. EPA may still award financial assistance the SBAPCD to keep the funds received SUPPLEMENTARY INFORMATION: The Clean to an agency not meeting this from EPA for FY–94. Air Act Amendments of 1990 contain at Section 184 provisions for the ‘‘Control requirement, however, if EPA, ‘‘after This notice constitutes a request for of Interstate Ozone Air Pollution.’’ notice and opportunity for public public comment and an opportunity for hearing, determines that a reduction in Section 184(a) establishes an ozone public hearing as required by the Clean expenditures is attributable to a non- transport region comprised of the States Air Act. All written comments received selective reduction in the expenditures of Connecticut, Delaware, Maine, in the programs of all Executive branch by October 6, 1995 on this proposal will Maryland, Massachusetts, New agencies of the applicable unit of be considered. EPA will conduct a Hampshire, New Jersey, New York, Government.’’ CAA section 105(c)(2). public hearing on this proposal only if Pennsylvania, Rhode Island, Vermont, These statutory requirements are a written request for such is received by parts of Virginia and the District of repeated in EPA’s implementing EPA at the address above by October 6, Columbia. regulations at 40 CFR 35.210(a). 1995. If no written request for a hearing The Assistant Administrator for Air In its FY–94 section 105 application, is received, EPA will proceed to a final and Radiation of the Environmental which EPA reviewed in early 1994, the determination. Protection Agency convened the first SBAPCD projected expenditures of non- Dated: August 18, 1995. meeting of the commission in New York Federal funds for recurrent expenditures City on May 7, 1991. The purpose of the David P. Howekamp, (or its maintenance of effort (MOE)) of Transport Commission is to deal with $4,221,583. This MOE would have been Acting Regional Administrator. appropriate matters within the transport sufficient to meet the MOE requirements [FR Doc. 95–22058 Filed 9–5–95; 8:45 am] region. of the CAA. In January of 1995, BILLING CODE 6560±50±P The purpose of this notice is to however, the SBAPCD submitted to EPA announce that this Commission will 46278 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices meet on September 28, 1995. The the pesticide chemicals cases Chloro-m- file format or ASCII file format. All meeting will be held at the address xylenol, Dowicil CTAC, Fosamine comments and data in electronic form noted earlier in this notice. Ammonium, Piperalin, Polybutene, must be identified by the docket number Section 176A(b)(2) of the Clean Air Terbuthylazine, and (Z)-9-tricosene. It ‘‘OPP–34081’’. No Confidential Business Act Amendments of 1990 specifies that also begins a 60–day public comment Information (CBI) should be submitted the meetings of Transport Commissions period of these documents. The REDs through e-mail. Electronic comments on are not subject to the provisions of the are the Agency’s summary documents of this notice may be filed online at many Federal Advisory Committee Act. This its scientific assessments of the human Federal Depository Libraries. Additional meeting will be open to the public as health and environmental data bases for information on electronic submissions space permits. these pesticide chemicals. They also can be found in ‘‘SUPPLEMENTARY TYPE OF MEETING: Open. include the Agency’s regulatory INFORMATION’’ of this document. AGENDA: Copies of the final agenda will conclusions regarding the future Information submitted as a comment be available from Stephanie Cooper of registration of uses and products the OTC office, (202) 508–3840 on containing these chemicals as active in response to this Notice may be Wednesday, September 20, 1995. The ingredients. claimed confidential by marking any purpose of this meeting is to review air DATES: Written comments on these part or all of that information as CBI. quality needs within the Northeast and decisions must be submitted by October Information so marked will not be Mid-Atlantic States, consider the 6, 1995. disclosed except in accordance with development of market-based programs ADDRESSES: Three copies of comments procedures set forth in 40 CFR part 2. in the region, and to discuss stationary identified with the docket number A copy of the comment that does not and mobile source portions of ozone ‘‘OPP–34081’’ and the case number contain CBI must be submitted for State Implementation Plans. (noted below), should be submitted to: inclusion in the public docket. John DeVillars, By mail: OPP Pesticide Docket, Public Information not marked confidential Regional Administrator, EPA Region I. Response and Program Resources will be included in the public docket [FR Doc. 95–22057 Filed 9–5–95; 8:45 am] Branch, Field Operations Division without prior notice (including BILLING CODE 6560±50±P (7506C), Office of Pesticide Programs, comments and data submitted Environmental Protection Agency, 401 electronically). The public docket and M St., SW., Washington, DC 20460. In docket index, including printed paper [OPP±34081; FRL 4972±4] person, deliver comments to: OPP versions of electronic comments, which Pesticide Docket, Rm. 1132, Crystal Mall Certain Chemicals; Availability of does not include any information 2 (CM#2), 1921 Jefferson Davis claimed as CBI will be available for Reregistration Eligibility Decision Highway, Arlington, VA. Documents for Comment public inspection in Rm. 1132 at the Comments and data may also be address given above, from 8 a.m. to 4:30 AGENCY: Environmental Protection submitted electronically by sending p.m., Monday through Friday, excluding Agency (EPA). electronic mail (e-mail) to: opp- legal holidays. ACTION: Notice of availability and [email protected]. Electronic FOR FURTHER INFORMATION CONTACT: opening of public comment period. comments must be submitted as an ASCII file avoiding the use of special Technical questions on the above listed SUMMARY: This notice announces the characters and any form of encryption. RED documents should be directed to availability of the Reregistration Comments and data will also be the appropriate Chemical Review Eligibility Decision (RED) documents for accepted on disks in WordPerfect in 5.1 Managers: Chemical Name Case No. Chemical Review Manager Telephone No. E-mail Address Chloro-m-xylenol ...... 3045 ...... Yvonne Brown ...... (703) 308±8073 ...... [email protected] Dowicil CTAC ...... 3069 ...... Ron Kendall ...... (703) 308±8068 ...... [email protected] Fosamine Ammonium ...... 2355 ...... Kathy Davis ...... (703) 308±8156 ...... [email protected] Piperalin ...... 3114 ...... Barbara Briscoe ...... (703) 308±8177 ...... [email protected] Polybutene ...... 4076 ...... Mark Wilhite ...... (703) 308±8586 ...... [email protected] Terbuthylazine ...... 2645 ...... Virginia Dietrich ...... (703) 308±8157 ...... [email protected] (z)-9-Tricosene ...... 4112 ...... Tom Myers ...... (703) 308±8074 ...... [email protected] To request a copy of any of the above older pesticides, those initially Products containing other active listed RED documents, or a RED Fact registered prior to November 1, 1984, to ingredients will not be reregistered until Sheet, contact the OPP Pesticide Docket, make sure they meet current scientific those other active ingredients are Public Response and Program Resources and regulatory standards. If necessary, determined to be eligible for Branch, in Rm. 1132 at the address modifications to use patterns and reregistration. given above or call (703) 305–5805. application methods may be required to The reregistration program is being SUPPLEMENTARY INFORMATION: The reduce risks to appropriate levels. All conducted under Congressionally - Agency has issued Reregistration registrants of products containing one or mandated time frames, and EPA Eligibility Decision (RED) documents for more of the above listed active recognizes both the need to make timely the pesticide chemical cases listed ingredients have been sent the reregistration decisions and to involve above. Under the Federal Insecticide, appropriate RED documents and must the public. Therefore, EPA is issuing Fungicide, and Rodenticide Act, as respond to labeling requirements and these REDs as final documents with a amended in 1988, EPA is conducting a product specific data requirements (if 60–day comment period. Although the reregistration program to reevaluate applicable) within 8 months of receipt. 60–day public comment period does not Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46279 affect the registrant’s response due date, Foaming Fumigant (EPA Registration 6(f)(1). Zeneca indicated in the letter it is intended to provide an opportunity Number 10182–185). that the subject product has not been for public input and a mechanism for DATES: Written comments must be manufactured or distributed in many initiating any necessary amendments to submitted on or before October 6, 1995. years, therefore, Zeneca requests the RED. All comments will be carefully Comments and data may also be voluntary cancellation of the considered by the Agency. If any submitted electronically by sending registration for VAPAM-B Foaming comment significantly affects a RED, electronic mail (e-mail) to: opp- Fumigant. EPA intends to approve the EPA will amend the RED by publishing [email protected]. Electronic proposed voluntary cancellation unless the amendment in the Federal Register. comments must be submitted as an Zeneca withdraws or amends its request Electronic copies of the REDs and ASCII file avoiding the use of special before the end of the comment period. RED fact sheets can be downloaded characters and any form of encryption. III. Procedures for Withdrawal of from the Pesticide Special Review and Comments and data will also be Request Reregistration Information System at accepted on disks in WordPerfect in 5.1 If Zeneca chooses to withdraw its 703–308–7224, and also can be reached file format or ASCII file format. All on the Internet via fedworld.gov and request for cancellation, it must submit comments and data in electronic form such withdrawal in writing to EPA’s gopher server, gopher.epa.gov. must be identified by the docket number Electronic comments can be sent Wilhelmena Livingston, Special Review [OPP–64028]. No Confidential Business Branch, Special Review and directly to EPA at: Information (CBI) should be submitted [email protected] Reregistration Division (7508W), through e-mail. Electronic comments on Environmental Protection Agency, 401 this notice may be filed online at many M St., S.W., Washington, DC 20460, Electronic comments must be Federal Depository Libraries. Additional submitted as an ASCII file avoiding the postmarked on or before October 6, information on electronic submissions 1995. This written withdrawal of the use of special characters and any form can be found below in this document. of encryption. request for cancellation must include a FOR FURTHER INFORMATION CONTACT: By current CSF for the product, and a The official record for this notice, as mail: Wilhelmena Livingston, Special well as the public version, as described commitment to pay any reregistration or Review Branch, Special Review and registration maintenance fees due, as above will be kept in paper form. Reregistration Division (7508W), Accordingly, EPA will transfer all well as to fulfill any applicable Environmental Protection Agency, 401 unsatisfied data requirements. comments received electronically into M St., SW., Washington, DC 20460. printed, paper form as they are received Office location and telephone number: IV. Provisions for Existing Stocks and will place the paper copies in the Special Review Branch, 3rd floor, 2800 Under the authority of FIFRA section official record which will also include Crystal Drive, Arlington, VA. (703) 308– 6(a)(1), EPA will establish certain all comments submitted directly in 8025; e-mail: livingston limitations on the distribution and use writing. The official record is the paper [email protected]. of exiting stocks of VAPAM-B Foaming record maintained at the address in SUPPLEMENTARY INFORMATION: This Fumigant subject to any final ‘‘ADDRESSES’’ at the beginning of this Notice announces the receipt of a cancellation notice. EPA defines the document. request from Zeneca Ag Products to term ‘‘existing stock’’ to mean any cancel its registration of VAPAM-B quantity of VAPAM-B Foaming List of Subjects Foaming Fumigant. Fumigant in the United States on the Environmental protection. effective date of the cancellation of a I. Background Dated: August 29, 1995. registration granted by the Agency. Such Pursuant to section 6(b) of the Federal existing stocks include VAPAM-B Richard D. Schmitt, Insecticide, Fungicide, and Rodenticide Foaming Fumigant that have been Acting Director, Special Review and Act (FIFRA), the Administrator may formulated, packaged, and labeled and Reregistration Division, Office of Pesticide seek cancellation of a product if a are being held for shipment or release or Programs. pesticide or its labeling or other material have been shipped or released into [FR Doc. 95–22055 Filed 9–5–95; 8:45 am] required to be submitted for registration commerce. BILLING CODE 6560±50±F does not comply with the provisions of Consistent with the Agency’s this act. The Agency issued a letter to established policy for determinations Zeneca Ag Products (Zeneca) on March concerning existing stocks (56 FR [OPP±64028; FRL 4972±6] 15, 1995, notifying the registrant that a 29362), the Agency will permit Zeneca Confidential Statement of Formula to sell and distribute existing stocks of Notice of Receipt of Voluntary (CSF) was not on file with the Agency this product for up to 1 year after the Cancellation Request of Registration for VAPAM-B Foaming Fumigant, a effective date of this cancellation. Any of VAPAM-B Foaming Fumigant product that contains metam-sodium. sale or distribution of the product by Containing the Active Ingredient The letter indicated that an up-to-date Zeneca after that 1 year period will be Metam-Sodium CSF or a request for voluntary a violation of federal law. Any existing cancellation must be received by the stocks remaining in the possession of all AGENCY: Environmental Protection Agency within 30 days of receipt of the other persons after 1 year may continue Agency (EPA). March 15, 1995 letter. to be sold, distributed, and used until ACTION such existing stocks are exhausted. : Notice. II. Request for Voluntary Cancellation SUMMARY: This Notice, issued pursuant On March 28, 1995, Zeneca Ag V. Comments to section 6(f)(1) of the Federal Products submitted a letter to EPA Persons interested in commenting on Insecticide, Fungicide, and Rodenticide requesting voluntary cancellation of the the proposed cancellation are invited to Act (FIFRA), announces EPA’s receipt of registration for VAPAM-B Foaming submit their written comments on or a request from Zeneca Ag Products to Fumigant (EPA registration number before October 6, 1995 to the address cancel the registration for VAPAM-B 10182–185), pursuant to FIFRA section given above. 46280 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices VI. Public Docket TME–95–10. The test marketing within the time period and restrictions A record has been established for this conditions are described below. specified below, will not present an notice under docket number ‘‘[OPP– DATES: This notice becomes effective unreasonable risk of injury to human 64028]’’ (including comments and data August 28, 1995. Written comments will health or the environment. Production submitted electronically as described be received until September 21, 1995. volume, use, and the number of below). A public version of this record, ADDRESSES: Written comments, customers must not exceed that including printed, paper versions of identified by the docket number specified in the application. All other electronic comments, which does not [OPPTS–59348] and the specific TME conditions and restrictions described in include any information claimed as CBI, number should be sent to: TSCA Non- the application and in this notice must is available for inspection from 8 a.m. to Confidential Information Center (NCIC), be met. 4:30 p.m., Monday through Friday, Office of Pollution Prevention and Advance notice of receipt of the excluding legal holidays. The public Toxics, Environmental Protection application was not published. record is located in Room 1132 of the Agency, Rm. NEB–607 (7407), 401 M Therefore, an opportunity to submit Public Response and Program Resources St., SW., Washington, D.C. 20460, (202) comments is being offered at this time. Branch, Field Operations Division 554–1404, TDD (202) 554–0551. EPA may modify or revoke the test (7506C), Office of Pesticide Programs, Comments and data may also be marketing exemption if comments are Environmental Protection Agency, submitted electronically by sending received which cast significant doubt on Crystal Mall #2, 1921 Jefferson Davis electronic mail (e-mail) to: its finding that the test marketing Highway, Arlington, VA. [email protected]. Electronic activities will not present an Electronic comments can be sent comments must be submitted as an unreasonable risk of injury. directly to EPA at: ASCII file avoiding the use of special The following additional restrictions [email protected] characters and any form of encryption. apply to TME–95–10. A bill of lading Comments and data will also be accompanying each shipment must state Electronic comments must be accepted on disks in WordPerfect in 5.1 that the use of the substance is restricted submitted as an ASCII file avoiding the file format or ASCII file format. All to that approved in the TME. In use of special characters and any form comments and data in electronic form addition, the applicant shall maintain of encryption. must be identified by [OPPTS–59348]. the following records until five years The official record for this notice, as No Confidential Business Information after the date they are created, and shall well as the public version, as described (CBI) should be submitted through e- make them available for inspection or above will be kept in paper form. mail. Electronic comments on this copying in accordance with section 11 Accordingly, EPA will transfer all notice may be filed online at many of TSCA: comments received electronically into Federal Depository Libraries. Additional 1. Records of the quantity of the printed, paper form as they are received information on electronic submissions TME substance produced and the date and will place the paper copies in the can be found under of manufacture. official record which will also include ‘‘SUPPLEMENTARY INFORMATION’’. 2. Records of dates of the shipments all comments submitted directly in FOR FURTHER INFORMATION CONTACT: to each customer and the quantities writing. The official record is the paper Shirley Howard, New Chemicals supplied in each shipment. record maintained at the address in Branch, Chemical Control Division 3. Copies of the bill of lading that ‘‘ADDRESSES’’ at the beginning of this (7405), Office of Pollution Prevention accompanies each shipment of the TME document. and Toxics, Environmental Protection substance. Agency, Rm. E–447H, 401 M St. SW., TME±95±10 List of Subjects Washington, D.C. 20460, (202) 260– Environmental protection, 3780. Date of Receipt: July 18, 1995. The Agricultural commodities, Pesticides SUPPLEMENTARY INFORMATION: Section extended comment period will close and pests. 5(h)(1) of TSCA authorizes EPA to September 21, 1995. exempt persons from premanufacture Applicant: Riechhold Chemicals, Inc. Dated: August 22, 1995. notification (PMN) requirements and Chemical: (G) Polyurethane Lois Rossi, permit them to manufacture or import Adhesives. Director, Special Review and Reregistration new chemical substances for test Use: (G) Laminate Adhesive and Division, Office of Pesticide Programs. marketing purposes if the Agency finds Veneer Adhesive. [FR Doc. 95–21944 Filed 9–5–95; 8:45 am] that the manufacture, processing, Production Volume: 90,900 kg/yr. BILLING CODE 6560±50±F distribution in commerce, use, and Number of Customers: Confidential. disposal of the substances for test Test Marketing Period: 12 months, marketing purposes will not present an Commencing on first day of commercial [OPPTS±59348; FRL±4975±2] unreasonable risk of injury to human manufacture. Risk Assessment: EPA identified no Certain Chemicals; Approval of a Test health or the environment. EPA may significant health or environmental Marketing Exemption impose restrictions on test marketing activities and may modify or revoke a concerns for the test market substance. AGENCY: Environmental Protection test marketing exemption upon receipt Therefore, the test market activities will Agency (EPA). of new information which casts not present any unreasonable risk of ACTION: Notice. significant doubt on its finding that the injury to human health or the test marketing activity will not present environment. SUMMARY: This notice announces EPA’s an unreasonable risk of injury. The Agency reserves the right to approval of an application for test EPA hereby approves TME–95–10. rescind approval or modify the marketing exemption (TME) under EPA has determined that test marketing conditions and restrictions of an section 5(h)(1) of the Toxic Substances of the new chemical substance exemption should any new information Control Act (TSCA) and 40 CFR 720.38. described below, under the conditions that comes to its attention cast EPA has designated this application as set out in the TME application, and significant doubt on its finding that the Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46281 test marketing activities will not present Policies Governing Them and to become a bank holding company by any unreasonable risk of injury to Examination of Exclusivity and acquiring 100 percent of the voting human health or the environment. Frequency Assignment Policies of the shares of Citizens National Bank, A record has been established for this Private Land Mobile Radio Services. (PR Victoria, Texas. notice under docket number [OPPTS– Docket No. 92–235) 2. Magnolia Partnership Investments, 59348] (including comments and data Number of Petitions Filed: 22. Ltd, Beaumont, Texas; to become a bank holding company by acquiring 44.3 submitted electronically as described Federal Communications Commission. percent of the voting shares of First of above). A public version of this record, William F. Caton, including printed, pager versions of Groves Corporation, Groves, Texas, and Acting Secretary. electronic comments, which does not thereby indirectly acquire First Bank & include any information claimed as CBI, FR Doc. 95–22032 Filed 9–5–95; 8:45 am] Trust Company, Groves, Texas, and is available for inspection from 12 noon BILLING CODE 6712±01±M First National Bank, Silsbee, Texas. to 4 p.m., Monday through Friday, Board of Governors of the Federal Reserve excluding legal holidays. The public System, August 30, 1995. record is located in the TSCA FEDERAL RESERVE SYSTEM William W. Wiles, nonconfidential information center Secretary of the Board. (NCIC), Rm. NEB–607, 401 M St., SW., CNB Bancshares of Victoria, Inc., et al.; Formations of; Acquisitions by; [FR Doc. 95–21999 Filed 9–5–95; 8:45 am] Washington, D.C. 20460. BILLING CODE 6210±01±F Electronic comments can be sent and Mergers of Bank Holding directly to EPA at: Companies [email protected] The companies listed in this notice Norwest Corporation; Application to have applied for the Board’s approval Engage in Nonbanking Activities Electronic comments must be under section 3 of the Bank Holding Norwest Corporation, Minneapolis, submitted as an ASCII file avoiding the Company Act (12 U.S.C. 1842) and § use of special characters and any form Minnesota, and its wholly owned 225.14 of the Board’s Regulation Y (12 subsidiary Norwest Financial Services, of encryption. CFR 225.14) to become a bank holding The official record for this notice, as Inc., Des Moines, Iowa (NFS) (together, company or to acquire a bank or bank Applicants), have given notice pursuant well as the public version, as described holding company. The factors that are above will be kept in paper form. to section 4(c)(8) of the Bank Holding considered in acting on the applications Company Act (12 U.S.C. 1843(c)(8)) Accordingly, EPA will transfer all are set forth in section 3(c) of the Act (BHC Act) and § 225.23(a)(3) of the comments received electronically into (12 U.S.C. 1842(c)). Board’s Regulation Y (12 CFR printed, paper form as they are received Each application is available for 225.23(a)(3)) to engage de novo through and will place the paper copies in the immediate inspection at the Federal NFS’s wholly owned subsidiaries, official record which will also include Reserve Bank indicated. Once the Orlandi Valuta, Los Angeles, California, all comments submitted directly in application has been accepted for and Orlandi Valuta Nacional, Boulder writing. The official record is the paper processing, it will also be available for City, Nevada (together, Companies), in record maintained at the address in inspection at the offices of the Board of the activity of transmitting money for ‘‘ADDRESSES’’ at the beginning of this Governors. Interested persons may customers within the United States, document. express their views in writing to the including Puerto Rico, the U.S. Virgin Reserve Bank or to the offices of the Islands, and Guam (domestic money List of Subjects Board of Governors. Any comment on transmission). Environmental protection, Test an application that requests a hearing Orlandi currently engages solely in marketing exemptions. must include a statement of why a the activity of transmitting money to a written presentation would not suffice Dated: August 28, 1995. foreign country (Mexico) on behalf of in lieu of a hearing, identifying customers. The activity is conducted Mary E. Cushmac, specifically any questions of fact that through Orlandi’s office locations and Acting Chief, New Chemicals Branch, Office are in dispute and summarizing the Orlandi’s network of outside of Pollution Prevention and Toxics. evidence that would be presented at a representatives. Companies will use this [FR Doc. 95–22056 Filed 9–5–95; 8:45 am] hearing. network following the acquisition and, Unless otherwise noted, comments BILLING CODE 6560±50±F subject to licensing and other regulatory regarding each of these applications requirements, intend to expand the must be received not later than network to include Applicants’ September 29, 1995. FEDERAL COMMUNICATIONS consumer finance offices. A ‘‘hotline’’ A. Federal Reserve Bank of Dallas COMMISSION telephone will be located at the office of (Genie D. Short, Vice President) 2200 the outside representative. This Correction to Report No. 2094; Petition North Pearl Street, Dallas, Texas 75201- telephone will be connected directly to for Reconsideration of Actions in 2272: Companies’ office and the customer will Rulemaking Proceedings 1. CNB Bancshares of Victoria, Inc., speak directly with an employee of Victoria, Texas; to become a bank Companies. The customer will provide August 31, 1995. holding company by acquiring 100 the information regarding the recipient Report No. 2094, released August 24, percent of the voting shares of Citizens and the dollar amount to be transferred. 1995 published at 60 FR 4480, August Bancorp of Delaware, Inc., Wilmington, The outside representative will collect 29, 1995 inadvertently omitted the Delaware, and thereby indirectly the money from the customer and below petition for reconsideration. acquire Citizens National Bank, deposit the funds in a designated Therefore this petition is hereby added. Victoria, Texas. account at a local bank chosen by the Subject: Replacement of Part 80 by In connection with this application, outside representative. These funds will Part 88 to Revise the Private Land Citizens Bancorp of Delaware, Inc., be held in trust for the benefit of the Mobile Radio Services and Modify the Wilmington, Delaware, also has applied remitting customer and will not be 46282 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices commingled with any other funds of activity of transmitting money for University of South Carolina, will chair Companies or the outside customers to a foreign country, except this panel meeting of the committee. representative. Companies will collect that the recipient will be located in the DATES: September 18, 1995, 9:00 a.m.– the funds deposited in the outside United States. 5:00 p.m. representative’s account by means of an In publishing the proposal for ACH transaction or similar transaction. comment, the Board does not take a TENTATIVE AGENDA: Companies will deposit an amount position on issues raised by the Monday, September 18, 1995 equal to the transmitted funds in an proposal. Notice of the proposal is 9:00 a.m. Panel convenes to hear account at a bank at a location near the published solely in order to seek the presentations on the VA and DoD disbursement site. The local views of interested persons on the clinical care systems disbursement site will notify the issues presented by the application and 12:30 p.m. Lunch recipient that the funds are available to does not represent a determination by 2:00 p.m. Panel reconvenes to take be picked up. When the recipient comes the Board that the proposal meets, or is public comment to the disbursement site, a check drawn likely to meet, the standards of the BHC 5:00 p.m. Panel adjourns on the local bank will be issued to the Act. recipient with funds immediately Any comments or requests for hearing A final agenda will be available at the available for the recipient to cash or should be submitted in writing and meeting. deposit the check. received by William W. Wiles, PLACE: The Radisson Plaza Hotel, 101 Section 4(c)(8) of the BHC Act Secretary, Board of Governors of the South Tyron Street, Charlotte, North provides that a bank holding company Federal Reserve System, Washington, Carolina. may, with Board approval, engage in D.C. 20551, not later than October 4, FOR FURTHER INFORMATION CONTACT: any activity which the Board, after due 1995. Any request for a hearing on this notice and opportunity for hearing, has application must, as required by § Michael E. Kowalok, Presidential determined (by order or regulation) to 262.3(e) of the Board’s Rules of Advisory Committee on Gulf War be so closely related to banking or Procedure (12 CFR 262.3(e)), be Veterans’ Illnesses, 1411 K Street, N.W., managing or controlling banks as to be accompanied by a statement of the suite 1000, Washington, D.C. 20005, a proper incident thereto. This statutory reasons why a written presentation telephone 202–761–0066, fax: 202–761– test requires that two separate tests be would not suffice in lieu of a hearing, 0310. met for an activity to be permissible for identifying specifically any questions of PUBLIC PARTICIPATION: Members of the a bank holding company. First, the fact that are in dispute, summarizing the public who wish to present oral Board must determine that the activity evidence that would be presented at a statements during the panel meeting is, as a general matter, closely related to hearing, and indicating how the party should contact the Advisory Committee banking. Second, the Board must find in commenting would be aggrieved by at the address or telephone number a particular case that the performance of approval of the proposal. listed above at least five business days the activity by the applicant bank This application may be inspected at prior to the meeting. This panel has a holding company may reasonably be the offices of the Board of Governors or particular interest in hearing about the expected to produce public benefits the Federal Reserve Bank of experiences of veterans of the Persian such as greater convenience, increased Minneapolis. Gulf War with the DoD and VA clinical competition, or gains in efficiency that Board of Governors of the Federal Reserve systems. Reasonable provisions will be outweigh possible adverse effects, such made to include presentations on the as undue concentration of resources, System, August 30, 1995. William W. Wiles, agenda, and requests from individuals decreased or unfair competition, who have not yet had an opportunity to Secretary of the Board. conflicts of interests, or unsound address the Advisory Committee will banking practices. [FR Doc. 95–22000 Filed 9–5–95; 8:45 am] take priority. The panel Chair is The Board has not previously BILLING CODE 6210±01±F empowered to conduct the meeting in a approved money transmission fashion that will facilitate the orderly activiteswithun the United States. The conduct of business. Any member of the Board has previously approved, by PRESIDENTIAL ADVISORY public who wishes to file a written order, however, the activity of COMMITTEE ON GULF WAR statement with the Advisory Committee transmitting money for customers to a VETERANS' ILLNESSES will be permitted to do so at any time. foreign county. See Philippine SUPPLEMENTARY INFORMATION: Commercial International Bank, Federal Meeting The Reserve Bulletin 270 (1991); Berger President established the Presidential Bank A/S, 76 Federal Reserve Bulletin AGENCY: Presidential Advisory Advisory Committee on Gulf War 457 (1990); Skandinaviska Enskilda Committee on Gulf War Veterans’ Veterans’ Illnesses by Executive Order Banken, 69 Federal Reserve Bulletin 42 Illnesses. 12961, May 26, 1995. The purpose of (1983); European-American Bancorp, ACTION: Notice of open meeting. this committee is to review and provide European-American Bancorp, 63 recommendations on the full range of Federal Reserve Bulletin 595 (1977). In SUMMARY: Under the provisions of the government activities associated with this regard, on August 28, 1995, the Federal Advisory Committee Act, this Gulf War veterans’ illnesses. The Board approved the notice by notice is hereby given to announce an committee reports to the President Applicants to acquire Orlandi and open meeting concerning the through the Secretary of Defense, thereby engage in the activity of Presidential Advisory Committee on Secretary of Health and Human transmitting money for customers to Gulf War Veterans’ Illnesses. The panel Services, and the Secretary of Veterans Mexico. Applicants believe that the will meet in open session to discuss Affairs. The committee members are proposed activities meet the National various clinical issues related to Gulf individuals with expertise relevant to Courier standard because the activity of War veterans’ illnesses. Captain the functions of the committee, and are domestic money transmission is Marguerite Knox, Clinical Assistant appointed by the President from non- identical to the previously approved Professor in the College of Nursing, Federal sectors. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46283 Dated: September 1, 1995. title III of the Older American Act. (Title organization for the subsequent fiscal L.M. Bynum, III of the Older Americans Act, entitled year shall be: (1) Increased by such Designated Federal Officer. ‘‘Grants for State and Community amount as the Assistant Secretary [FR Doc. 95–22176 Filed 9–5–95; 8:45 am] Programs on Aging’’ is the nationwide considers to be appropriate, in addition BILLING CODE 5000±04±M program of supportive and nutritional to the amount of any increase required services which serves persons over age by subsection (a), so that the grant 60 of all ethnic groups.) equals or more closely approaches the In the Older Americans Act DEPARTMENT OF HEALTH AND amount of the grant made under this Amendments of 1987, the name of title HUMAN SERVICES part to the tribal organization for fiscal VI was changed to Grants for Native year 1980; or (2) an amount the Administration on Aging Americans, and part B—Native Assistant Secretary considers to be Hawaiian Programs—was added. sufficient if the tribal organization did [Program Announcement 13655.911] Nutritional services and information not receive a grant under this part for and assistance services are required by either fiscal year 1980 or fiscal year Grants to Indian Tribal Organizations the Act. Nutritional services include 1991. for Supportive and Nutritional Services congregate meals and home-delivered Applications from current grantees for Older Indians meals. Supportive services include who are a part of a consortium and wish AGENCY: Administration on Aging information and assistance, to leave the consortium will be treated (AoA), OS, HHS. transportation, chore services, and other as new grant applications. Successful ACTION: Announcement of availability of supportive services which contribute to new grant applications for both current funds and opportunity to apply under the welfare of older Native Americans. grantees who are leaving a consortium the Older Americans Act, Title VI, 2. Eligibility of an Indian Tribal and tribal organizations who are not Grants for Native Americans, Part A– Organization or Indian Tribe To current grantees will be funded pending Indian Program. Receive a Grant availability of additional funds. Information on typical grant levels in SUMMARY: The Administration on Aging To be eligible to receive a grant, a Fiscal Year 1994 is given below as a will accept applications for funding in tribal organization or Indian tribe must guide to POSSIBLE funding levels for Fiscal Year 1996 under the Older meet the application requirements Tribes representing the following Americans Act, title VI, Grants for contained in sections 612(a) and 612(b) documented numbers of Indian elders Native Americans, part A–Indian of the Act, which are: ‘‘(1) the tribal over age 60: Program, from all current title VI, part organization represents at least 50 A grantees, current grantees who wish individuals who are 60 years of age or Population range (No. of older In- Amounts to leave a consortium and apply as a older; and (2) the tribal organization dians age 60 years and over, rep- of awards demonstrates the ability to deliver resented by the tribal organiza- in FY new grantee, and eligible federally tion) 1994 recognized Indian tribal organizations supportive services, including that are not now participating in title VI. nutritional services.’’ For purposes of 50 to 100 ...... $49,000 Successful applications from new title VI, part A, the terms ‘‘Indian tribe’’ 101 to 200 ...... 56,000 grantees will be funded if funds permit. and ‘‘tribal organization’’ have the same 201 to 300 ...... 64,500 301 to 400 ...... 73,000 DATES: December 5, 1995. meaning as in section 4 of the Indian Self-Determination and Education 401 to 500 ...... 81,600 ADDRESSES: See Appendix A. Assistance Act (25 U.S.C. 450b). 501 to 1500 ...... 95,000 FOR FURTHER INFORMATION CONTACT: This announcement concerns all 1501+ ...... 125,000 M. Yvonne Jackson, Ph.D., Office for federally recognized Indian tribal American Indian, Alaskan Native, and organizations, those currently 4. Application Process Native Hawaiian Programs, participating in title VI, part A Applicants should submit Administration on Aging, Department of individually or as members of a applications, describing their proposed Health and Human Services, Wilbur J. consortium and those that are not plans for nutritional and supportive Cohen Federal Building, Room 4257, currently participating in title VI, part services for older Indians for project 330 Independence Avenue, SW, A. period April 1, 1996–March 31,1999, as Washington, DC 20201, telephone (202) described in section 5 below, ‘‘Content 3. Available Funds 619–2713. of the Application.’’ SUPPLEMENTARY INFORMATION: Distribution of funds among tribal A three year project period was organizations is subject to the chosen in order to reduce the paperwork 1. Background and Program Purpose availability of appropriations to carry burden on the grantees. It is the intent The Administration on Aging (AoA) is out title VI, part A. As stated in section of this agency to conduct on site responsible for administering title VI, 614A(b) of the Act the amount of the monitoring at least once during the part A of the Older Americans Act, grant made under this part to a tribal three year project period. which provides for grants to Indian organization for fiscal year 1992 and for The Program Performance and tribal organizations representing each subsequent fiscal year shall be not Financial Status reports, due on a semi- federally recognized Tribes for the less than the amount of the grant made annual basis, will be reviewed for provision of nutritional and supportive under this part to the tribal organization compliance with the program services to Indian elders. for fiscal year 1991 as stated under regulations. Failure to submit the The 1978 Amendments to the Older section 614A(a) of the Act. If the funds required reports during the project Americans Act created title VI, Grants appropriated to carry out this part in a period may result in loss of future funds for Indian Tribal Organizations. The fiscal year subsequent to fiscal year and possibly termination of the grant purpose of this title is to promote the 1991 exceed the funds appropriated to within the project period. delivery of supportive and nutritional carry out this part in fiscal year 1991, Thirty days prior to the end of each services for Indian elders that are then the amount of the grant (if any) budget period within the three year comparable to services provided under made under this part to a tribal project period grantees shall notify AoA 46284 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices as to their desire to continue as a 311(a)(4), 331(1), 336, 338(a)(1), and If a tribal organization elects to grantee. Failure to submit this 339, 339A of the Act and § 1321.17, provide legal services, it must documentation within the required § 1321.59 and § 1321.64, is a planned substantially comply with the timeframe may result in loss of grant event in a day at which a variety of requirements in title 45 of the Code of funding. At the beginning of each prepared foods are provided to an Federal Regulations § 1321.71, and all budget period within the three year individual. These foods shall comply legal assistance providers must comply project period grantees will be notified with the U.S. Dietary Guidelines for fully with the requirements in of the funding level for the subsequent Americans published by the Secretary of § 1321.71(d) through § 1321.71(k). year. the Department of Health and the Transportation of persons to nutrition One original application, signed by Secretary of the Department of sites or other places is to be considered the principal official of the Tribe, and Agriculture and provide the nutrients as a ‘‘Supportive Service.’’ two copies of the complete application specified in the current, daily (D) Coordination with title III. The including all attachments must be Recommend Dietary Allowances, as application should provide a submitted to the Administration on established by the Food and Nutrition description of how title VI and title III Aging, Grants Management Division, Board of the National Research Council resources are to be coordinated within Margaret Tolson, Director, 330 of the National Academy of Sciences as the title VI service area, including Independence Avenue, SW., specified in Section 339(2) unless the information and assistance service. Washington, DC 20201. Incomplete meal is a special meal provided to meet (2) Evaluation Criteria applications will not be considered for the health, religious, or ethnic funding. considerations of eligible individuals. The application must discuss the 5. Content of the Application Snacks, partial meals, and second criteria to be used to evaluate the results helpings are not considered meals. and successes of the program, based on The application must meet the criteria 2. Provide at least one home delivered the objective indicated in Item A above. in sections 614(a) and (b) of the Act, and hot, cold, frozen, dried, canned, or It will also explain the methodology that title 45 of the Code of Federal supplemental food (with a satisfactory will be used to determine if the needs Regulations, § 1326.19. The application storage life) meal per day, 5 or more identified and discussed are being met may be presented in any format selected days a week, and any additional meals and if the results and benefits identified by the tribal organization. Contact the in Item B above are being achieved. AoA Regional Office in your geographic which the recipient of a grant may elect area if you have questions concerning to provide. The above definition of a D. Geographic Location the content of the application. The meal also applies here. Thus, neither individual grocery items nor food The application must include both a application must include the following narrative description of the title VI, part information: vouchers may not be used in lieu of home delivered meals. A service area, and a map with the A. Objectives and Need for Assistance If no title VI, part A funds are to be service area identified. The area to be This section must include objectives, used for nutrition services, the served by title VI, part A must have expressed in measurable terms, which application must state how such clear geographic boundaries. If the are related to the current supportive and services are provided in other ways, and geographic area overlaps with another nutrition service needs of the elders to how they are financed. current title VI, part A grantee or new be represented by the Tribal (b) Information and Assistance. applicant then coordination of services Organization. This section must also Information and assistance services are without duplication must be developed include a discussion of how the needs required. They must be available for between the two applicants and clearly were evaluated. older Indians living in the title VI part outlined in the application. This A service area and there should be a agreement must be signed by the B. Results or Benefits Expected description of what information and principal official of both tribal The application should describe the assistance services will be provided and organizations. A ‘‘Consortium results or benefits expected from each how they will be provided. The Agreement’’ is included in the service proposed. estimated number of individuals to be attachments of this Federal Register announcement. There is no prohibition, C. Approach served should be stated. If no title VI, part A funds are to be used for however, on its overlapping with areas (1) Description and Method of Delivery information and assistance services, the served by title III. of Each Service application must state how such E. Additional Information (a) Nutrition. Nutrition services are services are provided in other ways, and (1) Older Indians in the Title VI, Part A required. There should be a description how they are financed. Service Area of the methods, facilities, and staff to be (C) Other Supportive Services. The used in preparing, serving, and application must describe any other The law requires that a tribal delivering meals, and the estimated supportive services to be provided organization must represent at least 50 number of persons to be served. The wholly or partly by title VI, part A persons aged 60 years or over in order nutrition services provided, either funds. The description should include to be eligible for title VI funding. directly or by way of a grant or contract, what supportive services will be Therefore, the number of persons aged must be substantially in compliance provided and how they will be 60 or over living in the proposed title with the provisions of part C, title III, provided. The approximate number of VI service area must be stated in the which include: persons to be served by each service application. The tribal organization may 1. Provide at least one hot or other should be stated. use Bureau of Statistics population appropriate meal a day, 5 or more days Legal assistance and ombudsman figures, or may develop its own a week in a congregate setting, and any services may be provided, but are not population statistics, but they must be additional meals which the recipient of required. However, if provided, they certified from the Bureau of Indian a grant may elect to provide. A ‘‘meal’’, should be reported as ‘‘Supportive Affairs in order to establish eligibility. as used in section 307(a)(13), 308(b)(7), Services.’’ The amount of the grant is based on this Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46285 number of Indians or Alaskan Natives (4) Certification Forms Region IV (AL, FL, MS, SC, TN, NC, KY, GA) aged 60 years or over in the proposed Certifications are required of the Frank Nicholson, Regional Administrator, service area. Thus, the application applicant regarding (a) lobbying; (b) 101 Marietta Tower, Suite 1702, Atlanta, should include only the number of Georgia 30323, (404)331–5900, FAX debarment, suspension, and other (404)331–2017 Indians and Alaskan Natives aged 60 responsibility matters; and (c) drug-free years or over in the proposed service workplace requirements. Please note Region V (IL, IN, MI, MN, OH, WI) area and not the total population census that a duly authorized representative of Marion Mengert, Acting Regional of all tribal members, age 60 and above, the applicant organization must attest to Administrator, 105 West Adams Street, if not all the tribal members live in the 10th Floor, Chicago, Illinois 60603, the applicant’s compliance with these (312)353–3141, FAX (312)886–8533 proposed service area. If there is overlap certifications. between two or more title VI, part A Region VI (AR, LA, OK, NM, TX) applicants, as stated under ‘‘Geographic (5) Identifying Information John Diaz, Regional Administrator, 1200 Location’’, the eligible elders can only Applications must identify both the Main Tower Building, Room 1000, Dallas, be counted once and included in one principal official of the tribal Texas 75202, (214)767–2971, FAX application. The applicants are organization, and the proposed title VI (214)767–2951 responsible for determining how the program director: Name, Title, Address Region VII (IA, KS, MO, NE) eligible elders will be counted. The including Zip Code, Telephone Number, Larry Brewster, Regional Administrator, 1150 same elder may not be counted by both and, if available, the FAX Number. The Grand Avenue, suite 600, Kansas City, applicants. This must be stated clearly tribal organization’s EIN (Employer Missouri 64106, (816)374–6015, FAX in the application and signed by the Identification Number) must also be (816)374–6024 principal official of the tribal included. Region VIII (CO, MT, UT, WY, ND, SD) organization. If the applicant tribal organization is Percy Devine, Regional Administrator, 1961 As a separate matter, the regulations a consortium, the applicant must list the Stout Street, Room 308, Federal Office allow a Tribe to define, based on its own federally recognized tribes which are Building, Denver, Colorado 80294, criteria, who the Tribe will consider to included. A copy of each tribal (303)844–2951, FAX (303)844–2943 be an ‘‘older Indian’’ for purposes of resolution must be enclosed. Region IX (CA, NV, AZ, HI, GU, TTPI, CNMI, eligibility to receive title VI services. If AS) a Tribe selects a different definition of 6. Closing Date for Application Frank Cardenas, Regional Administrator, 50 ‘‘older Indian’’ for service delivery, the To be eligible for consideration, United Nations Plaza, Room 480, San application must state the age selected, applications must be received or Francisco, California 94102, (415)556– and the number of Indians under age 60 postmarked on or before December 5, 6003, FAX (415)556–7393 eligible to be served. If more than one 1995. (Applicants are cautioned to Region X (AK, ID, OR, WA) Tribe is included in the application, this request a legibly dated U.S. Postal Chisato Kawabori, Regional Administrator, information must be stated separately service postmark, or to obtain a legibly Blanchard Plaza, RX–33; Room 1202, 2201 for each Tribe. All Tribes in a dated receipt from a commercial carrier Sixth Avenue, Seattle, Washington 98121, consortium must use the same age for or the U.S. Postal Service. Private (206)615–2298, FAX (206)615–2305 ‘‘older Indian.’’ metered postmarks are not acceptable as Appendix B (2) Resolution proof of timely mailing.) Older Americans Act—Section 614(a)—No The tribal organization representing a 7. Action on Applications grant may be made under this part unless the eligible tribal organization submits an federally recognized Tribe must submit Awards will be made by the Assistant application to the Assistant Secretary which an original copy of the Tribal council Secretary on Aging Funding decisions meets such criteria as the Assistant Secretary resolution authorizing participation in will be announced as soon as possible. may by regulation prescribe. Each such title VI, part A. If the tribal organization application shall— Catalog of Federal Domestic Assistance (1) Provide that the eligible tribal represents a consortium of more than # Program 93.655 Grants to Indian Tribes and organization will evaluate the need for one Tribe, a resolution is required from Native Hawaiians. This Program each participating Tribe, specifically supportive and nutrition services among Announcement is not subject to E.O. 12372. older Indians to be represented by the tribal authorizing representation by the tribal Dated: July 7, 1995. organizations; organization for the purpose of title VI, Fernando M. Torres-Gil, (2) Provide for the use of such methods of part A of the Older Americans Act. administration as are necessary for the proper Assistant Secretary for Aging. (3) Program Assurances and efficient administration of the program to Appendix A be assisted; Title VI, part A Program Assurances (3) Provide that the tribal organization will must be included in the application. Regional Offices make such reports in such form and The title VI, part A Program Assurances Region 1 (CT, MA, ME, NH, RI, VT) containing such information, as the Assistant Secretary may reasonably require, and are those provisions identified in Thomas Hooker, Regional Administrator, comply with such requirements as the John F. Kennedy Building, Room 2075, section 614(a) of the Older Americans Assistant Secretary may impose to assure the Boston, Massachusetts 02203, (617)565– Act, and in title 45 of the Code of correctness of such reports; 1158, FAX (617)565–4511 Federal Regulations § 1326.19(d), issued (4) Provide for periodic evaluation of August 31, 1988 (see Appendix B). The Region II (NY, NJ, PR, VI) activities and projects carried out under the tribal organization must state that it Judith Rackmill, Regional Administrator, 26 application; agrees to abide by all the provisions for Federal Plaza, Room 38–102, New York, (5) Establish objectives consistent with the the entire project period being applied New York 10278, (212)264–2976, FAX purposes of this part toward which activities for April 1, 1993–March 31, 1996. (212)264–0114 under the application will be directed, Copies of the title III and title VI identify obstacles to the attainment of such Region III (DC, MD, VA, DE, PA, WV) objectives, and indicate the manner in which current law and regulations, and of part Paul E. Ertel, Jr., Regional Administrator, the tribal organization proposes to overcome 92, may be obtained from the Regional 3535 Market Street, P.O. Box 13716–Stop such obstacles; Program Director for the Administration 23, Philadelphia, Pennsylvania 19101, (6) Provide for establishing and on Aging. (See appendix A) (215)596–6891, FAX (215)596–0614 maintaining information and assistance 46286 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices services to assure that older Indians to be map of service area reflect this buildings) or other sites where work under served by the assistance made available understanding. the grant takes place. Categorical descriptions under this part will have reasonably lllllllllllllllllllll may be used (e.g., all vehicles of a mass convenient access to such services; transit authority or State highway department Signature and Date (7) Provide a preference for Indians aged 60 while in operation, State employees in each lllllllllllllllllllll and older for full or part-time staff positions local unemployment office, performers in whenever feasible; Title concert halls or radio studies.) (8) Provide assistance that either directly or lllllllllllllllllllll If the workplace identified to HHS changes by way of grant or contact with appropriate Tribal Organization during the performance of the grant, the entities nutrition services will be delivered to lllllllllllllllllllll grantee shall inform the agency of the older Indians represented by the tribal Signature and Date change(s), if it previously identified the organization substantially in compliance lllllllllllllllllllll workplaces in question (see above). Definitions of terms in the with the provisions of part C of title III, Title Nonprocurement Suspension and Debarment except that in any case in which the need for lllllllllllllllllllll nutritional services for older Indians common rule and Drug-Free Workplace represented by the tribal organization is Tribal Organization common rule apply to this certification. already met from other sources, the tribal lllllllllllllllllllll Grantees’ attention is called, in particular, to organization may use the funds otherwise Signature and Date the following definitions from these rules: required to be expended under this clause for lllllllllllllllllllll ‘‘Controlled substance’’ means a controlled supportive services; Title substance in Schedules I through V of the (9) Contain assurance that the provision of lllllllllllllllllllll Controlled Substances Act (21 U.S.C. 812) and as further defined by regulation (21 CFR sections 307(a)(14)(A) (i) and (iii), Tribal Organization 307(a)(14)(B), and 307(a)(14)(C) will be lllllllllllllllllllll 1308.11 through 1308.15). complied with whenever the application ‘‘Conviction’’ means a finding of guilt Signature and Date contains provisions for the acquisition, (including a plea of nolo contendere) or lllllllllllllllllllll alteration, or renovation of facilities to serve imposition of sentence, or both, by any as multipurpose senior centers; Title judicial body charged with the responsibility (10) Provide that any legal or ombudsman lllllllllllllllllllll to determine violations of the Federal or services made available to older Indians Tribal Organization State criminal drug statutes; represented by the tribal organization will be (Additional pages for signatures may be ‘‘Criminal drug statute’’ means a Federal or substantially in compliance with the added if needed.) non-Federal criminal statute involving the provisions of title III relating to the manufacture, distribution, dispensing, use, or furnishing of similar services; and U.S. Department of Health and Human possession of any controlled substance; (11) Provide satisfactory assurance that Services Certification Regarding Drug-Free ‘‘Employee’’ means the employee of a fiscal control and fund accounting Workplace Requirements—Grantees Other grantee directly engaged in the performance procedures will be adopted as may be Than Individuals of work under a grant, including (i) All necessary to assure proper disbursement of, By signing and/or submitting this ‘‘direct charge’’ employees; (ii) all ‘‘indirect and accounting for, Federal funds paid under application or grant agreement, the grantee is charge’’ employees unless their impact or this part to the tribal organization, including providing the certification set out below. involvement is insignificant to the any funds paid by the tribal organization to This certification is required by regulations performance of the grant; and, (iii) temporary a recipient of a grant or contract. implementing the Drug-Free Workplace Act personnel and consultants who are directly 45 CFR 1326.19 * * * The application Of 1988, 45 CFR Part 76, Subpart F. The engaged in the performance of work under shall provide that: regulations, published in the May 25, 1990 the grant and who are on the grantee’s (d) Assurances as prescribed by the Federal Register, require certification by payroll. This definition does not include Assistant Secretary that: grantees that they will maintain a drug-free workers not on the payroll of the grantee (1) A tribal organization represents at least workplace. The certification set out below is (e.g., volunteers, even if used to meet a 50 individuals who have attained 60 years of a material representation of fact upon which matching requirement; consultants or age or older; reliance will be placed when the Department independent contractors not on the grantee’s (2) A tribal organization shall comply with of Health and Human Services (HHS) payroll or employees of subrecipients or all applicable State and local license and determines to award the grant. If it is later subcontractors in covered workplaces). safety requirements for the provision of those determined that the grantee knowingly The grantee certifies that it will or will services; rendered a false certification, or otherwise continue to provide a drug-free workplace by: (3) If a substantial number of the older violates the requirements of the Drug-Free (a) Publishing a statement notifying Indians residing in the service area are of Workplace Act, HHS, in addition to any other employees that the unlawful manufacture, limited English-speaking ability, the tribal remedies available to the Federal distribution, dispensing, possession or use of organization shall utilize the services of Government, may take action authorized a controlled substance is prohibited in the workers who are fluent in the language under the Drug-Free Workplace Act. False grantee’s workplace and specifying the spoken by a predominant number of older certification or violation of the certification actions that will be taken against employees Indians; shall be grounds for suspension of payments, for violation of such prohibition; (4) Procedures to ensure that all services suspension or termination of grants, or (b) Establishing an ongoing drug-free under this part are provided without use of government wide suspension or debarment. awareness program to inform employees any means tests; Workplaces under grants, for grantees other about: (5) A tribal organization shall comply with than individuals, need not be identified on (1) The dangers of drug abuse in the all requirements set forth in § 1326.7 through the certification. If known, they may be workplace; (2) The grantee’s policy of § 1326.17; and identified in the grant application. If the maintaining a drug-free workplace; (3) Any (6) The services provided under this part grantee does not identify the workplaces at available drug counseling, rehabilitation, and will be coordinated, where applicable, with the time of application, or upon award, if employee assistance programs, and, (4) The services provided under title III of the Act. there is no application, the grantee must keep penalties that may be imposed upon the identity of the workplace(s) on file in its employees for drug abuse violations Consortium Agreement office and make the information available for occurring in the workplace; It is agreed by all participating Principal Federal inspection. Failure to identify all (c) Making it a requirement that each Officials that coordination of services, known workplaces constitutes a violation of employee to be engaged in the performance without duplication within a specified the grantee’s drug-free workplace of the grant be given a copy of the statement geographic area, has been developed between requirements. required by paragraph (a); the two or more Tribal Organizations Workplace identifications must include the (d) Notifying the employee in the statement applying for this grant. The application and actual address of buildings (or parts of required by paragraph (a) that, as a condition Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46287 of employment under the grant, the employee (a) are not presently debarred, suspended, Transactions’’ without modification in all will: proposed for debarment, declared ineligible, lower tier covered transactions and in all (1) Abide by the terms of the statement; or voluntarily excluded from covered solicitations for lower tier covered and, (2) Notify the employer in writing of his transactions by any Federal department of transactions. or her conviction for a violation or a criminal agency; Signature llllllllllllllll (b) have not within a 3-year period drug statute occurring in the workplace no llllllllllllllllll later than five calendar days after such preceding this proposal been convicted of or Date conviction; had a civil judgement rendered against them Title llllllllllllllllll (e) Notifying the agency in writing, within for commission of fraud or a criminal offense Organization llllllllllllll ten calendar days after receiving notice under in connection with obtaining, attempting to subparagraph (d)(2) from an employee or obtain, or performing a public (Federal, State, Certification Regarding Lobbying otherwise receiving actual notice of such or local) transaction or contract under a Certification for Contracts, Grants, Loans, and conviction. Employers of convicted public transaction; violation of Federal or Cooperative Agreements employees must provide notice, including State antitrust statutes or commission of position title, of every grant officer or other embezzlement, theft, forgery, bribery The undersigned certifies, to the best of his designee on whose grant activity the falsification or destruction of records, making or her knowledge and belief, that: convicted employee was working unless the false statements, or receiving stolen property; (1) No Federal appropriated funds have Federal agency has designated a central point (c) are not presently indicted or otherwise been paid or will be paid, by or on behalf of for the receipt of such notices. Notice shall criminally or civilly charged by a government the undersigned, to any person for include the identification number(s) of each entity (Federal, State or local) with influencing or attempting to influence an affected grant; commission of any of the offenses officer or employee of any agency, a Member (f) Taking one of the following actions, enumerated in paragraph (1) (b) of this of Congress, an officer or employee of within 30 calendar days of receiving notice certification; and Congress, or an employee of a Member of under subparagraph (d)(2), with respect to (d) have not within a 3-year period Congress in connection with the awarding of any employee who is so convicted: preceding this application/proposal had one any Federal contract, the making of any (1) Taking appropriate personnel action or more public transactions (Federal, State, or Federal grant, the making of any Federal against such an employee, up to and local) terminated for cause or default. loan, the entering into of any cooperative including termination, consistent with the The inability of a person to provide the agreement, and the extension, continuation, requirements of the Rehabilitation Act of certification required above will not renewal, amendment, or modification of any 1973, as amended; or, (2) Requiring such necessarily result in denial of participation Federal contract, grant, loan, or cooperative employee to participate satisfactorily in a for this covered transaction. If necessary, the agreement. drug abuse assistance or rehabilitation prospective participant shall submit an (2) If any funds other than Federal program approved for such purposes by a explanation of why it cannot provide the appropriated funds have been paid or will be Federal, State, or local health, law certification. The certification or explanation paid to any person for influencing or enforcement, or other appropriate agency; will be considered in connection with the attempting to influence an officer or (g) Making a good faith effort to continue Department of Health and Human Services’’ employee of any agency, a Member of to maintain a drug-free workplace through (HHS) determination whether to enter into Congress, an officer or employee of Congress, implementation of paragraphs (a), (b), (c), (d), this transaction. However, failure of the or an employee of a Member of Congress in (e) and (f). prospective primary participant to furnish a connection with this Federal contract, grant, The grantee may insert in the space certification or an explanation shall loan or cooperative agreement, the provided below the site(s) for the disqualify such person from participation in undersigned shall complete and submit performance of work done in connection this transaction. Standard Form–LLL, ‘‘Disclosure Form to with the specific grant (Use attachments, if The prospective primary participant agrees Report Lobbying,’’ in accordance with its needed): that by submitting this proposal, it will instructions. include the clause entitled ‘‘Certification (3) The undersigned shall require that the Place of Performance (Street address, City, Regarding Debarment, Suspension, language of this certification be included in County, State, ZIP Code) lllllllll the award documents for all subawards at all lll Ineligibility, and Voluntary Exclusion— Check if there are workplaces on file Lower Tier Covered Transactions’’, provided tiers (including subcontracts, subgrants, and that are not identified here. below, without modification in all lower tier contracts under grants, loans, and Sections 76.630 (c) and (d)(2) and 76.635 covered transactions and in all solicitations cooperative agreements) and that all (a)(1) and (b) provide that a Federal agency for lower tier covered actions. recipients shall certify and disclose may designate a central receipt point for accordingly. STATE-WIDE AND STATE AGENCY-WIDE Certification Regarding Debarment, This certification is a material certifications, and for notification of criminal Suspension, Ineligibility and Voluntary representation of fact upon which reliance drug convictions. For the Department of Exclusions—Lower Tier Covered was placed when this transaction was made Health and Human Services, the, central Transactions (To Be Supplied to lower Tier or entered into. Submission of this receipt point is: Division of Grants Participants) certification is a prerequisite for making or Management and Oversight, Office of By signing and submitting this lower tier entering into this transaction imposed by Management and Acquisition, Department of proposal, the prospective lower tier section 1352, title 31, U.S. Code. Any person Health and Human Services, Room 517-D, participant, as defined in 45 CFR Part 76, who fails to file the required certification 200 Independence Avenue, SW., certifies to the best of its knowledge and shall be subject to a civil penalty of not less Washington, DC 20201. belief that it and its principals: than $10,000 and not more than $100,000 for Signature llllllllllllllll (a) Are not presently debarred, suspended, each such failure. proposed for debarment, declared ineligible, Date llllllllllllllllll lllllllllllllllllllll or voluntarily excluded from participation in Title llllllllllllllllll Organization this transaction by any Federal department or lllllllllllllllllllll Organization llllllllllllll agency. Authorized Signature Title Date DGMO Form #2 Revised May 1990 (b) Where the prospective lower tier participant is unable to certify to any of the Certification Regarding Debarment, Note: If Disclosure Forms are required, above, such prospective participants shall please contact: Mr. William Sexton, Deputy Suspension, and Other Responsibility attach an explanation to this proposal. Matters—Primary Covered Transactions Director, Grants and Contracts Management The prospective lower tier participant Division, room 341F, HHH Building, 200 By signing and submitting this proposal, further agrees by submitting this proposal Independence Avenue, SW, Washington, the applicant, defined as the primary that it will include this clause entitled D.C. 20201–0001. participant in accordance with 45 CFR Part ‘‘Certification Regarding Debarment, 76, certifies to the best of its knowledge and suspension, Ineligibility and Voluntary [FR Doc. 95–22054 Filed 9–5–95; 8:45 am] belief that its principals involved: Exclusions—Lower Tier Covered BILLING CODE 4130±01±M 46288 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Food and Drug Administration based its approval is on file in the Health Care Financing Administration Dockets Management Branch (address [Docket No. 95M±0240] [BPO±133±PN] above) and is available from that office Wesley-Jessen; Premarket Approval of upon written request. Requests should Medicare Program; Data, Standards, Wesley-Jessen COE±405 Disinfection be identified with the name of the and Methodology Used to Establish Tablet device and the docket number found in Fiscal Year 1996 Budgets for Fiscal brackets in the heading of this Intermediaries and Carriers AGENCY: Food and Drug Administration, document. AGENCY: Health Care Financing HHS. Opportunity for Administrative Review ACTION: Notice. Administration (HCFA), HHS. Section 515(d)(3) of the act (21 U.S.C. ACTION: Proposed notice. SUMMARY: The Food and Drug 360e(d)(3)) authorizes any interested SUMMARY: Administration (FDA) is announcing its person to petition, under section 515(g) This notice describes the data, approval of the application by Wesley- of the act, for administrative review of standards, and methodology that would Jessen, Des Plaines, IL, for premarket CDRH’s decision to approve this be used to establish fiscal intermediary approval, under the Federal Food, Drug, application. A petitioner may request and carrier budgets for the Federal fiscal and Cosmetic Act (the act), of the year (FY) 1996, that begins October 1, either a formal hearing under part 12 (21 Wesley-Jessen COE–405 Disinfection CFR part 12) of FDA’s administrative 1995. Fiscal intermediaries and carriers Tablet. FDA’s Center for Devices and practices and procedures regulations or are public or private entities that Radiological Health (CDRH) notified the a review of the application and CDRH’s participate in the administration of the applicant, by letter on June 7, 1995, of action by an independent advisory Medicare program by performing claims the approval of the application. committee of experts. A petition is to be processing and benefit payment DATES: Petitions for administrative in the form of a petition for functions. This notice is published in review by October 6, 1995. reconsideration under § 10.33(b) (21 accordance with sections 1816(c)(1) and ADDRESSES: Written requests for copies CFR 10.33(b)). A petitioner shall 1842(c)(1) of the Social Security Act, of the summary of safety and identify the form of review requested which require us to publish for public effectiveness data and petitions for (hearing or independent advisory comment the data, standards, and administrative review to the Dockets committee) and shall submit with the methodology we intend to use to Management Branch (HFA–305), Food petition supporting data and establish budgets for Medicare fiscal and Drug Administration, rm. 1–23, information showing that there is a intermediaries and carriers. In addition, we respond to the single 12420 Parklawn Dr., Rockville, MD genuine and substantial issue of public comment we received in 20857. material fact for resolution through response to our proposed notice of FOR FURTHER INFORMATION CONTACT: administrative review. After reviewing October 21, 1994, and we announce the David M. Whipple, Center for Devices the petition, FDA will decide whether to data, standards, and methodology we and Radiological Health (HFZ–460), grant or deny the petition and will proposed to use to establish the Food and Drug Administration, 9200 publish a notice of its decision in the Medicare fiscal intermediary and carrier Corporate Blvd., Rockville, MD 20850, Federal Register. If FDA grants the budgets for FY 1995, beginning October 301–594–1744. petition, the notice will state the issue 1, 1994, as final. SUPPLEMENTARY INFORMATION: On to be reviewed, the form of review to be DATES: February 13, 1991, Wesley-Jessen, Des used, the persons who may participate Comments will be considered if Plaines, IL 60018, submitted to CDRH in the review, the time and place where we receive them at the appropriate an application for premarket approval of the review will occur, and other details. address, as provided below, no later than 5 p.m. on November 6, 1995. Wesley-Jessen COE–405 Disinfection Petitioners may, at any time on or Tablet. When the Wesley-Jessen COE– before October 6, 1995, file with the ADDRESSES: Mail written comments (1 405 Disinfection Tablet is dissolved in Dockets Management Branch (address original and 3 copies) to the following a sterile contact lens saline solution, the above) two copies of each petition and address: Health Care Financing solution is indicated for use in the supporting data and information, Administration, Department of Health chemical (not heat) disinfection of soft identified with the name of the device and Human Services, Attention: BPO– (hydrophilic) contact lenses. and the docket number found in 133–PN, P.O. Box 26676, Baltimore, MD In accordance with the provisions of brackets in the heading of this 21207. section 515(c)(2) of the act (21 U.S.C. document. Received petitions may be If you prefer, you may deliver your 360e(c)(2)) as amended by the Safe seen in the office above between 9 a.m. comments (1 original and 3 copies) to Medical Devices Act of 1990, this and 4 p.m., Monday through Friday. one of the following addresses: Room 309–G, Hubert H. Humphrey premarket approval application (PMA) This notice is issued under the Building, 200 Independence Avenue, was not referred to the Ophthalmic Federal Food, Drug, and Cosmetic Act Devices Panel of the Medical Devices SW., Washington, DC 20201, or (secs. 515(d), 520(h) (21 U.S.C. 360e(d), Room C5–09–26, 7500 Security Advisory Committee, an FDA advisory 360j(h))) and under authority delegated committee, for review and Boulevard, Baltimore, MD 21244– to the Commissioner of Food and Drugs 1850. recommendation because the (21 CFR 5.10) and redelegated to the information in the PMA substantially Director, Center for Devices and Because of staffing and resource duplicates information previously Radiological Health (21 CFR 5.53). limitations, we cannot accept comments reviewed by this panel. by facsimile (FAX) transmission. In On June 7, 1995, CDRH approved the Dated: August 24, 1995. commenting, please refer to file code application by a letter to the applicant Joseph A. Levitt, BPO–133–PN. Comments received from the Director of the Office of Device Deputy Director for Regulations Policy, Center timely will be available for public Evaluation, CDRH. for Devices and Radiological Health. inspection as they are received, A summary of the safety and [FR Doc. 95–21973 Filed 9–5–95; 8:45 am] generally beginning approximately 3 effectiveness data on which CDRH BILLING CODE 4160±01±F weeks after publication of a document, Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46289 in Room 309–G of the Department’s Health and Human Services, and the comment period, we will address those offices at 200 Independence Avenue, Office of Management and Budget comments in a final notice and, if SW, Washington, DC, on Monday (OMB) before the budget is submitted to necessary, make revisions to the FY through Friday of each week from 8:30 the President for approval and 1996 data, standards, and methodology. a.m. to 5 p.m. (phone: (202) 690–7890). forwarding to the Congress. Once the If no comments are received, the data, FOR FURTHER INFORMATION CONTACT: national contractor budget has been standards, and methodology proposed Leslie Trazzi, (410) 786–7544 approved, we issue Budget and for FY 1996 will become final, effective Performance Requirements (BPRs). BPRs October 1, 1995. SUPPLEMENTAL INFORMATION: specify the level of effort required for FY 1995 Budget Information—A I. Background contractor functions and serve as the proposed notice describing the data, statement of work for contractor use in Preparation of Contractor Budgets— standards, and methodology we preparing their individual budgets for Under sections 1816(a) and 1842(a) of proposed to use to establish contractor submission to us. the Social Security Act (the Act), public budgets for FY 1995 was published in The regional offices review the the Federal Register (59 53187) on or private organizations and agencies budgets submitted by contractors during may participate in the administration of October 21, 1994. In response to our a budget level determination process request for public comment in the the Medicare program under agreements that is based on current claims or contracts entered into with the proposed notice, we received one timely processing trends, legislative mandates, item of correspondence. Based on our Secretary. These Medicare contractors administrative initiatives, current year are known as fiscal intermediaries review of the comment submitted, we performance standards and criteria, and are making no changes to the data, (section 1816(a) of the Act) and carriers the availability of funds appropriated by (section 1842(a) of the Act). Fiscal standards, and methodology we the Congress. Subsequently, we allocate proposed to use. As noted earlier, it has intermediaries perform bill processing funding within these constraints. and benefit payment functions for Part been our practice to issue separate Requirements to Publish Contractor notices dealing with proposed and final A of the program (Hospital Insurance), Budget Information—Sections and carriers perform claim processing budget data. Because no changes are 1816(c)(1) and 1842(c)(1)(A) of the Act being made to the proposed budget data and benefit payment functions for Part require us to publish for public B of the program (Supplementary included in the October 21 notice, we comment the data, standards, and believe it appropriate to combine in this Medical Insurance). When bills are methodology we intend to use to submitted by providers, and claims by document the final notice announcing establish budgets for Medicare fiscal the contractor budget for FY 1995, and beneficiaries, physicians, and suppliers intermediaries and carriers at least 90 of services, fiscal intermediaries and the proposed contractor budget days before September 1. The statute elements for FY 1996. Therefore, carriers are responsible for— further requires that we publish the • Determining the eligibility status of through this notice, we announce that final data, standards, and methodology the data, standards, and methodology a beneficiary; no later than September 1. In the past, • Determining whether the services we proposed to use to establish the when preparing the Medicare contractor contractor budget for FY 1995 are final. on the submitted claims or bills are budget for each fiscal year, every covered under Medicare and, if so, the A discussion of the October 21, 1994, attempt was made to publish the proposed notice and our response to the correct payment amounts; and proposed and final notices as timely as • Making appropriate payments to the public comment received appears in possible. However, because of the time section IV. of this document. provider, beneficiary, physician, and/or involved in developing the budget and other supplier of services. the lengthy review and clearance II. Overview of FY 1996 National Fiscal intermediary and carrier process, we have been unable to publish Medicare Contractor Budget performance is monitored by us at the both proposed and final notices before A. Data, Standards, and Methodology central office staff and regional office the beginning of the fiscal year. (See, for levels. In general, the central office staff example, the notices for FYs 1993 and We submitted the FY 1996 national address issues that affect policies on a 1994 published in the Federal Register Medicare contractor budget proposal to national level, and the regional office at 59 FR 13491 and 35933.) However, the Congress in February 1995. The staff address issues dealing with because of our continuous workload for the FY 1996 request is regional and local policies, as well as communications with contractors, we expressed in terms of work processed. those of an operational nature. do not believe that the publication date For Part A, the FY 1996 estimated Continuous communication between us of the Federal Register document has workload (140.6 million bills) is 8.8 and the fiscal intermediaries and any negative effect on the fiscal percent more than the FY 1995 estimate. carriers is maintained through intermediaries or carriers. The BPRs For Part B, the FY 1996 estimated consultation workgroups that meet on a issued to all intermediaries and carriers workload (681.4 million claims) is a 3.9 regular basis and are comprised of discuss in detail the work, level of percent increase over the FY 1995 representatives from the central office, effort, and activities we expect them to estimate. regional offices, and Medicare perform in the coming fiscal year. Our estimates involved the use of a contractors. Further, we provide a discussion and regression model that uses the last 36 HCFA’s central office is responsible explanation of the bottom-line unit cost months of actual contractor workload for developing a national contractor target established for each intermediary data. For the FY 1996 projections, we budget for Part A and Part B of the and carrier at the time the BPRs are used November 1994 data, which were Medicare program. The budget is issued. the latest available to us at the time. We formulated over an 18-month period, Sections II and III of this notice will continue to update the resulting beginning in March of the calendar year contain proposed data, standards, and projections monthly to ensure that the preceding the fiscal year to which it methodology we intend to use to most timely data are available for applies. The central office receives establish budgets for Medicare fiscal budgeting purposes. input from the contractor community, intermediaries and carriers for FY 1996. The FY 1996 unit costs for processing our regional offices, the Department of If comments are received during the bills and claims were calculated based 46290 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices on the FY 1995 level adjusted for • Provider Payment; experimental use of the telephone to savings achieved due to productivity, • Productivity Investments; and conduct reviews and reconsiderations. electronic media claims, and reduced • Benefits Integrity. 3. Medicare Secondary Payer (Parts A funding for incremental workload. This The nine functional areas of and B) calculation resulted in a new unit cost, responsibility for carriers under Part B which, when multiplied by the Part A are— The Medicare secondary payer or Part B workloads, determines the • Claim Payment; function is the first of four initiatives total amount required for bill or claim • Review and Hearing; (Medicare secondary payer, medical processing in FY 1996. • Beneficiary or Physician Inquiry; review and utilization review, benefits Feedback received from contractors • Provider (physician/supplier) integrity, and provider audit) we and regional offices during the past Education and Training; developed as ‘‘payment safeguards’’ for several years has led us to believe that • Medicare Review and Utilization the Medicare program. Our continuing contractors can make major Review; Medicare secondary payer program is improvements in performance if given • Medicare Secondary Payer; designed to identify situations in which the authority to manage their budgets. • Participating Physicians; other insurers are the primary payers, to • The FY 1994 BPRs gave the regional Productivity Investments; and pay all claims correctly the first time, • offices the authority to set a budget and Benefits Integrity. and to recover Medicare dollars in the contractors the authority to manage The Hospital Insurance and instances in which mistaken conditional their budgets on a bottom-line basis. Supplementary Medical Insurance Trust payments have occurred. Once funding was issued, each Funds and appropriations provide We aggressively pursue the contractor had the flexibility to funding for these functions. Discussions identification of secondary payer optimally manage the budget consistent concerning the data, standards, and situations through the collection and with the statement of work contained in methodology for these functional areas matching of beneficiary-specific health the BPRs. Before FY 1993, contractors are in section III of this notice. In the care data through the Internal Revenue were not allowed to ‘‘shift’’ more than following national budget summary, we Service/Social Security Administration/ 5 percent of funds from one line item to combine the discussion of functional HCFA (IRS/SSA/HCFA) data match another in their budget, as determined areas that are common to fiscal authorized by section 1862(b)(5) of the by the lesser of the two line items. That intermediaries and carriers. However, Act. The FY 1996 budget includes restriction was intended to allow us to we list specific data for Part A or Part funding to process the workloads based maintain control over the national B under each heading. In developing the on the IRS/SSA/HCFA data match budget, but still give contractors some budget, we provide workload estimates project. We allocate the funds based on latitude with regard to reporting their for all functional areas that are the number of report identification costs. With the exception of the predominantly workload driven. We do numbers we expect a contractor to ‘‘Payment Safeguards,’’ ‘‘Productivity not provide workload estimates for process. Investments,’’ and ‘‘Other’’ line items, those functional areas that are not In addition to the IRS/SSA/HCFA contractors now have total flexibility in predominantly workload driven or for data match, we continue to pursue other the use of funds. There is a 5 percent an uncertain workload until final data matches with State Motor Vehicle limitation on the amount of funds that negotiations with the Medicare Administrations, Workers’ may be shifted out of individual contractors are complete. Compensation, Medicaid Agencies, and the Departments of Defense, Labor, and ‘‘Payment Safeguards,’’ with unlimited 1. Bill and Claim Payment (Parts A and Veterans Affairs. Further, our use of the shifting into ‘‘Payment Safeguards.’’ B) Shifting into or out of ‘‘Productivity initial enrollment questionnaire is an Investments’’ and ‘‘Other’’ line item We currently estimate the Part A important part of our commitment to funding, not governed by contract processed workload to be 140.6 million capturing vital health care coverage data modifications, may not exceed 5 bills in FY 1996. The Part B processed on beneficiaries and their spouses at the percent. Each ‘‘Other’’ line item is workload is currently projected at 681.4 time of Medicare enrollment and before treated separately. The ‘‘Productivity million claims. any claims are filed. Investment’’ line item is treated as a 2. Reconsideration (Part A), Review 4. Medical Review and Utilization whole and not as separate projects. (Part B), and Hearing (Parts A and B) Review (Parts A and B) Funding that is governed by contract Beneficiaries, providers, physicians, In addition to processing and paying modifications may not be shifted to and other suppliers are entitled by law claims from providers of services and other functions or line items. to appeal, through reconsiderations, Medicare beneficiaries, contractors B. Medicare Contractor Functional formal reviews, or hearings, as perform medical and utilization reviews Areas appropriate, the various payment of claims to determine whether services The Medicare contractor budget determinations made by Medicare are covered under the program and are consists of functional areas of contractors. We project that Part B medically necessary. The distribution of responsibility that are performed by the reviews and hearings workloads for FY Medicare contractor funding is based on fiscal intermediaries for Part A and the 1996 will not exceed FY 1995 levels, each contractor’s proportion of the carriers for Part B. The eight functional while workload for Part A workload and individual contractor areas of responsibility for fiscal reconsiderations and hearings will have medical review/utilization review intermediaries under Part A are— a moderate increase. We expect projects. • Bill Payment; contractors to control and respond to Specifically, our contractors are • Reconsideration and Hearing; requests for appeal and to control required to work with the medical • Medicare Secondary Payer; receipt of Administrative Law Judge community to develop clear medical • Medical Review and Utilization hearing requests. review policies and communicate those Review; We continue to maintain efficiencies policies to the providers of services. • Provider Audit (Desk Review, Field achieved in prior years through the use Moreover, we also emphasize the need Audit, and Provider Settlement); of shorter decision letters and the for systematic and ongoing analysis of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46291 claims data to focus prepayment and 5. Provider Audit (Part A only) productivity investments. We also fund postpayment medical review. To meet The audit of provider cost reports is projects that will improve this requirement, intermediaries and our primary instrument to help ensure administrative cost efficiency, such as carriers currently analyze local and the integrity of Part A Medicare administrative simplification. There is no single distribution national data to identify practice payments. Funding priorities are methodology for the allocation of patterns, trends, and aberrancies that directed toward the use of limited desk productivity investment funds. After we may reflect areas of potential abuse, reviews where low cost/low utilization determine the national cost of a inappropriate care, and overutilization. providers are involved and toward the productivity investment, we distribute This data-driven approach allows us to use of onsite focused reviews to expand funds among the contractors. These target and direct our efforts to our the overall examination of high cost/ funds are based on the contractors’ cost greatest risk of inappropriate program high payment issues. Program savings estimates or through formulas that we payment. remain relatively flat, while the FY 1996 derive based on project specifications. Part A medical reviews by fiscal funding level remains constant. Other productivity investment intermediaries focus on preventing In FY 1996, budget estimates allow for initiatives require equal effort by all inappropriate billing through provider a relatively consistent level of reviews contractors regardless of size and, education and on targeting reviews of and audits for all types of providers, therefore, funds are distributed equally providers who fail to change although an increasing number of among contractors. Finally, some inappropriate behavior. Through providers require both desk review and productivity investments, such as analysis of national and local data, areas settlement. Full desk reviews and field administrative simplification and the of abuse and overutilization are audits are directed toward high cost/ Medicare Transaction System, are given identified and payment is denied for high utilization providers and past poor only to contractors that are involved in services that are not covered under the performers. Contractors will retain a the specific projects. Medicare program. Reviews are targeted knowledgeable audit staff and provide where they will be most effective in training in accordance with government 8. Beneficiary or Physician Inquiry (Part protecting the program. auditing standards. B only) Part B medical reviews by carriers Contractors will also respond to identify areas of abuse and The Medicare contractors are the provider appeals by conducting direct link between beneficiaries, overutilization and focus on preventing intermediary hearings and by filing Medicare payment for medically providers, physicians and other position papers and attending hearings suppliers, and the Medicare program. It unnecessary or noncovered services. at the Provider Reimbursement Review Carriers use computerized methods of is the responsibility of HCFA and the Board (PRRB). Contractors will also contractors to provide the most effective analyzing utilization, epidemiologic, reopen and revise prior period and demographic data to detect trends and efficient service to beneficiaries, settlements based on provider requests, providers, physicians, and other in physician and other supplier as well as PRRB and HCFA directives activities and the delivery of health suppliers, and to continue to expand and resolve problems identified on their awareness and understanding of care. This is accomplished through provider cost reports. prepayment and postpayment analysis the Medicare program. of Medicare Part B claims. 6. Provider Payment (Part A only) We are currently revising all benefit notices into a single, easy to read In FY 1996, we will continue to In FY 1996, Medicare contractors will support the medical review activities of summary format. Carriers will begin provide payment services to using the new notice format in FY 1996. the four Durable Medical Equipment approximately 31,500 health care Regional Carriers (DMERCs). The Beneficiary and provider feedback is providers. These payment services used to modify the format, as necessary, DMERCs will conduct prepayment and include establishing and adjusting postpayment review of durable medical to ensure maximum beneficiary interim rates, recouping provider comprehension. We and our contractors equipment, prosthetics, orthotics, and overpayments, and providing supplies (DMEPOS) claims to identify will conduct extensive outreach to consultative services to providers for ensure a smooth transition to the new areas of potential abuse and maintaining and adjusting their overutilization and prevent payment for format. accounting systems to ensure accurate Our Carrier Customer Service Plan noncovered items and services. data for preparing Part A bills and cost initiative is expanded to include— The DMERCs will identify aberrancies reports. • Tone/clarity self-assessment; from an analysis of national and local We will distribute funds in proportion • Initiatives to improve service to databases. The DMERCs will initiate to workload by provider type. blind, deaf, and disabled beneficiaries; corrective action for overpayment • An automated inquiries analysis recoupment, target supplier claims for 7. Productivity Investments (Parts A and B) program; services most frequently billed, and • Improvements to the internal continue to revise regional medical We refer to the costs of implementing review process; review policies and screens for referral legislation and new initiatives that are • Partnerships with local beneficiary to the Office of the Inspector General designed to improve the effectiveness of counseling and assistance organizations; (OIG). This targeting principle will Medicare program administration as • The expansion of beneficiary assist in developing regional medical productivity investments. Productivity advisory committees; and review policies to address identified investments generally provide start-up • Initiatives designed to improve problem areas or trends in new funds for new or revised contractor service to Spanish speaking individuals. technologies. In addition to educating activities. Once these projects are Also, carriers use Audio Response suppliers, DMERCs need to educate the operational, their funding becomes part Units as the initial contact for providers, referring/ordering physicians of the contractor’s ongoing costs. The and a beneficiary Audio Response Unit responsible for prescribing DMEPOS criteria for selecting productivity script is offered to all carriers. In FY items and include them in the medical investments vary. For example, the 1996, carriers will expand the use of policy development process. statute or regulations require some Audio Response Units. The Audio 46292 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Response Units will provide improved referrals to the OIG by increasing our adjusting for various savings and service, accuracy, and consistency fraud detection capabilities through increases associated with initiatives, we through the use of expanded expanded data analysis and then arrayed the contractors’ unit costs standardized scripts and equipment improvements in fraud detection by the and identified the high cost contractors. enhancements. carriers and intermediaries. We believe that the use of the In FY 1996, carriers will receive an In addition, the National Claims complexity index has enabled us to estimated 40.1 million inquiries by History Database continues to be successfully achieve the goals of telephone, in writing, or through direct available to focus postpayment review improving efficiency in contractor contact, an increase of 1 percent over on practitioners and suppliers that operations and reducing contractor-by- the current FY 1995 projection of 39.6 appear to be billing fraudulently or that contractor cost inequities. Since we million inquiries. are misrepresenting to Medicare the have achieved these goals, and believe services or items they are furnishing. that costs can be controlled, we will 9. Participating Physicians/Suppliers In FY 1996, Medicare carriers will base each contractor’s FY 1996 unit cost (Part B only) focus their detection activities on on the FY 1995 level, adjusted for Participating physicians and suppliers medical laboratory, radiology, inflation and for savings achieved as a are those who agree to accept anesthesia, physician services, and result of increased productivity, and on assignment on all Medicare claims in ambulance claims. Also, in FY 1996, reduced funding for incremental return for certain incentives or benefits. Medicare carriers will upgrade their workload. All physicians are given an opportunity fraud detection capabilities by making to enroll or disenroll in the program better use of available databases and D. Overall Budget Considerations annually. expanded relationships with other fraud We note that limitations on the FY Carriers must perform several detection organizations. 1996 budget could require across-the- activities including: (1) Conducting board cost cutting measures. In that annual participation enrollment; (2) 12. Printing Claim Forms (Parts A and case, each regional office will determine Distributing the Medicare Participating B) the amount of budget reduction for its Physician/Supplier Directories; (3) Although this activity is not among contractors. the nine Part A and eight Part B Upgrading and maintaining direct III. FY 1996 National Medicare electronic media claim lines for contractor functional areas, it is a part of the national Medicare contractor Contractor Budget: Data, Standards, participants; and (4) Monitoring and and Methodology enforcing the program requirements for budget. In the interest of maintaining participants and nonparticipants, which standard formats and quality of Since the submission of the includes the comprehensive limiting Medicare entitlement and report forms, President’s FY 1996 Medicare contractor charge compliance program. we supply beneficiary enrollment and budget request to the Congress in provider cost reporting forms. The use February 1995, we have developed and 10. Physician/Supplier Education and of these forms is essential for issued BPRs to the contractors. These Training (Part B only) beneficiary notification and for effective requirements outline the statement of Increasing numbers of physicians, and efficient contractor operations. We work and level of effort that fiscal nonphysician practitioners, and other will print 50 million copies of these intermediaries and carriers are expected suppliers who furnish health care forms for FY 1996. to perform during the upcoming fiscal services rely on information gained year in each of the functional areas for through communications with carriers C. Contractor Unit Cost Calculations which they are responsible. about Medicare program provisions. To A key step in the contractor budget Our schedule is that draft BPRs are respond to this need, we have fostered process is the development of contractor released to the regional offices in April, interaction between suppliers of health unit costs for processing Part A bills and and the final BPRs are released in June care services and carriers to promote Part B claims. These bottom-line unit 1995. At the time of release, each fiscal efficient, economic claims activities. For costs encompass all budget line items intermediary and carrier is given the example, these activities include: (1) except ‘‘Provider Audit,’’ ‘‘Provider individual requirements to be used in Communicating with suppliers of health Reimbursement,’’ ‘‘Productivity preparing their FY 1996 budget request. care services; (2) Educating suppliers to Investments,’’ and, ‘‘Other.’’ The regional offices will send any eliminate the submission of erroneous As first implemented in FY 1992, the additional information that is pertinent or underdocumented claims; (3) complexity index was designed to to the fiscal intermediaries and carriers Distributing newsletters to all suppliers improve efficiency and reduce within their region. Fiscal of services detailing changes in contractor-by-contractor cost inequities intermediaries and carriers must submit coverage, payment, or billing policy; and was based on the application of the their budget requests to us no later than and (4) Educating carrier staff members, Industrial Engineering study 6 weeks after the issuance of the BPRs. on a regularly scheduled basis, to ensure commissioned by us. The Industrial After the fiscal intermediaries and compliance with legislative and policy Engineering study provided us with an carriers review the BPRs, they prepare changes affecting the coding and actual weighted unit cost for each claim their budget requests. The central office submission of claims. type; that is, inpatient or outpatient, and and regional office staff review the fiscal method of submission of a bill or a intermediary and carrier budget requests 11. Benefits Integrity (Parts A and B) claim. After adjustment for changes in as they are submitted. The regional We will continue to deter and detect program emphasis, these unit costs were office staff negotiates a final and Medicare fraud and abuse activities applied to each contractor’s individual mutually-acceptable budget, within the through concerted efforts with the OIG, workload mix to develop a weighted limits of the funding available to us, the Federal Bureau of Investigation, unit cost that reflects the complexity of with each fiscal intermediary and Medicaid Fraud Control Units, the its workload mix. We published an carrier. The central office prepares a Department of Justice, and other HCFA explanation of the complexity index in financial operating plan for each partners. As in FY 1995, we will a Federal Register notice published on regional office that provides total continue to improve the quality of January 2, 1992 (57 FR 57). After regional funding authority for each Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46293 functional area. The regional offices, in • Savings from prior productivity estimated percentage change in turn, prepare a Notice of Budget investments. workload. Approval for each fiscal intermediary • New legislation costs. We estimate the individual fiscal and carrier that provides a full year • Regional Office recommendations. intermediary and carrier budget budget plan subject to quarterly cash • Contract provisions. allocations for reconsiderations, draw limitations. reviews, and hearings by multiplying C. Methodology A. Standards forecast workloads by the adjusted unit The Medicare contractor budget is costs. The basic statement of work, along organized around the previously listed with new and special activities that 3. Beneficiary and Provider Inquiries functional areas that are performed by (Part B only) fiscal intermediaries and carriers are the fiscal intermediaries for Part A and expected to perform, is described in the the carriers for Part B. In 1992, we To establish a budgeted amount for BPR package. Fiscal intermediaries and developed a bottom-line unit cost for beneficiary and provider inquiries, we carriers are expected to perform the each individual contractor. The increase the prior year’s cost by the work as described in the BPR package following narrative describes the projected workload change. We also and in accordance with the standards methodology used to calculate consider special conditions unique to included in the Contractor Performance individual line-item costs. This specific carriers in negotiating the Evaluation for FY 1996. For methodology will be considered as budget. We will use the data to develop consideration in developing their initial general reference for contractors as they a budgeted cost for beneficiary and budget requests, a copy of the draft develop their FY 1996 budgets and also provider inquiries by multiplying Contractor Performance Evaluation provides additional explanation in forecasted processed volume by the unit standards will be sent to contractors. determining how certain costs and cost. Final FY 1996 Contractor Performance savings were determined. The regional 4. Provider Payment (Part A only) Evaluation standards will be published offices will negotiate with the fiscal in the Federal Register. intermediaries and carriers to resolve In determining individual fiscal B. Data any differences within the limits of the intermediary budgets for reimbursement funding available to us. activities, we took into consideration The following data contain various the FY 1995 budgeted figures, the workload volumes, functional costs, and 1. Bill and Claim Payment projected funding for FY 1996, and the manpower information that are used in A statistical forecasting model projected workload based on the developing the individual fiscal determines the individual fiscal workload reported on the Schedule of intermediary and carrier budgets for FY intermediary and carrier workload Providers Serviced. The Schedule of 1996: levels for FY 1996. Using the same data, Providers Serviced is a listing of all the • Forms HCFA–1523/1524 (a we are also projecting the number of facilities serviced by the fiscal multipurpose form that serves as the bills or claims a fiscal intermediary and intermediary. The Schedule of Providers Budget Request, Notice of Budget carrier may expect to have pending at Serviced is submitted with each initial Approval, and Interim Expenditure the end of FY 1995. We will then budget request so that a part of the Report). combine the FY 1996 receipt estimate analysis is the comparison of the • Forms HCFA–1523A/1524A with the anticipated end of FY 1995 composition of the provider community (Schedule of Productivity Investments pending level, and subtract the serviced by the fiscal intermediary and and Other). • Forms HCFA–1523B/1524B estimated FY 1996 pending for each any change reported between fiscal (Schedule of Credits, Electronic Data fiscal intermediary and carrier to years. establish a processed workload; that is, Processing, and Overhead). 5. Provider Audit (Part A only) • Forms HCFA–1523C/1524C Estimated FY 1996 receipts + Estimated (Schedule of Appeals). end of FY 1995 pending ¥ Estimated For FY 1996, the provider audit • Forms HCFA–1523D/1524D end of FY 1996 pending = Estimated FY function is divided into three major (Schedule of Medicare Secondary Payer 1996 Processed Workload. activities: field audits, desk reviews, Costs). In order to price individual contractor and settlements. The Contractor • Forms HCFA–1523E/1524E bill and claim workload, we develop a Auditing and Settlement Report (Form (Schedule of Medical Review Costs). unit cost that is the cost of processing HCFA–1525/1525A) provides a breakout • Forms HCFA–1523G/1524G a single bill or claim. The individual of audit activities and costs by type of (Schedule of Fraud and Abuse). fiscal intermediary and carrier unit costs provider and documents the savings • Form HCFA–1525A/1525A for FY 1996 are calculated from the unit incurred as a result of audit activity. (Contractor Audit Settlement Report). costs in the FY 1995 Notice of Budget Using this as a base, we develop the • Schedules A, B, & C. Approvals. Savings achieved from desk review costs by projecting the • Provider Payment Profile. operating efficiencies also are part of the number of providers serviced by the • Schedule of Providers Serviced. formula employed in computing FY unit cost per desk review (developed for • Medicare Secondary Payer Savings 1996 target unit costs. the latest Contractor Auditing and Settlement Report for FY 1994) to Report. 2. Reconsiderations (Part A), Reviews • determine the cost of handling the FY Medical Review/Utilization Review (Part B), and Hearings (Parts A and B) Savings Report. 1996 workload at the FY 1994 unit cost. • Form HCFA–2580 (Cost We will allocate funding based on the We base the settlement costs on the Classification Report). dollar amount spent (line 2 of Forms workload projected in the fiscal • Forms HCFA–1565/1566 (Carrier HCFA–1523/1524) in the prior years, intermediary’s budget request, Performance Report/Intermediary adjusted for inflation and changes in multiplied by the unit cost for Monthly Workload Report). volume. Specifically, we will adjust the settlements found in the most recent • OMB’s economic assumptions of previous year’s costs for Contractor Auditing and Settlement 3.2 Percent. reconsiderations and hearings by the Report for FY 1994. 46294 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices The first priority of all audit efforts is participation rates will receive greater • The fraud unit’s level of the completion of any special activities funding for the limiting charge violation sophistication to determine benefits required by legislation. The second monitoring. We have discontinued integrity funding allocations. priority is that all cost reports be carrier monitoring of the elective • The completion of any special reviewed and, to the extent possible, surgery disclosure requirement. We now activity required by legislation which settled. require carriers to investigate will be an overriding priority. beneficiary complaints on a case-by-case • The networking costs, which will 6. Medicare Secondary Payer basis. be determined by the personnel cost to We will review the estimated We allocate carrier monitoring funds support the Medicare Fraud and Abuse workload data, reported backlog data, based on the national percentage of Information Coordinator, travel costs, and any other items, for example, nonparticipating physicians/suppliers. and the other expenses needed to proposed Medicare secondary payer All carriers will receive the same conduct networking for the area systems enhancements, to determine funding amount for reporting assigned. Medicare secondary payer funding participation statistics. IV. Data, Standards, and Methodology allocations. Each contractor’s case mix 9. Productivity Investments Used to Establish the Medicare will be analyzed to adjust for Contractor Budgets for FY 1995 specialized workloads such as home We refer to the costs of implementing The October 21, 1994, notice health claims or durable medical legislation and new initiatives that are described the budget development equipment (DME). In FY 1996, we will designed to improve the effectiveness of process in general and gave an overview allocate the budget based on the above Medicare program administration as of how we intended to use the considerations, adjustments created by productivity investments. Several contractor budget data, standards, and shifts in the DME workload from all allocation methodologies will be methodology to establish the FY 1995 carriers to the four specialty carriers, employed in calculating the budgets. and other shifts in workload that may productivity investment budgets for Based on our review of the comments require adjustments. individual fiscal intermediaries and submitted, we are making no changes to carriers. For those projects involving 7. Medical Review/Utilization Review the proposed data, standards, and only single contractors or small groups methodology as published on October The individual fiscal intermediary of contractors, we will allocate funds 21, 1994. Therefore, we announce and carrier medical review/utilization based upon the specifications of the provisions of the proposed notice as review budgets for FY 1996 will be particular project. For those projects final. calculated in three segments: (1) involving all fiscal intermediaries or Prepayment medical review; (2) carriers, if the costs are driven by bill or Provisions of the Proposed Notice Postpayment medical review activities; claim volume, we will distribute the We indicated in the proposed notice and (3) Data analysis and screen funding based upon our workload development. The BPR describes the that the contractor budget would be projections for each contractor. Finally, structured to coincide with the eight activities and workload requirements for those projects involving all fiscal that the fiscal intermediaries and functional areas of responsibilities intermediaries or carriers that require performed by fiscal intermediaries for carriers are expected to meet. As part of equal effort, regardless of the the BPRs, we will ask the fiscal Part A and nine functional areas of contractor’s size, we derive a standard responsibilities performed by carriers intermediaries and carriers to estimate allocation to be given to all contractors. the level of funding that will be for Part B of the Medicare program. We necessary to meet such requirements. 10. Physician/Supplier Education and proposed that final funding for the We will allocate prepayment and Training (Part B only) contractor functions would be allocated in accordance with the current claims postpayment medical review funding to Distribution of funds made available contractors based upon the workload processing trends, legislative mandates, to HCFA for physician/supplier administrative initiatives, current year that a fiscal intermediary or carrier education and training is based upon projects for FY 1996. performance standards and criteria, and the ratio of physicians and suppliers in the availability of funds appropriated by 8. Participating Physicians/Suppliers each carrier’s service area to the the Congress. While the contractors (Part B only) national total of physicians and were preparing their budget requests, suppliers. In determining the individual carrier we developed preliminary budget funding levels for the participating 11. Benefits Integrity allocations for the 17 functional areas that were based on historical patterns, physician/supplier program for FY In allocating the FY 1996 benefits 1996, we considered the following workload growth, inflation assumptions, integrity budget to individual fiscal statistical forecasting reports, and any factors: intermediaries and carriers, we will • The number of physicians/ other available information. consider the following: A key step in the contractor’s budget suppliers in the carrier’s service area. • • The carrier’s current participation The prior year’s effectiveness in process is the development of contractor initiating fraud referrals to the OIG. unit costs for processing Part A bills and rate. • • The carrier’s recent performance in Initiating overpayment recoveries Part A claims. As in FY 1994, the FY increasing its participation rate. when appropriate. 1995 budget process used a bottom line • The statement of work to be • Prioritizing workload to unit cost approach. All budget line performed as outlined in the BPRs. concentrate on high dollar and multi- items except Provider Audit, • FY 1995 cost experience. state fraud. Productivity Investments, Other, and in Since participating physicians/ • The extracted workload and cost FY 1995, Provider Payment, are part of suppliers are eligible for toll-free data from the Schedule of Fraud and the bottom line unit cost calculation. In telephone lines for electronic billing, Abuse (Forms HCFA–1523G/1524G). FY 1995, the complexity index was not allowance will be made for these • The Medicare Fraud Unit used as it was in prior years. We believe expenses. Carriers with lower Workload Report. that the use of the complexity index Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46295 over the last 3 fiscal years has enabled allocations. Each contractor’s case mix issued. The intermediaries and carriers us to successfully achieve the goals of would be analyzed to adjust for have ample time to identify and resolve improving efficiency in contractor specialized workloads such as home any problems before they finalize their operations and reducing contractor-by- health claims or DME. budget requests for the fiscal year. contractor cost inequities. Since we In FY 1995, we proposed the budget Comment: The commenter indicated have achieved these goals, and believe be allocated based on adjustments that the use of the complexity index in that costs can be controlled, we based created by shifts in the DME workload prior years provided a methodologically each contractor’s unit cost on their FY from all carriers to the four specialty flawed basis for calculating the 1994 level, adjusted for savings carriers and by other shifts in workload contractor unit costs in FY 1995. achieved due to increased productivity, that may require adjustments. The Response: We do not agree. As stated electronic media claims, and reduced regional offices would negotiate with in the proposed notice, we believe that funding for incremental workload. the fiscal intermediaries and carriers to the complexity index is useful in Because of reduced funding in FY 1995 resolve any differences between our helping to control contractor costs by inflation was not given. allocations and their requests within the providing funding on the basis of The Medicare secondary payer limits of the funding available to us. workload complexity. The use of the function is the first of four initiatives we complexity index over the last 3 fiscal Analysis of and Response to Public developed as ‘‘Payment Safeguards’’ for years has enabled us to successfully Comment the Medicare program. The focus of the achieve the goals of improving Medicare secondary payer initiative is In response to our request for public efficiency in contractor operations and to ensure that the Medicare program comment in the October 21, 1994 notice, reducing contractor-by-contractor cost pays for covered care only to the extent we received one timely item of inequities. Since we have achieved the required after payment by the primary correspondence from a health insurance above goals, we believe it is reasonable insurer. We proposed that the standard company. Several issues that were for FY 1995 contractor unit costs to be for determining the amount of Medicare raised by the commenter are outside the based on each contractor’s FY 1994 secondary payer funding a contractor scope of the proposed notice and are not level. would receive in FY 1995 would be addressed in this notice. The proposed Comment: The commenter expressed based on workload volumes, required notices are intended to address only the concern about the process used to systems changes, and any special data, standards, and methodology to be develop specific Medicare secondary projects that may be assigned to used to establish budgets for fiscal payer savings goals for each contractor contractors. intermediaries and carriers for a for FY 1995 as well as how funding was Based on actuarial analysis, we particular fiscal year. Specific determined for each contractor for developed specific savings goals for instructions on how to implement and Medicare secondary payer activities. each contractor. The goals were monitor certain initiatives (for example, The commenter believed that Medicare developed on estimates of savings to be beneficiary inquiries, participating secondary payer funds are allocated achieved by contractors for the physician and benefits integrity) are after assigning Medicare secondary Medicare secondary payer categories of presented through program memoranda, payer savings goals. working aged, disabled, workers’ manual instructions, BPR, and other Response: The President’s budget compensation, end-stage renal disease, means. estimate that was published in February and liability or no-fault insurance. After Comment: The commenter was 1994 covers the entire Medicare assigning goals to contractors, funds concerned that the proposed notice was contractor budget. Although the budget were allocated based on the various published after the beginning of FY estimate mentions Medicare secondary Medicare secondary payer activities a 1995. The commenter believed that payer savings, it does not define specific contractor must perform such as untimely publication of the proposed savings per contractor. Further, we have processing prepayment claims, notice denied interested parties the not assigned savings goals to postpayment claims, inquiries, opportunity to comment before intermediaries and carriers since FY outreach, and hospital reviews. implementation of the budget. 1993. Therefore, Medicare secondary We proposed that in FY 1995, the Response: In the preparation of the payer funds are not allocated after Initial Enrollment Questionnaire would Medicare contractor budget each fiscal assigning Medicare secondary payer be operational. The Initial Enrollment year, we attempt to publish the savings goals to contractors. Questionnaire eliminates the need for proposed and final notices timely. The factors that affect Medicare first claim development on However, because of the time involved secondary payer funding for individual approximately 85 percent of new in reviewing data and developing the contractors are: the national Medicare enrollees. This initiative improves budget and the lengthy review and secondary payer budget; the priority of service to beneficiaries on a national clearance process, we were not able to the Medicare secondary payer activities; basis by providing detailed information publish the proposed and final notices individual contractor Medicare on the Medicare secondary payer before the beginning of the 1995 fiscal secondary payer budget requests and program at the time a beneficiary enrolls year. We regret that we were unable to workload estimates (a contractor’s in Medicare. publish the proposed notice timely, but estimated Medicare secondary payer We proposed to include funding to we do not believe that our actions workload and budget request is process the workloads based on the IRS/ substantively penalized or prejudiced compared to its previous workload and SSA/HCFA data match project. The the fiscal intermediaries or carriers. The expenditures for Medicare secondary funds would be allocated on the basis of BPRs issued to all intermediaries and payer activities); an analysis of a the number of report identification carriers discuss in detail the work, level contractor’s Medicare secondary payer numbers a contractor will process. We of effort, and activities we expect them budget request and that of similar would review the estimated workload to perform in the coming fiscal year. contractors with similar workloads data, reported backlog data, and Further, we provide a discussion and (intermediaries and carriers are proposed Medicare secondary payer explanation of the bottom-line unit cost compared separately); the ability of a systems enhancements to determine target established for each intermediary contractor to justify and document its Medicare secondary payer funding and carrier at the time the BPRs are request for additional funding, or for 46296 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices funding we believe is out of its peer services provided by an excluded party. Effective grouping; and negotiations between the Program beneficiaries remain free to Subject, city, State date regional offices and the individual decide for themselves whether they will contractors. continue to use the services of an MANIK, GOLAM, FLORAL excluded party even though no program PARK, NY ...... 08/16/95 V. Response to Comments MATHIS, JIMMY RONALD, payments will be made for items and PARKER, TX ...... 08/10/95 Because of the large number of items services provided by that excluded of correspondence we normally receive MERKOW, LEONARD, PITTS- party. The exclusions have national BURGH, PA ...... 08/14/95 on documents published for comment, effect and also apply to all other Federal PILARCZYK, DONNA, we are not able to acknowledge or non-procurement programs. PAINESVILLE, OH ...... 08/14/95 respond to them individually. We will RAO, MOHAN KONAKONDRA, consider all comments we receive by the LONGVIEW, TX ...... 08/10/95 Subject, city, State Effective date specified in the DATES section of date SANDERS, DEBORAH, LITTLE this notice, and we will respond to the ROCK, AR ...... 08/03/95 comments in a subsequent published PROGRAM-RELATED CONVICTIONS SLON, TIMOTHY, AMHERST, notice. To the extent that we receive NY ...... 08/16/95 AHMAD, MIRZA N, DEWITT, comments during the comment period, VAOESEA, SIAKI L, SEATTLE, NY ...... 08/16/95 WA ...... 08/03/95 we will address those comments in a BAKER, DALE, DAYTON, OH . 08/14/95 VILLARD, JOSEPH JR, ALEX- final notice and, if necessary, make BEGG, CYNTHIA L, ALBANY, ANDRIA, LA ...... 08/03/95 revisions to the proposed data, NY ...... 08/16/95 WALTER, DONALD M III, standards, and methodology for FY BEGG, CAROL J, PALM BEACH, FL ...... 08/14/95 1996. If no comments are received, we KINDERHOOK, NY ...... 08/16/95 WALTER, LUCILLE H, WIN- will simply adopt the proposed data, BELL, DOROTHY S, BRYAN, CHESTER, VA ...... 08/14/95 standards, and methodology for FY 1996 TX ...... 08/14/95 WALTER, FRANCINE P, PALM BOLAN, BERT WAYNE, EL BEACH, FL ...... 08/14/95 as final, effective October 1, 1995. RENO, OK ...... 08/03/95 In accordance with the provisions of BORREGO, ORESTES T, PATIENT ABUSE/NEGLECT CONVICTIONS Executive Order 12866, this proposed MIAMI, FL ...... 08/14/95 rule was not reviewed by the Office of BRIZ, PAZ, PIEDMONT, CA .... 08/03/95 BORDELON, BRADLEY Management and Budget. CAMBRIA MEDICAL ASSOCI- JAMES, MOREAUVILLE, LA 08/10/95 Authority: Sections 1816(c)(1) and ATES, PHILADELPHIA, PA .. 08/14/95 BROWN, MICHELLE, ADAMS, 1842(c)(1) of the Social Security Act (42 CASE, DAVID A, EUGENE, NY ...... 08/16/95 U.S.C. 1395h(c)(1) and 1395u(c)(1)). OR ...... 07/18/95 BROWN, CYNTHIA M, CHAN, JUAN M, FREMONT, PLAQUEMINE, LA ...... 08/10/95 (Catalog of Federal Domestic Assistance CA ...... 08/03/95 CARAVAGLIO, JOSEPH F, Program No. 93.773, Medicare—Hospital CLARK, MAUREEN E, PHILA- TRUMANSBURG, NY ...... 08/16/95 Insurance; and Program No. 93.774, DELPHIA, PA ...... 08/14/95 Medicare—Supplementary Medical CAVINESS, GEORGE E, CLARK'S FAMILY PHAR- Insurance Program.) RAMSEUR, NC ...... 08/14/95 MACY, PHILADELPHIA, PA . 08/14/95 COPELAND, MARY LOIS, Dated: August 16, 1995. CLINE, DARRELL E, AUBURN, MAYFLOWER, AR ...... 08/03/95 Bruce C. Vladeck, WA ...... 08/03/95 DAVIS, KEVIN EARL, Administrator, Health Care Financing FONSECA, MARIO, MIAMI GRANBURY, TX ...... 08/10/95 Administration. LAKES, FL ...... 08/14/95 DEAN, CHARLOTTE RE- [FR Doc. 95–22029 Filed 9–5–95; 8:45 am] GRECO, ISABEL, SANTE FE, BECCA, NATCHITOCHES, NM ...... 08/10/95 LA ...... 08/10/95 BILLING CODE 4120±01±P HAMILTON, ROSS, BRONX, FORSYTHE, RONALD J, HOT NY ...... 08/16/95 SPRINGS, AR ...... 08/10/95 HARR, ROBERT L, FORT GRIFFIS, CHARLES LAMAR, Office of Inspector General WORTH, TX ...... 08/10/95 OKLAHOMA CITY, OK ...... 08/10/95 HERNANDEZ, MARILYN SUE, HASAN, LEA, STATEN IS- Program Exclusions: July 1995 OKLAHOMA CITY, OK ...... 08/10/95 LAND, NY ...... 08/16/95 AGENCY: Office of Inspector General, HERZOG, BRUCE, ROSLYN, JACKSON, JASON L, COLUM- HHS. NY ...... 08/16/95 BIA, LA ...... 08/03/95 HOLSTON AMBULANCE KNIGHT, CARLA JEAN, ACTION: Notice of program exclusions. SERVICE, INC, LAKE TALLULAH, LA ...... 08/10/95 During the month of July 1995, the CHARLES, LA ...... 08/03/95 OLSEN, CHERYL ANN, HHS Office of Inspector General HOWARD, ROBERT L, OCEAN SPRINGS, MS ...... 08/10/95 ROSSVILLE, GA ...... 08/14/95 imposed exclusions in the cases set PARHAM, REGINA L, HUFF, MARY ANN, GRAND FORDYCE, AR ...... 08/10/95 forth below. When an exclusion is PRAIRIE, TX ...... 08/10/95 PEGUES, CLIFTON CURTIS, imposed, no program payment is made JOHN R WHITE DRUGS, INC, DUNN, NC ...... 08/14/95 to anyone for any items or services FAYETTEVILLE, NC ...... 08/14/95 PHILLIPS, QUINITA AMELIA, (other than an emergency item or JOHNSON, DEBRA A, GAL- LAFAYETTE, LA ...... 08/10/95 service not provided in a hospital VESTON, TX ...... 08/10/95 PITCHER, DONALD, BAKERS- emergency room) furnished, ordered or KANSAGRA, RAY, MARLTON, FIELD, MO ...... 08/03/95 prescribed by an excluded party under NJ ...... 08/16/95 SIMMONS, LARRY, NEW the Medicare, Medicaid, Maternal and KIMBRO, WILLIAM D, BERN, NC ...... 08/14/95 SLAUGHTER, LA ...... 08/10/95 SIMMONS, MICHAEL LEON, Child Health Services Block Grant and KURTZ, JOSEPH A, PHILA- NEW BERN, NC ...... 08/14/95 Block Grants to States for Social DELPHIA, PA ...... 08/14/95 THOMAS, BERNICE, SPRING Services programs. In addition, no M.A.S. TRANSIT, INC, CO- LAKE, NC ...... 08/14/95 program payment is made to any LUMBIA, LA ...... 08/10/95 UZZLE, CARLTON BERNARD, business or facility, e.g., a hospital, that MANGA, GREGORY M, YORK, GOLDSBORO, NC ...... 08/14/95 submits bills for payment for items or PA ...... 08/14/95 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46297 Effective Effective Effective Subject, city, State date Subject, city, State date Subject, city, State date WEATHERS, JAMES ED- FRENCH, ROBERT LEE, ENTITIES OWNED/CON- WARD, GULFPORT, MS ...... 08/10/95 WHITE DEER, TX ...... 08/10/95 TROLLED BY CONVICTED/ WITHERS, URSULA M, PHILA- GOOD, CLIFFORD N, AR- EXCLUDED DELPHIA, MS ...... 08/10/95 LINGTON, TX ...... 08/10/95 YANICK, JEAN, LYNN, MA ...... 08/16/95 GREENE, VIRGINIA, MALDEN, CARDIO MARKETING, MA ...... 08/16/95 PARKER, TX ...... 08/10/95 CONVICTION FOR HEALTH CARE FRAUD HART, ALRUNDUS, TRUTH CENTER FOR HUMAN OR CONSEQUENCE, NM .... 08/10/95 GROWTH, EL RENO, OK .... 08/03/95 GOLDSMITH, PAUL EDWARD HERRING, DIANE, BROOK- HEALTH EDUCATION SERV- JR, WAGGAMAN, LA ...... 08/10/95 LINE, MA ...... 08/16/95 ICES, EL RENO, OK ...... 08/03/95 JONES, PAMELA W, GRET- HOLLIMAN, DANIEL, SAN R M MEDICAL SUPPLY, NA, LA ...... 08/03/95 ANDREAS, CA ...... 08/03/95 PARKER, TX ...... 08/10/95 LIPSIE, SHARON R, BUCK- IONASCU, NATHAN, LEY, WA ...... 08/03/95 WAYNE BOLAN & ASSOCI- CHAPPAQUA, NY ...... 08/16/95 LORIO, TERRI L, HARVEY, LA 08/03/95 ATES, EL RENO, OK ...... 08/03/95 MCTEAR, CAROLYN, NEW JACKSON, DORIS D, IRVING, WAYNE BOLAN, PH.D. & ORLEANS, LA ...... 08/03/95 TX ...... 08/03/95 ASSOC, EL RENO, OK, DE- NUNNERY, TAMERA J, FAY- JOHNSON, MARILYNN L, FAULT ON HEAL LOAN ...... 08/03/95 ETTEVILLE, NC ...... 08/14/95 ROCHESTER, MN ...... 08/14/95 ABDAL-ALIM, KHALID B, PORTER, ANGERRIAN J, KASCHUB, TONI L, ARLING- HOUSTON, TX ...... 08/10/95 GRETNA, LA ...... 08/10/95 TON, TX ...... 08/10/95 CHMELIK, GREGORY J, SINGLETON, ROSALIND, KOSER, WILLIAM J, ALBANY, FAIRBAULT, MN ...... 08/14/95 MARRERO, LA ...... 08/03/95 CA ...... 08/03/95 COBY, MICHAEL E, AM- TOWNSEND, BETH ANGELA, LANKFORD, JAMES E JR, HERST, MA ...... 08/16/95 BOONE, NC ...... 08/14/95 UPPERCO, MD ...... 08/14/95 COGGINS, CHERYL R, ANTI- VU, DAM, BEAVERTON, OR ... 08/03/95 LOCKHART, JOYCE BASDAI, OCH, TN ...... 08/14/95 SILSBEE, TX ...... 08/10/95 ELLIS, ROBERT W, TERRELL, CONTROLLED SUBSTANCE CONVICTIONS McMICHAEL, RITA FAYE, LIT- TX ...... 08/10/95 TLE ROCK, AR ...... 08/10/95 HATTER, MARCUS A, LAN- BROCK, CHARLES F, MOHLER, MARSHA MAR- SING, MI ...... 08/14/95 CHARLEVOIX, MI ...... 08/14/95 GUERITE, AUSTIN, TX ...... 08/10/95 HOLMES, CLARENCE J, SPO- JOHNSON, KEITHLEY E, MOKLER, JOYCE, WIN- KANE, WA ...... 08/03/95 LAPEER, MI ...... 08/14/95 CHESTER, MA ...... 08/16/95 LAURICELLA, ELAINE M, SAN JEWETT, CHARLES D, VER- NAYAK, KRISHEN K, BETHEL SAILLES, KY ...... 08/14/95 BRUNO, CA ...... 08/03/95 PARK, PA ...... 08/14/95 MILLER, STUART M, FPC JORDAN, MARTIN E, CLEVE- PINE, MICHAEL J, BROOK- LAND, OH ...... 08/14/95 ELGIN AFB, FL ...... 08/14/95 INGS, OR ...... 08/03/95 NOCK, THOMAS RUFUS, MACHARA, KATHERINE L, POHL, MALCOLM W, WEY- ENTERPRISE, FL ...... 08/14/95 FORT DIX, NJ ...... 08/14/95 MOUTH, MA ...... 08/16/95 NOVICK, SALLY A, COTTAGE SMITH, TIMOTHY L, SAN AN- REMSBURG, LAURA ELLEN, GROVE, MN ...... 08/14/95 TONIO, TX ...... 08/10/95 PARIS, TX ...... 08/10/95 PAUL, JAY M, JAMISON, PA .. 08/14/95 URKEVIC, JAN P, BROOK- ROBERTS, EDWIN A, HAY- LINE, MA ...... 08/16/95 WARD, CA ...... 08/03/95 LICENSE REVOCATION/SUSPENSION/ WILLIAMS, EDWARD JR, FT SHLIMBAUM, CHARLES, SURRENDER LAUDERDALE, FL ...... 08/14/95 BRIGHTWATERS, NY ...... 08/16/95 WOOD, CAROL S, STEWART, DONNA LOUISE, BARR, EDDIE F, STOCKTON, INDIANOLA, WA ...... 08/03/95 CA ...... 08/03/95 HOUSTON, TX ...... 08/10/95 STRUCK, RAYMOND, BILLINGTON, LUANNE LEE, Dated: August 25, 1995. WESLACO, TX ...... 08/03/95 LITCHFIELD, MN ...... 08/14/95 BOURLAND, REGINA A, GAR- TURK, MARY KATHERINE, William M. Libercci, LAND, TX ...... 08/10/95 KILLEEN, TX ...... 08/10/95 Director, Health Care Administrative BRADFIELD, LLOYD E, WATHEN, BRUCE D, MUSKE- Sanctions, Office of Civil Fraud and BACKUS, MN ...... 08/14/95 GON, MI ...... 08/14/95 Administrative Adjudication. BURKE-DUDLEY, MARY E, [FR Doc. 95–22045 Filed 9–5–95; 8:45 am] MILFORD, MA ...... 08/16/95 FEDERAL/STATE EXCLUSION/ CALDWELL, PATRICIA, ALBU- SUSPENSION BILLING CODE 4150±04±P QUERQUE, NM ...... 08/10/95 CERILLI, PAULA, BRAINTREE, BUSH, KRISTY, ALVARADO, MA ...... 08/16/95 TX ...... 08/10/95 CHAPA, TAMMY JO, CLARK, LINDA KAY, KERMIT, ALAMAGORDO, NM ...... 08/10/95 TX ...... 08/10/95 CHAVEZ, SHANNON V, NEWTON, JOEL LANE, KAUF- LOMPOC, CA ...... 08/03/95 MAN, TX ...... 08/10/95 COGEN, MICHAEL, LAFAY- POLLEY, SUZANNE M, AUS- ETTE, CA ...... 08/03/95 TIN, TX ...... 08/10/95 DELONG, DENISE A, LOS SAXMAN, MICHAEL, NAMPA, FRESNOS, TX ...... 08/10/95 ID ...... 08/03/95 ELLIOTT, NELLIE R, BEAU- SCHULD, JOHN T, PHILADEL- MONT, TX ...... 08/10/95 PHIA, PA ...... 08/14/95 FLIEDNER, EUSTACE WESTWIND MANOR, CROWN CONWAY, ARLINGTON, TX 08/10/95 POINT, IN ...... 08/14/95 46298 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices DEPARTMENT OF HOUSING AND FOR FURTHER INFORMATION CONTACT: government may apply for nonentitled URBAN DEVELOPMENT Stephen Rhodeside, State and Small CDBG funds allocated to New York Cities Division, Office of Community State. Office of the Assistant Secretary for Planning and Development, Department Community Planning and The Fiscal Year 1995 competition in of Housing and Urban Development, New York State was announced in a Development Room 7184, 451 Seventh Street, SW., notice of funding availability (NOFA) Washington, DC 20410, Telephone (202) [Docket No. FR±3831±N±02] published in the Federal Register on 708–1322 (voice) or (202) 708–2565 December 5, 1994 (59 FR 62474). The Announcement of Funding Awards for (TDD). (These are not toll-free numbers.) NOFA announced the availability of the HUD-Administered Small Cities SUPPLEMENTARY INFORMATION: Title I of allocation of $50,616,000 for Community Development Block Grant the Housing and Community nonentitled communities in New York Program Fiscal Year 1995 Development Act of 1974, as amended State. The NOFA also announced the AGENCY: Office of the Assistant (the HCD Act), authorizes the Community Development Block Grant allocation of this funding amount Secretary for Community Planning and between the New York Office and the Development, HUD. (CDBG) Program. Section 106 provides that HUD will administer the CDBG Buffalo Office. ACTION: Announcement of funding In accordance with section 102 awards. Program for nonentitled units of local government within a State which does (a)(4)(C) of the Department of Housing SUMMARY: In accordance with section not elect to assume the administrative and Urban Development Reform Act of 102(a)(4)(C) of the Department of responsibility for the program. As such 1989, the Department is publishing the Housing and Urban Development HUD, continues to operate the names and addresses of the grantees, Reform Act of 1989, this announcement nonentitlement CDBG Program in and the amount of the award made to notifies the public of funding decisions Hawaii and New York in accordance each grantee. This information is made by the Department under the with 24 CFR part 570, subpart F. In provided in Appendix A to this HUD-Administered Small Cities Hawaii, HUD distributes funds in document. Community Development Block Grant Hawaii on a formula basis since there (CDBG) Program for Fiscal Year 1995. are only three nonentitlement entities. Dated: August 30, 1995. The announcement contains the names In New York State, HUD conducts an Andrew Cuomo, and addresses of the award winners and annual competition in which Assistant Secretary for Community Planning the amount of the awards. nonentitled units of general local and Development. APPENDIX AÐ1995 SMALL CITIES GRANTEES Grantee Grant No. Amount New York Office Town of Bethel, Box 300, White Lake, New York 12786 ...... B±95±DH±36±0109 $250,000 Town of Fallsburg, P.O. Box 830, South Fallsburg, New York 12779 ...... B±95±DH±36±0111 155,000 Village of Highland Falls, 180 Main Street, Highland Falls, New York 10928 ...... B±95±DH±36±0102 400,000 City of Kingston, City Hall, 1 Garraghan Drive, Kingston, New York 12401 ...... B±95±DH±36±0107 900,000 Town of Liberty, 120 North Main Street, Liberty, New York 12754 ...... B±95±DH±36±0116 400,000 Town of Marlborough, Route 9W, Milton, New York 12547 ...... B±95±DH±36±0117 400,000 Village of New Paltz, 25 Plattekill Avenue, P.O. Box 877, New Paltz, New York 12561 ...... B±95±DH±36±0123 400,000 Village of New Square, 766 North Main Street, New Square, New York 10977 ...... B±95±DH±36±0103 400,000 City of Port Jervis, Municipal Building, 20 Hammond Street, Port Jervis, New York 12771 ...... B±95±DH±36±0122 696,000 Town of Rockland, Town Hall, Livingston Manor, New York 12758 ...... B±95±DH±36±0112 275,000 Town of Rosendale, Box 423, Rosendale, New York 12472 ...... B±95±DH±36±0101 400,000 Town of Shawangunk, P.O. Box 247, Wallkill, New York 12589 ...... B±95±DH±36±0104 400,000 Town of Ulster, Town Hall, Neighborhood Road, Lake Katrine, New York 12449 ...... B±95±DH±36±0118 400,000 Village of Walden, 8 Scofield Street, Walden, New York 12586 ...... B±95±DH±36±0106 400,000 Village of Woodridge, P.O. Box 655, Woodridge, New York 12789 ...... B±95±DH±36±0114 302,000 Buffalo Office Village of Weedsport, P.O. Box 190, Weedsport, NY 13166 ...... B±95±DH±36±0002 $400,000 Village of Randolph, 26 Jamestown Street, Randolph, NY 14772 ...... B±95±DH±36±0003 600,000 Town of Northampton, Northampton Municipal Bldg, South Main Street, Northville, NY 12134 ...... B±95±DH±36±0006 400,000 Town of Mooers, Town Hall, P.O. Box 238, Mooers, NY 12958 ...... B±95±DH±36±0008 400,000 Town of Bellmont, Star Route, Merrill, NY 12955 ...... B±95±DH±36±0009 400,000 County of Lewis, Court House, 7660 State Street, Lowville, NY 13367 ...... B±95±DH±36±0010 600,000 Town of Willet, Town Hall, P.O. Box 37, Willet, NY 13863 ...... B±95±DH±36±0011 400,000 City of Watertown, Watertown Municipal BuildingÐRoom 302, 245 Washington Street, Watertown, NY B±95±DH±36±0013 400,000 13601. Village of Addison, P.O. Box B, Addison, NY 14801 ...... B±95±DH±36±0017 810,791 Town of New Hudson, Town Hall, Black Creek, NY 14714 ...... B±95±DH±36±0018 400,000 County of St. Lawrence, County Courthouse, 48 Court Street, Canton, NY 13617 ...... B±95±DH±36±0019 400,000 Town of Montezuma, RD #1, Montezuma, NY 13034 ...... B±95±DH±36±0021 399,360 Town of Pittsfield, RD #3 P.O. Box 231, Pittsfield, NY 13411 ...... B±95±DH±36±0023 400,000 Town of Brookfield, Town Hall, Main Street, Brookfield, NY 13314 ...... B±95±DH±36±0024 400,000 Town of Westville, RD 3, Malone, NY 12953 ...... B±95±DH±36±0027 400,000 Town of Plattsburgh, Town Office, 152 Banker Road, Plattsburgh, NY 12901 ...... B±95±DH±36±0028 400,000 Village of Canastota, Village Hall, 205 South Petersboro Street, Canastota, NY 13032 ...... B±95±DH±36±0029 830,000 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46299 APPENDIX AÐ1995 SMALL CITIES GRANTEESÐContinued Grantee Grant No. Amount Village of Penn Yan, P.O. Box 426, 3 Maiden Lane, Penn Yan, NY 14527 ...... B±95±DH±36±0030 91,500 Village of Northville, Village Offices, North Third Street, Northville, NY 12134 ...... B±95±DH±36±0031 400,000 Town of Palmyra, 201 East Main Street, Palmyra, NY 14552 ...... B±95±DH±36±0032 400,000 City of Oswego, City Hall, Oswego, NY 13126 ...... B±95±DH±36±0036 900,000 Village of Saranac Lake, Power & Light Building, 2 Main StreetÐ3rd Floor, Saranac Lake, NY 12983 ...... B±95±DH±36±0038 400,000 Town of Black Brook, Town Offices, Main Street AuSable, Forks, NY 12921 ...... B±95±DH±36±0039 400,000 Town of Dannemora, P.O. Box 658, Cook Street, Dannemora, NY 12929 ...... B±95±DH±36±0040 400,000 Town of AuSable, Town Hall, South Sable Street, Keeseville, NY 12944 ...... B±95±DH±36±0041 400,000 Town of Franklin, Box 73, Franklin, NY 12989 ...... B±95±DH±36±0042 400,000 City of Lockport, Lockport Municipal Building, One Locks Plaza, Lockport, NY 14094 ...... B±95±DH±36±0043 400,000 City of Amsterdam, City Hall, 61 Church Street, Amsterdam, NY 12010 ...... B±95±DH±36±0044 400,000 Town of Ohio, R.R. #1, Box 561, Cold Brook, NY 13324 ...... B±95±DH±36±0046 400,000 Town of Yates, 8 South Main Street, P.O. Box 197, Lyndonville, NY 14098 ...... B±95±DH±36±0047 400,000 City of Hornell, City Hall, 108 Broadway, Hornell, NY 14843 ...... B±95±DH±36±0050 400,000 City of Batavia, 10 West Main Street, City Hall, Batavia, NY 14020 ...... B±95±DH±36±0051 400,000 Village of Albion, 35±37 East Bank Street, Albion, NY 14411 ...... B±95±DH±36±0052 400,000 Village of Holley, 72 Public Square, Holley, NY 14470 ...... B±95±DH±36±0053 390,000 City of Geneva, 47 Castle Street, P.O. Box 273, Geneva, NY 14456 ...... B±95±DH±36±0058 900,000 City of Canandaigua, 2 North Main Street, Canandaigua, NY 14424 ...... B±95±DH±36±0059 900,000 City of Little Falls, City Hall, 659 Main Street, Little Falls, NY 13365 ...... B±95±DH±36±0060 400,000 Town of Dryden, 65 East Main Street, Dryden, NY 13053 ...... B±95±DH±36±0061 400,000 Town of Cincinnatus, Town Hall, Main Street, Cincinnatus, NY 13040 ...... B±95±DH±36±0062 338,000 Village of Clyde, South Park Street, Clyde, NY 14433 ...... B±95±DH±36±0065 400,000 Town of Dickinson, P.O. Box 101, Dickinson Center, NY 12930 ...... B±95±DH±36±0067 400,000 County of Seneca, County Hall, One DePronio Drive, Waterloo, NY 13165 ...... B±95±DH±36±0068 291,000 County of Niagara, 59 Park Avenue, Lockport, NY 14094 ...... B±95±DH±36±0069 600,000 Town of Summit, Town Hall, P.O. Box 132, Summit, NY 12175 ...... B±95±DH±36±0070 400,000 City of Gloversville, City Hall, Frontage Road, Gloversville, NY 12078 ...... B±95±DH±36±0071 400,000 Town of Ticonderoga, 324 Champlain Avenue, Ticonderoga, NY 12883 ...... B±95±DH±36±0075 400,000 City of Plattsburgh, 41 City Hall Place, Plattsburgh, NY 12901 ...... B±95±DH±36±0079 900,000 County of Tompkins, Tompkins County Courthouse, 320 North Tioga Street, Ithaca, NY 14850 ...... B±95±DH±36±0080 118,500 Town of Groton, 101 Conger Boulevard, Groton, NY 13073 ...... B±95±DH±36±0081 315,000 Town of Gaines, 14087 Ridge Road, Albion, NY 14411 ...... B±95±DH±36±0083 500,000 Town of Barre, 14317 West Barre Road, Albion, NY 14411 ...... B±95±DH±36±0084 400,000 County of Ontario, Ontario County Courthouse, 27 North Main Street, Canandiagua, NY 14424 ...... B±95±DH±36±0086 600,000 Village of Frankfort, P.O. Box 188, 126 East Orchard Street, Frankfort, NY 13340 ...... B±95±DH±36±0087 400,000 Village of Cold Brook, P.O. Box 215, Cold Brook, NY 13324 ...... B±95±DH±36±0088 400,000 County of Montgomery, Park Street, P.O. Box 1500, County Annex Building, Fonda, NY 12068 ...... B±95±DH±36±0089 600,000 County of Wayne, Wayne County Courthouse, 26 Church Street, Lyons, NY 14489 ...... B±95±DH±36±0091 350,000 City of Fulton, 141 South First Street, Fulton, NY 13069 ...... B±95±DH±36±0092 900,000 City of Ithaca, City Hall, 108 East Green Street, Ithaca, NY 14850 ...... B±95±DH±36±0094 900,000 County of Cattaraugus, 303 Court Street, Little Valley, NY 14755 ...... B±95±DH±36±0095 550,000 City of North Tonawanda, City Hall, 216 Payne Avenue, North Tonawanda, NY 14120 ...... B±95±DH±36±0096 600,000 Town of Starkey, Starkey Town Hall, 40 Seneca Street, Dundee, NY 14837 ...... B±95±DH±36±0097 400,000 Town of Allegany, Town Hall Building, 5 Mile Road, Allegany, NY 14706 ...... B±95±DH±36±0099 400,000 Village of Medina, 600 Main Street, Medina, NY 14103 ...... B±95±DH±36±0200 400,000 Village of Remsen, P.O. Box 335, Remsen, NY 13438 ...... B±95±DH±36±0208 400,000 Town of Ephratah, 5799 Southway 29, St. Johnsville, NY 13452 ...... B±95±DH±36±0209 400,000 Town of Hague, Town Hall, Hague, NY 12836 ...... B±95±DH±36±0210 400,000 City of Rensselaer, City Hall, 505 Broadway, Rensselaer, NY 12144 ...... B±95±DH±36±0212 900,000 Village of Hudson Falls, 220 Main Street, Hudson Falls, NY 12839 ...... B±95±DH±36±0214 400,000 Town of Gouverneur, RD #5ÐBox 10, Gouverneur, NY 13642 ...... B±95±DH±36±0215 400,000 Village of Fort Plain, Village Hall, 168 Canal Street, Fort Plain, NY 13339 ...... B±95±DH±36±0217 400,000 Town of Barton, 304 NYS Route 17c, Waverly, NY 14892 ...... B±95±DH±36±0218 194,000 City of Cohoes, City Hall, 97 Mohawk Street, Cohoes, NY 12047 ...... B±95±DH±36±0220 400,000 Town of Moriah, Town Offices, Park Street, Port Henry, NY 12974 ...... B±95±DH±36±0224 400,000 County of Madison, P.O. Box 606, Madison County Office Bldg, Wampsville, NY 13163 ...... B±95±DH±36±0225 225,000 County of Rensselaer, Ned Pattison Govment Ct, 1600 7th Avenue, Troy, NY 12180 ...... B±95±DH±36±0227 380,000 Town of Meredith, Turnpike Road, Meredith Square, Meridale, NY 13806 ...... B±95±DH±36±0228 400,000 County of Chenango, 5 Court Street, County Office Building, Norwich, NY 13815 ...... B±95±DH±36±0231 600,000 City of Oneonta, City Hall, 258 Main Street, Oneonta, NY 13820 ...... B±95±DH±36±0232 310,000 Town of Chateaugay, Town Hall, 45 East Main Street, Chateaugay, NY 12920 ...... B±95±DH±36±0233 400,000 City of Ogdensburg, City Hall, 330 Ford Street, Ogdensburg, NY 13669 ...... B±95±DH±36±0236 900,000 Town of Edinburg, Town Hall, 47 Military Road, Edinburg, NY 12134 ...... B±95±DH±36±0237 362,000 County of Madison, P.O. Box 606, Madison County Office Bldg, Wampsville, NY 13163 ...... B±95±DH±36±0242 600,000 Village of Gouverneur, 33 Clinton Street, Gouverneur, NY 13642 ...... B±95±DH±36±0244 400,000 County of Tompkins, Tompkins County Courthouse, 320 North Tioga Street, Ithaca, NY 14850 ...... B±95±DH±36±0247 270,000 Village of Keeseville, Civic Center, Main Street, Keeseville, NY 12944 ...... B±95±DH±36±0248 255,000 Town of Poestenkill, P.O. Box 210, Poestenkill, NY 12140 ...... B±95±DH±36±0250 382,000 County of Washington, County Office Building, Upper Broadway, Fort Edward, NY 12828 ...... B±95±DH±36±0251 600,000 County of Columbia, 401 State St. Office Bldg, Hudson, NY 12534 ...... B±95±DH±36±0254 200,000 County of Columbia, 401 State St. Office Bldg, Hudson, NY 12534 ...... B±95±DH±36±0255 400,000 46300 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices APPENDIX AÐ1995 SMALL CITIES GRANTEESÐContinued Grantee Grant No. Amount Village of Dresden, One Firehouse Avenue, Dresden, NY 14441 ...... B±95±DH±36±0256 400,000 Village of Warsaw, P.O. Box 49, Warsaw, NY 14569 ...... B±95±DH±36±0259 400,000 Town of Southport, 1139 Pennsylvania Avenue, Town Hall, Elmira, NY 14904 ...... B±95±DH±36±0261 233,000 County of Tioga, 56 Main Street, Owego, NY 13827 ...... B±95±DH±36±0262 600,000 Town of Chesterfield, Town Hall, Keeseville, NY 12944 ...... B±95±DH±36±0263 400,000 Town of Prattsburgh, 15 Chapel Street, Prattsburgh, NY 14873 ...... B±95±DH±36±0264 400,000 Village of McGraw, P.O. Box 676ÐCemetery Street, McGraw, NY 13101 ...... B±95±DH±36±0265 793,407 Village of Potsdam, Civic Center, P.O. Box 5168, Potsdam, NY 13676 ...... B±95±DH±36±0266 600,000 Town of Colchester, Town HallÐMain Street, P.O. Box 554, Downsville, NY 13755 ...... B±95±DH±36±0267 162,520 Town of Malone, 12 Elm Street, Malone, NY 12953 ...... B±95±DH±36±0270 350,000 Village of Harrisville, State Street, P.O. Box 249, Harrisville, NY 13648 ...... B±95±DH±36±0272 400,000 City of Oneida, City Hall-109 N. Main St, P.O. Box 550, Oneida, NY 13421 ...... B±95±DH±36±0273 900,000 Town of Preston, RR 2ÐBox 288, Oxford, NY 13830 ...... B±95±DH±36±0275 400,000 Town of New Berlin, 21 North Main Street, P.O. Box 163, New Berlin, NY 13411 ...... B±95±DH±36±0278 339,600 City of Cortland, City Hall, 25 Court Street, Cortland, NY 13045 ...... B±95±DH±36±0279 400,000 Town of Verona, Germany Road, Road #1ÐBox 249, Durhamville, NY 13054 ...... B±95±DH±36±0280 400,000 County of St. Lawrence, County Courthouse, 48 Court Street, Canton, NY 13617 ...... B±95±DH±36±0282 600,000 Town of Middletown, P.O. Box 577, Margaretville, NY 12455 ...... B±95±DH±36±0283 81,750 Town of Elizabethtown, Town Hall, Court Street, Elizabethtown, NY 12932 ...... B±95±DH±36±0286 400,000 Town of Hornellsville, Park Avenue, Arkport, NY 14807 ...... B±95±DH±36±0287 248,892 Town of Independence, P.O. Box 38, Marietta Avenue, Whitesville, NY 14897 ...... B±95±DH±36±0288 400,000 City of Johnstown, City Hall, 33-41 East Main Street, Johnstown, NY 12095 ...... B±95±DH±36±0294 900,000 Village of Whitehall, 1 Saunders Street, Village Hall, Whitehall, NY 12877 ...... B±95±DH±36±0295 842,680 [FR Doc. 95–21980 Filed 9–5–95; 8:45 am] National Park Service Coy Mound Site, Address Restricted, Coy BILLING CODE 4210±29±P vicinity, 95001120 National Register of Historic Places; Pulaski County Notification of Pending Nominations Boyle Park (Facilities Constructed by Civilian DEPARTMENT OF THE INTERIOR Nominations for the following Conservation Corps in Arkansas MPS), properties being considered for listing Roughly bounded by 38th St., Dorchester Bureau of Land Management in the National Register were received Dr., Covewood Cir., Glenmere Dr., Kanis [WY985±01±0777±64] by the National Park Service before Rd. and W. 12th St., Little Rock, 95001119 August 26, 1995. Pursuant to section Change of Address/Relocation and 60.13 of 36 CFR Part 60 written Sharp County Office Closure: Wyoming comments concerning the significance Hardy Downtown Historic District, Roughly of these properties under the National bounded by Kelly, Front, Church and 3rd SUMMARY: Effective on or about Register criteria for evaluation may be Sts., Hardy, 95001121 September 25, 1995, the Wyoming State forwarded to the National Register, COLORADO Office will be relocating to 5353 National Park Service, P.O. Box 37127, Yellowstone, Cheyenne, Wyoming Washington, D.C. 20013–7127. Written Douglas County 82009–4137. The mailing address will comments should be submitted by Louviers Village Club, Jct. of Louviers Blvd. remain: Bureau of Land Management, September 21, 1995. and First St., Louviers, 95001117 P.O. Box 1828, Cheyenne, Wyoming Carol D. Shull, 82003. Please address all MISSOURI Keeper of the National Register. correspondence to this address. Platte County Because of the relocation of the BLM ALABAMA Wyoming State Office, records will be Banneker, Benjamin, School, 31 W. Eighth Barbour County St., Parkville, 95001115 unavailable for inspection, and the Grace Episcopal Church, Louisville St. S of Public Room will be closed on the Courthouse Sq., Clayton, 95001116 NORTH CAROLINA following dates: September 25 through September 27, 1995. We plan to have ARKANSAS Lincoln County the Public Room open for business and Franklin County Sales Union Church and Cemetery, Jct. of NC 1005 (Startown Rd.) and NC 1274 records review on September 28, 1995 Franklin County Courthouse, 211 W. from 9:00 a.m. to 4:00 p.m., normal Commercial St., Ozark, 95001123 (Maiden—Salem Rd.), SE corner, Maiden Public Room hours. vicinity, 95001118 Johnson County EFFECTIVE DATE: September 25, 1995. SOUTH DAKOTA Dickerson, N. E., Store, E of AR 215, Ozark, FOR FURTHER INFORMATION CONTACT: 95001124 Davison County Susan Bennett, Supervisory Contact Representative, BLM, Wyoming State Logan County Kibbee—Nepstad House, 409 E. Fifth Ave., Office, 307–775–6131. Burnett Springs, End of Co. Rd. 704, Mitchell, 95001122 approximately one mi. E of Corley, Corley [FR Doc. 95–21972 Filed 9–5–95; 8:45 am] Alan R. Pierson, vicinity, 95001126 BILLING CODE 4310±70±P State Director. Schriver House, Leo Ave., N of jct. with AR [FR Doc. 95–21974 Filed 9–5–95; 8:45 am] 22, Subiaco vicinity, 95001125 BILLING CODE 4310±84±M Lonoke County Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46301 INTERSTATE COMMERCE Concepts, Inc., Interstate Commerce Affairs, Office of Management and COMMISSION Commission Building, 1201 Budget, Washington, DC 20503, and to Constitution Avenue, NW., Room 2229, Mr. Robert B. Briggs, Department of [Finance Docket No. 32689] Washington, DC 20423. Telephone: Justice Clearance Officer, Systems [Finance Docket No. 32689 (Sub-No. 1); Finance Docket No. 32690] (202) 289–4357/4359. [Assistance for Policy Staff/Information Resources the hearing impaired is available Management/Justice Management Patrick D. Broe, OmniTRAX, Inc., and through TDD services (202) 927–5721.] Division Suite 850, WCTR, Washington, Chicago Rail Link, L.L.C.ÐControlÐ Decided: August 22, 1995. DC 20530. Calumet Western Railway Company in By the Commission, Chairman Morgan, Extension of a Currently Approved Cook County, IL; Calumet Western Vice Chairman Owen, and Commissioners Collection Railway Company Restructuring in Simmons and McDonald. (1) Records and Reports of Cook County, IL; Indiana Harbor Belt Vernon A. Williams, Railroad CompanyÐAcquisition Registrants: Changes in Record Secretary. Requirements for Individual ExemptionÐCalumet Western Railway [FR Doc. 95–22028 Filed 9–5–95; 8:45 am] Company in Cook County, IL Practitioners. BILLING CODE 7035±01±P (2) Form: None. Drug Enforcement AGENCY: Interstate Commerce Administration, United States Commission. Department of Justice. ACTION: Notice of exemption. DEPARTMENT OF JUSTICE (3) Primary: Individuals or households. Other: Individuals or SUMMARY: In Finance Docket No. 32689, Information Collections Under Review households. Required information is the Commission exempts from the prior needed to maintain a closed system of The Office of Management and Budget approval requirements of 49 U.S.C. records by requiring the individual (OMB) has been sent the following 11343–45 the acquisition of control by practitioner to keep records of (1) collection(s) of information proposals Patrick D. Broe, OmniTRAX,Inc., and complimentary samples of controlled for review under the provisions of the Chicago Rail Link, L.L.C. (CRL), of substances dispensed to patients and (2) Paperwork Reduction Act (44 U.S.C. Calumet Western Railway Company (Cal controlled substances which are both Chapter 35) and the Paperwork West) through purchase of its administered and dispensed to patients. outstanding stock. In Finance Docket Reduction Reauthorization Act since the (4) 100,500 respondents/ No. 32689 (Sub-No. 1), the Commission last list was published. Entries are recordkeepers with .5 hours per exempts from the prior approval grouped into submission categories, response. requirements of 49 U.S.C. 11343–45 the with each entry containing the (5) 50,250 annual burden hours. acquisition by Cal West of certain track following information: (6) Not applicable under section and the acquisition by CRL of certain (1) the title of the form/collection; 3504(h) of Public Law 96–511. Public operating and trackage rights. In (2) the agency form number, if any, comment on this item is encouraged. Finance Docket No. 32690, the and the applicable component of the Department sponsoring the collection; Dated: August 29, 1995. Commission exempts from the prior Robert B. Briggs, approval requirements of 49 U.S.C. (3) who will be asked or required to respond, as well as a brief abstract; Department Clearance Officer, United States 11343–45 the acquisition by Indiana Department of Justice. Harbor Belt Railroad Company of a (4) an estimate of the total number of [FR Doc. 95–22007 Filed 9–5–95; 8:45 am] segment of track and certain operating respondents and the amount of time and trackage rights. The exemptions are estimated for an average respondent to BILLING CODE 4410±09±M subject to standard employee protective respond; conditions. (5) an estimate of the total public burden (in hours) associated with the Information Collections Under Review DATES: The exemptions will be effective collection; and on September 21, 1995. Petitions for The Office of Management and Budget (6) an indication as to whether stay must be filed by September 18, (OMB) has been sent the following Section 3504(h) of Public Law 96–511 1995, and petitions to reopen must be collection(s) of information proposals applies. filed by September 26, 1995. for review under the provisions of the Comments and/or suggestions Paperwork Reduction Act (44 U.S.C. ADDRESSES: Send pleadings referring to regarding the item(s) contained in this Finance Docket No. 32689, Finance Chapter 35) and the Paperwork notice, especially regarding the Reduction Reauthorization Act since the Docket No. 32689 (Sub-No. 1), and estimated public burden and associated Finance Docket No. 32690, to: (1) Office last list was published. Entries are response time, should be directed to the grouped into submission categories, of the Secretary, Case Control Branch, OMB reviewer, Mr. Jeff Hill on (202) Interstate Commerce Commission, 1201 with each entry containing the 395–7340 and to the Department of following information: Constitution Avenue, NW., Washington, Justice’s Clearance Officer, Mr. Robert B. DC 20423; and (2) Louis E. Gitomer, (1) the title of the form/collection; Briggs, on (202) 514–4319. If you (2) the agency form number, if any, Ball, Janik & Novack, Suite 1035, 1101 anticipate commenting on a form/ and the applicable component of the Pennsylvania Avenue, NW., collection, but find that time to prepare Department sponsoring the collection; Washington, DC 20004. such comments will prevent you from (3) who will be asked or required to FOR FURTHER INFORMATION CONTACT: prompt submission, you should notify respond, as well as a brief abstract; Beryl Gordon, (202) 927–5610. [TDD for the OMB reviewer and the Department (4) an estimate of the total number of the hearing impaired: (202) 927–5721.] of Justice Clearance Officer of your respondents and the amount of time SUPPLEMENTARY INFORMATION: intent as soon as possible. Written estimated for an average respondent to Additional information is contained in comments regarding the burden respond; the Commission’s decision. To purchase estimate or any other aspect of the (5) an estimate of the total public a copy of the full decision, write to, call, collection may be submitted to the burden (in hours) associated with the or pick up in person from: Dynamic Office of Information and Regulatory collection; and 46302 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices (6) an indication as to whether Reduction Reauthorization Act since the nation will be given an opportunity to Section 3504(h) of Public Law 96–511 last list was published. Entries are respond via this application. applies. grouped into submission categories, (4) 70 responses per year at .5 hours Comments and/or suggestions with each entry containing the per response. regarding the item(s) contained in this following information: (5) 50 annual burden hours. notice, especially regarding the (1) the title of the form/collection; (6) Not applicable under section 3504 estimated public burden and associated (2) the agency form number, if any, (h) of Public Law 96–511. Public response time, should be directed to the and the applicable component of the comment on this item is encouraged. OMB reviewer, Mr. Jeff Hill on (202) Department sponsoring the collection; Dated: August 29, 1995. 395–7340 and to the Department of (3) who will be asked or required to Robert B. Briggs, Justice’s Clearance Officer, Mr. Robert B. respond, as well as a brief abstract; Department Clearance Officer, United States Briggs, on (202) 514–4319. If you (4) an estimate of the total number of Department of Justice. anticipate commenting on a form/ respondents and the amount of time [FR Doc. 95–22009 Filed 9–5–95; 8:45 am] collection, but find that time to prepare estimated for an average respondent to BILLING CODE 4410±18±M such comments will prevent you from respond; prompt submission, you should notify (5) an estimate of the total public the OMB reviewer and the Department burden (in hours) associated with the Information Collections Under Review of Justice Clearance Officer of your collection; and The Office of Management and Budget intent as soon as possible. Written (6) an indication as to whether (OMB) has been sent the following comments regarding the burden Section 3504(h) of Public Law 96–511 collection(s) of information proposals estimate or any other aspect of the applies. for review under the provisions of the collection may be submitted to the Comments and/or suggestions Paperwork Reduction Act (44 U.S.C. Office of Information and Regulatory regarding the item(s) contained in this Chapter 35) and the Paperwork Affairs, Office of Management and notice, especially regarding the Reduction Reauthorization Act since the Budget, Washington, DC 20503, and to estimated public burden and associated last list was published. Entries are Mr. Roberts B. Briggs, Department of response time, should be directed to the grouped into submission categories, Justice Clearance Officer, Systems OMB reviewer, Mr. Jeff Hill on (202) with each entry containing the Policy Staff/Information Resources 295–7340 and to the Department of Management/Justice Management following information: Justice’s Clearance Officer, Mr. Robert B. (1) the title of the form/collection; Division Suite 850, WCTR, Washington, Briggs, on (202) 514–4319. If you DC 20530. (2) the agency form number, if any, anticipate commenting on a form/ and the applicable component of the Extension of a Currently Approved collection, but find that time to prepare Department sponsoring the collection; Collection such comments will prevent you from (3) who will be asked or required to prompt submission, you should notify (1) Import/Export Declaration: respond, as well as a brief abstract; the OMB reviewer and the Department Precursor and Essential Chemicals. (4) an estimate of the total number of (2) Form: DEA Form 486. Drug of Justice Clearance Officer of your respondents and the amount of time Enforcement Administration, United intent as soon as possible. Written estimated for an average respondent to States Department of Justice. comments regarding the burden respond; (3) Primary: Business or other for- estimate or any other aspect of the (5) an estimate of the total public profit. Other: Individual or households. collection may be submitted to the burden (in hours) associated with the The Chemical Diversion and Trafficking Office of Information and Regulatory collection; and Act of 1988 requires those who import/ Affairs, Office of Management and (6) an indication as to whether export certain chemicals to notify DEA Budget, Washington, DC 20503, and to Section 3504(h) of Public Law 96–511 15 days prior to shipment. Information Mr. Robert B. Briggs, Department of applies. will be used to prevent shipments not Justice Clearance Officer, Systems Comments and/or suggestions intended for legitimate purposes. Policy Staff/Information Resources regarding the item(s) contained in this (4) 1,800 respondents .20 hours per Management/Justice Management notice, especially regarding the response. Division, Suite 850, WCTR, Washington, estimated public burden and associated (5) 364 annual burden hours. DC 20530. response time, should be directed to the OMB reviewer, Mr. Jeff Hill, on (202) (6) Not applicable under section 3504 New Collection (h) of Public Law 96–511. Public 395–7340 and to the Department of comment on this item is encouraged. (1) Regional Coordination Initiative/ Justice’s Clearance Officer, Mr. Robert B. Regional Field Coordinator Application Dated: August 29, 1995. Briggs, on (202) 514–4319. If you Form. anticipate commenting on a form/ Robert B. Briggs, (2) Form: None. Office for Victims of collection, but find that time to prepare Department Clearance Officer, United States Crime, Office of Justice Programs, such comments will prevent you from Department of Justice. United States Department of Justice. prompt submission, you should notify [FR Doc. 95–22008 Filed 9–5–95; 8:45 am] (3) Primary: Not-for-profit the OMB reviewer and the Department BILLING CODE 4410±09±M institutions. Other: State, Local, or of Justice Clearance Officer of your Tribal Government. The information intent as soon as possible. Written Information Collections Under Review requested is necessary to identify comments regarding the burden Regional Field Coordinators who, with estimate or any other aspect of the The Office of Management and Budget support from the Office for Victims of collection may be submitted to the (OMB) has been sent the following Crime, will develop and implement Office of Information and Regulatory collection(s) of information proposals regional training and technical Affairs, Office of Management and for review under the provisions of the assistance projects on victim issues. Budget, Washington, DC 20503, and to Paperwork Reduction Act (44 U.S.C. Victims of Crime Agency administrators Mr. Robert B. Briggs, Department of Chapter 35) and the Paperwork and victim service providers across the Justice Clearance Officer, Systems Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46303 Policy Staff/Information Resources notice, especially regarding the last list was published. Entries are Management/Justice Management estimated public burden and associated grouped into submission categories, Division, Suite 850, WCTR, Washington, response time, should be directed to the with each entry containing the DC 20530. OMB reviewer, Mr. Jeff Hill on (202) following information: 395–7340 and to the Department of (1) the title of the form/collection; Extension of a Currently Approved Justice’s Clearance Officer, Mr. Robert B. (2) the agency form number, if any, Collection Briggs, on (202) 514–4319. If you and the applicable component of the (1) Report of Suspicious Orders or anticipate commenting on a form/ Department sponsoring the collection; Theft/Loss of Listed Chemicals/ collection, but find that time to prepare (3) who will be asked or required to Machines. such comments will prevent you from respond, as well as a brief abstract; (2) Form: None. Drug Enforcement prompt submission, you should notify (4) an estimate of the total number of Administration, United States the OMB reviewer and the Department respondents and the amount of time Department of Justice. of Justice Clearance Officer of your estimated for an average respondent to (3) Primary: Business or other for- intent as soon as possible. Written respond; profit. Other: Individual or households. comments regarding the burden (5) an estimate of the total public burden (in hours) associated with the The Domestic Chemical Diversion estimate or any other aspect of the collection; and Control Act of 1993 amends DEA’s collection may be submitted to the (6) an indication as to whether chemical recordkeeping requirements to Office of Information and Regulatory remove the exemption for certain drugs Section 3504(h) of Public Law 96–511 Affairs, Office of Management and applies. which contain ephedrine. Persons who Budget, Washington, DC 20503, and to previously were not required to keep Comments and/or suggestions Mr. Robert B. Briggs, Department of regarding the item(s) contained in this records or make reports regarding sales Justice Clearance Officer, Systems of these products now must do so. notice, especially regarding the Policy Staff/Information Resources estimated public burden and associated (4) 20,600 responses per year at .17 Management/Justice Management hours per response. 6,000 records at 1 response time, should be directed to the Division, Suite 850, WCTR, Washington, OMB reviewer, Mr. Jeff Hill, on (202) minute per record. DC 20530. (5) 1,003,502 annual burden hours. 395–7340 and to the Department of (6) Not applicable under section Extension of a Currently Approved Justice’s Clearance Officer, Mr. Robert B. 3504(h) of Public Law 96–511. Public Collection Briggs, on (202) 514–4319. If you anticipate commenting on a form/ comment on this item is encouraged. (1) Reporting on Psychotropic collection, but find that time to prepare Substances. Dated: August 29, 1995. such comments will prevent you from (2) Form: None. Drug Enforcement Robert B. Briggs, prompt submission, you should notify Administration, United States Department Clearance Officer, United States the OMB reviewer and the Department Department of Justice. Department of Justice. (3) Primary: Business or other for- of Justice Clearance Officer of your [FR Doc. 95–22010 Filed 9–5–95; 8:45 am] profit. Other: None. Pursuant to the intent as soon as possible. Written BILLING CODE 4410±09±M Economic and Social Council of the comments regarding the burden United Nations resolution (1991/44) estimate or any other aspect of the collection may be submitted to the under the United Nations Convention Information Collections Under Review Office of Information and Regulatory on Psychotropic Substances, the United Affairs, Office of Management and The Office of Management and Budget States must provide to the International Budget, Washington, DC 20503, and to (OMB) has been sent the following Narcotics Control Board of the United Mr. Robert B. Briggs, Department of collection(s) of information proposals Nations certain information concerning Justice Clearance Officer, Systems for review under the provisions of the psychotropic substances. This collection Policy Staff/Information Resources Paperwork Reduction Act (44 U.S.C. will provide necessary data to be Management/Justice Management Chapter 35) and the Paperwork reported to the United Nations. Division, Suite 850, WCTR, Washington, Reduction Reauthorization Act since the (4) 750 responses per year at 1.0 hours DC 20530. last list was published. Entries are per response. grouped into submission categories, (5) 750 annual burden hours. Extension of a Currently Approved with each entry containing the (6) Not applicable under section Collection following information: 3504(h) of Public Law 96–511. Public (1) Application for Registration under (1) the title of the form/collection; comment on this item is encouraged. Domestic Chemical Diversion Control (2) the agency form number, if any, Dated: August 29, 1995. Act of 1993 and Renewal Application and the applicable component of the Robert B. Briggs, for Registration under Domestic Department sponsoring the collection; Department Clearance Officer, United States Chemical Diversion Control Act. (3) who will be asked or required to Department of Justice. (2) Form: DEA Form 510, DEA Form 510a. Drug Enforcement Administration, respond, as well as a brief abstract; [FR Doc. 95–22011 Filed 9–5–95; 8:45 am] (4) an estimate of the total number of United States Department of Justice. respondents and the amount of time BILLING CODE 4410±09±M (3) Primary: Business or other for- estimated for an average respondent to profit. Other: Individuals or households. respond; Information Collections Under Review The Domestic Chemical Diversion (5) an estimate of the total public Control Act requires that distributors, burden (in hours) associated with the The Office of Management and Budget importers, and exporters of listed collection; and (OMB) has been sent the following chemicals which are being diverted in (6) an indication as to whether collection(s) of information proposals the United States for the production of Section 3504(h) of Public Law 96–511 for review under the provisions of the illicit drugs must register with the DEA. applies. Paperwork Reduction Act (44 U.S.C. Registration provides a system to aid in Comments and/or suggestions Chapter 35) and the Paperwork the tracking of the distribution of list I regarding the item(s) contained in this Reduction Reauthorization Act since the chemicals. 46304 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices (4) 11,500 responses per year at .5 Division Suite 850, WCTR, Washington, 395–7340 and to the Department of hours per response. DC 20530. Justice’s Clearance Officer, Mr. Robert B. (5) 5,750 annual burden hours. Briggs, on (202) 514–4319. If you Extension of a Currently Approved (6) Not applicable under section anticipate commenting on a form/ Collection 3504(h) of Public Law 96–511. Public collection, but find that time to prepare comment on this item is encouraged. (1) Removal of Restrictions on such comments will prevent you from Dated: August 29, 1995. Employing Certain Individuals. prompt submission, you should notify (2) Form: None. Drug Enforcement Robert B. Briggs, the OMB reviewer and the Department Administration, United States of Justice Clearance Officer of your Department Clearance Officer, United States Department of Justice. Department of Justice. intent as soon as possible. Written (3) Primary: Business or other for- [FR Doc. 95–22012 Filed 9–5–95; 8:45 am] comments regarding the burden profit. Other: Individuals or households, estimate or any other aspect of the BILLING CODE 4410±09±M Not-for-profit institutions, Federal collection may be submitted to the Government, State, Local or Tribal Office of Information and Regulatory Government. The information is Information Collections Under Review Affairs, Office of Management and necessary to maintain a closed system of Budget, Washington, DC 20503, and to The Office of Management and Budget distribution by requiring notification Mr. Robert B. Briggs, Department of (OMB) has been sent the following from DEA registrants of their intent to Justice Clearance Officer, Systems collection(s) of information proposals employ persons convicted of a felony Policy Staff/Information Resources for review under the provisions of the offense. Management/Justice Management Paperwork Reduction Act (44 U.S.C. (4) 100 responses per year at .5 hours Division, Suite 850, WCTR, Washington, Chapter 35) and the Paperwork per response. DC 20530. Reduction Reauthorization Act since the (5) 50 annual burden hours. last list was published. Entries are (6) Not applicable under section Extension of a Currently Approved grouped into submission categories, 3504(h) of Public Law 96–511. Public Collection with each entry containing the comment on this item is encouraged. (1) Report of Theft or Loss of following information: Dated: August 29, 1995. Controlled Substances. (1) the title of the form/collection; Robert B. Briggs, (2) DEA Form 106. Drug Enforcement (2) the agency form number, if any, Department Clearance Officer, United States Administration, United States and the applicable component of the Department of Justice. Department of Justice. Department sponsoring the collection; (3) Primary: Business or other for- [FR Doc. 95–22013 Filed 9–5–95; 8:45 am] (3) who will be asked or required to profit. Other: Individuals or households. respond, as well as a brief abstract; BILLING CODE 4410±09±M DEA Form 106 was designed to provide (4) an estimate of the total number of a standardized format with which DEA respondents and the amount of time Information Collections Under Review registrants could use to report a estimated for an average respondent to discovery of a theft or loss of a respond; The Office of Management and Budget controlled substance. The purpose is to (5) an estimate of the total public (OMB) has been sent the following maintain an accurate accounting of all burden (in hours) associated with the collection(s) of information proposals controlled substances, monitor collection; and for review under the provisions of the substances diverted into illicit markets (6) an indication as to whether Paperwork Reduction Act (44 U.S.C. and develop leads for criminal Section 3504(h) of Public Law 96–511 Chapter 35) and the Paperwork investigations. applies. Reduction Reauthorization Act since the (4) 8398 annual respondents at .5 Comments and/or suggestions last list was published. Entries are hours per response. regarding the item(s) contained in this grouped into submission categories, (5) 4199 annual burden hours. notice, especially regarding the with each entry containing the (6) Not applicable under section 3504 estimated public burden and associated following information: (h) of Public Law 96–511. Public response time, should be directed to the (1) the title of the form/collection; comment on this item is encouraged. OMB reviewer, Mr. Jeff Hill on (202) (2) the agency form number, if any, Dated: August 29, 1995. 395–7340 and to the Department of and the applicable component of the Robert B. Briggs, Justice’s Clearance Officer, Mr. Robert B. Department sponsoring the collection; Briggs, on (202) 514–4319. If you Department Clearance Officer, United States (3) who will be asked or required to Department of Justice. anticipate commenting on a form/ respond, as well as a brief abstract; [FR Doc. 95–22014 Filed 9–5–95; 8:45 am] collection, but find that time to prepare (4) an estimate of the total number of such comments will prevent you from respondents and the amount of time BILLING CODE 4410±09±M prompt submission, you should notify estimated for an average respondent to the OMB reviewer and the Department respond; Information Collections Under Review of Justice Clearance Officer of your (5) an estimate of the total public intent as soon as possible. Written burden (in hours) associated with the The Office of Management and Budget comments regarding the burden collection; and (OMB) has been sent the following estimate or any other aspect of the (6) an indication as to whether collection(s) of information proposals collection may be submitted to the Section 3504(h) of Public Law 95–511 for review under the provisions of the Office of Information and Regulatory applies. Paperwork Reduction Act (44 U.S.C. Affairs, Office of Management and Comments and/or suggestions Chapter 35) and the Paperwork Budget, Washington, DC 20503, and to regarding the item(s) contained in this Reduction Reauthorization Act since the Mr. Robert B. Briggs, Department of notice, especially regarding the last list was published. Entries are Justice Clearance Officer, Systems estimated public burden and associated grouped into submission categories, Policy Staff/Information Resources response time, should be directed to the with each entry containing the Management/Justice Management OMB reviewer, Mr. Jeff Hill, on (202) following information: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46305 (1) the title of the form/collection; Dated: August 29, 1995. Extension of a Currently Approved (2) the agency form number, if any, Robert B. Briggs, Collection and the applicable component of the Department Clearance Officer, United States (1) Application for Permit to Export Department sponsoring the collection; Department of Justice. Controlled Substances. (3) who will be asked or required to [FR Doc. 95–22015 Filed 9–5–95; 8:45 am] (2) DEA Form 161. Drug Enforcement respond, as well as a brief abstract; BILLING CODE 4410±09±M Administration, United States (4) an estimate of the total number of Department of Justice. respondents and the amount of time (3) Primary: Business or other for- estimated for an average respondent to Information Collections Under Review profit. Other: None. 21 CFR Section respond; 1312.22 requires individuals who export (5) an estimate of the total public The Office of Management and Budget controlled substances in Schedules I burden (in hours) associated with the (OMB) has been sent the following and II to obtain a permit from DEA. The collection; and collection(s) of information proposals information collected is used to issue (6) an indication as to whether for review under the provisions of the export permits and exercise control over Section 3504(h) of Public Law 96–511 Paperwork Reduction Act (44 U.S.C. the exportation of controlled substances applies. Chapter 35) and the Paperwork and compile data for submission to the Comments and/or suggestions Reduction Reauthorization Act since the United Nations for treaty requirements. regarding the item(s) contained in this last list was published. Entries are (4) 67 respondents with an average of notice, especially regarding the grouped into submission categories, 13 responses per year at .247 hours per estimated public burden and associated with each entry containing the response. response time, should be directed to the following information: (5) 215 annual burden hours. OMB reviewer, Mr. Jeff Hill on (202) (6) Not applicable under section 3504 (1) the title of the form/collection; 395–7340 and to the Department of (h) of Public Law 96–511. Public Justice’s Clearance Officer, Mr. Robert B. (2) the agency form number, if any, comment on this item is encouraged. and the applicable component of the Briggs, on (202) 514–4319. If you Dated: August 29, 1995. anticipate commenting on a form/ Department sponsoring the collection; Robert B. Briggs, collection, but find that time to prepare (3) who will be asked or required to such comments will prevent you from Department Clearance Officer, United States respond, as well as a brief abstract; Department of Justice. prompt submission, you should notify the OMB reviewer and the Department (4) an estimate of the total number of [FR Doc. 95–22016 Filed 9–05–95; 8:45 am] of Justice Clearance Officer of your respondents and the amount of time BILLING CODE 4410±09±M intent as soon as possible. Written estimated for an average respondent to comments regarding the burden respond; Information Collections Under Review estimate or any other aspect of the (5) an estimate of the total public collection may be submitted to the burden (in hours) associated with the The Office of Management and Budget Office of Information and Regulatory collection; and (OMB) has been sent the following Affairs, Office of Management and (6) an indication as to whether collection(s) of information proposals Budget, Washington, DC 20503, and to Section 3504(h) of Public Law 96–511 for review under the provisions of the Mr. Robert B. Briggs, Department of applies. Paperwork Reduction Act (44 U.S.C. Justice Clearance Officer, Systems Chapter 35) and the Paperwork Policy Staff/Information Resources Comments and/or suggestions Reduction Reauthorization Act since the Management/Justice Management regarding the item(s) contained in this last list was published. Entries are Division Suite 850, WCTR, Washington, notice, especially regarding the grouped into submission categories, DC 20530. estimated public burden and associated with each entry containing the response time, should be directed to the following information: Extension of a Currently Approved OMB reviewer, Mr. Jeff Hill on (202) Collection (1) the title of the form/collection; 395–7340 and to the Department of (2) the agency form number, if any, (1) ARCOS Transaction Reporting. Justice’s Clearance Officer, Mr. Robert B. and the applicable component of the (2) DEA Form 333. Drug Enforcement Briggs, on (202) 514–4319. If you Department sponsoring the collection; Administration, United States anticipate commenting on a form/ (3) who will be asked or required to Department of Justice. collection, but find that time to prepare respond, as well as a brief abstract; (3) Primary: Business or other for- such comments will prevent you for (4) an estimate of the total number of profit. Other: None. The information is prompt submission, you should notify respondents and the amount of time necessary for the United States to meet the OMB reviewer and the Department estimated for an average respondent to obligations under two international of Justice Clearance Officer of your respond; treaties: Single convention on Narcotic intent as soon as possible. Written (5) an estimate of the total public Drugs and Convention of Psychotropic comments regarding the burden burden (in hours) associated with the Substances. Treaties require information estimate or any other aspect of the collection; and on the manufacture and consumption of collection may be submitted to the (6) an indication as to whether certain substances. Information tracks Office of Information and Regulatory Section 3504(h) of Public Law 96–511 substances from manufacture to sale to Affairs, Office of Management and applies. dispensing level. Budget, Washington, DC 20503, and to Comments and/or suggestions (4) 2,468 annual respondents at 1.0 Mr. Robert B. Briggs, Department of regarding the item(s) contained in this hours per response. Justice Clearance Officer, Systems notice, especially regarding the (5) 2,468 annual burden hours. Policy Staff/Information Resources estimated public burden and associated (6) Not applicable under section Management/Justice Management response time, should be directed to the 3504(h) of Public Law 96–511. Public Division Suite 850, WCTR, Washington, OMB reviewer, Mr. Jeff Hill on (202) comment on this item is encouraged. DC 20530. 395–7340 and to the Department of 46306 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Justice’s Clearance Officer, Mr. Robert B. (2) the agency form number, if any, Dated; August 29, 1995. Briggs, on (202) 514–4319. If you and the applicable component of the Robert B. Briggs, anticipate commenting on a form/ Department sponsoring the collection; Department Clearance Officer, United States collection, but find that time to prepare (3) who will be asked or required to Department of Justice. such comments will prevent you from respond, as well as a brief abstract; [FR Doc. 95–22018 Filed 9–5–95; 8:45 am] prompt submission, you should notify (4) an estimate of the total number of BILLING CODE 4410±09±M the OMB reviewer and the Department respondents and the amount of time of Justice Clearance Officer of your estimated for an average respondent to intent as soon as possible. Written respond; Information Collections Under Review comments regarding the burden (5) an estimate of the total public estimate or any other aspect of the burden (in hours) associated with the The Office of Management and Budget collection may be submitted to the collection; and (OMB) has been sent the following Office of Information and Regulatory collection(s) of information proposals (6) an indication as to whether Affairs, Office of Management and for review under the provisions of the Section 3504(h) of Public Law 96–511 Budget, Washington, DC 20503, and to Paperwork Reduction Act (44 U.S.C. applies. Mr. Robert B. Briggs, Department of Chapter 35) and the Paperwork Justice Clearance Officer, Systems Comments and/or suggestions Reduction Act (44 USC Chapter 35) and Policy Staff/Information Resources regarding the item(s) contained in this the Paperwork Reduction Management/Justice Management notice, especially regarding the Reauthorization Act since the last list Division Suite 850, WCTR, Washington, estimated public burden and associated was published. Entries are grouped into DC 20530. response time, should be directed to the submission categories, with each entry OMB reviewer, Mr. Jeff Hill on (202) containing the following information: Extension of a Currently Approved 395–7340 and to the Department of Collection Justice’s Clearance Office, Mr. Robert B. (1) the title of the form/collection; Briggs, on (202) 514–4319. If you (2) the agency form number, if any, (1) Registrants Inventory of Drugs anticipate commenting on a form/ and the applicable component of the Surrendered. collection, but find that time to prepare Department sponsoring the collection; (2) DEA Form 41. Drug Enforcement such comments will prevent you from Administration, United States (3) who will be asked or required to prompt submission, you should notify respond, as well as a brief abstract; Department of Justice. the OMB reviewer and the Department (3) Primary: Business or other for- of Justice Clearance Officer of your (4) an estimate of the total number of profit. Other: None. Section 1307.21 of intent as soon as possible. Written respondents and the amount of time 21 CFR requires that any registrant comments regarding the burden estimated for an average respondent to desiring to voluntarily dispose of estimate or any other aspect of the respond; controlled substances shall list these collection may be submitted to the (5) an estimate of the total public controlled substances on DEA Form 41 Office of Information and Regulatory burden (in hours) associated with the and submit it to the nearest DEA office. Affairs, Office of Management and collection; and The DEA 41 is used to account for Budget, Washington, DC 20503, and to (6) an indication as to whether surrendered destroyed controlled Mr. Robert B. Briggs, Department of Section 3504(h) of Public Law 96–511 substances, and its use is mandatory. Justice Clearance Office, Systems Policy applies. (4) 20,000 respondents with .5 hours Staff/Information Resources per response. Management/Justice Management Comments and/or suggestions regarding the item(s) contained in this (5) 10,000 annual burden hours. Division Suite 850, WCTR, Washington, DC 20530. notice, especially regarding the (6) Not applicable under section 3504 estimated public burden and associated (h) of Public Law 96–511. Public Extension of a Currently Approved response time, should be directed to the comment on this item is encouraged. Collection OMB reviewer, Mr. Jeff Hill on (202) Dated: August 29, 1995. (1) Controlled Substances Import/ 395–7340 and to the Department of Robert B. Briggs, Export Declaration. Justice’s Clearance Officer, Mr. Robert B. Briggs, on (202) 514–4319. If you Department Clearance Officer, United States (2) DEA Form 236. Drug Enforcement Department of Justice. anticipate commenting on a form/ Administration, United States collection, but find that time to prepare [FR Doc. 95–22017 Filed 9–5–95; 8:45 am] Department of Justice. BILLING CODE 4410±09±M such comments will prevent you from (3) Primary: Business or other for- prompt submission, you should notify profit. Other: None. DEA Form 236 the OMB reviewer and the Department Information Collections Under Review provides the Drug Enforcement of Justice Clearance Officer of your Administration with control measures intent as soon as possible. Written The Office of Management and Budget over the importation and exportation of comments regarding the burden (OMB) has been sent the following controlled substances as required by estimate or any other aspect of the collection(s) of information proposals both domestic and international drug collection may be submitted to the for review under the provisions of the control laws. Affected public consists of Office of Information and Regulatory Paperwork Reduction Act (44 U.S.C. businesses or other nonprofit Affairs, Office of Management and Chapter 35) and the Paperwork organizations. Budget, Washington, DC 20503, and to Reduction Reauthorization Act since the (4) 2,760 respondents with .25 hours Mr. Robert B. Briggs, Department of last list was published. Entries are per response. Justice Clearance Officer, Systems grouped into submission categories, (5) 690 annual burden hours. Policy Staff/Information Resources with each entry containing the (6) Not applicable under section 3504 Management/Justice Management following information: (h) of Public Law 96–511. Public Division, Suite 850, WCTR, Washington, (1) the title of the form/collection; comment on this item is encouraged. DC 20530. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46307 Extension of a Currently Approved response time, should be directed to the with each entry containing the Collection OMB reviewer, Mr. Jeff Hill on (202) following information: (1) United States Official Order Forms 395–7340 and to the Department of (1) The title of the form/collection; for Schedule I and II Controlled Justice’s Clearance Officer, Mr. Robert B. (2) The agency form number, if any, Substances (ACCOUNTABLE FORMS). Briggs, on (202) 514–4319. If you and the applicable component of the Order Form Requisition. anticipate commenting on a form/ Department sponsoring the collection; (2) DEA Form 222, DEA Form 222a. collection, but find that time to prepare (3) Who will be asked or required to Drug Enforcement Administration, such comments will prevent you from respond, as well as a brief abstract; United States Department of Justice. prompt submission, you should notify (4) An estimate of the total number of (3) Primary: Business or other for- the OMB reviewer and the Department respondents and the amount of time profit. Other: Individuals or households, of Justice Clearance Officer of your estimated for an average respondent to Federal Government, State, Local or intent as soon as possible. Written respond; comments regarding the burden Tribal Government. DEA Form 222 is (5) An estimate of the total public estimate or any other aspect of the used to transfer or purchase schedule I burden (in hours) associated with the collection may be submitted to the and II controlled substances and the collection; and data is needed to provide an audit of the Office of Information and Regulatory Affairs, Office of Management and (6) An indication as to whether transfer and purchase. DEA Form 222a Section 3504(h) of Public Law 96–511 is used to obtain DEA 222 order form. Budget, Washington, DC 20503, and to Mr. Robert B. Briggs, Department of applies. Respondents are DEA registrants Comments and/or suggestions desiring to handle these controlled Justice Clearance Officer, Systems Policy Staff/Information Resources regarding the item(s) contained in this substances. notice, especially regarding the (4) 436,000 respondents with .25 Management/Justice Management Division Suite 850, WCTR, Washington, estimated public burden and associated hours per response. response time, should be directed to the (5) 109,000 annual burden hours. DC 20530. OMB reviewer, Mr. Jeff Hill on (202) (6) Not applicable under section Extension of a Currently Approved 395–7340 and to the Department of 3504(h) of Public Law 96–511. Public Collection Justice’s Clearance Officer, Mr. Robert B. comment on this item is encouraged. (1) Application for Registration and Briggs, on (202) 514–4319. If you Dated: August 29, 1995. Application for Registration Renewal. anticipate commenting on a form/ Robert B. Briggs, (2) DEA Form 363, DEA Form 363a. collection, but find that time to prepare Department Clearance Officer, United States Drug Enforcement Administration, such comments will prevent you from Department of Justice. United States Department of Justice. prompt submission, you should notify [FR Doc. 95–22019 Filed 9–5–95; 8:45 am] (3) Primary: Individuals or the OMB reviewer and the Department BILLING CODE 4410±09±M households. Other: Business or Other of Justice Clearance Officer of your for-profit. All firms and individuals who intent as soon as possible. Written distribute or dispense controlled comments regarding the burden Information Collections Under Review substances must register with DEA estimate or any other aspect of the collection may be submitted to the The Office of Management and Budget under the Controlled Substance Act. Office of Information and Regulatory (OMB) has been sent the following Registration via DEA Form 224 and DEA Affairs, Office of Management and collection(s) of information proposals Form 224a are necessary for adequate Budget, Washington, DC 20503, and to for review under the provisions of the oversight control over legal handlers of Mr. Robert B. Briggs, Department of Paperwork Reduction Act (44 U.S.C. controlled substances and is used to Justice Clearance Officer, Systems Chapter 35) and the Paperwork monitor their activities. Policy Staff/Information Resources Reduction Reauthorization Act since the (4) 275,000 responses with .20 hours Management/Justice Management last list was published. Entries are per response. Division Suite 850, WCTR, Washington, grouped into submission categories, (5) 55,000 annual burden hours. DC 20530. with each entry containing the (6) Not applicable under section following information: 3504(h) of Public Law 96–511. Public Extension of a Currently Approved (1) The title of the form/collection; comment on this item is encouraged. Collection (2) The agency form number, if any, Dated: August 29, 1995. (1) Application for Registration and and the applicable component of the Robert B. Briggs, Application for Registration Renewal. Department sponsoring the collection; Department Clearance Officer, United States (3) Who will be asked or required to (2) DEA Form 363, DEA Form 363a. Department of Justice. Drug Enforcement Administration, respond, as well as a brief abstract; [FR Doc. 95–22020 Filed 9–5–95; 8:45 am] (4) An estimate of the total number of United States Department of Justice. respondents and the amount of time BILLING CODE 4410±09±M (3) Primary: State, Local or Tribal estimated for an average respondent to Government. Other: Business or Other for-profit, Not-for-profit institutions. respond; Information Collections Under Review (5) An estimate of the total public Practitioners who dispense narcotic burden (in hours) associated with the The Office of Management and Budget drugs to individuals for maintenance or collection; and (OMB) has been sent the following detoxification treatment must register (6) An indication as to whether collection(s) of information proposals with DEA under the Narcotic Addict Section 3504(h) of Public Law 96–511 for review under the provisions of the Treatment Act of 1974. Registration is applies. Paperwork Reduction Act (44 U.S.C. needed for control measures and is used Comments and/or suggestions Chapter 35) and the Paperwork to prevent diversion. regarding the item(s) contained in this Reduction Reauthorization Act since the (4) 900 respondents with .50 hours notice, especially regarding the last list was published. Entries are per response. estimated public burden and associated grouped into submission categories, (5) 450 annual burden hours. 46308 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices (6) Not applicable under section 3504 and implementation of a national exemptions to the Department. In (h) of Public Law 96–511. Public system of voluntary skill standards and addition the notices stated that any comments on this item is encouraged. certification through voluntary interested person might submit a Dated: August 29, 1995. partnerships which have the full and written request that a public hearing be Robert B. Briggs, balanced participation of business, held (where appropriate). The industry, labor, education and other key applicants have represented that they Department Clearance Officer, United States Department of Justice. groups. have complied with the requirements of the notification to interested persons. [FR Doc. 95–22021 Filed 9–5–95; 8:45 am] Time and Place: The meeting will be held from 2 p.m. to approximately 5:30 p.m. on No public comments and no requests for BILLING CODE 4410±09±M Wednesday, September 20, 1995, in the a hearing, unless otherwise stated, were Auditorium of the Francis Perkins Building, received by the Department. Department of Labor, 200 Constitution The notices of proposed exemption DEPARTMENT OF LABOR Avenue, NW., Washington, DC. were issued and the exemptions are Agenda: The agenda for the Board Meeting being granted solely by the Department Office of the Secretary will include presentations on a variety of because, effective December 31, 1978, methods for occupational clusters. section 102 of Reorganization Plan No. President's Committee on the Public Participation: The meeting from 2 International Labor Organization; p.m. to approximately 5:30 p.m., is open to 4 of 1978 (43 FR 47713, October 17, Notice of Postponement of Closed the public. Seating is limited and will be 1978) transferred the authority of the Meeting available on a first-come, first-served basis. Secretary of the Treasury to issue Seats will be reserved for the media. Disabled exemptions of the type proposed to the This document postpones the individuals should contact Ed Rugenstein at Secretary of Labor. September 8, 1995 closed meeting of the (301) 495–1591, if special accommodations President’s Committee on the ILO until are needed. Statutory Findings September 14, 1995. Notice of this FOR FURTHER INFORMATION CONTACT: In accordance with section 408(a) of closed meeting was previously Ed Rugenstein at (301) 495–1591. the Act and/or section 4975(c)(2) of the published in the Federal Register on Code and the procedures set forth in 29 August 16, 1995, 60 FR 42588. The Signed at Washington, DC., this 30th day CFR Part 2570, Subpart B (55 FR 32836, of August, 1995. meeting is being postponed because of 32847, August 10, 1990) and based upon the scheduling difficulties of certain Judy Gray, the entire record, the Department makes participants. Executive Director, National Skill Standards the following findings: The closed meeting will now take Board. (a) The exemptions are place on Thursday, September 14, 1995 [FR Doc. 95–22047 Filed 9–5–95; 8:45 am] administratively feasible; at 10:00 am at the U.S. Department of BILLING CODE 4510±30±M (b) They are in the interests of the Labor, Third & Constitution Avenue, plans and their participants and N.W., Room S–2508, Washington, D.C. beneficiaries; and 20210. Pension and Welfare Benefits (c) They are protective of the rights of Administration FOR FURTHER INFORMATION CONTACT: the participants and beneficiaries of the Mr. Joaquin F. Otero, President’s [Prohibited Transaction Exemption 95±76; plans. Committee on the International Labor Exemption Application No. D±09819, et al.] John B. Toomey Rollover IRA (the IRA), Organization, U.S. Department of Labor, Located in Lorton, Virginia Grant of Individual Exemptions; John 200 Constitution Avenue, NW., Room [Prohibited Transaction Exemption 95–76 S–2235, Washington, DC 20210, B. Toomey Rollover IRA (the IRA), et al. Exemption Application No. D–09819] Telephone (202) 219–6043. AGENCY: Pension and Welfare Benefits Exemption Signed at Washington, D.C. this 31st day of Administration, Labor. August, 1995. The sanctions resulting from the ACTION: Grant of individual exemptions. Andrew J. Samet, application of section 4975 of the Code, Associate Deputy Under Secretary SUMMARY: This document contains by reason of section 4975(c)(1) (A) International Affairs. exemptions issued by the Department of through (E) of the Code shall not apply [FR Doc. 95–22080 Filed 9–5–95; 8:45 am] Labor (the Department) from certain of to the installment sale of 36.2 shares of common stock (the Stock) in JBT BILLING CODE 4510±28±M the prohibited transaction restrictions of 1 the Employee Retirement Income Holding Corporation (JBT) by the IRA Security Act of 1974 (the Act) and/or to JBT, a disqualified person with Employment and Training the Internal Revenue Code of 1986 (the respect to the IRA; provided that: (a) Administration Code). The purchase price JBT pays for the Notices were published in the Federal Stock is the greater of $410,146 or the National Skill Standards Board; Notice Register of the pendency before the fair market value of the Stock on the of Open Meeting Department of proposals to grant such date of the sale; (b) the fair market value of the Stock is determined by a qualified AGENCY: Employment and Training exemptions. The notices set forth a summary of facts and representations independent appraiser, as of the date of Administration, Labor. the sale; (c) the terms of the transaction ACTION: Notice of open meeting. contained in each application for exemption and referred interested are no less favorable to the IRA than SUMMARY: The National Skill Standards persons to the respective applications those negotiated at arm’s length with Board was established by an Act of for a complete statement of the facts and unrelated third parties in similar Congress, the Goals 2000: Educate representations. The applications have circumstances; (d) the trustee of the IRA America Act of 1994, Title V, Pub. L. been available for public inspection at 1 Pursuant to 29 CFR 2510.3–2(d), the IRA is not 103–227. The 28-member National Skill the Department in Washington, D.C. The within the jurisdiction of Title I of the Act. Standards Board will serve as a catalyst notices also invited interested persons However, there is jurisdiction under Title II of the and be responsible for the development to submit comments on the requested Act, pursuant to section 4975 of the Code. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46309 monitors compliance with the terms of withdrawals and participant loans and in duration depending upon the election the transaction throughout the duration permits the orderly disposal of Phillips of the participant. Phillips further of the installment sale; (e) the IRA common stock. explains that virtually none of the loans receives a cash downpayment of no less (b) Each loan made under the are in arrears or default since the Plan than $210,146 on the date of the sale proposed credit facility arrangement is requires that loan repayments be made and thereafter receives three (3) equal unsecured and no interest, commissions by payroll deduction or repaid in full. annual installment payments of or expenses are paid by the Plan. However, should a participant loan be $66,667, the first of which is due and (c) In the event of a loan default or in default, Phillips states that there will payable December 31, 1995, plus delinquency, Phillips has no recourse be no impact on Plan participants since interest at the fair market rate of against the Plan. the participant’s account will serve as interest, as determined by an (d) Each loan is initiated, accounted security for the loan and the event of independent, qualified third party, as of for and administered by an independent default will become a taxable the date of the transaction, on the fiduciary who monitors the terms and distribution to the participant. Finally, outstanding balance of the installment conditions of the exemption. Phillips notes that neither the Plan nor payments, payable annually until all the Written Comments BTC can control the value of Phillips installment payments have been made common stock that is held by the Plan The Department received six written and that the intent of the exemption is by JBT on or before December 31, 1997; comments with respect to the notice of (f) the outstanding balance of the proposed exemption and no requests for to allow participants the flexibility of installment payments at no time a public hearing. Of the written moving into or out of stock funds with exceeds 25 percent (25%) of the value comments received, five commenters the value of the stock established as of of the assets of the IRA; (g) the recommended that the Department grant the transaction valuation date. outstanding balance on the installment the proposed exemption. The sixth Technical Correction payments is secured by a recorded first commenter questioned whether the The Department notes that the correct mortgage interest in real property proposed credit facility arrangement pledged by JBT in favor of the IRA; (h) application number for the subject would be in the best interest of the Plan request is ‘‘D–09907’’ and not ‘‘D– the collateral which secures the since it would allow no recourse against installment payments has a value, as 09909’’ as it appeared in the proposed Plan assets. The commenter also raised exemption. Therefore, the Department determined by an independent, several questions about the Plan’s qualified appraiser, which at all times is has incorporated this revision into the participant loan program. grant notice. no less than 150 percent (150%) of the In response to the sixth commenter, After giving full consideration to the outstanding balance of the installment Bankers Trust Company (BTC), the Plan entire record, including the written payments; and (i) the IRA pays no trustee and independent fiduciary with comment that was submitted and the commissions, fees, or other expenses in respect to the proposed transactions, responses made by BTC and Phillips, connection with the transaction. notes that the purpose of the credit the Department has decided to grant the For a more complete statement of the facility arrangement is to facilitate exemption as described and revised facts and representations supporting the participant directions regarding their above. The comment letter and Department’s decision to grant this account balances on a more timely responses have been included as part of exemption refer to the notice of basis. According to BTC, receiving the the public record of the exemption proposed exemption published on July loans on an interest-free basis from application. The complete application 21, 1995, at 58 FR 37682. Phillips meets this purpose and it file, including all supplemental FOR FURTHER INFORMATION CONTACT: allows the Plan to avoid the expense of submissions received by the Angelena C. Le Blanc of the Department its current credit facility arrangement Department, is made available for public (202) 219–8883. (This is not a toll-free with NationsBank of Dallas, Texas. BTC inspection in the Public Documents number.) further represents that by requiring that Room of the Pension and Welfare the loans be on a non-recourse basis Phillips Petroleum Company (Phillips) Benefits Administration, Room N–5638, Located in Bartlesville, OK provides an additional safeguard to the U.S. Department of Labor, 200 Plan and ensures that participant [Prohibited Transaction Exemption 95–77; Constitution Avenue, NW., Washington, account balances will not be impacted Exemption Application No. D–09907] DC 20210. adversely. For a more complete statement of the Exemption With respect to the Plan’s participant facts and representations supporting the The restrictions of sections 406(a), loan program, the commenter has Department’s decision to grant this 406(b) (1) and (b)(2) of the Act and the inquired about the (a) number of exemption, refer to the notice of sanctions resulting from the application participants in the Plan having proposed exemption published on June of section 4975 of the Code by reason of outstanding participant loans, (b) the 7, 1995 at 60 FR 30106. section 4975(c)(1) (A) through (E) of the frequency of loan repayments, (c) the Code, shall not apply to (1) the making percentage of such loans that are in FOR FURTHER INFORMATION CONTACT: Ms. of interest-free loans to the Thrift Plan arrears or default, and (d) what Jan D. Broady of the Department, of Phillips Petroleum Company (the safeguards can and should be telephone (202) 219–8881. (This is not Plan) by Phillips, the Plan sponsor implemented to prevent depreciation in a toll-free number.) pursuant to the terms of a credit facility the value of Phillips common stock. KeyCorp 401(k) Savings Plan (the Plan), arrangement; and (2) the repayment of Phillips has responded to each of the Located in Cleveland, Ohio such loans by the Plan to Phillips. commenter’s concerns on these matters. [Prohibited Transaction Exemption 95–78; This exemption is conditioned on the In this regard, Phillips represents that as Exemption Application No. D–10023] following requirements: of July 17, 1995, approximately 2,000 (a) Each loan executed under the participants had outstanding participant Exemption proposed credit facility arrangement loans with the Plan. Phillips notes that The restrictions of sections 406(a) and provides short-term funds to the Plan in for these loans, repayment schedules 406(b)(1) and 406(b)(2) of the Act and connection with inter-fund transfers, range from three months to 180 months the sanctions resulting from the 46310 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices application of section 4975 of the Code, segment of the public market for equity (j) A plan fiduciary independent of by reason of section 4975(c)(1) (A) securities in the United States and/or the Bank and its affiliates authorizes the through (E) of the Code, shall not apply foreign countries. The organization investment of such plan’s assets in an to the loan of funds (the Loan) to the creating and maintaining the index must Index or Model-Driven Fund which Plan by KeyCorp the sponsor of the be (1) engaged in the business of purchases and/or holds BNY Stock. Plan, with respect to Guaranteed providing financial information, (k) A fiduciary independent of the Investment Contract No. 62149 (the GIC) evaluation, advice or securities Bank and its affiliates directs the voting issued by Confederation Life Insurance brokerage services to institutional of the BNY Stock held by an Index or Company of Canada (Confederation), clients, (2) a publisher of financial news Model-Driven Fund on any matter in and the potential repayment by the Plan or information, or (3) a public stock which shareholders of BNY Stock are of the Loan upon receipt of payments exchange or association of securities required or permitted to vote. under the GIC; provided the following dealers. The index must be created and conditions are satisfied: (a) No interest maintained by an organization Section II—General Conditions and/or other expenses are paid by the independent of the Bank and its (a) The Bank maintains or causes to be Plan in connection with the Loan; (b) affiliates. The index must be a generally maintained for a period of six years All of the terms and conditions of the accepted standardized index of from the date of the transaction the Loan are no less favorable to the Plan securities which is not specifically records necessary to enable the persons than those which the Plan could obtain tailored for the use of the Bank or its described in paragraph (b) of this in an arm’s-length transaction with an affiliates. Section to determine whether the (b) The acquisition or disposition of unrelated party; (c) The Loan will be no conditions of the exemption have been the BNY Stock is for the sole purpose of less than the amount described in met, except that (1) a prohibited maintaining strict quantitative paragraph 4 of the Notice of Proposed transaction will not be considered to Exemption; (d) The repayment of the conformity with the relevant index have occurred if, due to circumstances Loan will not exceed the total amount upon which the Index or Model-Driven beyond the control of the Bank, the of the Loan; (e) The repayment of the Fund is based. records are lost or destroyed prior to the Loan by the Plan will be restricted to (c) All acquisitions comply with Rule end of the six-year period, and (2) no funds paid to the Plan under the GIC by 10b–18 of the Securities and Exchange party in interest other than the Bank Confederation or other responsible third Commission, including the limitations shall be subject to the civil penalty that parties with respect to the GIC; and (f) regarding the price paid or received for may be assessed under section 502(i) of The repayment of the Loan will be such stock. the Act or to the taxes imposed by waived to the extent the amount of the (d) Aggregate daily purchases of BNY section 4975(a) and (b) of the Code if the Loan exceeds the proceeds the Plan Stock constitute no more than the records are not maintained or are not receives from the GIC. greater of: (1) 10 percent of the stock’s For a more complete statement of the average daily trading volume for the available for examination as required by facts and representations supporting the previous five days; or (2) 10 percent of paragraph (b) below. Department’s decision to grant this the stock’s trading volume on the date (b)(1) Except as provided in paragraph exemption refer to the notice of of the transaction. (b)(2) and notwithstanding any proposed exemption published on June (e) If the necessary number of shares provisions of section 504 (a)(2) and (b) 29, 1995 at 60 FR 33871. of BNY Stock cannot be acquired within of the Act, the records referred to in FOR FURTHER INFORMATION CONTACT: 10 business days from the date of the paragraph (a) of this Section are Charles S. Edelstein of the Department, event which causes the particular Index available at their customary location for telephone (202) 219–8881. (This is not or Model-Driven Funds to require BNY examination during normal business a toll-free number.) Stock, the Bank appoints a fiduciary hours by— which is independent of the Bank and (A) Any duly authorized employee or The Bank of New York (the Bank) Located its affiliates to design acquisition representative of the Department of in New York, New York procedures and monitor the Bank’s Labor or the Internal Revenue Service, [Prohibited Transaction Exemption 95–79; compliance with such procedures. Application No. D–10030] (B) Any fiduciary of a plan (f) All purchases and sales of BNY participating in an Index or Model- Exemption Stock are executed on the national Driven Fund who has authority to exchange on which BNY Stock is Section I—Exemption for the acquire or dispose of the interests of the primarily traded. Acquisition, Holding and Disposition of plan, or any duly authorized employee (g) No transactions involve purchases or representative of such fiduciary, BNY Stock from, or sales to, the Bank or any (C) Any contributing employer with The restrictions of sections affiliate (including officers, directors respect to any plan participating in an 406(a)(1)(D), 406(b)(1) and (b)(2) of the and employees of the Bank, as defined Index or Model-Driven Fund or any Act, and the sanctions resulting from in Section III(c) below), or any party in duly authorized employee or the application of section 4975 of the interest with respect to a plan which has representative of such employer, and Code by reason of section 4975(c)(1)(D) invested in an Index or Model-Driven and (E) of the Code, shall not apply to Fund. (D) Any participant or beneficiary of the acquisition, holding or disposition (h) No more than five (5) percent of any plan participating in an Index or of the common stock of the Bank’s the total amount of BNY Stock issued Model-Driven Fund, or any duly parent corporation, The Bank of New and outstanding at any time is held in authorized employee or representative York Company, Inc. (BNY Stock), by the aggregate by the Index and Model- of such participant or beneficiary. Index or Model-Driven Funds, if the Driven Funds. (2) None of the persons described in following conditions and the General (i) BNY Stock constitutes no more paragraph (b)(1)(B) through (D) shall be Conditions of Section II are met: than two (2) percent of the value of any authorized to examine trade secrets of (a) The Index or Model-Driven Fund independent third-party index on which the Bank, any of its affiliates, or is based on an index which represents the investments of an Index or Model- commercial or financial information the investment performance of a specific Driven Fund are based. which is privileged or confidential. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46311 Section III—Definitions by a qualified independent appraiser as General Information of May 31, 1995, or (b) the fair market (a) Index Fund—Any investment The attention of interested persons is fund, account or portfolio sponsored, value of the Stock as of the time of the 2 directed to the following: maintained and/or trusteed by the Bank, sale. or an affiliate of the Bank, in which one For a more complete statement of the (1) The fact that a transaction is the or more investors invest which is facts and representations supporting the subject of an exemption under section designed to replicate the capitalization- Department’s decision to grant this 408(a) of the Act and/or section weighted composition of a stock index exemption, refer to the notice of 4975(c)(2) of the Code does not relieve which satisfies the conditions of Section proposed exemption published on July a fiduciary or other party in interest or I(a) and (i). 21, 1995 at 60 FR 37688. disqualified person from certain other (b) Model-Driven Fund—Any EFFECTIVE DATE: This exemption is provisions to which the exemptions investment fund, account or portfolio effective July 28, 1995. does not apply and the general fiduciary sponsored, maintained and/or trusteed WRITTEN COMMENT: The Department responsibility provisions of section 404 by the Bank, or an affiliate of the Bank, received one written comment with of the Act, which among other things in which one or more investors invest respect to the proposed exemption, require a fiduciary to discharge his which is based on computer models which was submitted by the applicants. duties respecting the plan solely in the using prescribed objective criteria to The applicants had represented (see interest of the participants and transform an independent third-party notice of proposed exemption, rep. 4) beneficiaries of the plan and in a stock index which satisfies the when they filed their exemption prudent fashion in accordance with conditions of Section I (a) and (i). application that ‘‘Business and income section 404(a)(1)(B) of the Act; nor does (c) Affiliate—Any person directly or tax considerations have compelled PPS it affect the requirement of section indirectly, through one or more to consider making an election to be 401(a) of the Code that the plan must intermediaries, controlling, controlled treated as a ‘Subchapter S’ Corporation operate for the exclusive benefit of the by, or under common control with such under section 1362(a) of the Code.’’ The employees of the employer maintaining person; any officer, director, partner, applicants noted in their comment letter the plan and their beneficiaries; employee, relative (as defined in section that subsequent to the filing of the 3(15) of the Act), a brother, a sister, or exemption request, PPS determined (2) These exemptions are a spouse of a brother or a sister of such that, rather than electing Subchapter S supplemental to and not in derogation person; and any corporation or Corporation status itself, PPS would of, any other provisions of the Act and/ partnership of which such person is an merge into its subsidiary, Hobelmann or the Code, including statutory or officer, director, or partner. Port Services, Inc. (HPS), and that HPS administrative exemptions and For a more complete statement of the would elect Subchapter S Corporation transactional rules. Furthermore, the facts and representations supporting the status. That merger was concluded fact that a transaction is subject to an Department’s decision to grant this effective July 31, 1995, and HPS elected administrative or statutory exemption is exemption refer to the notice of Subchapter S Corporation status not dispositive of whether the proposed exemption published on July effective August 1, 1995. The applicants transaction is in fact a prohibited 12, 1995, at 60 FR 35944. represent that the decision to make HPS transaction; and FOR FURTHER INFORMATION CONTACT: rather than PPS the entity to elect Mr. (3) The availability of these E. F. Williams of the Department, Subchapter S status was made for exemptions is subject to the express telephone (202) 219–8194. (This is not business purposes unrelated to the condition that the material facts and a toll-free number.) redemption of the IRAs’ shares, and is representations contained in each Rollover Individual Retirement Accounts for not material to the requested exemption. The applicants also requested that the application are true and complete and Joseph Shepard, Located in Jacksonville, accurately describe all material terms of Florida; William Haspel, Located in exemption be made effective July 28, Bethesda, Maryland; and Richard 1995, instead of July 31, 1995, as had the transaction which is the subject of Geisendaffer, Paul Petryszak, William Kroh been proposed. The sale of shares from the exemption. In the case of continuing and Rolf Graage, Located in Baltimore, the IRAs to PPS occurred on July 28, exemption transactions, if any of the Maryland (Collectively, the IRAs) 1995 to allow sufficient time before July material facts or representations [Prohibited Transaction Exemption 95–80; 31, 1995 to complete other steps relating described in the application change Exemption Application Nos. D–10054– to the Subchapter S Corporation after the exemption is granted, the 10059] election. The applicants represent that exemption will cease to apply as of the Exemption the sale was made in accordance with date of such change. In the event of any all of the conditions set forth in the such change, application for a new The sanctions resulting from the proposed exemption. exemption may be made to the application of section 4975 of the Code, The Department has considered the Department. by reason of section 4975(c)(1)(A) entire record, including the comment Signed at Washington, D.C., this 31st day through (E) of the Code, shall not apply submitted by the applicants, and has of August, 1995. to the past sale by the IRAs of all the determined to grant the exemption common stock (the Stock) of Purchase effective July 28, 1995. Ivan Strasfeld, Port Services, Inc. (PPS) held by the Director of Exemption Determinations, FOR FURTHER INFORMATION CONTACT: Gary IRAs to PPS, provided that the following Pension and Welfare Benefits Administration, H. Lefkowitz of the Department, conditions were satisfied: (1) The sale of U.S. Department of Labor. telephone (202) 219–8881. (This is not Stock by each IRA was a one-time a toll-free number.) [FR Doc. 95–22042 Filed 9–5–95; 8:45 am] transaction for cash; (2) no commissions BILLING CODE 4510±29±P or other expenses were paid by the IRAs 2 Pursuant to 29 CFR 2510.3–2(d), the IRAs are in connection with the sale; and (3) the not within the jurisdiction of Title I of the Act. IRAs received the greater of: (a) the fair However, there is jurisdiction under Title II of the market value of the Stock as determined Act pursuant to section 4975 of the Code. 46312 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices [Application No. D±09956, et al.] within 15 days of the date of publication (1) The redemption price for the stock in the Federal Register. Such notice is determined by a qualified, Proposed Exemptions; TSC shall include a copy of the notice of independent appraiser. International Ltd., Custom Marketing proposed exemption as published in the (2) The note which evidences the and Import Profit Sharing Plan (the Federal Register and shall inform redemption price for the stock Plan) interested persons of their right to represents not more than 25 percent of AGENCY: Pension and Welfare Benefits comment and to request a hearing the Plan’s assets. Administration, Labor. (where appropriate). (3) The terms of the note are based upon terms that are comparable to those SUPPLEMENTARY INFORMATION: The ACTION: Notice of proposed exemption. that would be extended by a third party proposed exemptions were requested in lender. SUMMARY: This document contains applications filed pursuant to section notices of pendency before the (4) The stock, which secures TSC’s 408(a) of the Act and/or section obligations under the note, at all times Department of Labor (the Department) of 4975(c)(2) of the Code, and in proposed exemptions from certain of the represents 200 percent of the accordance with procedures set forth in outstanding balance of the note; prohibited transaction restriction of the 29 CFR Part 2570, Subpart B (55 FR Employee Retirement Income Security however, if the value of the stock ever 32836, 32847, August 10, 1990). falls below the 200 percent level, TSC Act of 1974 (the Act) and/or the Internal Effective December 31, 1978, section Revenue Code of 1986 (the Code). will pledge additional collateral. 102 of Reorganization Plan No. 4 of (5) The Plan is not required to pay any Written Comments and Hearing 1978 (43 FR 47713, October 17, 1978) fees or commissions in connection with Requests transferred the authority of the Secretary the redemption of the stock or the of the Treasury to issue exemptions of Unless otherwise stated in the Notice administration of the note. the type requested to the Secretary of (6) Boatmen’s First National Bank of of Proposed Exemption, all interested Labor. Therefore, these notices of Kansas City (Boatmen’s) holds persons are invited to submit written proposed exemption are issued solely certificates representing the stock in an comments, and with respect to by the Department. escrow account until TSC pays the exemptions involving the fiduciary The applications contain redemption price in full. prohibitions of section 406(b) of the Act, representations with regard to the (7) The Plan increases its liquidity requests for hearing within 45 days from proposed exemptions which are and investment yield by disposing of an the date of publication of this Federal summarized below. Interested persons asset and receives cash to promote asset Register Notice. Comments and request are referred to the applications on file diversification. for a hearing should state: (1) The name, with the Department for a complete address, and telephone number of the statement of the facts and Summary of Facts and Representations person making the comment or request; representations. 1. The Plan is a profit sharing plan and (2) the nature of the person’s with Mr. Jack Hardgree as its only TSC International Ltd., Custom Marketing interest in the exemption and the participant. As of December 12, 1994, manner in which the person would be and Import Profit Sharing Plan (the Plan) Located in Kansas City, MO the Plan had net assets of $565,500. The adversely affected by the exemption. A trustee of the Plan and the [Application No. D–09956] request for a hearing must also state the decisionmaker with respect to the Plan’s issues to be addressed and include a Proposed Exemption investments is Mr. Hardgree. general description of the evidence to be 2. TSC is a ‘‘C’’ corporation that presented at the hearing. A request for The Department of Labor is maintains its principal place of business a hearing must also state the issues to considering granting an exemption in Prairie Village, Kansas. It is engaged be addressed and include a general under the authority of section 4975(c)(2) in the import business and primarily description of the evidence to be of the Code and in accordance with the deals in metal products for U.S. presented at the hearing. procedures set forth in 29 CFR Part manufacturers. Mr. Hardgree is the sole ADDRESSES: All written comments and 2570, Subpart B (55 FR 32836, August director, officer and employee of TSC. request for a hearing (at least three 10, 1990). If the exemption is granted, 3. The Plan currently holds 19,000 copies) should be sent to the Pension the sanctions resulting from the shares of common stock of TSC. The and Welfare Benefits Administration, application of section 4975 of the Code, stock has a stated par value of $10 per Office of Exemption Determinations, by reason of section 4975(c)(1)(A) share and it is not publicly-traded. The Room N–5649, U.S. Department of through (E) shall not apply to the shares of stock that are held by the Plan Labor, 200 Constitution Avenue, N.W., proposed (1) redemption by TSC represent 97 percent of the issued and Washington, D.C. 20210. Attention: International Merchandising Ltd., outstanding stock of TSC. The 3 percent Application No. stated in each Notice of Custom Marketing and Import Company remaining shares of stock are owned by Proposed Exemption. The applications (TSC) of 19,000 shares of common stock Mr. Hardgree. for exemption and the comments issued by TSC and held by the Plan; and 4. Prior to the incorporation of TSC in received will be available for public (2) the extension of credit by the Plan January 1984, Mr. Hardgree was a inspection in the Public Documents to TSC in connection with the manufacturer’s representative with an 1 Room of Pension and Welfare Benefits redemption of the stock. unrelated company, Merchandise Administration, U.S. Department of The proposed exemption is International, Inc. (MII). That company Labor, Room N–5507, 200 Constitution conditioned on the following had a money purchase pension plan (the Avenue, N.W., Washington, D.C. 20210. requirements: MII Plan) with individually-directed accounts. In late 1983, Mr. Hardgree Notice to Interested Persons 1 Because Mr. Jack Hardgree is the sole participant resigned from his employment with MII, Notice of the proposed exemptions in the Plan, there is no jurisdiction under Title I of having been bought out by the two the Employee Retirement Income Security Act of will be provided to all interested 1974 (the Act). However, there is jurisdiction under remaining principals of MII. Although persons in the manner agreed upon by Title II of the Act pursuant to section 4975 of the Mr. Hardgree had no further the applicant and the Department Code. connections with MII as an employee or Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46313 owner after his resignation, he Plan. According to the appraisal report further security, Mr. Hardgree will continued to participate in the MII Plan. dated December 14, 1994, which was assign a portion of his life insurance 5. In January 1984, Mr. Hardgree prepared by Messrs. John C. Korschot, policy in the amount of the note. formed TSC. At the time of CFA, ASA, CBA and David K. Jones, 12. By letter dated June 23, 1995, TSC incorporation of TSC, Mr. Hardgree, in CBA of the firm, as of December 2, 1994, received a loan commitment in the his personal capacity, acquired 500 the 19,000 shares of TSC common stock amount of $141,375 from an unrelated shares of TSC common stock directly held by the Plan had a fair market value lender, Missouri Bank & Trust Company from TSC for $10 per share. This of $535,500 or $27.46 per share. The of Kansas City (Missouri Bank & Trust). amount represented the par value of appraisers stated that they used the The terms offered by Missouri Bank & such stock. In May 1985, Mr. Hardgree adjusted book value approach and the Trust are comparable to the terms of the directed the trustee of the MII Plan to market comparison approach in note. acquire, from TSC, 9,500 shares of TSC rendering their opinion as to the fair 13. Under the Escrow Agreement, TSC common stock for his individually- market value of the Plan’s controlling will pledge all 19,000 shares of the stock directed account in such Plan. The interest in the stock. In addition, the that are redeemed from the Plan by the acquisition price for the stock was $10 appraisers explained that they applied a delivery of certificates evidencing such per share. Although the stock had been discount factor of 15 percent to the pledged shares to Boatman’s. Boatmen’s authorized in TSC’s corporate charter, it initial value of $640,000 they had will hold the certificates until the loan had not been been issued. determined for the stock due to its lack is repaid. If at any time TSC defaults in In 1986, Mr. Hardgree again directed of marketability. The appraisers further the payment of principal or interest on the trustee of the MII Plan to acquire, noted that a control premium was the note, and the default remains from TSC, an additional 9,500 shares of implied in the $640,000 initial value. uncured for two months after written TSC’s authorized but unissued common 9. Although the value of TSC common notice, the entire unpaid principal stock, for his individually-directed stock and Plan assets have increased amount of the note and accrued interest account in the MII Plan. The acquisition significantly, it is represented that by thereon will become immediately due price for the stock was also established holding only TSC stock, the Plan is in and payable. Then, the Plan will have at $10 per share. It is represented that an illiquid position should assets be all of the certificates on deposit at the time of both stock acquisitions, needed for distributions. Moreover, it is delivered to it. At the end of 20 days Mr. Hardgree had no interest in MII represented that TSC cannot promise after receipt of a written demand from other than as a participant in the MII that its stock will hold or increase in the Plan, together with evidence that the Plan. It is also represented that value. Therefore, TSC requests an notice of the demand has been given to following the stock acquisitions, TSC administrative exemption from the TSC, Boatmen’s will deliver to the Plan common stock constituted the majority Department in order to redeem the the certificates held by Boatmen’s. If, of the assets of Mr. Hardgree’ account in shares of TSC common stock that are however, satisfactory proof is presented 2 held by the Plan in return for cash and the MII Plan. to Boatmen’s that all installments of the a promissory note. 6. In January 1991, TSC established note have been paid, Boatmen’s will the Plan by adopting the Mid American 10. TSC proposes to redeem the stock held by the Plan by giving the Plan a deliver to TSC, the shares remaining in Bank & Trust Company Defined its possession. Afterwards, all Contribution Master Plan. Soon after the cash downpayment of $394,125 and a promissory note in the principal amount obligations between the Plan, TSC and establishment of the Plan, the trustee of Boatmen’s will cease. the MII Plan transferred all 19,000 of $141,375. The note will bear a fixed rate of interest of 11 percent per annum. The Plan will not be required to pay shares of TSC common stock to Mid any fees or expenses in connection with American Bank & Trust Company, the The note will also provide for monthly installments of principal and interest the administration of the Escrow former trustee of the Plan, in a ‘‘trustee- Agreement. Further, no parties to the to-trustee transfer.’’ It is represented that over a period of two years after the date of the redemption. The note may be Escrow Agreement will grant a security Mr. Hardgree was advised that the stock interest in any of the securities transfer which was made on behalf of prepayable without penalty at any time by TSC. In addition, the Plan will not deposited with Boatmen’s or create a the Plan did not constitute a prohibited be required to pay any fees or lien, encumbrance, or other claim transaction.3 against monies or borrow from such 7. Mid American Bank & Trust commissions in connection with the redemption of the TSC common stock or stock. Company later became part of Johnson 14. In summary, it is represented that County Bank which was thereafter with respect to the administration of the proposed loan. the proposed transactions will satisfy acquired by Mercantile Bank. In 11. The note will be secured by the the statutory criteria for an exemption December 1994, Mercantile Bank shares of the TSC common stock that are under section 4975(c)(2) of the Code became the custodian for the Plan and redeemed from the Plan. The security because: Mr. Hardgree, the trustee. interest in such shares will be a first (a) The redemption price for the stock 8. TSC paid an unrelated third-party security interest and it will be governed has been determined by a qualified, investment banking firm, Stern Brothers by an escrow agreement (the Escrow independent appraiser. & Co. of Kansas City, Missouri for a Agreement) between TSC and (b) The note which evidences the valuation report of the 19,000 shares of Boatmen’s, with whom TSC currently redemption price for the stock will TSC common stock that are held by the has a revolving loan arrangement, as represent 25 percent of the Plan’s assets. escrow agent. At all times, the fair (c) The terms of the note are based 2 The Department expresses no opinion herein on whether the acquisition of TSC common stock by market value of the stock will represent upon terms that are comparable to those Mr. Hardgree’s individually-directed account in the 200 percent of the outstanding principal that would be extended by a third party MII Plan violated any of the provisions of Part 4 of balance of the note. If, however, the fair lender. Title I of the Act. market value of the stock should ever (d) The stock, which secures TSC’s 3 The Department expresses no opinion herein on whether the transfer of the TSC common stock from fall below this level, TSC will pledge obligations under the note, at all times the MII Plan to the Plan violated the exclusive additional collateral to cover the loan will represent 200 percent of the benefit rule of section 401(a) of the Code. payments made under the note. As outstanding balance of the note. 46314 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices (e) The Plan will not be required to including statutory or administrative SUPPLEMENTARY INFORMATION: The pay any fees or commissions in exemptions and transitional rules. meeting will be open to the public up connection with the redemption of the Furthermore, the fact that a transaction to the seating capacity of the room. stock or the administration of the note. is subject to an administrative or Agenda topics for the meeting are as (f) Boatmen’s will hold certificates statutory exemption is not dispositive of follows: representing the stock in an escrow whether the transaction is in fact a —NASA Actions on Committee’s Previous account until TSC pays the redemption prohibited transaction; and Recommendations price for the stock in full. (4) The proposed exemptions, if —NASA Human Factors Overview and (g) The Plan will increase its liquidity granted, will be subject to the express Updates on Ames Research Center and and investment yield by disposing of an condition that the material facts and Langley Research Center Programs asset and receive cash to promote representations contained in each —Crew-Centered Design Philosophy greater asset diversification. application are true and complete and —Aviation Safety and Automation Program —Human Engineering Methods Notice to Interested Persons accurately describe all material terms of the transaction which is the subject of —Air Traffic Management Human Factors Because Mr. Hardgree is the only the exemption. In the case of continuing participant in the Plan who will be It is imperative that the meeting be exemption transactions, if any of the affected by the proposed transactions, it held on these dates to accommodate the material facts or representations has been determined that there is no scheduling priorities of the key described in the application change need to distribute the notice of participants. Visitors will be requested after the exemption is granted, the pendency to interested persons. to sign a visitors register. exemption will cease to apply as of the Therefore, comments and requests for a date of such change. In the event of any Dated: August 31, 1995. public hearing are due 30 days from the such change, application for a new Danalee Green, date of publication of this notice of exemption may be made to the Management Controls Office. proposed exemption in the Federal Department. [FR Doc. 95–22076 Filed 9–5–95; 8:45 am] Register. BILLING CODE 7510±01±M FOR FURTHER INFORMATION CONTACT: Ms. Signed at Washington, DC, this 31st day of Jan D. Broady of the Department, August, 1995. telephone (202) 219–8881. (This is not Ivan Strasfeld, a toll-free number.) Director of Exemption Determinations Pension and Welfare Benefits Administration, NATIONAL FOUNDATION FOR THE General Information U.S. Department of Labor. ARTS AND THE HUMANITIES The attention of interested persons is [FR Doc. 95–22043 Filed 9–5–95; 8:45 am] National Endowment for the Arts; directed to the following: BILLING CODE 4510±29±P President's Committee on the Arts and (1) The fact that a transaction is the the Humanities subject of an exemption under section 408(a) of the Act and/or section NATIONAL AERONAUTICS AND Pursuant to section 10(a)(2) of the 4975(c)(2) of the Code does not relieve SPACE ADMINISTRATION Federal Advisory Committee Act (Public a fiduciary or other party in interest of Law 92–463), as amended, notice is disqualified person from certain other [Notice 95±084] hereby given that the President’s provisions of the Act and/or the Code, NASA Advisory Council, Aeronautics Committee on the Arts and the including any prohibited transaction Humanities will hold five Regional provisions to which the exemption does Advisory Committee, Subcommittee on Human Factors; Meeting Planning Meetings in the month of not apply and the general fiduciary September 1995. responsibility provisions of section 404 AGENCY: National Aeronautics and The date, times, and locations are as of the Act, which among other things Space Administration. require a fiduciary to discharge his follows: ACTION: Notice of meeting. duties respecting the plan solely in the Dates/times Locations interest of the participants and SUMMARY: In accordance with the beneficiaries of the plan and in a Federal Advisory Committee Act, Pub. September 13 from Lyndon Baines John- prudent fashion in accordance with L. 92–463, as amended, the National 2:30 p.m. to 4:30 son Library, 2313 section 404(a)(1)(b) of the act; nor does Aeronautics and Space Administration p.m. Red River Street, it affect the requirement of section announces a NASA Advisory Council, Austin, TX 78705. 401(a) of the Code that the plan must Aeronautics Advisory Committee, September 15 from J. Paul Getty Trust, operate for the exclusive benefit of the Subcommittee on Human Factors 1:30 p.m. to 3:30 401 Wilshire Bou- p.m. levard, Santa employees of the employer maintaining meeting. the plan and their beneficiaries; Monica, CA DATES: October 17, 1995, 8:30 a.m. to (2) Before an exemption may be 90401. 4:30 p.m.; October 18, 1995, 8:30 a.m. to September 18 from Room 527, Nancy granted under section 408(a) of the Act 4:30 p.m.; and October 19, 1995, 8:30 2:30 p.m. to 4:30 Hanks Center, and/or section 4975(c)(2) of the Code, a.m. to 11:30 a.m. p.m. 1100 Pennsylvania the Department must find that the Avenue, Washing- exemption is administratively feasible, ADDRESSES: National Aeronautics and ton, DC 20506. in the interests of the plan and of its Space Administration, Langley Research September 19 from American Express participants and beneficiaries and Center, Building 1268A, Room 2120, 2:00 p.m. to 4:00 Company, 200 protective of the rights of participants Hampton, VA 23681–0001. p.m. Vesey Street, New and beneficiaries of the plan; FOR FURTHER INFORMATION CONTACT: York, NY 10285. (3) The proposed exemptions, if Mr. Gregory W. Condon, National September 22 from Sara Lee Corpora- granted, will be supplemental to, and Aeronautics and Space Administration, 2:00 p.m. to 4:00 tion, Three First p.m. National Plaza, not in derogation of, any other Ames Research Center, Moffett Field, Chicago, IL 60602. provisions of the Act and/or the Code, CA 94035, 415/604–5567. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46315 These meetings will be open to the Cimarron facility submitted to NRC in 3. The requestor’s areas of concern public on a space available basis for the April 1995. Radioactive contamination about the licensing activity that is the purpose of planning for the future. at the Cimarron facility resulted from subject matter of the proceeding; and If, in the course of discussion, it operations to produce enriched uranium 4. The circumstances establishing that becomes necessary for the Committee to reactor fuels conducted from 1965 the request for a hearing is timely in discuss nonpublic commercial or through 1977. The Licensee also accordance with § 2.1205(c). financial information of intrinsic value, submitted a site characterization report In accordance with 10 CFR 2.1205(e), the committee will go into closed in support of the DP. The license each request for a hearing must also be session pursuant to subsection (c)(4) of amendment would authorize the served, by delivering it personally or by the Government in the Sunshine Act, 5 Licensee to decommission the Cimarron mail, to: U.S.C. 552b. facility in accordance with the DP. 1. The applicant, Cimarron Additionally, discussion concerning The NRC will require the Licensee to Corporation, Kerr-McGee Center, P.O. purely personal information about remediate the Cimarron facility to meet Box 25861, Oklahoma City, OK, 73125, individuals, such as personal NRC’s criteria, and, during the Attention: Mr. Jess Larsen, and biographical and salary data or medical decommissioning activities, to maintain 2. The NRC staff, by delivery to the information, may be conducted by the effluents and doses as low as reasonably Executive Director for Operations, One committee in closed session, in achievable. White Flint North, 11555 Rockville accordance with subsection (c)(6) of Prior to the issuance of the proposed Pike, Rockville, MD 20852, or by mail, U.S.C. 552b. amendment, NRC will have made addressed to the Executive Director for Any interested persons may attend as findings required by the Atomic Energy Operations, U.S. Nuclear Regulatory observers, on a space available basis, but Act of 1954, as amended, and NRC’s Commission, Washington, DC 20555. seating is limited in meeting rooms and regulations. These findings will be For further details with respect to this it is suggested that individuals wishing documented in a Safety Evaluation action, the application for amendment to attend notify the staff of the Report and an Environmental request is available for inspection at the President’s Committee in advance at Assessment. Commission’s Public Document Room, (202) 682–5409 or write to the 2120 L Street NW., Washington, DC The NRC hereby provides notice that Committee at 1100 Pennsylvania 20555. this is a proceeding on an application Avenue, NW, Suite 526, Washington, for a license amendment falling within Dated at Rockville, MD, this 23rd day of DC 20506. the scope of Subpart L, Informal Hearing August 1995. Dated: August 30, 1995. Procedures for Adjudications in For the Nuclear Regulatory Commission. Yvonne M. Sabine, Materials Licensing Proceedings, of Michael F. Weber, Director, Council and Panel Operations, NRC’s rules and practice for domestic Chief, Low-Level Waste and Decommissioning National Endowment for the Arts. licensing proceedings in 10 CFR part 2. Projects Branch, Division of Waste [FR Doc. 95–22075 Filed 9–5–95; 8:45 am] Pursuant to § 2.1205(a), any person Management, Office of Nuclear Material BILLING CODE 7537±01±M whose interest may be affected by this Safety and Safeguards. proceeding may file a request for a [FR Doc. 95–22039 Filed 9–5–95; 8:45 am] hearing in accordance with § 2.1205(c). BILLING CODE 7590±01±P NUCLEAR REGULATORY A request for a hearing must be filed COMMISSION within thirty (30) days of the date of [Docket No. 50±344] publication of this Federal Register [Docket No. 070±925] notice. Portland General Electric Co.; Trojan Consideration of Amendment Request The request for a hearing must be Nuclear Power Station; Federal Court for Decommissioning the Cimarron filed with the Office of the Secretary Decision and Opportunity for Public Corporation Facility in Crescent, Okla., either: Comments 1. By delivery to the Docketing and and Opportunity for Hearing On July 20, 1995, the United States Service Branch of the Office of the Court of Appeals for the First Circuit AGENCY: Nuclear Regulatory Secretary at One White Flint North, issued a decision granting a petition by Commission. 11555 Rockville Pike, Rockville, MD the Citizens Awareness Network ACTION: Notice of Consideration of 20852–2738; or Amendment Request for (‘‘CAN’’) for review of a decision by the 2. By mail or telegram addressed to Nuclear Regulatory Commission. See Decommissioning the Cimarron the Secretary, U.S. Nuclear Regulatory Corporation Facility in Crescent, Citizens Awareness Network, Inc. v. Commission, Washington, DC 20555. NRC, No. 94–1562, lll F.3d lll, Oklahoma, and Opportunity for Attention: Docketing and Service Hearing. 1995 WL 419188 (1st Cir., July 20, Branch. 1995). The First Circuit found that the The U.S. Nuclear Regulatory In addition to meeting other Commission erred when it rejected Commission is considering issuance of applicable requirements of 10 CFR part CAN’s request for a hearing on the an amendment to Special Nuclear 2 of the NRC’s regulations, a request for component removal project (‘‘CRP’’) that Material License No. SNM–928, issued a hearing filed by a person other than Yankee Atomic Electric Power Company to the Cimarron Corporation (the an applicant must describe in detail: (‘‘YAEC’’) is carrying out as part of Licensee), for the decommissioning of 1. The interest of the requestor in the decommissioning the Yankee Nuclear its former nuclear fuel fabrication proceeding; Power Station, located in Rowe, facility in Crescent, Oklahoma. 2. How that interest may be affected Massachusetts. The Court held that The Licensee requested the by the results of the proceeding, ‘‘CAN was entitled to a hearing under amendment in a letter dated May 4, including the reasons why the requestor section 189a [of the Atomic Energy Act 1995, requesting that License No. SNM– should be permitted a hearing, with of 1954] in connection with the NRC 928 be amended to incorporate the particular reference to the factors set out decision to permit YAEC’s early CRP.’’ decommissioning plan (DP) for the in § 2.1205(g); Slip op. at 26. The Court also held that 46316 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices the Commission had violated the the court rejected.4 Prior to January, balance of equities, including (1) any National Environmental Policy Act by 1993, NRC licensees could not initiate consequences for public health and permitting YAEC to initiate the CRP major dismantling activities prior to safety and the environment, (2) the costs before the agency had prepared an Commission approval of a to PGE and others from interrupting environmental assessment or impact decommissioning plan. Furthermore, decommissioning activities, and (3) the statement. The Court remanded the case prior to 1993 the Commission public interest. The Commission also to the Commission for further action in consistently offered opportunities for requests comments on the Commission’s accordance with these holdings. hearings on proposed decommissioning proposed response to the First Circuit 5 In reaching these results the Court plans. decision as a general matter. Alternative By a separate notice published today criticized the Commission’s change in suggestions on how the Commission the Commission is soliciting public interpretation of its 1988 should oversee decommissioning in the comments on how to proceed on decommissioning regulations 1 that it wake of the First Circuit decision are remand in the Yankee proceeding itself. announced in a staff requirements But other nuclear power plants welcome. memorandum dated January 14, 1993. contemplating or engaged in The NRC requests PGE to submit its In that memorandum, the Commission decommissioning may also be affected comments no later than 10 calendar decided to allow its licensees to conduct by the First Circuit decision. The most days after publication of this notice. The ‘‘any decommissioning activity’’ prior to notable of these is the Trojan Nuclear NRC requests other interested members NRC approval of a decommissioning Power Station, located near Portland, of the public to submit comments as plan, so long as the activity did not Oregon, and operated by Portland soon thereafter as possible, but no later ‘‘violate the terms of the licensee’s General Electric (‘‘PGE’’). Currently, than 17 calendar days after publication existing license * * * or 10 CFR 50.59 PGE is engaged in a program of of this notice. The NRC promptly will as applied to the existing license.’’ dismantlement and removal of large Previously, the Commission had place copies of all comments in its components in advance of receiving Public Document Room and in the Local required that ‘‘major dismantling and NRC approval of the Trojan other activities * * * must await NRC Public Document Room at the Trojan decommissioning plan. The Trojan site. approval of a decommissioning plan.’’ decommissioning plan was submitted to See Long Island Lighting Co. (Shoreham the NRC in January, 1995, and review by In addition, PGE and the parties to the Nuclear Power Station, Unit 1), CLI–91– the NRC staff is currently in progress. Oregon state proceeding reviewing the 2, 33 NRC 61, 73 n.5 (1991). Accord, In view of the First Circuit decision Trojan CRP should serve their Sacramento Municipal Utility District the Commission intends to issue a comments directly on each other and on (Rancho Seco Nuclear Generating Federal Register notice offering an the NRC staff. All comments should be Station), CLI–92–2, 35 NRC 47, 61 n.7 opportunity for a hearing on whether to addressed to: Emile Julian, Chief, (1992). Relying on the Commission’s approve the Trojan plan. In addition, Docketing and Service Branch, Office of new interpretation, YAEC began the Commission is considering whether the Secretary, U.S. Nuclear Regulatory removing major components from its it is necessary to halt any Commission, Washington, DC 20555. Yankee reactor before obtaining decommissioning activity at Trojan, Service of comments on the NRC Staff approval of a decommissioning plan.2 In pending a hearing. The First Circuit may be accomplished by addressing its decision, the First Circuit held decision does not require the them to: Seymour H. Weiss, Chief, Non- (among other things) that the Commission to take affirmative action Power Reactors and Decommissioning Commission had failed to give an halting dismantling activities currently Project Directorate, Office of Nuclear adequate explanation for its shift in being conducted in reliance on the Reactor Regulation, U.S. Nuclear policy. interpretation rejected by the court. Regulatory Commission, Washington, The Commission will not seek either Nonetheless, the Commission’s prior DC 20555, and Lawrence J. Chandler, rehearing of this decision by the First interpretation of its rules precludes Esq., Assistant General Counsel for major dismantling activities prior to Circuit or review in the United States Hearings and Enforcement, U.S. Nuclear Supreme Court. When the First Circuit’s approval of a decommissioning plan. Comments submitted at this time by Regulatory Commission, Washington, mandate issues, the Commission will DC 20555. Comments may be hand- comply with the decision.3 The interested persons should address the Commission’s legal authority to allow or delivered to the NRC’s Offices at 11555 Commission currently believes that, Rockville Pike, Rockville, Maryland pending completion of its ongoing forbid further decommissioning activity at Trojan and should address the current between 7:45 a.m. and 4:15 p.m. on rulemaking on decommissioning, Federal Workdays. further decommissioning activities must 4 The Commission has published for comment a FOR FURTHER INFORMATION CONTACT: be conducted under existing NRC proposed decommissioning rule that would regulations as the Commission introduce significant changes in the present Charles Mullins, Office of the General interpreted and applied them prior to regulations. See 60 FR 37374 (July 20, 1995). Counsel, U.S. Nuclear Regulatory the 1993 change in interpretation that Because this new rulemaking is underway, the Commission, Washington DC 20555, Commission does not intend to undertake procedures to reinstate the 1993 policy change. telephone (301) 415–1606. 1 See 53 FR 24018 (June 27, 1988). 5 The NRC staff offered an opportunity for Dated at Rockville, MD, this 30th day of 2 Subsequently, on February 14, 1995, the NRC hearings on proposed orders approving the August, 1995. approved a decommissioning plan for Yankee Shoreham, Fort St. Vrain, and Rancho Seco Rowe. See 60 FR 9870 (February 22, 1995). During decommissioning plans, which were the only plans For the Nuclear Regulatory Commission. the approval process, the NRC staff held an approved under the Commission’s 1988 Andrew L. Bates, informal public meeting to receive comments about decommissioning regulations. See, e.g., 56 FR the plan. 66459 (December 23, 1991); 57 FR 8940 (Mar. 13, Acting Secretary of the Commission. 3 Pursuant to Rule 41 of the Federal Rules of 1992); and 57 FR 9577 (Mar. 19, 1992). A hearing [FR Doc. 95–22034 Filed 9–5–95; 8:45 am] Appellate Procedure, the Court’s mandate will issue was requested on the Rancho Seco plan and was no later than September 12, 1995, unless the being conducted when the case was settled. A BILLING CODE 7590±01±P intervenor YAEC petitions for rehearing or obtains hearing was requested on the Shoreham plan, but a stay of mandate pending a petition for Certiorari. the case was settled before the hearing opened. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46317 [Docket No. 50±29] approval of a decommissioning plan.2 In whether it is necessary to halt any its decision, the First Circuit held decommissioning activity at Yankee, Yankee Atomic Electric Co.; Yankee (among other things) that the pending a hearing. The First Circuit’s Nuclear Power Station; Federal Court Commission had failed to give an decision does not require the Decision and Opportunity for Public adequate explanation for its shift in Commission to take affirmative action Comments policy. halting dismantling activities YAEC The Commission will not seek either currently is conducting in reliance on On July 20, 1995, the United States rehearing of this decision by the First the interpretation rejected by the court. Court of Appeals for the First Circuit Circuit or review in the United States Nevertheless, the Commission’s prior issued a decision granting a petition by Supreme Court. When the First Circuit’s interpretation of its rules precludes the Citizens Awareness Network mandate issues, the Commission will major dismantling activities prior to (‘‘CAN’’) for review of a decision by the comply with the decision.3 By this approval of a decommissioning plan. Nuclear Regulatory Commission. See notice the Commission intends (1) to Comments submitted at this time by Citizens Awareness Network, Inc. v. inform persons with an interest in interested persons should address the NRC, No. 94–1562, ———F.3d———, decommissioning activities at Yankee Commission’s legal authority to allow or 1995 WL 419188 (1st Cir., July 20, about the Commission’s present views forbid further decommissioning activity 1995). The First Circuit found that the on what compliance likely will entail at Yankee and should address the Commission erred when it rejected and (2) to solicit those persons’ views current balance of equities, including (1) CAN’s request for a hearing on the on the compliance issue. any consequences for public health and component removal project (‘‘CRP’’) that The Commission currently believes safety and the environment, (2) the costs Yankee Atomic Electric Power Company that, pending completion of its ongoing to YAEC and others from interrupting (‘‘YAEC’’) is carrying out as part of rulemaking on decommissioning, decommissioning activities, and (3) the decommissioning the Yankee Nuclear further decommissioning activities must public interest. The Commission also Power Station, located in Rowe, be conducted under NRC requests comments on the Commission’s Massachusetts. The Court held that decommissioning regulations as the proposed response to the First Circuit ‘‘CAN was entitled to a hearing under Commission interpreted and applied decision as a general matter. Alternative section 189a (of the Atomic Energy Act them prior to the 1993 change in suggestions on how the Commission of 1954) in connection with the NRC 4 interpretation that the court rejected. should oversee decommissioning in the decision to permit YAEC’s early CRP.’’ Prior to January, 1993, NRC licensees wake of the First Circuit decision are Slip op. at 26. The Court also held that could not initiate major dismantling welcome. the Commission had violated the activities prior to Commission approval National Environmental Policy Act by of a decommissioning plan. The NRC requests YAEC to submit its permitting YAEC to initiate the CRP Furthermore, prior to 1993 the comments no later than 10 calendar before the agency had prepared an Commission consistently offered days after publication of this notice. The environmental assessment or impact opportunities for hearings on proposed NRC requests other interested members statement. The Court remanded the case decommissioning plans.5 of the public, including CAN, to submit to the Commission for further action in Thus, after the mandate issues, the comments as soon thereafter as possible, accordance with these holdings. Commission intends to issue a Federal but no later than 17 calendar days after publication of this notice. The NRC In reaching these results the Court Register notice that will offer an opportunity for a hearing on the Yankee promptly will place copies of all criticized the Commission’s change in comments in its Public Document Room interpretation of its 1988 decommissioning plan and on whatever 1 remains to be done under the CRP. In and in the Local Public Document Room decommissioning regulations that it at the Yankee site. announced in a staff requirements addition, the Commission is considering memorandum dated January 14, 1993. In addition, CAN and YAEC should 2 In that memorandum, the Commission Subsequently, on February 14, 1995, the NRC serve their comments on each other and approved a decommissioning plan for Yankee on the NRC staff. All comments should decided to allow its licensees to conduct Rowe. See 60 FR 9870 (February 22, 1995). During ‘‘any decommissioning activity’’ prior to the approval process, the NRC staff held an be addressed to: Emile Julian, Chief, NRC approval of a decommissioning informal public meeting to receive comments about Docketing and Service Branch, Office of plan, so long as the activity did not the plan. the Secretary, U.S. Nuclear Regulatory 3 Pursuant to Rule 41 of the Federal Rules of ‘‘violate the terms of the licensee’s Commission, Washington, DC 20555. Appellate Procedure, the Court’s mandate will issue Service of comments on the NRC Staff existing license * * * or 10 CFR 50.59 no later than September 12, 1995, unless the as applied to the existing license.’’ intervenor YAEC petitions for rehearing or obtains may be accomplished by addressing Previously, the Commission had a stay of mandate pending a petition for Certiorari. them to: Seymour H. Weiss, Chief, Non- 4 required that ‘‘major dismantling and The Commission has published for comment a Power Reactors and Decommissioning proposed decommissioning rule that would Project Directorate, Office of Nuclear other activities * * * must await NRC introduce significant changes in the present approval of a decommissioning plan.’’ regulations. See 60 FR 37374 (July 20, 1995). Reactor Regulation, U.S. Nuclear See Long Island Lighting Co. (Shoreham Because this new rulemaking is underway, the Regulatory Commission, Washington, Nuclear Power Station, Unit 1), CLI–91– Commission does not intend to undertake DC 20555, and Lawrence J. Chandler, procedures to reinstate the 1993 policy change. Esq., Assistant General Counsel for 2, 33 NRC 61, 73 n.5 (1991). Accord, 5 The NRC staff offered an opportunity for Hearings and Enforcement, U.S. Nuclear Sacramento Municipal Utility District hearings on proposed orders approving the (Rancho Seco Nuclear Generating Shoreham, Fort St. Vrain, and Rancho Seco Regulatory Commission, Washington, Station), CLI–92–2, 35 NRC 47, 61 n.7 decommissioning plans, which were the only plans DC 20555. Comments may be hand- approved under the Commission’s 1988 (1992). Relying on the Commission’s delivered to the NRC’s Offices at 11555 decommissioning regulations. See, e.g., 56 FR Rockville Pike, Rockville, Maryland new interpretation, YAEC began 66459 (December 23, 1991); 57 FR 8940 (Mar. 13, removing major components from its 1992); and 57 FR 9577 (Mar. 19, 1992). A hearing 20852. Yankee reactor before obtaining was requested on the Rancho Seco plan and was FOR INFORMATION CONTACT: being conducted when the case was settled. A Charles hearing was requested on the Shoreham plan, but Mullins, Office of the General Counsel, 1 See 53 FR 24018 (June 27, 1988). the case was settled before the hearing opened. U.S. Nuclear Regulatory Commission, 46318 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Washington, DC 20555, telephone (301) The NRC hereby provides notice that Dated at Rockville, Md., this 23rd day of 415–1606. this is a proceeding on an application August, 1995. For the Nuclear Regulatory Commission, Dated at Rockville, MD, this 30th day of for a license amendment falling within August, 1995. the scope of Subpart L, Informal Hearing Michael F. Weber, For the Nuclear Regulatory Commission. Procedures for Adjudications in Chief, Low-Level Waste and Decommissioning Projects Branch, Division of Waste Andrew L. Bates, Materials Licensing Proceedings, of NRC’s rules and practice for domestic Management, Office of Nuclear Material Acting Secretary of the Commission. licensing proceedings in 10 CFR part 2. Safety and Safeguards. [FR Doc. 95–22035 Filed 9–5–95; 8:45 am] Pursuant to § 2.1205(a), any person [FR Doc. 95–22038 Filed 9–5–95; 8:45 am] BILLING CODE 7590±01±P whose interest may be affected by this BILLING CODE 7590±01±P proceeding may file a request for a hearing in accordance with § 2.1205(c). [Docket No. 50±271] [Docket No.: 070±3073] A request for a hearing must be filed within thirty (30) days of the date of In the Matter of: Vermont Yankee Consideration of Amendment Request publication of this Federal Register Nuclear Power Corporation (Vermont for Decommissioning the Kerr-McGee notice. Yankee Nuclear Power Station); Corp. Cushing Facility in Cushing, The request for a hearing must be Exemption Okla., and Opportunity for Hearing filed with the Office of the Secretary I AGENCY: Nuclear Regulatory either: Commission. 1. By delivery to the Docketing and The Vermont Yankee Nuclear Power Service Branch of the Office of the Corporation (VYNPC, the licensee) is ACTION: Notice of Consideration of Secretary at One White Flint North, the holder of Facility Operating License Amendment Request for 11555 Rockville Pike, Rockville, MD No. DPR–28 which authorizes operation Decommissioning the Kerr-McGee 20852–2738; or of the Vermont Yankee Nuclear Power Corporation Cushing Facility in 2. By mail or telegram addressed to Station (the facility) at power levels no Cushing, Oklahoma, and Opportunity the Secretary, U.S. Nuclear Regulatory greater than 1593 megawatts thermal. for Hearing. Commission, Washington, DC 20555. The facility is a single-unit boiling water The U.S. Nuclear Regulatory Attention: Docketing and Service reactor (BWR) located at the licensee’s Commission is considering issuance of Branch. site in Windham County, Vermont. In addition to meeting other an amendment to Special Nuclear The License provides, among other applicable requirements of 10 CFR Part Material License No. SNM–1999, issued things, that the Vermont Yankee 2 of the NRC’s regulations, a request for to the Kerr-McGee Corporation (the Nuclear Power Station is subject to all a hearing filed by a person other than Licensee), for the decommissioning of rules, regulations, and orders of the an applicant must describe in detail: its former enriched uranium and Nuclear Regulatory Commission (the 1. The interest of the requestor in the Commission) now or hereafter in effect. thorium processing facility in Cushing, proceeding; Oklahoma. 2. How that interest may be affected II The Licensee requested the by the results of the proceeding, On November 19, 1980, the amendment in a letter dated May 9, including the reasons why the requestor Commission published a revised 10 CFR 1995, requesting that License No. SNM– should be permitted a hearing, with 50.48 and a new Appendix R to 10 CFR 1999 be amended to incorporate the particular reference to the factors set out part 50 regarding fire protection features decommissioning plan (DP) for the in § 2.1205(g); of nuclear power plants. The revised Cushing facility submitted to NRC in 3. The requestor’s areas of concern Section 50.48 and Appendix R became April 1994. Radioactive contamination about the licensing activity that is the effective on February 17, 1981. Section at the Cushing facility resulted from subject matter of the proceeding; and III of Appendix R contains 15 operations to convert uranium 4. The circumstances establishing that subsections, lettered A through O, each hexafluoride or other compounds and/ the request for a hearing is timely in of which specifies requirements for a or scrap to nuclear fuel materials, and accordance with § 2.1205(c). particular aspect of the fire protection operations to process thorium to In accordance with 10 CFR 2.1205(e), features at a nuclear power plant. produce thorium pellets. These each request for a hearing must also be Subsection III.J is the subject of the operations were conducted from 1962 served, by delivering it personally or by licensee’s exemption request. through mid-1966. The license mail, to: Section III.J of Appendix R requires amendment would authorize the 1. The applicant, Kerr-McGee that emergency lighting units with at Licensee to decommission the Cushing Corporation, Kerr-McGee Center, least an 8-hour battery power supply facility in accordance with the DP. Oklahoma City, OK, 73125, Attention: shall be provided in all areas needed for The NRC will require the Licensee to Mr. Jess Larsen, and operation of safe shutdown equipment remediate the Cushing facility to meet 2. The NRC staff, by delivery to the and in access and egress routes thereto. NRC’s criteria, and, during the Executive Director for Operations, One decommissioning activities, to maintain White Flint North, 11555 Rockville III effluents and doses as low as reasonably Pike, Rockville, MD 20852, or by mail, By letter dated June 29, 1995, the achievable. addressed to the Executive Director for licensee requested an exemption from Prior to the issuance of the proposed Operations, U.S. Nuclear Regulatory Section III.J of Appendix R. In amendment, NRC will have made Commission, Washington, DC 20555. particular, the licensee stated that it findings required by the Atomic Energy For further details with respect to this cannot meet the requirements for Act of 1954, as amended, and NRC’s action, the application for amendment emergency lighting units with at least an regulations. These findings will be request is available for inspection at the 8- hour battery power supply in the documented in a Safety Evaluation Commission’s Public Document Room, following areas: Report and an Environmental 2120 L Street NW., Washington, DC (1) A portion of general yard areas for Assessment. 20555. access and egress to the Intake Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46319 Structure, the Northwest Cooling Tower the regulation in these particular effective on February 17, 1981. Section valve pit, and the fuel oil transfer pump circumstances is not necessary to III of Appendix R contains 15 building, and achieve the underlying purpose of subsections, lettered A through O, each (2) In those areas needed for manual Appendix R to 10 CFR part 50. of which specifies requirements for a hookup of a portable fuel oil transfer Accordingly, the Commission has particular aspect of the fire protection pump. determined that, pursuant to 10 CFR features at a nuclear power plant. The licensee proposes to utilize the 50.12(a)(2)(ii), special circumstances Subsection III.J is the subject of the security perimeter lighting for outdoor exist in that existing levels of emergency licensee’s request. egress routes and one outdoor task. lighting satisfy the underlying purpose Section III.J of Appendix R requires Based on the staff’s review of the of Appendix R to 10 CFR part 50. that emergency lighting units with at information provided by the licensee, Further, the staff has concluded that the least an 8-hour battery power supply the staff has concluded that, given that requested exemption is authorized by shall be provided in all areas needed for the security lighting is powered from a law, will not present an undue risk to operation of safe shutdown equipment separate power source, the security the public health and safety, and is and in access and egress routes thereto. lighting is not vulnerable to fire loss. consistent with the common defense On June 26, 1989, the NRC granted an The security lighting is inspected and and security. Therefore, the Commission maintained as part of the plant security exemption from these requirements for hereby grants the exemption request specified areas of the Reactor Building. requirements. The licensee has from the requirements of Section III.J of confirmed that the illumination levels Appendix R to 10 CFR part 50 described By letter dated June 29, 1995, the in the affected areas of the plant are in Section III above. licensee requested revocation of that adequate to enable operators to Pursuant to 10 CFR 51.32, the exemption. implement the actions required for safe Commission has determined that the III shutdown. issuance of this exemption will have no Therefore, the staff considers the significant impact on the quality of the Since the issuance of the exemption licensee’s alternative lighting human environment (60 FR 44088). from the emergency lighting configuration to be equivalent to that This Exemption is effective upon requirements of Appendix R, the achieved by literal conformance with issuance. licensee has installed conforming 8- Appendix R to 10 CFR part 50 and, hour battery powered lighting in the therefore, meets the underlying purpose Dated at Rockville, Md., this 30th day of August 1995. affected areas. As a result, these areas of Section III.J of Appendix R. For the Nuclear Regulatory Commission, conform to the lighting requirements of Therefore, the licensee’s request for the regulation and the exemption is no Steven A. Varga, exemption from the requirements of longer needed by the licensee. The Section III.J in the subject locations Director, Division of Reactor Projects—I/II, licensee has therefore requested Office of Nuclear Reactor Regulation. should be granted. revocation of the exemption. [FR Doc. 95–22036 Filed 9–5–95; 8:45 am] IV BILLING CODE 7590±01±P The NRC staff has reviewed the Pursuant to 10 CFR 50.12(a)(2), the information submitted by the licensee Commission will not consider granting and concludes that the conditions for [Docket No. 50±271] an exemption unless special which the exemption for emergency circumstances are present. Item (ii) of lighting was granted no longer exist In the Matter of: Vermont Yankee because the licensee has installed 8- the subject regulation includes special Nuclear Power Corporation (Vermont circumstances where application of the hour battery powered lighting which Yankee Nuclear Power Station); conform to Section III.J of Appendix R subject regulation would not serve the Revocation of Exemption underlying purpose of the rule or is not to 10 CFR part 50. necessary to achieve the underlying I IV purpose of the rule. The Vermont Yankee Nuclear Power The underlying purpose of Section Corporation (VYNPC, the licensee) is Accordingly, the Commission has III.J of Appendix R is to provide the holder of Facility Operating License determined that the specific exemption adequate illumination to assure the No. DPR–28 which authorizes operation from 10 CFR part 50, Appendix R, capability of performing all necessary of the Vermont Yankee Nuclear Power granted on June 26, 1989, for emergency safe shutdown functions as well as Station (the facility) at power levels no lighting is hereby revoked in that it is provide illumination for required greater than 1593 megawatts thermal. no longer needed. movements into and out of the plant. In The facility is a single-unit boiling water Pursuant to 10 CFR 51.32, the lieu of the 8-hour battery powered units reactor (BWR) located at the licensee’s Commission has determined that the specified by Appendix R, the licensee site in Windham County, Vermont. issuance of this Revocation of has proposed using existing security The License provides, among other Exemption will have no significant lighting. The staff has reviewed the things, that the Vermont Yankee impact on the quality of the human proposed alternative and has concluded, Nuclear Power Station is subject to all environment (60 FR 44088). as described above, that the security rules, regulations, and orders of the This Revocation of Exemption is lighting system would be a reliable Nuclear Regulatory Commission (the effective upon issuance. alternative and would provide an Commission) now or hereafter in effect. adequate level of illumination to assure Dated at Rockville, MD., this 30th day of that all required safe shutdown II August 1995. functions and required personnel On November 19, 1980, the For the Nuclear Regulatory Commission. movements can be performed. Commission published a revised 10 CFR Steven A. Varga, Therefore, the staff concludes that 50.48 and a new Appendix R to 10 CFR Director, Division of Reactor Projects—I/ special circumstances exist for the part 50 regarding fire protection features II,Office of Nuclear Reactor Regulation. licensee’s requested exemption in that of nuclear power plants. The revised [FR Doc. 95–22037 Filed 9–5–95; 8:45 am] imposition of the literal requirements of § 50.48 and Appendix R became BILLING CODE 7590±01±P 46320 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices [Docket No. 50±302] specified in the technical specifications boundary. It is also noted that the or associated bases. Paragraph III.D.1 licensee, as a condition of the proposed Florida Power Co.; Environmental specifies that a set of three Type A tests exemption, will perform the visual Assessment and Finding of No is to be performed at approximately containment inspection although it is Significant Impact equal intervals during each 10-year required by Appendix J to be performed The U. S. Nuclear Regulatory service period. Such tests are to be only in conjunction with Type A tests. Commission (the Commission) is limited to periods when the plant is The NRC staff considers that these considering issuance of an exemption non-operational and secured in the inspections, though limited in scope, from certain requirements of its shutdown condition under the provide an important added level of regulations to Facility Operating License administrative controls and in confidence in the continued integrity of No. DPR–72, issued to Florida Power accordance with the safety procedures the containment boundary. The change Corporation, (the licensee), for operation defined in the license. will not increase the probability or of the Crystal River Unit 3 Nuclear For CR3, the next available consequences of accidents, no changes Generating Plant (CR3), located in Citrus opportunity for performing the ILRT are being made in the types or amounts County, Florida. would be in Spring 1996. The licensee of any effluents that may be released requested a one-time interval extension offsite, and there is no significant Environmental Assessment for the ILRT by approximately 24 increase in the allowable individual or Identification of Proposed Action months from the Spring 1996 refueling cumulative occupational radiation outage to the Spring 1998 refueling exposure. Accordingly, the Commission The proposed action is in accordance outage. The licensee indicated that with the licensee’s application dated concludes that there are no significant approval of its request would save over radiological environmental impacts May 19, 1995, as supplemented August two million dollars and would reduce 8, 1995, for exemption from certain associated with the proposed action. personnel radiation exposure. The With regard to potential requirements of Title 10 Code of Federal proposed action is needed to permit the nonradiological impacts, the proposed Regulations, part 50 (10 CFR part 50), licensee to defer the ILRT. action does involve features located Appendix J, ‘‘Primary Reactor entirely within the restricted area as Containment Leakage Testing for Water Environmental Impacts of the Proposed defined in 10 CFR Part 20. It does not Cooled Power Reactors,’’ Paragraph Action affect nonradiological plant effluents III.D.1.(a), relating to Integrated Leak The Commission has completed its and has no other environmental impact. Rate Test (ILRT) frequency. The evaluation of the proposed action and Accordingly, the Commission concludes proposed exemption would allow CR3 a concludes that the proposed one-time that there are no significant one-time interval extension for the Type exemption would not increase the nonradiological environmental impacts A test (containment integrated leak rate probability or consequences of accidents associated with the proposed action. test) by approximately 24 months from previously analyzed and the proposed the spring 1996 refueling outage to the one-time exemption would not affect Alternatives to the Proposed Action spring 1998 refueling outage. facility radiation levels or facility Since the Commission has concluded The Need for the Proposed Action radiological effluents. there is no significant environmental In support of its exemption request, impact associated with the proposed Pursuant to 10 CFR part 50, Appendix the licensee submitted information action, any alternatives with equal or A, ‘‘General Design Criteria for Nuclear pertaining to Types A, B and C testing greater environmental impact need not Power Plants,’’ criterion 16, history, structural capability, and risk be evaluated. As an alternative to the ‘‘Containment design,’’ the ‘‘[r]eactor assessment. proposed action, the NRC staff containment and associated systems Two ILRTs have been performed considered denial of the proposed shall be provided to establish an during the last seven years with action. Denial of the application would essentially leak-tight barrier against the successful results. There have been no result in no change in current uncontrolled release of radioactivity to permanent or temporary modifications environmental impacts. the environment and to assure that the to the containment structure, liner or containment design conditions penetrations since the last Type A test, Alternative Use of Resources important to safety are not exceeded for and no future modifications are planned This action did not involve the use of as long as postulated accident prior to the 1998 refueling outage which any resources not previously considered conditions require.’’ 10 CFR 50.54, could adversely affect the Type A test in the Final Environmental Statements ‘‘Conditions of License,’’ paragraph O, results. related to operation of Crystal River states that ‘‘[p]rimary reactor The licensee will continue to be Unit 3, dated May 1973. containments for water cooled power required to conduct the Type B and C reactors shall be subject to the local leak rate tests which are, in Agencies and Persons Consulted requirements set forth in Appendix J to general, the principal means of In accordance with its stated policy, this part.’’ 10 CFR part 50, Appendix J, detecting containment leakage paths on August 28, 1995, the NRC staff requires periodic verification by tests of with the Type A tests confirming the consulted with the State of Florida the leak-tight integrity of the primary Type B and C test results. Types B and official, Dr. Lyle Jerretti, Office of reactor containment and establishes the C testing history at CR3 shows that the Radiation Control, regarding the acceptance criteria for such tests. The overall combined as-found leakage has environmental impact of the proposed purposes of the tests are to assure that been less than the allowed combined action. The State official had no periodic surveillance of reactor leakage rate of 0.6 La (266,431 SCCM) at comments. containment penetrations is performed the calculated maximum peak so that proper maintenance and repairs containment pressure as specified in Finding of No Significant Impact are made during the service life of the Appendix J. The NRC staff considers The Commission has determined not containment and leakage through the that these inspections provide the to prepare an environmental impact primary reactor containment shall not necessary level of confidence in the statement for the proposed exemption. exceed allowable leakage rate values as continued integrity of the containment Based upon the foregoing environmental Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46321 assessment, the Commission concludes actions at West Lake Landfill. In RELEVANT ACT SECTION: Section 8(f). that the proposed action will not have addition, the West Lake Landfill site SUMMARY OF APPLICATION: Applicant a significant effect on the quality of the will be removed from NRC’s Site seeks an order declaring that it has human environment. Decommissioning Management Plan ceased to be an investment company. For further details with respect to this list. NRC staff does not plan to take any FILING DATE: The application was filed action, see the request for exemption further action on the West Lake Landfill on July 25, 1995 and amended on dated May 19, 1995, as supplemented site unless specifically requested by August 17, 1995. August 8, 1995, which are available for EPA. Any questions regarding NRC’s HEARING OR NOTIFICATION OF HEARING: An public inspection at the Commission’s deferral decision should be forwarded to order granting the application will be Public Document Room, 2120 L Street, Ron Uleck by mail at Mail Stop T8F37, issued unless the SEC orders a hearing. NW., Washington, DC and at the local U.S. Nuclear Regulatory Commission, Interested persons may request a public document room located at Washington, DC 20555 or by phone at hearing by writing to the SEC’s Coastal Region Library, 8619 W. Crystal (301) 415–6722. Secretary and serving applicant with a Street, Crystal River, Florida 32629. Dated at Rockville, Maryland, this 28th day copy of the request, personally or by Dated at Rockville, MD, this 28th day of of August 1995. mail. Hearing requests should be August 1995. For the U.S. Nuclear Regulatory received by the SEC by 5:30 p.m. on For the Nuclear Regulatory Commission, Commission. September 25, 1995 and should be David B. Matthews, Michael F. Weber, accompanied by proof of service on Director, Project Directorate II–1, Division of Chief, Low-Level Waste and Decommissioning applicant, in the form of an affidavit or, Reactor Projects—I/II, Office of Nuclear Projects Branch, Division of Waste for lawyers, a certificate of service. Reactor Regulation. Management, Office of Nuclear Material Hearing requests should state the nature [FR Doc. 95–22041 Filed 9–5–95; 8:45 am] Safety and Safeguards. of the writer’s interest, the reason for the BILLING CODE 7590±01±P [FR Doc. 95–22040 Filed 9–5–95; 8:45 am] request, and the issues contested. BILLING CODE 7590±01±P Persons may request notification of a hearing by writing to the SEC’s [Docket No. 040±8801] Secretary. Organization, Functions, and Authority PROSPECTIVE PAYMENT ADDRESSES: Secretary, SEC, 450 5th Delegations; West Lake Landfill ASSESSMENT COMMISSION Street, NW., Washington, DC 20549. Applicant, 222 South Ninth Street, AGENCY: Nuclear Regulatory Notice of Meeting Piper Jaffray Tower, Minneapolis, Commission. Notice is hereby given of the meetings Minnesota 55402. ACTION: Notice of Deferral of Regulatory of the Prospective Payment Assessment FOR FURTHER INFORMATION CONTACT: Oversight to the U.S. Environmental Commission on Tuesday and Deepak T. Pai, Staff Attorney, at (202) Protection Agency for the West Lake Wednesday, September 12 and 13, 1995 942–0574, or Alison E. Baur, Branch Landfill, Bridgeton, Missouri, and at the Madison Hotel, 15th & M Streets, Chief, at (202) 942–0564 (Division of Removal of West Lake Landfill From NW., Washington, DC. Investment Management, Office of SDMP List. The Full Commission will convene at Investment Company Regulation). SUPPLEMENTARY INFORMATION: The This notice is to inform the public 9:00 a.m. on September 12, 1995, and adjourn at approximately 5 p.m. On following is a summary of the that, on June 16, 1995, the U.S. Nuclear application. The complete application Regulatory Commission (the Wednesday, September 13, 1995, the meeting will convene at 8 a.m. and may be obtained for a fee at the SEC’s Commission) deferred regulatory Public Reference Branch. oversight to the U.S. Environmental adjourn at noon. The meetings will be Protection Agency (EPA) for the held in Executive Chambers 1, 2, and 3 Applicant’s Representations remedial actions at the West Lake each day. All meetings are open to the public. 1. Applicant is a closed-end Landfill site in Bridgeton, Missouri. The diversified investment company site contains both hazardous and Molly Ryan, organized as a Minnesota corporation. radioactive waste, is currently being Executive Officer. On January 5, 1990, applicant filed a remediated by EPA, and does not hold [FR Doc. 95–22030 Filed 9–5–95; 8:45 am] notification of registration pursuant to a current NRC license. BILLING CODE 6820±BW±M section 8(a) of the Act and a registration NRC and EPA conduct regulatory statement pursuant to the Securities Act programs for site remediation under the of 1933. The registration statement Atomic Energy Act and the SECURITIES AND EXCHANGE became effective and applicant’s initial Comprehensive Environmental COMMISSION public offering commenced on February Response, Compensation, and Liability [Rel. No. IC±21324; 811±6021] 15, 1990. Act (CERCLA), respectively. Based on 2. Applicant is a ‘‘term trust’’ the reviews to date, NRC concluded that American Adjustable Rate Term Trust established and managed by Piper the remedial program being Inc.Ð1995; Notice of Application Capital Management Incorporated (the administered by EPA at the West Lake ‘‘Adviser’’) with a scheduled Landfill site under CERCLA is adequate August 29, 1995. termination date of April 15, 1995. No to protect the public and the AGENCY: Securities and Exchange action was needed by shareholders, the environment from the risks associated Commission (‘‘SEC’’). Board of Directors, or under state law, with the radioactive contamination at ACTION: Notice of Application for to effect the liquidation. the site. Therefore, NRC oversight of Deregistration under the Investment 3. Applicant’s investment objective remediation at the site would be Company Act of 1940 (the ‘‘Act’’). was to provide a high level of current burdensome and duplicative. income and to return $10 per Trust Consequently, NRC is deferring to EPA APPLICANT: American Adjustable Rate share (the initial offering price per Trust regulatory oversight of the remedial Term Trust Inc.—1995. share) to investors. The planned and 46322 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices orderly liquidation of securities began 1940 Act and Rule 6e–3(T)(c)(4) investment company. The Separate in October 1994 and such securities thereunder. Account is used to fund: (1) Certain were sold in the ordinary course of SUMMARY OF APPLICATION: Applicants individual flexible premium variable business at their then current market request an order that will permit the life insurance contracts (‘‘Existing values. The proceeds of such Separate Account, and any future Policies’’); (2) certain flexible liquidations then were invested in separate accounts established by IDS survivorship variable life insurance short-term securities which matured on (‘‘Future Accounts’’), to deduct from policies (‘‘Current Policies’’) for which a or before April 17, 1995. premium payments of certain flexible registration statement has been filed 4. In connection with its scheduled premium variable life insurance recently with the Commission to register liquidation, on April 17, 1995 applicant policies, an amount that is reasonably interests in the Current Policies under distributed approximately $105,800,000, related to the IDS’s increased Federal the Securities Act of 1933; and (3) which represented approximately tax burden resulting from the receipt of certain flexible variable life insurance 10,828,926 shares at $9.76922 net asset those premium payments pursuant to policies developed by IDS Life in the value, to its security holders. There are the application of Section 848 of the future (‘‘Future Policies’’) (Current 15 security holders to whom payment Internal Revenue Code of 1986, as Policies, together with Future Policies, has not been made because they have amended. ‘‘Policies’’). not yet submitted their stock FILING DATE: The application was filed 3. IDS is the principal underwriter for certificates. This represents on March 1, 1995, and was amended on the Policies. IDS is a registered broker- approximately 7,274 shares with a value July 24, 1995. dealer under the Securities Exchange Act of 1934, and is a member of the of $68,314.52 which is being held in a HEARING OR NOTIFICATION OF HEARING: An National Association of Securities non-interest bearing bank account at the order granting the application will be Dealers, Inc. transfer agent. Letters requesting the issued unless the Commission orders a 4. Applicants propose to deduct a certificates have been mailed to each hearing. Interested persons may request charge to reimburse IDS for the increase such security holder and payment will a hearing by writing to the in its Federal income taxes resulting be made as soon as practicable after the Commission’s Secretary and serving from the application of Section 848 of submission of the certificates. The Applicants with a copy of the request, the Internal Revenue Code of 1986 distribution to shareholders was based personally or by mail. Hearing requests (‘‘Code’’), as amended. The charge will on net asset value. should be received by the Commission be reasonably related to IDS’s increased 5. Applicant has retained $126,575 in by 5:30 p.m. on September 25, 1995, cash to pay estimated expenses for Federal tax burden, and will be and should be lawyers, a certificate of deducted from premiums received. transfer agent fees, tax reporting, service. Hearing requests should state auditing, accounting and legal expenses. 5. The Omnibus Budget the nature of the requestor’s interest, the Reconciliation Act of 1990 (‘‘OBRA If expenses are greater than the amount reason for the request, and the issues retained, the Adviser will pay the excess 1990’’), amending Section 848 of the contested. Persons may request Code, requires life insurance companies amount. notification of a hearing by writing to 6. Applicant is not a party to any to capitalize and amortize over ten years the Secretary of the Commission. certain general expenses for the current litigation or administrative proceeding. ADDRESSES: Secretary, Securities and 7. Applicant is neither engaged in, nor year. Prior law allowed these expenses Exchange Commission, 450 5th Street, to be deducted in full from the current does it propose to engage in, any NW., Washington, DC 20549. business activities other than those year’s gross income. Section 848, as Applicants: Mary Ellyn Minenko, amended, effectively accelerates the necessary for the winding-up of its Counsel, IDS Life Insurance Company, affairs. realization of income from specified IDS Tower 10, Minneapolis, Minnesota contracts and, consequently, the For the Commission, by the Division of 55440. payment of taxes on that income. Taking Investment Management, pursuant to FOR FURTHER INFORMATION CONTACT: into account the time value of money, delegated authority. Pamela K. Ellis, Senior Counsel, or Section 848 increases the insurance Margaret H. McFarland, Wendy Finck Friedlander, Deputy chief, company’s tax burden because the Deputy Secretary. at (202) 942–0670, Office of Insurance amount of general deductions that must [FR Doc. 95–22066 Filed 9–5–95; 8:45 am] Products (Division of Investment be capitalized and amortized is BILLING CODE 8010±01±M Management). measured by the premiums received SUPPLEMENTARY INFORMATION: The under the Policies. 6. The amount of deductions subject [Rel. No. IC±21325; No. 812±9506] following is a summary of the application; the complete application is to Section 848 equals a percentage of the IDS Life Insurance Company, et al. available for a fee from the current year’s net premiums received Commission’s Public Reference Branch. (i.e., gross premiums minus return August 29, 1995. premiums and reinsurance premiums) AGENCY: Securities and Exchange Applicants’ Representations under life insurance or other contracts Commission (‘‘SEC’’ or ‘‘Commission’’). 1. IDS is a stock life insurance categorized under this Section. The ACTION: Notice of Application for an company, organized in Minnesota, and Policies will be categorized under Order under the Investment Company is an indirect subsidiary of American Section 848 as life insurance contracts Act of 1940 (‘‘1940 Act’’). Express Company. requiring 7.7% of the net premiums 2. The Separate Account is a separate received to be capitalized and amortized APPLICANTS: IDS Life Insurance account established by IDS and under the schedule set forth in Section Company (‘‘IDS’’) and IDS Life Variable registered under the 1940 Act as a unit 848(c)(1). Life Separate Account (‘‘Separate investment trust. Currently, the Separate 7. The increased tax burden on every Account’’). Account has 6 subaccounts each of $10,000 of net premiums received under RELEVANT 1940 ACT SECTIONS: Order which invests in a corresponding the Policies is quantified by Applicants requested under Section 6(c) granting portfolio of IDS Life Series Fund, Inc., as follows. For each $10,000 of net exemptions from Section 27(c)(2) of the a registered open-end management premiums received in a given year, IDS Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46323 must capitalize $770 (i.e., 7.7% of Applicants represent that the 1.25% amounts deducted for ‘‘sales load’’) $10,000), and $38.50 of this amount charge will be reasonably related to must be held by a trustee or custodian may be deducted in the current year. IDS’s increased federal income tax having the qualifications established The remaining $731.50 ($770 less burden under Section 848. This under Section 26(a)(1) for the trustees of $38.50) is subject to taxation at the representation takes into account the unit investment trusts. These proceeds corporate tax rate of 35% and results in benefit to IDS of the amortization also must be held under an indenture or $256.02 (.35% × $731.50) more in taxes permitted by Section 848 and the use of agreement that conforms with the for the current year than IDS otherwise a 10% discount rate (which is provisions of Section 26(a)(2) and would have owed prior to OBRA 1990. equivalent to IDS’s targeted rate of Section 26(a)(3) of the 1940 Act. However, the current tax increase will return) in computing the future 5. ‘‘Sales load’’ is defined under be offset partially by deductions deductions resulting from such Section 2(a)(35), in relevant part, as: allowed during the next ten years, amortization. IDS also may add this The difference between the price of a which result from amortizing the 1.25% charge to the Existing Policies, security to the public and that portion of the remainder of the $770 ($77 in each of but only with respect to sales of new proceeds from its sale which is received and the following nine years and $38.50 in policies, not on additional premiums invested or held for investment by the issuer year ten). paid to currently-held policies. (SEC (or in the case of a unit investment trust, by 8. It is IDS’s business judgment that File Nos. 811–4298/33–11165).1 the depositor or trustee), less any portion of it is appropriate to use a discount rate such difference deducted for trustee’s or of at least 10% in evaluating the present Applicants’ Legal Analysis custodian’s fees, insurance premiums, issue value of its future tax deductions for the 1. Applicants request an order under taxes, or administrative expenses or fees following reasons. Capital that IDS must Section 6(c) of the 1940 Act granting which are not properly chargeable to sales or use to pay its increased federal tax exemptions from Sections 27(c)(2) of the promotional activities. burden under Section 848 will be 1940 Act and Rule 6e–3(T)(c)(4)(v) to Sales loads on periodic payment plan unavailable for investment. The cost of allow the deduction of a charge from certificates are limited by Sections capital used to satisfy this increased tax premiums to compensate IDS for its 27(a)(1) and 27(h)(1) to a maximum of burden essentially will be IDS’s after-tax increased federal tax burden based on 9% of total payments. rate of return (i.e., the return sought on receipt of these premiums under the 6. Certain provisions of Rule 6e–3(T) invested capital), which is in excess of Policies, and under the Existing provide a range of exemptive relief. Rule 10%. Accordingly, Applicants submit Policies. The charge will be in an 6e–3(T) provides exemptive relief if the that the targeted rate of return is amount that is reasonably related to separate account issues flexible appropriate for use in this present value IDS’s increased federal tax burden. premium variable life insurance calculation. Applicants assert that it is appropriate contracts, as defined in subparagraph 9. In determining the rate of return to deduct a charge for an insurer’s (c)(1) of that Rule. used in arriving at the discount rate, IDS increased tax burden attributable to considered a number of factors. These 7. Applicants state that paragraph premiums received, and to exclude the (b)(13)(iii)(E) of Rule 6e–3(T) provides factors include current market rates, deduction of this charge from sales load, inflation, and expected future interest exemptive relief from Section 27(c)(2) to because it is a legitimate expense of the permit an insurer to make certain rate trends. company and not for sales and 10. Using a federal corporate tax rate deductions, other than sales load, distribution expenses. including the insurer’s tax liabilities of 35%, and assuming a discount rate of 2. Section 6(c) authorizes the 10%, the present value of the increased from receipt of premium payments Commission, by order and upon imposed by states or by other tax burden resulting from Section 848 application, to exempt any person, on each $10,000 of net premium is governmental entities. Applicants assert security, or transaction, or class of that the proposed deduction with $95.62. persons, securities, or transactions, from 11. IDS does not incur incremental respect to Section 848 of the Code any provisions of the 1940 Act. The federal income tax when it passes on arguably is covered by subparagraph Commission grants relief under Section state premium taxes to Policy owners (b)(13)(iii) of Rule 6e–3(T). Applicants 6(c) to the extent an exemption is because state premium taxes are note, however, that the language of ‘‘necessary or appropriate in the public deductible in computing federal income paragraph (c)(4) of the Rule appears to interest and consistent with the taxes. Conversely, federal income taxes require that deductions for federal tax protection of investors and the purposes are not deductible in computing IDS’s obligations from receipt of premium fairly intended by the policy and federal income taxes. To compensate payments be treated as ‘‘sales load.’’ provisions of [the 1940 Act].’’ 8. Applicants state that paragraph IDS fully for the impact of Section 848, 3. The Separate Account is, and the (b)(1), together with paragraph (c)(4), of IDS must impose an additional charge to Future Accounts will be, regulated Rule 6e–3(T) provides an exemption make it whole for the $95.62 additional under the 1940 Act as issuers of from the Section 2(a)(35) definition of tax burden attributable to Section 848, periodic payment plan certificates. ‘‘sales load’’ by substituting a new as well as the tax on the additional Accordingly, the Separate Account, the definition to be used for the purposes of $95.62 itself, which can be determined Future Accounts, and IDS (as depositor the Rule. Rule 6e–3(T)(c)(4) defines by dividing $95.62 by the complement and principal underwriter) are deemed ‘‘sales load’’ during a period as the of 35% federal corporate income tax rate to be subject to Section 27 of the 1940 excess of any payments made during (i.e., 65%), resulting in an additional Act. charge of $147.11 for each $10,000 of 4. Section 27(c)(2) prohibits the sale that period over certain specified net premiums, or 1.47%. of periodic payment plan certificates charges and adjustments, including a 12. Based on its prior experience, IDS unless the following conditions are met. deduction for state premium taxes. reasonably expects to fully take almost The proceeds of all payments (except Under a literal reading of paragraph all future deductions. It is IDS’s (c)(4) of the Rule, a deduction for an judgment that a 1.25% charge would 1 Applicants represent that, during the Notice insurer’s increased federal tax burden reimburse it for the increased federal Period, the application will be amended to reflect does not fall squarely into those income tax liabilities under Section 848. this representation. itemized charges or deductions, 46324 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices arguably causing the deduction to be the factors taken into account by IDS in received by the SEC by 5:30 p.m. on treated as part of ‘‘sales load.’’ determining such targeted rate of return. September 25, 1995, and should be 9. Applicants state that the public accompanied by proof of service on the Conclusion policy that underlies paragraph (b)(13) applicant, in the form of an affidavit or, of Rule 6e–3(T), and particularly For the reasons and upon the facts set for lawyers, a certificate of service. subparagraph (b)(13)(i), like that which forth above, Applicants submit that the Hearing requests should state the nature underlies paragraphs (a)(1) and (h)(1) of requested exemptions to permit IDS to of the writer’s interest, the reason for the Section 27, is to prevent excessive sales deduct 1.25% of premium payments request, and the issues contested. loads from being charged for the sale of under the Policies are appropriate in the Persons may request notification of a periodic payment plan certificates. public interest and consistent with the hearing by writing to the SEC’s Applicants submit that this legislative protection of investors and the purposes Secretary. purpose is not furthered by treating a fairly intended by the policy and ADDRESSES: Secretary, SEC, 450 Fifth federal income tax charge based on provisions of the 1940 Act. Street, N.W., Washington, D.C. 20549. premium payments as a sales load For the Commission, by the Division of Applicant: Societe Generale, Securities because the deduction is not related to Investment Management, pursuant to Operations, 32, rue du Champ de Tir, the payment of sales commissions or delegated authority. 44300 Nantes, France; cc: Bruce E. other distribution expenses. Margaret H. McFarland, Clubb, Esq., Baker & McKenzie, 815 10. Applicants assert that the Deputy Secretary. Connecticut Avenue, N.W., Washington, standards of Section 6(c) are satisfied [FR Doc. 95–22067 Filed 9–5–95; 8:45 am] D.C., 20006–4078. because the requested relief is appropriate in the public interest and BILLING CODE 8010±01±M FOR FURTHER INFORMATION CONTACT: consistent with the purposes of the 1940 Marianne H. Khawly, Staff Attorney, at (202) 942–0562, or Robert A. Robertson, Act and the protection of investors. The [Investment Company Act Release No. exemptive relief would eliminate the 21323; International Series Release No. 846; Branch Chief, at (202) 942–0564 need for IDS to file additional 812±9640] (Division of Investment Management, exemptive applications for each Policy Office of Investment Company or Future Policy to be issued through a Societe Generale; Notice of Regulation). Future Account with respect to the same Application SUPPLEMENTARY INFORMATION: The issues under the 1940 Act that have following is a summary of the August 29, 1995. application. The complete application been addressed in this application, and AGENCY: Securities and Exchange may be obtained for a fee from the SEC’s thus would promote competitiveness in Commission (‘‘SEC’’). the variable life insurance market by Public Reference Branch. ACTION: Notice of Application for avoiding delay, reducing administrative Exemption under the Investment Applicant’s Representations expenses, and maximizing efficient use Company Act of 1940 (the ‘‘Act’’). of resources. Applicants further assert 1. Societe Generale requests an order to permit Societe Generale, the Foreign that the exemptive relief would enhance APPLICANT: Societe Generale. Subsidiaries, any U.S. Investment IDS’s ability to effectively take RELEVANT ACT SECTIONS: Order under advantage of business opportunities as Company, and any custodian for a U.S. section 6(c) of the Act for an exemption Investment Company to maintain they arise. If IDS were required to from section 17(f) of the Act. repeatedly seek exemptive relief with foreign securities, cash, and cash SUMMARY OF APPLICATION: Societe equivalents (collectively, ‘‘Assets’’) in respect to the same issues addressed in Generale requests an order that would the application, investors would not the custody of the Foreign Subsidiaries. permit United States registered For the purposes of this application, receive any benefit or additional investment companies other than protection thereby and might be ‘‘foreign securities’’ includes: (a) investment companies registered under Securities issued and sold primarily disadvantaged as a result of increased section 7(d) (a ‘‘U.S. Investment overhead expenses. outside the United States by a foreign Company’’), for which Societe Generales government, a national of any foreign Conditions for Relief serve as custodian or subcustodian, to country, or a corporation or other 1. IDS will monitor the maintain foreign securities and other organization incorporated or organized reasonableness of the 1.25% charge. assets in the Ivory Coast with Societe under the laws of any foreign country; 2. The registration statement for each General de Banques en Cote d’Ivoire and (b) securities issued or guaranteed Policy under which the 1.25% charge is (‘‘SGBCI’’), in Morocco with Societe by the Government of the United States deducted will: (a) disclose the charge; Generale Marocaine de Banques or by any state or any political (b) explain the purpose of the charge; (‘‘SGMB’’), and in South Africa with subdivision thereof or by any agency and (c) state that the charge is Societe Generale South Africa Limited thereof or by any entity organized under reasonable in relation to IDS’s increased (‘‘SGSA’’), subsidiaries of Societe the laws of the United States or of any federal tax burden under Section 848 of Generale (collectively, the ‘‘Foreign state thereof which have been issued the Code. Subsidiaries’’). and sold primarily outside the United 3. The registration statement for each FILING DATES: The application was filed States. Policy providing for the 1.25% on June 23, 1995 and amended on 2. Societe Generale is a bank deduction will contain as an exhibit an August 28, 1995. organized and existing under the laws of actuarial opinion as to: (a) The HEARING OR NOTIFICATION OF HEARING: An France. Societe Generale is regulated in reasonableness of the charge in relation order granting the application will be France by the Ministere de l’Economie to IDS’s increased federal tax burden issued unless the SEC orders a hearing. at des Finances and is subject to law No. under Section 848 of the Code resulting Interested persons may request a 8846 of June 24, 1984 Relating to the from the receipt of premiums; (b) the hearing by writing to the SEC’s Activities and Regulation of Credit reasonableness of the targeted rate of Secretary and serving applicant with a Institutions. Societe Generale is one of return that is used in calculating such copy of the request, personally or by the leading financial services charge; and (c) the appropriateness of mail. Hearing requests should be institutions in France and currently Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46325 provides worldwide custody services least $500,000. A ‘‘bank’’, as that term Foreign Subsidiary’s level of that include holding Assets of U.S. is defined in section 2(a)(5) of the Act, shareholder equity. Investment Companies or their includes: (a) a banking institution 2. Societe Generale, any U.S. custodians. In the United States, Societe organized under the laws of the United Investment Company, and any Generale has branch banking operations, States; (b) a member bank of the Federal custodian for a U.S. Investment representative offices, and as a result, is Reserve System; and (c) any other Company, will deposit Assets with a subject to the Bank Holding Company banking institution or trust company, Foreign Subsidiary only in accordance Act of 1956 and the International whether incorporated or not, doing with one of the two contractual Banking Act of 1978. As of December business under the laws of any state or arrangements described below, which 31, 1994, Societe Generale had of the United States, a substantial arrangement will remain in effect at all consolidated shareholders’ equity in portion of which consists of receiving times (during which the Foreign excess of the equivalent of deposits or exercising fiduciary powers Subsidiary fails to satisfy the $10,000,000,000. similar to those permitted to national requirements of rule 17f–5 and during 3. SGBCI was incorporated in Abidjan banks, which is supervised or examined which such Assets remain deposited in 1962. It is a 37% owned direct by state or federal authority having with the Foreign Subsidiary). subsidiary of Societe Generale. Other supervision over banks, and which is a. The Three-Party Agreement major shareholders include the Ivory not operated for the purposes of evading Arrangement. Under this arrangement, Coast government and Credit Suisse. the Act. the agreement will be a three-party SGBCI is regulated by the Ministry of 2. The only entities located outside agreement (the ‘‘Three-Party the Economy, Finance and Planning of the United States that section 17(f) Agreement’’) among (i) Societe the Ivory Coast under law No. 90–589 of authorizes to serve as custodians for Generale, (ii) the Foreign Subsidiary and July 25, 1990 Regarding Bank registered management investment (iii) the U.S. Investment Company, or Regulation. The Ivory Coast is a member companies are the overseas branches of the custodian for a U.S. Investment of the West African Monetary Union qualified U.S. banks. Rule 17f–5 Company pursuant to which Societe (‘‘WAMU’’) and, as a result, SGBCI is expands the group of entities that are Generale will undertake to provide specified custody services, and will supervised by the WAMU central bank. permitted to serve as foreign custodians. 4. Societe Generale commenced delegate to the Foreign Subsidiary such Rule 17f–5(c)(2)(i) defines the term banking operations in Morocco in 1913, of the duties and obligations of Societe ‘‘Eligible Foreign Custodian’’ to include which operations it incorporated into a Generale as will be necessary to permit a banking institution or trust company, subsidiary in 1962. After acquiring the Foreign Subsidiary to hold in incorporated or organized under the another bank in 1965, the merged entity custody the U.S. Investment Company’s laws of a country other than the United was renamed SGMB. SGMB is a 35% Assets. The Three-Party Agreement States, that is regulated by that country’s owned direct subsidiary of Societe further will provide that Societe government or an agency thereof and Generale. Other major shareholders Generale will be liable for any loss, that has shareholders’ equity in excess include Societe Marseillaise de Credit damage, cost, expense, liability, or claim of $200,000,000 or its equivalent. and Credit Suisse. SGMB is regulated by arising out of or in connection with the Societe Generale is an Eligible Foreign the Ministry of Finance of Morocco and performance by the Foreign Subsidiary Custodian under the rule. Bank al-Maghrib, the Moroccan central of its responsibilities under the Three- bank, under Law No. 93–147 of June 7, 3. The Foreign Subsidiaries satisfy the Party Agreement to the same extent as 1993 Relating to the Activities and requirements of rule 17f–5, with the if Societe Generale had itself been Regulation of Credit Institutions. exception of meeting the minimum required to provide custody services 5. SGSA is a bank incorporated in shareholders’ equity requirement. under the Three-Party Agreement. South Africa in 1981. SGSA was Accordingly, they are not Eligible b. The Custody Agreement/ acquired by Societe Generale in 1991. It Foreign Custodians and, absent Subcustody Agreement Arrangement. is a wholly owned subsidiary of Societe exemptive relief, could not serve as a Societe Generale will deposit Assets Generale. SGSA is regulated by the custodian for U.S. Investment Company with a Foreign Subsidiary in accordance Registrar of Banks of South Africa and Assets. with the Custody Agreement and the Reserve Bank of South Africa under 4. Section 6(c) provides, in relevant Subcustody Agreement described Banks Act No. 94 of 1990. part, that the SEC may, conditionally or below. 6. Societe Generale requests relief to unconditionally, by order, exempt any i. The Custody Agreement will be permit Societe Generale, as custodian or person or class of persons from any between Societe Generale and the U.S. subcustodian for a U.S. Investment provision of the Act or from any rule Investment Company or any custodian Company, when custody services are thereunder, if such exemption is for a U.S. Investment Company. In that required in the Ivory Coast, Morocco, or necessary or appropriate in the public agreement, Societe Generale will South Africa, to deposit, or cause or interest, consistent with the protection undertake to provide specified custody permit the U.S. Investment Company to of investors, and consistent with the or subcustody services, and the U.S. deposit, its Assets with the appropriate purposes fairly intended by the policy Investment Company (or its custodian) Foreign Subsidiary as delegate for and provisions of the Act. Societe will authorize Societe Generale to Societe Generale. Generale submits that its request delegate to the Foreign Subsidiary such satisfies this standard. of Societe Generale’s duties and Applicant’s Legal Analysis obligations as will be necessary to Applicant’s Conditions 1. Section 17(f) of the Act requires permit the Foreign Subsidiary to hold in every registered management Applicant agrees that any order of the custody the assets of U.S. Investment investment company to place and SEC granting the requested relief shall Companies. The Custody Agreement maintain its securities and similar be subject to the following conditions: further will provide that Societe investments in the custody of certain 1. The foreign custody arrangements Generale will be liable for any loss, enumerated entities, including a bank proposed regarding each Foreign damage, cost, expense, liability, or claim having at all times aggregate capital, Subsidiary satisfy the requirements of arising out of or in connection with the surplus, and undivided profits of at rule 17f–5 in all respects other than the performance by the Foreign Subsidiary 46326 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices of its responsibilities to the same extent be filed until the close of business on Docket Number: OST–95–418. as if Societe Generale had itself been October 30, 1995, and for economic Date filed: August 21, 1995. required to provide custody services injury until the close of business on Due Date for Answers, Conforming under the Custody Agreement. May 30, 1996, at the address listed Applications, or Motion to Modify ii. A Subcustody Agreement will be below: U.S. Small Business Scope: September 15, 1995. executed by Societe Generale and the Administration, Disaster Area 3 Office, Description: Application of Florida Foreign Subsidiary. Pursuant to this 4400 Amon Carter Blvd., Suite 102, Ft. West International Airways, Inc., agreement, Societe Generale will Worth, TX 76155 or other locally pursuant to 49 U.S.C. Section 41105, delegate to the Foreign Subsidiary such announced locations. and Subpart Q of the Regulations, of Societe Generale’s duties and The interest rates are: requests the transfer to FWIA of Florida obligations as will be necessary to West Gateway, Inc.’s existing certificate permit the Foreign Subsidiary to hold For Physical Damage: Percent and exemption authority as well as the Assets in custody in the country in scheduled and charter all-cargo service HOMEOWNERS WITH CRED- which it operates. The Subcustody IT AVAILABLE ELSEWHERE 8.000 allocations relating to U.S. South Agreement will explicitly provide that HOMEOWNERS WITHOUT American markets. (i) the Foreign Subsidiary is acting as a CREDIT AVAILABLE ELSE- Docket Number: OST–95–423. foreign custodian for Assets that belong WHERE ...... 4.000 Date filed: August 21, 1995. to a U.S. Investment Company pursuant BUSINESSES WITH CREDIT Due Date for Answers, Conforming to the terms of an exemptive order AVAILABLE ELSEWHERE ... 8.000 Applications, or Motion to Modify issued by the SEC and (ii) the U.S. BUSINESSES AND NON- Scope: September 18, 1995 Investment Company or its custodian PROFIT ORGANIZATIONS Description: Application of USAir, WITHOUT CREDIT AVAIL- (as the case may be) that has entered ABLE ELSEWHERE ...... 4.000 Inc., pursuant to 49 U.S.C. Sections into a Custody Agreement will be OTHERS (INCLUDING NON- 41101 and 41108, and Subpart Q of the entitled to enforce the terms of the PROFIT ORGANIZATIONS) Regulations, applies for a certificate of Subcustody Agreement and can seek WITH CREDIT AVAILABLE public convenience and necessity relief directly against the Foreign ELSEWHERE ...... 7.125 authorizing it to engage in scheduled Subsidiary. Further, the Subcustody For Economic Injury foreign air transportation of persons, Agreement will be governed either by BUSINESSES AND SMALL property and mail between the terminal New York law or French law, or by AGRICULTURAL COOPERA- point Philadelphia, Pennsylvania and Ivory Coast law for SGBCI, Moroccan TIVES WITHOUT CREDIT AVAILABLE ELSEWHERE ... 4.000 the coterminal points Rome and Milan, law for SGMB, or South African law for Italy. SGSA. If it is governed by French, Ivory The number assigned to this disaster Docket Number: OST–95–427. Coast, Moroccan, or South African law, for physical damage is 280712 and for Date filed: August 21, 1995. Societe Generale shall obtain an opinion economic injury the number is 863200. Due Date for Answers, Conforming of counsel in France, the Ivory Coast, Applications, or Motion to Modify Morocco, or South Africa, as the case (Catalog of Federal Domestic Assistance Program Nos. 59002 and 59008). Scope: September 18, 1995. may be, opining as to the enforceability Description: Application of Skyjet, Dated: August 30, 1995. of the rights of a third party beneficiary Inc. dba Skyjet Antigua & Barbuda, under the laws of such country. John T. Spotila, pursuant to U.S.C. and Subpart Q of the 3. Societe Generale currently satisfies Acting Administrator. Regulations, requests a foreign air and will continue to satisfy the [FR Doc. 95–22063 Filed 9–5–95; 8:45 am] carrier permit authorizing Skyjet minimum shareholders’ equity BILLING CODE 8025±01±P Antigua to perform passenger, property requirement set forth in rule 17f– and mail charter service between 5(c)(2)(i). Antigua and Barbuda and the United For the SEC, by the Division of Investment DEPARTMENT OF TRANSPORTATION States. Management, under delegated authority. Notice of Applications for Certificates Docket Number: OST–95–431. Margaret H. McFarland, Date filed: August 21, 1995. of Public Convenience and Necessity Due Date for Answers, Conforming Deputy Secretary. and Foreign Air Carrier Permits Filed Applications, or Motion to Modify [FR Doc. 95–22065 Filed 9–5–95; 8:45 am] Under Subpart Q During the Week Scope: September 18, 1995. BILLING CODE 8010±01±M Ended August 25, 1995 Description: Application of United The following Applications for Air Lines, Inc., pursuant to 49 U.S.C. SMALL BUSINESS ADMINISTRATION Certificates of Public Convenience and Section 41101 and Subpart Q of the Necessity and Foreign Air Carrier Regulations, applies for a Certificate of [Declaration of Disaster Loan Area #2807] Permits were filed under Subpart Q of Public Convenience and Necessity the Department of Transportation’s authorizing scheduled service of Texas; Declaration of Disaster Loan Procedural Regulations (See 14 CFR persons, property and mail between Los Area 302.1701 et. seq.). The due date for Angeles, California, and Guadalajara, Gray County and the contiguous Answers, Conforming Applications, or Mexico. counties of Armstrong, Carson, Motions to Modify Scope are set forth Docket Number: OST–95–449. Collingsworth, Donley, Hemphill, below for each application. Following Date filed: August 22, 1995. Hutchinson, Roberts, and Wheeler in the Answer period DOT may process the Due Date for Answers, Conforming the State of Texas constitute a disaster application by expedited procedures. Applications, or Motion to Modify area as a result of damages caused by Such procedures may consist of the Scope: September 19, 1995. severe thunderstorms and tornadoes adoption of a show-cause order, a Description: Amendment to the which occurred on June 8, 1995. tentative order, or in appropriate cases Application of Balkan Bulgarian Applications for loans for physical a final order without further Airlines, pursuant to Subpart Q of the damage as a result of this disaster may proceedings. Regulations, request that it be allowed Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46327 to provide foreign scheduled air ACTION: Notice of agency policy. the section. By removing the phrase, the transportation of persons property and Coast Guard can eliminate unnecessary mail between a point or points in SUMMARY: The Coast Guard is documentation and provide itself Bulgaria and the coterminal points New announcing a change to its policy flexibility in determining the York, New York, and Detroit, Michigan, concerning agency actions that are appropriate means of complying with United States of America, via Malta, categorically excluded from additional NEPA for the listed activities. By with local traffic rights between Malta, environmental analysis under the removing the phrase, the Coast Guard on the one hand, and Detroit and New National Environmental Policy Act will have the flexibility to use the York, on the other hand. (NEPA). The change concerns section, a programmatic EA or EIS, or an operations to carry out maritime safety, Paulette V. Twine, EA or EIS for the specific activity, maritime law enforcement, search and depending on the nature of the activity Chief, Documentary Services Division. rescue, domestic ice breaking, and oil or being planned. This change also brings [FR Doc. 95–22061 Filed 9–5–95; 8:45 am] hazardous substance removal programs. BILLING CODE 4910±62±P the section more in line with the stated FOR FURTHER INFORMATION CONTACT: purpose and intent of NEPA and the Mr. David Reese, Environmental Council on Environmental Quality Compliance and Restoration Branch, regulations, which include the Aviation Proceedings; Agreements (202) 267–1942. Filed During the Week Ended August requirement in 40 CFR part 1500.4(p) to 25, 1995 SUPPLEMENTARY INFORMATION: reduce excessive paperwork by using Background categorical exclusions to define The following Agreements were filed categories of actions which do not with the Department of Transportation Under regulations implementing the individually or cumulatively have a under the provisions of 49 U.S.C. 412 National Environmental Policy Act significant effect on the human and 414. Answers may be filed within (NEPA) (40 CFR parts 1500 through environment. This change does not 21 days of date of filing. 1508), each Federal agency is required effect the Coast Guard’s responsibility to Docket Number: OST–95–432. to adopt procedures to supplement comply fully with NEPA before Date filed: August 21, 1995. those regulations (40 CFR 1507.3). The engaging in an activity listed in the Parties: Members of the International Coast Guard’s procedures and policies section. It can be applied only if there Air Transport Association. are published as a Commandant are no extraordinary circumstances, as Subject: TC1 Reso/P 0456 dated instruction entitled, ‘‘National described in section 2.B.2.b., that would August 18, 1995. Environmental Policy Act Implementing limit its use. Expedited TC1 Longhaul Resos r-1 to Procedures and Policy for Considering For the reasons set out in the r-12. Environmental Impacts’’ (COMDTINST preamble, the Coast Guard announces Proposed Effective Date: Expedited M16475.1B). On July 29, 1994, the Coast the following amendment to section October 15, 1995. Guard published a notice in the Federal 2.B.2.e.(22) of COMDTINST M16475.1B: Docket Number: OST–95–433. Register (59 FR 38654) announcing the 2.B.2.e. Categorical Exclusion List Date filed: August 21, 1995. revision of section 2.B.2 of the Parties: Members of the International instruction. Section 2.B.2 lists the * * * * * Air Transport Association. proposed agency actions that are (22) Operations to carry out maritime Subject: TC1 Reso/P 0457 dated categorically excluded from the safety, maritime law enforcement, August 18, 1995. requirement that the actions undergo search and rescue, domestic ice Within South America Expedited the analysis that accompanies breaking, and oil or hazardous Reso 002e. preparation of an Environmental substance removal programs. Assessment (EA) or Environmental Proposed Effective Date: Expedited * * * * * October 15, 1995. Impact Statement (EIS). Dated: August 30, 1995. Docket Number: OST–95–434. Discussion of Change RADM Edward J. Barrett, Date filed: August 21, 1995. The Coast Guard is amending section Chief, Office of Engineering Logistics and Parties: Members of the International 2.B.2.e.(22) (the section) of Development. Air Transport Association. COMDTINST M16475.1B, which [FR Doc. 95–22026 Filed 9–5–95; 8:45 am] Subject: COMP Reso/P 1058 dated categorically excludes operations to BILLING CODE 4910±14±M August 18, 1995. carry out maritime safety, maritime law Composite Expedited Resolutions r-1 enforcement, search and rescue, to r-8. domestic ice breaking, and oil or Federal Aviation Administration Effective Date: Expedited October 1, hazardous substance removal programs Notice of Intent To Rule on Application 1995. that have been the subject of a To Use the Revenues From a Paulette V. Twine, programmatic NEPA analysis and Passenger Facility Charge (PFC) at documentation. It is being amended to Chief, Documentary Services Division. Baltimore Washington International remove the phase ‘‘that have been the [FR Doc. 95–22062 Filed 9–5–95; 8:45 am] Airport, Baltimore, MD BILLING CODE 4910±62±P subject of a programmatic NEPA analysis and documentation.’’ AGENCY: Federal Aviation A review of the implementation of the Administration (FAA), DOT. Coast Guard section disclosed that the phrase ‘‘that ACTION: Notice of Intent To Rule on have been the subject of a programmatic Application. [CGD 95±064] NEPA analysis and documentation’’ National Environmental Policy Act: imposes a requirement for a specific SUMMARY: The FAA proposes to rule and Agency Procedures for Categorical level of NEPA analysis and invites public comment on the Exclusions documentation (i.e., a programmatic application to use the revenues from a level) that may not be necessary or PFC at Baltimore Washington AGENCY: Coast Guard, DOT. appropriate for the actions included in International Airport under the 46328 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices provisions of the Aviation Safety and facility to be located southwest of the Mike Nicely, DOT/FAA, Texas Airport Capacity Expansion Act of 1990 (Title intersection of Runways 10–28 and Development Office, 2601 Meacham IX of the Omnibus Budget 15R–33L. Boulevard, Fort Worth, Texas 76193– Reconciliation Act of 1990) (Public Law Class or classes of air carriers which 0653, (817) 222–5606. Documents 101–508) and Part 158 of the Federal the public agency has requested not be reflecting this FAA action may be Aviation Regulations (14 CFR Part 158). required to collect PFCs: Air Taxi/ reviewed at this same location. DATES: Comments must be received on commercial operators filing FAA Form SUPPLEMENTARY INFORMATION: This or before October 6, 1995. 1800–31. notice announces that the FAA has ADDRESSES: Comments on this Any person may inspect the given its overall approval to the noise application may be mailed or delivered application in person at the FAA office compatibility program for Fort Worth in triplicate to the FAA at the following listed above under FOR FURTHER Spinks Airport, effective August 11, address: Washington Airports District INFORMATION CONTACT and at the FAA 1995 Office, 101 West Broad Street, Suite 300, regional Airports office located at: Under section 104(a) of the Aviation Falls Church, Virginia 22046. Fitzgerald Federal Building, John F. Safety and Noise Abatement Act of 1979 In addition, one copy of any Kennedy International Airport, Jamaica, (hereinafter referred to as ‘‘the Act’’), an comments submitted to the FAA must New York 11430. airport operator who has previously be mailed or delivered to Mr. Theodore In addition, any person may, upon submitted a noise exposure map may E. Mathison, Administrator of the request, inspect the application, notice submit to the FAA a noise compatibility Maryland Aviation Administration at and other documents germane to the program which sets forth the measures the following address: P.O. Box 8766, application in person at the Maryland taken or proposed by the airport BWI Airport, Baltimore, Maryland Aviation Administration. operator for the reduction of existing 21240–0766. Issued in Jamaica, New York on August 28, non-compatible land uses and Air carriers and foreign air carriers 1995. prevention of additional non-compatible may submit copies of written comments Anthony P. Spera, land uses within the area covered by the previously provided to the Maryland Acting Manager, Airports Division, Eastern noise exposure maps. The Act requires Aviation Administration under Section Region. such programs to be developed in 158.23 of Part 158. [FR Doc. 95–22069 Filed 9–5–95; 8:45 am] consultation with interested and FOR FURTHER INFORMATION CONTACT: BILLING CODE 4910±13±M affected parties including local Robert Mendez, Manager, Washington communities, government agencies, Airports District Office, 101 West Broad airport users, and FAA personnel. Street, Suite 300, Falls Church, Virginia FAA Approval of Noise Compatibility Each airport noise compatibility 22046. The application may be reviewed Program; Fort Worth Spinks Airport; program developed in accordance with in person at this same location. Fort Worth, TX Federal Aviation Regulations (FAR) Part SUPPLEMENTARY INFORMATION: The FAA 150 is a local program, not a Federal AGENCY: Federal Aviation program. The FAA does not substitute proposes to rule and invites public Administration, DOT. comment on the application to use the its judgment for that of the airport revenue from a PFC at Baltimore ACTION: Notice. proprietor with respect to which Washington International Airport under measures should be recommended for SUMMARY: The Federal Aviation action. The FAA’s approval or the provisions of the Aviation Safety Administration (FAA) announces its and Capacity Expansion Act of 1990 disapproval of FAR Part 150 program findings on the noise compatibility recommendations is measured (Title IX of the Omnibus Budget program submitted by the city of Fort Reconciliation Act of 1990) (Public Law according to the standards expressed in Worth under the provisions of Title I of Part 150 and the Act and is limited to 101–508) and Part 158 of the Federal the Aviation Safety and Noise Aviation Regulations (14 CFR Part 158). the following determinations: Abatement Act of 1979 (Public Law 96– a. The noise compatibility program On August 10, 1995, the FAA 193) and 14 CFR Part 150. These determined that the application to use was developed in accordance with the findings are made in recognition of the provisions and procedures of FAR Part the revenue from a PFC submitted by description of Federal and nonfederal Maryland Aviation Administration was 150; responsibilities in Senate Report No. b. Program measures are reasonably substantially complete within the 96–52 (1980). On February 13, 1995, the requirements of Section 158.25 of Part consistent with achieving the goals of FAA determined that the noise exposure reducing existing non-compatible land 158. The FAA will approve or maps submitted by the city of Fort disapprove the application, in whole or uses around the airport and preventing Worth under Part 150 were in the introduction of additional non- in part, no later than November 11, compliance with applicable 1995. compatible land uses; requirements. On August 11, 1995, the c. Program measures would not create The following is a brief overview of Administrator approved the Fort Worth the application. an undue burden on interstate or foreign Spinks Airport noise compatibility commerce, unjustly discriminate against Level of the proposed PFC: $3.00. program. All of the recommendations of Proposed charge effective date: types or classes of aeronautical uses, the program were approved. No program October 1, 1992. violate the terms of airport grant elements relating to mandatory new or Proposed charge expiration date: agreements, or intrude into areas revised flight procedures for noise April 31, 2009. preempted by the Federal Government; Total estimated PFC revenue: abatement were proposed by the city of and $286,057,383. Fort Worth. d. Program measures relating to the Brief description of proposed EFFECTIVE DATE: The effective date of the use of flight procedures can be project(s): This application requests the FAA’s approval of the Fort Worth implemented within the period covered authority to use the PFC revenues Spinks Airport noise compatibility by the program without derogating previously authorized to impose for the program is August 11, 1995. safety, adversely affecting the efficient design and construction of a new ARFF FOR FURTHER INFORMATION CONTACT: use and management of the navigable Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46329 airspace and air traffic control systems, substantive requirements of the Act and DATES: Comments must be received on or adversely affecting other powers and FAR Part 150 have been satisfied. The or before October 1, 1995. responsibilities of the Administrator overall program, therefore, was COMMENTS: prescribed by law. approved by the Administrator effective Written comments Specific limitations with respect to August 11, 1995. (preferably in triplicate) may be FAA’s approval of an airport noise Outright approval was granted for all addressed to and inspected at the offices compatibility program are delineated in of the specific program elements. The of Laboratories and Scientific Services, FAR Part 150, section 150.5. Approval following is a listing of the approved room 7113, 1301 Constitution Ave., NW, is not a determination concerning the actions on and off the airport: Washington, DC 20229. acceptability of land uses under Federal, a. Modify arrival and departure flight FOR FURTHER INFORMATION CONTACT: Mr. state, or local law. Approval does not by tracks (approved as voluntary); Robert L. Zimmerman, Jr., Office of itself constitute an FAA implementing b. Voluntary use of noise abatement Laboratories & Scientific Services, (202) action. A request for Federal action or departure and arrival procedures for 927–1060. approval to implement specific noise aircraft weighing over 12,500 Pounds compatibility measures may be (approved as voluntary); SUPPLEMENTARY INFORMATION: required, and an FAA decision on the c. Maintain current zoning ordinance; request may require an environmental d. Amend and expand the land use Background plan for noise compatibility; assessment of the proposed action. U.S. Note 1 to Chapter 69 reads in Approval does not constitute a e. Assign a noise abatement officer for noise program management for all three pertinent part ‘‘For the purposes of this commitment by the FAA to financially chapter, a ‘‘ceramic article’’ is a shaped assist in the implementation of the city of Fort Worth airports; f. Continue public involvement article having a glazed or unglazed body program nor a determination that all of crystalline or substantially crystalline measures covered by the program are program; structure * * *’’. The U.S. Customs eligible for grant-in-aid funding from the g. Conduct noise review and update Service wishes to define the concept of FAA. Where federal funding is sought, as required. ‘‘substantially crystalline’’ in scientific requests for project grants must be These determinations are set forth in submitted to the Federal Aviation detail in a Record of Approval endorsed terms based on state-of-the-art ceramic Administration, Texas Airport by the Administrator on August 11, technology. In this request for Development Office, 2601 Meacham 1995. The Record of Approval, as well comments, Customs is limiting the Boulevard, Fort Worth, Texas 76193– as other evaluation materials and the scope in defining the phrase to floor and 0650. documents comprising the submittal, wall tile. For this purpose Customs is The city of Fort Worth submitted to are available for review at the FAA soliciting comments from any interested the FAA on February 3, 1994, the noise office listed above and at the Fort Worth party. exposure maps, descriptions, and other Department of Aviation Offices. In a recent study of nearly 300 floor documentation produced during the Issued in Fort Worth, Texas on August 22, and wall tiles, Customs has found that noise compatibility planning study 1995. the percent crystallinity for this group of conducted from November 1991 through Otis T. Welch, tiles was never less than 30 percent as January 1995. The Fort Worth Spinks Manager, Texas Airport Development Office. determined by x-ray diffraction. Airport noise exposure maps were [FR Doc. 95–22070 Filed 9–5–95; 8:45 am] Furthermore, over 90 percent of the tiles determined by FAA to be in compliance BILLING CODE 4910±13±M studied demonstrated a crystallinity in with applicable requirements on the range of 50 to 90 percent. February 13, 1995. Notice of this The scientific literature indicates that determination was published in the DEPARTMENT OF THE TREASURY Federal Register on March 6, 1995. the degree of crystallinity a ceramic attains is critically dependent on the The Fort Worth Spinks Airport study Customs Service contains a proposed noise compatibility raw materials used to make the tile and program comprised of actions designed [T.D. (95±67)] the heat treatment to which these for phased implementation by airport materials are subjected. Often ceramic management and adjacent jurisdictions Crystallinity of Ceramic Tile materials are engineered to meet the from the date of study completion AGENCY: Customs Service, Department physical requirements for an intended beyond the year 1998. It was requested of the Treasury. use. Again in the case at hand, Customs that the FAA evaluate and approve this ACTION: Request for comments on the is interested in ceramic floor and wall material as a noise compatibility percent of crystallinity necessary to tiles. Two issues that Customs would program as described in section 104(b) satisfy the Harmonized Tariff Schedules consider in making the final of the Act. The FAA began its review of of the United States criteria that a determination of the degree of the program on February 13, 1995, and ‘‘ceramic article’’ be a shaped product crystallinity include: the percent was required by a provision of the Act ‘‘of crystalline or substantially crystallinity necessary to impart to approve or disapprove the program crystalline structure.’’ resiliency to the tile for its intended use; within 180 days (other than the use of the percent crystallinity at which a new flight procedures for noise control). SUMMARY: Customs is attempting to ceramic becomes a glass or a glass- Failure to approve or disapprove such identify the amount of crystallinity ceramic. Customs does not wish to limit program within the 180-day period shall necessary to satisfy the aforementioned discussions to these two issues. All be deemed to be an approval of such phrase ‘‘substantially crystalline’’ as it information provided will be given full program. applies to ceramic floor and wall tile. consideration. The submitted program contained Ceramic articles of this nature are seven proposed actions for noise normally imported under Subheading A.W. Tennant, mitigation on and off the airport. The numbers covered by U.S. Note 1 to Director, Laboratories and Scientific Services. FAA completed its review and Chapter 69 of the Harmonized Tariff [FR Doc. 95–22078 Filed 9–5–95; 8:45 am] determined that the procedural and Schedule of the United States (HTSUS). BILLING CODE 4820±02±P 46330 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices OFFICE OF THE UNITED STATES 1996, has been established by the Country FY 1996 TRADE REPRESENTATIVE Secretary of Agriculture at 1,117,195 allocation metric tons, raw value (1,231,496 short 1995±96 Allocation of the Tariff-rate tons). Haiti ...... 7,258 Quota for Raw Cane Sugar Section 404(d)(3) of the Uruguay Honduras ...... 10,530 Round Agreements Act (19 U.S.C. India ...... 8,424 AGENCY: Office of the United States 3601(d)(3)) authorizes the President to Jamaica ...... 11,583 Madagascar ...... 7,258 Trade Representative; 600 17th Street, allocate the in-quota quantity of a tariff- N.W., Washington, D.C. 20508. Malawi ...... 10,530 rate quota for any agricultural product Mauritius ...... 12,636 ACTION: Notice. among supplying countries or customs Mexico ...... 7,258 areas. The President delegated this Mozambique ...... 13,690 SUMMARY: The Office of the United authority to the United States Trade Nicaragua ...... 22,114 States Trade Representative (USTR) is Representative under paragraph (3) of Panama ...... 30,538 providing notice of the country-by- Presidential Proclamation No. 6763 (60 Papua New Guinea ...... 7,258 country allocation of the in-quota FR 1007). Paraguay ...... 7,258 quantity of the tariff-rate quota for Accordingly, the 1,117,195 metric Peru ...... 43,175 imported raw cane sugar for the period tons for raw cane sugar are being Philippines ...... 142,160 that begins October 1, 1995, and ends allocated to the following countries in South Africa ...... 24,220 September 30, 1996. metric tons, raw value: St. Kitts & Nevis ...... 7,258 Swaziland ...... 16,849 EFFECTIVE DATE: October 1, 1995. Taiwan ...... 12,636 ADDRESSES: Inquiries may be mailed or FY 1996 Country allocation Thailand ...... 14,743 delivered to Tom Perkins, Senior Trinidad-Tobago ...... 7,371 Economist, Office of Agricultural Affairs Argentina ...... 45,281 Uruguay ...... 7,258 (Room 421), Office of the United States Australia ...... 87,402 Zimbabwe ...... 12,636 Trade Representative, 600 17th Street, Barbados ...... 7,371 NW., Washington, DC 20508. Belize ...... 11,583 Total ...... 1,117,195 Bolivia ...... 8,424 FOR FURTHER INFORMATION CONTACT: Brazil ...... 152,691 Tom Perkins, Office of Agricultural The allocation includes the following Colombia ...... 25,273 minimum quota-holding countries: Affairs, 202–395–6127. Congo ...... 7,258 Congo, Cote d’Ivoire, Gabon, Haiti, SUPPLEMENTARY INFORMATION: Pursuant Cote d'Ivoire ...... 7,258 Madagascar, Mexico, Papua New to Additional U.S. Note 5 to chapter 17 Costa Rica ...... 15,796 Guinea, Paraguay, St. Kitts & Nevis, and of the Harmonized Tariff Schedule of Dominican Republic ...... 185,335 Eucador ...... 11,583 Uruguay. the United States (HTS), the United El Salvador ...... 27,379 Michael Kantor, States maintains a tariff-rate quota for Fiji ...... 9,477 United States Trade Representative. imports of raw sugar. The in-quota Gabon ...... 7,258 quantity of the tariff-rate quota for the Guatemala ...... 50,546 [FR Doc. 95–22031 Filed 9–5–95; 8:45 am] period October 1, 1995-September 30, Guyana ...... 12,636 BILLING CODE 3190±01±M 46331 Sunshine Act Meetings Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 This section of the FEDERAL REGISTER The meeting will convene at 7 p.m. at a. Revisions to Regulatory Requirements contains notices of meetings published under the North Smithfield Municipal Annex, for Reactor Pressure Vessel Integrity in the ``Government in the Sunshine Act'' (Pub. 575 Smithfield Road, North Smithfield, 10 CFR Part 50 (Tentative) L. 94-409) 5 U.S.C. 552b(e)(3). Rhode Island, for the following reasons: b. Final Amendment to 10 CFR Part 50, Appendix J. ‘‘Containment Leakage 1. Presentation from Town of North Testing,’’ to Adopt Performance-Oriented BOARD OF GOVERNORS OF THE FEDERAL Smithfield, Rhode Island. and Risk-Based Approaches (Tentative) 2. Annual Report. RESERVE SYSTEM (Contact: Andrew Bates, 301–415–1963) 3. Commission Business. TIME AND DATE: 11:00 a.m., Monday, 4. Other. Tuesday, September 12 September 11, 1995. It is anticipated that about twenty 10:30 a.m. and 1:30 p.m. All Employees Meetings (Public Meetings) PLACE people will be able to attend the session : Marriner S. Eccles Federal on ‘‘The Green’’ Plaza Area between Reserve Board Building, C Street in addition to the Commission buildings at White Flint entrance between 20th and 21st Streets, members. (Contact: Beth Hayden, 301–415–8200) N.W., Washington, D.C. 20551. Interested persons may make oral or written presentations to the Commission Week of September 18—Tentative STATUS: Closed. or file written statements. Such requests There are no meetings scheduled for the MATTERS TO BE CONSIDERED: should be made prior to the meeting to: Week of September 18. 1. Personnel actions (appointments, James R. Pepper, Executive Director, Week of September 25—Tentative promotions, assignments, reassignments, and Blackstone River Valley National salary actions) involving individual Federal There are no meetings scheduled for the Heritage Corridor Commission, One Week of September 25. Reserve System employees. Depot Square, Woonsocket, RI 02895, 2. Any items carried forward from a Note: The Nuclear Regulatory Commission previously announced meeting. Tel.: (401) 762–0250. is operating under a delegation of authority Further information concerning this to Chairman Shirley Ann Jackson, because CONTACT PERSON FOR MORE INFORMATION: meeting may be obtained from James R. with three vacancies on the Commission, it Mr. Joseph R. Coyne, Assistant to the Pepper, Executive Director of the is temporarily without a quorum. As a legal Board; (202) 452–3204. You may call Commission at the aforementioned matter, therefore, the Sunshine Act does not (202) 452–3207, beginning at address. apply; but in the interests of openness and public accountability, the Commission will approximately 5 p.m. two business days James R. Pepper, before this meeting, for a recorded conduct business as though the Sunshine Act Executive Director, BRVNHCC. announcement of bank and bank were applicable. holding company applications [FR Doc. 95–22224 Filed 9–1–95; 3:56 pm] The schedule for Commission scheduled for the meeting. BILLING CODE 4310±70±P meetings is subject to change on short Dated: September 1, 1995. notice. To verify the status of meetings William W. Wiles, NUCLEAR REGULATORY COMMISSION call (Recording)—(301) 415–1292. Secretary of the Board. DATE: Week of September 4, 11, 18, and CONTACT PERSON FOR MORE INFORMATION: [FR Doc. 95–2225 Filed 9–1–95; 3:47 pm] 25, 1995. Bill Hill (301) 415–1661. BILLING CODE 6210±01±P PLACE: Commissioners’ Conference This notice is distributed by mail to Room, 11555 Rockville Pike, Rockville, several hundred subscribers; if you no Maryland. longer wish to receive it, or would like BLACKSTONE RIVER VALLEY NATIONAL STATUS: Public. to be added to it, please contact the HERITAGE CORRIDOR Office of the Secretary, Attn: Operations Notice of Meeting MATTERS TO BE CONSIDERED: Branch, Washington, D.C. 20555 (301– 415–1963). Notice is hereby given in accordance Week of September 4 In addition, distribution of this with Section 552b of Title 5, United There are no meetings scheduled for the meeting notice over the internet system States Code, that a meeting of the Week of September 4. is available. If you are interested in Blackstone River Valley National Week of September 11—Tentative receiving this Commission meeting Heritage Corridor Commission will be schedule electronically, please send an held on Thursday, September 28, 1995. Monday, September 11 electronic message to [email protected] or 1:30 p.m. The Commission was established [email protected]. pursuant to Public Law 99–647. The Briefing on Status of Watts Bar Licensing purpose of the Commission is to assist (Public Meeting) Dated: August 31, 1995. (Contact: Steve Varga, 301–415–1403) William M. Hill, Jr., federal, state and local authorities in the 3:30 p.m. development and implementation of an Affirmation Session (Public Meeting) SECY Tracking Officer, Office of the integrated resource management plan (Please Note: These items will be affirmed Secretary. for those lands and waters within the immediately following the conclusion of [FR Doc. 95–22177 Filed 9–1–95; 2:34 pm] Corridor. the preceding meeting.) BILLING CODE 7590±01±M federal register September 6,1995 Wednesday Agreement; Notice of theNorthAmericanFreeTrade Regulatory StandardsForImplementation Amendments; FinalRule (NAFTA): ImplementationofInterim North AmericanFreeTradeAgreement 19 CFRParts10,12,24,etal. Customs Service Treasury Department ofthe Part II 46333 46334 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations DEPARTMENT OF THE TREASURY (the ‘‘Act’’), Pub. L. 103–182, 107 Stat. originating good concept, involving 2057. fungible materials, packaging materials, Customs Service The principal role of the U.S. Customs packing materials, transshipment, and Service is to administer the provisions non-qualifying operations. 19 CFR Parts 10, 12, 24, 123, 134, 162, of the NAFTA and the Act which relate Chapter Five sets forth the procedural 174, 177, 178, 181 and 191 to the importation of goods into the and other customs requirements which United States from Canada and Mexico. apply under the NAFTA, in particular [T.D. 95±68] Those Customs-related NAFTA with regard to claims for preferential RIN 1515±AB33 provisions which require tariff treatment. Articles 501–506 of this implementation through regulation Chapter provide for use of a Certificate North American Free Trade Agreement include certain tariff and non-tariff of Origin for purposes of certifying that provisions within Chapter Three an exported good qualifies as an AGENCY: U.S. Customs Service, (National Treatment and Market Access originating good under the Chapter Four Department of the Treasury. for Goods) and the provisions of Chapter origin rules, set forth the rights and ACTION: Final rule. Four (Rules of Origin) and Chapter Five obligations of importers regarding (Customs Procedures). imported goods and of exporters and SUMMARY: This document adopts as a The tariff-related provisions within producers regarding exported goods, final rule, with some changes, interim NAFTA Chapter Three which require and set forth the rights and obligations amendments to the Customs Regulations regulatory action by Customs are Article of the customs administration of the which were published in the Federal 303 (Restriction on Drawback and Duty importing country when conducting a Register on December 30, 1993, as T.D. Deferral Programs), Article 305 verification of the origin of a good and 94–1 to implement the preferential tariff (Temporary Admission of Goods), when denying a claim for preferential treatment and other Customs-related Article 306 (Duty-Free Entry of Certain tariff treatment. Article 507 sets forth provisions of the North American Free Commercial Samples and Printed confidentiality principles regarding Trade Agreement entered into by the Advertising Materials) and Article 307 business information collected pursuant United States, Canada and Mexico. (Goods Re-Entered after Repair or to Chapter Five. Article 508 requires EFFECTIVE DATE: October 1, 1995. Alteration). The non-tariff provisions of each Party to maintain penalties for FOR FURTHER INFORMATION CONTACT: Chapter Three requiring Customs violations of its laws and regulations Operational Aspects: Joyce Metzger, regulatory action are Article 310 relating to Chapter Five. Article 509 sets Office of Field Operations (202–927– (Customs User Fees), Article 311 forth the obligations for the issuance 0792). (Country of Origin Marking) and Annex and application of advance rulings by Audit Aspects: William Inch, Office of 300–B (Textile and Apparel Goods). the customs administration of the Strategic Trade (202–927–1100). Chapter Four of the NAFTA sets forth importing country regarding whether a Legal Aspects: Myles Harmon, Office the rules for determining whether an good meets the country of origin imported good qualifies as an of Regulations and Rulings (202–482– marking requirements of Article 311 or originating good of the United States, 7000). the origin rules of Chapter Four or other Canada or Mexico (NAFTA country) NAFTA requirements that apply to SUPPLEMENTARY INFORMATION: and, as such, is therefore eligible for certain goods at the time of importation. Background preferential tariff (duty-free or reduced Article 510 extends to exporters and duty) treatment as provided for under producers of goods substantially the On December 17, 1992, the United Article 302(2) and Annex 302.2 of the same rights of review and appeal States, Canada and Mexico (the NAFTA. Under Article 401 within that accorded to importers regarding ‘‘Parties’’) entered into an agreement, Chapter, originating goods may be advance rulings or marking the North American Free Trade grouped in two broad categories: (1) determinations of origin or country of Agreement (NAFTA). The stated Goods which are wholly obtained or origin determinations for purposes of objectives of the NAFTA are to: produced entirely in one or more preferential tariff treatment. Article 511 Eliminate barriers to trade in, and NAFTA countries; and (2) goods which requires the Parties to establish, and facilitate the cross-border movement of, are produced entirely in one or more implement through their respective laws goods and services between the NAFTA countries exclusively from or regulations, Uniform Regulations territories of the Parties; promote materials that originate in those regarding the interpretation, application conditions of fair competition in the free countries, or goods which are produced and administration of Chapter Four, trade area; increase substantially entirely in those countries and which Chapter Five and any other matter as investment opportunities in the satisfy the specific rules of origin in agreed by the Parties. Finally, Articles territories of the Parties; provide NAFTA Annex 401 (change in tariff 512 and 513 set forth procedures for adequate and effective protection and classification requirement and/or cooperation between the Parties enforcement of intellectual property regional value-content requirement). regarding the implementation and rights in each Party’s territory; create Article 402 sets forth the methods for administration of the customs-related effective procedures for the calculating the regional value content of aspects of the NAFTA. implementation and application of the a good and the rules for determining the Pursuant to Article 511 of the NAFTA, for its joint administration and value of materials used in the NAFTA, representatives of the Parties for the resolution of disputes; and production of a good. Article 403 sets engaged in a series of trilateral establish a framework for further forth special rules for calculating the discussions for the purpose of trilateral, regional and multilateral regional value content in the case of formulating uniform regulatory texts or cooperation to expand and enhance the automotive goods. Article 404 provides principles in respect of Chapters Four benefits of the NAFTA. for accumulation of production by two and Five and in respect of certain The provisions of the NAFTA were or more producers. Article 405 provides provisions within Chapter Three. As adopted by the United States with the a de minimis criterion. The remaining regards Chapter Three, agreement was enactment of the North American Free Articles within Chapter Four consist of reached on certain principles to be Trade Agreement Implementation Act additional sub-rules, applicable to the applied for purposes of implementing Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46335 the drawback provisions of Article 303. implementing regulations set forth in Customs would be willing to accept a With regard to the remaining Chapter T.D. 94–1 were included within one declaration prepared by the exporter, Three provisions, including the country new Part 181. However, in those cases and paragraph (b) (redesignated in this of origin marking provisions of Article in which NAFTA implementation was document as paragraph (a)(2) as 311 and its companion Annex 311 more appropriate in the context of an explained below) has been modified (which provide for the establishment of existing regulatory provision, the accordingly. ‘‘Marking Rules’’ for purposes of NAFTA regulatory text was Part 134, § 134.22 (General Rules for determining whether a good constitutes, incorporated in an existing Part within Marking of Containers or Holders) and thus may be marked as, a good of the Customs Regulations. T.D. 94–1 also a Party and which set forth disciplines set forth a number of cross-references Comment: One commenter expressed on the methods and procedures for the and other consequential changes to approval of the approach taken in new country of origin marking of goods), existing regulatory provisions to clarify § 134.22(d) regarding the country of those provisions were to be the relationship between those existing origin marking of usual containers, in implemented by each Party provisions and the NAFTA particular with reference to paragraph independently and as appropriate implementing regulations. Although the (d)(2) which, in the case of a good of a within each Party’s statutory and interim regulatory amendments were NAFTA country, removes from regulatory structure; the U.S. Marking promulgated pursuant to the foreign consideration the additional issue of Rules, contained in Part 102 of the affairs function exception to the general whether a particular container is Customs Regulations, were adopted on notice, public comment, and delayed capable of reuse in determining whether an interim basis in T.D. 94–4 which was effective date requirements of 5 U.S.C. a container must be marked. published in the Federal Register on 553 and took effect on January 1, 1994, Notwithstanding the fact that this January 3, 1994 (59 FR 110). As in order to coincide with the entry into NAFTA rule was specifically intended concerns Chapter Four, the Parties force of the NAFTA, T.D. 94–1 to implement Annex 311(7) of the agreed, by an exchange of letters dated nevertheless provided for the NAFTA, this commenter stated that this December 30, 1993, to implement submission of public comments thereon approach should not be limited to substantively verbatim texts of interim which would be considered before NAFTA goods but rather should be regulations covering all of the adoption of the interim regulations as a applied universally. In support of this provisions of that Chapter. Finally, in final rule, and the prescribed public suggestion the commenter argued that: recognition of the different existing comment period closed on March 30, (1) The standards applicable to usual customs legal and procedural 1994. In addition, two correction containers are regulatory rather than requirements in the three countries, in documents pertaining to T.D. 94–1 were specifically required by the marking the case of Chapter Five and some published in the Federal Register, one statute (19 U.S.C. 1304) and thus can be provisions of Chapter Three the Parties on February 24, 1994 (59 FR 8852) and changed; (2) the NAFTA does not agreed, by an exchange of letters dated the other on March 31, 1994 (59 FR require that its provisions be limited to December 30, 1993, to use a standards 15047). NAFTA trade; and (3) no public policy approach whereby agreement was Discussion of Comments purpose is served by having different reached on certain minimum principles usual container marking rules because A total of 15 commenters responded to be reflected in each Party’s they create confusion for importers and to the solicitation of comments on the regulations, with each Party being left may mislead the consumer regarding the interim regulations set forth in T.D. 94– free to implement those principles, and origin of the product packaged in the 1. The comments submitted, and the any other requirements not inconsistent container when it has a different Customs responses thereto, are set forth therewith, in accordance with the needs marking than that of the container. below. of the Party’s particular statutory and Customs response: The definition of regulatory framework. The trilaterally- Part 12, § 12.132 (Textile and Apparel ‘‘usual container’’ provided in agreed standards are set forth in a Goods Under the NAFTA) § 134.22(d)(1) applies to all containers, document entitled ‘‘Uniform Comment: One commenter noted that whether they are goods of a non-NAFTA Regulations for the Interpretation, whereas paragraph (b) of this section country or goods of a NAFTA country. Application, and Administration of provides only for preparation of the However, different regulatory Chapters Three (National Treatment and country of origin declaration by the requirements are provided in Part 134 of Market Access for Goods) and Five manufacturer or producer of the textile the Customs Regulations for (Customs Procedures) of the North or apparel goods, in the case of non- determining whether a usual container American Free Trade Agreement’’; the NAFTA goods the declaration may also is excepted from country of origin text of that standards document is be prepared by the exporter or importer marking. Section 304(b) of the Tariff Act of reproduced for the information of the under § 12.130(f). Since the NAFTA 1930, as amended (19 U.S.C. 1304(b)), public in a general notice also appearing provision imposes a more strict states in part that: in this issue of the Federal Register. requirement, this commenter suggested On December 30, 1993, Customs that the NAFTA text be aligned on .. . Usual containers in use as such at the published T.D. 94–1 in the Federal § 12.130(f) so as to provide for time of importation shall in no case be Register (58 FR 69460) setting forth preparation by the manufacturer, required to be marked to show the country interim amendments to the Customs producer, exporter or importer. of their own origin. Regulations to implement the Customs response: The U.S. importer Thus, although a container may not be preferential tariff treatment and other should not be allowed to prepare the a good of a NAFTA country, if it is a Customs-related provisions of the declaration in this context because the ‘‘usual container’’ as defined in NAFTA in accordance with the importer often lacks sufficient § 134.22(d)(1) of the Customs implementation principles agreed to by knowledge of the actual production and Regulations it may be excepted from the Parties as discussed above. In order origin of the goods. However, when the marking pursuant to 19 U.S.C. 1304(b) to provide transparency and facilitate importer cannot obtain a declaration provided that the conditions of that their use, the majority of the NAFTA from the manufacturer or producer, statutory provision are satisfied, as 46336 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Customs has ruled in HQ 735548 dated to a specific rule of origin that requires provides that if a U.S. exporter or February 14, 1995. eight digits. This commenter suggested producer has reason to believe that a The Part 134 regulations relating to that this creates an unnecessary burden Certificate of Origin completed and marking of containers from non-NAFTA on exporters because it requires them to signed by him contains incorrect countries (§§ 134.23 and 134.24) cross-reference and cross-document the information affecting its validity or generally draw a distinction between seventh and eighth digits of tariff accuracy, he shall within 30 calendar reusable and disposable containers in numbers for each NAFTA country and days so notify in writing all persons to determining whether they must be may mean in some cases that three whom the Certificate was given. First, marked to indicate their own country of separate Certificates would have to be this commenter suggested a problem origin. If the containers are determined prepared for one part number. Since the with the ‘‘within 30 calendar days’’ to be reusable, they are treated as tariff numbers in field 6 simply identify language in that significant controversy separate articles of commerce and are the rule of origin that the exporter used could arise in trying to pin down required to be individually marked with to certify the goods and because the exactly on which day the exporter or their country of origin. However, if the seventh and eighth digits in all three producer had the requisite ‘‘reason to containers are determined to be countries identify the same goods and believe’’. Second, the commenter disposable, they are not treated as the same rule of origin, this commenter expressed some confusion as to whether separate articles of commerce and are suggested the following alternative a Certificate could be deemed to be excepted from country of origin solutions: (1) The three governments incorrect if the information provided marking. could publish a single conversion list of thereon was accurate when the However, for containers which are the tariff numbers for each country for Certificate was signed, and in this determined to be ‘‘goods of a NAFTA distribution to customs officials and the regard the commenter questioned country’’, the distinction between public; or (2) the exporter could be whether the notice had to be provided reusable and disposable is not allowed to indicate with a ‘‘U’’, ‘‘C’’ or in the following circumstances: (1) applicable in determining the marking ‘‘M’’ prefix the country of the tariff Whenever there is a change in the requirements for the containers. The number used in field 6. product, even if a recipient of the country of origin marking requirements Customs response: Customs does not Certificate no longer receives the for containers which are ‘‘goods of a agree with the proposal of allowing product; and (2) where the exporter or NAFTA country’’ are based primarily on classification to be reported at the 6- producer is uncertain as to which of its whether the container is considered to digit level. Many of the specific rules of products the recipient intends to apply be a ‘‘usual container’’. If it is origin were written at the 7th and 8th the Certificate. Stating that the duty to determined to be a ‘‘usual container’’, as digit level to capture a desired ascertain inaccuracies and search for all defined in § 134.22(d)(1) of the processing condition. Where this is the Certificate recipients is unrealistic and regulations, the container is not case, a NAFTA claimant must indicate fraught with pitfalls for well-intentioned required to be marked with its own that the processing it performed exporters or producers, this commenter origin. The fact that a container is accomplished the required tariff shift. suggested that paragraph (d) be capable of repeated use does not Reporting a classification number at a redrafted to more specifically define the preclude it from being considered a lesser level would not satisfy this obligations of Certificate creators. ‘‘usual container’’. requirement. Customs response: The comment with Section 134.22(d) was included in the The proposal for publishing a list of regard to the commencement of the 30- interim regulations solely to implement all of the rules together with references day period appears to have merit. Annex 311(7) of the NAFTA, which to the 8-digit item numbers may have Accordingly, paragraph (d) of § 181.11, applies to containers which are goods of some merit. It should be noted that the as set forth below, has been modified by NAFTA countries. Customs does not tariff items in these rules are reflected inserting the phrase ‘‘after the date of believe that the NAFTA implementing either in the rules themselves or in the discovery of the error’’ immediately regulations are the proper vehicle for Appendix to Annex 401 of the NAFTA. after the phrase ‘‘30 calendar days’’. effecting a change in the marking Currently, the NAFTA Parties are This additional language would exploring within the trilateral working requirements for containers which are encompass the discovery of an error by groups created under the NAFTA the goods of non-NAFTA countries. Such a any involved party: the exporter, most appropriate means to keep the change (applying to imports from non- producer or verifying customs trading public aware of the changes to NAFTA countries the § 134.22(d)(2) administration. The condition that no the rules, including those that involve NAFTA ‘‘usual container’’ marking formal investigation be begun should be changes at the 8-digit level. The exception) should be the subject of a unaffected by the addition of this commenter’s suggestion will be kept in separate notice of proposed rulemaking phrase. For purposes of consistency and mind in that context. based on the same considerations, a to amend §§ 134.23 and 134.24, so as to Finally, Customs is of the opinion that similar modification has been made to give affected parties an opportunity to the suggestion of utilizing a letter prefix the text of § 181.21(b) regarding the submit any comments they may have. to a 6-digit classification number to correction of a declaration. Part 181, Subpart B (Export designate which country’s tariff With regard to the issue of the specific Requirements) schedule is being applied would not be circumstances in which notice of an workable. An enterprise wishing to take incorrect Certificate of Origin must be Section 181.11 advantage of NAFTA in any one of the provided, Customs would first point out Comment: With regard to the NAFTA countries must classify that where information believed by the preparation and use of Certificates of according to the actual tariff schedule of preparer of the Certificate to be accurate Origin in general, one commenter noted the importing country at the 7th or 8th is found to be incorrect by a verifying that the instructions for field 6 digit level as shown in that tariff in any customs administration, such (Harmonized System tariff classification case in which the specific origin rule information constitutes incorrect number) specify use of the 8-digit requires a change at that level. information which might affect the number of the country into which the Comment: One commenter raised two granting of preferential tariff treatment. good is imported if the good is subject issues regarding paragraph (d) which Accordingly, all recipients of the Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46337 Certificate must be notified of the Part 181, Subpart C (Import It should also be noted that the failure incorrect information so that a NAFTA Requirements) to deposit estimated duties when due is claim is not made based on erroneous a bond breach, and Customs may make Section 181.21 information. an immediate demand in the event of a Where there is a change to a product Comment: With regard to the breach. There is no basis for a different and the recipient of the Certificate requirement under paragraph (a) that procedure when the bond principal covering that product no longer receives the claim for preferential tariff treatment breaches that provision at the time of the product, it is the position of be based on a Certificate of Origin in the entry or when the bond principal Customs that if the product change possession of the importer, one breaches that provision at the time of affects the eligibility of the product commenter stated that the regulatory filing a corrected declaration. provision is unclear as to whether retroactively and if the recipient based Section 181.22 its claim of NAFTA treatment for that possession of a copy of the Certificate product on an incorrect Certificate, the would satisfy this requirement. This Comment: For purposes of submitting recipient must be sent a corrected commenter stated that permitting use of a Certificate of Origin to Customs under Certificate so that it might correct its copies of a Certificate is necessary paragraph (b), one commenter stated entry. Prospective shipments of the where there are multiple importer that, by referring to a Certificate ‘‘signed product should be covered by a new customers, where goods are exported to by the exporter or producer’’, the Certificate given to current importers of two NAFTA countries, and where a regulation appears to permit the the product. supplier provides a Certificate to a exporter to simply provide the central location of a producer which has producer’s Certificate to the importer. Finally, as regards a case in which the subsidiaries operating in more than one This commenter suggested that, if this is exporter or producer is uncertain as to NAFTA country. so and if the producer were allowed to the specific products to which the Customs response: Customs believes execute a single Certificate and provide recipient intends to apply the that this commenter makes a valid copies thereof to its customer exporters Certificate, it is the position of Customs point. Accordingly, paragraph (a) of who then could provide copies to their that an exporter or producer must § 181.21, as set forth below, has been customer importers, the following assume that each recipient of its modified to provide for possession of a benefits could be realized: (1) A Certificate intends to utilize it for all copy of a Certificate of Origin. producer Certificate would not have to products listed thereon and thus must Comment: With regard to the written be re-executed by exporters; (2) a be notified of any incorrect information declaration under paragraph (a) and the possessor of a Certificate would always appearing on the Certificate. written correction of a declaration under know who the producer of the goods Section 181.12 paragraph (b), a commenter suggested was; and (3) administrative effort would that additional provision should be be reduced by requiring creation of only A commenter stated that this section made for effecting both actions by a single Certificate. imposes overly broad and burdensome electronic means in order to reflect the Customs response: While the recordkeeping requirements on U.S. Customs Modernization provisions of commenter’s suggestion has some logic exporters and producers whose goods the Act. and merit under the regulatory text as qualify as originating goods under an Customs response: Although the written, Article 501(3) of the Agreement origin criterion that does not involve a suggestion has some merit in principle, (and § 181.11(b) in a U.S. export regional value-content requirement. Customs believes that it would be context) are quite clear that an Since in such a case data as to cost, premature at this time to revise these importer’s claim for preferential NAFTA value and payment are irrelevant in paragraphs to provide for electronic tariff treatment can only be based on a qualifying as an originating good, this means for complying with their Certificate of Origin prepared by the commenter states that § 181.12 should provisions. As Customs implements the exporter of the good. Moreover, any be written so as to require only that Customs Modernization provisions of Certificate completed by a producer is recordkeeping which is necessary to the Act, it will identify which regulatory done voluntarily whereas that prepared demonstrate the correctness of the basis activities may be performed by the exporter is a requirement for upon which originating status is electronically and will amend the claiming NAFTA treatment. In order to claimed. regulations accordingly. At that time, remove any ambiguity and ensure Customs response: The recordkeeping these NAFTA provisions will be consistency with the terms of the requirements contained in paragraph (a) reviewed and, if necessary, brought into Agreement, paragraph (b)(2) of § 181.22, of this section, including the specific line with whatever changes are made as set forth below, has been modified by types of records to be maintained, elsewhere in the Customs Regulations removing the two references to ‘‘or reflect the provisions of Article 505 of with respect to the electronic filing of producer’’. the Agreement which was implemented entry information. Comment: One commenter stated that by an amendment to 19 U.S.C. 1508 Comment: One commenter stated that this section should be modified to effected by section 205 of the Act. paragraph (b) should require that require that Customs provide Moreover, this comment fails to Customs send to the importer’s surety a notification to the importer’s surety recognize a basic problem that could copy of the importer’s corrected whenever the importer fails to comply arise from use of the suggested declaration because, if the importer fails with a request for submission of a minimalist approach: a customs to pay the required duties, the surety Certificate of Origin. This would enable administration may have no choice but will not be aware of this circumstance a surety to minimize its risk in cases to deny a claim for preferential tariff until the entry is liquidated and demand involving a series of related treatment if the claimed basis for is made upon the surety. importations which result in denial of originating status is not valid and no Customs response: Customs does not preferential tariff treatment and records have been maintained to now notify sureties during the entry issuance of a claim for increased duty support an applicable alternative basis process, and that policy should under the surety’s bond. involving a regional value-content continue to be applied in the context Customs response: The comment requirement. mentioned by this commenter. response under § 181.21 above regarding 46338 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations notice to a surety applies equally to this deferral program participants under Part under NAFTA is claimed. This is not comment. Moreover, the principal may 181 (see §§ 181.47 (b) and (c) and correct and therefore it should be made pay the duty so that no bond breach § 181.53(a)(3)). Accordingly, Customs clear that these effective dates apply to would occur. In any event, the believes that these requirements must be all merchandise whether or not NAFTA requested change would inject Customs retained. preferential treatment is involved. into the contractual relationship Customs response: Customs agrees Section 181.33 between the surety and its bond that the subpart covers all exports to principal. The submission of document Comment: Two commenters referred Canada or Mexico, whether a claim for copies is a matter that is best resolved to paragraph (d)(3) which provides that preferential tariff treatment is made or between the principal and its surety. where the entry covering the good has not. Accordingly, the second sentence of been liquidated, whether or not the § 181.41, as set forth below, has been Part 181, Subpart D (Post-Importation liquidation has become final, a post- modified by inserting a period after Duty Refund Claims) importation refund claim may be denied ‘‘January 1, 2001’’ and removing the rest Section 181.31 without reliquidating the entry. One of of the sentence. these commenters stated that this Comment: One commenter stated that Section 181.44(a) section and Part 174 of the Customs this section should be amended to Regulations should include the right to Comment: A commenter pointed out expressly permit sureties to submit post- file a protest within 90 days of the that it is too difficult for the drawback importation NAFTA claims so that denial of the claim whether or not the claimant to ‘‘discover’’ the duty paid on sureties may protect their interests, for liquidation has become final. The other the merchandise when it is imported example in a case where the importer is commenter stated that the regulations into the United States and when it is out of business and the surety has a do not, but should, provide for an imported into Canada and Mexico. As liability on the transaction. This administrative appeal process in the an alternative, this commenter commenter argued that this would be a case of a denial issued more than 90 suggested that a NAFTA control number logical and much needed extension of days after liquidation of the entry. be placed on the commercial invoice surety rights under the administrative Customs response: Customs agrees when a drawback claim is expected to process, noting in this regard that that a claimant has a right to file a be filed. Each U.S. exporter could use its sureties presently can file protests, protest based on a denial of a NAFTA tax identification number (from the petitions for relief from liquidated post-importation claim, including in Certificate of Origin) followed by a date damage claims and petitions under 19 cases in which the claim is denied more code and a sequential number. This U.S.C. 1520(c). than 90 days after liquidation of the control number should become part of Customs response: Both Article 502(3) entry and without reliquidation of the the import records associated with of the Agreement and the U.S. entry, and Customs also agrees that the NAFTA claims in Canada or Mexico. implementing statute specifically This commenter went on to state that regulations should explicitly reflect this provide for the filing of a post- whenever this sequential NAFTA right. Accordingly, § 174.12(e)(2), which importation claim by the importer. drawback control number appears, specifies when the 90-day time period While 19 U.S.C. 1514(c) expressly Canadian or Mexican Customs should for filing a protest begins in the case of provides for the filing of a protest by a enter the amount of duty from the a protest against a decision not surety in its own right, no import entry, together with the control involving a liquidation or reliquidation, corresponding surety right is reflected number, into a database which could be has been modified as set forth below by in 19 U.S.C. 1520(d) which was added downloaded into the U.S. Customs the inclusion of a specific reference to by section 206 of the Act. Of course, a computer system. The data could then a claim filed under 19 U.S.C. 1520(d). surety or any other party acting as a be accessed by U.S. Customs through Customs notes that in the case of a duly authorized agent may file a post- ABI to determine duties paid upon denial of a post-importation claim on importation claim on behalf of its importation into Canada or Mexico. the merits (that is, where the denial is importer principal. Upon liquidation of the import based on a negative origin transaction in Canada or Mexico, the determination rather than on procedural Section 181.32 computer record would be updated. The grounds), a person who signed a Comment: One commenter drawback claimant should be allowed to Certificate of Origin relating to the good complained of the post-importation waive the right to claim a refund of the at issue has a right to file a protest refund claim documentary requirements amount equal to the additional duties against the denial (see 19 U.S.C. in paragraphs (b)(3)–(5) of this section, that would be owed to Canadian or 1514(c)(2)(E) and interim § 174.12(a)(5) pointing out that the written statements Mexican Customs. This would set the as republished below). In order to reflect specified therein constitute added and date of entry when duties have been current Customs practice, §§ 181.33 burdensome requirements that are not paid in Canada or Mexico for drawback (d)(2) and (d)(3), as set forth below, have applied either in the case of a NAFTA purposes. The commenter suggested been modified to provide that the notice claim made at the time of entry or in the that without a link between the three of denial of the claim in such cases shall case of any other post-importation claim Customs administrations, drawback include a statement regarding the right procedure under Part 173 or 174 of the claims will be delayed. Customs Regulations. This commenter to file a protest against the denial under Customs response: This commenter therefore suggested removal of these Part 174 of the regulations. recognizes that the Agreement and the requirements. Part 181, Subpart E (Restrictions on statute require the amount of duty paid Customs response: The written Drawback And Duty-Deferral Programs) in Canada or Mexico to be reported. The statement requirements for post- commenter’s proposal to require a importation claims are designed to Section 181.41 drawback control number to be placed prevent an overpayment of a duty Comment: Two commenters stated on the commercial invoice and for the refund such as drawback. Customs notes that this section implies that the Customs Services of the three countries that there are parallel NAFTA effective dates of 1996 and 2001 apply to monitor that number would be requirements for drawback and duty only where preferential tariff treatment extremely burdensome. In addition, Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46339 Customs is aware that many U.S. are used to make one export article or as the term ‘‘identical or similar’’, importers have alleged an inability to one component, such as a chemical, is Customs does not intend to require that obtain the foreign invoice. Such split into two export articles. Section the substituted merchandise come from inability can only result from a failure 181.44, as set forth below, has been the same country to qualify for of the commercial participants to modified by redesignating paragraphs manufacturing drawback under the address the issues in a timely manner. (b)–(e) as (c)–(f) and adding a new NAFTA. Section 181.44(d), as set forth Drawback claims require that the paragraph (b) which sets forth the below, has been modified to clarify commercial participants resolve these relative value calculation and these points. information issues in the terms of the individual comparison principle and Section 181.45 sale before the export so that the includes the following example: Comment: With regard to the required information on the completed Upon importation of Chemical X into the transaction can be presented to Customs United States, Company A entered Chemical reference in this section to ‘‘same to establish any drawback eligibility. X and paid $2.00 in duties. Company A condition’’ instead of ‘‘unused Paragraph (c) of § 181.47 lists the processed Chemical X into Products Y and Z, merchandise’’, three commenters required evidence. each having the same relative value; that is, questioned whether a third unique type Comment: A commenter stated that $1.00 in duty is attributable to Product Y and of drawback is contemplated by this any claim based on estimates (that is, $1.00 in duty is attributable to Product Z. regulation, that is, same condition Company A exported Product Y to Canada the NAFTA duty rate multiplied by the drawback for NAFTA countries and and Canada assessed a free rate of duty. unused drawback or manufacturing invoice value) would not take into Company A exported Product Z to Mexico account duty exemptions that may be and Mexico assessed the equivalent of drawback for all other countries. available to Canadian and Mexican US$2.00 in duty. There is no entitlement to Otherwise, they stated that the importers and that may not be apparent drawback on the export of Product Y to terminology used in the NAFTA and in on the face of the commercial Canada because zero is the lesser amount 19 U.S.C. 1313(j), as amended by section documents (for example, articles when compared to the $1.00 in duty 632 of the Act, must be harmonized. assembled abroad and returned). If there attributable to Product Y as a result of the Also on this subject, another commenter separation of Chemical X into Products Y and are no such exemptions and value can stated that, for consistency, the term Z. There would be entitlement to drawback ‘‘same condition drawback’’ should be be determined on the face of the on the export to Mexico, consisting of the commercial documents, then the $1.00 duty attributable to Product Z, because replaced with ‘‘unused merchandise claimant should be allowed to base the that amount is the lesser amount when drawback.’’ duty amount on the appropriate NAFTA comparing the duty paid to the United States Customs response: The Agreement duty rate in Canada or Mexico and the US$ equivalent duty paid to Mexico. was signed by the United States on December 17, 1992. The United States multiplied by the FOB value. Section 181.44(c) Customs response: Drawback could not, without reopening claimants cannot base their claims on Comment: Three commenters negotiations with the two other estimates; rather, each claim must be expressed concern about the statement Governments, incorporate changes made based on the liquidated amount of duty in § 181.44(c) (redesignated in this to its national laws subsequent to paid on the import entry for goods document as § 181.44(d) as discussed December 17, 1992, in its obligation to entered into Canada or Mexico. above) that ‘‘same kind and quality’’ is implement the Agreement. synonymous with ‘‘identical or similar Consequently, with respect to trade Section 181.44(b) good’’. They stated that this terminology between the three NAFTA parties there Comment: Two commenters stated should not restrict or eliminate rulings will be unavoidable inconsistencies that this section is unclear as to the and court cases related to same kind and when compared with trade between the calculation of drawback when two or quality. Another commenter stated that United States and countries outside the more components are used in the making the term ‘‘same kind and Agreement. It is simply impossible to process of manufacture. One of these quality’’ synonymous with the terms eliminate all differences between the commenters raised the question of ‘‘identical’’ or ‘‘similar’’ seems to provisions of sections 203 and 632 of whether the comparison of duty paid eliminate substitution drawback since the Act by regulation. In trade between must be between the duty paid on each identical or similar goods are defined in NAFTA countries the provisions of component part and the duty paid on part as ‘‘goods that were produced in section 203 of the Act control. Subpart the finished article exported to Canada the same country as that good’’. If this E can do no more than to implement or Mexico or between the total duty is true, then the example in this section section 203 of the Act. is incorrect because it allows for the paid on all component parts and the Section 181.45(b) duty paid on the finished article substitution of foreign and domestic exported to Canada or Mexico. This goods. On a related subject, a Comment: Two commenters stated commenter provided the following commenter raised the point that the that the second sentence of the example example: statement that the two terms are should be amended to simply read ‘‘X synonymous leaves the door open for immediately exports the desk to Z in Two parts, X and Z, are imported duty- narrowing the scope of the ‘‘same kind Mexico’’ because, whether or not duties paid into the United States at $2.00 and $4.00, respectively. Assume article Y is and quality’’ provision to that of are owed in Mexico, the mere fact of manufactured and exported to Canada or ‘‘identical or similar.’’ This commenter exportation will allow X to obtain a Mexico and duty of $5.00 is due. Does the was of the view that it should be stated refund of 99% of the $25.00 in duty lesser of the two duties apply to X and Z that all rulings, court cases or other paid upon importation of the desk into individually (resulting in $6.00 in drawback) determinations pertaining to same kind the United States. These commenters or collectively (resulting in $5.00 in and quality will be the guiding force in went on to state that the fact that Z pays drawback)? understanding the meaning of ‘‘identical duty of $10.00 in Mexico is moot: 19 Customs response: With respect to the and similar good.’’ U.S.C. 1313(j)(1) contains no limitation duty comparisons, the comparison Customs response: Although it is true based upon payment of duties in the should be made on an individual basis that the term ‘‘same kind and quality’’ NAFTA country of import. Thus, regardless of whether two components is considered to have the same meaning including the $10.00 Mexican duty in 46340 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations the example rather than a ‘‘whether or pointed out that there never existed a must be presented by the person seeking not’’ phrase regarding payment of duty requirement for filing at the port of a refund of that duty from the exporting in Mexico, will be confusing to industry exportation. NAFTA country. In order to obtain the and to Customs personnel. Since the Customs response: Although the refund, the claimant must obtain the amount of duty is only germane in exporter’s summary procedure and cooperation of its customer in Canada or calculating the ‘‘lesser of two duties’’ waiver of prior notice provisions are not Mexico. under a manufacturing scenario, these specifically provided for in the NAFTA, Section 181.47(b)(1) commenters stated that the suggested they are not new to the Drawback modifications of the example would Program. Therefore, the existence of Comment: Two commenters more accurately reflect the law. these two privileges would not be a complained that the Canadian or Customs response: The sentence basis for eliminating the physical Mexican Customs entry and the which precedes the example, together inspection of the goods. With respect to document referred to as the with the example, illustrates precisely shortening the prior notice period from ‘‘certification’’, which are required to be the point made by the comment. 5 days to 48 hours, this principle submitted under this section, are too Comment: A commenter stated that already has been considered by Customs difficult for the U.S. exporter to obtain. the term ‘‘commercially in connection with a pending proposed Two other commenters stated that interchangeable’’ should be substituted revision of Part 191 of the Customs requiring both documents is redundant for ‘‘completely fungible’’ in Regulations. Section 181.46(b), as set and contradictory to the paperless entry subparagraph (2) of this section. forth below, has been modified to concept. Another commenter suggested Customs response: In order to avail specify a prior notice period of 2 that the entry documents should not be oneself of full drawback under direct working days rather than 5 days. required but rather should be used only identification, the Agreement and Comment: One commenter pointed if available and that certification should implementing legislation permit out that the statement in this section only be provided in the event of an identification of the exported good as that ‘‘[g]enerally, for same condition audit. the imported good by means of a drawback, the claim would be filed with Customs response: The provision recordkeeping system only if the goods the Customs port where the examination reflects a basic and necessary are fungible and commingled. Section would take place’’ is not practical and component of a proper NAFTA 181.45(b)(2)(i), as set forth below, has not required by law. drawback claim and is not redundant been modified as explained below in the Customs response: Because there are since alternative methods may be used response to the comments submitted currently no requirements that to establish that amount as set forth in regarding Schedule X of the Appendix claimants file same condition claims at paragraph (c) of § 181.47. As regards the to Part 181, and the modified text does the port where the examination will alleged burden imposed by this not include the superfluous word take place, Customs agrees that this provision, and as noted elsewhere, a ‘‘completely’’ before ‘‘fungible’’. statement should be replaced by the drawback claimant will need the following: ‘‘To facilitate expedited cooperation of its Mexican or Canadian Section 181.45(c) processing of claims, claimants should customer in order to benefit under the Comment: One commenter stated that file same condition drawback claims in agreement. the statement ‘‘X exports it within 90 the port where the examination would Section 181.47(b)(2)(i) days’’ in the example under this section take place’’. Section 181.46(b) as set should be changed to refer to ‘‘within 3 forth below has been modified Comment: Two commenters believed years’’. accordingly. that the documents required in Part 191 Customs response: The period for Comment: A commenter requested of the regulations satisfy the NAFTA exportation is clearly stated in that the text of this section be replaced requirements. They stated that § 181.45(c). An example cannot impose by the appropriate sections from Part commercial invoices, proof of payment a further qualification on either the 191 of the regulations. The commenter of duties and import documents relating statute or implementing regulation. So did not explain the basis for this to an exportation to a foreign country long as the period is less than 3 years comment. have never been required with the example correctly illustrates the Customs response: Customs believes drawback claims under Part 191 and provision. that the new language set forth in the should only be required in the event of an audit. These two commenters also Section 181.46(b) preceding response will at least in part address this comment. stated that these documents would not Comment: Two commenters stated be required at the time of filing the that the existing exporter’s summary Section 181.47(a) claim under the exporter’s summary procedure and waiver of prior notice Comment: Two commenters stated procedure. provisions and the new provisions for that this section places an undue burden Customs response: Paragraph (c) of ‘‘unused merchandise drawback’’ on the claimant because it requires the § 181.47 does not require filing of the eliminate the need to inspect the goods claimant to monitor the enforcement of Canadian or Mexican Customs entry prior to export because it would be too the Canadian or Mexican Customs because, under subparagraph (4), the difficult for Customs to determine regulations. These commenters also drawback claimant may file an affidavit ‘‘unused’’ status by visual inspection. argued that the section is also unfair in in lieu of the Canadian or Mexican entry These two commenters, after stating that that it requires the claimant to have document provided that certain the Office of Trade Operations has access to duty payment information to specified information is also submitted. indicated that the required 5 days of which it is not privileged, when The requirement for these new prior notice may be shortened to 48 sometimes the claimant does not even documents is a result of the new ‘‘lesser hours, suggested that any change to this know who the ultimate importer is in of the two’’ system which is part of the time period in Part 191 of the Customs Canada or Mexico. NAFTA Agreement. The documents Regulations should be reflected in the Customs response: The Agreement required in Part 191 of the regulations corresponding provision in Part 181. In provides that the amount of the duties would not enable either the claimant or addition, one of these commenters paid in the destination NAFTA country Customs to have knowledge of the Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46341 amount of duties paid upon importation to maintain records to support the claim Customs response: A waiver is needed into Canada or Mexico. and make them available upon request. from the importer who transfers any Section 181.47(b)(2)(ii)(G) provides an This includes records of importation merchandise to a manufacturer and alternative means for a drawback and invoice-level information. issues a certificate of delivery. A claimant under 19 U.S.C. 1313(j)(1) to manufacturer who transfers show exportation. Section 181.47(b)(2)(i)(C) merchandise to an exporter and issues Comment: Three commenters objected Section 181.47(b)(2)(i)(A) a certificate of manufacture and delivery to the inclusion of the Canadian and also needs to issue a waiver. Comment: Four commenters stated Mexican entry numbers on the that it is unclear why the tariff exporter’s summary procedure because: Section 181.47(b)(2)(i)(F) classification number of the imported (1) These numbers are not available to Comment: Three commenters stated merchandise is needed when the the exporter; (2) the exporter’s summary that the requirement that the drawback drawback is based upon the duty paid procedure was not intended for this claimant provide a certification that he (regardless of the tariff number). These purpose; and (3) the courts have ruled has not issued a Certificate of Origin for commenters further stated that tariff that when information such as this is the goods to another party, or that he numbers have never played a significant impossible to obtain the ‘‘best evidence will notify Customs if he does so, is not role in drawback before. available’’ must be accepted. valid because there is no NAFTA Customs response: The tariff Customs response: These numbers are provision that precludes drawback classification number will facilitate needed in order for the NAFTA when NAFTA preference is taken. One processing drawback claims by countries to implement a data exchange commenter stated that the separate Customs. The use of a number rather system which will be used to verify the certification or affidavit is not needed than a textual description is better requested amount of drawback based on because it is well known that double adapted to automated processing the ‘‘lesser of the two’’ system. The dipping is illegal. procedures. In the near future, tariff NAFTA parties will provide each with Customs response: The requirement is numbers will be required for all a tape of entry numbers and necessary since it is far from obvious drawback claims, not just for NAFTA corresponding duty payments so that that providing a Certificate of Origin claims. These numbers are needed for claimed amounts may be verified on a which enables a Mexican or Canadian compiling profiles as part of the spot-check basis. Entry numbers are importer to obtain a duty reduction or planned selectivity system for needed for this system to work. refund from Mexico or Canada would be drawback. considered illegal double-dipping by a Because drawback claims under the Section 181.47(b)(2)(i)(D) United States drawback claimant since Agreement require a comparison on an Comment: Three commenters stated that claimant would not necessarily individual basis, as noted by these same that the NAFTA regulations should benefit directly from the actions of its commenters, with respect to § 181.45, require only ‘‘evidence of exportation’’, customers. the line item information is needed in as is required in Part 191 of the Comment: Another commenter took order to process a claim under the regulations, rather than the ‘‘proof of issue with the requirement for an Agreement. exportation’’ provided for in this section affidavit by a manufacturing claimant certifying that no other claim has been Section 181.47(b)(2)(i)(B) and in other sections of these NAFTA regulations. filed on the goods. This commenter Comment: An objection was raised by Customs response: Customs agrees stated that once the claimant receives three commenters regarding the that the term ‘‘evidence’’ should be either a certificate of delivery or a requirement of submission of the substituted for the term ‘‘proof’’ in each certificate of manufacture and delivery, commercial invoice because many such context in order to be consistent he can only certify that he has not made importers do not have a hard copy of with Part 191 of the regulations, and the any other claim on the goods. The this document. These commenters Subpart E texts, as set forth below, have manufacturing claimant will not know argued that submission of the been appropriately modified whether the importer or any other party commercial invoice is contrary to the throughout. makes a claim on the goods. Customs modernization provisions of Customs response: The commenter the Act and to the principles of Section 181.47(b)(2)(i)(E) appears to compare the requirements of automation, and they further stated that Comment: Three commenters stated § 181.47(b)(2)(i)(F) and § 181.51(b). The the commercial invoice is difficult to that waivers of rights to drawback are Customs recordkeeping statute, 19 obtain because it contains proprietary already available in the form of U.S.C. 1508, as amended by section 205 information. Two of these commenters certificates of delivery and certificates of of the Act, does not prohibit a drawback also pointed out that Customs will not manufacture, and therefore any claimant from providing an affidavit on have sufficient staff to review all of this additional waiver requirement is the preparation of a Certificate of Origin documentation. redundant. with the drawback claim. It does require Customs response: Customs agrees Customs response: The certificate of a drawback claimant to report such facts that claimants should not be required to delivery does not waive any right to within 30 days of filing a drawback submit Customs Form 7501 and copies drawback particularly in light of the claim if that claimant has not already of commercial invoices with their right to transfer substitute merchandise. done so. claims unless they are requested by This certificate makes it absolutely clear Informed compliance means that the Customs. Accordingly, to the certifier that it may not claim any Government is under an obligation to § 181.47(b)(2)(i)(B), as set forth below, drawback with respect to the inform persons who deal with it which has been modified to specify only merchandise covered by the waiver. acts are proscribed. The regulation ‘‘Customs Form 7501 or the import Comment: A commenter questioned which requires a certification that the entry number’’. It should be noted, the validity of the waiver of the right to same import entry for the same however, that claimants (and other drawback by the importer in favor of the designation of goods has not been used parties who provide information on exporter when § 181.48(a) clearly states in more than one claim fulfills that which a claim is based) must continue that the exporter is entitled to drawback. obligation. 46342 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Section 181.47(b)(2)(ii)(A) section does not take into account commercial invoice because it will not Comment: Two commenters stated claimants using procedures under be available in hard copy. This that the requirement for the tariff § 191.51 of the regulations and that it commenter stated that a pro forma classification at entry is superfluous. should be amended to reflect that fact. invoice would solve this problem. Customs response: Customs agrees Customs response: Customs took the Customs response: As already pointed that where the exporter’s summary position in promulgating 19 CFR out, in the near future tariff numbers procedure is approved for the claimant, 191.142(b)(6) that drawback under 19 will be required for all drawback claims, the requirement in § 181.47(b)(2)(ii)(G) U.S.C. 1313(c) is payable to an exporter not just for NAFTA claims. These is not applicable; accordingly, this claimant who is the importer of record numbers are needed for compiling section as set forth below has been or the actual owner named in the import profiles as part of the planned modified by adding at the beginning of entry. There is nothing in section 203 or selectivity system for drawback. the first sentence the words ‘‘If a 632 of the Act which would require a Section 181.47(b)(2)(ii)(B) claimant is not approved for the change to that position. As such, it is unclear why the person who ordered the Comment: Four commenters stated exporter’s summary procedure,’’. In merchandise and who determined that that the requirement regarding addition, while the evidence of export the merchandise did not meet the order submission of commercial invoices is in document must be signed, Customs specifications would not have the conflict with the requirements of the agrees that the signature need not be in original invoice issued by the foreign Customs modernization provisions of ink; accordingly, the section as set forth supplier. the Act and is a step backwards in the below has been modified by removing automation process. These commenters the words ‘‘and signed in ink’’ from the Section 181.47(b)(2)(iii)(C) further argued that these documents are first sentence. Finally, Customs agrees that this section should reflect that Comment: It was pointed out by a impossible to obtain when the claimant commenter that import documents for is not the importer. One of these evidence of exportation may also be established in accordance with the foreign countries are not available to the commenters suggested requiring a pro U.S. seller and that it is virtually forma invoice instead for same provisions of § 191.51; accordingly, § 181.47(b)(2)(ii)(G), as set forth below, impossible for the U.S. seller to obtain condition claims in order to resolve the proof of payment and final duty latter problem. Another of these has been modified by adding at the end of the first sentence the words ‘‘, or any determination notices. commenters stated that the detail Customs response: The commenter required in this section may not be other evidence of exportation provided for in § 191.51 of this chapter’’. has misread the section. Subparagraph available due to automation and (C) states the evidence needed to show paperless entries and that it should be Section 181.47(b)(2)(ii)(H) that the specifications were not met. changed to refer to Customs Form 7501 Comment: Three commenters stated Section 181.47(c) and any appropriate documentation that providing a waiver from the which identifies the subject goods. importer is redundant since a certificate Comment: Two commenters stated Another commenter stated that the entry of delivery already serves the same that the phrase ‘‘for purposes of documents (such as Customs Form purpose. One of these commenters evidence of duties paid’’ is confusing in 7501) may not be available because of suggested that if Customs must have it, that § 181.47(a) also refers to ‘‘evidence confidentiality considerations. it should be provided for directly on the of exportation’’. They also suggested Customs response: Again, Customs certificate of delivery. that Customs may want to consider a agrees that claimants should not be Customs response: A certificate of single definition for ‘‘evidence of required to submit commercial invoices delivery does not in itself constitute a exportation’’ as has always been done with their claims. Accordingly, waiver of the right to claim drawback. under Part 191 of the regulations and § 181.47(b)(2)(ii)(B), as set forth below, Thus, an explicit waiver is necessary. introduce specific requirements only for has been modified by removing the two Customs agrees in principle that the 19 U.S.C. 1313 (a) or (b) drawback for references to commercial invoices, and waiver could be incorporated into the ‘‘evidence of duties paid’’ since this § 181.47(b)(2)(iii)(B), as set forth below, certificate of delivery form. However, information is germane only to has been similarly modified for until that form is revised to include the manufacturing drawback when purposes of consistency. However, waiver, a separate waiver is needed. calculating the ‘‘lesser of the two Customs would again point out that duties’’. claimants (and other parties who Section 181.47(b)(2)(ii)(I) Customs response: It would be quite provide information on which a claim is Comment: One commenter difficult for Customs to draft an affidavit based) must possess and maintain recommended that the affidavit be for the parties. The language needed to records to support the claim and make incorporated onto the ‘‘J’’ side of demonstrate that the claimant’s goods them available upon request. This Customs Form 7539, but with reference were received by its Mexican or includes records of importation and to ‘‘designated goods’’ changed to Canadian customer and the amount of invoice-level information. ‘‘identified goods’’. Another commenter duty paid to Canada or Mexico by that customer would depend on that Section 181.47(b)(2)(ii)(G) stated that the affidavit is unnecessary but that if Customs must have it, it customer’s statement. Comment: Two commenters stated should be included on the drawback There is a difference between the that this section should begin with the entry form instead. provision on exportation in words ‘‘If exporter summary procedures Customs response: So long as the § 181.47(b)(2)(ii)(G) (which has specific are not in force’’. In addition, two affidavit is included with the drawback reference to 19 U.S.C. 1313(j)(1)) and the commenters stated that the words entry, the legal requirement will be provision in § 181.47(c). Because in the ‘‘* * * and signed in ink’’ should be satisfied. former case there is full drawback deleted because obtaining an original available without a comparison between ink signature on a nonnegotiable copy of Section 181.47(b)(2)(iii)(B) the duty that was paid in the United a document is an unnecessary burden. Comment: One commenter objected to States and the duty paid in Canada or Finally, one commenter stated that this the requirement of submission of the Mexico, the provisions necessarily Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46343 differ. The provisions of § 181.47(c) also below, has been modified by adding at Congress in the new drawback apply in a NAFTA context to other duty the end the following sentence: provisions contained in section 632 of reduction programs such as temporary ‘‘However, any person who issues a the Act. In this regard this commenter importations under bond, bonded drawback certificate that enables referred to the accompanying House warehouses, and foreign trade zones another person to make or perfect a Report in which it was stated that ‘‘the (see § 181.53(a)(3)). drawback claim shall keep records in Committee expects that Customs should support of that certificate commencing issue drawback regulations which take Section 181.48 on the date that the certificate is issued into consideration the various time Comment: With regard to paragraphs and shall retain those records for three limitations for recordkeeping, filing (b) and (c), two commenters pointed out years following the date of payment of claims, amendments and clarifications that the wording is confusing and not the claim.’’ and for auditing and liquidating consistent with ‘‘mainline’’ drawback in drawback claims.’’ that, under Part 191 of the regulations Section 181.50(a) Customs response: There is no and under the Customs modernization Comment: A commenter raised the requirement under the law that provides provisions of the Act, it is always the issue that whereas the regulations for a specific time period for liquidation exporter of record who is entitled to require that the amount of duties paid of drawback claims, and practical drawback. One of these commenters to Canada or Mexico be ‘‘established’’ as considerations (including differences in suggested the following alternative a prerequisite to the completion of the the entry laws of the three NAFTA language: ‘‘The exporter of record is claim, they do not provide instructions Parties) militate against imposing a entitled to the drawback unless the as to how these duty amounts will be strict time limit for liquidation of a exporter directs in writing that another established and they do not prescribe a drawback claim. entity receive the drawback refund.’’ time frame in which the duty amounts On a related subject, the United States Customs response: The provision in will be settled for the purpose of and Canada have agreed that each § 181.48(b) follows the position set forth finalizing the claim. import transaction involving goods in 19 CFR 191.142(b)(6). Section Customs response: This section subject to a NAFTA drawback claim in 181.48(c) is consistent with current law describes generally the process by the exporting country should be regarding the identity of the claimant for which Customs will determine the monitored for a period of 3 years so that same condition drawback. The Customs amount of drawback to be paid. A appropriate information may be modernization provisions of the Act directive for the guidance of Customs provided to the exporting country for followed this interpretation with respect officers will address the internal purposes of applying the ‘‘lesser of’’ to the identity of the claimant for Customs procedures that will rule; this 3-year period was chosen unused merchandise drawback. implement the process in detail. With because it represents in most cases the Section 181.49 regard to the time frame issue, see the time during which all factors affecting discussion of § 181.50(b) below. ultimate finalization of the import entry Comment: One commenter stated that (including changes to the entry made by Section 181.50(b) this section does not specify which the importer after importation) would be records are required to be kept by the Comment: Two commenters stated set. Accordingly, § 181.50(b) as set forth exporter, importer, manufacturer or that requiring liquidation of entries below has been modified to provide that producer. This commenter argued that made in Mexico and Canada before a a drawback claim shall not be liquidated Customs recordkeeping requirements drawback claim is liquidated eliminates for a period of 3 years after the date of are strictly limited to those records most drawback claims from the Customs entry of the goods in Canada or Mexico. which are referenced in the statute and modernization act bypass system. In a Comment: A commenter made the that this is consistent with related comment, another commenter following suggestion with respect to the Congressional intent under H.R. 3450. stated that this section is in conflict policy that liquidation of the drawback This commenter also suggested that with the Customs modernization claim not occur until the liquidation of Customs review the commentary in the provisions of the Act in a bypass the Canadian or Mexican customs entry House Report with regard to section 632 (selectivity) system context because the has become final: In order to avoid a of the Act and that Customs also liquidation of all designated import long waiting period, a waiver of the compare § 181.49 to § 181.53(g). entries is no longer required for right to challenge the amount of Customs response: The types of drawback liquidation. This commenter estimated Canadian or Mexican duties records are set forth in § 181.47(b); this argued that requiring that there be prior should be established. Under this section simply sets the retention period. liquidation of the import entry in procedure, the claimant would agree to Since payment occurs in most instances Canada or Mexico undermines the waive the right to claim any additional under the accelerated payment program process and conflicts with the duties owed to Canadian or Mexican before liquidation takes place, the requirement for fair and reasonable Customs. period starts and ends earlier. In any procedures as described in the Customs response: The commenter event, § 181.49 follows the existing legislative history accompanying the alleges that liquidation of a drawback policy set forth in 19 CFR 191.5. Customs modernization provisions of claim can be done more quickly if the Customs notes that 19 U.S.C. 1313(t), the Act. right to challenge the amount of duties which was added by section 632 of the Customs response: Customs will not assessed by Canada or Mexico is Act, makes the general recordkeeping be able to determine the ‘‘lesser of’’ the waived. However, a U.S. drawback requirements set forth in 19 U.S.C. two duties unless the final amount of claimant, unless it is also the importer 1508(c) applicable in the context of duties paid upon entry to Canada or into Mexico or Canada, has no right to drawback certificates and provides that Mexico is available. See also the waive the amount of duty paid by the the retention period starts on the date response to the next comment. Mexican or Canadian importer. Also, a the certificate is issued in the case of a Comment: A commenter stated that a system involving payment of drawback person who issues a certificate relating time limit for liquidations is needed and claims based upon the waiving of rights to another person’s drawback claim. that the current indefinite time period is to challenge the Canadian or Mexican Accordingly, § 181.49, as set forth in conflict with the intent expressed by duty amounts could result in the United 46344 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations States issuing an overpayment to the Customs response: The first sentence made in the regulatory text to meet this drawback claimant each time the import under § 181.51(b) refers to a Certificate problem. entry was liquidated for a lower amount of Origin ‘‘provided for under Customs response: This comment is of duties. The change to § 181.50(b) § 181.11(a)’’, and the second sentence unclear because there is no ‘‘30-day discussed in the response to the refers to ‘‘any such’’ Certificate of window for filing the Certificate of preceding comment represents Customs Origin; as such the Certificate of Origin Origin.’’ There are, however, two 30-day view regarding the proper time period cannot be mistaken for any other windows established in this section during which liquidation of a drawback certificate of origin that may apply to which involve notifying Customs of the claim should not take place. other laws. Therefore, use of ‘‘NAFTA’’ existence of a Certificate of Origin for as suggested would be redundant and Section 181.50(c) goods on which drawback has been thus inappropriate. paid. These two notification periods are Comment: With respect to the Comment: A commenter referred necessary because if a drawback requirement that a person who receives specifically to the requirement that the claimant prepares a Certificate of Origin a drawback refund through accelerated claimant provide notice of whether for its Canadian or Mexican customer, it payment must repay the duties if a another person has prepared a NAFTA could result in a reduction of duty paid NAFTA claim is adversely affected Certificate of Origin for those goods. to Canada or Mexico on the goods for thereafter, a commenter stated that this This commenter stated that this is in which the claimant is basing its should be amended to state that conflict with the new regulation that the drawback claim. Therefore, it must be repayment is not required until the claimant provide an affidavit that no reported to Customs so that Customs adverse decision has been made final by Certificate of Origin has been provided will be able to track and adjust that the courts and/or by operation of law. for those goods. drawback claim. A drawback claimant Customs response: Section Customs response: The suggestion who makes a drawback claim and then 181.47(b)(2)(i)(F) requires a claimant to that a claimant who receives an provides a Certificate of Origin to its affirm that no NAFTA Certificate of accelerated payment before liquidation customer jeopardizes its drawback Origin was provided ‘‘except as stated need not repay it until the adverse claim. on the drawback claim’’. Section action which makes that accelerated 181.51(b) supplements that provision Section 181.52 payment erroneous would be acceptable and makes it clear that a claimant who if the bond required the recipient to Comment: Two commenters stated provides a NAFTA Certificate of Origin repay the principal sum with interest that this provision creates contingent must report that fact to Customs. running from the date that Customs Comment: A commenter stated that liabilities on every claim filed that made the accelerated payment and until new subsection (t) of 19 U.S.C. 1313 could go on for a significant amount of repaid. Since that process could take provides that ‘‘any person who issues a time and that, therefore, the time frames years, the bond amounts would have to certificate which would enable another allowed under NAFTA Article 502(3) be increased accordingly to protect the person to claim drawback shall be for duty refunds in Canada and Mexico revenue. Accordingly, Customs subject to the recordkeeping provisions should be clearly indicated. These two concludes that the obligation to repay of this chapter, with the retention commenters also stated that Customs arises whenever an administrative period beginning on the date that such will not be able to comply with this action occurs which affects the NAFTA certificate is issued’’ and that the requirement without automation, or drawback claim. interim regulations are deficient in that without recording the Canadian or Mexican entry number at the time the Section 181.51(a) they do not implement the language of this statutory provision. This drawback claim is filed. In this regard, Comment: Three commenters noted commenter stated that subsection (t) they referred to language pertaining to that certifying that an entry was not would be helpful because it would Title VI of H.R. 3450 which states that designated and paid on a prior establish a retention period beginning monitoring of drawback information can drawback claim is unnecessary because on the date the certificate was issued, only be carried out effectively through a claimant that knowingly does this is instead of the date of payment. exchange of electronic information. guilty of fraud, and the Compliance Customs response: The NAFTA Customs response: The commenters Program and the civil penalties should Certificate of Origin record retention are correct. The very nature of the offer sufficient protection against period is set forth in § 181.12. See 19 Agreement creates that contingent fraudulent claims. U.S.C. 1508(c). The NAFTA Certificate liability because of the differences in Customs response: Customs believes of Origin is not a certificate that would national laws and the right of an that the regulation serves a useful enable another person to claim importer to make a post-entry NAFTA purpose in reminding the claimant to drawback. The certificates covered by claim that is expressly provided in the exercise care to make certain that 19 U.S.C. 1313(t) are the certificate of Agreement. The alternative that was double claims are not made. delivery and the certificate of considered by the three Governments was to prohibit all refunds on goods Section 181.51(b) manufacture and delivery. Comment: A commenter stated that moving from one NAFTA party to Comment: A commenter stated that should this regulation remain as is, the another NAFTA party. Permitting the requirement for the claimant to state 30-day window for filing the Certificate limited refunds necessarily increases that no Certificate of Origin has been of Origin after filing the claim will uncertainty. provided for the goods should be create another administrative nightmare Section 181.53 changed to a statement that no other for Customs because all of the affidavits ‘‘NAFTA’’ Certificate of Origin has been regarding Certificates issued (which General comments: The following provided for the goods. This is because may come in at various times after general comments were made with sometimes exporters may use submission of the drawback entry) will regard to the operation of this section: Certificates of Origin for other purposes have to be matched with previously 1. A commenter requested that the (for example, for enforcement of trade filed drawback entries. This commenter effective dates of this section be stated sanctions). stated that some adjustment should be at the beginning of the section. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46345 2. One commenter stated that the commenter stated that the initial (including documentary) requirements regulations should address the sentence in § 181.53(e) provides a better that would apply for purposes of importation of goods from NAFTA definition of ‘‘a good that is § 181.53. However, Customs believes countries covered by U.S. duty deferral manufactured or otherwise changed in that it would be preferable to deal with programs, even though there will be condition in a foreign-trade zone * * *’’ this matter in a separate Federal some duties which could be deferred Customs response: The comment Register document rather than include under these programs until all of the seems to state that a class 2/8 warehouse such provisions in this final rule staged duty reductions and eliminations or a class 3/8 warehouse is excluded document. Accordingly, Customs under NAFTA have been completed. from coverage of § 181.53. Such intends to publish in the near future a This commenter also asked, if a claim warehouses are included under separate document amending § 181.53 for preferential tariff treatment is filed § 181.53(b). to address these procedural issues with upon importation, whether an importer Section 181.53(a)(2) a view to having appropriate regulations may file a warehouse entry or in place on January 1, 1996, when the application for admission to a foreign Comment: A commenter suggested Subpart E provisions go into effect. trade zone and, if the claim is valid, adding to this section the following Section 181.53(a)(3) whether it will be honored upon phrase: ‘‘except for a good eligible for warehouse withdrawal or foreign trade full drawback as provided for by section Comment: A commenter posed zone entry for consumption. 181.45 of this Subpart’’. In this regard, several questions about the process of 3. A commenter asked whether the this commenter stated that NAFTA ‘‘waiver or reduction’’ as provided for in ‘‘lesser of the two’’ method will apply Article 303(6) provides for several this section. Will a pro forma Customs when zero payment of duties is an issue. import transactions that are unaffected entry be prepared and held or will it be 4. A commenter stated that this by any limitations on drawback refunds filed in some manner with Customs? section does not address originating or duty-deferral programs. This How will the structure of the paperwork goods which are entered into a bonded commenter also stated that § 181.45 be organized? Because merchandise that warehouse, manipulated to the point captures these Article 303(6) is the subject of the pro forma entry will where they are deemed produced in the transactions for drawback refund also be the subject of a Customs Form bonded warehouse, and subsequently purposes. This commenter also stated 7512 and Customs Form 7525, how will withdrawn for consumption in the that the regulations should clearly state the Census reporting structure be United States. that a good departing a foreign-trade organized? 5. Three commenters stated that the zone for export to Mexico or Canada Customs response: The section sets 60-day allowance for obtaining proof of under circumstances included in Article the legal requirement for Customs to exportation and duty payment in 303(6) and/or § 181.45 shall not be waive or reduce the duties paid or owed subject to treatment ‘‘* * * as if it had Canada or Mexico should be extended on goods sent to Canada or Mexico. As been entered or withdrawn for domestic to a longer period, and one of these indicated in the response to the consumption, and thus subject to duty.’’ commenters suggested a 120-day period. preceding comment, the documentary Customs response: Customs agrees Customs response: The effective dates and other procedural aspects of § 181.53 that goods entitled to full drawback are already stated at the beginning of will be addressed in a separate under § 181.45 should be excluded from Subpart E. document. The comment dealing with imports this provision. Accordingly, from NAFTA countries is beyond the § 181.53(a)(2), as set forth below, has Section 181.53(e) scope of Subpart E. been modified by the addition of the General comments: The following Zero payment of duty into Canada or following sentence: ‘‘However, the general comments were made with Mexico will be considered in making provisions of this paragraph shall not regard to the operation of this section: the comparison. If no duty is paid into apply to goods covered by § 181.45.’’ 1. One commenter stated that, by Comment: A commenter questioned Canada or Mexico, there will be no duty requiring actual payment of duties to the meaning of the phrase ‘‘treatment as refund or deferral. Under the agreement, Mexico or Canada, these regulations withdrawn for consumption.’’ This Canada and Mexico are required to defeat the purpose for which this 60-day commenter stated that, from an provide reciprocal treatment of goods hiatus was created for foreign trade operations standpoint in the case of sent to the United States. zones. This purpose was to address the merchandise shipments from foreign The treatment of originating goods paperwork and procedural burden the trade zones, a ‘‘pro-forma’’ Customs entered into a warehouse and proposed ‘‘NAFTA Drawback’’ would Form 3461 and/or Customs Form 7501 withdrawn for consumption is beyond impose on Customs and on companies must be prepared. Since there is no legal the scope of Subpart E. that use foreign trade zones and export provision for a pro-forma version of The 60-day time period was set by to Canada and/or Mexico. This these two forms, this commenter stated Article 303(5) of the Agreement. commenter saw the burden as follows: Knowing of the time frame, there is no that the exact methodology of how to do reason why the beneficiary of the refund this should be provided in the Step One—Merchandise shipped from a cannot structure its transfer to ensure regulations. zone to Mexico and/or Canada with that it can comply with the time period. Customs response: With respect to the an appropriate tariff payment to U.S. meaning of ‘‘treatment as withdrawn for Customs. Section 181.53(a)(1) consumption’’ the provision informs the Step Two—Merchandise arrives in Comment: One commenter took issue person who withdraws that it will be Mexico or Canada with appropriate with the definition of ‘‘duty deferral’’ liable for duties on a good withdrawn tariff payments made. provided in this section, stating that for exportation to Canada or Mexico Step Three—The U.S. exporter files for Class 2 and 3 customs bonded unless it is exempted by the Agreement NAFTA Drawback with the evidence warehouses are excluded from this list, or statute. As regards documentation of payment(s) made in Canada or whereas their counterparts, requirements, Customs agrees that the Mexico. ‘‘warehousing/distribution foreign-trade regulations should incorporate specific This commenter went on to state that, zones’’ are not excluded. This provisions setting forth the procedural originally, the 60-day hiatus was 46346 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations expected to provide an opportunity to status would not be necessary but whether there should be a reduction or combine steps one and three but that, by should be mentioned. waiver of duty. requiring payments to be made, this 6. Two commenters stated that the The comment on section 202(a)(2) of section forces a return back to the three- provision under section 202(a)(2)(A) of the Act is beyond the scope of Subpart step procedure. As it is, the potential for H.R. 3450 should be included in this E. It deals with goods that are entered this situation already exists when a section or it will be misinterpreted. for consumption from a zone. Mexican or Canadian importer decides These commenters believed that it With respect to the use of weight as to use a deferral program that extends should be interpreted only to mean that part of the valuation methodology, his payment of duties owed beyond the a foreign trade zone cannot be used to Customs does not concur with the 60-day schedule imposed on the U.S. create a NAFTA originating good suggested change because the provisions exporter. The regulations and H.R. 3450 qualifying for NAFTA duty reduction. of this section follow the provisions of provide adequate anti-fraud provisions On a related subject, another commenter the Foreign Trade Zones Act (see 19 to protect against the opportunity for stated that this section does not address U.S.C. 81c(a)). any abuses that the suggested goods which are processed but not In the case of a shipment from the modifications might otherwise provide. produced in a foreign trade zone United States to Canada or Mexico, the Moreover, § 181.52 provides for the (processed with non-originating date of exportation would be the date on adjustment of drawback payments materials). This commenter asked which the goods leave the United States pursuant to a NAFTA preference claim whether privileged foreign status would with evidence that the person sending made subsequent to the payment of a be permitted to ‘‘lock in’’ NAFTA those goods to Canada or Mexico NAFTA drawback refund. This preferential tariff treatment. intends to join them to the commerce of commenter therefore suggested that in 7. A commenter requested further Canada or Mexico (see 19 CFR 101.1(k)). The common meaning of the term similar fashion such a protection could clarification of the valuation ‘‘assessed’’ applies. As such, there is no become part of the § 181.53(e) methodology included in this section. need to provide for a separate definition procedures so that evidence of duty This commenter further believed that paid could be based on the duty owed that repeats the common meaning. weight should not be a factor other than With respect to the proof of export (but not yet paid) in Mexico or Canada. when it is a factor for HTSUS purposes burden under NAFTA, the comment 2. The same commenter requested and therefore suggested using the fails to recognize that unlike drawback that the phrase ‘‘as calculated under language ‘‘in its condition and HTSUS for shipments to non-NAFTA countries, paragraph (e)(1) or (e)(2)’’ in the quantity.’’ the basis for entitlement to a refund, introductory paragraph of this section 8. A commenter asked what the date waiver or reduction in duty there be replaced by the phrase ‘‘as calculated of exportation is for NAFTA purposes. depends entirely on the article and the consistent with the provisions of 19 CFR 9. A commenter requested that a amount of duty paid to Canada or 146 Section 146.65’’. definition of ‘‘assessed’’ be provided. Mexico. Also, the comment confuses the 3. Another commenter stated that this 10. A commenter believed that the distinction between one drawback claim section does not take into account that requirement for proof of exportation in which may involve many exportations the Customs modernization provisions this section is an unnecessary of merchandise on which duty was of the Act allow for periodic entry paperwork burden and suggested that a previously paid and specific procedures for goods transferred from summary procedure similar to the one withdrawals on which potential duty foreign trade zones to be expanded to a used in drawback should be established. liability starts when that merchandise is monthly timeframe instead of Customs response: The requirement withdrawn from a zone. submission of entry-by-entry for the collection of duties is set forth paperwork. in Article 303(5)(a) of the Agreement. Section 181.53(e)(1) 4. Two commenters stated that the The inclusion of paragraphs (e)(1) and Comment: A commenter stated that examples provided in this section are (2) facilitate having the zone withdrawal there are imported goods in foreign convoluted and should be replaced. One NAFTA requirements in one part. trade zones destined for Canada and/or commenter suggested that the examples Whether a good is removed under the Mexico under zone restricted status (19 should set forth the following facts: The current weekly entry procedure or some CFR 146.44). This commenter stated imported products HTSUS other periodic entry procedure will not that a general exemption from 19 CFR classification; the rate of duty in the change the concepts set forth in the 146.63(b) should be provided for these United States and in Mexico or Canada; provision. goods because, for these goods to be dutiable value; and total value. Creating complex examples will tend entered or withdrawn for domestic Moreover, it was suggested that there to obscure the principles sought to be consumption from an FTZ, § 146.63(b) should also be an example illustrating illustrated: That is, which duty amounts provides that merchandise in zone NAFTA treatment for a good departing are to be compared? The use of oil is restricted status may be entered for a foreign trade zone for Mexico or appropriate since the principle is consumption only when the Foreign Canada that combines both privileged illustrated when privileged foreign Trade Zone Board has ruled that the and non-privileged foreign components status is claimed. There is no need for merchandise can be entered for and/or materials. a separate example of merchandise consumption. To require rulings on 5. A commenter pointed out that there consisting of nonprivileged and such a routine matter will impose an is no provision for mixed status privileged status merchandise since the unnecessary procedural burden on the merchandise (privileged and principles set in both examples would Foreign Trade Zone Board, zone users nonprivileged). This commenter also apply to such merchandise. and on Customs. stated that there is no provision for zone Export to Canada or Mexico of zone Customs response: The issue of goods restricted status merchandise. Since no restricted status merchandise will not in a zone restricted status will be production can occur in zone restricted require an entry for consumption. It will addressed in the separate document status, if storage distribution were not require the goods so exported to be regarding § 181.53 procedures to be included in the special actions under treated as a withdrawal for consumption published in the near future as § 181.53, new special provisions for this for the sole purpose of computing mentioned above. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46347 Section 181.53(e)(2) Section 181.53(g) Part 181, Subpart G (Origin Verifications and Determinations) Comment: A commenter took issue Comment: A commenter stated that with the implication of this section that the recordkeeping period is unclear, and Section 181.72 payments may be refunded only up to therefore this commenter assumed that Comment: In order to enable sureties the limits established by § 181.44. the normal recordkeeping periods apply to better protect their interests, one Specifically, this commenter stated that to drawback claims and to import commenter stated that the regulations under these regulations the exporter is entries. Two other commenters stated should be modified to require Customs required to make payments to U.S. to provide notice to the surety: (1) When Customs that might otherwise be that the 3-year period for record Customs commences an origin unnecessary or larger in amount than is retention should be stated to avoid verification under paragraph (a) legally required for reasons of failure to confusion. involving the bond principal’s goods; (2) meet the 60-day deadline. There should Customs response: Under 19 U.S.C. when Customs makes an inquiry of the be an explicit provision that provides 1508(c) and the regulations thereunder, importer under paragraph (c); and (3) for the refund of these unnecessary or the periods for record retention vary whenever the foreign producer or excessive payments in whole or in part according to the type of transaction exporter or the U.S. importer fails to when the evidence required by § 181.53 involved. With respect to warehouse cooperate during an origin verification. becomes available. withdrawals, foreign trade zone entries, Customs response: Requiring such Customs response: There is no and temporary importation bond allowance for a time extension or a notices to sureties would impose an transactions, the period is five years unnecessary burden on Customs. reconsideration of the initial from the date of entry. With respect to determination in the NAFTA legislation. Accordingly, this is a matter more drawback, the period is three years from appropriate for the surety and its As regards available remedies for any the payment of drawback to the ‘‘unnecessary or excessive’’ payments principal to resolve in the context of claimant. referred to by this commenter, this issue their contractual relationship. will be addressed in the separate Section 181.53(i) Section 181.75 § 181.53 document to be published as Comment: One commenter stated that mentioned above. Comment: A commenter stated that if the regulations should be modified to Comment: A commenter stated that this section relates to waiver or require Customs to provide notice to a the 60-day period should be defined on reduction of duty under duty deferral surety when a negative origin a business month basis, not on a daily programs, it is inappropriate to state determination is issued to the surety’s basis. that ‘‘* * * Customs shall reliquidate bond principal under paragraph (b). Customs response: As previously the NAFTA drawback claim’’ because Customs response: A negative stated, the 60-day period was set by the that issue already is addressed in determination of origin does not three Governments in the Agreement. § 181.52. necessarily result in a bond breach. The purpose of the 60-day requirement Customs response: The reference in Consequently, no useful purpose under was to enable the refund claimant to this section is necessary because, while these regulations would be served by provide the Canadian or Mexican entry § 181.52 is limited to traditional obligating Customs to provide such information so that the appropriate duty drawback, § 181.53 includes all of the notice to the surety. This is a matter that comparison could be made. is best left to the private parties to Comment: A commenter pointed out other contexts which are included in the resolve as a part of their contractual that separately defining duty term ‘‘NAFTA drawback’’ as defined in relationship. calculations when treating exports from § 181.1(o) of the regulations. foreign trade zones as domestic entries Section 181.54 Part 181, Appendix (Rules of Origin provides for many questions and Regulations) potentially disparate procedures. To Comment: A commenter stated that Section 2 diminish the likelihood for both these the open-ended time period for U.S. questions and procedures, this Customs to verify Canadian and Comment: The following comments commenter suggested that this section Mexican documentation creates were submitted on the definitions and be amended to reflect current FTZ indefinite contingent liabilities. This interpretation set forth in section 2: regulations that cover entries for commenter suggested that a definite 1. With regard to the definition of consumption. time period should be clearly indicated. ‘‘direct labor costs’’, one commenter Customs response: These procedural noted that many companies include issues will be addressed in the separate Customs response: Because the direct labor fringe benefits as part of § 181.53 document to be published as national laws differ and because the their burden, not as part of their direct mentioned above. Agreement expressly provides for post- labor costs. Thus, it would be more Comment: A commenter alleged that entry claims to be filed up to one year correct to indicate that the defined term there is a conflict in this section in that after entry, it is impossible to fix one ‘‘may’’ include fringe benefits in costs the section states that duty is assessed time limit that will cover all situations. that are associated with employees who on privileged foreign status goods at the Appendix to Part 181 are directly involved in the production time of admission to the zone but in the of a good. example refers to duty assessed one Additional comments were submitted 2. In the definition of ‘‘light-duty month after admission. regarding the relationship between the vehicle’’, a commenter stated that the Customs response: The commenter is Subpart E provisions and the provisions second reference to ‘‘8702.10.60’’ correct. Accordingly, § 181.53(e)(2), as of Schedule X of the Appendix to Part should read ‘‘8702.90.60’’. set forth below, has been modified by 181. Those comments are addressed 3. One commenter noted that the replacing the words ‘‘at the time of its below in connection with the discussion definitions and interpretation of admission to’’ with the words ‘‘at the of the Appendix comments. ‘‘similar goods’’ and ‘‘similar materials’’ time privileged status is granted in’’. are important parts in determining 46348 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations eligibility for averaging costs over time regional value content for each type of occurs in different NAFTA countries, where goods are produced in the same motor. When this issue was discussed this commenter stated that subsection facility. Given this purpose, this trilaterally, it was agreed that the (14) should be modified to reflect commenter argued that these definitions current reference to ‘‘similar’’ should linkage of the interest rate on a debt to and interpretation are unduly restrictive not be changed. the interest rate on government debt because goods and materials should Section 4 obligations of the country that issues the qualify as ‘‘similar’’ for purposes of debt, so that the amount of allowable averaging if they simply serve identical Comment: With regard to section 4(4) interest costs would depend on the functions. For example, if both which sets forth exceptions to the denomination of the debt rather than the automatic and manual transmissions are change in tariff classification location of the company. otherwise eligible for averaging, the fact requirement for originating goods, one 2. One commenter pointed out that in that these two transmissions may not commenter stated that subparagraph subsection (18) the reference to the meet the ‘‘similar characteristics and (b)(iii) should be removed because it period chosen in ‘‘subsection (14)(a)’’ component materials’’ definitional imposes a further qualification that is should properly refer to ‘‘subsection standard should not disqualify them not reflected in the NAFTA provisions 15(a)’’. from averaging. To accomplish this as set forth in General Note 12(b)(iv)(B), 3. With regard to the examples result this commenter suggested (1) that HTSUS. Specifically, whereas the contained in subsection (20), a the two definitions should be revised to NAFTA text simply refers to a case commenter stated that Example 9 would encompass goods and materials that where the undivided tariff headings or be more clear if it explained that the ‘‘although not alike in all respects, serve the tariff subheadings for the goods tooling expensed on the books of the same function’’ and (2) that the ‘‘provide for and specifically describe Producer A is considered as non- interpretation should be eliminated both the goods themselves and their originating because the material that the because it suggests that only identical parts’’, the Appendix text at issue adds tooling produced is non-originating. goods or materials qualify as ‘‘similar’’. a further requirement that the non- Customs response: With regard to the Customs response: With regard to the originating materials and the good ‘‘are first comment, Customs agrees that first comment, the commenter is correct not both classified as parts of goods disparate treatment may arise because that some companies may include direct under the heading or subheading’’ the interest caps in the NAFTA labor ‘‘fringe benefits’’ as part of their under consideration. This commenter countries may be different. However, in overhead. However, for purposes of suggested that this limiting Appendix order to provide certainty and stability allocating direct labor, the United text is not required by either the in this area, the United States, Canada States, Canada and Mexico agreed that language or the purpose of the NAFTA and Mexico agreed to apply the interest the cost of fringe benefits for direct labor provision and that the ‘‘specifically cap of the NAFTA country in which the must be included in the ‘‘direct labor describe’’ language of the NAFTA text producer is located. costs’’. Salaries and fringe benefits for could reasonably apply where the tariff Customs agrees that the reference to other than direct labor employees may provision is a ‘‘parts’’ provision because ‘‘subsection (14)(a)’’ should properly be included as overhead and would be the minimum regional value content read ‘‘subsection (15)(a)’’ in subsection allocated according to the methods for requirement would still apply. (18) which, as set forth below, has been overhead in Schedule VII. Customs response: Customs disagrees. modified accordingly. Customs agrees that the second Note 22 to the NAFTA clearly states that Although Customs agrees that reference to ‘‘8702.10.60’’ should read the phrase ‘‘specifically describes’’ in Example 9 in section 6(20) could be ‘‘8702.90.60’’ in the definition for Article 401(d) was intended to exclude more illustrative by addressing the ‘‘light-duty vehicle’’, and the definition, situations in which both the good and treatment of the cost of tooling as a as set forth below, has been modified the non-originating material are ‘‘non-originating cost’’ because it is accordingly. classifiable as ‘‘parts’’ in the heading or included in the cost of the non- Customs disagrees with the statement subheading under consideration. originating material produced by the that goods should be considered Section 6 tooling, Customs also notes that this ‘‘similar’’ if they merely serve identical example was merely intended to functions. Averaging in section 6(15) for Comment: The following comments illustrate how the cost must be captured regional value content purposes is were submitted on the regional value and that it cannot be counted twice. allowed so that a producer would not content provisions of section 6: This commenter’s suggestion, however, have to segregate the value of its 1. With regard to subsection (14) has been incorporated as a new Example materials and its production costs when which concerns non-allowable interest 8 which has been added to section 7(18) there is very little difference in the costs, one commenter agreed that the (renumbered from 7(17)) as set forth materials and the production costs that ‘‘700 basis points’’ standard (above below. would be allocated to goods for which which interest would not be countable NAFTA preference is to be claimed and toward total cost) was appropriately Section 7 to goods which are to be consumed in high. However, this commenter stated Comment: With regard to section a domestic or non-NAFTA market. The that, by referring to the yield on debt 7(17), one commenter pointed out that use of the term ‘‘similar’’ provides the obligations of comparable maturities in the first paragraph of Example 4 the necessary balance between the intended issued by the federal government of ‘‘the reference to ‘‘Material A’’ should read benefit and the need for assurance that country in which the producer is ‘‘Material X’’. the averaged costs will have a real located’’, this provision could result in Customs response: This typographical relationship to the goods. For example, disparate treatment of similarly situated error was corrected in a document although an electric motor and a companies located in different NAFTA published in the Federal Register on gasoline motor may serve the same countries. In order to avoid the March 31, 1994 (59 FR 15047). function in a model toy, averaged costs possibility that two companies with for non-originating materials and for net similar interest costs on a debt of the Section 9 costs for these two motors would not same denomination may face different Comment: With regard to Example 6 provide a meaningful measure of the interest caps because their production under section 9(10), one commenter Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46349 noted that although the example states in Article 403(2)(b) and is either paragraph (a), (b) or (c) would apply, that the producer designates the short originating or non-originating as far as depending, of course, on the specific block as an intermediate material, the calculation of the regional value content facts. If a producer uses an automotive example does not explain why this of the vehicle is concerned. This component assembly, automotive designation is made or what its effect commenter, apparently concerned by component or subcomponent, then might be on the origin of the part or the the appearance of a narrower tracing paragraph (d) or (e) would apply, traced value in the vehicle. rule under the Appendix text, stated resulting in the ‘‘tracing’’ of either the Customs response: The purpose of that section 10 should be revised to values of all non-originating materials Example 6 in section 9(10) is to reflect the correct, broader rule under that were incorporated into that material illustrate section 9(9)(a) which provides the NAFTA text, that is, that the value acquired and used by the producer or that the designation of a self-produced of non-originating listed materials must the entire value of that material material as an intermediate material is be traced to the original-equipment acquired and used by the producer. The only effective with regard to the engine and transmission and through structure of section 10(1) eliminates any calculation of the net cost of the light- them to the vehicle for purposes of doubt that, regardless of the stage in duty automotive good and, therefore, calculating the regional value content of which a listed non-originating material does not permit the producer to ignore the vehicle. is used, the value of that listed material the value of the traced materials for In the event that the revision must always be included in the value of purposes of the calculation of the value suggested above is not done, this non-originating materials when of non-originating materials in the light commenter made the following calculating the regional value content of duty automotive good. Customs agrees additional recommendations regarding any heavy-duty automotive good into that, in this case, it may be clearer to section 10: which the listed material is state that the intermediate material 1. As regards subsection (4) subsequently incorporated. qualifies as an originating material. concerning the option of using the light- Customs disagrees with this Accordingly, Example 6, as set forth duty tracing rules for heavy-duty commenter’s proposals for redrafting below, has been modified as follows: (1) components, three suggestions were section 10(4) because the regulation By adding a sentence immediately after made. First, the materials covered by the reflects the relevant NAFTA provisions the second sentence in the first subsection should be expanded to and the intent of the Parties. First, paragraph to read ‘‘The intermediate include listed materials and Article 403(2), which provides the rule material qualifies as an originating subcomponents. Second, if light-duty for determining the value of non- material’’; and (2) by changing the last and heavy-duty vehicles are produced originating materials in heavy-duty clause in the first sentence of the second in the same plant, the producer should automotive goods, does not apply to paragraph to read ‘‘even though the have the option of using the light-duty listed materials or to subcomponents. intermediate material is an originating rules for calculating regional value Second, Article 403 is very clear in that material.’’ content. Third, paragraph (b) should be it provides a specific rule for light-duty removed because even if a producer vehicles and a specific rule for heavy- Section 10 knows the final use of the component, duty vehicles. Third, with the exception Comment: One commenter alleged he should still have the option of using of the situation in which averaging is that the language of section 10, and in the light-duty rules. permitted under Article 403(4) (see particular the language of sections 10(1) 2. As regards subsection (9)(c) which section 12 of the Appendix), Article and 10(2), is contrary to the wording of provides that section 10 does not apply 403(2) does not provide for the Article 403(2) of the NAFTA in that the to a subcomponent for purposes of alternative use of the light-duty tracing Appendix language appears to require calculating its regional value content rule for heavy-duty automotive only tracing of the value of non- before it is incorporated into a heavy- components. In view of the fact that it originating listed materials of the duty automotive good, this commenter may be impossible to identify producer of the engine and transmission questioned the authority for this interchangeable heavy-duty components (the components), with two different subsection and stated that, if there is no and light-duty components that are results depending on the factual authority for it, then Situation 1 of produced in the same plant, the United circumstances: (1) If the producer of the Example 6 under subsection (10) is States, Canada and Mexico agreed that components is also the producer of the incorrect. Furthermore, this commenter the regulations should specifically vehicle, then the tracing must be made suggested that if there is authority for address this situation. through to the vehicle; or (2) if the subsection (9)(c), then there is a basis With regard to the comment on producer of the components and vehicle for setting up separate manufacturing section 10(9)(c) that there is no are different, then the tracing stops at companies to convert non-originating authority to exclude subcomponents the production of the components. In cost to originating for determining the from the regional value content other words, where the producer of the regional value content of a calculation in section 10, Customs vehicle is not the producer of the subcomponent that crosses a border, simply notes that the special rule set out component, that vehicle producer because the tracing requirement is in Article 403(2) of the NAFTA is for simply applies the normal rules of eliminated. vehicles and components. Furthermore, NAFTA Annex 401 to his product Customs response: Customs disagrees the use of a listed non-originating because he by definition does not ‘‘use’’ with the commenter’s conclusion that material in the production of a any material listed in NAFTA Annex the text of section 10 does not reflect subcomponent does not defeat the 403(2) within the meaning of Article Article 403(2) of the NAFTA which ‘‘tracing’’ requirement applicable to 403(2)(a) (it is the component producer requires that the value of a listed non- heavy-duty automotive goods. The who uses the listed material, that is, to originating material be ‘‘traced’’ through regulations set out in section 10(1) make produce the component, while the to any heavy-duty automotive good in it clear that the value of a listed non- vehicle producer uses that component which it is used. The rules in section originating material will always be to produce the vehicle): thus, the 10(1) are cumulative. If a producer of a traced through to any heavy-duty component, not being a listed material, heavy-duty automotive good ‘‘uses’’ a automotive good into which it is becomes the ‘‘other material’’ referred to listed non-originating material, then incorporated. For example, section 46350 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 10(1)(d) requires the ‘‘tracing’’ of a listed 2. One commenter noted that producer’s fiscal year), it would appear non-originating material even if it was subsection (5)(h) requires that the reasonable to allow the producer to file used in the production of an originating document in which the election to at least 10 days before the beginning of subcomponent. average is made must be filed at least 10 the period which will constitute the first days before the first day of the period in which the producer must Section 13 producer’s fiscal year, or such other average. However, the United States, Comment: The following comments shorter period that the concerned Canada and Mexico agreed that the were submitted on the special regional customs administration may accept. election should be filed at the same time value-content requirements contained in This commenter recommended that this that other elections to average under section 13: provision be amended to specify ‘‘10 section 11 must be filed. The 1. Two commenters referred to days before the shipment of the first requirement does not impose an subsection (4) which concerns the vehicle intended for sale’’. unnecessary hardship on a producer averaging period for calculation of Customs response: Customs agrees because the producer will have the regional value content for vehicles of a that section 13(4)(a)(i) would permit a requisite knowledge as to when such new plant or a refit plant. producer to average over a period of up prototypes will be produced. to 23 months. In the interest of aligning One of these commenters noted that Section 15 paragraph (a)(i) would allow a producer the averaging period with the period for to use launch and start-up cost for a which the special RVC is effective for Comment: One commenter made the period up to 23 months as originating production from a new plant or a refit following observations regarding section content in computing the regional value plant, it was considered to be more 15 which concerns the inability of a content. This commenter suggested that practical to combine the initial ‘‘stub’’ supplier, exporter or producer to the cost incurred from the first period with the first full fiscal year. provide sufficient information during a prototype date to the end of the fiscal Paragraphs (a)(ii) and (a)(iii) provide for verification of the origin of a good: year in which the first prototype was the subsequent full fiscal years and for 1. Whereas section 15 sets forth produced should be used for the the final stub period, if any. alternative means to verify the origin or Concerning the second comment on regional value content calculation for value of a material used in the section 13(4)(a), Customs first notes that the vehicles produced in the first fiscal production of a good when the person the commenter has referred to from whom the producer obtained the year. subparagraphs (i), (ii) and (iii) as material is unable to provide sufficient The second commenter concluded ‘‘alternative averaging periods’’. This is verifying information, when a producer that subsection (4) allows a motor not correct. One, two or all three of supplies verifying information the vehicle producer to elect one of the these subparagraphs could apply in any following three periods over which given situation, depending on the length relevant customs administration should regional value content is calculated by of the special RVC period and the accept it. Moreover, the customs averaging: (1) Paragraph (a)(i) allows relationship of the first year of that administration should have the averaging from the date of the period to the beginning of the obligation to explain in writing any production of a prototype through the producer’s fiscal year. refusal to accept the offered information end of the first fiscal year that begins In response to the remainder of this supporting the origin of the material. after that date, thus allowing the commenter’s remarks, Customs notes 2. While section 15 properly provides producer to roll the first partial year into that under Article 403(6), the ‘‘years’’ in that the customs administration shall the first full fiscal year for averaging the periods for which a special RVC take into consideration whether the purposes; (2) paragraph (a)(ii) allows applies to vehicles of a new plant or customs administration of the importing averaging over any fiscal year that vehicles of a refit plant are not country issued an advance ruling under begins after production of a prototype necessarily coterminous with the fiscal Article 509 of the NAFTA which and ends before the end of the special year of a producer. Under Article 403(6) concluded that the material is an regional value content period (the 5-year the ‘‘year’’ in the special RVC period originating material, a provision should or 2-year period specified in section begins when the first prototype motor be added to authorize a ‘‘retroactive 13(2)); and (3) paragraph (a)(iii) allows vehicle is produced in the new or refit ruling’’ that a material is an originating averaging over part of a fiscal year up plant. Under Article 403(3), the ‘‘year’’ material (for U.S. purposes, this could to the last day of that 5-year or 2-year in the averaging period for the RVC be done as a request for internal advice special regional value content period. calculation is the fiscal year of a as provided for in Part 177 of the However, this commenter stated that the producer. It was the intent of the Customs Regulations). A producer often exact time periods covered by these drafters of the regulations to align the learns of a supplier’s financial weakness three alternative averaging periods are averaging period with the special RVC in advance of problems that would not clear in the Appendix text as period in order to allow a producer to make it impossible to obtain the written. In addition, this commenter obtain the maximum benefit from the information necessary to verify the suggested that the end of an averaging statutory 5-year or 2-year special RVC origin of a material, and a ‘‘retroactive period involving a special regional period. Customs has no authority to ruling’’ provision would allow the value content period should coincide extend or reduce these NAFTA periods producer to obtain a ruling that would with the end of the producer’s fiscal which are also reflected in section cover prior periods. The procedure for year because significant accounting 202(c)(6) of the Act. obtaining such a ruling should be problems will arise if the averaging As regards the comment on section consistent with the advance ruling period cuts off before the fiscal year 13(5), Customs does not disagree provisions, except that the supplier of end. Thus, for example, a 5-year period entirely with the idea behind the the material should provide exact under section 13(2) would allow commenter’s proposal. Inasmuch as the historical data, including exporter’s averaging for full five fiscal years plus first averaging period would not include certificates of origin, rather than that portion of a year beginning with the the full fiscal year (if the first prototype projected costs. Addition of a retroactive date of production of the first qualifying of a motor vehicle is produced in a plant ruling provision would also reduce the prototype. on a date after the beginning of the need to rely on the other section 15 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46351 alternative means to verify the origin of meet the concern identified by the purpose of the test value is to establish a material. commenter. whether a transaction value between a Customs response: With regard to the related producer and seller, determined Schedule III first comment, Customs notes that in accordance with Schedule II, is subsection (1) of section 15 provides for Comment: One commenter stated that acceptable. Since transaction value is factors to be considered by a customs the valuation provisions of the interim the only method of determining the administration where, during a regulations should be reviewed and value of a good under Schedule II, there verification of a good, a producer of a revised to more accurately reflect the is no justification for any alternative material is unable to supply sufficient terms of General Note 12(c), HTSUS, bases of determining test values as there verifying information for reasons which specifically refers to the legal is under the Code. Just as test values beyond that person’s control. The standards set forth in section 402 of the under the Code must be based on a regulation thus contemplates the Tariff Act of 1930, as amended (19 value previously accepted by a customs situation in which a verification U.S.C. 1401a). This commenter cited the administration, so too NAFTA requires requires information from the producer following specific examples in this that a test value shall have been of the material, perhaps, for example, in regard: previously accepted. the form of that person’s books or 1. Under section 3 of Schedule III, records. It is unclear what the subsection (4) provides for the Schedule VII commenter’s reference is to accepting acceptance of transaction value between Comment: The following comments the information offered. Of course, related parties when the producer were submitted in regard to the nothing in section 15 precludes the demonstrates ‘‘that the transaction value reasonable allocation of costs provisions customs administration from of the good in that sale closely contained in Schedule VII: considering information from the approximates a test value referred to in 1. Two commenters referred producer of the good or from any other subsection (5).’’ However, the ‘‘test specifically to sections 3(1)–(3) which source; rather, the section enumerates value’’ referred to in subsection (5) is concern methods used for internal certain sources of information which limited to ‘‘the transaction value of management purposes by a producer of may provide relevant information. identical goods or similar goods sold at a good to reasonably allocate to that Normally, of course, the verification or about the same time as the good being good direct material costs, direct labor process proceeds by seeking information valued is sold to an unrelated buyer costs or overhead. from the producer of that good and, if who is located in the territory of the One of these commenters noted that necessary, from the producer of a NAFTA country in which the buyer is although the text in each case sets forth material. If the customs administration located.’’ This commenter stated that the criterion of ‘‘benefit, cause or ability is satisfied with respect to the origin of this is much more limited than the to bear’’ for purposes of determining the a material by virtue of information comparable statutory provision (19 reasonableness of the method used, the provided by the producer of the good, U.S.C. 1401a(b)(2)(B)) that applies under elements of this criterion are neither then presumably the situation identified General Note 12(c), HTSUS, which defined anywhere in the Appendix nor in section 15 will not occur. The includes other ‘‘test values’’ that can be further explained in the examples under NAFTA countries did not perceive the used to demonstrate the acceptability of Schedule VII. This commenter need to provide for an obligation to the transaction value between related suggested that: (1) This criterion should accept proffered information or to parties. be eliminated, on the theory that a cost explain any unwillingness to do so. 2. Also under section 3 of Schedule allocation method used for a (true) Customs does not believe that any III, subsection (8) appears to require that internal management purpose (that is, as amendment in this regard is necessary the ‘‘test value’’ has been ‘‘previously stated in section 7 of Schedule VII, not or appropriate. accepted by the customs solely for the purpose of qualifying a As regards the second comment, the administration’’. This commenter stated good as an originating good) should commenter accurately observes that that this requirement is not contained in satisfy the reasonableness requirement; section 15(1)(a) provides that, among the U.S. valuation statute referred to in or (2) at the least, a definition or the factors to be considered, is whether General Note 12(c), HTSUS. explanation of ‘‘benefit, cause or ability an advance ruling under Article 509 of Customs response: Schedules II, III to bear’’ should be included in the final the NAFTA has been issued with and VIII of the Appendix to Part 181 of Appendix texts. respect to the material. The commenter the interim NAFTA regulations were The second commenter expressed appears to be seeking a separate based on the Agreement on similar views and stated that the procedure through which the producer Implementation of Article VII of the following interpretation of section 3 of the good could obtain a decision with General Agreement on Tariffs and Trade should be expressly affirmed in the final respect to the origin of a material which (the ‘‘Customs Valuation Code,’’ or Appendix text: (1) That section 3 would presumably affect the origin ‘‘Code’’), rather than on the U.S. requires a customs administration to determination with respect to the good. valuation statute (19 U.S.C. 1401a), or accept an allocation method that is used Such a procedure is intrinsic to the the valuation statutes of Canada or by the producer of a good for an internal verification process. Thus, if the Mexico. Since the Code is a neutral management purpose, unless the outcome of the verification depends on document common to all three NAFTA allocation method is determined to be the origin of the material, it would be parties, it was therefore decided that the manifestly unreasonable; and (2) that a expected that the producer of the good Code should form the basis of that part customs administration bears a heavy would provide such information in its of the regulations that is concerned with burden to disqualify any allocation possession to demonstrate where the how to determine regional value content method based on lack of relation to the material originated. The customs under the transaction value method. criterion of benefit, cause or ability to adminstration would then apply the In regard to the specific points raised bear because an allocation method that conclusion to the goods subject to the by the commenter, the test value is used for internal management verification. Accordingly, it does not referred to in Schedule III, section 3(5), purposes is presumptively reasonable appear that there is any need for the is based on the transaction value of since a company is unlikely to rely on regulations to be amended in order to identical or similar goods since the an allocation method for internal 46352 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations decision-making if it does not meet the an allocation method that is solely for accepted as ‘‘reasonable’’ if it is solely benefit, cause or ability to bear criterion. the purpose of qualifying a good as an for the purpose of qualifying a good as Consistent with this interpretation, this originating good. This is precisely what an originating good. If costs are not commenter further suggested that section 7 is designed to prevent. reasonably allocated under section 3, section 3 should be revised to reflect a Second, section 7 is unnecessary then the producer is required to comply pure internal use test because the because, so long as an allocation method with section 4. Section 4 provides for ‘‘reasonableness’’ requirement, based on meets the reasonableness test under the the use of a method set out in the the benefit, cause or ability to bear benefit, cause or ability to bear criterion, addenda to Schedule VII and/or any criterion, does not add meaningfully to the purpose of the allocation method is method based on one of the criteria of the rule, injects an unnecessary degree irrelevant. Finally, section 7 is benefit, cause or ability to bear. redundant given the non-qualifying of subjectivity into the cost allocation Schedule VIII approval process, and is adequately operations provision in section 17 of the provided for by the terms of section 7 Appendix as regards any production or Comment: With regard to Schedule of Schedule VII. Finally, this commenter pricing practice the object of which is to VIII (value of materials), one commenter recommended that, at a minimum, the circumvent the Appendix. This raised an issue concerning section 3 following definitions be added to the commenter also suggested that if section which operates as an exception to the Appendix to clarify the meaning of the 7 is to be retained, it should, at a general rule that the transaction value of ‘‘benefit, cause or ability to bear’’ minimum, provide specific and a material is unacceptable if, among criterion: objective criteria for determining other things, the producer and the seller are related persons and the relationship Benefit or benefits received: This whether a cost allocation method is between them influenced the price criterion identifies the beneficiaries of used solely to qualify a good as an actually paid or payable for the material. the outputs of the cost pool and originating good. Customs response: Customs disagrees Referring specifically to the first allocates the costs in proportion to the with the commenters’ suggestions that sentence of subsection (7) which states benefits received. that ‘‘[s]ubsection (4) provides an Cause or cause and effect: This criterion the criteria of ‘‘benefit, cause or ability opportunity for the seller or the identifies the outputs of the cost pool to bear’’ are not necessary in section 3, or, in the alternative, that the terms producer to demonstrate that the (any grouping of individual costs) and should be defined. The terms are transaction value closely approximates a allocates the costs in proportion to the recognized principles used in the cost test value previously accepted by the services provided. customs administration of the NAFTA Ability to bear: This criterion advocates accounting industry. They are broad principles that provide a measure by country in which the producer is allocating costs in proportion to the which Customs can determine the located, and is therefore acceptable cost objective’s ability to bear. reasonableness of a cost allocation under subsection (1)’’, the commenter 2. With regard to section 6, one method for an internal management suggested the following interpretation commenter stated that paragraph (d) purpose. Customs does not dispute the thereof: the customs administration of should be eliminated so as to permit fact that most producers, for one or the NAFTA country into which a good allocation of a gain or loss from the sale more internal management purposes, is imported is required to accept (and of a capital asset consistent with are likely to rely on allocation methods thus may not audit) the transaction Generally Accepted Accounting that satisfy one of these criteria. The value of a material used in the Principles (GAAP) because, under regulation, however, is intended to production of the good if the customs GAAP, a gain or loss from the disposal capture all situations and, therefore, administration of the country into of an asset constitutes a legitimate must necessarily identify criteria against which the material was imported (and element of the total cost of the asset. which the regulatory requirement is to where the material was incorporated Thus, a gain or loss on depreciation be measured. into the exported good) approved that does not represent an extraordinary Concerning the comment on section transaction value during a valuation cost, and any write-off on sale or 6(d), Customs agrees with the audit performed on the material when it disposal of an asset should be reflected commenter’s analysis of the treatment, was imported. This commenter stated in total cost. for cost accounting purposes, of the gain that because section 3 is ambiguous, the 3. One commenter argued that section or loss from the sale of a capital asset. provision should be clarified to reflect 7 should be eliminated for several However, in this case the Parties agreed this interpretation. In addition, this reasons. First, section 7 is ambiguous that, for purposes of a ‘‘reasonable’’ commenter recommended that section 3 when taken in context with section 4, allocation of costs in the calculation of be modified to expressly state that the which applies when an allocation total cost, such gains or losses are not customs administration attempting to method does not satisfy section 3 and reasonably allocated to a good. verify the value of a good that which requires use of an allocation The commenter’s remarks concerning incorporates a material must accept any method that is reasonable based on the section 7 are understandable because pre-approval or advance ruling criterion of benefit, cause or ability to the criteria of ‘‘benefit, cause or ability concerning the value of the material by bear. The ambiguity exists because, if an to bear’’ are used in both sections 3 and the customs administration of the internally used allocation method is 4 to determine whether a cost allocation country into which the material was deemed not to satisfy the reasonableness is reasonable. Nevertheless, Customs first imported. requirement in section 3 by virtue of the does not agree that section 7 should be Customs response: For the purposes restriction in section 7, section 4 eliminated. The structure of Schedule of Schedule VIII, unless otherwise requires the producer of a good to use VII requires that, under section 3, an stated, the term ‘‘customs an alternative allocation method that allocation method for an internal administration’’ is defined as ‘‘the does meet the benefit, cause or ability to management purpose is to be used if it customs administration of the NAFTA bear reasonableness criterion. Given the is a reasonable allocation. However, country into whose territory the good, in rejection of the internally used section 7 states that any allocation the production of which the material allocation method under section 3, the method for an internal management being valued is used, is imported.’’ only solution under section 4 is to use purpose will, on its face, not be Section 3 sets forth the basis for Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46353 determining whether the transaction 100 percent imported, two of them the provisions of § 191.22 should be value of a material determined under stating that, in such a case, entries for used instead of Schedule X. section 2(1) is acceptable. One basis goods (within the appropriate time 6. Two commenters stated that the under section 3 for validating a period) may be designated under the inventory methods authorized for transaction value of a material is for a inventory averaging procedure and that foreign trade zone procedures (§ 146.23) seller or producer to demonstrate to a this is supported by the legislative should be included in Schedule X in customs administration (that is, a history relating to the Customs order to avoid the need for multiple customs administration as defined modernization provisions of the Act. inventory systems as the price for using above) that the transaction value These commenters also stated that, in both trade programs. These commenters determined in accordance with section such circumstances, the ‘‘high-to-low’’ cited, as an example that these two 2(1) closely approximates a test value method or any other Customs approved provisions are not in agreement (at least previously accepted by the customs accounting method may be used. with respect to terminology), the fact administration of the NAFTA country in 3. Another commenter stated that the that Schedule X calls for a specific which the producer is located. Appendix should not be used for the identification method whereas § 146.23 Accordingly, the regulations permit the purposes of determining inventory requires a unique identification number. customs administration of one NAFTA methods because the Appendix is If these two requirements are the same, country to accept the transaction value generally for rules of origin purposes. these commenters suggested that the of a material if it closely approximates This commenter also stated that the regulatory text should state that this is a test value determined by the customs inventory methods used to support a the case. administration of another NAFTA same condition drawback claim should 7. Another commenter asked whether country. However, this must be be set forth separately because Article LIFO and average methods are demonstrated to the satisfaction of the 303 of the NAFTA is not subject to the acceptable for drawback and, if so, customs administration (as defined for uniform regulations requirement of whether they can be used on exports to purposes of Schedule VIII), and there is Chapter 5 of the NAFTA. non-NAFTA countries. If not, this no requirement that a customs 4. Two commenters pointed out that commenter asked whether claimants administration must accept any test Customs should give some thought to must switch to FIFO or maintain value put forward by a particular seller companies that must keep extremely different accounting methods for the or producer. detailed records such as those dealing in same goods. footwear, eye wear, finished clothing Customs response: These comments Schedule X and other articles that are produced in principally address an allegedly Comment: The following comments a wide variety of styles, sizes and colors. impractical and unworkable application were submitted regarding Schedule X, This commenter stated that the of the inventory management methods principally in the context of the requirements of Schedule X are so of Schedule X as required under drawback and duty-deferral program onerous that companies that produce or § 181.45(b)(2)(i). In sum, the provisions of Subpart E of Part 181: distribute these types of articles will not commenters argue that the Customs- 1. With respect to the commingling of be able to export to Canada and Mexico approved methods in §§ 191.121(e) and fungible goods and the inventory for lack of ability to comply with these 191.22 (drawback) and in § 146.23 methods that are allowable to determine requirements. This commenter also (foreign trade zones) of the Customs the origin of materials, one commenter suggested that Customs should address Regulations should be allowed in place stated that Schedule X excludes the area of former 19 U.S.C. 1313(j)(2) of the methods set forth in Schedule X. identification procedures (inventory substitution drawback claimants in a Customs disagrees with these methods) that have been allowed in NAFTA context. In this regard, the comments to the extent that they drawback such as ‘‘lower to higher’’, commenter stated that, assuming such propose an expansion of the allowable ‘‘higher to lower’’ and blanket claimants meet the requirements for methods for determining which identification. This commenter also drawback under 19 U.S.C. 1313(j)(1), commingled goods are eligible for full stated that FIFO is administratively Customs should recognize that they do drawback under § 181.45(b). Schedule X unworkable and economically not need to resubmit any applications was promulgated under NAFTA Article unfeasible for most companies, in part for purposes of obtaining drawback 511 and applies, by operation of NAFTA because the association of entry under 19 U.S.C. 1313(j)(1) in a NAFTA Article 303(6)(b), to imported goods numbers with imported part numbers context but rather would simply file the which have been commingled with which is needed under FIFO is too claims in accordance with the fungible goods and which are exported detailed. On this same subject, two applicable regulations. This commenter, to Canada or Mexico in the same commenters stated that Schedule X is after stating that Customs officials from condition as when imported into the unworkable and not consistent with the the Office of Trade Operations have United States. intent of Congress which, as stated in indicated that the Schedule X inventory Nevertheless, the number of Ways and Means Report 103–361, was procedures will be applied to all 19 comments submitted on this point ‘‘* * * to provide sufficient flexibility U.S.C. 1313(j)(1) drawback claims, suggests that the text of § 181.45(b)(2)(i) in the inventory accounting methods for expressed the view that Schedule X could be improved. Accordingly, such goods to make them should apply only in the context of Part § 181.45(b)(2)(i), as set forth below, has administratively workable for industry.’’ 181. been modified to more clearly reflect the Another commenter stated that the 5. A commenter pointed out that intended effect of Article 303(6)(b), that words ‘‘completely fungible’’ should be §§ 191.141(e) and 191.22, taken is, as a narrow exception to the broad changed to ‘‘commercially together, also provide for storage and operation of Article 303 which restricts interchangeable’’ because of the identification methods and provide drawback to the amount determined redefinition of the term ‘‘fungible’’ in more options for approved accounting under the ‘‘lesser of’’ rule. Beginning in the Customs modernization provisions methods than Schedule X does. For 1996 (for exports to Canada) and in 2001 of the Act. example, these sections allow use of (for exports to Mexico), same condition 2. Three commenters raised the issue ‘‘high-to-low’’, but Schedule X does not. substitution drawback will be of commingled fungible goods that are This commenter therefore suggested that prohibited altogether. The only 46354 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations exceptions are for the goods described Customs practice and regulatory producer of the good where the importer in Article 303(6). Thus, ‘‘same standards (see, for example, the last is the requesting party; inclusion of the condition’’ drawback for imported sentence of § 134.41(b)). name and address of the producer and goods commingled with fungible goods importer of the good where the exporter Failure to Provide Documents in is allowed, but only to the extent that is the requesting party; inclusion of the Transshipment Cases the identity of the imported goods is name and address of the exporter and determined by use of one of the The new standard regarding shipping importer of the good where the producer approved inventory management documents provides that preferential is the requesting party; submission of methods set forth in Schedule X. tariff treatment may be denied to an copies of advance rulings or other originating good if the good is shipped rulings issued to the requesting party by Additional Changes to the Regulations through or transshipped in a non- Customs regarding the tariff In addition to the changes to the NAFTA country and the importer does classification of the good, if relevant to interim regulatory texts discussed not provide, upon request, copies of the the issue in the advance ruling request; above, this document modifies the customs control documents showing and, if no ruling on tariff classification interim texts to set forth changes that that the good remained under customs was issued to the requesting party, are necessary (1) to reflect subsequent control while in that non-NAFTA sufficient information to enable trilateral discussion and agreement country. Section 181.23, as set forth Customs to classify the good if relevant regarding regulatory standards pursuant below, has been modified by the to the issue in the advance ruling to Article 511 of the NAFTA or (2) based addition of a new paragraph (b) to request. on an independent review of the interim reflect this new standard, and § 181.31 2. Paragraph (b)(2)(ii), which concerns texts within Customs. These changes are (regarding post-importation claims) and tariff change rulings, has been changed discussed below. § 181.71 (regarding origin verifications), by designating the interim text as Changes Pursuant to Trilateral as set forth below, have been subparagraph (A) in order to facilitate Discussions appropriately modified as a the addition of a new subparagraph (B) consequence of the adoption of this new setting forth information that must be in Subsequent to the publication of the standard. an advance ruling request which interim regulations in T.D. 94–1, and in involves an origin issue requiring an keeping with the principle of ongoing Origin Verifications assessment of whether materials cooperation in the implementation and The Parties agreed to a new standard undergo an applicable change in tariff administration of the NAFTA as for origin verifications that permits classification. provided for in Section F of Chapter verification of the applicable rate of 3. In paragraph (b)(2)(iii), which Five of the NAFTA, representatives of duty applied to an originating good in concerns rulings on regional value the United States, Canada and Mexico accordance with NAFTA Annex 302.2 content, the following changes have held further meetings which resulted in and determination of whether a good is been made: in the first sentence, the agreement regarding (1) use of the a qualifying good for purposes of words ‘‘or under both methods’’ have definition of ‘‘conspicuous’’ as set forth NAFTA Annex 703.2. Accordingly, been added to reflect the fact that in Annex 311 of the NAFTA, (2) the § 181.72 as set forth below has been satisfaction of a regional value content adoption of an additional standard modified by the addition of a new requirement may involve use of both the covering denial of preferential tariff paragraph (a)(2) to reflect this standard. transaction value method and the net treatment based on a failure to provide In addition, the new standard for cost method as well as the fact that a certain documentation in transshipment origin verifications provides that a ruling on both issues may be sought; the cases, (3) the adoption of additional questionnaire may be completed, at the second sentence, which sets forth the standards for origin verifications, (4) the option of the exporter or producer, information to be submitted for adoption of additional standards to be either in the language of the importing purposes of the transaction value applied with regard to requests for country or in the language of the method, has been changed by inserting advance rulings under Article 509 of the country in which the exporter or specific references to relevant NAFTA, and (5) the modification of the producer is located. Paragraph (a)(3)(ii) provisions of the Appendix to Part 181, substantively verbatim texts (paragraph (a)(2)(ii) in the interim texts) by adding a requirement for information implementing the rules of origin of § 181.72, as set forth below, has been sufficient to calculate the value of each provisions of Chapter Four of the modified accordingly. material for which the origin is NAFTA. The agreed changes, as unknown and that is used in the reflected in the final regulatory texts set Requests for Advance Rulings production of the good, by adding a forth in this document, are summarized The new trilaterally-agreed standards requirement for specific information below. regarding advance ruling requests regarding each material that is claimed concern the information required to be to be an originating material and is used Definition of ‘‘Conspicuous’’ submitted with the request and in the production of the good, and by During the trilateral discussions it therefore only affect § 181.93 of the adding a requirement specifying was pointed out that the interim interim regulations. The substantive information to be submitted where the amendments to Part 134 did not set changes reflected in § 181.93, as set advance ruling request involves an issue forth the definition of ‘‘conspicuous’’ forth below, are as follows: as to whether the transaction value is contained in the country of origin 1. In paragraph (b)(1), which concerns acceptable with respect to the good; the marking provisions of Annex 311 of the general information to be included in third sentence, which sets forth the NAFTA. Accordingly, § 134.1 has been the request, the following requirements information to be submitted for modified, as set forth below, by the have been added: identification of the purposes of the net cost method, has addition of that definition as a new specific subject matter of the request; been changed by inserting specific paragraph (k). Customs believes that this inclusion of a statement regarding the references to relevant provisions of the definition is appropriate for both accuracy and completeness of the Appendix to Part 181, by adding NAFTA and non-NAFTA contexts since information submitted; inclusion of the references to lists of all ‘‘product, period the NAFTA definition reflects existing name and address of the exporter and and other’’ costs and of all ‘‘excluded’’ Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46355 costs, by limiting the required materials incomplete in sections 5, 7 and 10. Section 4 value information to non-originating Therefore, in order to make it clear as Section 7(10) provides for the materials or materials for which the to what costs are included in the ‘‘total situation in which a self-produced origin is unknown and that are used in cost’’ as that term is used in the material may be designated as an the production of the good, and by trilateral texts, new subsection (6) has intermediate material if it is used in the requiring a statement regarding the been added to section 2, new sections production of a good that is subject to period over which the net cost 5(10), 7(7) and 10(9)(f) have been added, a regional value content requirement. It calculation is to be made; and a new and consequential changes have been was not clear under the original sentence has been added at the end to made to the following provisions in trilateral texts that a self-produced limit the information required to be sections 5, 6 and 7: sections 5(9) (a) and material, used in a good which is not submitted where the advance ruling (b) (sections 5(8) (a) and (b) in the subject to a regional value content request concerns only the calculation of interim texts); section 6(12); and requirement, could be considered as a an element of a regional value content sections 7(6)(a) and (b). material for purposes of the NAFTA formula. 4. A new paragraph (b)(2)(iv), with the Effect of Choice to Average rules of origin. Accordingly, a new heading ‘‘NAFTA rulings on producer Throughout the trilateral texts there subsection (8) has been added to section materials’’, has been added to specify are references to ‘‘averaging’’ for 4 in order to make it clear that a self- information that must be submitted purposes of determining the net cost of produced material may be considered as where the advance ruling request either goods, the value of materials or the a material used in the production of a involves an issue with respect to an value of traced materials. Whenever a good even if the good is not subject to intermediate material or is submitted by producer makes the choice to average, a regional value content requirement. a Canadian or Mexican producer of a the period over which that producer Such a self-produced material must material and concerns only the origin of averages cannot be changed, and the have either originating or non- such material. duration of the choice to average must originating status under the NAFTA 5. Paragraph (b)(5), which requires the extend to the end of the fiscal year of rules of origin, and that status will submission of information regarding that producer. Although these influence the application of a particular prior or current transactions, has been requirements were implicit in the NAFTA rule of origin to the good reconfigured to facilitate the addition of original trilateral texts, it became produced from that material. In references to information regarding the apparent that it was necessary to state addition, a new subsection (9) has been following: judicial or quasi-judicial them explicitly. Therefore, new added to section 4 setting forth an review in Canada or Mexico; a subsections (7) through (10) have been example to illustrate such a situation. verification of origin performed in the added to section 2, and the following Section 6 United States, Canada or Mexico; an changes have been made to the related administrative appeal in the United provisions in sections 6 and 12 and in Article 403 of the NAFTA specifically States, Canada or Mexico; a request for Schedule X: revision of section provides a producer with the option to an advance ruling in the United States, 6(15)(a)(ii); addition of new sections use an averaging method for calculating Canada or Mexico; and the status or 6(18) and 6(19) and redesignation of the net cost for automotive goods, and disposition of any current or prior interim sections 6(18) and 6(19) as 6(20) sections 11, 12 and 13 of the trilateral judicial or quasi-judicial review, and 6(21); in sections 12(5) (a) and (b), regulations implement the specific verification of origin, administrative addition of the words ‘‘that is evenly provisions of Article 403 for automotive appeal, or advance ruling request. divisible into the number of months of goods. The NAFTA does not specifically the producer’s fiscal year remaining at provide for averaging with respect to Chapter Four Rules of Origin the beginning of that period’’; addition any other goods. However, because it With regard to the substantively of new sections 12(6) through 12(9) and was recognized that in many situations verbatim regulatory texts covering the redesignation of interim sections 12(6) non-automotive producers will have to rules of origin provisions of Chapter and 12(7) as 12(10) and 12(11); and use standard or projected costs to Four of the NAFTA, which were set revision of sections 3 and 12 of calculate the net cost and the value of forth in the interim regulations in the Schedule X. non-originating materials in their goods, Appendix to Part 181, the trilaterally- an averaging method was included in Averaging For De Minimis and agreed changes thereto concern section 6(15) of the trilateral texts in Accumulation clarifications of ambiguous provisions, order to permit, in a commercially corrections in grammar or punctuation The original trilateral texts failed to practicable manner, averaging of the and, in certain cases, textual additions provide specifically for the use of values required under the net cost to remedy instances in which the averaging in determining the value of method for non-automotive goods. The original trilateral text was incomplete or the non-originating materials in introductory text of section 6(15) as set the intent of the Parties was not subsections (1) and (5) of section 5 (de forth in this document has been adequately expressed. These changes, minimis), and in determining the net amended to more clearly state the intent which are incorporated in the text of the cost and value of non-originating of the Parties, that is, that the regional Appendix to Part 181 as set forth below, materials in subsection (2) of section 14 value content calculation for certain are as follows: (accumulation). To provide guidance on automotive goods may not be calculated the use of averaging in situations by the ‘‘averaging’’ permitted under Calculation of Total Cost involving de minimis or accumulation, section 6(15). Although this exclusion of Calculation of total cost is required for new subsections (11) and (12) have been automotive goods from the application purposes of the de minimis rule in added to section 5 and new subsection of section 6(15) appears to be a section 5, the net cost method in section (3) has been added to section 14. limitation, this is not the case. The 6 and the valuation of intermediate Consequential amendments, such as category of goods for which averaging materials in sections 7 and 10. However, redesignation of subsections and may be chosen under section 6(15) is references in the original trilateral texts internal references, have also been restricted to goods which are ‘‘identical to the calculation of total cost were made. or similar’’ as defined in section 2, 46356 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations whereas the various categories of unnecessary and potentially confusing which does not require revealing the automotive goods for which averaging paragraph (b) has been removed. This actual value as required in paragraph may be chosen under section 11, 12 or change does not affect a producer’s (e), it was determined that a third option 13 are not so restricted. Thus, this option to designate self-produced should be allowed. Accordingly, a new amendment will provide greater textual packaging materials as intermediate paragraph (f) has been added to provide clarity but will have minimal adverse materials if it is in the producer’s that the value of the traced material may effect on producers of automotive goods interest to do so, and this point has been be an amount that is based on the actual for which averaging may be chosen clarified by the addition of a new regional value content (RVC) of the under section 11, 12 or 13. section 7(14). Similarly, a new section acquired material (rather than the 7(19) has been added to cover regional value content requirement, or Section 7 accessories, spare parts and tools that RVCR), the amount being represented by Under Article 402(9) of the NAFTA, are self-produced. Consequential the formula VM × (1 ¥ RVC). As a the value of materials is either the amendments have also been made by consequence of the addition of this new transaction value (as defined in Article renumbering the subsections which paragraph (f), interim paragraphs (f) 415) or, if there is no transaction value follow these new provisions. through (h) have been redesignated as or the transaction value is unacceptable, A new Example 8 has also been added (g) through (i), the internal cross- the value determined in accordance to section 7(20) (section 7(17) in the references in these paragraphs have with the Articles 2 through 7 of the interim texts) in order to illustrate the been revised to reflect these changes, Customs Valuation Code. Section 7(1) effects of section 7(1) and section 7(11) and, in section 9(10), Example 9 has and Schedule VIII of the trilateral (section 7(10) in the interim texts) on a been amended and Examples 12 and 13 regulations implement the NAFTA with situation in which a producer of a good have been added in order to reflect the respect to the valuation of materials. provides an indirect material, which is new option for determining the value of Section 7(1) states that, if the producer also an assist in this example, to a a traced material which has been of the good is the importer of a material, material producer for use in the incorporated into an originating the value of that material for NAFTA production of a material that is material acquired by a producer of a purposes is the customs value. subsequently used in the production of light duty automotive good. However, ‘‘transaction value’’ or other the good. If the indirect material is value used as the basis for the customs provided free of charge and the cost of Section 10 value may not, in fact, reflect the the indirect material is not recorded on A new section 10(1)(d)(ii) has been transaction value ‘‘of the producer’’ or the books of that material producer, added to provide, as in the case of new other applicable value as defined in the section 7(11) provides that the value of section 9(2)(f), for a third alternative NAFTA. Section 7(2) as set forth in this the indirect material is not included in method to determine the value of a document has been revised to make it the regional value content calculation listed non-originating material clear that if the customs value for the under the net cost method for the incorporated into an originating materials referred to in section 7(1) was material when determining whether or material that is acquired for use in the not determined in a manner consistent not the material is originating. However, production of a heavy duty automotive with Schedule VIII, then the customs if, as in this example, the indirect good. Necessary consequential changes value may not be used as the value of material is also an assist and the have also been made involving the material: in such a case the value of material that is made with benefit of the renumbering interim subparagraphs (ii) the material must be determined indirect material is subsequently used and (iii) as (iii) and (iv), changing the according to Schedule VIII. In addition, in the production of a good by the affected internal cross-references in the in order to illustrate this principle, a producer who supplied the indirect texts, and making changes in Examples new Example 1 has been added in material, section 7(1) provides that the 1, 2 and 4 under section 10(10) to reflect section 7(20) (section 7(17) in the value of the indirect material (assist) is the new method. interim texts) and interim Examples 1 included in the value of that material A new text of Example 10 replaces the through 6 have been renumbered as (whether or not originating) when interim text in section 10(10) in order to Examples 2 through 7. For the same calculating the regional value content of illustrate the application of section 10(8) reasons, similar references to the use of the good. which allows the use of averaging under ‘‘customs value’’ as the value of a the principles of section 12(3) in order material have been clarified by revising Section 9 to determine the value of a non- sections 9(3) and 10(3) and section 1(2) If a traced material has been originating material for purposes of the of Schedule VIII. incorporated into an originating statement required in section Paragraph (b) of section 7(12) in the material that is then acquired by the 10(1)(b)(ii), section 10(1)(d)(i) or section original trilateral texts (renumbered in producer of a light duty automotive 10(1)(e)(i). The value of a non- this document as section 7(13)) could good, the value of that traced material originating material, in such a case, have been incorrectly interpreted as may be determined by one of the would not be the value of the acquired requiring that self-produced packaging methods set out in section 9(2)(e) or material which is a listed non- materials or containers be valued under 9(2)(f) of the trilateral regulations. originating material; it would be the subparagraphs (i) or (ii). Under such an Paragraph (e) requires information on value of the non-originating material interpretation, the value of a self- the actual value of a traced material. incorporated into the listed non- produced material would always have Paragraph (f) provides an alternative originating material by the producer of to be treated as a non-originating value which will always result in a value that that listed material. if the self-produced material were a represents the maximum value of a non-originating material. However, traced material allowable in the Section 11 under the NAFTA a producer is not originating acquired material. A new subsection (11) has been added required to treat a self-produced In order to provide the supplier of an to section 11 setting forth an Example to material as a material or to designate a acquired material with an option to pass illustrate the options available under self-produced material as an forward a value that is closer to the section 11(9)(b) in the event that a intermediate material. Therefore, this actual value of the traced material, but producer of a motor vehicle chooses to Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46357 average only those motor vehicles to be Schedule VIII Other Changes exported to the territory of only one The texts of sections 10(1)(c) and Based on further internal review of NAFTA country or to the territories of 10(3) have been revised in order to the interim regulatory texts, Customs more than one NAFTA country. resolve an ambiguity with respect to has determined that the following Section 12 which word is modified by the phrase additional changes thereto should be ‘‘in the country in which the material is made. Section 12(1) has been amended in produced’’. These changes reflect the Section 10.8(a) order to remove an ambiguous reference understanding that the determination of to the averaging of the regional value the amount added for profit and general The interim regulatory amendments content for automotive component expenses depends on whether the in T.D. 94–1 included the addition of a assemblies, automotive components, material is imported by the producer or new paragraph (a) to § 10.8 of the sub-components or listed materials and acquired from another person in the Customs Regulations (19 CFR 10.8) to thereby avoid any misunderstanding territory in which the producer is clarify that the provisions of that section with respect to the goods that may be located. In both cases the amount added do not apply in the case of goods averaged together if produced in the should be based on sales of materials of returned to the United States after same plant. Specifically, the words ‘‘any the same class or kind as that being exportation for repairs or alterations in or all automotive component valued. However, in regard to the Canada or Mexico, for which separate assemblies, automotive components, former, the determination should be provisions were set forth in interim § 181.64. Subsequently, on May 17, sub-components or listed materials’’ based on sales of such materials by 1994, Customs published in the Federal have been replaced by the words ‘‘an producers located in the country in Register (59 FR 25563) as T.D. 94–47 a automotive component assembly, an which the imported material was final rule document which included a automotive component, a produced, whereas in the latter, the complete revision of § 10.8. However, subcomponent or a listed material’’. The determination should be based on sales the text of this revised § 10.8 did not text as amended more closely follows by producers located in the same carry forward the substance of the the language of NAFTA Article 403(4) country as the producer of the material interim NAFTA amendment. (which refers to ‘‘a component’’ or ‘‘a being valued. listed material’’ of Annex 403.2) and Accordingly, this document amends the thus makes it clear, for example, that Schedule X introductory text of § 10.8(a) as published in T.D. 94–47 to incorporate engines and transmissions may not be During the trilateral discussions, it the substance of that NAFTA provision. grouped together for purposes of was noted that the first table in averaging regional value content. Addendum A as set forth in the interim Section 12.132 Section 16 Appendix was incomplete in that the The interim regulatory amendments trilaterally-agreed table included a third Section 16(1) has been revised in in T.D. 94–1 included the addition of a column ‘‘Total Value’’ under the new § 12.132 to clarify the use of order to provide a clearer interpretation heading ‘‘Materials inventory sales with respect to the nature of operations country of origin declarations, which (Receipts of material A)’’. Accordingly, were provided for in § 12.130(f) of the that, when performed on an originating the first table in Addendum A has been good during transshipment through a Customs Regulations (19 CFR 12.130(f)), corrected to reflect the trilateral text. in the case of textile and apparel goods non-NAFTA country, do not cause the which are subject to the provisions of good to lose its status as an originating Technical Amendments Annex 300–B of the NAFTA. good. The revised text in subsection Many additional amendments Subsequently, on June 20, 1994, (1)(a) further makes it clear that, except reflected in the texts set forth in this Customs published in the Federal for goods covered by section 16(3), a document concern simply technical Register (59 FR 31519) as T.D. 94–52 an good is considered not to be an changes relating to matters such as interim rule document which amended originating good if it is removed from punctuation, cross references, interim § 12.132 by adding thereto a customs control when outside the typographical format and consequential new paragraph (b) requiring submission territories of the NAFTA countries. renumbering of provisions. These of a Certificate of Eligibility in Schedule VII changes are not intended to have any connection with a claim for NAFTA effect on the substance or content of the preferential tariff treatment involving The definition of ‘‘discontinued texts. non-originating textile and apparel operations’’ in section 1 has been Section 181.131 goods subject to the tariff preference revised in both scope and meaning in level provisions of Appendix 6.B. to order to link the term, when used with In light of certain of the trilaterally- Annex 300–B of the NAFTA. In order to respect to a producer’s operations that agreed changes to the Appendix texts as ensure that this document accurately are located in a NAFTA country, to the discussed above, the Parties also agreed reflects current regulatory requirements, meaning set out in that NAFTA that it would be necessary to have a rule the text of § 12.132 is republished below country’s Generally Accepted covering the transition from the interim to incorporate the interim amendment Accounting Principles. This maintains Appendix texts to the new Appendix effected by T.D. 94–52. Customs intends the consistent treatment given in the texts in the case of producers for whom to publish a separate final rule NAFTA to issues related to allocation of an averaging period started prior to, and document in the near future which will costs. would extend beyond, the agreed specifically address T.D. 94–52, For similar reasons, the reference in October 1, 1995, effective date of the including any public comments section 6(c) to ‘‘cumulative effect of new Appendix texts. Accordingly, submitted in response thereto. accounting changes’’ has been amended § 181.131 as set forth below has been to reflect that such changes are those modified by designating the interim text Section 181.22(a) reported in accordance with a specific as paragraph (a) and by adding new Interim § 181.22(a) provided that the requirement of the applicable Generally paragraphs (b) and (c) to reflect the importer must maintain documentation Accepted Accounting Principles. agreed-upon transitional rules. relating to an imported good for five 46358 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations years after the date of ‘‘importation’’ of timely obtain the Certificate (denial of Section 181.62 the good. In order to reflect the the claim for preferential tariff With regard to interim § 181.62 which requirements of U.S. law (19 U.S.C. treatment). concerns duty-free treatment of 1508(c), as amended by section 614 of Section 181.41 commercial samples of negligible value the Act), § 181.22(a) as set forth below In § 181.41, which prescribes the imported from Canada or Mexico, has been modified to refer to five years Customs notes that paragraphs (b)(3) after the date of ‘‘entry’’ of the good. applicability of the Subpart E ‘‘NAFTA drawback’’ (as defined in § 181.1(o)) and (c) thereof, which specifically Section 181.22(b)(2) provisions, the first sentence has been addressed textile samples, did not In addition to the removal of the changed as set forth below by the devolve from a specific statutory references to a ‘‘producer’’ as discussed addition of a reference to ‘‘any good that provision whereas the remainder of the above, § 181.22(b)(2), as set forth below, is a ‘good subject to NAFTA drawback’ section did reflect the terms of an has been modified to refer to signature within the meaning of 19 U.S.C. 3333’’ underlying U.S. statutory provision of the Certificate of Origin by the in order to (1) incorporate by reference (subheading 9811.00.60, HTSUS). Since exporter’s authorized agent ‘‘having the terms of NAFTA Article 303(6) as implementation of the commercial knowledge of the relevant facts’’. implemented in U.S. law and (2) clarify sample provision in Article 306 of the Customs believes that this change is that those NAFTA Article 303 and U.S. NAFTA is a function of what is appropriate to ensure that the signature statutory standards are applicable under permissible or required under has substantive relevance that goes Subpart E both for drawback purposes applicable U.S. law (in this case, beyond that of a mere agency and for purposes of the § 181.53 duty- subheading 9811.00.60, HTSUS), relationship. deferral provisions. In addition, for § 181.62 as set forth below has been modified by the removal of paragraphs Section 181.22(d) similar clarification purposes, the first sentence of § 181.53(a)(2) as set forth (b)(3) and (c). The following changes have been below has been changed to refer to a Section 181.63 made to § 181.22(d) which specifies ‘‘‘good subject to NAFTA drawback’ Interim § 181.63, which concerned circumstances in which a Certificate of within the meaning of 19 U.S.C. 3333’’. Origin is not required: duty-free treatment of printed 1. For editorial and citation purposes, Section 181.44 advertising materials imported from the text as set forth below has been In § 181.44, which specifies the Canada or Mexico, reflected both the rearranged and divided into paragraph circumstances in which drawback is terms of Article 306 of the NAFTA and (d)(1) (which sets forth the general rules calculated under the NAFTA ‘‘lesser of the definition of ‘‘printed advertising for when a Certificate is not required) the two’’ rule, a new paragraph (g) has materials’’ in Article 318 of the NAFTA; and paragraph (d)(2) (which covers the been added as set forth below to cover thus, the regulatory text referred exception regarding a series of goods that are ‘‘unused’’ within the generically to ‘‘goods classified in importations). meaning of 19 U.S.C. 1313(j)(1) but have Chapter 49, HTSUS’’, which chapter 2. The introductory text of newly changed in condition after importation covers some goods for which duty-free designated paragraph (d)(1) has been into the United States so as not to be treatment is not provided. Since U.S. modified as set forth below by replacing eligible for full drawback under duty treatment of goods covered by the words ‘‘a Certificate of Origin shall § 181.45(b). NAFTA Article 306 is controlled by the not be required for’’ with the words ‘‘an terms of the HTSUS, Customs has importer shall not be required to have Section 181.47 determined that § 181.63 serves no a Certificate of Origin in his In order to facilitate Customs effective purpose and therefore should possession’’. Customs believes that this processing of NAFTA drawback claims, be removed and reserved until such change is necessary to clarify the intent the following changes have been made time as appropriate changes are made to which relates to the basic requirement to the text of interim § 181.47 which the HTSUS to reflect the terms of for possession of a Certificate when a concerns the completion of claims for NAFTA Article 306. claim for preferential tariff treatment is drawback under Subpart E: (1) In Section 181.64(c)(1)(ii) made (see the last sentence of paragraph (a), language has been added § 181.21(a)) rather than to the at the end of the second sentence to With regard to interim § 181.64 which requirement for submission of the provide that claims under Subpart E concerns goods returned after repair or Certificate to Customs when requested must be filed separately from non- alteration in Canada or Mexico, Customs under § 181.21(b). NAFTA claims filed under Part 191; and notes that paragraph (c)(1)(ii) thereof 3. In order to provide for proper (2) a sentence has been added at the end provides for a declaration by the owner, notification and related procedural of paragraph (b)(1) to provide for importer, consignee, or agent stating safeguards in a case where a Certificate inclusion of the word ‘‘NAFTA’’ at the that, among other things, ‘‘the goods is required because the importation is top of each drawback entry form filed were not previously imported in bond determined to be part of a series of under Subpart E. or admitted into a foreign trade zone or importations that may reasonably be imported in similar status’’. This considered to have been undertaken or Section 181.50 statement was included in the arranged for the purpose of avoiding a In § 181.50, which concerns payment declaration to address the exception for certification requirement, the text of and liquidation of drawback claims, ‘‘goods subject to NAFTA drawback’’ in newly designated paragraph (d)(2), as paragraph (b) as set forth below has U.S. Note 1 to Subchapter II of Chapter set forth below, has been modified (1) to been modified (1) to refer to when a 98, HTSUS. That note, which applies to require written notice to the importer drawback claim is to be liquidated the whole subchapter and thus pertains, that possession of a Certificate covering (rather than when it becomes ‘‘final’’) inter alia, to all articles returned after the importation at issue is required, (2) and (2) by the addition of a sentence at repair or alteration abroad (including to allow the importer 30 calendar days the end to refer to adjustments of those goods repaired or altered in to obtain a valid Certificate, and (3) to drawback claims under 19 U.S.C. Canada or Mexico and covered by specify the consequence of a failure to 1508(b)(2)(B)(iii). § 181.64), sets forth four circumstances Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46359 in which articles may not be classified below to provide that the verification Section 181.75(b)(2)(iv) and thus receive the duty treatment letter ‘‘may be on Customs Form 28 or Section 181.75(b)(2)(iv) as set forth prescribed in the subchapter (under other appropriate format’’. below has been modified by the subheading 9802.00.40 or 9802.00.50 in Section 181.72(d)(2)(ii) addition of language at the end to cover the case of repaired or altered goods). cases where an exporter or producer In § 181.72(d)(2)(ii) which concerns The note, which prior to the NAFTA did would protest the negative origin the consequences of a failure on the part not contain the ‘‘NAFTA drawback’’ determination itself rather than the of the exporter or producer of a good to exception language, was intended to liquidation of an entry (for example, respond to a follow-up verification letter ensure that goods imported into the where the importer’s NAFTA claim was or questionnaire, the introductory text United States in certain circumstances made in a protest rather than as part of has been modified as set forth below to in which duty is not paid or is later the entry process). refunded (for example, duty-free under provide that Customs may ‘‘consider the a temporary importation bond or with good to be non-originating and Section 181.76(a) subsequent drawback of duties upon consequently may’’ deny preferential Section 181.76(a) has been modified exportation), and which are tariff treatment on the good. Customs as set forth below to provide that an subsequently exported (for example, for believes that the reference to non- origin determination ‘‘may be applied’’ repair or alteration) and then returned, originating status in this context is (rather than ‘‘shall be effective’’) upon do not re-enter the commerce of the necessary if the follow-up letter or issuance of the determination, and the United States and again escape full duty questionnaire is to include the ‘‘written provisions regarding the negative origin assessment by virtue of their determination’’ (that is, a determination determination exception to this general classification in a reduced-duty as to whether the good is an originating rule have been set forth as a new provision under Subchapter II. The good) referred to in paragraphs (d)(1)(i) paragraph (b). Customs believes that exception in the note for ‘‘goods subject and (d)(2)(ii)(A). these editorial changes are necessary to to NAFTA drawback’’ was added in Section 181.73(a) align on terminology used elsewhere in connection with the adoption of the § 181.76 and to reflect the fact that a Section 181.73(a), which requires NAFTA in consideration of the fact that Customs decision regarding a rate of written notification prior to conducting the NAFTA drawback and duty-deferral duty takes effect only when actually a verification visit in Canada or Mexico, provisions (see Subpart E of Part 181 applied to a transaction (that is, in has been modified as set forth below by below) render the note unnecessary in a connection with the liquidation of an removing from the first sentence the NAFTA context because assessment of entry). duty is required prior to exportation to words ‘‘, including a follow-up to an Canada or Mexico under the NAFTA earlier visit,’’. On further review, Section 181.76(c) drawback provisions (see the definition Customs has determined that this In § 181.76(c) (§ 181.76(b) in the of ‘‘NAFTA drawback’’ in § 181.1(o) requirement is neither reflected in the interim texts), which concerns the below). text of the Agreement nor otherwise application of origin determinations On further review, Customs believes necessary since the procedural where there is a pattern of conduct by that the language in the declaration safeguards afforded by the notification an exporter or producer involving false quoted above does not adequately requirement are covered by the or unsupported representations on address the basic issue under U.S. Note notification given prior to the initial Certificates of Origin that a good 1 to Subchapter II of Chapter 98, visit. Moreover, requiring written qualifies as an originating good, the first HTSUS, that is, whether the imported notification (and, thus, written consent sentence as set forth below has been goods were subject to NAFTA under § 181.74) prior to each follow-up modified (1) to state that Customs may drawback. In other words, if the goods visit would impose an unreasonable ‘‘deny subsequent claims for’’ (rather were subject to NAFTA drawback, then administrative burden on Customs and than ‘‘withhold’’) preferential tariff none of the restrictions in the note could compromise the overall treatment and (2) by adding at the end would apply and the note would not be effectiveness of the verification visit the words ‘‘, provided that advance a bar to classification of the repaired or process. written notice of the intent to deny such altered goods in the subchapter. On the Section 181.75(a)(2) claims is given to the importer.’’ The other hand, if the goods were not subject first change is intended both to conform to NAFTA drawback and one of the Section 181.75(a)(2) requires that a the text to the legal responsibility of restrictions in the note applied to the written origin determination include a Customs in connection with the entry goods, then the note would operate as statement setting forth the findings of and liquidation process and to reflect a bar to classification of the repaired or fact made in connection with the origin the intent of the underlying NAFTA altered goods in the subchapter. verification and upon which the origin provision which is prospective in Accordingly, the declaration in determination is based. An exception nature. The second change is simply § 181.64(c)(1)(ii), as set forth below, has has been added to this section as set intended to ensure that the importer been modified in this regard to more forth below to cover the case of a will receive appropriate notice of the accurately reflect the minimum negative origin determination where intended action by Customs. In information that Customs must have to specific findings of fact cannot be made addition, as a consequence of the ensure compliance with the applicable because of a failure to respond to a replacement of the word ‘‘withhold’’ in statutory standard. follow-up verification letter or § 181.76(c), § 181.71 as set forth below questionnaire. Customs believes that has been modified by removing the Section 181.72(a)(2)(i) this change is necessary because, under words ‘‘or withhold’’ before the words In order to provide necessary modified § 181.72(d)(2)(ii) as discussed ‘‘preferential tariff treatment’’. flexibility to Customs and at the same above, the negative origin determination time reflect the method most often may result merely from a failure on the Section 181.76(e) employed by Customs, § 181.72(a)(2)(i), part of the exporter or producer of the In § 181.76(e) (§ 181.76(d) in the which concerns origin verification good to respond to the follow-up letter interim texts), which limits the letters, has been modified as set forth or questionnaire. application of negative origin 46360 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations determinations to prior importations in rule with certain changes thereto as and Budget in accordance with the certain specified circumstances, the first discussed above and as set forth below. Paperwork Reduction Act of 1980 (44 sentence as set forth below has been Although this document sets forth the U.S.C. 3507) under control number modified by adding at the end the words majority of the interim regulatory 1515–0205. The estimated average ‘‘and on which that person did in fact amendments adopted herein as a final annual burden associated with this rely.’’ Customs believes that this change rule and thus both republishes portions collection is 6.31 hours per respondent is necessary because the underlying of the interim texts without change and or recordkeeper. Comments concerning NAFTA provision is founded on the amends other portions of the interim the accuracy of this burden estimate and principle of equitable relief based on texts to incorporate the changes suggestions for reducing this burden detrimental reliance, and there can be discussed above, it does not republish should be directed to the U.S. Customs no occasion for equitable relief if no those unchanged interim amendments, Service, Paperwork Management reliance, and thus no detriment, has involving the following provisions, Branch, Room 6316, 1301 Constitution occurred. which were set forth in T.D. 94–1 Avenue, NW., Washington, DC 20229, within an amendatory instruction rather or the Office of Management and Section 181.76(f) than in full regulatory text format: Budget, Attention: Desk Officer for the Section 181.76(f) (§ 181.76(e) in the §§ 10.36a, 10.66, 10.67, 134.1, 134.22, Department of the Treasury, Office of interim texts) has been modified as set 134.23, 134.24, 134.32, 134.35, 134.43, Information and Regulatory Affairs, forth below (1) by replacing ‘‘denies’’ 134.44, 174.12, 174.29, 177.0, and 177.1. Washington, DC 20503. with ‘‘proposes to deny’’, (2) by This document also includes an Drafting Information replacing ‘‘effective date of the denial’’ appropriate update of the list of with ‘‘application of the determination’’, information collection approvals The principal author of this document and (3) and by adding after ‘‘90 calendar contained in § 178.2 of the Customs was Francis W. Foote, Office of days’’ the words ‘‘from the date of Regulations (19 CFR 178.2). Regulations and Rulings, U.S. Customs issuance of the determination’’. Customs Inapplicability of Public Notice and Service. However, personnel from other believes that these changes are offices participated in its development. appropriate for purposes of precision as Comment Procedures and Delayed regards the procedures discussed in the Effective Date Requirements List of Subjects section. Pursuant to the provisions of 5 U.S.C. 19 CFR Part 10 553(a), public notice and comment Section 181.81 procedures are inapplicable to these Alterations, Bonds, Customs duties Interim § 181.81 concerned the final regulations because they are within and inspection, Exports, Imports, applicability of penalties to NAFTA the foreign affairs function of the United Preference programs, Repairs, Reporting transactions and consisted of a general States. In addition, for the above reason and recordkeeping requirements, Trade statement (paragraph (a)) and a specific and because the Parties have agreed to agreements. provision regarding false certifications promulgate final NAFTA implementing by U.S. exporters or producers regulations with effect from October 1, 19 CFR Part 12 (paragraph (b)). On further review of 1995, it is determined that good cause Canada, Customs duties and this section, Customs believes that exists under the provisions of 5 U.S.C. interim paragraph (b) is redundant and inspection, Marking, Mexico, Reporting 553(d)(3) for dispensing with a 30-day and recordkeeping requirements, thus unnecessary because its purpose is delayed effective date. already achieved by the general interim Textiles and textile products, Trade paragraph (a) statement. Accordingly, Executive Order 12866 agreements. § 181.81 as set forth below has been Because this document involves a 19 CFR Part 24 modified to reflect only the text foreign affairs function of the United contained in interim paragraph (a). States and implements an international Accounting, Canada, Customs duties agreement, it is not subject to the and inspection, Financial and Section 181.100(b)(3) provisions of E.O. 12866. accounting procedures, Reporting and Section 181.100(b)(3) concerns the recordkeeping requirements, Trade effective date for a modification or Regulatory Flexibility Act agreements, User fees. revocation of an advance ruling and Based on the supplementary provides for a delayed effective date of information set forth above and because 19 CFR Part 123 up to 90 days in some circumstances. In these regulations implement obligations Canada, Customs duties and a case where the delay is requested by of international agreements and inspection, Imports, Mexico, Reporting the party to whom the ruling letter was statutory requirements relating thereto, and recordkeeping requirements, Trade issued, the text, as set forth below, has pursuant to the provisions of the agreements. been modified to refer to reliance ‘‘in Regulatory Flexibility Act (5 U.S.C. 601 good faith’’ rather than to reliance that et seq.) it is certified that the regulations 19 CFR Part 134 is ‘‘reasonable’’. This change aligns the will not have a significant economic text on the standard set forth in Article impact on a substantial number of small Canada, Country of origin, Customs 509(8) of the NAFTA. entities. Accordingly, the regulations are duties and inspection, Labeling, not subject to the regulatory analysis or Marking, Mexico, Packaging and Conclusion other requirements of 5 U.S.C. 603 and containers, Trade agreements. Accordingly, based on the comments 604. 19 CFR Part 162 received and the analysis of those comments as set forth above, and based Paperwork Reduction Act Administrative practice and on the additional considerations The collection of information procedure, Customs duties and discussed above, Customs believes that requirements contained in these final inspection, Reporting and the interim regulations published in regulations have been reviewed and recordkeeping requirements, Trade T.D. 94–1 should be adopted as a final approved by the Office of Management agreements. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46361 19 CFR Part 174 2. Section 10.8 is amended by revising separate country of origin declaration the introductory text of paragraph (a) to shall not be required for such goods for Administrative practice and read as follows: NAFTA purposes, the following procedure, Customs duties and additional requirements shall apply for inspection, Reporting and § 10.8 Articles exported for repairs or purposes of this section: recordkeeping requirements, Trade alterations. (1) All commercial importations of agreements. (a) Except as otherwise provided for textile and apparel goods shall be 19 CFR Part 177 in this section and except in the case of accompanied by the appropriate goods covered by § 181.64 of this declaration; Administrative practice and chapter, the following documents shall (2) A declaration by each U.S., procedure, Courts, Judicial proceedings, be filed in connection with the entry of Canadian, and/or Mexican manufacturer Rulings, Trade agreements. articles which are returned after having or producer of the goods, or by the 19 CFR Part 178 been exported for repairs or alterations exporter of the goods if a declaration and which are claimed to be subject to cannot be obtained from the Administrative practice and duty only on the value of the repairs or manufacturer or producer, and, if there procedure, Exports, Imports, Reporting alterations performed abroad under are multiple manufacturers or and recordkeeping requirements. subheading 9802.00.40 or 9802.00.50, producers, a separate declaration by 19 CFR Part 181 Harmonized Tariff Schedule of the each manufacturer, producer or United States (HTSUS): exporter, shall be furnished by the Administrative practice and * * * * * importer. Packaging operations shall not procedure, Canada, Customs duties and 3. The last sentence of § 10.31(f) is be considered manufacture or inspection, Exports, Imports, Mexico, republished to read as follows: production for purposes of this Reporting and recordkeeping paragraph; and requirements, Trade agreements (North § 10.31 Entry; bond. (3) If the district director is unable to American Free-Trade Agreement). * * * * * determine the country of origin of the 19 CFR Part 191 (f) * * * In addition, notwithstanding goods because the information any other provision of this paragraph, in contained in a declaration is Canada, Commerce, Customs duties the case of professional equipment incomplete, the shipment to which that and inspection, Drawback, Mexico, necessary for carrying out the business declaration pertains shall not be entitled Reporting and recordkeeping activity, trade or profession of a to preferential tariff treatment or any requirements, Trade agreements. business person, equipment for the other benefit under the NAFTA for Amendments to the Regulations press or for sound or television which it would otherwise be eligible. broadcasting, cinematographic (b) Certificate of Eligibility. In Accordingly, the interim rule equipment, articles imported for sports connection with a claim for NAFTA amending Parts 10, 12, 24, 123, 134, purposes and articles intended for preferential tariff treatment involving 162, 174, 177, 178 and 191 (19 CFR display or demonstration, if brought non-originating textile and apparel Parts 10, 12, 24, 123, 134, 162, 174, 177, into the United States by a resident of goods subject to the tariff preference 178 and 191) and adding Part 181, Canada or Mexico and entered under level provisions of Appendix 6.B. to Customs Regulations (19 CFR Part 181), Chapter 98, Subchapter XIII, HTSUS, no Annex 300–B of the NAFTA and which was published at 58 FR 69460– bond or other security shall be required Additional U.S. Notes 3 through 6 to 69565 on December 30, 1993, and which if the entered article is a good Section XI, Harmonized Tariff Schedule was corrected at 59 FR 8852 on originating in Canada or Mexico within of the United States, the importer shall February 24, 1994, and at 59 FR 15047 the meaning of General Note 12, submit to Customs a Certificate of on March 31, 1994, and the interim rule HTSUS. Eligibility covering the goods. The amending Part 12, Customs Regulations * * * * * Certificate of Eligibility shall be (19 CFR Part 12), which was published properly completed and signed by an at 59 FR 31519–31521 on June 20, 1994, PART 12ÐSPECIAL CLASSES OF authorized official of the Canadian or are adopted as a final rule with certain MERCHANDISE Mexican government and shall be changes set forth below. The final texts, presented to Customs at the time the except for those amendments published 1. The authority citation for part 12 claim for preferential tariff treatment is in T.D. 94–1 which were set forth continues to read in part as follows: filed under § 181.21 of this chapter. within an amendatory instruction rather Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 Failure to timely submit the required than in full regulatory text format, are (General Note 20, Harmonized Tariff Certificate of Eligibility will result in a either republished below without Schedule of the United States (HTSUS)), denial of the claim. change or are set forth below with the 1624; amendments discussed above under * * * * * PART 24ÐCUSTOMS FINANCIAL AND SUPPLEMENTARY INFORMATION. 2. Section 12.132 is republished to ACCOUNTING PROCEDURE read as follows: PART 10ÐARTICLES CONDITIONALLY 1. The general authority citation for FREE, SUBJECT TO A REDUCED § 12.132 Textile and apparel goods under Part 24 is revised to read as follows: RATE, ETC. the North American Free Trade Agreement. Authority: 5 U.S.C. 301; 19 U.S.C. 58a–58c, (a) Country of origin declaration. The 66, 1202 (General Note 20, Harmonized Tariff 1. The general authority citation for provisions of § 12.130(f) of this part Schedule of the United States), 1624; 31 part 10 is revised to read as follows: regarding submission of a country of U.S.C. 9701. Authority: 19 U.S.C. 66, 1202 (General origin declaration shall apply to all * * * * * Note 20, Harmonized Tariff Schedule of the textile and apparel goods which are 2. In § 24.22, paragraph (g)(1), the United States), 1321, 1481, 1484, 1498, 1508, subject to the provisions of Annex 300– introductory text of paragraph 1623, 1624, 3314; B of the North American Free Trade (g)(2)(i)(A), and paragraph (g)(2)(iv) are * * * * * Agreement (NAFTA). Although a republished to read as follows: 46362 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations § 24.22 Fees for certain services. Authority: 19 U.S.C. 66, 1202 (General determining whether a good is a good of * * * * * Note 20, Harmonized Tariff Schedule of the a NAFTA country. United States (HTSUS)), 1431, 1433, 1624. (g) Fee for arrival of passengers (k) Conspicuous. ‘‘Conspicuous’’ aboard commercial vessels and * * * * * means capable of being easily seen with commercial aircraft. 2. The last sentence of § 123.0 is normal handling of the article or republished to read as follows: (1) Fee. Except as provided in container. 4. Section 134.22(d) is republished to paragraph (g)(2) of this section: § 123.0 Scope. read as follows: (i) For the period from January 1, 1994 * * * Regulations pertaining to the through September 30, 1997, a fee of treatment of goods from Canada or § 134.22 General rules for marking of $6.50 shall be collected and remitted to Mexico under the North American Free containers or holders. Customs for services provided in Trade Agreement are contained in part * * * * * connection with the arrival of each 181 of this chapter. (d) Usual containers—(1) ‘‘Usual passenger aboard a commercial vessel or container’’ defined. For purposes of this commercial aircraft from outside the PART 134ÐCOUNTRY OF ORIGIN subpart, a usual container means the customs territory of the United States; MARKING container in which a good will and ordinarily reach its ultimate purchaser. 1. The authority citation for part 134 (ii) Commencing on October 1, 1997, Containers which are not included in is revised to read as follows: a fee of $5 shall be collected and the price of the goods with which they remitted to Customs for services Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 are sold, or which impart the essential provided in connection with the arrival (General Note 20, Harmonized Tariff character to the whole, or which have of each passenger aboard a commercial Schedule of the United States), 1304, 1624. significant uses, or lasting value vessel or commercial aircraft from a 2. The last sentence of § 134.0 is independent of the contents, will place outside the United States. republished to read as follows: generally not be regarded as usual containers. However, the fact that a (2) * * * § 134.0 Scope. (i)(A) Except during the period from container is sturdy and capable of * * * Provisions regarding the review January 1, 1994 through September 30, repeated use with its contents does not and appeal rights of exporters and 1997, persons whose journey: preclude it from being considered a producers resulting from adverse North usual container so long as it is the type * * * * * American Free Trade Agreement of container in which its contents are (iv) Except during the period from marking decisions are contained in ordinarily sold. A usual container may January 1, 1994 through September 30, subpart J of part 181 of this chapter. be any type of container, including one 1997, persons departing from and 3. In § 134.1, the last sentence of which is specially shaped or fitted to returning to the United States without paragraph (d)(2) and paragraphs (g), (h), contain a specific good or set of goods having touched a foreign port or place; (i) and (j) are republished, and a new such as a camera case or an eyeglass * * * * * paragraph (k) is added, to read as case, or packing, storage and 3. Section 24.23(c)(3) is republished follows: transportation materials. (2) A good of a NAFTA country which to read as follows: § 134.1 Definitions. is a usual container. A good of a § 24.23 Fees for processing merchandise. * * * * * NAFTA country which is a usual * * * * * (d) * * * container, whether or not disposable (c) * * * (2) * * * With respect to a good of a and whether or not imported empty or (3) The ad valorem, surcharge, and NAFTA country, if the manufacturing filled, is not required to be marked with specific fees provided for under process does not result in one of the its own country of origin. If imported paragraphs (b)(1) and (b)(2)(i) of this changes prescribed in the NAFTA empty, the importer must be able to section shall not apply either to goods Marking Rules as effecting a change in provide satisfactory evidence to originating in Canada within the the article’s country of origin, the Customs at the time of importation that meaning of General Note 9, HTSUS, or consumer who purchases the article it will be used only as a usual container to goods originating in Canada within after processing will be regarded as the (that it is to be filled with goods after the meaning of General Note 12, ultimate purchaser. importation and that such container is HTSUS, where such goods qualify to be * * * * * of a type in which these goods marked as goods of Canada pursuant to (g) Good of a NAFTA country. A ordinarily reach the ultimate purchaser). Annex 311 of the North American Free ‘‘good of a NAFTA country’’ is an article * * * * * Trade Agreement and without regard to for which the country of origin is 5. In § 134.32, paragraphs (p) and (q) whether the goods are marked. Where Canada, Mexico or the United States as are republished to read as follows: originating goods as described in the determined under the NAFTA Marking preceding sentence are entered or Rules. § 134.32 General exceptions to marking requirements. released with other goods that are not (h) NAFTA. ‘‘NAFTA’’ means the originating goods, the ad valorem, North American Free Trade Agreement * * * * * surcharge, and specific fees shall apply entered into by the United States, (p) Goods of a NAFTA country which only to those goods which are not Canada and Mexico on December 17, are original works of art; and originating goods. 1992. (q) Goods of a NAFTA country which (i) NAFTA country. ‘‘NAFTA are provided for in subheading 6904.10 * * * * * country’’ means the territory of the or heading 8541 or 8542 of the PART 123ÐCUSTOMS RELATIONS United States, Canada or Mexico, as Harmonized Tariff Schedule of the WITH CANADA AND MEXICO defined in Annex 201.1 of the NAFTA. United States (HTSUS) (19 U.S.C. 1202). (j) NAFTA Marking Rules. The * * * * * 1. The authority citation for part 123 ‘‘NAFTA Marking Rules’’ are the rules 6. Section 134.35(b) is republished to continues to read in part as follows: promulgated for purposes of read as follows: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46363 § 134.35 Articles substantially changed by PART 174ÐPROTESTS by an entry shall be considered as a manufacture. single protest whether filed as a single * * * * * 1. The authority citation for Part 174 protest or filed as separate protests continues to read as follows: (b) Goods of a NAFTA country. A relating to the same category by one or good of a NAFTA country which is to Authority: 19 U.S.C. 66, 1514, 1515, 1624. more parties in interest or an authorized be processed in the United States in a 2. The last sentence of § 174.0 is agent. manner that would result in the good republished to read as follows: (b) NAFTA transactions. The following rules shall apply to a becoming a good of the United States § 174.0 Scope. under the NAFTA Marking Rules is consolidation of multiple protests excepted from marking. Unless the good ** * Provisions applicable to concerning a determination of origin is processed by the importer or on its Canadian and Mexican exporters and under subpart G of part 181 of this behalf, the outermost container of the producers regarding administrative chapter if one of the protests is filed by good shall be marked in accord with review and appeal of adverse marking or on behalf of an exporter or producer this part. decisions under the North American described in § 174.12(a)(5) of this part: Free Trade Agreement are contained in (1) If consolidation under paragraph 7. Section 134.45(a) is republished to part 181 of this chapter. (a) of this section is pursuant to specific read as follows: 3. Section 174.12(a)(5) is republished written requests for consolidation § 134.45 Approved markings of country to read as follows: received from all interested parties who name. § 174.12 Filing of protests. filed protests under this part, those interested parties shall be deemed to (a) Language. (1) Except as otherwise (a) * * * (5) With respect to a determination of have waived their rights to provided in paragraph (a)(2) of this confidentiality as regards business section, the markings required by this origin under subpart G of part 181 of this chapter, any exporter or producer of information within the meaning of part shall include the full English name § 181.121 of this chapter. In such cases, of the country of origin, unless another the merchandise subject to that determination, if the exporter or a separate notice of the decision will be marking to indicate the English name of issued to each interested party under the country of origin is specifically producer completed and signed a Certificate of Origin covering the this part but without regard to whether authorized by the Commissioner of the notice reflects confidential business Customs. Notice of acceptable markings merchandise as provided for in § 181.11(a) of this chapter; or information obtained from one but not other than the full English name of the all of those interested parties. country of origin shall be published in * * * * * (2) If consolidation under paragraph the Federal Register and the Customs 4. Section 174.12(e)(2) is revised to (a) of this section is done by the district Bulletin. read as follows: director in the absence of specific (2) A good of a NAFTA country may § 174.12 Filing of protests. written requests for consolidation from be marked with the name of the country * * * * * all interested parties who filed protests of origin in English, French or Spanish. (e) * * * under this part, no waiver of * * * * * (2) The date of the decision, involving confidentiality by those interested neither a liquidation nor reliquidation, parties shall be deemed to have taken PART 162ÐRECORDKEEPING, as to which the protest is made (e.g., the place. In such cases, a separate notice of INSPECTION, SEARCH, AND SEIZURE date of an exaction, the date of written the decision will be issued to each notice excluding merchandise from interested party and each such notice 1. The authority citation for part 162 entry or delivery under any provision of shall adhere to the principle of continues to read in part as follows: the Customs laws, the date of a refusal confidentiality set forth in § 181.121 of Authority: 5 U.S.C. 301; 19 U.S.C. 66, to reliquidate under section 520(c)(1) of this chapter. 1624. the Tariff Act of 1930, as amended, or PART 178ÐAPPROVAL OF * * * * * the date of written notice of a denial of a claim filed under section 520(d) of the INFORMATION COLLECTION 2. The last sentence of § 162.0 is Tariff Act of 1930, as amended); or REQUIREMENTS republished to read as follows: * * * * * 15. 1. The authority citation for part 178 § 162.0 Scope. Section 174.15 is is revised to read as follows: republished to read as ** * Additional provisions follows: Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 concerning records maintenance and U.S.C. 3501 et seq. examination applicable to U.S. § 174.15 Consolidation of protests filed by 2. Section 178.2 is amended by different parties. importers, exporters and producers adding new listings to the table in under the North American Free Trade (a) General. Subject to paragraph (b) numerical order to read as follows: Agreement are contained in part 181 of of this section, separate protests relating this chapter. to one category of merchandise covered § 178.2 Listing of OMB control numbers. 46364 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 19 CFR OMB con- section Description trol No. ***** § 12.132 ...... Country of origin declaration covering textile and apparel goods under the North 1515±0205 American Free Trade Agreement. ***** § 181.11 ...... Certificate of Origin for purposes of the North American Free Trade Agreement ...... 1515±0205 §§ 181.22 and 181.32 ...... Claim for preferential tariff treatment under the North American Free Trade Agree- 1515±0205 ment. §§ 181.47 and 181.53 ...... Claim for refund, waiver or reduction of duty under the drawback and duty deferral 1515±0205 provisions of the North American Free Trade Agreement. § 181.64 ...... Claim for duty-free or reduced-duty treatment on repaired or altered goods under the 1515±0205 North American Free Trade Agreement. § 181.72 ...... Submission of information in connection with origin verifications under the North 1515±0205 American Free Trade Agreement. § 181.82 ...... Statement accompanying corrected declaration or notification of incorrect certification 1515±0205 under the North American Free Trade Agreement. §§ 181.93±181.96 and 181.102 ...... Submission of information in connection with requests for issuance or review of ad- 1515±0205 vance rulings under the North American Free Trade Agreement. §§ 181.113, 181.115 and 181.116 ...... Submission of information in connection with the review and appeal of adverse mark- 1515±0205 ing decisions under the North American Free Trade Agreement. § 181.131 ...... Claim for preferential tariff treatment under the North American Free Trade Agree- 1515±0205 ment. ***** 1. Part 181 is revised to read as 181.48 Person entitled to receive drawback. 181.94 Nonconforming requests for advance follows: 181.49 Retention of records. rulings. 181.50 Liquidation and payment of 181.95 Oral discussion of issues. PART 181ÐNORTH AMERICAN FREE drawback claims. 181.96 Change in status of transaction. TRADE AGREEMENT 181.51 Prevention of improper payment of 181.97 Withdrawal of NAFTA advance claims. ruling requests. Sec. 181.52 Subsequent claims for preferential 181.98 Situations in which no NAFTA 181.0 Scope. tariff treatment. advance ruling may be issued. 181.53 Waiver or reduction of duty under 181.99 Issuance of NAFTA advance rulings Subpart AÐGeneral Provisions duty-deferral programs. or other advice. 181.1 Definitions. 181.54 Verification of claim for drawback, 181.100 Effect of NAFTA advance ruling waiver or reduction of duties. Subpart BÐExport Requirements letters; modification and revocation. 181.101 Publication of decisions. 181.11 Certificate of Origin. Subpart FÐCommercial Samples and Goods Returned After Repair or Alteration 181.102 Administrative and judicial review 181.12 Maintenance and availability of of advance rulings. records. 181.61 Applicability. 181.13 Failure to comply with 181.62 Commercial samples of negligible Subpart JÐReview and Appeal of Adverse requirements. value. Marking Decisions 181.63 [Reserved] Subpart CÐImport Requirements 181.111 Applicability. 181.64 Goods re-entered after repair or 181.112 Definitions. 181.21 Filing of claim for preferential tariff alteration in Canada or Mexico. 181.113 Request for Basis of Adverse treatment upon importation. Marking Decision. 181.22 Maintenance of records and Subpart GÐOrigin Verifications and Determinations 181.114 Customs response to request. submission of Certificate by importer. 181.115 Intervention in importer’s protest. 181.23 Effect of noncompliance; failure to 181.71 Denial of preferential tariff treatment 181.116 Petition regarding adverse marking provide documentation regarding dependent on origin verification and decision. transshipment. determination. 181.72 Verification scope and method. Subpart KÐConfidentiality of Business Subpart DÐPost-Importation Duty Refund 181.73 Notification of verification visit. Information Claims 181.74 Verification visit procedures. 181.121 Maintenance of confidentiality. 181.31 Right to make post-importation 181.75 Issuance of origin determination. 181.122 Disclosure to government claim and refund duties. 181.76 Application of origin authorities. 181.32 Filing procedures. determinations. 181.33 Customs processing procedures. Subpart LÐRules of Origin Subpart HÐPenalties Subpart EÐRestrictions on Drawback and 181.131 Rules of origin. 181.81 Applicability to NAFTA Duty-Deferral Programs transactions. Appendix to Part 181ÐRules of Origin 181.41 Applicability. 181.82 Exceptions to application of Regulations 181.42 Duties and fees not subject to penalties. Authority: 19 U.S.C. 66, 1202 (General drawback. Subpart IÐAdvance Ruling Procedures Note 20, Harmonized Tariff Schedule of the 181.43 Eligible goods subject to drawback. United States), 1624, 3314. 181.44 Calculation of drawback. 181.91 Applicability. 181.45 Goods eligible for full drawback. 181.92 Definitions and general NAFTA § 181.0 Scope. 181.46 Time and place for filing drawback advance ruling practice. claim. 181.93 Submission of advance ruling This part implements the duty 181.47 Completion of claim for drawback. requests. preference and related Customs Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46365 provisions applicable to imported goods (3) Fee or other charge in connection Agreement Implementation Act (107 under the North American Free Trade with importation commensurate with Stat. 2057). Agreement (the NAFTA) entered into on the cost of services rendered; (o) NAFTA drawback. NAFTA December 17, 1992, and under the North (4) Premium offered or collected on drawback means any drawback, waiver American Free Trade Agreement an imported good arising out of any or reduction of U.S. customs duty Implementation Act (107 Stat. 2057) tendering system in respect of the provided for in subpart E of this part. (the Act). Except as otherwise specified administration of quantitative import (p) Net cost of a good. Net cost of a in this part, the procedures and other restrictions, tariff rate quotas or tariff good means the ‘‘net cost of a good’’ as requirements set forth in this part are in preference levels; and defined in the appendix to this part. addition to the Customs procedures and (5) Fee applied pursuant to section 22 (q) Originating. Originating, when requirements of general application of the U.S. Agricultural Adjustment Act, used with regard to a good or a material, contained elsewhere in this chapter. subject to the provisions of Chapter means a good or material which Additional provisions implementing Seven of the NAFTA. qualifies as originating in the United certain aspects of the NAFTA and the (e) Determination of origin. States, Canada and/or Mexico under the Act are contained in parts 10, 12, 24, Determination of origin means a rules set forth in General Note 12, 134 and 174 of this chapter. determination as to whether a good HTSUS, and in the appendix to this qualifies as a good originating in the part. (r) Person. Person means a natural Subpart AÐGeneral Provisions United States, Canada and/or Mexico person or an enterprise. § 181.1 Definitions. under the rules set forth in General Note (s) Preferential tariff treatment. 12, HTSUS, and in the appendix to this As used in this part, the following Preferential tariff treatment means the part. terms shall have the meanings indicated duty rate applicable to an originating (f) Exporter. Exporter means an unless either the context in which they good or to a good to which Appendix exporter located, and required under are used requires a different meaning or 6.B. to Annex 300–B of the NAFTA this part to maintain records regarding a different definition is prescribed for a applies. exportations of a good, in the United particular subpart, section or other (t) Producer. Producer means a States, Canada or Mexico. portion of this part: producer as defined in the appendix to (a) Canada. Canada, when used in a (g) Generally Accepted Accounting this part. geographical rather than governmental Principles. Generally Accepted (u) Production. Production means context, means the territory of Canada Accounting Principles means the production as defined in the appendix as defined in Annex 201.1 of the recognized consensus or substantial to this part. NAFTA. authoritative support in the United (v) Transaction value. Transaction (b) Commercial importation. States, Canada or Mexico with respect to value means transaction value as Commercial importation means the the recording of revenues, expenses, defined in the appendix to this part. importation of a good into the United costs, assets and liabilities, the (w) United States. United States, States, Canada or Mexico for the disclosure of information and the when used in a geographical rather than purpose of sale, or any commercial, preparation of financial statements. governmental context, means the industrial or other like use. Generally Accepted Accounting territory of the United States as defined (c) Customs administration. Customs Principles under this definition may in Annex 201.1 of the NAFTA. (x) Used. Used means used as defined administration means the competent encompass broad guidelines of general in the appendix to this part. authority that is responsible under the application as well as detailed standards, practices and procedures. (y) Value. Value means the value of a law of the United States, Canada or good or material for purposes of Mexico for the administration of its (h) HTSUS. HTSUS means the Harmonized Tariff Schedule of the calculating customs duties or for customs laws and regulations. purposes of applying the provisions of (d) Customs duty. Customs duty United States. the appendix to this part. means any customs or import duty and (i) Importer. Importer means an a charge of any kind imposed in importer located, and required under Subpart BÐExport Requirements connection with the importation of a this part to maintain records regarding good, including any form of surtax or importations of a good, in the United § 181.11 Certificate of Origin. surcharge in connection with such States, Canada or Mexico. (a) General. A Certificate of Origin importation, other than any: (j) Intermediate material. Intermediate shall be employed to certify that a good (1) Charge equivalent to an internal material means an ‘‘intermediate being exported either from the United tax imposed consistently with Article material’’ as defined in the appendix to States into Canada or Mexico or from III:2 of the General Agreement on Tariffs this part. Canada or Mexico into the United States and Trade, or any equivalent provision (k) Marking Rules. Marking Rules qualifies as an originating good for of a successor agreement to which the means the ‘‘NAFTA Marking Rules’’ as purposes of preferential tariff treatment United States, Canada and Mexico are defined in § 134.1(j) of this chapter. under the NAFTA. party, in respect of like, directly (l) Measure. Measure means any law, (b) Preparation of Certificate in the competitive or substitutable goods of the regulation, procedure, requirement or United States. An exporter in the United United States, Canada or Mexico, or in practice. States who completes and signs a respect of goods from which the (m) Mexico. Mexico, when used in a Certificate of Origin for the purpose set imported good has been manufactured geographical rather than governmental forth in paragraph (a) of this section or produced in whole or in part; context, means the territory of Mexico shall use Customs Form 434 or such (2) Antidumping or countervailing as defined in Annex 201.1 of the other medium or format as approved by duty that is applied pursuant to the NAFTA. the Canadian or Mexican customs domestic law of the United States, (n) NAFTA. NAFTA means the North administration for that purpose. Where Canada or Mexico and that is not American Free Trade Agreement the U.S. exporter is not the producer of applied inconsistently with Chapter approved by the Congress under section the good, that exporter may complete Nineteen of the NAFTA; 101(a) of the North American Free Trade and sign a Certificate on the basis of: 46366 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (1) Its knowledge of whether the good compliance with the provisions of this the symbol ‘‘CA’’ for a good of Canada, qualifies as an originating good; part, the records required to be or the symbol ‘‘MX’’ for a good of (2) Its reasonable reliance on the maintained under this section shall be Mexico, as a prefix to the subheading of producer’s written representation that made available for examination and the HTSUS under which each qualifying the good qualifies as an originating inspection by the port director or other good is classified. Except as otherwise good; or appropriate Customs officer in the same provided in § 181.22 of this part and (3) A completed and signed Certificate manner as provided in § 162.1d of this except in the case of a good to which for the good voluntarily provided to the chapter in the case of U.S. importer Appendix 6.B. to Annex 300–B of the exporter by the producer. records. NAFTA applies (see, however, § 12.132 (c) Submission of Certificate to (2) To the Canadian or Mexican of this chapter), the declaration shall be Customs. An exporter in the United customs administration. If a U.S. based on a complete and properly States, and a producer in the United exporter or producer receives executed original Certificate of Origin, States who has voluntarily provided a notification of, and consents to, an or copy thereof, which is in the copy of a Certificate of Origin to that origin verification visit by the Canadian possession of the importer and which exporter pursuant to paragraph (b)(3) of or Mexican customs administration covers the good being imported. this section, shall provide a copy of the under Article 506 of the NAFTA (see (b) Corrected declaration. If, after Certificate to Customs upon request. § 181.74(e) of this part), such consent making the declaration required under (d) Notification of errors in Certificate. shall constitute agreement by the U.S. paragraph (a) of this section or under An exporter or producer in the United exporter or producer to make available § 181.32(b)(2) of this part, the U.S. States who has completed and signed a to an officer of that customs importer has reason to believe that a Certificate of Origin, and who has administration all records required to be Certificate of Origin on which a reason to believe that the Certificate maintained under this section and to declaration was based contains contains information that is not correct, provide facilities for the inspection information that is not correct, the shall within 30 calendar days after the thereof. If, during the course of an origin importer shall within 30 calendar days date of discovery of the error notify in verification of a U.S. producer, the after the date of discovery of the error writing all persons to whom the Canadian or Mexican customs make a corrected declaration and pay Certificate was given by the exporter or administration finds that the U.S. any duties that may be due. A corrected producer of any change that could affect producer has failed to maintain its declaration shall be effected by the accuracy or validity of the records in accordance with the submission of a letter or other written Certificate. Generally Accepted Accounting statement to the Customs office where the original declaration was filed. § 181.12 Maintenance and availability of Principles applied in the United States, records. that customs administration will so § 181.22 Maintenance of records and inform the U.S. producer in writing and (a) Maintenance of records—(1) submission of Certificate by importer. will give the U.S. producer 60 calendar General. An exporter or producer in the (a) Maintenance of records. Each days to conform the records to those United States who completes and signs importer claiming preferential tariff Principles. If a U.S. exporter or producer a Certificate of Origin shall maintain in treatment for a good imported into the fails to maintain records or make the United States, for five years after the United States shall maintain in the records available to the Canadian or date on which the Certificate was United States, for five years after the Mexican customs administration in signed, all records relating to the origin date of entry of the good, all accordance with the provisions of this of a good for which preferential tariff documentation relating to the section, or if a U.S. producer fails to treatment may be claimed in Canada or importation of the good. Such conform its records to Generally Mexico, including records associated documentation shall include a copy of Accepted Accounting Principles as with: the Certificate of Origin and any other (i) The purchase of, cost of, value of, provided in this paragraph, the relevant records as specified in and payment for, the good that is Canadian or Mexican customs § 162.1a(a) of this chapter. exported from the United States; administration may deny preferential (b) Submission of Certificate. An (ii) The purchase of, cost of, value of, tariff treatment to the good that is the importer who claims preferential tariff and payment for, all materials, subject of the verification visit. treatment on a good under § 181.21 of including indirect materials, used in the § 181.13 Failure to comply with this part shall provide, at the request of production of the good that is exported requirements. the port director, a copy of each from the United States; and The port director may apply such Certificate of Origin pertaining to the (iii) The production of the good in the measures as the circumstances may good which is in the possession of the form in which the good is exported from warrant where an exporter or a producer importer. A Certificate of Origin the United States. in the United States fails to comply with submitted to Customs under this (2) Method of maintenance. The any requirement of this part. paragraph or under § 181.32(b)(3) of this records referred to in paragraph (a) of part: this section shall be maintained in Subpart CÐImport Requirements (1) Shall be on Customs Form 434, accordance with the Generally Accepted including privately-printed copies Accounting Principles applied in the § 181.21 Filing of claim for preferential thereof, or on such other form as United States and may be maintained in tariff treatment upon importation. approved by the Canadian or Mexican hard-copy form, on microfilm or (a) Declaration. In connection with a customs administration, or, as an microfiche or in automated record claim for preferential tariff treatment for alternative to Customs Form 434 or such storage devices (for example, magnetic a good under the NAFTA, the U.S. other approved form, in an approved discs and tapes) if associated computer importer shall make a written computerized format or such other programs are available to facilitate declaration that the good qualifies for medium or format as is approved by the retrieval of the data in a usable form. such treatment. The written declaration Office of Field Operations, U.S. Customs (b) Availability of records—(1) To may be made by including on the entry Service, Washington, DC 20229. An Customs. For purposes of determining summary, or equivalent documentation, alternative format must contain the Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46367 same information and certification set a Certificate of Origin in his possession requirement under this part, including forth on Customs Form 434; for: submission of a Certificate of Origin (2) Shall be signed by the exporter or (i) An importation of a good for which under § 181.22(b) or submission of a by the exporter’s authorized agent the port director has in writing waived corrected Certificate under § 181.22(c), having knowledge of the relevant facts; the requirement for a Certificate of the port director may deny preferential (3) Shall be completed either in the Origin because the port director is tariff treatment to the imported good. English language or in the language of otherwise satisfied that the good (b) Failure to provide documentation the country from which the good is qualifies for preferential tariff treatment regarding transshipment. Where the exported. If the Certificate is completed under the NAFTA; requirements for preferential tariff in a language other than English, the (ii) A non-commercial importation of treatment set forth elsewhere in this part importer shall also provide to the port a good; or are met, the port director nevertheless director, upon request, a written English (iii) A commercial importation of a may deny preferential tariff treatment to translation thereof; good whose value does not exceed an originating good if the good is (4) Shall be accepted by Customs for US$2,500, provided that, unless waived shipped through or transshipped in a four years after the date on which the by the port director, the producer, country other than the United States, Certificate was signed by the exporter or exporter, importer or authorized agent Canada or Mexico and the importer of producer; and includes on, or attaches to, the invoice the good does not provide, at the request (5) May be applicable to: or other document accompanying the of the port director, copies of the (i) A single importation of a good into shipment the following signed customs control documents that the United States, including a single statement: indicate to the satisfaction of the port shipment that results in the filing of one director that the good remained under or more entries and a series of I hereby certify that the good covered by this shipment qualifies as an originating good customs control while in such other shipments that results in the filing of for purposes of preferential tariff treatment country. one entry; or under the NAFTA. (ii) Multiple importations of identical Check One: Subpart DÐPost-Importation Duty goods into the United States that occur ( ) Producer Refund Claims within a specified period, not exceeding ( ) Exporter 12 months, set out therein by the ( ) Importer § 181.31 Right to make post-importation exporter or producer. ( ) Agent claim and refund duties. (c) Acceptance of Certificate. A lllllllllllllllllllll Notwithstanding any other available Certificate of Origin shall be accepted by Name remedy, including the right to amend an the port director as valid for the purpose lllllllllllllllllllll entry so long as liquidation of the entry set forth in § 181.11(a) of this part, Title has not become final, where a good provided that the Certificate is lllllllllllllllllllll would have qualified as an originating completed, signed and dated in Address good when it was imported into the accordance with the requirements of lllllllllllllllllllll United States but no claim for paragraph (b) of this section. If the port Signature and Date preferential tariff treatment on that director determines that a Certificate is (2) Exception. If the port director originating good was made at that time illegible or defective or has not been determines that an importation under § 181.21(a) of this part, the completed in accordance with described in paragraph (d)(1) of this importer of that good may file a claim paragraph (b) of this section, the section forms part of a series of for a refund of any excess duties at any importer shall be given a period of not importations that may reasonably be time within one year after the date of less than five working days to submit a considered to have been undertaken or importation of the good in accordance corrected Certificate. Acceptance of a arranged for the purpose of avoiding a with the procedures set forth in § 181.32 Certificate will result in the granting of certification requirement set forth in of this part. Subject to the provisions of preferential tariff treatment to the this part, the port director shall notify § 181.23 of this part, Customs may imported good unless, in connection the importer in writing that for that refund any excess duties by liquidation with an origin verification initiated importation the importer must have in or reliquidation of the entry covering under subpart G of this part or based on his possession a valid Certificate of the good in accordance with § 181.33(c) a pattern of conduct within the meaning Origin to support the claim for of this part. of § 181.76(c) of this part, the port preferential tariff treatment. The § 181.32 Filing procedures. director determines that the imported importer shall have 30 calendar days good does not qualify as an originating from the date of the written notice to (a) Place of filing. A post-importation good or should not be accorded such obtain a valid Certificate, and a failure claim for a refund under § 181.31 of this treatment for any other reason as to timely obtain the Certificate will part shall be filed with the director of specifically provided for elsewhere in result in denial of the claim for the port at which the entry covering the this part. A Certificate shall not be preferential tariff treatment. For good was filed. (b) Contents of claim. A post- accepted in connection with subsequent purposes of paragraph (d)(2) of this importation claim for a refund shall be importations during a period referred to section, a ‘‘series of importations’’ filed by presentation of the following: in paragraph (b)(5)(ii) of this section if, means two or more entries covering (1) A written declaration stating that based on an origin verification under goods arriving on the same day from the the good qualified as an originating subpart G of this part, the port director same exporter and consigned to the good at the time of importation and determined that a previously imported same person. identical good covered by the Certificate setting forth the number and date of the did not qualify as an originating good. § 181.23 Effect of noncompliance; failure entry covering the good; (d) Certificate not required—(1) to provide documentation regarding (2) Subject to § 181.22(d) of this part, General. Except as otherwise provided transshipment. a copy of each Certificate of Origin (see in paragraph (d)(2) of this section, an (a) Effect of noncompliance. If the § 181.11 of this part) pertaining to the importer shall not be required to have importer fails to comply with any good; 46368 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (3) A written statement indicating refund filed under this subpart should otherwise to be reliquidated based on whether or not the importer of the good be allowed and the entry covering the administrative review of a protest or provided a copy of the entry summary good has been liquidated, whether or petition for reliquidation or as a result or equivalent documentation to any not the liquidation has become final, the of judicial review, such reliquidation other person. If such documentation entry must be reliquidated in order to may include denial of the claim filed was so provided, the statement shall effect a refund of duties pursuant to this under this subpart. In either case, the identify each recipient by name, subpart. If the entry is otherwise to be port director shall give written notice of Customs identification number and reliquidated based on administrative the denial and the reason therefor to the address and shall specify the date on review of a protest or petition for importer and, in the case of a denial on which the documentation was provided; reliquidation or as a result of judicial the merits, to any person who (4) A written statement indicating review, the port director shall completed and signed a Certificate of whether or not the importer of the good reliquidate the entry taking into account Origin relating to the good. Each notice is aware of any claim for refund, waiver the claim for refund under this subpart. of denial given to a person who or reduction of duties relating to the (3) Information to be provided to completed and signed a Certificate of good within the meaning of Article 303 Canada or Mexico. If any information is Origin shall also include a statement of the NAFTA (see subpart E of this provided to Customs pursuant to regarding the right to file a protest part). If the importer is aware of any § 181.32(b) (4) or (5) of this part, that against the denial under part 174 of this such claim, the statement shall identify information, together with notice of the chapter. each claim by number and date and allowance of the claim and the amount shall identify the person who made the of duty refunded pursuant to this Subpart EÐRestrictions on Drawback claim by name, Customs identification subpart, shall be provided by the port and Duty-Deferral Programs number and address; and director to the customs administration (5) A written statement indicating of the country from which the good was § 181.41 Applicability. whether or not any person has filed a exported. This subpart sets forth the provisions protest or a petition or request for (d) Denial of claim—(1) General. The regarding drawback claims and duty- reliquidation relating to the good under port director may deny a claim for a deferral programs under Article 303 of any provision of law, and if any such refund filed under this subpart if the the NAFTA and applies to any good that protest or petition or request for claim was not filed timely, if the is a ‘‘good subject to NAFTA drawback’’ reliquidation has been filed, the importer has not complied with the within the meaning of 19 U.S.C. 3333. statement shall identify the protest, requirements of this subpart, if the Except in the case of § 181.42(d), the petition or request by number and date. Certificate of Origin submitted under provisions of this subpart apply to § 181.32(b)(3) of this part cannot be goods which are imported into the § 181.33 Customs processing procedures. accepted as valid (see § 181.22(c) of this United States and then subsequently (a) Status determination. After receipt part), or if, following initiation of an exported from the United States to of a post-importation claim under origin verification under § 181.72(a) of Canada on or after January 1, 1996, or § 181.32 of this part, the port director this part, the port director determines to Mexico on or after January 1, 2001. shall determine whether the entry either that the imported good did not The requirements and procedures set covering the good has been liquidated qualify as an originating good at the forth in this subpart for NAFTA and, if liquidation has taken place, time of importation or that a basis exists drawback are in addition to the general whether the liquidation has become upon which preferential tariff treatment definitions, requirements and final. may be denied under § 181.72(d), procedures for all drawback claims set (b) Pending protest, petition or request § 181.74(c) or § 181.76(c) of this part. forth in part 191 of this chapter, unless for reliquidation or judicial review. If (2) Unliquidated entry. If the port otherwise specifically provided in this the port director determines that any director determines that a claim for a subpart. Also, the requirements and protest or any petition or request for refund filed under this subpart should procedures set forth in this subpart for reliquidation relating to the good has be denied and the entry covering the NAFTA duty-deferral programs are in not been finally decided, the port good has not been liquidated, the port addition to the requirements and director shall suspend action on the director shall deny the claim in procedures for manipulation, claim filed under this subpart until the connection with the liquidation of the manufacturing and smelting and decision on the protest, petition or entry, and written notice of the denial refining warehouses contained in part request becomes final. If a summons and the reason therefor shall be given to 19 and part 144 of this chapter, for involving the tariff classification or the importer and, in the case of a denial foreign trade zones under part 146 of dutiability of the good is filed in the on the merits, to any person who this chapter, and for temporary Court of International Trade, the port completed and signed a Certificate of importations under bond contained in director shall suspend action on the Origin relating to the good. Each notice part 10 of this chapter. claim filed under this subpart until of denial given to a person who judicial review has been completed. completed and signed a Certificate of § 181.42 Duties and fees not subject to (c) Allowance of claim.—(1) Origin shall also include a statement drawback. Unliquidated entry. If the port director regarding the right to file a protest The following duties or fees which determines that a claim for a refund against the denial under part 174 of this may be applicable to a good entered for filed under this subpart should be chapter. consumption in the Customs territory of allowed and the entry covering the good (3) Liquidated entry. If the port the United States are not subject to has not been liquidated, the port director determines that a claim for a drawback under this subpart: director shall take into account the refund filed under this subpart should (a) Antidumping and countervailing claim for refund under this subpart in be denied and the entry covering the duties; connection with the liquidation of the good has been liquidated, whether or (b) A premium offered or collected on entry. not the liquidation has become final, the a good with respect to quantitative (2) Liquidated entry. If the port claim may be denied without import restrictions, tariff rate quotas or director determines that a claim for a reliquidation of the entry. If the entry is tariff preference levels; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46369 (c) Fees applied under section 22 of There is no entitlement to drawback on the quality’’ used in § 1313(b) (see the U.S. Agricultural Adjustment Act; export of Product Y to Canada because zero § 191.2(m) of this chapter) shall have the and is the lesser amount when compared to the same meaning as the term ‘‘identical or (d) Customs duties paid or owed $1.00 in duty attributable to Product Y as a result of the separation of Chemical X into similar good’’ used in Article 303 of the under unused merchandise substitution Products Y and Z. There would be NAFTA except that there shall be no drawback. There shall be no payment of entitlement to drawback on the export to requirement that the good be such drawback under 19 U.S.C. Mexico, consisting of the $1.00 duty manufactured in the same country. 1313(j)(2) on goods exported to Canada attributable to Product Z, because that Example 1. Upon importation of Product X amount is the lesser amount when comparing or Mexico on or after January 1, 1994. from Japan to the United States, Company A the duty paid to the United States and the paid $5.00 in duties. Company A substituted § 181.43 Eligible goods subject to US$ equivalent duty paid to Mexico. drawback. a same kind and quality domestic Product X (c) Direct identification for the Japanese Product X in its production Except as otherwise provided in this manufacturing drawback under 19 of Product Y under its 19 U.S.C. 1313(b) subpart, drawback is authorized for an U.S.C. 1313(a). Upon presentation of the drawback contract. Company A sold Product imported good that is entered for NAFTA drawback claim under 19 Y to Company B which subsequently consumption and is: U.S.C. 1313(a), in which the amount of exported it to Canada. On the importation of (a) Subsequently exported to Canada drawback payable is based on the lesser Product Y by Company B, Company B paid the equivalent of US$2.00 in duties assessed or Mexico (see 19 U.S.C. 1313(j)(1)); amount of the customs duties paid on (b) Used as a material in the by Revenue Canada and waived its right to the good either to the United States or drawback to Company A. Company A is production of another good that is to Canada or Mexico, the amount of subsequently exported to Canada or entitled to obtain drawback under 19 U.S.C. drawback refunded shall not exceed 99 1313(b) in the United States in the amount Mexico (see 19 U.S.C. 1313(a)); or percent of the duty paid on such (c) Substituted by a good of the same of $1.98 (or 99 percent of the US$2.00 imported merchandise into the United equivalent Company B paid in duty to kind and quality as defined in States. Canada) since that $2.00 was the lesser of the § 181.44(c) of this subpart and used as total amount of customs duties paid on the a material in the production of another Example 1. Upon the importation of product to either Canada or the United Product X to the United States from Japan, good that is subsequently exported to States. Company A paid $2.00 in duties. Company Canada or Mexico (see 19 U.S.C. A manufactured the imported Product X into Example 2. Same facts as above example, 1313(b)). Product Y, and subsequently exported it to but Company B paid the equivalent of US$5.00 to Revenue Canada. Company A is § 181.44 Calculation of drawback. Mexico. Mexico assessed the equivalent of US$11.00 in duties upon importation of entitled to obtain $4.95 in drawback (a (a) General. Except in the case of Product Y. Upon presenting a drawback refund of 99 percent of $5.00 paid to the goods specified in § 181.45 of this part, claim in the United States, in accordance United States). Since the same amount of drawback of the duties previously paid with 19 U.S.C. 1313(a), Company A would be duty was assessed by each country, drawback upon importation of a good into the entitled to a refund of 99 percent of the is allowable because the drawback paid does United States may be granted by the $2.00, or $1.98. The $2.00 paid by Company not exceed the lesser amount paid. United States, upon presentation of a A (less 1 percent) on the importation of Product X into the United States is a lesser (e) Meats cured with imported salt. NAFTA drawback claim under this amount of duties than the total amount of Meats, whether packed or smoked, subpart, on the lower amount of: customs duties paid to Mexico (the which have been cured with imported (1) The total duties paid or owed on equivalent of US$11.00) on Product Y. salt may be eligible for drawback in the good in the United States; or Example 2. Upon the importation of aggregate amounts of not less than $100 (2) The total amount of duties paid on Product X into the United States from Hong in duties paid on the imported salt upon the exported good upon subsequent Kong, Company A entered Product X and exportation of the meats to Canada or importation into Canada or Mexico. paid $5.00 in duties. Company A Mexico (see 19 U.S.C. 1313(f)). (b) Individual relative value and duty manufactured Product X into Product Y, sold comparison principle. For purposes of it to Company B in Mexico and subsequently Example. Company Z produced Virginia this section, relative value shall be exported it to Mexico. Company A reserved smoked ham on its Smithfield, Virginia farm, determined, and the comparison its right to drawback. Upon Product Y’s using 4,000 pounds of imported salt in curing the meat. The salt was imported from an between the duties referred to in importation, Company B was assessed a free rate of duty. Company A’s claim for HTSUS Column 2 country, with a duty of paragraph (a)(1) of this section and the drawback will be denied because Company A $200. Upon exportation of the hams to duties referred to in paragraph (a)(2) of is entitled to zero drawback for the reason Mexico, Company Z pays the equivalent of this section shall be made, separately that, as between the duty paid in the United US$250.00 in duties to Mexico. Company Z with reference to each individual States and the duty paid in Mexico, the duty is entitled to drawback of the full 100 percent exported good, including where two in Mexico was zero. of the $200.00 in duties it paid on the components or materials are used to (d) Substitution manufacturing importation of the salt into the United States because that $200.00 is a lesser amount than produce one exported good or one drawback under 19 U.S.C. 1313(b). component or material is divided among the total amount of customs duties paid to Upon presentation of a NAFTA Mexico on the exported meat. multiple exported goods. drawback claim under 19 U.S.C. Example. Upon importation of Chemical X 1313(b), on which the amount of (f) Jet aircraft engines. A foreign-built into the United States, Company A entered drawback payable is based on the lesser jet aircraft engine that has been Chemical X and paid $2.00 in duties. amount of the customs duties paid on overhauled, repaired, rebuilt, or Company A processed Chemical X into the good either to the United States or reconditioned in the United States with Products Y and Z, each having the same to Canada or Mexico, the amount of the use of imported merchandise, relative value; that is, $1.00 in duty is drawback is the same as that which including parts, may be eligible for attributable to Product Y and $1.00 in duty is attributable to Product Z. Company A would have been allowed had the drawback of duties paid on the exported Product Y to Canada and Canada substituted merchandise used in imported merchandise in aggregate assessed a free rate of duty. Company A manufacture been itself imported. For amounts of not less than $100 upon exported Product Z to Mexico and Mexico purposes of drawback under this exportation of the engine to Canada or assessed the equivalent of US$2.00 in duty. subpart, the term ‘‘same kind and Mexico (19 U.S.C. 1313(h)). 46370 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Example. A Swedish-made jet aircraft During Company A’s manufacturing process, Canada or Mexico by reason of failure engine is repaired in the United States using Company A substitutes a German good of the of the good to conform to sample or imported parts from Korea on which $160.00 same kind and quality (on which duty was specification or by reason of shipment in duties have been paid by Company W. The paid at a 2.5 percent rate) in the production of the good without the consent of the engine is subsequently exported to Canada by of another good that is subsequently exported Company W and Company W pays the to Canada. Company A may designate the consignee is eligible for drawback under equivalent of US$260.00 in duties to Canada. dutiable Canadian entry and claim full 19 U.S.C. 1313(c) without regard to the Upon showing the country in which the drawback (99 percent) on the 3 percent duty limitation on drawback set forth in engine was manufactured and a description paid under 19 U.S.C. 1313(b). (Note: NAFTA § 181.44 of this part. Such a good must of the processing performed thereon in the originating goods will continue to receive full be returned to Customs custody for United States on Customs Form 7575–A, drawback as they cross NAFTA borders for exportation under Customs supervision appropriately modified, Company W is successive stages of production until NAFTA within three years after the release from entitled to the full refund of the duties paid tariffs are fully phased out.) to the United States since that $160.00 was Customs custody. a lesser amount than the duties paid on the (b) Claims under 19 U.S.C 1313(j)(1) Example. X orders, after seeing a sample in engine to Canada. for goods in same condition. A good the ABC Company’s catalog, a certain imported into the United States and (g) Unused goods under 19 U.S.C. quantity of 2-by-4 lumber from ABC subsequently exported to Canada or Company located in Honduras. ABC 1313(j)(1) that have changed in Mexico in the same condition is eligible Company, having run out of the specific condition. An imported good that is for drawback under 19 U.S.C. 1313(j)(1) lumber, ships instead a different kind of unused in the United States under 19 without regard to the limitation on lumber. X rejects the lumber because it did U.S.C. 1313(j)(1) and that is shipped to drawback set forth in § 181.44 of this not conform to the sample and is asked to Canada or Mexico not in the same send it to a customer of ABC in Canada. X part. condition within the meaning of exports it within 90 days of its release from § 181.45(b)(1) may be eligible for Example. X imports a desk into the United Customs custody. X may recover 99 percent drawback under this section, except States from England and pays $25.00 in duty. of the $500 duties it paid to U.S. Customs when the shipment to Canada or Mexico X immediately exports the desk to Z in upon the exportation of the lumber, or does not constitute an exportation under Mexico and Z pays the equivalent of $495.00. US$10.00 in Mexican duties. X can obtain a 19 U.S.C. 1313(j)(4). refund of 99 percent of the $25.00 paid upon (d) Certain goods exported to Canada. Example. Upon importation of Product X importation of the desk into the United Goods identified in Annex 303.6 of the from Spain to the United States, the U.S. States. NAFTA and in sections 203(a) (7) and (8) of the North American Free Trade importer pays $10.00 in duties. While in the (1) Same condition defined. For original package in the importer’s warehouse, Agreement Implementation Act, if purposes of this subpart, a reference to Product X becomes damaged. A Canadian exported to Canada, are eligible for a good in the ‘‘same condition’’ includes purchaser buys Product X and imports it into drawback without regard to the a good that has been subjected to any of Canada and pays the equivalent of US$5.00 limitation on drawback set forth in the following operations provided that in duties assessed by Revenue Canada. The § 181.44 of this part. Canadian purchaser who exported Product X no such operation materially alters the from the United States to Canada and who characteristics of the good: § 181.46 Time and place for filing otherwise qualifies for drawback is entitled (i) Mere dilution with water or drawback claim. to drawback under 19 U.S.C. 1313(j)(1) in the another substance; (a) Time of filing. A drawback claim amount of $4.95 (99 percent of the US$5.00 (ii) Cleaning, including removal of equivalent in duties paid to Canada). under this subpart shall be filed or rust, grease, paint or other coatings; applied for, as applicable, within 3 Eligibility for full drawback of the $10.00 in (iii) Application of preservative, U.S. duties under § 181.45(b) would be years after the date of exportation of the including lubricants, protective precluded because Product X, although goods on which drawback is claimed. unused, was not exported to Canada in the encapsulation, or preservation paint; (iv) Trimming, filing, slitting or No extension will be granted unless it same condition as when imported into the is established that a Customs officer was United States within the meaning of cutting; § 181.45(b)(1). (v) Putting up in measured doses, or responsible for the untimely filing. packing, repacking, packaging or Drawback shall be allowed only if the § 181.45 Goods eligible for full drawback. repackaging; or completed good is exported within 5 (a) Goods originating in Canada or (vi) Testing, marking, labelling, years after importation of the Mexico. A Canadian or Mexican sorting or grading. merchandise identified or designated to originating good that is dutiable and is (2) Commingling of fungible goods— support the claim. A good subject to a imported into the United States is (i) General. Commingling of fungible claim for same condition drawback eligible for drawback without regard to goods in inventory, such as parts, is must be exported before the close of the the limitation on drawback set forth in permissible (see § 191.141(e) of this 3-year period beginning on the date of § 181.44 of this part if that originating chapter), provided that the entries for importation of the good into the United good is: designation for same condition States. (1) Subsequently exported to Canada drawback are identified on the basis of (b) Place of filing. A drawback claim or Mexico; an approved inventory method set forth must be filed at the port(s) where the (2) Used as a material in the in the appendix to this part. manufacturing drawback contract is on production of another good that is (ii) Exception. Agricultural goods file, whether a general rate or specific subsequently exported to Canada or imported from Mexico may not be rate, but exportation need not occur Mexico; or commingled with fungible agricultural from that port. To facilitate expedited (3) Substituted by a good of the same goods in the United States for purposes processing of claims, claimants should kind and quality and used as a material of same condition drawback under this file same condition drawback claims in in the production of another good that subpart. the port where the examination would is subsequently exported to Canada or (c) Goods not conforming to sample or take place (see § 191.141(b)(3) (ii) and Mexico. specifications or shipped without (iii) of this chapter). Customs must be Example. Company A imports a dutiable (3 consent of consignee under 19 U.S.C. notified at least 2 working days in percent rate) Canadian originating good. 1313(c). An imported good exported to advance of the intended date of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46371 exportation in order to have the domestic, duty-paid or duty-free (E) Customs Form 7512, if applicable. opportunity to examine the goods. merchandise, and including the tariff This is required for merchandise which classification number of the imported is examined at one port but exported § 181.47 Completion of claim for through border points outside of that drawback. merchandise; (B) Customs Form 7501 or the import port. Such goods must travel in bond (a) General. A claim for drawback entry number; from the location where they were shall be granted, upon the submission of (C) Exporter’s summary procedure, if examined to the point of the border appropriate documentation to applicable. For purposes of this subpart, crossing (exportation). If examination is substantiate compliance with the the exporter’s summary procedure must waived, in-bond transportation is not drawback laws and regulations of the include the Canadian or Mexican required; United States, evidence of exportation customs entry number and the amount (F) Notification of intent to export or to Canada or Mexico, and satisfactory of duty paid to Canada or Mexico; waiver of prior notice; evidence of the payment of duties to (D) Evidence of exportation and (G) Evidence of exportation. If a Canada or Mexico. Unless otherwise satisfactory evidence of the payment of claimant is not approved for the provided in this subpart, the duties in Canada or Mexico, as provided exporter’s summary procedure, either a documentation, filing procedures, time in paragraph (c) of this section; certified Customs Form 7511 or an and place requirements and other uncertified Customs Form 7511 applicable procedures required to (E) Waiver of right to drawback. If the person exporting to Canada or Mexico supported by documentary evidence of determine whether a good qualifies for exportation to Canada or Mexico such as drawback shall be in accordance with was not the importer or the manufacturer, written waivers executed a bill of lading, air waybill, freight the provisions of part 191 of this waybill, export ocean bill of lading, chapter; however, a drawback claim by the importer or manufacturer and by any intervening person to whom the Canadian customs manifest, cargo subject to the provisions of this subpart manifest, or certified copies thereof, shall be filed separately from any part good was transferred shall be submitted in order for the claim to be considered issued by the exporting carrier, or any 191 drawback claim (that is, a claim that other evidence of exportation provided involves goods exported to countries complete; and (F) An affidavit of the party claiming for in § 191.51 of this chapter. other than Canada or Mexico). Claims Supporting documentary evidence shall inappropriately filed or otherwise not drawback stating that no other drawback claim has been made on the designated establish fully the time and fact of completed within the 3-year period exportation, the identity of the exporter, specified in § 181.46 of this part shall be goods, that such party has not provided an exporter’s Certificate of Origin and the identity and location of the considered abandoned. ultimate consignee of the exported (b) Complete drawback claim—(1) pertaining to the exported goods to another party except as stated on the goods; General. A complete drawback claim (H) Waiver of right to drawback. If the drawback claim, and that the party under this subpart shall consist of the party exporting to Canada or Mexico agrees to notify Customs if he filing of the appropriate completed was not the importer, a written waiver subsequently provides such an drawback entry form, evidence of from the importer and from each exporter’s Certificate of Origin to any exportation (a copy of the Canadian or intermediate person to whom the goods person. Mexican customs entry showing the were transferred shall be required in (ii) Same condition drawback claim amount of duty paid to Canada or order for the claim to be considered under 19 U.S.C. 1313(j)(1). The Mexico) and its supporting documents, complete; and certificate(s) of delivery, when following shall be submitted in (I) An affidavit of the party claiming necessary, or certificate(s) of connection with a drawback claim drawback stating that no other drawback manufacture and delivery, and a covering a good in the same condition: claim has been made on the designated certification from the Canadian or (A) A completed Customs Form 7539J. goods. Mexican importer as to the amount of In addition, the tariff classification (iii) Nonconforming or improperly duties paid. Each drawback entry form number of the imported goods shall be shipped goods drawback claim. The filed under this subpart shall be recorded on the form; following shall be submitted in the case conspicuously marked at the top with (B) Customs Form 7501. The form of goods not conforming to sample or the word ‘‘NAFTA’’. must show the entry number, date of specifications or shipped without the (2) Specific claims. The following entry, port of importation, date of consent of the consignee and subject to documentation, for the drawback claims importation, importing carrier, and a drawback claim under 19 U.S.C. specified below, must be submitted to importer of record or ultimate consignee 1313(c): Customs in order for a drawback claim name and Customs or taxpayer (A) Customs Form 7539C, completed to be processed under this subpart. identification number. Explicit line item and submitted at the time the goods are Missing documentation or incorrect or information shall be clearly noted on returned to Customs custody; incomplete information on required the Customs Form 7501 so that the (B) Customs Form 7501 to establish customs forms or supporting subject goods are easily discernible; the fact of importation, the receipt of the documentation will result in an (C) Customs Form 7505, if applicable, imported goods and the identity of the incomplete drawback claim. to trace the movement of the imported party to whom drawback is payable (see (i) Manufacturing drawback claim. goods after importation; § 181.48(c) of this part); The following shall be submitted in (D) The certificate of delivery portion (C) Documentary evidence to support connection with a claim for direct of Customs Form 331, if applicable, for the claim that the goods did not identification manufacturing drawback purposes of tracing the transfer of conform to sample or specifications or or substitution manufacturing ownership of the imported goods from were shipped without the consent of the drawback: the importer to the claimant. This is consignee. In the case of nonconforming (A) A completed Customs Form 331, required if the drawback claimant is not goods, such documentation may include to establish the manufacture of goods the original importer of the merchandise a copy of a purchase order and any made with imported merchandise and, which is the subject of a same condition related documents such as a if applicable, the identity of substituted claim; specification sheet, catalogue or 46372 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations advertising brochure from the supplier, a copy thereof, respecting the relevant of all required documents, and the basis for which the order was entry; or exportation of the articles has been placed, and copy of a letter or telex or (4) An affidavit, from the person established and the amount of duties credit memo from the supplier claiming drawback, which is based on paid to Canada or Mexico has been indicating acceptance of the returned information received from the importer established, the entry will be liquidated merchandise. This documentation is of the good in Canada or Mexico. to determine the proper amount of necessary to establish that the goods are, drawback due either in accordance with in fact, being returned to the party from § 181.48 Person entitled to receive drawback. the limitation on drawback set forth in which they were procured or that they § 181.44 of this part or in accordance are being sent to the supplier’s other (a) Manufacturing drawback. The with the regular drawback calculation. customer directly; person named as exporter on the notice The liquidation procedures of subpart G (D) Customs Form 7512, if applicable; of exportation or on the bill of lading, of part 191 of this chapter shall control and air waybill, freight waybill, Canadian or for purposes of this subpart. Mexican customs manifest, cargo (E) Evidence of exportation, as (b) Time for liquidation. A drawback provided in paragraph (b)(2)(ii)(G) of manifest, or certified copies of these documents, shall be considered the claim shall not be liquidated until either this section. a written waiver of the right to protest (iv) Meats cured with imported salt. exporter and entitled to manufacturing drawback, unless the manufacturer or under 19 U.S.C. 1514 is filed with The provisions of paragraph (b)(2)(i) of Customs or the liquidation of the import this section relating to direct producer shall reserve the right to claim drawback. The manufacturer or entry has become final under U.S. law. identification manufacturing drawback In addition, except in the case of goods shall apply to claims for drawback on producer who reserves this right may claim drawback, and he shall receive covered by § 181.45 of this part, a meats cured with imported salt filed drawback claim shall not be liquidated under this subpart insofar as applicable payment upon production of satisfactory evidence that the for a period of 3 years after the date of to and not inconsistent with the entry of the goods in Canada or Mexico. provisions of this subpart, and the forms reservation was made with the knowledge and consent of the exporter. A drawback claim may be adjusted referred to in that paragraph shall be pursuant to 19 U.S.C. 1508(b)(2)(B)(iii) modified to show that the claim is being Drawback also may be granted to the agent of the manufacturer, producer, or even after liquidation of the U.S. import made for refund of duties paid on salt entry has become final. used in curing meats. exporter, or to the person the (v) Jet aircraft engines. The provisions manufacturer, producer, exporter, or (c) Accelerated payment. Accelerated of paragraph (b)(2)(i) of this section agent directs in writing to receive the drawback payment procedures shall relating to direct identification drawback of duties. apply as set forth in § 191.72 of this manufacturing drawback shall apply to (b) Nonconforming or improperly chapter. However, a person who claims for drawback on foreign-built jet shipped goods drawback. Only the receives drawback of duties under this aircraft engines repaired or importer of record or the actual owner procedure shall repay the duties paid if reconditioned in the United States filed of the merchandise or its agent may a NAFTA drawback claim is adversely under this subpart insofar as applicable claim drawback under 19 U.S.C. affected thereafter by administrative or to and not inconsistent with the 1313(c). court action. provisions of this subpart and the (c) Same condition drawback. The importer of record on the consumption § 181.51 Prevention of improper payment provisions of subpart L of part 191 of of claims. this chapter. entry is entitled to claim same condition (c) Evidence of exportation and of drawback under 19 U.S.C. 1313(j)(1) (a) Double payment of claim. The duties paid in Canada or Mexico. For unless he has in writing waived his drawback claimant shall certify to purposes of this subpart, evidence of right to claim drawback. Customs that he has not earlier received exportation and satisfactory evidence of § 181.49 Retention of records. payment on the same import entry for payment of duties in Canada or Mexico the same designation of goods. If, All records required to be kept by the notwithstanding such a certification, shall consist of one of the following exporter, importer, manufacturer or types of documentation, provided that, such an earlier payment was in fact producer under this subpart with made to the claimant, the claimant shall for purposes of evidence of duties paid, respect to manufacturing drawback such documentation includes the repay any amount paid on the second claims, and all records kept by others claim. import entry number, the date of which complement the records of the importation, the tariff classification importer, exporter, manufacturer or (b) Preparation of Certificate of number, the rate of duty and the amount producer (see § 191.5 of this chapter) Origin. The drawback claimant shall, of duties paid: shall be retained for at least three years within 30 calendar days after the filing (1) In the case of Canada, the after payment of such claims. However, of the drawback claim under this Canadian entry document, referred to as any person who issues a drawback subpart, submit to Customs a written the Canada Customs Invoice or B–3, certificate that enables another person to statement as to whether he has presented with either the K–84 make or perfect a drawback claim shall prepared, or has knowledge that another Statement or the Detailed Coding keep records in support of that person has prepared, a Certificate of Statement. A Canadian customs certificate commencing on the date that Origin provided for under § 181.11(a) of document that is not accompanied by a the certificate is issued and shall retain this part and pertaining to the goods valid receipt is not adequate evidence of those records for three years following which are covered by the claim. If, exportation and payment of duty in the date of payment of the claim. following such 30-day period, the Canada; claimant prepares, or otherwise learns (2) In the case of Mexico, the Mexican § 181.50 Liquidation and payment of of the existence of, any such Certificate entry document (the ‘‘pedimento’’); drawback claims. of Origin, the claimant shall, within 30 (3) The final customs duty (a) General. When the drawback claim calendar days thereafter, disclose that determination of Canada or Mexico, or has been fully completed by the filing fact to Customs. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46373 § 181.52 Subsequent claims for additions to, or deductions from, the of the US$800 equivalent in duties to preferential tariff treatment. final appraised value as may be Canada. Company N will only be required to If a claim for a refund of duties is necessary by reason of its change in pay $100 in U.S. duties out of the original allowed by the Canadian or Mexican condition. Such duty shall be paid no $900 bill. customs administration under Article later than 60 calendar days after the date (d) Bonded smelting or refining 502(3) of the NAFTA (post-importation of exportation except that, upon warehouse. For any qualifying imported claim) or under any other circumstance presentation of evidence of exportation metal-bearing materials (19 U.S.C. after drawback has been granted under and satisfactory evidence of the amount 1312), duty shall be assessed on the this subpart, the appropriate Customs of any customs duties paid to Canada or imported materials and the charges officer shall reliquidate the drawback Mexico on the exported good, the duty against the bond canceled no later than claim and obtain a refund of the amount shall be waived or reduced in an 60 calendar days after the date of paid in drawback in excess of the amount that does not exceed the lesser exportation of the treated materials to amount permitted to be paid under of either the total amount of duty Canada or Mexico either from the § 181.44 of this part. payable on the good under this section bonded smelting or refining warehouse § 181.53 Waiver or reduction of duty under or the total amount of customs duties or from such other customs bonded duty-deferral programs. paid to Canada or Mexico. warehouse after the transfer of the same (a) General—(1) Duty-deferral Example. Company B imports toys in bulk quantity of material from a bonded program defined. For purposes of this and makes a warehouse entry into a Class 8 smelting or refining warehouse. section, a ‘‘duty-deferral program’’ warehouse, whereupon Company B However, upon presentation of evidence repackages the toys for retail sale. Upon means a measure which postpones duty of exportation and satisfactory evidence withdrawal of the goods from the warehouse, of the amount of any customs duties payment upon arrival of a good in the $200 in U.S. duty is assessed. Company B United States, including a measure paid to Canada or Mexico on the exports this merchandise to Mexico and pays exported treated materials, the duty on governing manipulation warehouses, the equivalent of US$300 in duties. Thirty manufacturing warehouses, smelting days after exportation from the United States, the imported materials shall be waived and refining warehouses, foreign trade Company B submits to Customs evidence of or reduced in an amount that does not zones, or temporary importations under exportation and a copy of the Mexican exceed the lesser of either the total consumption entry (‘‘pedimento’’) as bond under Chapter 98, HTSUS, until amount of duty payable on the imported evidence of the payment of the US$300 materials under this section or the total withdrawn or removed for exportation equivalent to Mexico. Customs will waive the to Canada or Mexico. amount of customs duties paid to collection of the $200 assessment since $200 Canada or Mexico. (2) Treatment as entered or is a lesser amount than the total amount of Example. Company Z imports 47 million withdrawn for domestic consumption. duties paid to Mexico. pounds of electrolytic zinc which is entered Where a ‘‘good subject to NAFTA (c) Bonded manufacturing warehouse. into a bonded smelting and refining drawback’’ within the meaning of 19 Where a good is manufactured in a warehouse (Class 7) for processing. U.S.C. 3333 is imported into the United bonded warehouse (19 U.S.C. 1311) Thereafter, Company Z withdraws the States pursuant to a duty-deferral with imported materials and is then merchandise and pays $90,000 in U.S. duty program and is subsequently exported withdrawn for exportation to Canada or on the dutiable quantity of metal contained in the imported metal-bearing materials and to Canada or Mexico or is used as a Mexico, duty shall be assessed on the material in the production of another Customs cancels the bond charges. Two materials in their condition and weeks later, Company Z secures a buyer, good that is subsequently exported to quantity, and at their weight, at the time Canada or Mexico, the exported good Company B, in Canada and exports the of their importation into the United merchandise. Upon importation of the shall be treated, for purposes of this States. Such duty shall be paid no later processed zinc into Canada, the equivalent of section, as if it had been entered or than 60 calendar days after the date of US$50,000 in duties are assessed against withdrawn for domestic consumption exportation except that, upon Company B. Company Z would like to claim and thus subject to duty. However, the presentation of evidence of exportation a NAFTA refund under this section. provisions of this paragraph shall not and satisfactory evidence of the amount Company Z must secure from Company B the necessary Canadian documentation to show apply to goods covered by § 181.45. of any customs duties paid to Canada or (3) Adjustment to duties paid. exportation and to show that the US$50,000 Mexico on the exported good, the duty equivalent in duties was paid to Revenue Customs shall waive or reduce the shall be waived or reduced in an duties paid or owed under paragraph Canada in order for Company Z to obtain a amount that does not exceed the lesser refund of that amount from Customs. (a)(2) of this section by the person who of either the total amount of duty (e) Foreign trade zone. For a good that exports the good to Canada or Mexico in payable on the materials under this is manufactured or otherwise changed accordance with paragraphs (b) through section or the total amount of customs in condition in a foreign trade zone (19 (f) of this section, provided that duties paid to Canada or Mexico. evidence of exportation and satisfactory U.S.C. 81c(a)) and then exported from evidence of duties paid in Canada or Example. Company N imports tea into the the zone to Canada or Mexico, the duty Mexico (see § 181.47(c) of this part) are United States and makes a Class 6 warehouse assessed, as calculated under paragraph entry. Company N manufactures sweetened submitted within 60 calendar days of ice tea mix by combining the imported tea (e)(1) or (e)(2) of this section, shall be the date of exportation. with refined cane sugar and other flavorings paid no later than 60 calendar days after (b) Manipulation in warehouse. and packaging it in retail size canisters. Upon the date of exportation of the good to Where a good subject to NAFTA withdrawal of the ice tea mix from the Canada or Mexico except that, upon drawback under this subpart is warehouse for immediate exportation to presentation of evidence of exportation withdrawn from a bonded warehouse Canada, U.S. duty is assessed on the basis of and satisfactory evidence of the amount (19 U.S.C. 1562) after manipulation for the unmanufactured tea in the amount of of any customs duties paid to Canada or exportation to Canada or Mexico, duty $900. Company N, however, does not pay the Mexico on the exported good, the duty duties at this time. Canada assesses the shall be assessed on the good in its equivalent of US$800 on the exported ice tea shall be waived or reduced in an condition and quantity, and at its mix. Company N submits to Customs both amount that does not exceed the lesser weight, at the time of such withdrawal evidence of exportation to Canada and a of either the total amount of duty from the warehouse and with such Canadian K–84 Statement showing payment payable on the good under this section 46374 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations or the total amount of customs duties States. Such duty shall be paid no later NAFTA drawback claim and obtain a paid to Canada or Mexico. than 60 calendar days after the date of refund of the amount waived or reduced (1) Nonprivileged foreign status. In exportation except that, upon in excess of the amount permitted to be the case of a nonprivileged foreign presentation of evidence of exportation waived or reduced under this section. status good, duty is assessed on the and satisfactory evidence of the amount good in its condition and quantity, and § 181.54 Verification of claim for of any customs duties paid to Canada or drawback, waiver or reduction of duties. at its weight, at the time of its Mexico on the exported good, the duty exportation from the zone to Canada or shall be waived or reduced in an The allowance of a claim for Mexico. amount that does not exceed the lesser drawback, waiver or reduction of duties submitted under this subpart shall be of the total amount of duty payable on Example. CMG imports $1,000,000 worth subject to such verification, including the good under this section or the total of auto parts from Korea and admits them verification with the Canadian or into Foreign-Trade Subzone number 00, amount of customs duties paid to Mexican customs administration of any claiming nonprivileged foreign status. (If the Canada or Mexico. auto parts had been regularly entered they documentation obtained in Canada or would have been dutiable at 4 percent, or Example. Company A imports glassware Mexico and submitted in connection $40,000.) CMG manufactures subcompact under subheading 9813.00.05, HTSUS. The with the claim, as Customs may deem automobiles. Automobiles are dutiable at 2.5 glassware is from France and would be necessary. percent ($25,000) if entered for consumption dutiable under a regular consumption entry in the United States. CMG withdraws the at $6,000. Company A alters the glassware by Subpart FÐCommercial Samples and automobiles from the zone and sells them to etching hotel logos on the glassware. Two Goods Returned After Repair or weeks later, Company A sells the glassware XYZ who ships them to Mexico. XYZ enters Alteration the automobiles in Mexico, pays the to Company B, a Mexican company, and equivalent of US$20,000 in duty, and does ships the glassware to Mexico. Company B § 181.61 Applicability. enters the glassware and is assessed duties in not claim NAFTA preferential tariff This subpart sets forth the rules treatment. Before the expiration of 60 an amount equivalent to US$6,200 and claims NAFTA preferential tariff treatment. which apply for purposes of duty-free calendar days from exportation, CMG entry of commercial samples of submits the required documentation showing Company B provides a copy of the Mexican exportation and payment of duty in Mexico landing certificate to Company A showing negligible value as provided for in and pays $5,000 in duty to Customs that the US$6,200 equivalent in duties was Article 306 of the NAFTA and for representing the difference between the assessed but not yet paid to Mexico, and purposes of the re-entry of goods after $25,000 which would have been paid if the Customs sends a bill to Company A for the repair or alteration in Canada or Mexico automobiles had been entered for $6,000 in U.S. duty which Company A pays. as provided for in Article 307 of the consumption from the zone and the If Mexico ultimately denies Company B’s NAFTA. US$20,000 equivalent paid to Mexico by NAFTA claim and the Mexican duty XYZ. payment becomes final, Company A, upon § 181.62 Commercial samples of negligible submission to Customs of evidence of the value. (2) Privileged foreign status. In the finality of the collection of the US$6,200 case of a privileged foreign status good, (a) General. Commercial samples of equivalent by Mexico, is entitled to a refund negligible value imported from Canada duty is assessed on the good in its of the full $6,000 in U.S. duty. condition and quantity, and at its or Mexico may qualify for duty-free (g) Recordkeeping requirements. If a weight, at the time privileged status is entry under subheading 9811.00.60, person intends to claim a waiver or granted in the zone. HTSUS. For purposes of this section, reduction of duty on goods under this ‘‘commercial samples of negligible Example. O&G, Inc. admits Kuwaiti crude section, that person shall maintain value’’ means commercial samples petroleum into its zone and requests, one records concerning the value of all which have a value, individually or in month later, privileged foreign status on the involved goods or materials at the time crude before refining the crude into motor the aggregate as shipped, of not more gasoline and kerosene. Upon entry of the of their importation into the United than US$1, or the equivalent amount in refined goods from the zone by O&G, Inc., States and concerning the value of the the currency of Canada or Mexico, or U.S. duty is assessed on the imported crude goods at the time of their exportation to which are so marked, torn, perforated, petroleum in the amount of $700 rather than Canada or Mexico. Failure to maintain or otherwise treated that they are on the refined goods (which would have been adequate records will result in denial of unsuitable for sale or for use except as assessed $1,200). O&G, Inc. then ships the the claim for waiver or reduction of commercial samples. refined goods to Canada. D&O is the duty. (b) Qualification for duty-free entry. consignee in Canada and pays the Canadian (h) Failure to timely provide evidence Commercial samples of negligible value customs duty assessment of the equivalent of of duties paid or owed to Canada or imported from Canada or Mexico will US$1,500 on the goods. D&O claims NAFTA preferential tariff treatment in Canada. O&G, Mexico. If the person who exports the qualify for duty-free entry under Inc. potentially is entitled to a duty remission goods to Canada or Mexico fails to subheading 9811.00.60, HTSUS, only if: of the full $700 assessed in the United States. provide satisfactory evidence of duties (1) The samples are imported solely However, if D&O’s NAFTA claim is approved paid or owed to Canada or Mexico for the purpose of soliciting orders for and results in a refund of duty by Canada, within the 60-day period specified in foreign goods; and O&G, Inc.’s actual duty remission or refund this section, that person will be liable (2) If valued over US$1, the samples will be reduced by that amount of refund for payment of the full duties assessed are properly marked, torn, perforated or received by D&O in excess of $800. under this section and without any otherwise treated prior to arrival in the (f) Temporary importation under waiver or reduction thereof. United States so that they are unsuitable bond. Where a good, regardless of its (i) Subsequent claims for preferential for sale or for use except as commercial origin, was imported temporarily free of tariff treatment. If a claim for a refund samples. duty for repair, alteration or processing of duties is allowed by the Canadian or § 181.63 [Reserved] (subheading 9813.00.05, HTSUS) and is Mexican customs administration under subsequently exported to Canada or Article 502(3) of the NAFTA or under § 181.64 Goods re-entered after repair or Mexico, duty shall be assessed on the any other circumstance after duties have alteration in Canada or Mexico. good on the basis of its condition at the been waived or reduced under this (a) General. This section sets forth the time of its importation into the United section, Customs shall reliquidate the rules which apply for purposes of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46375 obtaining duty-free or reduced-duty etching and tempering operations, after (c) Documentation—(1) Declarations treatment on goods returned after repair which they are returned to the United States required. Except as otherwise provided or alteration in Canada or Mexico as for sale. The foreign operations exceed the in this section, the following provided for in subheadings 9802.00.40 scope of an alteration because they are declarations shall be filed in connection and 9802.00.50, HTSUS. Goods returned manufacturing processes which create with the entry of goods which are after having been repaired or altered in commercially different products with distinct returned from Canada or Mexico after Mexico, whether or not pursuant to a new characteristics. having been exported for repairs or warranty, and goods returned after (b) Goods not eligible for duty-free or alterations and which are claimed to be having been repaired or altered in reduced-duty treatment after repair or duty free or subject to duty only on the Canada pursuant to a warranty, are alteration. The duty-free or reduced- value of the repairs or alterations eligible for duty-free treatment, duty treatment referred to in paragraph performed abroad: provided that the requirements of this (a) of this section shall not apply to (i) A declaration from the person who section are met. Goods returned after goods which, in their condition as performed such repairs or alterations, in having been repaired or altered in exported from the United States to substantially the following form: Canada other than pursuant to a Canada or Mexico, are incomplete for I/We, llllll, declare that the goods warranty are subject to duty upon the their intended use and for which the value of the repairs or alterations using herein specified are the goods which, in the processing operation performed in condition in which they were exported from the applicable duty rate under the Canada or Mexico constitutes an United States-Canada Free-Trade the United States, were received by me (us) operation that is performed as a matter on llllll, 19llll, from Agreement (see § 10.301 of this chapter), of course in the preparation or llllll (name and address of owner or provided that the requirements of this manufacture of finished goods. exporter in the United States); that they were section are met. For purposes of this received by me (us) for the sole purpose of section, ‘‘repairs or alterations’’ means Example. Unflanged metal wheel rims are being repaired or altered; that only the restoration, addition, renovation, exported to Canada for a flanging operation repairs or alterations described below were redyeing, cleaning, resterilizing, or other to strengthen them so as to conform to U.S. performed by me (us); that such repairs or treatment which does not destroy the Army specifications for wheel rims; although alterations were (were not) performed essential characteristics of, or create a the goods when exported from the United pursuant to a warranty; that the full cost or States are dedicated for use in the making of new or commercially different good (when no charge is made) value of such wheel rims, they cannot be used for that from, the good exported from the United repairs or alterations is correctly stated purpose until flanged. The flanging operation below; and that no substitution whatever has States. does not constitute a repair or alteration been made to replace any of the goods Example. Glass mugs produced in the because that operation is necessary for the originally received by me (us) from the owner United States are exported to Canada for completion of the wheel rims. or exporter thereof mentioned above. Full cost or (when no charge is made) Marks and numbers Description of goods and of repairs or value of repairs or alterations (see Total value of goods after repairs or al- alterations Subchapter II, Chapter 98, HTSUS) terations lllllllllllllllllllll Date pursuant to a warranty, the port director Date Signature llllllllllllllll shall require a deposit of estimated Signature Address llllllllllllllll duties based upon the full cost or value lllllllllllllllllllll lllllllllllllllllllll of the repairs or alterations. The cost or Address Capacity value of the repairs or alterations lllllllllllllllllllll lllllllllllllllllllll lllllllllllllllllllll performed in Canada other than (2) Additional documentation. The pursuant to a warranty, which is to be Capacity port director may require such lllllllllllllllllllll set forth in the invoice and entry papers additional documentation as is deemed as the basis for the assessment of duty (ii) A declaration by the owner, necessary to prove actual exportation of for such goods, shall be limited to the importer, consignee, or agent having the goods from the United States for cost or value of the repairs or alterations repairs or alterations, such as a foreign knowledge of the pertinent facts in actually performed in Canada, which customs entry, a foreign customs substantially the following form: shall include all domestic and foreign invoice, a foreign landing certificate, bill I, llllllll, declare that the articles furnished for the repairs or of lading, or airway bill. (above) (attached) declaration by the person alterations but shall not include any of who performed the repairs or alterations (3) Waiver of declarations. If the port abroad is true and correct to the best of my director concerned is satisfied, because the expenses incurred in the United knowledge and belief; that the goods of the nature of the goods or production States whether by way of engineering llll were llll were not (check one) of other evidence, that the goods are costs, preparation of plans or subject to NAFTA drawback; that such goods imported under circumstances meeting specifications, furnishing of tools or were exported from the United States for equipment for doing the repairs or llll the requirements of this section, he may repairs or alterations from (port) on alterations in Canada, or otherwise. llll, 19ll; and that the goods entered waive submission of the declarations in their repaired or altered condition are the provided for in paragraph (c)(1) of this same goods that were exported on the above section. date and that are identified in the (above) (4) Deposit of estimated duties. For (attached) declaration. goods returned after having been lllllllllllllllllllll repaired or altered in Canada other than 46376 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Subpart GÐOrigin Verifications and (B) By any other method, regardless of provide the information and shall not Determinations whether it produces proof of receipt by constitute a ground for denying the exporter or producer; preferential tariff treatment on the good. § 181.71 Denial of preferential tariff (ii) A written questionnaire sent to an (d) Failure to respond to letter or treatment dependent on origin verification exporter or a producer, including a questionnaire.—(1) Nonresponse to and determination. producer of a material, in Canada or initial letter or questionnaire. If the Except where a Certificate of Origin Mexico. The questionnaire: exporter or producer, including a either is not submitted when requested (A) May be sent by certified or producer of a material, fails to respond under § 181.22(b) of this part or is not registered mail, or by any other method to a verification letter or questionnaire acceptable and a corrected Certificate is that produces a confirmation of receipt sent under paragraph (a)(2)(i) or (a)(2)(ii) not submitted or accepted as provided by the exporter or producer; or of this section within 30 calendar days in § 181.22(c) of this part and except as (B) May be sent by any other method, from the date on which the letter or otherwise provided in § 181.23 of this regardless of whether it produces proof questionnaire was sent, or such longer part and except in the case of a pattern of receipt by the exporter or producer; period as may be specified in the letter of conduct provided for in § 181.76(c) of and or questionnaire, Customs shall send a this part, Customs shall deny (C) May be completed by the follow-up verification letter or preferential tariff treatment on an Canadian or Mexican exporter or questionnaire to that exporter or imported good, or shall deny a post- producer either in the English language producer. The follow-up letter or importation claim for a refund filed or in the language of the country in questionnaire: under subpart D of this part, only after which that exporter or producer is (i) Except where the verification letter initiation of an origin verification under located; or questionnaire only involved the (iii) Visits to the premises of an § 181.72(a) of this part which results in origin of a material used in the exporter or a producer, including a a determination that the imported good production of a good and was sent to the producer of a material, in Canada or does not qualify as an originating good producer of the material, may include Mexico to review the types of records or should not be accorded such the written determination referred to in referred to in § 181.12 of this part and treatment for any other reason as § 181.75 of this part, provided that the observe the facilities used in the specifically provided for elsewhere in information specified in paragraph (b) of production of the good or material; and this part. that section is also included; and (iv) Any other method which results (ii) Shall be sent: § 181.72 Verification scope and method. in information from a Canadian or (A) By certified or registered mail, or Mexican exporter or producer, by any other method that produces a (a) General. Subject to paragraph (e) of including a Canadian or Mexican this section, Customs may initiate a confirmation of receipt by the exporter producer of a material, that is relevant or producer, if so requested by the verification in order to determine to the origin determination. The whether a good imported into the customs administration of Canada or information so obtained may form a Mexico from which the good was United States qualifies as an originating basis for a negative determination good for purposes of preferential tariff exported; or regarding a good (see § 181.75(b) of this (B) By any method, if no request treatment under the NAFTA as stated on part) only if the information is in under paragraph (d)(1)(ii)(A) of this the Certificate of Origin pertaining to writing and is signed by the exporter or section has been made by the Canadian the good. Such a verification: producer. or Mexican customs administration. (1) May also involve a verification of (b) Applicable accounting principles. (2) Nonresponse to follow-up letter or the origin of a material that is used in Any verification of a regional value- questionnaire—(i) Producer of a the production of a good that is the content requirement undertaken material. If a producer of a material fails subject of a verification under this pursuant to paragraph (a) of this section to respond to a follow-up verification section; shall be conducted in accordance with letter or questionnaire sent under (2) May include verification of the the Generally Accepted Accounting paragraph (d)(1) of this section, Customs applicable rate of duty applied to an Principles applied in the country from may consider the material to be non- originating good in accordance with which the good was exported to the originating for purposes of determining Annex 302.2 of the NAFTA and may United States. whether the good to which that material include a determination of whether a (c) Inquiries to importer not relates is an originating good. good is a qualifying good for purposes precluded. Nothing in paragraph (a) of (ii) Exporter or producer of a good. If of Annex 703.2 of the NAFTA; and this section shall preclude Customs the exporter or producer of a good fails from directing inquiries or requests to a (3) Shall be conducted only by means to respond to a follow-up verification U.S. importer for documents or other of one or more of the following: letter or questionnaire sent under information regarding the imported paragraph (d)(1) of this section, Customs (i) A verification letter which requests good. If such an inquiry or request may consider the good to be non- information from a Canadian or involves requesting the importer to originating and consequently may deny Mexican exporter or producer, obtain and provide written information preferential tariff treatment on the good including a Canadian or Mexican from the exporter or producer of the as follows: producer of a material, and which good or from the producer of a material (A) If the follow-up letter or identifies the good or material that is the that is used in the production of the questionnaire included a written subject of the verification. The good, such information shall be determination as provided for in verification letter may be on Customs requested by the importer and provided paragraph (d)(1)(i) of this section and Form 28 or other appropriate format and to the importer by the exporter or the exporter or producer fails to respond may be sent: producer only on a voluntary basis, and to the follow-up letter or questionnaire (A) By certified or registered mail, or a failure or refusal on the part of the within 30 calendar days or such longer by any other method that produces a importer to obtain and provide such period as specified therein: confirmation of receipt by the exporter information shall not be considered a (1) From the date on which the or producer; or failure of the exporter or producer to follow-up letter or questionnaire and Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46377 written determination were received by § 181.73 Notification of verification visit. Canadian or Mexican exporter or the exporter or producer, if sent (a) Written notification required. Prior producer of a good, or a Canadian or pursuant to paragraph (d)(1)(ii)(A) of to conducting a verification visit in Mexican producer of a material, has not this section; or Canada or Mexico pursuant to given its written consent to a proposed (2) From the date on which the § 181.72(a)(2)(iii) of this part, Customs verification visit within 30 calendar follow-up letter or questionnaire and shall give written notification of the days of receipt of notification pursuant written determination were either intention to conduct the visit. Such to § 181.73 of this part, Customs may received by the exporter or producer or notification shall be delivered: deny preferential tariff treatment to that sent by Customs, if sent in accordance (1) By certified or registered mail, or good, or for purposes of determining with paragraph (d)(1)(ii)(B) of this by any other method that produces a whether a good is an originating good section; or confirmation of receipt, to the address of may consider as non-originating that (B) Provided that the procedures set the Canadian or Mexican exporter or material, that would have been the forth in §§ 181.75 and 181.76 of this part producer whose premises are to be subject of the visit, provided that, as are followed, if the follow-up letter or visited; regards the good, notice of intent to questionnaire does not include a written (2) To the customs administration of deny such treatment is given to that determination as provided for in the country in which the visit is to exporter or producer of the good and to paragraph (d)(1)(i) of this section and occur; and the U.S. importer thereof prior to taking the exporter or producer fails to respond (3) If requested by the country in such action. A failure on the part of the to the follow-up letter or questionnaire which the visit is to occur, to the Canadian or Mexican exporter or within 30 calendar days or such longer embassy of that country located in the producer of a good, or on the part of the period as specified in the letter or United States. Canadian or Mexican producer of a questionnaire: (b) Contents of notification. The material, to maintain records or provide (1) From the date on which the notification referred to in paragraph (a) access to such records or otherwise follow-up letter or questionnaire was of this section shall include: cooperate during the verification visit received by the exporter or producer, if (1) The identity of the Customs office shall mean that the verification visit sent pursuant to paragraph (d)(1)(ii)(A) and officer issuing the notification; never took place and may be treated by of this section; or (2) The name of the Canadian or Customs in the same manner as a failure (2) From the date on which the Mexican exporter or producer of the to give written consent to a verification follow-up letter or questionnaire was good, or producer of the material, whose either received by the exporter or visit. However, in the case of a Canadian premises are to be visited; or Mexican producer of a good who is producer or sent by Customs, if sent in (3) The date and place of the proposed accordance with paragraph (d)(1)(ii)(B) found during a verification visit to have verification visit; not maintained records in accordance of this section. (4) The object and scope of the (e) Calculation of regional value with the Generally Accepted proposed verification visit, including Accounting Principles applied in the content under net cost method—(1) specific reference to the good or General. Where a Canadian or Mexican producer’s country, Customs may deny material that is the subject of the preferential tariff treatment on the good producer of a good elects to calculate verification; the regional value content of a good based solely on a failure to so maintain (5) The names and titles of the those records only if the producer does under the net cost method as set forth Customs officers performing the in General Note 12, HTSUS, and in the not conform the records to those proposed verification visit; Principles within 60 calendar days after appendix to this part, Customs may not, (6) The legal authority for the during the time period over which that Customs informs the producer in proposed verification visit; and writing of that failure. net cost is calculated, conduct a (7) A request that the Canadian or (d) Postponement of visit in Canada verification under § 181.72(a) of this Mexican exporter or producer of the or Mexico. Following receipt of the part with respect to the regional value good, or producer of the material, notification provided for in § 181.73 of content of that good. provide its written consent for the this part, the Canadian or Mexican (2) Cost submission for motor proposed verification visit. vehicles. Where, pursuant to General customs administration may, within 15 Note 12, HTSUS, and the appendix to § 181.74 Verification visit procedures. calendar days of receipt of the this part, a Canadian or Mexican (a) Written consent required. Prior to notification, postpone the proposed producer of a light duty vehicle or conducting a verification visit in Canada verification visit for a period not heavy duty vehicle, as defined in the or Mexico pursuant to § 181.72(a)(2)(iii) exceeding 60 calendar days from the appendix to this part, elects to average of this part, Customs shall obtain the date of such receipt by providing its regional value content calculation written consent of the Canadian or written notice of the postponement to over its fiscal year, Customs may Mexican exporter or producer of the the Customs officer who issued the request, in writing, that the producer good or producer of the material whose notification of the verification visit, provide a cost submission reflecting the premises are to be visited. unless a longer period is requested and actual costs incurred in the production (b) Written consent procedures. The agreed to by Customs. Such a of the category of motor vehicles for written consent provided for in postponement shall not constitute a which the election was made. Such a paragraph (a) of this section shall be failure to provide written consent written request shall constitute a delivered by certified or registered mail, within the meaning of paragraph (c) of verification letter under paragraph or by any other method that generates a this section and shall not otherwise by (a)(2)(i) of this section, and the reliable receipt, to the Customs officer itself constitute a valid basis upon requested cost submission shall be who gave the notification provided for which Customs may: submitted to Customs within 180 in § 181.73 of this part. (1) Consider a material that is used in calendar days after the close of the (c) Failure to provide written consent the production of a good to be a non- producer’s fiscal year or within 60 days or to cooperate or to maintain records. originating material; or from the date on which the request was Except as otherwise provided in (2) Deny preferential tariff treatment made, whichever is later. paragraph (d) of this section, where a to a good. 46378 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (e) Verification visits within the of § 181.76(c) of this part, following producer of the good may provide United States—(1) Notification and receipt and analysis of the results of an written comments or additional consent procedure. When the Canadian origin verification initiated under information regarding the or Mexican customs administration § 181.72(a) of this part in regard to a determination; and intends to conduct a verification visit in good imported into the United States (iv) A statement advising the exporter the United States, notification of such and prior to denying preferential tariff or producer of the right to file a protest intent will be given, and consent will be treatment on the import transaction under 19 U.S.C. 1514 and part 174 of required, as provided for under Article which gave rise to the origin this chapter: 506 of the NAFTA. For purposes of the verification, Customs shall provide the (A) Within 90 days after notice of required notification to Customs, such exporter or producer whose good is the liquidation is provided pursuant to part notification shall be sent to Project subject of the verification with a written 159 of this chapter; or North Star Coordination Center, P.O. determination of whether the good (B) In cases where the negative origin Box 400, Buffalo, New York 14225– qualifies as an originating good. Subject determination does not result in a 0400. to paragraph (b) of this section, the liquidation, within 90 days after the (2) Postponement of visit. Following written origin determination shall be date of issuance of the written receipt of notification from the sent within 60 calendar days after determination. Canadian or Mexican customs conclusion of the origin verification § 181.76 Application of origin administration of its intention to process, unless circumstances require determinations. conduct a verification visit in the additional time, and shall set forth: United States, Customs may, within 15 (1) A description of the good that was (a) General. Except as otherwise calendar days of receipt of the the subject of the verification together provided in this section, an origin notification, postpone the proposed with the identifying numbers and dates determination may be applied upon verification visit for a period not of the export and import documents issuance of the determination under exceeding 60 calendar days from the pertaining to the good; § 181.75 of this part. (b) Negative origin determinations. In date of such receipt by providing (2) Subject to the provisions of the case of a negative origin written notice of the postponement to § 181.131 of this part and except in the determination issued under § 181.75(b) the Canadian or Mexican customs case of a negative origin determination of this part: administration. where specific findings of fact cannot be (1) The date on which preferential (3) Designation of observers. A U.S. made because of a failure to respond to tariff treatment may be denied shall be exporter or producer, including a a follow-up verification letter or no earlier than 30 calendar days from producer of a material, whose good or questionnaire sent under § 181.72 of this the date on which: material is the subject of a verification part, a statement setting forth the (i) Receipt of the written visit by the Canadian or Mexican findings of fact made in connection with determination by the exporter or customs administration shall be allowed the verification and upon which the producer is confirmed, if a request to designate two observers to be present determination is based; and under § 181.75(b)(1) of this part has during the visit, subject to the following (3) With specific reference to the rules applicable to originating goods as set been made; or conditions: (ii) The written determination is sent (i) The U.S. exporter or producer shall forth in General Note 12, HTSUS, and by Customs, if no request under not be required to designate observers; in the appendix to this part, the legal § 181.75(b)(1) of this part has been (ii) There shall be no restriction on basis for the determination. made; and the class of persons that may be (b) Negative origin determinations. If (2) Before denying preferential tariff designated as observers by the U.S. Customs determines, as a result of an treatment, Customs shall take into exporter or producer; origin verification initiated under (iii) The observers to be present are § 181.72(a) of this part, that the good account any comments or additional designated in the written consent to the which is the subject of the verification information provided by the exporter or proposed visit or subsequent thereto; does not qualify as an originating good, producer during the period established (iv) The observers do not participate the written determination required in accordance with paragraph (b)(1) of in the verification visit in a manner under paragraph (a) of this section: this section. other than as passive observers; (1) Shall be sent by certified or (c) Cases involving a pattern of (v) The presence of observers shall in registered mail, or by any other method conduct. Where multiple origin no way affect the right to have legal that produces a confirmation of receipt verifications initiated under § 181.72(a) counsel or other advisors present during by the exporter or producer, if so of this part indicate a pattern of conduct the visit; requested by the customs administration by an exporter or producer involving (vi) There shall be no obligation on of Canada or Mexico from which the false or unsupported representations on the part of the United States government good was exported; and Certificates of Origin that a good or on the part of the Canadian or (2) Shall, in addition to the imported into the United States Mexican government to designate information specified in paragraph (a) of qualifies as an originating good, observers from its staff, even when the this section, set forth the following: Customs may deny subsequent claims U.S. exporter or producer fails to, or (i) A notice of intent to deny for preferential tariff treatment on specifically declines to, designate preferential tariff treatment on the good identical goods exported or produced by observers; and which is the subject of the such person until that person (vii) The failure of the U.S. exporter determination; establishes compliance with the rules or producer to designate observers shall (ii) The specific date after which applicable to originating goods as set not result in the postponement of the preferential tariff treatment will be forth in General Note 12, HTSUS, and visit. denied, as established in accordance in this part, provided that advance with § 181.76(a)(1) of this part; written notice of the intent to deny such § 181.75 Issuance of origin determination. (iii) The period, established in claims is given to the importer. For (a) General. Except in the case of a accordance with § 181.76(a)(1) of this purposes of this paragraph, a ‘‘pattern of pattern of conduct within the meaning part, during which the exporter or conduct’’ means repeated instances of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46379 false or unsupported representations by Rulings) or in accordance with Customs and related laws and an exporter or producer as established Departmental Memorandum 11–11–1 regulations shall also apply to U.S. by Customs on the basis of not fewer (National Customs Rulings) and in the importers, exporters and producers for than two origin verifications of two or case of Mexico must be issued pursuant violations of the laws and regulations more importations of the good that to Article 34 of the Codigo Fiscal de la relating to the NAFTA. result in the issuance of not fewer than Federacion and pursuant to Article 30 of two written determinations issued to the Ley Aduanera or the applicable § 181.82 Exceptions to application of penalties. that exporter or producer pursuant to provision of Mexican law related to § 181.75 of this part which conclude, as advance rulings under Article 509 of the (a) General. A U.S. importer who a finding of fact, that Certificates of NAFTA; and makes a corrected declaration under Origin completed and signed by that (2) ‘‘Consistent treatment’’ means the § 181.21(b) of this part shall not be exporter or producer with respect to established application by the Canadian subject to civil or administrative identical goods contain false or or Mexican customs administration that penalties for having made an incorrect unsupported representations. can be substantiated by the continued declaration, provided that the corrected (d) Differing determinations. Where acceptance by the customs declaration was voluntarily made. In Customs determines, either as a result of administration of the tariff classification addition, civil or administrative an origin verification initiated under or value of identical materials on penalties provided for under the U.S. § 181.72(a) of this part or under any importations of the materials into Customs laws and regulations shall not other circumstance, that a certain good Canada or Mexico by the same importer be imposed on an exporter or producer imported into the United States does not over a period of not less than two years in the United States who voluntarily qualify as an originating good based on immediately prior to the date of provides written notification pursuant a tariff classification or a value applied signature of the Certificate of Origin for to § 181.11(d) of this part with respect in the United States to one or more the good that is the subject of the to the making of an incorrect materials used in the production of the determination referred to in paragraph certification. good, including a material used in the (d) of this section, provided that with (b) ‘‘Voluntarily’’ defined—(1) production of another material that is regard to those importations: General. For purposes of paragraph (a) used in the production of the good, (i) The tariff classification or value of of this section, the making of a corrected which differs from the tariff the materials was not the subject of a declaration or the providing of written classification or value applied to the verification, review or appeal by that notification of an incorrect certification materials by the country from which the customs administration on the date of will be deemed to have been done good was exported, the Customs the determination under paragraph (d) voluntarily if: determination shall not become of this section; and (i) Done before the commencement of effective until Customs provides written (ii) The materials had not been a formal investigation; notification thereof both to the U.S. accorded a different tariff classification (ii) Done before any of the events importer of the good and to the person or value by one or more district, specified in § 162.74(g) of this chapter who completed and signed the regional or local offices of that customs have occurred; Certificate of Origin upon which the administration on the date of the (iii) Done within 30 calendar days claim for preferential tariff treatment for determination under paragraph (d) of after either the U.S. importer with the good was based. this section. respect to a declaration that an imported (e) Applicability of a determination to (f) Detrimental reliance. If Customs good qualified as an originating good, or prior importations. Customs shall not proposes to deny preferential tariff the U.S. exporter or producer with apply a determination made under treatment to a good pursuant to a paragraph (c) of this section to an respect to a certification pertaining to a determination made under paragraph good exported to Canada or Mexico, had importation made before the effective (d) of this section, Customs shall date of the determination if, prior to reason to believe that the declaration or postpone the application of the certification was not correct; notification of the determination, the determination for a period not customs administration of the country (iv) Accompanied by a written exceeding 90 calendar days from the statement setting forth the information from which the good was exported date of issuance of the determination either issued an advance ruling under specified in paragraph (b)(3) of this where the U.S. importer of the good, or section; and Article 509 of the NAFTA or any other the person who completed and signed ruling on the tariff classification or on (v) In the case of a corrected the Certificate of Origin upon which the declaration, accompanied or followed the value of such materials, or gave claim for preferential tariff treatment for consistent treatment to the entry of the by a tender of any actual loss of duties the good was based, demonstrates to the in accordance with paragraph (b)(5) of materials under the tariff classification satisfaction of Customs that it has relied or value at issue, on which a person is this section. in good faith to its detriment on the (2) Cases involving fraud. entitled to rely and on which that tariff classification or value applied to person did in fact rely. For purposes of Notwithstanding paragraph (b)(1) of this such materials by the customs this paragraph, the person who received section, a person who acted by means of administration of the country from notification of the determination shall fraud in making an incorrect declaration which the good was exported. demonstrate to the satisfaction of or certification may not make a Customs, in writing within 30 calendar Subpart HÐPenalties voluntary correction thereof. For days of receipt of the notification, that purposes of this paragraph (b)(2), the the conditions set forth herein have § 181.81 Applicability to NAFTA term ‘‘fraud’’ shall have the meaning set been met. For purposes of this transactions. forth in paragraph (B)(3) of appendix B paragraph: Except as otherwise provided in to part 171 of this chapter. (1) A ‘‘ruling’’ on which a person is § 181.82 of this part, all criminal, civil (3) Written statement. For purposes of entitled to rely in the case of Canada or administrative penalties which may paragraph (a) of this section, each must be issued pursuant to section be imposed on U.S. importers, exporters corrected declaration or notification of 43.1(1) of the Customs Act (Advance and producers for violations of the an incorrect certification shall be 46380 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations accompanied by a written statement the requirements of this section because ruling request may be required to which: the correction of the declaration or the present evidence of his or her authority (i) Identifies the class or kind of good written notification of an incorrect to represent the principal. The foregoing to which the incorrect declaration or certification is not considered to be requirements will not apply to an certification relates; done voluntarily as provided in this individual representing his or her full- (ii) Identifies each import or export section, that person may nevertheless time employer or to a bona-fide officer, transaction affected by the incorrect qualify for prior disclosure treatment director or other qualified representative declaration or certification with under 19 U.S.C. 1592(c)(4) and the of a corporation, association, or reference to each port of importation or regulations issued thereunder. organized group. exportation and the approximate date of (3) The term Headquarters Office, each importation or exportation. A U.S. Subpart IÐAdvance Ruling Procedures means the Office of Regulations and producer who provides written Rulings at Headquarters, United States notification that certain information in a § 181.91 Applicability. Customs Service, Washington, DC. Certificate of Origin is incorrect and This subpart sets forth the rules (4) An information letter is a written who is unable to identify the specific which govern the issuance and statement issued by the Headquarters export transactions under this paragraph application of advance rulings under Office or the National Commodity shall provide as much information Article 509 of the NAFTA and the Specialist Division or by such other concerning those transactions as the procedures which apply for purposes of office as designated by the producer, by the exercise of good faith review of advance rulings under Article Commissioner of Customs that does no and due diligence, is able to obtain; 510 of the NAFTA. Importers in the more than call attention to a well- (iii) Specifies the nature of the United States and exporters and established interpretation of principles incorrect statements or omissions producers located in Canada or Mexico under the NAFTA, without applying it regarding the declaration or may request and obtain an advance to a specific set of facts. If Customs certification; and ruling on a NAFTA transaction only in believes that general information may be (iv) Sets forth, to the best of the accordance with the provisions of this of some benefit to the person making the person’s knowledge, the true and subpart whenever the requested ruling request, an information letter may be accurate information or data which involves a subject matter specified in issued in response to a request for an should have been covered by or § 181.92(b)(6) of this part. Accordingly, advance ruling when: provided in the declaration or the provisions of this subpart shall (i) The request suggests that general certification, and states that the person apply in lieu of the administrative information, rather than an advance will provide any additional information ruling provisions contained in subpart ruling, is actually being sought; or data which is unknown at the time A of part 177 of this chapter except (ii) The request is incomplete or of making the corrected declaration or where the request for a ruling involves otherwise fails to meet the requirements certification within 30 calendar days or a subject matter not specified in set forth in this subpart; or within any extension of that 30-day § 181.92(b)(6). (iii) The requested advance ruling period as Customs may permit in order cannot be issued for any other reason. for the person to obtain the information § 181.92 Definitions and general NAFTA (5) A NAFTA transaction is an act or advance ruling practice. or data. activity to which the NAFTA provisions (4) Substantial compliance. For (a) Definitions. For purposes of this apply. A ‘‘prospective’’ NAFTA purposes of this section, a person shall subpart: transaction is one that is merely be deemed to have voluntarily corrected (1) An advance ruling is a written contemplated or is currently being a declaration or certification even statement issued by the Headquarters undertaken but has not resulted in any though that person provides corrected Office or the National Commodity arrival or in the filing of any entry or information in a manner which does not Specialist Division or by such other entry summary or other document or in conform to the requirements of the office as designated by the any other act so as to bring the written statement specified in paragraph Commissioner of Customs that transaction, or any part of it, under the (b)(3) of this section, provided that: interprets and applies the provisions of jurisdiction of any Customs office. A (i) Customs is satisfied that the NAFTA to a specific set of facts ‘‘current’’ NAFTA transaction is one information was provided before the involving any subject matter specified which is presently under consideration commencement of a formal in § 181.92(b)(6) of this part. An by a field office of Customs. A investigation; and ‘‘advance ruling letter’’ is an advance ‘‘completed’’ NAFTA transaction is one (ii) The information provided ruling issued in response to a written which has been acted upon by a includes, orally or in writing, request and set forth in a letter Customs field office and with respect to substantially the same information as addressed to the person making the which that office has issued a that specified in paragraph (b)(3) of this request or his designee. A ‘‘published determination which is final in nature, section. advance ruling’’ is an advance ruling but is (or was) subject to appeal, (5) Tender of actual loss of duties. A which has been published in full text in petition, protest or other review as U.S. importer who makes a corrected the Customs Bulletin. provided in the applicable Customs declaration shall tender any actual loss (2) An authorized agent is a person laws and regulations. An ‘‘ongoing’’ of duties at the time of making the expressly authorized by a principal to NAFTA transaction is a series of corrected declaration, or within 30 act on his or her behalf. An advance identical, recurring transactions, calendar days thereafter, or within any ruling requested by an attorney or other consisting of current and completed extension of that 30-day period as person acting as an agent must include transactions where future transactions Customs may allow in order for the a statement describing the authority are contemplated. importer to obtain the information or under which the request is made. With (6) The term National Commodity data necessary to calculate the duties the exception of attorneys whose Specialist Division means the National owed. authority to represent is known, any Commodity Specialist Division, United (6) Applicability of prior disclosure person appearing before Customs as an States Customs Service, New York, New provisions. Where a person fails to meet agent in connection with an advance York. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46381 (b) General advance ruling practice. questions presented in the advance Marking Rules set forth in part 102 of An advance ruling may be requested ruling request, or by the authorized this chapter; under the provisions of this subpart agent of any such person: (viii) Whether an originating good with respect to prospective NAFTA (i) An importer in the United States; qualifies as a good of Canada or Mexico transactions. An advance ruling will be (ii) An exporter or a producer of a under Annex 300–B, Annex 302.2 and based on the facts and circumstances good in Canada or Mexico; or Chapter Seven of the NAFTA; and presented by the requester. (iii) A Canadian or Mexican producer (ix) Whether a good is a qualifying (1) Prospective NAFTA transactions. of a material that is used in the good under Chapter Seven of the It is in the interest of the sound production of a good imported into the NAFTA. administration of the NAFTA that United States, but only with regard to § 181.93 Submission of advance ruling persons engaging in any transaction that material and only in regard to a requests. affected by NAFTA fully understand the matter described in paragraphs (b)(6)(i) (a) Form. A request for an advance consequences of that transaction prior to through (v) and (vii) of this section. its consummation. For this reason, ruling should be written in the English (6) Subject matter of advance rulings. language and in the form of a letter. For Customs will give full and careful Customs shall issue advance rulings consideration to written requests from any subject matter specified in under this subpart concerning the § 181.92(b)(6) (i), (v), (vi), (vii), (viii) or importers in the United States and following: exporters or producers in Canada or (ix) of this part, the request may be (i) Whether materials imported from a directed either to the Commissioner of Mexico for advance rulings or country other than the United States, information setting forth, with respect to Customs, Attention: Office of Canada or Mexico and used in the Regulations and Rulings, Washington, a specifically described transaction, a production of a good undergo an definitive interpretation of applicable DC 20229, or to the National applicable change in tariff classification Commodity Specialist Division, United law or other appropriate information. set forth in General Note 12, HTSUS, as (2) Current or ongoing NAFTA States Customs Service, 6 World Trade a result of production occurring entirely transactions. A question arising in Center, New York, NY 10048. For any in the United States, Canada and/or connection with a NAFTA transaction subject matter specified in Mexico; already before a Customs field office by § 181.92(b)(6)(ii), (iii) or (iv) of this part, (ii) Whether a good satisfies a regional reason of arrival, entry or otherwise will the request must be directed to the value-content requirement under the be resolved by that office in accordance Commissioner of Customs, Attention: transaction value method or under the with the principles and precedents Office of Regulations and Rulings, previously announced by the net cost method as provided for in Washington, DC 20229. Headquarters Office. If such a question General Note 12, HTSUS, and in this (b) Content—(1) General. Each request cannot be resolved on the basis of part; for an advance ruling must identify the clearly established rules set forth in the (iii) For purposes of determining specific subject matter under NAFTA or the regulations thereunder, whether a good satisfies a regional § 181.92(b)(6) of this part to which the or in applicable Treasury Decisions, value-content requirement under request relates, must contain a complete rulings, opinions, or court decisions General Note 12, HTSUS, and under this statement of all relevant facts relating to published in the Customs Bulletin, that part, the appropriate basis or method for the NAFTA transaction and must state field office may, if it believes it value to be applied by an exporter or a that the information presented is appropriate, forward the question to the producer in Canada or Mexico, in accurate and complete. The following Headquarters Office for consideration. accordance with the principles set forth facts must be included: the names, (3) Completed NAFTA transactions. A in the appendix to this part, for addresses, and other identifying question arising in connection with an calculating the transaction value of the information of all interested parties (if entry of merchandise which has been good or of the materials used in the known); the name of the port or place liquidated, or in connection with any production of the good; at which any good involved in the other completed NAFTA transaction, (iv) For purposes of determining transaction will be imported or which may not be the subject of an advance whether a good satisfies a regional will otherwise have jurisdiction with ruling request under this subpart. value-content requirement under respect to the act or activity described (4) Oral advice. Customs will not General Note 12, HTSUS, and under this in the transaction; and a description of issue an advance ruling in response to part, the appropriate basis or method for the transaction itself, appropriate in an oral request. Oral opinions or advice reasonably allocating costs, in detail to the subject matter of the of Customs personnel are not binding on accordance with the allocation methods requested advance ruling. Where the Customs. However, oral inquiries may set forth in the appendix to this part, for request for an advance ruling is be made to Customs offices regarding calculating the net cost of the good or submitted by or on behalf of the existing advance rulings, the scope of the value of an intermediate material; importer of the good involved in the such advance rulings, the types of (v) Whether a good qualifies as an transaction, the request must include transactions with respect to which originating good under General Note 12, the name and address of the exporter Customs will issue advance rulings, the HTSUS, and under the appendix to this and, if known, producer of the good. scope of the advance rulings which may part; Where the request for an advance ruling be issued, or the procedures to be (vi) Whether a good that re-enters the is submitted by or on behalf of the followed in submitting advance ruling United States after having been exported exporter of the good involved in the requests, as prescribed in this subpart. from the United States to Canada or transaction, the request must include (5) Who may request an advance Mexico for repair or alteration qualifies the name and address of the producer ruling. An advance ruling may be for duty-free treatment in accordance and importer of the good, if known. requested by any of the following with § 181.64 of this part; Where the request for an advance ruling persons (individuals, corporations, (vii) Whether the proposed or actual is submitted by or on behalf of the partnerships, associations, or other marking of a good satisfies country of producer of the good involved in the entities or groups) having a direct and origin marking requirements under part transaction, the request must include demonstrable interest in the question or 134 of this chapter and under the the name and address of the exporter 46382 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations and importer of the good, if known. In (B) Issues involving a change in tariff requirement to the good. Where the net addition, where relevant to the issue classification of a material. Where the cost method is specified, the advance that is the subject of the request for an request for the advance ruling involves ruling request must include: a list of all advance ruling, and regardless of the the application of a rule of origin that product, period and other costs relevant specific nature of the advance ruling requires an assessment of whether to determining the total cost of the good requested, the request must include: materials used in the production of an as defined in the appendix to this part; (i) A copy of any advance ruling or imported good undergo an applicable a list of all excluded costs to be other ruling with respect to the tariff change in tariff classification, the subtracted from the total cost of the classification of the good that has been request must list each material used in good as provided in the appendix to this issued by Customs to the person the production of the good and must: part; information sufficient to calculate submitting the request; or (1) Identify each material which is the value of each non-originating (ii) Sufficient information to enable claimed to be an originating material material, or material the origin of which Customs to classify the good where no and provide a complete description of is unknown, that is used in the advance ruling or other ruling with each such material, including the basis production of the good, in accordance respect to the tariff classification of the for the claim as to originating status; with section 7 of the appendix to this good has been issued by Customs to the (2) Identify each material which is a part; the basis for any allocation of costs person submitting the request. Such non-originating material, or for which in accordance with schedule VII of the information includes a full description the origin is unknown, and provide a appendix to this part; the period over of the good, including, where relevant, complete description of each such which the net cost calculation is to be the composition of the good, a material, including its tariff made; and any other information description of the process by which the classification if known; and relevant to determining the appropriate (3) Describe all processing operations good is manufactured, a description of value of any cost under this part. Where employed in the production of the good, the packaging in which the good is the advance ruling request concerns the location of each operation and the contained, the anticipated use of the only the calculation of an element of a sequence in which the operations occur. regional value content formula, and good and its commercial, common or (iii) NAFTA rulings on regional value technical designation, and product with regard to the information specified content. NAFTA advance ruling in paragraphs (b)(1) through (b)(5) of literature, drawings, photographs or requests, if involving the issue of schematics. this section, the request need only whether a good satisfies a regional value contain the following: the information (2) Description of transaction—(i) content requirement under the General. The prospective Customs in paragraph (b)(1), other than the transaction value method or under the information specified in paragraph transaction to which the advance ruling net cost method, or under both methods, (b)(1)(i) or (b)(1)(ii); the information in request relates must be described in as provided for in General Note 12, paragraph (b)(5); and any information in sufficient detail to permit proper HTSUS, and in the appendix to this this paragraph (b)(2)(iii) which is application of the relevant NAFTA part, must specify each method under relevant to the issue that is the subject provisions. which eligibility is sought. Where the of the request. (ii) Tariff change rulings—(A) transaction value method is specified, (iv) NAFTA rulings on producer General. If the transaction involves the the advance ruling request must materials. Where the advance ruling importation of a good or material for include: information sufficient to request involves an issue with respect to which a ruling is requested as to calculate the transaction value of the an intermediate material under Article whether a change in tariff classification good in accordance with schedule II of 402(10) of the NAFTA (see section 7(4) has occurred, the request should set the appendix to this part with respect to of the appendix to this part), the request forth: The principal or chief use of the the transaction of the producer of the must contain sufficient information to good or material in the United States good, adjusted to an F.O.B. basis; determine the origin and value of the and the commercial, common, or information sufficient to calculate the material in accordance with Article technical designation of the good or value of each non-originating material, 402(11) of the NAFTA (see section 7(6) material; if the good or material is or material the origin of which is of the appendix to this part). Where the composed of two or more substances, unknown, that is used by the producer advance ruling request is submitted by the relative quantity (by both weight in the production of the good in a Canadian or Mexican producer of a and by volume) and value of each accordance with the provisions of material under § 181.92(b)(5)(iii) of this substance; any applicable special section 7 and, where applicable, section part and concerns only the origin of invoicing requirements set forth in part 6(10) of the appendix to this part; a such material, and with regard to the 141 of this chapter (if known); and any complete description of each material information specified in paragraphs other information which may assist in that is claimed to be an originating (b)(1) through (b)(5) of this section, the determining the appropriate tariff material and that is used in the request need only include the following: classification of the good or material. production of the good, including the the information in paragraph (b)(1), The advance ruling request should also basis for the claim as to originating including any information specified in note, whenever germane, the purchase status; information sufficient to permit paragraph (b)(1)(i) or (b)(1)(ii) which is price of the good or material, and its an examination of the factors relevant to the issue that is the subject approximate selling price in the United enumerated in schedule III or VIII of the of the request; any information in States. Each individual request for an appendix to this part where the advance paragraph (b)(2)(ii)(B) which is relevant advance ruling must be limited to five ruling request involves an issue of to the issue that is the subject of the merchandise items, all of which must be whether, with respect to the good or request; a sample as provided for in of the same class or kind. Only NAFTA material under the applicable schedule, paragraph (b)(3) if relevant to the issue tariff change rulings will be issued the transaction value is acceptable; and that is the subject of the request; and the under this subpart. Tariff classification information sufficient for any other information in paragraph (b)(5). rulings which do not involve the circumstance to make any (3) Samples. Each request for an application of the NAFTA shall be determination relevant to the advance ruling should be accompanied issued under part 177 of this chapter. application of the regional value content by photographs, drawings, or other Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46383 pictorial representations of the good (C) The status or disposition of any Requests for special consideration made and, whenever possible, by a sample of matter on which an affirmative by telegram or electronic transmission the good unless a precise description of statement is made under paragraph will be treated in the same manner as the good is not essential to the advance (b)(5)(i)(B) of this section; and requests made by letter, but advance ruling requested. Any good consisting of (D) Whether the transaction described rulings will not be issued by telegram or materials in chemical or physical in the advance ruling request is but one electronic transmission. A telegram or combination for which a laboratory of a series of similar and related electronic transmission must be analysis has been prepared by or for the transactions. followed up with a signed original manufacturer should include a copy of (ii) Change in status of transaction. If within 14 calendar days of the that analysis, flow charts, CAS number, a prospective transaction which is the submission of the telegram or electronic and related information. A sample subject of an advance ruling request transmission. In no event can any submitted in connection with a request becomes a current transaction, the assurance be given that a particular for an advance ruling becomes a part of person who submitted the request shall request for an advance ruling will be the Customs file in the matter and will so notify the office processing the acted upon by the time requested. be retained until the advance ruling is request. (6) Statement of position. If the § 181.94 Nonconforming requests for issued or the advance ruling request is advance rulings. otherwise disposed of. A sample should request for an advance ruling asks that A person submitting a request for an only be submitted with the a particular determination or conclusion advance ruling that does not comply understanding that all or a part of it may be reached in the advance ruling letter, with all of the provisions of this subpart be damaged or consumed in the course a statement must be included in the will be so notified in writing, and the of examination, testing, analysis, or request setting forth the basis for that requirements that have not been met other actions undertaken in connection determination or conclusion, together will be pointed out. Such person will be with the advance ruling request. with a citation of all relevant supporting authority. given a period of 30 calendar days from (4) Related documents. If the question (7) Privileged or confidential the date of the notice (or such longer or questions presented in the advance information. Information which is period as the notice may provide) to ruling request directly relate to matters claimed to constitute trade secrets or supply any additional information that set forth in any invoice, contract, privileged or confidential commercial or is requested or otherwise conform the agreement, or other document, a copy of financial information regarding the advance ruling request to the the document must be submitted with business transactions of private parties requirements referred to in the notice. the request. (Original documents should the disclosure of which would cause The Customs file with respect to not be submitted inasmuch as any substantial harm to the competitive advance ruling requests which are not documents or exhibits furnished with position of the person making the brought into compliance with the the advance ruling request become a request (or of another interested party) provisions of this subpart within the part of the Customs file in the matter must be identified clearly, and the period of time allowed will be and cannot be returned.) The relevant reasons such information should not be administratively closed and the request facts reflected in any documents disclosed, including, where applicable, removed from active consideration. A submitted, and an explanation of their the reasons the disclosure of the request for an advance ruling that is bearing on the question or questions information would prejudice the removed from active consideration by presented, must be expressly set forth in competitive position of the person reason of failure to comply with the the advance ruling request. making the request (or of another provisions of this subpart may be (5) Prior or current transactions.—(i) interested party), must be set forth. An treated as withdrawn. A failure to General. Each request for an advance advance ruling will not be issued until comply with the provisions of this ruling must state: all trade secret, privilege or subpart will result in the rejection of the (A) Whether, to the knowledge of the confidentiality issues are resolved (see advance ruling request with the notice person submitting the request, the same § 181.99(a)(3) of this part). specifying the deficiencies. transaction or issue, or one identical to (c) Signing; instruction as to reply. it, has ever been considered, or is The request for an advance ruling must § 181.95 Oral discussion of issues. currently being considered by any be signed by a person authorized to (a) General. A person submitting a Customs office; make the request, as described in request for an advance ruling and (B) Whether, to the knowledge of the § 181.92(b)(5) of this part. An advance desiring an opportunity to orally discuss person submitting the request, the issue ruling requested by a principal or the issue or issues involved should involved has ever been, or is currently, authorized agent may direct that the indicate that desire in writing at the the subject of: advance ruling letter be addressed to the time the advance ruling request is filed. (1) Review by the United States Court other. Such a discussion will only be of International Trade, the United States (d) Requests for immediate scheduled when, in the opinion of the Court of Appeals for the Federal Circuit, consideration. Customs will normally Customs personnel by whom the or any court of appeal therefrom, or process requests for advance rulings in advance ruling request is under review by a judicial or quasi-judicial the order they are received and as consideration, a conference will be body in Canada or Mexico; expeditiously as possible, as specified helpful in deciding the issue or issues (2) A verification of origin performed in § 181.99 of this part. However, a involved or when a determination or in the United States, Canada or Mexico; request that a particular matter be given conclusion contrary to that advocated in (3) An administrative appeal in the consideration ahead of its regular order, the advance ruling request is United States, Canada or Mexico; or if made in writing at the time the contemplated. Conferences are (4) A request for an advance ruling request is submitted, or subsequent scheduled for the purpose of affording under this subpart, or a request for an thereto, and showing a clear need for the parties an opportunity to freely and advance ruling in Canada or Mexico such treatment, will be given openly discuss the matters set forth in under an appropriate authority referred consideration as the particular the advance ruling request. Accordingly, to in § 181.76(d)(1) of this part; circumstances warrant and permit. the parties will not be bound by any 46384 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations argument or position advocated or any other final disposition of the ruling can be issued. In the course of agreed to, expressly or by implication, request. All correspondence, evaluating the advance ruling request during the conference unless either documents, and exhibits submitted in Customs may solicit supplemental party subsequently agrees to be so connection with the request will be information from the person requesting bound in writing. The conference will retained in the Customs file and will not the advance ruling. The submission of not conclude with the issuance of an be returned. In addition, the supplemental information will extend advance ruling letter. Headquarters Office may forward, to the time for response. The time for (b) Time, place and number of Customs field offices which have or may response will also be extended if it is conferences. If a request for a conference have jurisdiction over the transaction to necessary to obtain information from is granted, the person making the which the advance ruling request other government agencies or in the request will be notified of the time and relates, its views in regard to the form of a laboratory analysis. place of the conference. No more than transaction or the issues involved (2) Submission of NAFTA advance one conference with respect to the therein, as well as appropriate ruling letters to field offices. Any matters set forth in an advance ruling information derived from materials in importer engaging in a NAFTA request will be scheduled, unless, in the the Customs file. transaction with respect to which an opinion of the Customs personnel by advance ruling letter has been issued whom the advance ruling request is § 181.98 Situations in which no NAFTA under this subpart either must ensure advance ruling may be issued. under consideration, additional that a copy of the advance ruling letter conferences are necessary. (a) General. No advance ruling letter is attached to the documents filed with (c) Representation. A person whose will be issued in response to a request the appropriate Customs office in request for a conference has been therefor which fails to comply with the connection with that transaction or granted may be accompanied at that provisions of this subpart. No advance must otherwise indicate with the conference by counsel or other ruling letter will be issued in regard to information filed for that transaction representatives, or may designate such a completed transaction. that an advance ruling has been persons to attend the conference in his (b) Pending matters. Where a request received. Any person receiving an or her place. for an advance ruling involves an issue advance ruling stating Customs (d) Additional information presented that is under review in connection with determination must set forth such at conferences. It will be the an origin verification under subpart G of determination in the documents or responsibility of the person submitting this part or that is the subject of an information filed in connection with the request for an advance ruling to administrative review procedure any subsequent entry of that provide for inclusion in the Customs file provided for in subpart J of this part or merchandise; failure to do so may result in the matter a written record setting in part 174 of this chapter, Customs may in a rejection of the entry and the forth any and all additional information, decline to issue the requested advance imposition of such penalties as may be documents, and exhibits introduced ruling. In addition, no NAFTA advance appropriate. An advance ruling received during the conference to the extent that ruling letter will be issued with respect after the filing of such documents or person considers such material relevant to any issue which is pending before the information must immediately be to the consideration of the advance United States Court of International brought to the attention of the ruling request. Such information, Trade, the United States Court of appropriate Customs field office. documents and exhibits shall be given Appeals for the Federal Circuit, or any (3) Disclosure of NAFTA advance consideration only if received by court of appeal therefrom. Litigation ruling letters. No part of the advance Customs within 30 calendar days before any other court will not preclude ruling letter, including names, following the conference. the issuance of an advance ruling letter, addresses, or information relating to the provided neither Customs nor any of its business transactions of private parties, § 181.96 Change in status of transaction. officers or agents is named as a party to shall be deemed to constitute privileged Each person submitting a request for the action. or confidential commercial or financial an advance ruling in connection with a information or trade secrets exempt NAFTA transaction must immediately § 181.99 Issuance of NAFTA advance from disclosure pursuant to the rulings or other advice. advise Customs in writing of any change Freedom of Information Act, as in the status of that transaction upon (a) NAFTA advance ruling letters—(1) amended (5 U.S.C. 552), and part 103 of becoming aware of the change. In General. Except as otherwise provided this chapter, or shall be deemed to be particular, Customs must be advised in paragraph (a)(2) of this section, subject to the confidentiality principle when any transaction described in the Customs will, within 120 calendar days set forth in § 181.121 of this part, unless, advance ruling request as prospective of receipt of a request, including any as provided in § 181.93(b)(7) of this part, becomes current and under the required information supplemental the information claimed to be exempt jurisdiction of a Customs field office. In thereto, issue an advance ruling letter in from disclosure is clearly identified and addition, any person engaged in a the English language setting forth the a valid basis for nondisclosure is set NAFTA transaction coming under the position of Customs and the reasons forth. Before the issuance of the advance jurisdiction of a Customs field office therefor with respect to a specifically ruling letter, the person submitting the who has previously requested a NAFTA described Customs transaction advance ruling request will be notified advance ruling with respect to that whenever a request for such an advance of any decision adverse to his request transaction must advise the field office ruling is submitted in accordance with for nondisclosure and will, upon of that fact. the provisions of this subpart and it is written request to Customs within 10 in the sound administration of the working days of the date of notification, § 181.97 Withdrawal of NAFTA advance NAFTA provisions to do so. Otherwise, be permitted to withdraw the advance ruling requests. a request for an advance ruling will be ruling request. If in the opinion of Any request for an advance ruling answered by an information letter or, in Customs an impasse exists on the issue may be withdrawn by the person those situations in which general of confidentiality and the person who submitting it at any time before the information is likely to be of little or no submitted the advance ruling request issuance of an advance ruling letter or value, by a letter stating that no advance does not withdraw the request, Customs Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46385 will decline to issue the advance ruling. unliquidated, or to other transactions other than the person to whom the letter All advance ruling letters issued by with respect to which Customs has not was addressed. Accordingly, no other Customs will be available, upon written taken final action on that date. See, person may rely on the advance ruling request, for inspection and copying by however, paragraph (b) of this section letter or assume that the principles of any person (with any portions (ruling letters which modify previous that advance ruling will be applied in determined to be exempt from advance ruling letters) and § 181.101 of connection with any transaction other disclosure deleted). this part (advance ruling letters than the one described in the letter. (4) Penalties for misrepresented or published in the Customs Bulletin). However, any person eligible to request omitted material facts or for (2) Application of NAFTA rulings to an advance ruling under § 181.92(b)(5) noncompliance. If Customs determines transactions—(i) General. Each NAFTA of this part may request information as that an issued advance ruling was based ruling letter is issued on the assumption to whether a previously-issued advance on incorrect information, the person to that all of the information furnished in ruling letter has been modified or whom the advance ruling was issued connection with the ruling request and revoked by writing the Commissioner of may be subject to appropriate penalties incorporated in the ruling letter, either Customs, Attention: Office of unless that person demonstrates that he directly, by reference, or by implication, Regulations and Rulings, Washington, used reasonable care and acted in good is accurate and complete in every DC 20229, and either enclosing a copy faith in presenting the facts and material respect. The application of an of the advance ruling letter or furnishing circumstances on which the advance advance ruling letter by a Customs field other information sufficient to permit ruling was based. In addition, Customs office to the transaction to which it is the advance ruling letter in question to may apply such measures as the purported to relate is subject to the be identified. circumstances may warrant in a case verification of the facts incorporated in (b) Modification or revocation of where a person to whom an advance the advance ruling letter, a comparison NAFTA advance ruling letters—(1) ruling was issued has failed to act in of the transaction described therein to General. Any NAFTA advance ruling accordance with the terms and the actual transaction, and the letter may be modified or revoked by conditions of the advance ruling. satisfaction of any conditions on which Customs Headquarters in any of the (b) Other NAFTA advice and the advance ruling was based, and if the following circumstances or for any of guidance. The Headquarters Office may facts are materially different or a the following purposes, provided that on its own initiative from time to time condition has not been satisfied, the written notice of the modification or issue other external advice and treatment specified in the advance revocation is given to the person to guidance with respect to issues or ruling will not be applied to the actual whom the advance ruling letter was transactions arising under the NAFTA transaction. If, in the opinion of any addressed: which come to its attention. Such Customs field office by whom the (i) If the ruling letter reflects or is NAFTA advice and guidance, which transaction is under consideration or based on an error: represent the official position of review, the advance ruling letter should (A) Of fact; Customs and which are likely to be of be modified or revoked, the findings (B) In the tariff classification of a good widespread interest and application, are and recommendations of that office will or material that is the subject of the published in the Customs Bulletin, as be forwarded to the Headquarters Office ruling; described in § 181.101 of this part. for consideration, prior to any final (C) In the application of a regional Nothing in this subpart shall preclude disposition with respect to the value-content requirement under Customs from issuing advice and transaction by that office. If the General Note 12, HTSUS, and under this guidance to its field offices concerning transaction described in the NAFTA part; the application of the NAFTA. advance ruling letter and the actual transaction are the same, and any and (D) In the application of the rules for § 181.100 Effect of NAFTA advance ruling all conditions set forth in the advance determining whether a good qualifies as letters; modification and revocation. ruling letter have been satisfied, the a good of Canada or Mexico under (a) Effect of NAFTA advance ruling advance ruling will be applied to the Annex 300–B, Annex 302.2 or Chapter letters—(1) General. An advance ruling transaction. Seven of the NAFTA; letter issued by Customs under the (ii) Tariff change rulings. Each (E) In the application of the rules for provisions of this subpart represents the advance ruling letter concerning determining whether a good is a official position of Customs with respect whether a change in tariff classification qualifying good under Chapter Seven of to the particular transaction or issue has occurred will be applied only with the NAFTA; or described therein and is binding on all respect to transactions involving either (F) In the application of the rules for Customs personnel in accordance with articles which are identical to the determining whether a good qualifies the provisions of this subpart until sample submitted with the advance for duty-free treatment under § 181.64 of modified or revoked. In the absence of ruling request and reflect the same this part when the good re-enters the a change of practice or other processing or articles which conform to United States after having been exported modification or revocation which affects the description set forth in the advance to Canada or Mexico for repair or the principle of the advance ruling set ruling letter. alteration; forth in the advance ruling letter, that (iii) Regional value content rulings. (ii) If the ruling letter is not in principle may be cited as authority in Each advance ruling letter concerning accordance with an interpretation the disposition of transactions involving the application of a regional value agreed on by the United States, Canada the same circumstances. An advance content requirement will be applied and Mexico regarding Chapter Three or ruling letter is generally effective on the only with respect to transactions Chapter Four of the NAFTA; date it is issued or such later date as involving the same merchandise and (iii) If there is a change in the material may be specified in the advance ruling identical facts. facts or circumstances on which the and, commencing on its effective date, (3) Reliance on NAFTA advance ruling is based; may be applied to entries for rulings by others. An advance ruling (iv) To conform to a modification of consumption and warehouse letter is subject to modification or Chapter Three, Four, Five or Seven of withdrawals for consumption which are revocation without notice to any person the NAFTA, or of the Marking Rules, or 46386 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations of the regulations set forth in this part; for public inspection. Disclosure is of the request in connection with a or governed by 31 CFR part 1, part 103 of conference, is filed with Customs. (v) To conform to a judicial decision this chapter, and § 181.99(a)(3) of this (b) Judicial review. Any person whose or change in domestic law. part. claims with regard to a request for (2) Application of modification or administrative review of an advance revocation of NAFTA advance ruling § 181.102 Administrative and judicial ruling have been denied in whole or in review of advance rulings. letters. The modification or revocation part under this section may seek judicial of a NAFTA advance ruling letter will (a) Administrative review—(1) review by filing a civil action in the not be applied to entries or warehouse Submission of request for review. Any United States Court of International withdrawals for consumption which person who received an advance ruling Trade in accordance with 28 U.S.C. were made prior to the effective date of issued under this subpart, or an 2632 within 180 days after the date of such modification or revocation, except authorized agent of such person, may mailing of notice of the denial. where the person to whom the advance request administrative review, at ruling was issued has not acted in Customs Headquarters, of that advance Subpart JÐReview and Appeal of accordance with its terms and ruling, including any modification or Adverse Marking Decisions conditions. revocation thereof, by letter addressed (3) Effective dates. Generally, a to the Assistant Commissioner, Office of § 181.111 Applicability. NAFTA letter modifying or revoking an Regulations and Rulings, U.S. Customs This subpart sets forth the earlier advance ruling will be effective Service, Washington, DC 20229. Such circumstances and procedures under on the date it is issued. However, request shall be filed within 30 calendar which exporters and producers of Customs may, upon request or on its days after issuance of the advance ruling merchandise imported into the United own initiative, delay the effective date and shall set forth the following States may obtain information about, of such a modification or revocation for information: and administrative and judicial review a period of up to 90 calendar days from (i) The name and address of the of, an adverse marking decision, as the date of issuance. Such a delay may person seeking review and the name provided for in Article 510 of the be granted at the request of the party to and address of his authorized agent if NAFTA. This subpart does not apply to whom the ruling letter was issued, the request is signed by such an agent; the review of advance rulings issued provided such party can demonstrate to (ii) The Customs identification under Article 509 of the NAFTA (see the satisfaction of Customs that it relied number or employer identification subpart I of this part) or to the review on the earlier advance ruling in good number in the case of a U.S. importer of determinations that a good is not an faith and to its detriment. The evidence and authorized agent thereof, the originating good under General Note 12, of such reliance must cover the period employer number or importer/exporter HTSUS, and the appendix to this part from the date of the letter modifying or number assigned by Revenue Canada in (see part 174 of this chapter). revoking the advance ruling back to the the case of a Canadian exporter or date of that advance ruling and must list producer and authorized agent thereof, § 181.112 Definitions. all transactions claimed to be covered and the federal taxpayer registry number For purposes of this subpart, the by the modified or revoked advance (RFC) in the case of a Mexican exporter following words and phrases have the ruling by entry number (or other or producer and authorized agent meanings indicated: Customs assigned number), the quantity thereof; (a) Adverse marking decision means a and value of merchandise covered by (iii) The number and date of the decision made by the port director each such transaction (where advance ruling at issue; which an exporter or producer of applicable), the ports of entry, and the (iv) The numbers and dates of any merchandise believes to be contrary to dates of final action by Customs. Such involved entries for consumption or the provisions of Annex 311 of the evidence must also include contracts, warehouse withdrawals for NAFTA and which may be protested by purchase orders, or other materials consumption; the importer pursuant to § 514, Tariff tending to establish that future (v) The nature of, and justification for, Act of 1930, as amended (19 U.S.C. transactions were arranged based on the the objection to the advance ruling set 1514), and part 174 of this chapter. earlier advance ruling. The request for forth distinctly and specifically with Notification of an adverse marking delay must specifically identify the respect to each aspect of the advance decision is given to an importer in the prior ruling on which reliance is ruling for which administrative review form of a Customs Form 4647 (Notice to claimed. All persons requesting a delay is sought; and Mark and/or Notice to Redeliver) and/or will be issued a separate letter setting (vi) Whether an oral discussion of the by assessing marking duties on forth the period, if any, of the delay to issues, as provided in § 181.95 of this improperly marked merchandise. be provided. In appropriate part, is desired. Examples of adverse marking decisions circumstances, Customs may decide to (2) Issuance of review decision. include determinations by the port make its decision, with respect to a Customs will normally issue a written director: that an imported article is not delay, applicable to all persons, decision within 120 days of receipt of a good of a NAFTA country, as irrespective of demonstrated reliance; in the request for administrative review determined under the Marking Rules, this event, a notice announcing the submitted under this section. However, and that it therefore cannot be marked delay will be published in the Customs Customs will, upon a reasonable ‘‘Canada’’ or ‘‘Mexico’’; that a good of a Bulletin and individual ruling letters showing of business necessity, issue a NAFTA country is not marked in a will not be issued. written decision within 60 days of manner which is sufficiently receipt of the request for administrative permanent; and that a good of a NAFTA § 181.101 Publication of decisions. review. For purposes of this paragraph, country does not qualify for an Within 90 days after issuing any the date of receipt of the request for exception from marking specified in precedential decision relating to any administrative review shall be the date Annex 311 of the NAFTA. Adverse NAFTA transaction, Customs shall on which all information necessary to marking decisions do not include: publish the decision in the Customs process the request, including any decisions issued in response to requests Bulletin or otherwise make it available information provided after submission for advance rulings under subpart I of Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46387 this part or for internal advice under marking decision and the transaction to Intervention in Protest’’. The statement part 177 of this chapter; decisions on which it relates, including the date of shall be signed by the exporter, protests under part 174 of this chapter; the decision. producer or his authorized agent. The and determinations that an article does provisions of § 174.3 of this chapter not qualify as an originating good under § 181.114 Customs response to request. shall apply for purposes of signature by General Note 12, HTSUS, and the (a) Time for response. The port a person other than the principal. appendix to this part. director will issue a written response to (c) Content. The NAFTA Exporter or (b) An exporter of merchandise is an the requestor within 30 days of receipt Producer Intervention in Protest letter exporter located in Canada or Mexico of a request containing the information shall include the following: who must maintain records in that specified in § 181.113 of this part. If the (1) The name and address of the country relating to the transaction to request is incomplete, such that the exporter or producer of the merchandise which the adverse marking decision transaction in question cannot be and the name and address of any relates. The records must be sufficient to identified, the port director will notify authorized agent filing the request on enable Customs to evaluate the merits of the requestor in writing within 30 days behalf of such principal; the exporter’s claim(s) regarding the of receipt of the request regarding what (2) In the case of a Canadian exporter adverse marking decision. information is needed. or producer, the employer number (c) A producer of merchandise is a (b) Content. The response by the port assigned by Revenue Canada, Customs person who grows, mines, harvests, director shall include the following: and Excise; in the case of a Mexican fishes, traps, hunts, manufactures, (1) A statement concerning the basis exporter or producer, the Federal processes or assembles such for the adverse marking decision; taxpayer registry number (RFC); and the merchandise in Canada or Mexico. (2) A copy of the relevant Customs Customs identification number of an Form 4647 (Notice to Mark and/or authorized agent filing the request on § 181.113 Request for basis of adverse Notice to Redeliver), if one was issued behalf of such principal; marking decision. to the importer and is available. If the (3) The number and date of each entry (a) Request; form and filing. The basis for the adverse marking decision is involved in the adverse marking exporter or producer of the merchandise indicated on the Customs Form 4647, no decision; which is the subject of an adverse statement under paragraph (b)(1) of this (4) A specific description of the marking decision may request a section is required; merchandise which is the subject of the statement concerning the basis for the (3) A statement as to whether the adverse marking decision; decision by filing a typewritten request, importer has filed a protest regarding (5) A complete statement of all in English, with the port director who the adverse marking decision and, if so, relevant facts relating to the adverse issued the decision. The request should where the protest was filed and the marking decision and the transaction to be on letterhead paper in the form of a protest number; and which it relates, including the date of letter and clearly designated as a (4) A statement concerning the the decision; ‘‘Request for Basis of Adverse Marking exporter’s or producer’s right to either (6) A detailed statement of position Decision’’ and shall be signed by the intervene in the importer’s protest as regarding why the exporter or producer exporter, producer or his authorized provided in § 181.115 of this part or file believes the adverse marking decision is agent. The provisions of § 174.3 of this a petition as provided in § 181.116 of contrary to the provision of Annex 311 chapter shall apply for purposes of this part. of the NAFTA; signature by a person other than the (7) A statement as to whether a principal. § 181.115 Intervention in importer's Request for Basis of Adverse Marking protest. (b) Content. The Request for Basis of Decision was filed under § 181.113 of Adverse Marking Decision letter shall (a) Conditional right to intervene. An this part, and if so, the date of such set forth the following information: exporter or producer of merchandise Request and of any Customs response (1) The name and address of the does not have an independent right to thereto issued under § 181.114 of this exporter or producer of the merchandise protest an adverse marking decision. part. Copies of the Request and the and the name and address of any However, if an importer protests the Customs response shall be submitted, if authorized agent filing the request on adverse marking decision in accordance available; behalf of such principal; with section 514, Tariff Act of 1930, as (8) The number assigned to the (2) A statement that the inquirer is the amended (19 U.S.C. 1514), and part 174 importer’s protest; exporter or producer of the merchandise of this chapter, the exporter or producer (9) A statement that the intervenor is that was the subject of the adverse of the merchandise which is the subject the exporter or producer of the marking decision; of the adverse marking decision may merchandise that was the subject of the (3) In the case of a Canadian exporter intervene in the importer’s protest. Such adverse marking decision being or producer, the employer number intervention shall not affect any time protested by the importer and, if the assigned by Revenue Canada, Customs limits applicable to the protest or delay intervenor is the exporter, a statement and Excise; in the case of a Mexican action on the protest. that it maintains sufficient records to exporter or producer, the Federal (b) Form and filing of intervention. In enable Customs to evaluate the merits of taxpayer registry number (RFC); and the order to intervene in an importer’s its claim(s) regarding the adverse Customs identification number of an protest, as provided for in paragraph (a) marking decision; and authorized agent filing the request on of this section, the exporter or producer (10) If the intervenor prefers that the behalf of such principal; of the merchandise shall file, in principle of confidentiality set forth in (4) The number and date of each entry triplicate, a typewritten statement of § 181.121 of this part be applied to the involved in the request; intervention, in English, with the port information submitted under this (5) A specific description of the director with whom the protest was section, a statement to that effect. If no merchandise which is the subject of the filed. The statement should be on such statement is included in the letter, adverse marking decision; and letterhead paper in the form of a letter the intervention and information (6) A complete statement of all and should be clearly designated submitted in connection therewith shall relevant facts relating to the adverse ‘‘NAFTA Exporter or Producer be subject to the same treatment as that 46388 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations provided in the case of requests by all that the exporter or producer was not background information are received at interested parties for consolidation of given notice of the pending protest Customs Headquarters, the Director, protests as set forth in § 174.15(b)(1) of pursuant to § 181.114 of this part. If the Tariff Classification Appeals Division, this chapter. importer filed a protest on which final shall determine if the petition is to be (d) Effect of Intervention. The rights of administrative action has not been taken granted or denied, in whole or in part, the intervenor under this section are and notice of the pending protest was and the petitioner shall be notified in subordinate to the importer’s protest not provided to the exporter or producer writing of the determination. If the rights. Accordingly, intervention by an under § 181.114 of this part, a petition petition is granted in whole or in part, exporter or producer of merchandise filed under this section shall be treated a description of the merchandise, a brief will not affect the procedures under part by the port director as an intervention summary of the issue(s) and the 174 of this chapter, and the importer’s under § 181.115 of this part. director’s findings will be published in elections concerning accelerated (b) Form and filing of petition. A the Customs Bulletin. disposition and application for further petition under this section shall be (3) Effect of granting the petition. The review of the protest will govern how typewritten, in English, and shall be decision on the petition, if contrary to the protest is handled and how the filed, in triplicate, with the port director the initial adverse marking decision, intervention is considered. If the who issued the adverse marking will be implemented with respect to importer withdraws or settles the decision. The petition under this protest, the exporter or producer has no subpart should be on letterhead paper in merchandise entered or withdrawn from right to continue the intervention the form of a letter, clearly designated warehouse for consumption after 30 action. as a ‘‘Petition for NAFTA Review of days from the date on which the notice (e) Action by port director. If final Adverse Marking Decision’’ and shall be of determination is published in the administrative action has already been signed by the exporter, producer or his Customs Bulletin. taken with respect to the importer’s authorized agent. The provisions of (e) Pending litigation. No decision on protest at the time the intervention is § 174.3 of this chapter shall apply for a petition will be issued under this filed, the port director shall so advise purposes of signature by a person other section with respect to any issue which the exporter or producer and, if the than the principal. is pending before the United States importer has filed a civil action in the (c) Content. The Petition for NAFTA Court of International Trade, the United Court of International Trade as a result Review of Adverse Marking Decision States Court of Appeals for the Federal of a denial of the protest, the port letter shall contain all the information Circuit, or any court of appeal director shall advise the exporter or specified § 181.115 of this part, except therefrom. Litigation before any other producer of that filing and of the for the protest number. It shall also court will not preclude the issuance of exporter’s or producer’s right to seek to include a statement that petitioner was a decision on a petition under this intervene in such judicial proceeding. If not notified by Customs in writing of a section, provided neither Customs nor final administrative action has not been pending protest. any of its officers or agents is named as taken on the protest, the port director (d) Review of petition—(1) Review by a party to the action. port director. Within 60 days of the date shall forward the intervention letter to (f) Judicial review of denial of of receipt of the petition, the port the Customs office which has the petition. importer’s protest under review for director shall determine if the petition consideration in connection with the is to be granted or denied, in whole or Any person whose petition under this protest. in part. If, after reviewing the petition, section has been denied, in whole or in (f) Final disposition. The intervenor the port director agrees with all of the part, may contest the denial by filing a shall be notified in writing of the final petitioner’s claims and determines that civil action in the United States Court disposition of the protest. If the protest the initial adverse marking decision was of International Trade within 30 days is denied in whole or in part, the not correct, a written notice granting the after the date of mailing of the notice of intervenor shall be furnished a copy of petition shall be issued to the petitioner. denial. A description of the merchandise, a the notice given to the importer under Subpart KÐConfidentiality of Business § 174.29. brief summary of the issue(s) and the port director’s findings shall be Information § 181.116 Petition regarding adverse forwarded to the Director, Tariff § 181.121 Maintenance of confidentiality. marking decision. Classification Appeals Division, (a) Right to petition. If the importer Customs Headquarters, for publication The port director or other Customs does not protest an adverse marking in the Customs Bulletin. If, after officer who has possession of decision in accordance with section reviewing the petition, the port director confidential business information 514, Tariff Act of 1930, as amended (19 determines that the initial adverse collected pursuant to this part shall, in U.S.C. 1514), and part 174 of this marking decision was correct in its accordance with part 103 of this chapter, the exporter or producer of the entirety, a written notice shall be issued chapter, maintain its confidentiality and merchandise which was the subject of to the petitioner advising that the matter protect it from any disclosure that could the adverse marking decision may file a has been forwarded to the Director, prejudice the competitive position of petition with Customs requesting Tariff Classification Appeals Division, the persons providing the information. reconsideration of the decision. The Customs Headquarters, for further petition may not be filed until after the § 181.122 Disclosure to government review and decision. All relevant authorities. importer’s time to protest the adverse background information, including marking decision has expired (see available samples, a description of the Nothing in § 181.121 of this part shall § 174.12(e) of this chapter for the time adverse marking decision and the preclude the disclosure of confidential limits for filing protests). If the importer reasons for the decision, and the port business information to governmental filed a protest upon which final director’s recommendation shall be authorities in the United States administrative action has been taken, furnished to Headquarters. responsible for the administration and the exporter or producer may file a (2) Review by Headquarters. Within enforcement of determinations of origin petition under this section, provided 120 days of the date the petition and and of customs and revenue matters. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46389 Subpart LÐRules of Origin NAFTA that were in effect prior to remainder of that fiscal year, provided October 1, 1995 (see 19 CFR chapter I, that: § 181.131 Rules of origin. 1994 edition, appendix to part 181) (1) The producer of the goods has (a) The regulations effective October continue to apply in regard to all goods made an election under section 12(1) of 1, 1995, implementing the rules of produced by that producer for the those regulations or has provided a origin provisions of General Note 12, remainder of that fiscal year. statement referred to in section 9(6) or HTSUS, and Chapter Four of the (c) If a motor vehicle producer’s fiscal NAFTA are contained in the appendix year that has been chosen by a producer 10(8) of those regulations that states the to this part. of goods pursuant to section 12(5) of the value of non-originating materials (b) If the fiscal year of a producer of regulations referred to in paragraph (b) determined in accordance with section goods begins before October 1, 1995, the of this section begins before October 1, 12(3) of those regulations; and producer may choose to have the 1995, the producer of the goods may (2) The period chosen under section regulations implementing the rules of choose to have those regulations 12(5) of those regulations is the fiscal origin provisions of General Note 12, continue to apply in regard to the goods year of the motor vehicle producer to HTSUS, and Chapter Four of the produced by that producer for the whom those goods are sold. Appendix to Part 181—Rules of Origin Regulations SECTION 1. CITATION This Appendix may be cited as the NAFTA Rules of Origin Regulations. PART I SECTION 2. DEFINITIONS AND INTERPRETATION Definitions (1) For purposes of this Appendix, ‘‘accessories, spare parts or tools that are delivered with a good and form part of the good’s standard accessories, spare parts or tools’’ means goods that are delivered with a good, whether or not they are physically affixed to that good, and that are used for the transport, protection, maintenance or cleaning of the good, for instruction in the assembly, repair or use of that good, or as replacements for consumable or interchangeable parts of that good; ‘‘adjusted to an F.O.B. basis’’ means, with respect to a good, adjusted by (a) deducting (i) the costs of transporting the good after it is shipped from the point of direct shipment, (ii) the costs of unloading, loading, handling and insurance that are associated with that transportation, and (iii) the cost of packing materials and containers, where those costs are included in the transaction value of the good, and (b) adding (i) the costs of transporting the good from the place of production to the point of direct shipment, (ii) the costs of loading, unloading, handling and insurance that are associated with that transportation, and (iii) the costs of loading the good for shipment at the point of direct shipment, where those costs are not included in the transaction value of the good; ‘‘Agreement’’ means the North American Free Trade Agreement; ‘‘applicable change in tariff classification’’ means, with respect to a non-originating material used in the production of a good, a change in tariff classification specified in a rule set out in Schedule I for the tariff provision under which the good is classified; ‘‘automotive component’’ means a good that is referred to in column I of an item of Schedule V; ‘‘automotive component assembly’’ means a good, other than a heavy-duty vehicle, that incorporates an automotive com- ponent; ‘‘costs incurred in packing’’ means, with respect to a good or material, the value of the packing materials and containers in which the good or material is packed for shipment and the labor costs incurred in packing it for shipment, but does not include the costs of preparing and packaging it for retail sale; ‘‘customs value’’ means (a) in the case of Canada, value for duty as defined in the Customs Act, except that for purposes of determining that value the reference in section 55 of that Act to ‘‘in accordance with the regulations made under the Currency Act’’ shall be read as a reference to ‘‘in accordance with subsection 3(1) of these Regulations’’, (b) in the case of Mexico, the valor en aduana as determined in accordance with the Ley Aduanera, converted, in the event such value is not expressed in Mexican currency, to Mexican currency at the rate of exchange determined in ac- cordance with subsection 3(1) of these Regulations, and (c) in the case of the United States, the value of imported merchandise as determined by the Customs Service in ac- cordance with section 402 of the Tariff Act of 1930, as amended, converted, in the event such value is not expressed in United States currency, to United States currency at the rate of exchange determined in accordance with subsection 3(1) of these Regulations. ‘‘days’’ means calendar days, and includes weekends and holidays; ‘‘direct labor costs’’ means costs, including fringe benefits, that are associated with employees who are directly involved in the production of a good; ‘‘direct material costs’’ means the value of materials, other than indirect materials and packing materials and containers, that are used in the production of a good; ‘‘direct overhead’’ means costs, other than direct material costs and direct labor costs, that are directly associated with the production of a good; 46390 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations ‘‘enterprise’’ means any entity constituted or organized under applicable laws, whether or not for profit and whether pri- vately owned or governmentally owned, including any corporation, trust, partnership, sole proprietorship, joint venture or other association; ‘‘excluded costs’’ means sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs; ‘‘fungible goods’’ means goods that are interchangeable for commercial purposes and the properties of which are essen- tially identical; ‘‘fungible materials’’ means materials that are interchangeable for commercial purposes and the properties of which are es- sentially identical; ‘‘Harmonized System’’ means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes, as set out in (a) in the case of Canada, the Customs Tariff, (b) in the case of Mexico, the Tarifa de la Ley del Impuesto General de Importacio´ n, and (c) in the case of the United States, the Harmonized Tariff Schedule of the United States; ‘‘heavy-duty vehicle’’ means a motor vehicle provided for in any of heading 8701, tariff items 8702.10.30 and 8702.90.30 (vehicles for the transport of 16 or more persons), subheadings 8704.10, 8704.22, 8704.23, 8704.32 and 8704.90 and head- ing 8705 and 8706; ‘‘identical goods’’ means, with respect to a good, goods that (a) are the same in all respects as that good, including physical characteristics, quality and reputation but excluding minor differences in appearance, (b) were produced in the same country as that good, and (c) were produced (i) by the producer of that good, or (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good; ‘‘identical materials’’ means, with respect to a material, materials that (a) are the same as that material in all respects, including physical characteristics, quality and reputation but exclud- ing minor differences in appearance, (b) were produced in the same country as that material, and (c) were produced (i) by the producer of that material, or (ii) by another producer, where no materials that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that material; ‘‘incorporated’’ means, with respect to the production of a good, a material that is physically incorporated into that good, and includes a material that is physically incorporated into another material before that material or any subsequently pro- duced material is used in the production of the good; ‘‘indirect material’’ means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the produc- tion of a good, and includes (a) fuel and energy, (b) tools, dies and molds, (c) spare parts and materials used in the maintenance of equipment and buildings, (d) lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings, (e) gloves, glasses, footwear, clothing, safety equipment and supplies, (f) equipment, devices and supplies used for testing or inspecting the other goods, (g) catalysts and solvents, and (h) any other goods that are not incorporated into the good but the use of which in the production of the good can rea- sonably be demonstrated to be part of that production; ‘‘interest costs’’ means all costs paid or payable by a person to whom credit is, or is to be advanced, for the advancement of credit or the obligation to advance credit; ‘‘intermediate material’’ means a self-produced material that is used in the production of a good and is designated as an intermediate material under section 7(4) ; ‘‘light-duty automotive good’’ means a light-duty vehicle or a good of a tariff provision listed in Schedule IV that is subject to a regional value-content requirement and is for use as original equipment in the production of a light-duty vehicle; ‘‘light-duty vehicle’’ means a motor vehicle provided for in any of tariff items 8702.10.60 and 8702.90.60 (vehicles for the transport of 15 or fewer persons) and subheadings 8703.21 through 8703.90, 8704.21 and 8704.31; ‘‘listed material’’ means a good that is referred to in column II of an item of Schedule V; ‘‘location of the producer’’ means, (a) where the warehouse or other receiving station at which a producer receives materials for use by the producer in the production of a good is located within a radius of 75 km (46.60 miles) from the place at which the producer pro- duces the good, the location of that warehouse or other receiving station, and (b) in any other case, the place at which the producer produces the good in which a material is to be used; ‘‘material’’ means a good that is used in the production of another good, and includes a part or ingredient; ‘‘motor vehicle assembler’’ means a producer of motor vehicles and any related person with whom, or joint venture in which, the producer participates with respect to the production of motor vehicles; ‘‘month’’ means a calendar month; ‘‘NAFTA country’’ means a Party to the Agreement; ‘‘national’’ means a natural person who is a citizen or permanent resident of a NAFTA country, and includes Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46391 (a) with respect to Mexico, a national or citizen according to Articles 30 and 34, respectively, of the Mexican Constitu- tion, and (b) with respect to the United States, a ‘‘national of the United States’’ as defined in the Immigration and Nationality Act on the date of entry into force of the Agreement; ‘‘net cost method’’ means the method of calculating the regional value content of a good that is set out in section 6(3); ‘‘non-allowable interest costs’’ means interest costs incurred by a producer on the producer’s debt obligations that are more than 700 basis points above the yield on debt obligations of comparable maturities issued by the federal government of the country in which the producer is located; ‘‘non-originating good’’ means a good that does not qualify as originating under this Appendix; ‘‘non-originating material’’ means a material that does not qualify as originating under this Appendix; ‘‘original equipment’’ means a material that is incorporated into a motor vehicle before the first transfer of title or consign- ment of the motor vehicle to a person who is not a motor vehicle assembler, and that is (a) a good of a tariff provision listed in Schedule IV, or (b) an automotive component assembly, automotive component, sub-component or listed material; ‘‘originating good’’ means a good that qualifies as originating under this Appendix; ‘‘originating material’’ means a material that qualifies as originating under this Appendix; ‘‘other costs,’’ with respect to total cost, means all costs that are not product costs or period costs; ‘‘packaging materials and containers’’ means materials and containers in which a good is packaged for retail sale; ‘‘packing materials and containers’’ means materials and containers that are used to protect a good during transportation, but does not include packaging materials and containers; ‘‘payments’’ means, with respect to royalties and sales promotion, marketing and after-sales service costs, the costs ex- pensed on the books of a producer, whether or not an actual payment is made; ‘‘period costs’’ means costs, other than product costs, that are expensed in the period in which they are incurred; ‘‘person’’ means a natural person or an enterprise; ‘‘person of a NAFTA country’’ means a national, or an enterprise constituted or organized under the laws of a NAFTA country; ‘‘point of direct shipment’’ means the location from which a producer of a good normally ships that good to the buyer of the good; ‘‘producer’’ means a person who grows, mines, harvests, fishes, traps, hunts, manufactures, processes or assembles a good; ‘‘product costs’’ means costs that are associated with the production of a good, and includes the value of materials, direct labor costs and direct overhead; ‘‘production’’ means growing, mining, harvesting, fishing, trapping, hunting, manufacturing, processing or assembling a good; ‘‘related person’’ means a person related to another person on the basis that (a) they are officers or directors of one another’s businesses, (b) they are legally recognized partners in business, (c) they are employer and employee, (d) any person directly or indirectly owns, controls or holds 25 percent or more of the outstanding voting stock or shares of each of them, (e) one of them directly or indirectly controls the other, (f) both of them are directly or indirectly controlled by a third person, or (g) they are members of the same family (members of the same family are natural or adopted children, brothers, sis- ters, parents, grandparents, or spouses); ‘‘reusable scrap or by-product’’ means waste and spoilage that is generated by the producer of a good and that is used in the production of a good or sold by that producer; ‘‘right to use,’’ for purposes of the definition of royalties, includes the right to sell or distribute a good; ‘‘royalties’’ means payments of any kind, including payments under technical assistance agreements or similar agreements, made as consideration for the use of, or right to use, any copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, secret formula or process, excluding those payments under technical assistance agreements or similar agreements that can be related to specific services such as (a) personnel training, without regard to where performed, and (b) if performed in the territory of one or more of the NAFTA countries, engineering, tooling, die-setting, software de- sign and similar computer services, or other services; ‘‘sales promotion, marketing and after-sales service costs’’ means the following costs related to sales promotion, marketing and after-sales service: (a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstra- tion materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after-sales service literature (product brochures, catalogs, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment; (b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives; (c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), traveling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel; (d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customers’ employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; (e) product liability insurance; 46392 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified sepa- rately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; (g) telephone, mail and other communications, where such costs are identified separately for sales promotion, market- ing and after-sales service of goods on the financial statements or cost accounts of the producer; (h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centers; (i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after-sales service offices and distribution centers, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and (j) payments by the producer to other persons for warranty repairs; ‘‘self-produced material’’ means a material that is produced by the producer of a good and used in the production of that good; ‘‘shipping and packing costs’’ means the costs incurred in packing a good for shipment and shipping the good from the point of direct shipment to the buyer, excluding the costs of preparing and packaging the good for retail sale; ‘‘similar goods’’ means, with respect to a good, goods that (a) although not alike in all respects to that good, have similar characteristics and component materials that enable the goods to perform the same functions and to be commercially interchangeable with that good, (b) were produced in the same country as that good, and (c) were produced (i) by the producer of that good, or (ii) by another producer, where no goods that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that good; ‘‘similar materials’’ means, with respect to a material, materials that (a) although not alike in all respects to that material, have similar characteristics and component materials that enable the materials to perform the same functions and to be commercially interchangeable with that material, (b) were produced in the same country as that material, and (c) were produced (i) by the producer of that material, or (ii) by another producer, where no materials that satisfy the requirements of paragraphs (a) and (b) were produced by the producer of that material; ‘‘subject to a regional value-content requirement’’ means, with respect to a good, that the provisions of this Appendix that are applied to determine whether the good is an originating good include a regional value-content requirement; ‘‘sub-component’’ means a good that comprises a listed material and one or more other materials or listed materials; ‘‘tariff provision’’ means a heading, subheading or tariff item; ‘‘territory’’ means, with respect to (a) Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources, (b) Mexico, (i) the states of the Federation and the Federal District, (ii) the islands, including the reefs and keys, in adjacent seas, (iii) the islands of Guadalupe and Revillagigedo situated in the Pacific Ocean, (iv) the continental shelf and the submarine shelf of such islands, keys and reefs, (v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters, (vi) the space located above the national territory, in accordance with international law, and (vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea, and its domestic law, Mexico may exercise rights with re- spect to the seabed and subsoil and their natural resources, and (c) the United States, (i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico, (ii) the foreign trade zones located in the United States and Puerto Rico, and (iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natu- ral resources; ‘‘total cost’’ means the total of all product costs, period costs and other costs incurred in the territory of one or more of the NAFTA countries; ‘‘transaction value method’’ means the method of calculating the regional value content of a good that is set out in sub- section 6(2); ‘‘used’’ means used or consumed in the production of a good; ‘‘verification of origin’’ means a verification of origin of goods under (a) in the case of Canada, paragraph 42.1(1)(a) or subsection 42.2(2) of the Customs Act, (b) in the case of Mexico, Article 506 of the Agreement, and (c) in the case of the United States, section 509 of the Tariff Act of 1930, as amended. Interpretation: ‘‘similar’’ (2) For purposes of the definitions of ‘‘similar goods’’ and ‘‘similar materials,’’ the quality of the goods or materials, their reputation and the existence of a trademark are among the factors to be considered for purposes of determining whether goods or materials are similar. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46393 Interpretation: terms used to refer to HTSUS; use of term ‘‘books’’ (3) For purposes of this Appendix, (a) ‘‘chapter,’’ unless otherwise indicated, refers to a chapter of the Harmonized System; (b) ‘‘heading’’ refers to any four-digit number, or the first four digits of any number, set out in the column ‘‘Heading/ Subheading’’ in the Harmonized System; (c) ‘‘subheading’’ refers to any six-digit number, or the first six digits of any number, set out in the column ‘‘Heading/ Subheading’’ in the Harmonized System; (d) ‘‘tariff item’’ refers to any eight-digit number set out in the column ‘‘Heading/Subheading’’ in the Harmonized Sys- tem; (e) any reference to a tariff item in Chapter Four of the Agreement or this Appendix that includes letters shall be re- flected as the appropriate eight-digit number in the Harmonized System as implemented in each NAFTA country; and (f) ‘‘books’’ refers to, (i) with respect to the books of a person who is located in a NAFTA country, (A) books and other documents that support the recording of revenues, expenses, costs, assets and liabilities and that are maintained in accordance with Generally Accepted Accounting Principles set out in the publica- tions listed in Schedule XII with respect to the territory of the NAFTA country in which the person is lo- cated, and (B) financial statements, including note disclosures, that are prepared in accordance with Generally Accepted Accounting Principles set out in the publications listed in Schedule XII with respect to the territory of the NAFTA country in which the person is located, and (ii) with respect to the books of a person who is located outside the territories of the NAFTA countries, (A) books and other documents that support the recording of revenues, expenses, costs, assets and liabilities and that are maintained in accordance with generally accepted accounting principles applied in that location or, where there are no such principles, in accordance with the International Accounting Standards, and (B) financial statements, including note disclosures, that are prepared in accordance with generally accepted accounting principles applied in that location or, where there are no such principles, in accordance with the International Accounting Standards. Use of Examples to illustrate the application of a provision (4) Where an example, referred to as an ‘‘Example,’’ is set out in this Appendix, the example is for purposes of illustrating the application of a provision, and where there is any inconsistency between the example and the provision, the provision prevails to the extent of the inconsistency. References to domestic laws (5) Except as otherwise provided, references in this Appendix to domestic laws of the NAFTA countries apply to those laws as they may be amended or superseded. Calculation of total cost (6) For purposes of sections 5(9), 6(11) and 7(6) and sections 10(1)(a) (i) and (ii), (a) total cost consists of all product costs, period costs and other costs that are recorded, except as otherwise provided in paragraphs (b) (i) and (ii), on the books of the producer without regard to the location of the persons to whom pay- ments with respect to those costs are made; (b) in calculating total cost, (i) the value of materials, other than intermediate materials, indirect materials and packing materials and contain- ers, shall be the value determined in accordance with section 7(1), (ii) the value of intermediate materials used in the production of the good or material with respect to which total cost is being calculated shall be calculated in accordance with section 7(6), (iii) the value of indirect materials and the value of packing materials and containers shall be the costs that are re- corded on the books of the producer for those materials, and (iv) product costs, period costs and other costs, other than costs referred to in subparagraphs (i) and (ii), shall be the costs thereof that are recorded on the books of the producer for those costs; (c) total cost does not include profits that are earned by the producer, regardless of whether they are retained by the producer or paid out to other persons as dividends, or taxes paid on those profits, including capital gains taxes; (d) gains related to currency conversion that are related to the production of the good shall be deducted from total cost, and losses related to currency conversion that are related to the production of the good shall be included in total cost; and (e) the value of materials with respect to which production is accumulated under section 14 shall be determined in ac- cordance with that section. (7) For purposes of calculating total cost under sections 5(9) and 7(6) and sections 10(1)(a) (i) and (ii), (a) where the regional value content of the good is calculated on the basis of the net cost method and the producer has chosen under section 6(15), 11 (1), (3) or (6), 12(5) or 13(4) to calculate the regional value content over a period, the total cost shall be calculated over that period; and (b) in any other case, the producer may choose that the total cost be calculated over (i) a month, (ii) any consecutive three month or six month period that falls within and is evenly divisible into the number of months of the producer’s fiscal year remaining at the beginning of that period, or (iii) the producer’s fiscal year. (8) A choice made under subsection (7) may not be rescinded or modified with respect to the good or material, or the pe- riod, with respect to which the choice is made. 46394 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (9) Where a producer chooses a one, three or six month period under subsection (7) with respect to a good or material, the producer shall be considered to have chosen under that subsection a period or periods of the same duration for the re- mainder of the producer’s fiscal year with respect to that good or material. (10) With respect to a good exported to a NAFTA country, a choice to average is considered to have been made (a) in the case of a choice referred to in section 11 (1), (3) or (6) or 13(4), if the choice is received by the customs ad- ministration of that NAFTA country; and (b) in the case of a choice referred to in section 2(7), 6(15) or 12(1), if the customs administration of that NAFTA country is informed in writing during the course of a verification of the origin of the good that the choice has been made. SECTION 3. CURRENCY CONVERSION (1) Where the value of a good or a material is expressed in a currency other than the currency of the country in which the producer of the good is located, that value shall be converted to the currency of the country in which that producer is lo- cated on the basis of (a) in the case of the sale of that good or the purchase of that material, the rate of exchange used by the producer for purposes of recording that sale or purchase, as the case may be; and (b) in the case of a material that is acquired by the producer other than by a purchase, (i) where the producer used a rate of exchange for purposes of recording another transaction in that other cur- rency that occurred within 30 days of the date on which the producer acquired the material, that rate, and (ii) in any other case, (A) with respect to a producer located in Canada, the rate of exchange referred to in section 5 of the Currency Exchange for Customs Valuation Regulations for the date on which the material was shipped directly to the producer, (B) with respect to a producer located in Mexico, the rate of exchange published by the Banco de Mexico in the Diario Oficial de la Federacion, under the title ‘‘TIPO de cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en la Republica Mexicana’’, for the date on which the material was shipped directly to the producer, and (C) with respect to a producer located in the United States, the rate of exchange referred to in 31 U.S.C. 5151 for the date on which the material was shipped directly to the producer. (2) Where a producer of a good has a statement referred to in section 9, 10 or 14 that includes information in a currency other than the currency of the country in which that producer is located, the currency shall be converted to the currency of the country in which the producer is located on the basis of (a) if the material was purchased by the producer in the same currency as the currency in which the information in the statement is provided, the rate of exchange used by the producer for purposes of recording the purchase; (b) if the material was purchased by the producer in a currency other than the currency in which the information in the statement is provided, (i) where the producer used a rate of exchange for purposes of recording a transaction in that other currency that occurred within 30 days of the date on which the producer acquired the material, that rate, and (ii) in any other case, (A) with respect to a producer located in Canada, the rate of exchange referred to in section 5 of the Currency Exchange for Customs Valuation Regulations for the date on which the material was shipped directly to the producer, (B) with respect to a producer located in Mexico, the rate of exchange published by the Banco de Mexico in the Diario Oficial de la Federacion, under the title ‘‘TIPO de cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en la Republica Mexicana’’, for the date on which the material was shipped directly to the producer, and (C) with respect to a producer located in the United States, the rate of exchange referred to in 31 U.S.C. 5151 for the date on which the material was shipped directly to the producer; and (c) if the material was acquired by the producer other than by a purchase, (i) where the producer used a rate of exchange for purposes of recording a transaction in that other currency that occurred within 30 days of the date on which the producer acquired the material, that rate, and (ii) in any other case, (A) with respect to a producer located in Canada, the rate of exchange referred to in section 5 of the Currency Exchange for Customs Valuation Regulations for the date on which the material was shipped directly to the producer, (B) with respect to a producer located in Mexico, the rate of exchange published by the Banco de Mexico in the Diario Oficial de la Federacion, under the title ‘‘TIPO de cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en la Republica Mexicana’’, for the date on which the material was shipped directly to the producer, and (C) with respect to a producer located in the United States, the rate of exchange referred to in 31 U.S.C. 5151 for the date on which the material was shipped directly to the producer. PART II SECTION 4. ORIGINATING GOODS Identification of goods which are ‘‘wholly obtained or produced’’ (1) A good originates in the territory of a NAFTA country where the good is (a) a mineral good extracted in the territory of one or more of the NAFTA countries; (b) a vegetable or other good harvested in the territory of one or more of the NAFTA countries; (c) a live animal born and raised in the territory of one or more of the NAFTA countries; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46395 (d) a good obtained from hunting, trapping or fishing in the territory of one or more of the NAFTA countries; (e) fish, shellfish or other marine life taken from the sea by a vessel registered or recorded with a NAFTA country and flying its flag; (f) a good produced on board a factory ship from a good referred to in paragraph (e), where the factory ship is reg- istered or recorded with the same NAFTA country as the vessel that took that good and flies that country’s flag; (g) a good taken by a NAFTA country or a person of a NAFTA country from or beneath the seabed outside the terri- torial waters of that country, where a NAFTA country has the right to exploit that seabed; (h) a good taken from outer space, where the good is obtained by a NAFTA country or a person of a NAFTA country and is not processed outside the territories of the NAFTA countries; (i) waste and scrap derived from (i) production in the territory of one or more of the NAFTA countries, or (ii) used goods collected in the territory of one or more of the NAFTA countries, where those goods are fit only for the recovery of raw materials; or (j) a good produced in the territory of one or more of the NAFTA countries exclusively from a good referred to in any of paragraphs (a) through (i), or from the derivatives of such a good, at any stage of production. Goods made from non-originating materials: change in tariff classification requirement; regional value-content requirement (2) A good originates in the territory of a NAFTA country where (a) each of the non-originating materials used in the production of the good undergoes the applicable change in tariff classification as a result of production that occurs entirely in the territory of one or more of the NAFTA countries, where the applicable rule in Schedule I for the tariff provision under which the good is classified specifies only a change in tariff classification, and the good satisfies all other applicable requirements of this Appendix; (b) each of the non-originating materials used in the production of the good undergoes the applicable change in tariff classification as a result of production that occurs entirely in the territory of one or more of the NAFTA countries and the good satisfies the applicable regional value-content requirement, where the applicable rule in Schedule I for the tariff provision under which the good is classified specifies both a change in tariff classification and a regional value- content requirement, and the good satisfies all other applicable requirements of this Appendix; or (c) the good satisfies the applicable regional value-content requirement, where the applicable rule in Schedule I for the tariff provision under which the good is classified specifies only a regional value-content requirement, and the good satisfies all other applicable requirements of this Appendix. Goods made exclusively from originating materials (3) A good originates in the territory of a NAFTA country where the good is produced entirely in the territory of one or more of the NAFTA countries exclusively from originating materials. Exceptions to the change in tariff classification requirement (4) A good originates in the territory of a NAFTA country where (a) except in the case of a good provided for in any of Chapters 61 through 63, (i) the good is produced entirely in the territory of one or more of the NAFTA countries, (ii) one or more of the non-originating materials used in the production of the good do not undergo an applicable change in tariff classification because the materials were imported together, whether or not with originating mate- rials, into the territory of a NAFTA country as an unassembled or disassembled good, and were classified as an assembled good pursuant to Rule 2(a) of the General Rules for the Interpretation of the Harmonized System, (iii) the regional value content of the good, calculated in accordance with section 6, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and (iv) the good satisfies all other applicable requirements of this Appendix, including any applicable, higher re- gional value-content requirement provided for in section 13 or Schedule I; or (b) except in the case of a good provided for in any of Chapters 61 through 63, (i) the good is produced entirely in the territory of one or more of the NAFTA countries, (ii) one or more of the non-originating materials used in the production of the good do not undergo an applicable change in tariff classification because (A) those materials are provided for under the Harmonized System as parts of the good, and (B) the heading for the good provides for both the good and its parts and is not further subdivided into sub- headings, or the subheading for the good provides for both the good and its parts, (iii) the non-originating materials that do not undergo a change in tariff classification in the circumstances de- scribed in subparagraph (ii) and the good are not both classified as parts of goods under the heading or sub- heading referred to in subparagraph (ii)(B), (iv) each of the non-originating materials that is used in the production of the good and is not referred to in sub- paragraph (iii) undergoes an applicable change in tariff classification or satisfies any other applicable requirement set out in Schedule I, (v) the regional value content of the good, calculated in accordance with section 6, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and (vi) the good satisfies all other applicable requirements of this Appendix, including any applicable, higher re- gional value-content requirement provided for in section 13 or Schedule I. Interpretation: heading or subheading which provides for both a good and parts of the good (5) For purposes of subsection (4)(b), 46396 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (a) the determination of whether a heading or subheading provides for a good and its parts shall be made on the basis of the nomenclature of the heading or subheading and the relevant Section or Chapter Notes, in accordance with the General Rules for the Interpretation of the Harmonized System; and (b) where, in accordance with the Harmonized System, a heading includes parts of goods by application of a Section Note or Chapter Note of the Harmonized System and the subheadings under that heading do not include a subheading designated ‘‘Parts’’, a subheading designated ‘‘Other’’ under that heading shall be considered to cover only the goods and parts of the goods that are themselves classified under that subheading. (6) For purposes of subsection (2), where Schedule I sets out two or more alternative rules for the tariff provision under which a good is classified, if the good satisfies the requirements of one of those rules, it need not satisfy the requirements of another of the rules in order to qualify as an originating good. Special rule for certain goods (7) A good originates in the territory of a NAFTA country if the good is referred to in Table 308.1.1 of Section B of Annex 308.1 to Chapter Three of the Agreement and is imported from the territory of a NAFTA country at a time when the NAFTA countries’ most-favored-nation rate of duty for that good is in accordance with paragraph 1 of Section A of that Annex. Self-produced material may be a material for determining applicability of rules of origin (8) For purposes of determining whether non-originating materials undergo an applicable change in tariff classification, a self-produced material may, at the choice of the producer of a good into which the self-produced material is incorporated, be considered as an originating material or non-originating material, as the case may be, used in the production of that good. (9) The following example is an ‘‘Example’’ as referred to in section 2(4). Example: section 4(8), Self-produced Materials as Materials for Purposes of Determining Whether Non-originating Materials Undergo an Applicable Change in Tariff Classification Producer A, located in a NAFTA country, produces Good A. In the production process, Producer A uses originating Material X and non-originating Material Y to produce Material Z. Material Z is a self-produced material that will be used to produce Good A. The rule set out in Schedule I for the heading under which Good A is classified specifies a change in tariff classification from any other heading. In this case, both Good A and the non-originating Material Y are of the same heading. However, the self-produced Material Z is of a heading different than that of Good A. For purposes of determining whether the non-originating materials that are used in the production of Good A undergo the applicable change in tariff classification, Producer A has the option to consider the self-produced Material Z as the material that must undergo a change in tariff classification. As Material Z is of a heading different than that of Good A, Material Z satisfies the applicable change in tar- iff classification and Good A would qualify as an originating good. SECTION 5. DE MINIMIS De minimis rule for non-originating materials that do not undergo subject to authorization, a required tariff change (1) Except as otherwise provided in subsection (4), a good shall be considered to originate in the territory of a NAFTA country where the value of all non-originating materials that are used in the production of the good and that do not under- go an applicable change in tariff classification as a result of production occurring entirely in the territory of one or more of the NAFTA countries is not more than seven percent (a) of the transaction value of the good determined in accordance with Schedule II with respect to the transaction in which the producer of the good sold the good, adjusted to an F.O.B. basis, or (b) of the total cost of the good, where there is no transaction value for the good under section 2(1) of Schedule III or the transaction value of the good is unacceptable under section 2(2) of that Schedule, provided that, (c) if, under the rule in which the applicable change in tariff classification is specified, the good is also subject to a re- gional value-content requirement, the value of those non-originating materials shall be taken into account in calculat- ing the regional value content of the good in accordance with the method set out for that good, and (d) the good satisfies all other applicable requirements of this Appendix. (2) For purposes of subsection (1), where (a) Schedule I sets out two or more alternative rules for the tariff provision under which the good is classified, and (b) the good, in accordance with subsection (1), is considered to originate under one of those rules, the good is not required to satisfy the requirements specified in any alternative rule referred to in paragraph (a). (3) For purposes of subsection (1), in the case of a good that is provided for in heading 2402, the percentage shall be nine percent instead of seven percent. Exceptions (4) Subsections (1) and (2) do not apply to (a) a non-originating material provided for in Chapter 4 or tariff items 1901.90.31, 1901.90.41 and 1901.90.81 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in Chapter 4; (b) a non-originating material provided for in Chapter 4 or tariff items 1901.90.31, 1901.90.41 and 1901.90.81 (dairy preparations containing over 10 percent by weight of milk solids) that is used in the production of a good provided for in any of tariff items 1901.10.10 (infant preparations containing over 10 percent by weight of milk solids), 1901.20.10 (mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale), 1901.90.31, 1901.90.41 and 1901.90.81 (dairy preparations containing over 10 percent by weight of milk solids), heading 2105 and tariff items 2106.90.05, 2106.90.13, 2106.90.41, 2106.90.51 and 2106.90.61 (preparations containing over 10 percent by weight of milk solids), 2202.90.10 and 2202.90.20 (beverages containing milk) and 2309.90.31 (animal feeds containing over 10 percent by weight of milk solids); Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46397 (c) a non-originating material provided for in any of heading 0805 and subheadings 2009.11 through 2009.30 that is used in the production of a good provided for in any of subheadings 2009.11 through 2009.30 and tariff items 2106.90.16 and 2106.90.17 (concentrated fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins) and 2202.90.30, 2202.90.35 and 2202.90.36 (fruit or vegetable juice of any single fruit or vegetable, for- tified with minerals or vitamins); (d) a non-originating material provided for in Chapter 9 that is used in the production of a good provided for in tariff item 2101.10.21 (instant coffee, not flavored); (e) a non-originating material provided for in Chapter 15 that is used in the production of a good provided for in any of headings 1501 through 1508, 1512, 1514 and 1515; (f) a non-originating material provided for in heading 1701 that is used in the production of a good provided for in any of headings 1701 through 1703; (g) a non-originating material provided for in Chapter 17 or heading 1805 that is used in the production of a good pro- vided for in subheading 1806.10; (h) a non-originating material provided for in any of headings 2203 through 2208 that is used in the production of a good provided for in any of headings 2207 through 2208; (i) a non-originating material that is used in the production of a good provided for in any of tariff item 7321.11.30 (gas stove or range), subheadings 8415.10, 8415.81 through 8415.83, 8418.10 through 8418.21, 8418.29 through 8418.40, 8421.12, 8422.11, 8450.11 through 8450.20 and 8451.21 through 8451.29, Mexican tariff item 8479.82.03 (trash com- pactors) or Canadian or U.S. tariff item 8479.89.55 (trash compactors), and tariff item 8516.60.40 (electric stove or range); (j) a printed circuit assembly that is a non-originating material used in the production of a good, where the applicable change in tariff classification for the good places restrictions on the use of that non-originating material, such as by prohibiting, or limiting the quantity of, that non-originating material; (k) a non-originating material that is a single juice ingredient provided for in heading 2009 that is used in the produc- tion of a good provided for in any of subheading 2009.90 and tariff items 2106.90.18 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins) and 2202.90.37 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins); (l) a non-originating material that is used in the production of a good provided for in any of Chapters 1 through 27, unless the non-originating material is of a different subheading than the good for which origin is being determined under this section; or (m) a non-originating material that is used in the production of a good provided for in any of Chapters 50 through 63. De minimis rule for regional value-content requirement (5) A good that is subject to a regional value-content requirement shall be considered to originate in the territory of a NAFTA country and shall not be required to satisfy that requirement where (a) the value of all non-originating materials used in the production of the good is not more than seven percent (i) of the transaction value of the good determined in accordance with Schedule II with respect to the transaction in which the producer of the good sold the good, adjusted to an F.O.B. basis, or (ii) of the total cost of the good, where there is no transaction value for the good under section 2(1) of Schedule III or the transaction value of the good is unacceptable under section 2(2) of that Schedule; and (b) the good satisfies all other applicable requirements of this Appendix. De minimis rule for textile goods (6) A good provided for in any of Chapters 50 through 63, that does not originate in the territory of a NAFTA country be- cause certain fibers or yarns that are used in the production of the component of the good that determines the tariff classi- fication of the good do not undergo an applicable change in tariff classification as a result of production occurring entirely in the territory of one or more of the NAFTA countries, shall be considered to originate in the territory of a NAFTA coun- try if (a) the total weight of all those fibers or yarns is not more than seven percent of the total weight of that component; and (b) the good satisfies all other applicable requirements of this Appendix. (7) For purposes of subsection (6), (a) the component of a good that determines the tariff classification of that good shall be identified in accordance with the first of the following General Rules for the Interpretation of the Harmonized System under which the identification can be determined, namely, Rule 3(b), Rule 3(c) and Rule 4; and (b) where the component of the good that determines the tariff classification of the good is a blend of two or more yarns or fibers, all yarns and fibers used in the production of the component shall be taken into account in determin- ing the weight of fibers and yarns in that component. (8) For purposes of subsections (1) and (5), the value of non-originating materials shall be determined in accordance with sections 7(1) through (4). Calculation of ‘‘total cost’’ for de minimis rules: choice of methods (9) For purposes of subsection (1)(b) and subsection (5)(a)(ii), the total cost of a good shall be, at the choice of the producer of the good, (a) the total cost incurred with respect to all goods produced by the producer that can be reasonably allocated to that good in accordance with Schedule VII; or (b) the aggregate of each cost that forms part of the total cost incurred with respect to that good that can be reasonably allocated to that good in accordance with Schedule VII. 46398 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Calculation of total cost; application of Schedules IX and X for determining value of non-originating materials (10) Total cost under subsection (9) consists of the costs referred to in section 2(6), and is calculated in accordance with that subsection and section 2(7). (11) For purposes of determining the value under subsection (1) of non-originating materials that do not undergo an appli- cable change in tariff classification, where Schedule X is not being used to determine the value of those non-originating materials, (a) if the value of those non-originating materials is being determined as a percentage of the transaction value of the good and the producer chooses under section 6(10) that one of the methods set out in Schedule IX be used to deter- mine the value of those non-originating materials for purposes of calculating the regional value content of the good, the value of those non-originating materials shall be determined in accordance with that method; (b) if (i) the value of those non-originating materials is being determined as a percentage of the total cost of the good, (ii) under the rule in which the applicable change in tariff classification is specified, the good is also subject to a regional value-content requirement and subsection (5)(a) does not apply with respect to that good, (iii) the regional value content of the good is calculated on the basis of the net cost method, and (iv) the producer chooses under section 6(15), 11(1), (3) or (6), 12(1) or 13(4) that the regional value content of the good be calculated over a period, the value of those non-originating materials shall be the sum of the values of non-originating materials determined in accordance with that choice, divided by the number of units of the goods with respect to which the choice is made; (c) if (i) the value of those non-originating materials is being determined as a percentage of the total cost of the good, (ii) under the rule in which the applicable change in tariff classification is specified, the good is not also subject to a regional value-content requirement or subsection (5)(a) applies with respect to that good, and (iii) the producer chooses under section 2(7)(b) that, for purposes of section 5(9), the total cost of the good be cal- culated over a period, the value of those non-originating materials shall be the sum of the values of non-originating materials divided by the number of units produced during that period; and (d) in any other case, the value of those non-originating materials may, at the choice of the producer, be determined in accordance with one of the methods set out in Schedule IX. (12) For purposes of subsection (5), the value of the non-originating materials used in the production of the good may, at the choice of the producer, be determined in accordance with one of the methods set out in Schedule IX. Examples illustrating de minimis rules (13) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: section 5(1) Producer A, located in a NAFTA country, uses originating materials and non-originating materials in the production of copper anodes provided for in heading 7402. The rule set out in Schedule I for heading 7402 specifies a change in tariff classification from any other chapter. There is no applicable regional value-content requirement for this heading. Therefore, in order for the copper anode to qualify as an originating good under the rule set out in Schedule I, Producer A may not use in the production of the copper anode any non-originat- ing material provided for in Chapter 74. All of the materials used in the production of the copper anode are originating materials, with the exception of a small amount of copper scrap provided for in heading 7404, that is in the same chapter as the copper anode. Under section 5(1), if the value of the non- originating copper scrap does not exceed seven percent of the transaction value of the copper anode or the total cost of the copper anode, whichever is applicable, the copper anode would be considered an originating good. Example 2: section 5(2) Producer A, located in a NAFTA country, uses originating materials and non-originating materials in the production of ceiling fans provided for in subheading 8414.51. There are two alternative rules set out in Schedule I for subheading 8414.51, one of which specifies a change in tariff classification from any other heading. The other rule specifies both a change in tariff classification from the subheading under which parts of the ceiling fans are classified and a regional value-content requirement. Therefore, in order for the ceiling fan to qualify as an originating good under the first of the alternative rules, all of the materials that are classified under the subheading for parts of ceiling fans and used in the production of the completed ceiling fan must be originating materials. In this case, all of the non-originating materials used in the production of the ceiling fan satisfy the change in tariff classification set out in the rule that specifies a change in tariff classification from any other heading, with the exception of one non-originating material that is classified under the subheading for parts of ceiling fans. Under section 5(1), if the value of the non-originating material that does not satisfy the change in tariff classification specified in the first rule does not exceed seven percent of the transaction value of the ceiling fan or the total cost of the ceiling fan, whichever is applicable, the ceiling fan would be considered an originating good. Therefore, under section 5(2), the ceiling fan would not be required to satisfy the alternative rule that specifies both a change in tariff classification and a regional value-content requirement. Example 3: section 5(2) Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46399 Producer A, located in a NAFTA country, uses originating materials and non-originating materials in the production of plastic bags provided for in subheading 3923.29. The rule set out in Schedule I for subheading 3923.29 specifies both a change in tariff classification from any other heading, except from subheadings 3920.20 or 3920.71, under which certain plastic materials are classified, and a regional value-content requirement. Therefore, with respect to that part of the rule that specifies a change in tariff classification, in order for the plastic bag to qualify as an originating good, any plastic materials that are classified under subheading 3920.20 or 3920.71 and that are used in the production of the plastic bag must be originating materials. In this case, all of the non-originating materials used in the production of the plastic bag satisfy the specified change in tariff classi- fication, with the exception of a small amount of plastic materials classified under subheading 3920.71. Section 5(1) provides that the plastic bag can be considered an originating good if the value of the non-originating plastic materials that do not satisfy the specified change in tariff classification does not exceed seven percent of the transaction value of the plastic bag or the total cost of the plastic bag, whichever is applicable. In this case, the value of those non-originating materials that do not satisfy the specified change in tariff classi- fication does not exceed the seven percent limit. However, the rule set out in Schedule I for subheading 3923.29 specifies both a change in tariff classification and a regional value- content requirement. Therefore, under section 5(1)(c), in order to be considered an originating good, the plastic bag must also, except as otherwise provided in section 5(5), satisfy the regional value-content requirement specified in that rule. As provided in section 5(1)(c), the value of the non-originating materials that do not satisfy the specified change in tariff classification, together with the value of all other non-originating materials used in the production of the plastic bag, will be taken into account in calculating the regional value content of the plastic bag. Example 4: section 5(5) Producer A, located in a NAFTA country, primarily uses originating materials in the production of shoes provided for in heading 6405. The rule set out in Schedule I for heading 6405 specifies both a change in tariff classification from any subheading other than sub- headings 6401.10 through 6406.10 and a regional value-content requirement. With the exception of a small amount of materials provided for in Chapter 39, all of the materials used in the production of the shoes are originating materials. Under section 5(5), if the value of all of the non-originating materials used in the production of the shoes does not exceed seven per- cent of the transaction value of the shoes or the total cost of the shoes, whichever is applicable, the shoes are not required to satisfy the regional value-content requirement specified in the rule set out in Schedule I in order to be considered originating goods. Example 5: section 5(5) Producer A, located in a NAFTA country, produces barbers’ chairs provided for in subheading 9402.10. The rule set out in Schedule I for goods provided for in heading 9402 specifies a change in tariff classification from any other chapter. All of the materials used in the production of these chairs are originating materials, with the exception of a small quantity of non-originating materials that are classified as parts of barbers’ chairs. These parts undergo no change in tariff classification because subheading 9402.10 provides for both barbers’ chairs and their parts. Although Producer A’s barbers’ chairs do not qualify as originating goods under the rule set out in Schedule I, section 4(4)(b) pro- vides, among other things, that, where there is no change in tariff classification from the non-originating materials to the goods because the subheading under which the goods are classified provides for both the goods and their parts, the goods shall qualify as originating goods if they satisfy a specified regional value-content requirement. However, under section 5(5), if the value of the non-originating materials does not exceed seven percent of the transaction value of the barbers’ chairs or the total cost of the barbers’ chairs, whichever is applicable, the barbers’ chairs will be considered originating goods and are not required to satisfy the regional value-content requirement set out in section 4(4)(b)(v). Example 6: sections 5 (6) and (7) Producer A, located in a NAFTA country, produces women’s dresses provided for in subheading 6204.41 from fine wool fabric of heading 5112. This fine wool fabric, also produced by Producer A, is the component of the dress that determines its tariff classification under subheading 6204.41. The rule set out in Schedule I for subheading 6204.41, under which the dress is classified, specifies both a change in tariff classifica- tion from any other chapter, except from those headings and chapters under which certain yarns and fabrics, including combed wool yarn and wool fabric, are classified, and a requirement that the good be cut and sewn or otherwise assembled in the territory of one or more of the NAFTA countries. Therefore, with respect to that part of the rule that specifies a change in tariff classification, in order for the dress to qualify as an originating good, the combed wool yarn and the fine wool fabric made therefrom that are used by Producer A in the production of the dress must be originating materials. At one point Producer A uses a small quantity of non-originating combed wool yarn in the production of the fine wool fabric. Under section 5(6), if the total weight of the non-originating combed wool yarn does not exceed seven percent of the total weight of all the yarn used in the production of the component of the dress that determines its tariff classification, that is, the wool fabric, the dress would be considered an originating good. PART III SECTION 6. REGIONAL VALUE CONTENT (1) Except as otherwise provided in subsection (6), the regional value content of a good shall be calculated, at the choice of the exporter or producer of the good, on the basis of either the transaction value method or the net cost method. Transaction Value Method (2) The transaction value method for calculating the regional value content of a good is as follows: TV− VNM RVC = ×100 TV where RVC is the regional value content of the good, expressed as a percentage; TV is the transaction value of the good, determined in accordance with Schedule II with respect to the transaction in which the producer of the good sold the good, adjusted to an F.O.B. basis; and VNM is the value of non-originating materials used by the producer in the production of the good, determined in ac- cordance with section 7. 46400 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Net Cost Method (3) The net cost method for calculating the regional value content of a good is as follows: NC− VNM RVC = ×100 NC where RVC is the regional value content of the good, expressed as a percentage; NC is the net cost of the good, calculated in accordance with subsection (11); and VNM is the value of non-originating materials used by the producer in the production of the good, determined, except as otherwise provided in sections 9 and 10, in accordance with section 7. VNM does not include value of non-originating materials used in originating material (4) Except as otherwise provided in section 9 and section 10(1)(d), for purposes of calculating the regional value content of a good under subsection (2) or (3), the value of non-originating materials used by a producer in the production of the good shall not include (a) the value of any non-originating materials used by another producer in the production of originating materials that are subsequently acquired and used by the producer of the good in the production of that good; or (b) the value of any non-originating materials used by the producer in the production of a self-produced material that is an originating material and is designated as an intermediate material. (5) For purposes of subsection (4), (a) in the case of any self-produced material that is not designated as an intermediate material, only the value of any non-originating materials used in the production of the self-produced material shall be included in the value of non- originating materials used in the production of the good; and (b) where a self-produced material that is designated as an intermediate material and is an originating material is used by the producer of the good with non-originating materials (whether or not those non-originating materials are pro- duced by that producer) in the production of the good, the value of those non-originating materials shall be included in the value of non-originating materials. Net Cost Method required in certain circumstances (6) The regional value content of a good shall be calculated only on the basis of the net cost method where (a) there is no transaction value for the good under section 2(1) of Schedule III; (b) the transaction value of the good is unacceptable under section 2(2) of Schedule III; (c) the good is sold by the producer to a related person and the volume, by units of quantity, of sales by that producer of identical goods or similar goods, or any combination thereof, to related persons during the six month period imme- diately preceding the month in which the goods are sold exceeds 85 percent of the producer’s total sales to all per- sons, whether or not related and regardless of location, after ‘‘the producer’s total sales’’of identical goods or similar goods, or any combination thereof, during that period; (d) the good is (i) a motor vehicle provided for in any of headings 8701 and 8702, subheadings 8703.21 through 8703.90 and headings 8704, 8705 and 8706, (ii) a good provided for in a tariff provision listed in Schedule IV or an automotive component assembly, auto- motive component, sub-component or listed material, and is for use in a motor vehicle referred to in subparagraph (i), either as original equipment or as an after-market part, (iii) a good provided for in any of subheadings 6401.10 through 6406.10, or (iv) a good provided for in tariff item 8469.10.40 (word processing machines); (e) the exporter or producer chooses to accumulate with respect to the good in accordance with section 14; or (f) the good is an intermediate material and is subject to a regional value-content requirement. Option to change from TVM to NCM for calculation of regional value content (7) If the exporter or producer of a good calculates the regional value content of the good on the basis of the transaction value method and the customs administration of a NAFTA country subsequently notifies that exporter or producer in writ- ing, during the course of a verification of origin, that (a) the transaction value of the good, as determined by the exporter or producer, is required to be adjusted under sec- tion 4 of Schedule II or is unacceptable under section 2(2) of Schedule III, there is no transaction value for the good under section 2(1) of Schedule III or the transaction value method may not be used because of the application of sub- section (6)(c), or (b) the value of any material used in the production of the good, as determined by the exporter or producer, is re- quired to be adjusted under section 5 of Schedule VIII or is unacceptable under section 2(3) of Schedule VIII, or there is no transaction value for the material under section 2(2) of Schedule VIII or the transaction value method may not be used to calculate the regional value content of the material because of the application of subsection (6)(c), the exporter or producer may choose that the regional value content of the good be calculated on the basis of the net cost method, in which case the calculation must be made within 60 days after the producer receives the notification, or such longer period as that customs administration specifies. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46401 Change from NCM to TVM not permitted (8) If the exporter or producer of a good chooses that the regional value content of the good be calculated on the basis of the net cost method and the customs administration of a NAFTA country subsequently notifies that exporter or producer in writing, during the course of a verification of origin, that the good does not satisfy the applicable regional value-content requirement, the exporter or producer of the good may not recalculate the regional value content on the basis of the trans- action value method. (9) Nothing in subsection (7) shall be construed as preventing any review and appeal under Article 510 of the Agreement, as implemented in each NAFTA country, of an adjustment to or a rejection of (a) the transaction value of the good; or (b) the value of any material used in the production of the good. Application of Schedule IX for determining value of ‘‘identical’’ non-originating materials under TVM (10) For purposes of the transaction value method, where non-originating materials that are the same as one another in all respects, including physical characteristics, quality and reputation but excluding minor differences in appearance, are used in the production of a good, the value of those non-originating materials may, at the choice of the producer of the good, be determined in accordance with one of the methods set out in Schedule IX. Options for calculating the net cost of a good (11) For purposes of subsection (3), the net cost of a good may be calculated, at the choice of the producer of the good, by (a) calculating the total cost incurred with respect to all goods produced by that producer, subtracting any excluded costs that are included in that total cost, and reasonably allocating, in accordance with Schedule VII, the remainder to the good; (b) calculating the total cost incurred with respect to all goods produced by that producer, reasonably allocating, in ac- cordance with Schedule VII, that total cost to the good, and subtracting any excluded costs that are included in the amount allocated to that good; or (c) reasonably allocating, in accordance with Schedule VII, each cost that forms part of the total cost incurred with re- spect to the good so that the aggregate of those costs does not include any excluded costs. Calculation of total cost (12) Total cost under subsection (11) consists of the costs referred to in section 2(6), and is calculated in accordance with that subsection. Calculation of net cost; excluded costs (13) For purposes of calculating net cost under subsection (11), (a) excluded costs shall be the excluded costs that are recorded on the books of the producer of the good; (b) excluded costs that are included in the value of a material that is used in the production of the good shall not be subtracted from or otherwise excluded from the total cost; and (c) excluded costs do not include any amount paid for research and development services performed in the territory of a NAFTA country. Non-allowable interest; determination under Schedule XI (14) For purposes of calculating non-allowable interest costs, the determination of whether interest costs incurred by a pro- ducer are more than 700 basis points above the yield on debt obligations of comparable maturities issued by the federal government of the country in which the producer is located shall be made in accordance with Schedule XI. Use of ‘‘averaging’’ over a period to calculate RVC under NCM; period cannot be changed (15) For purposes of the net cost method, the regional value content of the good, other than a good with respect to which a choice to average may be made under section 11(1), (3) or (6), 12(1) or 13(4), may be calculated, where the producer choos- es to do so, by (a) calculating the sum of the net costs incurred and the sum of the values of non-originating materials used by the producer of the good with respect to the good and identical goods or similar goods, or any combination thereof, pro- duced in a single plant by the producer over (i) a month, (ii) any consecutive three month or six month period that falls within and is evenly divisible into the number of months of the producer’s fiscal year remaining at the beginning of that period, or (iii) the producer’s fiscal year; and (b) using the sums referred to in paragraph (a) as the net cost and the value of non-originating materials, respectively. (16) The calculation made under subsection (15) shall apply with respect to all units of the good produced during the pe- riod chosen by the producer under subsection (15)(a). (17) A choice made under subsection (15) may not be rescinded or modified with respect to the goods or the period with respect to which the choice is made. Choice of averaging period cannot be changed for remainder of fiscal year (18) Where a producer chooses a one, three or six month period under subsection (15) with respect to goods, the producer shall be considered to have chosen under that subsection a period or periods of the same duration for the remainder of the producer’s fiscal year with respect to those goods. Choice of net cost method cannot be changed for remainder of the fiscal year (19) Where the net cost method is required to be used or has been chosen and a choice has been made under subsection (15), the regional value content of the good shall be calculated on the basis of the net cost method over the period chosen under that subsection and for the remainder of the producer’s fiscal year. 46402 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Obligation to perform self-analysis and give notification of changed circumstance if RVC calculated on basis of estimated costs (20) Except as otherwise provided in sections 11(10), 12(11) and 13(10), where the producer of a good has calculated the regional value content of the good under the net cost method on the basis of estimated costs, including standard costs, budgeted forecasts or other similar estimating procedures, before or during the period chosen in subsection (15)(a), the producer shall conduct an analysis at the end of the producer’s fiscal year of the actual costs incurred over the period with respect to the production of the good and, if the good does not satisfy the regional value-content requirement on the basis of the actual costs during that period, immediately inform any person to whom the producer has provided a Certificate of Origin for the good, or a written statement that the good is an originating good, that the good is a non-originating good. Option to treat any material as non-originating (21) For purposes of calculating the regional value content of a good, the producer of that good may choose to treat any material used in the production of that good as a non-originating material. Examples of Calculation of RVC under TVM and NCM (22) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: example of point of direct shipment (with respect to adjusted to an F.O.B. basis) A producer has only one factory, at which the producer manufactures finished office chairs. Because the factory is located close to transportation facilities, all units of the finished good are stored in a factory warehouse 200 meters from the end of the production line. Goods are shipped worldwide from this warehouse. The point of direct shipment is the warehouse. Example 2: examples of point of direct shipment (with respect to adjusted to an F.O.B. basis) A producer has six factories, all located within the territory of one of the NAFTA countries, at which the producer produces garden tools of various types. These tools are shipped worldwide, and orders usually consist of bulk orders of various types of tools. Because dif- ferent tools are manufactured at different factories, the producer decided to consolidate storage and shipping facilities and ships all fin- ished products to a large warehouse located near the seaport, from which all orders are shipped. The distance from the factories to the warehouse varies from 3 km to 130 km. The point of direct shipment for each of the goods is the warehouse. Example 3: examples of point of direct shipment (with respect to adjusted to an F.O.B. basis) A producer has only one factory, located near the center of one of the NAFTA countries, at which the producer manufactures finished office chairs. The office chairs are shipped from that factory to three warehouses leased by the producer, one on the west coast, one near the factory and one on the east coast. The office chairs are shipped to buyers from these warehouses, the shipping location depending on the shipping distance from the buyer. Buyers closest to the west coast warehouse are normally supplied by the west coast warehouse, buy- ers closest to the east coast are normally supplied by the warehouse located on the east coast and buyers closest to the warehouse near the factory are normally supplied by that warehouse. In this case, the point of direct shipment is the location of the warehouse from which the office chairs are normally shipped to customers in the location in which the buyer is located. Example 4: section 6(3), net cost method A producer located in NAFTA country A sells Good A that is subject to a regional value-content requirement to a buyer located in NAFTA country B. The producer of Good A chooses that the regional value content of that good be calculated using the net cost method. All applicable requirements of this Appendix, other than the regional value-content requirement, have been met. The applicable regional value-content requirement is 50 percent. In order to calculate the regional value-content of Good A, the producer first calculates the net cost of Good A. Under section 6(11)(a), the net cost is the total cost of Good A (the aggregate of the product costs, period costs and other costs) per unit, minus the excluded costs (the aggregate of the sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable in- terest costs) per unit. The producer uses the following figures to calculate the net cost: Product costs: Value of originating materials ...... $30.00 Value of non-originating materials ...... 40.00 Other product costs ...... 20.00 Period costs ...... 10.00 Other costs ...... 0.00 Total cost of Good A, per unit ...... $100.00 Excluded costs: Sales promotion, marketing and after-sales service cost ...... $5.00 Royalties ...... 2.50 Shipping and packing costs ...... 3.00 Non-allowable interest costs ...... 1.50 Total excluded costs ...... $12.00 The net cost is the total cost of Good A, per unit, minus the excluded costs. Total cost of Good A, per unit: ...... $100.00 Excluded costs ...... ¥12.00 Net cost of Good A, per unit ...... $88.00 The value for net cost ($88) and the value of non-originating materials ($40) are needed in order to calculate the regional value con- tent. The producer calculates the regional value content of Good A under the net cost method in the following manner: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46403 NC− VNM RVC = ×100 NC 88− 40 = ×100 88 = 54.5% Therefore, under the net cost method, Good A qualifies as an originating good, with a regional value-content of 54.5 percent. Example 5: section 6(6)(c), net cost method required for certain sales to related persons On January 15, 1994, a producer located in NAFTA country A sells 1,000 units of Good A to a related person, located in NAFTA country B. During the six month period beginning on July 1, 1993 and ending on December 31, 1993, the producer sold 90,000 units of identical goods and similar goods to related persons from various countries, including that buyer. The producer’s total sales of those iden- tical goods and similar goods to all persons from all countries during that six month period were 100,000 units. The total quantity of identical goods and similar goods sold by the producer to related persons during that six month period was 90 percent of the producer’s total sales of those identical goods and similar goods to all persons. Under section 6(6)(c), the producer must use the net cost method to calculate the regional value content of Good A sold in January 1994, because the 85 percent limit was exceeded. Example 6: section 6(11)(a) A producer in a NAFTA country produces Good A and Good B during the producer’s fiscal year. The producer uses the following figures, which are recorded on the producer’s books and represent all of the costs incurred with re- spect to both Good A and Good B, to calculate the net cost of those goods: 46404 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Product costs: Value of originating materials ...... $2,000 Value of non-originating materials ...... 1,000 Other product costs ...... 2,400 Period costs: (including $1,200 in excluded costs) ...... 3,200 Other costs ...... 400 Total cost of Good A and Good B ...... $9,000 The net cost is the total cost of Good A and Good B, minus the excluded costs incurred with respect to those goods. Total cost of Good A and Good B ...... $9,000 Excluded costs ...... ¥1,200 Net cost of Good A and Good B ...... $7,800 The net cost must then be reasonably allocated, in accordance with Schedule VII, to Good A and Good B. Example 7: section 6(11)(b) A producer located in a NAFTA country produces Good A and Good B during the producer’s fiscal year. In order to calculate the re- gional value content of Good A and Good B, the producer uses the following figures that are recorded on the producer’s books and in- curred with respect to those goods: Product costs: Value of originating materials ...... $2,000 Value of non-originating materials ...... 1,000 Other product costs ...... 2,400 Period costs: (including $1,200 in excluded costs) ...... 3,200 Other costs ...... 400 Total cost of Good A and Good B ...... $9,000 Under section 6(11)(b), the total cost of Good A and Good B is then reasonably allocated, in accordance with Schedule VII, to those goods. The costs are allocated in the following manner: Allocated to Allocated to Good A Good B Total cost ($9,000 for both Good A and Good B) ...... $5,220 $3,780 The excluded costs ($1,200) that are included in total cost allocated to Good A and Good B, in accordance with Schedule VII, are sub- tracted from that amount. Excluded Excluded Cost Allo- Cost Allo- cated to cated to Good A Good B Total excluded costs: Sales promotion, marketing and after-sale service costs ...... 500 290 210 Royalties ...... 200 116 84 Shipping and packing costs ...... 500 290 210 Net cost (total cost minus excluded costs) ...... $4,524 $3,276 The net cost of Good A is thus $4,524, and the net cost of Good B is $3,276. Example 8: section 6(11)(c) A Producer located in a NAFTA country produces Good C and Good D. The following costs are recorded on the producer’s books for the months of January, February and March, and each cost that forms part of the total cost are reasonably allocated, in accordance with Schedule VII, to Good C and Good D. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46405 Total cost: Good C and Allocated to Allocated to Good D (in Good C (in Good D (in thousands thousands thousands of dollars) of dollars) of dollars) Product costs: Value of originating materials ...... 100 0 100 Value of non-originating materials ...... 900 800 100 Other product costs ...... 500 300 200 Period costs (including $420 in excluded costs) ...... 5,679 3,036 2,643 Minus Excluded Costs ...... 420 300 120 Other costs ...... 0 0 0 Total cost (aggregate of product costs, period costs and other costs) ...... 6,759 3,836 2,923 Example 9: section 6(12) Producer A, located in a NAFTA country, produces Good A that is subject to a regional value-content requirement. The producer chooses that the regional value content of that good be calculated using the net cost method. Producer A buys Material X from Producer B, located in a NAFTA country. Material X is a non-originating material and is used in the production of Good A. Producer A provides Producer B, at no charge, with tools to be used in the production of Material X. The cost of the tools that is recorded on the books of Pro- ducer A has been expensed in the current year. Pursuant to section 5(1)(b)(ii) of Schedule VIII, the value of the tools is included in the value of Material X. Therefore, the cost of the tools that is recorded on the books of Producer A and that has been expensed in the current year cannot be included as a separate cost in the net cost of Good A because it has already been included in the value of Material X. Example 10: section 6(12) Producer A, located in a NAFTA country, produces Good A that is subject to a regional value-content requirement. The producer chooses that the regional value content of that good be calculated using the net cost method and averages the calculation over the produc- er’s fiscal year under section 6(15). Producer A determines that during that fiscal year Producer A incurred a gain on foreign currency conversion of $10,000 and a loss on foreign currency conversion of $8,000, resulting in a net gain of $2,000. Producer A also determines that $7,000 of the gain on foreign currency conversion and $6,000 of the loss on foreign currency conversion is related to the purchase of non-originating materials used in the production of Good A, and $3,000 of the gain on foreign currency conversion and $2,000 of the loss on foreign currency conversion is not related to the production of Good A. The producer determines that the total cost of Good A is $45,000 before deducting the $1,000 net gain on foreign currency conversion related to the production of Good A. The total cost of Good A is therefore $44,000. That $1,000 net gain is not included in the value of non-originating materials under section 7(1). Example 11: section 6(12) Given the same facts as in example 10, except that Producer A determines that $6,000 of the gain on foreign currency conversion and $7,000 of the loss on foreign currency conversion is related to the purchase of non-originating materials used in the production of Good A. The total cost of Good A is $45,000, which includes the $1,000 net loss on foreign currency conversion related to the production of Good A. That $1,000 net loss is not included in the value of non-originating materials under section 7(1). PART IV SECTION 7. MATERIALS Valuation of materials used in the production of a good other than certain automotive goods (1) Except as otherwise provided for non-originating materials used in the production of a good referred to in section 9(1) or 10(1), and except in the case of indirect materials, intermediate materials and packing materials and containers, for pur- poses of calculating the regional value content of a good and for purposes of sections 5(1) and (5), the value of a material that is used in the production of the good shall be (a) except as otherwise provided in subsection (2), where the material is imported by the producer of the good into the territory of the NAFTA country in which the good is produced, the customs value of the material with respect to that importation, or (b) where the material is acquired by the producer of the good from another person located in the territory of the NAFTA country in which the good is produced (i) the transaction value, determined in accordance with section 2(1) of Schedule VIII, with respect to the trans- action in which the producer acquired the material, or (ii) the value determined in accordance with sections 6 through 11 of Schedule VIII, where, with respect to the transaction in which the producer acquired the material, there is no transaction value under section 2(2) of that Schedule or the transaction value is unacceptable under section 2(3) of that Schedule, and shall include the following costs if they are not included under paragraph (a) or (b): (c) the costs of freight, insurance and packing and all other costs incurred in transporting the material to the location of the producer, (d) duties and taxes paid or payable with respect to the material in the territory of one or more of the NAFTA coun- tries, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable, (e) customs brokerage fees, including the cost of in-house customs brokerage services, incurred with respect to the ma- terial in the territory of one or more of the NAFTA countries, and (f) the cost of waste and spoilage resulting from the use of the material in the production of the good, minus the value of any reusable scrap or by-product. Valuation of material if customs value is not in accordance with Schedule VIII (2) For purposes of subsection (1)(a), where the customs value of the material referred to in that paragraph was not deter- mined in a manner consistent with Schedule VIII, the value of the material shall be determined in accordance with Sched- ule VIII with respect to the importation of that material and, where the costs referred to in subsections (1)(c) through (f) are not included in that value, those costs be added to that value. 46406 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Costs recorded on books (3) For purposes of subsection (1), the costs referred to in subsections (1)(c) through (f) shall be the costs referred to in those paragraphs that are recorded on the books of the producer of the good. Designation of self-produced material as an intermediate material; limitation on designations; designation is optional (4) Except for purposes of determining the value of non-originating materials used in the production of a light-duty auto- motive good and except in the case of an automotive component assembly, automotive component or sub-component for use as original equipment in the production of a heavy-duty vehicle, for purposes of calculating the regional value content of a good the producer of the good may designate as an intermediate material any self-produced material that is used in the production of the good, provided that where an intermediate material is subject to a regional value-content require- ment, no other self-produced material that is subject to a regional value-content requirement and is incorporated into that intermediate material is also designated by the producer as an intermediate material. (5) For purposes of subsection (4), (a) in order to qualify as an originating material, a self-produced material that is designated as an intermediate mate- rial must qualify as an originating material under these Regulations; (b) the designation of a self-produced material as an intermediate material shall be made solely at the choice of the producer of that self-produced material; and (c) except as otherwise provided in section 14(4), the proviso set out in subsection (4) does not apply with respect to an intermediate material used by another producer in the production of a material that is subsequently acquired and used in the production of a good by the producer referred to in subsection (4). Valuation of an intermediate material (6) The value of an intermediate material shall be, at the choice of the producer of the good, (a) the total cost incurred with respect to all goods produced by the producer that can be reasonably allocated to that intermediate material in accordance with Schedule VII; or (b) the aggregate of each cost that forms part of the total cost incurred with respect to that intermediate material that can be reasonably allocated to that intermediate material in accordance with Schedule VII. Calculation of total cost (7) Total cost under subsection (6) consists of the costs referred to in section 2(6), and is calculated in accordance with that section and section 2(7). Rescission of a designation during course of verification; option to designate another intermediate material (8) Where a producer of a good designates a self-produced material as an intermediate material under subsection (4) and the customs administration of a NAFTA country into which the good is imported determines during a verification of ori- gin of the good that the intermediate material is a non-originating material and notifies the producer of this in writing be- fore the written determination of whether the good qualifies as an originating good, the producer may rescind the designa- tion, and the regional value content of the good shall be calculated as though the self-produced material were not so des- ignated. (9) A producer of a good who rescinds a designation under subsection (8) (a) shall retain any rights of review and appeal under Article 510 of the Agreement, as implemented in each NAFTA country, with respect to the determination of the origin of the intermediate material as though the producer did not re- scind the designation; and (b) may, not later than 30 days after the customs administration referred to in subsection (8) notifies the producer in writing that the self-produced material referred to in paragraph (a) is a non-originating material, designate as an inter- mediate material another self-produced material that is incorporated into the good, subject to the proviso set out in subsection (4). (10) Where a producer of a good designates another self-produced material as an intermediate material under subsection (9)(b) and the customs administration referred to in subsection (8) determines during the verification of origin of the good that that self-produced material is a non-originating material, (a) the producer may rescind the designation, and the regional value content of the good shall be calculated as though the self-produced material were not so designated; (b) the producer shall retain any rights of review and appeal under Article 510 of the Agreement, as implemented in each NAFTA country, with respect to the determination of the origin of the intermediate material as though the pro- ducer did not rescind the designation; and (c) the producer may not designate another self-produced material that is incorporated into the good as an intermedi- ate material. Indirect Materials; deemed originating; value as recorded on books of producer (11) For purposes of determining whether a good is an originating good, an indirect material that is used in the production of the good (a) shall be considered to be an originating material, regardless of where that indirect material is produced; and (b) if the good is subject to a regional value-content requirement, for purposes of calculating the net cost under the net cost method, the value of the indirect material shall be the costs of that material that are recorded on the books of the producer of the good. Packaging Materials and Containers; origin disregarded for tariff change rules (12) Packaging materials and containers, if classified under the Harmonized System with the good that is packaged therein, shall be disregarded for purposes of (a) determining whether all of the non-originating materials used in the production of the good undergo an applicable change in tariff classification; and Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46407 (b) determining under section 5(1) the value of non-originating materials that do not undergo an applicable change in tariff classification. Actual originating status considered for RVC requirement; valuation of packaging (13) Where packaging materials and containers are classified under the Harmonized System with the good that is packaged therein and that good is subject to a regional value-content requirement, the value of those packaging materials and con- tainers shall be taken into account as originating materials or non-originating materials, as the case may be, for purposes of calculating the regional value content of the good. (14) For purposes of subsection (13), where packaging materials and containers are self-produced materials, the producer may choose to designate those materials as intermediate materials under subsection (4). Packing materials and containers; disregarded for tariff change rule and for RVC requirement; value as recorded on books (15) For purposes of determining whether a good is an originating good, packing materials and containers in which the good is packed (a) shall be disregarded for purposes of determining whether (i) the non-originating materials used in the production of the good undergo an applicable change in tariff classi- fication, and (ii) the good satisfies a regional value-content requirement; and (b) if the good is subject to a regional value-content requirement, the value of the packing materials and containers shall be the costs thereof that are recorded on the books of the producer of the good. Fungible materials; fungible commingled goods; inventory management methods for determining whether originating (16) For purposes of determining whether a good is an originating good, (a) where originating materials and non-originating materials that are fungible materials are used in the production of the good, the determination of whether the materials are originating materials may, at the choice of the producer of the good or the person from whom the producer acquired the materials, be made on the basis of any of the applicable inventory management methods set out in Schedule X; and (b) where originating goods and non-originating goods that are fungible goods are physically combined or mixed in in- ventory and prior to exportation do not undergo production or any other operation in the territory of the NAFTA country in which they were physically combined or mixed in inventory, other than unloading, reloading or any other operation necessary to preserve the goods in good condition or to transport the goods for exportation to the territory of another NAFTA country, the determination of whether the good is an originating good may, at the choice of the ex- porter of the good or the person from whom the exporter acquired the good, be made on the basis of any of the appli- cable inventory management methods set out in Schedule X. Accessories, spare parts and tools; deemed originating for tariff change rule; actual origin applicable for RVC requirement (17) Accessories, spare parts or tools that are delivered with a good and form part of the good’s standard accessories, spare parts or tools are originating materials if the good is an originating good, and shall be disregarded for purposes of deter- mining whether all the non-originating materials used in the production of the good undergo an applicable change in tariff classification or determining under section 5(1) the value of non-originating materials that do not undergo an applicable change in tariff classification, provided that (a) the accessories, spare parts or tools are not invoiced separately from the good; and (b) the quantities and value of the accessories, spare parts or tools are customary for the good, within the industry that produces the good. (18) Where a good is subject to a regional value-content requirement, the value of accessories, spare parts and tools that are delivered with that good and form part of the good’s standard accessories, spare parts or tools shall be taken into ac- count as originating or non-originating materials, as the case may be, in calculating the regional value content of the good. (19) For purposes of subsection (18), where accessories, spare parts and tools are self-produced materials, the producer may choose to designate those materials as intermediate materials under subsection (4). Examples illustrating the provisions on materials (20) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: section 7(2), Customs Value not Determined in a Manner Consistent with Schedule VIII Producer A, located in NAFTA country A, imports material A into NAFTA country A. Producer A purchased material A from a mid- dleman located in country B. The middleman purchased the material from a manufacturer located in country B. Under the laws in NAFTA country A that implement the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade, the customs value of material A was based on the price actually paid or payable by the middleman to the manufacturer. Producer A uses ma- terial A to produce Good C, and exports Good C to NAFTA country D. Good C is subject to a regional value-content requirement. Under section 4(1) of Schedule VIII, the price actually paid or payable is the total payment made or to be made by the producer to or for the benefit of the seller of the material. Section 1 of that Schedule defines producer and seller for purposes of the Schedule. A pro- ducer is the person who uses the material in the production of a good that is subject to a regional value-content requirement. A seller is the person who sells the material being valued to the producer. The customs value of material A was not determined in a manner consistent with Schedule VIII because it was based on the price ac- tually paid or payable by the middleman to the manufacturer, rather than on the price actually paid or payable by Producer A to the mid- dleman. Thus, section 7(2) applies and material A is valued in accordance with Schedule VIII. Example 2: section 7(5), Value of Intermediate Materials A producer located in a NAFTA country produces Good B, which is subject to a regional value-content requirement under section 4(2)(b). The producer also produces Material A, which is used in the production of Good B. Both originating materials and non-originating materials are used in the production of Material A. Material A is subject to a change in tariff classification requirement under section 4(2)(a). The costs to produce Material A are the following: 46408 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Product costs: Value of originating materials ...... $1.00 Value of non-originating materials ...... 7.50 Other product costs ...... 1.50 Period costs (including $0.30 in royalties) ...... 0.50 Other costs ...... 0.10 Total cost of Material A ...... $10.60 The producer designates Material A as an intermediate material and determines that, because all of the non-originating materials that are used in the production of Material A undergo an applicable change in tariff classification set out in Schedule I, Material A would, under paragraph 4(2)(a) qualify as an originating material. The cost of the non-originating materials used in the production of Material A is therefore not included in the value of non-originating materials that are used in the production of Good B for the purpose of determin- ing the regional value content of Good B. Because Material A has been designated as an intermediate material, the total cost of Material A, which is $10.60, is treated as the cost of originating materials for the purpose of calculating the regional value content of Good B. The total cost of Good B is determined in accordance with the following figures: Product costs: Value of originating materials Ðintermediate materials ...... $10.60 Ðother materials ...... 3.00 Value of non-originating materials ...... 5.50 Other product costs ...... 6.50 Period costs ...... 2.50 Other costs ...... 0.10 Total cost of Good B ...... $28.20 Example 3: section 7(5), Effects of the Designation of Self-produced Materials on Net Cost The ability to designate intermediate materials helps to put the vertically integrated producer who is self-producing materials that are used in the production of a good on par with a producer who is purchasing materials and valuing those materials in accordance with sub- section 7(1). The following situations demonstrate how this is achieved: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46409 Situation 1 A producer located in a NAFTA country produces Good B, which is subject to a regional value-content requirement of 50 percent under the net cost method. Good B satisfies all other applicable requirements of these Regulations. The producer purchases Material A, which is used in the production of Good B, from a supplier located in a NAFTA country. The value of Material A determined in accordance with subsection 7(1) is $11.00. Material A is an originating material. All other materials used in the production of Good B are non-originating materials. The net cost of Good B is determined as follows: Product costs: Value of originating materials (Material A) ...... $11.00 Value of non-originating materials ...... 5.50 Other product costs ...... 6.50 Period costs: (including $0.20 in excluded costs) ...... 0.50 Other costs ...... 0.10 Total cost of Good B ...... $23.60 Excluded costs: (included in period costs) ...... ¥0.20 Net cost of Good B ...... $23.40 The regional value content of Good B is calculated as follows: NC− VNM RVC = ×100 NC $23.40− $5. 50 = ×100 $23.40 = 76. 5% The regional value content of Good B is 76.5 percent, and Good B, therefore, qualifies as an originating good. Situation 2 A producer located in a NAFTA country produces Good B, which is subject to a regional value-content requirement of 50 percent under the net cost method. Good B satisfies all other applicable requirements of these Regulations. The producer self-produces Material A which is used in the production of Good B. The costs to produce Material A are the following: 46410 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Product costs: Value of originating materials ...... $1.00 Value of non-originating materials ...... 7.50 Other product costs ...... 1.50 Period costs: (including $0.20 in excluded costs) ...... 0.50 Other costs ...... 0.10 Total cost of Material A ...... $10.60 Additional costs to produce Good B are the following: Product costs: Value of originating materials ...... $0.00 Value of non-originating materials ...... 5.50 Other product costs ...... 6.50 Period costs: (including $0.20 in excluded costs) ...... 0.50 Other costs ...... 0.10 Total additional costs ...... $12.60 The producer does not designate Material A as an intermediate material under subsection 7(4). The net cost of Good B is calculated as follows: Costs of Material A (not designated Additional Costs as an intermediate to Produce Good Total material) B Product costs: Value of originating materials ...... $1.00 $0.00 $1.00 Value of non-originating materials ...... 7.50 5.50 13.00 Other product costs ...... 1.50 6.50 8.00 Period costs (including $0.20 in excluded costs) ...... 0.50 0.50 1.00 Other costs ...... 0.10 0.10 0.20 Total cost of Good B ...... $10.60 $12.60 $23.20 Excluded costs (in period costs) ...... 0.20 0.20 ¥0.40 Net cost of Good B (total cost minus excluded costs) ...... $22.80 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46411 The regional value content of Good B is calculated as follows: NC− VNM RVC = ×100 NC $22.80− $13. 00 = ×100 $22.80 = 42. 9% The regional value content of Good B is 42.9 percent, and Good B, therefore, does not qualify as an originating good. Situation 3 A producer located in a NAFTA country produces Good B, which is subject to a regional value-content requirement of 50 percent under the net cost method. Good B satisfies all other applicable requirements of these Regulations. The producer self-produces Material A, which is used in the production of Good B. The costs to produce Material A are the following: Product costs: Value of originating materials ...... $1.00 Value of non-originating materials ...... 7.50 Other product costs ...... 1.50 Period costs: (including $0.20 in excluded costs) ...... 0.50 Other costs ...... 0.10 Total cost of Material A ...... $10.60 Additional costs to produce Good B are the following: Product costs: Value of originating materials ...... $0.00 Value of non-originating materials ...... 5.50 Other product costs ...... 6.50 Period costs: (including $0.20 in excluded costs) ...... 0.50 Other costs ...... 0.10 Total additional costs ...... $12.60 The producer designates Material A as an intermediate material under subsection 7(4). Material A qualifies as an originating material under paragraph 4(2)(a). Therefore, the value of non-originating materials used in the production of Material A is not included in the value of non-originating materials for the purposes of calculating the regional value content of Good B. The net cost of Good B is cal- culated as follows: 46412 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Costs of Material A Additional (designated Costs to as an inter- Produce Total mediate Good B material) Product costs: Value of originating materials ...... $10.60 $0.00 $10.60 Value of non-originating materials ...... 5.50 5.50 Other product costs ...... 6.50 6.50 Period costs (including $0.20 in excluded costs) ...... 0.50 0.50 Other costs ...... 0.10 0.10 Total cost of Good B ...... $10.60 $12.60 $23.20 Excluded costs (in period costs) ...... 20 ¥0.20 Net cost of Good B (total cost minus excluded costs) ...... $23.00 The regional value content of Good B is calculated as follows: NC− VNM RVC = ×100 NC $23.00− $5. 50 = ×100 $23.00 = 76. 1% The regional value content of Good B is 76.1 percent, and Good B, therefore, qualifies as an originating good. Example 4: Originating Materials Acquired from a Producer Who Produced Them Using Intermediate Materials Producer A, located in NAFTA country A, produces switches. In order for the switches to qualify as originating goods, Producer A designates subassemblies of the switches as intermediate materials. The subassemblies are subject to a regional value-content requirement. They satisfy that requirement, and qualify as originating materials. The switches are also subject to a regional value-content requirement, and, with the subassemblies designated as intermediate materials, are determined to have a regional value content of 65 percent. Producer A sells the switches to Producer B, located in NAFTA country B, who uses them to produce switch assemblies that are used in the production of Good B. The switch assemblies are subject to a regional value-content requirement. Producers A and B are not accu- mulating their production within the meaning of section 14. Producer B is therefore able, under section 7(4), to designate the switch as- semblies as intermediate materials. If Producers A and B were accumulating their production within the meaning of section 14, Producer B would be unable to designate the switch assemblies as intermediate materials, because the production of both producers would be considered to be the production of one producer. Example 5: Single Producer and Successive Designations of Materials Subject to a Regional Value-Content Requirement as Intermediate Materials Producer A, located in NAFTA country, produces Material X and uses Material X in the production of Good B. Material X qualifies as an originating material because it satisfies the applicable regional value-content requirement. Producer A designates Material A as an in- termediate material. Producer A uses Material X in the production of Material Y, which is also used in the production of Good B. Material Y is also sub- ject to a regional value-content requirement. Under the proviso set out in section 7(4), Producer A cannot designate Material Y as an inter- mediate material, even if Material Y satisfies the applicable regional value-content requirement, because Material X was already des- ignated by Producer A as an intermediate material. Example 6: Single Producer and Multiple Designations of Materials as Intermediate Materials Producer X, who is located in NAFTA country X, uses non-originating materials in the production of self-produced materials A, B, and C. None of the self-produced materials are used in the production of any of the other self-produced materials. Producer X uses the self-produced materials in the production of Good O, which is exported to NAFTA country Y. Materials A, B and C qualify as originating materials because they satisfy the applicable regional value-content requirements. Because none of the self-produced materials are used in the production of any of the other self-produced materials, then even though each self-produced material is subject to a regional value-content requirement, Producer X may, under section 7(4), designate all of the self-produced materials as intermediate materials. The proviso set out in section 7(4) only applies where self-produced materials are used in the production of other self-produced materials and both are subject to a regional value-content requirement. Example 7: section 7(17) The following are examples of accessories, spare parts or tools that are delivered with a good and form part of the good’s standard ac- cessories, spare parts or tools: (a) consumables that must be replaced at regular intervals, such as dust collectors for an air-conditioning system, (b) a carrying case for equipment, (c) a dust cover for a machine, (d) an operational manual for a vehicle, (e) brackets to attach equipment to a wall, (f) a bicycle tool kit or a car jack, (g) a set of wrenches to change the bit on a chuck, (h) a brush or other tool to clean out a machine, and (i) electrical cords and power bars for use with electronic goods. Example 8: Value of Indirect Materials that are Assists Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46413 Producer A, located in a NAFTA country, produces Good A that is subject to a regional value-content requirement. The producer chooses that the regional value content of that good be calculated using the net cost method. Producer A buys Material X from Producer B, located in a NAFTA country, and uses it in the production of Good A. Producer A provides to Producer B, at no charge, tools to be used in the production of Material X. The tools have a value of $100 which is expensed in the current year by Producer A. Material X is subject to a regional value-content requirement which Producer B chooses to calculate using the net cost method. For purposes of determining the value of non-originating materials in order to calculate the regional value content of Material X, the tools are considered to be an originating material because they are an indirect material. However, pursuant to section 7(11) they have a value of nil because the cost of the tools with respect to Material X is not recorded on the books of Producer B. It is determined that Material X is a non-originating material. The cost of the tools that is recorded on the books of producer A is ex- pensed in the current year. Pursuant to section 5 of Schedule VIII, the value of the tools (see section 5(1)(b)(ii) of Schedule VIII) must be included in the value of Material X by Producer A when calculating the regional value content of Good A. The cost of the tools, although recorded on the books of producer A, cannot be included as a separate cost in the net cost of Good A because it is already included in the value of Material X. The entire cost of Material X, which includes the cost of the tools, is included in the value of non-originating mate- rials for purposes of the regional value content of Good A. PART V AUTOMOTIVE GOODS SECTION 8. DEFINITIONS AND INTERPRETATION For purposes of this Part, ‘‘after-market parts’’ means goods that are not for use as original equipment in the production of light-duty vehicles or heavy-duty vehicles and that are (a) goods provided for in a tariff provision listed in Schedule IV, or (b) automotive component assemblies, automotive components, sub-components or listed materials; ‘‘class of motor vehicles’’ means any one of the following categories of motor vehicles: (a) motor vehicles provided for in any of subheading 8701.20, tariff items 8702.10.30 and 8702.90.30 (vehicles for the transport of 16 or more persons), subheadings 8704.10, 8704.22, 8704.23, 8704.32 and 8704.90 and headings 8705 and 8706, (b) motor vehicles provided for in any of subheadings 8701.10 and 8701.30 through 8701.90, (c) motor vehicles provided for in any of tariff items 8702.10.60 and 8702.90.60 (vehicles for the transport of 15 or fewer persons) and subheadings 8704.21 and 8704.31, and (d) motor vehicles provided for in any of subheadings 8703.21 through 8703.90; ‘‘complete motor vehicle assembly process’’ means the production of a motor vehicle from separate constituent parts, which parts include the following: (a) a structural frame or unibody, (b) body panels, (c) an engine, a transmission and a drive train, (d) brake components, (e) steering and suspension components, (f) seating and internal trim, (g) bumpers and external trim, (h) wheels, and (i) electrical and lighting components; ‘‘first prototype’’ means the first motor vehicle that (a) is produced using tooling and processes intended for the production of motor vehicles to be offered for sale, and (b) follows the complete motor vehicle assembly process in a manner not specifically designed for testing purposes; ‘‘floor pan of a motor vehicle’’ means a component, comprising a single part or two or more parts joined together, with or without additional stiffening members, that forms the base of a motor vehicle, beginning at the firewall or bulkhead of the motor vehicle and ending (a) where there is a luggage floor panel in the motor vehicle, at the place where that luggage floor panel begins, and (b) where there is no luggage floor panel in the motor vehicle, at the place where the passenger compartment of the motor vehicle ends; ‘‘heavy-duty automotive good’’ means a heavy-duty vehicle or a heavy-duty component; ‘‘heavy-duty component’’ means an automotive component or automotive component assembly that is for use as original equipment in the production of a heavy-duty vehicle; ‘‘marque’’ means a trade name used by a marketing division of a motor vehicle assembler that is separate from any other marketing division of that motor vehicle assembler; ‘‘model line’’ means a group of motor vehicles having the same platform or model name; ‘‘model name’’ means the word, group of words, letter, number or similar designation assigned to a motor vehicle by a marketing division of a motor vehicle assembler (a) to differentiate the motor vehicle from other motor vehicles that use the same platform design, (b) to associate the motor vehicle with other motor vehicles that use different platform designs, or (c) to denote a platform design; ‘‘new building’’ means a new construction to house a complete motor vehicle assembly process, where that construction includes the pouring or construction of a new foundation and floor, the erection of a new frame and roof, and the installa- tion of new plumbing and electrical and other utilities; ‘‘plant’’ means a building, or buildings in close proximity but not necessarily contiguous, machinery, apparatus and fix- tures that are under the control of a producer and are used in the production of any of the following: (a) light-duty vehicles and heavy-duty vehicles, (b) goods of a tariff provision listed in Schedule IV, and (c) automotive component assemblies, automotive components, sub-components and listed materials; 46414 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations ‘‘platform’’ means the primary load-bearing structural assembly of a motor vehicle that determines the basic size of the motor vehicle, and is the structural base that supports the driveline and links the suspension components of the motor ve- hicle for various types of frames, such as the body-on-frame or space-frame, and monocoques; ‘‘received in the territory of a NAFTA country’’ means, with respect to section 9(2), the location at which a traced material arrives in the territory of a NAFTA country and is documented for any customs purpose, which, in the case of a traced material imported into (a) Canada, (i) where the traced material is imported on a vessel, as defined in section 2 of the Reporting of Imported Goods Regulations, is the location at which the traced material is last unloaded from the vessel and reported, under sec- tion 12 of the Customs Act, to a customs office, including reported for transportation under bond by a conveyance other than that vessel, and (ii) in any other case, is the location at which the traced material is reported, under section 12 of the Customs Act, to a customs office, including reported for transportation under bond, (b) Mexico, (i) where the traced material is imported on a vessel, the location at which the traced material is last unloaded from the vessel and reported for any customs purpose, and (ii) in any other case, the location at which the traced material is reported for any customs purpose, and (c) the United States, is the location at which the traced material is entered for any customs purpose, including en- tered for consumption, entered for warehouse or entered for transportation under bond, or admitted into a foreign trade zone; ‘‘refit’’ means a closure of a plant for a period of at least three consecutive months that is for purposes of plant conversion or retooling; ‘‘size category’’, with respect to a light-duty vehicle, means that the total of the interior volume for passengers and the in- terior volume for luggage is (a) 85 cubic feet (2.38 m3) or less, (b) more than 85 cubic feet (2.38 m3) but less than 100 cubic feet (2.80 m3), (c) 100 cubic feet (2.80 m3) or more but not more than 110 cubic feet (3.08 m3), (d) more than 110 cubic feet (3.08 m3) but less than 120 cubic feet (3.36 m3), or (e) 120 cubic feet (3.36 m3) or more; ‘‘traced material’’ means a material, produced outside the territories of the NAFTA countries, that is imported from outside the territories of the NAFTA countries and is, when imported, of a tariff provision listed in Schedule IV; ‘‘underbody’’ means the floor pan of a motor vehicle. SECTION 9. LIGHT-DUTY AUTOMOTIVE GOODS VNM determined by tracing of certain non-originating materials (1) For purposes of calculating the regional value content of a light-duty automotive good under the net cost method, the value of non-originating materials used by the producer in the production of the good shall be the sum of the values of the non-originating materials that are traced materials and are incorporated into the good. Valuation of traced materials for VNM in the RVC (2) Except as otherwise provided in subsections (3) and (6) through (8), the value of each of the traced materials that is in- corporated into a good shall be (a) where the producer imports the traced material from outside the territories of the NAFTA countries and has or takes title to it at the time of importation, the sum of (i) the customs value of the traced material, (ii) where not included in that customs value, any freight, insurance, packing and other costs that were incurred in transporting the traced material to the first place at which it was received in the territory of a NAFTA country, and (iii) where not included in that customs value, the costs referred to in subsection (4); (b) where the producer imports the traced material from outside the territories of the NAFTA countries and does not have or take title to it at the time of importation, the sum of (i) the customs value of the traced material, (ii) where not included in that customs value, any freight, insurance, packing and other costs that were incurred in transporting the traced material to the place at which it was when the producer takes title in the territory of a NAFTA country, and (iii) where not included in that customs value, the costs referred to in subsection (4); (c) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries and that person has or takes title to the material at the time of importation, if the producer has a statement that (i) is signed by the person from whom the producer acquired the traced material, whether in the form in which it was imported into the territory of a NAFTA country or incorporated into another material, and (ii) states (A) the customs value of the traced material, (B) where not included in that customs value, any freight, insurance, packing and other costs that were in- curred in transporting the traced material to the first place at which it was received in the territory of a NAFTA country, and (C) where not included in that customs value, the costs referred to in subsection (4), the sum of the customs value of the traced material, the freight, insurance, packing and other costs referred to in sub- paragraph (ii)(B) and the costs referred to in subparagraph (ii)(C); Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46415 (d) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries and that person does not have or take title to the material at the time of importation, if the producer has a statement that (i) is signed by the person from whom the producer acquired the traced material, whether in the form in which it was imported into the territory of a NAFTA country or incorporated into another material, and (ii) states (A) the customs value of the traced material, (B) where not included in that customs value, any freight, insurance, packing and other costs that were in- curred in transporting the traced material to the place at which it was located when the first person in the ter- ritory of a NAFTA country takes title, and (C) where not included in that customs value, the costs referred to in subsection (4), the sum of the customs value of the traced material, the freight, insurance, packing and other costs referred to in sub- paragraph (ii)(B) and the costs referred to in subparagraph (ii)(C); (e) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries and the producer acquires the traced material or a material that incorporates the traced material from a per- son in the territory of a NAFTA country who has title to it, if the producer has a statement that (i) is signed by the person from whom the producer acquired the traced material or the material that incorporates it, and (ii) states the value of the traced material or a material that incorporates the traced material, determined in accord- ance with subsection (5), with respect to a transaction that occurs after the customs value of the traced material was determined, the value of the traced material or the material that incorporates the traced material, determined in accordance with subsection (5), with respect to the transaction referred to in that statement; (f) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries, and the producer acquires a material that incorporates that traced material and the acquired material was produced in the territory of a NAFTA country and is subject to a regional value-content requirement, if the producer has a statement that (i) is signed by the person from whom the producer acquired that material, and (ii) states that the acquired material is an originating material and states the regional value content of the material, an amount equal to VM × (1 ¥ RVC) where VM is the value of the acquired material, determined in accordance with subsection (5), with respect to the transaction in which the producer acquired that material, and RVC is the regional value content of the acquired material, expressed as a decimal; (g) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries, and the producer acquires a material that incorporates that traced material and the acquired material was produced in the territory of a NAFTA country and is subject to a regional value-content requirement, if the producer has a statement that (i) is signed by the person from whom the producer acquired that material, and (ii) states that the acquired material is an originating material but does not state any value with respect to the traced material, an amount equal to VM × (1 ¥ RVCR) where VM is the value of the acquired material, determined in accordance with subsection (5), with respect to the transaction in which the producer acquired that material, and RVCR is the regional value-content requirement for the acquired material, expressed as a decimal; (h) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries and the producer acquires a material that (i) incorporates that traced material, (ii) was produced in the territory of a NAFTA country, and (iii) with respect to which an amount was determined in accordance with paragraph (f) or (g), if the producer of the good has a statement signed by the person from whom the producer acquired that material that states that amount, the amount as determined in accordance with paragraph (f) or (g), as the case may be; and (i) where a person other than the producer imports the traced material from outside the territories of the NAFTA countries and the producer does not have a statement described in any of paragraphs (c) through (h), the value of the traced material or any material that incorporates it, determined in accordance with subsection (5) with respect to the transaction in which the producer acquires the traced material or any material that incorporates it. Value of traced material if customs value is not in accordance with Schedule VIII (3) For purposes of subsections (2) (a) through (d), where the customs value of the traced material referred to in those para- graphs was not determined in a manner consistent with Schedule VIII, the value of the material shall be the sum of (a) the value of the material determined in accordance with Schedule VIII with respect to the transaction in which the person who imported the material from outside the territories of the NAFTA countries acquired it; and (b) where not included in that value, the costs referred to in subsections (2)(a) (ii) and (iii), subsections (2)(b) (ii) and (iii), subsections (2)(c)(ii) (B) and (C) or subsections (2)(d)(ii) (B) and (C), as the case may be. Additional costs included in traced value if not already included in customs value (4) The costs referred to in subsections (2) (a) through (d) and subsection (3) are the following: 46416 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (a) duties and taxes paid or payable with respect to the material in the territory of one or more of the NAFTA coun- tries, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable; and (b) customs brokerage fees, including the cost of in-house customs brokerage services, incurred with respect to the ma- terial in the territory of one or more of the NAFTA countries. Value of traced material determined under Schedule VIII if value is not customs value (5) For purposes of subsections (2) (e) through (g) and (i) and subsections (6) and (7), the value of a material (a) shall be the transaction value of the material, determined in accordance with section 2(1) of Schedule VIII with re- spect to the transaction referred to in that paragraph or subsection, or (b) shall be determined in accordance with sections 6 through 11 of Schedule VIII, where, with respect to the trans- action referred to in that paragraph or subsection, there is no transaction value for the material under section 2(2) of that Schedule, or the transaction value of the material is unacceptable under section 2(3) of that Schedule, and, where not included under paragraph (a) or (b), shall include taxes, other than duties paid on an importation of a ma- terial from a NAFTA country, paid or payable with respect to the material in the territory of one or more of the NAFTA countries, other than taxes that are waived, refunded, refundable or otherwise recoverable, including credit against tax paid or payable. (6) Where it is determined, during the course of a verification of origin of a light-duty automotive good with respect to which the producer of that good has a statement referred to in subsection (2) (f) or (g), that the acquired material referred to in that statement is not an originating material, the value of the acquired material shall, for purposes of subsection (2), be determined in accordance with subsection (5) with respect to the transaction in which that producer acquired it. Effect on value of traced material if value on a statement cannot be verified (7) Where any person who has information with respect to a statement referred to in any of subsections (2)(c) through (h) does not allow a customs administration to verify that information during a verification of origin, the value of the material with respect to which that person did not allow the customs administration to verify the information may be determined by that customs administration in accordance with subsection (5) with respect to the transaction in which that person sells, or otherwise transfers to another person, that material or a material that incorporates that material. Use of value of VNM as determined under section 12(3) for traced material incorporated into another material (8) Where a traced material is incorporated into a material produced in the territory of a NAFTA country and that material is incorporated into a light-duty automotive good, the statement referred to in subsection (2)(c), (d) or (e) may state the value of non-originating materials, determined in accordance with section 12(3), with respect to the material that incor- porates the traced material. Interpretations and clarifications for provisions applicable to tracing rules for light-duty automotive goods (9) For purposes of this section, (a) where a producer, in accordance with section 7(4), designates as an intermediate material any self-produced mate- rial used in the production of a light-duty automotive good, (i) the designation applies solely to the calculation of the net cost of that good, and (ii) the value of a traced material that is incorporated into that good shall be determined as though the designation had not been made; (b) the value of a material not listed in Schedule IV, when imported from outside the territories of the NAFTA coun- tries, (i) shall not be included in the value of non-originating materials that are used in the production of a light-duty automotive good, and (ii) shall be included in calculating the net cost of a light-duty automotive good that incorporates that material; (c) except as otherwise provided in section 12(10), this section does not apply with respect to after-market parts; (d) the costs referred to in subsections (2)(a)(ii) and (b)(ii), subsections (2)(c)(ii)(B) and (d)(ii)(B) and subsections (4) and (5) shall be the costs referred to in those paragraphs that are recorded on the books of the producer of the light- duty automotive good; (e) for purposes of calculating the regional value content of a light-duty automotive good, the producer of that good may choose to treat any material used in the production of that good as a non-originating material, and the value of that material shall be determined in accordance with subsection (5) with respect to the transaction in which the pro- ducer acquired it; and (f) any information set out in a statement referred to in subsection (2) that concerns the value of materials or costs shall be in the same currency as the currency of the country in which the person who provided the statement is lo- cated. Examples of application of tracing for light-duty automotive goods (10) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: Nuts and bolts provided for in heading 7318 are imported from outside the territories of the NAFTA countries and are used in the ter- ritory of a NAFTA country in the production of a light-duty automotive good referred to in section 9(1). Heading 7318 is not listed in Schedule IV so the nuts and bolts are not traced materials. Because the nuts and bolts are not traced materials the value, under section 9(1), of the nuts and bolts is not included in the value of non-originating materials used in the light-duty automotive good even though the nuts and bolts are imported from outside the territories of the NAFTA countries. The value, under section 9(9)(b), of the nuts and bolts is included in the net cost of the light-duty automotive good for the purposes of calculating, under section 9(1), regional value content of the motor vehicle. Example 2: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46417 A rear view mirror provided for in subheading 7009.10 is imported from outside the territories of the NAFTA countries and is used in the territory of a NAFTA country as original equipment in the production of a light-duty vehicle. Subheading 7009.10 is listed in Schedule IV. The rear view mirror is a traced material. For purposes of calculating, under section 9(1), regional value content of the light-duty vehicle, the value of the mirror is included in the value of non-originating materials in ac- cordance with sections 9(2) through (9). Example 3: Glass provided for in heading 7005 is imported from outside the territories of the NAFTA countries and is used in the territory of NAFTA country A in the production of a rear view mirror. The rear view mirror is a non-originating good because it fails to satisfy the ap- plicable change in tariff classification. That rear view mirror is exported to NAFTA country B where it is used as original equipment in the production of a light-duty vehi- cle. Even though the rear view mirror is a non-originating material and is provided for in a tariff item listed in Schedule IV, it is not a traced material because it was not imported from outside the territories of the NAFTA countries. For purposes of calculating, under section 9(1), the regional value content of a light-duty vehicle in which the rear view mirror is in- corporated, the value of the rear view mirror, under section 9(1), is not included in the value of non-originating materials used in the pro- duction of the light-duty vehicle. Even though the glass provided for in heading 7005 that was used in the production of the rear view mirror and incorporated into the light-duty vehicle was imported from outside the territories of the NAFTA countries, the glass is not a traced material because heading 7005 is not listed in Schedule IV. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle that incorporates the glass, the value of the glass is not included in the value of non-originating materials used in the production of the light- duty vehicle. The value of the rear view mirror would be included in the net cost of the light-duty vehicle, but the value of the imported glass would not be separately included in the value of non-originating materials of the light-duty vehicle. Example 4: An electric motor provided for in subheading 8501.10 is imported from outside the territories of the NAFTA countries and is used in the territory of a NAFTA country in the production of a seat frame provided for in subheading 9401.90. The seat frame, with the electric motor attached, is sold to a producer of seats provided for in subheading 9401.20. The seat producer sells the seat to a producer of light- duty vehicles. The seat is to be used as original equipment in the production of that light-duty vehicle. Subheadings 8501.10 and 9401.20 are listed in Schedule IV; subheading 9401.90 is not. The electric motor is a traced material; the seat is not a traced material because it was not imported from outside the territories of the NAFTA countries. The seat is a light-duty automotive good referred to in section 9(1). For purposes of calculating, under section 9(1), the regional value content of the seat, the value of traced materials incorporated into it is included in the value of non-originating materials used in the pro- duction of the seat. The value of the electric motor is included in that value. (However, the value of the motor would not be included sep- arately in the net cost of the seat because the value of the motor is included as part of the cost of the seat frame.) For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle, the value of the electric motor is included in the value of non-originating materials used in the production of the light-duty vehicle, even if the seat is an originating mate- rial. Example 5: Cast blocks, cast heads and connecting rod assemblies provided for in heading 8409 are imported from outside the territories of the NAFTA countries by an engine producer, who has title to them at the time of importation, and are used by the producer in the territory of NAFTA country A in the production of an engine provided for in heading 8407. After the regional value content of the engine is cal- culated, the engine is an originating good. It is not a traced material because it was not imported from outside the territories of the NAFTA countries. The engine is exported to NAFTA country B, to be used as original equipment by a producer of light-duty vehicles. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle that incorporates the engine, be- cause heading 8409 is listed in Schedule IV and because the cast blocks, cast heads and connecting rod assemblies were imported into the territory of a NAFTA country and are incorporated into the light-duty vehicle, the value of those materials, which are traced materials, is included in the value of non-originating materials used in the production of the light-duty vehicle, even though the engine is an originat- ing material. The producer of the light-duty vehicle did not import the traced materials. However, because that producer has a statement referred to in section 9(2)(c) and that statement states the value of non-originating materials of the traced materials in accordance with section 12(2), the producer of the light-duty vehicle may, in accordance with section 9(8), use that value as the value of non-originating materials of the light-duty vehicle with respect to that engine. Example 6: Aluminum ingots provided for in subheading 7601.10 and piston assemblies provided for in heading 8409 are imported from outside the territories of the NAFTA countries by an engine producer and are used by that producer in the territory of NAFTA country A in the production of an engine provided for in heading 8407. The aluminum ingots are used by the producer to produce an engine block; the piston assembly is then incorporated into the engine block and the producer designates, in accordance with section 7(4), a short block provided for in heading 8409 as an intermediate material. The intermediate material qualifies as an originating material. The engine that incorporates the short block is exported to NAFTA country B and used as original equipment in the production of a light-duty vehicle. The piston assemblies provided for in heading 8409 are traced materials; neither the engine nor the short block are traced materials be- cause they were not imported from outside the territories of the NAFTA countries. For purposes of calculating, under section 9(1), the regional value content of the engine, the value of the piston assemblies is in- cluded, under section 9(9)(a)(ii), in the value of non-originating materials, even if the intermediate material is an originating material. However, the value of the aluminum ingots is not included in the value of non-originating materials because subheading 7601.10 is not listed in Schedule IV. The value of the aluminum ingots does not need to be included separately in the net cost of the engine because that value is included in the value of the intermediate material, and the total cost of the intermediate material is included in the net cost of the engine. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle that incorporates the engine (and the piston assemblies), the value of the piston assemblies incorporated into that light-duty vehicle is included in the value of non-originat- ing materials of the light-duty vehicle. Example 7: 46418 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations An engine provided for in heading 8407 is imported from outside the territories of the NAFTA countries. The producer of the engine, located in the country from which the engine is imported, used in the production of the engine a piston assembly provided for in heading 8409 that was produced in a NAFTA country and is an originating good. The engine is used in the territory of a NAFTA country as origi- nal equipment in the production of a light-duty vehicle. The engine is a traced material. For purposes of calculating, under section 9(1), the regional value content of a light-duty vehicle that incorporates that engine, the value of the engine is included in the value of non-originating materials of that light-duty vehicle. The value of the piston assembly, which was, before its exportation to outside the territories of the NAFTA countries, an originating good, shall not be deducted from the value of non-originating materials used in the production of the light-duty vehicle. Under section 18 (transshipment), the piston assembly is no longer considered to be an originating good because it was used in the production of a good outside the territories of the NAFTA countries. Example 8: A wholesaler, located in City A in the territory of a NAFTA country, imports from outside the territories of the NAFTA countries rub- ber hoses provided for in heading 4009, which is listed in Schedule IV. The wholesaler takes title to the goods at the wholesaler’s place of business in City A. The customs value of the imported goods is $500. All freight, taxes and duties associated with the good to the whole- saler’s place of business total $100; the cost of the freight, included in that $100, from the place where it was received in the territory of a NAFTA country to the location of the wholesaler’s place of business in City A is $25. The wholesaler sells the rubber hoses for $650 to a producer of light-duty vehicles who uses the goods in the territory of a NAFTA country as original equipment in the production of a light- duty vehicle. The light-duty vehicle producer pays $50 to have the goods shipped from the location of the wholesaler’s place of business in City A to the location at which the light-duty vehicle is produced. The rubber hoses are traced materials and they are incorporated into a light-duty automotive good. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle, (1) if the wholesaler takes title to the goods before the first place at which they were received in the territory of a NAFTA country, then the value of non-originating materials, where the light-duty vehicle producer has a statement referred to in section 9(2)(c), would not include the cost of freight from the place where they were received in the territory of a NAFTA country to the location of the wholesaler’s place of business: in this situation, the value of non-originating materials would be $575; (2) if the producer has a statement referred to in section 9(2)(d) that states the customs value of the traced material and, where not in- cluded in that price, the cost of taxes, duties, fees and transporting the goods to the place where title is taken, the light-duty vehicle producer may use those values as the value of non-originating materials with respect to the goods: in this situation, the value of non- originating materials would be $600; or (3) if the wholesaler is unwilling to provide the light-duty vehicle producer with such a statement, the value of non-originating mate- rials with respect to the traced materials will be the value of the materials with respect to the transaction in which the producer ac- quired them, as provided for in section 9(2)(i), in this instance $650; the costs of transporting the goods from the location of the wholesaler’s place of business to the location of the producer will be included in the net cost of the goods, but not in the value of non-originating materials. Example 9: A wholesaler, located in City A in the territory of a NAFTA country, imports from outside the territories of the NAFTA countries rub- ber hose provided for in heading 4009, which is listed in Schedule IV. The wholesaler sells the good to a producer located in the territory of the NAFTA country who uses the hose to produce a power steering hose assembly, also provided for in heading 4009. The power steer- ing hose assembly is then sold to a producer of light-duty vehicles who uses that good in the production of a light-duty vehicle. The rub- ber hose is a traced material; the power steering hose assembly is not a traced material because it was not imported from outside the terri- tories of the NAFTA countries. The wholesaler who imported the rubber hose from outside the territories of the NAFTA countries has title to it at the time of impor- tation. The customs value of the good is $3, including freight and insurance and all other costs incurred in transporting the good to the first place at which it was received in the territory of the NAFTA country. Duties and fees and all other costs referred to in section 9(4), paid by the wholesaler with respect to the good, total an additional $1. The wholesaler sells the good to the producer of the power steer- ing hose assemblies for $5, not including freight to the location of that producer. The power steering hose producer pays $2 to have the good delivered to the location of production. The value of the power steering hose assembly sold to the light-duty vehicle producer is $10, including freight for delivery of the goods to the location of the light-duty vehicle producer. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle: (1) if the motor vehicle producer has a statement referred to in section 9(2)(c) from the producer of the power steering hose assembly that states the customs value of the imported rubber hose incorporated in the power steering hose assembly, and the value of the du- ties, fees and other costs referred to in section 9(4), the producer may use those values as the value of non-originating materials with respect to that traced good: in this situation, that value would be the customs value of $3 and the cost of duties and fees of $1, pro- vided that the wholesaler has provided the producer of the power steering hose assembly with the information regarding the customs value of the imported good and the other costs; (2) if the light-duty vehicle producer has a statement from the producer of the power steering hose assembly that states the value of the imported hose, with respect to the transaction in which the power steering hose assembly producer acquires the imported hose from the wholesaler, the light-duty vehicle producer may include that value as the value of non-originating materials, in accordance with section 9(2)(e): in this situation, that value is $5; and the $2 cost of transporting the good from the location of the wholesaler to the location of the producer, because that cost is separately identified, would not be included in the value of non-originating mate- rials of the light-duty vehicle; (3) if the light-duty vehicle producer has a statement referred to in section 9(2)(f) signed by the producer of the power steering hose assembly, the light-duty vehicle producer may use the formula set out in section 9(2)(f) to calculate the value of non-originating mate- rials with respect to that acquired material: in this situation, assuming the regional value content is 55 per cent, the value of non-orig- inating materials would be $4.50; and because the cost of transportation from the location of the producer of the power steering hose assembly to the location of the light-duty vehicle producer is included in the purchase price and not separately identified, it may not be deducted from the purchase price, because the formula referred to in section 9(2)(f) does not allow for the deduction of transpor- tation costs that would otherwise not be non-originating; (4) if the light-duty vehicle producer has a statement referred to in section 9(2)(g) signed by the producer of the power steering hose assembly, the light-duty vehicle producer may use the formula set out in section 9(2)(g) to calculate the value of non-originating mate- rials with respect to that acquired material: in this situation, assuming the regional value-content requirement is 50 per cent, the value of non-originating materials would be $5; and because the cost of transportation from the location of the producer of the power steer- ing hose assembly to the location of the light-duty vehicle producer is included in the purchase price and not separately identified, it may not be deducted from the purchase price, because the formula referred to in section 9(2)(g) does not allow for the deduction of transportation costs that would otherwise not be non-originating; or Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46419 (5) if the light-duty vehicle producer does not have a statement referred to in any of sections 9(2)(c) through (h) from the producer of the power steering hose assembly, the light-duty vehicle producer includes in the value of non-originating materials of the vehicles the value, determined in accordance with section 9(2)(i), of the power steering hose assembly: in this situation, that amount would be $10, the cost to the producer of acquiring that material. Example 10: A producer of light-duty vehicles located in City C in the territory of a NAFTA country imports from outside the territories of the NAFTA countries rubber hose provided for in heading 4009, which is listed in Schedule IV, and uses that good as original equipment in the production of a light-duty vehicle. The rubber hose arrives at City A in the NAFTA country, but the producer of the light-duty vehicle does not have title to the good; it is transported under bond to City B, and on its arrival in City B, the producer of the light-duty vehicle takes title to it and the good is re- ceived in the territory of a NAFTA country. The good is then transported to the location of the light-duty vehicle producer in City C. The customs value of the imported good is $4, the transportation and other costs referred to in subparagraph 9(2)(b)(ii) to City A are $3 and to City B are $2, and the cost of duties, taxes and other fees referred to in section 9(4) is $1. The cost of transporting the good from City B to the location of the producer in City C is $1. The rubber hose is traced material. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle, the value, under section 9(2)(b), of non-originating materials of that vehicle is the customs value of the traced material and, where not included in that value, the cost of taxes, duties, fees and the cost of transporting the traced material to the place where title is taken. In this situation, the value of non-origi- nating materials would be the customs value of the traced material, $4, the cost of duties taxes and other fees, $1, the cost of transporting the material to City A, $3, and the cost of transporting that material from City A to City B, $2, for a total of $10. The $1 cost of transport- ing the good from City B to the location of the producer in City C would not be included in the value of non-originating materials of the light-duty vehicle because a person of a NAFTA country has taken title to the traced material. Example 11: A radiator provided for in subheading 8708.91 is imported from outside the territories of the NAFTA countries by a producer of light- duty vehicles and is used in the territory of a NAFTA country as original equipment in the production of a light-duty vehicle. The radiator is transported by ship from outside the territories of the NAFTA countries and arrives in the territory of the NAFTA country at City A. The radiator is not, however, unloaded at City A and although the radiator is physically present in the territory of the NAFTA country, it has not been received in the territory of a NAFTA country. The ship sails in territorial waters from City A to City B and the radiator is unloaded there. The light-duty vehicle producer files, from City C in the same country, the entry for the radiator; the radiator enters the territory of the NAFTA country at City B. Subheading 8708.91 is listed in Schedule IV. The radiator is a traced material. For purposes of calculating, under section 9(1), the regional value content of the light-duty vehicle, the value of the radiator is in- cluded in the value of non-originating materials of the light-duty vehicle. The costs of any freight, insurance, packing and other costs in- curred in transporting the radiator to City B are included in the value of non-originating materials of the light-duty vehicle, including the cost of transporting the radiator from City A to City B. The costs of any freight, insurance, packing and other costs that were incurred in transporting the radiator from City B to the location of the producer are not included in the value of non-originating materials of the light- duty vehicle. Example 12: Producer X, located in NAFTA country A, produces a car seat of subheading No. 9401.20 that is used in the production of a light- duty vehicle. The only non-originating material used in the production of the car seat is an electric motor of subheading No. 8501.20 that was imported by Producer X from outside the territories of the NAFTA countries. The electric motor is a material of a tariff provision list- ed in Schedule IV and thus is a traced material. Producer X sells the car seat as original equipment to Producer Y, a light-duty vehicle producer, located in NAFTA country B. The car seat is an originating good because the non-originating material in the car seat (the electric motor) undergoes the applicable change in tariff classification set out in a rule that specifies only a change in tariff classification. Consequently, Producer X does not choose to cal- culate the regional value content of the car seat in accordance with section 12(1). For purposes of determining, under section 9(1), the value of non-originating materials used in the production of the light-duty vehi- cle that incorporates the car seat, the value of the electric motor is included even though the car seat qualifies as an originating material. Producer X provides Producer Y with a statement described in section 9(2)(c), with the value of non-originating material used in the production of the car seat determined in accordance with section 12(3), as is permitted by section 9(8). Producer Y uses that value as the value of non-originating materials used in the production of the light-duty vehicle with respect to the car seat. Example 13: This example has the same facts as in Example 12, except that the car seat does not qualify as an originating good under the rule that specifies only a change in tariff classification. Instead, it qualifies as an originating good under a rule that specifies a regional value-con- tent requirement and a change in tariff classification. For purposes of that rule, Producer X chose to calculate the regional value content of the car seat in accordance with section 12(1) over a period set out in section 12(5)(a) and using a category set out in section 12(4)(a). For purposes of the statement described in section 9(2)(c), Producer X determined, as is permitted under section 9(8), the value of non-originating material used in the production of the car seat in accordance with section 12(3) over a period set out in section 12(5)(a) and using a category set out in section 12(4)(e). SECTION 10. HEAVY-DUTY AUTOMOTIVE GOODS Determining VNM for the calculation of the RVC for heavy-duty automotive goods (1) Except as otherwise provided in subsections (3) through (8) and section 12(10)(a), for purposes of calculating the re- gional value content of a heavy-duty automotive good under the net cost method, the value of non-originating materials used by the producer of the good in the production of the good shall be the sum of (a) for each listed material that is a non-originating material, is a self-produced material and is used by the producer in the production of the good, at the choice of the producer, either (i) the total cost incurred with respect to all goods produced by the producer that can be reasonably allocated to that listed material in accordance with Schedule VII, (ii) the aggregate of each cost that forms part of the total cost incurred with respect to that listed material that can be reasonably allocated to that listed material in accordance with Schedule VII, or (iii) the sum of (A) the customs value of each non-originating material imported by the producer and used in the production of the listed material, and, where not included in that customs value, the costs referred to in subsections (2)(c) through (f), and 46420 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (B) the value of each non-originating material that is not imported by the producer of the listed material and is used in the production of the listed material, determined in accordance with subsection (2) with respect to the transaction in which the producer of the listed material acquired it; (b) for each listed material that is a non-originating material, is produced in the territory of a NAFTA country and is acquired and used by the producer in the production of the good, at the choice of the producer, either (i) the value of that non-originating listed material, determined in accordance with subsection (2), with respect to the transaction in which the producer acquired the listed material, or (ii) where the producer of the good has a statement described in clause (A) or (B) with respect to each material that is a non-originating material used in the production of that listed material, the sum of (A) the customs value of each non-originating material imported by the producer of the listed material and used in the production of that listed material, and, where not included in that customs value, the costs re- ferred to in subsections (2)(c) through (f), if the producer of the good has a statement signed by the producer of the listed material that states the customs value of that non-originating material and the costs referred to in subsections (2)(c) through (f) that the producer of the listed material incurred with respect to the non-originat- ing material, and (B) the value of each non-originating material that is not imported by the producer of the listed material, and is acquired and used in the production of the listed material, determined in accordance with subsection (2) with respect to the transaction in which the producer of the listed material acquired that non-originating ma- terial, if the producer of the good has a statement signed by the producer of the listed material that states the value of the acquired material, determined in accordance with subsection (2) with respect to the transaction in which the producer of the listed material acquired the non-originating material; (c) for each listed material, automotive component assembly, automotive component or sub-component that is im- ported from outside the territories of the NAFTA countries, and is used by the producer in the production of the good, (i) where it is imported by the producer, the customs value of that non-originating listed material, automotive component assembly, automotive component or sub-component, and, where not included in that customs value, the costs referred to in subsections (2)(c) through (f), and (ii) where it is not imported by the producer, the value of that non-originating listed material, automotive compo- nent assembly, automotive component or sub-component, determined in accordance with subsection (2) with re- spect to the transaction in which the producer acquired it; (d) for each automotive component assembly, automotive component or sub-component that is an originating material and is acquired and used by the producer in the production of the good, at the choice of the producer, (i) the sum of (A) the value of each non-originating listed material used in the production of the originating material, deter- mined under paragraphs (a) and (b), (B) the value of each non-originating material incorporated into the originating material, determined under paragraph (c), (C) the value of each non-originating listed material used in the production of a material referred to in para- graph (e) that is used in the production of the originating material, determined under paragraphs (a) and (b), and (D) where the value of a non-originating listed material referred to in clause (C), and used in the production of a non-originating automotive component assembly, automotive component or sub-component that is used in the production of the originating material, is not included under clause (C), the value of that automotive component assembly, automotive component or sub-component, determined under paragraph (e)(ii), if the producer has a statement, signed by the person from whom the originating material was acquired, that states the sum of the values, as determined by the producer of the originating material under paragraphs (a), (b), (c) and (e) of each non-originating material referred to in any of clauses (A) through (D) that is incorporated into that orig- inating material; (ii) an amount equal to the number resulting from applying the following formula: VM × (1 ¥ RVC) where VM is the value of the acquired material, determined in accordance with subsection (2), with respect to the transaction in which the producer of the good acquired that material, and RVC is the regional value content of the acquired material, expressed as a decimal, if the material is subject to a regional value-content requirement and the producer has a statement, signed by the person from whom the producer acquired that material, that states that the acquired material is an originating ma- terial and states the regional value content of the material, (iii) an amount equal to the number resulting from applying the following formula: VM × (1 ¥ RVCR) where VM is the value of the acquired material, determined in accordance with subsection (2), with respect to the transaction in which the producer of the good acquired that material, and RVCR is the regional value-content requirement for the acquired material, expressed as a decimal, if the material is subject to a regional value-content requirement and the producer has a statement, signed by the person from whom the producer acquired that material, that states that the acquired material is an originating ma- terial but does not state the value of non-originating materials with respect to that acquired material; or (iv) the value of that automotive component assembly, automotive component or sub-component determined in accordance with subsection (2) with respect to the transaction in which the producer acquired the material; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46421 (e) for each automotive component assembly, automotive component or sub-component that is a non-originating mate- rial produced in the territory of a NAFTA country and that is acquired by the producer and used by the producer in the production of the good, at the choice of the producer, either (i) the sum of the values of the non-originating materials incorporated into that non-originating material that is ac- quired by the producer, determined under paragraphs (a), (b), (c), (d) and (f), if the producer has a statement, signed by the person from whom the non-originating material was acquired, that states the sum of the values of the non-originating materials incorporated into that non-originating material, determined by the producer of the non-originating material in accordance with paragraphs (a), (b), (c), (d) and (f), or (ii) the value of that non-originating automotive component assembly, automotive component or sub-component, determined in accordance with subsection (2) with respect to the transaction in which the producer acquired the material; and (f) for each non-originating material that is not referred to in paragraph (a), (b), (c) or (e) and that is used by the pro- ducer in the production of the good, (i) where it is imported by the producer, the customs value of that non-originating material, and, where not in- cluded in that customs value, the costs referred to in subsections (2)(c) through (f), and (ii) where it is not imported by the producer, the value of that non-originating material, determined in accordance with subsection (2) with respect to the transaction in which the producer acquired the material. Application of Schedule VIII to determine VNM; additional costs to be included (2) For purposes of subsection (1)(a)(ii)(B), subsection (1)(b)(i), subsection (1)(b)(ii)(B), subsections (1)(c)(ii), (1)(d)(ii) through (iv), (1)(e)(ii) and subsection (1)(f)(ii), the value of a material (a) shall be the transaction value of the material, determined in accordance with section 2(1) of Schedule VIII with re- spect to the transaction referred to in that clause, subparagraph or paragraph, or (b) where, with respect to the transaction referred to in that clause, subparagraph, or paragraph, there is no transaction value for the material under section 2(2) of Schedule VIII or the transaction value of the material is unacceptable under section 2(3) of that Schedule, shall be determined in accordance with sections 6 through 11 of that Schedule, and shall include the following costs where they are not included under paragraph (a) or (b): (c) the costs of freight, insurance and packing, and all other costs incurred in transporting the material to the location of the producer, (d) duties and taxes paid or payable with respect to the material in the territory of one or more of the NAFTA coun- tries, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable, (e) customs brokerage fees, including the cost of in-house customs brokerage and customs clearance services, incurred with respect to the material in the territory of one or more of the NAFTA countries, and (f) the cost of waste and spoilage resulting from the use of the material in the production of the good, minus the value of any reusable scrap or by-product. Value of imported material if customs value is not in accordance with Schedule VIII (3) For purposes of subsections (1)(a)(ii)(A) and (b)(ii)(A) and subsections (1)(c)(i) and (f)(i), where the customs value of an imported material referred to in those clauses or paragraphs was not determined in a manner consistent with Schedule VIII, the value of the material shall be determined in accordance with Schedule VIII with respect to the importation for which that customs value was determined and, where the costs referred to in sections (2)(c) through (f) are not included in that value, those costs shall be added to the value of the material. Option to use section 9 tracing rules in certain circumstances (4) For purposes of calculating the regional value content of a heavy-duty component, where (a) a heavy-duty component is produced in the same plant as an automotive component assembly or automotive com- ponent that is of the same heading or subheading as that heavy-duty component and is for use as original equipment in a light-duty vehicle, and (b) it is not reasonable for the producer to know which of the production will constitute a heavy-duty component for use in a heavy-duty vehicle, the value of the non-originating materials used in the production of the heavy-duty component in that plant may, at the choice of the producer, be determined in the manner set out in section 9. (5) For purposes of calculating the regional value content of a heavy-duty vehicle, where a producer of such a vehicle ac- quires, for use by that producer in the production of the vehicle, a heavy-duty component with respect to which the value of non-originating materials has been determined in accordance with subsection (4), the value of the non-originating mate- rials used by the producer with respect to that heavy-duty component is the value of non-originating materials determined under that subsection. VNM may be redetermined for certain acquired materials (6) Where it is determined, during the course of a verification of origin of a heavy-duty automotive good with respect to which the producer of that good has a statement referred to in subsection (1)(d)(ii) or (iii) that the acquired material re- ferred to in that statement is not an originating material, the value of the acquired material shall, for purposes of sub- section (1), be determined in accordance with subsection (2) with respect to the transaction in which that producer ac- quired it. 46422 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Effect on value of traced material if value on a statement cannot be verified (7) Where any person who has information with respect to a statement referred to in subsection (1)(b)(ii), (d)(i) or (e)(i) does not allow a customs administration to verify that information during a verification of origin, the value of any material with respect to which that person did not allow the customs administration to verify the information may be determined by that customs administration in accordance with subsection (2) with respect to the transaction in which that person sells, or otherwise transfers to another person, that material or a material that incorporates that material. Use of value of VNM as determined under section 12(3) for traced material incorporated into another material (8) Where a heavy-duty component, sub-component or listed material is incorporated into a material produced in the terri- tory of a NAFTA country and that material is incorporated into a heavy-duty automotive good, the statement referred to in subsection (1)(b)(ii), (d)(i) or (e)(i) may state the value of non-originating materials, determined in accordance with section 12(3), with respect to the material that incorporates the heavy-duty component, sub-component or listed material. Interpretations and clarifications for provisions applicable to rules for determining VNM for heavy-duty automotive goods (9) For purposes of this section, (a) for purposes of calculating the regional value content of a heavy-duty automotive good, sub-component or listed material, a producer of such a good may, in accordance with section 7(4), designate as an intermediate material any self-produced material, other than a heavy-duty component or sub-component, that is used in the production of that good; (b) except as otherwise provided in section 12(10), this section does not apply with respect to after-market parts; (c) this section does not apply to a sub-component for purposes of calculating its regional value content before it is in- corporated into a heavy-duty automotive good; (d) for purposes of calculating the regional value content of a heavy-duty automotive good, the producer of that good may choose to treat any material used in the production of that good as a non-originating material, and the value of that material shall be determined in accordance with subsection (2) with respect to the transaction in which the pro- ducer acquired it; (e) any information set out in a statement referred to in subsections (1)(b)(ii), (d)(i) through (iii) or (e)(i) that concerns the value of materials or costs shall be in the same currency as the currency of the country in which the person who provided the statement is located; and (f) total cost under subsections (1)(a)(i) and (ii) consists of the costs referred to section 2(6), and is calculated in ac- cordance with that section and section 2(7). Examples of application of rules for determining VNM for heavy-duty automotive goods (10) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: A listed material is imported from outside the territories of the NAFTA countries A cast head, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and used in that country in the production of an engine that will be used as original equipment in the production of a heavy-duty vehicle. No other non-originating materials are used in the production of the engine. The cast head is a listed material; the engine is an automotive compo- nent. Situation 1: Use of the listed material in an automotive component For purposes of calculating the regional value content of the engine, the value of listed materials imported from outside the territories of the NAFTA countries is included in the value of non-originating materials used in the production of the engine. Because the cast head was produced outside the territories of the NAFTA countries, its value, under section 10(1)(c), is included in the value of non-originating materials used in the production of the engine. Situation 2: Use of an originating automotive component incorporating the listed material The engine is an originating material acquired by the producer of the heavy-duty vehicle. For purposes of calculating the regional value content of the heavy-duty vehicle that incorporates that engine (and incorporates the cast head), the value of non-originating mate- rials used in the production of the heavy-duty vehicle is determined under section 10(1)(d) with respect to that engine. The producer may choose to include in the value of non-originating materials of the heavy-duty vehicle (a) the value, determined under section 10(1)(d)(i), of the non-originating materials that are incorporated into the engine, which is the value, determined under sections 10(1) (a) through (c) and paragraph (e)(ii), of the non-originating materials; (b) the value, determined under section 10(1)(d)(ii), which is an amount equal to the amount determined under section 10(1)(d)(iv) multiplied by the remainder of one minus the regional value content, expressed as a decimal, of the engine; (c) the value, determined under section 10(1)(d)(iii), which is an amount equal to the amount determined under section 10(1)(d)(iv) multiplied by the remainder of one minus the regional value-content requirement, expressed as a decimal, for the engine; or (d) the value, determined under section 10(1)(d)(iv), of the engine. The heavy-duty vehicle producer may only choose the first option if that producer has a statement, referred to in section 10(1)(d)(i), from the person from whom the engine was acquired. In this situation, the value, determined under section 10(1)(c), of the cast head, is included in the value of non-originating materials of the heavy-duty vehicle, with respect to the engine that is used in the production of the heavy-duty vehicle. The heavy-duty vehicle producer may only choose the second option if that producer has a statement, referred to in section 10(1)(d)(ii), from the person from whom the engine was acquired. In this situation, because of the application of the equation, the value of the cast head will be included in the amount determined under section 10(1)(d)(ii) and is, consequently, included in the value of non- originating materials used in the production of the heavy-duty vehicle. The heavy-duty vehicle producer may only choose the third option if that producer has a statement, referred to in section 10(1)(d)(iii), from the person from whom the engine was acquired. In this situation, because of the application of the equation, the value of the cast head will be included in the amount determined under section 10(1)(d)(iii) and is, consequently, included in the value of non-originating materials used in the production of the heavy-duty vehicle. Situation 3: Use of a non-originating automotive component incorporating the listed material Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46423 The engine is a non-originating material acquired by the producer of the heavy-duty vehicle. For purposes of calculating the regional value content of the heavy-duty vehicle that incorporates that engine (and incorporates the cast head), the value of non-originating mate- rials used in the production of the heavy-duty vehicle is determined under section 10(1)(e) with respect to that engine. The producer of the heavy-duty vehicle may choose to include in the value of non-originating materials either (a) the value, as determined under section 10(1)(e)(i), of the non-originating materials that are incorporated into the engine, which is the value of the non-originating materials as determined under sections 10(1)(a) through (d) and (f), or (b) the value of the engine, determined under section 10(1)(e)(ii). The heavy-duty vehicle producer may only choose the first option if that producer has a statement, referred to in section 10(1)(e)(i), from the person from whom the engine was acquired. In this situation, the value of the cast head, as determined under section 10(1)(c), is included in the value of non-originating materials used in the production of the heavy-duty vehicle, with respect to the engine that is used in the production of the heavy-duty vehicle. Example 2: A material is imported from outside the territories of the NAFTA countries A rocker arm assembly, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and used in that country in the production of an engine that will be used as original equipment in the production of a heavy-duty vehicle. No other non-originating materials are used in the production of the engine. The rocker arm assembly is neither a listed material nor a sub-component; the engine is an automotive component. Situation 1: Use of the material in an automotive component For purposes of calculating the regional value content of the engine, the value of non-originating materials that are not listed materials is included in the value of non-originating materials used in the production of the engine. Because the rocker arm assembly was produced outside the territories of the NAFTA countries, it is a non-originating material and its value, under section 10(1)(f), is included in the value of non-originating materials used in the production of the engine. Situation 2: Use of an originating automotive component incorporating the material The engine is an originating material acquired by the producer of the heavy-duty vehicle. For purposes of calculating the regional value content of the heavy-duty vehicle that incorporates that engine (and incorporates the rocker arm assembly), the value of non-origi- nating materials used in the production of the heavy-duty vehicle is determined under section 10(1)(d) with respect to that engine. The producer may choose to include in the value of non-originating materials of the heavy-duty vehicle (a) the value, determined under section 10(1)(d)(i), of the non-originating materials that are incorporated into the engine, which is the value, determined under sections 10(1) (a) through (c) and paragraph (e)(ii), of the non-originating materials; (b) the value, determined under section 10(1)(d)(ii), which is an amount equal to the amount determined under section 10(1)(d)(iv) multiplied by the remainder of one minus the regional value content, expressed as a decimal, of the engine; (c) the value, determined under section 10(1)(d)(iii), which is an amount equal to the amount determined under section 10(1)(d)(iv) multiplied by the remainder of one minus the regional value-content requirement, expressed as a decimal, for the engine; or (d) the value, determined under section 10(1)(d)(iv), of the engine. The heavy-duty vehicle producer may only choose the first option if that producer has a statement, referred to in section 10(1)(d)(i), from the person from whom the engine was acquired. In this situation, the value of the rocker arm assembly, as determined under section 10(1)(f), is not included in the value of non-originating materials of the heavy-duty vehicle, with respect to the engine that is used in the production of the heavy-duty vehicle. The heavy-duty vehicle producer may only choose the second option if that producer has a statement, referred to in section 10(1)(d)(ii), from the person from whom the engine was acquired. In this situation, because of the application of the equation, the value of the rocker arm assembly will be included in the amount determined under section 10(1)(d)(ii) and will, consequently, be included in the value of non-originating materials used in the production of the heavy-duty vehicle. The heavy-duty vehicle producer may only choose the third option if that producer has a statement, referred to in section 10(1)(d)(iii), from the person from whom the engine was acquired. In this situation, because of the application of the equation, the value of the rocker arm assembly will be included in the amount determined under section 10(1)(d)(iii) and will, consequently, be included in the value of non-originating materials used in the production of the heavy-duty vehicle. Situation 3: Use of a non-originating automotive component incorporating the material The engine is a non-originating material acquired by the producer of the heavy-duty vehicle. For purposes of calculating the regional value content of the heavy-duty vehicle that incorporates that engine (and incorporates the rocker arm assembly), the value of non-origi- nating materials used in the production of the heavy-duty vehicle is determined under section 10(1)(e) with respect to that engine. The producer of the heavy-duty vehicle may choose to include in the value of non-originating materials either (a) the value, as determined under section 10(1)(e)(i), of the non-originating materials that are incorporated into the engine, which is the value of the non-originating materials as determined under sections 10(1) (a) through (d) and (f), or (b) the value of the engine, determined under section 10(1)(e)(ii). The heavy-duty vehicle producer may only choose the first option if that producer has a statement, referred to in section 10(1)(e)(i), from the person from whom the engine was acquired. In this situation, the value of the rocker arm assembly, as determined under section 10(1)(f), is included in the value of non-originating materials used in the production of the heavy-duty vehicle, with respect to the engine that is used in the production of the heavy-duty vehicle. Situation 4: Use of the material in a self-produced automotive component If the engine is a self-produced material rather than an acquired material, the heavy-duty vehicle producer is using the rocker arm as- sembly in the production of the heavy-duty vehicle rather than in the production of the engine, because, under section 7(4), the engine cannot be designated as an intermediate material. For purposes of calculating the regional value content of the heavy-duty vehicle, the value, under section 10(1)(f), of the rocker arm assembly is included in the value of non-originating materials used in the production of the heavy-duty vehicle. Example 3: An automotive component is imported from outside the territories of the NAFTA countries A transmission, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and used in that country as original equipment in the production of a heavy-duty vehicle. The transmission is an automotive component. Situation: Use of the automotive component For purposes of calculating the regional value content of the heavy-duty vehicle in which the transmission is used, the value of the transmission is included in the value of the non-originating materials under section 10(1)(c), regardless of whether the producer imported the transmission or acquired it from someone else in the territory of a NAFTA country. Example 4: An automotive component is imported from outside the territories of the NAFTA countries 46424 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations A transmission, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and com- bined with an engine to produce an engine-transmission assembly that will be used as original equipment in the production of a heavy- duty vehicle. The transmission is an automotive component; the engine-transmission assembly is an automotive component assembly. Situation: Use of the automotive component assembly The automotive component assembly is acquired by a producer who uses it in the production of a heavy-duty vehicle. If the auto- motive component assembly that incorporates the imported transmission is an originating material, the value of non-originating materials used in the production of the automotive component assembly is determined, at the choice of the producer, under any of section 10(1)(d) (i), (ii), (iii) and (iv). (See example 1 for more detailed explanations of these provisions.) If the automotive component assembly that incor- porates the imported transmission is a non-originating material, the value of non-originating materials used in the production of the auto- motive component assembly is determined, at the choice of the producer, under section 10(1)(e) (i) or (ii). (See example 1 for more de- tailed explanations of these provisions.) Regardless of whether the automotive component assembly is an originating material or a non-originating material, the value of the automotive component that was imported from outside the territories of the NAFTA countries is included in the value of non-originating materials used in the production of the heavy-duty vehicle. The transmission is a non-originating material, and, for purposes of calculat- ing the regional value content of an automotive component assembly or heavy-duty vehicle that incorporates that transmission, the value of the transmission is included in the value of non-originating materials used in the production of the automotive component assembly or heavy-duty vehicle that incorporates it. Example 5: A material is imported from outside the territories of the NAFTA countries An aluminum ingot, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and used in that country in the production of cast block that will be used in an engine that will be used as original equipment in the produc- tion of a heavy-duty vehicle. The aluminum ingot is not a listed material; the cast block is a listed material; the engine is an automotive component. Situation 1: Use of the material in an intermediate material that is a listed material The engine producer designates the cast block as an intermediate material under section 7(4). For purposes of determining the origin of that cast block, because the aluminum ingot is classified under a different heading than the cast block, the cast block satisfies the appli- cable change in tariff classification and is an originating material. Situation 2: Use of the listed material incorporating the material For purposes of calculating the regional value content of the engine that incorporates that cast block (and thus incorporates the alu- minum ingot), the value of non-originating materials is determined under section 10(1). Because none of sections 10(1) (a) through (f) re- quire that a listed material that is an originating material be included in the value of non-originating materials used in the production of a good, the value of the cast block is not included in the value of non-originating materials used in the production of the engine or in the value of non-originating materials used in the production of an automotive component assembly or heavy-duty vehicle that incorporates the engine. Because section 10(1)(d) does not refer to a listed material that is an originating material, the value of the non-originating aluminum ingot used in the production of the originating cast block is not included in the value of non-originating materials used in the production of any good or material that incorporates the originating cast block. Example 6: A non-originating listed material is used to produce a sub-component that is used to produce another sub-component A crankshaft, produced in the territory of NAFTA country A from a forging imported from outside the territories of the NAFTA coun- tries, is a non-originating material. The crankshaft is sold to another producer, located in the same country, who uses it to produce an originating block assembly. That block assembly is sold to another producer, also located in the same country, who uses it to produce a finished block. The finished block is sold to a producer of engines, who is located in NAFTA country B, for use in the production of a heavy-duty vehicle. The crankshaft is a listed material; the block assembly is a sub-component, as is the finished block. Situation 1: Calculating the regional value content of the finished block A sub-component is not a heavy-duty automotive good. As referred to in section 10(9)(c), for purposes of calculating the regional value content of the sub-component before it is incorporated into a heavy-duty automotive good, such as when the sub-component is ex- ported from the territory of one NAFTA country to the territory of another NAFTA country, the value of non-originating materials of the sub-component includes only the value of non-originating materials used in the production of that sub-component. Because the block as- sembly is an originating material, its value is not included in the value of non-originating materials of the finished block, nor is the value of the non-originating crankshaft included in the value of non-originating materials used in the production of the finished block because the crankshaft was used in the production of the block assembly and was not used in the production of the finished block. Situation 2: Calculating the regional value content of the component that incorporates the finished block For purposes of calculating the regional value content of the heavy-duty vehicle that incorporates a sub-component, the value of non- originating materials used in the production of the sub-component is determined under section 10(1) (d) or (e) with respect to that sub- component. In this situation, the value, under section 10(1)(b), of the non-originating crankshaft is included in the value of non-originat- ing materials used in the production of the engine. (See examples 1 and 2 for more detailed explanations of sections 10(1) (d) and (e).) Example 7: A non-listed material is imported from outside the territories of the NAFTA countries and is used in the production of another non-listed material A bumper part, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and is used in the production of a bumper. The bumper is used in the territory of a NAFTA country as original equipment in the production of a heavy-duty vehicle. Neither a bumper part nor a bumper is a listed material, sub-component, automotive component or automotive com- ponent assembly. Situation 1: The non-listed material is an originating material The bumper is an originating material. For purposes of calculating the regional value content of the heavy-duty vehicle, neither the value of the imported bumper part nor the value of the bumper is included in the value of the non-originating materials. Situation 2: The non-listed material is a non-originating material The bumper is a non-originating material. For purposes of calculating the regional value content of the heavy-duty vehicle, the value of non-originating materials used in the production of the heavy-duty vehicle is determined under section 10(1)(f) with respect to the bumper. In this situation, the value of the bumper is included in the value of non-originating materials of the heavy-duty vehicle. Because a bumper is not a listed material, the producer of the heavy-duty vehicle does not have the option, under section 10(1)(b)(ii), to include only the value of the imported bumper part in the value of non-originating materials used in the production of the heavy-duty vehicle. Example 8: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46425 Situation: Transhipment of a listed material A producer, located in the territory of a NAFTA country, produces, in that country, a cast head that is an originating good. The pro- ducer exports the cast head to outside the territories of the NAFTA territories, where valves, springs, valve lifters, a camshaft and gears are added to it to create a cast head assembly. An engine producer, located in the territory of a NAFTA country, imports the cast head as- sembly into that country and uses it in the production of an engine that will be used as original equipment in the production of a heavy- duty vehicle. A cast head is a listed material; a cast head assembly is a sub-component. For purposes of calculating the regional value content of the engine, the value of the imported cast head assembly is included in the value of non-originating materials under section 10(1)(c). The value of the cast head cannot be deducted from the value determined under section 10(1)(c). Although the cast head was once an originating good, under section 18 when further production was performed with re- spect to the cast head outside the territories of the NAFTA countries, it was no longer an originating good. Example 9: A material is imported from outside the territories of the NAFTA countries and a heavy-duty vehicle producer self-produces a non-originating listed material A material, produced outside the territories of the NAFTA countries, is imported into the territory of a NAFTA country and used in that country in the production of a water pump that will be used as original equipment by the same producer in the production of a heavy-duty vehicle. Although the producer, under section 7(4), designates the water pump as an intermediate material it is a non-originat- ing material because it fails to satisfy the regional value-content requirement. A water pump is a listed material. For purposes of calculating the regional value content of the heavy-duty vehicle, the value of non-originating materials includes, at the choice of the producer, either the total cost, determined under section 10(1)(a)(i), of the water pump or the value, determined under section 10(1)(a)(iii)(A), of the material imported from outside the territories of the NAFTA countries. Example 10: A material is acquired and used to produce a non-originating listed material A material, produced outside the territories of the NAFTA countries, is acquired in the territory of a NAFTA country and is used in that country in the production of a water pump that will be used as original equipment in the production of a heavy-duty vehicle. The producer of the water pump and the producer of the heavy-duty vehicle are separate, unrelated producers, located in the same country. A water pump is a listed material. The producer of the water pump chose to calculate the regional value content of the water pump in ac- cordance with section 12(1) over a period set out in section 12(5)(a) and using a category set out in section 12(4)(b). The water pump is a non-originating material because it fails to satisfy the regional value-content requirement. For purposes of calculating the regional value content of the heavy-duty vehicle, the value of non-originating materials includes, at the choice of the producer, either the value, determined under section 10(1)(b)(i), of the water pump or, if the producer has a statement re- ferred to in section 10(1)(b)(ii)(B), the value, determined under that section, of the material imported from outside the territories of the NAFTA countries. The producer has a statement referred to in section 10(1)(b)(ii)(B) and chooses to use the value of non-originating material determined under that section. The statement states, as is permitted under section 10(8), the value of non-originating material used in the production of the water pump in accordance with section 12(3) over a period set out in section 12(5)(a) and using a category set out in section 12(4)(e). SECTION 11. MOTOR VEHICLE AVERAGING NC and VNM for motor vehicles may be averaged over producer’s fiscal year (1) For purposes of calculating the regional value content of light-duty vehicles or heavy-duty vehicles, the producer of those motor vehicles may choose that (a) the sum of the net costs incurred and the sum of the values of non-originating materials used by the producer be calculated over the producer’s fiscal year with respect to the motor vehicles that are in any one of the categories set out in subsection (5) that is chosen by the producer; and (b) the sums referred to in paragraph (a) be used in the calculation referred to in section 6(3) as the net cost and the value of non-originating materials, respectively. Information required when producer chooses to average for motor vehicles (2) A choice made under subsection (1) shall (a) state the category chosen by the producer, and (i) where the category referred to in subsection (5)(a) is chosen, state the model line, model name, class of motor vehicle and tariff classification of the motor vehicles in that category, and the location of the plant at which the motor vehicles are produced, (ii) where the category referred to in subsection (5)(b) is chosen, state the model name, class of motor vehicle and tariff classification of the motor vehicles in that category, and the location of the plant at which the motor vehi- cles are produced, and (iii) where the category referred to in subsection (5)(c) is chosen, state the model line, model name, class of motor vehicle and tariff classification of the motor vehicles in that category, and the locations of the plants at which the motor vehicles are produced; (b) state the basis of the calculation described in subsection (9); (c) state the producer’s name and address; (d) state the period with respect to which the choice is made, including the starting and ending dates; (e) state the estimated regional value content of motor vehicles in the category on the basis stated under paragraph (b); (f) be dated and signed by an authorized officer of the producer; and (g) be filed with the customs administration of each NAFTA country to which vehicles in that category are to be ex- ported during the period covered by the choice, at least 10 days before the first day of the producer’s fiscal year, or such shorter period as that customs administration may accept. 46426 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Averaging period (3) Where the fiscal year of a producer begins after the date of the entry into force of the Agreement but before one year after that date, the producer may choose that the calculation of regional value content referred to in subsection (1) or (6) be made under that subsection over the period beginning on the date of the entry into force of the Agreement and ending at the end of that fiscal year, in which case the choice shall be filed with the customs administration of each NAFTA country to which vehicles are to be exported during the period covered by the choice not later than 10 days after the entry into force of the Agreement, or such longer period as that customs administration may accept. (4) Where the fiscal year of a producer begins on the date of the entry into force of the Agreement, the producer may make the choice referred to in subsection (1) not later than 10 days after the entry into force of the Agreement, or such longer period as the customs administration referred to in subsection (2)(g) may accept. Categories of motor vehicles for averaging (5) The categories referred to in subsection (1) are the following: (a) the same model line of motor vehicles in the same class of motor vehicles produced in the same plant in the terri- tory of a NAFTA country; (b) the same class of motor vehicles produced in the same plant in the territory of a NAFTA country; and (c) the same model line of motor vehicles produced in the territory of a NAFTA country. (6) Where applicable, a producer may choose that the calculation of the regional value content of motor vehicles referred to in Schedule VI be made in accordance with that schedule. Timely filing of choice to average (7) Subject to section 5(4) of Schedule VI, the choice referred to in subsection (6) shall be filed with the customs adminis- tration of the NAFTA country to which vehicles referred to in that schedule are to be exported, at least 10 days before the first day of the producer’s fiscal year with respect to which that choice is to apply or such shorter period as the customs administration may accept. Choice to average cannot be rescinded (8) A choice filed for the period referred to in subsection (1) or (3) may not be (a) rescinded; or (b) modified with respect to the category or basis of calculation. Averaged net cost and VNM included in calculation of RVC on the basis of producer’s option to include all vehicles of category or only certain exported vehicles of category (9) For purposes of this section, where a producer files a choice under subsection (1), (3) or (4), including a choice referred to in section 13(9), the net cost incurred and the values of non-originating materials used by the producer, with respect to (a) all motor vehicles that fall within the category chosen by the producer and that are produced during the fiscal year or, in the case of a choice filed under subsection (3), during the period with respect to which the choice is made, or (b) those motor vehicles to be exported to the territory of one or more of the NAFTA countries that fall within the cat- egory chosen by the producer and that are produced during the fiscal year or, in the case of a choice filed under sub- section (3), during the period with respect to which the choice is made, shall be included in the calculation of the regional value content under any of the categories set out in subsection (5). Year-end analysis required if averaging based on estimated costs; obligation to notify of change in status (10) Where the producer of a motor vehicle has calculated the regional value content of the motor vehicle on the basis of estimated costs, including standard costs, budgeted forecasts or other similar estimating procedures, before or during the producer’s fiscal year, the producer shall conduct an analysis at the end of the producer’s fiscal year of the actual costs in- curred over the period with respect to the production of the motor vehicle, and, if the motor vehicle does not satisfy the regional value content requirement on the basis of the actual costs, immediately inform any person to whom the producer has provided a Certificate of Origin for the motor vehicle, or a written statement that the motor vehicle is an originating good, that the motor vehicle is a non-originating good. (11) The following example is an ‘‘Example’’ as referred to in section 2(4). Example: A motor vehicle producer located in NAFTA country A produces vehicles that fall within a category set out in section 11(5) that is chosen by the producer. The motor vehicles are to be sold in NAFTA countries A, B and C, as well as in country D, which is not a NAFTA country. Under section 11(1), the motor vehicle producer may choose that the sum of the net costs incurred and the sum of the values of non-originating materials used by the producer be calculated over the producer’s fiscal year. The producer may state in the choice the basis of the calculation as described in section 11(9)(a), in which case the calculation would be on the basis of all the motor ve- hicles produced regardless of where they are destined. Alternatively, the producer may state in the choice the basis of the calculation as described in section 11(9)(b). In this case, the producer would also need to state that the calculation is on the basis of (a) the motor vehicles produced that are for export to NAFTA countries B and C; (b) the motor vehicles produced that are for export to only NAFTA country B; or (c) the motor vehicles produced that are for export to only NAFTA country C. The calculation would be on the basis as described in the choice. SECTION 12. AUTOMOTIVE PARTS AVERAGING NC and VNM for automotive parts may be averaged to determine RVC of parts (1) The regional value content of any or all goods that are of the same tariff provision listed in Schedule IV, or an auto- motive component assembly, an automotive component, a sub-component or a listed material, produced in the same plant, may, where the producer of those goods chooses to do so, be calculated by Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46427 (a) calculating the sum of the net costs incurred and the sum of the values of non-originating materials used by the producer of the goods over the period set out in subsection (5) that is chosen by the producer with respect to any or all of those goods in any one of the categories set out in subsection (4) that is chosen by the producer; and (b) using the sums referred to in paragraph (a) in the calculation referred to in section 6(3) as the net cost and the value of non-originating materials, respectively. (2) The calculation of the regional value content made under subsection (1) shall apply with respect to each unit of the goods in the category set out in subsection (4) that is chosen by the producer and produced during the period chosen by the producer under subsection (5). VNM for each unit in a category of goods for which averaging used (3) The value of non-originating materials of each unit of the goods (a) in the category set out in subsection (4) chosen by the producer, and (b) produced during the period chosen by the producer under subsection (5), shall be the sum of the values of non-originating materials referred to in subsection (1)(a) divided by the number of units of the goods in that category and produced during that period. Categories of automotive parts for averaging (4) The categories referred to in subsection (1)(a) are the following: (a) original equipment for use in the production of light- duty vehicles; (b) original equipment for use in the production of heavy-duty vehicles; (c) after-market parts; (d) any combination of goods referred to in paragraphs (a) through (c); (e) goods that are in a category set out in any of paragraphs (a) through (d) and are sold to one or more motor vehicle producers; and (f) goods that are in a category set out in any of paragraphs (a) through (e) and are exported to the territory of one or more of the NAFTA countries. Periods for averaging RVC for automotive parts (5) The period referred to in subsection (1)(a) is, (a) with respect to goods referred to in subsection (4) (a), (b) or (d), or subsection (4) (e) or (f) where the goods in that category are in a category referred to in subsection (4) (a) or (b), any month, any consecutive three month period that is evenly divisible into the number of months of the producer’s fiscal year remaining at the beginning of that period or the fiscal year of the motor vehicle producer to whom those goods are sold; and (b) with respect to goods referred to in subsection (4)(c), or subsection (4) (e) or (f) where the goods in that category are in a category referred to in subsection (4)(c), any month, any consecutive three month period that is evenly divis- ible into the number of months of the producer’s fiscal year remaining at the beginning of that period, the fiscal year of that producer or the fiscal year of the motor vehicle producer to whom those goods are sold. Choice to average may not be rescinded (6) A choice made under subsection (1) may not be rescinded or modified with respect to the goods or the period with re- spect to which the choice is made. (7) Where a producer of goods chooses a one or three month period under subsection (5) with respect to the goods referred to in subsection (5)(a), that producer shall be considered to have chosen under that subsection a period or periods of the same duration for (a) the remainder of the fiscal year of the motor vehicle producer to whom those goods are sold, where the producer chooses under subsection (9)(a) the fiscal year of that motor vehicle producer; and (b) the remainder of the fiscal year of the producer of those goods, where the producer does not choose under sub- section (9)(a) the fiscal year of the motor vehicle producer to whom the goods are sold. (8) Where a producer of goods chooses a one or three month period under subsection (5) with respect to the goods referred to in subsection (5)(b), that producer shall be considered to have chosen under that subsection a period or periods of the same duration for the remainder of, at the choice of the producer, the producer’s fiscal year or the fiscal year of the motor vehicle producer to whom those goods are sold. (9) Where a producer of goods chooses a one or three month period under subsection (5) with respect to the goods, the producer may, (a) with respect to goods referred to in subsection (5)(a), at the end of the fiscal year of the motor vehicle producer to whom those goods are sold, choose the fiscal year of that motor vehicle producer; and (b) with respect to goods referred to in subsection (5)(b), at the end of the producer’s fiscal year or the fiscal year of the motor vehicle producer to whom those goods are sold, as the case may be, choose the producer’s fiscal year or the fiscal year of that motor vehicle producer. Applicable method for averaging VNM under different categories (10) Where a producer chooses that the regional value content of goods be calculated in accordance with subsection (1) and the goods are in any of the categories set out in subsections (4) (d) through (f), the value of non-originating materials (a) shall be determined in the manner set out in section 9, where any of those goods are light-duty automotive goods; (b) shall be determined in the manner set out in section 10, where any of those goods are heavy-duty automotive goods but none of the goods are light-duty automotive goods; and (c) shall be determined in the manner set out in section 7, where none of those goods are light-duty automotive goods or heavy-duty automotive goods. 46428 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Year-end analysis required if averaging based on estimated costs; obligation to notify of change in status (11) Where the producer of a good has calculated the regional value content of the good on the basis of estimated costs, in- cluding standard costs, budgeted forecasts or other similar estimating procedures, before or during the period chosen under subsection (1), the producer shall conduct an analysis, at the end of the producer’s fiscal year following the end of that period, of the actual costs incurred over the period with respect to the production of the good and, if the good does not satisfy the regional value content requirement on the basis of the actual costs during that period, immediately inform any person to whom the producer has provided a Certificate of Origin for the good, or a written statement that the good is an originating good, that the good is a non-originating good. SECTION 13. SPECIAL REGIONAL VALUE-CONTENT REQUIREMENTS Changes in regional value content level for automotive goods (1) Notwithstanding the regional value-content requirement set out in Schedule I, and except as otherwise provided in subsection (2), the regional value-content requirement for a good referred to in paragraph (a) or (b) is as follows: (a) for the fiscal year of a producer that begins on the day closest to January 1, 1998 and for the three following fiscal years of that producer, not less than 56 percent, and for the fiscal year of a producer that begins on the day closest to January 1, 2002 and thereafter, not less than 62.5 percent, in the case of (i) a light-duty vehicle, and (ii) a good provided for in any of headings 8407 and 8408 and subheading 8708.40, that is for use in a light-duty vehicle; and (b) for the fiscal year of a producer that begins on the day closest to January 1, 1998 and for the three following fiscal years of that producer, not less than 55 percent, and for the fiscal year of a producer that begins on the day closest to January 1, 2002 and thereafter, not less than 60 percent, in the case of (i) a heavy-duty vehicle, (ii) a good provided for in any of headings 8407 and 8408 and subheading 8708.40 that is for use in a heavy-duty vehicle, and (iii) except in the case of a good referred to in paragraph (a)(ii) or provided for in any of subheadings 8482.10 through 8482.80, 8483.20 and 8483.30, a good of a tariff provision listed in Schedule IV that is subject to a re- gional value-content requirement and is for use in a light-duty vehicle or a heavy-duty vehicle. Regional value content level for motor vehicles produced in a new plant or in a refit plant (2) Notwithstanding the regional value-content requirement set out in Schedule I, the regional value-content requirement for a light-duty vehicle or a heavy-duty vehicle that is produced in a plant is as follows: (a) not less than 50 percent for five years after the date on which the first prototype of the motor vehicle is produced in the plant by a motor vehicle assembler, if (i) the motor vehicle is of a class, marque or, except in the case of a heavy-duty vehicle, size category and type of underbody, that was not previously produced by the motor vehicle assembler in the territory of any of the NAFTA countries, (ii) the plant consists of, or includes, a new building in which the motor vehicle is assembled, and (iii) the value of machinery that was never previously used for production, and that is used in the new building or buildings for the purposes of the complete motor vehicle assembly process with respect to that motor vehicle, is at least 90 percent of the value of all machinery used for purposes of that process; and (b) not less than 50 percent for two years after the date on which the first prototype of the motor vehicle is produced in the plant by a motor vehicle assembler following a refit of that plant, if the motor vehicle is of a class, marque or, except in the case of a heavy-duty vehicle, size category and type of underbody, that was not assembled by the motor vehicle assembler in the plant before the refit. Value of machinery in a new plant (3) For purposes of subsection (2)(a)(iii), the value of machinery shall be (a) where the machinery was acquired by the producer of the motor vehicle from another person, the cost of that ma- chinery that is recorded on the books of the producer; (b) where the machinery was used previously by the producer of the motor vehicle in the production of another good, the cost of the machinery that is recorded on the books of the producer minus accumulated depreciation of that ma- chinery that is recorded on those books; and (c) where the machinery was produced by the producer of the good, the total cost incurred with respect to that ma- chinery, calculated on the basis of the costs that are recorded on the books of the producer. Averaging period for calculation of RVC for vehicles of new plant or refit plant (4) For purposes of calculating the regional value content of a motor vehicle referred to in subsection (2) that is in any one of the categories set out in subsection (7) that is chosen by the producer, the producer may file with the customs adminis- tration of the NAFTA country into the territory of which vehicles in that category are to be imported a choice to calculate the regional value content of such vehicles by (a) calculating the sum of the net costs incurred and the sum of the values of non-originating materials used by the producer with respect to all of such motor vehicles in the category chosen over (i) the period beginning on the day on which the first prototype of the motor vehicle is produced and ending on the last day of the producer’s first fiscal year that begins on or after the beginning of the period, (ii) a fiscal year of the producer that starts after the period referred to in subparagraph (i) and ends on or before the end of the period referred to in subsection (2)(a) or (b), or (iii) the period beginning on the first day of the producer’s fiscal year that begins before the end of the period re- ferred to in subsection (2)(a) or (b) and ending at the end of that period; and Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46429 (b) using the sums referred to in paragraph (a) in the calculation referred to in section 6(3) as the net cost and the value of non-originating materials, respectively. Information required on document filed when choosing to average; timely filing; (5) A choice made under subsection (4) shall (a) state the category chosen by the producer and (i) where the category referred to in subsection (7)(a) is chosen, the model name, model line, class of motor vehi- cle and tariff classification of the motor vehicles in that category, and the location of the plant at which the motor vehicles are produced, and (ii) where the category referred to in subsection (7)(b) is chosen, state the model name, class of motor vehicle and tariff classification of the motor vehicles in that category, and the plant location at which the motor vehicles are produced; (b) state the basis of the calculation described in subsection (8); (c) state the producer’s name and address; (d) state the period with respect to which the choice is made, including the starting and ending dates; (e) state the estimated regional value content of motor vehicles in the category on the basis stated under paragraph (b); (f) state whether the choice is with respect to a motor vehicle referred to in subsection (2)(a) or (b); (g) be dated and signed by an authorized officer of the producer; and (h) be filed with the customs administration of each NAFTA country to which vehicles in that category are to be ex- ported during the period covered by the choice, at least 10 days before the first day of the producer’s fiscal year, or such shorter period as that customs administration may accept. No rescission or modification permitted (6) A choice filed for the period referred to in subsection (4) may not be (a) rescinded; or (b) modified with respect to the category or basis of calculation. Categories of motor vehicles for averaging (7) The categories referred to in subsection (4) are the following: (a) the same model line of motor vehicles in the same class of motor vehicles produced in the same plant in the terri- tory of a NAFTA country; and (b) the same class of motor vehicles produced in the same plant in the territory of a NAFTA country. (8) For purposes of subsection (4), the net cost incurred and the values of non-originating materials used by the producer, with respect to (a) all motor vehicles that fall within the category chosen by the producer and that are produced during the period with respect to which the choice is made, or (b) those motor vehicles to be exported to the territory of one or more of the NAFTA countries that fall within the cat- egory chosen by the producer and that are produced during the period with respect to which the choice is made, shall be included in the calculation of the regional value content under any of the categories set out in subsection (7). Period for averaging RVC of motor vehicles of new or refit plant (9) Where the period referred to in subsection (4) ends on a day other than the last day of the producer’s fiscal year, the producer may, for purposes of section 11, make the choice referred to in that section with respect to (a) the period beginning on the day following the end of that period and ending on the last day of that fiscal year; or (b) the period beginning on the day following the end of that period and ending on the last day of the following full fiscal year. Year-end analysis required if averaging based on estimated costs; obligation to notify of change in status (10) Where the producer of a motor vehicle has calculated the regional value content of the motor vehicle on the basis of estimated costs, including standard costs, budgeted forecasts or other similar estimating procedures, before or during the producer’s fiscal year, the producer shall conduct an analysis at the end of the producer’s fiscal year of the actual costs in- curred over the period with respect to the production of the motor vehicle, and, if the motor vehicle does not satisfy the regional value-content requirement on the basis of the actual costs, immediately inform any person to whom the producer has provided a Certificate of Origin for the motor vehicle, or a written statement that the motor vehicle is an originating good, that the motor vehicle is a non-originating good. PART VI GENERAL PROVISIONS SECTION 14. ACCUMULATION Option to determine origin of good by accumulating the production of a material with production of the good in which the material is used (1) Subject to subsections (2) and (4), for purposes of determining whether a good is an originating good, an exporter or producer of a good may choose to accumulate the production, by one or more producers in the territory of one or more of the NAFTA countries, of materials that are incorporated into that good so that the production of the materials shall be con- sidered to have been performed by that exporter or producer. Statement required; information as to net cost and value of non-originating materials from production of material if accumulating for regional value content requirement (2) Where a good is subject to a regional value-content requirement and an exporter or producer of the good has a state- ment signed by a producer of a material that is used in the production of the good that 46430 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (a) states the net cost incurred and the value of non-originating materials used by the producer of the material in the production of that material, (i) the net cost incurred by the producer of the good with respect to the material shall be the net cost incurred by the producer of the material plus, where not included in the net cost incurred by the producer of the material, the costs referred to in sections 7(1)(c) through (e), and (ii) the value of non-originating materials used by the producer of the good with respect to the material shall be the value of non-originating materials used by the producer of the material; or (b) states any amount, other than an amount that includes any of the value of non-originating materials, that is part of the net cost incurred by the producer of the material in the production of that material, (i) the net cost incurred by the producer of the good with respect to the material shall be the value of the material, determined in accordance with section 7(1), and (ii) the value of non-originating materials used by the producer of the good with respect to the material shall be the value of the material, determined in accordance with section 7(1), minus the amount stated in the statement. Averaging of costs from accumulated production (3) Where a good is subject to a regional value-content requirement and an exporter or producer of the good does not have a statement described in subsection (2) but has a statement signed by a producer of a material that is used in the produc- tion of the good that (a) states the sum of the net costs incurred and the sum of the values of non-originating materials used by the pro- ducer of the material in the production of that material and identical materials or similar materials, or any combina- tion thereof, produced in a single plant by the producer of the material over a month or any consecutive three, six or twelve month period that falls within the fiscal year of the producer of the good, divided by the number of units of materials with respect to which the statement is made, (i) the net cost incurred by the producer of the good with respect to the material shall be the sum of the net costs incurred by the producer of the material with respect to that material and the identical materials or similar mate- rials, divided by the number of units of materials with respect to which the statement is made, plus, where not in- cluded in the net costs incurred by the producer of the material, the costs referred to in sections 7(1) (c) through (e), and (ii) the value of non-originating materials used by the producer of the good with respect to the material shall be the sum of the values of non-originating materials used by the producer of the material with respect to that mate- rial and the identical materials or similar materials divided by the number of units of materials with respect to which the statement is made; or (b) states any amount, other than an amount that includes any of the values of non-originating materials, that is part of the sum of the net costs incurred by the producer of the material in the production of that material and identical ma- terials or similar materials, or any combination thereof, produced in a single plant by the producer of the material over a month or any consecutive three, six or twelve month period that falls within the fiscal year of the producer of the good, divided by the number of units of materials with respect to which the statement is made, (i) the net cost incurred by the producer of the good with respect to the material shall be the value of the material, determined in accordance with section 7(1), and (ii) the value of non-originating materials used by the producer of the good with respect to the material shall be the value of the material, determined in accordance with section 7(1), minus the amount stated in the statement. Accumulated production considered to be production of a single producer (4) For purposes of section 7(4), where a producer of the good chooses to accumulate the production of materials under subsection (1), that production shall be considered to be the production of the producer of the good. (5) For purposes of this section, (a) in order to accumulate the production of a material, (i) where the good is subject to a regional value-content requirement, the producer of the good must have a state- ment described in subsection (2) or (3) that is signed by the producer of the material, and (ii) where an applicable change in tariff classification is applied to determine whether the good is an originating good, the producer of the good must have a statement signed by the producer of the material that states the tariff classification of all non-originating materials used by that producer in the production of that material and that the production of the material took place entirely in the territory of one or more of the NAFTA countries; (b) a producer of a good who chooses to accumulate is not required to accumulate the production of all materials that are incorporated into the good; and (c) any information set out in a statement referred to in subsection (2) or (3) that concerns the value of materials or costs shall be in the same currency as the currency of the country in which the person who provided the statement is located. Examples of accumulation of production (6) Each of the following examples is an ‘‘Example’’ as referred to in section 2(4). Example 1: section 14(1) Producer A, located in NAFTA country A, imports unfinished bearing rings provided for in subheading 8482.99 into NAFTA country A from a non-NAFTA territory. Producer A further processes the unfinished bearing rings into finished bearing rings, which are of the same subheading. The finished bearing rings of Producer A do not satisfy an applicable change in tariff classification and therefore do not qualify as originating goods. The net cost of the finished bearing rings (per unit) is calculated as follows: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46431 Product costs: Value of originating materials ...... $0.15 Value of non-originating materials ...... 0.75 Other product costs ...... 0.35 Period costs: (including $0.05 in excluded costs) ...... 0.15 Other costs ...... 0.05 Total cost of the finished bearing rings, per unit ...... $1.45 Excluded costs: (included in period costs) ...... 0.05 Net cost of the finished bearing rings, per unit ...... $1.40 Producer A sells the finished bearing rings to Producer B who is located in NAFTA country A for $1.50 each. Producer B further processes them into bearings, and intends to export the bearings to NAFTA country B. Although the bearings satisfy the applicable change in tariff classification, the bearings are subject to a regional value-content requirement. Situation A: Producer B does not choose to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bearings. The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ...... $0.45 Value of non-originating materials (value, per unit, of the bearing rings purchased from Producer A) ...... 1.50 Other product costs ...... 0.75 Period costs: (including $0.05 in excluded costs) 0.15 Other costs ...... 0.05 Total cost of the bearings, per unit ...... $2.90 Excluded costs: (included in period costs) ...... 0.05 Net cost of the bearings, per unit ...... $2.85 Under the net cost method, the regional value content of the bearings is NC− VNM RVC = ×100 NC $2.85− $1. 50 = ×100 $2.85 = 47. 4% Therefore, the bearings are non-originating goods. Situation B: Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bear- ings. Producer A provides a statement described in section 14(2)(a) to Producer B. The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ($0.45∂$0.15) ...... $0.60 Value of non-originating materials (value, per unit, of the unfinished bearing rings imported by Producer A) ...... 0.75 Other product costs ($0.75∂$0.35) ...... 1.10 Period costs: (($0.15∂$0.15), including $0.10 in excluded costs) ...... 0.30 Other costs: ($0.05∂$0.05) ...... 0.10 Total cost of the bearings, per unit ...... $2.85 Excluded costs: (included in period costs) ...... 0.10 Net cost of the bearings, per unit ...... $2.75 Under the net cost method, the regional value content of the bearings is 46432 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations NC− VNM RVC = ×100 NC $2.75− $0. 75 = ×100 $2.75 = 72. 7% Therefore, the bearings are originating goods. Situation C: Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bear- ings. Producer A provides to Producer B a statement described in section 14(2)(b) that specifies an amount equal to the net cost minus the value of non-originating materials used to produce the finished bearing rings ($1.40¥$0.75 = $0.65). The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ($0.45∂$0.65) ...... $1.10 Value of non-originating materials ($1.50¥$0.65) ...... 0.85 Other product costs ...... 0.75 Period costs: (including $0.05 in excluded costs) ...... 0.15 Other costs ...... 0.05 Total cost of the bearings, per unit ...... $2.90 Excluded costs: (included in period costs) ...... 0.05 Net cost of the bearings, per unit ...... $2.85 Under the net cost method, the regional value content of the bearings is NC− VNM RVC = ×100 NC $2.85− $0. 85 = ×100 $2.85 = 70. 2% Therefore, the bearings are originating goods. Situation D: Producer B chooses to accumulate costs incurred by Producer A with respect to the bearing rings used in the production of the bear- ings. Producer A provides to Producer B a statement described in section 14(2)(b) that specifies an amount equal to the value of other product costs used in the production of the finished bearing rings ($0.35). The net cost of the bearings (per unit) is calculated as follows: Product costs: Value of originating materials ...... $0.45 Value of non-originating materials ($1.50¥$0.35) ...... 1.15 Other product costs ($0.75 + $0.35) ...... 1.10 Period costs: (including $0.05 in excluded costs) ...... 0.15 Other costs ...... 0.05 Total cost of the bearings, per unit ...... $2.90 Excluded costs: (included in period costs) ...... 0.05 Net cost of the bearings, per unit ...... $2.85 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46433 NC− VNM RVC = ×100 NC $2.85− $1. 15 = ×100 $2.85 = 59. 7% Therefore, the bearings are originating goods. Example 2: section 14(1) Producer A, located in NAFTA country A, imports non-originating cotton, carded or combed, provided for in heading 5203 for use in the production of cotton yarn provided for in heading 5205. Because the change from cotton, carded or combed, to cotton yarn is a change within the same chapter, the cotton does not satisfy the applicable change in tariff classification for heading 5205, which is a change from any other chapter, with certain exceptions. Therefore, the cotton yarn that Producer A produces from non-originating cotton is a non-origi- nating good. Producer A then sells the non-originating cotton yarn to Producer B, also located in NAFTA country A, who uses the cotton yarn in the production of woven fabric of cotton provided for in heading 5208. The change from non-originating cotton yarn to woven fabric of cotton is insufficient to satisfy the applicable change in tariff classification for heading 5208, which is a change from any heading outside headings 5208 through 5212, except from certain headings, under which various yarns, including cotton yarn provided for in heading 5205, are classified. Therefore, the woven fabric of cotton that Producer B produces from non-originating cotton yarn produced by Pro- ducer A is a non-originating good. However, under section 14(1), if Producer B chooses to accumulate the production of Producer A, the production of Producer A would be considered to have been performed by Producer B. The rule for heading 5208, under which the cotton fabric is classified, does not exclude a change from heading 5203, under which carded or combed cotton is classified. Therefore, under section 15(1), the change from carded or combed cotton provided for in heading 5203 to the woven fabric of cotton provided for in heading 5208 would satisfy the applicable change of tariff classification for heading 5208. The woven fabric of cotton would be considered as an originating good. Producer B, in order to choose to accumulate Producer A’s production, must have a statement described in section 14(4)(a)(ii). SECTION 15. INABILITY TO PROVIDE SUFFICIENT INFORMATION Supplier of material unable to provide information; beyond control of supplier; procedure to be followed by Customs (1) Where, during a verification of origin of a good, the person from whom a producer of the good acquired a material used in the production of that good is unable to provide the customs administration that is conducting the verification with suf- ficient information to substantiate that the material is an originating material or that the value of the material declared for purpose of calculating the regional value content of the good is accurate, and the inability of that person to provide the in- formation is due to reasons beyond the control of that person, the customs administration shall, before making a deter- mination as to the origin or value of the material, consider, where relevant, the following: (a) whether the customs administration of the NAFTA country into the territory of which the good was imported is- sued an advance ruling under Article 509 of the Agreement, as implemented in each NAFTA country, with respect to that material that concluded that the material is an originating material or that the value of the material declared for purposes of calculating the regional value content of the good is accurate; (b) whether an independent auditor has confirmed the accuracy of (i) any signed statement referred to in this Appendix with respect to the material, (ii) the information that was used by the person from whom the producer acquired the material to substantiate whether the material is an originating material, or (iii) the information submitted by the producer of the material with an application for an advance ruling where, on the basis of that information, the customs administration concluded that the material is an originating material or that the value declared for the purpose of calculating the regional value content of the good is accurate; (c) whether the customs administration has, before the start of the origin verification of the good, conducted a verifica- tion of origin of identical materials or similar materials produced by the producer of the material and determined that (i) the identical materials or similar materials are originating materials, or (ii) any signed statement referred to in this Appendix with respect to those identical materials or similar materials is accurate; (d) whether the producer of the good has exercised due diligence to ensure that any signed statement that is referred to in this Appendix with respect to the material and that was provided by the person from whom the producer ac- quired the material is accurate; (e) where the customs administration has access only to partial records of the person from whom the producer ac- quired the material, whether the records provide sufficient evidence to substantiate that the material is an originating material or that the value of the material declared for purposes of calculating the regional value content of the good is accurate; (f) whether the customs administration can obtain, subject to Article 507 of the Agreement, as implemented in each NAFTA country, by means other than those referred to in paragraphs (a) through (e), relevant information regarding the determination of the origin or value of the material from the customs administration of the NAFTA country in the territory of which the person from whom the producer acquired the material was located; and (g) whether the producer of the good, the person from whom the producer acquired the material or a representative of that person or producer agrees to bear the expenses incurred in providing the customs administration with the assist- ance that it may require for determining the origin or value of the material. ‘‘Reasons beyond control’’ of supplier (2) For purposes of subsection (1), ‘‘reasons beyond the control’’ of the person from whom the producer of the good ac- quired the material includes 46434 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (a) the bankruptcy of the person from whom the producer acquired the material or any other financial distress situa- tion or business reorganization that resulted in that person or a related person having lost control of the records con- taining the information that substantiate that the material is an originating material or the value of the material de- clared for the purpose of calculating the regional value content of the good; (b) any other reason that results in partial or complete loss of records of that producer that the producer could not rea- sonably have been expected to foresee, including loss of records due to fire, flooding or other natural cause. Exporter or producer of good unable to provide information; reasons beyond control of exporter or producer; procedure to be followed by Customs (3) Where, during a verification of origin of a good, the exporter or producer of the good is unable to provide the customs administration conducting the verification with sufficient information to substantiate that the good is an originating good, and the inability of that person to provide the information is due to reasons beyond the control of that person, the customs administration shall, before making a determination as to the origin of the good, consider, where relevant, the following: (a) whether the customs administration of the NAFTA country into the territory of which the good was imported is- sued an advance ruling under Article 509 of the Agreement, as implemented in each NAFTA country, with respect to that good that concluded that the good is an originating good; (b) whether an independent auditor has confirmed the accuracy of an origin statement with respect to the good; (c) whether the customs administration has, before the start of the origin verification of the good, conducted a verifica- tion of origin of identical goods or similar goods produced by the producer of the good and determined that the iden- tical goods or similar goods are originating goods; (d) whether the exporter or producer of the good has exercised due diligence to ensure that the information provided to substantiate that the good is an originating good is sufficient; and (e) where the customs administration has access only to partial records of the exporter or producer of the good, wheth- er the records provide sufficient evidence to substantiate that the good is an originating good; (f) whether the customs administration can obtain, subject to Article 507 of the Agreement, as implemented in each NAFTA country, by means other than those referred to in paragraphs (a) through (e), relevant information regarding the determination of the origin of the good from the customs administration of the NAFTA country in the territory of which the exporter or producer of the good was located; and (g) whether the exporter or producer of the good or a representative of that person agrees to bear the expenses in- curred in providing the customs administration with the assistance that it may require for determining the origin or value of the good. ‘‘Reasons beyond control’’ (4) For purposes of subsection (3), ‘‘reasons beyond the control’’ of the exporter or producer of the good includes (a) the bankruptcy of the exporter or producer or any other financial distress situation or business reorganization that resulted in that person or a related person having lost control of the records containing the information that substan- tiate that the good is an originating good; (b) any other reason that results in partial or complete loss of records of that exporter or producer that that person could not reasonably have been expected to foresee, including loss of records due to fire, flooding or other natural cause. SECTION 16. TRANSSHIPMENT Effect of subsequent processing outside the territory of a NAFTA country; loss of originating good status (1) A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or more of the NAFTA countries that would enable the good to qualify as an originating good if subsequent to that produc- tion (a) the good is withdrawn from customs control outside the territories of the NAFTA countries; or (b) the good undergoes further production or any other operation outside the territories of the NAFTA countries, other than unloading, reloading or any other operation necessary to preserve the good in good condition, such as inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sul- phur dioxide or other aqueous solutions, replacing damaged packing materials and containers and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a NAFTA country. Transshipped good considered entirely non-originating (2) A good that is a non-originating good by application of subsection (1) is considered to be entirely non-originating for purposes of this Appendix. Exceptions for certain goods (3) Subsection (1) does not apply with respect to a good provided for in any of subheadings 8541.10 through 8541.60 and 8542.11 through 8542.80 where any further production or other operation that that good undergoes outside the territories of the NAFTA countries does not result in a change in the tariff classification of the good to a subheading outside sub- headings 8541.10 through 8542.90. SECTION 17. NON-QUALIFYING OPERATIONS Mere dilution; production or pricing practice to circumvent the provisions of this Appendix 17. A good is not an originating good merely by reason of (a) mere dilution with water or another substance that does not materially alter the characteristics of the good; or (b) any production or pricing practice with respect to which it may be demonstrated, on the basis of a preponderance of evidence, that the object was to circumvent this Appendix. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46435 SCHEDULE I Schedule I shall be the text of Annex 401 to the Agreement as implemented in General Note 12 of the HTSUS. SCHEDULE II VALUE OF GOODS SECTION 1. Definitions. For purposes of this Schedule, unless otherwise stated: ‘‘buyer’’ refers to a person who purchases a good from the producer; ‘‘buying commissions’’ means fees paid by a buyer to that buyer’s agent for the agent’s services in representing the buyer in the purchase of a good; ‘‘producer’’ refers to the producer of the good being valued. SECTION 2. For purposes of Article 402(2) of the Agreement, as implemented by section 6(2) of this Appendix, the transaction value of a good shall be the price actually paid or payable for the good, determined in accordance with section 3 and ad- justed in accordance with section 4. SECTION 3. (1) The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the producer. The payment need not necessarily take the form of a transfer of money; it may be made by letters of credit or ne- gotiable instruments. The payment may be made directly or indirectly to the producer. For an illustration of this, the set- tlement by the buyer, whether in whole or in part, of a debt owed by the producer is an indirect payment. (2) Activities undertaken by the buyer on the buyer’s own account, other than those for which an adjustment is provided in section 4, shall not be considered to be an indirect payment, even though the activities might be regarded as being for the benefit of the producer. For an illustration of this, the buyer, by agreement with the producer, undertakes activities re- lating to the marketing of the good. The costs of such activities shall not be added to the price actually paid or payable. (3) The transaction value shall not include the following charges or costs, provided that they are distinguished from the price actually paid or payable: (a) charges for construction, erection, assembly, maintenance or technical assistance related to the good undertaken after the good has been sold to the buyer; or (b) duties and taxes paid in the country in which the buyer is located with respect to the good. (4) The flow of dividends or other payments from the buyer to the producer that do not relate to the purchase of the good are not part of the transaction value. SECTION 4. (1) In determining the transaction value of a good, the following shall be added to the price actually paid or payable: (a) to the extent that they are incurred by the buyer, or by a related person on behalf of the buyer, with respect to the good being valued and are not included in the price actually paid or payable (i) commissions and brokerage fees, except buying commissions, (ii) the costs of transporting the good to the producer’s point of direct shipment and the costs of loading, unload- ing, handling and insurance that are associated with that transportation, and (iii) where the packaging materials and containers in which the good is packaged for retail sale are classified with the good under the Harmonized System, the value of the packaging materials and containers; (b) the value, reasonably allocated in accordance with subsection (12), of the following elements where they are sup- plied directly or indirectly to the producer by the buyer, free of charge or at reduced cost for use in connection with the production and sale of the good, to the extent that the value is not included in the price actually paid or payable: (i) a material, other than an indirect material, used in the production of the good, (ii) tools, dies, molds and similar indirect materials used in the production of the good, (iii) an indirect material, other than those referred to in subparagraph (ii) or in paragraphs (c), (e) or (f) of the defi- nition ‘‘indirect material’’ set out in Article 415 of the Agreement, as implemented by section 2(1) of this Appen- dix, used in the production of the good, and (iv) engineering, development, artwork, design work, and plans and sketches necessary for the production of the good, regardless of where performed; (c) the royalties related to the good, other than charges with respect to the right to reproduce the good in the territory of one or more of the NAFTA countries, that the buyer must pay directly or indirectly as a condition of sale of the good, to the extent that such royalties are not included in the price actually paid or payable; and (d) the value of any part of the proceeds of any subsequent resale, disposal or use of the good that accrues directly or indirectly to the producer. (2) The additions referred to in subsection (1) shall be made to the price actually paid or payable under this section only on the basis of objective and quantifiable data. (3) Where objective and quantifiable data do not exist with regard to the additions required to be made to the price actu- ally paid or payable under subsection (1), the transaction value cannot be determined under section 2. (4) No additions shall be made to the price actually paid or payable for the purpose of determining the transaction value except as provided in this section. (5) The amounts to be added under subsections (1)(a) (i) and (ii) shall be (a) those amounts that are recorded on the books of the buyer, or (b) where those amounts are costs incurred by a related person on behalf of the buyer and are not recorded on the books of the buyer, those amounts that are recorded on the books of that related person. (6) The value of the packaging materials and containers referred to in subsection (1)(a)(iii) and the value of the elements referred to in subsection (1)(b)(i) shall be 46436 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (a) where the packaging materials and containers or the elements are imported from outside the territory of the NAFTA country in which the producer is located, the customs value of the packaging materials and containers or the elements, (b) where the buyer, or a related person on behalf of the buyer, purchases the packaging materials and containers or the elements from an unrelated person in the territory of the NAFTA country in which the producer is located, the price actually paid or payable for the packaging materials and containers or the elements, (c) where the buyer, or a related person on behalf of the buyer, acquires the packaging materials and containers or the elements from an unrelated person in the territory of the NAFTA country in which the producer is located other than through a purchase, the value of the consideration related to the acquisition of the packaging materials and containers or the elements, based on the cost of the consideration that is recorded on the books of the buyer or the related per- son, or (d) where the packaging materials and containers or the elements are produced by the buyer, or by a related person, in the territory of the NAFTA country in which the producer is located, the total cost of the packaging materials and con- tainers or the elements, determined in accordance with subsection (7), and shall include the following costs that are recorded on the books of the buyer or the related person supplying the pack- aging materials and containers or the elements on behalf of the buyer, to the extent that such costs are not included under paragraphs (a) through (d): (e) the costs of freight, insurance, packing, and all other costs incurred in transporting the packaging materials and containers or the elements to the location of the producer, (f) duties and taxes paid or payable with respect to the packaging materials and containers or the elements, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable, (g) customs brokerage fees, including the cost of in-house customs brokerage services, incurred with respect to the packaging materials and containers or the elements, and (h) the cost of waste and spoilage resulting from the use of the packaging materials and containers or the elements in the production of the good, less the value of renewable scrap or by-product. (7) For purposes of subsection (6)(d), the total cost of the packaging materials and containers referred to in subsection (1)(a)(iii) or the elements referred to in subsection (1)(b)(i) shall be (a) where the packaging materials and containers or the elements are produced by the buyer, at the choice of the buyer, (i) the total cost incurred with respect to all goods produced by the buyer, calculated on the basis of the costs that are recorded on the books of the buyer, that can be reasonably allocated to the packaging materials and containers or the elements in accordance with Schedule VII, or (ii) the aggregate of each cost incurred by the buyer that forms part of the total cost incurred with respect to the packaging materials and containers or the elements, calculated on the basis of the costs that are recorded on the books of the buyer, that can be reasonably allocated to the packaging materials and containers or the elements in accordance with Schedule VII; and (b) where the packaging materials and containers or the elements are produced by a person who is related to the buyer, at the choice of the buyer, (i) the total cost incurred with respect to all goods produced by that related person, calculated on the basis of the costs that are recorded on the books of that person, that can be reasonably allocated to the packaging materials and containers or the elements in accordance with Schedule VII, or (ii) the aggregate of each cost incurred by that related person that forms part of the total cost incurred with respect to the packaging materials and containers or the elements, calculated on the basis of the costs that are recorded on the books of that person, that can be reasonably allocated to the packaging materials and containers or the ele- ments in accordance with Schedule VII. (8) Except as provided in subsections (10) and (11), the value of the elements referred to in subsections (1)(b)(ii) through (iv) shall be (a) the cost of those elements that is recorded on the books of the buyer, or (b) where such elements are provided by another person on behalf of the buyer and the cost is not recorded on the books of the buyer, the cost of those elements that is recorded on the books of that other person. (9) Where the elements referred to in subsections (1)(b)(ii) through (iv) were previously used by or on behalf of the buyer, the value of the elements shall be adjusted downward to reflect that use. (10) Where the elements referred to in subsections (1)(b)(ii) and (iii) were leased by the buyer or a person related to the buyer, the value of the elements shall be the cost of the lease as recorded on the books of the buyer or that related person. (11) No addition shall be made to the price actually paid or payable for the elements referred to in subsection (1)(b)(iv) that are available in the public domain, other than the cost of obtaining copies of them. (12) The producer shall choose the method of allocating to the good the value of the elements referred to in subsections (1)(b)(ii) through (iv), provided that the value is reasonably allocated to the good in a manner appropriate to the cir- cumstances. The methods the producer may choose to allocate the value include allocating the value over the number of units produced up to the time of the first shipment or allocating the value over the entire anticipated production where contracts or firm commitments exist for that production. For an illustration of this, a buyer provides the producer with a mold to be used in the production of the good and contracts with the producer to buy 10,000 units of that good. By the time the first shipment of 1,000 units arrives, the producer has already produced 4,000 units. In these circumstances, the producer may choose to allocate the value of the mold over 4,000 units or 10,000 units but shall not choose to allocate the value of the elements to the first shipment of 1,000 units. The producer may choose to allocate the entire value of the ele- ments to a single shipment of a good only where that single shipment comprises all of the units of the good acquired by the buyer under the contract or commitment for that number of units of the good between the producer and the buyer. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46437 (13) The addition for the royalties referred to in subsection (1)(c) shall be the payment for the royalties that is recorded on the books of the buyer, or where the payment for the royalties is recorded on the books of another person, the payment for the royalties that is recorded on the books of that other person. (14) The value of the proceeds referred to in subsection (1)(d) shall be the amount that is recorded for such proceeds on the books of the buyer or the producer. SCHEDULE III UNACCEPTABLE TRANSACTION VALUE SECTION 1. Definitions. For purposes of this Schedule, unless otherwise stated ‘‘buyer’’ refers to a person who purchases a good from the producer; ‘‘customs administration’’ refers to the customs administration of the NAFTA country into whose territory the good being valued is imported; ‘‘producer’’ refers to the producer of the good being valued. SECTION 2. (1) There is no transaction value for a good where the good is not the subject of a sale. (2) The transaction value of a good is unacceptable where (a) there are restrictions on the disposition or use of the good by the buyer, other than restrictions that (i) are imposed or required by law or by the public authorities in the territory of the NAFTA country in which the buyer is located, (ii) limit the geographical area in which the good may be resold, or (iii) do not substantially affect the value of the good; (b) the sale or price actually paid or payable is subject to a condition or consideration for which a value cannot be de- termined with respect to the good; (c) part of the proceeds of any subsequent resale, disposal or use of the good by the buyer will accrue directly or indi- rectly to the producer, and an appropriate addition to the price actually paid or payable cannot be made in accordance with section 4(1)(d) of Schedule II; or (d) except as provided in section 3, the producer and the buyer are related persons and the relationship between them influenced the price actually paid or payable for the good. (3) The conditions or considerations referred to in subsection (2)(b) include the following circumstances: (a) the producer establishes the price actually paid or payable for the good on condition that the buyer will also buy other goods in specified quantities; (b) the price actually paid or payable for the good is dependent on the price or prices at which the buyer sells other goods to the producer of the good; and (c) the price actually paid or payable is established on the basis of a form of payment extraneous to the good, such as where the good is a semi-finished good that has been provided by the producer to the buyer on condition that the pro- ducer will receive a specified quantity of the finished good from the buyer. (4) For purposes of subsection (2)(b), conditions or considerations relating to the production or marketing of the good shall not render the transaction value unacceptable, such as where the buyer undertakes on the buyer’s own account, even though by agreement with the producer, activities relating to the marketing of the good. (5) Where objective and quantifiable data do not exist with regard to the additions required to be made to the price actu- ally paid or payable under section 4(1) of Schedule II, the transaction value cannot be determined under the provisions of section 2 of that Schedule. For an illustration of this, a royalty is paid on the basis of the price actually paid or payable in a sale of a liter of a particular good that was purchased by the kilogram and made up into a solution. If the royalty is based partially on the purchased good and partially on other factors that have nothing to do with that good, such as when the purchased good is mixed with other ingredients and is no longer separately identifiable, or when the royalty cannot be distinguished from special financial arrangements between the producer and the buyer, it would be inappropriate to add the royalty and the transaction value of the good could not be determined. However, if the amount of the royalty is based only on the purchased good and can be readily quantified, an addition to the price actually paid or payable can be made and the transaction value can be determined. SECTION 3. (1) In determining whether the transaction value is unacceptable under section 2(2)(d), the fact that the producer and the buyer are related persons shall not in itself be grounds for the customs administration to render the transaction value un- acceptable. In such cases, the circumstances surrounding the sale shall be examined and the transaction value shall be ac- cepted provided that the relationship between the producer and the buyer did not influence the price actually paid or pay- able. Where the customs administration has reasonable grounds for considering that the relationship between the producer and the buyer influenced the price, the customs administration shall communicate the grounds to the producer, and that producer shall be given a reasonable opportunity to respond to the grounds communicated by the customs administration. If that producer so requests, the customs administration shall communicate in writing the grounds on which it considers that the relationship between the producer and the buyer influenced the price actually paid or payable. 46438 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (2) Subsection (1) provides that, where the producer and the buyer are related persons, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the value provided that the relationship between the producer and the buyer did not influence the price actually paid or payable. It is not intended under subsection (1) that there should be an examination of the circumstances in all cases where the producer and the buyer are related persons. Such an examination will only be required where the customs administration has doubts that the price actually paid or payable is acceptable because of the relationship between the producer and the buyer. Where the customs administration does not have doubts that the price actually paid or payable is acceptable, it shall accept that price without requesting fur- ther information. For an illustration of this, the customs administration may have previously examined the relationship be- tween the producer and the buyer, or it may already have detailed information concerning the relationship between the producer and the buyer, and may already be satisfied from that examination or information that the relationship between them did not influence the price actually paid or payable. (3) In applying subsection (1), where the producer and the buyer are related persons and the customs administration has doubts that the transaction value is acceptable without further inquiry, the customs administration shall give the producer an opportunity to supply such further information as may be necessary to enable it to examine the circumstances sur- rounding the sale. In such a case, the customs administration shall examine the relevant aspects of the sale, including the way in which the producer and the buyer organize their commercial relations and the way in which the price actually paid or payable for the good being valued was arrived at, in order to determine whether the relationship between the pro- ducer and the buyer influenced that price actually paid or payable. Where it can be shown that the producer and the buyer buy from and sell to each other as if they were not related persons, the price actually paid or payable shall be con- sidered as not having been influenced by the relationship between them. For an illustration of this, if the price actually paid or payable for the good had been settled in a manner consistent with the normal pricing practices of the industry in question or with the way in which the producer settles prices for sales to unrelated buyers, the price actually paid or pay- able shall be considered as not having been influenced by the relationship between the buyer and the producer. As an- other illustration, where it is shown that the price actually paid or payable for the good is adequate to ensure recovery of the total cost of producing the good plus a profit that is representative of the producer’s overall profit realized over a rep- resentative period of time, such as on an annual basis, in sales of goods of the same class or kind, the price actually paid or payable shall be considered as not having been influenced by the relationship between the producer and the buyer. (4) In a sale between a producer and a buyer who are related persons, the transaction value shall be accepted and deter- mined in accordance with section 2 of Schedule II wherever the producer demonstrates that the transaction value of the good in that sale closely approximates a test value referred to in subsection (5). (5) The value to be used as a test value shall be the transaction value of identical goods or similar goods sold at or about the same time as the good being valued is sold to an unrelated buyer who is located in the territory of the NAFTA country in which the buyer is located. (6) In applying a test value referred to in subsection (4), due account shall be taken of demonstrated differences in com- mercial levels, quantity levels, the value of the elements specified in section 4(1)(b) of Schedule II and the costs incurred by the producer in sales to unrelated buyers that are not incurred by the producer in sales to a related person. (7) The application of the test value referred to in subsection (4) shall be used at the initiative of the producer and shall be used only for comparison purposes to determine whether the transaction value of the good is acceptable. The test value shall not be used as the transaction value of that good. (8) Subsection (4) provides an opportunity for the producer to demonstrate that the transaction value closely approximates a test value previously accepted by the customs administration, and is therefore acceptable under subsections (1) and (4). Where the application of a test value under subsection (4) demonstrates that the transaction value of the good being valued is acceptable, the customs administration shall not examine the question of influence in regard to the relationship between the producer and the buyer under subsection (1). Where the customs administration already has sufficient information available, without further inquiries, that the transaction value closely approximates a test value referred to in subsection (4), the producer is not required to apply a test value to demonstrate that the transaction value is acceptable under that subsection. (9) A number of factors must be taken into consideration for the purpose of determining whether the transaction value of the identical goods or similar goods closely approximates the transaction value of the good being valued. These factors in- clude the nature of the good, the nature of the industry itself, the season in which the good is sold, and whether the dif- ference in values is commercially significant. Since these factors may vary from case to case, it would be impossible to apply an acceptable standardized difference such as a fixed amount or fixed percentage difference in each case. For an il- lustration of this, a small difference in value in a case involving one type of good could be unacceptable, while a large dif- ference in a case involving another type of good might be acceptable for the purposes of determining whether the trans- action value closely approximates a test value set out in subsection (4). SCHEDULE IV LIST OF TARIFF PROVISIONS FOR THE PURPOSES OF SECTION 9 OF THE APPENDIX 4009 4010.10 4011 4016.93.10 4016.99.30 and 4016.99.55 7007.11 and 7007.21 7009.10 8301.20 8407.31 8407.32 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46439 8407.33 8407.34.05, 8407.34.15 and 8407.34.25 8407.34.35, 8407.34.45 and 8407.34.55 8408.20 8409 8413.30 8414.59.30 8414.80.05 8415.81 through 8415.83 8421.39.40 8481.20, 8481.30 and 8481.80 8482.10 through 8482.80 8483.10 through 8483.40 8483.50 8501.10 8501.20 8501.31 8501.32.45 8507.20.40, 8507.30.40, 8507.40.40 and 8507.80.40 8511.30 8511.40 8511.50 8512.20 8512.40 8519.91 8527.21 8527.29 8536.50 8536.90 8537.10.30 8539.10 8539.21 8544.30 8706 8707 8708.10.30 8708.21 8708.29.20 8708.29.10 8708.29.15 8708.39 8708.40 8708.50 8708.60 8708.70.05, 8708.70.25 and 8708.70.45 8708.80 8708.91 8708.92 8708.93.15 and 8708.93.60 8708.94 8708.99.03, 8708.99.27 and 8708.99.55 8708.99.06, 8708.99.31 and 8708.99.58 8708.99.09, 8708.99.34 and 8708.99.61 8708.99.12, 8708.99.37 and 8708.99.64 8708.99.15, 8708.99.40 and 8708.99.67 8708.99.18, 8708.99.43 and 8708.99.70 8708.99.21, 8708.99.46 and 8708.99.73 8708.99.24, 8708.99.49 and 8708.99.80 9031.80 9032.89 9401.20 46440 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations SCHEDULE V LIST OF AUTOMOTIVE COMPONENTS AND MATERIALS FOR THE PURPOSES OF SECTION 10 OF THE APPENDIX Column I Column II Item automotive components listed materials 1. Engines provided for in heading 8407 or 8408 ...... Cast blocks, cast heads, fuel nozzles, fuel injector pumps, glow plugs, turbochargers, superchargers, electronic engine controls, intake mani- folds, exhaust manifolds, intake valves, exhaust valves, crankshafts, cam- shafts, alternators, starters, air cleaner assemblies, pistons, connecting rods and assemblies made therefrom, rotor assemblies for rotary en- gines, flywheels (for manual transmissions), flexplates (for automatic transmissions), oil pans, oil pumps, pressure regulators, water pumps, crankshaft gears, camshaft gears, radiator assemblies, charge-air cool- ers. 2. Gear boxes (transmissions) provided for in subheading (a) For manual transmissions: transmission cases and clutch housings; 8708.40. clutches; internal shifting mechanisms; gear sets, synchronizers and shafts; and (b) For torque convertor type transmissions: transmission cases and con- vertor housings; torque convertor assemblies; gear sets and clutches; electronic transmission controls. SCHEDULE VI REGIONAL VALUE-CONTENT CALCULATION FOR CAMI SECTION 1. Definitions. In this Schedule, ‘‘closed’’ means, with respect to a plant, a closure (a) for purposes of re-tooling for a change in model line, or (b) as a result of any event or circumstance (other than the imposition of antidumping duties or countervailing duties, or an interruption of operations resulting from a labor strike, lock-out, labor dispute, picketing or boycott of or by em- ployees of CAMI Automotive, Inc. or General Motors of Canada Limited) that CAMI Automotive, Inc. or General Mo- tors of Canada Limited could not reasonably have been expected to avert by corrective action or by exercise of due care and diligence, including a shortage of materials, failure of utilities, or inability to obtain or a delay in obtaining raw materials, parts, fuel or utilities; ‘‘GM’’ means General Motors of Canada Limited, General Motors Corporation, General Motors de Mexico, S.A. de C.V., and any subsidiary directly or indirectly owned by any of them, or by any combination thereof; ‘‘producer’’ means CAMI Automotive, Inc. SECTION 2. For purposes of section 11 of this Appendix, for purposes of determining the regional value content, in a fiscal year, of a motor vehicle of a class of motor vehicles or a model line produced by the producer in the territory of Canada and im- ported into the territory of the United States, the producer may choose to calculate the regional value content by (a) calculating Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46441 (i) the sum of (A) the net cost incurred by the producer, during that fiscal year, in the production in the territory of Canada of motor vehicles of a category referred to in section 3 that is chosen by the producer, and (B) the net cost incurred by General Motors of Canada Limited, during the fiscal year that corresponds most closely to the producer’s fiscal year, in the production in the territory of Canada of a corresponding class of motor vehicles or model line, and (ii) the sum of (A) the value, determined in accordance with section 9 of this Appendix for light-duty vehicles and section 10 of this Appendix for heavy-duty vehicles, of the non-originating materials that are used by the producer, during that fiscal year, in the production in the territory of Canada of motor vehicles of a category referred to in section 2.1 that is chosen by the producer, and (B) the value, determined in accordance with section 9 of this Appendix for light-duty vehicles and section 10 of this Appendix for heavy-duty vehicles, of the non-originating materials that are used by General Motors of Canada Limited, during the fiscal year that corresponds most closely to the producer’s fiscal year, in the production in the territory of Canada of a corresponding class of motor vehicles or model line, and (b) using the sums referred to in paragraphs (a)(i) and (ii) as the net cost and the value of non-originating materials, re- spectively, in the calculation referred to in section 6(3) of this Appendix, provided that (c) at the beginning of the producer’s fiscal year, General Motors of Canada Limited owns 50 percent or more of the voting common stock of the producer, and (d) GM acquires 75 percent or more by unit of quantity of the class of motor vehicles or model line, as the case may be, that the producer produced in the territory of Canada in the producer’s fiscal year for sale in the territory of one or more of the NAFTA countries. SECTION 3. The categories referred to in clauses 2(a)(i)(A) and (ii)(A) are the following: (a) the class of motor vehicles that the producer produced in the territory of Canada in the producer’s fiscal year for sale in the territory of one or more of the NAFTA countries; and (b) the model line that the producer produced in the territory of Canada in the producer’s fiscal year for sale in the territory of one or more of the NAFTA countries. SECTION 4. Where GM does not satisfy the requirement set out in section 2(d), the producer may choose that the regional value content be calculated in accordance with section 2 only for those motor vehicles that are acquired by GM for distribution under the GEO marque or another GM marque. SECTION 5. (1) The producer may choose that the calculation referred to in section 2 be made over a period of two fiscal years where (a) any plant operated by the producer or by General Motors of Canada Limited is closed for more than two consecu- tive months; and (b) the motor vehicles of a category referred to in section 3, with respect to which the producer chooses that the re- gional value content be calculated in accordance with section 2, are produced in that plant. (2) Subject to subsection (3), the period of two fiscal years referred to in subsection (1) corresponds to the fiscal year in which the plant is closed and, at the choice of the producer, the preceding or the subsequent fiscal year. (3) Where the plant is closed for a period that spans two fiscal years, the calculation referred to in section 2 may be made only over those two fiscal years. (4) Where the producer has chosen that the regional value content be calculated over two fiscal years under this section, the choice referred to in section 11(6) of this Appendix shall be filed not later than 10 days after the end of the period dur- ing which the plant is closed, or at such later time as the customs administration may accept. SECTION 6. For purposes of this Schedule, a motor vehicle producer shall be deemed to be GM where, as a result of an amalgama- tion, reorganization, division or similar transaction, that motor vehicle producer (a) acquires all or substantially all of the assets used by GM, and (b) directly or indirectly controls, or is controlled by, GM, or both that motor vehicle producer and GM are controlled by the same person. SCHEDULE VII REASONABLE ALLOCATION OF COSTS SECTION 1. Definitions. For purposes of this Schedule, ‘‘costs’’ means any costs that are included in total cost and that need to be allocated pursuant to sections 5(9), 6(11) and 7(6) and sections 10(1)(a)(i) and (ii) of these Regulations, section 4(7) of Schedule II and sections 5(7) and 10(2) of Sched- ule VIII; ‘‘discontinued operations’’, in the case of a producer located in a NAFTA country, has the meaning set out in that NAFTA country’s Generally Accepted Accounting Principles; ‘‘indirect overhead’’ means period costs and other costs; ‘‘internal management purpose’’ means any purpose relating to tax reporting, financial reporting, financial planning, deci- sion-making, pricing, cost recovery, cost control management or performance measurement; and ‘‘overhead’’ means costs, other than direct material costs and direct labor costs. SECTION 2. Interpretation. 46442 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (1) In this Schedule, reference to ‘‘producer’’ shall, for purposes of section 4(7) of Schedule II, be read as a reference to ‘‘buyer’’. (2) In this Schedule, reference to ‘‘good’’ shall, (a) for purposes of section 6(14) of this Appendix, be read as a reference to ‘‘identical goods or similar goods, or any combination thereof’’; (b) for purposes of section 7(6) of this Appendix, be read as a reference to ‘‘intermediate material’’; (c) for purposes of section 11 of this Appendix, be read as a reference to ‘‘category of vehicles that is chosen pursuant to section 11(1) of this Appendix’’; (d) for purposes of section 12 of this Appendix, be read as a reference to ‘‘category of goods chosen pursuant to sec- tion 12(1) of this Appendix’’; (e) for purposes of section 13(4) of this Appendix, be read as a reference to ‘‘category of vehicles chosen pursuant to section 13(4) of this Appendix’’; (f) for purposes of section 4(7) of Schedule II, be read as a reference to ‘‘packaging materials and containers or the ele- ments’’; and (g) for purposes of section 5(7) of Schedule VIII, be read as a reference to ‘‘elements’’. Methods to Reasonably Allocate Costs SECTION 3. (1) Where a producer of a good is using, for an internal management purpose, a cost allocation method to allocate to the good direct material costs, or part thereof, and that method reasonably reflects the direct material used in the production of the good based on the criterion of benefit, cause or ability to bear, that method shall be used to reasonably allocate the costs to the good. (2) Where a producer of a good is using, for an internal management purpose, a cost allocation method to allocate to the good direct labor costs, or part thereof, and that method reasonably reflects the direct labor used in the production of the good based on the criterion of benefit, cause or ability to bear, that method shall be used to reasonably allocate the costs to the good. (3) Where a producer of a good is using, for an internal management purpose, a cost allocation method to allocate to the good overhead, or part thereof, and that method is based on the criterion of benefit, cause or ability to bear, that method shall be used to reasonably allocate the costs to the good. SECTION 4. Where costs are not reasonably allocated to a good under section 3, those costs are reasonably allocated to the good if they are allocated, (a) with respect to direct material costs, on the basis of any method that reasonably reflects the direct material used in the production of the good based on the criterion of benefit, cause or ability to bear; (b) with respect to direct labor costs, on the basis of any method that reasonably reflects the direct labor used in the production of the good based on the criterion of benefit, cause or ability to bear; and (c) with respect to overhead, on the basis of any of the following methods: (i) the method set out in Addendum A, Addendum B or Addendum C, (ii) a method based on a combination of the methods set out in Addenda A and B or Addenda A and C, and (iii) a cost allocation method based on the criterion of benefit, cause or ability to bear. SECTION 5. Any cost allocation method referred to in section 3 or 4 that is used by a producer for the purposes of this Appendix shall be used throughout the producer’s fiscal year. Costs Not Reasonably Allocated SECTION 6. The allocation to a good of any of the following is considered not to be reasonably allocated to the good: (a) costs of a service provided by a producer of a good to another person where the service is not related to the good; (b) gains or losses resulting from the disposition of a discontinued operation; (c) cumulative effects of accounting changes reported in accordance with a specific requirement of the applicable Gen- erally Accepted Accounting Principles; and’’. (d) gains or losses resulting from the sale of a capital asset of the producer. SECTION 7. Any costs allocated under section 3 on the basis of a cost allocation method that is used for an internal management purpose that is solely for the purpose of qualifying a good as an originating good are considered not to be reasonably allo- cated. ADDENDUM A COST RATIO METHOD Calculation of Cost Ratio For the overhead to be allocated, the producer may choose one or more allocation bases that reflect a relationship be- tween the overhead and the good based on the criterion of benefit, cause or ability to bear. With respect to each allocation base that is chosen by the producer for allocating overhead, a cost ratio is calculated for each good produced by the producer in accordance with the following formula: AB CR = TAB where CR is the cost ratio with respect to the good; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46443 AB is the allocation base for the good; and TAB is the total allocation base for all the goods produced by the producer. Allocation to a Good of Costs Included in Overhead The costs with respect to which an allocation base is chosen are allocated to a good in accordance with the following formula: CAG = CA × CR where CAG is the costs allocated to the good; CA is the costs to be allocated; and CR is the cost ratio with respect to the good. Excluded Costs Under section 6(11)(b) of this Appendix, where excluded costs are included in costs to be allocated to a good, the cost ratio used to allocate that cost to the good is used to determine the amount of excluded costs to be subtracted from the costs allocated to the good. Allocation Bases for Costs The following is a non-exhaustive list of allocation bases that may be used by the producer to calculate cost ratios: Direct Labor Hours Direct Labor Costs Units Produced Machine-hours Sales Dollars or Pesos Floor Space ‘‘Examples’’ The following examples illustrate the application of the cost ratio method to costs included in overhead. Example 1: Direct Labor Hours A producer who produces Good A and Good B may allocate overhead on the basis of direct labor hours spent to produce Good A and Good B. A total of 8,000 direct labor hours have been spent to produce Good A and Good B: 5,000 hours with respect to Good A and 3,000 hours with respect to Good B. The amount of overhead to be allocated is $6,000,000. Calculation of the Ratios: Good A: 5,000 hours/8,000 hours = .625 Good B: 3,000 hours/8,000 hours = .375 Allocation of overhead to Good A and Good B: Good A: $6,000,000 × .625 = $3,750,000 Good B: $6,000,000 × .375 = $2,250,000 Example 2: Direct Labor Costs A producer who produces Good A and Good B may allocate overhead on the basis of direct labor costs incurred in the production of Good A and Good B. The total direct labor costs incurred in the production of Good A and Good B is $60,000: $50,000 with respect to Good A and $10,000 with respect to Good B. The amount of overhead to be allocated is $6,000,000. Calculation of the Ratios: Good A: $50,000/$60,000 = .833 Good B: $10,000/$60,000 = .167 Allocation of Overhead to Good A and Good B: Good A: $6,000,000 × .833 = $4,998,000 Good B: $6,000,000 × .167 = $1,002,000 Example 3: Units Produced A producer of Good A and Good B may allocate overhead on the basis of units produced. The total units of Good A and Good B pro- duced is 150,000: 100,000 units of Good A and 50,000 units of Good B. The amount of overhead to be allocated is $6,000,000. Calculation of the Ratios: Good A: 100,000 units/150,000 units = .667 Good B: 50,000 units/150,000 units = .333 Allocation of Overhead to Good A and Good B: Good A: $6,000,000 x .667 = $4,002,000 Good B: $6,000,000 x .333 = $1,998,000 Example 4: Machine-hours A producer who produces Good A and Good B may allocate machine-related overhead on the basis of machine-hours utilized in the production of Good A and Good B. The total machine-hours utilized for the production of Good A and Good B is 3,000 hours: 1,200 hours with respect to Good A and 1,800 hours with respect to Good B. The amount of machine-related overhead to be allocated is $6,000,000. Calculation of the Ratios: Good A: 1,200 machine-hours/3,000 machine-hours = .40 Good B: 1,800 machine-hours/3,000 machine-hours = .60 Allocation of Machine-Related Overhead to Good A and Good B: Good A: $6,000,000 × .40 = $2,400,000 Good B: $6,000,000 × .60 = $3,600,000 Example 5: Sales Dollars or Pesos A producer who produces Good A and Good B may allocate overhead on the basis of sales dollars. The producer sold 2,000 units of Good A at $4,000 and 200 units of Good B at $3,000. The amount of overhead to be allocated is $6,000,000. Total Sales Dollars for Good A and Good B: Good A: $4,000 × 2,000 = $8,000,000 Good B: $3,000 × 200 = $600,000 Total Sales Dollars: $8,000,000 + $600,000 = $8,600,000 Calculation of the Ratios: 46444 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Good A: $8,000,000/$8,600,000 = .93 Good B: $600,000/$8,600,000 = .07 Allocation of Overhead to Good A and Good B: Good A: $6,000,000 × .93 = $5,580,000 Good B: $6,000,000 × .07 = $420,000 Example 6: Floor Space A producer who produces Good A and Good B may allocate overhead relating to utilities (heat, water and electricity) on the basis of floor space used in the production and storage of Good A and Good B. The total floor space used in the production and storage of Good A and Good B is 100,000 square feet: 40,000 square feet with respect to Good A and 60,000 square feet with respect to Good B. The amount of overhead to be allocated is $6,000,000. Calculation of the Ratios: Good A: 40,000 square feet/100,000 square feet = .40 Good B: 60,000 square feet/100,000 square feet = .60 Allocation of Overhead (Utilities) to Good A and Good B: Good A: $6,000,000 × .40 = $2,400,000 Good B: $6,000,000 × .60 = $3,600,000 ADDENDUM B DIRECT LABOR AND DIRECT MATERIAL RATIO METHOD Calculation of Direct Labor and Direct Material Ratio For each good produced by the producer, a direct labor and direct material ratio is calculated in accordance with the following formula: DLC+ DMC DLDMR = TDLC+ TDMC where DLDMR is the direct labor and direct material ratio for the good; DLC is the direct labor costs of the good; DMC is the direct material costs of the good; TDLC is the total direct labor costs of all goods produced by the producer; and TDMC is the total direct material costs of all goods produced by the producer. Allocation of Overhead to a Good Overhead is allocated to a good in accordance with the following formula: OAG = O × DLDMR where OAG is the overhead allocated to the good; O is the overhead to be allocated; and DLDMR is the direct labor and direct material ratio for the good. Excluded Costs Under section 6(11)(b) of this Appendix, where excluded costs are included in overhead to be allocated to a good, the direct labor and direct material ratio used to allocate overhead to the good is used to determine the amount of excluded costs to be subtracted from the overhead allocated to the good. ‘‘Examples’’ Example 1: The following example illustrates the application of the direct labor and direct material ratio method used by a producer of a good to allocate overhead where the producer chooses to calculate the net cost of the good in accordance with section 6(11)(a) of this Appendix. A producer produces Good A and Good B. Overhead (O) minus excluded costs (EC) is $30 and the other relevant costs are set out in the following table: Good A Good B Total Direct labor costs (DLC) ...... $5 $5 $10 Direct material costs (DMC) ...... 10 5 15 Totals ...... $15 $10 $25 Overhead Allocated to Good A OAG (Good A) = O ($30) × DLDMR ($15/$25) OAG (Good A) = $18.00 Overhead Allocated to Good B OAG (Good B) = O ($30) × DLDMR ($10/$25) OAG (Good B) = $12.00 Example 2: The following example illustrates the application of the direct labor and direct material ratio method used by a producer of a good to allocate overhead where the producer chooses to calculate the net cost of the good in accordance with section 6(11)(b) of this Appendix and where excluded costs are included in overhead. A producer produces Good A and Good B. Overhead (O) is $50 (including excluded costs (EC) of $20). The other relevant costs are set out in the table of Example 1. Overhead Allocated to Good A Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46445 OAG (Good A) = [O ($50) × DLDMR ($15/$25)] ¥ [EC ($20) × DLDMR ($15/$25)] OAG (Good A) = $18.00 Overhead Allocated to Good B OAG (Good B) = [O ($50) × DLDMR ($10/$25)] ¥ [EC ($20) × DLDMR ($10/$25)] OAG (Good B) = $12.00 ADDENDUM C DIRECT COST RATIO METHOD Direct Overhead Direct overhead is allocated to a good on the basis of a method based on the criterion of benefit, cause or ability to bear. Indirect Overhead Indirect overhead is allocated on the basis of a direct cost ratio. Calculation of Direct Cost Ratio For each good produced by the producer, a direct cost ratio is calculated in accordance with the following formula: DLC+ DMC + DO DCR = TDLC+ TDMC + TDO where DCR is the direct cost ratio for the good; DLC is the direct labor costs of the good; DMC is the direct material costs of the good; DO is the direct overhead of the good; TDLC is the total direct labor costs of all goods produced by the producer; TDMC is the total direct material costs of all goods produced by the producer; and TDO is the total direct overhead of all goods produced by the producer; Allocation of Indirect Overhead to a Good Indirect overhead is allocated to a good in accordance with the following formula: IOAG = IO × DCR where IOAG is the indirect overhead allocated to the good; IO is the indirect overhead of all goods produced by the producer; and DCR is the direct cost ratio of the good. Excluded Costs Under section 6(11)(b) of this Appendix, where excluded costs are included in (a) direct overhead to be allocated to a good, those excluded costs are subtracted from the direct overhead allocated to the good; and (b) indirect overhead to be allocated to a good, the direct cost ratio used to allocate indirect overhead to the good is used to determine the amount of excluded costs to be subtracted from the indirect overhead allocated to the good. ‘‘Examples’’ Example 1: The following example illustrates the application of the direct cost ratio method used by a producer of a good to allocate indirect overhead where the producer chooses to calculate the net cost of the good in accordance with section 6(11)(a) of this Appendix. A producer produces Good A and Good B. Indirect overhead (IO) minus excluded costs (EC) is $30. The other relevant costs are set out in the following table: Good A Good B Total Direct labor costs (DLC) ...... $5 $5 $10 Direct material costs (DMC) ...... 10 5 15 Direct overhead (DO) ...... 8 2 10 Totals ...... $23 $12 $35 Indirect Overhead Allocated to Good A IOAG (Good A) = IO ($30) × DCR ($23/$35) IOAG (Good A) = $19.71 Indirect Overhead Allocated to Good B IOAG (Good B) = IO ($30) × DCR ($12/$35) IOAG (Good B) = $10.29 Example 2: The following example illustrates the application of the direct cost ratio method used by a producer of a good to allocate indirect overhead where the producer has chosen to calculate the net cost of the good in accordance with section 6(11)(b) of this Appendix and where excluded costs are included in indirect overhead. A producer produces Good A and Good B. The indirect overhead (IO) is $50 (including excluded costs (EC) of $20). The other rel- evant costs are set out in the table to Example 1. Indirect Overhead Allocated to Good A IOAG (Good A) = [IO ($50) × DCR ($23/$35)] ¥ [EC ($20) × DCR ($23/$35)] 46446 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations IOAG (Good A) = $19.72 Indirect Overhead Allocated to Good B IOAG (Good B) = [IO ($50) × DCR ($12/$35)] ¥ [EC ($20) × DCR ($12/$35)] IOAG (Good B) = $10.28 SCHEDULE VIII VALUE OF MATERIALS SECTION 1. Definitions. (1) For purposes of this Schedule, unless otherwise stated, ‘‘buying commissions’’ means fees paid by a producer to that producer’s agent for the agent’s services in representing the producer in the purchase of a material; ‘‘customs administration’’ refers to the customs administration of the NAFTA country into whose territory the good, in the production of which the material being valued is used, is imported; ‘‘materials of the same class or kind’’ means, with respect to materials being valued, materials that are within a group or range of materials that (a) is produced by a particular industry or industry sector, and (b) includes identical materials or similar materials; ‘‘producer’’ refers to (a) in the case of section 10(1)(b)(i) of these Regulations, the producer of the listed material, and (b) in any other case, the producer who used the material in the production of a good that is subject to a regional value-content requirement; ‘‘seller’’ refers to a person who sells the material being valued to the producer. Interpretation (2) Where it is to be determined under section 9(3) of these Regulations whether the customs value of a material was deter- mined in a manner consistent with this Schedule for purposes of section 9(2) (c) or (d) of these Regulations, a reference in this Schedule to ‘‘producer’’ shall be read as a reference to ‘‘person other than the producer who imports the traced mate- rial from outside the territories of the NAFTA countries. SECTION 2. (1) Except as provided under subsections (2) and (3), the transaction value of a material under Article 402(9)(a) of the Agreement, as implemented by section 7(1)(b) and sections 9(5) and 10(2) of this Appendix, shall be the price actually paid or payable for the material determined in accordance with section 4 and adjusted in accordance with section 5. (2) There is no transaction value for a material where the material is not the subject of a sale. (3) The transaction value of a material is unacceptable where (a) there are restrictions on the disposition or use of the material by the producer, other than restrictions that (i) are imposed or required by law or by the public authorities in the territory of the NAFTA country in which the producer of the good or the seller of the material is located, (ii) limit the geographical area in which the material may be used, or (iii) do not substantially affect the value of the material; (b) the sale or price actually paid or payable is subject to a condition or consideration for which a value cannot be de- termined with respect to the material; (c) part of the proceeds of any subsequent disposal or use of the material by the producer will accrue directly or indi- rectly to the seller, and an appropriate addition to the price actually paid or payable cannot be made in accordance with section 5(1)(d); and (d) except as provided in section 3, the producer and the seller are related persons and the relationship between them influenced the price actually paid or payable for the material. (4) The conditions or considerations referred to in subsection (3)(b) include the following circumstances: (a) the seller establishes the price actually paid or payable for the material on condition that the producer will also buy other materials or goods in specified quantities; (b) the price actually paid or payable for the material is dependent on the price or prices at which the producer sells other materials or goods to the seller of the material; and (c) the price actually paid or payable is established on the basis of a form of payment extraneous to the material, such as where the material is a semi-finished material that has been provided by the seller to the producer on condition that the seller will receive a specified quantity of the finished material from the producer. (5) For purposes of subsection (3)(b), conditions or considerations relating to the use of the material shall not render the transaction value unacceptable, such as where the producer undertakes on the producer’s own account, even though by agreement with the seller, activities relating to the warranty of the material used in the production of a good. (6) Where objective and quantifiable data do not exist with regard to the additions required to be made to the price actu- ally paid or payable under section 5(1), the transaction value cannot be determined under the provisions of section 2(1). For an illustration of this, a royalty is paid on the basis of the price actually paid or payable in a sale of a liter of a par- ticular good that is produced by using a material that was purchased by the kilogram and made up into a solution. If the royalty is based partially on the purchased material and partially on other factors that have nothing to do with that mate- rial, such as when the purchased material is mixed with other ingredients and is no longer separately identifiable, or when the royalty cannot be distinguished from special financial arrangements between the seller and the producer, it would be inappropriate to add the royalty and the transaction value of the material could not be determined. However, if the amount of the royalty is based only on the purchased material and can be readily quantified, an addition to the price actu- ally paid or payable can be made and the transaction value can be determined. SECTION 3. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46447 (1) In determining whether the transaction value is unacceptable under section 2(3)(d), the fact that the seller and the pro- ducer are related persons shall not in itself be grounds for the customs administration to render the transaction value un- acceptable. In such cases, the circumstances surrounding the sale shall be examined and the transaction value shall be ac- cepted provided that the relationship between the seller and the producer did not influence the price actually paid or pay- able. Where the customs administration has reasonable grounds for considering that the relationship between the seller and the producer influenced the price, the customs administration shall communicate the grounds to the producer, and that producer shall be given a reasonable opportunity to respond to the grounds communicated by the customs administra- tion. If that producer so requests, the customs administration shall communicate in writing the grounds on which it con- siders that the relationship between the seller and the producer influenced the price actually paid or payable. (2) Subsection (1) provides that, where the seller and the producer are related persons, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the value provided that the relationship between the seller and the producer did not influence the price actually paid or payable. It is not intended under subsection (1) that there should be an examination of the circumstances in all cases where the seller and the producer are related persons. Such an examination will only be required where the customs administration has doubts that the price actually paid or payable is acceptable because of the relationship between the seller and the producer. Where the customs administration does not have doubts that the price actually paid or payable is acceptable, it shall accept that price without requesting fur- ther information. For an illustration of this, the customs administration may have previously examined the relationship be- tween the seller and the producer, or it may already have detailed information concerning the relationship between the seller and the producer, and may already be satisfied from that examination or information that the relationship between them did not influence the price actually paid or payable. (3) In applying subsection (1), where the seller and the producer are related persons and the customs administration has doubts that the transaction value is acceptable without further inquiry, the customs administration shall give the producer an opportunity to supply such further information as may be necessary to enable it to examine the circumstances sur- rounding the sale. In such a case, the customs administration shall examine the relevant aspects of the sale, including the way in which the seller and the producer organize their commercial relations and the way in which the price actually paid or payable by that producer for the material being valued was arrived at, in order to determine whether the relation- ship between the seller and the producer influenced that price actually paid or payable. Where it can be shown that the seller and the producer buy from and sell to each other as if they were not related persons, the price actually paid or pay- able shall be considered as not having been influenced by the relationship between them. For an illustration of this, if the price actually paid or payable for the material had been settled in a manner consistent with the normal pricing practices of the industry in question or with the way in which the seller settles prices for sales to unrelated buyers, the price actually paid or payable shall be considered as not having been influenced by the relationship between the producer and the seller. For another illustration of this, where it is shown that the price actually paid or payable for the material is adequate to en- sure recovery of the total cost of producing the material plus a profit that is representative of the seller’s overall profit real- ized over a representative period of time, such as on an annual basis, in sales of materials of the same class or kind, the price actually paid or payable shall be considered as not having been influenced by the relationship between the seller and the producer. (4) In a sale between a seller and a producer who are related persons, the transaction value shall be accepted and deter- mined in accordance with section 2(1), wherever the seller or the producer demonstrates that the transaction value of the material in that sale closely approximates one of the following test values that occurs at or about the same time as the sale and is chosen by the seller or the producer: (a) the transaction value in sales to unrelated buyers of identical materials or similar materials, as determined in ac- cordance with section 2(1); (b) the value of identical materials or similar materials, as determined in accordance with section 9; or (c) the value of identical materials or similar materials, as determined in accordance with section 10. (5) In applying a test value referred to in subsection (4), due account shall be taken of demonstrated differences in com- mercial levels, quantity levels, the value of the elements specified in section 5(1)(b) and the costs incurred by the seller in sales to unrelated buyers that are not incurred by the seller in sales by the seller to a related person. (6) The application of a test value referred to in subsection (4) shall be used at the initiative of the seller, or at the initia- tive of the producer with the consent of the seller, and shall be used only for comparison purposes to determine whether the transaction value of the material is acceptable. The test value shall not be used as the transaction value of that mate- rial. (7) Subsection (4) provides an opportunity for the seller or the producer to demonstrate that the transaction value closely approximates a test value previously accepted by the customs administration of the NAFTA country in which the pro- ducer is located, and is therefore acceptable under subsection (1). Where the application of a test value under subsection (4) demonstrates that the transaction value of the material being valued is acceptable, the customs administration shall not examine the question of influence in regard to the relationship between the seller and the producer under subsection (1). Where the customs administration already has sufficient information available, without further inquiries, that the trans- action value closely approximates one of the test values determined under subsection (4), the seller or the producer is not required to apply a test value to demonstrate that the transaction value is acceptable under that subsection. (8) A number of factors must be taken into consideration for the purpose of determining whether the transaction value of the identical materials or similar materials closely approximates the transaction value of the material being valued. These factors include the nature of the material, the nature of the industry itself, the season in which the material is sold, and whether the difference in values is commercially significant. Since these factors may vary from case to case, it would be impossible to apply an acceptable standardized difference such as a fixed amount or fixed percentage difference in each case. For an illustration of this, a small difference in value in a case involving one type of material could be unacceptable, while a large difference in a case involving another type of material might be acceptable for the purposes of determining whether the transaction value closely approximates a test value set out in subsection (4). 46448 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations SECTION 4. (1) The price actually paid or payable is the total payment made or to be made by the producer to or for the benefit of the seller of the material. The payment need not necessarily take the form of a transfer of money: it may be made by letters of credit or negotiable instruments. Payment may be made directly or indirectly to the seller. For an illustration of this, the settlement by the producer, whether in whole or in part, of a debt owed by the seller, is an indirect payment. (2) Activities undertaken by the producer on the producer’s own account, other than those for which an adjustment is pro- vided in section 5, shall not be considered to be an indirect payment, even though the activities might be regarded as being for the benefit of the seller. (3) The transaction value shall not include charges for construction, erection, assembly, maintenance or technical assist- ance related to the use of the material by the producer, provided that they are distinguished from the price actually paid or payable. (4) The flow of dividends or other payments from the producer to the seller that do not relate to the purchase of the mate- rial are not part of the transaction value. SECTION 5. (1) In determining the transaction value of the material, the following shall be added to the price actually paid or payable: (a) to the extent that they are incurred by the producer with respect to the material being valued and are not included in the price actually paid or payable, (i) commissions and brokerage fees, except buying commissions, and (ii) the costs of containers which, for customs purposes, are classified with the material under the Harmonized System; (b) the value, reasonably allocated in accordance with subsection (12), of the following elements where they are sup- plied directly or indirectly to the seller by the producer free of charge or at reduced cost for use in connection with the production and sale of the material, to the extent that the value is not included in the price actually paid or pay- able: (i) a material, other than an indirect material, used in the production of the material being valued, (ii) tools, dies, molds and similar indirect materials used in the production of the material being valued, (iii) an indirect material, other than those referred to in subparagraph (ii) or in paragraphs (c), (e) or (f) of the defi- nition ‘‘indirect material’’ set out in Article 415 of the Agreement, as implemented by section 2(1) of this Appen- dix, used in the production of the material being valued, and (iv) engineering, development, artwork, design work, and plans and sketches performed outside the territory of the NAFTA country in which the producer is located that are necessary for the production of the material being valued; (c) the royalties related to the material, other than charges with respect to the right to reproduce the material in the territory of the NAFTA country in which the producer is located that the producer must pay directly or indirectly as a condition of sale of the material, to the extent that such royalties are not included in the price actually paid or pay- able; and (d) the value of any part of the proceeds of any subsequent disposal or use of the material that accrues directly or in- directly to the seller. (2) The additions referred to in subsection (1) shall be made to the price actually paid or payable under this section only on the basis of objective and quantifiable data. (3) Where objective and quantifiable data do not exist with regard to the additions required to be made to the price actu- ally paid or payable under subsection (1), the transaction value cannot be determined under section 2(1). (4) No additions shall be made to the price actually paid or payable for the purpose of determining the transaction value except as provided in this section. (5) The amounts to be added under subsection (1)(a) shall be those amounts that are recorded on the books of the pro- ducer. (6) The value of the elements referred to in subsection (1)(b)(i) shall be (a) where the elements are imported from outside the territory of the NAFTA country in which the seller is located, the customs value of the elements, (b) where the producer, or a related person on behalf of the producer, purchases the elements from an unrelated per- son in the territory of the NAFTA country in which the seller is located, the price actually paid or payable for the ele- ments, (c) where the producer, or a related person on behalf of the producer, acquires the elements from an unrelated person in the territory of the NAFTA country in which the seller is located other than through a purchase, the value of the consideration related to the acquisition of the elements, based on the cost of the consideration that is recorded on the books of the producer or the related person, or (d) where the elements are produced by the producer, or by a related person, in the territory of the NAFTA country in which the seller is located, the total cost of the elements, determined in accordance with subsection (7), and shall include the following costs, that are recorded on the books of the producer or the related person supplying the elements on behalf of the producer, to the extent that such costs are not included under paragraph (a) through (d): (e) the costs of freight, insurance, packing, and all other costs incurred in transporting the elements to the location of the seller, (f) duties and taxes paid or payable with respect to the elements, other than duties and taxes that are waived, re- funded, refundable or otherwise recoverable, including credit against duty or tax paid or payable, (g) customs brokerage fees, including the cost of in-house customs brokerage services, incurred with respect to the ele- ments, and (h) the cost of waste and spoilage resulting from the use of the elements in the production of the material, minus the value of reusable scrap or by-product. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46449 (7) For the purposes of subsection (6)(d), the total cost of the elements referred to in subsection (1)(b)(i) shall be (a) where the elements are produced by the producer, at the choice of the producer, (i) the total cost incurred with respect to all goods produced by the producer, calculated on the basis of the costs that are recorded on the books of the producer, that can be reasonably allocated to the elements in accordance with Schedule VII, or (ii) the aggregate of each cost incurred by the producer that forms part of the total cost incurred with respect to the elements, calculated on the basis of the costs that are recorded on the books of the producer, that can be rea- sonably allocated to the elements in accordance with Schedule VII; and (b) where the elements are produced by a person who is related to the producer, at the choice of the producer, (i) the total cost incurred with respect to all goods produced by that related person, calculated on the basis of the costs that are recorded on the books of that person, that can be reasonably allocated to the elements in accordance with Schedule VII, or (ii) the aggregate of each cost incurred by that related person that forms part of the total cost incurred with respect to the elements, calculated on the basis of the costs that are recorded on the books of that person, that can be rea- sonably allocated to the elements in accordance with Schedule VII. (8) Except as provided in subsections (10) and (11), the value of the elements referred to in subsections (1)(b)(ii) through (iv) shall be (a) the cost of those elements that is recorded on the books of the producer; or (b) where such elements are provided by another person on behalf of the producer and the cost is not recorded on the books of the producer, the cost of those elements that is recorded on the books of that other person. (9) Where the elements referred to in subsections (1)(b)(ii) through (iv) were previously used by or on behalf of the pro- ducer, the value of the elements shall be adjusted downward to reflect that use. (10) Where the elements referred to in subsections (1)(b)(ii) and (iii) were leased by the producer or a person related to the producer, the value of the elements shall be the cost of the lease that is recorded on the books of the producer or that re- lated person. (11) No addition shall be made to the price actually paid or payable for the elements referred to in subsection (1)(b)(iv) that are available in the public domain, other than the cost of obtaining copies of them. (12) The producer shall choose the method of allocating to the material the value of the elements referred to in subsections (1)(b)(ii) through (iv), provided that the value is reasonably allocated to the material in a manner appropriate to the cir- cumstances. The methods the producer may choose to allocate the value include allocating the value over the number of units produced up to the time of the first shipment or allocating the value over the entire anticipated production where contracts or firm commitments exist for that production. For an illustration of this, a producer provides the seller with a mold to be used in the production of the material and contracts with the seller to buy 10,000 units of that material. By the time the first shipment of 1,000 units arrives, the seller has already produced 4,000 units. In these circumstances, the pro- ducer may choose to allocate the value of the mold over 4,000 units or 10,000 units but shall not choose to allocate the value of the elements to the first shipment of 1,000 units. The producer may choose to allocate the entire value of the ele- ments to a single shipment of material only where that single shipment comprises all of the units of the material acquired by the producer under the contract or commitment for that number of units of the material between the seller and the pro- ducer. (13) The addition for the royalties referred to in subsection (1)(c) shall be the payment for the royalties that is recorded on the books of the producer, or where the payment for the royalties is recorded on the books of another person, the payment for the royalties that is recorded on the books of that other person. (14) The value of the proceeds referred to in subsection (1)(d) shall be the amount that is recorded for such proceeds on the books of the producer or the seller. SECTION 6. (1) If there is no transaction value under section 2(2) or the transaction value is unacceptable under section 2(3), the value of the material, referred to in Article 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be the transaction value of identical materials sold, at or about the same time as the material being valued was shipped to the producer, to a buyer located in the same country as the producer. (2) In applying this section, the transaction value of identical materials in a sale at the same commercial level and in sub- stantially the same quantity of materials as the material being valued shall be used to determine the value of the material. Where no such sale is found, the transaction value of identical materials sold at a different commercial level or in different quantities, adjusted to take into account the differences attributable to the commercial level or quantity, shall be used, pro- vided that such adjustments can be made on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate, whether the adjustment leads to an increase or a decrease in the value. (3) A condition for adjustment under subsection (2) because of different commercial levels or different quantities is that such adjustment be made only on the basis of evidence that clearly establishes that an adjustment is reasonable and accu- rate. For an illustration of this, a bona fide price list contains prices for different quantities. If the material being valued consists of a shipment of 10 units and the only identical materials for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller’s bona fide price list and using the price applicable to a sale of 10 units. This does not require that sales had to have been made in quantities of 10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence of such an objective measure, however, the determination of a value under this section is not appropriate. (4) If more than one transaction value of identical materials is found, the lowest such value shall be used to determine the value of the material under this section. SECTION 7. 46450 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (1) If there is no transaction value under section 2(2) or the transaction value is unacceptable under section 2(3), and the value of the material cannot be determined under section 6, the value of the material, referred to in Article 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be the transaction value of similar ma- terials sold, at or about the same time as the material being valued was shipped to the producer, to a buyer located in the same country as the producer. (2) In applying this section, the transaction value of similar materials in a sale at the same commercial level and in sub- stantially the same quantity of materials as the material being valued shall be used to determine the value of the material. Where no such sale is found, the transaction value of similar materials sold at a different commercial level or in different quantities, adjusted to take into account the differences attributable to the commercial level or quantity, shall be used, pro- vided that such adjustments can be made on the basis of evidence that clearly establishes that the adjustment is reasonable and accurate, whether the adjustment leads to an increase or a decrease in the value. (3) A condition for adjustment under subsection (2) because of different commercial levels or different quantities is that such adjustment be made only on the basis of evidence that clearly establishes that an adjustment is reasonable and accu- rate. For an illustration of this, a bona fide price list contains prices for different quantities. If the material being valued consists of a shipment of 10 units and the only similar materials for which a transaction value exists involved a sale of 500 units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller’s bona fide price list and using the price applicable to a sale of 10 units. This does not require that sales had to have been made in quantities of 10 as long as the price list has been established as being bona fide through sales at other quantities. In the absence of such an objective measure, however, the determination of a value under this section is not appropriate. (4) If more than one transaction value of similar materials is found, the lowest such value shall be used to determine the value of the material under this section. SECTION 8. If there is no transaction value under section 2(2) or the transaction value is unacceptable under section 2(3), and the value of the material cannot be determined under section 6 or 7, the value of the material, referred to in Article 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be determined under section 9 or, when the value cannot be determined under that section, under section 10 except that, at the request of the producer, the order of application of sections 9 and 10 shall be reversed. SECTION 9. (1) Under this section, if identical materials or similar materials are sold in the territory of the NAFTA country in which the producer is located, in the same condition as the material was in when received by the producer, the value of the ma- terial, referred to in Article 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be based on the unit price at which those identical materials or similar materials are sold, in the greatest aggregate quantity by the producer or, where the producer does not sell those identical materials or similar materials, by a person at the same trade level as the producer, at or about the same time as the material being valued is received by the producer, to persons located in that territory who are not related to the seller, subject to deductions for the following: (a) either the amount of commissions usually earned or the amount generally reflected for profit and general expenses, in connection with sales, in the territory of that NAFTA country, of materials of the same class or kind as the material being valued; and (b) taxes, if included in the unit price, payable in the territory of that NAFTA country, which are either waived, re- funded or recoverable by way of credit against taxes actually paid or payable. (2) If neither identical materials nor similar materials are sold at or about the same time the material being valued is re- ceived by the producer, the value shall, subject to the deductions provided for under subsection (1), be based on the unit price at which identical materials or similar materials are sold in the territory of the NAFTA country in which the pro- ducer is located, in the same condition as the material was in when received by the producer, at the earliest date within 90 days after the date the material being valued was received by the producer. (3) The expression ‘‘unit price at which those identical materials or similar materials are sold, in the greatest aggregate quantity’’ in subsection (1) means the price at which the greatest number of units is sold in sales between unrelated per- sons. For an illustration of this, materials are sold from a price list which grants favorable unit prices for purchases made in larger quantities. Total quantity Sale quantity Unit price Number of sales sold at each price 1±10 units ...... 100 10 sales of 5 units ...... 65 ...... 5 sales of 3 units ...... 11±25 units ...... 95 5 sales of 11 units ...... 55 ...... 1 sale of 20 units ...... Over 25 units ...... 90 1 sale of 30 units ...... 80 ...... 1 sale of 50 units ...... The greatest number of units sold at a particular price is 80; therefore, the unit price in the greatest aggregate quantity is 90. As another illustration of this, two sales occur. In the first sale 500 units are sold at a price of 95 currency units each. In the second sale 400 units are sold at a price of 90 currency units each. In this illustration, the greatest number of units sold at a particular price is 500; therefore, the unit price in the greatest aggregate quantity is 95. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46451 (4) Any sale to a person who supplies, directly or indirectly, free of charge or at reduced cost for use in connection with the production of the material, any of the elements specified in section 5(1)(b), shall not be taken into account in establish- ing the unit price for the purposes of this section. (5) The amount generally reflected for profit and general expenses referred to in subsection (1)(a) shall be taken as a whole. The figure for the purposes of deducting an amount for profit and general expenses shall be determined on the basis of information supplied by or on behalf of the producer unless the figures provided by the producer are inconsistent with those usually reflected in sales, in the country in which the producer is located, of materials of the same class or kind as the material being valued. Where the figures provided by the producer are inconsistent with those figures, the amount for profit and general expenses shall be based on relevant information other than that supplied by or on behalf of the producer. (6) For the purposes of this section, general expenses are the direct and indirect costs of marketing the material in ques- tion. (7) In determining either the commissions usually earned or the amount generally reflected for profit and general expenses under this section, the question as to whether certain materials are materials of the same class or kind as the material being valued shall be determined on a case-by-case basis with reference to the circumstances involved. Sales in the coun- try in which the producer is located of the narrowest group or range of materials of the same class or kind as the material being valued, for which the necessary information can be provided, shall be examined. For the purposes of this section, ‘‘materials of the same class or kind’’ includes materials imported from the same country as the material being valued as well as materials imported from other countries or acquired within the territory of the NAFTA country in which the pro- ducer is located. (8) For the purposes of subsection (2), the earliest date shall be the date by which sales of identical materials or similar materials are made, in sufficient quantity to establish the unit price, to other persons in the territory of the NAFTA coun- try in which the producer is located. SECTION 10. (1) Under this section, the value of a material, referred to in Article 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be the sum of (a) the cost or value of the materials used in the production of the material being valued, as determined on the basis of the costs that are recorded on the books of the producer of the material, (b) the cost of producing the material being valued, as determined on the basis of the costs that are recorded on the books of the producer of the material, and (c) an amount for profit and general expenses equal to that usually reflected in sales (i) where the material being valued is imported by the producer into the territory of the NAFTA country in which the producer is located, to persons located in the territory of the NAFTA country in which the producer is located by producers of materials of the same class or kind as the material being valued who are located in the country in which the material is produced, and (ii) where the material being valued is acquired by the producer from another person located in the territory of the NAFTA country in which the producer is located, to persons located in the territory of the NAFTA country in which the producer is located by producers of materials of the same class or kind as the material being valued who are located in the country in which the producer is located, (d) the value of elements referred to in section 5(1)(b)(i), determined in accordance with section 5(6), and (e) the value of elements referred to in sections 5(1)(b)(ii) through (iv), determined in accordance with section 5(8) and reasonably allocated to the material in accordance with section 5(12). (2) For purposes of subsections (1)(a) and (b), where the costs recorded on the books of the producer of the material relate to the production of other goods and materials as well as to the production of the material being valued, the costs referred to in subsections (1)(a) and (b) with respect to the material being valued shall be those costs recorded on the books of the producer of the material that can be reasonably allocated to that material in accordance with Schedule VII. (3) The amount for profit and general expenses referred to in subsection (1)(c) shall be determined on the basis of informa- tion supplied by or on behalf of the producer of the material being valued unless the profit and general expenses figures that are supplied with that information are inconsistent with those usually reflected in sales by producers of materials of the same class or kind as the material being valued who are located in the country in which the material is produced or the producer is located, as the case may be. The information supplied shall be prepared in a manner consistent with gen- erally accepted accounting principles of the country in which the material being valued is produced. Where the material is produced in the territory of a NAFTA country, the information shall be prepared in accordance with the Generally Accept- ed Accounting Principles set out in the authorities listed for that NAFTA country in Schedule XII. (4) For purposes of subsection (1)(c) and subsection (3), general expenses means the direct and indirect costs of producing and selling the material that are not included under subsections (1)(a) and (b). (5) For purposes of subsection (3), the amount for profit and general expenses shall be taken as a whole. Where, in the in- formation supplied by or on behalf of the producer of a material, the profit figure is low and the general expenses figure is high, the profit and general expense figures taken together may nevertheless be consistent with those usually reflected in sales of materials of the same class or kind as the material being valued. Where the producer of a material can demonstrate that it is taking a nil or low profit on its sales of the material because of particular commercial circumstances, its actual profit and general expense figures shall be taken into account, provided that the producer of the material has valid com- mercial reasons to justify them and its pricing policy reflects usual pricing policies in the branch of industry concerned. For an illustration of this, such a situation might occur where producers have been forced to lower prices temporarily be- cause of an unforeseeable drop in demand, or where the producers sell the material to complement a range of materials and goods being produced in the country in which the material is sold and accept a low profit to maintain competitive- ness. A further illustration is where a material was being launched and the producer accepted a nil or low profit to offset high general expenses associated with the launch. 46452 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (6) Where the figures for the profit and general expenses supplied by or on behalf of the producer of the material are not consistent with those usually reflected in sales of materials of the same class or kind as the material being valued that are made by other producers in the country in which that material is sold, the amount for profit and general expenses may be based on relevant information other than that supplied by or on behalf of the producer of the material. (7) Where a customs administration uses information other than that supplied by or on behalf of the producer of the mate- rial for the purposes of determining the value of a material under this section, the customs administration shall commu- nicate to the producer, if that producer so requests, the source of such information, the data used and the calculations based upon such data, subject to the provisions on confidentiality under Article 507 of the Agreement, as implemented in each NAFTA country. (8) Whether certain materials are of the same class or kind as the material being valued shall be determined on a case-by- case basis with reference to the circumstances involved. For purposes of determining the amount for profit and general ex- penses usually reflected under the provisions of this section, sales of the narrowest group or range of materials of the same class or kind, which includes the material being valued, for which the necessary information can be provided, shall be ex- amined. For the purposes of this section, the materials of the same class or kind must be from the same country as the ma- terial being valued. SECTION 11. (1) Where there is no transaction value under section 2(2) or the transaction value is unacceptable under section 2(3), and the value of the materials cannot be determined under sections 6 through 10, the value of the material, referred to in Arti- cle 402(9)(b) of the Agreement, as implemented by section 7(1)(b)(ii) of Part IV of this Appendix, shall be determined under this section using reasonable means consistent with the principles and general provisions of this Schedule and on the basis of data available in the country in which the producer is located. (2) The value of the material determined under this section shall not be determined on the basis of (a) a valuation system which provides for the acceptance of the higher of two alternative values; (b) a cost of production other than the value determined in accordance with section 10; (c) minimum values; (d) arbitrary or fictitious values; (e) where the material is produced in the territory of the NAFTA country in which the producer is located, the price of the material for export from that territory; or (f) where the material is imported, the price of the material for export to a country other than to the territory of the NAFTA country in which the producer is located. (3) To the greatest extent possible, the value of the material determined under this section shall be based on the methods of valuation set out in sections 2 through 10, but a reasonable flexibility in the application of such methods would be in conformity with the aims and provisions of this section. For an illustration of this, under section 6, the requirement that the identical materials should be sold at or about the same time as the time the material being valued is shipped to the producer could be flexibly interpreted. Similarly, identical materials produced in a country other than the country in which the material is produced could be the basis for determining the value of the material, or the value of identical mate- rials already determined under section 9 could be used. For another illustration, under section 7, the requirement that the similar materials should be sold at or about the same time as the material being valued are shipped to the producer could be flexibly interpreted. Likewise, similar materials produced in a country other than the country in which the material is produced could be the basis for determining the value of the material, or the value of similar materials already determined under the provisions of section 9 could be used. For a further illustration, under section 9, the ninety days requirement could be administered flexibly. SCHEDULE IX METHODS FOR DETERMINING THE VALUE OF NON-ORIGINATING MATERIALS THAT ARE IDENTICAL MATERIALS AND THAT ARE USED IN THE PRODUCTION OF A GOOD Definitions and Interpretation SECTION 1. Definitions. For purposes of this Schedule, ‘‘FIFO method’’ means the method by which the value of non-originating materials first received in materials inventory, determined in accordance with section 7 of this Appendix, is considered to be the value of non-originating materials used in the production of the good first shipped to the buyer of the good; ‘‘identical materials’’ means, with respect to a material, materials that are the same as that material in all respects, includ- ing physical characteristics, quality and reputation but excluding minor differences in appearance; ‘‘LIFO method’’ means the method by which the value of non-originating materials last received in materials inventory, determined in accordance with section 7 of this Appendix, is considered to be the value of non-originating materials used in the production of the good first shipped to the buyer of the good; ‘‘materials inventory’’ means, with respect to a single plant of the producer of a good, an inventory of non-originating ma- terials that are identical materials and that are used in the production of the good; and ‘‘rolling average method’’ means the method by which the value of non-originating materials used in the production of a good that is shipped to the buyer of the good is based on the average value, calculated in accordance with section 4, of the non-originating materials in materials inventory. General SECTION 2. For purposes of sections 5(11) and (12) and 6(10) of this Appendix, the following are the methods for determining the value of non-originating materials that are identical materials and are used in the production of a good: (a) FIFO method; (b) LIFO method; and Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46453 (c) rolling average method. SECTION 3. (1) Where a producer of a good chooses, with respect to non-originating materials that are identical materials, any of the methods referred to in section 2, the producer may not use another of those methods with respect to any other non-origi- nating materials that are identical materials and that are used in the production of that good or in the production of any other good. (2) Where a producer of a good produces the good in more than one plant, the method chosen by the producer shall be used with respect to all plants of the producer in which the good is produced. (3) The method chosen by the producer to determine the value of non-originating materials may be chosen at any time during the producer’s fiscal year and may not be changed during that fiscal year. Average Value for Rolling Average Method SECTION 4. (1) The average value of non-originating materials that are identical materials and that are used in the production of a good that is shipped to the buyer of the good is calculated by dividing (a) the total value of non-originating materials that are identical materials in materials inventory prior to the shipment of the good, determined in accordance with section 7 of this Appendix, by (b) the total units of those non-originating materials in materials inventory prior to the shipment of the good. (2) The average value calculated under subsection (1) is applied to the remaining units of non-originating materials in ma- terials inventory. ADDENDUM ‘‘EXAMPLES’’ ILLUSTRATING THE APPLICATION OF THE METHODS FOR DETERMINING THE VALUE OF NON- ORIGINATING MATERIALS THAT ARE IDENTICAL MATERIALS AND THAT ARE USED IN THE PRODUCTION OF A GOOD The following ‘‘examples’’ are based on the figures set out in the table below and on the following assumptions: (a) Materials A are non-originating materials that are identical materials that are used in the production of Good A; (b) one unit of Materials A is used to produce one unit of Good A; (c) all other materials used in the production of Good A are originating materials; and (d) Good A is produced in a single plant. Materials inventory Sales (Receipts of materials A) (Shipments of Date good A) (M/D/Y) Quantity Unit Quantity (units) cost * (units) 01/01/94 ...... 200 $1.05 ...... 01/03/94 ...... 1,000 1.00 ...... 01/05/94 ...... 1,000 1.10 ...... 01/08/94 ...... 500 01/09/94 ...... 500 01/10/94 ...... 1,000 1.05 ...... 01/14/94 ...... 1,500 01/16/94 ...... 2,000 1.10 ...... 01/18/94 ...... 1,500 * Unit cost is determined in accordance with section 7 of this Appendix. Example 1: FIFO method By applying the FIFO method: (1) the 200 units of Materials A received on 01/01/94 and valued at $1.05 per unit and 300 units of the 1,000 units of Material A received on 01/03/94 and valued at $1.00 per unit are considered to have been used in the production of the 500 units of Good A shipped on 01/ 08/94; therefore, the value of the non-originating materials used in the production of those goods is considered to be $510 [(200 unit × $1.05) + ($300 units × $1.00)]; (2) 500 units of the remaining 700 units of Materials A received on 01/03/94 and valued at $1.00 per unit are considered to have been used in the production of the 500 units of Good A shipped on 01/09/94; therefore, the value of the non-originating materials used in the production of those goods is considered to be $500 (500 units × $1.00); (3) the remaining 200 units of the 1,000 of Materials A received on 01/03/94 and valued at $1.00 per unit, the 1,000 units of Materials A received on 01/05/94 and valued at $1.10 per unit, and 300 units of the 1,000 Materials A received on 01/10/94 and valued at $1.05 per unit are considered to have been used in the production of the 1,500 units of Good A shipped on 01/14/94; therefore, the value of non- originating materials used in the production of those goods is considered to be $1,615 [(200 units × $1.00) + (1,000 units × $1.10) + (300 units × $1.05)]; and (4) the remaining 700 units of the 1,000 units of Materials A received on 01/10/94 and valued at $1.05 per unit and 800 units of the 2,000 units of Materials A received on 01/16/94 and valued at $1.10 per unit are considered to have been used in the production of the 1,500 units of Good A shipped on 01/18/94; therefore, the value of non-originating materials used in the production of those goods is consid- ered to be $1,615 [(700 × $1.05) + (800 × $1.10)]. Example 2: LIFO method By applying the LIFO method: (1) 500 units of the 1,000 units of Materials A received on 01/05/94 and valued at $1.10 per unit are considered to have been used in the production of the 500 units of Good A shipped on 01/08/94; therefore, the value of the non-originating materials used in the production of those goods is considered to be $550 (500 units × $1.10); 46454 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (2) the remaining 500 units of the 1,000 units of Materials A received on 01/05/94 and valued at $1.10 per unit are considered to have been used in the production of the 500 units of Good A shipped on 01/09/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $550 (500 units × $1.10); (3) the 1,000 units of Materials A received on 01/10/94 and valued at $1.05 per unit and 500 units of the 1,000 units of Material A re- ceived on 01/03/94 and valued at $1.00 per unit are considered to have been used in the production of the 1,500 units of Good A shipped on 01/14/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $1,550 [(1,000 units × $1.05) + (500 units × $1.00)]; and (4) 1,500 units of the 2,000 units of Materials A received on 01/16/94 and valued at $1.10 per unit are considered to have been used in the production of the 1,500 units of Good A shipped on 01/18/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $1,650 (1,500 units × $1.10). Example 3: Rolling average method The following table identifies the average value of non-originating Materials A as determined under the rolling average method. For purposes of this example, a new average value of non-originating Materials A is calculated after each receipt. Materials inventory Date Quantity (M/D/Y) (units) Unit cost* Total value Beginning Inventory ...... 1/1/94 200 $1.05 $210 Receipt ...... 1/3/94 1,000 1.00 1,000 AVERAGE VALUE ...... 1,200 1.008 1,210 Receipt ...... 1/5/94 1,000 1.10 1,100 AVERAGE VALUE ...... 2,200 1.05 2,310 Shipment ...... 1/8/94 500 1.05 525 AVERAGE VALUE ...... 1,700 1.05 1,785 Shipment ...... 1/9/94 500 1.05 525 AVERAGE VALUE ...... 1,200 1.05 1,260 Receipt ...... 1/16/94 2,000 1.10 2,200 AVERAGE VALUE ...... 3,200 1.08 3,460 * Unit cost is determined in accordance with section 7 of this Appendix. By applying the rolling average method: (1) the value of non-originating materials used in the production of the 500 units of Good A shipped on 01/08/94 is con- sidered to be $525 (500 units × $1.05); and (2) the value of non-originating materials used in the production of the 500 units of Good A shipped on 01/09/94 is con- sidered to be $525 (500 units × $1.05). SCHEDULE X INVENTORY MANAGEMENT METHODS PART I FUNGIBLE MATERIALS Definitions and Interpretation SECTION 1. Definitions. For purposes of this Part, ‘‘average method’’ means the method by which the origin of fungible materials withdrawn from materials inventory is based on the ratio, calculated under section 5, of originating materials and non-originating materials in materials inven- tory; ‘‘FIFO method’’ means the method by which the origin of fungible materials first received in materials inventory is consid- ered to be the origin of fungible materials first withdrawn from materials inventory; ‘‘LIFO method’’ means the method by which the origin of fungible materials last received in materials inventory is consid- ered to be the origin of fungible materials first withdrawn from materials inventory; ‘‘materials inventory’’ means, (a) with respect to a producer of a good, an inventory of fungible materials that are used in the production of the good, and (b) with respect to a person from whom the producer of the good acquired those fungible materials, an inventory from which fungible materials are sold or otherwise transferred to the producer of the good; ‘‘opening inventory’’ means the materials inventory at the time an inventory management method is chosen; ‘‘origin identifier’’ means any mark that identifies fungible materials as originating materials or non-originating materials. General SECTION 2. The inventory management methods for determining whether fungible materials referred to in section 7(16)(a) of this Appendix are originating materials are the following: (a) specific identification method; (b) FIFO method; (c) LIFO method; and (d) average method. SECTION 3. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46455 Where a producer of a good or a person from whom the producer acquired the materials that are used in the produc- tion of the good chooses an inventory management method referred to in section 2, that method, including the averaging period chosen in the case of the average method, shall be used from the time the choice is made until the end of the fiscal year of the producer or person. Specific Identification Method SECTION 4. (1) Except as otherwise provided under subsection (2), where the producer or person referred to in section 3 chooses the specific identification method, the producer or person shall physically segregate, in materials inventory, originating mate- rials that are fungible materials from non-originating materials that are fungible materials. (2) Where originating materials or non-originating materials that are fungible materials are marked with an origin identi- fier, the producer or person need not physically segregate those materials under subsection (1) if the origin identifier re- mains visible throughout the production of the good. Average Method SECTION 5. Where the producer or person referred to in section 3 chooses the average method, the origin of fungible materials withdrawn from materials inventory is determined on the basis of the ratio of originating materials and non-originating materials in materials inventory that is calculated under sections 6 through 8. SECTION 6. (1) Except as otherwise provided in sections 7 and 8, the ratio is calculated with respect to a month or three-month period, at the choice of the producer or person, by dividing (a) the sum of (i) the total units of originating materials or non-originating materials that are fungible materials and that were in materials inventory at the beginning of the preceding one-month or three-month period, and (ii) the total units of originating materials or non-originating materials that are fungible materials and that were re- ceived in materials inventory during that preceding one-month or three-month period, by (b) the sum of (i) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory at the beginning of the preceding one-month or three-month period, and (ii) the total units of originating materials and non-originating materials that are fungible materials and that were received in materials inventory during that preceding one-month or three-month period. (2) The ratio calculated with respect to a preceding month or three-month period under subsection (1) is applied to the fungible materials remaining in materials inventory at the end of the preceding month or three-month period. SECTION 7. (1) Where the good is subject to a regional value-content requirement and the regional value content is calculated under the net cost method and the producer or person chooses to average over a period under sections 6(15), 11(1), (3) or (6), 12(1) or 13(4) of this Appendix, the ratio is calculated with respect to that period by dividing (a) the sum of (i) the total units of originating materials or non-originating materials that are fungible materials and that were in materials inventory at the beginning of the period, and (ii) the total units of originating materials or non-originating materials that are fungible materials and that were re- ceived in materials inventory during that period, by (b) the sum of (i) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory at the beginning of the period, and (ii) the total units of originating materials and non-originating materials that are fungible materials and that were received in materials inventory during that period. (2) The ratio calculated with respect to a period under subsection (1) is applied to the fungible materials remaining in ma- terials inventory at the end of the period. SECTION 8. (1) Where the good is subject to a regional value-content requirement and the regional value content of that good is cal- culated under the transaction value method or the net cost method, the ratio is calculated with respect to each shipment of the good by dividing (a) the total units of originating materials or non-originating materials that are fungible materials and that were in ma- terials inventory prior to the shipment, by (b) the total units of originating materials and non-originating materials that are fungible materials and that were in materials inventory prior to the shipment. (2) The ratio calculated with respect to a shipment of a good under subsection (1) is applied to the fungible materials re- maining in materials inventory after the shipment. Manner of Dealing With Opening Inventory SECTION 9. (1) Except as otherwise provided under subsections (2) and (3), where the producer or person referred to in section 3 has fungible materials in opening inventory, the origin of those fungible materials is determined by (a) identifying, in the books of the producer or person, the latest receipts of fungible materials that add up to the amount of fungible materials in opening inventory; 46456 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (b) determining the origin of the fungible materials that make up those receipts; and (c) considering the origin of those fungible materials to be the origin of the fungible materials in opening inventory. (2) Where the producer or person chooses the specific identification method and has, in opening inventory, originating materials or non-originating materials that are fungible materials and that are marked with an origin identifier, the origin of those fungible materials is determined on the basis of the origin identifier. (3) The producer or person may consider all fungible materials in opening inventory to be non-originating materials. PART II FUNGIBLE GOODS Definitions and Interpretation SECTION 10. Definitions. For purposes of this Part, ‘‘average method’’ means the method by which the origin of fungible goods withdrawn from finished goods inventory is based on the ratio, calculated under section 12, of originating goods and non-originating goods in finished goods inven- tory; ‘‘FIFO method’’ means the method by which the origin of fungible goods first received in finished goods inventory is con- sidered to be the origin of fungible goods first withdrawn from finished goods inventory; ‘‘finished goods inventory’’ means an inventory from which fungible goods are sold or otherwise transferred to another person; ‘‘LIFO method’’ means the method by which the origin of fungible goods last received in finished goods inventory is con- sidered to be the origin of fungible goods first withdrawn from finished goods inventory; ‘‘opening inventory’’ means the finished goods inventory at the time an inventory management method is chosen; and ‘‘origin identifier’’ means any mark that identifies fungible goods as originating goods or non-originating goods. General SECTION 11. The inventory management methods for determining whether fungible goods referred to in section 7(16)(b) of this Ap- pendix are originating goods are the following: (a) specific identification method; (b) FIFO method; (c) LIFO method; and (d) average method. SECTION 12. Where an exporter of a good or a person from whom the exporter acquired the good chooses an inventory management method referred to in section 11, that method, including the averaging period chosen in the case of the average method, shall be used from the time the choice is made until the end of the fiscal year of the exporter or person. Specific Identification Method SECTION 13. (1) Except as provided under subsection (2), where the exporter or person referred to in section 12 chooses the specific identification method, the exporter or person shall physically segregate, in finished goods inventory, originating goods that are fungible goods from non-originating goods that are fungible goods. (2) Where originating goods or non-originating goods that are fungible goods are marked with an origin identifier, the ex- porter or person need not physically segregate those goods under subsection (1) if the origin identifier is visible on the fungible goods. Average Method SECTION 14. (1) Where the exporter or person referred to in section 12 chooses the average method, the origin of each shipment of fun- gible goods withdrawn from finished goods inventory during a month or three-month period, at the choice of the exporter or person, is determined on the basis of the ratio of originating goods and non-originating goods in finished goods inven- tory for the preceding one-month or three-month period that is calculated by dividing (a) the sum of (i) the total units of originating goods or non-originating goods that are fungible goods and that were in finished goods inventory at the beginning of the preceding one-month or three-month period, and (ii) the total units of originating goods or non-originating goods that are fungible goods and that were received in finished goods inventory during that preceding one-month or three-month period, by (b) the sum of (i) the total units of originating goods and non-originating goods that are fungible goods and that were in finished goods inventory at the beginning of the preceding one-month or three-month period, and (ii) the total units of originating goods and non-originating goods that are fungible goods and that were received in finished goods inventory during that preceding one-month or three-month period. (2) The calculation with respect to a preceding month or three-month period under subsection (1) is applied to the fun- gible goods remaining in finished goods inventory at the end of the preceding month or three-month period. Manner of Dealing with Opening Inventory SECTION 15. (1) Except as otherwise provided under subsections (2) and (3), where the exporter or person referred to in section 12 has fungible goods in opening inventory, the origin of those fungible goods is determined by Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46457 (a) identifying, in the books of the exporter or person, the latest receipts of fungible goods that add up to the amount of fungible goods in opening inventory; (b) determining the origin of the fungible goods that make up those receipts; and (c) considering the origin of those fungible goods to be the origin of the fungible goods in opening inventory. (2) Where the exporter or person chooses the specific identification method and has, in opening inventory, originating goods or non-originating goods that are fungible goods and that are marked with an origin identifier, the origin of those fungible goods is determined on the basis of the origin identifier. (3) The exporter or person may consider all fungible goods in opening inventory to be non-originating goods. ADDENDUM A ‘‘EXAMPLES’’ ILLUSTRATING THE APPLICATION OF THE INVENTORY MANAGEMENT METHODS TO DETERMINE THE ORIGIN OF FUNGIBLE MATERIALS The following ‘‘examples’’ are based on the figures set out in the table below and on the following assumptions: (a) originating Material A and non-originating Material A that are fungible materials are used in the production of Good A; (b) one unit of Material A is used to produce one unit of Good A; (c) Material A is only used in the production of Good A; (d) all other materials used in the production of Good A are originating materials; and (e) the producer of Good A exports all shipments of Good A to the territory of a NAFTA country. Materials inventory Sales (Receipts of material A) (Shipments of Date good A) (M/D/Y) Quantity Unit cost * Total value Quantity (units) (units) 12/18/93 ...... 100 (O 1) $1.00 $100 12/27/93 ...... 100 (N 2) 1.10 110 01/01/94 ...... 200 (OI 3) 01/01/94 ...... 1,000 (O) 1.00 1,000 01/05/94 ...... 1,000 (N) 1.10 1,100 01/10/94 ...... 100 01/10/94 ...... 1,000 (O) 1.05 1,050 01/15/94 ...... 700 01/16/94 ...... 2,000 (N) 1.10 2,200 01/20/94 ...... 1,000 01/23/94 ...... 900 * Unit cost is determined in accordance with section 7 of this Appendix. 1 ``O'' denotes originating materials. 2 ``N'' denotes non-originating materials. 3 ``OI'' denotes opening inventory. Example 1: FIFO method Good A is subject to a regional value-content requirement. Producer A is using the transaction value method to determine the regional value content of Good A. By applying the FIFO method: (1) the 100 units of originating Material A in opening inventory that were received in materials inventory on 12/18/93 are considered to have been used in the production of the 100 units of Good A shipped on 01/10/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $0; (2) the 100 units of non-originating Material A in opening inventory that were received in materials inventory on 12/27/93 and 600 units of the 1,000 units of originating Material A that were received in materials inventory on 01/01/94 are considered to have been used in the production of the 700 units of Good A shipped on 01/15/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $110 (100 units x $1.10); (3) the remaining 400 units of the 1,000 units of originating Material A that were received in materials inventory on 01/01/94 and 600 units of the 1,000 units of non-originating Material A that were received in materials inventory on 01/05/94 are considered to have been used in the production of the 1,000 units of Good A shipped on 01/20/94; therefore, the value of non-originating materials used in the production of those goods is considered to be $660 (600 units x $1.10); and (4) the remaining 400 units of the 1,000 units of non-originating Material A that were received in materials inventory on 01/05/94 and 500 units of the 1,000 units of originating Material A that were received in materials inventory on 01/10/94 are considered to have been used in the production of the 900 units of Good A shipped on 01/23/94; therefore, the value of non-originating materials used in the produc- tion of those goods is considered to be $440 (400 units x $1.10). Example 2: LIFO method Good A is subject to a change in tariff classification requirement and the non-originating Material A used in the production of Good A does not undergo the applicable change in tariff classification. Therefore, where originating Material A is used in the production of Good A, Good A is an originating good and, where non-originating Material A is used in the production of Good A, Good A is a non-originating good. By applying the LIFO method: (1) 100 units of the 1,000 units of non-originating Material A that were received in materials inventory on 01/05/94 are considered to have been used in the production of the 100 units of Good A shipped on 01/10/94; (2) 700 units of the 1,000 units of originating Material A that were received in materials inventory on 01/10/94 are considered to have been used in the production of the 700 units of Good A shipped on 01/15/94; (3) 1,000 units of the 2,000 units of non-originating Material A that were received in materials inventory on 01/16/94 are considered to have been used in the production of the 1,000 units of Good A shipped on 01/20/94; and 46458 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations (4) 900 units of the remaining 1,000 units of non-originating Material A that were received in materials inventory on 01/16/94 are consid- ered to have been used in the production of the 900 units of Good A shipped on 01/23/94. Example 3: Average method Good A is subject to an applicable regional value-content requirement. Producer A is using the transaction value method to determine the regional value content of Good A. Producer A determines the average value of non-originating Material A and the ratio of originating Material A to total value of originating Material A and non-originating Material A in the following table. Materials inventory Sales (Shipments Date (Receipts of material A) (Non-originating material) of good A) (M/D/Y) Quantity Quantity Quantity (units) Total value Unit cost * (units) Total value Ratio (units) Receipt ...... 12/18/93 100 (O 1) $100 $1.00 Receipt ...... 12/27/93 100 (N 2) 110 1.10 100 $110.00 NEW AVERAGE INV...... 200 (OI 3) 210 1.05 100 105.00 0.50 VALUE. Receipt ...... 01/01/94 1,000 (O) 1,000 1.00 NEW AVERAGE INV...... 1,200 1,210 1.01 100 101.00 0.08 VALUE. Receipt ...... 01/05/94 1,000 (N) 1,100 1.10 1,000 1,100.00 NEW AVERAGE INV...... 2,200 2,310 1.05 1,100 1,155.00 0.50 VALUE. Shipment ...... 01/10/94 (100) (105) 1.05 (50) (52.50) ...... 100 Receipt ...... 01/10/94 1,000 (O) 1,050 1.05 NEW AVERAGE INV...... 3,100 3,255 1.05 1,050 1,102.50 0.34 VALUE. Shipment ...... 01/15/94 (700) (735) 1.05 (238) (249.90) ...... 700 Receipt ...... 01/16/94 2,000 (N) 2,200 1.10 2,000 2,000.00 NEW AVERAGE INV...... 4,400 4,720 1.07 2,816 3,013.20 0.64 VALUE. Shipment ...... 01/20/94 (1,000) (1,070) 1.07 (640) (648.80) ...... 1,000 Shipment ...... 01/23/94 (900) (963) 1.07 (576) (616.32) ...... 900 NEW AVERAGE INV...... 2,500 2,687 1.07 1,596 1,707.24 0.64 VALUE. * Unit cost is determined in accordance with section 7 of this Appendix. 1 ``O'' denotes originating materials. 2 ``N'' denotes non-originating materials. 3 ``OI'' denotes opening inventory. By applying the average method: (1) before the shipment of the 100 units of Material A on 01/10/94, the ratio of units of originating Material A to total units of Material A in materials inventory was .50 (1,100 units/2,200 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was .50 (1,100 units/2,200 units); based on those ratios, 50 units (100 units × .50) of originating Material A and 50 units (100 units × .50) of non-originating Material A are considered to have been used in the production of the 100 units of Good A shipped on 01/10/94; therefore, the value of non-originating Material A used in the production of those goods is considered to be $52.50 [100 units × $1.05 (average unit value) × .50]; the ratios are applied to the units of Material A remaining in materials inventory after the shipment: 1,050 units (2,100 units × .50) are considered to be originating materials and 1,050 units (2,100 units × .50) are considered to be non-originating materials; (2) before the shipment of the 700 units of Good A on 01/15/94, the ratio of units of originating Material A to total units of Material A in materials inventory was 66% (2,050 units/3,100 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 34% (1,050 units/3,100 units); based on those ratios, 462 units (700 units × .66) of originating Material A and 238 units (700 units × .34) of non-originating Material A are considered to have been used in the production of the 700 units of Good A shipped on 01/15/94; therefore, the value of non-originating Material A used in the production of those goods is considered to be $249.90 [700 units × $1.05 (average unit value) × 34%]; the ratios are applied to the units of Material A remaining in materials inventory after the shipment: 1,584 units (2,400 units × .66) are considered to be originating materials and 816 units (2,400 units × .34) are considered to be non-originating materials; (3) before the shipment of the 1,000 units of Material A on 01/20/94, the ratio of units of originating Material A to total units of Material A in materials inventory was 36% (1,584 units/4,400 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 64% (2,816 units/4,400 units); based on those ratios, 360 units (1,000 units × .36) of originating Material A and 640 units (1,000 units × .64) of non-originating Material A are considered to have been used in the production of the 1,000 units of Good A shipped on 01/20/94; therefore, the value of non-originating Material A used in the production of those goods is considered to be $684.80 [1,000 units × $1.07 (average unit value) × 64%]; those ratios are applied to the units of Material A remaining in materials inven- tory after the shipment: 1,224 units (3,400 units × .36) are considered to be originating materials and 2,176 units (3,400 units × .64) are considered to be non-originating materials; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46459 (4) before the shipment of the 900 units of Good A on 01/23/94, the ratio of units of originating Material A to total units of Material A in materials inventory was 36% (1,224 units/3,400 units) and the ratio of units of non-originating Material A to total units of Material A in materials inventory was 64% (2,176 units/3,400 units; based on those ratios, 324 units (900 units × .36) of originating Material A and 576 units (900 units × .64) of non-originating Material A are considered to have been used in the production of the 900 units of Good A shipped on 01/23/94; therefore, the value of non-originating Material A used in the production of those goods is considered to be $616.32 [900 units × $1.07 (average unit value) × 64%]; those ratios are applied to the units of Material A remaining in materials inventory after the shipment: 900 units (2,500 units × .36) are considered to be originating materials and 1,600 units (2,500 units × .64) are considered to be non-originating materials. Example 4: Average method Good A is subject to an applicable regional value-content requirement. Producer A is using the net cost method and is averaging over a period of one month under section 6(15)(a) of this Appendix to determine the regional value content of Good A. By applying the average method: the ratio of units of originating Material A to total units of Material A in materials inventory for January 1994 is 40.4% (2,100 units/ 5,200 units); based on that ratio, 1,091 units (2,700 units × .404) of originating Material A and 1,609 units (2,700 units-1,091 units) of non-originat- ing Material A are considered to have been used in the production of the 2,700 units of Good A shipped in January 1994; therefore, the value of non-originating materials used in the production of those goods is considered to be $0.64 per unit [$5,560 (total value of Material A in materials inventory)/ $5,200 (units of Material A in materials inventory) = $1.07 (average unit value) × (1-.404)] or $1,728 ($0.64 × 2,700 units); and that ratio is applied to the units of Material A remaining in materials inventory on January 31, 1994: 1,010 units (2,500 units × .404) are considered to be originating materials and 1,490 units (2,500 units-1,010 units) are considered to be non-originating materials. ADDENDUM B ‘‘EXAMPLES’’ ILLUSTRATING THE APPLICATION OF THE INVENTORY MANAGEMENT METHODS TO DETERMINE THE ORIGIN OF FUNGIBLE GOODS The following ‘‘examples’’ are based on the figures set out in the table below and on the assumption that Exporter A acquires originating Good A and non-originating Good A that are fungible goods and physically combines or mixes Good A before exporting those goods to the buyer of those goods. Finished goods inven- Sales (shipments of Date (M/D/Y) tory (receipts of good A) good A) Quantity (units) Quantity (units) 12/18/93 ...... 100 (O 1) 12/27/93 ...... 100 (N 2) 01/01/94 ...... 200 (OI 3) 01/01/94 ...... 1,000 (O) 01/05/94 ...... 1,000 (N) 01/10/94 ...... 100 01/15/94 ...... 1,000 (O) 01/16/94 ...... 700 01/20/94 ...... 2,000 (N) 01/20/94 ...... 1,000 01/23/94 ...... 900 1 ``O'' denotes originating goods. 2 ``N'' denotes non-originating goods. 3 ``OI'' denotes opening inventory. Example 1: FIFO method By applying the FIFO method: (1) the 100 units of originating Good A in opening inventory that were received in finished goods inventory on 12/18/93 are considered to be the 100 units of Good A shipped on 01/10/94; (2) the 100 units of non-originating Good A in opening inventory that were received in finished goods inventory on 12/27/93 and 600 units of the 1,000 units of originating Good A that were received in finished goods inventory on 01/01/94 are considered to be the 700 units of Good A shipped on 01/15/94; (3) the remaining 400 units of the 1,000 units of originating Good A that were received in finished goods inventory on 01/01/94 and 600 units of the 1,000 units of non-originating Good A that were received in finished goods inventory on 01/05/94 are considered to be the 1,000 units of Good A shipped on 01/20/94; and (4) the remaining 400 units of the 1,000 units of non-originating Good A that were received in finished goods inventory on 01/05/94 and 500 units of the 1,000 units of originating Good A that were received in finished goods inventory on 01/10/94 are considered to be the 900 units of Good A shipped on 01/23/94. Example 2: LIFO method By applying the LIFO method: (1) 100 units of the 1,000 units of non-originating Good A that were received in finished goods inventory on 01/05/94 are considered to be the 100 units of Good A shipped on 01/10/94; (2) 700 units of the 1,000 units of originating Good A that were received in finished goods inventory on 01/10/94 are considered to be the 700 units of Good A shipped on 01/15/94; (3) 1,000 units of the 2,000 units of non-originating Good A that were received in finished goods inventory on 01/16/94 are considered to be the 1,000 units of Good A shipped on 01/20/94; and (4) 900 units of the remaining 1,000 units of non-originating Good A that were received in finished goods inventory on 01/16/94 are con- sidered to be the 900 units of Good A shipped on 01/23/94. Example 3: Average method 46460 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations Exporter A chooses to determine the origin of Good A on a monthly basis. Exporter A exported 3,000 units of Good A during the month of February 1994. The origin of the units of Good A exported during that month is determined on the basis of the preceding month, that is January 1994. By applying the average method: the ratio of originating goods to all goods in finished goods inventory for the month of January 1994 is 40.4% (2,100 units/5,200 units); based on that ratio, 1,212 units (3,000 units × .404) of Good A shipped in February 1994 are considered to be originating goods and 1,788 units (3,000 units ¥ 1,212 units) of Good A are considered to be non-originating goods; and that ratio is applied to the units of Good A remaining in finished goods inventory on January 31, 1994: 1,010 units (2,500 units × .404) are considered to be originating goods and 1,490 units (2,500 units ¥ 1,010 units) are considered to be non-originating goods. SCHEDULE XI METHOD FOR CALCULATING NON-ALLOWABLE INTEREST COSTS Definitions and Interpretation SECTION 1. Definitions. For purposes of this Schedule, ‘‘fixed-rate contract’’ means a loan contract, installment purchase contract or other financing agreement in which the inter- est rate remains constant throughout the life of the contract or agreement; ‘‘linear interpolation’’ means, with respect to the yield on federal government debt obligations, the application of the fol- lowing mathematical formula: A+[((B¥A)×(E¥D))/(C¥D)] where A is the yield on federal government debt obligations that are nearest in maturity but of shorter maturity than the weighted average principal maturity of the payment schedule under the fixed-rate contract or variable-rate con- tract to which they are being compared, B is the yield on federal government debt obligations that are nearest in maturity but of greater maturity than the weighted average principal maturity of that payment schedule, C is the maturity of federal government debt obligations that are nearest in maturity but of greater maturity than the weighted average principal maturity of that payment schedule, D is the maturity of federal government debt obligations that are nearest in maturity but of shorter maturity than the weighted average principal maturity of that payment schedule, and E is the weighted average principal maturity of that payment schedule; ‘‘payment schedule’’ means the schedule of payments, whether on a weekly, bi-weekly, monthly, yearly or other basis, of principal and interest, or any combination thereof, made by a producer to a lender in accordance with the terms of a fixed-rate contract or vari- able-rate contract; ‘‘variable-rate contract’’ means a loan contract, installment purchase contract or other financing agreement in which the in- terest rate is adjusted at intervals during the life of the contract or agreement in accordance with its terms; ‘‘weighted average principal maturity’’ means, with respect to fixed-rate contracts and variable-rate contracts, the number of years, or portion thereof, that is equal to the number obtained by (a) dividing the sum of the weighted principal payments, (i) in the case of a fixed-rate contract, by the original amount of the loan, and (ii) in the case of a variable-rate contract, by the principal balance at the beginning of the interest rate period for which the weighted principal payments were calculated, and (b) rounding the amount determined under paragraph (a) to the nearest single decimal place and, where that amount is the midpoint between two such numbers, to the greater of those two numbers; ‘‘weighted principal payment’’ means, (a) with respect to fixed-rate contracts, the amount determined by multiplying each principal payment under the con- tract by the number of years, or portion thereof, between the date the producer entered into the contract and the date of that principal payment, and (b) with respect to variable-rate contracts (i) the amount determined by multiplying each principal payment made during the current interest rate period by the number of years, or portion thereof, between the beginning of that interest rate period and the date of that payment, and (ii) the amount equal to the outstanding principal owing, but not necessarily due, at the end of the current interest rate period, multiplied by the number of years, or portion thereof, between the beginning and the end of that in- terest rate period; ‘‘yield on federal government debt obligations’’ means (a) in the case of a producer located in Canada, the yield for federal government debt obligations set out in the Bank of Canada’s Weekly Financial Statistics (i) where the interest rate is adjusted at intervals of less than one year, under the title ‘‘Treasury Bills’’, and (ii) in any other case, under the title ‘‘Selected Government of Canada benchmark bond yields’’, for the week that the producer entered into the contract or the week of the most recent interest rate adjustment date, if any, under the contract, (b) in the case of a producer located in Mexico, the yield for federal government debt obligations set out in La Seccion de Indicadores Monetarios, Financieros, y de Finanzas Publicas, de los Indicadores Economicos, published by the Banco de Mexico under the title ‘‘Certificados de la Tesoreria de la Federacion’’ for the week that the producer en- tered into the contract or the week of the most recent interest rate adjustment date, if any, under the contract, and (c) in the case of a producer located in the United States, the yield for federal government debt obligations set out in the Federal Reserve statistical release (H.15) Selected Interest Rates Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46461 (i) where the interest rate is adjusted at intervals of less than one year, under the title ‘‘U.S. government securities, Treasury bills, Secondary market’’, and (ii) in any other case, under the title ‘‘U.S. Government Securities, Treasury constant maturities’’, for the week that the producer entered into the contract or the week of the most recent interest rate adjustment date, if any, under the contract. General SECTION 2. For purposes of calculating non-allowable interest costs (a) with respect to a fixed-rate contract, the interest rate under that contract shall be compared with the yield on fed- eral government debt obligations that have maturities of the same length as the weighted average principal maturity of the payment schedule under the contract (that yield determined by linear interpolation, where necessary); (b) with respect to a variable-rate contract (i) in which the interest rate is adjusted at intervals of less than or equal to one year, the interest rate under that contract shall be compared with the yield on federal government debt obligations that have maturities closest in length to the interest rate adjustment period of the contract, and (ii) in which the interest rate is adjusted at intervals of greater than one year, the interest rate under the contract shall be compared with the yield on federal government debt obligations that have maturities of the same length as the weighted average principal maturity of the payment schedule under the contract (that yield determined by linear interpolation, where necessary); and (c) with respect to a fixed-rate or variable-rate contract in which the weighted average principal maturity of the pay- ment schedule under the contract is greater than the maturities offered on federal government debt obligations, the in- terest rate under the contract shall be compared to the yield on federal government debt obligations that have matu- rities closest in length to the weighted average principal maturity of the payment schedule under the contract. ADDENDUM ‘‘EXAMPLE’’ ILLUSTRATING THE APPLICATION OF THE METHOD FOR CALCULATING NON-ALLOWABLE INTEREST COSTS IN THE CASE OF A FIXED-RATE CONTRACT The following example is based on the figures set out in the table below and on the following assumptions: (a) a producer in a NAFTA country borrows $1,000,000 from a person of the same NAFTA country under a fixed-rate contract; (b) under the terms of the contract, the loan is payable in 10 years with interest paid at the rate of 6 percent per year on the declining principal balance; (c) the payment schedule calculated by the lender based on the terms of the contract requires the producer to make annual payments of principal and interest of $135,867.36 over the life of the contract; (d) there are no federal government debt obligations that have maturities equal to the 6-year weighted average prin- cipal maturity of the contract; and (e) the federal government debt obligations that are nearest in maturity to the weighted average principal maturity of the contract are of 5- and 7-year maturities, and the yields on them are 4.7 percent and 5.0 percent, respectively. Principal pay- Weighted principal Years of loan Principal balance 1 Interest payment 2 Payment schedule ment 3 payment 4 1 ...... $924,132.04 $60,000.00 $75,867.96 $135,867.96 $75,867.96 2 ...... 843,712.00 55,447.92 80,420.04 135,867.96 160,840.08 3 ...... 758,466.76 50,622.72 85,245.24 135,867.96 255,735.72 4 ...... 668,106.81 45,508.01 90,359.95 135,867.96 361,439.82 5 ...... 572,325.26 40,086.41 95,781.55 135,867.96 478,907.76 6 ...... 470,796.81 34,339.52 101,528.44 135,867.96 609,170.67 7 ...... 363,176.66 28,247.81 107,620.15 135,867.96 753,341.06 8 ...... 249,099.30 21,790.60 114,077.36 135,867.96 912,618.88 9 ...... 128,177.30 14,945.96 120,922.00 135,867.96 1,088,298.02 10 ...... (0.00) 7,690.66 128,177.32 135,867.96 1,281,773.22 ...... $5,977,993.19 1 The principal balance represents the loan balance at the end of each full year the loan is in effect and is calculated by subtracting the current year's principal payment from the prior year's ending loan balance. 2 Interest payments are calculated by multiplying the prior year's ending loan balance by the contract interest rate of 6 percent. 3 Principal payments are calculated by subtracting the current year's interest payments from the annual payment schedule amount. 4 The weighted principal payment is determined by, for each year of the loan, multiplying that year's principal payment by the number of years the loan had been in effect at the end of that year. 5 The weighted average principal maturity of the contract is calculated by dividing the sum of the weighted principal payments by the original loan amount and rounding the amount determined to the nearest decimal place. Weighted Average Principal Maturity $5,977,993.19/$1,000,000=5.977993 or 6 years 5 By applying the above method: (1) the weighted average principal maturity of the payment schedule under the 6 percent contract is 6 years; (2) the yields on the closest maturities for comparable federal government debt obligations of 5 years and 7 years are 4.7 percent and 5.0 percent, respectively; therefore, using linear interpolation, the yield on a federal government debt obligation that has a maturity equal to the weighted average principal maturity of the contract is 4.85 percent. This number is calculated as follows: 46462 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 4.7+[((5.0¥4.7)×(6¥5))/(7¥5)] =4.7+0.15 =4.85%; and (3) the producer’s contract interest rate of 6 percent is within 700 basis points of the 4.85 percent yield on the com- parable federal government debt obligation; therefore, none of the producer’s interest costs are considered to be non- allowable interest costs for purposes of the definition ‘‘non-allowable interest costs.’’ ‘‘EXAMPLE’’ ILLUSTRATING THE APPLICATION OF THE METHOD FOR CALCULATING NON-ALLOWABLE INTEREST COSTS IN THE CASE OF A VARIABLE-RATE CONTRACT The following example is based on the figures set out in the tables below and on the following assumptions: (a) a producer in a NAFTA country borrows $1,000,000 from a person of the same NAFTA country under a variable- rate contract; (b) under the terms of the contract, the loan is payable in 10 years with interest paid at the rate of 6 percent per year for the first two years and 8 percent per year for the next two years on the principal balance, with rates adjusted each two years after that; (c) the payment schedule calculated by the lender based on the terms of the contract requires the producer to make annual payments of principal and interest of $135,867.96 for the first two years of the loan, and of $146,818.34 for the next two years of the loan; (d) there are no federal government debt obligations that have maturities equal to the 1.9-year weighted average prin- cipal maturity of the first two years of the contract; (e) there are no federal government debt obligations that have maturities equal to the 1.9-year weighted average prin- cipal maturity of the third and fourth years of the contract; and (f) the federal government debt obligations that are nearest in maturity to the weighted average principal maturity of the contract are 1- and 2-year maturities, and the yields on them are 3.0 percent and 3.5 percent respectively. Weighted principal Beginning of year Principal balance Interest rate (%) Interest payment Principal payment Payment schedule payment 1 ...... $1,000,000.00 6.00 $60,000.00 $75,867.96 $135,867.96 $75,867.96 2 ...... 924,132.04 6.00 55,447.92 80,420.04 135,867.96 1,848,264.08 ...... $1,924,132.04 Weighted Average Principal Maturity $1,924,132.04/$1,000,000=1.92413204 or 1.9 years By applying the above method: (1) the weighted average principal maturity of the payment schedule of the first two years of the contract is 1.9 years; (2) the yield on the closest maturities of federal government debt obligations of 1 year and 2 years are 3.0 and 3.5 per- cent, respectively; therefore, using linear interpolation, the yield on a federal government debt obligation that has a maturity equal to the weighted average principal maturity of the payment schedule of the first two years of the con- tract is 3.45 percent. This amount is calculated as follows: 3.0+[((3.5¥3.0)×(1.9¥1.0))/(2.0¥1.0)] =3.0+0.45 =3.45%; and (3) the producer’s contract rate of 6 percent for the first two years of the loan is within 700 basis points of the 3.45 percent yield on federal government debt obligations that have maturities equal to the 1.9-year weighted average prin- cipal maturity of the payment schedule of the first two years of the producer’s loan contract; therefore, none of the producer’s interest costs are considered to be non-allowable interest costs for purposes of the definition ‘‘non-allow- able interest costs’’. Weighted principal Beginning of year Principal balance Interest rate (%) Interest payment Principal payment Payment schedule payment 1 ...... $1,000,000.00 6.00 $60,000.00 $75,867.96 $135,867.96 2 ...... 924,132.04 6.00 55,447.92 80,420.04 135,867.96 3 ...... 843,712.01 8.00 67,496.96 79,321.38 146,818.34 $79,321.38 4 ...... 764,390.62 8.00 61,151.25 85,667.09 146,818.34 1,528,781.24 $1,608,102.62 Weighted Average Principal Maturity $1,608,102.62/$843,712.01=1.905985 or 1.9 years By applying the above method: (1) the weighted average principal maturity of the payment schedule under the first two years of the contract is 1.9 years; Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46463 (2) the federal government debt obligations that are nearest in maturities to the weighted average principal maturity of the contract are 1- and 2-year maturities, and the yields on them are 3.0 and 3.5 percent, respectively; therefore, using linear interpolation, the yield on a federal government debt obligation that has a maturity equal to the weighted aver- age principal maturity of the payment schedule of the first two years of the contract is 3.45 percent. This amount is calculated as follows: 3.0+[((3.5¥3.0)×(1.9¥1.0))/(2.0¥1.0)] =3.0+0.45 =3.45% (3) the producer’s contract interest rate, for the third and fourth years of the loan, of 8 percent is within 700 basis points of the 3.45 percent yield on federal government debt obligations that have maturities equal to the 1.9-year weighted average principal maturity of the payment schedule under the third and fourth years of the producer’s loan contract; therefore, none of the producer’s interest costs are considered to be non-allowable interest costs for purposes of the definition ‘‘non-allowable interest costs’’. SCHEDULE XII GENERALLY ACCEPTED ACCOUNTING PRINCIPLES SECTION 1. Generally Accepted Accounting Principles means the recognized consensus or substantial authoritative support in the territory of a NAFTA country with respect to the recording of revenues, expenses, costs, assets and liabilities, disclosure of information and preparation of financial statements. These standards may be broad guidelines of general application as well as detailed standards, practices and procedures. SECTION 2. For purposes of Generally Accepted Accounting Principles, the recognized consensus or authoritative support are re- ferred to or set out in the following publications: (a) with respect to the territory of Canada, The Canadian Institute of Chartered Accountants Handbook, as updated from time to time; (b) with respect to the territory of Mexico, Los Principios de Contabilidad Generalmente Aceptados, issued by the Instituto Mexicano de Contadores Pu´ blicos A.C. (IMCP), including the boletines complementarios, as updated from time to time; and (c) with respect to the territory of the United States, (i) the following publications of the American Institute of Certified Public Accountants (AICPA), as updated from time to time: (A) AICPA Professional Standards, (B) Committee on Accounting Procedure Accounting Research Bulletins, (C) Accounting Principles Board Opinions and Statements, (D) APB Accounting and Auditing Guides, (E) AICPA Statements of Position, and (F) AICPA Issues Papers and Practice Bulletins, (ii) the following publications of the Financial Accounting Standards Board (FASB), as updated from time to time: (A) FASB Accounting Standards and Interpretations, (B) FASB Technical Bulletins, and (C) FASB Concepts Statements. PART 191ÐDRAWBACK 1. The general authority citation for Part 191 is revised to read as follows: Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States), 1313, 1624. * * * * * 2. The last sentence of § 191.0 is republished to read as follows: § 191.0 Scope. * * * Additional drawback provisions relating to the North American Free Trade Agreement are contained in subpart E of part 181 of this chapter. Dated: August 16, 1995. George J. Weise, Commissioner of Customs. Approved: John P. Simpson, Deputy Assistant Secretary of the Treasury. [FR Doc. 95–21716 Filed 8–30–95; 9:56 am] BILLING CODE 4820±02±P 46464 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices DEPARTMENT OF THE TREASURY the case of Chapter Five and some Article 511(1) of the North American provisions of Chapter Three the Parties Free Trade Agreement, adopt the Customs Service agreed, by an exchange of letters dated following Uniform Regulations December 30, 1993, to use a standards regarding the interpretation, application Regulatory Standards for approach whereby agreement was and administration of Chapters Three Implementation of the North American reached on certain minimum principles and Five of the North American Free Free Trade Agreement to be reflected in each Party’s Trade Agreement: regulations, with each Party being left AGENCY: U.S. Customs Service, Section A—Certification of Origin Department of the Treasury. free to implement those principles, and any other requirements not inconsistent 1. The Certificate of Origin referred to ACTION: General notice. therewith, in accordance with the needs in Article 501(1) of the North American SUMMARY: This document publishes for of the Party’s particular statutory and Free Trade Agreement (hereinafter ‘‘the the information of the general public the regulatory framework. Agreement’’) shall be: text of a document setting forth uniform On December 30, 1993, Customs (a) equivalent in substance to the regulatory standards adopted by the published T.D. 94–1 in the Federal Certificate of Origin set out in Annex United States, Canada and Mexico for Register (58 FR 69460) setting forth I.1a; purposes of implementing the interim amendments to the Customs (b) in a printed format or in such preferential tariff treatment and other Regulations to implement the other medium or format as may be Customs-related provisions of the North preferential tariff treatment and other approved by the customs administration American Free Trade Agreement Customs-related provisions of the of the Party into whose territory the (NAFTA). The final Customs NAFTA in accordance with the good is imported; Regulations implementing the NAFTA, implementation principles agreed to by (c) completed by the exporter in which are based in part on the standards the Parties as discussed above. accordance with these Uniform set forth herein, also appear in this issue Subsequent to the publication of T.D. Regulations, including any instructions of the Federal Register. 94–1, the Parties engaged in additional contained in the Certificate of Origin set FOR FURTHER INFORMATION CONTACT: trilateral discussions with a view to out in Annex I.1a; and Myles Harmon, Office of Regulations modifying the Chapter Four (d) at the option of the exporter, and Rulings (202–482–7000). substantively verbatim texts and the completed in either the language of the standards adopted for purposes of Party into whose territory the good is SUPPLEMENTARY INFORMATION: Chapters Three and Five, and those imported or the language of the Party Background modifications were formally agreed to from whose territory the good is by the Parties through an exchange of exported in accordance with Annex On December 17, 1992, the United letters in June 1995. The substantively I.1d. States, Canada and Mexico (the verbatim texts relating to Chapter Four 2. For purposes of Article 501(5)(a) of ‘‘Parties’’) entered into an agreement, and the standards adopted for purposes the Agreement, a single Certificate of the North American Free Trade of Chapters Three and Five, as so Origin may be used for: Agreement (NAFTA). The stated modified, have been incorporated in the (a) a single shipment of goods that objectives of the NAFTA included provisions of the Customs Regulations results in the filing of one or more elimination of barriers to trade in, and implementing the NAFTA that are entries on the importation of the goods facilitation of the cross-border published as a final rule also in this into the territory of a Party; or movement of, goods and services issue of the Federal Register. (b) more than one shipment of goods between the territories of the Parties. The purpose of this document is to set that result in the filing of one entry on The provisions of the NAFTA were forth for the information of the general the importation of the goods into the adopted by the United States with the public the current text of the NAFTA territory of a Party. enactment of the North American Free Chapter Three and Chapter Five Trade Agreement Implementation Act, Article II: Obligations Regarding regulatory standards document as Pub. L. 103–182, 107 Stat. 2057. Importations agreed to by the Parties. Prior to the entry into force of the 1. For purposes of Article 502(1)(a) of NAFTA on January 1, 1994, Dated: August 24, 1995. the Agreement, ‘‘valid Certificate of representatives of the Parties engaged in Stuart P. Seidel, Origin’’ means a Certificate of Origin a series of trilateral discussions Assistant Commissioner, Office of that the exporter of the good in a pursuant to Article 511 of the NAFTA Regulations and Rulings. territory of a Party completes in for the purpose of formulating uniform Accordingly, the document accordance with the requirements set regulatory texts or principles in respect containing the regulatory standards out in Article I of these Uniform of Chapters Four and Five of the relating to Chapters Three and Five of Regulations. NAFTA and in respect of certain the NAFTA, as discussed above, is 2. For purposes of Article 502(1)(c) of provisions within Chapter Three of the reproduced below: the Agreement: NAFTA. As concerns Chapter Four (a) the importer shall, upon the which sets forth the rules of origin and Uniform Regulations for the request of the customs administration of related provisions for purposes of Interpretation, Application, and the Party into whose territory the good preferential duty treatment under the Administration of Chapters Three is imported, provide a written NAFTA, the Parties agreed, by an (National Treatment and Market Access translation of the Certificate of Origin in exchange of letters dated December 30, for Goods) and Five (Customs the language of that Party; and 1993, to implement substantively Procedures) of the North American Free (b) where the customs administration verbatim texts covering all of the Trade Agreement of the Party into whose territory the provisions of that Chapter. However, in The Government of Canada, the good is imported determines that a recognition of the different existing Government of the United Mexican Certificate of Origin is illegible, customs legal and procedural States and the Government of the defective on its face or has not been requirements in the three countries, in United States of America, pursuant to completed in accordance with Article I Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46465 of these Uniform Regulations, the Section B—Administration and 413(e) of the Agreement, the producer importer shall be granted a period of not Enforcement shall be given an opportunity to record less than five working days to provide its costs in accordance with those Article V: Records the customs administration with a copy Generally Accepted Accounting of the corrected Certificate. 1. The documentation and records Principles within 60 days of being required to be maintained under Article 3. An importer that makes a corrected informed in writing by the customs 505 of the Agreement shall be kept in administration that the records have not declaration of origin pursuant to Article such a manner as to enable an officer of 502(1)(d) and (2)(b) of the Agreement been maintained in accordance with the customs administration of a Party, in those Generally Accepted Accounting and pays any duties owing shall not, in conducting a verification of origin under Principles. accordance with Article 502(2)(b), be Article 506, to perform detailed 6. For purposes of Article 505 of the subject to penalties, as set out in Annex verifications of the documentation and Agreement and these Uniform II.3. records to verify the information on the Regulations, ‘‘records’’ include books as 4. Where as a result of an origin basis of which: referenced in the Uniform Regulations verification conducted under Article (a) in the case of an importer, a claim under Chapter Four. 506 of the Agreement, the customs for preferential tariff treatment was Article VI: Origin Verifications administration of a Party determines made with respect to a good imported that a good that is covered by a into its territory; and 1. For purposes of Article 506(1)(c) of Certificate of Origin that is applicable to (b) in the case of an exporter or the Agreement, the customs multiple importations of identical goods producer, a Certificate of Origin was administration of a Party may conduct in accordance with Article 501(5)(b) completed with respect to a good a verification of origin with respect to a does not qualify as an originating good, exported to the territory of another good that is imported into its territory such Certificate may not be used to Party. by means of: 2. Importers, exporters and producers claim preferential tariff treatment for (a) A verification letter that requests in the territory of a Party that are those identical goods after the date that information from the exporter or required to maintain documentation or the written determination is provided producer of the good in the territory of records under Article 505 of the under Article 506(9). another Party, provided that it contains Agreement shall be permitted, in specific reference to the good that is the Article III: Exceptions accordance with that Party’s law, to subject of the verification; or maintain such documentation and (b) any other method of 1. The statement referred to in Article records in machine-readable form, communication customarily used by the 503(a) of the Agreement shall, where provided that the documentation or customs administration of the Party in required by the customs administration records can be retrieved and printed. conducting a verification. of the Party into whose territory the 3. Exporters and producers that are 2. Subject to paragraph 3, where the good is imported, be attached to, or required to maintain records pursuant to customs administration of a Party handwritten, stamped or typed on, the Article 505(a) of the Agreement shall, conducts a verification under paragraph commercial invoice covering the good. subject to the notification and consent 1(b), it may, on the basis of a response 2. For purposes of Article 503 of the requirements provided for in Article of an exporter or producer to a Agreement, ‘‘series of importations’’ is 506(2), make those records available for communication referred to in paragraph defined in Annex III.2. inspection by an officer of the customs 1(b), issue a determination under Article administration of a Party conducting a 506(9) of the Agreement: Article IV: Obligations Regarding verification visit and provide facilities (a) that the good does not qualify as Exportations for inspection thereof. an originating good, provided that the 4. A Party may deny preferential tariff response is in writing and is signed by 1. For purposes of Article 504(1)(b) of treatment to a good that is the subject of that exporter or producer; or the Agreement, ‘‘promptly’’ is defined an origin verification where the (b) that the good qualifies as an in Annex IV.1. exporter, producer or importer of the originating good. 2. For purposes of Article 504(3) of good that is required to maintain 3. Where the producer of a good the Agreement, no Party may impose records or documentation under Article chooses to calculate the regional value civil or administrative penalties on an 505 of the Agreement: content of a good under that net cost exporter or producer of a good in its (a) subject to paragraph 5, fails to method as set out in the Uniform territory where the exporter or producer, maintain records or documentation Regulations under Chapter Four of the prior to the commencement of an relevant to determine the origin of the Agreement, the customs administration investigation by officials of that Party good in accordance with the of the Party into whose territory the with authority to conduct a criminal requirements of the Agreement, these good was imported may not, during the investigation regarding the Certificate of Uniform Regulations or the Uniform time period over which the net cost has Origin, provides the written notification Regulations under Chapter Four of the been calculated, verify the regional referred to in Article 504(1)(b). Agreement; or value content in respect of that good. (b) denies access to the records or 4. The customs administration of a 3. For purposes of Article 504(1)(b) of documentation. Party, in conducting a verification visit the Agreement, where the customs 5. Where the customs administration under Article 506(1)(b) of the administration of a Party provides an of a Party finds during the course of an Agreement, shall send the notice exporter or producer of a good with a origin verification that a producer of a referred to in Article 506(2)(a) by determination under Article 506(9) that good in the territory of another Party has certified or registered mail, or any other the good is a non-originating good, the failed to maintain its records in method that produces a confirmation of exporter or producer shall notify all accordance with the Generally Accepted receipt by the exporter or producer persons to whom it gave a Certificate of Accounting Principles applied in the whose premises are to be visited. Origin in respect of that good of the territory of the Party in which the good 5. When the exporter or producer of determination. is produced as required by Article a good that is the subject of a proposed 46466 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices verification visit by the customs producer to supply the information or as the customs administration may deny administration of a Party has not given a ground for denying preferential tariff preferential tariff treatment to the good. its written consent to a visit under treatment. 18. Where the customs administration Article 506(4) of the Agreement, the 14. Nothing in this Article shall limit of a Party does not send a written customs administration may determine any right accorded under Chapter Five determination under paragraph 16(b) that the good does not qualify as an of the Agreement to the exporter or and the exporter or producer fails to originating good and may deny producer of a good in the territory of a respond to the subsequent verification preferential tariff treatment to that good. Party by virtue of the fact that such letter or questionnaire within 30 days: 6. For purposes of Article 506(7) of exporter or producer is also the importer (a) from the date of its receipt by the the Agreement, an exporter or producer of the good in the territory of the Party exporter or producer, where it was sent of a good shall identify to the customs in which preferential tariff treatment is in accordance with paragraph 16(a)(i), administration conducting a verification claimed. or visit any observers designated to be 15. Where a customs administration (b) from the date of its receipt by the present during such visit. conducts a verification of origin of a exporter or producer or from the date it 7. Each Party shall identify to the good under Article 506(1)(a) of the was sent by the customs administration, other Parties, by January 1, 1994, the Agreement or paragraph 1(a), it may as the case may be, in accordance with office to which notice shall be sent send the verification letter or paragraph 16(a)(ii), under Article 506(2)(a)(ii) of the questionnaire by: the customs administration may deny Agreement. (a) certified or registered mail, or any preferential tariff treatment to the good 8. For purposes of Article 506(5) of other method that produces in accordance with paragraph 19. the Agreement, a notice of confirmation of receipt by the exporter 19. Where the customs administration postponement of a verification visit or producer; or of a Party determines, as a result of an shall be made in writing and shall be (b) any other method, regardless of origin verification, that a good that is sent to the address of the customs office whether it produces proof of receipt the subject of the verification does not that sent the notice of intention to from the exporter or producer of the qualify as an originating good, the conduct a verification visit. good. written determination provided for 9. The common standards for the 16. Where the customs administration under Article 506(9) of the Agreement written questionnaires referred to in of a Party has sent a verification letter shall: Article 506(1)(a) of the Agreement are or questionnaire to an exporter or (a) include a notice of intent to deny set out in Annex VI.9. producer of a good in the territory of preferential tariff treatment with respect 10. Where, pursuant to Article 403(3) another Party and such exporter or to that good that specifies the date after of the Agreement, a producer of a motor producer fails to respond within the which preferential tariff treatment will vehicle identified in Article 403 (1) or period specified therein, which shall be be denied and the period during which (2) elects to average its regional value- no less than 30 days from the date on the exporter or producer of the good content calculation over its fiscal year, which the verification letter or may provide written comments or the customs administration of the Party questionnaire was sent, the customs additional information regarding the into whose territory the motor vehicle administration: determination; and was imported may request, in writing, (a) shall send a subsequent (b) if requested by the Party from that the producer submit a cost verification letter or questionnaire: whose territory the good is exported, be submission reflecting the actual costs (i) if requested by the Party from sent by certified or registered mail or by incurred in the production of the whose territory the good was exported, any other method that produces category of motor vehicles for which the by the method set out in paragraph confirmation of receipt by the exporter election was made. 15(a), or or producer of the good. 11. Where the customs administration (ii) if not requested by the Party from 20. Where the customs administration of a Party requests that a cost whose territory the good was exported, of a Party determines on the basis of submission be submitted by the by the method set out in paragraph 15 information obtained during a producer of a motor vehicle under (a) or (b); and verification that a good does not qualify paragraph 10, such cost submission (b) may send, with that subsequent as an originating good: shall be submitted within 180 days after verification letter or questionnaire, the (a) the date on which preferential the close of that producer’s fiscal year written determination referred to in tariff treatment may be denied pursuant or within 60 days from the date on Article 506(9) of the Agreement, to the notice referred to in paragraph 19, which the request was made, whichever including a notice of intent to deny shall be no earlier than 30 days from the is later. preferential tariff treatment referred to date on which 12. Where the customs administration in paragraph 19. (i) receipt of the written of a Party sends a written request under 17. Where the customs administration determination is confirmed by the paragraph 10, such request shall of a Party sends a written determination exporter or producer, if a request has constitute a verification letter under under paragraph 16(b) and the exporter been made under subparagraph 19(b), paragraph 1(a). or producer fails to respond to the and 13. The customs administration of a subsequent verification letter or (ii) the customs administration sends Party may, for purposes of verifying the questionnaire within 30 days: the written determination, if no such origin of a good, request that the (a) from the date of its receipt by the request has been made; and importer of the good voluntarily obtain exporter or producer, where it was sent (b) before denying preferential tariff and supply written information in accordance with paragraph 16(a)(i); treatment, the customs administration voluntarily provided by the exporter or or shall take into account any comments or producer of the good in the territory of (b) from the date of its receipt by the additional information provided by the another Party, provided that the failure exporter or producer or from the date it exporter or producer during the period or refusal of the importer to obtain and was sent by the customs administration, referred to in subparagraph (a). supply such information shall not be as the case may be, in accordance with 21. For purposes of Article 506(10) of considered as a failure of the exporter or paragraph 16(a)(ii), the Agreement, ‘‘pattern of conduct’’ Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46467 means repeated instances of false or production of the good’’ means accordance with the rules set out in unsupported representations by an materials that are used in the Annex 302.2 of the Agreement; and exporter or producer of a good in the production of the good or that are used (b) whether a good is a qualifying territory of a Party that are established in the production of a material that is good for the purposes of Annex 703.2 of by the customs administration of used in the production of the good. the Agreement. another Party on the basis of not fewer 27. Article 506(12)(a) of the Section C—Advance Rulings than two origin verifications of two or Agreement in relation to Article 506(11) more importations of the goods that includes: Article VII: Advance Rulings result in not fewer than two written (a) a ruling or advance ruling that is 1. For purposes of Article 509 of the determinations being sent to that issued with respect to a material that is Agreement, the customs administration exporter or producer pursuant to Article used in the production of the good or of a Party shall issue an advance ruling 506(9) that conclude, as a finding of that is used in the production of a to a producer in the territory of another fact, that Certificates of Origin material that is used in the production Party of a material that is used in the completed by that exporter or producer of the good; or production of a good in the territory of with respect to identical goods contain (b) the consistent treatment given on another Party, provided that the good is false or unsupported representations. the entry of a material that is used in the to be subsequently imported into the 22. For purposes of Article 506(12) of production of the good or that is used territory of the Party issuing the ruling, the Agreement, ‘‘consistent treatment’’ in the production of a material used in concerning any matter covered by means the established application by the production of the good. Article 509(1) (a) through (e) and (g) the customs administration of a Party 28. Where the customs administration with respect to that material. that can be substantiated by the of a Party, in conducting a verification 2. The common standards regarding continued acceptance by that customs of origin of a good imported into its the information to be submitted in an administration of the tariff classification territory under Article 506 of the application for an advance ruling are set or value of identical materials on Agreement, conducts a verification of out in Annex VII.2. importations of the materials into its the origin of a material that is used in 3. For purposes of Article 509 of the territory by the same importer over a the production of the good, the Agreement, an application to the period of not less than two years verification of the material shall be customs administration of a Party for an immediately prior to the date that the conducted in accordance with the advance ruling shall be completed in Certificate of Origin for the good that is procedures set out in: the language of that Party as set out in the subject of the determination under (a) Article 506 (1), (2), (3), (5), (7) and Annex I.1d. Article 506(11) was completed, (8); and 4. Subject to paragraph 5 and 6, the provided that with respect to those (b) paragraphs 1, 2, 3, 4, 6, 8, 13, 14, customs administration to which the importations: 15 and 16(a). application is made shall issue an (a) such materials had not been 29. The customs administration of a advance ruling within 120 days of its accorded a different tariff classification Party, in conducting a verification of a receipt of all information reasonably or value by one or more district, material that is used in the production required to process the application, regional or local offices of that customs of a good pursuant to paragraph 28, may including any supplemental information administration on the date of such consider the material to be non- that may be requested. determination; and originating in determining whether the 5. Each Party may provide that where (b) the tariff classification or value of good is an originating good where the an application for an advance ruling is such materials is not the subject of a producer or supplier of that material made to its customs administration that verification, review or appeal by that does not allow the customs involves an issue that is the subject of: customs administration on the date of administration access to information (a) a verification of origin, such determination. required to make a determination of (b) a review by or appeal to the 23. For purposes of Article 506(12) of whether the material is an originating customs administration, or the Agreement, a person shall be material by the following or other (c) judicial or quasi-judicial review in entitled to rely on a ruling or advance means: its territory, ruling in accordance with Annex VI.23. 24. A ruling or advance ruling (a) denial of access to its records; the customs administration may decline referred to in paragraph 23 that is issued (b) failure to respond to a verification to issue the ruling. by the customs administration of a Party questionnaire or letter; or 6. For purposes of Article 509(3) of shall remain in force until modified or (c) refusal to consent to a verification the Agreement, where the customs revoked. visit within 30 days of receipt of administration of a Party determines 25. No modification or revocation of notification under Article 506(2) of the that an application for an advance a ruling referred to in paragraph 23, Agreement, as made applicable by ruling is incomplete, it may decline to other than an advance ruling, may be paragraph 28. further process the application provided applied to a good that was the subject 30. A Party shall not consider a that: of the ruling and that was imported material that is used in the production (a) it has notified the applicant of any prior to the date of such modification or of a good to be a non-originating supplemental information required and revocation unless: material solely on the basis of a of the period, which shall not be less (a) the person to whom the ruling was postponement of a verification visit than 30 days, within which the issued has not acted in accordance with under Article 506(5) of the Agreement applicant must provide the information; its terms and conditions; or as made applicable by paragraph 28(a). and (b) there has been a change in the 31. Where the customs administration (b) the applicant has failed to provide material facts or circumstances on of a Party conducts a verification under the information within the period which the ruling was based. Article 506 of the Agreement, it may specified. 26. For purposes of Article 506(11) of also verify: 7. Nothing in paragraph 5 or 6 shall the Agreement, reference to the phrase, (a) the applicable rate of customs duty be construed so as to prevent a person ‘‘one or more materials used in the applied to an originating good in from re-applying for an advance ruling. 46468 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 8. For purposes of Article 509(7) of established under Annex 311 only territory of a Party, including any the Agreement, ‘‘importations of a where: change referred to under paragraph 7(b). good’’ is defined in Annex VII.8. (a) materials used in the production of 3. For purposes of Article 303(1) of the good are obtained from, or the Agreement, where a good is Section D—Review and Appeal (b) processing of the good occurs in, exported from the territory of a Party to Article VIII: Review and Appeal the territory of a Party other than the the territory of another Party and 1. A denial of preferential tariff Party from whose territory the good is entered into a duty deferral program in treatment to a good by the customs exported or the Party into whose that other Party: administration of a Party under these territory the good is imported, provided (a) the good shall not be considered to Uniform Regulations may be appealed that the good has been improved in have been exported to the territory of under Article 510 of the Agreement by condition or advanced in value in the that other Party unless and until such the exporter or producer of the good territory of the Party from which it is time as the good is withdrawn from the who completed the Certificate of Origin exported. Otherwise, the customs duty deferral program for consumption for the good in respect of which a claim administration shall apply the in the customs territory of that other for preferential tariff treatment was preferential tariff rate of duty that is Party, and denied, including a denial of applicable to the Party from whose (b) where the good or another good preferential tariff treatment under territory the good is exported, provided incorporating that good is subsequently Article 506(4). that the good has been improved in exported directly from the duty deferral 2. Where an advance ruling is issued condition or advanced in value in that program to a non-NAFTA country, under Article 509 of the Agreement or territory. Article 303 shall not apply to the good, paragraph 1 of Article VII of these 3. For purposes of Annex 302.2 of the and a refund, waiver or reduction of Uniform Regulations, a modification or Agreement, each Party may, duties may be granted upon revocation of the advance ruling shall be notwithstanding that the requirements presentation of satisfactory evidence of subject to review and appeal under of Article 502 and any other legal the exportation of the good or that other Article 510. requirements imposed under its law good to the non-NAFTA country. 3. Where a Party denies preferential have been satisfied, deny the applicable 4. In accordance with paragraph (d) of tariff treatment to a good on the basis: preferential tariff rate of duty set out in the definition of ‘‘satisfactory evidence’’ (a) that a corrected Certificate of that Annex to an originating good under Article 318, ‘‘satisfactory Origin has not been provided within imported into its territory: evidence’’ includes an affidavit from the that period set out in Article II(2)(b) of (a) if, where contrary to the laws of person claiming, subject to Article 303 these Uniform Regulations, or that Party, the claim for preferential of the Agreement, a refund, waiver or (b) of a failure to comply with a time tariff treatment for the good is not reduction of customs duties, where such limit under these Uniform Regulations supported by documentary evidence affidavit is based on information or under the Agreement, except for the such as invoices, bills of lading or received from the importer of the good time limit under Article 502(3) of the waybills that indicate the shipping route in the territory of the Party into which Agreement, with respect to the and all points of shipment and the good was subsequently exported. furnishing of records or other transshipment prior to the importation 5. Satisfactory evidence, in the form information to the customs of the good into its territory, and of one or more of the documents administration of that Party, (b) if, where the good is shipped referred to in the definition in Article the decision rendered on review and through or transshipped in the territory 318 of the Agreement and paragraph 4, appeal under Article 510(2)(a) of that of a country that is not a Party under the shall contain: determination shall be on the merits of NAFTA, the importer of the good does (a) the import entry number, whether the good qualifies as an not provide, on the request of that (b) the date of importation, originating good, provided that in the Party’s customs administration, a copy (c) the tariff classification number, case of subparagraph (a) above, a of the customs control documents that (d) the rate of duty, and corrected Certificate of Origin is indicate, to the satisfaction of the (e) the amount of duties paid, provided to the customs administration customs administration, that the good in respect of the importation of the good of the Party. remained under customs control while into the territory of the Party to which in the territory of such country, Section E—Tariff Elimination the good was subsequently exported. Section F—Drawback and Duty 6. The Party to whom a claim for Article IX: Tariff Elimination Deferral Programs refund of the amount of customs duties 1. For purposes of Annex 302.2 and paid, or a waiver or reduction of the Annex 300–B of the Agreement, Annex Article X: Drawback and Duty Deferral amount of customs duties owed, is 302.2 (4), (5), (6), (8), (10), (11), (12) and Programs made may request that the Party to (13) and Annex 300–B, Section 2, 1. For purposes of Article 303 of the whose territory the good was paragraph 2(b) do not apply where a Agreement, ‘‘identical or similar’’ means subsequently exported examine the Party gives duty free treatment to all ‘‘identical’’ and ‘‘similar’’ as defined in information referred to under paragraph other Parties in respect of an originating Article 15, subsections 2 (a) and (b) of 5 (a) through (e) that was provided in good imported into its territory. the Customs Valuation Code, and as connection with that claim. 2. For purposes of Annex 302.2 and further defined in Annex IX.1. 7. The Party to whom a request was Annex 300–B of the Agreement, the 2. For purposes of Article 303(1) of made under paragraph 6 shall: customs administration of the Party into the Agreement, ‘‘the total amount of (a) where it determines that the whose territory an originating good is customs duties paid to another Party on information referred to under paragraph imported shall determine the applicable the good that has been subsequently 5 is not correct at the time of the preferential tariff rate of duty under exported to the territory of that other request, provide the requesting Party Annex 302.2 (8), (10), (11), (12) and (13) Party’’ means the customs duties that with the corrected information, and and Annex 300–B, Section 2, paragraph are paid in respect of the entry for (b) monitor the importations in 2(b) on the basis of the Marking Rules consumption of the good in the customs respect of the goods that were the Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46469 subject of a request and notify the (e) putting up in measured doses, or Agreement are in accordance with requesting Party of any change in packing, repacking, packaging ; Chapter Five of the Agreement and respect of the duties paid in connection repackaging; or these Uniform Regulations. therewith. (f) testing, marking, labelling, sorting, 3. These Uniform Regulations shall 8. For purposes of Article 303.6(b) of or grading, enter into force on the date of the entry the Agreement, the circumstances under provided that such operations do not into force of the Agreement. which a good shall be considered to be materially alter the characteristics of the 4. For purposes of Chapter Five of the in same condition include the good. Agreement and these Uniform following: Regulations, any reference to ‘‘materials Section G—Final Provisions (a) mere dilution with water or that are used in the production of the another substance; Article XI: Final Provisions good’’ or ‘‘that are used in the (b) cleaning, including removal of 1. For purposes of Chapter Five of the production of a material that is used in rust, grease, paint or other coatings; Agreement and these Uniform the production of the good’’ shall (c) application of preservative, Regulations, ‘‘completed’’ means include materials that are incorporated including lubricants, protective completed, signed and dated. into a good or material as defined in the encapsulation, or preservation paint; 2. Each Party shall ensure that its Uniform Regulations for Chapter Four. (d) trimming, filing, slitting or cutting; customs procedures governed by the BILLING CODE 4820±02±M 46470 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices BILLING CODE 4820±02±C Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46471 NORTH AMERICAN FREE TRADE AGREEMENT CERTIFICATE OF ORIGIN INSTRUCTIONS For purposes of obtaining preferential tariff treatment, this document must be completed legibly and in full by the exporter and be in the possession of the importer at the time the declaration is made. This document may also be completed voluntarily by the producer for use by the exporter. Please print or type: Field 1: State the full legal name, address (including country) and legal tax identification number of the exporter. Legal tax identification number is: in Canada, employer number or importer/exporter number assigned by Revenue Canada; in Mexico, federal taxpayer’s registry number (RFC); and in the United States, employer’s identification number or Social Security number. Field 2: Complete field if the Certificate covers multiple shipments of identical goods as described in Field #5 that are imported into a NAFTA country for a specified period of up to one year (blanket period). ‘‘FROM’’ is the date upon which the Certificate becomes applicable to the good covered by the blanket Certificate (it may be prior to the date of signing this Certificate). ‘‘TO’’ is the date upon which the blanket period expires. The importation of a good for which preferential tariff treatment is claimed based on this Certificate must occur between these dates. Field 3: State and full legal name, address (including country) and legal tax identification number, as defined in field #1, of the producer. If more than one producer’s good is included on the Certificate, attach a list of the additional producers, including the legal name, address (including country) and legal tax identification number, cross referenced to the good described in field #5. If you wish this information to be confidential, it is acceptable to state ‘‘Available to Customs upon request’’. If the producer and the exporter are the same, complete field with ‘‘SAME’’. If the producer is unknown, it is acceptable to state ‘‘UNKNOWN’’. Field 4: State the full legal name, address (including country) and legal tax identification number, as defined in field #1, of the importer. If the importer is not known, state ‘‘UNKNOWN’’; if multiple importers, state ‘‘VARIOUS’’. Field 5: Provide a full description of each good. The description should be sufficient to relate it to the invoice description and to the Harmonized System (H.S.) description of the good. If the Certificate covers a single shipment of a good, include the invoice number as shown on the commercial invoice. If not known, indicate another unique reference number, such as the shipping order number. Field 6: For each good described in field #5, identify the H.S. tariff classification to six digits. If the good is subject to a specific rule of origin in Annex 401 that requires eight digits, identify to eight digits, using the H.S. tariff classification of the country into whose territory the good is imported. Field 7: For each good described in field #5, state which criterion (A through F) is applicable. The rules of origin are contained in Chapter Four and Annex 401. Additional rules are described in Annex 703.2 (certain agricultural goods), Annex 300–B, Appendix 6A (certain textile goods) and Annex 308.1 (certain automatic data processing goods and their parts). NOTE: In order to be entitled to preferential tariff treatment, each good must meet at least one of the criteria below. Preference Criteria A—The good is ‘‘wholly obtained or produced entirely’’ in the territory of one or more of the NAFTA countries, as referred to in Article 415. NOTE: The purchase of a good in the territory does not necessarily render it ‘‘wholly obtained or produced’’. If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(a) and 415) B—The good is produced entirely in the territory of one or more of the NAFTA countries and satisfies the specific rule of origin, set out in Annex 401, that applies to its tariff classification. The rule may include a tariff classification change, regional value-content requirement or a combination thereof. The good must also satisfy all other applicable requirements of Chapter Four. If the good is an agricultural good, see also criterion F and Annex 703.2 (Reference: Article 401(b)) C—The good is produced entirely in the territory of one or more of the NAFTA countries exclusively from originating materials. Under this criterion, one or more of the materials may not fall within the definition of ‘‘wholly produced or obtained’’, as set out in Article 415. All materials used in the production of the good must qualify as ‘‘originating’’ by meeting the rules of Article 401(a) through (d). If the good is an agricultural good, see also criterion F and Annex 703.2 (Reference: Article 401(c)) D—Goods are produced in the territory of one or more of the NAFTA countries but do not meet the applicable rule of origin, set out in Annex 401, because certain non-originating materials do not undergo the required change in tariff classification. The goods do nonetheless meet the regional value-content requirement specified in Article 401(d). This criterion is limited to the following two circumstances: 1. The good was imported into the territory of a NAFTA country in an unassembled or disassembled form but was classified as an assembled good, pursuant to H.S. General Rule of Interpretation 2(a); or 2. The good incorporated one or more non-originating materials, provided for as parts under the H.S., which could not undergo a change in tariff classification because the heading provided for both the good and its parts and was not further subdivided into subheadings, or the subheading provided for both the good and its parts and was not further subdivided. NOTE: This criterion does not apply to Chapters 61 through 63 of the H.S. (Reference: Article 401(d)) E—Certain automatic data processing goods and their parts, specified in Annex 308.1 that do not originate in the territory are considered originating upon importation into the territory of a NAFTA country from the territory of another NAFTA country when the most-favoured-nation tariff rate of the good conforms to the rate established in Annex 308.1 and is common to all NAFTA countries (Reference: Annex 308.1) F—The good is an originating agricultural good under preference criterion A, B, or C above and is not subject to a quantitative restriction in the importing NAFTA country because it is a ‘‘qualifying good’’ as defined in Annex 703.2, Section A or B (please specify). A good listed in Appendix 703.2.B.7 is also exempt from quantitative restrictions 46472 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices and is eligible for NAFTA preferential tariff treatment if it meets the definition of ‘‘qualifying good’’ in Section A of Annex 703.2. NOTE 1: This criterion does not apply to goods that wholly originate in Canada or the United States and are imported into either country. NOTE 2: A tariff rate quota is not a quantitative restriction. Field 8: For each good described in field #5, state ‘‘YES’’ if you are the producer of the good. If you are not the producer of the good, state ‘‘NO’’ followed by (1), (2) or (3), depending on whether this certificate was based upon: (1) your knowledge of whether the good qualifies as an originating good; (2) your reliance on the producer’s written representation (other than a Certificate of Origin) that the good qualifies as an originating good; or (3) a completed and signed Certificate for the good, voluntarily provided to the exporter by the producer. Field 9: For each good described in field #5, where the good is subject to a regional value content (RVC) requirement, indicate ‘‘NC’’ if the RVC is calculated according to the net cost method; otherwise, indicate ‘‘NO’’. If the RVC is calculated according to the net cost method over a period of time, further identify the beginning and ending date (DD/MM/YR) of that period. (Reference: Articles 402.1, and 402.5) Field 10: Identify the name of the country (‘‘MX’’ or ‘‘US’’ for agricultural and textile goods exported to Canada; ‘‘US’’ or ‘‘CA’’ for all goods exported to Mexico; or ‘‘CA’’ or ‘‘MX’’ for all goods exported to the United States) to which the preferential rate of customs duty applies, as set our in Annex 302.2, in accordance with the Marketing Rules or in each Party’s schedule of tariff elimination. For all other originating goods exported to Canada, indicate appropriately ‘‘MX’’ or ‘‘US’’ if the goods originate in that NAFTA country, within the meaning of the NAFTA Rules of Origin Regulations,, and any subsequent processing in the other NAFTA country does not increase the transaction value of the goods by more than seven percent; otherwise indicate ‘‘JNT’’ for joint production. (Reference: Annex 302.2). Field 11: This field must be completed, signed and dated by the exporter. When the Certificate is completed by the producer for use by the exporter, it must be completed, signed and dated by the producer. The date must be the date the Certificate was completed and signed. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46473 Annex I.1d Language of a Party For purposes of these Uniform Regulations the language of a Party shall be, in the case of: (a) Canada, English or French; (b) Mexico, Spanish; and (c) the United States, English. 46474 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Annex II.3 Corrected Declaration of Origin An importer shall not be subject to penalties if, in the case of: (a) Canada, the importer makes the corrected declaration within ninety days from the date on which the importer has reason to believe that the declaration is incorrect; (b) Mexico, the importer makes the corrected declaration before the customs administration begins an investigation regarding an incorrect declaration or initiates the exercise of its auditing powers on the accuracy of a declaration or an inspection pursuant to the application of the random selection procedures; and (c) United States, the importer makes the corrected declaration within thirty days from the date on which the importer has reason to believe that the declaration is incorrect and such corrected declaration is make before the commencement of a formal investigation of the incorrect declaration. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46475 Annex III.2 Country-Specific Definitions of ‘‘Series of Importations’’ For purposes of Article 503 of the Agreement, ‘‘series of importations’’ means, in the case of: (a) Canada, two or more importations of a good accounted for separately but covered by one commercial invoice issued by the seller of the good to the purchaser of the good; (b) Mexico, two or more customs entries covering a good arriving the same day or released the same day, and consigned to, or imported by any person, but covered by one commercial invoice; and (c) the United States, two or more customs entries covering a good arriving the same day from the same exporter and consigned to the same person. 46476 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Annex IV.1 Country-Specific Definitions of ‘‘Promptly’’ For purposes of Article 504(1)(b) of the Agreement, ‘‘promptly’’ means, in the case of: (a) Canada, immediately; (b) Mexico, prior to the commencement of an investigation by officials with authority to conduct criminal investigations regarding the Certificate of Origin; and (c) the United States, within 30 days. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46477 Annex VI.9 Common Standards for Written Questionnaires 1. For purposes of Article VI.9 of these Uniform Regulations, the Parties will seek to agree on uniform questions to be included in a general questionnaire. 2. Subject to paragraph 3, where the customs administration of a Party conducts a verification under Article 506(1)(a) of the Agreement, it shall send the general questionnaire referred to in paragraph 1 of this Annex. 3. For purposes of Article 506(1)(a) of the Agreement, where the customs administration of a Party requires specific information not reflected in the general questionnaire, it may send a more specific questionnaire, according to the information required to determine whether the good that is the subject of the verification is an originating good. 4. For purposes of Article VI of these Uniform Regulations, the verification questionnaires may, at the option of the exporter or producer, be completed in either the language of the Party into whose territory the good is imported, or the language of the Party in the territory in which the exporter or producer is located. 5. Nothing in this Annex shall be interpreted to constrain the customs administration of a Party from requesting additional information in accordance with Article 506(1)(a) of the Agreement and these Uniform Regulations. 46478 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Annex VI.23 Rulings and Advance Rulings A person shall be entitled to rely on a ruling or advance ruling that is issued, in the case of: (a) Canada, in accordance with Departmental Memorandum 11–11–1 (National Customs Rulings) or pursuant to section 43.1(1) of the Customs Act (Advance Rulings); (b) Mexico, pursuant to Article 34 of the Co´digo Fiscal de la Federacio´n and to Article 30 of the Ley Aduanera or the applicable provision of Mexican law related to advance rulings under Article 509 of the Agreement; and (c) the United States, pursuant to 5 U.S.C. 301, 19 U.S.C. 66, or 19 U.S.C. 1624. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46479 Annex VII.2 Common Standards for Information Required in the Application for an Advance Ruling 1. For purposes of Article 509(2) of the Agreement, each Party shall provide that a request for an advance ruling shall contain: (a) the name and address of the exporter, producer or importer of the good requesting the issuance of the ruling, as the case may be, hereinafter referred to as the applicant, (b) where the applicant is (i) the exporter of the good, the name and address of the producer and importer of the good, if known, (ii) the producer of the good, the name and address of the exporter and importer of the good, if known, or (iii) the importer of the good, the name and address of the exporter and, if known, the producer of the good. (c) where the request is made on behalf of an applicant, the name and address of the person requesting the issuance of the advance ruling and either (i) a written statement from the person requesting the issuance of the advance ruling, or (ii) upon the request of the customs administration of that Party, such person provide, in accordance with its laws, evidence from the applicant on whose behalf the ruling is being requested, that indicates that the person is duly authorized to transact business as the agent of the applicant. (d) a statement, on the basis of the applicant’s knowledge, as to whether the issue that is the subject of the request for an advance ruling is, or has been, the subject of (i) a verification of origin (ii) an administrative review or appeal (iii) a judicial or quasi-judicial review, or (iv) a request for an advance ruling in the territory of any Party, and if so, a brief statement setting forth the status or disposition of the matter. (e) a statement, on the basis of the applicant’s knowledge, as to whether the good that is the subject of the request for an advance ruling has previously been imported into the territory of the Party to whom the request for the advance ruling has been made. (f) a statement that the information presented is accurate and complete, and (g) a complete description of all relevant facts and circumstances relating to the issue that is the subject of the request for the advance ruling, including, (i) a concise statement, within the scope of Article 509(1) of the Agreement, setting forth the issue on which the advance ruling is sought, and (ii) a general description of the good. 2. Where relevant to the issue that is the subject of the request for an advance ruling, the request shall include, in addition to the information referred to in paragraph 1, (a) a copy of any advance ruling or other ruling with respect to the tariff classification of the good that has been issued to the applicant by the Party to whom the request for an advance ruling is made, and (b) if no previous advance ruling or other ruling with respect to the tariff classification of the good has been issued by the Party to whom the request for the advance ruling is made, sufficient information to enable the customs administration of that Party to classify the good, including, (i) a full description of the good, including, where relevant, the composition of the good, a description of the process by which the good is manufactured, a description of the packaging in which the good is contained, the anticipated use of the good and its commercial, common or technical designation, product literature, drawings, photographs, or schematics, and (ii) where practical and useful, a sample of the good. 3. Where the request for the advance ruling involves the application of a rule of origin that requires an assessment of whether materials used in the production of the good undergo an applicable change in tariff classification, the request shall include: (a) a listing of each material that is used in the production of the good, (b) with respect to each material referred to in paragraph (a) that is claimed to be an originating material, a complete description of the material, including the basis on which it is considered that the material originates, (c) with respect to each material referred to in paragraph (a) that is a non-originating material or the origin of which is unknown, a complete description of the material, including its tariff classification, if known, and (d) a description of all processing operations employed in the production of the good, the location of each operation and the sequence in which the operations occur. 4. Where the request for an advance ruling involves the application of a regional value-content requirement, the applicant shall indicate whether the request is based on the use of the transaction value or the net cost method, or both. 5. Where the request for an advance ruling involves the use of the transaction value method, the request shall include: (a) information sufficient to calculate the transaction value of the good in accordance with Schedule II of the NAFTA Rules of Origin Regulations with respect to the transaction of the producer of the good, adjusted to a F.O.B. basis, (b) information sufficient to calculate the value of each material that is a non-originating material or the origin of which is unknown that is used in the production of the good in accordance with Section 7, and, where applicable, section 6(10) of the NAFTA Rules of Origin Regulations, and (c) with respect to each material that is claimed to be an originating material that is used in the production of the good, a complete description of the material including the basis on which it is considered that the material originates. 46480 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 6. Where the request for an advance ruling involves the use of the net cost method, the request shall include: (a) a listing of all product, period and other costs relevant to determining the total cost of the good referred to under the NAFTA Rules of Origin Regulations, (b) a listing of all excluded costs to be subtracted from the total cost referred to under the NAFTA Rules of Origin Regulations, (c) information sufficient to calculate the value of each material that is a non-originating material or the origin of which is unknown that is used in the production of the good in accordance with section 7 of the NAFTA Rules of Origin Regulation, (d) the basis for any allocation of costs in accordance with Schedule VII of the NAFTA Rules of Origin Regulations, and (e) the period over which the net cost calculation is to be made. 7. Where the request for an advance ruling involves an issue of whether, with respect to a good or a material that is used in the production of a good, the transaction value of the good or the material is acceptable, the request shall include information sufficient to permit an examination of the factors enumerated in Schedules III or VIII of the NAFTA Rules of Origin Regulations, as applicable. 8. Where the request for an advance ruling involves an issue with respect to an intermediate material under Article 402(10) of the Agreement, the request shall contain sufficient information to determine the origin and value of the material in accordance with Article 402(11). 9. Where the request for an advance ruling is limited to the calculation of an element of a regional value content formula, in addition to the information required under paragraph 1, only that information set out under paragraph 4, 5 and 6 which is relevant to the issue that is the subject of the request for an advance ruling need be contained in the request. 10. Where the request for an advance ruling is limited to the origin of a material that is used in the production of a good in accordance with Article VII.1 of these Uniform Regulations, in addition to the information required under paragraph 1, only that information set out under paragraph 2 and 3 which is relevant to the issue that is the subject of the advance ruling need be contained in the request. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices 46481 Annex VII.8 Country-Specific Definitions of ‘‘importations of a good’’ For purposes of Article 509(7) of the Agreement, ‘‘importations of a good’’ means importations of a good: (a) which, in the case of Canada, has been released pursuant to section 31 of the Customs Act; (b) for which, in the case of Mexico, an entry document has been presented pursuant to Article 25 of the Ley Aduanera (Customs Act); and (c) which, in the case of the United States, has been entered pursuant to section 1484 of title 19, United States Code. 46482 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices Annex IX.1 United States Definition of ‘‘identical or similar’’ For purposes of Article 303 of the Agreement, in the case of the United States ‘‘identical or similar’’ shall have the same meaning as ‘‘same kind and quality’’ as set forth in 19 U.S.C. § 1313(b). [FR Doc. 95–21717 Filed 9–5–95; 8:45 am] BILLING CODE 4820±02±M federal register September 6,1995 Wednesday and Practices:FinalRules Control UnitPrograms;ReligiousBeliefs 28 CFRParts541and548 Bureau ofPrisons Justice Department of Part III 46483 46484 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations DEPARTMENT OF JUSTICE ray exposure for the requesting inmate. (the paragraph heading is republished) This change is intended to make more and paragraph (g) is revised to read as Bureau of Prisons efficient use of Bureau staff. follows: In § 541.49, paragraph (a) is revised to 28 CFR Part 541 specify additional staff (namely, the § 541.46 Programs and services. [BOP±1025±F] officer-in-charge or lieutenant) on the * * * * * control unit team. (c) Industries (UNICOR). If an Control Unit Programs In § 541.50, paragraph (b)(2) is revised industry program exists in a control unit for editorial purposes. There is no each inmate participating in this AGENCY: Bureau of Prisons, Justice. change in the intent of this section. program may earn industrial pay, ACTION: Final rule. Because these changes are subject to the regulations of Federal administrative in nature and are not Prison Industries, Inc. (UNICOR). * ** SUMMARY: In this document, the Bureau more restrictive on inmates, the Bureau * * * * * of Prisons is amending its regulations on finds good cause for exempting the Control Unit Programs to reflect changes (g) Counselor services. The unit provisions of the Administrative counselor ordinarily handles phone call in staffing assignments or the mission of Procedure Act (5 U.S.C. 553) requiring specific institutions, to conform to requests, special concerns and requests notice of proposed rulemaking, the of inmates, and requests for revisions for Federal Prison Industries opportunity for public comment, and work assignments, and to make an administrative remedy forms. The unit delay in effective date. Members of the counselor is also available for editorial amendment. public may submit comments EFFECTIVE DATE: September 6, 1995. consultation and for counseling as concerning this rule by writing to the recommended in the mental health ADDRESSES: Office of General Counsel, previously cited address. These evaluation (see paragraph (i) of this Bureau of Prisons, HOLC room 754, 320 comments will be considered but will section—Mental Health Services). First Street, NW., Washington, DC receive no response in the Federal 20534. Register. * * * * * FOR FURTHER INFORMATION CONTACT: Roy The Bureau of Prisons has determined 3. In § 541.48, paragraph (b) is revised Nanovic, Office of General Counsel, that this rule is not a significant to read as follows: Bureau of Prisons, phone (202) 514– regulatory action for the purpose of E.O. § 541.48 Search of control unit inmates. 12866, and accordingly this rule was not 6655. * * * * * SUPPLEMENTARY INFORMATION: The reviewed by the Office of Management and Budget. After review of the law and (b) An inmate in a control unit may Bureau of Prisons is amending its request in writing that an X-ray be taken regulations on Control Unit Programs. A regulations, the Director, Bureau of Prisons has certified that this rule, for in lieu of the digital search discussed in final rule on this subject was published paragraph (a) of this section. The in the Federal Register August 17, 1984 the purpose of the Regulatory Flexibility Act (Pub. L. 96–354), does not have a Warden shall approve this request, (49 FR 32991) and was amended June provided it is determined and stated in 20, 1985 (50 FR 25662). significant impact on a substantial number of small entities. writing by the institution’s Clinical This document makes the following Director or Acting Clinical Director changes to the Bureau’s regulations on List of Subjects in 28 CFR Part 541 (may not be further delegated) that the control unit programs to reflect changes Prisoners. amount of X-ray exposure previously in staffing assignments or the mission of Kathleen M. Hawk, received by the inmate, or anticipated to specific institutions, and changes in the be given the inmate in the immediate Bureau’s regulations on Federal Prison Director, Bureau of Prisons. Accordingly, pursuant to the future, does not make the proposed X- Industries work assignments. ray medically unwise. Staff are to place In § 541.46, paragraph (c), obsolete rulemaking authority vested in the Attorney General in 5 U.S.C. 552(a) and documentation of the X-ray, and the references to Federal Prison Industries inmate’s signed request for it, in the industrial good time have been delegated to the Director, Bureau of Prisons in 28 CFR 0.96(p), part 541 in inmate’s central and medical files. The removed. Regulations on Federal Prison Warden’s authority may not be Industries work programs (28 CFR part subchapter C of 28 CFR, chapter V is amended as set forth below. delegated below the level of Acting 345) were revised on March 27, 1995 (60 Warden. FR 15826). Paragraph (g) is revised for Subchapter CÐInstitutional the sake of clarity by dividing the * * * * * Management existing text into two sentences. There 4. In § 541.49, paragraph (a) is is no change in the intent of this amended by revising the second PART 541ÐINMATE DISCIPLINE AND paragraph. sentence to read as follows: SPECIAL HOUSING UNITS In § 541.48, paragraph (b) is revised to § 541.49 Review of control unit placement. remove specific reference to the Marion 1. The authority citation for 28 CFR (a) * * * Once every 30 days, the Control Unit, which is currently being part 541 continues to read as follows: deactivated. The procedures in revised control unit team, comprised of the Authority: 5 U.S.C. 301; 18 U.S.C. 3621, control unit manager and other paragraph (a) for the inmate’s request 3622, 3624, 4001, 4042, 4081, 4082 (Repealed that an X-ray be taken in lieu of digital members designated by the Warden in part as to offenses committed on or after (ordinarily to include the officer-in- search are therefore applicable for any November 1, 1987), 4161–4166 (Repealed as control unit. Revised paragraph (b) now to offenses committed on or after November charge or lieutenant, case manager, and specifies the institution’s Clinical 1, 1987), 5006–5024 (Repealed October 12, education staff member assigned to the Director or Acting Clinical Director 1984 as to offenses committed after that unit), shall meet with an inmate in the (rather than the Chief or Acting Chief of date), 5039; 28 U.S.C. 509, 510; 28 CFR 0.95– control unit. * * * Health Programs) as the official 0.99. * * * * * responsible for making a medical 2. In § 541.46, paragraph (c) is 5. In § 541.50, paragraph (b)(2) is determination regarding cumulative X- amended by revising the first sentence revised to read as follows: Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46485 § 541.50 Release from a control unit. notification in writing) of the inmate’s assignment and designates the chaplain * * * * * request. The change will then be as being responsible for verifying the (b) * * * effected in a timely fashion. specific religious tenets. The revised (2) To another federal or non-federal The material in §§ 548.12 through section clarifies procedures by institution; or 548.15 has been revised and reorganized specifying that the inmate makes the * * * * * as §§ 548.12 through 548.20. request in writing. New § 548.12 restates material New § 548.18 restates provisions from [FR Doc. 95–21933 Filed 9–5–95; 8:45 am] formerly in old § 548.12(a). As revised, former § 548.15(a) regarding religious BILLING CODE 4410±05±P this section on chaplains now also observances. As revised, this section specifies that pastoral care and clarifies procedures for the submission counseling from representatives in the of an inmate’s request for time off from DEPARTMENT OF JUSTICE community are available in accordance work to observe a religious holy day and with the provisions of new §§ 548.14 requires that the chaplain work with Bureau of Prisons and 548.19. requesting inmates to accommodate a New § 548.13 restates material proper observance of the holy day 28 CFR Part 548 formerly in old §§ 548.12 (b) and 548.15 celebration. [BOP 1011±I] (b). As revised, new § 548.13 New § 548.19 derives from an emphasizes that chaplains are expansion of provisions from former RIN 1120±AA17 responsible for directing the § 548.12(c) regarding pastoral visits. As institution’s religious activities and that Religious Beliefs and Practices added, this section requires that the each institution shall have space chaplain facilitate arrangements for AGENCY: Bureau of Prisons, Justice. designated for the conduct of religious pastoral visits by a clergyperson or ACTION: Interim rule. activities. representative of the inmate’s faith if New § 548.14 restates material requested by an inmate and gives the SUMMARY: In this interim rule, the formerly in old § 548.12 (c) regarding chaplain the discretion to request an Bureau of Prisons is amending its pastoral care and counseling available NCIC check and documentation of such regulations on Religious Beliefs and from representatives in the community. person’s religious credentials when Practices in order to provide for the As revised these provisions may require necessary. The revised section specifies uniform implementation of a common verification of a volunteer’s or that such visits are not considered social fare religious diet menu and to simplify contractor’s religious credentials from a visits, in accordance with existing and update procedures relating to recognized member of the faith group. Bureau policy on visiting regulations religious beliefs and practices. New § 548.15 consolidates material (see 28 CFR 540.48), and provides for DATES: Effective September 6, 1995; from old § 548.12 (d) and (e). As revised, administrative details on the location of comments due by November 6, 1995. this section now specifies that such visits. attendance at religious activities is New § 548.20 restates provisions ADDRESSES: Office of General Counsel, voluntary and, unless otherwise contained in former § 548.13 (a) and (b) Bureau of Prisons, HOLC room 754, 320 specifically determined by the Warden, on dietary practices, including religious First Street, NW., Washington, DC is open to all. diets. In the past, religious diets offered 20534. New § 548.16 consolidates material by the Bureau were limited to kosher FOR FURTHER INFORMATION CONTACT: Roy from old § 548.12 (f) and (g). As revised, diets and a pilot program offering a Nanovic, Office of General Counsel, paragraph (a) of new § 548.16 clarifies common fare menu (i.e., a diet designed Bureau of Prisons, phone (202) 514– that religious items are considered to be to meet nutritional standards and the 6655. part of the inmate’s personal property basic requirements of religious dietary SUPPLEMENTARY INFORMATION: The and are subject to normal considerations norms). Bureau of Prisons is amending its of safety and security. This paragraph As revised, paragraph (a) of new regulations on Religious Beliefs and also provides that the chaplain is to § 548.20 specifies procedures for Practices. A final rule on this subject verify the religious significance for the consideration of requests for a religious was published in the Federal Register Warden’s approval. Paragraph (b) diet under a common fare menu. December 14, 1984 (49 FR 48902). restates the provisions of former References to nutritional standards have The Bureau of Prisons is updating its § 548.12(f) regarding the wearing of been removed because the Bureau regulations on Religious Beliefs and religious items during religious services, believes it is unnecessary in this Practices to include provisions for the ceremonies, and meetings in the chapel regulation to restate its basic policy of implementation of a common fare or within the institution. Paragraph (c) providing nutritionally adequate meals. religious diet. In addition, the of new § 548.16 restates the provisions The Bureau initially piloted operation of regulations have been revised and of former § 548.12(g). Revised paragraph a common fare menu at institutions in reorganized for the sake of clarity. A (c) also requires that the distribution to its South Central Region and gradually discussion of the specific changes inmates of religious literature purchased expanded operation of the program follows. by or donated to the Bureau is nationwide. Review of the small number In § 548.10, paragraph (a) has been contingent upon the approval of the of inmate complaints on this subject revised for the sake of clarity. Paragraph institution’s chaplain. This change is filed under the Administrative Remedy (b) has been revised for the sake of intended to ensure that inmates are not Program has demonstrated the benefits clarity and to provide examples of coerced or harassed to change religious and practicability of the common fare religious activity or practice. Paragraph affiliation. menu. Documentation requirements for (c) has been revised to clarify that an New § 548.17 restates provisions from processing a request include a written inmate may request at any time to former § 548.14 covering work statement from the inmate articulating change religious preference by notifying assignments. As revised, this section the religious motivation for the chaplain in writing. This revision is broadens applicability by covering participating in the common fare necessary to provide for adequate instances where a religious tenet is program. Paragraph (b) specifies documentation (i.e., requiring the jeopardized by a particular work procedures for withdrawal or removal 46486 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations from a requested religious diet. The subchapter C of 28 CFR, chapter V is belief. An inmate may designate any or process of reapproving a religious diet amended as set forth below. no religious preference at his/her initial ordinarily may extend up to thirty days. team screening. By notifying the Repeated withdrawals may result in Subchapter CÐInstitutional chaplain in writing, an inmate may longer waiting periods (up to one year). Management request to change this designation at any This delay for reinstatement is intended time, and the change will be effected in to preserve the integrity and orderly PART 548ÐRELIGIOUS PROGRAMS a timely fashion. operation of the religious diet program 1. The authority citation for 28 CFR § 548.11 Definition. and to prevent fraud. Paragraph (c) part 548 is revised to read as follows: contains provisions for accommodations For purposes of this subpart, the term to be made for an annual ceremonial or Authority: 5 U.S.C. 301; 18 U.S.C. 3621, ‘‘religious activity’’ includes religious commemorative meal which specify that 3622, 3624, 4001, 4042, 4081, 4082 (Repealed in part as to offenses committed on or after diets, services, ceremonies, and such meal is for the members of the November 1, 1987), 5006–5024 (Repealed meetings. particular religious group. The October 12, 1984 as to offenses committed § 548.12 Chaplains. discretionary provisions contained in after that date), 5039; 28 U.S.C. 509, 510; 42 former § 548.13(b) on the purchase of U.S.C. 1996; 28 CFR 0.95–0.99. Institution chaplains are available food to be used for these meals have 2. Subpart B, consisting of §§ 548.10 upon request to provide pastoral care been removed from the revised through 548.15, is revised to consist of and counseling to inmates through regulations because the Bureau believes §§ 548.10 through 548.20 as follows: group programs and individual services. them to be administrative in nature. Pastoral care and counseling from Internal staff guidelines specify that Subpart BÐReligious Beliefs and Practices representatives in the community are Bureau Food Service staff are of Committed Offenders available in accordance with the responsible for procuring such special Sec. provisions of §§ 548.14 and 548.19. foods. 548.10 Purpose and scope. 548.11 Definition. § 548.13 Schedules and facilities. Because implementation of a common 548.12 Chaplains. fare menu provides wider 548.13 Schedules and facilities. (a) Under the general supervision of accommodation to the religious needs of 548.14 Community involvement the Warden, chaplains shall schedule inmates and has generally shown its (volunteers, contractors). and direct the institution’s religious benefits and practicability (based upon 548.15 Equity. activities. the small number of Administrative 548.16 Inmate religious property. (b) The Warden may relieve an inmate Remedy filings), the Bureau finds good 548.17 Work assignments. from an institution program or 548.18 Observance of religious holy days. cause for exempting the provisions of assignment if a religious activity is also the Administrative Procedure Act (5 548.19 Pastoral visits. 548.20 Dietary practices. scheduled at that time. U.S.C. 553) requiring notice of proposed (c) Institutions shall have space rulemaking, and delay in effective date, Subpart BÐReligious Beliefs and designated for the conduct of religious and is implementing this change as an Practices of Committed Offenders activities. interim rule. Other regulatory changes in this document are administrative in § 548.10 Purpose and scope. § 548.14 Community involvement nature or are restatements or (a) The Bureau of Prisons provides (volunteers, contractors). reorganizations made for the sake of inmates of all faith groups with (a) The institution’s chaplain may clarity. Members of the public may reasonable and equitable opportunities contract with representatives of faith submit comments concerning this rule to pursue religious beliefs and practices, groups in the community to provide by writing to the previously cited within the constraints of budgetary specific religious services which the address. These comments will be limitations and consistent with the chaplain cannot personally deliver due considered before the rule is finalized. security and orderly running of the to, ordinarily, religious prescriptions or The Bureau of Prisons has determined institution and the Bureau of Prisons. ecclesiastical constraints to which the that this rule is not a significant (b) When considered necessary for the chaplain adheres. regulatory action for the purpose of E.O. security or good order of the institution, the Warden may limit attendance at or (b) The institution’s chaplain may 12866, and accordingly this rule was not secure the services of volunteers to reviewed by the Office of Management discontinue a religious activity. Opportunities for religious activities are assist inmates in observing their and Budget. After review of the law and religious beliefs. regulations, the Director, Bureau of open to the entire inmate population, Prisons has certified that this rule, for without regard to race, color, (c) The Warden or the Warden’s the purpose of the Regulatory Flexibility nationality, or ordinarily, creed. The designee (ordinarily the chaplain) may Act (Pub. L. 96–354), does not have a Warden, after consulting with the require a recognized representative of significant impact on a substantial institution chaplain, may limit the faith group to verify a volunteer’s or number of small entities. participation in a particular religious contractor’s religious credentials prior activity or practice to the members of to approving his or her entry into the List of Subjects in 28 CFR Part 548 that religious group. Ordinarily, when institution. the nature of the activity or practice Prisoners. § 548.15 Equity. (e.g., religious fasts, wearing of Kathleen M. Hawk, headwear, work proscription, No one may disparage the religious Director, Bureau of Prisons. ceremonial meals) indicates a need for beliefs of an inmate, nor coerce or Accordingly, pursuant to the such a limitation, only those inmates harass an inmate to change religious rulemaking authority vested in the whose files reflect the pertinent affiliation. Attendance at all religious Attorney General in 5 U.S.C. 552(a) and religious preference will be included. activities is voluntary and, unless delegated to the Director, Bureau of (c) The Bureau of Prisons does not otherwise specifically determined by Prisons in 28 CFR 0.96(p), part 548 in require an inmate to profess a religious the Warden, open to all. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46487 § 548.16 Inmate religious property. requested in writing by the inmate, and and equitable opportunity to observe (a) Inmate religious property includes the specific religious tenets have been their religious dietary practice within but is not limited to rosaries and prayer verified by the chaplain. Maintaining the constraints of budget limitations and beads, oils, prayer rugs, phylacteries, security, safety, and good order in the the security and orderly running of the medicine pouches, and religious institution are grounds for denial of institution and the Bureau through a medallions. Such items, which become such request for a different work common fare menu. The inmate will part of an inmate’s personal property, assignment. provide a written statement articulating are subject to normal considerations of the religious motivation for safety and security. If necessary, their § 548.18 Observance of religious holy days. participation in the common fare religious significance shall be verified program. Any approval of a request for by the chaplain prior to the Warden’s Consistent with maintaining security, religious diets must be documented in approval. safety, and good order in the institution, (b) An inmate ordinarily shall be the Warden shall endeavor to facilitate writing by the chaplain, who will allowed to wear or use personal the observance of important religious forward a copy of the approval form to religious items during religious services, holy days which involve special fasts, the food service administrator. ceremonies, and meetings in the chapel, dietary regulations, worship, or work (b) An inmate who has been approved unless the Warden determines that the proscription. The inmate must submit a for a common fare menu must notify the wearing or use of such items would written request to the chaplain for time chaplain in writing if the inmate wishes threaten institution security, safety, or off from work to observe a religious holy to withdraw from the religious diet. good order. Upon request of the inmate, day. The Warden may request the Approval for an inmate’s religious diet the Warden may allow the wearing or chaplain to consult with community may be withdrawn by the chaplain if the use of certain religious items throughout representatives of the inmate’s faith inmate is documented as being in group and/or other appropriate sources the institution, consistent with violation of the terms of the religious to verify the religious significance of the considerations of security, safety, or diet program to which the inmate has good order. The Warden may request requested observance. The chaplain will agreed to in writing. In order to preserve the chaplain to obtain direction from work with requesting inmates to the integrity and orderly operation of representatives of the inmate’s faith accommodate a proper observance of group or other appropriate sources the holy day. The Warden will the religious diet program and to concerning the religious significance of ordinarily allow an inmate to take prevent fraud, inmates who withdraw the items. earned vacation days, or to make up for (or are removed) may not be (c) An inmate who wishes to have missed work, or to change work immediately reestablished back into the religious books, magazines or assignments in order to facilitate the program. The process of reapproving a periodicals must comply with the observance of the religious holy day. religious diet for an inmate who general rules of the institution regarding voluntarily withdraws or who is ordering, purchasing, retaining and § 548.19 Pastoral visits. removed ordinarily may extend up to accumulating personal property. If requested by an inmate, the thirty days. Repeated withdrawals Religious literature is permitted in chaplain shall facilitate arrangements (voluntary or otherwise), however, may accordance with the procedures for pastoral visits by a clergyperson or result in inmates being subjected to a governing incoming publications. representative of the inmate’s faith. waiting period of up to one year. Distribution to inmates of religious (a) The chaplain may request an NCIC literature purchased by or donated to check and documentation of such (c) The chaplain may arrange for the Bureau of Prisons is contingent clergyperson’s or faith group inmate religious groups to have one upon the chaplain’s granting his or her representative’s credentials. appropriate ceremonial or approval. (b) Pastoral visits may not be counted commemorative meal each year for their as social visits. They will ordinarily take members as identified by the religious § 548.17 Work assignments. place in the visiting room during regular preference reflected in the inmate’s file. When the religious tenets of an visiting hours. An inmate may attend one religious inmate’s faith are violated or ceremonial meal in a calendar year. jeopardized by a particular work § 548.20 Dietary practices. assignment, a different work assignment (a) The Bureau provides inmates [FR Doc. 95–21934 Filed 9–5–95; 8:45 am] ordinarily shall be made after it is requesting a religious diet reasonable BILLING CODE 4410±05±P federal register September 6,1995 Wednesday Compact; Notice Indian Gaming;ApprovedTribal/State Bureau ofIndianAffairs Interior Department ofthe Part IV 46489 46490 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Notices DEPARTMENT OF THE INTERIOR Bureau of Indian Affairs Indian Gaming AGENCY: Bureau of Indian Affairs, Interior. ACTION: Notice of Approved Tribal/State Compact. SUMMARY: Pursuant to 25 U.S.C. 2710, of the Indian Gaming Regulatory Act of 1988 (Pub. L. 100–497), the Secretary of the Interior shall publish, in the Federal Register, notice of approved Tribal/State Compacts for the purpose of engaging in Class III (casino) gambling on Indian reservations. The Assistant Secretary— Indian Affairs, Department of the Interior, through her delegated authority, has approved the Tribal/State Gaming Compact between the Skokomish Indian Tribe and the State of Washington, which was executed on May 25, 1995. DATES: This action is effective upon date of publication. FOR FURTHER INFORMATION CONTACT: George T. Skibine, Director, Indian Gaming Management Staff, Bureau of Indian Affairs, Washington, DC 20240, (202) 219–4068. Dated: August 25, 1995. Ada E. Deer, Assistant Secretary—Indian Affairs. [FR Doc. 95–22046 Filed 9–5–95; 8:45 am] BILLING CODE 4310±02±P federal register September 6,1995 Wednesday Final Rule and GeneralProvisionsActEnforcement: Programs; State-Administered Nonprofit Organizations;DirectGrant Higher Education,Hospitalsand Administration ofGrantstoInstitutions 34 CFRParts74,75,76,and81 Education Department of Part V 46491 46492 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations DEPARTMENT OF EDUCATION Section-by-Section Analysis Section 81.24 is amended to Section 74.53 establishes record implement section 250(a)(1) of the IASA 34 CFR Parts 74, 75, 76, and 81 retention and access requirements for by revising § 81.24(b)(1) to require the discretionary grants and cooperative Secretary, in issuing a notice of a RIN 1880±AA64 agreements awarded on or after October preliminary departmental decision, to 1, 1994. The section is amended by establish a prima facie case. Administration of Grants to Institutions removing ‘‘five’’ and adding in its place Section 81.27 is amended to of Higher Education, Hospitals and ‘‘three’’ in all appropriate places to implement section 250(a)(1) of the Nonprofit Organizations; Direct Grant reflect IASA removal of the GEPA IASA, to allow a recipient 60 days to file Programs; State-Administered requirement that recipients under an application for review of a Programs; and General Provisions applicable programs maintain records preliminary departmental decision in ActÐEnforcement for five years. In addition, the remaining place of the 30 days allowed in the paragraphs are revised by removing ‘‘5’’ current requirement. AGENCY: Department of Education. Section 81.33 is amended to wherever it appears and adding in its implement section 250(a)(3)(B) of the ACTION: Final regulations. place ‘‘3’’. IASA so that, during the Secretary’s Section 75.125 is amended by revising review of a decision of the Office of SUMMARY: The Secretary makes the heading and authority citation to Administrative Law Judges, ex parte technical amendments to the Education eliminate reference to the Joint Funding communication between employees of Department General Administrative Simplification Act which no longer the Secretary’s office and individuals Regulations (EDGAR) to implement exists. amendments to the General Education Section 75.734 is removed because representing the Department or the Provisions Act (GEPA) made by the the IASA amended GEPA to remove the recipient are prohibited. Improving America’s Schools Act former requirement that recipients Paperwork Reduction Act of 1980 (IASA). The provisions will diminish under applicable programs maintain These regulations have been the paperwork burden for recipients, records for five years. The removal of permit the Secretary to approve State examined under the Paperwork § 75.734 allows recipients of Reduction Act of 1980 and have been plans for a period longer than three discretionary grant programs to rely on years, authorize the Secretary to take found to contain no information the rules in Parts 74 and 80, which collection requirements. actions other than termination actions require that records be maintained for if, after a hearing, the Secretary only three years. Intergovernmental Review determines that a State plan is not Section 76.101 is amended to reflect Some programs affected by these substantially approvable, improve the the new section number for the section regulations are subject to the procedures and requirements governing of the General Education provisions Act requirements of Executive Order 12372 hearings for the recovery of funds, (GEPA) that specifies the content of the and the regulations in 34 CFR Part 79. implement other statutory requirements single State application. The objective of the Executive Order is and make other technical changes to Section 76.103 is revised to change to foster an intergovernmental EDGAR. the effective period for a state plan from partnership and a strengthened EFFECTIVE DATE: These regulations take a three-year State plan to give the federalism by relying on processes effect October 6, 1995. Secretary the flexibility to establish a developed by State and local multi-year State plan period. Under the FOR FURTHER INFORMATION CONTACT: governments for coordination and amended regulation, the Secretary could Ronelle Holloman, U.S. Department of review of proposed Federal financial establish a State plan period for more assistance. Education, 600 Independence Avenue, than three years. SW., Room 3636, ROB–3, Washington, In accordance with the order, this Section 76.301 is amended to reflect document is intended to provide early DC 20202–4700. Telephone: (202) 205– the new section number for the section 3501. Individuals who use a notification of the Department’s specific of GEPA that authorizes the single State plans and actions for these programs. telecommunications device for the deaf application. (TDD) may call the Federal Information Section 76.401 specifies procedures Assessment of Educational Impact Relay Service (FIRS) at 1–800–877–8339 that States must follow in disapproving The Secretary has determined that between 8 a.m. and 8 p.m., Eastern time, local applications and specifies actions this document does not require Monday through Friday. the Secretary may take if it’s determined transmission of information that is being SUPPLEMENTARY INFORMATION: The that a State did not comply with any of gathered by or is available from any Secretary is amending sections in 34 the provisions in § 76.401. The section other agency or authority of the United CFR Parts 74, 75, 76, and 81 to is amended by revising paragraph (d)(8) States. implement the Improving America’s to include language that will allow the Schools Act of 1994 (Pub. L. 103–382), Secretary additional measures to Waiver of Proposed Rulemaking enacted October 20, 1994, and to make achieve compliance other than It is the practice of the Secretary to other technical changes. The Improving immediate termination of assistance to offer interested parties the opportunity America’s Schools Act extends the the State. to comment on proposed regulations in authorization for programs under the Section 76.734 is removed because accordance with the Administrative Elementary and Secondary Education the IASA amended GEPA to remove the Procedure Act (5 U.S.C. 553). However, Act of 1965 and, as it relates to these former requirement that recipients since these changes merely incorporate amendments, diminishes paperwork maintain records for five years. The statutory amendments into the burden for educators and clarifies removal of § 76.734 allows recipients regulations and do not implement procedures handled by the Office of under state administered programs to policy changes over which the Secretary Administrative Law Judges. Other rely on the rules in Parts 74 and 80, has discretion, public comment could technical changes to EDGAR are also which require that records be have no effect. Therefore, the Secretary being made. maintained for only three years. has determined pursuant to 5 U.S.C. Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46493 553(b)(B) that public comment on these 74.34, 74.35, 74.36, 74.37, 74.40, 74.41, (Authority: 20 U.S.C. 1221e–3, 2890, and regulations is unnecessary and contrary 74.42, 74.43, 74.44, 74.45, 74.46, 74.47, 3474) to the public interest. 74.48, 74.50, 74.51, 74.52, 74.60, 74.61, 10. The authority citation for section 74.62, 74.70, 74.71, 74.72, and 74.73 and List of Subjects Appendix A to Part 74 is revised to read as 75.616 is revised to read as follows: follows: (Authority: 20 U.S.C. 1221e–3 and 3474, 42 34 CFR Part 74 (Authority: 20 U.S.C. 1221e–3, 3474; OMB U.S.C. 8373(b), and E.O. 12185) Administrative practice and Circular A–110) 11. The authority citation for section procedure, Education Department, Grant 75.617 is revised to read as follows: programs-education, Grant PART 75ÐDIRECT GRANT PROGRAMS (Authority: 20 U.S.C. 1221e–3 and 3474, 31 Administration, Hospitals, Institutions U.S.C. 3504, 3505) of higher education, Non-profit 4. The authority citation for Part 75 organizations, Reporting and continues to read as follows: PART 76ÐSTATE-ADMINISTERED recordkeeping requirements. PROGRAMS Authority: 20 U.S.C. 1221e–3 and 3474, 34 CFR Part 75 unless otherwise noted. 12. The authority citation for part 76 continues to read as follows: Education Department, Grant 5. Section 75.125 is amended by programs-education, Grant revising the heading and the authority Authority: 20 U.S.C. 1221e–3, 3474, and administration, Incorporation by citation to read as follows: 6511(a) unless otherwise noted. reference. 13. Section 76.101 is amended by § 75.125 Submit a separate application to 34 CFR Part 76 removing ‘‘Section 435’’ and adding, in each program. its place, ‘‘Section 441’’ and the Education Department, Grant * * * * * authority citation is revised to read as programs-education, Grant (Authority: 20 U.S.C. 1221e–3 and 3474) follows: administration, Intergovernmental relations, State-administered programs. § 75.734 [Removed] (Authority: 20 U.S.C. 1221e–3, 1232d, and 6. Section 75.734 and the note and 3474) 34 CFR Part 81 cross-reference following the section are 14. Section 76.103 is amended by Enforcement, General Education removed. revising the heading and paragraph (a); Provisions Act. 7. Section 75.740 is amended in and by removing ‘‘three-year’’ in Dated: August 30, 1995. paragraph (a) by removing the number paragraph (b) and adding, in its place, Richard W. Riley, ‘‘438’’ and adding in its place the ‘‘multi-year’’ to read as follows: Secretary of Education. number ‘‘444’’ and in paragraph (b) by § 76.103 Multi-year State plans. removing the number ‘‘439’’ and adding (Catalog of Federal Domestic Assistance (a) Beginning with fiscal year 1996, in its place the number ‘‘445’’ and Number does not apply.) each State plan will be effective for a revising the authority citation to read as period of more than one fiscal year, to The Secretary amends Parts 74, 75, follows: 76, and 81 of Title 34 of the Code of be determined by the Secretary or by Federal Regulations as follows: § 75.740 Protection of and access to regulations. student records; student rights in research, * * * * * PART 74ÐADMINISTRATION OF experimental programs, and testing. (Authority: 20 U.S.C. 1221e–3, 1231g(a), and GRANTS AND AGREEMENTS WITH * * * * * 3474) INSTITUTIONS OF HIGHER (Authority: 20 U.S.C. 1221e–3, 1232g, 1232h, 15. Section 76.301 is amended by EDUCATION, HOSPITALS AND OTHER and 3474) removing ‘‘Section 436’’ and adding, in NON-PROFIT ORGANIZATIONS 8. The authority citation for sections 75.1, its place, ‘‘Section 442’’ and the 75.2, 75.4, 75.50, 75.51, 75.60, 75.61, 75.62, authority citation is revised to read as 1. The authority citation for Part 74 is 75.100, 75.101, 75.102, 75.103, 75.104, revised to read as follows: 75.105, 75.109, 75.112, 75.117, 75.119, follows: Authority: 20 U.S.C. 1221e–3 and 3474; 75.125, 75.126, 75.127, 75.128, 75.129, (Authority: 20 U.S.C. 1221e–3, 1232d, and OMB Circular A–110, unless otherwise 75.155, 75.156, 75.158, 75.159, 75.190, 3474) noted. 75.191, 75.192, 75.200, 75.201, 75.210, 16. Section 76.401 is amended by 75.215, 75.216, 75.217, 75.218, 75.219, 2. In section 74.53, the introduction to 75.220, 75.222, 75.230, 75.231, 75.232, revising paragraph (d)(8) and the paragraph (b) is amended by removing 75.233, 75.234, 75.235, 75.236, 75.250, authority citation to read as follows: ‘‘five’’ and adding in its place, ‘‘three’’, 75.251, 75.253, 75.260, 75.261, 75.262, § 76.401 Disapproval of an applicationÐ in paragraph (b) (1) and (3) and (g) (1) 75.500, 75.511, 75.515, 75.516, 75.517, opportunity for a hearing. and (2) removing ‘‘5–’’ and adding, in its 75.519, 75.524, 75.525, 75.530, 75.531, 75.532, 75.533, 75.534, 75.560, 75.561, * * * * * place, ‘‘3–’’; in paragraph (b)(3) by (d) * * * removing ‘‘5’’ and adding in its place 75.562, 75.563, 75.564, 75.590, 75.591, 75.592, 75.600, 75.601, 75.602, 75.603, (8) If a State educational agency does ‘‘3’’; and by revising the authority 75.604, 75.605, 75.606, 75.607. 75.608, not comply with any provision of this citation to read as follows: 75.609, 75.610, 75.611, 75.612, 75.613, section, or with any order of the 75.614, 75.615, 75.618, 75.620, 75.621, § 74.53 Qualifications and exceptions Secretary under this section, the 75.622, 75.626, 75.650, 75.681, 75.682, Secretary terminates all assistance to the * * * * * 75.683, 75.700, 75.701, 75.702, 75.703, (Authority: 20 U.S.C. 1221e–3 and 3474; State educational agency under the 75.707, 75.708, 75.720, 75.730, 75.731, applicable program or issues such other OMB Circular A–110) 75.732, 75.900, 75.901, 75.903, and 75.910 is 3. The authority citation for sections 74.1, revised to read as follows: orders as the Secretary deems appropriate to achieve compliance. 74.2, 74.3, 74.4, 74.5, 74.10, 74.11, 74.12, (Authority: 20 U.S.C. 1221e–3 and 3474) 74.13, 74.14, 74.15, 74.16, 74.17, 74.20, * * * * * 74.21, 74.22, 74.23, 74.24, 74.25, 74.26, 9. The authority citation for section (Authority: 20 U.S.C. 1221e–3, 1231b–2, 74.27, 74.28, 74.30, 74.31, 74.32, 74.33, 75.580 is revised to read as follows: 3474, and 6511(a)) 46494 Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations § 76.734 [Removed] Authority: 20 U.S.C. 1221e–3, 1234–1234i, 39. The authority citation for section 17. Section 76.734 and the note and 3474(a), unless otherwise noted. 81.10 is revised to read as follows: following the section are removed. 30. Section 81.24 is amended by (Authority: 5 U.S.C. 554(d)(1), 557(d)(1)(A); 18. The authority citation for § 76.1 is revising paragraph (b)(1) and the 20 U.S.C. 1221e–3, 1234(f)(1), and 3474(a)) revised to read as follows: authority citation to read as follows: 40. The authority citation for section (Authority: 20 U.S.C. 1221e–3, 3474, and § 81.34 Notice of a disallowance decision. 81.13 is revised to read as follows: 6511(a)) * * * * * (Authority: 20 U.S.C. 1221e–3, 1234 (f)(1) 19. The authority citation for §§ 76.2, (b)(1) The notice must establish a and (h), and 3474(a)) 76.50, 76.51, 76.500, 76.532, 76.533, prima facie case for the recovery of 76.534, 76.563, 76.600, 76.703, 76.704, 41. The authority citation for section funds, including an analysis reflecting 81.14 is revised to read as follows: and 76.707 is revised to read as follows: the value of the program services (Authority: 20 U.S.C. 554(c)(1), 1221e–3, (Authority: 20 U.S.C. 1221e–3, 3474, and actually obtained in a determination of 1234(f)(1), and 3474(a)) 6511(a)) harm to the Federal interest. 20. The authority citation for * * * * * 42. The authority citation for section §§ 76.100, 76.102, 76.104, 76.106, (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 81.15 is revised to read as follows: 76.125, 76.141, 76.142, 76.201, 76.202, 1234a(a), and 3474(a)) (Authority: 5 U.S.C. 556 (d) and (e); 20 U.S.C. 76.235, 76.261, 76.300, 76.302, 76.303, 31. Section 81.37 is amended by 1221e–3, 1234(f)(1), and 3474(a)) 76.400, 76.650, 76.651, 76.652, 76.653, removing ‘‘30’’ in paragraph (b) and 43. The authority citation for section 76.654, 76.655, 76.656, 76.657, 76.658, adding, in its place, ‘‘60’’ and revising 81.21 is revised to read as follows: 76.659, 76.660, 76.661, 76.662, and the authority citation to read as follows: (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 76.770 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 1234a(k), 1234b (a) and (b), and 3474(a)) (Authority: 20 U.S.C. 1221e–3 and 3474) 1234a(b)(1), and 3474(a)) 44. The authority citation for section 21. The authority citation for § 76.140 32. Section 81.43 is amended by 81.22 is revised to read as follows: is revised to read as follows: redesignating paragraph (a) as paragraph (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), (Authority: 20 U.S.C. 1221e–3, 1231g(a), and (a)(1); adding a new paragraph (a)(2); 1234b(a), and 3474(a)) and revising the authority citation to 3474) 45. The authority citation for section read as follows: 22. The authority citation for § 76.304 81.23 is revised to read as follows: is revised to read as follows: § 81.43 Review by the Secretary. (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), (Authority: 20 U.S.C. 1221e–3, 1232e, and (a)(1) * * * 1234b(b), and 3474(a)) 3474) (2) During the Secretary’s review of 46. The authority citation for section 23. The authority citation for the initial decision there shall not be 81.24 is revised to read as follows: §§ 76.530, 76.560, 76.561, 76.681, any ex parte contact between the Secretary and individuals representing (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 76.683, 76.700, 76.701, 76.702, 76.720, 1234a(a), and 3474(a)) 76.722, 76.731, 76.760, 76.761, and the Department or the recipient. 76.902 is revised to read as follows: * * * * * 47. The authority citation for section 81.25 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 3474, and (Authority: 5 U.S.C. 557(b); 20 U.S.C. 1221e– 6511(a)) 3, 1234(f)(1), 1234a(d), and 3474(a)) (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 1234a(j), and 3474(a); 31 U.S.C. 3711) 24. The authority citation for § 76.580 33. The authority citation for sections is revised to read as follows: 81.1, 81.7, 81.8, 81.11, 81.12, 81.17, and 48. The authority citation for section 81.19 is revised to read as follows: 81.26 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 2890, and 3474) (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), and 3474(a)) 1234a (j), and 3474(a)) 25. The authority citation for § 76.591 is revised to read as follows: 34. The authority citation for section 49. The authority citation for section 81.2 is revised to read as follows: 81.27 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1226c, 1231a, 3474, and 6511(a)) (Authority: 20 U.S.C. 1221e–3, 1234 (b), (c), (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), and (f)(1), 1234a(a)(1), 1234i, and 3474(a)) 1234a(b)(1), and 3474(a)) 26. The authority citation for § 76.677 is revised to read as follows: 35. The authority citation for section 50. The authority citation for section 81.4 is revised to read as follows: 81.28 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 2727(b)(3)(D), 2972(f), and 3474) (Authority: 20 U.S.C. 1221e–3, 1234 (b) and (Authority: 20 U.S.C. 1221e–3, 1234 (e) and (c), and 3474(a)) (f)(1), 1234a(b), and 3474(a)) 27. The authority citation for § 76.705 is revised to read as follows: 36. The authority citation for section 51. The authority citation for section 81.5 is revised to read as follows: 81.29 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1225(b), and 3474) (Authority: 5 U.S.C. 556(b); 20 U.S.C. 1221e– (Authority: 5 U.S.C. 556(d); 20 U.S.C. 1221e– 3, 1234 (d), (f)(1) and (g)(1), and 3474(a)) 3, 1234(f)(1), 1234a(c), and 3474(a)) 28. The authority citation for § 76.740 is revised to read as follows: 37. The authority citation for section 52. The authority citation for section 81.6 is revised to read as follows: 81.30 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1232g, 1232h, 3474, and 6511(a)) (Authority: 5 U.S.C. 556(d); 20 U.S.C. 1221e– (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 3, 1234(f)(1), and 3474) 1234a(b)(3), 1234b(b)(1), and 3474(a)) PART 81ÐGENERAL EDUCATION 38. The authority citation for section 53. The authority citation for section PROVISIONS ACTÐENFORCEMENT 81.9 is revised to read as follows: 81.31 is revised to read as follows: 29. The authority citation for part 81 (Authority: 5 U.S.C. 554(b); 20 U.S.C. 1221e– (Authority: 5 U.S.C. 557(c); 20 U.S.C. 1221e– is revised to read as follows: 3, 1234(f)(1), and 3474(a)) 3, 1234(f)(1), and 3474(a)) Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Rules and Regulations 46495 54. The authority citation for section 81.32 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 1234a(e), and 3474(a)) 55. The authority citation for section 81.33 is revised to read as follows: (Authority: 5 U.S.C. 557(b); 20 U.S.C. 1221e– 3, 1234(f)(1), 1234a(d), and 3474(a)) 56. The authority citation for section 81.34 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 1234a(g), and 3474(a)) 57. The authority citation for the appendix to Part 81 is revised to read as follows: (Authority: 20 U.S.C. 1221e–3, 1234(f)(1), 1234b(a), and 3474(a)) [FR Doc. 95–21998 Filed 9–5–95; 8:45 am] BILLING CODE 4000±01±P i Reader Aids Federal Register Vol. 60, No. 172 Wednesday, September 6, 1995 CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING SEPTEMBER Federal Register/Code of Federal Regulations At the end of each month, the Office of the Federal Register General Information, indexes and other finding 202±523±5227 publishes separately a List of CFR Sections Affected (LSA), which aids lists parts and sections affected by documents published since Public inspection announcement line 523±5215 the revision date of each title. 874...... 45685 Laws 5 CFR 876...... 45685 Public Laws Update (numbers, dates, etc.) 523±6641 304...... 45647 878...... 45685 Presidential Documents 353...... 45670 880...... 45685 532...... 46213 882...... 45685 Executive orders and proclamations 523±5227 870...... 45670 884...... 45685 The United States Government Manual 890...... 45670 886...... 45685 523±5227 1320...... 45776, 46148 888...... 45685 890...... 45685 Other Services 7 CFR 892...... 45685 Electronic and on-line services (voice) 523±4534 271...... 45990 895...... 46251 Privacy Act Compilation 523±3187 272...... 45990 898...... 46251 TDD for the hearing impaired 523±5229 273...... 45990 945...... 46017 24 CFR 1137...... 46214 882...... 45661 ELECTRONIC BULLETIN BOARD 1942...... 46215 887...... 45661 Free Electronic Bulletin Board service for Public Law numbers, 982...... 45661 8 CFR Federal Register finding aids, and list of documents on public 983...... 45661 inspection. 202±275±0920 329...... 45658 25 CFR FAX-ON-DEMAND 12 CFR Proposed Rules: You may access our Fax-On-Demand service. You only need a fax 3...... 46170 63...... 45982 machine and there is no charge for the service except for long 208...... 46170 distance telephone charges the user may incur. The list of 225...... 46170 26 CFR documents on public inspection and the daily Federal Register’s 325...... 46170 1...... 45661 table of contents are available using this service. The document Proposed Rules: numbers are 7050-Public Inspection list and 7051-Table of 23...... 46246 28 CFR Contents list. The public inspection list will be updated 0...... 46018 immediately for documents filed on an emergency basis. 14 CFR 541...... 46484 NOTE: YOU WILL ONLY GET A LISTING OF DOCUMENTS ON 39...... 46216 548...... 46484 97...... 46218 FILE AND NOT THE ACTUAL DOCUMENT. Documents on 29 CFR public inspection may be viewed and copied in our office located 399...... 46018 at 800 North Capitol Street, N.W., Suite 700. The Fax-On-Demand Proposed Rules: 1601...... 46219 telephone number is: 301±713±6905 39...... 45683 32 CFR 15 CFR 92...... 46019 FEDERAL REGISTER PAGES AND DATES, SEPTEMBER 275...... 45659 33 CFR 45647±46016...... 1 46017±46212...... 5 16 CFR 100...... 45668 46213±46496...... 6 600...... 45659 110...... 45776 165 (2 documents) ...... 45669, 19 CFR 45670 10...... 46188, 46334 Proposed Rules: 12...... 46188, 46334 117...... 46069 24...... 46334 34 CFR 102...... 46188 123...... 46334 74...... 46492 134...... 46334 75...... 46492 162...... 46334 76...... 46492 174...... 46334 81...... 46492 177...... 46334 Proposed Rules: 178...... 46188 75...... 46004 181...... 46334 191...... 46334 40 CFR 9...... 45948 21 CFR 52 ...... 46020, 46021, 46024, Proposed Rules: 46025, 46029, 46220, 46222 862...... 45685 61...... 46206 866...... 45685 63...... 45948 868...... 45685 70...... 45671 870...... 45685 Proposed Rules: 872...... 45685 52 ...... 46070, 46071, 46252 ii Federal Register / Vol. 60, No. 172 / Wednesday, September 6, 1995 / Reader Aids 70...... 45685, 46072 45 CFR 2404...... 46152 49 CFR 372...... 46076 670...... 46234 2405...... 46152 393...... 46236 42 CFR 2406...... 46152 571...... 46064 46 CFR 2413...... 46152 412...... 45778 552...... 46047 2415...... 46152 413...... 45778 50 CFR Proposed Rules: 2416...... 46152 417...... 45673, 46228 20...... 46012 424...... 45778 40...... 46087 2419...... 46152 649...... 45682 485...... 45778 154...... 46087 2426...... 46152 489...... 45778 2428...... 46152 672...... 46067 47 CFR 2429...... 46152 Proposed Rules: 44 CFR 73...... 46063 2432...... 46152 10...... 46087 64...... 46030, 46037 Proposed Rules: 2437...... 46152 13...... 46087 65 ...... 46038, 46040, 46042, 25...... 46252 2452...... 46152 17...... 46087 625...... 46105 46043 2453...... 46152 67...... 46044 48 CFR 649...... 45690 Proposed Rules: Proposed Rules: 2401...... 46152 650...... 45690 67...... 46079, 46085 2402...... 46152 52...... 46259 651...... 45691